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EXHIBIT 2.3
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STOCK PURCHASE AGREEMENT
AMONG
WEBGAIN (NOVA SCOTIA) COMPANY,
THE OBJECT PEOPLE INC.,
1004155 ONTARIO INC.,
1004156 ONTARIO INC.,
1004157 ONTARIO INC.,
THE OBJECT PEOPLE HOLDINGS INC.,
XXXX XXXX,
XXXX XXXXXXX,
XXXX XXXXX
AND
THE PERSON'S LISTED ON SCHEDULE 1 HERETO
DATED AS OF APRIL 7, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS ................................................................ 2
ARTICLE II PURCHASE AND SALE OF THE SECURITIES ....................................... 5
SECTION 2.01 PURCHASE AND SALE ....................................................... 5
SECTION 2.02 PURCHASE PRICE .......................................................... 6
SECTION 2.03 PAYMENT OF PURCHASE PRICE ............................................... 6
SECTION 2.04 EQUITY PARTICIPATION PLANS .............................................. 6
SECTION 2.05 CLOSING ................................................................. 6
SECTION 2.06 CLOSING DELIVERIES ...................................................... 7
SECTION 2.07 FURTHER ASSURANCES. ..................................................... 8
SECTION 2.08 CONSUMMATION OF CLOSING ................................................. 8
SECTION 2.09 PURCHASE PRICE ADJUSTMENT ............................................... 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE GROUP COMPANIES
AND THE CONTROLLING SHAREHOLDERS ..................................................... 10
SECTION 3.01 CORPORATE EXISTENCE AND POWER ........................................... 10
SECTION 3.02 CORPORATE AUTHORIZATION AND AUTHORITY ................................... 11
SECTION 3.03 SUBSIDIARIES ............................................................ 11
SECTION 3.04 EFFECT OF AGREEMENT ON TIRE GROUP COMPANIES ............................. 12
SECTION 3.05 CAPITALIZATION .......................................................... 12
SECTION 3.06 GOVERNMENTAL AUTHORIZATION .............................................. 14
SECTION 3.07 FINANCIAL STATEMENTS .................................................... 14
SECTION 3.08 ABSENCE OF CERTAIN CHANGES .............................................. 15
SECTION 3.09 NO UNDISCLOSED MATERIAL LIABILITIES ..................................... 17
SECTION 3.10 RELATED PARTY TRANSACTIONS .............................................. 17
SECTION 3.11 MATERIAL CONTRACTS ...................................................... 17
SECTION 3.12 LITIGATION .............................................................. 19
SECTION 3.13 COMPLIANCE WITH LAWS AND COURT ORDERS; NO DEFAULTS .. ................... 20
SECTION 3.14 PROPERTIES .............................................................. 20
SECTION 3.15 PRODUCTS ................................................................ 21
SECTION 3.16 INTELLECTUAL PROPERTY ................................................... 22
SECTION 3.17 INSURANCE COVERAGE ...................................................... 25
SECTION 3.18 LICENSES AND PERMITS .................................................... 25
SECTION 3.19 RESERVED ................................................................ 26
SECTION 3.20 LOANS, NOTES, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE .................. 26
SECTION 3.21 RESERVED ................................................................ 26
SECTION 3.22 FINDERS FEES ............................................................ 26
SECTION 3.23 EMPLOYEE BENEFIT PLAITS; TERMINATION AND SEVERANCE AGREEMENTS ........... 26
SECTION 3.24 EMPLOYEE AND LABOR MATTERS .............................................. 29
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SECTION 3.25 ENVIRONMENTAL MATTERS ................................................... 30
SECTION 3.26 CERTAIN PRACTICES ....................................................... 30
SECTION 3.27 RECORDS ................................................................. 31
SECTION 3.28 NO INDEMNIFICATION LIABILITIES .......................................... 31
SECTION 3.29 FULL DISCLOSURE ......................................................... 31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS ........................ 31
SECTION 4.01 TITLE TO SHARES ......................................................... 31
SECTION 4.02 SHAREHOLDER POWER AND AUTHORITY ......................................... 32
SECTION 4.03 EFFECT OF AGREEMENT ON TIRE SHAREHOLDERS ................................ 32
SECTION 4.04 LITIGATION .............................................................. 32
SECTION 4.05 SHAREHOLDER AGREEMENTS .................................................. 33
SECTION 4.06 FULL DISCLOSURE ......................................................... 33
SECTION 4.07 RESIDENCE ............................................................... 33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER .................................... 33
SECTION 5.01 CORPORATE EXISTENCE AND POWER ........................................... 33
SECTION 5.02 CORPORATE AUTHORIZATION AND AUTHORITY . ................................. 34
SECTION 5.03 GOVERNMENTAL AUTHORIZATION .............................................. 34
SECTION 5.04 EFFECT OF AGREEMENT ON BUYER ............................................ 34
SECTION 5.05 FINDERS FEES ............................................................ 34
ARTICLE VI COVENANTS OF THE PARTIES .................................................. 35
SECTION 6.01 REASONABLE BEST EFFORTS ................................................. 35
SECTION 6.02 CERTAIN FILINGS ......................................................... 35
SECTION 6.03 PUBLIC ANNOUNCEMENTS .................................................... 35
SECTION 6.04 NONCOMPETITION; NONSOLICITATION ......................................... 35
SECTION 6.05 CONFIDENTIALITY ......................................................... 36
SECTION 6.06 NO NEGOTIATIONS ......................................................... 36
SECTION 6.07 SALES AND TRANSFER TAXES ................................................ 37
SECTION 6.08 OPTIONS OF BUYER'S AFFILIATE ............................................ 37
ARTICLE VII TAX REPRESENTATIONS AND COVENANTS ........................................ 37
SECTION 7.01 TAX DEFINITIONS ......................................................... 37
SECTION 7.02 TAX REPRESENTATIONS AND COVENANTS ....................................... 38
ARTICLE VIII EMPLOYEE BENEFITS ....................................................... 42
SECTION 8.01 EMPLOYEE MATTERS ........................................................ 42
ARTICLE IX COVENANTS OF THE COMPANY AND THE SHAREHOLDERS ............................. 43
SECTION 9.01 COOPERATION ............................................................. 43
SECTION 9.02 ACCESS .................................................................. 44
SECTION 9.03 INSURANCE ............................................................... 44
SECTION 9.04 COMPLIANCE WITH LAWS .................................................... 45
SECTION 9.05 KEEPING OF BOOKS AND RECORDS ............................................ 45
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SECTION 9.06 ACTIONS PRIOR TO CLOSING ................................................ 45
SECTION 9.07 NOTICE OF CHANGES; UPDATES .............................................. 47
SECTION 9.08 PRESERVATION ............................................................ 48
SECTION 9.09 LITIGATION .............................................................. 48
SECTION 9.10 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES ............... 48
SECTION 9.11 OBLIGATIONS OF AFFILIATES ............................................... 48
SECTION 9.12 CONSENTS ................................................................ 49
SECTION 9.13 LIFE INSURANCE POLICIES ................................................. 49
SECTION 9.14 ACTIONS PRIOR TO EFFECTIVE TIME ......................................... 49
ARTICLE X CONDITIONS TO CLOSING ...................................................... 49
SECTION 10.01 CONDITIONS TO OBLIGATIONS OF THE PARTIES ............................... 49
SECTION 10.02 CONDITIONS TO OBLIGATION OF BUYER ...................................... 50
SECTION 10.03 CONDITIONS TO OBLIGATIONS OF THE GROUP COMPANIES AND TIRE
SHAREHOLDERS ........................................................... 52
ARTICLE XI SURVIVAL; INDEMNIFICATION ................................................. 53
SECTION 11.01 SURVIVAL ............................................................... 53
SECTION 11.02 INDEMNIFICATION BY THE CONTROLLING SHAREHOLDERS ........................ 53
SECTION 11.03 INDEMNIFICATION BY BUYER ............................................... 54
SECTION 11.04 THIRD-PARTY CLAIMS ..................................................... 55
SECTION 11.05 PAYMENT ................................................................ 56
SECTION 11.06 NO CONTRIBUTION ........................................................ 56
SECTION 11.07 EQUITABLE RELIEF ....................................................... 57
SECTION 11.08 THE REPRESENTATIVE ..................................................... 57
ARTICLE III TERMINATION .............................................................. 59
SECTION 12.01 GROUNDS FOR TERMINATION ................................................ 59
SECTION 12.02 EFFECT OF TERMINATION .................................................. 59
ARTICLE XIII MISCELLANEOUS ........................................................... 59
SECTION 13.01 NOTICES ................................................................ 59
SECTION 13.02 MODIFICATIONS AND AMENDMENTS ........................................... 61
SECTION 13.03 WAIVERS AND CONSENTS ................................................... 61
SECTION 13.04 INTERPRETATION ......................................................... 61
SECTION 13.05 RELIANCE ............................................................... 62
SECTION 13.06 EXPENSES ............................................................... 62
SECTION 13.07 SUCCESSORS AND ASSIGNS ................................................. 62
SECTION 13.08 GOVERNING LAW .......................................................... 62
SECTION 13.09 COUNTERPARTS; THIRD PARTY BENEFICIARIES ................................ 62
SECTION 13.10 ENTIRE AGREEMENT ....................................................... 63
SECTION 13.11 SPECIFIC PERFORMANCE ................................................... 63
SECTION 13.12 KNOWLEDGE .............................................................. 63
SECTION 13.13 CURRENCY ............................................................... 63
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EXHIBITS:
Exhibit A--Form of Escrow Agreement
Exhibit B--Forms of Employment Offer Letters
Exhibit C--Form of Holdback Agreement
SCHEDULES:
Schedule 1--Shareholders
Schedule 2--Unit Shareholders
Schedule 3.03--Subsidiaries
Schedule 3.04--Effect of Agreement on Group Companies and Subsidiaries
Schedule 3.05--Capitalization Issues
Schedule 3.06--Governmental Authorizations
Schedule 3.08--Material Changes
Schedule 3.09--Liabilities
Schedule 3.11--Material Contracts
Schedule 3.12--Legal Proceedings
Schedule 3.14--Liens, etc.
Schedule 3.15--Proprietary Software
Schedule 3.16--Intellectual Property
Schedule 3.17--Insurance
Schedule 3.18--Licenses and Permits
Schedule 3.20--Loans, Notes, Accounts Receivable, etc.
Schedule 3.23--Employee Benefit Plans
Schedule 3.24--Employee Matters
Schedule 4.05--Shareholder Rights Agreements
Schedule 5.03--Governmental Authorization
Schedule 5.04--Effect of Agreement on Buyer
Schedule 6.08--Options
Schedule 7.02--Tax Matters
Schedule 8.01--Employees
Schedule 9.06--Actions Prior to Closing
Schedule 9.14--Actions Prior to Effective Time
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of April 7,
2000 ("Execution Date") by and among WebGain (Nova Scotia) Company a corporation
organized under the laws of Nova Scotia, Canada (the "Buyer"), The Object People
Inc., a corporation organized under the laws of the Province of Ontario, Canada
(the "Company" or "TOP"), 1004155 Ontario Inc. a corporation organized under the
laws of the Province of Ontario, Canada ("1004155"), 1004156 Ontario Inc., a
corporation organized under the laws of the Province of Ontario, Canada
("1004156"), 1004157 Ontario Inc., a corporation organized under the laws of the
Province of Ontario, Canada ("1004157"), The Object People Holdings Inc., a
corporation organized under the laws of the Province of Ontario, Canada
("Holdings"), and Xxxx Xxxx, Xxxx Xxxxxxx, Xxxx Xxxxx (collectively, the
"Controlling Shareholders") and those persons listed on Schedule 1, including
the Controlling Shareholders, (individually a "Shareholder" and collectively,
the "Shareholders").
WHEREAS, as of the date hereof, the certain Shareholders own all of the
issued and outstanding share capital of each of 1004155, 1004156 and 1004157;
and
WHEREAS, as of the date hereof, 1004155, 1004156, 1004157, Xxxx Xxxx and
Xxxx Xxxxxxx own all of the issued and outstanding share capital of Holdings;
and
WHEREAS, as of the date hereof, Holdings owns all of the issued and
outstanding share capital of the Company; and
WHEREAS, prior to the Closing Date (as defined below), each of 1004155,
1004156, 1004157 and Holdings will be amalgamated into the Company (the
"Amalgamation") and certain employees of the Company and its subsidiaries will
acquire shares of the capital stock of the Company, whereupon the Shareholders
and the Unit Shareholders (as defined below) will own all of the issued and
outstanding share capital of the Company, with each Shareholder and Unit
Shareholder holding the number of shares set forth opposite such holder's name
in Schedules 1 and 2 hereto, respectively; and
WHEREAS; BEA Systems (Nova Scotia) Company, a corporation organized
under the laws of Nova Scotia, Canada, the Company, The Object People (U.S.)
Inc., a Delaware corporation ("TOP US"), The Object People Limited, a
corporation organized under the laws of England and Wales ("TOP UK"), The
Object People GmbH, a corporation organized under the laws of Germany ("TOP
Germany"), and 1395135 Ontario Inc., a corporation organized under the laws of
the Province of Ontario, Canada ("Newco Canada"), have entered into a Stock and
Asset Purchase Agreement, dated as of the date hereof (the "BEA Stock Purchase
Agreement"); and
WHEREAS, Buyer is willing to buy and the Shareholders and the Unit
Shareholders are willing to sell the Shares (as defined below) at Closing on the
terms and conditions and in reliance on the representations and warranties
herein set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations and warranties set forth herein, the parties hereto
agree as follows:
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ARTICLE I
DEFINITIONS
The following terms, as used herein, have the following meanings:
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with such Person; and including any Person in like relation to an
Affiliate. A person shall be deemed to control a Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"Balance Sheets" means the unconsolidated balance sheets of each of TOP
and TOP US as of July 31, 1999.
"Balance Sheet Date" means July 31, 1999.
"Closing" means the closing defined in Section 2.05.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Shares" means the shares in the capital stock of the Company,
prior to, on or after the Amalgamation, as the context so requires.
"Confidential Information" means any information relating to the assets,
prospects, products, services or operations of the Company or any Affiliate
thereof that is not generally known, is proprietary to the Company or such
Affiliate and is made known to such Person or learned or acquired by such Person
while such Person was an officer, director, employee or independent contractor
of the Company or any Subsidiary, including, without limitation, information
relating to the software developed by the Company or any Subsidiary, information
as to sources of, and arrangements for, hardware supplied to customers or
clients of the Company or any Subsidiary, submission and proposal procedures of
the Company or any Subsidiary, customer or contact lists, information concerning
trade secrets of the Company, or any of its Affiliates and any improvements
relating to the products of the Company or any Subsidiary in accounting,
marketing, selling, leasing, financing and other business methods and
techniques.
However, Confidential Information shall not include (i) at the time of
disclosure to any Person such information that was in the public domain or later
entered the public domain other than as a result of a breach of an obligation
herein or of any agreement between such Person and the Company or any
Subsidiary; or (ii) subsequent to disclosure to any Person, such Person received
such information from a third party under no obligation to maintain such
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information in confidence, and the third party came into possession of such
information other than as a result of a breach of an obligation herein.
"Environmental Laws" means any and all federal, state, provincial, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, now in
effect, relating to human health, the environment or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Substances or wastes into the
environment, including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"Environmental Liabilities" means any and all liabilities of or relating
to any Group Company or any Subsidiary (including any entity which is, in whole
or in part, a predecessor of any Group Company or any Subsidiary), whether
vested or unvested, contingent or fixed, actual or potential, known or unknown,
which (a) arise under or relate to matters covered by Environmental Laws and (b)
relate to actions occurring or conditions existing on or prior to the Closing
Date.
"Environmental Permits" means all permits, licenses, authorizations,
certificates and approvals of governmental authorities required by any
Environmental Laws to be obtained by any Group Company or any Subsidiary or
relating to any Environmental Law and necessary or proper for the business of
any Group Company or any Subsidiary as currently conducted.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles, consistently
applied, for the applicable jurisdiction.
"Group Companies" or "Group Company" means 1004155, 1004156, 1004157,
Holdings and the Company, collectively or individually, respectively; provided,
however, that, after the completion of the Amalgamation, such terms shall refer
only to the Company.
"Hazardous Substances" means any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics, including, without limitation,
any substance regulated under any Environmental Laws.
"immediate Family Member" means, with respect to any Person, such
Person's spouse, parents, children and siblings.
"Intellectual Property Right" means any trademark, copyright, service
xxxx, trade name, domain name, universal resource locator patent, maskworks, net
lists, schematics,
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technology, know-how, trade secrets, drawings, specifications, formulas,
inventions, processes, computer software programs or applications (in both
source code and object code form), licenses, and any and all other tangible and
intangible proprietary information, material, intellectual property rights and
interests (including any registrations or applications for registration of any
of the foregoing and the goodwill associated therewith).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, encumbrance or other adverse claim of any kind in
respect of such asset. For the purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Material Adverse Effect" means any material adverse change in, or
material adverse effect on, the business, assets, prospects, results of
operations, value or financial or other condition of the Group Companies and the
Subsidiaries, taken as a whole, or any event or circumstance that could have any
such effect or that could prevent, hinder or delay the consummation of the sale
and transfer of the Shares.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Purchase Price" means the purchase price for the Shares as defined in
Section 2.02.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Services Business Assets" means the business and assets of TOP UK, TOP
Germany, and Newco Canada and the US Assets as defined in the BEA Stock Purchase
Agreement.
"Shares" means, collectively, all of the issued and outstanding Common
Shares as of immediately prior to the Closing, including without limitation the
Unit Shares.
"Subsidiary" means any corporation, entity or other organization,
whether incorporated or unincorporated, of which (i) at least a majority of the
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are directly or indirectly owned or controlled by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries, or
(ii) the Company or any other Subsidiary is a general partner, managing partner,
managing member or Person performing similar functions (excluding any such
partnership or other entity where the Company or any other Subsidiary does not
have general primary decisional authority in such partnership or other entity);
provided, however, that for purposes of this Agreement, TOP UK and TOP Germany
shall be deemed not to be Subsidiaries of any Group Company.
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"TOPLink Software" means any proprietary software developed by TOP or
any Subsidiary and currently sold, licensed or otherwise used by TOP or any
Subsidiary in their respective business and any and all enhancements, upgrades,
customizations, modifications and maintenance thereof, which may read on or
infringe on any of U.S. Patent Nos. 5499371, 5165362 or 5706506.
"TOPLink Software Claims" means any charge, complaint, action, suit,
hearing, investigation, claim, demands or other proceeding by or before any
court, arbitrator, administrative agency or governmental body, or any settlement
relating thereto, relating to or arising out of the use, development, ownership,
marketing, licensing or distribution of the TOPLink Software, where such
liabilities or obligations have arisen prior to the Closing Date or arise out of
the actions pending in the U.S. District Court for the Northern District of
California (Civ. No. 99-5182 MMC, filed December 6, 1999), brought by
Persistence Software, Inc. against TOP and TOP US (the "Persistence Actions").
"TOPLink Software Liability" means any and all liabilities or
obligations for or relating to any TOPLink Software Claim.
