EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
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by and among
SHL Systemhouse Co.,
MCI Systemhouse Corp.,
SHL Computer Innovations Inc.,
SHL Technology Solutions Limited
and
General Physics Corporation
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June 3, 1998
TABLE OF CONTENTS
ARTICLE 1 -- DEFINITIONS 1
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1.1 Definitions 1
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1.2 Construction of Certain Terms and Phrases 10
1.3 Currency 10
1.4 Time of Essence 10
1.5 Schedules 10
ARTICLE 2 -- SALE OF ASSETS AND ASSUMPTION OF LIABILITIES; CLOSING 11
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2.1 Purchased Assets 11
2.2 Excluded Assets 15
2.3 Assumption of Liabilities 15
2.4 Excluded Liabilities 17
2.5 Purchase Price 17
2.6 Payment of Purchase Price 17
2.7 Closing and Closing Date 18
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES OF SELLERS 18
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3.1 Purchased Assets 18
3.2 Purchased Assets Used in Business 19
3.3 Corporate Existence of Sellers19
3.4 Authority 19
3.5 No Conflicts 19
3.6 Sellers' Governmental Approvals and Filings 20
3.7 Litigation; Compliance with Laws 20
3.8 Sellers Agreements 21
3.9 Employees 22
3.10 No Other Agreements to Purchase 23
3.11 Taxes 23
3.12 Financial Statements23
3.13 Brokers 24
3.14 Residency 24
3.15 GST Registration 24
3.16 QST Registration 24
3.17 Absence of Certain Changes 24
3.18 Insurance. 25
3.19 Intellectual Property. 26
3.20 Environmental Matters. 26
3.21 Benefit Plans 26
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF BUYER 27
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4.1 Corporate Existence 27
4.2 Authority 27
4.3 No Conflicts 27
4.4 Buyer's Governmental Approvals and Filings 28
4.5 Litigation; Compliance with Laws 28
4.6 Brokers 28
ARTICLE 5 -- COVENANTS OF THE PARTIES 29
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5.1 Conduct of Business 29
5.2 Investigation by Buyer 30
5.3 Confidentiality 30
5.4 Consents and Approvals 31
5.5 Employees; Employee Benefits 31
5.6 Buyer's or Sellers' Knowledge of Breach 35
5.7 Reasonable Best Efforts, etc. 35
5.8 Bulk Sales Act Indemnity 35
5.9 Access to Books and Records 35
5.10 Use of Sellers' Names 35
5.11 Limitations 36
5.12 Cooperation With Respect to Financing 37
5.13 No Solicitation of Offers 37
5.14 Repayments and Apportionments. 37
5.15 Side Letters 38
5.16 Intellectual Property License38
5.17 Courseware and Other Materials 38
5.18 Buyer's Guarantee of Subsidiary Actions 38
5.19 Tax Registration 39
5.20 Symposium Licenses 39
ARTICLE 6 -- CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS 39
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6.1 Representations and Warranties39
6.2 Performance 40
6.3 Approvals and Filings40
6.4 Orders and Laws 40
6.5 Deliveries by Sellers40
6.6 Corporate Authorization 41
6.7 No Material Adverse Effect 41
ARTICLE 7 -- CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS 41
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7.1 Representations and Warranties41
7.2 Performance 41
7.3 Approvals and Filings41
7.4 Orders and Laws 42
7.5 Deliveries by Buyer 42
7.6 Corporate Authorization 42
ARTICLE 8 -- TAX MATTERS 43
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8.1 Elections and Notification-Canada 43
8.2 Elections and Notifications - U.K. 43
8.3 Allocation of Purchase Price 44
8.4 Distribution of Purchase Price44
8.5 Transfer Taxes 44
8.6 Property Taxes 44
8.7 Compliance with U.K. Restrictive Trade Practices
Act 1976. 45
ARTICLE 9 -- SURVIVAL AND INDEMNIFICATION 45
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9.1 Survival of Representations and Warranties. 45
9.2 Indemnification 45
9.3 Method of Asserting Claims. 47
9.4 Tax Indemnity 50
ARTICLE 10 -- TERMINATION 51
10.1 Termination 51
10.2 Procedure Upon Termination 51
ARTICLE 11 -- MISCELLANEOUS PROVISIONS 52
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11.1 Amendment or Supplement 52
11.2 Non-Compete and Nonsolicitation 52
11.3 Waiver of Compliance53
11.4 Notices 53
11.5 Binding Nature; Assignment 54
11.6 Entire Agreement 55
11.7 Expenses 55
11.8 No Third Party Beneficiary 55
11.9 Further Assurances 55
11.10 Press Releases and Announcements 55
11.11 Governing Law 56
11.12 Jurisdiction 56
11.13 Severability 56
11.14 Counterparts 56
11.15 Headings 56
SCHEDULES
Schedule 2.1(A)(1) - Real Property
Schedule 2.1(A)(2) - Personal Property - Owned
Schedule 2.1(A)(3) - Personal Property - Leased
Schedule 2.1(A)(4) - Business Contracts
Schedule 2.1(A)(6) - Business Books and Records
Schedule 2.1(A)(7) - Intellectual Property Rights
Schedule 2.1(A)(8) - Prepaid Expenses
Schedule 2.1(A)(9) - Numbers
Schedule 2.1(A)(11) - Other Items
Schedule 3.1 - Title and Liens
Schedule 3.2 - Items Not Included as Purchased Assets
Schedule 3.6 - Seller's Governmental Approvals and Filings
Schedule 3.7 - Actions or Proceedings
Schedule 3.8 - Certain Agreements
Schedule 3.9(A) - North American Employees
Schedule 3.9(B) - U.K. Employees
Schedule 3.17 - Certain Changes
Schedule 5.2 - Employee Contacts
Schedule 5.5 - Employee Benefits
Schedule 5.14 - Apportionment
Schedule 8.3 - Allocation of Purchase Price
Schedule 8.4 - Distribution of Purchase Price
ATTACHMENTS
Attachment 1 - U.K. Properties
EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B - Preferred Provider Agreement
Exhibit C - Transition Services Agreement
Exhibit D - Schedule of Revenue and Expenses
Exhibit E - Schedule of Revenue
Exhibit F - Property Letter Agreement
Exhibit G - U.K. Letter Agreement
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 3rd day of June, 1998, among SHL Systemhouse Co., a Nova Scotia
corporation, MCI Systemhouse Corp., a Delaware corporation, SHL Computer
Innovations Inc., a New Brunswick corporation, SHL Technology Solutions Limited,
a United Kingdom corporation (collectively, the "Sellers"), and General Physics
Corporation, a Delaware corporation (the "Buyer").
W I T N E S S E T H
WHEREAS, Sellers, through their Learning Technologies division, are
engaged in the business in Canada, the United States and the United Kingdom of
providing desktop computer and information technology training and services,
developing courseware for such training, providing facilities for such training
and developing customized training solutions (the "Business"); and
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, Sellers have agreed to sell and assign to Buyer, and Buyer has agreed
to purchase and assume from Sellers (directly or through one or more
subsidiaries), the assets and liabilities used or held for use in the Business
as a going concern, as set forth in this Agreement, on and subject to the terms
and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each party, the
parties hereto agree as follows:
I. ARTICLE -- DEFINITIONS
A. Definitions. The following terms when used in this Agreement have the
meanings set forth below:
1."Acknowledgment" has the meaning ascribed to it in Section 9.3(A)(1).
1."Acquisition Proposal" has the meaning ascribed to it in Section 5.13.
1. "Actions or Proceedings" means any action, suit, formal
charge, proceeding, arbitration or Governmental or Regulatory Authority
investigation.
1. "Affiliate" means, with respect to any Person, any other
Person which controls, is controlled by, or is under common control
with the subject entity; a Person which controls an Affiliate under the
foregoing shall also be deemed to be an Affiliate of such entity. For
purposes hereof, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of any such entity whether through the
ownership of voting securities, by contract, or otherwise.
1. "Agreement" means this Asset Purchase Agreement and the
Attachments, Exhibits and Schedules hereto as the same may be amended
or supplemented from time to time by the written agreement of the
parties.
1. "Assignment and Assumption Agreements" has the meaning
ascribed to it in Section 2.3(B).
1. "Assumed Liabilities" has the meaning ascribed to it in
Section 2.3(A).
1. "Benefit Plan" means any Plan, existing at the Closing Date
or prior thereto, established or to which contributions have at any
time been made by any of the Sellers or their Affiliates, or any
predecessor of any of the foregoing, under which any Employee or former
employee of the Business or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
1. "Bulk Sales Laws" means the Bulk Sales Act (Ontario) and
such other comparable legislation in the other provinces of Canada in
which the assets of the Business are located.
1. "Business" has the meaning ascribed to it in the Recitals
to this Agreement.
1. "Business Books and Records" has the meaning ascribed to it
in Section 2.1(A)(6).
1. "Business Contracts" has the meaning ascribed to it in
Section 2.1(A)(4).
1. "Business Day" means a day other than Saturday, Sunday or
any day on which banks located in Toronto, Ontario, New York, New York
or London, England are not open for business.
1. "Buyer" has the meaning ascribed to it in the Recitals to
this Agreement.
1. "Buyer Indemnified Parties" means Buyer and its officers,
directors, employees and Affiliates.
1. "Claim Notice" means written notification pursuant to
Section 9.3 of a Third Party Claim as to which indemnity under Section
9.2 is sought by an Indemnified Party, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third
Party Claim and for the Indemnified Party's claim against the
Indemnifying Party under Section 9.2, together with the amount or, if
not then reasonably ascertainable, the estimated amount, determined in
good faith, of such Third Party Claim.
1. "Closing" means the closing of the transactions
contemplated by Section 2.7.
1. "Closing Date" has the meaning ascribed to it in Section
2.7.
1. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1. "Company Marks" means the names "MCI", "SHL", "Systemhouse"
and any logo, trademark, service mark, trade name, copyright, trade
secret or business name associated therewith and any and all rights or
interests of any of the Sellers therein.
1. "Confidentiality Agreement" means that certain
Confidentiality Agreement, dated January 30, 1998, by and between SHL
Systemhouse Co., MCI Systemhouse Corp. and General Physics Corporation.
1. "Contract" means any definitive agreement, including
customer agreements and goodwill associated therewith, lease, license
(other than Licenses), evidence of indebtedness, mortgage, deed of
trust, indenture, security agreement or other contract.
1. "Cut-Off Date" means, with respect to any representation or
warranty contained in this Agreement, the date on which such
representation or warranty ceases to survive as provided in Section
9.1.
1. "Dispute Period" means the period ending thirty (30) days
following receipt by an Indemnifying Party of either a Claim Notice or
an Indemnity Notice.
1. "Employees" has the meaning ascribed to it in Section 5.5.
1. "Environmental Law" means statutes, laws, regulations and
permits applicable to the Business relating to environmental
protection in the U.S. and Canada.
1. "ERISA" means the Employment Retirement Income Security
Act of 1974, as amended.
1. "Escrow Agent" means The First National Bank of Maryland
(together with any successor thereto).
1. "Escrow Agreement" means that certain Escrow Agreement
between Sellers and Buyer substantially in the form attached
hereto as Exhibit A.
1. "Escrow Deposit" has the meaning ascribed to it in Section
2.6.
1. "Excluded Assets" has the meaning ascribed to it in Section
2.2.
1. "Excluded Liabilities" has the meaning ascribed to it in
Section 2.4.
1. "General Conveyance" has the meaning ascribed to it in
Section 2.1(B).
1. "Governmental or Regulatory Authority" means any
government, regulatory authority, department, court, tribunal,
arbitrator, authority, agency, commission, official or other
instrumentality of Canada, the United States or the United
Kingdom, or any municipality, district, state, province or
other subdivision thereof.
1. "GP UK" means General Physics Corporation (UK) Limited, a
private company incorporated in England and Wales and
registered under No. 03424328 whose registered office is at 21
Holborn Viaduct, London EC1A 2DY.
1. "Indemnified Party" means any Person claiming
indemnification under any provision of Article 9.
1. "Indemnifying Party" means any Person against whom a claim
for indemnification is being asserted under any provision of
Article 9.
1. "Indemnity Notice" means written notification pursuant to
Section 9.3(B) of a claim for indemnity under Article 9 by an
Indemnified Party, specifying the nature of and basis for such
claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such claim.
1. "Intellectual Property Rights" has the meaning ascribed to
it in Section 2.1(A)(7).
1. "Knowledge of Buyer" means the actual knowledge of the
officers of Buyer.
1. "Knowledge of Sellers" means the actual knowledge of the
persons responsible for the management of the Business.
1. "Laws" means all laws, statutes, rules, regulations or
ordinances having the effect of law in any city, state,
province or other political subdivision of Canada, the United
States or the United Kingdom or of any Governmental or
Regulatory Authority.
1. "Leased Real Property" has the meaning ascribed to it in
Section 2.1(A)(1).
1. "Liabilities" means all indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become
due).
1. "Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations or
franchises granted or issued by any Governmental or Regulatory
Authority.
1. "Lien" means any mortgage, pledge, assessment, security
interest, hypothec, lease, lien (whether statutory or
otherwise), adverse claim, security interest of any kind,
levy, charge, exception, reservation, easement, right of
occupation, any matter capable of registration against title,
option, right of preemption or other encumbrance, or any
conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
1. "Locations" has the meaning ascribed to it in Section
2.1(A)(1).
1. "Loss" or "Losses" shall mean the full amount of any sum
which a party pays on account of any and all liabilities,
Taxes, judgments, penalties, fines, losses and reasonable
costs and expenses, including but not limited to, attorneys
fees and accounting fees and related disbursements but not
including exemplary damages or economic losses, such as loss
of revenue, loss of profits or loss of use. For purposes of
determining the amount of Loss and whether or not a Loss or
Losses individually or in the aggregate exceed the limitation
amounts set forth in Section 9.2 hereof, Losses shall be
determined after giving effect to any third party
reimbursements or other payments received with respect to any
such Loss (excluding only federal, state, foreign or local tax
benefits obtained or received by the Person incurring the
Loss).
1. "Material Adverse Effect" means a material adverse effect
on the assets, properties, liabilities, business, affairs,
prospects, financial condition or results of operations of a
Person, taken as a whole.
1. "Money Judgment" means any judgment for money damages
entered against an Indemnified Party (including compensatory
or punitive damages) or settlements entered into in accordance
with the provisions of Section 9.3(A)(1).
1. "NATS System" means (1) the NATS system, described on
Schedule 2.1(A)(7), (2) the OPIS system, described on Schedule
2.1(A)(7), (3) the benefits of the Consultancy Agreement
between SHL Technology Solutions Limited and CMA Solutions
Limited listed on Schedule 2.1(A)(4), and (4) the Goldmine,
Goldsync, Goldbox and Crystal Reports Licenses listed on
Schedule 2.1(A)(4).
1. "Operative Agreements" means, collectively, the General
Conveyance and the Assignment and Assumption Agreements.
1. "Order" means any writ, judgment, decree or injunction of
any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
1. "Other Items" has the meaning ascribed to it in Section
2.1(A)(11).
1. "Owned Real Property" has the meaning ascribed to it in
Section 2.1(A)(1).
1. "PAYE" means tax required by law to be deducted from
payments made or treated as made to U.K. Employees. ----
1. "Permitted Lien" means (i) any Lien for Taxes not yet due
or payable or being contested in good faith by appropriate
proceedings for which adequate reserves have been established;
(ii) Liens arising or resulting from any action taken by
Buyer; (iii) any Lien arising in the ordinary course of
business by operation of Law or contract which has not at the
time been filed or registered against title to the asset or
served upon any Seller pursuant to law or which relates to a
Liability that is not yet due or delinquent; (iv) undetermined
or inchoate liens and charges incidental to current operations
which have not been filed pursuant to Law or which relate to
obligations not due or delinquent; (v) any servitudes,
easements, restrictions, rights of way and other rights in
real property or any interest therein or imperfection of title
or similar Lien which individually or in the aggregate with
other such Liens could not reasonably be expected to
materially adversely affect the use of the Purchased Assets;
(vi) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms of any lease, and Liens or
rights reserved in any lease for rent or for compliance with
the terms of such lease; (vii) security given in the ordinary
course of the Business to any public utility, municipality or
Governmental or Regulatory or Authority in connection with the
operation of the Business, other than security for borrowed
money; and (viii) the Liens disclosed in Schedule 3.1.
1. "Person" means any natural person, corporation, general
partnership, limited partnership, proprietorship, other
business organization, trust, union, association or
Governmental or Regulatory Authority.
1. "Personal Property" has the meaning ascribed to it in
Section 2.1(A)(2).
1. "Personal Property Leases" has the meaning ascribed to it
in Section 2.1(A)(3).
1. "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, leave of absence, layoff, vacation, day
or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other
insurance, severance, separation or other employee benefit
plan, practice, policy or arrangement of any kind, whether
written or oral, or whether for the benefit of a single
individual or more than one individual including, but not
limited to, any "employee benefit plan" within the meaning of
Section 3(3) of ERISA.
1. "Preferred Provider Agreement" means that agreement dated
the date hereof between Sellers and Buyer substantially in the
form attached hereto as Exhibit B.
1. "Purchase Price" has the meaning ascribed to it in Section
2.5.
1. "Purchased Assets" has the meaning ascribed to it in
Section 2.1(A).
1. "Real Property Leases" has the meaning ascribed to it in
Section 2.1(A)(1).
1. "Representatives" has the meaning ascribed to it in Section
5.2.
1. "Resolution Period" means the period ending thirty (30)
days following receipt by an Indemnified Party of a written
notice from an Indemnifying Party stating that it disputes all
or any portion of a claim set forth in a Claim Notice or an
Indemnity Notice.
1. "Sellers" has the meaning ascribed to it in the Recitals to
this Agreement.
1. "Sellers Agreements" means the Business Contracts, Real
Property Leases and Personal Property Leases.
1. "Seller Indemnified Parties" means Sellers and their
officers, directors, employees and Affiliates.
1. "Services" has the meaning ascribed to it in the Transition
Services Agreement.
1. "SHL UK" means SHL Technology Solutions Limited, a private
company incorporated in England and Wales and registered under
No. 01832838, whose registered office is at 137 Stanford
Street, London SE1 9NJ.
1. "Subsidiaries" has the meaning ascribed to it in Section
11.5.
1. "Tax" shall mean all forms of tax, levy, assessment, duty,
charge or withholding imposed, collected or administered by
any Tax Authority and shall include (without limitation)
income tax (including income tax or amounts on account of
income tax required to be deducted or withheld from or
accounted for in respect of any payment), sales taxes, goods
and services tax, VAT, large corporations tax, tax on capital,
unemployment insurance premiums, workmens' compensation and
other employment related taxes including PAYE and national
insurance contributions, duties of customs and excise, all
taxes, duties or charges replaced by or replacing, or similar
to any of the foregoing, and all other taxes on gross or net
income, profits or gains, distributions, receipts, sales, use,
occupation, value added and property, and any payment
whatsoever which any Person may be or become bound to make to
any Person as a result of the operation of any enactment
relating to tax, together with all penalties, fines, charges
and interest relating to any of the foregoing or to any late
or incorrect return in respect of any of them.
1. "Tax Authority" shall mean any federal, state, provincial
or municipal taxing or other Governmental or Regulatory
Authority or agency (whether within or outside the
jurisdiction of incorporation or residence of Buyer) concerned
with the imposition, collection or administration of any Tax.
1. "Tax Claim" shall mean the issue of any notice, demand,
assessment, reassessment, letter or other document by or on
behalf of any Tax Authority or the taking of any other action
by or on behalf of any Tax Authority from which notice,
demand, assessment, reassessment, letter, document or action
it appears that a Tax (other than taxes on or in respect of
income, profits, capital or capital gains) will be imposed on
any Purchased Asset or in respect of any Purchased Asset
against Buyer.
1. "Tax Return" means any return, report, information return,
declaration, statement, or other document (including any
supporting information) filed or required to be filed with any
Tax Authority in connection with the determination,
assessment, or collection of any Tax (whether or not such Tax
is imposed on the Seller) or the administration of any law,
regulation, or administrative requirement relating to any Tax.
1. "Temporary Facilities" means those locations, the leasehold
interests in which Sellers will not convey to Buyer, where
Sellers currently conduct the Business, but whose employees,
operations and Personal Property will be conveyed to Buyer
hereunder as part of the Purchased Assets and which Buyer will
occupy and assume certain related liabilities for a limited
time, all as set forth in the Transition Services Agreement.
1. "Third Party Claim" has the meaning ascribed to it in
Section 9.3(A).
1. "Transfer Taxes" means all sales, use, consumption, goods
and services, real property transfer, reporting, recording,
gains, stock transfer and other similar taxes and fees
(including VAT and stamp duty in the United Kingdom) and
registration charges, together with any interest, charge and
penalties in relation to any such taxes.
1. "Transition Services Agreement" means the agreement, which
will be dated the Closing Date, among Sellers and Buyer,
pursuant to which Sellers will provide transition services to
Buyer for a six (6) month period substantially in the form
attached hereto as Exhibit C.
1. "U.K. Employees" has the meaning ascribed to it in Section
3.9(B).
1. "U.K. Employment Regulations" has the meaning ascribed to
it in Section 5.5(E).
1. "U.K. Properties" means the properties, brief particulars
of which are set out in Part II of Schedule 2.1(A)(1), and
"U.K. Property" shall be construed accordingly.
1. "VAT" has the meaning ascribed to it in Section 8.2(A).
1. "VATA" has the meaning ascribed to it in Section 8.2(B).
1. "Year 2000 Compliant" has the meaning ascribed to it in
Section 5.11(B). -------------------
A. Construction of Certain Terms and Phrases. Unless the context of
this Agreement otherwise requires, (A) words of any gender include each other
gender; (B) words using the singular or plural number also include the plural or
singular number, respectively; (C) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; and (D) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement. Whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified.
A. Currency. Unless otherwise indicated, all dollar amounts in this
Agreement are expressed in United States funds.
A. Time of Essence. Time shall be of the essence of this Agreement.
A. Schedules. The following Schedules are attached to and form part of
this Agreement:
Schedule 2.1(A)(1) - Real Property
Schedule 2.1(A)(2) - Personal Property - Owned
Schedule 2.1(A)(3) - Personal Property - Leased
Schedule 2.1(A)(4) - Business Contracts
Schedule 2.1(A)(6) - Business Books and Records
Schedule 2.1(A)(7) - Intellectual Property Rights
Schedule 2.1(A)(9) - Numbers
Schedule 2.1(A)(11) - Other Items
Schedule 3.1 - Title and Liens
Schedule 3.2 - Items Not Included as Purchased Assets
Schedule 3.6 - Sellers'Governmental Approvals and Filings
Schedule 3.7 - Actions or Proceedings
Schedule 3.8 - Certain Agreements
Schedule 3.9(A) - North American Employees
Schedule 3.9(B) - U.K. Employees
Schedule 3.17 - Certain Changes
Schedule 5.2 - Employee Contacts
Schedule 5.5 - Employee Benefits
Schedule 5.14 - Apportionment
Schedule 8.3 - Allocation of Purchase Price
Schedule 8.4 - Distribution of Purchase Price
I. ARTICLE -- SALE OF ASSETS AND ASSUMPTION OF LIABILITIES; CLOSING
A. Purchased Assets. On the Closing Date, each Seller shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire
and accept from Sellers, as a going concern, all of Sellers' right, title and
interest in, to and under all property and assets identified by Sellers as the
same shall exist on the date hereof (collectively, the "Purchased Assets"). The
terms and conditions applicable to the sale and purchase of the U.K. Properties
are set out in Attachment 1; in the case of any conflict between the provisions
of Attachment 1 and the remainder of this Agreement, the provisions of
Attachment 1 shall apply.
1. The Purchased Assets are identified in the relevant Schedules
attached hereto and are as set forth below:
a) Real Property. (a) Assumption or sublease of the leases, subleases
and leasehold improvements or portions thereof of real property as to which any
Seller is the lessee, sublessee or sublessor which are identified on Schedule
2.1(A)(1) attached hereto (the "Leased Real Property"), together with any
options of any of the Sellers to purchase the underlying property and leasehold
improvements thereon, and in each case all other rights, subleases, licenses,
permits, deposits and profits appurtenant to or related to such leases and
subleases (the "Real Property Leases"); and (b) title to the real property
identified on Schedule 2.1(A)(1) attached hereto (the "Owned Real Property"),
together with improvements thereon, and all other rights, licenses, permits, and
profits appurtenant to or related to such Owned Real Property (together with the
Leased Real Property and the Temporary Facilities, the "Locations");
a) Personal Property. The furniture, fixtures and equipment, machinery,
computers (subject to Schedule 3.2), supplies, work-in-process, inventory and
other personal property as identified on Schedule 2.1(A)(2) attached hereto (the
"Personal Property");
a) Personal Property Leases. Assumption of the leases of Personal
Property as identified on Schedule 2.1(A)(3) attached hereto, relating to the
Personal Property as to which any Seller is the lessee or sublessee together
with any options to purchase the underlying property, to the extent transferable
(the "Personal Property Leases");
a) Business Contracts. All Contracts identified on Schedule 2.1(A)(4)
attached hereto (the "Business Contracts");
a) Intentionally Omitted;
a) Business Books and Records. Subject to Sellers' right of access
subsequent to the Closing Date set forth below in this Article 2, the books and
records relating to the Purchased Assets and the Business identified on Schedule
2.1(A)(6) attached hereto (the "Business Books and Records");
a) Intellectual Property Rights. Those trademarks and service marks,
and appurtenant goodwill, and the domain name TRAININGNOW.COM, associated
website located at "http://www.trainingnow.com" and associated e-mail service,
trade names, copyrights and trade secrets and all registrations and applications
for registration for any of the foregoing in each case as Sellers currently own
or utilize in the Business in the items as identified on Schedule 2.1(A)(7)
attached hereto (the "Intellectual Property Rights");
a) Goodwill. The goodwill of the Business in or arising from the
Purchased Assets;
a) Numbers. All telephone, telex, post office box and other numbers and
addresses primarily related to the Business, to the extent transferable, as
listed on Schedule 2.1(A)(9) hereto;
a) Materials. Except as otherwise provided in Section 5.17, all sales
data, brochures, catalogs, literature, forms, mailing lists, art work,
photographs and advertising material, in whatever form or media, that relate
primarily to the Business, with the exception of sales data, brochures,
catalogs, literature, forms, mailing lists, art work, photographs and
advertising material which in any way utilize the Company Marks, which may be
utilized only as provided in Section 5.10 hereof;
a) Other Items. Certain other assets and properties of Sellers as
identified on Schedule 2.1(A)(11) attached hereto; and
a) Remaining Assets. Except with respect to intellectual property
rights and the Excluded Assets and except as set forth on Schedule 3.2, all
other assets of Sellers primarily used or held for use in the Business as
currently conducted, which are not otherwise specified herein.
1. General Conveyance. Sellers will assign and transfer to
Buyer title in and to the Purchased Assets by delivery of (1) one or
more bills of sale in form and substance mutually acceptable to Buyer
and Sellers (the "General Conveyance"), duly executed by Sellers, and
(2) such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance mutually acceptable to
Buyer and Sellers, acting reasonably, as shall be effective to vest in
Buyer all of Sellers' right, title and interest in, to and under the
Purchased Assets. In relation to those of the Purchased Assets situated
in the U.K., risk in and title to each of such assets which are capable
of physical delivery shall pass on delivery of the same by Sellers to
Buyer, which shall be deemed to occur at the relevant U.K. premises of
the Seller at which they are located at the Closing.
