\
EXHIBIT 2.4
--------------------
AMENDED AND RESTATED
SHARE PURCHASE AGREEMENT
--------------------
Among
3087769 NOVA SCOTIA COMPANY
and
COMPUWARE CORPORATION
and
CHANGEPOINT CORPORATION
and
EACH OF THE SELLERS
Dated as of April 27, 2004
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS............................................. 1
SECTION 1.02. DEFINITIONS....................................................... 7
SECTION 1.03. SCHEDULES......................................................... 9
SECTION 1.04. KNOWLEDGE......................................................... 10
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE OF THE SHARES................................... 10
SECTION 2.02. PURCHASE PRICE.................................................... 10
SECTION 2.03. CLOSING........................................................... 10
SECTION 2.04. CLOSING DELIVERIES BY EACH OF THE SELLERS......................... 10
SECTION 2.05. CLOSING DELIVERIES BY PARENT AND THE PURCHASER.................... 11
SECTION 2.06. ESCROW............................................................ 11
SECTION 2.07. TRANSFER AND DISBURSEMENT AGENT................................... 11
SECTION 2.08. COMPANY OPTIONS................................................... 12
SECTION 2.09. ARTEMIS ADJUSTMENT................................................ 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
SECTION 3.01. ORGANIZATION AND AUTHORITY........................................ 13
SECTION 3.02. NO CONFLICT....................................................... 13
SECTION 3.03. OWNERSHIP AND POSSESSION OF SHARES................................ 14
SECTION 3.04. GOOD TITLE CONVEYED............................................... 14
SECTION 3.05. COMPANY SHAREHOLDERS AGREEMENT.................................... 14
SECTION 3.06. LITIGATION........................................................ 14
SECTION 3.07. COMPLIANCE WITH LAWS.............................................. 14
SECTION 3.08. BROKERS........................................................... 15
SECTION 3.09. FULL DISCLOSURE................................................... 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
i
SECTION 4.01. ORGANIZATION AND QUALIFICATION.................................... 15
SECTION 4.02. SUBSIDIARIES...................................................... 15
SECTION 4.03. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS............. 16
SECTION 4.04. CAPITALIZATION.................................................... 17
SECTION 4.05. FINANCIAL STATEMENTS.............................................. 18
SECTION 4.06. ABSENCE OF CERTAIN CHANGES OR EVENTS.............................. 18
SECTION 4.07. ASSETS; PROPERTIES................................................ 20
SECTION 4.08. PERMITS; COMPLIANCE............................................... 21
SECTION 4.09. CONTRACTS AND COMMITMENTS......................................... 21
SECTION 4.10. INTELLECTUAL PROPERTY............................................. 23
SECTION 4.11. ABSENCE OF LITIGATION............................................. 25
SECTION 4.12. CUSTOMERS......................................................... 25
SECTION 4.13. EMPLOYEE BENEFIT PLANS............................................ 25
SECTION 4.14. LABOUR............................................................ 28
SECTION 4.15. INSURANCE......................................................... 30
SECTION 4.16. TAXES............................................................. 30
SECTION 4.17. ENVIRONMENTAL MATTERS............................................. 32
SECTION 4.18. RELATED PARTY TRANSACTIONS........................................ 32
SECTION 4.19. RECEIVABLES....................................................... 33
SECTION 4.20. PRODUCT LIABILITY................................................. 33
SECTION 4.21. BROKERS........................................................... 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
SECTION 5.01. ORGANIZATION AND AUTHORITY........................................ 33
SECTION 5.02. NO CONFLICT....................................................... 34
SECTION 5.03. GOVERNMENTAL CONSENTS AND APPROVALS............................... 34
SECTION 5.04. INVESTMENT PURPOSE................................................ 34
SECTION 5.05. FINANCING......................................................... 34
SECTION 5.06. LITIGATION........................................................ 34
SECTION 5.07. BROKERS........................................................... 35
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. CONDUCT OF BUSINESS PRIOR TO THE CLOSING.......................... 35
SECTION 6.02. ACCESS TO INFORMATION............................................. 37
SECTION 6.03. CONFIDENTIALITY................................................... 37
SECTION 6.04. REGULATORY AND OTHER AUTHORIZATIONS; NOTICES AND CONSENTS......... 38
SECTION 6.05. NOTICE OF DEVELOPMENTS............................................ 39
SECTION 6.06. NO SOLICITATION OR NEGOTIATION.................................... 39
SECTION 6.07. VOTING............................................................ 40
SECTION 6.08. NO DISPOSITION OR ENCUMBRANCE OF THE SHARES BY THE SELLERS........ 40
ii
SECTION 6.09. COMPANY BOARD REPRESENTATION...................................... 40
SECTION 6.10. ADDITIONAL PARTIES................................................ 41
SECTION 6.11. OBLIGATIONS OF THE PURCHASER...................................... 41
SECTION 6.12. SECURITIES OF THE PARENT.......................................... 41
SECTION 6.13. NON-COMPETITION................................................... 41
SECTION 6.14. SECTION 116 CERTIFICATES.......................................... 41
SECTION 6.15. CONVERSION OF CLASS A SHARES...................................... 42
SECTION 6.16. PRE-CLOSING TRANSACTION........................................... 43
SECTION 6.17. FURTHER ACTION.................................................... 43
SECTION 6.18. DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE.............. 43
SECTION 6.19. DISCLOSURE SCHEDULES.............................................. 44
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF EACH OF THE SELLERS.................. 44
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF PARENT AND THE PURCHASER............. 44
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. SURVIVAL.......................................................... 46
SECTION 8.02. INDEMNIFICATION BY THE SELLERS.................................... 46
SECTION 8.03. INDEMNIFICATION PROCEDURES........................................ 48
SECTION 8.04. DISTRIBUTIONS FROM THE INDEMNITY ESCROW FUND...................... 49
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION....................................................... 49
SECTION 9.02. EFFECT OF TERMINATION............................................. 50
SECTION 9.03. AMENDMENT......................................................... 50
SECTION 9.04. WAIVER............................................................ 50
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. EXPENSES......................................................... 50
SECTION 10.02. NOTICES.......................................................... 50
SECTION 10.03. PUBLIC ANNOUNCEMENTS............................................. 52
SECTION 10.04. SEVERABILITY..................................................... 52
SECTION 10.05. ENTIRE AGREEMENT................................................. 52
SECTION 10.06. ASSIGNMENT....................................................... 52
SECTION 10.07. NO THIRD PARTY BENEFICIARIES..................................... 53
iii
SECTION 10.08. GOVERNING LAW.................................................... 53
SECTION 10.09. WAIVER OF JURY TRIAL............................................. 53
SECTION 10.10. SELLERS' REPRESENTATIVE.......................................... 53
SECTION 10.11. HEADINGS......................................................... 54
SECTION 10.12. COUNTERPARTS..................................................... 54
SCHEDULES
Schedule A - Name of Sellers *
Schedule B - Issued Capital *
Schedule 2.02 - Allocation of the Aggregate Purchase Price *
Schedule 2.06 - Form of Escrow Agreement *
Schedule 2.08 - Form of Non-Competition Agreement *
Disclosure Schedule *
* - The Company will furnish supplementally a copy of any omitted schedule to
the Commission upon request.
iv
SHARE PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SHARE PURCHASE AGREEMENT (the "AGREEMENT"), dated as
of April 27, 2004
AMONG 3087769 NOVA SCOTIA COMPANY, an unlimited liability
corporation incorporated under the laws of Nova Scotia (the
"PURCHASER")
AND COMPUWARE CORPORATION, a corporation incorporated under the
laws of Michigan (the "PARENT")
AND CHANGEPOINT CORPORATION, a corporation incorporated under the
laws of Ontario (the "COMPANY")
AND EACH OF THE SELLERS (as defined herein).
WHEREAS, each Seller is (a) the record holder and beneficial owner of the number
of (i) Common Shares without nominal or par value (each, a "COMMON SHARE") of
the Company, (ii) Class A Preferred Shares without nominal or par value (each, a
"CLASS A SHARE"), and (iii) Class B Preferred Shares without nominal or par
value (each, a "CLASS B SHARE" and, together with the Class A Shares and Common
Shares the "SHARES") of the Company, all as set forth next to such Seller's name
on SCHEDULE A, to this Agreement; and
WHEREAS, the Sellers wish to sell, or cause to be sold, to the Purchaser, and
the Purchaser wishes to purchase from the Sellers, all the equity interests in
the Company upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual agreements and
covenants hereinafter set forth, each of the Sellers, the Company, the Parent
and the Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. For purposes of this Agreement:
"ACTION" means any inquiry, investigation, claim, proceeding, action, suit or
arbitration by or before any Governmental Authority.
"ACQUISITION EXPENSES" means, collectively, the fees and expenses of the Company
or any Company Subsidiary incurred in connection with the structuring,
negotiation, preparation, execution and performance of this Agreement and the
Escrow Agreement, including but not limited to the premium with respect to the
directors and officers insurance rider referenced in Section 6.18.
1
"AFFILIATE" means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"AGGREGATE PURCHASE PRICE" means US$100,000,000 in cash less the Acquisition
Expenses.
"ARTEMIS ESCROW AMOUNT" means the amount referenced in SCHEDULE 1.01.
"ARTEMIS ESCROW FUND" means the Artemis Escrow Amount deposited with the Escrow
Agent, as such sum may be increased or decreased as provided in the Escrow
Agreement.
"ARTEMIS SETTLEMENT" means the acquisition for cash consideration by the Parent
or any of its Affiliates of the interests in Changepoint France Sarl not
currently owned by the Company, free and clear of any encumbrances.
"ARTEMIS SETTLEMENT AMOUNT" means the amount equal to the sum of (i) the cash
consideration payable to Artemis to effect the Artemis Settlement, and (ii) any
other reasonable costs and expenses incurred (including external legal counsel
or consultants fees and expenses) suffered or incurred by the Parent or any of
its Affiliates in relation to or arising out of, or with respect to, the Artemis
Settlement.
"ARTEMIS SETTLEMENT DATE" means the date upon which the Artemis Settlement
occurs.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by Law to be closed in Nova Scotia,
Ontario or Michigan.
"CANADIAN GAAP" means Canada generally accepted accounting principles and
practices in effect as of the date of the applicable financial statements,
applied consistently throughout the periods involved.
"CRA" means the Canada Revenue Agency.
"CLAIMS" means any and all judicial, quasi-judicial, administrative or
quasi-administrative investigations, notices of noncompliance or violation,
demand letters, claims, proceedings, actions, suits, petitions, appeals, liens,
consent orders or consent agreements.
"CLOSING CONSIDERATION" means the Aggregate Purchase Price less the Escrow
Amount.
"CODE" means the United States Internal Revenue Code of 1986, as amended through
the date hereof.
"COMPANY ACCOUNTANTS" means KPMG LLP, Chartered Accountants.
"COMPANY MATERIAL ADVERSE EFFECT" means any event, circumstance, change or
effect that, individually or in the aggregate with all other events,
circumstances, changes or effects, is or is reasonably likely to be materially
adverse to the business, operations, assets or liabilities or results of
operations of the Company and the Company Subsidiaries taken as a whole, except
for any event, circumstance, change or effect that arises on account of, or
results from (a) any
2
changes in economic or political conditions generally, (b) any loss of
customers, suppliers or employees by the Company or the Company Subsidiaries
that results from the public announcement of the transactions contemplated by
this Agreement and (d) any action taken by Parent or any of its Affiliates.
"COMPANY SHAREHOLDERS AGREEMENT" means the Third Amended and Restated Unanimous
Shareholders Agreement made as of May 26, 2000, among the Company and the
Sellers or their respective predecessors.
"COMPANY SOFTWARE" means all Software (a) material to the operation of the
Company or any Company Subsidiary or (b) manufactured, distributed, sold,
licensed or marketed by the Company or any Company Subsidiary.
"COMPETITION ACT" means the Competition Act (Canada), as amended.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"),
with respect to the relationship between or among two or more 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, dated as of
the date hereof, delivered by the Company to Parent and the Purchaser in
connection with this Agreement.
"ENCUMBRANCE" means any third party right (including, without limitation,
adverse claim, option, equity, right of pre-emption, power of sale), security
interest, hypothec, pledge, mortgage, charge, lien, prior claim (including,
without limitation, environmental and tax liens), ownership or title retention
agreement, conditional sale agreement, lease, leasing, sale and leaseback,
license, and any other agreement that in substance secures payment or
performance of an obligation, 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.
"ENVIRONMENTAL LAWS" means all Laws, now or hereafter in effect and as amended,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, guideline,
directive or policy document, relating to the environment, health, safety,
natural resources or Hazardous Materials.
"ENVIRONMENTAL PERMITS" means all permits, approvals, identification numbers,
licenses and other authorizations required under or issued pursuant to any
applicable Environmental Law.
"ESCROW AGENT" means the Royal Bank of Canada.
"ESCROW AMOUNT" means the sum of the Artemis Escrow Amount and the Indemnity
Escrow Amount.
3
"ESCROW FUND" means the Escrow Amount deposited with the Escrow Agent as such
sum may be increased or decreased as provided in the Escrow Agreement.
"ETA" means Part IX of the Excise Tax Act (Canada), as amended.
"FT ACT" means the Fair Trading Act 1973 of the United Kingdom, as amended.
"FT ACT APPROVAL" means an indication from the United Kingdom Office of Fair
Trading, on terms and conditions reasonably satisfactory to the Purchaser, that
it is not the intention of the Secretary of State for Trade and Industry to
refer the transaction or any matter arising therefrom to the United Kingdom
Competition Commission (in so far as the transaction is a merger qualifying for
investigation by the Competition Commission under the FT Act).
"GOVERNMENTAL AUTHORITY" means any Canadian, United States, United Kingdom,
France, Barbados or other federal, national, supranational, state, provincial,
territorial, local, or similar government, governmental or administrative
authority, agency or commission or any judicial, quasi-judicial, administrative
or quasi-administrative tribunal or arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HAZARDOUS MATERIALS" means (a) petroleum and petroleum products, radioactive
materials, asbestos-containing materials, 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 which is regulated by any Environmental Law.
"HSR ACT" means the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INDEBTEDNESS" means, with respect to the Company, (a) all indebtedness of the
Company and the Company Subsidiaries, contingent or otherwise, for borrowed
money, (b) all obligations of the Company and the Company Subsidiaries evidenced
by notes, bonds, debentures or other similar instruments, including accrued and
unpaid interest, and (c) all obligations of the Company and the Company
Subsidiaries as lessee under leases that have been or should be, in accordance
with Canadian GAAP, recorded as capital leases.
"INDEMNITY ESCROW AMOUNT" means US$10,250,000.
"INDEMNITY ESCROW FUND" means the Indemnity Escrow Amount deposited with the
Escrow Agent, as such sum may be increased or decreased as provided in the
Escrow Agreement.
"INTELLECTUAL PROPERTY" means (a) patents, patent applications, and statutory
invention registrations, (b) trademarks, service marks, domain names, trade
dress, logos, trade names, corporate names, and other identifiers of source or
goodwill, including registrations and
4
applications for registration thereof, together with the goodwill associated
therewith (c) mask works and copyrights, including copyrights in Software, and
registrations and applications for registration thereof, (d) confidential and
proprietary information, including trade secrets, know-how and invention rights
and (e) rights in designs.
"INVESTMENT CANADA ACT" means the Investment Canada Act (Canada), as amended.
"INVESTMENT CANADA ACT APPROVAL" means that the Minister shall have determined,
or have been deemed to have determined, that the transactions contemplated by
this Agreement are of net benefit to Canada on terms and conditions satisfactory
to the Purchaser.
"IRS" means the United States Internal Revenue Service.
"ITA" means the Income Tax Act (Canada), as amended.
"LAW" means any Canadian, United States, European Union, United Kingdom or other
federal, national, supranational, state, provincial, territorial, local or
similar constitution, code, statute, law, ordinance, regulation, rule, order,
requirement or rule of law (including, without limitation, common law).
"LEASED REAL PROPERTY" means the immovable and real property leased by the
Company or any Company Subsidiary, in each case, as tenant, together with, to
the extent leased by the Company or any Company Subsidiary, all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of movable and personal
property of the Company or any Company Subsidiary attached or appurtenant
thereto and all easements, licenses, rights and appurtenances relating to the
foregoing.
"LIABILITIES" means any and all debts, liabilities and obligations, 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.
"LICENSED INTELLECTUAL PROPERTY" means all Intellectual Property licensed to the
Company or any Company Subsidiary.
"LICENSES" means all (a) agreements governing licenses of Intellectual Property
by the Company or any Company Subsidiary to third parties, (b) agreements
governing licenses of Intellectual Property by third parties to the Company or
any Company Subsidiary and (c) agreements between the Company and third parties
relating to the development or use of Intellectual Property.
"MINISTER" means the Canadian Minister responsible for the Investment Canada
Act.
"OWNED INTELLECTUAL PROPERTY" means all Intellectual Property owned by the
Company or any Company Subsidiary.
5
"PARENT SECURITIES" means any shares of the Parent or any other securities that
are convertible into, exchangeable for or which derive their value from shares
of the Parent.
"PER SELLER CLOSING CONSIDERATION" shall mean that portion of the Closing
Consideration payable to a Seller hereunder, less any amount withheld pursuant
to SECTION 6.14, if applicable,
"PERMITTED ENCUMBRANCES" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced,
or where such proceeding has been commenced, is being contested in good faith by
the Company or any Company Subsidiary through proceedings provided for by
applicable Law, and as to which neither the Company nor any Company Subsidiary
is otherwise subject to any liability under applicable Law due to its existence,
unless such liability is being contested in good faith by the Company or any
Company Subsidiary through proceedings provided for by applicable Law: (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) are not in excess of US$10,000 in the
case of a single property or US$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; (d) minor survey
exceptions, reciprocal easement agreements and other customary encumbrances on
title to immovable and 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; (e) encumbrances incurred in the ordinary
course of business consistent with past practices that do not in the aggregate
affect assets with a value in excess of US$10,000; and (f) encumbrances against
the property and assets of the Company or any Company Subsidiary described in
SECTION 1.01 of the DISCLOSURE SCHEDULE.
"PERSON" means any individual, partnership, firm, corporation, limited liability
company, 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 United States Securities Exchange Act of 1934, as amended.
"PURCHASE PRICE BANK ACCOUNT" means the bank account(s) to be designated by the
Sellers' Representative in a written notice to the Purchaser and the Transfer
and Disbursement Agent.
"PURCHASER'S ACCOUNTANTS" means Deloitte & Touche LLP, independent accountants
of Parent and its Affiliates.
"RECEIVABLES" means any and all accounts receivable arising from the conduct by
the Company and the Company Subsidiaries of their business before the Closing
Date, together with any unpaid financing charges accrued thereon.
"REGULATIONS" means the Treasury Regulations (including Temporary Regulations)
promulgated by the United States Department of Treasury with respect to the Code
or other federal tax statutes.
6
"SEC" means the United States Securities and Exchange Commission.
"SELLER" means each Person listed on the signature pages hereof.
"SERIES" means a series of transactions or events, for purposes of paragraph
88(1)(c)(vi) of the ITA, that includes the acquisition of the Shares by the
Purchaser.
"SELLERS' REPRESENTATIVE" means ▇▇▇▇ ▇▇▇▇▇▇ or such other Person appointed
pursuant to SECTION 10.10.
"SOFTWARE" means computer software, programs and databases in any 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.
"TAX" or "TAXES" means any and all taxes, fees, levies, duties, tariffs,
imposts, assessments, reassessments and other charges of any kind, whether
direct or indirect (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, capital, immovable and real and movable and personal property,
land transfer, use, share capital, wage, payroll, employment, employer health,
social security, workers' compensation, unemployment compensation and retirement
contributions, or net worth; corporation tax; taxes or other charges in the
nature of customs or excise, withholding, ad valorem, stamp, transfer, turnover
or value added, sales and use, goods and services, harmonized sales or gains
taxes; license, registration and documentation fees; and customs' duties,
tariffs, and similar charges.
"TAX AUTHORITY" means a Governmental Authority having jurisdiction with respect
to Taxes.
"TAX RETURNS" means any and all returns, schedules, information statements,
reports, and forms required to be filed with a Governmental Authority with
respect to Taxes.
"TRANSFER AND DISBURSEMENT AGENT" means the Escrow Agent or such other third
party, reasonably satisfactory to the Parties, acting as intermediary between,
on one side, the Purchaser and the Parent and, on the other side, the Company
and the Sellers, for the purpose of facilitating the completion of the Closing.
SECTION 1.02. DEFINITIONS The following terms have the meanings set forth in the
Sections set forth below:
Definition Location
---------- --------
"ACQUISITION PROPOSAL" 6.06
"ADJUSTABLE AMOUNT" 2.08
"AGREEMENT" Preamble
"AGGREGATE PER SELLER PURCHASE PRICE" 2.04
7
Definition Location
---------- --------
"AUDITED FINANCIAL STATEMENTS" 4.05(a)
"CANADIAN ENTITIES" 4.15(d)
"CANADIAN PENSION PLANS" 4.13(b)
"CANADIAN PLANS" 4.13(a)
"CLASS A SHARE" Recitals
"CLASS B SHARE" Recitals
"COMMON SHARE" Recitals
"CLOSING" 2.03
"CLOSING DATE" 2.03
"COMPANY" Preamble
"COMPANY ARTICLES" 4.01
"COMPANY OPTIONS" 2.08
"COMPANY PERMITS" 4.08(a)
"COMPANY STOCK OPTION PLANS" 2.08
"COMPANY SUBSIDIARY" 4.02
"COMPANY WARRANT" Recitals
"CONFIDENTIALITY AGREEMENT" 6.02
"CUSTOMERS" 4.12
"ERISA" 4.13(a)
"EXCHANGE ACT" 4.20(a)
"FINANCIAL STATEMENTS" 4.05(a)
"INDEMNIFIED PARTY" 8.02(a)
"INDEMNIFYING PARTY" 8.02(a)
"INTERIM FINANCIAL STATEMENTS" 4.05(a)
"LEASES" 4.07(b)
"LOSS" 8.02(a)
"MATERIAL CONTRACTS" 4.09(a)
"NON-CANADIAN RESIDENT" 6.15(a)
"NON COMPETITION AGREEMENT" 6.14
"PARENT" Preamble
"PLANS" 4.13(k)
"PRE-CLOSING TRANSACTION" 6.17
"PROCEEDINGS" 4.13(d)
"PURCHASER" Preamble
"REMITTANCE DATE" 6.15(b)
"RESIGNATION" 6.09
"RESTRICTIVE AGREEMENT" 4.09(a)(vii)
"SCHEDULE A" Recitals
"SECTION 116 CERTIFICATE" 6.16(a)
"SECURITIES ACT" 4.20(a)
"SHARES" Recitals
"U.K. PLANS" 4.13(a)
"FRENCH PLANS" 4.13(a)
"U.S. PLANS 4.13(a)
"WARN" 4.13A(f)
8
Definition Location
---------- --------
"WITHHELD AMOUNT" 6.15(b)
SECTION 1.03. SCHEDULES
SCHEDULES: The following schedules are attached to this Agreement
and are deemed to be a part of and incorporated in this Agreement:
- Schedule A - Name of Sellers
- Schedule B - Issued Capital
- Schedule 1.01 - Artemis Escrow Amount
- Schedule 2.02 - Allocation of the Aggregate Purchase Price
- Schedule 2.06 - Escrow Agreement
- Schedule 2.08 - Form of Non-Competition Agreement
- Disclosure Schedule
- Section 1.01 - Permitted Encumbrances
- Section 2.08 - Company Options
- Section 3.08 - Brokers
- Section 4.02 - Company Subsidiaries
- Section 4.03(c) - Authority - Required Third Party or
Governmental Authority Consents
- Section 4.06 - Absence of Certain Changes or Events since July
31, 2003
- Section 4.07(b) - Leased Real Property
- Section 4.08(a) - Exceptions to Company Permits
- Sections 4.09(a) - Material Contracts
- Section 4.10(a) - Intellectual Property
- Section 4.10(c) - Exceptions to Ownership of Intellectual
Property
- Section 4.10(i) - Open Source Materials
- Section 4.12 - Largest Customers
- Section 4.13(a) - Employees Benefit Plans
- Section 4.13(a)(v) - Employees and Independent Contractors
- Section 4.13(e) - Schedule of any separation, severance,
termination or similar-type benefits payable to any person
- Section 4.13(i) - Details of any Personal Pension Schemes as
defined in section 630 of the U.K. Income and Corporation
taxes ▇▇▇ ▇▇▇▇
- Section 4.14(d) - Labour - Non-Compliance Occupational Health
& Safety
- Section 4.15 - Insurance policies
- Section 4.16(a) - Tax Return Exceptions
- Section 4.16(a)(viii) - Taxation Years
- Section 4.16(f) - Non-arms length transactions for
consideration not at fair market value
9
- Section 4.16(i) - Elections under the ITA
- Section 4.16(j) - Non-resident Sellers
- Section 4.18 - Related Party Transactions
- Section 4.21 - Brokers and other Third Party Fees
- Section 6.13 - Persons to enter into Non-Competition
Agreements
- Section 8.02(e) - Parent Securities
SECTION 1.04. KNOWLEDGE"KNOWLEDGE" - an individual will be deemed to have
"Knowledge" of a particular fact or other matter if
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, senior employee, partner, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE OF THE SHARES Upon the terms and subject to the
conditions of this Agreement, at the Closing, each of the Sellers shall sell,
assign, transfer, convey and deliver, or cause to be sold, assigned,
transferred, conveyed and delivered, to the Purchaser, all of such Seller's
Shares, and the Purchaser shall purchase all of such Seller's Shares.
SECTION 2.02. PURCHASE PRICE The purchase price for the Shares shall be the
Aggregate Purchase Price. The Aggregate Purchase Price shall be allocated among
the Common Shares and Class B Shares, assuming the conversion of all of the
Class A Shares in accordance with SECTION 6.15, as set out in SCHEDULE 2.02
(such allocation hereinafter referenced as the "AGGREGATE PER SELLER PURCHASE
PRICE").
SECTION 2.03. CLOSING Subject to the terms and conditions of this Agreement, the
sale and purchase of the Shares contemplated by this Agreement shall take place
at a closing (the "CLOSING") to be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ at 10:00 A.M. on the
fifth Business Day following the satisfaction or waiver of the conditions to the
obligations of the Parties set forth in SECTIONS 7.01(B) and 7.02(C) or at such
other place or at such other time or on such other date as the Company and the
Purchaser may mutually agree upon in writing (the day on which the Closing takes
place being the "CLOSING DATE").
SECTION 2.04. CLOSING DELIVERIES BY EACH OF THE SELLERS At the Closing, each of
the Sellers shall deliver or cause to be delivered to the Purchaser:
10
(a) stock certificates evidencing such Seller's Shares duly endorsed
in blank, or accompanied by stock powers duly executed in blank in form
and substance reasonably satisfactory to the Purchaser and with all
required stock transfer tax stamps affixed;
(b) a receipt for an amount equal to the Per Seller Closing
Consideration;
(c) if applicable, the Resignations contemplated by SECTION 6.09;
and
(d) the certificates and other documents required to be delivered
pursuant to SECTION 6.14 and SECTION 7.02.
In addition, the Sellers' Representative shall provide to the Purchaser an
estimate of the Acquisition Expenses ("ACQUISITION EXPENSES ESTIMATE").
SECTION 2.05. CLOSING DELIVERIES BY PARENT AND THE PURCHASER(a) At the Closing,
the Purchaser shall deliver to each of the Sellers:
(i) Per Seller Closing Consideration by wire transfer in immediately
available funds to the Purchase Price Bank Account for the benefit of such
Seller;
(ii) a receipt for such Seller's Shares; and
(iii) the certificates and other documents required to be delivered
pursuant to SECTION 7.01.
(b) At the Closing, the Purchaser shall deliver to the Escrow Agent, in
accordance with the Escrow Agreement, the Escrow Amount by wire transfer in
immediately available funds to the accounts designated therefor in the Escrow
Agreement.
(b) At the Closing, the Purchaser shall deliver to the Transfer and
Disbursement Agent a sum equivalent to the Acquisition Expenses Estimate and
directions to disburse such funds at the direction of the Sellers'
Representative. .
SECTION 2.06. ESCROW Prior to the Closing, each of the Sellers and the Purchaser
shall enter into an Escrow Agreement with the Escrow Agent substantially in the
form of SCHEDULE 2.06 (the "ESCROW AGREEMENT"). In accordance with the terms of
the Escrow Agreement, the Purchaser shall deposit the Artemis Escrow Amount and
the Indemnity Escrow Amount to be managed and paid out by the Escrow Agent in
accordance with the terms of the Escrow Agreement.
SECTION 2.07. TRANSFER AND DISBURSEMENT AGENT(a) All deliveries to be made by
each of the Sellers pursuant to SECTION 2.04 shall be made, on their behalf by,
and all deliveries to be made to the Sellers pursuant to SECTION 2.05 shall be
made, for their benefit to, the Transfer and Disbursement Agent.
(b) The Parent and the Purchaser shall be responsible for payment of the
agency fees of the Transfer and Disbursement Agent associated with the
disbursement of the Aggregate Purchase Price to the Sellers.
11
(c) The Sellers shall be obligated for payment of all Acquisition Expenses.
The Sellers' Representative shall provide the Transfer and Disbursement Agent
with instructions for disbursement.
SECTION 2.08. COMPANY OPTIONS Prior to Closing, the Company shall cause each
stock option, right or warrant convertible into or exercisable to purchase
Shares (collectively, the "COMPANY OPTIONS"), whether or not exercisable and
whether or not vested, granted under the Company's stock option plans or any
stock option agreement or employment agreement (the "COMPANY STOCK OPTION
PLANS") to be exercised pursuant to the terms thereof, unless otherwise
terminated. To the extent the Company pays an amount in respect of the
termination of the Company Options of an employee of a Company Subsidiary, such
Company Subsidiary shall reimburse the Company for such amount, and until paid
such liability to reimburse shall be reflected in the books and records of the
Company. All holders of Company Options whose options are terminated shall
execute appropriate releases of any claims they may have with respect to such
Company Options. Such releases shall be binding on such holders and shall inure
to the benefit of the Purchaser and the Parent. Any amounts payable with respect
to such terminated Company Options shall be reduced for applicable tax
withholding and the Company shall properly and timely pay to the proper Taxing
Authority any amounts so withheld. All holders of Company Options and the
amounts paid to such holders to cancel and terminate their options shall be set
out in SECTION 2.08 of the DISCLOSURE SCHEDULE.
SECTION 2.09. ARTEMIS ADJUSTMENT(a) Following Closing, the Parent shall cause
▇▇▇▇▇ ▇▇▇▇▇, on behalf of the Parent, to lead the negotiations with respect to
the Artemis Settlement; provided, however, that in the event ▇▇▇▇▇ ▇▇▇▇▇ shall
be unable or unwilling to lead such negotiations following the Closing, the
Sellers' Representative and the Parent shall, in good faith, appoint a
replacement to lead the negotiations with respect to the Artemis Settlement.
(b) The Parent shall provide the Sellers' Representative with written notice
of the Artemis Settlement Amount no later than 15 Business Days following the
Artemis Settlement Date. If the Artemis Escrow Fund is greater than the Artemis
Settlement Amount, then, in accordance with the terms of the Escrow Agreement,
the difference between the Artemis Escrow Fund and the Artemis Settlement Amount
shall be paid to the Sellers by the Escrow Agent from the Artemis Escrow Fund
and the Artemis Settlement Amount shall be paid to the Purchaser by the Escrow
Agent from the Artemis Escrow Fund. In the event that the Artemis Settlement
Amount is greater than the Artemis Escrow Fund, then, in accordance with the
terms of the Escrow Agreement, (i) the difference between the Artemis Settlement
Amount and the Artemis Escrow Fund shall be paid to the Purchaser by the Escrow
Agent from the Indemnity Escrow Fund, and (ii) the Artemis Escrow Fund shall be
paid to the Purchaser by the Escrow Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
As an inducement to Parent and the Purchaser to enter into this Agreement, each
of the Sellers, severally and not jointly, hereby represents and warrants to the
Parent and the Purchaser as follows:
12
SECTION 3.01. ORGANIZATION AND AUTHORITY(a) Such Seller, if he or she is a
natural person, has full legal capacity to execute and deliver this Agreement
and the Escrow Agreement, and to perform his, her or its obligations hereunder
and thereunder, and to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and the Escrow Agreement shall be, duly and
validly executed and delivered by such Seller, and (assuming the due
authorization, execution and delivery by Parent and the Purchaser) this
Agreement constitutes, and the Escrow Agreement shall constitute, a legal, valid
and binding obligation of such Seller enforceable against such Seller in
accordance with its terms. The failure of the spouse, if any, of such Seller to
be a party or signatory to this Agreement or the Escrow Agreement shall not (i)
prevent such Seller from performing his or her obligations and from consummating
the transactions contemplated hereunder or thereunder or (ii) prevent this
Agreement or the Escrow Agreement from constituting the legal, valid and binding
obligation of such Seller enforceable against such Seller in accordance with its
terms.
(b) Such Seller, if it is a corporation or other legal entity, is duly
incorporated or organized, validly existing and in good standing under the Laws
of its jurisdiction of incorporation or organization and has all necessary
corporate or other power and authority to execute and deliver this Agreement and
the Escrow Agreement, and to perform its obligations hereunder and thereunder,
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Escrow Agreement by such
Seller, the performance by such Seller of its obligations hereunder and
thereunder, and the consummation by such Seller of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate or other action on the part of such Seller, and no other corporate or
other proceeding on the part of such Seller is necessary to authorize this
Agreement or the Escrow Agreement or the performance by such Seller of its
obligations hereunder or thereunder, or to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and the Escrow
Agreement shall be, duly and validly executed and delivered by such Seller, and
(assuming due authorization, execution and delivery by Parent and the Purchaser)
this Agreement constitutes, and the Escrow Agreement shall constitute, a legal,
valid and binding obligation of such Seller enforceable against such Seller in
accordance with its terms.
SECTION 3.02. NO CONFLICT The execution, delivery and performance of this
Agreement and the Escrow Agreement by such Seller do not, and shall not:
(a) if it is a corporation or other legal entity, conflict with or violate the
organizational documents of such Seller;
(b) assuming that all filings and notifications described in SECTION 4.03(C)
have been made, conflict with or violate any Law or Governmental Order
applicable to such Seller; or
(c) conflict with, result in any breach of, or constitute a default (or an
event that with notice or lapse of time, or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any of the
Shares owned by such Seller pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except for any such conflicts, violations, breaches, defaults or
other occurrences that would not
13
prevent or materially delay consummation of the transactions contemplated by
this Agreement and the Escrow Agreement.
SECTION 3.03. OWNERSHIP AND POSSESSION OF SHARES Such Seller (a) is the sole
record holder and beneficial owner of, and has good, valid and marketable title
to, all the Common Shares, Class A Shares and Class B Shares set forth next to
such Seller's name on SCHEDULE A and (b) holds the number of Company Options set
forth next to such Seller's name on SCHEDULE A. Such Seller's Shares and Company
Options are all the equity securities of the Company held or owned, either of
record or beneficially, by such Seller, and (other than such Seller's Company
Options held by such Seller, if any) such Seller does not have any option or
other right to acquire any other securities of the Company. Immediately prior to
the Closing, such Seller's Shares and, if applicable, such Seller's Company
Options, shall be the only equity securities of the Company held or owned,
either of record or beneficially, by such Seller, and such Seller shall not have
any option or other right to acquire any other securities of the Company. The
certificates representing such Common Shares, Class A Shares and Class B Shares
(including any Shares issued upon exercise of any Company Options) are now and
at all times during the term hereof shall be held by such Seller or by a nominee
or custodian for the sole and exclusive benefit of such Seller, free and clear
of all Encumbrances whatsoever, except for any Encumbrances created by this
Agreement or the Company Shareholder Agreement. Except as provided in the
Company Shareholder Agreement, such Seller has not appointed or granted any
proxy, which appointment or grant is still effective, with respect to such
Seller's Shares.
SECTION 3.04. GOOD TITLE CONVEYED The share certificates, stock powers,
endorsements, assignments and other instruments to be executed and delivered by
such Seller to the Purchaser at the Closing shall be valid and binding
obligations of such Seller, enforceable in accordance with their respective
terms.
SECTION 3.05. COMPANY SHAREHOLDERS AGREEMENT The Company Shareholder Agreement
is valid and binding on such Seller and is in full force and effect against such
Seller. Such Seller is not in breach of or default under (nor does there exist
any condition which upon the passage of time or the giving of notice would cause
such a breach of or default under) the Company Shareholder Agreement.
SECTION 3.06. LITIGATION As at the date hereof, there are no Actions by or
against such Seller or affecting any of such Seller's Shares or Company Options
pending before any Governmental Authority (or, to the knowledge of such Seller,
threatened to be brought by or before any Governmental Authority) which could
affect the legality, validity or enforceability of this Agreement or the Escrow
Agreement or the consummation of the transactions contemplated hereby or
thereby.
SECTION 3.07. COMPLIANCE WITH LAWS Except as would not adversely affect the
ability of such Seller to carry out its, his or her obligations under, and to
consummate the transactions contemplated by, this Agreement and the Escrow
Agreement, such Seller has not been and is not in conflict with, or in default
or violation of any Law or Governmental Order applicable to such Seller or
affecting such Seller's Shares or Company Options.
14
SECTION 3.08. BROKERS Except as set out in SECTION 3.08 of the DISCLOSURE
SCHEDULE, no broker, finder, investment banker or any other third party is
entitled to any brokerage, finder's, consulting or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of such Seller, and no Person has, or as a
result of any of the transactions contemplated hereby shall have, as a result of
any commitment of such Seller towards such Person, any right, interest or claim
against or upon the Purchaser, the Parent, the Company or any of their
respective properties or the Shares for any commission, fee or other
compensation as broker, finder, investment banker or for services in any similar
capacity.
SECTION 3.09. FULL DISCLOSURE Such seller has made or caused to be made due
enquiry with respect to each of the representations and warranties of such
Seller contained in this Agreement or in any other agreement between the Parties
or certificates delivered pursuant to this Agreement, and none of the same
intentionally contains any untrue statement of a material fact or intentionally
omits to state a material fact necessary to make any of the representations or
warranties of such Seller contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
As an inducement to Parent and the Purchaser to enter into this
Agreement, the Company hereby represents and warrants to the Parent and the
Purchaser as follows:
SECTION 4.01. ORGANIZATION AND QUALIFICATION The Company is a corporate body
duly incorporated, validly existing and in good standing under the laws of the
Province of Ontario and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted. The Company is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary or desirable, except for such
failures to be so qualified or licensed and in good standing that would not have
a Company Material Adverse Effect. The Company has delivered to Parent prior to
the date of this Agreement a complete and correct copy of the Articles of
Amalgamation of the Company, as amended (the "COMPANY ARTICLES"). The Company
Articles have not been further modified or amended and are in full force and
effect. The Company is not in violation of any of the provisions of the Company
Articles.
SECTION 4.02. SUBSIDIARIES SECTION 4.02 of the DISCLOSURE SCHEDULE lists each
subsidiary of the Company and its place of organization or incorporation (each,
a "COMPANY SUBSIDIARY") and the current ownership of such shares or similar
ownership interests. Except for the Company Subsidiaries, neither the Company
nor any Company Subsidiary owns, or holds the right to acquire, any share of
capital, partnership interest, joint venture interest or other equity interest
in any other Person. Each Company Subsidiary is a corporation, limited liability
company or society of restricted liability duly incorporated or formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite organizational power and
authority and all necessary approvals of Governmental Authorities to
15
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted. Each Company Subsidiary is duly qualified or licensed
as a foreign corporation or limited liability company to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not have a Company Material Adverse Effect. The
Company has delivered to Parent prior to the date of this Agreement, a complete,
correct and up-to-date copy of the Articles of Incorporation (or equivalent
documents), as amended, of each Company Subsidiary. Each Company Subsidiary's
Articles of Incorporation (or equivalent documents) have not been further
modified or amended and are in full force and effect. The Company Subsidiaries
are not in violation of any of the provisions of their respective Articles of
Incorporation (or equivalent documents).
SECTION 4.03. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS(a) The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, and to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company, the performance by the Company of its obligation hereunder, and
the consummation by the Company of the transactions contemplated hereunder, have
been duly and validly authorized by all necessary action on the part of the
Company, and no other corporate proceeding on the part of the Company is
necessary to authorize this Agreement or the performance by the Company of its
obligation hereunder or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and the
Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The Board of
Directors of the Company has adopted a resolution approving the transactions
contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement by the Company
do not, and shall not, (i) conflict with or violate any provision of the Company
Articles or any equivalent organizational documents of any Company Subsidiary,
(ii) assuming that all filings and notifications described in SECTION 4.03(c)
have been made, conflict with or violate any Law or Governmental Order
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected, or (iii)
conflict with, or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in any payment becoming payable by the Company or any Company
Subsidiary to any third party, or result in the creation of any Encumbrance
(other than Permitted Encumbrances) on any material property or asset of the
Company or any Company Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and (iii) of this
SECTION 4.03(b), for any such conflicts, violations, breaches, defaults or other
occurrences that would not have a Company Material Adverse Effect, and that
could not reasonably be expected to prevent or materially delay the consummation
of the transactions contemplated by this Agreement.
16
(c) Except as set forth in SECTION 4.03(c) of the DISCLOSURE SCHEDULE, the
execution and delivery of this Agreement and the Escrow Agreement by the Sellers
and execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement and the Escrow Agreement by the Sellers and
performance of this Agreement by the Company shall not, require or make
desirable any material consent, approval, authorization or other order of,
action by, filing with, or notification to, any third party or Governmental
Authority, except for Investment Canada Act Approval, provided that the Company
makes no representation or warranty with respect to the pre-merger notification
requirements of the Competition Act (Canada), HSR Act and FT Act Approval.
SECTION 4.04. CAPITALIZATION The authorized capital of the Company consists of
(a) an unlimited number of Common Shares, (b) 5,983,962 Class A Shares and (c)
2,873,696 Class B Shares. As of the date hereof, (i) 10,423,684 Common Shares,
5,983,962 Class A Shares and 2,873,696 Class B Shares are issued and
outstanding, all of which are validly issued, fully paid and non-assessable and
(ii) 4,824,081 Shares are reserved for future issuance pursuant to the Company
Options. SCHEDULE B to this Agreement sets forth a complete and correct list of
all holders of Common Shares, Class A Shares, Class B Shares or Company Options
and the number of Shares or Company Options held by such Person. No Common
Share, Class A Share or Class B Share is held in the treasury of the Company or
by the Company Subsidiaries. Except for the Common Shares, Class A Shares, Class
B Shares and Company Options, there are no other shares of capital or securities
convertible into or exercisable or exchangeable for shares of capital of the
Company issued and outstanding. Except for the Company Shareholder Agreement and
the Company Options granted pursuant to the Company Stock Option Plans, there
are no options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character (whether exercisable now or in the
future and whether contingent or not) relating to the issued or unissued shares
of capital of the Company or any Company Subsidiary or obligating the Company or
any Company Subsidiary to issue or sell any shares of capital, options, warrants
or convertible securities of, or other equity interests in, the Company or any
Company Subsidiary. All Common Shares, Class A Shares or Class B Shares subject
to issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. Other than the Company Articles
and the Company Shareholder Agreement, there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital of the Company or any Company
Subsidiary. Except for Changepoint France Sarl, all the outstanding capital of
each Company Subsidiary is legally and beneficially owned directly or indirectly
by the Company and each outstanding share of capital of each Company Subsidiary
is duly authorized, validly issued, fully paid and non-assessable and each such
share owned by the Company or another Company Subsidiary is free and clear of
all Encumbrances on the Company's or such other Company Subsidiary's voting
rights and other Encumbrances of any nature whatsoever (other than Permitted
Encumbrances) and there is no agreement to give or create any such interest. The
share register of the Company accurately records: (i) the name and address of
each Person owning Common Shares, Class A Shares, Class B Shares, Company
Warrants or Company Options and (ii) the certificate number of each certificate
evidencing shares of capital 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. There are no material
outstanding contractual obligations of the Company or any Company Subsidiary to
provide funds
17
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other Person.
SECTION 4.05. FINANCIAL STATEMENTS(a) True and complete copies of (i) the
audited consolidated balance sheet of the Company for each of the fiscal years
ended as of July 31, 2000, July 31, 2001, July 31, 2002, and July 31, 2003, and
the related audited consolidated statements of operations, shareholders' equity
(deficiency) and cash flows of the Company, together with all related notes and
schedules thereto, accompanied by the reports thereon of the Company Accountants
(collectively, the "AUDITED FINANCIAL STATEMENTS") and (ii) the unaudited
consolidated balance sheet of the Company as of March 31, 2004 (the "INTERIM
BALANCE SHEET"), and the related unaudited consolidated statements of operations
and cash flows for the period or periods from August 1, 2003 through March 31,
2004 of the Company, together with all related notes and schedules thereto
(collectively, the "INTERIM FINANCIAL STATEMENTS", and together with the Audited
Financial Statements, the "FINANCIAL STATEMENTS") have been delivered by the
Company to Parent prior to the date of this Agreement. The Financial Statements
(i) were prepared in accordance with the books of account and other financial
records of the Company and the Company Subsidiaries, (ii) present fairly in all
material respects the consolidated financial condition and consolidated results
of operations and cash flow of the Company as at the respective dates thereof
and for the respective periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which did not
and would not have a Company Material Adverse Effect) and (iii) have been
prepared in accordance with Canadian GAAP applied on a basis consistent with the
past practices of the Company and the Company Subsidiaries.
(b) There are no material Liabilities of the Company or any Company Subsidiary
other than Liabilities (i) reflected or reserved against on the Interim Balance
Sheet, or (ii) incurred since the date of the Interim Balance Sheet in the
ordinary course of business consistent with past practice and which did not and
would not have a Company Material Adverse Effect.
(c) None of the Company or any Company Subsidiary has guaranteed the
indebtedness of any Person that is not a Company Subsidiary.
SECTION 4.06. ABSENCE OF CERTAIN CHANGES OR EVENTS Since July 31, 2003, except
as set out in SECTION 4.06 of the DISCLOSURE SCHEDULE, the business of the
Company and the Company Subsidiaries has been conducted in the ordinary course
and in a manner consistent with the practices applied during the periods
specified in the Financial Statements, and since the July 1, 2003 neither the
Company or any of the Company Subsidiaries has entered into any transaction
other than in the ordinary course and in a manner consistent with the practices
applied during the periods specified in the Financial Statements and there has
been no adverse change in the condition (financial or otherwise), liabilities,
retained earnings or operations of either of the Company or the Company
Subsidiaries (including relationships with suppliers, customers and others).
Without limiting the generality of the foregoing, except as set out in SECTION
4.06 of the DISCLOSURE SCHEDULE, other than in the ordinary course of business
since July, 1, 2003,
(i) neither the Company or the Company Subsidiaries has purchased or
redeemed directly or indirectly any share of its share capital;
18
(ii) neither the Company or the Company Subsidiaries has issued or
sold or agreed to issue or sell any share of its share capital or any
option, warrant, conversion or other right to acquire any such share or
any securities convertible into or exchangeable for any such share, or
amended its organizational documents other than the Company Options issued
in accordance with the Company Stock Option Plans;
(iii) neither the Company or the Company Subsidiaries has declared
or paid any dividend or declared or made any other distribution on any of
the shares of its shares capital;
(iv) neither the Company or the Company Subsidiaries has incurred or
discharged any obligation or liability (whether accrued, absolute or
contingent) other than the obligations and liabilities reflected in the
Financial Statements or incurred since July 1, 2003 in the ordinary course
of and in a manner consistent with past practices;
(v) neither the Company or the Company Subsidiaries has waived,
cancelled or accelerated the collection of any of its accounts receivable
or claims or rights;
(vi) neither the Company or the Company Subsidiaries has postponed
or delayed the payment of any of its accounts payable, debts, obligations
or liabilities;
(vii) neither the Company or the Company Subsidiaries has entered
into any transaction, contract, agreement, indenture, instrument or
commitment other than in the ordinary course of and in a manner consistent
with past practices;
(viii) neither the Company or the Company Subsidiaries has acquired
or sold, assigned, transferred, licensed, terminated, leased or disposed
of the Owned Intellectual Property or the Company Software;
(ix) neither the Company or the Company Subsidiaries has suffered or
incurred any damage, destruction, loss or liability (whether or not
covered by any insurance), any strike, lock-out or other labour trouble
such as slow down or work stoppage, or any loss of any of its employees,
customers, suppliers, sales agents, sales representatives, distributors or
independent contractors that, either by itself or in the aggregate, has
affected adversely or may affect adversely either of the Company or the
Company Subsidiaries;
(x) neither the Company or the Company Subsidiaries has suffered any
material loss of, or material change with respect to, any contract or
agreement, whether written or oral, material to the Business;
(xi) neither the Company or the Company Subsidiaries has entered
into any employment agreement or made, promised or agreed to make any
change in the form or terms of compensatory remuneration payable or to
become payable to any of its employees, directors, officers, shareholders,
representatives, licensors, licensees, distributors, agents, suppliers or
independent contractors or to any other Person nor made, promised or
agreed to make any bonus or other incentive payment or arrangement with
any of its employees, directors, officers, shareholders, representatives,
licensors,
19
licensees, distributors, agents, suppliers, customers or independent
contractors or any other Person, other than the amendments to the Company
Stock Option Plans authorized and approved by the board of directors of
the Company by resolutions dated April 27, 2004;
(xii) neither the Company or the Company Subsidiaries has made any
change in its accounting policies, principles and practices as utilized in
the preparation of the Audited Financial Statements;
(xiii) neither the Company or the Company Subsidiaries has made any
loan or advance, or assumed, guaranteed, endorsed or otherwise became
liable with respect to the liabilities or obligations of any other Person;
(xiv) neither the Company or the Company Subsidiaries has granted to
any customer any special allowance or discount or changed its pricing,
credit or payment policies;
(xv) neither the Company or the Company Subsidiaries has incurred
any indebtedness other than in the ordinary course of and in a manner
consistent with past practices;
(xvi) neither the Company or the Company Subsidiaries has modified
or changed its business relationship with its material suppliers,
customers or any other Person having business relations with it;
(xvii) neither the Company or the Company Subsidiaries has made any
payment to, or for the benefit of, any present or former employee,
director, officer, share-holder, representative, licensor, licensee,
distributor, agent, supplier, independent contractor or affiliate of
either of the Company or the Company Subsidiaries or any other Person,
otherwise than at the regular rates payable to them, by way of salary,
pension, bonus or other remuneration consistent with the practices applied
during the periods specified in the Financial Statements and provided that
all distributions to shareholders are set out in SCHEDULE 2.02;
(xix) neither the Company or the Company Subsidiaries has made any
capital expenditure other than expenditures which in the aggregate do not
exceed $100,000; or
(xxii)) neither the Company or the Company Subsidiaries has
authorized or agreed to any of the foregoing matters referred to in this
Section 4.06.
SECTION 4.07. ASSETS; PROPERTIES(a) The Company or a Company Subsidiary has
good, valid and marketable title to all of the movable and personal property
shown on or reflected in the Interim Balance Sheet and thereafter acquired, free
and clear of all Encumbrances, except for Permitted Encumbrances and except for
movable and personal property disposed of in the ordinary course of business
consistent with past practice since the date of the Interim Balance Sheet. The
Company or a Company Subsidiary owns, leases or has the legal right to use all
the material properties and assets, including the Leases, the Company Permits,
the Material Contracts and the Licenses, used or currently intended to be used
by the Company or a Company
20
Subsidiary in the conduct of their business, and such properties, assets and
rights constitute all the properties, assets and rights as are necessary to
conduct the business of the Company and the Company Subsidiaries as conducted or
currently intended to be conducted. The properties and assets of the Company and
the Company Subsidiaries have been maintained in accordance with good business
practice, except where the failure to do so would not have a Company Material
Adverse Effect.
(b) SECTION 4.07(b) of the DISCLOSURE SCHEDULE contains a full and complete
list of the Leased Real Property. The leases for the Leased Real Property listed
in SECTION 4.07(b) of the DISCLOSURE SCHEDULE (the "LEASES") are in full force
and effect against the Company or a Company Subsidiary (and, to the Company's
knowledge, the other parties thereto), and the Company or a Company Subsidiary
holds a good, valid and existing leasehold interest under each of the Leases for
the term set forth in SECTION 4.07(b) of the DISCLOSURE SCHEDULE. The Company
has delivered or made available to Parent prior to the date of this Agreement
complete and accurate copies of each of the Leases, and none of the Leases has
been modified in any material respect. Neither the Company nor any Company
Subsidiary is in default in any material respect under any of the Leases.
(c) The Company does not own any real property. The Company is not a party to
any contract to purchase or acquire any real property.
SECTION 4.08. PERMITS; COMPLIANCE(a) Except as disclosed in SECTION 4.08(a) of
the DISCLOSURE SCHEDULE, each of the Company and the Company Subsidiaries is in
possession of all material franchises, grants, authorizations, licenses,
certifications, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary for
the Company or any Company Subsidiary to own, lease and operate its properties
or to carry on its business as it is now being conducted (the "COMPANY PERMITS")
except where the failure to be in possession of such Company Permits would not
have a Company Material Adverse Effect, and no suspension or cancellation of any
of the Company Permits is pending or, to the knowledge of the Company,
threatened. No Company Permit has lapsed or expired.
(b) Neither the Company nor any Company Subsidiary has been or is in conflict
with, or in default or violation of, (i) any Law applicable to the Company or
any Company Subsidiary or by which any material property or asset of the Company
or any Company Subsidiary is bound or affected, (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary or any property or asset
of the Company or any Company Subsidiary is bound or affected or (iii) any
Company Permits, except with respect to clauses (i) and (ii) for any such
conflicts, defaults or violations that would not have a Company Material Adverse
Effect.
SECTION 4.09. CONTRACTS AND COMMITMENTS(a) SECTION 4.09(a) of the DISCLOSURE
SCHEDULE contains a complete list of the following contracts and agreements,
whether written or oral, to which the Company or any Company Subsidiary is a
party (such contracts and agreements, together with the Leases, the Licenses and
the Restrictive Agreements, being "MATERIAL CONTRACTS"):
21
(i) any contract or agreement which (A) is likely to involve
consideration in excess of US$100,000 during the fiscal year ended as of
July 31, 2004 or (B) is likely to involve consideration in excess of
US$100,000 over the remaining term of such contract or agreement;
(ii) any contract or agreement which (A)(x) is likely to involve
consideration in excess of US$100,000 during the fiscal year ended as of
July 31, 2004 or (y) is likely to involve consideration in excess of
US$100,000 over the remaining term of such contract or agreement and (B)
cannot be cancelled by the Company or the Company Subsidiary, as
applicable, without penalty or further payment and without more than 60
days' notice;
(iii) all contracts relating to Indebtedness;
(iv) all swap, forward, future, option, hedge or similar
arrangements and agreements of a financial nature (including with respect
to currencies or interest rates);
(v) all contracts and agreements with any Governmental Authority,
except for contracts entered into in the ordinary course of the business
of the Company or any Company Subsidiary;
(vi) all contracts and agreements that (A) limit or purport to limit
the ability of the Company or any Company Subsidiary or any contracting
party to compete in any line of business or with any person or in any
geographic area or during any period of time, (B) require the Company or
any Company Subsidiary or any contracting party to use any supplier or
third party for all or substantially all of the Company's or the Company
Subsidiaries' or any contracting party's requirements or needs, (C) limit
or purport to limit the ability of the Company or any Company Subsidiary
or any contracting party to solicit any customers or clients of the other
parties thereto, (D) require the Company or any Company Subsidiary or any
contracting party to provide to the other parties thereto "most favored
nations" pricing or (E) require the Company or any Company Subsidiary or
any contracting party to purchase or order any minimum amount of supplies
or services (each, a "RESTRICTIVE AGREEMENT");
(vii) all joint venture contracts, partnership arrangements or other
agreements involving a sharing of profits, losses, costs or liabilities by
the Company or any Company Subsidiary with any third party;
(viii) all contracts and agreements which are not on an arm's length
basis; and
(ix) all offers, tenders, proposals and contracts to perform
services on a fix bid or fix price basis.
(b) Each Material Contract: (i) is valid and binding on the Company or a
Company Subsidiary, as the case may be, and, to the knowledge of the Company,
the other parties thereto, and is in full force and effect against the Company
or a Company Subsidiary and represents the entire agreement between or among the
parties thereto with respect to the subject matter thereof and (ii) upon
consummation of the transactions contemplated by this Agreement shall continue
22
in full force and effect without penalty or other adverse consequence. None of
the Company or any Company Subsidiary or, to the knowledge of the Company, any
other party thereto is in material breach of, or default under (nor does there
exist any condition which upon the passage of time or the giving of notice would
cause such a breach of or default under), any Material Contract.
(c) Parent either has been supplied with, or has been given access to, a true
and correct copy of all written Material Contracts, together with all material
amendments, waivers or other changes thereto, and has been given a written
description of all oral contracts included in the Material Contracts.
(d) Except for the Material Contracts, there is no contract the termination of
which, prior to its expiration in accordance with its terms, will result in a
Company Material Adverse Effect.
SECTION 4.10. INTELLECTUAL PROPERTY(a) SECTION 4.10(a) of the DISCLOSURE
SCHEDULE sets forth a true and complete list of all (i) patents and patent
applications, rights in designs, unregistered or common law trademarks,
registered trademarks and trademark applications, unregistered or common law
copyrights, registered copyrights and copyright applications and Company
Software included in the Owned Intellectual Property, and (ii) material
Licenses. The Company has delivered or made available to Parent, prior to the
date of this Agreement, correct and complete copies of all the Licenses.
(b) The operation of the business of the Company and the Company Subsidiaries,
and the use of the Owned Intellectual Property and, to the knowledge of the
Company, Licensed Intellectual Property in connection therewith, do not conflict
with or infringe the Intellectual Property of any third party, and no claim is
pending or, to the knowledge of the Company, threatened and no notice has been
given to either the Company or any Company Subsidiary asserting that the
operation of such business, or such use of the Owned Intellectual Property or
Licensed Intellectual Property, does or may conflict with or infringe the
Intellectual Property of any third party.
(c) Except as disclosed in SECTION 4.10(c) of the DISCLOSURE SCHEDULE, the
Company or a Company Subsidiary owns all right, title and interest in and to the
Owned Intellectual Property and Licenses, and is entitled to use the Owned
Intellectual Property and Licensed Intellectual Property in the ordinary course
of the business of the Company and the Company Subsidiaries as presently
conducted. The Owned Intellectual Property and, to the knowledge of the Company,
the Licensed Intellectual Property are subsisting, valid and enforceable, and
have not been adjudged invalid or unenforceable in whole or in part.
(d) No Action has been asserted in writing, or is pending or threatened in
writing, against the Company or any Company Subsidiary (i) based upon or
challenging or seeking to deny or restrict the use by the Company or any Company
Subsidiary of any of the Owned Intellectual Property or Licensed Intellectual
Property or (ii) alleging that the Licensed Intellectual Property is being used
in conflict with the terms of any license or other agreement.
(e) To the knowledge of the Company, no person is infringing on the Owned
Intellectual Property or Licensed Intellectual Property. Neither the Company nor
any Company Subsidiary
23
has granted any license or other right to any third party with respect to the
Owned Intellectual Property or Licensed Intellectual Property other than in the
ordinary course of business.
(f) To the knowledge of the Company, the Company Software (1) is free of all
material viruses, worms, trojan horses and other known contaminants which
prevent the operation of software programs or operating systems from being used
on a system-wide basis and for which there is no reasonable work-around solution
available; (2) is not the subject of an Action pending or, to the knowledge of
the Company, an Action threatened to be brought against the Company or any
Company Subsidiary, in respect thereof; and (3) is in substantial conformance
with the current documentation, whether electronically embedded, written or
otherwise, shipped with such Company Software, except for errors and bugs of the
type, scope and nature generally acceptable in the software industry for similar
types of software products. Except for licenses issued to distributors,
resellers, value-added resellers, strategic partners and the Company's escrow
agent(s) in the ordinary course, no rights in the Company Software have been
transferred to any third party except to the customers of the Company or the
Company Subsidiaries to whom the Company has licensed such Company Software in
the ordinary course of business.
(g) The Company has taken reasonable steps in accordance with normal industry
practice to maintain the confidentiality of its trade secrets and its other
confidential Intellectual Property. To the knowledge of the Company (i) there
has been no misappropriation of any material trade secrets or other material
Intellectual Property of the Company or any Company Subsidiary by any Person,
(ii) no employee, independent contractor or agent of the Company or any Company
Subsidiary has misappropriated any trade secrets of any other person in the
course of such performance as an employee, independent contractor or agent, and
(iii) no employee, independent contractor or agent of the Company or any Company
Subsidiary 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.
(h) No Owned Intellectual Property, or, to the knowledge of the Company,
Licensed Intellectual Property, is subject to any outstanding decree, order,
injunction, judgment or ruling restricting the use of such Intellectual Property
or that would impair the validity or enforceability of such Intellectual
Property. The consummation of the transactions contemplated by this Agreement
will not result in the termination, loss or impairment of any of the Owned
Intellectual Property or the Licenses the losses of which would be materially
adverse to the Company.
(i) SECTION 4.10(i) of the DISCLOSURE SCHEDULE lists all software or other
material that is distributed as "free software," "open source software" or under
a similar licensing or distribution model (including but not limited to the GNU
General Public License, GNU Lesser General Public License, Sun Community Source
License (SCSL) or the Sun Industry Standards License (SISL)) ("OPEN SOURCE
MATERIALS") that is used by Company in any way and describes the manner in which
the Open Source Materials were used and, if appropriate, modified and
distributed by the Company. Except as set forth in SECTION 4.10(i) of the
DISCLOSURE SCHEDULE, Company has not (1) incorporated Open Source Materials
into, or combined Open Source Materials with, Company's Software or products,
(b) distributed Open Source Materials in conjunction with Company's Software or
products, or (c) used Open Source Materials that create, or purport to create,
obligations for Company with respect to Company's Owned
24
Intellectual Property or Company Software or grant, or purport to grant, to any
third party, any rights or immunities under Company's Owned Intellectual
Property or Company Software (including using any Open Source Materials that
require, as a condition of use, modification or distribution of such Open Source
Materials that other software incorporated into, derived from or distributed
with such Open Source Materials be (i) disclosed or distributed in source code
form, (ii) be licensed for the purpose of making derivative works, or (iii) be
redistributable at no charge). No Owned Intellectual Property or Company
Software are subject to the terms of license of any such Open Source Materials.
SECTION 4.11. ABSENCE OF LITIGATION There is no material Action pending or, to
the knowledge of the Company, threatened to be brought against the Company or
any Company Subsidiary, or any property or asset of the Company or any Company
Subsidiary, before any Governmental Authority. Neither the Company nor any
Company Subsidiary nor any material property or asset of the Company or any
Company Subsidiary is subject to any Governmental Order, or any continuing order
of, consent decree, settlement agreement or other similar written agreement
with, or, to the knowledge of the Company, continuing investigation by, any
Governmental Authority.
SECTION 4.12. CUSTOMERS SECTION 4.12 of the DISCLOSURE SCHEDULE lists the 10
largest customers of the Company and the Company Subsidiaries by consolidated
revenue during the six-month period ended January 31, 2004 (the "CUSTOMERS").
Since January 31, 2004 through the date hereof, to the knowledge of the Company,
none of the Company or any Company Subsidiary has received any written notice
from any of the Customers to the effect that any such Customer intends to cease
or materially reduce the amount or size of orders placed with the Company or any
Company Subsidiary or otherwise reduce the amount of business conducted with the
Company or any Company Subsidiary.
SECTION 4.13. EMPLOYEE BENEFIT PLANS(a) For purposes of this Agreement, "PLANS"
are all the employee benefit plans, programs, arrangements and agreements
including, without limitation, any employee benefit plan as defined in Section
3(3) of the United States Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), each employee benefit plan for which the Company or any
Company Subsidiary could incur liability under Section 4069, 4201 or 4212 (c) of
ERISA and each retirement, pension, supplemental retirement, enhanced
retirement, savings, retirement savings, bonus, profit sharing, stock purchase,
stock option, phantom stock, restricted stock, share appreciation rights,
deferred compensation, severance or termination pay, redundancy policies, change
of control, insurance, medical, hospital, dental care, retiree medical or life
insurance, vision care, drug, sick leave, short term or long term disability,
salary continuation, unemployment benefits, vacation, incentive, compensation,
employment or other employee benefit plan, program, arrangement, policy or
practice whether written or oral, formal or informal, funded or unfunded,
registered or unregistered, insured or self-insured, that is maintained or
otherwise contributed to, or required to be contributed to, by or on behalf of
the Company or a Company Subsidiary for the benefit of current or former
employees, directors, officers, shareholders, independent contractors or agents
of the Company or a Company Subsidiary (collectively, the "PLANS"). SECTION
4.13(a)(i) of the DISCLOSURE SCHEDULE identifies all Plans covering employees of
the Company or any Company Subsidiary who are or were employed in Canada (the
"CANADIAN PLANS"). SECTION 4.13(a)(ii) of the DISCLOSURE SCHEDULE identifies all
Plans covering employees of the Company or any Company
25
Subsidiary who are or were employed in the United States (the "U.S. PLANS").
SECTION 4.13(a)(iii) of the DISCLOSURE SCHEDULE identifies all Plans covering
employees of the Company or any Company Subsidiary who are or were employed in
the United Kingdom (the "U.K. PLANS"). SECTION 4.13(a)(iv) of the DISCLOSURE
SCHEDULE identifies all Plans covering employees of the Company or any Company
Subsidiary who are or were employed in France (the "FRENCH PLANS"). SECTION
4.13(a)(v) of the DISCLOSURE SCHEDULE lists all of the employees and independent
contractors of the Company and its subsidiaries. Other than as set out in the
DISCLOSURE SCHEDULE to this SECTION 4.13(a), there are no Plans covering
employees of the Company or any Company Subsidiary. The Company has furnished
the Parent with a complete and accurate copy of each Plan (and where no text
exists, a summary is provided) and a complete and accurate copy of each material
document prepared in connection with each such Plan, all as amended to the date
hereof, including, without limitation, with respect to the Canadian Plans, (A)
the entire historical documentation, (B) all materials or documents distributed
to new or existing members of the Canadian Plans during the last three years and
(C) the most recent annual information returns filed with any Governmental
Authority, and with respect to the U.K. Plans, a copy of each employee handbook
and material communication to employees, directors or officers. No fact,
condition or circumstances has occurred since the date of such documents which
would materially affect the information contained therein. Each Plan referenced
on SECTION 4.13(a) of the DISCLOSURE SCHEDULE is in writing.
(b) Each Plan has been maintained in all material respects in compliance with
its terms and with the requirements prescribed by all applicable Laws, and is in
good standing in respect of such applicable Laws, and each Plan that is required
to be registered under any applicable Laws is duly registered with the relevant
Governmental Authority. All contributions, premiums or payments required to be
paid, deducted or remitted and all obligations required to be performed by the
Company or a Company Subsidiary pursuant to the terms of any Plan or by
applicable Laws, have been paid, deducted, remitted or performed in a timely
fashion and there are no outstanding defaults or violations with regard to same.
All such contributions have been fully deducted for income tax purposes (and
where relevant, social security contribution purposes) and no such deduction has
been challenged or disallowed by any government entity and no fact or event
exists which could give rise to any such challenge or disallowance.
(c) No event has occurred, there exists no condition or set of circumstances,
and there has been no failure to act on the part of either the Company or a
Company Subsidiary or a trustee or an administrator of any Plan, that could
subject either the Company or a Company Subsidiary, a trustee or administrator
of any Plan, any Plan or any successor plan to the imposition of any tax,
penalty, penalty tax or other liability, whether by way of indemnity or
otherwise, under the terms of such Plan, ERISA, the Code or any other applicable
Law. There are no actions, suits, claims, trials, demands, investigations,
arbitration or other proceedings pending or, to the knowledge of the Company or
a Company Subsidiary, threatened with respect to the Plans (other than routine
claims for benefits) ("PROCEEDINGS") and no circumstances or event has occurred
that could result in a Proceeding.
(d) No promises or commitments have been made by the Company or a Company
Subsidiary to amend or terminate any Plan, to provide increased benefits
thereunder or to establish any new Plan, except as required by applicable Laws,
including, without limitation, ERISA or the Code.
26
(e) Except as set forth in SECTION 4.13(e) of the DISCLOSURE SCHEDULE, none of
the Plans (i) provides or has provided for the payment of separation, severance,
termination or similar-type benefits to any person, (ii) obligates the Company
or a Company Subsidiary to pay separation, severance, termination or
similar-type benefits solely or partially as a result of any transaction
contemplated by this Agreement, (iii) provides for the acceleration, vesting or
increase in benefits solely or partially as a result of any transaction
contemplated by this Agreement or (iv) provides for payments that could result,
separately or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of Section 280G of the Code. None of the Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of the Company or a Company
Subsidiary. There are no termination policies (including, without limitation,
redundancy policies) whether or not contractual that have been applied to any of
the former employees of the Company or any of the Company Subsidiaries within
the period of five years ending with the date of this Agreement.
(f) None of Canadian Plans is a registered pension plan.
(g) None of the Canadian Plans requires or permits retroactive increases or
assessments in premiums or payments. Neither the Company nor any Company
Subsidiary contribute or are required to contribute to any multi-employer
pension or benefit plan. None of the Canadian Plans is a multiemployer pension
or benefit plan. All Canadian Plans can be amended or terminated without any
restrictions and the Company or a Company Subsidiary has the unrestricted power
to amend or terminate any of the Canadian Plans. There is no pending termination
or winding-up procedure in respect of any of the Canadian Plans, and no
circumstances or event has occurred under which any of the Canadian Plans could
be declared terminated or wound-up in whole or in part under the terms of such
Canadian Plans or any applicable Laws. The liabilities of the Company or any
Company Subsidiary under any unfunded Canadian Plan are properly accrued and
reflected in the financial statements of the Company and any Company Subsidiary.
(h) None of the U.K. Plans is an occupational pension scheme (as defined in
Section 1 of the U.K. Pension Schemes Act 1933) or provides or funds any
relevant benefits (as defined in Section 612(l) of the U.K. Income and
Corporation Taxes Act 1988 but as if the exception contained in that section
were omitted) for any past or present director, officer or employee, or for any
dependant of any such person, under or in connection with which the Company or
any Company Subsidiary has or may have any liability (actual or contingent,
present or future). Each of the U.K. Plans is a defined contribution pension
plan, the contribution(s) of the Company or a Company Subsidiary's is no more
than 5% of eligible pay of an employee, and that the Company or a Company
Subsidiary has no liability for termination or withdrawal penalties pursuant to
a UK Plan.
(i) SECTION 4.13(i) of the DISCLOSURE SCHEDULE sets forth details of those
U.K. Plans that are personal pension schemes (as defined in section 630 of the
U.K. Income and Corporation Taxes Act 1988) (the "PERSONAL PENSION SCHEMES") and
specifies the required rates for contributions by or on behalf of each director,
officer or employee and each of the Company and the Company Subsidiaries has
satisfied, and continues to satisfy, its obligations under Part I of the U.K.
Welfare Reform and Pensions ▇▇▇ ▇▇▇▇ in respect of its directors, officers and
employees from time to time. The Personal Pension Schemes are approved personal
pension schemes within the
27
meaning of Chapter IV of Part XIV of the U.K. Income and Corporation Taxes Act
of 1988; they have at all times complied with and been duly administered in
accordance with all applicable legislation, regulations and requirements
(including, without limitation, the requirements of the Inland Revenue and where
applicable contracting-out requirements); and nothing has been done or omitted
to be done which will or may result in any Personal Pension Scheme ceasing to be
an approved personal pension scheme. All amounts due in connection with the
Personal Pension Schemes have been paid; and there are no actions, suits or
claims pending or threatened in respect of the Personal Pension Schemes. The
Personal Pension Schemes do not provide any benefits other than money purchase
benefits (as defined in Section 181 of the U.K. Pension Schemes Act 1993).
SECTION 4.14. LABOUR
(a) None of the Company or any Company Subsidiary has any collective
bargaining agreement, recognition agreement or other arrangement with any labor
union or other employee association or representative of employees or any
letters of understanding or letters of policy in respect thereof and none of the
Company or any Company Subsidiary has made any commitment to or conducted
negotiations with any labor union or other employee association or
representative of employees with respect to any future agreements. No strike,
slowdown, picketing or work stoppage by any union or other group of employees
against the Company or any Company Subsidiary or their assets wherever located,
and no secondary boycott with respect to their products or services, lockout by
them of any of their employees or any other labor trouble or other occurrence,
event or condition of a similar character, has occurred or been threatened.
There has not during the period of three years ending with the date of this
Agreement been any industrial action or dispute regarding the dismissal or
variation of terms or conditions of employment involving any category or
material number of employees or former employees of the Company or any of the
Company Subsidiaries or involving any employee representative of any employee or
former employee of the Company or any of the Company Subsidiaries.
(b) There is no certification of any bargaining agent outstanding or applied
for with respect to any of the employees of the Company or any Company
Subsidiary and there is no current attempt, to the knowledge of the Company, to
organize or establish any labor union or employee association in connection with
the Company or any Company Subsidiary or their businesses. There are no
outstanding labor tribunal proceedings, including any proceedings which could
result in the certification of a trade union as a bargaining agent for employees
or dependent contractors of the Company or any Company Subsidiary in respect of
their businesses that are not already covered by the collective agreements. To
the knowledge of the Company, there are no threatened or apparent union
organizing activities involving employees or dependent contractors of the
Company or any Company Subsidiary in respect of the business of the Company and
the Company Subsidiaries that are not already covered by the collective
agreements. To the knowledge of the Company, none of the Company or any Company
Subsidiary is in default under any collective agreement.
(c) The Company and the Company Subsidiaries are currently in compliance with
and there are no complaints, nor to the knowledge of the Company, are there any
threatened complaints, against the Company or any Company Subsidiary pursuant to
any Laws relating to employees,
28
including employment standards, human rights, occupational health and safety,
worker classification workplace safety, wages, hours, pay, employment
discrimination, employment equity and the withholding of taxes and other sums as
may be required by the relevant Governmental Authority except for issues
relating to the dismissal of employees in the ordinary course of business of the
Company or the Company Subsidiaries that would not have or is not expected to
have a Company Material Adverse Effect. To the knowledge of the Company, no
event has occurred which might lead to a complaint against the Company or any
Company Subsidiary under such Laws. There are no outstanding decisions or
settlements or pending settlements which place any obligation upon the Company
or any Company Subsidiary to do or refrain from doing any act. All current
assessments under workplace safety Laws in relation to the business of the
Company and the Company Subsidiaries have been paid or accrued by the Company or
any Company Subsidiary and business of the Company and the Company Subsidiaries
has not been subject to any special penalty assessment under such Laws that has
not been paid. The Company and the Company Subsidiaries are in compliance in all
aspects with the requirements of any Law relating to workers' compensation,
including, without limitation, the maintenance of adequate insurance with
respect to workers' compensation claims.
(d) There are no inspection reports under occupational health and safety
legislation relating to the business of the Company and the Company
Subsidiaries. Except as set forth in SECTION 4.14(d) of the DISCLOSURE SCHEDULE,
the Company and the Company Subsidiaries are operating in compliance with all
occupational health and safety legislation, including but not limited to the
Workplace Hazardous Materials Information System (WHMIS), relating to the
business of the Company and the Company Subsidiaries. To the knowledge of the
Company, there are no pending or threatened charges against the Company or any
Company Subsidiary under occupational health and safety legislation relating to
the business of the Company and the Company Subsidiaries. There have been no
fatal or other critical accidents that might lead to charges pursuant to
occupational health and safety legislation. To the knowledge of the Company,
there are no appeals of any remedial orders under occupational health and safety
legislation relating to the business of the Company and the Company Subsidiaries
which are currently outstanding.
(e) There is no agreement between the Company or any of the Company
Subsidiaries that relates to the supply of persons in relation to the business
of the Company or any of the Company Subsidiaries, including without limitation
secondees, agency staff, contract staff or temporary staff.
(f) There has not been any transaction during the period of three years ending
with the date of this Agreement involving the Company or any of the Company
Subsidiaries to which the U.K. Transfer of Undertakings (Protection of
Employment) Regulations 1981 (or equivalent legislation) has applied. Neither
the Company nor any of the Company Subsidiaries has breached any regulation or
legislation of any kind in respect of any category or material number of
employees or former employees of the Company or any of the Company Subsidiaries.
The Company and the Company Subsidiaries are in compliance with the requirements
of the Workers Adjustment and Retraining Notification Act and any local or state
law equivalent ("WARN") and have no liabilities pursuant to WARN.
29
SECTION 4.15. INSURANCE
SECTION 4.15 of the DISCLOSURE SCHEDULE sets forth a true and complete list and
description of all insurance policies in effect as of the date hereof, providing
coverage with respect to the business or assets of the Company or the Company
Subsidiaries. Each such policy has been issued to the Company or a Company
Subsidiary. None of the Company or the Company Subsidiaries is in default with
respect to any of the provisions contained in any such insurance policy, nor has
it failed to give any notice or present any claim under any such insurance
policy in a timely fashion and none of the Company or the Company Subsidiaries
has received notice from any insurer denying any claim. All premiums due
thereunder have been paid when due, and none of the Company or any Company
Subsidiary has received any notice of cancellation or termination in respect of
any such policy.
SECTION 4.16. TAXES
(a) Except as disclosed in SECTION 4.16(a) of the DISCLOSURE SCHEDULE, (i) the
Company, each of the Company Subsidiaries, and any affiliated group of which any
such Company Subsidiary is or has been a member (including any affiliated group
within the meaning of Section 1504(a) of the Code), has filed or caused to be
filed all Tax Returns required to be filed by any of them as required by the
ITA, under the Code, or by applicable provincial, state, local or foreign Tax
laws (and, to the knowledge of the Company, all Tax Returns for the periods
after the periods described in SECTION 4.16(a)(viii) of the DISCLOSURE SCHEDULE
were filed within the time prescribed by applicable Tax laws); (ii) all Taxes
due and payable or remittable with respect to the periods or portions of periods
ending on or prior to the Closing Date reflected on those Tax Returns, and all
assessments, reassessments, Tax installments, or other remittances (whether or
not required to be shown on Tax Returns) required to be made on or prior to the
Closing Date have been paid or will be paid on or prior to the Closing Date or,
to the extent unpaid and not due and payable as of the Closing Date, adequate
provision for the payment thereof has been or will be made in the Audited
Financial Statements or the Interim Financial Statements; (iii) all such Tax
Returns are true, correct and complete in all material respects and fully
disclose the income, tax, expenses, deductions, and credits to the extent
permitted by Law, and none of such Tax Returns has been amended; (iv) there are
no written proposed adjustments for the assessment or collection of Taxes and
none of the Company or any Company Subsidiary has had any communications with
any Tax Authority which indicated that any such pending or threatened actions
for the assessment or collection of Taxes against the Company or any Company
Subsidiary is currently in progress and, to the knowledge of the Company, there
are no pending or threatened actions for the assessment or collection of Taxes
against the Company or any Company Subsidiary; (v) neither the Company nor any
Company Subsidiary is a party to, is bound by, or has any obligation under any
Tax sharing, indemnification or allocation agreement or similar agreement; (vi)
except in connection with the winding-up of a wholly-owned subsidiary, neither
the Company nor any Company Subsidiary has any liability for the Taxes of any
other corporation for any reason, including as a transferee or successor; (vii)
neither the Company nor any Company Subsidiary (A) files, has filed or is
required to file Tax Returns in jurisdictions outside Canada, the United States,
Barbados, the United Kingdom, or France and no claim is being made by a Tax
Authority in a jurisdiction where the Company or any Company Subsidiary, as the
case may be, does not file Tax Returns that the Company or the Company
Subsidiary, as the case may be, is or may be subject to taxation by that
jurisdiction, or (B) has
30
any income reportable for a period ending after the Closing Date that is
attributable to an activity or a transaction (e.g., an installment sale)
occurring in, or a change in accounting method made for, a period ending on or
prior to the Closing Date, that resulted in a deferred reporting of income from
such transaction or from such change in accounting method; (viii) the income tax
liabilities of the Company and each Company Subsidiary have been assessed for
the taxation years or taxable periods prior to the taxation years or taxable
periods set out in SECTION 4.16(a)(viii) of the DISCLOSURE SCHEDULE, and copies
of all assessments and reassessments relating to such taxation years have been
provided to the Purchaser; (ix) there are no outstanding waivers or agreements
extending, or requests to extend, the statute of limitations for any period with
respect to any Tax to which the Company and/or the Company Subsidiaries may be
subject; (x) neither the Company nor any of the Company Subsidiaries is a party
to any agreement or arrangement that would result in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code determined
without regard to subsection (b)(4) thereof; (xi) neither the Company nor any
Company Subsidiary is required to make any adjustment (under Section 481(a) of
the Code or otherwise), by reason of a change or proposed change in accounting
method or otherwise, for which an adequate provision for the payment thereof has
not been made on the Interim Financial Statements or books of account of the
Company; and (xii) no Tax liens exist or have been filed on any assets of the
Company or any Company Subsidiary (other than liens for Taxes not yet due and
payable).
(b) The Company has delivered or made available to Parent prior to the date of
this Agreement correct and complete copies of all Canadian federal and
provincial, and U.S. federal and state income and franchise Tax Returns of the
Company and the Company Subsidiaries for all periods ending July 31, 1999 and
thereafter.
(c) Each of the Company and the Company Subsidiaries has withheld from each
payment made to each of its present and former employees, officers and directors
and to any non-resident of the country in which the Company or such Company
Subsidiary is a resident the amount of any Taxes and other deductions required
to be withheld therefrom and has paid the same to the proper government
authority within the time periods required under any applicable legislation.
(d) No amount in respect of any outlay or expense that is deductible for the
purposes of computing the income of each of the Company and the Company
Subsidiaries which are subject to Tax under the ITA (the "CANADIAN ENTITIES")
for the purposes of the ITA has been owing by any such Canadian Entities for
longer than two (2) years to a person with whom such Canadian Entity was not
dealing at arm's length (for the purposes of the ITA) at the time the outlay or
expense was incurred.
(e) The shares of all Company Subsidiaries owned by the Company and/or by
Company Subsidiaries are held as capital property for purposes of the ITA.
(f) Except as disclosed in SECTION 4.16(f) of the DISCLOSURE SCHEDULE, neither
the Company nor the Company Subsidiaries have, either directly or indirectly,
transferred or allowed the use of property to, rendered services to, or lent
money to, or acquired or obtained the use of property from, received services
from, or borrowed money from, a person with whom they were not dealing at arm's
length (for the purposes of the ITA) for consideration other than consideration
which was, to the knowledge of the Company, a fair market value consideration
31
(g) There are no circumstances which exist and would result in, or which have
existed and resulted in section 80 of the ITA applying to any of the Canadian
Entities.
(h) Neither the Company nor any Company Subsidiary has been a party to an
election made under Section 93 of the ITA. The Company has not been a party to
an election made under Section 85 of the ITA with respect to the acquisition of
shares of any of the Company Subsidiaries located in the United Kingdom or
Barbados.
(i) The Canadian Entities are each a registrant for the purposes of Part IX of
the ETA and none is a financial institution within the meaning of the ETA. The
Canadian Entities have not made any elections under Part IX of the ETA after
1997 and, to the knowledge of the Company, no other such elections are in
effect.
(j) Except as disclosed in SECTION 4.16(j) of the DISCLOSURE SCHEDULE, the
Sellers are not, and will not be at Closing, non-residents of Canada within the
meaning of the ITA.
SECTION 4.17. ENVIRONMENTAL MATTERS (a) The Company and the Company Subsidiaries
are in compliance in all material respects with, and for the past three years
have been in compliance in all material respects with, all applicable
Environmental Laws. All past non-compliance with Environmental Laws or
Environmental Permits has been resolved without any pending, ongoing or future
material obligation, cost or liability.
(b) To the knowledge of the Company, there are no underground or aboveground
storage tanks or any surface impoundments, septic tanks, sumps or lagoons in
which Hazardous Materials are being or have been treated, stored or disposed of
on any immovable and real property currently used or occupied by the Company or
any Company Subsidiary, or on any property formerly owned, leased, used or
occupied by the Company or any Company Subsidiary.
(c) To the knowledge of the Company, there has been no material Release of
Hazardous Materials on any immovable and real property currently used or
occupied by the Company or any Company Subsidiary, or, during the Company's or
any Company Subsidiary's ownership, lease, use or occupancy of such property, on
any property formerly owned, leased, used or occupied by the Company or any
Company Subsidiary.
(d) To the knowledge of the Company, there is no asbestos or
asbestos-containing material at any of the immovable and real property currently
used or occupied by the Company or any Company Subsidiary.
(e) There are no claims relating to any Environmental Law pending or, to the
knowledge of the Company, threatened against the Company or any Company
Subsidiary, their business, or any other immovable and real property currently
used or occupied by the Company or any Company Subsidiary, and, to the knowledge
of the Company, there are no circumstances that could reasonably be expected to
form the basis of any such claim.
SECTION 4.18. RELATED PARTY TRANSACTIONS Except as contemplated by this
Agreement or as set out in SECTION 4.18 of the DISCLOSURE SCHEDULE, no executive
officer, director, shareholder or Affiliate of the Company or any Company
Subsidiary nor any immediate family member or Affiliate of such executive
officer, director or shareholder (a) is a party to any agreement,
32
contract, commitment, arrangement or transaction with the Company or any Company
Subsidiary or (b) is entitled to any payment or transfer of any assets from the
Company or any Company Subsidiary or (c) has any material interest in any
material property used by the Company or any Company Subsidiary or (d) has an
interest in any customer or supplier of the Company or any Company Subsidiary or
provider of any services to the Company or any Company Subsidiary, except in
each case the ownership of less than 5% of the outstanding share capital of any
publicly traded company.
SECTION 4.19. RECEIVABLES Except to the extent, if any, reserved for on the
Interim Balance Sheet, all Receivables reflected on the Interim Balance Sheet
arose from the license of software and related services to persons not
affiliated with the Company or any Company Subsidiary and in the ordinary course
of business consistent with past practice and, except as reserved for on the
Interim Balance Sheet, constitute, to the extent they remain outstanding, only
valid, undisputed claims of the Company or a Company Subsidiary. All Receivables
existing on the Closing Date shall have arisen from, the license of software and
related services to persons not affiliated with the Company or any Company
Subsidiary and in the ordinary course of business consistent with past practice.
None of the Receivables include any amounts in respect of "forced sales" in
connection with delinquent accounts, which is not fully reserved.
SECTION 4.20. PRODUCT LIABILITY No facts or circumstances exist that reasonably
would be expected to be the basis for any claims or remedial expenses
(including, without limitation, claims for product liability, defects, breaches,
product warranties or personal injury claims) in connection with the production,
packaging, sale, distribution or use of any of the products produced in the
business of the Company or any Company Subsidiary prior to or on the Closing
Date that are reasonably likely to result in a Company Material Adverse Effect.
SECTION 4.21. BROKERS
Except as set out in SECTION 4.21 of the DISCLOSURE SCHEDULE, no broker, finder,
investment banker nor any affiliate of the Company is entitled to any brokerage,
finder's, consulting or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
As an inducement to the Company and each of the Sellers to enter into this
Agreement, Parent and the Purchaser, jointly and not severally, hereby represent
and warrant to each of the Sellers as follows:
SECTION 5.01. ORGANIZATION AND AUTHORITY Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all necessary corporate power
and authority to execute and deliver this Agreement and (in the case of the
Purchaser) the Escrow Agreement, to perform its obligations hereunder and (in
the case of the Purchaser) thereunder and to consummate the transactions
33
contemplated by this Agreement and (in the case of the Purchaser) thereby. The
execution and delivery by Parent and the Purchaser of this Agreement and the
Escrow Agreement, the performance by Parent and the Purchaser of its obligations
hereunder and (in the case of the Purchaser) thereunder and the consummation by
Parent and the Purchaser of the transactions contemplated by this Agreement and
(in the case of the Purchaser) thereby have been duly and validly authorized by
all necessary corporate action on the part of Parent and the Purchaser, and no
other corporate proceeding on the part of Parent or the Purchaser is necessary
to authorize this Agreement or the Escrow Agreement or the performance by Parent
or the Purchaser of its obligations hereunder or thereunder, or to consummate
the transactions contemplated hereby and thereby. This Agreement has been, and
the Escrow Agreement shall be, duly and validly executed and delivered by Parent
and the Purchaser, and (assuming due authorization, execution and delivery by
the Sellers and the Company) this Agreement constitutes, and the Escrow
Agreement shall constitute, a legal, valid and binding obligation of Parent and
the Purchaser, enforceable against Parent and the Purchaser in accordance with
its terms.
SECTION 5.02. NO CONFLICT Assuming the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in SECTION 5.03, except as may result from any facts or circumstances relating
solely to the Sellers or the Company, the execution, delivery and performance by
Parent or the Purchaser of this Agreement and the Escrow Agreement do not and
shall not (a) conflict with or violate any provision of the Certificate of
Incorporation or By-laws of Parent or the Purchaser, (b) conflict with or
violate any Law or Governmental Order applicable to Parent or the Purchaser or
(c) conflict with, or result in any breach of or 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,
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, which would adversely affect the ability of the Purchaser
to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement or the Escrow Agreement.
SECTION 5.03. GOVERNMENTAL CONSENTS AND APPROVALS The execution and delivery by
Parent and the Purchaser of this Agreement and the Escrow Agreement do not, and
the performance of this Agreement and the Escrow Agreement by Parent and the
Purchaser shall not, require or make desirable any consent, approval,
authorization or other order of, action by, filing with, or notification to any
Governmental Authority, except Investment Canada Act Approval, the notification
requirements of the HSR Act, and FT Act Approval.
SECTION 5.04. 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 5.05. FINANCING Parent has available all funds necessary to consummate
all the transactions contemplated by this Agreement and the Escrow Agreement.
SECTION 5.06. LITIGATION There are no Actions by or against Parent or the
Purchaser pending before any Governmental Authority (or, to the knowledge of
Parent or the Purchaser, threatened to be brought by or before any Governmental
Authority) which could affect the legality, validity
34
or enforceability of this Agreement or the Escrow Agreement or the consummation
of the transactions contemplated hereby or thereby.
SECTION 5.07. BROKERS No broker, finder, investment banker or any other third
party is entitled to any brokerage, finder's, consulting or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Purchaser.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. CONDUCT OF BUSINESS PRIOR TO THE CLOSING Except as expressly
provided in this Agreement and except as may be consented to in writing by the
Purchaser (such consent not to be unreasonably withheld or delayed) between the
date of this Agreement and the Closing Date, the Company and the Company
Subsidiaries shall (a) conduct their business only in the ordinary course and on
a basis consistent with past practice, including maintaining the levels of
capital expenditures substantially consistent with budgets for the period
between the date hereof and the date set forth in SECTION 9.01(a) (correct and
complete copies of which have been provided to Parent), it being understood that
the Company Options are to be terminated or exercised in accordance with SECTION
2.08 and that the Pre-Closing Transaction contemplated by SECTION 6.16 is to be
completed prior to Closing, which levels are at least consistent with past
practice, (b) use reasonable efforts to preserve intact their business
organization and assets, (c) use reasonable efforts to keep available to
themselves and to the Purchaser the services of their present officers and key
employees, (d) not shorten or lengthen the customary payment cycles for any of
its payables or receivables, except in the ordinary course of the business of
the Company or any Subsidiary consistent with the Company's past practice and
(e) use reasonable efforts to preserve their current relationships with their
respective customers, suppliers, distributors and other Persons with which they
have significant business relationships. Without limiting the generality of the
foregoing, the Company shall assure that, after the date hereof and prior to the
Closing Date, without the prior written consent of the Purchaser:
(i) neither the Company nor any Company Subsidiary shall: (A)
amend its Articles of Incorporation or equivalent documents, (B) except as
set forth in SECTION 6.10, issue, sell, transfer, pledge, dispose of or
encumber any shares of any class or series of its capital, or securities
convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of any class or
series of its capital, (C) split, combine or reclassify any shares of any
class or series of its capital, (D) declare or pay any dividend on any of
the Shares or declare or make any other distribution of its capital or (E)
redeem, purchase or otherwise acquire directly or indirectly any shares of
any class or series of its capital, or any instrument or security which
consists of or includes a right to acquire such shares except for the
acquisition of any shares held by employees or former employees of the
Company or any Company Subsidiary in connection with a termination of
employment of such employee or former employee and except for the
termination of the Company Options in accordance with SECTION 2.08;
35
(ii) neither the Company nor any of the Company Subsidiaries shall
incur or assume any Indebtedness;
(iii) neither the Company nor any Company Subsidiary shall (A) grant
any increase, or announce any increase, in the wages, salaries,
compensation, bonuses, incentives, pension or other benefits payable by
the Company or any Company Subsidiary to any of its employees other than
normal recurring increases in the ordinary course of business or pursuant
to plans, programs or agreements existing on the date hereof, including,
without limitation, any increase or change pursuant to any Plan, or (B)
establish or increase or promise to increase any benefits under any Plan,
in either case except as required by law or any agreement or involving
ordinary increases consistent with the past practices of the Company or
such Company Subsidiary;
(iv) neither the Company nor any Company Subsidiary shall
voluntarily permit any insurance policy naming it as a beneficiary or a
loss payable payee to be cancelled or terminated prior to the Closing
Date;
(v) neither the Company nor any of the Company Subsidiaries shall
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
the Company or any Company Subsidiary;
(vi) neither the Company nor any Company Subsidiary shall change in
any material respect any of the accounting methods or practices used by it
unless required by Canadian GAAP;
(vii) neither the Company nor any Company Subsidiary shall merge
with, enter into a consolidation with or acquire an interest in any Person
or acquire a substantial portion of the assets or business of any Person
or any division or line of business thereof, or otherwise acquire any
material assets other than in the ordinary course of business consistent
with past practice;
(viii) neither the Company nor any Company Subsidiary shall make any
capital expenditure or commitment for any capital expenditure inconsistent
with its budgets for the period between the date hereof and the date set
forth in SECTION 9.01(a);
(ix) neither the Company nor any Company Subsidiary shall sell,
transfer, lease, sublease, license, abandon or otherwise dispose of any
properties or assets, immovable and real, movable and personal or mixed
(including, without limitation, leasehold interests and intangible
assets), other than the licensing of Company Software or the sale of
immaterial assets or inventories, each in the ordinary course of business
consistent with past practice;
(x) neither the Company nor any Company Subsidiary shall write
down or write up (or fail to write down or write up in accordance with
Canadian GAAP and applicable generally accepted accounting practices in
any relevant jurisdiction consistent with past practice) the value of any
inventories or receivables or revalued any assets of the Company or any
Company Subsidiary other than in the ordinary course of business
36
consistent with past practice and in accordance with Canadian GAAP and
applicable generally accepted accounting practices in any relevant
jurisdiction;
(xi) neither the Company nor any Company Subsidiary shall amend,
modify or consent to the termination of any Material Contract or other
agreement which, if in effect on the date hereof, should be listed in
SECTION 4.09 of the DISCLOSURE SCHEDULE or the Company's or any Company
Subsidiary's rights thereunder other than in the ordinary course of
business and consistent with past practice;
(xii) neither the Company nor any of the Company Subsidiaries shall
enter into any agreement, contract, commitment or arrangement to do any of
the foregoing; and
(xiii) neither the Company nor any of the Company Subsidiaries shall
make, change or revoke any Tax election or Tax accounting method, or shall
settle or compromise any Tax deficiency;
provided, that notwithstanding anything else to the contrary in this Agreement,
the Company agrees to terminate and to cause the Company Subsidiaries to
terminate, all swap, forward, future, option, hedge or similar arrangements of a
financial nature (including with respect to currencies or interest rates) prior
to the Closing Date and to satisfy in full all obligations under any such
agreement prior to the Closing Date.
SECTION 6.02. ACCESS TO INFORMATION From the date hereof until the Closing, upon
reasonable notice, the Company shall and shall cause the Company Subsidiaries
and each of the Company's and the Company Subsidiaries' officers, directors,
employees, agents, representatives, accountants and counsel to: (i) afford the
respective officers, employees, agents, accountants, counsel 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 each Company Subsidiary and to those officers, directors, employees, agents,
accountants and counsel of the Company and each Company Subsidiary who have any
knowledge relating to the Company or any Company Subsidiary and (ii) furnish to
the respective officers, employees, agents, accountants, counsel and
representatives of the Purchaser such additional financial and operating data
and other information regarding the assets, properties, liabilities and goodwill
of the Company or any Company Subsidiaries (or legible copies thereof) as the
Purchaser may from time to time reasonably request. All information provided to
the Purchaser pursuant to this SECTION 6.02 shall be kept confidential in
accordance with the confidentiality agreement dated January _5, 2004 between the
Company and the Parent (the "CONFIDENTIALITY AGREEMENT").
SECTION 6.03. CONFIDENTIALITY
Each of the Sellers agrees to, and shall cause its agents, representatives,
Affiliates, employees, officers and directors, if any, to: (a) treat and hold as
confidential and otherwise not use in a manner injurious to the Company or any
of its Affiliates (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
contracts, operations methods, product development techniques, business
acquisition plans, new personnel acquisition plans and
37
all other confidential or proprietary information with respect to the Company
and each Company Subsidiary, (b) in the event that such Seller 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, the Company or any
Company Subsidiary may seek a protective order or other remedy or waive
compliance with this SECTION 6.03, (c) in the event that such protective order
or other remedy is not obtained, or the Purchaser waives compliance with this
SECTION 6.03, furnish only that portion of such confidential information which
is legally required to be provided and exercise its reasonable 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 Company or the Purchaser any and all copies (in whatever form or
medium) of all such confidential information then in the possession of such
Seller or any of its agents, representatives, Affiliates, employees, officers
and directors and destroy any and all additional copies then in the possession
of such Seller 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: (i) any information
that, at the time of disclosure, is available publicly and was not disclosed in
breach of this Agreement by such Seller, its agents, representatives,
Affiliates, employees, officers or directors, if any; (ii) any information
available to such Seller, its agents, representatives, Affiliates, employees,
officers or directors, if any, on a non-confidential basis from any source other
than the Company or the Company Subsidiaries, provided that such source is not
bound by a confidentiality or other similar agreement with the Company or the
Company Subsidiaries, or by any other legal, contractual or fiduciary obligation
which prohibits the disclosure of such information; or (iii) any information
that has been independently acquired or developed by such Seller, its agents,
representatives, Affiliates, employees, officers or directors, if any, without
violating any of the obligations of such Seller under this SECTION 6.03 and
provided further that, with respect to Intellectual Property, specific
information shall not be deemed to be within the foregoing exceptions 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. Each of the Sellers agrees and
acknowledges that remedies at law for any breach of its obligations under this
SECTION 6.03 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 6.04. REGULATORY AND OTHER AUTHORIZATIONS; NOTICES AND CONSENTS(a) Upon
the terms and subject to the conditions hereof, each of the Parent and the
Company shall use its reasonable efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary, proper or
desirable under applicable Law or otherwise to consummate the transactions
contemplated by this Agreement and the Escrow Agreement, (ii) obtain from
Governmental Authorities and third parties any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
Parent or the Company or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement and the Escrow Agreement (iii)
expeditiously make all necessary or desirable filings, and thereafter make any
other required or advisable submissions, required under, or relating to, the HSR
Act, the
38
Investment Canada Act, the Competition Act (Canada) and the FT Act, with respect
to this Agreement and the Transactions contemplated by this Agreement and the
Escrow Agreement and (iv) keep confidential all notices, applications,
information and related confidential documentation in relation to any filings
made for the purpose of the transactions contemplated by this Agreement and the
Escrow Agreement. The Parent and the Company shall cooperate with each other in
connection with the making of all such filings, including by providing, as
appropriate, copies of all such documents to the non-filing party or its
advisors prior to filing, except for information that Parent or the Purchaser,
acting reasonably, considers confidential or competitively sensitive and if
requested, by accepting all reasonable changes suggested in connection with such
filings.
(b) The Parent and the Company shall file as soon as practicable after the
date of this Agreement all required or advisable filings and notifications,
under or relating to, the HSR Act, the Investment Canada Act, the Competition
Act (Canada) and the FT Act and shall promptly respond as advisable to all
inquiries or requests received from a Governmental Authority in relation to such
filings or notices for additional information or documentation.
(c) The Company and Parent shall use their respective reasonable efforts to
obtain any third party consents (i) necessary, proper or advisable to consummate
the transactions contemplated by this Agreement, (ii) required to be disclosed
in the Disclosure Schedule or (iii) required to prevent a Company Material
Adverse Effect from occurring prior to the Closing Date.
(d) From the date hereof until the Closing Date, each of the Company and the
Purchaser shall promptly notify the other Party in writing of any pending or, to
the knowledge of such notifying Party, threatened action, suit, arbitration or
other proceeding or investigation by any Governmental Authority or any person
(i) challenging or seeking material damages in connection with the transactions
contemplated by this Agreement or (ii) seeking to restrain or prohibit
consummation of the transactions contemplated by this Agreement or otherwise
limit the right of Parent or its Affiliates to own or operate all or any portion
of the businesses or assets of the Company or the Company Subsidiaries.
SECTION 6.05. NOTICE OF DEVELOPMENTS Prior to the Closing, each of the Sellers
and the Company shall promptly notify the Purchaser in writing of all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could reasonably result in any breach of a representation or
warranty or covenant of such Seller or the Company, respectively, in this
Agreement such that the conditions contained in SECTIONS 7.02(a) or (b) would
not be satisfied.
SECTION 6.06. NO SOLICITATION OR NEGOTIATION Each of the Sellers and the Company
agree that between the date of this Agreement and the earlier of (a) the Closing
and (b) the termination of this Agreement, such Party shall not and shall cause
its Affiliates, officers, directors, representatives or agents (if any) not to
(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 of the Company or any Company Subsidiary or assets of the
Company or any Company Subsidiary (other than Inventory to be sold in the
ordinary course of business consistent with past practice), (B) to enter into
any merger, amalgamation, consolidation or other business combination with the
Company or any Company Subsidiary or (C) to enter into a
39
recapitalization, reorganization or any other extraordinary business transaction
involving or otherwise relating to the Company or any Company Subsidiary (any
such proposal or offer described in clauses (A), (B) or (C), an "ACQUISITION
PROPOSAL") 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. Each of the Sellers and the Company
immediately shall cease and use its reasonable efforts to cause to be terminated
all existing discussions, conversations, negotiations and other communications
with any Persons conducted heretofore with respect to any of the foregoing. Each
of the Sellers and the Company 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.
SECTION 6.07. VOTING Each of the Sellers hereby irrevocably agrees with the
Purchaser, from and after the date hereof and until the earlier to occur of the
Closing and the termination of this Agreement, that each such Seller shall vote
such Seller's Shares at any meeting of the shareholders of the Company, however
called, and in any action by consent of the shareholders of the Company, (a)
against any action, proposal, agreement or transaction that would result in a
breach of any covenant, obligation, agreement, representation or warranty of the
Company, or such Seller, under this Agreement (whether or not theretofore
terminated) or of such Seller contained in this Agreement, and (b) against any
action, agreement, transaction (other than the transactions contemplated hereby)
or proposal (including any Acquisition Proposal) that could result in any of the
conditions to the Seller's and the Company's obligations under this Agreement
(whether or not theretofore terminated) not being fulfilled or that is intended,
or could reasonably be expected, to impede, interfere, delay, discourage or
adversely affect this Agreement.
SECTION 6.08. NO DISPOSITION OR ENCUMBRANCE OF THE SHARES BY THE SELLERS(a) Each
of the Sellers agrees that, except as contemplated by this Agreement, such
Seller shall not sell, transfer, tender, pledge, assign, contribute to the
capital of any entity, hypothecate, give or otherwise dispose of, grant a proxy
or power of attorney with respect to, deposit into any voting trust, enter into
any voting agreement, or create or permit to exist any Encumbrance of any nature
whatsoever with respect to, any of such Seller's Shares (or agree or consent to,
or offer to do, any of the foregoing).
(b) Each of the Sellers agrees not to exercise after the date hereof until
after the termination, if any, of this Agreement any of such Seller's Company
Options held by such Seller without the prior written consent of the Purchaser.
SECTION 6.09. COMPANY BOARD REPRESENTATION Effective as of the Closing, each of
the Sellers shall cause the directors nominated by such Seller (including such
Seller, if applicable) or who are otherwise affiliated with such Seller (except
for such persons as shall have been designated in writing prior to the Closing
by the Purchaser to such Seller) to resign from the Board of Directors of the
Company and the boards of directors of the Company Subsidiaries and
40
to deliver to the Purchaser at the Closing a resignation and general release in
form and substance reasonably satisfactory to the Purchaser (each, a
"RESIGNATION").
SECTION 6.10. ADDITIONAL PARTIES The Company agrees not to issue any Shares
pursuant to the Company Options unless and until any Person exercising such
Company Options shall have become a party to the Company Shareholder Agreement
in accordance with the terms thereof and such Person shall have executed an
Adherence Agreement and delivered such duly and validly executed Adherence
Agreement to Parent, after which such Person shall be deemed a Seller for
purposes of this Agreement and the Escrow Agreement. The Company further agrees
not to issue any Shares pursuant to the Company Options after the 15th Business
Day immediately preceding the Closing Date.
SECTION 6.11. OBLIGATIONS OF THE PURCHASER Parent shall take all action
necessary to cause the Purchaser to perform its obligations under this Agreement
and to consummate the transactions contemplated by this Agreement on the terms
and subject to the conditions set forth in this Agreement.
SECTION 6.12. SECURITIES OF THE PARENT
Each Seller will use its commercially reasonable efforts so that such Seller
will not acquire for its own account any Parent Securities in a manner that
would constitute a part of the Series and to prevent Purchaser from qualifying
for a paragraph 88(1)(d) bump under the ITA.
SECTION 6.13. NON-COMPETITION
Each of the persons identified on SECTION 6.13 of the DISCLOSURE SCHEDULE shall
enter into a non-competition and non-solicitation agreement in favour of the
Purchaser, substantially in the form annexed as SCHEDULE 2.08 hereto (a
"NON-COMPETITION AGREEMENT") on or before the Closing Date in connection with
their employment after Closing.
SECTION 6.14. SECTION 116 CERTIFICATES(a) If a Seller is a non-resident of
Canada (a "NON RESIDENT") for purposes of the ITA, such Non Resident shall
deliver to the Purchaser a certificate issued by the CRA pursuant to subsection
116(2) or (4) of the ITA (a "SECTION 116 CERTIFICATE") in respect of the
disposition by such Non Resident to the Purchaser of such Non Resident's Shares.
In the case of a Section 116 Certificate issued pursuant to subsection 116(2) of
the ITA, the "certificate limit" specified therein shall not be less than that
portion of the Aggregate Purchase Price to which such Non Resident is entitled
to receive on the sale of Shares to the Purchaser (the "NON-CANADIAN PER SELLER
PURCHASE PRICE").
(b) If a Section 116 Certificate with a certificate limit not less than the
Non-Canadian Per Seller Purchase Price has not been delivered by such Non
Resident to the Purchaser on or before the Closing Date, the Purchaser shall
withhold from such Non Resident's Non-Canadian Per Seller Purchase Price an
amount equal to 25% of such Non-Canadian Per Seller Purchase Price (the
"WITHHELD AMOUNT"). The Withheld Amount shall be deposited by the Purchaser in
an interest bearing account at a bank reasonably acceptable to such Non
Resident.
41
(c) If on or before the 30th day of the month following the calendar month in
which Closing occurs (the "REMITTANCE DATE") the Purchaser receives a Section
116 Certificate with a certificate limit at least equal to the Non-Resident's
Non-Canadian Per Seller Purchase Price, the Purchaser shall, promptly after
receipt of such certificate, pay to the Non-Resident the Withheld Amount
together with interest earned on the investment of the Withheld Amount less any
applicable withholding tax with respect to such interest.
(d) In the event that on or before the Remittance Date the Purchaser does not
receive a Section 116 Certificate or receives a Section 116 Certificate with a
certificate limit that is less than the Non-Resident's Non-Canadian Per Seller
Purchase Price then, unless the CRA shall have issued a letter confirming that
the CRA will not enforce the remittance of funds as is normally required under
subsection 116(5) of the ITA and that the Purchaser will not be charged interest
or penalties if it delays the remittance of amounts in respect of the purchase
of the Shares until further instructed by CRA (a "COMFORT LETTER"), the
Purchaser shall remit to the Receiver General for Canada (the "RECEIVER
GENERAL"), the Withheld Amount (or, if a Section 116 Certificate is received by
Purchaser but with a certificate limit less than the Non-Resident's Non-Canadian
Per Seller Purchase Price, the relevant portion of the Withheld Amount) and
shall pay to the Non-Resident the interest earned on the investment of the
Withheld Amount less applicable withholding Tax with respect to such interest.
If CRA has provided a Comfort Letter, the Purchaser shall not remit the Withheld
Amount to the Receiver General on the date that would otherwise be the
Remittance Date and if the relevant Section 116 Certificate is subsequently
received while the Comfort Letter remains in effect, with a certificate limit at
least equal to the Non-Resident's Non-Canadian Per Seller Purchase Price, the
Purchaser shall, promptly after receipt of such certificate, pay to the
Non-Resident the Withheld Amount together with interest earned on the investment
of the Withheld Amount less any applicable withholding tax with respect to such
interest. If notification from CRA is received that the Comfort Letter is no
longer in effect, such date of receipt shall be deemed to be the Remittance Date
for the purposes of this section.
(e) If there is an increase in the Aggregate Purchase Price pursuant to
SECTION 2.09, the provisions of this SECTION 6.14 will apply mutatis mutandis in
order that there be complete compliance with Section 116 of the ITA for such
adjustment.
SECTION 6.15. CONVERSION OF CLASS A SHARES
Each of the Sellers that holds Class A Shares as at the date hereof hereby
irrevocably exercises such Seller's right to convert all of such Seller's Class
A Shares into Common Shares in accordance with terms of the Company Articles;
provided, however, that notwithstanding anything to the contrary herein, the
exercise of such conversion right by such Seller in this SECTION 6.15 is
conditional upon the completion of the transaction of purchase and sale
contemplated by the Agreement and shall only become effective after the
satisfaction or waiver of all conditions precedent to, and immediately prior, to
the Closing as contemplated by this Agreement. For greater certainty, in the
event that this Agreement is terminated in accordance with SECTION 9.01,
exercise of such conversion right by such Seller in this SECTION 9.01 shall
immediately be null and void and of no force and effect. Each of the Sellers
that holds Class A Shares as at the date hereof further acknowledges and agrees
that such Seller shall not receive certificates evidencing the Common Shares to
which it is entitled as a result of the conversion of
42
the Class A Shares. Instead, such Seller shall be deemed to have sold such
Common Shares to the Purchaser in accordance with the terms of this Agreement by
delivering to the Purchaser certificates representing all of such Seller's Class
A Shares at the Closing and shall be entitled to the Aggregate Per Seller
Purchase Price payable to such Seller hereunder. Such Seller covenants and
agrees that it shall execute and deliver all such documents, instruments and
other papers that may be required to carry out the provisions of this SECTION
6.15 on or before the Closing Date.
SECTION 6.16. PRE-CLOSING TRANSACTION
The Parties acknowledge and agree that, conditional upon the completion of the
transaction of purchase and sale contemplated by this Agreement and prior to
Closing, the Company will sell to Changepoint Inc. a number of redeemable
preference quota(s) in Changepoint International SRL for such cash
consideration, each as as determined by the Company prior to Closing, and that
the board of directors of Changepoint Holdings Corporation will pass a
resolution authorizing its winding up and liquidation, to occur forthwith, and
transferring to the Company, its sole shareholder, all of its assets (which at
that time will consist solely of its interest in Changepoint International SRL
and to take such other steps that are required or necessary to terminate its
corporate existence (collectively, the "PRE-CLOSING TRANSACTION"); provided,
however, that any costs in relation to or associated with the Pre-Closing
Transaction and any Taxes that are incurred as a result of the proposed sale of
one common quota of interest in Changepoint International SRL shall be borne by
the Purchaser and shall not be included in the determination of the Acquisition
Expenses; and provided further that any capital expenditures incurred in
connection with the Pre-Closing Transaction and the consummation of the
transactions necessary or otherwise concluded in connection with the Pre-Closing
Transaction shall not constitute or result in, directly or indirectly, a breach
of the representation and warranty of the Company provided for in SECTION 4.06
or any representation or warranty of the Company or of any of the Sellers with
respect to Taxes, the Tax Returns of the Company or any Company Subsidiary or
the Parent Securities.
SECTION 6.17. FURTHER ACTION Each of the Parties shall use its reasonable
efforts to take, or cause to be taken, all appropriate action, to do or cause to
be done all things necessary, proper or advisable under applicable Law, and to
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 and the Escrow Agreement, including,
in the case of each of the Sellers, using its reasonable efforts to cause the
Company to satisfy its obligations hereunder.
SECTION 6.18. DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE
For a period of three (3) years after the Closing, Parent shall use its
commercially reasonable efforts to maintain in effect the Company's directors'
and officers' liability insurance existing at the time of Closing covering those
persons covered by such insurance immediately prior to the Closing (the "Covered
Persons"). Sellers agree (i) to make the necessary arrangements for the
continuation of such coverage and for the payment of any premiums attributable
thereto. The parties agree that the premium for continuation of such insurance
shall be considered an Acquisition Expense, which shall be paid in full by
Sellers on or prior to Closing. Further Parent agrees to indemnify the Covered
Persons for a period of three (3) years following the Closing
43
which indemnity shall be limited to only those matters that are covered by such
directors and officers liability insurance but which are in excess of the
coverage dollar limitations of such insurance.
SECTION 6.19. DISCLOSURE SCHEDULES
The Purchaser and the Company shall be entitled, during the period commencing on
the date hereof and ending at 5:00 p.m. (Toronto time) on April 29, 2004, to
provide supplements or amendments to the Disclosure Schedule forming part of
this Agreement. Delivery of final Disclosure Schedules acceptable to Purchaser
shall be a condition precedent to Parent's and Purchaser's obligation to
consummate this transaction as provided in Section 7.02(i).
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF EACH OF THE SELLERS The obligations
of each of the Sellers to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or written waiver, at or prior to
the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. The representations and
warranties of Parent and the Purchaser contained in this Agreement shall be true
and correct in all material respects as of the Closing, except to the extent
such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of that date, in each case, with the same force and effect as if
made as of the Closing Date; the covenants and agreements contained in this
Agreement to be complied with by Parent and the Purchaser on or before the
Closing Date shall have been complied with in all material respects; and the
Sellers shall have received a certificate from Parent to such effect signed by a
duly authorized officer thereof;
(b) Competition and Other Clearances. Any waiting period (and any extension
thereof) under the Competition Act and HSR Act shall have expired or shall have
been terminated;
(c) No Governmental Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary, preliminary
or permanent) or issued any Governmental Order which is then in effect and has
the effect of making the transactions contemplated by this Agreement or the
Escrow Agreement illegal or otherwise restricting or prohibiting consummation of
such transactions; and
(d) Escrow Agreement. The Purchaser shall have executed and delivered to the
Sellers the Escrow Agreement.
(e) Other. Any other documents or other items required to be executed and/or
delivered by the Purchaser under this Agreement.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF PARENT AND THE PURCHASER The
obligations of Parent and the Purchaser to consummate the transactions
contemplated by this Agreement shall
44
be subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants of the Sellers. The
representations and warranties of each of the Sellers contained in this
Agreement shall be true and correct in all material respects as of the Closing,
except to the extent such representations and warranties are as of another date,
in which case, such representations and warranties shall be true and correct in
all material respects as of that date, in each case, with the same force and
effect as if made as of the Closing Date; the covenants and agreements contained
in this Agreement to be complied with by each of the Sellers on or before the
Closing Date shall have been complied with in all material respects; and the
Purchaser shall have received a certificate of each of the Sellers to such
effect signed by each such Seller that is a natural person or by a duly
authorized officer of such Seller if it is a corporation or other legal entity;
(b) Representations, Warranties and Covenants of the Company. The
representations and warranties of the Company contained in this Agreement shall
be true and correct as of the Closing Date with the same force and effect as if
made as of the Closing Date, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of that date, and except for any
failures to be true and correct which would not, taken as a whole, have a
Company Material Adverse Effect; the covenants and agreements contained in this
Agreement to be complied with by the Company on or before the Closing Date shall
have been complied with in all material respects; and the Purchaser shall have
received a certificate of the Company to such effect signed by the Company or by
a duly authorized officer thereof;
(c) Competition and Other Clearances. Any waiting period (and any extension
thereof) under the Competition Act and HSR Act shall have expired or shall have
been terminated and Investment Canada Act Approval and FT Act Approval shall
have been obtained;
(d) No Governmental Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary, preliminary
or permanent) or issued any Governmental Order which is then in effect and has
the effect of making the transactions contemplated by this Agreement or the
Escrow Agreement illegal or otherwise restricting or prohibiting consummation of
such transactions;
(e) Company Options. All of the Company Options shall have been exercised or
terminated as contemplated by SECTION 2.08 or such Company Options shall have
expired in accordance with their terms;
(f) Company Shareholders Agreement. The Company Shareholders Agreement shall
have been terminated in accordance with its terms; and
(g) Escrow Agreement. Each of the Sellers shall have executed and delivered to
the Purchaser the Escrow Agreement.
(h) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Loan. The Company shall have delivered to Purchaser
evidence that the loan issued to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ has been satisfied in full and
is no longer outstanding.
45
(i) Other. Any other documents or other items required to be executed and/or
delivered by the Sellers or Seller's Representative under this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. SURVIVAL The representations, warranties, covenants and agreements
of the Parties contained in this Agreement shall survive the Closing and shall
remain in full force and effect until the date that is 18 months following the
Closing Date, at which time they shall expire and cease to be of any further
force and effect.
SECTION 8.02. INDEMNIFICATION BY THE SELLERS(a) Subject to the limitations
contained in this SECTION 8.02, each of the Sellers (the "INDEMNIFYING PARTIES")
agrees to indemnify the Parent, the Purchaser and their Affiliates (including
from and after the Closing, the Company), and their successors and permitted
assigns (as used in this ARTICLE VIII, each, an "INDEMNIFIED PARTY") against and
hold them harmless, on a joint and several basis, from all Liabilities, losses,
damages, claims, costs and expenses, orders, judgments, awards fines, interest
and penalties (including attorneys' and consultants' fees and expenses), without
duplication, suffered or incurred by any of them (a "LOSS") arising out of, or
with respect to, directly or indirectly, (i) any breach or inaccuracy of any
representation or warranty of the Company contained in this Agreement or any
certificate delivered by the Company pursuant hereto or (ii) any breach of or
noncompliance with any covenant or agreement of the Company contained in this
Agreement; provided, however, that the aggregate liability for indemnification
and indemnification obligation of the Sellers to the Indemnifying Parties
pursuant to this SECTION 8.02 shall be limited to the Indemnity Escrow Fund.
(b) No claim may be made against the Indemnifying Parties for indemnification
pursuant to SECTION 8.02(a)(i) unless (i) such claim is made prior to the
expiration of applicable survival period set forth in SECTION 8.01, and (ii)
with respect to any claim, unless such claim involves Losses in excess of US$
250,000 (nor shall such item be applied to or considered for purposes of
calculating the aggregate amount of Losses of the Indemnified Parties if it
involves losses of US$10,000 or less) provided that if such threshold is
exceeded, the Indemnifying Parties shall be liable, subject to the other
limitations herein, for all Losses (it being understood and agreed that for the
purposes of calculating the amount of Losses and not for purposes of determining
whether a breach or inaccuracy has occurred under this SECTION 8.02, such
representations and warranties shall be interpreted without regard to any
limitations or qualifications therein as to "materiality" (including the word
"MATERIAL") or "COMPANY MATERIAL ADVERSE EFFECT"). Notwithstanding any provision
to the contrary, the Indemnified Parties may make a claim with respect to a
breach of this Agreement with regard to Acquisition Expenses without reference
to the above dollar thresholds.
(c) Each of the Sellers agrees to indemnify the Indemnified Parties against
and hold them harmless, on a several and not joint basis, from all Losses
suffered or incurred by any of them arising out of, or with respect to, directly
or indirectly, (i) any breach or inaccuracy of any representation or warranty of
such Seller contained in this Agreement or the Escrow Agreement or any
certification delivered by such Seller pursuant hereto, or (ii) any breach of or
46
noncompliance with any covenant or agreement of such Seller contained herein or
the Escrow Agreement other than the covenant of the Sellers provided in SECTION
6.12; provided, however, that the aggregate liability for indemnification and
indemnification obligation of each Seller to the Indemnifying Parties pursuant
to this SECTION 8.02(c) shall be limited to the Aggregate Per Seller Purchase
Price actually received by such Seller at Closing. For greater certainty, it is
acknowledged and agreed that the Indemnified Parties shall have no recourse
against the Indemnity Escrow Fund in respect of Losses under this SECTION
8.02(c).
(d) Payments by the Indemnifying Parties pursuant to SECTIONS 8.02(a), (c),
(e) OR (f) shall be limited to the amount of any Loss that remains after
deducting therefrom (i) any insurance or other third party recoveries actually
received by the Person seeking indemnification offsetting the amount of such
Loss (net of cost of recovery and applicable taxes) and (ii) any recoveries
actually received by such Person or any of its Affiliates pursuant to
indemnification or otherwise with respect thereto (net of cost of recovery and
applicable taxes). The Indemnified Parties shall seek full recovery under all
insurance policies and similar agreements covering any Loss to the same extent
as they would if such Loss were not subject to indemnification hereunder. In the
event that any Indemnified Party receives any payment from a third party with
respect to any Loss for which any such Indemnified Party has been indemnified
hereunder, then the Purchaser shall promptly pay to the Sellers' Representative
(on behalf of the Indemnifying Party(ies)) an amount equal to the amount of any
such recovery (net of cost of recovery and applicable taxes). Any and all
payments by the Indemnifying Parties pursuant to SECTION 8.02(a) or (c) shall be
treated as adjustments to the Aggregate Purchase Price for Tax purposes and the
Parties agree to act and file Tax Returns for all purposes consistent with such
position.
(e) Notwithstanding anything to the contrary contained herein, if (i) Parent
relies on a paragraph 88(1)(d) bump under the ITA in connection with the
reorganization of the Company following the Closing and (ii) the paragraph
88(1)(d) bump is denied in whole or in part solely by virtue of a breach of the
covenant of a Seller contained in SECTION 6.12, the Sellers, jointly and
severally, shall indemnify the Indemnified Parties against and hold them
harmless from any Canadian income tax liability of Parent, Purchaser or the
Company suffered or incurred by any of them arising out of, or with respect to,
directly or indirectly, such breach the covenant of such Seller contained in
SECTION 6.12; provided, however, that the aggregate liability for
indemnification and indemnification obligation of the Sellers to the Indemnified
Parties pursuant to this SECTION 8.02(e) shall be limited to the lesser of (i)
US$6,500,000, and (ii) the amount then in the Indemnity Escrow Fund; and
provided further, that the Parties acknowledge and agree that none of the
following shall result, directly or indirectly, in any liability for
indemnification or indemnification obligation of the Sellers to the Indemnified
Parties pursuant to this SECTION 8.02(e): (A) any actions taken by or at the
request of the Parent or any of its Affiliates or subsidiaries, or (B) the
purchase, sale, ownership or holding of any Parent Securities by any Seller or
any other Person prior to the date hereof or prior to the Closing as disclosed
in SECTION 8.02(e) of the DISCLOSURE SCHEDULE.
(f) Notwithstanding anything to the contrary contained herein, in addition to
the indemnity provided under SECTION 8.02(a), each of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (collectively, the "MANAGEMENT SELLERS") agrees to indemnify
the Indemnified Parties against and hold them harmless, on pro rata basis, from
all Losses suffered or incurred by any of them arising out of, or with respect
to, directly or indirectly, any breach or inaccuracy of the
47
representation or warranty of the Company contained in SECTION 4.04; provided,
however, that the Management Sellers shall only be obliged to indemnify the
Indemnifying Parties under this SECTION 8.02(f) to the extent that, and in the
amount by which, the Losses exceed the Indemnity Escrow Fund, if any; and
provided further, that the aggregate liability for indemnification and
indemnification obligation of the Sellers to the Indemnifying Parties pursuant
to this SECTION 8.02(f) shall be limited to 75% of the Aggregate Per Seller
Purchase Price paid to the Management Sellers at Closing;
(g) For greater certainty, the Parties acknowledge and agree that the remedies
of the Indemnified Parties under this SECTION 8.02 shall be the exclusive
remedies of the Indemnified Parties against the Indemnifying Parties.
SECTION 8.03. INDEMNIFICATION PROCEDURES An Indemnified Party shall give the
Indemnifying Parties under SECTION 8.02 prompt written notice in accordance with
SECTION 10.02 of any claim, assertion, event or proceeding by or in respect of
which such Indemnified Party is requesting indemnification hereunder. Until such
time as the Indemnifying Parties acknowledge in writing their obligations to
indemnify the Indemnified Party against any Losses (subject to the limitations
contained in this ARTICLE VIII) that may result from such claim, assertion,
event or proceeding, the Indemnified Party shall have the right to direct,
through counsel of its own choosing the defense or settlement of any claim or
proceeding the subject of indemnification hereunder at its own expense, which
expenses shall be treated as Losses for purposes of SECTION 8.02. At such time
as the Indemnifying Parties acknowledge in writing their obligations to
indemnify the Indemnified Party against any Losses that may result from such
claim, assertion, event or proceeding, the Indemnifying Party shall have the
right to direct, through counsel of its own choosing, which counsel shall be
reasonably satisfactory to the Indemnified Party, the defense or settlement of
any claim or proceeding the subject of indemnification hereunder at the expense
of the Indemnifying Parties. If the Indemnifying Parties elect to assume the
defense of any such claim or proceeding, the Indemnified Party may participate
in such defense, but in such case the expenses of the Indemnified Party shall be
paid by the Indemnified Party. If the Indemnified Party reasonably concludes
(based on the advice of counsel) that there are legal defenses available to it
which are different or additional defenses conflict with those of the
Indemnifying Parties, the Indemnified Party may employ its own counsel at the
expense of the Indemnifying Parties, it being understood that the Indemnifying
Parties shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to one
firm of attorneys acting as local counsel). The Indemnified Party shall provide
the Indemnifying Parties with reasonable access to its records and personnel
relating to any such claim, assertion, event or proceeding during normal
business hours and shall otherwise cooperate with the Indemnifying Parties in
the defense or settlement thereof, and the Indemnifying Parties shall reimburse
the Indemnified Party for all its reasonable out-of-pocket expenses in
connection therewith. If the Indemnifying Parties elect to direct the defense of
any such claim or proceeding, the Indemnified Party shall not pay, or permit to
be paid, any part of any claim or demand arising from such asserted liability
unless the Indemnifying Parties consent in writing to such payment or unless a
final judgment from which no appeal may be taken by or on behalf of the
Indemnifying Parties is entered against the Indemnified Party for such
liability. No settlement in respect of any third-party claim may be effected by
the Indemnifying Parties
48
without the Indemnified Party's prior written consent, which consent shall not
be unreasonably withheld. If the Indemnifying Parties shall fail to undertake
any such defense, the Indemnified Party shall have the right to undertake the
defense or settlement thereof, at the Indemnifying Parties' expense. If the
Indemnified Party assumes the defense of any such claim or proceeding pursuant
to this SECTION 8.03 and proposes to settle such claim or proceeding prior to a
final judgment thereon or to forgo any appeal with respect thereto, then the
Indemnified Party shall give the Indemnifying Parties prompt written notice
thereof and the Indemnifying Parties shall have the right to participate in the
settlement or assume or reassume the defense of such claim or proceeding in the
event the Indemnifying Parties agree to assume liability for any Losses (subject
to the limitations contained in this ARTICLE VIII) arising from such claim or
proceeding. All notices required to be sent by the Indemnified Party to any of
the Indemnifying Parties, all notices required to be sent by such Indemnifying
Party to the Indemnified Party and all decisions or actions required to be taken
by any of the Indemnifying Parties shall be sent to, sent by and taken by the
Sellers' Representative on behalf of any such Indemnifying Party.
SECTION 8.04. DISTRIBUTIONS FROM THE INDEMNITY ESCROW FUND Distributions from
the Indemnity Escrow Fund shall be made pursuant to the Escrow Agreement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION This Agreement may be terminated at any time prior to
the Closing:
(a) by either the Company or the Purchaser if the Closing shall not have
occurred by June 1, 2004; provided, however, that the right to terminate this
Agreement under this SECTION 9.01(a) shall not be available to (i) the Company
if its or any of the Sellers' failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur on or prior to such date or (ii) the Purchaser if
Parent's or the Purchaser's failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur on or prior to such date;
(b) by the Company if Parent or the Purchaser shall have breached in any
material respect any of their representations, warranties, covenants or other
agreements contained in this Agreement which would give rise to the failure of a
condition set forth in ARTICLE VII, which breach cannot be or has not been cured
within 30 days after the giving of written notice by the Company to Purchaser
specifying such breach;
(c) by the Purchaser if any of the Sellers or the Company shall have breached
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement which would give rise to the
failure of a condition set forth in ARTICLE VII, which breach cannot be or has
not been cured within 30 days after the giving of written notice by the
Purchaser to such breaching Party and the Company specifying such breach;
(d) by either the Purchaser or the Company if there shall be any Governmental
Order that is final and non-appealable preventing the consummation of the
transactions contemplated by this
49
Agreement and the Escrow Agreement; provided, however, that the right to
terminate this Agreement under this SECTION 9.01(d) shall not be available to
(i) the Company if its or any of the Sellers' failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have resulted in,
such Governmental Order or (ii) the Purchaser if Parent's or the Purchaser's
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, such Governmental Order; or
(e) by the mutual written consent of the Company and the Purchaser.
SECTION 9.02. EFFECT OF TERMINATION In the event of termination of this
Agreement as provided in SECTION 9.01, this Agreement shall forthwith become
void and there shall be no liability on the part of either Party except (a) that
the provisions of ARTICLE X shall survive such termination and (b) that nothing
herein shall relieve any Party from liability for any breach of this Agreement.
SECTION 9.03. AMENDMENT This Agreement may not be amended or modified except (a)
by an instrument in writing signed by the Parties, if on or prior to the
Closing, or by the Purchaser, on the one hand, and the Sellers' Representative,
on the other hand, if following the Closing, or (b) by a waiver in accordance
with SECTION 9.04.
SECTION 9.04. WAIVER The Parent and the Purchaser and (following the Closing)
the Company, on the one hand, and the Sellers and (prior to the Closing) the
Company, on the other hand, may (a) extend the time for the performance of any
of the obligations or other acts of the other Parties, (b) waive any
inaccuracies in the representations and warranties of the other Parties
contained herein or in any document delivered by the other Parties pursuant
hereto or (c) waive compliance with any of the agreements of the other Parties
or conditions to such Parties' obligations contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed,
on the one hand, by the Purchaser and, on the other hand, by the Company, if
prior to the Closing, or by the Sellers' Representative, if following the
Closing. 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 X
GENERAL PROVISIONS
SECTION 10.01. 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 by this Agreement shall be paid by
the Party incurring such costs and expenses, whether or not the Closing shall
have occurred.
SECTION 10.02. 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 an internationally recognized overnight
50
courier service, by telecopy or 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 10.02):
(a) if to the Sellers, to the address of the Sellers provided in
SCHEDULE B to this Agreement.
(b) (i) if to the Company, and on or prior to the Closing:
Changepoint Corporation
▇▇ ▇▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Apps & Dellelce, LLP
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(ii) if to the Company, and after the Closing:
c/o Compuware Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: 313-227-7690
Attention: Chief Executive Officer
with a copy to:
(c) if to the Parent:
Compuware Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: 313-227-7690
Attention: Chief Executive Officer
51
with a copy to: General Counsel
(d) if to the Purchaser:
c/o Compuware Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: 313-227-7690
Attention: Chief Executive Officer
with a copy to: General Counsel
SECTION 10.03. PUBLIC ANNOUNCEMENTS None of the Sellers or the Company shall
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated by this Agreement or
otherwise communicate with any news media without the prior consent of the
Purchaser (which consent shall not be unreasonably withheld), and neither Parent
nor the Purchaser shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated by
this Agreement or otherwise communicate with any news media without the prior
consent of the Company (which consent shall not be unreasonably withheld),
except as required under applicable securities laws and in each case the Parties
shall cooperate as to the timing and contents of any such press release or
public announcement.
SECTION 10.04. 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 by this Agreement 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 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 by this Agreement are consummated as
originally contemplated to the greatest extent possible.
SECTION 10.05. ENTIRE AGREEMENT This Agreement and the Escrow Agreement and the
Confidentiality Agreement constitute the entire agreement of the Parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, between the Seller and the
Purchaser with respect to the subject matter hereof and thereof.
SECTION 10.06. ASSIGNMENT This Agreement may not be assigned by operation of law
or otherwise without the express written consent of Parties (which consent may
be granted or withheld in the sole discretion of such Parties); provided,
however, that Parent or the Purchaser may assign this Agreement or any of its
rights and obligations hereunder to one or more of its Affiliates without the
consent of the Sellers or the Company; provided, however, that no such
assignment shall relieve Parent or the Purchaser (as the case may be) of its
obligations hereunder if such assignee does not perform such obligations.
52
SECTION 10.07. NO THIRD PARTY BENEFICIARIES Except for the provisions of SECTION
6.15 and ARTICLE VIII relating to indemnified parties, this Agreement shall be
binding upon and inure solely to the benefit of the Parties 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 Company or any Company Subsidiary, any legal or
equitable right, benefit or remedy of any nature whatsoever, including, without
limitation, any rights of employment for any specified period, under or by
reason of this Agreement.
SECTION 10.08. GOVERNING LAW This Agreement shall be governed by, and construed
in accordance with, the laws of the Province of Ontario applicable to contracts
executed in and to be performed in that Province. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined
exclusively in any court sitting in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. The Parties hereby (a)
submit to the exclusive jurisdiction of the Supreme Court of the Province of
Ontario for the purpose of any Action arising out of or relating to this
Agreement brought by any Party, and (b) irrevocably waive, and agree not to
assert by way of motion, defense, or otherwise, in any such Action, any claim
that it is not subject personally to the jurisdiction of the above-named court,
that its property is exempt or immune from attachment or execution, that the
Action is brought in an inconvenient forum, that the venue of the Action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by the above-named court.
SECTION 10.09. WAIVER OF JURY TRIAL Each of the Parties hereby waives to the
fullest extent permitted by applicable law any right it may have to a trial by
jury with respect to any litigation directly or indirectly arising out of, under
or in connection with this Agreement or the transactions contemplated by this
Agreement. Each of the Parties (a) certifies that no representative, agent or
attorney of any other Party has represented, expressly or otherwise, that such
other Party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other Party have been
induced to enter into this Agreement and the transactions contemplated by this
Agreement, as applicable, by, among other things, the mutual waivers and
certifications in this SECTION 10.09.
SECTION 10.10. SELLERS' REPRESENTATIVE For the purpose of administering
efficiently the rights and obligations of the Sellers under this Agreement and
the Escrow Agreement and any defense or settlement of any Claim for which the
Sellers may be required to indemnify the Indemnified Parties hereunder, each of
the Sellers hereby appoints the Seller Representative to act as its true and
lawful agent and attorney, in its name and on its behalf, for such purpose, with
full power of substitution, and the Seller Representative hereby accept such
appointment. Any disbursements of monies to the Sellers by the Sellers'
Representative pursuant to this Agreement or the Escrow Agreement shall be made
to the Sellers on a pro rata basis in accordance with the allocations described
in SCHEDULE 2.02. The Sellers' Representative may at any time following the
Closing resign by giving 10 Business Days' prior written notice of resignation
to the Sellers and the Purchaser. Sellers who, immediately prior to Closing,
held more than 50% of the issued and outstanding Shares may remove the Sellers'
Representative by giving 10 Business Days written notice to the Sellers'
Representative and the Purchaser. If the Sellers' Representative shall resign or
be removed by the Sellers, a successor Sellers' Representative shall be
appointed by written instrument executed by the Sellers who, immediately prior
to
53
Closing, held more than 50% of the issued and outstanding Shares and delivered
to the Purchaser and, thereupon, the resignation or removal of the predecessor
Sellers' Representative shall become effective.
SECTION 10.11. HEADINGS The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 10.12. COUNTERPARTS This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
Parties 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.
[INTENTIONALLY LEFT BLANK]
54
IN WITNESS WHEREOF, each of the Sellers, the Company, Parent and the
Purchaser have duly executed or caused this Agreement to be executed as of the
date first hereinbefore written, as applicable, by their respective officers
thereunto duly authorized, as applicable.
NATCAN INVESTMENT MANAGEMENT INC.
AS AGENT FOR THE ALTAMIRA EQUITY FUND
Per: /s/ ▇▇▇▇ Onslow
-------------------------------
NATCAN INVESTMENT MANAGEMENT INC.
AS AGENT FOR THE ALTAMIRA SCIENCE & TECHNOLOGY FUND
Per: /s/ Reza Samahin
-------------------------------
NATCAN INVESTMENT MANAGEMENT INC.
AS AGENT FOR THE ALTAMIRA e-BUSINESS FUND
Per: /s/ Reza Samahin
-------------------------------
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
C.A. ▇▇▇▇▇▇▇ CAPITAL MANAGEMENT LTD.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇
THE ▇▇▇▇▇ FAMILY TRUST
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇
55
THE ▇▇▇▇▇▇ FAMILY TRUST
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
56
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇ ▇▇▇▇▇▇
DYNAMIC MUTUAL FUNDS
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ FAMILY TRUST
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
1359290 ONTARIO LTD.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
GMP SECURITIES LTD. (FORMERLY ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & PARTNERS)
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
57
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
THE BUSINESS ENGINEERING, SCIENCE &
TECHNOLOGIES DISCOVERY FUND INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
JMI EQUITY FUND (BARBADOS) SRL
Per: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
JMI SERVICES, INC.
Per: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇ ▇▇▇▇▇▇
GUNDYCO IN TRUST FOR ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ Kaison Khammonivong /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
58
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇ ▇▇▇▇▇▇
NINE MILE CREEK HOLDINGS LIMITED
Per: /s/ authorized signature
--------------------------------
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ FAMILY TRUST
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
1359292 ONTARIO LTD.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ FAMILY TRUST
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
1359288 ONTARIO LTD.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
59
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
PROTEGE VIRTUAL MANAGEMENT LIMITED
Per: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------~-
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ FAMILY TRUST
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
1359293 ONTARIO LTD.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
RBC DOMINION SECURITIES ACCT ▇▇▇-▇▇▇▇▇-▇▇
(CASURINA LIMITED PARTNERSHIP)
Per: /s/ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇ ▇▇▇▇▇▇
THE ▇▇▇▇▇▇ FAMILY TRUST
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ IN TRUST FOR
TRIMARK DISCOVERY FUND
Per: /s/ ▇▇▇▇▇ ▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇▇ CAPITAL CORPORATION AS
AGENT FOR TRIAX GROWTH FUND INC.
Per: /s/ ▇.▇. ▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------- ------------------------------------
WITNESS: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
THE VENGROWTH II INVESTMENT FUND INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
THE VENGROWTH INVESTMENT FUND INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
XDL CHANGEPOINT HOLDINGS INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
XDL INTERVEST (EF) LIMITED PARTNERSHIP
BY ITS G.P. XDL INTERVEST EF GP INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
61
XDL INTERVEST (USA) LIMITED PARTNERSHIP
BY ITS G.P. XDL INTERVEST USA GP INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
XDL INTERVEST LIMITED PARTNERSHIP
BY ITS G.P. XDL INTERVEST GP INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
COMPUWARE CORPORATION
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
3087769 NOVA SCOTIA COMPANY
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
CHANGEPOINT CORPORATION
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
62