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EXHIBIT 2.1
COMBINATION AGREEMENT
BY AND AMONG
BALISOFT TECHNOLOGIES INC.,
SERVICESOFT CORPORATION
AND
SERVICESOFT CANADA INC.
DATED AS OF FEBRUARY 1, 1999
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TABLE OF CONTENTS
PAGE NO.
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION...........................................................2
1.1 Definitions...................................................................................2
1.2 Certain Rules of Interpretation...............................................................6
1.3 Entire Agreement..............................................................................7
1.4 Exhibits and Schedules........................................................................7
ARTICLE 2
THE COMBINATION........................................................................................8
2.1 Balisoft Recapitalization.....................................................................8
2.2 ServiceSoft Recapitalization..................................................................8
2.3 The Amalgamation..............................................................................9
2.4 Closing Time..................................................................................9
2.5 Effect of the Amalgamation....................................................................9
2.6 Directors and Officers........................................................................9
2.7 Effect on Balisoft Shares.....................................................................9
2.8 Dissenting Shares.............................................................................12
2.9 ServiceSoft Special Voting Share..............................................................12
2.10 Support Agreement between ServiceSoft and Amalco..............................................13
2.11 Voting and Exchange Trust Agreement...........................................................13
2.12 ServiceSoft Shareholders Agreement............................................................13
2.13 Appointment of Directors to ServiceSoft Board of Directors....................................13
2.14 Registration Rights...........................................................................13
2.15 Surrender of Certificates.....................................................................14
2.16 No Further Ownership Rights in Balisoft Common Shares or Balisoft Preferred
Shares........................................................................................15
2.17 Lost, Stolen or Destroyed Certificates........................................................15
2.18 Taking of Necessary Action: Further Action...................................................15
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BALISOFT.............................................................16
3.1 Organization, Standing and Power..............................................................16
3.2 Capital Structure of Balisoft and the Balisoft Subsidiaries...................................16
3.3 Authority, Conflicts, Consents................................................................18
3.4 Balisoft Financial Statements.................................................................19
3.5 Absence of Undisclosed Liabilities............................................................19
3.6 Absence of Certain Changes....................................................................19
3.7 Tax Matters...................................................................................20
3.8 Title to Properties; Absence of Liens and Encumbrances; Condition of
Equipment.....................................................................................22
3.9 Intellectual Property.........................................................................22
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3.10 Material Contracts............................................................................24
3.11 Interested Party Transactions.................................................................24
3.12 Litigation....................................................................................25
3.13 Environmental and Safety Laws.................................................................25
3.14 Brokers' and Finders' Fees....................................................................25
3.15 Employee Benefit Plans and Compensation.......................................................25
3.16 Insurance.....................................................................................27
3.17 Compliance with Laws..........................................................................27
3.18 Complete Copies of Materials..................................................................27
3.19 Representations Complete......................................................................27
3.20 Disclosure Schedule...........................................................................27
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SERVICESOFT
AND SERVICESOFT CANADA.................................................................................28
4.1 Organization, Standing and Power..............................................................28
4.2 Capital Structure of ServiceSoft and the ServiceSoft Subsidiaries.............................28
4.3 Authority, Conflicts, Consents................................................................29
4.4 ServiceSoft Financial Statements..............................................................30
4.5 Absence of Undisclosed Liabilities............................................................31
4.6 Absence of Certain Changes....................................................................31
4.7 Tax Matters...................................................................................31
4.8 Title to Properties; Absence of Liens and Encumbrances; Condition of
Equipment.....................................................................................33
4.9 Intellectual Property.........................................................................34
4.10 Material Contracts............................................................................36
4.11 Interested Party Transaction..................................................................36
4.12 Litigation....................................................................................37
4.13 Environmental and Safety Laws.................................................................37
4.14 Brokers' and Finders' Fees....................................................................37
4.15 Employee Benefit Plans and Compensation.......................................................40
4.16 Insurance.....................................................................................41
4.17 Compliance with Laws..........................................................................41
4.18 Complete Copies of Materials..................................................................41
4.19 Representations Complete......................................................................41
4.20 Disclosure Schedule...........................................................................41
ARTICLE 5
CONDUCT PRIOR TO THE EFFECTIVE TIME....................................................................41
5.1 Conduct of Business of Balisoft...............................................................41
5.2 Conduct of Business of ServiceSoft............................................................44
5.3 No Solicitation...............................................................................46
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ARTICLE 6
ADDITIONAL AGREEMENTS..................................................................................48
6.1 Access to Information.........................................................................48
6.2 Confidentiality...............................................................................48
6.3 Expenses......................................................................................49
6.4 Public Disclosure.............................................................................49
6.5 Consents......................................................................................49
6.6 Legal Requirements............................................................................49
6.7 Notification of Certain Matters...............................................................49
6.8 Employee Benefit Arrangement..................................................................49
6.9 Further Assurances............................................................................50
ARTICLE 7
CONDITIONS TO THE AMALGAMATION.........................................................................50
7.1 Conditions to Obligations of Each Party to Effect the Amalgamation............................50
7.2 Additional Conditions to Obligations of Balisoft..............................................51
7.3 Additional Conditions to the Obligations of ServiceSoft.......................................52
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW.....................................................53
8.1 Survival of Representations and Warranties....................................................53
8.2 Escrow Arrangements...........................................................................54
ARTICLE 9
CERTAIN RIGHTS OF SERVICESOFT TO ACQUIRE
EXCHANGEABLE SHARES....................................................................................68
9.1 ServiceSoft Liquidation Call Right............................................................68
9.2 ServiceSoft Redemption Call Right.............................................................70
9.3 Withholding Rights............................................................................72
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER......................................................................72
10.1 Termination...................................................................................72
10.2 Effect of Termination.........................................................................73
10.3 Amendment.....................................................................................73
10.4 Extension, Waiver.............................................................................74
ARTICLE 11
GENERAL PROVISIONS.....................................................................................74
11.1 Notices.......................................................................................74
11.2 Severability..................................................................................75
11.3 Other Remedies................................................................................76
11.4 Governing Law; Consent to Jurisdiction........................................................76
11.5 Rules of Construction.........................................................................76
11.6 Counterparts..................................................................................77
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COMBINATION AGREEMENT
This COMBINATION AGREEMENT (the "AGREEMENT") is made and entered into as of
February 1, 1999 by and among (i) Balisoft Technologies Inc., a corporation
incorporated under the laws of Ontario ("BALISOFT") (ii) ServiceSoft
Corporation, a corporation incorporated under the laws of Delaware (the
"SERVICESOFT"), and (iii) ServiceSoft Canada, Inc., a corporation incorporated
under the laws of Ontario ("SERVICESOFT CANADA").
RECITALS
A. The Boards of Directors of each of Balisoft, ServiceSoft and ServiceSoft
Canada believe it is in the best interests of each company and their respective
shareholders that Balisoft and ServiceSoft combine their business operations
through the amalgamation of ServiceSoft Canada and Balisoft (the "AMALGAMATION";
the corporation continuing from such Amalgamation shall be referred to herein as
"AMALCO") and, in furtherance thereof, have approved the Amalgamation.
B. Pursuant to the Amalgamation, among other things, (i) all of the issued and
outstanding common shares of Balisoft ("BALISOFT COMMON SHARES ") shall be
exchanged for Class A Shares of Amalco ("CLASS A SHARES"), which Class A Shares
will immediately thereafter be changed into exchangeable non-voting shares of
Amalco ("EXCHANGEABLE COMMON SHARES") pursuant to articles of amendment to be
filed by Amalco (the "ARTICLES OF AMENDMENT") and that each Exchangeable Common
Share shall thereafter be exchangeable in accordance with its terms and the
terms and conditions set forth in a Voting and Exchange Trust Agreement (as
defined in Section 2.11 herein) to be entered into pursuant hereto, for one
common share of ServiceSoft (a "SERVICESOFT COMMON SHARE"); (ii) all of the
issued and outstanding preferred shares of Balisoft and all other securities of
Balisoft or its affiliates representing rights to acquire preferred shares of
Balisoft (collectively, "BALISOFT PREFERRED SHARES") shall be exchanged for
Class B Shares of Amalco ("CLASS B SHARES") (or rights to acquire Class B
Shares), which Class B Shares will immediately thereafter be changed into
exchangeable non-voting shares of Amalco ("EXCHANGEABLE PREFERRED SHARES") (or
rights to acquire Exchangeable Preferred Shares) pursuant to the Articles of
Amendment and that each Exchangeable Preferred Share shall thereafter be
exchangeable in accordance with its terms and the terms and conditions set forth
in the Voting and Exchange Trust Agreement for one Series H Preferred Share of
ServiceSoft ("SERIES H PREFERRED SHARE") and (iii) all of the options issued by
Balisoft to its employees ("BALISOFT EMPLOYEE OPTIONS") to acquire Balisoft
Common Shares shall be replaced by options of equivalent value to acquire
ServiceSoft Common Shares; and (iv) to the extent that Balisoft has other
outstanding securities at the Closing Time (as defined below) representing
rights to acquire Balisoft Common Shares or other Balisoft voting securities
("BALISOFT OTHER SECURITIES"), all such rights under such Balisoft Other
Securities shall become rights to acquire Class A Shares or Class B Shares (as
applicable) and, subsequently, Exchangeable Common Shares or Exchangeable
Preferred Shares (collectively, "EXCHANGEABLE SHARES"), in each case in
accordance with the terms and subject to the conditions set forth in this
Agreement.
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C. A portion of the Exchangeable Shares otherwise deliverable by Amalco to the
holders of Balisoft Common Shares, Balisoft Preferred Shares and Balisoft Other
Securities (collectively "BALISOFT SHARES") in connection with the transactions
contemplated hereunder shall be placed in escrow, the release of which shall be
contingent upon certain events and conditions.
D. In accordance with the terms of this Agreement, ServiceSoft will create a
pool of ServiceSoft Common Shares and ServiceSoft Series H Preferred Shares
(collectively "SERVICESOFT SHARES") beneficially owned by all current
shareholders of ServiceSoft to be placed in escrow, the release of which shall
be contingent upon certain events and conditions.
E. Balisoft, ServiceSoft and ServiceSoft Canada desire to make certain
representations and warranties and other agreements in connection with the
Amalgamation.
NOW, THEREFORE, in consideration of the covenants, promises,
representations and warranties set forth herein, and for other good and valuable
consideration, the parties to this Agreement hereby agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, the following words and
terms shall have the meanings set out below:
"ACCELERATION TRANSACTION" has the meaning as defined in Section 8.2(i);
"AGREEMENT" means this combination agreement, including the Exhibits and
Schedules, and all instruments supplementing or amending or confirming this
Agreement "ARTICLE" or "SECTION" means and refers to the specified article or
section of this Agreement;
"AMALGAMATION AGREEMENT" has the meaning as defined in Section 2.4;
"ARTICLES OF AMALGAMATION" has the meaning as defined in Section 2.4;
"BALISOFT ADJUSTMENT NUMBER" has the meaning as defined in Section 8.2(h);
"BALISOFT AGENT" has the meaning as defined in Section 8.2(k);
"BALISOFT BALANCE SHEET" has the meaning as defined in Section 3.5;
"BALISOFT COMMON NUMBER" means the total number of 149,601 outstanding Balisoft
Common Shares following completion of the Balisoft Reorganization;
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"BALISOFT COMMON RATIO" means the portion of Balisoft's total outstanding
securities represented by Balisoft Common Shares, Balisoft Other Securities and
Balisoft Employee Options and is equal to 0.575, representing the quotient
obtained when the Balisoft Pre Total Common is divided by the Balisoft Pre Fully
Diluted Common;
"BALISOFT DISCLOSURE SCHEDULE" has the meaning as defined in Article 3;
"BALISOFT EMPLOYEE OPTIONS NUMBER" means the total number of 41,805 Balisoft
Common Shares which may be issued upon exercise of outstanding Balisoft Employee
Options following completion of the Balisoft Reorganization;
"BALISOFT ESCROW AMOUNT" means 465,877 Exchangeable Common Shares and 456,319
Exchangeable Preferred Shares (collectively representing 20% of the Balisoft
Post Fully Diluted Common);
"BALISOFT ESCROW FUND" has the meaning as defined in Section 8.2(a);
"BALISOFT EXCHANGE RATIO" means 15.571, subject to adjustment in accordance with
Article 8;
"BALISOFT FINANCIAL STATEMENTS" has the meaning as defined in Section 3.4;
"BALISOFT ISRAEL" has the meaning as defined in Section 3.1;
"BALISOFT OTHER SECURITIES NUMBER" means the total number of 6,898 Balisoft
Common Shares which may be issued upon conversion, exchange or exercise of all
outstanding Balisoft Other Securities following completion of the Balisoft
Recapitalization;
"BALISOFT POST TOTAL COMMON" means the total number of Exchangeable Common
Shares provided to holders of Balisoft Common Shares, Balisoft Other Securities
and Balisoft Employee Options upon the Amalgamation and the filing of Articles
of Amendment and is equal to the product of the Balisoft Common Ratio multiplied
by the Balisoft Post Fully Diluted Common;
"BALISOFT POST TOTAL PREFERRED" means the total number of Exchangeable Preferred
Shares provided to holders of Balisoft Preferred Shares upon the Amalgamation
and the filing of Articles of Amendment and is equal to the product of the
Balisoft Preferred Ratio multiplied by the Balisoft Post Fully Diluted Common;
"BALISOFT PREFERRED NUMBER" means the total number of 146,532 outstanding
Balisoft Preferred Shares following completion of the Balisoft Recapitalization;
"BALISOFT PREFERRED RATIO" means the portion of Balisoft's total outstanding
securities represented by Balisoft Preferred Shares and is equal to 0.425,
representing the quotient obtained when the Balisoft Preferred Number is divided
by the Balisoft Pre Fully Diluted Common;
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"BALISOFT POST FULLY DILUTED COMMON" means the aggregate number of ServiceSoft
Common Shares issuable in respect of all Exchangeable Common Shares,
Exchangeable Preferred Shares and all other securities convertible or
exchangeable for ServiceSoft Common Shares provided to holders of all Balisoft
securities upon the Amalgamation and the filing of Articles of Amendment and is
equal to the product obtained when the Balisoft Pre Fully Diluted Common is
multiplied by the Balisoft Exchange Ratio;
"BALISOFT PRE FULLY DILUTED COMMON" means 344,836, representing the sum of the
Balisoft Pre Total Common plus the Balisoft Preferred Number;
"BALISOFT PRE TOTAL COMMON" means 198,304, representing the sum of the Balisoft
Common Number plus the Balisoft Other Securities Number plus the Balisoft
Employee Options Number;
"BALISOFT RECAPITALIZATION" means the reorganization of the capital structure of
Balisoft to be completed prior to Closing in accordance with Section 2.1;
"BALISOFT SUBSIDIARIES" has the meaning set out in Section 3.1;
"BALISOFT VALUE" means $10,738,636, subject to adjustment in accordance with
Section 8.2;
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which the
principal commercial banks located in Toronto and Boston are open for business
during normal banking hours;
"CERTIFICATES" has the meaning as defined in Section 2.15(c);
"CLOSING DATE" has the meaning as defined in Section 2.4;
"CLOSING TIME" has the meaning as defined in Section 2.4;
"CONFIRMATION CERTIFICATE" has the meaning as defined in Section 8.2(e);
"CONFIRMED LOSSES" has the meaning as defined in Section 8.2(h);
"DISSENTING SHARES" has the meaning as defined in Section 2.8;
"ESCROW ACCELERATION NOTICE" has the meaning as defined in Section 8.2(i);
"ESCROW AGENT" has the meaning as defined in Section 8.2(a);
"ESCROW CLAIM CERTIFICATE" has the meaning as defined in Section 8.2(e);
"ESCROW RELEASE DATE" has the meaning as defined in Section 8.2(i);
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"EXCHANGE AGENT" has the meaning as defined in Section 2.15;
"FINAL BALISOFT ADJUSTMENT" has the meaning as defined in Section 8.2(h);
"FINAL SERVICESOFT ADJUSTMENT" has the meaning as defined in Section 8.2(h);
"KNOWLEDGE" of a party means (a) in the case of Balisoft, the actual knowledge
of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer of Balisoft, or any member of the
Balisoft board of directors, and (b) in the case of ServiceSoft, the actual
knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇, President of ServiceSoft, or any member of the
ServiceSoft board of directors.
"LOSSES" has the meaning as defined in Section 8.2(c);
"OBJECTION NOTICE" has the meaning ascribed to it in Section 8.2(e);
"REGISTRATION RIGHTS AGREEMENT" has the meaning as defined in Section 2.14;
"SERVICESOFT ADJUSTMENT NUMBER" has the meaning as defined in Section 8.2(h);
"SERVICESOFT AGENT" has the meaning as defined in Section 8.2(l);
"SERVICESOFT BALANCE SHEET" has the meaning as defined in Section 4.5;
"SERVICESOFT COMMON NUMBER" means the total number of 34,742 issued and
outstanding ServiceSoft Common Shares following completion of the ServiceSoft
Recapitalization but prior to the Amalgamation;
"SERVICESOFT DISCLOSURE SCHEDULE" has the meaning as defined in Article 4;
"SERVICESOFT EMPLOYEE OPTIONS NUMBER" means the total number of 1,225,150
ServiceSoft Common Shares which may be issued upon exercise of all outstanding
ServiceSoft Employee Options following completion of the ServiceSoft
Recapitalization but prior to the Amalgamation;
"SERVICESOFT ESCROW AMOUNT" means 1,060,522 ServiceSoft Series H Preferred
Shares representing, 20% of the total number of ServiceSoft Series H Preferred
Shares following completion of all steps in the ServiceSoft Recapitalization and
prior to the Closing Time;
"SERVICESOFT ESCROW FUND" has the meaning as defined in Section 8.2(b);
"SERVICESOFT FINANCIAL STATEMENTS" has the meaning as defined in Section 4.4;
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"SERVICESOFT FULLY DILUTED COMMON" means 6,562,500, representing the sum of the
ServiceSoft Common Number plus the ServiceSoft Preferred Number plus the
ServiceSoft Employee Options Number;
"SERVICESOFT PREFERRED NUMBER" means the total number of 5,302,608 outstanding
Series H Preferred Shares of ServiceSoft following completion of the ServiceSoft
Recapitalization but prior to the Amalgamation;
"SERVICESOFT RECAPITALIZATION" means the reorganization of ServiceSoft's capital
structure to be completed prior to Closing in accordance with Section 2.2;
"SERVICESOFT SHAREHOLDERS AGREEMENT" has the meaning as defined in Section 2.12;
"SERVICESOFT VALUE" means $13,125,000, subject to adjustment in accordance with
Section 8.2;
"SPECIAL COMMON VOTING SHARE" has the meaning as defined in Section 2.9;
"SPECIAL PREFERRED VOTING SHARE" has the meaning as defined in Section 2.9;
"TAX" and "TAXES" have the meanings as defined in Section 3.7(a);
"TOTAL BALISOFT CLAIM" has the meaning as defined in Section 8.2(h);
"TOTAL SERVICESOFT CLAIM" has the meaning as defined in Section 8.2(h); and
"VOTING AND EXCHANGE TRUST AGREEMENT" has the meaning as defined in
Section 2.11.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement:
(a) TIME - time is of the essence in the performance of the parties'
respective obligations;
(b) CURRENCY - unless otherwise specified, all references to money amounts
are to United States dollars;
(c) HEADINGS - the descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended as
complete or accurate descriptions of content;
(d) SINGULAR, ETC. - the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances as the context otherwise permits;
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(e) CONSENTS - whenever a provision of this Agreement requires an approval
or consent by a party to this Agreement and notification of such
approval or consent is not delivered within the applicable time
limited, then, unless otherwise specified, the party whose consent or
approval is required shall be conclusively deemed to have withheld its
consent or approval;
(f) CALCULATION OF TIME - unless otherwise specified, time periods within
or following which any payment is to be made or act is to be done
shall be calculated by excluding the day on which the period commences
and including the day which ends the period and by extending the
period to the next Business Day following if the last day of the
period is not a Business Day; and
(g) BUSINESS DAY - whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a day
other than a Business Day, such payment shall be made or action taken
on the next Business Day following.
1.3 ENTIRE AGREEMENT - This Agreement (including the Schedules and Exhibits
hereto) together with the agreements and other documents to be delivered
pursuant to this Agreement, constitutes the entire agreement between the parties
pertaining to the subject matter of this Agreement and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties including, without limitation, the Letter of Intent
dated December 17, 1998, and there are no warranties, representations or other
agreements between any of them in connection with the subject matter of this
Agreement except as specifically set forth in this Agreement and any document
delivered pursuant to this Agreement. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions (whether or
not similar) nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
1.4 EXHIBITS AND SCHEDULES - The exhibits and schedules to this Agreement, as
listed below, are an integral part of this Agreement:
Balisoft Disclosure Schedule
ServiceSoft Disclosure Schedule
Exhibit A - Form of Amalgamation Agreement
Exhibit B - Form of Articles of Amalgamation
Exhibit C - Provisions for the Special Voting Share
Exhibit D - Form of Support Agreement
Exhibit E - Form of Voting and Exchange Trust Agreement
Exhibit F - Form of ServiceSoft Shareholders Agreement
Exhibit G - Form of Registration Rights Agreement
Exhibit H - Form of ▇▇▇▇▇▇▇▇▇ Employment Agreement
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Exhibit I - Form of Tarrant Employment Agreement Amendment
Exhibit J - Terms of ServiceSoft Series H Preferred Shares
ARTICLE 2
THE COMBINATION
2.1 BALISOFT RECAPITALIZATION - Prior to the Closing, Balisoft shall complete
the Balisoft Recapitalization consisting of:
(a) the exercise of all outstanding Special Warrants for 110,115 Balisoft
Preferred Shares; and
(b) in the discretion of their holders, the exchange of all Gemini Shares
for 36,417 Balisoft Preferred Shares.
2.2 SERVICESOFT RECAPITALIZATION - Prior to the Closing, ServiceSoft shall
complete a reorganization of its capital structure consisting of:
(a) the creation of the ServiceSoft Series H Preferred Shares having the
terms set out in EXHIBIT J;
(b) a consolidation of and amendment to ServiceSoft's capital changing:
(i) each outstanding ServiceSoft Common Share and ServiceSoft
Employee Option into 0.53781 ServiceSoft Common Shares and ServiceSoft
Employee Options, as applicable; and
(ii) changing each outstanding ServiceSoft Series F Preferred Share
into 0.43025 ServiceSoft Series H Preferred Shares resulting in an
aggregate of 2,250,489 ServiceSoft Series H Preferred Shares; and
(iii) changing each outstanding ServiceSoft Series G Preferred Share
into 0.43025 ServiceSoft Series H Preferred Shares resulting in an
aggregate of 1,991,587 ServiceSoft Series H Preferred Shares; and
(c) following the consolidation of ServiceSoft's capital specified in
paragraph (b) above, and prior to Closing, ServiceSoft shall declare a
stock dividend on the ServiceSoft Series H Preferred Shares equal to
an aggregate of 1,060,522 ServiceSoft Series H Preferred Shares
representing 20% of the total number of ServiceSoft Series H Preferred
Shares outstanding following the issuance thereof, all of which
ServiceSoft Series H Preferred Shares shall be delivered to the Escrow
Agent at the Closing in accordance with subsection 2.7(d)(ii).