1. Nonassignability.
a) Save in respect of the U.K. Properties,
notwithstanding anything contained in this Agreement or any
agreement executed in connection herewith to the contrary,
neither this Agreement nor any agreement executed in
connection herewith shall constitute an assignment, transfer,
sublicense or sublease of, or an agreement to assign,
transfer, sublicense or sublease, any right, title or interest
in, to or under any contract, license, lease, commitment,
sales order, purchase order or other agreement, or any claim
or right to any benefit arising thereunder or resulting
therefrom, if an attempted assignment, transfer, sublicense or
sublease thereof, without the consent or waiver of a third
party thereto (including a Governmental or Regulatory
Authority), would constitute a breach thereof or a violation
of any Law or Order or in any way materially adversely affect
the rights of Buyer or Sellers thereunder, unless and until
such consent or waiver has been duly obtained or such
assignment, transfer, sublicense or sublease has otherwise
become lawful.
a) Sellers shall take all reasonable steps, including
payment of reasonable fees, to obtain all required consents,
waivers or novations of the contracts, licenses, leases,
commitments, sales orders, purchase orders or other
agreements, and Buyer shall use reasonable efforts (including
responsibility for its out-of-pocket costs) to cooperate with
Sellers in such process. With respect to all such agreements,
Buyer shall cooperate with Sellers in seeking to have Sellers
released from payments Buyer is required to make from and
after the Closing. In the interim, save in respect of all
intellectual property and information technology licenses and
agreements, Sellers shall use commercially reasonable efforts
as agent for Buyer to provide Buyer the benefits of any such
contract, license, lease, commitment, sales order, purchase
order or other agreement by utilizing Buyer as a subcontractor
thereunder, and Buyer shall comply in all material respects
with any applicable terms, conditions and limitations of use.
Each Seller shall, as soon as reasonably practicable after
receipt, pay to Buyer (or as it shall direct) any sums
received by it under such contract or agreement. In relation
to the intellectual property and information technology
licenses and agreements, during such interim period, Sellers
shall receive and hold the benefit of the relevant licenses as
agent for Buyer and Buyer shall comply in all material
respects with any applicable terms, conditions and limitations
of use. Each Seller shall, as soon as reasonably practicable
after receipt, pay to Buyer (or as it shall direct) any sums
received by it under such licenses.
a) Notwithstanding the foregoing obligations of
Sellers, to the extent that Sellers are unable, after using
reasonable efforts, to obtain any required consent, waiver or
novation of a contract or other agreement or to provide Buyer
with the benefit of any such contract or other agreement, then
the said obligations of Sellers shall cease with respect to
each such contract or agreement and Sellers shall have the
right to terminate the same.
a) Notwithstanding the foregoing obligations of
Sellers, in the event Sellers are unable, after using
reasonable efforts, to obtain any required consent, waiver or
novation of any intellectual property or information
technology license or to provide Buyer with the benefit of any
such licence, then the said obligations of Sellers shall cease
with respect to each such license and Sellers shall have the
right to terminate the same.
a) Sellers shall indemnify Buyer for any Losses
suffered by Buyer as a result of Sellers' inability to either
(i) obtain a consent, novation or waiver of, or (ii) provide
the benefits of, a contract, license, lease, commitment, sales
order, purchase order or other agreement.
A. Excluded Assets. Notwithstanding anything contained in Section 2.1
to the contrary, the Purchased Assets shall not include any of the following
properties, contracts, rights and other assets of the Sellers (the "Excluded
Assets"):
1. all cash and cash equivalents;
1. all Accounts Receivable due to any Seller;
1. all Purchased Assets used up or disposed of in the ordinary
course of operating the Business after the date hereof through
the Closing Date;
1. with the exception of those items listed on Schedule 2.1(A)(7)
hereto, any right, title and interest of Sellers in the Company
Marks, provided, however, that Buyer shall have the right to
utilize such Company Marks as set forth in Section 5.10 hereof,
but only to the extent set forth therein;
1. any and all mortgages on real property held by any Seller,
security interests of whatever kind held by any Seller and
guarantees for the benefit of any Seller, with the exception of
those relating to the Purchased Assets;
1. any and all claims, causes of action, counterclaims, choses in
action, rights of set off and other rights of recovery of any
kind, including, but not limited to, mechanic's or materialman's
liens or any other liens, or any rights to payment, or to enforce
payment, in connection with goods or services rendered, supplies
furnished or other work performed by or on behalf of Sellers
prior to the Closing Date;
1. any and all insurance policies issued to or naming any Seller
as an additional insured and all coverage and proceeds under past
or current insurance policies;
1. all properties, contracts, rights and other assets of any
Seller used or held for use in the Business which are identified
on Schedule 3.2; and
1. any and all properties, contracts, rights and other assets of
any Seller not primarily used in the Business or set out in one
of the Schedules in Section 2.1 above.
A. Assumption of Liabilities.
1. In connection with the sale of the Purchased Assets
pursuant to Section 2.1, Buyer will on the Closing Date assume and
agree to pay, perform, satisfy and discharge when due, the following
obligations in connection with the operation of the Business at the
Locations, except for the Excluded Liabilities, as the same shall arise
on the Closing Date or thereafter (the "Assumed Liabilities"):
a) Real Property Obligations. All actual or contingent
liabilities and obligations of the Sellers, including without
limitation those for utilities and the transfer thereof, arising
under the Real Property Leases or in connection with the
ownership of the Owned Real Property or otherwise in relation to
immoveable Purchased Assets (owned, leased or otherwise), but not
including, save and except in relation to the U.K. Properties,
any liability for any breach thereof occurring prior to the
Closing Date;
a) Personal Property Lease Obligations. All liabilities and
obligations arising under the Personal Property Leases but not
including any liability for any breach thereof occurring prior to
the Closing Date;
a) Obligations under Contracts and Licenses. All obligations
under the Business Contracts and Business Licenses, but not
including any liability for any breach thereof occurring prior to
the Closing Date;
a) Deferred Revenue. All obligations arising out of deferred
revenue, calculated in accordance with past practice, as
reflected on the financial records of the Business as of three
(3) Business Days prior to the Closing Date and certified by an
officer of the Business in an Officer's Certificate delivered
pursuant to Section 6.5(F). If, within thirty (30) days after the
Closing Date, either Sellers or Buyer shall reasonably determine
that the calculation was not made in accordance with the past
practice of the Business, Sellers or Buyer, as the case may be,
shall promptly pay to the other the amount by which the
calculation is incorrect; and
a) Obligations of Business. All liabilities and obligations
arising from the Buyer's operation of the Business on or after
the Closing Date.
(B) Assignment and Assumption Agreements. Buyer will assume from
Sellers the due payment, performance and discharge of the Assumed
Liabilities by delivery of (1) one or more assignment and
assumption agreements in form and substance mutually acceptable
to Sellers and Buyer (the "Assignment and Assumption
Agreements"), acting reasonably, duly executed by Buyer, and (2)
such other good and sufficient instruments of assumption, in form
and substance mutually acceptable to Sellers and Buyer, acting
reasonably, as shall be effective to cause Buyer to assume the
Assumed Liabilities as and to the extent provided in this Section
2.3.
A. Excluded Liabilities. Notwithstanding the provisions of Section 2.3,
there shall be specifically excluded from the Assumed Liabilities the following
liabilities (the "Excluded Liabilities") of Sellers:
1. all liabilities of Sellers related to the Excluded Assets;
1. all liabilities, claims and obligations arising from the
Sellers' operation of the Business prior to the Closing Date, other
than those liabilities, claims or obligations arising under the Assumed
Liabilities;
1. any liability for or on account of any Tax of Sellers,
provided, however, that Sellers and Buyer shall divide, on a daily
proration basis, any property taxes on the Purchased Assets for the tax
year that includes the Closing Date;
1. all expenses, Taxes, debts, liabilities and obligations of
any Seller incurred or to be incurred by any Seller in the preparation
of this Agreement and the performance of the terms and provisions of
this Agreement, but not including Transfer Taxes, which shall be the
responsibility of the Buyer pursuant to Section 8.5;
1. any liability based on Sellers' failure to comply with Bulk
Sales Laws with respect to the transfer of the Purchased Assets; and
1. all costs, expenses, debts, liabilities and obligations of
any Seller incurred in connection with any litigation by the Calgary
START Program students referred to on Schedule 3.7.
A. Purchase Price. The aggregate purchase price for the Purchased
Assets will be U.S.$26,800,000.00 (the "Purchase Price"). The Purchase Price
shall be satisfied by the payments referred to in Section 2.6 and the assumption
of the Assumed Liabilities as provided in Section 2.3.
A. Payment of Purchase Price. (A) Upon the execution of this Agreement,
Buyer shall deposit the amount of $500,000.00 into escrow (the "Escrow
Deposit"). The total Escrow Deposit shall be held by the Escrow Agent pursuant
to the Escrow Agreement. At the Closing, the Escrow Deposit shall be paid by the
Escrow Agent to Sellers and credited to the Purchase Price and the interest
earned thereon shall be paid to Sellers. If the Closing does not occur due to a
termination of this Agreement: (1) by the parties pursuant to Section 10.1(A);
(2) by its terms pursuant to Section 10.1(B) through no fault of any party; (3)
by its terms pursuant to Section 10.1(B) based on Sellers' failure to fulfill a
condition of closing; or (4) by Buyer pursuant to its rights under Section
10.1(C) thereof, the total Escrow Deposit, together with any interest thereon,
shall be returned to Buyer. If the Closing does not occur due to a termination
of this Agreement: (1) by its terms pursuant to Section 10.1(B) based on Buyer's
failure to fulfill a closing condition; or (2) by Sellers pursuant to their
rights under Section 10.1(C) thereof, the total Escrow Deposit, together with
any interest thereon, shall be paid to Sellers. Nothing contained in this
Section 2.6 shall be deemed to waive any other rights the parties may have under
this Agreement.
(B) At the Closing, Buyer will pay to Sellers (1) $26,300,000 minus (2)
the amount of deferred revenue set forth on the Officer's Certificate
delivered pursuant to Section 6.5(F). Payment shall be by wire transfer
of immediately available United States funds to such account or
accounts as Sellers may direct by written notice delivered to Buyer by
Sellers no later than two (2) Business Days prior to the Closing Date.
A. Closing and Closing Date. The Closing will take place at such place
as Buyer and Sellers mutually agree, at 10:00 a.m. local time, on the Closing
Date. The Closing Date shall be June 15, 1998 or such other date as may be
mutually agreed to by the parties. Subject to Attachment 1, upon delivery of the
instruments of sale, conveyance, assignment, transfer and delivery, title to the
Purchased Assets so conveyed shall pass to Buyer at Closing.
I. ARTICLE -- REPRESENTATIONS AND WARRANTIES OF SELLERS
Except with respect to the U.K. Properties, Sellers, jointly and
severally, hereby represent and warrant to Buyer as follows:
A. Purchased Assets. Except as set forth on Schedule 3.1 and as
otherwise set forth in this Agreement, Sellers have good and marketable title
to, or have valid leasehold interests in or valid rights under Contract to, all
the Purchased Assets and on the Closing Date will transfer and convey to Buyer
good and marketable title (save and except in relation to the U.K. Properties)
to, valid leasehold interests in or valid rights under Contract to, the
Purchased Assets. Except as set forth on Schedule 3.1, all such Purchased Assets
are free and clear of all Liens, other than Permitted Liens. Except as set forth
on Schedule 3.1, the facilities, machinery, furniture, office and other
equipment that are part of the Purchased Assets are in good operating condition
and repair, subject only to ordinary wear and tear.
A. Purchased Assets Used in Business. Except as set forth on Schedule
3.2, and except for the other Excluded Assets, the Purchased Assets represent,
and on the Closing Date will represent (with the exception of those Purchased
Assets used or disposed of in the ordinary course of operating the Business
after the date hereof), all of the material assets used in the ordinary conduct
of the Business as the same is carried on by Sellers at Closing.
A. Corporate Existence of Sellers. Sellers are corporations duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and have all requisite power and
authority to carry on their respective businesses as now conducted, to own or
lease their respective properties and assets and to consummate the transactions
contemplated hereby and under the Operative Agreements to which a particular
Seller may be a party. Sellers are duly qualified or licensed to do business as
a foreign company in good standing in each foreign jurisdiction in which the
conduct of their respective businesses or the ownership or leasing of their
respective properties require such qualification, other than jurisdictions in
which the failure to so qualify would not materially adversely affect the
transactions contemplated hereby or have a material adverse effect on the
conduct of the Business.
A. Authority. Each Seller has full power and authority to execute and
deliver this Agreement and the Operative Agreements to which it will be a party,
to perform its respective obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by
each Seller of this Agreement and the Operative Agreements to which it will be a
party, and the performance by it of its respective obligations hereunder and
thereunder, have been duly and validly authorized by all necessary corporate
action. This Agreement has been, and the Operative Agreements to which any
Seller will be a party, when executed and delivered by each such Seller, will be
duly and validly executed and delivered by such Seller and constitutes, or will
constitute, as the case may be, legal, valid and binding obligations enforceable
against such Seller in accordance with their respective terms, except as the
same may be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditors' rights generally or by
general equitable principles.
A. No Conflicts. Neither the execution and delivery by Sellers of this
Agreement and the Operative Agreements to which any Seller will be a party, nor
the performance by each Seller of its obligations under this Agreement and such
Operative Agreements, nor the consummation of the transactions contemplated
hereby and thereby will:
1. conflict with or result in a violation or breach of any of
the provisions of Sellers' organizational documents;
1. result in a breach or default under any material contract
or agreement to which any Seller is a party or by which any Seller is
bound or to which any material property or asset of any of them is
subject, which breach or default would have a Material Adverse Effect;
and
1. conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to any of the
Purchased Assets (other than such conflicts, violations or breaches
which could not in the aggregate reasonably be expected to materially
adversely affect the validity or enforceability of this Agreement or
any of such Operative Agreements or to materially adversely affect the
use of the Purchased Assets or the operations of the Business).
A. Sellers' Governmental Approvals and Filings. No consent, approval or
action of, filing or registration with or notice to any Governmental or
Regulatory Authority on the part of Sellers is required in connection with the
execution, delivery and performance of this Agreement or any of the Operative
Agreements to which any Seller will be a party or the consummation of the
transactions contemplated hereby or thereby, except where the failure to obtain
any such consent, approval or action, to make any such filing or to give any
such notice could not reasonably be expected to materially adversely affect the
ability of Sellers to consummate the transactions contemplated by this Agreement
or any of the Operative Agreements or to perform their respective obligations
hereunder or thereunder, or to materially adversely affect the use of the
Purchased Assets or the operations of the Business.