"Transaction Documents" means this Agreement, the Escrow Agreement, the
Holdback Agreement, the employee offer letters referred to in Section
2.06(c)(iii) and any other document contemplated hereby or thereby.
"Unit Shareholders" means the holders of the Unit Shares, with each
holder holding the number of Shares set forth opposite such holder's name on
Schedule 2 hereto.
"Unit Shares" means the Common Shares issuable upon the exercise of the
options issued or issuable in connection with the Equity Participation Plans.
ARTICLE II
PURCHASE AND SALE OF THE SECURITIES
Section 2.01 PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties contained
herein, on the Closing Date and effective as of the Closing, each of the
Shareholders shall sell, convey, assign, transfer and deliver to Buyer and Buyer
shall purchase from each Shareholder and Unit Shareholder, that number of
Shares, each as set forth opposite the name of such Shareholder or Unit
Shareholder in Schedules 1 and 2 hereto, respectively, free and clear of all
Liens, in exchange for the Purchase Price. The obligations of the Shareholders
under Section 2.01 hereof shall be several, and not joint; provided, however,
that in addition to other closing conditions set forth herein, Buyer shall not
be obligated to purchase the Shares unless and until each and every Shareholder
and Unit Shareholder tenders its Shares listed in Schedule 1 or 2 in accordance
with the terms and provisions of this Agreement.
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Section 2.02 PURCHASE PRICE. The purchase price for the Shares shall be
$18,500.000, as adjusted in accordance with Section 2.09 hereof (the "Purchase
Price"), payable in accordance with Section 2.03 hereof.
Section 2.03 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be
payable as follows:
(a) $16,650,000 of the Purchase Price shall be paid to or for the
benefit of the Shareholders and the Unit Shareholders in cash at the Closing in
the individual amounts set forth on Schedules 1 and 2 hereto; and
(b) to secure the indemnification obligations of the Shareholders and
the Unit Shareholders hereunder Buyer shall withhold an aggregate of
$1,850.000 (the "Escrow Amount") of the Purchase Price payable to the
Shareholders and the Unit Shareholders from the respective amounts payable to
the Shareholders and the Unit Shareholders pursuant to Section 2.02 hereof, and
Buyer shall deposit the Escrow Amount into an account (the "Escrow"), to be
governed by the terms hereof and the terms of an Escrow Agreement substantially
in the form attached hereto as Exhibit A (with such changes as may be agreed to
by the parties thereto, the "Escrow Agreement"; and the escrow agent designated
therein, the "Escrow Agent"); and the Shareholders and the Unit Shareholders
shall be deemed to have contributed to the Escrow Amount that proportion thereof
as is set forth on Schedules 1 and 2.
Section 2.04 EQUITY PARTICIPATION PLANS. Prior to the Closing Date, the
Company shall cause (i) any and all Units (as defined in the Equity
Participation Plans (as defined below)) outstanding at any time prior to the
Closing Date that were granted or issued pursuant to the Company's 1998 Equity
Participation Plan, 1999 Equity Participation Plan and 2000 Equity Participation
Plan (collectively, the "Equity Participation Plans") to be converted into
Options (as defined in the Equity Participation Plans) on a one-for-one basis in
accordance with the provisions of the Equity Participation Plans or, with the
employees' consents, surrendered, (ii) each Option not surrendered to be
exercised before Closing and the Unit Shares to be irrevocably sold to Buyer in
accordance with this Agreement and (iii) the termination of Equity Participation
Plans and any rights of any person thereunder from and after the Closing Date.
Section 2.05 CLOSING. Subject to the satisfaction or waiver of each of
the conditions set forth in Article X, the closing (the "Closing") of the
purchase and sale of the Shares hereunder shall take place at 10:00 a.m. at the
offices of Yegendorf, Brazeau, Seller, Prehogan & Xxxxxx, 00 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxx, Xxxxxx, on the first mutually agreeable business day
following the fulfillment or waiver of the conditions set forth in Article X,
but in any event not later than ten business days after such fulfillment or
waiver, or at such other time and place as the parties shall mutually agree
(such date and time being called the "Closing Date").
Section 2.06 CLOSING DELIVERIES. At the Closing on the terms and subject
to the conditions set forth herein and in reliance on the representations,
warranties, covenants and other agreements set forth herein, the parties to this
Agreement shall deliver the following:
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(a) Buyer shall deliver to the Company, the Shareholders or the
Escrow Agent, as the case may be:
(i) a copy of each of the Escrow Agreement and the Holdback
Agreement, duly and validly executed by an authorized officer of Buyer;
(ii) $16,650,000 of the Purchase Price to the Shareholders and
the Unit Shareholders in accordance with Section 2.03 hereof;
(iii) $1,850,000 of the Purchase Price to the Escrow Agent in
accordance with Section 2.03 hereof;
(iv) $6,000,000 to the Holdback Agent in accordance with Section
2.09 hereof;
(v) an opinion of Blake, Xxxxxxx & Xxxxxxx LLP, counsel to
Buyer, addressed to the Company and the Shareholders and dated as of the
Closing Date, in form and substance reasonably satisfactory to the
Company (the "Buyer's Opinion");
(vi) an officer's certificate duly executed by an executive
officer of Buyer, in form and substance reasonably satisfactory to the
Company (the "Buyer's Officer's Certificate"): and
(vii) such other agreements, instruments, certificates and other
documents as may be reasonably necessary or appropriate to effectuate
completely the transactions contemplated hereby and each of the
Transaction Documents.
(b) Each Shareholder or the Representative (as defined in Section
11.08 hereof), as the case may be, shall deliver to Buyer:
(i) all certificates, transfer forms and other instruments, in
form and substance satisfactory to Buyer, evidencing the transfer,
conveyance and sale of all the Shares to be sold by such Shareholder or
Unit Shareholder to Buyer in accordance with the terms of this Agreement
and as set forth on Schedule 1 hereto.
(ii) a copy of each of the Escrow Agreement and the Holdback
Agreement, duly and validly executed by the Representative, on behalf of
the Shareholders and Unit Shareholders; and
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(iii) such other agreements, instruments, certificates and other
documents as may be reasonably necessary or appropriate to effectuate
completely the transactions contemplated hereby and each of the
Transaction Documents.
(c) The Company shall deliver to Buyer the following:
(i) an opinion of Yegendorf, Brazeau, Seller, Prehogan &
Xxxxxx, counsel to the Company, addressed to Buyer and dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyer
(the "Company's Opinion");
(ii) an officer's certificate, duly executed by an executive
officer of the Company, in form and substance reasonably satisfactory to
Buyer (the "Officer's Certificate");
(iii) a copy of the countersigned employment offer letters,
substantially in the form attached hereto as Exhibit B (with such
changes as may be agreed to by the parties thereto), duly and validly
executed by at least 90% of the employees not working exclusively as a
part of the Services Business Assets and each of Xxxx Xxxxxx, Xxxxx
Xxxxxxxxxx, Xxxxxx XxxXxxxxx, S. Xxxxxxx Xxxxxxxxxxx and Xxxxxx Xxxxx;
and
(iv) such other agreements, instruments, certificates and other
documents as may be reasonably necessary or appropriate to effectuate
completely the transactions contemplated hereby and each of the
Transaction Documents.
Section 2.07 FURTHER ASSURANCES. At any time and from time to time after
the Closing Date, at the request of Buyer and without further consideration,
each Shareholder (and, as and to the extent necessary or appropriate, the Group
Companies or their officers) will execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation as may be reasonably
requested in order to more effectively transfer, convey and assign to the Buyer,
and to confirm the Buyer's title to, the Shares.
Section 2.08 CONSUMMATION OF CLOSING. All acts, deliveries and
confirmations comprising the Closing regardless of chronological sequence shall
be deemed to occur contemporaneously and simultaneously upon the occurrence of
the last act, delivery or confirmation of the Closing and none of such acts,
deliveries, or confirmations shall be effective unless and until the last of the
same shall have occurred; provided, however, that the documents tabled in
respect of the sale and purchase of the Shares in accordance herewith shall not
be released from escrow until 4 p.m. on the next business day after the closing
of the BEA Stock Purchase Agreement (the "Effective Time"), or such other time
or date as may be agreed to by the parties hereto.
Section 2.09 PURCHASE PRICE ADJUSTMENT
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(a) Subject to the terms and conditions of this Agreement, and in
reliance upon the representations and warranties contained herein, on the
Closing Date Buyer shall pay $6,000,000 (the "Holdback Amount") to State Street
Bank and Trust Company of California, N.A. (the "Holdback Agent"), in federal
funds by wire transfer to the bank account designated by the Holdback Agent, for
application in accordance with Section 11.05(b) and the holdback agreement (the
"Holdback Agreement"), to be entered into among the Representative, Buyer and
the Holdback Agent on or prior to the Closing Date, substantially in the form
attached hereto as Exhibit C (with such changes as may be agreed to by the
parties thereto). The parties hereto agree that the Holdback Amount belongs to
Buyer until such time as any part thereof is to be paid to the Shareholders and
the Unit Shareholders in accordance with paragraph (b) below.
(b) In the event that any of the Holdback Amount shall not have been
paid or is not payable to Buyer or its designee in accordance with the Holdback
Agreement following the final, non-appealable resolution of any and all TOPLink
Software Claims or TOPLink Software Liability (the "Holdback Balance"), then the
Holdback Agent shall pay to the Shareholders and the Unit Shareholders in
accordance with the Holdback Agreement, as an adjustment, the Holdback Balance.
This adjustment to the purchase price relates to underlying goodwill, the value
of which cannot reasonably be expected to be agreed upon as of the Closing Date.
(c) In the event that TOP or TOP US shall have actually received
monies in payment of an award in connection with a favorable judgment in respect
of any of their counter or cross-claims in the Persistence Actions, then Buyer
shall pay to the Shareholders and the Unit Shareholders as soon as practicable
after the receipt thereof, as a purchase price adjustment, and in proportion to
their interests in and to the Holdback Amount as set forth in Schedules 1 and 2
hereto, the after-tax proceeds therefrom to the extent that any amount of the
Holdback Amount has been paid to Buyer, TOP or TOP US or any of their Affiliates
(as of immediately after the Closing Date) in accordance with this Agreement and
the Holdback Agreement.
Section 2.10 SECTION 116 OF THE INCOME TAX ACT (CANADA)
(a) Each of the Unit Shareholders who are non-residents of Canada as
disclosed in Schedule 2 hereto (the "Non-Resident Shareholders") shall, on or
before Closing, deliver to the Buyer a certificate, satisfactory in form and
substance to the Buyer, issued by the Canada Customs and Revenue Agency pursuant
to subsection 116(2) of the Income Tax Act (Canada) (a "Section 116
Certificate") in respect of the proposed disposition by the Non-Resident
Shareholder of the Non-Resident Shareholder's Shares. Each Section 116
Certificate shall specify a "certificate limit" in an amount no less than the
proportion of the Purchase Price payable to such Non-Resident Shareholder (the
"Non-Resident Shareholder's Purchase Price").
(b) In the event that a Section 116 Certificate required under Section 2.10(a)
has not been delivered by a Non-Resident Shareholder to the Buyer on or before
Closing, or in the event that a Section 116 Certificate that is delivered by a
Non-Resident Shareholder to the Buyer on or before Closing specifies a
"certificate limit" that is less than the Non-Resident Shareholder's Purchase
Price, the Buyer shall be entitled to withhold from the Non-Resident
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Shareholder's Purchase Price an amount equal to 33 1/3% of the Non-Resident
Shareholder's Purchase Price (the "Withheld Amount"). The Withheld Amount shall
be remitted to the Receiver General of Canada on the day that the Withheld
Amount is required to be so remitted pursuant to subsection 116(5) of the Income
Tax Act (Canada) (the "Remittance Date").
(c) Notwithstanding the foregoing, if a Non-Resident Shareholder
delivers a Section 116 Certificate or a replacement Section 116 Certificate to
the Buyer at any time after Closing and at least two business days prior to the
Remittance Date, the Buyer shall pay the Withheld Amount to the Non-Resident
Shareholder provided that the "certificate limit" specified in such Section 116
Certificate is not less than the nonresident Shareholder's Purchase Price.
(d) In any case where the Buyer withholds and remits to the Receiver
General of Canada any amount pursuant to this Section 2.10, the Buyer shall be
deemed to have paid such amount to the Non-Resident Shareholder on account of
the Non-Resident Shareholder's Purchase Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE GROUP COMPANIES
AND THE CONTROLLING SHAREHOLDERS
Each Group Company and the Controlling Shareholders jointly and
severally represent and warrant to Buyer as of the date hereof and, except where
specifically provided herein to be as of the date hereof, as of the Closing Date
as follows:
Section 3.01 CORPORATE EXISTENCE AND POWER. Each Group Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
material governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted. Each Group Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Without limiting the effect of the foregoing, the parties hereto acknowledge
that TOP is not registered as a foreign corporation under the laws of the State
of North Carolina. Each Group Company has heretofore delivered or, on or prior
to the Closing Date, will deliver, to Buyer true and complete copies of its
respective organizational documents as currently in effect.
Section 3.02 CORPORATE AUTHORIZATION AND AUTHORITY. Each Group Company
has the corporate power and authority to execute, deliver and perform this
Agreement and the other Transaction Documents to which it is a party. This
Agreement, and the other Transaction Documents to which it is a party, have been
duly authorized and approved by all necessary
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corporate action on the part of each Group Company. This Agreement has been duly
executed and delivered by each Group Company and assuming that it has been
executed and delivered by Buyer, constitutes a legal, valid and binding
obligation of each Group Company, enforceable against such Group Company in
accordance with its terms, except as enforcement thereof may be limited by
liquidation, conservatorship, bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally from
time to time in effect and except that equitable remedies are subject to
judicial discretion and except that a court of competent jurisdiction may find
the provisions of Section 6.04 to be unenforceable in whole or in part. Each of
the other Transaction Documents to which each Group Company is a party, when
executed and delivered in accordance with the terms hereof and assuming that
each such Transaction Document has been duly executed and delivered by the other
parties thereto, will constitute the legal, valid and binding obligation of such
Group Company, enforceable against such Group Company in accordance with its
terms, except as enforcement thereof may be limited by liquidation,
conservatorship, bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally from time to time
in effect and except that equitable remedies are subject to judicial discretion.
Section 3.03 SUBSIDIARIES.
(a) Except for TOP US, no Group Company owns, directly or indirectly,
any capital stock or ownership interest in or have any direct or indirect equity
or ownership interest in any Person that is not a Group Company. TOP US is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted and as contemplated to be conducted.
TOP US is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
TOP US has heretofore delivered or, on or prior to the Closing Date, will
deliver, to Buyer true and complete copies of its articles of incorporation and
bylaws as then in effect.
(b) All the outstanding capital stock of TOP US has been duly
authorized and validly issued, is fully paid and non-assessable and is owned by
TOP free and clear of all Liens. Except as set forth in this Section 3.03 and
except as set forth in Schedule 3.03, there are no outstanding or authorized (i)
shares of capital stock or voting securities of TOP US, (ii) securities of TOP
US or the Company convertible into, exercisable for or exchangeable for shares
of capital stock or voting securities of TOP US or (iii) options, warrants,
purchase rights, calls, commitments, subscription rights, conversion rights,
exchange rights, stock appreciation, phantom stock, profit participation, or
similar rights to acquire from the Company or TOP US, or similar obligations of
TOP US to issue, any capital stock, voting securities or securities convertible
into, exercisable for or exchangeable for capital stock or voting securities of
TOP US (the items in clauses (i), (ii) and (iii) being referred to collectively
as the "Subsidiary Securities"). There are no outstanding obligations of the
Company or TOP US to repurchase, redeem or
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otherwise acquire Subsidiary Securities. There are no statutory or contractual
shareholders' rights relating to the acquisition (including, without limitation,
rights of first refusal, pre-emptive rights and anti-dilution rights),
disposition, registration under the Securities Act or other similar rights with
respect to the Subsidiary Securities. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the capital
stock of TOP US.
Section 3.04 EFFECT OF AGREEMENT ON THE GROUP COMPANIES. Except as set
forth in Schedule 3.04, neither the execution and delivery of this Agreement or
the Transaction Documents to which it is a party nor the consummation of the
transactions contemplated hereby or thereby will (i) result in the acceleration,
breach or termination of, or the creation in any party of the right to
accelerate, terminate, modify, cancel or require any notice under, any contract,
lease, license, instrument or other arrangement, or other obligation or
liability to which any Group Company or any Subsidiary is a party or is bound or
to which any Group Company's or any Subsidiary's assets are subject, (ii)
conflict with, violate or result in a breach of any provision of the
organizational documents of any Group Company or any Subsidiary, (iii) conflict
with or violate any law, rule, regulation, ordinance, order, writ, injunction or
decree applicable to any Group Company or any Subsidiary or by which any of
their respective assets is bound or affected, except where such conflict or
violation could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect, or (iv) result in the creation of any Lien upon
the Shares or any assets, tangible or intangible, of any Group Company or any
Subsidiary.
Section 3.05 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of an
unlimited number of Common Shares. As of the date hereof, there were outstanding
21,250,000 Common Shares, all of which are held of record by Holdings, free and
clear of all Liens. The authorized capital stock of 1004155 consists of an
unlimited number of common shares. Preferred "A" shares, Preferred "B" shares,
Preferred "C" shares, Preferred "D" shares, Preferred "E" shares and Preferred
"F" shares. As of the date hereof, there were outstanding 10 common shares,
90,000 Preferred "B" shares, 1,000,000 Preferred "C" shares, 1,159,968 Preferred
"D" shares, 910,000 Preferred "E" shares and 100 Preferred "F" shares, all of
which are held of record by the Shareholders in the amounts set forth opposite
each such Shareholder's name in Schedule 1, free and clear of all Liens. The
authorized capital stock of 1004156 consists of an unlimited number of common
shares, Preferred "A" shares, Preferred "B" shares, Preferred "C" shares,
Preferred "D" shares, Preferred "E" shares and Preferred "F" shares. As of the
date hereof, there were outstanding 10 common shares, 90,000 Preferred "B"
shares, 1,000,000 Preferred "C" shares, 1,159,968 Preferred "D" shares, 910,000
Preferred "E" shares and 100 Preferred "F" shares, all of which are held of
record by the Shareholders in the amounts set forth opposite each such
Shareholder's name in Schedule 1, free and clear of all Liens. The authorized
capital stock of 1004157 consists of an unlimited number of common shares,
Preferred "A" shares, Preferred "B" shares, Preferred "C" shares, Preferred "D"
shares, Preferred "E" shares and Preferred "F" shares. As of the date hereof,
there were outstanding 10 common shares, 20,000 Preferred "B" shares, 480,034,
Preferred "C" shares, 1,508,379 Preferred "E" shares and 100 Preferred "F"
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shares, all of which are held of record by the Shareholders in the amounts set
forth opposite each such Shareholder's name in Schedule 1, free and clear of all
Liens. The authorized capital stock of Holdings consists of an unlimited number
of Class "A" common shares, Class "B" common shares, Class "C" common shares,
Preferred "A" shares, Preferred "B" shares, Preferred "C" shares, Preferred
"D" shares, Preferred "E" shares and Preferred "F" shares. As of the date
hereof, there were outstanding 45 Class "A" common shares, 25 Class "B" common
shares, 15 Class "C" common shares, 12,499,985 Preferred "A" shares and 100
Preferred "C" shares, all of which are held of record as follows: (i) 45 Class
"A" common shares and 5,624,944 Preferred "A" shares are held of record by
1004155; (ii) 25 Class "B" common shares and 6,624,944 Preferred "A" shares are
held of record by 1004156; (iii) 15 Class "C" common shares and 1,250,097
Preferred "A" shares are held of record by 1004157; and (iv) 50 Preferred
"C" shares are held of record by each of Xxxx Xxxx and Xxxx Xxxxxxx; in
each case, free and clear of all Liens.
