EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made on December 3, 2001,
among Documentum Canada Company, a Nova Scotia company ("Buyer"), The Bulldog
Group Inc., an Ontario corporation ("Bulldog"), Empower Computerware Inc., an
Ontario corporation ("Empower"), The Bulldog Group USA, Inc., a Delaware
corporation ("Bulldog US") and The Bulldog Group UK Limited, an English company
("Bulldog UK") (Bulldog, Empower, Bulldog US and Bulldog UK will be referred to
collectively as "Sellers").
WHEREAS Sellers carry on the business of developing, distributing, selling and
licensing software and related products worldwide (the "Business");
AND WHEREAS Sellers wish to sell, and Buyer wishes to purchase,
substantially all of the assets of the Business on the terms set forth in this
Agreement;
NOW THEREFORE in consideration of the mutual premises and covenants
herein contained and of other goods and valuable consideration, the receipt and
sufficiency of which are acknowledged by each of the parties hereto, the parties
agree as follows:
ARTICLE 1
DEFINITIONS AND USE OF TERMS
1.1 CONSTRUCTION
Any reference in this Agreement to an "Article," "Section" or
"Schedule" refers to the corresponding Article, Section or Schedule of or to
this Agreement, unless the context indicates otherwise. The headings of Articles
and Sections are provided for convenience only and should not affect the
construction or interpretation of this Agreement. All words used in this
Agreement should be construed to be of such gender or number as the
circumstances require. The term "include" or "including" indicates examples of a
foregoing general statement and not a limitation on that general statement. Any
reference to a statute refers to the statute, any amendments or successor
legislation, and all regulations promulgated under or implementing the statute,
as in effect at the relevant time. Any reference to a Contract or other document
as of a given date means the Contract or other document as amended, supplemented
and modified from time to time through such date. Unless otherwise indicated,
all references to money or monetary amounts refer to the lawful money of the
United States.
1.2 DEFINITIONS
For the purposes of this Agreement, the following terms and
variations of them have the meanings specified in this Section:
"Accounts Receivable" is defined in Section 3.6.
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"Adverse Consequences" means any Liability, loss, damages
(including incidental and consequential damages), Claim, cost, deficiency,
diminution of value, or expense (including costs of investigation and defense,
penalties, and reasonable legal fees and costs), arising by way of a Claim or
otherwise.
"Affiliates" has the meaning given in the OBCA.
"Agreement" is defined in the first paragraph of this agreement.
"Ancillary Agreements" means the Employment Agreements, the
Non-Competition Agreement, the Registration Rights Agreement and the Escrow
Agreement.
"Assets" is defined in Section 2.1.
"Assumed Employees" is defined in Section 7.1(a)(i).
"Assumed Liabilities" is defined in Section 2.3.
"Balance Sheet" is defined within the definition of "Financial
Statements".
"Bulldog" is defined in the first paragraph of this Agreement.
"Bulldog UK" is defined in the first paragraph of this Agreement.
"Bulldog US" is defined in the first paragraph of this Agreement.
"Business" is defined in the recitals hereto.
"Business Day" means any day, other than a Saturday a Sunday or a
day that is a statutory holiday in the Province of Ontario or the State of
California.
"Buyer" is defined in the first paragraph of this Agreement.
"Buyer Indemnitees" is defined in Section 11.2.
"Cash Payment" is defined in Section 2.3(b)(i).
"Claim" means any claim or demand of whatever nature asserted by
a third party in respect of a Liability (including in respect of legal costs on
a solicitor-client basis) or alleged Liability.
"Closing" means the consummation and completion of all of the
transactions to be carried out in accordance with this Agreement, including the
execution, delivery, and performance of the Ancillary Agreements.
"Closing Date" is defined in Section 2.5.
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"Collective Agreement" means any Contract, directly or by
operation of law, with any Union and includes all letters of understanding,
letters of intent, side bar letters and other written communications with any
Union that creates obligations or sets out any understanding with respect to the
interpretation of the provisions of a Contract with such a Union.
"Commercial Software" means packaged commercially available
software programs generally available to the public which have been licensed to
any of Sellers pursuant to end-user licenses and which are used in the Business.
"Consent" means any approval, consent, ratification, waiver or
other authorization.
"Contemplated Transactions" means all of the transactions to be
carried out in accordance with this Agreement, including the purchase and sale
of the Assets, the assumption of the Assumed Liabilities, the performance by the
parties of their other obligations under this Agreement, and the execution,
delivery, and performance of the Ancillary Agreements.
"Contract" means any contract, agreement, commitment,
understanding, undertaking, lease, license, franchise, warranty, guaranty,
mortgage, note, bond, or other instrument or consensual obligation (whether
written or oral and whether express or implied) that is legally binding on the
parties thereto.
"Contravention" or "Contravene" -- an act or omission would
"Contravene" something and such an act would constitute a "Contravention" if, as
the context requires:
(a) the act or omission would conflict with it, violate it, result in
a breach or violation of or failure to comply with it or
constitute a default under it;
(b) the act or omission would give any Governmental Body or other
Person the right to challenge, revoke, withdraw, suspend, cancel,
terminate, or modify it, to exercise any remedy or obtain any
relief under it, or to declare a default or accelerate the
maturity of any obligation under it; or
(c) the act or omission would result in the creation of an
Encumbrance.
"Copyrights" means all registered and unregistered copyrights in
both published works of authorship and unpublished works of authorship,
including the Programs.
"Designated Employees" means those Employees listed in Schedule
2.6(a)(iii);
"Design Documentation" is defined in Section 3.26 (e).
"Documentum Stock" is defined in Section 2.4(b)(ii).
"Embedded Products" is defined in Section 3.26(c).
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"Employee" means any active or inactive individual, employee, or
officer of any of Sellers, or a director of any of Sellers if currently employed
by such party and who performs services on a full or part-time basis.
"Employee Benefit Plans" means any agreement, plan, program,
fund, policy, Contract or arrangement (whether written or oral) providing any
bonus, incentive compensation, profit sharing, retirement, pension, insurance,
disability, death benefit, medical, dental or vision insurance or expense
reimbursement, sick pay, dependent care, equity share bonus, equity share
option, equity share purchase arrangement or equity share appreciation rights,
equity equivalent bonus, savings, deferred compensation, consulting, severance
pay or termination pay, change-in-control benefit, holiday or vacation pay,
day-care, legal services, supplemental or excess benefit, housing assistance,
moving expense reimbursement, educational assistance, welfare or other benefits
beyond an Employee's or former Employee's current base pay, to any Employee or
former Employee and the beneficiaries and dependents of any such Employee or
former Employee, regardless of whether it is private, funded, unfunded, financed
by the purchase of insurance, contributory or non-contributory, except any
benefit mandated by Legal Requirements and by tax laws.
"Employment Agreement" means each agreement to be entered into at
Closing between Buyer and a Designated Employee.
"Employment Laws" means all Legal Requirements relating to
employment and labour, including without limitation those relating to wages,
hours or employment or labour standards generally, labour or industrial
relations, pension benefits, human rights, pay equity, employment equity,
workers' compensation, or workplace safety and insurance, occupational health
and safety, immigration, employer health tax, employment or unemployment
insurance, Canada or Quebec Pension Plan and income tax withholdings, applicable
to all Employees or former Employees.
"Empower" is defined in the first paragraph of this Agreement.
"Encumbrance" means any charge, Claim, mortgage, servitude,
easement, right of way, community or other property interest, covenant,
equitable interest, lease or other possessory interest, lien, option, pledge,
security interest, preference, priority, pre-emptive right, right of first
refusal, or similar restriction, including any restriction on use, voting (in
the case of any equity security), transfer, receipt of income or exercise of any
other attribute of ownership.
"Environmental, Health, and Safety Liabilities" means any
Liability arising from or under any Occupational Health and Safety Law,
including those consisting of or relating to:
(a) any environmental, health, or safety matter or condition,
including on-site or off-site contamination, occupational health
and safety, and regulation of any chemical substance or product;
(b) any fine, penalty, judgment, award, settlement, Proceeding,
Claim, demand or any response, investigative, monitoring,
remedial, reclamation, restoration, or inspection Liability
arising under any Occupational Health and Safety Law;
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(c) Liability under any Occupational Health and Safety Law for
cleanup costs or corrective action, (whether or not such cleanup
has been required or requested by any Governmental Body or other
Person) and for any natural resource damage; or
(d) any other compliance, corrective, reclamation, remedial or
restoration measures required under any Occupational Health and
Safety Law.
"Escrow Agent" means BNY Trust Company of Canada.
"Escrow Agreement" means the escrow agreement to be entered into
on Closing by Buyer, Seller and the Escrow Agent.
"Escrowed Shares" is defined in Section 2.4(b)(iii).
"ETA" means the Excise Tax Act (Canada), R.S.C. 1985, c. E-15.
"Financial Statements" means (a) audited consolidated balance
sheets of Sellers as at December 31 for each of the years 1998 through 2000, and
the related audited consolidated statements of income, changes in shareholders'
equity, and cash flow for each of the fiscal years then ended, together with the
report thereon of Deloitte & Touche, (b) an audited consolidated balance sheet
of Sellers as at December 31, 2000 (including the notes thereto, the "Balance
Sheet"), and the related statements of income, changes in shareholders' equity,
and cash flow for the fiscal year then ended, together with the report thereon
of Deloitte & Touche, and (c) an unaudited balance sheet of Sellers as at
October 31, 2001 (the "Interim Balance Sheet") and the related unaudited
statements of income, changes in shareholders' equity, and cash flow for the
fiscal period then ended.
"GAAP" means generally accepted accounting principles for
financial reporting in Canada as recommended by the Canadian Institute of
Chartered Accountants in its handbook, applied on a basis consistent with the
prior practice of the Person to which such principles are applied.
"Governmental Authorization" means any Consent, license, Permit
or registration given by any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body" means any:
(a) country, nation, region, province, state, territory, county,
city, town, village, district, municipality or other
jurisdiction;
(b) federal, provincial, state, local, municipal, territorial,
aboriginal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, ministry,
department, commission or other entity and any court, board,
commission or other tribunal);
(d) multinational organization;
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(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, ministerial, perogative, legislative,
policy, regulatory, or tax authority or power of any nature;
and
(f) an official of any of the foregoing.
"GST/HST" means Goods and Services Tax/Harmonized Sales Tax
imposed pursuant to Part IX of the ETA.
"ITA" means the Income Tax Act (Canada), R.S.C. 1985 (5th
Supplement) c.1.
"Indemnity Claim" is defined in Section 11.8.
"Intellectual Property" is defined in Section 3.25(a).
"Interim Balance Sheet" is defined within the definition of
"Financial Statements".
"Knowledge" -- (i) an individual will be considered to have
"Knowledge" of a fact or matter if the individual is actually aware of the fact
or matter or a prudent individual could be expected to discover or otherwise
become aware of the fact or matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of the fact or matter; and
(ii) an entity will be considered to have "Knowledge" of a fact or matter if any
individual who is serving as a director, manager or senior executive, officer,
partner, executor, or trustee of that entity (or in similar capacity) has, or at
any time had, Knowledge of the fact or matter.
"Labour Disturbance" means any strike, cessation of work, refusal
to work by Employees in combination or in accordance with a common
understanding, or a slow down or other concerted activity on the part of such
Employees designed to restrict or limit output, or any lockout, closing of place
of employment, suspension of work or refusal by Seller to continue to employ any
Employees, or any other disturbance or dispute involving Employees.
"Labour Relations Matter" means any matter regarding wages,
salaries, bonuses, commissions, hours of work, vacations or vacation pay,
holidays or holiday pay, severance pay, notice or pay in lieu of notice,
termination pay, sick leave, personal days, pension or other Employee benefits,
worker's compensation or workplace safety and insurance, income tax
withholdings, employment or unemployment insurance, Canada and Quebec Pension
Plan or employer health tax, human rights, pay equity, employment equity,
occupational health and safety, employment standards, or arising under any
Employment Laws generally.
"Legal Requirement" means any constitution, law, bylaw, statute,
treaty, convention, rule, regulation, ordinance, guideline, policy, code, Order,
Permit, standard principle of common law, notice from or approval of any
Governmental Body or any Contract with any Governmental Body relating to
compliance with any of the foregoing.
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"Liabilities" means liabilities or obligations of any nature,
whether known or unknown, whether absolute, accrued, contingent, xxxxxx,
inchoate, or otherwise, whether due or to become due, and whether or not
required to be reflected on a balance sheet prepared in accordance with GAAP.
"Marks" means business names, trade names, registered and
unregistered trade marks, service marks, and applications therefor.
"Material Adverse Effect" -- something would be considered to
have a "Material Adverse Effect" on Sellers or the Business if it: (i)
materially adversely affects the financial or other condition, results of
operations, Assets, Liabilities, equity, business or prospects of any of Sellers
or of the Business, (ii) materially impedes the ongoing operations of any of
Sellers, or (iii) significantly adversely affects a material asset of any of
Sellers.
"Net Names" means all rights in Internet websites and domain
names.
"Non Competition Agreement" means the confidentiality and
non-competition agreement to be entered into by Sellers on Closing.
"OBCA" means the Business Corporations Act (Ontario), R.S.O.
1990, c.B-16.
"Occupational Health and Safety Law" means any Legal Requirement
designed to provide safe and healthy working conditions and to reduce
occupational health and safety hazards, and any program, whether established by
a Governmental Body or any other Person (such as those promulgated or sponsored
by industry associations and insurance companies) designed to provide safe and
healthy working conditions.
"Order" means any order, direction, summons, judgment,
requirement, decree, ruling, demand, assessment, reassessment or arbitration
award of any Governmental Body or arbitrator.
