1
Exhibit 10.13
NEXTERA ENTERPRISES, L.L.C
as Nextera
and
SIBSON ACQUISITION, CO.
as Canadian Buyer
and
THE HOLDERS OF ALL OF THE SHARES
OF SIBSON CANADA INC.
as the SC Shareholders
SHARE PURCHASE AGREEMENT
AUGUST 31, 1998
STIKEMAN, ▇▇▇▇▇▇▇
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
Section 1.1 Defined Terms................................................1
Section 1.2 Other Defined Terms..........................................7
ARTICLE 2
PURCHASE AND SALE OF PURCHASED SHARES
Section 2.1 Pre-Closing Steps............................................9
Section 2.2 Purchase of Purchased Shares................................11
Section 2.3 Purchase Price of Purchased Shares..........................12
Section 2.4 Satisfaction of Purchase Price..............................12
ARTICLE 3
CLOSING
Section 3.1 Closing.....................................................12
Section 3.2 Closing Procedures..........................................12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SC SHAREHOLDERS
Section 4.1 Organization and Qualification of SC Holdco.................13
Section 4.2 Capitalization; Beneficial Ownership of SC Holdco...........13
Section 4.3 Activities of SC Holdco.....................................13
Section 4.4 Organization and Qualification of Sibson Canada.............13
Section 4.5 Capitalization; Beneficial Ownership of Sibson Canada.......14
Section 4.6 Subsidiaries of Sibson Canada...............................14
Section 4.7 Authority...................................................14
Section 4.8 Canadian Assets.............................................15
Section 4.9 Real Property...............................................15
Section 4.10 Financial Statements......................................17
Section 4.11 Absence of Certain Changes or Events......................18
Section 4.12 Contracts and Commitments.................................20
Section 4.13 Permits...................................................22
Section 4.14 Litigation................................................22
Section 4.15 Compliance with Law.......................................23
Section 4.16 Ordinary Course...........................................23
Section 4.17 Officers and Compensation.................................23
Section 4.18 Employees; Labour Matters.................................23
Section 4.19 Banking Relations.........................................24
Section 4.20 No Brokers................................................24
Section 4.21 No Other Agreements to Sell the Purchased Shares..........24
Section 4.22 Clients...................................................24
Section 4.23 Backlog...................................................25
(i)
3
Section 4.24 Proprietary Rights........................................25
Section 4.25 Taxes.....................................................25
Section 4.26 Employee Benefit Programs.................................27
Section 4.27 Insurance.................................................29
Section 4.28 Accounts Receivable.......................................30
Section 4.29 [Intentionally deleted.]..................................30
Section 4.30 Environmental Matters.....................................30
Section 4.31 Warranty or Other Claims..................................31
Section 4.32 Records; Copies of Documents..............................31
Section 4.33 Powers of Attorney........................................32
Section 4.34 Disclosure................................................32
Section 4.35 Offshore Investment Representations.......................32
Section 4.36 Amounts Owing to SC Shareholders..........................36
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF NEXTERA AND
CANADIAN BUYER
Section 5.1 Organization................................................36
Section 5.2 Authority...................................................37
Section 5.3 Litigation..................................................38
Section 5.4 No Brokers..................................................39
Section 5.5 Membership Interests of Nextera.............................39
Section 5.6 Operating Agreement.........................................39
Section 5.7 Financial Statements........................................39
Section 5.8 Taxes.......................................................41
Section 5.9 Absence of Certain Changes or Events........................42
Section 5.10 [Intentionally Deleted]...................................43
Section 5.11 Compliance with Laws......................................43
Section 5.12 Proprietary Rights........................................43
ARTICLE 6
COVENANTS
Section 6.1 Further Assurances..........................................44
Section 6.2 Exchangeable Documentation..................................45
Section 6.3 Conduct of Business.........................................45
Section 6.4 No Solicitation of Other Offers.............................47
Section 6.5 Notification of Certain Matters.............................47
Section 6.6 Option Pool.................................................48
Section 6.7 Additional Units............................................49
Section 6.8 Conduct of the Business Following the Closing...............49
Section 6.9 Preservation of Confidentiality.............................49
Section 6.10 Activities of Canadian Buyer..............................50
Section 6.11 Investment Canada Act.....................................50
Section 6.12 Annual Incentive Plan.....................................50
(ii)
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ARTICLE 7
CONDITIONS TO SC SHAREHOLDERS' OBLIGATIONS
Section 7.1 Representations, Warranties and Covenants of Nextera
and Canadian Buyer........................................50
Section 7.2 No Actions or Court Orders..................................50
Section 7.3 Completion of Transactions under the U.S. Purchase
Agreement.................................................51
Section 7.4 Consents....................................................51
Section 7.5 Material Changes............................................51
Section 7.6 Approval of SC Shareholder's Counsel........................51
Section 7.7 Opinions of Counsel.........................................51
Section 7.8 Escrow Agreement............................................52
Section 7.9 Employment Agreements.......................................52
Section 7.10 Corporate Documents.......................................52
Section 7.11 Operating Agreement of Nextera............................52
Section 7.12 Operating Agreement of SC Amalco..........................52
Section 7.13 Exchangeable Documentation................................52
Section 7.14 Equity Participation Plan.................................52
Section 7.15 Annual Incentive Plan.....................................52
Section 7.16 Share Exchange Agreement..................................53
Section 7.17 Shareholders Loans........................................53
ARTICLE 8
CONDITIONS TO CANADIAN BUYER'S AND NEXTERA'S OBLIGATIONS
Section 8.1 Representations, Warranties and Covenants...................53
Section 8.2 Consents; Regulatory Compliance and Approval................53
Section 8.3 No Actions or Court Orders..................................53
Section 8.4 Approval of Canadian Buyer's Counsel........................54
Section 8.5 Approval of Nextera's Counsel...............................54
Section 8.6 Opinions....................................................54
Section 8.7 Material Changes............................................54
Section 8.8 Corporate Documents.........................................54
Section 8.9 Permits.....................................................55
Section 8.10 Escrow Agreement..........................................55
Section 8.11 Employment Agreements.....................................55
Section 8.12 Third-Party Financing.....................................55
Section 8.13 Pre-Closing Steps.........................................55
Section 8.14 Exchangeable Documentation................................55
Section 8.15 Share Exchange Agreement..................................55
ARTICLE 9
INDEMNIFICATION
Section 9.1 Indemnification by the Selling Parties......................55
Section 9.2 Limitations on Indemnification by the SC Shareholders.......56
Section 9.3 Indemnification by Nextera and Canadian Buyer...............58
Section 9.4 Limitation on Indemnification by Nextera and Canadian Buyer.58
Section 9.5 Notice; Defense of Claims...................................58
(iii)
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Section 9.6 Satisfaction of SC Shareholders Indemnification Obligations.59
Section 9.7 Use of Nextera Class A Units................................59
Section 9.8 Exclusive Remedy............................................60
Section 9.9 Indemnity...................................................60
ARTICLE 10
TERMINATION OF AGREEMENT; RIGHTS TO PROCEED
Section 10.1 Termination...............................................60
Section 10.2 Effect of Termination.....................................60
ARTICLE 11
MISCELLANEOUS
Section 11.1 Fees and Expenses.........................................61
Section 11.2 Governing Law.............................................61
Section 11.3 Notices...................................................61
Section 11.4 Entire Agreement..........................................63
Section 11.5 Assignability; Binding Effect.............................63
Section 11.6 Captions and Gender.......................................64
Section 11.7 Execution in Counterparts.................................64
Section 11.8 Amendments................................................64
Section 11.9 Publicity and Disclosures.................................64
Section 11.10 Specific Performance......................................64
Section 11.11 U.S. Currency.............................................65
LIST OF EXHIBITS AND SCHEDULES
(iv)
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SHARE PURCHASE AGREEMENT
This Share Purchase Agreement, dated as of August 31, 1998, is by and
among NEXTERA ENTERPRISES, L.L.C., a Delaware limited liability company
("NEXTERA"), SIBSON ACQUISITION, CO., a newly formed Nova Scotia unlimited
liability company ("CANADIAN BUYER") and an indirect wholly owned subsidiary of
Nextera and the holders, directly or indirectly, of all of the issued and
outstanding shares of SIBSON CANADA INC. ("SIBSON CANADA") identified on Exhibit
A hereto as such (collectively, the "SC SHAREHOLDERS").
RECITALS:
(a) Pursuant to the Asset Purchase Agreement of even date herewith
(the "U.S. Purchase Agreement") among SC/NE, LLC ("Buyer"),
Nextera, Sibson & Company, L.P. ("Seller"), Sibson & Company,
Inc., SC2, Inc. and the Shareholders (as such term is defined
in the U.S. Purchase Agreement), the parties thereto agreed
that contemporaneously with the transactions contemplated
under the U.S. Purchase Agreement all of the issued and
outstanding shares of Sibson Canada would be sold to Nextera
or a direct or indirect wholly-owned subsidiary of Nextera;
(b) The SC Shareholders own of record and beneficially directly or
indirectly all of the issued and outstanding shares in the
capital of Sibson Canada and desire to sell all of such shares
to the Canadian Buyer upon the terms and subject to the
conditions of this Agreement; and
(c) The Canadian Buyer is an indirect wholly-owned subsidiary of
Nextera;
In consideration of the respective covenants and promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
As used herein, the terms below shall have the following meanings. Any
of such terms, unless the context otherwise requires, may be used in the
singular or plural, depending upon the reference:
"ACTION" shall mean any action, claim, suit, litigation, proceeding,
arbitral action, governmental audit, criminal prosecution, governmental
investigation or unfair labour practice charge or complaint.
"AFFILIATE" shall have the meaning set forth in the Business
Corporations Act (Ontario), as amended, and the rules and regulations
thereunder.
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"BOOKS AND RECORDS" shall mean, (a) all records and lists of Sibson
Canada pertaining to Sibson Canada, the Canadian Business and the
Canadian Assets, (b) all records and lists pertaining to the Canadian
Business, or personnel of Sibson Canada, (c) all product, business and
marketing plans of Sibson Canada and (d) all books, ledgers, files,
reports, plans, tax returns, drawings and operating records of every
kind maintained by Sibson Canada, including the originals of Sibson
Canada's minute books.
"BUSINESS DAY" shall mean any day of the year, other than a Saturday,
Sunday or any day on which banks are authorized or required to close in
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"BUYER OPERATING AGREEMENT" shall mean the Limited Liability Company
Agreement of SC/NE, LLC dated as of August 31, 1998, a true and correct
copy of which is attached as Exhibit F.
"CANADIAN ASSETS" shall mean all of Sibson Canada's right, title and
interest in and to the business, properties, assets and rights of any
kind, whether tangible or intangible, real or personal and wherever
located and constituting, or used or useful in connection with, or
related to, the Canadian Business or in which Sibson Canada has any
interest, including without limitation all of Sibson Canada's right,
title and interest in the following: all accounts and notes receivable
(whether current or noncurrent), refunds, deposits, prepayments or
prepaid expenses (including without limitation any prepaid insurance
premiums) of Sibson Canada; all cash and cash equivalents held by
Sibson Canada; all equity interests in other entities held by Sibson
Canada; all Contract Rights; all Leases; all Owned Real Property, if
any; all Leasehold Estates; all Leasehold Improvements; all Fixtures
and Equipment; all Inventory; all Books and Records; all Proprietary
Rights relating to the Canadian Business; all Permits, all Insurance
Policies; all available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, art work, display
units, telephone and fax numbers and purchasing records related to the
Canadian Business; all rights under or pursuant to all warranties,
representations and guarantees made by in connection with the Canadian
Assets or services furnished to Sibson Canada pertaining to the
Canadian Business or affecting the Canadian Assets; all deposits and
prepaid expenses of Sibson Canada; all claims, causes of action, causes
in action, rights of recovery and rights of set-off of any kind,
against any person or entity, including without limitation any liens,
security interests, pledges or other rights to payment or to enforce
payment in connection with service performed or products delivered by
Sibson Canada on or prior to the Closing Date; and the goodwill of
Sibson Canada and the Canadian Business.
"CANADIAN BUSINESS" shall mean all of Sibson Canada's current
operations, wherever carried on, including its business of management
and human resources consulting.
"CLOSING DATE" shall mean August 31, 1998, or such other date as
Canadian Buyer and SC Shareholders shall mutually agree upon in
writing.
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"CONTRACT" shall mean any agreement, contract, note, loan, evidence of
indebtedness, purchase order, letter of credit, indenture, security or
pledge agreement, franchise agreement, undertaking, covenant not to
compete, employment agreement, license agreement, instrument,
obligation or commitment to which Sibson Canada is a party or is bound
and which relates to the Canadian Business or the Canadian Assets,
whether oral or written, but excluding all Leases.
"CONTRACT RIGHTS" shall mean all of Sibson Canada's rights and
obligations under the Contracts including, without limitation, those
Contracts listed on Schedule 4.9 and Schedule 4.12.
"COPYRIGHTS" shall mean registered copyrights, copyright applications
and unregistered copyrights.
"COURT ORDER" shall mean any judgment, decision, consent decree,
injunction, ruling or order of any federal, provincial or local court
or governmental agency, department or authority that is binding on any
person or its property under applicable law.
"DAMAGES" shall mean damages, Liabilities, losses, Taxes, fines,
penalties, costs, and expenses (including, without limitation,
reasonable fees of counsel) of any kind or nature whatsoever (whether
or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) but excluding
consequential or special damages.
"DEFAULT" shall mean (1) a breach of or default under any Contract or
Lease, (2) the occurrence of an event that with the passage of time or
the giving of notice or both would constitute a breach of or default
under any Contract or Lease, or (3) the occurrence of an event that
with or without the passage of time or the giving of notice or both
would give rise to a right of termination, renegotiation or
acceleration under any Contract or Lease.
"DISCLOSURE SCHEDULE" shall mean a schedule executed and delivered by
the Canadian Shareholders to Canadian Buyer as of the date hereof which
sets forth the exceptions to the representations and warranties
contained in Article IV hereof and certain other information called for
by this Agreement. Unless otherwise specified or the context otherwise
requires, each reference in this Agreement to any numbered schedule is
a reference to that numbered schedule which is included in the
Disclosure Schedule.
"ENCUMBRANCE" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, conditional sales
agreement or other similar right of third parties, whether voluntarily
incurred or arising by operation of law, and includes, without
limitation, any agreement to give any of the foregoing in the future,
and any contingent sale or other title retention agreement or lease in
the nature thereof.
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"ESCROW AGENT" shall have the meaning assigned to such term in the
Escrow Agreement attached hereto as Exhibit B.
"EXCHANGEABLE SHARES" shall mean the exchangeable preference shares in
the capital of the Canadian Buyer having attached thereto the rights,
privileges, restrictions and conditions set forth in Exhibit O.
"FACILITY LEASES" shall mean all of the leases described on Schedule
4.9.
"FIXTURES AND EQUIPMENT" shall mean all of the furniture, fixtures,
furnishings, machinery, spare parts, supplies, equipment and other
tangible personal property owned by Sibson Canada and used in
connection with the Canadian Business, wherever located and including
any such Fixtures and Equipment in the possession of any of Sibson
Canada's, including all warranty rights with respect thereto.
"FORMER FACILITY" shall mean each plant, office, manufacturing
facility, store, warehouse, improvement, administrative building and
all real property and related facilities that was owned, leased or
operated by Sibson Canada at any time prior to the date hereof.
"GAAP" shall mean generally accepted accounting principles.
"INSURANCE POLICIES" shall mean the insurance policies related to
Sibson Canada, the Canadian Assets and the Canadian Business listed on
Schedule 4.27.
"INVENTORY" shall mean all of Sibson Canada's inventory held for resale
and all of Sibson Canada's raw materials, work in process, finished
products, wrapping, supply and packaging items and similar items with
respect to the Canadian Business, in each case wherever the same may be
located.
"KNOWLEDGE OF NEXTERA" shall mean the actual knowledge of any member of
the Board of Directors, the Manager, or the Chief Financial Officer of
Nextera or that which could be learned by any such individual upon
reasonable investigation.
"KNOWLEDGE OF SC SHAREHOLDERS" shall mean the actual knowledge of ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or that
which could be learned by any such individual upon reasonable
investigation.
"LEASED REAL PROPERTY" shall mean all leased plants, offices,
manufacturing facilities, stores, warehouses, improvements,
administration buildings, and all real property and related facilities
which are identified or listed on Schedule 4.9 attached hereto.
"LEASEHOLD ESTATES" shall mean all of Sibson Canada's rights and
obligations as lessee under the Leases.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements situated
in or on the Leased Real Property and owned by Sibson Canada.
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"LEASES" shall mean all of the existing leases with respect to the
personal or real property of Sibson Canada, including, without
limitation, those leases listed on Schedule 4.9 and/or Schedule 4.12.
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, guaranty or
endorsement of or by any person of any type, whether accrued, absolute,
contingent, matured, unmatured or other.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" shall mean with
respect to Sibson Canada, the Canadian Business or the Canadian Assets,
any material adverse effect or change in the condition (financial or
other), business, results of operations, prospects, assets, Liabilities
or operations of Sibson Canada, the Canadian Business and/or the
Canadian Assets taken as a whole or on the ability of the SC
Shareholders to consummate the transactions contemplated hereby, or any
event or condition which would, with the passage of time, constitute a
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE." "MATERIAL
ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" shall mean with respect to
Nextera any material adverse effect or change in the condition
(financial or other), business, results of operations, prospects,
assets, liabilities or operations of Nextera and its Subsidiaries taken
as a whole or on the ability of Nextera to consummate the transactions
contemplated hereby, or any event or condition which would, with the
passage of time, constitute a "MATERIAL ADVERSE EFFECT" or "MATERIAL
ADVERSE CHANGE."
"NEXTERA CLASS A UNITS" shall mean the Class A Common Units of Nextera
representing membership interests in Nextera.
"NEXTERA DISCLOSURE SCHEDULE" shall mean a schedule and letters
executed and delivered by Nextera and Buyer to the Selling Parties as
of the date hereof which sets forth the exceptions to the
representations and warranties contained in Article 5 hereof and
certain other information called for by this Agreement. Unless
otherwise specified or the context otherwise requires, each reference
in this Agreement to any numbered schedule is a reference to that
numbered schedule which is included in the Nextera Disclosure Schedule.
"NEXTERA OPERATING AGREEMENT" shall mean the Second Amended and
Restated Limited Liability Company Agreement of Nextera Enterprises,
L.L.C. dated as of May 1, 1998, as amended, a true and correct copy of
which is attached as Exhibit G hereto.
"ORDINARY COURSE OF BUSINESS" or "ORDINARY COURSE" or any similar
phrase shall mean the ordinary course of the Canadian Business and
consistent with Sibson Canada's past practice.
"PERMITS" shall mean all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any
governmental authority, whether foreign, federal, provincial or local,
or any other person, necessary or desirable for the past,
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present or anticipated conduct of, or relating to the operation of the
Canadian Business.
"PERMITTED LIEN" shall mean: (i) materialmen's, mechanics', carriers',
workmen's, repairmen's or other like liens arising in the ordinary
course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings, (ii) liens for current taxes
not yet due or any taxes being contested in good faith by appropriate
proceedings, (iii) liens to secure performance of statutory
obligations, (iv) any lien securing any purchase money indebtedness
incurred in the ordinary course of business and reflected in Sibson
Canada's financial statements and (v) liens of lessors under Leases.
"PROPRIETARY RIGHTS" shall mean all of Sibson Canada's Copyrights,
Trademarks, patents, technology rights and licenses, computer software
(including without limitation any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, designs, specifications, plans, drawings and intellectual
property rights.
"REGULATIONS" shall mean any laws, statutes, ordinances, regulations,
rules, court decisions, agency guidelines, principles of law and orders
of any foreign, federal, provincial or local government and any other
governmental department or agency, including without limitation all Tax
Acts (as defined herein), Environmental Laws, energy, motor vehicle
safety, public utility, zoning, building and health codes, and
occupational safety and health and laws respecting employment
practices, employee documentation, terms and conditions of employment
and wages and hours.
"REPRESENTATIVE" shall mean any officer, director, principal, attorney,
agent, employee or other representative.
"SC SHAREHOLDERS" shall mean those individuals and entities identified
as such on Exhibit A hereto.
"SUBSIDIARY" shall mean, with respect to Canadian Buyer a subsidiary
within the meaning of the Business Corporations Act (Ontario) and, with
respect to Nextera shall mean (a) any corporation in an unbroken chain
of corporations beginning with Nextera if the corporation other than
the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain and, for greater
certainty, shall include Canadian Buyer, (b) any partnership in which
Nextera is a general partner, (c) any limited liability company in
which Nextera is a managing member, or (d) any partnership or limited
liability company in which Nextera possesses a 50% or greater interest
in the total capital or total income of such partnership and "LLC
SUBSIDIARY" shall mean a Subsidiary of Nextera that is a limited
liability company.
"TAX" shall mean all governmental taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, VAT, service, service use, ad
valorem, transfer, franchise, profits, license, lease,
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withholding, social security, payroll, employment, excise, estimated,
severance, stamp, recording, occupation, real and personal property,
gift, windfall profits or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, whether computed on a
separate, consolidated, unitary, combined or other basis, together with
any interest, fines, penalties, additions to tax or other additional
amounts imposed thereon or with respect thereto imposed by any taxing
authority (domestic or foreign) and shall include any such or other
amounts payable to a person pursuant to any Regulation for failing to
withhold, deduct and remit to the proper authorities amounts in respect
of any such amounts imposed on any other person.
"TAX ACTS" shall mean the Canadian federal Income Tax Act, the Ontario
Income Tax Act and the Ontario Corporations Tax Act.
"TRADEMARKS" shall mean registered trademarks, registered service
marks, trademark and service ▇▇▇▇ applications and unregistered
trademarks and service marks.
SECTION 1.2 OTHER DEFINED TERMS.
The following terms shall have the meanings defined for such terms in
the Sections set forth below:
TERM SECTION
Amalgamation 2.1(1)(d)
Amalgamation Order 2.1(1)(c)
Audited Financial Statements 6.8
Base Balance Sheet 4.7(1)
Base Balance Sheet Date 4.7(1)
Buyer Indemnified Party 9.1
Buyer Indemnified Parties 9.1
Class A Units 4.35
Clients 4.18
Closing 3.1
Confidential Information 6.10
Employee Program 4.23(11)(a)
Employment Agreement 8.10
Environmental Law 4.27(5)
Escrow Amount 2.4(b)
Escrow Agreement 2.4(b)
Equity Participation Plan 6.6
Exchange Trust Agreement 6.3
Facility Lease 4.6(2)
Financial Statements 4.7(1)
Fraud Claims 9.1(a)
General Claims 9.1(e)
Hazardous Material 4.27(5)
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Hazardous Waste 4.27(5)
Individual Claims 9.1(f)
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TERM SECTION
---- -------
Individual Fraud Claims 9.1
Individual General Claims 9.1(f)
Interim Financial Statements 6.8
Leased Real Property 4.6(2)
Material Contracts 4.9(1)
NS Act 2.1(1)(a)
Newco 4.35
Newco Class A Stock 4.35
Nextera Balance Sheet 5.7(1)
Nextera Financial Statements 5.7(1)
Ownership Claims 9.1(b)
Principals 7.9
Pro Forma Financial Statements 5.7(3)
Purchased Shares 2.2
Restricted Period 4.35
SC Amalco 2.1(1)(d)
SC Holdco 2.1(1)(a)
SC Unlimco 2.1(1)(b)
Securities 4.35(d)
SC Shareholders Indemnified Party 9.3
Share Exchange Agreement 7.16
Sibson Canada 4.27(5)
Sigma Consulting 5.1(5)
Support Agreement 6.3
Tax Claims 9.1(c)
Tax Returns 4.22(a)
ARTICLE 2
PURCHASE AND SALE OF PURCHASED SHARES
SECTION 2.1 PRE-CLOSING STEPS.
(1) As soon as practicable after the date hereof, but in any event prior to
the Closing Date, the parties hereto shall have caused the following
actions to have occurred (the "Pre-Closing Steps"):
(a) Sibson Canada and 1053861 Ontario Limited ("SC HOLDCO") shall
each be continued under the Companies Act (Nova Scotia) ("NS
ACT") as a limited liability company;
(b) An unlimited liability company ("SC UNLIMCO") shall be
incorporated under the NS Act as a wholly-owned subsidiary of
Sibson Canada and the parties hereby agree that SC Unlimco
will have no assets or liabilities nor will it carry
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on any business on or prior to closing and the parties hereby
understand and agree that the Representations and Warranties
are based on that assumption;
(c) Immediately following the continuance and incorporation
described above, an order of the Supreme Court of Nova Scotia
shall have been applied for and obtained under Section 134 of
the NS Act (the "AMALGAMATION ORDER"), approving the
amalgamation of Sibson Canada, SC Holdco and SC Unlimco to
form an unlimited liability company under the name "SIBSON
CANADA CO"; and
(d) As the first step of Closing and prior to the acquisition
contemplated in Section 2.2 hereof, Sibson Canada, SC Holdco
and SC Unlimco will be amalgamated (the "AMALGAMATION") by way
of Amalgamation Agreement under the NS Act and the resulting
company ("SC AMALCO") will be an unlimited liability company
under the NS Act. SC Amalco will have an authorized capital
consisting of 10,000,000 common shares and 10,000,000 Class A
common shares with the rights, privileges, restrictions and
conditions attaching to the existing common shares and Class A
common shares in the capital of Sibson Canada at the date
hereof.
(2) Upon the Amalgamation, the shares of Sibson Canada, SC Holdco and SC
Unlimco will be converted into shares of SC Amalco or cancelled as
follows:
(a) The 10 voting shares of SC Holdco shall be converted into 210
common shares of SC Amalco, the 100 Class A shares of SC
Holdco shall be converted into 2,099 common shares of SC
Amalco, the 100 Class B shares of SC Holdco shall be converted
into 2,099 common shares of SC Amalco, the 100 Class C shares
of SC Holdco shall be converted into 2,099 common shares of SC
Amalco;
(b) All of the issued and outstanding common shares and Class A
common shares in the capital of Sibson Canada will be
converted into 3,494 common shares of SC Amalco on the basis
of 6.5065 common shares of SC Amalco for each common or Class
A common share of Sibson Canada, save and except the issued
and outstanding shares of Sibson Canada held by SC Holdco,
which will be cancelled without any repayment of capital in
respect thereof (fractions rounded as per Exhibit A); and
(c) All of the issued and outstanding shares in the capital of SC
Unlimco held by Sibson Canada will be cancelled without any
repayment of capital in respect thereof.
(3) The parties acknowledge and agree that the Representations and
Warranties of the SC Shareholders will be based upon the assumption
that:
(a) following the continuance of Sibson Canada and SC Holdco under
the NS Act all of the property rights, assets and liabilities
of such corporations continue to be the property rights,
assets and liabilities of the continued companies, and ;
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(b) upon the amalgamation of the continued Sibson Canada, the
continued SC Holdco and SC Unlimco (collectively, the
"Pre-Amalgamating Companies") all of the property of such
Pre-Amalgamating Companies shall become the property of SC
Amalco; Amalco becomes liable for all of the liabilities and
obligations of the Pre-Amalgamating Companies; the rights of
creditors and others against the property, rights and assets
of each of the Pre-Amalgamating Companies become rights
against the property, rights and assets of SC Amalco; and the
obligations, if any, of the Pre-Amalgamating Companies under
this agreement become the obligations of SC Amalco.
(c) The SC Shareholders shall have no liability with regard to any
warranty, breach of a representation or relating to the
Pre-Closing Steps.
(4) Except where the context otherwise requires, any reference herein to
"Sibson Canada" shall be deemed to include reference to Sibson Canada
Inc., as continued under the NS Act and to SC Amalco, following the
Amalgamation.
(5) Notwithstanding anything to the contrary, and in particular section
11.4, the parties acknowledge and agree that a certain letter agreement
from Nextera to the SC Shareholders dated August 11, 1998 regarding the
Pre-Closing Steps is in full force and effect in accordance with the
terms thereof.
(6) Intentionally Deleted
(7) Legal fees shall be payable on Closing, by Sibson Canada to ▇▇▇▇▇▇▇ in
the amount of CDN. $100,000.
(8) The Exchangeable Shares, by virtue of their terms, the Support
Agreement and the Exchange Trust Agreement, entitle the holders thereof
to acquire Nextera Class A Units, or Newco Class A Stock (as
hereinafter defined) on certain terms and conditions. Nextera shall
take all steps in the United States and Ontario to ensure that the SC
Shareholders are in no worse position than the sellers under the U.S.
Purchase Agreement as a result of failure to obtain any regulatory
approval that may be necessary recognizing (i) that the hold period
imposed upon the SC Shareholders with respect to the Nextera Class A
Units or Newco Class A Stock may, but not necessarily will, be greater
than the hold period imposed on the Shareholders under the U.S.
Purchase Agreement and (ii) that Nextera shall not be required to
obtain listing of the Nextera Class A Units or Newco Class A Stock in
Canada.
(9) The Exchangeable Shares are fully transferable between the SC
Shareholders.
SECTION 2.2 PURCHASE OF PURCHASED SHARES.
Upon the terms and subject to the conditions contained herein, at the
Closing, the SC Shareholders will sell and the Canadian Buyer will purchase all
of the issued and outstanding shares of SC Amalco consisting of 10,001 common
shares, (collectively, the "PURCHASED SHARES") free and clear of all
Encumbrances.
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SECTION 2.3 PURCHASE PRICE OF PURCHASED SHARES.
In consideration of the sale, and delivery of the Purchased Shares to
Canadian Buyer and in reliance upon the representations and warranties of the SC
Shareholders herein contained and made at the Closing and upon the terms and
subject to the satisfaction or waiver of the party entitled thereto of all of
the conditions set forth herein, Canadian Buyer agrees at the Closing to pay to
SC Shareholders for the Purchased Shares $3,105,532.50 which, together with
Nextera's/Canadian Buyer's performance of its other obligations pursuant to this
Agreement, shall constitute the entire consideration to be paid by Buyer
hereunder.
SECTION 2.4 SATISFACTION OF PURCHASE PRICE.
The Canadian Buyer shall satisfy the purchase consideration for the
Purchased Shares as follows:
(a) The sum of $2,611,000 to be paid to the SC Shareholders
allocated as set forth in Exhibit "A" by wire transfer of
immediately available funds, bank draft or certified cheque;
(b) In reliance upon the representations and warranties of SC
Shareholders herein contained and made at the Closing and upon
the terms and subject to the satisfaction or waiver of all of
the conditions set forth herein, Buyer agrees that at the
Closing, it will (i) deliver to the SC Shareholders as set out
in Exhibit A the aggregate amount of 138,761 Exchangeable
Shares and (ii) deliver to the Escrow Agent 59,052
Exchangeable Shares (the "Escrow Amount") in SC Shareholder's
name, or as the SC Shareholders may direct, as set out in
Exhibit B and to be held in the manner described in the Escrow
Agreement to be executed in substantially the form attached
hereto as Exhibit B. The parties acknowledge that the value of
the Exchangeable Shares is $2.50 per share.
ARTICLE 3
CLOSING
SECTION 3.1 CLOSING.
The Closing of the transactions contemplated herein (the "CLOSING")
shall be held at Stikeman, ▇▇▇▇▇▇▇ in Toronto on August 31, 1998 or at such
other date and location as may be mutually agreed upon by the parties.
SECTION 3.2 CLOSING PROCEDURES.
Subject to the satisfaction or waiver by the relevant party of the
conditions of closing in its favour, at the Closing, the SC Shareholders shall
deliver actual possession of the certificates evidencing the Purchased Shares to
the Canadian Buyer and record the Canadian Buyer or its nominee as the
registered owner and thereupon the Canadian Buyer shall pay or satisfy the
Purchase Price in accordance with Section 2.3.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SC SHAREHOLDERS
As a material inducement to Nextera and Canadian Buyer to enter into
this Agreement and consummate the transactions contemplated hereby, the SC
Shareholders hereby jointly and severally represent and warrant to Nextera and
Canadian Buyer with the exception of Sections 4.1, 4.2 and 4.3 for which the SC
Shareholder of SC Holdco, being ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ represents and warrants to
Nextera and Canadian Buyer that:
SECTION 4.1 ORGANIZATION AND QUALIFICATION OF SC HOLDCO.
Immediately prior to its continuance into Nova Scotia, SC Holdco was a
corporation duly organized, validly existing and in good standing under the laws
of the Province of Ontario with corporate power and authority to conduct its
business in the manner and in the places where such business is currently
conducted. Copies of the Certificate and Articles of Incorporation and Bylaws of
SC Holdco, and all amendments thereto, heretofore delivered to Canadian Buyer
are accurate and complete as of the date of continuance. SC Holdco was not in
violation of any term of its Certificate and Articles of Incorporation or
Bylaws. SC Holdco was not required to be licensed or qualified to conduct its
business in any other jurisdiction in which failure to be so licensed or
qualified would have a material adverse effect on Sibson Holdco, the Canadian
Assets or the Canadian Business.
SECTION 4.2 CAPITALIZATION; BENEFICIAL OWNERSHIP OF SC HOLDCO.
The authorized capital of SC Holdco consists of an unlimited number of
common shares, an unlimited number of Class A shares, an unlimited number of
Class B Shares and an unlimited number of Class C Shares of which 10 common
shares, 100 Class A shares, 100 Class B Shares and 100 Class C Shares are duly
and validly issued, and outstanding, and are fully paid and non-assessable.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is the owner of record and beneficially of all of the above
shares. There are no outstanding options, warrants, rights, commitments,
pre-emptive rights or agreements of any kind for the issuance or sale of, or
outstanding securities convertible into, any additional equity of any class of
shares of SC Holdco. None of the shares in the capital of SC Holdco has been
issued in violation of any Regulation. There are no voting trusts, voting
agreements, proxies or other agreements, instruments or undertakings with
respect to the voting of the shares of SC Holdco.
SECTION 4.3 ACTIVITIES OF SC HOLDCO
SC Holdco has no assets or liabilities and has not engaged in any other
activities other than holding the shares of Sibson Canada. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as
a SC Shareholder, represents and warrants that those matters set forth herein
under Sections 4.10, 411, 4.12, 4.14, 4.15, 4.16, 4.19, 4.20, 4.21, 4.25, 4.27,
4.30, 4.32, 4.33 and 4.34 apply to SC Holdco mutatis mutandis as if named
therein.
SECTION 4.4 ORGANIZATION AND QUALIFICATION OF SIBSON CANADA.
Immediately prior to its continuance into Nova Scotia, Sibson Canada
was a corporation duly organized, validly existing and in good standing under
the laws of the Province of Ontario with corporate power and authority to own or
lease its properties and to conduct its business in the manner and in the places
where such properties are owned or
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leased or such business is currently conducted or proposed to be conducted.
Copies of the Certificate and Articles of Incorporation and Bylaws of Sibson
Canada, and all amendments thereto, heretofore delivered to Canadian Buyer are
accurate and complete as of the date of continuance. Sibson Canada was not in
violation of any terms of its Certificate and Articles of Incorporation or
Bylaws. Sibson Canada was not required to be licensed or qualified to conduct
its business in any other jurisdiction in which failure to be so licensed or
qualified would have a material adverse effect on Sibson Canada, the Canadian
Assets or the Canadian Business.
SECTION 4.5 CAPITALIZATION; BENEFICIAL OWNERSHIP OF SIBSON CANADA.
The authorized capital of Sibson Canada consists of an unlimited number
of common shares and an unlimited number of Class A common shares of which 1,307
common shares and 230 Class A common shares are duly and validly issued, and
outstanding, and are fully paid and non-assessable. Each SC Shareholder is the
owner of record and beneficially of the number of common shares set forth
opposite such SC Shareholder's name on Schedule 4.5. There are no outstanding
options, warrants, rights, commitments, pre-emptive rights or agreements of any
kind for the issuance of sale of, or outstanding securities convertible into,
any additional equity of any class of Sibson Canada. None of the shares in the
capital of Sibson Canada has been issued in violation of any Regulation. There
are no voting trusts, voting agreements, proxies or other agreements,
instruments or undertakings with respect to the voting of the shares of Sibson
Canada except for the existing shareholders agreement between the SC
Shareholders as set out in Schedule 4.5.
SECTION 4.6 SUBSIDIARIES OF SIBSON CANADA.
Sibson Canada has no Subsidiaries, except as contemplated in this
Agreement, or investments in any other corporations or business organization.
SECTION 4.7 AUTHORITY.
(1) Each of the SC Shareholders has full, right, authority and power to
enter into this Agreement and each agreement, document and instrument
to be executed and delivered by SC Shareholders pursuant to this
Agreement and to carry out the transactions contemplated hereby or
thereby. The execution, delivery and performance by each SC Shareholder
of this Agreement and each such other agreement, document and
instrument have been duly authorized by all necessary action of each SC
Shareholder and no other action on the part of any of the SC
Shareholders is required in connection therewith.
(2) This Agreement and each agreement, document and instrument executed and
delivered by any of the SC Shareholders pursuant to this Agreement
constitutes, or when executed and delivered will constitute, valid and
binding obligations of each of them that is a party thereto enforceable
in accordance with their terms (assuming the due authorization,
execution and delivery by the other parties thereto), subject to the
effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject to the effect of general principles of equity, including,
without limitation, the possible unavailability of
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specific performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law.
(3) The execution, delivery and performance by the SC Shareholders of this
Agreement and each such other agreement, document and instrument:
(a) With respect to SC Holdco and Sibson Canada, does not and will
not violate any provision of the Certificate of Incorporations
(as amended) or the Bylaws of SC Holdco of Sibson Canada;
(b) Does not and will not violate any applicable laws or require
SC Shareholder to obtain any approval, consent or waiver of,
or make any filing with, any person or entity (governmental or
otherwise) that will not be obtained or made on or prior to
the Closing; and
(c) Does not and will not result in (a) a breach of, constitute a
default under, accelerate any obligation under, or give rise
to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration
award to which any of the SC Shareholders or Sibson Canada is
a party or by which the property of SC Shareholders or Sibson
Canada is bound or affected and which is material to any SC
Shareholder or Sibson Canada (as applicable), or the Canadian
Assets or the Canadian Business, taken as a whole, or (b)
result in the creation or imposition of any mortgage, pledge,
lien, security interest or other charge or encumbrance on any
equity interest in any SC Shareholder or Sibson Canada except,
in the case of clause (a), for such breaches , defaults,
accelerations or terminations as would not, individually or in
the aggregate, have a material adverse effect.
SECTION 4.8 CANADIAN ASSETS.
Excluding the Leased Real Property and any leases of personal property,
Sibson Canada has title to the Canadian Assets free and clear of any
Encumbrances other than the Permitted Liens. The Canadian Assets include all
assets necessary for the conduct of the Canadian Business as currently conducted
and proposed to be conducted. Schedule 4.8 contains an accurate list by general
category of all tangible Canadian Assets where the value of an individual item
exceeds $25,000 or where an aggregate of similar items exceeds $50,000 except
for tangible Assets that have been fully depreciated for tax purposes. All
tangible assets and properties which are part of the Canadian Assets and are
material to the operation of the Business are in good operating condition and
repair (normal wear and tear excepted) and are usable in the ordinary course of
business.
SECTION 4.9 REAL PROPERTY.
(1) OWNED REAL PROPERTY. Sibson Canada does not own any real property.
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(2) LEASES. All of the real property leased or sub-leased by Sibson Canada
is identified on Schedule 4.9 (herein referred to as the "LEASED REAL
PROPERTY" and such lease is herein referred to as the "FACILITY
LEASE").
(3) A true and complete copy of the Facility Lease has been delivered to
the Canadian Buyer. The Facility Lease has been duly authorized and
executed by Sibson Canada and, to the knowledge of the SC Shareholders,
the other parties thereto and is in full force and effect and binding
and enforceable against the parties thereto (assuming due
authorization, execution and delivery by the other parties thereto),
subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject to the effect of general principles of equity,
including, without limitation, the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law. Sibson Canada is not in default under
any Facility Lease, nor to the knowledge of the SC Shareholders has any
event occurred which, with notice or the passage of time, or both,
would give rise to such a default. To the knowledge of the SC
Shareholders, none of the other parties to any Facility Lease is in
default under such Facility Lease and there is no event which, with
notice or the passage of time, or both, would give rise to such a
default. The SC Shareholders have no knowledge of the status of the
head-lease to the Facility Lease.
(4) LEASES OR OTHER AGREEMENTS. Except for the Facility Lease listed on
Schedule 4.9, neither Sibson Canada nor any of its Subsidiaries holds,
or is obligated under or a party to, any leases, subleases, licenses,
occupancy agreements, options, rights, concessions or other agreements
or arrangements, written or oral, granting to any person the right to
purchase, use or occupy any real property in connection with the
Canadian Business or any portion thereof or interest in any such real
property.
(5) FACILITY LEASES AND LEASED REAL PROPERTY. With respect to the Facility
Lease to which Sibson Canada is a party, as lessee or sublessee, Sibson
Canada has an unencumbered leasehold interest as a lessee or a
sub-lessee in the Leasehold Estate subject to the Permitted Liens. The
actions contemplated by this Agreement do not violate the terms or
result in the termination of, or create a right to terminate, such
Facility Lease. Sibson Canada enjoys peaceful and undisturbed
possession of all the Leased Real Property, as applicable.
(6) CONDITION OF LEASED REAL PROPERTY. To the knowledge of the SC
Shareholders, there are no material defects in the physical condition
of any portion of the Leased Real Property and all such Leased Real
Property is in good operating condition and repair (reasonable wear and
tear excepted).
(7) COMPLIANCE WITH THE LAW. None of the SC Shareholders nor Sibson Canada
has received any written notice from any governmental authority of any
violation of any law, ordinance, regulation, license, permit or
authorization issued with respect to the Leased Real Property that has
not been heretofore corrected. None of the SC Shareholders nor Sibson
Canada has received any written notice of any real estate tax
deficiency or assessment and is not aware of any proposed deficiency,
claim or
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assessment with respect to any of the Leased Real Property, or any
pending or threatened condemnation thereof.
SECTION 4.10 FINANCIAL STATEMENTS.
(1) The SC Shareholders have delivered to Nextera and the Canadian Buyer
the following financial statements of Sibson Canada, copies of which
are attached hereto as Schedule 4.10;unaudited balance sheets and
statements of earnings, retained earnings and changes in financial
position for its fiscal years ended December 31, 1995, 1996 and 1997,
and unaudited balance sheet as at April 30, 1998 and income statement
for the month ended April 30, 1998 (with comparison to budget) and
income statement for the month ended April 30, 1998 (with comparison to
prior year) (collectively, the "FINANCIAL STATEMENTS"). The December
31, 1997 balance sheet is hereinafter referred to as the "BASE BALANCE
SHEET" and December 31, 1997 is hereafter referred to as the "BASE
BALANCE SHEET DATE." The Financial Statements, have been prepared in
accordance with GAAP (subject to normal year-end adjustments in the
case of the unaudited Financial Statements for the interim period)
applied consistently during the periods covered thereby, and said
Financial Statements in the case of the unaudited Financial Statements
present fairly in all material respects the financial condition of
Sibson Canada at the dates of said statements and the results of its
operations for the periods covered thereby, and the unaudited balance
sheet as at April 30, 1998 and income statement for the month ended
April 30, 1998 (with comparison to budget) and income statement for the
month ended April 30, 1998 (with comparison to prior year) ended April
30, 1998 provided by the SC Shareholders to Canadian Buyer present
fairly and completely in all material respects the information
purported to be shown thereon.
(2) The SC Shareholder of SC Holdco has delivered the unaudited financial
statements of SC Holdco (copies of which are attached hereto as
Schedule 4.10) for its fiscal years ending December 31, 1995, 1996 and
1997.
(3) Sibson Canada's fiscal year 1998 operating budget attached hereto as
Schedule 4.10(2) which has previously been supplied by the SC
Shareholders to the Canadian Buyer has been prepared in good faith on
the basis of assumptions by Sibson Canada which Sibson Canada believed
were reasonable at the time of the preparation of such budget.
(4) Except as set forth on Schedule 4.10 as of the date hereof Sibson
Canada does not have any Liabilities of any nature, whether accrued,
absolute or contingent (including without limitation Liabilities as
guarantor or otherwise with respect to obligations of others, or
Liabilities for any Tax due or then accrued or to become due or
contingent or potential Liabilities relating to activities of Sibson
Canada or the conduct of the Canadian Business prior to the date hereof
or the Closing, as the case may be, regardless of whether claims in
respect thereof had been asserted as of such date), except Liabilities
(i) stated or adequately reserved against on the Base Balance Sheet or
the notes thereto, (ii) incurred or arising in the ordinary course of
business under Contracts, Leases, Permits and other business
arrangements described in the Disclosure Schedule (and under those
Contracts, Leases and Permits which are not
23
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required to be disclosed on the Disclosure Schedule) none of which
relates to any Default under any Contract or Lease, breach of warranty,
tort infringement or violation of any Regulation or Court Order or that
arose out of any Action and none of which, individually or in the
aggregate, has or would have a material adverse effect, (iii) incurred
or arising in the ordinary course of the Canadian Business subsequent
to the Base Balance Sheet Date consistent with the terms of this
Agreement (none of which relates to any Default under any Contract or
Lease, breach of warranty, tort infringement or violation of any
Regulation or Court Order or arose out of any Action) and none of
which, individually or in the aggregate, has or would have a material
adverse effect, (iv) disclosed in this Article IV or on the Disclosure
Schedule or (v) future performance under Contracts, none of which
relates to any default, breach of warranty, fort infringement or
violation of any Regulation or Court Order or arose out of any action
and none of which individually or in the aggregate has or would have a
material adverse effect.
SECTION 4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in Schedule 4.11, since the Base Balance Sheet
Date, there has not been any:
(a) Actual or, to the knowledge of the SC Shareholders, threatened
material adverse change;
(b) Change in accounting methods, principles or practices of
Sibson Canada affecting the Canadian Assets, its Liabilities
or the Canadian Business;
(c) Revaluation by Sibson Canada of any of the Canadian Assets,
including without limitation writing down the value of
inventory or writing off notes or accounts receivable;
(d) Damage, destruction or loss (whether or not covered by
insurance) which has had or will have a material adverse
effect;
(e) cancellation of any indebtedness or waiver or release of any
right or claim of Sibson Canada relating to its activities or
properties which had or will have a material adverse effect;
(f) Declaration, setting aside, or payment of dividends or
distributions by Sibson Canada or any redemption, purchase or
other acquisition of any of the securities of Sibson Canada;
(g) Increase in the rate of compensation payable or to become
payable to any director, officer or other employee of Sibson
Canada or any consultant earning in excess of $100,000 per
year, Representative or agent of Sibson Canada, including,
without limitation, the making of any loan to, or the payment,
grant or accrual of any bonus, incentive compensation, service
award or other similar benefit to, any such person, or the
addition to, modification of, or contribution to any Employee
Program, arrangement, or practice described in
24
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the Disclosure Schedule (except for normal increases,
payments, grants and accruals in the ordinary course of
business consistent with past practices and that in the
aggregate have not resulted in material increase in benefits
or compensation expense of Sibson Canada, taken as a whole);
(h) Adverse change in employee relations which has or is
reasonably likely to have a material adverse effect on the
productivity, the financial condition, results of operations
or Canadian Business of Sibson Canada or the relationships
between the employees of Sibson Canada and the management of
Sibson Canada;
(i) With the exception of notice of termination of the Facility
Lease in September, (x) amendment, cancellation or termination
of any Contract, commitment, agreement, Lease, transaction or
Permit relating to the Canadian Assets or the Canadian
Business, or (y) with the exception of this Agreement and the
other agreements entered into in connection herewith, and an
offer to lease on new premises, entry into any Contract,
Lease, transaction or Permit which is not in the ordinary
course of business, including without limitation any
employment or consulting agreements, except in the cases of
the foregoing clauses (x) and (y), the amendment, cancellation
or termination or the entering into, of Contracts or
commitments for the provision of consulting services in the
ordinary course of business consistent with past practices;
(j) Mortgage, pledge or other encumbrance of any Canadian Assets,
except purchase money mortgages arising in the ordinary course
of business and Permitted Liens;
(k) Sale, assignment or transfer of any of the Canadian Assets,
except to the extent Canadian Assets are sold or disposed of
in the ordinary course of business;
(l) Incurrence of indebtedness by Sibson Canada for borrowed money
or commitment to borrow money entered into by Sibson Canada,
or loans made or agreed to be made by Sibson Canada, or
indebtedness guaranteed by Sibson Canada, except for employee
advances in the ordinary course of business and endorsements
for collection or deposit in the ordinary course of business
and borrowings under Sibson Canada's existing credit
facilities in the ordinary course of business;
(m) Except as provided in this Agreement or the other agreements
contemplated hereby or as described in the Disclosure
Schedule, incurrence by Sibson Canada of Liabilities, except
Liabilities incurred in the ordinary course of business, or
increase or change in any assumptions underlying or methods of
calculating, any doubtful account contingency or other
reserves of Sibson Canada;
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(n) Payment, discharge or satisfaction of any Liabilities of
Sibson Canada other than the payment, discharge or
satisfaction in the ordinary course of business of Liabilities
set forth or reserved for on the Base Balance Sheet or
incurred in the ordinary course of business;
(o) Capital expenditure by Sibson Canada in excess of Cdn.$25,000
individually or Cdn.$50,000 in the aggregate, with the
exception of the Sun Life offer to lease, the execution of any
Lease by Sibson Canada or the incurring of any obligation by
Sibson Canada to make any capital expenditures or execute any
Lease;
(p) Failure to pay or satisfy when due any Liability of Sibson
Canada, except where the failure would not have a material
adverse effect;
(q) Failure of Sibson Canada to use commercially reasonable
efforts to carry on diligently the Canadian Business in the
ordinary course;
(r) Disposition or lapsing of any Proprietary Rights or any
disposition or disclosure to any person of any Proprietary
Rights not theretofore a matter of public knowledge other than
as would not have a material adverse effect; or
(s) Agreement by Sibson Canada or any SC Shareholder to do any of
the things described in the preceding clauses (a) through (r)
other than as expressly provided for herein.
SECTION 4.12 CONTRACTS AND COMMITMENTS.
(1) CONTRACTS. Schedule 4.12 sets forth the following Contracts (or
descriptions thereof, in the case of oral Contracts) to which Sibson
Canada is a party or by which it is bound (collectively, the "MATERIAL
CONTRACTS"):
(a) Contracts not made in the ordinary course of business;
(b) Employment contracts and severance agreements, to employ or
terminate present executive officers or other personnel and
other contracts with present officers, directors or
shareholders of Sibson Canada or (B) employment contracts and
severance agreements that will result in the payment by, or
the creation of any Liability to pay on behalf of Sibson
Canada or Canadian Buyer, any severance, termination, "golden
parachute", or other similar payments to any present or former
personnel following termination of employment or otherwise as
a result of the consummation of the transactions contemplated
by this Agreement it being understood that no such contracts
or agreements need to be listed by with respect to clause (B)
if no payment is to be made or liability exists following the
closing;
(c) Labour or union contracts;
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(d) Distribution, franchise, license, technical assistance, sales,
commission, agency or advertising contracts in respect of the
Canadian Assets or the Canadian Business, or consultant (where
a third party is providing services to Sibson Canada),
excluding (A) software license that are not material to the
Business and (B) consultant contracts involving aggregate fees
of less than $25,000 per annum and that are terminable by
Sibson Canada on no more than three months notice;
(e) Contracts or agreements with a client or customer of Sibson
Canada providing for an aggregate payment by such client or
customer in excess of $75,000 which, to the knowledge of SC
Shareholders, obligate Sibson Canada to indemnify such client
or customer;
(f) Options with respect to any property, real or personal,
whether Sibson Canada is the grantor thereunder;
(g) Contracts (excluding real property leases) involving actual
future expenditures or, to the knowledge of SC Shareholders,
other Liabilities (including without limitation, potential or
contingent Liabilities), in excess of $40,000 in the aggregate
(excluding Liabilities for indirect expenditures such as
salaries and overhead expenses and any contingent or potential
Liability) to the Canadian Business or the Canadian Assets;
(h) Contracts or commitments relating to commission arrangements
with others;
(i) Promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation in respect of borrowed
money, individually in excess of or in the aggregate in excess
of $40,000, whether Sibson Canada shall be the borrower,
lender or guarantor thereunder or whereby any Canadian Assets
are pledged (excluding credit provided by Sibson Canada in the
ordinary course of business to purchasers of its services and
excluding the Shareholder Loans as defined herein);
(j) Contracts containing covenants limiting the freedom of Sibson
Canada or any of its respective officers, directors,
shareholders or affiliates, to engage in any line of business
or compete with any person;
(k) Any Contract to supply services to the Canadian federal,
provincial, or local government or any other foreign
government or any agency or department thereof;
(l) Leases of real property; or
(m) Leases of personal property not cancellable (without
Liability) within 30 calendar days, excluding leases of
personal property involving the expenditure of less than
$25,000 in the aggregate annually.
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(2) The SC Shareholders have delivered to Canadian Buyer true, correct and
complete copies (or descriptions thereof with respect to oral Material
Contracts) of all of the Material Contracts, including all amendments
and supplements thereto. Other than the Material Contracts, the SC
Shareholders have no other Contracts of the type described in clauses
(a) through (m) above.
(3) ABSENCE OF DEFAULTS. SC Canada has fulfilled, or taken all action
necessary to enable it to fulfill when due, all of its respective
material obligations under each such Material Contract. To the
knowledge of the SC Shareholders, all other parties to such Material
Contracts are currently in compliance in all material respects with the
provisions thereof, no party is in Default in any respect thereunder
and no notice of any such claim of Default relating thereto has been
given to Sibson Canada or the SC Shareholders. To the knowledge of the
SC Shareholders, there is no reason to believe that the services called
for by any Material Contract between SC Shareholders and a client of SC
Shareholders cannot be supplied substantially in accordance with the
terms of such Material Contract, including time specifications, and
Sibson Canada has no reason to believe that any Material Contract will
upon performance by Sibson Canada result in a net loss to Sibson
Canada.
SECTION 4.13 PERMITS.
(1) Sibson Canada has, and at all times has had, all Permits required under
any Regulation (including Environmental Laws) in the operation of its
Canadian Business or in the ownership of the Canadian Assets, except
for those Permits the absence of which would not individually or in the
aggregate have a material adverse effect. A complete list of such
Permits is set forth in Schedule 4.13. Sibson Canada is not in Default,
nor has it received any notice of any claim of Default, with respect to
any such Permit. To the knowledge of the SC Shareholders, no present or
former shareholder, director, officer or employee of Sibson Canada or
any affiliate thereof, or any other person, firm, corporation or other
entity, owns or has any proprietary, financial or other interest
(direct or indirect) in any such Permit.
(2) Except as disclosed on Schedule 4.13 hereto, no notice to, declaration,
filing or registration with, or Permit from, any domestic or foreign
governmental or regulatory body or authority, or any other person or
entity, is required to be made or obtained by Sibson Canada in
connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 4.14 LITIGATION.
Except as set forth on Schedule 4.14, there are no Actions pending or
to the knowledge of the SC Shareholders, threatened (a) against, (i) Sibson
Canada, the Canadian Business or the Canadian Assets (including with respect to
Environmental Laws), (ii) to the knowledge of the SC Shareholders, any officers
or directors of Sibson Canada, as such, or (iii) to the knowledge of the SC
Shareholders, any SC Shareholder in such SC Shareholder's capacity as a
shareholder of Sibson Canada or as an employee of SC Canada, (b) against Sibson
Canada seeking to delay, limit or enjoin the transactions contemplated by this
Agreement (c) against Sibson Canada, or any of its officers or directors or SC
Shareholders,
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in their capacity as such that involves the risk of criminal liability to any
such entity or person or (d) in which Sibson Canada is a plaintiff, including
any derivative suits brought by or on behalf of Sibson Canada nor, to the
knowledge of the SC Shareholders, is there any reasonable basis for any such
Action. Sibson Canada is not in Default with respect to or subject to any Court
Order, and there are no unsatisfied judgments against Sibson Canada, the
Canadian Business or the Canadian Assets. There is not a reasonable likelihood
of an adverse determination of any pending Actions that could have a material
adverse effect. There are no Court Orders or agreements with, or liens by, any
governmental authority or quasi-governmental entity relating to any
Environmental Law which regulate, obligate, bind or in any way affect the SC
Shareholders, the Canadian Assets or the Canadian Business, other than the
Permitted Liens.
SECTION 4.15 COMPLIANCE WITH LAW.
Except as set forth on Schedule 4.15, Sibson Canada and the conduct of
the Canadian Business have been and are in substantial compliance with all
Regulations and Court Orders relating to the Canadian Assets or the Canadian
Business or operations of Sibson Canada except in each case for such
non-compliance as would not, individually or in the aggregate, have a material
adverse effect. Within the last five years, Sibson Canada has not received any
written notice to the effect that, it is not in compliance with any such
Regulations or Court Orders.
SECTION 4.16 ORDINARY COURSE.
Except for the transactions contemplated by this Agreement and as set
forth on Schedule 4.16, since December 31, 1997, Sibson Canada has conducted its
business only in the ordinary course and consistently with its prior practices.
SECTION 4.17 OFFICERS AND COMPENSATION.
Schedule 4.17 hereto contains a true and complete list of all current
officers and directors of Sibson Canada. In addition, Schedule 4.17 hereto
contains a list of all managers, employees and consultants of Sibson Canada who,
individually, have received or are scheduled to receive compensation from Sibson
Canada for the fiscal year ended December 31, 1997, in excess of $50,000. In
each case Schedule 4.17 includes the current job title and aggregate annual
compensation of each such individual.
SECTION 4.18 EMPLOYEES; LABOUR MATTERS.
As of the date of this Agreement, Sibson Canada employs a total of
approximately 21 (twenty-one) full-time employees and no part-time employees.
Except as set forth in Schedule 4.18, Sibson Canada has not received any written
notice that any employee intends to terminate his or her employment with Sibson
Canada following the Closing. Sibson Canada is not delinquent in payments to any
of its employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it to the date hereof or amounts
required to be reimbursed to such employees. Sibson Canada does not have a
policy, practice, plan or program of paying severance pay or any form of
severance compensation in connection with the termination of employment, except
as set forth in Schedule 4.18 and all of its employees may be terminated with
notice or pay in lieu thereof as required by applicable law in the absence of a
written agreement. Sibson Canada
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is in compliance in all material respects with all applicable laws and
regulations respecting labour, employment, fair employment practices, work place
safety and health, terms and conditions of employment, and wages and hours.
There are no charges of employment discrimination or unfair labour practices
pending or, to the knowledge of SC Shareholders, threatened and there exists no
basis for any such claim, nor are there any strikes, slowdowns, stoppages of
work, or any other concerted interference with normal operations which are
existing, pending, or to the knowledge of the SC Shareholders, threatened
against or involving Sibson Canada. No question concerning union representation
exists respecting any employees of Sibson Canada. There are no pending
grievances, complaints or charges that have been filed against Sibson Canada
under any dispute resolution procedure (including, but not limited to, any
arbitration or similar proceedings) and no claim of which SC Shareholders has
received written notice. No collective bargaining agreement is in effect or is
currently being or is about to be negotiated by Sibson Canada. Sibson Canada has
not received any written notice indicating that any of its employment policies
or practices is currently being audited or investigated by any federal,
provincial or local government agency.
SECTION 4.19 BANKING RELATIONS.
Schedule 4.19 contains a complete and correct list of the names and
locations in which Sibson Canada has accounts or safe deposit boxes and the
names of all persons authorized to draw thereon or have access thereto.
SECTION 4.20 NO BROKERS.
Neither Sibson Canada nor any of the SC Shareholders nor any of their
respective officers, directors, employees, or affiliates has employed or made
any agreement with any broker, finder or similar agent or any person or firm
which will result in the obligation of Canadian Buyer, or any of its affiliates
to pay any finder's fee, brokerage fees or commission or similar payment in
connection with the transactions contemplated hereby.
SECTION 4.21 NO OTHER AGREEMENTS TO SELL THE PURCHASED SHARES.
Other than as described on Schedule 4.21 neither the SC Shareholders
nor Sibson Canada nor to the knowledge of the SC Shareholders, any of Sibson
Canada's officers, directors, employees or affiliates have any commitment or
legal obligation, absolute or contingent, to any other person or firm other than
Canadian Buyer and Nextera under this Agreement or the Letter Agreement signed
August 11, 1998 to sell, assign, transfer or effect a sale of any of the
Canadian Shares (other than inventory or services in the ordinary course of
business), to sell or effect a sale of the equity of Sibson Canada, to effect
any merger, consolidation, liquidation, dissolution or other reorganization of
Sibson Canada or to enter into any agreement or cause the entering into of an
agreement with respect to any of the foregoing.
SECTION 4.22 CLIENTS.
Schedule 4.22 sets forth all clients which (i) accounted for more than
$75,000 in revenue for Sibson Canada for the six months ended June 30, 1998 and
or (ii) accounted for more than $150,000 in revenue for Sibson Canada in the
twelve months ended December 31, 1997 (collectively, the "CLIENTS"). To the
knowledge of the SC Shareholders, the relationships of Sibson Canada with its
Clients are good commercial working relationships.
30
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SECTION 4.23 BACKLOG.
As of the date hereof, Sibson Canada has a backlog of orders for the
sale or lease of services, for which potential revenues have not been recognized
by Sibson Canada, as set forth in Schedule 4.23.
SECTION 4.24 PROPRIETARY RIGHTS.
(1) PROPRIETARY RIGHTS. Schedule 4.24 lists (i) for each registered
Trademark of Sibson Canada, the application serial number or
registration number, the class of goods or services covered and the
expiration date for each country in which a Trademark has been
registered and (ii) for each registered Copyright of Sibson Canada, the
number and date of filing for each country in which a Copyright has
been filed. Other than the items set forth or Schedule 4.24 there are
no Proprietary Rights used by Sibson Canada that are material to the
conduct of the Canadian Business. Sibson Canada owns no patents or
registered designs and has not filed any patent applications or
registered design applications.
(2) ROYALTIES AND LICENSES. Except as set forth on Schedule 4.24, Sibson
Canada has no obligation to compensate any person for the use of any
such Proprietary Rights nor has Sibson Canada granted to any person any
license, option or other rights to use in any manner any of such
Proprietary Rights, whether requiring the payment of royalties or not.
(3) OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. Except as set forth on
Schedule 4.24, Sibson Canada owns or has a valid right to use each of
such Proprietary Rights. No other person (i) has notified Sibson Canada
that it is claiming any ownership of or right to use any such
Proprietary Rights, or (ii) to the knowledge of the SC Shareholders, is
infringing upon any such Proprietary Right in any way. To the knowledge
of the SC Shareholders, except as set forth on Schedule 4.24, use of
such Proprietary Rights by Sibson Canada does not and will not conflict
with, infringe upon or otherwise violate the valid rights of any third
party in or to such Proprietary Rights, and no Action has been
instituted against or notices received by Sibson Canada that are
presently outstanding alleging that use of the Proprietary Rights by
Sibson Canada infringes upon or otherwise violates any rights of a
third party in or to such Proprietary Rights.
SECTION 4.25 TAXES.
Except as otherwise set forth on Schedule 4.25:
(a) All returns, declarations, reports, estimates, statements,
schedules or other information or documents with respect to
Taxes (collectively, "TAX RETURNS") required to be filed by or
with respect to Sibson Canada have been timely filed (giving
effect to extensions granted with respect thereto), with the
appropriate tax authorities and all such Tax Returns are true,
correct, and complete in all material respects;
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(b) Sibson Canada has timely paid all Taxes due from it or claimed
to be due from it by any federal, provincial, local, foreign
or other taxing authority;
(c) There are no liens for Taxes upon any of the assets of, or
interests in Sibson Canada, except liens for Taxes not yet due
and payable;
(d) No Tax Return of Sibson Canada has been audited by the
relevant taxing authority. No deficiency for any Taxes has
been proposed, asserted or assessed against Sibson Canada that
has not been resolved and paid in full. There are no
outstanding waivers, objections, extensions, or comparable
consents regarding the application of the statute of
limitations or period of reassessment with respect to any
Taxes or Tax Returns that have been given or made by Sibson
Canada (including the time for filing of Tax Returns or paying
Taxes) and Sibson Canada has no pending requests for any such
waivers, extensions, or comparable consents;
(e) No audit or other proceeding by any federal, provincial, local
or foreign court, governmental, regulatory, administrative or
similar authority is presently pending with respect to any
Taxes or Tax Return of Sibson Canada and Sibson Canada has not
received written notice of any pending audits or proceedings;
(f) Sibson Canada has not received a ruling from any taxing
authority or signed an agreement with any taxing authority
that could reasonably be expected to have a material adverse
effect on Sibson Canada or the Canadian Assets or the Canadian
Business;
(g) Sibson Canada has complied in all respects with all applicable
Regulations relating to the payment and withholding of Taxes
and has, within the time and the manner prescribed by law,
paid over to the proper governmental authorities all amounts
so withheld;
(h) Sibson Canada is not a party to or bound by or has any
obligation under any Tax sharing allocation or indemnity
agreement or similar contract or arrangement (whether or not
written);
(i) No power of attorney granted by Sibson Canada with respect to
any Taxes is currently in force;
(j) Sibson Canada is not subject to any joint venture, partnership
or other arrangement or contract that is treated as a
partnership for income tax purposes;
(k) There is no expectation or reason to suspect that any taxing
authority may claim or assess any material amount of Taxes
payable by Sibson Canada for any period ending on or prior to
the Closing Date and there are no facts of which Sibson Canada
or the SC Shareholders are aware which would constitute
grounds for the assessment of any material amount of Taxes
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payable by Sibson Canada for any period ending on or prior to
the Closing Date;
(l) Each of the SC Shareholders is a resident of Canada for
purposes of the Tax Acts;
(m) No issue has been raised by a federal, provincial, local or
foreign taxing authority in any examination relating to Sibson
Canada which could reasonably be expected to result in a
proposed deficiency for any subsequent taxable period;
(n) Each of Sibson Canada and Holdco is, and at all times prior to
the Closing Date was, a Canadian-controlled private
corporation for the purposes of the Tax Acts; and
(o) For the purposes of the Tax Acts, the fair market value on May
31, 1996 of the 307 common shares, the 115 Class A common
shares and the 115 Class A common shares in Sibson Canada's
share capital issued on that date to ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇, respectively, did not exceed one
hundred and forty-three Canadian dollars per share.
SECTION 4.26 EMPLOYEE BENEFIT PROGRAMS.
(1) Schedule 4.26 lists every Employee Program (as defined below) that has
been maintained (as defined below) by Sibson Canada at any time during
the three-year period ending on the date of the Closing.
(2) The SC Shareholders do not know and have no reason to know, of any
failure of any party to comply in any material respect with any laws
applicable to the Employee Programs that have been maintained by Sibson
Canada. With respect to any Employee Program ever maintained by Sibson
Canada, there has occurred no material violation of, or material breach
of any duty under applicable law or any Tax law requirements, or
conditions to favorable Tax treatment, applicable to such plan), which
could result, directly or indirectly, in any Taxes, penalties or other
liability to Sibson Canada. No litigation, arbitration, or governmental
administrative proceeding (or investigation) or other proceeding (other
than those relating to routine claims for benefits) is pending or, to
the knowledge of the SC Shareholders, threatened with respect to any
Employee Program.
(3) With respect to each Employee Program maintained by Sibson Canada
within the three years preceding the Closing, complete and correct
copies of the following documents (if applicable to such Employee
Program) have previously been delivered to Canadian Buyer: (i) all
documents embodying or governing such Employee Program, and any funding
medium for the Employee Program (including, without limitation, trust
agreements) as they may have been amended; (ii) the summary plan
description for such Employee Program (or other descriptions of such
Employee Program provided to employees) and all modifications thereto;
(iii) any insurance policy (including any fiduciary liability insurance
policy) related to such Employee
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Program; (iv) any documents evidencing any loan to an Employee Program
that is an employee stock ownership plan; and (v) all other materials
reasonably necessary for Canadian Buyer to perform any of its
responsibilities with respect to any Employee Program subsequent to the
Closing (including, without limitation, health care continuation
requirements).
(4) Sibson Canada has not announced any plan or legally binding commitment
to create any additional Employee Program which is intended to cover
employees or former employees of Sibson Canada or to amend or modify
any existing Employee Program which covers or has covered employees or
former employees of Sibson Canada.
(5) Each Employee Plan listed on Schedule 4.26 may be amended, terminated,
modified or otherwise revised prospectively by Sibson Canada including
the elimination of any and all future benefit accruals under any
Employee Plan.
(6) No event has occurred in connection with which Sibson Canada or any
Employee Program, directly or indirectly, could be subject to any
material liability (A) under any Regulation or governmental order
relating to any Employee Programs or (B) pursuant to any obligation of
Sibson Canada to indemnify any person against liability incurred under
any such Regulation or order as they relate to the Employee Programs.
(7) Except as described on Schedule 4.26, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will result in the acceleration or creation of any
rights of any person to benefits under any Employee Program (including,
without limitation, the acceleration of the vesting or exercisability
of any stock options, the acceleration of the vesting of any restricted
stock, or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).
(8) Each Employee Program and related trust agreement or other funding
instrument, as applicable, which covers or has covered employees or
former employees of Sibson Canada (with respect to their relationship
with such entities) is legally valid and binding and in full force and
effect.
(9) There is no contract, agreement, plan or arrangement covering any
employee or former employee of Sibson Canada that, individually or
collectively, provides for the payment by Sibson Canada of any amount
that is not deductible under the Income Tax Act (Canada).
(10) All contributions required to be made by Sibson Canada with respect to
any Employee Program due as of any date through and including the
Closing Date have been made when due.
(11) For purposes of this SECTION:
(a) "EMPLOYEE PROGRAM" means (A) any employee benefit plan,
including, but not limited to, health, dental, insurance, and
similar plans and programs for the benefit of employees and
(B) any employment, consulting, severance or
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other similar contract, arrangement or policy, any stock
option plan, phantom stock plan, bonus or incentive award
plan, deferred compensation agreement, supplemental income
arrangement, and vacation plan, and any other employee benefit
plan, agreement, and arrangement not described in (A) above.
In the case of an Employee Program funded through a trust,
each reference to such Employee Program shall include a
reference to such trust; and
(b) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to
provide) benefits under such Employee Program, or has any
obligation (by agreement or under applicable law) to
contribute to or provide benefits under such Employee Program,
or if such Employee Program provides benefits to or otherwise
covers employees of such entity, or their spouses, dependants,
or beneficiaries.
(12) The only pension plans existing in respect of the employees of Sibson
Canada are the pension plans listed in Schedule 4.26. True, correct and
complete copies of all such pension plans and related documentation
(including pension plan summaries for participants, funding agreements,
actuarial reports and investment management agreements) have been
provided to Canadian Buyer and are accurately described in Schedule
4.26. All such pension plans are duly registered where required by, and
are in good standing under, all applicable laws, rules and Regulations
including the Income Tax Act (Canada) and the Pension Benefits Act
(Ontario) and to the knowledge of the SC Shareholders there are no
actions, claims, proceedings, pending or threatened (other than routine
claims for benefits) relating to any such pension plans. All required
employer contributions and premiums under such pension plans have been
made, all such plans are fully funded on both a going concern and
wind-up basis in accordance with applicable laws, rules and Regulations
and with the actuarial methods and assumptions used in the most recent
actuarial reports therefor, and there have been no surplus withdrawals
or contribution holidays.
SECTION 4.27 INSURANCE
Schedule 4.27 contains a complete and accurate list of all policies or
binders of fire, liability, title, worker's compensation, product liability and
other forms of insurance maintained by Sibson Canada or the Canadian Business,
the Canadian Assets or its employees. All such insurance coverage applicable to
Sibson Canada, the Canadian Business and the Canadian Assets is in full force
and effect and provides coverage as may be required by applicable Regulation and
by any and all Contracts to which Sibson Canada is a party. There is no Default
under any such coverage nor is there presently any failure to give notice or
present any claim under any such coverage in a due and timely fashion. There are
no outstanding unpaid premiums except in the ordinary course of business and no
notice of cancellation or nonrenewal of any such coverage has been received.
There are no provisions in such insurance policies for retroactive or
retrospective premium adjustments. All products liability, general liability and
workers' compensation insurance policies maintained by Sibson Canada are
presently occurrence policies and not claims made policies except for Sibson
Canada's professional liability (error and admissions), fiduciary liability and
employment practices policies. There are no outstanding performance bonds
covering or issued for the benefit of Sibson Canada. To the knowledge of the SC
Shareholders, no insurer has advised
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Sibson Canada that it intends to reduce coverage, increase premiums or fail to
renew existing policy or binder.
SECTION 4.28 ACCOUNTS RECEIVABLE.
To the knowledge of SC Shareholders, the accounts receivable set forth
on the Base Balance Sheet, and all accounts receivable arising since the Base
Balance Sheet Date, represent bona fide claims of Sibson Canada against debtors
for sales, services performed or other charges arising on or before the date
hereof, and all the goods delivered and services performed which gave rise to
said accounts where delivered or performed in all material respects in
accordance with the applicable orders, Contracts or customer requirements. Said
accounts receivable are subject to no defenses, counterclaims or rights of
setoff and are fully collectible in the ordinary course of business without cost
in collection efforts therefor, except to the extent of the appropriate reserves
for bad debts on accounts receivable as set forth on the Base Balance Sheet and,
in the case of accounts receivable arising since the Base Balance Sheet Date, to
the extent of a reasonable reserve rate for bad debts on accounts receivable
which is not greater than the rate reflected by the reserve for bad debts on the
Base Balance Sheet (or that of Sibson U.S. whichever is greater).
SECTION 4.29 [INTENTIONALLY DELETED.]
SECTION 4.30 ENVIRONMENTAL MATTERS.
(1) Except for Hazardous Materials contained in cleaning and other office
products used in the ordinary course of Sibson Canada's business (i)
Sibson Canada has not ever generated, transported, used, stored,
treated, disposed of, or managed any Hazardous Waste (as defined
below); (ii) to the knowledge of the SC Shareholders, no Hazardous
Material (as defined below) has ever been or is threatened to be
spilled, released, or disposed of at any site presently or formerly
owned, operated, leased, or used by Sibson Canada or has ever been
located in the soil or groundwater at any such site; (iii) to the
knowledge of the SC Shareholders, no Hazardous Material has ever been
transported from any site presently or formerly owned, operated,
leased, or used by Sibson Canada for treatment, storage, or disposal at
any other place; (iv) to the knowledge of the SC Shareholders, Sibson
Canada does not presently own, operate, lease, or use, nor has it
previously owned, operated, leased, or used any site on which
underground storage tanks are or were located; and (v) to the knowledge
of the SC Shareholders no lien has ever been imposed by any
governmental agency on any property, facility, machinery, or equipment
owned, operated, leased, or used by Sibson Canada in connection with
the presence of any Hazardous Material.
(2) To the knowledge of the SC Shareholders, Sibson Canada does not have
liability under, of has ever violated in any material respect, any
Environmental Law (as defined below); (ii) to the knowledge of the SC
Shareholders, Sibson Canada does not have any property owned, operated,
leased, or used by it, and any facilities and operations of Sibson
Canada thereon, are presently in compliance in all material respects
with all applicable Environmental Laws; (iii) Sibson Canada has not
ever entered into or been subject to any judgment, consent decree,
compliance order, or
36
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administrative order with respect to any environmental or health and
safety matter or received any request for information, notice, demand
letter, administrative inquiry, or formal or informal complaint or
claim with respect to any environmental or health and safety matter or
the enforcement of any Environmental Law; and (iv) the SC Shareholders
have no reason to believe that any of the items enumerated in clause of
this subSECTION will be forthcoming.
(3) [Intentionally deleted.]
(4) The SC Shareholders have made available to the Canadian Buyer copies of
all documents and records, and information in the possession of SC
Shareholders and Sibson Canada concerning any environmental or health
and safety matter relevant to Sibson Canada, whether generated by
Sibson Canada or others, including, without limitation, environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control
plans, and reports, correspondence, Permits, licenses, approvals,
consents, and other authorizations related to environmental or health
and safety matters issued by any governmental agency.
(5) For purposes of this SECTION 4.30, (i) "HAZARDOUS MATERIAL" shall mean
and include any hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, toxic substance, pollutant,
contaminant, or other substance which may pose a threat to the
environment or to human health or safety, as defined or regulated under
any Environmental Law except for any Hazardous Material contained in
cleaning and other office products used in the ordinary course of
Sibson Canada's Business; (ii) "HAZARDOUS WASTE" shall mean and include
any contaminant or hazardous waste as defined or regulated under any
Environmental Law; (iii) "ENVIRONMENTAL LAW" shall mean any
environmental or health and safety-related Regulation, including,
without limitation, the Environmental Protection Act (Ontario) and the
Occupational Health and Safety Act (Ontario), whether existing as of
the date hereof, previously enforced, or subsequently enacted; (iv)
"SIBSON CANADA" shall mean and include Sibson Canada and all other
entities for whose conduct Sibson Canada is or may be held responsible
under any Environmental Law.
SECTION 4.31 WARRANTY OR OTHER CLAIMS.
To the knowledge of the SC Shareholders, there are no existing or
threatened service liability, warranty or other similar claims, or any
reasonable basis upon which a material claim of such nature could be based,
against Sibson Canada for services which are negligent, defective or fail to
meet any service warranties. Since the Balance Sheet Date, no claim has been
asserted against Sibson Canada for renegotiation or price redetermination of any
business transaction, and, to the knowledge of the SC Shareholders, there are no
facts known to the SC Shareholders upon which any such claim could be based.
SECTION 4.32 RECORDS; COPIES OF DOCUMENTS.
The actions recorded in the corporate records of Sibson Canada are
complete and accurate and all corporate proceedings and actions reflected in
such records have been conducted or taken in compliance with all applicable
Regulations and the articles and by-
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laws of Sibson Canada. Such corporate records contain complete and accurate
minutes of all meetings of the directors and shareholders held since
incorporation and all such meetings were properly called and held and contain
all resolutions passed by the directors and shareholders (and committees, if
any) and all such resolutions were properly passed and the share certificate
books, register of shareholders and registers of transfers are complete and
accurate. The SC Shareholders have made available for inspection and copying by
the Canadian Buyer and its counsel true and correct copies of all documents
referred to in this SECTION or in the Schedules delivered to the Canadian Buyer
pursuant to this Agreement.
SECTION 4.33 POWERS OF ATTORNEY.
Except for a power of attorney given by ▇▇▇▇▇▇▇ ▇▇▇▇▇ in connection
with this Agreement and the documentation herewith, neither Sibson Canada nor
any of the SC Shareholders has any outstanding power of attorney with respect to
or affecting any transaction contemplated by this Agreement.
SECTION 4.34 DISCLOSURE.
The representations, warranties and statements contained in this
Agreement and in the exhibits and schedules hereto do not contain any untrue
statement of a material fact, and, when taken together, do not omit to state a
material fact required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made. To the knowledge of the SC
Shareholders, there are no current facts which presently or may in the future
have a material adverse affect on the business, properties, prospects,
operations or condition of Sibson Canada which have not been specifically
disclosed herein or in a Schedule furnished herewith, other than general
economic conditions affecting the industries in which Sibson Canada operates.
SECTION 4.35 OFFSHORE INVESTMENT REPRESENTATIONS.
Each SC Shareholder hereby represents, warrants and covenants as set
forth below, and all such representations and warranties shall be true and
correct as of the Closing Date as if then made and shall survive the Closing:
(a) Such SC Shareholder is not a U.S. Person (as defined in
Regulation S under the Securities Act of 1933 Act, as amended
(the "Securities Act")), is not an affiliate (as defined in
Rule 501(b) under the Securities Act) of Nextera and is not a
corporation that has been formed principally for the purpose
of investing in securities not registered under the Securities
Act.
(b) Such SC Shareholder is purchasing the Exchangeable Shares and
will exchange such Exchangeable Shares for Nextera Class A
Units of Nextera or Newco Class A Stock (the "Newco Class A
Stock") of Nextera Enterprises, Inc. ("Newco") for its own
account for the purpose of investment and not (A) with a view
to, or for sale in connection with, any distribution thereof
or (B) for the account of, as a nominee or agent for, or on
behalf of any U.S. Person.
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(c) At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this
Agreement, (i) such SC Shareholder was outside the United
States.
(d) Such SC Shareholder:
(i) understands that the Nextera Class A Units or Newco
Class A Stock for which the Exchangeable Shares may
be exchanged (together the Nextera Class A Units and
Newco Class A Stock are referred to herein as the
"Securities") are distributed under Regulation S
under the 1933 Securities Act, as amended, and the SC
Shareholders will not, during the period commencing
on the date of the exchange of the Exchangeable
Shares into the Securities and ending on the first
anniversary of such date, or such shorter period as
may be permitted by Regulation S or other applicable
securities law, (the "Restricted Period"), offer,
sell, pledge or otherwise transfer the Securities in
the United States, or to a U.S. Person for the
account or benefit of a U.S. Person; the foregoing
restrictions shall not apply to the conversion of
Class A Units into Newco Class A Stock provided that
the balance of the Restricted Period shall apply;
(ii) understands that the Securities are being offered in
a transaction not involving any public offering
within the meaning of the Securities Act and that the
Securities have not been registered under the
Securities Act, and will, during the Restricted
Period, offer, sell, pledge or otherwise transfer the
Securities only in accordance with Rules 903 or 904
of Regulation S under the Securities Act, pursuant to
registration under the Securities Act or pursuant to
an available exemption from the registration
requirements of the Securities Act (and based upon an
opinion of counsel if the Company so requests, acting
reasonably), and in accordance with all applicable
state and foreign securities laws;
(iii) will, after expiration of the Restricted Period,
offer, sell, pledge or otherwise transfer the
Securities only pursuant to registration under the
Securities Act or an available exemption therefrom
(and based upon an opinion of counsel, acting
reasonably, if the Company so requests) and, in any
case, in accordance with all applicable state and
foreign securities laws; and
(iv) has not in the United States, engaged in, and prior
to the expiration of the Restricted Period will not
engage in, any short selling of any equity security
issued by Nextera, or Newco (including, without
limitation, the Class A Units and Newco Class A
Stock) or any hedging transaction with respect to any
such equity security, including without limitation,
put, call or other option transaction, option writing
and equity swaps.
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(e) None of the SC Shareholders, its affiliates or any person
acting on behalf of the SC Shareholder or any such affiliates
has engaged, or will engage, in any directed selling efforts
(within the meaning of Rule 901(b) of Regulation S under the
Securities Act) with respect to the Securities and them, their
affiliates and all persons acting on their behalf have
complied and will comply with the "offering restrictions"
requirements of Regulation S under the Securities Act.
(f) The transactions contemplated by this Agreement have not been
pre-arranged with a buyer (other than Nextera) located in the
United States or with a U.S. Person, and are not part of a
plan or scheme to evade the registration requirements of the
Securities Act.
(g) Neither such SC Shareholder, any affiliate of such SC
Shareholder, nor any person acting on their behalf has
undertaken or carried out any activity for the purpose of, or
that could reasonably be expected to have the effect of,
conditioning the market in the United States, its territories
or possessions, for any of the Securities. The SC Shareholder
agrees not to cause any advertisement of the Securities to be
published in any newspaper or periodical or posted in any
public place and not to issue any circular relating to the
Securities, except such advertisements that include the
statements required by Regulation S under the Securities Act.
(h) Such SC Shareholder understands that the Securities have not
been registered under the Securities Act by reason of a
specific exemption therefrom, and may not be transferred or
resold except pursuant to an effective registration statement
or exemption from registration (and based upon an opinion of
counsel, acting reasonably, if Nextera or Newco so requests)
and each certificate representing the Securities will be
endorsed with the following legends:
(i) THE SHARES ARE BEING OFFERED TO INVESTORS WHO ARE NOT
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT OF 1933, AS AMENDED) AND WITHOUT
REGISTRATION WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN
RELIANCE UPON REGULATION S PROMULGATED UNDER THE
SECURITIES ACT.
(ii) SUBSCRIPTIONS MAY ONLY BE ACCEPTED FROM PROSPECTIVE
INVESTOR THAT, AT ANY TIME THE BUY ORDER FOR THE
SHARES IS ORIGINATED, IS OUTSIDE THE UNITED STATES,
ITS TERRITORIES AND POSSESSIONS, AND IS NOT A U.S.
PERSON (AS DEFINED IN REGULATION S), WAS NOT FORMED
UNDER THE LAWS OF ANY UNITED STATES JURISIDICTION,
WAS NOT FORMED FOR THE PURPOSE OF INVESTING IN
SECURITIES NOT REGISTERED
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UNDER THE SECURITIES ACT, AND IS NOT PURCHASING THE
SHARES FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON,
WITHIN THE MEANING OF REGULATION S UNDER THE ACT. BY
SIGNING THE SUBSCRIPTION AGREEMENT, A PROSPECTIVE
INVESTOR UNDER REGULATION S CERTIFIES TO THE COMPANY
THAT IT QUALIFIES AS A NON-U.S. PERSON AND IS
THEREFORE ELIGIBLE TO PURCHASE SHARES IN THE
OFFERING, THAT IT IS NOT PURCHASING THE SHARES AS A
RESULT OF OR IN CONNECTION WITH ANY ACTIVITY THAT
WOULD CONSTITUTE "DIRECTED SELLING EFFORTS" (WITHIN
THE MEANING GIVEN SUCH TERM IN REGULATION S) IN THE
UNITED STATES, THAT IT WILL NOT BECOME AN AFFILIATE
OF THE COMPANY AS A RESULT OF THE PURCHASE OF THE
SHARES, THAT NO OFFER OR SALE OF THE SHARES WAS MADE
TO THE INVESTOR IN THE UNITED STATES, AND THAT SUCH
INVESTOR IS NOT PURCHASING THE SHARES WITH A VIEW TO
THEIR DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT.
(iii) PROSPECTIVE INVESTORS UNDER REGULATION S ARE ALSO
ADVISED THAT DURING THE ONE-YEAR RESTRICTED PERIOD
PROVIDED FOR IN RULE 903 OF REGULATION S, NO OFFERS
OR SALES OF THE SHARES OFFERED HEREBY MAY BE MADE IN
THE UNITED STATES OR TO U.S. PERSONS. AFTER THE
EXPIRATION OF THE ONE-YEAR RESTRICTED PERIOD, RESALES
OF THE SHARES MAY ONLY BE MADE IN THE UNITED STATES
OR TO A U.S. PERSON IF THE SHARES HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
(iv) Any legend required to be placed thereon by
applicable federal or state securities laws.
(i) Such SC Shareholder has substantial experience in evaluating
and investing in private placement transactions of securities
in companies similar to Nextera and Newco so that he is
capable of evaluating the merits and risks of acquiring the
Securities to be issued to such SC Shareholder and has the
capacity to protect his own interests. Such SC Shareholder
must bear the economic risk of holding the Securities
indefinitely unless such securities are registered pursuant to
the Securities Act, or an exemption from registration is
available for the disposition thereof. Such SC Shareholder
understands that there is no assurance that any exemption from
registration under the Securities Act will be available.
(j) Such SC Shareholder is acquiring the Securities for his own
account for investment only, and not with the view to, or for
resale in connection with,
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any distribution thereof. It understands that the Securities
to be acquired has not been, and will not be, registered under
the Securities Act by reason of a specific exemption from
registration provisions of the Securities Act, the
availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of
such SC Shareholder's representations as expressed herein.
(k) Such SC Shareholder understands that no public market now
exists for any of the securities issued by Nextera or Newco
and that neither Nextera or Newco has made any assurances that
a public market will ever exist for such securities.
(l) Such SC Shareholder has received and read the Nextera business
plan and financial statements and has had an opportunity to
discuss Nextera's business, management and financial affairs
with its management. Such SC Shareholder has also had an
opportunity to ask questions of and receive answers from
officers of Nextera regarding the terms and conditions of
acquiring the Securities pursuant to this Agreement, which
questions were answered to such Shareholder's satisfaction.
SECTION 4.36 AMOUNTS OWING TO SC SHAREHOLDERS.
Both parties agree that there are shareholder loans owing to the SC
Shareholders by Sibson Canada (the "Shareholder Loans") as listed in Schedule
4.36. Such amounts will be evidenced in promissory notes delivered at Closing.
After closing the Principals of Sibson Canada can distribute cash flow
permitting in ordinary course.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF NEXTERA AND
CANADIAN BUYER
As a material inducement to the SC Shareholders to enter into this
Agreement and consummate the transactions contemplated hereby, Nextera and
Canadian Buyer jointly and severally hereby make the representations and
warranties to the SC Shareholders as follows, which representations and
warranties are, as of the date hereof, and will be, as of the Closing Date, true
and correct:
SECTION 5.1 ORGANIZATION.
(1) Nextera is a limited liability company organized, validly existing and
in good standing under the laws of the State of Delaware with full
limited liability company power to own or lease its properties and to
conduct its business in the manner and in the places where such
properties are owned or leased or such business is conducted by it.
Each of Nextera's Subsidiaries is duly organized or incorporated (as
applicable) and in good standing under the laws of the state of its
organization or incorporation (as applicable) with full limited
liability company power or corporate power (as applicable) to own or
lease its properties and to conduct its business in the manner and in
the places where such properties are owned or leased or such business
is
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conducted by it. Neither Nextera nor any of Nextera's Subsidiaries is
required to be licensed or qualified to conduct its business or own its
property in any other jurisdiction in which failure to be so licensed
or qualified would have a material adverse effect.
(2) Canadian Buyer is an unlimited liability company incorporated,
organized and in good standing under the NS Act with full corporate
power and authority to own or lease its properties and to conduct its
business in the manner and in the places where such properties are
owned or leased or such business is or is proposed to be conducted.
Canadian Buyer is a direct or indirect wholly-owned subsidiary of
Nextera.
(3) CAPITAL STRUCTURE. The authorized capital of Canadian Buyer consists of
100,000,000 Common Shares without par value and 250,000 Exchangeable
Shares. Immediately after Closing the issued capital of Canadian Buyer
will consist of 10,000,000 common shares and 197,813 Exchangeable
Shares.
(4) EXCHANGEABLE SHARES. On the Closing Date, all necessary corporate
action will have been taken by the Canadian Buyer to duly authorize the
issuance and delivery of the Exchangeable Shares to the SC Shareholders
pursuant to SECTION 2.3 and upon the satisfaction of the terms and
conditions hereof and the consummation of the transactions contemplated
hereby and the issue of such Exchangeable Shares, such Exchangeable
Shares will be issued as fully paid and non-assessable free and clear
of any and all Encumbrances, and Nextera and Canadian Buyer have no
knowledge of any reason why SC Shareholders should not be entitled to
acquire units of Nextera so as to be in the same position as the
Shareholders under the US Purchase Agreement.
(5) SUBSIDIARIES. Other than Symmetrix, Inc., SGM Consulting, L.L.C. (d/b/a
"SIGMA CONSULTING"), The Planning Technologies Group, L.L.C., Pyramid
Imaging, Inc., SC/NE, L.L.C. and the Canadian Buyer, Nextera has no
Subsidiaries or investments in any other corporation or business
organization. The Canadian Buyer was founded solely for the purpose of
consummating the transactions contemplated herein and prior to Closing
will not have transacted any business or have incurred any liabilities,
except as provided for herein and obtaining of funding for purposes of
payment of the cash portion of the Purchase Price. Canadian Buyer has
no Subsidiaries and does not own an equity interest in any other
corporation or business.
SECTION 5.2 AUTHORITY
(1) Nextera and Canadian Buyer have full right, authority and power to
enter into this Agreement and each agreement, document and instrument
to be executed and delivered by Nextera and Canadian Buyer pursuant to
this Agreement and to carry out the transactions contemplated hereby.
The execution, delivery and performance by Nextera and Canadian Buyer
of this Agreement and each such other agreement, document and
instrument have been duly authorized by all necessary organizational
action of Nextera and Canadian Buyer and no other action on the part of
Nextera and Canadian Buyer is required in connection therewith.
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(2) This Agreement and each other agreement, document and instrument
executed and delivered by Nextera and Canadian Buyer pursuant to this
Agreement constitutes, or when executed and delivered will constitute,
valid and binding obligations of Nextera and Canadian Buyer enforceable
in accordance with their terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject to the effect of
general principles of equity, including, without limitation, the
possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
The execution, delivery and performance by Nextera and Canadian Buyer
of this Agreement and each such agreement, document and instrument:
(a) Does not and will not violate any provision of the Memorandum
and Articles of Association of Canadian Buyer;
(b) Does not and will not violate any provision of the certificate
of formation of Nextera and the Operating Agreement of
Nextera;
(c) Does not and will not violate any laws of Canada or of any
province or the laws of the United States or of any state or
any other jurisdiction applicable to Nextera and Canadian
Buyer or require Nextera and Canadian Buyer to obtain any
approval, consent or waiver of, or make any filing with, any
person or entity (governmental or otherwise) which has not
been obtained or made or opinion to Closing other than (x) any
such approval, consent or waiver of or filing with respect to
which the failure to so obtain will not have a material
adverse effect on the business and operation of Canadian
Buyer, individually, or Nextera and its Subsidiaries, taken as
a whole, following the Closing and (y) any approvals,
consents, waivers or filings in connection with Contracts and
Leases as a result of the transactions contemplated hereby;
and
(d) Does not and will not result in a breach of, constitute a
Default under, accelerate any obligation under, or give rise
to a right of termination of any indenture, loan or credit
agreement, or other agreement mortgage, lease, permit, order,
judgment or decree to which Nextera, its Subsidiaries or the
Canadian Buyer is bound or affected, or result in the creation
or imposition of any mortgage, pledge, lien, security interest
or other charge or similar encumbrance on any of the assets or
capital stock of Nextera or Canadian Buyer and which is
material to the business and financial condition of Nextera or
Canadian Buyer on a consolidated basis, except in the case of
clause (b), for such breaches, defaults, accelerations or
terminations as would not, individually or in the aggregate,
have a material adverse effect.
SECTION 5.3 LITIGATION.
Other than as set forth on Schedule 5.3, there are no Actions pending
or to the knowledge of Nextera, and Canadian Buyer, threatened or anticipated
(a) against, related to or affecting (i) Nextera and its Subsidiaries on a
consolidated basis (including with respect to Environmental Laws) or (ii) any
officers, directors or managers of Nextera or its Subsidiaries as such, (b)
seeking to delay, limit or enjoin the transactions contemplated by this
Agreement
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(c) that involve the risk of criminal liability on Nextera or its Subsidiaries
or any of their officers, directors or managers, or (d) in which Nextera or its
Subsidiaries are a plaintiff, including any derivative suits brought by or on
behalf of any of Nextera or its Subsidiaries. Neither Nextera nor any of its
Subsidiaries are in Default with respect to or subject to any Court Order, and
there are no unsatisfied judgments against Nextera or its Subsidiaries. There is
not a reasonable likelihood of an adverse determination of any pending Actions
that could have a materially adverse effect. There are no Court Orders or
agreements with, or liens by, any governmental authority or quasi-governmental
entity relating to any Environmental Law which regulates, obligates, binds or in
any way affects Nextera or its Subsidiaries.
SECTION 5.4 NO BROKERS.
Neither Nextera nor Canadian Buyer nor any of their officers,
directors, managers, employees, shareholders, members or affiliates has employed
or made any agreement with any broker, finder or similar agent or any person or
firm which will result in the obligation of Canadian Buyer or SC Shareholders to
pay any finder's fee, brokerage fees or commission or similar payment in
connection with the transactions contemplated hereby.
SECTION 5.5 MEMBERSHIP INTERESTS OF NEXTERA.
Schedule 5.5 sets forth all of the issued and outstanding membership
interests of Nextera and all of the issued and outstanding membership interests
of Canadian Buyer on the date hereof and on the Closing Date (assuming
consummation of the transaction contemplated hereby and under the U.S.
Agreement, including, in the case of Nextera, the issuance of Nextera Class A
Units under the Employment Agreements). Except as set forth on Schedule 5.5 and
the obligations under this Agreement, there are no outstanding options,
warrants, rights, commitments, pre-emptive rights or agreements of any kind for
the issuance and sale of, or outstanding securities convertible into, any
additional membership interests of any class of Nextera. Schedule 5.5 sets forth
a list of all agreements, if any, instruments and undertakings, relating to the
voting, transfer, registration, repurchase or any similar right with respect to
the issued and outstanding equity interests of Nextera. None of the equity
interests of Nextera or Canadian Buyer were issued in violation of any federal,
provincial or state law.
SECTION 5.6 OPERATING AGREEMENT.
The Nextera Operating Agreement attached as Exhibit G and the Buyer
Operating Agreement attached as Exhibit F are in full force and effect, as
amended through the Closing Date.
SECTION 5.7 FINANCIAL STATEMENTS.
(1) Nextera and Canadian Buyer have delivered or caused to be delivered
to the SC Shareholders, the following financial statements, copies
of which are attached hereto as Schedule 5.7: a consolidated balance
sheet of Nextera and a consolidated statement of profit and loss of
Nextera as of December 31, 1997 as audited by Ernst & Young LLP (the
"Audited Financial Statements") an unaudited balance sheet of
Nextera and its Subsidiaries as of June 30, 1998 and an unaudited
statement of profit and loss of Nextera for the six months ended
June 30, 1998 (the "INTERIM FINANCIAL STATEMENTS") and together with
the Audited Financial Statements (the "NEXTERA
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FINANCIAL STATEMENTS"). The December 31, 1997 balance sheet is
hereinafter referred to as the "NEXTERA BALANCE SHEET" and December 31,
1997 is hereinafter referred to as the "NEXTERA BALANCE SHEET DATE."
The Nextera Financial Statements have been prepared in accordance with
generally accepted accounting principles (subject to normal year-end
adjustments in the case of the Interim Financial Statements) applied
consistently during the period covered thereby, and said Audited
Financial Statements present fairly in all material respects the
consolidated financial condition of Nextera at the date of said
statements and the consolidated results of its operations for the
period covered thereby and the Interim Financial Statements present
fairly and completely in all material respects the information to be
shown thereon.
(2) Except as set forth on Schedule 5.7, as of the date hereof and as of
the Closing, Nextera and its Subsidiaries and Canadian Buyer do not
have any Liabilities of any nature, whether accrued, absolute or
contingent (including without limitation, Liabilities as guarantor or
otherwise with respect to obligations of others, or Liabilities for any
Tax due or then accrued or to become due or contingent or potential
Liabilities relating to activities of Nextera or any Subsidiary of
Nextera or Canadian Buyer or the conduct of any of the businesses prior
to the date hereof or the Closing, as the case may be, regardless of
whether claims in respect thereof had been asserted as of such date),
except Liabilities (i) stated or adequately reserved against on the
Nextera Balance Sheet or the notes thereto, or (ii) incurred or arising
in the ordinary course of business of Nextera or any Subsidiary of
Nextera after the Nextera Balance Sheet Date, (iii) disclosed in this
Article 5 or on the Nextera Disclosure Schedule or (iv) future
performance obligations under contracts and leases, none of which
relates to any default, breach of warranty, tort infringement, or
violation of any Regulation or Court Order or arose out of any action.
(3) Nextera has delivered to SC Shareholders the following unaudited pro
forma financial statements, copies of which are attached hereto as
Schedule 5.7: a consolidated balance sheet of Nextera and its
subsidiaries as of June 30, 1998 and a consolidated statement of profit
and loss of Nextera for the six months ended June 30, 1998 (the "Pro
Forma Statements"). The Pro Forma Statements have been prepared giving
effect to the consummation of each acquisition made by Nextera
subsequent to January 1, 1998 (including pursuant to this Agreement and
the acquisition of Sibson Canada). The Pro Forma Statements have been
prepared based on information Nextera believes to be reasonable as of
the date of delivery thereof, and present fairly in all material
respects on a pro forma basis the estimated financial position of
Nextera as of June 30, 1998 and results of operations for the six
months then ended, assuming that the events specified in the preceding
sentence had actually occurred. The Pro Forma Statements are not
necessarily indicative of the financial position or results of
operations that would have been obtained had the pro forma events
actually occurred and should be read in conjunction with the Nextera
Financial Statements provided to SC Shareholders.
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SECTION 5.8 TAXES.
(1) All Tax Returns required to be filed by Nextera, each L.L.C. Subsidiary
and each corporate Subsidiary have been timely filed (giving effect to
extensions granted with respect thereto), and all such Tax Returns are
true, correct, and complete in all material respects.
(2) Nextera, each L.L.C. Subsidiary and each corporate Subsidiary has
timely paid all Taxes due from them or claimed to be due from them by
any federal, state, local, foreign or other taxing authority.
(3) There are no liens for Taxes upon any of the assets of Nextera, any
L.L.C. Subsidiary or corporate Subsidiary, except liens for taxes not
yet due and payable.
(4) No Tax Returns of Nextera, any L.L.C. Subsidiary and any corporate
Subsidiary have been examined by the relevant taxing authority. No
deficiency for any Taxes has been proposed, asserted or assessed
against Nextera, any L.L.C. Subsidiary or any corporate Subsidiary that
has not been resolved and paid in full. There are no outstanding
waivers, extensions, or comparable consents regarding the application
of the statute of limitations with respect to any Taxes or Tax Returns
that have been given by Nextera, any L.L.C. Subsidiaries or any
corporate Subsidiary (including the time for filing of Tax Returns or
paying Taxes) and neither, Nextera, any L.L.C. Subsidiary or any
corporate Subsidiary has any pending requests for any such waivers,
extensions, or comparable consents.
(5) No audit or other proceeding by any federal, state, provincial, local
or foreign court, governmental, regulatory, administrative or similar
authority is presently pending with respect to any Taxes or Tax Return
of Nextera any L.L.C. Subsidiary or any corporate Subsidiary, and
neither, Nextera, any L.L.C. Subsidiary nor any corporate Subsidiary
has received written notice of any pending audits or proceedings.
(6) Nextera, each L.L.C. Subsidiary and each corporate Subsidiary have
established adequate reserves in accordance with generally accepted
accounting principles for all Taxes not yet due and payable, which
reserves are set forth in Schedule 5.8.
(7) Nextera, each L.L.C. Subsidiary and each corporate Subsidiary have
complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to
Sections 1441, 1442, 1445 and 1446 of the Internal Revenue Code or
similar provisions under any applicable state, provincial and foreign
laws) and have, within the time and the manner prescribed by law, paid
over to the proper governmental authorities all amounts so withheld.
(8) Neither Nextera, any L.L.C. Subsidiary nor any corporate Subsidiary is
a party to, is not bound by any obligation under any Tax sharing
allocation or indemnity agreement or similar contract or arrangement.
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(9) Nextera is, and has been at all times since its formation, properly
characterized as a partnership for federal and applicable state and
local income Tax purposes.
(10) No power of attorney granted by Nextera, any L.L.C. Subsidiary or any
corporate Subsidiary with respect to any Taxes is currently in force.
(11) Other than its own operating agreement, Nextera is not subject to any
joint venture, partnership or other arrangement or contract that is
treated as a partnership for U.S. federal income Tax purposes.
(12) There is no expectation that any taxing authority may claim or assess
any material amount of Taxes payable by Nextera, any L.L.C. Subsidiary
or any corporate Subsidiary for any period ending on or prior to the
Closing Date and there are no facts which would constitute grounds for
the assessment of any material amount of Taxes payable by Nextera, any
L.L.C. Subsidiary or any corporate Subsidiary for any period ending on
or prior to the Closing Date.
SECTION 5.9 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in Schedule 5.9, since the date of the Nextera
Balance Sheet, there has not been any:
(a) Actual or threatened material adverse change in the financial
condition, working capital, shareholders' equity, assets,
Liabilities, reserves, revenues, income earnings, prospects of
Nextera and its Subsidiaries on a consolidated basis;
(b) Change in accounting methods, principles or practices by
Nextera or any Subsidiary of Nextera affecting Nextera's
assets, Liabilities or business;
(c) Revaluation by Nextera or any Subsidiary of Nextera of any of
their assets, including without limitation writing down the
value of inventory or writing off notes or accounts
receivable;
(d) Damage, destruction or loss (whether or not covered by
insurance) which has had or will have a material adverse
affect on the assets or the business of Nextera or its
Subsidiaries on a consolidated basis;
(e) Cancellation of any indebtedness or waiver or release of any
right or claim of Nextera or any Subsidiary of Nextera
relating to its activities or properties which had or will
have a material adverse effect on their assets or business;
(f) Declaration, setting aside, or payment of dividends or
distributions by Nextera or any Subsidiary of Nextera in
respect of its equity securities or any redemption, purchase
or other acquisition of any of the securities of Nextera or
any Subsidiary of Nextera;
(g) Adverse change in employee relations which has or is
reasonably likely to have a material adverse effect on the
productivity, the financial condition,
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results of operations of Nextera and its Subsidiaries on a
consolidated basis or the relationships between the employees
of Nextera and its Subsidiaries and the management of Nextera
and its Subsidiaries;
(h) Payment, discharge or satisfaction of any Liabilities of
Nextera or any Subsidiary of Nextera other than the payment,
discharge or satisfaction in the ordinary course of business
of Liabilities set forth or reserved for on the Nextera
Balance Sheet or incurred in the ordinary course of business;
(i) Failure to pay or satisfy when due any Liability of Nextera or
any Subsidiary of Nextera, except where the failure would not
have a material adverse effect on Nextera and its Subsidiaries
on a consolidated basis;
(j) Disposition or lapsing of any Proprietary Rights or any
disposition or disclosure to any person of any of the
Proprietary Rights of Nextera or its Subsidiaries or Canadian
Buyer not theretofore a matter of public knowledge other than
as would not have a material adverse effect; or
(k) Agreement by Nextera or any of its Subsidiaries to do any of
the things described in the preceding clauses (a) through (k)
other than as expressly provided for herein.
SECTION 5.10 [INTENTIONALLY DELETED].
SECTION 5.11 COMPLIANCE WITH LAWS.
Nextera and each of its Subsidiaries has been and are in substantial
compliance with all Regulations relating to the operation of Nextera and each of
its Subsidiaries except in each case where such non-compliance would not
individually or in the aggregate have a material adverse effect. Within the last
five years, neither Nextera or any of its Subsidiaries have received any notice
to the effect that, or otherwise been advised that, they are not in compliance
with any such Regulations or Court Orders, and Nextera and Canadian Buyer have
no reason to anticipate that any existing circumstances are likely to result in
violations of any of the foregoing.
SECTION 5.12 PROPRIETARY RIGHTS.
(a) Proprietary Rights. Schedule 6.13 lists: (i) for each
registered Trademark of Nextera or any Subsidiary, the
application serial number of registration number, the class of
goods covered and the expiration date for each country in
which a Trademark has been registered and (ii) for each
registered Copyright of Nextera or any Subsidiary, the number
and date of filing for each country in which a Copyright has
been filed. Other than the items set forth on Schedule 5.12
and other than the unregistered service/trade name "Nextera
Enterprises" and variations thereof, there are no Proprietary
Rights used by Nextera or any Subsidiary that are material to
the conduct of its business. Nextera or any Subsidiary has no
patents or registered designs nor has it filed any patent
applications or registered design applications.
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(b) Royalties and Licenses. Except as set forth on Schedule 6.13
neither Nextera nor any Subsidiary, has any obligation to
compensate any person for the use of any such Proprietary
Rights nor has Nextera or any Subsidiary granted to any person
any license, option or other rights to use in any manner any
of such Proprietary Rights, whether requiring the payment of
royalties or not.
(c) Ownership and Protection of Proprietary Rights. Except as set
forth on Schedule 5.12, Nextera and/or its Subsidiaries own or
have a valid right to use each of such Proprietary Rights.
Except as set forth in Schedule 5.12, no other person (i) has
notified Nextera or any Subsidiary that it is claiming any
ownership of or right to use such Proprietary Rights, or (ii)
to the knowledge of Nextera and its Subsidiaries, is
infringing upon any such Proprietary Right in any way. To the
knowledge of Nextera and its Subsidiaries, except as set forth
on Schedule 5.13, use of such Proprietary Rights by Nextera or
any Subsidiary does not and will not conflict with, infringe
upon or otherwise violate the valid rights of any third party
in or to such Proprietary Rights, and no Action has been
instituted against or notices received by Nextera or any
Subsidiary that are presently outstanding alleging that use of
the Proprietary Rights by Nextera or any Subsidiary infringes
upon or otherwise violates any rights of a third party in or
to such Proprietary Rights.
ARTICLE 6
COVENANTS
SECTION 6.1 FURTHER ASSURANCES.
Upon the terms and subject to the conditions contained herein,
Nextera and Canadian Buyer on the one hand, and the SC Shareholders on the other
hand, agree, both before and after the Closing, (a) to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement, (b) to execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder, and (c)
to cooperate with each other in connection with the foregoing. Without limiting
the foregoing, the SC Shareholders, on the one hand, and Canadian Buyer on the
other hand, agree to use their respective commercially reasonable efforts (i) to
obtain the consents of each relevant party with respect to license agreements
between Sibson & Company, L.P. and Sibson Canada (as listed in Schedule 6.1) and
the consent from Toronto-Dominion Bank provided, however, that to the extent
Canadian Buyer fails to cooperate (i) by providing on a timely basis any
financial or similar information reasonably requested by the party whose consent
is sought, including, without limitation, any pro forma financial statements
with respect to Buyer reflecting the consummation of the transactions
contemplated hereby, or (ii) executing and delivering any assumption agreement
or similar instrument requested by any lessor or sublessor and which is
reasonably acceptable to Buyer in connection with the obtaining of any consent
with respect to a Contract or Facility Lease listed on Schedule 4.12, SC
Shareholders shall not be required to obtain said consent hereunder and the
obtaining of said consent shall no longer be deemed a condition to Closing under
Article IX hereof; provided, further that no party shall
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be required to make any payments, commence litigation or agree to modifications
of the terms thereof in order to obtain any such waivers, consents or approvals,
(ii) to obtain all necessary Permits as are required to be obtained under any
Regulations, (iii) to give all notices to, and make all registrations and
filings with third parties, including without limitation submissions of
information requested by governmental authorities, and (iv) to fulfill all
conditions to this Agreement.
For greater certainty, Nextera, the Canadian Buyer, and the SC
Shareholders agree to elect jointly under Section 85 of the Income Tax Act
(Canada) (the "ITA"), each in the prescribed form when presented in a timely
fashion, in connection with purchase and sale hereunder.
Each of the SC Shareholders and their Ontario holding companies
agree to elect jointly under Section 85 of the Income Tax Act (Canada) (the
"ITA"), each in the prescribed form, when presented in a timely fashion, in
connection with purchase and sale hereunder.
SECTION 6.2 EXCHANGEABLE DOCUMENTATION.
Nextera, Canadian Buyer and SC Shareholders hereto agree to execute
and deliver or cause to be executed and delivered on Closing (i) a support
agreement between Nextera and the Canadian Buyer in the form or substantially in
the form of Exhibit I (the "SUPPORT AGREEMENT") and (ii) an exchange trust
agreement among Nextera, Canadian Buyer and SC Shareholders and a trustee in the
form or substantially in the form of Exhibit H (the "EXCHANGE TRUST AGREEMENT")
SECTION 6.3 CONDUCT OF BUSINESS.
Except as set forth on Schedule 6.3, between the date of this
Agreement and the date of the Closing, the SC Shareholders will cause Sibson
Canada:
(a) Use reasonable efforts to conduct its business only in the
ordinary course consistent with past operations and refrain
from changing or introducing any method of management or
operations except in the ordinary course of business;
(b) With the exception of the termination of the Facility Lease
and an offer to lease of Sibson Canada, not enter into,
extend, materially modify, terminate or renew any Contract or
Lease, except in the ordinary course of business;
(c) Not sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Canadian Assets,
or any interests therein, except in the ordinary course of
business and for the Permitted Liens;
(d) Not incur any Liability for long-term interest bearing
indebtedness, guarantee the obligations of others, indemnify
others or, except in the ordinary course of business
(including borrowings in the ordinary course of business under
Sibson Canada's revolving credit facility) and endorsements
for collection of deposits in the ordinary course of business,
incur any other Liability;
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(e) Refrain from making any change or incurring any obligation to
make a change in its charter document other than are required
to effect the steps referred to in Section 2.1 hereof;
(f) Refrain from declaring, setting aside or paying any dividend,
making any other distribution in respect of its capital stock
or making any direct or indirect redemption, purchase or other
acquisition of its capital stock;
(g) Refrain from making any material change in the method of
determining compensation (whether salary or bonus) payable or
to become payable to any of its employees and use all
reasonable efforts in the ordinary course of business to
maintain Sibson Canada's workforce at its current level and
make no material adjustment in wages or hours of work, nor
enter into any employment agreement, or adopt any new Employee
Programs or other benefit or severance plan or amend or
otherwise modify in any material respect any existing
employment agreement, Employee Programs or other benefit or
severance plan;
(h) Refrain from entering into any arrangement or amending any
existing arrangement between Sibson Canada and any officer,
director, or any of the SC Shareholders (or any entity
affiliated with such persons), except for arrangements
contemplated by this Agreement or the Disclosure Schedule;
(i) Refrain from prepaying any loans (if any) from its
shareholders, officers or directors, borrowing any funds
(other than borrowings in the ordinary course of business
under Sibson Canada's revolving credit facility) or making any
other change in its borrowing arrangements;
(j) Use its commercially reasonable efforts to prevent any change
with respect to its management and supervisory personnel and
banking arrangements;
(k) Use its commercially reasonable efforts to keep intact its
business organization, to keep available its present officers
and employees and to preserve the goodwill of all independent
contractors and others having business relations with it;
(l) Have in effect and maintain at all times all insurance of the
kind, in the amount and with the insurers set forth in the
Schedule 4.27 hereto or equivalent insurance with any
substitute insurers approved in writing by the Canadian Buyer;
(m) Maintain the working capital of Sibson Canada in the ordinary
course of business at levels consistent with past operations;
and
(n) Permit Canadian Buyer and its authorized representatives
during normal business hours to have full access to all its
properties, assets, records, tax returns, contracts and
documents and furnish to the Canadian Buyer or its authorized
representatives such financial and other information with
respect to
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its business or properties as Canadian Buyer may from time to
time reasonably request.
Between the date of this Agreement and the Closing, Nextera shall
provide SC Shareholders with prior written notice of (a) any material actions,
transactions or developments outside the ordinary course of Nextera's and its
Subsidiaries' respective businesses; (b) failure of Nextera or any of its
Subsidiaries to use all reasonable efforts to conduct their respective business
only in the ordinary course consistent with past operations; (c) failure of
Nextera or any Subsidiaries to use all reasonable efforts in the ordinary course
of business to maintain their respective workforces at current levels and not
make any material adjustment in wages or hours of work, nor enter into any
amendments to any material employment agreement, or adopt any new pension,
benefit or severance plan; (d) other than the issuance of equity interests upon
the exercise of options as set forth on Schedule 6.6, any issuance or sale of
any additional equity interests by any of Nextera or its Subsidiaries of its
respective operating agreement in the case of a limited liability company or
constituent documents in the case of a corporation so as to effect the value of
such person or the ability of such person.
SECTION 6.4 NO SOLICITATION OF OTHER OFFERS.
Neither Sibson Canada, SC Holdco, nor any of the SC Shareholders,
nor any of their officers, directors, agents, or employees or Representatives
will, directly or indirectly, solicit, encourage, assist, initiate discussions
or engage in negotiations with, provide any information concerning the
operations, properties or assets of Sibson Canada, or entertain or enter into
any agreement or transaction with, any person, other than Canadian Buyer or
Nextera, relating to the possible acquisition of the equity of Sibson Canada or
any of its assets, except for the sale of assets in the ordinary course of
business of Sibson Canada consistent with the terms of this Agreement. If such a
proposal is received, Sibson Canada will promptly notify Nextera of the terms of
such proposal and the identity of the party making the proposal.
SECTION 6.5 NOTIFICATION OF CERTAIN MATTERS.
(a) From the date hereof through the Closing, the SC
Shareholders on the one hand, and Nextera and
Canadian Buyer on the other hand, shall give prompt
notice to the other of (i) the occurrence, or failure
to occur, of any event which occurrence or failure
would be likely to cause any representation or
warranty contained in this Agreement or in any
exhibit or schedule hereto to be untrue or inaccurate
in any respect and (ii) any failure of such party, or
any of its respective affiliates or Representatives,
to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it
under this Agreement or any exhibit or schedule
hereto; provided, however, that such disclosure shall
not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any
condition except as otherwise provided in Section
6.5(b) hereof. The SC Shareholders shall promptly
notify Canadian Buyer of any Default, the threat or
commencement of any Action, or any development that
occurs before the Closing that could in any way
materially affect Sibson Canada, the Canadian Assets
or the Canadian Business. The Buyer and Nextera shall
promptly notify the SC
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Shareholders of any default, the threat or
commencement of any action, or any development that
occurs before the Closing that could in any way
materially affect the Canadian Buyer or Nextera,
individually, or their respective business and
operations.
(b) Anything in Section 6.5(a) to the contrary
notwithstanding, if any event not expressly
contemplated by this Agreement occurs at any time
between the date hereof and the Closing Date that
would result in any representation or warranty made
by the SC Shareholders, on the one hand, and Canadian
Buyer and Nextera, on the other hand, not being true
in any material respect on the Closing Date, such
parties shall promptly give written notice of such
event to such other parties. Following receipt of
such notice, the parties receiving notice shall have
no obligation to consummate the transactions
contemplated hereby and the SC Shareholders, on the
one hand, or Canadian Buyer and Nextera, on the other
hand, may terminate this Agreement pursuant to
Article XIII hereof; provided, however, that if such
parties consummate the transactions contemplated
hereby, such parties shall not have any
indemnification rights hereunder relating to or
arising out of, the subject matter of the event
described in any written notice validly given
pursuant to this Section 6.5(b) and; provided,
further, that the giving of any notice by a party
pursuant to this Section 6.5(b) shall not relieve
such party of any liability for breach of any
covenant hereunder or the failure of any
representation or warranty of such party hereunder to
be true and correct as of the date hereof.
SECTION 6.6 OPTION POOL.
(1) At the Closing Nextera agrees to grant to Employees of Sibson Canada
options under the Amended and Restated Equity Participation Plan
effective as of July 28, 1998 (the "Equity Participation Plan") a true
and correct copy of which is attached hereto as Exhibit K and in the
forms of related agreements attached hereto as Exhibit K-1 for
employees who are also Principals and Exhibit K-2 for employees who are
not Principals, which grants shall consist options to purchase 23,000
Nextera Class A Units to be distributed as set forth in a letter of
even date herewith from SC Shareholders to Nextera which letter makes
specific reference to this Section 6.6. Such options shall have an
exercise price of $7.50 per share and shall vest at the rate of
twenty-five percent (25%) per year over four (4) years. In connection
with the U.S. Purchase Agreement, Nextera has agreed to make available
to Buyer (as defined under the Buyer Operating Agreement) an additional
pool of options to purchase 100,000 Nextera Class A Units for hiring
purposes and performance recognition in calendar year 1998 subject to
Nextera's review and approval and with such terms and conditions as may
be determined by Nextera, of which options to purchase 30,000 Nextera
Class A Units have been allocated as set forth in the letter referred
to in the preceding sentence.
(2) Nextera has duly adopted the Equity Participation Plan attached as
Exhibit K and form of related agreement in the forms attached as
Exhibit K-1 and K-2 hereto. The SC Shareholders acknowledge that (a)
the terms of the options are governed by such
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Equity Participation Plan attached as Exhibit K and related agreements
in the forms attached as Exhibit K-1 and K-2; and (b) the Tax
consequences of the options are materially different in a limited
liability company as compared to a corporate structure, and the SC
Shareholders have been advised by their own Tax advisors of such Tax
consequences.
SECTION 6.7 ADDITIONAL UNITS.
The Employment Agreement of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall provide for the
sale by Nextera of Nextera Class A Units to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
SECTION 6.8 CONDUCT OF THE BUSINESS FOLLOWING THE CLOSING.
(1) Nextera and Canadian Buyer agree to maintain the consulting service
offerings of Sibson Canada in substantially the same form as such
service offerings existed immediately prior to the Closing; provided,
however, that Canadian Buyer (i) may make available additional service
offerings and (ii) may eliminate existing service offerings if the
gross revenues and/or net profits derived from such offerings are
determined by Nextera and Canadian Buyer to be inadequate to maintain
such service offerings.
(2) Canadian Buyer and Nextera hereby confirms that as of the date hereof
they intend (i) to use the "SIBSON & COMPANY, L.L.C., A NEXTERA
COMPANY" name in its worldwide operations, (ii) to cause Canadian Buyer
(or some other entity controlled by Nextera) to conduct the Business
for the foreseeable future under the present name of Business. The
parties acknowledge that the intention of Canadian Buyer and Nextera
with respect to this Section 6.6(b) is not a binding commitment on the
part of Canadian Buyer or Nextera.
SECTION 6.9 PRESERVATION OF CONFIDENTIALITY.
In connection with the negotiation of this Agreement and the
preparation for the consummation of the transactions contemplated hereby, the
parties acknowledge that each has had access to confidential information
relating to each other, including technical or marketing information, ideas,
methods, developments, inventions, improvements, business plans, trade secrets,
scientific or statistical data, diagrams, drawings, specifications or other
proprietary information relating thereto, together with all analyses,
compilations, studies or other documents, records or data prepared by Sibson
Canada and the SC Shareholders, on the one hand and Canadian Buyer, on the
other, or their respective Representatives which contain or otherwise reflect or
are generated from such information ("CONFIDENTIAL INFORMATION"). Prior to the
date of the Closing, each of the parties shall treat all Confidential
Information as confidential, preserve the confidentiality thereof and not
disclose any Confidential Information, except to their Representatives and
affiliates who need to know such Confidential Information in connection with the
transactions contemplated hereby. The parties shall use all reasonable efforts
to cause their Representatives to treat all Confidential Information as
confidential, preserve the confidentiality thereof and not disclose any
Confidential Information. Prior to and following the Closing, except as
otherwise contemplated in this Agreement, Canadian Buyer on the one hand and the
SC Shareholders on the other may not disclose the terms of this Agreement or
furnish copies of this
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Agreement to any other person without the prior written consent of each of the
other parties to this Agreement. Each party shall be responsible for any breach
of this Agreement by any of its Representatives.
SECTION 6.10 ACTIVITIES OF CANADIAN BUYER.
Nextera and Canadian Buyer agree that for so long as the SC
Shareholders are holders of Exchangeable Shares the Canadian Buyer will not
engage in any activities other than holding shares or other securities of Sibson
Canada and capital or loan transactions with Nextera or its Subsidiaries.
SECTION 6.11 INVESTMENT CANADA ACT.
Nextera and the Canadian Buyer, as promptly as practicable after the
execution of this agreement will make, or cause to be made, all such filings and
submissions applicable to it, as may be required for it to consummate the
purchase of Sibson Canada, including the filing of notice pursuant to the
Investment Canada Act. Each of the SC Shareholders and Nextera and Canadian
Buyer will coordinate and cooperate with one another in exchanging such
information and supplying such assistance as may be reasonably requested in
connection with the foregoing. Nextera and Canadian Buyer agree to provide
evidence of the Investment Canada Act notification to the SC Shareholders.
SECTION 6.12 ANNUAL INCENTIVE PLAN.
On or prior to the Closing, Buyer shall adopt the Annual Incentive
Plan attached hereto as Exhibit N.
ARTICLE 7
CONDITIONS TO SC SHAREHOLDERS' OBLIGATIONS
The obligations of SC Shareholders to consummate the transactions
provided for hereby are subject, in the discretion of the SC Shareholders, to
the satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by the SC Shareholders.
SECTION 7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS
OF NEXTERA AND CANADIAN BUYER.
All representations and warranties of Nextera and Canadian Buyer
contained in this Agreement shall be true and correct at and as of the date of
this Agreement and at and as of the Closing Date, except as and to the extent
that the facts and conditions upon which such representations and warranties are
based are expressly required or permitted to be changed by the terms hereof, and
Nextera and Canadian Buyer shall have performed and satisfied all agreements and
covenants required hereby to be performed by it prior to or on the Closing Date.
SECTION 7.2 NO ACTIONS OR COURT ORDERS.
No Action by any governmental authority or other person shall have
been instituted or threatened which questions the validity or legality of the
transactions contemplated hereby
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and which could reasonably be expected to (a) materially affect the right or
ability of Nextera or Canadian Buyer to purchase and own the Purchased Shares or
to permit Sibson Canada to operate, possess or transfer the Canadian Assets
after the Closing, (b) materially damage the SC Shareholders if the transactions
contemplated hereunder are consummated or (c) materially damage the business or
financial condition of Nextera or Canadian Buyer on a consolidated basis if the
transactions contemplated hereunder are consummated. There shall have been no
determination by the SC Shareholders, acting in good faith, that the
consummation of the transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or threat by any
person or any federal, provincial or other governmental authority of litigation.
There shall not be any Regulation or Court Order that makes the purchase and
sale of the Purchased Shares contemplated hereby illegal or otherwise
prohibited.
SECTION 7.3 COMPLETION OF TRANSACTIONS UNDER THE U.S.
PURCHASE AGREEMENT.
All of the transactions contemplated under the U.S. Purchase
Agreement shall have been completed (or waived by the parties thereto)
contemporaneously with the Closing contemplated hereunder.
SECTION 7.4 CONSENTS.
All Permits, consents (consisting only of the consent of The Toronto
Dominion Bank), approvals and waivers from governmental authorities and other
parties necessary to the consummation of the transactions contemplated hereby
and for the continued operation of the Canadian Business by Sibson Canada shall
have been obtained.
SECTION 7.5 MATERIAL CHANGES.
Since December 31, 1997, there shall not have been any material
adverse change with respect to the financial or business condition of Nextera or
its Subsidiaries except as disclosed on the schedules hereto provided by Nextera
to SC Shareholders.
SECTION 7.6 APPROVAL OF SC SHAREHOLDER'S COUNSEL.
All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and all
related legal matters contemplated by this agreement shall have been approved by
▇▇▇▇▇▇▇ & Partners, counsel to the SC Shareholders and such counsel shall have
received on behalf of the SC Shareholders such other certificates, opinions and
documents in form satisfactory to such counsel as the SC Shareholders may
reasonably require from Canadian Buyer to evidence compliance with the terms and
conditions hereof as of the Closing and the correctness as of the Closing of the
representations and warranties of Canadian Buyer and the fulfillment of its
covenants.
SECTION 7.7 OPINIONS OF COUNSEL.
Nextera and Canadian Buyer shall have delivered to the SC
Shareholders an opinion of Stikeman, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Stirling
Scales, counsel to Canadian Buyer, dated as of the Closing Date, in the form
attached hereto as Exhibit C;
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Nextera shall have delivered to the SC Shareholders an opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, and ▇▇▇▇▇ & ▇▇▇▇▇▇▇ each counsel to Nextera, dated as of
Closing Date, in the form attached hereto as Exhibit C1.
SECTION 7.8 ESCROW AGREEMENT.
Canadian Buyer and Nextera and the Escrow Agent shall have executed
and delivered the Escrow Agreement in substantially the form attached hereto as
Exhibit B.
SECTION 7.9 EMPLOYMENT AGREEMENTS.
Canadian Buyer shall have executed and delivered to each of ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Principals") an Employment Agreement as
hereinafter defined in substantially the forms attached as Exhibit E-1 and E-2.
SECTION 7.10 CORPORATE DOCUMENTS.
The SC Shareholders shall have received from Canadian Buyer and
Nextera resolutions adopted by the boards of directors of Canadian Buyer and
Nextera, approving this Agreement and the agreements and the transactions
contemplated hereby and thereby, certified by an officer of Canadian Buyer and
Nextera, as applicable, respectively.
SECTION 7.11 OPERATING AGREEMENT OF NEXTERA.
A majority of the membership interests of Nextera shall have adopted
that certain First Amendment to the Nextera Operating Agreement which, among
other things, admits ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as a member of Nextera. The SC
Shareholders shall have received from Nextera (a) a copy of the Nextera
Operating Agreement including the First Amendment thereto attached hereto as
Exhibit G and (b) resolutions adopted by the Board of Directors of Nextera,
approving this Agreement and the agreements and the transactions contemplated
hereby and thereby, certified by an officer of Nextera.
SECTION 7.12 OPERATING AGREEMENT OF SC AMALCO.
Nextera, as the indirect parent of Canadian Buyer and SC Amalco,
shall have adopted the form of Buyer Operating Agreement attached hereto as
Exhibit F. The SC Shareholders shall have received from Canadian Buyer (a) a
copy of the Buyer Operating Agreement and (b) resolutions adopted by the Board
of Directors of Canadian Buyer, approving this Agreement and the agreements and
the transactions contemplated hereby and thereby, certified by an officer of
Canadian Buyer.
SECTION 7.13 EXCHANGEABLE DOCUMENTATION.
The parties thereto shall have executed and delivered the Support
Agreement and the Exchange Trust Agreement.
SECTION 7.14 EQUITY PARTICIPATION PLAN.
The parties thereto shall have executed and delivered the Equity
Participation Plan.
SECTION 7.15 ANNUAL INCENTIVE PLAN.
Buyer shall have adopted the Annual Incentive Plan attached hereto
as Exhibit N.
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SECTION 7.16 SHARE EXCHANGE AGREEMENT.
The parties thereto shall have adopted the Share Exchange Agreement
attached hereto as Exhibit L.
SECTION 7.17 SHAREHOLDERS LOANS.
Nextera and Canadian Buyer shall have delivered promissory notes
evidencing the Shareholder Loans.
ARTICLE 8
CONDITIONS TO CANADIAN BUYER'S AND NEXTERA'S OBLIGATIONS
The obligations of Nextera and Canadian Buyer to consummate the
transactions provided for hereby are subject, in the discretion of Nextera and
Canadian Buyer to the satisfaction, on or prior to the Closing Date, of each of
the following conditions, any of which may be waived by Nextera and Canadian
Buyer.
SECTION 8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
All representations and warranties of the SC Shareholders or SC
Shareholder contained in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and at and as of the
Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and each SC Shareholder shall have
performed and satisfied in all material respects all agreements and covenants
required hereby to be performed by it prior to or on the Closing Date.
SECTION 8.2 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL.
All Permits, consents, approvals and waivers from governmental
authorities necessary to the consummation of the transactions contemplated
hereby and for the operation of the Canadian Business by Canadian Buyer shall
have been obtained. The parties agree that the only consent to be obtained prior
to Closing is that of The Toronto-Dominion Bank. Canadian Buyer shall be
satisfied that all approvals required under any Regulations to carry out the
transactions contemplated by this Agreement shall have been obtained and that
the parties shall have complied with all Regulations applicable to this
Agreement and the transactions contemplated hereby.
SECTION 8.3 NO ACTIONS OR COURT ORDERS.
No Action by any governmental authority or other person shall have
been instituted or threatened which questions the validity or legality of the
transactions contemplated hereby and which could reasonably be expected (a) to
materially damage Canadian Buyer, (b) to materially damage the Canadian Assets
or the Canadian Business if the transactions contemplated hereunder are
consummated, including without limitation any material adverse effect on the
right or ability of Canadian Buyer to own, operate, possess or transfer the
Canadian Assets after the Closing or (c) to materially damage the business or
financial condition of Canadian Buyer on a consolidated basis if the
transactions contemplated hereunder are consummated. There shall have been no
determination by Canadian Buyer,
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acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, provincial or other
governmental authority of litigation. There shall not be any Regulation or Court
Order that makes the purchase and sale of the Purchased Shares contemplated
hereby illegal or otherwise prohibited.
SECTION 8.4 APPROVAL OF CANADIAN BUYER'S COUNSEL.
All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and all
related legal matters contemplated by this Agreement shall have been approved by
Stikeman, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Stirling Scales, as counsel for Nextera
and Canadian Buyer, and such counsel shall have received on behalf of Nextera
and Canadian Buyer such other certificates, opinions, and documents in form
satisfactory to such counsel as Nextera and Canadian Buyer may reasonably
require from the SC Shareholders to evidence compliance with the terms and
conditions hereof as of the Closing and the correctness as of the Closing of the
representations and warranties of the SC Shareholders and the fulfillment of
their respective covenants.
SECTION 8.5 APPROVAL OF NEXTERA'S COUNSEL.
All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and all
related legal matters contemplated by this Agreement shall have been approved by
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, as counsel for Nextera, and such counsel shall have received
on behalf of Nextera such other certificates, opinions, and documents in form
satisfactory to such counsel as Nextera reasonably require from SC Shareholders
to evidence compliance with the terms and conditions hereof as of the Closing
and the correctness of the Closing of the representations and warranties of the
SC Shareholders and the fulfilment of their respective covenants.
SECTION 8.6 OPINIONS.
SC Shareholders shall have delivered to the Canadian Buyer and
Nextera an opinion of ▇▇▇▇▇▇▇ & Partners, counsel to SC Shareholders, dated as
of the Closing Date, in the form attached hereto as Exhibit D.
SECTION 8.7 MATERIAL CHANGES.
Since the Base Balance Sheet Date, there shall not have been any
material adverse change with respect to Sibson Canada, the Canadian Business or
the Canadian Assets except as disclosed on the Disclosure Schedule.
SECTION 8.8 CORPORATE DOCUMENTS.
Canadian Buyer shall have received from the SC Shareholders
resolutions adopted by the board of directors of Sibson Canada and SC Holdco
approving this Agreement and the agreements and the transactions contemplated
hereby and thereby, certified by an officer of Sibson Canada.
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SECTION 8.9 PERMITS.
Sibson Canada shall continue to own or shall have obtained or been
granted the right to use all Permits necessary to its continued operation of the
Canadian Business.
SECTION 8.10 ESCROW AGREEMENT.
The SC Shareholders and the Escrow Agent shall have executed and
delivered the Escrow Agreement in substantially the form attached hereto as
Exhibit B.
SECTION 8.11 EMPLOYMENT AGREEMENTS.
Each of the individuals listed on Schedule 8.11 shall have executed and
delivered to Canadian Buyer and/or Sibson Canada an employment agreement in
substantially the form attached hereto as Exhibit E (individually, an
"Employment Agreement" and collectively, the "Employment Agreements").
SECTION 8.12 THIRD-PARTY FINANCING.
Canadian Buyer shall have received third party financing in an amount
sufficient to fund the Purchase Price for the Purchased Shares.
SECTION 8.13 PRE-CLOSING STEPS.
All the Pre-Closing Steps referred to in Section 2.1 hereof shall have
been completed to the satisfaction of Canadian Buyer and true copies of all
documents evidencing such steps, including the Certificate of Amalgamation and
the Amalgamation Agreement, shall have been delivered to Canadian Buyer.
SECTION 8.14 EXCHANGEABLE DOCUMENTATION.
The parties thereto shall have executed and delivered the Support
Agreement and the Exchange Trust Agreement in the form, or substantially in the
form, attached hereto as Exhibit I and H, respectively.
SECTION 8.15 SHARE EXCHANGE AGREEMENT.
The Shareholders shall have executed the Share Exchange Agreement in
substantially the form attached hereto as Exhibit M.
ARTICLE 9
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION BY THE SELLING PARTIES.
The SC Shareholders jointly and severally agree subsequent to the
Closing to indemnify and hold Nextera, Canadian Buyer and its Subsidiaries,
affiliates, successors and assigns and persons serving as officers, directors,
partners, managers, shareholders, members, employees and agents thereof (other
than the SC Shareholders, except to the extent of Liabilities incurred in their
capacities as an officer, director or employee of Canadian Buyer after the
Closing) (individually a "BUYER INDEMNIFIED PARTY" and collectively the "BUYER
INDEMNIFIED PARTIES") harmless from and against any Damages which may be
sustained or
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suffered by any of them attributable to, arising out of or based
upon any of the following matters:
(a) Any failure to convey title to the Purchased Shares free and
clear of any Encumbrances other than Permitted Liens
(collectively, "Ownership Claims");
(b) Any liability of Sibson Canada for Taxes arising from its
respective activities, assets and all events and transactions
on or prior to the Closing, including with respect to risks
and other matters disclosed in Schedule 4.25, (to the extent
there is no reserve contained in the Financial Statements) and
any breach of the representations and warranties set forth in
Section 4.25 hereof and any covenant with respect to Taxes or
tax related matters set forth herein or in any related
agreement (collectively, "Tax Claims");
(c) [Intentionally deleted.];
(d) Other than Ownership Claims, Tax Claims, any other material
breach of any representation, warranty or covenant of SC
Shareholders under this Agreement or in any certificate,
schedule or exhibit delivered pursuant hereto by SC
Shareholders (collectively, "General Claims"); and
(e) In addition, each SC Shareholder severally, but not jointly,
agrees subsequent to the Closing to indemnify and hold all
Buyer Indemnified Parties harmless from and against any
Damages attributable to, arising out of or based upon fraud,
or intentional misrepresentation by such SC Shareholder in
connection with the transactions completed by this Agreement
(collectively "Individual Fraud Claims") or any breach
(whether or not deliberate or wilful) of any representation or
warranty or covenant contained in Article 4 made by a
particular SC Shareholder (collectively, "Individual General
Claims" and together with Individual Fraud Claims, "Individual
Claims"). For greater certainty, the SC Shareholders shall be
jointly and severally liable for all representations and
warranties herein; however, any representation or warranty
made by an individual SC Shareholder as to matters solely
relating to such SC Shareholder shall be Individual Claims of
that SC Shareholder, and all representations and warranties
made regarding SC Holdco shall be Individual Claims of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ for which he will be severally liable.
SECTION 9.2 LIMITATIONS ON INDEMNIFICATION BY THE SC SHAREHOLDERS.
Anything contained in this Agreement to the contrary notwithstanding,
the liability of the SC Shareholders to provide any indemnification to any Buyer
Indemnified Party and right of Buyer Indemnified Parties to indemnification
under Section 9.1 (or otherwise) shall be subject to the following provisions:
(a) Subject to Section 9.2(b) and 9.2(g) no claims for
indemnification shall be made under this Agreement against any
SC Shareholder, and no indemnification shall be payable to any
Buyer Indemnified Party, with respect
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to General Claims and Individual General Claims asserted after
the date which is eighteen (18) months following the Closing;
(b) No claims for indemnification shall be made under this
Agreement against any SC Shareholder, and no indemnification
shall be payable to any Buyer Indemnified Party, with respect
to any Tax Claim asserted after expiration of all applicable
statutes of limitation or periods of reassessment with respect
to the Tax that is the subject of the indemnification claim
and the expiration of all applicable statutes of limitation or
periods of reassessment taking into account any actual or
effective extensions thereof with respect to the assessment or
collection of the Tax;
(c) The aggregate amount to be payable by the SC Shareholders to
all Buyer Indemnified Parties for claims for indemnification
with respect to General Claims and individual General Claims
(including any amounts subject to the Escrow Agreement and any
Nextera Class A Units or other shares or securities delivered
pursuant to the Share Exchange Agreement delivered to Nextera
in satisfaction of an indemnification claim) shall in no event
exceed $2,047,299;
(d) With respect to General Claims, the amount payable by an SC
Shareholder to all Buyer Indemnified Parties for claims for
indemnification hereunder shall in no event exceed such SC
Shareholder's pro rata share of the total amount to be paid to
all Buyer Indemnified Parties for claims for indemnification
hereunder. The pro rata shares of the SC Shareholders for
purposes of this paragraph shall be the same percentages as
the SC Shareholders' respective ownership interests listed on
Schedule 4.2;
(e) With respect to Individual Claims the SC Shareholder who makes
the representation, warranty or covenant, from which the claim
arose shall be severally liable for indemnification in respect
of such a claim, and the other SC Shareholders shall not be
jointly liable therefor to an amount as described in 9.2(d);
(f) The SC Shareholders shall have no obligation for
indemnification with respect to General Claims hereunder until
aggregate claims for indemnification with respect to General
Claims hereunder exceed $14,000, in which case the SC
Shareholders shall be obligated for indemnification of all
General Claims including the initial $14,000 of such claims;
(g) Claims for indemnification with respect to claims based on
fraud or intentional misrepresentation, Ownership Claims, Tax
Claims (except with respect to subsection (b) above) and
Individual Fraud Claims made under this Agreement by any Buyer
Indemnified Party shall not be subject to any of the
limitations set forth in this Section 9.2.
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SECTION 9.3 INDEMNIFICATION BY NEXTERA AND CANADIAN BUYER.
Nextera and Canadian Buyer agree to indemnify and hold the SC
Shareholders and their affiliates and persons serving as officers, directors,
partners, managers, shareholders, members, employees and agents thereof
(individually a "SC SHAREHOLDERS INDEMNIFIED PARTY" and collectively the "SC
SHAREHOLDERS INDEMNIFIED PARTIES") harmless from and against any Damages which
may be sustained or suffered by any of them attributable to arising out of or
based upon any of the following matters:
(a) Fraud, intentional misrepresentation or the cause or knowledge
of a deliberate or wilful breach of any representations,
warranties or covenants of Nextera and/or Canadian Buyer with
respect to this Agreement in connection with the transactions
contemplated by this Agreement; and
(b) Any breach of any representation, warranty or covenant made by
the Nextera and/or Canadian Buyer in this Agreement or in any
certificate or schedule delivered by Nextera and/or the
Canadian Buyer hereunder.
SECTION 9.4 LIMITATION ON INDEMNIFICATION BY NEXTERA AND CANADIAN BUYER.
Notwithstanding the foregoing, (a) no indemnification shall be
payable to the SC Shareholders Indemnified Parties with respect to claims
asserted pursuant to Section 9.3(b) above after the date which is eighteen (18)
months after the Closing, (b) and the aggregate amount to be payable to all SC
Shareholders Indemnified Parties pursuant to Section 12.3 shall not exceed
$2,047,299 and (c) Nextera and Canadian Buyer shall have no obligation for
indemnification hereunder until aggregate claims for indemnification hereunder
exceed $14,000, in which case Nextera and Canadian Buyer shall be obligated for
indemnification of all claims, including the initial $14,000 of such claims.
Claims for indemnification with respect to fraud, intentional misrepresentation
or the cause or knowledge of a deliberate or wilful breach of any
representations, warranties or covenants of Canadian Buyer under this Agreement
or in any certificate, schedule or exhibit delivered pursuant hereto or a breach
of Sections 6.6 through 6.8 shall not be subject to any of the limitations set
forth in this Section 9.4.
SECTION 9.5 NOTICE; DEFENSE OF CLAIMS.
An indemnified party shall make claims for indemnification hereunder by
giving written notice thereof to the indemnifying party promptly on discovery
and in any event within the period in which indemnification claims can be made
hereunder. If indemnification is sought for a claim or liability asserted by a
third party, the indemnified party shall also give written notice thereof to the
indemnifying party promptly after it receives notice of the claim or liability
being asserted, but the failure to do so shall not relieve the indemnifying
party from any liability except to the extent that it is prejudiced by the
failure or delay in giving such notice. Such notice shall summarize the basis
for the claim for indemnification and any claim or liability being asserted by a
third party. Within 20 days after receiving such notice the indemnifying party
shall give written notice to the indemnified party stating whether it disputes
the claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within 20 days after
receipt of notice thereof,
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it shall be deemed to have accepted and agreed to the claim, which shall become
immediately due and payable. The indemnifying party shall be entitled to direct
the defense against a third party claim or liability with counsel selected by it
(subject to the consent of the indemnified party, which consent shall not be
unreasonably withheld) as long as the indemnifying party is conducting a good
faith and diligent defense and to compromise or settle it with consent of the
indemnified party, which consent shall not be unreasonably withheld. The
indemnified party shall at all times have the right to fully participate at its
own expense in the defense of a third party claim or liability, directly or
through counsel; provided, however, that if the named parties to the action or
proceeding include both the indemnifying party and the indemnified party and the
indemnified party is advised that representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the indemnified party may engage separate counsel at the expense of the
indemnifying party. If no such notice of intent to dispute and defend a third
party claim or liability is given by the indemnifying party, or if such good
faith and diligent defense is not being or ceases to be conducted by the
indemnifying party, the indemnified party shall have the right, at the expense
of the indemnifying party, to undertake the defense of such claim or liability
(with counsel selected by the indemnified party), and to compromise or settle
it, with consent of the indemnifying party, which consent shall not be
unreasonably withheld. If the third party claim or liability is one that by its
nature cannot be defended solely by the indemnifying party, then the indemnified
party shall make available such information and assistance as the indemnifying
party may reasonably request and shall cooperate with the indemnifying party in
such defense, at the expense of the indemnifying party.
SECTION 9.6 SATISFACTION OF SC SHAREHOLDERS INDEMNIFICATION OBLIGATIONS.
Nextera shall bring and control all indemnification claims hereunder
and under the Share Exchange Agreement on behalf of the Buyer Indemnified
Parties, including without limitation Canadian Buyer. In order to satisfy the
indemnification obligations of the SC Shareholders hereunder and under the
Exchange Agreement, Nextera shall proceed first directly against the Escrow
Amount as further set forth in the Escrow Agreement and then may proceed
directly against the SC Shareholders subject to the limitations set forth
herein. A Buyer Indemnified Party may proceed against the SC Shareholder of its
choosing subject to the limitations set forth in the Agreement.
SECTION 9.7 USE OF NEXTERA CLASS A UNITS.
To the extent indemnification claims exceed the Escrow Deposit (as
defined in the Escrow Agreement), the SC Shareholders may, at their option,
elect to satisfy any indemnification claims under this Agreement by delivering
to the indemnified party Exchangeable Shares issued pursuant to Section 2.3 or
any securities into which such Exchangeable Shares may be converted into, or
exchanged for, including, without limitation Nextera Class A Units. To the
extent that Exchangeable Shares (or such other securities) are used to satisfy
indemnification obligations under this Agreement, such shares shall be valued in
accordance with the terms of the Escrow Agreement. No statement of value in this
Agreement shall affect such valuation under the Escrow Agreement.
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SECTION 9.8 EXCLUSIVE REMEDY.
Other than Fraud Claims, the foregoing indemnification provisions in
this Article 8 shall be the exclusive remedy for any breach of the
representations and warranties of the SC Shareholders in Articles 4 and of
Nextera and Canadian Buyer in Article 5 above.
SECTION 9.9 INDEMNITY.
For a period of one year from the Closing Date, Nextera and Canadian
Buyer shall jointly and severally indemnify the SC Shareholders, in the event
Sibson Canada Co. is wound up with in the meaning of the NS Act for their
liability to contribute to the assets of Sibson Canada as required by S.134 of
the NS Act to an amount sufficient for payment of Sibson Canada's debts and
liabilities and the costs, charges, and expenses of the winding up and for the
adjustments of the right of contributories among the SC Shareholders. For
greater certainty, Nextera and Canadian Buyer do not indemnify the SC
Shareholders for any breach of the representations and warranties.
ARTICLE 10
TERMINATION OF AGREEMENT; RIGHTS TO PROCEED
SECTION 10.1 TERMINATION.
At any time prior to the Closing, this Agreement may be terminated as
follows:
(a) By mutual written consent of all of the parties to this
Agreement;
(b) By Canadian Buyer, pursuant to written notice to the SC
Shareholders, if any of the conditions set forth in Article 7
of this Agreement have not been satisfied at or prior to the
Closing, or if it has become reasonably and objectively
certain that any of such conditions, other than a condition
within the control of the SC Shareholders, will not be
satisfied at or prior to the Closing, such written notice to
set forth such conditions which have not been or will not be
so satisfied;
(c) By the SC Shareholders, pursuant to written notice to Canadian
Buyer, if any of the conditions set forth in Article 6 of this
Agreement have not been satisfied at or prior to the Closing,
or if it has become reasonably and objectively certain that
any of such conditions, other than a condition within the
control of Canadian Buyer and Nextera, will not be satisfied
at or prior to the Closing, such written notice to set forth
such conditions which have not been or will not be so
satisfied; and
(d) By Canadian Buyer if the Closing shall not have occurred on or
before September 30, 1998.
SECTION 10.2 EFFECT OF TERMINATION.
All obligations of the parties hereunder shall cease upon any
termination pursuant to Section 10.1, provided, however, that the provisions of
Article 9 and Article 10, Section 4.35,
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Section 6.6 and Section 6.9, Section 11.1, and 11.9 hereof shall survive any
termination of this Agreement. No termination shall relieve any party of any
liability for breach of this Agreement prior to termination except as otherwise
provided for herein.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 FEES AND EXPENSES.
Except as otherwise specified in this Agreement, each party hereto
shall pay its own legal, accounting, out-of-pocket and other expenses incident
to this Agreement and to any action taken by such party in preparation for
carrying this Agreement into effect.
The fees and expenses incurred by Sibson Canada for the transactions
contemplated herein shall be paid by Sibson Canada on Closing. Notwithstanding
the foregoing, in the event that the transaction does not close solely as a
result of Canadian Buyer's and/or Nextera's failure to obtain third-party
financing for the Purchase Price, Nextera shall reimburse Sibson Canada for its
actual out-of-pocket expenses it incurred in connection herewith, up to a
maximum of CDN. $25,000 upon the submission of reasonably detailed invoices for
such expenses.
SECTION 11.2 GOVERNING LAW.
This Agreement shall be construed under and governed by the internal
laws of Province of Ontario without regard to its conflict of laws provisions.
SECTION 11.3 NOTICES.
Any notice, request, demand or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
if delivered or sent by facsimile transmission, upon receipt, or if sent by
registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in their post office
facilities properly addressed with postage prepaid. All notices to a party will
be sent to the addresses set forth below or to such other address or person as
such party may designate by notice to each other party hereunder:
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TO NEXTERA: Nextera Enterprises, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ T. Breback, Jr.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With an additional copy to: Maron & Sandler
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
TO CANADIAN BUYER: ▇/▇ ▇▇/▇▇, ▇.▇.▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ "▇" ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With an additional copy to: Stikeman, ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
TO THE SC SHAREHOLDERS AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
1053861 ONTARIO LIMITED:
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
With a copy to: ▇▇▇▇▇▇▇ & Partners
Ernst & Young Tower
Toronto-Dominion Centre
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice given hereunder may be given on behalf of any party by his
counsel or other authorized representatives.
SECTION 11.4 ENTIRE AGREEMENT.
This Agreement, including the Escrow Agreement, Employment Agreements,
Support Agreement, Exchange Trust Agreement, the Nextera Operating Agreement the
Buyer Operating Agreement, the Share Exchange Agreement, Letter Agreement and
all other documents delivered herewith, the entire agreement of the parties with
respect to its subject matter, and supersedes all previous written or oral
negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such schedules and exhibits; and all
inducements to the making of this Agreement relied upon by either party hereto
have been expressed herein or in such schedules or exhibits.
SECTION 11.5 ASSIGNABILITY; BINDING EFFECT.
This Agreement shall only be assignable by Canadian Buyer to an entity
controlling, controlled by or under common control with Canadian Buyer upon
written notice to the SC Shareholders; provided, however, that Canadian Buyer
shall remain liable for all obligations hereunder to the extent such obligations
are not satisfied by the transferee. This Agreement
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may not be assigned by the SC Shareholders without the prior written consent of
the Canadian Buyer. This Agreement shall be binding upon and enforceable by, and
shall inure to the benefit of, the parties hereto and their respective legal
personal representation successors and permitted assigns. Assignment of this
Agreement by any party shall not relieve such party from its obligations
hereunder.
SECTION 11.6 CAPTIONS AND GENDER.
The captions in this Agreement are for convenience only and shall not
affect the construction or interpretation of any term or provision hereof. The
use in this Agreement of the masculine pronoun in reference to a party hereto
shall be deemed to include the feminine or neuter, as the context may require.
SECTION 11.7 EXECUTION IN COUNTERPARTS.
For the convenience of the parties and to facilitate execution, this
Agreement, and any documents in connection herewith, may be executed by
facsimile, with originals to follow, in two or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
document.
SECTION 11.8 AMENDMENTS.
This Agreement may not be amended or modified, nor may compliance with
any condition or covenant set forth herein be waived, except by a writing duly
and validly executed by each party hereto, or in the case of a waiver, the party
waiving compliance, provided that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ may consent to any such
amendment or modification or waiver on behalf of the SC Shareholders provided
further that the Shareholder Representative may not enter into any such
amendment or modification or waive any condition or covenant that materially and
adversely affects any SC Shareholder differently than all other SC Shareholders
affected thereby without the consent of such SC Shareholder.
SECTION 11.9 PUBLICITY AND DISCLOSURES.
No press releases or public disclosure, either written or oral, of the
transactions contemplated by this Agreement, shall be made by Nextera, a party
to this Agreement without the prior knowledge and written consent of Canadian
Buyer and the SC Shareholders.
SECTION 11.10 SPECIFIC PERFORMANCE.
The parties agree that it would be difficult to measure damages which
might result from a breach of this Agreement by the SC Shareholders and that
money damages would be an inadequate remedy for such a breach. Accordingly, if
there is a breach or proposed breach of any provision of this Agreement by any
SC Shareholder, and Canadian Buyer do not elect to terminate under Article 10,
Nextera and Canadian Buyer shall be entitled, in addition to any other remedies
which it may have, to an injunction or other appropriate equitable relief to
restrain such breach without having to show or prove actual damage to Nextera or
Canadian Buyer.
The parties agree that it would be difficult to measure damages which
might result from a breach of this Agreement by the Canadian Buyer or Nextera
and that money damages
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would be an inadequate remedy for such a breach. Accordingly, if there is a
breach or proposed breach of any provision of this Agreement by Canadian Buyer
or Nextera, and the SC Shareholders do not elect to terminate under Article 10,
the SC Shareholders shall be entitled, in addition to any other remedies which
it may have, to an injunction or other appropriate equitable relief to restrain
such breach without having to show or prove actual damage to Nextera or Canadian
Buyer.
SECTION 11.11 U.S. CURRENCY.
Any reference herein to dollar amounts shall refer to lawful currency
of the United States of America.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives, as of the date first written
above.
NEXTERA ENTERPRISES, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
CANADIAN BUYER:
SIBSON ACQUISITION CO
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
1053861 ONTARIO LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
SC SHAREHOLDERS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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