(b) All Shares have been, or when issued will be, duly authorized and
validly issued, are fully paid and non-assessable and the holders thereof are
not, or will not be, entitled to any preemptive or other similar rights. Except
as set forth in this Section 3.05 and except as set forth in Schedule 3.05,
there are no outstanding or authorized (i) shares of capital stock or voting
securities of any Group Company, (ii) securities of any Group Company or any
Subsidiary convertible into, exercisable for or exchangeable for shares of
capital stock or voting securities of any Group Company or (iii) options,
warrants, purchase rights, calls, commitments, subscription rights, conversion
rights, exchange rights, stock appreciation, phantom stock, profit
participation, or similar rights to acquire from any Group Company, or similar
obligations of any Group Company to issue, any capital stock, voting securities
or securities convertible into, exercisable for or exchangeable for capital
stock or voting securities of any Group Company (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "Group Company Securities").
There are no outstanding obligations of any Group Company to repurchase, redeem
or otherwise acquire any Group Company Securities. There are no statutory or
contractual shareholders' rights relating to the acquisition (including, without
limitation, rights of first refusal, pre-emptive rights and anti-dilution
rights), disposition, registration under the Securities Act, or other similar
rights with respect to any Group Company Securities. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of
the capital stock of any Group Company.
(c) Each Unit Shareholder owns, or will own as of immediately prior
to the Closing, the Shares set forth opposite its name in Schedule 2 hereto
(which in the aggregate and together with the Shares held by the Shareholders
represent all of the issued and outstanding shares of capital stock of the
Company) free and clear of any Lien, restriction on sale or transfer (other than
restrictions imposed by applicable securities laws), preemptive right,
limitations on voting rights or options and has the authority to dispose of such
Shares in connection with this Agreement.
Section 3.06 GOVERNMENTAL AUTHORIZATION. Except as set forth in Schedule
3.06, the execution, delivery and performance by any Group Company of this
Agreement requires no
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action by or in respect of, or filing with, any governmental body, agency, or
official, excluding Tax filings and documents related to the employment of
employees of the Group Companies or TOP US.
Section 3.07 FINANCIAL STATEMENTS.
TOP has delivered to Buyer (i) unconsolidated audited (a) balance sheets of TOP
as of July 31, 1997 and 1998, (b) the related statements of income, changes in
stockholders equity, and cash flows for each such fiscal year then ended, and
(c) all related notes and schedules; and (ii)(a) unaudited balance sheets of
each of TOP and TOP US as of July 31, 1999, (b) the related statements of income
and changes in stockholders equity for the period then ended, and (c) all
related notes and schedules, all of which have not been audited by TOP's
independent public accountant (collectively, the "Financial Statements"). The
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, subject to any
qualifications set forth in the applicable notes and schedules, present fairly,
the financial condition of the Company and the Subsidiaries as of such dates and
the results of operations of the Company and the Subsidiaries for such periods,
include all adjustments that are necessary for a fair presentation of the
information shown, are correct and complete, and are consistent with the books
and records of the Company and the Subsidiaries (which books and records are
true and complete in all material respects). The Financial Statements reflect
reserves appropriate and adequate for all known liabilities and reasonably
anticipated losses as required by GAAP (including appropriate and adequate
reserves for inventory, bad debt and accrued liabilities.) The Company has
disclosed to Buyer all material facts relating to the preparation of the
Financial Statements, including the basis of accounting for affiliated
transactions, and the Company has delivered to Buyer complete and correct copies
of all letters of representation from the Company to its accountants in
connection with the audited Financial Statements and all management letters from
the accountants to the Company.
Section 3.08 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
3.08, since the Balance Sheet Date, the Group Companies and the Subsidiaries
have conducted their respective businesses in the ordinary and usual course and,
except pursuant to or as contemplated under any Transaction Documents or the BEA
Stock Purchase Agreement, there has not been any Material Adverse Effect and
there is no condition or development or contingency of any kind existing that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Without limiting the foregoing, except as set forth in
Schedule 3.08 and in the transactions contemplated by this Agreement or the BEA
Stock Purchase Agreement, since the Balance Sheet Date, there has not been,
occurred or arisen, considered individually or in the aggregate:
(a) any issuance or sale or authorization of the issuance or sale of
any shares of capital stock or other securities of any Group Company or Group
Company Securities relating to shares of capital stock or other securities of
any Group Company or any shares of capital stock or
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other securities of any Subsidiary or Subsidiary Securities relating to shares
of capital stock or other securities of any Subsidiary;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of any Group
Company or any Subsidiary, or any direct or indirect repurchase, redemption,
retirement, purchase or other acquisition by any Group Company or any Subsidiary
of any outstanding shares of capital stock or other securities of, or other
ownership interests in, any Group Company or any Subsidiary;
(c) any amendment of any term of any outstanding security of any
Group Company or any Subsidiary;
(d) other than in the ordinary and usual course of business, any
incurrence, assumption or guarantee by any Group Company or any Subsidiary of
any indebtedness for (i) borrowed money, for amounts drawn under a letter of
credit, or for the deferred purchase price of property or services for which any
Group Company or any Subsidiary or their respective assets is liable, (ii)
unfunded amounts under a loan agreement, letter of credit, or other credit
facility for which any Group Company or any Subsidiary could be liable, if such
amounts were advanced under the credit facility, (iii) amounts to be paid as a
guaranteed payment or a preferred or special dividend, including any mandatory
redemption of shares or interests, (iv) obligations under leases that constitute
capital leases, and (v) under interest rate swaps, caps, floors, collars and
other interest hedge agreements, in each case whether any Group Company or any
Subsidiary is liable contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations any Group Company or any
Subsidiary otherwise assures a creditor against loss, other than in the ordinary
and usual course of business consistent with past practice;
(e) any Lien on any asset of any Group Company or any Subsidiary,
which Lien, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect;
(f) any making of any loan, advance or capital contributions to or
investment in any Person;
(g) any damage, destruction or other casualty loss affecting the
business or assets of any Group Company or any Subsidiary that is either not
fully covered by insurance or which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by any Group Company or any Subsidiary relating to their
respective assets or business (including the acquisition or disposition of any
assets) or any relinquishment by any Group Company or any Subsidiary of any
contract or other right (direct or indirect, whether alleged, contingent or
otherwise), other than transactions and commitments in the ordinary and usual
course of business;
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(i) any sale, assignment, transfer or grant of any license or
sublicense with respect to any Intellectual Property Right or other intangible
asset used or useful in the business of the Company or any Subsidiary, other
than transactions and commitments in the ordinary and usual course of business;
(j) any incurrence or payment of any obligation or liability
(absolute, accrued or contingent) other than current liabilities shown on the
Balance Sheets and current liabilities incurred since the Balance Sheet Date in
the ordinary and usual course of business consistent with past practice;
(k) any change in any method of accounting or accounting practice by
the Company, except for any such change after the date hereof required by reason
of a concurrent change in GAAP;
(1) other than transactions or commitments in the ordinary and usual
course of business or as required by applicable law, any (i) employment,
deferred compensation, severance, retirement or other similar agreement entered
into with any director, officer or employee of any Group Company or any
Subsidiary (or any amendment to any such existing agreement), (ii) grant of any
severance or termination pay to any director, officer or employee of any Group
Company or any Subsidiary, or (iii) change in compensation or other benefits
payable to any director, officer or employee of any Group Company or any
Subsidiary pursuant to any severance or retirement plans or policies thereof, in
each case;
(m)any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of any Group Company or any Subsidiary, which employees
were not subject to a collective bargaining agreement at the Balance Sheet Date,
or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or
with respect to any employees of any Group Company or any Subsidiary;
(n) acceleration of the collection of accounts receivable, delay in
the payment of accounts payable and other accrued liabilities, deferral of
maintenance and other expenses, or other increase in cash on hand, in each case
other than in the ordinary course of business;
(o) any other occurrence, event, incident, action, failure to act, or
transaction outside the ordinary and usual course of business involving any
Group Company or any Subsidiary, which individually or collectively could
reasonably be expected to have a Materially Adverse Effect; or
(p) no Group Company nor any Subsidiary has committed to enter into,
or is it the intention or expectation of the Company or any Subsidiary to enter
into any of the foregoing.
Section 3.09 NO UNDISCLOSED MATERIAL LIABILITIES. There are no material
liabilities of any Group Company or any Subsidiary, considered individually or
in the aggregate, of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and
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there is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than:
(a) liabilities provided for in the Balance Sheets or disclosed in
the notes thereto;
(b) liabilities disclosed on Schedule 3.09;
(c) liabilities incurred for accounts payable and any accruals of
current liabilities since the Balance Sheet Date in each case in type and
amounts which are accrued in the ordinary and usual course of the Company's or
any Subsidiary's business; and
(d) TOPLink Software Liabilities.
Section 3.10 RELATED PARTY TRANSACTIONS. There are no transactions and
agreements between any Group Company or any Subsidiary, on the one hand, and any
Shareholders, suppliers, customers or other parties ("Related Parties"), on the
other hand, where an officer, director, employee or holder of 5% or more of the
outstanding equity of such Related Xxxxx is, or is an Immediate Family Member
of, an officer, director, employee or holder of 5% or more of the outstanding
capital stock of any Group Company, except for the Consulting Agreement, dated
as of August 1, 1998, between TOP and Learning Dimensions Inc.
Section 3.11 MATERIAL CONTRACTS.
(a) Except (A) for the agreements disclosed in Schedule 3.11 (which
agreements are referred to herein as "Material Agreements", and each a "Material
Agreement"), (B) for the agreements constituting Services Business Assets, and
(C) pursuant to or as contemplated under the BEA Stock Purchase Agreement or any
of the Transaction Documents, no Group Company nor any Subsidiary is currently a
party to or bound by:
(i) any lease (whether of real or personal property) providing
for annual rentals of $10,000 or more;
(ii) any agreement for the purchase of materials, supplies,
goods, services, equipment or other assets that provides for either (A) annual
payments by any Group Company or any Subsidiary of $10,000 or more or (B)
aggregate payments by any Group Company or any Subsidiary of $50,000 or more;
(iii) any consulting services, sales, distribution or other
similar agreement providing for the sale by any Group Company or any Subsidiary
of materials, supplies, goods, services, equipment or other assets that provides
for either (A) annual payments to any Group Company or any Subsidiary of $25,000
or more or (B) aggregate payments to any Group Company or any Subsidiary of
$50,000 or more;
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(iv) any partnership, joint venture or other similar agreement or
arrangement;
(v) any agreement relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets or otherwise);
(vi) any agreement relating to indebtedness for borrowed money or
the deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset), except any such agreement (A) with
an aggregate outstanding principal amount not exceeding 525,000 and (B) which
may be prepaid on not more than 30 days notice without the payment of any
penalty;
(vii) any license, franchise or similar agreement that provides
for either (A) annual payments to or from any Group Company or any Subsidiary of
$10,000 or more or (B) aggregate payments to or from any Group Company or any
Subsidiary of 550,000 or more;
(viii) any agency, dealer, sales representative, marketing or
other similar agreement that provides for either (A) annual payments by any
Group Company or any Subsidiary of $10,000 or more or (B) aggregate payments by
any Group Company or any Subsidiary of $550,000 or more;
(ix) any agreement that limits the freedom of any Group Company
or any Subsidiary to compete in any line of business or with any Person or in
an), area or which could so limit the freedom of any Group Company or any
Subsidiary;
(x) any agreement with any other Person directly or indirectly
owning, controlling or holding with power to vote 5% or more of the outstanding
voting securities of any Affiliate, which agreement will not have been
terminated on or prior to the Closing Date in accordance with this Agreement;
(xi) any agreement with any director, officer or employee of any
Group Company or any Subsidiary or with any "associate" or any member of the
"immediate family" (as such terms are respectively defined in Rules 12b-2 and
16a-1 of the Exchange Act) of any such director, officer or employee;
(xii) any other agreement, commitment, arrangement or plan not
made in the ordinary and usual course of business; or
(xiii) any agreement under which the consequences of a default or
termination could reasonably be expected to have a Material Adverse Effect.
(b) Each Group Company and each Subsidiary has paid in full all
amounts due and required to be paid as of the date hereof under each Material
Agreement required to be identified and will have satisfied in full all of its
liabilities, agreements and obligations thereunder due and required to be paid
prior to the Closing. All of the Material Agreements
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listed are in full force and effect. Each Group Company and each Subsidiary and
each other party thereto have performed all of the obligations required to be
due, paid or performed by them to date, have received no notice of default and
are not in default (with due notice or lapse of time or both) under any Material
Agreement except where any such failures to perform and defaults could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. None of the Group Companies, any Subsidiary or the Controlling
Shareholders has any present intention of not fully performing or expectation of
not being able to fully perform all of its obligations under each Material
Agreement, and none of the Group Companies, any Subsidiary or the Controlling
Shareholders has any knowledge of any breach or anticipated breach by any other
party to any contract or commitment to which any Group Company or any Subsidiary
is a party. There exists no actual or threatened termination, cancellation or
limitation of the business relationship of any Group Company or any Subsidiary
with any party to any such Material Agreement.
(c) The Company and each Subsidiary has listed in Schedule 3.11 its
ten largest customers of software products for the fiscal year ended July 31,
1999 (determined on the basis of both revenues and bookings during such period),
and the revenues and bookings for each customer during those periods. Except as
set forth on Schedule 3.11, none of these customers has reduced or terminated,
or has notified the Company or any Subsidiary in writing that it intends to
reduce or terminate, the amount of its business with the Company or any
Subsidiary.
Section 3.12 LITIGATION.
(a) Except for the Persistence Actions, there is no action, suit,
investigation or proceeding pending against or threatened against or affecting,
any Group Company or any Subsidiary or any of their respective assets before any
court or arbitrator or any governmental body, agency or official, nor is there
any basis therefor. None of the Group Companies, any Subsidiary or the
Controlling Shareholders has any reason to believe that any such action, suit,
investigation or proceeding will be brought against any Group Company or any
Subsidiary.
(b) No director or officer of any Group Company or any Subsidiary has
been convicted in a criminal proceeding in respect of which a pardon has not
been granted, is a named subject of a criminal proceeding which is presently
pending (excluding traffic violations and other minor offenses) or is to the
knowledge of such Person the subject of a criminal investigation.
Section 3.13 COMPLIANCE WITH LAWS AND COURT ORDERS; NO DEFAULTS. No
Group Company nor any Subsidiary is in violation of, nor has since the Balance
Sheet Date violated, any provisions of any laws, statutes, ordinances,
regulations, administrative interpretations, judgements, injunctions, orders,
policies or decrees of any court or governmental or administrative authority
that are applicable to any Group Company or any Subsidiary or their respective
assets, except for violations that have not had and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
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Section 3.14 PROPERTIES.
(a) Except as set forth on Schedule 3.14, the Company and each
Subsidiary has good title to, or in the case of leased property has valid
leasehold interests in, all personal property and assets (whether tangible or
intangible) leased in its name and reflected on its Balance Sheet or acquired or
leased after the Balance Sheet Date, except for property and assets sold since
the Balance Sheet Date in the ordinary and usual course of business or pursuant
to the BEA Stock Purchase Agreement. The Company and each Subsidiary has valid
leasehold interests in all real leased property leased in its name and reflected
on its Balance Sheet or leased after the Balance Sheet Date. None of such
property or assets (whether real or personal) is subject to any Liens, except:
(i) Liens disclosed on the Balance Sheets;
(ii) Liens for taxes not yet due or being contested in good faith
(and for which adequate accruals or reserves have been established on the
Balance Sheets); or
(iii) Liens disclosed in Schedule 3.14
(b) Except as set forth in Schedule 3.14, the equipment owned by the
Company and the Subsidiaries has been maintained consistently with standards
generally followed in the industry (giving due account to the age and length of
use of same, ordinary wear and tear excepted) and are adequate and suitable for
their uses.
(c) Except as disclosed in Schedule 3.14, the property and assets
owned or leased by the Company and the Subsidiaries, taken together with
Services Business Assets, or which they otherwise has the right to use,
constitute all of the property and assets held for use or used in connection
with the business of the Company and the Subsidiaries and are adequate to
conduct such business.
Section 3.15 PRODUCTS.
(a) Each of the software products produced or developed by the
Company or any Subsidiary is, and at all times up to and including the sale
thereof by the Company or any Subsidiary (a) has been in compliance in all
material respects with all applicable federal, state, and local laws and
regulations and (b) conforms in all material respects to any promises or
affirmations of fact made on the container or label for such product or in
connection with its sale, subject to returns, repairs, defects and allowances
consistent with past practice.
(b) Each product contains adequate warnings of any material design
defect, presented in a reasonably prominent manner, in accordance with
applicable laws, rules and regulations and current industry practice with
respect to its contents and use.
(c) Schedule 3.15(c) contains a list of all proprietary software
developed by the Company or any Subsidiary and currently sold, licensed or
otherwise used by the Company or
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any Subsidiary in their respective business, and any and all enhancements,
upgrades, customizations, modifications and maintenance thereof (the
"Proprietary Software"). Schedule 3.15(c) contains a list of all software other
than Proprietary Software which is currently distributed, licensed or otherwise
used by the Company or any Subsidiary, in their respective businesses, and any
and all enhancements, upgrades, customizations, modifications, and maintenance
thereof, but excluding any such item that constitutes a Services Business Asset,
(the "Licensed Software"). The Proprietary Software containing or calling on a
calendar function including without limitation, any function indexed to the CPU
clock, and any function providing specific dates or days, or calculating spans
of dates or days, records, stores, processes, provides, and, where appropriate,
inserts true and accurate dates and calculations for dates and spans including,
without limitation, dates and date calculations in and between the 20th and 21st
centuries.
(d) The Proprietary Software and the Licensed Software used by the
Company or any Subsidiary, operates in substantial conformity with its user
documentation and other descriptions and standards applicable thereto provided
by the Company or any Subsidiary, and the Proprietary Software does not contain
any known virus, timer, clock, counter or other limiting design, instruction or
routine, that would erase data, programming or become inoperable or otherwise
incapable of being used in the full manner for which it was designed and created
nor has any of the Company, any Subsidiary or the Controlling Shareholders been
informed that the Licensed Software has any such problems.