"Ordinary Course of Business" refers to actions taken in Sellers'
normal operation of the Business, consistent with its past practice and
practices of other Persons in its same line of business and having no Material
Adverse Effect on Sellers.
"Patents" means patents, patent applications, and inventions and
discoveries that may be patentable.
"Permits" means all approvals, certificates, consents, licenses,
permits, registrations and authorizations required under any Legal Requirement.
"Person" refers to an individual or an entity, including a
corporation, limited liability company, unlimited liability company,
partnership, limited partnership, joint venture, trust, trustee, executor,
administrator or other legal representative, syndicate, association,
Governmental Body or any other body with legal personality separate from its
equityholders or members.
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"Proceeding" means any action, arbitration, audit, examination,
investigation, determination of appeal or assessment inquiry, hearing,
litigation, prosecution or suit (whether civil, criminal, administrative,
judicial or investigative, whether formal or informal, and whether public or
private) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Programs" is defined in Section 3.26(a).
"PST" is defined in Section 2.9.
"Purchase Price" is defined in Section 2.4(a).
"Registration Rights Agreement" means the registration rights
agreement in respect of the Shares.
"Related Person" has the meaning given in the ITA.
"Representative" means, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, legal counsel,
accountant, or other representative of that Person.
"Retained Liabilities" means all Liabilities of Sellers other
than the Assumed Liabilities.
"Sellers" is defined in the first paragraph of this Agreement.
"Seller Contract" means any Contract identified on Schedule
2.1(e), and any other Contract:
(a) under which any of Sellers has or may acquire rights;
(b) under which any of Sellers is or may become subject to any
Liability; or
(c) by which any of Sellers or any of the Assets is or may become
bound.
"Shares" is defined in Section 2.4(b)(ii).
"Subsidiary" has the meaning given in the OBCA.
"Taxes" includes any taxes, duties, fees, premiums, assessments,
imposts, levies and other charges of any kind whatsoever imposed by any
Governmental Body, including all interest, penalties, fines, additions to tax or
other additional amounts imposed in respect thereof, including Transfer Taxes
and those taxes levied on, or measured by, or referred to as, income, gross
receipts, profits, capital, transfer, land transfer, sales, goods and services,
harmonized sales, use, value-added, excise, stamp, withholding, business,
franchising, property, payroll, employment, health, employer health, social
services, education and social security taxes, all surtaxes, all customs duties
and import and export taxes, all licence, franchise and registration
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fees and all employment insurance, health insurance and Canada, Quebec and other
government pension plan premiums or contributions;
"Termination" is defined in Section 7.1(a)(iii)(C).
"Termination Costs" is defined in Section 7.1(a)(iii)(C).
"Third Party Liability" is defined in Section 11.8.
"Threatened" -- an action or matter would be considered to have
been "Threatened" if a demand or statement has been made (whether orally or in
writing) or a notice has been given (whether orally or in writing), or any other
event has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such action or matter is likely to be asserted,
commenced, taken or otherwise pursued in the future.
"Trade Secrets" means all know-how, trade secrets, confidential
or proprietary information, customer lists, software, technical information,
industrial designs, data, process technology, plans, drawings and blue prints.
"Transfer Taxes" means all federal, provincial, state,
territorial, aboriginal, municipal, local, foreign, and other taxes, imposts,
rates, surtaxes, charges, fees, duties (including customs duties), levies,
tolls, premiums, contributions or other assessments imposed, assessed, or
charged in respect of the transfer, sale, conveyance, consumption, use, import,
export, or registration thereof, of property, including, without limiting the
generality of the foregoing, ad valorem, turnover, real and personal property
(tangible and intangible), sales, retail sales, consumption, use, VAT, goods and
services, commodity, harmonized, health, education, social service, franchise,
excise, stamp, leasing, lease, and transfer taxes imposed by any Governmental
Body, and including any such taxes required to be collected, withheld or
remitted, and including any interest, fines, penalties or additions to tax
attributable thereto and including any penalties or fines for failing to
collect, withhold, deduct or remit such taxes, and any installments or payments
payable in respect thereof.
"Union" means any labour or trade organization or association of
employees that has as one of its purposes the regulation of relations between
employers and employees through collective bargaining, or any other
representative of employees.
"VAT" means value added tax, including the value added tax
established pursuant to the Value Added Tax Xxx 0000 (UK).
1.3 SCHEDULES AND EXHIBITS
The Schedules and Exhibits to this Agreement, as listed below,
are an integral part of this Agreement:
Schedule 2.1(a) Leased Real Property
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Schedule 2.1(b) Other Tangible Assets
Schedule 2.1(c) Inventories
Schedule 2.1(e) Contracts
Schedule 2.2(b) Excluded Assets
Schedule 2.3 Assumed Liabilities
Schedule 2.6(a)(iii) Designated Employees
Schedule 2.6(a)(xiv) Secured Creditors to Release Security on Closing
Schedule 2.11 Allocation of Purchase Price
Schedule 3.3(a) Governmental Authorizations
Schedule 3.6 Accounts Receivable
Schedule 3.8 Liabilities of Sellers
Schedule 3.10 No Material Change
Schedule 3.11(b) Description of Real Property Leases
Schedule 3.11(c) Encumbrances
Schedule 3.13(a) Seller Contracts
Schedule 3.13(b) Contracts Requiring Consent to Assign
Schedule 3.14 20 largest customers; 10 largest suppliers; Material
Change in Relationships; Warranties
Schedule 3.15 Insurance Policies; Insurance Claims
Schedule 3.17(a)(i) Employee Benefit Plans
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Schedule 3.17(a)(ii) Financial Cost of Employee Benefit Plans
Schedule 3.17(c) Employee Benefit Plan Matters
Schedule 3.18(a) Employee List
Schedule 3.18(e) Employee Matters
Schedule 3.19(a) Legal Requirements; Governmental Authorizations
Schedule 3.19(b) Permits
Schedule 3.20(b) Orders to which Sellers are subject
Schedule 3.20(c) Proceedings
Schedule 3.21 Interest of Related Persons
Schedule 3.22 Brokers fees and finder fees
Schedule 3.25(b) Seller Contracts in respect of Intellectual Property
Schedule 3.25(c) Encumbrances on Intellectual Property
Schedule 3.25(e) Marks
Schedule 3.25(f) Copyrights
Schedule 3.25(h) Net Names
Schedule 3.26 Programs
Schedule 3.26(b) Contracts in respect of Programs
Schedule 3.26(c) Contracts in respect of Embedded Products
Schedule 3.26(d) Software Authors
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ARTICLE 2
SALE AND TRANSFER OF ASSETS; CLOSING
2.1 ASSETS
Upon and subject to the terms and conditions of this Agreement,
at the Closing, Sellers will sell, convey, assign, transfer and deliver to
Buyer, and Buyer will purchase from Sellers, all of the right, title, benefit
and interest of Sellers in and to all of Sellers' assets relating to the
Business (the "Assets"), including but not limited to Sellers' right, title and
interest in and to:
(a) the real property leased to Sellers and listed in Schedule
2.1(a);
(b) all other tangible assets of Sellers, whether owned, leased or
rented, including, without limitation, all equipment, furniture,
fixtures, computer hardware and equipment, furnishings and
vehicles, all as more specifically set out in Schedule 2.1(b);
(c) all inventories of Sellers, all as more specifically set out in
Schedule 2.1(c);
(d) all accounts receivable (whether or not billed as of the Closing
Date), refunds, notes, evidences of indebtedness, credits,
claims, debts and obligations of any kind due and owing to
Sellers as of the Closing Date relating to the Business, save and
except any tax refunds owing to Sellers in respect of the
Business in respect of any reporting period of Sellers ending on
or before the Closing Date;
(e) those Contracts listed in Schedule 2.1(e);
(f) all customer and vendor lists of Sellers, all files and documents
required in connection with the ongoing administration and
operation of the Business including, without limitation, customer
information, current and historical referral lists, credit
information on customers and vendors, and certain other business
and financial records, files, accounts, books and documents
relating to the Business;
(g) the sole and exclusive use of all Permits owned, held, used, or
otherwise possessed relating to the Business;
(h) the exclusive use of the telephone numbers of Sellers, as
applicable, and all intangible personal property rights and
goodwill of Sellers relating exclusively to the Business,
including, without limitation, the right to use the name
"Bulldog", and all trade names and applications therefor;
(i) all prepayments and prepaid expenses made for the benefit of the
Business;
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(j) all sales, advertising, promotion and selling literature and
materials;
(k) all Intellectual Property; and
(l) all other assets, rights, rights of set-off, properties and
interests used in the Business which are owned or held by
Sellers, other than the Excluded Assets.
2.2 EXCLUDED ASSETS
The Assets do not include the following assets (the "Excluded
Assets"):
(a) any right or claim to refund of any taxes, including without
limitation GST/HST, VAT or benefits under any insurance policies
with respect to the Assets or the operation of the Business
relating to any periods prior to the Closing Date (whether any
such refund or benefit is received prior to or after the Closing
Date);
(b) those assets more particularly described and listed on Schedule
2.2(b).; and
(c) cash on hand, cash on deposit, cash equivalents, certificates of
deposit and marketable securities held by Sellers.
2.3 ASSUMED LIABILITIES
Except as expressly set forth in this Agreement, Buyer shall not
assume or be liable for any Liability of any of Sellers. From the Closing, Buyer
will assume and agrees to discharge the following Liabilities (the "Assumed
Liabilities"):
(a) all Liabilities of the Sellers arising following Closing and
relating to the Contracts listed in Schedule 2.1(e);
(b) those Liabilities set out specifically on Schedule 2.3; and
(c) those Liabilities arising following Closing in favour of the
Assumed Employees, as specifically set out in Section 7.1.
2.4 PURCHASE PRICE
(a) The aggregate consideration payable by Buyer to Sellers for the
Assets (the "Purchase Price") will be $11.5 million.
(b) The payment of the Purchase Price will be satisfied by Buyer as
follows:
(i) the payment to Sellers, on Closing, the aggregate sum of
$2,000,000 (the "Cash Payment"), as directed in writing by
Sellers;
(ii) the delivery to Sellers, on Closing and as directed by
Sellers, an aggregate number of shares (the "Shares") of
Common Stock of Documentum, Inc. (the "Documentum Stock")
equivalent in number to $6,850,000 divided
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by the average per share trading price, on NASDAQ, of
Documentum Stock for the 10 trading days ending 2 days
before the Closing Date;
(iii) the delivery to the Escrow Agent, on Closing, of shares
(the "Escrowed Shares") of Documentum Stock equivalent in
number to $1,150,000 divided by the average per share
trading price, on NASDAQ, of Documentum Stock for the 10
trading days ending 2 days before the Closing Date; and
(iv) the assumption of the Assumed Liabilities, which shall be
approximately $1,500,000.
2.5 CLOSING
The Closing will take place at the offices of Xxxxx & XxXxxxxx (Toronto)
at Suite 2100, BCE Place, 000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxx, or by telephone and
fax if Buyer and Seller so agree, commencing at 10:00 a.m. (local time) on
December 5, 2001 (the "Closing Date"), unless Buyer and Sellers agree otherwise.
2.6 CLOSING OBLIGATIONS AND DELIVERIES
At the Closing:
(a) Sellers will deliver to Buyer:
(i) a general conveyance, executed by Sellers, for all of the
Assets;
(ii) an assignment and assumption agreement in respect of the
Contracts set out in Schedule 2.1(e), executed by Sellers,
together with any Consent required for the assignment of
such Contracts;
(iii) the Employment Agreements, executed by the Designated
Employees;
(iv) the Non-Competition Agreement, executed by Sellers and by
each of Xxxxx Xxxxxxxx, Xxxx Xxxxxx and XX Xxxx;
(v) the Escrow Agreement, executed by Sellers;
(vi) the Registration Rights Agreement, executed by Sellers;
(vii) a certificate executed by a senior officer of each of
Sellers in respect of the accuracy of Sellers'
representations and warranties as at the date of this
Agreement and as of the Closing Date in accordance with
Section 8.1;
(viii) a certificate executed by a senior officer of each of
Sellers in respect of the performance of and compliance
with Sellers' covenants in accordance with Section 8.2;
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(ix) certificates of status with respect to each of Sellers
certified by the corporate registrars in each
jurisdiction in which the conduct of its business or the
ownership or leasing of assets requires it to be
qualified to do business in such jurisdiction, in each
case as of a date not more than ten (10) days prior to
the Closing Date;
(x) a certificate executed by a senior officer of each of
Sellers attaching a true and complete copy of each of the
following:
(A) its constating documents; and
(B) a resolution of that party, the form and substance
of which are satisfactory to Buyer, authorizing the
execution, delivery and performance of this
Agreement and all Ancillary Agreements and the
consummation of the Contemplated Transactions;
(xi) the purchase certificate referred to in Section
7.1(a)(vi);
(xii) a duplicate copy of an order from an Ontario court of
competent jurisdiction, in form and content satisfactory
to Buyer, which order shall waive the application of the
Bulk Sales Act (Ontario), R.S.O. 1990, c.B-14, to the
Contemplated Transactions; and
(xiii) The Provincial Sales Tax clearance certificates referred
to in Section 2.10;
(xiv) A release in respect of the security held in favour of
each of those secured creditors listed in Schedule
2.6(a)(xiv) in respect of the assets of any of the
Sellers, signed by the respective secured creditor,
together with evidence of the discharge of any
registrations of such security interest pursuant to
applicable laws;
(xv) An acknowledgement, in form and content satisfactory to
Buyer, in respect of (a) the aggregate amount owed by
Sellers in favour of SPE Bulldog Holdings Inc. or any
Affiliate thereof; (b) the specific security over the
assets of Seller in favour of SPE Bulldog Holdings Inc.
