EXHIBIT 2.1
EXECUTION COPY
PURCHASE AGREEMENT
This Purchase Agreement (this "AGREEMENT") is entered into as of July
31, 2006 by and between FPD Acquisition Corporation, a Delaware corporation
("FPD ACQUISITION"), 1706045 Ontario Limited, an Ontario corporation ("HOLDINGS"
and collectively with FPD Acquisition, "BUYER"), Front Porch Digital, Inc., a
Delaware corporation ("FPD"), ManagedStorage International, Inc., a Delaware
corporation ("MSI") and Incentra Solutions, Inc., a Nevada corporation
("INCENTRA", and collectively with MSI, "FPD PARENT"). Buyer, FPD, MSI and
Incentra are referred to collectively herein as the "PARTIES".
WHEREAS, this Agreement contemplates a transaction in which FPD
Acquisition will purchase substantially all of the assets (and assume certain of
the liabilities) of FPD and Holdings will purchase all the interests in FPD's
French subsidiary, S.A.S. Front Porch Digital International ("FP FRANCE"), in
return for cash.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"2006 FISCAL PERIOD" means the calendar period from and including the
commencement of business on January 1, 2006, through the close of business on
December 31, 2006.
"2007 FISCAL PERIOD" means the calendar period from and including the
commencement of business on January 1, 2007, through the close of business on
December 31, 2007.
"2008 FISCAL PERIOD" means the calendar period from and including the
commencement of business on January 1, 2008, through the close of business on
December 31, 2008.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"ACCOUNTS RECEIVABLES" means amounts owed to FPD for goods or services
sold on open account, determined in accordance with GAAP.
"ACQUIRED ASSETS" means all right, title, and interest in, to and under
all of the assets of FPD, including all of its (a) Leased Real Property, (b)
tangible personal property, (c) Intellectual Property including Technology
Assets and Documentation owned by, or issued or licensed to, FPD or FP France,
goodwill associated therewith, licenses and sublicenses granted and obtained
with respect thereto, and rights thereunder, remedies against infringements
thereof including infringement prior to this Agreement, and rights to protection
of interests therein under the laws of all jurisdictions, (d) leases, subleases,
and rights thereunder, (e) agreements, contracts, indentures, mortgages,
instruments, Liens, guaranties, other similar arrangements, and rights
thereunder (excluding any Intercompany Transactions other than License Agreement
by and between FP Parent and FP France, dated as of January 1, 2005 (the
"Intercompany License Agreement"), (f) accounts, notes, and other receivables,
(g) securities (excluding the capital
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stock in FP France), (h) claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of set off, and rights of
recoupment (including any such item relating to the payment of Taxes), (i)
franchises, approvals, permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and governmental
agencies, (j) books, records, ledgers, files, documents, correspondence, lists,
drawings, and specifications, creative materials, advertising and promotional
materials, studies, reports, and other printed or written materials, and (k) Net
Working Capital; PROVIDED, HOWEVER, that the Acquired Assets shall not include
(i) the corporate charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of FPD as a corporation or (ii) any
of the rights of FPD under this Agreement (or under any side agreement between
FPD on the one hand and Buyer on the other hand entered into on or after the
date of this Agreement).
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of CODE
SECTION 1504(A) or any similar group defined under a similar provision of state,
local, or foreign law.
"APPLICABLE RATE" means the corporate base rate of interest publicly
announced from time to time by XX Xxxxxx Xxxxx plus 2.5% per annum.
"ARBITRATOR" means BDO Xxxxxxx, LLP.
"ASSUMED LIABILITIES" means (a) all Liabilities of FPD set forth on the
face of the Most Recent Balance Sheet except Liabilities relating to
Intercompany Transactions (rather than in any notes thereto), (b) all
Liabilities of FPD which have arisen after the Most Recent Fiscal Month End in
the Ordinary Course of Business except Liabilities relating to Intercompany
Transactions (other than any Liability resulting from, arising out of, relating
to, in the nature of, or caused by any breach of contract, breach of warranty,
tort, infringement, violation of law, or environmental matter, including without
limitation those arising under Environmental, Health, and Safety Requirements),
the Basis of which occurred prior to the Closing, (c) all obligations of FPD
under the agreements, contracts, leases, licenses, and other arrangements
referred to in the definition of Acquired Assets either (i) to furnish goods,
services, and other non-Cash benefits to another party after the Closing or (ii)
to pay for goods, services, and other non-Cash benefits that another party will
furnish to it after the Closing, and (d) all other Liabilities and obligations
of FPD set forth in Schedule 1(a); PROVIDED, HOWEVER, that, notwithstanding the
above, the Assumed Liabilities shall not include (i) any Liability of FPD for
Taxes, (ii) any Liability of FPD for (x) income, transfer, sales, use, and other
Taxes arising in connection with the consummation of the transactions
contemplated hereby (y) Taxes arising because FPD is transferring the Acquired
Assets and (z) Withholding Tax, State Sales Tax or Value Added Tax, (iii) any
Liability of FPD for the unpaid Taxes of any Person under REG. SECTION 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise, (iv) any
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obligation of FPD to indemnify any Person (including FPD Parent or its
Affiliates) by reason of the fact that such Person was a director, officer,
employee, or agent of FPD and FP France or was serving at the request of any
such entity as a partner, trustee, director, officer, employee, or agent of
another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement, or otherwise), (v) any Liability of FPD for costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, (vi) any Liability or obligation of FPD under this
Agreement (or under any side agreement between FPD on the one hand and Buyer on
the other hand entered into on or after the date of this Agreement) or (vii) any
Indebtedness.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"BUSINESS" means the design, development and delivery of digital archive
management and transcoding solutions, including the sale of the relevant
software, professional services, maintenance and support and the resale of
third-party hardware and software.
"CASH" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and CODE SECTION 4980B and of any similar state law.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any and all information concerning the
Business. Without limiting the generality of the foregoing, Confidential
Information includes but is not limited to information: (a) which constitutes
proprietary information of the Business; (b) which contains financial
statements, financial projections and budgets, historical and projected sales;
capital spending budgets and plans, business plans, the names and backgrounds of
key personnel, customer lists and customer information, personnel training and
techniques and materials, marketing plans or market expansion proposals and
sales techniques and materials of FPD and FP France, however documented; (c)
product specifications, discoveries, improvements, processes, marketing and
service methods or techniques, formulae, designs, styles, specifications, data
bases, computer programs (whether in source code or object code), know-how,
strategies, current and anticipated customer requirements, price lists, market
studies, and any other information, however documented, that is a trade secret
of FPD or FP France under applicable law; and (d) notes, analyses, compilations,
studies, summaries, and other material prepared by FPD or FP France containing
or based, in whole or in part, on any information included in the foregoing.
"CONTROLLED GROUP" has the meaning set forth in CODE SECTION 1563.
"DISCLOSURE SCHEDULE" has the meaning set forth in SECTION 3 below.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as such term
is defined in ERISA Section 3(3) or implemented by French law or the French
Collective Bargaining Agreement for Consultancy Services, as applicable, and any
other employee benefit plan, program or arrangement of any kind.
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"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2) or as implemented by French law or the French Collective Bargaining
Agreement for Consultancy Services, as applicable.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1) or as implemented by French law or the French Collective Bargaining
Agreement for Consultancy Services, as applicable.
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all federal,
state, local, and foreign statutes, regulations, ordinances, and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations, with respect to U.S.
common law and France law, respectively, concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including, without limitation, all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances, or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, or radiation, each as amended and as now or hereafter in
effect.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" means each entity that is treated as a single employer
with FPD for purposes of CODE SECTION 414.
"ESCROW AGREEMENT" means the Escrow Agreement entered into concurrently
herewith and attached hereto as EXHIBIT A.
"ESCROW AMOUNT" means $2,500,000.
"EXCESS LOSS ACCOUNT" has the meaning set forth in REG. SECTION
1.1502-19.
"FIDUCIARY" has the meaning set forth in ERISA SECTION 3(21).
"FISCAL PERIOD" means either the 2006 Fiscal Period, 2007 Fiscal Period
or 2008 Fiscal Period, as applicable.
"FP FRANCE SHARES" means any share or interest of FP France.
"FRENCH GAAP" means France generally accepted accounting principles as
in effect from time to time, consistently applied.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"INDEBTEDNESS" means, with respect to any Person, (a) all indebtedness
of such Person, whether or not contingent, for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all obligations of such Person as
lessee under leases that have been or should be, in accordance with GAAP (and
French GAAP), recorded as capital leases, (e) all obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or similar
facilities, (f) all Indebtedness of others referred to in clauses (a) through
(e) above guaranteed directly or indirectly in any manner by such Person, and
(g) all
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Indebtedness referred to in clauses (a) through (f) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Encumbrance on property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"INTELLECTUAL PROPERTY" means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, information regarding processes and procedures and
Business and marketing plans and proposals), (f) all other copyrightable works,
including software and all other computer software (including source code,
object code, executable code, technical and descriptive materials relating to
the acquisition, design, development, use or maintenance of computer code, data,
databases, program documentation and related documentation and materials), (g)
all advertising and promotional materials, (h) all other proprietary rights, and
(i) all copies and tangible embodiments thereof (in whatever form or medium).
"INTERCOMPANY TRANSACTION" has the meaning set forth in REG. SECTION
1.1502-13.
"KNOWLEDGE" means actual knowledge of a Person, as of the date hereof,
after reasonable investigation.
"LEASED REAL PROPERTY" means all leasehold or subleasehold estates and
other rights to use or occupy any land, buildings, structures, improvements,
fixtures, or other interest in real property held by FPD or FP France, together
with all Leased Real Property Subleases, including the right to all security
deposits and other amounts and instruments deposited by or on behalf of FPD or
FP France thereunder.
"LEASED REAL PROPERTY SUBLEASES" means all subleases, licenses or other
agreements pursuant to which FPD or FP France conveys or grants to any Person a
subleasehold estate in, or the right to use or occupy, any Leased Real Property
or portion thereof.
"LEASES" means all leases, subleases, licenses, concessions and other
agreements (written or oral), including all amendments, extensions, renewals,
guaranties, and other agreements with respect thereto, pursuant to which FPD or
FP France holds any Leased Real Property, including the right to all security
deposits and other amounts and instruments deposited by or on behalf of FPD or
FP France thereunder.
"LIABILITY" means any liability or obligation of whatever kind or nature
(whether known
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or unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest other than (a) liens for Taxes not yet due and payable, (b)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (c) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means (a) any
circumstance, change in or effect on FPD, FP France or the Business that,
individually or in the aggregate with all other circumstances, changes in or
effects on FPD, FP France or the Business is or is reasonably likely to be
materially adverse to the assets, operations, properties, liabilities (including
contingent liabilities), results of operations or financial condition of FPD,
its assets or the Business; PROVIDED, HOWEVER, that circumstances, changes and
effects that are caused by (x) economic conditions generally in the United
States, France, Canada, United Kingdom, Germany, Spain, Belgium, Singapore,
Korea or China, other than the effects of any such circumstances, changes or
effects which adversely affect FPD, FP France or the Business to a materially
greater extent than its competitors in the applicable industries in which FPD,
FP France or the Business compete, or (y) general economic conditions effecting
the industry in which FPD competes as a whole and not specifically related to
FPD, FP France or the Business, other than the effects of any such
circumstances, changes or effects which adversely affect FPD, FP France or the
Business to a materially greater extent than its competitors in the applicable
industries in which FPD, FP France or the Business compete, in any case, shall
not be considered a Material Adverse Effect; or (b) any effect that would
materially impair Buyer's or FPD's ability to consummate the transaction
contemplated hereby.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA SECTION 3(37).
"NET SOFTWARE REVENUE" means sales of DIVArchive, Bitscream or other
proprietary software of FPD or FP France, currently in existence or derivations
thereto, whether sold separately or in combination with other products or
services net of any customer discount. For the purpose of this definition and
any calculation prepared in connection therewith, the net discount may not be
greater than 20% of the weighted average discount provided to comparable sales
for the prior 6 months.
"NET WORKING CAPITAL" means the excess of current assets over current
liabilities, as determined in accordance with GAAP calculated substantially in
the form attached hereto as Schedule 1(b). Accounts Receivable calculated for
this purpose shall be valued at face value if the maturity is ninety (90) days
or less and at zero (0), if the maturity is more than ninety (90) days.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OWNED REAL PROPERTY" means all land, together with all buildings,
structures, improvements and fixtures located thereon, including all electrical,
mechanical, plumbing and other building systems, fire protection, security and
surveillance systems, telecommunications,
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computer, wiring, and cable installations; utility installations, water
distribution systems, and landscaping, together with all easements and other
rights and interests appurtenant thereto (including air, oil, gas, mineral, and
water rights, owned by FPD or FP France), together with all Owned Real Property
Leases, including the right to all security deposits and other amounts and
instruments deposited by or on behalf of FPD or FP France thereunder.