(e) The Company or a Subsidiary is the sole and exclusive owner of
all right, title and interest in and to the Proprietary Software, and has the
right to use, execute, reproduce, display, advertise, modify, prepare or have
prepared derivative works based upon, and has the right to distribute, exploit,
sell, transfer, license or lease all versions and releases of the Proprietary
Software. No Person other than (a) the Company, (b) any Subsidiary, or (c)
current customers of the Company or any Subsidiary, who have either signed a
license agreement with the Company or such Subsidiary, has any right or interest
of any kind or nature in or to the Proprietary Software or any portion thereof
including any right to sell, license, lease, transfer, distribute, use or
otherwise exploit the Proprietary Software other than through the licensing of
object code versions of the Proprietary Software. All of the Proprietary
Software was created by regular full-time employees of the Company or a
Subsidiary, and all such employees have waived their moral rights in and to the
Proprietary Software. To the extent that any author or developer of the
Proprietary Software was not a regular full-time employee of the Company or a
Subsidiary at the time such Person contributed to such Proprietary Software and
has waived his or her moral rights in and to such contribution. With respect to
the Proprietary Software: (a) the Company or Subsidiary maintains
machine-readable, master-reproducible copies, source code listings, technical
documentation and user manuals for the most current releases or versions thereof
and for all earlier releases or versions thereof currently being supported by
the Company or any Subsidiary; and (b) it can be maintained and modified by
reasonable competent programmers familiar with such language, hardware and
operating systems. Notwithstanding anything to the contrary in this paragraph
(e), it is acknowledged that the claims and allegations, even if true,
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made in the Persistence Actions against TOP and TOP US shall not be a breach of
this paragraph (e).
Section 3.16 INTELLECTUAL PROPERTY.
(a) Schedule 3.16 contains a list of all Intellectual Property Rights
owned or licensed and used or held for use by the Company or any Subsidiary,
including, without limitation, Intellectual Property Rights in and to the
Proprietary Software and the Licensed Software, but excluding all such items
that constitute Services Business Assets, ("Company Intellectual Property
Rights"), specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right; (ii) the owner of such Intellectual Property Right;
(iii) the jurisdictions by or in which such Intellectual Property Right is or
has been issued or registered or in which an application for such issuance or
registration has been filed, including the respective registration or
application numbers; and (iv) licenses, sublicenses and other agreements as to
which the Company or any Subsidiary is a party and pursuant to which any Person
is authorized to use such Intellectual Property Right, including the identity of
all parties thereto, a description of the nature and subject matter thereof, the
applicable royalty and the term thereof.
(b) The Company Intellectual Property Rights constitute all
Intellectual Property Rights necessary for the operation of the Company's and
the Subsidiaries' businesses as presently conducted and as proposed to be
conducted by the Company or TOP US. The Company Intellectual Property Rights
will be owned or available for use by the Company and the Subsidiaries on
identical terms and conditions immediately subsequent to the Closing hereunder.
No Company Intellectual Property Rights are involved in any interference or
re-examination or cancellation or opposition or expungement or amendment or
abandonment proceeding and none of the Company, any Subsidiary or the
Controlling Shareholders has been notified or alerted that any such proceeding
will hereafter be commenced. Except as set forth in Schedule 3.16, none of the
Company, any Subsidiary or any Shareholder, as to itself, has any knowledge of
any basis for provoking or initiating an interference or opposition proceeding
with respect to any Intellectual Property Right held or used by others, and does
not have any basis for believing that any of the Company Intellectual Property
Rights are being infringed by others. Each Person that has contributed to the
conception, reduction to practice, invention, authorship, creation or
development of any Company Intellectual Property Rights owned by the Company or
any Subsidiary has waived his or her moral rights in any copyright works within
such Company Intellectual Property Rights owned by the Company and each
Subsidiary, including without limitation the right to the integrity of such
copyright works, the right to be associated with such copyright works and the
right to modify such copyright works.
(c) Except for the Persistence Actions and as set forth in Schedule
3.16, no Group Company nor any Subsidiary is, or has been, a defendant in any
action, suit, investigation or proceeding relating to, or otherwise been
notified of, any alleged claim or infringement of the Company Intellectual
Property Rights, and (i) no Group Company, any Subsidiary or the Company
Intellectual Property Rights have infringed or are infringing on the
intellectual property of any third party, and (ii) no Group Company, any
Subsidiary or the Controlling Shareholders
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has any knowledge of any continuing infringement by any third party of any
Company Intellectual Property Right. Except as set forth on Schedule 3.16 or
pursuant to the BEA Stock Purchase Agreement, no Group Company nor any
Subsidiary has entered into any agreement to indemnify any other Person against
any charge of infringement, misappropriation or other conflict with respect to
any Intellectual Property Right.
(d) The Company has delivered to Buyer correct and complete copies of
all of the Company's and the Subsidiaries' patents, registrations and
applications and material licenses, agreements, and permissions (as amended to
date) relating to Company Intellectual Property Rights not constituting Services
Business Assets and has made available to Buyer correct and complete copies of
all other written documentation evidencing ownership and prosecution (if
applicable) of each such Company Intellectual Property Right. With respect to
each Intellectual Property Right that the Company or any Subsidiary owns and
subject to the Persistence Actions:
(i) all patents, industrial designs, copyrights, trademarks and
integrated circuit topographies included in the Company Intellectual Property
Rights and which are registered are valid and in full force (excluding the
registered US trademark for "TOP Link");
(ii) the Company and each Subsidiary possess all right, title,
and interest in and to the item;
(iii) the item is not subject to any outstanding judgment, order,
decree, stipulation, injunction, or charge;
(iv) action, suit, proceeding, hearing, investigation, claim, or
demand pending or threatened which challenges the legality, validity,
enforceability, use, or ownership of the Intellectual Property Right; and
(v) the item is not subject to any lien, security interest or
other encumbrance.
(e) Except as set forth in Schedule 3.16, the Company has supplied
Buyer with correct and complete copies of all licenses, sublicenses, agreements,
and permissions (as amended to date) with respect to such Intellectual Property
Right. With respect to each such Intellectual Property Right and subject to the
claims made in the Persistence Actions:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and effect;
(ii) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the Closing;
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(iii) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which with notice
or lapse of time could constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are true and correct
in all material respects with respect to the license under which the sublicense
has been granted;
(vi) except as set forth in Schedule 3.16, with respect to each
license, sublicense, agreement or permission, the item of the Intellectual
Property Right under each such license, sublicense, agreement or permission is
not subject to any outstanding judgment, order, decree, stipulation, injunction,
or charge; and
(vii) except as set forth in Schedule 3.16, with respect to each
license, sublicense, agreement or permission, no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand is pending or
threatened which challenges the legality, validity, or enforceability of the
item of the Intellectual Property Right under each such license, sublicense,
agreement or permission.
(f) Notwithstanding the foregoing, the Parties hereto acknowledge and
agree that the failure of TOP or any Subsidiary to register or apply for
registration in relation to any Company Intellectual Property Rights shall not
be a breach of this Section 3.16; provided, however, that this paragraph (f)
shall not apply to any claim by a third-party that any Company Intellectual
Property Right infringes the Intellectual Property Rights of such third-party.
Section 3.17 INSURANCE COVERAGE. Schedule 3.17 correctly describes each
insurance policy and fidelity bond relating to the assets, business, operations,
employees, officers or directors of the Company and the Subsidiaries. There is
no claim by the Company or any Subsidiary pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds or in respect of which such underwriters
have reserved their rights. All premiums payable under all such policies and
bonds have been paid timely and the Company and the Subsidiaries has otherwise
complied fully with the terms and conditions of all such policies and bonds.
Such policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) are in full force and effect. Such
policies and bonds are of the type and in amounts customarily carried by Persons
conducting businesses similar to those of the Company and the Subsidiaries.
There is no threatened termination of, premium increase with respect to, or
material alteration of coverage under, any of such policies or bonds. Except as
disclosed in Schedule 3.17, the Company and the Subsidiaries shall after the
Closing continue to have coverage under such policies and bonds with respect to
events occurring prior to the Closing.
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Section 3.18 LICENSES AND PERMITS.
(a) Schedule 3.18 correctly describes each license, franchise, permit
or other similar authorization and all approvals of governmental or regulatory
authorities affecting, or relating in any way to, the assets or business of the
Group Companies and the Subsidiaries which are material thereto (the "Permits")
together with the name of the government agency or entity issuing such Permit.
Except as set forth on the Schedule 3.18, such Permits are valid and in full
force and effect and none of the Permits will be terminated or impaired or
become terminable, in whole or in part, as a result of the transactions
contemplated hereby, except where such impairment or termination, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) The Group Companies and the Subsidiaries have all Permits and all
approvals of governmental or regulatory authorities as are required to operate
their respective businesses as presently conducted and as presently proposed to
be conducted in each jurisdiction where it is engaged in such activity, except
where the failure to have or maintain such Permits or approvals would not have
a Material Adverse Effect.
Section 3.19 RESERVED.
Section 3.20 LOANS, NOTES, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE.
Schedule 3.20 provides an accurate and complete breakdown and aging of all
accounts receivable, notes receivable and other receivables of the Group
Companies and the Subsidiaries as of February 29, 2000. Except as set forth on
Schedule 3.20 and except for any receivables payable by Buyer, all receivables
(a) have arisen only from bona fide transactions in the ordinary and usual
course of business consistent with past practice, (b) represent valid
obligations, (c) are current and collectible in the aggregate face amounts
thereof without any counterclaim or set-off when due, except to the extent of
the normal allowance for doubtful accounts with respect to accounts receivable
that are computed in a manner consistent with GAAP and past practice and are
reflected in the Balance Sheet or with respect to receivables arising subsequent
to the Balance Sheet Date, in a manner consistent with the books and records of
such Group Company or such Subsidiary, and (d) are owned by such Group Company
or such Subsidiary free of all Liens. No discount or allowance from any
receivable has been made or agreed to (other than customary payment discounts in
the ordinary and usual course of business consistent with past practice), and
none represents xxxxxxxx prior to actual sale of goods or provision of services
which will not be sold or provided within 12 months therefrom. Accounts payable
of the Group Companies and the Subsidiaries reflected on the Balance Sheets and
all accounts payable arising after the Balance Sheet Date arose, and have
arisen, from bona fide transactions.
Section 3.21 RESERVED.
Section 3.22 FINDERS' FEES. No investment banker, broker, finder or
other intermediary is entitled to any fee or commission in connection with the
transactions
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contemplated by this Agreement based upon arrangements made by or on behalf of
any Group Company or any Subsidiary.
Section 3.23 EMPLOYEE BENEFIT PLANS; TERMINATION AND SEVERANCE
AGREEMENTS.
(a) Schedule 3.23 attached hereto sets forth a complete and accurate
list of each pension, retirement, savings, profit sharing, deferred
compensation, medical, vision, dental or health plan, or life insurance plan,
bonus, incentive and special compensation or other plan or other employee
benefit plan, program, contract, arrangement, agreement or understanding,
including each employment, termination and severance agreement, contract,
arrangement and understanding (whether written or oral) with employees of the
Group Companies or the Subsidiaries (hereinafter referred to individually as a
"Plan" and collectively as the "Plans") to which each Group Company or any
Subsidiary is required to contribute, or which each Group Company or any
Subsidiary sponsors or which is otherwise applicable to employees or retirees or
categories of employees or retirees of the Group Companies or the Subsidiaries
generally.
(b) All of the Plans are and have been established, registered,
qualified, invested and administered, in all respects, in accordance with all
laws, regulations, orders or other legislative, administrative or judicial
promulgations applicable to the Plans ("Applicable Laws") and in accordance with
all understandings, written or oral, between any of the Group Companies and the
Subsidiaries and the Employees. All governmental filings pertaining to the Plans
that are required to be made prior to the Closing Date have been made or will
have been made prior to the Closing. No fact or circumstances exists that could
adversely affect the tax-exempt status of a Plan that is intended to be
tax-exempt.
(c) All obligations regarding the Plans have been satisfied, there
are no outstanding defaults or violations by any party thereto and no taxes,
penalties or fees are owing under, or that may be imposed upon, any of the
Plans. The Group Companies and the Subsidiaries, or at least one of them, may
unilaterally amend, modify, vary or terminate, in whole or in part, each Plan
and suspend contributions under or withdraw surplus from each Plan (or the
related trust), subject only to the approvals required by Applicable Laws and
other limitations imposed by statute.
(d) No Plan, nor any related trust or other funding medium
thereunder, is subject to any pending investigation, examination or other
proceeding, action or claim initiated by any governmental agency or
instrumentality, or by any other party (other than routine claims for benefits)
and there exists no state of facts which, after notice or lapse of time or both,
could reasonably be expected to give rise to any such investigation, examination
or other proceeding, action or claim or to affect the registration of any Plan
required to be registered with any governmental agency. Further, should any
matter arise which could affect the registration of any of the Plans, the
appropriate Group Company or Subsidiary will, in a timely fashion, take all
steps required to ensure the registration is not affected.
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(e) All contributions or premiums required to be made by any of the
Group Companies or the Subsidiaries under the terms of each Plan or by
Applicable Laws have been made in a timely fashion in accordance with Applicable
Laws and the terms of the Plans, and none of the Group Companies or the
Subsidiaries has, and as of the Closing, none of them will have, any liability
(other than liabilities accruing after the Closing Date) with respect to any of
the Plans. Contributions or premiums will be paid by the Group Companies and the
Subsidiaries on an accrual basis for the period up to the Closing even though
not otherwise required to be made until a later date in respect of the period
that includes the Closing or any prior period.
(f) No amendments have been made to any Plan and no improvements to
any Plan have been promised and no amendments or improvements to a Plan will be
made or promised prior to the Closing Date. There have been no improper
withdrawals, applications or transfers of assets from any Plan or the trusts or
other funding media relating thereto, and none of the Group Companies or the
Subsidiaries, nor any of their agents, nor any other person that is a fiduciary
with respect to any of the Plans has been in breach of any fiduciary obligation
with respect to the Plans or the trust or other funding media relating thereto.
Subject to approvals under Applicable Laws and other limitations imposed by
statute, the Buyer may amend, revise or merge any Plan or the assets transferred
from any Plan with any other arrangement, plan or fund.
(g) The Group Companies and the Subsidiaries have furnished to the
Buyer true, correct and complete copies of all the Plans as amended as of the
date hereof together with all related documentation including, without
limitation, funding agreements, actuarial reports, funding and financial
information returns and statements, all professional opinions (whether or not
internally prepared) with respect to each Plan, all material internal memoranda
concerning the Plans, copies of material correspondence with all regulatory
authorities with respect to each Plan and plan summaries, booklets and personnel
manuals. No material changes have occurred to the Plans or are expected to occur
which would affect the actuarial reports or financial statements required to be
provided to the Buyers pursuant to this Section 3.23.
(h) Each Plan that is subject to a funding requirement as a matter of
Applicable Law or contract is fully funded or fully insured on both an ongoing
and solvency basis pursuant to the actuarial assumptions in Schedule 3.23. All
employee data necessary to administer each Plan has been provided by the Group
Companies and the Subsidiaries to Buyer and is true and correct as of the date
hereof, and the Group Companies and the Subsidiaries will notify the Buyer of
any changes thereto occurring prior to the Closing Date. No insurance policy or
any other contract or agreement affecting any Plan requires or permits a
retroactive increase in premiums or payments due thereunder. The level of
insurance reserves under each insured Plan is reasonable and sufficient to
provide for all incurred but unreported claims.
(i) Except as disclosed in Schedule 3.23, none of the Plans provides
benefits to retired employees or to the beneficiaries or dependents of retired
employees.
(j) There is not now, and there has never been, any trade or business
(whether or not incorporated), other than another Group Company or Subsidiary,
that would be treated as a
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single employer with any Group Company or Subsidiary under Section 4001 of the
U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 414(b), (c), (m) or (o) of the Code.
(k) With respect to any Plan that covers one or more Employee who is
a citizen or resident of the United States and that is not excluded from the
coverage of Title I of ERISA by reason of being maintained outside of the United
States primarily for the benefit of persons substantially all of whom are
nonresident aliens, as provided in Section 4(b)(4) of ERISA (each plan so
identified, an "ERISA Plan"): (i) no "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code has occurred; (ii) no civil
or criminal action under Title I, Subtitle B, Part 5 of ERISA is pending or
threatened against any fiduciary of any Plan; (iii) the Company's 401(k) Plan is
the only ERISA Plan that is a "pension plan" as defined in Section 3(2) of ERISA
(an "ERISA Pension Plan"), and that Plan and its trust are a qualified plan and
trust under the Code and the applicable regulations, with respect to which the
Internal Revenue Service ("IRS") has issued a favorable determination letter,
and nothing has occurred since the date of each determination letter that would
affect adversely its qualification and the IRS has not taken any action to
revoke any favorable determination with respect to the qualified status of that
Plan; (iv) no ERISA Pension Plan has been terminated or merged during the past
six years; and (v) the Group Companies have provided to the Buyer a copy of the
bond required by Section 412 of ERISA, if any.
(1) No Plan has been terminated or merged under circumstances that
would, under the laws of the applicable jurisdiction, cause any Group Company or
any Subsidiary to have liability or potential liability for obligations under
the plan with which it was merged with respect to operations of that plan before
the merger of plans.
(m) No Group Company or any Subsidiary is a party to any employment,
termination or severance agreement, contract, arrangement or understanding with
any employee or former employee of the Group Companies and the Subsidiaries that
is not terminable by its terms at will by the applicable employer without cost
or penalty, except where such cost or penalty is imposed by statutory law. The
purchase by Buyer of the Shares will not result in any obligation of Buyer to
pay any employee of the Group Companies and the Subsidiaries (i) severance pay
or termination benefits so long as such employee remains employed by Buyer or
the applicable Group Company or Subsidiary after the Closing or (ii) "sale of
business" for "change of control" bonus or payment, except where such obligation
is imposed by statutory law.
Section 3.24 EMPLOYEE AND LABOR MATTERS.
(a) Neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other contract with or commitment to any
labor union or association representing any employee of the Company or any
Subsidiary, nor does any labor union or collective bargaining agent represent
any employees of the Company or any Subsidiary. No such agreement, contract or
other commitment has been requested by, or is under discussion by management of
the Company or any Subsidiary (or any management group or association of
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which the Company or any Subsidiary is a member or otherwise a participant)
with, any group of employees or others, nor are there any other current
activities known to the Company or any Subsidiary to organize any employees of
the Company or any Subsidiary into a collective bargaining unit. There are no
pending, or to the knowledge of the Company or any Subsidiary threatened, union
grievances against the Company or any Subsidiary as to which there is a
reasonable possibility of a material adverse determination. Neither the Company
nor any Subsidiary is engaged in any unfair labor practice. There is no unfair
labor practice complaint pending or, to the knowledge of the Company or any
Subsidiary, threatened against the Company or any Subsidiary. There is, and
during the past two years there has been, no labor strike, dispute, slow-down or
work stoppage pending, or, to the knowledge of the Company or any Subsidiary,
threatened against the Company or any Subsidiary. There are no pending, or, to
the knowledge of the Company or any Subsidiary, threatened, charges against the
Company or any Subsidiary or any current or former employee, officer or director
of the Company or any Subsidiary before the Equal Employment Opportunity
Commission or any state or local agency, or governmental authority of a
jurisdiction other than the United States, that is responsible for the
prevention of unlawful employment practices.