or any Affiliate thereof; together with an undertaking to
discharge such security upon repayment of the amount set
forth in (i) by Buyer;
(xvi) separate assignments of all registered Intellectual
Property in registrable form, each in form and substance
satisfactory to Buyer, executed by Sellers;
(xvii) separate assignments of all registered Intellectual
Property in registrable form, currently held by SPE
Bulldog Holdings Inc., executed by SPE Bulldog Holdings
Inc.; and
(xviii) an undertaking by SPE Bulldog Holdings Inc. to change its
corporate
15
name to a name that does not include the word "Bulldog";
(xix) physical delivery of all tangible personal property that
constitutes the Assets, including such physical evidence
of the Intellectual Property as any of the Sellers
possesses, as Buyer may direct;
(b) Buyer will deliver to Sellers:
(i) the Cash Payment;
(ii) the Shares;
(iii) a certificate executed by a senior officer of Buyer in
respect of the accuracy of Buyer's representations and
warranties as of the date of this Agreement and as of the
Closing Date in accordance with Section 9.1;
(iv) a certificate executed by a senior officer of Buyer in
respect of the performance of and compliance with Buyer's
covenants in accordance with Section 9.2;
(v) the Non-Competition Agreement, executed by Buyer;
(vi) the Escrow Agreement, executed by Buyer;
(vii) the Registration Rights Agreement, executed by Documentum,
Inc.;
(viii) a certificate of status with respect to Buyer certified by
the Nova Scotia Registrar as of a date not more than ten
(10) days prior to the Closing Date; and
(ix) a certificate executed by a senior officer of Buyer
attaching a true and complete copy of each of the
following:
(A) the memorandum and articles of association of
Buyer; and
(B) a resolution of Buyer approving of the execution,
delivery and performance of this Agreement and all
Ancillary Agreements and the consummation of the
Contemplated Transactions;
(x) a certificate executed by a senior officer of Documentum,
Inc. attaching a true and complete copy of the articles
and by-laws of Documentum, Inc.; and
(c) Buyer will deliver the Escrowed Shares to the Escrow Agent.
16
2.7 TRANSFER TAX MATTERS
The Purchase Price is exclusive of all applicable Transfer Taxes.
Upon identification by the parties of those Transfer Taxes applicable to the
Contemplated Transactions, each party will do such acts and things as each may
reasonably request for the purpose of paying and remitting any applicable
Transfer Taxes to the applicable Governmental Body or Governmental Bodies.
2.8 CANADIAN GOODS AND SERVICES TAX/HARMONIZED SALES TAX
Buyer will, on or before the 29th day of the calendar month immediately
following the calendar month of the Closing Date, deliver to Bulldog, by cheque
payable to the Receiver General of Canada, all applicable GST/HST payable under
Division II of Part IX of the ETA and that is required to be collected under
section 221 of the ETA from Buyer in respect of the sale and purchase of the
Assets. In this regard, Sellers represent and warrants to Buyer (a) Bulldog and
Empower are each registered under Subdivision d of Division V of Part IX of the
ETA and that Bulldog's GST/HST registration number is 130886799 RT 0001 and (b)
Empower's GST/HST registration number is 13564 5786 RT0001. Buyer represents to
Sellers that Buyer is registered under Subdivision d of Division V of Part IX of
the ETA and that Buyer's GST/HST registration number is 872802715 RT 0001.
2.9 PROVINCIAL SALES AND USE TAXES
The Purchase Price is exclusive of all applicable Canadian
provincial sales, use, and consumption taxes (collectively "PST") payable in
connection with the sale and transfer of the Assets. Buyer will pay any
applicable PST directly to the appropriate provincial tax authorities within the
time prescribed by law for the payment of such tax.
2.10 PROVINCIAL SALES AND USE TAX CLEARANCE CERTIFICATES
On or before Closing, Sellers will deliver to Buyer a duplicate
copy of a Provincial Sales Tax Clearance Certificate from every province that
imposes a sales, use, or consumption tax of general application and in which any
of Sellers holds assets or does business. Each clearance certificate will cover
all periods up to the Closing Date.
2.11 ALLOCATIONS/PRORATION
The Purchase Price under this Agreement will be allocated in accordance
with Schedule 2.11. After the Closing, Buyer and Sellers will make consistent
use of the allocation specified in Schedule 2.11 for all tax purposes and in any
and all filings, declarations and reports. Neither Buyer nor Sellers will
contend or represent that such allocation is not a correct allocation. All fees,
taxes, charges and like items not expressly addressed in this Agreement will be
prorated as of the Closing Date.
2.12 CONSENT TO ASSIGNMENT
To the extent that the assignment of any Seller Contract requires the
Consent of another person, this Agreement will not constitute an agreement to
assign such Seller Contract if an
17
attempted assignment would constitute a breach thereof. Sellers will use
commercially reasonable efforts to obtain any required Consents to the
assignment of each Seller Contract. If a required Consent to the assignment of a
Seller Contract is not obtained, then to the extent permitted by Legal
Requirements and, if Buyer so requests, Sellers will cooperate with Buyer to
provide for Buyer the benefits under such contract, including enforcement, at
the cost of and for the benefit of Buyer, of any and all rights of Sellers
against any other party.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated herein, Sellers jointly and severally represent
and warrant to Buyer as follows and acknowledges that Buyer is relying upon such
representations and warranties in connection with the consummation by Buyer of
the Contemplated Transactions:
3.1 ORGANIZATION
Each of Sellers is a corporation duly incorporated, organized and
validly existing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct the Business as it is now being
conducted, to own and use the Assets, and to perform all its obligations under
all applicable Seller Contracts. Each of Sellers is duly registered to conduct
business in each jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such registration. No Seller except Bulldog and Empower carries on
business in Canada. Bulldog and Empower carry on business and hold assets only
in the Province of Ontario.
3.2 ENFORCEABILITY; NO CONFLICT
Each of Sellers has all requisite legal and corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party and to consummate and perform the Contemplated Transactions,
each of which actions has been duly authorized and approved by all necessary
corporate action of such Seller. Assuming due authorization, execution and
delivery by the other parties thereto, this Agreement constitutes, and each
Ancillary Agreement to which each of Sellers is or will be a party will, upon
execution and delivery thereof, constitute, the legal, valid, and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms, save as same may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally to the extent that the remedies of
specific performance and injunction, being equitable remedies, may only be
granted in the discretion of a court of competent jurisdiction.
3.3 NO GOVERNMENTAL AUTHORIZATION OR CONSENTS; NO CONFLICT
(a) Except as set out in Schedule 3.3(a) none of Sellers is or will
be required to give any notice to any Person or obtain any
Consent or Governmental Authorization in connection with the
execution and delivery of this Agreement or of the Ancillary
Agreements or the consummation or performance of any of the
Contemplated
18
Transactions, in particular:
(i) on the assumption that Buyer and its Affiliates have no
assets in Canada and have had no sales in, from or into
Canada during their last completed fiscal year until the
date hereof, notification of the proposed transaction or
any part thereof will not be required pursuant to Part IX
of the Competition Act (Canada), R.S.C. 1985, c.C-34; and
(ii) the proposed transaction is not reviewable (in whole or in
part) under the Investment Canada Act, R.S.C. 1985, c.28
(1st Supplement) .
(b) Neither the execution and delivery of this Agreement by Sellers
nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice
or lapse of time) conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under
or result in the imposition of any form of penalty or prepayment
or require an acceleration of payment pursuant to:
(i) any of Sellers' constating documents, including any
shareholder agreements; or
(ii) any Seller Contract; or
(iii) any Governmental Authorization, Legal Requirement, Permit
or Order to which any of Sellers or any of the Assets may
be subject;
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer the Financial Statements. The
Financial Statements have been prepared in accordance with the books and records
of Sellers and fairly present the financial condition and the results of
operations, changes in shareholders' equity, and cash flow of Sellers as at the
respective dates of, and for the periods referred to in, such Financial
Statements, all in accordance with GAAP, except as otherwise noted in the notes
or schedules, subject in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse). All material assets of Sellers are
reflected in the Interim Balance Sheet. The assets and liabilities of Sellers
are fairly valued in the Interim Balance Sheet, and, except in the Ordinary
Course of Business, their values have not changed significantly between the date
of the Interim Balance Sheet and the date hereof.
3.5 BOOKS AND RECORDS
The books of account and other records of or pertaining to
Sellers, all of which have been made available to Buyer, are complete and
correct in all material respects and have been maintained in accordance with
sound business practices, including the maintenance of an adequate system of
internal controls. Each transaction of each of Sellers is properly and
accurately recorded on the books and records of such Seller, and each document
(including any
19
Contract, invoice, or receipt) on which entries in such Seller's books and
records are based is complete and accurate in all material respects.
3.6 ACCOUNTS RECEIVABLE
All accounts receivable of Sellers that are reflected on the
Interim Balance Sheet and the accounting records of Sellers as of the Closing
Date (collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Schedule 3.6 contains a complete and accurate
list of all Accounts Receivable as of December 4, 2001, which list sets forth
the aging of each such Account Receivable.
3.7 INVENTORY
Sellers do not own or possess any inventory.
3.8 NO UNDISCLOSED LIABILITIES
Except as disclosed in Schedule 3.8, none of Seller has any
Liabilities except for liabilities reflected in the Interim Balance Sheet and
current Liabilities incurred in the Ordinary Course of Business since the date
thereof.
3.9 NO MATERIAL ADVERSE EFFECT
Since the date of the Interim Balance Sheet, nothing has had a
Material Adverse Effect on any of Sellers, and no event has occurred or
circumstance exists that may result in such a Material Adverse Effect.
3.10 ABSENCE OF CERTAIN CHANGES AND EVENTS
Other than as disclosed in Schedule 3.10, since the date of the Interim
Balance Sheet, each of Sellers has conducted its business only in the Ordinary
Course of Business and there has not been any:
(a) Payment (except in the Ordinary Course of Business) or increase
by such Seller of any bonuses, salaries, or other compensation to
any director, officer or Employee, or entry into any employment,
severance, or any similar Contract with any director, officer or
Employee;
(b) adoption of, amendment to, or increase in the payments to or
benefits under, any Employee Benefit Plan;
(c) damage to or destruction or loss of any asset or property of such
Seller, whether or not covered by insurance, which may have a
Material Adverse Effect on such Seller;
(d) entry into, termination of or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative,
joint venture, credit, guarantee or
20
similar Seller Contract, or (ii) any Seller Contract or
transaction involving a total remaining commitment by or to
Seller of at least $10,000;
(e) sale (other than sales in the Ordinary Course of Business), lease
or other disposition of any asset or property of such Seller or
the creation of any Encumbrance on any material asset of such
Seller;
(f) cancellation or waiver of any Claims or rights with a value to
Seller in excess of $10,000;
(g) material change in the accounting methods used by such Seller;
(h) purchase of or agreement to purchase any additional assets
(including shares of any corporation) by such Seller at a cost of
greater than $10,000 in any one instance;
(i) sale (other than sales of inventory in the Ordinary Course of
Business), lease or other disposition of any Intellectual
Property necessary to the Business, or the creation of any
Encumbrance on any Intellectual Property owned, held or used by
such Seller;
(j) action taken by such Seller or any of its directors, officers or
shareholders to authorize any of the foregoing actions; or
(k) Contract entered into by such Seller to do any of the foregoing.
3.11 PROPERTIES AND ASSETS
(a) None of Sellers owns any real property.
(b) Schedule 3.11(b) contains an accurate description (by location,
name of lessor, date of lease, and term expiration date) of all
leases of real property to which each of Sellers is a party.
(c) Except as set out in Schedule 3.11(c), Sellers own good and
transferable title to all of the Assets free and clear of any
Encumbrances.
3.12 CONDITION AND SUFFICIENCY OF TANGIBLE ASSETS
Each item of tangible personal property of each of Sellers is in
good operating condition and repair, ordinary wear and tear excepted, is free
from latent and patent defects and is suitable for immediate use in the Ordinary
Course of Business. None of Sellers owns or leases any assets (a) not used in
the Business, or (b) presently used in the Business but the use of which is made
available to other Persons for matters unrelated to the Business.
3.13 CONTRACTS; NO DEFAULTS
(a) Schedule 3.13(a) contains a complete and accurate list, and
Sellers have delivered
21
to Buyer true and complete copies, of:
(i) each Seller Contract that involves performance of services or
delivery of goods or materials by one of Sellers of an amount or
value in excess of $10,000;
(ii) each Seller Contract that involves the borrowing of money by one
of Sellers whether secured or otherwise;
(iii) each Seller Contract that involves performance of services or
delivery of goods or materials to one of Sellers of an amount or
value in excess of $10,000;
(iv) each Seller Contract that was not entered into in the Ordinary
Course of Business and that involves the expenditure or receipt
by one of Seller of an amount or value in excess of $10,000;
(v) each Seller Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any real
or personal property;
(vi) any letters of credit outstanding at the date hereof;
(vii) each Seller Contract (however named) involving a sharing of
profits, losses, costs, or Liabilities by one of Sellers with any
other Person;
(viii) each Seller Contract containing covenants that in any way purport
to restrict the business activity of one of Sellers or limit the
freedom of one of Sellers to engage in any line of business or to
compete with any Person;
(ix) each Seller Contract providing for payments to or by any Person
based on or determined by reference to sales, purchases, or
profits, other than direct payments for goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Seller Contract entered into other than in the Ordinary
Course of Business that contains or provides for an express
undertaking by one of Sellers to be responsible for consequential
damages;
(xii) each Seller Contract for capital expenditures in excess of
$10,000;
(xiii) each written warranty, guarantee, and or other similar
undertaking with respect to contractual performance extended by
one of Sellers other than in the Ordinary Course of Business; and
(xiv) each Seller Contract with any Affiliate or related party.