"OWNED REAL PROPERTY LEASES" means all leases, licenses, or other
agreements (written or oral) pursuant to which FPD or FP France conveys or
grants to any Person a leasehold estate in, or the right to use or occupy, any
Owned Real Property or portion thereof.
"PERMITTED ENCUMBRANCES" means with respect to each parcel of Real
Property: (a) real estate taxes, assessments and other governmental levies,
fees, or charges imposed with respect to such Real Property that are (i) not due
and payable as of the Closing Date or (ii) are being contested in good faith and
for which appropriate reserves have been established in accordance with GAAP;
(b) mechanics' liens and similar liens for labor, materials, or supplies
provided with respect to such Real Property incurred in the Ordinary Course of
Business for amounts that are not due and payable that (i) as of the Closing
Date or (ii) being contested in good faith and for which appropriate reserves
have been established in accordance with GAAP; (c) zoning, building codes and
other land use laws regulating the use or occupancy of such Real Property or the
activities conducted thereon that are imposed by any governmental authority
having jurisdiction over such Real Property that are not violated by the current
use or occupancy of such Real Property or the operation of FPD's or FP France's
Business as currently conducted thereon; and (d) easements, covenants,
conditions, restrictions, and other similar matters of record affecting title to
such Real Property which do not or would not impair the use or occupancy of such
Real Property in the operation of FPD's or FP France's Business as currently
conducted thereon except Owned Real Property Leases.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity, or a
governmental entity (or any department, agency, or political subdivision
thereof).
"POST-EARNOUT PERIOD" means the calendar period from and including the
commencement of business on January 1, 2009 through December 31, 2009.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA SECTION 406
and CODE SECTION 4975.
"REPORTABLE EVENT" has the meaning set forth in ERISA SECTION 4043.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"STATE SALES TAX" means any tax or other amount owed by a FPD Parent,
FPD or FP France, or required to be collected by FPD Parent, FPD or FP France
from its customers and remitted by FPD Parent, FPD or FP France to the relevant
taxing authority, in connection with sales of tangible personal property or
taxable services, under the laws of any state or local taxing jurisdiction
within the United States.
"SUBSIDIARY" means FP France and, with respect to any Person, any
corporation, limited liability company, partnership, association, or other
business entity of which (i) if a corporation,
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a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers, or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof and for this purpose, a
Person or Persons owns a majority ownership interest in such a business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of such business entity's gains or losses or shall be or control any
managing director or general partner of such business entity (other than a
corporation). The term "Subsidiary" shall include all Subsidiaries of such
Subsidiary.
"TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under CODE
SECTION 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, whether computed on a
separate or consolidated, unitary or combined basis or in any other manner,
including any interest, penalty, or addition thereto, whether disputed or not
and including any obligation to indemnify or otherwise assume or succeed to the
Tax liability of any other Person.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"VALUE ADDED TAX" means any tax or other amount owed by FPD Parent, FPD
or FP France, or required to be collected by FPD Parent, FPD or FP France from
its customers and remitted by FPD Parent, FPD or FP France to the relevant
taxing authority, in connection with sales of tangible property or taxable
services, under the laws of any taxing jurisdiction outside the United States.
"WITHHOLDING TAX" means any tax or other amount owed by FP France on
payments of dividends, royalties, interest, wages or other payments under the
applicable laws of France or other jurisdictions that have taxing authority over
FP France's operations.
2. BASIC TRANSACTION.
(a) PURCHASE AND SALE OF ACQUIRED ASSETS. On and subject to the
terms and conditions of this Agreement, FPD Acquisition agrees to purchase from
FPD, and FPD agrees to sell, transfer, convey, and deliver to FPD Acquisition,
all of the Acquired Assets at the Closing for the consideration specified below
in SECTIONS 2(d) and 2(e).
(b) PURCHASE AND SALE OF FP FRANCE SHARES. On Closing, FPD shall
sell to Holdings and the Holdings shall purchase from FPD all outstanding
capital stock of FP France by executing the French Purchase Agreement attached
hereto as EXHIBIT B ("French Purchase Agreement"), free and clear of all Liens
and all rights attached thereto. To the extent that the provisions of the French
Purchase Agreement are inconsistent with the provisions of this Agreement, (i)
the provisions of this Agreement shall prevail and the inconsistent provisions
of
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the French Purchase Agreement shall be given effect only to the extent required
to comply with applicable local laws, and (ii) the parties shall nonetheless to
the maximum extent permitted by law comply with the applicable provisions of
this Agreement as though they were bound by such provisions of this Agreement
instead of the applicable provisions of the French Purchase Agreement, and if
not permitted by applicable law to comply with this Agreement strictly in
accordance with its terms, such parties shall implement such arrangements as may
be necessary to afford to each such party as nearly as practicable the benefits
and burdens such party would have enjoyed and been subject to had the parties
been permitted to comply with this Agreement strictly in accordance with its
terms.
(c) ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, FPD Acquisition agrees to assume and become
responsible for all Assumed Liabilities at the Closing. FPD Acquisition will not
assume or have any responsibility, however, with respect to any other obligation
or Liability of FPD not included within the definition of Assumed Liabilities.
(d) PURCHASE PRICE. Buyer agrees to pay to FPD at the Closing
$33,000,000 less the Escrow Amount (such difference, the "CLOSING PURCHASE
PRICE") by delivery of cash in the amount of the Closing Purchase Price payable
by wire transfer. At Closing, Buyer agrees to pay to XX Xxxxxx Xxxxx, as escrow
agent (the "ESCROW AGENT"), the Escrow Amount in cash payable by wire transfer
or delivery of other immediately available funds for deposit into the escrow
account. The Escrow Amount plus any interest accrued thereon will be available
to satisfy any amounts owed by FPD or FPD Parent to Buyer under Section 9 in
accordance herewith and with the terms of the Escrow Agreement. Any payments
pursuant to SECTION 2(e) or 2(f) shall adjust (upward or downward) the Closing
Purchase Price of the Acquired Assets and FP France Shares (the "PURCHASE
PRICE").
(e) EARNOUT PAYMENT.
(i) Following the Closing, FPD Parent will be entitled to
receive up to four contingent payments totaling, in the aggregate, Five
Million Dollars ($5,000,000) (collectively, the "Earnout Payments").
Each Earnout Payment is the product of five percent (5%) of the Net
Software Revenue collected (in cash or functional equivalent) for each
Fiscal Period and will be paid in accordance with section 2(e)(vii) upon
the final determination of the Revenue Statement for the applicable
Fiscal Period in accordance with this section 2(e). For the avoidance of
doubt, upon receipt by FPD of $5,000,000 in connection with this section
2(e), whether in Fiscal Year 2006 or otherwise, this section 2(e) will
no longer be effective. Notwithstanding the foregoing, the calculation
of Net Software Revenue will not include cash received after January 1,
2006 in connection with any agreement entered into prior to January 1,
2006.
(ii) Within sixty (60) days following the end of each Fiscal
Period and the Post-Earnout Period, Buyer shall, at its expense, deliver
to FPD a statement of Net Software Revenue for the relevant Fiscal
Period (or cash received during the Post-Earnout Period, if applicable)
(each a "Revenue Statement"), which shall be certified as correct by the
chief financial officer, or equivalent, of Buyer, together with copies
of such computations and all reasonable supporting documentation. With
respect to the Revenue
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Statement delivered for the 2008 Fiscal Period, Buyer shall also deliver
a comprehensive list of agreements (each a "Earnout Contract" and
collectively, the "Earnout Contracts") entered into during the 2008
Fiscal Period ("Earnout Contract Statement"), where Buyer, by the terms
of each Earnout Contract, is due to receive additional Net Software
Revenue cash payments during the Post-Earnout Period.
(iii) During the thirty (30) days immediately following
Buyer's delivery of the Revenue Statement and Earnout Contract
Statement, if applicable, FPD shall be entitled to review the Revenue
Statement and Earnout Contract Statement, if applicable, and any working
papers, trial balances and similar materials relating to the Revenue
Statement and Earnout Contract Statement, if applicable, prepared by
Buyer or its accountants, and Buyer shall provide FPD and its
representatives with reasonable access, during Buyer's normal business
hours and upon reasonable notice, to Buyer's personnel, properties,
books and records for the sole purpose of verifying the Revenue
Statement and Earnout Contract Statement, if applicable. All accounting
entries made in the Revenue Statement for the applicable Revenue Period
will be made regardless of their amount and all detected errors and
omissions will be corrected regardless of their materiality.
(iv) The Revenue Statement and Earnout Contract Statement, if
applicable, shall become final and binding upon the Parties upon the
earlier of (A) written notice from FPD that the Revenue Statement and
Earnout Contract Statement, if applicable, is agreed to, or (B) in the
absence of such notice, on the thirty-first (31st) day following Buyer's
delivery of such Revenue Statement and Earnout Contract Statement, if
applicable, unless FPD gives written notice to Buyer of its disagreement
with the Revenue Statement or Earnout Contract Statement, if applicable,
(a "Notice of Disagreement With Revenue Statement") prior to such date.
Any Notice of Disagreement with Revenue Statement and Earnout Contract
Statement, if applicable, shall specify in reasonable detail the nature
of any disagreement so asserted.
(v) If a timely Notice of Disagreement with Revenue
Statement or Earnout Contract Statement, if applicable, is received by
Buyer with respect to the Revenue Statement or Earnout Contract
Statement, if applicable, then the Revenue Statement and Earnout
Contract Statement, if applicable, shall become final and binding upon
the Parties on the earlier of (A) the date Buyer and FPD resolve in
writing all differences they have with respect to the matters specified
in a Notice of Disagreement with Revenue Statement, or (B) the date the
matters in dispute are finally resolved in writing by the Arbitrator in
the manner described below.
(vi) During the thirty (30) days immediately following the
delivery of any Notice of Disagreement with Revenue Statement, Buyer and
FPD shall seek in good faith to resolve in writing any differences which
they may have with respect to the matters specified in such Notice of
Disagreement with Revenue Statement. During such period, FPD and FPD's
accountants shall have access to Buyer's working papers, trial balances
and similar materials (including the working papers, trial balances and
similar materials of Buyer's accountants) prepared in connection with
Buyer's preparation of the Revenue Statement and Earnout Contract
Statement, if applicable. If such differences have not been resolved by
the end of such 30-day period, Buyer and FPD shall submit to the
10
Denver, Colorado office of the Arbitrator for review and resolution any
and all matters which remain in dispute and which were included in any
Notice of Disagreement with Revenue Statement (it being understood that
the Arbitrator shall act as an arbitrator to determine only those
matters which remain in dispute), and the Arbitrator shall reach a
final, binding resolution of all matters which remain in dispute, which
final resolution shall be (A) in writing, (B) furnished to Buyer and FPD
as soon as practicable (but in any event within thirty (30) days) after
the items in dispute have been referred to the Arbitrator, and (C) made
in accordance with this Agreement. The Arbitrator's resolution of the
relevant Net Software Revenue calculations may not be less than Buyer's
calculation of such Net Software Revenue calculations nor greater than
FPD's calculation of such Net Software Revenue calculations. The Revenue
Statement and Earnout Contract Statement, if applicable, with any
adjustments necessary to reflect the Arbitrator's resolution of the
matters in dispute, shall become final and binding on the Parties on the
date the Arbitrator delivers its final resolution to the Parties. Each
of Buyer and FPD shall pay its own costs and expenses incurred in
connection with such arbitration, provided that the fees and expenses of
the Arbitrator shall be borne by FPD and Buyer in such proportion as the
Arbitrator shall determine based upon the relative merit of the position
of the Parties. This provision for arbitration shall be specifically
enforceable by the Parties and the decision of the Arbitrator in
accordance with the provisions hereof shall be final and binding with
respect to the matters so arbitrated and there shall be no right of
appeal therefrom.
(vii) If an Earnout Payment is payable with respect to the
applicable Fiscal Period or Post-Earnout Period, such Earnout Payment
shall be paid by Buyer to FPD, within the later of (A) 90 days following
the applicable Fiscal Period or Post-Earnout Period; and (B) fifteen
(15) days following FPD's agreement to or final resolution of the
applicable Revenue Statement.
(f) NET WORKING CAPITAL.
(i) No later than three (3) Business Days prior to the
Closing Date, FPD shall cause to be prepared and delivered to Buyer a
statement (the "Estimated NWC Statement"), together with copies of such
computations and all reasonable supporting documentation, which shall be
certified as correct by the Chief Financial Officer of FPD Parent,
presenting FPD's estimated Net Working Capital as of the end of business
on the Closing Date (the "Estimated Net Working Capital").
