Exhibit 2.1
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STOCK PURCHASE AGREEMENT
By and Among
VECTOR CC HOLDINGS IV, SRL
and
WINZIP COMPUTING LLC
and
CAYMAN LTD. HOLDCO
and
COREL CORPORATION
May 1, 2006
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TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF SHARES ................................... 1
Section 1.01 Purchase and Sale of WinZip Shares ................... 1
Section 1.02 Cancellation of WinZip Options; Issuance of Corel
Options .............................................. 2
ARTICLE II CONSIDERATION 2
Section 2.01 Consideration ........................................ 2
ARTICLE III REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
SELLER ............................................................... 3
Section 3.01 Organization and Qualification ....................... 3
Section 3.02 Authority; Binding Nature of Agreement ............... 3
Section 3.03 No Conflict .......................................... 4
Section 3.04 Capitalization; Title to Shares ...................... 4
Section 3.05 Financial Statements ................................. 4
Section 3.06 Absence of Undisclosed Liabilities ................... 5
Section 3.07 Absence of Certain Changes ........................... 5
Section 3.08 Litigation ........................................... 6
Section 3.09 Compliance with Laws ................................. 6
Section 3.10 Title to Assets ...................................... 7
Section 3.11 Real Property ........................................ 7
Section 3.12 Intellectual Property ................................ 8
Section 3.13 Contracts ............................................ 11
Section 3.14 Governmental Authorizations .......................... 12
Section 3.15 Tax Matters .......................................... 12
Section 3.16 Employee Matters ..................................... 13
Section 3.17 Environmental Matters; Health and Safety ............. 15
Section 3.18 Related Party Transactions ........................... 16
Section 3.19 Material Relationships ............................... 16
Section 3.20 Sales Policies; Warranties ........................... 16
Section 3.21 Brokers and Finders .................................. 16
Section 3.22 Additional Representations and Warranties of the
Seller ............................................... 16
Section 3.23 Material Misstatements or Omissions .................. 16
Section 3.24 Exclusive Representations and Warranties ............. 17
ARTICLE IV REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
PURCHASER ............................................................ 17
Section 4.01 Authority; Binding Nature of Agreement ............... 17
Section 4.02 Non-Contravention .................................... 18
Section 4.03 Due Incorporation; Good Standing ..................... 18
Section 4.04 Corel Shares ......................................... 18
Section 4.05 Additional Representations and Warranties of the
Purchaser ............................................ 18
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TABLE OF CONTENTS
(Continued)
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ARTICLE V ADDITIONAL COVENANTS AND AGREEMENTS OF THE SELLER AND WINZIP
HOLDINGS ............................................................. 19
Section 5.01 Publicity ............................................ 19
Section 5.02 Confidential Information ............................. 19
Section 5.03 Brokers and Finders .................................. 19
Section 5.04 Certain Filings ...................................... 19
Section 5.05 Company Information .................................. 19
Section 5.06 Further Assurances ................................... 20
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS OF THE PURCHASER ......... 20
Section 6.01 Brokers and Finders .................................. 20
Section 6.02 Certain Filings ...................................... 20
Section 6.03 Nondisclosure ........................................ 20
Section 6.04 Further Assurances ................................... 21
ARTICLE VII CERTAIN OTHER AGREEMENTS .................................... 21
Section 7.01 Use of Name .......................................... 21
Section 7.02 Certain Tax Matters .................................. 21
Section 7.03 Access to Information ................................ 22
Section 7.04 Conduct of Business Until Closing .................... 22
Section 7.05 Negative Covenants ................................... 23
Section 7.06 Non-Solicitation ..................................... 23
Section 7.07 Goodwill ............................................. 24
Section 7.08 Restricted Property .................................. 24
Section 7.09 Termination .......................................... 24
ARTICLE VIII CLOSING .................................................... 24
Section 8.01 Time and Place of Closing ............................ 24
Section 8.02 Conditions to Closing ................................ 25
ARTICLE IX INDEMNIFICATION .............................................. 27
Section 9.01 Indemnification of the Purchaser ..................... 27
Section 9.02 Indemnification of the Seller ........................ 28
Section 9.03 Survival of Representations and Warranties ........... 29
Section 9.04 Additional Indemnification Provisions ................ 29
ARTICLE X MISCELLANEOUS ................................................. 30
Section 10.01 Expenses ............................................. 30
Section 10.02 Notices .............................................. 30
Section 10.03 Entire Agreement ..................................... 31
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TABLE OF CONTENTS
(Continued)
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Section 10.04 Severability ......................................... 31
Section 10.05 Successors and Assigns ............................... 31
Section 10.06 Governing Law ........................................ 32
Section 10.07 Waiver of Jury Trial ................................. 32
Section 10.08 Counterparts ......................................... 32
Section 10.09 Effect of Investigations ............................. 32
Section 10.10 Waivers .............................................. 32
Section 10.11 No Third-Party Beneficiaries ......................... 32
Section 10.12 Construction ......................................... 33
Section 10.13 Preparation of Document .............................. 33
ANNEXES
Annex A - Definitions
Annex B - WinZip Holdings Capitalization
Annex C - Corel Options
EXHIBITS
Exhibit A - Form of Corel Option
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Lockup Agreement
SCHEDULES
Seller Disclosure Schedule
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THIS STOCK PURCHASE AGREEMENT made May 1, 2006 by and among Cayman
Ltd. Holdco, an exempted company formed under the laws of the Cayman Islands
("WinZip Holdings"); Vector CC Holdings IV, SRL, a Barbados corporation (the
"Seller"), the owner of all of the issued and outstanding shares of all classes
of capital stock of WinZip Holdings (collectively, the "WinZip Shares"); Corel
Corporation, a corporation existing pursuant to the federal laws of Canada (the
"Purchaser"); and, for the purposes of Section 1.02 only, WinZip Computing LLC,
a Delaware limited liability company and an indirect, wholly-owned subsidiary of
WinZip Holdings ("WinZip Computing"). Capitalized terms used herein and not
defined in the specific Section in which they are used shall have the meanings
assigned to such terms in Annex A.
WITNESSETH:
WHEREAS, the Company is engaged in the business of developing,
selling, marketing and distributing compression utility software, including,
without limitation, the Software Product (such activities and all incidental or
related businesses of the Company being herein referred to as the "Business");
WHEREAS, the Seller is the holder of the number of WinZip Shares set
forth opposite the Seller's name in Column C on Annex B, which WinZip Shares
constitute all of the issued and outstanding shares of all classes of capital
stock of WinZip Holdings;
WHEREAS, the persons set forth in Column A on Annex C (the "WinZip
Optionholders") are the holders of certain options to purchase membership
interests of WinZip Computing (the "WinZip Options"), which WinZip Options were
granted pursuant to the WinZip Computing LLC 2005 Class B Unit Option Plan (the
"WinZip Option Plan") and constitute all outstanding options to purchase
membership interests of WinZip Computing;
WHEREAS, the Purchaser desires to acquire from the Seller, and the
Seller desires to sell to the Purchaser, all of the WinZip Shares on the terms
and subject to the conditions hereinafter set forth; and
WHEREAS, pursuant to the terms of the WinZip Option Plan, the
transactions contemplated in this Agreement shall collectively constitute a
"Corporate Transaction" and accordingly, the WinZip Options shall be converted
into options to purchase common shares of the Purchaser (the "Corel Options").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth and intending to be legally
bound, the Parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.01 Purchase and Sale of WinZip Shares. Subject to the terms
and conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements herein contained, at the Closing, the
Seller shall sell, assign and convey to the
Purchaser, free and clear of all Liens, and the Purchaser shall purchase,
acquire and accept from the Seller, all of the WinZip Shares.
Section 1.02 Cancellation of WinZip Options; Issuance of Corel
Options. Subject to the terms and conditions of this Agreement and on the basis
of the representations, warranties, covenants and agreements herein contained:
(a) on or prior to the Closing, each of the Seller and WinZip
Computing shall take, and shall cause each WinZip Optionholder to take, all
actions as may be necessary to cancel each of the WinZip Options;
(b) at the Closing, the Seller shall deliver to the Purchaser the
certificates or other documentation evidencing each of the WinZip Options, each
marked "cancelled"; and
(c) at the Closing, the Purchaser shall grant to each WinZip
Optionholder 0.087325 Corel Options for each WinZip Option surrendered by such
WinZip Optionholder and delivered to the Purchaser pursuant to Section 1.02(b),
such that the Purchaser shall deliver to each WinZip Optionholder the number of
Corel Options set forth in Column C on Annex C, in each case upon the terms set
forth in Columns D and E on Annex C, by delivering an option certificate, in the
form attached as Exhibit A, to each such WinZip Optionholder (or to the Seller,
on behalf of each WinZip Optionholder). WinZip Computing hereby agrees and
affirms that, in accordance with the terms of the WinZip Option Plan: (i) the
Corel Options to be issued to each WinZip Optionholder pursuant to this
Agreement and the WinZip Option Plan preserve the economic value of the WinZip
Options to be surrendered by such WinZip Optionholder; and (ii) the terms
associated with the Corel Options to be issued to each WinZip Optionholder
pursuant to this Agreement and the WinZip Option Plan are substantially
equivalent to or better than the terms associated with the WinZip Options to be
surrendered by such WinZip Optionholder.
ARTICLE II
CONSIDERATION
Section 2.01 Consideration.
(a) In consideration of the sale, assignment and conveyance of all of
the WinZip Shares by the Seller to the Purchaser at the Closing, the Purchaser
shall issue or cause to be issued to the Seller four million three hundred
twenty-two thousand five hundred eighty-six (4,322,586) common shares of the
Purchaser (as adjusted pursuant to Section 2.02 (if applicable) the "Corel
Shares"), in accordance with Section 2.01(b) (the Corel Shares are sometimes
referred to collectively herein as the "Consideration"). The Parties hereby
agree that each Corel Share shall be valued for all purposes of this Agreement
at a value equal to the per-share IPO offering price (the "Per Share
Consideration").
(b) Issuance of the Corel Shares. At the Closing, the Purchaser shall
issue and deliver to the Seller a certificate, in negotiable form, representing
the Corel Shares. The delivery of the Corel Shares to the Seller as provided
above shall constitute full and final transfer of the Consideration to the
Seller.
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ARTICLE III
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE SELLER
Except as set forth in the Disclosure Schedule, the Seller represents
and warrants, to and for the benefit of the Purchaser Indemnified Parties for
purposes of Article IX, only as to the matters expressly set forth in this
Article III. Disclosure of an item anywhere on the Disclosure Schedule shall be
deemed to be disclosure of such item with respect to, and therefore to qualify
each representation and warranty contained in, each Section and subsection in
this Article III where such qualification is reasonably apparent from the text
of the disclosure; provided, however, that for purposes of determining whether
the Seller has committed a fraudulent breach of a representation or warranty,
such qualification need not be reasonably apparent from the text of the
disclosure. Representations and warranties shall be deemed to be qualified by
the items set forth in the Disclosure Schedule even if they do not expressly use
the phrase "except as set forth in Part ___ of the Disclosure Schedule" (or
phrases of similar import). Notwithstanding any other provisions of this Article
III, the only representations and warranties made by the Seller relating,
directly or indirectly, to intellectual property assets or intellectual property
issues (including the Owned Intellectual Property), including, but not limited
to, any agreements, licenses, liabilities, ownership, performance, software
"bugs", design flaws, security vulnerabilities, warranties as to
merchantability, fitness for a particular purpose, or suitability of software,
title or infringement issues, or rights or authority or any other matters
relating thereto, are made in Section 3.13 hereof. The inclusion of any direct
or indirect reference to intellectual property assets or issues, or rights or
authority relating thereto, in any Part of the Disclosure Schedule shall not be
deemed to have the effect or to imply that any provision of this Article III
(other than Section 3.13) contains representations and warranties pertaining to
intellectual property assets or issues.
Section 3.01 Organization and Qualification. Each WinZip Entity is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has full power and authority to own its
properties and to conduct the businesses in which it is now engaged. Each WinZip
Entity is in good standing in each other jurisdiction wherein the failure to
qualify or to be in good standing could reasonably be expected to result in a
Material Adverse Effect. Except as set forth on Part 3.01 of the Disclosure
Schedule, WinZip Holdings does not have any subsidiaries, own any capital stock
or other proprietary interest, directly or indirectly, in any other Person, nor
have any agreement with any Person to acquire any such capital stock or other
proprietary interest. Accurate and complete copies of the articles of
incorporation, including all amendments thereto and restatements thereof, and
by-laws (or other similar organizational documents, as applicable) of each
WinZip Entity and of the corporate minutes and the stock record books of each
WinZip Entity have been delivered to the Purchaser. Complete and accurate
records with respect to the issuance, transfer, redemption and cancellation of
all shares of capital stock are set forth in such stock record books.
Section 3.02 Authority; Binding Nature of Agreement. The Seller and
WinZip Holdings have all power, capacity and authority necessary to enter into
and to perform their obligations under this Agreement and each Transaction
Document to which they are party. This Agreement and each Transaction Document
constitutes the legal, valid and binding obligation of
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the Seller and WinZip Holdings, enforceable against the Seller and WinZip
Holdings in accordance with their terms, subject to (i) Laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) Laws governing specific performance, injunctive relief and other equitable
remedies.
Section 3.03 No Conflict. Neither the execution and delivery of this
Agreement or any Transaction Document by WinZip Holdings and the Seller, nor,
the performance by WinZip Holdings and the Seller pursuant hereto or thereto,
will (a) violate the certificate of incorporation, bylaws or other similar
organizational documents of any WinZip Entity, (b) result in a violation or
breach of, or permit any third party to rescind any term or provision of, or
constitute a default under, any indenture, mortgage, deed of trust or other
Contract, license or other agreement to which the Seller, the Company or any
other WinZip Entity is a party or by which either of them, or any of the
property or assets of the Company or any other WinZip entity, is bound, or
create any Lien upon any of the property or assets of the Company or any other
WinZip Entity, (c) violate any Law, order, award, judgment, or decree applicable
to or binding on the Seller, the Company or any other WinZip Entity, or any
permit, license or approval of any Governmental Authority which is material to
the operation of the business, or (d) require any notice to, or consent,
approval, order or authorization of, or the registration, declaration or filing
with, any Governmental Authority or other third party.
Section 3.04 Capitalization; Title to Shares.
(a) The authorized and outstanding shares of each class of capital
stock of WinZip Holdings are as set forth on Part 3.04(a) of the Disclosure
Schedule. As of the Closing Date, the Seller will own all of the shares of stock
set forth opposite the Seller's name in Column C on Annex B, free and clear of
all Liens (including any restriction on the right to vote, sell or otherwise
dispose of such shares). As of the Closing Date, the Seller will have the
unrestricted right to transfer the WinZip Shares to the Purchaser and, upon
transfer of the WinZip Shares to the Purchaser hereunder, the Purchaser shall
acquire good, valid and marketable title to the WinZip Shares, free and clear of
all Liens. The WinZip Shares constitute all of the outstanding shares of capital
stock of all classes of WinZip Holdings. All of the WinZip Shares have been duly
and validly authorized and issued, are fully paid and non-assessable. WinZip
Holdings, either directly or indirectly, owns all of the issued and outstanding
shares of capital stock (or other equity interests, as applicable) of each other
WinZip Entity, including, without limitation, the Company.
(b) Other than the WinZip Options, there are no outstanding
subscriptions, warrants, options, calls, commitments or other rights or
agreements to which any WinZip Entity is subject to or bound relating to the
issuance, sale, transfer or redemption of shares of stock or other securities of
any WinZip Entity.
Section 3.05 Financial Statements. The Company has delivered to the
Purchaser the following financial statements (the "Financial Statements"): (i)
the unaudited Balance Sheet of the Company as of February 28, 2006 and the
audited Balance Sheets of the Company as of November 30, 2003, 2004 and 2005,
(ii) the unaudited Statement of Operations of the Company for the fiscal quarter
ended February 28, 2006 and the audited Statements of Operations of the Company
for the fiscal years ended November 30, 2003, 2004 and 2005,
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(iii) the unaudited Statement of Cash Flow of the Company for the fiscal quarter
ended February 28, 2006 and the audited Statements of Cash Flow for the fiscal
years ended November 30, 2003, 2004 and 2005, and (iv) the unaudited Statement
of Changes in Shareholder's Equity of the Company for the fiscal quarter ended
February 28, 2006 and audited Statements of Changes in Shareholders' Equity of
the Company for the fiscal years ended November 30, 2003, 2004 and 2005. The
Financial Statements (i) are accurate and complete in all material respects and
present fairly in all material respects the financial position of the Company as
of the respective dates thereof and the results of operations of the Company for
the periods covered thereby, and (ii) have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis throughout the periods covered.
Section 3.06 Absence of Undisclosed Liabilities. The Company does not
have any liabilities or obligations; either accrued, contingent or otherwise,
which are not reflected in this Agreement or the Disclosure Schedule, except as
have been incurred in the Ordinary Course of Business since November 30, 2005.
As of the Closing, the WinZip Entities, on a consolidated basis, will have Net
Debt of no more than sixteen million five hundred thousand dollars
($16,500,000).
Section 3.07 Absence of Certain Changes. Since November 30, 2005,
except as described in Part 3.07 of the Disclosure Schedule or as contemplated
by this Agreement, no WinZip Entity has:
(a) suffered any change in its financial condition, assets,
liabilities, net worth or business from that shown on the Balance Sheet that,
either individually or in the aggregate, has had a Material Adverse Effect;
(b) suffered any damage, destruction or loss, whether or not covered
by insurance, which has had a Material Adverse Effect;
(c) declared or made or agreed to declare or make any distributions of
any assets of any kind whatsoever to any shareholder (or other holder of equity
interests, as applicable) as a dividend, in redemption or as the purchase price
of any of the capital stock or other equity interests of such WinZip Entity or
in discharge or cancellation, whether in part or in whole, of any indebtedness
(whether in payment of principal, interest or otherwise) owing to any of them,
or for any other purpose, except the payment of normal compensation and the
reimbursement of bona fide business expenses in the Ordinary Course of Business;
(d) issued or sold, or contracted to issue or sell, any shares or
other securities or any securities convertible into, or exchangeable for, shares
of stock, or securities, warrants, options or rights to purchase any of the
foregoing;
(e) mortgaged, pledged, hypothecated or otherwise encumbered any of
its material assets, tangible or intangible;
(f) sold or Transferred any of its assets, property or rights; or
canceled or agreed to cancel any of its debts or claims, except for fair value,
in the ordinary course of business;
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(g) suffered any change in its Business, its relationships with
customers, or its contracts with customers or suppliers which has had, or would
reasonably be expected to have, a Material Adverse Effect; provided, however,
that for purposes of determining whether the Seller has committed a fraudulent
breach of this Section 3.07(g), the phrase "or would reasonably be expected to
have," shall be disregarded;
(h) incurred any commitment (through negotiations or otherwise) or any
liability to any labor organization, or been involved in any labor dispute;
(i) materially increased the amount of its indebtedness, obligations
or liabilities;
(j) entered or agreed to enter into any agreement or arrangement
granting any preferential rights to purchase a material part of its assets,
property or rights;
(k) placed any orders for materials, merchandise or supplies in
exceptional or unusual quantities based upon past operating practices or
accepted orders from customers under conditions relating to price, terms of
payment, time or delivery, or like matters materially different from the
conditions regularly and usually specified on acceptance of orders for similar
merchandise from customers similarly situated;
(l) made any change in the accounting practices or methods followed by
it; or
(m) entered into any other transaction other than in the Ordinary
Course of Business, or been involved in any event or experienced any condition
of any character, that, either individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse Effect; provided,
however, that for purposes of determining whether Seller has committed a
fraudulent breach of this Section 3.07(m), the phrase "or would reasonably be
expected to have," shall be disregarded.
Section 3.08 Litigation. There is no action, suit or proceeding
pending or, to the Seller's knowledge, threatened, at law, in equity, by way of
arbitration or before any Governmental Authority, (i) against the Seller or
WinZip Holdings relating to or affecting the Business or assets of the Company,
(ii) against the Company, (iii) against any other WinZip Entity, or (iv) seeking
to prevent or postpone the consummation of any of the Transactions. To the
Seller's knowledge, there are no existing facts or conditions which might give
rise to any charge, claim, litigation, proceeding, or investigation by any third
party which would reasonably be expected to have a Material Adverse Effect, nor
are there any facts or conditions which might give rise to any order of
condemnation, appropriation or other taking of any of the assets of the Company.
Section 3.09 Compliance with Laws. The Company has all necessary
licenses, permits and other approvals of Governmental Authorities necessary to
operate the Business as now conducted, each of which licenses, permits and
approvals is in good standing, the Company has conducted the Business, and
properly filed all necessary reports, in accordance with applicable Laws the
violation of which would reasonably be expected to have a Material Adverse
Effect.
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Section 3.10 Title to Assets. The Company owns, and has good, valid
and marketable title to, all assets purported to be owned by it, including all
assets reflected on the Balance Sheet, and all of such assets are owned by the
Company free and clear of any Encumbrances, except for any lien for current
Taxes not yet due and payable. There are no assets that are material to the
Business of the Company that are being leased to the Company (other than real
property). As indicated in the introductory paragraph to this Article 3, the
Parties acknowledge that this Section 3.10 does not apply in any respect to
Intellectual Property.
Section 3.11 Real Property.
(a) The Company does not own, and has never owned, any real property.
(b) Part 3.11 of the Disclosure Schedule lists: (i) the street address
of each parcel of real property leased by the Company as tenant, together with,
to the extent leased by the Company, all buildings and other structures,
facilities or improvements currently located thereon, all fixtures, systems,
equipment and items of personal property of the Company attached or appurtenant
thereto, and all easements, licenses, rights and appurtenances relating to the
foregoing (the "Leased Real Property"), (ii) the identity of the lessor, lessee
and current occupant (if different from lessee) of each such parcel of Leased
Real Property, (iii) the term (referencing applicable renewal periods) and
rental payment terms of the leases (and any subleases) pertaining to each such
parcel of Leased Real Property, and (iv) the current use of each such parcel of
Leased Real Property.
(c) Except as described on Part 3.11 of the Disclosure Schedule, there
is no material violation of any Law (including, without limitation, any
building, planning or zoning Law) relating to any of the Leased Real Property.
The Seller has made available to the Purchaser true and correct copies of each
deed for each parcel of Leased Real Property, to the extent available, and all
the title insurance policies, title reports, surveys, certificates of occupancy,
environmental reports and audits, appraisals, permits, other title documents and
other documents relating to or otherwise affecting the Leased Real Property, the
operation of the Business thereon or any other uses thereof, in each case to the
extent any such document is in any WinZip Entity's possession. The Company is in
peaceful and undisturbed possession of each parcel of Leased Real Property and
there are no contractual or legal restrictions that preclude or restrict the
ability to use the premises for the purposes for which they are currently being
used. To the Seller's knowledge, all existing water, sewer, steam, gas,
electricity, telephone and other utilities required for the use, occupancy and
operation of the Leased Real Property are adequate for the conduct of the
Business as it has been and currently is conducted. To the Seller's knowledge,
there are no material latent defects or material adverse physical conditions
affecting the Leased Real Property or any of the facilities, buildings,
structures, improvements, fixtures, fixed assets and personalty of a permanent
nature annexed, affixed or attached to, located on or forming part of the Leased
Real Property. Except as set forth on Part 3.11 of the Disclosure Schedule, the
Company has not leased or subleased any parcel or any portion of any parcel of
Leased Real Property to any other Person, nor has the Company assigned its
interest under any lease or sublease listed on Part 3.11 of the Disclosure
Schedule to any third party.
(d) The Seller has, or has caused to be, delivered to the Purchaser
correct and complete copies of all leases and subleases listed on Part 3.11 of
the Disclosure Schedule and
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any and all ancillary documents pertaining thereto. With respect to each of such
leases and subleases, except as otherwise set forth on Part 3.11 of the
Disclosure Schedule:
(i) such lease or sublease, together with all ancillary
documents, is legal, valid, binding, enforceable and in full force and effect
and represents the entire agreement between the respective landlord and tenant
with respect to such property;
(ii) such lease or sublease will not cease to be legal, valid,
binding, enforceable and in full force and effect on terms identical to those
currently in effect as a result of the consummation of the Transactions, nor
will the consummation of the Transactions constitute a breach or default under
such lease or sublease or otherwise give the landlord a right to terminate such
lease or sublease;
(iii) with respect to each such lease or sublease: (A) neither
the Seller nor any WinZip Entity has received any notice of cancellation or
termination under such lease or sublease and no lessor has any right of
termination or cancellation under such lease or sublease except in connection
with the default of the Company thereunder, (B) neither the Seller nor any
WinZip Entity has received any notice of a breach or default under such lease or
sublease, which breach or default has not been cured, and (C) the Company has
not granted any other Person any rights, adverse or otherwise, under such lease
or sublease; and
(iv) neither the Company nor to the knowledge of the Seller any
other party to such lease or sublease, is in breach or default thereunder in any
material respect, and, to the knowledge of the Seller, no event has occurred
that, with notice or lapse of time, would constitute such a breach or default or
permit termination, modification or acceleration under such lease or sublease.
(e) There are no condemnation proceedings or eminent domain
proceedings of any, kind pending or, to the knowledge of the Seller, threatened
against any of the Leased Real Property.
(f) All the Leased Real Property is occupied under a valid and current
certificate of occupancy or similar permit, the Transactions will not require
the issuance of any new or amended certificate of occupancy and, to the
knowledge of the Seller, there are no facts that would prevent the Leased Real
Property from being occupied after the Closing in the same manner as immediately
prior to the Closing.
(g) All improvements on the Leased Real Property constructed by or on
behalf of the Company or, to the knowledge of the Seller, constructed by or on
behalf of any other Person were constructed in compliance with all applicable
Laws (including, but not limited to, any building, planning or zoning Laws)
affecting such Leased Real Property.
Section 3.12 Intellectual Property.
(a) Part 3.12 of the Disclosure Schedule contains a complete and
accurate list of all Registered Owned Intellectual Property and specifies, where
applicable, the jurisdictions in which each such item of Registered Owned
Intellectual Property has been issued or registered and lists any pending
proceedings or actions before any court, tribunal (including the United
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States Patent and Trademark Office or equivalent authority anywhere in the
world) related to any of the Registered Owned Intellectual Property.
(b) Except as disclosed on Part 3.12 of the Disclosure Schedule, all
necessary registration, maintenance and renewal fees currently due in connection
with Registered Owned Intellectual Property have been made and all necessary
documents, recordations and certificates in connection with such Registered
Owned Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign jurisdictions, as
the case may be, for the purposes of maintaining such Registered Owned
Intellectual Property. There are no actions that must be taken by the Company
within sixty (60) days after the date hereof, including the payment of any
registration, maintenance or renewal fees or the filing of any documents,
applications or certificates for the purposes of maintaining, perfecting or
preserving or renewing any Registered Owned Intellectual Property.
(c) All the Owned Intellectual Property is owned by the Company free
and clear of any Encumbrance and, except as set forth on Part 3.12 of the
Disclosure Schedule, none of the Owned Intellectual Property infringes on the
Intellectual Property of any other Person; provided, however, that, in the case
of trademarks, the representations and warranties set forth in the first
sentence of this Section 3.12(c) are made to the knowledge of the Seller. To the
knowledge of the Seller, and except as set forth on Part 3.12 of the Disclosure
Schedule, no Person is using any Intellectual Property that infringes upon the
Owned Intellectual Property.
(d) Notwithstanding anything to the contrary contained herein, the
Company makes no representations or warranties concerning Patents except as
expressly set forth in this Section 3.12(d):
(i) The Company does not own, and has never owned, any Patents.
(ii) Except as set forth in Part 3.12 of the Disclosure Schedule,
the Company has not received any written or oral claims from the holders of
Patents (or their representatives) alleging that one or more of the Company's
products infringe(s) on such, holders' Patents.
(e) Part 3.12 of the Disclosure Schedule contains a complete and
accurate list of all Licensed Intellectual Property, other than "shrink wrap"
and similar widely available commercial software. With respect to each of the
licenses and sublicenses pursuant to which the Company licenses Licensed
Intellectual Property from another Person:
(i) such license or sublicense is legal, valid, binding,
enforceable and in full force and effect and represents the entire agreement
between the respective licensor and licensee with respect to the subject matter
of such license or sublicense;
(ii) such license or sublicense will not cease to be legal,
valid, binding, enforceable and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the Transactions,
nor will the consummation of the Transactions constitute a breach or default
under such license or sublicense or otherwise give the licensor or sublicensor a
right to terminate such license or sublicense;
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(iii) with respect to each such license or sublicense: (A) the
Company has not received any notice of cancellation or termination under such
license or sublicense, and (B) the Company has not received any notice of a
breach or default by the Company under such license or sublicense, which breach
or default has not been cured;
(iv) neither the Company, nor to the knowledge of the Seller, any
other party to such license or sublicense is in breach or default in any
material respect under such license or sublicense;
(v) no claims have been made in writing against the Company
alleging that any Licensed Intellectual Property is being licensed, sublicensed
or used in violation of any Intellectual Property of any Person; and
(vi) to the knowledge of the Seller, and except as set forth on
Part 3.12 of the Disclosure Schedule, no Person is using any Intellectual
Property that infringes upon the Licensed Intellectual Property. For purposes of
this Section 3.12(e)(vi), "Licensed Intellectual Property" shall be deemed to
exclude "shrink wrap" and similar widely available commercial software.
(f) Except for non-exclusive license grants of the Software Product in
the Ordinary Course of Business, and except as set forth on Part 3.12 of the
Disclosure Schedule, the Company has not Transferred ownership of or granted any
license of or right to use any Owned Intellectual Property to any other Person.
Part 3.12 of the Disclosure Schedule briefly describes the types of agreements
pursuant to which the Company grants licenses relating to the Software Product
to other Persons, how such licenses are customarily entered into, and certain
material terms of such licenses. Part 3.12 of the Disclosure Schedule also sets
forth a complete and accurate list of the Company's current signed resale and
e-commerce agreements. Except as set forth in Part 3.12 of the Disclosure
Schedule, the Company has provided to the Purchaser complete and accurate copies
of all of its site licenses that were entered into with terms that differed from
the then current standard site license terms.
(g) Upon the Closing, the Company shall continue to own or possess, or
own or possess adequate and enforceable licenses, sublicenses or other rights to
use, without payment of any fee other than fees disclosed in Part 3.12 of the
Disclosure Schedule, all the Owned Intellectual Property and Licensed
Intellectual Property.
(h) The Owned Intellectual Property and the Licensed Intellectual
Property constitute all the Intellectual Property currently used in, and
necessary in the conduct of, the Business and there are no other items of
Intellectual Property that are material to the Company or the Business;
provided, however, that nothing contained herein shall be construed as a
representation or warranty by the Seller that any item of Owned Intellectual
Property or Licensed Intellectual Property that is not included in the Software
Product (including without limitation any Internal-Use-Only IP) can be licensed
or sold by the Company without infringing on the Intellectual Property of any
other Person, or that no other Person is infringing on it.
(i) To the extent that any Intellectual Property has been developed or
created for the Company by an employee or consultant, the Company has a written
agreement with such
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Person with respect thereto and the Company thereby has obtained ownership of,
and is the exclusive owner of, all such Intellectual Property by operation of
law or by valid assignment.
(j) Except as set forth on Part 3.12 of the Disclosure Schedule, the
Company has taken reasonable steps to protect the Company's rights in the
Company's confidential information and trade secrets that it wishes to protect
or any trade secrets or confidential information of third parties provided to
the Company, and, without limiting the foregoing, the Company has and enforces a
policy requiring each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided to the
Purchaser and all current and former employees and contractors of the Company
have executed such an agreement, except where the failure to do so is not
reasonably expected to be material to the Company. Part 3.12 of the Disclosure
Schedule briefly describes certain measures the Company has taken, or not taken,
to protect the value and confidentiality of its Intellectual Property.
(k) The Company has made available to the Purchaser accurate and
complete copies of the Company's records relating to known "bugs" in the
Software Product. The Seller is not making any representations or warranties to
the Purchaser concerning the potential consequences of any or all of such
"bugs," or the merchantability, fitness for a particular purpose, accuracy or
completeness, or responses or results of the Software Product, or the absence of
any program defects or design flaws in the Software Product, including, without
limitation, defects or design flaws that may create or result in security
vulnerabilities. Annex B to the Disclosure Schedule contains additional
background information concerning certain "bugs" and product performance issues.
(l) Part 3.12 of the Disclosure Schedule describes the Company's
current privacy and upgrade statements.
(m) The Company's license agreements contain a complete and accurate
description of the Company's warranty policies.
Section 3.13 Contracts.
(a) In Part 3.13(a) of the Disclosure Schedule are identified:
(i) each Company Contract relating to the employment of, or
performance of services by, any employee or consultant;
(ii) each Company Contract imposing any material restriction on
the Company's right or ability to (A) compete with, (B) acquire any product,
asset or service from, (C) sell any product or asset to, (D) perform any
services for or (E) transact business with, any other Person;
(iii) each Company Contract with any WinZip Entity (other than
the Company);
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(iv) any current Company advertising agreements pursuant to which
the Company has made payments in excess of $125,000 within the last three months
or expects to make payments in excess of $125,000 within the next three months;
and
(v) any other Company Contract (other than license grants of the
Software Product) that involves the future payment or delivery of cash or other
consideration by or to the Company in an amount in excess of $50,000 in any
future calendar year.
(b) Contracts described in the preceding clauses "(i)" through "(v)"
are referred to in this Agreement as "Material Contracts."
(c) Except as set forth in Part 3.13(c) of the Disclosure Schedule:
(i) all Company Contracts are valid and in effect and the Company is not in
default under any such Company Contract, and to the Seller's knowledge, no other
party thereto is in default; and (ii) neither the Seller nor any WinZip Entity
has received notice of default under any Company Contract, and the Seller knows
of no event that has occurred which (after notice and lapse of time or both)
would become a breach or default under, or otherwise permit unilateral
modification, cancellation, acceleration or termination of any such Company
Contract.
Section 3.14 Governmental Authorizations. Part 3.14 of the Disclosure
Schedule identifies each material Governmental Authorization held by the
Company. Each such Governmental Authorization is valid and in full force and
effect and, collectively, such Governmental Authorizations constitute all
Governmental Authorizations necessary to enable the Company to conduct its
Business as it is currently conducted, in each case except where the absence or
invalidity of any such Governmental Authorizations would not reasonably be
expected to have a Material Adverse Effect.
Section 3.15 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any WinZip
Entity with any Governmental Authority with respect to any taxable period ending
on or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been or will be accurately and completely prepared in all
material respects in compliance with all applicable Laws. All amounts, if any,
shown on the Company Returns to be due on or before the Closing Date have been
or will be paid. The Seller has delivered to the Purchaser accurate and complete
copies of all Company Returns filed since December 31, 2001 and before the
Closing Date that have been requested by the Purchaser.
(b) Part 3.15(b) of the Disclosure Schedule identifies all
examinations or audits of any Company Return filed after December 31, 2001 and
any extension or waiver requested or currently in effect. The Seller has
delivered to the Purchaser copies of all audit reports by a Governmental
Authority and similar documents (to which any WinZip Entity has access) relating
to the Company Returns filed after December 31, 2001.
(c) No claim or Legal Proceeding is pending or, to the Seller's
knowledge, has been threatened against or with respect to any WinZip Entity in
respect of any Tax. There are no unsatisfied liabilities for Taxes with respect
to any written notice of deficiency or similar
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written document received by any WinZip Entity with respect to any Tax. There
are no Liens for Taxes upon any of the assets of the Company, except liens for
current Taxes not yet due and payable. No WinZip Entity is required to include
any adjustment in taxable income for any tax period (or portion thereof) ending
after the Closing Date pursuant to Section 481 of the Code as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(d) Except as set forth in Part 3.15(d) of the Disclosure Schedule,
there is no agreement, plan, arrangement or other Contract covering any current
or former employee or independent contractor of the Company that could give rise
to the payment of any amount that would not be deductible pursuant to Section
280G or Section 162 of the Code.
(e) Notwithstanding anything to the contrary set forth herein, the
representations and warranties set forth in this Section 3.15 do not apply to
(i) state income and sales and use Taxes (ii) city or local Taxes and (iii)
Taxes in any jurisdiction outside the United States except in connection with
the Seller Tax Reorganization.
(f) No WinZip Entity has any liability for the Taxes of any Person
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law), as a transferee or successor, by contract or otherwise.
(g) Except as set forth in Part 3.15(g) of the Disclosure Schedule,
the Company has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
Section 3.16 Employee Matters.
(a) Except as described on Part 3.16 of the Disclosure Schedule, the
Company does not have any written or oral contracts of employment with any
employee of the Company, and the Company is not a party to or subject to any
collective bargaining agreements and has not been a party to or subject to any
collective bargaining agreement or collective bargaining plan during the last
five (5) years. The Company is not a party to any pending or, to the Seller's
knowledge, threatened labor dispute affecting the Business. The Company has
complied in all material respects with all applicable Laws relating to the
employment of labor, including but not limited to the provisions thereof
relative to wages, hours, collective bargaining, payment of Social Security,
unemployment and withholding taxes, and ensuring equality of opportunity for
employment. The Company is not liable for any arrears of wages or any Taxes or
penalties for failure to comply with any of the foregoing. The Company has not
entered into and is not obligated to enter into any agreement relating to the
payment of vacation pay to any employee and the Company does not have any
obligation to any employees to provide them with pay for vacation time, except
for vacation pay payable in the Ordinary Course of Business. A true and correct
statement of the names, employment status, and rates of compensation (including
salaries, wages, commissions and bonuses), and accrued paid absence time of all
employees of the Company, is set forth on Part 3.16 of the Disclosure Schedule.
The Company has paid all remuneration (including 2005 employment and incentive
bonuses) due and owing to employees.
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(b) Part 3.16 of the Disclosure Schedule sets forth a correct and
complete list of every stock option, stock purchase, stock appreciation right,
bonus, deferred or current compensation, excess benefits, profit sharing,
pension, thrift, savings, retirement, severance, sickness, accident, medical,
disability, hospitalization, vacation, insurance or other plan,, agreement,
arrangement, commitment or practice which provides benefits to or for or on
behalf of any one, or more employees of the Company (including former employees)
or their beneficiaries (collectively, "Employee Benefit Plans"). The Seller has
delivered to the Purchaser true, correct and complete copies of all Employee
Benefit Plans in effect on the date of this Agreement, all descriptions thereof,
all trust agreements or other funding arrangements (including insurance or group
annuity contracts) relating thereto, and all amendments thereto.
(c) Except as listed on Part 3.16 of the Disclosure Schedule, no
employee benefit plan exists which covers or is maintained for the benefit of
any of the employees of the Company or to which the Company is required to make
contributions on account of any employees of the Company. With respect to each
Employee Benefit Plan, the Seller has delivered to the Purchaser true, complete
and correct copies of (i) the latest plan description and all modifications
thereto, (ii) the last three (3) financial statements for each Employee Benefit
Plan and the related trusts and other funding arrangements (including insurance
and group annuity contracts), and (iii) any filings, determinations or
qualification letters or rulings filed with, or issued by, a Governmental
Authority. No Employee Benefit Plan or any related trust owns any securities
issued by the Company or any other Person. No Taxes (or interest or penalties
with respect thereto) are due or owing with respect to any Employee Benefit
Plan.
(d) Each Employee Benefit Plan which is intended to qualify for
special Tax treatment, including Tax deferral (a "Qualified Plan"), has received
a favorable determination letter from the applicable Governmental Authority.
Each amendment to a Qualified Plan or a related trust has, where required, been
determined by the applicable Governmental Authority not to adversely affect the
qualified status of such Qualified Plan or the Tax exempt status of the related
trust. No event has occurred which would cause the loss of the Tax exempt status
of any related trust, or the imposition of any Tax liability or penalty in
connection with any Qualified Plan or a related trust.
(e) There are no actions, suits, arbitrations or claims pending or, to
the knowledge of the Seller, threatened against any Employee Benefit Plan. Each
Employee Benefit Plan is in compliance in all material respects with all
requirements of applicable Laws and has been administered in all material
respects in accordance with its terms and with applicable Laws.
(f) No Employee Benefit Plan provides benefits (including, without
limitation, death, health or medical benefits (whether or not insured)) with
respect to current or former employees of the Company beyond their retirement or
other termination of service with the Company, other than (i) coverage mandated
by applicable Law, (ii) deferred compensation benefits in accordance with the
rules of the relevant Employee Benefit Plan, or (iii) benefits the full cost of
which are borne by the current or former employees (of their beneficiaries) in
accordance with the Employee Benefit Plan.
(g) The Company has not terminated an Employee Benefit Plan.
-14-
Section 3.17 Environmental Matters; Health and Safety.
(a) There are no outstanding or, to the Seller's knowledge, threatened
actions, claims, proceedings, determinations or judgments by any party,
including but not limited to any Governmental Authority, against or involving
the Company in any manner arising under any national, international, federal,
state, local or other environmental, health or safety law, regulation, order or
requirement or requiring the remediation or removal of an existing condition, or
substance. The Company has not received any notice of, nor is the Seller aware
of, any outstanding or threatened orders, determinations or notices of violation
issued by any Governmental Authority administering environmental or health and
safety laws in connection with ownership of or operation by the Company of the
Business which have not been complied with or resolved to the satisfaction of
such Governmental Authority.
(b) The Business is being and has been operated in all material
respects in compliance with all applicable national, international, federal,
state, and local environmental or health and safety laws, regulations and
ordinances governing the Company and the Business including, but not limited to,
all discharges into or onto the soil and/or the ground or surface water,
emissions into the ambient air, and generation, accumulation, labeling,
transportation, handling, treatment, storage and disposal of waste material or
process by-products (including solid, hazardous or toxic waste or substances, if
any) or removal of any existing condition or substance. The Company has complied
in all material respects with all notice, record keeping and reporting
requirements imposed by any Governmental Authority and any informational
requests or demands arising under any national, international, federal, state,
local or other environmental or health and safety laws.
(c) The Leased Real Property has been operated by the Company in a
manner consistent with the representations of paragraphs (a), (b) and (e) of
this Section 3.17.
(d) All real properties formerly owned, leased or rented by the
Company for the Business were owned, operated and utilized by the Company
consistent with the representations of paragraphs (a), (b) and (e) of this
Section 3.17.
(e) The Company has not released, disposed of or caused or permitted
the disposal of any Hazardous Substances upon any of the Real Property or any of
the real properties from which the Company has conducted its Business. The
Company has not, directly or indirectly, disposed of any Hazardous Substances
off-site.
(f) There are no pending or, to the Seller's knowledge, threatened
actions, claims, proceedings or judgments against the Company by any present or
former officers, agents or employees of the Company alleging or involving
personal injury or damage as a result of violation of any national,
international, federal, state, local or other environmental or health and safety
Laws or otherwise involving environmental conditions under which such persons
were employed nor, to the Seller's knowledge, is there a basis for commencing
any such action, claim or proceeding.
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(g) To the Seller's knowledge, each of the real properties owned,
leased or rented by the Company are free of all asbestos, asbestos-containing
materials, polychlorinated biphenyls and all Hazardous Substances.
Section 3.18 Related Party Transactions. To the Seller's knowledge, no
WinZip Entity (other than the Company) has any direct or indirect interest in
any material asset used in the Business or in any Material Contract. No WinZip
Entity (other than the Company) has any material indebtedness owing to or from
the Company.
Section 3.19 Material Relationships. To the Seller's knowledge, no
supplier, distributor, consultant or programmer for the Company or material
current customer of the Company (defined for this purpose as a customer subject
to a Company Contract that involves the future payment or delivery of cash or
other consideration to the Company by such customer in an amount in excess of
$75,000 in any future calendar year under such Company Contract) has notified
the Company of an intention to terminate or substantially reduce its existing
business relationship with the Company where such termination or reduction has
had, or would reasonably be expected to have, a Material Adverse Effect.
Section 3.20 Sales Policies; Warranties. Part 3.20 of the Disclosure
Schedule briefly describes the Company's current policy with respect to returns
and refunds.
Section 3.21 Brokers and Finders. Neither any WinZip Entity nor the
Seller has entered into any contract with respect to the payment of any
brokerage fees, commissions or finders' fees in connection with the
Transactions.
Section 3.22 Additional Representations and Warranties of the Seller.
(a) Access to Data. The Seller has had an opportunity to discuss the
Purchaser's business, management and financial affairs with the Purchaser's
management, and it has been given access to copies of documents, which it has
requested.
(b) No Reliance on Certain Types of Advice. The Seller is not relying
on the Purchaser for advice with respect to tax considerations, the suitability
of its investment in the Purchaser or legal or economic considerations.
(c) Marketability. The Seller understands that the Purchaser is
closely held and that, until such time as the IPO shall have been consummated
and the Corel Shares registered pursuant to the Registration Rights Agreement,
there will be no public market for resale of the Corel Shares. It understands
that it is possible that a market for the Corel Shares will not ever develop. As
a consequence, the Seller understands that it may not be able to liquidate its
investment in the Purchaser, even in the event of an emergency. The Seller also
understands that, for the foregoing reasons, the Corel Shares may not be readily
accepted as collateral for a loan.
Section 3.23 Material Misstatements or Omissions. No representation or
warranty expressly made by the Seller in this Agreement or in the Disclosure
Schedule contains any untrue statement of a material fact, or omits a material
fact necessary to make the statement of facts contained therein, in light of the
circumstances in which they were made, not materially misleading.
-16-
Section 3.24 Exclusive Representations and Warranties. Except as
expressly set forth in this Article III, the Seller is not making any
representations or warranties to the Purchaser concerning the Company, any other
WinZip Entity or the Business, and therefore with the exception of such express
representations and warranties the Purchaser is acquiring WinZip Holdings on an
"as is, where is" basis. Without limiting the generality of the foregoing,
except as expressly set forth in this Article III, (i) the Seller makes no
implied representations or warranties of any kind, (ii) the Seller makes no
representations or warranties of any kind concerning matters occurring after the
Closing Date, including but not limited to the financial performance of the
Company after the Closing Date, (iii) the Seller makes no representations or
warranties of any kind relating, directly, or indirectly, to intellectual
property assets or intellectual property issues (including the Owned
Intellectual Property), including, but not limited to, any agreements, licenses,
liabilities, ownership, performance, software "bugs", design flaws, security
vulnerabilities, warranties as to merchantability, fitness for a particular
purpose, or suitability of software, title or infringement issues, or rights or
authority or any other matters relating thereto, and (iv) neither written
communications or verbal statements made by any officer, employee, agent,
advisor or consultant of the Seller or any WinZip Entity, nor information
furnished or set forth or obtained elsewhere, whether orally or in writing, or
pursuant to any due diligence investigation, shall be deemed a representation or
warranty of any kind and the Purchaser may not rely on any such written
communications, verbal statements or information.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
Section 4.01 Authority; Binding Nature of Agreement. The Purchaser has
all power, capacity and authority necessary to enter into and to perform its
obligations under this Agreement and each Transaction Document. This Agreement
and each Transaction Document constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to (i) Laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) Laws governing
specific performance, injunctive relief and other equitable remedies.
-17-
Section 4.02 Non-Contravention. Neither the execution and delivery of
this Agreement or any Transaction Document by the Purchaser nor the performance
by the Purchaser pursuant hereto or thereto, will (a) violate the Purchaser's
Articles of Incorporation or bylaws, (b) result in a violation or breach of, or
permit any third parry to rescind any term or provision of, or constitute a
default under, any indenture, mortgage, deed of trust or other Contract, license
or other agreement to which the Purchaser is a party or by which the Purchaser
or any of the Purchaser's property or assets is bound, (c) violate any Law,
order, award, judgment, or decree applicable to or binding upon the Purchaser,
or any permit, license or approval of any Governmental Authority, or (d) require
any notice to, or consent, approval, order or authorization of, or the
registration, declaration or filing with, any Governmental Authority or other
third party.
Section 4.03 Due Incorporation; Good Standing. The Purchaser is a
corporation duly continued and validly existing under the federal laws of Canada
and has all necessary, power and authority: (i) to conduct its business in the
manner currently being conducted; (ii) to own and use its assets in the manner
they are currently owned and used; and (iii) to consummate the Transactions.
Section 4.04 Corel Shares. All of the Corel Shares have been duly and
validly authorized and issued and are fully-paid and non-assessable. None of the
Corel Shares are reserved for any purpose. All of the Corel Options have been
duly and validly authorized and issued. Sufficient common shares of the
Purchaser have been reserved for issuance pursuant to the Corel Options.
Section 4.05 Additional Representations and Warranties of the
Purchaser.
(a) Access to Data. The Purchaser has had an opportunity to discuss
the Company's Business, management and financial affairs with the Company's
management, and it has been given access to copies of documents, which it has
requested.
(b) No Reliance on Certain Types of Advice. The Purchaser is not
relying on the Seller for advice with respect to tax considerations, the
suitability of its investment in WinZip Holdings and in the Company or legal or
economic considerations.
(c) Marketability. The Purchaser understands that WinZip Holdings is
closely held and that there is no public market for resale of the WinZip Shares.
It understands that it is possible that a market for the WinZip Shares will not
ever develop. As a consequence, the Purchaser understands that it may not be
able to liquidate its investment in the WinZip Shares, even in the event of an
emergency. The Purchaser also understands that, for the foregoing reasons, the
WinZip Shares may not be readily accepted as collateral for a loan.
-18-
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
OF THE SELLER AND WINZIP HOLDINGS
The Seller and WinZip Holdings hereby covenant and agree as follows:
Section 5.01 Publicity. WinZip Holdings and the Seller covenant and
agree that any and all publicity (whether written or oral) and notices to
third-parties concerning the Transactions shall be subject to the prior written
approval of the Purchaser. The Seller shall assist the Purchaser in informing
the personnel and management of the Company of the change in the ownership of
the Company; provided always that such communications shall be made only by or
with the prior approval of the Purchaser.
Section 5.02 Confidential Information. The Seller acknowledges that
after the Closing the Purchaser and the Company could be irreparably damaged if
confidential information of the Company or the Business were disclosed to or
utilized on behalf of any Person other than the Purchaser and its Affiliates,
and the Seller covenants and agrees that it shall not, following the Closing
Date, without the prior written consent of the Purchaser, disclose (or permit to
be disclosed) or use (or permit to be used) in any way any such information,
unless (a) compelled to disclose such confidential information by Law and, in
any such event, the Seller gives the Purchaser prompt written notice of any such
requirement prior to any such disclosure; (b) such confidential information is
available to the public through no fault of the Seller; or (c) such confidential
information becomes available to the Seller from a third-party who is under no
confidential or fiduciary obligation to the Purchaser or the Company with
respect to such confidential information.
Section 5.03 Brokers and Finders. The Purchaser shall not have any
obligation to pay any fees, expenses or other compensation to any Person dealt
with by the Seller or any WinZip Entity in connection with this Agreement and
the Transactions; any such fees, expenses and other compensation shall be the
sole responsibility of the Seller; and the Seller hereby agrees to indemnify and
save the Purchaser and each WinZip Entity harmless from any and all Losses
arising from any claim for any such fees, expenses or other compensation.
Section 5.04 Certain Filings. The Seller and WinZip Holdings shall
make, and shall cause each other WinZip Entity to make, all filings with
Governmental Authorities that are required to be made by the Seller, WinZip
Holdings or any other WinZip Entity to carry out the Transactions. The Seller
and WinZip Holdings agree to assist, and shall cause each other WinZip Entity to
assist, the Purchaser in making all such filings, applications and notices as
may be necessary or desirable in order to obtain the authorization, approval or
consent of any Governmental Authority which reasonably may be required in
connection with the consummation of the Transactions.
Section 5.05 Company Information. In addition to taking the actions
specified in Section 7.03, at the Closing, and thereafter upon the Purchaser's
request, the Seller shall furnish any and all information in its possession
about each WinZip Entity relating to periods ending on or prior to the Closing
Date (collectively, "Company Information"), including
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company descriptions and financial information, that the Purchaser may
reasonably request in connection with or as a result of the consummation of the
Transactions.
Section 5.06 Further Assurances. The Seller and WinZip Holdings agree
to, and agree to cause each other WinZip Entity to, execute and deliver such
additional documents and instruments, and perform such additional acts, as the
Purchaser reasonably may request to effectuate or carry out and perform all the
terms, provisions and conditions of this Agreement and the Transactions and to
effectuate the intent and purposes hereof.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PURCHASER
Section 6.01 Brokers and Finders. The Seller shall have no obligation
to pay any fees, expenses or other compensation to any Person dealt with by the
Purchaser in connection with this Agreement and the Transactions; any such fees,
expenses and other compensation shall be the sole responsibility of the
Purchaser; and the Purchaser hereby agrees to indemnify and save the Seller
harmless from any and all Losses arising from any claim for any such fees,
expenses or other compensation.
Section 6.02 Certain Filings. The Purchaser shall make or cause to be
made all filings with Governmental Authorities that are required to be made by
the Purchaser to carry out the Transactions. The Purchaser agrees to assist each
WinZip Entity and the Seller in making all such filings, applications and
notices as may be necessary or desirable in order to obtain the authorization,
approval or consent of any Governmental Authority which reasonably may be
required in connection with the consummation of the Transactions.
Section 6.03 Nondisclosure.
(a) The Purchaser agrees not to, and will cause its representatives
and Affiliates not to, except as required by Law, at any time disclose (i) the
purchase price contemplated by the Original Stock Purchase Agreement, (ii) the
contents of the Original Stock Purchase Agreement or the other agreements
referred to therein, or (iii) the identity of the seller pursuant to the
Original Stock Purchase Agreement. In the event that the Purchaser or any such
representative or Affiliate becomes legally compelled to disclose any such
information, including, without limitation, in connection with the IPO, the
Purchaser shall provide the Seller with prompt written notice of such
requirement so that the Seller may seek a protective order or other remedy or
waive compliance with this Section 6.03(a). In the event that such protective
order or other remedy is not obtained, or the Seller waives compliance with this
Section 6.03(a), the Purchaser shall furnish only that portion of such
confidential information which is legally required to be provided and take all
commercially reasonable steps to obtain assurances that confidential treatment
will be accorded such information as may be reasonably determined by the Seller
to be "sensitive".
(b) Notwithstanding the foregoing, the preceding paragraph shall not
apply to (i) any information that, at the time of disclosure, is publicly
available and was not disclosed in breach of this Agreement or the Original
Stock Purchase Agreement by the Purchaser or the
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Seller, or their representatives or Affiliates, and (ii) communications in the
Ordinary Course of Business with investors that hold an interest, directly or
indirectly, in the Purchaser. The Purchaser agrees and acknowledges that
remedies at Law for any breach of its obligations under this Section 6.03(b) are
inadequate and that in addition thereto the Seller shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach, without the necessity of demonstrating the inadequacy of money
damages.
Section 6.04 Further Assurances. The Purchaser agrees to execute and
deliver such additional documents and instruments, and perform such additional
acts, as the Seller reasonably may request to effectuate or carry out and
perform all the terms, provisions and conditions of this Agreement and the
Transactions and to effectuate the intent and purposes hereof.
ARTICLE VII
CERTAIN OTHER AGREEMENTS
Section 7.01 Use of Name. The Seller acknowledges that the Company
owns the name "WinZip", and any and all variants thereof and all other trade
names, trademarks or service marks under which the Company has ever conducted
its Business. The Seller agrees that the Seller has no right to use or otherwise
exploit such names and further agrees that the Seller has no right to use any
such names together or separately.
Section 7.02 Certain Tax Matters.
(a) The Seller shall be responsible for all transfer, excise, stamp,
sales, use, recording or similar taxes or fees arising out of the sale,
assignment and conveyance of the WinZip Shares by the Seller. The Seller shall
make any filings associated therewith required under applicable Law.
(b) The Purchaser shall cause each WinZip Entity to file when due all
Tax Returns that are required to be filed by such WinZip Entity following the
Closing Date.
(c) After the Closing Date, the Purchaser and the Seller shall:
(i) assist in all reasonable respects (and cause their respective
Affiliates to assist) the other Parties in preparing any Tax Returns which such
Party is responsible for preparing and filing in accordance with this Section
7.02;
(ii) cooperate in all reasonable respects in preparing for any
audits of, or disputes with taxing authorities regarding, and Tax Returns of,
any WinZip Entity;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records and documents relating to Taxes of
any WinZip Entity, except to the extent determined by counsel for the Party
involved to be privileged or work product;
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(iv) provide timely notice to the other in writing of any pending
or threatened tax audit or assessments of any WinZip Entity for any taxable
periods; and
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audits or information
request with respect to any such taxable period.
Section 7.03 Access to Information.
WinZip Holdings will give, and the Seller shall cause WinZip Holdings
to give, between the date hereof and the Closing, full access to the premises,
assets, books, accounts, tax returns, contracts, commitments, records and
personnel of each of the WinZip Entities to the Purchaser and its accountants,
legal advisers and representatives during normal business hours and furnish the
Purchaser and its representatives with all such information relating to the
Business and the Company's affairs and assets as the Purchaser may reasonably
request.
Section 7.04 Conduct of Business Until Closing.
Except as expressly provided in this Agreement or with the prior
written consent of the Purchaser, prior to the Closing the Company and each
other WinZip Entity shall, and the Seller will cause the Company and each other
WinZip Entity to:
(a) operate the Business (including, without limitation, the payment
of payables and the collection of receivables) only in the ordinary course,
consistent with past practice and, to the extent consistent with that operation,
use best efforts to preserve its business organization, including the services
of its officers and employees, and its business relationships with customers,
suppliers and others having business dealings with it;
(b) maintain all its assets, whether owned or leased, in good
condition and repair and maintain insurance upon all its assets comparable in
amount, scope and coverage to that in effect on the date of this Agreement;
(c) satisfy all salary or bonus obligations to employees, as incurred
up until and including the Closing Date (including, without limitation, all
declared and owing 2005 bonus payments);
(d) maintain its books, records and accounts in the ordinary course on
a basis consistent with past practice (including the recording and/or treatment
of accounts receivable and payable); and
(e) do or refrain from doing all acts and things in order to ensure
that the representations and warranties in Article III remain true and correct
in all material respects at the Closing Date (except for any representations and
warranties which are qualified by materiality in Article III, which
representations and warranties are to be strictly true and correct) as if those
representations and warranties were made at and as of the Closing Date, and to
satisfy or cause to be satisfied the conditions in Section 8.02(a) which are
within its control.
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Section 7.05 Negative Covenants.