The information set out in Schedule 3.13(a) includes, for each
Contract, (a) the
22
parties thereto; (b) the date and expiration date thereof; and
(c) Sellers' remaining obligations thereunder.
(b) Each Seller Contract is in full force and effect, is valid and
enforceable in accordance with its terms, and, except as set
forth in Schedule 3.13(b), is assignable by one of Sellers to
Buyer without the Consent of any other Person. Sellers have not
Contravened any of the applicable terms and requirements of such
Contracts, and none of Sellers has any knowledge of any
Contravention of any Seller Contract by the other parties
thereto.
(c) Other that in respect of the current negotiation of an end-user
agreement with Xxxxx New Media, there are no renegotiations of,
attempts to renegotiate, or outstanding rights to renegotiate any
Seller Contracts and no one has made written demand for such
renegotiations. None of Sellers has any knowledge that any party
to a Seller Contract does not intend to renew it.
(d) None of Sellers has entered into any speculative Contracts (such
as hedging or future Contacts) out of the Ordinary Course of
Business.
3.14 CUSTOMERS AND SUPPLIERS
Schedule 3.14 lists (a) the names and addresses of the 20 largest
customers and the 10 largest suppliers (measured in each case by dollar volume
of purchases or sales during the fiscal period ended October 31, 2001) of
Sellers; and (b) the dollar amount of purchases or sales which each such
customer or supplier represented during the year ended December 31, 2000. Except
as disclosed in Schedule 3.14, there exists no actual, and none of Sellers has
any Knowledge of any Threatened, termination, cancellation or material
limitation of, or any material change in, the business relationship of Sellers
with any customer, supplier, group of customers or group of suppliers listed in
Schedule 3.14. None of Sellers has made any material oral or written
representations or warranties with respect to its products or services. No
customer of Sellers has any right to any credit or refund for products sold or
services rendered or to be rendered by Sellers pursuant to any Contract,
understanding or practice of any of Sellers other than pursuant to the normal
course return policy of Sellers described in Schedule 3.14. No material purchase
commitments by any of Sellers (of either products or services) are in excess of
ordinary business requirements or at a price in excess of market price at the
date such contract was made. There are no purchase commitments that provide that
any supplier will be the exclusive supplier of any of Sellers and there are no
purchase commitments except as written and recorded on the books of any of
Sellers.
3.15 INSURANCE
Sellers maintain in full force and effect insurance policies
covering Sellers' insurable business risks and Liabilities in adequate amounts
to provide reasonable protection for the business of and the properties owned
and used by Sellers and for their respective directors and officers including
product liability insurance. Schedule 3.15 contains: (a) a list and brief
description of each such policy, including the policy number, coverage, name and
address of the insurance carrier, principal amount or limit, annual premium,
date of expiration, and loss
23
experience for the current and preceding policy year; and (b) a description of
any self-insured retention, retrospective premium program, captive insurance
program, and insurance-type reserves. Sellers have complied with each such
policy and program and have not failed to give any notice or present any Claim
thereunder in a due and timely manner which failure would reasonably be expected
to result in a loss or forfeiture of any material right thereunder. Schedule
3.15 also contains a description of all material insurance Claims made by or on
behalf of any of Sellers in the three years prior to the date hereof.
3.16 TAXES
(a) No failure, if any, of any Seller to duly and timely pay all
Taxes, including installments on account of Taxes for the current
year that are due and payable by it, will result in an
Encumbrance on the Assets or any Liability to Buyer.
(b) There are no actions, suits, proceedings, investigations, audits
or claims now pending or, to the knowledge of any Seller,
Threatened against the Seller in respect of any Taxes and there
are no matters under discussion, audit or appeal with any
Governmental Body relating to Taxes, which will result in an
Encumbrance on the Assets or any Liability to Buyer.
(c) Each of the Sellers has duly and timely withheld from any amount
paid or credited by it to or for the account or benefit of any
Person, including any Employees, officers or directors and any
non-resident Person, the amount of all Taxes and other deductions
required by any laws to be withheld from any amount and has duly
and timely remitted the same to the appropriate Governmental
Body.
(d) Bulldog and Empower are not non-resident persons within the
meaning of section 116 of the ITA.
(e) Sellers have filed all Tax returns required by applicable laws to
be filed up to and including the date of this Agreement other
than the May 31, 2001 Canadian income tax return for Bulldog.
(f) There are no Tax liens (other than for taxes not yet due and
payable) upon the Assets, nor are the Assets subject to any trust
arising under applicable laws.
(g) Bulldog US and Bulldog UK are non-resident persons within the
meaning of section 116 of the ITA.
3.17 EMPLOYEE BENEFITS
(a) Schedule 3.17(a)(i) contains a complete and accurate list of all
Employee Benefit Plans. There exists no undertaking or
commitment, whether legally binding or not, to create any
additional Employee Benefit Plan or to change any existing
Employee Benefit Plan. Schedule 3.17(a)(ii) sets forth the
financial cost of all obligations owed under any Employee Benefit
Plan that is not subject to the
24
disclosure and reporting requirements of any Legal Requirement.
(b) Sellers have delivered to Buyer:
(i) all documents that set forth the terms of each Employee
Benefit Plan and of any related trust, including all
summary plan descriptions, summaries and descriptions
furnished to participants and beneficiaries;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) a written description of any Employee Benefit Plan that is
not otherwise in writing;
(iv) all annual information returns and financial statements
filed with respect to all Employee Benefit Plans;
(v) all reports prepared or filed in the three years prior to
the date hereof by any of Sellers or any third-party
administrators, actuaries, investment managers, trustees,
consultants, or other independent contractors with respect
to any Employee Benefit Plan;
(vi) all notices that were given by any of Sellers with respect
to any Employee Benefit Plan to any Governmental Body or
any participant or beneficiary, pursuant to statute, in
the three years prior to the date hereof, including
notices that are expressly mentioned elsewhere in this
Section;
(vii) all notices that were given by any Governmental Body to
any of Sellers in relation to any Employee Benefit Plan in
the three years prior to the date hereof;
(viii) all trust agreements, insurance contracts or policies or
other funding or related agreements in relation to each
Employee Benefit Plan; and
(ix) all advance income tax rulings, professional opinions, and
material correspondence, including without limitation,
correspondence of any Governmental Body and internal
memoranda, relating to the Employee Benefit Plans.
(c) Except as disclosed in Schedule 3.17(c):
(i) Seller has performed all of its obligations under all
Employee Benefit Plans. Seller has made appropriate
entries in its financial records and statements for all
obligations and liabilities under the Employee Benefit
Plans that have accrued but are not due.
(ii) Each of Sellers is, and each Employee Benefit Plan is, in
compliance with all applicable Legal Requirements relating
to the Employee Benefit Plans. No fact or circumstance
exists that could adversely affect the tax-exempt
25
status of any Employee Benefit Plan.
(iii) There have been no improper withdrawals, applications or
transfers of assets from any Employee Benefit Plan or the
trust or other funding media related thereto.
(iv) Neither Sellers nor any Representative of Sellers, has
taken any action or failed to take any action, that could
subject any of them to Liability for breach of any
statutory or fiduciary duty relating to any Employee
Benefit Plan.
(v) All contributions, premiums or other amounts required to
be paid or provided by any Person to or under each
Employee Benefit Plan have been duly made in accordance
with the terms of the Employee Benefit Plans and all
applicable Legal Requirements and are deductible under
applicable tax legislation.
(vi) No act or event has occurred or circumstance exists that
may result in (A) a material increase in premium costs of
Employee Benefit Plans that are insured, or (B) a material
increase in benefit costs of Employee Benefit Plans that
are self-insured.
(vii) Other than routine claims for benefits, there is no Claim
against, or Proceeding involving, any Employee Benefit
Plan that is pending or that, to any of Sellers'
Knowledge, is Threatened.
(viii) Each of the Employee Benefit Plans is fully funded or
fully insured and no unfunded liability or other deficit
exists thereunder.
(ix) None of the Employee Benefit Plans is a multi-employer
pension plan as defined in applicable Legal Requirement.
(x) Seller provides no health or other benefits for any
retired or former Employee nor is it obligated to provide
health or other benefits to any active Employee following
such Employee's retirement or other termination of
service, or to the beneficiaries or dependents of former
Employees.
(xi) The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any
Employee benefit and does not require any notification to
be given to any Governmental Body.
3.18 EMPLOYMENT LAW MATTERS
(a) Set forth in Schedule 3.18(a) are the names and titles of all
Employees who perform services on a full or part time basis and
who are currently actively or inactively employed by any of
Sellers, together with particulars of their
26
compensation (including salary, bonuses, commissions, or any
incentive payments), positions held, location of employment, age
and start date with such Seller, whether such Employee has
entered into an employment Contract with one of Sellers, and
whether such Employee is (a) absent on a leave of absence; or (b)
absent and in receipt of workers' compensation, workplace safety
and insurance, or disability benefits. Where such Employee has
entered into an employment contract with such Seller, a true copy
has been provided to Buyer. All of the written Contracts with
Employees are in compliance with applicable Employment Laws.
There are no Contracts with any Employee which are not terminable
by one of Sellers upon providing that period of notice (or at
such Seller's option, pay in lieu of notice) required by the
applicable labour or employment standards legislation or by
providing reasonable notice at common law.
(b) There are no written Seller Contracts with any agents,
consultants, independent contractors or outside vendors.
(c) Each of Sellers is currently in compliance with all of the
employment Contracts referred to in Section 3.18(a).
(d) None of Sellers is a party to or bound by any Collective
Agreement. No Union claims to represent the Employees or has been
certified as bargaining agent for them. None of the Employees is
represented by any Union and none of Sellers has any Knowledge of
any current Union organizing activities among the Employees.
There are no outstanding or, to the Knowledge of Sellers,
Threatened applications for certification or any other
proceedings in which a Union is claiming or seeking exclusive
authority to bargain collectively for any Employees, nor has
there ever been any such activities. Neither Sellers nor any
Representative of Sellers, have received or sent a notice to
commence collective bargaining for the purposes of bargaining a
Collective Agreement or revision or renewal of same, nor has any
of them agreed to conduct collective bargaining with any Union
representing any of the Employees.
(e) Except as disclosed in Schedule 3.18(e):
(i) no employee of Bulldog or Empower is employed outside the
Province of Ontario;
(ii) no Employee is on permanent or temporary lay off, leave of
absence for any reason, jury duty or off work receiving
workers' compensation benefits or insurance, short term
disability or long term disability benefits;
(iii) no Employee is entitled to any special consideration under
any agreement with any of Sellers;
(iv) each of Sellers has at all times been in material
compliance with its obligations under all Employment Laws
and Occupational Health and Safety Laws. None of Sellers
is liable for any assessments, penalties or
27
other sums for failure to comply with any Employment Laws
or any Occupational Health and Safety Laws;
(v) there are no Claims, outstanding, pending or, to any of
Sellers' Knowledge, Threatened against such Seller under
any Employment Laws, nor have there been any Claims filed
under any Employment Law for three years prior to the date
of this Agreement;
(vi) none of Sellers has received notice of the intent of any
Governmental Body responsible for the enforcement of any
Employment Laws to conduct an investigation with respect
to or relating to such Seller, and no such investigation
is in progress;
(vii) to Sellers' Knowledge, no Employee or former Employee has
suffered any illness, disease, injury or death as a result
of his or her employment by one of Sellers;
(viii) all current employer contributions, assessments and
filings, including but not limited to, experience rating
surcharges and Workwell surcharges, payroll premiums,
non-compliance charges, contributions or any other amounts
under the Workplace Safety and Insurance Act, 1997
(Ontario), S.O. 1977, c.16, Sched. A, or similar
Employment Laws, have been paid by one of Sellers. None of
Sellers has been subject to any special or penalty
assessment or surcharge, including but not limited to,
experience rating surcharges and Workwell surcharges under
such legislation;
(ix) none of Sellers has liability of any kind to any Employee
or former Employee, except for compensation or
remuneration and benefits payable to such Employee or
former Employee, or to which such Employee or former
Employee may be entitled, in the Ordinary Course of
Business. There are no outstanding loans or advances made
or granted by any of Sellers to any Employee or former
Employee;
(x) the consummation of the transactions contemplated by this
Agreement will not cause or result in the termination of
employment of any Employee and will not entitle any
Employee to pay in lieu of notice of termination,
termination pay, severance pay, retiring allowance,
retirement benefit or any other payment under any written
or oral agreement with any of Sellers;
(xi) all obligations of each of Sellers, whether arising by
operation of law, Contract, past custom or otherwise, for
wages, salaries, remuneration, compensation, bonuses,
commissions, vacation and holiday pay, sick pay or leave,
termination or severance pay or pay in lieu of notice of
termination, and any other form of compensation payable to
any Employee or former Employee in respect of the services
rendered by any of them, have been paid; and
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(xii) each of Sellers has withheld all amounts required by law
to be withheld from payments made by them with respect to
any Employee or former Employee, including those with
respect to tax withholdings, Canada and Quebec Pension
Plan contributions and Unemployment or Employment
Insurance premiums and remittances, and has remitted such
amounts to the appropriate Governmental Bodies within the
times required by law.
(f) To any of Sellers' Knowledge, no Employee or director of any of
Sellers is a party to, or is otherwise bound by, any Contract,
including any confidentiality, noncompetition, or proprietary
rights agreement, between such Employee or director and any other
Person that in any way adversely affects or will affect (i) the
performance of his duties as an Employee or director of any of
Sellers, or (ii) the ability of any of Sellers to conduct its
business, including any such agreements between such Seller and
any such Employee or director. To any of Sellers' Knowledge, no
Designated Employee or group of Employees intends to terminate
his or their employment with any of Sellers.
(g) Sellers have delivered to Buyer true and correct copies of any
written personnel policies, rules or procedures applicable to the
Employees.
3.19 LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as disclosed in Schedule 3.19(a):
(i) Each of Sellers is, and at all times during the three year
period prior to the date hereof has been, in compliance
with each Legal Requirement that is or was applicable to
it or to the conduct or operation of the Business or the
ownership or use of the Assets.
(ii) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may cause any of Sellers
to Contravene any Legal Requirement or may give rise to
any obligation on the part of such Seller to undertake, or
to bear all or any portion of the cost of, any remedial
action of any nature.
(iii) Neither Sellers nor Sellers' Representatives have
received, at any time in the three year period prior to
the date hereof, any notice or other communication
(whether oral or written) from any Governmental Body or
any other Person regarding any actual, alleged, possible,
or potential Contravention of any Legal Requirement by any
of Sellers or any actual, alleged, possible, or potential
obligation on the part of any of Sellers to undertake, or
to bear all or any portion of the cost of, any remedial
action of any nature.
(b) Schedule 3.19(b) contains a complete and accurate list of each
Permit that is held by each of Sellers or that otherwise relates
to the Business or the Assets, all of which are valid and in full
force and effect and will remain so upon their transfer
29
to Buyer at Closing. Except as disclosed in Schedule
3.19(b):
(i) Each of Sellers is, and at all times in the three years
prior to the date hereof has been, in compliance with all
of the terms and requirements of each such Permit
applicable to it.
(ii) No event has occurred or circumstance exists that may
(with or without notice or lapse of time) constitute or
result directly or indirectly in Contravention of any
Permit.
(iii) None of Sellers has received, at any time in the three (3)
years prior to the date hereof, any notice or other
communication (whether oral or written) from any
Governmental Body or any other Person regarding any
actual, alleged, possible, or potential Contravention of
any Permit by such Seller.
(iv) All applications required to have been filed for the
renewal of such Permits have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all
other filings required to have been made with respect to
such Permits have been duly made on a timely basis with
the appropriate Governmental Bodies.
(v) All such Permits are renewable by their terms or in the
Ordinary Course of Business without the need to comply
with any special qualification procedures or to pay any
amounts other than routine fees or similar charges.
The Permits listed in Schedule 3.19(b) collectively constitute all of the
Permits necessary to permit Sellers to conduct and operate the Business lawfully
in the manner in which they currently conduct and operate the Business and to
permit Sellers to own and use the Assets in the manner in which they currently
own and use the Assets.
3.20 PROCEEDINGS AND ORDERS
(a) There is no pending Proceeding:
(i) by or against any of Sellers or that otherwise relates to
the Business or to any of the Assets; or
(ii) that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To any of Sellers' Knowledge, no such Proceeding has been
Threatened nor is there any reasonable basis for any as yet
unasserted Claim or action.
(b) Schedule 3.20(b) lists each Order to which any of Sellers or any
of the Assets is or has been subject. To any of Sellers'
Knowledge, no officer, director, agent or
30
Employee is subject to any Order that prohibits such officer,
director, agent or Employee from engaging in or continuing any
conduct, activity, or practice relating to the Business.
(c) Except as disclosed in Schedule 3.20(c):
(i) Each of Sellers is, and at all times in the three years
prior to the date hereof has been, in compliance with all
of the terms and requirements of each Order to which it,
or any of the assets owned or used by it, is or has been
subject;
(ii) No event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse
of time) a violation of or failure to comply with any term
or requirement of any Order to which any of Sellers, or
any of the assets owned or used by any of Sellers, is
subject; and
(iii) None of Sellers has received, at any time in the three
years prior to the date hereof, any notice or other
communication (whether oral or written) from any
Governmental Body or any other Person regarding any
actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any
Order to which such Seller, or any of the assets owned or
used by such Seller, is or has been subject.
(d) In the five years prior to the date hereof, no Claims have arisen
or have been alleged to have arisen from any products
manufactured and/or sold or any services provided by any of
Sellers. To any of Sellers' Knowledge no such Claim is
Threatened.
3.21 RELATIONSHIPS WITH RELATED PERSONS
Other than as disclosed in Schedule 3.21, no Related Person of
any of Sellers has any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), of such Seller. Neither Sellers nor
any Related Person of Sellers, owns (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in a Person that has:
(i) had business dealings or a material financial interest in any transaction
with Sellers; or (ii) engaged in competition with any of Sellers with respect to
any line of the products or services of Sellers in any market presently served
by Sellers except for less than 1% of the outstanding capital stock of any
competing business that is publicly traded on any recognized exchange. Other
than as disclosed in Schedule 3.21, no Related Person of Sellers is a party to
any Contract with, or has any claim or right against, any of Sellers. Schedule
3.21 describes all services that a Related Person of Sellers provides to any of
Sellers utilizing either: (i) assets not owned by Sellers; or (ii) persons not
employed by Sellers; and the manner in which the costs of providing such
services have been allocated to Sellers.
3.22 BROKERS OR FINDERS
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Other than as disclosed in Schedule 3.22, neither Sellers nor any
of their Representatives have incurred any Liability for brokerage or finders'
fees or agents' commissions or other similar payment in connection with the
Contemplated Transactions.
3.23 SECURITIES LAW
Each of Sellers is an "accredited investor" within the meaning of
the Ontario Securities Commission Rule 00-000, Xxxxxx Distributions.
3.24 DISCLOSURE
(a) No representation or warranty of any of Sellers in this Agreement
and no statement in the Schedules contains any untrue statement
or omits to state a material fact necessary to make the
statements therein or herein, in light of the circumstances in
which they were made, not misleading.
(b) None of Sellers has Knowledge of any fact that has specific
application to any of Sellers or the Business (other than general
economic or industry conditions) and that could have a Material
Adverse Effect on Sellers or the Business that has not been set
forth in this Agreement.
3.25 INTELLECTUAL PROPERTY
(a) "Intellectual Property" means all intellectual property owned,
used or licensed (as licensor or licensee) by any of Sellers,
including without limitation:
(i) each of Sellers' name and all Marks;
(ii) all Copyrights;
(iii) all Trade Secrets; and
(iv) all Net Names, in each case owned, used or licensed (as
licensor or licensee) by any of Sellers.
(b) Schedule 3.25(b) contains a complete and accurate list and
summary description, including any royalties paid or received by
any of Sellers, and Sellers have delivered to Buyer accurate and
complete copies, of all Seller Contracts relating to the
Intellectual Property, except for any license for Commercial
Software with a value of less than $1,000 under which any of
Sellers is the licensee. There are no outstanding and, to any of
Sellers' Knowledge, no Threatened disputes or disagreements with
respect to any such Seller Contract.
(c) The Intellectual Property constitutes all the intellectual
property necessary for the continued operation of the Business by
Buyer in any material respect after the Closing in the same
manner as operated by Sellers before the Closing. Except as
disclosed in Schedule 3.25(c), one or several of Sellers is the
owner or licensee of all right, title, and interest in and to the
Intellectual Property, free and clear of all
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Encumbrances, and has the absolute right to use all of the
Intellectual Property without payment to a third party, except in
respect of the licenses listed in Schedule 3.25(c). Except as
disclosed in Schedule 3.25(c), all former and current Employees
of Sellers have executed written Contracts with one of Sellers
that;
(i) assign to such Seller all rights to any works of
authorship, inventions, improvements, discoveries, or
information relating to the Business; and
(ii) waive for the benefit of such Seller all moral rights in
any works of authorship relating to the Business,
including but not limited to the right to the integrity of
the work, the right to be associated with the work as its
author by name or under a pseudonym and the right to
remain anonymous.
(d) Patents:
(i) None of Sellers owns, uses or licenses any Patents.
(e) Marks:
(i) Schedule 3.25(e) contains a complete and accurate list and
summary description of all Marks owned, used or licensed
by each of Sellers.
(ii) All Marks owned, used or licensed by any of Sellers that
have been registered are currently in compliance with all
formal legal requirements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees
or taxes or actions falling due within 90 days after the
Closing Date.
(iii) No Xxxx owned, used or licensed by any of Sellers has been
or is now involved in any opposition, invalidation, or
cancellation Proceeding and, to any of Sellers' Knowledge,
no such action is Threatened with respect to any of the
Marks.
(iv) To any of Sellers' Knowledge, there is no potentially
infringing Xxxx of any other Person.
(v) No Xxxx owned, used or licensed by any of Sellers is
infringed or, to such Seller's Knowledge, has been
challenged or Threatened in any way in Canada, the United
States or the United Kingdom. None of the Marks owned,
used or licensed by any of Sellers infringes or is alleged
to infringe any Xxxx of any other Person in Canada, the
United States or the United Kingdom.
(vi) All products and materials containing a Xxxx xxxx the
proper registration notice where required by law.
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(f) Copyrights:
(vii) Schedule 3.25(f) contains a complete and accurate list and
summary description of all Copyrights owned, used or
licensed by each of Sellers.
(viii) All of such Copyrights owned, used or licensed by any of
Sellers are currently in compliance with formal legal
requirements, are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions
falling due within 90 days after the Closing Date.
(ix) No Copyright owned, used or licensed by any of Sellers is
infringed or, to such Seller's Knowledge, has been
challenged or threatened in any way, in Canada, the United
States or the United Kingdom. None of the subject matter
of any of the Copyrights owned, used or licensed by any of
Sellers infringes or is alleged to infringe any copyright
of any third party or is a derivative work based on the
work of any other Person, in Canada, the United States or
the United Kingdom.
(x) All works encompassed by such Copyrights have been marked
with the proper copyright notice where required by law.
(g) Trade Secrets:
(i) With respect to each Trade Secret owned, used or licensed
by Seller, the documentation relating to such Trade Secret
is current, accurate, and sufficient in detail and content
to identify and explain it and to allow its full and
proper use without reliance on the knowledge or memory of
any individual.
(ii) Sellers have taken all reasonable precautions to protect
the secrecy, confidentiality, and value of all Trade
Secrets owned, used or licensed by any of Sellers
(including the enforcement by such Seller of a policy
requiring each Employee, consultant or contractor to
execute proprietary information and confidentiality
agreements substantially in such Seller's standard form,
which agreements have been executed by all Employees or
former Employees, consultants and contractors of such
Seller).
(iii) The Trade Secrets owned, used or licensed by any of
Sellers are not part of the public knowledge or literature
in Canada, the United States or the United Kingdom, and,
to such Seller's Knowledge, have not been used, divulged,
or appropriated either for the benefit of any Person
(other than Sellers) or to the detriment of such Seller.
No Trade Secret owned, used or licensed by any of Sellers
is subject to any adverse claim or has been challenged or
Threatened in any way or infringes any Intellectual
property, in Canada, the United States or the United
Kingdom.
(h) Net Names:
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(xi) Schedule 3.25(h) contains a complete and accurate list and
summary description of all Net Names owned, used or
licensed by each of Sellers.
(xii) All Net Names owned, used or licensed by any of Sellers
have been registered in the name of such Seller.
(xiii) No Net Name owned, used or licensed by any of Sellers has
been or is now involved in any dispute, opposition,
invalidation or cancellation Proceeding and, to such
Seller Knowledge, no such action is Threatened with
respect to any Net Name owned, used or licensed by such
Seller.
(xiv) To any of Sellers' Knowledge, there is no domain name
application pending of any other person that would or
potentially would interfere with or infringe any Net Name
owned, used or licensed by such Seller.
(xv) No Net Name owned, used or licensed by any of Sellers is
infringed or, to such Seller's Knowledge, has been
challenged, interfered with or Threatened in any way. No
Net Name infringes, interferes with or, to any of Sellers'
Knowledge, is alleged to interfere with or infringe the
trade-xxxx, copyright or domain name of any other Person,
in Canada, the United States or the United Kingdom.
3.26 SOFTWARE
(a) Bulldog owns, or is licensed, or otherwise possesses legally
enforceable rights, to use, sell or license, as applicable, all
computer programs (excluding in each case Commercial Software
used in the Business ("Programs"). Schedule 3.26(a) contains a
complete and correct list of all of the Programs. Sellers have
licenses for all Commercial Software used in the Business and
Sellers do not have any obligation to pay fees, royalties and
other amounts at any time pursuant to any such license. Bulldog
disclaims any and all representations, warranties and conditions
with respect to the Commercial Software, express, implied or
collateral, including merchantability and fitness for a
particular purpose.
(b) Schedule 3.26(b) sets forth a complete list of all: (i) Contracts
to which any of Sellers is a party (as licensor, licensee or
otherwise) and pursuant to which such Seller or any other Person
is authorized to use, sell, distribute or license any Programs;
and (ii) Contracts with resellers and distributors that grant
non-exclusive rights to use or modify and resell or sublicense
object code. None of Sellers is in violation of any such license,
sublicense or agreement.
(c) Schedule 3.26(c) lists all Contracts to which any of Sellers is a
party and pursuant to which such Seller is authorized to use any
third party Patents, Marks, Trade Secrets or Copyrights,
including software, which are incorporated in any existing
product or service of any of Sellers ("Embedded Products"). None
of Sellers is contractually obligated to pay compensation to any
third party with respect to any Programs, except pursuant to the
agreements disclosed on Schedule 3.26(c).
35
None of Sellers has entered into any Contract under which such
Seller is restricted, and is not otherwise restricted, from
combining, incorporating, embedding or bundling or allowing
others to combine, incorporate, embed or bundle any of its
products with those of another party.
(d) Schedule 3.26(d) lists all authors of the Programs or any other
Person who participated in the development of the Programs or any
portion thereof or performed any work related to the Programs
(such authors and other persons or entities are collectively
referred to as the "Software Authors"). Each Software Author made
his contribution to the Programs within the scope of employment
with Bulldog, as a work made in the course of employment and was
directed by Bulldog to work on the Programs. Other than as
disclosed in Schedule 3.26(d), the Programs and every portion
thereof are an original creation of the Software Authors and do
not contain any source code or portions of source code (including
any "canned program") created by any parties other than the
Software Authors. Each Software Author has waived in writing for
the benefit of Bulldog all moral rights in the Programs,
including but not limited to the right to the integrity of the
work, the right to be associated with the work as its author by
name or under a pseudonym and the right to remain anonymous.
(e) There are no material defects in any of Bulldog's software
products and such products shall perform in accordance with
related documentation and promotional material supplied by
Bulldog, and there are no material errors in any documentation,
specifications, manuals, user guides, promotional material,
internal notes and memos, technical documentation, drawings, flow
charts, diagrams, source language statements, demo disks,
benchmark test results, and other written materials related to,
associated with or used or produced in the development of the
Programs (collectively, the "Design Documentation"). To the
Knowledge of each of Sellers, the computer software included in
the Programs does not contain any "back door," "time bomb,"
"Trojan horse," "worm," "drop dead device," "virus" (as these
terms are commonly used in the computer software industry), or
other software routines designed to permit unauthorized access,
to disable or erase software or data, or to perform any other
similar type of functions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer hereby represents and
warrants to Seller as follows and acknowledges that Seller is relying upon such
representations and warranties in connection with the consummation by Seller of
the Contemplated Transactions:
4.1 ORGANIZATION
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Buyer is a corporation duly incorporated, organized and validly
existing under the laws of the Province of Nova Scotia.
4.2 ENFORCEABILITY; NO CONFLICT
(a) Buyer has all requisite legal and corporate power and authority
to execute and deliver this Agreement and the Ancillary
Agreements to which it is or will be a party and to perform its
obligations under this Agreement and such Ancillary Agreements to
which it is or will be a party, which actions have been duly
authorized and approved by all necessary corporate action of
Buyer. Assuming due authorization, execution and delivery by the
other parties thereto, this Agreement constitutes the legal,
valid, and binding obligation of Buyer and each Ancillary
Agreement to which Buyer is a party will, upon execution and
delivery thereof, constitute, legal, valid and binding
obligations of Buyer, in each case enforceable against Buyer in
accordance with its terms save as same may be limited by
bankruptcy, insolvency or similar laws affecting creditors rights
generally to the extent that the remedies of specific performance
and injunction, being equitable remedies, may only be granted in
the discretion of a court of competent jurisdiction.
(b) Buyer is not and will not be required to obtain any Governmental
Authorization or Consent in connection with the execution and
delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
(c) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated
Transactions by Buyer will directly or indirectly (with or
without notice or lapse of time) conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, or result in the imposition of any form of penalty
or prepayment or require an acceleration of payment pursuant to:
(i) Buyer's memorandum and articles of association;
(ii) any Buyer Contract ; or
(iii) any Governmental Authorization, Legal Requirement, Permit
or Order to which Buyer may be subject.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against
Buyer and that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened.
4.4 BROKERS OR FINDERS
37
Neither Buyer nor any of its agents have incurred any Liability
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with the Contemplated Transactions.
4.5 SECURITIES
The issuance and delivery by Documentum, Inc. of the Shares in
connection with the Contemplated Transactions will have been duly and validly
authorized by all necessary corporate action on the part of Documentum, Inc. and
will be issued in compliance with all applicable securities laws. The Shares to
be issued in connection with the Contemplated Transactions will, when issued in
accordance with the terms of this Agreement, have been validly issued, fully
paid and non-assessable.
ARTICLE 5
COVENANTS AND AGREEMENTS OF SELLER BEFORE CLOSING
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date and upon
reasonable advance notice from Buyer, Sellers will, and, subject to applicable
law, will cause Sellers' Representatives to, (a) afford Buyer and its
Representatives full and free access to Sellers' personnel, properties,
Contracts, books and records, and other documents and data, (b) furnish Buyer
and its Representatives with copies of all such Contracts, books and records,
and other documents and data as Buyer may reasonably request, (c) furnish Buyer
and its Representatives with such additional financial, operating, and other
data and information as Buyer may reasonably request, and (d) permit Buyer to
make inquiries of clients and suppliers of Sellers and have discussions with
Employees, in each case upon receiving the prior consent of Sellers, such
consent not to be unreasonably withheld or delayed. No investigation by Buyer
hereunder will affect or mitigate the covenants, representations and warranties
of Sellers.
5.2 OPERATION OF THE BUSINESS OF SELLER
Between the date of this Agreement and the Closing Date, Sellers
will:
(a) conduct the Business only in the Ordinary Course of Business;
(b) use their best efforts to preserve the Business intact, keep
available the services of the current officers and agents of each
of Sellers, and maintain relations and goodwill with suppliers,
customers, landlords, creditors, Employees, agents and others
having business relationships with Sellers;
(c) maintain the insurance policies listed in Schedule 3.15;
(d) confer with Buyer concerning operational matters of a material
nature;
38
(e) otherwise report periodically to Buyer concerning the status of
the Business and Assets; and
(f) not, without the prior consent of Buyer, take any action, or fail
to take any action, within its control to cause any of their
representations in this Agreement to become untrue.
5.3 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement,
Sellers will make all filings that Legal Requirements require them to make to
consummate the Contemplated Transactions, including those specified in Schedule
3.3(a). Between the date of this Agreement and the Closing Date, Sellers will
cooperate with Buyer with respect to all filings that Buyer elects to make or
that Legal Requirements require Buyer to make in connection with the
Contemplated Transactions.
5.4 NOTIFICATION
Between the date of this Agreement and the Closing Date, Sellers
will promptly notify Buyer in writing if any of Sellers becomes aware of: (i)
any fact or condition that causes or constitutes a breach of any of Sellers'
representations and warranties as of the date of this Agreement, or (ii) the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had that representation or
warranty been made as of the time of the occurrence or discovery of such fact or
condition. Such delivery will not affect any rights of Buyer under Section 10.2
and Article 11. During the same period, Sellers will promptly notify Buyer of
the occurrence of any breach of any covenant of any of Sellers in this Agreement
or of the occurrence of any event that may make the satisfaction of the
conditions in Article 8 impossible or unlikely.
5.5 PAYMENT OF INDEBTEDNESS
Buyer will be entitled to set off, from the Cash Payment, all
indebtedness owed by Bulldog to Documentum, Inc.
5.6 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant
to Article 10, Sellers and their Representatives will not, directly or
indirectly, solicit, initiate, encourage or entertain any inquiries or proposals
from, discuss or negotiate with, provide any non-public information to, or
consider the merits of any inquiries or proposals from, any Person (other than
Buyer) relating to any business combination transaction involving Sellers
including the sale of any of the shares of any of Sellers, any merger or
consolidation or the sale of the business or any of the assets of Sellers (other
than in the Ordinary Course of Business).
5.7 BEST EFFORTS
39
Sellers will use their best efforts to cause the conditions in
Article 8 to be satisfied.
ARTICLE 6
COVENANTS OF BUYER BEFORE CLOSING
6.1 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement,
Buyer will make all filings that Legal Requirements require it to make to
consummate the Contemplated Transactions. Between the date of this Agreement and
the Closing Date, Buyer will: (i) cooperate with Sellers with respect to all
filings that Legal Requirements require Sellers to make in connection with the
Contemplated Transactions; and (ii) cooperate with Sellers in obtaining all
Governmental Authorizations and Consents identified in Schedule 3.3(a); provided
that this Section will not require Buyer to dispose of or make any change in any
portion of its business or to incur any other burden.
6.2 BEST EFFORTS
Buyer will use its best efforts to cause the conditions in
Section 8.3 and Article 9 to be satisfied.
ARTICLE 7
OTHER AGREEMENTS OF THE PARTIES
7.1 EMPLOYEES
(a) Buyer and Sellers agree as follows:
(i) The Designated Employees will be offered employment with
Buyer pursuant to written Employment Agreements, on terms
and conditions of employment, including but not limited to
salary, wages, and Employee Benefit Plans which are
substantively similar in the aggregate to those currently
received by the Designated Employees. Drafts of these
Employment Agreements will be prepared by Buyer and
delivered to Sellers prior to Closing. In respect of other
Employees, Buyer will have the sole discretion to
determine to whom Buyer will make offers of employment and
upon what conditions of employment such offers will be
made. Those Employees who are offered and who accept
employment with Buyer (the "Assumed Employees") shall
become employees of Buyer immediately following the
Closing. Nothing in this Agreement is intended to, nor
does it, confer any rights and privileges upon any person
not a party to this Agreement. An Employee to whom Buyer
elects not to make an offer of employment will remain the
responsibility of Sellers
40
before and after the Closing.
(ii) All items in respect of Assumed Employees which require
adjustment including premiums for unemployment or
employment insurance, or employer health tax, Canada and
Quebec Pension Plan contributions or similar statutory
contributions in the U.S. and UK, accrued wages, salaries,
commissions, bonuses, vacation pay or other employee
benefits, shall be adjusted to the Closing Date.
(iii) Sellers shall be responsible for all Claims by or on
behalf of the Assumed Employees, whether such Claims are
asserted by or after the Closing Date, in respect of any:
(A) Labour Relations Matter arising prior to Closing;
(B) Labour Disturbance arising prior to Closing;
(C) all other Claims and Liabilities in respect of any
Employment Laws relating to circumstances arising
prior to Closing.
(iv) Sellers shall be responsible for all Claims by or on
behalf of all Employees other than Assumed Employees
including specifically the Employees who are or were
employed by Bulldog UK who are not Assumed Employees in
respect of any:
(A) Labour Relations Matter;
(B) Labour Disturbance arising;
(C) Severance pay, accrued vacation pay, accrued sick
leave and accrued personal days and any other
similar obligations (the "Termination Costs")
relating to the termination of such Employee's
employment, or any break in service or any other
event entitling someone to payment for such
benefits (a "Termination"); or
(D) all other Claims and Liabilities in respect of any
Employment Laws.
(v) Buyer covenants and agrees that, subject to Closing, it
shall be responsible for:
(A) all Claims and Liabilities, in respect of each
Assumed Employee to the extent such Liabilities
arise or accrue on or after the Closing Date and
relate to any Labour Relations Matter; and
(B) all Termination Costs relating to a Termination
which occurs after Closing in respect of any
Assumed Employee.
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(vi) Prior to the Closing, Bulldog shall obtain and deliver to
Buyer a Purchase Certificate from the Ontario Workplace
Safety and Insurance Board confirming that, as of the date
of Closing, Bulldog no longer has any amounts owing to the
Workplace Safety and Insurance Board.
(b) The parties acknowledge and agree that Buyer shall assume no
responsibility nor incur any Liability for any benefits accrued
or otherwise to be provided under the Employee Benefit Plans or
any other Liability pursuant thereto, that all Employees to which
the Employee Benefit Plans relate shall continue to be entitled
to the benefits provided under such Employee Benefit Plans in
respect of employment up to the Closing Date, and that from and
after the Closing Seller shall continue to remain fully
responsible for the satisfaction of said benefits, all costs and
expenses related to, or arising in connection with the Employee
Benefit Plans and any other Employee benefit related Claims or
costs relating to any Employees, and relating to any Assumed
Employees to the extent that such Claims or costs are based on
facts or circumstance which arose or existed prior to the Closing
Date, whether or not any such Claims or costs are asserted prior
to, on or after the Closing Date, and shall fulfill all statutory
and other responsibility with respect thereto.
(c) In the event that the transactions under this Agreement are not
completed in accordance with the terms and conditions hereof,
Sellers shall remain solely responsible for all Employees, and
Sellers hereby jointly and severally covenant and agree to
indemnify and save Buyer harmless from any Liability in respect
thereof, including any Termination Costs.
(d) For a period of two (2) years after the Closing, none of Sellers
shall, nor shall they permit their Affiliates, directly or
indirectly without the prior consent of Buyer, to hire or make
any attempt whatsoever to hire any of the Assumed Employees for
any position with any of Sellers or any Affiliate of Sellers,
unless such Assumed Employee has been terminated by Buyer.
7.2 RISK AND INSURANCE
Until the Closing, the Assets shall be and remain at the risk of
Sellers. If, prior to Closing, any material part of the Assets is destroyed or
damaged by fire or any other casualty, Buyer shall have the option, exercisable
by notice in writing:
(a) to reduce the Purchase Price by an amount equal to the cost of
repair or, if destroyed or damaged beyond repair, by an amount
equal to the replacement cost of the assets forming part of the
Assets so destroyed or damaged and to complete the purchase;
(b) to complete the purchase of the Assets without reduction of the
Purchase Price, in which event all proceeds of insurance shall be
payable to Buyer and all right and claim of Sellers to any such
proceeds not paid by the Closing shall be assigned by Sellers to
Buyer; or
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(c) to terminate this Agreement, in which case Section 10.2 will
apply.