A.Litigation; Compliance with Laws.Except as disclosed on Schedule 3.7:
1. There are no Actions or Proceedings pending or, to the
Knowledge of Seller, threatened, or any facts or circumstances which
could form the basis of any such Action or Proceeding, against, any
Seller or the Purchased Assets which, if adversely determined, could
reasonably be expected (1) to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement
or any of the Operative Agreements, (2) individually or in the
aggregate with other such Actions or Proceedings, to materially
adversely affect the use of the Purchased Assets or the operations of
the Business or (3) question the validity of this Agreement; and
1. No Seller is in violation of or in default under any Law or
Order applicable to the Purchased Assets or the Business, the effect of
which, in the aggregate could reasonably be expected to materially
adversely affect the use of the Purchased Assets or the operations of
the Business.
A. Sellers Agreements. Except as set forth on Schedule 3.8, Sellers
have delivered true and complete copies of all Sellers Agreements (and all
material amendments and modifications thereto whether written or, to the
Knowledge of Sellers, oral) to Buyer or its representatives prior to execution
of this Agreement including, without limitation, each:
(i) contract with any labor union;
(ii) employment or consulting contract or other contract for
services, which has a term of one year or more or involves a commitment in
excess of $65,000, with respect to the U.K. Employees or in excess of $25,000
with respect to other Employees and any independent contractors employed by the
Business;
(iii) lease, whether as lessor or lessee, with respect to any
property, real or personal, which has a term of one year or more or involves a
commitment in excess of $50,000;
(iv) loan agreement or instrument relating to any debt;
(v) contract of purchase or sale other than in the ordinary
course of business involving more than $50,000;
(vi) contract with any agent, dealer or distributor, which has
a term of one year or more or involves a commitment in excess of $50,000;
(vii) stand-by letter of credit, guarantee or performance
bond;
(viii) contract or agreement relating to the Business
restricting the ability of any Seller from freely engaging in the Business
anywhere in the world;
(ix) contract not made in the ordinary course of business,
which has a term of one year or more or involves a commitment in excess of
$50,000; and
(x) other contract, except insubstantial contracts for
supplies or services not involving more than $50,000 and which can be terminated
within one year without cost.
Except as set forth on Schedule 2.1(A)(4) or Schedule 3.8, no Seller, with
respect to the Business, is a party to any material contract with any
Governmental or Regulatory Authority. Except as set forth on Schedule 3.8,
neither the Sellers, nor to the Knowledge of Sellers, the party with which any
individual Seller has contracted, are in material breach of any of the U.K.
Employees' employment or consultants' consulting contracts or any Sellers
Agreements and the U.K. Employees' employment and consultants' consulting
contracts and the Sellers Agreements are in full force and effect.
A. Employees.
1. Schedule 3.9(A) contains a complete and accurate list of
the names of all individuals in Canada and the U.S. who are full-time
or part-time employees or individuals engaged on contract to provide
services or sales or other agents or representatives of the Sellers
employed or engaged in the Business as of the date hereof, specifying
the date of hire, title or classification and rate of salary, hourly
pay or contract rate and commission or bonus entitlements and benefits
(if any) for each such individual.
1. Schedule 3.9(B) contains a list of the names of all
full-time or part-time employees or individuals in the U.K. who the
parties intend will, pursuant to the U.K. Employment Regulations,
transfer from Sellers to Buyer at Closing (the "U.K. Employees").
1. Employee Plans. Neither SHL Systemhouse Co. nor SHL
Computer Innovations Inc. has any pension plans or other analogous
arrangements which would be governed by Canadian federal or provincial
pension benefits legislation.
1. Employee Accruals.
a) Canada. Except with respect to timing issues
relating to Sellers' Employee Stock Purchase Plan, Group
Registered Savings Plan and Deferred Profit Share Plan, with
respect to all Canadian Employees, accruals for unpaid
vacation pay, premiums for unemployment insurance, health
premiums, income tax, Workers' Compensation, Canada Pension
Plan and Quebec Pension Plan premiums, accrued wages, salaries
and commissions have been paid and have been reflected in the
books and records of the Sellers. The Sellers have withheld
from each payment made to any Canadian Employee the amount of
all taxes and other deductions (including income taxes, Canada
Pension Plan, Quebec Pension Plan and employment insurance
contributions, as applicable) required to be withheld, and
have paid or will pay the same, together with the Seller's
share, if any, to the extent required to be paid, to the
proper authorities. To the Knowledge of Sellers, Sellers have
no obligation to reinstate any former employee in connection
with the Business.
a) U.K. Except with respect to timing issues relating
to Sellers' Employee Stock Purchase Plan, with respect to all
U.K. Employees, accruals for PAYE and National Insurance
contributions, accrued wages, salaries, commissions and
bonuses have been paid and have been reflected in the books
and records of SHL UK. SHL UK has withheld from each payment
made to any U.K. Employee, the amount of all PAYE and National
Insurance deductions required to be withheld and have paid or
will pay the same, together with SHL UK 's share, if any, to
the extend required to be paid, to the proper authorities.
1. Collective Agreements. With respect to the Business, there
are no Contracts with any labor union or like employee association nor
any commitments or pending negotiations with respect to any future
agreements. To the Knowledge of Sellers, there is currently no
organizing activity with respect to forming a labor union or like
employee association.
A. No Other Agreements to Purchase. No person other than the Buyer has
any written or oral agreement or option or any right or privilege (whether by
law, preemptive or contractual) capable of becoming an agreement or option for
the purchase from the Sellers of any of the Purchased Assets, other than
pursuant to purchase orders accepted by the Sellers in the ordinary course of
the Business.
A. Taxes.
1. Sellers have filed all material Tax Returns and related
forms required to be filed (including any applicable extensions of
time), and have paid in full or remitted (as appropriate) all material
Taxes required to be paid or remitted that are related to the Business
or the Purchased Assets.
1. There are no Liens for Taxes on the Purchased Assets except
for property taxes not yet due and payable that are to be prorated as
provided in Section 2.4(C). There are no Taxes of a Seller, or
deficiencies in Taxes or claims for Taxes against a Seller, for any
taxable period that could become a Liability of or Tax Claim against,
or which could be assessed or collected against, Buyer or become a Lien
on any Purchased Assets.
1. All amounts that are required to be collected or withheld
by a Seller, or with respect to Taxes of a Seller, have been duly
collected or withheld and all such amounts that are required to be
remitted to any Tax Authority have been duly remitted.
A. Financial Statements. The unaudited Schedule of Revenues and
Expenses of the Business for the fiscal quarter ended March 31, 1998, in the
form attached hereto as Exhibit D, and the Statement of Revenue of the Business
for the year ended December 31, 1997, in the form attached hereto as Exhibit E,
fairly represent in all material respects the items set forth thereon.
A. Brokers. Other than RBC Dominion Securities Inc., Sellers have not
employed any broker, finder, investment banker or financial advisor or incurred
any liability for any brokerage or finder's fees, commissions or similar
compensation in connection with the transactions contemplated hereby.
A. Residency. Neither SHL Systemhouse Co. nor SHL Computer Innovations
Inc. is a non-resident of Canada for the purposes of the Income Tax Act
(Canada). SHL Systemhouse Co. and SHL Computer Innovations Inc. are the only
Sellers of Purchased Assets located in Canada.
A. GST Registration. Each of SHL Systemhouse Co. and SHL Computer
Innovations Inc. is a registrant for purposes of the Excise Tax Act (Canada)
whose registration numbers are, respectively, 87305-7368rt and 12195-9878rt.
A. QST Registration. Each of SHL Systemhouse Co. and SHL Computer
Innovations Inc. is registered for purposes of the Act Respecting Quebec Sales
Tax whose registration numbers are, respectively, 1020743839tq and 1017592145tq.
A. Absence of Certain Changes. Since March 31, 1998 (except (i) for the
execution and delivery of this Agreement and the Operative Agreements and (ii)
as set forth in Schedule 3.17), with respect only to the Purchased Assets or the
Business, no Seller has:
1. had any change in its condition, operations, business, properties,
assets or liabilities other than changes in ordinary course of the Business,
none of which has had a Material Adverse Effect;
1. suffered any damage, destruction or loss of physical property
(whether or not covered by insurance) materially or adversely affecting the
condition or operations of the Business;
1. paid or obligated itself to pay in excess of $50,000 in the
aggregate for fixed assets relating to the Business;
1. suffered any substantial loss or waived any substantial right
resulting in a Material Adverse Effect on the Business;
1. sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, any assets relating to the Business having a
fair market value at the time of sale, transfer or disposition of $50,000 or
more in the aggregate, or canceled, or agreed to cancel, any debts or claims of
the Business, other than in the ordinary course;
1. mortgaged, pledged or subjected to any charge, lien, claim or
encumbrance, or agreed to mortgage, pledge or subject to any charge, lien, claim
or encumbrance, any of its material properties or assets relating to the
Business;
1. increased, or agreed to increase, the compensation or bonuses or
special compensation of any kind of any of the officers, employees or agents of
the Business over the rate being paid to them on December 31, 1997, other than
normal merit and/or cost-of-living increases pursuant to customary arrangements
consistently followed, or adopted or increased any benefit under any insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with any such officer, employee or agent other than pursuant to customary
arrangements consistently followed;
1. lost any major customer or had any material order canceled or knows
of any threatened cancellation of any material order relating to the Business;
1. made or permitted any material amendment or termination of any
material contract, agreement or license relating to the Business to which it is
a party other than in the ordinary course of business;
1. had any resignation or termination of employment of any of the key
officers or employees of the Business or knows of any impending or threatened
resignation or resignations or termination or terminations of employment that
would have a Material Adverse Effect on the Business;
1. had any labor strike or work stoppage or knows of any impending or
threatened labor strike or work stoppage relating to the Business;
1. experienced any shortage or difficulty in obtaining any raw material
relating to the Business; and
1. entered into any transaction valued at more than $50,000 not in the
ordinary course of the Business.
A. Insurance. All properties and operations of each Seller with respect
to the Business are insured for their respective benefits, in amounts deemed
adequate by their respective Boards of Directors or managements, against all
risks usually insured against by persons operating similar properties or
conducting similar operations in the localities where such properties are
located or such operations are conducted under valid and enforceable policies
issued by insurers of recognized responsibility.
A. Intellectual Property. (A) Except as set forth on Schedules
2.1(A)(2), (4), or (7) or Schedule 3.2 and except for the Company Marks, and
with respect only to the Business: (1) no Seller owns any patent relating to any
product which is manufactured by or for the Business or any process used in the
manufacture of any such product, and, to the Knowledge of Sellers, there is no
patent needed which would cover any material product or process; and (2) no
Seller owns any material copyright, registered trademark or trade name, nor has
any license to use any material copyright, trademark or trade name been issued
by Sellers relating to the Business, nor does any Seller use any material
copyright, registered trademark or trade name needed to run the Business. Each
of the registered trademarks listed on Schedule 2.1(A)(7) has been validly
issued and is owned by a Seller or an Affiliate thereof, and, to the Knowledge
of Sellers, Sellers or their Affiliates have the exclusive rights to use all
such registered trademarks in the Business. Each of the registered trademarks
listed on Schedule 2.1(A)(7) as owned by an Affiliate of Seller will be
transferred to Buyer at the Closing.
(B) Except as set forth on Schedules 2.1(A)(2), (4), or (7) or
Schedule 3.2 and except for the Company Marks, and with respect only to
the Business: (1) there are no existing Licences or other arrangements
which SHL UK has granted to any third party or any third party has
acquired any right or interest in connection with any of the
Intellectual Property Rights or as a result of which the enforceability
of any of the Intellectual Property Rights against any third party may
be adversely affected. SHL UK has not had notice of any claim by a
third party which might materially affect the validity or
enforceability of any of the Intellectual Property Rights which is
registered or which are material to the Business. To the Knowledge of
Sellers, there have been no infringements by any third party of any of
the Intellectual Property Rights and, to the Knowledge of SHL UK, no
aspect of the carrying on of its Business infringes any intellectual
property rights of any third party which would have a Material Adverse
Effect on the Business.
A. Environmental Matters. With respect only to the Business, no Seller
has been notified of or has any Knowledge of (A) any breach of a material
Environmental Law or (B) any material liability under any Environmental Law.
A. Benefit Plans. There has been no liability, and no such liability is
reasonably expected, under Title IV of ERISA with respect to any Benefit Plan
maintained or previously maintained by any Seller or any entity in the
controlled group (within the meaning of Section 412(d)(5) of the Code) of any
Seller.
I. ARTICLE -- REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
A. Corporate Existence. Buyer is a corporation, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite power and authority to carry on its business
as now conducted, to own or lease its properties and assets and to consummate
the transactions contemplated hereby and under the Operative Agreements to which
Buyer is a party. Buyer is duly qualified or licensed to do business as a
foreign company in good standing in each foreign jurisdiction in which the
conduct of its business or the ownership or leasing of its properties requires
such qualification, other than jurisdictions in which the failure to so qualify
would not materially adversely affect the transactions contemplated hereby.
A. Authority. Buyer has full power and authority to execute and deliver
this Agreement, the Operative Agreements and the Preferred Provider Agreement,
to which it will be a party, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by Buyer of this Agreement, the Operative Agreements and
the Preferred Provider Agreement to which it will be a party and the performance
by Buyer of its obligations hereunder and thereunder, have been duly and validly
authorized by all necessary corporate action. This Agreement has been, and the
Operative Agreements and the Preferred Provider Agreement to which Buyer will be
a party, when executed and delivered by Buyer, will be, duly and validly
executed and delivered by Buyer and constitutes, or will constitute, as the case
may be, legal, valid and binding obligations enforceable against Buyer in
accordance with their respective terms, except as the same may be limited by
insolvency, bankruptcy, reorganization or other laws relating to or affecting
the enforcement of creditors' rights or by general equitable principles.
A. No Conflicts. Neither the execution and delivery by Buyer of this
Agreement, the Operative Agreements and the Preferred Provider Agreement to
which Buyer will be a party, nor the performance by Buyer of its obligations
under this Agreement, such Operative Agreements and the Preferred Provider
Agreement, nor the consummation of the transactions contemplated hereby and
thereby will:
1. conflict with or result in a violation or breach of any of the
provisions of Buyer's organizational documents;
1. result in a breach or default under any material contract or
agreement to which Buyer is a party or by which Buyer is bound or to which any
material property or asset of Buyer is subject, which breach or default would
have a Material Adverse Effect; and
1. conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to Buyer or any of its assets and
properties, other than such conflicts, violations or breaches which could not in
the aggregate reasonably be expected to materially adversely affect the validity
or enforceability of this Agreement or any of such Operative Agreements or the
Preferred Provider Agreement.
