Exhibit 10.56
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STOCK PURCHASE AGREEMENT
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Among
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and
▇▇▇▇▇▇▇▇▇▇.▇▇▇ LTD.
Dated as of May 23, 2000
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms.................................... 1
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares.......................... 8
SECTION 2.02. Purchase Price........................................... 8
SECTION 2.03. Closing.................................................. 8
SECTION 2.04. Closing Deliveries by the Sellers........................ 9
SECTION 2.05. Closing Deliveries by the Purchaser...................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization, Authority and Qualification of the
Sellers.................................................. 9
SECTION 3.02. Organization, Authority and Qualification of the
Company.................................................. 10
SECTION 3.03. Capital Stock and Ownership of the Company............... 10
SECTION 3.04. Subsidiaries............................................. 11
SECTION 3.05. Corporate Books and Records.............................. 11
SECTION 3.06. No Conflict.............................................. 11
SECTION 3.07. Governmental Consents and Approvals...................... 11
SECTION 3.08. Financial Information; Books and Records................. 11
SECTION 3.09. Absence of Undisclosed Liabilities....................... 12
SECTION 3.10. Receivables.............................................. 12
SECTION 3.11. Inventories.............................................. 12
SECTION 3.12. Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions........................... 13
SECTION 3.13. Litigation............................................... 14
SECTION 3.14. Compliance with Laws..................................... 14
SECTION 3.15. Environmental Matters.................................... 14
SECTION 3.16. Material Contracts....................................... 14
SECTION 3.17. Intellectual Property.................................... 15
SECTION 3.18. Real Property............................................ 17
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SECTION 3.19. Property................................................. 17
SECTION 3.20. Employee Benefit Plans................................... 17
SECTION 3.21. Labor Matters............................................ 18
SECTION 3.22. Certain Interests........................................ 18
SECTION 3.23. Taxes.................................................... 18
SECTION 3.24. Accounts; Lockboxes; Safe Deposit Boxes; Powers of
Attorney................................................. 19
SECTION 3.25. Full Disclosure.......................................... 19
SECTION 3.26. Brokers.................................................. 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser.............. 20
SECTION 4.02. No Conflict.............................................. 20
SECTION 4.03. Governmental Consents and Approvals...................... 21
SECTION 4.04. Investment Purpose....................................... 21
SECTION 4.05. Purchaser Common Shares.................................. 21
SECTION 4.06. Brokers.................................................. 21
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing................. 22
SECTION 5.02. Access to Information.................................... 22
SECTION 5.03. Confidentiality.......................................... 22
SECTION 5.04. Notice of Developments................................... 23
SECTION 5.05. No Solicitation or Negotiation........................... 23
SECTION 5.06. Further Action........................................... 24
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Conditions to Obligations of the Sellers................. 24
SECTION 6.02. Conditions to Obligations of the Purchaser............... 25
ARTICLE VII
INDEMNIFICATION
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SECTION 7.01. Survival of Representations and Warranties............... 26
SECTION 7.02. Indemnification by the Sellers........................... 26
SECTION 7.03. Limits on Indemnification................................ 28
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ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.01. Termination.............................................. 28
SECTION 8.02. Effect of Termination.................................... 29
SECTION 8.03. Waiver................................................... 30
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Expenses................................................. 30
SECTION 9.02. Notices.................................................. 30
SECTION 9.03. Public Announcements..................................... 32
SECTION 9.04. Headings................................................. 32
SECTION 9.05. Severability............................................. 32
SECTION 9.06. Entire Agreement......................................... 32
SECTION 9.07. Assignment............................................... 32
SECTION 9.08. No Third Party Beneficiaries............................. 32
SECTION 9.09. Amendment................................................ 33
SECTION 9.10. Governing Law............................................ 33
SECTION 9.11. Counterparts............................................. 33
SECTION 9.12. Specific Performance..................................... 33
EXHIBIT 2.02 Exhibit 2.02
EXHIBIT A Exhibit A
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DISCLOSURE SCHEDULE
The Disclosure Schedule shall include the following Sections
3.01 Organization, Authority and Qualification of the Sellers
3.02 Organization and Qualification of the Company
3.03 Capital Stock and Ownership of the Company
3.06 No Conflict
3.07 Governmental Consents and Approvals
3.08 Financial Statements
3.09 No Undisclosed Liabilities
3.10 Receivables
3.11 Inventories
3.12 Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions
3.13 Litigation
3.14 Compliance with Laws
3.15 Environmental Matters
3.16 Material Contracts
3.17 Intellectual Property
3.18 Real Property
3.19 Property
3.22 Certain Interests
3.23 Taxes
3.24 Accounts; Lockboxes; Safe Deposit Boxes; Power of Attorney
5.01 Conduct of Business Prior to the Closing
STOCK PURCHASE AGREEMENT, dated as of May 23, 2000, between ▇▇▇▇▇▇ ▇.
▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇
▇▇▇▇▇ (each a "Seller" and collectively, the "Sellers"), and ▇▇▇▇▇▇▇▇▇▇.▇▇▇
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Ltd., an Ontario, Canada corporation (the "Purchaser").
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W I T N E S S E T H:
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WHEREAS, the Sellers own all the issued and outstanding shares (the
"Shares") of common stock, no par value per share (the "Common Stock"), of Epoch
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Technology Inc., a Texas corporation (the "Company");
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WHEREAS, the Sellers, through the Company, are engaged in the business
as a travel services computer software designer, developer and licensor; and
WHEREAS, the Sellers wish to sell to the Purchaser, and the Purchaser
wishes to purchase from the Sellers, the Shares and the Shareholders' Loans (as
defined below), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Purchaser and the Sellers
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used herein, the following
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terms shall have the following meanings:
"Acquisition Documents" means this Agreement, the Ancillary
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Agreements, and any certificate, Financial Statement, Interim Financial
Statement, report or other document delivered pursuant to this Agreement or the
transactions contemplated hereby.
"Action" means any claim, action, suit, arbitration, inquiry,
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proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
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Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" or "this Agreement" means this Stock Purchase Agreement,
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dated as of May 23, 2000, between the Sellers and the Purchaser (including the
Exhibits hereto and the Disclosure Schedule) and all amendments hereto made in
accordance with the provisions of Section 11.09.
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"Ancillary Agreements" means the Consulting Agreements , the
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Assignment Agreement, the Spousal Consents and the U.S. Purchaser's Letters.
"Assignment Agreement" means the Assignment Agreement to be executed
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by ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ on the Closing Date.
"Business Day" means any day that is not a Saturday, a Sunday or other
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day on which banks are required or authorized by Law to be closed in the
Province of Ontario.
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended through the date hereof.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
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and Liability Information System, as updated through the date hereof.
"Closing" has the meaning specified in Section 2.03.
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"Closing Balance Sheet" means the audited consolidated balance sheet
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(including the related notes and schedules thereto) of the Company, to be
prepared pursuant to Section 2.08(a) and to be dated as of the Closing Date.
"Closing Date" has the meaning specified in Section 2.03.
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"Code" means the Internal Revenue Code of 1986, as amended through the
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date hereof.
"Common Stock" has the meaning specified in the recitals to this
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Agreement.
"Company" has the meaning specified in the recitals to this Agreement.
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"Company Software" means all Software (i) material to the operation of
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the business of the Company, or (ii) manufactured, distributed, sold, licensed
or marketed by the Company, including but not limited to the ERA Software.
"control" (including the terms "controlled by" and "under common
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control with"), with respect to the relationship between or among two or more
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Persons, means the possession, directly or indirectly or as trustee, personal
representative or executor, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by contract, credit
arrangement or otherwise.
"Disclosure Schedule" means the Disclosure Schedule attached hereto,
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dated as of the date hereof, and forming a part of this Agreement.
"Employment Agreement" means the employment agreement to be executed
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by the Purchaser and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ on the
Closing Date.
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"Encumbrance" means any security interest, pledge, hypothecation,
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mortgage, lien (including, without limitation, environmental and tax liens),
violation, charge, lease, license, encumbrance, servient easement, adverse
claim, reversion, reverter, preferential arrangement, restrictive covenant,
condition or restriction of any kind, including, without limitation, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership.
"Environment" means surface waters, groundwaters, soil, subsurface
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strata and ambient air.
"Environmental Claims" means any and all administrative, regulatory or
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judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations, proceedings, consent orders or
consent agreements relating in any way to any Environmental Law or any
Environmental Permit (hereinafter "Claims"), including, without limitation, (a)
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any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) any and all Claims by any Person seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Condition" means a condition relating to or arising or
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resulting from a failure to comply with any applicable Environmental Law or
Environmental Permit or a Release of a Hazardous Material into the Environment.
"Environmental Laws" means any Law, now or hereafter in effect and as
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amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
the environment, health, safety or Hazardous Materials, including, without
limitation, the CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C.
(S)(S) 6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
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(S)(S) 6901 et seq.; the Clean Water Act, 33 U.S.C. (S)(S) 1251 et seq.; the
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Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601 et seq.; the Clean Air Act,
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42 U.S.C. (S)(S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S)
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300f et seq.; the Atomic Energy Act, 42 U.S.C. (S)(S) 2011 et seq.; the Federal
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Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S)(S) 136 et seq.; and the
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Federal Food, Drug and Cosmetic Act, 21 U.S.C. (S)(S) 301 et seq.
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"Environmental Permits" means all permits, approvals, identification
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numbers, licenses and other authorizations required under any applicable
Environmental Law.
"Financial Statements" has the meaning specified in Section
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3.08(a)(i).
"Finder's Fee" has the meaning specified in Section 3.26.
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"Governmental Authority" means any Canadian federal, provincial or
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local or any U.S. federal, state or local or any other foreign government,
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral
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body.
"Governmental Order" means any order, writ, judgment, injunction,
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decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Materials" means (a) petroleum and petroleum products,
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radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls and radon gas, (b) any other chemicals, materials or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words of similar import, under any applicable
Environmental Law, and (c) any other chemical, material or substance exposure to
which is regulated by any Governmental Authority.
"Indebtedness" means, with respect to any Person, (a) all indebtedness
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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 indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of such Person as
lessee under leases that have been or should be, in accordance with U.S. GAAP,
recorded as capital leases, (f) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, valued, in the case of redeemable
preferred stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all Indebtedness of others
referred to in clauses (a) through (g) above guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (iv) otherwise to assure
a creditor against loss, and (i) all Indebtedness referred to in clauses (a)
through (g) 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.
"Indemnified Party" has the meaning specified in Section 7.02(a).
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"Intellectual Property" means any patents, patent applications,
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inventions, copyrights, trade secrets, trademarks (registered or unregistered),
mask works (registered or unregistered), trade names, service marks, logos or
other marks or labels, computer software, algorithms, pending applications for
any of the foregoing, and other intellectual and proprietary rights, whether or
not subject to statutory registration or protection.
"Interim Financial Statements" has the meaning specified in Section
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3.08(a)(ii).
"IRS" means the Internal Revenue Service of the United States.
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"Law" means any Canadian federal, provincial, local or any U.S.
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federal, state or local or any other foreign statute, law, ordinance,
regulation, rule, code, order, requirement or rule of law (including, without
limitation, common law).
"Leased Real Property" means the real property leased by the Company,
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as tenant, together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Company attached or appurtenant
thereto, and all easements, licenses, rights and appurtenances relating to the
foregoing.
"Liabilities" means any and all debts, liabilities and obligations,
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whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law (including, without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"Loss" has the meaning specified in Section 7.02(a).
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"Material Adverse Effect" means any circumstance, change in or effect
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on the Company that, individually or in the aggregate with all other
circumstances, changes in or effects on the Company: (a) is or is reasonably
likely to be, materially adverse to the business, operations, assets or
liabilities (including, without limitation, contingent liabilities), employee
relationships, customer or supplier relationships, prospects, results of
operations or the condition (financial or otherwise) of the Company or (b) is
reasonably likely to materially adversely affect the ability of the Purchaser to
operate or conduct the business of the Company in the manner in which it is
currently operated or conducted.
"Material Contracts" has the meaning specified in Section 3.16(a).
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"Permitted Encumbrances" means such of the following as to which no
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enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced and as to which Sellers or Purchaser is not otherwise subject to
civil or criminal liability due to its existence: (a) liens for Taxes,
assessments and governmental charges or levies not yet due and payable; (b)
Encumbrances imposed by Law, such as materialmen's, mechanics', carriers',
workmen's and repairmen's liens and other similar liens arising in the ordinary
course of business securing obligations that (i) are not overdue for a period of
more than 30 days and (ii)
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are not in excess of $5,000 in the case of a single property or $50,000 in the
aggregate at any time; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
were not incurred in connection with any Indebtedness, (ii) do not render title
to the property encumbered thereby unmarketable and (iii) do not, individually
or in the aggregate, materially adversely affect the value of or the use of such
property for its current and anticipated purposes.
"Person" means any individual, partnership, firm, corporation,
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association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Purchase Price" has the meaning specified in Section 2.02.
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"Purchase Price Top Up Amount" has the meaning specified in Section
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2.02.
"Purchaser" has the meaning specified in the preamble to this
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Agreement.
"Purchaser Common Shares" means common shares without par value of the
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Purchaser, or, if all or substantially all of such common shares are converted
into or exchanged for other equity securities of the Purchaser, such other
equity securities.
"Reference Balance Sheet" means the unaudited consolidated balance
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sheet (including the related notes and schedules thereto) of the Company, dated
as of April 30, 2000, a copy of which is set forth in Section 3.08(a)(i) of the
Disclosure Schedule.
"Reference Balance Sheet Date" means April 30, 2000.
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"Regulations" means the Treasury Regulations (including Temporary
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Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"Release" means disposing, discharging, injecting, spilling, leaking,
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leaching, dumping, emitting, escaping, emptying, seeping, placing and the like
into or upon any land or water or air or otherwise entering into the
Environment.
"Remedial Action" means all action reasonably necessary and required
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under any applicable Environmental Law or Environmental Permit and all action
required by a Governmental Authority to (a) clean up, remove, treat or handle in
any other way Hazardous Materials in the Environment; (b) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or the Environment; or (c) perform remedial
investigations, feasibility studies, corrective actions, closures, and
postremedial or postclosure studies, investigations, operations, maintenance and
monitoring on, about or in any Real Property.
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"Sellers" has the meaning specified in the preamble to this Agreement.
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"Shareholders' Loans" means the Liabilities of the Company as
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described in Section 3.22(b) of the Disclosure Schedule.
"Shares" has the meaning specified in the recitals to this Agreement.
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"Software" means computer software, programs and databases in any
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form, including Internet web sites, web content and links, source code, object
code, operating systems and specifications, data, databases, database
management code, utilities, graphical user interfaces, menus, images, icons,
forms, methods of processing, software engines, platforms, and data formats, all
versions, updates, corrections, enhancements, and modifications thereof, and all
related documentation, developer notes, comments and annotations.
"Spousal Consent" has the meaning specified in Section 2.04.
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"Subsidiaries" means any and all other corporations, partnerships,
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joint ventures, associations and other entities controlled by the Company
directly or indirectly through one or more intermediaries.
"Tangible Personal Property" has the meaning specified in Section
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3.18(a).
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
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tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges.
"Third Party Claims" has the meaning specified in Section 7.02(b).
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"U.S. GAAP" means United States generally accepted accounting
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principles and practices in effect from time to time applied consistently
throughout the periods involved.
"U.S. Purchaser's Letter" means the U.S. Purchaser's Letter to be
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executed by each of the Sellers on the Closing Date.
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ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares and Shareholders'
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Loans. Upon the terms and subject to the conditions of this Agreement, at
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the Closing, the Sellers shall sell, assign, transfer, convey and deliver, or
cause to be sold, assigned, transferred, conveyed and delivered, to the
Purchaser, the Shares and the Shareholders' Loans, and the Purchaser shall
purchase the Shares and the Shareholders' Loans.
SECTION 2.02. Purchase Price. (a) The purchase price for the Shares
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and the Shareholders' Loans shall be U.S.$10 million (together, the "Purchase
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Price") to be distributed among the Sellers at the Closing Date in accordance
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with Exhibit 2.02. The Purchase Price shall consist of U.S.$2 million in cash
(the "Cash Purchase Price"), of which U.S.$25,000 has been deposited with the
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Sellers, and 3,200,000 Purchaser Common Shares at U.S.$2.50 per Purchaser Common
Share ("Common Share Purchase Price").
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(b) If on the 91st day after the Closing Date, the closing sale price
of the Purchaser Common Shares on The Toronto Stock Exchange is less than
U.S.$2.50 per Purchaser Common Share (converted based on the noon buying rate on
such date in the City of New York for cable transfers in Canadian dollars as
certified for customs purposes by the Federal Reserve Bank of New York), then
the Sellers shall be entitled to an amount (the "Purchase Price Top Up Amount")
equal to the product of (a) 3,200,000 Purchaser Common Shares and (b) the
difference of U.S.$2.50 minus the closing price of the Purchaser Common Shares
on The Toronto Stock Exchange (converted based on the noon buying rate on such
date in the City of New York for cable transfers in Canadian dollars as
certified for customs purposes by the Federal Reserve Bank of New York) on such
date. The Purchaser shall pay the Purchase Price Top Up Amount to the Sellers at
the Purchaser's option in cash or in Purchaser Common shares, valued at the
closing price on The Toronto Stock Exchange (converted based on the noon buying
rate on such date in the City of New York for cable transfers in Canadian
dollars as certified for customs purposes by the Federal Reserve Bank of New
York). If the Purchaser elects to pay the Purchase Price Top Up Amount in
Purchaser Common Shares, each Seller will be entitled that proportion of the
total Purchaser Price Top Up Amount which the number of Purchaser Common Shares
set forth next to its name in Exhibit 2.03 bears to 3,200.000.
SECTION 2.03. Closing. Subject to the terms and conditions of this
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Agreement, the sale and purchase of the Shares and Shareholders' Loans
contemplated by this Agreement shall take place at a closing (the "Closing") to
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be held at the offices of Shearman & Sterling, Commerce Court West, ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ at 2:00 P.M. New York time on the later to
occur of (a) May 23, 2000 or (b) the fifth Business Day following the
satisfaction or waiver of all other conditions to the obligations of the parties
set forth in Article VI, or at such other place or at such other time or on such
other date as the Sellers and the Purchaser may mutually agree upon in writing
(the day on which the Closing takes place being the "Closing Date").
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SECTION 2.04. Closing Deliveries by the Sellers. At the Closing, the
Sellers shall deliver or cause to be delivered to the Purchaser:
(a) stock certificates evidencing the Shares duly endorsed in blank,
or accompanied by stock powers duly executed in blank, in form satisfactory
to the Purchaser and with all required stock transfer tax stamps affixed;
(b) a cross-receipt for the Purchase Price;
(c) an executed U.S. Purchaser's Letter from each of the Sellers;
(d) an executed counterpart of each of the Employment Agreements;
(e) executed spousal consents in the form as attached in Exhibit A
(each, a "Spousal Consent") from each of the persons listed in Schedule
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3.01;
(f) an executed Assignment Agreement; and
(g) the certificates and other documents required to be delivered
pursuant to Section 6.02.
SECTION 2.05. Closing Deliveries by the Purchaser. At the Closing,
-----------------------------------
the Purchaser shall deliver to the Sellers:
(a) the Cash Purchase Price by wire transfer in immediately available
funds to an account designated by the Sellers and share
certificates for the Common Share Purchase Price;
(b) a cross-receipt for the Shares;
(c) an executed counterpart of each of the Employment Agreements; and
(d) the certificates and other documents required to be delivered
pursuant to Section 6.01.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
As an inducement to the Purchaser to enter into this Agreement, the
Sellers, jointly and severally, hereby represent and warrant to the Purchaser as
follows:
SECTION 3.01. Organization, Authority and Qualification of the
------------------------------------------------
Sellers. Each Seller is an individual and is competent and has all necessary
-------
power and authority to enter into
10
this Agreement and the Ancillary Agreements, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Except as set forth in Schedule 3.01, no person has any community
property rights, by virtue of marriage or otherwise, in any of the Shares. This
Agreement has been, and upon their execution the Ancillary Agreements shall have
been, duly executed and delivered by each Seller, and (assuming due
authorization, execution and delivery by the Purchaser) this Agreement
constitutes, and upon their execution the Ancillary Agreements shall constitute,
legal, valid and binding obligations of each Seller enforceable against such
Seller in accordance with their respective terms. The Spousal Consents being
executed by the persons listed on Schedule 3.01 hereto are enforceable against
such persons in accordance with their terms.
SECTION 3.02. Organization, Authority and Qualification of the
------------------------------------------------
Company. The Company is a corporation duly organized, validly existing and
-------
in good standing under the laws of the State of Texas and has all necessary
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by it and to carry on its business as it has been and
is currently conducted. The Company is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary or desirable, and all such jurisdictions are set forth
in Section 3.02 of the Disclosure Schedule. All corporate actions taken by the
Company have been duly authorized, and the Company has not taken any action that
in any respect conflicts with, constitutes a default under or results in a
violation of any provision of its Certificate of Incorporation or By-laws. True
and correct copies of the Certificate of Incorporation and By-laws of the
Company, each as in effect on the date hereof, have been delivered by the
Sellers to the Purchaser.
SECTION 3.03. Capital Stock and Ownership of the Company. (a) The
------------------------------------------
authorized capital stock of the Company consists of 200,000 shares of Common
Stock. As of the date hereof, 75,053 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable. None
of the issued and outstanding shares of Common Stock was issued in violation of
any preemptive rights. There are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character relating
to the Shares or obligating either any Seller or the Company to issue or sell
any Shares, or any other interest in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Common Stock or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. The Shares constitute all the issued and outstanding capital stock
of the Company and are owned of record and beneficially by the Sellers, in the
amounts set forth opposite each Seller's name in Schedule 3.03(a) of the
Disclosure Schedule, free and clear of all Encumbrances. Upon consummation of
the transactions contemplated by this Agreement and registration of the Shares
in the name of the Purchaser in the stock records of the Company, the Purchaser,
assuming it shall have purchased the Shares for value in good faith and without
notice of any adverse claim, will own all the issued and outstanding capital
stock of the Company free and clear of all Encumbrances. Upon consummation of
the transactions contemplated by this Agreement, the Shares will be fully paid
and nonassessable. Except as disclosed in Section 3.03(a) of the Disclosure
Schedule, there are no voting trusts, stockholder agreements, proxies or
11
other agreements or understandings in effect with respect to the voting or
transfer of any of the Shares. Except for the Spousal Consents being executed
simultaneously with the execution of the Agreement, no action is or will be
required on the part of any person in order to effect the conveyance to the
Purchaser of each Seller's right, title and interest in the Shares, free and
clear of any community property interest.
(b) The stock register of the Company accurately records: (i) the
name and address of each Person owning Shares, and (ii) the certificate number
of each certificate evidencing shares of capital stock issued by the Company,
the number of shares evidenced by each such certificate, the date of issuance
thereof and, in the case of cancellation, the date of cancellation.
SECTION 3.04. Subsidiaries. There are no Subsidiaries of the
------------
Company.
SECTION 3.05. Corporate Books and Records. The minute books of the
---------------------------
Company contain accurate records of all meetings and accurately reflect all
other actions taken by the stockholders, Boards of Directors and all committees
of the Boards of Directors of the Company. Complete and accurate copies of all
such minute books and of the stock register of the Company have been provided by
the Sellers to the Purchaser.
SECTION 3.06. No Conflict. The execution, delivery and performance of
-----------
this Agreement and the Ancillary Agreements by each Seller do not and will not
(a) violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws (or similar organizational documents) of
the Company, (b) conflict with or violate (or cause an event which could have a
Material Adverse Effect as a result of) any Law or Governmental Order applicable
to any Seller, the Company or any of their respective assets, properties or
businesses, or (c) except as set forth in Section 3.06(c) of the Disclosure
Schedule, conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on any of the Shares or any of the
assets or properties of each Seller or the Company pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which any Seller or the Company
is a party or by which any of the Shares or any of such assets or properties is
bound or affected.
SECTION 3.07. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery and performance of this Agreement and each Ancillary Agreement by the
Sellers do not and will not require any consent, approval, authorization or
other order of, action by, filing with or notification to, any Governmental
Authority.
SECTION 3.08. Financial Information; Books and Records. (a) True and
----------------------------------------
complete copies of (i) the audited consolidated balance sheet of the Company for
each of the two fiscal years ended as of December 31, 1998, 1999, and the
related audited consolidated statements of income, retained earnings,
stockholders' equity and changes in financial position of
12
the Company, together with all related notes and schedules thereto,
(collectively referred to herein as the "Financial Statements") and (ii) the
--------------------
unaudited consolidated balance sheet of the Company as of March 31, 2000, and
the related consolidated statements of income, retained earnings, stockholders'
equity and changes in financial position of the Company, together with all
related notes and schedules thereto (collectively referred to herein as the
"Interim Financial Statements") have been delivered by the Sellers to the
-----------------------------
Purchaser. The Financial Statements, the Interim Financial Statements and the
Reference Balance Sheet (i) were prepared in accordance with the books of
account and other financial records of the Company, (ii) present fairly the
consolidated financial condition and results of operations of the Company as of
the dates thereof or for the periods covered thereby, (iii) have been prepared
in accordance with U.S. GAAP applied on a basis consistent with the past
practices of the Company and (iv) include all adjustments (consisting only of
normal recurring accruals) that are necessary for a fair presentation of the
consolidated financial condition of the Company and the results of the
operations of the Company as of the dates thereof or for the periods covered
thereby.
(b) The books of account and other financial records of the Company:
(i) reflect all items of income and expense and all assets and Liabilities
required to be reflected therein in accordance with U.S. GAAP applied on a basis
consistent with the past practices of the Sellers, (ii) are in all material
respects complete and correct, and do not contain or reflect any material
inaccuracies or discrepancies and (iii) have been maintained in accordance with
good business and accounting practices.
SECTION 3.09. Absence of Undisclosed Liabilities. There are no
----------------------------------
Liabilities of the Company, other than Liabilities (i) reflected or reserved
against on the Reference Balance Sheet, (ii) disclosed in Section 3.09 of the
Disclosure Schedule or (iii) incurred since the date of this Agreement in the
ordinary course of business, consistent with past practice, of the Company and
which do not and could not have a Material Adverse Effect. Reserves are
reflected on the Reference Balance Sheet against all Liabilities of the Company
in amounts that have been established on a basis consistent with the past
practices of the Company and in accordance with U.S. GAAP.
SECTION 3.10. Receivables. Except to the extent, if any, reserved for
-----------
on the Reference Balance Sheet, all accounts receivables, whether reflected on
the Reference Balance Sheet or otherwise, have arisen from, the sale or services
to Persons not affiliated with the Sellers or the Company and in the ordinary
course of business consistent with past practice and, except as reserved against
on the Reference Balance Sheet, constitute or will constitute, as the case may
be, only valid, undisputed claims of the Company not subject to valid claims of
setoff or other defenses or counterclaims other than normal cash discounts
accrued in the ordinary course of business consistent with past practice. Each
such account receivable either is (subject to the reserve for bad debts, if any,
reflected on the Reference Balance Sheet) or will be good and have been
collected or are or will be collectible, without resort to litigation or
extraordinary collection activity, within 90 days of the Closing Date.
SECTION 3.11. Inventories. All of the inventories of the Company,
-----------
whether reflected on the Reference Balance Sheet or otherwise, consist of a
quality and quantity usable
13
and saleable in the ordinary and usual course of business, except for items of
obsolete materials and materials of below-standard quality, all of which have
been written off or written down on the Reference Balance Sheet to fair market
value or for which adequate reserves have been provided therein. All
inventories not written off have been priced at the lower of average cost or
market. The quantities of each type of inventory (whether raw materials, work-
in-process or finished goods) are not excessive, but are reasonable and
warranted in the present circumstances of the Company. All work-in-process and
finished goods inventory held by the Company is free of any defect or
deficiency. Section 3.11 of the Disclosure Schedule lists all goods, if any,
held by the Company on consignment or other goods, if any, in the possession of
the Company which goods are not owned by the Company, in each case with a
description of the terms of such consignment and the name, address and telephone
number of the owner of such property. Section 3.11 of the Disclosure Schedule
lists all goods, if any, owned by the Company which goods have been consigned by
the Company to another Person together with a description of terms of such
consignment and the name, address and telephone number of the Person to whom
such property has been cosigned.
SECTION 3.12. Conduct in the Ordinary Course; Absence of Certain
--------------------------------------------------
Changes, Events and Conditions. Since the Reference Balance Sheet Date, except
------------------------------
as disclosed in Section 3.12 of the Disclosure Schedule, the business of the
Company has been conducted in the ordinary course and consistent with past
practice. As amplification and not limitation of the foregoing, except as
disclosed in Section 3.12 of the Disclosure Schedule, since the Reference
Balance Sheet Date, neither the Sellers nor the Company:
(a) permitted or allowed any of the assets of the Company to be
subjected to any Encumbrance, other than Permitted Encumbrances and
Encumbrances that will be released at or prior to the Closing;
(b) conducted the business of the Company outside the ordinary course
consistent with past practice;
(c) amended, terminated, cancelled or compromised any material claims
of the Company or waived any other rights of substantial value to the
Company;
(d) sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed (including,
without limitation, leasehold interests and intangible property);
(e) issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same, of
the Company;
(f) incurred any Indebtedness; or
(g) amended, modified or consented to the termination of any Material
Contract or the Company's rights thereunder.
14
SECTION 3.13. Litigation. Except as set forth in Section 3.13 of the
----------
Disclosure Schedule (which, with respect to each Action disclosed therein, sets
forth the parties, nature of the proceeding, date and method commenced, amount
of damages or other relief sought and, if applicable, paid or granted), there
are no Actions by or against the Company pending before any Governmental
Authority (or, to the best knowledge of the Company after due inquiry,
threatened to be brought by or before any Governmental Authority).
SECTION 3.14. Compliance with Laws. (a) Except as set forth in Section
--------------------
3.14(a) of the Disclosure Schedule, the business of the Company has been
conducted and will continue to be conducted in accordance with all Laws and
Governmental Orders applicable to the Company or any of its properties or assets
and Company is not in violation of any such Law or Governmental Order.
(b) Section 3.14(b) of the Disclosure Schedule sets forth a brief
description of each Governmental Order applicable to the Company or any of its
properties or assets, and no such Governmental Order has or has had a Material
Adverse Effect.
SECTION 3.15. Environmental Matters. Except as disclosed in Section
---------------------
3.15 of the Disclosure Schedule:
(a) The Company has complied with all applicable Environmental Laws
and has obtained all required Environmental Permits and is in compliance
therewith. All past non-compliance with Environmental Laws or Environmental
Permits has been resolved without any pending, on-going or future obligation,
cost or liability.
(b) The Company, nor to the Company's knowledge, any other person or
entity, has released any Hazardous Material into the Environment at any property
formerly owned or operated by the Company.
(c) There are no Environmental Claims pending or, to the Company's
knowledge, threatened against the Company and to the Company's knowledge there
are no circumstances that can reasonably be expected to form the basis of any
such Environmental Claim.
(d) Neither the Execution of this Agreement nor the consummation of
the transactions contemplated herein will require any notice to or consent of
Governmental Authorities or third parties, or any investigation, remediation, or
other action related to Hazardous Material, pursuant to any applicable
Environmental Law or Environmental Permit.
SECTION 3.16. Material Contracts. (a) Section 3.16(a) of the
------------------
Disclosure Schedule lists all of the following contracts and agreements
(including, without limitation, oral and informal arrangements) of the Company
(such contracts and agreements, being "Material Contracts"):
-------------------
(i) each contract, agreement and other arrangement, for the
purchase of goods or for the furnishing of services to the Company;
15
(ii) each contract, agreement and other arrangement, for the sale of
goods or for the furnishing of services by the Company;
(iii) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the Company
is a party and which are not cancellable without penalty or further payment
and without more than 30 days' notice;
(iv) all contracts and agreements relating to Indebtedness of the
Company;
(v) all contracts and agreements that limit or purport to limit the
ability of the Company to compete in any line of business or with any
Person or in any geographic area or during any period of time;
(vi) all contracts and agreements between or among the Company, on
one hand, and any Affiliate of the Sellers, on the other hand;
(vii) all license, agreements and other agreements with respect to
any of the Intellectual Property;
(viii) all secrecy, confidentiality and non-disclosure agreements;
and
(ix) all other contracts and agreements, whether or not made in the
ordinary course of business, which are material to the Company or the
absence of which would have a Material Adverse Effect.
For purposes of this Section 3.16 the term "lease" shall include any and all
-----
leases, subleases, sale/leaseback agreements or similar arrangements.
(b) Except as disclosed in Section 3.16(b) of the Disclosure Schedule,
each Material Contract: (i) is valid and binding on the parties thereto and is
in full force and effect, and (ii) upon consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements, except to the
extent that any consents set forth in Section 3.06 of the Disclosure Schedule
are not obtained, shall continue in full force and effect without penalty or
other adverse consequence. The Company is not in breach of, or default under,
any Material Contract.
(c) Except as disclosed in Section 3.16(c) of the Disclosure
Schedule, no other party to any Material Contract is in breach thereof or
default thereunder.
(d) Except as disclosed in Section 3.16(d) of the Disclosure Schedule,
there is no contract, agreement or other arrangement granting any Person any
preferential right to purchase, other than in the ordinary course of business
consistent with past practice, any of the properties or assets of the Company.
SECTION 3.17. Intellectual Property. (a) The Company (i) owns all
---------------------
right, title and interest in or has the right to use, all Intellectual Property
(other than patents, patent
16
applications and inventions) used in the conduct of its business as presently
conducted and (ii) has the right to use, execute, reproduce, display, perform,
modify, enhance, distribute, prepare derivative works from and sublicense,
without requirement to make royalty or other payments to any other person
(except in the case of Intellectual Property licensed by the Company from a
third party licensor where the terms of such license make provision for
royalties or other payments and salaries and sales commissions paid to employees
and sales agents in the ordinary course of the Company's business consistent
with its past practice), each such item of Intellectual Property. Section
3.17(a) of the Company Disclosure Schedule sets forth a true and complete list
of (i) all copyright applications, copyright registrations, mask works,
trademark applications, trademark registrations, trade names, service ▇▇▇▇
registrations and service ▇▇▇▇ applications, material unregistered marks,
patents and patent applications owned and used in the current conduct of the
Company's business, (ii) all other filings, applications, registrations or other
formal actions taken with respect to any of the foregoing pursuant to federal,
state, local and foreign law or regulations with respect to protections of
Intellectual Property, and (iii) a nonconfidential inventions disclosure of
inventions owned and used in the current conduct of the Company's business. The
Company is not aware of any loss, cancellation, termination or expiration of any
such application, registration or other filings or formal actions, except as set
forth in Section 3.17(a) of the Company Disclosure Schedule that are owned or
controlled by the Company and any of its affiliate entities.
(b) The operation of the business of the Company as currently
conducted or as contemplated to be conducted, the use of the Company's
Intellectual Property in connection therewith and the Company's transmission,
use, linking and other practices related to the operation of their web sites in
connection with its business, the content thereof and the advertisements
contained therein, do not conflict with, infringe, misappropriate or otherwise
violate the Intellectual Property or other proprietary rights, including rights
of privacy, publicity and endorsement, of any third party, and no Actions are
pending or threatened against the Company alleging any of the foregoing. The
Company has not received any written or oral communications alleging that the
Company has violated any rights relating to Intellectual Property of any other
person.
(c) The Company's Intellectual Property include all of the
Intellectual Property used in the ordinary day-to-day conduct of its business,
and there are no other items of Intellectual Property that are material to such
ordinary day-to-day conduct thereof. The Intellectual Property are subsisting,
valid and enforceable, and have not been adjudged invalid or unenforceable in
whole or part.
(d) No Actions have been asserted, are pending, or threatened against
the Company (i) based upon or challenging or seeking to deny or restrict the use
by the Company of any of the its Intellectual Property, or (ii) alleging that
any services provided by, processes used by, or products manufactured or sold by
the Company infringe or misappropriate any Intellectual Property right of any
third party.
(e) To the Company's knowledge, the Company Software is free of all
viruses, worms, trojan horses and other material known contaminants, and does
not contain any
17
bugs, errors, or problems of a material nature that disrupt its operation or
have an adverse impact on the operation of other software programs or operating
systems. No rights in the Company Software have been transferred to any third
party except to the customers to whom the Company has licensed such Company
Software in the ordinary course of business.
(f) The Company has the right to use all software development tools,
library functions, compilers, and other third party software that are material
to its business or that are required to operate or modify the Company Software.
(g) The Company has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of the trade secrets and other
confidential Intellectual Property used in connection with its business. To the
knowledge of Sellers or the Company (i) there has been no misappropriation of
any material trade secrets or other material confidential Intellectual Property
used in connection with the business of the Company by any person, and (ii) no
employee, independent contractor or agent of the Company has misappropriated any
trade secrets of any other person in the course of performance as an employee,
independent contractor or agent; and (iii) no employee, independent contractor
or agent of Company is in default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of invention agreement or
similar agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Intellectual Property.
SECTION 3.18. Real Property. The Company owns no real property.
-------------
SECTION 3.19. Property (a) The Company has good, valid and marketable
--------
title to all the properties and assets that it purports to own (tangible and
intangible) free and clear of all Encumbrances, including all such properties
and assets reflected in the Reference Balance Sheet and all such properties and
assets purchased by the Company since the Reference Balance Sheet Date, which
subsequently acquired properties and assets (other than inventory) are listed in
Schedule 3.19 of the Disclosure Schedule. All properties and assets reflected in
the Reference Balance Sheet have a fair market or realizable value at least
equal to the value thereof as reflected therein. The rights, properties and
other assets presently owned, leased or licensed by the Company include all such
rights, properties and other assets necessary to permit the Company to conduct
its business in all material respects in the same manner as such business has
been conducted prior to the date hereof.
(b) The Seller has the complete and unrestricted power and unqualified
right to sell, assign, transfer, convey and deliver the Shareholders' Loans to
the Purchaser without penalty or other adverse consequences. Following the
consummation of the transactions contemplated by this Agreement and the
execution of the instruments of transfer contemplated by this Agreement, the
Purchaser will own, with good, valid and marketable title, or otherwise acquire
the Shareholders' Loans, free and clear of any Encumbrances and without
incurring any penalty or other adverse consequence.
SECTION 3.20. Employee Benefit Plans. (a) The Company does not
----------------------
sponsor,
18
maintain, or contribute to and has never sponsored, maintained or contributed to
any employee benefit plan, program, arrangement and contract covering any
current or former officers or employees of the Company (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) or the
---------------------
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), whether
-----
written or oral.
(b) The Company is not a party to any (i) employment agreement, (ii)
severance agreement, program or policy, or (iii) plan, program, agreement or
other arrangement which relates to a change in control of the Company or
provides for the acceleration of the time of payment or vesting of any benefits.
(c) The Company does not have any actual or contingent liability under
Title IV of ERISA.
SECTION 3.21. Labor Matters. There are no controversies pending, or,
-------------
to the knowledge of the Company, threatened between the Company and any of its
respective employees; (ii) the Company is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company nor are there any activities or proceedings of any labor
union to organize any such employees; and (iii) there are no strikes, slowdown,
works stoppages or lockouts or, to the knowledge of the Company, threats of any
of the foregoing by, or with respect to, any employees of the Company.
SECTION 3.22. Certain Interests. (a) Except as disclosed in Section
-----------------
3.22(a) of the Disclosure Schedule, no stockholder, officer or director of the
Company and no relative or spouse (or relative of such spouse) who resides with,
or is a dependent of the Sellers or any such stockholder, officer or director:
(i) has any direct or indirect financial interest in any competitor,
supplier or customer of the Company, provided, however, that the ownership
-------- -------
of securities representing no more than one percent of the outstanding
voting power of any competitor, supplier or customer, and which are also
listed on any national securities exchange or traded actively in the
national over-the-counter market, shall not be deemed to be a "financial
interest" so long as the Person owning such securities has no other
connection or relationship with such competitor, supplier or customer;
(ii) owns, directly or indirectly, in whole or in part, or has any
other interest in any tangible or intangible property which the Company
uses or has used or otherwise; or
(iii) has outstanding any Indebtedness to the Company.
(b) Except as disclosed in Section 3.22(b) of the Disclosure Schedule,
the Company has no Liability or any other obligation of any nature whatsoever to
any officer, director or stockholder of the Company or to any relative or spouse
(or relative of such spouse) who resides with, or is a dependent of, any such
officer, director or stockholder.
SECTION 3.23. Taxes. (a) All returns and reports in respect of Taxes
-----
required to
19
be filed with respect to the Company have been timely filed; (b) all Taxes
required to be shown on such returns and reports or otherwise due have been
timely paid; (c) all such returns and reports are true, correct and complete in
all material respects; (d) no adjustment relating to such returns has been
proposed formally or informally by any Tax authority and, to the best knowledge
of Sellers and the Company, no basis exists for any such adjustment; (e) there
are no pending or, to the best knowledge of Sellers and the Company, threatened
actions or proceedings for the assessment or collection of Taxes against the
Company; (f) no consent under Section 341(f) of the Code has been filed with
respect to the Company; (g) there are no tax liens on any assets of the Company;
(h) neither Seller nor any affiliate is a party to any agreement or arrangement
that would result, separately or in the aggregate, in the actual or deemed
payment by the Company of any "excess parachute payments" within the meaning of
section 280G of the Code (without regard to Section 280G(b)(4) of the Code); (i)
the Company has not been includible in any consolidated, combined or unitary
return for any taxable period for which the statute of limitations has not
expired; (j) the Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code; (k) the
Company is not doing business in or engaged in a trade or business in any
jurisdiction in which it has not filed all required income or ▇▇▇▇▇▇▇▇ tax
return; (l) the Company is not subject to any accumulated earnings tax penalty
or personal holding company tax; and (m) no power of attorney that is currently
in force has been granted with respect to any matter relating to Taxes that
could affect the Company.
SECTION 3.24. Accounts; Lockboxes; Safe Deposit Boxes; Powers of
--------------------------------------------------
Attorney. Section 3.24 of the Disclosure Schedule is a true and complete list
--------
of (a) the names of each bank, savings and loan association, securities or
commodities broker or other financial institution in which the Company has an
account, including cash contribution accounts, and the names of all persons
authorized to draw thereon or have access thereto, and (b) the location of all
lockboxes and safe deposit boxes of the Company and the names of all Persons
authorized to draw thereon or have access thereto. At the time of the Closing,
without the prior written consent of the Purchaser, the Company shall not have
any such account, lockbox or safe deposit box other than those listed in Section
3.24 of the Disclosure Schedule, nor shall any additional Person have been
authorized, from the date of this Agreement, to draw thereon or have access
thereto or to hold any such power of attorney relating to the Company. Except
as disclosed in Section 3.24 of the Disclosure Schedule, the Sellers have not
commingled monies or accounts of the Company with other monies or accounts of
the Sellers or relating to its other businesses nor have the Sellers transferred
monies or accounts of the Company other than to an account of the Company. At
the time of the Closing, all monies and accounts of the Company shall be held
by, and be accessible only to, the Company.
SECTION 3.25. Full Disclosure. (a) The Sellers are not aware of any
---------------
facts pertaining to the Sellers or, the Company which affect adversely the
Company or which are likely in the future to affect adversely the Company and
which have not been disclosed in this Agreement, the Disclosure Schedule or the
Financial Statements or otherwise disclosed to the Purchaser by the Sellers in
writing.
(b) No representation or warranty of the Sellers in this Agreement,
nor any
20
statement or certificate furnished or to be furnished to the Purchaser pursuant
to this Agreement, or in connection with the transactions contemplated by this
Agreement, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading; nor are there any facts which should
reasonably be known to the Purchaser relating to the Shares or the Company not
disclosed herein, which might be reasonably expected to diminish the
appreciation of the Purchaser of the worth of the Company or which might be
reasonably expected to deter the Purchaser from completing the transactions
described in this Agreement.
SECTION 3.26. Brokers. Except for ▇▇▇ ▇▇▇▇▇, no broker, finder or
-------
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement or
the Ancillary Agreements based upon arrangements made by or on behalf of the
Sellers. The Purchaser is solely responsible for the finder's fee of 80,000
Purchaser Common Shares ( the "Finder's Fee") due to ▇▇▇ ▇▇▇▇▇.
---------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
As an inducement to the Sellers to enter into this Agreement, the
Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
-------------------------------------------
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the Province of Ontario and has all necessary corporate power
and authority to enter into this Agreement and the Ancillary Agreements, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Agreements by the Purchaser, the performance by the
Purchaser of its obligations hereunder and thereunder and the consummation by
the Purchaser of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Purchaser. This Agreement
has been, and upon their execution the Ancillary Agreements will be, duly
executed and delivered by the Purchaser, and (assuming due authorization,
execution and delivery by the Sellers) this Agreement constitutes, and upon
their execution the Ancillary Agreements will constitute, legal, valid and
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms.
SECTION 4.02. No Conflict. Except as may result from any facts or
-----------
circumstances relating solely to the Sellers, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by the Purchaser, do
not and will not (a) violate, conflict with or result in the breach of any
provision of the Certificate of Incorporation or By-laws of the Purchaser, (b)
conflict with or violate any Law or Governmental Order applicable to the
Purchaser or (c) conflict with, or result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give to others any rights
of termination, amendment, acceleration,
21
suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of the Purchaser pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which the
Purchaser is a party or by which any of such assets or properties is bound or
affected, which would have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by this Agreement or by
the Ancillary Agreements.
SECTION 4.03. Governmental Consents and Approvals. Except for approval
-----------------------------------
by The Toronto Stock Exchange and the Winnipeg Stock Exchange, the execution,
delivery and performance of this Agreement and each Ancillary Agreement to which
it is a party by the Purchaser do not and will not require any consent,
approval, authorization or other order of, action by, filing with, or
notification to, any Governmental Authority.
SECTION 4.04. Investment Purpose. The Purchaser is acquiring the
------------------
Shares solely for the purpose of investment and not with a view to, or for offer
or sale in connection with, any distribution thereof.
SECTION 4.05. Purchaser Common Shares. The Purchaser Common Shares
-----------------------
comprising the Common Share Purchase Price have been duly authorized, and when
issued and delivered to the Sellers as consideration for the Shares in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable.
SECTION 4.06. Brokers. Except for ▇▇▇ ▇▇▇▇▇, no broker, finder or
-------
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement or
the Ancillary Agreements based upon arrangements made by or on behalf of the
Purchaser. The Purchaser is solely responsible for the Finder's Fee due to ▇▇▇
▇▇▇▇▇. If on the 91st day after the Closing Date, the closing sale price of the
Purchaser Common Shares on The Toronto Stock Exchange is less than U.S.$2.50 per
Purchase Common Share (converted based on the noon buying rate on such date in
the City of New York for cable transfers in Canadian dollars as certified for
customs purposes by the Federal Reserve Bank of New York), then ▇▇▇ ▇▇▇▇▇ shall
be entitled to an additional amount equal to the product of (a) 80,000 Purchaser
Common Shares and (b) the difference of U.S.$2.50 minus the closing price of the
Purchaser Common Shares on The Toronto Stock Exchange (converted based on the
noon buying rate on such date in the City of New York for cable transfers in
Canadian dollars as certified for customs purposes by the Federal Reserve Bank
of New York) on such date. The Purchaser shall pay such amount to ▇▇▇ ▇▇▇▇▇ at
the Purchaser's option in cash or in Purchaser Common Shares, valued at the
closing price on The Toronto Stock Exchange (converted based on the noon buying
rate on such date in the City of New York for cable transfers in Canadian
dollars as certified for customs purposes by the Federal Reserve Bank of New
York) on such date.
ARTICLE V
ADDITIONAL AGREEMENTS
22
SECTION 5.01. Conduct of Business Prior to the Closing. (a) Each of
----------------------------------------
the Sellers covenants and agrees that, except as described in Section 5.01(a) of
the Disclosure Schedule, between the date hereof and the time of the Closing,
the Company shall not conduct its business other than in the ordinary course and
consistent with the Company's prior practice.
(b) Except as described in Section 5.01(b) of the Disclosure Schedule,
the Sellers covenant and agree that, prior to the Closing, without the prior
written consent of the Purchaser, neither the Sellers nor the Company will do
any of the things enumerated in the second sentence of Section 3.12 (including,
without limitation, clauses (a) through (g) thereof).
SECTION 5.02. Access to Information. (a) From the date hereof until
---------------------
the Closing, upon reasonable notice, the Sellers shall cause the Company and
each of the Company's officers, directors, employees, agents, representatives,
accountants and counsel to: (i) afford the officers, employees and authorized
agents, accountants, counsel, financing sources and representatives of the
Purchaser reasonable access, during normal business hours, to the offices,
properties, plants, other facilities, books and records of the Company and to
those officers, directors, employees, agents, accountants and counsel of the
Company who have any knowledge relating to the Company and (ii) furnish to the
officers, employees and authorized agents, accountants, counsel, financing
sources and representatives of the Purchaser such additional financial and
operating data and other information regarding the assets, properties and
goodwill of the Company (or legible copies thereof) as the Purchaser may from
time to time reasonably request.
(b) In order to facilitate the resolution of any claims made against
or incurred by the Sellers prior to the Closing, for a period of seven years
after the Closing, the Purchaser shall (i) retain the books and records of the
Company relating to periods prior to the Closing in a manner reasonably
consistent with the prior practice of the Company and (ii) upon reasonable
notice, afford the officers, employees and authorized agents and representatives
of the Sellers reasonable access (including the right to make, at the Sellers's
expense, photocopies), during normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser or the Company after the Closing or for any
other reasonable purpose, for a period of seven years following the Closing, the
Sellers shall (i) retain the books and records of the Sellers which relate to
the Company and its operations for periods prior to the Closing and which shall
not otherwise have been delivered to the Purchaser and (ii) upon reasonable
notice, afford the officers, employees and authorized agents and representatives
of the Purchaser or the Company reasonable access (including the right to make
photocopies, at the expense of the Purchaser), during normal business hours, to
such books and records.
SECTION 5.03. Confidentiality. Each of the Sellers agrees to, and
---------------
shall cause its agents, representatives, Affiliates, employees, officers and
directors to: (a) treat and hold as confidential (and not disclose or provide
access to any Person to) all information relating to trade secrets, processes,
patent and trademark applications, product development, price, customer and
supplier lists, pricing and marketing plans, policies and strategies, details of
client and consultant
23
contracts, operations methods, product development techniques, business
acquisition plans, new personnel acquisition plans and all other confidential
information with respect to the Company, (b) in the event that the Sellers or
any such agent, representative, Affiliate, employee, officer or director becomes
legally compelled to disclose any such information, provide the Purchaser with
prompt written notice of such requirement so that the Purchaser or the Company
may seek a protective order or other remedy or waive compliance with this
Section 5.03, (c) in the event that such protective order or other remedy is not
obtained, or the Purchaser waives compliance with this Section 5.03, furnish
only that portion of such confidential information which is legally required to
be provided and exercise its best efforts to obtain assurances that confidential
treatment will be accorded such information, and (d) promptly furnish (prior to,
at, or as soon as practicable following, the Closing) to the Purchaser any and
all copies (in whatever form or medium) of all such confidential information
then in the possession of the Sellers or any of its agents, representatives,
Affiliates, employees, officers and directors and, except as otherwise required
by Section 5.02(c), destroy any and all additional copies then in the possession
of the Sellers or any of its agents, representatives, Affiliates, employees,
officers and directors of such information and of any analyses, compilations,
studies or other documents prepared, in whole or in part, on the basis thereof;
provided, however, that this sentence shall not apply to any information that,
-------- -------
at the time of disclosure, is available publicly and was not disclosed in breach
of this Agreement by the Sellers, its agents, representatives, Affiliates,
employees, officers or directors; provided further that, with respect to
-------- -------
Intellectual Property, specific information shall not be deemed to be within the
foregoing exception merely because it is embraced in general disclosures in the
public domain. In addition, with respect to Intellectual Property, any
combination of features shall not be deemed to be within the foregoing exception
merely because the individual features are in the public domain unless the
combination itself and its principle of operation are in the public domain. The
Sellers agrees and acknowledges that remedies at law for any breach of its
obligations under this Section 5.03 are inadequate and that in addition thereto
the Purchaser shall be entitled to seek equitable relief, including injunction
and specific performance, in the event of any such breach.
SECTION 5.04. Notice of Developments. Prior to the Closing, the
----------------------
Sellers shall promptly notify the Purchaser in writing of (a) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any breach of a representation or warranty or
covenant of the Sellers in this Agreement or which could have the effect of
making any representation or warranty of the Sellers in this Agreement untrue or
incorrect in any respect and (b) all other material developments affecting the
assets, Liabilities, business, financial condition, operations, results of
operations, customer or supplier relations, employee relations, projections or
prospects of the Company.
SECTION 5.05. No Solicitation or Negotiation. Each Seller agrees that
------------------------------
between the date of this Agreement and the earlier of (a) the Closing and (b)
the termination of this Agreement, none of the Sellers, the Company, or any of
their respective Affiliates, officers, directors, representatives or agents will
(i) solicit, initiate, consider, encourage or accept any other proposals or
offers from any Person (A) relating to any acquisition or purchase of all or any
portion of the capital stock of the Company or assets of the Company (other than
Inventory to be sold in the ordinary course of business consistent with past
practice), (B) to enter into any
24
business combination with the Sellers or the Company or (C) to enter into any
other extraordinary business transaction involving or otherwise relating to the
Sellers or the Company or (ii) participate in any discussions, conversations,
negotiations and other communications regarding, or furnish to any other Person
any information with respect to, or otherwise cooperate in any way, assist or
participate in, facilitate or encourage any effort or attempt by any other
Person to seek to do any of the foregoing. The Sellers immediately shall cease
and cause to be terminated all existing discussions, conversations, negotiations
and other communications with any Persons conducted heretofore with respect to
any of the foregoing. The Sellers shall notify the Purchaser promptly if any
such proposal or offer, or any inquiry or other contact with any Person with
respect thereto, is made and shall, in any such notice to the Purchaser,
indicate in reasonable detail the identity of the Person making such proposal,
offer, inquiry or contact and the terms and conditions of such proposal, offer,
inquiry or other contact. The Sellers agrees not to, and to cause the Company,
not to, without the prior written consent of the Purchaser, release any Person
from, or waive any provision of, any confidentiality or standstill agreement to
which the Sellers, or the Company is a party.
SECTION 5.06. Further Action. Each of the parties hereto shall use all
--------------
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01. Conditions to Obligations of the Sellers. The
----------------------------------------
obligations of each Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The representations and
-----------------------------------------
warranties of the Purchaser contained in this Agreement shall have been true and
correct when made and shall be true and correct in all material respects as of
the Closing, with the same force and effect as if made as of the Closing Date,
other than such representations and warranties as are made as of another date,
the covenants and agreements contained in this Agreement to be complied with by
the Purchaser on or before the Closing Date shall have been complied with in all
material respects;
(b) No Proceeding or Litigation. No Action shall have been commenced
---------------------------
by or before any Governmental Authority against any of the Sellers or the
Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the reasonable, good
faith determination of the Sellers, is likely to render it impossible or
unlawful to consummate such transactions; provided, however, that the
-------- -------
provisions of this Section 6.01(b) shall not apply if the Sellers has
directly or indirectly solicited or encouraged any such Action;
25
(c) Resolutions. The Sellers shall have received a true and complete
-----------
copy, certified by the Secretary or an Assistant Secretary of the
Purchaser, of the resolutions duly and validly adopted by the Board of
Directors of the Purchaser evidencing its authorization of the execution
and delivery of this Agreement and the Ancillary Agreements to which it is
a party and the consummation of the transactions contemplated hereby and
thereby;
(d) Incumbency Certificate. The Sellers shall have received a
----------------------
certificate of the Secretary or an Assistant Secretary of the Purchaser
certifying the names and signatures of the officers of the Purchaser
authorized to sign this Agreement and the Ancillary Agreements and the
other documents to be delivered hereunder and thereunder;
(e) Ancillary Agreements. The Purchaser shall have executed and
--------------------
delivered to the Sellers each of the Ancillary Agreements to which it is a
party.
SECTION 6.02. Conditions to Obligations of the Purchaser. The
------------------------------------------
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The representations and
-----------------------------------------
warranties of the Sellers contained in this Agreement shall have been true and
correct when made and shall be true and correct as of the Closing Date with the
same force and effect as if made as of the Closing Date, other than such
representations and warranties as are made as of another date, the covenants and
agreements contained in this Agreement to be complied with by the Sellers on or
before the Closing Date shall have been complied with;
(b) No Proceeding or Litigation. No Action shall have been commenced
---------------------------
or threatened by or before any Governmental Authority against any of the
Sellers or the Purchaser, seeking to restrain or materially and adversely
alter the transactions contemplated hereby which the Purchaser believes, in
its sole and absolute discretion, is likely to render it impossible or
unlawful to consummate the transactions contemplated by this Agreement or
which could have a Material Adverse Effect or otherwise render inadvisable,
in the sole and absolute discretion of the Purchaser, the consummation of
the transactions contemplated by this Agreement; provided, however, that
-------- -------
the provisions of this Section shall not apply if the Purchaser has
solicited or encouraged any such Action;
(c) Consents and Approvals. The Purchaser and the Sellers shall have
----------------------
received, each in form and substance satisfactory to the Purchaser in its
sole and absolute discretion, all authorizations, consents, orders and
approvals of all Governmental Authorities and officials and all third party
consents and estoppel certificates which the Purchaser in its sole and
absolute discretion deems necessary or desirable for the consummation of
the transactions contemplated by this Agreement and the Ancillary
Agreements, including, without limitation, all third party consents
required under any Material Contracts;
26
(d) Good Standing; Qualification to Do Business. The Purchaser shall
-------------------------------------------
have received good standing certificates for the Company from the Secretary
of State of the State of Texas and from the secretary of state in each
other jurisdiction in which the properties owned or leased by any of the
Company, or the operation of its business in such jurisdiction, requires
the Company to qualify to do business as a foreign corporation, in each
case dated as of a date not earlier than five Business Days prior to the
Closing Date and accompanied by bring-down telegrams dated the Closing
Date;
(e) No Material Adverse Effect. No event or events shall have
--------------------------
occurred, or be reasonably likely to occur, which, individually or in the
aggregate, have, or could have, a Material Adverse Effect; and
(f) Ancillary Agreements. The Sellers shall have executed and
--------------------
delivered to the Purchaser each of the Ancillary Agreements to which it (or
its spouse) is a party.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Sellers contained in this Agreement and
the Ancillary Agreements, and all statements contained in the Acquisition
Documents, shall survive the Closing until the second anniversary of the Closing
Date, except for Section 3.23, which shall survive until the expiration of the
applicable tax statute of limitations; provided, however, that insofar as any
-------- -------
claim is made by the Purchaser for the breach of any representation or warranty
of the Sellers contained herein, which claim arises out of allegations of
personal injury or property damage suffered by any third party on or prior to
the Closing Date or attributable to products or Inventory sold or shipped, or
activities or omissions that occur, on or prior to the Closing Date, such
representations and warranties shall, for purposes of such claim by the
Purchaser, survive until thirty calendar days after the expiration of the
applicable statute of limitations governing such claims. Neither the period of
survival nor the liability of the Sellers with respect to the Sellers's
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of the Purchaser. If written notice of a claim has been
given prior to the expiration of the applicable representations and warranties
by the Purchaser to the Sellers, then the relevant representations and
warranties shall survive as to such claim, until such claim has been finally
resolved.
SECTION 7.02. Indemnification by the Sellers. (a) Subject to the time
------------------------------
limits set forth in Section 7.01, the Purchaser and its Affiliates, officers,
directors, employees, agents, successors and assigns (each an "Indemnified
-----------
Party") shall be indemnified and held harmless by each Seller for and against
-----
any and all Liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from:
----
27
(i) the breach of any representation or warranty made by each Seller
contained in the Acquisition Documents; or
(ii) the breach of any covenant or agreement by each Seller contained
in the Acquisition Documents; or
(iii) Liabilities of the Company not reflected on the Reference
Balance Sheet, whether arising before or after the Closing Date, arising
from or relating to the ownership or actions or inactions of the Sellers or
the Company prior to the Closing; or
(iv) any and all Losses suffered or incurred by the Purchaser or the
Company by reason of or in connection with any claim or cause of action of
any third party to the extent arising out of any action, inaction, event,
condition, liability or obligation of each Seller occurring or existing
prior to the Closing; or
(v) any and all Taxes imposed upon the Company relating to the
operation of the Company prior to the Closing Date.
To the extent that the Sellers's undertakings set forth in this Section 7.02 may
be unenforceable, the Sellers shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Losses incurred by the Purchaser, the Company.
(b) An Indemnified Party shall give each Seller notice of any matter
which an Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, within 60 days of such
determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of each Seller under this Article VII
with respect to Losses arising from claims of any third party which are subject
to the indemnification provided for in this Article VII ("Third Party Claims")
------------------
shall be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give each Seller notice of such Third Party
Claim within 30 days of the receipt by the Indemnified Party of such notice;
provided, however, that the failure to provide such notice shall not release any
-------- -------
Seller from any of its obligations under this Article VII except to the extent
that such Seller is materially prejudiced by such failure and shall not relieve
any Seller from any other obligation or Liability that it may have to any
Indemnified Party otherwise than under this Article VII. If a Seller
acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then
the Sellers shall be entitled to assume and control the defense of such Third
Party Claim at its expense and through counsel of its choice if it gives notice
of its intention to do so to the Indemnified Party within five days of the
receipt of such notice from the Indemnified Party; provided, however, that if
-------- -------
there exists or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the judgment of the Indemnified Party in its sole and
absolute discretion, for the same counsel to represent both the Indemnified
Party and
28
the Sellers, then the Indemnified Party shall be entitled to retain its own
counsel, in each jurisdiction for which the Indemnified Party determines counsel
is required, at the expense of the Sellers. In the event that the Sellers
exercise the right to undertake any such defense against any such Third Party
Claim as provided above, the Indemnified Party shall cooperate with the Sellers
in such defense and make available to the Sellers, at the Sellers' expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Sellers. Similarly, in the event the Indemnified
Party is, directly or indirectly, conducting the defense against any such Third
Party Claim, the Sellers shall cooperate with the Indemnified Party in such
defense and make available to the Indemnified Party, at the Sellers' expense,
all such witnesses, records, materials and information in the Sellers'
possession or under the Sellers' control relating thereto as is reasonably
required by the Indemnified Party. No such Third Party Claim may be settled by
the Sellers without the prior written consent of the Indemnified Party.
SECTION 7.03. Limits on Indemnification. Notwithstanding anything to
-------------------------
the contrary contained in this Agreement, the maximum amount of indemnifiable
Losses which may be recovered from a Seller arising out of or resulting from the
causes enumerated in Section 7.02 shall be an amount equal to the Purchase Price
received by such Seller.
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any
-----------
time prior to the Closing:
(a) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) an event or condition occurs that has
resulted in or that may be expected to result in a Material Adverse Effect,
(ii) any representation or warranty of the Sellers contained in this
Agreement shall not have been true and correct when made, (iii) the Sellers
shall not have complied with any covenant or agreement to be complied with
by it and contained in this Agreement or (iv) the Company makes a general
assignment for the benefit of creditors, or any proceeding shall be
instituted by or against the Company seeking to adjudicate any of them a
bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition
of its debts under any Law relating to bankruptcy, insolvency or
reorganization
(b) by either the Purchaser or the holders of a majority of the Shares
in the event that any Governmental Authority shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable
(c) by the mutual written consent of the holders of a majority of the
Shares and the Purchaser.
29
SECTION 8.02. Effect of Termination. In the event of termination of
---------------------
this Agreement as provided in Section 8.01, this Agreement shall forthwith
become void and there shall be no liability on the part of either party hereto
except (i) as set forth in Sections 5.03, 8.02(b) and 9.01 and (ii) that nothing
herein shall relieve either party from liability for any each of this Agreement.
30
SECTION 8.03. Waiver. The parties to this Agreement may (a) extend the
------
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Expenses. Except as otherwise specified in this
--------
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 9.02. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
9.02):
(a) if to the Sellers:
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (972-575-1049)
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇. Jr.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attention:
31
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attention:
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attention:
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy:
Attention:
with a copy to:
Gardere & ▇▇▇▇▇ L.L.P.
8000 Thanksgiving Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
b) if to the Purchaser:
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Ltd.
▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
32
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
SECTION 9.03. Public Announcements. Except as required by law, no
--------------------
party to this Agreement shall make, or cause to be made, any press release or
public announcement in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without the
prior written consent of the other party, and the parties shall cooperate as to
the timing and contents of any such press release or public announcement.
SECTION 9.04. Headings. The descriptive headings contained in this
--------
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.05. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 9.06. Entire Agreement. This Agreement and the Ancillary
----------------
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between the Sellers and the Purchaser with
respect to the subject matter hereof and thereof.
SECTION 9.07. Assignment. This Agreement may not be assigned by
----------
operation of law or otherwise without the express written consent of the Sellers
and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Sellers or the Purchaser); provided, however, that the
-------- -------
Purchaser may assign this Agreement to an Affiliate of the Purchaser without the
consent of the Sellers.
SECTION 9.08. No Third Party Beneficiaries. Except for the provisions
----------------------------
of Article IX relating to Indemnified Parties, this Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person, including, without limitation, any union or any employee
or former employee of the Sellers, any legal or equitable right, benefit or
remedy of any nature whatsoever, including, without limitation, any rights of
employment for
33
any specified period, under or by reason of this Agreement.
SECTION 9.09. Amendment. This Agreement may not be amended or modified
---------
except (a) by an instrument in writing signed by, or on behalf of all of, the
Sellers and the Purchaser or (b) by a waiver in accordance with Section 8.03.
SECTION 9.10. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the Province of Ontario and the
federal laws of Canada applicable therein. This Agreement shall in all respects
be treated as an Ontario contract and the parties do hereby agree to attorn to
the exclusive jurisdiction of the courts of the Province of Ontario.
SECTION 9.11. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.12. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity without the necessity of demonstration the inadequacy
of monetary damages.
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇.▇▇▇, LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: CEO
Exhibit 2.02
Name Cash Shares
---- ---- ------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. 804,378 1,200,219
▇▇▇▇▇▇▇ ▇▇▇▇▇ 693,378 1,200,219
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 308,988 511,638
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 49,831 85,273
▇▇▇▇ ▇. ▇▇▇▇ 24,916 42,636
▇▇▇ ▇▇▇▇▇ 93,509 160,015
Grand Total 1,975,000 3,200,000
Exhibit A
SPOUSAL CONSENT
The undersigned represents that the undersigned is the spouse of
--------------------------------------------------------
name of spouse
and that the undersigned is familiar with the terms of the Stock Purchase
Agreement attached hereto. The undersigned hereby agrees that the interest
of the undersigned's spouse in all property which is the subject of such
Agreement shall be irrevocably bound by the terms of such Agreement and by
any amendment, modification, waiver or termination signed by the
undersigned's spouse. The undersigned further agrees that the
undersigned's community property interest in all property which is the
subject of such Agreement shall be irrevocably bound by the terms of such
Agreement, and that such Agreement shall be binding on the executors,
administrators, heirs and assigns of the undersigned. The undersigned
further authorizes the undersigned's spouse to amend, modify or terminate
such Agreement, or waive any rights thereunder, and that each such
amendment, modification, waiver or termination signed by the undersigned's
spouse shall be binding on the community property interest of undersigned
in all property which is the subject of such Agreement and on the
executors, administrators, heirs and assigns of the undersigned, each as
fully as if the undersigned had signed such amendment, modification, waiver
or termination.
Dated:
Signed: _____________________________