7.3 CHANGE OF NAME
Forthwith after the Closing, but in any event not later than 30
days thereafter, each of Sellers will (a) change its name to any name not
incorporating the word "Bulldog" or any variation thereof or any name or
combination of words which shall be confusingly similar to "Bulldog"; (b) take
any and all necessary steps to cancel any business name registrations in respect
of business names incorporating the word "Bulldog" or any variation thereof or
any name or combination of words which shall be confusingly similar to
"Bulldog"; and (c) cause SPE Bulldog Holdings Inc. and any of the Affiliates
thereof to change its name to any name not incorporating the word "Bulldog" or
any variation thereof .
ARTICLE 8
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required at Closing is subject to the satisfaction, on or before the Closing
Date, of each of the following conditions (any of which may be waived by Buyer
in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
Each of the representations and warranties of each of Sellers in
this Agreement must have been accurate as of the date of this Agreement and must
be accurate as of the Closing Date as if then made.
8.2 SELLER'S PERFORMANCE
Each of the covenants and obligations that each of Sellers is
required to perform or to comply with pursuant to this Agreement on or before
the Closing Date must have been duly performed and complied with.
8.3 CONSENTS
Each of the Governmental Authorizations and Consents identified
in Schedule 3.3(a) must have been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS
Sellers shall have delivered such other documents as Buyer may
reasonably request for the purpose of (i) evidencing the accuracy of any of
Sellers' representations and warranties, (ii) evidencing the performance by
Sellers of, or the compliance by Sellers with, any covenant or obligation
required to be performed or complied with by any of Sellers, (iii) evidencing
the satisfaction of any condition referred to in this Article, or (iv) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
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8.5 ACCEPTANCE OF OFFERS OF EMPLOYMENT
All of the Designated Employees shall accept the offer of
employment by Buyer, subject to the completion of the Contemplated Transactions.
8.6 NO PROCEEDINGS
Since the date of this Agreement, there must not have been
commenced or Threatened against Buyer, or against any Related Person of Buyer,
any Proceeding (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions; or (b) that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
8.7 NO CLAIM REGARDING ASSET OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any
Claim asserting that such Person (a) is the holder or the beneficial owner of,
or has the right to obtain beneficial ownership of any material Asset or Assets
of Seller; or (b) is entitled to all or any portion of the Purchase Price.
8.8 NO PROHIBITION
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), Contravene or cause Buyer or any Related Person of Buyer to
suffer any Adverse Consequence under: (a) any applicable Legal Requirement or
Order; or (b) any Legal Requirement or Order that has been published, introduced
or otherwise proposed by or before any Governmental Body.
8.9 ORDER
Sellers shall have received and delivered to Buyer at or prior to
the Closing Date an order from an Ontario court of competent jurisdiction, in
form and content satisfactory to Buyer, which Order shall waive the application
of the Bulk Sales Act (Ontario), R.S.O. 1990, c.B-14, to the Contemplated
Transactions.
8.10 BOOKS AND RECORDS
At the Closing, all of those books and records referred to in
Section 3.5 will be in the possession of Sellers, except for books and records
pertaining to Sellers, which Sellers will make available to Buyer after the
Closing promptly upon Buyer's request.
8.11 RECEIPT OF THIRD PARTY DOCUMENTATION
Sellers will have received and delivered to Buyer at or prior to
Closing Date the following:
(a) a release in respect of the security held in favour of each of
those secured creditors listed in Schedule 2.6(a)(xiv) in respect
of the assets of any of the
44
Sellers, signed by the respective secured creditor, together
with evidence of the discharge of any registrations of such
security interest pursuant to applicable laws;
(b) an acknowledgement, in form and content satisfactory to Buyer, in
respect of (a) the amount owed by Sellers in favour of SPE
Bulldog Holdings Inc. or any Affiliate thereof; (b) the specific
security over the assets of Seller in favour of SPE Bulldog
Holdings Inc. or any Affiliate thereof; together with an
undertaking to discharge such security upon repayment of the
amount set forth in (i) by Buyer;
(c) separate assignments of all registered Intellectual Property in
registrable form, currently held by SPE Bulldog Holdings Inc. and
used in the Business, executed by SPE Bulldog Holdings Inc.; and
(d) an undertaking by SPE Bulldog Holdings Inc. to change its
corporate name to a name that does not include the word
"Bulldog".
8.12 SCHEDULES
On or before the Closing Date, the Schedules and Ancillary Agreements
will be in form and content satisfactory to Buyer, in its sole
discretion, will be initialed for identification by Buyer or by its
designated representative and will be attached to this Agreement. Buyer
will have reviewed, and have found satisfactory, all contracts,
documents and any other information identified in such Schedules. The
parties agree to negotiate in good faith, such amendments to this
Agreement and the Ancillary Agreements as may be necessary to reflect
the disclosures made in the Schedules. In the event that the parties
cannot agree upon the form and content of the Ancillary Agreements, the
Schedules, or the consequential changes to this Agreement, on or before
the Closing Date, Buyer in its sole discretion, will have the right to
terminate this Agreement without any obligation whatsoever, and the
monies owed by Sellers to Buyer will become immediately due and payable.
ARTICLE 9
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Sellers' obligation to sell the Assets and to take the other actions
required at Closing is subject to the satisfaction, on or before the Closing
Date, of each of the following conditions (any of which may be waived by
Sellers, in whole or in part):
9.1 ACCURACY OF REPRESENTATIONS
Each of Buyer's representations and warranties in this Agreement
must have been accurate as of the date of this Agreement and must be accurate as
of the Closing Date as if then made.
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9.2 BUYER'S PERFORMANCE
Each of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement on or before the Closing
Date must have been duly performed and complied with.
9.3 ADDITIONAL DOCUMENTS
Buyer must have caused to be delivered to Sellers such documents
as Sellers may reasonably request for the purpose of (i) evidencing the accuracy
of any representation or warranty of Buyer, (ii) evidencing the performance by
Buyer of, or the compliance by Buyer with, any covenant or obligation required
to be performed or complied with by Buyer, (iii) evidencing the satisfaction of
any condition referred to in this Article, or (iv) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
ARTICLE 10
TERMINATION
10.1 TERMINATION EVENTS
This Agreement may, by notice given before or at the Closing and
subject to Section 10.2, be terminated:
(a) by either Buyer or Sellers if a material breach of any provision
of this Agreement has been committed by the other party and such
breach has not been waived;
(b) by Buyer if any condition in Article 8 has not been satisfied as
of the date specified for Closing in Section 2.5 or if
satisfaction of such a condition by such date is or becomes
impossible (other than through the failure of Buyer to comply
with its obligations under this Agreement) and Buyer has not
waived such condition on or before such date;
(c) by Sellers if any condition in Article 9 has not been satisfied
as of the date specified for Closing in Section 2.5 or if
satisfaction of such a condition by such date is or becomes
impossible (other than through the failure of Sellers to comply
with their obligations under this Agreement) and Sellers have not
waived such condition on or before such date;
(d) by Buyer pursuant to Section 7.2(c);
(e) by mutual consent of Buyer and Sellers; or
(f) by either Buyer or Sellers if the Closing has not occurred (other
than through the failure of the party seeking to terminate this
Agreement to comply fully with its obligations under this
Agreement) on or before December 31, 2001, or such later date as
the parties may agree upon.
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10.2 EFFECT OF TERMINATION
Each party's right of termination under Section 10.1 (and Buyer's
right to terminate under Section 7.2(c)) is in addition to any other rights it
may have under this Agreement or otherwise, and the exercise of such right of
termination will not be an election of remedies. If this Agreement is terminated
pursuant to Section 10.1 or 7.2(c), all obligations of the parties under this
Agreement will terminate; provided, however, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
ARTICLE 11
INDEMNIFICATION
11.1 SURVIVAL, RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE; WAIVER
All representations, warranties, covenants, and obligations in
this Agreement, the certificates delivered pursuant to Section 2.6, and any
other certificate or document delivered pursuant to this Agreement will survive
the Closing and the consummation of the Contemplated Transactions, subject to
the limitations set forth in Section 11.4. The right to indemnification, payment
of damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any Knowledge acquired (or capable of having been acquired) about, the
accuracy or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages, or other remedy based on such representation, warranty, covenant, or
obligation.
11.2 INDEMNIFICATION BY SELLERS
Sellers will jointly and severally indemnify and hold harmless
Buyer, and its Representatives and Affiliates (collectively, the "Buyer
Indemnitees") for, and will pay to Buyer Indemnitees the monetary value of, any
Adverse Consequences arising, directly or indirectly, from or in connection
with:
(a) any breach of any representation or warranty made by any of
Sellers in this Agreement, the certificate delivered pursuant to
Section 2.6(a)(vii), or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) any breach by any of the Sellers of any covenant or obligation in
this Agreement, the certificate delivered pursuant to Section
2.6(a)(viii), or any other certificate or document delivered by
Sellers pursuant to this Agreement;
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(c) any Liabilities of any of Sellers existing at or arising out of a
state of facts existing on or before the Closing Date, to the
extent that such Liabilities are not reflected or reserved
against in the Interim Balance Sheet, including Liabilities
arising from or relating to:
(i) any product shipped or manufactured by, or any services
provided by, Sellers before the Closing Date;
(ii) any Environmental, Health, and Safety Liabilities;
(iii) any risk or actual incidence of illness, disability, death
or other injury to, or the contraction of any diseases by,
any Person (including any Employee or former Employee)
resulting from exposure to hazardous materials, products,
or other materials on or before the Closing Date, without
regard to when such injuries or diseases are first
manifested;
(d) any matter disclosed in Schedules 3.19 or 3.20;
(e) any Claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with
any of Sellers (or any Person acting on such Seller's behalf) in
connection with any of the Contemplated Transactions;
(f) any Claim relating to Employment Laws which may be made or
brought or levied against Buyer, or which Buyer may suffer or
incur, after the Closing Date, that are brought by or in respect
of any Employee, or by any Governmental Body on their behalf, to
the extent such Claim relates to the period prior to the Closing
Date or relates to any Employee who is not an Assumed Employee;
(g) any Retained Liability or Excluded Asset; and
(h) any and all Proceedings or Claims incidental to any of the
matters set forth in Section 11.2(a) through (g).
Subject to the limitation on indemnity set out in Section
11.5, Sellers will also jointly and severally indemnify Buyer for the
amount (the "Revenue Deficiency") by which, in the period between the
Closing Date and June 30, 2002, the license revenues generated by the
Business are less than $5,000,000. The Buyer will be indemnified for any
Revenue Deficiency in an amount to be calculated according to the
following formula, up to a maximum amount of $500,000:
Revenue Deficiency X $1,150,000
------------------
$5,000,000
(For example, for a Revenue Deficiency of $1,000,000, the amount of the
indemnity would be equal to $230,000.)
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Sellers will also jointly and severally indemnify Buyer
for losses sustained by the Buyer in the first year following Closing as
a result of the voluntary termination of employment by any of the
Assumed Employees, including loss of actual or proposed license revenue,
costs of hiring and training of employees, lost opportunity costs, and
customer Claims in respect of products licensed to, or services provided
to, such customers.
11.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay to
Sellers the monetary value of any Adverse Consequences arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Buyer in
this Agreement, or in any certificate delivered by Buyer pursuant
to this Agreement;
(b) any breach by Buyer of any covenant or obligation in this
Agreement, or in any certificate delivered by Buyer pursuant to
this Agreement;
(c) any Claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer
(or any Person acting on its behalf) in connection with any of
the Contemplated Transactions; and
(d) any and all Proceedings, demands or assessments incidental to any
of the matters set forth in Section 11.3(a) through (c).
11.4 TIME LIMITATIONS
(a) The representations and warranties of each of the parties, other
than as specifically set out in Section 11.4(b), will survive the
Closing and will continue in full force and effect for the
benefit of the other party for a period of one year from the
Closing Date; and
(b) The representations and warranties of Sellers set forth in
Section 3.16 relating to Taxes shall terminate after three (3)
months following the expiration of any time within which an
assessment, reassessment or similar document may be issued under
any applicable law.
11.5 LIMITATIONS ON AMOUNT--SELLERS
Sellers will have no liability (for indemnification or otherwise)
with respect to the matters governed by Section 11.2(a), or, to the extent
relating to any failure to perform or comply before the Closing Date, Section
11.2(b) until the total monetary value of all Adverse Consequences with respect
to such matters exceeds $50,000 except (a) in the event that any of Sellers had
Knowledge of a breach of one of Sellers' representations and warranties at any
time prior to the date on which such representation and warranty is made; or (b)
in the event that any
49
of Sellers intentionally breaches any covenant or obligation; in which case this
limitation will not apply. Notwithstanding the above, the aggregate maximum
amount of any indemnity provided by Sellers to Buyer, in this Article 11 or
elsewhere in this Agreement, other than in respect of section 7.1(a)(iv), will
be the value of the Escrowed Shares from time to time until such Escrowed Shares
are released from Escrow, following which time the aggregate maximum amount of
such indemnity will be the value of the Escrowed Shares upon their release from
escrow.
11.6 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise)
with respect to the matters governed by Sections 11.3(a) or 11.3(b) until the
total monetary value of all Adverse Consequences with respect to such matters
exceeds $50,000 except (a) in the event that Buyer had Knowledge of a breach of
one of Buyer's representations and warranties at any time prior to the date on
which such representation and warranty is made; or (b) in the event that Buyer
intentionally breaches any covenant or obligation; in either case this
limitation will not apply. Notwithstanding the above, the aggregate maximum
amount of any indemnity provided by Buyer to Seller in this Agreement will be
the value of the Escrowed Shares from time to time until such Escrowed Shares
are released from Escrow, following which time the aggregate maximum amount of
such indemnity will be equal to the value of the Escrowed Shares upon their
release from escrow.
11.7 ESCROW; RIGHT OF SETOFF
Upon notice to Sellers specifying in reasonable detail the basis
for its action, Buyer may set off any amount to which it may be entitled under
this Article against amounts otherwise payable under this Agreement or may give
notice of a Claim in such amount under the Escrow Agreement. The exercise of
such right of setoff by Buyer in good faith, whether or not ultimately
determined to be justified, will not constitute a breach under this Agreement.
Neither the exercise of nor the failure to exercise such right of setoff or to
give a notice of a Claim under the Escrow Agreement will constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to it.
11.8 PROCEDURE FOR INDEMNIFICATION
(1) The following provisions and the provisions of Section 11.9 will
apply to any claim by Buyer for indemnification by Sellers pursuant to Article
11 hereof (an "Indemnity Claim"):
(a) Promptly after becoming aware of any matter that may reasonably
give rise to an Indemnity Claim, Buyer will provide to Sellers
written notice of the Indemnity Claim specifying the basis for
the Indemnity Claim and the amount of the Indemnity Claim or, if
an amount is not then determinable, an estimate of the amount of
the Indemnity Claim, if an estimate is feasible in the
circumstances;
(b) Buyer will not negotiate, settle, compromise or pay (except in
the case of payment of a judgment) any Indemnity Claim relating
to an alleged Liability to any other Person (a "Third Party
Liability") as to which it proposes to assert an Indemnity
50
Claim, except with the prior written consent of Sellers (which
consent shall not be unreasonably withheld or delayed);
(c) With respect to any Third Party Liability, provided Sellers first
admit Buyer's right to indemnification for the amount of such
Third Party Liability which may at any time be determined or
settled, then, in any legal, administrative or other proceedings
in connection with the matters forming the basis of the Third
Party Liability, the following procedures will apply:
(i) Except as contemplated by subparagraph (ii) of this
paragraph, Sellers will have the right to assume carriage
of the compromise or settlement of the Third Party
Liability and the conduct of any related Proceedings, but
Buyer shall have the right and shall be given the
opportunity at its expense to participate in the defence
of the Third Party Liability, to consult with Sellers in
the settlement of the Third Party Liability and the
conduct of related Proceedings (including consultation
with counsel);
(ii) Notwithstanding subparagraphs (i) of this paragraph,
Sellers shall not settle the Third Party Liability or
conduct any legal, administrative or other proceedings in
any manner which would, in the reasonable opinion of the
Purchaser, have a Material Adverse Effect on the condition
of the Business or Buyer, except with the prior written
consent of Buyer (not to be unreasonably withheld or
delayed).
(iii) Sellers shall keep Buyer advised of the status of any
Third Party Liability and will provide Buyer copies of all
relevant documentation as it becomes available.
(d) If, with respect to any Third Party Liability, Sellers do not
admit Buyer's right to indemnification or declines to assume
carriage of the settlement or of any Proceedings relating to the
Third Party Liability, then the following provisions will apply:
(i) Buyer, at its discretion, may assume carriage of the
settlement or of Proceedings relating to the Third Party
Liability and may defend or settle the Third Party
Liability on such terms as Buyer, acting in good faith,
considers advisable; and
(ii) Any cost, loss, damage or expense incurred or suffered by
Buyer in the settlement or defence of such Third Party
Liability or the conduct of any Proceedings shall be added
to the amount of the Indemnity Claim.
(2) The provisions of Sections 11.8 and 11.9 shall apply mutatis
mutandis to any Claim by Sellers for indemnification by Buyer pursuant to
Article 11 hereof.
11.9 RESOLUTION OF DISPUTES BY MEDIATION OR ARBITRATION
51
The parties shall act in good faith to resolve promptly any
controversy or claim arising out of or relating to this Agreement or the
Contemplated Transactions, including any contract or tort Claims, by
negotiations between senior executives of the parties who have authority to
settle the controversy (and who do not have direct responsibility for
administration of this Agreement). If the parties are unable to resolve the
dispute by negotiation, then the disputing party shall give the other party
written notice of the dispute. Within 10 days after receipt of the notice, the
receiving party shall submit to the other party a written response. The notice
and response shall include (i) a statement of the party's position and a summary
of the evidence and the arguments supporting its position, and (ii) the name and
title of the executive who shall represent that party. The executives shall meet
at a mutually acceptable time at Toronto, Ontario within 20 days of the date of
the disputing party's notice and then as often as they reasonably deem necessary
to exchange relevant information and to attempt to resolve the dispute by
mediation before resorting to arbitration. Each of the executives may, if they
desire, attend such meetings with legal counsel present.
If the matter has not been resolved pursuant to the mediation
procedure within 60 days after the initiation of the mediation, or if either
party does not participate in the mediation, then the controversy or Claim shall
be settled by submitting it to arbitration at ADR Xxxxxxxx International in
Toronto, Ontario pursuant to the provisions of the Ontario International
Commercial Arbitration Act, R.S.O. 1990, c. I.9. The arbitration panel will
consist of a sole arbitrator. The arbitration shall be final and binding.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction.
The arbitrator may grant interim awards and equitable relief,
including temporary restraining orders, preliminary injunctions, and specific
performance. However, this Section 11.9 and this Agreement do not preclude any
party from seeking injunctive relief in a court in order to protect its rights
until the time that a judgment is entered on an award, nor does the filing of
any action constitute a waiver by a party of its right to seek arbitration under
this Agreement. The arbitrator may not award punitive damages or other damages
not measured by the prevailing party's actual damages, including damages
specifically permitted under this Agreement. The submission of a dispute to
arbitration as provided in this Section 11.9 and the rendering of a decision by
the arbitrator is a condition precedent to any right of legal action on the
dispute. The cost and expense of the arbitration, including the fees of the
arbitrator, shall be divided equally between Sellers and Buyer, unless the
arbitrator orders a different allocation of the costs and expenses. Nothing
contained in this Agreement prevents the parties from settling any dispute, at
any time, by mutual agreement.
ARTICLE 12
POST-CLOSING COVENANTS
12.1 PAYMENT OF OTHER RETAINED LIABILITIES
Sellers will pay in full, or make adequate provision for the
payment in full of, all of the Retained Liabilities and other Liabilities of
Sellers under this Agreement. If any such Liabilities are not so paid or
provided for, or if Buyer reasonably determines that failure to make
52
any payments will impair Buyer's use or enjoyment of the Assets or Buyer's
conduct of the Business, Buyer may at any time after the Closing Date elect to
make all such payments directly (but will have no obligation to do so) and
pursue its indemnification rights and remedies pursuant to Article 11 and set
off and deduct the full amount of all such payments from the unpaid balance of
the Purchase Price or from any other amounts owed to Sellers. Buyer will receive
full credit for all payments so made.
12.2 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
After Closing, Sellers will cooperate with Buyer in its efforts to
continue and maintain for the benefit of Buyer those business relationships of
Sellers existing prior to Closing and relating to the Business, including
relationships with lessors, employees, regulatory authorities, licensors,
customers, suppliers, and others, and Seller will satisfy the Retained
Liabilities in a manner which is not detrimental to any said relationships.
Sellers will refer to Buyer all inquiries relating to the Business. Seller will
take no action which would tend to diminish the value of the Assets after
Closing or which would interfere with the business of Buyer to be engaged in
after the Closing Date, including, without limitation, disparaging the name or
business of Buyer.
ARTICLE 13
GENERAL PROVISIONS
13.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of its
Representatives. If this Agreement is terminated, the obligation of each party
to pay its own expenses will be subject to any rights of such party arising from
a breach of this Agreement by another party.
13.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines. Sellers will not make any
disclosure of the Contemplated Transactions to any Person, except with the prior
written consent of Buyer or as required by Legal Requirements. Sellers and Buyer
will consult with each other concerning the means by which Sellers' Employees,
customers, suppliers and others having dealings with Sellers will be informed of
the Contemplated Transactions, and Buyer will have the right to be present for
any such communication.
13.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer
and Sellers will maintain in confidence, and will cause the Representatives of
Buyer and Sellers to maintain in
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confidence, and not use to the detriment of another party hereto or the Business
any written, oral, or other information obtained in confidence from another
party in connection with this Agreement or the Contemplated Transactions,
unless: (a) such information is already known to such party or to others not
bound by a duty of confidentiality or such information becomes publicly
available through no fault of such party; (b) the use of such information is
necessary or appropriate in making any filing or obtaining any Consent required
for the consummation of the Contemplated Transactions; or (c) the furnishing or
use of such information is required by or necessary or appropriate in connection
with Proceedings.
If the Contemplated Transactions are not consummated, each party
will return or destroy as much of such written information as the other party
may reasonably request.
13.4 NOTICES
Any communication (including any consent, approval or
instructions) provided for under this Agreement shall be in writing and shall be
effectively given if: (a) delivered personally, or (b) sent by prepaid courier
service or registered mail addressed to:
Sellers:
c/o Xxxxxxxx Xxxxx and Associates
Address: 000 Xxxxxxx Xxxx Xxxx
Xxxxxxx X0X 0X0
Facsimile No.: 000-000-0000
Attention: Xxxxxxxx Xxxxx
with a copy to:
Osler, Xxxxxx & Harcourt LLP
Attention: Xxxx Xxxxxxx
Address: Xxx 00, 0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile No.: 000-000-0000
Buyer:
Attention: General Counsel
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Address: 0000 Xxxx Xxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000-0000
Facsimile No.: 000-000-0000
with a copy to:
Xxxxx & XxXxxxxx
Attention: Xxxxxxx Xxxxxx
Address: One Prudential Plaza, 000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
With a copy to:
Xxxxx & XxXxxxxx
Attention: Xxxxxx XxXxxxx
Address: 000 Xxx Xxxxxx, XXX Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx, X0X 0X0
Any notice so given shall be deemed conclusively to have been
given and received when so delivered personally or by pre-paid courier service
or on the fifth day following the sending thereof by registered mail. Any party
thereto or others mentioned above may change any particulars of its address for
notice by notice to the others in the manner aforesaid.
13.5 FURTHER ASSURANCES
The parties agree: (a) to furnish upon request to each other such
further information; (b) to execute and deliver to each other such other
documents; and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the Contemplated Transactions.
13.6 INCORPORATION OF SCHEDULES
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part of this Agreement.
13.7 ENTIRE AGREEMENT AND MODIFICATION
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This Agreement supersedes all prior agreements among the parties
with respect to its subject matter (including the Letter of Intent between Buyer
and Bulldog dated November 7, 2001) and constitutes (together with the documents
delivered pursuant to this Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Agreement may not be amended, supplemented or otherwise modified except by
a written agreement executed by the party to be charged with the modification.
13.8 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred
to in this Agreement, time is of the essence.
13.9 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the other
parties, except that Buyer may assign, prior to or following Closing, any of its
rights and delegate any of its obligations under this Agreement to any Affiliate
or to any subsequent acquirer of the Assets. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the parties' successors and permitted assigns. Nothing expressed or
referred to in this Agreement will be construed to give any Person, other than
the parties to this Agreement, any legal or equitable right, remedy, or Claim
under or with respect to this Agreement or any provision of this Agreement
except such rights as shall inure to a successor or permitted assignee pursuant
to this Section.
13.11 ENFORCEMENT OF AGREEMENT
Sellers acknowledge and agree that Buyer could be damaged
irreparably if any of the provisions of this Agreement are not performed in
accordance with the specific terms and that any breach of this Agreement by
Sellers could not be adequately compensated in all cases by monetary damages
alone. Accordingly, Sellers agree that, in addition to any other right or remedy
to which Buyer may be entitled, at law or in equity, it will be entitled to
enforce any provision of this Agreement by a decree of specific performance and
to temporary, preliminary and permanent injunctive relief to prevent breaches or
threatened breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.
13.12 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither any failure nor any delay by any party
in exercising any right, power, or
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privilege under this Agreement or any of the documents referred to in this
Agreement will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the exercise
of any other right, power, or privilege. To the maximum extent permitted by
applicable law: (a) no Claim or right arising out of this Agreement or any of
the documents referred to in this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the Claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of that party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
13.13 JURISDICTION AND SERVICE OF PROCESS
Any Proceeding arising out of or relating to this Agreement or
any Contemplated Transaction must be brought in the courts of the Province of
Ontario, and each of the parties irrevocably submits to the exclusive
jurisdiction of such courts in any such Proceeding, waives any objection it may
now or hereafter have to venue or to convenience of forum, agrees that all
Claims in respect of the Proceeding shall be heard and determined only in such
courts, and agrees not to bring any Proceeding arising out of or relating to
this Agreement or any Contemplated Transaction in any other court. The parties
agree that any or all of them may file a copy of this Section with any court as
written evidence of the knowing, voluntary and bargained agreement between the
parties irrevocably to waive any objections to venue or to convenience of forum.
Process in any Proceeding referred to in this Section may be served on any party
anywhere in the world.
13.14 GOVERNING LAW
This Agreement will be governed by and construed under the laws
of the Province of Ontario without regard to conflicts of laws principles that
would require the application of any other law.
13.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
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The parties have executed and delivered this Agreement as of the date
indicated in the first sentence of this Agreement.
DOCUMENTUM CANADA COMPANY
By:
-----------------------------------
Name:
Title:
THE BULLDOG GROUP INC.
By:
-----------------------------------
Name:
Title:
EMPOWER COMPUTERWARE INC.
By:
Name:
Title:
THE BULLDOG GROUP USA, INC.
By:
Name:
Title:
THE BULLDOG GROUP UK LIMITED
By:
Name:
Title:
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