A. Buyer's Governmental Approvals and Filings. No consent, approval or
action of, filing or registration with or notice to, any Governmental or
Regulatory Authority on the part of Buyer is required in connection with the
execution, delivery and performance of this Agreement or any of the Operative
Agreements or Preferred Provider Agreement to which Buyer will be a party or the
consummation of the transactions contemplated hereby or thereby, except where
the failure to obtain any such consent, approval or action, to make any such
filing or to give any such notice could not reasonably be expected to materially
adversely affect the ability of Buyer to consummate the transactions
contemplated by this Agreement or any of such Operative Agreements or Preferred
Provider Agreement or to perform its obligations hereunder or thereunder.
A. Litigation; Compliance with Laws. There are no Actions or
Proceedings pending or, to the Knowledge of Buyer, threatened, or any facts or
circumstances which could form the basis of any such Action or Proceeding,
against, relating to or affecting Buyer or any of its assets and properties
which could reasonably be expected to (A) result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements, (B) materially adversely affect the performance of
Buyer's obligations hereunder or the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements or Preferred
Provider Agreement or (C) question the validity of this Agreement.
A. Brokers. Buyer has not employed any broker, finder, investment
banker or financial advisor or incurred any liability for any brokerage or
finder's fees, commissions or similar compensation in connection with the
transactions contemplated hereby.
I. ARTICLE -- COVENANTS OF THE PARTIES
Sellers covenant and agree with Buyer that, except to the extent that
the other party may otherwise consent in writing:
A. Conduct of Business.
1. From the date hereof to the Closing Date, except for
transactions, activities, agreements or commitments which would not be
material to the Business, Sellers shall carry on the Business
substantially in the same manner as heretofore conducted and:
a) Each Seller will maintain itself at all times as a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction under which it is
incorporated;
a) Each Seller will carry on the Business
substantially in the manner carried on as of the date hereof
and each Seller will, with respect to the Business, not engage
in any activity or transaction or make any commitment to
purchase or spend, other than in the ordinary course of the
Business as heretofore conducted; provided, however, without
the written consent of Buyer, no Seller will make any
commitment with respect to the Business to purchase or spend
$50,000 or more, except with respect to purchases for products
of the Business that are intended to be resold;
a) No Seller will pay or obligate itself to pay, any
compensation, commission or bonus to any officer, employee or
independent contractor of the Business as such, except for the
regular compensation and commissions payable to such officer,
employee or independent contractor at the rate in effect on
the date of this Agreement;
a) Sellers will continue to carry all of their
existing insurance with respect to the Business, in amounts
deemed adequate by their respective Boards of Directors or
managements, against all risks usually insured against by
persons operating similar properties or conducting similar
operations in the localities where such properties are located
or such operations are conducted, under valid and enforceable
policies issued by insurers of recognized responsibility;
a) Sellers will use their best efforts to preserve
the Business organization intact and to preserve for Buyer
relationships with suppliers, licensees, distributors and
customers and others having relationships with the Business;
a) No Seller will sell or otherwise dispose of or
pledge or otherwise encumber, any of the Purchased Assets
except in the ordinary course of business and Sellers will
maintain the Locations, machinery and equipment in good
operating condition and repair, subject only to ordinary wear
and tear; and
a) Without limiting the foregoing, each Seller will
consult with Buyer regarding all material developments,
transactions and proposals relating to the Business or the
Purchased Assets.
1. Notwithstanding the foregoing, Sellers shall not be
prohibited or restricted from taking any action specifically required
or permitted by any other provision of this Agreement.
1. On the Closing Date, the Purchased Assets shall be deemed
to include any additional assets relating to the Business that have
been acquired in the ordinary course of conduct of the Business after
the date hereof through the Closing Date.
A. Investigation by Buyer. Sellers, prior to the Closing Date, will (A)
provide Buyer and its officers, employees, counsel, accountants, financial
advisors, consultants and other representatives (collectively, the
"Representatives") with reasonable access, upon reasonable prior notice and
during normal business hours, to all officers, employees and agents of Sellers
who have responsibility for the Purchased Assets, and (B) furnish Buyer and such
other Persons with such additional information and data concerning the Purchased
Assets and the Assumed Liabilities as Buyer or any of such other Persons
reasonably may request in connection with such investigation, except to the
extent that furnishing any such information or data would violate any Law,
Order, Contract or License applicable to Sellers or by which any of the
Purchased Assets are bound. For the purpose of facilitating the above, Sellers
shall promptly designate individuals, each of whom shall be empowered to receive
and act upon such requests, and Buyer agrees to use its best efforts to ensure
that no communication shall be made by Buyer or its Representatives with any
employee, officer or agent of Sellers who has not been so designated on Schedule
5.2 without the prior written consent of the designee. Notwithstanding the
foregoing, Buyer shall not, directly or indirectly, contact any customer or
supplier of a Seller without such Seller's prior written consent with respect to
the Business or the transactions contemplated hereby.
A. Confidentiality. All documents and information, whether oral or
written, concerning Sellers, the Purchased Assets and the Assumed Liabilities
furnished to Buyer or its Representatives under Section 5.2 or otherwise in
connection with the transactions contemplated hereunder shall be considered
"Confidential Information" as defined in the Confidentiality Agreement and shall
be held subject to such agreement. The Confidentiality Agreement shall remain in
full force and effect pursuant to the terms thereof, notwithstanding the
execution and delivery of this Agreement or the termination hereof. Buyer shall,
and shall cause its officers, employees and authorized Representatives to,
comply fully with all terms and conditions of the Confidentiality Agreement.
A. Consents and Approvals.
1. The parties hereto shall make or cause to be made all
necessary filings, as promptly as practicable, in order to facilitate
prompt consummation of the transactions contemplated hereby. In
addition, the parties hereto shall use their respective reasonable
efforts, and shall cooperate fully with each other to (1) comply as
promptly as practicable with all governmental requirements applicable
to the transactions contemplated hereby, and (2) obtain promptly all
approvals, permits, orders, qualifications or other consents of any
applicable Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this Agreement.
Further, Sellers shall obtain clearance certificates from Canadian
Governmental or Regulatory Authorities that have previously been
requested by Buyer (none of which are required to consummate the
transactions contemplated hereby). Each of the parties hereto shall
furnish to the other parties such necessary information and reasonable
assistance as such other parties may reasonably request in connection
with the foregoing.
(B) Subject to the Confidentiality Agreement and applicable
law, the parties hereto shall coordinate and cooperate with each other
in providing such assistance as the other may reasonably request in
connection with the foregoing.
(C) Except in relation to the Purchased Assets located in the
U.K. which obligation shall commence at Closing, each party will use
reasonable efforts to obtain, as promptly as practical, all consents,
approvals or actions of, and give all notices to, any Person required
of such party in respect of transactions contemplated hereby and
provide such other information and communications to such Persons as
such Persons may reasonably request in connection therewith. Each party
will provide prompt notification to the other when any such consent,
approval, action or notice referred to above is obtained, taken, made
or given, as applicable, and will advise the other of any
communications with any Person regarding any of the transactions
contemplated by this Agreement.
A. Employees; Employee Benefits. Except as set forth on Schedule 5.5,
1. Buyer to Offer Employment. Buyer shall, no later than one
(1) Business Day after the date hereof, offer employment effective as
of the Closing Date to all of the employees of the Business (the
"Employees"), except those Employees who are employed in the U.K. Such
offers shall require acceptance or rejection thereof no later than
seven (7) Business Days after the date hereof and shall offer all such
Employees the same or comparable positions as held by such Employees as
of the Closing Date, at the same or comparable wages and salaries (and
commissions, where applicable) and with the same or comparable benefits
(as set forth on Schedule 3.9), as such Employees receive as of the
Closing Date (the "Offer"). All Employees shall be entitled to
participate in all employee benefit plans maintained by Buyer for its
full-time employees, subject to existing eligibility requirements.
Buyer acknowledges and agrees that the Employees shall be credited with
years of service with Sellers for purposes of determining eligibility
and vesting under Buyer's employee benefit plans, including without
limitation, Buyer's vacation, service awards, severance benefits and
health care plan. Sellers agree to use their best efforts to ensure
that at least 85% of the Employees who are offered employment by Buyer
accept such employment and to use reasonable commercial efforts to
ensure that Roger St. Germain enters into an employment agreement with
Buyer. Sellers also agree to cooperate with Buyer to ensure that the
independent contractors engaged by Sellers in the Business on the
Closing Date agree to continue providing services in the Business for
the Buyer.
1. Location. Each Employee accepting employment will be
employed by Buyer in the same Location in which the Employee was
employed immediately prior to the Closing Date.
1. Sellers' Obligations.
(1) All Employees shall cease to actively participate
in all Benefit Plans as of the Closing Date and Sellers shall
retain all liabilities thereunder. In addition, Sellers shall
be responsible for (i) paying any wages, salaries, holiday and
banked overtime and, except with respect to U.K. Employees,
vacation, which relate to the employment of the Employees by
Sellers prior to the Closing Date and (ii) all other
employment matters relating to the Business, including
Employee terminations prior to the Closing Date, benefits and
pension obligations accrued and not paid prior to the Closing
Date, actions, causes of actions, claims and demands, and any
award, judgment, penalties, costs or expenses relating
thereto.
(2) Each Seller shall assume the liability for any
and all obligations or liabilities, including but not limited
to any liability under ERISA, the WARN Act, Title VII and
analogous U.S. federal and state, Canadian and U.K. employment
laws, including any common law, statutory or contractual
obligation to provide notice of termination, compensation in
lieu of such notice or severance pay associated with any
Canadian or U.S. Employee who does not accept an Offer of
employment from Buyer made in compliance with this Agreement.
Sellers also agree to indemnify Buyer from and against all
Losses incurred by Buyer arising out of any Quebec, Canada
Employees' refusal to accept an Offer of employment from Buyer
made in compliance with this Agreement.
(3) In relation to any Employees employed in or from
the U.K. who are not listed as U.K. Employees, Sellers shall
be responsible for and shall pay all wages, salaries, holiday
and vacation pay and severance and any other obligations
pertaining to termination of employment whether before or
after the Closing Date to the extent that such Employees are
not listed as U.K. Employees and shall indemnify Buyer in
respect of the same.
1. Buyer's Obligations.
a) With respect to all Employees who accept
employment with Buyer pursuant to Section 5.5(A) and all the
U.K. Employees, each such Employee will be an employee of
Buyer on and as of the Closing Date, and, subject to paragraph
(E) below, Buyer shall be responsible for, and shall (i) pay
all wages, salaries, holiday and vacation pay and severance
(and any other obligation pertaining to termination of
employment) on and after the Closing Date in respect of such
Employees and (ii) assume liability for all employment matters
relating to such Employees arising with respect to the period
on and after the Closing Date, including actions, causes of
actions, claims and demands arising on or after the Closing
Date, and any award, judgment, penalties, costs or expenses
relating thereto.
a) Buyer shall assume the liability for any and all
obligations or liabilities, including but not limited to any
liability under ERISA, the WARN Act, Title VII and analogous
U.S. federal and state, Canadian and U.K. employment laws,
including any common law, statutory or contractual obligation
to provide notice of termination, compensation in lieu of such
notice or severance pay associated with any failure on the
part of Buyer to offer employment to the Employees on the
terms and conditions of this Agreement. Buyer shall indemnify
each Seller from and against any costs, claims, charges and
expenses attributable to any failure by Buyer to comply with
its obligations under the U.K. Employment Regulations.
1. Transfer of Employment and Pensions.
(1) For the avoidance of doubt, in the U.K., the
parties acknowledge and agree that the sale of the Purchased
Assets from Sellers to Buyer is a "relevant transfer" within
the meaning of the Transfer of Undertakings (Protection of
Employment) Regulations 1981 (the "U.K. Employment
Regulations"). Pursuant to the U.K. Employment Regulations,
the employment of U.K. Employees shall at Closing
automatically transfer from Sellers to the Buyer. Both Sellers
and Buyer agree to comply with all requirements provided in
the U.K. Employment Regulations before and after Closing.
(2) The Buyer agrees that from the Closing Date it
will make contributions to any personal pension scheme in
which any of the U.K. Employees is a member as of the Closing
Date at the level of contribution currently provided by
Sellers to U.K. Employees under Sellers' standard terms and
conditions of employment.
(3) Save for the personal pension schemes in respect
of U.K. Employees of which Sellers have notified Buyer,
Sellers are not a party to nor participate in nor contribute
to any other scheme, agreement or arrangement (whether legally
enforceable or not) for the provision of any pension or
retirement for any U.K. Employee or for the widow, widower,
child or dependent of any U.K. Employee.
(4) Sellers contribute to U.K. personal pensions
schemes in accordance with Sellers' standard terms and
conditions of employment. All contributions which have fallen
due for payment in respect of such schemes have been paid
promptly.
(5) All U.K. Employees who have at any time had the
right to join the group personal pension scheme have been
advised of that right. No U.K. Employee has been excluded from
such pension scheme or from any of the benefits thereunder in
contravention of Article 119 of the Treaty of Rome or the
Pensions Act 1995.
(6) None of Sellers is engaged or involved in any
proceedings which relate to or are in connection with personal
pension schemes for U.K. Employees and no such proceedings are
pending or threatened and, to the Knowledge of Sellers, there
are no facts likely to give rise to any such proceedings.
1. Without prejudice to the U.K. Employment Regulations,
nothing herein shall be construed as preventing the Buyer from
terminating the employment of any employee, from modifying the terms
and conditions of employment of any employee, or from terminating or
modifying any benefit plan that Buyer may maintain or establish and
Sellers shall have no liability therefor.
A. Buyer's or Sellers' Knowledge of Breach. If prior to the Closing
Date, any of the Sellers or Buyer shall have actual knowledge of a material
breach by the other of any representation, warranty or agreement contained in
this Agreement, the party so aware shall promptly advise the other parties in
writing of the specifics thereof and such notice shall be delivered to the other
parties prior to the Closing, provided, that any notice to Sellers or Buyer, on
the part of Buyer or Sellers, respectively, shall not diminish or otherwise
adversely affect the rights of Buyer or Sellers, respectively, hereunder,
including but not limited to the rights of the parties under Article 9 hereof.
A. Reasonable Best Efforts, etc. Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take or cause to be taken all action, to do or cause
to be done, and to assist and cooperate with the other parties hereto in doing,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement, including, but not limited to,
(A) the satisfaction of the conditions precedent to the obligations of any of
the parties hereto, and (B) the execution and delivery of such instruments, and
the taking of such other actions, as the other parties hereto may reasonably
require in order to carry out the intent of this Agreement.
A. Bulk Sales Act Indemnity. Buyer agrees that it shall not require
Sellers to comply with the requirements of the applicable Bulk Sales Laws in
respect of the transactions contemplated by this Agreement and the Operative
Agreements. Sellers shall indemnify Buyer in respect of and hold it harmless
from and against any and all Losses, based, in whole or in part, upon the
failure of Sellers to comply with applicable Bulk Sales Laws in respect of such
transactions.
A. Access to Books and Records. To the extent any of the Business Books
and Records are required by Law or required, in Seller's reasonable judgment, to
be retained by any Seller, such Seller may deliver duplicate originals or, if
duplicate originals cannot be made available, photostatic copies or other
reproductions. Buyer covenants and agrees to retain the Business Books and
Records as required by applicable Laws. So long as the Business Books and
Records relating to the period prior to the Closing Date are retained by Buyer
as agreed above, Sellers shall have reasonable access to and the right to
inspect and to make copies (at their own expense) of the same at any time upon
reasonable request during normal business hours for any proper and bona fide
purpose without undue interference with the business operations of Buyer.
A. Use of Sellers' Names. Buyer shall not, and shall cause its
Affiliates not to, use any Company Marks, any variation thereof or anything
similar thereto, nor any other names, logos, trademarks, service marks, trade
names, copyrights or trade secrets utilized by any Seller which are not
specifically identified on Schedule 2.1(A)(7); provided, however, that Buyer
will be permitted to utilize for purposes of using up the stock (A) all
inventory listed on Schedule 2.1(A)(2) existing as of the Closing Date and
embodying the Intellectual Property Rights listed on Schedule 2.1(A)(7), and (B)
all materials referred to in Section 2.1(A)(10), which contain such names,
logos, trademarks, service marks, business names or trade names in each case for
a period of ninety (90) days after the Closing Date, at which time Buyer shall
no longer be permitted to utilize and must destroy or recycle any such inventory
or material; and provided, further, that (i) Buyer shall use reasonable efforts
to include with such inventory and material information a prominently located
notice clearly stating that Buyer is now the owner of the Business, (ii) Buyer
shall have no rights to utilize any Company Marks in new print or media
advertising which is not transferred under this Agreement, and (iii) Buyer will,
pursuant to Section 2.1(A)(7), become as of the Closing Date the owner of all of
Sellers' interest (except the Company Marks) in the website of the Business, in
the format in which it exists as of the Closing Date, and, accordingly, Buyer
shall assume responsibility as of the Closing Date for the use of any
third-party trademarks, trade names, copyrighted materials or other proprietary
information therein.
A. Limitations. (A) WITH RESPECT TO ALL INVENTORY AND PRODUCT CONVEYED
PURSUANT TO THIS AGREEMENT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF
SELLERS SET FORTH IN THIS AGREEMENT, THE SALE OF THE INVENTORY AND PRODUCT IS
MADE "AS IS, WHERE IS", AND SELLERS SHALL NOT BE DEEMED TO HAVE MADE ANY FURTHER
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, NOW OR HEREAFTER, AS TO THE
VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, QUALITY OR WORKMANSHIP,
FITNESS FOR USE OR A PARTICULAR PURPOSE, MAINTENANCE OR MARKETABILITY OF ANY OF
THE INVENTORY OR PRODUCT.
(B) Sellers expressly disclaim any warranty (1) that any
software, hardware, equipment and/or computer systems, to the extent
that they are included in the Purchased Assets or to the extent that
Buyer has rights of access under the terms of the Transition Service
Agreement, will be Year 2000 Compliant, and (2) in relation to currency
related processes, including, without limitation, functionality
relating to European Monetary Union, to the extent that such currency
related processes are included in the Purchased Assets. For purposes of
this Agreement (x) "Year 2000 Compliant" shall mean, with respect to
software products, hardware, equipment and/or any computer system that
neither performance nor functionality is affected by dates prior to,
during and after the year 2000, whether or not such date is affected by
a leap year) and (y) "functionality" shall mean any processes and the
result of any processes.
A. Cooperation With Respect to Financing. Sellers agree to cooperate in
any reasonable manner with Buyer in connection with Buyer's satisfaction of
conditions under its financing commitment letter from Fleet Bank, N.A.
A. No Solicitation of Offers. No Seller shall, directly or indirectly,
through any officer, director, employee, agent or otherwise, (A) solicit,
initiate or encourage the submission of proposals or offers from any Person
relating to any acquisition or purchase of all or a material amount of the
assets of, or any equity interest in, or any merger, consolidation or business
combination with, the Business (an "Acquisition Proposal"), or (B) participate
in any discussion or negotiation regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with or assist,
facilitate or encourage, any Acquisition Proposal by any other Person.
A. Repayments and Apportionments. (A) Buyer shall, subject to
subsection (E) below, promptly after receipt of notification of the amount due,
reimburse Sellers all amounts owed pursuant to Section 5.5(D)(2).
(B) Sellers and Buyer agree to cooperate in good faith with
one another to allocate all costs and expenses associated with the
Assumed Liabilities (certain of which are set forth on Schedule
5.14(B)) to the appropriate party and to remit, as necessary, all funds
to cover such costs and expenses.
(C) Buyer agrees to reimburse Sellers for the prepayment of
certain categories of expenses set forth on Schedule 5.14(C), as
reflected on the financial records of the Business on the Closing Date.
(D) On the Closing Date, Sellers will deliver an Officer's
Certificate pursuant to Section 6.5(F) setting forth an estimate of:
(1) the amount referred to in paragraph (A) of this section; (2)
payments due under paragraph (B) of this section to the extent they are
identifiable on such date; and (C) the amount due pursuant to paragraph
(C) of this section, each as reflected on the financial records of the
Business as of three (3) Business Days prior to the Closing Date and
certified by an Officer of the Business. Any adjustment to this amount
or additional items (not quantifiable at Closing) due under paragraph
(A), (B) or (C) of this section shall, subject to paragraph (E) of this
section, be paid by Buyer promptly after receipt of notification of the
amount due.
(E) Buyer shall have ten (10) Business Days to review all
amounts indicated by Sellers as due under this Section 5.14 and shall,
within such period, bring to Sellers' attention any discrepancies it
reasonably believes exist. Sellers and Buyer shall use best efforts to
work together in good faith to resolve any issues within ten (10)
Business Days of Buyer's identification thereof.
A. Side Letters.
(A) New U.K. Property. SHL UK and Buyer will promptly execute
that certain letter agreement, attached hereto as Exhibit F, pursuant
to which Buyer agrees to use best endeavors to assist SHL UK in
locating and negotiating a lease for a London training facility to
replace the current facility at Golden Lane, and to reimburse SHL UK at
Closing for its costs and expenses in connection therewith, all as set
forth therein.
(B) U.K. Letter. Sellers will promptly execute that certain
letter agreement, attached hereto as Exhibit G, pursuant to which
Sellers agree to prevent any originally executed copies of this
Agreement to be delivered to the U.K.
A. Intellectual Property License. Buyer shall grant to Sellers a
royalty free license to use the NATS System and any other information technology
or intellectual property rights transferred to Buyer under this Agreement, so
far as they are required by the Sellers to perform the Services under the
Transition Services Agreement, for the purposes of providing all Services
thereunder for the term thereof, or such extended period as may be necessary for
the purposes of Sellers providing the Services under the Transition Services
Agreement.
A. Courseware and Other Materials. Buyer acknowledges and recognizes
that the Contracts specified in Item (J) of Schedule 3.2 (the "Teaching
Contracts"), whether oral or written, between Sellers and certain third parties
granting Sellers the right to use the courseware materials listed in Schedule
2.1(A)(7) and the advertising and promotional materials produced or used by the
Sellers as set out in Schedule 2.1(A)(7) (together, the "Courseware Materials")
shall not be assigned, novated or otherwise transferred to Buyer as part of the
Purchased Assets. Buyer shall obtain at its own cost all replacement consents
and licences for the Teaching Contracts and certain of the internet website and
e-mail services offered in connection with the TRAININGNOW.COM domain name which
are necessary to enable Buyer to use the Courseware Materials including, without
limitation, consents from third parties who have any legal interest in the
Courseware Materials or software, hardware, and any other data, documentation,
materials or equipment used by Buyer in connection with its use of the
Courseware Materials.
A. Buyer's Guarantee of Subsidiary Actions. (A) In consideration of
Sellers entering into and acting in accordance with this Agreement, Buyer (as
principal obligor and not merely as a surety) unconditionally and irrevocably
guarantees as a continuing obligation the proper and punctual performance by
Buyer and its Subsidiaries all of their obligations under or pursuant to this
Agreement (including any documents of transfer or otherwise entered into
pursuant to the terms of this Agreement).
(B) Buyer's liability hereunder shall not be discharged or
impaired by any amendment to or variation of this Agreement, any
release of, or granting of time or other indulgence to, Buyer or any
third party, any liquidation, administration, receivership or
winding-up of Buyer or by any other act or omission or any other events
or circumstances whatsoever (whether or not known to Buyer, Sellers or
the Subsidiaries) which would or might (but for this clause) operate to
impair or discharge Buyer's liability under this guarantee.
A. Tax Registration. Buyer's obligations under this Agreement in
respect of the Purchased Assets located in Canada will be adopted and assumed by
a Canadian Subsidiary prior to the Closing Date by separate instrument. Such
Subsidiary will, prior to the Closing Date, be registered for the purposes of
the Excise Tax Act (Canada) and the Act respecting Quebec Sales Tax and will
provide Sellers with copies of the Subsidiary's PST, GST and QST registration
documents.
A. Symposium Licenses. Sellers and Buyer agree that, notwithstanding
their inclusion on Schedule 3.2, each party shall have the right to attempt to
sell the six Symposium licenses set forth thereon, which are currently owned by
the Business. If Buyer shall enter into an agreement of sale for the licenses
prior to the execution of any such agreement by Sellers, Sellers agree to
transfer such licenses to Buyer at Sellers' cost therefor, as reflected on the
financial records of Sellers. Sellers and Buyer agree to cooperate to keep the
other informed about the status of negotiations for any such sale.
I. ARTICLE -- CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of Buyer hereunder to purchase the Purchased Assets are
subject to the fulfillment, 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 Buyer in
its sole discretion):
A. Representations and Warranties. The representations and warranties
of Sellers contained herein shall be true and accurate in all material respects
as of the date made and as of the Closing as though such representations and
warranties were made at and as of the Closing, except for (i) changes permitted
or contemplated by this Agreement, (ii) changes occurring in the ordinary course
of the Business since the date of execution of this Agreement, and (iii)
representations and warranties made as of a specified date; and Buyer shall have
received at the Closing a certificate, dated the Closing Date, signed by the
president or a vice president or a director of each Seller to such effect.
A. Performance. Sellers shall have performed and complied, in all
material respects, with all agreements, obligations and covenants required to be
performed or complied with by them on or prior to the Closing; and Buyer shall
have received at the Closing a certificate, dated the Closing Date, signed by
the president or a vice president or director of each Seller to such effect.
A. Approvals and Filings. All material consents, authorizations and
approvals from, and all material declarations, filings and registrations with,
Governmental or Regulatory Authorities or third parties required to consummate
the transactions contemplated hereby without a Material Adverse Effect shall
have been obtained or made.
A. Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
A. Deliveries by Sellers. Sellers shall have delivered to Buyer the
following:
1. subject to the provisions of Attachment 1 in relation to the U.K.
Properties, executed documents of transfer and assignment required to transfer
title to the Purchased Assets to Buyer including, without limitation, the
Operative Agreements;
1. the Preferred Provider Agreement duly executed by Sellers;
1. executed copies of the Transition Services Agreement;
1. certificates from appropriate authorities, dated as of or about the
Closing Date, as to the good standing and qualification to do business of each
Seller in its jurisdiction of incorporation;
1. a certificate of the Secretary or Assistant Secretary of each Seller
certifying as to resolutions of the board of directors and stockholders, as
appropriate, and incumbency and signature of its officers or directors;
1. Officers' or Directors' Certificates referred to in Sections
2.3(A)(4), 2.6(B), 5.14(D), 6.1 and 6.2;
1. Officer's Certificate from SHL Systemhouse Co. setting forth the
material Licenses used in the ordinary operations of the Canadian Business on
the Closing Date;
1. such other certificates and documents as Buyer or its counsel may
reasonably request; and
1. all other previously undelivered items required to be delivered by
Sellers at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith.
A. Corporate Authorization. All corporate action necessary to authorize
(i) the execution, delivery and performance by Sellers of this Agreement and the
Operative Agreements and (ii) the consummation of the transactions contemplated
hereby and thereby, shall have been obtained by Sellers.
A. No Material Adverse Effect. No event, occurrence, fact, condition,
change, development or effect shall have occurred, exist or come to exist since
March 31, 1998, that, individually or in the aggregate, has constituted or
resulted in, or could reasonably be expected to constitute or result in, a
Material Adverse Effect on the Business or the Purchased Assets (taken as a
whole).
I. ARTICLE -- CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
The obligation of Sellers hereunder to sell the Purchased Assets is
subject to the fulfillment, 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 Sellers in
their sole discretion):
A. Representations and Warranties. The representations and warranties
of Buyer contained herein shall be true and accurate in all material respects as
of the date when made and as of the Closing as though such representations and
warranties were made at and as of the Closing, except for (i) changes permitted
or contemplated by this Agreement and (ii) representation and warranties made as
of a specified date; and Sellers shall have received at the Closing a
certificate, dated the Closing Date, signed by the president or a vice president
of Buyer to such effect.
A. Performance. Buyer shall have performed and complied with, in all
material respects, all agreements, obligations and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing; and
Sellers shall have received at the Closing a certificate, dated the Closing
Date, signed by the president or a vice president of Buyer to such effect.
A. Approvals and Filings. All other material consents, authorizations
and approvals from, and all material declarations, filings and registrations
with, Governmental or Regulatory Authorities or third parties required to
consummate the transactions contemplated hereby without a Material Adverse
Effect shall have been obtained or made.
A. Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
A. Deliveries by Buyer. Buyer shall have delivered to Sellers the
following:
1. payment of the cash portion of the Purchase Price;
1. the Preferred Provider Agreement duly executed by Buyer;
1. the Transition Services Agreement duly executed by Buyer;
1. subject to the provisions of Attachment 1 in relation to the U.K.
Properties, the Operative Agreements, duly executed by Buyer;
1. certificates from appropriate authorities, dated as of or about the
Closing Date, as to the good standing and qualification to do business of Buyer
in its jurisdiction of incorporation;
1. a certificate of the Secretary or Assistant Secretary of Buyer
certifying as to resolutions of its board of directors and stockholders, as
appropriate, and incumbency and signature of its officers;
1. the Operative Agreements, duly executed by Buyer;
1. Officer's Certificate referred to in Sections 7.1 and 7.2;
1. such other certificates and documents as Sellers or their counsel
may reasonably request; and
1. all other previously undelivered items required to be delivered by
Buyer at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith unless waived in writing by the Sellers.
A. Corporate Authorization. All corporate action, necessary to
authorize (i) the execution, delivery and performance by Buyer of this
Agreement, the Operative Agreements and the Preferred Provider Agreement and
(ii) the consummation of the transactions contemplated hereby and thereby, shall
have been obtained by Buyer.
I. ARTICLE -- TAX MATTERS
A. Elections and Notification-Canada
1. The Purchase Price is exclusive of all Canadian Taxes.
1. Deferred Revenue Election. SHL Systemhouse Co., SHL Computer
Innovations Inc. and Buyer covenant and agree to elect jointly under subsection
20(24) of the Income Tax Act (Canada) and within the prescribed form and the
prescribed time for purposes of the Income Tax Act (Canada), and shall therein
elect that the payment by them to Buyer as consideration for the assumption by
Buyer of the deferred revenue of SHL Systemhouse Co. and SHL Computer
Innovations Inc. (as set out in Schedule 8.3 hereto) may be deducted in
computing the SHL Systemhouse Co. and SHL Computer Innovations Inc. income for
the taxation year in which the Closing Date occurs and that the amount is deemed
to be an amount described in paragraph 12(1)(a) of the Income Tax Act (Canada)
for Buyer for its taxation year in which the Closing Date occurs.
A. Elections and Notifications - U.K.
1. The Purchase Price is exclusive of United Kingdom value added tax
("VAT").
1. The parties hereto acknowledge and agree that they shall
each use reasonable efforts to ensure that the transfer of the
Purchased Assets is treated as a transfer of a going concern for the
purposes of section 49(1) of the Value Added Tax Act 1994 ("VATA") and
article 5 of the Value Added Tax (Special Provisions) Order 1995 will
apply to the sale hereunder of the Purchased Assets by SHL UK and
accordingly Buyer represents and warrants that:
a) GP UK intends to use such Purchased Assets to carry on the same kind
of business as the Business with effect from Closing; and
a) GP UK is duly registered under VATA.
1. If:
a) Buyer or GP UK is in breach of paragraph (B)(2) or is reasonably
believed by the Sellers to be in breach of paragraph (B)(1), or
a) Notwithstanding any other provision in this Agreement to the
contrary, HM Customs & Excise determine, notwithstanding the intention of the
parties expressed in paragraph (B), that an amount of VAT is payable in respect
of the sale hereunder by SHL UK of the Business and the Purchased Assets,
then Buyer shall procure that GP UK shall, within fourteen (14) days of
receipt of an appropriate VAT invoice from SHL UK, pay to SHL UK the amount of
the VAT shown on the invoice and Buyer shall indemnify SHL UK on an after tax
basis against any claim by HM Customs & Excise for any penalties or interest
arising in relation to such VAT, save to the extent that such penalties or
interest have arisen as a result of a default or delay on behalf of SHL UK.
Where paragraph (1) above applies, Sellers may require VAT to be paid at Closing
by Buyer on the sale hereunder of the Purchased Assets, but the VAT shall be
refunded if HM Customs & Excise both subsequently confirm that VAT is not
chargeable and make repayment of or give credit for, any such VAT accounted for
to HM Customs & Excise by or on behalf of SHL UK.
1. The parties agree that, after Closing, SHL UK may preserve
such of the records relating to the Business as are required to be
preserved by paragraph 6 of Schedule 11 VATA.
A. Allocation of Purchase Price. The Purchase Price (which is exclusive
of all Taxes) shall be allocated among each of the Purchased Assets in
accordance with their relative fair market values in the manner set forth in
Schedule 8.3 hereto. Such allocations shall be conclusive and binding on each of
the Sellers and the Buyer for purposes of all Tax Returns. Sellers and Buyer
agree not to take positions on any Tax Returns inconsistent with such
allocations.
A. Distribution of Purchase Price. The Purchase Price shall be
distributed among the Sellers according to the relative fair market values of
the Purchased Assets sold by each in the manner set forth on Schedule 8.4
hereto.
A. Transfer Taxes. Buyer shall pay all Transfer Taxes arising out of or
in connection with the purchase and sale of the Purchased Assets hereunder at
the time of Closing to Sellers or the relevant Governmental or Regulatory
Authority, as appropriate. Buyer shall also reimburse Sellers for any and all
additional Transfer Taxes assessed against or paid by any Seller to a Tax
Authority in connection with such purchase and sale. All reimbursements shall be
paid by Buyer within forty-five (45) days of submission by any Seller to Buyer
of evidence reasonably satisfactory to Buyer of such payment of Transfer Taxes
by any Seller.
A. Property Taxes. Buyer and Sellers shall divide on a daily proration
basis property taxes on the Purchased Assets for the tax year that includes the
Closing Date.
A. Compliance with U.K. Restrictive Trade Practices Act 1976. If there
is any provision of this Agreement or of any agreement or arrangement of which
this Agreement forms part which causes or would cause this Agreement or that
agreement or arrangement to be subject to registration under the U.K.
Restrictive Trade Practices Act 1976, then that provision shall not take effect
until the day after particulars of this Agreement or that agreement or
arrangement (as the case may be) have been furnished to the U.K. Director
General of Affair Trading pursuant to Section 24 of the Restrictive Trade
Practices Act 1976.
I. ARTICLE -- SURVIVAL AND INDEMNIFICATION
A. Survival of Representations and Warranties. The respective
representations, warranties, covenants and agreements of the parties contained
herein or in any certificate or other document delivered prior to or at the
Closing pursuant to this Agreement shall survive for a period of two (2) years
after the Closing Date except for (A) claims made on or prior to two (2) years
after the Closing Date pursuant to Article 9, which claims and the provisions of
Article 9 shall survive until the liability is finally determined and (B) the
obligations of the parties under Sections 3.1 (but only with respect to Sellers'
title to the Purchased Assets), 5.8, 8.1, 8.2, 8.5 and 8.6, which obligations
shall survive until sixty (60) days following the end of the relevant
limitations period, including any extension thereof (each such date being a
"Cut-Off Date"). Thereafter, no party shall be under any liability whatsoever
with respect to any such representation, warranty, covenant or agreement or any
certificate in respect thereof.
A. Indemnification.
1. Subject to paragraphs (C) and (D) of this Section 9.2 and
the other Sections of this Article 9, Sellers shall, jointly and
severally, indemnify Buyer Indemnified Parties in respect of, and hold
each of them harmless from and against, any and all Losses suffered,
incurred or sustained by any of them or to which any of them becomes
subject, resulting from or arising out of any breach of a
representation or warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of Sellers contained in this
Agreement.
1. Subject to paragraphs (C) and (D) of this Section 9.2 and
the other Sections of this Article 9, Buyer shall indemnify the Seller
Indemnified Parties in respect of, and hold each of them harmless from
and against, any and all Losses suffered, incurred or sustained by any
of them or to which any of them becomes subject, resulting from or
arising out of (i) any breach of a representation or warranty or
nonfulfillment of or failure to perform any covenant or agreement on
the part of Buyer or its Subsidiaries contained in this Agreement or
(ii) the Assumed Liabilities.
1. An Indemnified Party shall provide the Indemnifying Party
with a Claim Notice or Indemnity Notice, as the case may be, with
respect to such claim, as soon as reasonably practicable following the
time at which the Indemnified Party discovered such claim and in any
event prior to the Cut-Off Date.
1. Except with respect to any indemnification payments made
pursuant to the provisions of any transfer, lease or underlease of the
U.K. Properties pursuant to Attachment 1, the terms of which shall not
be subject to the limitations of this Section 9.2 (D), notwithstanding
anything to the contrary contained in this Agreement, no amounts of
indemnity shall be payable as a result of any claim in respect of a
Loss arising under paragraph (A) or (B) of this Section 9.2:
a) in the case of a claim by a Buyer Indemnified
Party or a Seller Indemnified Party, as the case may be,
unless, until and then only to the extent that Buyer
Indemnified Parties or the Seller Indemnified Parties, as
applicable, have suffered, incurred, sustained or become
subject to Losses referred to in such paragraphs in excess of
$200,000 in the aggregate, and then only to the extent of such
excess;
a) in the case of a claim by a Buyer Indemnified
Party for any Losses, to the extent that Buyer Indemnified
Parties have received payments in respect of claims made under
such paragraphs aggregating in excess of $12,000,000; or
a) with respect to any claim for indemnification
hereunder to the extent that the Indemnifying Party can
demonstrate that it was actually prejudiced by the Indemnified
Party's failure to provide a Claim Notice or Indemnity Notice
in accordance with paragraph (C) above (but only with respect
to the additional amount of Loss resulting from such failure);
provided, that the limitations contained in clauses (1) and (2) shall not apply
not apply to Losses arising from breach of the provisions of Sections 5.5 and
11.7 and Article 8; and
provided, further, that such limitations do not apply to Losses arising from (x)
Buyer's failure to fulfill its obligations under the Assumed Liabilities and (y)
any Loss suffered by Buyer in respect of any Excluded Liability; and
provided, further, that the limitation contained in clause (1) shall not apply
to Losses arising from Sellers' failure to obtain the consent of any landlord to
the assignment of the leases listed on Schedule 2.1(A)(4) for the following
properties: Burrard Street, Vancouver; 505 University Avenue, Toronto; 100
University Avenue, Toronto; Bank Street, Ottawa; and 800 Rene Levesque,
Montreal.
1. The remedies provided in this Section 9.2 shall be the
exclusive remedies of each of Buyer Indemnified Parties and Seller
Indemnified Parties with respect to any Losses relating to or arising
from a breach of the representations, warranties and covenants
contained in this Agreement.
1. Notwithstanding anything to the contrary contained in this
Agreement, the parties expressly agree that Buyer shall have no right
of rescission of this Agreement under the U.K. Misrepresentation Act or
any other comparable Laws.
A. Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 9.2 will be asserted and resolved as follows:
1. In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 9.2 is asserted
against or sought to be collected from such Indemnified Party by a
Person other than Sellers or Buyer or any Affiliate of Sellers or Buyer
(a "Third Party Claim"), the Indemnified Party shall deliver a Claim
Notice to the Indemnifying Party in accordance with Section 9.2(C). The
Indemnifying Party will notify the Indemnified Party within the Dispute
Period whether the Indemnifying Party disputes its liability to the
Indemnified Party under Section 9.2 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party
against such Third Party Claim.
a) If the Indemnifying Party notifies the Indemnified
Party within the Dispute Period that the Indemnifying Party
desires to defend the Indemnified Party with respect to the
Third Party Claim pursuant to this Section 9.3(A), and
provided that the Indemnifying Party delivers to the
Indemnified Party a written instrument setting forth the
Indemnifying Party's irrevocable agreement to indemnify the
Indemnified Party for any Money Judgment or other Loss in
connection with such Third Party Claim (an "Acknowledgment"),
then the Indemnifying Party will have the right to defend, at
the sole cost and expense of the Indemnifying Party, such
Third Party Claim by all appropriate proceedings, which
proceedings will be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be
settled at the discretion of the Indemnifying Party, provided,
that the Indemnifying Party will not agree to any settlement
without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld) unless such
settlement (x) requires no more than a monetary payment for
which the Indemnifying Party has irrevocably agreed to
indemnify any Indemnified Party hereunder and (y) includes a
full, unconditional and complete release of the Indemnified
Party; and provided, further, that the Indemnified Party will
be entitled to control the defense of any Third Party Claim as
to which, in the reasonable judgment of the Indemnifying
Party's counsel, representation of both the Indemnifying Party
and the Indemnified Party would be inappropriate under
applicable standards of professional conduct due to actual or
potential conflicts of interest between them (provided that
the Indemnified Party shall not agree to any settlement
without the prior written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld)). The
Indemnified Party and its counsel may participate in, but not
control, any defense or settlement of any claim controlled by
the Indemnifying Party pursuant to Section 9.3(A)(1);
provided, that the Indemnified Party will bear its own costs
and expenses with respect to such participation unless the
Indemnifying Party and the Indemnified Party mutually agree to
the retention of such counsel. The Indemnified Party and the
Indemnifying Party will cause their respective legal counsel
to provide reasonable cooperation to the other and its legal
counsel in connection with the other's controlling or assuming
the defense of any Third Party Claim, including by furnishing
all papers served in such proceeding. Notwithstanding the
foregoing, the Indemnified Party may take over the control of
the defense or settlement of a Third Party Claim at any time
if it irrevocably waives its right to indemnity under Section
9.2 with respect to such Third Party Claim.
a) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party Claim
pursuant to Section 9.3(A), or if the Indemnifying Party fails
to give any notice whatsoever within the Dispute Period, then
the Indemnified Party will have the right to defend the Third
Party Claim by all appropriate proceedings, which proceedings
will be vigorously and diligently prosecuted by the
Indemnified Party to a final conclusion or will be settled at
the discretion of the Indemnified Party; provided, that if the
Indemnifying Party is not defending but has delivered to the
Indemnified Party an Acknowledgment, the Indemnified Party
will not agree to any settlement without the prior written
consent of the Indemnifying Party (which consent shall not be
unreasonably withheld) unless the Indemnified Party
irrevocably waives its right to indemnity under this Agreement
with respect to such settlement. The Indemnifying Party may
participate in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this Section
9.3(A)(2), and the Indemnifying Party will bear its own costs
and expenses with respect to such participation. The
Indemnifying Party will, and will cause its legal counsel to,
provide reasonable cooperation to the Indemnified Party and
its legal counsel in connection with the defense of any claim
as to which the Indemnifying Party has not assumed the
defense. In any event, the Indemnified Party will keep the
Indemnifying Party reasonably informed as to the status of the
defense of any claim as to which the Indemnifying Party has
not assumed the defense.
a) If the Indemnifying Party notifies the Indemnified
Party that it does not dispute its liability to the
Indemnified Party with respect to the Third Party Claim under
Section 9.2 or fails to notify the Indemnified Party within
the Dispute Period whether the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Third
Party Claim, the Indemnifying Party shall be deemed to have
waived any rights to dispute its liability to indemnify and
hold harmless the Indemnified Party with respect to such claim
and the Indemnifying Party shall pay any Loss to the
Indemnified Party on demand following the time that the amount
of such liability is finally determined. If the Indemnifying
Party has disputed its liability with respect to such claim
within the Dispute Period, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, the parties shall
attempt to resolve such dispute by mediation, or if mediation
is unsuccessful, by binding arbitration.