(b) All employees working in the United States hired by the Company
and each Subsidiary on or after November 7, 1986 are authorized for employment
by such party in the United States in accordance with the Immigration and
Naturalization Act, as amended, and regulations promulgated under that statute,
except where the failure to be so authorized, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No
allegations of immigration-related unfair employment practices have been made
with the Equal Employment Opportunity Commission or the Special Counsel for
Immigration-Related Unfair Employment Practices. The Company and each Subsidiary
has completed and retained in accordance with the Immigration and Naturalization
Service regulations a Form I-9 for all employees working in the United States
hired on or after November 7, 1986, except those employees whose employment
terminated on or before June 1, 1987. Except as set forth in Schedule 3.24
hereto, none of the employees currently employed by the Company or any
Subsidiary is authorized for employment in the United States pursuant to a
nonimmigrant visa which authorizes the employee to be employed by the Company or
any Subsidiary. All employees working in jurisdictions other than the United
States have been hired and are employed in compliance with all applicable laws
of the relevant jurisdiction.
Section 3.25 ENVIRONMENTAL MATTERS. No Group Company nor any Subsidiary
is in violation of any federal, state, or local Environmental Laws applicable to
it or its properties, or any material limitations, restrictions, conditions,
standards, obligations or timetables contained in any Environmental Law. No
notice or action alleging such violation is pending or threatened, and no past
or present condition or practice of the businesses conducted by any Group
Company or any Subsidiary would prevent continued compliance with any
Environmental Permits or give rise to any common law or statutory liability or
otherwise from the basis of any claim, action or proceeding with respect to any
Group Company or any Subsidiary involving any Hazardous Substances. To the
knowledge of any Group Company, any Subsidiary or the Controlling Shareholders,
the Group Companies and the Subsidiaries have no Environmental Liability.
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Section 3.26 CERTAIN PRACTICES. No Group Company, any Subsidiary or any
of their respective directors, officers or employees has, directly or
indirectly, given or agreed to give any significant rebate, gift or similar
benefit to any supplier, customer, governmental employee or other person who
was, is or may be in a position to help or hinder any Group Company or any
Subsidiary (or assist in connection with any actual or proposed transaction).
Section 3.27 RECORDS. The minute books of the Group Companies and the
Subsidiaries, as previously made available to the Buyer, accurately reflect as
of the date hereof all formal corporate action of the stockholders and the board
of directors of the Group Companies and the Subsidiaries and the stock
certificate books and stock transfer ledgers thereof are complete and correct in
all respects with respect to the matters set forth therein.
Section 3.28 NO INDEMNIFICATION LIABILITIES. Except pursuant to the BEA
Stock Purchase Agreement, there are no known existing liabilities that require
any Group Company or any Subsidiary to indemnify any of their respective
officers or directors for acts or omissions by such persons acting on behalf of
any Group Company or any Subsidiary or, except for the Group Companies' or the
Subsidiaries' organizational documents, existing agreements to provide
indemnification for such liabilities.
Section 3.2 9 FULL DISCLOSURE. No representation or warranty of any
Group Company or any Subsidiary made in this Agreement or any of the Transaction
Documents, including any schedules or exhibits hereto or thereto, nor any
written statement furnished to Buyer pursuant hereto, or in connection with the
transactions contemplated hereby, furnished to Buyer by any Group Company or
any Subsidiary, contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
or facts contained herein or therein not misleading. There is no fact or
information known to any Group Company or any Subsidiary which the Group
Companies have not disclosed to the Buyer in writing which any Group Company or
any Subsidiary presently believes has or could have a Material Adverse Effect
other than any changes in the prospects of any Group Company or any Subsidiary
which result from developments affecting general economic or industry
conditions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders hereby severally represents and warrants to
Buyer, as to himself or herself only, as of the date hereof and, except where
specifically provided herein to be as of the date hereof, as of the Closing
Date, as follows:
Section 4.01 TITLE TO SHARES. Each Shareholder owns, or will own as of
immediately prior to the Closing, the Shares set forth opposite its name in
Schedule I hereto (which in the aggregate together with the Unit Shares
represent all of the issued and outstanding shares of
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capital stock of the Company) free and clear of any Lien, restriction on sale or
transfer (other than restrictions imposed by applicable securities laws),
preemptive right, limitations on voting rights or options and has the authority
to dispose of such Shares pursuant to this Agreement.
Section 4.02 SHAREHOLDER POWER AND AUTHORITY. Each Shareholder has the
legal capacity and authority to execute, deliver and perform this Agreement and
the other Transaction Documents to which such Shareholder is a party. This
Agreement has been duly executed and delivered by each Shareholder and
constitutes the legal, valid and binding obligation of such Shareholder,
enforceable against the Shareholder in accordance with its terms, except as
enforcement thereof may be limited by liquidation, conservatorship, bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally from time to time in effect and except that
equitable remedies are subject to judicial discretion, and except that a court
of competent jurisdiction may find the provisions of Section 6.04 to be
unenforceable in whole or part. Each of the other Transaction Documents to which
such Shareholder is a party, when executed and delivered in accordance with the
terms hereof and assuming that each such Transaction Document has been duly
executed and delivered by the other parties thereto, will constitute the legal,
valid and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms, except as enforcement thereof may be
limited by liquidation, conservatorship, bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally from time to time in effect and except that equitable remedies are
subject to judicial discretion.
Section 4.03 EFFECT OF AGREEMENT ON THE SHAREHOLDERS. Neither the
execution and delivery of this Agreement nor the Transaction Documents to which
each Shareholder is a party nor the consummation of the transactions
contemplated hereby or thereby will (i) result in the acceleration, breach or
termination of, or the creation in any party of the right to accelerate,
terminate, modify, cancel or require any notice under, any contract, lease,
license, instrument or other arrangement, or other obligation or liability to
which such Shareholder is a party or is bound or to which the Shareholder's
assets are subject, except for any rights that an employee of the Company or any
Subsidiary may have by reason of any changes in such employee's employment
proposed by Buyer, (ii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction or decree applicable to the Shareholder by
which any of his or her respective properties or assets is bound or affected,
(iv) or result in the creation of any Lien upon the Shares or any assets,
tangible or intangible, of such Shareholder.
Section 4.04 LITIGATION. There are no claims, actions, suits,
arbitrations, grievances, proceedings or investigations pending or threatened
against such Shareholder, at law, in equity or before any federal, state,
municipal or other governmental or nongovernmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
Section 4.05 SHAREHOLDER AGREEMENTS. Except for the Shareholders
Agreement (as defined in Section 10.02(d)) or as set forth on Schedule 4.05,
there are no agreements, written or oral, between any Group Company and any
Shareholder or between any Shareholders, relating to
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the acquisition (including, without limitation, rights of first refusal,
pre-emptive rights and anti-dilution rights), disposition, registration under
the Securities Act, as amended, or other similar rights with respect to the
Group Company Securities. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
any Group Company.
Section 4.06 FULL DISCLOSURE. No representation or warranty of the
Shareholders made in this Agreement, nor any written statement furnished to
Buyer pursuant hereto, or in connection with the transactions contemplated
hereby, heretofore furnished to Buyer by the Shareholders, contains or will
contain any statement which constitutes an untrue statement of a material fact
or fails or will fail to state a material fact which was necessary to make the
statements or facts contained herein or therein not misleading.
Section 4.07 RESIDENCE. The Shareholders and the Unit Shareholders are
not non-residents of Canada for purposes of Section 116 of the Income Tax Act
(Canada), except as disclosed in Schedule 2 hereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Group Companies and the
Shareholders as follows:
Section 5.01 CORPORATE EXISTENCE AND POWER. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted and as contemplated to be conducted by
Buyer. Buyer is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary, except
for those jurisdictions where failure to be so qualified, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Section 5.02 CORPORATE AUTHORIZATION AND AUTHORITY. Buyer has the
corporate power and authority to execute, deliver and perform this Agreement and
the other Transaction Documents to which it is a party. This Agreement, and the
other Transaction Documents to which it is a party, have been duly authorized
and approved by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer, and assuming that it
has been duly executed and delivered by the Company and the Shareholders,
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as enforcement thereof may be
limited by liquidation, conservatorship, bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
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rights generally from time to time in effect and except that equitable remedies
are subject to judicial discretion. Each of the other Transaction Documents to
which Buyer is a party, when executed and delivered in accordance with the terms
hereof and assuming that each such Transaction Document has been duly executed
and delivered by the other parties thereto, constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as enforcement thereof may be limited by liquidation,
conservatorship, bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally from time to time
in effect and except that equitable remedies are subject to judicial discretion.
Section 5.03 GOVERNMENTAL AUTHORIZATION. Except as set forth in Schedule
5.03, the execution, delivery and performance by Buyer of this Agreement
requires no action by or in respect of, or filing with, any governmental body,
agency, or official, except for those previously made or which will be made
prior to Closing and except for Tax filings and documents related to the
employment of employees of the Group Companies.
Section 5.04 EFFECT OF AGREEMENT ON BUYER. Except asset forth in
Schedule 5.04, neither the execution and delivery of this Agreement nor the
Transaction Documents to which it is a party nor the consummation of the
transactions contemplated hereby or thereby will (i) conflict with, violate or
result in a breach of any provision of the certificate of incorporation or
bylaws of Buyer, or (ii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction or decree applicable to Buyer or by which any
of its assets is bound or affected.
Section 5.05 FINDERS' FEES. Except as previously disclosed by Buyer to
the Company, no investment banker, broker, finder or other intermediary is
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by Buyer.
ARTICLE VI
COVENANTS OF THE PARTIES
Section 6.01 REASONABLE BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Each of the parties
agrees to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or desirable
in order to consummate or implement expeditiously the transactions contemplated
by this Agreement.
Section 6.02 CERTAIN FILINGS. Each of the parties shall cooperate with
one another (a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are
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required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement, and
(b) in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers.
Section 6.03 PUBLIC ANNOUNCEMENTS. Each of the parties acknowledges the
importance of appropriate disclosures in positioning the relationship between
the two companies to the distribution channel, the press, customers and others.
Each of Buyer, the Group Companies and the Shareholders agree to make no press
releases or other public announcements regarding this Agreement without prior
written consent of Buyer and TOP.
Section 6.04 NONCOMPETITION; NONSOLICITATION. In order that Buyer may
have and enjoy the benefit of the acquisition of the Company, none of the
Shareholders shall directly or indirectly, for a period of three years
commencing on the Closing Date, (a) engage (as owner, stockholder, partner or
otherwise, except as a holder of fewer than 5% of the outstanding shares or
other equity interests of a company whose shares or other equity interests are
publicly traded) in any business which directly or indirectly competes with the
business of the Company or any Subsidiary as now conducted by the Company or any
Subsidiary as of the Closing Date or for which the Company or any Subsidiary has
developed a written business plan; (b) solicit work from, or perform work for,
any customer of the Company or any Subsidiary for work substantially similar to
work performed by the Company or such Subsidiary for the customer; (c) induce
any employee of the Company or any Subsidiary to engage in any activity in which
such Shareholder is prohibited from engaging by clause (a) or to terminate his
or her employment with the Company or any Subsidiary, and will not directly or
indirectly employ or offer employment to any person who was employed by the
Company or any Subsidiary unless such person shall have been terminated without
cause or ceased to be employed by the Company or such Subsidiary for a period of
at least 12 months; or (d) make any statement or take any action intended to
impair the goodwill or the business reputation of the Company or any Subsidiary,
or to be otherwise detrimental to the interests of the Company or any
Subsidiary, including any action or statement intended, directly or indirectly,
to benefit a competitor of the Company or any Subsidiary. It is expressly
understood and agreed that although the Shareholders and Buyer consider the
restrictions contained in this Section 6.04 to be reasonable, if a final
judicial determination is made by a court of competent jurisdiction that the
time and territory or any other restriction contained in this Section 6.04 is an
unenforceable restriction against any Shareholder, the provisions of this
Section 6.04 shall not be rendered void but shall be deemed amended to apply as
to such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Section
6.04 is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
Section 6.05 CONFIDENTIALITY. Each individual Shareholder will treat and
hold as such all Confidential Information, refrain from using any of the
Confidential Information except in
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connection with this Agreement, and deliver promptly to the Company or destroy,
at the request and option of the Company, all tangible embodiments (and all
copies) of the Confidential Information which are in his or its possession. In
the event that any Shareholder is requested or required (by oral question or
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, that individual will promptly notify the Company of
the request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 6.05.
If, in the absence of a protective order or the receipt of a waiver hereunder,
any Shareholder is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, that
individual may disclose the Confidential Information to the tribunal; provided,
however, that the disclosing individual shall use his or her best efforts to
obtain, at the request of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate.
Section 6.06 NO NEGOTIATIONS. Until the termination of this Agreement in
accordance with its terms, no Group Company nor the Shareholders shall initiate
discussions with, engage in negotiations with, or provide any information to any
corporation, partnership, person or other entity or group involving the possible
sale, directly or indirectly, transfer or joint venture with the Company or any
Subsidiary, their respective businesses or assets, or the capital stock of any
Group Company or any Subsidiary to any person or entity other than Buyer.
Section 6.07 SALES AND TRANSFER TAXES. All applicable filing, recording,
registration, stamp, documentary and other similar Taxes and fees ("Transfer
Taxes") that are payable in connection with the sale and transfer of the Shares
will be borne solely by Buyer (except to the extent that such Transfer Taxes are
required to be paid under applicable legislation by one or more of the
Shareholders or Unit Shareholders).
Section 6.08 OPTIONS OF BUYER'S AFFILIATE. Buyer hereby agrees to cause
WebGain, Inc. to grant options to purchase shares of its common stock, with the
grant date thereof to be dated as of the date hereof, to those persons listed on
the attached Schedule 6.08, in the individual amounts set forth opposite such
person's name on such Schedule 6.08 and on such other terms and conditions as
are set forth in the stock option plan or plans and related agreements pursuant
to which such options will be granted; provided, however, that no such options
will be granted, or any such grant shall be cancelled without any payment
therefor, to any person who is not a Transferred Employee (as defined in Section
8.01 hereof).
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ARTICLE VII
TAX REPRESENTATIONS AND COVENANTS
The Group Companies and the Controlling Shareholders jointly and
severally represent, warrant and covenant to Buyer as of the date hereof and as
of the Closing Date as follows:
Section 7.01 TAX DEFINITIONS. The following terms, as used herein, have
the following meanings:
"Pre-Closing Tax Period" means any Tax period ending on or before the
Closing Date.
"Tax" means (a) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, real and personal property,
environmental, income, goods and services, capital, capital gains, net worth,
employer health or windfall profit tax, custom, duty or other tax, levy, impost,
fee or other like assessment or charge of any kind whatsoever, including Canada
Pension Plan and provincial pension plan contributions, unemployment and
employment insurance payments and workers' compensation premiums, together with
any installments with respect thereto, together with any interest, penalty,
fine, addition-to-tax or additional amount imposed by any governmental authority
(domestic, federal, state, provincial, municipal or foreign) (a "Taxing
Authority"), whether disputed or not, (b) any liability of any Group Company or
any Subsidiary for the payment of any amount of the type described in clause (a)
above as a result of being a member of an affiliated, consolidated, combined or
unitary group, and (c) any liability of any Group Company or any Subsidiary for
the payment of any amount as a result of being party to any Tax Sharing
Agreement or with respect to the payment of any amounts of the type described in
clauses (a) or (b) above as a result of any express or implied obligation to
indemnify any other Person.
"Tax Asset" means any net operating loss, net capital loss, investment
tax credit, foreign tax credit, charitable deduction carryover or any other
credit or tax attribute which could reduce Taxes (including, without limitation,
credits or other tax attributes which could reduce alternative minimum Taxes).
"Tax Sharing Agreement" means any existing Tax sharing agreements or
arrangements (whether or not written) binding any Group Company or any
Subsidiary and any other agreement or arrangement (including any arrangement
required or permitted by law) which (a) requires any Group Company or any
Subsidiary to make any Tax payment to or for the account of any other person,
(b) affords any other person to utilize any Tax Asset of any Group Company or
any Subsidiary to reduce such other person's Taxes, (c) affords any Group
Company or any Subsidiary the right to utilize any Tax Asset of any other person
to reduce any Taxes of any Group Company or any Subsidiary, (d) requires or
permits the transfer or assignment of income, revenues, receipts, or gains, or
(e) requires or permits any Group Company or any Subsidiary to
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determine its Tax liability by taking into account or by reference to the Tax
liability, income, revenues, receipts or gains of any other person.
Section 7.02 TAX REPRESENTATIONS AND COVENANTS.
(a) Except as set forth in the Balance Sheets (including the notes
thereto) or on Schedule 7.02(a):
(i) all Tax returns, statements, reports, declarations,
remittances, information returns, forms and other documents of every nature
(including estimated tax or information returns and reports) required to be
filed with any Taxing Authority or in respect of any Taxes or in respect of any
other provision in any domestic or foreign, federal, provincial, municipal,
state, territorial or other taxing statute with respect to any Pre-Closing Tax
Period by or on behalf of any Group Company or any Subsidiary (collectively, the
"Returns") have been or will be timely filed with all appropriate Taxing
Authorities when due in accordance with all applicable laws except with respect
to any Return that is not due until after the Closing Date;
(ii) with the exception of Return that is not due until after
the Closing Date the Returns correctly reflected (and, as to any Returns not
filed as of the date hereof, will correctly reflect) in all material respects
the facts regarding the income, business, assets, operations, activities and
status of the Group Companies and the Subsidiaries and any other information, as
required to be shown therein, are correct and complete in all material respects,
and no material fact has been omitted therefrom;
(iii) all Taxes shown as due and payable on the Returns that
have been filed, or on any assessments or reassessments in respect of any such
Returns have been timely paid in full, or withheld and remitted to the
appropriate Taxing Authority;
(iv) the charges, accruals and reserves for Taxes required to be
paid by the Group Companies and the Subsidiaries for any Pre-Closing Tax Period
(including any Pre-Closing Tax Period for which no Return has yet been filed)
reflected on the Balance Sheets and the books of the Group Companies and the
Subsidiaries (excluding any provision for deferred income taxes) are adequate to
cover such Taxes in accordance with Canadian generally accepted accounting
principles;
(v) no Group Company nor any Subsidiary is delinquent in the
payment of any Tax required to be paid on or prior to the date thereof or has
requested any extension of time within which to file any Return, which Return
has not yet been filed;
(vi) no other Taxes in respect of any Pre-Closing Tax Period are
payable by the Group Companies or the Subsidiaries, except to the extent such
Taxes (A) are reflected on the Balance Sheets or (B) are reasonably attributable
to a Group Company or the Subsidiaries for a Tax Period ending on the Closing
Date and are unrelated to the transactions contemplated hereby or by the BEA
Stock Purchase Agreement (other than due to any challenge,
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reassessment or reallocation of the valuation of any of the Services Business
Assets (or liabilities assumed in connection therewith) from and after the
Closing Date);
(vii) no Group Company (or any member of any affiliated,
consolidated, combined or unitary group of which any Group Company is or has
been a member) has granted, executed or filed with any Taxing Authority any
extension or waiver of or agreement extending or waiving, the statute of
limitations period, or assessment or reassessment period, applicable to any
Return, which period (after giving effect to such extension or waiver) has not
yet expired;
(viii) there is no claim, audit, action, suit, proceeding, or
investigation now pending or threatened (including, any issues that, to the
knowledge of any Group Company, any Subsidiary or the Controlling Shareholders,
may be raised by any Taxing Authority) against or with respect to any Group
Company or any Subsidiary in respect of any Tax or Tax Asset;
(ix) there are no reassessments of Taxes of the Group Companies
or the Subsidiaries that have been issued and are outstanding and there are no
outstanding issues which have been raised and communicated to the Group
Companies or the Subsidiaries by any Taxing Authority for any taxation year in
respect of which a Return of the Group Companies or Subsidiaries has been
audited;
(x) no Taxing Authority has challenged, disputed or questioned
the Group Companies or the Subsidiaries in respect of Taxes or of any Returns;
(xi) the Group Companies and the Subsidiaries are not
negotiating any draft assessment or reassessment with any Taxing Authority;
(xii) none of the Group Companies, the Subsidiaries or the
Controlling Shareholders is aware of any contingent liabilities for Taxes or any
grounds for an assessment or reassessment of the Group Companies or the
Subsidiaries, including, without limitation, unreported benefits conferred on
any shareholder of the Group Companies or Subsidiaries, aggressive treatment of
income, expenses, credits or other claims for deduction under any Return other
than as disclosed in the Balance Sheets, except for the Company's practice of
paying substantial year-end bonuses to each of Xxxx Xxxx, Xxxx Xxxxx, Xxxx
Xxxxxxx and Learning Dimensions Inc.;
(xiii) none of the Group Companies, the Subsidiaries or the
Controlling Shareholders has received any indication from any Taxing Authority
that an assessment or reassessment of the Group Companies or Subsidiaries is
proposed in respect of any Taxes, regardless of its merits;
(xiv) all taxation years up to and including the taxation year
ended July 31,1995 are considered closed by Canadian federal governmental bodies
and all taxation years up to and including the taxation year ended July 31, 1994
are considered closed by provincial governmental bodies, in each case, for the
purposes of all Taxes;
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(xv) the Group Companies and the Subsidiaries have withheld from
each payment made to any of their present or former employees, officers and
directors, and to all persons who are non-residents of Canada for the purposes
of the Income Tax Act (Canada) all amounts required by law to be withheld, and
furthermore, have remitted such withheld amounts within the prescribed periods
to the appropriate Taxing Authority;
(xvi) the Group Companies and the Subsidiaries have remitted all
Canada Pension Plan contributions, provincial pension plan contributions,
unemployment and employment insurance premiums, employer health taxes and other
Taxes payable by them in respect of their employees and have remitted such
amounts to the proper Taxing Authority within the time required under the
applicable legislation;
(xvii) the Group Companies and the Subsidiaries have charged,
collected and remitted on a timely basis all Taxes as required under applicable
legislation on any sale, supply or delivery whatsoever, made by the Group
Companies or the Subsidiaries;
(xviii) at Closing, for the purposes of the Income Tax Act
(Canada), the Group Companies and the Subsidiaries will own depreciable property
of the prescribed classes and having undepreciated capital costs as set out in
Schedule 7.02(a);
(xix) the Group Companies and the Subsidiaries will not at any
time be deemed to have a capital gain pursuant to subsection 80.03(2) of the
Income Tax Act (Canada) as a result of any transaction or event taking place
prior to Closing;
(xx) the Group Companies and the Subsidiaries have not and,
without the prior written consent of Buyer, will not claim any capital gains
reserves in respect of any of the transactions referred to in the BEA Stock
Purchase Agreement;
(xxi) there are no circumstances existing which could result in
the application of section 78 of the Income Tax Act (Canada) or any equivalent
provincial provision to the Group Companies or the Subsidiaries;
(xxii) no Group Company nor any Subsidiary has filed any request
for ruling or determination of any Taxing Authority in respect of any Tax which
has been denied during the past five years or which is pending;
(xxiii) no Group Company nor any Subsidiary owns any interest in
real property in the State of New York or in any other jurisdiction in which a
Tax is imposed on the transfer of a controlling interest in an entity that owns
any interest in real property;
(xxiv) no Group Company (except with respect to the other Group
Companies or the Subsidiaries) nor any Subsidiary (except with respect to the
Group Companies or any other Subsidiary) has been a member of an affiliated,
consolidated, combined or unitary group;
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(xxv) all information set forth in the notes to the Balance
Sheets relating to Tax matters is true and complete as of the date thereof;
(xxvi) no Group Company nor any Subsidiary is a party to any Tax
Sharing Agreement or is otherwise under any obligation to pay any third party an
amount with respect to any Tax;
(xxvii) since the Balance Sheet Date, no Group Company nor any
Affiliate of any Group Company has, to the extent it may affect or relate to any
Group Company or any Subsidiary, made or changed any tax election, changed any
annual tax accounting period, adopted or changed any method of tax accounting,
filed any amended Return, entered into any closing agreement, settled any Tax
claim or assessment, surrendered any right to claim a Tax refund, or consented
to any extension or waiver of the limitation period applicable to any Tax claim
or assessment, if any such action would have the effect of increasing the Tax
liability or decreasing any Tax Asset of any Group Company or any Subsidiary;
and
(xxviii) since the Balance Sheet Date, no Group Company nor any
Subsidiary has reserved any amount for or made any payment of Taxes to any other
person or any Taxing Authority except for such Taxes as were due or payable to
the Taxing Authority or had been properly estimated in accordance with
applicable law as applied in a manner consistent with past practice of the Group
Companies.
(b) Schedule 7.02(b) contains a list of all jurisdictions (whether
foreign or domestic) to which any Tax is properly payable by the Group Companies
and the Subsidiaries.
(c) Schedule 7.02(c) contains an accurate description of current
audit issues relating to any Tax, and Schedule 7.02(c) contains copies of
revenue agent's or similar reports furnished by any Taxing Authority for the
taxable years which have not been examined and closed or with respect to which
the applicable period for assessment or reassessment under applicable law, after
giving effect to extensions or waivers, has not expired.
ARTICLE VIII
EMPLOYEE BENEFITS
SECTION 8.01 EMPLOYEE MATTERS.
(a) The term "Employees" shall mean all employees of the Company and
the Subsidiaries on the day immediately prior to the Closing Date, including any
employees on vacation, but excluding any employee on (i) long-term disability or
(ii) short-term disability or worker's compensation until, in the case of clause
(ii) above, such employee is physically able to return to active employment with
such Group Company or Subsidiary. Attached hereto as Schedule 8.01 is a current
list of Employees, including current base rates of pay, positions
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(including non-exempt status) and dates of hire of such Employees. The term
"Transferred Employees" shall mean any Employees who are employed by Buyer or
any Affiliate of Buyer (other than BEA Systems, Inc. or any of its wholly-owned
subsidiaries) immediately after the Closing. The term "Employee" or "Transferred
Employee" shall mean any of the Employees or Transferred Employees,
respectively.
(b) The Controlling Shareholders shall indemnify and hold harmless
the Buyer from and against any and all losses, damages, expenses, liabilities,
claims and demands whatsoever made or brought against the Buyer by any person,
employee, association or trade union or by any governmental agency, authority or
ministry which in any way pertains to or arises out of the employment of the
employees by any of the Group Companies or the Subsidiaries prior to the
Closing, including, without limiting the generality of the foregoing, any and
all losses, damages, expenses, liabilities, claims and demands whatsoever with
respect to any of the following incurred by any Group Company or any Subsidiary
or by the Buyer in defending any such claim or demand: (i) wages, severance pay,
notice of termination of employment or pay in lieu of such notice, damages for
wrongful dismissal or any other employee benefits or claims, including vacation
pay, and including any interest, award, judgment or penalty relating thereto and
any costs or expenses (including legal fees); (ii) all income taxes, social
security and unemployment or disability insurance taxes or other deductions
required by law, including the Canada Pension Plan Act, the Unemployment
Insurance Act (Canada), the Employment Insurance Act (Canada) and any applicable
provincial legislation, to have been collected or withheld and all Plan
contributions and insurance premiums that are required to be made in respect of
such periods, (iii) stay, severance (to the extent it is required to be paid by
statutory law or by contract, it being understood that the Shareholders
represent that nothing in statutory law or contract requires payment of
severance for Transferred Employees), change-of-control or termination bonuses
for Employees (including Transferred Employees) due and owing as a result of the
transactions contemplated by this Agreement, (iv) worker's compensation claims
of Employees (including Transferred Employees) arising out of injuries,
accidents or other events taking place or occurring prior to the Closing Date,
and (v) other sickness, accident and hospital claims of Employees (including
Transferred Employees) in respect of which medical expenses are incurred or
claims are submitted or filed prior to the Closing Date; provided, however, that
the indemnity provided in this Section 8.01(b) shall not apply to a payment or
obligation that arises out of employment of an Employee after the Closing merely
by reason of the fact that the amount thereof is calculated, in whole or in
part, with reference to the period of employment prior to the Closing.
(c) Buyer agrees to pay, or cause each of the Company or TOP US to
pay, within 15 days after the Closing Date, a signing bonus to each Transferred
Employee, with the amount of each signing bonus to be paid to each individual
Transferred Employee to be determined in writing by Xxxx Xxxx and submitted to
Buyer for its approval, and subject to its reasonable discretion; provided,
however, that amount of signing bonuses to be paid pursuant to this paragraph
(c) and pursuant to Section 8.01(c) of the BEA Stock Purchase Agreement shall be
$400,000 in the aggregate.
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ARTICLE IX
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
The Group Companies and the Shareholders (or certain of them, as
applicable) covenant and agree with Buyer that at all times prior to the Closing
or termination of this Agreement (or after the Closing in the case of Section
9.02(b)).
Section 9.01 COOPERATION. The Shareholders shall use their best efforts
in good faith to perform and fulfill and to cause the Group Companies and the
Subsidiaries to perform and fulfill, all conditions and obligations to be
fulfilled or performed by them hereunder to the end that the transactions
contemplated hereby will be fully and timely consummated. The Shareholders shall
not take any action that is intended or could reasonably be expected to cause
any Group Company, any Subsidiary or any Shareholder to fail to perform and
fulfill all conditions and obligations to be fulfilled or performed by any Group
Company, any Subsidiary or any Shareholder hereunder, or that is intended or
could reasonably be expected to cause the transactions contemplated hereby not
to be fully and timely consummated. Each Shareholder shall use its best efforts
in good faith to satisfy, perform and fulfill all conditions and obligations to
be fulfilled or performed it hereunder, to the end that the transactions
contemplated hereby will be fully and timely consummated. Each Shareholder
agrees to vote and shall vote in favor of or consent to any and all actions
required to be approved by it in order to consummate the transactions
contemplated hereby.
Section 9.02 ACCESS.
(a) Until the Closing, the Shareholders shall:
(i) give and shall cause the Group Companies and the
Subsidiaries to give Buyer, its attorneys, accountants and other authorized
representative complete access, upon reasonable notice and at reasonable times.
to the Group Companies' and the Subsidiaries' offices, assets, properties,
customers, suppliers, employees, products, technology, business and financial
records, contracts, business plans, budgets and projections, agreements,
commitments and other documents and information concerning the Group Companies,
the Subsidiaries and persons employed by or doing business with any Group
Company or any Subsidiary;
(ii) furnish and cause the Group Companies and the Subsidiaries
to furnish Buyer and its representatives during such period all such information
as such representatives may reasonably request;
(iii) cooperate and cause the officers, employees, consultants,
agents, accountants and attorneys of the Group Companies and the Subsidiaries to
cooperate with the representatives of Buyer in connection with such review and
examination; and
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(iv) promptly make full disclosure to Buyer of all facts that
come to any Shareholder's attention that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(b) At or promptly following the Closing, if requested by Buyer, the
Shareholders shall deliver or shall cause to be delivered to Buyer all records
relating to the Group Companies and the Subsidiaries that are in any
Shareholder's possession or in the possession of any Shareholder's accountants,
attorneys and other third parties.
Section 9.03 INSURANCE. The Company shall, and shall cause the
Subsidiaries to, maintain with its current insurers or with other financially
sound insurers, insurance against such casualties and contingencies and of such
types and in such amounts as is in place as of the date hereof.
Section 9.04 COMPLIANCE WITH LAWS. The Group Companies shall, and shall
cause the Subsidiaries to, conduct their businesses in compliance with all laws,
rules, regulations, statutes, ordinances and other legal requirements, except
where such failure to be in compliance, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.
Section 9.05 KEEPING OF BOOKS AND RECORDS. The Group Companies shall,
and shall cause the Subsidiaries to, keep and maintain adequate records and
books of account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions and in which all
proper reserves for depreciation, depletion, obsolescence, amortization, Taxes,
bad debts and other purposes in connection with its business shall be made.
Section 9.06 ACTIONS PRIOR TO CLOSING. Except as set forth in Schedule
9.06 or except as consented to in writing by Buyer, the Group Companies shall,
and shall cause the Subsidiaries to, conduct their business pending the Closing
only in the ordinary and usual course of business. Except as expressly
contemplated by this Agreement, the BEA Stock Purchase Agreement or as consented
to in writing by Buyer, from the Execution Date to the Closing Date:
(a) no Shareholder shall sell, transfer or pledge, or authorize or
propose the sale, transfer or pledge, of any of the Shares or other equity
interests relating to the Shares or consent to the Shares becoming subject to
any Lien;
(b) except for the transactions specifically contemplated by the BEA
Stock Purchase Agreement, the Group Companies shall not, and shall cause the
Subsidiaries not to, take any action to cause and shall not:
(i) issue, sell, transfer or pledge, or authorize or propose
the issuance, sale, transfer or pledge, of (A) shares of capital stock of any
class (including the Common Shares), or other securities relating to the capital
stock or other securities of any Group Company
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or any Subsidiary, or (B) any other securities in respect of, in lieu of or in
substitution for the Shares;
(ii) redeem, repurchase or otherwise reacquire any of its
outstanding securities (including the Common Shares);
(iii) delete, add, amend or alter any term of any outstanding
security of any Group Company or any Subsidiary;
(iv) declare, accrue, set aside, make or pay any dividend or
distribution (whether in cash, stock or property) on or in respect of any share
of capital stock or other securities of any Group Company or any Subsidiary;
(v) make any acquisition of assets or securities, any
disposition of assets or securities, or any change in their capitalization, or
enter into any contract or release or relinquish any contract or other rights;
(vi) incur, assume or guarantee any indebtedness for borrowed
money other than in the ordinary and usual course of business consistent with
past practice exceeding $10,000 individually or in the aggregate, or permit any
Group Company's or any Subsidiary's assets to become subject to any Lien;
(vii) propose or adopt any amendments or restatements to the
organizational documents of any Group Company or any Subsidiary;
(viii) enter into, consummate or become a party to any
transaction for the merger or consolidation of or by any Group Company or any
Subsidiary with any other corporation or entity, or any acquisition by it of all
or any part of the stock or the business or assets, other than inventory or
equipment in the ordinary and usual course of business, of any other natural
person, firm, association, corporation or other entity or business organization;
(ix) enter into, consummate or become party to any
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(x) create or take any action relating to the creation of, any
subsidiary or purchase or take any action relating to the purchase of any equity
interest in any other entity;
(xi) enter into, consummate or become party to any individual
transaction or series of related transactions totaling $50,000 or more;
(xii) execute, amend or modify any contract, agreement,
franchise, permit, or license, other than in the ordinary and usual course of
business;
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(xiii) waive any right or rights of any Group Company or any
Subsidiary (alleged, contingent or otherwise), or fail to satisfy when due any
liability of any Group Company or any Subsidiary;
(xiv) enter into, amend, restate or modify in any respect any
employment agreement or adopt, amend, restate or modify in any respect any
employee benefit plans or suffer any ERISA Affiliate to adopt, amend, restate or
modify in any respect any employee benefit plan;
(xv) loan or advance to, or enter into an agreement, arrangement
or transaction with any of the officers, directors, consultants, or employees
(or to or with any of their Immediate Family Members) of any Group Company or
its Affiliates, or any business or entity in which any of their officers,
directors, consultants, agents or employees (or any Immediate Family Member) has
any direct or indirect interest in excess of 5%;
(xvi) except as required by law or GAAP after notification to
and consultation with Buyer, change any of their accounting methods, principles
or practices or change any depreciation or amortization policies or rates;
(xvii) accelerate the collection of accounts receivable, delay
the payment of accounts payable and other accrued liabilities, defer maintenance
and other expenses, or otherwise increase cash on hand, in each case other than
in the ordinary course of business;
(xviii) declare or pay any bonus to any employee of any Group
Company other than (A) declare and pay prior to the Closing Date bonuses to
employees of TOP UK or TOP Germany in an aggregate amount up to $60,000 (in
addition to the amounts set forth in clauses (B) and (C) herein), (B) declare
and pay prior to the Closing Date bonuses to employees of any Group Company, TOP
or TOP US in an aggregate amount up to $243,000 (in addition to the amounts set
forth in clauses (A) and (C) herein) or (C) declare and pay prior to the Closing
Date bonuses to Xxxx Xxxx or Xxxx Xxxxx in an aggregate amount up to $80,000 (in
addition to the amounts set forth in clauses (A) and (B) herein);
(xix) except as required by law after notification to and
consultation with Buyer, make any Tax election; or
(xx) agree in writing or orally to take any of the foregoing
actions or any other action which could cause any representation or warranty in
this Agreement to be untrue.
Section 9.07 NOTICE OF CHANGES; UPDATES.
(a) Until the Closing, the Group Companies and the Shareholders
shall notify Buyer in writing of any change in the business of the Company or
any Subsidiary that could have a Material Adverse Effect as soon as it becomes
apparent to any of such parties that any such change has occurred or could
reasonably be expected to occur.
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(b) The Group Companies and the Shareholders shall give Buyer prompt
written notice if any Group Company, any Subsidiary or any Shareholder becomes
aware of any event, condition, fact or circumstance: (i) that occurred or
existed on or prior to the date of this Agreement and that caused or
constitutes a material inaccuracy in or a material breach of any representation,
warranty or covenant made by any Group Company or any Shareholder under this
Agreement and which was unknown to any Group Company or any Shareholder on the
date of this Agreement; or (ii) that occurs or arises or exists after the date
of this Agreement and that causes a material inaccuracy in or a material breach
of any representation, warranty or covenant made by any Group Company or any
Shareholder in this Agreement.
Section 9.08 PRESERVATION OF BUSINESS. Until the Closing, the Group
Companies and the Shareholders will use their best efforts to preserve the Group
Companies' and the Subsidiaries' business organizations intact, and to preserve
their goodwill. Without limiting the generality of the foregoing or any other
covenant contained herein, the Group Companies will, and shall cause each
Subsidiary to, timely perform all obligations required of such party under the
contracts and permits listed or required to be listed on the schedules to this
Agreement.
Section 9.09 LITIGATION. The Group Companies and the Shareholders will
promptly notify the Buyer in writing of any lawsuits claims, proceedings or
investigations which are threatened or commenced against or by any Group
Company, any Subsidiary or against any employee, consultant or director of any
Group Company or any Subsidiary or against the Shareholders or their Affiliates
or the Unit Shareholders in connection with their ownership of the Shares or
the transactions contemplated hereby.
Section 9.10 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES.
From the date hereof up to and including the Closing Date or the termination of
this Agreement: (a) the Group Companies shall, and shall cause the Subsidiaries
to, conduct their respective businesses in a manner such that the
representations and warranties contained herein shall continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date,
except for changes and the consequences of events arising in the ordinary and
usual course of business consistent with past practice after the date hereof or
which are permitted or contemplated in this Article IX, the Transaction
Documents or the BEA Stock Purchase Agreement and none of which could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect; and (b) the Shareholders will advise Buyer promptly in writing of any
condition or circumstance occurring from the date hereof up to and including the
Closing Date which could cause any representation or warranty of the Group
Companies or the Shareholders to become untrue.
Section 9.11 OBLIGATIONS OF AFFILIATES. The Shareholders hereby release
and forever discharge the Group Companies, the Subsidiaries and their respective
directors, officers, employees, agents, successors and assigns from and against
any and all claims, demands, liabilities, obligations, damages, costs, expenses,
actions and causes of action, in law or in equity, known or unknown, which the
shareholders ever had or now have against any Group Company
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or any Subsidiary as of the date hereof. Notwithstanding the foregoing, the
Shareholders do not release the Group Companies and the Subsidiaries from (i)
claims directly resulting from any Group Company's or any Subsidiary's willful
misconduct or fraud; (ii) covenants, obligations, or liabilities explicitly set
forth in this Agreement; (iii) any Group Company's or any Subsidiary's
obligations under any agreement to which it is a party, which is intended to
remain in effect after the Closing; or (iv) the Shareholders' rights under this
Agreement or any agreement or certificate delivered expressly pursuant thereto.
Section 9.12 CONSENTS. The Group Companies shall use their best efforts
to obtain the consents to the transactions contemplated by this Agreement as
required by the agreements listed or required to be listed on Schedule 3.04.
Section 9.13 LIFE INSURANCE POLICIES. Each of Xxxx Xxxx, Xxxx Xxxxxxx
and Xxxx Xxxxx may assume the benefits and burdens of any policies of life
insurance on their respective lives which are held by the Company, provided that
they initiate any such transfer request with the applicable insurers within 30
days after the Closing Date and pay any and all costs and Taxes of the Company
associated therewith.
Section 9.14 ACTIONS PRIOR TO EFFECTIVE TIME. Except as set forth in
Schedule 9.14 or except as consented to in writing by Buyer, from the closing
date of the BEA Stock Purchase Agreement until the Effective Time, the Group
Companies shall not engage in any conduct or transactions that is not in the
ordinary and usual course of business consistent with past practice.
ARTICLE X
CONDITIONS TO CLOSING
Section 10.01 CONDITIONS TO OBLIGATIONS OF THE A PARTIES. The
obligations of each of the parties to consummate the Closing shall be
conditioned upon the satisfaction or waiver (in whole or in part) of each of the
following conditions concurrently with or prior to Closing:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
or any of the Transaction Documents shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the sales
contemplated hereby, which makes the consummation of such sales unlawful, void,
voidable or unenforceable under applicable law, rules and regulations of any
governmental authority, domestic or foreign.
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(b) Government Approvals. Buyer, the Group Companies and the
Shareholders shall have obtained all other authorizations, consents, orders and
approvals required from or of, or declarations or filings with, or expirations
of waiting periods imposed by, any governmental authorities required for the
consummation of the transactions contemplated by the Agreement.
(c) Contractual Consents. The Group Companies and the Subsidiaries
shall have given all notices to, and obtained all consents, approvals or
authorizations of or from, any individual, corporation or other party which is
necessary to permit the consummation of the transactions contemplated hereby and
by each of the Transaction Documents including, without limitation, any consents
required under contracts and agreements listed on Schedule 3.11 to which any
Group Company or any Subsidiary is a party or by which it is bound, or which may
be required to permit the change of ownership of any Group Company; provided,
however, that the Group Companies and the Shareholders may not invoke the terms
of this Section 10.01(c) unless and until each such party has used its best
efforts to obtain such consents, approvals and authorizations under any third
party contracts to which any Group Company or any Subsidiary is a party or by
which its assets are or may become bound.
(d) Exhibits. Buyer, the Group Companies and the Shareholders, as
the case may be, shall have delivered all Exhibits referred to herein required
to be provided to each other party, in such form as shall be reasonably
acceptable to the receiving party.
(e) Equity Participation Plans Units. All Units and Options issued
or granted pursuant to the Equity Participation Plans shall have been exercised,
cancelled or surrendered and all Unit Shareholders shall have irrevocably agreed
to transfer all Unit Shares to Buyer in accordance with Section 2.04 hereof.
(f) BEA Stock Purchase Agreement Closing. The conditions to the
obligations of the parties to the BEA Stock Purchase Agreement shall have been
satisfied or waived in accordance therewith and the consummation of the closing
of the transactions contemplated by the BEA Stock Purchase Agreement shall have
occurred.
(g) Agreement on Ancillary Documents. On or prior to April 12, 2000,
the Company and Buyer shall have agreed, each acting in their sole discretion,
to the form and substance of all the Schedules to this Agreement (including,
without limitation, any Schedules to the Exhibits to this Agreement).
Section 10.02 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer
to consummate the Closing shall be conditioned upon the satisfaction or waiver
(in whole or in part of each of the following conditions concurrently with or
prior to Closing:
(a) the Group Companies and the Shareholders shall have performed
and complied with all of their obligations hereunder required to be performed or
complied with by them on or prior to the Closing Date, and the representations
and warranties of the Group Companies and the Shareholders contained in this
Agreement and in any certificate or other
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writing delivered by the Company pursuant hereto, shall be true and correct in
all material respects as of the Closing Date.
(b) Buyer shall have received the Company's Opinion.
(c) All requisite approvals from governmental agencies and consents
from third parties listed or required to be listed on Schedule 3.06 shall have
been obtained.
(d) The Shareholders Agreement, dated as of December 16, 1998 (the
"Shareholders Agreement"), by and among 1004155, 1004156, 1004157. Xxxx Xxxx,
Xxxx Xxxxxxx, Xxxx Xxxxx, The Xxxx Family Trust, The Xxxxxxx Family Trust, The
White Family Trust, The Xxxx Family Trust Xx. 0, Xxx Xxxxxxx Xxxxxx Xxxxx Xx. 0,
The White Family Trust No. 2, TOP and Holdings, shall have been terminated
without any continuing liabilities or rights thereunder.
(e) The Controlling Shareholders shall have assumed the obligations
of the Sellers (as defined in the BEA Stock Purchase Agreement) under Article XI
of the BEA Stock Purchase Agreement, except for Losses otherwise indemnifiable
pursuant to (i) Section 11.02(d) thereof or (ii) Section 11.02(c) thereof to the
extent that such indemnifiable Loss is caused by the non-compliance with or the
failure to perform any agreement, obligation or covenant contained in the BEA
Stock Purchase Agreement because such agreement, obligation or covenant requires
an act after the Closing Date by any of BEA Systems (Nova Scotia) Company, TOP,
TOP US, TOP UK, TOP Germany or Newco Canada that is beyond the control of the
Controlling Shareholders.
(f) Buyer shall have received the Officer's Certificate.
(g) Buyer shall have received a copy of the countersigned employment
offer letters, substantially in the form attached hereto as Exhibit B (with such
changes as may be agreed by the parties thereto), duly and validly executed by
at least 90% of the employees not working exclusively as a part of the Services
Business Assets and each of Xxxx Xxxxxx, Xxxxx Xxxxxxxxxx, Xxxxxx XxxXxxxxx, S.
Xxxxxxx Xxxxxxxxxxx and Xxxxxx Xxxxx.
(h) Buyer shall have received a certificate of good standing and a
copy of the articles of incorporation, each certified by the Secretary of State
of the State of Delaware, as of a date within five (5) days preceding the
Closing Date, of TOP US, and a certificate of status certified by the Ministry
of Consumer and Commercial Relations of the Province of Ontario, as of a date
within five (5) days preceding the Closing Date, of TOP.
(i) Nothing shall have occurred or be threatened that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; provided, however, that for purposes of this paragraph (j), a
Material Adverse Effect shall include a reduction in the number of employees of
the Company and the Subsidiaries, in the aggregate, of more than 10%
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of the total number of such employees as of the date hereof, but excluding, in
each case, any employees hired by the purchaser of the Services Business Assets.
(j) All actions, proceedings, consents, instruments and documents
required to be delivered by, at the behest or direction of, the Group Companies
and the Shareholders hereunder or incident to its or their performance
hereunder, and all other related matters, shall be reasonably satisfactory as to
form and substance to Buyer and its counsel.
Section 10.03 CONDITIONS TO OBLIGATIONS OF THE GROUP COMPANIES AND THE
SHAREHOLDERS. The obligations of the Group Companies and the Shareholders to
consummate the Closing shall be conditioned upon the satisfaction or waiver (in
whole or in part) of each of the following conditions concurrently with or prior
to Closing:
(a) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date, and the representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto shall be true and correct as of the Closing Date.
(b) The Company shall have received the Buyer's Officer's
Certificate.
(c) The Company shall have received the Buyer's Opinion;
(d) Buyer shall have delivered $16,650,000 of the Purchase Price to
the Shareholders and the Unit Shareholders in accordance with Article II hereof;
(e) The Company shall have received evidence that Buyer has
delivered $1,850,000 of the Purchase Price to the Escrow Agent in accordance
with Article II hereof;
(f) The Company shall have received evidence that Buyer has
delivered $6,000,000 to the Holdback Agent in accordance with Article II hereof;
(g) All actions, proceedings, consents, instruments and documents
required to be delivered by, at the behest or direction of, Buyer hereunder or
incident to its performance hereunder, and all other related matters, shall be
reasonably satisfactory as to form and substance to the Company and its counsel.
ARTICLE XI
SURVIVAL; INDEMNIFICATION.
Section 11.01 SURVIVAL. The covenants, agreements, representations and
warranties of the parties hereto set forth in this Agreement (including the
Schedules hereto), or in any certificate delivered with respect thereto, which
will be deemed to be covenants, agreements,
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representations and warranties hereunder, shall survive the Closing Date and (i)
all covenants, agreements representations and warranties contained in this
Agreement, except for those covenants, agreements, representations and
warranties contained in Sections 3.01, 3.02, 3.05, 3.15, 3.16, 3.23, 3.24,
3.25, 4.01, 4.02, 6.04 and 6.05 and Articles VII, VIII and XI, shall remain in
full force and effect for one year following the Closing Date, (ii) all
covenants, agreements, representations and warranties contained in Sections 6.04
and 6.05 shall remain in full force and effect for the time period specified
therein, (iii) all covenants, agreements, representations and warranties
contained in Sections 3.01, 3.02,3,05,3.15,3.16 3.23,3.24,3.25, 4.01 and 4.02
and Articles VII and VIII shall remain in full force and effect until sixty (60)
days after the expiration of any applicable statute of limitations or assessment
or reassessment period, as the case may be, (including any extensions thereof)
and (iv) all covenants, agreements, representations and warranties contained in
this Article XI shall remain in full force and effect indefinitely; provided,
however, that all such covenants, agreements, representations and warranties
described above shall survive after the applicable survival period with respect
to any claim made by Buyer or Buyer's Affiliates (as defined in Section 11.02
hereof) prior to the expiration thereof until, and shall expire when, such claim
is finally resolved. All covenants, agreements, representations and warranties
made by the Group Companies or the Shareholders shall be unaffected by any
investigation made by Buyer or by any knowledge obtained as a result thereof or
otherwise.
Section 11.02 INDEMNIFICATION BY THE CONTROLLING SHAREHOLDERS. The
Controlling Shareholders will, jointly and severally, indemnify, defend, save
and hold Buyer and any of its affiliates and any of its and their respective
directors, officers, employees, representatives or agents ("Buyer's Affiliates")
harmless from and against any and all damage, cost, liability, loss, Tax,
penalty, expense, assessment, judgment or deficiency of any nature whatsoever
(including, without limitation, reasonable attorney's fees and expenses.
consultant's and investigator's fees and expenses, and other costs and expenses
incident to any suit, action or proceeding or any investigation by
Buyer)(together, "Losses")incurred or sustained by Buyer or any of Buyer's
Affiliates or which may be claimed against Buyer or any of Buyer's Affiliates
which shall arise out of or result from (a) any breach of any representation or
warranty given or made by the Group Companies or the Shareholders herein or in
any certificate delivered with respect thereto (except for any breach of any
representation and warranty given or made by the Group Companies or the
Shareholders in Sections 3.01, 3.02, 3.05, 3.16, 3.24, 3.25, 4.01 and 4.02 and
Articles VII and VIII or in any certificate delivered with respect thereto), (b)
any breach of any representation and warranty given or made by the Group
Companies or the Shareholders in Sections 3.01,3.02, 3.05, 3.16, 3.24, 3.25,
4.01 and 4.02 and Articles VII and VIII or any certificate delivered with
respect thereto, (c) the noncompliance with or nonperformance of any agreement,
obligation or covenant of the Group Companies or the Shareholders under this
Agreement, (d) the TOPLink Software Liabilities (but excluding any Loss on
account of lost-opportunity costs or the reimbursement for the time of internal
employees of TOP or any Subsidiary in connection with or as a result of the
Persistence Actions), (e) any Taxes required to be paid by a Group Company,
Subsidiary or any successor relating to taxation years or periods ending on the
Closing Date or the previous day that either are not attributable to the current
year's operations or are related to the transactions contemplated hereby or by
the BEA Stock Purchase Agreement (other than due
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to any challenge, reassessment or reallocation of the valuation of any of the
Services Business Assets (or liabilities assumed in connection therewith) from
and after the Closing Date), or (f) any breach of any representation and
warranty given or made by the Group Companies or the Controlling Shareholders in
Section 3.25. The Controlling Shareholders shall not be obligated to indemnify
Buyer and Buyer's Affiliates pursuant to clause (a) of this Section 11.02 until
the aggregate Losses incurred as a result of such breaches shall have exceeded
$200,000, in which case the Controlling Shareholders shall be liable for the
full amount of Losses incurred by Buyer and Buyer's Affiliates. The Controlling
Shareholders shall not be obligated to indemnify Buyer and Buyer's Affiliates
pursuant to clause (f) of this Section 11.02 for Losses in excess of $200,000
for each site that the Company or any Subsidiary currently occupies or has
occupied. Any claim for indemnification hereunder must be made by notice to the
Representative within the applicable time period specified in Section 11.01. In
determining the amount of any indemnifiable Losses under this Section 11.02,
such amount shall be (A) reduced to take into account any net Tax (as defined in
Section 7.01 hereof) benefit realized by Buyer or Buyer's Affiliates arising
from the incurrence or payment by Buyer or Buyer's Affiliates of such Losses,
(B) increased to take into account any net Tax cost incurred by Buyer or Buyer's
Affiliates as a result of the receipt or accrual of payments hereunder
(grossed-up for such increase) and (C) increased by an amount equal to the rate
of Goods and Services Tax applied to such amount, if applicable, in each case
determined by treating Buyer or Buyer's Affiliates as recognizing all other
items of income, gain, loss, deduction or credit before recognizing any item
arising from such Losses.
Section 11.03 INDEMNIFICATION BY BUYER. Buyer will indemnify, defend,
save and hold the Shareholders and any of their affiliates and any of their or
their affiliate's respective directors, officers, employees, representatives or
agents (the "Shareholders' Affiliates") harmless from and against any and all
Losses incurred or sustained by the Shareholders or any of the Shareholders'
Affiliates or which may be claimed against the Shareholders or any of the
Shareholders' Affiliates which shall arise out of or result from (a) any breach
of any representation or warranty given or made by Buyer herein or in any
certificate delivered with respect thereto or (b) the noncompliance with or
nonperformance of any agreement, obligation or covenant of Buyer under this
Agreement; provided that the Buyer's indemnification obligations shall not
exceed the Escrow Amount. Any Claim for indemnification hereunder for any breach
of a representation or warranty must be made by notice to Buyer within the
applicable time period specified in Section 11.01. In determining the amount of
any indemnifiable Losses under this Section 11.03, such amount shall be (A)
reduced to take into account any net Tax (as defined in Section 7.01 hereof)
benefit realized by the Shareholders or the Shareholders' Affiliates arising
from the incurrence or payment by the Shareholders or the Shareholders'
Affiliates of such Losses, (B) increased to take into account any net Tax cost
incurred by the Shareholders or the Shareholders' Affiliates as a result of the
receipt or accrual of payments hereunder (grossed-up for such increase) and (C)
increased by an amount equal to the rate of Goods and Services Tax applied to
such amount, if applicable, in each case determined by treating the Shareholders
or the Shareholders' Affiliates as recognizing all other items of income, gain,
loss, deduction or credit before recognizing any item arising from such Losses.
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Section 11.04 Third-Party Claims. Reasonably promptly after service of
notice of any claim or of process by any third person in any matter in respect
of which indemnity may be sought from the other party pursuant to this
Agreement, the party in receipt of the claim (the "Indemnified Party") shall
notify the other party (the "Indemnifying Party") of the receipt thereof.
Failure to give such notice reasonably promptly shall not relieve the
Indemnifying Party of its obligation hereunder; provided, however, that if such
failure to give notice reasonably promptly adversely affects the ability of the
Indemnifying Party to defend such claims or materially increases the amount of
indemnification which the Indemnifying Party is Obligated to pay hereunder, the
amount of indemnification to which the Indemnified Party will be entitled to
receive shall be reduced to an amount which the Indemnified Party would have
been entitled to receive had such notice been timely given. Unless the
Indemnifying Party shall notify the Indemnified Party that it elects to assume
the defense of any such claim or process or settlement thereof (such notice to
be given as promptly as reasonably possible in view of the necessity to arrange
for such defense (and in no event later than 10 days following the aforesaid
notice) and to be accompanied by an acknowledgment of the Indemnifying Party's
obligation to indemnify Indemnified Party in respect of such matter), the
Indemnified Party shall assume the defense of any such claim or process or
settlement thereof. Such defense shall be conducted expeditiously (but with due
regard for obtaining the most favorable outcome reasonably likely under the
circumstances, taking into account costs and expenditures) and the Indemnifying
Party or Indemnified Party, as the case may be, shall be advised promptly of all
developments. If the Indemnifying Party assumes the defense, the Indemnified
Party will have the right to participate fully in any such action or proceeding
and to retain its own counsel, but the fees and expenses of such counsel will be
at its own expense unless (i) the Indemnifying Party shall have agreed to the
retention of such counsel for both the indemnifying and indemnified parties or
(ii) the named parties to any such suit, action or proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified Party
and, in the reasonable opinion of the Indemnified Party, representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. No settlement of a claim by either party
shall be made without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the Indemnifying Party shall not be entitled to assume the defense of
any such action or proceeding (and shall be liable for the fees and expenses of
counsel incurred by the Indemnified Party in defending such matter) seeking an
order, injunction or other equitable relief or relief for other than money
damages against the Indemnified Party and the Indemnified Party shall have the
sole and exclusive right to settle such matter.
Section 11.05 Payment.
(a) To secure the indemnification obligations of the Controlling
Shareholders to Buyer set forth in Section 11.02 (except for Section 11.02(d)),
51,850,000 shall be deposited into the Escrow in accordance with Section 2.03
hereof and the terms of the Escrow Agreement. In the event that any amounts are
due and owing to Buyer under the indemnification provisions of
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this Article XI, Buyer shall (i) be entitled to offset such amounts against the
Escrow Amount pursuant to the terms and provisions of the Escrow Agreement and
(ii) not be entitled to seek any indemnification amounts in excess of the amount
held in the Escrow, except as otherwise expressly permitted under the terms and
provisions of this Agreement with respect to claims of actual fraud by the
Shareholders or the Group Companies and indemnification claims for Losses
incurred or suffered by Buyer for any inaccuracy in any representation or any
breach of any warranty contained in Sections 3.01, 3.02, 3.05, 4.01 or 4.02.
(b) Buyer shall deposit an additional S6,000,000 with the Holdback
Agent in accordance with Section 2.09 hereof and the terms of the Holdback
Agreement to be held until the final, non-appealable resolution or settlement of
all TOPLink Software Claims. In the event that any amounts are due and owing to
Buyer under the indemnification provisions of this Article XI solely on account
of Section 11.02(d) thereof, Buyer shall (i) be entitled to claim such amounts
from the Holdback Agent pursuant to the terms and provisions of the Holdback
Agreement and (ii) not be entitled to seek any indemnification amounts in excess
of the amount held by the Holdback Agent pursuant to the Holdback Agreement,
except as otherwise expressly permitted under the terms and provisions of this
Agreement with respect to claims of actual fraud by the Shareholders or the
Group Companies.
Section 11.06 No Contribution. The Shareholders acknowledge that their
indemnification obligations hereunder relate solely to their capacities as
former shareholders of any Group Company, and accordingly, such indemnification
obligations set forth in this Article XI shall not entitle the Controlling
Shareholders, or any current or former officer, director or employee of any
Group Company, to any indemnification from any Group Company under any Group
Company's organizational documents, this Agreement or any of the Transaction
Documents. In addition, each Shareholder waives, and acknowledges and agrees,
that he, she, it and they will not have and will not exercise or assert (or
attempt to exercise or assert), any right of contribution, right of subrogation,
right of indemnity or other similar right or remedy against any Group Company,
with respect to any action or failure to act by any Group Company occurring on
or prior to the Closing or in connection with any actual or alleged breach of
any representation, warranty, covenant or other obligation or agreement set
forth in this Agreement or any certificate delivered in connection with this
Agreement.
Section 11.07 Equitable Relief. In the event of a breach or threatened
breach by the Shareholders of Sections 6.04 or 6.05 hereof, regarding
noncompetition, nonsolicitation and restrictions on transfer, each Shareholder
hereby consents and agrees that Buyer shall be entitled to an injunction or
similar equitable relief restraining the breaching party from committing or
continuing any such breach or threatened breach or granting specific performance
of any act required to be performed by such Shareholder under any such
provision, without the necessity of showing any actual damage or that money
damages would not afford an adequate remedy and without the necessity of posting
any bond or other security. Nothing herein shall be construed as prohibiting
Buyer, the Group Companies or the Shareholders from pursuing any other remedies
at law or in equity which it may have.
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Section 11.08 The Representative.
(a) The Shareholders hereby authorize, direct and appoint, and the
Shareholders represent and warrant to Buyer that the Unit Shareholders have
prior to the Closing Date authorized, directed and appointed, Mr. Xxxx Xxxx to
act as the sole and exclusive agent, attorney-in-fact and representative of the
Shareholders and the Unit Shareholders, and if Xx. Xxxx is no longer willing or
able to serve hereunder, Mr. Xxxx Xxxxx, and, further, if neither Xx. Xxxx nor
Xx. Xxxxx are no longer willing or able to serve hereunder, then Xx. Xxxx
Xxxxxxx (the "Representative"), and hereby further authorize and direct the
Representative (i) to take any, and all actions (including, without limitation,
executing and delivering any and all agreements, instruments, certificated and
other documents, incurring any and all costs and expenses for the account of the
Shareholders and the Unit Shareholders (which costs and expenses shall
constitute Losses incurred or suffered by Buyer within the meaning of this
Article XI) and making any and all determinations which may be required or
permitted by this Agreement or any of the Transaction Documents to be taken by
the Shareholders, the Unit Shareholders or the Representative, (ii) to exercise
such other rights, power and authority as are authorized, delegated and granted
to the Representative hereunder in connection -,with the transactions
contemplated hereby and thereby, and (iii) to exercise such rights, power and
authority as are incidental to the foregoing. Any such actions taken, exercises
of rights, power or authority, and any decision or determination made by the
Representative consistent therewith, shall be absolutely and irrevocably binding
on each Shareholder as if such Shareholder or Unit Shareholder personally had
taken such action, exercised such rights, or authority or made such decision or
determination in such Shareholder's individual capacity. Notwithstanding
anything to the contrary contained in this Agreement, with respect to the
specific matters set forth in this Article XI, (i) each Shareholder and Unit
Shareholder hereby irrevocably relinquishes such holder's right to act
independently and other than through the representative, except with respect to
the removal of the Representative or appointment of a successor Representative
as provided in Section 11.08(b) hereof, and (ii) no Shareholder or Unit
Shareholder shall have any right under this Agreement or otherwise to institute
any suit, action or proceeding against any Group Company or the Buyer, with
respect to any such matter, any such right being irrevocably and exclusively
delegated to the Representative. The Representative hereby acknowledges and
accepts the foregoing authorization and appointment and agrees to serve as the
Representative in accordance with the terms of this Agreement.
(b) The Representative shall serve as Representative until his
resignation, removal from such position of responsibility, incapacity or death;
provided, however that the Representative shall not have the right to resign
without (i) prior written notice to the Shareholders and the Unit Shareholders,
and (ii) selecting a successor representative reasonably satisfactory to the
Buyer who shall serve until a successor thereto is elected by the Shareholders
and the Unit Shareholders. The Representative may be removed at any time, and a
successor representative reasonably satisfactory to Buyer may be appointed
pursuant to written action by the Shareholders and the Unit Shareholders who,
immediately prior to the Closing Date, held Shares constituting at least 80% of
all such shares then outstanding. Any successor to the Representative shall, for
purposes of this Agreement, be deemed to be, from the time of the
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appointment thereof in accordance with the terms hereof, the Representative, and
from and after such time, the term "Representative" as used herein and therein
shall be deemed to refer to such successor. No appointment of a successor shall
be effective unless and until such successor agrees in writing to be bound by
the terms of this Agreement.
(c) The Representative shall be permitted to independently retain
counsel, consultants and other advisors and shall promptly notify Buyer after
retaining any such person.
(d) The provisions of this Section 11.08 shall in no way impose any
obligations on the Buyer, and notwithstanding any notice received by Buyer to
the contrary (except any notice of the appointment of a successor Representative
approved by the Buyer in accordance with Section 11.08(b) hereof), Buyer (i)
shall be entitled to rely upon and shall be fully protected in relying upon, and
shall have no liability to the Shareholders or the Unit Shareholders with
respect to, and shall be indemnified by the Shareholders for, from and against
any and all liability arising out of actions, decisions and determination of the
Representative, which liabilities shall constitute Losses within the meaning of
this Article XI, and (ii) shall be entitled to assume that all actions,
decisions and determinations of the Representative are fully authorized by the
Shareholders for all purposes under this Agreement.
(e) The Representative shall not be liable to the Shareholders or
the Unit Shareholders for the performance of any act, or the failure to act,
provided the Representative acted or failed to act in good faith and in a manner
such Representative reasonably believed to be in the scope of such
Representative's authority under this Agreement and for a purpose which such
Representative reasonably believed to be in the best interests of the
Shareholders and the Unit Shareholders, considered together as a group.
ARTICLE XII
TERMINATION
Section 12.01 Grounds for Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual written agreement of the parties;
(b) by any xxxxx if the Closing shall not have been consummated on
or before April 26, 2000;
(c) by any party if there shall be any law or regulation that makes
consummation of the transactions contemplated hereby illegal or otherwise
prohibited or if consummation of the transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction; or
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(d) by Buyer if there has been, since the date of this Agreement,
any Material Adverse Effect, or any development reasonably expected to result in
a prospective Material Adverse Effect in the business affairs or business
prospects of any Group Company or any Subsidiary, whether or not arising in the
ordinary and usual course of business consistent with past practice.
Section 12.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 12.01, termination shall be without liability of either
party (or any Shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement and the
parties hereto agree to return or destroy any written Confidential Information,
and copies thereof, belonging to the other parties hereto. The provisions of
Sections 3.2 2, 5.05, 6.05 and 13.06 shall survive any termination hereof
pursuant to Section 12.01. Notwithstanding the foregoing, in the event of the
willful and deliberate failure by either party to fulfill a condition to the
performance of the obligations of the other party, the party who has failed to
fulfill such condition shall be fully liable for any and all Losses incurred or
suffered by the other party as a result of such failure.
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be deemed to have been given if delivered personally, mailed by certified
mail (return receipt requested) or sent by telecopier or recognized courier
delivery service to the parties at the following addresses or at such other
addresses as, specified by the parties by like notice:
If to Buyer: WebGain (Nova Scotia) Company
c/o BEA Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: BEA Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
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and with a copy to: Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Group Companies: The Object People Inc.
00 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attention: Mr. Xxxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Yegendorf Xxxxxxx Seller Prehogan & Xxxxxx
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Shareholders Mr. Xxxx Xxxx, as Representative
or the Controlling The Object People Inc.
Shareholders: 00 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Notice so given shall be deemed given and received on the date of actual
transmission by telecopier and on the date of actual receipt by personal
delivery or delivery by courier.
Section 13.02 MODIFICATIONS AND AMENDMENTS. Notice so given shall be
deemed given and received on the date of actual transmission if by telecopier or
upon actual receipt if by personal delivery or delivery by courier.
Section 13.03 WAIVERS AND CONSENTS. No failure or delay by a party
hereto in exercising any right, power or remedy under this Agreement, and no
course of dealing between the parties hereto, shall operate as a waiver of any
such right, power or remedy of the party. No single or partial exercise of any
right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. Subject to the
limitations set forth herein, the election of any remedy by a party hereto shall
not constitute a waiver of the right of such party to pursue other
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available remedies. No notice to or demand on a party not expressly required
under this Agreement shall entitle the party receiving such notice or demand to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the party giving such notice or demand to
any other or further action in any circumstances without such notice or demand.
The terms and provisions of this Agreement may be waived, or consent for the
departure therefrom granted, only by written document executed by the party
entitled to the benefits of such terms or provisions. No such waiver or consent
shall be deemed to be or shall constitute a waiver or consent with respect to
any other terms or provisions of this Agreement, whether or not similar. Each
such waiver or consent shall be effective only in the specific instance and for
the purpose for which it was given, and shall not constitute a continuing waiver
or consent.
Section 13.04 INTERPRETATION. The parties hereto acknowledge and agree
that: (a) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement (except with respect to the disclosure schedules,
which are the sole responsibility of the Company) and have contributed to its
revision; (b) the rule of construction to the effect that any ambiguities are
resolved against the drafting party shall not be employed in the interpretation
of this Agreement; and (c) the terms and provisions of this Agreement shall be
construed fairly as to all parties hereto and not in favor of or against any
party, regardless of which party was generally responsible for the preparation
of this Agreement.
Section 13.05 RELIANCE. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained in this Agreement and the certificates expressly
delivered hereby.
Section 13.06 EXPENSES. Each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated; provided, however, that such fees and expenses billed to
or incurred by any Group Company in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Shareholders and not any
Group Company.
Section 13.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that, no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto except that Buyer may transfer or
assign, in whole or, from time to time, in part, to one or more direct or
indirect subsidiaries or Affiliates, any or all of its rights and obligations
under this Agreement, including but not limited to the right to purchase all or
a portion of the Shares, but no such transfer or assignment will relieve Buyer
of its obligations hereunder or adversely affect the
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Group Companies or the timing of the transactions contemplated hereby. Any
purported assignment in violation of this Agreement shall be void.
Section 13.08 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of Ontario and the laws of Canada therein,
without regard to the conflicts of law principles.
Section 13.09 COUNTERPARTS; THIRD PARTY BENEFICIARIES. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. No provision of this Agreement is intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder.
Section 13.10 ENTIRE AGREEMENT. This Agreement, together with all
appendices, schedules and exhibits identified in this Agreement, constitutes the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement. No representation, inducement, promise, understanding, condition or
warranty not set forth herein has been made or relied upon by either party
hereto.
Section 13.11 SPECIFIC PERFORMANCE. Each of the parties hereto agrees
that any breach by it of any provision of this Agreement, would irreparably
injure the other party and that money damages would be an inadequate remedy
therefore. Accordingly, each of the parties hereto agrees that the other party
shall be entitled to one or more injunctions enjoining any such breach or
requiring specific performance of this Agreement and consents to the entry
thereof, this being in addition to any other remedy to which the non-breaching
party is entitled hereunder.
Section 13.12 KNOWLEDGE. Whenever the term to the "knowledge of" any
Group Company, any Subsidiary, the Controlling Shareholders or the Shareholders,
or a similar phrase, is used in this Agreement, such phrase shall mean the (i)
actual knowledge of such persons, in addition to the knowledge of the employees
of any Group Company or any Subsidiary, which shall be imputed to such persons,
and (ii) knowledge that could have been obtained with respect to those matters
which would cause a reasonable person, in a similar position, to investigate the
matter further and which could have been obtained from such investigation.
Section 13.13 CURRENCY. Unless otherwise specifically designated herein,
references in this Agreement to "dollars" or "$" shall mean the legal currency
of the United States of America.
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IN WITNESS WHEREOF, the parties hereto have duly executed or, if a
corporation. have caused this Agreement to be duly executed by their respective
authorized officers, as of the day and year first above written.
WEBGAIN (NOVA SCOTIA) COMPANY
By /s/ XXXXXX X. XXXXXXX
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: VP
THE OBJECT PEOPLE INC.
By /s/ XXXX XXXX
--------------------------------------
Name: Xxxx Xxxx
Title: President
1004155 ONTARIO INC.
By /s/ XXXX XXXX
--------------------------------------
Name: Xxxx Xxxx
Title: President
1004156 ONTARIO INC.
By /s/ XXXX XXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxx
Title: President
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1004157 ONTARIO INC.
By /s/ XXXX XXXXX
--------------------------------------
Name: Xxxx Xxxxx
Title: President
THE OBJECT PEOPLE HOLDINGS INC.
By /s/ XXXX XXXX
--------------------------------------
Name: Xxxx Xxxx
Title: President
CONTROLLING SHAREHOLDERS:
/s/ XXXX XXXX
-----------------------------------------
Xxxx Xxxx
/s/ XXXX XXXXXXX
-----------------------------------------
Xxxx Xxxxxxx
/s/ XXXX XXXXX
-----------------------------------------
Xxxx Xxxxx
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OTHER SHAREHOLDERS:
/s/ XXXXXXXXX XXXX
-----------------------------------------
Xxxxxxxxx Xxxx
/s/ XXXXX XXXXXXX
-----------------------------------------
Xxxxx Xxxxxxx
/s/ XXXXXX XXXXX
-----------------------------------------
Xxxxxx Xxxxx
THE XXXX FAMILY TRUST
Per: /s/ XXXX XXXX
--------------------------------------
Xxxx Xxxx, Trustee
Per: /s/ XXXXXXXXX XXXX
--------------------------------------
Xxxxxxxxx Xxxx, Trustee
Per: /s/ XXXXXX XXXXXXX
--------------------------------------
Xxxxxx Xxxxxxx, Trustee
THE XXXXXXX FAMILY TRUST
Per: /s/ XXXX XXXXXXX
--------------------------------------
Xxxx Xxxxxxx, Trustee
Per: /s/ XXXXX XXXXXXX
--------------------------------------
Xxxxx Xxxxxxx, Trustee
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Per: /s/ XXXX XXXXX
--------------------------------------
Xxxx Xxxxx, Trustee
THE WHITE FAMILY TRUST
Per: /s/ XXXX XXXXX
--------------------------------------
Xxxx Xxxxx, Trustee
Per: /s/ XXXXX XXXXX
--------------------------------------
Xxxxx Xxxxx, Trustee
Per: /s/ XXXX XXXX
--------------------------------------
Xxxx Xxxx, Trustee
THE XXXX FAMILY TRUST NO. 2
Per: /s/ XXXX XXXX
--------------------------------------
Xxxx Xxxx, Trustee
Per: /s/ XXXXXXXXX XXXX
--------------------------------------
Xxxxxxxxx Xxxx, Trustee
Per: /s/ XXXXXX XXXXXXX
--------------------------------------
Xxxxxx Xxxxxxx Trustee
THE XXXXXXX FAMILY TRUST NO. 2
Per: /s/ XXXX XXXXXXX
--------------------------------------
Xxxx Xxxxxxx, Trustee
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Per: /s/ XXXXX XXXXXXX
--------------------------------------
Xxxxx Xxxxxxx, Trustee
Per: /s/ XXXX XXXXX
--------------------------------------
Xxxx Xxxxx, Trustee
THE WHITE FAMILY TRUST NO.2
Per: /s/ XXXX XXXXX
--------------------------------------
Xxxx Xxxxx, Trustee
Per: /s/ XXXXX XXXXX
--------------------------------------
Xxxxx Xxxxx, Trustee
Per: /s/ XXXX XXXX
--------------------------------------
Xxxx Xxxx, Trustee
-------------
*The "Other Shareholders" in signing this Agreement are acknowledging and are
bound by all provisions of this Agreement except those provisions contained in
Article III, Section 6.04 and Articles VII, VIII and XI (except Sections 11.01,
11.04, 11.05, 11.06 and 11.07 contained therein) of this Agreement.
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LIST OF SCHEDULE AND EXHIBITS*
EXHIBITS:
Exhibit A--Form of Escrow Agreement
Exhibit B--Forms of Employment Offer Letters
Exhibit C--Form of Holdback Agreement
SCHEDULES:
Schedule 1--Shareholders
Schedule 2--Unit Shareholders
Schedule 3.03--Subsidiaries
Schedule 3.04--Effect of Agreement on Group Companies and Subsidiaries
Schedule 3.05--Capitalization Issues
Schedule 3.06--Governmental Authorizations
Schedule 3.08--Material Changes
Schedule 3.09--Liabilities
Schedule 3.11--Material Contracts
Schedule 3.12--Legal Proceedings
Schedule 3.14--Liens, etc.
Schedule 3.15--Proprietary Software
Schedule 3.16--Intellectual Property
Schedule 3.17--Insurance
Schedule 3.18--Licenses and Permits
Schedule 3.20--Loans, Notes, Accounts Receivable, etc.
Schedule 3.23--Employee Benefit Plans
Schedule 3.24--Employee Matters
Schedule 4.05--Shareholder Rights Agreements
Schedule 5.03--Governmental Authorization
Schedule 5.04--Effect of Agreement on Buyer
Schedule 6.08--Options
Schedule 7.02--Tax Matters
Schedule 8.01--Employees
Schedule 9.06--Actions Prior to Closing
Schedule 9.14--Actions Prior to Effective Time
*Omitted Schedules and Exhibits will be furnished supplementally to the
Commission upon request.
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