Exhibit 99a
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STOCK PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
ARIEL CORPORATION
AND
ALIS TECHNOLOGIES INC.
NOVEMBER 23, 1998
STOCK PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made, effective as of the 23rd day of November, 1998,
by and among Ariel Corporation, a Delaware corporation having its principal
place of business at 0000 Xxxxx 000, Xxxxxxxx, Xxx Xxxxxx 00000 ("Ariel"), Alis
Technologies Inc., a corporation organized under the laws of Canada, having its
principal place of business at 000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxx X0X 0XX ("Alis"), and the sole stockholder of Solutions for
Communications & International ISDN, a French stock corporation registered with
the Commercial Register of Paris under No. 338 679 731 having a principal place
of business at 00/00, Xxxxxxxxx xx Xxxxxxx Xxxxxxx Xxxxx, 00000 Xxxxx, Xxxxxx
("SCii").
RECITALS
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WHEREAS, Alis owns all of the outstanding capital shares of SCii (the
"SCii Stock"), which shares represent all of the issued and outstanding shares
of capital stock of SCii and has, directly or through a wholly owned subsidiary,
advanced to SCii the aggregate amount of approximately FF7,500,000
(US$1,355,042), all as more particularly set forth on Schedule 2.2 hereto
(together with all accrued and unpaid interest thereon and all other amounts due
in connection therewith, the "Advances"); and
WHEREAS, Ariel wishes to purchase from Alis and Alis wishes to sell to
Ariel, all of the SCii Stock and Alis' rights to repayment of the Advances (the
"Repayment Rights"), on the terms and conditions set forth below.
NOW, THEREFORE, intending to be legally bound hereby, and in
consideration of the mutual premises and the representations, warranties and
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Sale and Purchase of the SCii Stock.
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1.1 Sale and Purchase of the SCii Stock. Subject to the terms,
provisions and conditions of this Agreement and upon the basis of the
representations and warranties made herein, at the Closing (as defined below)
Alis shall sell, assign and transfer to Ariel (a) all of the SCii Stock set
forth on Schedule 3.1 annexed hereto by delivering a transfer certificate or
certificates representing such SCii Stock (an "Ordre de Mouvement") duly
endorsed for transfer, and (b) the Repayment Rights, in consideration of the
purchase price (the "Purchase Price") set forth in Section 2 hereof.
1.2 Closing. The closing (the "Closing") of the sale and purchase of
the SCii Stock under this Agreement shall take place at the offices of Xxxxxx &
Hannah LLP, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, at 10 o'clock a.m.
on the date hereof. The date of the Closing is hereinafter referred to as the
"Closing Date." At Closing:
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(a) Alis shall deliver to Ariel:
(i) duly endorsed transfer certificates representing the SCii
Stock ("Ordre de Mouvement");
(ii) the Escrow Agreement annexed hereto as Exhibit A;
(iii) original instruments evidencing the Advances;
(iv) an opinion of counsel from (i) Xxxxxxxxxx Xxxxxxxx
Xxxxx Xxxxxx, counsel to Alis and from (ii) Xxxxxxx
Xxxxxxxx Bregou, counsel to SCii, both annexed hereto
as Exhibit C;
(v) [intentionally omitted];
(vi) any consents required pursuant to Schedule 3.11 of this
Agreement;
(vii) all of the corporate records or minute books prepared
and kept in compliance with French Company Law, stock
certificate books ("attestation d'inscription en
compte") reflecting the registration of Ariel as the
sole owner of the SCii Stock, documents and seals of
SCii not previously delivered to Ariel;
(viii) a certificate from the President du Conseil
d'Administration of SCii dated the Closing Date
certifying as to true copies of all corporate action
taken by the directors of SCii relative to this
Agreement and all related documents thereto, and the
By-Laws of SCii as amended to date (the "President's
Certificate");
(ix) a certificate from Alis dated the Closing Date
certifying as to true copies of all corporate action
taken by the directors of Alis relative to this
Agreement and all related documents thereto, and the
Certificate of Incorporation or Memorandum of
Organization and the By-Laws of Alis, all as amended
to date (the "Secretary's Certificate");
(x) evidence of release from and termination of all
previous stockholders of SCii together with covenants
of non-competition, non-solicitation and
confidentiality received from such former
stockholders; and
(xi) evidence of the resignation or termination of each of
Messrs. Mered, Cleroux, Xxxxx and Zerrouki and of Xx.
Xxxxxxx, as an officer, director, employee and/or
independent contractor, as applicable, effective
prior to or as of the Closing Date.
(b) Ariel shall deliver the Purchase Price to Alis as described in
Section 2 hereof.
2. Purchase Price and Method of Payment
2.1 Purchase Price. At the Closing Ariel shall:
(a) deliver to Alis the sum of Two Million Five Hundred Eighty Thousand
Seventy Three and 00/100 U.S. Dollars (US$2,580,073.00), such payment to be made
by check); and
(b) deliver to the Escrow Agent the sum of Five Hundred Thousand and
00/100 U.S. Dollars (US$500,000.00) to be held in escrow pursuant to the terms
of Escrow Agreement.
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The sums in subsections (a) and (b) of this Section 2.1 are collectively
referred to herein as the "Purchase Price".
2.2 Allocation of Purchase Price. The parties agree that (i) the
Purchase Price shall be allocated in the manner set forth in Schedule 2.2
hereto, and (ii) no party will take any action with any third party, including
any governmental authority, that is inconsistent with such allocation.
2.3 Taxes. Alis agrees to pay any and all taxes, including income and
capital gains taxes as relates to Alis' disposition of the SCii Stock or the
Advances, and any stamp and documentary tax, arising by virtue of the sale or
transfer of the SCii Stock and the receipt of the Purchase Price, if any. If the
registration of this Agreement with tax authorities is requested, for any
reason, by one of the parties, such party shall bear all costs and expenses,
including registration duties.
3. Representations and Warranties of Alis.
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For purposes of this Section, the following terms shall have the
meanings provided:
"Authority" means any governmental authority, body, agency, or
department, whether federal, provincial, national, regional, departemental or
municipal;
"Debt" means all current liabilities and long term debt of SCii and its
Subsidiaries;
"Intellectual Property" means the entire right, title and interest in
and to all proprietary rights of every kind and nature, including patents,
copyrights, trademarks, mask works, trade secrets and proprietary information,
and all applications for any of the foregoing, and any license or agreements
granting rights related to the foregoing (i) subsisting in, covering, reading
on, directly applicable to or existing in SCii's or its Subsidiaries' products
and services, as set forth on Schedule II hereto or its technology, including,
without limitation, all Intellectual Property identified in Schedule 3.14; (ii)
that are owned, licensed or controlled in whole or in part by SCii or its
Subsidiaries; or (iii) that are used in or necessary to the development,
manufacture, sales, marketing or testing of SCii's or its Subsidiaries' products
and services.
"Person" means an individual, partnership, unincorporated association,
organization, syndicate, corporation, trust and a trustee, executor,
administrator or other legal or personal representative;
"Subsidiary" means any corporation with respect to which a specified
Person (or Subsidiary thereof) owns a majority of common stock or otherwise has
the power to vote or direct the voting of sufficient securities to elect a
majority of the board of directors or otherwise direct the business and policies
of that corporation; and
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"Tax" means all governmental taxes, levies, duties, assessments,
reassessments and other charges of any nature whatsoever, whether direct or
indirect, including income tax, profits tax, gross receipts tax, corporation
tax, sales and use tax, wage tax, payroll tax, employer's health tax, worker's
compensation levy, capital tax, stamp duty, real and personal property tax, land
transfer tax, customs or excise duty, excise tax, turnover or value added tax on
goods sold or services rendered, withholding tax, social security and
unemployment insurance charges (including ASSEDIC) or retirement contributions,
and any interest, fines, additions to tax and penalties thereon.