(ii) Buyer and its accountants shall be entitled to review
the Estimated NWC Statement and any working papers, trial balances and
similar materials relating to the Estimated NWC Statement prepared by
FPD or FPD's accountants and FPD shall provide Buyer and its accountants
with reasonable access, during FPD's normal business hours, to FPD's
personnel, properties, books and records necessary to verify the
Estimated NWC Statement.
(iii) Buyer and FPD shall negotiate in good faith to resolve
any disagreements regarding the Estimated Net Working Capital. After
considering Buyer's objections, if any, FPD shall make such revisions to
the Estimated Net Working Statement as are
11
mutually acceptable to Buyer and FPD and shall deliver revised Estimated
Net Working Capital Statement not less than one (1) Business Day prior
to the Closing Date, and the Closing Purchase Price shall be adjusted on
the Closing Date in accordance with such revised calculations of the
Estimated Net Working Capital. On the Closing Date, Buyer shall pay the
Closing Purchase Price as adjusted (upward if in excess of $660,000,
downward if less than $660,000) by the excess of, or deficiency in, the
Estimated Net Working Capital and any disagreements that may continue to
exist with respect to the Estimated Net Working Capital prior to Closing
shall be resolved after Closing in connection with the calculation of
the Closing Net Working Capital described below.
(iv) As promptly as practicable, but no later than sixty (60)
days after the Closing Date, Buyer shall cause to be prepared and
delivered to FPD a closing statement (the "Closing Statement")
presenting the Net Working Capital as of the end of business on the
Closing Date ("Closing Net Working Capital").
(v) The Closing Statement shall become final and binding
upon the Parties on the earlier of (i) written notice from FPD that the
Closing Statement is agreed to, or (ii) in the absence of such notice,
on the thirty-first (31st) day following Buyer's delivery of such
Closing Statement, unless FPD gives written notice to Buyer of its
disagreement with the Closing Statement (a "Notice of Disagreement with
Closing Statement") prior to such date. Any Notice of Disagreement with
Closing Statement shall specify in reasonable detail the nature of any
disagreement so asserted.
(vi) During the thirty (30) days immediately following the
delivery of any Notice of Disagreement with Closing Statement, Buyer and
FPD shall seek in good faith to resolve in writing any differences which
they may have with respect to the matters specified in such Notice of
Disagreement with Closing Statement. During such period, FPD and FPD's
accountants shall have access to Buyer's working papers, trial balances
and similar materials (including the working papers, trial balances and
similar materials of Buyer's accountants) prepared in Buyer's
preparation of the Closing Statement. If such differences have not been
resolved by the end of such 30-day period, Buyer and FPD shall submit to
the Arbitrator for review and resolution any and all matters which
remain in dispute and which were included in any Notice of Disagreement
with Closing Statement (it being understood that the Arbitrator shall
act as an arbitrator to determine only those matters which remain in
dispute), and the Arbitrator shall reach a final, binding resolution of
all matters which remain in dispute, which final resolution shall be (A)
in writing, (B) furnished to Buyer and FPD as soon as practicable after
the items in dispute have been referred to the Arbitrator, and (C) made
in accordance with this Agreement. The Arbitrator's resolution of the
Closing Net Working Capital may not be less than Buyer's calculation of
the Closing Net Working Capital nor greater than FPD's calculation of
the Closing Net Working Capital. The Closing Statement, with any
adjustments necessary to reflect the Arbitrator's resolution of the
matters in dispute, shall become final and binding on the Parties on the
date the Arbitrator delivers its final resolution to the Parties. Each
of Buyer and FPD shall pay its own costs and expenses incurred in
connection with such arbitration, provided that the fees and expenses of
the Arbitrator shall be borne by FPD and Buyer in such proportion as the
Arbitrator shall determine based upon the relative merit of the position
of the Parties. This provision for
12
arbitration shall be specifically enforceable by the Parties and the
decision of the Arbitrator in accordance with the provisions hereof
shall be final and binding with respect to the matters so arbitrated and
there shall be no right of appeal therefrom.
(vii) If the Closing Net Working Capital, as finally
determined in accordance with SECTIONS 2(f)(v) or (vi), as applicable,
is less than $660,000 (such difference being the "NWC Deficit"), then
FPD shall pay to Buyer, within five (5) Business Days after the
determination of the Closing Net Working Capital, an amount equal to the
NWC Deficit. If the Closing Net Working Capital exceeds $660,000 (such
difference being the "NWC Excess"), then Buyer shall pay to FPD, within
five (5) Business Days after the determination of the Closing Net
Working Capital, an amount equal to the NWC Excess.
(g) CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Incentra, in
Boulder, Colorado effective at 11:59 p.m. local time not later than the second
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Parties may mutually determine
(the "Closing Date").
(h) DELIVERIES AT CLOSING. At the Closing,
(i) FPD Parent, FPD and FP France, as applicable, will
deliver to Buyer the various certificates, instruments, and documents
referred to in SECTION 7(a) below;
(ii) Buyer will deliver to FPD the various certificates,
instruments, and documents referred to in SECTION 7(b) below;
(iii) FPD will execute, acknowledge (if appropriate), and
deliver to Buyer (A) assignments (including Intellectual Property
transfer documents) and (B) such other instruments of sale, transfer,
conveyance, and assignment as Buyer and its counsel may request;
(iv) Buyer will execute, acknowledge (if appropriate), and
deliver to FPD (A) an assumption in the form attached hereto as EXHIBIT
C and (B) such other instruments of assumption as FPD and its counsel
reasonably may request; and
(v) Buyer will deliver to FPD and the Escrow Agent the
consideration specified in SECTION 2(d) above.
(i) ALLOCATION. Buyer shall prepare a proposed allocation of the
Purchase Price (and all other capitalized costs) among the Acquired Assets and
FP Shares in accordance with CODE SECTION 1060 and the Treasury regulations
thereunder (and any similar provision of state, local or foreign law, as
appropriate). Buyer shall deliver such allocation to FPD within 60 days after
the Closing Date. If FPD disagrees with any items reflected on the schedules so
provided, FPD shall notify Buyer of such disagreement and its reason for so
disagreeing, in which case Buyer and FPD shall attempt to resolve the
disagreement. To the extent the parties cannot agree on a mutually acceptable
determination and/or allocation of the Purchase Price, such determination and/or
allocation shall be made by the Arbitrator, whose decision shall be final and
finding and
13
whose fees and expenses shall be shared equally by Buyer and FPD. Buyer and FPD
and their Affiliates shall report, act and file Tax Returns (including, but not
limited to Internal Revenue Service Form 8594) in all respects and for all
purposes consistent with such allocation prepared by the parties pursuant to
this section. FPD shall timely and properly prepare, execute, file and deliver
all such documents, forms and other information as Buyer may reasonably request
to prepare such allocation. Neither Buyer nor FPD shall take any position
(whether in audits, tax returns or otherwise) which is inconsistent with such
allocation unless required to do so by applicable law.
3. FPD'S REPRESENTATIONS AND WARRANTIES. FPD and FPD Parent
represent and warrant, jointly and severally, to Buyer that the statements
contained in this SECTION 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the disclosure
schedule accompanying this Agreement (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 3.
(a) ORGANIZATION OF FPD. FPD is a corporation duly organized,
validly existing, and in good standing under the laws of Delaware.
(b) AUTHORIZATION OF TRANSACTION. FPD has full power and authority
(including full corporate power) to execute and deliver this Agreement and to
perform its obligations hereunder. Without limiting the generality of the
foregoing, the board of directors of FPD and FPD Parent have duly authorized the
execution, delivery, and performance of this Agreement by FPD and FPD Parent.
This Agreement constitutes the valid and legally binding obligation of FPD and
FPD Parent, enforceable in accordance with its terms and conditions.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in SECTION 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which FPD, FPD Parent and FP France is subject
or any provision of the charter or bylaws (or comparable organizational
documents) of FPD, FPD Parent and FP France or (ii) after obtaining the required
consents related to the transfer of assets as set forth on Schedule 3(c),
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which FPD, FPD Parent and FP France is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Lien upon any of its assets). Neither FPD, FPD
Parent nor FP France needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions referred to in SECTION
2 above).
(d) BROKERS' FEES. Other than set forth on Schedule 3(d), Neither
FPD Parent nor FPD has any Liability or obligation to pay any fees or
commissions to any broker, finder, or
14
agent with respect to the transactions contemplated by this Agreement for which
Buyer could become liable or obligated. FPD's Subsidiary does not have any
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. Except as set forth in Schedule 3(e), FPD and
FP France have good and marketable title to, or a valid leasehold interest in,
the properties and assets used by them, including without limitation the
Acquired Assets and the FP France Shares, free and clear of any Liens or
restriction on transfer.
(f) SUBSIDIARIES. FPD has only one Subsidiary, FP France. Schedule
3(f) sets forth the (i) number of shares of authorized capital stock of FP
France's capital stock, (ii) the number of issued and outstanding shares of FP
France's capital stock, (iii) the number of shares of FP France's capital stock
held in treasury, and (iv) FP France's directors and officers. FP France is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of FP France's incorporation and has the requisite
powers to conduct its business. FP France is not in a position of insolvency
("ETAT DE CESSATIONO DES PAIEMENTS"). FP France is duly authorized to conduct
Business and is in good standing under the laws of each jurisdiction where such
qualification is required. FP France has full corporate power and authority and
all licenses, permits, and authorizations necessary to carry on the Business in
which it is engaged and in which it presently proposes to engage and to own and
use the properties owned and used by it. FPD has delivered to Buyer correct and
complete copies of the charter and bylaws of FP France (as amended to date). The
bylaws ("STATUTS") of FP France are up-to-date. No arrangement and, in
particular, no shareholders agreement modify the rules set forth in FP France
bylaws as, whether or not such agreement is enforceable vis-a-vis third parties.
No power of attorney, proxy or similar authorization, which will be in effect on
or after the Closing Date, has been given by FP France to anyone. All of the
issued and outstanding shares of capital stock of FP France have been duly
authorized and are validly issued, fully paid, and nonassessable. FPD holds of
record and owns beneficially all of the outstanding shares of FP France, free
and clear of any restrictions on transfer except as set forth on Schedule 3(f),
Taxes, Liens, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require FPD or FP France to
sell, transfer, or otherwise dispose of any capital stock of FP France or that
could require FP France to issue, sell, or otherwise cause to become outstanding
any of its own capital stock (other than this Agreement). There are no
outstanding stock appreciation, phantom stock, profit participation, or similar
rights with respect to FP France. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any capital stock of
FP France. The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of FP France
are correct and complete and in FP France's possession. FP France is not in
default under or in violation of any provision of its charter or bylaws. The
filings made by FP France with the Clerk of the Commercial Court of Toulouse are
complete and up-to-date, and the K-bis excerpt delivered by the Registry of
Commerce and Companies of Toulouse is up-to-date and reflect its current legal
situation. Neither FPD nor FP France controls directly or indirectly or has any
direct or indirect equity participation in any corporation, partnership, trust,
or other business association which is not a Subsidiary of FPD. Except for FP
France, neither FPD nor
15
FP France owns or has any right to acquire, directly or indirectly, any
outstanding capital stock of, or other equity interests in, any Person. The FP
France Shares are validly issued and fully paid and represent the entire issued
share capital of FP France. FP France has not authorized or issued any
securities whatsoever other than the FP France Shares and is not required to do
so pursuant to any agreement.
(g) FINANCIAL STATEMENTS AND BUDGET. Attached hereto as EXHIBIT D
are the following financial statements (collectively the "Financial
Statements"): (i) audited consolidated and unaudited consolidating balance
sheets and statements of income, changes in stockholders' equity, and cash flow
as of and for the fiscal years ended 2004 and 2005 (the "Most Recent Fiscal Year
End") for FPD and FP France (presented on a consolidated basis with FPD Parent);
(ii) French statutory audited balance sheets and statements of income, changes
in stockholders' equity, and cash flow as of and for the fiscal years ended 2004
and 2005 for FP France; (iii) consolidated balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the
quarters ended March 31, 2006 and 2005 (presented on a consolidated basis with
FPD Parent) (iv) unaudited consolidated and consolidating balance sheets and
statements of income, and changes in stockholders' equity (the "Most Recent
Financial Statements") as of and for the 6 months ended June 30, 2006 (the "Most
Recent Fiscal Month End") for FPD and FP France and (v) unaudited balance sheet
attached hereto as Schedule 3(g) reflecting the assets and liabilities
transferred pursuant to that certain Assignment and Assumption Agreement, dated
as of April 30, 2006 between FPD parent to FPD. The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP and
French GAAP (solely with respect to audited statutory financials) applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of FPD and FP France as of such dates and the results of
operations of FPD and FP France for such periods, are correct and complete, and
are consistent with the books and records of FPD and FP France (which books and
records are correct and complete); PROVIDED, HOWEVER, that the Most Recent
Financial Statements are subject to normal year-end adjustments (which will not
be material individually or in the aggregate) and lack footnotes and other
presentation items. FPD Parent maintains a separate Cash account for FPD (into
which FPD Parent deposits all of the receipts of FPD and out of which FPD Parent
makes all of the disbursements of FPD). Attached hereto as EXHIBIT E is a copy
of the budget for the fiscal period ending on December 31, 2006 ("2006 Budget").
To the Knowledge of FPD Parent, FPD and FP France, based upon the Most Recent
Financial Statements and prospects for the Business through December 31, 2006,
the 2006 Budget is an accurate reflection of the expectations (revenue and
expenses) of the Business in all material respects.
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there has not been any Material Adverse Change. Without
limiting the generality of the foregoing, and except as set forth in Schedule
3(h), since that date:
(i) neither FPD nor FP France has sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) neither FPD nor FP France has entered into any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more
16
than $50,000 individually or more than $250,000 in the aggregate or
otherwise outside the Ordinary Course of Business;
(iii) no party (including FPD and FP France) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $50,000 to which FPD or FP France is a
party or by which any of them is bound;
(iv) neither FPD nor FP France has imposed or permitted to
exist any Lien upon any of its assets, tangible or intangible other than
in respect of Liabilities reflected on the Most Recent Financial
Statements;
(v) neither FPD nor FP France has made any capital
expenditure (or series of related capital expenditures) involving more
than $50,000 individually or more than $250,000 in the aggregate or
otherwise outside the Ordinary Course of Business;
(vi) neither FPD nor FP France has made any capital
investment in, any loan to, or any acquisition of the securities or
assets of, any other Person other than Intercompany Transactions (or
series of related capital investments, loans, and acquisitions);
(vii) neither FPD nor FP France has issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation;
(viii) neither FPD nor FP France has delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) neither FPD nor FP France has cancelled, compromised,
waived, or released any right or claim (or series of related rights and
claims);
(x) neither FPD nor FP France has transferred, assigned, or
granted any license or sublicense of any rights under or with respect to
any Intellectual Property except pursuant to a valid and enforceable
contract entered into in the Ordinary Course of Business;
(xi) there has been no change made or authorized in the
charter or bylaws of FPD or FP France;
(xii) neither FPD nor FP France has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants,
or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(xiii) neither FPD nor FP France has declared, set aside, or
paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) neither FPD nor FP France has experienced any damage,
destruction, or
17
loss (whether or not covered by insurance) to its property in excess of
$50,000;
(xv) neither FPD nor FP France has made any loan to, or
entered into any other transaction with, any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xvi) neither FPD nor FP France has entered into any
employment contract or collective bargaining agreement or in-house
agreement, written or oral, or modified the terms of any existing such
contract or agreement;
(xvii) neither FPD nor FP France has granted any increase in
the base compensation of any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xviii) neither FPD nor FP France has adopted, amended,
modified, or terminated any bonus, profit sharing, incentive, severance,
or other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) neither FPD nor FP France has made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xx) neither FPD nor FP France has made or pledged to make
any charitable or other capital contribution outside the Ordinary Course
of Business;
(xxi) neither FPD nor FP France has paid any amount to any
third party with respect to any Liability or obligation (including any
costs and expenses FPD has incurred or may incur in connection with this
Agreement and the transactions contemplated hereby) which would not
constitute an Assumed Liability if in existence as of the Closing;
(xxii) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving FPD or FP France;
(xxiii) neither FPD nor FP France has discharged a material
Liability or Lien outside the Ordinary Course of Business;
(xxiv) neither FPD nor FP France has made any loans or advances
of money;
(xxv) neither FPD nor FP France has disclosed any Confidential
Information, except pursuant to a valid and enforceable Non-Disclosure
Agreement; and
(xxvi) none of FPD and FP France has committed to any of the
foregoing.
(i) UNDISCLOSED LIABILITIES. Neither FPD nor FP France has Knowledge
of any Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing,
18
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
(j) LEGAL COMPLIANCE. In the last three years, each of FPD, FP
France, and their respective predecessors and Affiliates has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and including the
Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply.
(k) TAX MATTERS.
(i) Each of FPD and FP France has timely filed all Tax
Returns that it was required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by FPD or FP
France (whether or not shown or required to be shown on any Tax Return)
have been paid. Neither FPD nor FP France currently is the beneficiary
(or has requested) of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where FPD or FP France does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens on any of
the assets of FPD and FP France that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) Each of FPD and FP France has withheld and paid all
Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, and all Forms W-2 and 1099 required
with respect thereto have been properly completed and timely filed.
(iii) None of FPD Parent, FPD or FP France reasonably expects
any authority to assess any additional Taxes for any period for which
Tax Returns have been filed. There is no dispute or claim concerning any
Tax Liability of FPD and FP France either (A) claimed or raised by any
authority in writing or (B) as to which FPD Parent, FPD and FP France
(and employees responsible for Tax matters with respect to each Person),
has Knowledge based upon personal contact with any agent of such
authority. Schedule 3(k) lists all federal, state, local, and foreign
income Tax Returns filed with respect to FPD and FP France for taxable
periods ended on or after December 31, 2003, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently
are the subject of audit. FPD has delivered to Buyer correct and
complete copies of all income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by FPD and FP
France since December 31, 2003.
(iv) Neither FPD nor FP France has waived any statute of
limitations in respect
19
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The unpaid Taxes of FPD and FP France (A) did not, as of
the Most Recent Fiscal Month End, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of
the Most Recent Balance Sheet (rather than in any notes thereto) and (B)
do not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of FPD
and FP France in filing their Tax Returns.
(vi) Neither FPD nor FP France has filed a consent under CODE
SECTION 341(f) concerning collapsible corporations. Neither FPD nor FP
France has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under CODE SECTION
280G. Neither FPD nor FP France has been a United States real property
holding corporation within the meaning of CODE SECTION 897(c)(2) during
the applicable period specified in CODE SECTION 897(c)(1)(A)(ii). Each
of FPD and FP France has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of CODE SECTION
6662. Neither FPD nor FP France is a party to any Tax allocation or
sharing agreement. Neither FPD nor FP France (A) has been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other
than a group the common parent of which was FPD Parent) or (B) has any
Liability for the Taxes of any Person (other than FPD and FP France)
under REG. SECTION 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or
otherwise.
(vii) FPD's Subsidiary will not be required to include any
item of income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the Closing
Date as a result of (A) a change in method of accounting for a taxable
period (or portion thereof) ending on or prior to the Closing Date, (B)
any "closing agreement," as described in SECTION 7121 of the Code (or
any corresponding provision of state, local or foreign income Tax law),
(C) any Intercompany Transaction or any Excess Loss Account (or any
corresponding or similar provision or administrative rule of federal,
state, local or foreign income Tax law), (D) any installment sale or
open transaction made on or prior to the Closing Date or (E) as a result
of any prepaid amount received on or prior to the Closing Date.
(viii) Neither FPD nor FP France has distributed stock of
another Person, or has had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in
part by CODE SECTION 355 or SECTION 361.
(l) REAL PROPERTY.
(i) Neither FPD nor FP France own any real property.
(ii) Schedule 3(l)(ii) sets forth the address of each parcel
of Leased Real
20
Property, and a true and complete list of all Leases for each such
Leased Real Property (including the date and name of the parties to such
Lease document). FPD has delivered to Buyer a true and complete copy of
each such Lease document, and in the case of any oral Lease, a written
summary of the material terms of such Lease. Except as set forth in
Schedule 3(l)(ii), with respect to each of the Leases:
(A) such Lease is legal, valid, binding, enforceable
and in full force and effect;
(B) the transaction contemplated by this Agreement
does not require the consent of any other party to such Lease
(except for those Leases for which Lease Consents are obtained),
will not result in a breach of or default under such Lease, and
will not otherwise cause such Lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical
terms following the Closing;
(C) neither FPD's nor FP France's possession and
quiet enjoyment of the Leased Real Property under such Lease has
been disturbed and there are no disputes with respect to such
Lease;
(D) neither FPD nor FP France, or any other party to
the Lease is in breach or default under such Lease, and no event
has occurred or circumstance exists which, with the delivery of
notice, the passage of time or both, would constitute such a
breach or default, or permit the termination, modification or
acceleration of rent under such Lease;
(E) no security deposit or portion thereof deposited
with respect to such Lease has been applied in respect of a
breach or default under such Lease which has not been
redeposited in full;
(F) neither FPD nor FP France owes, or will owe in
the future, any brokerage commissions or finder's fees with
respect to such Lease;
(G) the other party to such Lease is not an
Affiliate of, and otherwise does not have any economic interest
in FPD or FP France;
(H) neither FPD nor FP France has subleased,
licensed or otherwise granted any Person the right to use or
occupy such Leased Real Property or any portion thereof;
(I) neither FPD nor FP France has collaterally
assigned or granted any other Lien in such Lease or any interest
therein; and
(J) there are no Liens on the estate or interest
created by such Lease.
(iii) Neither FPD nor FP France have any Leased Real Property
Subleases (including all amendments, extensions, renewals, guaranties
and other agreements with respect thereto) (collectively, the "Landlord
Leases").
21
(iv) The Leased Real Property identified in Schedule 3(l)(ii)
(collectively, the "Real Property") comprise all of the real property
used in FPD's or FP France's Business; and neither FPD nor FP France is
a party to any agreement or option to purchase any real property or
interest therein.
(m) INTELLECTUAL PROPERTY.
(i) FPD and FP France own and possess all right, title and
interest in and to, or have the right to use pursuant to a valid,
enforceable and transferable written license, sublicense, agreement, or
permission all Intellectual Property necessary or desirable for the
operation of the Business of FPD and FP France as presently conducted
and as presently proposed to be conducted. Each item of Intellectual
Property owned or used by FPD or FP France immediately prior to the
Closing hereunder will be owned or available for use by Buyer or the
Subsidiary on identical terms and conditions immediately subsequent to
the Closing hereunder. Each of FPD and FP France has taken all
commercially reasonable and desirable action to maintain and protect
each item of Intellectual Property that it owns or uses.
(ii) Neither FPD nor FP France has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and except as set forth
in Schedule 3(m)(ii), none of FPD Parent, FPD or FP France (and
employees with responsibility for Intellectual Property matters) has
ever received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or violation
(including any claim that FPD or FP France must license or refrain from
using any Intellectual Property rights of any third party). To the
Knowledge of FPD Parent, FPD and FP France (and employees responsible
for Intellectual Property matters with respect to each Person), no third
party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of FPD or FP
France.
(iii) Schedule 3(m)(iii) identifies each patent, copyright or
registration or application therefor which has been issued to FPD or FP
France with respect to any of its Intellectual Property, identifies each
pending application or application for registration which FPD or FP
France has made with respect to any of its Intellectual Property, and
identifies each license, sublicense, agreement, or other permission
which FPD or FP France has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). FPD has
delivered to Buyer correct and complete copies of all such patents,
copyrights, registrations, applications, licenses, sublicenses,
agreements, and permissions (as amended to date) and has made available
to Buyer correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such item.
Schedule 3(m)(iii) also identifies each unregistered trademark, service
xxxx, trade name, corporate name or Internet domain name, computer
software item (other than commercially available off-the-shelf software
purchased or licensed for less than a total cost of $1,000 in the
aggregate) and each material unregistered copyright used by FPD or FP
France in connection with any of its Businesses. With respect to each
item of Intellectual Property required to be identified in Schedule
3(m)(iii):
22
(A) Except as set forth in Schedule 3(m)(iii)(A),
FPD and FP France own and possess all right, title, and interest
in and to the item, free and clear of any Lien, license, or
other restriction or limitation regarding use or disclosure;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand has been made
or is pending or is threatened which challenges the legality,
validity, enforceability, use, or ownership of the item, and
there are no grounds for the same;
(D) except as set forth in Schedule 3(m)(iii)(D),
neither FPD nor FP France has ever agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item;
and
(E) no loss or expiration of the item is threatened,
pending, or reasonably foreseeable, except for patents expiring
at the end of their statutory terms (and not as a result of any
act or omission by FPD Parent, FPD, or FP France, including
without limitation, a failure by FPD Parent, FPD, or FP France
to pay any required maintenance fees).
(iv) Schedule 3(m)(iv) identifies each item of Intellectual
Property that any third party owns and that FPD or FP France uses
pursuant to license, sublicense, agreement, or permission. FPD has
delivered to Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified
in Schedule 3(m)(iv);
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following consummation of the transactions contemplated hereby;
(C) no party to the license, sublicense, agreement,
or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration
thereunder;
(D) no party to the license, sublicense, agreement,
or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
23
(F) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or
is threatened that challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property,
and there are no grounds for the same; and
(G) Except as set forth in Schedule 3(m)(iv)(G),
neither FPD nor FP France has granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(v) FPD and FP France (and employees with responsibility for
Intellectual Property matters with respect to each Person): (A) neither
FPD nor FP France has in the past infringed upon, misappropriated, or
otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the operation of its Businesses as
presently conducted; (B) there are no facts that indicate a likelihood
of any of the foregoing; and (C) no notices regarding any of the
foregoing (including, without limitation, any demands or offers to
license any Intellectual Property from any third party) have been
received.
(vi) None of FPD Parent, FPD and FP France (and employees
with responsibility for Intellectual Property matters with respect to
each Person) has any Knowledge of any new products, inventions,
procedures, or methods of manufacturing or processing that any
competitors or other third parties have developed (as they exist in
their current form) which reasonably could be expected to supersede or
make obsolete any product or process of FPD or FP France or to limit the
Business of FPD and FP France as presently conducted or as presently
proposed to be conducted.
(vii) FPD and FP France have taken all commercially reasonable
and desirable action to maintain and protect all of the Intellectual
Property of FPD and FP France and will continue to maintain and protect
all of the Intellectual Property of FPD and FP France prior to Closing
so as not to adversely affect the validity or enforceability thereof. To
the Knowledge of FPD Parent, FPD and FP France, the owners of any of the
Intellectual Property licensed to FPD and FP France have taken all
commercially reasonable and desirable action to maintain and protect the
Intellectual Property covered by such license.
(viii) To the extent such items exist and are in the possession
of FPD or FP France, the Acquired Assets include the source code, system
documentation, statements of principles of operation, and schematics for
all software, delivery platforms, gateways, "on ramp" connections and
access points (collectively, the "Technology Assets"), as well as any
pertinent commentary or explanation that may be necessary to render such
materials understandable and usable by a trained computer programmer.
The technical and descriptive materials relating to the acquisition,
design, development, use or maintenance of computer code and program
documentation (the "Documentation") also includes any programs owned or
licensed by FPD (including compilers), "workbenches," tools and higher
level (or "proprietary") language used for the development, maintenance
and implementation of the Technology Assets. FPD or FP France has
validly and effectively obtained the right and license to the
third-party software contained in the
24
Technology Assets and Documentation pursuant to the contracts comprising
Acquired Assets or contracts in the name of FP France. The Technology
Assets and Documentation contain no other programming or materials in
which any third party may claim superior, joint or common ownership.
Neither FPD nor FP France has granted, transferred or assigned any right
or interest in the Technology Assets, the Documentation or its other
Intellectual Property to any Person. There are no contracts, agreements,
licenses and other commitments and arrangements in effect with respect
to the marketing, distribution, licensing or promotion of the Technology
Assets, the Documentation or its Intellectual Property by any
salesperson, distributor, sublicensor or other remarketer or sales
organization.
(ix) FPD and FP France have complied in all material respects
with and are presently in compliance with all foreign, federal, state,
local, governmental (including, but not limited to, the Federal Trade
Commission and State Attorneys General), administrative or regulatory
laws, regulations, guidelines and rules applicable to any Intellectual
Property and FPD and FP France shall take all steps necessary to ensure
such compliance until Closing.
(x) Any applicable application, filing, registration,
renewal and other fees for the Intellectual Property owned by FPD and FP
France in connection with its Business have been paid.
(n) TANGIBLE ASSETS. FPD and FP France own or lease all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
their Businesses as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from material defects (patent and
latent), has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
(o) CONTRACTS. Schedule 3(o) lists the following contracts and other
agreements to which FPD or FP France is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $50,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products, or other personal property, or
for the furnishing or receipt of services, the performance of which will
extend over a period of more than one year, result in a material loss to
FPD or FP France, or involve consideration in excess of $50,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any Indebtedness,
or under which it has imposed a Lien on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or
noncompetition;
25
(vi) any agreement involving any of FPD Parent and their
Affiliates (other than FPD and FP France);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have a Material Adverse Effect;
(xii) any agreement under which it has granted any Person any
registration rights (including, without limitation, demand and piggyback
registration rights);
(xiii) any agreement under which FPD or FP France has advanced
or loaned any other Person amounts in the aggregate exceeding $50,000,
other than Intercompany Transactions, which will be terminated at
closing (except for the Intercompany License Agreement); or
(xiv) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $50,000.
FPD has delivered to Buyer a correct and complete copy of each written agreement
listed in Schedule 3(o) (as amended to date) and a written summary setting forth
the terms and conditions of each oral agreement referred to in Schedule 3(o).
With respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in SECTION 2 above); (C)
no party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) no party has
repudiated any provision of the agreement.
(p) NOTES AND ACCOUNTS RECEIVABLE. All notes and Accounts Receivable
of FPD and FP France are reflected properly on their books and records, are
valid receivables subject to no setoffs or counterclaims, are fully collectible,
and will be collected in a reasonable time at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
FPD and FP France.
(q) POWERS OF ATTORNEY. Except as set forth on Schedule 3(q), there
are no
26
outstanding powers of attorney executed on behalf of FPD or FP France.
(r) INSURANCE. Schedule 3(r) sets forth the following information
with respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which FPD or FP France is a party, a named insured, or
otherwise the beneficiary of coverage:
(i) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(ii) the policy number and the period of coverage; and
(iii) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount of
coverage.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect, and will remain so until the
Closing; (B) neither FPD nor FP France nor any other party to the policy is in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (C) no party to the policy
has repudiated any provision thereof. Neither FPD or FP France has been denied
coverage by an insurance carrier. Each of FPD and FP France has been covered
during the past 5 years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Schedule 3(r) describes any self-insurance arrangements affecting FPD
and FP France.
(s) LITIGATION. Schedule 3(s) sets forth each instance in which FPD
or FP France (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the Knowledge of FPD Parent,
FPD and FP France (and employees with responsibility for litigation matters with
respect to each Person) is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Schedule 3(s) could result in (1) any
Material Adverse Change, (2) prevention of the consummation of any transactions
contemplated by this Agreement, (3) causing any of the transactions contemplated
by this Agreement to be rescinded following consummation, (4) affecting
adversely the right of FPD Acquisition or Holdings to own the Acquired Assets,
or (5) affecting adversely the right of FPD Acquisition or Holdings to operate
its Business. None of FPD Parent, FPD or FP France (and employees with
responsibility for litigation matters) has any reason to believe that any such
action, suit, proceeding, hearing, or investigation may be brought or threatened
against FPD or FP France or that there is a basis for the foregoing.
(t) PRODUCT WARRANTY. To the Knowledge of FPD and FP France, and
excluding any normal warranty and support obligations incurred in the Ordinary
Course of Business each product sold or delivered by FPD or FP France has been
in conformity with all applicable contractual commitments and all express and
implied warranties, and neither FPD nor FP France has any Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any
27
Liability) for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of FPD and FP France.
(u) EMPLOYEES. Schedule 3(u) sets forth the employees by company,
the annual salary for each and any accrued but unpaid bonus. To the Knowledge of
FPD Parent, FPD and FP France (and employees with responsibility for employment
matters with respect to each Person), no executive, key employee, or group of
employees has any plans to terminate employment with FPD or FP France, and all
employees have executed legally binding agreements regarding the ownership of
Intellectual Property and prohibiting the disclosure of Confidential Information
and certain post-termination competition. Except for FP France, which applies
the National Collective Bargaining Agreement for Consultancy Services ("SYNTEC")
but does not apply any in-house collective bargaining agreement, FPD is not a
party to and is not bound by a collective bargaining agreement. Neither FPD nor
FP France has experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Neither FPD nor FP France
has committed any unfair labor practice. None of FPD Parent, FPD and FP France
(and employees with responsibility for employment matters with respect to such
Person) has any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of FPD
or FP France. FPD and FP France have at all times complied with all applicable
labour and social security legislation and practices and in particular with the
legislation and practices on working time, occupational accidents and employee
representation, applying to the Employees. FPD and FP France have respected the
instructions given by the competent authorities regarding employment law, social
security law and health and safety regulations, and has obtained all necessary
consents. FPD and FP France are up to date with all contributions in respect of
the various social bodies, for contingency funds, welfare (including but not
limited to the basic, supplementary and further supplementary contingency funds
and pension schemes) and these contributions have been made by it in the form
and within such a period as is required. There are no collective or individual
negotiations in progress, either with the employees or with the social bodies,
with a view to changing in a material manner the guarantees and social costs
currently borne and all of the undertakings given by FPD and FP France. FPD and
FP France have not been subject to investigation, supervision or readjustment by
any social authority or body. There are no collective dismissals pertaining to
the Employees being implemented in the businesses of FPD and FP France.
(v) EMPLOYEE BENEFITS.
(i) Schedule 3(v) lists each Employee Benefit Plan that FPD
or FP France maintains, to which FPD or FP France contributes or has any
obligation to contribute, or with respect to which FPD or FP France has
any Liability or potential Liability.
(A) Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) has been maintained,
funded and administered in accordance with the terms of such
Employee Benefit Plan and the terms of any applicable collective
bargaining agreement and complies in form and in operation in
all respects with the applicable requirements law and
legislation in the relevant jurisdiction.
28
(B) All required reports and descriptions (including
Form 5500 annual reports, summary annual reports, and summary
plan descriptions) have been timely filed and/or distributed in
accordance with the applicable requirements of ERISA and the
Code with respect to each such Employee Benefit Plan. The
requirements of COBRA have been met with respect to each such
Employee Benefit Plan and each Employee Benefit Plan maintained
by an ERISA Affiliate which is an Employee Welfare Benefit Plan
subject to COBRA, excepted for FP France. FPD shall at all times
on and after the Closing Date comply with COBRA and with the
notice and coverage certification requirements of ERISA Section
701 and Code Section 9801 with respect to all individuals who
are "M&A qualified beneficiaries," within the meaning of COBRA,
in connection with the asset purchase transaction described in
this Agreement.
(C) All contributions (including all employer
contributions and employee salary reduction contributions) that
are due have been made within the time periods prescribed by the
law and the applicable regulation in the relevant jurisdictions
to each such Employee Benefit Plan that is an Employee Pension
Benefit Plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been made to
each such Employee Pension Benefit Plan or accrued in accordance
with the past custom and practice of FPD and FP France. All
premiums or other payments for all periods ending on or before
the Closing Date have been paid with respect to each such
Employee Benefit Plan that is an Employee Welfare Benefit Plan.
(D) Except for the FP France, each such Employee
Benefit Plan which is intended to meet the requirements of a
"qualified plan" under CODE SECTION 401(a) has received a
determination from the Internal Revenue Service that such
Employee Benefit Plan is so qualified, and nothing has occurred
since the date of such determination that could adversely affect
the qualified status of any such Employee Benefit Plan.
(E) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan or any Employee
Benefit Plan maintained by an ERISA Affiliate. No Fiduciary has
any Liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect
to the administration or the investment of the assets of any
such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of FPD Parent, FPD and
FP France (and employees with responsibility for employee
benefits matters), threatened. None of FPD Parent, FPD and FP
France (and employees with responsibility for employee benefits
matters of such Person) has any Knowledge of any Basis for any
such action, suit, proceeding, hearing, or investigation.
(F) FPD has delivered to Buyer correct and complete
copies of the plan documents and summary plan descriptions.
29
(ii) Neither FPD, nor FP France, nor any ERISA Affiliate
contributes to, has any obligation to contribute to, or has any
liability under or with respect to any Employee Pension Benefit Plan
that is a "defined benefit plan" (as defined in ERISA SECTION (35)). No
asset of FPD or FP France is subject to any Lien under ERISA or the
Code.
(iii) Neither FPD, nor FP France, nor any ERISA Affiliate
contributes to, has any obligation to contribute to, or has any
Liability (including withdrawal liability as defined in ERISA SECTION
4201) under or with respect to any Multiemployer Plan.
(iv) Neither FPD nor FP France maintains, contributes to or
has an obligation to contribute to, or has any Liability or potential
Liability with respect to, any Employee Welfare Benefit Plan providing
health or life insurance or other welfare-type benefits for current or
future retired or terminated directors, officers or employees (or any
spouse or other dependent thereof) of FPD or FP France other than in
accordance with COBRA or the National Collective Bargaining Agreement
for Consultancy Services, as applicable.
(v) Neither this Agreement nor any transaction contemplated
hereby will (i) entitle any current or former employee, officer or
director of FPD to severance pay, unemployment compensation or any
similar or other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation or benefits due any such
employee, officer or director.
(vi) Each "nonqualified deferred compensation plan" (as such
term is defined by Code Section 409A(d)(1) and the guidance thereunder)
under which FPD makes, is obligated to make or promises to make,
payments (each, a "409A Plan") complies in operation with the
requirements of Code Section 409A and the guidance thereunder. FPD will
ensure that each 409A Plan complies in form with Code Section 409A no
later than the date on which such formal compliance is required by the
Department of Treasury guidance under Code Section 409A. No payment to
be made under any 409A Plan is or will be subject to the penalties of
Code Section 409A(a)(1).
(vii) The parties agree that Buyer is not adopting or
continuing any Employee Benefit Plan and that all Employee Benefit Plans
and any obligation or claim in connection therewith are not part of the
Acquired Assets or Assumed Liabilities. The parties agree that Buyer has
no obligation under this Agreement to provide any employee benefit plan
or policy with respect to any Hired Employee at any time.
(w) GUARANTIES. Except as set forth in Schedule 3(w), neither FPD
nor FP France is a guarantor or otherwise is liable for any Liability or
obligation (including indebtedness) of any other Person.
(x) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) Each of FPD, FP France, and their respective
predecessors and Affiliates has complied and is in compliance, in each
case in all material respects, with all Environmental, Health, and
Safety Requirements including all material permits, licenses
30
and other authorizations that are required pursuant to Environmental,
Health, and Safety Requirements for the occupation of its facilities and
the operation of its Business; a list of all such material permits,
licenses and other authorizations is set forth on Schedule 3(x)(i).
(ii) Neither FPD nor FP France, nor their respective
Affiliates has received any written or oral notice, report or other
information regarding any actual or alleged material violation of
Environmental, Health, and Safety Requirements, or any material
liabilities or potential material liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any material
investigatory, remedial or corrective obligations, relating to any of
them or its facilities arising under Environmental, Health, and Safety
Requirements.
(iii) Except as set forth on Schedule 3(x)(iii), none of the
following exists at any property or facility owned or operated by FPD or
FP France: (1) underground storage tanks, (2) asbestos-containing
material in any friable and damaged form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills,
surface impoundments, or disposal areas.
(iv) None of FPD, FP France, or any of their respective
predecessors or Affiliates has treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or
owned or operated any property or facility (and no such property or
facility is contaminated by any such substance) in a manner that has
given or would give rise to material liabilities, including any material
liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA") or the Solid Waste Disposal Act, as
amended or any other Environmental, Health, and Safety Requirements.
(v) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
material obligations for site investigation or cleanup, or notification
to or consent of government agencies or third parties, pursuant to any
of the so-called "transaction-triggered" or "responsible property
transfer" Environmental, Health, and Safety Requirements.
(y) EURO. As deemed commercially reasonable, all of the computer
software, firmware and hardware (whether general or special purpose) or other
similar or related items of automated, computerized, or other systems that are
used or relied on by FP France (i) are capable of performing all appropriate
functions necessary to process more than one currency and any common currency
adopted by one or more members of the European Union (the "EURO"), (ii) comply
with all legal requirements applicable to the Euro in any jurisdiction,
including the rules on conversion and rounding set out in applicable European
Community regulations, and (iii) are capable of displaying and printing, and
incorporate in all relevant screen layouts, all symbols and codes adopted by any
government or any other European Union body in relation to the Euro.
(z) CERTAIN BUSINESS RELATIONSHIPS WITH FPD AND FP FRANCE. Except as
set forth in
31
Schedule 3(z), neither FPD Parent nor any of their Affiliates, FPD Parent's
directors, officers, employees and shareholders, and FPD's and FP France's
directors, officers, employees, and shareholders has been involved in any
business arrangement or relationship with FPD or FP France within the past 12
months, and none of FPD Parent and their Affiliates, FPD Parent' directors,
officers, employees and shareholders, and FPD's and FP France's directors,
officers, employees, and shareholders owns any asset, tangible or intangible,
which is used in the Business of FPD or FP France.
(aa) CUSTOMERS AND SUPPLIERS.
(i) Schedule 3(aa) lists the 25 largest customers of FPD
(based on gross sales, on a consolidated basis) for each of the two most
recent fiscal years and sets forth opposite the name of each such
customer the percentage of consolidated net sales attributable to such
customer. Schedule 3(aa) also lists any additional current customers
that FPD anticipates shall be among the 25 largest customers for the
current fiscal year.
(ii) Since the date of the Most Recent Balance Sheet, no
material supplier of FPD or any FP France has indicated that it shall
stop, or materially decrease the rate of, supplying materials, products
or services to FPD or FP France, and no customer listed on Schedule
3(aa) has indicated that it shall stop, or decrease the rate of, buying
materials, products or services from FPD or FP France.
(bb) DISCLOSURE. The representations and warranties contained in this
SECTION 3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this SECTION 3 not misleading.
4. Buyer's Representations and Warranties. Buyer represents and
warrants to FPD and FPD Parent that the statements contained in this SECTION 4
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this SECTION 4.
(a) ORGANIZATION OF BUYER. Buyer is a corporation (or other entity)
duly organized, validly existing, and in good standing under the laws of
Delaware and Ontario, respectively.
(b) AUTHORIZATION OF TRANSACTION. Buyer has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of Buyer,
enforceable in accordance with its terms and conditions. The execution, delivery
and performance of this Agreement and all other agreements contemplated hereby
have been duly authorized by Buyer.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in SECTION 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer is subject or any provision of its
charter, bylaws,
32
or other governing documents or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Buyer is a party or by which it is bound or to which any of its assets
is subject. Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions referred to in SECTION
2 above).
(d) BROKERS' FEES. Except as set forth on Schedule 4(d), Buyer has
no Liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which FPD could become liable or obligated.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his, her, or its
reasonable best efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
Closing conditions set forth in SECTION 7 below).
(b) NOTICES AND CONSENTS. FPD will give (and will cause FP France to
give) any notices to third parties, and FPD will use its reasonable best efforts
(and will cause FP France to use its reasonable best efforts) to obtain any
third party consents, referred to in SECTION 3(C) above, the Lease Consents, and
the items set forth on Schedule 5(b). Each of the Parties will (and FPD will
cause FP France to) give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in SECTION 3(C)
and SECTION 4(C) above. Without limiting the generality of the foregoing, each
of the Parties will file (and FPD will cause FP France to file) any Notification
and Report Forms and related material that he, she, or it may be required to
file with French authorities.
(c) OPERATION OF BUSINESS. FPD will not (and will not cause or
permit FP France to) engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, FPD will not (and will not cause or permit FP
France to) (i) declare, set aside, or pay any dividend or make any distribution
with respect to its capital stock or redeem, purchase, or otherwise acquire any
of its capital stock, (ii) pay any amount to any third party with respect to any
Liability or obligation (including any costs and expenses FPD has incurred or
may incur in connection with this Agreement and the transactions contemplated
hereby) which would not constitute an Assumed Liability if in existence as of
the Closing, (iii) fail to make capital expenditures set forth in the 2006
Budget, or (iv) otherwise engage in any practice, take any action, or enter into
any transaction of the sort described in SECTION 3(H) above.
(d) PRESERVATION OF BUSINESS. FPD will keep (and will cause FP
France to keep) its Business and properties substantially intact, including its
present operations, physical facilities, working conditions, insurance policies,
and relationships with lessors, licensors, suppliers, customers, and employees.
33
(e) FULL ACCESS. FPD will permit (and will cause FP France to
permit) representatives of Buyer to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
FPD and FP France, to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or pertaining to each of
FPD and FP France.
(f) NOTICE OF DEVELOPMENTS. Each Party will give prompt written
notice to the other Party of any material adverse development causing a breach
of any of its own representations and warranties in SECTION 3 and SECTION 4
above. No disclosure by any Party pursuant to this SECTION 5(F), however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. FPD and FPD Parent will not (and FPD will not cause
or permit FP France to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
FPD or FP France (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. FPD will notify Buyer immediately if
any Person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
(h) LEASES. Neither FPD nor FP France shall amend, modify, extend,
renew or terminate any Lease, nor shall FPD or FP France enter into any new
lease, sublease, license or other agreement for the use or occupancy of any real
property, without the prior written consent of Buyer.
(i) EMPLOYEES. Prior to the Closing Date, Buyer shall offer
employment on substantially similar base salaries to the period prior to Closing
commencing on the Closing date to all employees of FPD other than those set
forth on Schedule 5(i) (such employees who accept the terms and conditions of
such offer and who are employed by Buyer are hereinafter referred to as "HIRED
EMPLOYEES"). FPD agrees to terminate or cause to be terminated the employment of
such employees who agree to become Hired Employees effective as of the Closing
Date.
6. POST-CLOSING COVENANTS. The Parties agree as follows with
respect to the period following the CLOSING.
(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as the other Party
reasonably may request, all the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification under SECTION 9
below). FPD acknowledges and agrees that from and after the Closing the Buyer
will be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to FPD and FP
France.
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(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving FPD or FP France, the other Party will cooperate
with the contesting or defending Party and its counsel in the contest or
defense, make available its personnel, and provide such testimony and access to
its books and records as shall be reasonably necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification under SECTION 9 below).
(c) TRANSITION. FPD will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of FPD and FP France from maintaining the
same business relationships with the Buyer and FPD and FP France after the
Closing as it maintained with FPD and FP France prior to the Closing. FPD will
refer all customer inquiries relating to the Businesses of FPD and FP France to
the Buyer from and after the Closing.
(d) CONFIDENTIALITY. FPD will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in its possession. In the
event that FPD is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, FPD will notify the Buyer promptly of the request or requirement so
that the Buyer may seek an appropriate protective order or waive compliance with
the provisions of this SECTION 6(D). If, in the absence of a protective order or
the receipt of a waiver hereunder, FPD is, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand liable
for contempt, FPD may disclose the Confidential Information to the tribunal;
PROVIDED, HOWEVER, that FPD shall use its best efforts to obtain, at the request
of the Buyer, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate.
(e) COVENANT NOT TO COMPETE; NON-SOLICITATION; RESTRICTIONS ON
HIRING.
(i) NON-COMPETITION. For a period of three (3) years from
and after the Closing Date, FPD Parent, FPD and its Affiliates will not
engage, own, manage, control, participate in, consult with or render
service for, directly or indirectly, in any Business that FPD and FP
France conducts as of the Closing Date in any geographic area in which
FPD or FP France conducts that Business as of the Closing Date;
PROVIDED, HOWEVER, that owning less than 1% of the outstanding stock of
any publicly traded corporation shall not be deemed to engage, own,
manage, control, participate in, consult with or render service for, a
Business.
(ii) NONSOLICITATION. For a period of three (3) years after
the Closing Date, FPD Parent, FPD and its Affiliates shall not, directly
or indirectly through another Person
35
(i) solicit or attempt to solicit any employee set forth on Schedule
3(u) to terminate his or her employment with the Buyer, FP France or its
Affiliates, (ii) solicit or attempt to solicit any customer, supplier,
licensee, licensor, or other business relation of the Buyer, FP France
or its Affiliates where such solicitation interferes with the
relationship between any such customer, supplier, licensee, licensor, or
other business relation and Buyer, FP France or its Affiliates, and
(iii) hire directly or through another entity an employee set forth on
Schedule 3(u).
(iii) If the final judgment of a court of competent
jurisdiction declares that any term or provision of this SECTION 6(e) is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable
as so modified after the expiration of the time within which the
judgment may be appealed. All of the covenants in this SECTION 6(e) are
intended by each party hereto to be, and shall be construed as, an
agreement independent of any other provision in this Agreement, and the
existence of a claim or cause of action by FPD Parent, FPD or its
Affiliates against Buyer whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Buyer of
any covenant in this SECTION 6(e). It is specifically agreed that the
time periods set forth in this SECTION 6(e) shall be computed by
excluding from that computation any time during which FPD Parent, FPD or
its Affiliates are in violation of any provision of this SECTION 6(e).
(iv) Because the Business is unique and because FPD Parent,
FPD and its Affiliates have had access to Confidential Information, the
parties hereto agree that money damages would not necessarily be an
adequate remedy for any breach of SECTIONS 6(d) or 6(e). Because of the
difficulty in measuring the economic losses that may be incurred by
Buyer as a result of any breach by FPD Parent, FPD or its Affiliates of
the covenants in SECTIONS 6(d) or 6(e), and because of the immediate and
irreparable damage that could be caused to Buyer for which it would have
no other adequate remedy, FPD Parent, FPD and its Affiliates agree that
Buyer may enforce the provisions of SECTIONS 6(d) and 6(e) by an
equitable or legal means, including seeking an appropriate injunction or
restraining order against FPD Parent, FPD and its Affiliates if a breach
of any of those provisions occurs. Therefore, in the event of a breach
or threatened breach of SECTIONS 6(d) or 6(e), Buyer or its successors
or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief (temporary or permanent),
without posting bond, in order to enforce, or prevent any violations of,
the provisions hereof. In the event of any breach of threatened breach
by FPD Parent, FPD or its Affiliates of the terms of SECTION 6(d) or
6(E), FPD Parent, FPD or its Affiliate, as applicable, shall reimburse
Buyer for its attorneys' fees, court costs and other expenses in incurs
in the enforcement thereof.
(f) NAME CHANGE. On or within three (3) days of the Closing Date,
FPD Parent, FPD and its Affiliates shall (a) amend it governing documents and
take all other action necessary to
36
change its name to one sufficiently dissimilar to FPD's present name, in Buyer's
judgment, to avoid confusion and (b) take all actions requested by Buyer to
enable Buyer to change its name to FPD's present name.
(g) THIRD PARTY CONSENTS. After Closing, Incentra or FPD, as
applicable, shall use its best efforts to obtain the consent, to the extent
required by contract, from any counterparty to a contract set forth on Schedule
3(o) not previously secured prior to Closing pursuant to SECTION 7(a)(iii).
Specifically with respect to any contracts with Oracle or its Affiliates and
securing the consent to the transactions contemplated by this Purchase
Agreement, Incentra agrees to secure the assignment of any such agreements
within 30 days.
(h) EARNOUT STATEMENTS. Beginning with the second quarter after
Closing, no later than sixty (60) days after the completion of each quarter
within each Fiscal Period, Buyer shall cause to be prepared and delivered to FPD
Parent an interim statement of that quarter's Net Software Revenue (the "Interim
Revenue Statement").
(i) CONTRACT ENFORCEMENT. After Closing and at no cost to Incentra
or FPD, Incentra or FPD, as applicable, will make commercially reasonable
efforts to assist Buyer in enforcing any non-competition or non-solicitation
covenants in connection with the Business entered into with FPD Parent or FPD
prior to Closing, but not assigned pursuant to this Agreement.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO BUYER'S OBLIGATION. Buyer's obligation to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in SECTION
3 above shall be true and correct in all material respects at and as of
the Closing Date, except to the extent that such representations and
warranties are qualified by terms such as "material" and "Material
Adverse Effect," in which case such representations and warranties shall
be true and correct in all respects at and as of the Closing Date;
(ii) FPD shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except
to the extent that such covenants are qualified by terms such as
"material" and "Material Adverse Effect," in which case FPD shall have
performed and complied with all of such covenants in all respects
through the Closing;
(iii) FPD and FP France shall have procured all of the third
party consents specified in SECTION 5(b) above;
(iv) FPD and FP Parent shall have delivered to Buyer a
certificate to the effect that each of the conditions specified above in
SECTION 7(a)(i)-(iii) is satisfied in all respects;
(v) Incentra, FPD, FP France, MSI and Buyer shall have
received all other authorizations, consents, and approvals of
governments and governmental agencies
37
referred to in SECTION 3(c) and SECTION 4(c) above;
(vi) Xxxxxxx Xxxxxxx shall have entered into an employment
agreement with FPD Acquisition substantially in the form attached hereto
as EXHIBIT F;
(vii) The Parties will have executed a transition services
agreement substantially in the form attached hereto as EXHIBIT G;
(viii) Buyer shall have received the resignations, effective as
of the Closing, of each director and officer of FP France other than
those whom Buyer shall have specified in writing at least three business
days prior to the Closing;
(ix) all actions to be taken by FPD in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby shall be satisfactory in
form and substance to Buyer;
(x) FPD and FP France shall have obtained and delivered to
Buyer a written consent for the assignment of each of the Leases (the
"LEASE CONSENTS"), in form and substance satisfactory to Buyer;
(xi) FPD Parent and FPD shall deliver to Buyer a non-foreign
affidavit dated as of the Closing Date, sworn under penalty of perjury
and in form and substance required under Treasury Regulations issued
pursuant to CODE SECTION 1445 stating that it is not a "foreign person"
as defined in CODE SECTION 1445 (the "FIRPTA Affidavit");
(xii) All employees of FPD and FP France shall be available
for hiring by Buyer in its sole discretion, on and as of the Closing
Date;
(xiii) no damage or destruction or other change has occurred
with respect to any of the Real Property or any portion thereof that,
individually or in the aggregate, would materially impair the use or
occupancy of the Real Property or the operation of FPD's or FP France's
Business as currently conducted;
(xiv) Incentra, FPD, MSI and FP France shall have delivered to
Buyer copies of the certificate of incorporation of FPD and FP France
certified not more than fifteen (15) days before the Closing Date by the
Secretary of State (or comparable officer) of the jurisdiction of each
such Person's incorporation (or formation);
(xv) Incentra, FPD, MSI, and FP France shall have delivered
to Buyer copies of the certificate of good standing (or similar
document) of FPD Parent, FPD and FP France issued not more than fifteen
(15) days before the Closing Date by the Secretary of State (or
comparable officer) of the jurisdiction of each such Person's
organization and of each jurisdiction in which each such Person is
qualified to do business; and
(xvi) Incentra, FPD, MSI and FP France shall have delivered to
Buyer a certificate of the secretary or an assistant secretary of FPD
Parent, FPD and FP France, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, as to (i)
38
no amendments to the Certificate of Incorporation (or other formation)
of FPD Parent, FPD and FP France since the date specified in clause
(xvi) above; (ii) the bylaws (or other organizational documents) of FPD
Parent, FPD and FP France; (iii) the resolutions of the board of
directors (or other authorizing body) (or a duly authorized committee
thereof) and shareholders, if applicable, of FPD Parent, FPD and FP
France authorizing the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; and (iv) incumbency
and signatures of the officers of such FPD Parent, FPD and FP France
executing this Agreement or any other agreement contemplated by this
Agreement.
(xvii) All intercompany agreements or contracts between FPD
Parent and its Affiliates and FP France shall be terminated other than
Intercompany License Agreement (and all balances of such intercompany
agreements shall be zero).
Buyer may waive any condition specified in this SECTION 7(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO FPD'S OBLIGATION. FPD's obligation to consummate
the transactions to be performed by it in connection with the Closing is subject
to satisfaction of the following conditions:
(i) the representations and warranties set forth in SECTION
4 above shall be true and correct in all material respects at and as of
the Closing Date, except to the extent that such representations and
warranties are qualified by terms such as "material" and "Material
Adverse Effect," in which case such representations and warranties shall
be true and correct in all respects at and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except
to the extent that such covenants are qualified by terms such as
"material" and "Material Adverse Effect," in which case Buyer shall have
performed and complied with all of such covenants in all respects
through the Closing;
(iii) To Buyer's Knowledge, no action, suit, or proceeding
shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(iv) Buyer shall have delivered to FPD a certificate to the
effect that each of the conditions specified above in SECTION
7(b)(i)-(iii) is satisfied in all respects;
(v) FPD Parent, FPD, FP France, and Buyer shall have
received all other authorizations, consents, and approvals of
governments and governmental agencies referred to in SECTION 3(c) and
SECTION 4(c) above; and
39
(vi) Each of person on Schedule 7(a)(ix) shall have entered
into a release with FPD substantially in the form attached hereto as
EXHIBIT H;
(vii) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to FPD.
FPD may waive any condition specified in this SECTION 7(b) if it executes a
writing so stating at or prior to the Closing.
8. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) Buyer and FPD may terminate this Agreement by mutual
written consent at any time;
(ii) Buyer may terminate this Agreement by giving written
notice to FPD at any time prior to the Closing in the event FPD has
breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, Buyer has notified FPD of the
breach, and the breach has continued without cure for a period of 10
days after the notice of breach; and
(iii) FPD may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing in the event Buyer has
breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, FPD has notified Buyer of the
breach, and the breach has continued without cure for a period of 10
days after the notice of breach.
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to SECTION 8(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach of this Agreement).
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event FPD, FPD Parent or FP France breaches (or
in the event any third party alleges facts that, if true, would mean
such Person has breached) any of its representations, warranties, and
covenants contained in this Agreement, and, if there is an applicable
survival period pursuant to SECTION 9(f) below, provided that the Buyer
makes a written claim for indemnification against FPD pursuant to
SECTION 10(g) below within such survival period, then FPD and FPD
Parent, joint and severally, agree to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may suffer
through and after the date of the claim for indemnification (including
any Adverse
40
Consequences the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach); PROVIDED,
HOWEVER, that FPD and FPD Parent shall not have any obligation to
indemnify the Buyer from and against any Adverse Consequences resulting
from, arising out of, relating to, in the nature of, or caused by the
breach (or alleged breach) of any representation or warranty of FPD
contained in SECTION 3(g) through (3)(j), SECTIONS 3(l) through 3(w) and
SECTIONS (y) through (3)(bb) above until the Buyer has suffered Adverse
Consequences by reason of all such breaches (or alleged breaches) in
excess of a $200,000 aggregate threshold (at which point FPD and FPD
Parent will be obligated to indemnify the Buyer from and against all
such Adverse Consequences relating back to the first dollar).
(ii) FPD and FPD Parent agree to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or caused
by:
(A) any Liability of FPD which is not an Assumed
Liability (including any Liability of FPD that becomes a
Liability of the Buyer under any common law doctrine of de facto
merger or successor liability, under Environmental, Health, and
Safety Requirements, or otherwise by operation of law);
(B) any Liability of FPD or FP France for unpaid
Taxes with respect to any Tax year or portion thereof ending on
or before the Closing Date (or for any Tax year beginning before
and ending after the Closing Date to the extent allocable to the
portion of such period beginning before and ending on the
Closing Date);
(C) any Liability of FPD Parent for the unpaid Taxes
of any Person (including FPD and FP France) under REG. SECTION
1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise;
(D) any Liabilities arising from any employee's
employment with, or termination from employment with FPD Parent,
FPD or FP France, whether pursuant to an employment agreement or
otherwise. For the avoidance of doubt, and in addition to the
foregoing, FPD Parent and FPD will indemnify Buyer from all
payment or compensation obligations to directors, officers, and
employees of FPD Parent, FPD and FP France arising as a result
of this transaction (including any failure to amend any assumed
employment agreement, written or oral, for benefits offered by
FPD Parent, FPD or FP France prior to closing but not reasonably
available to such employee post-closing) or the period prior to
Closing including, but not limited to, severance, salary,
vacation (to the extent payable in cash) and bonus payments;
(E) any Liabilities arising out of, relating to, in
the nature of, or caused by items set forth in SECTION 9(g); and
41
(F) any Liabilities arising out of the failure to
secure the consent of Oracle to assign all agreements in
connection with the Business.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF FPD AND FPD PARENT.
(i) In the event the Buyer breaches (or in the event any
third party alleges facts that, if true, would mean the Buyer has
breached) any of its representations, warranties, and covenants
contained in this Agreement, and, if there is an applicable survival
period pursuant to SECTION 9(f) below, provided that FPD makes a written
claim for indemnification against the Buyer pursuant to SECTION 10(g)
below within such survival period, then the Buyer agrees to indemnify
FPD and FPD Parent from and against the entirety of any Adverse
Consequences FPD and FPD Parent may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences FPD
and FPD Parent may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
(ii) The Buyer agrees to indemnify FPD and FPD Parent from
and against the entirety of any Adverse Consequences FPD may suffer
resulting from, arising out of, relating to, in the nature of, or caused
by any Assumed Liability.
(iii) The Buyer agrees to indemnify FPD and FPD Parent from
and against the entirety of any liability, including but not limited to
all costs of defense, FPD and/or FPD Parent may suffer resulting from,
arising out of, or relating to any claim made by Xxxx Xxxxxxxxxx related
to this Agreement or the transactions contemplated herein.
(c) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against the other
Party (the "Indemnifying Party") under this SECTION 9, then the
Indemnified Party shall promptly notify the Indemnifying Party thereof
in writing; PROVIDED, HOWEVER, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely
to the extent) the Indemnifying Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
15 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification
42
obligations hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party,
likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with SECTION 9(d)(ii)
above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not
to be withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably); PROVIDED,
HOWEVER, the Indemnifying Party shall not be required to obtain the
prior written consent of the Indemnified Party if the settlement
unconditionally releases the Indemnified Party from all Liability and
obligations with respect to such Third Party Claim;
(iv) In the event any of the conditions in SECTION 9(d)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, the Indemnifying Party in
connection therewith), (B) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Party will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 9.
(d) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this SECTION 9. All
indemnification payments under this SECTION 9 shall be deemed adjustments to the
Purchase Price.
(e) OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant (including without limitation any such remedy arising
under Environmental, Health, and Safety Requirements) any Party may have with
respect to FPD Parent, FPD, Buyer, or the transactions contemplated by this
Agreement.
(f) SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(i) The representations and warranties of FPD and FPD Parent
contained in
43
this Agreement shall survive the Closing until eighteen (18) months
after the Closing; PROVIDED, HOWEVER, that (A) the representations and
warranties made pursuant to SECTIONS 3(a) through 3(f) shall survive
indefinitely; and (B) the representations and warranties made pursuant
to SECTIONS 3(k) and 3(x) shall survive until the 90th day after the
relevant statute of limitations. Neither the period of survival nor the
liability of FPD or FPD Parent with respect to their representations and
warranties shall be reduced by any investigation made at any time by or
on behalf of Buyer. If written notice of a claim has been given prior to
the expiration of the applicable representations and warranties by Buyer
to FPD or FPD Parent, then the relevant representations and warranties
shall survive as to such claim, until such claim has been finally
resolved.
(ii) The representations and warranties of Buyer contained in
this Agreement shall survive the Closing until eighteen (18) months
after the Closing; PROVIDED, HOWEVER, that the representations and
warranties made pursuant to SECTIONS 4(a), 4(b), and 4(c) shall survive
indefinitely. Neither the period of survival nor the liability of Buyer
with respect to Buyer's representations and warranties shall be reduced
by any investigation made at any time by or on behalf of FPD. If written
notice of a claim has been given prior to the expiration of the
applicable representations and warranties by FPD to Buyer, then the
relevant representations and warranties shall survive as to such claim,
until such claim has been finally resolved.
(g) WITHHOLDING TAX; STATE SALES TAX; VALUE-ADDED TAX. FPD and FPD
Parent, jointly and severally, agree to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer through and after the
date of the claim for indemnification (including any Adverse Consequences the
Buyer may suffer after the end of any applicable statute of limitations)
resulting from, arising out of, relating to, in the nature of, or caused by the
failure to withhold and remit Withholding Tax, State Sales Tax or Value-Added
Tax ("Other Tax" or "Other Taxes") incurred by, imposed upon or attributable to
the FPD or FP France, including, without limitation, reasonable legal fees and
expenses incurred by the Buyer or any party hereto and relating thereto, for any
period (or portion thereof) prior to and including the Closing Date to the
extent that such Taxes were not reflected on the Financial Statements as a
reserve for the payment of Withholding Tax, State Sales Tax or Value-Added Tax
for the period (or portion thereof) ending on or prior to the Closing Date. For
purposes of this SECTION 9(g), any interest, penalty or additional charge
included in Other Tax shall be deemed to be part of the item or event giving
rise to such interest, penalty or additional charge is attributable. The
indemnity provided for in this SECTION 9(G) shall be independent of any other
indemnity provision hereof. Any Other Taxes, legal fees and expenses subject to
indemnification under this SECTION 9(g) shall not be subject to indemnification
under SECTION 9(a) hereof.
(h) LIMITATION OF LOSS; SOLE AND EXCLUSIVE REMEDY. The Parties
acknowledge and agree that, after the Closing, notwithstanding any other
provision of this Agreement to the contrary, the sole and exclusive remedy of
the Parties with respect to claims for Adverse Consequences or otherwise in
connection with, arising out of or resulting from the subject matter of this
Agreement and the other transaction documents and the transactions contemplated
hereby (in the absence of fraud, bad faith or willful misconduct) and thereby
shall be in accordance with, and limited solely to indemnification under the
provisions of this SECTION 9; provided that except for (A) SECTION 9(a)(ii), (B)
payments pursuant to SECTION 2(f) and (C) the claims of
44
indemnification in respect of breaches or alleged breaches of SECTIONS 3(A)
through 3(f), 3(k) and 3(y), the total Liability of FPD and FPD Parent to
indemnify and hold Buyer harmless in respect of Liability or otherwise pursuant
to SECTION 9(a) shall be limited to the Escrow Amount until the eighteen (18)
month anniversary of the Closing. With respect to an indemnification after the
release of the Escrow Amount, but prior to eighteen (18) months post Closing,
the Buyer will be entitled to retain any accrued, but unpaid Earnout Payments to
satisfy such indemnity.
(i) RELEASE OF ESCROW FUND. As soon as reasonably practicable (which
shall in any case be within fifteen (15) days) after the twelve (12) month
anniversary date hereof (the "Escrow Termination Date"), the Parties shall
execute and deliver to the Escrow Agent joint instructions as contemplated in
Section 4 of the Escrow Agreement, instructing the Escrow Agent to liquidate the
Escrow Fund and deliver to Incentra or FPD, as designated in such joint
instructions, funds then remaining in the Escrow Fund, less the aggregate amount
of all disputed amounts relating to any claims made pursuant to this SECTION 9,
if any, not paid or otherwise resolved by the Escrow Termination Date. If any
such claims are pending resulting in disputed amounts remaining in escrow, the
Parties shall, as soon as reasonably practicable after the resolution of such
claim, execute and deliver to the Escrow Agent joint instructions (which shall
be within fifteen (15) days of such resolution) as contemplated in Section 4 of
the Escrow Agreement, instructing the Escrow Agent to liquidate the Escrow Fund
and deliver the funds then remaining in escrow in accordance with the resolution
of the claim or dispute.
10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the other Party;
PROVIDED, HOWEVER, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party prior to making
the disclosure); PROVIDED, FURTHER, that FPD Parent, FPD or its Affiliates may
not use the name "Genuity" or a derivation thereto without express written
consent of Buyer, in its sole discretion.
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they relate in any way to
the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; PROVIDED, HOWEVER, that Buyer may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which
45
cases Buyer nonetheless shall remain responsible for the performance of all of
its obligations hereunder).
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by means of facsimile), each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) when delivered
personally to the recipient, (ii) one business day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) one
business day after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) four business days after being mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
and addressed to the intended recipient as set forth below:
If to FPD: 0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Copy to (which shall Law Offices of Xxxx Xxxx Guest
not constitute notice) ATTN: Xxxx Guest, Esq.
00 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Buyer: FPD Acquisition Corporation
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President
1706045 Ontario Limited
Xxxxx 000, 00 Xxxxxxxxxx Xxxxxx West
T-D Centre, Toronto, ON M5K IN2
Attention: President
Copy to (which shall Xxxxxxxxxx Xxxxxxxx LLP
not constitute notice): 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxxxxx XX, Esq.
Facsimile No.: 000-000-0000
46
Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Colorado or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and FPD. FPD may consent to any such amendment at any time prior to the Closing
with the prior authorization of its board of directors. No waiver by any Party
of any provision of this Agreement or any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be valid
unless the same shall be in writing and signed by the Party making such waiver
nor shall such waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such default,
misrepresentation, or breach of warranty or covenant.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) EXPENSES. Each of Buyer, FPD Parent, FPD, and FP France will
bear his, her, or its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby; PROVIDED, HOWEVER, that FPD Parent shall also bear the costs and
expenses of FPD and FP France (including all of their legal and broker fees and
expenses) in connection with this Agreement and the transactions contemplated
hereby in the event that the transactions contemplated by this Agreement are
consummated. Without limiting the generality of the foregoing, all transfer,
documentary, sales, use, stamp, registration and other such Taxes, and all
conveyance fees, recording charges and other fees and charges (including any
penalties and interest) incurred in connection with the consummation of the
transactions contemplated by this Agreement shall be paid by FPD Parent when
due, and FPD Parent will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such Taxes, fees and charges, and,
if required by applicable law, the Parties will, and will cause their Affiliates
to, join in the execution of any such Tax Returns and other documentation.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law
47
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
The Parties intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) SPECIFIC PERFORMANCE. Each Party acknowledges and agrees that
the other Party would be damaged irreparably in the event any provision of this
Agreement not performed in accordance with its specific terms or otherwise is
breached, so that a Party shall be entitled to injunctive relief to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in addition to any other remedy to
which such Party may be entitled, at law or in equity. In particular, the
Parties acknowledge that the Business of FPD and FP France is unique and
recognize and affirm that in the event FPD Parent breach this Agreement, money
damages would be inadequate and Buyer would have no adequate remedy at law, so
that Buyer shall have the right, in addition to any other rights and remedies
existing in its favor, to enforce its rights and the other Parties' obligations
hereunder not only by action for damages but also by action for specific
performance, injunctive, and/or other equitable relief.
(o) MEDIATION AND ARBITRATION. Any dispute arising under this
Agreement, whether contract, tort, or both, but excluding claims asserted by any
party in any action permitted to be brought by Buyer pursuant to SECTION 10(n)
in which specific performance and is sought by the party, regardless of whether
other causes of action, whether for damages, injunctive relief or otherwise, are
also asserted therein (herein, a "Dispute") shall be settled by mediation or, if
necessary, binding arbitration as set forth in this SECTION 10(o).
(i) Before invoking the binding arbitration mechanism set
forth in SECTION 10(o)(ii) below, the Parties shall first participate in
mediation of a Dispute as follows:
(A) Either party may commence mediation proceedings
by providing to the Judicial Arbitration and Mediation Service
("JAMS") and the other party a written request for mediation,
setting forth the subject of the dispute and the relief
requested. Within two (2) business days after receipt of such
request, the Parties shall cooperate with each other and with
JAMS to select a mediator from a list of mediators provided by
JAMS, or its successor. The Parties shall thereafter cooperate
48
with each other and with JAMS to schedule mediation proceedings,
which shall be scheduled as quickly as possible but in any event
within twenty (20) business days after a party's request is made
invoking the provisions of this SECTION 10(o). The mediation
shall be held at the offices of JAMS in Denver, Colorado. The
mediation shall be conducted according to the rules of JAMS. The
cost of mediation shall be borne by the Parties equally.
(B) At least ten (10) business days before the date
of the mediation, each side shall provide the mediator with a
statement of its position and copies of all supporting
documents. Each party shall send to the mediation a person who
has authority to bind the party. If a subsequent dispute will
involve third parties, such as insurers or subcontractors, they
shall also be asked to participate in the mediation. All offers,
promises, conduct and statements, whether oral or written (other
than the written statement(s) of position and the supporting
documents provided by the Parties in accordance with the first
sentence of this SECTION 10(o)), made in the course of mediation
by any of the Parties, their agents, attorneys, employees and
experts, and by the mediator or JAMS employees, are
confidential, privileged and inadmissible for any purpose,
including impeachment, in any arbitration or other proceeding
involving the Parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation.
(C) If a party has participated in the mediation and
is dissatisfied with the outcome, that party may invoke the
dispute resolution provisions in SECTION 10(o)(ii) of this
Agreement. Unless otherwise agreed by the Parties, the mediator
shall be disqualified from serving as an arbitrator. The
provisions of this SECTION 10(o) may be enforced by any court of
competent jurisdiction, and the party seeking enforcement shall
be entitled to an award of all costs, fees and expenses,
including attorneys' fees, to be paid by the party against whom
enforcement is ordered.
(ii) Subject to SECTION 10(o)(ii) above, any Dispute between
the Parties hereto arising out of this Agreement, upon written Notice of
one party served upon the other, shall be settled by binding arbitration
in accordance with the rules and procedures set forth by JAMS. The
Notice delivered pursuant to this SECTION 10(c)(ii) shall contain a
detailed statement of the Dispute, including a description of the
factual contentions which support said Dispute. The Parties shall, by
joint agreement, select a single arbitrator, but if they do not agree on
the selection of an arbitrator within twenty (20) days after the date
that the Notice was received by the non-sending Party, then selection
shall be made in accordance with the rules and procedures set forth by
JAMS. The arbitration shall be held in Denver, Colorado, or such other
place as the Parties shall mutually agree in writing. The Parties agree
that any Claims that are submitted to arbitration pursuant to the
provisions of this SECTION 10(o)(ii), and which seek, in the aggregate,
damages or payment of seventy-five thousand dollars ($75,000) or less,
shall be resolved through the application of the expedited procedures
for commercial cases.
(p) TAX MATTERS. Any agreement between FPD and FP France regarding
allocation or payment of Taxes or amounts in lieu of Taxes shall be deemed
terminated at and as of the
49
Closing. Buyer and FPD agree to utilize, or cause their respective Affiliates to
utilize, the standard procedure set forth in Revenue Procedure 96-60, 1996-2
C.B. 399, with respect to wage reporting.
(q) CURRENCY. All amounts are in U.S. Dollars.
* * * * *
50
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
INCENTRA SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
FRONT PORCH DIGITAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
MANAGEDSTORAGE
INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Chief Executive Officer
-------------------------------------
FPD ACQUISITION CORPORATION
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
-------------------------------------
Title: President
-------------------------------------
1706045 ONTARIO LIMITED
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
-------------------------------------
Title: President
-------------------------------------
51