Following distribution of this stock dividend,
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the total issued and outstanding ServiceSoft Shares shall consist of
34,741 ServiceSoft Common Shares and 5,302,598 ServiceSoft Series H
Preferred Shares.
2.3 THE AMALGAMATION - At the Closing Time (as defined in Section 2.4 below)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Business Corporations Act (Ontario) (the "Act")
Balisoft and ServiceSoft Canada shall be amalgamated in order to create Amalco.
2.4 CLOSING TIME - Unless this Agreement is earlier terminated pursuant to
Section 10.1, the closing of the Amalgamation (the "Closing") will take place as
promptly as practicable, but (except as may otherwise be agreed by Balisoft and
ServiceSoft) no later than 3 Business Days following the later of (a)
satisfaction or waiver of the conditions set forth in Article 7, and (b) 10
Business Days following the date of this Agreement at the offices of Osler,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇, 1 First Canadian Place, Toronto,
Ontario M5X I B8, unless another place or time is expressly agreed to in writing
by Balisoft and ServiceSoft. The date upon which the Closing actually occurs is
herein referred to as the "CLOSING DATE". On the Closing Date, the parties
hereto shall cause the Amalgamation to be consummated by (i) executing and
delivering an agreement (the "AMALGAMATION AGREEMENT") substantially in the form
attached hereto as EXHIBIT A, duly completed in accordance with this Agreement,
and (ii) filing Articles of Amalgamation with the Director under the Act in the
form attached as EXHIBIT B hereto (the "ARTICLES OF AMALGAMATION"), in
accordance with the relevant provisions of the Act (the time that such Articles
of Amalgamation become effective under the Act being referred to herein as the
"CLOSING TIME").
2.5 EFFECT OF THE AMALGAMATION - At the Closing Time, the effect of the
Amalgamation shall be as provided under Section 179 of the Act. Without limiting
the generality of the foregoing, and subject thereto, at the Closing Time, the
separate corporate existence of each of Balisoft and ServiceSoft Canada shall
cease, all the property, rights, privileges, powers and franchises of Balisoft
and ServiceSoft Canada shall vest in Amalco, and all debts, liabilities,
obligations and duties of ServiceSoft Canada and Balisoft shall become the
debts, liabilities, obligations and duties of Amalco. The name of Amalco shall
be "ServiceSoft Canada Inc."
2.6 DIRECTORS AND OFFICERS - The directors of Amalco immediately after the
Closing Time shall be the individuals identified as directors of Amalco in the
Amalgamation Agreement.
2.7 EFFECT ON BALISOFT SHARES - Subject to the terms and conditions of this
Agreement, as of the Closing Time, by virtue of the Amalgamation and without any
action on the part of Balisoft and ServiceSoft Canada or the holder of any
Balisoft shares, and immediately thereafter, upon the filing of the Articles of
Amendment by Amalco, in each case as more fully described below, the following
shall occur:
(a) EXCHANGE OF BALISOFT COMMON SHARES FOR CLASS A SHARES - Upon the
Amalgamation each Balisoft Common Share issued and outstanding
following the Balisoft Recapitalization and immediately prior to the
Closing Time (other than any
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Dissenting Shares (as defined in and to the extent provided in Section
2.8)) will automatically be exchanged for that number of Class A
Shares equal to the Balisoft Exchange Ratio.
(b) EXCHANGE OF BALISOFT PREFERRED SHARES FOR CLASS B SHARES - Upon the
Amalgamation each Balisoft Preferred Share issued and outstanding
following the Balisoft Recapitalization and immediately prior to the
Closing Time (other than any Dissenting Shares) will automatically be
exchanged for that number of Class B Shares equal to the Balisoft
Exchange Ratio (and, for greater certainty, this exchange shall
automatically result in all securities representing rights to acquire
Balisoft Preferred Shares becoming rights to acquire that number of
Class B Shares equal to the number of Balisoft Preferred Shares which
could previously be acquired thereunder multiplied by the Balisoft
Exchange Ratio).
(c) CHANGE OF CLASS A SHARES AND CLASS B SHARES INTO EXCHANGEABLE SHARES -
Immediately following the Amalgamation and the exchange of Balisoft
Common Shares for Class A Shares pursuant to paragraph (a) above and
the exchange of Balisoft Preferred Shares for Class B Shares pursuant
to paragraph (b) above, Amalco shall file the Articles of Amendment
and, pursuant thereto, each Class A Share issued upon the Amalgamation
shall immediately be changed into one Exchangeable Common Share and
each Class B Share issued upon the Amalgamation shall immediately be
changed into one Exchangeable Preferred Share (and, for greater
certainty, all securities representing rights to acquire Class B
Shares shall automatically become rights to acquire Exchangeable
Preferred Shares), in each case, without any further action on the
part of any holders thereof.
(d) DELIVERY OF EXCHANGEABLE SHARES: ESCROW -
(i) Upon the issuance of the Exchangeable Shares in accordance with
paragraph (c) above, that number of Exchangeable Shares (which may
include Gemini Shares having rights to acquire Exchangeable Shares)
equal to the Balisoft Escrow Amount shall be placed in escrow in the
Balisoft Escrow Fund in accordance with subsection 8.2(a), and all
other Exchangeable Shares issued in accordance with paragraph (c)
above shall be distributed to the registered holders thereof (being
the registered holders of the Balisoft Common Shares exchanged for
Class A Shares upon the Amalgamation which were changed into the
Exchangeable Common Shares upon the filing of the Articles of
Amendment and the registered holders of the Balisoft Preferred Shares
exchanged for Class B Shares upon the Amalgamation which were changed
into the Exchangeable Preferred Shares upon the filing of the Articles
of Amendment).
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(ii) Upon the Closing, all of the ServiceSoft Common Shares and
ServiceSoft Series H Preferred Shares distributed pursuant to the
stock dividend declared by ServiceSoft in accordance with subsection
2.2(d) shall be placed in escrow in the ServiceSoft Escrow Fund in
accordance with subsection 8.2(b).
(iii) Promptly following the Closing, certificates representing all
Exchangeable Shares comprising the Balisoft Escrow Fund and all
ServiceSoft Shares comprising the ServiceSoft Escrow Fund shall be
delivered to the Escrow Agent and certificates representing all
Exchangeable Shares which are not required to be held in escrow in
accordance with this Agreement shall be delivered to the registered
holders thereof in accordance with Section 2.15.
(e) BALISOFT OTHER SECURITIES - At the Closing Time, all Balisoft Other
Securities shall continue to have, and be subject to, the same terms
and conditions of such Balisoft Other Securities immediately prior to
the Closing Time, except that (A) each Balisoft Other Security shall
be exercisable for that whole number of Class A Shares equal to the
product of the number of Balisoft Common Shares that were issuable
upon exercise of such Balisoft Other Security immediately prior to the
Closing Time multiplied by the Balisoft Exchange Ratio, rounded up to
the nearest whole number of Class A Shares held by any particular
holder, (B) the per share exercise price for Class A Shares issuable
upon exercise of such Balisoft Other Security shall be equal to the
quotient determined by dividing the exercise price per Balisoft Common
Share at which such Balisoft Other Security was exercisable
immediately prior to the Closing Time by the Balisoft Exchange Ratio,
rounded down to the nearest whole cent. Immediately following the
Closing Time and upon the filing of the Articles of Amendment, the
right to receive Class A Shares upon exercise of such Balisoft Other
Securities shall become a right to receive the same number of
Exchangeable Common Shares, and Amalco will issue to each holder of
outstanding Balisoft Other Securities a document evidencing the
foregoing changes to such Balisoft Other Securities.
(f) BALISOFT EMPLOYEE OPTIONS - At the Closing Time, all outstanding
Balisoft Employee Options shall become that number of ServiceSoft
Employee Options equal to the product of the number of Balisoft Common
Shares that were issuable upon exercise of such Balisoft Employee
Options immediately prior to the Closing Time multiplied by the
Balisoft Exchange Ratio, rounded down to the nearest whole number, and
each such ServiceSoft Employee Option shall have an exercise price
equal to the Quotient determined by dividing the exercise price per
Balisoft Common Share at which such Balisoft Employee Options were
exercisable immediately prior to the Closing Time by the Balisoft
Exchange Ratio, rounded up to the nearest whole cent. Promptly
following the Closing, ServiceSoft will issue to each current holder
of Balisoft Employee Options a new document evidencing the replacement
of their
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Balisoft Employee Options with ServiceSoft Employee Options in
accordance with this subparagraph 2.7(f).
(g) FRACTIONAL SHARES - No fraction of a Class A Share or Class B Share
shall be issued, but in lieu thereof, the number of Class A Shares or
Class B Shares issuable to any holder of Balisoft Common Shares shall
be rounded up to the nearest whole number, after aggregating all
fractional Class A Shares or Class B Shares to be received by such
holder.
2.8 DISSENTING SHARES -
(a) Notwithstanding any provision of this Agreement to the contrary, any
Balisoft Common Shares or Balisoft Preferred Shares held by a holder
who has exercised dissent rights for such shares in accordance with
Section 185 of the Act and who, as of the Closing Time, has not
effectively withdrawn or lost such dissent rights ("DISSENTING
SHARES"), shall not be exchanged for Class A Shares or Class B Shares
pursuant to Section 2.7, but the holder thereof shall only be entitled
to such rights as are granted by Section 185 of the Act.
(b) Notwithstanding the provisions of subsection (a), if any holder of
Dissenting Shares shall effectively withdraw or lose (through failure
to perfect or otherwise) his or her dissent rights, then, as of the
later of the Closing Time and the occurrence of such event, such
holder's shares shall automatically be converted into and represent
only the right to receive Class A Shares as provided in subsection
2.7(a) or Class B Shares as provided in subsection 2.7(b) (and, upon
the filing of Articles of Amendment under subsection 2.7(c),
Exchangeable Common Shares or Exchangeable Preferred Shares, as
applicable), without interest thereon, upon surrender of the
certificate representing such shares, subject to the conditions set
forth below and throughout this Agreement, including without
limitation the escrow provisions set forth in Section 8.2.
2.9 SERVICESOFT SPECIAL VOTING SHARE -
(a) Prior to the Closing Time, ServiceSoft shall amend its Certificate of
Incorporation to create the ServiceSoft Series X Special Preferred
Share (the "SPECIAL COMMON VOTING SHARE") and the ServiceSoft Series Y
Special Preferred Shares (the "SPECIAL PREFERRED VOTING SHARE"), each
having the terms and conditions set out in EXHIBIT C.
(b) Immediately following the Amalgamation and contemporaneously with the
filing of the Articles of Amendment in accordance with subsection
2.7(c), ServiceSoft shall issue one Special Common Voting Share and
one Special Preferred Voting Share to an independent trust company in
Toronto as trustee (the "TRUSTEE") to be held by it
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in trust for the benefit of the holders from time to time of
Exchangeable Common Shares and Exchangeable Preferred Shares,
respectively (in each case other than ServiceSoft) in accordance with
the provisions of the Voting and Exchange Trust Agreement (as defined
in Section 2.11 hereof).
2.10 SUPPORT AGREEMENT BETWEEN SERVICESOFT AND AMALCO - Immediately following
the Amalgamation, ServiceSoft and Amalco shall enter into a Support Agreement
substantially in the form attached hereto as EXHIBIT D (the "SUPPORT
AGREEMENT"), pursuant to which ServiceSoft shall agree, among other things and
subject to certain conditions, to issue one ServiceSoft Common Share in exchange
for each Exchangeable Common Share and to issue one ServiceSoft Series H
Preferred Share in exchange for each Exchangeable Preferred Share. For so long
as any Exchangeable Shares remain outstanding, the parties agree to comply with
all of the terms of the Support Agreement and not to amend the Support Agreement
without the written consent of the Balisoft Agent (as defined in Section 8.2).
2.11 VOTING AND EXCHANGE TRUST AGREEMENT - Immediately following the
Amalgamation, ServiceSoft, Amalco and the Trustee shall enter into a Voting and
Exchange Trust Agreement substantially in the form attached hereto as Exhibit E
(the "VOTING AND EXCHANGE TRUST AGREEMENT"), providing for the exercise of
voting rights in ServiceSoft by holders of Exchangeable Shares and certain other
matters.
2.12 SERVICESOFT SHAREHOLDERS AGREEMENT - Immediately following the
Amalgamation, ServiceSoft shall, and shall use its best efforts to cause all
ServiceSoft major shareholders and all major holders of Exchangeable Common
Shares and Exchangeable Preferred Shares to, enter into the ServiceSoft
Shareholders Agreement substantially in the form attached hereto as EXHIBIT F
(the "SERVICESOFT SHAREHOLDERS AGREEMENT"), pursuant to which all such parties
shall agree on the composition of the ServiceSoft board of directors, certain
rights and restrictions regarding issuances of new securities of ServiceSoft and
transfers of outstanding ServiceSoft securities and certain other matters.
2.13 APPOINTMENT OF DIRECTORS TO SERVICESOFT BOARD OF DIRECTORS - ServiceSoft
shall use its best efforts to cause ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the nominee of the
holders of Exchangeable Shares who are Major Shareholders (as defined in the
ServiceSoft Shareholders Agreement) to be elected to the ServiceSoft board of
directors, and to take all steps necessary to ensure that the ServiceSoft board
of directors is composed of the nominees specified in the ServiceSoft
Shareholders Agreement, effective upon the Closing and thereafter in accordance
with the terms of the ServiceSoft Shareholders Agreement.
2.14 REGISTRATION RIGHTS - Immediately following the Amalgamation, ServiceSoft
shall and shall use its best efforts to cause the ServiceSoft shareholders
currently holding registration rights to enter into a Registration Rights
Agreement substantially in the form attached hereto as EXHIBIT G (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which certain shareholders of
ServiceSoft
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(including certain holders of Exchangeable Common Shares or Exchangeable
Preferred Shares) shall be provided with registration rights upon the terms and
conditions specified therein.
2.15 SURRENDER OF CERTIFICATES -
(a) EXCHANGE AGENT - Amalco or such other party mutually agreed by the
parties shall act as exchange agent in the Amalgamation (the "EXCHANGE
AGENT")
(b) AMALCO TO PROVIDE EXCHANGEABLE SHARES - Promptly after the Closing
Time, Amalco shall make available to the Exchange Agent, for exchange
in accordance with this Article 2, the aggregate number of
Exchangeable Common Shares outstanding following the change (pursuant
to the Articles of Amendment) of the Class A Shares issuable pursuant
to subsection 2.7(a) in exchange for outstanding Balisoft Common
Shares and the aggregate number of Exchangeable Preferred Shares
outstanding following the change (pursuant to the Articles of
Amendment) of the Class B Shares issuable pursuant to subsection
2.7(b) in exchange for outstanding Balisoft Preferred Shares; provided
that (i) no Exchangeable Common Shares shall be deposited in respect
of Balisoft Common Shares as to which dissent rights have been
exercised and not withdrawn under Section 2.8 and (ii) Amalco shall
deposit into escrow on behalf of the holders of Balisoft Common Shares
and Balisoft Preferred Shares the number of Exchangeable Shares
comprising the Balisoft Escrow Fund in accordance with subsections
2.7(d) and 8.2(a).
(c) EXCHANGE PROCEDURES - As soon as reasonably practicable after the
Closing Time, Amalco shall cause to be delivered, to each holder of
record of a certificate or certificates (the "CERTIFICATES") which
immediately prior to the Closing Time represented outstanding Balisoft
Common Shares exchanged for Class A Shares upon the Amalgamation and
changed into Exchangeable Common Shares pursuant to the Articles of
Amendment or, Balisoft Preferred Shares exchanged for Class B Shares
upon the Amalgamation and changed into Exchangeable Preferred Shares
pursuant to the Articles of Amendment, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing Exchangeable Shares. No certificates shall
be issued by Amalco in respect of any Class A Shares or Class B
Shares. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions
thereto, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of whole
Exchangeable Shares issued to such holder pursuant to Section 2.7
(subject to the escrow provisions of Section 8.2) and the Certificate
so surrendered shall forthwith be cancelled. Until so surrendered,
each outstanding Certificate that, prior to the Closing Time,
represented Balisoft Common
19
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Shares, will be deemed from and after the Closing Time, to evidence
only the right to receive Exchangeable Common Shares in respect of
each such share and each outstanding Certificate that, prior to the
Closing Time, represented Balisoft Preferred Shares, will be deemed
from and after the Closing Time, to evidence only the right to receive
Exchangeable Preferred Shares in respect of each such share (in each
case subject to the escrow provisions of Section 8.2).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES - No dividends or
other distributions with respect to Exchangeable Shares declared or
made after the Closing Time and with a record date after the Closing
Time will be paid to the holder of any unsurrendered Certificate with
respect to the Exchangeable Shares represented thereby until the
holder of record of such Certificate shall surrender such Certificate
Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the
certificates representing whole Exchangeable Shares issued in exchange
therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the
Closing Time theretofore payable with respect to such whole number of
Exchangeable Shares.
2.16 NO FURTHER OWNERSHIP RIGHTS IN BALISOFT COMMON SHARES OR BALISOFT PREFERRED
SHARES - All Class A Shares issued upon the Amalgamation in exchange for
Balisoft Common Shares in accordance with the terms hereof shall be deemed to
have been issued in fall satisfaction of all rights pertaining to such Balisoft
Common Shares and all Class B Shares issued upon the Amalgamation in exchange
for Balisoft Preferred Shares in accordance with the terms hereof shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
Balisoft Preferred Shares, and there shall be no further registration of
transfers on the records of Amalco of Balisoft Common Shares or Balisoft
Preferred Shares which were outstanding immediately prior to the Closing Time.
If, after the Closing Time, Certificates are presented to Amalco for any reason,
they shall be canceled and exchanged as provided in this Article 2 (subject to
the escrow provisions of Section 8.2).
2.17 LOST, STOLEN OR DESTROYED CERTIFICATES - In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall make payment
in exchange for such lost, stolen or destroyed Certificates, upon the making of
an affidavit in a form satisfactory to the Exchange Agent of that fact by the
holder thereof, of such amount as may be required pursuant to Section 2.7;
PROVIDED, HOWEVER, that ServiceSoft may, in its sole discretion and as a
condition precedent to the issuance thereof, require the owner of any such lost,
stolen or destroyed Certificates to deliver a bond in such sum as ServiceSoft
may reasonably direct as indemnity against any claim that may be made against
ServiceSoft, Amalco or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
2.18 TAKING OF NECESSARY ACTION: Further Action - If, at any time after the
Closing Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest Amalco with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
Balisoft and ServiceSoft Canada or to vest ServiceSoft with control in Amalco,
the
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officers and directors of Amalco are fully authorized in the name of Amalco or
otherwise to take, and will take, all such lawful and necessary and/or desirable
action so long as such action is consistent with this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BALISOFT
Except as disclosed in a document of even date herewith and delivered by
Balisoft to ServiceSoft prior to the execution and delivery of this Agreement
and referring to the representations and warranties in this Agreement (the
"BALISOFT DISCLOSURE SCHEDULE"), Balisoft represents and warrants to ServiceSoft
as follows:
3.1 ORGANIZATION, STANDING AND POWER - Each of Balisoft, Balisoft Ltd., a
company organized under the laws of Israel ("BALISOFT ISRAEL"), and Balisoft
Technologies (US) Inc., a Delaware corporation ("BALISOFT US" and together with
Balisoft Israel, the "BALISOFT SUBSIDIARIES"), is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Balisoft and each of the Balisoft Subsidiaries has the corporate
power to own its properties and to carry on its business as now being conducted
and as proposed to be conducted and is duly qualified to do business and is in
good standing in each jurisdiction in which it is required to be so qualified.
Balisoft has delivered a true and correct copy of the Articles and Bylaws or
other charter documents, as applicable, of Balisoft and each of the Balisoft
Subsidiaries, each as amended to date, to ServiceSoft. Neither Balisoft nor any
of the Balisoft Subsidiaries is in violation of any of the provisions of its
Articles or Bylaws (or equivalent organizational documents).
3.2 CAPITAL STRUCTURE OF BALISOFT AND THE BALISOFT SUBSIDIARIES -
(a) BALISOFT -
(i) The authorized capital of Balisoft consists of an unlimited
number of Balisoft Common Shares, of which 149,601 are issued and
outstanding, and an unlimited number of Class A Preferred Shares, none
of which are issued or outstanding. There are no other outstanding
shares of capital stock or voting securities of Balisoft. Special
Warrants to purchase an aggregate of 110,115 Balisoft Preferred Shares
(the "SPECIAL WARRANTS") are outstanding; Common Share Warrants to
purchase an aggregate of 6,898 Balisoft Common Shares (collectively,
the "BALISOFT COMMON WARRANTS") are outstanding; 100 Series A
Preferred Shares of Balisoft Israel exchangeable for 36,417 Balisoft
Common Shares (the "GEMINI SHARES") are outstanding; Balisoft has
reserved an aggregate of 45,455 Balisoft Common Shares for issuance to
employees pursuant to its stock option plans (the "BALISOFT OPTION
PLANS"), and options to purchase an aggregate of 41,805 Balisoft
Common Shares are outstanding pursuant to such Balisoft Option Plans
(the "BALISOFT EMPLOYEE OPTIONS"). There are currently no other
Balisoft securities outstanding. All
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outstanding Balisoft Common Shares and all outstanding Special
Warrants, Balisoft Common Warrants, Gemini Shares and Balisoft
Employee Options (collectively, the "BALISOFT WARRANTS") are duly
authorized, validly issued, fully paid and nonassessable and are free
of any liens or encumbrances other than any liens or encumbrances
created by or imposed upon the holders thereof, and are not subject to
preemptive rights or rights of first refusal created by statute, the
Articles or Bylaws of Balisoft or any agreement to which Balisoft is a
party or by which it is bound other than the Balisoft Stakeholders
Agreement dated June 3, 1998. Balisoft has reserved an aggregate of
not less than 198,885 Common Shares for issuance upon the exercise of
all outstanding Balisoft Warrants.
(ii) Except for the Balisoft Warrants, there are no other options,
warrants, calls, rights, commitments or agreements of any character to
which Balisoft is a party or by which it is bound obligating Balisoft
to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of Balisoft or
obligating Balisoft to grant, extend, accelerate the vesting of,
change the price of, or otherwise amend or enter into any such option,
warrant, call, right, commitment or agreement. The terms of each of
the Balisoft Warrants will permit the assumption or substitution of
options or warrants, as applicable, to purchase Class A Shares or
Class B Shares, as applicable, upon the Amalgamation and Exchangeable
Common Shares or Exchangeable Preferred Shares, as applicable, upon
the filing of the Articles of Amendment as provided in this Agreement,
without the consent or approval of the holders of such securities,
holders of Balisoft Common Shares, or otherwise as follows: the
Special Warrants and the Gemini Shares will either be exercised by
their holders for Balisoft Preferred Shares prior to the Closing Time
or will become exercisable for Class B Shares upon the Amalgamation
and Exchangeable Preferred Shares upon the Filing of Articles of
Amendment, the Balisoft Common Warrants will become exercisable for
Class A Shares upon the Amalgamation and Exchangeable Common Shares
upon the filing of Articles of Amendment, and the Balisoft Employee
Options will become with ServiceSoft Employee Options. True and
complete copies of all agreements and instruments relating to or
issued under the Balisoft Option Plans have been made available to
ServiceSoft and its counsel and such agreements and instruments have
not been amended, modified or supplemented, and there are no
agreements to amend, modify or supplement such agreements or
instruments in any case from the form made available to ServiceSoft
and its counsel.
(iii) As of or prior to the Closing Time, Balisoft shall undertake the
Balisoft Recapitalization in accordance with Section 2.1.
(b) BALISOFT ISRAEL - The authorized capital stock of Balisoft Israel
consists of 1,000 Ordinary Shares, of which 1,000 shares are issued
and outstanding, 999 of which are owned by Balisoft and 1 of which is
owned by ▇▇. ▇▇▇ ▇▇▇▇▇▇▇ in trust for Balisoft
22
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and 100 Series A Preferred Shares of which 100 are issued and
outstanding as the Gemini Shares.
(c) BALISOFT US - The authorized capital stock of Balisoft US consists of
100 shares of Common Stock, par value US $0.01 per share, and 10,000
shares of Preferred Stock, par value US $0.01 per share of which 100
shares of Common Stock are issued and outstanding, all of which are
owned by Balisoft and no shares of Preferred Stock are issued and
outstanding.
3.3 AUTHORITY, CONFLICTS, CONSENTS -
(a) Balisoft has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Balisoft, except for the
formal approval of this Agreement and the Amalgamation by holders of
Balisoft Common Shares and Balisoft Preferred Shares, which approval
is a closing condition to the Amalgamation as set forth in subsection
7.1 (a) of this Agreement. This Agreement has been duly executed and
delivered by Balisoft and constitutes the valid and binding obligation
of Balisoft, enforceable in accordance with its terms.
(b) Except as described in Section 3.3 of the Balisoft Disclosure
Schedule, to the Knowledge of Balisoft the execution and delivery of
this Agreement by Balisoft does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in
any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any benefit under (any
such event, a "CONFLICT") (i) any provision of the Articles or Bylaws
of Balisoft, as amended, or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Balisoft or any of the Balisoft
Subsidiaries or any of their properties or assets.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality (each, a
"GOVERNMENTAL ENTITY") is required by or in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the
Articles of Amalgamation as provided in Section 2.3; (ii) the filing
of the Articles of Amendment as provided in subsection 2.7(c); and
(iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable
provincial securities laws and the securities laws of any foreign
county;
23
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and (iv) the notification filing required under the provisions of the
Investment Canada Act (Canada). Section 3.3 of the Balisoft Disclosure
Schedule sets forth a full and complete list of all necessary
consents, waivers and approvals of third parties applicable to the
operations of Balisoft or any of the Balisoft Subsidiaries that are
required to be obtained by Balisoft in connection with the execution
and delivery of this Agreement by Balisoft or the consummation by
Balisoft of the transactions contemplated hereby. Prior to the Closing
Date, Balisoft will use reasonable efforts to obtain, and to cause the
Balisoft Subsidiaries to obtain, all such consents.
3.4 BALISOFT FINANCIAL STATEMENTS -
(a) Balisoft has furnished to ServiceSoft its unaudited consolidated
balance sheet, consolidated statements of loss and deficit and changes
in financial position (together with notes thereto) as of and for the
period ended September 30, 1998 and its unaudited balance sheet and
statements of operations as of and for the period ended November 30,
1998 (collectively, the "BALISOFT FINANCIAL STATEMENTS"). The Balisoft
Financial Statements are included as Section 3.4 of the Balisoft
Disclosure Schedule. The Balisoft Financial Statements, including the
notes thereto, were complete and correct in all material respects as
of their respective dates, complied as to form in all material
respects with applicable accounting requirements as of their
respective dates, and have been prepared in accordance with Canadian
GAAP applied on a basis consistent throughout the periods indicated
and consistent with each other. The Balisoft Financial Statements are
in accordance with the books and records of Balisoft and fairly
present the consolidated financial condition and operating results of
Balisoft at the dates and during the periods indicated therein
(subject, in the case of unaudited statements, to normal, recurring
year-end adjustments). There has been no change in Balisoft accounting
policies.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES - Balisoft and the Balisoft Subsidiaries
have no obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balisoft Balance Sheet dated December 31, 1998, a true, correct and complete
copy of which is included in the Balisoft Financial Statements (the "BALISOFT
BALANCE SHEET"), (ii) those incurred in the ordinary course of business and not
required to be set forth in the footnotes to audited financial statements
prepared in accordance with Canadian GAAP, (iii) those incurred in the ordinary
course of business since the Balisoft Balance Sheet date and consistent with
past practice, which do not in any event exceed $25,000 in the aggregate, and
(iv) those set forth in Section 3.5 of the Balisoft Disclosure Schedule.
3.6 ABSENCE OF CERTAIN CHANGES - Since the date of the Balisoft Balance Sheet,
except as set forth in Section 3.6 of the Balisoft Disclosure Schedule, Balisoft
and each of the Balisoft Subsidiaries has conducted its business in the ordinary
course consistent with past practice and there has not occurred: (a) any change,
event or condition that has resulted in, or might reasonably be expected to
result in, a material adverse effect to Balisoft and the Balisoft Subsidiaries,
taken as a
24
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whole; (b) any acquisition, sale or transfer of any material asset of Balisoft
or any Balisoft Subsidiaries other than in the ordinary course of business and
consistent with past practice; (c) any change in accounting methods or practices
by Balisoft or any Balisoft Subsidiaries or any revaluation by Balisoft or any
Balisoft Subsidiaries of any of their respective assets; (d) any issuance or
agreement to issue or any commitment to issue any equity, security, bond, note
or other security of Balisoft or any Balisoft Subsidiaries (except for the
issuance of employee options to purchase Balisoft Common Shares issued in the
ordinary course of business); (e) any declaration, setting aside, or payment of
a dividend or other distribution with respect to the shares of Balisoft or any
Balisoft Subsidiaries, or any direct or indirect redemption, purchase or other
acquisition by Balisoft or any Balisoft Subsidiaries of any of its or the
Balisoft Subsidiaries' shares of capital stock; or (f) any negotiation or
agreement by Balisoft or any Balisoft Subsidiaries to do any of the things
described in the preceding clauses (a) through (e).
3.7 TAX MATTERS -
(a) DEFINITION OF TAXES - For the purposes of this Agreement, "TAX" or,
collectively, "TAXES", means; (i) any and all federal, provincial,
state and local Canadian, United States and other foreign taxes, and
similar assessments and other governmental charges, duties,
impositions, fees, royalties, withholdings, contributions and
liabilities, including taxes based upon or measured by gross receipts,
gross income, gross profits, sales (including goods and services), use
and occupation, and value added, ad valorem, transfer, franchise,
stamp, documentary, severance, net income, capital, employer health,
workers compensation, pension, withholding, payroll, recapture,
employment, excise and property taxes, assessments, charges, duties,
impositions, fees, royalties, withholdings, contributions and
liabilities, together with all interest, penalties and additions
imposed with respect to such amounts and any expenses incurred in
connection with the determination, settlement or litigation of any Tax
liability; (ii) any liability for the payment of any amounts of the
type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period;
and (iii) any liability for the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or implied
obligation to indemnify any other person or as a result of any
obligations under any agreements or arrangements with any other person
with respect to such amounts and including any liability for Taxes of
a predecessor entity.
(b) TAX RETURNS AND AUDITS -
(i) Balisoft and the Balisoft Subsidiaries as of the Closing Time
will have prepared and timely filed all required federal, provincial,
state and local Canadian, United States and other foreign returns,
declarations, remittances, estimates, information statements and
reports ("RETURNS') relating to any and all Taxes imposed on or
assessed with respect to or measured by or charged against or
attributable to Balisoft or any of the Balisoft Subsidiaries, to the
Knowledge of
25
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Balisoft all such Returns are true, complete and correct in all
respects and have been completed in accordance with applicable law and
no material fact or facts have been omitted from such Returns which
would make any of them misleading.
(ii) Balisoft and the Balisoft Subsidiaries as of the Closing Time:
(A) will have paid all Taxes shown on the Returns, all Taxes due and
payable by them and all Taxes assessed or reassessed against them and
(B) will have withheld/collected and remitted in a timely manner any
Taxes required to be withheld/collected and remitted.
(iii) Neither Balisoft nor any of the Balisoft Subsidiaries have been
delinquent in the payment of any Tax. There is no Tax deficiency
assessed or proposed against Balisoft or any of the Balisoft
Subsidiaries, nor have Balisoft or any of the Balisoft Subsidiaries
executed any waiver of any statute of limitations on or extending the
period for the assessment or collection of any Tax that is still in
effect.
(iv) Neither Balisoft nor any of the Balisoft Subsidiaries have
received notice of any audit or other examination relating to Taxes or
any request for such an audit or examination and there are no claims,
actions, suits, litigation, arbitrations, proceedings or appeals
pending, proposed or threatened in respect of Taxes imposed on or
assessed with respect to or measured by or charged against or
attributable to Balisoft or any of the Balisoft Subsidiaries.
(v) Balisoft and the Balisoft Subsidiaries are accrual basis taxpayers
and do not have any liabilities for unpaid Taxes not yet due which
have not been accrued or reserved against in accordance with Canadian
GAAP on the Balisoft Balance Sheet, whether asserted or unasserted,
contingent or otherwise.
(vi) There are no liens, pledges, charges, claims, security interests
or other encumbrances of any sort ("LIENS") on the assets of Balisoft
or any of the Balisoft Subsidiaries relating to or attributable to
Taxes other than Liens for taxes not yet due and payable.
(vii) Neither Balisoft nor any of the Balisoft Subsidiaries are a
party to a tax sharing, indemnification or allocation agreement (other
than this Agreement) nor does Balisoft or any of the Balisoft
Subsidiaries owe any amount under any such agreement.
(viii) Balisoft and the Balisoft Subsidiaries have charged, collected
and remitted on a timely basis all Taxes as required under applicable
law on any sale, supply or delivery whatsoever made by each of them.
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3.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION OF
EQUIPMENT -
(a) Subsection 3.8(a) of the Balisoft Disclosure Schedule sets forth a
list of all real property currently owned or leased by Balisoft and
the Balisoft Subsidiaries and, in the case of leased property, the
name of the lessor, the date of the lease and each amendment thereto
and the aggregate annual rental and/or other fees payable under any
such lease. All such leases are in full force and effect, are valid
and effective in accordance with their respective terms, and there is
not, under any of such leases, any existing default or event of
default (or event which with notice or lapse of time, or both, would
constitute a default) of Balisoft.
(b) Balisoft and the Balisoft Subsidiaries have good and valid title to,
or, in the case of leased properties and assets, valid leasehold
interests in, all of their tangible properties and assets free and
clear of any Liens, except as reflected in the Balisoft Financial
Statements and except for Liens for Taxes not yet due and payable.
(c) The equipment owned or leased by Balisoft and the Balisoft
Subsidiaries, taken as a whole, is (i) adequate for the conduct of the
business of Balisoft and the Balisoft Subsidiaries as currently
conducted (ii) generally in good operating condition, subject to
normal wear and tear, and (iii) reasonably maintained.
3.9 INTELLECTUAL PROPERTY -
(a) Except as set forth in subsection 3.9(a) of the Balisoft Disclosure
Schedule, Balisoft and the Balisoft Subsidiaries own, or are licensed
or otherwise possess legally enforceable and irrevocable rights to
use, all patents, industrial designs, trademarks, trade names, service
marks, copyrights, Internet domain names, and any applications
therefor, net lists, schematics, technology, know-how, computer
software programs or applications (in both source code and object code
form as to software programs and applications owned by Balisoft or the
Balisoft Subsidiaries and in object code form as to software programs
and applications licensed by Balisoft or the Balisoft Subsidiaries),
and tangible or intangible proprietary information or material
(collectively, "BALISOFT INTELLECTUAL PROPERTY") that are used or
proposed to be used in the business of Balisoft or the Balisoft
Subsidiaries as currently conducted or as currently proposed to be
conducted by Balisoft or the Balisoft Subsidiaries.
(b) Subsection 3.9(b) of the Balisoft Disclosure Schedule sets forth a
complete list of all patents, industrial designs, registered and
material unregistered trademarks, registered copyrights, trade names
and service marks, Internet domain names, and any applications
therefor in respect of any of the foregoing, included in the Balisoft
Intellectual Property, and specifies, where applicable, the
jurisdictions in which the rights to such Balisoft Intellectual
Property have been issued or registered or in which an application for
such issuance and registration has been filed, including the
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respective registration or application numbers and the names of all
registered owners. All registered patents, industrial designs,
trademarks, service marks and copyrights held by Balisoft and the
Balisoft Subsidiaries are valid and subsisting.
(c) Subsection 3.9(c) of the Balisoft Disclosure Schedule sets forth a
complete list of all licenses, sublicenses and other agreements
(including all amendments and supplements thereto) to which Balisoft
or any of the Balisoft Subsidiaries are a party and pursuant to which
Balisoft or any of the Balisoft Subsidiaries are entitled to use
intellectual property of a third party or any other person is
authorized to use Balisoft Intellectual Property that is material to
Balisoft and the Balisoft Subsidiaries, taken as a whole, and includes
the identity of all parties thereto. To the Knowledge of Balisoft,
neither Balisoft nor any of the Balisoft Subsidiaries are in violation
of any license, sublicense or agreement described on such list and
neither Balisoft nor any of the Balisoft Subsidiaries has infringed,
and the business of each of Balisoft or the Balisoft Subsidiaries as
currently conducted, or as currently proposed by Balisoft or the
Balisoft Subsidiaries to be conducted, does not infringe any
copyright, patent, trademark, service ▇▇▇▇, industrial design, trade
search or other proprietary right of any third party. The execution
and delivery of this Agreement by Balisoft, and the consummation of
the transactions contemplated hereby, will not (i) cause Balisoft or
any of the Balisoft Subsidiaries to be in violation or default under
any such license, sublicense or agreement, (ii) entitle any other
party to any such license, sublicense or agreement to terminate or
modify such license, sublicense or agreement or (iii) require Balisoft
or any of the Balisoft Subsidiaries to repay any funds already
received by it from a third party or make to a third party any
incremental payment. Except for rights granted in agreements, licenses
or sublicenses described in subsections 3.9(b) and (c) of the Balisoft
Disclosure Schedule, to the Knowledge of Balisoft, Balisoft or one of
the Balisoft Subsidiaries is the sole and exclusive owner or licensee
of, with all right, title and interest in and to (free and clear of
any Liens), the Balisoft Intellectual Property, and has sole and
exclusive rights (and is not contractually obligated to pay any
compensation to any third party in respect thereof) to the use thereof
or the material covered thereby in connection with the services or
products in respect of which the Balisoft Intellectual Property is
being used.
(d) No claims contesting Balisoft's ownership of or right to use Balisoft
Intellectual Property, or asserting any right of a third party to use
any Balisoft Intellectual Property, have been asserted or threatened
to Balisoft or any of the Balisoft Subsidiaries or their agents, nor
to the Knowledge of Balisoft are there any valid grounds for any bona
fide claims (i) against the use by Balisoft or any of the Balisoft
Subsidiaries of any Balisoft Intellectual Property used in the
business of Balisoft or any of the Balisoft Subsidiaries as currently
conducted or as currently proposed to be conducted by Balisoft or any
of the Balisoft Subsidiaries, or (ii) challenging the validity,
effectiveness, or ownership by Balisoft of any of the Balisoft
Intellectual Property.
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(e) To the Knowledge of Balisoft (i) there is no material unauthorized
use, infringement or misappropriation of any of the Balisoft
Intellectual Property by any third party, including any employee or
former employee of Balisoft or the Balisoft Subsidiaries, and (ii) no
Balisoft Intellectual Property or product of Balisoft or any of the
Balisoft Subsidiaries is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing
thereof by Balisoft or any of the Balisoft Subsidiaries.
(f) Balisoft and each of the Balisoft Subsidiaries has a policy requiring
each employee and contractor materially involved in proprietary
aspects of the business to execute ownership and nondisclosure of
proprietary information and confidentiality agreements in the standard
forms, and all current and former employees, consultants and
contractors of Balisoft and the Balisoft Subsidiaries involved in
proprietary aspects of the business of Balisoft or any of the Balisoft
Subsidiaries have executed such an agreement.
3.10 MATERIAL CONTRACTS -
(a) Section 3.10 of the Balisoft Disclosure Schedule lists all written
contracts or commitments involving any annual payment or receipt in
excess of $50,000 ("BALISOFT MATERIAL CONTRACTS") to which Balisoft or
any of the Balisoft Subsidiaries is a party. Balisoft has made
available to ServiceSoft true and complete copies of all written
Balisoft Material Contracts in effect on the date hereof.
(b) To the Knowledge of Balisoft, each of the Balisoft Material Contracts
is in full force and effect and unamended, (except for such amendments
as are disclosed on Section 3.10 of the Balisoft Disclosure Schedule)
and is valid, binding and enforceable in accordance with its terms. To
the Knowledge of Balisoft, no party to any Balisoft Material Contract
or successor or assignee thereof, is in default of any material
provision thereof and there exists no event or condition which does or
would, by itself or with giving of notice or the passage of time or
both, constitute a breach of or default under any Balisoft Material
Contract or results in the acceleration of any obligation thereunder.
3.11 INTERESTED PARTY TRANSACTIONS - Except as disclosed in Section 3.11 of the
Balisoft Disclosure Schedule, to the Knowledge of Balisoft no officer, director,
employee or shareholder of more than 5% of the Balisoft Common Shares
(calculated on a fully diluted basis), nor any parent, sibling, child or spouse
of any of such persons, or any trust, partnership or corporation in which any of
such persons has or has had an interest, has or has had, directly or indirectly,
(i) an interest in any entity which furnished or sold, or furnishes or sells,
services or products that Balisoft or any of the Balisoft Subsidiaries furnish
or sell, or propose to furnish or sell, or (ii) any interest in any entity that
purchases from or sells or furnishes to, Balisoft or any of the Balisoft
Subsidiaries, any goods or
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services or (iii) a beneficial interest in any Balisoft Material Contract;
PROVIDED, HOWEVER, that passive ownership of no more than five percent (5%) of
the outstanding voting stock of a corporation shall not be deemed an "interest
in any entity" for purposes of this Section 3.11.
3.12 LITIGATION - There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or to the Knowledge of Balisoft threatened,
against Balisoft or any Balisoft Subsidiaries or any of their properties or
their officers or directors (in their capacities as such). There is no judgment,
decree or order against Balisoft or any Balisoft Subsidiaries any of their
respective directors or officers (in their capacities as such), that could
prevent, enjoin, alter or delay any of the transactions contemplated by this
Agreement or that has a reasonable risk of having a material adverse effect on
Balisoft and the Balisoft Subsidiaries, taken as a whole.
3.13 ENVIRONMENTAL AND SAFETY LAWS -To the Knowledge of Balisoft, Balisoft and
the Balisoft Subsidiaries are not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, except
to the extent such violation would not have a material adverse effect on the
assets, properties, financial condition, operating results or business of
Balisoft and the Balisoft Subsidiaries (taken as a whole), and no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
3.14 BROKERS' AND FINDERS' FEES - Neither Balisoft nor any of the Balisoft
Subsidiaries have incurred, nor will they incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.15 EMPLOYEE BENEFIT PLANS AND COMPENSATION -
(a) PLANS - Subsection 3.15(a) of the Balisoft Disclosure Schedule
contains a true and complete list of each employee benefit plan or
arrangement, and any plan, agreement or program providing for
pensions, retirement income, deferred compensation, profit sharing,
bonuses, stock options, stock appreciation or other forms of incentive
compensation that (i) is entered into, maintained or contributed to,
as the case may be, by Balisoft or any Balisoft Subsidiaries and (ii)
covers any employee or former employee of Balisoft or any Balisoft
Subsidiaries (collectively "BALISOFT BENEFIT ARRANGEMENTS'). Each
Balisoft Benefit Arrangement has been maintained and administered in
material compliance with its terms and with the requirements
prescribed by any and all statutes, laws, ordinances and regulations
which are applicable thereto. No Balisoft Benefit Arrangement has
unfunded liabilities that, as of the Closing, will not be offset by
insurance or fully accrued or reserved against in the Balisoft Balance
Sheet. Except as required by law or by the provisions of such Balisoft
Benefit Arrangement, no condition exists that would prevent Balisoft
or any of the Balisoft Subsidiaries from amending or terminating any
Balisoft Benefit Arrangement.
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(b) NO POST-EMPLOYMENT OBLIGATIONS - Except as set forth in subsection
3.15(b) of the Balisoft Disclosure Schedule, no Balisoft Benefit
Arrangement provides, or has any liability to provide, life insurance,
medical or other employee benefits to any employee upon his or her
retirement or termination of employment for any reason, except as may
be required by law, and neither Balisoft nor any of the Balisoft
Subsidiaries have ever represented, promised or contracted (whether in
oral or written form) to any employee (either individually or to
employees as a group) that such employee(s) would be provided with
life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required
by law.
(c) EMPLOYMENT MATTERS - Balisoft has delivered to ServiceSoft a complete
list of all current employees of Balisoft and the Balisoft
Subsidiaries and their position, gross remuneration and length of
employment. To the Knowledge of Balisoft, Balisoft and the Balisoft
Subsidiaries: (i) are in compliance in all material respects with all
applicable foreign, federal and provincial laws, rules and regulations
respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to
employees; (ii) have withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments
to employees; (iii) are not liable for any arrears of wages or any
Taxes or any penalty for failure to comply with any of the foregoing;
and (iv) except as required by applicable law, are not liable for any
payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation
benefits, social security or other benefits for employees (other than
routine payments to be made in the normal course of business and
consistent with past practice).
(d) LABOR - Except as set forth in subsection 3.15(d) of the Balisoft
Disclosure Schedule, neither Balisoft nor any of the Balisoft
Subsidiaries are involved in or threatened with any labor dispute,
grievance, litigation or claim relating to labor, occupational health
and safety or human rights matters involving any employee, including,
without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in liability having a
material adverse effect on Balisoft and the Balisoft Subsidiaries,
taken as a whole. Neither Balisoft nor any of the Balisoft
Subsidiaries have engaged in any unfair labor practices which would,
individually or in the aggregate, directly or indirectly result in
liability to Balisoft or any of the Balisoft Subsidiaries. Except as
set forth in subsection 3.15(d) of the Balisoft Disclosure Schedule,
neither Balisoft nor any of the Balisoft Subsidiaries are presently,
nor have they been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to
employees and no collective bargaining agreement is being negotiated
by
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Balisoft or any of the Balisoft Subsidiaries or, to the Knowledge of
Balisoft, is being organized or is threatened.
3.16 INSURANCE - Section 3.16 of the Balisoft Disclosure Schedule lists all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of Balisoft and the
Balisoft Subsidiaries. Except as disclosed in Section 3.16 of the Balisoft
Disclosure Schedule such policies and bonds are sufficient in amount to allow
Balisoft or the Balisoft Subsidiaries (as applicable) to replace any of its
properties that might be damaged or destroyed. There is no claim by Balisoft or
any of the Balisoft Subsidiaries pending under any of such policies or bonds as
to which Balisoft or any of the Balisoft Subsidiaries have received notice that
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and Balisoft or the applicable Balisoft Subsidiary are
otherwise in material compliance with the terms of such policies and bonds (or
other policies and bonds providing substantially similar insurance coverage).
