Exhibit 2.1
ASSET PURCHASE AGREEMENT
This
Asset Purchase
Agreement (“ Agreement ”) is made and
entered into as of March 11, 2005, by and between
CyberGuard
Corporation (“ Buyer ”), a Florida
corporation, and Zix SCM,
Inc. (“ Seller ”), a Delaware
corporation.
RECITALS
Whereas ,
Seller is engaged in the development, marketing, promotion,
distribution, and sale of certain web filtering and content
security products currently marketed by Seller under the names
“Web Inspector” and “Message Inspector”
(the “ Inspector Business ”);
Whereas ,
Seller desires to sell substantially all of the assets which are
related to, necessary for, or used in connection with, the
operation of the Inspector Business to Buyer, and Buyer desires to
purchase such assets on the terms and conditions as set forth
herein; and
Now,
Therefore, in consideration of the foregoing premises
and the mutual representations, warranties, covenants and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1
Purchase and Sale of Assets . Upon delivery of all items
required by Article V of this Agreement, Seller shall sell,
convey, assign, transfer and deliver to Buyer all of its right,
title and interest in and to the assets, properties, rights,
licenses, contracts and business, of every kind and description,
wherever located, necessary to operate and primarily used or held
for use in, the Inspector Business by Seller as the same shall
exist on the Closing Date, including, except for the Excluded
Assets, the assets listed on Annex A hereto (collectively,
the “ Purchased Assets ”), free and clear of all
mortgages, pledges, claims, obligations, liens, security interests,
defects, charges and encumbrances whatsoever (“
Encumbrances ”); and Buyer agrees to purchase and
acquire such Purchased Assets.
1.2
Excluded Assets . Notwithstanding anything to the contrary
contained in this Agreement, the Purchased Assets shall not
include, and Seller shall retain for its own use and benefit, those
assets specifically listed on Annex B hereto which are used
in the Inspector Business.
1.3
Liabilities . At the Closing, Buyer shall assume and fully
satisfy, pay, perform and discharge when due those Liabilities (as
defined herein) of Seller specifically listed on Annex C hereto (the “
Assumed Liabilities ”). Buyer shall not assume any
Liabilities of Seller other than the Assumed Liabilities. For
purposes of this Agreement, “ Liabilities ”
shall mean, with respect to any entity, any liability or
obligation, whether known or unknown, asserted or
unasserted,
absolute or contingent, accrued
or fixed, liquidated or unliquidated or due or to become due,
including those arising under any law, claim or order and those
arising under contract.
1.4
Purchase Price . The Purchase Price (the “ Purchase
Price ”) for the Purchased Assets shall be Three Million
Six Hundred Twenty Six Thousand Dollars ($3,626,000) and shall be
paid as follows:
(a) At
the Closing, Buyer shall deliver by wire transfer to Seller a cash
payment of $2,126,000, in immediately available funds in accordance
with wire transfer instructions provided to Buyer by
Seller.
(b) At
the Closing, Buyer shall deliver to Seller a promissory note in the
form attached as Annex
D hereto (the “ Promissory Note ”) in
the principal amount of $1,500,000, such principal amount to be
paid in cash in three installments of $500,000 each on each of
June 15, 2005, September 15, 2005, and December 15,
2005.
1.5
Transfer Taxes . Buyer and Seller each agree to deliver to
the other party (or to such governmental or taxing authority as the
other party reasonable directs) any form of document that may be
required or reasonably requested in order to obtain an exemption
with respect to any federal, state, local or other, sales, use or
other transfer taxes that may otherwise be required to be paid on
the transfer of the Purchased Assets or that may otherwise be due
with respect to such transfer, promptly upon the earlier of
(i) reasonable demand by the other party or (ii) learning that
such form or document is required. If any sales or other taxes are
payable in connection with the transfer of any of the Purchased
Assets hereunder, Seller shall be solely responsible therefor and
shall hold Buyer harmless therefrom.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as
otherwise set forth in the Disclosure Schedule attached hereto,
Seller makes the following representations and warranties, each of
which is true and correct on the date hereof :
2.1
Organization and Good Standing . Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller has all requisite corporate
power and authority to carry on the Inspector Business as it is
currently being conducted. Seller is duly qualified, is authorized
to do business and is in good standing as a foreign corporation in
all jurisdictions in which it has property or employees, except for
those jurisdictions in which failure to do so would not have a
Material Adverse Effect. For purposes of this Agreement, “
Material Adverse Effect ” shall mean any material
adverse effect on the condition (financial or otherwise) of the
Inspector Business.
