PURCHASE AGREEMENT
This Agreement made in duplicate this 5th day of January, 0000
X X X X X X X:
POWERTRADER, INC., a corporation
incorporated under the laws of the State of
Delaware, U.S.A.
(hereinafter called "PTI")
OF THE FIRST PART
- and -
FINANCIAL MODELS COMPANY INC.
a corporation incorporated under the laws of
the Province of Ontario
(hereinafter called "FMC")
OF THE SECOND PART
RECITALS
A. Vendor is, or will be at Closing, directly or indirectly, the registered and
beneficial owner of [insert number] shares being all of the issued and
outstanding Common Stock of PowerTrader Software Inc. (hereinafter "PTSI");
B. At Closing FMC is willing to purchase and the Vendor is willing to sell its
respective interest in the shares of Common Stock of PowerTrader Software Inc.
on the terms and conditions contained in this Agreement;
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions. In this Agreement, the following terms shall have the
meanings set out below unless the context requires otherwise:
(1) "Affiliate" means, with respect to any Person, any other Person
who directly or indirectly controls, is controlled by, or is
under direct or indirect common control with, such Person, and
includes 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; and the term "controlled" shall have a similar
meaning.
(2) "Agreement" means this Agreement, including the Exhibits and the
Schedules to this Agreement, as it or they may be amended or
supplemented from time to time, and the expressions "hereof",
"herein", "hereto", "hereunder", "hereby" and similar expressions
refer to this Agreement and not to any particular Section or
other portion of this Agreement.
(3) "Applicable Employee Benefit Plans" has the meaning given in
Section 7.1(24)
(4) "Applicable Law" means, with respect to any Person, property,
transaction, event or other matter, any law, rule, statute,
regulation, order, judgement, decree, treaty or other requirement
having the force of law (collectively, the "Law") relating or
applicable to such Person, property, transaction, event or other
matter. Applicable Law also includes, where appropriate, any
interpretation of the Law (or any part thereof) by any Person
having jurisdiction over it, or charged with its administration
or interpretation.
(4) "Assets" means all the properties, assets, interests and rights
of PTI in PTSI and of PTSI including the following:
(a) all rights and interests of PTI and PTSI to and in the
Leased Premises and under the Premises Leases, including
prepaid rents, security deposits and options to renew or
purchase, rights of first refusal under the Premises Leases
and all leasehold improvements owned by PTI and PTSI and
forming part of the Leased Premises;
(b) the inventories;
(c) the Receivables;
(d) all rights and interest under or pursuant to all
warranties, representations and guarantees, express,
implied or otherwise, of or made by suppliers or others in
connection with the Assets;
(e) the Intellectual Property;
(f) the Contracts;
(g) the Books and Records of PTSI;
(h) all prepaid charges, sums and fees paid by PTSI before the
Closing Time;
(i) all goodwill of PTSI including the present telephone
numbers, internet domain addresses and other communications
numbers and addresses
(j) all of the issued and outstanding shares in the capital of
any subsidiaries of PTSI; and
(k) all proceeds of any or all of the foregoing received or
receivable after the Closing Time.
(6) "Books and Records" means all books, records, files and papers of
PTSI including (to the extent assignable) computer programs used
by PTSI in connection with the above, manuals and data, sales and
advertising materials, sales and purchases correspondence, trade
association files, research and development records, lists of
present and former customers and suppliers, personnel, employment
and other records, and the minute and share certificate books of
PTSI, and all copies and recordings of the foregoing.
(7) "Business" means the business carried on by PTSI which primarily
involves the design, development and provision of software
products, internet services and related services to the financial
services sector.
(8) "Business Day" means any day except Saturday, Sunday or any day
on which banks are generally not open for business in the City of
Toronto.
(9) "Canadian Dollar" means the lawful currency of Canada.
(10) "Claim" has the meaning given in Section 8.1.
(11) "Closing" means the completion of the purchase and sale of the
Shares in accordance with the provisions of this Agreement.
(12) "Closing Date" means the Business Day as soon as practicable
after completion of all conditions and due diligence, but in no
event later than March 1, 1999 unless the parties shall otherwise
agree.
(13) "Closing Time" means the time of closing on the Closing Date
provided for in
Section 5.1.
(14) "Common Stock" means the common shares of PTSI [ ] par value per
share.
(15) "Consents and Approvals" means all consents and approvals
required to be obtained in connection with the execution and
delivery of this Agreement and the completion of the transactions
contemplated by this Agreement or required to carry on the
Business after the Closing Date as the Business is currently
carried on by PTSI.
(16) "Contracts" means all rights and interests of PTSI in all pending
and/or executory contracts, agreements, leases and arrangements
to which PTSI is a party or by which PTSI or any of the Assets or
the Business is bound or affected, as defined in section 7.1(14)
and 7.1(15).
(17) "Corporation" is defined in Section 7.1(8).
(18) "Direct Claim" has the meaning given in Section 8.5.
(19) "Director" means a director of PTI; and "Directors" means every
Director.
(20) "Employee" means an individual who is or has been employed by
either PTI or PTSI; and "Employees" means every Employee.
(21) "Employee Plans" has the meaning given in Section 7.1(24).
(22) "Financial Statements" has the meaning given in Section 7.1(12).
(23) "GAAP" means those accounting principles which are recognized as
being generally accepted in the United States from time to time
as set out in the handbook published by the American Institute of
Certified Public Accountants, consistently applied.
(24) "Indemnified Party" means a Person whom the Vendors or FMC, as
the case may be, has agreed to indemnify under Article 8.
"Indemnifying Party" means, in relation to an Indemnified Party,
the Party to this Agreement that has agreed to indemnify that
Indemnified Party under Article 8.
(25) "Intellectual Property" means all of PTI's and PTSI's rights to
and interests in:
(a) all business and trade names, corporate names, brand names
and slogans Related to the Business;
(b) all patents, patent rights, patent applications (including
all reissues, divisions continuations, continuations
-in-part and extensions of any patent or patent
application), industrial designs and applications for
registration or industrial designs and trade secrets
Related to the Business;
(c) all copyrights and trade-marks (whether used with software
or services and including the goodwill attaching to such
trade-marks), registrations and applications for
trade-marks and copyrights Related to the Business; and
(d) all licenses of the intellectual property listed in items
(a) to (c) above.
(26) "Interim Period" means the period from the date of this Agreement
to the date of Closing.
(27) "Knowledge" of any Person means in the case of an individual, the
knowledge of that individual after reasonable inquiry of those
persons who ought reasonably to have knowledge of the matter and
in the case of a corporation, the knowledge of any of the
officers or directors of such corporations after reasonable
inquiry of those persons who ought reasonably to have knowledge
of the matter.
(28) "Leased Premises" means all real property that is leased or
occupied by PTI or PTSI under the Premises Leases.
(29) "Liabilities" means all costs, expenses, charges, debts,
liabilities, claims, demands and obligations, whether primary or
secondary, direct or indirect, fixed, contingent, absolute or
otherwise, under or in respect of any contract, agreement,
arrangement, lease commitment or undertaking, Applicable Law and
Taxes.
(30) "Lien" means any lien, mortgage, charge, hypothec, pledge,
security interest, prior assignment, option, warrant, lease,
sublease, right to possession, encumbrance, claim, right or
restriction which affects, by way of a conflicting ownership
interest or otherwise, the right, title or interest in or to any
particular property.
(31) "Material Adverse Change" means a change in the Business, Assets
or capital of PTSI which has had or is reasonably likely to have
a significant adverse effect on the value of the Shares.
(32) "Notices" means the notices required to be given to any Person
under Applicable Law or pursuant to any contract or other
obligation to which either of PTI or PTSI is a party or by which
either of PTI or PTSI is bound or which is applicable to any of
the Assets in connection with the execution and delivery of this
Agreement or the completion of the transactions contemplated by
this Agreement or the carrying on of the Business after the
Closing as the Business is currently carried on by PTSI.
(36) "Officer" means an officer of any of PTSI.; and "Officers" means
every Officer.
