Exhibit 4.(a).29
XXXX SYSTEMS, INC.
as Purchaser
C360 SOLUTIONS INCORPORATED
as Company
XXXX XXXXXXX
XXXXXXX XXXXXXXXX
XXXXXXX X. XXXXXXXX
XXXXX XXXXXXXXX
XXXX XXXXXXX
AND
XXXXXX XXXXX
as Sellers
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of April ___, 2006, is made by and
among XXXX SYSTEMS, INC., a company organized and existing under the laws of
Delaware (the "Purchaser"); C360 SOLUTIONS INCORPORATED, a company organized and
existing under the laws of Georgia (the "Company"); and XX. XXXX XXXXXXX having
an address of 0000 Xxxxxxxx Xxxxx Xx Xxxxxxx XX 00000, XX. XXXXXXX XXXXXXXXX
having an address of 0000 Xxx Xxxxx Xxxxxxx Xxxxxxx, XX 00000, XX. XXXXXXX X.
XXXXXXXX having an address of 00000 Xxxx Xxxxxx Xxxxxxxxxx, XX 00000, XX. XXXXX
SARACEVIC having an address of 000 Xxxxxxxx Xxxxxx #0000 Xxxxxxx, XX 00000, XX.
XXXX XXXXXXX having an address of 0000 Xxxxxxxx Xxxxx Xxxxxxx, XX 00000, and XX.
XXXXXX XXXXX having an address of 0000 Xxxxxxx Xx Xxxxxxx, XX 00000
(collectively, the "Sellers"), all of whom may be collectively referred to
herein as the "Parties" or individually as a "Party".
WITNESSETH
WHEREAS, just prior to the Closing (defined herein), the Sellers are the
only legal and beneficial owners of 100% of the issued and outstanding shares of
the Company on a fully diluted basis which they desire to sell 100% of the
Shares (defined herein) to the Purchaser (the "Equity Interest") and Purchaser
wishes to purchase the Equity Interest from the Sellers.
WHEREAS concurrently with the closing of this Agreement, the Purchaser will
receive Employment Agreements (defined herein) duly executed by the Key
Employees (as defined below).
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the Parties agree as follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.01 Defined Terms. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"$" shall mean, when used by itself, the United States dollar, the legal
currency of the United States.
"Affiliate" shall mean any Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Agreement" shall mean this Stock Purchase Agreement, the exhibits and
schedules hereto and the certificates delivered in accordance herewith, as the
same may be amended, supplemented or modified from time to time.
"Assets" shall mean all of the assets of the Company including but not
limited to the Intellectual Property, the IP Assets, the Material Contracts, the
Equipment Leases, and the Property Leases.
"Benefit Arrangement" shall mean any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or contract or arrangement (whether or not written) providing for
compensation, bonus, or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self - insured
arrangements), health
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or medical benefits, disability benefits, worker's compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance or
other benefits) that (i) is not an Employee Plan; and (ii) covers any employee
or former employee of the Company employed in the United States.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
"CDC Corporation Stock" shall mean the Class A Common Shares of CDC
Corporation, a Cayman Islands company.
"Claim Notice" shall mean written notification pursuant to Section 10.02(a)
enclosing a copy of all papers served, if any, and specifying the nature of and
basis for such claim together with the amount or, if not then reasonably
ascertainable, the estimated amount of such claim.
"Closing" shall have the meaning given to such term in Section 2.03.
"Closing Balance Sheet" shall mean the unaudited consolidated balance sheet
of the Company prepared in accordance with GAAP as of the Closing Date which
balance sheet shall include, without limitation, the effect of the cash balance
of the Company as a result of (a) the Company's repurchase prior to Closing of
the common stock from certain shareholders who were former employees of the
Company including, without limitation, Mr. Xxxxx Xxxxxx, pursuant to the terms
of the Company's 2003 Stock Option Plan, (b) the payment made to Xx. Xxxxxxx
Xxxxx to assist with the acquisition process and (c) the payment made by the
Company for one firm to the Sellers pursuant to Section 12.02.
"Closing Balance Sheet Date" shall mean the date of the Closing Balance
Sheet which shall be the Closing Date.
"Closing Date" shall mean the date of the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock, no par value, of the Company.
"Company" means c360 Solutions Incorporated, a company organized and
existing under the laws of Georgia.
"Constitution" shall mean the certificate or articles of incorporation and
by-laws, or similar charter documents, as may be amended from time to time.
"Disclosure Schedule" shall mean the disclosure schedule attached as
Exhibit A containing all lists, descriptions, exceptions and other information
and materials as are required to be included therein by the Sellers pursuant to
this Agreement.
"Effective Date" shall mean the date of this Agreement.
"Employee Litigation" shall have the meaning given in Section 3.12(i).
"Employment Agreements" shall mean the employment agreements in forms
satisfactory to the Purchaser and substantially similar to that attached as
Attachment A dated the Closing Date and duly signed by each of the Key
Employees.
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"Employee Plan" mean any "employment benefit plan" as defined in Section
3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by any Seller or the Company and
(iii) covers any employee or former employee of the Company.
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgement, order, decree, injunction, permit or governmental
restrictions or requirement or any agreement with any governmental authority or
other third party, whether now or hereafter in effect, relating to human health
and safety, the environment or to pollutants, contaminants, wastes or chemicals
or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials.
"Equity Interest" shall mean the Common Stock representing 100% of the
total issued and outstanding shares in the Company on a fully diluted basis
which are currently owned by the Sellers and which shall be purchased by the
Purchaser in accordance with the terms of this Agreement, as of the Closing.
"Equipment Leases" shall mean leases of, and agreements to hire, equipment
(including motor vehicles) to the Company including, without limitation, those
listed in Section 3.14(c) of the Disclosure Schedule.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended and the rules and regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles of the United
States.
"Governmental Licenses" shall have the meaning given to such term in
Section 3.17.
"Governmental or Regulatory Authority" shall mean any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
any state of the United States or any applicable foreign country or any domestic
or foreign state, county, city or other political subdivision.
"Hold Back Amount" shall mean the amount determined pursuant to the
following formula:
($300,000) + (10% x 400,000 x A)
where
A = the average closing price of CDC Corporation Stock over the 10 trading
days immediately preceding the Closing Date.
"Inception Date" shall mean November 20, 2001, the date of incorporation of
the Company.
"Indemnified Party" shall mean the party being indemnified.
"Indemnifying Party" shall mean the party indemnifying the other.
"Indemnified Period" shall mean the period between Closing and one year
from the Closing.
"Insolvency Proceeding" means proceedings by or against a Person under the
United States Bankruptcy Code or other insolvency law, or the bankruptcy or
insolvency law of any jurisdiction of the United States which proceedings may
include assignments for the benefit of creditors or proceedings seeking
reorganization, arrangement or other similar relief.
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"Installment Date" shall mean the date of any of the First Cash
Installment, the Second Cash Installment, the Third Cash Installment, the First
Stock Installment, the Second Stock Installment, the Third Stock Installment,
the Fourth Stock Installment, the Fifth Stock Installment, the Sixth Stock
Installment, the Seventh Stock Installment, the Eighth Stock Installment, the
Ninth Stock Installment, the Tenth Stock Installment, the Eleventh Stock or the
Twelfth Stock Installment.
"Intellectual Property" shall mean: (a) all copyrightable works,
copyrights, design rights including all improvements, revisions, amendments,
modifications or alternations and all applications, registrations, and renewals
in connection therewith; (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (c) all inventions discoveries and patents (whether patentable or
unpatentable and whether or not reduced to practice), all improvements,
revisions, amendments, modifications or alternations thereto; (d) all trade
secrets and confidential information (including ideas, research and development,
know-how, formulas, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals);
(e) all computer software (including data and related documentation) or source
or object code, including all improvements, revisions, amendments, modifications
or alternations; (f) all other proprietary, intellectual and industrial rights
in whatever form or medium, including moral rights; and (g) the IP Assets.
"IP Assets" shall mean the computer software in part or whole created,
developed, designed, owned and/or licensed by the Company including, without
limitation, c360 Core Productivity Pack (includes Console, Duplicate Detection,
Multi-Field Search, Alerts, Relationship Explorer, Summary and Email Link), c360
Sales Productivity Pack (includes Forecast Manager and Web Connect), c360
Service Productivity Pack (includes Email to Case and My Workplace), c360
High-Tech Productivity Pack, c360 Customer Portal, c360 SDK (Software
Development Kit) for Microsoft CRM, Active Widgets grid (3rd party item licensed
for use by c360), Dev Express grid (3rd party item licensed for use by c360)..
"Key Employees" shall mean each of Xx. Xxxx Xxxxxxx, Xx. Xxxxxxx Xxxxxxxxx,
Xx. Xxxxxxx Xxxxxxxx, Xx. Xxxxx Xxxxxxxxx and Xx. Xxxx Xxxxxxx.
"Law" shall mean all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law in any jurisdiction of the United
States or any other applicable foreign country or any domestic or foreign state,
county, city or other political subdivision or of any Governmental or Regulatory
Authority.
"Liability" as used either singularly or in the plural shall mean any
liability, debt or obligation of the Company, including any drawdowns under any
loans made to the Company.
"Licensed Intellectual Property" shall mean all Intellectual Property owned
by a third party and licensed or sublicensed to the Company.
"Lien" shall mean with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such share, property or asset.
"Loss" shall mean any and all damages, fines, fees, penalties,
deficiencies, losses and expenses
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(including without limitation interest, reasonable court costs, reasonable fees
of attorneys, reasonable retainers, reasonable fees of accountants and other
experts or other reasonable expenses of litigation, reasonable witnesses
costs/expenses or other proceedings or of any claim, default or assessment).
"Material Adverse Effect" shall mean a material adverse effect upon
(financial or otherwise) the business, assets or results of operations or
prospects of the Company.
"Material Contracts" shall have the meaning given in Section 3.16(f).
"Order" shall mean any writ, judgement, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Owned Intellectual Property" shall mean all Intellectual Property owned by
the Company.
"Person" shall mean an individual, partnership, corporation, association,
trust, joint venture, unincorporated organization, and any government,
governmental department or agency or political subdivision thereof.
"Proceeding" shall have the meaning give in Section 3.10.
"Property Leases" shall mean all property leases executed by the Company
that are effective as at the Closing including, without limitation, the lease of
approximately 2,500 square feet of office space at Xxx Xxxxxxxx Xxxx Xxxxx 000
Xxxxxxx XX 00000.
"Records" means originals and copies, of all books, files, reports,
records, correspondence, documents and other material of or relating to or used
in connection with the Company and including, without limitation: (a) all
relevant by-laws and certificates of incorporation, minute books, statutory
books and registers, books of account and copies of taxation returns; (b) sales
literature, market research reports, brochures and other promotional material;
(c) all sales and purchasing records; and (d) lists of all regular suppliers and
customers.
"Revenue" shall mean the actual consolidated revenues of the Purchaser and
any of its Affiliates for professional services (including but not limited to
training, support and remote assistance), maintenance, CRM license sales, add-on
products, industry solutions and development tools all as related to the
Microsoft Dynamics CRM platform in accordance with GAAP as may be agreed upon by
the Purchaser and the Company, or (in the event such parties cannot agree)
determined by a mutually agreed to auditor.
"Securities Act" shall mean the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder or any similar U.S. federal
statute and the rules and regulations of the SEC thereunder.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Sellers" shall have the meaning given in the Recitals hereto and "Seller"
shall mean any of the Sellers.
"Subsidiaries" when used in plural or "Subsidiary" when used singly shall
mean, in relation to the Company, a corporate entity whose voting shares are
owned more than 10% by the Company.
"Total Consideration" shall have the meaning given to such term in Section
2.02.
"Transaction Documents" shall mean this Agreement (and all relevant share
transfers, share
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certificates, board and shareholder resolutions and any other ancillary
documents required for the consummation of this Agreement) and the Employment
Agreements.
"Transfer" shall mean the making of any sale, exchange, assignment or gift,
the granting of any security interest, pledge or other encumbrance in, or the
creation of, any voting trust or other agreement or arrangement with respect to
the transfer of voting rights in the Equity Interest, or the creation of any
other claim thereof or any other transfer or disposition whatsoever, whether
voluntary or involuntary, affecting the right, title or interest or possession
in or of the Equity Interest.
"U.S." or "US" shall mean the United States of America.
"Warranties" shall have the meaning given in Section 9 and "Warranty" shall
have a corresponding meaning.
1.02 Principles of Construction.
(a) All references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified. The
words "hereof," "herein," and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provisions of this Agreement.
(b) All accounting terms not specifically defined herein shall be construed
in accordance with generally accepted accounting principles in the United
States.
(c) The singular terms include the plural and the plural terms include the
singular.
(d) The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.
SECTION 2. SALE AND PURCHASE OF THE EQUITY INTEREST AND CONSIDERATION.
2.01 Sale and Purchase of the Equity Interest.
(a) Subject to the terms and conditions hereof, and in reliance upon the
representations, warranties and covenants contained in this Agreement as of the
Effective Date and on the Closing Date the Purchaser agrees to purchase the
Equity Interest from the Sellers and each Seller agrees, jointly and severally,
to sell, transfer, convey, assign and deliver the Equity Interest to the
Purchaser.
(b) Each of the Sellers hereby waives in favor of the Purchaser any
pre-emptive or other rights that each Seller has now or might otherwise have in
respect of any of the Equity Interest held by the Sellers prior to Closing. Each
Seller agrees that the Equity Interest will be transferred free from any Lien
and with all rights, including dividend rights, attached or accruing to them on
and from the Closing Date.
2.02 Consideration.
(a) Total Consideration. Subject to terms and conditions hereof, the
consideration to be paid for the Equity Interest by the Purchaser shall be an
aggregate of $3 million in cash (the "Cash Consideration") paid in the manner
set out in Section 2.02(c) and an amount of CDC Corporation Stock (the "Stock
Consideration") paid in the manner set out in Section 2.02(e). The aggregate of
the Cash Consideration and Stock Consideration shall be the "Total
Consideration".
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(b) Hold back. An amount equal to up to the Hold Back Amount, shall be
available to the Purchaser for the satisfaction of any indemnified event or
circumstance brought by the Purchaser against any Seller or the Company pursuant
to the indemnifications granted under Section 10, which arise during the
Indemnified Period ("Hold Back Amount").
The Hold Back Amount shall be drawn exclusively from the Third Cash Installment
(defined below).
(c) Payment of Cash Consideration. The Cash Consideration shall be paid in
three installments as follows:
(i) a first installment of $1,250,000 payable on Closing ("First Cash
Installment");
(ii) a second installment of $875,000 payable on the nine month
anniversary of Closing ("Second Cash Installment"); and
(iii) a third installment of up to $875,000 less (A) that portion of
the Hold Back Amount (if any and subject to the minimum thresholds set out
in the final paragraph of Section 10.03) that are contested or not agreed
upon or awarded under Section 10 and (B) the True Up Amount(if any)
(defined in Section 2.02(d)) payable on the eighteen month anniversary of
Closing ("Third Cash Installment").
For avoidance of doubt, portions of the Hold Back Amount which are
contested or otherwise not agreed upon at the time of the Third Cash Installment
is payable shall be deducted from the Third Cash Installment and paid into an
escrow account pending the final resolution of such matter pursuant to Section
10.
For of avoidance of doubt, the payment of the Cash Consideration shall not
be conditioned upon the employment, continued employment or achievement of any
performance objectives of any of the Sellers with respect to the Employment
Agreements. Each payment made as part of the Cash Consideration shall be paid by
electronic transfer.
(d) True Up of Cash Consideration. The "True Up Amount" (if any) shall be
determined as follows:
(i) Each of the Company and the Sellers hereby represent and warrant
that the current assets of the Company as of February 13. 2006 is $292,000
(the "Actual Current Assets");
(ii) Each of the Company and the Sellers hereby represent and warrant
that the current liabilities of the Company as of February 13. 2006 is
$117,000 (the "Actual Current Liabilities");
(iii) The Closing Balance Sheet shall include the current assets of
the Company as at the Closing Balance Sheet Date ("Closing Current Assets")
and the current liabilities of the Company as at the Closing Balance Sheet
Date ("Closing Current Liabilities");
(iv) In the event that the difference between [Actual Current Assets -
Actual Current Liabilities] - [Closing Current Assets - Closing Current
Liabilities] (such difference the "Difference Amount") is greater than
$70,000, then the True Up Amount shall equal:
[Closing Current Assets - Closing Current Liabilities] - $70,000
(v) In the event that the Difference Amount is less than or equal to
$70,000, then
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the True Up Amount shall be zero.
Example 1:
Assuming that the Closing Current Assets are $192,000 and the Closing
Current Liabilities are $117,000, then the Difference Amount would be
[$292,000 - $117,000] - [$192,000 - $117,000] = $100,000. Because the
Difference Amount is greater than $70,000, then the True Up Amount
would equal [$100,000 - $70,000] = $30,000.
Example 2:
Assuming that the Closing Current Assets are $212,000 and the
Closing Current Liabilities are $97,000, then the Difference Amount is
[$292,000 - $117,000] - [$212,000 - $97,000] = $60,000. Because the
Difference Amount is less than $70,000, then the True Up Amount would
equal zero.
(e) Payment of Stock Consideration. Subject to Section 2.02(g), the Stock
Consideration shall be paid in twelve installments as follows:
(i) a first, second, third, fourth, fifth, sixth, seventh and eighth
installment of 50,000 shares of CDC Corporation Stock for each installment
shall be payable respectively on the following dates: Closing ("First Stock
Installment"), on the three month anniversary of Closing ("Second Stock
Installment"), on the six month anniversary of Closing ("Third Stock
Installment"), on the nine month anniversary of Closing ("Fourth Stock
Installment"), on the twelve month anniversary of Closing ("Fifth Stock
Installment"), on the fifteen month anniversary of Closing ("Sixth Stock
Installment"), on the eighteen month anniversary of Closing ("Seventh Stock
Installment") and on the twenty-one month anniversary of Closing ("Eighth
Stock Installment"). The payment of the First Stock Installment, the Second
Stock Installment, the Third Stock Installment, the Fourth Stock
Installment, the Fifth Stock Installment, the Sixth Stock Installment, the
Seventh Stock Installment and the Eighth Stock Installment shall not be
conditioned upon the employment, continued employment or achievement of any
performance objectives of any of the Sellers with respect to the Employment
Agreements.
(ii) the ninth, tenth, eleventh and twelve installments of the Stock
Consideration shall be respectively payable (if any) on each of the
following dates: on the twenty-four month anniversary of Closing ("Ninth
Stock Installment"), on the twenty-seven month anniversary of Closing
("Tenth Stock Installment"), on the thirty month anniversary of Closing
("Eleventh Stock Installment") and on the thirty-three month anniversary of
Closing ("Twelfth Stock Installment"). The payment of any of the Ninth
Stock Installment, the Tenth Stock Installment, the Eleventh Stock
Installment and the Twelfth Stock Installment to any particular Seller
shall be conditioned upon the continued full time employment and to the
extent of the Final Installment Payouts are achieved as set forth below of
such Seller with respect to his/her Employment Agreement at the time such
installment is to be issued; provided, however, that the preceding
condition shall not apply in the event that such Seller was terminated as
an employee for a reason other than Cause (as defined in the Employment
Agreement). For the avoidance of doubt, if such Seller was terminated as an
employee for a reason other than Cause and to the extent the Final
Installment Payouts were not achieved, then such Seller is not eligible to
receive Stock Consideration under the Ninth Stock Installment, Tenth Stock
Installment, Eleventh Stock Installment or Twelfth Stock Installment which
remain unpaid as of the date of such termination.
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The amount of CDC Corporation Stock to be issued in the Ninth Stock
Installment, Tenth Stock Installment, Eleventh Stock Installment and
Twelfth Stock Installment (each a "Final Installment Payout") shall be
determined pursuant to the following formula:
A = ( B / $9.0 million ) x 50,000
where:
A = The number of shares of CDC Corporation Stock to be issued in
such installment; provided, however, that (i) in the event A is
less than 40,000 (which shall mean that B is less than $7.2
million), then zero shares shall be issued and (ii) in the event
A is great than 50,000 (which shall mean that B is greater than
$9 million), then the maximum of 50,000 shares shall be issued;
and
B = the Revenue for the twenty-four month period immediately
precedent the relevant stock installment.
For the avoidance of doubt, in the event that the Revenue for the 24
month period immediately preceding the relevant stock installment is
less than $7.2 million, the amount of CDC Corporation Stock issued
with respect to the relevant stock installment shall be zero;
For the avoidance of doubt, in the event that the Revenue for the 24
month period immediately preceding the relevant stock installment is
greater than $9 million, the amount of CDC Corporation Stock issued
with respect to the relevant stock installment shall be 50,000.
(iii) The obligation to deliver Stock Consideration shall be deemed
satisfied by delivery by a person authorized on behalf of CDC Corporation
of irrevocable instructions to the Company's Transfer Agent (as defined in
Section 3A.07) to issue such Stock Consideration to the Sellers entitled
thereto and a stock certificate evidencing such stock has actually been
delivered to the Sellers within a reasonable time after such time.
(iv) In the event prior to the Installment Date for the payment of any
Stock Consideration there shall be a stock split, reverse stock split,
recapitalization, dividend or distribution (other than regular cash
dividends), or other similar change on the shares of CDC Corporation Stock,
the number of shares of CDC Corporation Stock to be issued as Stock
Consideration in connection with this Section 2.02(e) shall be similarly
adjusted so that the Sellers shall receive the number of shares of CDC
Corporation Stock that such Seller would have received if such installment
had be made immediately prior to such event.
(f) Apportionment of Cash Consideration and Stock Consideration. All
amounts paid to the Sellers under this Agreement (including both the Cash
Consideration and the Stock Consideration) shall be apportioned between the
Sellers on a pro-rata basis relative to each Sellers' percentage ownership of
Equity Interest prior to Closing.
(g) Confirmation of Seller Details in order to Deliver the Cash
Consideration and Stock Consideration. All amounts paid to the Sellers under
this Agreement (including both the Cash Consideration and the Stock
Consideration) shall only be payable upon receipt of each Seller's banking
details by the Purchaser. Exhibit 2.02(g)(A) sets forth the banking details for
each Seller with respect to the First Cash Installment and the First Stock
Installment.
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At least five Business Days prior to any subsequent Installment Date, each
Seller shall send confirmation to the Purchaser of such Seller's banking details
in the form set forth in Exhibit 2.02(g)(B), if such banking details have
changed. In the event Purchaser delivers payment to the incorrect account
address on account of the failure of the Seller to provide Seller's changed
banking details, Purchaser shall not be obligated to deliver payment to Seller's
correct details until Purchaser has recovered the amount delivered to the
incorrect account address.
(h) Failure to Promptly Deliver Cash Consideration or Stock Consideration.
An "Event of Payment Default" shall occur hereunder if: the Purchaser fails to
make any payment of the Total Consideration on the payment date and in
accordance with the terms set forth in this section 2.02.
For avoidance of doubt, it is not an Event of Default if the Purchaser
fails to make any payment when due on account of the failure of the Seller to
provide Seller's changed banking details to the Purchaser.
(i) Rights on Default.
If there shall occur any Event of Default, then the Sellers may declare the
entire Total Consideration immediately due and payable, by notice in writing to
the Purchaser, whereupon the entire unpaid Total Consideration shall
automatically become due and payable, without any further requirement by the
Sellers to give additional notice of any kind or character, all of which are
hereby expressly waived, anything herein to the contrary notwithstanding.
Subject to applicable law, upon the occurrence and during the continuance
of an Event of Default, the Total Consideration shall bear interest, from the
date of the occurrence of such Event of Default until such Event of Default is
cured or waived, payable on demand in immediately available funds, at the
greater of the maximum rate allowable by law or twelve percent (12.00%) per
annum ("DEFAULT RATE"). Upon any such declaration or automatic acceleration,
such Total Consideration plus interest at the Default Rate shall become
immediately due and payable the Sellers and the Sellers shall also be entitled
to exercise all of its rights and remedies hereunder whether at law or in
equity. No remedy herein conferred upon the Sellers is intended to be exclusive
of any other remedy and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity
If any amount of the Stock Consideration issuable by the Purchaser is not
considered issued pursuant to the provisions of Section 2.02(e)(iii) when due,
the Stock Consideration Cash Equivalent (as defined below) of such Stock
Consideration shall bear interest from the date such installment was due until
the date such Stock Consideration is considered issued pursuant to the
provisions of Section 2.02(e)(iii) at the Default Rate. For avoidance of doubt,
failure by the Purchaser to make any payment when due on account of the failure
of the Seller to provide Seller's changed banking details to the Purchaser shall
not trigger this Section 2.02 (i). For purposes of the preceding sentence "Stock
Consideration Cash Equivalent" shall mean the number of shares of CDC
Corporation Stock for such Installment multiplied by the average closing price
of CDC Corporation Stock over the 10 trading days immediately preceding the
Installment Date for such Stock Consideration.
In the event of litigation relating to making payment of or issuing the
Cash Consideration or Stock Consideration, as the case may be, the prevailing
party shall have the right to request the court to require the non-prevailing
party to pay the prevailing party's reasonable legal fees incurred in connection
with such litigation.
2.03 Closing. The closing for the purchase and sale of the Equity Interest
(the "Closing") shall be April ___, 2006 (the "Closing Date") at the offices of
the Purchaser at Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, XXX,
or (if not such date) as soon as possible thereafter, but in no
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event later than ten (10) Business Days after satisfaction of the conditions set
forth in Section 7 and 8, or some other time, date and place as the Parties may
agree. At the Closing:
(a) the Purchaser agrees to purchase the Equity Interest from the Sellers,
and the Sellers jointly and severally agree to: (i) sell, transfer, convey,
assign and deliver the Equity Interest to the Purchaser; and (ii) give the
undertakings and make the covenants set forth in this Agreement. Such issuance,
sale, transfer, conveyance, assignment and delivery of the Equity Interest shall
convey good and marketable title to the Equity Interest held by such Seller,
free and clear of any and all Liens;
(b) the Sellers shall deliver to the Purchaser share transfers and
certificate(s) in a registrable form evidencing the Equity Interest duly
endorsed in blank or with stock powers duly executed together with all duly
executed documents and forms required for the stamping of the transfers in
respect of the conveyance of the Equity Interest to the Purchaser in accordance
with the Company's Constitution;
(c) the Sellers and the Company shall also deliver to the Purchaser the
opinions, certificates and further assurances as contemplated herein.
The payment of the First Cash Installment and the First Stock Installment
shall be the last action performed at Closing and shall be made promptly after
receipt by the Purchaser of the Equity Interest, and are conditioned upon: (a)
the execution of the other Transaction Documents; and (b) each of the other
conditions precedent set out in this Section 2 and Section 7.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS.
Each of the Company and the Sellers jointly and severally represents and
warrants to, and for the benefit of the Purchaser as of the Effective Date and
the Closing Date the following:
3.01 Authority. (a) The Company has all requisite corporate authority and
corporate approval required to enter into, execute and deliver this Agreement
and the Transaction Documents and to perform its obligations hereunder and each
of the other documents required to be entered into pursuant hereto. The Board,
the Sellers (constituting all of the stockholders) have approved the
transactions contemplated by this Agreement and each of the Transaction
Documents. The affirmative votes of the holders of a majority of all shares of
the Company issued and outstanding are the only votes of the holders of the
Company's capital stock necessary to approve this Agreement and the Transaction
Documents and the transactions contemplated therein. This Agreement and the
Transaction Documents have been duly and validly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company
enforceable against the Company (and the Sellers) in accordance with there
terms. No meeting has been convened or resolution proposed, or petition
presented, and no order has been made, for the winding-up of the Company. No
distress, execution or other similar order or process has been levied on any of
the property or assets of the Company. No voluntary arrangement has been
proposed or reached with any creditors of the Company. No receiver, receiver and
manager, provisional liquidator, liquidator or other officer of the court has
been appointed in relation to the Company. The Company is able to pay its debts
as and when they fall due and the Company is not insolvent (net liabilities
greater than net assets).
Each of the Company and Sellers have full legal capacity, power and
authority to enter into, execute and deliver this Agreement and, where
applicable, the Transaction Documents, and to perform each of their obligations
hereunder, thereunder and under each of the other documents required to be
entered into pursuant hereto. This Agreement and each applicable Transaction
Documents have been duly and validly executed and delivered by each Seller and
when executed will constitute a legal, valid and binding obligation of each
Seller enforceable against each Seller in accordance with its terms. No meeting
has been convened or resolution proposed, or petition
12
presented, and no order has been made, for the bankruptcy of any Seller. Each
Seller is able to pay its debts as and when they fall due.
3.02 Organization and Authorization of the Company. (a) The Company is a
corporation duly organized, validly existing, and in good standing under laws of
its jurisdiction of incorporation and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted and to own, use and lease its assets
and properties. Immediately prior to Closing, the Company is duly qualified to
do business as a chapter "S" corporation is in good standing in each
jurisdiction where it carries on business.
(b) During the preceding twelve (12) months from the Closing Date, the
Company has only conducted business in United States of America, except as set
forth on Section 3.02(c) of the Disclosure Schedule, and is duly qualified,
licensed or admitted to do business in the State of Georgia. The Company has
full corporate power to own its properties, assets and business and to carry on
its business operations and has done everything necessary to do business
lawfully in the aforementioned jurisdictions, including making all such filings
required to be filed in such jurisdiction.
(c) The name of each director and officer of the Company on the Effective
Date and the Closing Date, and the position with the Company held by each, are
listed in Section 3.02(c) of the Disclosure Schedule.
(d) Prior to the execution of this Agreement, the Sellers and the Company
have made available to the Purchaser true and complete copies of the
Constitution and Records of the Company as in effect on the date hereof. The
Records are: (i) complete, true and accurate; (ii) give a true and fair view of
the trading transactions, financial and contractual position of the Company and
of its assets and liabilities; (iii) as far as is relevant, have been prepared
in accordance with all relevant laws; (iv) are in the possession of the Company
in their original form.
3.03 Capitalization & Ownership. (a) As at the Closing Date, the issued
capital stock of the Company consists of 1,648,750 shares, of which 1,000,000
have been issued to Xx. Xxxx Xxxxxxx, 412,250 have been issued to Xx. Xxxxxxx
Xxxxxxxxx, 166,500 have been issued to Xx. Xxxxxxx X. Xxxxxxxx, 25,000 have been
issued to Xx. Xxxxx Saracevic, 25,000 have been issued to Xx. Xxxx Xxxxxxx and
20,000 have been issued to Xx. Xxxxxx Xxxxx. All of the issued shares have been
duly authorized and validly issued to the Sellers and are fully paid and
non-assessable, have been issued in compliance with all applicable Law,
including securities Laws, and was not issued in violation of or subject to any
preemptive rights, put or call rights or obligations, rights of first refusal,
anti-dilution rights or liquidation rights or other rights to subscribe for or
purchase securities of the Company.
Aside from the Equity Interest, there are no authorized, issued or
outstanding shares of the Company. The Equity Interest comprises the whole of
the issued ordinary share capital of the Company. The Sellers are the registered
holders and beneficial owners of the Equity Interest. Upon the consummation of
the Closing, 1,648,750 shares will be issued and outstanding to the Purchaser.
(b) The Equity Interest is not, and shall not be, encumbered by any Lien or
other interests of any other third party whatsoever. The Sellers collectively
are the recorded and beneficial owners of all of the Equity Interest, free and
clear of any Lien and any other limitation or restriction (including without
limitation, any restriction on the right to vote, sell or otherwise dispose of
the Equity Interest), and will transfer and deliver to the Purchaser at the
Closing valid title to the Equity Interest free and clear of any Lien and any
such limitation or restriction. None of the Equity Interest has been
transferred, sold, exchanged, assigned or given as a gift, granted as a security
interest, pledged or encumbered, made part of any voting trust or other
agreement or arrangement with respect to the transfer of voting rights therein.
13
(c) There are no outstanding (i) shares of capital stock or voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company; or
(iii) options or other rights to acquire from the Company, pre-emptive rights,
conversion rights, Liens or any other obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company (collectively referred to
as "Company Securities"). There is no option, right to acquire, pre-emptive
rights, conversion rights, mortgage, charge, pledge, Lien or other form of
security or any other agreement or commitment of any nature whatsoever, over or
affecting the Equity Interest and there is no agreement or commitment to give or
create any of the foregoing. There are no outstanding obligations of the Company
to repurchase, redeem or otherwise acquire any Company Securities.
(d) There is no restriction(s) on the sale or transfer of any of the Equity
Interest to the Purchaser whatsoever.
3.04 Subsidiaries. (a) As at the Closing Date, the Company has no
Subsidiaries.
3.05 Noncontravention. The execution, delivery and performance by the
Sellers and the Company of this Agreement and the Transaction Documents do not,
and the performance by the Sellers and the Company of their respective
obligations under this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Constitution or any resolutions of the
shareholders or directors of the Company;
(b) conflict with or result in a violation or breach of any term or
provision of any Law or Order of any governmental, administrative or regulatory
body applicable to any Seller or the Company or any of their respective assets
and properties; nor
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute a default under, (iii) require the Sellers or the Company to obtain
any consent, approval or action under, (iv) result in or give to any Person any
right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments under,
or (vi) result in the creation or imposition of any Lien upon the Sellers or the
Company or any of their respective assets or properties under, any contract or
license to which the Sellers or the Company is a party or by which any of their
respective assets or properties is bound.
3.06 Governmental Approvals and Filings. The execution, delivery and
performance by the Sellers of this Agreement and the Transaction Documents and
the consummation of the transactions contemplated hereby require no action by or
in respect of, or filing with, any governmental body, agency or official.
3.07 Books and Records. The minute books, statutory books and registers and
other similar records of the Company, as made available to the Purchaser prior
to the execution of this Agreement, contain a true and complete record of all
actions taken at all Board, Board committee and shareholder meetings and by all
written consents in lieu of meetings of the equity holders, the boards of
directors and committees of the boards of directors of the Company,
respectively. The share transfer ledgers and other similar records of the
Company, as made available to the Purchaser, accurately reflect all record
transfers prior to the execution of this Agreement in the equity of the Company.
3.08 No Undisclosed Liabilities or Indebtedness. (a) Except for liabilities
reflected in the unaudited balance sheet of the Company as of the Closing Date,
the Company does not have any liability or obligation of any nature (whether
known or unknown and whether absolute, accrued,
14
contingent, or otherwise). Without limiting the preceding paragraph, except as
set forth in the unaudited balance sheet of the Company as of the Closing Date,
the Company does not have any liability for: (i) indebtedness for money
borrowed; (ii) the deferred purchase price of property or services; (iii)
capital lease obligations; (iv) conditional sale or other title retention
agreements; or (v) guarantees or other third party undertakings for any
liability or obligation of any other Person for any matter which relates to or
affects or will affect such parties or any of the Assets.
3.09 Taxes. (a) The Company has duly filed all returns, computations,
notices and information required to be made or provided by it for any tax
purpose (including without limitation, income tax, capital gains tax, goods and
services tax, fringe benefits tax, payroll tax, group tax, water and municipal
rates and stamp and customs duty) (the "Tax or Duty Return") and the same have
been made or given within the requisite periods and on a proper basis and when
made were true and accurate in all material respects and are up to date and none
of them is or likely to be the subject of any dispute with any tax authority.
(b) No Tax or Duty Return contains any statement that is either: (i) false
or misleading in any respects; or (ii) omits to refer to any matter which is
required to be included or without which the statement is false or misleading.
(c) The Company has paid when due, and has withheld, deducted and accounted
to the relevant authorities for, all taxes, levies, assessments, contributions,
fees, rates, duties, and other governmental or municipal charges or impositions
(including without limitation provisional taxation, income tax, capital gains
tax, goods and services tax, fringe benefits tax, payroll tax, group tax, water
and municipal rates and stamp and customs duty) which it has become liable to
pay, withhold, deduct or account for on or before the date hereof. For the
purposes of this Section 3.09(c) "a liability to pay" includes a liability to
pay any penalty or interest. Neither the Company, nor any respective director or
officer of the Company has paid or become liable to pay any fine, penalty,
surcharge or interest in relation to tax in relation to the activities of the
Company.
(d) The Company has complied in all respects with all legislation,
regulations, executive orders and directions relating to or associated with any
taxes, levies, assessments, contributions, fees, rates, duties, and other
governmental or municipal charges or impositions, except for such
non-compliances which would not, individually or in the aggregate, constitute a
Material Adverse Effect.
(e) There are no outstanding or likely disputes or questions or demands
between the Company and any Governmental or Regulatory Authority or agent
thereof.
(f) Except in respect of this Agreement and the Transactional Documents and
as set forth in Section 3.08(a) of the Disclosure Schedule, all taxes payable in
respect of every deed, agreement or other document or transaction to which the
Company is or has been a party or by which it derives, has derived or will
derive a material benefit have been duly paid and no such deed, agreement or
other document is unstamped or insufficiently stamped. All applicable taxes,
duties and any stamp duty payable on any transfer of the Equity Interest before
the Closing has been duly paid.
(g) All amounts of income tax required by any Law to be deducted by the
Company from the salary or wages of employees have been duly deducted and, where
required, duly paid.
3.10 Litigation/Products. (a) There is no action, suit, arbitration
proceeding, inquiry, claim or investigation pending against, threatened against
or affecting either the Company or any Seller or any of their respective
properties before any court or arbitrator or any governmental body, agency or
official (whether or not the defense thereof or liabilities in respect thereof
are covered by insurance) (any "Proceeding"). So far as the Company and each
Seller is aware, having made due and proper inquiries, there are no facts likely
to give rise to any Proceeding.
15
(b) Neither the Company, nor any Seller (as it relates to the Company) have
commenced or settled any legal proceedings within the last two (2) years. There
are no outstanding Orders by which the Company or any Seller (as it relates to
the Company) or any of their securities, assets, properties or businesses are
bound.
(c) No claim has been made against the Company in connection with any
defective product or services supplied by it in the course of carrying on its
business and the Company has maintained insurance that is customary to the
applicable industry and type of business, for at least the last three (3) years
against any such claim.
(d) Each of the IP Assets produced or sold by the Company is, and at all
times up to and including the Closing Date, has been: (i) in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations and (ii) conforms to any promises or affirmations of fact made in
respect of such IP Asset in the Material Contracts. There is no design defect,
except for bugs which (i) do not materially impair the use of the Productwith
respect to any such IP Asset and (ii) are logged in our development management
system as they are discovered and each of such IP Assets contains adequate
warnings, presented in a reasonably prominent manner, in accordance with all
applicable laws, rules and regulations and current industry practice with
respect to its content and use.
3.11 Compliance With Laws and Orders. (a) The Company is not in violation
of, and has not violated since November 20, 2001, and is not under investigation
with respect to and has not been threatened to be charged with or given notice
of any violation of, any Law or Order. Neither the Sellers nor any of the
Company's directors, officers, or key employees (including the Key Employees) in
relation to the Company, has committed any felony or any material breach of the
requirements or conditions of any Law.
3.12 Employees. (a) Section 3.12(a) of the Disclosure Schedule contains a
list of: (i) the names, commencement date, title, annual salaries, other
compensation (including any bonus or commission entitlements), any other
benefits provided or which the Company is bound to provide (whether now or in
the future) of all employees and officers of the Company and details of any
other material terms and conditions of employment and contractors of such
persons, all of which information is true and complete in all respects. None of
the employees of the Company have indicated to any Seller or the Company that
he/she intends to resign or retire as a result of the transaction contemplated
by this Agreement or otherwise within one (1) year after the Closing Date.
(b) Section 3.12(b) of the Disclosure Schedule contains an accurate and
complete list of each Employee Plan and the Company has not made any commitments
to establish new or to expand existing Employee Plans. The Company has performed
all obligations required to be performed under the Employee Plans and each
Employee Plan has been established and maintained in accordance with its terms
and in compliance with all applicable Laws and Orders. There are no actions,
suits or claims which have been filed, or, threatened or anticipated against any
Employee Plan. Each Employee Plan can be amended, terminated or otherwise
discontinued after the Closing Date in accordance with its terms, applicable
Laws or Orders, without liability to the Company (other than ordinary
administration expenses incurred in a termination event). There are no inquiries
or proceedings that have been filed, or, threatened by any Governmental or
Regulatory Authority with respect to any Employee Plan. The Sellers and the
Company have furnished to the Purchaser copies of all Employee Plans (and if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof together with the three most recent annual reports and
most recent actuarial valuation report prepared in connection with any Employee
Plan. Section 3.12(b) of the Disclosure Schedule identifies each Employee Plan
which is (i) a Multiemployer Plan, (ii) a Title IV
16
Plan or (iii) maintained in connection with any trust described in Section
501(c)(9) of the Code. The Sellers and the Company have provided the Purchaser
with complete age, salary, service and related data as of the Closing Date for
all employees and former employees covered under any Title IV Plan.
(c) All contributions and payments accrued under each Employee Plan and
Benefit Arrangement, determined in accordance with prior finding and accrual
practices, as adjusted to include proportional accruals for the period ending
the Closing Date, will be discharged and paid in full prior to the Closing Date.
(d) The Company has paid to the relevant Governmental and Regulatory
Authority, all taxes, all contributions and other levies due in respect of all
of the Company's employees and contractors (past and present) in respect of
their employment or services up to the Closing Date.
(e) With respect to each agreement with employees and contractors of the
Company, the Company has duly performed and complied with all of its obligations
(including, but not limited to, the making all payments for services rendered,
and other benefits). The Company has duly complied with applicable employment
regulations and Laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, and are not engaged in any unfair
labor practices. Each of the contracts entered into with employees, consultants
or contractors of the Company is enforceable against the parties to it and there
is no party in breach of, or in default under, such contract.
(f) Each of the employees and contractors of the Company have executed a
contractual agreement that contains: (i) a confidentiality clause; and (ii) an
assignment of all rights that each employee or contractor might have in any of
the Intellectual Property to the Company. No employee or contractor has any
individual rights to the Intellectual Property and IP Assets, including the
right to receive royalties or other payments from the Company.
(g) Neither the Company nor any Seller has offered, promised or agreed for
the future any variation in any employment or contractor/service agreement.
Without limiting the generality of the preceding sentence, since January 1, 2006
there has been no material change in the remuneration or benefits of any
executives, directors, officers or Key Employees of the Company, except as set
forth in Section 3.12(g) of the Disclosure Schedule.
(h) There is not in existence any bonus, profit sharing scheme, share
option scheme, share incentive scheme or any other scheme or arrangement under
which the employees, any contractors or any of them are or is or would be
entitled to participate in the profits or shares of the Company, except as set
forth in Section 3.12(h) of the Disclosure Schedule.
(i) There is no industrial action or dispute existing or threatened or
anticipated in respect of or concerning any of the current or former employees
of the Company relating to or based on any facts or circumstances (or part
thereof) arising or existing prior to Closing ("Employee Litigation"). There are
no facts or circumstances which are likely to result in such a dispute.
(j) Each employee of the Company has been devoting 100% of his/her business
time during the Company's business hours to the conduct of the Company's
business.
(k) No loans or other advances have been made to any director, officer,
employee or contractor of the Company.
(l) Except as set forth in Schedule 3.12(l), since January 1, 2006, the
Company has not dismissed any employee or terminated any contractor of the
Company.
17
(m) The Company has no current or projected liability in respect of
post-employment or post retirement health or medical or life insurance benefits
for retired, former or current employees or the Company.
(n) No employee or former employee of the Company will become entitled to
any bonus, retirement, severance, job security or similar benefit or enhanced
such benefit (including acceleration of vesting or exercise of incentive award)
as a result of the transaction contemplated hereby, except to the extent
contained in employment agreements offered by the Purchaser.
3.13 Real Property and Business Premises. (a) The Company owns no real
property whatsoever.
(b) All of the commercial leases and subleases executed by the Company are
in full force and effect, and the Company has not received notice of any claim
of any sort that is currently outstanding and that has been asserted by anyone
adverse to the rights of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company to the
continued possession of the commercial leased or subleased premises under any
such commercial lease or sublease.
(c) Section 3.13(c) of the Disclosure Schedule accurately describes all the
business premises leased or occupied by the Company (the "Business Premises").
The Company has exclusive occupation of the Business Premises. The Company is
not in breach of any term or obligation of any leases or licenses relating to
the Business Premises. The Company has made all payments required by and has
otherwise complied with the terms of each of the leases and/or licenses relating
to the Business Premises. There are no current disputes relating to any of the
Business Premises or their use.
3.14 Tangible Personal Property and Plant & Equipment. (a) The Company is
in possession of and has good title to, or has valid leasehold interests in or
valid rights under contract to use, all tangible personal property including all
plant and equipment used in the conduct of its business, including all tangible
personal property reflected on the balance sheets included in the Closing
Balance Sheet and tangible personal property acquired since the Inception Date
other than property disposed of since such date in the ordinary course of
business. All such tangible personal property including all plant and equipment
that is owned by the Company is free and clear of all Liens and is in good
working order and condition, ordinary wear and tear excepted, and its use
complies in all material respects with all applicable Laws.
(b) Section 3.14(b) of the Disclosure Schedule is a complete list of all
items of plant and equipment owned by the Company with a written down value in
excess of $10,000 as at the Effective Date ("Plant and Equipment"). Each item of
Plant and Equipment is in good repair taking into account normal wear and tear,
is in satisfactory working condition and capable of doing the work for which it
is designed and is physically in the possession of the Company.
(c) Section 3.14(c) of the Disclosure Schedule is a complete list of all
Equipment Leases. The Company has made all payments required by and has
otherwise complied with the terms of each of the Equipment Leases.
3.15 Intellectual Property. (a) The Company owns or has the right to use
pursuant to license, sublicense, agreement or permission all the Intellectual
Property set out in Section 3.15(a) of the Disclosure Schedule.
(b) The Company has not infringed upon, misappropriated, or used without a
required license, any Intellectual Property of third parties. The Company has
not, received any written charge, complaint, claim, demand, or notice alleging
any such infringement, misappropriation, or misuse that
18
has not been finally resolved (including any claim that the Company must license
or refrain from using any Intellectual Property of any third party). No third
party has infringed upon, misappropriated, or otherwise misused any Intellectual
Property that would have a Material Adverse Effect on the Company.
(c) Section 3.15(c) of the Disclosure Schedules identifies each registered
and unregistered (as indicated) copyright, trademark, trade name, service xxxx,
domain name, patent, trade secret or other registration or other Intellectual
Property which is owned by the Company and identifies each license, agreement,
or other permission currently in effect pursuant to which the Company has
granted to any third party rights with respect to any of the Intellectual
Property other than in the ordinary course of business. The Company has
delivered to the Purchaser correct and complete copies of all such registered
and unregistered copyrights, trademarks, trade names, mask works, service marks,
domain names, patents, registrations, applications, licenses, agreements, and
permissions or other Intellectual Property (as amended to date) and have made
available to the Purchaser correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of rights of
each such item. With respect to each item of Intellectual Property identified in
Section 3.15(c) of the Disclosure Schedule:
(i) the Company possess all right, title, and interest in and each
item, or has the valid right to use each item, free and clear of any Liens
and the Company has not assigned or in any way disposed of any right, title
or interest in any item;
(ii) each 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 has been filed or is threatened which
challenges the legality, validity, enforceability, use, or ownership of
each item;
(iv) except for indemnifications provided in the ordinary course of
business, the Company has not agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or other conflict with
respect to each item; and
(v) each item is valid and enforceable in every jurisdiction the
Company conducts business; and
(vi) the Company has taken all necessary steps to obtain and maintain
appropriate registrations for each item and to protect and defend each
item.
(d) Section 3.15(d) of the Disclosure Schedules lists the items of
Intellectual Property that any third party owns and that the Company use
pursuant to applicable licenses, sublicenses, agreements, or permission. With
respect to each item of Intellectual Property required to be identified on
Section 3.15(d) of the Disclosure Schedule:
(i) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable according to the applicable
terms by the applicable party against the other party thereto, and in full
force and effect;
(ii) the license, sublicense, agreement, or permission will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms immediately following the consummation of the transactions
contemplated hereby;
(iii) the Company is not in breach or default of any such license,
sublicense, agreement or permission, and to the Knowledge of the Company no
event has occurred which
19
with notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(iv) no current or former customer to such 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;
(v) no party to the license, sublicense, agreement, or permission has
overtly repudiated any provision thereof by written notice to the Company
or any representatives thereof;
(vi) no underlying item of Intellectual Property is subject to any
outstanding injunction, judgment, order, decree, ruling or charge;
(vii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand has been filed, is threatened, or is pending
against the Company in relation to any underlying item of Intellectual
Property and no owner of such Intellectual Property has threatened any
action, suit, proceeding, hearing, investigation, charge, complaint, claim
or demand which challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property;
(viii) the Company has not granted any sublicense or similar right
with respect to the license, sublicense, agreement or permission other than
pursuant to in the ordinary course of business; and
(ix) the Company has not taken any action or inaction or assisted any
other person to take any action or inaction with such Intellectual Property
that infringes upon, misappropriate, or otherwise misuses any such
Intellectual Property.
(e) There is no software or other material that is distributed as "free
software", "open source software" or under a similar licensing or distribution
model (including the GNU General Public License (GPL), GNU Lesser General Public
License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic
License, the Netscape Public License, the Sun Community Source License (SCSL)
the Sun Industry Standards License (SISL) and the Apache License) ("OPEN SOURCE
MATERIALS") that is included in any IP Assets or Company Intellectual Property,
or that is otherwise used by Company in any way. Except as explicitly set forth
in Section 3.15(e) of the Disclosure Schedules, Company has not (i) incorporated
Open Source Materials into, or combined Open Source Materials with, any IP
Assets or Company Intellectual Property; (ii) distributed Open Source Materials
in conjunction with any IP Assets or Company Intellectual Property; or (iii)
used Open Source Materials that create, or purport to create, obligations for
Company or any Subsidiary with respect to any IP Assets or Company Intellectual
Property or grant, or purport to grant, to any third party, any rights or
immunities under any IP Assets or Company Intellectual Property (including using
any Open Source Materials that require, as a condition of use, modification
and/or distribution of such Open Source Materials that other software
incorporated into, derived from or distributed with such Open Source Materials
be (A) disclosed or distributed in source code form, (B) be licensed for the
purpose of making derivative works, or (C) be redistributable at no charge).
(f) there has not been:
20
(i) any infringement of any of the Company's Intellectual Property
rights by any third party or any infringement by the Company of any third
party's Intellectual Property rights;
(ii) any misuse or unauthorized disclosure of the Company's
confidential information; or
(iii) any other act which may affect the validity or enforceability of
the Intellectual Property rights of the Company.
(g) None of the Company or any Seller are aware, having made due and proper
inquiries, of any inappropriate, improper, unpermitted or infringing use by any
other person of any of the business names or the trade marks owned or used by
the Company.
3.16 Contracts.
(b) There are no contracts or obligations, agreements or arrangements
involving the Company and no practices in which the Company is engaged, which
are void, illegal, unenforceable, registerable or under which contravene in any
material respect, any fair competition legislation or regulations of any
applicable Governmental or Regulatory Authority, nor has the Company received
any threat or complaint or request for information or investigation in relation
to or in connection with any such legislation or regulations.
(c) The Company has duly performed and complied at all times with its
obliations under all Material Contracts. None of the Material Contracts entered
into by the Company are known to the Company or any Seller to be likely to
result in a loss for the Company. The Company has not made any offers, tenders
or quotations which are still outstanding and capable of giving rise to a
contract by the unilateral act of a third party, other than in the ordinary
course of business and on customary terms.
(d) Except as set forth in Section 3.15(d) of the Disclosure Schedule, with
respect to the Material Contracts:
(i) the Company is not under any obligation which cannot readily be
fulfilled, performed or discharged by it on a timely basis and without
undue or unusual expenditure or effort or loss;
(ii) there are no grounds for rescission, avoidance, repudiation or
termination (other than those as set out in the respective contracts) and
neither the Company nor any officer, director or any Key Employees of the
Company have received notice of rescission or termination;
(iii) each is valid, binding and enforceable against the parties to it
and there is no party in material breach of, or in default under, any such
contract and each will be enforceable by the Company after Closing; and
(iv) none contain any provision or covenant prohibiting or limiting
the ability of the Company to engage in any business activity or compete
with any Person or prohibits or limits the ability of any Person to compete
with the Company.
(e) following a change in the: (i) control of the Company, (ii) composition
of the Board; or (iii) ownership of the Equity Interest, any of the Company's
customers, suppliers or licensors which relate to Material Contracts would,
cease to remain customers, suppliers or licensors to the same extent
21
and of the same nature as prior to the date hereof or a right to terminate or
vary the Material Contract would be created.
(f) Section 3.16(f) of the Disclosure Schedule contains a true and correct
complete list of all of the following agreements, instruments, written contract
or other arrangement, together with any related amendments, waivers,
supplements, work orders, notices as to termination or change thereunder, to
which the Company or any Seller (as it relates to the Company) are a party, if
any (the "Material Contracts"), complete and accurate descriptions of which are
contained Section 3.16(f) of the Disclosure Schedule:
(i) all end user license agreements or other license agreements (or
group of related agreements) pursuant to which the Company has on a
consolidated basis recognized annual revenue in excess of $10,000 in the
year of 2005;
(ii) all indirect resellers, original equipment manufacturer's,
distributorship, franchise, dealer, sales agent, joint venture and partner
agreements pursuant to which the Company has on a consolidated basis
recognized annual revenue in excess of $10,000 in the year of 2005;
(iii) all support agreements (or group of related agreements) pursuant
to the Company has on a consolidated basis recognized annual revenue in
excess of $10,000 in the year of 2005;
(iv) all service, consultancy or advisory agreements or agreements to
provide work to third parties (or group of related agreements) pursuant to
which the Company has on a consolidated basis recognized annual revenue in
excess of $10,000 in the year of 2005;
(v) all agreements for the purchase or sale of products (or group of
related agreements) pursuant to which the Company has on a consolidated
basis recognized annual revenue in excess of $50,000 in the year of 2005.
(vi) any agreement (or group of related agreements) for the purchase
or sale of supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will extend
over a rolling period of more than one year or involve consideration in
excess of $10,000 annually;
(vii) any agreement (or group of related agreements) under which the
Company has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or other obligation, having a value in excess of $10,000
annually;
(viii) any currently effective profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance, or other
plan or arrangement for the benefit of the Company's current or former
directors, officers, and employees;
(ix) any outstanding agreement under which the Company has advanced or
loaned any amount in excess of $10,000 (excluding loans associated with
travel and meal expenses);
(x) any agreement pursuant to which the Company has an obligation to
pay royalties or make other payments in connection with the sale of
products or services, in excess of $10,000;
(xi) any other agreement (or group of related agreements), other than
employment-related agreements or agreements with contracts, the performance
of which involves payment by the Company of annual consideration in excess
of $50,000 after the Closing;
22
(xii) all contracts related to the disposition or acquisition of
assets in excess of $50,000, including any contracts related to the merger,
consolidation, reorganization or any similar transaction of the Company;
(xiii) all contracts or certified summaries of the relevant provisions
that limit payment of dividends or require financial ratios or financial
covenants to be met or which have the effect of altering any of the rights
or obligations of or encumbering any of the Assets;
(xiv) all agreements or related agreements for the lease obligations
of real property or plant and equipment of the Company in excess of $10,000
annually;
(xv) all insurance contracts of the Company;
(xvi) all escrow agreements (including software escrow agreements),
arrangements or promises of the Company;
(xvii) any other contract creating or relating to any sharing of
revenues, profits, losses, costs or liabilities pursuant to which the
Company has on a consolidated basis recognized annual revenue in excess of
$50,000 in the year of 2005;
(xviii) any contract creating or involving any agency relationship,
distribution arrangement or franchise relationship pursuant to which the
Company has on a consolidated basis recognized annual revenue in excess of
$50,000 in the year of 2005; and
(xix) any contract which provides for indemnification of any officer,
director, employee or agent of the Company.
3.17 Licenses. The Company possesses such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses") issued
by any regulatory agencies or bodies in any jurisdiction that the Company
conducts business. The Company is in compliance with the terms and conditions of
all such Governmental Licenses. All of the Governmental Licenses are valid and
in full force and effect. The Company has not received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses.
All consents, approvals and actions of, filings with and notices to any third
party, Governmental or Regulatory Authority necessary to permit any Seller or
the Company to perform their respective obligations under this Agreement and
each of the Transaction Documents and to consummate the transactions
contemplated hereby and thereby shall have been duly obtained, made or given,
and shall be in full force and effect.
3.18 Insurance. Section 3.18 of the Disclosure Schedule contains a true and
complete list of all material liability, property, workers' compensation,
directors' and officers' liability and other insurance policies currently in
effect that insure the business, operations or employees of the Company or
affect or relate to the ownership, use or operation of any of the material
assets and properties of the Company and that have been issued to the Company.
The insurance coverage provided by such policies will not terminate or lapse by
reason of the transactions contemplated by this Agreement. Each policy listed in
Section 3.18 of the Disclosure Schedule is valid and binding and in full force
and effect, no premiums due thereunder have not been paid and neither the
Company nor the Person to whom such policy has been issued has received any
notice of cancellation or termination in respect of any such policy or is in
default thereunder. The Company has not received any notice that any insurer
under any policy referred to in this Section 3.18 is denying liability with
respect to a claim thereunder or defending under a reservation of rights clause.
3.19 Brokers or Finders. Except as set forth in Schedule 3.19, the Company
has not incurred, or will incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions, consulting fees or any
similar charges in connection with this Agreement. For the avoidance of doubt,
any brokerage, finders' fee, agents' commissions, consulting fees or any similar
charge(s) in relation to or associated with this Agreement, will be paid by the
Sellers.
23
3.20 Disclosure and Information. (a) No representation or warranty
contained in this Agreement and given by, or on behalf of, any Seller or the
Company or any Key Employee and no statement contained in the Disclosure
Schedule or in any certificate, list or other writing furnished to the Purchaser
pursuant to any provision of this Agreement (including, without limitation, the
Company's Financial Statements), contains any untrue statement or omits to state
a fact necessary in order to make the statements herein or therein, in the light
of the circumstances under which they were made, not misleading in any respect.
The facts set out in the Disclosure Schedule are true and accurate in all
material respects.
(b) (i) There are no material facts or circumstances relating to the Equity
Interest, the Company, any of the Assets or the financial position, operations,
or profitability of the Company which have not been fully and properly disclosed
to the Purchaser in accordance with this Agreement. (ii) There are no facts or
circumstances which might reasonably be expected to have a Materially Adversely
Effect on the financial position, operations, profitability or prospects of the
Company, which have not been fully and properly disclosed to the Purchaser in
accordance with this Agreement.
3.21 Environmental Matters (i) No notice, notification, demand, request for
information, citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed and no investigation, action, claim, suit,
proceeding or review is pending, or threatened by any government entity or other
Person with respect to any matters relating to the Company and relation to or
arising our of any Environmental Law. (ii) There are no facts, conditions,
situations or set of circumstances which could reasonably be expected to result
in or be the basis for any liability of or relating to the Company arising under
or relating to any Environmental Law.
3.22 Financial Representations. (a) Section 3.22(a) of the Disclosure
Schedule contains the unaudited consolidated balance sheets of each of the years
ending 2003, 2004 and 2005 and related unaudited consolidated statements of
income and cash flows and the unaudited interim consolidated balance sheets for
the 3 months ending March 31, 2006 and the related unaudited interim
consolidated statements of income and cash flows of the Company fairly present,
in conformity with generally accepted accounting principles applied on a
consistent basis.
(b) All accounts receivable reflected on each of the consolidated and
audited balance sheets for the twelve (12) months preceding December 31, 2005
and in the unaudited balance sheet for the 3 months preceding the Closing Date
of the Company and all accounts receivable arising subsequent to the Closing
Date (collectively the "Accounts Receivable"): (i) have arisen from bona fide
sales transactions in the ordinary course of the business on ordinary trade
terms; (ii) represent valid, enforceable and binding obligations due to the
Company; (iii) have been collected or are collectible in the ordinary course of
business in the aggregate recorded amounts thereof without valid set-off or
counterclaim; and (iv) are not subject to any counter claim or set off.
(c) Section 3.22(c) of the Disclosure Schedule describes the names and
locations of all banks and financial institutions in which there are accounts or
safe deposit boxes maintained by, or for the benefit of, the Company, the
designation of each such account and safe deposit box, and the names of all
persons authorized to draw on or have access to each such account and safe
deposit box.
(d) All forecasts and projections of any future financial results or sales
pipeline activities of the Company provided to the Purchaser by or on behalf of
the Company, any of the Company's management or any Seller were prepared in good
faith and were based upon reasonable assumptions. There was at the time of the
Closing no matters or circumstances that were known by the Company, any Seller
or any Key Employee that would have had a Material Adverse Effect upon the
actual and
24
projected financial results of the Company.
(e) The Company is not directly or indirectly obliged in any way to
guarantee, assume or provide funds to satisfy an obligation of any Person. No
letter of comfort has been given by the Company.
3.23. Absence of Changes. Except as disclosed in the Disclosure Schedules,
since January 1, 2006 and until Closing, there has not been any change in the
business, condition (financial or otherwise), operations or results of
operations of the Company that would result in a Material Adverse Effect.
Without limiting the generality of the foregoing, since January 1, 2006 and
until Closing:
(a) The Company has not sold, leased, transferred, or assigned any of its
Assets, tangible or intangible other than in the ordinary course of business;
(b) The Company has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
relating to the Assets or for any liabilities other than in the ordinary course
of business;
(c) No Person (including each Seller and the Company) has accelerated,
terminated, modified or cancelled any agreement, contract, lease or license (or
series of related agreements, contracts, leases and licenses) involving more
than $10,000 to which the Company is a party or by which they or any of them are
bound, other than terminations and cancellations of agreements which occur in
the ordinary course of business;
(d) The Company has not imposed, or agreed to, or suffered the imposition
of any lien in excess of $10,000 upon any of the Assets, tangible or intangible;
(e) The Company has not made any capital expenditure (or series of related
capital expenditures) involving more than $10,000;
(f) Except as set forth in Schedule 3.23(f), the Company has not made any
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 individually more than $10,000 other than pursuant to
agreements with suppliers that were entered into in the ordinary course of
business;
(g) The Company has not issued any note, bond, debenture or other debt
security or created, incurred, assumed or guaranteed any indebtedness for
borrowed money or capitalized lease obligation either involving more than
$10,000 individually;
(h) Excepting Known Proceedings, the Company has not cancelled,
compromised, waived or released any right or claim (or series of related rights
and claims) involving more than $10,000;
(i) There has been no change made or authorized in the Constitution of the
Company;
(j) Except as set forth in Schedule 3.23(j), the Company has not issued,
sold or otherwise disposed of any of their capital stock, or granted any
options, warrants or other rights to purchase or obtain (including upon
conversion, exchange or exercise) any of their capital stock other than
necessary or desirable to effectuate the actions contemplated in this Agreement;
(k) The Company has not declared, set aside or paid any dividend or made
any distribution with respect to their capital stock (whether in cash or in
kind) or redeemed, purchased or
25
otherwise acquired any of their capital stock;
(l) The Company has not experienced any damage, destruction, loss (whether
or not covered by insurance) or material interruption to the Assets in excess of
$10,000;
(m) The Company has not made any loan to any of its directors, officers or
employees, or entered into any other compensation transaction with any of their
directors, officers or employees;
(n) The Company has not entered into or modified the terms of any
employment or severance agreement or arrangement;
(o) Except as set forth in Schedule 3.23(o), the Company has not granted
any increase in the base compensation or any other forms of compensation of any
of their directors, officers or employees;
(p) The Company has not changed any of its methods of accounting or
material accounting practices in any respect;
(q) The Company has not entered into any transaction, commitment or
obligation or taken any other action inconsistent with their past practices;
(r) The business of the Company has been carried on in the ordinary and
usual course and no contracts or commitments differing from those ordinarily
necessitated by the nature of that business have been entered into or incurred;
(s) There has been no change in the assets, the liabilities or the
financial position or profits of the Company except changes in the ordinary
course of business, none of which individually or in the aggregate is materially
adverse to the Company;
(t) The business or financial position of the Company has not been
materially and adversely affected by any matter, either financial or otherwise
and whether covered by insurance or not;
(u) There has been no alteration to the rights attached to any of the
Equity Interest or to the capital structure of the Company;
(v) No additional directors have been appointed to the Company; and
(w) The Company has not made or pledged to make any charitable or other
capital contribution outside the ordinary course of business.
3.24 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
3.25 No Illegal Payments, etc. Neither the Company nor any of its officers,
employees, agents or Affiliates has directly or indirectly given or agreed to
give any illegal gift, contribution, payment or similar benefit to any supplier,
customer, governmental official or employee or other Person who was or is in a
position to help or hinder the business (or assist in connection with any actual
transaction) or made or agreed to make any illegal contribution, or reimbursed
any illegal political gift or contribution made by any other person, to any
candidate for federal, state, local or foreign public office.
3.26 Product, Services and Assets.
26
(a) There are no current or threatened disputes with regards to the
Company's current version of its IP Assets. The Company's IP Assets have been
successfully installed and utilized by customers of the Company.
(b) No IP Assets sold, leased or delivered by the Company and no support or
service provided by the Company to customers on or prior to the Closing Date is
subject to any express guaranty, express warranty or other indemnity (including
without limitation as to product or service reliability, security,
interoperability, compatibility (forward and backward), upgrade path or upgrade
timing) except as expressly set forth on those contracts with customers copies
of which have been provided to the Purchaser.
(c) The Company is the legal and beneficial owner of all its Assets. There
are no mortgages, pledges, liens, encumbrances, charges or other security
interests over or affecting any Asset.
(d) The Assets are sufficient to enable the effective conduct of the
business of the Company after Closing as it is carried on at the date of this
agreement and at Closing.
3.27 Substantial Customers and Suppliers. (a) For purposes of this Section
3.27(a), a "Material Customer" shall mean any of the twenty (20) customers of
the Company, taken as a whole, with the highest attributed revenues for the
period of January 1, 2004 through March 31, 2006. Section 3.27(a) of the
Disclosure Schedule lists the Material Customers (whether direct or indirect)
and applicable contracts of the Company. Each of the Material Customers, related
contracts and attributed revenues are not duplicative or redundant. With respect
to the applicable contracts with Material Customers, there exists no event of
default and no event has occurred which would result in any such event of
default or prevent the Company from obtaining the benefit thereunder. The
Company's relationship with each Material Customer is good and there are no
facts or circumstances to the Knowledge of the Company of: (a) any dispute
threatened, actual or pending between the Company and any Material Customer; or
(b) any desire or plan of any Material Customer to terminate or modify such
relationship.
(b) For purposes of this Section 3.27(b), a "Material Supplier" shall mean
any of the top ten (10) third party suppliers of the Company, taken as a whole
with the highest attributed costs or the basis of costs for the period January
1, 2004 through March 31, 2006. Section 3.27(b) of the Disclosure Schedule lists
the material suppliers. With respect to the applicable contracts with Material
Suppliers, there exists no event of default and no event has occurred which
would result in any such event of default or prevent the Company from obtaining
the benefit thereunder. The Company's relationship with each Material Supplier
is good and there are no facts or circumstances to the Knowledge of the Company
of: (a) any dispute threatened, actual or pending between the Company and any
Material Supplier; or (b) any desire or plan of any Material Supplier to
terminate or modify such relationship.
(c) None of the Sellers or the Company has notice, or is aware of any facts
or circumstances, that any Material Customer or Material Supplier has ceased,
materially reduced or threatened to cease or materially reduce, its purchases or
supplies (as the case may be).
3.28 No Bankruptcy or Insolvency (a) No order has been made, or petition
presented, or resolution passed for the winding-up or bankruptcy of the Company
or any Seller. None of the Sellers or the Company has had:
(i) any petition or order for winding-up or bankruptcy filed against it;
(ii) any appointment of a receiver over the whole or part of the
undertaking of its assets;
27
(iii) any petition or order for administration against it;
(iv) any voluntary arrangement between any creditor and it;
(v) any distress or execution or other process levied in respect of it
which remain undischarged; or
(vi) any unfulfilled or unsatisfied judgment or court order against it over
the amount of $5,000.
(b) None of the Sellers or the Company is insolvent (total liabilities
greater than total assets) and each can pay its debts as and when they fall due.
(c) There are no circumstances which would entitle any Person to present a
petition for the winding-up or administration (or like action) of the Company or
any Seller or to appoint a receiver over the whole or any part of the
undertaking or assets of the Company or any Seller.
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE SELLERS WITH RESPECT TO
SECURITIES LAW MATTERS.
Each Seller represents and warrants to, and for the benefit of the
Purchaser as of the Effective Date, the Closing Date and each Installment Date,
the following:
3A.01 Business or Financial Experience. By reason of his/her business or
financial experience or the business or financial experience of its professional
advisors who are unaffiliated with Purchaser, and who are not compensated by
Purchaser, he/she has the capacity to protect his/her own interests in
connection with the acquisition of the Stock Consideration.
3A.02 Investment Intent. Each of the Sellers is acquiring the Stock
Consideration for investment for his/her own account, not as a nominee or agent,
and not with the view to, or for resale in connection with, any distribution
thereof. He/she understands that the Stock Consideration has not been, and will
not be, registered under the Securities Act by reason of a specific exemption
from the registration provisions of the Securities Act, the availability of
which depends upon, among other things, the bona fide nature of such Seller's
investment intent and the accuracy of such Seller's representations as expressed
herein.
3A.03 Unregistered Stock. Each of the Sellers acknowledge and agree that
the CDC Corporation Stock issued as part of the Stock Consideration shall not
have been registered under the Securities Act, or under any securities laws of
any state of the United State and shall be deemed "restricted securities". Such
CDC Corporation Stock may be resold or transferred only: (i) pursuant to the
exemption from the registration requirements of the Securities Act provided by
Rule 144 thereunder; (ii) outside the United States in accordance with
Regulation S under the Securities Act; or (iii) in reliance upon another
available exemption from the registration requirements of the Securities Act.
Further, each of the Company and the Sellers acknowledge and agree that Rule 144
of the Securities Act permits only limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or an
Affiliate of such issuer), in a non-public offering subject to the satisfaction
of certain conditions, including among other things: the resale occurring not
less than one (1) year from the date such person had been issued such
securities; the availability of certain public information concerning the
issuer; the sale being through a broker in an unsolicited "broker transaction"
or in a transaction directly with a market maker (as this term is defined in the
Securities Exchange Act of 1934); and that any sale of such securities may be
made only in limited amounts during any three-month period not exceeding
specified limitation.
28
3A.04 Legend. Each of the Sellers acknowledges and agrees that the CDC
Corporation Stock issued as part of the Stock Consideration shall bear the
following legend:
"The Class A common shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), or under the securities laws of any state of the United States.
These securities may be resold or transferred only (1) pursuant to the
exemption from the registration requirements of the Securities Act provided
by Rule 144 thereunder, (2) outside the United States in accordance with
Regulation S under the Securities Act, (3) in reliance upon another
available exemption from the registration requirements of the Securities
Act subject, in each case described above, to the receipt by the company or
the company's agent of any necessary certifications or endorsements
relating to the compliance with the restrictions on transfer applicable to
the Class A common shares and, in the case of any transfer pursuant to
clauses (1), (2) or (3) above an opinion of counsel to the effect that such
transfer is exempt from the registration requirements of the Securities
Act, or (4) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with applicable state and
securities laws."
3A.05 Opportunity to Discuss. The Seller has had an opportunity to discuss
the business, management and financial affairs of CDC Corporation with CDC
Corporation's management.
3A.06 Additional Certifications, Opinions, etc. The Seller acknowledges
that, on any proposed resale of the Stock Consideration, if requested by Bank of
New York, as transfer agent (the "Transfer Agent") of CDC Corporation, it will
be required to furnish to the Transfer Agent such certifications, legal opinions
and other information as the transfer agent may reasonably require to confirm
that the proposed sale complies with the restrictions on transfer under
applicable United States state and Federal securities laws.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
4.01 Organization of the Purchaser. The Purchaser represents and warrants
that the Purchaser is (i) a corporation duly organized validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority to enter into and perform its obligations under this
Agreement and the Transaction Documents, including the full right and authority
to cause the issuance of the CDC Corporation Stock in accordance with the terms
and condition of this Agreement and (ii) is a wholly owned subsidiary of CDC
Corporation. All of the shares of CDC Corporation Stock to be issued to the
Sellers have been duly authorized and, upon issuance, will be validly issued,
fully paid, and nonassessable. Once executed by the Purchaser, this Agreement
and the Transaction Documents required to be executed by the Purchaser have been
duly and validly executed and delivered by the Purchaser and when duly executed
will constitute a legal, valid and binding obligation of the Purchaser
enforceable against such Purchaser subject to bankruptcy, reorganization,
insolvency, moratorium, restructuring or similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity.
4.02 Authority; No Conflict. Neither the execution and delivery of this
Agreement and the Transaction Documents by Purchaser nor the consummation or
performance of any of the transactions contemplated by this Agreement and the
Transaction Documents by Purchaser will, directly or indirectly (with or without
notice or lapse of time): (i) constitute a breach any provision of Purchaser's
certificate of incorporation or bylaws; (ii) to the Knowledge of Purchaser,
constitute a breach or give any Governmental Body or other Person the right to
challenge any of the Transactions contemplated by this Agreement or to exercise
any remedy or obtain any relief under any legal requirement to which Purchaser
may be subject; or (iii) constitute a breach of any resolution adopted
29
by the board of directors of Purchaser; or (iv) any constitute a breach of any
contract to which Purchaser is a party or by which Purchaser may be bound which
breach would have the effect of preventing, delaying, making illegal or
otherwise interfering with, any of the transactions contemplated by this
Agreement.
4.03 Broker Fees. No agreement, explicit or implied, with any person for
brokerage fees, commissions or payments in connection with this transaction have
been entered into.
4.04 Governmental Approvals and Filings. To the Knowledge of the Purchaser,
the execution, delivery and performance by the Sellers of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency or official.
4.05 Certain Proceedings. There is no pending Proceeding that has been
commenced against Purchaser that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
transactions contemplated by this Agreement. To Purchaser's knowledge, no such
Proceeding has been threatened.
SECTION 5. COVENANTS OF THE SELLERS AND THE COMPANY.
Each Seller and the Company, jointly and severally, covenants and agrees
with the Purchaser that, at all times from and after the Effective Date until
the Closing and, with respect to any covenant, agreement or appointment by its
terms to be performed in whole or in part after the Closing, for the period
specified herein or, if no period is specified herein, indefinitely, each Seller
and the Company will comply with all covenants and provisions of this Section,
except to the extent the Purchaser otherwise consent in writing.
5.01 Financial Statements. (a) Prior to Closing, the Company and the
Sellers shall deliver to the Purchaser true and complete copies of the: (i)
audited consolidated financial statements of the Company for March 31, 2006,
together with a true and correct copy of the report on such audited information
and all letters from the auditors, with respect to the results of such audits;
and (ii) the management accounts for the March 31, 2006 months preceding the
Closing Date. All such financial statements will be reconciled to GAAP and
fairly present the financial condition and results of the consolidated
operations of the Company as of the respective dates thereof and for the
respective period covered thereby.
(b) Prior to Closing, the Company and the Sellers shall deliver to the
Purchaser: (i) projected consolidated statements of operations, shareholders'
equity and cash flows for the calendar years 2005 and 2006 (by month); and (ii)
the Company's operating budget for calendar years 2005 and 2006 (by month). Such
projections noted in Sections 5.01(b)(i) and (ii) were prepared based on
assumptions which in the Company's and the Sellers' determination were
reasonable and made in good faith.
5.02 Books and Records. If at any time after the Closing, any Seller
discovers in its possession or under its control any other Records, such Seller
shall forthwith deliver as make available such Records to the Purchaser at the
offices of the Company.
5.03 Fulfilment of Conditions. Each Seller and the Company will execute and
deliver at the Closing each instrument that the Sellers and the Company are
required under this Agreement to execute and deliver as a condition to the
Closing, shall take all commercially reasonable steps necessary or desirable and
proceed diligently and in good faith to satisfy all other conditions to the
obligations of the Purchaser contained in this Agreement and shall not permit
the Company to take, or fail to take, any
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action that could reasonably be expected to result in the non-fulfilment of any
such condition. Without limiting the generality of the foregoing, each Seller
and the Company shall not take or omit to take any reasonable action, or permit
such action or omission if it reasonably can be expected that as a result of
such action or omission, any representation or warranty made by the Sellers or
the Company under this Agreement shall not be true and correct in all respects
at and as of the Closing Date as if made on that date.
5.04 Notice and Cure. The Sellers and the Company shall notify the
Purchaser promptly in writing of, and contemporaneously, shall provide true and
complete copies of any and all information or documents relating to, and will
use all commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance occurring after the Effective Date that causes or
shall cause any covenant or agreement of the Sellers or the Company under this
Agreement to be breached or that renders or shall render untrue any
representation or warranty of such party contained in this Agreement as if the
same were made on or as of the date of such event, transaction or circumstance.
The Company and the Sellers shall notify the Purchaser promptly in writing of,
and shall use all commercially reasonable efforts to cure, before the Closing,
any violation or breach of any representation, warranty, covenant or agreement
made by such party in this Agreement, whether occurring or arising before, on or
after the Effective Date. No notice given pursuant to this Section shall have
any effect on the representations, warranties, covenants or agreements contained
in this Agreement for purposes of determining satisfaction of any condition
contained herein or shall in any way limit the right of the Purchaser to seek
indemnity under this Agreement.
5.05 Conduct of Business in Ordinary Course. From and after the Effective
Date and prior to the Closing Date, the Company will not and the Sellers will
not cause the Company to take any actions inconsistent with Section 3.23 or
which will lead to a Material Adverse Effect occurring. With the exception of
the provisions set forth in this Agreement and the transaction contemplated
herein, the Company will carry on (and the Sellers shall cause the Company to
carry on) their business in the ordinary course in substantially the same manner
as heretofore conducted and, to the extent consistent with such business, use
efforts consistent with past practice and policies to preserve intact their
respective present business organization, keep available the services of their
respective present officers, consultants and employees and preserve their
relationships with customers, suppliers and distributors and others having
business dealings with them. The Sellers shall cause the officers of the Company
to confer at such times as the Purchaser may reasonably request with
representatives of the Purchaser to report operational matters of a material
nature and to report the general status of the ongoing operations of the
business of the Company. Notwithstanding the foregoing, the Sellers and the
Company may not and will not without the prior written consent of the Purchaser
(which shall not be unreasonably withheld):
(a) other than in the ordinary course of business consistent with prior
practice, enter into any commitment or transaction, including but not limited to
any purchase of assets (other than supplies or cash equivalents) for a purchase
price in excess of $25,000;
(b) other than in the ordinary course of business consistent with prior
practice, enter into or amend any agreements pursuant to which any other party
is granted support, service, marketing or publishing rights;
(c) other than in the ordinary course of business consistent with prior
practice, enter into or terminate any contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments, or commitments, or amend or otherwise change in any respect the
terms thereof in an adverse manner; or
(d) modify in any material respect existing discounts or other terms and
conditions with third parties in a manner adverse to the Company.
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5.06 Indebtedness. Without obtaining the prior written consent of the
Purchaser (which shall not be unreasonably withheld) neither any Seller nor the
Company will: (a) incur any indebtedness for borrowed money by way of direct
loan, sale of debt securities, purchase money obligation, conditional sale,
guarantee or otherwise; (b) cause any existing debt facility to be drawn down.
5.07 Cooperation. Each Seller and the Company agree and undertakes to
promptly use their reasonable efforts to assist the Purchaser to effect the
transfer of the Equity Interest to the Purchaser and to execute all documents,
papers, forms, authorizations, declarations or oaths, obtain the consents,
releases and waivers of third parties and Governmental or Regulatory, and take
any other steps that may be necessary to do so in order to consummate the
transactions contemplated under this Agreement and each Transaction Document.
5.08 Access to Information. From the Effective Date until the Closing Date,
the Sellers will (i) give, and will cause the Company to give, the Purchaser and
its Representatives (defined below) full access to the offices, properties,
books and records of the Company and to the books and records of the Sellers
relating to the Company; (ii) furnish, and will cause the Company to furnish to
the Purchaser and its advisors such financial and operating data and other
information relating to the Company as such Persons shall request and (iii)
instruct employees and advisors of the Sellers to cooperate with the Purchaser
in its investigations of the Company. For the avoidance of doubt, no
investigation by the Purchaser or other information received by the Purchaser
shall operate as a waiver or otherwise affect any representations, warranty or
agreement given or made by the Sellers hereunder. "Representatives" shall refer
to ant of the Purchaser's officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants or other representatives.
5.09 Insurance. The Sellers and the Company will maintain in force up to
the Closing Date policies of insurance of the same character and coverage as
those described in Section 3.18 of the Disclosure Schedule, and the Sellers will
promptly notify the Purchaser in writing of any changes in such insurance
coverage occurring prior to the Closing Date.
5.10 Power of Attorney. Upon Closing, each Seller hereby appoints the
Purchaser to be its attorney in relation to the Purchaser's relevant Equity
Interest from the Closing until the relevant Equity Interest is registered in
the name of the Purchaser. The Purchaser may do in the name of each Seller and
on its behalf everything necessary or expedient, in the Purchaser's sole
discretion to: (a) transfer the relevant shares; (b) exercise any rights,
including rights to appoint a proxy or representative and voting rights,
attaching to the relevant Equity Interest; (c) receive any dividend or other
entitlement paid or credited to any Seller in respect of the relevant Equity
Interest; (d) do any other act or thing in respect of the relevant Equity
Interest. Each Seller declares that all acts and things done by the Purchaser in
exercising powers under this power of attorney will be as good and valid as if
they had been done by such Seller and agrees to ratify and confirm whatever the
Purchaser does in exercising powers under this power of attorney. Each Seller
declares that this power of attorney of the Purchaser is given for valuable
consideration and is irrevocable from the Closing until the relevant Equity
Interest is registered in the name of the Purchaser.
5.11 Noncompetition. (a) Each of the Sellers agrees that for a period
between the date of such Seller's Employment Agreement and one full year after
the termination of such Seller's Employment Agreement, he/she shall not engage,
either directly or indirectly, as an officer, director or employee with the same
or substantially similar duties as such Seller performed as an employee under
his/her Employment Agreement in any sole proprietorship, corporation,
partnership, limited liability company, joint stock association or similar
entity, in the states in which products for Microsoft Dynamics CRM platform had
been sold during the preceding 365 days in the business of providing customer
relationship management products or services that are then provided by Purchaser
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or are currently planned and budgeted to be offered by Purchaser within the next
12 months thereof, as documented in written strategic plans (the "Business").
(b) If any provision contained in this Section shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section, but this
Section shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. It is the intention of the parties
that if any of the restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted by
applicable law, or in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions and shall be valid and
enforceable under such applicable law. Each Seller acknowledges that the
Purchaser would be irreparably harmed by any breach of this Section and that
there would be no adequate remedy at law or in damages to compensate the
Purchaser for any such breach. Each Seller agrees that the Purchaser shall be
entitled to injunctive relief requiring specific performance by the Sellers of
this Section, and the Sellers consents to the entry thereof.
SECTION 6. COVENANTS OF THE PURCHASER.
The Purchaser covenants and agrees with the Sellers and the Company that,
at all times from and after the Effective Date until the Closing, the Purchaser
will comply with all covenants and provisions of this Section, except to the
extent the Sellers and the Company may otherwise consent in writing.
6.01 Notice and Cure. The Purchaser shall notify the Company in writing of,
and contemporaneously, shall provide true and complete copies of any and all
information or documents relating to, and will use all commercially reasonable
efforts to cure before the Closing, any event, transaction or circumstance
occurring after the Effective Date that causes or shall cause any covenant or
agreement of the Purchaser under this Agreement to be breached or that renders
or shall render untrue any representation or warranty of such party contained in
this Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. The Purchaser shall notify the Company promptly in
writing of, and shall use all commercially reasonable efforts to cure, before
the Closing, any violation or breach of any representation, warranty, covenant
or agreement made by such party in this Agreement, whether occurring or arising
before, on or after the Effective Date. No notice given pursuant to this Section
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein or shall in any way limit the right of the
Company or the Sellers to seek indemnity under this Agreement.
6.02 Fulfilment of Conditions. The Purchaser will execute and deliver at
the Closing each instrument that the Purchaser is required to execute and
deliver as a condition to the Closing, shall take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
all other conditions to the obligations of the Sellers and the Company contained
in this Agreement and shall not take, or fail to take, any action that could
reasonably be expected to result in the non-fulfilment of any such condition.
Without limiting the generality of the foregoing, the Purchaser shall not take
or omit to take any reasonable action, or permit such action or omission if it
reasonably can be expected that as a result of such action or omission, any
representation or warranty made by the Purchaser under this Agreement shall not
be true and correct in all respects at and as of the Closing Date as if made on
that date.
6.03 Cooperation. The Purchaser agrees and undertakes to promptly use its
reasonable efforts to assist the Sellers to effect the transfer of the Equity
Interest to the Purchaser and to execute
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all documents, papers, forms, authorizations, declarations or oaths, obtain the
consents, releases and waivers of third parties and Governmental or Regulatory
Authorities, and take any other steps that may be necessary to do so in order to
consummate the transactions contemplated under this Agreement and each
Transaction Document.
6.04 Payment and Issuance of Total Consideration. The Purchaser covenant
and agrees to promptly cause the issuance of the Stock Consideration and pay all
Cash Consideration, on the dates due to Sellers, in accordance with the terms
and conditions of this Agreement.
SECTION 7. CONDITIONS TO OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser under this Agreement are subject to the
fulfilment, at or before the Closing of each of the following conditions the
satisfaction of which will be determined by the Purchaser acting reasonably (all
or any of which may be waived in whole or in part by the Purchaser in its sole
discretion):
7.01 Representations and Warranties. Each of the representations and
warranties made by the Sellers and/or the Company in this Agreement and the
Transaction Documents and all facts specified in the Disclosure Schedules shall
be true and correct in all respects in which they are given on and as of the
Closing Date.
7.02 Performance. Each Seller and the Company shall have performed and
complied with, each agreement, covenant and obligation required by this
Agreement and the Transaction Documents to be so performed or complied with by
any Seller or the Company at or before the Closing.
7.03 Certificates. On the Closing Date, the Seller shall have delivered to
the Purchaser a certificate from the company secretaries of the Company and a
certificate from at least one officer of the Company prior to Closing
substantially in the form and to the effect of Exhibit 7.03(a) and 7.03(b)
attached hereto.
7.04 Consents and Approvals. All consents, approvals and actions of,
filings with and notices to any third party, Governmental or Regulatory
Authority necessary to permit any Seller and the Company to perform their
respective obligations under this Agreement and each of the Transaction
Documents and to consummate the transactions contemplated hereby and thereby
shall have been duly obtained, made or given, and shall be in full force and
effect as at the Closing Date. Each such consent, approval and actions of,
filings with and notices to any third party, Governmental or Regulatory
Authority are set out in Section 7.04 of the Disclosure Statement. The Purchaser
shall have received duly executed copies of all such consents and releases and
there will not be any consents or releases which have not been received and are
required to be received. No statute, rule or regulation, and no final and
nonappealable order, decree or injunction will have been enacted, entered,
promulgated or enforced by any court or Governmental or Regulatory Authority of
competent jurisdiction which enjoins or prohibits the consummation of the
transactions contemplated by this Agreement.
7.05 Opinion of Counsel. The Purchaser shall have received the opinion of
the Company's and the Sellers' legal counsel on the Closing Date, containing
substantially the opinion to the effect of Exhibit 7.05 attached hereto.
7.06 Key Employees. Each of the Key Employees shall have executed an
Employment Agreement.
7.07 Proceedings. All proceedings to be taken on the part of the Sellers or
the Company in connection with the transactions contemplated by this Agreement,
the Transaction Document and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchaser, and
34
the Purchaser shall have received copies of all such documents and other
evidences as the Purchaser may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
7.08 Legal Action. As of the Closing Date, there will not be any actual
written threats or any action, proceeding or other application pending before
any court or Governmental or Regulatory Authority brought by any Person or
Governmental or Regulatory Authority: (i) challenging or seeking to restrain or
prohibit the consummation of the transactions contemplated by this Agreement, or
seeking to obtain any material damages from any of the Parties or their
Affiliates as a result of such transactions; (ii) seeking to prohibit or impose
any limitations on the Purchaser's ownership or operation of all or any portion
of the Equity Interest or the underlying assets of the Company, or to compel the
Purchaser's to dispose of or hold separate all or any portion of its or the
Equity Interest or the Company's business or assets as a result of the
transactions contemplated by the Agreement; or (iii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation.
7.09 No Material Adverse Change. From the Effective Date to the Closing
Date and as at the Closing Date, there shall not have occurred any Material
Adverse Effect on the Equity Interest, any of the Assets or any operation or
financial performance of the Company.
7.10 Share Transfers/Certificates. The Purchaser shall have received duly
executed transfers of the Equity Interest in its favor, in a registrable form
and in accordance with the Company's Constitution representing the Equity
Interest, together with share certificates for such Equity Interest and all
other consents, approvals and/or documents needed by the Purchaser to register
the transfers and obtain ownership of the Equity Interest as the Purchaser may
require.
7.11 Termination of Rights and Certain Securities. Any registration rights,
rights of refusal, voting rights, rights to any liquidation preference or
redemption rights relating to any security of the Company will be terminated,
waived or satisfied as of the Closing Date.
7.12 Closing Documents. All closing documentation must be received by the
Purchaser, including but not limited to the Company and each Key Employee having
entered into the Employment Agreements.
7.13 Board Approval of the Company. The Board of the Company shall have:
(a) approved the execution of the Transaction Documents and the transactions
contemplated herein and therein; (b) approved the transfer of the Equity
Interest; (c) resolved and directed that subject to the payment of stamp duty,
the transfers of the Equity Interest are, registered; and (d) approved the
appointment of the representatives of the Board selected by the Purchaser and
the resignation of all directors who were on the Board prior to the Closing, but
so that a properly constituted board of directors is in existence at all times.
7.14 Board Appointee. Effective as of the Closing Date, the designees of
the Purchaser shall have been elected to the Board and the current directors of
the Company shall have resigned, but so that a properly constituted board of
directors is in existence at all times.
7.15 Shareholders Approval. On or before the Closing Date, each Seller
shall have approved the execution of this Agreement, each Transactional Document
and the transactions contemplated herein and therein by both the Company and
each such Seller.
7.16 Completion of Due Diligence. The Purchaser shall have completed all
necessary due diligence investigations to its satisfaction.
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7.17 Approval of the Purchaser's Board of Directors or delegated
subcommittee and Approval of each of the Seller's Boards. The board of directors
of the Purchaser or its delegated subcommittee shall have authorized and
approved each of: (i) the terms and conditions of this Agreement and each
Transaction Document; and (ii) the execution and performance of this Agreement
and each Transaction Document by a duly authorized officer or director of the
Purchaser and the transactions contemplated herein and therein; and
7.18 Third Party Consent. Each of the following Persons consenting to the
change of control of the Company as anticipated by this Agreement and agreeing
not to terminate their respective agreements in a form satisfactory to the
Purchaser:
(a) The c360 Offshore Software Solutions Ltd. offshore development
contract;
(b) The building lease agreement with Dunwoody Park Partners, Inc.;
(c) All other third parties to any Material Contracts which require
approval in the event of a change of control.
The Company shall have given the notice of change of control required to be
given pursuant to the software license agreement with ActiveWidgets Ltd.
7.19 Change of Bank Authorities. The delivery to the Purchaser duly
completed bank authorities approved by each of the Company's bankers and the
Board authorising the operation of each of the Company's bank accounts by
nominees of the Purchaser.
7.20 Delivery of Company Seal and Books & Records. The delivery to the
Purchaser of the Company's books and records, the common seal and any other
company seals of the Company.
7.21 Converting to C Corporation. The Company have converted from a
subchapter S corporation to a C corporation.
SECTION 8. CONDITIONS TO OBLIGATIONS OF THE SELLERS AND THE COMPANY.
The obligations of the Sellers and the Company hereunder are subject to the
fulfilment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by the Sellers or the Company
in their sole discretion):
8.01 Representations and Warranties. Each of the representations and
warranties made by the Purchaser in this Agreement and the Transaction Documents
shall be true and correct in all respects in which they are given on and as of
the Closing Date as though such representation or warranty was made on and as of
the Closing Date.
8.02 Performance. The Purchaser shall have performed and complied with each
agreement, covenant and obligation required by this Agreement to be so performed
or complied with by such Purchaser at or before the Closing.
8.03 Consents and Approvals. All consents, approvals and actions of,
filings with and notices to any third party, Governmental or Regulatory
Authority necessary to permit the Purchaser to perform its obligations under
this Agreement and to consummate the transactions contemplated hereby and
thereby shall have been duly obtained, made or given, and shall be in full force
and effect as at the Closing Date.
8.04 Legal Action. As of the Closing Date, there will not be any actual
written threats or
36
any action, proceeding or other application pending before any court or
Governmental or Regulatory Authority brought by any Person or Governmental or
Regulatory Authority: (i) challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or seeking to
obtain any material damages from any of the Parties or their Affiliates as a
result of such transactions; (ii) seeking to prohibit or impose any limitations
on the Seller's ownership of the CDC Corporation Stock; or (iii) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation.
8.05 Closing Documents. All closing documentation must be received by the
Company and Sellers, including but not limited to the Purchaser having entered
into the Employment Agreements.
8.06 Board Approval of the Purchaser. The Board of the Purchaser shall have
approved the execution of the Transaction Documents and the transactions
contemplated herein and therein.
8.07 Approval of the Company's Board of Directors and Shareholders. The
board of directors and Shareholders of the Company shall have authorized and
approved each of: (i) the terms and conditions of this Agreement and each
Transaction Document; and (ii) the execution and performance of this Agreement
and each Transaction Document by a duly authorized officer or director of the
Company and the transactions contemplated herein and therein.
SECTION 9 REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Unless otherwise expressly provided for in this Agreement:
(a) All representations and warranties contained in this Agreement, any
schedule, exhibit, the Disclosure Schedule or certificate or document delivered
pursuant hereto in connection with the transactions contemplated by this
Agreement or the Transaction Documents (the "Warranties") shall survive through
to the date prescribed by Section 10.03 of this Agreement.
(b) The covenants of the Parties shall survive the Closing, except
otherwise set forth in Sections 5 or 6.
(c) Each of the Warranties are true and correct in all respects on and as
of the Effective Date, the Closing Date and if specified on any other date, on
such date, as though such representation or warranty was made on each of those
dates.
(d) None of the Warranties are extinguished or affected by any
investigation made by or on behalf of a Party into the affairs of another Party.
Each Party acknowledges that it has made and given the Warranties with the
intention of inducing the other Parties to enter into this Agreement and the
Purchaser has entered into this Agreement in full reliance on the Warranties
given hereunder.
SECTION 10. INDEMNIFICATION
10.01 Indemnification. (a) By Seller(s). Each Seller shall individually,
but not jointly and severally, indemnify the Company, the Purchaser and the
Purchaser's and the Company's officers, directors, shareholders and Affiliates
(each an "Indemnified Party" and collectively "Indemnified Parties") in respect
of, and hold each of them harmless from and against, any and all Loss or
liability suffered, incurred or sustained by any of them, resulting from,
arising out of or associated with:
(i) any misrepresentation, inaccuracy in or breach of any
representation or warranty or the nonfulfillment of, or failure to perform,
any covenant or agreement on the part
37
of any Seller or the Company contained in this Agreement or the Transaction
Documents;
(ii) any current, pending or threatened Proceeding, Employee
Litigation or dispute, or any future Proceeding, Employee Litigation or
dispute that relates to, or is associated with, any act or omission of the
Company, any Seller or any individual for or on behalf of the Company or
any Seller which took place prior to the Closing including, without
limitation, any current, pending, threatened or future Proceedings from
Xxxxx Xxxxxx, Xxxxx Xxxxxx or any other former shareholder of the Company.
(b) By Purchaser. Purchaser shall indemnify the Company, the Sellers and
the Sellers' and the Company's officers, directors, shareholders and Affiliates
(each an "Indemnified Party" and collectively "Indemnified Parties") in respect
of, and hold each of them harmless from and against, any and all Loss or
liability suffered, incurred or sustained by any of them, resulting from,
arising out of or associated with:
(i) any misrepresentation, inaccuracy in or breach of any
representation or warranty or the nonfulfillment of, or failure to perform,
any covenant or agreement on the part of Purchaser contained in this
Agreement or the Transaction Documents;
(ii) any future Proceeding or dispute that relates to, or is
associated with, any act or omission of the Purchaser or any individual for
or on behalf of the Purchaser which took place after the Closing.
(c) If any Indemnified Party is entitled to indemnification under this
Section 10.01 for some or a portion of the Loss or liability suffered, incurred
or sustained by it but not for the total amount, each Indemnifying Party shall,
individually but not jointly and severally, indemnify such Indemnified Party for
the portion of such Loss or liability as to which the Indemnified Party is so
entitled.
(d) The representations and warranties made by Company and Sellers
(including the representations and warranties set forth in Sections 2 and 3 and
the representations and warranties set forth in the Sellers' Closing
Certificate) shall survive the Closing and shall expire on the first anniversary
of the Closing Date; provided, however, that if, at any time prior to the first
anniversary of the Closing Date, any Indemnified Party (acting in good faith)
delivers to any of the Sellers a written notice alleging the existence of an
inaccuracy in or a breach of any of the representations and warranties made by
the Signing Shareholder (and setting forth in reasonable detail the basis for
such Indemnified Party's belief that such an inaccuracy or breach may exist) and
asserting a claim for recovery under Section 10.01 and in accordance with the
procedures set forth in Section 10.02 based on such alleged inaccuracy or
breach, then the claim asserted in such notice shall survive the first
anniversary of the Closing until such time as such claim is fully and finally
resolved.
(c) Without in any way limiting any of its other rights or remedies under
Section 10.01, Section 10.02 or at law, if the Purchaser believes it is entitled
to indemnification under this Section 10.01, it may, in its sole and absolute
discretion, withhold any agreed to or disputed Loss or liability suffered,
incurred or sustained by it from the Hold Back Amount ("Claimed Amount") until
any of the following has taken place and it has followed the below procedures:
(i) no response is received from the Indemnifying Parties within 10
days from delivery of the Claim Notice;
(ii) a response is received that the Indemnifying Parties ("Response
Notice") that it agrees to pay a portion of the Claim Amount (the "Agreed
Amount") and desires to dispute the remainder of the Claim Amount; or
38
(iii) indicate that no part of the Claimed Amount may be deducted from
the Holdback Amount. Any part of the Claimed Amount that is not agreed to
be deducted from the Holdback Amount pursuant to the Response Notice shall
be the "Contested Amount."
If the Sellers deliver a Response Notice agreeing that the full
Claimed Amount may be deducted from the Holdback Amount, the Claimed Amount
shall be deducted from the Holdback Amount. If the Sellers deliver a Response
Notice agreeing that less than the full Claimed Amount may be deducted from the
Holdback Amount, the Agreed Amount shall be deducted from the Holdback Amount.
Such payment shall not be deemed to be made in full satisfaction of the claim
described in such Claim Notice, but shall count toward the satisfaction of the
claim described in such Claim Notice. If the Sellers deliver a Response Notice
indicating that there is a Contested Amount, the Sellers and the Indemnified
Party shall attempt in good faith to resolve the dispute related to the
Contested Amount. If the Indemnified Party and the Sellers resolve such dispute,
such resolution shall be binding on the Sellers and such Indemnified Party and a
settlement agreement shall be signed by such Indemnified Party and the Sellers
setting forth the resolved amount. Such resolved amount shall be deducted from
the Holdback Amount. If the Sellers and the Indemnified Party are unable to
resolve the dispute relating to any Contested Amount within 30 days after the
delivery of the Claim Notice ("Initial Resolution Period"), then the claim
described in the Claim Notice shall be settled by binding arbitration in the
State of New York in accordance with the AAA Rules. Arbitration will be
conducted by one arbitrator, mutually selected by Indemnified Party and the
Sellers. If Indemnified Party and the Sellers fail to mutually select an
arbitrator within three business days following the expiration of the Initial
Resolution Period, then arbitration will be conducted by three arbitrators: one
selected by Indemnified Party; one selected by the Sellers; and the third
selected by the first two arbitrators. If Indemnified Party or the Sellers fail
to select an arbitrator within 10 days following the expiration of the Initial
Resolution Period, then the other shall be entitled to select the second
arbitrator. Indemnified Party and the Sellers agree to use all reasonable
efforts to cause the arbitration hearing to be conducted within 45 days after
the appointment of the mutually-selected arbitrator or the last of the three
arbitrators, as the case may be, and to use all reasonable efforts to cause the
decision of the arbitrator(s) to be furnished within 60 days after the
appointment of the mutually-selected arbitrator or the last of the three
arbitrators, as the case may be. The parties further agree that discovery shall
be completed at least 10 days prior to the date of the arbitration hearing. The
decision of the arbitrator(s) shall relate solely: (i) to whether the
Indemnified Party is entitled to recover the Contested Amount (or a portion
thereof), and the portion of such Contested Amount the Indemnified Party is
entitled to recover; and (ii) to the determination of the non-prevailing party
as provided below. The final decision of the arbitrator(s) shall be furnished to
the Sellers and the Indemnified Party in writing and shall constitute a
conclusive determination of the issue(s) in question, binding upon the Sellers
and the Indemnified Party and shall not be contested by any of them. The
prevailing party shall have the right to require the arbitrator(s) to requite
the non-prevailing party in any arbitration to pay the reasonable expenses
(including attorneys' fees) of the prevailing party and the fees and expenses
associated with the arbitration (including the arbitrators' fees and expenses).
For purposes of this Section, the non-prevailing party shall be determined
solely by the arbitrator(s). Any amounts payable by the Sellers shall be
deducted from the Holdback Amount pursuant to the written decision of the
arbitrator(s).
10.02 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an Indemnified
Party might seek indemnity under Section 10.01 arises by way of discovery by the
Indemnified Party or by way of a third-party asserting or threatening a claim
against or seeking to collect a related obligation against such Indemnified
Party ("Claim"), the Indemnified Party shall deliver a notice ("Claim Notice")
to the Indemnifying Party. Failure by an Indemnified Party to provide a Claim
Notice with reasonable promptness of the Indemnified Party receiving notice of a
Claim will not prevent the Indemnified Party
39
from so making a claim and being indemnified under this Section 10 provided: (i)
that the Indemnifying Party's ability to defend has not been irreparably and
substantially prejudiced by such failure of the Indemnified Party; and (ii) that
the delay does not result in the delivery of notice after the relevant
indemnification period has expired. Upon receipt of a Claim Notice, the
Indemnifying Party will notify the Indemnified Party promptly (and in any event
within 10 days), whether in the case of a Claim under Section 10.01(a), the
Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Claim (or in the case where no third party is
involved, whether the Indemnifying Party desires at its sole cost and expense,
to make the Indemnified Party whole). In the case of a Claim under Section
10.01(b), each Indemnifying Party hereby agrees, at its sole cost and expense,
to vigorously defend either the Indemnified Party or the Company (as the case
may be) against any Claim and any current, pending or threatened Proceeding,
Employee Litigation or dispute (or in the case where no third party is involved,
the Indemnifying Party will, at its sole cost and expense, make the Indemnified
Party whole).
(b) Where an Indemnifying Party defends a Claim, the Indemnifying Party
must choose legal representatives reasonably satisfactory to the Indemnified
Party, at the sole cost and expense of the Indemnifying Party, and must defend
such Claim by all appropriate proceedings (including appeals), which proceedings
must be vigorously and diligently prosecuted or defended (as the case may be) by
the Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any relief
other than the payment of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party will not be indemnified in
full pursuant to Section 10.01). The Indemnifying Party will have full control
of such defense and proceedings, including any compromise or settlement thereof;
provided, however, that the Indemnified Party may file any motion, answer or
other pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests, at the sole
cost and expense of the Indemnifying Party. The Indemnified Party may
participate in, but not control, any defense or settlement of any Claim
controlled by the Indemnifying Party pursuant to this Section, at the
Indemnifying Party's sole cost and expense. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the defense or settlement of any
Claim at any time if it irrevocably waives its right to indemnity under Section
10.01 with respect to such Claim.
(c) If the Indemnifying Party desires, or is required, to make the
Indemnified Party whole, then the Indemnifying Party shall, within fourteen (14)
days of receiving the Claim Notice, make an offer to settle the Claim to the
Indemnified Party. The Indemnifying Party shall be liable for the full amount of
any Claim plus interest at a commercial rate.
10.03 Threshold and Limitations.
(a) The Indemnifying Party shall not be required to make any
indemnification payment pursuant to this Section 10 until such time as the total
amount of all Damages that have been directly or indirectly suffered or incurred
by any one or more of the Indemnified Parties, or to which any one or more of
the Indemnified Parties has or have otherwise become subject, exceeds $10,000 in
the aggregate. Subject to the limitations in Section 10.03(b), if the total
amount of such Damages exceeds $10,000, then the Indemnified Parties shall be
entitled to be indemnified against and compensated and reimbursed for the full
amount of such Damages (and not merely the portion of such Damages exceeding
$10,000).
(b) The total liability of the Indemnifying Party pursuant to Section 10
shall be limited to the Hold Back Amount. Notwithstanding the foregoing, there
will be no limitation on the obligations of the Indemnifying Party for
indemnifiable amounts arising out of (i) criminal activity or fraud or willful
misstatements or omissions by the Selling Shareholders in connection with this
Agreement or
40
(ii) any inaccuracy in or breach of the representations and warranties set forth
in Sections 3.03, 3.09, 3.15, 3.28 and 4.01.
SECTION 11. TERMINATION
11.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) at any time after April 18, 2006 in the event that Closing has not
taken place by that date, by either the Purchaser or any Seller upon written
notice to the other; or
(b) at any time before the Closing, by the Sellers or the Purchaser, in the
event (i) of a material breach hereof by any non-terminating party if such
non-terminating party fails to cure such breach within seven (7) Business Days
following notification thereof by the terminating party or (ii) upon notice to
the non-terminating party by the terminating party that the satisfaction of any
material condition to the terminating party's obligations under this Agreement
becomes impossible or impracticable with the use of commercially reasonable
efforts if the failure of such condition to be satisfied is not caused by a
material breach hereof by the terminating party (but not otherwise).
11.02 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 11.01, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of any Seller or the
Purchaser (or any of their respective officers, directors, employees, agents or
other representatives or Affiliates), except that the provisions with respect to
the indemnifications in Section 10, expenses in Section 12.02, and
confidentiality in Section 12.12 shall continue to apply following any such
termination.
SECTION 12. MISCELLANEOUS
12.01 Notices. All notices, requests, demands, consents, instructions or
other communications required or permitted hereunder shall be in writing and by
fed ex, courier or fax to each party as follows:
If to the Sellers, or to the Company, to:
c360 Solutions Incorporated
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxx
Fax: 000.000.0000
With a copy to:
The Business Law Advisors
0000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xx. Xxxx Xxxxxxx
If to the Purchaser, to:
Xxxx Systems, Inc.
Xxx Xxxxxxxxx Xxxxxxx
00
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx
Fax: [INSERT]
All such notices, requests, demands, consents, instructions or other
communications shall be effective: (a) when sent by Federal Express or other
overnight service of recognized standing, on the second business day following
the deposit with such service; and (b) when faxed, upon confirmation of receipt
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice is to be delivered pursuant to
this Section. Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
12.02 Expenses. Each of Sellers (and not the Company) shall pay for each of
their costs and expenses relating to the negotiation, execution and closing of
this Agreement and the transactions contemplated hereby;. Notwithstanding the
prior sentence, in the event this Agreement shall terminate pursuant to the
provisions of Section 11.01 hereto, the Purchaser shall reimburse the Company up
to an aggregate of $10,000 in connection which third party legal fees incurred
relating to this Agreement, upon the presentation of reasonable and proper
receipts.
12.03 Public Announcements. Subject to the subsequent sentences, at all
times at or before the Closing, each Seller, the Company and the Purchaser shall
not issue or make any reports, statements or releases to the public or generally
to the employees, customers, suppliers or other Persons to whom the Company
provides services or with whom the Company otherwise has significant business
relationships with respect to this Agreement or the transactions contemplated
hereby without the consent of the other parties, which consent shall not be
unreasonably withheld. If any party is unable to obtain the approval of its
public report, statement or release from the other party and such report,
statement or release is, in the opinion of legal counsel to such party, required
by Law or by any Court of competent jurisdiction or governmental or regulatory
body in order to discharge such party's disclosure obligations, then such party
may make or issue the legally required report, statement or release and promptly
furnish the other party with a copy thereof.
12.04 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion.
12.05 Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.
12.06 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Section 10.
12.07 Assignment; Binding Effect. Subject always to the subsequent
sentence, neither this Agreement nor any right, interest or obligation hereunder
may be assigned by any party hereto without the prior written consent of the
other party hereto and any attempt to do so will be void, except for assignments
and transfers by operation of Law. At any time after the execution of this
Agreement, the Purchaser may assign any or all of its rights, interests and
obligations hereunder (including without limitation its rights under Section 10)
provided that, each such assignee agrees in writing to be bound by
42
all of the terms, conditions and provisions contained herein. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.
12.08 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby: (a) such provision will be fully
severable; (b) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom; and (c) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
12.09 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflicts of laws principles thereof.
12.10 Jurisdiction. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought against any
of the parties in the courts of the State of New York and each of the parties
hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts) in any such suit, action or proceeding and waives
any objection to venue laid therein.
12.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
12.12 Confidentiality. Each party hereto will hold, and will use its
reasonable endeavors to cause its Affiliates to hold, in strict confidence from
any Person (other than any such Affiliate, unless: (i) compelled to disclose by
judicial or administrative process (including without limitation in connection
with obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law; or (ii) disclosed in any action, suit, proceeding, inquiry,
investigation either before or brought by Governmental or Regulatory Authority
or otherwise, brought by a party hereto in pursuit of its rights or in the
exercise of its remedies hereunder), all documents and information concerning
the other party or any of its Affiliates furnished to it by the other party in
connection with this Agreement or the transactions contemplated hereby,
including, without limitation, the terms and conditions of this Agreement except
to the extent that such documents or information can be shown to have been: (a)
previously known by the party receiving such documents or information; (b) in
the public domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party; or (c) later
acquired by the receiving party from another source if the receiving party is
not aware that such source is under an obligation to another party hereto to
keep such documents and information confidential. In the event the transactions
contemplated hereby are not consummated, upon the request of the other party,
each party hereto shall, and shall cause its Affiliates to, promptly redeliver
or cause to be redelivered all copies of documents and information furnished by
the other party in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related thereto or based
thereon prepared by the party furnished such documents and information.
12.13 Exercise of Rights. A party may exercise a right, power or remedy at
its discretion, and separately or concurrently with another right, power or
remedy. A single or partial exercise of a right, power or remedy by a party does
not prevent a further exercise of that or of any other right, power or remedy.
Failure by a party to exercise or delay in exercising a right, power or remedy
does not prevent
43
its exercise. The rights, powers and remedies provided in this Agreement are
cumulative with and not exclusive of the rights, powers or remedies provided by
law independently of this Agreement.
12.14 Further Assurances. Each party agrees, at its own expense, on the
request of any other party, to do everything reasonably necessary to give effect
to this Agreement and the transactions contemplated by it (including, without
limitation, the execution of documents) and to use all reasonable endeavours to
cause relevant third parties to do likewise.
12.15 Rule of Construction. As each of the parties has reviewed this
Agreement and has had the opportunity to make revisions, the parties agree that
any rule of construction to the effect that any ambiguities are to be construed
against the drafting party shall not apply in the interpretation of this
Agreement or any of the Transaction Documents.
44
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party hereto, and shall be effective as of
the date first above written
XXXX SYSTEMS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
C360 SOLUTIONS INCORPORATED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
XXXX XXXXXXX
----------------------------------------
XXXXXXX XXXXXXXXX
----------------------------------------
XXXXXXX X. XXXXXXXX
----------------------------------------
XXXXX XXXXXXXXX
----------------------------------------
XXXX XXXXXXX
----------------------------------------
XXXXXX XXXXX
----------------------------------------
45
SCHEDULES
[INSERT]
46
EXHIBIT 2.02(G)(A)
BANKING DETAILS FOR EACH OF THE SELLERS
(1) Xxxx Xxxxxxx
Wire Transfer Instructions:
Xxxx Xxxxxxx
Bank Name: Bank of America
Bank Account: 007 5727 6525
Account Routing #: 000000000
Wire Routing #: 000000000
Bank Address: X.X. Xxx 00000, Xxxxx, XX 00000-0000
ABA# (SWIFT#): BOFAUS3N
Name in which CDC Corporation Stock is to be registered and address to
which the stock certificate representing such restricted shares is to be
delivered:
[Xxxx Xxxxxxx
c/o c360 Solutions Incorporated
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000] [CONFIRM]
(2) Xxxxxxx Xxxxxxxxx
Wire Transfer Instructions:
[INSERT WIRE TRANSFER INSTRUCTIONS]
Name in which CDC Corporation Stock is to be registered and address to
which the stock certificate representing such restricted shares is to be
delivered:
[Xxxxxxx Xxxxxxxxx
c/o c360 Solutions Incorporated
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000] [CONFIRM]
(3) Xxxxxxx X. Xxxxxxxx
Wire Transfer Instructions:
Xxxxxxx Xxxxxxxx
Bank Name: Wachovia Bank
Bank Account: 4802951285
Account Routing #: 000000000
Wire Routing #: 000000000
Bank Address: 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx, XX 00000
ABA# (SWIFT#): 000000000
Name in which CDC Corporation Stock is to be registered and address to
which the stock certificate representing such restricted shares is to be
delivered:
47
[Xxxxxxx X. Xxxxxxxx
c/o c360 Solutions Incorporated
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000] [CONFIRM]
(4) Xxxxx Xxxxxxxxx
Wire Transfer Instructions:
Xxxxx Xxxxxxxxx
Bank Name: Wachovia
Bank Account: 1000285879929
Account Routing #: 000000000
Wire Routing #: 000000000
Bank Address: 000 Xxxxxxxx Xxxxxx XX, Xxxxxxx, XX 00000
ABA# (SWIFT#): 000000000
Name in which CDC Corporation Stock is to be registered and address to
which the stock certificate representing such restricted shares is to be
delivered:
[Xxxxx Xxxxxxxxx
c/o c360 Solutions Incorporated
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000] [CONFIRM]
(5) Xxxx Xxxxxxx
Wire Transfer Instructions:
[INSERT WIRE TRANSFER INSTRUCTIONS]
Name in which CDC Corporation Stock is to be registered and address to
which the stock certificate representing such restricted shares is to be
delivered:
[Xxxx Xxxxxxx
c/o c360 Solutions Incorporated
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000] [CONFIRM]
(6) Xxxxxx Xxxxx
Wire Transfer Instructions:
Xxxxxx Xxxxx
Bank Name: Bank of America
48
Bank Account: 0032 7314 4727
Account Routing #: 061 000 052
Wire Routing #: 026 009 593
Bank Address: 0000 Xxxx Xxxxx Xx, Xxxxxxx, XX 00000
ABA# (SWIFT#): BOFAUS3N
Name in which CDC Corporation Stock is to be registered and address to
which the stock certificate representing such restricted shares is to be
delivered:
[Xxxxxx Xxxxx
c/o c360 Solutions Incorporated
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000] [CONFIRM]
49
EXHIBIT 2.02(G)(B)
BANKING DETAILS CONFIRMATION LETTER
Xxxx Systems, Inc.
Xxx Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Ladies and Gentlemen:
Reference is hereby made to Section 2.02(g) of the Stock Purchase Agreement
dated as of April ___, 2006 among Xxxx System, Inc., c360 Solutions
Incorporated, and each of the Sellers named therein (the "Stock Purchase
Agreement"). Capitalized terms used herein without definition shall have the
meaning given to such term in the Stock Purchase Agreement.
I, [INSERT NAME], am one of the Sellers.
[In connection with the [Second Cash Installment/Third Cash Installment] [INSERT
AS APPROPRIATE], please deliver the proceeds in connection therewith in
accordance with the following instructions:
[INSERT WIRE TRANSFER INSTRUCTIONS]]
[In connection with the [Second Stock Installment/Third Stock Installment,
Fourth Stock Installment/Fifth Stock Installment/Sixth Stock Installment/Seventh
Stock Installment/Eighth Stock Installment/Ninth Stock Installment/Tenth Stock
Installment/Eleventh Stock Installment/Twelfth Stock Installment] [INSERT AS
APPRORIATE], please have the CDC Corporation Stock representing the Stock
Consideration in connection with such installment registered in the following
name, and have the stock certificate representing such Stock Consideration
delivered to the following address:
[INSERT NAME AND ADDRESS]]
Please feel free to contact the Seller at [INSERT SELLER PHONE NUMBER] with any
questions.
Sincerely,
----------------------------------------
[INSERT NAME OF SELLER]
50
EXHIBIT 7.03(A)
COMPANY SECRETARY'S CERTIFICATE
C360 INCORPORATED
I, __________________________________, the company secretary of c360
Incorporated, a corporation organized and existing under the laws of Georgia
(the "Company") and having a registered address of 0 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000, pursuant to Section 7.03(a) of the Stock Purchase
Agreement dated as of April ___, 2006 (the "Stock Purchase Agreement") by and
among Xxxx Systems, Inc. (the "Purchaser"), the Company and the Sellers named
therein, do hereby certify on behalf of the Company as follows:
(1) Attached hereto as Exhibit A is a true, complete and correct copy of the
Certificate of Incorporation of the Company and all amendments thereto (as so
amended, the "Certificate of Incorporation"), no amendment to the Certificate of
Incorporation has been authorized or become effective since the date of the last
such amendment, no amendment of other document relating to or affecting the
Certificate of Incorporation has been filed with the Secretary of State of the
State of Georgia since such date and no action has been taken by the Company,
its equity holders, directors or officers in contemplation of the filing of any
such amendment or other document or in contemplation of the liquidation or
dissolution of the Company.
(2) Attached hereto as Exhibit B is a true, complete and correct copy of the
Bylaws of the Company and all amendments thereto (as so amended, the "Bylaws"),
no amendment to the Bylaws has been authorized or become effective since the
date of the last such amendment, and no action has been taken by the Company,
its equity holders, directors or officers in contemplation of the filing of
amending such Bylaws.
(3) Attached hereto as Exhibit C is a true, complete and correct copy of the
resolutions adopted by the Board of Directors of the Company with respect to the
Stock Purchase Agreement and the transactions contemplated thereby, which
resolutions were duly and validly adopted by a meeting of the Board of Directors
of the Company on [_______________]. All such resolutions are in full force and
effect on the date hereof in the form in which adopted and no other resolutions
have been adopted by the Board of Directors of the Company or any committee
thereof relating to the Stock Purchase Agreement and the transactions
contemplated thereby.
(4) Each of the following named individuals is a duly elected or appointed,
qualified and acting officer of the Company who holds, and at all times since
date of execution of Stock Purchase Agreement has held, the offices set opposite
such individual's name, and the signature written opposite the name and title of
such officer is such officer's genuine signature:
Xxxx Xxxxxxx Chairman and President --------------------------------
Xxxxxxx X. Xxxxxxxx Chief Executive Officer --------------------------------
Capitalized terms used herein without definition shall have the meaning
given to such term in the Stock Purchase Agreement.
51
IN WITNESS WHEREOF, the Secretary of the Company has caused this Certificate to
be executed on and as of April ___, 2006.
----------------------------------------
Name:
----------------------------------
Title: Secretary
I, ____________________________, Chief Executive Officer of the Company, DO
HEREBY CERTIFY on behalf of the Company that ________________________________ is
the duly elected or appointed, qualified and acting Secretary of the Company,
and the signature set forth above is the genuine signature of such Secretary.
----------------------------------------
Name:
----------------------------------
Title: Chief Executive Officer
52
EXHIBIT 7.03(B)
OFFICER'S CERTIFICATE
C360 INCORPORATED
I, __________________________________, the chief executive officer of c360
Incorporated, a corporation organized and existing under the laws of Georgia
(the "Company"), pursuant to Section 7.03 of the Stock Purchase Agreement dated
as of April ___, 2006 (the "Stock Purchase Agreement") by and among Xxxx
Systems, Inc., the Company and the Sellers named therein, do hereby certify on
behalf of the Company as follows:
(1) Each of the representations and warranties made by the Company in the Stock
Purchase Agreement is true and correct in all material respects on and as of the
Closing Date
(2) Each of the agreements, covenants and obligations required by the Stock
Purchase Agreement to be performed or complied with by the Company at or before
the Closing has been duly performed or complied with in all material respects.
(3) From the Effective Date to the Closing Date and as at the Closing Date,
there has not occurred any Material Adverse Effect on the Equity Interest, any f
the Assets or any operation or financial performance of the Company.
Capitalized terms used herein without definition shall have the meaning
given to such term in the Stock Purchase Agreement.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
on behalf by the undersigned on and as of April ___, 2006.
C360 INCORPORATED
By:
------------------------------------
Name:
----------------------------------
Title: Chief Executive Officer
53
EXHIBIT 7.05
FORM OF OPINION OF COMPANY'S AND SELLER'S COUNSEL
Opinion to cover the following points:
(1) The Company is duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation.
(2) The Company has full power and authority under its Certificate of
Incorporation and Bylaws to enter into, execute the Agreement.
(3) The Stock Purchase Agreement has been duly authorized and when executed
will constitute a legal, valid and binding agreement, enforceable in
accordance with its terms.
(4) All of the issued shares have been duly authorized and validly issued to
the Sellers and are fully paid and non-assessable, and were not issued in
violation of or subject to any preemptive rights, put or call rights or
obligations, rights of first refusal anti-dilution rights or liquidation
rights or other rights to subscribe for or purchase securities of the
Company.
(5) The execution, delivery and performance of the Stock Purchase Agreement
does not conflict with or result in a breach of any of the terms or
provisions of the Certificate of Incorporation or Bylaws, or any law,
public rule or regulation applicable to the Company in Georgia.
(6) Such law firm has not been engaged to represent the Company in any action,
suit, claim or proceeding against or brought by the Company or any Seller
54