2.2
Authority and Authorization . Seller has the requisite
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of
this Agreement by Seller, and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller, and do not constitute a
breach or violation of or default under the relevant charter
documents of Seller. This Agreement has been duly and validly
executed and delivered by Seller
- 2 -
and, when this Agreement is duly
executed and delivered by Buyer, it will constitute a valid and
binding obligation of Seller enforceable against Seller in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, or other similar laws or court decisions
relating to or affecting the rights of creditors generally, and by
general principles of equity.
2.3
Absence of Restrictions . The execution, delivery and
performance of this Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby (a) does not
constitute a breach or violation of or default (or an event which,
with or without notice or lapse of time (or both), could become a
violation or default) under any judgment, decree, order,
governmental permit or license to which Seller is a party, or any
law, rule or regulation to which Seller is subject; (b) does
not require the consent or approval of any other party to, or
result in the breach, suspension or termination of any provision
of, or constitute a default under, or result in the acceleration of
the performance of the obligations of Seller under, or result in
the creation of any liens or encumbrances upon all or any portion
of the Purchased Assets pursuant to any contract to which Seller is
a party or by which Seller or any of the Purchased Assets are bound
or any license, permit or approval to which Seller is subject; and
(c) does not and will not require any notice to, filing or
registration with, or permit, authorization, consent or approval
of, any governmental or regulatory organization or
instrumentality.
2.4
Intellectual Property .
(a)
Definition . For the purposes of this Agreement, “
Intellectual Property ” means any or all of the
following and all rights in, arising out of, or associated
therewith: (A) United States, international and foreign
patents and applications therefor and all reissues, divisions,
renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (B) all inventions (whether
patentable or not), invention disclosures, improvements, trade
secrets, proprietary information, know-how, technology, technical
data and customer lists, and all documentation relating to any of
the foregoing; (C) all copyrights (whether registered or
unregistered), mask work rights, copyright registrations and
applications therefor; (D) all industrial designs and any
registrations and applications therefor throughout the world;
(E) all trade names, logos, common law trademarks and service
marks, trademark and service mark registrations and applications
therefor throughout the world; (F) all databases and data
collections and all rights therein throughout the world;
(G) all web sites, domain names and URLs; and (H) any
similar, corresponding or equivalent rights to any of the
foregoing.
(b)
Section 2.4(b) of the Disclosure Schedule sets forth a
list of all Purchased Assets that are used in the Inspector
Business and constitute statutory Intellectual Property and domain
names. The items listed on Schedule 2.4(b) as well as
all other assets used in the operation of the Inspector Business
that constitute Intellectual Property as defined in Section
2.4(a) (including, without limitation, the software listed on
Annex A-3 hereto and trade secrets, know-how and goodwill
attendant to Intellectual Property not readily reducible to
schedule form) shall be referred to herein as the “
Intellectual Property Assets ”. Seller owns or has
enforceable rights to use all such Intellectual Property
Assets.
- 3 -
(c)
Section 2.4(c) of the Disclosure Schedule sets forth a
list of all Intellectual Property licensed from third parties to
Seller and used in the Inspector Business. To the knowledge of
Seller, each such license is valid and in full force and effect,
and is enforceable by Seller in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other
similar laws or court decisions relating to or affecting the rights
of creditors generally.
(d) Seller
has not (i) entered into any exclusive licensing agreements
relating to any Intellectual Property Assets; or (ii) entered
into any arrangements or agreements that would cause an encumbrance
or impairment of Intellectual Property Assets.
