Exhibit 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
as of August 17, 2005, by and between Avantce RSI, LLC, a Delaware limited
liability company ("AVANTCE"), and Robocom Systems International, Inc., a
corporation duly organized and existing under the laws of the State of New York,
U.S.A. (the "Company").
RECITALS:
WHEREAS, the Company is in the business of developing, marketing,
distributing, licensing, and maintaining software and other products and
services for the provision of warehousing and supply chain management solutions
(collectively, the "Business");
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to sell to AVANTCE for the consideration set forth below,
and AVANTCE desires to purchase from the Company, substantially all of the
assets of the Company used or useful in the operation of the Business, all as
more fully described in Section 2.02, and the Company desires to cause AVANTCE
to assume and AVANTCE has agreed to assume from the Company certain liabilities
and obligations of the Company arising in connection with the Business, as
described in Section 2.03;
NOW, THEREFORE, in reliance upon the representations, warranties and
agreements made herein and in consideration of the premises and covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions. Except as otherwise specified or as the context
may otherwise require, in addition to the capitalized terms defined elsewhere
herein, the following terms shall have the respective meanings set forth below
whenever used in this Agreement:
"AAA" has the meaning assigned to such term in Section 11.13 hereof.
"Accounts Receivable" means any and all amounts and other obligations owed
to the Company by reason of a sale of a good or provision of a service in the
ordinary course of its conduct of the Business;
"Affiliate" means, when used with respect to a specified Person, another
Person that, directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified. For purposes of this Agreement, the term "control" (including, with
its correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise).
"Agreement" means this Asset Purchase Agreement, as it may from time to
time be amended, supplemented or otherwise modified in accordance with the terms
hereof.
"Avantce's Damages" means all Damages sustained, incurred or suffered by
AVANTCE and/or its shareholders, officers, directors, affiliates or employees
resulting from or arising in connection with: (a) any material misrepresentation
by the Company contained in or made pursuant to this Agreement or in any
certificate, instrument or agreement delivered to AVANTCE pursuant to or in
connection with this Agreement; or (b) any material breach of warranty or any
default in the performance of any covenant or obligation of the Company under or
in connection with this Agreement.
"Assigned Contracts" has the meaning assigned to such term in Section
2.02(b) hereof.
"Assumed Liabilities" has the meaning assigned to such term in Section
2.03 hereof.
"Assumption Agreement" means the Assumption Agreement, to be dated the
Closing Date, executed by the Company and AVANTCE, substantially in the form of
Exhibit A hereto.
"Xxxx of Sale" means the Xxxx of Sale, to be dated the Closing Date,
executed by the Company and accepted by AVANTCE, substantially in the form of
Exhibit B hereto.
"Business" has the meaning assigned to such term in the recitals to this
Agreement.
"Cash Adjustment Payment" has the meaning assigned to such term on
Schedule 2.01 of this Agreement
"Closing" has the meaning assigned to such term in Section 6.01 hereof.
"Closing Date" has the meaning assigned to such term in Section 6.01
hereof.
"Company's Damages" means all Damages sustained, incurred or suffered by
the Company and/or its shareholders, officers, directors, affiliates or
employees, resulting from or arising in connection with: (a) any material
misrepresentation by AVANTCE contained in or made pursuant to this Agreement or
in any certificate, instrument or agreement delivered to the Company pursuant to
or in connection with this Agreement; (b) any material breach of warranty or any
default in the performance of any covenant or obligation of AVANTCE under or in
connection with this Agreement; or (c) the Assumed Liabilities.
"Company Intellectual Property" means the Intellectual Property used by
the Company (whether owned or licensed by the Company) in connection with the
Business, including without limitation, Computer Documentation, RIMS Software,
Know-how, Records, Trademarks, Copyrights and Patents.
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"Company Stockholder Approval" has the meaning assigned to such term in
Section 3.02 hereof.
"Computer Documentation" means the technical documentation pertaining to
the Business including, without limitation, any end-user manuals, product
specifications, algorithms, diagrams, bug lists, and electronic machine readable
versions of such manuals, product answer books and other related documentation
and additionally any marketing or sales materials.
"Contract" means any note, bond, mortgage, indenture, lease, permit,
contract, agreement or other instrument or obligation, whether written or oral,
or any amendment, supplement or restatement of any of the foregoing.
"Contract Assignment" means the Assignment and Assumption of Contracts, to
be dated the Closing Date, executed by AVANTCE and the Company, substantially in
the form of Exhibit C hereto.
"Copyrights" has the meaning assigned to such term in Section 2.02(f)
hereof.
"Copyright Assignment" means the Copyright Assignment, to be dated the
Closing Date, executed by the Company and accepted by AVANTCE, substantially in
the form of Exhibit D hereto.
"Damages" means any and all damages, losses, liabilities, obligations,
penalties, fines, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses (including, without limitation,
reasonable attorneys' and experts' fees and disbursements) of any kind or of any
nature whatsoever (whether based in common law, statute or contract; fixed or
contingent; known or unknown) suffered or incurred by a party hereto, its
employees, affiliates, successors and assigns and, if applicable, any Liens on
the Transferred Assets.
"Disputes" has the meaning assigned to such term in Section 11.13 hereof.
"Governmental Entity" means any government, any governmental,
administrative or regulatory entity, authority, commission, board, agency,
instrumentality, bureau or political subdivision and any court, tribunal or
judicial or arbitral body (whether U.S. or any other foreign, federal, state or
local entity or, in the case of an arbitral body, whether governmental, public
or private).
"Guaranty Agreement" means a Guaranty Agreement, to be dated as of the
Closing Date, executed by the Principal AVANTCE Members, substantially in the
form attached hereto as Exhibit J.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" has the meaning assigned to such term in Section 3.02
hereof.
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"Excluded Assets" means any the assets and other property of the Company
set forth on Schedule 2.02-1 hereto.
"Indemnified Party" has the meaning assigned to such term in Section 10.03
hereof.
"Indemnitor" has the meaning assigned to such term in Section 10.03
hereof.
"Intellectual Property" means all copyrights, patents, trademarks, trade
names, and applications for any of the foregoing, whether registered or
unregistered, of any party, or to which it has rights.
"Know-how" has the meaning assigned to such term in Section 2.02(g)
hereof.
"Knowledge" means an individual will have "Knowledge" of a particular fact
or other matter if such individual is actually aware or should be aware of such
fact or other matter and a Person (other than an individual) will have
"Knowledge" of a particular fact or other matter if an individual who is serving
as a director, officer or manager of such Person has actual awareness or should
have awareness of such fact or other matter.
"Leased Tangible Property" means shall mean all telephone equipment,
computers or computer equipment, furniture and fixtures and other tangible
personal property that are necessary for the Company to conduct the Business as
it relates to the Transferred Assets, in each case which is subject to a
leasehold interest held by the Company.
"Liabilities" mean, with respect to any Person, (i) any right against such
Person to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, (ii) any right against such Person to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured, and (iii) any obligation of such Person for the performance of any
covenant or agreement (whether for the payment of money or otherwise).
"Licensed Intellectual Property" shall mean Company Intellectual Property
that the Company uses or has the right to use, in each case pursuant to Third
Party Licenses.
"Lien" means any lien, charge, claim, pledge, security interest,
conditional sale agreement or other title retention agreement, lease, mortgage,
security agreement, right of first refusal, option, right of way, easement or
any other encumbrance of any nature whatsoever.
