Exhibit 2.2
TORYS DRAFT DATE 4/3/06
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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
April -, 2006
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TABLE OF CONTENTS
PAGE
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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)
PAGE
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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)
PAGE
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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 April -, 2006 by and among
Cayman Ltd. Holdco, a Cayman Islands corporation ("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.
W I T N E S S E T H:
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;
- 9 -
(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
- 12 -
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 or (ii) city or local Taxes.
(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.
(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
- 13 -
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.
- 15 -
(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
- 19 -
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 10:00 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 April 21, 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, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ 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 to the Purchaser evidence, in form and
substance reasonably satisfactory to the Purchaser, of the repayment in full of
the WFF Indebtedness;
(vii) 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;
(viii) 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;
(ix) delivered to the Purchaser 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
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(x) 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.
(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 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;
- 28 -
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 any of the Seller Indemnified
Parties, as the case may be, and other reasonable out of pocket
- 29 -
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
▇▇▇▇ Court
▇▇▇▇▇▇'▇ Court Hill
St. ▇▇▇▇▇▇▇, Barbados
Telecopy No.: 436-7057
with a copy to:
Vector Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to WinZip Holdings:
Cayman Ltd. Holdco
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c/o Walkers SPV Limited
▇▇▇▇▇▇ House, ▇▇▇▇ Street, P.O. Box 908GT
▇▇▇▇▇▇ 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
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 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.
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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 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.
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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.
* * *
- 33 -
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Parties as of the date first above written.
COREL CORPORATION:
By
-----------------------------------
Name:
Title:
VECTOR CC HOLDINGS IV, SRL:
By
-----------------------------------
Name:
Title:
CAYMAN LTD. HOLDCO:
By
-----------------------------------
Name:
Title:
For the purposes of Section 1.02 only:
WINZIP COMPUTING LLC:
By
-----------------------------------
Name:
Title:
- 34 -
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 ▇▇▇▇ 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 - 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).
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"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.
"WFF CREDIT AGREEMENT" shall mean that certain Credit Agreement, dated
as of June 29, 2005, by and among WinZip International, as Borrower, WinZip
Holdings, as Parent Guarantor, ▇▇▇▇▇ Fargo Foothill, Inc., as Arranger and
Administrative Agent, and the Lenders signatory thereto.
"WFF INDEBTEDNESS" shall mean any indebtedness or other obligation of
any WinZip Entity under the WFF Credit Agreement and related documentation.
"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.
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"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
A B C D E
NO. OF SHARES OF PERCENTAGE
CLASS OF STOCK STOCK HELD BY INTEREST IN
HELD BY SUCH SUCH APPLICABLE PERCENTAGE
SHAREHOLDER SHAREHOLDER SHAREHOLDER CLASS INTEREST
----------- ----------- ----------- ----- --------
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Annex C
Corel Options
A B C D E
EXERCISE PRICE OTHER MATERIAL
WINZIP NUMBER OF NUMBER OF OF COREL TERMS OF COREL
OPTIONHOLDER WINZIP OPTIONS COREL OPTIONS OPTIONS OPTIONS
------------ -------------- ------------- ------- -------
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