(e) To
Seller’s knowledge, other than as set forth in
Section 2.4(e) of the Disclosure Schedule, the
Intellectual Property Assets do not infringe, and are not based on
a misappropriation of, any Intellectual Property of any third
party. No proceeding charging Seller with, or an allegation of,
infringement or misappropriation of the Intellectual Property
Assets has been filed or, to the knowledge of Seller, is threatened
by any person. Seller is not making any unauthorized use of any
confidential information or Intellectual Property of any third
party in connection with the conduct of the Inspector
Business.
(f) To
the knowledge of Seller, there has not been any unauthorized use,
disclosure, infringement or misappropriation of the Intellectual
Property Assets.
(g) Seller
has secured valid written assignments from all consultants and
employees who contributed to the creation or development of the
Intellectual Property Assets used in the Inspector Business, of all
rights to such contributions that Seller does not already own by
operation of law, and Seller has obtained waivers of any moral
rights existing in such contributions.
(h) Seller
has taken steps consistent with prevailing industry practice to
protect and preserve confidential information of all its
Intellectual Property used in the Inspector Business not otherwise
protected by issued patents or published in whole by virtue of any
copyright registration (“ Confidential Information
”). To the knowledge of Seller, no present or former employee
or consultant is in material violation of any written agreement
with Seller relating to Confidential Information. All use,
disclosure or appropriation of Confidential Information owned by
Seller by or to a third party has been pursuant to the terms of a
written agreement between Seller and such third party. All use,
disclosure or appropriation by Seller of Confidential Information
not owned by it has been pursuant to and in accordance with the
terms of a written agreement between Seller and the owner of such
Confidential Information, or is otherwise lawful.
(i) Other
than as set forth in Section 2.4(i) of the Disclosure
Schedule, the Intellectual Property Assets are adequate for the
operation of the Inspector Business as currently
conducted.
2.5
Compliance with Laws and Regulations . Seller is in
compliance in all material respects with all laws, statutes,
ordinances, rules, regulations, decrees, orders, permits and other
similar legal and regulatory requirements applicable to the
Inspector Business, and has obtained
- 4 -
all material authorizations,
consents, approvals, orders, licenses and permits that are
necessary for or applicable to the conduct of the Inspector
Business from, and has accomplished all material filings,
registrations and qualifications with, or obtained exemptions from,
all appropriate federal, state, local or foreign governmental
agencies or quasi-governmental agencies. There is no pending or, to
the knowledge of Seller, threatened investigation concerning the
possible violation by Seller of any such laws, regulations,
statutes or the like in connection with the Inspector Business.
Seller is not in violation with any term of any judgment, writ,
decree, injunction or order entered by any court or governmental
authority (domestic or foreign) and outstanding against Seller with
respect to the Inspector Business. All material licenses and
permits to conduct the Inspector Business are in full force and
effect and, except as set forth on Section 2.5 of the
Disclosure Schedule, are freely transferable to Buyer.
2.6
Legal Proceedings . There are no actions, suits, claims,
investigations, complaints, arbitrations or other proceedings or
investigations pending or, to the knowledge of Seller, threatened
against Seller with respect to the Inspector Business, before any
court, governmental, administrative or other regulatory
organization or instrumentality or before any arbitrator, mediator
or other body of competent jurisdiction. There are no proceedings
pending or, to the knowledge of Seller, threatened which seek to
restrain, rescind or in any way restrict, delay or prohibit or
which may have the effect of restricting, delaying or prohibiting
Seller’s ability to consummate the transactions contemplated
by this Agreement. Seller is not subject to any judgment,
injunction, order, decree, ruling, charge or arbitration decision
or award outstanding against it relating to the Purchased
Assets.
2.7
Agreements, Contracts and Commitments . Set forth in
Section 2.7 of the Disclosure Schedule is a true and
complete list of all material agreements, contracts and commitments
to which Seller is a party or by which the Seller is bound and
which relate to the Inspector Business and are to be assigned to
Buyer (except for customer contracts that are memorialized only via
the customer executing a “click through” license),
(collectively, the “ Inspector Business Agreements
”). All of the Inspector Business Agreements are legal,
valid, binding and enforceable against the parties in accordance
with their respective terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, or other similar laws or court decisions
relating to or affecting the rights of creditors generally, and by
general principles of equity) and in full force and effect. No
default (or event or condition which, upon notice, passage of time
or both, would become a default or would cause the acceleration of
any obligation of any party thereto or the creation of any
encumbrance on any Purchased Asset) currently exists on the part of
the Seller or on the part of any third party, with respect to any
Inspector Business Agreement. Except as set forth on
Schedule 2.7 , all amounts due and owing by Seller
under the Inspector Business Agreements have been paid in full.
Seller has delivered to Buyer a correct and complete copy of each
agreement listed in Section 2.7 of the Disclosure
Schedule. Subject to obtaining any necessary consents, each
agreement will be duly assigned to Buyer on the Closing Date and
upon such assignment, Buyer will acquire all right, title, and
interest of Seller in and to such contract and will be substituted
for Seller under the terms of such agreement. Except as set forth
on Section 2.7 of the Disclosure Schedule, no consent
is required for such assignment.
- 5 -
2.8
Labor Matters . No work stoppage or labor strike against
Seller is pending, or to the knowledge of Seller, threatened, or
reasonably anticipated with respect to the Inspector Business.
There are no actions, suits, claims, labor disputes or grievances
pending, or to the knowledge of Seller, threatened, or reasonably
anticipated relating to any labor, safety or discrimination matters
involving any Seller employee with respect to the Inspector
Business, including, without limitation, charges of unfair
practices within the meaning of the National Labor Relations Act.
Seller is not presently, nor has it been in the past, a party to,
or bound by, any collective bargaining agreement or union contract
with respect to its employees of the Inspector Business, and no
collective bargaining agreement is being negotiated by
Seller.
2.9
Employees . Section 2.9 of the Disclosure
Schedule lists each employee or consultant of Seller used in the
Inspector Business and describes such employee’s title,
annual compensation, bonus or profit-sharing arrangements and
accrued vacation (as of December 31, 2004), and the date his
or her employment commenced. No Schedule 4.2 Employee (as
hereinafter defined) has any claim against Seller on account of or
for (a) overtime pay (other than for the current payroll
period), (b) wages or salary (excluding current bonuses or
accruals) for any period other than the current pay period,
(c) vacation, time off or pay in lieu of vacation or time off,
other than earned in respect of the current fiscal year, or
(d) any violation of any law relating to minimum wages, child
labor or maximum hours of work.
2.10 Fees .
Other than as set forth on Section 2.10 of the
Disclosure Schedule, Seller has not paid or become obligated to pay
any broker’s, finder’s or other intermediary’s
fees in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby. Buyer shall have no liability for any such fees.
2.11 Taxes
. The Purchased Assets will not be subject to any Encumbrances
arising out of any unpaid Taxes and there are no grounds for the
assertion or assessment of any Encumbrances against the Purchased
Assets in respect of any Taxes. For the purposes of this Agreement
“ Tax ” means any federal, state, local, or
foreign income, gross receipts, ad valorem, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Section 59A),
customs duties, capital stock, net worth, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, workers compensation, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever
imposed by any federal, state, local or foreign government or any
agency or political subdivision of any such government, including
any interest, penalty, or addition thereto, without regard to
whether such tax is disputed or not or arose before, on or after
the Closing Date.
2.12 Necessary
Property . The Purchased Assets and Assumed Liabilities
constitute all of Seller’s material property and property
rights now used, useful or necessary for the conduct of the
Inspector Business in the manner and to the extent presently
conducted by Seller.
2.13 Financial
Statements .
(a) Attached
to Section 2.13 of the Disclosure Schedule is selected
financial data relating to the Inspector Business (the “
Financial Schedule ”).
- 6 -
(b) The
Financial Schedule was derived from the books and records of the
Inspector Business and (i) is true and correct with respect to
the data presented therein, (ii) presents fairly, in all material
respects, the information set forth thereon, and (iii) has
been prepared in accordance with GAAP.
2.14 Events
Subsequent to December 31, 2004. Since December 31,
2004, except as set forth in Section 2.14 of the
Disclosure Schedule, there has been no:
(a) adverse
change in the condition of the Inspector Business other than
changes in the ordinary course;
(b) loss
or threatened loss of a material customer account of the Inspector
Business;
(c) material
damage, destruction or loss, whether covered by insurance or not,
affecting the Purchased Assets;
(d) transaction
entered into or carried out by Seller related to the Inspector
Business other than in the ordinary course of the
business;
(e) grant
of any Encumbrance with respect to the Purchased Assets;
(f) transfer
of any material assets related to the Inspector Business other than
arm’s-length sales, leases, or dispositions in the ordinary
course of the business;
(g) modification
or termination of any contract or any material term thereof related
to the Inspector Business;
(h) any
increase in the compensation payable to employees of the Inspector
Business or any increase in, or institution of, any bonus,
insurance, pension, profit-sharing or other employee benefit plan,
for or with such employees, or any change in any benefit plan,
other than in the ordinary course of business; or
(i) commitment
or agreement by Seller to do any of the foregoing items.
2.15 Use and
Condition of Property . All of the Purchased Assets are in good
operating condition and repair as required for their use in the
Inspector Business as presently conducted, and conform in all
material respects to all applicable laws, and no notice of any
violation of any law relating to any of the Purchased Assets has
been received by Seller except such as have been fully complied
with. There is no proposed, pending or threatened condemnation
proceeding or similar action affecting the Purchased Assets or with
respect to any streets or public amenities appurtenant thereto or
in the vicinity thereof which would adversely affect the Inspector
Business or the use of the Purchased Assets.
2.16 No Breach
of Law or Governing Documents . Seller, in connection with the
Inspector Business, has complied with and is not in default under
or in breach or violation of any applicable law of any government
body, or the provisions of any franchise or license, or in default
under or in breach or violation of any provision of its certificate
of incorporation or its
- 7 -
bylaws. Neither the execution of
this Agreement nor the Closing do or will constitute or result in
any such default, breach or violation. No government permits or
consents are necessary to effect the transactions contemplated
hereby.
2.17 Product
Warranties. Set forth on Section 2.17 of the
Disclosure Schedule are the written standard forms of product
warranties and guarantees used in the Inspector Business, and
copies of all other material product warranties and guarantees, and
a summary of all material oral product warranties used by Seller if
different from the foregoing. Except as specifically described on
Section 2.17 of the Disclosure Schedule, since
December 31, 2004, no product warranty or similar claims have
been made against Seller in connection with the Inspector Business
except routine claims as to which, in the aggregate, losses and
expenses in respect of repair or replacement of merchandise do not
and will not exceed $10,000. The aggregate loss and expense
attributable to all product, warranty and similar claims now
pending or hereafter asserted with respect to the Purchased Assets
sold on or prior to the Closing Date will not exceed $10,000. To
Seller’s knowledge, no person or party (including, but not
limited to, government agencies of any kind) has any claim, or
basis for any action or proceeding, against Seller under any Law
relating to unfair competition, false advertising or other similar
claims arising out of product warranties, guarantees,
specifications, manuals or brochures used in the Inspector
Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to
Seller that:
3.1
Organization . Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Florida. Buyer has the requisite corporate power and all
necessary governmental authority to conduct its business as
currently being conducted and is duly qualified, is authorized to
do business and is in good standing as a foreign corporation in all
jurisdictions in which the nature of its activities and of its
properties makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material
adverse effect on Buyer’s business, financial condition or
operations, taken as a whole.
3.2
Authority and Authorization . Buyer has the requisite
corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part
of Buyer and do not and will not constitute a breach or violation
of or default under the relevant charter documents of Buyer. This
Agreement has been duly and validly executed and delivered by Buyer
and, when this Agreement is duly executed and delivered by Seller,
it will constitute a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other
similar laws or court decisions relating to or affecting the rights
of creditors generally.
3.3
Absence of Restrictions . The execution, delivery and
performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby
- 8 -
(a) does not and will not
constitute a breach or violation of or default (or an event which,
with or without notice or lapse of time (or both), could become a
breach, violation or default) under any judgment, decree, order,
governmental permit or license to which Buyer is a party, or any
law, rule or regulation to which Buyer is subject; (b) does
not and will not require the c
|