1. In the event any Indemnified Party should have a claim
under Section 9.2 against any Indemnifying Party that does not involve
a Third Party Claim, the Indemnified Party shall deliver an Indemnity
Notice to the Indemnifying Party in accordance with Section 9.2(C). If
the Indemnifying Party notifies the Indemnified Party that it does not
dispute the claim described in such Indemnity Notice or fails to notify
the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity
Notice, the Indemnifying Party shall be deemed to have waived any
rights to dispute its liability to indemnify and shall hold harmless
the Indemnified Party with respect to such claim and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on
demand following the time that the amount of such liability is finally
determined. If the Indemnifying Party has disputed its liability with
respect to such claim within the Dispute Period, the Indemnifying Party
and the Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, the parties shall attempt to resolve such
dispute by mediation, or if mediation is unsuccessful, by binding
arbitration.
1. In the event of any Loss resulting from a material breach
of a representation or warranty or nonfulfillment or failure to be
performed of any covenant or agreement contained in this Agreement as
to which an Indemnified Party would be entitled to claim indemnity
under Section 9.2 but for the provisions of Section 9.2 (D)(1), such
Indemnified Party shall nevertheless deliver a written notice to the
Indemnifying Party containing the information that would be required in
a Claim Notice or an Indemnity Notice, as applicable, with respect to
such Loss. In the case of a Claim Notice, the provisions of Section
9.3(A)(1) will be applicable. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described therein
or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such
Claim Notice or Indemnity Notice, as the case may be, the Loss
specified in the notice will be conclusively deemed to have been
incurred by the Indemnified Party for purposes of making the
determination set forth in Section 9.2(D)(1). If the Indemnifying Party
has timely disputed the claim described in such Claim Notice or
Indemnity Notice, as the case may be, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a resolution
of such dispute, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by mediation.
1. In the event of any claim for indemnity under Section
9.2(A), Buyer agrees to give Sellers and its representatives reasonable
access to the Business Books and Records and its employees in
connection with the matters for which indemnification is sought to the
extent Sellers reasonably deem necessary in connection with their
rights and obligations under this Article 9.
A. Tax Indemnity.
1. Except in relation to the Purchased Assets located in the
United Kingdom, for which indemnification shall be provided only to the
extent set forth in Attachment 1, Sellers shall indemnify Buyer for any
Tax imposed on or in respect of the Purchased Assets or any Lien for
Taxes attaching to the Purchased Assets, in each case for or arising in
respect of any period or portion thereof ending prior to the Closing
Date, but not including a daily proration of any property Taxes on the
Purchased Assets for the tax year that includes the Closing Date as
provided in Section 8.6.
1. Unless a claim has theretofore been made, Sellers shall
cease to have any liability under this Section 9.4 in respect of any
liability to Tax when sixty (60) days following the statutory period
for enforcement of that liability to Tax, including extensions thereof,
has expired.
1. Notwithstanding the above, such Tax indemnity is
conditioned upon Buyer promptly providing to Sellers any notice of any
proposed assessment of any Taxes that Buyer receives to enable Sellers
the opportunity to seek administrative relief, a ruling, judicial
review (original and appellate) or other appropriate review as to the
applicability of any such Taxes prior to any assessment of Taxes.
I. ARTICLE -- TERMINATION
A. Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
1. at any time before the Closing by mutual written agreement of
Sellers and Buyer; or
1. unless extended by mutual written agreement of Sellers and Buyer,
two (2) months following the execution of this Agreement, if the Closing shall
not have occurred; or
1. by the Buyer in writing, if the Sellers have, or by the
Sellers in writing, if Buyer has, in any material respect, breached (1)
any covenant or agreement contained herein or (2) any representation or
warranty contained herein if the failure of any such representation or
warranty to be true and correct as of the date of this Agreement has,
in the case of the Sellers, a Material Adverse Effect on the Business
or, in the case of the Buyer, a material adverse effect upon the
Buyer's ability to perform its obligations under this Agreement, and in
either case if such breach has not been cured by two (2) months
following the execution of this Agreement. A termination of this
Agreement by any Seller shall result in the termination of this
Agreement for all Sellers.
A. Procedure Upon Termination. In the event of termination and
abandonment by the Sellers, or the Buyer, or both, pursuant to this Article 10,
written notice thereof shall forthwith be given to the other party and this
Agreement shall terminate and be abandoned without further action by the Sellers
or the Buyer. If this Agreement is terminated as provided herein:
1. each party will redeliver as soon as possible, and in any
event within thirty (30) days, all documents, work papers and other
material of any other party relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof and
whether or not pursuant to the Confidentiality Agreement, to the
parties furnishing the same; and
1. no party hereto shall have any liability or further
obligation to any other party to this Agreement, except as provided in
Section 5.3 with respect to the Confidentiality Agreement (which shall
survive the termination of this Agreement) and Section 11.6, and except
for such legal and equitable rights and remedies which any party may
have by reason of any breach or violation of this Agreement by any
other party.
I. ARTICLE -- MISCELLANEOUS PROVISIONS
A. Amendment or Supplement. This Agreement may be amended or
supplemented at any time by mutual agreement of all of the parties hereto. Any
such amendment or supplement must be in writing and approved by all necessary
corporate action.
A. Non-Compete and Nonsolicitation.
1. For a period of three (3) years commencing on the Closing Date:
a) Neither SHL Systemhouse Co., MCI Systemhouse
Corp., SHL Computer Innovations Inc. nor SHL UK will permit
any subsidiary to, directly or indirectly, compete with Buyer
with respect to the Business as it is currently conducted and
as it is conducted on the Closing Date.
a) Neither SHL Systemhouse Co., MCI Systemhouse
Corp., SHL Computer Innovations Inc. nor SHL UK shall (a)
render the type of service or advice currently rendered by the
Business, (b) sell the products currently sold by the
Business, other than as part of a contract or arrangement to
also sell products, services or advice distinct from that of
the Business as it is currently conducted and as it is
conducted on the Closing Date, or (c) engage in or become a
proprietor, partner or stockholder (other than a stockholder
holding less than 1% of the total number of outstanding shares
of any class of stock) of any business which competes with the
Business as it is currently conducted and as it is conducted
on the Closing Date.
a) Notwithstanding anything to the contrary contained
herein, in the event of a change in control of SHL Systemhouse
Co. or MCI Systemhouse Corp. to a non-affiliated Person
(excepting only the Sellers' parent company's pending
acquisition by WorldCom, Inc.), the provisions of this Section
11.2 shall become null and void if such Person owns, manages
or is a participant (other than a stockholder holding less
than 1% of the total number of outstanding shares of any class
of stock) in any business which competes with the Business, as
it is currently conducted and as it is conducted on the
Closing Date.
a) For the avoidance of doubt, the term "Business"
shall explicitly exclude custom training and support provided
by SHL Systemhouse Co. which is ancillary to the delivery of
outsourcing and systems integration services provided by SHL
Systemhouse Co.
1. For a period of one year after the Closing, Sellers agree
(1) not to hire any Employees without the prior written consent of
Buyer and (2) not to solicit any person acting as an independent
contractor of the Business on the Closing Date, provided, however, if
an independent contractor in an unsolicited manner or in response to a
general advertisement or a recruiter approaches a Seller for potential
employment and is subsequently hired, such actions shall not constitute
a breach of this provision.
1. For a period of one year after the Closing, Buyer agrees
not to solicit any employee of Sellers without their prior written
consent, provided, however, if any such employee in an unsolicited
manner or in response to a general advertisement or a recruiter
approaches Buyer for potential employment and is subsequently hired,
such actions shall not constitute a breach of this provision.
A. Waiver of Compliance. Except with respect to any required board of
directors or regulatory approval, all of the parties hereto by written
instrument signed by an executive officer of such party, may at any time extend
the time for the performance of any of the obligations or other acts of the
Sellers, on the one hand, or Buyer, on the other hand, and may, with the
concurrence of the Sellers and Buyer, waive (A) any inaccuracies of such parties
in the representations or warranties contained in this Agreement, or any
document delivered pursuant hereto, (B) compliance with any of the covenants,
undertakings or agreements of such parties, or satisfaction of any of the
conditions precedent to its obligations, contained herein, or (C) the
performance by such parties of any of its obligations set out herein.
A. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid:
1. If to the Sellers:
SHL Systemhouse Co.
100 University Avenue, 12th Floor
Toronto, Ontario M5J 1V6
Attention: John LaCalamita
Chief Legal Counsel and Secretary
with a copy to:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attention: General Counsel
or to such other person or address as the Sellers shall designate to
the Buyer in writing.
1. If to the Buyer:
General Physics Corporation
6700 Alexander Bell Drive, Suite 400
Columbia, Maryland 21046
Attn: John McAuliffe
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attn: David W. Pollak
or to such other person or address as the Buyer shall designate to the Sellers
in writing.
A. Binding Nature; Assignment. (A) This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without prior written consent of the other parties; provided, however,
that Buyer may assign all or any part of its rights under this Agreement and
delegate all or any part of its obligations (including, without limitation, the
assumption of any of the Real Property Leases or any obligations thereunder) to
one or more corporations, partnerships, limited liability companies or other
entities all or substantially all of the capital stock or equity interests of
which are owned by Buyer (each a "Subsidiary"), in which event all of the rights
and powers of Buyer and remedies available to it hereunder shall extend to and
be enforceable by each such Subsidiary; provided, further, however, that
notwithstanding anything contained in this Agreement to the contrary, in the
event of any such assignment or delegation, Buyer shall become jointly and
severally liable for all actions of any Subsidiary pursuant to this Agreement
and all obligations hereunder. In the event of any such assignment and
delegation the terms "Buyer" and "party" as used in this Agreement shall be
deemed to refer to each such Subsidiary of Buyer where reference is made to
actions to be taken with respect to the acquisition of the Purchased Assets and
the assumption of the Assumed Liabilities and shall be deemed to include both
Buyer and each such Subsidiary where appropriate.
(B) Except as otherwise expressly provided herein, nothing
contained herein shall be deemed to give rise to any personal
obligation of any of the directors, officers, stockholders or
principals of any of the parties hereto, by reason of any breach or
violation of any of the provisions hereof or otherwise, and no party
hereto shall have any rights against, or be entitled to sue or seek any
recovery from, any such Persons.
A. Entire Agreement. This Agreement, including the other documents
referred to herein (including, without limitation, the Confidentiality
Agreement), contain the entire Agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein. The parties hereto in executing and delivering,
and in carrying out the provisions of, this Agreement are relying solely on the
representations, warranties and covenants contained in this Agreement or in any
writing delivered pursuant to provisions of this Agreement, and not upon any
representation, warranty, covenant, or information, written or oral, made by any
person other than as specifically set forth herein or therein.
A. Expenses. Except as otherwise expressly provided herein, each party
to this Agreement will pay its own expenses in connection with the negotiation
of this Agreement, the performance of its obligations hereunder, and the
consummation of the transactions contemplated herein; provided that all
transfer, recordation and sales taxes, notarial fees and taxes and the like, if
any, incurred as a result of the consummation of the transactions contemplated
by this Agreement shall be paid by the Buyer.
A. 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 Article 9.
A. Further Assurances. Subject to the terms and conditions of this
Agreement, at any time or from time to time after the Closing each party hereto
shall execute and deliver such other documents and instruments, provide such
materials and information and take such other actions as may reasonably be
necessary, proper or advisable, to the extent permitted by Law, to fulfil its
obligations under this Agreement, the Operative Agreements and the Preferred
Provider Agreement to which it is a party.
A. Press Releases and Announcements. The parties hereto shall agree
with each other as to the form and substance of any press release related to
this Agreement and the transactions contemplated hereby, and shall consult each
other as to the form and substance of other public disclosures related thereto,
provided, however, that nothing contained herein shall prohibit any party,
following notification to the other parties, from making any disclosure which
its counsel deems necessary.
A. Governing Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York, without reference to conflict of law provisions.
A. Jurisdiction. The parties hereto consent to personal jurisdiction in
the State of New York and agree that the exclusive venue and place of trial for
the resolution of any disputes arising in connection with the interpretation or
enforcement of this Agreement shall be either the federal or state court in the
State of New York.
A. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated herein is not affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner.
A. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
A. Headings. The headings contained in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
SHL Systemhouse Co.
By:_______________________
Name:
Title:
MCI Systemhouse Corp.
By:_______________________
Name:
Title:
SHL Computer Innovations Inc.
By:_______________________
Name:
Title:
SHL Technology Solutions Limited
By:_______________________
Name:
Title:
General Physics Corporation
By:_______________________
Name:
Title: