Exhibit 2.1
NORTEL NETWORKS LIMITED
as Vendor
and
METASOLV SOFTWARE, INC.
as Purchaser
and
METASOLV, INC.
as Guarantor
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ASSET PURCHASE AGREEMENT
January 21, 2002
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TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.................................................................. 1
Section 1.2 Gender and Number.............................................................. 18
Section 1.3 Headings, etc.................................................................. 18
Section 1.4 Currency....................................................................... 18
Section 1.5 Certain Phrases etc............................................................ 18
Section 1.6 Incorporation of Schedules and Exhibits........................................ 18
ARTICLE 2
PURCHASED ASSETS
Section 2.1 Purchase and Sale.............................................................. 19
Section 2.2 Excluded Assets................................................................ 20
Section 2.3 Assignment of Contracts........................................................ 21
Section 2.4 Assumption of Liabilities...................................................... 23
Section 2.5 Transferred Equipment.......................................................... 24
Section 2.6 No Reliance.................................................................... 25
Section 2.7 Purchaser Affiliates........................................................... 25
ARTICLE 3
PURCHASE PRICE
Section 3.1 Purchase Price................................................................. 26
Section 3.2 Allocation of Purchase Price................................................... 26
Section 3.3 Payment of Purchase Price...................................................... 26
Section 3.4 Adjustments to the Purchase Price.............................................. 27
Section 3.5 Final Determination............................................................ 27
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Vendor................................... 28
Section 4.2 Representations and Warranties of the Purchaser................................ 40
Section 4.3 Representations and Warranties of the Guarantor................................ 41
ARTICLE 5
PRE-CLOSING COVENANTS AND OTHER AGREEMENTS
Section 5.1 Conduct of Business Prior to Closing........................................... 42
Section 5.2 Revised Schedule............................................................... 44
Section 5.3 Actions to Satisfy Closing Conditions.......................................... 44
Section 5.4 Transfer of the Purchased Assets............................................... 44
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Section 5.5 Filings and Authorizations........................................................ 44
Section 5.6 Review of Business Information and Employee Information........................... 45
Section 5.7 Review for Investigation.......................................................... 46
Section 5.8 Confidentiality................................................................... 46
Section 5.9 Delivery of Vendor's Closing Documentation........................................ 47
Section 5.10 Ancillary Agreements.............................................................. 47
Section 5.11 Delivery of Purchaser's Closing Documentation..................................... 47
Section 5.12 Insurance Matters................................................................. 47
Section 5.13 Taxes............................................................................. 47
Section 5.14 Employees......................................................................... 49
Section 5.15 Vacation.......................................................................... 55
Section 5.16 Parties' Responsibility........................................................... 55
Section 5.17 Cooperation with Respect to Compensation and Benefits Issues...................... 57
Section 5.18 Employees and Employee Plans...................................................... 57
Section 5.19 Commission and Incentive Payment.................................................. 58
Section 5.20 Risk of Loss...................................................................... 58
Section 5.21 Deletion of Non-Transferred Software.............................................. 59
Section 5.22 Removal of Transferred Equipment.................................................. 59
Section 5.23 Non-Competition................................................................... 59
Section 5.24 Bulk Sales Compliance............................................................. 61
Section 5.25 Required Audited Financial Statements............................................. 61
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 Conditions for the Benefit of the Purchaser....................................... 61
Section 6.2 Conditions for Benefit of the Vendor and the Vendor Affiliates.................... 62
Section 6.3 Conditions to the Obligations of Purchaser and Vendor............................. 63
Section 6.4 Time and Place of Closing......................................................... 64
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival of Representations, Warranties and Covenants............................. 64
Section 7.2 Indemnification in Favour of the Purchaser........................................ 65
Section 7.3 Indemnification in Favour of the Vendor and the Vendor Affiliates................. 65
Section 7.4 Limitations on Indemnification.................................................... 66
Section 7.5 Procedure for Indemnification - Other Claims...................................... 66
Section 7.6 Indemnification Proceedings - Third Party Claims.................................. 66
Section 7.7 Exclusion of Other Remedies....................................................... 68
ARTICLE 8
MISCELLANEOUS
Section 8.1 Termination....................................................................... 69
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Section 8.2 Effect of Termination............................................................. 70
Section 8.3 Publicity......................................................................... 70
Section 8.4 Expenses.......................................................................... 70
Section 8.5 Brokers........................................................................... 70
Section 8.6 Third Party Beneficiaries......................................................... 70
Section 8.7 Notices........................................................................... 71
Section 8.8 Attornment........................................................................ 72
Section 8.9 Further Assurances................................................................ 72
Section 8.10 Enurement......................................................................... 73
Section 8.11 Assignment........................................................................ 73
Section 8.12 Time of the Essence............................................................... 73
Section 8.13 Counterparts and Faxes............................................................ 74
Section 8.14 Tender............................................................................ 74
Section 8.15 Judgment Currency................................................................. 74
Section 8.16 Guarantee......................................................................... 74
Section 8.17 Severability...................................................................... 75
Section 8.18 Entire Agreement.................................................................. 75
Section 8.19 Specific Performance.............................................................. 75
Section 8.20 Amendments........................................................................ 75
Section 8.21 Waiver............................................................................ 76
Section 8.22 Governing Law..................................................................... 76
ADDENDA
SCHEDULE 1.1(m) Business Application Software
SCHEDULE 1.1(z) Contracts
SCHEDULE 1.1(jj) Employees and Employee Information
SCHEDULE 1.1(mmm) Employees of the Vendor with Knowledge
SCHEDULE 1.1(vvv) Material Contracts
SCHEDULE 1.1(xxx) Network Identifiers
SCHEDULE 1.1(eeee) Permitted Encumbrances
SCHEDULE 1.1(eeeee) Third Party Software
SCHEDULE 1.1(jjjj) Products
SCHEDULE 1.1(kkkkk) Transferred Equipment
SCHEDULE 1.1(lllll) Transferred Intellectual Property
SCHEDULE 1.1(mmmmm) Transferred Patents
SCHEDULE 1.1(nnnnn) Transferred Trademarks
SCHEDULE 2.2(r) Excluded Assets
SCHEDULE 2.7 Purchaser Affiliates
SCHEDULE 3.2(1) Allocation of Purchase Price
SCHEDULE 4.1(d) Required Authorizations
SCHEDULE 4.1(h) Financial Statements
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SCHEDULE 4.1(j) Licenses and Permits
SCHEDULE 4.1(m) Absence of Certain Changes or Events
SCHEDULE 4.1(p) Employee Relations
SCHEDULE 4.1(q) Employee Plans
SCHEDULE 4.1(r) Litigation
SCHEDULE 4.1(s) Sufficiency of Intellectual Property
SCHEDULE 4.1(w) Products and Source Code
SCHEDULE 4.1(cc) Ten Largest Customers of Purchased Business
SCHEDULE 4.2(g) Purchaser's Employee Plans and Compensation Plans
SCHEDULE 5.9 Vendor's Closing Documentation
SCHEDULE 5.11 Purchaser's Closing Documentation
SCHEDULE 5.14(2) French and German Employee Terms of Employment
SCHEDULE 5.14(5) Terms of Employment with Purchaser
SCHEDULE 5.14(13) Brazil Employee Terms of Employment
SCHEDULE 5.15 Vacation
SCHEDULE 5.25 Required Audited Financial Statements
EXHIBIT "A" Bill of Sale and Assignment and Assumption Agreement
EXHIBIT "B" Intellectual Property License Agreement
EXHIBIT "C" Loaned Employee Agreement
EXHIBIT "D" Patent Assignment Agreement
EXHIBIT "E" Premises License Agreement
EXHIBIT "F" Reseller, Maintenance and Referral Agreement
EXHIBIT "G" Trademark Assignment Agreement
EXHIBIT "H" Trademark License Agreement
EXHIBIT "I" Transition Services Agreement
EXHIBIT "J" Offers of Employment
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement dated January 21, 2002, between Nortel
Networks Limited, a Canada Business Corporations Act ("CBCA") corporation, as
the vendor (the "Vendor"), MetaSolv Software, Inc., a Delaware corporation, as
the purchaser buying the assets as agent for or on behalf of various of its
Affiliates (the "Purchaser"), and MetaSolv, Inc., a Delaware corporation (the
"Guarantor"), as the guarantor.
WHEREAS the Vendor and the Vendor Affiliates (as defined below) own
certain properties and assets that are used or held for use in connection with
the Purchased Business (as defined below);
AND WHEREAS each of the Vendor and the Vendor Affiliates wish to sell
to the Purchaser, and the Purchaser wishes to purchase from the Vendor and the
Vendor Affiliates, the Purchased Assets (as defined below) upon the terms and
subject to the conditions set forth herein;
NOW THEREFORE for good and valuable consideration, the Parties hereto
agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.
Unless otherwise defined, capitalized terms used herein shall have the
following meanings:
(a) "Accounts Receivable" means accounts receivable, notes receivable
and other debts due or accruing due to the Vendor or the Vendor
Affiliates in connection with the delivery of the Products and
services by the Purchased Business.
(b) "Action" means any litigation, claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any
Governmental Entity or any private arbitrator or arbitration
board, mediator or referee.
(c) "Adjustment Amount" has the meaning specified in Section 3.4.
(d) "Affiliate" has the meaning given to the term "affiliate" in the
CBCA.
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(e) "Agreed Documentation" means a complete set of the documentation
constituting the Contracts.
(f) "Agreement" means this asset purchase agreement and all
instruments in amendment or confirmation of it.
(g) "Ancillary Agreements" means, collectively, the (i) Bill of Sale
and Assignment and Assumption Agreement, (ii) Intellectual
Property License Agreement, (iii) Transition Services Agreement,
(iv) Loaned Employee Agreement, (v) Reseller, Maintenance and
Referral Agreement, (vi) Trademark License Agreement, (vii)
Trademark Assignment Agreement, (viii) Patent Assignment
Agreement, and (ix) Premises License Agreement.
(h) "Assumed Liabilities" has the meaning specified in Section 2.4.
(i) "Authorization" means, with respect to any Person, any order,
permit, approval, waiver, license, qualification, registration or
similar authorization of any Governmental Entity having
jurisdiction over the Person.
(j) "Best Efforts" means reasonable best efforts without the
necessity of assuming any material obligations or paying any
material amounts to unrelated parties.
(k) "Bill of Sale and Assignment and Assumption Agreement" means the
assignment document substantially in the form of Exhibit "A", to
be entered into on the Closing Date by each of the Vendor and the
applicable Vendor Affiliates, as assignors, and the Purchaser, as
assignee, pursuant to which each of the Vendor and the applicable
Vendor Affiliates will assign to the Purchaser all of its right,
title and interest in and to the Purchased Assets including all
benefits of the Vendor and the Vendor Affiliates under, and
obligations in respect of, the Contracts.
(l) "Brazil Employee" and "Brazil Transferring Employee" have the
meaning specified in Schedule 5.14(13).
(m) "Business Application Software" means the licensed third party
software, other than the Third Party Software that is listed or
described in Schedule 1.1(m).
(n) "Business Day" means any day of the year, other than a Saturday,
Sunday or any day on which banks are required or authorized to
close in Toronto, Ontario or Plano, Texas.
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(o) "Business Information" means copies (in any format) of all books,
records, files, appropriate U.S. personal property tax returns
and documentation of each of the Vendor and the Vendor
Affiliates, wherever located, used or held for use primarily in
the conduct of the Purchased Business or in connection with the
Purchased Assets, but excluding any Intellectual Property rights
(other than Transferred Intellectual Property) therein and
employee data other than Employee Information.
(p) "Canadian Counsel" means, with respect to the Vendor, Stikeman
Elliott (Toronto) and, with respect to the Purchaser, Aird &
Berlis LLP (Toronto).
(q) "CARP" has the meaning specified in Section 4.1(p)(ii).
(r) "Circumstance" has the meaning specified in Section 7.6(1).
(s) "Closing" means the completion of the transactions contemplated
in this Agreement.
(t) "Closing Date" means February 1, 2002 or if later, the third
Business Day following the date that conditions precedent to the
Closing shall have been satisfied (other than those acts and
deliveries prescribed by Article 6 hereof to occur at Closing),
or such other date as the Vendor and the Purchaser may agree to
in writing.
(u) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(v) "Commonly Controlled Entity" has the meaning specified in Section
4.1(q)(iii).
(w) "Competition Act" means the Competition Act, R.S.C. 1985, c.C-34
(as amended) and the regulations thereto.
(x) "Competitive Products" has the meaning specified in Section
5.23(1).
(y) "Consent" means in respect of any Contract the consent of any
contracting party to (i) the sale of all or substantially all of
the assets of a Vendor Affiliate or (ii) the assignment of such
Contract, or any of the benefits, advantages, obligations and
liabilities thereof, if required by the terms of such Contract as
described in Schedule 1.1(z).
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(z) "Contracts" means, collectively, the (i) Customer Contracts, (ii)
Equipment Leases, (iii) Leases, (iv) Purchase Commitments, (v)
Third Party Licenses, and (vi) such other contracts listed in
Schedule 1.1(z), as the same may be amended pursuant to Section
5.2.
(aa) "Corporate Desktop Software" means software licensed to the
Vendor or a Vendor Affiliate (other than the Third Party Software
and the Third Party Licenses) under a transferable corporate
license which, as of the Effective Time, is installed on personal
computers forming part of the Transferred Equipment.
(bb) "Current Liabilities" means all liabilities of the Purchased
Business as presented in the Financial Statements.
(cc) "Current Liabilities Amount" has the meaning specified in Section
3.4.
(dd) "Customer Contracts" means, contracts and contract proposals that
provide for the sale of any of the Products and/or services
related thereto listed or described under the heading "Customer
Contracts" in Schedule 1.1(z), as may be supplemented and/or
modified in Schedule 1.1(z) under the heading "Implied Terms".
(ee) "Damages" means, in respect of any matter, losses, damages, costs
and expenses (including all reasonable legal and other
professional fees and disbursements, fees paid to any
Governmental Entity, interest, fines, penalties and amounts paid
in settlement) arising as a consequence of such matter, excluding
any incidental and consequential damages; provided, however, that
incidental and consequential damages are not excluded for
purposes of a Party's indemnity liability hereunder, to the
extent such damages are included in a third party claim for which
one Party must indemnify the other Party hereunder.
(ff) "Designated Employees" means the Employees other than the
Excluded Employees to whom the Purchaser shall give offers of
employment pursuant to Section 5.14(5) and who are listed in
Schedule 1.1(jj) as Designated Employees.
(gg) "Desktop Software" means Corporate Desktop Software and Single
Use Desktop Software.
(hh) "Draft Statement of Adjustment" has the meaning specified in
Section 3.4.
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(ii) "Effective Time" means 11:59 p.m. (Eastern Time) on the Closing
Date or such other time as the Parties may agree to in writing.
(jj) "Employee" means an employee of the Purchased Business whose name
is listed in Schedule 1.1(jj).
(kk) "Employee Information" means the employee data relating to the
Employees which is required to be disclosed pursuant to this
Agreement.
(ll) "Employee Plans" means any incentive compensation, commission,
vacation pay, holiday pay, sabbatical leave, scholarship or
tuition reimbursement, dependent care assistance, immigration
assistance, salary continuation, employee loan or loan guarantee,
deferred compensation plan, severance pay, change in control,
bonus plan, profit sharing plan, stock option plan, employee
stock purchase plan, restricted stock, stock appreciation right,
phantom stock, and any other employee benefit plan, agreement,
arrangement or commitment maintained by or on behalf of any of
the Vendor or the Vendor Affiliates which covers any Employee
including, for greater certainty, any registered retirement
savings, pension, retirement, investment, health, dental, vision
care, drug, welfare or disability plan or insurance plan which
any of the Vendor or a Vendor Affiliate sponsors or to which such
party contributes or is required to contribute and which applies
to or in respect of any Employee.
(mm) "Employee Start Date" means the date a Transferred Employee
commences employment with the Purchaser or an Affiliate of the
Purchaser, which in the case of:
(i) the Designated Employees means the Closing Date;
(ii) the French Employee means the Closing Date;
(iii) the German Employees means the German Employee Transfer Date;
(iv) the Brazil Employee means the Closing Date;
(v) the UK Employees means the UK Employee Transfer Date;
(vi) a Leave Employee means the Leave Employee Start Date; and
(vii) a Loaned Employee means the Loaned Employee Start Date.
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As used in this Agreement, the term "Employee Start Date" shall mean
in each case the applicable Employee Start Date with respect to each
Transferred Employee.
(nn) "Employees' Representatives" has the meaning specified in Section
5.14(1).
(oo) "Employment Transfer Laws" means any law, act, regulation, code
or instrument in the relevant jurisdiction within the European
Union which implements the Acquired Rights Directive (Council
Directive 77/187/EEC dated February 14, 1977).
(pp) "Encumbrance" in respect of any property or asset, means any
encumbrance or title defect of whatever kind or nature,
regardless of form, whether or not registered or registrable and
whether or not consensual or arising by law (statutory or
otherwise), including any mortgage, lien, charge, pledge, title
retention agreement or security interest, whether fixed or
floating, or any assignment, lease, option, right of pre-emption,
privilege, encumbrance, restrictive covenant, right of use or
other right or claim of any kind or nature whatsoever which
affects ownership of, title to, or the right to possess, use or
occupy, such property or assets or any part thereof or interest
therein.
(qq) "Environmental Laws" means all common, civil, national, federal,
provincial, state, territorial, regional, municipal or local laws
which relate to protection of the environment, health and safety,
or Hazardous Substances contained in statutes or regulations or
in written policies, guidelines, orders, directives or notices
which have the force of law or permits, approvals or court or
other tribunal orders having jurisdiction over the Purchased
Business.
(rr) "Equipment Leases" means those equipment leases listed or
described in Schedule 1.1(z).
(ss) "ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended.
(tt) "Excluded Assets" has the meaning specified in Section 2.2.
(uu) "Excluded Employees" means those Designated Employees who are not
offered employment by the Purchaser and who are identified on
Schedule 1.1(jj) as Excluded Employees, such schedule to be
updated through the Closing Date to identify all such Excluded
Employees as
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mutually agreed to by the Vendor and the Purchaser from time to
time.
(vv) "Filings" has the meaning specified in Section 5.5.
(ww) "Financial Statements" has the meaning specified in Section
4.1(h).
(xx) "Financial Statement Date" means December 31, 2001.
(yy) "French Employee" has the meaning specified in Section 5.14(2).
(zz) "German Employee" has the meaning specified in Section 5.14(2).
(aaa) "German Employee Transfer Date" means the date which is ten (10)
business days after the Closing Date.
(bbb) "Guarantor" has the meaning set forth in the recitals to this
Agreement.
(ccc) "Governmental Entity" means any national, federal, provincial,
state, territorial, regional, municipal, county, district, local
or other governmental authority, domestic or foreign, or any
entity exercising executive, legislative, judicial, regulatory,
administrative or taxing functions under the authority of any of
the foregoing and "Governmental Entities" has a corresponding
meaning.
(ddd) "GST Election" has the meaning specified in Section 5.13.
(eee) "GST Legislation" has the meaning specified in Section 5.13.
(fff) "Hazardous Substances" means (i) any hazardous materials,
hazardous wastes, hazardous substances, toxic wastes, and toxic
substances as those or similar terms are defined under any
Environmental Laws, (ii) any asbestos or any material that
contains any hydrated mineral silicate, including chrysotile,
amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or non-friable (iii) PCBs, or PCB-containing
materials, or fluids, (iv) radon, (v) any other hazardous,
radioactive, toxic or noxious substance, material, pollutant,
contaminant, constituent, or solid, liquid or gaseous waste, (vi)
any petroleum, petroleum hydrocarbons, petroleum products, crude
oil and any fractions or derivatives thereof, any oil or gas
exploration or production waste, and any natural gas, synthetic
gas and any mixtures thereof, (vii) any substance that, whether
by its nature or its use, is subject to regulation under any
Environmental Laws or with respect to which
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any Environmental Laws or Governmental Entity requires
environmental investigation, monitoring or remediation or (viii)
any underground storage tanks, dikes, or impoundments as defined
under any Environmental Laws.
(ggg) "ICA" means the Investment Canada Act, R.S.C. 1985, c.28 (1st
Supp) (as amended) and the regulations thereto.
(hhh) "Indemnified Party" has the meaning specified in Section 7.6(1).
(iii) "Indemnifying Party" has the meaning specified in Section 7.6(1).
(jjj) "Intellectual Property" means all intellectual property in any
jurisdiction, including: (i) all trademarks, service marks, brand
names, certification marks, trade dress, assumed names, business
names, trade names and other indications of source, registered
and unregistered; (ii) patents and patent rights, including
patent applications; (iii) trade secrets and other confidential
or non-public business information, including ideas, formulas,
compositions, inventor's notes, discoveries and improvements,
know-how, manufacturing and production processes, procedures and
techniques, and research and development information (whether or
not patentable), invention disclosures, unpatented blue prints,
drawings, schematics, specifications, concepts, diagrams,
protocols, parameters, engineering details, functional
descriptions, layouts, architectural models, designs, plans,
proposals and technical data and database contents or other
technical or scientific documentation including bills of
materials, component supplier lists and manuals, business and
marketing plans, and customer lists and information; (iv)
registered and unregistered copyrights and writings and other
copyrightable works of authorship, including computer programs,
databases and documentation therefor, and all rights to any of
the foregoing; (v) moral rights; (vi) features of shape,
configuration, pattern or ornament and design registrations or
patents; (vii) Network Identifiers; (viii) registrations of, and
applications to register, any of the foregoing with any
Governmental Entity and any renewals or extensions thereof; and
(ix) any claims or causes of action arising out of or related to
any infringement or misappropriation of any of the foregoing.
(kkk) "Intellectual Property License Agreement" means the intellectual
property license agreement substantially in the form of Exhibit
"B" to be entered into as of the Closing Date between the Vendor
and the
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Purchaser, pursuant to which the Vendor will grant to the
Purchaser licenses to use the Vendor Licensed Intellectual
Property.
(lll) "Interim Period" means the period between the date hereof and the
Effective Time.
(mmm) "Knowledge" or "aware of" or a similar phrase means, with
reference to the Vendor (the word "Vendor", for the purposes of
this definition, shall include the Vendor Affiliates), (i) the
actual knowledge of any of the Persons listed in Schedule
1.1(mmm), or (ii) the knowledge that any such Person, other than
those five Persons identified with an asterisk (*), is expected
to possess in light of his or her position with the Vendor, any
of the Vendor Affiliates, any of their respective Affiliates or
the Purchased Business, after reasonable inquiry by such Person.
(nnn) "Laws" means any statutes, laws, ordinances, rules, regulations
or by-laws of any Governmental Entity having jurisdiction.
(ooo) "Leased Properties" means the lands and premises listed and
described in Schedule 1.1(z) by reference to their municipal
address and proper legal description.
(ppp) "Leases" means the leases of the Leased Properties described in
Schedule 1.1(z).
(qqq) "Leave Employee" means any Employee (other than a UK Employee)
who is on short-term disability leave, long-term disability
leave, absent and in receipt of workers' compensation benefits,
or on another form of approved leave as at the Closing Date and
designated as a Leave Employee in Schedule 1.1(jj).
(rrr) "Leave Employee Start Date" means the date a Leave Employee
commences employment with the Purchaser or one of its Affiliates,
at which time such Leave Employee becomes a Transferred Employee.
(sss) "Loaned Employee" means any Employee listed in Schedule 1.1(jj)
who is designated as a "Loaned Employee".
(ttt) "Loaned Employee Agreement" means the loaned employee agreement
substantially in the form of Exhibit "C" to be entered into
between the Vendor and the Purchaser relating to the provision of
services by the Loaned Employees to the Purchaser.
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(uuu) "Loaned Employee Start Date" means the date a Loaned Employee
commences employment with the Purchaser or one its Affiliates, at
which time such Loaned Employee becomes a Transferred Employee.
(vvv) "Material Contracts" means the Contracts that are listed in
Schedule1.1(vvv).
(www) "Material Adverse Effect" means any long-term or short-term
effect that is materially adverse to (i) the Purchased Business,
operations, results of operations, assets or liabilities or the
conditions (financial or otherwise) of the Purchased Business,
taken as a whole, or (ii) the ability of Vendor or the Vendor
Affiliates to perform their respective obligations under this
agreement or the other Transaction Documents to which they are a
Party, including consummation of the transactions contemplated
hereby and thereby, but shall not include (1) any loss of
Employees or (2) any effect (including any loss of customers) to
the extent arising out of or resulting from (A) general economic
or financial conditions, (B) a change, condition or circumstance
in the industry in which the Purchased Business operates or (C)
this Agreement, the transactions contemplated hereby, any
announcement hereof or the identity of the Purchaser; and
provided that the failure of the Purchased Business to achieve
internal or external financial forecasts or projections shall
not, by itself, constitute a Material Adverse Effect.
(xxx) "Network Identifiers" means those identifiers for internet
protocol addresses and networks listed in Schedule 1.1(xxx).
(yyy) "Order" means any legally binding order, decision, direction,
directive, declaration, injunction, decree, writ, judgment,
ruling, award, request, undertaking or any commitment required as
a condition to the granting of any licence, permit, certificate,
consent, registration, qualification, authorization, approval or
the like by any Governmental Entity or remedial relief from any
Laws or administrative action or proceeding or like communication
or stipulation rendered or issued by any Governmental Entity,
court or arbitrator having jurisdiction.
(zzz) "Ordinary Course" means, with respect to an action taken by a
Person, that such action is consistent with the past practices of
the Person and is taken in the ordinary course of the normal
day-to-day operations of the Person.
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(aaaa) "Outside Date" means July 22, 2002 provided that if any condition
in Section 6.3 shall not have been fulfilled on July 22, 2002,
"Outside Date" means October 21, 2002.
(bbbb) "Parties" means the Vendor, the Purchaser and the Guarantor and
any other Person who may become a party to this Agreement and
"Party" means any one of them.
(cccc) "Patent Assignment Agreement" means the assignment agreement
substantially in the form of Exhibit "D" to be entered into on
the Closing Date by the Vendor, as assignor, and the Purchaser,
as assignee, pursuant to which the Vendor will assign to the
Purchaser all of its right, title and interest in and to the
Transferred Patents.
(dddd) "PBGC" has the meaning specified in Section 4.1(q)(ii).
(eeee) "Permitted Encumbrances" means (i) liens for Taxes, assessments
or governmental charges or levies not yet due and delinquent,
(ii) all licenses or other rights granted with respect to the
Transferred Intellectual Property under any Contract; (iii) all
licenses or other rights under any cross-licenses listed in
Schedule 1.1(eeee) and (iv) Encumbrances listed and described in
Schedule 1.1(eeee), but only to the extent such Encumbrances
conform to the description in Schedule 1.1(eeee).
(ffff) "Person" includes an individual, a partnership, a corporation, a
limited liability company, a trust, an estate, a joint venture,
an unincorporated organization, a Governmental Entity or other
entity.
(gggg) "Personal Data" has the meaning specified in Section 5.6(2)(a).
(hhhh) "Premises License Agreement" means the premises license agreement
substantially in the form of Exhibit "E" to be entered into on
the Closing Date among the Vendor and the applicable Vendor
Affiliates as licensor and the Purchaser or the applicable
Affiliate of the Purchaser, as licensee, pursuant to which each
of the applicable Vendor and the Vendor Affiliates will license
to the Purchaser or the applicable Affiliate of the Purchaser the
use of certain leased property.
(iiii) "Proceeding" has the meaning specified in Section 7.6(2).
(jjjj) "Products" means the products listed in Schedule 1.1(jjjj).
(kkkk) "Property Taxes" has the meaning specified in Section 5.13(5).
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(llll) "PST Legislation" means the Retail Sales Tax Act (Ontario) and
the Social Service Tax Act (British Columbia) as each such Act
may be amended from time to time.
(mmmm) "Purchase Commitments" means forward commitments by the Vendor or
any Vendor Affiliate for services or supplies entered into in
connection with the Purchased Business in the Ordinary Course
listed or described in Schedule 1.1(z).
(nnnn) "Purchase Price" has the meaning specified in Section 3.1.
(oooo) "Purchased Assets" has the meaning specified in Section 2.1.
(pppp) "Purchased Business" means any and all operations and activities
of the Vendor and the Vendor Affiliates relating only to the
design, development, production, enhancement, testing,
demonstration, marketing, distribution, sales or support
(including service support and maintenance) of the Products but
not including any rights to receive from the Vendor or any Vendor
Affiliate corporate overhead services or shared corporate
services, including the following, but only to the extent that
they constitute corporate overhead services or shared corporate
services, (i) corporate (A) treasury, (B) information services,
(C) sales and account management, (D) legal, (E) tax, (F) human
resources, (G) risk management, (H) finance, or (I) group
purchasing plans or (ii) Intellectual Property covering, embodied
or used in the development, manufacture, sale or provision of
corporate (A) financial, human resources, sales and marketing,
order management, bills of materials, logistics, customs/excise,
information systems or administrative processes or services,
including any computer software used in connection therewith, and
including services relating to the provision of access to design
tools and databases, or (B) materials, components, assemblies or
parts that are supplied for use in or by the Products from other
business units of the Vendor prior to Closing.
(qqqq) "Purchaser" has the meaning set out in the recitals.
(rrrr) "Purchaser Indemnified Parties" has the meaning specified in
Section 7.2.
(ssss) "Purchaser's Employee Plans" means any incentive compensation,
commission, vacation pay, holiday pay, sabbatical leave,
scholarship or tuition reimbursement, dependent care assistance,
immigration assistance, salary continuation, employee loan or
loan guarantee,
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deferred compensation plan, severance pay, change in control,
bonus plan, profit sharing plan, stock option plan, employee
stock option plan, restricted stock, stock appreciation plan,
phantom stock, and any other employee benefit plan, agreement,
arrangement or commitment maintained by or on behalf of the
Purchaser which covers or will cover any Transferred Employee
including, for greater certainty, any registered retirement
savings, pension, retirement, investment, health, dental, vision
care, drug, welfare or disability plan or insurance plan which
the Purchaser sponsors or will sponsor or to which the Purchaser
contributes or will contribute or is required to contribute or
which applies or will apply to or in respect of any Transferred
Employee.
(tttt) "Reseller, Maintenance and Referral Agreement" means the
reseller, maintenance and referral agreement in the form of
Exhibit "F" to be entered into between the Vendor, the Vendor
Affiliates and the Purchaser to permit the Vendor and the Vendor
Affiliates to fulfill design, development, sales and support
obligations in respect of any of the Products (whether existing
before or arising after Closing).
(uuuu) "SEC" has the meaning specified in Section 5.25.
(vvvv) "Single Use Desktop Software" means software licensed to the
Vendor or a Vendor Affiliate (other than the Third Party Software
and the Third Party Licenses) under a transferable, shrink-wrap
or click-wrap license agreement for use on a single computer that
is, as at the Effective Time, installed on personal computers
forming part of the Transferred Equipment.
(wwww) "Statement of Adjustment" has the meaning specified in Section
3.5(2).
(xxxx) "Subcontracted Customer Contract" has the meaning specified in
Section 2.3(2).
(yyyy) "Subsidiary" shall mean, with respect to a specified body
corporate, any body corporate of which more than 50% of the
outstanding shares ordinarily entitled to elect a majority of the
board of directors thereof (whether or not shares of any other
class or classes shall or might be entitled to vote upon the
happening of any event or contingency) are at the time owned
directly or indirectly by such specified body corporate and shall
include any body corporate, joint
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venture, partnership or other entity over which it exercises
direction or control or which is in a like relation to a
subsidiary.
(zzzz) "Targeted Current Liabilities" has the meaning specified in
Section 3.4.
(aaaaa) "Taxes" means any federal, provincial, state, municipal or local
taxes or other impositions by any Governmental Entity, including
the following taxes and impositions: net income, alternative or
add-on minimum tax, profits or excess profits tax, franchise tax,
gross income, individual income, capital, value added, goods and
services, gross receipts, sales, use, ad valorem, business rates,
transfer, franchise, profits, business, real or personal
property, gains, service, service use, withholding or back up
withholding tax, payroll, employment, social security, worker's
compensation, excise, severance, occupation, stamp duties,
documentary, registration charges, land transfer, premium,
prohibited transaction, environmental, intangibles, business
license, property, customs, duties or other type of fiscal levy
and all other taxes, fees, assessments, deductions, withholdings
or charges of any kind whatsoever, together with any interest and
penalties, additions to tax or additional amounts imposed or
assessed with respect thereto. Taxes also include "Transfer
Taxes".
(bbbbb) "Tax Return" means any return, declaration (including estimated
tax), report, statement, claim for refund or credit, information
return or statement or prescribed form filed or required to be
filed with any taxing authority relating to Taxes, including
information returns or reports with respect to backup withholding
and payments to third parties, and any schedule or attachment
relating to any of the foregoing or any amendment thereof.
(ccccc) "Third Party Licenses" means licenses and other agreements other
than licenses for Desktop Software, pursuant to which any third
party has granted the Vendor or any Vendor Affiliate any rights
in Intellectual Property used or, held for use primarily in the
conduct of the Purchased Business as conducted immediately prior
to Closing or at any time since September 1, 2001, each of which
is listed in Schedule 1.1(z).
(ddddd) "Third Party Licensed Intellectual Property" means the rights in
Intellectual Property, licensed to the Vendor or a Vendor
Affiliate under the Third Party Licenses.
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(eeeee) "Third Party Software" means the third party software licensed to
the Vendor or a Vendor Affiliate under a shrink-wrap or
click-wrap license agreement which software is listed in Schedule
1.1(eeeee).
(fffff) "Trademark Assignment Agreement" means the assignment agreement
substantially in the form of Exhibit "G" to be entered into on
the Closing Date by the Vendor, as assignor, and the Purchaser,
as assignee, pursuant to which the Vendor will assign to the
Purchaser all of its right, title and interest in and to the
Transferred Trademarks.
(ggggg) "Trademark License Agreement" means the license agreement
substantially in the form of Exhibit "H", to be entered into on
the Closing Date between the Vendor and the Purchaser providing
for the use of the business name and trademark "Preside" (and, if
necessary and on mutual agreement, other business names and
trademarks of the Vendor not included in the Transferred
Intellectual Property) by the Purchaser for a limited period of
time after the Closing Date.
(hhhhh) "Transaction Documents" means, collectively, this Agreement, the
Ancillary Agreements and all other agreements, instruments,
certificates and other documents to be entered into or delivered
by any Party pursuant to this Agreement and "Transaction
Document" means any one of such documents.
(iiiii) "Transfer Taxes" means all goods and services, sales, use, land
transfer, gross receipt, documentary, recording, registration,
conveyance, excise, value-added, stamp duties, federal and
provincial sales taxes and all other similar taxes, duties,
registration charges or other like charges together with any
interest, penalties, additions to tax or additional amounts
imposed with respect thereto.
(jjjjj) "Transferred Employees" means, collectively, (i) Designated
Employees who accept an offer of employment from the Purchaser
and commence employment with the Purchaser pursuant to Section
5.14(5), (ii) such of the Leave Employees and Loaned Employees
who accept an offer of employment from the Purchaser and commence
employment with the Purchaser or an Affiliate of the Purchaser
pursuant to Section 5.14(6), (iii) such of the French Employee
and German Employees who accept an offer of employment from the
Purchaser or an Affiliate of the Purchaser and commence
employment with the Purchaser or an Affiliate of the Purchaser
pursuant to Section 5.14(2) or whose employment
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transfers to the Purchaser or an Affiliate of the Purchaser
pursuant to Employment Transfer Laws, (iv) the UK Employees and
(v) the Brazil Transferring Employee.
(kkkkk) "Transferred Equipment"means, collectively, (i) UNIX work
stations, servers and related equipment, telecom equipment and
the peripherals and cables (other than cables which comprise
infrastructure) and testing and other laboratory equipment all as
listed in Schedule 1.1(jjjj) and (ii) tools, instruments,
furniture (other than leased furniture), office equipment, and
all other property and all other tangible personal property,
other than property enumerated in subsection (i) of this
definition, that is both (A) owned and (B) used or held for use
by the Vendor or any of the Vendor Affiliates primarily in the
conduct of the Purchased Business as conducted immediately prior
to Closing or at any time since September 1, 2001.
(lllll) "Transferred Intellectual Property" means, collectively, (i) the
Intellectual Property owned by the Vendor or any Vendor Affiliate
and used or held for use primarily in the conduct of the
Purchased Business as conducted immediately prior to Closing or
at any time since September 1, 2001, including the Intellectual
Property listed or described in Schedule 1.1(lllll) but excluding
the (A) Transferred Patents, (B) Transferred Trademarks, (C)
Network Identifiers, (D) Vendor Licensed Intellectual Property,
and (E) trademarks licensed under the Trademark License
Agreement, (ii) the Transferred Patents, (iii) the Transferred
Trademarks, and (iv) the Network Identifiers.
(mmmmm) "Transferred Patents" means, collectively, those rights,
including patent applications, listed or described in Schedule
1.1(mmmmm).
(nnnnn) "Transferred Trademarks" means, collectively, those trademarks
listed or described in Schedule 1.1(nnnnn).
(ooooo) "Transition Services Agreement" means the transition services
agreement substantially in the form of Exhibit "I" to be entered
into on the Closing Date by the Vendor and the Purchaser pursuant
to which the Vendor will agree to provide certain fee-based
services to the Purchaser in connection with the Purchased
Business for a limited period of time after the Closing Date.
(ppppp) "UK Affiliate" has the meaning specified in Section 2.7.
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(qqqqq) "UK Business" has the meaning specified in Section 2.7.
(rrrrr) "UK Employees" means the Employees whose work location is within
the United Kingdom and who are listed in Schedule 1.1(jj) as UK
Employees.
(sssss) "UK Employee Transfer Date" means the later of the Closing Date
or the date upon which the certificate contemplated by Section
5.14(11) is issued and delivered by the Vendor to the Purchaser.
(ttttt) "U.S. GAAP" means United States generally accepted accounting
principles in a manner consistently applied.
(uuuuu) "Vendor" has the meaning set out in the recitals to this
Agreement.
(vvvvv) "Vendor Affiliates" means, collectively, Accugraph Corporation,
Architel Systems Corporation ("Architel"), Architel Systems
(U.S.) Corporation, Architel Systems (U.K.) Corporation, Nortel
Networks Technology Corporation ("NN Technology"), Nortel
Networks Inc. ("NNI"), Nortel Networks S.p.A., Nortel Networks
Hispania, S.A., Nortel Networks UK Limited and Nortel Networks
S.A.
(wwwww) "Vendor Indemnified Parties" has the meaning specified in Section
7.3.
(xxxxx) "Vendor Licensed Intellectual Property" means the Intellectual
Property licensed under the Intellectual Property License
Agreement owned by the Vendor or any Vendor Affiliate that is or
was used or held for use both in the conduct of the Purchased
Business and for other purposes at any point in time between
September 1, 2001 and Closing, but not including any rights to
receive from the Vendor or any Vendor Affiliate corporate
overhead services or shared corporate services, including, but
only to the extent that they constitute corporate overhead
services or shared corporate services, Intellectual Property
covering, embodied used in the development, manufacture, sale or
provision of corporate (i) financial, human resources, sales and
marketing, order management, bills of materials, logistics,
customs/excise, information systems or administrative processes
or services, including any computer software used in connection
therewith, and including services relating to the provision of
access to design tools and databases, or (ii) materials,
components, assemblies or parts that are supplied to the
Purchased Business for use in or by the Products from other
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business units of the Vendor prior to Closing or at any time
since September 1, 2001. For the avoidance of doubt, the Parties
acknowledge and agree that the Licensed Patents (as defined in
the Intellectual Property License Agreement), or any other
element of the Vendor Licensed Intellectual Property set forth on
a schedule in the Intellectual Property License Agreement, is not
used primarily in the conduct of the Purchased Business and is
not and was not, and shall not be deemed to be or have been, used
or held for use primarily in the conduct of the Purchased
Business as at, or at any time prior to, Closing.
Section 1.2 Gender and Number.
Unless the context requires otherwise, any reference in this Agreement to
gender shall include all genders, and words importing the singular number only
shall include the plural and vice versa.
Section 1.3 Headings, etc.
The provision of a table of contents, the division of this Agreement into
Articles, Sections, subsections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in the construction or interpretation of this Agreement.
Section 1.4 Currency.
All references in this Agreement to dollars, unless otherwise specifically
indicated, are expressed in the currency of the United States.
Section 1.5 Certain Phrases etc.
In this Agreement, the words "including", "include" and "includes" means
"including (or include or includes) without limitation", and the phrase "the
aggregate of", "the total of", "the sum of", or a phrase of similar meaning
means "the aggregate (or total or sum) without duplication, of" and in the
computation of periods of time from a specified date to a later specified date,
unless otherwise expressly stated, the word "from" means "from and including"
and the words "to" and "until" each mean "to but excluding".
Section 1.6 Incorporation of Schedules and Exhibits.
The schedules and the exhibits attached to this Agreement shall, for all
purposes of this Agreement, form an integral part of it.
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ARTICLE 2
PURCHASED ASSETS
Section 2.1 Purchase and Sale.
On and subject to the terms and conditions set forth in this Agreement, the
Vendor agrees to sell, convey, assign and transfer or cause to be sold,
conveyed, assigned and transferred, free and clear of any Encumbrances (other
than Permitted Encumbrances), to the Purchaser and the Purchaser agrees to
purchase from the Vendor and the Vendor Affiliates on the Closing Date the
following:
(a) the Transferred Equipment;
(b) the Authorizations held by the Vendor and the Vendor Affiliates
exclusively in the conduct of the Purchased Business that are
assignable;
(c) the Business Information;
(d) the Employee Information;
(e) subject to Section 2.3 and the terms and conditions of the Bill
of Sale and Bill of Sale and Assignment and Assumption Agreement,
the Contracts (other than the Leases) which are in effect at the
Effective Time;
(f) the Transferred Intellectual Property;
(g) the leasehold interest of each of the Vendor and the applicable
Vendor Affiliates in and to the Leased Properties and all right,
title and interest under the Leases subject to obtaining the
applicable Consent;
(h) the Third Party Software, to the extent such Third Party Software
is transferable; and
(i) the assets included on the Financial Statements under the heading
"Other Assets", if any.
The property and assets described in this Section 2.1 are collectively
referred to as the "Purchased Assets". Notwithstanding the foregoing, all right,
title and interest in and to the relevant portion of the Employee Information
shall transfer to the Purchaser or an Affiliate of the Purchaser on the
applicable Employee Start Date; provided however, no such Employee Information
shall transfer in respect of the Excluded Employees.
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Section 2.2 Excluded Assets.
Notwithstanding anything in Section 2.1 or elsewhere in this Agreement to
the contrary, the Purchased Assets shall not include any assets other than the
assets specifically listed or described in Section 2.1, and any corresponding
Schedules, and, without limiting the generality of the foregoing and for greater
certainty, shall expressly exclude the following (collectively, "Excluded
Assets"):
(a) any cash and cash equivalents, all bank account balances and all
petty cash;
(b) any Taxes, including duty drawbacks or duty refunds, and property
Taxes, refundable to the Vendor or a Vendor Affiliate in
connection with the Purchased Business in respect of
transactions, or in respect of the period, prior to the Effective
Time, and any refundable Taxes or Tax credits;
(c) subject to Section 5.20, any refunds due from, or payments due
on, claims with the insurers of the Vendor or a Vendor Affiliate;
(d) the minute books and corporate records of each of the Vendor and
the Vendor Affiliates;
(e) all Accounts Receivable;
(f) all books, documents, records and files prepared in connection
with or relating to the transactions contemplated by this
Agreement, including bids received from other parties and
analyses relating to the Purchased Assets, the Assumed
Liabilities or the Purchased Business;
(g) other than as provided in the Transition Services Agreement, any
rights of the Purchased Business to receive from the Vendor or a
Vendor Affiliate corporate overhead and shared services,
including treasury, corporate information services, corporate
sales and account management, legal, tax, human resources, risk
management, finance and group purchasing plans;
(h) all corporate, financial, taxation and other records of the
Vendor and the Vendor Affiliates other than the Business
Information;
(i) rights in any real property, whether owned or leased, other than
such rights relating to (i) the Leased Properties and (ii) the
temporary co-location arrangements pursuant to the Premises
License Agreement;
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(j) except for the Transferred Equipment, all other equipment that is
both (i) owned and (ii) used or held for use by the Vendor or any
Vendor Affiliate and the leased furniture;
(k) all extra-provincial, sales, excise or other licenses or
registrations issued to or held by the Vendor and Vendor
Affiliates, whether in respect of the Purchased Business or
otherwise;
(l) any rights of the Vendor and the Vendor Affiliates under this
Agreement or any other Transaction Document;
(m) any and all Intellectual Property of the Vendor and the Vendor
Affiliates and any tangible embodiments of any such property
other than the Transferred Intellectual Property;
(n) any and all employee data other than the Employee Information;
(o) the books and records that the Vendor and the Vendor Affiliates
are, in the reasonable opinion of Vendor's counsel, required by
Law to keep;
(p) the Desktop Software and the Business Application Software;
(q) all stock or equity interests in any Person; and
(r) the other assets and rights listed in Schedule 2.2(r).
Section 2.3 Assignment of Contracts.
(1) Nothing in this Agreement nor any other Transaction Document shall be
construed as an attempt by the Parties to assign or as requiring the Vendor
or a Vendor Affiliate to assign, or to cause the assignment of any Contract
which, by its terms or as a matter of applicable Law, is not assignable in
whole or in part without Consent, unless and until such Consent shall have
been given. The Vendor shall use its Best Efforts and cooperate fully, and
shall cause each Vendor Affiliate to use their respective Best Efforts and
cooperate fully, with the Purchaser and its Affiliates to obtain as soon as
commercially reasonable, all Consents provided that the failure to obtain
any or all of such Consents prior to Closing shall not entitle the
Purchaser to terminate this Agreement or not to complete the transactions
contemplated hereby.
(2) With respect to each Customer Contract to which the Vendor or a Vendor
Affiliate, as applicable, has received the Consent to assign to the
Purchaser on or before the Closing Date, the Purchaser and the Vendor or
any Vendor Affiliate, as appropriate, acknowledge and agree that, as of the
Closing and
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pursuant to the terms and conditions of the Bill of Sale and Assignment and
Assumption Agreement, all right, title and interest in and to such Customer
Contract shall have been assigned to the Purchaser and the Purchaser shall
have assumed all of the benefit and obligations under such Customer
Contract, but only to the extent set forth in the form of such Customer
Contract contained in the Agreed Documentation. With respect to each
Customer Contract to which the Vendor or a Vendor Affiliate, as applicable,
has not received the consent to assign to the Purchaser on or before the
Closing Date (each such Customer Contract referred to herein as a
"Subcontracted Customer Contract"), the Purchaser and the Vendor or any
Vendor Affiliate, as appropriate, and as between and among them, as the
case may be, acknowledge and agree that, as of the Closing and pursuant to
the terms and conditions of the Bill of Sale and Assignment and Assumption
Agreement, all right, title and interest in and to such Subcontracted
Customer Contract shall have been conditionally assigned to the Purchaser
and the Purchaser shall have conditionally assumed all of the benefits and
obligations under such Subcontracted Customer Contract but only to the
extent such benefits and obligations are set forth in the form of such
Subcontracted Customer Contract contained in the Agreed Documentation.
(3) Until the required Consent has been obtained and as with respect to the
third party to such Subcontracted Customer Contracts, the Purchaser shall
act as sub-contractor of the Vendor or any Vendor Affiliates, as
applicable, in respect of such Subcontracted Customer Contracts pursuant to
terms and conditions to be agreed between the Vendor and the Purchaser.
(4) To the extent a customer and/or the Purchaser provides the Vendor with
written evidence and establishes, to the reasonable satisfaction of the
Vendor, a contractual relationship relating to the same subject matter of
any Customer Contract (for purposes of this Subsection (4) the term
Customer Contract shall include any Subcontracted Customer Contract) the
terms and conditions of which are different from the terms and conditions
of the form of Customer Contract set forth in the Agreed Documentation
(such as a different signed version of such Contract, an addendum, exhibit,
schedule or other documentation that purports to amend, modify, supplement
or replace all or any part of such Contract or constitute a waiver
thereof), the Vendor shall (i) pay to the Purchaser the full amount of any
additional direct costs incurred by the Purchaser (including a reasonable
overhead allocation) resulting from the discrepancy that the Purchaser,
acting reasonably, cannot pass on to the customer, and (ii) indemnify the
Purchaser for all Damages, any claim for such indemnification to be treated
in the same manner as a claim asserted under Section 7.2(d).
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(5) In an effort to preserve the Agreed Documentation, the Vendor and the
Purchaser agree to deliver, as of the date hereof, a complete and accurate
copy of all such documentation to be held by their respective Canadian
Counsel.
(6) Except as set forth in Section 5.2, the Purchaser may in its sole
discretion, acting reasonably, decide whether or not to accept the
assignment of any contract with a customer that provides for the sale of
any of the Products and/or services related thereto the existence of which
is made known to the Purchaser at any time after Closing. Any contract
contemplated by this Section 2.3(6) that is not assumed by the Purchaser
shall be treated pursuant to the terms and conditions of the Reseller,
Maintenance and Referral Agreement.
(7) Subject to the receipt of any required Consent, the Vendor shall use its
Best Efforts, and shall cause each Vendor Affiliate, as applicable, to use
their respective Best Efforts, to assign and transfer to the Purchaser the
Equipment Leases. If any such Consent is not obtained for the assignment of
any Equipment Lease (to the extent such Equipment Lease may relate to any
Transferred Equipment) prior to Closing, the Vendor and the Vendor
Affiliates shall buy out such portion of such Equipment Leases (but only to
the extent as they relate to the Transferred Equipment) for which Consents
have not been obtained and sell such Transferred Equipment, covered by such
Equipment Leases to the Purchaser, free and clear of all Encumbrances, at
the buy out value, which equipment shall form part of the Transferred
Equipment.
(8) The Purchaser shall be responsible and shall pay the Vendor and the Vendor
Affiliates for any and all reasonable costs, including any Transfer Taxes,
relating to the assignment and transfer of the Equipment Leases referred to
above.
(9) The Vendor shall use its Best Efforts, and shall cause the Vendor
Affiliates to use their respective Best Efforts, to deliver to the
Purchaser as soon as practicable after the Effective Time all
documentation, including any license agreements, relating to the Third
Party Software; provided, however, that the Vendor shall have no
obligations to deliver documentation to the Purchaser in respect of any
Third Party Software the license for which relates to lines of business or
divisions of the Vendor or its Affiliates other than the Purchased
Business.
Section 2.4 Assumption of Liabilities.
Subject to Closing, effective as of and from the Effective Time, the
Purchaser shall assume and become responsible for, and shall perform, discharge
and pay
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when due the following obligations and liabilities (collectively, "Assumed
Liabilities"):
(a) all obligations and liabilities of any kind with respect to the
Purchased Business to the extent such obligations and liabilities
arise out of the conduct of the Purchased Business by the
Purchaser or the use, ownership or operation of the Purchased
Assets from and after the Effective Time; provided, however, that
the Purchaser shall not assume nor shall the Purchaser become
responsible or liable for any liability or obligation arising
from or out of any breach or non-performance of any Contract
occurring before the Effective Time;
(b) the current liabilities of the Purchased Business as at Closing;
(c) all obligations and liabilities relating to or arising from or in
connection with the Purchaser's employment of each of the
Transferred Employees from and after the Employee Start Date; and
(d) subject in all respects to Section 5.15, all obligations and
liabilities of the Vendor and the Vendor Affiliates in respect of
accrued and unused vacation relating to or arising from or in
connection with the Vendor's or a Vendor Affiliate's employment
of each of the Transferred Employees which obligations and
liabilities existed and accrued at any or all times prior to the
Employee Start Date.
Nothing in this Section 2.4 shall be construed to negate any liability or
obligation explicitly assumed by the Purchaser elsewhere in this Agreement or in
any other Transaction Document. Other than those liabilities explicitly assumed
by the Purchaser in this Section 2.4 and elsewhere in this Agreement or any
other Transaction Document, the Purchaser, directly or indirectly, shall assume
no liabilities or obligations of Vendor or any Vendor Affiliate and shall not be
liable therefor.
Section 2.5 Transferred Equipment.
EACH OF THE PURCHASER AND THE GUARANTOR ACKNOWLEDGE THAT THE TRANSFERRED
EQUIPMENT IS BEING PURCHASED ON AN "AS IS, WHERE IS" BASIS ON CLOSING AND THAT
IT IS RELYING ENTIRELY UPON ITS OWN INVESTIGATIONS AND INSPECTIONS HERETOFORE
AND HEREAFTER CONDUCTED IN PROCEEDING WITH THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THAT NO REPRESENTATION OR WARRANTY IS GIVEN BY ANY OF THE VENDOR
OR THE VENDOR AFFILIATES WITH RESPECT TO THE CONDITION OR STATE OF REPAIR OF THE
TRANSFERRED EQUIPMENT. WITHOUT LIMITING THE FOREGOING, SAVE AND EXCEPT AS TO
TITLE MATTERS SET OUT IN SECTION 4.1(F), THE
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PURCHASER AND THE GUARANTOR EXPRESSLY ACKNOWLEDGE THAT THERE ARE NO
REPRESENTATIONS, WARRANTIES, TERMS, CONDITIONS, UNDERSTANDINGS OR COLLATERAL
AGREEMENTS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE
CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF
THE TRANSFERRED EQUIPMENT.
Section 2.6 No Reliance.
Each of the Purchaser and the Guarantor further acknowledge that all
written and oral information (including analyses, financial information and
projections, compilations and studies) obtained by the Purchaser or the
Guarantor from the Vendor and the Vendor Affiliates or any of their directors,
officers, employees, professional consultants or advisors with respect to the
Purchased Business, the Purchased Assets or otherwise relating to the
transactions contemplated in this Agreement has been obtained for the
convenience of the Purchaser and the Guarantor only and the Vendor and the
Vendor Affiliates are not making any representation or warranty as to the
accuracy or completeness of such information except for the representations and
warranties of the Vendor contained in this Agreement or in any certificate
delivered pursuant hereto.
Section 2.7 Purchaser Affiliates.
The Vendor acknowledges and agrees with the Purchaser and the Affiliates of
the Purchaser listed in Schedule 2.7 that:
(a) the Purchaser is purchasing that part of the Purchased Business
and those of the Purchased Assets located in or relating to the
United Kingdom (the "UK Business") as agent for and on behalf of
the Affiliate of the Purchaser listed in Schedule 2.7 as the UK
Affiliate (the "UK Affiliate") and references in this Agreement
to the Purchaser shall for all purposes be construed as
references to the UK Affiliate in so far as they relate to the UK
Business;
(b) pursuant to Section 5.14(1), the UK Affiliate will be the
employer of the UK Employees from the UK Employee Transfer Date;
(c) pursuant to Section 5.14(2), the French Employee shall be
employed by the Affiliate of the Purchaser listed in Schedule 2.7
as the French Affiliate from the Closing Date; and
(d) pursuant to Section 5.14(2), the German employees shall be
employed by the Affiliate of the Purchaser listed in Schedule 2.7
as the German Affiliate from the German Employee Transfer Date.
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ARTICLE 3
PURCHASE PRICE
Section 3.1 Purchase Price.
The purchase price (the "Purchase Price") payable by the Purchaser to the
Vendor for the Purchased Assets shall be an aggregate of $35,000,000 subject to
final adjustments under Section 3.4 and Article 7.
Section 3.2 Allocation of Purchase Price.
(1) The Vendor and the Purchaser agree, as promptly as practicable following
the date of this Agreement, but in any event not later than five (5)
Business Days prior to the Closing Date, to allocate the Purchase Price, as
set forth in Schedule 3.2(1), subject to adjustments under Section 3.4 and
Article 7. Any subsequent adjustments to the allocation hereunder shall be
reasonably agreed by the Vendor and the Purchaser.
(2) The Vendor and the Purchaser hereby agree to execute and file or cause to
be executed and filed all Tax Returns and prepare or cause to be prepared
all financial statements, returns and other instruments on the basis of the
allocations referred to in this Section 3.2, subject to adjustment in
accordance with Section 3.4 and Article 7. The Vendor, the Vendor
Affiliates, the Purchaser and any of their respective Affiliates shall not
take any position on any Tax Return (including IRS Form 8594), before any
Governmental Entity charged with the collection of any income Tax, or in
any judicial proceeding relating to Taxes, that is inconsistent with the
allocation of the Purchase Price established pursuant to this Section 3.2.
(3) The Vendor and the Purchaser shall accumulate, and the Vendor shall cause
each Vendor Affiliate, if applicable, to accumulate, the needed information
to file a complete and timely Section 1060 statement (Form 8594) pursuant
to the Code with respect to the purchase and sale of the Purchased Assets
which are located in the United States as of the Closing Date.
(4) Except as otherwise provided in this Agreement, none of the Purchaser, the
Vendor or the Vendor Affiliates, if applicable, shall be responsible for
any Tax liability or any other expense of any other Party to this Agreement
resulting from the reporting and allocations made by such other Party as
contemplated by this Section 3.2.
Section 3.3 Payment of Purchase Price.
At the Closing, the Purchaser shall pay the Purchase Price to the Vendor,
on its own behalf and, as applicable, as agent for each of the Vendor
Affiliates, by way of electronic transfer of immediately available funds to such
bank account as the
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Vendor may designate to the Purchaser in writing at least two (2) Business Days
prior to the Closing Date.
Section 3.4 Adjustments to the Purchase Price.
(1) Within thirty (30) days after the Closing, the Vendor shall prepare and
deliver to the Purchaser an unaudited statement of management net
assets and liabilities of the Purchased Business as of the Closing
Date. The Vendor shall prepare such unaudited statement of management
net assets and liabilities on a basis consistent with the preparation
of the Financial Statements. Further, such unaudited statement of
management net assets and liabilities will be used by the Purchaser for
informational purposes, will be subject to change and will not
necessarily reflect the final unaudited statement of net assets and
liabilities of the Purchased Business as of the Closing Dates as
described in Section 5.25.
(2) Immediately following delivery of the audited financial statements as
required pursuant to Section 5.25, the Vendor shall prepare and deliver
to the Purchaser a draft statement of adjustment (the "Draft Statement
of Adjustment") setting forth the amount, as of the Closing Date, of
the current liabilities of the Purchased Business (the "Current
Liabilities Amount"). The Draft Statement of Adjustment shall be
prepared on a basis consistent with the preparation of the Financial
Statements as described in Section 4.1(h) and shall include any
adjustments to the management current liabilities discovered during the
audit required pursuant to Section 5.25 that are applicable at the
Closing Date. To the extent the Current Liabilities Amount, as adjusted
pursuant to this Section 3.4(2) above, is greater than $8,500,000.00
(the "Targeted Current Liabilities"), the Vendor shall pay the
difference to the Purchaser. To the extent the Current Liabilities
Amount, as adjusted pursuant to this Section 3.4(2) above, is less than
the Targeted Current Liabilities, the Purchaser shall pay the
difference to the Vendor. Such amount shall be referred to herein as
the "Adjustment Amount" and payment of the Adjustment Amount by either
the Vendor or the Purchaser shall be made within ten (10) Business Days
of the finalization of the Statement of Adjustment as described in
Section 3.5.
Section 3.5 Final Determination.
(1) Within fifteen (15) Business Days following delivery of the Draft
Statement of Adjustment, the Purchaser shall cause its auditors to
review the Draft Statement of Adjustment and shall notify the Vendor in
writing if it has any objections to the Draft Statement of Adjustment.
The notice of objection must contain a statement of the basis of each
of the Purchaser's objections and each amount in dispute. For greater
certainty, the amount in dispute must relate to current liabilities
that are to be assumed by the Purchaser and should not
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include any liabilities that have been included in the audited
financial statements solely for the purpose of compliance with GAAP.
The Vendor shall request that its auditors provide access, upon
reasonable request, to the Purchaser and its auditors to all work
papers of the Vendor's auditors and the Vendor shall provide access,
upon every reasonable request, to the Purchaser and its auditors to
the accounting books and records and the appropriate personnel to
verify the accuracy, presentation and other matters relating to the
preparation of the Draft Statement of Adjustment. The Purchaser shall
be deemed to have accepted the Draft Statement of Adjustment if it
does not notify the Vendor of its objection within the said fifteen
(15) Business Day period.
(2) If the Purchaser disputes the Draft Statement of Adjustment, the
Parties will work expeditiously and in good faith in an attempt to
resolve such dispute within a further period of twenty (20) Business
Days after the date of notification by the Purchaser to the Vendor of
such dispute. In the absence of an agreement by the Parties, the final
amount of the adjustment shall be determined within ten (10) Business
Days by a nationally-recognized firm (in both the United States and
Canada) of certified public accountants as may be agreed to by the
Parties, and such determination shall be conclusive, final and binding
on the Vendor and the Purchaser. Such firm of certified public
accountants shall be deemed to be acting as experts and not as
arbitrators. The Vendor and the Purchaser will share equally all fees
and expenses charged by such accountants for resolving such matter.
Immediately following the fifteen (15) Business Day period referred to
in Section 3.5(1) or the resolution of any dispute in accordance with
the foregoing, as the case may be, the Vendor shall deliver to the
Purchaser the final Statement of Adjustment (the "Statement of
Adjustment") together with any report of the auditor's produced
thereon. Such Statement of Adjustment shall be final and binding upon
the Parties and shall not be subject to appeal, absent manifest error.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Vendor.
The Vendor represents and warrants to the Purchaser as follows, and
acknowledges that the Purchaser is relying on such representations and
warranties in connection with the transactions contemplated by this Agreement:
(a) Incorporation and Organization. Each of the Vendor and the Vendor
Affiliates is a corporation incorporated and validly existing under
the laws of its jurisdiction of incorporation and has the
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requisite corporate power and authority to enter into, deliver
and perform its obligations pursuant to each of the Transaction
Documents to which it is or will become a party and to carry out
the transactions contemplated hereunder and thereunder, as
applicable. Each of the Vendor and the Vendor Affiliates is
qualified, licensed or registered to carry on business in the
jurisdictions in which the nature of the Purchased Business or
Purchased Assets makes such qualification necessary.
(b) Validity of the Agreement. The execution and delivery of this
Agreement and the Ancillary Agreements by the Vendor, the
performance by the Vendor of its obligations hereunder and
thereunder and the consummation by the Vendor of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of the Vendor. The
execution and delivery by each Vendor Affiliate of the Ancillary
Agreements to which it is a party, the performance by each Vendor
Affiliate of its obligations thereunder and the consummation by
each Vendor Affiliate of the transactions contemplated thereby,
have been duly authorized by all requisite corporate and
shareholder action on the part of such Vendor Affiliate. This
Agreement and all other Transaction Documents to which the Vendor
and/or each Vendor Affiliate is or will be a party have been or
at Closing will be duly and validly executed and delivered by the
Vendor and/or each Vendor Affiliate, as the case may be, and
(assuming due authorization, execution and delivery by the other
parties hereto and thereto) constitute or at Closing will
constitute legal, valid and binding obligations of the Vendor
and/or each Vendor Affiliate, as the case may be, enforceable
against it in accordance with their respective terms subject only
to any limitation under applicable Laws relating to (A)
bankruptcy, winding-up, insolvency, arrangement and other similar
laws of general application affecting the enforcement of
creditors' rights, (B) the discretion that a court may exercise
in the grant of equitable remedies such as specific performance
and injunction, and (C) the legality, validity or binding effect
of the provisions of Section 5.23.
(c) No Conflict. The execution, delivery and performance of this
Agreement by the Vendor and the execution, delivery and
performance of the Transaction Documents by the Vendor and/or the
Vendor Affiliates that are a party thereto, and the consummation
of the transactions contemplated hereby and thereby:
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(i) do not (or would not with the giving of notice, the lapse of
time or the happening of any other event or condition):
(A) conflict with or result in a violation of any provision
of the constating documents or by-laws of the Vendor or
any of the Vendor Affiliates; or
(B) other than as a result of the failure to obtain any
Consent, conflict with or result in a breach of or a
default under, or give to any Person any right to
terminate, accelerate, cancel, suspend or modify, any
Material Contract thereunder;
(ii) will not conflict with or result in a breach of, or cause the
termination or revocation of, any Authorization held by the
Vendor or any Vendor Affiliate necessary to the ownership of
the Purchased Assets or the operation of the Purchased
Business; and
(iii) subject to Section 5.5, will not result in the violation of
any Order or Law.
(d) Required Authorizations. There is no requirement of the Vendor or
any Vendor Affiliate to make any filing with, give any notice to,
or obtain any Authorization of, any Governmental Entity as a
condition to the lawful completion of the transactions
contemplated by this Agreement, except for the filings,
notifications and Authorizations described in Schedule 4.1(d) (as
determined in accordance with Section 5.5(1)), or that relate
solely to the identity of the Purchaser or the nature of the
business carried on by the Purchaser prior to Closing.
(e) No Other Agreements to Purchase. Except for the Purchaser's right
under this Agreement, no Person has any written or oral agreement
or option or any right or privilege capable of becoming such for
the purchase or acquisition from the Vendor or any of the Vendor
Affiliates of any of the Purchased Assets other than assets sold
in the Ordinary Course.
(f) Title to Purchased Assets. Other than the Transferred
Intellectual Property and the Vendor Licensed Intellectual
Property, each of the Vendor and the Vendor Affiliates owns (with
good title), or has a valid leasehold or license interest in, as
the case may be, all of the
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Purchased Assets free and clear of all Encumbrances except for
Permitted Encumbrances.
(g) Sufficiency of the Purchased Assets. The Purchased Assets
(together with the rights of the Purchaser and its Affiliates
under the Ancillary Agreements) other than the Transferred
Intellectual Property, the Vendor Licensed Intellectual Property
and the Third Party Licensed Intellectual Property (including
Third Party Licensed Intellectual Property subject to Consent),
all of which are addressed in Section 4.1(s), include all rights
and property necessary and sufficient, in all material respects,
to carry on the Purchased Business as conducted immediately prior
to Closing or at any time since September 1, 2001.
(h) Financial Statements. The unaudited management financial
statements attached as Schedule 4.1(h) (the "Financial
Statements") are true, correct and complete and present fairly
the statement of assets and liabilities of the Purchased Business
as of December 31, 2001, and the related statement of profit and
loss of the Purchased Business for the fiscal year then ended.
The Financial Statements have been compiled from the books and
records of the Purchased Business and except as disclosed on
Schedule 4.1(h), (i) have been prepared in accordance with U.S.
GAAP and (ii) present fairly, in all material respects, the
financial position of the Purchased Business, or the profit (or
loss) of the Purchased Business, as the case may be, as of the
date or for the period indicated. Except as disclosed in Schedule
4.1(h), there is no liability or obligation of any kind, whether
accrued, absolute, fixed, contingent, or otherwise, of the Vendor
or any of its Subsidiaries that is not reflected or reserved
against in the statement of assets and liabilities other than (A)
liabilities incurred in the Ordinary Course since the Financial
Statement Date, or (B) any such liability that would not be
required to be presented in financial statements prepared in
conformity with U.S. GAAP applied, in a manner consistent with
past practice, in the preparation of the Financial Statements.
(i) Residence of the Vendor. None of the Vendor, Architel or NN
Technology is a non-resident of Canada within the meaning of
Section 116 of the Income Tax Act (Canada). Except for those sold
by Architel and NN Technology, none of the Purchased Assets that
are being sold by the Vendor Affiliates constitute "taxable
Canadian property" as such term is defined within the meaning of
Section 248 of the Income Tax Act (Canada).
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(j) Authorizations. To the Vendor's Knowledge, the Vendor and the
Vendor Affiliates hold all Authorizations that are required for
the operation of the Purchased Business as conducted immediately
prior to Closing or any time since September 1, 2001 or for the
ownership and use of the Purchased Assets. All such
Authorizations are listed in Schedule 4.1(j). To the Vendor's
Knowledge such Authorizations are in full force and effect and no
Action has been taken or threatened in writing that would
terminate or impair such Authorization.
(k) No Breach of Material Contracts. Except as disclosed in Schedule
1.1(vvv) and other than license fees which may be owing under the
Third Party Licences at Closing, each of the Vendor and the
Vendor Affiliates has performed all of the obligations required
to be performed by it and is entitled to all benefits thereunder,
and is not in breach or default in any material respect of any
Material Contract. Each of the Material Contracts is in full
force and effect, unamended, and except as set forth in Section
1.1(vvv) and other than license fees which may be owing under the
Third Party Licenses at Closing, there exists no default or event
of default or event, occurrence, condition or act (including the
purchase of the Purchased Assets) which, with the giving of
notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default under any
Material Contract other than any requirements to obtain the
Consent of the other party. Schedule 1.1(vvv) contains a list of
the Material Contracts setting out, in respect of each Material
Contract, (i) the parties, (ii) any restrictions on (A)
assignment or (B) the sale of all or substantially all of the
assets of any Vendor Affiliate and (iii) the nature and extent of
any default or event of default, thereunder and how such default
or event of default has been addressed by the Vendor and/or the
relevant Vendor Affiliate, as the case may be.
(l) No Breach of Other Contracts. Except for certain acts of default
or breach which, in the aggregate, would not have a Material
Adverse Effect none of the Vendor or the Vendor Affiliates, as
the case may be, has violated or breached any of the terms or
conditions of any Contract (other than the Material Contracts).
(m) Absence of Certain Changes or Events. Except as disclosed in
Schedule 4.1(m), since the Financial Statement Date to the date
of this Agreement, except as expressly contemplated by this
Agreement or consented to in writing by the Purchaser, (a) no
change or event has occurred that has had or would reasonably be
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expected to have a Material Adverse Effect and (b) no
material transaction, obligation or liability has been
undertaken or incurred by the Purchased Business outside the
Ordinary Course.
(n) Equipment Leases. Other than the Equipment Leases, none of
the Vendor or any of the Vendor Affiliates is a party to any
lease, sublease, license or contract in the nature of a
lease or conditional sales contract in respect of any
tangible personal property which is used exclusively in the
conduct of Purchased Business and the Vendor and the Vendor
Affiliates are in possession of all of the tangible personal
property which is the subject of the Equipment Leases.
(o) Books and Records. All accounting and financial books and
records of the Vendor and, to the Vendor's Knowledge, the
Vendor Affiliates relating to the Purchased Business have
been fully, properly and accurately kept and are complete in
all material respects. The books and records of the Vendor
and the Vendor Affiliates and other data or information
relating to the Purchased Business are not recorded, stored,
maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or
not) which would not be available to a purchaser of the
Purchased Business in the Ordinary Course.
(p) Employee Relations.
(i) Except as disclosed in Schedule 4.1(p), none of the
Vendor or any of the Vendor Affiliates is party to or
bound by any employment contracts with any Person or
contracts for personal services with any agents or
independent contractors in relation to the Purchased
Business, which are either wholly or partly in writing
and none of the Employees is employed other than for an
indefinite duration terminable on reasonable notice
according to law. True and complete copies of all such
employee agreements and contracts have been delivered to
the Purchaser and the information in Schedule 4.1(p) with
respect thereto is accurate and complete.
(ii) Schedule 1.1(jj) is an accurate and complete list as of
the date of this Agreement and when updated pursuant to
Section 5.15, will be an accurate and complete list of
all Employees setting forth: (A) name; (B) the title or
position and salary/rate of pay currently paid to each
such Employee; (C) credited service date;
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(D) work location; (E) the percentage range of incentive
awards for 2001; (F) Capital Accumulation and Retirement
Plan ("CARP") participation; (G) which of the Employees
are UK Employees, Designated Employees, the French
Employee, German Employees, Brazil Employee, Excluded
Employees, Loaned Employees or Leave Employees and, for
each Leave Employee, the expected date of return to work,
if known; and (H) visa and or ex-patriot status or other
basis for each Employee's authorization to work in the
country in which such Employee is located if not a
citizen of such country; and (I) Employees who are
eligible pursuant to the Vendor or Vendor Affiliates
policies for overtime pay; (J) the global identification
number assigned by the Vendor to each such Employee; (K)
accrued and unused vacation expressed in number of days
and dollars; and (L) most recent hire date. There are no
Persons other than those listed as UK Employees on
Schedule 1.1(jj) who are or who could at any time qualify
as UK Employees.
(iii) None of the Vendor nor any of the Vendor Affiliates has
recognized as the exclusive bargaining representative of
any Employee, or entered into any contracts (including
labour contracts, collective bargaining agreements and
employee agreements) with or purportedly on behalf of any
trade union, labour union, employee association or
bargaining agency, and none of the Vendor nor any of the
Vendor Affiliates has made commitments to or conducted
negotiations with any trade union, labour union, employee
association, bargaining agency or director, officer,
employee or agent thereof with respect to any future
agreements by the Vendor or a Vendor Affiliate, as the
case may be, in relation to the Purchased Business.
Except as set out in Schedule 4.1(p), to Vendor's
Knowledge, no trade union, labour union, employee
association or bargaining agency has been certified as
the exclusive bargaining representative of any Employees,
and no trade union, labour union, employee association or
bargaining agency is seeking to represent any Employee.
(iv) There has not been for a period of twelve (12)
consecutive months prior to the date hereof, nor is there
existent or, to the Knowledge of the Vendor, threatened
any strike, slowdown, picketing or work stoppage or other
labour claims or disputes or industrial action with
respect to the Purchased Business.
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(v) Except as disclosed in Schedule 1.1(jj), the Vendor and
the Vendor Affiliates are in compliance in all material
respects with all Laws relating to employment (including
workplace health and safety) that are applicable to the
Employees.
(vi) There are no outstanding assessments, penalties, fines,
levies, charges, surcharges or other amounts due or owing
pursuant to any applicable workers' compensation
legislation in respect of the Purchased Business or
Employees and the Vendor has no Knowledge of any audit of
the Purchased Business currently being performed pursuant
to any applicable workers' compensation legislation or
employment standards legislation.
(vii) All obligations of the Vendor and the Vendor Affiliates,
as the case may be, with respect to the Employees for
withholding tax, Canada Pension Plan contributions,
employment insurance contributions or contributions of
any kind have been paid or remitted in full on or before
the due date thereof.
(viii) The Vendor and each applicable Vendor Affiliate has
complied with all of its obligations under Employment
Transfer Laws, save where any such failure to comply is a
consequence of any failure by Purchaser to provide the
information needed for the purpose of complying with the
Vendor's and each applicable Vendor Affiliate's
obligations to inform and consult with UK Employees.
(q) Employee Plans.
(i) Schedule 4.1(q) contains an accurate and complete list of
the Employee Plans and all amendments to the Employee
Plans since their last restatement. True, complete and
correct copies of the Employee Plans and any amendments,
and any summary plan descriptions have been provided to
the Purchaser by the Vendor.
(ii) Except as disclosed in Schedule 4.1(q) as to any Employee
Plan subject to Title IV of ERISA, there has been no
event or condition which presents the risk of an Employee
Plan termination, no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302
of ERISA or Section 412 of the Code has been incurred, no
reportable event within the meaning of Section 4043 of
ERISA (for which the disclosure requirements of
Regulation Section 4043.1 et seq.,
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promulgated by the Pension Benefit Guaranty Corporation
("PBGC") have not been waived) has occurred, no notice of
intent to terminate the Employee Plan has been given under
Section 4041 of ERISA, no proceeding has been instituted
under Section 4042 of ERISA to terminate the Employee Plan,
no liability to the PBGC has been incurred, and the assets
of the Employee Plan equal or exceed the actuarial present
value of the benefit liabilities, within the meaning of
Section 4041 of ERISA, under the Employee Plan, based upon
reasonable actuarial assumptions and the asset valuation
principles established by the PBGC.
(iii) Except as disclosed in Schedule 4.1(q) with respect to any
employee benefit plan, within the meaning of Section 3(3) of
ERISA, which is not listed in Schedule 4.1(q) but which is
sponsored, maintained or contributed to, or has been
sponsored, maintained or contributed to within six years
prior to the Closing Date, by any corporation, trade,
business or entity under common control with the Vendor,
within the meaning of Section 414(b), (c) or (m) of the Code
or Section 4001 of ERISA ("Commonly Controlled Entity"), (i)
no withdrawal liability, within the meaning of Section 4201
of ERISA, has been incurred, which withdrawal liability has
not been satisfied, (ii) no liability to the PBGC has been
incurred by any Commonly Controlled Entity, which liability
has not been satisfied, (iii) no accumulated funding
deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been
incurred, and (iv) all contributions (including instalments)
to such plan required by Section 302 of ERISA and Section
412 of the Code have been timely made.
(r) Litigation. Except as disclosed in Schedule 4.1(r) and subject to
Section 4.1(u), there is no Action pending or, to the Vendor's
Knowledge, threatened, involving or affecting the Vendor, the
Purchased Business or the Purchased Assets, that has or could
reasonably be expected to have a Material Adverse Effect. There is not
currently outstanding against any of the Vendor or the Vendor
Affiliates any Order which has or could reasonably be expected to have
a Material Adverse Effect.
(s) Sufficiency of Intellectual Property. Except as set forth in Schedule
4.1(s), the Transferred Intellectual Property, the Vendor Licensed
Intellectual Property and the Third Party Licensed Intellectual
Property (including the Third Party Licensed Intellectual
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Property subject to Consent constitute all the Intellectual
Property used by, held for use by or necessary for the
Vendor and the Vendor Affiliates to conduct the Purchased
Business as conducted immediately prior to Closing or at any
time since September 1, 2001, in all material respects.
(t) Rights to Third Party Licensed Intellectual Property.
Provided that the Third Party Licensed Intellectual Property
does not infringe the Intellectual Property rights of any
third Person (with respect to which the Vendor has no
Knowledge of any such infringement), the Vendor and the
Vendor Affiliates are licensed to use all Third Party
Licensed Intellectual Property that is used or held for use
in the conduct of the Purchased Business as conducted
immediately prior to Closing or at any time since September
1, 2001 in all material respects, an accurate list of which
licenses as of the date of this Agreement is set out in
Schedule 1.1(z). Except as set forth in Schedule 4.1(s), the
Vendor has no Knowledge that any of the licensors of the
Third Party Licenses have threatened to withdraw, or would
be placed in a position that might require them to withdraw,
any services thereunder in connection with any part of the
Purchased Business or any of the Products.
(u) Ownership of Vendor Licensed Intellectual Property and No
Infringement of Third Party Intellectual Property Rights.
The Vendor or the Vendor Affiliates own all rights in and to
the Vendor Licensed Intellectual Property and the "Preside"
trademark identified in the Trademark License Agreement for
the purposes of conducting the Purchased Business as
conducted immediately prior to Closing or at any time since
September 1, 2001, in all material respects. Except as
disclosed in Schedule 4.1(r), the individuals identified in
Schedule 1.1(mmm) have no actual knowledge that the use of
the Vendor Licensed Intellectual Property or the "Preside"
trademark identified in the Trademark License Agreement for
the purposes of conducting the Purchased Business as
conducted immediately prior to Closing or at any time since
September 1, 2001 infringes or misappropriates the
Intellectual Property right of any third Person. Except as
disclosed in Schedule 4.1(r), the Vendor has no Knowledge of
any claims made against the Vendor or the Vendor Affiliates
during the past two (2) years that the conduct of the
Purchased Business as conducted immediately prior to Closing
or at any time since September 1, 2001 infringes or
misappropriates any Intellectual Property right of any third
Person or improperly discloses any Intellectual Property to
any other Person. Except as
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disclosed in Schedule 4.1(r), neither the Transferred
Intellectual Property, the Vendor Licensed Intellectual
Property or the "Preside" trademark identified in the
Trademark License Agreement is the subject of any Action.
(v) Transferred Intellectual Property and Vendor Licensed
Intellectual Property. All patents, registrations and
certificates issued by any Governmental Entity included in
the Transferred Intellectual Property are valid and
subsisting and have been properly maintained. Other than
Permitted Encumbrances, the Vendor has not granted to any
third Person any license or other right to any of the
Transferred Intellectual Property and the Vendor is not a
party to or bound by any contract or any other obligation
that limits or impairs its ability to transfer the
Transferred Intellectual Property or to license the Vendor
Licensed Intellectual Property. For greater certainty,
nothing in this Agreement, except to the extent set out in
Section 4.1(u), shall constitute a representation or
warranty that the Transferred Intellectual Property or the
Vendor Licensed Intellectual Property does not infringe or
misappropriate the Intellectual Property rights of any third
Person. The Vendor has no Knowledge that a third Person is
infringing or has infringed any foreign or domestic patent,
trademark, service mark, trade name or copyright that forms
a part of the Transferred Intellectual Property, or has
misappropriated or improperly disclosed any trade secret,
confidential information or know-how that forms a part of
the Transferred Intellectual Property.
(w) Products and Source Code. Except as disclosed in Schedule
4.1(w), none of the Vendor nor any of the Vendor Affiliates
has granted any rights to or has provided source code in
respect of any of the Transferred Intellectual Property to
any third Person, other than pursuant to escrow arrangements
in respect of source code required by software maintenance
agreements entered into in the Ordinary Course, the
particulars of which escrow arrangements, including the
parties thereto, the date and term thereof and the address
of the location at which the source code has been stored,
are listed in Schedule 4.1(w). Except as listed in Schedule
4.1(w), or as is permitted pursuant to any Contract, there
are no distributors, sales agents, representatives or any
other persons, including VARs, OEMs or resellers, who have
rights to market or license the Products at Closing.
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(x) Taxes. No failure, if any, of the Vendor and the Vendor
Affiliates to pay Taxes for periods ending on or before the
Effective Date, will result in an Encumbrance on the
Purchased Assets.
(y) Tax Matters. Each of the Vendor and the Vendor Affiliates
listed below is registered for purposes of the GST
Legislation and PST Legislation with registration numbers as
set out opposite its name:
Entity GST Number PST Number
Vendor 119409258-RT001 7947-0009 (Ontario)
R001048 (British Columbia)
NN Technology 118802974-RT0001 0274-3442
Architel 123712044-RT0001 6493-4616
(z) Compliance with Laws. To the Vendor's Knowledge, the Vendor
and the Vendor Affiliates are conducting the Purchased
Business in all material respects in compliance with all
applicable Laws of each jurisdiction in which the Purchased
Business is carried on.
(aa) Environmental Matters. To the Vendor's Knowledge, none of
the Vendor or any Vendor Affiliate is in violation of any
Environmental Laws. There are no Hazardous Substances
located on or in any of the Leased Properties and no Release
of any Hazardous Substances has occurred on or from such
Leased Properties.
(bb) Leased Properties. Each Lease creates a valid leasehold
estate in the Leased Properties thereby demised and is in
full force and effect without amendment other than as
described in Schedule 1.1(z). Except as otherwise disclosed
in Schedule 1.1(z), neither the lessee nor, to the Vendor's
Knowledge, the lessor thereunder is in default in any
material respect under any Lease relating to the Leased
Properties nor shall the consummation of the transactions
contemplated hereby and under the Transaction Documents
cause the lessee to be in default thereunder.
(cc) Customers. Schedule 4.1(cc) contains a list of the ten (10)
largest customers of the Purchased Business (in terms of
sales) during the fiscal years ended December 31, 2000, and
December 31, 2001, showing the approximate total sales by
the Purchased Business to each such customer during the
fiscal years ended December 31, 2000 and December 31, 2001,
respectively. Except as disclosed in Schedule 4.1(cc), to
the Vendor's Knowledge, none of the customers
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listed in Schedule 4.1(cc) has indicated in writing that it
intends to cease purchasing Products. Except as set forth in
Schedule 4.1(cc), neither the Purchased Business nor any of
the Vendor or the Vendor Affiliates with respect to the
Purchased Business had any customer who accounted for more
than five percent (5%) of the sales of the Purchased
Business during the fiscal years ended December 31, 2000 and
December 31, 2001.
Section 4.2 Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the Vendor and the
Vendor Affiliates as follows, and acknowledges that the Vendor and the Vendor
Affiliates are relying on such representations and warranties in connection with
the transactions contemplated by this Agreement:
(a) Incorporation and Organization. The Purchaser is a corporation
incorporated and existing under the laws of its jurisdiction of
incorporation. The Purchaser has the requisite corporate power and
authority to enter into, deliver and perform its obligations pursuant
to each of the Transaction Documents to which it is or will become a
party and to carry out the transactions contemplated thereby.
(b) Validity of Agreement. This Agreement and all other Transaction
Documents to which the Purchaser is or will be a party has been or at
Closing, will be, duly and validly executed and delivered by the
Purchaser, and, assuming due authorization, execution and delivery by
the other parties thereto, constitute or at Closing, will constitute
legal, valid and binding obligations of the Purchaser enforceable
against it in accordance with their terms, subject only to any
limitation under applicable Laws relating to (i) bankruptcy,
winding-up, insolvency, arrangement and other similar laws of general
application affecting the enforcement of creditors' rights, and (ii)
the discretion that a court may exercise in the grant of equitable
remedies such as specific performance and injunction.
(c) Required Authorizations. There is no requirement to make any filing
with, give any notice to, or obtain any Authorization of, any
Governmental Entity as a condition to the lawful completion of the
transactions contemplated by this Agreement, except for such filings,
notifications and Authorizations as have been obtained as of the date
hereof or will be obtained prior to the Closing Date except for the
filings, notifications and Authorizations described in Schedule
4.1(d), (as determined in accordance with Section 5.5(1)), or that
relate solely to the identity of the Vendor or a Vendor Affiliate
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or the nature of the business carried on by the Vendor or a Vendor
Affiliate prior to Closing.
(d) Availability of Funds. The Purchaser has or will have, as of the
Closing Date, cash available, or irrevocable commitments from
financial institutions to enable the Purchaser to consummate the
transactions contemplated by this Agreement and all other
Transaction Documents to be entered into or delivered by the
Purchaser pursuant to this Agreement.
(e) Litigation. There is no Action pending or, to the Purchaser's
knowledge, threatened in writing, that seeks to enjoin, prevent,
alter or delay any of the transactions contemplated by this
Agreement or any Ancillary Agreement.
(f) Investment Canada. The Purchaser is a "WTO investor" as that term
is defined by the ICA.
(g) Purchaser's Employee Plans and Compensation Plans. Schedule 4.2(g)
contains an accurate and complete list of the Purchaser's Employee
Plans, including a summary of the Purchaser's compensation plans,
in which, subject to Section 5.18 and other than with respect to
the Employee Stock Purchase Plan and the Technical Ladder Program,
each of the Transferred Employees may participate immediately,
following the Closing Date. True, complete and correct copies of
such Purchaser's Employee Plans and any summary plan descriptions
have been provided to the Vendor by the Purchaser. With respect to
each such plan, the Purchaser has complied in all material respects
with all applicable requirements of Law and each such plan has at
all times been properly administered in all material respects in
accordance with its terms. There is no audit or, to the Purchaser's
knowledge, investigation pending (other than routine qualification
or registration determination filings) with respect to any
Purchaser's Employee Plan before any Governmental Entity.
Section 4.3 Representations and Warranties of the Guarantor.
The Guarantor hereby represents and warrants to the Vendor and the Vendor
Affiliates as follows, and acknowledges that the Vendor and the Vendor
Affiliates are relying on such representations and warranties in connection with
the transactions contemplated by this Agreement:
(a) Incorporation and Organization. The Guarantor is a corporation and
incorporated and existing under the laws of its jurisdiction of
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incorporation. The Guarantor has the requisite corporate power and
authority to enter into, deliver and perform its obligations
pursuant to each of the Transaction Documents to which it is or
will become a party and to carry out the transactions contemplated
thereby.
(b) Validity of Agreement. This Agreement and all other Transaction
Documents to which the Guarantor is or will be a party, have been
or at Closing will be duly and validly executed and delivered by
the Guarantor and, upon execution and delivery by the other party
thereto, constitute or at Closing will constitute legal, valid and
binding obligations of the Guarantor, enforceable against it in
accordance with the terms, subject only to any limitation under
applicable Laws relating to (i) bankruptcy, winding-up, insolvency,
arrangement and other similar laws of general application affecting
the enforcement of creditors' rights, and (ii) the discretion that
a court may exercise in the grant of equitable remedies such as
specific performance and injunction.
(c) Litigation. There is no Action pending, or, to the Guarantor's
knowledge, threatened in writing, any investigation pending that
seeks to enjoin, prevent, alter or delay any of the transactions
contemplated by this Agreement or any Ancillary Agreement.
ARTICLE 5
PRE-CLOSING COVENANTS AND OTHER AGREEMENTS
Section 5.1 Conduct of Business Prior to Closing.
(1) During the Interim Period, the Vendor and the Vendor Affiliates will
conduct the Purchased Business in the Ordinary Course and in compliance
in all material respects with all applicable Laws; provided, however,
that the Vendor will not, and will cause the Vendor Affiliates not to,
enter into any non-arm's length transaction in connection with the
Purchased Business or the Purchased Assets (other than non-arm's length
transactions with Affiliates in the Ordinary Course) without the prior
written consent of the Purchaser.
(2) Without limiting the generality of Section 5.1(1), during the Interim
Period, the Vendor will, and will cause the Vendor Affiliates to:
(a) use their Best Efforts to preserve intact the current business
organization of the Purchased Business, keep available the services
of the Employees except the Excluded Employees who are given notice
of termination by the Vendor during the Interim Period and maintain
good relations with, and the goodwill of, suppliers,
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customers, landlords,lessors, creditors, distributors trade union,
labour union, employee association and other bargaining agencies and
all other Persons having business relationships with the Vendor or the
Vendor Affiliates in connection with the Purchased Business;
(b) use its Best Efforts to retain possession and control of the Purchased
Assets and preserve the confidentiality of any confidential or
proprietary information of the Purchased Business;
(c) use its Best Efforts to conduct the Purchased Business so as not to
cause or permit to exist a breach of any representations and
warranties of the Vendor contained in this Agreement;
(d) not amend, waive default under, accept any surrender of, cancel or
fail to use its Best Efforts to renew any of the Material Contracts
(provided that it shall not be required to renew any Material Contract
on terms that are less favourable to it) referred to in Schedule
1.1(vvv) or any Authorizations or amend any Customer Contract, in each
case, other than in the Ordinary Course, without the prior written
consent of the Purchaser;
(e) not enter into any (i) contracts with customers of the Purchased
Business other than in the Ordinary Course or (ii) other contracts
with customers of the Purchased Business with development obligations
without the consent of the Purchaser;
(f) except for Permitted Encumbrances, not create or assume any
Encumbrance on or in respect of the Purchased Assets;
(g) not terminate other than for cause (or an equivalent standard in any
applicable jurisdiction outside of Canada or the United States) or
transfer out of the Purchased Business any Employee other than the
Excluded Employees without the consent of the Purchaser, provided that
with respect to any such termination for cause (or an applicable
equivalent standard), the Vendor or a Vendor Affiliate, as the case
may be, shall first advise the Purchaser regarding the basis of such
termination;
(h) not hire or transfer into the Purchased Business any Person (other
than an Employee) without the consent of the Purchaser; and
(i) not agree to or make any commitment, orally or in writing, to take any
actions prohibited by this Agreement.
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Section 5.2 Revised Schedule.
Subject to acceptance by the Purchaser, which acceptance shall not be
unreasonably withheld or delayed, the Vendor shall have the right to deliver to
the Purchaser, at least two (2) Business Days prior to the Closing Date, an
updated Schedule 1.1(z) relating to Contracts, revised to include any contract
with a customer that provides for the sale of any of the Products and/or
services related thereto entered into in the Ordinary Course during the Interim
Period and on standard terms or pursuant to a proposal disclosed on such
Schedule prior to its revision pursuant to this Section 5.2, provided no such
additional contract shall in any event (i) include any development obligations
which development obligations have not been previously reviewed and consented to
by the Purchaser or (ii) provide for the sale of other products or services of
the Vendor or any of the Vendor Affiliates. Upon the acceptance of any such
contract, the form of such contract as agreed to by the Vendor or any Vendor
Affiliate, as applicable, and the customer shall be deposited with the Canadian
Counsel of each of the Vendor and the Purchaser and shall become Agreed
Documentation.
Section 5.3 Actions to Satisfy Closing Conditions.
(1) The Vendor agrees to take, and to cause the Vendor Affiliates to take, all
such actions as are within its power to control and use its Best Efforts to
cause other actions to be taken which are not within its power to control,
so as to ensure compliance with all of the conditions set forth in Section
6.1 at or prior to the time for satisfaction thereof including, ensuring
that there has been no breach of any representations and warranties made by
it in any Transaction Document.
(2) The Purchaser agrees to take all such actions as are within its power to
control and use its Best Efforts to cause other actions to be taken which
are not within its power to control, so as to ensure compliance with all of
the conditions set forth in Section 6.2 at or prior to the time for
satisfaction thereof including ensuring that there has been no breach of
any representations and warranties made by it in any Transaction Document.
Section 5.4 Transfer of the Purchased Assets.
Subject to Section 2.3, the Vendor shall take, or shall cause to be taken,
all necessary steps and proceedings to permit good title to the Purchased Assets
to be duly and validly transferred, assigned and conveyed to the Purchaser at
the Closing, free of all Encumbrances other than Permitted Encumbrances.
Section 5.5 Filings and Authorizations.
(1) Within two (2) Business Days following the date of this Agreement,
Purchaser shall identify any Authorization that Purchaser is (or the
Parties are) required to obtain from a Governmental Entity in order to
complete the transactions
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contemplated by this Agreement, and Purchaser shall inform the Vendor
within such time, in writing, of each Authorization that must be
obtained. Purchaser and Vendor shall, within four (4) Business Days
following the date of this Agreement (or such shorter period as may be
required by an applicable Law), or such other period that the Purchaser
and the Vendor may agree upon in writing, promptly make or submit all
information and documents that Purchaser and Vendor deem reasonable in
order to obtain the Authorizations (the "Filings") (including the
Canadian Competition Bureau under the Competition Act) prior to Closing
and promptly file any additional information or documents required or
considered advisable in connection with the Filings as soon as
practicable after receipt for request therefor. The Purchaser shall
(i) use every reasonable effort to obtain, or cause to be obtained, all
Authorizations, including, as may in the sole discretion of the
Purchaser, acting reasonably, be necessary or advisable, the entering
into of any agreement, undertaking, consent order or the like with a
Governmental Entity in order to obtain an Authorization, and provided
that, however, the Purchaser shall not be required to divest itself or
to cause any Affiliate thereof to divest itself of any assets or
business or interest therein, and (ii) use its Best Efforts to take, or
cause to be taken, all other actions which are necessary in order for
it to fulfil its obligations under this Agreement. Each of the
Purchaser and Vendor will coordinate and cooperate with one another in
exchanging such information and documents, including providing the
other Party (and its counsel) with an opportunity to review and comment
on advance drafts, as may be reasonable in the circumstances, and
supplying such assistance as may be reasonably requested by each in
connection with or related to a Filing, including providing each other
with all notices and information supplied to or with any Governmental
Entity (except for notices and information which the Vendor or the
Purchaser, in each case acting reasonably, considers highly
confidential and sensitive which may be filed on a confidential basis),
and all notices and correspondence received from any Governmental
Entity.
(2) The Purchaser shall be solely responsible for all fees payable to any
Governmental Entity in respect of, in association with, or related to
any Filings set out in paragraph (1) above or as set out in Schedule
4.1(d) hereto.
Section 5.6 Review of Business Information and Employee Information.
(1) The Vendor agrees to permit, on reasonable notice and subject to
applicable Law, access by the Purchaser, its accountants and solicitors
to review all of the Business Information and corporate records until
the Closing Date and Employee Information until the applicable Employee
Start Date, and to make all of the same readily available to the
Purchaser for inspection until such applicable date, to enable the
Purchaser to investigate the affairs of the
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Vendor and the Vendor Affiliates pertaining to the Purchased Business,
and the Vendor shall furnish to the Purchaser and its accountants and
solicitors such information with respect to the Purchased Business as
the Purchaser may reasonably request.
(2) The Purchaser undertakes that until the Employee Start Date:
(a) the Employee Information and any other personal data with respect
to the Employees disclosed to it and its advisors ("Personal
Data") shall be held in confidence;
(b) it shall restrict the disclosure of Personal Data to such of its
Affiliates, employees and advisors as is necessary for the
purposes of complying with its obligations pursuant to this
Agreement;
(c) except as set forth in Section 5.6(2)(b), Personal Data shall not
be disclosed to any other Person without the consent of Vendor
such consent not to be unreasonably withheld or delayed; and
(d) Personal Data shall not be used save for the purpose of complying
with its obligations pursuant to this Agreement, and in the event
that the Closing does not take place or, in respect of Excluded
Employees, shall be retained for no longer than reasonably
necessary.
Section 5.7 Review for Investigation.
The Vendor shall promptly make available to the Purchaser, as the
Purchaser may reasonably request, copies of all Leases, certificates, Contracts,
agreements and such other materials and documents that the Vendor or a Vendor
Affiliate has in its possession, and that it can legally disclose without
consent from the other party or parties thereto, pertaining to the Purchased
Business for the purpose of allowing the Purchaser to investigate, at its own
expense, the condition, extent, quality, quantity or any other aspects of the
Purchased Assets and the compliance of the Vendor and the Vendor Affiliates with
applicable Laws; provided, however, that the Vendor shall use its Best Efforts
to promptly obtain any such consent from such other party or parties in order to
make available to the Purchaser such materials and documents so requested.
Section 5.8 Confidentiality.
The Parties acknowledge that the confidentiality agreement dated as of
July 17, 2001 between Nortel Networks Corporation and the Guarantor (the
"Confidentiality Agreement") remains in full force and effect in accordance with
its terms, which are incorporated herein by reference, and each of the Parties
and their respective Affiliates agree to be bound thereby in the same manner and
to the same
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extent as if the terms had been set out in this Agreement in full. The Vendor
acknowledges that each of the Vendor Affiliates are bound by the Confidentiality
Agreement and agrees to cause each such entity to comply with all terms thereof.
Section 5.9 Delivery of Vendor's Closing Documentation.
At the Closing, subject to and on the terms and conditions set forth in
this Agreement, the Vendor shall deliver or cause to be delivered to the
Purchaser such appropriately executed instruments of sale, assignment, transfer
and conveyance, consents, approvals, certificates and other documents in form
and substance reasonably satisfactory to the Purchaser and its counsel
evidencing and effecting the sale and transfer to the Purchaser of the Purchased
Assets including the documents set out in Schedule 5.9 (it being understood,
however, that such instruments shall not require the Vendor or any other Person
to make any additional representations, warranties or covenants, express or
implied, not contained in this Agreement).
Section 5.10 Ancillary Agreements.
On or prior to the Closing Date, each of the Vendor and the Purchaser shall
execute and deliver, and shall cause its respective Affiliates that are party
thereto to execute and deliver, each of the Ancillary Agreements.
Section 5.11 Delivery of Purchaser's Closing Documentation.
At the Closing, subject to and on the terms and conditions set forth in
this Agreement, the Purchaser shall deliver to the Vendor, instruments of
assumption, consents, approvals, certificates and other documents in form and
substance reasonably satisfactory to the Vendor and its counsel evidencing and
effecting the assumption by the Purchaser of the Assumed Liabilities and such
other documents as specifically required by this Agreement or any other
Transaction Document, including the documents set out in Schedule 5.11 (it being
understood, however, that such instruments shall not require the Purchaser or
any other Person to make any additional representations, warranties or
covenants, express or implied, not contained in this Agreement).
Section 5.12 Insurance Matters.
Until Closing, the Vendor and the Vendor Affiliates shall maintain
property, liability and other insurance with respect to the Purchased Business
and the Assets at the levels in effect on the date hereof. The Purchaser shall
be responsible for placing its own property, liability and other insurance
coverage with respect to the Purchased Business and the Purchased Assets in
respect of the period from and after the Effective Time.
Section 5.13 Taxes.
(1) The Purchaser or an Affiliate of the Purchaser shall be liable for and
shall pay any Taxes which may be exigible under Part IX of the Excise Tax
Act (Canada)
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("GST Legislation") in connection with the sale of the Purchased
Business. However, the Vendor agrees to jointly elect with the
Purchaser at the Purchaser's option under subsection 167(1) of the
GST Legislation. If the Purchaser wishes to make such election, the
Purchaser shall provide to the Vendor at Closing a duly completed Goods
and Services Tax ("GST") Form #GST 44, "Election Concerning the
Acquisition of a Business or Part of a Business" (the "GST Election")
in the prescribed form and containing the prescribed information and
the Vendor and the Purchaser will execute such form.
(2) The Purchaser or an Affiliate of the Purchaser shall file such joint
elections with the return required to be filed by the Purchaser under
the GST Legislation for the Purchaser's reporting period in which the
sale is made, in compliance with the requirements of the GST
Legislation. The Purchaser will indemnify and hold harmless the Vendor
for all Taxes, interest and penalties that the Vendor may be required
to pay should the joint elections described above not be available in
the opinion of the Canada Customs and Revenue Agency.
(3) The Purchaser or an Affiliate of the Purchaser shall pay directly to
the appropriate taxing authority, within the time specified therefor
all applicable Taxes payable in connection with the purchase of the
Purchased Assets, other than Taxes on any gain that may be realized on
the sale of the Purchased Assets provided that if any such Taxes are
required to be collected and remitted by the Vendor or a Vendor
Affiliate, they shall be paid by the Purchaser to the Vendor or such
Vendor Affiliate, at the Closing. The Purchaser shall indemnify and
hold harmless the Vendor and the Vendor Affiliates for all Taxes,
interests and penalties to the extent the Vendor or a Vendor Affiliate
does not charge the Purchaser any Ontario, British Columbia or other
applicable provincial sales tax at Closing and the Purchaser's claimed
entitlement to an exemption is subsequently disallowed or not accepted
by the Ontario, British Columbia or other applicable tax authority.
(4) If the Purchaser or an Affiliate of the Purchaser wishes to claim any
exemption relating to, or a reduced rate of, Taxes in connection with
the transactions contemplated herein, unless expressly stated otherwise
in this Agreement, the Purchaser shall be solely responsible for
ensuring that such exemption applies and, in that regard, shall provide
the Vendor and the Vendor Affiliates at or prior to the Effective Time
with its vendor permit number and/or any appropriate certificate of
exemption and/or other document or evidence to support the claimed
entitlement to such exemption by the Purchaser. The Purchaser shall
indemnify and hold harmless the Vendor and the Vendor Affiliates for
all Taxes, interests and penalties to the extent the Vendor or a Vendor
Affiliate does not charge the Purchaser any
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such Tax, and the claimed entitlement to an exemption by the Purchaser
is subsequently disallowed or not accepted by the relevant
authorities.
(5) All ad valorem taxes, real property taxes, personal property taxes and
similar obligations that are calculated on an annual or other periodic
basis ("Property Taxes") attributable to the Purchased Assets with
respect to the tax period in which the Closing Date occurs shall be
apportioned as of the Closing Date between the applicable Vendor or
Vendor Affiliate and the Purchaser determined by prorating such
Property Taxes on a daily basis over the entire tax period.
(6) If the Purchaser or an Affiliate of the Purchaser pays any Property
Taxes for which the Vendor or any Vendor Affiliate is liable, the
Vendor or such Vendor Affiliate shall promptly reimburse the
Purchaser, and if the Vendor or any Vendor Affiliate pays any Property
Taxes for which the Purchaser is liable, the Purchaser shall promptly
reimburse the Vendor or any Vendor Affiliate. Payment shall be made
promptly in cash upon receipt of a copy of any such supplemental bill
of the amount necessary to accomplish such proration.
Section 5.14 Employees.
(1) The Vendor and the Purchaser accept and agree that as of the UK
Employee Transfer Date, the Employment Transfer Laws shall operate to
transfer to the Purchaser (or an Affiliate of the Purchaser) the
contract of employment of each UK Employee and accordingly the
Purchaser shall employ, or cause to be employed, each UK Employee with
effect from the UK Employee Transfer Date and the Purchaser shall
treat or shall cause to be treated, each UK Employee's continuous
period of service with the Vendor or a Vendor Affiliate as continuous
with Purchaser (or an Affiliate of the Purchaser). With respect to
each UK Employee, the Vendor and each applicable Vendor Affiliate and
the Purchaser shall comply with their respective obligations under all
Employment Transfer Laws applicable to each UK Employee including, in
the case of the Vendor and Vendor Affiliates, informing and consulting
with and providing written notices or communications to such UK
Employees or their employee representatives or works councils
("Employees' Representatives") as required by Employment Transfer
Laws. The Purchaser shall provide the Vendor with sufficient
information to enable the Vendor and the Vendor Affiliates to carry
out their duties with regard to providing information to and
consulting with the UK Employees and any Employees' Representatives,
or any applicable government authority pursuant to the Employment
Transfer Laws and such other information as is reasonably requested by
the Vendor and the Vendor Affiliates in respect of the UK Employees or
any UK Employees' Representatives.
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(2) The Parties acknowledge that Employment Transfer Laws shall not
operate to transfer to the Purchaser (or an Affiliate of the
Purchaser) the contract of employment of the Employee employed by the
Vendor or a Vendor Affiliate whose work location is within France (the
"French Employee") or of each Employee employed by the Vendor or a
Vendor Affiliate whose work location is within Germany (each a "German
Employee"). Accordingly, the Purchaser shall or shall cause a
Purchaser Affiliate to enter into a three party agreement with the
French Employee and with each German Employee, in the form set out in
Schedule 5.14(2), pursuant to which the Purchaser or relevant
Purchaser Affiliate shall offer employment to such French Employee and
such German Employees, to commence effective as of the Employee Start
Date. Such offers of employment shall be on terms and conditions on
which such French Employee or such German Employees as applicable are
currently employed by the Vendor or a Vendor Affiliate as disclosed to
the Purchaser and shall remain open for acceptance until the Employee
Start Date. Without limiting the generality of the foregoing, such
offers of employment will include the terms and conditions set forth
in Schedule 5.14(2), Section 5.15 and Section 5.18. The Purchaser
shall provide the Vendor with sufficient information which the Vendor
reasonably requires in order to provide information to and consult
with the French Employee and the German Employees and the work
councils representing such French Employee and the German Employees
concerning the offer of employment referred to in this Section 5.14(2)
and any measures proposed by the Purchaser or an Affiliate of the
Purchaser which may affect the French Employee or the German
Employees.
(3) The Vendor covenants with the Purchaser that the Vendor will fully
indemnify the Purchaser and hold the Purchaser and any of its
Affiliates harmless against all Damages arising:
(a) from the employment or termination of employment by the Vendor or
any Vendor Affiliate of any of the UK Employees, the French
Employee or the German Employees prior to the Employee Start
Date, or any failure by the Purchaser or any Affiliate of the
Purchaser to employ the UK Employees, French Employee or German
Employees in the period commencing on the Closing and ending on
the Employee Start Date which arise or are alleged to arise
against the Purchaser by virtue of the operation of the
Employment Transfer Laws, provided that the claim is not made as
a result of any failure by the Purchaser or an Affiliate of the
Purchaser to provide information for the purposes of
consultation, any materially detrimental change or proposed
change by the Purchaser or any Affiliate of the Purchaser to the
remuneration,
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benefits (including any pensions benefits), terms and conditions
of employment, or the working conditions of any UK Employee,
French Employee or German Employees; or
(b) at any time whether before or after the Effective Time and which
are brought by any Person (which shall include any individual or
organisation, trade union, labour union, works council or
employee representative) other than a UK Employee, the French
Employee, the German Employees, or an Employees' Representative
which arise or are alleged to arise against the Purchaser by
virtue of the operation of the Employment Transfer Laws provided
that the claim is not made as a result of any failure by the
Purchaser to provide information for the purposes of
consultation.
(4) If the Employment Transfer Laws do not or are found not to apply to
any person who is a UK Employee, the Purchaser agrees that following
the Closing Date:
(a) the Purchaser (or any of its Affiliates) shall within five (5)
Business Days of being so requested by the Vendor make to each
such UK Employee an offer in writing to employ him or her under a
new contract of employment to take effect upon the termination
referred to below; and
(b) the offer to be made will, subject to the exceptions set forth in
Schedule 5.14(5) (i) be on terms and conditions substantially the
same, in the aggregate, as the terms and conditions on which such
UK Employee is employed immediately prior to the Closing Date as
disclosed in this Agreement and (ii) provide that his or her
period of continuous service with the Vendor or Vendor Affiliate,
as applicable, shall be counted as continuous service with the
Purchaser (or the relevant Affiliate of the Purchaser).
If such offer is accepted, Vendor or the relevant Vendor Affiliate
shall terminate the employment of the UK Employee concerned.
(5) The Purchaser shall give offers of employment pursuant to Section
5.14(6) by means of a letter substantially in the form attached hereto
as Exhibit "J", to the Designated Employees to commence effective as
of the Employee Start Date. Subject to the exceptions set forth in
Schedule 5.14(5), such offers of employment shall be on terms and
conditions substantially the same, in the aggregate, as the terms and
conditions on which such Designated Employees are currently employed
by the Vendor or a Vendor Affiliate as disclosed to the Purchaser in
this Agreement. Without limiting the generality of the
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foregoing, such offers of employment will include the terms and
conditions set forth in Section 5.14(5) and (6), Section 5.15 and
Section 5.18.
(6) The Purchaser shall, not more than five (5) days after the later of
(i) the date of this Agreement or (ii) the date of provision of all of
the information in Section 5.16(3) by the Vendor, deliver the offers
of employment contemplated by Section 5.14(5) accompanied by all
information reasonably necessary for Designated Employees to properly
consider such offers, such offers to remain open for acceptance for
five (5) Business Days, provided that the fifth day is at least two
(2) Business Days before the Closing Date. With respect to Leave
Employees and Loaned Employees, (y) each Leave Employee shall be
maintained as an Employee of the Vendor or a Vendor Affiliate, as
applicable, until such time as the Leave Employee is able to return to
work and perform, with or without reasonable accommodation, the
essential functions of such Leave Employee's position, at which time
the Purchaser shall provide such Leave Employee with a written offer
or employment, such offer to remain open for five (5) days, provided
that the Purchaser is not required to offer employment to any Leave
Employee unless the Leave Employee is so able to return to work and
perform the essential functions of the position within twelve (12)
months of the Closing Date and (z) each Loaned Employee shall be
maintained as a Loaned Employee of the Vendor or a Vendor Affiliate,
as applicable, until such time as the Employee is authorized to work
for the Purchaser in the United States or Canada, as applicable
(subject to earlier termination in accordance with the Loaned Employee
Agreement), five (5) days prior to which time the Purchaser shall
provide such Employee with a written offer of employment, such offer
to remain open for five (5) days; provided that, if the Purchaser does
not have at least five (5) days notice of such authorization, the
offer shall be made upon the Purchaser first receiving notice that the
Loaned Employee is or will be so authorized. The Purchaser and the
Vendor and the Vendor Affiliates shall cooperate with each other in
facilitating the employment by the Purchaser or an Affiliate of the
Purchaser of any Leave Employee or Loaned Employee pursuant to this
Section 5.14 it being understood that the offer of employment will be
on the same terms as provided to Designated Employees pursuant to
Section 5.14(5). The Purchaser shall advise the Vendor in writing
within five (5) days following expiry of the offers of employment as
to which Designated Employees did not accept such offer of employment.
Each Transferred Employee's employment with the Vendor or a Vendor
Affiliate, as applicable, shall terminate by virtue of such employee's
acceptance and commencement of employment with the Purchaser or an
Affiliate of the Purchaser, such termination to be effective as of the
Employee Start Date; and the Vendor or the Vendor Affiliate, as
applicable, shall, subject to Section 5.19, provide to each
Transferred Employee all entitlements of every nature or kind owing to
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such Transferred Employee to and by the date of termination of
employment, including all applicable salary, bonus, incentive pay,
notice of termination, payment in lieu of notice or severance, whether
pursuant to contract, statute (including the Worker Adjustment
Retraining Notification Act and similar laws) or otherwise.
(7) The Vendor and the Vendor Affiliates shall remain responsible for any
and all costs and liabilities associated with (i) any UK Employee or
Brazil Employee who terminates his employment prior to the Employee
Start Date or who elects not to work for the Purchaser, save where
such termination or election is as a result of or related to any act
or omission by the Purchaser including any proposed change by the
Purchaser or any Affiliate of the Purchaser to the remuneration,
benefits (including any pension benefits), terms and conditions of
employment, or the working conditions of any UK Employee or the Brazil
Employee, and (ii) the Designated Employees, Leave Employees, Loaned
Employees, French Employee, and German Employees who receive an offer
of employment from the Purchaser in accordance with Section 5.14(2),
(5) or (6) but who do not accept such offer or commence employment
with the Purchaser or an Affiliate of the Purchaser and (iii) the
Employees who are not listed as Designated Employees, Leave Employees,
Loaned Employees, French Employees and German Employees or UK
Employees on Schedule 1.1(jj) and the Excluded Employees. Prior to
Closing, with respect to any UK Employee and Brazil Employee and,
prior to acceptance or expiration, as the case may be, of any offer of
employment by the Purchaser to any Designated Employee, Leave
Employees, Loaned Employees, French Employees and German Employees
with respect to such Employees, neither the Vendor nor any Affiliate
of the Vendor shall take any actions: (a) to offer alternative
employment within the operations of the Vendor or any Affiliate of the
Vendor to any such Employee, except as otherwise agreed to by the
Purchaser in writing; or (b) to discourage or prevent any such
Employee from becoming a Transferred Employee.
(8) For a period of twelve (12) months following the Closing Date, the
Purchaser shall not knowingly, except with the Vendor's prior written
consent, which consent shall not be unreasonably withheld, make any
offers of employment to any of the Vendor's or the Vendor Affiliates'
employees, or knowingly hire (as an employee or in any other capacity)
any of said employees, including the Designated Employees who have
rejected the Purchaser's offer of employment described above,
provided, however, that nothing in this provision shall prevent the
Purchaser from making generalized employment searches, by
advertisement or by engaging firms to conduct searches that are not
focused on the above mentioned Employees and hiring any Transferred
Employees found through such searches.
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(9) For a period of twelve (12) months following the Employee Start Date,
none of the Vendor or the Vendor Affiliates shall knowingly solicit
for employment or knowingly hire (as an employee or in any other
capacity) any Transferred Employee, or any Person that is an employee
of the Purchaser or any affiliate of the Purchaser immediately prior
to the Effective Time; provided, however, that nothing in this
provision shall prevent the Vendor or the Vendor Affiliates from
making generalized employment searches, by advertisement or by
engaging firms to conduct searches that are not focused on Transferred
Employees and hiring any Transferred Employees found through such
searches.
(10) With respect to Transferred Employees employed in the United States,
nothing in this Agreement is intended to create an employment
relationship between the Purchaser (or an Affiliate of the Purchaser)
and such Transferred Employee other than an at-will employment
relationship.
(11) Notwithstanding the execution and delivery of this Agreement, the
contracts of employment of the UK Employees shall not transfer to the
UK Affiliate until the Vendor and each relevant Vendor Affiliate has
provided information to and consulted with the UK Employees and/or
Employees' Representatives of the UK Employees pursuant to the
Employment Transfer Laws. The Vendor and each relevant Vendor
Affiliate shall as soon as possible following execution of this
Agreement provide information to and consult with the UK Employees
and/or Employees' Representatives of the UK Employees and shall give
notice to the German Employees pursuant to the Employment Transfer
Laws and shall not unreasonably delay completion of same. Upon
completion of such consultation with the UK Employees and/or the
Employees' Representatives of the UK Employees, Vendor shall without
delay deliver to Purchaser a certificate to that effect, and such
certificate shall be regarded as conclusive evidence that such
consultation has taken place.
(12) Except as otherwise permitted under this Agreement, neither the Vendor
nor the Vendor Affiliates shall make any claim against the Purchaser
or the Transferred Employees which claim arises under any employment
agreement, confidentiality or non-competition agreement between any
Transferred Employee and the Vendor or the Vendor Affiliates solely by
virtue of the Transferred Employees' employment by the Purchaser or an
Affiliate of the Purchaser in the Purchased Business.
(13) The Parties agree that Schedule 5.14(13) to this Agreement shall
govern, except as specifically addressed in this Agreement, the
treatment of the Brazil Employee.
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Section 5.15 Vacation.
(1) On or immediately before Closing the Vendor shall deliver to the
Purchaser an updated Schedule 1.1(jj) and will further update such
Schedule to set forth (i) all accrued and unused vacation expressed in
number of days due and owing to and (ii) the applicable vacation
entitlement for the Designated Employees, the French Employee, the
German Employees, the Brazil Employee, the UK Employees, the Leave
Employees and the Loaned Employees up to the Employee Start Date and
the Vendor's calculation of the total dollar amount of pay for such
accrued and unused vacation days, and the Purchaser or an Affiliate of
the Purchaser shall grant each Transferred Employee paid time off in
an amount equal to the accrued unused vacation days for such
Transferred Employee set forth in such updated Schedule 1.1(jj) or, to
the extent permitted by applicable Law, pay all or any portion to each
such Transferred Employee his or her vacation pay entitlement with
respect to such accrued unused vacation days. At the Employee Start
Date the Vendor shall pay to the Purchaser in respect of the relevant
Transferred Employees, an amount equal to the vacation pay accrual.
(2) Notwithstanding anything to the contrary in Article 7 herein, the
Vendor shall indemnify and save the Purchaser Indemnified Parties
harmless of and from any Damages suffered by them in respect of (i)
any failure to pay to the Purchaser the amounts contemplated by
Section 5.15(1) and (ii) any error in the calculation of such amounts
and the Parties agree that Section 7.4(1) shall have no application to
the amounts payable to the Purchaser pursuant to this Section 5.15(2).
(3) Notwithstanding anything to the contrary in Article 7 herein, the
Purchaser shall indemnify and save the Vendor Indemnified Parties
harmless of and from any Damages suffered by them in respect of any
failure of the Purchaser to abide by its obligations under Section
5.15(1) and the Parties agree that Section 7.4(2) shall have no
application to the amounts payable to the Vendor pursuant to this
Section 5.15(3).
Section 5.16 Parties' Responsibility.
(1) Subject to Section 5.19, Section 5.16(2) and except as provided in the
Loaned Employee Agreement, the Vendor and the Vendor Affiliates will
be responsible for and bear and discharge any and all costs,
obligations, Taxes and liabilities, in the case of each Transferred
Employee accrued up to the Employee Start Date (including all
liabilities arising from matters occurring at or prior to such
Employee Start Date) for or in respect of the employment in the
Purchased Business of such Transferred Employee. Without limiting the
generality of the foregoing:
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(a) the Vendor shall, and shall cause the Vendor Affiliates to, pay
and remain liable for any and all liability for claims of
Transferred Employees under applicable workers' compensation Laws
that were existing as at, or accrued to the Employee Start Date
including claims filed after such time but only to the extent
that such claims are: (x) based on accidents, injuries or
illnesses incurred prior to such time, or (y) determined by
applicable workers' compensation Laws that relate to such
Transferred Employee's employment with the Vendor or a Vendor
Affiliate in the period prior to such time, but excluding any
liabilities with respect to reemployment obligations imposed on
the Purchaser pursuant to such Laws that may apply to such
Transferred Employees; provided that this Section 5.16 shall not
operate to preclude the apportionment of liability between the
Vendor or the Vendor Affiliates on the one hand and the Purchaser
or the Purchaser Affiliates on the other hand, in accordance with
applicable workers' compensation Laws;
(b) the Vendor shall, and shall cause the Vendor Affiliates to, in a
manner consistent with applicable workers' compensation Laws, pay
and shall remain liable for any and all workers' compensation
assessments, penalties, fines, levies, charges, surcharges or
other amounts that may be assessed with respect to Transferred
Employees before or after the Employee Start Date but only to the
extent that such assessments, penalties, fines, levies, charges,
surcharges or other amounts are attributable to the period prior
to the Employee Start Date;
(c) the Vendor shall, and shall cause the Vendor Affiliates to,
remain responsible for the adjudication of claims by Transferred
Employees under the Employee Plans.
(2) Notwithstanding any provision in the Loaned Employment Agreement, the
Purchaser will be responsible for and bear and discharge any and all
costs, obligations, Taxes and liabilities related to its employment of
each Transferred Employee. The Purchaser shall indemnify the Vendor
and any Vendor Affiliate, as applicable, for Damages incurred by such
Person as a result of (i) a change in any Transferred Employee's
compensation, benefits, or any other term or condition of employment
after the applicable Employee Start Date until the twelve (12) month
anniversary of such Employee Start Date and (ii) any materially
detrimental change or proposed change to the remuneration, benefits
(including any pension benefits), terms and conditions of employment
or the working conditions of any UK Employee, French Employee or
German Employee made by the Purchaser or an Affiliate of the Purchaser
as of or prior to the Employee Start Date.
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(3) Immediately following the date of this Agreement the Vendor and/or the
Vendor Affiliates, as appropriate, shall deliver to the Purchaser the
following information with respect to each Designated Employee, French
Employee, German Employee, Leave Employee, Loaned Employee, Brazil
Employee and each UK Employee: (A) name; and (B) global identification
number assigned by the Vendor.
(4) Except as specifically permitted pursuant to the terms and conditions
of the Intellectual Property License Agreement or any other
Transaction Document, the Vendor and each Vendor Affiliate agree to
deliver to the Purchaser or destroy all copies of the Transferred
Intellectual Property and the Products immediately following the
Effective Time.
Section 5.17 Cooperation with Respect to Compensation and Benefits Issues.
After the date hereof, the Vendor and the Purchaser shall co-operate
promptly and in good faith in implementing the transition of coverage of
Transferred Employees from the Employee Plans to the Purchaser's Employee Plans
including the provision of information (including information regarding periods
of leave or breaks in service with respect to the Employees whose work location
is in the United States) required to ensure the participation of the Transferred
Employees in the Purchaser's Employee Plans in accordance with Section 5.18. The
Vendor and the Purchaser further agree that such Parties shall share all
information required to administer the Employee Plans and the Purchaser's
Employee Plans and all requests for such information shall be handled in a
timely manner and transmitted in a reasonable format.
Section 5.18 Employees and Employee Plans.
As of the later of the Employee Start Date or the provision of all of
the information in Section 5.16(3) and Section 5.17 by the Vendor, each
Transferred Employee, shall cease participating in, being covered by and
accruing benefits under the Employee Plans and shall be eligible to immediately
commence participation in the Purchaser's Employee Plans save and except the
Employee Stock Purchase Plan and the Technical Ladder Program. Except as set out
herein, each Transferred Employee and, as applicable, such Employee's eligible
dependants, shall participate in, be covered by and accrue benefits under the
Purchaser's Employee Plans from and after the Employee Start Date. With respect
to the Purchaser's Employee Plans in existence as of the Closing Date, the
Purchaser shall, to the extent permitted by applicable Law, honour the
Transferred Employees' credited service date for purpose of determining plan
eligibility for membership and vesting under such Purchaser's Employee Plans,
but not for purposes of benefits or contribution calculations. For greater
certainty, service with the Vendor shall be recognized by the Purchaser in
respect of the Transferred Employee's rights on termination of employment with
the Purchaser. With respect to health, life, welfare and other
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group benefits in the Purchaser's Employee Plans, the Purchaser shall, to the
extent agreed by the provider of such benefit, waive evidence of insurability
and pre-existing conditions limitations (except as may exist under the Employee
Plans).
Section 5.19 Commission and Incentive Payment.
The Vendor or a Vendor Affiliate, as appropriate, shall retain
responsibility for and shall pay to the Transferred Employees that portion of
the 2001 and 2002 Success incentive payment to which such Transferred Employees
are entitled under the Vendor's Success incentive payment Plan and all bonuses
of any kind earned and payable in connection with the consummation of the
transactions contemplated by this Agreement. Such payments will be made or a
date or dates in accordance with ordinary business practice of the Vendor. The
Purchaser or a Purchaser Affiliate, as appropriate, shall retain responsibility
for and shall pay to the Transferred Employees all earned but unpaid sales
commissions.
Section 5.20 Risk of Loss.
From the time of execution of this Agreement up to the Effective Time,
the Purchased Assets shall be and remain at the risk of the Vendor and the
Vendor Affiliates, as the case may be. If, prior to the Effective Time, all or
any material part of the Purchased Assets is lost, destroyed or damaged by fire
or any other casualty or shall be appropriated, expropriated or seized by any
Governmental Entity or other lawful authority, the Purchaser shall have the
option, exercisable by notice in writing given within four (4) Business Days
after the Purchaser receives notice in writing from the Vendor of such loss,
destruction, damage, appropriation, expropriation or seizure:
(a) to reduce the Purchase Price by an amount equal to the cost of
repair or, if destroyed or damaged beyond repair or appropriated,
expropriated or seized, by an amount equal to the replacement
value of the property and Purchased Assets so damaged or
destroyed or appropriated, expropriated or seized and to complete
the transactions contemplated hereby; or
(b) to complete the transaction contemplated in this Agreement
without reduction of the Purchase Price, in which event all
proceeds of insurance or compensation for destruction or damage
or appropriation, expropriation or seizure will be payable to the
Purchaser and all right and claim of the Vendor and the Vendor
Affiliates to any such amount not paid by the time of the Closing
Date will be assigned to the Purchaser.
If the Purchaser receives notice from the Vendor pursuant to the foregoing
provisions of this Section 5.20 less than four (4) Business Days prior to
Closing Date,
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the Closing Date will be postponed to the earliest Business Day that is four (4)
Business Days after the date on which such notice is received by the Purchaser.
If the Purchaser elects to reduce the Purchase Price pursuant to the foregoing
provisions of this Section 5.20, the Vendor and the Purchaser will prior to the
time of Closing determine the amount of the reduction to the extent that it is
then determinable and will undertake to adjust such amount after Closing, if
necessary.
Section 5.21 Deletion of Non-Transferred Software.
The Purchaser agrees that, following the Closing, the Purchaser shall
not use and shall cause each of the Purchaser's Affiliates not to use any items
of software loaded on the Transferred Equipment (including the Desktop Software
and the Business Application Software) as of the Closing Date which are not
transferred or licensed to the Purchaser pursuant to this Agreement, any other
Transaction Document or otherwise. The Purchaser shall, as soon as is reasonably
practical, and in any event no later than forty-five (45) days following the
Closing, delete all such software from any of the Transferred Equipment on which
it is installed.
Section 5.22 Removal of Transferred Equipment.
The Purchaser covenants and agrees to remove or cause to be removed
all of the Transferred Equipment located at premises of the Vendor and the
Vendor Affiliates other than the Leased Properties as soon as practicable after
Closing and, in any event, no later than the expiry date of the Premises License
Agreement in respect of such premises, if any. The Purchaser shall remove the
Transferred Equipment (i) at its sole cost and expense and (ii) without undue
interference to the ordinary conduct of the business of the Vendor or any Vendor
Affiliate, as applicable, during such hours and on such date or date as the
Vendor or the applicable Vendor Affiliate agree, acting reasonably.
Section 5.23 Non-Competition.
(1) For a period of eighteen (18) months from the Closing Date and other
than as permitted in any Transaction Document, neither the Vendor nor
any of its Affiliates shall directly or indirectly sell, provide,
distribute, deliver, develop, produce or market products that are
directly in competition with and perform the same or substantially the
same functions as those performed, on the date of this Agreement, by
the Products (the "Competitive Products").
(2) For greater certainty, the prohibition in subsection (1) shall not
apply to any of the following:
(a) The sale, provision, distribution, delivery, marketing, design,
development or production of Competitive Products by the Vendor
or any of its Affiliates that are not sold as separate components
but
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that are integrated into, or utilized as part of, a broader
product offering within a customer's network;
(b) The ownership by the Vendor or any of its Affiliates of (A) a
Person that engages, directly or indirectly, in the sale of
Competitive Products if such sales account for less than fifteen
percent (15%) of such Person's consolidated annual revenues for
the fiscal year preceding the acquisition of such Person by the
Vendor or its Affiliates or (B) a Person (provided such Person
has been acquired by the Vendor or any of its Affiliates within
four (4) months from the Closing Date) that engages, directly or
indirectly, in the sale of Competitive Products if such sales
account for fifteen percent (15%) or more of such Person's
consolidated annual revenues for the fiscal year preceding the
acquisition of such Person by the Vendor or any of its Affiliates
and if the Vendor or any of its Affiliates divests itself, within
eight (8) months from having acquired ownership of such Person,
of that portion of the business of such Person which involves the
sale of Competitive Products; or
(c) The Vendor or any of its Affiliates acting as a reseller,
consultant or systems integrator with respect to the Products (if
acquired, directly or indirectly, from the Purchaser), or
Competitive Products sold, provided, distributed, delivered,
designed, developed, produced or marketed by Persons other than
the Vendor or any of its Affiliates, including the implementation
or modification thereof, provided that such Competitive Products
are not sold as separate components but are in each instance
integrated into, or utilized as part of a broader offering of
combined hardware and software components of the Vendor or any of
its Affiliates.
(3) Each of the Vendor and its Affiliates understands that the Purchaser
shall be entitled to protect and preserve the going concern value of
the Purchased Business to the extent permitted by Law and that the
Purchaser would not have entered into this Agreement absent the
provisions of this Section 5.23. Notwithstanding any other provision
of this Agreement, it is understood and agreed that the remedy of
indemnity payments and other remedies at law would be inadequate in
the case of any breach of the covenants contained in this Section
5.23; the Purchaser shall be entitled to equitable relief, including
the remedy of specific performance, with respect to any breach or
attempted breach of such covenants.
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Section 5.24 Bulk Sales Compliance.
The Purchaser hereby waives compliance by the Vendor and the Vendor
Affiliates with any Laws governing bulk sales (to the extent such Laws are
applicable to the transactions contemplated by this Agreement). The Vendor
agrees to execute and deliver or cause to be executed and delivered to the
Purchaser, at or prior to the Closing, any further documents or affidavits
pursuant to the Bulk Sales Act (Ontario) as may be reasonably requested by the
Purchaser with respect to Architel.
Section 5.25 Required Audited Financial Statements.
(1) The Vendor shall prepare and deliver to the Purchaser with respect to
the Purchased Business prior to the date that is sixty (60) days after
the Closing Date, audited statements of net assets and liabilities,
profit and loss, and cash flows as of and for each of the periods
ended as described in Schedule 5.25. The Vendor shall also prepare and
deliver no later than sixty (60) days after the Closing Date unaudited
statements of net assets and liabilities as of the Closing Date and
for any interim quarter end, and unaudited statements of profit and
loss, and cash flows for the Purchased Business for the period
beginning on January 1, 2002 and ending on the Closing Date as well as
for any interim quarter end. In each case, the audited and unaudited
financial statements, as the case may be, prepared and delivered by
the Vendor shall fairly present the financial position and results of
operations and cash flows of the Purchased Business as of and for each
of the periods indicated in accordance with U.S. GAAP consistently
applied. The Vendor understands that such financial statements will be
filed or used to prepare filings with the Securities and Exchange
Commission of the United States (the "SEC"). The Vendor will assist,
and request its accountants to assist, with respect to such filings
and any other filings with the SEC or any other offering documents
that include such financial statements, and the Purchaser shall pay
the cost of any consent or comfort letter of the Vendor's accountants
required in connection with the inclusion of such financial statements
in filings or offering documents. The Vendor agrees to pay the cost of
the audit fees associated with this requirement.
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 Conditions for the Benefit of the Purchaser.
The obligation of the Purchaser to complete the transactions
contemplated by this Agreement is subject to fulfilment of each of the following
conditions on or before the Effective Time, each of which is included for the
exclusive benefit of the
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Purchaser and may be waived in writing in whole or in part by the Purchaser, in
its sole discretion:
(a) Representations and Warranties. Except for any inaccuracy that
has not had and would not reasonably be expected to have a
Material Adverse Effect on the Purchased Business or the
Purchased Assets, the representations and warranties of the
Vendor contained in Section 4.1 of this Agreement shall be true
and correct in all respects (i) as at the Effective Time with the
same force and effect as if made at and as of such time or (ii)
if made as of a date specified therein as of such date, and the
Vendor shall deliver a certificate of an officer of the Vendor to
such effect.
(b) Performance of Vendor's Covenants. All the covenants contained in
this Agreement to be complied with or performed by the Vendor at
or before the Effective Time shall have been complied with or
performed in all material respects and the Vendor shall not be in
material breach of any agreement or covenant on its part
contained in this Agreement.
(c) Closing Deliveries. The Vendor shall have properly executed and
delivered, or received a waiver by the Purchaser as to the
documents contemplated in Section 5.9 and Section 5.10 relating
to the Closing.
(d) Actions or Proceedings. No Order shall have been issued and no
action, suit or other proceeding shall have been commenced or
threatened in writing by any Person to enjoin, restrict or
prohibit any of the transactions contemplated hereby.
Section 6.2 Conditions for Benefit of the Vendor and the Vendor Affiliates.
The obligation of the Vendor and the Vendor Affiliates to complete the
transactions contemplated by this Agreement is subject to fulfilment of each of
the following conditions on or before the Effective Time, each of which is
acknowledged to be for the exclusive benefit of the Vendor and the Vendor
Affiliates and may be waived in writing in whole or in part by the Vendor and
the Vendor Affiliates, in their sole discretion:
(a) Representations and Warranties. Except for any inaccuracy that
has not had and would not reasonably be expected to have a
material adverse effect on the ability of the Purchaser to
consummate the transactions contemplated by this Agreement, the
representations and warranties of the Purchaser and the Guarantor
contained in Section 4.2 and Section 4.3, respectively, of this
Agreement shall be true and correct in all respects (i) as at the
Effective Time with the
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same force and effect as if made at and as of such time or (ii)
if made as of a date specified therein, as of such date, and the
Purchaser and the Guarantor shall each deliver a certificate of
an officer to such effect.
(b) Performance of Purchaser's Covenants. All the covenants contained
in this Agreement to be complied with or performed by the
Purchaser at or before the Effective Time shall have been
complied with or performed in all material respects and the
Purchaser shall not be in material breach of any agreement or
covenant on its part contained in this Agreement.
(c) Closing Deliveries. The Purchaser shall have properly executed
and delivered, or received a waiver by the Vendor as to the
documents contemplated in Section 5.10 and Section 5.11 relating
to the Closing.
(d) Actions or Proceedings. No Order shall have been issued and no
action, suit or other proceeding shall have been commenced or
threatened in writing by any Person to enjoin, restrict or
prohibit any of the transactions contemplated hereby.
Section 6.3 Conditions to the Obligations of Purchaser and Vendor.
The obligations of the Parties hereto to effect the Closing are
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Competition Act. Provided that the transactions contemplated by
this Agreement are notifiable in accordance with Section 114 of
the Competition Act, then any one of the below subparagraphs (i),
(ii) or (iii) shall have occurred:
(i) the Purchaser shall have received an advance ruling certificate
in accordance with Section 102 of the Competition Act;
(ii) the Commissioner of Competition (the "Commissioner") shall have
waived the obligation to notify and supply information under
paragraph 113(c) of the Competition Act; or
(iii) the Purchaser and Vendor shall have each filed all notices and
information required under Part IX of the Competition Act and
the applicable waiting period under Section 123 of the
Competition Act shall have expired.
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(b) Other Approvals. To the extent applicable to the transactions
contemplated by this Agreement, all other Filings contemplated by
Section 5.5(1) and any filings, notifications and Authorizations
described in Schedule 4.1(d) shall have been made and all
Authorizations necessary to complete the transactions
contemplated by this Agreement shall have been obtained and/or
statutory waiting periods shall have expired.
Section 6.4 Time and Place of Closing.
The Closing shall be held at the offices of Stikeman Elliott, Toronto,
Ontario at 10:00 a.m. (local time) on the Closing Date, or at such other place
or time as may be agreed upon in writing between the Parties hereto, and shall
be effective as of the Effective Time.
ARTICLE 7
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival of Representations, Warranties and Covenants.
(1) The representations and warranties of the Vendor contained in this
Agreement or certified by the certificate delivered to the Purchaser
pursuant to Section 6.1(a) shall survive the Closing and,
notwithstanding the Closing and any investigation made by or on behalf
of the Purchaser, shall continue in full force and effect for the
benefit of the Purchaser for a period of eighteen (18) months after
the Closing Date and any claim in respect thereof shall be made in
writing during such time period (in which event the representations
and warranties to which such claim relates shall survive in respect of
such claim until the final settlement or termination of such claim)
and shall be subject to Section 7.5 and Section 7.6 save and except
that a claim in respect of any of such representations and warranties
involving (i) fraud or fraudulent misrepresentation or (ii) a claim in
respect of the representations and warranties set forth in Section
4.1(e) (No Other Agreements to Purchase), Section 4.1(f) (Title to
Purchased Assets) and Section 4.1(aa) (Environmental Matters) may be
made at any time after the Closing Date. To the extent that such are
performable after the Closing, each of the covenants and agreements
contained in each of the Transaction Documents shall survive the
Closing indefinitely.
(2) The representations and warranties of the Purchaser contained in this
Agreement or certified by the certificate delivered to the Vendor
pursuant to Section 6.2(a) shall survive the Closing and,
notwithstanding the Closing and any investigation made by or on behalf
of the Vendor and the Vendor Affiliates, shall continue in full force
and effect for the benefit of the Vendor and the Vendor Affiliates for
a period of eighteen (18) months after the
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Closing Date and any claim
in respect thereof shall be made in writing within such time
period (in which event the representations and warranties to
which such claim relates shall survive in respect of such claim
until the final settlement or termination of such claim) and
shall be subject to Section 7.5 and Section 7.6 save and except
a claim in respect of any of such representations and
warranties involving fraud or fraudulent misrepresentation may
be made at any time after the Closing Date. To the extent that
such are performable after the Closing, each of the covenants
and agreements contained in each of the Transaction Documents
shall survive the Closing indefinitely.
Section 7.2 Indemnification in Favour of the Purchaser.
Subject to Section 7.4, the Vendor shall indemnify and save the
Purchaser, the Guarantor, their respective Affiliates and each of their
respective officers, directors, employees (the "Purchaser Indemnified Parties")
harmless from and against any and all Damages suffered by, imposed upon or
asserted against the Purchaser as a result of, in respect of, connected with or
arising out of, under, or pursuant to:
(a) any failure of the Vendor to perform or fulfil any covenant of the
Vendor under this Agreement;
(b) any breach of any representation or warranty given by the Vendor
contained in this Agreement or certified in any certificate
delivered to the Purchaser pursuant to Section 6.1(a);
(c) the failure of the Parties to comply with any applicable bulk
sales Laws in respect of the transaction of purchase and sale
contemplated under this Agreement; or
(d) any liabilities of the Vendor and the Vendor Affiliates relating
to the Purchased Business other than the Assumed Liabilities.
Section 7.3 Indemnification in Favour of the Vendor and the Vendor Affiliates.
Subject to Section 7.4, the Purchaser shall indemnify and save the
Vendor, the Vendor Affiliates and each of their respective officers, directors
and employees (collectively, the "Vendor Indemnified Parties") harmless from and
against any and all Damages suffered by, imposed or asserted against the Vendor
or a Vendor Affiliate as a result of, in respect of, connected with or arising
out of, under or pursuant to:
(a) any failure of the Purchaser to perform or fulfil any covenant of
the Purchaser under this Agreement;
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(b) any breach of any representation or warranty given by the
Purchaser ontained in this Agreement or certified in any \
certificate delivered to the Vendor pursuant to Section 6.2(a);
(c) the Assumed Liabilities; or
(d) any costs or liabilities arising from claims or assertions
of discrimination in violation of Laws in connection with
any failure by the Purchaser to extend offers of employment
to the Employees set out in Schedule 1.1(jj).
Section 7.4 Limitations on Indemnification.
(1) Except for claims made under Section 7.2 in respect of Section 4.1(e)
(No Other Agreements to Purchase) and Section 4.1(f) (Title to
Purchased Assets) no claim for indemnification shall be made by any
Purchaser Indemnified Party pursuant to Section 7.2(a) or Section
7.2(b) until the total amount of all Damages with respect to such
matters exceeds $350,000 and then only for the amount by which such
Damages exceed $350,000 up to a maximum of 33% of the Purchase Price.
(2) Except for any claims made under Section 7.3 in respect of Section
5.13, no claim for indemnification shall be made by any Vendor
Indemnified Party pursuant to Section 7.3(a) and Section 7.3(b) until
the total amount of all Damages with respect to such matters exceeds
$350,000 and then only for the amount by which such Damages exceed
$350,000 up to a maximum of 33% of the Purchase Price.
Section 7.5 Procedure for Indemnification - Other Claims.
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the Party from whom indemnification is sought
in accordance with this Agreement.
Section 7.6 Indemnification Proceedings - Third Party Claims.
(1) Promptly after receipt by the party seeking indemnification (the
"Indemnified Party") of a notice of any action, proceeding, claim or
potential claim ("Circumstance") against it by a third party that could
give rise to a right of indemnification under Section 7.2 or Section
7.3, the Indemnified Party will, if a claim is to be made against the
party who may become obligated to provide indemnification hereunder
(the "Indemnifying Party"), give written notice to the Indemnifying
Party describing the Circumstance in reasonable detail. The failure to
notify the Indemnifying Party will not relieve the Indemnifying Party
of any liability that it may have to any Indemnified Party, except to
the extent that the Indemnifying Party
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demonstrates that the defence of such action is actually prejudiced by\
the Indemnified Party's failure to give such notice.
(2) If any proceeding referred to in Section 7.6(1) (a "Proceeding") is
brought against an Indemnified Party and it gives notice to the
Indemnifying Party of the commencement of the Proceeding, the
Indemnifying Party will be entitled to participate in the Proceeding as
hereinafter provided. Subject to the next following sentence, to the
extent that the Indemnifying Party wishes to assume the defence of the
Proceeding with counsel satisfactory to the Indemnified Party, it may
do so provided it reimburses the Indemnified Party for all of its
out-of-pocket expenses (including solicitor's fees and disbursements)
arising prior to or in connection with such assumption. The
Indemnifying Party may not assume defence of the Proceeding if: (i) the
Indemnifying Party is also a party to the Proceeding and the
Indemnified Party determines in good faith that joint representation
would be inappropriate; or (ii) the Indemnifying Party fails to provide
reasonable assurance to the Indemnified Party of its financial capacity
to defend the Proceeding and provide indemnification with respect to
the Proceeding. After notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defence of the
Proceeding as against the Indemnified Party, the Indemnifying Party
will not, as long as it diligently conducts such defence, be liable to
the Indemnified Party under this Section 7.6 for any fees of other
counsel or any other expenses with respect to the defence of the
Proceeding, in each case subsequently incurred by the Indemnified Party
in connection with the defence of the Proceeding, other than reasonable
costs of investigation approved in advance by the Indemnifying Party.
If the Indemnifying Party assumes the defence of a Proceeding as
against the Indemnified Party (A) it will be conclusively established
for purposes of this Agreement that the claims made in that Proceeding
are within the scope of, and subject to, indemnification, (B) no
compromise or settlement of such claims may be made by the Indemnifying
Party without the Indemnified Party's consent unless (y) there is no
admission of any violation of Laws or any violation of the rights of
any Person and no adverse effect on any other claims that may be made
against the Indemnified Party, and (z) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party, and
(C) the Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its consent.
If notice is given to an Indemnifying Party of the commencement of any
Proceeding and the Indemnifying Party does not, within ten (10) days
after receipt of such notice, give notice to the Indemnified Party of
its election to assume the defence of the Proceeding, the Indemnifying
Party will be bound by any determination made in the Proceeding or any
compromise or settlement effected by the Indemnified Party acting in
good faith.
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(3) Notwithstanding the foregoing, if an Indemnified Party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or any of its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification
under this Agreement, the Indemnified Party may, by notice of the
Indemnifying Party, assume the exclusive right to defend, compromise,
or settle the Proceeding. In such case, the Indemnifying Party will not
be bound by any compromise or settlement effected without its consent
(which may not be unreasonably withheld) but shall be bound by a final
and conclusive judgement of a court of competent jurisdiction.
(4) Where the defence of a Proceeding is being undertaken and controlled by
the Indemnifying Party, the Indemnified Party will use its Best Efforts
to make available to the Indemnifying Party those employees whose
assistance, testimony or presence is necessary to assist the
Indemnifying Party in evaluating and defending any such claims.
However, the Indemnifying Party shall be responsible for the expense
associated with any employees made available by the Indemnified Party
to the Indemnifying Party pursuant to this Section 7.6(4), which
expense shall be equal to an amount to be mutually agreed upon per
person per hour or per day for each day or portion thereof that the
employees are assisting the Indemnifying Party and which expenses shall
not exceed the actual cost to the Indemnified Party associated with the
employees.
(5) With respect to any Proceeding at the request of the Indemnifying
Party, the Indemnified Party shall make available to the Indemnifying
Party or its representatives on a timely basis all documents, records
and other materials in the possession of the Indemnified Party, at the
expense of the Indemnifying Party, reasonably required by the
Indemnifying Party for its use in defending any such claim and shall
otherwise cooperate on a timely basis with the Indemnifying Party in
the defence of such claim.
(6) With respect to any Proceeding in respect of Taxes enforceable by
Encumbrance against the property of the Indemnified Party, the
Indemnifying Party's right to so defend the Proceeding shall only apply
after payment of the re-assessment.
Section 7.7 Exclusion of Other Remedies.
(1) From and after the Closing Date, no Party shall have the right to bring
any proceeding against any other Party for a breach of any
representation, warranty, covenant or agreement contained in this
Agreement or any other Transaction Document whether in contract, tort
or otherwise, except pursuant to Section 7.1, Section 7.2 and Section
7.3.
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(2) Notwithstanding anything in this Agreement to the contrary, the
liability of any party under Article 7 shall be in addition to, and not
exclusive of, any other liability that such party may have at law or
equity based on such party's fraudulent acts or omissions. None of the
provisions set forth in this Agreement, including the provisions set
forth in Section 7.2 or Section 7.3, shall be deemed a waiver by any
party to this Agreement of any right or remedy which such party may
have at law or equity based on any other party's fraudulent acts or
omissions, nor shall any such provisions limit, or be deemed to limit,
(a) the amounts of recovery sought or awarded in any such claim for
fraud, (b) the time period during which a claim for fraud may be
brought, or (c) the recourse which any such party may seek against
another party with respect to a claim for fraud; provided, that with
respect to such rights and remedies at law or equity, the parties
further acknowledge and agree that none of the provisions of this
Section 7.7, nor any reference to this Section 7.7 throughout this
Agreement, shall be deemed a waiver of any defences which may be
available in respect of actions or claims for fraud including defences
of statutes of limitations or limitations of damages.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Termination.
This Agreement may be terminated at any time prior to the Closing (except
as limited as to time in Section 8.1(b) below):
(a) by the mutual written consent of Vendor and Purchaser;
(b) by the Vendor or the Purchaser, if the Closing shall not have
occurred prior to the Outside Date, provided, however, that the
right to terminate this Agreement under this Section 8.1(b)
shall not be available to any Party whose failure to fulfil any
covenant or obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing
to occur on or prior to the Outside Date;
(c) by the Purchaser in the event a condition set forth in Section
6.1 becomes incapable of being fulfilled or being cured within
thirty (30) days and such condition has not been waived; or
(d) by the Vendor in the event a condition set forth in Section
6.2 becomes incapable of being fulfilled or being cured within
thirty (30) days and such condition has not been waived;
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provided, however, that the Party seeking termination pursuant to Section
8.1(b), Section 8.1(c) or Section 8.1(d) is not then in material breach of any
of its representations, warranties, covenants or agreements contained in this
Agreement.
Section 8.2 Effect of Termination.
If this Agreement is terminated pursuant to Section 8.1, all further
obligations of the Parties under or pursuant to this Agreement shall terminate
without further liability of any Party to the others except for the provisions
of Section 5.8 (Confidentiality), Section 8.4 (Expenses), Section 8.5 (Brokers),
Section 8.8 (Attornment) and Section 8.22 (Governing Law); provided, nothing
herein shall relieve any Party from liability for any breach of this Agreement
occurring before the termination hereof.
Section 8.3 Publicity.
Save as required by Law or the requirements of any stock exchange, none
of the Parties shall issue any press release or make any other public statement
or announcement relating to or connected with or arising out of this Agreement
or the matters contained herein, without obtaining the prior written approval of
the others, to the contents and the manner of presentation and publication
thereof. If disclosure is required by Law or the requirements of any stock
exchange, the disclosing Party shall consult in advance with the other Parties
and attempt in good faith to reflect such other Parties' concerns in the
required disclosure.
Section 8.4 Expenses.
Except as otherwise expressly provided herein, all costs and expenses
(including the fees and disbursements of legal counsel, investment advisers and
auditors) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such expenses.
Section 8.5 Brokers.
Except for (i) Credit Suisse First Boston Corporation, which was
retained by the Vendor in connection with the sale of the Purchased Assets, and
(ii) Deutsche Banc Alex.Brown Inc., which has been retained by the Guarantor in
connection with the sale of the Purchased Assets, neither the Vendor, the
Purchaser or the Guarantor has used a broker, agent or other intermediary in
connection with the sale of the Purchased Assets and no Party shall be liable
for any commission or other remuneration payable or alleged to be payable to any
broker, agent or other intermediary who purports to act or have acted for any
other Party.
Section 8.6 Third Party Beneficiaries.
Except as the same relates to the Vendor Affiliates, the Parties intend
that this Agreement shall not benefit or create any right, remedy or claim under
or in respect of this Agreement or any provision hereof, or cause of action in
or on behalf of any
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Person other than the Parties hereto, their respective successors and permitted
assigns and any Indemnified Parties, and no Person, other than the Parties
hereto, their respective successors and their permitted assigns and any
Indemnified Parties shall be entitled to rely on the provisions hereof in any
action, suit, proceeding, hearing or other forum.
Section 8.7 Notices.
Any notice, direction, communication, reports or other instrument
required or permitted to be given hereunder shall be in writing and given by
delivery or by telecopy or other similar form of communication to any Party at
the address specified below:
(a) To the Purchaser:
MetaSolv Software, Inc.
5560 Tennyson Parkway
Plano, Texas
75024 U.S.A.
Attention: Jonathan K. Hustis
Telephone: 972-403-8300
Telecopy: 972-403-8989
(b) To the Guarantor:
MetaSolv, Inc.
5560 Tennyson Parkway
Plano, Texas
75024 U.S.A.
Attention: Jonathan K. Hustis
Telephone: 972-403-8300
Telecopy: 972-403-8989
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(c) To the Vendor at:
Nortel Networks Limited
8200 Dixie Road
Suite 100
Brampton, Ontario
L6T 5P6
Attention: Corporate Secretary
Telephone: 905-863-1103
Telecopy: 905-863-8386
With a copy to:
Nortel Networks Inc.
2221 Lakeside Boulevard
Richardson, Texas 75082-4399
U.S.A.
Attention: Robert Fishman
Telephone: 972-685-4157
Telecopy: 972-685-3405
Any such notice, direction or other instrument given as aforesaid shall be
deemed to have been effectively given: (a) if delivered, on the date of such
delivery; or (b) if sent by telecopy or other similar form of
telecommunications, on the next Business Day following such transmission. Any
Party may change its address for service from time to time by notice given in
accordance with the foregoing and any subsequent notice shall be sent to the
Party at its changed address.
Section 8.8 Attornment.
Each of the Parties irrevocably attorns and submits to the
non-exclusive jurisdiction of the Superior Court of Justice of Ontario or such
other Ontario court as shall be applicable to the matter.
Section 8.9 Further Assurances.
(1) Each of the Parties hereto, upon the request of any other Party hereto,
whether before or after the Effective Time, shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged or
delivered, all such further acts, deeds, documents, assignments,
transfers, conveyances and assurances, as may be reasonably necessary
or desirable to effect complete consummation of the transactions
contemplated by this Agreement.
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(2) The Purchaser and the Guarantor covenant not to, and agree to cause their
Affiliates and each of their own and their respective Affiliates'
directors, officers and employees not to, take any action that would
adversely affect the collectibility of any Accounts Receivable including
making or causing to be made (a) any disparagement in respect of the Vendor
or any Vendor Affiliate or any of their respective employees, or (b) any
direct or indirect offer to compromise any such Accounts Receivable;
provided that nothing in this Section 8.9 shall restrict the Purchaser or
the Guarantor from taking any action to collect amounts owed to them
consistent with reasonable collection practises. The Purchaser and the
Guarantor shall use their respective Best Efforts to assist the Vendor and
the Vendor Affiliates to collect the Accounts Receivable, including
providing the Vendor and the Vendor Affiliates (or an account debtor on
behalf of any of the Vendor and the Vendor Affiliates), on customary terms,
such services and technical support, Business Information and Transferred
Intellectual Property as any of the Vendor or the Vendor Affiliates may
reasonably request to assist them in collecting the Accounts Receivable
without deduction, set-off or counterclaim.
Section 8.10 Enurement.
This Agreement shall enure to the benefit of and be binding upon the
Parties and their respective successors and permitted assigns.
Section 8.11 Assignment.
The Vendor and the Purchaser shall be entitled to assign this Agreement to
any Affiliate without the consent of the other Parties provided that (i) the
assignment does not result in additional Taxes for the non-assigning Parties
and, (ii) the assignment is subject to the following conditions:
(a) the assignee shall execute and deliver a confidentiality
agreement to the other Parties in substantially the same form as
the Confidentiality Agreement;
(b) the assignee shall become jointly and severally liable with the
assigning Party, as a principal and not as a surety, with respect
to all of the representations, warranties, covenants, indemnities
and agreements of the assigning Party; and
(c) the assignee shall execute an agreement confirming the assignment
and the assumption by the assignee of all such obligations of the
assigning Party under this Agreement.
Section 8.12 Time of the Essence.
Time shall be of the essence of this Agreement.
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Section 8.13 Counterparts and Faxes.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same instrument. In addition, execution of this Agreement by each
Party may be evidenced by way of facsimile transmission of such Party's
signature (which signature may be by separate counterpart) or a photocopy of
such facsimile signature, and such facsimile signature, or photocopy of such
facsimile signature, shall be deemed to constitute valid and effective execution
and delivery by such Party of this Agreement.
Section 8.14 Tender.
Any tender of funds or documents may be made upon the Parties or their
respective counsel.
Section 8.15 Judgment Currency.
If for the purposes of obtaining judgement in any court, it is necessary to
convert a sum due to a Party in any currency (the "Original Currency") into
another currency (the "Other Currency") the Parties agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which, in accordance with normal banking procedures, the Party could purchase
the Original Currency with the Other Currency on the Business Day preceding the
day on which final judgement is given or, if permitted by applicable Law, on the
day in which the judgement is paid or satisfied.
Section 8.16 Guarantee.
The Guarantor agrees to use its Best Efforts to cause the Purchaser to
comply with the terms of this Agreement in accordance with the provisions
contained herein and hereby guarantees the obligations of the Purchaser to
indemnify the Vendor Indemnified Parties in respect of any and all Damages
contemplated by Section 7.3 arising or attributable to any condition or
circumstances existing (without regard for when a claim for indemnification in
respect of such Damages is asserted) during the period ending eighteen (18)
months following Closing. This guarantee shall be a continuing and irrevocable
guarantee and shall survive the Closing indefinitely. Without limitation, the
obligations of this guarantee shall not be released, discharged or affected by
any extensions of time or indulgences or modifications granted by the Vendor in
favour of the Purchaser, or by any failure to enforce any of the terms of this
Agreement or by the bankruptcy, insolvency, dissolution, amalgamation,
winding-up or reorganization of the Purchaser and the Guarantor hereby waives
any right to require the Vendor to exhaust any action or recourse against the
Purchaser before requiring performance by the Guarantor pursuant to this
guarantee.
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Section 8.17 Severability.
If any provision, clause, or part of this Agreement or the application
thereof under certain circumstances, is held invalid, illegal or unenforceable,
the remainder of the Agreement or the application of such provision, clause or
parts under other circumstances, shall not be affected thereby unless such
invalidity, illegality or unenforceability materially impairs the ability of the
Parties to consummate the transactions contemplated by this Agreement.
Section 8.18 Entire Agreement.
This Agreement constitutes the entire agreement between the Parties hereto
pertaining to the subject matter hereof and supersedes all prior and
intermediate agreements, understandings, negotiations and discussions, whether
oral or written, of the said Parties. There are no representations, warranties,
conditions or other agreements, express or implied, statutory or otherwise,
between the Parties in connection with the subject matter of this Agreement,
except as specifically set forth herein.
Section 8.19 Specific Performance.
Notwithstanding anything contained in this Agreement to the contrary, the
Parties shall be entitled to the remedy of specific performance with respect to
the other's obligations hereunder.
Section 8.20 Amendments.
This Agreement may only be amended, modified or supplemented by a written
agreement signed by all the Parties hereto.
[intentionally left blank]
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Section 8.21 Waiver.
(1) No waiver of any of the provisions of this Agreement shall be deemed to
constitute a waiver of any other provision (whether or not similar), nor
shall such waiver constitute a waiver or continuing waiver unless otherwise
expressly provided in writing duly executed by the Party to be bound
thereby.
(2) No failure on the part of the Vendor or the Purchaser to exercise, and no
delay in exercising any right under this Agreement shall operate as a
waiver of such right, nor shall any single or partial exercise of any right
preclude any other or further exercise of any other right.
Section 8.22 Governing Law.
This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
IN WITNESS WHEREOF this Agreement has been executed by the Parties as of
the date first above written.
NORTEL NETWORKS LIMITED
By:_______________________________
Khush Dadyburjor
Vice President, Mergers &
Acquisitions
METASOLV SOFTWARE, INC.
By:_______________________________
James P. Janicki
Chief Executive Officer
METASOLV, INC.
By:_______________________________
James P. Janicki
Chief Executive Officer