EXHIBIT 2.7
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BETWEEN
CGI-AMS INC.
AND
OS ACQUISITION CORP.
DATED AS OF MARCH 10, 2005
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TABLE OF CONTENTS
PAGE
1 DEFINITIONS....................................................................... 1
2 SALE OF ASSETS; CLOSING........................................................... 6
2.1. Sale of Assets............................................................. 6
2.2. Consideration.............................................................. 6
2.3. Net Current Assets Adjustment to Purchase Price............................ 6
2.4. Accounts Receivable Adjustment to Purchase Price........................... 7
2.5. Release of Escrow Funds.................................................... 8
2.6. Buyer's Assumption of Liabilities.......................................... 8
2.7. Closing.................................................................... 8
2.8. Deliveries by Seller at Closing............................................ 9
2.9. Deliveries by Buyer at Closing............................................. 10
3 REPRESENTATIONS AND WARRANTIES OF SELLER.......................................... 10
3.1. Organization and Power..................................................... 10
3.2. Authorization.............................................................. 10
3.3. No Conflict................................................................ 11
3.4. Title to Purchased Assets.................................................. 11
3.5. Condition of Purchased Assets.............................................. 11
3.6. Financial Statements....................................................... 11
3.7. Accounts Receivable; Credits............................................... 12
3.8. Pre-▇▇▇▇................................................................... 12
3.9. Litigation................................................................. 12
3.10. Compliance with Law........................................................ 12
3.11. Absence of Undisclosed Liabilities......................................... 12
3.12. Absence of Certain Changes................................................. 12
3.13. Contracts.................................................................. 13
3.14. Intellectual Property...................................................... 14
3.15. Real Property.............................................................. 16
3.16. Environmental Matters...................................................... 17
3.17. Labor; ERISA............................................................... 17
3.18. Taxes...................................................................... 18
3.19. Relationships with Related Persons......................................... 19
3.20. Brokers.................................................................... 19
3.21. Insurance.................................................................. 19
3.22. Powers of Attorney......................................................... 19
3.23. Debt....................................................................... 19
3.24. Solvency................................................................... 19
3.25. Corporate Predecessors and Previous Names.................................. 20
3.26. Affiliates of Seller....................................................... 20
3.27. No Options................................................................. 20
3.28. Statements not Misleading.................................................. 20
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4 REPRESENTATIONS AND WARRANTIES OF BUYER........................................... 21
4.1. Organization and Power of Buyer............................................ 21
4.2. Authorization.............................................................. 21
4.3. No Conflict................................................................ 21
5 COVENANTS......................................................................... 21
5.1. Conduct of Business........................................................ 21
5.2. No Contemporaneous Negotiations............................................ 23
5.3. Consent of Third Parties................................................... 23
5.4. Insurance Coverage......................................................... 23
5.5. Further Assurances; Cooperation............................................ 23
5.6 Use of Names............................................................... 24
5.7. Passage of Title and Risk of Loss.......................................... 24
5.8. Transfer of Goodwill and Business.......................................... 24
5.9. Expenses; Transfer Taxes................................................... 24
5.10. Taxes...................................................................... 24
5.11. Employment Matters......................................................... 25
6 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS....................................... 26
6.1. Representations and Warranties Accurate; Compliance with Covenants......... 26
6.2. Litigation Affecting Closing............................................... 26
6.3. Instruments of Sale, Etc................................................... 27
6.4 Consents................................................................... 27
6.5 No Material Adverse Effect................................................. 27
6.6. Deliveries at Closing...................................................... 27
7 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS...................................... 27
7.1. Representations and Warranties Accurate; Compliance with Covenants......... 27
7.2. Litigation Affecting Closing............................................... 27
7.3. Deliveries at Closing...................................................... 27
8 TERMINATION....................................................................... 28
8.1. Termination Events......................................................... 28
8.2. Effect of Termination...................................................... 28
8.3. Return of Documents........................................................ 28
9 INDEMNIFICATION................................................................... 28
9.1. Indemnified Losses......................................................... 28
9.2. Indemnification by Seller.................................................. 28
9.3. Indemnification by Buyer................................................... 29
9.4. Third Party Claims Against Buyer........................................... 29
9.5 Third Party Claims Against Seller.......................................... 29
9.6. Procedures; No Waiver; Exclusivity......................................... 30
9.7. Set-Off.................................................................... 30
9.8. Survival................................................................... 31
9.9. Limitations on Indemnification by Seller................................... 32
9.10. Exclusive Remedy........................................................... 32
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10 MISCELLANEOUS..................................................................... 32
10.1. Notices.................................................................... 32
10.2. Entire Agreement........................................................... 33
10.3. Counterparts............................................................... 33
10.4. Parties in Interest; Assignment............................................ 33
10.5. Governing Law.............................................................. 33
10.6. Schedules and Headings..................................................... 33
10.7. Amendment.................................................................. 34
10.8. Waiver..................................................................... 34
10.9. Facsimile Signatures....................................................... 34
10.10 Press Release.............................................................. 34
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EXHIBITS AND SCHEDULES
Exhibit A -- Escrow Agreement
Exhibit B Opinion of Counsel to Seller
Exhibit C -- ▇▇▇▇ of Sale, Assignment and Conveyance
Exhibit D -- Lease Assignments
Exhibit E -- Assumption of Liabilities
Exhibit F-1 -- Transition Services Agreement
Exhibit F-2 -- Master Services Agreement
Exhibit G -- Non-Competition Agreement
Exhibit H -- Assignment and Assumption Agreement
Schedule 1A -- Assumed Liabilities
Schedule 1B -- Purchased Assets
Schedule 3.3 -- Consents, Etc.
Schedule 3.4 -- Title to Purchased Assets
Schedule 3.6 -- Reference Date Balance Sheet
Schedule 3.13 -- Contracts
Schedule 3.14 -- Intellectual Property
Schedule 3.15 -- Real Property
Schedule 3.17 -- Labor; ERISA
Schedule 3.20 -- Brokers
Schedule 3.21 -- Insurance Policies
Schedule 3.23 -- Debt
Schedule 3.25 -- Previous Names
Schedule 5.3 -- Consents
Schedule 5.11 -- Severance Obligations
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is executed as of March
10, 2005, by and between CGI-AMS INC., a Delaware corporation ("Seller"), and OS
ACQUISITION CORP., a Delaware corporation ("Buyer") (collectively, the
"parties").
RECITALS
WHEREAS, Seller owns assets comprising the U.S. division of a business
unit known as the Services to Credit Union (SCU) business, which business unit
provides core banking, data processing, loan origination, loan decisioning, home
banking, Internet banking, website hosting, call center and related services to
credit unions in the United States, on both a licensed, in-house basis and an
outsourced basis (the "Business"); and
WHEREAS, Buyer wishes to purchase from Seller, and Seller wishes to sell
to Buyer, the assets of the Business, which assets are hereinafter defined as
the Purchased Assets, upon the terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
"Accounts Receivable" shall mean the aggregate of (a) all trade accounts
receivable and other rights to payment from customers of the Business and the
full benefit of all security for such accounts or rights to payment, including
all trade accounts receivable representing amounts receivable in respect of
goods shipped or products sold or services rendered to customers of the
Business, (b) all other accounts or notes receivable of the Business and the
full benefit of all security for such accounts or notes, and (c) any cash or
payment-in-transit, claim, remedy or other right related to any of the
foregoing, in each case, as at the Closing Date.
"Affiliate" of any Person means any other Person directly or indirectly:
i) controlling; ii) controlled by; or iii) under common control with such
Person. For the purposes of this definition, "control", when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have correlative meanings;
"Agreement" means this purchase agreement, as the same may be amended from
time to time, and all schedules and instruments in amendment or confirmation of
it; "hereof", "hereto" and "hereunder" and similar expressions mean and refer to
this Agreement and not to any particular Article, Section, Subsection or other
subdivision; "Article", "Section", "Subsection" or other subdivision of this
Agreement followed by a number means and refers to the specified Article,
Section, Subsection or other subdivision of this Agreement;
"Assumed Liabilities" shall mean only the duties, liabilities or
obligations of the Business, if any, arising after the Closing Date in
connection with the items identified on Schedule 1A, except as otherwise noted
on Schedule 1A, and shall specifically exclude, among other things, (i) any
liabilities for employment, income, sales, property or other Taxes incurred or
accrued by the Business prior to the Closing Date or Seller, including without
limitation as a result of this transaction; (ii) any fees or expenses incurred
by the Business or Seller in connection with this transaction; (iii) any debt,
payables or other liabilities to Related Persons other than salary and other
payroll related expenses that may be specifically set forth on Schedule 1A; (iv)
any liabilities related to any Benefit Plan; (v) any and all liability related
to any real property owned or used by the Business or Seller except as
specifically set forth in the Lease Assignments; (vi) any litigation pending
against the Business or Seller on the Closing Date; (vii) any warranty liability
to customers of the Business or Seller arising out of or relating to any breach
by the Business or Seller of any obligation to a customer that occurred prior to
the Closing; and (viii) any liability or obligation constituting or arising out
of any Debt of the Business or Seller that required payment or performance prior
to the Closing Date except to the extent specifically set forth on Schedule 1A.
"Benefit Plans" means with respect to any of the employees of the
Business, any group registered retirement savings plan, 401(k), any profit
sharing or pension plan, oral or written, whether or not sponsored by Seller,
any deferred compensation payables, accrued bonus payables, other accrued
liabilities, and any COBRA-related obligations, any phantom stock option, stock
option, stock bonus, employee stock purchase, bonus, retirement, severance,
deferred compensation, annuity, executive compensation, incentive compensation,
educational assistance, health or insurance or other plan, policy or arrangement
providing benefits to or with respect to employees or former employees of or
independent contractors to the Business, all of which are disclosed as benefit
plans on Schedule 3.17.
"Books and Records" means Seller's material technical, business and
financial records, financial books and records of account (other than any
document forming part of the Financial Statements), quality control data,
machinery and equipment maintenance records, warranty information, sales and
marketing information, books, reports, files, lists, drawings, plans, logs,
briefs, customer and supplier lists, deeds, certificates, contracts, surveys,
title opinions or any other material documentation and information in any form
whatsoever (including written, printed, electronic or computer printout form)
relating to the Business; provided however that the foregoing shall not be
deemed to include the corporate records of Seller comprised of the articles,
by-laws, any unanimous share/stockholders agreements and any amendments thereto;
minutes of meetings and resolutions of stockholders, directors and any committee
thereof; and the stock certificate books, register of shareholders, register of
transfers and register of directors.
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"Business" shall have the meaning assigned to it in the preamble.
"Closing" shall mean the consummation of the purchase and sale transaction
described herein.
"Closing Date" shall mean the date on which the Closing occurs, as
specified in Section 2.7.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Current Assets" shall mean all Accounts Receivable and prepaid expenses
of Seller and other assets of Seller classified as current assets in accordance
with GAAP, to the extent included in the Purchased Assets.
"Current Liabilities" shall mean all trade accounts payable and deferred
revenue obligations (whether categorized as deferred revenue or as customer
deposits), accrued sales commissions, accrued costs of sales and amounts owing
by Seller to vendors and suppliers for goods and services provided in respect of
the Business before the Closing Date but invoiced after the Closing Date, and
other debts, liabilities and obligations of Seller in respect of the Business
that are classified as current liabilities in accordance with GAAP, to the
extent included in the Assumed Liabilities.
"Debt", as applied to any Person, means: (a) indebtedness or liability of
such Person for borrowed money, or with respect to deposits or advances of any
kind, or for the deferred purchase price of property or services; (b) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person under conditional sale or other
title retention agreements relating to property or assets purchased by such
Person, (d) all obligations of such Person for the deferred purchase price of
property or services; (e) all obligations of such Person as lessee under capital
leases; (f) current liabilities of such Person in respect of the present value
of unfunded vested benefits under any employee Benefit Plan; (g) obligations of
such Person under letters of credit, bankers acceptances, or comparable
arrangements; (h) obligations of such Person arising under acceptance
facilities; (i) guaranties; endorsements (other than for collection or deposit
in the ordinary course of business), and other contingent obligations of such
Person to purchase, to provide funds for payment, to supply funds to invest in
any Persons, or otherwise to assure a creditor against loss; (j) all obligations
of such Person secured by any Lien on any of such Person's assets or property,
whether or not the obligations have been assumed, and (k) all obligations of
such Person in respect of interest rate protection agreements, foreign currency
exchange agreements or other interest or exchange rate hedging arrangements.
"ERISA" shall mean the U.S. Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" shall mean those items listed as such on Schedule 1B
hereto.
"Financial Statements" shall have the meaning assigned to it in Section
3.6.
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"GAAP" shall mean Canadian generally accepted accounting principles
consistently applied.
"Governmental Entity" shall mean (i) any multinational, federal,
provincial, state, municipal, local or other governmental or public department,
court, commission, board, bureau, agency or instrumentality, domestic or
foreign; (ii) any subdivision, agent, commission, board, or authority of any of
the foregoing; or (iii) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of any of
the foregoing;
"Knowledge" - an individual will be deemed to have "Knowledge" of a fact
or other matter if:
(a) such individual is actually aware of that fact or matter; or
(b) a prudent individual could be expected to discover or otherwise become
aware of that fact or matter in the course of conducting a reasonably
comprehensive investigation regarding the accuracy of any representation or
warranty contained in this Agreement.
Seller will be deemed to have "Knowledge" of a particular fact or other matter
if any of the following persons (collectively, the "Listed Persons") has
Knowledge of that fact or other matter (as set forth in (a) and (b) above):
▇▇▇▇▇▇ ▇▇▇▇▇ - Director, Business Development and Marketing
▇▇▇ ▇▇▇▇ - Director, Application Development
▇▇▇▇ ▇▇▇▇▇▇▇ - Director, Application Services and Consulting
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Vice President, Service Delivery
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - Director, Finance and Admin
▇▇▇▇ ▇▇▇▇▇▇ - Senior Vice President, Services to Credit Unions
"Lease Assignments" shall have the meaning assigned to it in Section
2.8(i).
"Leases" shall mean the real property leases listed on Schedule 3.15.
"Liens" shall mean all liabilities, claims, liens, charges, pledges,
security interests, options, restrictions or other encumbrances of any kind.
"Material Adverse Effect" means any circumstance, change in, or effect on,
the Business that, individually or in the aggregate with any other
circumstances, changes in, or effects on, the Business: (a) is, or could be,
materially adverse to the business, operations, assets or liabilities
(including, without limitation, contingent liabilities), employee relationships,
customer or supplier relationships, results of operations or the condition
(financial or otherwise) of the Business, or (b) could materially adversely
affect the ability of Buyer to operate or conduct the Business in the manner in
which it is currently operated or conducted, or contemplated to be conducted, by
Seller, or (c) could impair the ability of Seller to consummate the transactions
contemplated by this Agreement.
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"Net Current Assets" shall mean the amount of Current Assets included in
the Purchased Assets minus the amount of Current Liabilities included in the
Assumed Liabilities.
"Permitted Liens" shall have the meaning assigned to it in Section 3.4.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
Governmental Entity (or any department, agency or political subdivision
thereof).
"Purchase Price" shall mean the aggregate amount to be paid by Buyer to
Seller for the Purchased Assets and includes the cash consideration payable
pursuant to Section 2.2(a) and the Escrow Funds payable pursuant to Section
2.2(b).
"Purchased Assets" shall mean all of Seller's property and assets, whether
real, personal or mixed, tangible and intangible, of every kind and description,
wherever located, that arise from, relate to, or are used in or necessary for
the conduct of the Business including without limitation those items identified
on Schedule 1B, but excluding the Excluded Assets.
"Records" shall mean all books of account, general, financial and
accounting records, files, invoices, payment authorizations, correspondence to
and from customers, suppliers and payors, and other data and information owned
by Seller in respect of the Business.
"Reference Date" shall mean September 30, 2004.
"Reference Date Balance Sheet" shall have the meaning assigned to it in
Section 3.6.
"Related Person" shall mean any officer, director, stockholder of Seller
or any holder of five percent (5%) or more of any class of stock of Seller or
any member of the immediate family of any such officer, director, stockholder or
any entity controlled by any such officer, director, stockholder or by a family
member of any such officer, director, stockholder.
"Taxes" (or "Tax" where the context requires) shall mean all federal,
provincial, state, county, city, local, foreign and other taxes (including,
without limitation, premium, excise, GST, value added, sales, use, consumption,
occupancy, gross receipts, franchise, ad valorem, severance, capital tax,
capital levy, production, transfer, withholding, employment, unemployment
compensation, payroll-related and property taxes, import duties and other
governmental charges and assessments), whether or not measured in whole or in
part by net income, including deficiencies, interest, additions to tax or
interest or penalties with respect thereto.
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ARTICLE 2
SALE OF ASSETS; CLOSING
SECTION 2.1. SALE OF ASSETS. At the Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer, free and clear of all Liens (except
Permitted Liens), good and marketable title to all of the Purchased Assets.
SECTION 2.2. CONSIDERATION. The Purchase Price shall be US$24,000,000,
subject to the adjustments set forth in this Agreement, including without
limitation in Sections 2.3 and 2.4 and 5.11 hereof. Buyer shall pay the Purchase
Price by delivery in the following manner:
(a) US$22,200,000.00 in cash by wire transfer of immediately available
funds from Buyer to Seller at Closing; and
(b) US$1,800,000.00 (the "Escrow Funds") in cash by wire transfer of
immediately available funds at Closing to U.S. Bank National Association (the
"Escrow Agent"), to be held under an escrow agreement in substantially the form
of Exhibit A (the "Escrow Agreement"), said Escrow Funds to be paid to Seller on
the one (1) year anniversary of the Closing Date in accordance with the Escrow
Agreement, but subject to the terms and conditions described in this Agreement,
including, without limitation, in Sections 2.3, 2.4, 2.5 and 9.7 hereof.
SECTION 2.3. NET CURRENT ASSETS ADJUSTMENT TO PURCHASE PRICE.
(a) Estimated Net Current Assets. Within sixty (60) days following the
Closing Date, Buyer will prepare, or cause to have prepared, and deliver to
Seller a balance sheet of the Business and a statement of the Net Current Assets
of the Business as of the Closing Date. As prepared by Buyer, this statement of
the Net Current Assets shall be referred to as the "Estimated Net Current
Assets." The Estimated Net Current Assets shall be prepared in accordance with
GAAP.
(b) Objection. The Estimated Net Current Assets shall be deemed accepted
by Seller and binding unless Seller sends Buyer a written objection thereto
within twenty-one (21) days following Seller's receipt thereof. In the event
that Seller delivers a timely written objection as aforesaid, and Buyer and
Seller are unable to resolve such objection within twenty-one (21) days after
Buyer is notified of Seller's objection, the matters in dispute shall be
submitted for final and binding determination to a firm of independent certified
public accountants jointly selected by Buyer and Seller (the "Accountants"). The
Accountants shall prepare their resolution statement within forty-five (45) days
of appointment. In the event that the parties are required to agree on the
identity of the Accountants but are unable to do so, then the firm to be used
shall be selected by lot from among the "Big 4" accounting firms having offices
in the Hartford, Connecticut area, other than those firms which have had a
material relationship with Buyer or Seller. The Estimated Net Current Assets
proposed by Buyer, as adjusted by agreement of Seller and Buyer or finally
determined by the Accountants, as applicable, to reflect the resolution of any
timely objections made thereto by Seller in accordance with this paragraph,
shall constitute the "Final
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Net Current Assets" and shall be binding on the parties hereto. Buyer and Seller
shall each pay their own expenses of preparing and analyzing the Estimated Net
Current Assets and resolving objections thereto. The fees and expenses of the
Accountants used to resolve objections will be borne equally by Buyer on the one
hand and Seller on the other hand.
(c) Access to Information. Solely in connection with the preparation of
the Estimated Net Current Assets and the Final Net Current Assets:
(i) Buyer and Seller shall give each other and each other's
accountants reasonable access to the books and records of the Business,
and shall cause employees of the Business to cooperate and provide each
other with all information reasonably requested, all after receiving
reasonable notice from the other party of its requirements and reaching
agreement as to mutually convenient times for review; and
(ii) Buyer and Seller, to the extent within their respective
control, shall give to each other and their agents access to the books,
financial records, work papers and other materials and documents used or
produced in connection with the preparation of the Estimated Net Current
Assets and the Final Net Current Assets.
(d) Final Net Current Assets. In the event that the Final Net Current
Assets are less than US$2,000,000 (the difference is referred to as a "Reduction
in Net Current Assets"), Seller shall be liable for such difference as a
reduction of the Purchase Price. Buyer shall be entitled to set-off the amount
of such Reduction in Net Current Assets from the Escrow Funds in accordance with
Section 2.5 and Section 9.7 of this Agreement, and, to the extent the Reduction
in Net Current Assets exceeds the amount of the Escrow Funds then available
under the Escrow Agreement, Seller shall pay the difference to Buyer within
twenty (20) days after receipt of written demand therefor. In the event that the
Final Net Current Assets are greater than US$2,000,000 (the excess is referred
to as an "Excess in Net Current Assets"), the Purchase Price shall be increased
by such difference. Buyer shall pay the difference to Seller within twenty (20)
days following the determination of Final Net Current Assets.
SECTION 2.4. ACCOUNTS RECEIVABLE ADJUSTMENT TO PURCHASE PRICE.
(a) Receivable Shortfall. Buyer and Seller agree that the Purchase Price
payable to Seller shall be reduced to the extent that the Accounts Receivable
have not been collected by Buyer within one hundred eighty (180) days following
the Closing Date (the "Collection Period").
(b) Adjustment to Purchase Price. Within thirty (30) days following the
end of the Collection Period, Buyer shall prepare and furnish to Seller a
statement setting forth the Accounts Receivable and all payments made thereon,
calculated as of the end of the Collection Period, and the amount, if any, owing
from Seller to Buyer pursuant to Section 2.4(a) (a "Receivable Shortfall").
Seller shall be liable for the Receivable Shortfall. Buyer shall set-off the
Receivable Shortfall from the Escrow Funds in accordance with Section 2.5 and
Section 9.7 and, to the extent the amount of the Receivable Shortfall exceeds
the amount of the Escrow Funds then available under the Escrow Agreement, Seller
shall pay the difference to Buyer
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within (10) days after receipt of written demand therefor. Upon payment of the
Receivable Shortfall, Buyer shall assign to Seller those Accounts Receivable
which were uncollected at the end of the Collection Period.
(c) Collection of Accounts Receivable. Between the Closing Date and the
end of the Collection Period, Buyer shall use reasonable efforts consistent with
its usual and customary collection practices to collect the Accounts Receivable,
provided that Buyer shall not be obligated to resort to litigation.
(d) Payments in Transit after the Closing. Any payments that are received
by Seller after the Closing Date in respect of Accounts Receivable shall be
owned by and deemed the property of Buyer, and Seller shall receive such
payments in trust for Buyer and shall turn over to Buyer, all such amounts
within thirty (30) days of receipt thereof.
SECTION 2.5. RELEASE OF ESCROW FUNDS.
(a) Initial Release. Within ten (10) days after the Final Net Current
Assets has been determined in accordance with Section 2.3(b) of this Agreement,
Buyer shall instruct the Escrow Agent in writing to release to Seller a portion
of the Escrow Funds in an amount equal to the lesser of (1) the Net Escrow Funds
Available determined as of the date that the Final Net Current Assets amount is
determined and after giving effect to any disbursements or required
disbursements of Escrow Funds to Buyer on account of a Reduction in Net Current
Assets, and (2) the amount of US$350,000 less the Reduction in Net Current
Assets, if any (the lesser of (1) and (2) is referred to as the "Initial Release
Amount").
(b) Subsequent Release. Within forty (40) days after the end of the
Collection Period, Buyer shall instruct the Escrow Agent in writing to release
Escrow Funds in an amount equal to the lesser of (1) the Net Escrow Funds
Available as of the last day of the Collection Period, determined after giving
effect to any disbursements or required disbursements of Escrow Funds to Buyer
on account of a Reduction in Net Current Assets and on account of any Receivable
Shortfall, and (2) US$450,000 less the Receivable Shortfall, if any (the lesser
of (1) and (2) is referred to herein as the "Subsequent Release Amount").
(c) Net Escrow Funds Available. For purposes of this Section 2.5, "Net
Escrow Funds Available" shall mean, as of any date, the Escrow Funds then held
by the Escrow Agent less the amount of all Claimed Set-Offs (as defined in
Section 9.7 hereof) as of such date.
SECTION 2.6. BUYER'S ASSUMPTION OF LIABILITIES. On the terms and subject
to the conditions set forth in this Agreement, and in further consideration of
the transfer of the Purchased Assets, at the Closing, Buyer shall assume only
those duties, liabilities or obligations of the Business included in the Assumed
Liabilities and as specifically set forth on Schedule 1A.
SECTION 2.7. CLOSING. The Closing shall take place at the offices of
Buyer's counsel, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ on the date hereof or at such other time and location as the parties
hereto shall agree in writing.
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SECTION 2.8. DELIVERIES BY SELLER AT CLOSING. At the Closing, Seller shall
convey, transfer, assign and deliver to Buyer all of the Purchased Assets,
including in each case good and merchantable title to all personal property
included therein, free and clear of all Liens (except Permitted Liens). Seller
shall deliver to Buyer:
(a) Evidence of fulfillment of each of the conditions set forth in Article
6.0;
(b) The Escrow Agreement fully executed by Seller and Escrow Agent;
(c) An opinion of counsel to Seller, dated the Closing Date, to the effect
and substantially in the form of Exhibit B to this Agreement;
(d) ▇▇▇▇ of Sale and General Conveyance in the form of Exhibit C and such
assignments and other instruments of transfer as may be reasonably satisfactory
to Buyer's counsel, and with such consents to the conveyance, transfer and
assignment thereof as may be necessary to effect the conveyance, transfer,
assignment and delivery of the Purchased Assets to Buyer and to vest in Buyer
the title to the Purchased Assets and to assure to Buyer the full benefit of the
Purchased Assets, including without limitation:
(i) the transfer of all registered Proprietary Rights of Seller (as
such term is defined in Section 3.14 hereof) included in the Purchased
Assets and applications therefor; and
(ii) the consent(s) listed on Schedule 5.3;
(e) Releases of all Liens (other than Permitted Liens) on the Purchased
Assets;
(f) A Lease Assignment and Assumption Agreement with respect to each
Lease, in the form attached hereto as Exhibit D executed by Seller (the "Lease
Assignment");
(g) A Good Standing Certificate of current date for Seller from the
jurisdiction of its organization confirming that Seller exists and has not been
dissolved;
(h) A Secretary's Certificate with respect to Seller's Certificate of
Incorporation, By-laws, director resolution and officer incumbency, in form and
substance satisfactory to Buyer;
(i) A Transition Services Agreement in the form attached hereto as Exhibit
F-1, and a Master Services Agreement in the form attached hereto as Exhibit F-2,
each fully executed by Seller;
(j) A Non-Competition Agreement in the form attached hereto as Exhibit G,
fully executed by each of Seller and the other parties set forth in such
agreement (the "Non-Competition Agreement");
(k) An assignment and assumption agreement with respect to the contracts
set forth on Schedule 3.13 in the form attached hereto as Exhibit H, fully
executed by CGI Group, Inc. and Seller (the "Assignment and Assumption
Agreement"); and
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(l) Such other documents and instruments as Buyer or Buyer's counsel may
reasonably request to better evidence or effectuate the transactions
contemplated hereby.
Simultaneously with the delivery referred to in this Section, Seller shall
take or cause to be taken all such actions as may reasonably be required to put
Buyer in actual possession and operating control of the Purchased Assets.
SECTION 2.9. DELIVERIES BY BUYER AT CLOSING. At the Closing, Buyer shall
deliver to Seller:
(a) The Escrow Agreement fully executed by Buyer;
(b) An Assumption Agreement in the form attached hereto as Exhibit E fully
executed by Buyer, pursuant to which Buyer assumes, as of the Closing Date, the
Assumed Liabilities;
(c) The Lease Assignments, fully executed by Buyer;
(d) In accordance with Section 2.2(a) of this Agreement, Buyer shall
deliver to Seller an amount equal to US$22,200,000.00, constituting the cash
portion of the Purchase Price;
(e) In accordance with Section 2.2(b) of this Agreement, Buyer shall
deliver to the Escrow Agent the Escrow Funds;
(f) The Transition Services Agreement in the form attached hereto as
Exhibit F-1, and the Master Services Agreement in the form attached hereto as
Exhibit F-2, each fully executed by Buyer; and
(g) The Non-Competition Agreement fully executed by Buyer.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
SECTION 3.1. ORGANIZATION AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation. Seller has full power and authority to own its
properties and conduct the business presently being conducted by it. Seller has
full legal power, authority and capacity to execute this Agreement and to
consummate the transactions contemplated by this Agreement.
SECTION 3.2. AUTHORIZATION. The execution, delivery and performance of
this Agreement by Seller have been duly authorized and approved by all requisite
action on the part of Seller's directors and stockholders. This Agreement
constitutes the valid and binding obligation of Seller and is enforceable
against Seller in accordance with its terms, except as such
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enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, and other similar laws relating to or limiting creditors' rights
generally and by equitable principles.
SECTION 3.3. NO CONFLICT. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and the
compliance with the terms hereof will not (a) violate any law, judgment, order,
decree, statute, ordinance, rule or regulation applicable to Seller or the
Business, or any permit, license or approval of any Governmental Entity in
respect of Seller or the Business, (b) conflict with any provision of the
Certificate/Articles of Incorporation, By-laws or other organizational document
of Seller, (c) result in any violation of, and will not conflict with, or result
in a material breach of any terms of, or constitute a default under, any
mortgage, charge, license, instrument or agreement to which Seller is a party or
by which Seller or any of the Purchased Assets is bound or create any Lien upon
any of the Purchased Assets, or (d) except as set forth on Schedule 3.3, require
any notice to, or consent, approval, order or authorization of, or the
registration, declaration or filing with, any Governmental Entity or other
Person, including, without limitation, under any Contract.
SECTION 3.4. TITLE TO PURCHASED ASSETS. Seller has good, valid and
marketable title to all of the Purchased Assets, free and clear of all Liens,
except those Liens set forth on Schedule 3.4 ("Permitted Liens"). No other party
has any rights or claims to possession of any of the Purchased Assets. None of
the Purchased Assets are subject to any option, contract, arrangement or
understanding that would restrict Seller's ability to transfer the Purchased
Assets to Buyer as contemplated herein. Except as set forth on Schedule 3.4, the
Purchased Assets constitute all assets, rights and properties used by Seller to
operate, or necessary to operate the Business as operated by Seller prior to
Closing. No Related Person of Seller owns, leases or licenses assets, properties
or other rights used in the conduct of the Business. All employees engaged in
conducting the Business are employees of Seller.
SECTION 3.5. CONDITION OF PURCHASED ASSETS. All of the tangible property
included in the Purchased Assets is in good operating condition and repair,
ordinary wear and tear excepted, and in the state of maintenance, repair and
operating condition required for the proper operation and use thereof in the
ordinary and usual course of business.
SECTION 3.6. FINANCIAL STATEMENTS. Seller has delivered to Buyer financial
information respecting the Business (the "Financial Statements"), as follows:
(i) an unaudited balance sheet as of the Reference Date (the "Reference Date
Balance Sheet"), a copy of which is attached hereto as Schedule 3.6; and (ii)
unaudited profit and loss statement of the Business for the twelve (12) months
ended as of the Reference Date. The Financial Statements fairly present the
financial position and results of operations of the Business for the periods
then ended and the financial position of the Business at the dates thereof and
were prepared in accordance with GAAP; provided, however, the unaudited
Financial Statements (i) are subject to normal recurring year-end adjustments
and (ii) do not contain all footnote disclosures required by GAAP. The books of
account for the Business are and, during the period covered by the Financial
Statements were, correct and complete in all material respects, fairly and
accurately reflect or reflected the income, expenses, assets and liabilities of
the Business, including the
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nature thereof and the transactions giving rise thereto, and provide or provided
a fair and accurate basis for the preparation of the Financial Statements.
SECTION 3.7. ACCOUNTS RECEIVABLE; CREDITS. The Accounts Receivable are
bona fide and good, and are collectible in the amounts shown on the books of
account of Seller. No Account Receivable has been released by Seller, in whole
or in part, so as to reduce its value. There are no outstanding customer credits
or allowances (including allowances for bad debts) which have been authorized by
Seller prior to the Closing Date. The uncollectibility of any Accounts
Receivable resulting in an adjustment to the Purchase Price based on a
Receivable Shortfall in accordance with Section 2.4 shall not be considered a
breach of the representation and warranty of collectibility contained in this
Section 3.7.
SECTION 3.8. PRE-▇▇▇▇. Seller has not pre-billed or received prepayment
for products to be sold, services to be rendered, or expenses to be incurred by
the Business subsequent to the Closing Date, except in the ordinary course of
the Business and consistent with Seller's prior practices with respect to the
Business, with a corresponding current liability included on the Reference Date
Balance Sheet.
SECTION 3.9. LITIGATION. There is no suit, action or proceeding pending
against or affecting Seller or the employees of Seller or its Affiliates
relating to the Business, the Purchased Assets, or the transactions contemplated
hereby, nor is there any such suit, action or proceeding threatened against
Seller or any of the employees of Seller or its Affiliates. Neither Seller nor
the Business are subject to any order of a Governmental Entity.
SECTION 3.10. COMPLIANCE WITH LAW. Seller has all necessary licenses,
permits and other approvals of Governmental Entities necessary to operate the
Business as now conducted, each of which is in good standing, and Seller has
conducted the Business and properly filed all necessary reports in accordance
with applicable laws and regulations.
SECTION 3.11. ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no
liabilities or obligations, either accrued, contingent or otherwise, related to
or arising from the Business, nor are there other liabilities or obligations of
the Business, which are not reflected in (i) the Reference Date Balance Sheet or
(ii) this Agreement or the Schedules hereto, except as have been incurred in the
ordinary course of business since the Reference Date.
SECTION 3.12. ABSENCE OF CERTAIN CHANGES. Since the Reference Date,
neither Seller, with respect to the Business, nor the Business have or will have
as of the Closing:
(a) suffered any adverse change in its financial condition, assets,
liabilities, net worth or business from that shown on the Reference Date Balance
Sheet that, either individually or in the aggregate, has had a Material Adverse
Effect;
(b) suffered any damage, destruction or loss, whether or not covered by
insurance, materially adversely affecting its properties or the Business;
(c) declared or paid or agreed to declare or pay any dividends or
distributions of any cash or other assets of any kind whatsoever;
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(d) mortgaged, pledged, hypothecated or otherwise encumbered any of the
Purchased Assets, tangible or intangible;
(e) sold or transferred any assets, property or rights related to or used
in the Business, or canceled or agreed to cancel any of debts or claims related
to or arising from the Business, except for fair value, in the ordinary course
of business;
(f) suffered any Material Adverse Effect with respect to the Business'
relationships with customers or employees, or with respect to the Business'
contracts with customers;
(g) incurred any commitment (through negotiations or otherwise) or any
liability to any labor organization, or been involved in any labor dispute in
each case with respect to employees assigned to or who perform services related
to the Business;
(h) increased the amount of Debt or other obligations or liabilities
related to the Business by more than US$100,000 in the aggregate;
(i) entered or agreed to enter into any agreement or arrangement granting
any preferential rights to purchase a material part of the assets, property or
rights of the Business;
(j) placed any orders for materials, merchandise or supplies for the
Business in exceptional or unusual quantities based upon past operating
practices or accepted orders from customers of the Business under conditions
relating to price, terms of payment, time or delivery, or like matters
materially different from the conditions regularly and usually specified on
acceptance of orders for similar merchandise or from customers similarly
situated, with respect to the Business;
(k) made any change in the accounting practices or methods followed by it,
with respect to the Business;
(l) engaged in any restructuring; or
(m) entered into any other transaction, or been involved in any event or
experienced any condition of any character, that, either individually or in the
aggregate, has had a Material Adverse Effect on any of the Purchased Assets or
the Business.
SECTION 3.13. CONTRACTS. Schedule 3.13 lists all of the contracts, leases,
arrangements and understandings including, without limitation, sales orders,
purchase orders and distribution agreements, which relate to the Business as it
is conducted by Seller, other than the Proprietary Rights Agreements (which are
listed on Schedule 3.14) and other than any agreement involving solely the
payment or receipt of money by the Business or Seller and involving (and
expected to involve for future periods) less than US$5,000 of payments or
receipts in any one year (the "Contracts"), each of which was entered into,
arrived at or conducted on behalf of Seller with appropriate authority and in
accordance with Seller's customary practices. Seller is not and, to Seller's
knowledge, the other parties to such Contracts, arrangements and understandings
are not in default thereof and all Contracts are valid and in effect. Except as
set forth on Schedule 3.31, no customer or supplier of the Business has given
any notice or made any threat or otherwise
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revealed an intent to cancel or otherwise terminate its relationship with the
Business, to materially and/or adversely change the relationship, to
substantially reduce the volume of business it currently does with the Business
or to refuse to renew any Contract when it expires.
SECTION 3.14. INTELLECTUAL PROPERTY.
(a) Except as set forth on Schedule 3.14(a), Seller either owns or
possesses the irrevocable, perpetual, royalty-free license and other rights to
use the Proprietary Rights (as defined in Section 3.14(h) below) used by Seller
in connection with the Business or related to any Purchased Asset (the "Business
Proprietary Rights"), including, without limitation, the proprietary computer
software and programs known as Cyberbranch(R) and Cybersuite, including, without
limitation, the related Loan Origination System, Loan Navigator, Dynamic
CyberReporting and E-Statement software (collectively, the "CGI Software"), and
any Proprietary Rights necessary to develop, manufacture, publish, market,
license and sell the CGI Software, reference manuals, CD-ROMs and other
materials and products published, marketed or licensed by either Seller
(collectively, the "Products"), all of which are in good standing and
uncontested and free and clear of any liens or any deposit arrangements and none
of the same are owned or licensed or held by any Affiliate or Related Person.
(b) Except as set forth on Schedule 3.14(b), Seller is not infringing upon
or, otherwise acting adversely to, any Proprietary Rights, including trade
secrets, owned by any other Person or Persons, in connection with the Business.
Except as set forth on Schedule 3.14(b), no claim, suit, demand, proceeding or,
investigation is pending or has been asserted and, to the best Knowledge of
Seller, no claim, suit, demand, proceeding or investigation is threatened with
respect to, based on or alleging infringement of, any such rights of any third
party, or challenging the validity or effectiveness of any license for such
rights, and there is no basis for any such claim, suit, demand, proceeding or
investigation. Except as set forth on Schedule 3.14(b), the Business Proprietary
Rights, the CGI Software and the Products do not infringe or violate any
Proprietary Rights of any Person. Seller has taken all actions reasonably
necessary to maintain and protect the Business Proprietary Rights.
(c) Schedule 3.14(c) contains a brief description (including the
expiration date, renewal provisions and other material terms) of all contracts,
agreements, commitments or licenses relating to the Business Proprietary Rights
or the Products, including, without limitation, all license agreements
(including, without limitation, all forms of "shrink wrap" or "click wrap" and
other license agreements), agreements for software acquisition, development
agreements, author agreements, publishing agreements and OEM, VAR and other
distribution agreements (the "Proprietary Rights Agreements"). Seller has
delivered to Buyer true and complete copies of all of the Proprietary Rights
Agreements (other than end user agreements on a form provided to Buyer in
accordance with Section 3.14(f) below) prior to the execution of this Agreement.
To Seller's Knowledge, all of the Proprietary Rights Agreements are in full
force and effect and enforceable in accordance with their terms and there is no
violation or default under the Proprietary Rights Agreements. To Seller's
Knowledge, no event has occurred or circumstance exists which with notice or
lapse of time or both would constitute an event of default, or give rise to a
right of termination or cancellation, or result in the loss or adverse
modification of any right or benefit under any of the Proprietary Rights
Agreements. No party to any Proprietary Rights
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Agreement has given Seller written notice of or made a claim with respect to,
and Seller is not otherwise aware of, any material breach or default under any
thereof. There have been no oral or written modifications to the terms or
provisions of any of the Proprietary Rights Agreements. No amount payable to
Seller or reserved under any Proprietary Rights Agreement has been assigned by
Seller or anticipated and no amount payable to Seller under any Proprietary
Rights Agreement is in arrears or has been collected in advance and to Seller's
Knowledge, there exists no offset or defense to payment of any amount under a
Proprietary Rights Agreement. Except as specifically identified on Schedule
3.14(c), no Contract and no Proprietary Agreement contains any non-compete
covenant, exclusivity clause or other restriction that would limit Buyer's
ability to engage in the Business and market the Products, on an outsourced
basis, a licensed, in-house basis or otherwise.
(d) Seller has the exclusive right to manufacture, develop, publish,
market, license or sell the Products (all of which are listed on Schedule
3.14(d)) in any and all media and by print or electronic means. No Person other
than Seller may manufacture, develop, publish, market, license or sell the
Products without the prior consent of Seller and Seller has not given any such
consent and Seller owns, or is the exclusive licensee of, all right, title and
interest in and to the Products and the exclusive right to apply for copyright
protection therefor. None of the individuals or entities who have performed
services in connection with the development of any of the Products, as employees
or as independent contractors holds any proprietary rights with respect to such
Products. To the Knowledge of Seller, except as set forth on Schedule 3.14(d),
each of such employees and independent contractors has signed a nondisclosure
and invention assignment agreement with or for the benefit of Seller.
(e) Schedule 3.14(e) contains a true and complete list of all software
owned, developed, published or sold by Seller and which is used, sold or
licensed by the Business, including, without limitation, the CGI Software, with
all such software owned by Seller designated by an asterisk (*) (the "Business
Software"), as well as a description of any software included or embedded in any
of the Business Software and which requires the consent (whether subject to
royalty or otherwise) of a party other than Seller in order for any such
Business Software to be sold, licensed, updated, enhanced or modified or
integrated with the software by the Business, together with true and correct
copies of all contracts between or among Seller, on the one hand, and any author
or licensor of the software, on the other hand.
(f) There has been no publication or public distribution by Seller (or the
Business) of any of the source codes of any of the Business Software that would
in any way affect the right of the Business to seek copyright protection for the
Business Software. Schedule 3.14(f) contains true and correct copies of each
form of license agreement which has been used by the Business, in connection
with the marketing, license and distribution of the Business Software. Each end
user of the Business Software has either signed a license agreement or has
acquired the Business Software pursuant to a so-called "shrink wrap" or "click
wrap" license with Seller. With respect to any contracts pertaining to the
Business Software entered into by Seller, Seller has licensed the Business
Software and not sold it, thus retaining ownership of the Business Software.
Seller is not aware of any claims actually or purporting to be within the scope
of the warranty coverage afforded to purchasers of any of the Business Software,
or of any efforts, omissions or failures to
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perform. Schedule 3.14(f) sets forth all of the currently known bugs in any of
the Business Software.
(g) Schedule 3.14(g) contains a true and complete list of all trademarks,
trademark registrations, and applications therefor, service marks, service
names, trade names, domain names, patents and patent applications, copyrights
and copyright registrations, and applications therefor, included in the Business
Proprietary Rights, or otherwise wholly or partially owned, licensed, held or
used in the conduct of the Business.
(h) For purposes hereof, "Proprietary Rights" shall mean know-how,
invention rights, technology or other intellectual property, including, without
limitation, all trade secrets, customer and vendor information, lists and
databases, including, without limitation, customer, mailing and subscription
lists, proprietary processes, methods and apparatus, information not known to
the general public, any literary work, whether or not copyrightable, ideas,
concepts, designs, discoveries, formulae, patents, patent applications and
statutory invention rights, product and service developments, inventions,
improvements, processes, disclosures, trademarks, trademark applications, trade
names, fictional business names, service marks, copyrights, copyright
applications, logos, trade dress, all rights in internet web sites and internet
domain names, software, source codes and materials, object codes and materials,
algorithms, techniques, architecture, mask work rights, prototypes, engineering
and design models, technical information, specifications and materials in
whatever form or media recording or evidencing technology or proprietary
information, information with respect to firmware and hardware, and any
information relating to any product or program which has either been developed,
acquired or licensed for or by Seller, including the maintenance, modification
or enhancement thereof and all publishing and manufacturing information
(including with respect to custom chips, boards and other components) and all
license agreements (whether as licensor or licensee) relating thereto.
SECTION 3.15. REAL PROPERTY. Schedule 3.15 describes all leases of real
property used, in whole or in part, by the Business. Seller has delivered to
Buyer a true, correct and complete copy of the Leases and any and all ancillary
documents pertaining thereto (including, but not limited to, all amendments,
consents for alterations and documents recording variations and evidence of
commencement dates and expiration dates). The Leases are legal, valid, binding,
enforceable against Seller and in full force and effect and represent the entire
agreement between the landlord thereunder and Seller with respect to the
property subject thereto. To Seller's Knowledge, nothing impairs Seller's
ability to enforce its rights under the Leases against the applicable landlord.
Seller has not received any notice of a breach or default under the Leases, and
Seller has not granted to any other Person any rights, adverse or otherwise,
under the Leases. Seller is not, nor (to the Knowledge of Seller) is any other
party to the Leases, in breach or default in any material respect, and, to the
Knowledge of Seller, no event has occurred that, with notice or lapse of time
would constitute such a breach or default or permit termination, modification or
acceleration under any of the Leases. The rental set forth in each of the Leases
is the actual rental being paid, and there are no separate agreements or
understandings with respect to the same. Other than the leasehold interests
created by the Leases, Seller holds no interests in real property of any kind
that are held or used in connection with the Business. The premises subject to
the Leases are not subject to any zoning ordinance, outstanding work orders or
directions requiring any work, repairs, construction or capital expenditures,
Lien, or other
- 16 -
restriction or encumbrance which would have a Material Adverse Effect on the
Business or the use and enjoyment of such property in the manner in which such
property is currently used and enjoyed. To Seller's Knowledge, there is no
planned or threatened taking or condemnation of all or any part of such
premises. The buildings and structures located on any real property used by
Seller in the operation of the Business are in compliance with applicable
sanitation, health and safety legislation and regulations and are not subject to
any orders or direction of a sanitation or occupational health and safety
authority or similar body.
SECTION 3.16. ENVIRONMENTAL MATTERS. Seller is not now nor has been in the
past in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety in connection with the premises
subject by the Leases or the conduct of the Business, and no material
expenditures are or will be required from lessees in order to comply with any
such existing statute, law or regulation in connection with the premises subject
to the Leases or the conduct of the Business. No Hazardous Materials (as defined
below) are used or have been used, stored, or disposed of by or in connection
with the Business or, to the Knowledge of Seller, by any other Person on any
real property subject to Leases, or owned or occupied by Seller in connection
with the Business. For the purposes of the preceding sentence, "Hazardous
Materials" shall mean (a) materials which are listed or otherwise defined as
"hazardous" or "toxic" under any applicable local, state, federal and/or foreign
laws and regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control of
hazardous wastes, or other activities involving hazardous substances, including
building materials or (b) any petroleum products or nuclear materials.
SECTION 3.17. LABOR; ERISA. (a) Except as set forth on Schedule 3.17,
Seller is not, nor, as of the Closing Date will be, a party to any employment,
severance or consulting agreement or to any collective bargaining agreement, nor
are its employees members of a collective bargaining unit or union, nor has
there been any unionization activity, in each case related to the employees of
the Business (the "Business Employees"). With respect to the Business Employees,
Seller has complied with all laws relating to the employment of labor, including
provisions relating to wages, hours, collective bargaining, and the payment of
unemployment, employment insurance, workers' compensation, Social Security,
payroll, withholding and similar Taxes, with respect to Business Employees and
is not liable for any arrears of wages, compensation fund contributions or any
Taxes or penalties for failure to comply with such laws with respect to Business
Employees. Schedule 3.17 attached hereto contains a list of all Business
Employees at the Closing Date with their respective employers (i.e. the entity
who is their current employer), current salaries or hourly rates, any commission
or bonus compensation owing or received during the last twelve (12) months job
description, length of employment or date of hire, dates and amounts of the most
recent increases in salary, accrued vacation and all other amounts owing to all
employees, and a description of all benefits provided to Business Employees. No
Business Employee has given any notice or made any threat, or otherwise revealed
an intent, to cancel or otherwise terminate his or her relationship with the
Business or indicated an intention not to accept employment with Buyer, if
employment is offered. Subject to applicable statutory rights, there exists no
written contracts of employment with any of the Business Employees or any oral
contracts of employment which are not terminable on the giving of reasonable
notice and/or severance pay in accordance with applicable
- 17 -
law and no inducements to accept employment with any party were offered to any
Business Employees which have the effect of increasing the period of notice of
termination to which any such employee is entitled. Seller and each Affiliate of
Seller who has employed Business Employees has deducted and remitted to the
relevant governmental authority or entity all income taxes, unemployment
insurance contributions, employer health tax remittances and any taxes or
deductions or other amounts which it is required by statute or contract to
collect and remit to any governmental authority or other entities entitled to
receive payment of such deduction with respect to the Business Employees. All
Business Employees have been paid to the date of this Agreement all amounts
payable on account of salary, bonus, payments and commissions.
(b) Schedule 3.17 lists "employee Benefit Plans" as defined in Section
3(3) of ERISA and any other plans in which Business Employees, or any
beneficiary thereof, is entitled to participate or to receive benefits
(including without limitation, equity, deferred compensation, severance,
retirement, and medical or life insurance). Seller has furnished Buyer with a
complete and accurate copy of each such plan. No such plan requires Buyer to
assume any employment, compensation, fringe benefit, pension, profit sharing or
deferred compensation agreement or plan in respect of any employee, and Seller
does not or has not contributed to or maintained a "multiemployer plan" (as
defined in ERISA Section 3(37)) with respect to the Business Employees.
SECTION 3.18. TAXES.
(a) Seller has prepared and filed or caused to be prepared and filed, all
federal, state, provincial, local and foreign returns, estimates, information
statements and reports, including without limitation, all informational returns
("Returns") relating to any and all Taxes concerning or attributable to the
Purchased Assets or the Business ("Business-Related Taxes") which Seller is
required to file on or before the Closing and such Returns were true and
accurate in all material respects and were completed in accordance with
applicable law when filed.
(b) Seller has (i) paid all Business-Related Taxes it is required to pay
and (ii) withheld with respect to Business Employees all federal and state
income taxes, FICA, FUTA and other Taxes required to be withheld, and Seller has
not been delinquent in the payment of any such Tax nor is there any Tax
deficiency outstanding, proposed or assessed against Seller with respect to such
Taxes.
(c) No audit or other examination of any Return of Seller is presently in
progress with respect to Business-Related Taxes, nor has Seller been notified of
any request for such an audit or other examination.
(d) Seller has no liabilities for unpaid Business-Related Taxes which have
not been accrued or reserved against on the Reference Date Balance Sheet,
whether asserted or unasserted, contingent or otherwise, and Seller has no
Knowledge of any basis for the assertion of any such liability.
(e) The transactions contemplated herein are not subject to the tax
withholding provisions of Code Section 3406 or Subchapter A of Chapter 3 of the
Code, or any other
- 18 -
provision of law, or if they are subject to such provisions, such provisions
have or shall at the time of Closing have been satisfied.
SECTION 3.19. RELATIONSHIPS WITH RELATED PERSONS. No Affiliate, nor any
Related Person has any interest in any property (whether real, personal, or
mixed and whether tangible or intangible) used in or pertaining to the Business.
Neither Seller nor any Affiliate or Related Person of Seller is, or has owned
(of record or as a beneficial owner) an equity interest or any other financial
or profit interest in, a Person that has (a) had business dealings or a material
financial interest in any transaction with the Business, or (b) engaged in
competition with the Business. No Affiliate or Related Person of Seller is a
party to any Proprietary Agreement or Contract.
SECTION 3.20. BROKERS. Except as set forth on Schedule 3.20, there are no
claims for brokerage commissions, finder's fees or similar compensation arising
out of or due to any act of or on behalf of Seller in connection with the
transactions contemplated by this Agreement.
SECTION 3.21. INSURANCE. The Business and the Purchased Assets are insured
with respect to all events occurring prior to the Closing Date, in amounts and
against risks that are commercially reasonable. All of such insurance policies
and bonds covering the Business are in full force and effect and no written
notice of termination of any such insurance policies or bonds has been received
by Seller. Seller has not received any written communication or other written
notice regarding any actual or possible refusal of any coverage or rejection of
any claim related to the Business, nor has Seller failed to either give any
notice or present any claim under any such insurance policy in due and timely
fashion.
SECTION 3.22. POWERS OF ATTORNEY. No Person has any power of attorney to
act on behalf of Seller in connection with any of the Purchased Assets or the
Business other than such powers to so act as normally pertain to the officers of
Seller.
SECTION 3.23. DEBT. Set forth in Schedule 3.23 hereto is a complete and
correct list of all Debt of Seller related to or arising from the Business,
other than trade debt incurred in the ordinary course of business, none of which
is overdue unless such trade debt is being contested diligently and in good
faith by appropriate proceedings and appropriate cash reserves have been
established therefor. The maximum principal or face amounts of the obligations
set forth, which are outstanding and which can be outstanding, are correctly
stated, and all Liens of any nature given or agreed to be given as security
therefor are correctly described or indicated in such Schedule.
SECTION 3.24. SOLVENCY.
(a) Seller is not now insolvent and will not be rendered insolvent by the
transactions contemplated by this Agreement. As used in this section,
"insolvent" means that the sum of the debts and other probable liabilities of
Seller exceeds the present fair saleable value of Seller's assets or Seller is
unable to pay its obligations as they become due.
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(b) Immediately after giving effect to the consummation of the
transactions contemplated by this Agreement: (i) Seller will be able to pay its
remaining liabilities as they become due in the usual course of its business;
(ii) Seller will not have unreasonably little capital, given its circumstances;
(iii) Seller will have assets (calculated at fair market value) that exceed its
remaining liabilities; and (iv) taking into account all pending and threatened
litigation, final judgments against Seller in actions for money damages which
are not reasonably anticipated to be rendered at a time when, or in amounts such
that, Seller will be unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum probable amount of such
judgments in any such actions and the earliest reasonable time at which such
judgments might be rendered) as well as all other obligations of Seller. The
cash available to Seller after Closing, after taking into account all other
anticipated uses of the cash, will be sufficient to pay all such liabilities,
debts and judgments promptly in accordance with their terms.
SECTION 3.25. CORPORATE PREDECESSORS AND PREVIOUS NAMES. Set out in
Schedule 3.25 is a list of all corporate predecessors of Seller and all previous
corporate (and business) names of Seller and its predecessors, and of all
Persons who have owned any of the Purchased Assets while used in the operation
of the Business or who have operated the Business, together with all names used
by them, in each case since December 31, 2000.
SECTION 3.26. AFFILIATES OF SELLER. Except as set forth on Schedule 3.26,
no Affiliate of Seller (i) owns, leases, licenses or has other rights to any
assets, rights or property used by or necessary to operate the Business, (ii)
has any liabilities or obligations, accrued, contingent or otherwise, which
directly result from the operation of the Business (as opposed to general
corporate, tax and similar liabilities of Seller that do not relate specifically
to the Business), (iii) is party to, or bound by, or a beneficiary under any
contract, lease, arrangement or understanding which relates to the Business,
(iv) owns, licenses or has other rights to any Proprietary Rights used in
connection with the Business or related to the Purchased Assets, (v) has
obtained a registered trademark or tradename or filed a trademark or tradename
application for the names Cyber Branch, Cyber Suite, Loan Navigator, Cyber
Reporting or any similar name in Canada, (vi) owns, licenses or has other rights
to any CGI Software, the Products or any other software used, sold or licensed
by the Business or any derivative, revision, version, improvement or refinement
of any of the foregoing, or (vii) is party to, bound by, or a beneficiary under
any contract, agreement, commitment or license relating to Proprietary Rights
used in connection with the Business or related to the Purchased Assets.
SECTION 3.27. NO OPTIONS. No Person other than Buyer has any agreement or
option or any right capable of becoming an agreement or option for the purchase
from Seller of any portion of the Purchased Assets or the Business.
SECTION 3.28. STATEMENTS NOT MISLEADING. To Seller's Knowledge, Seller and
its Affiliates have fully complied with all of Buyer's (and Buyer's counsel's)
due diligence requests and have provided Buyer with all information and
documentation requested by Buyer and Buyer's counsel, or have expressly
indicated in response to a request that the required information and
documentation, while it may exist, is not being provided. Seller has disclosed
all facts, events or transactions which are material to the Purchased Assets and
the Business. No
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representation or warranty of Seller or document furnished by Seller or by any
Affiliate of Seller hereunder is false or inaccurate in any material respect or
contains any untrue statement of a material fact or omits to state any fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, as of the Closing Date, as
follows:
SECTION 4.1. ORGANIZATION AND POWER OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has full corporate power and authority to own its properties and
conduct the business presently being conducted by it, to execute this Agreement,
and to consummate the transactions contemplated by this Agreement.
SECTION 4.2. AUTHORIZATION. The execution, delivery and performance of
this Agreement by Buyer have been duly authorized and approved by all requisite
action on the part of Buyer, and this Agreement constitutes the valid and
binding obligation of Buyer and is enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other similar laws relating to or
limiting creditors' rights generally and by equitable principles.
SECTION 4.3. NO CONFLICT. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and the
compliance with the terms hereof will not, (a) violate any law, judgment, order,
decree, statute, ordinance, rule or regulation applicable to Buyer, or any
permit, license or approval of any Governmental Entity, (b) conflict with any
provision of Buyer's certificate of incorporation, Bylaws or other
organizational or organic document, (c) result in any violation of, and will not
conflict with, or result in a breach of any terms of, or constitute a default
under, any mortgage, instrument or agreement to which Buyer is a party or by
which Buyer is bound, or (d) require any notice to, or consent, approval, order
or authorization of, or the registration, declaration or filing with, any
Governmental Entity or other third party, which, in the case of clause (c) or
(d), would have a material adverse effect on Buyer's ability to consummate the
transactions contemplated by this Agreement.
ARTICLE 5
COVENANTS
SECTION 5.1. CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the Closing, Seller agrees (except as expressly
provided in this Agreement
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or the Schedules hereto or to the extent that Buyer shall otherwise consent in
writing) that it and its Affiliates:
(a) shall carry on the Business in the ordinary course in substantially
the same manner as presently conducted, maintain the Records in substantially
the same manner as presently maintained, and preserve the relationships of the
Business with its customers, suppliers and employees (at current salary levels);
(b) shall not sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of the Purchased Assets having an individual or
aggregate value in excess of US$100,000;
(c) shall not acquire any material capital asset for use in the operation
of the Business ("material" for purposes of this paragraph shall mean any
capital asset whose acquisition price or fair market value is in excess
US$100,000);
(d) shall not enter into or assume any pledge or other title retention
agreement, or permit any Lien other than Permitted Liens to attach upon any of
the Purchased Assets;
(e) shall maintain and keep in good order and repair in a manner
consistent with prior practices, subject to reasonable wear and tear, all of the
Purchased Assets;
(f) shall not solicit or accept advance payments from customers of the
Business for services or goods which are to be performed or delivered by the
Business subsequent to the Closing Date, except in the ordinary course of
business consistent with prior practices;
(g) shall not enter into any contract, commitment or agreement which
either individually or in the aggregate would have a Material Adverse Effect
upon the Business or the Purchased Assets, or amend, modify adversely, cancel,
rescind, revoke or terminate any of the Contracts;
(h) shall not incur any additional indebtedness related to the Business or
the Purchased Assets except in the ordinary course of business;
(i) shall not materially increase the level of compensation or employee
benefits of any Business Employee;
(j) shall not take any action that would or might result in any of its
representations and warranties set forth in this Agreement becoming untrue
(including the accuracy of the Schedules), any of the conditions to Closing set
forth in Article 6 not being satisfied, or the Business or any of the Purchased
Assets becoming materially less valuable;
(k) shall comply with all laws, rules and regulations of any Governmental
Entity applicable to the Purchased Assets or the conduct of the Business and
shall maintain its good standing under all permits and licenses necessary to
conduct the Business;
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(l) shall promptly advise Buyer in writing of the occurrence of any matter
or event that is material to the Business, the Purchased Assets, the Closing
conditions or the representations and warranties of Seller in this Agreement.
SECTION 5.2. NO CONTEMPORANEOUS NEGOTIATIONS. Pending the Closing, Seller
shall not (i) directly or indirectly through any other party engage in any
negotiations with or provide any information to any other person, firm or
corporation with respect to an acquisition transaction concerning the Business
or the Purchased Assets, or (ii) directly or indirectly through any other party
solicit any proposal relating to the acquisition of the Business or the
Purchased Assets. Seller will promptly notify Buyer of any inquiry or proposal
received by Seller with respect to such a transaction, including information as
to the identity of the parties making such inquiry or proposal and the specified
terms of such inquiry or proposal, as the case may be.
SECTION 5.3. CONSENT OF THIRD PARTIES. Seller shall obtain, as soon as
practicable after the date hereof, but in any event prior to the Closing Date,
the consent in writing of Person(s) listed on Schedule 5.3 to the transactions
contemplated by this Agreement. Seller acknowledges and agrees that in no event
shall Buyer be liable to Seller (or its Affiliates) for, or subject to a claim
for indemnification for, Losses (as such term is defined in Section 9.1 hereof)
arising from the failure to obtain the consent in writing of any Person to the
assignment of any contract, agreement, obligation, lease, permit, license or
other undertaking included in the Purchased Assets.
SECTION 5.4. INSURANCE COVERAGE. Insurance coverage for the Business
consistent with Section 3.21 hereof shall be maintained in effect by Seller
between the date hereof and the Closing Date.
SECTION 5.5. FURTHER ASSURANCES; COOPERATION.
(a) Seller will, and will cause its Affiliates to, provide such other
information, and execute and deliver all such other and additional instruments,
notices, releases, undertakings, consents and other documents, and will do all
such other acts and things, as may be reasonably requested by Buyer as necessary
to assure to Buyer all the rights and interests granted or intended to be
granted under this Agreement. Seller shall, and will cause its Affiliates to,
take or shall cause to be taken such other reasonable actions as Buyer may
require more effectively to transfer, convey and assign to, and vest in, Buyer,
and put Buyer in possession of, the Purchased Assets and the Business as
contemplated by this Agreement. In the event that any of the Purchased Assets
cannot be fully and effectively transferred to Buyer without the consent of a
third party or parties, including, without limitation, the consent of each
landlord under any Lease, and if at the Closing Buyer shall have waived their
right to receive at the Closing such consent, Seller shall thereafter be
obligated to use its best efforts to assure to Buyer the benefits of such
contract, commitment, other arrangement or other Purchased Asset.
(b) Each party to this Agreement has, prior to the Closing and will
continue until December 31, 2006, to permit the appropriate officers, employees
and accountants of the other party to meet with its respective officers,
employees and accountants responsible for its internal controls and the
disclosure controls and procedures of and to discuss such matters as such party
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may deem necessary or appropriate for the parties to satisfy their respective
obligations under Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2003 and any
rules and regulations relating thereto, and similar Canadian laws and
regulations, all with respect to the Business.
(c) Notwithstanding the foregoing, Buyer agrees that it will promptly
grant to Seller and/or an Affiliate designated by Seller a perpetual,
non-exclusive, non-transferable, royalty-free license with no right to market,
sell, license or otherwise distribute on a stand-alone basis the software
designated on Schedule 3.14(a) as embedded (the "Embedded Software") in certain
software products sold or licensed by Seller's Canadian Affiliates, such that
Seller and/or such Affiliate may continue to service the Canadian products with
the Embedded Software embedded in it, and may continue to market such Canadian
software products with the Embedded Software embedded in them. Such license
shall be on an "as-is" basis without representation, warranty or indemnity of
any kind.
SECTION 5.6. USE OF NAMES. From and after the Closing Date, neither Seller
nor any Affiliate of Seller shall use the names Cyberbranch(R) and Cybersuite,
including, without limitation, the related Loan Origination System, Loan
Navigator and Dynamic CyberReporting, or any similar name.
SECTION 5.7. PASSAGE OF TITLE AND RISK OF LOSS. Legal title, equitable
title, and risk of loss with respect to the property and rights to be
transferred hereunder shall not pass to Buyer until the property or right is
transferred at the Closing and possession thereof is delivered to Buyer.
SECTION 5.8. TRANSFER OF GOODWILL AND BUSINESS. From and after the Closing
Date, Seller shall, when requested to do so by Buyer, provide its full
cooperation and good faith assistance to effectuate a smooth transfer of the
Business and goodwill to Buyer.
SECTION 5.9. EXPENSES; TRANSFER TAXES. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense. Any sales, use, franchise, conveyance
or other transfer Tax which becomes payable by any of the parties to this
Agreement as a result of the conveyance and transfer from Seller to Buyer of the
Purchased Assets or otherwise as a result of the transactions contemplated
hereby and any other transfer or documentary Taxes or any filing or recording
fees applicable to such conveyance and transfer shall be paid by Seller, and
Seller shall promptly provide Buyer with proof of payment of such Taxes.
SECTION 5.10. TAXES.
(a) Continuing Obligation. Seller shall be responsible for and pay or
cause to be paid when due all Taxes attributable to, levied or imposed upon or
incurred in connection with the Purchased Assets or the Business relating or
pertaining to the period (or that portion of any period) ending on or prior to
the Closing Date. Seller shall continue to timely file within the time period
for filing, or any extension granted with respect thereto, all of Seller's
Returns required to be filed in connection with the Purchased Assets and the
Business, and such Returns shall be true and correct and completed in accordance
with applicable laws.
- 24 -
(b) Status at Closing. At Closing, Seller shall have (i) paid or cause to
be paid all Taxes attributable to, levied or imposed upon or incurred in
connection with the Purchased Assets or the Business it is required to pay as of
such time, and (ii) withheld with respect to Business Employees all federal and
state income taxes, FICA, FUTA and other Taxes required to be withheld as of
such time, if any.
(c) Tax Elections. No new elections with respect to Business Taxes, or any
changes in current elections with respect to Business Taxes, affecting the
Purchased Assets or the Business shall be made by Seller after the date of this
Agreement without the prior written consent of Buyer.
(d) Cooperation and Records Retention. Seller and Buyer shall each (i)
provide the other with such assistance as may reasonably be requested by either
of them in connection with the preparation of any Return, audit or other
examination by any taxing authority or judicial or administrative proceeding
relating to liability for Business Taxes, (ii) retain and provide the other with
any records or other information which may be relevant to such Return, audit or
examination, proceeding or determination, and (iii) provide the other with any
final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Return of the
other for any period. Without limiting the generality of the foregoing, Buyer
and Seller shall retain, until the applicable statutes of limitations (including
any extensions) have expired, copies of all Returns, supporting work schedules
and other records or information which may be relevant to such Returns for all
Tax periods or portions thereof ending before or including the Closing Date and
shall not destroy or otherwise dispose of any such records without first
providing the other party with a reasonable opportunity to review and copy the
same.
SECTION 5.11. EMPLOYMENT MATTERS.
(a) Except as specifically provided in this Section 5.11, Seller shall be
responsible for any salary, wages, bonuses, commissions, vacation with pay,
banked or unused sick days, pension benefits or other employee benefits due or
accruing due to, or for any or other such costs or amounts payable to or
associated with, all Business Employees for all periods through Closing
(collectively "Employee Remuneration").
(b) For purposes of this Agreement, "Designated Employees" shall mean the
Business Employees whom Buyer wants to hire at Closing for purposes of
carrying-on the Business post-Closing. The Designated Employees are listed as
such on Schedule 5.11. Seller shall cooperate with Buyer in Buyer's efforts to
hire all Designated Employees and the Buyer shall offer the Designated Employees
employment with aggregate compensation and benefits that, when taken as a whole,
are not materially less favorable to each Designated Employee than his or her
current aggregate compensation and benefits (it being understood that certain
components of compensation and certain benefits may be better and others worse,
but that when balanced against one another and taken as a whole, the aggregate
compensation and benefits will be materially equivalent). The Designated
Employees who accept Buyer's offer of employment are referred to as the "Hired
Employees." The employment of all Hired Employees by Seller shall be deemed to
have ended effective upon the Closing. Seller shall, consistent with its
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normal payroll practice, pay all compensation or other money due to such Hired
Employees with respect to their employment and termination by Seller through and
including the Closing Date. Seller shall, and hereby does, release the Hired
Employees (i) from all employment obligations to Seller, and (ii) from their
obligations under any non-competition or confidentiality agreement in favor of
Seller, to the extent necessary to allow them to become employed by Buyer.
(c) For purposes of this Agreement, "Non-Designated Employees" shall mean
Business Employees whom Buyer does not want to hire at Closing. The
Non-Designated Employees are listed as such on Schedule 5.11. Seller intends to
terminate the employment of such the Non-Designated Employees as of the Closing.
Based on information provided by Seller, Schedule 5.11 sets forth the severance
payments that Seller will be required by the terms of its existing severance
agreements or policies to make to the Non-Designated Employees upon the
termination of their employment at Closing. Buyer agrees to pay to Seller an
amount equal to one-half of the aggregate severance payments payable to the
Non-Designated Employees as a result of their termination of employment at
Closing, provided, however, that (1) the amount payable to each Non-Designated
Employee shall not exceed the amount set forth on Schedule 5.11 for such
Non-Designated Employee, and (2) in the event that the aggregate amount of such
severance payments exceeds US$340,000 (such that Seller's share reaches
US$170,000), Buyer shall pay Seller 100% of the amount paid in excess of
US$170,000. Seller shall provide to Buyer within 45 days of the Closing a report
setting forth the severance payments actually made to Non-Designated Employees,
along with a calculation of Buyer's resulting obligation to Seller. Subject to
the resolution of any disputes over such report and calculation, Buyer shall pay
to Seller the amount owing on or before the date that is 60 days after Closing.
ARTICLE 6
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
All obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or at the Closing Date, of each of the following
conditions:
SECTION 6.1. REPRESENTATIONS AND WARRANTIES ACCURATE; COMPLIANCE WITH
COVENANTS. All representations and warranties of Seller contained in this
Agreement shall have been true in all material respects when made and shall be
true in all material respects at and as of the Closing Date, except as otherwise
specifically contemplated by this Agreement and except that if any
representation or warranty is qualified by materiality or with reference to
Material Adverse Effect, then each such representation or warranty shall be true
in all respects. Seller shall have complied in all material respects with all
covenants and conditions required to be performed or complied with by them prior
to or at the Closing Date. Seller shall furnish Buyer with an appropriate
certificate to the foregoing effect as of the Closing Date.
SECTION 6.2. LITIGATION AFFECTING CLOSING. No action, suit or proceeding
shall be pending or threatened by or before any court or Governmental Entity in
which it is sought to
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restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby.
SECTION 6.3. INSTRUMENTS OF SALE, ETC. Seller shall have executed and
delivered to Buyer such instruments of sale, conveyance, transfer and assignment
satisfactory to counsel for Buyer as are necessary or desirable to vest in Buyer
title to all of the Purchased Assets.
SECTION 6.4. CONSENTS. All authorizations, approvals, permits or consents
of any Governmental Entity or third Person listed on Schedule 5.3 necessary for
the consummation of the transactions contemplated by this Agreement shall have
been duly obtained by Seller in writing, shall be effective on the Closing Date,
and shall have been delivered to Buyer.
SECTION 6.5. NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
event listed in Section 3.12 that would have a Material Adverse Effect on the
Business, the Purchased Assets or the Assumed Liabilities.
SECTION 6.6. DELIVERIES AT CLOSING. Seller shall have delivered to Buyer,
fully executed by all applicable parties, each of the items specified in Section
2.8 of this Agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
SECTION 7.1. REPRESENTATIONS AND WARRANTIES ACCURATE; COMPLIANCE WITH
COVENANTS. All representations and warranties of Buyer contained in this
Agreement shall have been true in all material respects when made and shall be
true in all material respects at and as of the Closing Date, except as otherwise
specifically contemplated by this Agreement and except that if any
representation or warranty is qualified by materiality or with reference to
Material Adverse Effect, then each such representation or warranty shall be true
in all respects. Buyer shall have performed and complied in all material
respects with all covenants and conditions required to be performed or complied
with by it prior to or at the Closing Date.
SECTION 7.2. LITIGATION AFFECTING CLOSING. No action, suit or proceeding
shall be pending or threatened by or before any court or Governmental Entity in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 7.3. DELIVERIES AT CLOSING. Buyer shall have delivered to Seller,
fully executed by Buyer, each of the items specified in Section 2.9 of this
Agreement.
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ARTICLE 8
TERMINATION
SECTION 8.1. TERMINATION EVENTS. This Agreement may be terminated by
written notice on or before the Closing Date:
(a) by the mutual consent of the parties hereto; or
(b) by Buyer, if the conditions set forth in Article 6 are not satisfied
(or are incapable or being satisfied) on or before March 31, 2005, without fault
of Buyer; or
(c) by Seller, if the conditions set forth in Article 7 are not satisfied
(or are incapable of being satisfied) on or before March 31, 2005 without fault
of Seller.
SECTION 8.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1 hereof, this Agreement shall forthwith
become void and there shall be no liability on the part of Buyer, Seller, their
respective officers or directors, except that the agreements contained in
Section 8.3 hereof shall survive the termination hereof and any confidentiality
or non-disclosure agreements between Buyer and Seller or its Affiliates shall
survive in accordance with their terms.
SECTION 8.3. RETURN OF DOCUMENTS. In the event that the sale of the
Purchased Assets is not consummated for any reason whatsoever, or if this
Agreement is terminated for any reason whatsoever, each party will return to the
other party on a timely basis all documents, agreements, instruments or other
written information concerning the other party that was obtained from such other
party, or to the extent permitted by law will destroy the same and provide to
the other party written certification of such destruction, and will destroy any
related electronic files, to the extent commercially feasible.
ARTICLE 9
INDEMNIFICATION
SECTION 9.1. INDEMNIFIED LOSSES. For the purpose of this Article 9 and
when used elsewhere in this Agreement, "Losses" shall mean and include any and
all liability, loss, damage, claim, expense, cost, fine, fee, penalty,
obligation or injury including those resulting from any and all actions, suits,
proceedings, demands, assessments or judgments, together with reasonable costs
and expenses including the attorneys' fees and other legal costs and expenses
relating thereto.
SECTION 9.2. INDEMNIFICATION BY SELLER. Seller hereby agrees to indemnify
and hold harmless Buyer against and in respect of any Losses which arise out of
or result from:
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(a) any breach by Seller of any representation or warranty of Seller made
herein or in any certificate, document, writing or instrument delivered by
Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of Seller in this
Agreement or in any certificate, document, writing or instrument delivered by
Seller pursuant to this Agreement, including without limitation, the Transition
Services Agreement and the Non-Competition Agreement;
(c) any liability or obligation of Seller, its Affiliates or the Business
as operated through the Closing Date or otherwise arising out of the ownership
or operation of Seller, its Affiliates, the Business or the Purchased Assets
prior to the Closing, other than the Assumed Liabilities, whether or not such
liability or obligation was disclosed to Buyer, including, without limitation,
sales and use Taxes for all periods ending on or prior to the Closing Date; and
(d) as provided in Section 9.4 hereof.
SECTION 9.3. INDEMNIFICATION BY BUYER. Subject to the limitations set
forth in this Article 9, Buyer agrees to indemnify and hold harmless Seller
against and in respect of any Losses which arise out of or result from:
(a) any breach by Buyer of any representation or warranty of Buyer made
herein or in any certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement;
(b) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement or in any other certificate, document, writing or instrument delivered
by Buyer pursuant to this Agreement;
(c) the Assumed Liabilities; and
(d) as provided in Section 9.5 hereof.
SECTION 9.4. THIRD PARTY CLAIMS AGAINST BUYER. Seller further agrees to
indemnify and hold Buyer harmless from and against any and all Losses resulting
from causes of action or claims of any kind asserted by unrelated third parties
arising from any liability of any nature incurred in connection with any action,
suit, proceeding, claim or demand by any person or entity where any of the
alleged or actual breach, default, act, omission or other grounds therefore is
attributable to events occurring prior to the Closing and related to Seller, its
Affiliates, the Business or the Purchased Assets, including, without limitation,
any and all Losses attributable to goods, products and services provided by the
Business or Seller or its Affiliates prior to the Closing Date, whether or not
such litigation, proceeding or claim is pending, threatened, or asserted before,
on or after the Closing Date.
SECTION 9.5. THIRD PARTY CLAIMS AGAINST SELLER. Subject to the limitations
set forth in this Article 9, Buyer further agrees to indemnify and hold Seller
harmless from and against any and all Losses resulting from causes of action or
claims of any kind asserted by unrelated third parties arising from any
liability of any nature incurred in connection with any action, suit,
- 29 -
proceeding, claim or demand by any person or entity where any of the alleged or
actual breach, default, act, omission or other grounds therefore is attributable
to events occurring after the Closing and related to Buyer or the Purchased
Assets, whether or not such litigation, proceeding or claim is pending,
threatened, or asserted before, on or after the Closing Date.
SECTION 9.6. PROCEDURES; NO WAIVER; EXCLUSIVITY. All claims for
indemnification by a party pursuant to this Article 9 in connection with an
action, suit or proceeding shall be made in accordance with the provisions of
this Section 9.6. The party entitled to indemnification under this Article 9
(the "Indemnified Person") shall give prompt written notification to the Person
obligated to provide such indemnification (the "Indemnifying Person") of the
commencement of any action, suit or proceeding relating to a third party claim
for which indemnification pursuant to this Article 9 may be sought; provided,
however, that no delay on the part of the Indemnified Person in notifying the
Indemnifying Person shall relieve the Indemnifying Person from any liability or
obligation under this Article 9 except to the extent of any damage or liability
caused solely by or arising out of such delay. Within 20 days after delivery of
such notification, the Indemnifying Person may, upon written notice thereof to
the Indemnified Person, assume control of the defense of such action, suit or
proceeding with counsel reasonably satisfactory to the Indemnified Person,
provided (i) the Indemnifying Person acknowledges in writing to the Indemnified
Person that the Indemnifying Person shall indemnify the Indemnified Person with
respect to all elements of such action, suit or proceeding and any damages,
fines, costs or other liabilities that may be assessed against the Indemnified
Person in connection with such action, suit or proceeding, and (ii) the third
party seeks monetary damages only. If the Indemnifying Person does not so assume
control of such defense, the Indemnified Person shall control such defense. The
party not controlling such defense may participate therein at its own expense;
provided, that if the Indemnifying Person assumes control of such defense and
the Indemnified Person is advised by counsel in writing that the Indemnifying
Person and the Indemnified Person may have conflicting interests or different
defenses available with respect to such action, suit or proceeding, the
reasonable fees and expenses of counsel to the Indemnified Person shall be
considered "Losses" for purposes of this Agreement. The party controlling such
defense shall keep the other party advised of the status of such action, suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the other party with respect thereto. An Indemnified
Person shall not agree to any settlement of such action, suit or proceeding
without the prior written consent of the Indemnifying Person, which shall not be
unreasonably withheld or delayed. The Indemnifying Person shall not agree to any
settlement or the entry of a judgment in any action, suit or proceeding without
the prior written consent of the Indemnified Person, which shall not be
unreasonably withheld (it being understood that it is reasonable to withhold
such consent if, among other things, the settlement or the entry of a judgment
(A) lacks a complete release of the Indemnified Person for all liability with
respect thereto or (B) imposes any liability or obligation on the Indemnified
Person).
SECTION 9.7. SET-OFF. (a) Buyer shall be entitled to a set-off against the
Escrow Funds for any amounts payable to Buyer pursuant to this Article 9 or
under Section 2.3 or Section 2.4 (a "Claimed Set-Off"). Nothing in this Section
9.7 shall be construed or interpreted as a limitation on Buyer's right to
indemnification in accordance with this Article 9.
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(b) Buyer shall give Seller written notice of any Claimed Set-Off. Except
in the case of a Claimed Set-Off made pursuant to Section 2.3 or 2.4 of this
Agreement, Seller shall have thirty (30) days from the date of Buyer's written
notice to object to the Claimed Set-Off. Seller shall make any objection to a
Claimed Set-Off in writing and shall forward the same to both Buyer and the
Escrow Agent in the case of a claim against the Escrow Funds (an "Escrow
Claim"). If Seller does not timely object to an Escrow Claim, or in the case of
any Claimed Set-Off made pursuant to Section 2.3 or 2.4 of this Agreement (which
Claimed Set-Off shall not be made until the Final Net Current Assets or the
Receivable Shortfall, as applicable, have been determined in accordance with
Section 2.3 or 2.4, as applicable), Buyer may give unilateral written notice to
the Escrow Agent to release a portion of the Escrow Funds equivalent to the
Claimed Set-Off, which written notice in the case of a Claimed Set-Off made
pursuant to Section 2.3 or 2.4 of this Agreement shall include a certification
by Buyer that the Final Net Current Assets or the Receivable Shortfall have been
finally determined in accordance with Section 2.3 or 2.4, as applicable. Seller
hereby acknowledge that such written notice shall be sufficient to authorize the
Escrow Agent to release the Escrow Funds as directed by Buyer.
(c) If Seller does timely object to a Claimed Set-Off, except in the case
of a Claimed Set-Off made pursuant to Section 2.3 or 2.4 of this Agreement, the
Escrow Agent shall not release any portion of the Escrow Funds to Buyer until
the Escrow Agent receives instructions which are signed by Buyer and Seller, or
until the dispute has been definitively resolved by court proceedings. If Seller
does timely object and Seller and Buyer are unable to agree to the amount of the
Claimed Set-Off within thirty (30) days, either Seller or Buyer may institute
court proceedings for a determination of the amount of the Claimed Set-Off. If
Seller objects to a Claimed Set-Off, or during the pendency of Seller's thirty
(30) day notice period, Buyer may require the Escrow Agent to retain a portion
of the Escrow Funds to cover an Escrow Claim by giving the Escrow Agent
unilateral written notice to retain said portion of the Escrow Funds, which
written notice Seller hereby acknowledges to be sufficient to authorize the
Escrow Agent to retain said portion of the Escrow Funds as directed by Buyer,
and in which event the Escrow Agent shall not release that portion of the Escrow
Funds to Seller in accordance with the Escrow Agreement until the Escrow Agent
receives instructions which are signed by both Buyer and Seller, or until the
dispute has been definitively resolved by court proceedings.
SECTION 9.8. SURVIVAL. All representations and warranties made by Seller
and Buyer herein (except for those set forth in Sections 3.1, 3.2, 3.4, 4.1 and
4.2, which shall survive indefinitely, those set forth in Section 3.14, which
shall survive for a period of five (5) years from the Closing Date and those set
forth in Sections 3.16, 3.17 and 3.18, which shall survive until expiration of
the applicable statute of limitation), or in any certificate, document, writing
or instrument delivered pursuant to this Agreement, shall survive the Closing
for a period of two (2) years following the Closing Date. No claim may be
asserted under Section 9.2(a) or 9.3(a) with respect to breach of a
representation or warranty after the two (2) year anniversary of the Closing
Date (except for claims for breach of a representation or warranty set forth in
Section 3.1, 3.2, 3.4, 3.14, 3.16, 3.17, 3.18, 4.1 or 4.2), provided that claims
as to which written notice is given prior to such date may be prosecuted
thereafter. The indemnity obligations set forth in Sections 9.2(b), (c) and (d),
Sections 9.3(b) and (c), Section 9.4 and Section 9.5 shall survive indefinitely.
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SECTION 9.9. LIMITATIONS ON INDEMNIFICATION BY SELLER. Notwithstanding any
other provision of this Article 9, Seller shall not be liable to Buyer under
Section 9.2(a) for breach of representations and warranties (a) until the total
of all Losses with respect to such matters exceeds US$120,000.00, after which,
subject to this Section 9.9, Seller shall be liable back to dollar one, such
that such amount is a threshold and not a deductible (the "Threshold"), and (b)
for Losses in excess of US$15,000,000.00 (the "Cap"), provided that Seller's
liability under Section 9.2(a) for Losses that arise from the breach of the
representations and warranties of Seller set forth in Sections 3.1, 3.2, 3.4 and
3.18 shall not be subject to the Cap. Nothing set forth in this Section 9.9
limits Seller's liability and obligations, and the Threshold and the Cap shall
not apply to Seller's liability and obligations under Sections 2.3, 2.4, 9.2(b),
9.2(c), 9.2(d) or 9.4, or under any other Section or provision of this
Agreement, except for Section 9.2(a), notwithstanding the fact that the facts or
circumstances giving rise to a claim under any such Section also constitute a
breach of a representation or warranty and/or give rise to a claim under Section
9.2(a).
SECTION 9.10. EXCLUSIVE REMEDY. The provisions of this Article 9 set forth
the sole and exclusive remedy of the parties hereto with respect to any matter
or event described in this Article 9.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and delivered personally or sent by
overnight delivery, postage prepaid to the addresses set forth below:
To Buyer:
OS Acquisition Corp.
c/o Open Solutions Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Vice President, General Counsel & Secretary
Open Solutions Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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and
▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
To Seller:
CGI Group Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, Chairman of the Board and Chief
Executive Officer
With a copy to:
▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Le Windsor
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
SECTION 10.2. ENTIRE AGREEMENT. This Agreement (including the schedules
and exhibits hereto) constitutes the sole understanding of the parties with
respect to the subject matter hereof.
SECTION 10.3. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 10.4. PARTIES IN INTEREST; ASSIGNMENT. This Agreement shall inure
to the benefit of, and be binding upon, the parties hereto and their respective
successors and assigns, provided that Seller may not assign or delegate this
Agreement or any right, liability or obligation hereunder without Buyer's prior
written consent and any assignment or delegation by Seller without the prior
written consent of Buyer shall be void and of no force or effect.
SECTION 10.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, U.S.A.
without reference to its conflicts of laws principles.
SECTION 10.6. SCHEDULES AND HEADINGS. All of the schedules and exhibits
attached hereto are a part of this Agreement and all of the matters contained
therein are incorporated herein by reference. The descriptive headings of the
several Articles and Sections of this Agreement are inserted for convenience
only and do not constitute part of this Agreement.
- 33 -
SECTION 10.7. AMENDMENT. This Agreement may be amended only by the parties
hereto by any instrument in writing signed by or on behalf of each of the
parties hereto.
SECTION 10.8. WAIVER. Any term or provision of this Agreement may be
waived only in writing by the party or parties who are entitled to the benefits
being waived.
SECTION 10.9. FACSIMILE SIGNATURES. Facsimile signatures shall be fully
binding and effective for all purposes and shall be given the same effect as
original signatures. If any party delivers a copy of this Agreement containing a
facsimile signature, such party shall promptly forward copies containing
original signatures to the other party; provided, however, that the copies
containing the facsimile signatures shall remain binding even if the document
containing original signatures is not sent to the other party.
SECTION 10.10 PRESS RELEASE. Neither Buyer nor Seller shall make any
public announcement or issue any press release relating to this Agreement, or
any related agreements or transactions contemplated hereby or thereby, except in
a form approved by the other party (which approval shall not be unreasonably
withheld) provided however, that nothing herein shall prevent a party from
making any disclosure required by law, subject to good faith efforts to obtain
prior approval of the details and terms of such disclosure taking into account
deadlines for compliance with the securities laws of Canada and the United
States.
[THE NEXT SUCCEEDING PAGE IS A SIGNATURE PAGE.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the date first above written.
CGI-AMS INC.
(A DELAWARE CORPORATION)
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
OS ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary, Treasurer
[Signature Page to Asset Purchase Agreement]
OMITTED SCHEDULES
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, Open Solutions
Inc. (the "Company") has, with respect to the Asset Purchase Agreement, dated as
of March 10, 2005, between OS Acquisition Corp. and CGI-AMS Inc., omitted to
file the schedules listed in the table of contents herewith. These schedules
will be supplementally furnished to the Commission upon request.