"Major Shareholders" shall mean each of Xxxxx Xxxxxxx, Xxxxxxxx Xxxxx and
Xxxxxxx Xxxxxxx.
"Material Permits" has the meaning assigned to such term in Section 3.10
hereof.
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"Owned Intellectual Property" shall mean Company Intellectual Property (i)
created or developed by employees of the Company in connection with the Business
or (ii) to which the Company has acquired, by purchase, assignment or other
transfer the unconditional, unrestricted, exclusive right to control or prevent
any and all use of such Intellectual Property by others without any consent, or
approval of or payment to, any other Person.
"Owned Tangible Property" shall mean all telephone equipment, computers or
computer equipment, furniture and fixtures and other tangible personal property
that are necessary for the Company to conduct its business as it relates to the
Transferred Assets, in each case which is owned by the Company and relating to
the Business.
"Patents" has the meaning assigned to such term in Section 2.02(e) hereof.
"Patent Assignment" means the Patent Assignment, to be dated the Closing
Date, executed by the Company and accepted by AVANTCE, substantially in the form
of Exhibit E hereto.
"Person" means any individual, corporation, partnership, limited
partnership, firm, joint venture, association, joint stock company, trust,
estate, limited liability company, unincorporated association, government or
regulatory body (or any agency or political subdivision thereof) or other
entity.
"Principal AVANTCE Members" shall mean each of Xxxxx Lode, Xxxxxx Xxxxxxx
and Xxx Xxxxxxxxx.
"Promissory Note" has the meaning assigned to such term on Schedule 2.01
hereto.
"Purchase Price" has the meaning assigned to such term in Section 2.01
hereof.
"Records" has the meaning assigned to such term in Section 2.02(c) hereof.
"RIMS Software" has the meaning assigned to such term in Section 2.02(i)
hereof.
"SEC" has the meaning assigned to such term in Section 3.04 hereof.
"Tangible Property" shall mean the Owned Tangible Property and the Leased
Tangible Property.
"Third Party License" shall mean all licenses, agreements, obligations or
other commitments under which a Person has granted the Company a right to use
any Licensed Intellectual Property in connection with the Transferred Assets,
but retains one or more rights to use such Intellectual Property,
"Trademarks" has the meaning assigned to such term in Section 2.02(d)
hereof.
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"Trademark Assignment" means the Trademark Assignment, to be dated the
Closing Date, executed by the Company and accepted by AVANTCE, substantially in
the form of Exhibit F hereto.
"Transaction Documents" means this Agreement, the Assumption Agreement,
the Xxxx of Sale, the Contract Assignment, the Copyright Assignment, the
Trademark Assignment, the Patent Assignment and the Promissory Note.
"Transferred Assets" has the meaning assigned to such term in Section 2.02
hereof.
"Transferred Benefit Plan" means any 401K Plan, vacation pay, sickness,
hospitalization or other medical, dental, vision, disability or death benefit
plan (whether provided through insurance, on a funded or unfunded basis or
otherwise), employee stock option purchase plan, and each other employee benefit
plan, program or arrangement, whether or not an employee benefit plan within the
meaning of Section 3(3) of ERISA which since January 1, 1993 has been maintained
or contributed to by the Company for the benefit of or relating to any of its
employees or to any former employee of the Company or his/her dependents,
survivors or beneficiaries.
"Transferred Employee" has the meaning assigned to such term in Section
9.03(a) hereof.
"Warranties" mean those obligations of the Company based upon, or arising
from, warranties, whether of material, design, workmanship and/or fitness for
use, covering parts or products manufactured, delivered, installed or sold by
the Company on or before the Closing Date.
Section 1.02 Rules of Construction. This Agreement and the other
Transaction Documents shall be deemed to have been drafted by both the Company
and AVANTCE and neither this Agreement nor any other Transaction Document shall
be construed against any party as the principal draftsperson hereof or thereof.
The Exhibits and Schedules attached hereto are incorporated herein by reference
and shall be considered part of this Agreement. Other capitalized terms used in
this Agreement and not defined in Section 1.01 shall have the meanings assigned
to them elsewhere in this Agreement. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. When a reference is made in this
Agreement to an Article, Section, Exhibit or Schedule, such reference shall be
to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. Any agreement, instrument or statute defined
or referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of
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comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to such
Person's predecessors (to the extent applicable) and permitted successors and
assigns.
ARTICLE II
TERMS OF THE TRANSACTION
Section 2.01 Purchase Price. The Transferred Assets shall be sold,
assigned, granted, transferred, conveyed and delivered by the Company and shall
be purchased, acquired and accepted by AVANTCE in consideration for the purchase
price as set forth in Schedule 2.01 (the "Purchase Price").
Section 2.02 Transfer of Assets. On and subject to the terms and
conditions of this Agreement, at the Closing, the Company shall sell, grant,
convey, transfer, assign and deliver to AVANTCE, and AVANTCE shall purchase,
acquire and accept from the Company, all of the Company's right, title and
interest in, the assets and rights of the Company, other than the Excluded
Assets, with such additions thereto or deletions therefrom as may be permitted
by the terms of this Agreement (collectively, the "Transferred Assets"),
including without limitation:
(a) all of the Company's right, title and interest in the Computer
Documentation;
(b) all of the Company's rights in, to and under all Contracts
relating to the Business, except for those Contracts which are listed on
Schedule 3.09, which Schedule the parties may mutually agree to amend through
Exhibit C hereto (each an "Assigned Contract" and collectively, the "Assigned
Contracts");
(c) all originals or, to the extent originals are not available,
copies of papers, sales and business files and records, contract records, test
and design records, product specifications, drawings, engineering, maintenance,
supplier and customer lists and other business records and documents used in
connection with the Business, whether maintained in electronic or physical form
(the "Records");
(d) the trademarks, trade names, service marks, trade styles, trade
dress and such unregistered rights as may exist through use, and foreign
counterparts thereof, owned by the Company and used primarily in the Business
including as set forth in Schedule 2.02(d) which the parties may mutually agree
to amend through Exhibit F hereto (the "Trademarks");
(e) all domestic and foreign unregistered patent rights, patent
applications, patent registrations, letters patent or similar legal protection
issuing thereon, and all rights and benefits under any applicable treaty or
convention held and/or owned by the Company and used in conjunction with the
Business and the RIMS Software, including as set forth in Schedule 2.02(e) which
the parties may mutually agree to amend through Exhibit E hereto (the
"Patents");
(f) all domestic and foreign common law and statutory rights
associated with the copyrights, copyright applications, copyright registrations
and the moral rights that now or hereafter exist in the RIMS Software, Records
and Computer Documentation, including all of the Company's associated copyright
registrations and application, which are set forth in Schedule
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2.02(f) which the parties may mutually agree to amend through Exhibit D hereto
(the "Copyrights");
(g) the technologies, trade-secrets, designs, improvements,
formulae, manufacturing methods, practices, processes, technical data, product
development data, research data, specifications, or methods and know-how,
whether or not patentable, whether or not a secret and whether or not reduced to
writing that are used in the Business (the "Know-how");
(h) the Owned Intellectual Property and all of the Company's right,
title and interest in, to and under the Licensed Intellectual Property;
(i) the computer software of the Company known as "RIMS", including
source code, binary executable code, object code, compilers, assemblers and
algorithms, (the "RIMS Software");
(j) with regard to the Business, all other assets, including any
cash or cash equivalents, Accounts Receivable, any and all Owned Tangible
Property and all of the Company's right, title and interest in and to all Leased
Tangible Property, that are necessary for the Company to conduct its business;
and
(k) all of the Company's right, title and interest in, to and under
the Material Permits; and
(l) the Transferred Benefit Plans and the assets attributable or
related to any such Transferred Benefit Plans.
Section 2.03 Assumption of Liabilities. AVANTCE shall assume,
undertake to pay, perform or discharge the liabilities of the Company, except
those liabilities which are excluded in Schedule 2.03,(all of which are
hereinafter referred to collectively as the "Assumed Liabilities"), all of which
AVANTCE will assume and pay, discharge or perform, as appropriate, in a timely
manner as and when required from and after the Closing Date: AVANTCE shall be
under no obligations to assume any liabilities of the Company that are excluded
in Schedule 2.03,
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to AVANTCE, that:
Section 3.01 Organization; Authority. The Company is duly approved,
validly existing and in good standing under the laws of the State of New York.
The Company has all necessary corporate power and authority to operate all its
properties and to carry on its business as it is now being conducted. The
Company has all necessary corporate power and authority to sell, convey,
transfer, assign and deliver the Transferred Assets to AVANTCE as contemplated
by this Agreement, and to execute, deliver and perform its obligations hereunder
and under the other Transaction Documents to which it is a party.
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Section 3.02 Authorization of Transaction. The board of directors of the
Company has duly authorized and approved the transactions contemplated by this
Agreement and has resolved that the transactions contemplated hereby are fair
to, advisable and in the best interests of the Company's stockholders. The Major
Shareholders have irrevocably agreed to vote all shares owned or controlled by
them in favor of the transactions contemplated by this Agreement. The Major
Shareholders have agreed that they will not vote any shares owned or controlled
by them in favor of any other competing offer to purchase either the assets or
stock of the Company. The affirmative vote (in person or by duly authorized and
valid proxy at a Company stockholders' meeting or by written consent) of the
holders of two-thirds of the outstanding shares of each of the Company's common
stock, in favor of the adoption of this Agreement is the only vote of the
holders of any class or series of the Company's capital stock required by
applicable law and the Company's organizational instruments to duly effect such
adoption (the "Company Stockholder Approval"). Other than the actions required
to obtain the Company Stockholder Approval and filings necessary for the Company
to comply with any applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Company has taken all action
required by law, its articles of incorporation, its bylaws or otherwise to
authorize and to approve the execution, delivery and performance of this
Agreement, the other Transaction Documents to which it is to be a party and the
documents, agreements and certificates executed and delivered by it or to be
executed and delivered by it in connection herewith and therewith.
This Agreement is, and each other Transaction Document to which the Company is
to be a party, when executed and delivered by the Company at the Closing and,
assuming due authorization, execution and delivery by AVANTCE, will be duly
executed and delivered by the Company, and shall constitute a valid and legally
binding obligation of the Company, enforceable against the Company, in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy laws or creditors' rights generally or by general
principles of equity. All persons who have executed this Agreement on behalf of
the Company or who will execute on behalf of the Company any other Transaction
Document or other documents, agreements or certificates in connection herewith
or therewith, have been duly authorized to do so by all necessary corporate
action.
Section 3.03 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under
applicable law (including, without limitation, filings necessary for the Company
to comply with any applicable requirement of the Exchange Act), neither the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will require
any filing with, notice to, or permit, authorization, consent or approval of,
any Governmental Entity. Except as set forth on Schedule 3.03, neither the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (a)
conflict with or result in any breach of any provision of the articles of
association or other organizational documents of the Company, (b) result in the
creation or imposition of any Liens upon the Transferred Assets, (c) result in a
material violation or material breach of, require any notice to any party
pursuant to, or constitute (with or without due notice or lapse of time or both)
a material default (or give rise to any right of termination, amendment,
cancellation, acceleration or right of non-renewal or contractually require any
prepayment or offer to purchase any debt or give rise to the loss of a material
benefit) under, any of the terms, conditions or provisions of any Contract by
which the Transferred Assets may be
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bound, or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or the Transferred Assets.
Section 3.04 Financial Statements; Other Financial Information. The
financial statements of the Company included in the reports filed by the Company
with the Securities and Exchange Commission (the "SEC") pursuant to the Exchange
Act (including the related notes) complied as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, fairly present the consolidated financial condition of the
Company and its subsidiaries at the dates thereof and the consolidated results
of operations and cash flows of the Company and its subsidiaries for the periods
then ended (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that were not material in amount or effect).
Section 3.05 Transferred Assets. (a) The Company has good and marketable
title to, or a valid leasehold interest in, all of the Transferred Assets. All
such Transferred Assets are free and clear of all Liens other than (a) Liens
which shall be discharged or removed by Seller prior to or at Closing and which
are specifically noted on Schedule 3.05 and (b) such imperfections of title or
encumbrances, if any, which are not, individually or in the aggregate, material
in character, amount or extent, and which do not detract from the value, or
interfere with the present use, of the Transferred Assets subject thereto or
affected thereby.
(b) All of the Tangible Property included in the Transferred Assets
are in good repair and operating condition, reasonable wear and tear excepted.
The RIMS Software performs in all material respects all of the functions as
previously disclosed to AVANTCE in writing and presentations and as outlined in
the relevant product manuals and presentations in accordance with their written
specifications.
(c) The Accounts Receivable included in the Transferred Assets are,
to the Company's Knowledge, good and collectible in accordance with past
practices (less the amount of any provision, reserve or similar adjustment
therefor on the books and records of the Company).
Section 3.06 Intellectual Property. (a) The Company has disclosed to
AVANTCE or its counsel correct and complete copies of all applications, filings,
licenses, agreements and related correspondence and documents embodying the
Company Intellectual Property.
(b) Except as set forth in Schedule 3.06(b): (i) the Company owns or
has the right to use all of the Company Intellectual Property necessary for the
Company to conduct its business as presently conducted, including the right to
sell and distribute the products of the Company; (ii) no proceedings have been
instituted, are pending or, to the best of the Company's Knowledge, threatened,
which challenge the Company's rights in respect of the aforesaid or the validity
thereof; (iii) none of the Owned Intellectual Property used by the Company is
the subject of any Lien or (except as specifically identified and disclosed in a
Schedule to this Agreement) other agreement granting rights therein to any third
party; (iv) the Company has not received notice of any charges of interference
or infringement of any Company Intellectual Property; (v) (A) the RIMS product
line does not infringe upon or otherwise violates the Intellectual Property
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rights of others and the Company has not received any claims of such
infringements or violation; and (B)to the Company's Knowledge, none of the
Company Intellectual Property are being infringed by others and none are subject
to any outstanding order, decree, judgment, stipulation or charge; (vi) the
employees, consultants and contractors who have been and are engaged to develop
the Company Intellectual Property have been required to sign assignable and
legally binding confidentiality and, as applicable, assignment-of-invention
and/or work-for-hire agreements; (vii) the Company does not have Knowledge of
any facts or claims which would cause any of the Company Intellectual Property
to be invalid; and (viii) the Owned Intellectual Property was not developed
under a grant from any Governmental Entity or private source.
Section 3.07 Operations Since the Financial Statements. Since the
date of the audited 2005 year end financial statements which have been provided
to AVANTCE, there has not been, and there will not be as of the Closing Date:
(a) Any change in the business, results of operations, assets,
financial condition, or manner of conducting the business of the Company which
has or may be reasonably expected to have a material adverse effect on such
business, results of operations, Transferred Assets, or financial condition;
(b) Any damage, destruction, or loss (whether covered by insurance)
which has, or may reasonably be expected to have, a material adverse effect upon
any of the Transferred Assets and/or the business operations of the Company;
(c) Any amendment or termination by the Company of any material
Contract, franchise, permit, license or other agreement that relates to the
Transferred Assets;
(d) Except with the prior written consent of AVANTCE, which consent
shall not be unreasonable withheld, any settlement resulting in payment or a
promise to make payment by the Company of any threatened litigation or claim,
including but not limited to, any settlement of any outstanding issues with
Company's former distributor in the United Kingdom; or
(e) The imposition of any Lien on the Transferred Assets.
Section 3.08 Litigation. Except as set forth on Schedule 3.08, there is no
claim, court recorded settlement, suit, action, proceeding or investigation
pending, or to the Knowledge of the Company, threatened against or affecting the
Transferred Assets and there is no judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against the Company that
could reasonably be expected to have a material adverse effect on the
Transferred Assets or could affect the performance of the Company's obligations
under this Agreement. The Company is not presently engaged in any legal action
to recover monies due or damages relating to the Transferred Assets.
Section 3.09 Additional Assigned Contracts and Commitments. Schedule 3.09
lists (a) all distribution agreements that the Company is a party to and the
revenue associated with each such distribution agreement applicable to the
Business during the period of the most recent audited annual financial
statements of the Company and (b) all the obligations of the Company to provide
maintenance and support to the Company's customers. [Except as set forth on
Schedule
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3.09, there is nothing contained in any customer agreement that would restrict
or limit AVANTCE's ability to establish the level of maintenance fees under
these agreements.] The Company is not and, to the Knowledge of the Company, no
other party is, in violation of or in default under (nor, to the Knowledge of
the Company, does there exist any condition which upon the passage of time or
the giving of notice or both would reasonably be expected to cause such a
violation of or default under) any material Assigned Contract to which it is a
party or by which it or any of its properties or assets is bound. Each Assigned
Contract constitutes a valid and binding obligation of the Company and, to the
Knowledge of the Company, each other party thereto, enforceable against such
other party in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy laws or creditors' rights generally or by
general principles of equity.
Section 3.10 Compliance with Laws. The Company is in compliance in all
material respects with all applicable statutes, laws, codes, ordinances,
regulations, rules, Material Permits, judgments, decrees and orders of any
Governmental Entity applicable to the Transferred Assets. The Company has not
received, and to the Company's Knowledge, there does not exist, any notice of
any action, suit, hearing, charge or investigation to the effect that the
Transferred Assets are, were or may be in violation of any requirement of law or
any order of any Governmental Entity. The Company has in effect all material
permits and licenses necessary for it to own, lease or operate the Transferred
Assets and to carry on such business as now conducted (and the Company has
timely made appropriate filings for issuance or renewal thereof) and Schedule
3.10 contains a list of all such material permits and licenses (the "Material
Permits").
Section 3.11 Insurance. The Company maintains adequate insurance with
qualified insurance carriers with respect to liability and property loss or
damage as it relates to Transferred Assets. Copies of all such policies have
been provided to AVANTCE.
Section 3.12 Transactions with Affiliates. Except as set forth on Schedule
3.12 or otherwise disclosed pursuant to this Article III: (a) no Affiliate,
director, or officer of the Company owns any interest in any asset or property
(real or personal, tangible or intangible), business or Contract, used or
intended for use or otherwise relating to the business currently conducted or
proposed to be conducted by the Company relating to the Transferred Assets and
(b) there are no arrangements or agreements related to the Transferred Assets
between the Company, on the one hand, and any of its respective Affiliates,
directors or officers, on the other hand, providing for the receipt of any
payments or benefits to such Affiliates, directors or officers
Section 3.13 Finders or Brokers. Except as set forth on Schedule 3.13, no
broker, investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company shall be solely
responsible to pay any fees the named entity and/or person and any other third
party related to this transaction retained by Company. The Company shall
indemnify and hold AVANTCE harmless from any claims for failure to pay any such
fees.
Section 3.14 Complete Disclosure. None of the representations and
warranties made by the Company in this Agreement or made in any certificate or
other document furnished hereunder will contain any untrue statement of material
fact, or omit to state a material fact necessary in
12
order to make the statement contained herein or therein, in light of the
circumstances under which such statements were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AVANTCE
AVANTCE represents and warrants to the Company, that:
Section 4.01 Authority. AVANTCE is duly organized, validly existing and in
good standing under the laws of the State of Delaware, U.S.A. AVANTCE has all
necessary corporate power and authority to execute and deliver this Agreement
and the other Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby or thereby. The execution, delivery and
performance of this Agreement, and the other Transaction Documents to which it
is a party, by AVANTCE and the consummation by AVANTCE of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of AVANTCE and no other corporate proceeding on the
part of AVANTCE is necessary to authorize this Agreement and the other
Transaction Documents to which it is a party or to consummate the transactions
contemplated hereby and thereby to which AVANTCE is a party. This Agreement has
been, and each other Transaction Document to which AVANTCE is to be a party will
be, when executed and delivered by the AVANTCE at the Closing, duly executed and
delivered by AVANTCE and, assuming due authorization, execution and delivery by
the Company, constitutes a valid and binding obligation of AVANTCE enforceable
against AVANTCE in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy laws or creditors' rights generally or by
general principles of equity.
Section 4.02 Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of AVANTCE. AVANTCE
shall be solely responsible to pay any fees to any third party related to this
transaction retained by AVANTCE. AVANTCE shall indemnify and hold the Company
harmless from any claims for failure to pay any such fees.
Section 4.03 No Violation. The execution and delivery of this Agreement
and each Transaction Document by the signatories thereto, and the consummation
of the transactions contemplated hereby and thereby and compliance with the
terms hereof and thereof does not and will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under or result in the creation
of any Lien of any kind upon any of the properties or assets of AVANTCE under,
any provision of (i) the Articles/Certificate of Incorporation or By-laws of
AVANTCE, (ii) any note, bond, mortgage, indenture, deed of trust, license,
lease, contract, commitment or loan or other agreement to which AVANTCE is a
party or by which any of its properties or assets are bound, or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to AVANTCE or its property or assets.
Section 4.04 Financing Commitment. AVANTCE has received term sheets
indicating a
13
willingness to finance the Purchase Price from its lender(s) in connection with
the purchase of the Transferred Assets and does not anticipate any issues in
obtaining the necessary financing to consummate the Transactions contemplated
hereby.
Section 4.05 Complete Disclosure. None of the representations and
warranties made by AVANTCE in this Agreement, or made in any certificate or
other document furnished hereunder will contain any untrue statement of material
fact, or omit to state a material fact necessary in order to make the statement
contained herein or therein, in light of the circumstances under which such
statements were made, not misleading.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.01 (a) Conditions to the Obligations of AVANTCE. The obligation
of AVANTCE to consummate the transactions contemplated by this Agreement shall
be subject to the following conditions precedent (the "AVANTCE Purchase
Conditions") (any of which may be waived in whole or in part in writing by
AVANTCE in its sole discretion):
(i) The representations and warranties of the Company set forth in
this Agreement, or in any other document delivered in connection herewith, shall
be true and correct as of the date hereof and as of the Closing Date as though
made on or as of such date (except for representations and warranties made as of
a specified date).
(ii) No court action shall have been instituted or threatened to
restrain or prohibit the acquisition by AVANTCE, or the conveyance by the
Company, of the Transferred Assets.
(iii) The Company shall have performed and complied with all of its
obligations under this Agreement required to be completed prior to Closing and
all documents and instruments required to be delivered by the Company shall be
in form and substance reasonably satisfactory to AVANTCE.
(iv) As of the Closing, there shall be no previously undisclosed
liabilities of the Company in excess of twenty thousand dollars ($20,000). For
the purposes hereof, the liabilities and obligations of the Company that are
deemed to have been disclosed to AVANTCE, include (i) those disclosed on
Schedule 2.03 hereto, (ii) those disclosed in the Company's audited financial
statements for the year ended May 31, 2005, (iii) those arising in the ordinary
course of business consistent with past practice under any Assigned Contract or
(iv) those incurred in the ordinary course of business consistent with past
practice since May 31, 2005.
(v) The Company shall have obtained the Company Stockholder Approval
to this Agreement and the transactions contemplated hereby.
(vi) AVANTCE shall have obtained financing necessary to close the
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transactions contemplated by this Agreement.
(b) Conditions to the Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated by this Agreement shall be
subject to the following conditions precedent (the "Company Purchase
Conditions") (any of which may be waived in whole or in part in writing by the
Company in its sole discretion):
(i) The representations and warranties of AVANTCE set forth in this
Agreement, or in any other document delivered in connection herewith, shall be
true and correct as of the date hereof and as of the Closing Date as though made
on or as of such date (except for representations and warranties made as of a
specified date).
(ii) No court action shall have been instituted or threatened to
restrain or prohibit the acquisition by AVANTCE, or the conveyance by the
Company, of the Transferred Assets.
(iii) AVANTCE shall have performed and complied with all of its
obligations under this Agreement required to be completed prior to Closing and
all documents and instruments required to be delivered by AVANTCE shall be in
form and substance reasonably satisfactory to the Company.
(iv) The Company shall have obtained the Company Stockholder
Approval to this Agreement and the transactions contemplated hereby.
Section 5.02 Termination. (a) This Agreement may be terminated at any time
prior to Closing as follows:
(i) by the mutual consent of the Company and AVANTCE;
(ii) by either party, in the event that the Closing does not occur
at or before 5:00 p.m. New York time, on October 15, 2005; provided, however,
that the right to terminate this Agreement pursuant to this Section 5.02(a)(i)
shall not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of the transaction to be
consummated by such time and date;
(iii) by either party, in the event the Company fails to obtain the
Company Stockholder Approval;
(iv) by AVANTCE, if the Company shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (X) would give rise to the failure of a condition set
forth in Section 5.01(a)(i) or (iii), and (Y) is either incapable of being cured
by the Company or, if curable, is not cured within 15 days of receipt from
AVANTCE of written notice thereof; or
15
(v) by the Company, if AVANTCE shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (X) would give rise to the failure of a condition set
forth in Section 5.01(b)(i) or (iii), and (Y) is either incapable of being cured
by AVANTCE or, if curable, is not cured within 15 days of receipt from the
Company written notice thereof.
(b) In the event of a termination of this Agreement pursuant to
Section 5.02, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of AVANTCE or the Company or their
respective shareholders, officers or directors; provided, however, that nothing
herein shall relieve any party for liability for any for any knowing or willful
breach by such party of any of its representations, warranties, covenants or
agreements set forth in this Agreement or in respect of fraud by any party.
Notwithstanding the foregoing, the provisions of this Section 5.02 and Sections
8.02, 8.03 and 9.01 hereof shall survive any termination of this Agreement.
(c) In the event that, prior to the date that this Agreement is duly
terminated pursuant to Section 5.02, the Company enters into a transaction under
which a third party acquires, or obtains an option to acquire, all or
substantially all of the capital stock or assets of the Company, the Company
covenants and agrees to pay to AVANTCE immediately upon entry into such
alternative transaction the principal sum of three hundred and forty thousand
dollars ($340,000) as liquidated damages to compensate AVANTCE for its direct
and indirect costs and expenses in connection with the transactions contemplated
by this Agreement, including AVANTCE's management time devoted to negotiation
and preparation for the transactions contemplated by this Agreement and
AVANTCE's loss as a result of such transactions not being consummated.
ARTICLE VI
CLOSING
Section 6.01 Closing. (a) The closing of all transactions contemplated by
this Agreement (the "Closing") will occur and will be deemed to be effective on
the fifth business day after all conditions to the Closing have been satisfied
or waived or such other date as the parties may mutually agree (the "Closing
Date"). All actions to be taken at Closing will be considered to be taken
simultaneously and no documents will be considered to be delivered until all
documents to be delivered at the Closing have been executed and delivered.
(b) The following actions will occur at the Closing:
(i) An officer of each party will execute a certificate, in
substantially the form attached hereto as Exhibit G, stating that all
representations and warranties made by such party in this Agreement are true and
complete as of the Closing Date (each, an "Officer Certificate").
(ii) The Company will deliver to AVANTCE an opinion of counsel
in form and substance satisfactory to AVANTCE which shall be substantially in
the form attached
16
hereto as Exhibit H ("Company's Counsel's Letter").
(iii) The Company shall execute and deliver to AVANTCE the
Company's remaining Transaction Documents, including the Written Approvals for
Assignment or Change-of-Control under Annex 1.2 to Exhibit C, and any other
endorsements and other good and sufficient instruments and documents of transfer
and assignment, all dated as of the Closing Date and in a form reasonably
satisfactory to AVANTCE, as shall be necessary and effective to transfer and
assign to and to further vest in AVANTCE all of the Transferred Assets.
(iv) AVANTCE shall execute and deliver to the Company
AVANTCE's remaining Transaction Documents and shall accept each of the Xxxx of
Sale, Copyright Assignment, Patents Assignment, Trademark Assignment and the
Company certificates provided for herein.
(v) AVANTCE shall make a wire transfer of same day funds in
the amount of the Initial Purchase Price as set forth on Schedule 2.01.
(vi) The Company shall, in cooperation with AVANTCE, take all
steps reasonably required to put AVANTCE in actual possession and operating
control of the Transferred Assets.
(vii) Each of the Principal AVANTCE Members shall have
executed and delivered to the Company a Guaranty Agreement.
(viii) The parties shall also execute, if applicable, and
deliver to the other party (A) such other certified charters, incumbency
certificates, good standing certificates and other instruments reasonably
requested by the other party and (B) all other documents necessary to effectuate
the transactions contemplated by, and the terms of, this Agreement.
Section 6.02 Further Assurances. From time to time, pursuant to the
request of a party delivered to the other party after the Closing Date, such
party shall execute, deliver and acknowledge such other instruments and
documents of conveyance and transfer or assumption and, at the expense of the
requesting party, shall take such other actions and shall execute and deliver
such other documents, certifications and further assurances as the other party
reasonably may request in order to vest and confirm more effectively in AVANTCE
title to or to put AVANTCE more fully in legal possession of, or to enable
AVANTCE to use, any of the Transferred Assets, or to enable AVANTCE to complete,
perform or discharge any of the Assumed Liabilities or otherwise enable the
parties to carry out the purposes and intent of this Agreement.
ARTICLE VII
COVENANTS
Section 7.01 Non-Competition. (a) For a period of five (5) years after the
Closing Date, the Company and the Major Shareholders shall not, directly or
indirectly, engage in a business or enterprise that includes the development or
marketing of any competing computer software, and
17
during such period shall not solicit or attempt to solicit sales or licenses of
any competing computer software, interfere with, disrupt or attempt to disrupt
the relationship, contractual or otherwise between AVANTCE and its customers,
suppliers, agents, consultants, officers or employees. This Section 7.01 shall
be enforceable on a worldwide basis. For the purposes of this Agreement, the
phrase "competing computer software" means any software products which has the
same or substantially similar purposes as the RIMS Software, which performs
functions substantially similar to the RIMS Software, and the marketing of which
would tend to inhibit licensing or marketing of such software. The provisions of
this Section shall prevent the Company from investing its assets in securities
of any corporation engaged in business competitive to that of the Business;
provided, however, that the Company shall not be prevented from owning up to
five percent (5%) of the total shares of all classes of stock outstanding of any
corporation.
(b) The undertaking of this non-competition covenant is an integral
part of this transaction and the consideration paid by AVANTCE pursuant to this
Agreement shall be consideration not only for the purchase of the Transferred
Assets and the other transactions contemplated by this Agreement, but also for
the undertaking of this non-competition clause. If this covenant is
unenforceable in any jurisdiction, it shall not render the covenant
unenforceable in any other jurisdiction. If this covenant is deemed too broad in
any jurisdiction, the covenant shall be altered to meet the requirements of that
jurisdiction, but in no event shall the covenant be rendered null and void.
(c) In consideration of the agreement of the Major Shareholders set
forth in Section 7.01 and the indemnities of the Major Shareholders set forth in
Section 10.01 Avantce shall pay to each of the Major Shareholders an amount
equal to $76,667. These payments shall be made in four equal installments within
10 days of the end of the first four fiscal quarters after the Closing Date.
These payments shall be personally guaranteed by the Principal AVANTCE Members
pursuant to the Guaranty Agreement.
Section 7.02 Conduct of Business. From the date hereof to the Closing, the
Company shall carry on its business in the ordinary course consistent with past
practice. Without limiting the generality of the foregoing, from the date hereof
to the Closing, the Company shall not (except in the ordinary course consistent
with past practice or unless AVANTCE shall otherwise approve in writing, and
which approval should not be unreasonably withheld, and except as expressly
permitted by this Agreement):
(a) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of the Transferred Assets;
(b) modify, amend or terminate any material Contract relating to the
Transferred Assets, or waive, release or assign any rights or claims;
(c) enter into any Contact relating to the distribution, sale or
marketing by third parties of the products and services of the Business
18
(d) enter into any settlement agreement resulting in payment or a
promise for payment by the Company relating to any threatened litigation or
claims, including but not limited to, any settlement of any outstanding issues
with Company's former distributor in the United Kingdom; or
(e) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 7.03 Transition. Prior to the Closing Date, the Company will use
commercially reasonable efforts to preserve for the benefit of AVANTCE the
relations between the Company and its customers, suppliers and other Persons
having business relations with the Company with respect to the Transferred
Assets.
Section 7.04 Post-Closing Access to Book and Records. From and after the
Closing Date, AVANTCE shall permit the Company and its officers and
representatives to have reasonable access to the facilities and property
comprising the Business or the Transferred Assets, to consult with and obtain
the assistance (including, without limitation, reasonable travel in connection
with court proceedings) of such of AVANTCE's employees as shall be familiar with
the relevant facts in connection with Tax and accounting matters, the
prosecution or defense by the Company of claims and proceedings and other legal,
contractual and regulatory matters and to review and to have access to the
books, files and records related to the Business for the period ending on the
Closing Date (and the right to make copies thereof at the expense of the
Company) as the Company shall from time to time reasonably request. The Company
shall reimburse any employee of AVANTCE for its out-of-pocket expenses
reasonably incurred in connection with this Section 7.04.
ARTICLE VIII
NON-DISCLOSURE
Section 8.01 Publicity. All notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and coordinated by and between the Company and AVANTCE. Neither
of the parties shall act unilaterally in this regard without the prior written
approval of the other party, which approval shall not be unreasonably withheld.
Section 8.02 Non-Disclosure of Agreement. Except by mutual agreement or as
may be required to obtain financing for the transactions contemplated by this
Agreement or, the Company Stockholder Approval, or unless compelled to disclose
by judicial or administrative process or by other requirements of law, no party
shall disclose any of the terms and conditions of this Agreement except as may
be necessary to enforce its terms, or as ordered by a court of competent
jurisdiction.
Section 8.03 Confidentiality. The Company and AVANTCE acknowledge that any
information that it has learned about the other during the course of this
transaction is confidential and may contain valuable proprietary trade secrets
and, accordingly, its use and disclosure, must be strictly controlled. All
parties, their officers, directors, employees, and other representatives will
hold any information in strict confidence and will not use, disclose, or
proliferate any information derived about the other during the course of this
transaction prior to the date of
19
Closing. After the date of the Closing, the Company shall not disclose any
information learned about AVANTCE or the Transferred Assets without the written
approval of AVANTCE, unless compelled to disclose by judicial or administrative
process or by other requirements of law. Notwithstanding the foregoing, the
following information regarding any party shall not be deemed to be confidential
information subject to the provisions of this Section 8.03: information publicly
known or generally known in the industry of the Business through no act of the
disclosing party, information obtained from independent sources, information
required to be disclosed to the disclosing party's representatives for the
purposes of this transaction or information known by the disclosing party on a
non-confidential basis prior to the disclosure to such party.
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.01 Costs and Expenses. Each of the parties shall pay all of
their respective costs and expenses incurred or to be incurred by each of them
in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement provided, however, that AVANTCE
shall pay to the Company an amount equal to the costs and expenses of the
Company's third party advisors incurred in connection with the transactions
contemplated by this Agreement, not to exceed $150,000 in the aggregate, in the
event of a termination of this Agreement pursuant to Section 5.02 (a) (v).
Section 9.02 Bulk Sales Law. The parties hereby waive the other party's
compliance with the provisions of Article 6 of the Uniform Commercial Code -
Bulk Transfers and the Bulk Sales Act and any other applicable United States,
state or provincial bulk sales act or statute, if applicable.
Section 9.03 Employees; Benefit Plans.
(a) Employees. AVANTCE shall offer employment, effective as of the
Closing Date, to all officers (other than any Major Shareholder), employees,
agents and consultants of the Company employed primarily in connection with the
Business (the "Business Employees") who are employed as of the Closing on such
terms and conditions generally comparable to those in effect immediately prior
to the Closing. Each such Business Employee who accepts AVANTCE's offer of
employment effective as of the Closing Date shall be referred to herein as a
"Transferred Employee". Nothing herein shall, or shall be construed to, limit
AVANTCE's right at any time to terminate the employment of any Transferred
Employee or to amend or terminate any employee benefit plan or otherwise change
terms and conditions of employment of any Transferred Employee.
(b) Employee Benefits.
(i) The parties agree that, to the extent permissible under
applicable law, AVANTCE shall be a successor employer for purposes of the
Federal Insurance Contributions Act, as codified at 26 U.S.C. xx.xx. 3101-3128,
the Federal Unemployment Tax Act, as codified at 26 U.S.C. xx.xx. 3301-3311,
and, if AVANTCE so elects, under any applicable state workers
20
compensation and unemployment compensation laws. The Company agrees to provide
AVANTCE with such wage, tax and other information with respect to Transferred
Employees as AVANTCE may reasonably require for such purposes.
(ii) AVANTCE shall assume and be bound by, obligated and responsible
for any and all duties, responsibilities, commitments, expenses, obligations or
liabilities of the Company relating to the Business (or which may be asserted
against or imposed upon AVANTCE as a successor or transferee of the Company as
an acquirer of the Business or the Transferred Assets or otherwise as a matter
of law) which arise from, or relate to, any Transferred Benefit Plan, including
the Transferred Benefit Plans, liabilities for salaries, wages, sick pay, COBRA
continuation coverage or benefits under any other employee benefit plan or
arrangement, workers compensation or unemployment insurance premiums, tax
withholding, occupational injury, illness or disability, or claims arising under
any employment, labor or discrimination laws whether payable prior to or after
the Closing.
(iii) The parties agree to furnish each other with such information
concerning Business Employees and Transferred Benefit Plans, and to take all
such other action, as is necessary and appropriate to effect the transactions
contemplated by this Section 9.03.
ARTICLE X
INDEMNIFICATION
Section 10.01 Indemnification by the Company. The Major Shareholders,
personally, jointly and severally, shall be liable for, shall indemnify AVANTCE,
and its officers, directors, Affiliates and employees for, shall hold harmless,
protect and defend AVANTCE and its officers, directors, Affiliates or employees
from and against, and shall reimburse AVANTCE, and its officers, directors,
Affiliates and employees for, any and all of AVANTCE's Damages; provided,
however, that the foregoing indemnification obligation shall only be available
in the event and to the extent that AVANTCE's Damages exceed $50,000, and
provided further, that the total amount of AVANTCE's Damages for which AVANTCE
may be indemnified pursuant this Article X shall not exceed $2,500,000 for any
Intellectual Property claim and $500,000 for any other claims, in the aggregate
regardless of whether the Company receives any insurance proceeds covering such
Damages and net of any tax benefits to AVANTCE.
Section 10.02 Indemnification by AVANTCE. AVANTCE shall be liable for,
shall indemnify the Company, and its officers, directors, Affiliates and
employees for, shall hold harmless, protect and defend the Company and its
officers, directors, Affiliates and employees, from and against, and shall
reimburse the Company, and its officers, directors, Affiliates and employees
for, any and all of the Company's Damages.
Section 10.03 Matters Involving Third Parties, Etc. (a) If any legal
proceeding shall be instituted, or any claim or demand made, against an
indemnified party or a party which proposes to assert that the provisions of
this Article X apply (the "Indemnified Party") such Indemnified Party shall give
prompt written notice of the claim to the party obliged or alleged to be so
obliged so to indemnify such Indemnified Party (the "Indemnitor"). The omission
so to notify, or notify promptly, such Indemnitor, however, shall not relieve
such Indemnitor from any duty to
21
indemnify which otherwise might exist with regard to such claim unless (and only
to the extent that) the omission to notify, or notify promptly, materially
prejudices the ability of the Indemnitor to assume the defense of such claim.
After any Indemnitor has received notice from an Indemnified Party that a claim
has been asserted against such Indemnified Party, the Indemnitor shall within
thirty (30) days pay to the Indemnified Party the amount of such Damages in
accordance with and subject to the provisions of this Section; provided,
however, that no such payment shall be due during any period in which the
Indemnitor is contesting in good faith either its obligation to make such
indemnification or the amount of Damages payable, or both. After any Indemnitor
has received notice from an Indemnified Party that a claim has been asserted
against it by a third party, the Indemnitor shall have the right, upon giving
written notice to the Indemnified Party, to participate in the defense of such
claim and to elect to assume the defense against the claim, at its own expense,
through the Indemnified Party's attorney or an attorney selected by the
Indemnitor and approved by the Indemnified Party, which approval shall not be
unreasonably withheld. If the Indemnitor fails to give prompt notice of such
election, then the Indemnitor shall be deemed to have elected not to assume the
defense of such claim and the Indemnified Party may defend against the claim
with its own attorney.
(b) If the Indemnitor so elects to participate in the defense of
such claim or to assume the defense against a claim, then the Indemnified Party
will cooperate and make available to the Indemnitor (and its representatives)
all employees, information, books and records in its possession or under its
control which are reasonably necessary or useful in connection with such
defense; and if the Indemnitor shall have elected to assume the defense of a
claim, then the Indemnitor shall have the right to compromise and settle in good
faith any such claim provided such release or settlement contains an
unconditional release of the Indemnified Party. If such conditions are not
satisfied and such unconditional release not obtained, then the Indemnitor will
not compromise or settle such action, suit, proceeding, or claim without the
prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. If the Indemnitor is conducting the defense of
a claim, the Indemnified Party may retain separate co-counsel at its cost and
expense and participate in such defense.
(c) If the Indemnitor does not elect to assume or is deemed to have
elected not to assume the defense of a claim then: (i) the Indemnified Party
shall have the right to conduct such defense; (ii) the Indemnified Party shall
have the right to compromise and to settle, in good faith, the claim without the
prior consent of the Indemnitor; (iii) the Indemnitor will periodically
reimburse the Indemnified Party for costs (including reasonable legal fees); and
(iv) if it is ultimately determined that the claim of loss which shall form the
basis of such judgment or settlement is one that is validly an obligation of the
Indemnitor that elected not to assume the defense, then such Indemnitor shall be
bound by any ultimate judgment or settlement as to the existence and the amount
of the claim and the amount of said judgment or settlement (including the
attorneys' fees, costs and expenses of defending such claims) shall be
conclusively deemed for all purposes of this Agreement to be a liability on
account of which the Indemnified Party is entitled to be indemnified hereunder,
subject to any limits on the right to be so indemnified hereunder. Upon the
determination of liability under and subject to Section 9.01 or 9.02 hereof, the
appropriate party shall within thirty (30) days of such determination, pay the
amount of such claim.
22
Section 10.04 Credits Against Future Payment. If AVANTCE is determined to
be entitled to indemnification by the Major Shareholders under the terms of this
Agreement, then AVANTCE shall first credit such amount for which it is entitled
to indemnification against any payments (if any such payments are due and owing
at that time), which it may be required to make to the Company pursuant to the
Promissory Note.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Notices. All notices, requests, demands or other
communications hereunder shall be in writing, hand delivered or mailed by
certified mail, return receipt required, or by overnight courier, receipt
signature required or by facsimile transmission with verification of
transmission received by the sender, to each party at the address that follows
or at such other place as any party may, by written notice to the other parties
hereto, direct:
23
Addresses for the Company:
Prior to the Closing:
Xxxxx Xxxxxxx
Chief Executive Officer
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
After the Closing:
c/o Xxxxx Xxxxxxx
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
In each case, with a copy to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
Attn: Xxxx Xxxxxxx, Esq.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-326-0806
Address for AVANTCE:
Xxxxxx Xxxxxxx
Xxx Xxxxxxxxx
000 Xxxxxx Xxx
Xxxxxxxxx Xxxx, XX 00000
Facsimile: 000 000-0000
Addresses for the Major Shareholders:
Xx. Xxxxx Xxxxxxx
00 Xxxxxxxxx
Xxxxxxxxx Xxxxxxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Mr. Xxxxxxxx Xxxxx
X.X. Xxx 000
00 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
24
Xx. Xxxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
In each case, with a copy to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
Attn: Xxxx Xxxxxxx, Esq.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-326-0806
Any such notice, when sent in accordance with the provisions hereof, shall
be deemed to have been given and received (a) on the day personally delivered or
faxed (with confirmation) or (b) on the second day after the day overnight
delivered or (c) on the fifth day following the date mailed.
Section 11.02 Modification and Waiver/Entire Agreement. This Agreement,
and the exhibits, schedules and other documents referenced herein, constitutes
the entire Agreement between the parties pertaining to the subject matter
contained herein and supersedes all prior and contemporaneous agreements,
representations and understanding of the parties. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by the
parties. No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
Section 11.03 Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, including telecopy facsimiles, each of which shall
be deemed an original, but all of which together shall constitute one and the
same Agreement.
Section 11.04 Rights of Parties. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any Persons other than the parties hereto and their
respective successors, heirs, executors and assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over or against any party to
this Agreement; provided, however, that in the event the Company assigns the
Promissory Note to any third Person established for the benefit of the Company's
shareholders on the Closing Date, such third Person shall have such rights
hereunder and under the Promissory Note as have been assigned by the Company to
such third Person.
25
Section 11.05 Successor Liability. This entire Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors, heirs, executors and assigns.
Section 11.06 Specific Performance. Each of the parties hereto
acknowledges that the rights, benefits and obligations of such party pursuant to
this Agreement are unique and that no adequate remedy exists at law if any such
party shall fail to perform any of its obligations hereunder, and each party
therefore confirms and agrees that each such party's right to specific
performance is essential to protect the interests of each party hereto.
Accordingly, each party hereby agrees that each party shall, in addition to any
other remedies which the parties may have hereunder or at law or in equity or
otherwise, have the right to have all obligations, undertakings, agreements and
other provisions of this Agreement specifically performed by each other party
hereto. Notwithstanding any breach or default by any of the parties of any of
their representations, warranties, covenants or agreements under this Agreement,
if the transactions contemplated by it shall be consummated at the Closing, each
of the parties waives any rights that it may have to rescind this Agreement or
the transactions contemplated hereby; provided, however, that this waiver shall
not affect any other rights or remedies available to the parties under this
Agreement or under applicable law.
Section 11.07 Costs. If any legal action or other proceeding is brought or
any Dispute arising regarding the enforcement or interpretation of this
Agreement or because of an alleged Dispute, breach, default or misrepresentation
in connection with any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover reasonable costs, including
attorney's fees, incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
Section 11.08 Taxes. All sales, use, transfer and purchase taxes and fees,
if any, arising out of the transfer of the Transferred Assets pursuant to this
Agreement shall be shared equally by the Company and AVANTCE. The Company and
AVANTCE agree to cooperate with each other and to file all necessary
documentation (including, without limitation, all tax returns) with respect to
such amounts in a timely manner.
Section 11.09 Assignability. This Agreement may not be assigned by either
party without the prior written consent of the other party hereto, which consent
shall not be unreasonably withheld.
Section 11.10 Severability of Provisions. If any provision, or a part
thereof, of this Agreement is prohibited, unenforceable or invalid under
applicable law, then the provision or part thereof shall be ineffective to the
extent of such prohibition, unenforceability or invalidity under such law
without affecting the enforceability or validity of such provision in any other
jurisdiction and without invalidating the remainder of such provision or other
provisions of this Agreement.
Section 11.11 Cooperation of Parties. Each party shall give its full
cooperation to the other in achieving and fulfilling the terms of this Agreement
and to that end each party shall give all consents and information and execute
all such documents as may reasonably be required to so
26
fulfill and achieve these purposes, including such as may be required by
governmental laws or regulations.
Section 11.12 Survival; Remedies. All representations and warranties, of
the parties contained in this Agreement, or any instrument, certificate, opinion
or other writing provided for in it, shall survive the Closing for a period of
one year (the "Survival Period"). Notwithstanding anything to the contrary
contained herein, the parties acknowledge and agree that the indemnification
provisions contained in Article X hereof shall be the sole and exclusive remedy
for Company's Damages or AVANTCE's Damages, as the case may be. Expiration of
the Survival Period shall not affect the rights of any party under Article X
hereof in respect of any specific claim for Damages made in writing by such a
party and received by the other party prior to such expiration.
Section 11.13 Mediation; Arbitration; Governing Law. (a) If any disputes,
claims or controversies arise in connection with, pursuant to, or related to,
this Agreement ("Disputes"), the parties agree to use their commercially
reasonable efforts to have their respective management resolve such Dispute
within a reasonable time through negotiations and efforts by the affected
parties. If such Dispute cannot be resolved by negotiation, the parties agree to
subject the Dispute to a sole mediator selected by the parties, or, if the
parties are unable to agree to the sole mediator, the parties agree to submit
the Dispute to mediation under the rules of the American Arbitration Association
("AAA"). If not thus resolved, within ninety (90) days after the conclusion of
mediation, the Dispute will be referred to arbitration under an arbitral
tribunal composed of an agreed upon number of arbitrators by the AAA in
accordance with the rules of the AAA.
(b) The place of mediation or arbitration shall beWilmington,
Delaware, U.S.A.
(c) This Agreement shall be governed and construed according to the
laws of the State of Delaware, excluding conflict of laws principles, provided
that any Dispute relating to the validity or effect of this arbitration clause,
or to any arbitration arising thereunder, shall be governed by the arbitration
law of the arbitral situs.
(d) The award may grant any relief appropriate under the applicable
law, including without limitation declaratory relief and/or specific
performance. However, the parties agree that notwithstanding the applicable law,
the arbitral tribunal shall not be empowered to award punitive damages against
either party.
(e) Nothing contained in this arbitration clause shall prevent
either party from seeking conservatory or interim measures from the arbitral
tribunal or courts of competent jurisdiction. Such limited recourse to the
courts shall be in furtherance of the arbitration and shall not affect the
jurisdiction of the arbitral tribunal to determine the Dispute, claim or
controversy at issue.
(f) In the event that any Dispute arises under both this present
Agreement and any other agreement, document or instrument executed by the
parties in connection with the transactions contemplated hereby, such Disputes
shall be resolved in a consolidated proceeding
27
by a single arbitral tribunal appointed by the AAA. The parties recognize that
Disputes involving AVANTCE, the Company and a third party may not necessarily be
consolidated with such proceeding without the consent of such third party.
However, the parties agree to consolidation of such Disputes with the principal
arbitration if the third party agrees.
(h) The parties shall disclose and produce to each other all
documents on which they intend to rely in the arbitration and all documents
directly relevant to claims or defenses in the case. The arbitral tribunal shall
have the power to order production of such documents.
(i) The parties hereby agree there shall be no right of appeal to
any court on the merits of any Dispute.
(j) Judgment on the award may be entered in any court having
jurisdiction over the award or any of the parties or their assets.
[signature page follows]
28
IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly executed by the
parties hereto as of the day and year first above written.
AVANTCE RSI, LLC
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Managing Director
ROBOCOM SYSTEMS INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
Major Shareholders for the purposes of Section 7.01 and Article X
/s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxxx Xxxxx
--------------------------------------
Xxxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx
29