Alis represents and warrants to Ariel, upon which representations and
warranties Ariel relies, and which representations and warranties shall survive
the Closing through and until November 23, 2001 (except as set forth in Section
7.1 herein) regardless of any investigation by Ariel of the affairs of Alis and
SCii, as follows:
3.1 Capitalization of SCii. SCii's authorized capital stock consists of
19,688 shares, FF100 par value per share, all of which are issued and
outstanding on the date hereof, all of which SCii Stock is owned by Alis as set
forth on Schedule 3.1. All such issued and outstanding shares of capital stock
have been and on the Closing Date will be duly and validly issued and are, or
will be on such date, fully paid and non-assessable. There are not, and on the
Closing Date there will not be, outstanding (i) any options, warrants or other
rights to purchase from SCii any equity or debt security of SCii; (ii) any
securities convertible into or exchangeable for any equity or debt security; or
(iii) any other commitments of any kind for the issuance of additional shares of
equity or debt securities of SCii. No shares of capital stock of SCii have been
repurchased or redeemed by SCii or are held by SCii.
3.2 Authorization. This Agreement has been duly and validly executed
and delivered by Alis. This Agreement and all other agreements and obligations
entered into and undertaken in connection with the transactions contemplated
hereby to which Alis is a party constitute the valid and legally binding
obligations of Alis, as applicable, enforceable against it in accordance with
their respective terms except insofar as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting the rights of creditors and
general equitable principles. The execution, delivery and performance by Alis of
this Agreement and the agreements provided for herein, and the consummation by
Alis of the transactions contemplated hereby and thereby, will not, with or
without the giving of notice or the passage of time or both, (a) violate the
provisions of any law, rule or regulation applicable to SCii or Alis; (b)
violate the provisions of the By-laws, as amended, of SCii or Alis; (c) violate
any judgment, decree, order or award of any court, governmental body or
arbitrator; or (d) conflict with or result in the breach or termination of any
term or provision of, or constitute a default under, or cause any acceleration
under, or cause the creation of any indebtedness, contract, lease, license,
permit, lien, charge or encumbrance upon the properties or assets of SCii
pursuant to, any indenture, mortgage, deed of trust or other instrument or
agreement to which SCii is a party or by which SCii or any of its properties is
or may be bound.
3.3 Organization. SCii is a corporation duly organized, validly
existing and in good standing under the laws of France, and has all requisite
power and authority (corporate and other)
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to own its properties and to carry on its business as now being conducted and as
proposed to be conducted. SCii is duly qualified to do business and is in good
standing in all jurisdictions in which its ownership of property or the
character of its business requires such qualification and where failure to be so
qualified would have a material adverse effect on SCii. In particular, all of
SCii's secondary offices are duly registered with the French Registry of
Commerce and Companies. Certified copies of the By-laws of SCii, as amended to
date, as well as an original excerpt ("extrait k-bis") from the French Registry
of Commerce and Companies, shall be delivered to Ariel at Closing, and shall be
complete and correct, and no amendments shall have been made thereto or have
been authorized since the date hereof. As of the date hereof, there has been no
request for the annulment or the dissolution of SCii, nor any bankruptcy
restructuring procedure ("redressment judiciaire") or judicial liquidation
against SCii. As the date hereof, SCii is not insolvent ("etat de cessation de
paiements") and is not under an obligation to apply for a bankruptcy
restructuring procedure. There are no grounds upon which a third party could
require the dissolution or winding up of the affairs of SCii. Subject to the
provisions of this Section 3.3, Ariel acknowledges that Ariel may need to
provide additional funds to SCii for short-term purposes after the Closing.
3.4. Subsidiaries. Schedule 3.4 sets forth for each of SCii's
Subsidiaries that comprise in whole or in part, SCii (i) its name and
jurisdiction of incorporation, (ii) the number of shares of authorized capital
stock of each class of its capital stock, (iii) the number of issued and
outstanding shares of each class of its capital stock, the names of the record
holders thereof, and the number of shares held by each such holder, (iv) the
number of shares of its capital stock held in treasury and (v) its directors and
officers. Each Subsidiary is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary is duly authorized to conduct business and is in good standing as a
foreign corporation in each jurisdiction listed in Schedule 3.4, which such
jurisdictions are the only jurisdictions where the nature of the activities
conducted by it or the character of the property owned, leased or operated by it
make such qualification necessary or appropriate. Each Subsidiary has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used by
it. Alis has delivered to Ariel correct and complete copies of the charter and
by-laws (or equivalent documents) of each Subsidiary (each as amended to date).
All of the issued and outstanding shares of capital stock of each Subsidiary
have been duly authorized and are validly issued, fully paid, and nonassessable.
SCii owns beneficially all of the outstanding shares of each Subsidiary that it
holds of record, free and clear of any Taxes, liens, options, warrants, purchase
rights, contracts and commitments. All operations relating to the acquisition
merger, dissolution, liquidation or sale of existing or former subsidiaries were
conducted in full compliance with applicable laws.
3.5 Financial Statements
(a) SCii Financial Statements. Annexed hereto as Schedule 3.5 are true
and complete copies of SCii's unaudited financial statements as of June 30,
1998, if available (the "1998 Financial Statements"), and the audited financial
statements as of December 31, 1997 (the "1997 Financial Statements") and
December 31, 1996 (the "1996 Financial Statements") (collectively,
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the "1996, 1997 and 1998 Financial Statements" are referred to as the "Financial
Statements"). All such Financial Statements are in accordance with the books and
records of SCii, and (i) present fairly and correctly the financial position of
SCii as of the respective dates and for the respective periods indicated,
including without limitation, the stockholders' equity of SCii, (ii) include all
required material adjustments, and (iii) have been prepared in accordance with
consistently applied French generally accepted accounting principles.
(b) No Adverse Changes or Undisclosed Liabilities. Except as set forth
on Schedule 3.5 or Schedule 3.20, since June 30, 1998, there has not occurred or
arisen, whether or not in the ordinary course of business: (i) any material
adverse change in the assets, financial condition, operations or business of
SCii, or (ii) any event, condition or state of facts of any character known to
Alis that might materially and adversely affect the results of operations,
business, financial condition or prospects of SCii. Except as set forth on
Schedule 3.5, SCii and its Subsidiaries have no material liabilities or
obligations, fixed, accrued, contingent or otherwise, which are not fully
reflected or provided for on, or disclosed in the notes to, the Financial
Statements except liabilities and obligations incurred in the ordinary course of
business since June 30, 1998, none of which individually or in the aggregate has
been or is materially adverse to the operations, business, financial condition
or prospects of SCii.
3.6 Accounts Receivable; Inventories. Except as set forth on Schedule
3.6, (i) any accounts receivable reflected on the Financial Statements have been
collected or are collectible in the amounts shown, subject to a reasonable
allowance for doubtful accounts as set forth in the Financial Statements; (ii)
the inventories shown on the Financial Statements and the inventories acquired
since June 30, 1998 consist of items of a quantity and quality rentable, usable
or salable in the normal course of the business of SCii; and (iii) the value at
which the inventories are carried on the Financial Statements reflect the lower
of SCii's cost or net realizable market value.
3.7 Tax Matters.
(a) Adequate provision has been made by SCii in the Financial
Statements for any Taxes due and unpaid at the date of the Financial Statements,
or for the payment of any Tax installments due in respect of the current
taxation year of SCii and its Subsidiaries. Except to the extent reflected or
reserved against in the Financial Statements, SCii and its Subsidiaries are not
liable for any Taxes. French national, regional, departemental or local income
tax assessments or reassessments have been received by SCii covering all past
periods through the 1997 fiscal year and SCii has paid all such assessments and
reassessments, or where permitted by law, security therefor has been provided.
No notices of objection or appeals are outstanding with respect to any
assessment, reassessment or determination of SCii by any Authority. Except as
disclosed in Schedule 3.7, there are no actions, suits, audits, investigations,
claims or other proceedings pending or, to Alis' knowledge, after due inquiry,
threatened, against SCii in respect of any Taxes and there are no facts or
circumstances known to Alis, or acts, omissions, events, transactions, or series
of transactions (including the entering into and/or completion of this
Agreement) occurring wholly or partly on or before the Closing, which could, or
are likely to, give rise to any such actions, suits, investigations, claims or
other proceedings. There are no
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agreements, waivers or other arrangements providing for an extension of time
with respect to the filing of any Tax return or the payment of any Taxes by SCii
or its Subsidiaries. Copies of all assessments or other notices sent to SCii or
its Subsidiaries by any Tax Authority have been delivered to Ariel.
(b) SCii and its Subsidiaries have on a timely basis filed all Tax
returns, information returns, reports, elections, designations, and other
filings required to be filed by them pursuant to any Tax legislation. No such
filing has contained any material misstatement or omitted any statement of any
material fact that should have been included therein. SCii and its Subsidiaries
have not and are not required to file any Tax returns, information returns or
designations in any jurisdiction outside France or the United Kingdom.
(c) SCii and its Subsidiaries have withheld and remitted to the proper
authority, or where permitted by law provided security for, on a timely basis
and in a form required under the appropriate Tax legislation, all amounts in
respect of Taxes, including unemployment insurance premiums and any other
deductions required to be withheld and remitted by it.
(d) There is no deductible outlay or expense owing by SCii or its
Subsidiaries to a person with whom they were not dealing at arm's length at the
time the outlay or expense was incurred which is unpaid and which will be
included in SCii's or its Subsidiaries' income for any taxation year ending on
or after the Closing Date;
(e) SCii or its Subsidiaries do not have any loans or indebtedness
outstanding which have been made to directors, former directors, officers,
shareholders or employees of SCii or its Subsidiaries or to any person or
corporation not dealing at arm's length with any of the foregoing;
(f) SCii and its Subsidiaries have not either directly or indirectly,
transferred property to or acquired property from a Person with whom SCii or its
Subsidiaries was not dealing at arm's length for consideration other than
consideration equal to the fair market value of the property at the time of the
disposition or acquisition thereof;
(g) All of the interest which has been paid or is payable by SCii or
its Subsidiaries in respect of their Debt is deductible in calculating SCii's or
its Subsidiaries' income for Tax purposes;
(h) All of the tangible personal property of SCii and its Subsidiaries
is located in Montpelier, France, Paris, France, and Portsmouth, England;
(i) SCii and its Subsidiaries have paid all retail sales tax on the
tangible personal property acquired by them;
(j) No revenues and expenses relating to a period prior to the Closing
Date have been received, accrued or paid, as the case may be, at conditions
which would be characterized as an "acte anormal de gestion" (as defined by
French courts).
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3.8 Title to Properties. SCii and its Subsidiaries have good and
marketable title to all of their respective properties and assets reflected in
the Financial Statements or acquired since June 30, 1998 except properties and
assets disposed of in the ordinary course of business since June 30, 1998 or
referred to on Schedule 3.8, and none of such properties or assets is subject to
any mortgage, pledge, lien, security interest, lease, charge, encumbrance,
objection, claim or joint ownership, except as shown on Schedule 3.8. All leases
listed on Schedule 3.8 are legal, valid, binding, enforceable and in full force
and effect on identical terms following the consummation of the transactions
contemplated hereby, and no default exists now or will exist as of the date of
the Closing. Except for its interest as a tenant of real property leased to it,
or as set forth on Schedule 3.8, SCii does not own any right, title or interest
in or to real property of any kind. The going concern ("fonds de commerce")
operated by SCii is fully owned by SCii. It has been lawfully and validly
created, purchased or contributed to and, except as set forth in Schedule 3.8
hereof, is free from any pledge, security, privilege or any other similar third
party rights of any kind and has not been leased by SCii to any third party
pursuant to a "location gerance" agreement.
3.9 Agreements, Contracts and Commitments. Except as shown on Schedule
3.9, SCii and its Subsidiaries are not a party to or liable in connection with
and have not made or granted any oral or written:
(a) agreement (or group of related agreements) for the lease of
personal property to or from any person or entity providing for lease payments
in excess of US$25,000 (or its equivalent in other currency);
(b) agreement (or group of related agreements) for the purchase or sale
of raw materials, commodities, supplies, products, or other personal property,
or for the furnishing or receipt of services, the performance of which will
extend over a period of more than one (1) year, result in a material loss or
involve consideration in excess of US$25,000 (or its equivalent in other
currency);
(c) agreement concerning a partnership or joint venture;
(d) agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness in excess of
US$25,000 (or its equivalent in other currency) or under which it has imposed a
lien on any of its assets, tangible or intangible;
(e) agreement entered into between SCii and its Subsidiaries;
(f) profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or arrangement for the
benefit of the current or former directors, officers, and employees of SCii;
(g) agreement providing for the employment or consultancy with any
individual on a full-time, part-time, consulting or other basis providing annual
compensation in excess of US$25,000 (or its equivalent in other currency) or
providing severance or retirement benefits;
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(h) agreement under which it has advanced or loaned any amount to any
of the directors, officers, or employees of SCii and its Subsidiaries other than
in the ordinary course of business;
(i) agreement under which the consequences of a default or termination
could have a material adverse effect on the business, financial condition,
operations, results of operations, or future prospects of SCii;
(j) contract or arrangement with any federal, state or local government
agency;
(k) other agreement (or group of related agreements) the performance of
which involves consideration in excess of US$25,000 (or its equivalent in other
currency);
(l) note, loan, credit, security or guaranty agreement or other
obligation relating to the borrowing of money;
(m) license agreement, or sales representative, agency, distributor,
franchise, advertising or property management agreement;
(n) insurance or indemnity contract, bank account and other depositary
arrangement (including the names of persons authorized to draw thereon) or power
of attorney (on behalf of any person or entity, including Alis, in respect of
SCii, its assets, liabilities or business);
(o) agreement, not elsewhere specifically disclosed pursuant to this
Agreement, involving, or providing any benefit to, any officer, director,
employee or stockholder of SCii;
(p) agreement or arrangement for the sale of any of SCii's assets or
the grant of any preferential rights to purchase any of its assets, property or
rights or requiring the consent of any party to the transfer and assignment of
such assets, property or rights; and
(q) contracts, agreements or other arrangements imposing a
confidentiality, non-competition or non-solicitation obligation on SCii.
(r) contracts or agreements which contain a change of control provision
under which SCii's contracting party is entitled to terminate the contract or
agreement in the event of a transfer of all or substantially all of SCii's
stock.
Each of Alis and SCii has delivered to Ariel a correct and complete copy of each
written agreement listed in Schedule 3.9 and a written summary setting forth the
terms and conditions of each oral agreement referred to in Schedule 3.9. Except
as disclosed in Schedule 3.9, with respect to each such agreement: (i) the
agreement is legal, valid, binding, enforceable, and in full force and effect
and each such agreement has not been terminated or expired or if it has expired,
such agreement has been renewed on the same terms and conditions as the
previously existing contract; (ii) subject to Ariel obtaining the necessary
consents disclosed in Schedule 3.11 hereto,
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the agreement will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (iii) SCii is not, and to Alis' knowledge
after due inquiry no other party is, in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (iv) SCii is not, and to Alis' knowledge after due inquiry no
other party has, repudiated any provision of the agreement. The provisions of
the paragraph regarding the enforceability of any provision of such agreements
may be subject to, or affected by, applicable bankruptcy, insolvency, fraudulent
conveyance or transfer laws, reorganization, moratorium or similar laws relating
to or affecting creditors' rights generally, or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.10 Employee Benefit and Pension Plans. Except as set forth in
Schedule 3.10, SCii and its Subsidiaries do not participate in or contribute to
any retirement plans, profit-sharing schemes, incentive plans or other optional
social regimes (the "Benefit Plans") in favor of present or past employees or in
favor of the heirs or present or past employees other than those required by
applicable laws, regulations, collective bargaining agreements for the industry
and company collective labor agreement with SCii and its Subsidiaries.
SCii and its Subsidiaries are in compliance in all material respects
with their obligations under the Benefit Plans and the social regimes that
generally cover: death, work incapacity, disability, health and unemployment
required by applicable laws, regulations, collective bargaining agreements for
the industry and company collective labor agreements with SCii and its
Subsidiaries. SCii and its Subsidiaries have no direct or indirect actual or
contingent liability for any Benefit Plan or any social regimes required by
applicable laws, regulations, collective bargaining agreements for the industry
and company collective labor agreements, other than to make payments for
contributions, premiums or benefits when due. All such payments have been made
on a timely basis.
3.11 Required Consents, No Default. Except as described in Schedule
3.11, neither the execution and delivery of this Agreement nor compliance by
SCii or Alis with its terms and provisions will require the affirmative consent,
approval, order or authorization of or any registration, declaration or filing
with any third party or governmental authority or result in any default or
breach of its By-laws, as amended, or any indenture, mortgage, lease, loan or
other agreement to which it is a party or is bound or to which its properties
are subject. Schedule 3.11 sets forth a true, correct and complete list of the
identities of any person or entity whose consent or approval is required to
effectuate the transactions contemplated by this Agreement; and also sets forth
the matter, agreement or contract to which such consent related. SCii or its
Subsidiaries are not in default under or in violation of any provision of their
respective By-laws, as amended. SCii or its Subsidiaries are not in default
under or in violation of any provision of any indenture, mortgage, lease, loan
or other agreement to which each entity is a party or is bound or to which its
properties are subject, except such defaults as are set forth in Schedule 3.11,
none of which individually or in the aggregate, has been or is materially
adverse to the operations, business, financial condition or prospects of SCii.
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3.12 Litigation. Except as set forth on Schedule 3.12 attached hereto
(a) there are no judicial or administrative actions, claims, suits, proceedings
or investigations to which Alis or SCii or its Subsidiaries is a party (either
as a plaintiff or defendant) pending or, to Alis' knowledge, threatened before
any court or governmental agency, authority, body or arbitrator and, to Alis'
knowledge, there is no basis for any such action, claim, suit, proceeding or
investigation; (b) neither SCii or its Subsidiaries nor, to Alis' knowledge, any
officer, director or employee of SCii or its Subsidiaries has been permanently
or temporarily enjoined by any order, judgment or decree of any court or any
governmental agency, authority or body from engaging in or continuing any
conduct or practice in connection with the business, assets, or properties of
SCii or its Subsidiaries; and (c) there is not in existence on the date hereof
any citations, fines or penalties assessed, or any order, judgment or decree of
any court, tribunal or agency enjoining or requiring Alis, SCii or its
Subsidiaries to take any action of any kind with respect to SCii's or its
Subsidiaries' business, assets or properties.
3.13 No Broker's or Finder's Fees. Except as set forth in Schedule
3.13, No agent, broker, investment banker, person or firm acting on behalf of
Alis, SCii or any of its Subsidiaries or Affiliates (as defined in Section 3.21
hereto) or under the authority of any of them is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly in connection with any of the transactions contemplated herein.
3.14 Intellectual Property.
(a) SCii owns or has the right to use pursuant to license, sublicense,
agreement, or permission all Intellectual Property. Subject to obtaining all
necessary consents as disclosed in Schedule 3.11, each item of Intellectual
Property owned or used in connection with the business of SCii and its
Subsidiaries immediately prior to the Closing hereunder will be owned or
available for use by SCii and its Subsidiaries on identical terms and conditions
immediately subsequent to the Closing hereunder. Except as disclosed in Schedule
3.14 hereto, Alis has taken all necessary and desirable action which is usual
and customary for businesses of the type as SCii to maintain and protect each
item of Intellectual Property that SCii and its Subsidiaries own or use.
(b) Except as disclosed in Schedule 3.14, SCii and its Subsidiaries
have not interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of third parties, and there
has never been any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that SCii or its Subsidiaries must license or refrain from using any
Intellectual Property rights of any third party). To the knowledge of the
directors and officers (and employees with responsibility for Intellectual
Property matters) of SCii and its Subsidiaries, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of SCii or its Subsidiaries.
(c) Except as disclosed in Schedule 3.14, all of SCii's or its
Subsidiaries' employees, officers and directors that have participated in the
development of the Products have entered into
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agreements with SCii assigning all right, title and interest in the Intellectual
Property therein to SCii, subject to applicable laws. Pursuant to such
agreements or applicable law, SCii owns all of the right, title and interest of
their employees, officers and directors to any Intellectual Property in the
Products.
(d) Schedule 3.14 identifies each patent or registration which has been
issued to SCii with respect to its Intellectual Property, identifies each
pending patent application or application for registration which has been made
with respect to SCii's Intellectual Property, and identifies each license,
agreement, or other permission which SCii has granted to any third party with
respect to any of the Intellectual Property. Alis has delivered to Ariel correct
and complete copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and have made available to
Ariel correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Schedule 3.14 also
identifies each trade name or unregistered trademark or servicemark used by SCii
or its Subsidiaries in connection with their business. With respect to each item
of Intellectual Property required to be identified in Schedule 3.14:
(i) except as disclosed in Schedule 3.14, SCii possesses all
right, title, and interest in and to the item, free and clear of any
lien, license, or other restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the knowledge of
the directors and officers (and employees with responsibility for
Intellectual Property matters) of SCii and its Subsidiaries, is
threatened which challenges the legality, validity, enforceability,
use, or ownership of the item; and
(iv) SCii and its Subsidiaries have never agreed to indemnify
any person or entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(e) Schedule 3.14 identifies each item of Intellectual Property that
any third party owns and that SCii or its Subsidiaries use in connection with
their business pursuant to license, sublicense, agreement, or permission. Alis
has delivered to Ariel correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each item of Intellectual Property required to be identified in Schedule 3.14:
(i) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(ii) subject to obtaining necessary consents as disclosed in
Schedule 3.14, the license, sublicense, agreement, or permission will
continue to be legal, valid, binding,
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enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby;
(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 would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(iv) to Alis' knowledge, 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 with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling,
or charge;
(vii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the knowledge of
Alis, the directors and officers (and employees with responsibility for
Intellectual Property matters) of SCii and its Subsidiaries, is
threatened, which challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property; and
(viii) SCii and its Subsidiaries have not granted any
sublicense or similar right with respect to the license, sublicense,
agreement, or permission.
(f) To Alis' knowledge, SCii and its Subsidiaries will not interfere
with, infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continued
operation of their businesses as presently conducted and proposed to be
conducted.
3.15 Product Warranties; Defects; Liability. To Alis' knowledge, each
product manufactured, sold, leased, or delivered by SCii or its Subsidiaries has
been in conformity in all material respects with all applicable French, European
Union or foreign laws and regulations, contractual commitments and all express
and implied warranties, and SCii and its Subsidiaries have no liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand giving rise to any liability)
for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the face of
the most recent Financial Statements (rather than in any notes thereto) which
such reserve is adequate to address all such liabilities. Except as disclosed in
Schedule 3.15, no product manufactured, sold, leased, or delivered by SCii or
its Subsidiaries is subject to any guaranty, warranty, or other indemnity beyond
the applicable standard terms and conditions of sale or lease. Schedule 3.15
includes copies of the standard terms and conditions of sale or lease for SCii
products (containing applicable guaranty, warranty, and indemnity
-13-
provisions). To Alis' knowledge, SCii and its Subsidiaries have no liability
(and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of them
giving rise to any liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by SCii or its Subsidiaries and there
has been no inquiry or investigation made in respect thereof by any person or
entity including any governmental or administrative agency.
3.16 Year 2000. Except as set forth on Schedule 3.16, (i) all of SCii's
or its Subsidiaries' computer or operating systems can recognize and shall
recognize the advent of the year 2000; and (ii) can correctly recognize and
manipulate date information relating to dates before, on or after January 1,
2000; and (iii) the operation and functionality of such computer or operating
systems will not be adversely affected by the advent of the year 2000 or any
manipulations of data featuring date information relating to dates before, on or
after January 1, 2000. Further, except as set forth on Schedule 3.16, (a) all of
SCii's or its Subsidiaries' products can recognize and shall recognize the
advent of the year 2000; and (b) can correctly recognize and manipulate date
information relating to dates before, on or after January 1, 2000; and (c) the
operation and functionality of such products will not be adversely affected by
the advent of the year 2000 or any manipulations of data featuring date
information relating to dates before, on or after January 1, 2000.
3.17 Governmental Consents. Except as set forth on Schedule 3.17
hereto, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental or
European Union authority is required to be obtained or made by Alis or SCii in
connection with the execution and delivery of this Agreement or the sale and
delivery of the SCii Stock, as contemplated by this Agreement, except such
filings as shall have been made prior to and shall be effective on and as of the
Closing.
3.18 Compliance with Agreements and Laws. SCii and its Subsidiaries
have all requisite licenses, permits and certificates, including environmental,
health and safety permits, from authorities necessary to conduct its business as
currently conducted (collectively, the "Permits"), all of which Permits are
listed on Schedule 3.18 and all of which are valid and subsisting and in good
standing and will be unaffected by the transactions contemplated by this
Agreement. The business of SCii and its Subsidiaries as conducted through the
date hereof has not violated any French, European Union or foreign laws,
regulations or orders (including, but not limited to, any of the foregoing
relating to employment discrimination, occupational safety, environmental
protection, hazardous waste, conservation, or corrupt practices, and laws
relating to the merger of Servoc, N.A. into SCii), the enforcement of which
would have a material adverse effect on the business or prospects and operations
of SCii or its Subsidiaries. Except as set forth on Schedule 3.18, SCii or its
Subsidiaries have had no notice or communication from any French, European Union
or foreign governmental or regulatory authority or otherwise of any such
violation or noncompliance.
3.19 Employee Relations.
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(a) SCii and its Subsidiaries are in compliance with all applicable
material French, European Union or foreign laws respecting labor matters, such
as, without limitation, all environmental, health and safety questions, all
immigration requirements, the establishment and function of the institutions
representing employees or unions, social security and tax law matters,
employment and employment practices, terms and conditions of employment and
wages and hours, and it is not engaged in any unfair labor practice, and no
arrears in the payment of wages or social security taxes exist. Except as set
forth in Schedule 3.19, SCii, and its Subsidiaries are not the subject of any
particular proceedings by the French Labor Inspector ("Inspecteur du Travail")
or similar foreign authorities for failure to comply with French labor laws.
(b) SCii or its Subsidiaries have not made any agreements, whether
directly or indirectly, with any labor union, employee association or other
similar entity or made commitments to or conducted negotiations with any labor
union or employee association or similar entity with respect to any future
agreements except for those described in Schedule 3.19. No trade union, employee
association or other similar entity has any bargaining rights acquired by either
certification or voluntary recognition with respect to the employees of SCii or
its Subsidiaries except as set forth in Schedule 3.19. Alis is not aware of any
current attempts to organize or establish any other labor union, employee
association or other similar entity. Applicable industry-wide collective
bargaining agreements are set forth on Schedule 3.19 hereto.
(c) To Alis' or that of the directors and officers (and employees
responsible for employment matters) of SCii's knowledge, except for Xxxxx Xxxxx
and Xxxxxx Xxxxxxx (who each shall resign or be terminated as of or prior to the
Closing), no executive, key employee, or group of employees relating to SCii or
its Subsidiaries has any plans to terminate employment with SCii or its
Subsidiaries. SCii or its Subsidiaries have not experienced any labor disputes
or work stoppage due to labor disagreements with regard to SCii's or its
Subsidiaries' business.
3.20 Absence of Changes. Since June 30, 1998 and except as disclosed in
Schedule 3.20, SCii has operated and conducted its business and that of its
Subsidiaries only in the ordinary course of business and, with respect to, by
and on behalf of SCii or its Subsidiaries, there has not been:
(a) any sale, lease, transfer, or assignment of assets,
tangible or intangible, other than sales of inventory for a fair
consideration in the ordinary course of business;
(b) any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) entered into other
than in the ordinary course of business and in an amount not in excess
of US$25,000 (or its equivalent in other currencies);
(c) any acceleration, termination, modification, or
cancellation of any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) involving
payments of more than US$25,000 (or its equivalent in other currencies)
to which SCii or its Subsidiaries is a party or by which it is bound;
(d) creation or imposition of any lien upon any assets,
tangible or intangible;
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(e) any capital expenditure (or series of related capital
expenditures) involving more than US$10,000 (or its equivalent in other
currencies) singly or US$50,000 (or its equivalent in other currencies)
in the aggregate or outside the ordinary course of business;
(f) capital investment in, any loan to, or any acquisition of
the securities or assets of, any other person (or series of related
capital investments, loans, and acquisitions) involving payments of
more than US$25,000 (or its equivalent in other currencies) or outside
the ordinary course of business;
(g) issuance of any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation involving payments of more than
US$15,000 (or its equivalent in other currencies) singly or US$50,000
(or its equivalent in other currencies) in the aggregate;
(h) any delay or postponement of payment of accounts payable
and other liabilities outside the ordinary course of business;
(i) any cancellation, compromise, waiver, or release of any
right or claim or Indebtedness (or series of related rights and claims)
involving payments of more than US$25,000 (or its equivalent in other
currencies) or outside the ordinary course of business;
(j) grant of any license or sublicense of any rights or
modification of any rights under or with respect to, or entered into
any settlement regarding any infringement of its rights to, any
Intellectual Property;
(k) any reason for Alis to believe that any major vendors,
licensors, distributors and customers do not intend to continue with
Ariel a business relationship on terms at least as favorable as the
relationship such vendors, licensors, distributors and customers, as
the case may be, currently have with SCii or its Subsidiaries;
(l) any suppliers that have terminated or intend to terminate
or are considering terminating their respective business relationships
or have modified or intend to modify such relationships with SCii or
its Subsidiaries in a manner which is less favorable to SCii or its
Subsidiaries or have agreed not to or will not agree to do business on
such terms and subject to conditions at least as favorable as the terms
and conditions as provided to SCii or its Subsidiaries on the date of
the most recent balance sheet in its Financial Statements and Alis has
no knowledge of any facts which would form the basis for such
termination or modification or any threat or notification, orally or in
writing of the foregoing;
(m) any damage, destruction, or loss (whether or not covered
by insurance) to property used in SCii or its Subsidiaries;
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(n) any loan to, or any other transaction with, any directors,
officers and employees of SCii and its Subsidiaries outside the
ordinary course of business;
(o) any employment contract or collective bargaining agreement
entered into, written or oral, or modification of the terms of any
existing such contract or agreement;
(p) any increase, modification or change in the compensation
of any of the directors, officers, and employees outside the ordinary
course of business;
(q) any adoption, amendment, modification or termination of
any employee benefit plan or other plan, contract, or commitment for
the benefit of any director, officer or employee of SCii and its
Subsidiaries (or taken any such action with respect to any other
employee plan);
(r) any modification or change in the employment terms for any
of the directors, officers and employees or any offer of employment
outside the ordinary course of business;
(s) any charitable or other capital contribution outside the
ordinary course of business or any pledge to make such a contribution;
(t) any payment of any amount to any third party with respect
to any liability or obligation (including any costs and expenses SCii
or its Subsidiaries have incurred or may incur in connection with this
Agreement and the transactions contemplated hereby);
(u) any modification or change in the application of generally
accepted accounting principles from the manner in which it was applied
in the most recent Financial Statements;
(v) any other material occurrence, event, incident, action,
failure to act, or transaction outside the ordinary course of business;
and
(w) any commitment to any of the foregoing.
3.21 Indebtedness to and from Officers, Directors and Stockholders.
Except as set forth on Schedule 3.21 hereto, SCii or its Subsidiaries are not,
and on the Closing Date will not be, indebted, directly or indirectly, to any
person who is an officer, director or stockholder of SCii or its Subsidiaries or
any Affiliate (as hereinafter defined) of any such person in any amount
whatsoever other than for salaries for services rendered or reimbursable
business expenses, all of which have been reflected on the Financial Statements,
and no officer, director, stockholder or Affiliate is indebted to SCii or its
Subsidiaries except for advances made to employees of SCii or its Subsidiaries
in the ordinary course of business to meet reimbursable business expenses
anticipated to be incurred by such obligor. In addition, SCii or its
Subsidiaries are not a party to any agreement or arrangement whereby they engage
in a transaction of any kind with any Affiliate except on terms and conditions
no less favorable to SCii or its Subsidiaries than would
-17-
be customary for such transactions between unaffiliated parties or upon terms
and conditions on which similar transactions with others could fairly be
expected to be entered into. All agreements and arrangements with any Affiliate
are fairly and accurately described in Schedule 3.21 and copies of all
instruments constituting or related to the Notes have been delivered to Ariel.
For purposes of this Agreement, "Affiliate" shall mean any officer, director or
stockholder of an entity or any person or entity controlled by such officers,
directors or stockholders.
3.22 Conflicts of Interest. Except as set forth on Schedule 3.22
attached hereto, no officer, director or stockholder nor, to Alis' best
knowledge, any Affiliate of any such Person (including Societe Civile des
Informaticiens Independants), now has or within the last year had, either
directly or indirectly:
(a) an equity or debt interest in any corporation, partnership, joint
venture, association, organization or other person or entity which furnishes or
sells or during such period furnished or sold services or products to SCii or
its Subsidiaries or purchases or during such period purchased from SCii or its
Subsidiaries any goods or services, or otherwise during such period did business
with SCii or its Subsidiaries; or
(b) a beneficial interest in any contract, commitment or agreement to
which SCii or its Subsidiaries are or were a party or under which SCii or its
Subsidiaries are or were obligated or bound or to which any of SCii's or its
Subsidiaries' properties may be or may have been subject, other than stock
options and other contracts, commitments or agreements between and such persons
in their capacities as employees, officers or directors of SCii or its
Subsidiaries.
3.23 Personnel Information.
(a) Schedule 3.23 contains a complete and accurate list of all
employees, independent contractors, consultants, and subcontractors of SCii and
its Subsidiaries, their respective positions, dates of hire with SCii or its
Subsidiaries, or any predecessors of SCii or its Subsidiaries, current salaries,
benefits and other remunerations, and dates of last salary increases, and
indicates which employees are parties to a written or oral agreement of
employment (including confidentiality and non-competition/non-solicitation
agreements).
(b) Except as disclosed in Schedule 3.23, SCii or its Subsidiaries are
not a party to any agreements with past or present employees, agents or
independent contractors. No oral contracts of employment have been entered into
with any employees employed by SCii or its Subsidiaries which are not terminable
in accordance with applicable law and SCii or its Subsidiaries has not entered
into any agreements with such employees with respect to the termination of
employment. SCii or its Subsidiaries do not have any obligation to re-instate
any employees, other than as required by applicable laws, regulations and
collective bargaining agreements.
(c) Except as disclosed on Schedule 3.23, at the Closing Date, SCii or
its Subsidiaries will not have terminated, laid-off or dismissed (whether such
dismissal is actual or constructive) in the four weeks preceding the Closing
Date any employees of SCii or its Subsidiaries.
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(d) All liabilities in respect of employees have or shall have been
paid in full to the Closing Date, including premium contributions, remittance
and assessments for unemployment insurance, employer's health tax, income tax,
workers' compensation and any other employment related legislation, accrued
wages, Taxes, salaries and commissions including, without limitation, Taxes and
other assessments relating to the termination of Xxxxxx Xxxxxxx from SCii.
Except as disclosed in Schedule 3.23, the employees and managers of SCii and its
Subsidiaries are not entitled to receive any indemnities (such as termination
indemnities, retirement indemnities or end of work indemnities) which exceed the
indemnities required by the laws, regulations and collective bargaining
agreements which apply to SCii and its Subsidiaries, and no employees are
entitled to participate in SCii's or its Subsidiaries' profits or to participate
in retirement or life insurance plans or funds which are not required by the
laws, regulations or collective bargaining agreements which apply to SCii and
its Subsidiaries.
(e) Except as set forth in Schedule 3.12(a), there are no outstanding,
pending, threatened or anticipated assessments, actions, causes of action,
claims, complaints, demands, orders, prosecutions or suits against SCii or its
Subsidiaries or their directors, officers or agents pursuant to or under any
applicable rules, regulations, collective bargaining agreements, orders or laws,
including, without limitation, unemployment insurance, Tax, employer's health
tax, employment standards, labor relations, occupational health and safety,
human rights, workers' compensation and pay equity laws.
(f) All vacation pay, bonuses, commissions and other emoluments
relating to the employees of SCii or its Subsidiaries are accurately reflected
in all respects and have been accrued in the financial records of SCii or its
Subsidiaries.
(g) Schedule 3.23 sets forth the name and address of each bank or other
institution in which SCii or its Subsidiaries have established an account for
investment, deposit, checking, savings or borrowing, or through which credit is
extended, a brief description thereof, and the names and titles of authorized
signers and limits, if any.
3.24 Executory Agreements. All of SCii's or its Subsidiaries' leases,
employment agreements and other material executory agreements, which are not
described in any other Schedule hereto are listed on Schedule 3.24 attached
hereto and made a part hereof. Complete copies of each have been made available
to Ariel prior to the execution of this Agreement, and they and each of them
will be in full force and effect on the Closing Date and thereafter for the
benefit of SCii or its Subsidiaries. SCii or its Subsidiaries have not received
notice of default, nor has there been any default by SCii, its Subsidiaries or
any party thereto, under any of the aforesaid. All of the aforesaid are valid
and binding upon SCii or its Subsidiaries.
3.25 Insurance of Properties. All of SCii's or its Subsidiaries'
properties and operations are adequately insured, and have been during the past
five (5) years, by reputable insurers, against loss or damage of the kinds and
in amounts customarily insured against by such persons, and SCii or its
Subsidiaries' carry, with such insurers in customary amounts, such other
insurance, including larceny, embezzlement or other criminal misappropriation
insurance and
-19-
business interruption insurance, as is usually carried by companies of
established reputation engaged in the same or a similar business similarly
situated. Schedule 3.25 attached hereto and made a part hereof contains a
complete and correct list of all policies of insurance of every kind and nature
covering SCii or its Subsidiaries, including without limitation, policies of
life, fire, theft, employee fidelity and other casualty and liability insurance,
indicating the insurer, the policy number, the type of coverage, the amount of
coverage and the expiration date of each policy. Such policies are and will be
at Closing in full force and effect, and will be unaffected by the transactions
contemplated by this Agreement. Complete and correct copies of each such policy
have been made available to Ariel prior to the execution of this Agreement.
3.26 Guarantees, Warranties and Discounts. Except as described in
Schedule 3.26 attached hereto,
(a) Neither SCii or its Subsidiaries, nor Alis is a party to or bound
by any agreement of guarantee, indemnification, assumption or endorsement or any
other like commitment of the obligations, liabilities (contingent or otherwise)
or indebtedness of any person with respect to or in connection with SCii's or
its Subsidiaries' business;
(b) Neither SCii nor its Subsidiaries have given any guarantee or
warranty in respect of any of the products sold or the services provided by
them, except warranties made in the ordinary course of its business and in the
form of SCii's or its Subsidiaries' standard written warranty, and except for
warranties implied by law;
(c) SCii or its Subsidiaries are not now subject to any agreement or
commitment, and SCii or its Subsidiaries have not, within three (3) years prior
to the date hereof, entered into any agreement with or made any commitment to
any customer which would require SCii or its Subsidiaries to repurchase any
products sold to such customers or to adjust any price or grant any refund,
discount or other concession to such customer; and
(d) SCii or its Subsidiaries are not required to provide any letters of
credit, bonds or other financial security arrangements in connection with any
transactions with its suppliers or customers.
3.27 Books and Records. The books and all corporate and financial
records of SCii and its Subsidiaries are complete and correct in all material
respects and have been maintained in accordance with applicable sound business
practices, laws and other requirements.
3.28 Subsidies and Public Aids.Schedule 3.28 hereto enumerates the
subsidies granted by governmental or public organizations (including Anvar and
Coface), be it national, regional, departemental or other, as well as the leases
and other contracts and preferential conditions granted by a governmental
authority be it national, regional, departemental or other, to SCii and its
Subsidiaries and from which SCii and its Subsidiaries currently benefit or have
benefited since their incorporation. Except as disclosed in Schedule 3.28, SCii
and its Subsidiaries have satisfied all conditions which have to be satisfied in
connection with the subsidies they have received. In particular, SCii and its
Subsidiaries will, in no event, be
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required to reimburse for any reason whatsoever the subsidies already received,
which are non-reimbursable subsidies. Subsidies which are reimbursable will not
be accelerated for any reason whatsoever, and neither SCii nor its Subsidiaries
will be required to pay any indemnity or penalty of any nature whatsoever
(including in the form of an increase in any applicable interest rate) in
connection with any reimbursable subsidy already directly or indirectly
received.
3.29 Suppliers and Customers. Schedule 3.29 lists for the fiscal year
ending December 31, 1997 the five (5) principal suppliers and five (5) principal
customers of SCii and its Subsidiaries. Except as disclosed in Schedule 3.29
none of these suppliers or customers have broken off or interrupted, or
threatened in writing to break off or interrupt, relations with SCii and its
Subsidiaries, and none of these customers have reduced or threatened to reduce
their orders significantly.
3.30 Disclosure. No representation or warranty by Alis in this
Agreement, nor any statement, certificate or Schedule furnished by or on behalf
of Alis or SCii or its Subsidiaries pursuant to this Agreement nor any document
or certificate delivered to Ariel pursuant to this Agreement contains any untrue
or misleading statement of a material fact or omits or will omit to state a
material fact reasonably related to the transactions covered by this Agreement,
and all such representations and warranties are and on the Closing Date will be
accurate and complete in all material respects.
4. Representations of Alis Regarding the SCii Stock.
Alis represents and warrants to Ariel, upon which representations and
warranties Ariel relies, and which representations and warranties shall survive
the Closing, regardless of any investigation by Ariel of the affairs of Alis, as
follows:
4.1 Marketable Title to SCii Stock. Alis has good, valid and marketable
title to the SCii Stock set forth on Schedule I attached hereto, which is free
and clear of any and all agreements, covenants, conditions, restrictions, voting
trust arrangements, security agreements, liens, charges, encumbrances, options
and adverse claims or rights whatsoever. No restrictions are applicable on the
transfer of any of the SCii Stock that would prevent such SCii Stock from being
transferred to Ariel pursuant to this Agreement. Schedule I attached hereto sets
forth a true and correct description of all SCii Stock owned by Alis, and such
SCii Stock represents Alis' entire ownership interest in SCii and will at
Closing be free of any restriction on their transfer.
4.2 Authority. Alis has the full right, power and authority to enter
into this Agreement and to transfer, convey and sell to Ariel at the Closing the
SCii Stock to be sold by Alis hereunder and, upon consummation of the purchase
contemplated hereby, Ariel will acquire from Alis good and marketable title to
such SCii Stock, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
4.3 No Prohibitions on Transfer. Alis is not a party to, subject to or
bound by any agreement or any judgment, order, writ, prohibition, injunction or
decree of any court or other
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governmental body that would prevent the execution or delivery of this Agreement
by Alis or the transfer, conveyance and sale of the SCii Stock to be sold by
Alis to Ariel pursuant to the terms hereof.
5. Representations and Warranties of Ariel.
Ariel represents and warrants to Alis, as follows:
5.1 Organization and Related Matters. Ariel is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full corporate power to enter into this Agreement and to
consummate the transactions contemplated hereby.
5.2 No Breach of Charter or Contract. Neither the execution, delivery
and performance of this Agreement and the consummation by Ariel, nor compliance
with the terms and provisions of this Agreement by Ariel, will conflict with or
result in a breach of any of the terms, conditions or provisions of the
Certificate of Incorporation, as amended, or by-laws of Ariel, or of any
contracts to which Ariel is a party.
5.3 Authorization of Agreement. The execution, delivery and performance
of this Agreement by Ariel have been duly and validly authorized and approved by
the Board of Directors of Ariel and no other proceedings on the part of Ariel
are necessary to authorize the execution, delivery and performance of this
Agreement by Ariel.
6. Alis' Post-Closing Covenants.
6.1 No Solicitation. Alis agrees that for a period of two (2) years
from the Closing Date they will not directly or indirectly solicit for
employment or employ any person now employed by SCii and its Subsidiaries
without the prior written consent of Ariel.
6.2 No Competition. In consideration of the sale of the SCii Stock,
Alis undertakes that it will not, directly or through any Affiliate or Person,
for a period of two (2) years from the execution of this Agreement, within
France and the United Kingdom, carry on or be engaged in any activity competing
with the businesses of SCii and its Subsidiaries, as carried out as of the date
hereof.
6.3 Confidentiality. Alis undertakes not to, at any time after the
Closing Date, disclose or use for any purpose any information concerning SCii
and its Subsidiaries or their business affairs (including but not limited to any
of the information referenced in Section 3.15 hereof), except:
(i) to the extent required by applicable laws;
(ii) to their professional advisers under circumstances of
confidentiality; or
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(iii) to the extent that such information is at the date hereof or
hereafter becomes public knowledge other than through improper disclosure by any
Person.
7. Indemnification.
7.1 Survival of Representations and Warranties. All of the
representations and warranties of Alis (except for those contained in Section
3.1 (Capitalization of SCii), Section 3.2 (Authorization), Section 3.7 (Tax
Matters), Section 3.12 (Litigation) and Section 3.15 (Product Warranties;
Defects; Liability)) contained herein or in any document certificate or other
instrument required to be delivered hereunder shall survive the Closing and
continue in full force and effect until November 23, 2001. The representations
and warranties of Alis contained in Sections 3.1, 3.2, 3.7, 3.12 and 3.15 shall
survive the Closing and shall continue in full force and effect without limit as
to time (subject to any applicable statutes of limitations and any extensions or
waivers thereof for taxes). The termination of any such representation and
warranty, however, shall not affect any claim for breaches of representations or
warranties if written notice thereof is given to the breaching party or parties
prior to such termination date. The representations and warranties of Ariel
contained in Sections 5.1, 5.2 and 5.3 shall survive the Closing and shall
continue in full force and effect without limit as to time (subject to any
applicable statutes of limitations). All covenants and indemnities of any party
in this Agreement or in any document or certificate delivered hereunder shall,
unless otherwise specifically provided therein, remain in full force and effect
forever.
7.2 Indemnification Provisions for the Benefit of Ariel. (a) Alis
agrees to indemnify, defend and hold harmless Ariel and its directors, officers
and Affiliates against and in respect of all liabilities, obligations,
judgments, liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, Taxes, losses, fines, penalties, expenses, fees, costs, amounts
paid in settlement (including attorneys' and expert witness fees and
disbursements in connection with investigating, defending or settling any action
or threatened action), arising out of any claim, damages, complaint, demand,
cause of action, audit, investigation, hearing, action, suit or other proceeding
asserted or initiated or otherwise existing in respect of any matter
(collectively, the "Losses") that results from the inaccuracy of any
representation or warranty made by Alis herein or any third party allegation
which if true would mean a representation or warranty made by Alis herein was
inaccurate, or resulting from any misrepresentation, breach of warranty (as if
all materiality and knowledge provisions were not contained therein) or
nonfulfillment of any agreement or covenant of Alis contained herein or in any
agreement or instrument required to be entered into in connection herewith or
from any misrepresentation in or omission from any schedule, document,
certificate or other instrument required to be furnished by Alis hereunder.
Ariel shall provide Alis written notice for any claim made in respect of the
indemnification provided in this Section 7.2, whether or not arising out of a
claim by a third party, which notice shall set out in reasonable detail the
factual basis of the claim. In any event, Alis will have no liability under this
Agreement until the total of all Losses in the aggregate exceeds One Hundred
Thousand and no/100 U.S. Dollars (US$100,000.00) and then Ariel shall be
entitled to collect the entire amount of all Losses, including but not limited
to, those amounts aggregating to such $100,000.00.
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(b) In no event shall the liability of Alis for indemnification under
Section 7.2(a) exceed in the aggregate $3,050,000 except that claims for
indemnification for losses, costs, claims, demands, damages, liabilities and
expenses (including reasonable attorneys' fees) of any type arising under
Section 7.2(a) from any of the following shall not be limited to $3,050,000;
(i) any liability under Section 7.2(a) which results from
claims asserted by any taxing authority or other governmental agency
against Ariel, SCii or their respective successors or assigns
(including without limitation liabilities for claims in connection with
income and employment taxes or other payments with respect to employees
and consultants of SCii accruing on or prior to the Closing Date,
including without limitation unemployment insurance); or
(ii) knowing and intentional misrepresentation of the
representations or warranties of Alis and SCii; or
(iii) any liability under Section 7.2(a) which results from
claims asserted in connection with any environmental laws.
(c) Where there is a legitimate purpose in connection with Alis'
defense of a claim for which Alis is or may be required to indemnify Ariel, upon
prior reasonable written request by Alis specifying the need therefor, Ariel
and/or SCii shall provide Alis with copies of all information or documentation
as may be necessary for Alis to prepare a full and complete defense to any such
claim; provided, however, that the foregoing right shall not be exercisable in
such a manner as to interfere unreasonably with the normal operations and
business of Ariel or SCii; and provided, further, that, as to so much of such
information as constitutes trade secrets or confidential business information of
Ariel or SCii, Alis and its officers, directors and representatives, in addition
to any other duties of confidentiality, will use due care to not disclose such
information except (i) as required by law or (ii) with the prior written consent
of Ariel.
7.3 Indemnification Provisions for Benefit of Alis. Ariel hereby agrees
to indemnify, defend and hold harmless Alis and its directors, officers and
Affiliates against and in respect of all liabilities, obligations, judgments,
liens, injunctions, charges, orders, decrees, rulings, damages, dues,
assessments, Taxes, losses, fines, penalties, damages, expenses, fees, costs,
amounts paid in settlement (including attorneys' and expert witness fees and
disbursements in connection with investigating, defending or settling any action
or threatened action) arising out of any claim, complaint, demand, cause of
action, audit, investigation, hearing, action, suit or other proceeding asserted
or initiated in respect of any matter that results from the inaccuracy of any
representation or warranty made by Ariel herein, or any third party allegation
which if true would mean a representation or warranty made by Ariel herein was
inaccurate, or resulting from any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant of Ariel contained herein or in any
agreement or instrument required to be entered into in connection herewith or
from any misrepresentation in or omission from any schedule, document,
certificate or other instrument required to be furnished by Ariel hereunder.
Alis shall provide Ariel written notice for any claim made in respect of the
indemnification provided in this Section 7.3, whether or not arising out of a
claim by a third party.
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7.4 Matters Involving Third Parties.
(a) If any third party shall notify any party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other party (the
"Indemnifying Party") under this Article 7, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party forfeits any substantial
rights or defenses.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party - in writing within fifteen (15) days after
the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Losses the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim, (ii)
the Indemnifying Party provides the Indemnified Party with evidence acceptable
to the Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief, (iv)
settlement of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with subsection (b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be withheld or
delayed), and (iii) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
unless written agreement is obtained releasing the Indemnified Party from all
liability thereunder.
(d) In the event any of the conditions in subsection (b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including attorneys' fees and
expenses), and (iii) the Indemnifying Parties will remain responsible for any
Losses the Indemnified Party may suffer resulting from, arising
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out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Article 7.
7.5 Escrow; Rights of Set-Off. Upon the occurrence of or the discovery
of an indemnification event and upon notice to Alis specifying in reasonable
detail the basis for a set-off, Ariel may give notice of a claim in such amount
under the Escrow Agreement. Neither the exercise of nor the failure to exercise
the right to give a notice of claim under the Escrow Agreement will constitute
an election of remedies or limit Ariel in any manner in the enforcement of any
other remedies that may be available to Ariel.
7.6 Non-Exclusive Remedy. The foregoing indemnification provisions are
in addition to, and not in derogation of, any statutory, equitable, or common
law remedy any party hereto may have for breach of representation, warranty, or
covenant any party may have with respect to SCii or the transactions
contemplated by this Agreement.
8. Arbitration.
8.1 Any dispute, controversy or claim arising out of or relating solely
to this Agreement and the Escrow Agreement, including the breach thereof, shall
be settled by an amicable effort on the part of both parties. An attempt to
arrive at a settlement shall be deemed to have failed thirty (30) days after
either party so notifies the other party in writing, and either party may
institute arbitration or any related proceeding thirty (30) days after the date
of such notice.
8.2 If an attempt at settlement has failed, and written notice thereof
has been given as provided herein, any and all claims, disputes, controversies
or differences between the parties arising out of or in connection with this
Agreement shall be finally settled by arbitration under the Rules of Arbitration
of the International Chamber of Commerce by three arbitrators appointed in
accordance with such Rules. The two (2) party-appointed arbitrators shall agree
on the third arbitrator within thirty (30) days of their appointment by the
parties, failing which the third arbitrator shall be appointed by the ICC Court
of Arbitration.
The arbitration shall take place in New York, New York and shall be
conducted in the English language. The arbitral award shall be in English.
9. General.
9.1 Governing Law. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by the
internal laws of the State of Delaware in the United States of America. If any
provision of this Agreement shall be held invalid by a court with jurisdiction
over the parties to this Agreement, then and in that event such provision shall
be deleted from the Agreement, which shall then be construed to give effect to
the remaining provisions thereof. Alis consents to the exclusive jurisdiction
of, and agrees that the sole forum for resolution of any dispute shall be in,
the courts of the State of Delaware, in
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connection with any dispute that may be properly brought to a court pursuant to
this Agreement or is related to the transactions contemplated hereby.
9.2 Payment of Expenses. Whether or not the transactions contemplated
hereby are consummated, Ariel shall pay its own expenses, and Alis shall pay its
own and SCii's expenses, in connection with the negotiation, authorization,
preparation, execution and performance of this Agreement, including, without
limitation, all fees and expenses of investment banking firms, agents,
representatives, counsel and accountants.
9.3 Survival of Covenants. All covenants and agreements contained
herein which are to be performed or fulfilled after the Closing Date shall
survive and remain in full force and effect.
9.4 Notices. Any payments, notices or other communications required or
permitted hereunder shall be given in writing and deemed to have been properly
given if and when delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
if to Ariel: Ariel Corporation
0000 Xxxxx 000
Xxxxxxxx, Xxx Xxxxxx 00000
X.X.X.
Attention: Xxxxxxx Xxxxxxx, Chief Executive Officer
with copies to: Xxxxxx & Hannah LLP
Attn: Xxxxxxxx X. Xxxxxxx, Esquire
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
X.X.X.
Salans Xxxxxxxxx & Heilbronn
Attn: M. Xxxxxxxx Xxxxx
0, Xxx Xxxxxx X'Xxxxxx
00000 Xxxxx
Xxxxxx
if to Alis: Alis Technolgies Inc.
000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx X0X 0X0
Xxxxxx
Attention: Xxxxxx Xxxxx, Chief Executive Officer
with a copy to: Xxxxxxxxxx Xxxxxxxx Xxxxx Xxxxxx
Attn: M. Xxxxxxx Xxxxxxx
600 de La Gauchetiere Street West, Suite 2400
Xxxxxxxx, Xxxxxx X0X 0X0
Xxxxxx
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or such other address as shall be furnished in writing by any party, and any
such payment, notice or communication shall be deemed to have been made or given
five (5) business days after the date so mailed (except that a notice of change
of address shall not be deemed to have been given until received by the
addressee) or on the date of actual receipt, whichever first occurs.
9.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors,
assigns, heirs, executors, administrators and legal representatives, provided,
however, that Alis shall not assign any of its rights or delegate any of its
obligations hereunder to any party without the prior written consent of Ariel,
which consent shall be at Ariel's sole discretion.
9.6 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
9.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall considered one and the same agreement.
9.8 Waiver. The failure of any party to this Agreement at any time or
times to required performance of any provision hereof shall in no manner affect
such party's right at a later time to enforce the same. No waiver by any party
of any condition, or of the breach of any term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or the breach of any other term, covenant, representation or warranty
of this Agreement.
9.9 Entire Agreement. This Agreement, together with the Schedules and
Exhibits annexed hereto, contains the entire agreement among the parties hereto
with respect to the transactions contemplated herein, and supersedes all prior
agreements and understandings, whether written or oral, among the parties hereto
with respect to the subject matter of this Agreement.
9.10 Additional Actions. Ariel and Alis agree, and Alis agrees to cause
SCii and its Subsidiaries, 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.
9.11 Severability. The parties intend that in the event that any one or
more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, then such invalid, illegal or
unenforceable provision shall not affect the other provisions of this Agreement,
and this Agreement shall be construed as if such provision had never been
contained herein.
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IN WITNESS WHEREOF, this Agreement has been signed by each of parties
hereto as of the day and year first above written.
ARIEL CORPORATION
By:___________________________________
Xxxxxxx Xxxxxxx, Chairman and
Chief Executive Officer
ALIS TECHNOLOGIES INC.
By:___________________________________
Xxxxxx Xxxxxx, Vice President, Finance and
Chief Financial Officer
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