EXHIBIT 2.2
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SHARE PURCHASE AGREEMENT
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B E T W E E N
AMI SEMICONDUCTOR NETHERLANDS B.V.
and its Parent Company
AND
DSPFACTORY LTD.
and certain of its Shareholders
September 9, 2004
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Defined Terms.......................................................... 2
1.2 Currency............................................................... 7
1.3 Sections and Headings.................................................. 7
1.4 Rules of Construction.................................................. 7
1.5 Accounting Principles.................................................. 8
1.6 Entire Agreement....................................................... 8
1.7 Time of Essence........................................................ 8
1.8 Applicable Law; Consent to Jurisdiction................................ 9
1.9 Knowledge.............................................................. 9
1.10 Amendment and Waivers.................................................. 9
1.11 Severability........................................................... 9
1.12 Schedules.............................................................. 9
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares........................................... 11
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price......................................................... 11
3.2 Escrow................................................................. 11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COVENANTORS
4.1 Organization........................................................... 11
4.2 Authorization.......................................................... 12
4.3 No Other Agreements to Purchase........................................ 12
4.4 No Violation........................................................... 12
4.5 Sufficiency of Purchased Assets........................................ 12
4.6 Title to Personal Property............................................. 13
4.7 Real Property Lease.................................................... 13
4.8 Leased Property........................................................ 13
4.9 Inventories............................................................ 14
4.10 Accounts Receivable.................................................... 15
4.11 Intellectual Property.................................................. 15
4.12 Insurance.............................................................. 17
4.13 No Expropriation....................................................... 17
4.14 Agreements and Commitments............................................. 17
4.15 Compliance with Laws; Governmental Authorizations...................... 17
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4.16 Consents and Approvals................................................. 18
4.17 Books and Records...................................................... 18
4.18 Litigation............................................................. 18
4.19 No Undisclosed Liabilities............................................. 19
4.20 Absence of Changes..................................................... 19
4.21 Non-Arm's Length Transactions.......................................... 19
4.22 Tax Matters............................................................ 20
4.23 Employment Matters..................................................... 21
4.24 Customers and Suppliers................................................ 22
4.25 Product Warranties and Product Liability............................... 22
4.26 Environmental.......................................................... 22
4.27 Capitalization and Share Matters....................................... 23
4.28 Full Disclosure........................................................ 24
4.29 Insolvency / Over-Indebtedness......................................... 25
4.30 Professional and Social Welfare........................................ 25
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 Organization........................................................... 25
5.2 Authorization.......................................................... 26
5.3 No Violation........................................................... 26
5.4 Consents and Approvals................................................. 26
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENTCO
7.1 Organization........................................................... 26
7.2 Authorization.......................................................... 26
7.3 No Violation........................................................... 27
7.4 Consents and Approvals................................................. 27
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.1 Survival of Representations and Warranties............................. 27
7.2 Implied Warranties..................................................... 28
ARTICLE 8
COVENANTS
8.1 Access to the Purchased Business and Purchased Assets.................. 28
8.2 Delivery of Books and Records.......................................... 29
8.3 Conduct of Purchased Business Prior to Closing......................... 29
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8.4 No Solicit............................................................. 30
8.5 Delivery of Closing Documentation...................................... 30
8.6 Action by the Purchaser and the Vendor................................. 32
8.7 Actions Before Closing................................................. 32
8.8 Actions Regarding Liabilities.......................................... 33
ARTICLE 9
EMPLOYEE MATTERS
9.1 Notice to Employees.................................................... 33
9.2 Employees.............................................................. 33
9.3 Employee Accruals...................................................... 33
ARTICLE 10
CONDITIONS OF CLOSING
10.1 Mutual Conditions Precedent............................................ 33
10.2 Conditions of Closing in Favour of the Purchaser....................... 34
10.3 Conditions of Closing in Favour of the Vendor.......................... 36
ARTICLE 11
CLOSING DATE AND TRANSFER OF POSSESSION
11.1 Place of Closing....................................................... 37
11.2 Transfer............................................................... 37
11.3 Further Assurances..................................................... 38
11.4 Risk of Loss........................................................... 38
ARTICLE 12
INDEMNIFICATION
12.1 Indemnification by the Covenantors..................................... 38
12.2 Indemnification by the Purchaser....................................... 40
12.3 Notice of Claim........................................................ 41
12.4 First Party Claims..................................................... 41
12.5 Third Party Claims..................................................... 41
12.6 Settlement of Third Party Claims....................................... 42
12.7 Co-operation........................................................... 43
12.8 Threshold and Maximum Indemnification.................................. 43
12.9 Exclusivity............................................................ 43
ARTICLE 13
MISCELLANEOUS
13.1 Dispute Resolution..................................................... 43
13.2 Notices................................................................ 44
13.3 Construction........................................................... 45
13.4 Intentionally Left Blank............................................... 45
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13.5 Public Announcement.................................................... 45
13.6 Disclosure............................................................. 45
13.7 Expenses............................................................... 45
13.8 Confidentiality........................................................ 46
13.9 Successors and Assigns................................................. 46
13.10 Counterparts........................................................... 46
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made the ninth day of September, 0000,
X X X X X X X:
AMI SEMICONDUCTOR NETHERLANDS B.V.
a corporation existing under the laws of the Netherlands,
(hereinafter referred to as the "Purchaser"),
AMIS HOLDINGS, INC.
a corporation existing under the laws of Delaware,
(hereinafter referred to as "Parentco")
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DSPFACTORY LTD.,
a corporation existing under the laws of the Province of
Ontario ,
(hereinafter referred to as the "Vendor"),
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DNN HOLDINGS LTD.,
a corporation existing under the laws of Ontario,
(hereinafter referred to as "Stork"),
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SOUTHBRIDGE INVESTMENT PARTNERSHIP NO. 1,
a limited partnership existing under the laws of the
Province of Ontario,
(hereinafter referred to as "Southbridge"),
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MVO INVESTMENTS LTD.,
a corporation existing under the laws of Ontario,
(hereinafter referred to as "MVO").
THIS AGREEMENT WITNESSES THAT, in consideration of the respective
covenants, agreements, representations, warranties and indemnities of the
parties herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each party), the parties
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS
For the purposes of this Agreement, the following terms shall have
the respective meanings set out below and grammatical variations of such terms
shall have corresponding meanings:
"ACCOUNTS PAYABLE" means all amounts in connection with the Purchased
Business due and owing to traders, suppliers and other Persons,
outstanding as of the Effective Time, which have been incurred, whether or
not invoiced, in the ordinary course of business;
"ACCOUNTS RECEIVABLE" means any and all accounts receivable, trade
receivables, notes receivable and other receivables arising in connection
with the Purchased Business;
"AFFILIATE" means, in relation to any person, any other person that
directly or indirectly controls, that is directly or indirectly controlled
by, or that is under the direct or indirect common control of, such
person; provided, however, that (a) where one person controls another
person, any other person controlled by the first such person shall be
deemed to be an Affiliate of the second such person; and (b) any
corporation in respect of which any person owns beneficially, directly or
indirectly, not less than 50% of such corporation's voting securities,
shall be deemed to be an Affiliate of such person (for purposes hereof,
"control" means, in respect of any person, the power or authority to
direct, or cause the direction of, directly or indirectly, the management,
policies or actions of any other person, whether through the ownership of
equity securities or voting securities or by Contract or otherwise);
"AMIS HOLDINGS" means AMIS Holdings, Inc., the Purchaser's parent company
or any successor thereto (whether by amalgamation, continuance or
otherwise);
"ARBITRAL TRIBUNAL" has the meaning set out in Section 1.8;
"ASSET PURCHASE AGREEMENT" means the asset purchase agreement entered into
on the date hereof between the Covenantors, Parentco and certain
Affiliates of Parentco relating to the business of the Vendor in Canada;.
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"BUSINESS DAY" means a day, other than a Saturday or a Sunday, on which
banks are open for ordinary banking business in Toronto, Ontario and
Zurich, Switzerland;
"CLAIM" means any claim, action, demand, lawsuit or proceeding;
"CLEANUP" means any investigation, containment, cleanup, removal or other
remediation or corrective action;
"CLOSING DATE" means the third Business Day following the issuance and
entry of the Final Order (as defined in the Asset Purchase Agreement)
provided that all other conditions contained in Article 10 of this
Agreement have been fulfilled or waived in writing but in any event not
later than November 30, 2004 unless otherwise agreed in writing by the
parties;
"CLOSING DATE PAYMENT" has the meaning set out in Section 3.1;
"COMPANY" means dspfactory SA, a company incorporated in Switzerland,
having its registered office at Xxxxxx-Xxxxxxxx 00x, 0000 Xxxxx-Xxxxxxxx
XX, Xxxxxxxxxxx;
"COMPANY EMPLOYEE PLANS" has the meaning set out in Section 9.2(a);
"COMPANY'S AGREEMENTS" means those Contracts to which the Company is a
party which each involve a yearly aggregate consideration of CHF 5,000 or
more; evidence or provide for any borrowing indebtedness of the Company,
excluding lease agreements; guarantee the performance, liabilities or
obligations of any other person or entity; are not in the ordinary course
of the business; are terminable by any third party, or which would be
breached, in both cases, as a result of the transactions contemplated by
this Agreement; relate to Intellectual Property Rights owned by or
licensed to the Company or which relate to Intellectual Property Rights
licensed, assigned, sold, transferred, or conveyed by a third party to the
Company or by the Company to any third party in connection with the
Business; which are concluded with or for the benefit of any Affiliate of
the Vendor; or, are otherwise material to the Purchased Business, but not
including Contracts associated with the COTS Software and employment
Contracts.
"COMPANY INTELLECTUAL PROPERTY" has the meaning set out in Section
4.11(b);
"CONSULTING AGREEMENT" has the meaning set out in Section 8.7(b);
"CONTAMINANT" has the meaning set out in Section 4.11(k);
"CONTRACT" means any agreement, indenture, contract, lease, deed of trust,
licence, option, instrument or other commitment, whether written or oral;
"COTS SOFTWARE" means commercial off-the-shelf software which is generally
available and subject to standard term licence agreements;
"COVENANTORS" means, collectively, the Vendor, Stork, Southbridge, and MVO
and individually means any one of them;
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"DESIGNATED KEY EMPLOYEES" means the employees of the Company who are
named in Schedule 9.2(b) as key employees;
"DISABLING CODE" has the meaning set out in Section 4.11(k);
"EFFECTIVE TIME" means the time on the Closing Date which is specified in
the Plan of Arrangement for the completion of the transactions
contemplated herein;
"EMPLOYMENT LEGISLATION" means, all federal, cantonal and local laws,
ordinances, codes, statutes, rules and regulations, orders, directives,
notices, decrees or judgments rendered by, and all policies, guidelines
and similar guidance of any Governmental Authority, relating to the
employment by the Company of its employees;
"ENCUMBRANCE" means any encumbrance, lien, charge, hypothecation, pledge,
mortgage, title retention agreement, security interest of any nature,
adverse claim, exception, right of set-off, reservation, easement, right
of occupation, any matter capable of registration against title, option,
right of pre-emption, privilege or any Contract to create any of the
foregoing;
"ENVIRONMENTAL LAWS" means all federal, cantonal and local laws,
ordinances, codes, statutes, rules and regulations, orders, directives,
notices, decrees or judgments rendered by, and all policies, guidelines
and similar guidance of any Governmental Authority, relating to (i) the
protection of the environment; (ii) pollution; (iii) the Release,
threatened Release, Cleanup or manufacture, processing, distribution, use,
treatment, storage, transport or handling of Hazardous Substances; or (iv)
worker and public health and safety;
"ENVIRONMENTAL PERMITS" means all licences, permits, approvals, consents,
certificates, registrations or other authorizations required under
Environmental Laws;
"FINANCIAL STATEMENTS" mean the audited financial statements (consisting
of the income statement, the balance sheet and notes to the financial
statements) and the annual report of the Company for the business periods
ended on the last day of February 2002, 2003 and 2004;
"FIRST PARTY CLAIM" has the meaning set out in Section 12.3;
"GOVERNMENTAL AUTHORITY" means any national, federal, state, county,
municipal, cantonal, district or local government or government body, or
any public administrative or regulatory agency, political subdivision,
commission, court, board or body, or representative of any of the
foregoing, foreign or domestic, of, or established by any such government
or government body which has authority in respect of a particular matter
or any quasi-governmental body having the right to exercise any regulatory
authority thereunder;
"HAZARDOUS SUBSTANCES" means any substances, chemicals, materials or
wastes that are toxic or hazardous or any pollutant or contaminant which
is now or hereafter restricted,
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regulated, prohibited or penalized by any Environmental Laws; "Hazardous
Substances" specifically includes asbestos-containing materials,
radioactive materials and petroleum and its fractions;
"INDEMNIFIED PARTY" means a person seeking indemnification as set out in
Section 12.2;
"INDEMNIFYING PARTY" means a person providing indemnification as set out
in Section 12.2;
"INTELLECTUAL PROPERTY" means industrial and intellectual property,
including all:
(a) trade secrets, confidential information and confidential
know-how, including all unpatented inventions, customer and
supplier lists, formulae, processes, technology, inventor's
notes, unpublished studies and data, research designs,
research results and notes, prototypes, drawings, design and
construction specifications, production, operating and quality
control manuals, marketing strategies, and current or proposed
business opportunities;
(b) copyrights, including all copyrights in software;
(c) industrial designs, design patents and other designs;
(d) integrated circuit topography rights;
(e) patents; and
(f) trade-marks, including both registered and unregistered
trade-marks and service marks, designs, logos, indicia,
distinguishing guises, trade dress, trade names, business
names, internet domain names, any other source or business
identifiers and fictitious characters, and all goodwill
associated with the foregoing,
and all registrations, applications for registration, reissues,
extensions, renewals, divisions, continuations, continuations-in-part,
proprietary information, documentation, licences, registered user
agreements and other agreements relating to the foregoing;
"LEASES" has the meaning set out in Section 4.7;
"LEASED PROPERTY" has the meaning set out in Section 4.7;
"LOSSES", in respect of any matter, means all Claims, losses, damages,
obligations, liabilities, deficiencies, fines, costs and expenses
(including all legal and other professional fees and disbursements,
interest, penalties and amounts paid in settlement) arising, directly or
indirectly, as a result of such matter (but excluding any consequential
losses);
"PENSION FUND" has the meaning set out in Section 4.30;
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"PERMITS" has the meaning set out in Section 4.15;
"PERMITTED ENCUMBRANCES" means:
(a) liens for taxes, assessments and governmental charges
due and being contested in good faith and diligently by
appropriate proceedings (and for the payment of which
adequate provision has been made);
(b) inchoate liens claimed or held by any Governmental
Authority or a public utility in respect of the payment
of taxes or utilities not yet due and payable; and
(c) the Encumbrances described in Schedule 4.6;
"PERSON" or "PERSON" means an individual, firm, corporation, limited
liability company, syndicate, partnership, trust, association, joint
venture, unincorporated organization, Governmental Authority or other
legal or business entity;
"PLAN OF ARRANGEMENT" has the meaning set out in the Asset Purchase
Agreement;
"PREMISES" has the meaning set out in Section 4.8;
"PURCHASED BUSINESS" means the business carried on by the Company prior to
the Effective Time, consisting primarily of the development, and also of
the marketing and sale of ultra-miniaturized, ultra-low power,
software-programmable digital signal processing products;
"RELEASE" means any release, spill, emission, discharge, disposal,
dispersal, leaching or migration into the indoor or outdoor environment;
"SALE SHARES" means the entire outstanding share capital of the Company as
set out in certified extract of the commercial register of the Canton of
Neuchatel showing the capital increase in accordance with Section 10.1(d)
of this Agreement;
"SOCIAL SECURITY CONTRIBUTIONS" shall mean the mandatory contributions to
the old-age pension insurance scheme (AHV), pension fund scheme (BVG),
invalidity insurance (IV), loss of salary insurance (EO) and unemployment
insurance (ALV), or any equivalent or similar contributions and any other
social security contributions (including accident and health insurance
contributions as the case may be) applicable in the jurisdictions in which
the Company does business, together with any interest or any penalty
imposed by any social security authority with respect thereto;
"SYSTEMS" means: (a) all computer systems, hardware, equipment and
peripherals and all computer software and files used by the Company,
including the Third Party Software Licences; and (b) all process controls,
environmental controls and any other support systems used by the Company
which employ, store or process date/time information in electronic form,
which are used in the operation of the Purchased Business as currently
carried on and are either owned or controlled by the Vendor or the
Company;
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"TAX" or "TAXES" means all taxes, charges, fees, levies or other
assessments, including all income, capital gains, profit, capital, sales,
value-added, use, transfer, goods and services, franchise, withholding,
social security, payroll, premium, employment, health, education, excise,
stamp, business, property or other taxes, customs duties, surtaxes, fees,
assessments, assessments as required insurance (such as workers'
compensation insurance), late filing or payment penalties, charges or
governmental or statutory imposts of any kind whatsoever imposed by any
Governmental Authority or other taxing authority, together with any
interest, penalty, fine or other amount on, or in lieu of non-collection
of, late payment of or otherwise in respect of, such taxes;
"TAX ACT" means the Income Tax Act (Canada);
"TERMINATION AGREEMENT" has the meaning set out in Section 8.7(b);
"THIRD PARTY CLAIM" has the meaning set out in Section 12.3;
"THIRD PARTY SOFTWARE LICENSES" means all third party software licences in
favour of the Company and associated maintenance agreements and associated
maintenance agreements and all machine readable media containing copies of
all source code, object code, data files, records and other information
subject to or provided in connection with such third party software
licences and copies of all documentation, including documents setting out
applicable licence terms, operating procedures and error recovery
procedures provided by third parties or prepared by the Vendor or the
Company in connection with such licences;
"TIME OF CLOSING" means 10:00 a.m. (Eastern Standard Time) on the Closing
Date, or such other time on the Closing Date as the Vendor or the
Purchasers may mutually determine.
1.2 CURRENCY
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are expressed in United States dollars.
1.3 SECTIONS AND HEADINGS
The division of this Agreement into Articles, Sections and Schedules
and the insertion of headings and an index are for convenience of reference only
and shall not affect the construction or the interpretation of this Agreement.
Unless otherwise specified herein, any reference in this Agreement to an
Article, Section or Schedule refers to the specified Article, Section of or
Schedule to this Agreement. In this Agreement, the terms "this Agreement",
"hereof", "herein", "hereunder" and similar expressions refer to this Agreement
and not to any particular part, Article, Section or other provision hereof and
include any agreement supplemental or ancillary hereto.
1.4 RULES OF CONSTRUCTION
In this Agreement:
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(a) words importing the singular number only shall include the plural
and vice versa and words importing the masculine gender shall
include the feminine and neuter genders and vice versa;
(b) the words "include", "includes" and "including" means "include",
"includes" or "including", in each case, "without limitation";
(c) reference to any agreement, indenture or other instrument in writing
means such agreement, indenture or other instrument in writing as
amended, modified, replaced or supplemented from time to time;
(d) reference to any statute shall be deemed to be a reference to such
statute as amended, re-enacted or replaced from time to time;
(e) if there is any conflict or inconsistency between the provisions
contained in the body of this Agreement and those of any Schedule,
the provisions contained in the body of this Agreement shall
prevail;
(f) time periods within which a payment is to be made or any other
action is to be taken hereunder shall be calculated excluding the
day on which the period commences and including the day on which the
period ends; and
(g) whenever any payment to be made or action to be taken hereunder 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 following
Business Day.
1.5 ACCOUNTING PRINCIPLES
In this Agreement, accounting terms that are not defined herein
shall be construed in accordance with GAAP. "GAAP" refers to generally accepted
accounting principles in Switzerland pursuant to the Swiss Code of Obligations.
1.6 ENTIRE AGREEMENT
This Agreement, together with the agreements specifically
contemplated herein or entered into or delivered in connection herewith,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether written or oral (including the letter of intent dated
May 11, 2004 and the letter dated June 17, 2004 from AMI Semiconductor, Inc. to
the Vendor). There are no conditions, covenants, agreements, representations,
warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as herein provided or as
provided in other documents executed and delivered by the parties in connection
herewith.
1.7 TIME OF ESSENCE
Time shall be of the essence of this Agreement.
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1.8 APPLICABLE LAW; CONSENT TO JURISDICTION
This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties shall
be governed by, the laws of Switzerland with the exclusion of the Vienna
Convention on the International Sale of Goods dated April 11, 1980, without
regard to conflicts of laws principles. Any dispute, controversy or claim
arising out of or in relation to this Agreement, including the validity,
invalidity, breach or termination thereof, which cannot be settled by mutual
agreement between the parties as herein provided shall be finally settled by
arbitration in accordance with the Swiss Rules of International Arbitration of
the Swiss Chamber of Commerce in force when the notice of arbitration is
submitted in accordance with these Rules (the "Arbitral Tribunal"). The number
of arbitrators shall be three. The seat of the arbitration shall be in Zurich
and the arbitration proceedings shall be conducted in English.
1.9 KNOWLEDGE
Where any matter is stated to be within the Vendor's knowledge in
this Agreement, the Vendor shall be deemed for purposes of this Agreement to
have the knowledge of the relevant facts that a senior manager of the Vendor
and/or the Company with responsibility for the matter in question would
reasonably be expected to have after due internal investigation and inquiry.
Where any matter is stated to be within the Purchaser's knowledge or Parentco's
knowledge in this Agreement, the Purchaser or Parentco, as the case may be,
shall be deemed for purposes of this Agreement to have the knowledge of the
relevant facts that a senior manager of the Purchaser or Parentco, as the case
may be with responsibility for the matter in question would reasonably be
expected to have after due internal investigation and inquiry.
1.10 AMENDMENT AND WAIVERS
No amendment or waiver of any provision of this Agreement shall be
binding on either party unless consented to in writing by such party. No waiver
of any provision of this Agreement shall constitute a waiver of any other
provision, and no waiver shall constitute a continuing waiver unless otherwise
provided.
1.11 SEVERABILITY
If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct. To the extent that any such
provision is found to be invalid, illegal or unenforceable, the parties hereto
shall act in good faith to substitute for such provision, to the extent
possible, a new provision with content and purpose as close as possible to the
provision so determined to be invalid, illegal or unenforceable.
1.12 SCHEDULES
The following Schedules are attached to and form part of this
Agreement:
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Schedule 4.1 - Organization
Schedule 4.4 No Violation
Schedule 4.5 - Location of Assets
Schedule 4.6 - Permitted Encumbrances
Schedule 4.7 - Leased Property
Schedule 4.10 - Accounts Receivable
Schedule 4.11(a) - Third Party Software Licenses
Schedule 4.11(b) - Intellectual Property
Schedule 4.11(c) - Restrictions on Intellectual Property
Schedule 4.11(d) - Intellectual Property Abandonment and
Registration Matters
Schedule 4.11(e) - Adverse Claims
Schedule 4.11(h) - Infringement/Breach of Company's
Intellectual Property
Schedule 4.12 - Insurance
Schedule 4.14 - Contracts
Schedule 4.15 - Permits
Schedule 4.16 - Consents and Approvals
Schedule 4.17(b) - Financial Statements
Schedule 4.18 - Litigation
Schedule 4.20 - Absence of Changes
Schedule 4.21 - Non-Arm's Length Transactions
Schedule 4.23(c) - Employment Arrangements
Schedule 4.23(d) - Employees
Schedule 4.23(e) - Employment Contracts Re Notice Period
Schedule 4.23(f) - Lay-Offs
Schedule 4.24 - Major Customers
Schedule 4.25 - Product Warranties
Schedule 4.30 - Professional & Social Welfare
Schedule 8.5(a)(vi) Confirmation of Ernst & Young, Biel
re at arm's length transactions
Schedule 9.1 - Notice to Employees
Schedule 9.2(a) - Company Employee Plans
Schedule 9.2(b) - Designated Key Employees
Schedule 10.2(i) - Lock-up Agreement
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES
In accordance with the terms of this Agreement, the Vendor shall
sell to the Purchaser and the Purchaser shall purchase from the Vendor the Sale
Shares free and clear from any liens, charges and other rights of any third
parties, for the consideration set out in Section 3.1
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below. The transaction contemplated herein will be completed in accordance with
the terms of the Plan of Arrangement, as defined in the Asset Purchase
Agreement.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
At the Time of Closing and in accordance with the Plan of
Arrangement, the Purchaser shall pay to the Vendor $6,000,000 (the "Closing Date
Payment") by means of wire transfer in immediately available funds to an account
designated by the Vendor.
3.2 ESCROW
The amount held in escrow pursuant to Section 3.4 of the Asset
Purchase Agreement shall also be held as security for the Covenantors' potential
obligations with respect to any indemnity obligations under this Agreement,
provided that said escrow shall not limit the indemnification obligations of the
Vendor under this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COVENANTORS
Each of the Covenantors, jointly and severally, represents and
warrants to the Purchaser and Parentco that as of the date of this Agreement and
as of the Closing Date the representations and warranties set out in this
Article 4 are true and correct (except that the representations and warranties
which are explicitly made as of a specific date, shall be true and correct only
as of such date) as follows except that the representations and warranties set
out in Section 4.2, the second sentence of Section 4.21 and the first sentence
of Section 4.28 to the extent it relates to Section 4.2 and Section 4.21 (second
sentence only) are made severally only by each Covenantor with respect to such
Covenantor only, and acknowledges that the Purchaser and Parentco are relying on
such representations and warranties in connection with the purchase of the Sale
Shares:
4.1 ORGANIZATION
The Vendor is a corporation duly incorporated and organized and
validly existing under the laws of the Province of Ontario and has the corporate
power to own or lease its property, to carry on the business as now being
conducted by it, to enter into this Agreement and to perform its obligations
hereunder. The Company is a corporation duly incorporated and organized and
validly existing under the laws of Switzerland and has the corporate power to
own or lease its property, to carry on the Purchased Business as now being
conducted by it. The Vendor and the Company are each duly qualified as a
corporation to do business in all jurisdictions in which each of them conducts
business in a manner so as to require such qualification. The certified articles
of association and internal regulations of the Company, which are attached
hereto as Schedule 4.1 are correct, complete, in compliance with applicable
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law and up-to-date. The Vendor is not insolvent or deemed to be insolvent for
any purpose of any law applicable to it.
4.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered and
is a legal, valid and binding obligation of each Covenantor, enforceable against
each Covenantor by the Purchaser in accordance with its terms, except (a) as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the rights and remedies of creditors generally, and (b)
as the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defences and to the discretion of a
court of competent jurisdiction before which any proceeding may be brought.
4.3 NO OTHER AGREEMENTS TO PURCHASE
No person other than the Purchaser has any written or oral agreement
or option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase or acquisition from
the Vendor of the Sale Shares or from the Company of any of the assets of the
Company, other than pursuant to purchase orders accepted by the Vendor or the
Company in the ordinary course of the Purchased Business.
4.4 NO VIOLATION
Except as set out in Schedule 4.4, the execution and delivery of
this Agreement by the Vendor and the consummation of the transaction herein
provided for do not and will not result in: (a) the breach or violation of any
of the provisions of, or constitute a default under, or conflict with or cause
the acceleration of any obligation of the Vendor or the Company under: (i) any
Contract, Third Party Software Licence or Permit to which the Vendor or the
Company is a party, or by which they or the Purchased Business is bound or its
assets are subject; (ii) any provision of its certificate of incorporation or
by-laws or resolutions of the board of directors (or any committee thereof) or
shareholders of the Vendor or the Company; (iii) any shareholders agreement
entered into by the shareholders of the Vendor or the Company; (iv) any
judgment, decree, order, award, or other authorization of any court,
Governmental Authority or arbitrator having jurisdiction over the Vendor or the
Company; or (iv) any applicable law, statute, ordinance regulation or rule; or
(b) the creation or imposition of any Encumbrance on the Sale Shares or any of
the assets of the Company.
4.5 SUFFICIENCY OF ASSETS
The assets owned or leased by the Company, in conjunction with the
assets owned or leased by the Vendor are sufficient to carry on the Purchased
Business in substantially the same manner as the Purchased Business is carried
on prior to the date hereof except that no representation or warranty is made to
the extent that the ability to so carry on business is diminished by the absence
of employees who are not retained by or otherwise continue in the employ of the
Company. All tangible assets of the Company are in good operating condition and
are in a state of good repair and maintenance, reasonable wear and tear
excepted. During the two years preceding the date of this Agreement, there has
not been any significant interruption of
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operations (being an interruption of more than one day) of the Purchased
Business due to inadequate maintenance of any of its assets. Except as set out
on Schedule 4.5, all the tangible assets of the Company are situated at the
Leased Property. The assets of the Company, together with the Purchased Assets
as described in the Asset Purchase Agreement, include all assets which have been
used by the Company to conduct the Purchased Business or are required for the
purpose of carrying on the Purchased Business.
4.6 TITLE TO PERSONAL PROPERTY
The assets of the Company (other than Intellectual Property) are
owned by the Company free and clear of all Encumbrances other than Permitted
Encumbrances.
4.7 REAL PROPERTY LEASE
Other than the Leases, the Company has no interest in any real
property, and except for the leases (the "Leases") described in Schedule 4.7
relating to the real property that is leased by the Company (the "Leased
Property"), the Company is not a party to any other lease or agreement to lease
in respect of any real property which is used in the Purchased Business, whether
as lessor or lessee. The Company occupies the Leased Property and has the
exclusive and unencumbered right to occupy and use the Leased Property upon the
terms and conditions contained in the Lease. The Leases are in full force and
effect, and neither the Company nor the Vendor nor to either of their knowledge
any other party thereto is in breach of any covenants, conditions or obligations
contained therein. None of the Leases is terminable by any third party, or would
be breached, in both cases, as a result of the transactions contemplated by this
Agreement. The Vendor has made available to the Purchaser a true and complete
copy of the Leases and all amendments thereto and no other terms apply to the
Leased Property.
4.8 LEASED PROPERTY
All buildings, structures, improvements and appurtenances situated
on the Leased Property (collectively, the "Premises") are in good operating
condition and in a state of reasonably good maintenance and repair, are adequate
and suitable for the purposes for which they are currently being used and the
Company has adequate rights of ingress and egress for the operation of the
Purchased Business in the ordinary course as currently conducted. To the
knowledge of the Vendor, none of such buildings, structures, improvements or
appurtenances (or any equipment therein), nor the operation or maintenance
thereof, violates any material restrictive covenant or any provision of any
federal, cantonal or municipal law, ordinance, rule or regulation, or encroaches
on any property owned by others. Without limiting the generality of the
foregoing:
(a) to the knowledge of the Vendor, the Leased Property and the
Premises, the current uses thereof and the conduct of the Purchased
Business comply with all regulations, statutes, enactments, laws and
including those dealing with zoning, parking, access, loading
facilities, landscaped areas, building construction, fire and public
health and safety and Environmental Laws;
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(b) no alteration, repair, improvement or other work has been ordered,
directed or requested in writing to be done or performed to or in
respect of the Leased Property and the Premises or to any of the
plumbing, heating, elevating, water, drainage or electrical systems,
fixtures or works by any municipal, provincial or other competent
authority, which alteration, repair, improvement or other work has
not been completed, and the Vendor does not know of any written
notification having been given to them or to the Purchased Business
of any such outstanding work being ordered, directed or requested,
other than those which have been complied with;
(c) all accounts for work and services performed and materials placed or
furnished upon or in respect of the Leased Property and the Premises
at the request of the Vendor or the Company have been fully paid and
satisfied and no person is entitled to claim a lien against the
Leased Property or the Premises or any part thereof, other than
current accounts in respect of which the payment due date has not
yet passed;
(d) there is nothing owing in respect of the Leased Property and the
Premises by the Company or the Vendor to any municipal corporation
or to any other corporation or commission owning or operating a
public utility for water, gas, electrical power or energy, steam or
hot water, or for the use thereof, other than current accounts in
respect of which the payment due date has not yet passed;
(e) no part of the Leased Property or the Premises has been taken or
expropriated by any federal, cantonal, municipal or other competent
authority nor has any notice or proceeding in respect thereof been
given or commenced;
(f) to the knowledge of the Vendor, there are no Encumbrances, which
affect the Leased Property or the Premises that would not be learned
by conducting a title search on the property in the normal course of
business;
(g) the Leased Property and the Premises are fit for its present use,
and there are no material or structural repairs or replacements
which are necessary or advisable and, without limiting the
generality of the foregoing, there are no repairs to, or
replacements of, the roof or the mechanical, electrical, heating,
ventilating, air-conditioning, plumbing or drainage equipment or
systems which are necessary or advisable to permit the continued
operation of the Purchased Business, and none of the Leased Property
or the Premises is currently undergoing any alteration or renovation
nor is any such alteration or renovation contemplated; and
(h) to the knowledge of the Vendor, there are no outstanding levies,
charges or fees assessed against the Leased Property or the Premises
by any public authority (including development or improvement
levies, charges or fees).
4.9 INVENTORIES
The Company has no inventory.
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4.10 ACCOUNTS RECEIVABLE
All accounts receivable, book debts and other debts due or accruing
to the Company in connection with the Purchased Business have arisen out of bona
fide transactions in the ordinary course of business and are bona fide and good
and, subject to an allowance for doubtful accounts which have been reflected on
the books of the Company in accordance with GAAP, collectible without set-off or
counterclaim. Schedule 4.10 sets forth a true, accurate and complete aging
schedule of all Accounts Receivable of the Company outstanding at the day
immediately prior to the Closing Date. In the Financial Statements, the assets
of the Company are valued in accordance with GAAP consistently applied.
4.11 INTELLECTUAL PROPERTY
(a) Schedule 4.11(a) lists all Contracts and amendments thereto which set
forth the terms of the Third Party Software Licences except for Contracts in
respect of COTS Software. The Third Party Software Licences govern the Company's
rights with respect to the Third Party Software Licences.
(b) The Intellectual Property listed in Schedule 4.11(b), the unregistered
owned Intellectual Property of the Company, the COTS Software, and the Third
Party Software Licences (collectively the "Company Intellectual Property"),
together with the Intellectual Property owned by the Vendor, comprise all
Intellectual Property required in order for the Purchaser to conduct the
Purchased Business in the manner conducted by the Vendor or the Company prior to
the date hereof.
(c) The Company is the owner of the rights in Company Intellectual
Property, free and clear of all Encumbrances and the terms and conditions
contained in the Third Party Software Licenses and is not a party to or bound by
any Contract or any other obligation whatsoever that limits or impairs its
rights in and to the Company Intellectual Property, except as specified in the
Contracts specifically listed in Schedule 4.11(a), and except as set out in
agreements governing the COTS Software and except as set out in Schedule 4.11(c)
and except for Permitted Encumbrances.
(d) None of the Company Intellectual Property (other than the COTS
Software) has been used or enforced or failed to be used or enforced in a manner
that would result in the abandonment, cancellation or unenforceability of any of
the Company Intellectual Property, except for the Intellectual Property
applications marked "abandoned" on Schedule 4.11(d). The Company has maintained
or caused to be maintained the rights to Company Intellectual Property in a
prudent and commercially reasonable manner (provided that no representation is
given that the Company has applied for all possible registrations of the Company
Intellectual Property) and, without limiting the generality of the foregoing,
has registered or applied to register the Company Intellectual Property as set
out in Schedule 4.11(d), has paid all applicable fees due under all Contracts,
including the Third Party Software Licences, for the Company Intellectual
Property and for all registrations and applications for registrations listed on
Schedule 4.11(d), and has renewed or made applications for renewal within the
applicable renewal periods for the Third Party Software Licences.
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(e) Except as specifically disclosed in Schedule 4.11(e), neither the
Vendor nor the Company has received any notice of any adverse claim or
litigation and neither the Vendor nor the Company is a party to any litigation
challenging the validity, ownership or enforceability of any of the Company
Intellectual Property, or of the Company's right to use the Company Intellectual
Property. Except as set out in Schedule 4.11(e), the Vendor has no knowledge of
any state of facts which casts doubt on the validity or enforceability of any of
the Company Intellectual Property (other than the COTS Software).
(f) The products of the Company as at the date hereof operate
substantially in accordance with the specifications and documentation therefor
provided to the Company's customers.
(g) To the knowledge of the Vendor, the conduct of the Purchased Business,
as currently carried on by the Company and/or the Vendor, including the use of
the Company Intellectual Property (other than the COTS Software), does not
infringe upon or breach the Intellectual Property, domestic or foreign, of any
other person. Neither the Vendor nor the Company has received any notice of any
adverse claim or litigation and is not party to any litigation alleging that the
conduct of the Purchased Business, as currently carried on by the Company and/or
the Vendor, infringes upon or breaches any Intellectual Property of any other
person, except as specifically disclosed in Schedule 4.11(e). The Vendor has no
knowledge of any state of facts or event which would provide any other person
with a reasonable basis for claiming that the conduct of the Purchased Business,
as currently carried on by the Vendor and/or the Company, including the use of
the Company Intellectual Property (other than the COTS Software), infringes upon
or breaches the Intellectual Property of that other person.
(h) Except as set out in Schedule 4.11(h), to the knowledge of the Vendor,
there is no basis for any claim that the Company's Intellectual Property rights
in the Company Intellectual Property (other than the COTS Software) are being or
have been infringed or breached by any other person.
(i) The Vendor has made available to the Purchaser true and complete
copies of all Contracts, software, media and documentation comprising the
Company Intellectual Property.
(j) Provided that the required consents set out in Schedule 4.16 are
obtained, the sale of the Sale Shares to Purchaser hereunder does not and will
not violate any Company Agreements or invalidate any such Company Intellectual
Property.
(k) The Systems owned by the Company and, to the Vendor's knowledge, the
Systems licensed to the Company, including the Third Party Software Licences,
are free of any disabling codes or instructions (each, a "Disabling Code"), and
any virus or other contaminant (each, a "Contaminant"), that may, or may be used
to, access, modify, delete, damage or disable the Systems or that may result in
damage thereto. The Company has taken reasonable steps and implemented all
reasonable procedures to ensure that the Systems are free from Disabling Codes
and Contaminants. The Company has taken all reasonable steps and implemented all
reasonable procedures to safeguard the Systems and restrict unauthorized access
thereto.
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4.12 INSURANCE
Attached as Schedule 4.12 is a list of all insurance policies
maintained by the Vendor or the Company in respect of the Purchased Business.
The Company is not in default with respect to any of the material provisions
contained in any such insurance policy. The Company has not received any notice
or other communication from any insurance provider within 3 years prior to the
date hereof cancelling or amending such policies or substantially increasing the
annual or other premiums payable under any of said insurance policies and no
such cancellation or amendment is threatened. All premiums pertaining to the
insurance policies have been paid as they fell due, or are duly provided for in
the Financial Statements.
4.13 NO EXPROPRIATION
No notice or proceeding in respect of an action by a Governmental
Authority to expropriate any assets of the Purchased Business has been given or
commenced, and the Vendor is not aware of any intent or proposal to give any
such notice or commence any such proceedings.
4.14 AGREEMENTS AND COMMITMENTS
Schedules 4.7, 4.11(a), and 4.14 list the Company's Agreements. The
Company has performed in all material respects all of the obligations required
to be performed by it and is entitled to all benefits under, and is not in
default or, to the knowledge of the Vendor, alleged to be in default in respect
of any of the Company's Agreements. All of the Company's Agreements are in full
force and effect, and no event, condition or occurrence exists with respect to
the Company or, to the knowledge of the Vendor, with respect to the
counterparties to the Company's Agreements, which, after notice or lapse of time
or both, would constitute a default under any of the Company's Agreements. The
Vendor has made available to the Purchaser a true and complete copy of each of
the Company's Agreements
4.15 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
The Company has complied in all material respects with all laws,
statutes, ordinances, regulations, rules, judgments, decrees, franchises or
other federal, cantonal, local and foreign governmental authorizations,
guidelines, policies or orders applicable to the Purchased Business. except that
the directors of the Company do not hold any shares in the capital stock of the
Company. In particular, the Company is or has during the last 5 years not been a
party to any agreement, arrangement, concerted practice or course of conduct
which (i) is subject to registration or requiring approval under any merger
regulation or any applicable competition law, (ii) infringes the Swiss
Competition Law Act or (iii) is or has been subject to notification for negative
clearance or notification filed with the Swiss Competition Commission.
All of the Company's permits (collectively, the "Permits"), as set
out in Schedule 4.15, respectively, are all the (a) government permits; and (b)
other approvals, consents, certificates, registrations and authorizations
(whether governmental, regulatory or otherwise) held by or granted to the Vendor
or the Company which are applicable to the Purchased Business, the Leased
Property, and/or the Premises, and there are no other material (i) government
permits (including Environmental Permits), and (ii) other licences, approvals,
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consents, registrations, certificates or authorizations (including Environmental
Permits) necessary for the Purchaser to conduct the Purchased Business in
substantially the same manner as currently conducted or to own or lease any of
the assets of the Company. Each Permit is valid, binding and in full force and
effect, neither the Vendor nor the Company is in violation, default or breach of
any Permit, and no proceeding is pending or, to the knowledge of the Vendor,
threatened for violation of or to revoke or limit any Permit. The Vendor has
made available to the Purchaser a true and complete copy of each Permit and all
amendments thereto.
4.16 CONSENTS AND APPROVALS
There is no requirement to make any filing with, give any notice to
or to obtain any licence, permit, certificate, registration, authorization,
consent or approval of, any Governmental Authority or any other person as a
condition to the lawful consummation of the transactions contemplated by this
Agreement, except for the filings, notifications, licences, permits,
certificates, registrations, authorizations, consents and approvals described in
Schedule 4.16. Except as set out in Schedule 4.16, under any Contract to which
the Vendor or the Company is a party or by which it or the Purchased Business is
bound or the assets of the Company are subject, there is no requirement to give
notice to, or to obtain the consent or approval of, any party to such agreement,
instrument or commitment relating to the consummation of the transactions
contemplated by this Agreement.
4.17 BOOKS AND RECORDS
(a) The books and records relating to the Company shall be left in the
possession of the Company or the Company's external accountants and fairly and
correctly set out and disclose in all material respects all of the information
contained therein.
(b) The Financial Statements are as set forth in Schedule 4.17(b) and have
been prepared in accordance with the provisions of Swiss law and GAAP, applied
consistently throughout the last 3 financial years and are correct and complete
and are free from any material misstatements of the financial condition and the
results of operations of the Company. The Company is in possession and has
accurately kept and completed all accounts, books, ledgers, financial and other
records as required by applicable laws.
(c) The Financial Statements contain all actual, conditional and
contingent liabilities and all accruals and reserves that, according to GAAP
should be contained therein.
4.18 LITIGATION
Except as set out in Schedule 4.18, there are no actions, suits,
investigations or proceedings in progress or affecting or, to the knowledge of
the Vendor, threatened against the Vendor or the Company in respect of or
affecting the Purchased Business, the Leased Property, the Premises or any of
the Company's assets or any part thereof, at law or in equity or before or by
any court, Governmental Authority, domestic or foreign, or before or by an
arbitrator or arbitration board. The Vendor has no knowledge of any ground on
which any such action, suit or proceeding might be commenced with any reasonable
likelihood of success.
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4.19 NO UNDISCLOSED LIABILITIES
The Accounts Payable shall, as of the Time of Closing, include no
past due amounts. The Company does not have any liabilities or commitments,
whether or not accrued and whether or not determined or determinable, other than
as disclosed in the Financial Statements, incurred in the ordinary course of
business since February 29, 2004 or disclosed in this Agreement.
4.20 ABSENCE OF CHANGES
Except as listed in Schedule 4.20, since February 29, 2004, the
Purchased Business has been carried on only in the ordinary and normal course
consistent with past practice and there has not been: (a) any material adverse
change in the condition (financial or otherwise), assets, liabilities,
operations, earnings, business or prospects of the Purchased Business; (b) any
damage, destruction or loss (whether or not covered by insurance) affecting the
assets of the Purchased Business; (c) any obligation or liability (whether
absolute, accrued, contingent or otherwise, and whether due or to become due)
incurred by the Vendor or the Company in connection with the Purchased Business,
other than those incurred in the ordinary and normal course of the Purchased
Business and consistent with past practice; (d) any payment, discharge or
satisfaction of any Encumbrance, liability or obligation of the Vendor or the
Company in relation to the Purchased Business or its assets (whether absolute,
accrued, contingent or otherwise, and whether due or to become due) other than
payment of accounts payable, tax liabilities and other debts and liabilities
incurred in the ordinary and normal course of business consistent with past
practice; (e) any labour trouble adversely affecting the Purchased Business ;
(f) any licence, sale, assignment, transfer, disposition, pledge, mortgage or
granting of a security interest or other Encumbrance on or over any assets of
the Purchased Business other than licences granted and product sales made in the
ordinary course of business; (g) any capital expenditures or commitments
relating to the Purchased Business or its assets in excess of $100,000 in the
aggregate; (h) any change in the accounting or tax practices followed by the
Company; (i) any change adopted by the Company in its depreciation or
amortization policies or rates; (j) any material change in the credit terms
offered to customers of, or by suppliers to, the Purchased Business; (k) any
indebtedness for borrowed money incurred by the Company becoming, or becoming
capable of being declared, repayable earlier than the due date for payment or
forgiveness or cancellation of indebtedness owed to the Company or waiver of any
claims or rights by the Company with regard to such indebtedness, or (l) any
dividend, distribution or other disposition or any transfer, lease, license of
assets of the Company to the Vendor.
4.21 NON-ARM'S LENGTH TRANSACTIONS
Except as listed in Schedule 4.21, with respect to the Purchased
Business: (a) the Company has not since February 29, 2004 made any payment or
loan to, or borrowed any moneys from or is otherwise indebted to, any officer,
director, employee, shareholder or any other person (other than the Vendor) not
dealing at arm's length with the Company (within the meaning of the Tax Act and
Swiss tax law and practices) or any Affiliate or Associate of any of the
foregoing, except for usual employee reimbursements and compensation paid in the
ordinary course of the Purchased Business and except for payments due and
payable in the ordinary
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course of business on outstanding indebtedness; and (b) except for Contracts of
employment, the Company is not a party to any Contract with any officer,
director, employee, shareholder or any other person (other than the Vendor) not
dealing at arm's length with the Company (within the meaning of the Tax Act and
Swiss tax law and practices) or any Affiliate or Associate of any of the
foregoing. No officer, director or shareholder of a Covenantor (other than the
Vendor) and no entity which is an Affiliate or Associate of one or more of such
individuals (other than the Vendor): (i) owns, directly or indirectly, any
interest in (except for shares representing less than one per cent of the
outstanding shares of any class or series of any publicly traded company), or is
an officer, director, employee or consultant of, any person which is, or is
engaged in business as, a direct competitor of the Purchased Business or a
lessor, lessee, supplier, distributor, sales agent or customer of the Purchased
Business; (ii) owns, directly or indirectly, in whole or in part, any property
that the Vendor or the Company uses in the operations of the Purchased Business;
or (iii) has any cause of action or other claim whatsoever against, or owes any
amount to, the Vendor or the Company in connection with the Purchased Business,
except for any liabilities reflected in the Financial Statements and claims in
the ordinary course of business such as for accrued vacation pay and accrued
benefits under any Vendor or Company Employee Plans set out in Schedules 4.23(d)
and 9.2(a).
4.22 TAX MATTERS
There are no actions, suits, proceedings, investigations or claims
in progress or to the knowledge of the Vendor, threatened against the Vendor or
the Company in respect of Taxes, government charges or assessments, whether paid
or unpaid, nor are any material matters under discussion with any Governmental
Authority relating to Taxes, governmental charges or assessments, whether paid
or unpaid, asserted by any such authority which could result in a claim against
the Company or Encumbrance on the Purchased Business or its assets.
The Company has filed when due, correct and accurate all returns for
Taxes and has otherwise complied in all respects with requirements relating to
the filing of Tax returns and the supply of all information required to be
supplied to any tax authority.
The Company has complied with all and any requirements relating to
the payment of Taxes, of whatever nature, including interest and penalties, if
any. The Company has withheld from each payment made by it the amount of all
Taxes and deductions required to be withheld therefrom and has paid the same to
the proper taxing or other authority with the time prescribed under applicable
law.
The Company has paid and, if not paid, established adequate
provisions in the Financial Statements for the year ended February 29, 2004 for
all Taxes of whatever nature that may be assessed or computed on the results,
operations or transactions of the Company for all periods prior to the date
hereof, regardless of the financial period during which such Taxes may become
due and payable.
The amounts of the provisions for deferred Taxes in the Financial
Statements for the year ended February 29, 2004 and the financial statements
provided pursuant to Section 8.5(c) are adequate and fully in accordance with
GAAP.
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There are no liens for Taxes on the assets of the Purchased
Business. None of such assets are subject to any joint venture, partnership or
other agreement or arrangement that is treated as a partnership for federal
income tax purposes. The Company has remitted to the appropriate tax authority,
when required by law to do so, all amounts collected by it pursuant to
applicable law.
The Company has not distributed or caused to be distributed, any
hidden or constructive dividend, nor distributed or granted any other benefit to
the Vendor or any other person which could lead to the imposition of any
withholding taxes on such hidden or constructive dividend.
4.23 EMPLOYMENT MATTERS
(a) Neither the Vendor nor the Company has (i) entered into any Contract
or any collective bargaining agreement with any labour union or employee
association in respect of any of the employees employed by the Company; or (ii)
made any commitments to or conducted negotiations with any labour union or
employee association with respect to any future agreements in respect of any of
the employees employed by the Company.
(b) To the Vendor's knowledge, there are no current attempts to organize
or to establish any labour union or employee association in respect of any of
the employees employed by the Company and there is no certification of any such
union with regard to a bargaining unit.
(c) Except as disclosed in Schedule 4.23(c), since December 31, 2003,
neither the Vendor nor the Company has granted or offered any increase in the
compensation of employees of the Company (including any increase pursuant to any
applicable Vendor or Company Employee Plan or commitment thereunder and any
severance, termination or change of control benefits), or any increase in any
compensation or bonus payable to any officer, employee, consultant or agent
thereof or executed or promised to execute any Contract of employment with any
officer or employee, or made any loan to, or engaged in any transaction with,
any employee, officer or director of the Company.
(d) Schedule 4.23(d) contains a complete and accurate list of the names of
the Employees as of the date hereof, together with the length of hire, title or
classification of each such person, notice periods for termination, the rate of
salary or hourly pay at the Company, any commission or bonus entitlements and
any other remuneration payable by the Company or the Vendor to each such person
as of such date and any Vendor- or Company-committed wage increases up to and
including the Closing Date.
(e) Except for the employees who have entered into employment contracts
listed in Schedule 4.23(d), the employment of each other employee of the Company
can be terminated by the Company without damages or compensation (other than
that payable by law) by giving at any time only the period of notice applicable
to that employee under the laws of Switzerland or the internal regulations of
the Company set out in Schedule 4.23(e). As of the Time of Closing, no employee
will have any claim for overtime work exceeding CHF 5,000 or any claim for
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holidays earned and not taken exceeding fifteen days unless such claim is
covered by provisions established specifically for such purposes. All employees
are Swiss citizens or holders of a valid work permit.
(f) Schedule 4.23(f) identifies any Employees who are on lay-off or who
have been absent continually from work for a period in excess of one month, as
well as the reason for their absence.
(g) There are no claims or charges outstanding, or to the best of the
knowledge of the Vendor, anticipated, nor are there any orders, decisions,
directions or convictions currently registered or outstanding by any tribunal or
agency against or in respect of the Vendor under or in respect of any Employment
Legislation.
(h) The Company is in compliance with all applicable Employment
Legislation
(i) The Vendor is in compliance with all terms of the stock option plan of
the Vendor approved by the board of directors of the Vendor on October 4, 2001
and its predecessors.
4.24 CUSTOMERS AND SUPPLIERS
Schedule 4.24 sets out the major customers of the Company (being
those customers of the Purchased Business accounting for more than 75% of sales
for the period May 31, 2003 to June 1, 2004) and since June 1, 2004 there has
been no termination or cancellation of, and no modification or change in, the
Company's business relationship with such major customers. The Vendor has no
reason to believe that the benefits of any relationship with any of such major
customers or any of the major suppliers of the Purchased Business will not
continue after the Closing Date in substantially the same manner as prior to the
date of this Agreement.
4.25 PRODUCT WARRANTIES AND PRODUCT LIABILITY
Schedule 4.25 is a complete list of all express, written warranties
given to purchasers of products or software supplied by the Vendor or the
Company in connection with the Purchased Business.
The Company has not manufactured or sold any product which does not
in all material respects comply with all applicable laws, regulations or
standards in the countries where the said products are offered or sold or which
is defective or dangerous or which does not conform with any representation or
warranty, express or implied, given in respect of it.
4.26 ENVIRONMENTAL
(a) The Purchased Business, the Leased Property and the Premises have been
and are in material compliance with all Environmental Laws.
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(b) Neither the Vendor nor the Company has used or permitted to be used,
except in compliance with all Environmental Laws, the Leased Property or the
Premises to generate, manufacture, process, distribute, use, treat, store,
dispose of, transport or handle any Hazardous Substance.
(c) To the knowledge of the Vendor, there are no underground storage
tanks, ozone-depleting substances or polychlorinated biphenyls in or on the
Leased Property or the Premises and the Premises have not been and are not
insulated with urea formaldehyde insulation or asbestos-containing material.
(d) Neither the Vendor nor the Company is responsible for any Cleanup or
any other remedy or liability under any Environmental Laws in connection with
the Leased Property, the Premises, the Purchased Business or its assets. Neither
the Vendor nor the Company has ever received any formal or informal notice of,
or been prosecuted for, non-compliance with any Environmental Laws, nor has the
Vendor or the Company settled any allegations of any such non-compliance prior
to prosecution. There are no written notices, orders or directions relating to
environmental matters or other matters governed by Environmental Laws requiring,
or notifying the Vendor or the Company that it is or may be responsible for, any
work, repairs, construction or material capital expenditures to be made under
Environmental Laws with respect to the Purchased Business, its assets, the
Leased Property, or the Premises. Neither the Vendor nor the Company has ever
received a written claim or notice and otherwise has no knowledge of potential
liability or actual liability, relating to any Cleanup at any off-site location
arising out of the Vendor's, the Company's or any other person's activities or
operations at the Leased Property or the Premises.
(e) Neither the Vendor nor the Company has caused or permitted, nor has
there been to the knowledge of the Vendor, any Release of any Hazardous
Substance on, in, around, from or in connection with the Leased Property or the
Premises or the Purchased Business or any such Release on or from a facility
which was previously owned or leased, or any such Release, to the Vendor's
knowledge, on or from a facility owned or operated by any third party but with
respect to which the Vendor or the Company in connection with the Purchased
Business is or may reasonably be alleged to have liability.
(f) All Hazardous Substances and all other wastes and other materials and
substances used in whole or in part by the Vendor or the Company in connection
with the Purchased Business or resulting from the operation of the Purchased
Business have been disposed of, treated and stored by the Vendor and the Company
in compliance with all Environmental Laws.
(g) The Vendor has made available to the Purchaser all documents in the
Vendor's or the Company's possession or under its control relating to compliance
by the Vendor or the Company with or claims against the Vendor or the Company
under Environmental Laws or to any other environmental or occupational health
and safety matter in connection with the Leased Property, the Premises or the
Purchased Business.
4.27 CAPITALIZATION AND SALE SHARE MATTERS
The Company has a share capital of CHF 100,000, divided into 100
registered
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shares numbered 1 - 100 with a par value of CHF 1,000 each, fully paid-in. There
are no other shares or share certificates of the Company issued and outstanding.
Immediately prior to Closing, the Vendor will have, and at Closing
the Purchaser will receive, full ownership to the Sale Shares. Immediately prior
to Closing, the Sale Shares will be free and clear of any charges or other
rights of any third parties, other than the Permitted Encumbrances set out in
Schedule 5.6 of the Asset Purchase Agreement. Upon the conclusion of the Closing
and the steps set forth in the Plan of Arrangement, the Sale Shares shall be
free and clear of any charges or other rights of any third parties Immediately
prior to Closing, the Sale Shares will be the only shares of the Company issued
and outstanding and the Vendor will be the only shareholder of the Company.
There are no securities of the Company convertible into or
exchangeable for share of capital stock of the Company or options or other
rights to acquire or other obligation of the Company to issue any capital stock
or securities convertible into or exchangeable for capital stock of the Company.
There are no obligations of the Company to purchase any of its own shares.
There is no option, warrant, conversion privilege, pledge, right of
pre-emption, right to acquire, right of first refusal or similar right over or
affecting the shares of the Company or at Closing any of the Sale Shares, nor is
there any commitment to give or create any of the foregoing, and no person has
claimed to be entitled to any of the foregoing.
4.28 FULL DISCLOSURE
None of the representations and warranties of the Covenantors
contained herein and none of the information contained in the Schedules to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained therein not misleading. There has been no event, transaction or
information which has come to the attention of any Covenantor that has not been
disclosed to the Purchaser in writing which could reasonably be expected to have
a material adverse effect on the assets, business, earnings, prospects,
properties or condition (financial or otherwise) of the Purchased Business or
the prospects of the Purchased Business.
4.29 INSOLVENCY / OVER-INDEBTEDNESS
(a) No order has been notified and no resolution has been passed for the
dissolution of the Company or for a liquidator to be appointed in
respect of the Company, no petition has been presented and no
meeting has been convened for the purpose of dissolving the Company.
(b) No receivership administrator has been appointed in respect of the
Company, or all or any of its assets.
(c) The Company is not insolvent, unable to pay its debts or has stopped
paying its debts as they fall due.
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(d) No unsatisfied judgement is outstanding against the Company.
(e) As of the Closing Date, the Company will not be overindebted
(uberschuldet) or have a capital loss (Unterbilanz) within the
meaning of article 725 of the Swiss Code of Obligations.
(f) There are no reasons that any of the events described under 4.29(a)
to (e) above are about to occur.
4.30 PROFESSIONAL AND SOCIAL WELFARE
Any and all returns and reports related to Social Security
Contributions that are required to be filed with respect to the Company prior to
the date hereof have been timely and correctly filed. The Company has paid in
full any and all Social Security Contributions as and when due. No social
security authority is now asserting any deficiency or claim for additional
Social Security Contributions (or interest thereon or penalties in connection
therewith) and any and all Social Security Contributions which (although not
due) have accrued on the basis of the salaries to be paid until the date hereof,
have been fully provisioned.
There are no facts or circumstances existing which may lead to a
re-assessment by any social security authority of Social Security Contributions
relating to any period prior to the date hereof.
The details of the employee pension fund of the Company are
described in Schedule 4.30 (hereinafter the "Pension Fund"). The Company is
meeting all its obligations under the Pension Fund and has paid (or provisioned)
all contributions required prior to the date hereof as stipulated by the
regulations of the Pension Fund. The Company is not required to cover any
funding deficiencies or additional benefits under the Pension Fund by way of
additional contributions. The Company is not required to contribute to any
pension fund other than the Pension Fund.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendor that as of the
date of this Agreement and the Closing Date the representations and warranties
set out in this Article 5 are true and correct as follows and acknowledge and
confirm that the Vendor is relying on such representations and warranties in
connection with the sale of the Sale Shares:
5.1 ORGANIZATION
The Purchaser is a corporation duly incorporated and organized and
validly existing under the laws of the Netherlands and has the corporate power
to enter into this Agreement and to perform its obligations hereunder.
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5.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered by
the Purchaser and each is a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser by the Vendor in accordance with
its terms, except (a) as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights and remedies of
creditors generally, and (b) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defences and to the discretion of a court of competent jurisdiction before which
any proceedings may be brought.
5.3 NO VIOLATION
The execution and delivery of this Agreement by the Purchaser and
the consummation of the transactions herein provided for will not result in the
violation of, or constitute a default under, or conflict with or cause the
acceleration of any obligation of the Purchaser under: (a) any Contract to which
the Purchaser is a party or by which it is bound; (b) any provision of its
certificate of incorporation or by-laws or resolutions of the board of directors
(or any committee thereof) or shareholders of the Purchaser; (c) any judgment,
decree, order or award of any court, Governmental Authority or arbitrator having
jurisdiction over the Purchaser; or (d) any applicable law, statute, ordinance,
regulation or rule.
5.4 CONSENTS AND APPROVALS
There is no requirement for the Purchaser to make any filing with,
give any notice to or obtain any licence, permit, certificate, registration,
authorization, consent or approval of or from, any Governmental Authority or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENTCO
Parentco represents and warrants to the Vendor that as of the date
of this Agreement and the Closing Date the representations and warranties set
out in this Article 6 are true and correct as follows and acknowledges and
confirms that the Vendor is relying on such representations and warranties in
connection with the sale of the Sale Shares:
6.1 ORGANIZATION
Parentco is a corporation validly existing under the laws of the
State of Delaware, has the corporate power to enter into this Agreement and to
perform its obligations hereunder.
6.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered by
Parentco and each is a legal, valid and binding obligation of Parentco,
enforceable against Parentco by the Vendor in accordance with its terms, except
(a) as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights and remedies of creditors
generally, and (b) as the remedy of specific performance and injunctive and
other forms
- 26 -
of equitable relief may be subject to equitable defences and to the discretion
of a court of competent jurisdiction before which any proceedings may be
brought.
6.3 NO VIOLATION
The execution and delivery of this Agreement by Parentco and the
consummation of the transactions herein provided for will not result in the
violation of, or constitute a default under, or conflict with or cause the
acceleration of any obligation of Parentco under: (a) any Contract to which
Parentco is a party or by which it is bound; (b) any provision of its
certificate of incorporation or by-laws or resolutions of the board of directors
(or any committee thereof) or shareholders of Parentco; (c) any judgment,
decree, order or award of any court, Governmental Authority or arbitrator having
jurisdiction over Parentco; or (d) any applicable law, statute, ordinance,
regulation or rule.
6.4 CONSENTS AND APPROVALS
There is no requirement for Parentco to make any filing with, give
any notice to or obtain any licence, permit, certificate, registration,
authorization, consent or approval of or from, any Governmental Authority or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Any claims for the breach or inaccuracy in the representations and
warranties contained in this Agreement shall survive the closing of the
transactions contemplated hereby and, notwithstanding such closing or any
investigation made by or on behalf of the party entitled to the benefit thereof,
shall continue in full force and effect for the benefit of the party entitled to
the benefit thereof; provided, however, that, subject to Sections 12.1(a) and
12.2(a), any claims for the breach of or inaccuracy in the representations and
warranties contained in Articles 4 and 5 and 6 or elsewhere in this agreement
shall survive until the date which is 18 months after the Closing Date; provided
further that:
(a) any claim for the breach of or inaccuracy in the representations and
warranties set out in Sections 4.1, 4.2, 4.3, 4.4, 4.6, 5.1, 5.2 and
5.3, 6.1, 6.2, 6.3 and, to the extent relating to title to or
ownership of Intellectual Property, Section 4.11, shall survive and
continue in full force and effect for a period commencing on the
date of this Agreement and ending ten years following the Closing
Date;
(b) any claim for the breach of or inaccuracy in the representations and
warranties set out in Section 4.22 and 4.30 shall survive and
continue in full force and effect until one year following the
expiration of the period, if any, during which an assessment,
reassessment or other form of recognized document assessing
liability
- 27 -
for tax, social security contribution, interest or penalties under
applicable legislation in respect of any year to which such
representations and warranties extend could be issued under such tax
legislation;
(c) any claim for the breach of or inaccuracy in the representation and
warranty in Section 4.26 shall survive and continue in full force
and effect for a period commencing on the date of this Agreement and
ending five years following the Closing Date; and
(d) a claim for any breach by any party hereto of or inaccuracy in any
of the representations and warranties contained in this Agreement
involving fraud or fraudulent misrepresentation may be made at any
time.
7.2 IMPLIED WARRANTIES
The parties hereby agree that all warranties and conditions which
might otherwise be implied in this Agreement pursuant to any statute or treaty
relating to the sale of goods are hereby excluded.
ARTICLE 8
COVENANTS
8.1 ACCESS TO THE PURCHASED BUSINESS AND ASSETS
The Vendor shall forthwith make available to the Purchaser and its
authorized representatives and, if requested by the Purchaser, shall provide the
Purchaser with copies of all title documents, Contracts, financial information,
policies, plans, reports, orders, Permits, books of account, accounting records
and all other documents, information and data reasonably relating to the
Purchased Business or the Sale Shares. The Vendor shall have afforded the
Purchaser and its authorized representatives access during normal business hours
to the assets of the Purchased Business, the Leased Property and the Premises.
At the request of the Purchaser, the Vendor shall have executed such consents,
authorizations and directions as may be reasonably necessary to permit any
reasonable inspection of the assets of the Purchased Business or to enable the
Purchaser or their authorized representatives to obtain reasonable access to all
files and records relating to any of such assets maintained by a Governmental
Authority or other public authority. At the Purchaser's request, the Vendor
shall co-operate with the Purchaser in arranging any such meetings as the
Purchaser should reasonably request with:
(a) Employees;
(b) customers, suppliers, distributors or others who have or have had a
business relationship with the Vendor or the Company in respect of
the Purchased Business; and
(c) the auditors, lawyers or any other persons engaged or previously
engaged to provide services to the Vendor or the Company who have
knowledge of matters relating to the Purchased Business or its
assets.
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The Vendor may conduct, at the request of the Purchaser and in
co-operation with the representatives or consultants of the Purchaser, such
physical review of the assets of the Purchased Business as is necessary to
confirm the values presented on the Financial Statements, to the reasonable
satisfaction of the Purchaser. The exercise of any rights of inspection by or on
behalf of a Purchaser under this Section 8.1 shall not mitigate or otherwise
affect any of the representations and warranties of the Vendor hereunder which
shall continue in full force and effect as provided in Section 7.1 or in such
other agreements, as the case may be.
8.2 DELIVERY OF BOOKS AND RECORDS
At the Time of Closing, all the books and records described in
Section 4.17 shall be in the possession of the Company or its accounting firm.
The Purchaser agrees that it will preserve the books and records so delivered to
it for such period as is required by any applicable law, and will permit the
Vendor or its authorized representatives reasonable access thereto in connection
with the tax, any dispute pursuant to this Agreement or other legitimate affairs
of the Vendor, but the Purchaser shall not be responsible or liable to the
Vendor for or as a result of any accidental loss or destruction of or damage to
any such books or records.
8.3 CONDUCT OF PURCHASED BUSINESS PRIOR TO CLOSING
Without in any way limiting any other obligations of the Vendor
hereunder, during the period from the date hereof to the Time of Closing:
(a) Conduct Business in the Ordinary Course. The Vendor shall cause the
Company to conduct the Purchased Business only in the ordinary and
normal course in accordance and consistent with past practice and
the Vendor shall not and shall ensure that the Company shall not,
without the prior written consent of the Purchaser, enter into any
transaction or refrain from doing any action which, if effected
before the date of this Agreement, would constitute a breach of any
representation, warranty, covenant or other obligation of the Vendor
contained herein (including terminate or pay or offer to pay
severance benefits to any Employee or terminate prior to the Closing
Date, any contractor), and the Vendor shall not and shall ensure
that the Company shall not enter into any material Contract with
respect to the Purchased Business without the consent of the
Purchaser, which consent shall not be unreasonably withheld;
(b) Continue Insurance. The Vendor shall cause the Company to continue
to maintain in full force and effect all policies of insurance or
renewals thereof now in effect, shall use its reasonable commercial
efforts to take out, at the expense of the Purchaser, such
additional insurance as may be reasonably requested by the Purchaser
and shall give all notices and present all claims under all policies
of insurance in a due and timely fashion;
(c) Regulatory Consents. The Vendor shall cause the Company to use its
best efforts to maintain, at or prior to the Time of Closing, from
all appropriate federal, provincial, municipal or other governmental
or regulatory bodies, the Permits described in Schedule 4.15;
- 29 -
(d) Contractual Consents. The Vendor shall cause the Company to use its
best efforts to give or obtain, at or prior to the Time of Closing,
the notices, consents and approvals described in Schedule 4.16;
(e) Preserve Goodwill. The Vendor shall cause the Company to use its
best efforts to preserve intact the Purchased Business and its
assets and to carry on the Purchased Business as currently
conducted, and the Vendor shall cause the Company to use its
reasonable commercial efforts to promote and preserve for the
Purchaser the goodwill of suppliers, customers and others having
business relations with the Company;
(f) Discharge Liabilities. The Vendor shall cause the Company to pay and
discharge the liabilities of the Company relating to the Purchased
Business that come due prior to the Closing Date and would be
payable by the Company in the ordinary course in accordance and
consistent with the previous practice of the Company, except those
contested in good faith by the Company; and
(g) Corporate Action. The Vendor shall use its best efforts to take or
cause to be taken all necessary corporate action, steps and
proceedings to approve or authorize validly and effectively the
transfer of the Sale Shares to the Purchaser and the execution and
delivery of this Agreement and the other agreements and documents
contemplated hereby and to cause all necessary meetings of directors
and shareholders of the Vendor and the Company to be held for such
purpose.
8.4 NO SOLICIT
For the purpose of assuring to the Purchaser the full benefit of the
business and goodwill of the Company, the Covenantors undertake (such
undertaking having been taken into account when determining the Purchase Price
under this Agreement) as separate and independent agreements that they will at
no time after Closing disclose to any person, or use for any purpose, any
information concerning the business, accounts or finances of the Company or any
of its clients' or customers' transactions or affairs of which they have
knowledge and that they will use their best endeavours to prevent the
publication or disclosure of such information; and for two years after Closing,
either on their own account or for any other person directly or indirectly
solicit, interfere with or endeavour to entice away from any Company or any
member of the Purchaser's group of companies as then constituted, any person who
to their knowledge is, or has during the immediately preceding 3 years been, a
employee of the Company or any member of the Purchaser's group of companies as
then constituted.
8.5 DELIVERY OF CLOSING DOCUMENTATION
(a) Upon Closing, the Vendor shall deliver to the Purchaser:
(i) the certificate representing the Sale Shares duly endorsed to the
Purchaser;
(ii) a resolution of the Company's board of directors consenting to the
transfer of the
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Sale Shares to the Purchaser and authorizing the Purchaser's
registration in the Company's share register;
(iii) the Company's share register evidencing the registration of the
Purchaser as the owner of the Sale Shares;
(iv) letters of resignation by members of the board of directors of the
Company, each such resignation to be effective as of the Closing
Date and to include a statement of the resigning board member that
he/she has been fully compensated for his/her services rendered to
the Company, that he/she has no and waives any claim of whatever
nature against the Company as the case may be and that he/she has
transferred title to the respective qualifying share to the Vendor;
(v) a certified copy of the current extract of the commercial register
of the Canton of Neuchatel evidencing the capital increase as set
out in Section 10.1.(d);
(vi) the confirmation of the statutory auditors of the Company, Ernst &
Young AG, Biel, as to inter-company transactions being and having
been at all times in accordance with the transfer pricing study
attached as Schedule 8.5(a)(vi);
(vii) the duly executed Termination Agreement; and
(viii) confirmation of the Company and any intra-group company having
entered into contracts and agreements with the Company that they
are completely settled and that each party thereto is fully and
completely released from any and all of their respective
obligations under the relevant agreements and that no further
claims or rights of whatever nature are existing against each
other.
(b) The Purchaser shall deliver to the Vendor a certificate of status and
two copies, certified by a senior officer of the Purchaser as of the Closing
Date, of its constating documents and internal regulations and of the resolution
authorizing the execution, delivery and performance by the Purchaser of this
Agreement and any documents to be provided by it pursuant to the provisions
hereof. The Purchaser shall also execute and deliver or cause to be executed and
delivered two copies of such other documents relevant to the closing of the
transactions contemplated hereby as the Vendor, acting reasonably, may request.
(c) Promptly after the Closing Date, the Purchaser shall (i) hold an
extraordinary shareholders' meeting of the Company and shall elect new members
of the board of directors of the Company and grant full discharge with effect
until the Closing Date to all the board members of the Company who have resigned
as of the Closing Date (the "Discharge" (Entlastung)), and (ii) cause the
Company to waive any claim of whatever nature against all the board members of
the Company who have resigned as of the Closing Date (the "Waiver" (Verzicht)).
For the avoidance of doubt, neither the Discharge nor the Waiver shall be
construed as a limitation, waiver or release of any rights or recourse that the
Purchaser and/or Parentco may have against any Covenantor under this Agreement
or the Asset Purchase Agreement.
- 31 -
8.6 ACTION BY THE PURCHASER AND THE VENDOR
The Purchasers and the Vendor shall take or cause to be taken all
necessary corporate action, steps and proceedings to approve or authorize
validly and effectively the transfer of the Sale Shares from the Vendor to the
Purchaser, the execution and delivery of this Agreement and the other agreements
and documents contemplated hereby and the performance of each party's respective
obligations hereunder and thereunder, and each party shall cause all necessary
meetings of its board of directors (or any committee thereof) to be held for
such purpose.
8.7 ACTIONS BEFORE CLOSING
(a) Issuance of New Share Certificates. The Vendor shall cause the board
of directors of the Company (i) to declare the existing share certificates no. 1
- 6 null and void, (ii) to issue new share certificates representing the Sale
Shares, (iii) to amend the share register of the Company to reflect such change
accordingly and (iv) to confirm that the share register of the Company is
correct, accurately reflects the owner of the shares as well as any transfer
thereof and that the Vendor is the owner of all of the Sale Shares;
(b) Consulting Agreement with Xxxxx Xxxxxxxx. The Vendor undertake to have
the consulting agreement entered into between the Vendor and the Company on the
one side and Xxxxx Xxxxxxxx on the other side dated November 30, 2000 together
with the supplementary agreement dated November 30, 2000 (collectively the
"Consulting Agreement") terminated effective on or before Closing. The
termination of the Consulting Agreement shall be agreed upon in a termination
agreement (the "Termination Agreement") which shall include (i) a statement of
Xxxxx Xxxxxxxx that he has been fully compensated for his services rendered to
the Company and that he has no and waives any claim of whatever nature against
the Company and/or its present or former officers and (ii) an obligation of
Xxxxx Xxxxxxxx not to solicit any individual who is employed by or retained by
the Company or the Vendor for a period of two years after the Closing Date.
8.8 ACTIONS REGARDING LIABILITIES
The Vendor shall pay or cause to be fully repaid at Closing all
inter-company liabilities, the bank loans granted by Credit Suisse, and any
other long-term debts of the Company.
8.9 CLOSING FINANCIAL STATEMENTS
Promptly after Closing, the Vendor shall deliver to the Purchaser an
unaudited financial statement of the Company as of the Time of Closing
evidencing (i) the full settlement of all intra-group receivables/payables, (ii)
the full settlement of over-indebtedness and (iii) the restoring of full stated
capital.
- 32 -
ARTICLE 9
EMPLOYEE MATTERS
9.1 NOTICE TO EMPLOYEES
The Vendor acknowledges and confirms that, promptly after the
execution of this Agreement, it will cause the Company to provide a letter to
each of the Employees describing the changes in his or her conditions of
employment to be effective on the Closing Date, except for the bonus
entitlement, which shall end as of December 31, 2004, or as the case may be,
giving him or her notice of employment termination as described in Schedule 9.1.
9.2 EMPLOYEES
(a) The Vendor acknowledges and confirms that Schedule 9.2(a) sets forth
all of the employee benefits plans applicable to the Company's Employees (the
"Company Employee Plans").
(b) The Vendor covenants and agrees to work with and provide all
commercially reasonable assistance to the Purchaser in procuring the continued
employment by the Company of the Designated Key Employees named in Schedule
9.2(b).
(c) The Vendor shall ensure that the Company shall continue to employ each
of the Employees until the Closing Date except for any such employee who, at any
time prior to the Closing Date (i) is terminated for important reason; (ii)
voluntarily resigns; (iii) retires; or (iv) dies.
9.3 EMPLOYEE ACCRUALS
The Vendor or the Company will pay when due all premiums for
unemployment insurance, health premiums, pension plan premiums, accrued wages,
salaries and commissions and employee benefit plan payments to the Closing Date
and accruals from the date of the last such payment to the Closing Date shall be
reflected in the books and records of the Purchased Business.
ARTICLE 10
CONDITIONS OF CLOSING
10.1 MUTUAL CONDITIONS PRECEDENT
The sale and purchase of the Sale Shares is subject to the following
terms and conditions for the benefit of the Vendor and the Purchaser (provided
that no party may rely on the non-satisfaction or non-fulfilment of any such
term or condition to the extent the same resulted from any misrepresentation or
breach of warranty or covenant hereunder by such party, or the failure by such
party to exercise reasonable commercial efforts and reasonable diligence to
procure the satisfaction or fulfilment of such term or condition), to be
performed or fulfilled at or
- 33 -
prior to the Time of Closing (which conditions may be waived, in whole or in
part, in writing by both of the parties):
(a) No Action or Proceeding Regarding Completion of Transaction. No
legal or regulatory action or proceeding shall be pending or
threatened by any person to enjoin, restrict or prohibit the
consummation of the transactions contemplated hereby;
(b) No Action or Proceeding Regarding Carrying-on of the Purchased
Business. No legal or regulatory action or proceeding shall be
pending or threatened by any person which would enjoin, restrict,
prohibit or materially adversely affect the Purchaser from carrying
on the Purchased Business on or after the Closing Date in materially
the same manner as it was carried on up to the Closing Date;
(c) Regulatory Consents. There shall have been obtained from all
appropriate Governmental Authorities such licences, permits,
consents, approvals, certificates, registrations and authorizations
as are required to be obtained by the parties to permit the
consummation of the transactions contemplated hereby and to permit
the Purchaser to conduct the Purchased Business after the Effective
Time;
(d) Capital Increase. The share capital of the Company shall have been
validly increased by way of set-off of inter-company debts as
determined and agreed between the Vendor and the Purchaser, both
acting reasonably, and effectively registered with the commercial
register of the Canton of Neuchatel on or before Closing.
10.2 CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER
The sale and purchase of the Sale Shares is subject to the following
conditions for the exclusive benefit of the Purchaser, to be performed or
fulfilled at or prior to the Time of Closing (which conditions may be waived, in
whole or in part, by the written consent of the Purchaser):
(a) Representations and Warranties. The representations and warranties
of any of the Covenantors contained in this Agreement shall be true
and at the Time of Closing with the same force and effect as if such
representations and warranties had been made at and as of such time,
except for changes therein specifically permitted by this Agreement
or resulting from any transaction expressly consented to in writing
by the Purchaser, and a certificate of a duly authorized officer of
the Vendor, dated the Closing Date, to that effect shall have been
delivered to the Purchaser, such certificate to be in the form
agreed to by the Vendor's counsel and the Purchaser's counsel;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by any of the Covenantors
at or before the Time of Closing shall have been complied with or
performed, and a certificate of a duly authorized officer of the
Vendor, dated the Closing Date, to that effect shall have
- 34 -
been delivered to the Purchaser, such certificate to be in the form
agreed to by the Vendor's counsel and the Purchaser's counsel;
(c) Consents. The Vendor shall have given or obtained the notices, and
required consents and approvals described in Section 4.16, in each
case in form and substance satisfactory to the Purchaser;
(d) Designated Key Employees. None of the Designated Key Employees and
no more than twenty percent (20%) of the rest of the Employees shall
have terminated or provided notice to terminate their employment
with the Company;
(e) Intentionally Left Blank;
(f) Concurrent Canadian Acquisition. The Purchaser and the Vendor shall
have completed and satisfied all of the conditions of closing
contained in the Asset Purchase Agreement and the transactions
contemplated thereby shall be completed concurrently with the
transactions contemplated by this Agreement;
(g) Intentionally Left Blank.
(h) No Damage. No damage by fire or other hazard to the whole or any
material part of the Purchased Business or its assets shall have
occurred prior to the Time of Closing;
(i) Lock-Up Agreements. Xxxxxxxxx Xxxxx shall have executed and
delivered an agreement which shall contain, among other things, a
lock-up provision in the form entitled "major employee equity-holder
agreement" attached as Schedule 10.2(i) (the "Lock-Up Agreement");
(j) No Material Adverse Change. The Purchaser shall be satisfied in its
sole discretion that there shall have been no material adverse
change in the condition (financial or otherwise), assets,
liabilities, earnings, business, operations or prospects of the
Purchased Business since February 29, 2004, provided that this
Section shall in no way diminish Vendor's responsibilities pursuant
to Article 4;
(k) Intentionally Left Blank;
(l) Legal Matters. All actions, proceedings, instruments and documents
reasonably required to implement this Agreement, or instrumental
thereto, and all legal matters relating to the purchase of the Sale
Shares shall have been approved as to form and legality by the
Purchaser's counsel;
(m) Intentionally Left Blank.
(n) Over-Indebtedness. Any over-indebtedness (Uberschuldung) of the
Company shall be fully settled;
(o) Intentionally Left Blank.
- 35 -
(p) Inter-Company Receivables and Relationships. All inter-company
receivables shall have been settled on or before Closing and all
inter-company relationships, contracts and agreements shall be
terminated on or before Closing and no further rights and
obligations of whatever nature shall survive;
(q) Pension Matters. The Vendor shall have delivered to the Purchaser a
written confirmation of the Pension Fund that the Company has
performed its obligations under the Pension Fund and has paid (or
provisioned) all contributions required prior to the Time of Closing
as stipulated by the regulations of the Pension Fund and is not
required to cover any funding deficiencies or additional benefits
under the Pension Fund by way of additional contributions; and
(r) Social Security Matters. The Vendor shall have delivered to the
Purchaser a written confirmation of the "Caisse Cantonale
Neuchateloise de Compensation" that the Company has paid in full any
and all Social Security Contributions as and when due.
If any of the conditions contained in this Section 10.2, shall not be performed
or fulfilled at or prior to the Time of Closing to the satisfaction of the
Purchaser, the Purchaser, by notice to the Vendor, may terminate this Agreement
and the obligations of the Vendor and the Purchaser under this Agreement, other
than the obligations contained in Sections 13.5, 13.6, 13.7 and 13.8, shall be
terminated, provided that the Purchaser may also bring an action pursuant to
Article 12 against a Covenantor for damages (other than consequential damages)
suffered by the Purchaser where the non-performance or non-fulfilment of the
relevant condition is as a result of a breach of covenant, representation or
warranty by the Covenantor. Any such condition which is waived in whole or in
part by the Purchaser shall be with prejudice to any claims it may have for
breach of covenant, representation or warranty.
10.3 CONDITIONS OF CLOSING IN FAVOUR OF THE VENDOR
The sale and purchase of the Sale Shares is subject to the following
conditions for the exclusive benefit of the Vendor, to be performed or fulfilled
at or prior to the Time of Closing (which conditions may be waived, in whole or
in part, by the written consent of the Vendor):
(a) Representations and Warranties. The representations and warranties
of the Purchaser and Parentco contained in this Agreement shall be
true and correct in all matters and respect at the Time of Closing
with the same force and effect as if such representations and
warranties were made at and as of such time, except for changes
therein specifically permitted by this Agreement or resulting from
any transaction expressly consented to in writing by the Vendor, and
a certificate of a duly authorized representative of the Purchaser
and of Parentco, dated the Closing Date, to that effect shall have
been delivered to the Vendor, such certificate to be in the form
agreed to by the Vendor's counsel and the Purchaser's counsel;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchaser and of
Parentco at or before the
- 36 -
Time of Closing shall have been complied with or performed, and a
certificate of a duly authorized representative of the Purchaser and
of Parentco, dated the Closing Date, to that effect shall have been
delivered to the Vendor, such certificate to be in the form agreed
to by the Vendor's counsel and the Purchaser's counsel;
(c) Legal Matters. All actions, proceedings, instruments and documents
reasonably required to implement this Agreement, or instrumental
thereto, shall have been approved as to form and legality by the
Vendor's counsel;
(d) Intentionally Left Blank;
(e) Payments. The Purchaser shall have made the payment to the Vendor
referred to in Section 3.1;
(f) Key Employees. None of the Designated Key Employees and no more than
twenty percent (20%) of the rest of the Employees shall have
terminated or provided notice to terminate their employment with the
Company;
(g) Concurrent Canadian Acquisition. The Purchasers and the Vendor shall
have completed and satisfied all of the conditions of closing
contained in the Asset Purchase Agreement and the transactions
contemplated thereby shall be completed concurrently with the
transactions contemplated by this Agreement;
If any of the conditions contained in this Section 10.3 shall not be performed
or fulfilled on or prior to the Time of Closing to the satisfaction of the
Vendor, the Vendor, by notice to the Purchaser, may terminate this Agreement and
the obligations of the Vendor and the Purchaser under this Agreement, other than
the obligations contained in Sections 13.5, 13.6, 13.7 and 13.8 shall be
terminated, provided that the Vendor may also bring an action pursuant to
Article 12 against the Purchaser for damages (other than consequential damages)
suffered by the Vendor where the non-performance or non-fulfilment of the
relevant condition is as a result of a breach of covenant, representation or
warranty by the Purchaser. Any such condition which is waived in whole or in
part by the Vendor shall be with prejudice to any claims it may have for breach
of covenant, representation or warranty.
ARTICLE 11
CLOSING DATE AND TRANSFER OF POSSESSION
11.1 PLACE OF CLOSING
The closing shall take effect at the Time of Closing at the offices
of Gowling Xxxxxxx Xxxxxxxxx LLP, Kitchener, Ontario, or at such other place or
time as the Purchaser and the Vendor may agree upon in writing.
11.2 TRANSFER
Subject to compliance with the terms and conditions hereof, the
transfer of possession of the Sale Shares shall be deemed to take effect as at
the Effective Time.
- 37 -
11.3 FURTHER ASSURANCES
From time to time subsequent to the Closing Date, each party
covenants and agrees that at all times after the Closing Date, at the expense of
the requesting party, it will promptly execute and deliver all such documents,
including all such additional conveyances, transfers, consents and other
assurances and do all such other acts and things as the other party, acting
reasonably, from time to time may request be executed or done in order to
evidence better or perfect or effectuate any provision of this Agreement or of
any agreement or other document executed pursuant to this Agreement or any of
the respective obligations intended to be created hereby.
11.4 RISK OF LOSS
From the date hereof up to the Time of Closing, the Purchased
Business and the Sale Shares shall be and remain at the risk of the Vendor. If,
prior to the Time of Closing, all or any material part of the Purchased Business
or its assets which are necessary to carry on the Purchased Business as
currently conducted are destroyed or damaged by fire or any other casualty or
shall be appropriated, expropriated or seized by Governmental Authority or other
lawful authority, unless the Purchaser terminates its obligations under this
Agreement as contemplated by Section 10.2, the Purchaser shall complete the
purchase without reduction of the Purchase Price, in which event all proceeds of
insurance or compensation for expropriation or seizure shall be paid to the
Purchaser in respect of the Purchased Business at the Time of Closing and all
right and claim of the Vendor to any such amounts not paid by the Closing Date
shall be assigned at the Time of Closing to the Purchaser.
ARTICLE 12
INDEMNIFICATION
12.1 INDEMNIFICATION BY THE COVENANTORS
Each of the Covenantors shall, jointly and severally, indemnify and
save harmless the Purchaser, its directors, officers, shareholders, Affiliates
and agents and any successor to or assignee of the Purchaser's interest in the
Purchased Business or all or any substantial part of the assets of the Purchased
Business and all directors, officers, employees and agents of each such
successor, shareholder or affiliate from and against any and all Losses suffered
or incurred by the Purchaser as a result of or arising directly or indirectly
out of or in connection with:
(a) any breach by a Covenantor or any inaccuracy of any representation
or warranty of a Covenantor contained in this Agreement (provided
that a Covenantor shall not be required to indemnify or save
harmless the Purchaser in respect of any such breach or inaccuracy
of any representation or warranty unless the Purchaser shall have
provided notice to the Vendor, with a copy to each of the other
Covenantors, in accordance with Section 12.3 on or prior to the
expiration of any applicable time period related to such
representation and warranty set out in Section 7.1);
(b) any breach or non-performance by a Covenantor of any covenant to be
performed by it which is contained in this Agreement;
- 38 -
(c) any Swiss or foreign taxes of any kind incurred by Purchaser or its
Affiliates as a result of the reorganizational steps taken by the
Vendor and its Affiliates as set out in Section 2.2 of the
Arrangement other than the steps described in Sections 2.2(m) and
(n) thereof;
(d) the sale of products by the Purchased Business up to the Effective
Time in respect of which product liability claims;
(e) any claims by any employees of the Purchased Business, including
claims with respect to the Vendor or Company Employee Plans relating
to the period prior to the Effective Time, other than claims by
Employees with respect to their employment with the Purchaser after
the Effective Time;
(f) any event occurring or any condition existing at or prior to the
Effective Time relating to the Purchased Business, the Leased
Property, the Premises or the Sale Shares which now or hereafter
constitutes a violation of, or gives rise to any liability under,
any Environmental Laws;
(g) any Release of any Hazardous Substances in, on, under or from the
Leased Property, the Premises or any asset of the Purchased Business
and whether by the Vendor, the Company or any other person at or
prior to the Effective Time and for greater certainty, whether or
not known at the Closing Date;
(h) any commission or other remuneration payable or alleged to be
payable to any broker, agent or other intermediary who purports to
act or have acted for or on behalf of the Company or the Vendor with
respect to the Purchased Business;
(i) any material misstatement of the financial condition or the results
of operations contained in the financial statement provided pursuant
to Section 8.5(c);
(j) any breach by the Company of any Contract with a Governmental
Authority occurring prior to the Time of Closing;
(k) any claim by a third party alleging that the Company Intellectual
Property infringes an Intellectual Property right of such third
party to the extent of the damages associated with such claim which
arise from activities occurring prior to the Time of Closing; and
(l) any claim by a third party arising from the increase in the share
capital of the Company as described in Section 10.1(d).
Articles 201 and 210 of the Swiss Code of Obligations (regarding the buyer's
notification duties and statute of limitation) shall not be applicable to any
claim arising out of or in connection with this Agreement. An obligation to
indemnify hereunder may be satisfied, and the Purchaser may seek recourse by a
reduction of the Purchase Price or a payment by the Covenantors.
- 39 -
12.2 INDEMNIFICATION BY THE PURCHASER
Each of the Purchaser and Parentco shall, jointly and severally,
indemnify and save harmless each of the Vendor, its directors, officers,
employees and agents, and its successors and all directors, officers, employees
and agents of each such successor from and against any and all Losses suffered
or incurred by such party as a result of or arising directly or indirectly out
of or in connection with:
(a) any breach by the Purchaser or Parentco of or any inaccuracy of any
representation or warranty of the Purchaser or Parentco contained in
this Agreement (provided that the Purchasers shall not be required
to indemnify or save harmless the Vendor in respect of any breach or
inaccuracy of any representation or warranty unless the Vendor shall
have provided notice to the Purchaser or Parentco in accordance with
Section 12.3 on or prior to the expiration of the applicable time
period related to such representation and warranty set out in
Section 7.1);
(b) any breach or non-performance by the Purchaser or Parentco of any
covenant to be performed by it which is contained in this Agreement;
(c) the operations of the Purchased Business after the Effective Time,
including the sale of products by the Purchased Business after the
Effective Time in respect of which product liability claims,
warranty claims and other claims with respect to the quality,
suitability or compliance with specifications or orders of such
products may be made by customers of the Purchased Business or other
persons or any failure by the Purchaser to pay, satisfy, discharge,
perform or fulfil on a timely basis any of the assumed liabilities;
(d) warranty claims and other claims made by customers with respect to
the quality, suitability or compliance with specifications or orders
of products sold by the Purchased Business prior to the Effective
Time;
(e) any event occurring or any condition existing after the Effective
Time relating to the Purchased Business, the Leased Property, or the
Premises which constitutes a violation of, or gives rise to any
liability under, any Environmental Laws;
(f) any Release of any Hazardous Substances in, on, under or from the
Leased Property, the Premises or its assets and whether by the
Company or any other person after the Effective Time;
(g) any breach or non-fulfilment of the terms or non-performance by the
Company of any Contract, Third Party Software Licences, or the Lease
following the Effective Time;
(h) any claims after the Effective Time by Employees with respect to
their employment with the Company after the Effective Time;
- 40 -
(i) any commission or other remuneration payable or alleged to be
payable to any broker, agent or other intermediary who purports to
act or have acted for or on behalf of the Purchaser; and
(j) any claim by a third party alleging that the Company Intellectual
Property infringes an Intellectual Property right of such third
party to the extent of the damages associated with such claim which
arise from activities occurring after the Time of Closing.
12.3 NOTICE OF CLAIM
In the event that any party (the "Indemnified Party") shall assert a
First Party Claim or become aware of any Third Party Claim in respect of which
another party (the "Indemnifying Party") agreed to indemnify the Indemnified
Party pursuant to this Agreement, the Indemnified Party shall promptly give
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a Claim asserted by a third person against the
Indemnified Party (a "Third Party Claim") or whether the Claim is asserted by
the other party (a "First Party Claim"), and shall also specify with reasonable
particularity (to the extent that the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time to contest effectively the determination of
any liability susceptible of being contested, the Indemnifying Party shall be
entitled to set off against the amount claimed by the Indemnified Party the
amount of any Losses incurred by the Indemnifying Party resulting from the
Indemnified Party's failure to give such notice on a timely basis.
12.4 FIRST PARTY CLAIMS
With respect to any First Party Claim, following receipt of notice
from the Indemnified Party of the Claim, the Indemnifying Party shall have 60
days to make such investigation of the Claim as is considered necessary or
desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 60-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim, failing which the matter shall be referred to
dispute resolution pursuant to the provisions of Section 13.1.
12.5 THIRD PARTY CLAIMS
With respect to any Third Party Claim, the Indemnifying Party shall
have the right, at its expense, prior to any payment to the third person
asserting the Third Party Claim by
- 41 -
the Indemnified Party or its Affiliates, to participate in or assume control of
the negotiation, settlement or defence of the Claim. Subject to Section 12.6, if
the Indemnifying Party elects to assume such control, the Indemnified Party
shall have the right to participate in, but not control, the negotiation,
settlement or defence of such Third Party Claim and to retain counsel to act on
its behalf, provided that the fees and disbursements of such counsel shall be
paid by the Indemnified Party unless the Indemnifying Party consents to the
retention of such counsel or unless the representation of both the Indemnifying
Party and the Indemnified Party by the same counsel would be inappropriate due
to the actual or potential differing interests between them (such as the
availability of different defences). If the Indemnifying Party, having elected
to assume such control, thereafter fails to defend the Third Party Claim within
a reasonable time, the Indemnified Party shall be entitled to assume such
control. In such event, the Indemnifying Party shall be bound by the results
obtained by the Indemnified Party with respect to such Third Party Claim.
Provided that the Indemnified Party has first provided to the Indemnifying Party
at least 10 Business Days prior written notice thereof with reasonable details
and during such 10 Business Days afforded the Indemnifying Party an opportunity
to provide to the Indemnified Party input thereon (the Indemnifying Party shall
not be obligated to give effect to any of such input), the Indemnified Party
shall be entitled to make a payment to any person (a "Third Party") with respect
to the Third Party Claim before the completion of settlement negotiations or
related legal proceedings where (a) such payment is necessary in the reasonable
view of the Indemnified Party acting in good faith and in a manner consistent
with reasonable commercial practices, in respect of (i) a Third Party Claim by a
customer relating to products or services supplied by the Purchased Business
where the Indemnified Party is the Purchaser and the Purchased Business where
the Indemnified Party is the Vendor, or (ii) a Third Party Claim relating to any
Contract which is reasonably necessary to the ongoing operations of the
Purchased Business or any material part thereof by a reasonable and prudent
operator in order to avoid material damage to the relationship between the
Indemnified Party and any of its major customers or to preserve the rights of
the Indemnified Party under such an essential Contract, or (b) the Indemnified
Party is required to do so by applicable law or the order of any court, tribunal
or regulatory body having jurisdiction. In such event, the Indemnifying Party,
forthwith after demand by the Indemnified Party, shall reimburse the Indemnified
Party for such payment. If the amount of any liability of the Indemnified Party
under the Third Party Claim in respect of which such payment was made, as
finally determined, is less than the amount which was paid by the Indemnifying
Party to the Indemnified Party, the Indemnified Party, forthwith after receipt
of the difference from the Third Party, shall pay the amount of such difference
to the Indemnifying Party.
12.6 SETTLEMENT OF THIRD PARTY CLAIMS
If the Indemnifying Party fails to assume control of the defence of
any Third Party Claim in accordance with Section 12.5, the Indemnified Party
shall have the exclusive right to contest, settle or pay the amount claimed.
Whether or not the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Third Party Claim, and subject to the provisions of
Section 12.5 as to the rights of an Indemnified Party to make payment to a Third
Party before the completion of settlement negotiations, the Indemnifying Party
shall not settle any Third Party Claim without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed;
provided, however, that the liability of the
- 42 -
Indemnifying Party shall be limited to the proposed settlement amount if any
such consent is not obtained within a reasonable period of time for any reason.
12.7 CO-OPERATION
The Indemnified Party and the Indemnifying Party shall co-operate
fully with each other with respect to Third Party Claims and shall keep each
other fully advised with respect thereto (including supplying copies of all
relevant documentation promptly as it becomes available) and provide to each
other all reasonable assistance including the provision of documents,
information and personnel.
12.8 THRESHOLD AND MAXIMUM INDEMNIFICATION
No Claim shall be made pursuant to Sections 12.1 or 12.2 until the
aggregate Losses suffered or incurred by the Indemnified Party in respect of all
matters which could be the subject of such a Claim (whether under this Agreement
or the Asset Purchase Agreement or both) exceed $100,000, at which time the
Indemnified Party may make Claims in respect of all Losses, including for
greater certainty, the first $100,000 thereof. The maximum aggregate amount
which the Indemnifying Party is required to pay pursuant to Section 12.1 or 12.2
and Section 14.1 or 14.2 of the Asset Purchase Agreement is $25,000,000.
12.9 EXCLUSIVITY
(a) The provisions of this Article 12 shall apply to and are the sole
and exclusive remedy of each party with respect to any Claim for
breach of any covenant, representation, warranty or other provision
of this Agreement or any agreement, certificate or other document
delivered pursuant hereto (other than a claim for specific
performance or injunctive relief) with the intent that all such
Claims shall be subject to the limitations and other provisions
contained in this Article 12 and the provisions of Article 13.
(b) Notwithstanding any other provision of this Agreement, the Purchaser
and Parentco agree that the sole liability of the Covenantors with
respect to the title and ownership of Intellectual Property shall be
with respect to Section 4.11 and the sole liability of the
Covenantors with respect to infringement by the Vendor's
Intellectual Property of the Intellectual Property of other persons
shall be pursuant to the provisions of Section 4.11(e), 4.11(g) and
12.1(k).
ARTICLE 13
MISCELLANEOUS
13.1 DISPUTE RESOLUTION
For any dispute or claim arising out of or relating to this
Agreement, or breach hereof, the parties, prior to filing any claims in the
Arbitral Tribunal shall in good faith first attempt to negotiate a written
resolution of such dispute or claim within a period not to exceed 15 days from
the date of receipt of a party's request for such negotiation. Such negotiations
shall be
- 43 -
conducted by managers of each party who have authorization to resolve any such
dispute or claim. Notwithstanding the foregoing, either party at any time may
apply to any court of competent jurisdiction for injunctive relief in the event
of an alleged breach of this Agreement or otherwise to prevent irreparable harm.
13.2 NOTICES
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person, transmitted by
facsimile or similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
(i) if to the Purchaser and Parentco:
AMIS Holdings Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx
X.X.X. 00000
Attention: Xxxxxxx Xxxxx, Vice-President and General
Counsel
Facsimile No.: 208.234.6035
(ii) if to the Vendor:
000 Xxxxx Xxxxx
Xxxx 000
Xxxxxxxx, XX
X0X 0X0
Attention: Xxxxxx Xxxx
Facsimile No. 519.884.0228
(iii) if to any Covenantor other than the Vendor:
c/o DNN Holdings Ltd.
000 Xxxx Xxxxxx
Xxxxxx 0
Xxxxxxxxx Xxxxxxx X0X0X0
Attention: Xxxxxxx Xxxxx
Facsimile No.: 000-000-0000
(b) Any such notice or other communication shall be effective when
received.
(c) Either party may change its address for service at any time by giving
notice to the other party in accordance with this Section 13.2.
- 44 -
13.3 CONSTRUCTION
The parties hereto acknowledge that their respective legal counsel
have reviewed and participated in settling the terms of this Agreement and that
any rule of construction to the effect that any ambiguity is to be resolved
against the drafting party, including the rule or doctrine of contra
proferentum, shall not be applicable in the interpretation of this Agreement.
13.4 INTENTIONALLY LEFT BLANK
13.5 PUBLIC ANNOUNCEMENT
The parties shall consult with each other before issuing any press
release or making any other public announcement with respect to this Agreement
or the transactions contemplated hereby and, except as required by any
applicable law or regulatory requirement, neither of them shall issue any such
press release or make any such public announcement without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed.
13.6 DISCLOSURE
Prior to any public announcement of the transaction contemplated
hereby pursuant to Section 13.5, neither party shall disclose this Agreement or
any aspects of such transaction except to its board of directors, its senior
management, its legal, accounting, financial or other professional advisors, any
investment bank, dealer or financial institution contacted by it with respect to
any financing required in connection with such transaction or otherwise and
counsel to such investment bank, dealer or financial institution, or as may be
required by any applicable law or any regulatory authority or stock exchange
having jurisdiction.
13.7 EXPENSES
Except as otherwise provided herein, each party shall be responsible
for the expenses (including fees and expenses of legal advisors, accountants and
other professional advisors) incurred by it and its Affiliates, respectively, in
connection with the negotiation and settlement of his Agreement and the
completion of the transactions contemplated hereby.
13.8 CONFIDENTIALITY
The parties shall keep the terms and conditions of this Agreement
confidential pursuant to the terms and subject to the conditions contained in
the non-disclosure agreement dated January 20, 2004 made between the Vendor and
Parentco, as amended.
13.9 SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and shall be binding on
and enforceable by the parties and their respective successors and permitted
assigns. Neither party may assign any of its rights or obligations hereunder
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. No assignment by the Purchaser to its
Affiliate will relieve it from any of its obligations hereunder.
- 45 -
13.10 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument.
THE REST OF THIS PAGE IS LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF this Agreement has been executed by the parties.
AMI SEMICONDUCTOR NETHERLANDS B.V.
By /s/ Xxxxx Xxxxx
_______________________________
Name: Xxxxx Xxxxx
Title:
DSPFACTORY LTD.
By /s/ Xxxxxx Xxxx
_______________________________
Name: Xxxxxx Xxxx
Title: President and CEO
/s/ Xxxxx Xxxxx
_______________________________
Name: Xxxxx Xxxxx
Title: Vice-President, Finance and
Administration
DNN HOLDINGS LTD.
By /s/ Xxxxxxx Xxxxx
_______________________________
Name: Xxxxxxx Xxxxx
Title:
- 46 -
SOUTHBRIDGE INVESTMENT
PARTNERSHIP NO. 1, BY ITS GENERAL
PARTNER, SIPGP NO. 1 INC.
By /s/ Reg Xxxxxxxx
________________________________
Name: Reg Xxxxxxxx
Title:
MVO INVESTMENTS LTD.
By /s/ M. Xxx X'Xxxxxxx
_______________________________
Name: M. Xxx X'Xxxxxxx
Title: President
- 47 -