There is no threatened termination of, or material premium increase with respect
to, any of such policies.
3.17 COMPLIANCE WITH LAWS - To the Knowledge of Balisoft, Balisoft and each of
the Balisoft Subsidiaries has complied with, are not in violation of, and have
not received any notices of violation with respect to, any foreign, federal,
provincial or local statute, law or regulation with respect to the conduct of
its business, or the ownership or operation of their business, assets or
properties.
3.18 COMPLETE COPIES OF MATERIALS - Balisoft has delivered or made available to
ServiceSoft true and complete copies of each agreement, contract, commitment or
other document (or summaries of same) that is referred to in the Balisoft
Disclosure Schedule or that has been requested in writing by ServiceSoft or its
counsel.
3.19 REPRESENTATIONS COMPLETE - To the Knowledge of Balisoft, none of the
representations or warranties made herein by Balisoft (as modified by the
Balisoft Disclosure Schedule), nor any statement made in any Schedule or
certificate furnished by Balisoft pursuant to this Agreement, contains or will
contain at the Closing Time, any untrue statement of a material fact, or omits
or will omit at the Closing Time to state any material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
3.20 DISCLOSURE SCHEDULE - The Balisoft Disclosure Schedule has been prepared
and executed by Balisoft and dated and delivered on the date of this Agreement.
Balisoft shall endeavor to disclose in the Balisoft Disclosure Schedule each
item of information in each separate section in which such item may reasonably
be required to be disclosed, PROVIDED, HOWEVER that any item of information
disclosed in any one section of the Balisoft Disclosure Schedule may be
cross-referenced in other relevant sections thereof for purposes of disclosure
under this Agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SERVICESOFT
AND SERVICESOFT CANADA
Except as disclosed in a document of even date herewith and delivered by
ServiceSoft and ServiceSoft Canada to Balisoft prior to the execution and
delivery of this Agreement and referring to the representations and warranties
in this Agreement (the "SERVICESOFT DISCLOSURE SCHEDULE ") but subject to the
overriding agreements specified in this Article 4, ServiceSoft and ServiceSoft
Canada jointly represent and warrant to Balisoft as follows:
4.1 ORGANIZATION, STANDING AND POWER - Each of ServiceSoft and ServiceSoft
Canada, ServiceSoft (Europe) NV ("ServiceSoft Belgium"), ServiceSoft Ltd.
("SeviceSoft Israel") and ServiceSoft Deustchland GmbH ("ServiceSoft Germany")
(collectively, the "SERVICESOFT SUBSIDIARIES"), is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and there are no other subsidiaries of ServiceSoft. ServiceSoft
and each of the ServiceSoft Subsidiaries has the corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which it is required to be so qualified. ServiceSoft has
delivered a true and correct copy of the Articles of Association or other
charter documents, as applicable, of ServiceSoft and each of the ServiceSoft
Subsidiaries, each as amended to date, to Balisoft. Notwithstanding the
disclosure provided in Section 4.1 of the ServiceSoft Disclosure Schedule,
ServiceSoft and ServiceSoft Canada agree as an overriding agreement of this
Article 4 that any Losses arising from non-compliance by any of the ServiceSoft
Subsidiaries with the terms of this Section 4.1 shall be for the account of
ServiceSoft and its shareholders and that, accordingly, this Agreement
(including in particular Section 8.2) shall be interpreted as if no disclosure
was contained on Section 4.1 of the ServiceSoft Disclosure Schedule.
4.2 CAPITAL STRUCTURE OF SERVICESOFT AND THE SERVICESOFT SUBSIDIARIES -
(a) SERVICESOFT - The authorized capital stock of ServiceSoft consists of
13,000,000 Common Shares, par value $0.01 each (the "SERVICESOFT
COMMON SHARES"), of which 64,598 are issued and outstanding and
10,200,000 Preferred Shares, par value $0.01 each, consisting of (a)
5,300,000 Series F Preferred Shares (the "SERIES F PREFERRED"), of
which 5,230,654 shares are issued and outstanding, (b) 4,900,000
Series G Preferred Shares (the "SERIES G PREFERRED"), and collectively
with the Series F Preferred, the "SERVICESOFT PREFERRED SHARES"), of
which 4,628,907 shares are issued and outstanding. ServiceSoft has
issued warrants (the "SERVICESOFT WARRANTS") to purchase an aggregate
of up to 117,188 shares of Series G Preferred and up to 2,098 Common
Shares. There are no other outstanding shares of ServiceSoft capital
stock or voting securities. Each outstanding ServiceSoft Series F
Preferred Share and Series G Preferred Share issuable upon exercise of
the ServiceSoft Warrants is convertible into one ServiceSoft Common
Share. There are currently a total of 9,924,159 ServiceSoft Common
Shares outstanding, on a fully
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diluted basis. All outstanding ServiceSoft Common Shares and
ServiceSoft Preferred Shares are duly authorized, validly issued,
fully paid and non-assessable and are free of any liens or
encumbrances other than any liens or encumbrances created by or
imposed upon the holders thereof, and, except as set forth in Section
4.2(a) of the ServiceSoft Disclosure Schedule, are not subject to
preemptive rights or rights of first refusal created by statute, or
any agreement to which ServiceSoft is a party or by which it is bound.
ServiceSoft has reserved 2,533,422 ServiceSoft Common Shares for
issuance to employees and consultants pursuant to the ServiceSoft
Stock Option Plan (the "SERVICESOFT OPTION PLAN") of which 2,275,921
shares are subject to outstanding, unexercised options. Other than as
set forth in Section 4.2(a) of the ServiceSoft Disclosure Schedule,
there are no other options, warrants, calls, rights, commitments or
agreements of any character to which ServiceSoft is a party or by
which it is bound obligating ServiceSoft to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of capital stock of ServiceSoft.
(b) SERVICESOFT CANADA - The authorized capital of ServiceSoft Canada
consists of an unlimited number of common shares, of which one common
share is issued and outstanding and is owned by ServiceSoft.
(c) SERVICESOFT BELGIUM - The authorized capital of ServiceSoft Belgium
consists of 10,000 shares of which all are issued and outstanding and
owned by ServiceSoft.
(d) SERVICESOFT ISRAEL - The authorized capital of ServiceSoft Israel
consists of 881,453 shares of which all are issued and outstanding and
are all owned by ServiceSoft, except for five Ordinary Shares held by
Israeli individuals and one Ordinary Share held by ▇▇▇▇▇ Electronic
Industries Ltd.
(e) SERVICESOFT GERMANY - All of the authorized capital of ServiceSoft
Germany is owned by ServiceSoft, except for one Common Share held by
an individual.
4.3 AUTHORITY, CONFLICTS, CONSENTS -
(a) Each of ServiceSoft and ServiceSoft Canada has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the
part of each of ServiceSoft and ServiceSoft Canada. This Agreement has
been duly executed and delivered by ServiceSoft and ServiceSoft Canada
and constitutes the valid and binding obligation of each of them,
enforceable in accordance with its terms.
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(b) To the Knowledge of ServiceSoft, the execution and delivery of this
Agreement by ServiceSoft and ServiceSoft Canada does not, and the
consummation of the transactions contemplated hereby will not,
Conflict with (i) any provision of the Articles of Association of
ServiceSoft or the Articles or Bylaws of ServiceSoft Canada, or the
relevant charter documents of any other ServiceSoft Subsidiary, each
as amended, or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ServiceSoft or any of its Subsidiaries or any of their
properties or assets.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or
with respect to ServiceSoft or ServiceSoft Canada or any other
ServiceSoft Subsidiary in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of the Articles of Amalgamation as
provided in Section 2.3; (ii) the filing of the Articles of Amendment
as provided in subsection 2.7(c); (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may
be required under applicable provincial securities laws and the
securities laws of any foreign country; and (iv) such filings as may
be required under the notification provisions of the Investment Canada
Act (Canada). Section 4.3(c) of the ServiceSoft Disclosure Schedule
sets forth a full and complete list of all necessary consents, waivers
and approvals of third parties applicable to the operations of
ServiceSoft or the ServiceSoft Subsidiaries that are required to be
obtained by ServiceSoft or the ServiceSoft Subsidiaries in connection
with the execution and delivery of this Agreement by ServiceSoft and
ServiceSoft Canada or the consummation by ServiceSoft and ServiceSoft
Canada of the transactions contemplated hereby. Prior to the Closing
Date, ServiceSoft will use reasonable efforts to obtain, and to cause
the ServiceSoft Subsidiaries to obtain, all such consents.
4.4 SERVICESOFT FINANCIAL STATEMENTS - ServiceSoft has furnished to Balisoft
its consolidated unaudited financial statements dated September 30, 1998 and its
unconsolidated unaudited draft balance sheet, statement of operations and
statements of stockholders equity and cash flows dated November 1998
(collectively, the "SERVICESOFT FINANCIAL STATEMENTS"). The ServiceSoft
Financial Statements are included as Section 4.4 of the ServiceSoft Disclosure
Schedule. The ServiceSoft Financial Statements were complete and correct in all
material respects as of their respective dates, complied as to form in all
material respects with applicable accounting requirements as of their respective
dates, and have been prepared in accordance with US GAAP applied on a basis
consistent throughout the periods indicated and consistent with each other. The
ServiceSoft Financial Statements are in accordance with the books and records of
ServiceSoft and fairly present the consolidated financial condition and
operating results of ServiceSoft at the dates and during the periods indicated
therein (subject, in the case of unaudited statements, to normal, recurring
year-end adjustments). There has been no change in ServiceSoft accounting
policies.
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4.5 ABSENCE OF UNDISCLOSED LIABILITIES - ServiceSoft and the ServiceSoft
Subsidiaries have no obligations or liabilities of any nature (matured or
unmatured, fixed or contingent) other than (i) those set forth or adequately
provided for in the ServiceSoft Balance Sheet dated December 1998, a true,
correct and complete copy of which is included in the ServiceSoft Financial
Statements (the "SERVICESOFT BALANCE SHEET"), (ii) those incurred in the
ordinary course of business and not required to be set forth in the footnotes to
audited financial statements prepared in accordance with US GAAP, and (iii)
those incurred in the ordinary course of business since the ServiceSoft Balance
Sheet Date and consistent with past practice, which do not in any event exceed
$25,000 in the aggregate, and (iv) those set forth in Section 4.5 of the
ServiceSoft Disclosure Schedule.
4.6 ABSENCE OF CERTAIN CHANGES - Since the date of the ServiceSoft Balance
Sheet, except as set forth in Section 4.6 of the ServiceSoft Disclosure
Schedule, ServiceSoft and each of the ServiceSoft Subsidiaries has conducted its
business in the ordinary course consistent with past practice and there has not
occurred: (a) any change, event or condition that has resulted in, or might
reasonably be expected to result in, a material adverse effect to ServiceSoft
and the ServiceSoft Subsidiaries, taken as a whole; (b) any acquisition, sale or
transfer of any material asset of the ServiceSoft or any ServiceSoft
Subsidiaries other than in the ordinary course of business and consistent with
past practice; (c) any change in accounting methods or practices by ServiceSoft
or any ServiceSoft Subsidiaries or any revaluation by ServiceSoft or any
ServiceSoft Subsidiaries of any of their respective assets; (d) any issuance or
agreement to issue or any commitment to issue any equity security, bond, note or
other security of ServiceSoft or any ServiceSoft Subsidiaries (except for the
issuance of employee options to purchase ServiceSoft Common Shares issued in the
ordinary course of business); (e) any declaration, setting aside, or payment of
a dividend or other distribution with respect to the shares of ServiceSoft or
any ServiceSoft Subsidiaries, or any direct or indirect redemption, purchase or
other acquisition by the ServiceSoft or any ServiceSoft Subsidiaries of any of
its or the ServiceSoft Subsidiaries' shares of capital stock; or (f) any
negotiation or agreement by ServiceSoft or any ServiceSoft Subsidiaries to do
any of the things described in the preceding clauses (a) through (e).
4.7 TAX MATTERS -
(a) TAX RETURNS AND AUDITS -
(i) ServiceSoft and the ServiceSoft Subsidiaries as of the Closing
Time will have prepared and timely filed all required federal,
provincial, state and local Canadian, United States and other foreign
Returns relating to any and all Taxes imposed on or assessed with
respect to or measured by or charged against or attributable to
ServiceSoft or any of the ServiceSoft Subsidiaries, to the Knowledge
of ServiceSoft all such Returns are true, complete and correct in all
respects and have been completed in accordance with applicable law and
no material fact or facts have been omitted from such Returns which
would make any of them misleading.
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(ii) ServiceSoft and the ServiceSoft Subsidiaries as of the Closing
Time: (A) will have paid all Taxes shown on the Returns, all Taxes due
and payable by them and all Taxes assessed or reassessed against them
and (B) will have withheld/collected and remitted in a timely manner
any Taxes required to be withheld/collected and remitted.
(iii) Neither ServiceSoft nor any of the ServiceSoft Subsidiaries have
been delinquent in the payment of any Tax. There is no Tax deficiency
assessed or proposed against ServiceSoft or any of the ServiceSoft
Subsidiaries, nor have ServiceSoft or any of the ServiceSoft
Subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax that
is still in effect.
(iv) Neither ServiceSoft nor any of the ServiceSoft Subsidiaries have
received notice of any audit or other examination relating to Taxes or
any request for such an audit or examination and there are no claims,
actions, suits, litigation, arbitrations, proceedings or appeals
pending, proposed or threatened in respect of Taxes imposed on or
assessed with respect to or measured by or charged against or
attributable to ServiceSoft or any of the ServiceSoft Subsidiaries.
(v) ServiceSoft and the ServiceSoft Subsidiaries are accrual basis
taxpayers and do not have any liabilities for unpaid Taxes not yet due
which have not been accrued or reserved against in accordance with US
GAAP on the ServiceSoft Balance Sheet, whether asserted or unasserted,
contingent or otherwise.
(vi) There are no Liens on the assets of ServiceSoft or any of the
ServiceSoft Subsidiaries relating to or attributable to Taxes other
than Liens for taxes not yet due and payable.
(vii) Neither ServiceSoft nor any of the ServiceSoft Subsidiaries are
a party to a tax sharing, indemnification or allocation agreement
(other than this Agreement) nor does ServiceSoft or any of the
ServiceSoft Subsidiaries owe any amount under any such agreement.
(viii) ServiceSoft and the ServiceSoft Subsidiaries have charged,
collected and remitted on a timely basis all Taxes as required under
applicable law on any sale, supply or delivery whatsoever made by each
of them.
(ix) No power of attorney currently in force has been granted by
either ServiceSoft or any of the ServiceSoft Subsidiaries concerning
any Tax matter.
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(x) No property of ServiceSoft or the ServiceSoft Subsidiaries is
"tax-exempt use property" within the meaning of Section 168 of the
Internal Revenue Code of 1986 (as amended, the "Code").
(xi) Neither ServiceSoft nor any of the ServiceSoft Subsidiaries are
required to include in income any adjustment pursuant to Section 481
(a) of the Code by reason of a voluntary change in accounting method
initiated by ServiceSoft or the ServiceSoft Subsidiaries, and the
Internal Revenue Service has not proposed an adjustment or change in
accounting method.
(xii) ServiceSoft and the ServiceSoft Subsidiaries are not affiliated
(within the meaning of Section 1504(a) of the Code or any similar
provision of state, local or foreign law) with any entities other than
themselves, and have no liability for Taxes of any person (other than
each other) under Section 1.1502-6 of the Treas. Reg. (or any similar
provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(xiii) ServiceSoft and the ServiceSoft Subsidiaries are not a party to
any agreement, contract, or arrangement that would result, separately
or in the aggregate, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code.
(xiv) All transactions that could give rise to an understatement of
federal income tax (within the meaning of Section 6662 of the Code) by
ServiceSoft and the ServiceSoft Subsidiaries have been adequately
disclosed (or, with respect to Tax Returns filed following the Closing
will be adequately disclosed) on ServiceSoft and the ServiceSoft
Subsidiaries' Tax Returns in accordance with Section 6662(d)(2)(B) of
the Code.
4.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION OF
EQUIPMENT -
(a) Subsection 3.8(a) of the ServiceSoft Disclosure Schedule sets forth a
list of all real property currently owned or leased by ServiceSoft and
the ServiceSoft Subsidiaries and, in the case of leased property, the
name of the lessor, the date of the lease and each amendment thereto
and the aggregate annual rental and/or other fees payable under any
such lease. All such leases are in full force and effect, are valid
and effective in accordance with their respective terms, and there is
not, under any of such leases, any existing default or event of
default (or event which with notice or lapse of time, or both, would
constitute a default) of ServiceSoft.
(b) ServiceSoft and the ServiceSoft Subsidiaries have good and valid title
to, or, in the case of leased properties and assets, valid leasehold
interests in, all of their tangible properties and assets free and
clear of any Liens, except as reflected in the
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ServiceSoft Financial Statements and except for Liens for Taxes not
yet due and payable.
(c) The equipment owned or leased by ServiceSoft and the ServiceSoft
Subsidiaries, taken as a whole, is (i) adequate for the conduct of the
business of ServiceSoft and the ServiceSoft Subsidiaries as currently
conducted (ii) generally in good operating condition, subject to
normal wear and tear, and (iii) reasonably maintained.
4.9 INTELLECTUAL PROPERTY -
(a) Except as set forth in subsection 4.9(a) of the ServiceSoft Disclosure
Schedule, ServiceSoft and the ServiceSoft Subsidiaries own, or are
licensed or otherwise possess legally enforceable rights to use, all
patents, industrial designs, trademarks, trade names, service marks,
copyrights, Internet domain names, and any applications therefor, net
lists, schematics, technology, know-how, computer software programs or
applications (in both source code and object code form as to software
programs and applications owned by ServiceSoft and the ServiceSoft
Subsidiaries and in object code form as to software programs and
applications licensed by ServiceSoft and the ServiceSoft
Subsidiaries), and tangible or intangible proprietary information or
material (collectively, "SERVICESOFT INTELLECTUAL PROPERTY') that are
used or proposed to be used in the business of ServiceSoft and the
ServiceSoft Subsidiaries as currently conducted or as proposed to be
conducted by ServiceSoft and the ServiceSoft Subsidiaries.
(b) Subsection 4.9(b) of the ServiceSoft Disclosure Schedule sets forth a
complete list of all patents, industrial designs, registered and
material unregistered trademarks, registered copyrights, trade names
and service marks, Internet domain names, and any applications
therefor in respect of any of the foregoing, included in the
ServiceSoft Intellectual Property, and specifies, where applicable,
the jurisdictions in which the rights to such ServiceSoft Intellectual
Property have been issued or registered or in which an application for
such issuance and registration has been filed, including the
respective registration or application numbers and the names of all
registered owners. All registered patents, industrial designs,
trademarks, service marks and copyrights held by ServiceSoft and the
ServiceSoft Subsidiaries are valid and subsisting.
(c) Subsection 4.9(c) of the ServiceSoft Disclosure Schedule sets forth a
complete list of all licenses, sublicenses and other agreements
(including all amendments and supplements thereto) to which
ServiceSoft or any of the ServiceSoft Subsidiaries are a party and
pursuant to which ServiceSoft or any of the ServiceSoft Subsidiaries
are entitled to use intellectual property of a third party or any
other person is authorized to use ServiceSoft Intellectual Property
that is material to ServiceSoft and the ServiceSoft Subsidiaries,
taken as a whole, and includes the identity of all parties
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thereto. To the Knowledge of ServiceSoft, neither ServiceSoft nor any
of the ServiceSoft Subsidiaries are in violation of any license,
sublicense or agreement described on such list and neither ServiceSoft
nor any of the ServiceSoft Subsidiaries has infringed and the business
of each of ServiceSoft or the ServiceSoft Subsidiaries as currently
conducted, or as currently proposed by ServiceSoft or the ServiceSoft
Subsidiaries to be conducted, does not infringe any copyright, patent,
trademark, service ▇▇▇▇, industrial design, trade search or other
proprietary right of any third party. The execution and delivery of
this Agreement by ServiceSoft, and the consummation of the
transactions contemplated hereby, will not (i) cause ServiceSoft or
any of the ServiceSoft Subsidiaries to be in violation or default
under any such license, sublicense or agreement, (ii) entitle any
other party to any such license, sublicense or agreement to terminate
or modify such license, sublicense or agreement or (iii) require
ServiceSoft or any of the ServiceSoft Subsidiaries to repay any funds
already received by it from a third party or make to a third party any
incremental payment. Except for rights granted in agreements, licenses
or sublicenses described in subsections 4.9(b) and (c) of the
ServiceSoft Disclosure Schedule, to the Knowledge of ServiceSoft,
ServiceSoft or one of the ServiceSoft Subsidiaries is the sole and
exclusive owner or licensee of, with all right, title and interest in
and to (free and clear of any Liens), the ServiceSoft Intellectual
Property, and has sole and exclusive rights (and is not contractually
obligated to pay any compensation to any third party in respect
thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the
ServiceSoft Intellectual Property is being used.
(d) No claims contesting ServiceSoft's ownership of or right to use
ServiceSoft Intellectual Property, or asserting any right of a third
party to use any ServiceSoft Intellectual Property, have been asserted
or threatened to ServiceSoft or any of the ServiceSoft Subsidiaries or
their agents, nor to the Knowledge of ServiceSoft are there any valid
grounds for any bona fide claims (i) against the use by ServiceSoft or
any of the ServiceSoft Subsidiaries of any ServiceSoft Intellectual
Property used in the business of ServiceSoft or any of the ServiceSoft
Subsidiaries as currently conducted or as currently proposed to be
conducted by ServiceSoft or any of the ServiceSoft Subsidiaries, or
(ii) challenging the validity, effectiveness, or ownership by
ServiceSoft of any of the ServiceSoft Intellectual Property.
(e) To the Knowledge of ServiceSoft (i) there is no material unauthorized
use, infringement or misappropriation of any of the ServiceSoft
Intellectual Property by any third party, including any employee or
former employee of ServiceSoft or the ServiceSoft Subsidiaries, and
(ii) no ServiceSoft Intellectual Property or product of ServiceSoft or
any of the ServiceSoft Subsidiaries is subject to any outstanding
decree, order, judgment, or stipulation restricting in any manner the
licensing thereof by ServiceSoft or any of the ServiceSoft
Subsidiaries.
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(f) ServiceSoft and each of the ServiceSoft Subsidiaries has a policy
requiring each employee and contractor materially involved in
proprietary aspects of the business to execute ownership and
nondisclosure of proprietary information and confidentiality
agreements in the standard forms, and all current and former
employees, consultants and contractors of ServiceSoft and the
ServiceSoft Subsidiaries involved in proprietary aspects of the
business of ServiceSoft or any of the ServiceSoft Subsidiaries have
executed such an agreement.
(g) ServiceSoft and the ServiceSoft Subsidiaries have been and are in
compliance with the Export Administration Act of 1979, as amended, and
all regulations promulgated thereunder.
4.10 MATERIAL CONTRACTS
(a) Section 4.10 of the ServiceSoft Disclosure Schedule lists all written
contracts or commitments: (i) involving any annual payment in excess
of $50,000, (ii) in respect of any sales made in the ordinary course
of business, involving annual receipts in excess of $100,000, and
(iii) in respect of any other matters, involving annual receipts in
excess of $50,000; (collectively, "SERVICESOFT MATERIAL CONTRACTS") to
which ServiceSoft or any of the ServiceSoft Subsidiaries is a party.