(38) "Party" means a party to this Agreement and any reference to a
Party includes its successors and permitted assigns; and
"Parties" means every Party.
(39) "Permitted Liens" means the mortgages, charges and other liens
listed in Schedule 1.1(39)
(40) "Person" is to be broadly interpreted and includes an individual,
a corporation, a partnership, a trust, an unincorporated
organization, the government of a country or any political
subdivision thereof or any agency or department of any such
government, and the executors, administrators or other legal
representatives of an individual in such capacity.
(41) "Preferred Stock" means the [insert number] of issued shares of
Preferred Stock having those rights and privileges as are set
forth in Schedule 1.1(41).
(42) "Premises Leases" means all the leases, agreements to lease,
subleases, licence agreements and occupancy or other agreements
relating to the Leased Premises.
(43) "Purchase Price" has the meaning given in Section 2.1.
(44) "Purchaser's Solicitors" means XxXxxxxx, Xxxxxxxx and Skadden,
Arps.
(45) "Receivables" means all accounts receivable, bills receivable,
trade accounts, book debts and insurance claims of PTI and PTSI
together with any unpaid interest accrued on such items and any
security or collateral for such items, including recoverable
deposits, but excluding any amounts owing to or from Affiliates.
(46) "Related to the Business" means used in, arising from or relating
in any manner to the Business.
(47) "Shares" means collectively, the Common Stock and the Preferred
Stock of PTSI and "Share" means any such shares.
(48) "Software" means all rights to and interest in the computer
application programs, associated information processing
technology, databases, procedures and data files, comprising
[?????],provided by PTSI and all copyrights therein, and
technology, computer programs and other computer software
(including systems and applications), source code, object code,
algorithms and architecture related thereto.
(49) "Taxes" (individually, "Tax") means all taxes, charges, fees,
levies, imposts, and other assessments, including all income,
sales, use, goods and services, value added, capital, capital
gains, alternative, net worth, transfer, profits, withholding,
payroll, employer health, excise, franchise, real property and
personal property taxes, and any other taxes, custom duties,
fees, assessments or similar charges in the nature of a tax
including Canada Pension Plan and provincial pension plan
contributions, unemployment insurance payments and workers'
compensation premiums, together with any instalments with respect
thereto, and any interest, fines and penalties imposed by any
governmental authority, (including federal, state, provincial,
municipal and foreign governmental authorities), and whether
disputed or not.
(50) "Third Party Claim" has the meaning given in Section 8.5.
(54) "Vendor" means PowerTrader Inc..
(55) "Vendor's Solicitors" means Gallop, Xxxxxxx & Xxxxxx, X.X.
1.2 Headings and Table of Contents. The division of this Agreement into
Articles and Sections, the insertion of headings, and the provision of any table
of contents are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.3 Number and Gender. Unless the context requires otherwise, words
importing the singular include the plural and vice versa and words importing
gender include all genders.
1.4 Business Days. If any payment is required to be made or other
action is required to be taken pursuant to this Agreement on a day which is not
a Business Day, then such payment or action shall be made or taken on the next
Business Day.
1.5 Currency and Payment Obligations. Except as otherwise expressly
provided in this Agreement:
(1) all dollar amounts referred to in this Agreement are stated in
Canadian Dollars; and
(2) any payment contemplated by this Agreement shall be made by cash,
certified cheque or any other method that provides immediately
available funds.
1.6 Statute References. Any reference in this Agreement to any statute
or any section thereof shall, unless otherwise expressly stated, be deemed to be
a reference to such statute or section as amended, restated or re-enacted from
time to time.
1.7 Section and Schedule References. Unless the context requires
otherwise, references in this Agreement to Sections, Exhibits or Schedules are
to Sections, Exhibits or Schedules of this Agreement. The Exhibits and Schedules
to this Agreement are as follows:
SCHEDULES
1.1(39) Permitted Liens
1.1(41) Preferred Stock
7.1(2) Authorized Capital
7.1(6) Ownership of Shares
7.1(8) Organization of Corporations
7.1(12) Financial Statements
7.1(13) Assets
7.1(14) Leased Premises
7.1(15) Material Contracts
7.1(17) Intellectual Property and Software
7.1(20) Consents and Approvals
7.1(22) Litigation
7.1(23) Employment Contracts
7.1(24) Employees Plans
7.1(25) Suppliers
7.1(26) Product Warranties
7.1(27) Affiliated Transactions
7.1(28) Intercompany Services
7.1(29) Filings
7.1(31) Tax Paid
ARTICLE 2
PURCHASE OF SHARES
2.1 Agreement to Purchase Vendor's Shares. At the Closing Time, subject
to the terms and conditions of this Agreement, the Vendor shall sell to FMC, and
FMC shall purchase from the Vendor, [insert number] Common Shares at a price of
[insert price] per Common Share and [insert number] Preferred Shares at a price
of [insert price] per Preferred Share for aggregate proceeds to the Vendor of
[insert number] (the "Purchase Price").
2.2 Payment of Purchase Price and Subscription Price. The Purchase
Price shall be paid and satisfied by FMC by certified cheque, bank draft or wire
transfer at the Closing Time.
ARTICLE 3
QUALIFICATION
3.1 PTI shall, on or before the Closing Time, take or cause to be
taken, including the passing of requisite resolutions of the directors of PTI,
all actions to provide for the sale of the shares of Common Stock and of the
Preferred Stock
3.2 All actions required to be taken by or on behalf of PTI so as to
permit FMC to purchase the Vendor's Shares pursuant to regulatory exemptions
pursuant to the Securities Laws shall have occurred on or prior to the Closing
Time.
ARTICLE 4
CLOSING ARRANGEMENTS
4.1 Closing. The Closing shall take place at 10:00 a.m. on the Closing
Date at the offices of FMC's Solicitors, or at such other time on the Closing
Date or such other place as may be agreed orally or in writing by the Vendor and
FMC.
4.2 Vendors' Closing Deliveries. At the Closing, the Vendor shall
deliver or cause to be delivered to FMC the following documents, as applicable:
(1) a transfer of the Shares in a form to be agreed upon by the
Parties, acting reasonably, duly executed by the Vendor;
(2) a bring-down certificate of PTI in a form to be agreed upon by
the Parties, acting reasonably;
(3) a corporate certificate of the Secretary or other officer of PTI,
in a form to be agreed upon by the Parties, acting reasonably;
(5) evidence in form satisfactory to FMC, acting reasonably, that the
Consents and Approvals required to be obtained by the Vendor have
been obtained;
(6) an opinion of the Vendor's Solicitors addressed to FMC in a form
to be agreed upon by the Parties, acting reasonably; and
(7) all such other assurances, consents, agreements, documents and
instruments as may be reasonably required by FMC to complete the
transactions provided for in this Agreement.
4.3 FMC's Closing Deliveries. At the Closing, FMC shall deliver or
cause to be delivered to the Vendor the following documents and payments:
(1) a bring-down certificate of the President or other senior officer
of FMC dated as of the Closing Date in a form to be agreed upon
by the Parties, acting reasonably;
(2) a corporate certificate of the Secretary or other officer of FMC
in a form to be agreed upon by the Parties, acting reasonably;
(3) the payments referred to in Section 2.2;
(4) evidence in form satisfactory to the Vendor, acting reasonably,
that the Consents and Approvals required to be obtained by FMC
have been obtained;
(8) an opinion of FMC's Solicitors addressed to the Vendor in a form
to be agreed upon by the Parties, acting reasonably;
(9) all such other assurances, consents, agreements, documents and
instruments as may reasonably be required by the Vendor to
complete the transactions provided for in this Agreement.
ARTICLE 5
CONDITIONS OF CLOSING
5.1 FMC's Conditions. FMC shall not be obliged to complete the purchase
and sale of Shares pursuant to this Agreement unless, at or before the Closing
Time, each of the following conditions has been satisfied, it being understood
that the following conditions are included for the exclusive benefit of FMC and
may be waived, in whole or in part, only in writing by FMC at any time; and the
Vendor agrees with FMC to take all such actions, steps and proceedings as are
reasonably within their control as may be necessary to ensure that the following
conditions are fulfilled at or before the Closing Time:
(1) Representations and Warranties. The representations and
warranties of the Vendor in Section 6.1 shall be true and correct
at the Closing in all material respects.
(2) Vendor's Compliance. The Vendor shall have materially performed
and complied with all of the terms and conditions in this
Agreement on its part to be performed or complied with at or
before Closing and shall have furnished or caused to have been
furnished to FMC such certificates, affidavits or statutory
declarations of the Vendor or of officers of the Vendor as FMC
or FMC's counsel may reasonably think necessary in order to
establish that the terms, covenants and conditions contained in
this Agreement to have been performed or complied with by the
Vendor at or prior to the time of Closing have been performed and
complied with and that the representations and warranties of the
Vendor herein given are true and correct at the Closing.
(3) Material Adverse Change. During the Interim Period, there shall
have been no Material Adverse Change.
(4) No Litigation. There shall be no litigation or proceedings other
than as herein disclosed:
(a) pending or threatened against any of the Vendor or against
any of its respective Affiliates or any of its respective
directors or officers, for the purpose of enjoining,
preventing or restraining the completion of the
transactions contemplated by this Agreement; or
(b) pending or threatened against the Vendor or against any of
its respective Affiliates or any of its respective
directors or officers which:
(i) in the result, could adversely affect the right of
FMC to acquire or retain the Shares; or
(ii) in the reasonable judgment of FMC, would have a
substantial and adverse impact on the Business.
(5) Transfer of Shares. All necessary steps and proceedings shall
have been taken to permit the Shares to be duly and regularly
transferred to and registered in the name of FMC.
(6) Consents and Approvals. All the Consents and Approvals have been
obtained, including Consents and Approvals:
(a) in connection with any shareholders agreement, indenture,
lease, deed of trust, mortgage, loan agreement, or other
material agreements Related to the Business; and
(b) in connection with any credit agreement and any related
security agreements entered into by the Vendor or its
Affiliates; and
(7) Form and Legality. The form and legality of all matters
incidental to the sale by the Vendor and the purchase by FMC of
the Shares shall be subject to the approval of FMC's Solicitors.
5.2 Condition not Fulfilled. If any condition in Section 5.1 has not
been fulfilled in all material respects at or before the Closing Time, and
unless the Parties have agreed to extend the Closing Date, then FMC may, in its
sole discretion, without limiting any rights or remedies available to FMC at law
or in equity, either:
(1) terminate this Agreement by notice to the Vendor in which event
FMC shall be released from its obligations under this Agreement
to complete the purchase of the Shares e; or
(2) waive compliance with any such condition without prejudice to its
right of termination in the event of non-fulfilment of any other
condition.
5.3 Vendors'/Corporations' Conditions. The Vendor shall not be
obligated to complete the transactions contemplated by this Agreement unless, at
or before the Closing Time, each of the following conditions has been satisfied,
it being understood that the following conditions are included for the exclusive
benefit of the Vendor, and may be waived, in whole or in part, only in writing
by the Vendor at any time; and FMC agrees with the Vendor to take all such
actions, steps and proceedings as are reasonably with FMC's control as may be
necessary to ensure that the following conditions are fulfilled at or before the
Closing Time:
(1) Representations and Warranties. The representations and
warranties of FMC in Section 6.2 shall be true and correct at the
Closing in all material respects.
(2) FMC's Compliance. FMC shall have materially performed and
complied with all of the terms and conditions in this Agreement
on its part to be performed or complied with at or before the
Closing Time and shall have furnished or caused to have been
furnished to the Vendor such certificates, affidavits or
statutory declarations of FMC or of officers of FMC as the Vendor
or its counsel may reasonably thing necessary in order to
establish that the terms, covenants and conditions contained in
this Agreement to have been performed or complied with by FMC at
or prior to the time of Closing have been performed and complied
with and that the representations and warranties of FMC herein
given are true and correct at closing.
(3) Consents and Approvals. All of the Consents and Approvals to be
obtained by FMC shall have been obtained.
5.4 Condition not Fulfilled. If any condition in Section 5.3 shall not
have been fulfilled at or before the Closing Time, and unless the Parties have
agreed to extend the Closing Date, and without limiting any rights or remedies
available to the Vendor at law or in equity, then:
(1) the Vendor may, in its sole discretion, terminate this Agreement
by notice to FMC, in which event the Vendor shall be released
from all obligations under this Agreement; or
(2) the Vendors may, in its sole discretion, waive compliance with
any such condition without prejudice to any right of termination
they may have in the event of non-fulfillment of any other
condition.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of the Vendor. As a material
inducement to FMC's entering into this Agreement and completing the transactions
contemplated by this Agreement, and acknowledging that FMC is entering into this
Agreement in reliance upon the representations and warranties set out in this
Section 6.1, the Vendor and PTSI jointly and severally represent and warrant to
FMC as follows:
(1) Incorporation and Authorization. Each of PTI and PTSI is a
corporation duly incorporated under the laws of the jurisdiction
of its organization and is duly organized, validly subsisting and
in good standing under such laws, and each has all necessary
corporate power, authority and capacity to enter into this
Agreement and all other agreements and instruments to be executed
by them as contemplated by this Agreement and carry out their
obligations under this Agreement and such other agreements and
instruments. The Vendor has all necessary capacity and authority
to execute this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and such
other agreements and instruments and the completion of the
transactions contemplated by this Agreement and such other
agreements and instruments have been duly authorized by all
necessary corporate action on the part of PTI and PTSI.
(2) Authorized Capital. As of the date hereof, the only issued and
outstanding shares in the capital of PTSI are set out in Schedule
6.1(2). Except as set forth in Schedule 6.1(2), there are
outstanding no other shares, warrants, rights or securities
convertible into shares or other evidence whatsoever of an
interest in PTSI and no shares of PTSI are under option or are
agreed to be conditionally or unconditionally issued, except
pursuant to this Agreement. The rights, privileges, restrictions
and conditions attached to the Shares as are set out in Schedule
1.1(42) and the shares of Common Stock and Preferred Stock
outstanding are as set out in Schedule 6.1(2).
(3) Dividends. No dividends have been declared or paid on or in
respect of the Shares and no other distribution on any of its
securities or shares has been made by PTSI since June 30, 1998
and all dividends which to the date hereof have been declared or
paid by PTSI have been duly and validly declared or paid.
(4) Enforceability of Obligations. This Agreement constitutes a valid
and binding obligation of the Vendor enforceable against the
Vendor in accordance with its terms, subject, however, to
limitations on enforcement imposed by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of the
rights of creditors and others and to the extent that equitable
remedies such as specific performance and injunctions are only
available in the discretion of the court from which they are
sought. The Vendor is not an insolvent person within the meaning
of the Bankruptcy and Insolvency Act (Canada) and the U.S.
Bankruptcy Code and will not become an insolvent person as a
result of the Closing.
(5) Residence of Vendor. The Vendor is a non-resident of Canada for
purposes of Section 116 of the Income Tax Act (Canada).
(6) Ownership of Common Shares. The Vendor will be at the Closing
Time the registered and beneficial holder of the number of shares
of Common Stock and Preferred Stock specified in Section 2.1 with
good and marketable title thereto, free and clear of all Liens
and at the Closing shall transfer to FMC good and valid title to
such Common Stock and Preferred Stock, and such shares are all of
the issued and outstanding Shares owned beneficially by the
Vendor in PTSI. Except as set out in Schedule 6.1(6), no Person
other than FMC has any agreement, option, right or privilege
capable of becoming an agreement for the purchase from the Vendor
any of the Common Stock or Preferred Stock.
(7) Organization of the Corporations.
(a) The information set out in Schedule 6.1(8) concerning the
name and jurisdiction of incorporation, and the directors
and officers of each of PTSI. (the "Corporation") is true
and complete.
PTI owns all of the issued and outstanding shares of PTSI.;
(b) The Corporation is incorporated and validly subsisting
under the laws of its jurisdiction of incorporation.
(c) The Corporation is licensed or qualified to do business
under the laws of the jurisdictions specified in Schedule
6.1(8) and neither the character nor the location of the
properties owned by any Corporation nor the nature of the
business conducted by it requires licensing or
qualification under the laws of any other jurisdiction. The
Corporation has full corporate power to carry on its
business and to own and operate its assets, properties and
business as now carried on and owned and operated. Except
as set forth in Schedule 6.1(2), there are no rights,
subscriptions, warrants, options, conversion rights, calls,
commitments or plans or agreements of any kind outstanding
which would enable any Person to purchase or otherwise
acquire any shares or other securities of any Corporation
including, without limitation, any securities convertible
into or exchangeable or exercisable for shares or other
securities of any Corporation.
(8) Corporate Records. The minute book of each of PTI and PTSI, save
as noted in Schedule 6.1(9) hereto, contains true, correct and
complete copies, in all material aspects, of its articles, its
by-laws, the minutes of meetings of its board of directors and
every committee thereof and of its shareholders and written
resolutions of its directors and shareholders. The share register
of shareholders, register of transfers and register of directors
and officers of the Corporation are complete and accurate in all
material respects. In those matters where any minute book
aforesaid requires the execution of further documents, the Vendor
undertakes and agrees to provide such assistance as is reasonably
requested by FMC in order to make such minute book true, correct
and complete.
(9) Bankruptcy. Neither PTI nor PTSI has made an assignment in favour
of its creditors nor a proposal in bankruptcy to its creditors or
any class thereof nor had any petition for a receiving order
presented in respect of it. Neither the Vendor nor PTSI has
initiated proceedings with respect to a compromise or arrangement
with its creditors or for its winding up, liquidation or
dissolution. No receiver has been appointed in respect of the
Vendor or PTSI or any of the Assets and no execution or distress
has been levied upon any of the Assets.
(10) Financial Statements. The Vendor has furnished FMC with the
annual audited consolidated financial statements of PTI for the
fiscal year ended June 30, 1997, together with unaudited
consolidated financial statements for the periods ended June 30,
1998 and August 31, 1998 (the "Financial Statements"), true and
complete copies of which are annexed as Schedule 6.1(12). The
balance sheets contained in such Financial Statements present
fairly, in all material respects, the financial position of the
Corporations as of their respective dates and the results of its
operations for the periods indicated, in accordance with U.S.
GAAP consistently applied.
(11) Title to Assets. The Corporation has good and marketable title to
all the Assets, free and clear of any and all Liens, except for
Permitted Liens. The Assets are sufficient to permit the
continued operation of the Business in substantially the same
manner as conducted on the date of this Agreement. Schedule
6.1(11) sets out a complete and accurate list of all locations
where the Assets are situate. There is no agreement, option or
other right or privilege outstanding in favour of any Person for
the purchase from the Corporation of the Business or of any of
the Assets out of the ordinary course of business.
(12) Leased Premises. Schedule 6.1(12) lists all the Premises Leases
and describes accurately the lease agreements relating thereto.
FMC has received a true and complete copy of such lease
agreements. Each Premises Lease is in full force and effect,
unamended by oral or written agreement, and the Corporation is
entitled to the full benefit and advantage of such Premises Lease
in accordance with the terms thereof. Except as set forth in
Schedule 6.1(14) each Premises Lease is in good standing and
there has not been any material default by the Corporation, and
to the Knowledge of the Vendor, by any other party thereto under
any Premises Lease nor is the Vendor aware of any material
dispute between any Corporation and any landlord under any of the
Premises Leases. None of the Premises Leases has been assigned by
a Corporation in favour of any Person. The current uses of the
Leased Premises comply with Applicable Law.
(13) Contracts. Schedule 6.1(13) lists all the Contracts other than
the Premises Leases and the Vendor has provided true and complete
copies of same to FMC. Except as set forth in Schedule 6.1(13) no
Corporation is in material default under any Contract and there
has not occurred any event which, with the lapse of time or
giving of notice or both, would constitute a default under any
Contract by the Corporation or to the Knowledge of the Vendor,
any other party to the Contract. Except as set forth in Schedule
6.1(13) each Contract is in full force and effect, unamended by
written or oral agreement, and the Corporation is entitled to the
full benefit and advantage of each Contract in accordance with
its terms. No Corporation has received any notice of a default by
the Corporation or a dispute between the Corporation and any
other party in respect of any Contract. The Corporation is not a
party to or bound by any contract or commitment to pay any
royalty, licence fee or management fee, save as disclosed in
Schedule 6.1(13).
(14) Receivables. The Receivables are valid obligations which arose in
the ordinary course of business and to the Knowledge of the
Vendor will be collected in the ordinary course of business, in
the aggregate, at their full face value subject to the usual
reservation for bad debts, which reservation is adequate for all
reasonably foreseeable events.
(15) Intellectual Property and Software.
(a) Schedule 6.1(15) lists all of the registrations and
applications for registration of any material Intellectual
Property and Software. All of the registrations and
applications for registration of any material Intellectual
Property are valid and subsisting in good standing and are
recorded in the name of the Corporation.
(b) The Corporation has the exclusive right to use, sell,
license and dispose of, and has the right to bring actions
for infringement of any material Intellectual Property and
Software.
(c) The Corporations is the sole owner, except as set out in
Schedule 6.1(16), of the Intellectual Property and the
Software free of any and all claims of interest by any
third party, and is entitled to the exclusive and
uninterrupted use of the Intellectual Property and Software
without payment of any royalty or other fees.
(d) The Corporation has made every reasonable effort to protect
their legal rights to the use of the Intellectual Property
and the Software. Subject to the licenses granted by the
Corporation, no other Person has any right, title or
interest in any of the Software. Except as described in
Schedule 6.1(15), all copies of any software forming a part
of the Software have been disclosed or distributed solely
in Object Code form and subject to agreements with
appropriate copyright and confidentiality restrictions and
limitations of liability. Except as described in Schedule
6.1(15), the Source Code for any of the Software has not
been delivered to any Person by or on behalf of the
Corporation.
(e) Schedule 6.1(15 ) lists all current litigation, including
all pending or to the Knowledge of the Vendor, threatened
actions, suits or claims, relating to the Intellectual
Property and/or the Software.
(e) Except as listed in Schedule 6.1(15), all employees and
independent contractors of the Corporation and other
Persons involved in the development of the Software and the
trade secrets included in the Intellectual property since
[insert date] have entered into non-disclosure agreements
pursuant to which they have agreed to maintain the
confidentiality of the Software and of such trade secrets
included in the Intellectual Property, have assigned all
rights they may have in such Software and trade secrets to
the Corporation and no shareholder, officer, director or
employee of the Corporation, or any other Person, has any
right, title or interest in any of the Software or the
Intellectual Property.
(f) To the Knowledge of the Vendor, no Person has infringed or
misappropriated the Corporation's rights to the
Intellectual Property.
(g) To the Knowledge of the Vendor, there is no governmental
prohibition or restriction on the use of the Intellectual
Property.
(h) All of the Corporation's permissions and licences to use
intellectual property of other Persons in relation to or in
connection with the Software which is embodied in the
Software and which is material to the operation of the
Software (excluding commercial off-the-shelf software) are
disclosed in Schedule 6.1(15). Except as disclosed in
Schedule 6.1(15), the Software does not contain nor embody
any third party intellectual property, including software,
development tools and utilities material to the performance
of the Software. All such licences referred to in Schedule
6.1(15) are in full force and effect and neither the
Corporation nor the other party to any such licence is in
default of its obligations thereunder.
(i) To the Knowledge of the Vendor, neither the manufacture,
marketing, sale, license or use of any Software or services
based upon the Software currently manufactured, marketed,
licensed, sold, provided or used by the Corporation
violates, in any material way, any licence or agreement of
the Corporation with any Person or infringes upon, or
constitutes misappropriation of, the intellectual property
rights of any other Person, whether common law or
statutory, including rights relating to defamation, rights
of privacy or publicity and contractual rights.
(l) The computer software comprising part of the Software is in
good operating condition and functions in accordance with
the specifications described in the documentation related
thereto, and to the Knowledge of the Vendor, is free from
material errors in design and material operating defects.
All source code for the computer software comprising part
of the Software is sufficiently documented in the source
code or in the associated documentation to enable a
software developer reasonably skilled in such environment
to understand, modify, compile and otherwise utilize all
aspects of the Software within a reasonable time.
(16) Licences and Permits. The Corporation holds all Licences and
Permits required to carry on the Business free and clear of any
and all Liens, other than Permitted Liens, and all such Licences
and Permits are in full force and effect, no Corporation is in
violation of any term or provision or requirement of any such
Licences and Permits, and no Person has threatened to revoke,
amend or impose any condition in respect of, or commenced
proceedings to revoke, amend or impose conditions in respect of,
any such Licence or Permit.
(17) Undisclosed Liabilities. The Corporation does not have any
liabilities, obligations, indebtedness or commitments, whether
accrued, absolute, contingent or otherwise, which are not
disclosed in the Financial Statements or referred to or disclosed
herein, other than liabilities, obligations and indebtedness
incurred in the normal course of business since the date of the
Financial Statements.
(18) Consents and Approvals. All the Consents and Approvals are listed
in Schedule 6.1(18). Except for the Consents and Approvals, no
consent or approval of any Person is required in connection with
the execution and delivery of this Agreement and the completion
of the transactions contemplated by this Agreement or to permit
the Corporation to carry on the Business after the Closing as the
Business is currently carried on by the Corporation.
(19) Absence of Conflicting Agreements. The execution, delivery and
performance of this Agreement by the Vendor and the completion
(with any required Consents and Approvals) of the transactions
contemplated by this Agreement do not and will not result in or
constitute any of the following:
(a) a material default, breach or violation or an event that,
with notice or lapse of time or both, would be a material
default, breach or violation of any of the terms,
conditions or provisions of the articles or by-laws of the
Vendor or the Corporation;
(b) an event which, pursuant to the terms of any Contract or
Licence or Permit, causes any right or interest of any
Corporation to come to an end or be amended in any way that
is detrimental to the Business or entitles any other Person
to terminate or amend any such right or interest;
(c) the creation or imposition of any Lien on any Asset; or
(d) the violation of any Applicable Law by either of the Vendor
or the Corporation.
(20) Litigation. Except as set out in Schedule 6.1(20), there is no
action, suit, proceeding, claim, application, complaint or
investigation in any court or before any arbitrator or before or
by an regulatory body or governmental or non-governmental body
pending or threatened by or against any Corporation Related to
the Business or affecting the Business or the operation or
capital of the Corporations or the transactions contemplated by
this Agreement, and, to the Knowledge of the Vendor, there is no
factual or legal basis which is reasonably likely to give rise to
any such action, suit, proceeding, claim, application, complaint
or investigation.
(21) Employment Contracts. Schedule 6.1(21) lists, as of the date of
this Agreement, the compensation and benefit of each of the
senior employees and directors of the Corporation and the Vendor
has provided true and complete copies of same to FMC. To the
Knowledge of the Vendor the Corporation is in compliance with all
Applicable Laws relating to Employees and terms of employment
and, except as set out in Schedule 6.1(21) is not a party to or
bound by any additional or other contracts for the employment of
any senior employee or director or any bonus, deferred
compensation, profit sharing, retirement, hospitalization
insurance or other plans or arrangements providing employee
benefits, except for the plans providing employee benefits
described in Schedule 6.1(21). Except for remuneration paid to
employees in the usual and ordinary course of business and made
at current rates of remuneration no payments have been made or
authorized by the Corporation to officers, directors or employees
of the Corporation other than in the ordinary course of business.
(22) Employee Plans. The Vendor has made available to FMC all the
employee benefit, health, welfare, supplemental unemployment
benefit, bonus, pension, profit sharing, deferred compensation,
stock compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability and similar plans
or arrangements or practices relating to the Employees or former
Employees of the Corporation, more particularly set out in
Schedule 6.1(22), which are currently maintained or were
maintained at any time in the last five calendar years (the
"Employee Plans"). All obligations regarding the Employee Plans
have been satisfied, there are no outstanding defaults or
violations by any party to any Employee Plan and no Taxes,
penalties or fees are owing or exigible under any of the Employee
Plans.
(23) Customers and Suppliers. Schedule 6.1(23) lists all customers and
the largest suppliers of the Corporation (or such additional
customers or suppliers of such Corporation which are sufficient
to constitute twenty per cent or more of total sales or
purchases, as the case may be) for the 12 month period
immediately before the date of this Agreement, and the aggregate
amount which each customer was invoiced and each supplier charged
and was paid during such period. Except as set out in Schedule
6.1(23), the Vendor is not aware of, nor has it received notice
of, any intention on the part of any such customer or supplier to
cease doing business with the Corporation or to modify or change
in any material manner any existing arrangement with the
Corporation for the purchase or supply of any products or
services. To the Knowledge of the Vendor the relationships of the
Corporation with each of its principal suppliers, shippers and
customers are satisfactory and, except as set out in Schedule
6.1(23), there are no unresolved disputes with any such supplier,
shipper or customer
(24) Product Warranties. To the Knowledge of the Vendor, and except as
disclosed in Schedule 6.1(24) there are no existing, pending or
threatened claims against the Corporation on account of product
warranties or with respect to the production or sale of defective
or inferior products.
(25) Affiliated Transactions. Except as described in Schedule 6.1(25),
the Corporation is not liable in respect of advances, loans,
guarantees to or on behalf of any shareholder, officer, director,
Employee or Affiliate of the Corporation or any other Person with
whom the Corporation does not deal at arm's length.
(26) Intercompany Services. Except as described in Schedule 6.1(26),
there are no material intercompany services provided to the
Corporation by the Vendor or by any Affiliate of the Vendor.
(27) Filings. Except as set out in Schedule 6.1(27), the Corporation
has prepared and filed on time with all appropriate government
bodies including, without limitation, all securities commissions
and regulatory bodies, all tax returns, declarations,
remittances, information returns, reports and other such
documents of every nature required to be filed by or on behalf of
the Corporations in respect of any Taxes or in respect of any
other provision in any domestic or foreign, federal, provincial,
municipal, state, territorial or other relevant statute for all
fiscal periods ending prior to the date hereof and will continue
to do so in respect of any fiscal period ending on or before the
Closing Date. All such filed returns, declarations, remittances,
information returns, reports and other documents are correct and
complete in all material respects, and no material fact has been
omitted therefrom. The Vendor is a "reporting issuer" in the
United States and is not in default or on the list of defaulting
reporting issuers maintained under any Applicable Laws.
(28) Taxes Paid. Except as set out in Schedule 6.1(28), the
Corporation has paid in full all Taxes required to be paid on or
prior to the date hereof and has made adequate provision in the
Financial Statements in accordance with generally accepted
accounting principles for the payment of all Taxes in respect of
all fiscal periods ending on or before the Closing Date.
(29) Absence of Certain Changes or Events. Except as otherwise
disclosed herein the Corporation has not:
(a) suffered any Material Adverse Change;
(b) amended its certificate or articles of incorporation;
(c) declared or made any payment of any dividend or other
distribution in respect of its shares and has not redeemed,
purchased or otherwise acquired any shares;
(d) issued or sold any shares or other securities or issued,
sold or granted any option, warranty or right to purchase
any shares or other securities;
(e) disposed of any of the Assets reflected on the balance
sheet forming part of the Financial Statements, except
sales of inventories in the normal course of business;
(f) changed any accounting or costing systems or methods
(including, without limitation) revenue recognition
methods) in any material respect;
(g) suffered any extraordinary loss or cancelled or waived any
material debt, claim or other right other than as
specifically agreed to herein;
(h) incurred or assumed any liabilities, obligations or
indebtedness (whether accrued, absolute, contingent or
otherwise) or extended any guarantee except current
liabilities, obligations and indebtedness in the normal
course of business;
(i) made or granted any bonus, increased the compensation paid
(other than for normal merit and cost of living increases)
or made or guaranteed any loans or advances to any
Director, Officer, senior employee or Affiliate in any
material way;
(j) mortgaged, pledged, granted a security interest in or
otherwise encumbered any of the Assets, except in the
normal course of business;
(k) entered into any Contract or any other transaction that was
not in the normal course of business; or
(l) terminated, cancelled or modified in any material respect
or received notice or a request for termination,
cancellation or modification in any material respect of any
Contract, except in the normal course of business.
(30) Full Disclosure. The foregoing resolutions and warranties
(including the Schedules) do not contain any untrue statement of
a material fact or omit to state any material fact necessary to
make any such statement or representation not misleading to a
prospective purchaser of the Shares seeking full information as
to the Corporation and its properties, businesses and affairs.
6.2.1 Representations and Warranties of FMC. FMC represents and
warrants to the Vendor as follows:
(1) Incorporation and Power. FMC is a corporation duly incorporated
under the laws of the jurisdiction of its incorporation and is
duly organized, validly subsisting and in good standing under
such laws.
(2) Due Authorization. FMC has all necessary corporate power,
authority and capacity to enter into this Agreement and all other
agreements and instruments to be executed by it as contemplated
by this Agreement and to carry out its obligations under this
Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other
agreements and instruments and the completion of the transactions
contemplated by this Agreement and such other agreements and
instruments have been duly authorized by all necessary corporate
action on the part of FMC.
(3) Enforceability of Obligations. This Agreement constitutes a valid
and binding obligation of FMC enforceable against FMC in
accordance with its terms subject, however, to limitations on
enforcement imposed by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally and to the
extent that equitable remedies such as specific performance and
injunctions are only available in the discretion of the court
from which they are sought.
(4) Consents and Approvals. No consent or approval of any Person is
required by FMC in connection with the execution and delivery of
this Agreement and the completion of the transactions
contemplated by this Agreement.
6.2.1 Survival of Representations and Warranties.
(1) The representations and warranties contained in Section 6.1 or
any other agreement, certificate or instrument delivered pursuant
to this Agreement shall survive the Closing for a period of two
years from the Closing Date, and notwithstanding the Closing and
any inspection or inquiries made by or on behalf of FMC, shall
continue in full force and effect for the benefit of FMC, after
which time the Vendor shall be released from all obligations in
respect of such representations and warranties except with
respect to any Claims asserted by FMC in writing (setting out in
reasonable detail the nature of the Claim and the approximate
amount of such Claim) before the expiration of such period, but
(a) there shall be no time limit on the representations and
warranties of the Vendor which relate to the enforceability of
the Vendor's obligations under this Agreement in Section 6.1(3),
the incorporation of the Corporation in Section 6.1(7), the due
authorization of this Agreement by the Vendor and the Corporation
in Section 6.1(2) or to the title of the Vendor to the Shares in
Section 6.1(5}, and (b) the time limit in connection with the
representations and warranties relating to Intellectual Property
and Software matters in Section 6.1(15) shall be five years.
(2) The representations and warranties of FMC contained in Section
6.2 or any other agreement, certificate or instrument delivered
pursuant to this Agreement shall survive the Closing for a period
of two years from the Closing Date, and notwithstanding the
Closing, shall continue in full force and effect for the benefit
of the Vendor, after which time FMC shall be released from all
obligations in respect of such representations and warranties
except with respect to any Claims asserted by the Vendor in
writing (setting out in reasonable detail the nature of the Claim
and the appropriate amount thereof) before the expiration of such
period, but there shall be no time limit on the representations
and warranties of FMC which relate to the incorporation of FMC in
Section 6.2(1), the due authorization of this Agreement by FMC in
Section 6.2(2) and the enforceability of FMC's obligations under
this Agreement in Section 6.2(3).
(2) Despite Sections 6.3(1) and 6.3(2), in the event that any
representation or warranty of any Party under Section 6.1 or 6.2
is made with the intent to deceive in reckless disregard of the
accuracy of such representation and warranty, such representation
and warranty shall survive the Closing in perpetuity.
ARTICLE 7
INDEMNIFICATION
7.1.1 Indemnity by the Vendors. The Vendor shall indemnify and hold
FMC, its directors, officers, employees, agents and representatives harmless in
respect of any claim, demand, action, cause of action, damage, loss, cost,
liability or expense (hereinafter referred to as a "Claim") which may be made or
brought against an Indemnified Party or which it may suffer or incur directly or
indirectly as a result of, in respect of or arising out of:
(1) any incorrectness in or breach of any representation or warranty
of the Vendor contained in this Agreement or under any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement; or
(2) any breach of or any non-fulfillment of any covenant or agreement
on the part of the Vendor under this Agreement or under any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement,
provided however that the Vendor shall not be liable for any Claim by FMC in
connection with the breach of any representation or warranty of the Vendor
contained in this Agreement or under any other agreement, certificate or
instruments executed and delivered pursuant to this Agreement relating to the
enforceability of the Vendors' obligations under this Agreement in Section
6.1(3), or to the title of each Vendor to the Shares in Section 6.1(5) or the
breach or non-fulfillment of any covenant or agreement on the part of the Vendor
under this Agreement or any other agreement, certificate or instrument executed
and delivered pursuant to this Agreement.
7.2 Indemnity by FMC. FMC shall indemnify and hold the Vendor, its
directors, officers, employees, agents, representatives and Affiliates and their
respective directors, officers, employees, agents and representatives harmless
in respect of any Claim which may be made or brought against an Indemnified
Party or which it may suffer or incur directly or indirectly as a result of, in
respect of or arising out of:
(1) any incorrectness in or breach of any representation or warranty
of FMC contained in this Agreement or under any other agreement,
certificate or instrument executed and delivered pursuant to this
Agreement; or
(2) any breach or non-fulfilment of any covenant or agreement on the
part of FMC under this Agreement or under any other agreement,
certificate or instrument executed and delivered pursuant to this
Agreement.
7.3 Limitation. Except to the extent relating to any fraud, no Party
shall have any Liability for indemnification pursuant to Sections 7.1 and 7.2,
save as follows: (a) the Vendor shall not have any Liability for indemnification
pursuant to Section 7.1(1) in any amount in excess of the portion of the
Purchase Price received by such Vendor or Corporation; and (b) FMC shall have no
Liability for indemnification pursuant to Section 7.2 in any amount in excess of
the portion of the Purchase Price paid by FMC to each Vendor.
7.4 Notice of Claim. If an Indemnified party becomes aware of a Claim
in respect of which indemnification is provided for pursuant to any of Sections
7.1 or 7.32 as the case may be, the Indemnified Party shall promptly give
written notice of the Claim to the Indemnifying Party. Such notice shall specify
whether the Claim arises as a result of a claim by a Person against the
Indemnified Party (a "Third Party Claim") or whether the Claim does not so arise
(a "Direct Claim"), and shall also specify with reasonable particularity (to the
extent the information is available):
(a) the factual basis of the Claim; and
(b) the amount of the Claim, if known.
If through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time effectively to contest the determination of
any liability susceptible of being contested, then the Liability of the
Indemnifying Party to the Indemnified Party under this Article shall be reduced
by the amount of any losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.
7.5 Direct Claims. In the case of a Direct Claim, the Indemnifying
Party shall have 60 days from receipt of notice of the Claim within which to
make such investigation of the Claim as the Indemnifying Party considers
necessary or desirable. For the purpose of such investigation, the Indemnified
Party shall make available to the Indemnifying Party the information relied upon
by the Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or before the expiration of such 60 day period (or any mutually agreed
upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim, failing which the matter shall be referred to
non-binding mediation in such manner as the parties may agree or shall be
determined by a court of competent jurisdiction.
7.6 Third Party Claims. In the case of a Third Party Claim, the
Indemnifying Party shall have the right, at its expense, to participate in or
assume control of the negotiation, settlement or defence of the Claim. If the
Indemnifying Party elects to assume such control, the Indemnifying Party shall
reimburse the Indemnified Party for all of the Indemnified Party's out-of-pocket
expenses incurred as a result of such participation or assumption. The
Indemnified Party shall have the right to participate in the negotiation,
settlement or defence of such Third Party Claim and to retain counsel to act on
its behalf, provided that the fees and disbursements of such counsel shall be
paid by the Indemnified Party unless the Indemnifying Party consents to the
retention of such counsel at its expense or unless the named parties to any
action or proceeding include both the Indemnifying Party and the Indemnified
Party and a representation of both the Indemnifying Party and the Indemnified
Party by the same counsel would be inappropriate due to the actual or potential
differing interests between them (such as the availability of different
defences). The Indemnified Party shall cooperate with the Indemnifying Party so
as to permit the Indemnifying Party to conduct such negotiation, settlement and
defence and for this purpose shall preserve all relevant documents in relation
to the Third Party Claim, allow the Indemnifying Party access on reasonable
notice to inspect and take copies of all such documents and require its
personnel to provide such statements as the Indemnifying Party may reasonably
require and to attend and give evidence at any trial or hearing in respect of
the Third Party Claim. If, having elected to assume control of the negotiation,
settlement or defence of the Third Party claim, the Indemnifying Party
thereafter fails to conduct such negotiation, settlement or defence with
reasonable diligence, then the Indemnified Party shall be entitled to assume
such control and the Indemnifying Party shall be bound by the results obtained
by the Indemnified Party with respect to such Third Party Claim. If any Third
Party Claim is of a nature such that (i) the Indemnified Party is required by
Applicable Law or the order of any court, tribunal or regulatory body having
jurisdiction, or (ii) it is necessary in the reasonable view of the Indemnified
Party acting in good faith and in a manner consistent with reasonable commercial
practices, in respect of (A) a Third Party Claim by a customer relating to
products or services supplied by the Business or (B) a Third Party Claim
relating to any Contract which is necessary to the ongoing operations of the
Business or any material part thereof in order to avoid material damage to the
relationship between the Indemnified Party and any of its major customers or to
preserve the rights of the Indemnified Party under such an essential Contract,
to make a payment to any person (a "Third Party") with respect to the Third
Party Claim before the completion of settlement negotiations or related legal
proceedings, as the case may be, then the Indemnified Party may make such
payment and the Indemnifying Party shall, promptly after demand by the
Indemnified Party, reimburse the Indemnified Party for such payment. If the
amount of any liability of the Indemnified Party under the Third Party Claim in
respect of such a payment was made, as finally determined, is less than the
amount which was paid by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, promptly after receipt of the difference from the Third
Party, pay the amount of such difference to the Indemnifying Party. If such a
payment, by resulting in settlement of the Third Party Claim, precludes a final
determination of the merits of the Third Party Claim and the Indemnified Party
and the Indemnifying Party are unable to agree whether such payment was
unreasonable in the circumstances having regard to the amount and merits of the
Third Party Claim, then such dispute shall be referred to and finally settled by
binding arbitration from which there shall be no appeal.
7.7 Settlement of Third Party Claims. If the Indemnifying Party fails
to assume control of the defence of any Third Party Claim, the Indemnified Party
shall have the exclusive right to contest, settle or pay the amount claimed.
Whether or not the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Third Party Claim, the Indemnifying Party shall not
settle any Third Party Claim without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that the liability of the Indemnifying Party shall be limited to the
proposed settlement amount if any such consent is not obtained for any reason
within a reasonable time after the request therefor.
7.8 Interest on Claims. The amount of any Claim submitted under Section
7.1 or 7.2 as damages or by way of indemnification shall bear interest from and
including the date any Indemnified Party is required to make payment in respect
thereof at the Prime Rate calculated from and including such date to but
excluding the date reimbursement of such Claim by the Indemnifying Party is
made, and the amount of such interest shall be deemed to be part of such Claim.
7.9 Tax Adjustments. The amount of any Claim submitted under Section
7.1 or 7.2 as damages or by way of indemnification shall be determined on an
after-Tax basis, and without limiting the generality of the foregoing shall (a)
be net of the present value of any Tax benefits to the Indemnified Party
resulting from the claim for indemnity and (b) include the amount necessary to
hold the Indemnified Party harmless after Tax. The present value of any Tax
benefits shall be the amount, calculated on the date that is the Business Day
immediately preceding the date of payment of the Claim, that is required to
provide a yield from such date to the last day of the latest taxation year of
the Indemnified Party to which the Tax benefits relate that is equal to the sum
of the yield to maturity on such date, assuming semi-annual compounding, that a
non-callable Government of Canada bond would carry if issued in Canadian dollars
in Canada at 100% of its principal amount on such date and maturing
approximately on the last day of the latest taxation year of the Indemnified
Party to which the Tax benefits relate, plus five per cent.
7.10 Set-0ff. FMC shall be entitled to set-off the amount of any Claim
submitted under Section 7.1 as damages or by way of indemnification against the
Corporation, once finally determined, against any other amounts payable by FMC
to the Corporation whether under this Agreement or otherwise.
7.11 Dispute Resolution. In the event that any Party shall have any
disagreement, dispute, controversy or claim arising out of or relating to this
Agreement, the performance or interpretation hereof, the relationship
contemplated hereby, or the breach, termination or invalidity hereof or thereof
( a "Dispute"), then such Party shall notify each other in a writing setting
forth briefly the nature of the Dispute and the amount involved, if any. Within
ten (10) days of receipt of such notice, the Parties shall each designate a
representative with full power and authority to resolve the Dispute, who shall
meet within fifteen (15) days of their designation to attempt through good faith
negotiation to reach an amicable resolution. If the Parties are unable to
resolve the Dispute within sixty (60) days following the date on which
negotiations commenced, any Party can submit the Dispute to mediation in
accordance with the procedures of the American Arbitration Association. Nothing
in this Agreement is intended to limit a Party's right to seek, at any time,
injunctive or other provisional judicial relief if in the circumstances such
relief is necessary to avoid irreparable harm or other injury for which there is
no adequate remedy at law.
ARTICLE 8
INTERIM PERIOD
8.1 Investigation. Until the Closing, FMC and its representatives and
advisers shall be permitted to make such investigations, inspections, surveys or
tests of the properties and assets of the Corporation, its predecessor companies
and Affiliates and of its respective financial and legal condition as FMC deems
necessary or desirable to familiarize itself with such properties, assets and
other matters. Without limiting the generality of the foregoing, FMC shall be
permitted complete access to all documents relating to information scheduled or
required to be disclosed under this Agreement, to the Books and Records, the
Contracts, the Leased Premises, the Employees, records regarding suppliers,
customers and regulators and environmental reports, surveys, inspection reports
and all other reports prepared by advisers of the Corporation, its predecessor
companies and its Affiliates and the Corporation shall provide to FMC
photocopies of all such written information and documents as may be reasonably
requested by FMC. Any such investigations, inspections, surveys or tests shall
not, however, affect or mitigate the representations and warranties of the
Vendor under this Agreement which shall continue in full force and effect as
provided under this Agreement.
8.2 Authorizations. The Vendor shall execute and deliver any
authorizations required to permit the investigations, inspections, surveys or
tests described in Section 8.1.
8.3 Confidentiality.
(1) Each party shall hold in strictest confidence and not use in any
manner, other than as expressly contemplated by this Agreement,
any Confidential Information (as defined below) of the other
Party.
(2) Section 8.3(1) shall not apply to the disclosure of any
Confidential Information where such disclosure is required by
Applicable Law. In that case, the Party required to disclose
shall, as soon as possible in the circumstances, notify the other
Party of the requirement. Upon receiving such notification, the
other Party may take any reasonable action to challenge the
requirement, and the affected Party shall, at the expense of the
other Party, assist the other Party in taking such reasonable
action.
(3) Following the termination of this Agreement, each Party shall
promptly, upon request from the other Party, return to the
requesting Party all copies of any tangible items (other than
this Agreement), if any, which are or which contain Confidential
Information of the requesting Party; provided that if the Party
so obligated to return Confidential Information has prepared
summaries or analyses containing or concerning Confidential
Information, then such Party may, instead of returning the
summaries or analyses, destroy them and provide a certificate to
that effect to the requesting Party.
(3) For the purposes of this Section 8.3:
(a) "Confidential Information" of a Party at any time means all
information relating to the business of such Party and its
Affiliates (including business plans, way of doing
business, business results and prospects and customer
lists) which,
(i) at the time is of a confidential nature (whether or
not specifically identified as confidential) and is
known or should be known by the other Party as being
confidential, and
(ii) has been or is from time to time made known to or is
otherwise learned by the other Party as a result of
the matters provided for in this Agreement,
including the following information:
(iii) the terms of this Agreement;
(iv) a Party's proprietary software and Intellectual
Property; and
(v) a Party's business records,
but not including any information that at such time:
(vi) has become generally available to the public other
than as a result of a disclosure by the other Party.
8.4 Action During Interim Period. During the Interim Period, the
Corporation shall be operated and managed in the usual and ordinary course of
business such that the Corporation shall:
(1) other than changes to compensation or other benefits which have
been approved by a majority of the board of directors or in
accordance with existing agreements, not make or agree to make
any material change in the compensation of any Senior Employee
and not pay or agree to pay or set aside any bonus, profit
sharing, retirement, insurance, death, severance or fringe
benefit or other extraordinary or indirect compensation to, for
or on behalf of any Senior Employee;
(2) not dispose of any of the Assets, except for sales of inventories
in the normal course of business;
(3) not enter into any Material Contract that is not in the normal
course of business;
(4) not issue any shares or other securities of the Corporation in
connection with the warrant transactions or the exercise of
options already granted;
(4) not declare or cause to be paid any dividend or make any other
form of distribution or payment on the Shares or any other
securities of the Corporation;
(5) use all reasonable efforts not to default in the performance of
any term or condition of any Material Contract or Licences and
Permits;
(6) not cancel any policy of insurance which relates to the
Corporation or any of the Assets, except with the prior written
consent of FMC;
(7) use all reasonable efforts to maintain relations with the
suppliers, customers and landlords of the Corporation in
accordance with past custom and practice; and
(8) except as otherwise disclosed herein, pay before delinquency all
Taxes and other obligations which become due and payable by the
Corporation.
8.5 Exclusive Dealings. During the Interim Period neither the Vendor
nor the Corporation without the consent of FMC, not to be unreasonably withheld,
shall take any action, directly or indirectly, to encourage, initiate or engage
in discussions or negotiations with, or provide any information to, any Person,
other than FMC and the designated and authorized representatives of either
party, concerning any sale, transfer or assignment of the Shares or the Assets
(other than sales in the ordinary course of business) involving the Corporation.
The Vendor and the Corporation shall notify FMC promptly if any such discussions
or negotiations are sought or if any proposal for a sale, transfer or assignment
of the Shares or the Assets is received or being considered. Notwithstanding the
foregoing, the restrictions set out in this Section 8.5 shall not apply
following the termination of this Agreement.
8.6 Regulatory Approvals. The Vendor shall cooperate, and shall cause
the Corporation to cooperate, with FMC and render all necessary assistance
required by FMC in connection with any application, notification or filing of
FMC to or with any regulatory agency, at FMC's expense.
8.7 Updates to Information. The Vendor shall update on or before
Closing, by amendment or supplement, any of the information disclosure schedules
referred to in this Agreement and any other disclosure in writing to FMC as soon
as reasonably possible after new or conflicting information comes to the
attention of the Vendor. FMC shall not be obligated to accept any such amendment
or supplement if it results in a Material Adverse Change in the Business and
receipt of any such amendment or supplement shall not be deemed to be a waiver
or release by FMC of any provision of this Agreement.
ARTICLE 9
GENERAL
9.1 Expenses. FMC and the Vendor shall each be solely responsible for
and bear all of its own respective expenses, including, without limitation,
expenses of legal counsel, accountants, and other advisors incurred at any time
in connection with pursuing or consummating the transactions contemplated in
this Agreement.
9.2 Public Announcements. Except to the extent otherwise required by
law or with the prior consent of the other Party, no Party shall make any public
announcement regarding this Agreement or the transactions contemplated by this
Agreement. The parties shall mutually agree upon an appropriate public
announcement to be made after execution of this Agreement.
9.3 Notices. Any notice, certificate, consent, determination or other
communication required or permitted to be given or made under this Agreement
shall be in writing and shall be effectively given and made if (i) delivered
personally, (ii) sent by prepaid courier service or mail, or (iii) sent prepaid
by fax or other similar means of electronic communication, in each case to the
applicable address set out below:
(i) if to the Vendor, to:
Xx. Xxxxxxx X. Xxxxx
c/o Gallop, Xxxxxxx & Xxxxxx, X.X.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
(ii) Financial Models Company Inc. 0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
XxXxxxxx Xxxxxxxx
Xxxxx 0000
Xxxxxxx Xxxxxxxx Bank Tower
Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
Any such communication so given or made shall be deemed to have been given or
made and to have been received on the day of delivery if delivered, or on the
day of faxing or sending by other means of recorded electronic communication,
provided that such day in either event is a Business Day and the communication
is so delivered, faxed or sent before 4:30 p.m. local time of the recipient on
such day. Otherwise, such communication shall be deemed to have been given and
made and to have been received on the next following Business Day. Any such
communication sent by mail shall be deemed to have been given and made and to
have been received on the fifth Business Day following the mailing thereof;
provided however that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made and to have been
received only upon actual receipt. Any Party may from time to time change its
address under this Section by notice to the other Party given in the manner
provided by this Section.
9.4 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties pertaining to the subject matter of this Agreement and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written. There are no conditions, warranties, representations or
other agreements between the Parties in connection with the subject matter of
this Agreement, whether oral or written, express or implied, statutory or
otherwise) except as specifically set out in this Agreement.
9.5 Waiver. A waiver of any default, breach or non-compliance under
this Agreement is not effective unless in writing and signed by the party to be
bound by the waiver. No waiver shall be inferred from or implied by any failure
to act or delay in acting by a party in respect of any default, breach or
non-observance or by anything done or omitted to be done by the other party. The
waiver by a party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that party's rights under this Agreement in
respect of any continuing or subsequent default, breach or non-observance
(whether of the same or any other nature).
9.6 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such prohibition or unenforceability and shall be
severed from the balance of this Agreement, all without affecting the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
9.7 Non-Merger. Each party hereby agrees that all provisions of this
Agreement, other than (a) the conditions in Article 5 and (b) the
representations and warranties contained in Article 6 and the indemnities in
Sections 8.1 and 8.2 hereof (which shall be subject to the arrangements made in
such Articles or Sections) shall forever survive the execution, delivery and
performance of this Agreement, Closing and the execution, delivery and
performance of any and all documents delivered in connection with this
Agreement.
9.8 Further Assurances. Each Party shall promptly do, execute, deliver
or cause to be done, executed and delivered all further acts, documents and
things in connection with this Agreement that the other Party may reasonably
require for the purposes of giving effect to this Agreement.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Provinces of Ontario and British Columbia and
the laws of Canada applicable in such Province.
9.10 Successors and Assigns. This Agreement shall enure to the benefit
of, and be binding on, the Parties and their respective successors and permitted
assigns. No Party may assign or transfer, whether absolutely, by way of security
or otherwise, all or any part of its respective rights or obligations under this
Agreement without the prior written consent of the other Parties, provided,
however, that from and after the Closing, FMC shall be entitled to transfer all
or a portion of the Shares, and all ancillary rights therein and thereto,
without the prior written consent of any other Party.
9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument.
Counterparts may be executed either in original or faxed form and the Parties
adopt any signatures received by a receiving fax machine as original signatures
of the Parties; provided, however, that any Party providing its signature in
such manner shall promptly forward to the other Parties an original of the
signed copy of the Agreement which was so faxed.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
6th day of January, 1999.
FINANCIAL MODELS COMPANY INC. POWERTRADER, INC.
Per: Per:
------------------------------ ----------------------------------
Name: Name:
Title: Title:
