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EXHIBIT 10.25
AGREEMENTS RELATING TO THE SALE OF ASSETS OF TRADEWAVE DIVISION
ASSET PURCHASE AGREEMENT AND TRANSITION PLAN
THIS ASSET PURCHASE AGREEMENT AND TRANSITION PLAN (the "Agreement") is
made and entered into as of April , 1999 by and between Digital Signature Trust
Co., a Utah corporation having an office at 0 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx,
Xxxx 00000 (the "Buyer" or "DST") and CyberGuard Corporation, a Florida
Corporation having an office at 0000 Xxxx Xxxxxxxxxx Xxxx., Xxxx Xxxxxxxxxx, XX
00000 (the "Seller" or "CyberGuard").
RECITALS:
WHEREAS, Seller's TradeWave division ("TradeWave") that is conducted from
offices located in Austin, Texas, is engaged in electronic commerce (the
"Business"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase certain of
the assets of the Business and the goodwill associated with the Business, as
more fully described below; and
WHEREAS, the parties hereto acknowledge that Seller is engaged in other
businesses, including without limitation a computer network security business
that is headquartered in Fort Lauderdale, Florida, with other locations
throughout the United States of America and in other countries worldwide, and
none of the assets of Seller other than those associated with TradeWave are
intended to be transferred in connection with this Agreement; and
WHEREAS, it will not be possible for DST to begin paying employees,
contractors and certain recurring expenses for between two (2) weeks and two (2)
months after Closing and to provide for a smooth transition of all funding
liabilities and to allow DST adequate time to set up its own bank accounts,
credit card management services account and transfer of employees and
contractors to DST's payroll;
WHEREAS, Seller and Buyer have the requisite power and authority to
consummate the transactions contemplated herein.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and recitals contained herein, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. INCORPORATION OF RECITALS. The foregoing recitals are hereby
incorporated by reference and made a part of this Agreement. Furthermore, the
following agreements and documents are being executed and delivered by and
between Seller and Buyer on the date of this Agreement: 1) a Closing
Reconciliation Statement ("Closing Statement"); 2) a General Assignment,
Conveyance and Xxxx of Sale ("Xxxx of Sale"); 3) an Assignment and Assumption
Agreement ("Assignment"); 4) a Trademark Assignment ("Trademark Assignment"); 5)
an Escrow Agreement; and other certificates and documents delivered in
connection with the Closing (collectively, the "Closing Agreements, Certificates
and Documents.")
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2. TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES.
2.1 PURCHASED ASSETS.
(a) Pursuant to the provisions set forth in this Agreement, Seller
shall cause to be sold, conveyed, transferred, assigned, and
delivered to Buyer, and Buyer shall purchase and acquire, all
those tangible and intangible assets of Seller that are described
in Schedules 1, 2, 3, 4, 5, and 6 to the Xxxx of Sale, Schedule 1
to the Assignment, the Trademark Assignment and the goodwill of
the Business (collectively, the "Assets").
(b) At the "Closing" (as defined below in Section 4), all Assets shall
be transferred to Buyer free and clear of any and all liens,
encumbrances, mortgages, security interests, pledges, claims,
equities and restrictions or charges of any kind or nature
whatsoever (collectively, "Liens").
2.2 EXCLUDED ASSETS. It is specifically understood and agreed by
the parties hereto that Buyer is not purchasing (a) any assets of Seller other
than those associated with TradeWave and more fully described in this Agreement
and the documents referenced herein; or (b) with respect to TradeWave's accounts
receivable, the account receivable under the MCC Contract #: F33615-94-C-4400.
2.3 METHOD OF CONVEYANCE. The sale, transfer, conveyance,
assignment and delivery of the Assets to Buyer in accordance with Section 2.1
hereof shall be effected on the "Closing Date" (as defined below in Section 4)
by Seller's execution and delivery to Buyer of the Xxxx of Sale, the Assignment
and the Trademark Assignment.
2.4 ASSUMED LIABILITIES. Buyer shall not assume any of the
liabilities of Seller or the Business except for (a) obligations arising under
the Assignment; (b) any obligations created by Buyer in hiring the employees of
the Business, as described in section 2.5 below; (c) Buyer's obligations
specifically set forth in this Agreement; and (d) Buyer's obligations
specifically described on Schedule 2 to the Assignment.
2.5 EMPLOYEES AND CONSULTANTS. At the Closing, DST shall offer
employment to Tradewave employees and DST shall offer employment or consulting
contracts (at Buyer's discretion) to Tradewave consultants ("Offers"). In the
event DST does not present the Offers at the Closing, DST will, at the Closing,
provide a letter to CyberGuard describing the terms of the Offers and will
deliver such Offers within one week from Closing. To ensure a smooth transition
and timely completion of Tradewave's obligations herein, the following Tradewave
individuals must remain as DST employees or consultants for six months, in the
ratios provided below:
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At least 5 of the following must At least 3 of the following must remain for
remain for six months for six months
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Xxx Xxxxx, Employee Xxxxxxx Xxxxxxxx, Employee
Xxxxx Xxxxxxx, Employee Xxxxx Xxxx, Consultant
Xxxxxxx Xxxxxxxxxx, Employee Xxxxxxxx Xxxx, Employee
Xxxx Xxxxxx, Employee Xxxxxx Xxxxx, Consultant
Xxxxxxx Xxxx, Employee Xxxxxx Xxxx, Consultant
Xxxxxxx Xxxxxxx, Employee Xxxxx Xxx, Employee
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If the number of employees and/or consultants falls below the requirements
listed above, DST will be reimbursed by CyberGuard either in cash or by
reduction of the escrow fund at the rate of
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$10,000 per employee/consultant, representing the cost of recruiting and
training replacements. As an incentive to Tradewave employees to remain with
DST, CyberGuard shall allow the remaining unvested CyberGuard stock options of
all employees to fully vest if they remain DST employees for six months.
3. PURCHASE PRICE.
3.1 PAYMENT OF THE PURCHASE PRICE. The Purchase Price (the
"Purchase Price") for the Assets purchased by Buyer hereunder shall be
$810,000.00, of which a portion shall be paid to Seller via cashiers or
certified check and a portion shall be paid by DST into an escrow account, as
such amounts are specifically listed on the Closing Statement.
3.2 TEXAS SALES TAX. Buyer shall be responsible for the payment of
any sales, use or transfer tax applicable to the purchase of the Assets
hereunder and the payment of any applicable sales or use tax to the State of
Texas or any political subdivision thereof. Seller shall not collect any sales
or use taxes at the Closing.
4. CLOSING. Subject to the terms and conditions set forth in this Agreement, the
consummation of the transactions contemplated by this Agreement (the "Closing")
shall take place on April , 1999 or such other date as shall be mutually agreed
upon in writing by the parties hereto. The date on which the Closing shall occur
is referred to herein as the "Closing Date."
5. REPRESENTATIONS AND WARRANTIES OF SELLER. As a material inducement to Buyer
to enter into this Agreement and consummate the transactions contemplated
hereby, Seller hereby represents and warrants to Buyer as of the Date hereof and
as of the Closing Date as follows:
5.1 POWER AND AUTHORITY. Seller is a Florida
corporation in good standing. As evidenced by Schedule 5.1, Seller has the
power, legal capacity and authority to execute and deliver this Agreement and
the other agreements and instruments for which provision is made herein to be
executed and delivered by Seller and to perform its obligations under this
Agreement and such other agreements and instruments to which it is a party, and
no further corporate approval, including shareholder approval, is necessary.
This Agreement and such other agreements and instruments constitute valid and
binding obligations of Seller enforceable against Seller in accordance with
their respective terms. All action on the part of Seller or any other party
necessary for the authorization, execution, delivery and performance by Seller
of this Agreement will be performed on or prior to the Closing Date including,
without limitation, the obtaining of all approvals and consents required for a
valid and effective transfer of the Assets; provided, however, that the parties
acknowledge that it may be impractical to obtain consents to assignments of all
contracts and agreements that are being assigned to Buyer under this Agreement
on or before the Closing Date, and the parties agree that as to any such
required consent, they will work together after the Closing to obtain such
consent.
5.2 ASSET VALUE. The following financial information accurately
reflects the net book value of the Assets listed below as of the dates stated in
such documents, and no material change of any kind has occurred in the financial
condition, assets, or operation of Seller with regard to these Assets, from the
dates stated in such documents to the present time:
(a) Current Outstanding Receivables $ 35,649
(b) Unbilled Receivables OASIS Now Due $ 109,300
(c) Unbilled Receivables NSD (Due August) $ 333,333
(d) Computer Hardware $ 138,638
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(e) Computer Software $ 34,156
(f) Furniture $ 14,706
5.3 LIABILITIES. The following accounting summary accurately reflects
the book value of all Liabilities (not including obligations for future payments
under Contracts) to be assumed by Buyer as of the dates stated in such
documents, and no material change of any kind has occurred in the amounts of
such Liabilities, or the operation of Seller with regard to these Liabilities,
from the dates stated in such documents to the present time:
Schedule 2 to Assignment Agreement $ 76,690.95
5.4 TITLE TO ASSETS; SUITABILITY AND MERCHANTABILITY EXCLUDED. Except as
identified in Schedule 5.4 to this Agreement, Seller has good and marketable
title to all of the Assets and said Assets are not pledged, liened or otherwise
encumbered, nor have they been made the subject of any adverse claim or rights
or the subject of prior agreement. Seller makes no representation or warranty
concerning the merchantability of the assets or suitability of the assets for
any particular purpose.
5.5 CONTRACTS.
(a) Buyer will assume all Seller's obligations arising
under the contracts and agreements described in the
Assignment (the "Contracts"). Each Contract is a
legal, valid and binding obligation of the parties
thereto and is in full force and effect. Seller has
entered into no special contracts with the employees
or contractors described in paragraph 2.5 hereof
which would materially affect Buyer's obligations to,
or relationships with, such employees or contractors.
No notice of default has been received and the
Contracts are otherwise in good standing.
(b) Seller further represents: (i) All material
agreements with TradeWave customers that will
continue to generate revenues for TradeWave after the
Closing, including without limitation an agreement
with Nippon Systems Development and the individual
agreements relating to OASIS ("Customer Contracts")
have been disclosed to DST, and all disclosures that
have been made to DST by CyberGuard regarding the
Customer Contracts are true and accurate; (ii) Each
of the Customer Contracts represent the legal, valid
and binding obligation of the parties thereto and are
in full force and effect; and (iii) the Customer
Contracts are in good standing, there are no
outstanding defaults under the Customer Contracts, no
event has occurred and no condition or state of facts
exists that would cause a material breach, default or
event of default under any Customer Contract, or
would give to any customer the right to cause a
termination or would cause an acceleration of any
obligation under any Customer Contract; provided,
however that DST acknowledges that CyberGuard has
disclosed to DST the status of the completion of the
Y2K testing that is required by OASIS.
5.6 SOFTWARE LICENSES. The Software licenses listed in Schedule 2 to the Xxxx
of Sale are held in good standing, and Seller is not in breach nor
delinquent in the payment of any fees required to be paid under any of the
software licenses listed in Schedule 2 to the Xxxx of Sale.
5.7 NO VIOLATION.
(a) The execution and delivery of this Agreement by Seller, the performance by
Seller of its obligations and the consummation of the transactions contemplated
hereunder will not result in
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(I) a violation of any law, statute, rule, regulation, judgment or decree (each,
a "Law") of any domestic or foreign court or governmental, administrative or
regulatory authority, agency or instrumentality, including without limitation
the Securities and Exchange Commission and Florida Division of Securities (each,
a "Governmental Authority") applicable to Seller or the Assets; or (II) the
creation or imposition of any Lien upon the Assets or constitute an event which,
after notice or lapse of time or both, would result in any of the foregoing. (b)
To the knowledge of Seller, no litigation, claim, suit, proceeding or
investigation, related to the Assets or the Business is pending or threatened
(i) against Seller, or any officer or director of Seller; or (ii) against the
Assets.
5.8 NO CONSENTS. Other than as described on Schedule 5.8 hereto, no
consent, approval, authorization or other action by, or filing with, any
Governmental Authority (each, a "Governmental Approval") or other third party is
required to be obtained or made by Seller in connection with the execution,
delivery and performance of this Agreement and the other agreements and
instruments contemplated herein to which Seller is a party and the consummation
by Seller of the transactions contemplated hereby.
5.9 Y2K COMPATIBILITY.
(a) Seller has made necessary modifications to the existing code in its
Trade VPI suite of PKI proxy software and Seller believes the Trade
VPI product line is now Y2K-Compliant,
(b) Seller has purchased upgrades to some third-party software that when
installed will be Y2K-compliant, namely Sybase version 11.0.3 and
Remedy version 4.0; and
(c) In order to test and verify Y2K compliance, Seller has adopted a Y2K
/ T-Cert Release Plan set forth in Schedule 12.
6. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement to Seller
to enter into this Agreement and consummate the transactions contemplated
hereby, Buyer hereby represents and warrants to Seller as of the date hereof and
as of the Closing Date as follows:
6.1 POWER AND AUTHORITY. Buyer has the power, legal capacity and authority
to execute and deliver this Agreement and the other agreements and
instruments for which provision is made herein to be executed and
delivered by Buyer and to perform its obligations under this Agreement
and such other agreements and instruments to which it is a party. This
Agreement and such other agreements and instruments constitute valid and
binding obligations of Buyer enforceable against Buyer in accordance
with their respective terms. All action on the part of Buyer or any
other party necessary for the authorization, execution, delivery and
performance by Buyer of this Agreement will be performed on or prior to
the Closing Date.
6.2 NO VIOLATION OR LITIGATION. The execution and delivery of this Agreement
by Buyer, the performance by Buyer of its obligations and the
consummation of the transactions contemplated hereunder will not result
in a violation of any Law of any Governmental Authority applicable to
Buyer. No litigation related to the Assets is pending against Buyer or
the Assets which: (I) seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement, (II) challenges any of the
terms or conditions of such transactions, or (III) seeks damages in
connection therewith.
6.3 NO CONSENTS. No Governmental Approval or other third party consent,
approval or authorization is required to be obtained or made by Buyer in
connection with the execution, delivery and performance of this
Agreement and the other agreements and instruments contemplated herein
to which Buyer is a party and the consummation by Buyer of the
transactions contemplated hereby and thereby.
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7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO THE OBLIGATION OF BUYER. The obligation of Buyer to
proceed with the Closing is subject to the satisfaction on or prior to
the Closing Date of all the following conditions, any one or more of
which may be waived in whole or in part by Buyer in its sole discretion:
(a) Seller shall have complied with all of the respective covenants and
agreements contained herein, and all of the representations and
warranties of Seller contained in this Agreement shall be true on
and as of the Closing Date as if made anew on and as of the Closing
Date.
(b) Buyer shall have received the following documents, in each case in
form and substance reasonably satisfactory to Buyer and its
counsel: (I) the Closing Agreements, Certificates and Documents
shall have been executed and delivered by Seller; and (II) Copies
of all contracts and agreements to be assumed by Buyer and all
other contracts that are in force by and between Seller and any
other third party which relates to the Assets being purchased.
(c) No Litigation shall be pending or threatened and no order,
injunction or decree shall have been entered by any Governmental
Authority which in Buyer's sole discretion would prohibit, restrict
or delay consummation of the transactions contemplated by this
Agreement.
(d) All consents and approvals of third parties which are required to
consummate the transactions contemplated herein shall have been
obtained and delivered to Buyer. From the date hereof until the
Closing Date, there shall have occurred no adverse changes or
events which singularly or as whole would have a material adverse
effect on the Business or the Assets.
(e) Buyer shall have received from Coast Business Credit the complete
release of all its liens and security interests on the Assets.
7.2 CONDITIONS TO THE OBLIGATION OF SELLER. The obligation of Seller to
proceed with the Closing is subject to the satisfaction on or prior to
the Closing Date of all the following conditions, any one or more of
which may be waived in whole or in part by Seller in its sole
discretion.
(a) Buyer shall have complied with all of the respective covenants and
agreements contained herein, and all of the representations and
warranties of Buyer contained in this Agreement shall be true on
and as of the Closing Date as if made anew on and as of the Closing
Date.
(b) Seller shall have been paid the Purchase Price as provided in
Section 3 of this Agreement. The Closing Agreements, Certificates
and Documents shall have been executed and delivered by Buyer.
(c) No Litigation shall be pending or threatened and no order,
injunction or decree shall have been entered by any Governmental
Authority which in Seller's sole discretion would prohibit,
restrict or delay consummation of the transactions contemplated by
this Agreement.
(d) Buyer shall have offered employment to Seller's employees, and
employment or consulting contracts at Buyer's discretion to
Seller's consultants, as described in Section 2.5.
(e) All consents and approvals of third parties which are required to
consummate the transactions contemplated herein shall have been
obtained, including, without limitation, the consent to the Closing
and the release of the lien from Coast Business Credit.
8. RISK OF LOSS. Prior to the Closing, the risk of loss of, damage to, or
destruction of the Assets shall remain with Seller. On and after the
Closing Date, the risk of loss of, damage to, or destruction of the
Assets shall be with Buyer.
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9. FURTHER ASSURANCES. Seller shall, from time to time after the Closing,
upon the request of Buyer, execute, acknowledge and deliver all such
further assignments, transfers, conveyances, assurances and other
documents as may be required to transfer to and to vest in Buyer all
right, title and interest of Seller in and to the Assets and the
Business and to protect the right, title and interest of Buyer in and to
the Assets and the Business.
10. NOTICES. Notices required or permitted hereunder will be effective if
delivered by (a) certified mail, return receipt requested, or (b) hand
delivery or overnight courier, to the address given below:
If to Buyer: Digital Signature Trust Co.
0 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Fax: 000-000-0000
Attention: Legal Department
If to Seller: CyberGuard Corporation
0000 Xxxx Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Legal Department
All notices delivered hereunder shall be marked "PERSONAL AND CONFIDENTIAL."
Any party may change the address or number to which notices are to be
addressed by giving the other party notice in the manner herein set forth.
Any notice given in accordance with the requirements of this Section shall be
deemed to have been received when delivered by overnight courier or by
facsimile transmission, if confirmation of receipt is provided by the party
to be charged with notice, or, if mailed, on the third business day following
the date upon which such notice shall have been deposited in the U.S. mails,
prepaid, return receipt requested.
11. TRANSITION PLAN
11.1 Term. The term of this Transition Plan shall be for two (2) weeks
from the date hereof ("Term"). The Term will be automatically extended
if DST has not been able to set up its own bank accounts, credit card
management services account and transfer of employees and contractors to
DST's payroll before two (2) weeks from the date hereof, but without the
mutual written consent of both parties to this Agreement, it shall not
be extended beyond six (6) weeks from the end of the initial two (2)
week Term. In the event that Buyer fails to completely transfer all
operations related to Buyer's purchase of TradeWave within eight (8)
weeks from the date hereof, Seller shall have no further responsibility
to make any disbursements on behalf of Buyer.
11.2 CyberGuard's Responsibilities. CyberGuard agrees to provide, on
behalf of DST, the following:
(a) payments for all CyberGuard's personnel and contractors who
agree to become DST's employees ("Personnel" and "Contractors",
respectively), including Personnel payroll, 401k contributions,
insurance payments, vacation accruals, as such items and
amounts are more specifically listed on SCHEDULE 11.2, entitled
TradeWave Operating Costs and attached hereto;
(b) payment for travel expenses for Personnel and Contractors;
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(c) payment for recurring operating expenses, as such items and
amounts are more specifically listed on SCHEDULE 11.2 attached
hereto;
(d) credit card processing and management services;
(e) invoices to DST, with supporting documentation, for all
CyberGuard's expenditures on behalf of DST arising from this
Agreement;
(f) payment for software licenses or software upgrades and toolkits
("Upgrades") that are reasonably necessary to complete the
T-Cert/Y2K Release Plan. A list of the current and expected
Upgrades and payments for Upgrades is described on Schedule
11.2 hereto;
(g) payments for such other expenses as are reasonably necessary to
fund the operation of TradeWave.
11.3 DST's Responsibilities. DST hereby agrees to:
(a) reimburse CyberGuard for one hundred percent (100%) of
CyberGuard's payments made and expenses incurred in connection
with Section 11.2 of this Agreement, plus five percent (5%)
processing fee, within seven (7) days from the date of
CyberGuard's invoices to DST;
(b) DST will take no actions that will increase CyberGuard's
obligations set forth in Section 11.2 of this Agreement; and
(c) DST will use its best efforts to take all actions necessary to
complete the transfer of TradeWave to DST, including without
limitation, establishing bank accounts, establishing a credit
card management service account, establishing the employees and
contractors of TradeWave as employees and contractors of DST
(including completion of any payroll and insurance matters) and
the transfer of the payment responsibilities for TradeWave's
recurring operating expenses to DST.
12. Y2K T-CERT RELEASE PLAN. Both parties agree to the terms and deadlines
described in the T-Cert/Y2K Release Plan attached hereto and incorporated by
reference herein as Schedule 12.
13. NON-SOLICITATION. For a period of two (2) years from the date hereof,
CyberGuard shall not (and shall not allow its then current employees to)
(i) encourage, induce, attempt to induce, solicit or attempt to solicit (on
the CyberGuard's behalf or on behalf of any other person or entity) anyone
who is employed at the time, or was employed during the previous three
months, by the DST or any of the DST's subsidiaries, to leave his or her
employment with DST or any of DST's subsidiaries; or (ii) solicit the
business of any customers or prospective customers of TradeWave as of the
date hereof with respect to certificate authority business as it relates to
electronic commerce.
14. NON-COMPETITION. CyberGuard hereby agrees that for a period of two (2)
years following the date hereof neither CyberGuard nor any of its
subsidiaries, whether acting individually or through any joint venture or
one or more third parties, shall own, manage, operate, control or engage in
the ownership, management, operation or control of or have any interest in,
as a majority stockholder, partner or otherwise, any business, entity or
enterprise that engages in or manages a certificate authority business as
it relates to electronic commerce; provided, however, in the event of a
merger, acquisition of substantially all assets of CyberGuard or similar
transaction between CyberGuard and a third party whose majority business is
in the area of public key infrastructure, this Section 14 shall be deemed
void and of no further force or effect.
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15. GOVERNING LAW. The validity, interpretation and performance of this
Agreement will be determined in accordance with the laws of the State of
Texas applicable to contracts made and to be performed wholly within the
state.
16. COUNTERPARTS.This Agreement may be executed in counterparts, each of which
will be deemed an original, but both of which together shall constitute one
and the same instrument. The parties agree that signatures transmitted by
facsimile shall for all purposes be considered as effective as original
executed documents delivered in person.
17. CAPTIONS; GENDER; REFERENCES. The headings, subheadings and captions in
this Agreement and in any appendix, exhibit or schedule hereto are for
reference purposes only and are not intended to affect the meaning or
interpretation of this Agreement. For purposes of this Agreement, the use
of masculine pronouns shall be deemed to include feminine and neuter
pronouns, as appropriate. References in this Agreement to sections,
subsections, schedules or exhibits are to sections, subsections, schedules
or exhibits in or to this Agreement unless otherwise stated. Unless
explicitly stated to the contrary, words such as "hereof", "herein",
"hereunder" and words of similar meaning shall refer to this Agreement as a
whole and not to any particular section or subsection.
18. ENTIRE AGREEMENT; AMENDMENTS, ETC. This Agreement, together with the
Closing Agreements, Certificates and Documents, contain the entire
agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior negotiations, discussions, agreements,
arrangements and understandings, written or oral, relating to the subject
matter of this Agreement. No amendment or modification of, or any waiver of
any provision of, this Agreement shall be effective against a party unless
set forth in a writing signed by such party.
19. ATTORNEYS' FEES. In the event any suit or other legal proceeding is brought
for the enforcement of any of the provisions of this Agreement, the parties
hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits,
reasonable attorneys' fees including attorneys' fees for any appeal and
costs incurred in bringing such suit or proceeding.
20. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES; ASSIGNMENT;
SEVERABILITY. This Agreement shall be binding upon the parties hereto and
their respective successors and permitted assigns. This Agreement is not
intended to, and shall not be construed to, create any rights as a
third-party beneficiary or otherwise in favor of any person or entity who
is not a party to this Agreement or a successor or permitted assign of a
party to this Agreement. No party hereto shall assign this Agreement
without the other party's prior written consent. If any provision of this
Agreement is held to be unenforceable, invalid or void to any extent for
any reason, that provision shall remain in force and effect to the maximum
extent allowable, if any, and the enforceability and validity of the
remaining provisions of this Agreement shall not be affected thereby.
21. INDEMNIFICATION.
a. INDEMNIFICATION OF BUYER BY SELLER. Seller hereby agrees to indemnify
Buyer for any and all losses, claims, damages, taxes (of any nature),
expenses (including costs of investigations and reasonable legal fees
and expenses at trial or an appeal and without initiation of suit) or
other liabilities which arise out of or result from 1) the negligent or
fraudulent conduct or actions of Seller prior to Closing that result in
any claims against
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or damages to Buyer, including but not limited to the issuance of
digital certificates that are found to be issued as the result of either
negligence of fraud, or 2) any misrepresentation or breach of any
warranty, representation or covenant of Seller made in this Agreement.
Additionally, Buyer and Seller agree that errors and omissions insurance
coverage will be carried by Seller sufficient to cover any claim or loss
arising out of conduct engaged or alleged to have been engaged in by
Seller, its shareholders, officers, agents and employees, before the
date of Closing.
b. INDEMNIFICATION PROCEDURE. If any action is commenced against, or claim
is made by Buyer under the indemnification provisions of this
Indemnification Agreement, Buyer shall give notice to Seller thirty (30)
days following Buyer's knowledge thereof. To the extent that failure to
give such notice unduly prejudices Seller and causes additional damages
to be incurred, Seller shall not be liable for such additional damages
or to the extent it is actually prejudiced. Except for the reduction in
liability set forth in the previous sentence, the failure to give such
notice will not relieve Seller from any liability which it may otherwise
have to Buyer whether arising hereunder or otherwise. With respect to
each such notice, Seller shall immediately retain counsel reasonably
satisfactory to Buyer and take such other actions as are necessary to
defend Buyer or to discharge the indemnity obligations hereunder. Buyer
and Seller shall participate in all decisions regarding the defense of
any action to be taken concerning the indemnified obligations or the
discharge thereof. If Seller fails to notify Buyer within thirty (30)
days of receipt of Buyer's notice that Seller must retain counsel and
take such other actions as are necessary, Buyer may, at its option,
conduct such defense at the expense of Seller and Seller shall pay on
demand any amounts owed hereunder to Buyer.
c. INDEMNIFICATION OF SELLER BY BUYER. Buyer hereby agrees to indemnify
Seller for any and all losses, claims, damages, taxes (of any nature),
expenses (including costs of investigations and reasonable legal fees
and expenses at trial or an appeal and without initiation of suit) or
other liabilities which arise out of or result from 1) customer,
employee or vendor claims that arise from Buyer's failure to perform its
obligations after the Closing, or 2) any misrepresentation or breach of
any warranty, representation or covenant of Buyer made in the Agreement.
d. INDEMNIFICATION PROCEDURE. If any action is commenced against or claim
is made by Seller under the indemnification provisions of this
Agreement, Seller shall give notice to Buyer thirty (30) days following
Seller's knowledge thereof. To the extent that failure to give such
notice unduly prejudices Buyer and causes additional damages to be
incurred, Buyer shall not be liable for such additional damages or to
the extent it is actually prejudiced. Except for the reduction in
liability set forth in the previous sentence, the failure to give such
notice will not relieve Buyer from any liability which it may otherwise
have to Seller whether arising hereunder or otherwise. With respect to
each such notice, Buyer shall immediately retain counsel reasonably
satisfactory to Seller and take such other actions as are necessary to
defend Seller or to discharge the indemnity obligations hereunder.
Seller and Buyer shall participate in all decisions regarding the
defense of any action to be taken concerning the indemnified obligations
or the discharge thereof. If Buyer fails to notify Seller within thirty
(30) days of receipt of Seller's notice that Buyer must retain counsel
and take such other actions as are necessary, Seller may, at its option,
conduct such defense at the expense of Buyer and Buyer shall pay on
demand any amounts owed hereunder to Seller.
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e. SETTLEMENT. For the purposes of this Section 21 of this Agreement, the
party (either Buyer or Seller) that provides indemnification shall be
the "Indemnifying Party" and the party receiving indemnification shall
be the "Indemnified Party". An Indemnifying Party may, without the
consent of the Indemnified Party, settle or compromise any action or
consent to the entry of any judgment which includes as an unconditional
term thereof the delivery of the claimant or plaintiff to the
Indemnified Party of a duly executed written release of the Indemnified
Party from all liability in respect of such action, which release shall
be reasonably satisfactory in form and substance to counsel for the
Indemnified Party; provided, however, that the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any action in any manner that, in the reasonable judgment of
the Indemnified Party or its counsel, would materially and adversely
affect the Indemnified Party.
f. TERMINATION. The right of an Indemnified Party to seek Indemnification
under this Section 21 of this Agreement shall survive until October 22,
2000. If either party intends to make a claim for indemnification
against the other, notice of such claim must be received by the
Indemnifying Party no later than 5:00 PM, Austin, TX time, on October
22, 2000. After October 22, 2000, this Indemnification Agreement shall
continue in effect only with respect to matters for which notice of a
claim for indemnification has been received by the Indemnifying Party on
or prior to October 22, 2000.
22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The various representations and
warranties of the parties contained in this Agreement shall survive the
Closing until October 22, 2000.
IN WITNESS WHEREOF, each of the parties has caused this Asset Purchase
Agreement and Transition Plan to be duly executed and delivered as of the date
first above written.
CyberGuard Corporation Digital Signature Trust Co.
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ------------------------------
Title: Title:
------------------------------ ------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Assignment") is made,
entered into and effective as of April ___, 1999, by and between CYBERGUARD
CORPORATION, a Florida corporation having an office at 0000 Xxxx Xxxxxxxxxx
Xxxx., Xxxx Xxxxxxxxxx, XX 00000 ("Assignor") and DIGITAL SIGNATURE TRUST CO., a
Utah corporation having an office at 0 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
("Assignee").
WHEREAS, both parties hereto agree that the "Business" shall mean
Assignor's division known as TradeWave that is engaged in electronic commerce
and conducted out of Austin, Texas. Both parties further acknowledge that
Assignor's computer network security business and its assets are located in Fort
Lauderdale, Florida and other locations throughout the United States of America
and in other countries worldwide, and none of those assets are intended to be
transferred in connection with the transaction between Assignor and Assignee;
and
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WHEREAS, as of the date hereof, Assignor has conveyed to Assignee certain
of the assets owned by Assignor and associated with or employed in the Business
(collectively, the "Assets").
WHEREAS, in connection with such conveyance, Assignor has agreed to
assign to Assignee all of its respective right, title and interest in, to and
under certain contracts, agreements and other intangible personal property
relating to or included within the Assets.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. ASSIGNMENT. Assignor hereby assigns, transfers and conveys to
Assignee all of Assignor's interest in, to and under those contracts
and agreements relating to the Business described on SCHEDULE 1
attached hereto (collectively, the "Contracts").
2. ASSUMPTION OF OBLIGATIONS. Assignee hereby accepts the assignment
from Assignor of the Contracts, and assumes and agrees to pay,
perform and/or discharge in accordance with their terms (i) the
Contracts; and (ii) any such other liabilities of Assignor which
Assignee has elected in writing to assume as described on SCHEDULE 2
attached hereto.
3. OTHER LIABILITIES EXCLUDED. The parties acknowledge and agree that
except, as and to the extent provided in Section 2 hereof, Assignee
is not assuming, nor under any circumstances shall Assignee be
obligated to pay, assume or be responsible for (nor shall any of the
Assets be or become liable for or subject to) any other of Assignor's
leases, contracts, agreements, liabilities, indebtedness or
obligations; and any and all other liabilities and obligations of
Assignor (whether by contract, lease or agreement or otherwise) are
specifically excluded and excepted from the liabilities and
obligations to be assumed by Assignee hereunder. Assignor hereby
confirms that Assignee is not assuming any liability arising from a
contract between CyberGuard and IBM.
4. COOPERATION. Each of Assignor and Assignee agree to execute such
other documents and take such other actions as may be reasonably
necessary or desirable to confirm or effectuate the assignments and
assumptions contemplated hereby.
5. BENEFIT; PURPOSE; MODIFICATION; LAW. This Assignment shall inure to
the benefit of and be binding upon Assignee, Assignor, and their
respective legal representatives, successors and assigns. The sole
purposes hereof are to assign certain rights to Assignee and to
relieve Assignor of certain liabilities and obligations and not to
create third-party beneficiary rights. Therefore, this Assignment may
be modified by a writing signed by Assignee and Assignor without the
consent of any third party. This Assignment shall be construed and
governed in accordance with the laws of the State of Texas without
any reference to its conflicts of law provisions.
IN WITNESS WHEREOF, the parties have entered into this Assignment as of
the date first written above.
CYBERGUARD CORPORATION
By
----------------------------
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13
Title:
-------------------------
("Assignor")
DIGITAL SIGNATURE TRUST CO.
By:
----------------------------
Title:
-------------------------
("Assignee")
STATE OF _______________)
COUNTY OF_____________)
The foregoing instrument was acknowledged before me this ______ day of
___________1999, by ___________________________, as ______________________ of
CyberGuard Corporation, a Florida corporation.
My Commission Expires: ___________________
------------------------------
NOTARY PUBLIC
STATE OF _______________)
COUNTY OF_____________)
The foregoing instrument was acknowledged before me this ________ day of
__________1999, by _______________________, as _______________________ of
Digital Signature Trust Co., a corporation.
My Commission Expires: ______________________
------------------------------
NOTARY PUBLIC
GENERAL ASSIGNMENT, CONVEYANCE AND XXXX OF SALE
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14
THIS GENERAL ASSIGNMENT, CONVEYANCE AND XXXX OF SALE ("Xxxx of Sale"),
is made and entered into as of April ____, 1999, by and between CYBERGUARD
CORPORATION, a Florida corporation having an office at 0000 Xxxx Xxxxxxxxxx
Xxxx., Xxxx Xxxxxxxxxx, XX 00000 ("Assignor") and DIGITAL SIGNATURE TRUST CO., a
Utah corporation having an office at 0 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
("Assignee").
WHEREAS, This Xxxx of Sale is being delivered to Assignee in connection
with the transaction for the sale of assets of CyberGuard's TradeWave division
("TradeWave") to Assignee; and
WHEREAS, both parties hereto agree that the "Business" shall mean
Assignor's division known as TradeWave that is engaged in electronic commerce
and conducted out of Austin, Texas. Both parties hereto further acknowledge that
Assignor's computer network security business and its assets are located in Fort
Lauderdale, Florida and other locations throughout the United States of America
and in other countries worldwide, and none of those assets are intended to be
transferred in connection with the transaction between Assignor and Assignee;
and
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
Assignor hereby assigns, transfers and conveys unto Assignee, its
successors and assigns forever, the following assets and properties relating to
the Business:
(a) all tangible personal property, including, but not limited to,
all computer hardware, equipment, furniture and supplies, that
are located in Austin, Texas at the Assignor's TradeWave
division facilities and that are used in the operation and
support of the Business as of the date hereof, those items
more specifically described on SCHEDULE 1, attached hereto;
(b) all computer software (including object code and source code,
in machine readable and listing form), operating systems,
application programs and program documentation, routines and
subroutines, directories, databases, hyperlinks, screen
displays, user interfaces and machine interfaces, system
documentation (including internal documentation, documentation
made available to customers and training materials), all
rights to other related technology including, without
limitation, all algorithms, tradenames, trademarks, service
marks, registered or unregistered, including applications and
registrations therefor, and other related intellectual
property rights, utilized by Assignor in connection with the
development, operation and support of TradeWave as of the date
hereof, including, without limitation, those items more
specifically described on SCHEDULE 2 attached hereto;
(c) the names "TradeWave" and any variants thereof and all
tradename applications, trademarks, trademark applications,
service marks, service xxxx applications and logos (each
whether registered or unregistered, national or
international), domain names, export permits, advertising and
artwork related thereto, relating to those names more
specifically described on SCHEDULE 3 attached hereto;
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(d) all contracts, agreements, lease agreements, service
agreements, customer agreements, consulting agreements, that
are specifically described on SCHEDULE 4 attached hereto; and
(e) all marketing lists, advertising lists and mailing lists
(including, without limitation, electronic or "e-mail" lists)
used in connection with the Business, as described on SCHEDULE
5 attached hereto; and
(f) all accounts receivables that are specifically described on
SCHEDULE 6 attached hereto.
Assignor hereby constitutes and appoints Assignee its true and lawful
attorney, with full power of substitution, in the name of Assignor or otherwise,
and on behalf and for the benefit of Assignee: (a) to demand and receive from
time to time any and all of the transferred assets and properties; (b) to give
receipts and releases for or in respect of the same or any part thereof; (c) to
collect for their account all items transferred hereunder; (d) to endorse checks
and other instruments; (e) to institute and prosecute, from time to time, in the
name of Assignor or otherwise, any and all actions, suits and proceedings which
Assignee deems proper to collect, assert or enforce any claim, title, right,
debt, note or actions, suits or proceedings with respect to the transferred
properties; and (f) to execute such other documents and take such other action
as may be necessary from time to time to carry out this Xxxx of Sale. Assignor
hereby declares that the foregoing powers are coupled with an interest and shall
be irrevocable.
Assignor covenants and agrees that it will at any time and from time to
time do, execute, acknowledge and deliver any and all other acts, deeds,
assignment, transfers, conveyances, powers of attorney or other instruments that
Assignee reasonably deems necessary or proper to carry out the assignment and
conveyance intended to be made hereunder.
This Xxxx of Sale shall be binding upon and inure to the benefit of
Assignor and Assignee and their successors and assigns. This Xxxx of Sale may be
modified only by a writing signed by both parties hereto. This Xxxx of Sale
shall be construed and governed in accordance with the laws of the State of
Texas without any reference to its conflicts of law provisions.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Assignor and Assignee have executed this Xxxx of
Sale effective as of the date first above written.
CYBERGUARD CORPORATION
By:___________________________
Title:_________________________
("Assignor")
DIGITAL SIGNATURE TRUST CO.
By:___________________________
Title:_________________________
("Assignee")
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16
STATE OF _______________)
COUNTY OF_____________)
The foregoing instrument was acknowledged before me this ________ day
of _______________________1999, by _____________________________________,as
_____________________________________ of CyberGuard Corporation, a Florida
Corporation.
My Commission Expires:
------------------------------
NOTARY PUBLIC
STATE OF _______________)
COUNTY OF_____________)
The foregoing instrument was acknowledged before me this ________ day
of __________1999, by _______________________, as _______________________ of
Digital Signature Trust Co., a corporation.
My Commission Expires: ______________________
-----------------------------
NOTARY PUBLIC
ESCROW AGREEMENT
This Escrow Agreement (this "AGREEMENT") is entered into as of
April ____, 1999 (the "EFFECTIVE DATE"), by and among Digital Signature Trust
Company a Utah corporation ("DST"), and CyberGuard Corporation, a Florida
corporation ("CYBERGUARD"), and Union Bank as escrow agent (the "ESCROW AGENT").
A. DST and CyberGuard have entered into an Asset Purchase
Agreement dated as of the date hereof (the "ASSET PURCHASE AGREEMENT") pursuant
to which DST will acquire certain assets of CyberGuard's TradeWave Division
("TradeWave") from CyberGuard.
B. Pursuant to the Asset Purchase Agreement, a payment of a
certain amount of cash is to be made by DST to CyberGuard (the "CASH PAYMENT").
C. The Asset Purchase Agreement provides for Four Hundred Five
Thousand Dollars ($405,000.00) of the Cash Payment (the "ESCROW FUNDS") to be
withheld by DST and placed in an escrow account (the "ESCROW ACCOUNT").
D. The parties hereto desire to establish the terms and
conditions pursuant to which the Escrow Funds will be deposited, held in, and
disbursed from the Escrow Account.
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NOW, THEREFORE, the parties hereto hereby agree as follows:
1. ESCROW. On the Effective Date, DST will deposit the Escrow
Funds with the Escrow Agent, who will hold them in escrow until required to be
released pursuant to Sections 2 or 4 hereof. The Escrow Agent agrees to accept
delivery of the Escrow Funds and to hold such Escrow Funds in escrow subject to
the terms and conditions of this Agreement.
2. DEPOSIT OF ESCROW FUNDS; RELEASE FROM ESCROW; INVESTMENTS
(a) DELIVERY OF ESCROW FUNDS. On the Effective Date
the Escrow Funds will be delivered by DST to the Escrow Agent in the form of a
check or wire transfer in the amount of Four Hundred Five Thousand Dollars
($405,000.00) and the Escrow Agent shall deposit the Escrow Funds in a separate
escrow account with the Escrow Agent. The Escrow Funds shall be maintained in
such account until the release of the Escrow Funds in accordance with Sections 2
or 4 hereof.
(b) TERMINATION OF ESCROW. On September 30, 1999 (the
"FINAL RELEASE DATE"), the Escrow Agent will deliver the Escrow Funds to
CyberGuard less (A) any Escrow Funds delivered to DST in accordance with Section
4 hereof in satisfaction of Claims and (B) any Escrow Funds subject to possible
delivery to DST in accordance with Section 4 hereof with respect to any then
pending but unresolved Claims of DST, subject to the Escrow Agent's receipt of
written instructions from DST and CyberGuard as provided in Section 2(c) below.
Any Escrow Funds held as a result of clause (B) will be delivered to CyberGuard
or DST (as appropriate) promptly upon resolution of each specific Claim involved
pursuant to Section 4.
(c) RELEASE OF ESCROW FUNDS. The Escrow Funds will be
held by the Escrow Agent until released pursuant to Section 2(b) above or
Section 4, below. On the Final Release Date (in the case of Section 2(b)) or
after the applicable release condition is met (in the case of Section 4), as the
case may be, the Escrow Agent will deliver to CyberGuard the amount of Escrow
Funds to be released on such date as identified by CyberGuard to the Escrow
Agent in writing (in the case of Section 2(b)) or as identified in the Notice of
Completion (in the case of Section 4 (d) ) or as identified in the applicable
Notice of Claim (in the case of Section 4(a)) or in the final decision of
litigation or arbitration, as applicable (in the case of Section 4(b)) received
by the Escrow Agent, as the case may be. Such delivery will be in the form of a
check or wire transfer issued in the name of CyberGuard. DST and CyberGuard
undertake to deliver a timely written notice to Escrow Agent identifying the
amount of Escrow Funds to be released at such time.
(d) POWER TO TRANSFER ESCROW FUNDS. The Escrow Agent
is hereby granted the power to effect any transfer of Escrow Funds contemplated
by this Agreement. DST and CyberGuard will cooperate with the Escrow Agent in
promptly effecting such transfers.
(e) INVESTMENT OF ESCROW FUNDS. The Escrow Agent
shall invest the funds held in the Escrow Account in a money market account
selected by Escrow Agent. All interest or any other income earned with respect
to such investment shall be allocated and paid to CyberGuard and shall not
constitute part of the Escrow Funds.
3. NOTICE OF CLAIM. If DST wishes to assert a claim against
the Escrow Funds, it shall deliver one or more written notices (each, a "Notice
of Claim") before the Final
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Release Date to CyberGuard with a copy to the Escrow Agent, specifying with
reasonable particularity (to the extent that the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known, or if not
known, DST's good faith estimate of the reasonably foreseeable maximum amount of
the alleged damages arising from such Claim (the "ESTIMATED DAMAGES"), the basis
thereof and documentation supporting same.
Notices of Claim may be sent for any of the reasons described in section 4 (c)
of this Agreement.
4. RESOLUTION OF NOTICE OF CLAIM AND TRANSFER OF ESCROW FUNDS.
Any Notice of Claim received by CyberGuard and the Escrow Agent, will be
resolved as follows:
(a) UNCONTESTED CLAIMS. In the event that CyberGuard
does not either (i) contest a Notice of Claim in writing to the Escrow Agent and
DST or (ii) pay the amount demanded (as certified by CyberGuard to the Escrow
Agent in writing), all within 30 days after Notice of Claim was received by the
Escrow Agent and CyberGuard (an "UNCONTESTED CLAIM"), then the Escrow Agent will
promptly pay to DST that amount of Escrow Funds equal to the amount of the Claim
and/or Estimated Damages specified in the Notice of Claim and will notify
CyberGuard of such transfer.
(b) CONTESTED CLAIMS. In the event that CyberGuard
delivers written notice contesting all, or a portion of, a Notice of Claim to
DST and the Escrow Agent within the 30-day period provided above, and if the
matters that are the subject of the Claims are not resolved by CyberGuard and
DST within ten (10) business days thereafter, then such claims will be settled
by binding arbitration which will be conducted as provided in Section 5 herein.
Any portion of the Notice of Claim that is not contested will be resolved as set
forth above in Section 4(a). The final decision of the arbitrator will be
furnished to the Escrow Agent, CyberGuard and DST in writing and will constitute
a conclusive determination of the issue in question, binding upon CyberGuard and
DST. After receipt by the Escrow Agent of written notice that the Notice of
Claim is contested by CyberGuard, the Escrow Agent will continue to hold in the
Escrow Account, Escrow Funds sufficient to cover such Claim (and Estimated
Damages, if any) (notwithstanding the expiration of the Final Release Date)
until (i) execution, and delivery to the Escrow Agent, of a settlement agreement
by DST and CyberGuard setting forth a resolution of the Notice of Claim, or (ii)
receipt by the Escrow Agent of a copy of the final award of the arbitrator or
court, as the case may be, together with a written certificate from DST or
CyberGuard certifying that the same is a true, accurate and complete copy of a
final decision, award or settlement of such Notice of Claim pursuant to this
Section 4(b).
(c) BASIS FOR CLAIMS. DST AND CYBERGUARD AGREE THAT
DST MAY ASSERT A CLAIM AGAINST THE ESCROW FUNDS FOR ANY OF THE FOLLOWING
REASONS:
(i) NSD PAYMENT. If DST has not received payment of
at least $330,000 from NSD, a customer of
CyberGuard's TradeWave Division, on or before the
Final Release Date, then DST shall have a claim
against the Escrow Funds in the amount of the
difference between the amount received from NSD
and $330,000.
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(ii) COMPLETION OF WORK. Section 12 of the Asset
Purchase Agreement requires that certain
licensing, Y2K testing and development, T-CERT
product development and certain localization
work for NSD be completed by the former
TradeWave Division of CyberGuard before the
Escrow Funds be released to CyberGuard (the
"Work"). If Work is completed on or before the
final date required by OASIS for Y2K testing
schedule requirements ("OASIS Required Date"),
then there shall be no reduction in the amount
of the Escrow Funds to be paid to CyberGuard
under this Section 4 (c) (ii). If the Work is
not completed by the OASIS Required Date, then
for each two (2) week delay in the completion of
the Work, DST shall be paid $40,500 of the
Escrow Funds. In addition, if a delay in any of
the Work results in significant impairment of
TradeWave customer relationships, DST will have
the right to assert a Claim for such damage,
with the amount of such Claim either to be
agreed to by CyberGuard or to be subject to
arbitration as required under Section 5 of this
Agreement.
Other than as set forth above in this Section 4 (c) there shall be no other
basis for Claims by DST against the Escrow Funds.
(d) NOTICE OF COMPLETION. Upon completion of the Work and the
receipt by DST of at least $330,000 from NSD as described in Section 4 (c) (ii)
above, CyberGuard shall have the right to send DST and the Escrow Agent a notice
that there are no possible Claims remaining against the Escrow Funds by DST and,
therefore, CyberGuard should be paid the remaining amount of the Escrow Funds
("Notice of Completion"). In the event that DST does not contest the Notice of
Completion in writing to the Escrow Agent and CyberGuard within fifteen (15)
days after a Notice of Completion has been received by the Escrow Agent and DST,
then the Escrow Agent will promptly pay to CyberGuard the full amount of Escrow
Funds remaining in the Escrow Account.
5. ARBITRATION. DST and CyberGuard agree that they shall use
best reasonable efforts to settle amicably disagreements arising from or in
connection with this Agreement. To this effect, following notice of either to
the other (with copy to the Escrow Agent) of a disagreement, which shall include
any failure to agree upon a matter to be agreed upon (a "DISPUTE") the parties
hereto shall consult and negotiate with one another in good faith an
understanding to reach a just and equitable solution. If those attempts fail
after a period of ten (10) Business Days from the time the parties have been
notified of the Dispute, then every such Dispute shall be settled by arbitration
in accordance with the commercial arbitration rules of American Arbitration
Association then in effect. Any judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator shall have the authority to grant any equitable
and legal remedies that would be available in a judicial proceeding instituted
to resolve the Dispute.
(a) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with the relevant state contract law;
provided, however, that such lawyers cannot work for a firm then performing
services for either party, that each party will have the opportunity to make
such reasonable objection to any of the arbitrators listed as such party may
wish and that the American
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Arbitration Association will select the arbitrator from the list of arbitrators
as to whom neither party makes any such objection. In the event that the
foregoing procedure is not followed, each party will choose one person from the
list of arbitrators provided by the American Arbitration Association (provided
that such person does not have a conflict of interest), and the two persons so
selected will select from the list provided by the American Arbitration
Association the person who will act as arbitrator.
(b) PAYMENT OF COSTS. DST and CyberGuard will bear
the expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. The arbitrator will award to the prevailing
party, as determined by the arbitrator, all costs, fees and expenses related to
the arbitration, including reasonable fees and expenses of attorneys,
accountants and other professionals incurred by the prevailing party. DST and
CyberGuard shall pay in equal proportions all costs and expenses of the Escrow
Agent in connection with any arbitration.
(c) BURDEN OF PROOF. For any Dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
(d) AWARD. Upon the conclusion of the arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons for
any decision reached and will deliver such documents to each party to this
Agreement along with a signed copy of the award.
(e) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
(f) EXCLUSIVE REMEDY. Except as specifically
otherwise provided in this Agreement, arbitration will be the sole and exclusive
remedy to DST or CyberGuard for any Dispute arising out of this Agreement.
6. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) The Escrow Agent shall only have those duties as
are expressly set forth in this Agreement, and no implied duties shall be read
into this Agreement or the rest of the Escrow Agreement. The Escrow Agent will
incur no liability with respect to any action taken or suffered by it in
reliance upon any notice, direction, instruction, consent, statement or other
document believed by it to be genuine and duly authorized, nor for any other
action or inaction, except its own willful misconduct or gross negligence. The
Escrow Agent will not be responsible for the validity or sufficiency of this
Agreement. In all questions arising under this Agreement, the Escrow Agent may
rely on the advice or opinion of counsel, including in-house counsel, and for
anything done, omitted or suffered in good faith by the Escrow Agent based on
such advice or opinion, the Escrow Agent will not be liable to anyone. The
Escrow Agent will not be required to take any action hereunder involving any
expense unless the payment of such expense is made or provided for in a manner
satisfactory to it. The Escrow Agent shall not be obligated to take any legal
action or other action hereunder which might, in its judgment, involve any
expense or liability unless it shall have been furnished with acceptable
indemnification.
(b) In the event conflicting demands are made or
conflicting notices are served upon the Escrow Agent with respect to the Escrow
Account, the Escrow Agent will have the absolute right, at the Escrow Agent's
election, to do either or both of the following:
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(i) resign so a successor can be appointed pursuant to Section 10 hereof or (ii)
file a suit in interpleader and obtain an order from a court of competent
jurisdiction requiring the parties to interplead and litigate in such court
their several claims and rights among themselves. In the event such interpleader
suit is brought, the Escrow Agent will thereby be fully released and discharged
from all further obligations imposed upon it under this Agreement, and DST and
CyberGuard will each pay the Escrow Agent half its costs, expenses and
reasonable attorney's fees expended or incurred by the Escrow Agent pursuant to
the exercise of Escrow Agent's rights under this Section 6.
(c) In no event shall the Escrow Agent be liable for
any indirect, punitive, special or consequential damages, or any amount in
excess of the value of the pledged collateral (as of the date of the action or
omission giving rise to liability).
(d) The Escrow Agent shall in no instance be under
any duty to give any property held by it hereunder any greater degree of care
than it gives its own similar property. In no event shall the Escrow Agent have
any obligation to advance or risk funds.
(e) The Escrow Agent shall not be deemed to have
notice of any fact, claim or demand with respect hereto unless actually known by
an officer charged with responsibility for administering this Agreement or
unless in writing received by the Escrow Agent and making specific reference to
this Agreement.
(f) All indemnifications in favor of Escrow Agent
contained in this Agreement shall survive the resignation or removal of the
Escrow Agent, and shall survive the termination of this Agreement.
(g) The Escrow Agent is not responsible for the
recitals appearing in this Agreement or Section 4(c). The recitals and Section
4(c) of this Agreement shall be deemed to be statements and agreements of the
other parties to this Agreement.
(h) Nothing in this Agreement shall obligate the
Escrow Agent to qualify to do business or act in any jurisdiction in which it is
not presently qualified to do business, or be deemed to impose upon the Escrow
Agent the duties of a trustee. The duties of the Escrow Agent under this
Agreement are strictly ministerial in nature.
(i) In no event shall the Escrow Agent have any
liability for any failure or inability of any of the other parties to perform or
observe its duties under the Agreement, or by reason of a breach of this
Agreement by either of the other parties hereto. In no event shall the Escrow
Agent be obligated to take any action against any of the other parties to compel
performance hereunder.
(j) In the event of any ambiguity or uncertainty
under this Agreement, or in any notice, instruction, or other communication
received by the Escrow Agent hereunder, the Escrow Agent may, in its discretion,
refrain from taking action, and may retain the pledged collateral until and
unless it receives written instruction signed by DST and CyberGuard which
eliminates such uncertainty or ambiguity.
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7. NOTICES. Any notice, certificate, consent, determination or
other communication required or permitted to be given or made under this
Agreement shall be in writing and shall be effectively given and made if (i)
delivered personally, (ii) sent by prepaid courier service or certified or
registered mail, or (iii) sent prepaid by fax and receipt thereof is confirmed,
in each case to the applicable address set out below:
(i) if to CyberGuard, to:
CyberGuard Corporation
0000 Xxxx Xxxxxxxxxx Xxxx., Xxxxx #000
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Chief Financial
Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx, Esq.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) if to DST, to:
Digital Signature Trust Company
Xxx Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention:Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Digital Signature Trust Company
Xxx Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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(iii) If to the Escrow Agent, to:
Union Bank
0000 Xxxxxxx Xxxxx Xxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (954) ________
or to such other address as a party may have furnished to the other parties by
written notice given in accordance with this Section 7.
Any such communication so given or made shall be deemed to
have been given or made and to have been received on the day of delivery if
delivered, or on the day of faxing or sending by other means of recorded
electronic communication, provided that such day in either event is a Business
Day and the communication is so delivered, faxed or sent before 4:30 p.m. on
such day. As used herein, a "BUSINESS DAY" shall be any day which is not a
Saturday, Sunday or federal holiday. Otherwise, such communication shall be
deemed to have been given and made and to have been received on the next
following Business Day. Any such communication sent by mail shall be sent via
certified or registered mail, return receipt requested, and shall be deemed to
have been given and made and to have been received on the fifth Business Day
following the mailing thereof; provided however that no such communication shall
be mailed during any actual or apprehended disruption of postal services. Any
such communication given or made in any other manner shall be deemed to have
been given or made and to have been received only upon actual receipt; provided
that for any notice or other writing required to be delivered to the Escrow
Agent, such notice or other writing shall only be deemed delivered when actually
received.
Any party may from time to time change its address under this
Section 7 by notice to the other parties given in the manner provided by this
Section.
8. GENERAL.
(a) GOVERNING LAW, ASSIGNS. This Agreement will be
governed by and construed in accordance with the internal laws of the State of
Florida without regard to conflict-of-law principles and will be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns.
(b) COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(c) ENTIRE AGREEMENT. This Agreement constitutes the
entire understanding and agreement of the Parties with respect to the subject
matter of this Agreement and supersedes all prior agreements or understandings,
written or oral, between the parties with respect to the subject matter hereof.
(d) WAIVERS. No waiver by any party hereto of any
condition or of any breach of any provision of this Agreement will be effective
unless in writing. No waiver by any party of any such condition or breach, in
any one instance, will be deemed to be a further or continuing waiver of any
such condition or breach or a waiver of any other condition or breach of any
other provision contained herein.
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9. INDEMNITY.
Each of DST and CyberGuard, jointly and severally, hereby
covenants and agrees to indemnify the Escrow Agent, its directors, officers,
agents and employees, for, and to defend and hold them harmless from and
against, any and every loss, liability, damage, claim, cost and expense of any
nature incurred or suffered by the Escrow Agent and arising out of or in
connection with this Agreement or the administration of this Agreement or the
performance or observance by the Escrow Agent of its responsibilities or
services under this Agreement (including but not limited to attorneys fees and
other costs and expenses of defending or preparing to defend against any claim
or liability), unless and except to the extent such loss, liability, damage,
cost or expense shall be caused by the Escrow Agent's own willful misconduct or
gross negligence. The Escrow Agent shall be entitled to reimbursement on demand
for all expenses incurred in connection with the administration of this
Agreement or the escrow created hereby which are in excess of its compensation
for normal services hereunder, including, without limitation, payment of any
legal fees and expenses incurred by the Escrow Agent in connection with the
resolution of any claim by any party hereunder.
10. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent
becomes unavailable or unwilling to continue in its capacity herewith, the
Escrow Agent may resign and be discharged from its duties or obligations
hereunder by giving notice of its resignation to the parties to this Agreement,
specifying a date not less than ten days following such notice date of when such
resignation will take effect. CyberGuard will designate a successor Escrow Agent
prior to the expiration of such ten-day period by giving written notice to the
Escrow Agent and DST. CyberGuard may appoint a successor Escrow Agent without
the consent of DST so long as such successor is a bank (or, in the case of a
subsidiary of a bank holding company, its holding company as an institution)
with assets of at least $50,000,000, and may appoint any other successor Escrow
Agent with the consent of DST, which will not be unreasonably withheld. The
Escrow Agent will promptly deliver the Escrow Funds to such designated
successor. If no successor Escrow Agent is named by DST and CyberGuard, the
Escrow Agent may apply to a court of competent jurisdiction for appointment of a
successor Escrow Agent.
11. AMENDMENT. This Agreement may be amended by the written
agreement of DST, the Escrow Agent and CyberGuard, provided that, if the Escrow
Agent does not agree to an amendment agreed upon by DST and CyberGuard (except
an amendment adversely affecting the rights or protections of the Escrow Agent),
the Escrow Agent will resign and CyberGuard will appoint a successor Escrow
Agent in accordance with Section 10 above.
12. DISPUTE RESOLUTION RELATING TO DISPUTES INVOLVING THE
ESCROW AGENT. It is understood and agreed that should any dispute arise with
respect to the delivery, ownership, right of possession, and/or disposition of
the Escrow Funds, or should any claim be made upon such Escrow Funds by a third
party, the Escrow Agent upon receipt of written notice of such dispute or claim
by the parties hereto or by a third party, is authorized and directed to retain
in its possession without liability to anyone, all or any of said Escrow Funds
until such dispute shall have been settled either by the mutual written
agreement of the parties involved or by a final order, decree or judgment of
court in the United States of America, the time for perfection of an appeal of
such order, decree or judgment having expired. The Escrow Agent may, but shall
be under no duty whatsoever to, institute or defend any legal proceedings which
relate to the Escrow Funds.
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13. CONSENT TO JURISDICTION AND SERVICE RELATING TO DISPUTES
INVOLVING THE ESCROW AGENT. DST and CyberGuard hereby absolutely and irrevocably
consent and submit to the jurisdiction of the courts in the State of Florida
(and of any Federal court located in said state) in connection with any actions
or proceedings brought against DST and CyberGuard by the Escrow Agent arising
out of or relating to this Escrow Agreement. In any such action or proceeding,
DST and CyberGuard hereby absolutely and irrevocably waive personal service of
any summons, complaint, declaration or other process and hereby absolutely and
irrevocably agree that the service thereof may be made by certified or
registered first-class mail directed to DST and CyberGuard, as the case may be,
as their respective addresses in accordance with Section 7 hereof.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
DIGITAL SIGNATURE TRUST CYBERGUARD CORPORATION
By: By:
---------------------------------- ---------------------------
Title: Title:
------------------------------- ------------------------
UNION BANK, As Escrow Agent
By:
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Print Name:
--------------------------
SIGNATURE PAGE TO
ESCROW AGREEMENT
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