Except as expressly provided in this Agreement or with the prior
written consent of the Purchaser, prior to the Closing, no WinZip Entity shall,
and the Seller shall ensure that no WinZip Entity shall:
(a) amend its certificate of incorporation, by-laws, constating
documents or other organizational documents;
(b) merge or consolidate with, or acquire all or substantially all the
shares or assets of, any Person;
(c) Transfer, lease, license, sell or otherwise dispose of any of its
assets, other than inventory in the Ordinary Course of Business, consistent with
past practice;
(d) terminate any employee or alter any employee compensation,
benefits or other terms and conditions of employment (provided that the
Purchaser's consent to such an action may not be unreasonably withheld);
(e) declare or pay any dividends (whether in cash, in property or
otherwise) or make any other distributions of any kind in respect of its capital
stock (or other equity interests, as applicable), other than one or more cash
dividends not to exceed, individually or in the aggregate, seven million five
hundred thousand dollars ($7,500,000) at anytime after February 21, 2006, or
purchase, redeem or otherwise acquire or dispose of or issue any shares of
capital stock (or other equity interests, as applicable) or any notes, bonds or
other securities of any kind;
(f) otherwise incur any debt or liabilities outside of the Ordinary
Course of Business;
(g) make any payments outside of the Ordinary Course of Business,
including, without limitation, any payments to Affiliates or payments in respect
of debts or liabilities (other than trade liabilities incurred in the Ordinary
Course of Business and scheduled debt repayments); or
(h) without limiting the generality of this Section 7.05, change the
Company's pricing policies, announce new products, or enter into, renew, amend
or terminate significant Contracts.
Section 7.06 Non-Solicitation.
Neither the Seller (including its directors, officers, employees and
agents) nor any WinZip Entity shall initiate, encourage, cooperate with, provide
non-public information to or participate in any discussions with any third party
(other than their professional advisors) regarding the Transactions or any other
proposed financing of any WinZip Entity or sale of any WinZip Entity's
securities or assets, and the Seller and each WinZip Entity shall immediately
terminate any such discussions currently in progress. If, prior to the earlier
of the Closing and the termination of this Agreement, the Seller or any WinZip
Entity receives an inquiry concerning a proposed transaction that could be
inconsistent with the Transactions, then the Seller or such
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WinZip Entity shall immediately notify the Purchaser of that event and provide
the Purchaser with a copy of that proposal (if in writing) or a summary of that
inquiry (if oral).
Section 7.07 Goodwill.
The Seller and each WinZip Entity covenants and agrees that the Seller
and such WinZip Entity shall not take or omit to take any action which could
directly or indirectly impair the goodwill of the Company or any other WinZip
Entity or the Business or the business reputation or good name of the Company or
any other WinZip Entity.
Section 7.08 Restricted Property. For a period of one (1) year
following the Closing Date, the Seller agrees not to Transfer the Restricted
Property to any Person, including, without limitation, the fund or funds or
other Persons holding an interest in the Seller or any other Affiliates.
Section 7.09 Termination.
This Agreement may be terminated and the Transactions may be abandoned
at any time prior to the Closing by:
(a) mutual written agreement of the Purchaser and the Seller;
(b) either the Purchaser or the Seller, by written notice to the
other, if the Transactions have not been consummated prior to the Drop Dead Date
(provided that the right to terminate this Agreement under this Section 7.09(b)
will not be available to any Party whose failure to fulfill any of its
obligations under this Agreement has been the cause of or resulted in the
failure to consummate the Transactions by the Drop Dead Date); or
(c) either the Purchaser or the Seller, by written notice to the
other, if there will be any applicable Law that makes the consummation of the
Transactions illegal or otherwise prohibited or if any order of a Governmental
Authority of competent jurisdiction restrains or prohibits the consummation of
the Transactions, and that order becomes final and non-appealable.
Sections 5.03, 6.01, 6.03 and 10.01 of this Agreement shall survive
the termination of this Agreement pursuant to this Section 7.09.
ARTICLE VIII
CLOSING
Section 8.01 Time and Place of Closing. The closing of the
Transactions (the "Closing") shall be held at 8:00 a.m. (New York time) on the
Business Day on which all of the Conditions to Closing described in Section 8.02
have been fully satisfied or waived by the appropriate Party or Parties or such
other date as may be mutually agreed upon by the Parties, which date shall in no
event be later than May 15, 2006 (the "Drop Dead Date"), unless such date has
been extended by mutual agreement of the Parties (the "Closing Date"), at the
offices of Torys LLP, 237 Park Avenue, New York, NY or such other place as may
be agreed to in writing.
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Section 8.02 Conditions to Closing.
At the Closing:
(a) The Seller shall have:
(i) delivered the WinZip Shares to the Purchaser by delivering
one or more certificates in negotiable form representing the WinZip Shares. The
certificates evidencing the WinZip Shares shall be (A) duly endorsed in blank or
accompanied by duly executed instruments of transfer duly endorsed in blank; and
(B) accompanied by any necessary documentary or stock transfer stamps or taxes
attached and cancelled. Upon the Closing all rights, title and interest in and
to the WinZip Shares shall immediately vest in the Purchaser;
(ii) delivered to the Purchaser the certificates or other
documentation evidencing each of the WinZip Options, each marked "cancelled" in
accordance with Section 1.02(b);
(iii) delivered to the Purchaser a certificate executed by the
Seller, in form and substance reasonably acceptable to the Purchaser, confirming
that (a) the representations and warranties of the Seller made in or pursuant to
this Agreement are true and correct in all material respects (except for any
representations and warranties which are qualified by materiality in Article
III, which representations and warranties are to be strictly true and correct)
on the Closing Date with the same force and effect as if made at and as of the
Closing Date, (b) the covenants contained in this Agreement to be performed by
the Seller and any WinZip Entity at or prior to the Closing Date have been
performed in all material respects, and (c) neither the Seller nor any WinZip
Entity is in breach of any agreement on its part contained in this Agreement;
(iv) delivered to the Purchaser the Registration Rights
Agreement, executed by the Seller;
(v) delivered to the Purchaser the Lockup Agreement, executed by
the Seller;
(vi) delivered, or caused to be delivered, to the Purchaser all
consents required pursuant to any Contract, Permit or from any Governmental
Authority as a result of the entering into and performance of this Agreement;
(vii) delivered to the Purchaser evidence of the resignations of
each of the directors and officers of WinZip Holdings and each other WinZip
Entity designated by the Purchaser to the Seller; and
(viii) delivered to the Purchaser all documents reasonably
requested by the Purchaser relating to the existence of the Seller and WinZip
Holdings, and the due authorization and consummation of the Transactions and all
other actions and proceedings taken at or before the Closing in connection with
the performance by the Seller and WinZip Holdings of their obligations under
this Agreement, which documents shall be in form and substance reasonably
satisfactory to the Purchaser.
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(b) The Purchaser shall have:
(i) delivered the Corel Shares to the Seller in accordance with
Section 2.01(b) by delivering a certificate in negotiable form representing the
Corel Shares. Upon the Closing, subject to Section 7.08, all rights, title and
interest in and to the Corel Shares shall immediately vest in the Seller;
(ii) delivered to the Seller the aggregate number of Corel
Options set forth in Column C on Annex C, in each case upon the terms set forth
in Columns D and E on Annex C, by delivering an option certificate, in the form
attached as Exhibit A, in the name of each of the WinZip Optionholders to the
Seller in accordance with Section 1.02(d);
(iii) delivered to the Seller the Registration Rights Agreement,
executed by the Purchaser;
(iv) delivered to the Seller evidence that the WinZip Entities,
on a consolidated basis, have Net Debt of no more than sixteen million five
hundred thousand dollars ($16,500,000); and
(v) delivered to the Seller all documents reasonably requested by
the Seller relating to the existence of the Purchaser, and the due authorization
and consummation of the Transactions and all other actions and proceedings taken
at or before the Closing in connection with the performance by the Purchaser of
its obligations under this Agreement, which documents shall be in form and
substance reasonably satisfactory to the Seller.
(c) In addition, the Closing shall be expressly conditioned upon the
occurrence of the following events:
(i) the IPO shall have been consummated;
(ii) no material adverse or prospective adverse change in the
condition (financial or otherwise), results of operation, assets, properties,
Business or prospects of any WinZip Entity shall have occurred;
(iii) no fire, war, strike, riot, labor dispute, technical
failure or act of God shall have occurred (1) that restrains or prohibits the
Company for a period of at least five (5) Business Days from carrying on in any
material respect the Business as the Business is being carried on at the date of
this Agreement, or (2) has or would reasonably be expected to have a Material
Adverse Effect on the Business, assets, financial condition, results of
operations or prospects of the Company and/or the Business or which would
materially and adversely effect the consummation of the Transactions;
(iv) no Laws shall have been enacted that restrain or prohibit
the Company from carrying on the Business as the Business is being carried on at
the date of this Agreement; and
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(v) no proceeding shall be pending by any Person to restrain or
prohibit (1) the consummation of the Transactions, or (2) the Company from
carrying on the Business as the Business is being carried on at the date of this
Agreement.
ARTICLE IX
INDEMNIFICATION
Section 9.01 Indemnification of the Purchaser.
(a) The Seller (A) hereby agrees to defend, indemnify, and hold
harmless the Purchaser, each WinZip Entity and each of their respective
Affiliates, and each of their respective directors, managers, officers,
employees, representatives, agents, successors and assigns (individually, and
collectively, the "Purchaser Indemnified Parties") against and in respect of any
and all Losses caused by or resulting or arising from (i) the breach by WinZip
Holdings or the Seller of any of their covenants or agreements hereunder or
under any of the Transaction Documents (limited, in the case of WinZip Holdings,
to breaches occurring at or before Closing); and (ii) the breach or inaccuracy
of any of the representations or warranties made by the Seller herein (including
in any Exhibit or Schedule) or in any Transaction Document.
(b) The Purchaser Indemnified Parties shall promptly after any of them
becomes aware of any circumstance which might reasonably be expected to become
the subject matter of a claim to be made by any of them against the Seller under
this Agreement (a "Purchaser Claim"), advise the Seller in writing of such
circumstance, and shall provide the Seller, from time to time, such information
that the Seller shall reasonably request in connection therewith; provided that
any delay or failure to so advise the Seller shall not relieve the Seller from
any liability except to the extent that the defense of such Purchaser Claim is
prejudiced by such delay or failure. The Purchaser shall have exclusive control
and discretion in the conduct of the defense of any such matter, however, the
Seller shall not be required to make any indemnification hereunder with respect
to any amounts paid in settlement except to the extent the Seller have approved
the terms thereof, acting reasonably. The Seller shall have the right to employ
separate counsel in any action brought in respect of any matter which is or may
be the subject of a Purchaser Claim for indemnification hereunder, and shall
have the right to participate in the defense thereof, but the fees and expenses
related thereto, including fees and expenses of counsel, shall be at the expense
of the Seller.
(c) Notwithstanding anything to the contrary contained herein, the
liability of the Seller to Purchaser Indemnified Parties with respect to claims
for indemnification pursuant to Section 9.01(a) is subject to the following:
The Seller shall not be liable to Purchaser Indemnified Parties with
respect to claims for indemnification pursuant to this Section 9.01:
(i) (A) to the extent that the dollar value of the amounts
indemnifiable for such breaches exceeds an aggregate of the product of (i)
ninety-three thousand
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two hundred thirty-eight (93,238) multiplied by (ii) the Per Share Consideration
(the "General Indemnity Cap"); and
(B) unless and until the aggregate amounts indemnifiable for
such breaches exceeds the product of (i) twenty-three thousand two hundred
ninety-nine (23,299) multiplied by (ii) the Per Share Consideration (the
"Threshold"), at which time all such amounts (including those below the
Threshold) shall be indemnifiable (subject to the General Indemnity Cap).
(ii) The limitations set forth in Section 9.01(c)(i)(A) above
shall not apply with respect to fraud or to claims respecting breaches of the
representations and warranties set forth in Section 3.04 (Capitalization; Title
to Shares), and Section 3.15 (Tax Matters) (collectively, the "Seller Specified
Representations"), provided that, for the purposes of the application of this
Section 9.01(c)(i)(B)(ii) only (i.e., not for purposes of the use of the defined
term "Seller Specified Representations" elsewhere in this Agreement), the term
"Seller Specified Representations" shall not include representations and
warranties in Section 3.04 which apply to the Seller Tax Reorganization, which
representations and warranties, for the avoidance of doubt, shall be subject to
the Threshold and the General Indemnity Cap;
(iii) unless such claim is asserted in writing on or prior to the
applicable Survival Expiration Date, if any.
(d) Purchaser Claims shall be satisfied first by recourse to the
Restricted Property and thereafter by cash payments from Seller to Purchaser.
For the avoidance of doubt, in full or partial settlement of any Purchaser
Claims, the Seller shall surrender out of the Restricted Property first (i) any
cash that forms part of the Restricted Property, and, thereafter, (ii) a number
of Corel Shares equal to a fraction, the numerator of which shall be the
remaining aggregate dollar amount payable under such Purchaser Claim and the
denominator of which shall be the Per Share Consideration, as set forth in
Section 2.01 (rounding down to the nearest whole share).
Section 9.02 Indemnification of the Seller.
(a) The Purchaser hereby agrees to defend, indemnify, and hold
harmless the Seller and its Affiliates, and each of their respective directors,
managers, officers, employees, representatives, agents, successors and assigns
(individually, and collectively, the "Seller Indemnified Parties") against and
in respect of any and all Losses caused by or resulting or arising from (i) the
breach by the Purchaser of any of its covenants or agreements hereunder or under
any of the Transaction Documents; and (ii) the breach or inaccuracy of any of
the representations or warranties made by the Purchaser herein (including in any
Exhibit or Schedule) or in any Transaction Documents.
(b) The Seller Indemnified Parties shall promptly after any of them
becomes aware of any circumstance which might reasonably be expected to become
the subject matter of a claim to be made by any of them against the Purchaser
under this Agreement (a "Seller Claim"), advise the Purchaser of such
circumstance, and shall afford the Purchaser, from time to time, such
information as the Purchaser shall reasonably request in connection therewith;
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provided that any delay or failure to so advise the Purchaser shall not relieve
the Purchaser from any liability except to the extent that the defense of such
Seller Claim is prejudiced by such delay or failure.
(c) Notwithstanding anything to the contrary contained herein, the
Purchaser shall not be liable to Seller Indemnified Parties with respect to
claims for indemnification for breaches of representations and warranties
hereunder pursuant to Section 9.02(a):
(i) to the extent that the aggregate of all amounts indemnifiable
hereunder exceeds the General Indemnity Cap, except that the foregoing
limitations shall not apply with respect to fraud or to claims respecting
breaches of the representations and warranties set forth in Section 4.04 (Corel
Shares), (collectively, the "Purchaser Specified Representations");
(ii) unless and until the aggregate amounts indemnifiable for
such breaches exceeds the Threshold, at which time all such amounts (including
those below the Threshold) shall be indemnifiable (subject to the General
Indemnity Cap); and
(iii) unless such claim is asserted in writing on or prior to the
applicable Survival Expiration Date, if any.
(d) Seller Claims shall be satisfied exclusively by cash payments from
Purchaser to Seller.
Section 9.03 Survival of Representations and Warranties. The
representations and warranties of the Parties contained herein shall expire on
the first anniversary of the Closing Date; notwithstanding any investigation at
any time made by or on behalf of any Party, and shall not survive beyond such
period, provided that if written notice is properly given under this Article IX
with respect to any matter allegedly the subject of this Article IX prior to
such period, the obligations under this Article IX shall continue in force and
effect indefinitely until the applicable claim is finally resolved and provided
further that the Seller Specified Representations and the Purchaser Specified
Representations shall survive for the applicable statute of limitations or
applicable period of reassessment (for each date, the applicable "Survival
Expiration Date").
Section 9.04 Additional Indemnification Provisions.
(a) Except in the case of fraud, from and after the Closing, the
provisions of this Article IX shall be the exclusive basis for the assertion of
claims against, or the imposition of liability on, any Party in respect of the
Transactions, including any breach or alleged breach of this Agreement in each
case other than claims for specific performance.
(b) As used herein, "Losses" means any and all losses, claims,
assessments, demands, damages, liabilities, diminution in value, obligations,
costs and expenses, including without limitation, reasonable fees and
disbursements of counsel sustained or incurred by the Purchaser Indemnified
Parties (or any of them) or the Seller Indemnified Parties (or any of them), as
the case may be, in any action, dispute, claim or proceeding between any of the
Purchaser Indemnified Parties, on the one hand, and any of the Seller
Indemnified Parties, on the other hand, or involving a third-party claim against
any of the Purchaser Indemnified Parties or
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any of the Seller Indemnified Parties, as the case may be, and other reasonable
out of pocket costs and expenses incurred in connection with investigating,
preparing or defending any action, suit or proceeding, commenced or threatened,
or any claim whatsoever.
(c) Any payment by the Purchaser or the Seller under this Agreement,
other than the issuance of the Corel Shares, shall be treated for tax purposes
as an adjustment to the Consideration.
(d) No Purchaser Indemnified Person shall be required to make any
claim against any other Person or to take any other action to pursue any claim
hereunder against any of the Seller Indemnifying Persons. None of the Seller
Indemnifying Persons shall be entitled to any indemnification, right of
contribution, right of subrogation or other right of recovery from any WinZip
Entity in connection with any claim made by any Purchaser Indemnified Person
against the Seller Indemnified Persons (or any of them), hereunder, all of which
are expressly waived and released by each of the Seller Indemnified Persons.
ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses. Except as otherwise specifically provided
herein, each Party shall pay its own expenses incidental to negotiations,
preparation of agreements and the Closing; provided that the Purchaser shall pay
reasonable expenses incurred by the Seller in connection with the IPO.
Section 10.02 Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally, sent by telecopy, sent by federal
Express or other nationally recognized overnight carrier, or sent by registered
or certified mail, postage prepaid, as follows:
(a) If to the Seller:
Vector CC Holdings IV, SRL
c/o Corporate Services Limited
Erin Court
Bishop's Court Hill
St. Michael, Barbados
Telecopy No.: 436-7057
with a copy to:
Vector Capital Corporation
456 Montgomery St., 19th Floor
San Francisco, CA 94104
Attention: Dewey Chambers
Telecopy No.: (415) 293-5100
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(b) If to WinZip Holdings:
Cayman Ltd. Holdco
c/o Walkers SPV Limited
Walker House, Mary Street, P.O. Box 908GT
George Town, Grand Cayman
Cayman Islands
with a copy to the Purchaser at the address set forth in Section
10.02(c).
(c) If to the Purchaser:
Corel Corporation
1600 Carling Avenue
Ottawa, Ontario K17 8R7
Canada
Attention: Christopher DiFrancesco
Telecopy No.: (613) 725-2691
Any of the above addresses may be changed at any time by notice given
as provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied or by overnight courier, and five (5) Business
Days after the date of mailing, if mailed by registered or certified mail.
Section 10.03 Entire Agreement. This Agreement (including the Annexes,
Exhibits and Schedules) and the documents referred to herein (including, for
greater certainty, the Transaction Documents) contain the entire agreement among
the Parties with respect to the Transactions and supersedes all prior
agreements, understandings, negotiations and discussions, whether written or
oral, of the Parties, and no amendment or modification hereof shall be effective
unless in writing and signed by the Party against which it is sought to be
enforced.
Section 10.04 Severability. If one or more of the provisions of this
Agreement are held to be unenforceable under applicable law, such provisions
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.
Section 10.05 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the Parties.
(b) No Party may assign any of its rights, interests or obligations
under this Agreement without the written approval of the Seller in the case of
the Purchaser, and the Purchaser in the case of the Seller; provided, however,
that the Purchaser may assign any and all of its rights and interests hereunder
(i) to any Affiliate; (ii) in connection with a sale of all or substantially all
of the assets of the Purchaser or any of its corporate parents, or direct or
indirect consolidated subsidiaries; or (iii) to any bank or other financial
institution which has extended
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credit to the Purchaser or any of its Affiliates. Any attempted assignment in
violation of this Section 10.05(B) shall be null and void.
Section 10.06 Governing Law. The validity of this Agreement and of any
of its terms or provisions, as well as the rights and duties of the Parties
under this Agreement, shall be construed pursuant to and in accordance with the
laws of the State of New York, without regard to the conflicts of laws
provisions thereof.
Section 10.07 Waiver of Jury Trial. EACH OF THE PARTIES WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. EACH OF THE PARTIES HEREBY AGREES THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT THE PARTIES MAY FILE A COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
Section 10.08 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Any counterpart or other
signature hereupon or upon a Transaction Document delivered by facsimile shall
be deemed for all purposes as constituting good and valid execution and delivery
of this Agreement or the Transaction Document, as applicable, by such Party.
Section 10.09 Effect of Investigations. Any due diligence review,
audit or other investigation or inquiry undertaken or performed by or on behalf
of the Purchaser shall not limit, qualify, modify or amend the representations,
warranties and covenants of, and indemnities by, the Seller made or undertaken
pursuant to this Agreement and the Transaction Documents, irrespective of the
knowledge and information received (or which should have been received)
therefrom by Purchaser.
Section 10.10 Waivers. The failure of any Party at any time or times
to require performance of any provision hereof shall in no manner affect its
right at a later time to enforce the same. No breach of any term, covenant,
representation or warranty contained in this Agreement shall be effective unless
in writing, and no waiver in any one or more instances shall be deemed to be a
further or continuing waiver of any such breach in other instances or a waiver
of any other breach of any other term, covenant, representation or warranty.
Section 10.11 No Third-Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the Parties and their permitted
assigns and nothing herein, whether express or implied, is intended to or shall
confer upon any other Person (other than
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Purchaser Indemnified Parties and Seller Indemnified Parties) any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
Section 10.12 Construction.
(a) Unless the context otherwise requires: (i) "or" is not exclusive;
(ii) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP; (iii) terms defined in this Agreement in their singular or
plural forms have correlative meanings when used herein in their plural or
singular forms, respectively; (iv) pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require; (v) any date specified for any action that is not a Business Day shall
be deemed to mean the first Business Day after such date; (vi) a reference to a
Person includes its successors and permitted assigns; (vii) the word "including"
shall mean "including without limitation"; (viii) except where otherwise
expressly provided, all references herein to dollar amounts shall mean United
States dollars; (ix) any reference to any federal, state, local or foreign
statute or law shall be to such statute or law as amended at the applicable
time, and shall be deemed also to refer to all rules and regulations promulgated
thereunder at the applicable time; and (x) the inclusion of headings and a table
of contents in this Agreement is for convenience of reference only and shall not
affect the construction or interpretation hereof.
Section 10.13 Preparation of Document. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties and no presumption or burden
of proof shall rise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
* * *
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
Parties as of the date first above written.
COREL CORPORATION:
By /s/ Christopher DiFrancesco
-------------------------------------
Name: Christopher DiFrancesco
Title: V P Legal,
General Counsel and Secretary
VECTOR CC HOLDINGS IV, SRL:
By /s/ Chris Nicholson
-------------------------------------
Name: Chris Nicholson
Title: Authorized Signatory
---------------------------------
CAYMAN LTD. HOLDCO:
By /s/ Chris Nicholson
-------------------------------------
Name: Chris Nicholson
Title: Authorized Signatory
---------------------------------
For the purposes of Section 1.02 only:
WINZIP COMPUTING LLC:
By /s/ Chris Nicholson
-------------------------------------
Name: Chris Nicholson
Title: Authorized Signatory
---------------------------------
[WinZip Acquisition Agreement Signature Page]
Annex A
Definitions
Definitions. Capitalized terms used in this Agreement shall have the
following meanings:
"AFFILIATE" shall mean, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person. For the purposes of
this definition, "control" when used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership, directly or indirectly, of more than 10% of the voting or equity
securities or other interests of any such Person and/or by contract or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"AGREEMENT" shall mean this Stock Purchase Agreement, including the
preamble, recitals and all Annexes, Exhibits and Schedules, and all amendments
or restatements, as permitted, and the expressions "hereof", "herein", "hereto",
"hereunder", "hereby" and similar expressions refer to this Stock Purchase
Agreement; and unless otherwise indicated, references to "preamble", "recitals",
"Article", "Section", "Exhibit" or "Schedule" mean the preamble, recitals or the
specified Article, Section, Exhibit or Schedule of this Agreement.
"BALANCE SHEET" shall mean the unaudited balance sheet of the Company as of
February 28, 2006, a true and correct copy of which has been delivered to the
Purchaser.
"BENEFIT PLANS" shall have the meaning set forth in Section 3.20.
"BUSINESS" shall have the meaning set forth in the recitals.
"BUSINESS DAY" shall mean a day other than a Saturday or Sunday or other
day on which commercial banks in New York, New York are authorized or required
by law to close.
"CLOSING" shall have the meaning set forth in Section 8.01.
"CLOSING DATE" shall have the meaning set forth in Section 8.01.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall mean, collectively, WinZip Computing and WinZip
International, and, for the purposes of Article III only, unless the context
shall otherwise require, includes all predecessor entities of WinZip Computing
and WinZip International.
"COMPANY CONTRACT" shall mean any Contract of which the Seller is aware to
which the Company is a party or, to the Seller's knowledge, by which the Company
is bound.
"COMPANY INFORMATION" shall have the meaning set forth in Section 5.05.
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"COMPANY RETURNS" shall have the meaning set forth in Section 3.15.
"CONSIDERATION" shall have the meaning set forth in Section 2.01(a).
"CONTRACTS" shall mean any agreement, contract, subcontract or other
legally binding commitment or undertaking, whether written or oral.
"COREL SHARES" shall have the meaning set forth in Section 2.01(a).
"DROP DEAD DATE" shall have the meaning set forth in Section 8.01.
"EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in Section
3.16(b).
"ENCUMBRANCES" shall mean Lien, pledge, security interest, right of first
refusal, preemptive right or community property interest.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign laws,
rules and regulations relating to environmental health and safety matters, the
pollution or protection of the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) or the protection of
human health and safety from environmental hazards, including laws, rules and
regulations relating to emissions, discharges, releases or threatened releases
of Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.05.
"GAAP" shall mean United States generally accepted accounting principles,
as in effect from time to time, consistently applied.
"GENERAL INDEMNITY CAP" shall have the meaning set forth in Section
9.01(c)(i)(A).
"GOVERNMENTAL AUTHORITY" shall mean the collective reference to any court,
tribunal, government, or governmental or administrative agency, authority or
instrumentality, federal, state or local, or domestic or foreign, or any
arbitrator having competent jurisdiction over the matter or matters in question.
"GOVERNMENTAL AUTHORIZATION" shall mean any: (a) permit, license,
certificate, franchise, permission, clearance, registration, qualification or
authorization issued, granted, given or otherwise made available by or under the
authority of any Governmental Authority or pursuant to any Law; or (b) right
under any Contract with any Governmental Authority.
"HAZARDOUS SUBSTANCES" shall mean any chemical, compound, material or
substance that is defined, listed in, or otherwise classified pursuant to, any
of the Environmental Laws as a "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance" or "toxic pollutant", (2) petroleum,
natural gas, natural gas liquids, liquefied natural gas, synthetic gas usable
for fuel and drilling fluids, produced waters, and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources and
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(3) any "medical waste" as defined in any of the Environmental Laws or the
disposition of which is regulated by any law, ordinance or regulation.
"INTELLECTUAL PROPERTY" shall mean any or all of the following: (i) all
Patents; (ii) all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation relating to any of the
foregoing; (iii) all copyrights, copyright registrations and applications
therefor and all other rights corresponding thereto throughout the world; (iv)
all industrial designs and any registrations and applications therefor
throughout the world; (v) all trade names, logos, common law trademarks and
service marks; trademark and service mark registrations and applications
therefor and all goodwill associated therewith throughout the world; (vi) all
databases and data collections and all rights therein throughout the world;
(vii) all computer software, including all source code, object code, firmware,
development tools, files, records and data, all media on which any of the
foregoing is recorded, all web addresses, sites and domain names, and (viii) all
documentation related to any of the foregoing.
"INTERNAL-USE-ONLY IP" shall mean software that is used in the conduct of
the Company's business as it is currently conducted, but is not included in the
Software Product. Examples of Internal-Use-Only IP include, without limitation,
(i) the Company's database system, (ii) the software that the Company uses to
track downloads, and (iii) the Company's e-mail management software.
"IPO" shall mean the initial public offering of approximately 6,500,000
common shares of the Purchaser in the United States and in Canada by the
Purchaser and certain shareholders of the Purchaser.
"KNOWLEDGE" as used with respect to WinZip Holdings and/or the Seller means
the actual knowledge of any executive officer of WinZip Holdings and/or the
Seller, as appropriate.
"LAW" shall mean any federal, state, local, municipal, foreign or other
law, statute, constitution, principle of common law, resolution, ordinance,
code, edict, decree, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Authority, including, without limitation, federal
securities laws.
"LEASED REAL PROPERTY" shall have the meaning specified in Section 3.11.
"LEGAL PROCEEDING" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Authority or any arbitrator or arbitration panel.
"LOCKUP AGREEMENT" shall mean the Lockup Agreement, in the form attached
hereto as Exhibit C.
"LICENSED INTELLECTUAL PROPERTY" shall mean all Intellectual Property that
is licensed or sublicensed to the Company by a third party.
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"LIENS" shall mean all liens, mortgages, charges, security interests,
covenants, easements, restrictions, adverse claims or other encumbrances of any
kind whatsoever and howsoever arising.
"LOSSES" shall have the meaning set forth in Section 9.04(b).
"MATERIAL CONTRACTS" shall have the meaning set forth in Section 3.13(b).
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
businesses, properties, assets, condition (financial or other), results of
operations and/or prospects of any WinZip Entity and/or the Business.
"NET DEBT" shall mean long-term indebtedness of the WinZip Entities, on a
consolidated basis, minus cash.
"ORDINARY COURSE OF BUSINESS" shall mean the ordinary course of business of
the Company, consistent with past practice.
"ORIGINAL STOCK PURCHASE AGREEMENT" shall mean that certain Stock Purchase
Agreement dated as of January 18, 2005 pursuant to which Vector WZ Holdings,
Ltd., a Cayman Islands corporation acquired all of the issued and outstanding
securities of WinZip Computing, Inc., a Connecticut corporation.
"OWNED INTELLECTUAL PROPERTY" shall mean all Intellectual Property that is
owned by any of the WinZip Entities.
"PARTY" shall mean each of the parties to this Agreement.
"PATENTS" shall mean all United States and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof.
"PER SHARE CONSIDERATION" shall have the meaning set forth in Section
2.01(a).
"PERMITS" shall have the meaning set forth in Section 3.17(b).
"PERSON" shall mean any individual, partnership, venture, unincorporated
association, organization, syndicate, corporation, limited liability company or
other entity, trust, or trustee, executor, administrator or other legal or
personal representative, or Governmental Authority.
"PURCHASER" shall have the meaning set forth in the preamble.
"PURCHASER CLAIM" shall have the meaning set forth in Section 9.01(b).
"PURCHASER INDEMNIFIED PARTIES" shall have the meaning set forth in Section
9.01(a).
"PURCHASER SPECIFIED REPRESENTATIONS" shall have the meaning set forth in
Section 9.02(c)(i).
A-4
"QUALIFIED PLAN" shall have the meaning set forth in Section 3.16(d).
"REAL PROPERTY" shall have the meaning set forth in Section 3.11.
"REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (i) Patents; (ii) registered trademarks, applications
to register trademarks, intent-to-use applications, or other registrations or
applications related to trademarks; (iii) registered copyrights and applications
for copyright registration; and (iv) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other public
legal authority.
"REGISTERED OWNED INTELLECTUAL PROPERTY" shall mean Owned Intellectual
Property that is Registered Intellectual Property.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, in the form attached hereto as Exhibit B.
"RESTRICTED PROPERTY" shall mean the Restricted Shares, together with all
dividends (whether cash, stock or otherwise) or other distributions made or paid
in respect of such Restricted Shares after the Closing Date.
"RESTRICTED SHARES" shall mean ninety-three thousand two hundred
thirty-eight (93,238) Corel Shares.
"SECURITIES ACT" shall have the meaning set forth in Section 4.05(a).
"SELLER" shall have the meaning set forth in the preamble.
"SELLER CLAIM" shall have the meaning set forth in Section 9.02(b).
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in Section
9.02(a).
"SELLER SPECIFIED REPRESENTATIONS" shall have the meaning set forth in
Section 9.01(c)(i).
"SELLER TAX REORGANIZATION" shall mean any or all structuring steps
undertaken by the Seller and/or its Affiliates in respect of the WinZip Entities
subsequent to January 18, 2005.
"SOFTWARE PRODUCT" shall mean the English-language version of the WinZip
software product that is delivered by the Company to the customer on a
distribution diskette (or the downloadable equivalent thereof) in the form in
which it was delivered at any time prior to the date of this Agreement
(including any beta versions that were released to the public).
"SURVIVAL EXPIRATION DATE" shall have the meaning set forth in Section
9.03.
"TAX RETURNS" shall mean any return, report, document, statement or form
required to be filed with respect to any Taxes (including any schedules required
to be attached thereto),
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including information returns, claims for refund, amended returns and
declarations of estimated Tax.
"TAXES" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Authority.
"THRESHOLD" shall have the meaning set forth in Section 9.01(c)(i)(B).
"TRANSACTION DOCUMENTS" shall mean, collectively, the agreements,
instruments, certificates and other documents delivered pursuant hereto or
otherwise in connection herewith, including, without limitation, the
Registration Rights Agreement and the Lockup Agreement.
"TRANSACTIONS" shall mean, collectively, the transactions contemplated by
this Agreement and the Transaction Documents.
"TRANSFER" shall mean to directly or indirectly transfer, sell, assign,
hypothecate, pledge, encumber, mortgage, charge, grant a security interest in,
exchange, gift, bequest or otherwise dispose of or enter into any other
arrangement by which possession, legal title, beneficial ownership or the right
to receive proceeds or benefits of or from the subject matter passes from one
Person to another, or to the same Person in a different capacity, whether or not
voluntary and whether or not for value, and any agreement to effect any of the
foregoing, and the words "Transferred", "Transferring" and similar words have
corresponding meanings.
"WINZIP COMPUTING" shall have the meaning set forth in the preamble.
"WINZIP ENTITIES" shall mean, collectively, WinZip Holdings and each direct
or indirect subsidiary of WinZip Holdings set forth on Part 3.01 of the
Disclosure Schedule, including, without limitation, WinZip Computing and WinZip
International.
"WINZIP HOLDINGS" shall have the meaning set forth in the preamble.
"WINZIP INTERNATIONAL" shall mean WinZip International, LLC, a Delaware
limited liability company.
"WINZIP OPTION PLAN" shall have the meaning set forth in the recitals.
"WINZIP OPTIONS" shall have the meaning set forth in the recitals.
"WINZIP OPTIONHOLDERS" shall have the meaning set forth in the preamble.
"WINZIP SHARES" shall have the meaning set forth in the preamble.
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Annex B
WinZip Holdings Capitalization
C D
B NO. OF SHARES OF PERCENTAGE
CLASS OF STOCK STOCK HELD BY INTEREST IN E
A HELD BY SUCH SUCH APPLICABLE PERCENTAGE
SHAREHOLDER SHAREHOLDER SHAREHOLDER CLASS INTEREST
- ----------- --------------- ---------------- ----------- ----------
Vector CC
Holdings IV,
SRL ordinary shares 20,000 100% 100%
B-1