ServiceSoft has made available to Balisoft true and complete copies of
all written ServiceSoft Material Contracts in effect on the date
hereof.
(b) To the Knowledge of ServiceSoft, each of the ServiceSoft Material
Contracts is in full force and effect and unamended, (except for such
amendments as are disclosed on Section 4.10 of the ServiceSoft
Disclosure Schedule) and is valid, binding and enforceable in
accordance with its terms. To the Knowledge of ServiceSoft, no party
to any ServiceSoft Material Contract or successor or assignee thereof,
is in default of any material provision thereof and there exists no
event or condition which does or would, by itself or with giving of
notice or the passage of time or both, constitute a breach of or
default under any ServiceSoft Material Contract or results in the
acceleration of any obligation thereunder.
4.11 INTERESTED PARTY TRANSACTIONS - Except as disclosed in Section 4.11 of the
ServiceSoft Disclosure Schedule, to the Knowledge of ServiceSoft no officer,
director, employee or shareholder of more than 5% of the ServiceSoft Common
Shares (calculated on a fully diluted basis), nor any parent, sibling, child or
spouse of any of such persons, or any trust, partnership or corporation in which
any of such persons has or has had an interest, has or has had, directly or
indirectly, (i) an interest in any entity which furnished or sold, or furnishes
or sells, services or products that ServiceSoft or any of the ServiceSoft
Subsidiaries furnish or sell, or propose to furnish or sell, or (ii) any
interest in any entity that purchases from or sells or furnishes to, ServiceSoft
or any of the ServiceSoft Subsidiaries, any goods or services or (iii) a
beneficial interest in any ServiceSoft Material Contract; PROVIDED, HOWEVER,
that passive ownership of no more than five percent (5%) of
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the outstanding voting stock of a corporation shall not be deemed an "interest
in any entity" for purposes of this Section 4.11.
4.12 LITIGATION - There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, to the Knowledge of ServiceSoft threatened
against ServiceSoft or any ServiceSoft Subsidiaries or any of their properties
or any of their officers or directors (in their capacities as such). There is no
judgment, decree or order against, ServiceSoft or any ServiceSoft Subsidiaries,
or any of their respective directors or officers (in their capacities as such),
that could prevent, enjoin, alter or delay any of the transactions contemplated
by this Agreement or that has a reasonable risk of having a material adverse
effect on ServiceSoft and the ServiceSoft Subsidiaries, taken as a whole.
4.13 ENVIRONMENTAL AND SAFETY LAWS - To the Knowledge of ServiceSoft,
ServiceSoft and the ServiceSoft Subsidiaries are not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, except to the extent such violation would not
have a material adverse effect on the assets, properties, financial condition,
operating results or business of ServiceSoft and the ServiceSoft Subsidiaries
(taken as a whole), and no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
4.14 BROKERS' AND FINDERS' FEES -Neither of ServiceSoft nor any of the
ServiceSoft Subsidiaries have incurred, nor will they incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.15 EMPLOYEE BENEFIT PLANS AND COMPENSATION
(a) PLANS - Subsection 4.15(a) of the ServiceSoft Disclosure Schedule
contains a true and complete list of each "employee pension benefit
plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), employee welfare benefit
plan" (as defined in Section 3(l) of ERISA), and any plan, agreement
or program providing for pensions, retirement income, deferred
compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation that (i) is
entered into, maintained or contributed to, as the case may be, by
ServiceSoft or any ServiceSoft Subsidiaries and (ii) covers any
employee or former employee of ServiceSoft or any ServiceSoft
Subsidiaries (collectively "SERVICESOFT BENEFIT ARRANGEMENTS"). Each
ServiceSoft Benefit Arrangement (and each related trust insurance
contract or fund) has been maintained and administered in material
compliance with its terms and with the requirements prescribed by
ERISA, the Code and all other statutes, laws, ordinances and
regulations which are applicable thereto. The requirements of the
consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") have been met with respect to each ServiceSoft Benefit
Arrangement which is an employee
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welfare benefit plan under Section 3(l) of ERISA. All required reports
and descriptions (including Form 5500 Annual Reports, summary annual
reports, PBGCI's and summary plan descriptions) have been timely filed
and distributed appropriately with respect to each such ServiceSoft
Benefit Arrangement. No ServiceSoft Benefit Arrangement has unfunded
liabilities that, as of the Closing, will not be offset by insurance
or fully accrued or reserved against in the ServiceSoft Balance Sheet.
Except to the extent required under COBRA, ServiceSoft and the
ServiceSoft Subsidiaries does not maintain, contribute to, or have any
liability or obligation to contribute to any funded or unfunded
medical, health or life insurance plan or similar arrangement for
present or future retirees, their spouses or dependents or present or
future terminated employees, their spouses or dependents. No
ServiceSoft Benefit Arrangement has applied for or received a waiver
of the minimum funding standards imposed by Section 412 of the Code,
and no ServiceSoft Benefit Arrangement has an "accumulated funding
deficiency" within the meaning of Section 412(a) of the Code as of the
most recent plan year. Each ServiceSoft Benefit Arrangement subject to
Title IV of ERISA has paid all premiums when due to the Pension
Benefit Guaranty Corporation. ("PBGC"). ServiceSoft and the
ServiceSoft Subsidiaries have not incurred, and none of the directors
and officers (and employees with responsibility for employee benefits
matters) of ServiceSoft and the ServiceSoft Subsidiaries have any
reason to expect that they will incur, any liability to the PBGC
(other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability as defined in Section 4201
of ERISA) or under the Code with respect to any such ServiceSoft
Benefit Arrangement which is an employee pension benefit plan under
Section 3(2) of ERISA. Except as required by law or by the provisions
of such ServiceSoft Benefit Arrangement, no condition exists that
would prevent ServiceSoft or any ServiceSoft Subsidiaries from
amending or terminating any ServiceSoft Benefit Arrangement.
(b) Except as disclosed in subsection 4.15(b) of the ServiceSoft
Disclosure Schedule, there are no investigations by any governmental
agency, termination proceedings or other claims (except claims for
benefits payable in the normal operation of the ServiceSoft Benefit
Arrangements), suits or proceedings against or involving any
ServiceSoft Benefit Arrangement that would result in material
liability against ServiceSoft and the ServiceSoft Subsidiaries or any
ServiceSoft Benefit Arrangement. Except as disclosed in subsection
4.15(b) of the ServiceSoft Disclosure Schedule, the ServiceSoft
Benefit Arrangements that are pension benefit plans have received
determination letters from the Internal Revenue Service to the reflect
that such ServiceSoft Benefit Arrangements are qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of Sellers, has revocation been
threatened, nor are there any facts that could result in any such
revocation, nor has any such ServiceSoft Benefit Arrangement been
amended since the date of its most recent determination letter or
application therefor in any respect
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that would adversely affect its qualification. No "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA) has occurred which involves the assets of any ServiceSoft
Benefit Arrangement and which could subject any employees of
ServiceSoft and the ServiceSoft Subsidiaries, a trustee, administrator
or other fiduciary of any trusts created under any ServiceSoft Benefit
Arrangement to the tax or penalty on prohibited transactions imposed
by Section 4975 of the Code or the sanctions imposed under Title I of
ERISA. No fiduciary has any liability for breach of fiduciary duty or
any other failure to at or comply in connection with the
administration or investment of the assets of any ServiceSoft Benefit
Arrangement. Except as disclosed in subsection 4.15(b) of the
ServiceSoft Disclosure Schedule, none of the ServiceSoft Benefit
Arrangements have been terminated nor have there been any "reportable
events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect thereto. The execution of this Agreement and
the consummation of the transaction contemplated hereby will not
result in the acceleration or early vesting of any payments or
benefits under any ServiceSoft Benefit Arrangement or in the payment
of any "excess parachute payments" within the meaning of Section 280G
of the Code.
(c) ServiceSoft and the ServiceSoft Subsidiaries are not a members of a
controlled group of corporations, within the meaning of Section 414(b)
of the Code, are not members of a group of trades or businesses under
common control, within the meaning of Section 414(c) of the Code, and
are not members of an affiliated service group, within the meaning of
Section 414(m) and (o) of the Code. ServiceSoft and the ServiceSoft
Subsidiaries do not contribute to, never have contributed to, and
never have been required to contribute to any multiemployer plan (as
defined in Section 3(37) of ERISA) and none of them has any liability
(including withdrawal liability as defined in Section 4201 of ERISA)
under any multiemployer plan.
(d) NO POST-EMPLOYMENT OBLIGATIONS - Except as set forth in subsection
4.15(d) of the ServiceSoft Disclosure Schedule, no ServiceSoft Benefit
Arrangement provides, or has any liability to provide, life insurance,
medical or other employee benefits to any employee upon his or her
retirement or termination of employment for any reason, except as may
be required by law, and neither ServiceSoft nor any of the ServiceSoft
Subsidiaries have ever represented, promised or contracted (whether in
oral or written form) to any employee (either individually or to
employees as a group) that such employee(s) would be provided with
life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required
by law.
(e) EMPLOYMENT MATTERS - ServiceSoft has delivered to Balisoft a complete
list of all current employees of ServiceSoft and the ServiceSoft
Subsidiaries and their position, gross remuneration and length of
employment. To the Knowledge of ServiceSoft, ServiceSoft and the
ServiceSoft Subsidiaries: (i) are in compliance in all material
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respects with all applicable foreign, federal and provincial laws,
rules and regulations respecting employment, employment practices,
terms and conditions of employment and wages and hours, in each case,
with respect to employees; (ii) have withheld all amounts required by
law or by agreement to be withheld from the wages, salaries and other
payments to employees; (iii) are not liable for any arrears of wages
or any Taxes or any penalty for failure to comply with any of the
foregoing; and (iv) except as required by applicable law, are not
liable for any payment to any trust or other fund or `to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits for employees
(other than routine payments to be made in the normal course of
business and consistent with past practice).
(f) LABOR - Except as set forth in subsection 4.15(f) of the ServiceSoft
Disclosure Schedule, neither ServiceSoft nor any of the ServiceSoft
Subsidiaries are involved in or threatened with any labor dispute,
grievance, litigation or claim relating to labor, occupational health
and safety or human rights matters involving any employee, including,
without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in liability having a
material adverse effect on ServiceSoft and the ServiceSoft
Subsidiaries, taken as a whole. Neither ServiceSoft nor any of the
ServiceSoft Subsidiaries have engaged in any unfair labor practices
which would, individually or in the aggregate, directly or indirectly
result in liability to ServiceSoft or any of the ServiceSoft
Subsidiaries. Except as set forth in subsection 4.15(f) of the
ServiceSoft Disclosure Schedule, neither ServiceSoft nor any of the
ServiceSoft Subsidiaries are presently, nor have they been in the
past, a party to, or bound by, any collective bargaining agreement or
union contract with respect to employees and no collective bargaining
agreement is being negotiated by ServiceSoft or any of the ServiceSoft
Subsidiaries or, to the Knowledge of ServiceSoft, is being organized
or is threatened.
4.16 INSURANCE - Section 4.16 of the ServiceSoft Disclosure Schedule lists all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of ServiceSoft and the
ServiceSoft Subsidiaries. Except as disclosed in Section 4.16 of the ServiceSoft
Disclosure Schedule such policies and bonds are sufficient in amount to allow
ServiceSoft or the ServiceSoft Subsidiaries (as applicable) to replace any of
its properties that might be damaged or destroyed. There is no claim by
ServiceSoft or any of the ServiceSoft Subsidiaries pending under any of such
policies or bonds as to which ServiceSoft or any of the ServiceSoft Subsidiaries
have received notice that coverage has been questioned, denied or disputed by
the underwriters of such policies or bonds. All premiums due and payable under
all such policies and bonds have been paid and ServiceSoft or the applicable
ServiceSoft Subsidiary are otherwise in material compliance with the terms of
such policies and bonds (or other policies and bonds providing substantially
similar insurance coverage). There is no threatened termination of, or material
premium increase with respect to, any of such policies.
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4.17 COMPLIANCE WITH LAWS - To the Knowledge of ServiceSoft, ServiceSoft and
each of the ServiceSoft Subsidiaries has complied with, are not in violation of,
and have not received any notices of violation with respect to, any foreign,
federal, provincial or local statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of their business, assets
or properties.
4.18 COMPLETE COPIES OF MATERIALS - ServiceSoft has delivered or made available
to Balisoft true and complete copies of each agreement, contract, commitment or
other document (or summaries of same) that is referred to in the ServiceSoft
Disclosure Schedule or that has been requested in writing by Balisoft or its
counsel.
4.19 REPRESENTATIONS COMPLETE - To the Knowledge of ServiceSoft, none of the
representations or warranties made herein by ServiceSoft or ServiceSoft Canada
(as modified by the ServiceSoft Disclosure Schedule), nor any statement made in
any Schedule or certificate furnished by ServiceSoft or ServiceSoft Canada
pursuant to this Agreement contains or will contain at the Closing Time, any
untrue statement of a material fact, or omits or will omit at the Closing Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.
4.20 DISCLOSURE SCHEDULE - The ServiceSoft Disclosure Schedule has been prepared
and executed by ServiceSoft and dated and delivered on the date of this
Agreement. ServiceSoft shall endeavor to disclose in the ServiceSoft Disclosure
Schedule each item of information in each separate section in which such item
may reasonably be required to be disclosed, provided, however, that any item of
information disclosed in any one section of the ServiceSoft Disclosure Schedule
may be cross-referenced in other relevant sections thereof for purposes of
disclosure under this Agreement.
ARTICLE 5
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 CONDUCT OF BUSINESS OF BALISOFT - During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Closing Time, Balisoft agrees (except to the extent that ServiceSoft
shall otherwise consent in writing), to carry on its business and the business
of the Balisoft Subsidiaries in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to pay its debts and
Taxes when due unless validly withheld, to pay or perform other obligations when
due, and, to the extent consistent with such business and except as agreed to by
ServiceSoft and Balisoft, use all reasonable efforts consistent with past
practice and policies to preserve intact the present business organization, keep
available the services of its present officers and key employees and preserve
their relationships with customers and others having business dealings with it,
all with the goal of preserving unimpaired Balisoft and the Balisoft
Subsidiaries' goodwill and ongoing businesses at the Closing Time. Balisoft
shall promptly notify ServiceSoft of any event or occurrence or emergency not in
the ordinary course of business of
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Balisoft or the Balisoft Subsidiaries, and any material event involving Balisoft
or the Balisoft Subsidiaries. Except as expressly contemplated by this
Agreement, Balisoft and the Balisoft Subsidiaries shall not, without the prior
written consent of ServiceSoft:
(a) Enter into any commitment or transaction not in the ordinary course of
business or any commitment or transaction of the type described in
Section o hereof;
(b) Transfer to any person or entity any rights to the Balisoft
Intellectual Property (other than such transfers effectuated in the
ordinary course of business);
(c) Enter into or amend any agreements not cancelable by Balisoft without
penalty on 90 days notice or less pursuant to which any other party is
granted exclusive marketing, distribution or similar rights with
respect to any products of Balisoft or any of the Balisoft
Subsidiaries;
(d) Amend, terminate or violate any distribution agreement or material
contract, agreement or license which Balisoft or any of the Balisoft
Subsidiaries are a party or by which either is bound other than
termination by Balisoft or any of the Balisoft Subsidiaries pursuant
to the terms thereof in the ordinary course of business and without
financial penalty to Balisoft or any of the Balisoft Subsidiaries;
(e) Commence any material litigation;
(f) Except as contemplated by the Balisoft Recapitalization, declare, set
aside or pay any dividends on or make any other distributions (whether
in cash, stock or property) in respect of any Balisoft Common Shares
or Balisoft Preferred Shares, or split, combine or reclassify any
Balisoft Common Shares or Balisoft Preferred Shares;
(g) Except for the issuance of Balisoft Common Shares or Balisoft
Preferred Shares upon exercise or conversion of presently outstanding
securities of Balisoft or the Balisoft Subsidiaries or otherwise in
connection with the Balisoft Recapitalization, issue, deliver or sell
or authorize or propose the issuance, delivery or sale of, or
purchase, propose the purchase of, repurchase, redeem or otherwise
acquire, directly or indirectly, any shares of capital stock or
securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, including those of any of the Balisoft Subsidiaries;
(h) Except in connection with the Balisoft Recapitalization or to
facilitate the closing of the transactions contemplated by this
Agreement, cause or permit any amendments to its or any of the
Balisoft Subsidiaries' Articles of Incorporation or Bylaws (or
comparable organizational documents);
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(i) Acquire or agree to acquire by merging, amalgamating or consolidating
with, or by purchasing any of the assets or equity securities of, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of Balisoft and the
Balisoft Subsidiaries, taken as a whole;
(j) Sell, lease, license or otherwise dispose of any of its or the
Balisoft Subsidiaries' properties or assets except in the ordinary
course of business;
(k) Incur any indebtedness for borrowed money (except with respect to
indebtedness incurred by Balisoft or any of the Balisoft Subsidiaries
in the ordinary course of business and under existing term loans or
revolving credit lines in an amount not more than $50,000) or
guarantee any such indebtedness or issue or sell any debt securities
of Balisoft or any of the Balisoft Subsidiaries or guarantee any debt
securities of others;
(l) Grant any severance or termination pay to, or accelerate any benefits
of, (i) any director or officer or (ii) any other employee except
payments made pursuant to written agreements outstanding on the date
hereof and disclosed in the Balisoft Disclosure Schedule;
(m) Adopt or amend any employee benefit plan, or enter into any employment
contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the salaries or
wage rates of its employees other than hirings and terminations in the
ordinary course of business and other than customary increases
associated with annual reviews scheduled during such period;
(n) Revalue any of its assets including, without limitation, writing down
the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business;
(o) Pay, discharge or satisfy, in an amount in excess of $10,000 (in any
one case) or $50,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of
liabilities in the ordinary course of business or liabilities
reflected or reserved against in the Balisoft Financial Statements (or
the notes thereto) or in connection with the Balisoft
Recapitalization;
(p) Make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes,
or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
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(q) Enter into any development, joint marketing or other strategic
arrangement or agreement except for such marketing agreements that are
(i) entered into in the ordinary course of business, (ii) do not
provide for the exclusive grant of any rights and (iii) terminable at
Balisoft's or the applicable Balisoft Subsidiary's option at any time
without the payment of any termination fees; or
(r) Take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1 (a) through (q) above, or any other action
that would prevent Balisoft from performing or cause Balisoft not to
perform the transactions contemplated herein or its covenants
hereunder.
5.2 CONDUCT OF BUSINESS OF SERVICESOFT - During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Time, ServiceSoft agrees (except to the extent that
Balisoft shall otherwise consent in writing), to carry on its business and the
business of the ServiceSoft Subsidiaries in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, to pay its
debts and Taxes when due unless validly withheld, to pay or perform other
obligations when due, and, to the extent consistent with such business and
except as agreed to by Balisoft and ServiceSoft, use all reasonable efforts
consistent with past practice and policies to preserve intact the present
business organization, keep available the services of its present officers and
key employees and preserve their relationships with customers and others having
business dealings with it, all with the goal of preserving unimpaired
ServiceSoft and the ServiceSoft Subsidiaries' goodwill and ongoing businesses at
the Closing Time. ServiceSoft shall promptly notify Balisoft of any event or
occurrence or emergency not in the ordinary course of business of ServiceSoft or
the ServiceSoft Subsidiaries, and any material event involving ServiceSoft or
the ServiceSoft Subsidiaries. Except as expressly contemplated by this
Agreement, ServiceSoft and the ServiceSoft Subsidiaries shall not, without the
prior written consent of Balisoft:
(a) Enter into any commitment or transaction not in the ordinary course of
business or any commitment or transaction of the type described in
Section __ hereof;
(b) Transfer to any person or entity any rights to the ServiceSoft
Intellectual Property (other than such transfers effectuated in the
ordinary course of business);
(c) Enter into or amend any agreements not cancelable by ServiceSoft
without penalty on 90 days notice or less pursuant to which any other
party is granted exclusive marketing, distribution or similar rights
with respect to any products of ServiceSoft or any of the ServiceSoft
Subsidiaries;
(d) Amend, terminate or violate any distribution agreement or material
contract, agreement or license which ServiceSoft or any of the
ServiceSoft Subsidiaries are a party or by which either is bound other
than termination by ServiceSoft or any of the
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ServiceSoft Subsidiaries pursuant to the terms thereof in the ordinary
course of business and without financial penalty to ServiceSoft or any
of the ServiceSoft Subsidiaries;
(e) Commence any material litigation;
(f) Except as contemplated by the ServiceSoft Recapitalization, declare,
set aside or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any ServiceSoft
Common Shares or ServiceSoft Preferred Shares, or split, combine or
reclassify any ServiceSoft Common Shares or ServiceSoft Preferred
Shares;
(g) Except for the issuance of ServiceSoft Common Shares or ServiceSoft
Preferred Shares upon exercise or conversion of presently outstanding
securities of ServiceSoft or the ServiceSoft Subsidiaries or otherwise
in connection with the ServiceSoft Recapitalization, issue, deliver or
sell or authorize or propose the issuance, delivery or sale of, or
purchase, propose the purchase of, repurchase, redeem or otherwise
acquire, directly or indirectly, any shares of capital stock or
securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, including those of any of the ServiceSoft Subsidiaries;
(h) Except in connection with the ServiceSoft Recapitalization or to
facilitate the closing of the transactions contemplated by this
Agreement, cause or permit any amendments to its or any of the
ServiceSoft Subsidiaries' Articles of Incorporation or Bylaws (or
comparable organizational documents);
(i) Acquire or agree to acquire by merging, amalgamating or consolidating
with, or by purchasing any of the assets or equity securities of, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of ServiceSoft and
the ServiceSoft Subsidiaries, taken as a whole;
(j) Sell, lease, license or otherwise dispose of any of its or the
ServiceSoft Subsidiaries' properties or assets except in the ordinary
course of business;
(k) Incur any indebtedness for borrowed money (except with respect to
indebtedness incurred by ServiceSoft or any of the ServiceSoft
Subsidiaries in the ordinary course of business and under existing
term loans or revolving credit lines in an amount not more than
$50,000) or guarantee any such indebtedness or issue or sell any debt
securities of ServiceSoft or any of the ServiceSoft Subsidiaries or
guarantee any debt securities of others;
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(1) Grant any severance or termination pay to, or accelerate any benefits
of, (i) any director or officer or (ii) any other employee except
payments made pursuant to written agreements outstanding on the date
hereof and disclosed in the ServiceSoft Disclosure Schedule;
(m) Adopt or amend any employee benefit plan, or enter into any employment
contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the salaries or
wage rates of its employees other than hirings and terminations in the
ordinary course of business and other than customary increases
associated with annual reviews scheduled during such period;
(n) Revalue any of its assets including, without limitation, writing down
the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business;
(o) Pay, discharge or satisfy, in an amount in excess of $10,000 (in any
one case) or $50,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of
liabilities in the ordinary course of business or liabilities
reflected or reserved against in the ServiceSoft Financial Statements
(or the notes thereto) or in connection with the ServiceSoft
Recapitalization;
(p) Make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes,
or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(q) Enter into any development, joint marketing or other strategic
arrangement or agreement except for such marketing agreements that are
(i) entered into in the ordinary course of business, (ii) do not
provide for the exclusive grant of any rights and (iii) terminable at
ServiceSoft's or the applicable ServiceSoft Subsidiary's option at any
time without the payment of any termination fees; or
(r) Take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1 (a) through (q) above, or any other action
that would prevent ServiceSoft from performing or cause ServiceSoft
not to perform the transactions contemplated herein or its covenants
hereunder.
5.3 NO SOLICITATION -
(a) Until the Closing Time or the date of termination of this Agreement
pursuant to the provisions of Section 10.1 hereof, as the case may be,
except with the written consent
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of ServiceSoft, Balisoft will not (nor will Balisoft permit any of
Balisoft's officers, directors, agents, representatives or affiliates
to) directly or indirectly, take any of the following actions with any
party other than ServiceSoft or its designees: (i) solicit, conduct
discussions with or engage in negotiations with any person, relating
to the possible acquisition by any person other than ServiceSoft of
any material portion of the business of Balisoft or the Balisoft
Subsidiaries (whether by way of reorganization, merger, purchase of
outstanding capital stock, purchase of assets or otherwise) or of any
portion of the capital stock of Balisoft or the Balisoft Subsidiaries
(an "ALTERNATIVE BALISOFT TRANSACTION"), (ii) provide information with
respect to it to any person, other than ServiceSoft, relating to or in
connection with an Alternative Balisoft Transaction, (iii) enter into
an agreement with any person, other than ServiceSoft, providing for an
Alternative Balisoft Transaction or (iv) make or authorize any
statement, recommendation or solicitation in support of an Alternative
Balisoft Transaction.
(b) Until the Closing Time or the date of termination of this Agreement
pursuant to the provisions of Section 10.1 hereof, as the case may be,
except with the written consent of Balisoft, ServiceSoft will not (nor
will ServiceSoft permit any of ServiceSoft's officers, directors,
agents, representatives or affiliates to) directly or indirectly, take
any of the following actions with any party other than Balisoft or its
designees: (i) solicit, conduct discussions with or engage in
negotiations with any person, relating to the possible acquisition by
any person other than Balisoft of any material portion of the business
of ServiceSoft or the ServiceSoft Subsidiaries (whether by way of
reorganization, merger, purchase of outstanding capital stock,
purchase of assets or otherwise) or of any portion of the capital
stock of ServiceSoft or the ServiceSoft Subsidiaries (an "ALTERNATIVE
SERVICESOFT TRANSACTION"), (ii) provide information with respect to it
to any person, other than Balisoft, relating to or in connection with
an Alternative ServiceSoft Transaction, (iii) enter into an agreement
with any person, other than Balisoft, providing for an Alternative
ServiceSoft Transaction or (iv) make or authorize any statement,
recommendation or solicitation in support of an Alternative
ServiceSoft Transaction.
(c) If, prior to the Closing Time or the termination of this Agreement,
Balisoft or ServiceSoft receives any bona fide offer or proposal
relating to any of the above, such party shall immediately notify the
other party thereof, including information as to the identity of the
party making any such offer or proposal and the specific terms of such
offer or proposal, as the case may be; PROVIDED, HOWEVER, that neither
party shall be required to notify the other of any contacts with
parties who have previously made offers to them where such parties
repeat such previously made offers, such previously made offers are
declined, and the parties have no further contact.
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ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 ACCESS TO INFORMATION -
(a) Balisoft shall afford ServiceSoft and its accountants, counsel and
other representatives, reasonable access during normal business hours
upon reasonable notice during the period prior to the Closing Time or
the termination of this Agreement to (a) all of Balisoft's and
Balisoft Subsidiaries' properties, books, contracts, commitments and
records, and (b) with the consent of Balisoft, which consent shall not
be unreasonably withheld, all other information concerning the
business, properties and personnel (subject to restrictions imposed by
applicable law) of Balisoft as ServiceSoft may reasonably request
including, without limitation, access upon reasonable request to
Balisoft's and Balisoft Subsidiaries' employees, customers and vendors
for due diligence inquiry. Balisoft agrees to provide to ServiceSoft
and its accountants, counsel and other representatives copies of
internal financial statements, business plans and projections promptly
upon request.
(b) ServiceSoft shall afford Balisoft and its accountants, counsel and
other representatives, reasonable access during normal business hours
upon reasonable notice during the period prior to the Closing Time or
the termination of this Agreement to (a) all of ServiceSoft's and
ServiceSoft Subsidiaries' properties, books, contracts, commitments
and records, and (b) with the consent of ServiceSoft, which consent
shall not be unreasonably withheld, all other information concerning
the business, properties and personnel (subject to restrictions
imposed by applicable law) of ServiceSoft as Balisoft may reasonably
request including, without limitation, access upon reasonable request
to ServiceSoft's and ServiceSoft Subsidiaries' employees, customers
and vendors for due diligence inquiry. ServiceSoft agrees to provide
to Balisoft and its accountants, counsel and other representatives
copies of internal financial statements, business plans and
projections promptly upon request.
(c) No information or knowledge obtained in any investigation pursuant to
this Section 6.1 or otherwise shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Amalgamation.
6.2 CONFIDENTIALITY - Each of the parties hereto hereby agrees to keep all
information or knowledge obtained in any investigation pursuant to Section 6.1,
or pursuant to the negotiation and execution of this Agreement or the completion
of the transactions contemplated hereby, confidential in accordance with the
terms of the confidentiality agreement executed by Balisoft and ServiceSoft on
November 12, 1998, (the "CONFIDENTIALITY AGREEMENT").
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6.3 EXPENSES -
(a) If the Amalgamation is not consummated Balisoft and ServiceSoft shall
each pay 50% of the fees and expenses of each party's legal counsel up
to a maximum of $50,000 (or such other amount as may be mutually
agreed) and all other fees and expenses incurred in connection with
the transactions contemplated by this Agreement including without
limitation, all additional legal fees, all accounting, financial
advisory, consulting and all other fees and expenses of third parties
incurred by Balisoft or ServiceSoft in connection with the negotiation
and completion of the terms and conditions of this Agreement and the
transactions contemplated hereby, shall be the obligation of the
respective party incurring such fees and expenses.
(b) If the Amalgamation is consummated, all reasonable legal, accounting,
similar third party fees and reasonable out-of-pocket expenses
associated with the transactions contemplated by this Agreement
incurred by Balisoft and ServiceSoft shall be paid by ServiceSoft.
6.4 PUBLIC DISCLOSURE - The parties hereto agree that they shall not make any
disclosure, by means of the issuance of any reports, statements, releases or
other public disclosure, or any other third party disclosure, relating to the
terms and conditions of this Agreement and the transactions contemplated hereby,
except in such form as may be mutually agreed or as may be required by
applicable law (provided that in such circumstances the disclosing party shall
use reasonable efforts to notify the other party in advance).
6.5 CONSENTS - Each of Balisoft and ServiceSoft shall promptly apply for or
otherwise seek, and use its best efforts to obtain, all consents and approvals
required to be obtained by it for the consummation of the Amalgamation, and
Balisoft shall use its best efforts to obtain all consents, waivers and
approvals under any of Balisoft's agreements, contracts, licenses or leases in
order to preserve the benefits thereunder for Amalco and otherwise in connection
with the Amalgamation.
6.6 LEGAL REQUIREMENTS - Subject to the terms and conditions provided in this
Agreement, each of the parties hereto shall use its reasonable best efforts to
take promptly, or cause to be taken, all reasonable actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings and to remove any injunctions
or other impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the purpose
of securing to the parties hereto the benefits contemplated by this Agreement.
6.7 NOTIFICATION OF CERTAIN MATTERS - Balisoft shall give prompt notice to
ServiceSoft, and ServiceSoft shall give prompt notice to Balisoft, of (i) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of
which may cause any representation or warranty of
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Balisoft on the one hand and ServiceSoft on the other hand contained in this
Agreement to be untrue or inaccurate at the Closing Time and (ii) any failure of
Balisoft or any of the Balisoft Subsidiaries or ServiceSoft or any of the
ServiceSoft Subsidiaries, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section 6.7 shall not limit or otherwise affect any remedies available to the
party receiving such notice.
6.8 EMPLOYEE BENEFIT ARRANGEMENTS - ServiceSoft agrees, from and after the
Closing Date, to cause Amalco to honor all obligations under the employment and
severance agreements to which Balisoft or the Balisoft Subsidiaries is presently
a party. Employees of Amalco immediately following the Closing Date who
immediately prior to the Closing Date were employees of Balisoft or the Balisoft
Subsidiaries shall be given credit for purposes of eligibility and vesting under
each employee benefit plan, program, policy or arrangement of ServiceSoft or
Amalco in which such employees participate subsequent to the Closing Date for
all service with Balisoft and the Balisoft Subsidiaries prior to the Closing
Date (to the extent such credit was given by Balisoft or the Balisoft
Subsidiaries) for purposes of eligibility and vesting.
6.9 FURTHER ASSURANCES - Each of the parties to this Agreement shall use its
best efforts to complete the transactions contemplated hereby and to fulfill or
cause to be fulfilled the conditions to closing under this Agreement. Each party
hereto, at the reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
ARTICLE 7
CONDITIONS TO THE AMALGAMATION
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE AMALGAMATION - The
respective obligations of each party to this Agreement to effect the
Amalgamation shall be subject to the satisfaction at or prior to the Closing
Time of the following conditions:
(a) CORPORATE APPROVALS - This Agreement and the Amalgamation (including
without limitation all issuances of ServiceSoft securities issuable
upon the Amalgamation and upon the exercise, conversion or exchange of
securities of ServiceSoft and Amalco issuable upon the Amalgamation
and including in respect of the ServiceSoft Escrow Fund) shall have
been approved and adopted by the shareholders of Balisoft, ServiceSoft
and ServiceSoft Canada, as required.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY - No temporary restraining
order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the
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Amalgamation or restricting the conduct or operations of the business
of Amalco or ServiceSoft shall be in effect, nor shall any proceeding
brought by a Governmental Entity, seeking any of the foregoing be
pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to
the Amalgamation, which makes the consummation of the Amalgamation
unlawful.
(c) GOVERNMENTAL APPROVAL - Each of Balisoft and ServiceSoft shall have
timely obtained from each Governmental Entity all approvals, waivers
and consents, if any, necessary for consummation of or in connection
with the Amalgamation and the transactions contemplated hereby.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF BALISOFT - The obligations of
Balisoft to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Time of each of the following conditions, any of which may be waived, in
writing, exclusively by Balisoft:
(a) ADDITIONAL SERVICESOFT AGREEMENTS - (i) Each of the agreements to be
entered into in accordance with Article 2 by ServiceSoft, ServiceSoft
Canada and the relevant shareholders of Balisoft and ServiceSoft shall
have been entered into and ServiceSoft shall have entered into an
Employment Agreement with ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as Chief Executive Officer of
ServiceSoft substantially in the form attached hereto as EXHIBIT H and
▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have executed the Employment Agreement Amendment
in the form attached hereto as EXHIBIT I (in each case effective upon
or immediately following Closing), all ServiceSoft Employee Options
issuable to the current employees of Balisoft shall have been
authorized and reserved for issuance and (conditional upon the
Closing) issued to the applicable Balisoft employees. (ii) The agreed
nominees of Balisoft shall have been appointed (effective upon the
Closing) to the ServiceSoft board of directors and all current members
of the ServiceSoft board of directors other than ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have resigned (effective upon the Closing) from
the ServiceSoft board of directors. (iii) ServiceSoft shall have
created the Special Common Voting Share and the Special Preferred
Voting Share in accordance with subsection 2.9(a).
(b) REPRESENTATIONS WARRANTIES AND COVENANTS - The representations and
warranties of ServiceSoft contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Time,
with the same force and effect as if made on the Effective Date
(except the extent expressly contemplated by this Agreement) and each
of ServiceSoft and ServiceSoft Canada shall have performed and
complied in all material respects with all covenants, obligations and
conditions of this Agreement required to be performed and complied
with by it as of the Closing Time.
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(c) CERTIFICATE OF SERVICESOFT - Balisoft shall have been provided with a
certificate executed on behalf of ServiceSoft by its President and its
Chief Financial Officer to the effect that, as of the Closing Time:
(i) all representations and warranties made by ServiceSoft and
ServiceSoft Canada under this Agreement are true and correct in all
material respects; and
(ii) all covenants, obligations and conditions of this Agreement to be
performed by ServiceSoft and ServiceSoft Canada on or before such date
have been so performed in all material respects.
(d) CLAIMS - There shall not have occurred any claims (whether asserted or
unasserted in litigation) which may materially and adversely affect
the consummation of the transactions contemplated hereby or the
business, assets (including intangible assets), financial condition or
results of operations of ServiceSoft and the ServiceSoft Subsidiaries,
taken as a whole.
(e) LITIGATION - There shall be no action, suit, claim or proceeding of
any nature pending, or overtly threatened, against ServiceSoft or the
ServiceSoft Subsidiaries, their respective properties or any of their
officers or directors, arising out of, or in any way connected with,
the Amalgamation or the other transactions contemplated by the terms
of this Agreement.
(f) THIRD PARTY CONSENTS - Balisoft shall have been furnished with
evidence reasonably satisfactory to it that ServiceSoft and the
ServiceSoft Subsidiaries have obtained all consents, approvals and
waivers as set forth in subsection 4.3(c) of the ServiceSoft
Disclosure Schedule.
(g) LEGAL OPINION - Balisoft shall have received from Land & ▇▇▇▇▇ counsel
to ServiceSoft, a legal opinion, dated the Closing Date, in such form
as shall be agreed by the parties, acting reasonably.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SERVICESOFT - The obligations
of ServiceSoft and ServiceSoft Canada to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing Time of each of the following conditions, any of which
may be waived, in writing, exclusively by ServiceSoft (on behalf of itself and
ServiceSoft Canada):
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS - The representations and
warranties of Balisoft contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Time as,
with the same force and effect as if made on the Effective Date
(except to the extent expressly contemplated in this Agreement) and
Balisoft shall have performed and complied in all material respects
with all
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covenants, obligations and conditions of this Agreement required to be
performed and complied with by it as of the Closing Time.
(b) CERTIFICATE OF BALISOFT - ServiceSoft shall have been provided with a
certificate executed on behalf of Balisoft by its Chief Executive
Officer and its President to the effect that, as of the Closing Time:
(i) all representations and warranties made by Balisoft in this
Agreement are true and correct in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement to be
performed by Balisoft on or before such date have been so performed in
all material respects.
(c) CLAIMS - There shall not have occurred any claims (whether asserted or
unasserted in litigation) which may materially and adversely affect
the consummation of the transactions contemplated hereby or the
business, assets (including intangible assets), financial condition or
results of operations of Balisoft and the Balisoft Subsidiaries, taken
as a whole.
(d) LITIGATION - There shall be no action, suit, claim or proceeding of
any nature pending, or overtly threatened, against Balisoft or the
Balisoft Subsidiaries, their respective properties or any of their
officers or directors, arising out of, or in any way connected with,
the Amalgamation or the other transactions contemplated by the terms
of this Agreement.
(e) THIRD PARTY CONSENTS - ServiceSoft shall have been furnished with
evidence reasonably satisfactory to it that Balisoft has obtained all
consents, approvals and waivers as set forth in subsection 3.3(c) of
the Balisoft Disclosure Schedule.
(f) LEGAL OPINION - ServiceSoft shall have received from Osler, ▇▇▇▇▇▇ &
Harcourt, counsel to Balisoft, a legal opinion, dated the Closing
Date, in such form as shall be agreed by the parties, acting
reasonably.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES - All covenants to be performed
by Balisoft, ServiceSoft and ServiceSoft Canada prior to the Closing Time, and
all representations and warranties of Balisoft, ServiceSoft and ServiceSoft
Canada set forth in this Agreement or in any instrument delivered pursuant to
this Agreement, shall survive until the Escrow Release Date (as defined below)
following which they shall expire. Notwithstanding the foregoing, nothing
contained in this Section 8.1 shall preclude a party from bringing an action for
fraud at any time.
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8.2 ESCROW ARRANGEMENTS -
(a) BALISOFT ESCROW FUND - As soon as practicable after the Closing Time,
that number of Exchangeable Shares (which may include Gemini Shares
having rights to acquire Exchangeable Shares) comprising the Balisoft
Escrow Amount will be deposited by Amalco, without any act of any
holder of Exchangeable Shares, with an independent trust company in
Toronto acceptable to the Balisoft Agent and the ServiceSoft Agent
(each as defined below) as escrow agent (the "ESCROW AGENT"), such
deposit to constitute an escrow fund (the "BALISOFT ESCROW FUND") to
be governed by the terms set forth herein. The Balisoft Escrow Amount
contributed on behalf of each registered holder of Exchangeable Shares
(or Gemini Shares having rights to acquire Exchangeable Shares) shall
be a fraction of the total Balisoft Escrow Amount equal to such
holder's proportional holdings of the total number of Exchangeable
Shares (calculated assuming the exchange of all Gemini Shares for
Exchangeable Preferred Shares) (and in respect of registered holders
of both Exchangeable Common Shares and Exchangeable Preferred Shares,
in proportion to their respective holdings of Exchangeable Shares of
each such class) and shall be deducted from the number of Exchangeable
Shares which such holder of Balisoft Common Shares or Balisoft
Preferred Shares, as applicable, would otherwise be entitled to
receive pursuant to Section 2.7. A list of the respective Balisoft
Escrow Amounts contributed by each registered holder of Exchangeable
Shares (or Gemini Shares) shall be provided to the Escrow Agent. The
Escrow Agent shall act as agent for each registered holder of
Exchangeable Shares held in the Balisoft Escrow Fund, and shall be
authorized to hold or deal with such Exchangeable Shares on behalf of
their registered holders as instructed by them, subject to the terms
of this Agreement. The Balisoft Escrow Amount deposited in the
Balisoft Escrow Fund shall be used effectively to reduce the
consideration deliverable to the Balisoft Shareholders in the event of
any reduction to the Balisoft Value as of the Closing Date determined
on or prior to the Escrow Release Date in accordance with the terms of
this Article 8.
(b) SERVICESOFT ESCROW FUND - Concurrent with the delivery of Exchangeable
Shares to the Escrow Agent to create the Balisoft Escrow Fund in
accordance with subsection 8.2(a), ServiceSoft shall deliver all of
the ServiceSoft Series H Preferred Shares distributed to shareholders
of ServiceSoft pursuant to the stock dividend referred to in
subsection 2.2(d) representing that number of ServiceSoft Series H
Preferred Shares comprising the ServiceSoft Escrow Amount to the
Escrow Agent to constitute an escrow fund (the "SERVICESOFT ESCROW
FUND") to be governed by the terms set forth herein. The ServiceSoft
Escrow Amount deposited in respect of each registered holder of
ServiceSoft Series H Preferred Shares shall be a fraction of the total
ServiceSoft Escrow Amount equal to such holder's proportional holdings
of the total number of ServiceSoft Series H Preferred Shares. A list
of the respective ServiceSoft Escrow Amounts allocated to each
registered holder of ServiceSoft Series H
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Preferred Shares shall be provided to the Escrow Agent. The Escrow
Agent shall act as agent for each registered holder of ServiceSoft
Series H Preferred Shares held in the ServiceSoft Escrow Fund, and
shall be authorized to hold or deal with such ServiceSoft Series H
Preferred Shares on behalf of their registered holders as instructed
by them, subject to the terms of this Agreement. The ServiceSoft
Escrow Amount deposited in the ServiceSoft Escrow Fund shall be used
effectively to allocate to the ServiceSoft Shareholders any reduction
to the ServiceSoft Value as of the Closing Date determined on or prior
to the Escrow Release Date in accordance with the terms of this
Article 8.
(c) LOSSES ARISING FROM BALISOFT MISREPRESENTATIONS - In the event of any
claim, loss, expense, liability or other damage, including reasonable
attorneys' fees, to the extent of the amount of such claim, loss,
expense, liability or other damage ("Losses") that ServiceSoft or any
of its affiliates have incurred prior to the Escrow Release Date by
reason of the breach by Balisoft of any representation, warranty,
covenant or agreement of Balisoft contained in this Agreement, in
respect of which Losses a Confirmation Certificate has been delivered
or deemed to have been delivered by the Balisoft Agent as provided
below, the Balisoft Value and the Balisoft Exchange Ratio shall be
reduced subject to and in accordance with the terms of subsection
8.2(h) below. ServiceSoft and Balisoft each acknowledge that such
Losses, if any, shall be deemed to relate to unresolved contingencies
existing at the Closing Time which, if resolved at the Closing Time,
would have led to a reduction in the Balisoft Value and the Balisoft
Exchange Ratio and a corresponding adjustment to the number of Class A
Shares and Class B Shares of Amalco delivered to shareholders of
Balisoft on the Amalgamation. Nothing herein shall limit the liability
of Balisoft for any breach of any covenant, or any willful breach of
any representation or warranty, if the Amalgamation does not close.
(d) LOSSES ARISING FROM SERVICESOFT MISREPRESENTATION - In the event of
any Losses that ServiceSoft or any of its affiliates have incurred
prior to the Escrow Release Date by reason of the breach by
ServiceSoft of any representation, warranty, covenant or agreement of
ServiceSoft contained in this Agreement, in respect of which Losses a
Confirmation Certificate has been delivered or deemed to have been
delivered by the ServiceSoft Agent as provided below, the ServiceSoft
Value shall be reduced, subject to and in accordance with the terms of
subsection 8.2(h) below. ServiceSoft and Balisoft each acknowledge
that such Losses, if any, shall be deemed to relate to unresolved
contingencies existing at the Closing Time which, if resolved at the
Closing Time, would have led to a reduction in the ServiceSoft Value
and an increase to the Balisoft Exchange Ratio and a corresponding
adjustment to the number of Class A Shares and Class B Shares of
Amalco delivered to shareholders of Balisoft on the Amalgamation and
for which the Balisoft Shareholders may be compensated by a
corresponding reduction in the number of ServiceSoft Series H
Preferred Shares held by the current shareholders of ServiceSoft.
Nothing herein shall limit the
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liability of ServiceSoft for any breach of any covenant, or any
willful breach of any representation or warranty, if the Amalgamation
does not close.
(e) ESCROW CLAIM FOR BALISOFT MISREPRESENTATION - At any time prior to the
Escrow Release Date, the ServiceSoft Agent may deliver to the Escrow
Agent a certificate (an "ESCROW CLAIM CERTIFICATE") signed by the
ServiceSoft Agent: (A) stating that ServiceSoft has paid or properly
accrued or reasonably anticipates that it will have to pay or accrue
Losses by reason of the breach by Balisoft of any representation,
warranty, covenant or agreement of Balisoft contained in this
Agreement, and (B) specifying in reasonable detail the individual
items of Losses included in the amount so stated, the date each such
item was paid or properly accrued, or the basis for such anticipated
liability, and the nature of the misrepresentation, breach of warranty
or claim to which such item is related. At the time of delivery of any
Escrow Claim Certificate to the Escrow Agent by the ServiceSoft Agent,
a duplicate copy of such Escrow Claim Certificate shall be delivered
to the Balisoft Agent. At any time following receipt of any such
Escrow Claim Certificate, the Balisoft Agent may sign and deliver to
the Escrow Agent and the ServiceSoft Agent a certificate confirming
such Losses (a "CONFIRMATION CERTIFICATE"). In the event that the
Balisoft Agent wishes to dispute the claim contained in the Escrow
Claim Certificate, it shall deliver a notice to the Escrow Agent and
the ServiceSoft Agent prior to the expiration of the 30 day period
beginning on the date of the Escrow Claim Certificate indicating its
objection thereto (an "OBJECTION NOTICE"). If the Escrow Agent and the
ServiceSoft Agent have not received an Objection Notice prior to the
expiration of such 30 day period, the Balisoft Agent shall be deemed
to have delivered a Confirmation Certificate on the last date of such
period in respect of the applicable Escrow Claim Certificate.
(f) ESCROW CLAIM FOR SERVICESOFT MISREPRESENTATION - At any time prior to
the Escrow Release Date, the Balisoft Agent may deliver to the Escrow
Agent an Escrow Claim Certificate signed by the Balisoft Agent: (A)
stating that ServiceSoft has paid or properly accrued or reasonably
anticipates that it will have to pay or accrue Losses by reason of the
breach by ServiceSoft of any representation, warranty, covenant or
agreement of ServiceSoft contained in this Agreement, and (B)
specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid or
properly accrued, or the basis for such anticipated liability, and the
nature of the misrepresentation, breach of warranty or claim to which
such item is related. At the time of delivery of any Escrow Claim
Certificate to the Escrow Agent by the Balisoft Agent, a duplicate
copy of such Escrow Claim Certificate shall be delivered to the
ServiceSoft Agent. At any time following receipt of any such Escrow
Claim Certificate, the ServiceSoft Agent may sign and deliver to the
Escrow Agent and the Balisoft Agent a Confirmation Certificate
confirming such Losses. In the event that the ServiceSoft Agent wishes
to dispute the claim contained in the Escrow Claim Certificate, it
shall deliver an Objection Notice to the
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Escrow Agent and the Balisoft Agent prior to the expiration of the 30
day period beginning on the date of the Escrow Claim Certificate
indicating its objection thereto. If the Escrow Agent and the Balisoft
Agent have not received an Objection Notice prior to the expiration of
such 30 day period, the ServiceSoft Agent shall be deemed to have
delivered a Confirmation Certificate on the last date of such period
in respect of the applicable Escrow Claim Certificate.
(g) RESOLUTION OF CONFLICTS, ARBITRATION -
(i) In the event that any Objection Notice is delivered in response to
any Escrow Claim Certificate, the Balisoft Agent and the ServiceSoft
Agent shall attempt in good faith to resolve the dispute and agree
upon an appropriate amount to settle the outstanding claim. If such an
agreement is reached, the Balisoft Agent and the ServiceSoft Agent
shall each sign a Confirmation Certificate setting out the agreed
amount of the Loss (which may be less than the amount set out in the
Escrow Claim Certificate and may be equal to zero) and promptly
deliver a copy of such Confirmation Certificate to the Escrow Agent.
(ii) If no such agreement can be reached within 30 days of the date of
the Objection Notice, either the Balisoft Agent or the ServiceSoft
Agent may demand arbitration of the matter by written notice to the
other. Upon any such arbitration demand, the outstanding dispute shall
be settled by arbitration conducted by three arbitrators. The Balisoft
Agent and the ServiceSoft Agent shall each select one arbitrator
within 15 days of the arbitration demand notice date, and the two
arbitrators so selected shall select a third arbitrator (and any party
failing to name an arbitrator within such 15 day period shall forfeit
its right to do so). The arbitrators shall set a limited time period
and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the
sole judgement of the arbitrators, to discover relevant information
from the opposing parties about the subject matter of the dispute. The
arbitrators shall rule upon motions to compel or limit discovery and
shall have the authority to impose sanctions, including attorneys fees
and costs, to the same extent as a court of competent law or equity,
should the arbitrators determine that discovery was sought without
substantial justification or that discovery was refused or objected to
without substantial justification. Unless otherwise agreed by both the
Balisoft Agent and the ServiceSoft Agent, the arbitration proceedings
shall be conducted in such a manner so as to provide for a final
decision within not more than 60 days from the date of the arbitration
demand notice. The decision of a majority of the three arbitrators as
to the validity and amount of any claim in such arbitration award
shall be binding and conclusive upon the parties to this Agreement.
Such decision shall be written and shall be supported by written
findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrators. The Balisoft
Agent and the ServiceSoft Agent shall each sign a Confirmation
Certificate setting out the
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final amount of the Loss as determined by such arbitration and
promptly provide a copy of such Confirmation Certificate to the Escrow
Agent.
(iii) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration
initiated by the Balisoft Agent shall be held in Toronto, Ontario and
any such arbitration initiated by the ServiceSoft Agent shall be held
in Boston, Massachusetts and all such arbitrations shall be held in
accordance with the provisions of the Arbitration Act (Ontario). The
arbitrators may in their discretion determine whether the fees and
expenses of the arbitration, including without limitation the fees of
each arbitrator and the reasonable fees and expenses of legal counsel,
shall form part of their award (and thereby be, in effect, charged to
one side of the dispute) or be paid by ServiceSoft.
(h) ESCROW RELEASE -
(i) On the Escrow Release Date, the Escrow Agent shall calculate the
totals for all Losses for which it has received or is deemed to have
received a Confirmation Certificate ("CONFIRMED LOSSES"), as provided
below. If the Escrow Agent has received any Confirmation Certificate
signed by both the Balisoft Agent and the ServiceSoft Agent showing a
Loss amount that is different from the amount in the corresponding
Escrow Claim Certificate, the amount of the corresponding Confirmed
Loss shall be the amount of the Loss specified in such Confirmation
Certificate.
(ii) Release of Balisoft Escrow Fund -
(A) The Escrow Agent shall calculate the sum of all Confirmed
Losses arising from Escrow Claim Certificates provided by
ServiceSoft (the "TOTAL SERVICESOFT CLAIM"). The Escrow
Agent shall then subtract US $l00,000 from the Total
ServiceSoft Claim and calculate 35% of any resulting
positive balance to determine the final amount of the claim
against Balisoft up to a maximum of US $2,147,727
representing 20% of the initial Balisoft Value (the "FINAL
BALISOFT ADJUSTMENT").
(B) If the Final Balisoft Adjustment is zero (or a negative
amount), then no adjustment shall be made to the Balisoft
Value or the Balisoft Exchange Ratio and the Escrow Agent
shall promptly release all Exchangeable Shares held in the
Balisoft Escrow Fund from escrow and deliver the
certificates representing all such Exchangeable Shares to
the registered holders thereof.
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(C) If the Final Balisoft Adjustment is greater than zero, (1)
the Balisoft Value shall be deemed to be reduced by the
amount of such Final Balisoft Adjustment, and (2) the
Balisoft Exchange Ratio shall be reduced by multiplying it
by a fraction equal to the adjusted Balisoft Value in
accordance with clause (1) divided by the initial Balisoft
Value prior to such adjustment. The Escrow Agent shall
calculate the number of Exchangeable Shares (assuming the
exchange of any Gemini Shares held in the Balisoft Escrow
Fund for Exchangeable Preferred Shares) represented by the
Final Balisoft Adjustment (the "BALISOFT ADJUSTMENT NUMBER")
as the quotient obtained by dividing the Final Balisoft
Adjustment by the fair market value of the Exchangeable
Shares on the date hereof which is equal to US $2.00. The
Escrow Agent shall extract a number of Exchangeable Shares
(and any proportionate number of Gemini Shares) equal to the
Balisoft Adjustment Number from the Balisoft Escrow Fund and
return all such Exchangeable Shares to Amalco for
cancellation and all such returned Exchangeable Shares shall
promptly be canceled by Amalco (and Amalco shall cause any
such returned Gemini Shares to be cancelled by Balisoft
Israel). The Escrow Agent shall promptly release the balance
of the Exchangeable Shares (and any Gemini Shares) remaining
in the Balisoft Escrow Fund from escrow and deliver the
certificates representing all such Exchangeable Shares to
the registered holders thereof.
(iii) Release of ServiceSoft Escrow Fund -
(A) The Escrow Agent shall calculate the sum of all Confirmed
Losses arising from Escrow Claim Certificates provided by
Balisoft (the "TOTAL BALISOFT CLAIM"). The Escrow Agent
shall then subtract US $100,000 from the Total Balisoft
Claim and calculate 35% of any resulting positive balance to
determine the final amount of the claim against ServiceSoft
up to a maximum of US $3,625,000 representing 20% of the
initial ServiceSoft Value (the "FINAL SERVICESOFT
ADJUSTMENT").
(B) If the Final ServiceSoft Adjustment is zero (or a negative
amount), then no adjustment shall be made to the ServiceSoft
Value and the Escrow Agent shall promptly release all
ServiceSoft Series H Preferred Shares held in the
ServiceSoft Escrow Fund from escrow and deliver the
certificates representing all such ServiceSoft Series H
Preferred Shares to the registered holders thereof.
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(C) If the Final ServiceSoft Adjustment is greater than zero,
the ServiceSoft Value shall be deemed to be reduced by the
amount of such Final ServiceSoft Adjustment. The Escrow
Agent shall calculate the number of ServiceSoft Series H
Preferred Shares represented by the Final ServiceSoft
Adjustment (the "SERVICESOFT ADJUSTMENT NUMBER") as the
quotient obtained by dividing the Final ServiceSoft
Adjustment by the fair market value of the ServiceSoft
Series H Preferred Shares on the date hereof which is equal
to US $2.00. The Escrow Agent shall extract a number of
ServiceSoft Series H Preferred Shares equal to the
ServiceSoft Adjustment Number from the ServiceSoft Escrow
Fund and return all such ServiceSoft Series H Preferred
Shares to ServiceSoft for cancellation and all such returned
ServiceSoft Series H Preferred Shares shall promptly be
cancelled by ServiceSoft. The Escrow Agent shall promptly
release the balance of the ServiceSoft Series H Preferred
Shares remaining in the ServiceSoft Escrow Fund from escrow
and deliver the certificates representing all such
ServiceSoft Series H Preferred Shares to the registered
holders thereof.
(iv) All calculations, extractions and distributions in respect of the
Balisoft Escrow Fund and the ServiceSoft Escrow Fund shall be
determined by the Escrow Agent in respect of each individual
shareholder as nearly as possible in proportion to the number of
Exchangeable Shares registered in its name in Balisoft Escrow Fund and
the ServiceSoft Escrow Fund, as applicable, and for those shareholders
holding both Exchangeable Common Shares and Exchangeable Preferred
Shares, in proportion to their respective holdings of each such class
of Exchangeable Shares.
(i) ESCROW RELEASE DATE -
(i) Subject to the requirements set forth in this subsection 8.2(i),
the Balisoft Escrow Fund and the ServiceSoft Escrow Fund shall each
remain in existence immediately following the Closing Time and shall
terminate at 5:00 p.m., Toronto Time on the Escrow Release Date (as
defined below). As used herein "ESCROW RELEASE DATE" shall mean the
earlier of (i) the date 60 days after the date of delivery by
ServiceSoft's independent auditors to ServiceSoft of signed, audited
consolidated financial statements for the ServiceSoft fiscal year
ended December 31, 1999, (ii) April 1, 2000.
(ii) In the event that ServiceSoft proposes (as evidenced by a
resolution of the ServiceSoft board of directors) to complete an
initial public offering of ServiceSoft Common Shares, a sale of all of
the outstanding shares or all or substantially all of the assets of
ServiceSoft to, or a merger or other business combination with, an
arm's length third party (any of such proposed transactions, an
"ACCELERATION
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TRANSACTION"), ServiceSoft shall promptly provide written notice (the
"ESCROW ACCELERATION NOTICE") to the Balisoft Agent and the
ServiceSoft Agent thereof. In such circumstances, the ServiceSoft
board of directors shall have the discretion to accelerate the Escrow
Release Date to a date not less than 45 days from the date of the
Escrow Acceleration Notice. The Escrow Acceleration Notice shall
include the expected closing date of the Acceleration Transaction and
the proposed new Escrow Release Date. In the event that a binding
agreement in respect of the Acceleration Transaction (or a
substantially similar transaction) is not executed within 60 days of
the Escrow Acceleration Notice, the Escrow Acceleration Notice shall
be null and void and the Escrow Release Date shall remain unchanged
(unless otherwise agreed by the Balisoft Agent and the ServiceSoft
Agent); otherwise the Escrow Release Date shall be accelerated to the
date proposed by ServiceSoft in the Escrow Acceleration Notice.
(iii) If on any scheduled Escrow Release Date there shall remain any
unresolved claims represented by Escrow Claim Certificates which have
been delivered where no corresponding Confirmation Certificate has
been delivered or is deemed to have been delivered, the Escrow Release
Date shall be extended as required until the date of delivery or
deemed delivery of such Confirmation Certificate; provided, however,
that no new Escrow Claim Certificate shall be delivered by the
Balisoft Agent or the ServiceSoft Agent following the initially
scheduled Escrow Release Date.
(iv) ServiceSoft shall notify the Escrow Agent in writing of the
establishment of the Escrow Release Date, and of any acceleration or
extension thereof in accordance with this subsection 8.2(i). In the
event of any acceleration of the Escrow Release Date pursuant to
clause 8.2(i)(ii) above, the Escrow Agent shall not make any
deliveries of Exchangeable Share certificates until it has received
written notice from ServiceSoft of the execution of a binding
agreement by ServiceSoft in respect of the relevant Acceleration
Transaction (unless directed otherwise in a certificate signed by both
the Balisoft Agent and the ServiceSoft Agent).
(j) STATUS OF ESCROW FUNDS -
(i) The Escrow Agent shall hold and safeguard the Balisoft Escrow Fund
and the ServiceSoft Escrow Fund as agent for and on behalf of their
registered holders in accordance with the terms of this Agreement
during the period that each escrow fund remains in existence, and
shall hold and dispose of the Exchangeable Shares comprising the
Balisoft Escrow Fund and the ServiceSoft Escrow Fund only in
accordance with the terms hereof. The registered holders of the
Exchangeable Shares held in the Balisoft Escrow Fund shall be treated
as the owners of the Balisoft Escrow Fund for all purposes, subject to
the terms of this Agreement. The registered holders of the ServiceSoft
Shares held in the ServiceSoft Escrow Fund shall be
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treated as the owners of the ServiceSoft Escrow Fund for all purposes,
subject to the terms of this Agreement.
(ii) Any Exchangeable Shares or other equity securities issued or
distributed in respect of the Exchangeable Shares and any ServiceSoft
Shares or other equity securities issued or distributed in respect of
the ServiceSoft Shares (including in each case shares issued upon a
stock split) (collectively, "NEW SHARES") then held in either the
Balisoft Escrow Fund or the ServiceSoft Escrow Fund shall be added
thereto and shall remain held in escrow therein for all purposes of
this Article 8 until the Escrow Release Date. All cash dividends, if
any, paid on Exchangeable Shares or ServiceSoft Shares, shall be paid
on all Exchangeable Shares held in the Balisoft Escrow Fund or
ServiceSoft Shares held in the ServiceSoft Escrow Fund and shall
remain held in escrow therein in accordance with this Article 8 until
the Escrow Release Date.
(iii) Each registered holder of Exchangeable Shares held in the
Balisoft Escrow Fund shall have all voting and other contractual
rights with respect to such Exchangeable Shares (and any New Shares
having voting rights) for so long as such Exchangeable Shares or other
voting securities are held in the Balisoft Escrow Fund, except to the
extent that the Balisoft Agent and the ServiceSoft Agent otherwise
agree in writing.
(iv) Each registered holder of ServiceSoft Shares held in the
ServiceSoft Escrow Fund shall have all voting and other contractual
rights with respect to such ServiceSoft Shares (and any New Shares
having voting rights) for so long as such ServiceSoft Shares or other
voting securities are held in the ServiceSoft Escrow Fund, except to
the extent that the Balisoft Agent and the ServiceSoft Agent otherwise
agree in writing.
(v) None of the Exchangeable Shares held in the Balisoft Escrow Fund
shall be exchanged for ServiceSoft Common Shares or ServiceSoft
Preferred Shares prior to the Escrow Release Date, except to the
extent that the Balisoft Agent and the ServiceSoft Agent agree in
writing, in their discretion, provided that in such event the
ServiceSoft Common Shares or ServiceSoft Preferred Shares, as
applicable, issued in respect of such Exchangeable Shares shall be
placed into escrow in the Balisoft Escrow Fund, as applicable, under
the terms and conditions hereof. A copy of any such agreement shall be
delivered to the Escrow Agent directing it as to any such exchange.
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(k) BALISOFT AGENT -
(i) In the event that the Amalgamation is approved by the Balisoft
shareholders, effective upon the Closing, and without any further act
of any Balisoft shareholder, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be appointed as
agent and attorney-in-fact (the "BALISOFT AGENT") for each registered
holder of Exchangeable Shares held in the Balisoft Escrow Fund and the
ServiceSoft Escrow Fund, to give and receive notices and
communications, to authorize delivery to Amalco of Exchangeable Shares
from the Balisoft Escrow Fund or the ServiceSoft Escrow Fund in
satisfaction of claims by ServiceSoft, to object to such deliveries,
to agree to, negotiate, enter into settlements and compromises of, and
demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of the Balisoft Agent for the
accomplishment of the foregoing. Such agency may be changed by the
registered holders of such Exchangeable Shares from time to time upon
not less than 30 days prior written notice to ServiceSoft and the
Escrow Agent; provided that the Balisoft Agent may not be removed
unless holders of a two-thirds interest of the Balisoft Escrow Fund
agree to such removal and to the identity of the substituted agent.
The Balisoft Agent may resign from such agency at any time upon
written notice to ServiceSoft and the Escrow Agent, whereupon holders
of not less than a two-thirds interest in the Balisoft Escrow Fund
shall promptly appoint a replacement Balisoft Agent and shall notify
ServiceSoft and the Escrow Agent in writing of any replacement
Balisoft Agent. No bond shall be required of the Balisoft Agent, and
the Balisoft Agent shall not receive compensation for his or her
services. Notices or communications to or from the Balisoft Agent
shall constitute notice to or from each of the registered holders of
Exchangeable Shares held in the Balisoft Escrow Fund and the
ServiceSoft Escrow Fund.
(ii) The Balisoft Agent shall not be liable for any act done or
omitted hereunder as Balisoft Agent except to the extent the Balisoft
Agent acts in bad faith or is grossly negligent. ServiceSoft shall
indemnify the Balisoft Agent and hold the Balisoft Agent harmless
against any loss, liability or expense incurred without negligence or
bad faith on the part of the Balisoft Agent and arising out of or in
connection with the acceptance or administration of the Balisoft
Agent's duties hereunder, including the reasonable fees and expenses
of any legal counsel retained by the Balisoft Agent. The Balisoft
Agent shall be entitled to recover from ServiceSoft all expenses,
including reasonable fees and expenses of any such legal counsel,
incurred by the Balisoft Agent in connection with the acceptance or
administration of the Balisoft Agent's duties hereunder.
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(iii) A decision, act, consent or instruction of the Balisoft Agent
shall constitute a decision of all the registered holders of
Exchangeable Shares held in the Balisoft Escrow Fund and the
ServiceSoft Escrow Fund and shall be final, binding and conclusive
upon each of such shareholders, and the Escrow Agent, the ServiceSoft
Agent, ServiceSoft and Amalco may rely upon and shall be fully
protected in relying upon any such decision, act, consent or
instruction of the Balisoft Agent as being the decision, act, consent
or instruction of each and every such shareholder. The Escrow Agent,
the ServiceSoft Agent, ServiceSoft and Amalco are hereby relieved from
any liability to any person for any acts done by them in accordance
with such decision, act, consent or instruction of the Balisoft Agent.
(1) SERVICESOFT AGENT -
(i) Effective upon the Closing, and without any further act of
ServiceSoft or Amalco, ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be appointed as agent and
attorney-in-fact (the "SERVICESOFT AGENT") for ServiceSoft and for
Amalco in respect of all matters relating to the disposition of
Exchangeable Shares held in the Balisoft Escrow Fund and the
ServiceSoft Escrow Fund, to give and receive notices and
communications, to authorize delivery of Exchangeable Shares held in
the Balisoft Escrow Fund or the ServiceSoft Escrow Fund to the
registered holders thereof in satisfaction of claims by Balisoft, to
object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the
judgment of the ServiceSoft Agent for the accomplishment of the
foregoing. Such agency may be changed by the ServiceSoft board of
directors from time to time upon not less than 30 days prior written
notice to the Balisoft Agent and the Escrow Agent, which notice shall
identify the replacement ServiceSoft Agent. The ServiceSoft Agent may
resign from such agency at any time upon written notice to the
Balisoft Agent and the Escrow Agent, whereupon the ServiceSoft board
of directors shall promptly appoint a replacement ServiceSoft Agent
and shall notify the Balisoft Agent and the Escrow Agent in writing of
any replacement ServiceSoft Agent. No bond shall be required of the
ServiceSoft Agent, and the ServiceSoft Agent shall not receive
compensation for his or her services. Notices or communications to or
from the ServiceSoft Agent shall constitute notice to or from
ServiceSoft and Amalco.
(ii) The ServiceSoft Agent shall not be liable for any act done or
omitted hereunder as ServiceSoft Agent except to the extent the
ServiceSoft Agent acts in bad faith or is grossly negligent.
ServiceSoft shall indemnify the ServiceSoft Agent and hold the
ServiceSoft Agent harmless against any loss, liability or expense
incurred without negligence or bad faith on the part of the
ServiceSoft Agent and arising out of or in connection with the
acceptance or administration of the
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ServiceSoft Agent's duties hereunder, including the reasonable fees
and expenses of any legal counsel retained by the ServiceSoft Agent.
The ServiceSoft Agent shall be entitled to recover from ServiceSoft
all expenses, including reasonable fees and expenses of any such legal
counsel, incurred by the ServiceSoft Agent in connection with the
acceptance or administration of the ServiceSoft Agent's duties
hereunder.
(iii) A decision, act, consent or instruction of the ServiceSoft Agent
shall constitute a decision of ServiceSoft and Amalco and shall be
final, binding and conclusive upon each of them, and the Escrow Agent,
the Balisoft Agent ServiceSoft and Amalco may rely upon and shall be
fully protected in relying upon any such decision, act, consent or
instruction of the ServiceSoft Agent as being the decision, act,
consent or instruction of ServiceSoft and Amalco. The Escrow Agent,
the Balisoft Agent, ServiceSoft and Amalco are hereby relieved from
any liability to any person for any acts done by them in accordance
with such decision, act, consent or instruction of the ServiceSoft
Agent.
(m) ESCROW AGENT'S DUTIES -
(i) The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth in this Article 8, and as
set forth in any additional written escrow instructions which the
Escrow Agent may receive after the date of this Agreement which are
signed by the Balisoft Agent and the ServiceSoft Agent, and no implied
duties or obligations shall be read into this Agreement against the
Escrow Agent. The Escrow Agent may rely and shall be protected in
relying or refraining from acting on any instrument, instruction,
notice or other document reasonably believed to be genuine and to have
been signed or presented by the proper party or parties. The Escrow
Agent shall not be liable for any act done or omitted hereunder as
Escrow Agent while acting in good faith and in the exercise of
reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to disregard any
and all warnings of judicial proceedings or similar actions given by
any of the parties hereto or by any other person, excepting only
orders or process of courts of law, and is hereby expressly authorized
to comply with and obey orders, judgments or decrees of any court. In
case the Escrow Agent obeys or complies with any such order, judgment
or decree of any court, the Escrow Agent shall not be liable to any of
the parties hereto or to any other person by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found
to have been entered without jurisdiction.
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(iii) The Escrow Agent shall not be liable in any respect on account
of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any
documents or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the expiration of any
rights under any statute of limitations with respect to this Agreement
or any documents deposited with the Escrow Agent.
(v) In performing any duties under this Agreement, the Escrow Agent
shall not be liable to any party for damages, losses, or expenses,
except for gross negligence or willful misconduct on the part of the
Escrow Agent. The Escrow Agent shall not incur any such liability for
(A) any act or failure to act made or omitted in good faith, or (B)
any action taken or omitted in reliance upon any instrument,
instruction, notice or other document, including any written statement
of affidavit provided for in this Agreement that the Escrow Agent
shall in good faith believe to be genuine, nor will the Escrow Agent
be liable or responsible for forgeries, fraud, impersonations, or
determining the scope of any representative authority. In addition,
the Escrow Agent may consult with legal counsel in connection with the
Escrow Agent's duties under this Agreement and shall be fully
protected in any act taken, suffered, or permitted by him/her in good
faith in accordance with the advice of counsel. The Escrow Agent is
not responsible for determining and verifying the authority of any
person acting or purporting to act on behalf of any party to this
Agreement.
(vi) If any controversy arises between the parties to this Agreement,
or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be
required to determine the controversy or to take any action regarding
it. The Escrow Agent may hold all documents and certificates
representing Exchangeable Shares and may wait for settlement of any
such controversy by final appropriate legal proceedings or other means
as, in the Escrow Agent's discretion, the Escrow Agent may be
required, despite what may be set forth elsewhere in this Agreement.
In such event, the Escrow Agent will not be liable for damage.
Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims
and rights among themselves. The Escrow Agent is authorized to deposit
with the clerk of the court all documents and certificates
representing Exchangeable Shares held in escrow. Upon initiating such
action, the Escrow Agent shall be fully released and discharged of and
from all obligations and liability imposed by the terms of this
Agreement.
(vii) The parties and their respective successors and assigns agree
jointly and severally to indemnify and hold the Escrow Agent harmless
against any and all losses, claims, damages, liabilities, and
expenses, including reasonable costs of
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investigation, counsel fees, and disbursements that may be imposed on
the Escrow Agent or incurred by the Escrow Agent in connection with
the performance of his/her duties under this Agreement, including but
not limited to any litigation arising from this Agreement or involving
its subject matter, such indemnity to be satisfied by ServiceSoft.
This right of indemnification shall survive the termination of this
Agreement and the resignation or removal of the Escrow Agent. The
costs and expenses of enforcing this right of indemnification shall
also be paid by ServiceSoft.
(viii) The Escrow Agent may be removed from time to time by the
registered holders of Exchangeable Shares held in the Balisoft Escrow
Fund and the registered holders of ServiceSoft Shares held in the
ServiceSoft Escrow Fund upon not less than 30 days prior written
notice; provided that the Escrow Agent may not be removed unless
holders of a 75% interest in each of the Balisoft Escrow Fund and the
ServiceSoft Escrow Fund agree to such removal and to the identity of
the substituted agent. The Escrow Agent may resign at any time upon
giving at least 30 days written notice to the Balisoft Agent and the
ServiceSoft Agent; provided, however, that no such resignation shall
become effective until the appointment of a successor escrow agent
which shall be accomplished as follows: the Balisoft Agent and the
ServiceSoft Agent shall use their best efforts to mutually agree on a
successor escrow agent within 30 days after receiving such notice. If
the parties fail to agree upon a successor escrow agent within such
time, ServiceSoft shall have the right to appoint a successor escrow
agent authorized to do business in the Province of Ontario, Canada.
The successor escrow agent shall execute and deliver an instrument
accepting such appointment and it shall, without further acts, be
vested with all the estates, properties, rights, powers, and duties of
the predecessor escrow agent as if originally named as escrow agent.
Upon such appointment of a successor escrow agent, the Escrow Agent
shall be discharged from any further duties and liability under this
Agreement.
(n) EXCLUSIVITY OF REMEDIES - Resort to the provisions of this Article 8
providing for the delivery of ServiceSoft Shares to ServiceSoft for
cancellation from the ServiceSoft Escrow Fund shall be the exclusive
remedy of Balisoft and its shareholders for any Losses arising from
any breach of any representation or warranty of ServiceSoft contained
in this Agreement, except for any Losses arising from fraud. Resort to
the provisions of this Article 8 providing for the delivery of
Exchangeable Shares to Amalco for cancellation from the Balisoft
Escrow Fund shall be the exclusive remedy of ServiceSoft, ServiceSoft
Canada and their affiliates for any Losses arising from any breach of
any representation or warranty of Balisoft contained in this
Agreement, except for any Losses arising from fraud. Nothing in this
Article 8 shall limit the liability of Balisoft or ServiceSoft for any
breach of this Agreement if the Amalgamation does not close.
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(o) FEES - All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by ServiceSoft.
ARTICLE 9
CERTAIN RIGHTS OF SERVICESOFT TO ACQUIRE EXCHANGEABLE SHARES
9.1 SERVICESOFT LIQUIDATION CALL RIGHT -
(a) ServiceSoft shall have the overriding right (the "LIQUIDATION CALL
RIGHT"), in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of Amalco pursuant to Article 5 of the
provisions of the Exchangeable Shares (the "EXCHANGEABLE SHARE
PROVISIONS") to purchase from all but not less than all of the holders
of Exchangeable Shares on the Liquidation Date (as defined in the
Exchangeable Share Provisions) all, but not less than all of the
Exchangeable Shares held by each such holder on payment by ServiceSoft
of an amount per Exchangeable Common Share equal to (i) the Current
Market Price (as defined in the Exchangeable Share Provisions) of a
ServiceSoft Common Share on the last Business Day prior to the
Liquidation Date, which shall be satisfied in full by causing to be
delivered to such holder one ServiceSoft Common Share, plus (ii) an
additional amount equivalent to the full amount of all dividends
declared and unpaid on such Exchangeable Common Share and all
dividends declared on ServiceSoft Common Shares which have not been
declared on such Exchangeable Common Shares in accordance with Section
5.1 of the Exchangeable Share Provisions (collectively, the
"LIQUIDATION CALL COMMON PURCHASE PRICE"), and payment by ServiceSoft
of an amount per Exchangeable Preferred Share equal to (iii) the
Current Market Price (as defined in the Exchangeable Share Provisions)
of a ServiceSoft Series H Preferred Share on the last Business Day
prior to the Liquidation Date, which shall be satisfied in full by
causing to be delivered to such holder one ServiceSoft Series H
Preferred Share, plus (iv) an additional amount equivalent to the full
amount of all dividends declared and unpaid on such Exchangeable
Preferred Shares and all dividends declared on ServiceSoft Series H
Preferred Shares which have not been declared on such Exchangeable
Preferred Shares in accordance with Section 5.1 of the Exchangeable
Share Provisions (collectively, the "LIQUIDATION CALL PREFERRED
PURCHASE PRICE"), provided that if the record date for any such
declared and unpaid dividends occurs on or after the Liquidation Date,
the Liquidation Call Common Price or Liquidation Call Preferred
Purchase Price (each, a "LIQUIDATION CALL PURCHASE PRICE"), as
applicable, shall not include such additional amount equivalent to
such dividends. In the event of the exercise of the Liquidation Call
Right by ServiceSoft, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to ServiceSoft on the
Liquidation Date on payment by ServiceSoft to the holder of the
applicable Liquidation Call Purchase Price for each such Exchangeable
Share.
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(b) To exercise the Liquidation Call Right, ServiceSoft must notify
Amalco's transfer agent (the "TRANSFER AGENT"), as agent for the
holders of Exchangeable Shares, and Amalco of ServiceSoft's intention
to exercise such right at least 30 days before the Liquidation Date in
the case of a voluntary liquidation, dissolution or winding up of
Amalco and at least five Business Days before the Liquidation Date in
the case of an involuntary liquidation, dissolution or winding up of
Amalco. The Transfer Agent will notify the holders of Exchangeable
Shares as to whether or not ServiceSoft has exercised the Liquidation
Call Right forthwith after the expiry of the period during which the
same may be exercised by ServiceSoft. If ServiceSoft exercises the
Liquidation Call Right, on the Liquidation Date (i) ServiceSoft will
purchase and the holders will sell all of the Exchangeable Common
Shares then outstanding for a price per Exchangeable Common Share
equal to the Liquidation Call Common Purchase Price, and (ii)
ServiceSoft will purchase and the holders will sell all of the
Exchangeable Preferred Shares then outstanding for a price per
Exchangeable Preferred Share equal to the Liquidation Call Preferred
Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, ServiceSoft shall deposit with
the Transfer Agent, on or before the Liquidation Date, certificates
representing the aggregate number of ServiceSoft Common Shares and
ServiceSoft Series H Preferred Shares deliverable by ServiceSoft in
payment of the total Liquidation Call Purchase Price and a cheque or
cheques in the amount of the remaining portion, if any, of the total
Liquidation Call Purchase Price. Provided that the total Liquidation
Call Purchase Price has been so deposited with the Transfer Agent, on
and after the Liquidation Date the rights of each holder of
Exchangeable Common Shares and Exchangeable Preferred Shares will be
limited to receiving such holder's proportionate part of the total
Liquidation Call Purchase Price payable by ServiceSoft upon
presentation and surrender by the holder of certificates representing
the Exchangeable Common Shares or Exchangeable Preferred Shares (as
applicable) held by such holder and the holder shall on and after the
Liquidation Date be considered and deemed for all purposes to be the
holder of the ServiceSoft Common Shares or ServiceSoft Series H
Preferred Shares (as applicable) delivered to such holder. Upon
surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents
and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of Amalco and such
additional documents and instruments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and
the Transfer Agent on behalf of ServiceSoft shall deliver to such
holder, certificates representing the ServiceSoft Common Shares or
ServiceSoft Series H Preferred Shares (as applicable) to which the
holder is entitled and a cheque or cheques of ServiceSoft payable at
par and in Canadian dollars at any Canadian branch of the bankers of
ServiceSoft or of Amalco in Canada in payment of the
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remaining portion, if any, of the total Liquidation Call Purchase
Price. If ServiceSoft does not exercise the Liquidation Call Right in
the manner described above, on the Liquidation Date the holders of the
Exchangeable Shares will be entitled to receive in exchange therefor
the liquidation price otherwise payable by Amalco in connection with
the liquidation, dissolution or winding-up of Amalco pursuant to
Article 5 of the Exchangeable Share Provisions.
9.2 SERVICESOFT REDEMPTION CALL RIGHT -
(a) ServiceSoft shall have the overriding right (the "REDEMPTION CALL
RIGHT"), notwithstanding the proposed redemption of Exchangeable
Shares by Amalco pursuant to Article 7 of the Exchangeable Share
Provisions, to purchase from all but not less than all of the holders
of Exchangeable Shares to be redeemed on the Redemption Date (as
defined in the Exchangeable Share Provisions) all but not less than
all of the Exchangeable Shares held by each such holder on payment by
ServiceSoft to the holder of an amount per Exchangeable Common Share
equal to (i) the Current Market Price (as defined in the Exchangeable
Share Provisions) of a ServiceSoft Common Share on the last Business
Day prior to the Redemption Date, which shall be satisfied in full by
causing to be delivered to such holder one ServiceSoft Common Share,
plus (ii) an additional amount equivalent to the full amount of all
dividends declared and unpaid on such Exchangeable Common Share and
all dividends declared on ServiceSoft Common Shares which have not
been declared on such Exchangeable Common Shares in accordance with
Section 7.1 of the Exchangeable Share Provisions (collectively the
"REDEMPTION CALL COMMON PURCHASE PRICE"), and payment by ServiceSoft
to the holder of an amount per Exchangeable Preferred Share equal to
(iii) the Current Market Price (as defined in the Exchangeable Share
Provisions) of a ServiceSoft Series H Preferred Share on the last
Business Day prior to the Redemption Date, which shall be satisfied in
full by causing to be delivered to such holder one ServiceSoft Series
H Preferred Share, plus (iv) an additional amount equivalent to the
full amount of all dividends declared and unpaid on such Exchangeable
Preferred Shares and all dividends declared on ServiceSoft Series H
Preferred Shares which have not been declared on such Exchangeable
Preferred Shares in accordance with Section 7.1 of the Exchangeable
Share Provisions (collectively, the "REDEMPTION CALL PREFERRED
PURCHASE PRICE") provided that if the record date for any such
declared and unpaid dividend occurs on or after the Redemption Date,
the Redemption Call Common Purchase Price or Redemption Call Preferred
Purchase Price (each, a "REDEMPTION CALL PURCHASE PRICE"'), as
applicable, shall not include such additional amount equivalent to
such dividends. In the event of the exercise of the Redemption Call
Right by ServiceSoft, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to be redeemed to ServiceSoft
on the Redemption Date on payment by ServiceSoft to the holder of the
applicable Redemption Call Purchase Price for each such Exchangeable
Share.
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(b) To exercise the Redemption Call Right, ServiceSoft must notify the
Transfer Agent, as agent for the holder of Exchangeable Shares, and
Amalco of ServiceSoft's intention to exercise such right at least 20
days before the Automatic Redemption Date (as defined in the
Exchangeable Share Provisions), in the case of the Automatic
Redemption (as defined in the Exchangeable Share Provisions). The
Transfer Agent will notify the holders of the Exchangeable Shares as
to whether or not ServiceSoft has exercised the Redemption Call Right
forthwith after the expiry of the period during which the same may be
exercised by ServiceSoft. If ServiceSoft exercises the Redemption Call
Right, on the Redemption Date ServiceSoft will purchase and the
holders will sell all of the Exchangeable Shares to be redeemed for a
price per Exchangeable Common Share equal to the Redemption Call
Common Purchase Price and a price per Exchangeable Preferred Share
equal to the Redemption Call Preferred Purchase Price.
(c) For the purposes of completing this purchase of Exchangeable Shares
pursuant to the Redemption Call Right, ServiceSoft shall deposit with
the Transfer Agent, on or before the Redemption Date, certificates
representing the aggregate number of ServiceSoft Common Shares and
ServiceSoft Series H Preferred Shares deliverable by ServiceSoft in
payment of the total Redemption Call Purchase Price and a cheque or
cheques in the amount of the remaining portion, if any, of the total
Redemption Call Purchase Price. Provided that the total Redemption
Call Purchase Price has been so deposited with the Transfer Agent, on
and after the Redemption Date the rights of each holder of
Exchangeable Common Shares and Exchangeable Preferred Shares so
purchased will be limited to receiving such holder's proportionate
part of the total Redemption Call Purchase Price payable by
ServiceSoft upon presentation and surrender by the holder of
certificates representing the Exchangeable Common Shares or
Exchangeable Preferred Shares (as applicable) purchased by ServiceSoft
from such holder and the holder shall on and after the Redemption Date
be considered and deemed for all purposes to be the holder of the
ServiceSoft Common Shares or ServiceSoft Series H Preferred Shares (as
applicable) delivered to such holder. Upon surrender to the Transfer
Agent of a certificate or certificates representing Exchangeable
Shares, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the Act and
the By-laws of Amalco and such additional documents and instruments as
the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive
in exchange therefor, and the Transfer Agent on behalf of ServiceSoft
shall deliver to such holder, certificates representing the
ServiceSoft Common Shares or ServiceSoft Series H Preferred Shares (as
applicable) to which the holder is entitled and a cheque or cheques of
ServiceSoft payable at par and in Canadian dollars at any branch of
the bankers of ServiceSoft or of Amalco in Canada in payment of the
remaining portion, if any, of the total Redemption Call Purchase
Price. If ServiceSoft does not exercise the Redemption
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Call Right in the manner described above, on the Redemption Date the
holder of the Exchangeable Shares will be entitled to receive in
exchange therefor the redemption price otherwise payable by Amalco in
connection with the redemption of Exchangeable Shares pursuant to
Article 7 of the Exchangeable Share Provisions.
9.3 WITHHOLDING RIGHTS - ServiceSoft and the Transfer Agent shall be entitled
to deduct and withhold from the consideration otherwise payable to any holder of
Exchangeable Shares such amounts as ServiceSoft or the Transfer Agent is
required or permitted to deduct and withhold with respect to such payment under
the Income Tax Act (Canada) or any provision of provincial, local or foreign tax
law. To the extent that amounts are so withheld, such withheld amounts shall be
treated for all purposes hereof as having been paid to the holder of shares in
respect of which such deduction and withholding was made, provided that such
withheld amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required or permitted to be deducted or withheld
from any payment to a holder exceeds the cash portion of such consideration as
is necessary to provide sufficient funds to ServiceSoft or the Transfer Agent,
as the case may be, ServiceSoft is hereby authorized to sell or otherwise
dispose of, or direct to have sold or disposed of, at fair market value, such
portion of the Exchangeable Shares or consideration payable to the holder as is
necessary in order to enable ServiceSoft to comply with such deduction or
withholding requirement and ServiceSoft or the Transfer Agent shall give an
accounting to the holder with respect thereto and any balance of such proceeds
of sale.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION - Except as provided in Section 10.2 below, this Agreement may
be terminated and the Amalgamation abandoned at any time prior to the Closing
Time:
(a) by mutual written consent of Balisoft and ServiceSoft; or
(b) by Balisoft or ServiceSoft if there shall be a final nonappealable
order of a court in effect preventing consummation of the
Amalgamation; or there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Amalgamation by any Governmental Entity which would
make the consummation of the Amalgamation illegal; or
(c) by Balisoft or ServiceSoft if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the Amalgamation by any Governmental Entity,
which would: (i) prohibit Balisoft's or ServiceSoft's ownership or
operation of all or a material portion of the business of Balisoft or
(ii) compel ServiceSoft or Balisoft to dispose of or hold separate all
or a material portion of the business or assets of Balisoft or
ServiceSoft as a result of the Amalgamation; or
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(d) by Balisoft if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this
Agreement on the part of ServiceSoft, provided that if such breach is
curable by ServiceSoft within 5 Business Days through the exercise of
its reasonable best efforts, then for so long as ServiceSoft continues
to exercise such reasonable best efforts Balisoft may not terminate
this Agreement under this Section 10.1 (e) unless such breach is not
cured within 5 Business Days following written notice of such breach
to ServiceSoft by Balisoft (with the provision that no cure period
shall be required for a breach which by its nature cannot be cured);
or
(e) by ServiceSoft if it is not in material breach of its obligations
under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this
Agreement on the part of Balisoft provided that if such breach is
curable by Balisoft within 5 Business Days through the exercise of its
reasonable best efforts, then for so long as Balisoft continues to
exercise such reasonable best efforts ServiceSoft may not terminate
this Agreement under this Section 10.1(f) unless such breach is not
cured within 5 Business Days following written notification of such
breach to Balisoft from ServiceSoft (with the provision that no cure
period shall be required for a breach which by its nature cannot be
cured); or
(f) by Balisoft or ServiceSoft if it is not in material breach of its
obligations under this Agreement and the Closing has not been
completed by 5:00 p.m. (Toronto time) on March 31, 1999.
Where action is taken to terminate this Agreement pursuant to this Section 10.1,
such termination shall be effective upon the party terminating this Agreement
providing notice to the other party that its board of directors has authorized
such termination.
10.2 EFFECT OF TERMINATION - In the event of termination of this Agreement as
provided in Section 10.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Balisoft or ServiceSoft, or
their respective officers, directors or shareholders; PROVIDED, HOWEVER, that
each party shall remain liable for any breaches of this Agreement prior to its
termination.
10.3 AMENDMENT - Except as is otherwise required by applicable law after the
receipt of necessary shareholder and director approvals for this Agreement, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto.
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10.4 EXTENSION, WAIVER - At any time prior to the Closing Time, Balisoft, on the
one hand, and ServiceSoft, on the other hand, may, to the extent legally
allowed: (i) extend the time for the performance of any of the obligations of
the other party hereto, (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE 11
GENERAL PROVISIONS
11.1 NOTICES - All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given upon receipt or, if earlier, (a) upon delivery, if
delivered by hand, (b) 5 Business Days after the Business Day of deposit with a
nationally recognized courier for overnight delivery, freight prepaid, (c) one
Business Day after the Business Day of facsimile transmission, if delivered by
facsimile transmission with copy by first class mail, postage prepaid, or (d) 5
Business Days after the Business Day of mailing by first class mail, postage
prepaid; and shall be addressed to the address set forth below (or at such other
address as a party may designate by 15 days advance written notice to the other
party pursuant to the provisions above):
(a) if to Balisoft, to:
Balisoft Technologies Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ATTENTION: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to:
Osler, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
1 First Canadian Place, Suite 6600
Toronto, Ontario
Canada M5X IB8
ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to ServiceSoft, ServiceSoft Canada or Amalco, to:
ServiceSoft Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Land & ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇.▇.▇. ▇▇▇▇▇-▇▇▇▇
ATTENTION: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
11.2 SEVERABILITY - In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such
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provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.3 OTHER REMEDIES - Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
11.4 GOVERNING LAW; CONSENT TO JURISDICTION - This Agreement shall be governed
by and construed in accordance with the laws the Province of Ontario and the
federal laws of Canada applicable therein, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws. Each of the
parties hereto irrevocably (i) agrees that any legal suit, action or proceeding
against the other parties to this Agreement in connection with any matter based
upon or arising out of this Agreement or the matters contemplated herein may be
instituted in any federal or provincial court in the Province of Ontario, Canada
(ii) waives to the fullest extent it may effectively do so, any objection which
it may now or hereafter have to the laying of venue of any such proceeding, and
(iii) submits to the exclusive jurisdiction of such courts in any suit, action
or proceeding.
11.5 RULES OF CONSTRUCTION - The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
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11.6 COUNTERPARTS - This Agreement may be executed in one or more counterparts
(including by means of telecopier), all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
IN WITNESS WHEREOF Balisoft, ServiceSoft, ServiceSoft Canada have caused
this Agreement to be signed by their duly authorized respective officers, all as
of the date first written above.
BALISOFT TECHNOLOGIES INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SERVICESOFT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
SERVICESOFT CANADA INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
82
BALISOFT TECHNOLOGIES INC.
DISCLOSURE SCHEDULE
TO
COMBINATION AGREEMENT
BY AND AMONG
BALISOFT TECHNOLOGIES INC.,
SERVICESOFT CORPORATION
AND
SERVICESOFT CANADA INC.
DATED AS OF FEBRUARY 1, 1999
BALISOFT TECHNOLOGIES INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SERVICESOFT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
SERVICESOFT CANADA INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Tilde: President
83
BALISOFT TECHNOLOGIES INC.
DISCLOSURE SCHEDULE
TO
COMMUNICATION AGREEMENT
BY AND AMONG
BALISOFT TECHNOLOGIES INC,
SERVICESOFT CORPORATION
AND
SERVICESOFT CANADA INC.
DATED AS OF FEBRUARY 1, 1999
BALISOFT TECHNOLOGIES INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SERVICESOFT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
SERVICESOFT CANADA INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President