EXHIBIT 10.3
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is entered into this 26/th/ day of September, 1997, among
Software AG Americas, Inc., a corporation incorporated under the laws of the
Commonwealth of Virginia (the "Guarantor"), Software AG Systems (Canada) Inc., a
corporation incorporated under the Business Corporations Act (Ontario) (the
"Buyer"), Xxxxxx X. Xxxxxx and Xxxxx Xxxxxx, of the Township of Puslinch in the
Province of Ontario (collectively, the "Principals"), and Caelum Investments
Inc., a corporation incorporated under the Business Corporations Act (Ontario)
(the "Seller");
WITNESSETH:
WHEREAS the Seller is the holder of all of the issued and outstanding securities
in the capital of R.D. Nickel & Associates Incorporated, a corporation
amalgamated under the Business Corporations Act (Ontario) (as hereinafter
further defined, the "Corporation");
AND WHEREAS the Corporation is the successor corporation resulting from the
amalgamation effective September 26, 1997 of R. D. Nickel & Associates
Incorporated (the "Predecessor Corporation") and its wholly-owned subsidiary
R.D. Nickel & Associates International Inc. (the "Subsidiary");
AND WHEREAS the Corporation continues to carry on the software and information
services businesses formerly carried on by the Predecessor Corporation and the
Subsidiary (the "Software Business") comprised of the marketing, distribution,
licensing, maintenance, and support of certain of the systems and applications
computer programs described in the Disclosure Schedule attached hereto (the
"Distributed Software Programs") and the acquisition, development, marketing,
distribution, licensing, maintenance and support of certain of the systems and
applications computer programs described in the Disclosure Schedule attached
hereto (the "Owned Software Programs") (the Distributed Software Programs and
the Owned Software Programs being referred to collectively herein as the
"Software Programs");
AND WHEREAS the Seller desires to sell to the Buyer, and the Buyer desires to
buy from the Seller, the Purchased Securities (as hereinafter defined) being all
of the issued and outstanding securities in the capital of the Corporation
(other than the Special Share, as hereinafter defined, to be redeemed prior to
the Closing Date) thereby acquiring ownership of the Software Business, all upon
the terms and conditions set forth herein;
AND WHEREAS the Guarantor is the registered and beneficial owner of all of the
issued and outstanding securities of the Buyer, and the Principals are the
registered and beneficial owners of all of the securities of the Seller;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, and agreements of the Parties hereinafter set forth, the Parties,
intending to be legally bound, do hereby agree as follows:
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ARTICLE I
INTERPRETATION
1.01 Defined Terms.
As used in this Agreement, the following terms have the following meanings:
"AG Security Agreement" means the general security agreement of the Buyer in
favour of the Seller securing the payment and performance by the Buyer of its
obligations under the Note and the Other Obligations to be entered into on the
Closing Date substantially in the form of the agreement attached hereto as
Exhibit "1";
"Agreement" means this share purchase agreement and all schedules, exhibits and
instruments in amendment or confirmation of it; "hereof", "hereto" and
"hereunder" and similar expressions mean and refer to this Agreement and not to
any particular Article, Section, Subsection or other subdivision; "Article",
"Section", "Subsection" or other subdivision of this Agreement followed by a
number means and refers to the specified Article, Section, Subsection or other
subdivision of this Agreement;
"Amalgamation" means the amalgamation of the Predecessor Corporation and the
Subsidiary implemented under the OBCA pursuant to certificate and articles of
amalgamation dated September 26, 1997;
"Americas Guarantee" means the guarantee of the Guarantor in favour of the
Seller of the obligations of the Buyer under the Note and the Other Obligations
to be entered into on the Closing Date substantially in the form of the
agreement annexed hereto as Exhibit "2";
"Americas Security Agreement" means the security agreement of the Guarantor in
favour of the Seller securing the payment and performance of its obligations
under the AG Guarantee, to be entered into on the Closing Date substantially in
the form attached hereto as Exhibit "3";
"Ancillary Agreements" means the AG Security Agreement, the Americas Guarantee,
the Americas Security Agreement, the Consulting Agreement, the Lease, the Note,
the Non-Compete Agreement, the RD Guarantee, the RD Security Agreement and all
other agreements, certificates and other instruments delivered or given pursuant
to this Agreement and "Ancillary Agreement" means any one of such agreements,
certificates or other instruments;
"Auditor" means Messrs. KPMG Peat Marwick, Chartered Accountants;
"Authorization" means, with respect to any person, any governmental
authorization, order, permit, approval, grant, license, consent, right,
franchise, privilege, certificate, judgement, writ, injunction, award,
determination, direction, decree, variance, permission, to or from, or filings,
notices, or recordings to or with or by rule or regulation of any Governmental
Entity having jurisdiction over such person;
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"Balance Sheet Date" means November 30, 1996;
"business day" means any day of the year, other than a Saturday, Sunday or any
other day on which Canadian chartered banks are required or authorized to close
in Toronto, Ontario;
"Claim" means, in respect of any person, any claim of any nature whatsoever
against such person, including any demand, liability, obligation, debt, cause of
action, suit, proceeding, judgement, award, assessment, or reassessment;
"Closing" means the completion of the transaction of purchase and sale
contemplated by this Agreement on the Closing Date;
"Closing Date" means September 30, 1997, or such earlier or later date as the
Parties may mutually agree upon in writing;
"Consents" means the consents of each contracting party to each Material
Contract that requires the consent of such party to the change in control of the
Corporation contemplated by either or both of the Amalgamation and this
Agreement and the consummation of the transactions contemplated thereby and
hereby in order to preserve and maintain the rights of the Corporation
thereunder after the Closing Date, and "Consent" means any one of such Consents;
"Consulting Agreement" means the consulting agreement among the Guarantor, the
Buyer and the Principals to be entered into on the Closing Date substantially in
the form of the agreement annexed hereto as Exhibit "4";
"Corporation" means, as of and after the date hereof, the corporation resulting
from the Amalgamation and includes, for all purposes of this Agreement in
respect of all periods referred to herein prior to the effective date of the
Amalgamation, each of the Predecessor Corporation and the Subsidiary;
"Disclosure Schedule" means the disclosure schedule attached hereto as
Schedule "1" providing full disclosure of all matters required or permitted to
be disclosed by the Seller to the Buyer under this Agreement with respect to the
Principals, the Seller, the Corporation, the Predecessor Corporation, the
Subsidiary and the Software Business;
"Dividend Refund" has the meaning specified in Section 2.04;
"Encumbrances" means liens, charges, mortgages, pledges, security interests,
Claims, defects of title, restrictions and any other rights of third parties
relating to any property, including rights of set-off, and other encumbrances of
any kind and "Encumbrance" means any of the foregoing;
"Excluded Assets" means the assets listed in Schedule "2";
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"Financial Statements" means the balance sheets of the Predecessor Corporation
for the fiscal year ending November 30, 1996 and of the Subsidiary for the
fiscal year ended December 31, 1996 and the accompanying statements of income,
retained earnings and changes in financial position for the year then ended and
all notes thereto copies of which are attached as Schedule "3";
"GAAP" means, at any time, accounting principles generally accepted in Canada
at such time;
"Governmental Entity" means (i) any multinational, federal, provincial, state,
municipal, local or other governmental or public department, court, commission,
board, bureau, agency or instrumentality, domestic or foreign; (ii) any
subdivision, agent, commission, board, or authority of any of the foregoing; or
(iii) any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
foregoing;
"Interim Period" means the period between the date hereof and the Closing Date;
"Interim Statement Date" means July 31, 1997;
"Interim Financial Statements" means the unaudited combined balance sheet of
the Predecessor Corporation and the Subsidiary as at July 31, 1997 and the
accompanying unaudited statements of income and retained earnings for the 8
months then ended, copies of which are attached hereto as Schedule "4";
"knowledge" means, with reference to any information that is provided or any
statement that is made by any person under this Agreement or any Ancillary
Agreement, and that is qualified as being "to their knowledge", that such
information or statement has been provided or made to the best of their
knowledge, information and belief (and, in the case of the Seller and
Principals, is based on their own knowledge and after making inquiries of Xxxxxx
Xxxxxx and Xxxxx Xxxxxxxx), without concealment, suppression or omission of any
material information relevant to such statement or information;
"laws" means all statutes, codes, ordinances, decrees, rules, regulations,
municipal by-laws, judicial or arbitral or administrative or ministerial or
departmental or regulatory judgements, orders, decisions, rulings or awards,
policies, voluntary restraints, guidelines, or any provisions of such laws,
including general principles of common and civil law and equity, binding on or
affecting the person referred to in the context in which such word is used; and
"law" means any of the foregoing.
"Lease" means the lease agreement between the Corporation and Deanel Corp. to be
entered into as of the Closing Date providing for the lease by Deanel Corp. to
the Corporation of the real property, including buildings, structures, and other
improvements located thereon, fixtured therein, and appurtenances thereto, and
easements and other rights relative to the building located at 000 Xxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxx, substantially in the form of the agreement annexed hereto as
Exhibit "5";
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"loss" means any loss whatsoever, including expenses, costs, damages,
penalties, fines, any and all legal fees and disbursements, interest, and debt;
"material", "material information", "material facts", "material change", and
words having similar meaning, mean, unless the context otherwise requires,
information relating to the business and affairs of the Corporation, the
Predecessor Corporation, the Subsidiary and their respective properties, assets
and liabilities that, if generally disclosed, would result in, or would
reasonably be expected to result in, a significant decrease in the market price
or value of the Purchased Securities or the Software Business, and for purposes
of this Agreement, each reference to any material adverse effect upon the
financial condition, operation, or prospects of the Software Business or the
Material Assets, or any other reference to a material item or circumstance,
shall be construed to include any act, omission, event, or circumstances that
would entail loss, liability, damage, or expense to the Buyer (with respect to
the rights and benefits expected by the Buyer to be obtained under this
Agreement) of $5,000 in any single instance, whether under one or more
representations, warranties, covenants, or agreements contained herein, or
$25,000 in the aggregate, taken as a whole under all representations,
warranties, covenants, and agreements contained herein;
"Material Assets" has the meaning specified in Section 3.12;
"Material Contracts" means all material contracts with respect to the Software
Business to which the Corporation (including the Predecessor Corporation and the
Subsidiary) is a party, including all contracts, leases of personal property,
licenses, undertakings, engagements or commitments of any nature, written or
oral, to which the Corporation is entitled in connection with the Software
Business, including (a) contracts that either involve expenditure of more than
$50,000 or require performance by any party thereto more than six (6) months
after the Closing Date; (b) unfilled purchase orders; (c) forward commitments
for supplies or materials entered into the ordinary course of the Software
Business; (d) all restrictive agreements and negative covenant agreements which
the Corporation may have with its employees, past or present; and (e) all of the
contracts specifically listed in the Disclosure Schedule;
"Non-Compete Agreement" means the non-compete agreement of the Principals and
the Seller in favour of the Guarantor and the Buyer to be entered into on the
Closing Date substantially in the form of the agreement attached hereto as
Exhibit "6"
"Note" means the secured promissory note of the Buyer in favour of the Seller
referred to in Section 2.03 to be entered into on the Closing Date in the form
of the note attached hereto as Exhibit "7";
"OBCA" means the Business Corporations Act (Ontario);
"Other Obligations" means, collectively, (i) the obligations of the Buyer (if
any) under the Consulting Agreement; (ii) the obligations of the Buyer (if any)
under Section 2.07; and (iii) the obligations of the Buyer (if any) under
Section 8.05(c);
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"Parties" means the Seller, Buyer, Principals and Guarantor and "Party" means
any one of them;
"Permitted Encumbrances" means (i) Encumbrances for taxes, assessments or
governmental charges or levies on property not yet due and delinquent; (ii)
easements, encroachments and other minor imperfections of title which do not,
individually or in the aggregate, materially detract from the value of, or
impair the use or marketability of, any property so encumbered; and (iii) the
Encumbrances disclosed in the Disclosure Schedule;
"person" means an individual, partnership, corporation, trust, unincorporated
association, joint venture or other entity or any Governmental Entity, and
pronouns have a similarly extended meaning;
"Public Offering" means the completion of an initial public offering of its
securities completed in accordance with the requirements of the Securities Act
of 1933, as amended by (i) Software AG Systems, Inc.; (ii) the Guarantor; (iii)
any successor corporation resulting from the merger or reorganization of either
or both of such corporations which does not result from a third party
acquisition of control of such corporations; and (iv) in the case of an
acquisition of control under (iii), any successor corporation that is not, at
the time of such acquisition of control, already a public company;
"Purchase Price" has the meaning specified in Section 2.02;
"Purchased Securities" means 1,000 common shares in the capital of the
Corporation;
"RD Guarantee" means the guarantee of the Corporation in favour of the Seller of
the obligations of the Buyer under the Note and the Other Obligations to be
entered into on the Closing Date substantially in the form of the agreement
annexed hereto as Exhibit "8";
"RD Security Agreement" means the security agreement of the Guarantor in favour
of the Seller securing the payment and performance of its obligations under the
RD Guarantee, to be entered into on the Closing Date substantially in the form
attached hereto as Exhibit "9";
"Redemption Amount" means the amount for which the Special Share is redeemable;
"Software AG Canada" means Software AG of Canada Inc., a corporation
incorporated under the Canada Business Corporations Act;
"Special Dividend" means the special dividend declared by the Corporation in the
amount of $5,000,000 to be paid to the Seller prior to the Closing Date as
contemplated by Section 2.04;
"Special Share" means the special share of the Corporation held as of the date
hereof by the Seller;
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"Special Share Redemption" means the special share redemption completed in
accordance with Section 2.04;
"subsidiary" has the meaning specified in the OBCA; and
"Time of Closing"' means 1:00 p.m. (Toronto time) on the Closing Date or such
other time on the Closing Date as the Closing may occur.
1.02 Gender and Number.
Any reference in this Agreement to gender shall include all genders, and words
importing the singular number only shall include the plural and vice versa.
1.03 Headings, Etc.
The provision of a Table of Contents, the division of this Agreement into
Articles, Sections, Subsections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in the construction or interpretation of this Agreement.
1.04 Currency.
All references in this Agreement or any Ancillary Agreement to dollars, unless
otherwise specifically indicated, are expressed in Canadian dollars.
1.05 Severability.
Any Article, Section, Subsection or other subdivision of this Agreement or any
Ancillary Agreement or any other provision of this Agreement or any Ancillary
Agreement which is, or becomes, illegal, invalid or unenforceable shall be
severed from this Agreement and any Ancillary Agreement and be ineffective to
the extent of such illegality, invalidity or unenforceability and shall not
affect or impair the remaining provisions hereof or thereof.
1.06 Entire Agreement.
This Agreement together with the Ancillary Agreements constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties including, without limitation, the
letter of intent dated August 20, 1997 among, inter alia, Xxxxxx Capital
Partners and Xxxxxx Xxxxxx. There are no representations, warranties, conditions
or other agreements, express or implied, statutory or otherwise, between the
Parties in connection with the subject matter of this Agreement, except as
specifically set forth herein and therein. If there is any conflict between the
provisions of this Agreement and the provisions of any Ancillary Agreement, the
provisions of this Agreement shall govern.
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1.07 Amendments.
This Agreement and any Ancillary Agreement may only be amended, modified or
supplemented by a written agreement signed by all of the Parties to such
agreement.
1.08 Waiver.
Any of the terms or conditions of this Agreement may be waived in writing at any
time by the party that is entitled to the benefits thereof. No waiver of any of
the provisions of this Agreement shall be deemed to or shall constitute a waiver
of any other provision hereof (whether or not similar). No waiver of any of the
provisions of this Agreement or any Ancillary Agreement shall be deemed to
constitute a waiver of any other provision (whether or not similar), nor shall
such waiver constitute a waiver or continuing waiver unless otherwise expressly
provided in writing duly executed by the party to be bound thereby.
1.09 Governing Law.
This Agreement and all Ancillary Agreements shall be governed by and interpreted
and enforced in accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein which apply to contracts made and to be performed
entirely in Ontario without giving effect to the principles of conflicts of law
thereof.
1.10 Inclusion.
Where the word "including" or "includes" is used in this Agreement it means
"including (or includes) without limitation". Words of inclusion shall not be
construed as terms of limitation herein, so that references to "included"
matters shall be regarded as nonexclusive, noncharacterizing illustrations.
1.11 Accounting Terms.
All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP.
1.12 Incorporation of Exhibits and Schedules.
The following are the exhibits schedules attached to and incorporated in this
Agreement:
Exhibit Schedule
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"1" -- Form of AG Security Agreement "1" -- Disclosure Schedule
"2" -- Form of Americas Guarantee "2" -- Excluded Assets
"3" -- Form of Americas Security Agreement "3" -- Financial Statements
"4" -- Form of Consulting Agreement "4" -- Interim Financial Statements
"5" -- Form of Lease Agreement "5" -- Americas Interim Financial Statements
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Exhibit Schedule
------- --------
"6" -- Form of Non-Compete Agreement "6" -- Employee Bonus Allocation
"7" -- Form of Note "7" -- Foreign Royalties Credit
"8" -- Form of RD Guarantee
"9" -- Form of RD Security Agreement
ARTICLE II
PURCHASED SECURITIES AND PURCHASE PRICE
2.01 Purchase of Purchased Securities.
On the terms and subject to the conditions of this Agreement, the Buyer agrees
to purchase from the Seller, and the Seller agrees to sell and deliver to the
Buyer, on the Closing Date, all right, title, and interest of the Seller in and
to the Purchased Securities, being all of the issued and outstanding securities
in the capital of the Corporation as of the Closing Date.
2.02 Purchase Price.
The aggregate purchase price for the Purchased Securities (the "Purchase Price")
shall be $14,000,000.
2.03 Payment of Purchase Price.
On the Closing Date, against delivery by the Seller of certificates evidencing
the Purchased Securities duly endorsed for transfer and accompanied by
instruments of transfer in the manner contemplated by this Agreement, and upon
satisfaction of all other terms and conditions to be satisfied by the Seller and
the Principals hereunder, the Buyer shall pay the Purchase Price to the Seller.
The Purchase Price shall be paid by or on behalf of the Buyer as to $7,000,000
by wire transfer in same day available funds to the Seller on the Closing Date,
and the balance of the Purchase Price shall be paid upon the terms and
conditions of the Note which shall be delivered by the Buyer to the Seller on
the Closing Date.
2.04 Special Dividend and Special Share Redemption.
The Buyer acknowledges that, prior to the Closing Date:
1. the Corporation shall pay to the Seller the Special Dividend
in cash on its common shares;
2. the Special Share is redeemable prior to the Closing Date for
an amount equal to 75% of the dividend refund received
pursuant to subsection 129(1) of the Income Tax Act (Canada)
by the Corporation in respect of dividends paid by it prior to
the Closing Date as more particularly set forth in the terms
and conditions of the
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Special Share contained in the articles of the Corporation (the
"Dividend Refund"); and
3. the Corporation shall redeem the Special Share prior to the Closing
Date for $773,500 by payment in cash.
The Buyer and Seller hereby acknowledge and agree that the Dividend Refund may
be subject to adjustment in the event that there shall be issued to the
Corporation a notice of assessment or reassessment pursuant to any taxing
statute, which assessment or reassessment is based upon a determination that the
Corporation was not entitled to the Dividend Refund or to some portion thereof.
Neither the Corporation nor the Buyer shall have any obligation to appeal such
assessment but the Principals and the Seller shall be able to contest such
assessment or reassessment at their own expense. In this event, the Dividend
Refund shall be deemed to be and to have always been the amount of the dividend
refund ultimately determined by the taxing authority. In the event that the
Redemption Amount is subsequently adjusted in accordance with the terms of the
Special Share as a result of an assessment or reassessment under a taxing
statute relating to the Dividend Refund, the Seller shall pay to the
Corporation, or the Corporation shall pay to the Seller, as the case may be,
within 30 days of the Corporation receiving notice from the taxation authority
of such adjustment such amount as shall be required to ensure that the Seller
has received and retained an amount equal to the Redemption Amount as so
adjusted. The Buyer shall have the right to set-off any obligations owing by the
Seller to the Corporation pursuant to this Section 2.04 against any amounts
owing by the Buyer to the Seller under the Note or otherwise under this
Agreement or any Ancillary Agreement, and the indemnities provided by the Seller
and the Principals to the Buyer under Article IX shall extend to and
specifically include any obligations of the Seller to the Corporation pursuant
to this Section 2.04.
2.05 Removal.
The Buyer acknowledges that Seller shall be entitled, on or prior to the Closing
Date, to remove the Excluded Assets from the Corporation and obtain full
ownership thereof.
2.06 AG Amalgamation.
The Seller and Principals acknowledge that the Buyer shall be entitled to
complete a short-form vertical amalgamation of the Buyer and the Corporation on
or forthwith following the Closing Date pursuant to the provisions of the OBCA
whereupon the RD Guarantee and RD Security Agreement shall terminate and the
AG Security Agreement shall continue in full force and effect to secure the
obligations due under the Note and the Other Obligations.
2.07 Royalty Repayment.
The Buyer and the Guarantor acknowledge that the Subsidiary was credited in the
amount of $1,500,000 (the "Credit") by the Guarantor in respect of estimated
royalties due to the Corporation as a result of certain sales of the
Corporation's Owned Software Programs in jurisdictions outside of North America
up to the Closing Date (the "Foreign Royalties"). The
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countries and the periods of time in respect of which such Credit has been
granted and the allocation of the Credit among them is set forth in
Schedule "7". The Guarantor shall, after the Closing Date, use reasonable
commercial efforts to collect ("collect", "collection" and "collected" including
the exercise of rights of set-off in respect of, or the obtaining of other
equivalent compensation for) Foreign Royalties and, in doing so, shall use
currently available site audit procedures for license compliance customary in
the industry. The Guarantor shall provide the Seller with semi-annual reporting,
by March 31, 1998 and September 30, 1998, as to Foreign Royalties collected and
the efforts made by the Guarantor to do so. In the event that the actual amount
of Foreign Royalties due to the Corporation (determined in accordance with
current practice and based upon the royalties actually collected by the
Guarantor) in respect of the countries and the periods of time identified in
Schedule "7", exceeds the amount of the Credit, the Guarantor and the
Corporation shall pay such excess amount to the Seller within 30 days following
the final determination of the actual amount of such Foreign Royalties collected
by the Guarantor. In the event that the Guarantor collects Foreign Royalties
which relate to countries and/or periods of time other than those identified in
Schedule "7" due to the Corporation (determined in accordance with current
practice and based upon the royalties actually collected by the Guarantor), the
Guarantor shall pay such Foreign Royalties collected, that would have otherwise
been payable to the Corporation, to the Seller. Such payments shall be made in
full within 30 days following the collection by the Guarantor of such Foreign
Royalties. In the event that the Seller disagrees with the calculation by the
Corporation and/or the Guarantor of the amount of Foreign Royalties collected or
the amount due to the Seller hereunder (if any), the Seller may, at its own
expense, audit the records of the Guarantor and the Corporation relating to the
collection of Foreign Royalties and related records on reasonable notice and
during normal business hours. Any difference between the amount actually paid by
the Corporation and/or the Guarantor to the Seller hereunder and the amount
determined upon such audit to have been collected by the Guarantor and/or the
Corporation shall be payable by the Corporation and/or the Guarantor to the
Seller, or by the Seller to the Corporation and/or the Guarantor, as the case
may be. In the event that, as a result of such audit, the Corporation and/or the
Guarantor is required to pay to the Seller an amount in excess of 5% of the
amount previously paid by the Corporation and/or the Guarantor to the Seller
hereunder, the Corporation and/or the Guarantor shall reimburse the Seller for
the cost of such audit up to a maximum of $10,000. The payment and performance
by the Corporation of its obligations (if any) to pay such amount hereunder
shall be secured pursuant to the guarantees and security of the Guarantor, the
Buyer and the Corporation forming part of the Ancillary Documents. The
Corporation shall cease to have any obligation hereunder after November 30, 1998
provided that such final determination has been made as of September 30, 1998,
the reports required hereunder have been provided to the Seller, and any amounts
due to the Seller hereunder have been paid. The Seller shall thereafter have the
right, in consultation with the Guarantor, acting reasonably (and the Guarantor
having no obligation to assist the Seller) to directly pursue the collection of
unpaid Foreign Royalties, at its own cost and expense, until March 3 1, 1999 if
it determines, acting reasonably, that additional amounts may be payable.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPALS AND SELLER
The Principals and Seller hereby jointly and severally represent and warrant to
the Buyer, acknowledging the Buyer is relying thereon in entering into this
Agreement and completing the transactions contemplated hereby, as follows:
3.01 Organization of Corporation and Seller.
The Corporation is, and each of the Predecessor Corporation and the Subsidiary
prior to the Amalgamation were, corporations validly existing and in good
standing under the OBCA with the corporate power and authority to conduct the
Software Business and to own and lease their respective properties and assets.
As to the conduct of the Software Business and the use and ownership of the
Material Assets specifically, the Corporation is and each of the Predecessor
Corporation and the Subsidiary prior to the Amalgamation were, duly qualified or
licensed to do business and is in good standing to do business in the
jurisdictions identified in the Disclosure Schedule which are the only
jurisdictions in which the failure to be so qualified or licensed would be
material. The Seller is validly existing and in good standing under the laws of
the Province of Ontario, Canada with the corporate power and authority to
conduct its business and to own the Purchased Securities.
3.02 Capacity, Power and Authority.
The Principals have the capacity, and the Seller has the power and authority, in
each case to execute, deliver, and perform its obligations under this Agreement
and the Ancillary Agreements to be executed and delivered by it in connection
with the transactions contemplated hereby. The Principals and the Seller have
taken all necessary corporate and other action to authorize the execution and
delivery of this Agreement and such other Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby. This Agreement
is, and the Ancillary Agreements shall be, the legal, valid, and binding
obligations of the Principals and the Seller, enforceable against each of them
in accordance with their respective terms. The Principals have executed and
delivered this Agreement after having obtained such independent legal and other
professional advice as they deemed necessary or appropriate, on a fully informed
basis, and without duress or coercion.
3.03 Restrictive Documents.
None of the Corporation, the Predecessor Corporation, the Subsidiary or the
Seller is subject to, or a party to, any charter or by-law restriction, any law,
any Claim, any shareholders agreement, voting trust, contract or instrument, any
Encumbrance or any other restriction of any kind or character which would
prevent the consummation of the transactions contemplated by this Agreement or
compliance with the terms, conditions and provisions of this Agreement and the
Ancillary Agreements, or the continued operation of the Software Business after
the date hereof on substantially the same basis as heretofore operated, or which
would restrict the ability of the Buyer to acquire any of the Purchased
Securities, except for the necessity of obtaining the
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Consents required or contemplated by this Agreement, provided that the Buyer
acknowledges that it has directed the Seller not to obtain the Consents
otherwise required in connection with the Material Contracts marked "*" in
Section 3.12 (c)(l) of the Disclosure Schedule.
3.04 Authorized and Issued Capital.
The authorized capital of the Corporation, after giving effect to the
Amalgamation, consists solely of the securities identified in the articles of
amalgamation of the Corporation dated as of September 26, 1997, true and
complete copies of which have been provided to the Buyer as of the date hereof.
The issued capital of the Corporation at the date hereof, after giving effect to
the Amalgamation, consists solely of the Purchased Securities and the Special
Share which is to be redeemed by the Corporation prior to the Closing Date as
contemplated by Section 2.04. The Purchased Securities have been duly issued and
are outstanding as fully paid and non-assessable shares in the capital of the
Corporation and the Seller is their sole registered and beneficial holder.
All of the issued and outstanding securities of Software AG Canada are owned by
the Principals.
3.05 Options, etc.
Except for the Buyer's right hereunder, no person has or will have any option,
warrant, right, call, commitment, conversion right, right of exchange or other
agreement or any right, privilege or entitlement (whether by law, pre-emptive or
contractual) capable of becoming an option, warrant, right, call, commitment,
conversion right, right of exchange or other agreement for the purchase from the
Seller of any of the Purchased Securities or the Special Share, or from the
Principals of the securities of Software AG Canada or for the purchase,
subscription, allotment or issuance of any unissued securities in the capital of
the Corporation (in each case both before and after giving effect to the
Amalgamation), or of Software AG Canada.
3.06 Title to Purchased Shares.
The Purchased Securities are owned by the Seller with a good and marketable
title thereto, free and clear of all Encumbrances other than the rights of the
Buyer under this Agreement. The Seller has the right, power and authority to
enter into this Agreement and to sell such Purchased Securities as contemplated
herein. The delivery of the Purchased Securities to the Buyer pursuant to the
provisions hereof on the Closing Date will transfer to the Buyer valid title
thereto, free and clear of all Encumbrances.
3.07 Dividends and Distributions.
Since the Balance Sheet Date, except for the Special Dividend, the Special Share
Redemption and the payment of a dividend in December, 1996 in the amount of
$800,000 from the Subsidiary to the Predecessor Corporation and from the
Predecessor Corporation to the Seller, none of the Corporation, the Predecessor
Corporation, the Subsidiary or Software AG Canada has, directly or indirectly,
declared, paid or otherwise become obligated to make any dividend or
--14--
other distribution on any of its securities, redeemed, purchased or otherwise
acquired any of its securities of any class or agreed to do any of the
foregoing.
3.08 Corporate Records.
The corporate records of each of the Corporation, the Predecessor Corporation,
the Subsidiary and Software AG Canada are materially complete and accurate, and
all material corporate proceedings and actions reflected therein have been
conducted or taken in compliance with all applicable laws and with their
articles and by-laws, in each case in all material respects, and without
limiting the generality of the foregoing, (i) the minute books contain complete
and accurate minutes of all meetings and written resolutions of the directors
and shareholders held since the date of incorporation of the Corporation for
which minutes or other records of proceedings exist; (ii) all material acts and
proceedings of such shareholders, directors and officers of each of such
corporations have been duly approved or ratified by the directors or
shareholders of the Corporation in compliance with applicable laws; (iii) the
share certificate books, register of shareholders and register of transfers are
complete and accurate, in all material respects, and all such transfers have
been duly completed and approved and any exigible tax payable in connection with
the transfer of any of their securities has been duly paid; and (iv) the
registers of directors and officers are complete and accurate in all material
respects and all former and present directors and officers were duly elected or
appointed as the case may be.
3.09 Residence of the Seller.
The Seller is not a non-resident of Canada within the meaning of the Income Tax
Act (Canada).
3.10 Required Government Consent.
No Authorization of any Governmental Entity is required to be obtained by the
Seller or the Corporation for the execution and delivery of this Agreement and
the Ancillary Agreements, the consummation of the transactions contemplated
hereby and thereby.
3.11 Title to Tangible Property.
Except for Permitted Encumbrances, the Corporation holds good and marketable
title to all of the properties and assets of the Corporation used in connection
with the Software Business, including without limitation all of the Material
Assets formerly owned and used by the Predecessor Corporation and the Subsidiary
(other than the Excluded Assets), free and clear of all Claims and Encumbrances
of any nature whatsoever.
3.12 Disclosure of Properties and Material Assets.
The Disclosure Schedule contains complete lists of the following:
(a) Software Business. All Distributed Software Programs, all Owned Software
Programs and all software programs currently under development;
--15--
(b) [Intentionally Deleted]
(c) Software Contracts. All contracts, with any person respecting the
ownership, license, acquisition, design, development, distribution,
marketing, use, or maintenance of computer program code, related
technical or user documentation, and databases, including all the
software contracts consisting of (1) licenses from third parties
(development and/or marketing); (2) licenses from third parties (internal
use only); (3) development contracts, work-for-hire agreements, and
consulting and employment agreements; (4) distributorships, dealerships,
franchises, and manufacturer's representative contracts; (5) licenses and
sublicenses to others; and (6) maintenance, support, or enhancement
agreements (the "Software Contracts");
(d) Computer Equipment. All equipment and devices (including data processing
hardware and related telecommunications equipment, media, and tools) and
the Corporation's rights under all related warranties;
(e) Other Fixed Assets. All office furniture, fixtures and other fixed
assets;
(f) [Intentionally Deleted]
(g) Authorizations. All Authorizations currently applicable to the Software
Business other than such Authorization as are required to carry on
business generally;
(h) Intellectual Property. All patents, trademarks, service marks and trade
names (including registrations and applications pertaining thereto) (the
"Intellectual Property");
(i) Leases. All personal property leases or rental contracts agreements, and
other commitments and arrangements currently in effect to which the
Corporation is a party that either (1) have an annual rental, if any
individual instance, in excess of $15,000, or (2) continue in effect for
a period of twelve (12) months or longer without allowing the Corporation
to terminate without penalty for any reason upon the delivery of any
required action with respect to:
1. equipment, including data processing hardware and associated
telecommunications equipment, media, and tools;
2. office furnishings and fixtures; and
3. other personal property used in the Software Business (the "Leases").
(j) General Contracts. All other material contracts, agreements, licenses,
commitments, arrangements, and permissions with respect to the Software
Business (the "General Contracts") to the extent not otherwise disclosed
in this Agreement.
--16--
(k) Accounts Receivable. All accounts receivable, including all license fees
and maintenance fees and charges owing or to become owing to the
Corporation under Software Contracts, in each case relating to or arising
from the Software Business (the "Accounts Receivable").
(1) Claims. All Claims the Corporation may have against any person relating
to or arising from the Material Assets or the Software Business,
including rights to recoveries for damages or defective goods, to
refunds, insurance claims, and choices in action.
(m) [Intentionally Deleted]
(n) Business Interests, Participations, and Ownership Positions. All
interests, participations, and ownership positions held by the
Corporation in any corporation, partnership, joint venture, co-marketing
arrangement, or similar enterprise or undertaking relating to the
Software Business.
3.13 Condition of Properties and Material Assets.
All of the Material Assets of the Software Business, to the extent that they are
tangible property, are in good operating order, condition, and repair, ordinary
wear and tear excepted, are suitable for use in the Software Business in the
ordinary course.
3.14 Intellectual Property.
(a) Ownership. Except for the rights and licenses validly and effectively
established by the Software Contracts in favour of third parties, the
Corporation owns or has the right to use, and will continue to own after the
Closing Date, all Intellectual Property. The Disclosure Schedule sets forth all
registered trademarks and service marks, all reserved trade names, all
registered copyrights, and all filed patent applications and issued patents
listed in the Disclosure Schedule used in the Software Business or otherwise
necessary for the conduct of the Software Business as heretofore conducted.
(b) Procedures for Trade Secret Protection. The Corporation has used its best
efforts to enforce an adequate trade secret protection program through
contractual agreements with officers, employees, developers, consultants and
other persons dealing with the Software Business. To the knowledge of the
Principals and the Seller, there has been no material violation of such program
by any person. The source code and system documentation relating to the Software
Programs (1) to the best knowledge of the Principals and the Seller have at all
times been maintained in confidence and (2) have been disclosed by the
Corporation only to employees and consultants having "a need to know" the
contents thereof in connection with the performance of their duties.
(c) Personnel Agreements. All personnel, including employees, agents,
consultants, and contractors, who have contributed to or participated in the
conception and development of the Owned Software Programs, technical
documentation, or Intellectual Property on behalf of the Corporation have
executed the agreement included in the Disclosure Schedule in
Section 3.12(c)(3).
--17--
(d) Absence of Claims. No Claims have been asserted by any person to the use
of the Intellectual Property, and the Principals and the Seller do not know of
any valid basis for any such Claim. The use of the Intellectual Property, such
as patents and trademarks, by the Corporation does not infringe on the rights of
any person.
(e) Name. Software AG Canada has not received any notification that it does
not have the right to the use of the name "Software AG" within Canada as its
corporate name and shall continue to have such right following the Closing Date.
3.15 Adequacy of Technical Documentation.
The technical documentation with respect to the current versions of the Owned
Software Programs includes the source code, generation and administration
user's manuals and specifications and written procedures for all such Owned
Software Programs as may be necessary to render such materials understandable
and usable by a trained computer programmer. The technical documentation also
includes any program (including compilers), "workbenches," tools, and higher
level (or "proprietary") language used for the development, maintenance, and
implementation of the Owned Software Programs.
3.16 Third-Party Components in Software Programs.
The Corporation has validly and effectively obtained the right and license to
use, copy, modify, and distribute the third-party programming and materials
contained in the Owned Software Programs and is in possession of related
technical documentation. The Owned Software Programs and related technical
documentation contain no other programming or materials in which any third party
may claim superior, joint, or common ownership, including any right or license.
The Software Programs and related technical documentation do not contain
derivative works of any programming or materials not owned in their entirety by
the Corporation except for derivative works which result from the inclusion of
Software licensed by the Corporation from Apex Software Corporation in the
Corporation's CONSTRUCT SPECTRUM software.
3.17 Third-Party Interests or Marketing Rights in Software Programs.
The Corporation has not granted, transferred, or assigned any right or interest
in the Owned Software Programs, the related technical documentation, or the
Intellectual Property to any person, except pursuant to the Software Contracts
identified as "distributorships, dealerships, franchises, and manufacturer's
representative contracts" or "licenses and sublicenses to others" in the
Disclosure Schedule. Except as set forth in the Disclosure Schedule, all
Software Contracts identified as "licenses and sublicenses to others" in the
Disclosure Schedule constitute only end-user agreements, each of which grants
the end-user thereunder solely the nonexclusive right and license to use
identified Software Programs and related user documentation for internal
purposes only except that some of such Software Contracts provide that (a) a
service bureau may use the Software Programs and related technical documentation
to process data for an end-user; (b) subsidiaries, affiliates and related
corporations of an end-user may use the Software Programs and
--18--
related technical documentation; and (c) the end-user may assign such Software
Contract to a purchaser of all or substantially all of the assets of such
end-user. There are no contracts, agreements, licenses, and other commitments
and arrangements in effect with respect to the marketing, distribution,
licensing, or promotion of the Software Programs, the related technical
documentation, or the Intellectual Property by any independent salesperson,
distributor, sublicensor, or other remarketer or sales organization, except for
the Software Contracts identified as "distributorships, dealerships, franchises,
and manufacturer's representative contracts" in the Disclosure Schedule.
3.18 Leases.
All of the Leases are valid, binding, and enforceable in accordance with their
terms and are in full force and effect. There are no existing defaults by the
Corporation thereunder, and no act, event, or omission has occurred that,
whether with or without notice, lapse of time, or both, would constitute a
default thereunder. Full, true and complete copies of the Leases, other than the
proposed lease for the Toronto site, have been provided to the Buyer.
3.19 Leased Property.
The Corporation is not a party to, or under any agreement or option to become a
party to, any lease with respect to real property, whether as landlord or
tenant, other than the leased premises identified in the Disclosure Schedule
(the "Leased Premises"). Full, true and complete copies of the leases with
respect to the Leased Premises have been provided to the Buyer.
3.20 Subsidiaries and Investments.
Except as disclosed in the Disclosure Schedule, the Corporation does not have
any subsidiaries or any agreements of any nature to establish or acquire any
subsidiary or to acquire or lease any other business operations and the
Corporation has not made or agreed to make any loan to or investment in any
other person. None of the Corporation, the Seller or the Principals is a party
to any joint venture or other similar agreement or arrangement that involves any
sharing of profits of the Software Business or is similar to or competitive with
the Software Business, other than the Software Contracts identified as "licenses
from third parties (development and/or marketing)" or "distributorships,
dealerships, franchises, and manufacturer's representative contracts" in the
Disclosure Schedule.
3.21 Material Contracts.
The contracts listed in the Disclosure Schedule, full, true and complete copies
of which have been provided to the Buyer, constitute all the Material Contracts
of the Corporation. Except as disclosed in the Disclosure Schedule, Financial
Statements and Interim Financial Statements and as contemplated by this
Agreement the Corporation is not a party to or bound (including as a result of
the Amalgamation) by any agreement not identified as a Material Contract that
involves:
--19--
(a) any employment agreement, bonus, deferred compensation, pension, profit
sharing, stock option, phantom stock plan, employee stock purchase,
health, insurance, retirement or other employee benefit plan, any
collective agreements or any agreement (oral or written) providing for
compensation to be paid to any employee consequent upon the sale of any
substantial portion of outstanding securities in its capital or any
direct or indirect change in its ownership or control;
(b) any material agreement or commitment relating to the borrowing of money;
(c) any material agreement or commitment relating to capital expenditures
other than capital expenditures incurred in the ordinary course of
business consistent with past practice;
(d) any loan or advance to, or investment in, any other person or any
agreement or commitment relating to the making of any such loan, advance
or investment;
(e) any bonds, debentures, mortgages, notes or other similar indebtedness or
liabilities whatsoever or any agreement to create or issue any bonds,
debentures, mortgages, notes or other similar indebtedness;
(f) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any other person (other than the
endorsement of negotiable instruments for collection in the ordinary
course of business);
(g) any management, consulting or any other similar agreement or commitment;
(h) any non-competition, non-solicitation or similar agreement or commitment
limiting its freedom or that of any successor to the ownership of the
assets or the Software Business to engage in any line of business or to
compete with any other person;
(i) any licensing or other agreement or commitment relating to intellectual
property used in the conduct of the Software Business;
(j) any agreement or commitment entered into in the ordinary course of the
Software Business involving an expenditure or commitment of more than
$25,000 (other than purchase orders accepted from time to time consistent
with current practice) which is not cancelable without penalty within
thirty (30) days;
(k) any material agreement or commitment not entered into in the ordinary
course of the Software Business; and
(1) any agreement or arrangement with any person with whom the Corporation or
the Seller (or their directors, officers or employees) does not deal at
arm's length within the meaning of the Income Tax Act (Canada).
--20--
All of the Material Contracts are valid, binding, and enforceable in accordance
with their terms and are in full force and effect. There are no existing
material defaults by the Corporation (or, to their knowledge material defaults
by the other parties hereto) under any such contracts and no act, event, or
omission has occurred that, whether with or without notice, lapse of time, or
both, would constitute a default thereunder. The customers of the Corporation
who are, to the knowledge of the Corporation, currently in default of their
license obligations with respect to the Software Programs are identified in the
Disclosure Schedule.
3.22 Accounts Receivable.
All Accounts Receivable are fully collectible within the customary collection
cycle, subject only to bad debts that will not exceed the amount of bad debt
reserves set forth in the Interim Financial Statements. All Accounts Receivable
call for payment to be made within ninety (90) days to the principal office of
the Corporation.
3.23 Financial Matters.
(a) Financial Statements. The Financial Statements have been prepared in
accordance with GAAP, consistently applied with the principles and procedures
employed in prior periods by the Predecessor Corporation and the Subsidiary. The
Financial Statements properly reflect all properties, assets and liabilities of
the Corporation. The Financial Statements fairly present the results of
operation and the financial position of the Corporation as of the Balance Sheet
Date in conformity with GAAP consistently applied with the principles and
procedures employed in prior periods.
(b) Interim Financial Statements. The Interim Financial Statements have
been prepared in accordance with GAAP, consistently applied with the principles
and procedures employed in prior interim periods by the Predecessor Corporation
and the Subsidiary except that: (i) such statements are not accompanied by
notes; (ii) no provision has been made in the Interim Financial Statements for
taxes payable; (iii) no provision has been made in the Interim Financial
Statements for foreign royalties receivable; and (iv) no provision has been made
in the Interim Financial Statements for employee bonuses. The Interim Financial
Statements properly reflect all properties, assets and liabilities of the
Corporation. The Interim Financial Statements fairly present the results of
operation and the financial position of the Corporation as of the Interim
Statement Date in conformity with GAAP consistently applied with the principles
and procedures employed in prior periods.
(c) Cash Balances. As of September 23, 1997, the cash balances of the
Corporation, comprised of deposits with the Corporation's banker and readily
marketable securities on deposit with Royal Bank of Canada and RBC Dominion
Securities Ltd., are approximately $5 million, after payment of the amounts
permitted under Article II hereof, after assuming that all cheques and similar
obligations that have been issued by the Corporation have been presented for
payment as of September 23, 1997. Between such date and the date hereof, there
has been no material changes in such cash balances.
--21--
(d) Capital Expenditures. No material capital expenditures have been made or
authorized by the Corporation since the Balance Sheet Date, other than as
disclosed in the Interim Financial Statements and the Disclosure Schedule.
(e) Undisclosed Liabilities. Except as set forth in this Agreement, or in the
Disclosure Schedule, there are no liabilities or obligations, secured or
unsecured (whether absolute, accrued, contingent, or otherwise, and whether due
or to become due), of a nature required by GAAP to be reflected in a balance
sheet of the Corporation, except such liabilities and obligations that either
(1) are accrued and reserved against in the Interim Financial Statements or (2)
have arisen or been incurred in the ordinary course of business since the
Interim Statement Date.
3.24 Conduct of Software Business.
(a) Ordinary Course of Business; No Removal or Disposal of Material Assets.
Except as set forth in the Interim Financial Statements and the Disclosure
Schedule, the Corporation has operated the Software Business in the ordinary
course consistent with past practices since the Balance Sheet Date, and has not
disposed of any Material Assets (other than the Excluded Assets);
(b) No Material Adverse Change. Except as set forth in the Disclosure
Schedule and the Interim Financial Statements, since the Balance Sheet Date,
there has been no material adverse change in the Software Business or in the
financial condition, operations, or prospects of the Software Business without
restricting the foregoing, the Seller has not (1) suffered any damage or
destruction adversely affecting the Software Business or involving the Material
Assets in the amount of $10,000 in any one instance; (2) increased the
compensation payable or to become payable to employees of the Seller involved in
the Software Business or declared any bonus (except for a general increase in
compensation rates effective December 1, 1996 the terms of which have been
disclosed to the Buyer and an increase in the compensation of Xxxx Xxxxxx to
$60,000 per annum); (3) incurred any liability or obligation relating to the
Software Business other than in the ordinary course consistent with past
practice; (4) made any change in any method, practice, or principle of
accounting involving the Software Business (other than changes to US generally
accepted accounting principles requested by the Buyer); (5) paid, loaned, or
advanced any material monetary amount or other asset to, or sold, transferred,
or leased any asset to, any employee involved in the Software Business except
for normal compensation involving salary and benefits; or (6) agreed to take any
action described in this Section 3.24(b).
3.25 Vendors and Customers.
The Disclosure Schedule lists each licensor, developer, remarketer, distributor,
and supplier of property or services to whom the Corporation, the Predecessor
Corporation or the Subsidiary paid in the aggregate $50,000 or more during the
fiscal year ended November 30, 1996 (none of which have been paid more than
$200,000), and each licensee, end-user, or customer of, the Corporation as of
the Balance Sheet Date. None of such customers or suppliers has terminated, or
materially changed or reduced, its relationship with the Corporation since such
date or advised the Corporation, the Seller or the Principals that it intends to
do so.
--22--
3.26 Legal Matters.
(a) Litigation. Except as set forth in the Disclosure Schedule, no Claim is
pending, or, to the best of their knowledge, threatened against the Corporation,
its present or former directors, officers, or employees, or any party to any
Software Contract, affecting, involving, or relating to the Software Business.
The Corporation is not, to their knowledge, subject to any judgement, order or
decree entered in respect of any Claim.
(b) Compliance With Laws. There is no outstanding or, to the best of their
knowledge, threatened order, writ, injunction, or decree of any court,
governmental agency, or arbitration tribunal against the Corporation affecting,
involving, or relating to the Software Business or the Material Assets. The
Corporation is not in violation of any applicable law affecting, involving, or
relating to the Software Business or the Material Assets except where
noncompliance has no material adverse effect upon the financial condition,
operation, or prospects of the Software Business or the Material Assets, and
they have received no notices of any allegation of any such violation.
(c) Adequacy of Authorizations. The Authorizations listed in the Disclosure
Schedule constitute all Authorizations of Governmental Entities that are
required for the ownership and use of the Material Assets and the conduct of the
Software Business under Canadian law, other than Authorizations required to
carry on business generally. The Corporation is in compliance with all terms and
conditions of such required Authorizations. All of the Authorizations are in
full force and effect, and, to the best of their knowledge, no suspension or
cancellation of any of them is being threatened, nor will any of the
Authorizations be affected by the consummation of the transactions described in
this Agreement. The Corporation is in compliance with all other applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in those laws or contained in
any law, regulation, code, plan, order, decree, judgment, notice, or demand
letter issued, entered, promulgated, or approved thereunder relating to or
affecting the Software Business.
(d) Environmental Compliance. Except as set forth in the Disclosure Schedule,
neither the Seller, nor, to the best of their knowledge, any prior owner, user,
controller, or occupant, nor any tenant, subtenant, prior tenant, or prior
subtenant has ever used Hazardous Materials (as hereinafter defined) on, from,
or affecting the Material Assets or any facility, site, area, or property owned,
used, controlled, or occupied by the Software Business, in any manner that
violates any Canadian law, regulation, governmental restriction, order,
judgment, or decree governing the use, storage, treatment, transportation,
manufacture, handling, production, or disposal of Hazardous Materials. For
purposes hereof, "Hazardous Materials" include any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined under applicable
Canadian federal and provincial environmental laws. The term "material" includes
asbestos, polychlorinated biphenyls, kerosene, and fuel oil. The term "release"
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing into the environment. The
term "environment"
--23--
means any surface or groundwater water supply, land, surface, or subsurface
strata or the ambient air.
3.27 Taxes and Filings.
The Corporation has filed or caused to be filed, within the times and within the
manner prescribed by law, all federal, provincial, local and foreign tax returns
and tax reports which are required to be filed by it. Such returns and reports
reflect accurately all liability for taxes for the periods covered thereby and
full, true and complete copies of such returns and reports for the past 3 fiscal
years have been provided to the Buyer. To their knowledge all federal,
provincial, local and foreign income, profits, franchise, sales, use, occupancy,
excise and other taxes and assessments (including interest and penalties)
payable by or due from the Corporation have been fully paid or are adequately
disclosed and fully provided for in the books and records and the Financial
Statements or the Interim Financial Statements (except as set forth in Section
3.23(b) above) as the case may be. The federal income tax liability of the
Corporation has been assessed for all fiscal years up to but excluding its
current fiscal year. No field audit of any tax return is currently in progress
nor has the Corporation been notified in writing that any tax returns previously
filed by it will be subject to reassessment. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable to any tax
return of the Corporation, except in respect of the fiscal years 1991 through
1993. The Buyer acknowledges that in 1997 a scientific research and experimental
development tax credit claim of the Predecessor Corporation for the fiscal year
ended November 30, 1995 and the prior years was reassessed (and details of such
reassessment have been provided to the Buyer) by Revenue Canada, Taxation and
that the corresponding Ontario and Alberta claims have not yet been assessed by
the Ontario and Alberta Ministries of Revenue and the amount of such claims may
be reduced upon such assessments. The Corporation records scientific research
and experimental development tax credits on its financial statements only when
and to the extent the same was applied against income taxes otherwise payable
and the future tax benefit to the Corporation regarding such claims is not
recorded on the Financial Statements or the Interim Financial Statements. The
Buyer agrees that neither the Seller nor the Principals shall have any liability
pursuant to this Section 3.27 in respect of assessments or potential
reassessments of federal or provincial scientific research and experimental
development tax credits claimed until the amount of such liability exceeds the
amount of the Corporation's scientific research and experimental development tax
credit carry-forward as at the date hereof.
3.28 Employee Matters.
To their knowledge:
(1) The Corporation is in compliance with all laws respecting employment and
employment practices, terms and conditions of employment, pay equity and wages
and hours and has not and is not engaged in any unfair labour practice.
(2) No unfair labour practice, complaint or grievance against the Corporation is
pending or, to the best of the knowledge of the Corporation, threatened before
any labour relations board or similar Governmental Entity with respect to the
Software Business.
--24--
(3) There is no labour strike, dispute, slowdown or stoppage actually pending or
involving or, to the best of the knowledge of the Corporation, threatened
against the Corporation with respect to the Software Business.
(4) No union representation question exists respecting the employees of the
Corporation in connection with the Software Business.
(5) No grievance which might have a material adverse effect upon the Corporation
or the conduct of the Software Business exists, no arbitration proceeding
arising out of or under any collective agreement is pending, and no Claim
therefor has been asserted.
(6) No collective bargaining agreement is currently being negotiated by the
Corporation with respect to any of its employees and true, correct and complete
copies of the only collective agreements in force with respect to employees have
been provided to the Buyer.
(7) A complete list of all permanent and full time employees of the Corporation,
their salaries and wage rates, bonus arrangements, benefits, positions and
length of service has been provided to the Buyer by the Seller.
(8) No employee of the Corporation has any agreement as to length of notice
required to terminate his or her employment, other than such agreements as have
been referred to in the Disclosure Schedule and except as results by law from
the employment of an employee without agreement as to such notice or as to
length of employment.
(9) All bonuses, commissions and other benefit payments due to current and
former employees of the Corporation are reflected and have been accrued in the
Interim Financial Statements of the Corporation. The Buyer acknowledges that (a)
the Corporation does not accrue vacation pay in its books and records; (b)
employees of the Corporation are entitled to carry forward the unused portion of
their vacation entitlement in any year into the following year only; and (c) the
Corporation only pays vacation pay to its employees upon cessation of employment
with the Corporation based on the foregoing.
(10) The aggregate amount of salaries, pensions, bonuses, or other remuneration
of any nature paid or payable by the Corporation to or for its present or former
officers, directors, shareholders, employees or persons not dealing at arm's
length (as such term is construed under the Income Tax Act (Canada)) with them
during the year ended on the Balance Sheet Date, and during the period ended
July 31, 1997 are fully reflected in the Financial Statements, or the Interim
Financial Statements, as the case may be, and since that date, payments to such
persons have been made at no greater rates except for the payments disclosed in
the Disclosure Schedule.
(11) The only benefit plans existing in respect of the employees of the
Corporation are the benefit plans identified in the Disclosure Schedule. True,
correct and complete copies of all written benefit plans and related
documentation have been provided to the Buyer and any oral or written benefit
plans are accurately described in the Disclosure Schedule. The benefit plans are
--25--
duly registered where required by, and are in good standing under, all
applicable laws. All required employer and employee contributions and premiums
under the benefit plans to the date hereof have been made, the respective fund
or funds established under the benefit plans are funded in accordance with
applicable laws, and no past service funding liabilities exist thereunder.
(12) No pension plans exist in respect of the employees of the Corporation.
(13) No payments have been made or authorized since the Balance Sheet Date
by the Corporation to its officers, directors, former directors, shareholders or
employees or to any person not dealing at arm's length (as such term is
construed under the Income Tax Act (Canada)) with any of the foregoing, except
in the ordinary course of the Software Business and at the regular rates payable
to them of salary, pension, bonuses, rents or other remuneration of any nature
and except for the bonus payments and salary increases made subsequent to
November 30, 1996 and disclosed to the Buyer, full provision for which has been
made in the Interim Financial Statements.
(14) To the best of their knowledge, no certification or decertification
question or organizational drive exists or has existed within the past
twelve (12) months respecting the Corporation, the Predecessor Corporation
or the Subsidiary or their employees.
(15) To the best of their knowledge, there are no charges, investigations,
administrative proceedings, or formal complaints of discrimination (including
discrimination based upon sex, age, marital status, race, national origin,
sexual preference, handicap, or veteran status) pending or, to their knowledge,
threatened before any Governmental Entity pertaining to the Corporation, the
Predecessor Corporation, the Subsidiary or their employees and, to their
knowledge, no basis for any such charge, investigation, administrative
proceeding, or complaint exists.
3.29 Insurance Polices.
The Disclosure Schedule lists all insurance policies of the Corporation relating
to the Software Business in force as of the date hereof, naming the Corporation
as an insured or beneficiary or as a loss-payable payee or for which the
Corporation has paid or is obligated to pay all or part of the premiums. All
such policies of insurance coverage are in full force and effect and full, true
and complete copies of such policies have been provided to the Buyer. The
Corporation is not, to their knowledge, in default with respect to any of the
provisions contained in any such insurance policy and, to their knowledge, has
not failed to give any notice or present any Claim under any such insurance
policy in due and timely fashion. The Corporation has not received notice of any
pending or threatened termination or retroactive premium increase with respect
thereto; and the Corporation is in compliance with all conditions contained
therein, the noncompliance with which could result in termination of insurance
coverage or increased premiums for prior or future periods. There are no pending
material Claims against such insurance by the Corporation as to which insurers
have denied liability or are defending under any reservation of rights, and, to
their knowledge, there exists no material Claim under such insurance that has
not been properly filed by the Corporation.
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3.30 Broker's or Finder's Fees.
Neither the Seller nor the Principals has authorized any person to act as broker
or finder or in any other similar capacity in connection with the transactions
contemplated by this Agreement in any manner that may or will impose liability
on the Buyer, the Corporation or the Software Business.
3.31 Related-Party Transactions.
Except as disclosed in the Disclosure Schedule, the Corporation is not a party
to any contract, agreement, license, lease, or arrangement with, or any other
commitment to, directly or indirectly, (1) any officer or salaried employee of
the Software Business in office within two (2) years of the date of execution
hereof; (2) any corporation, trust, or other entity in which any such officer or
salaried employee has a material equity or participating interest; or (3) or any
partnership in which any such officer or salaried employee has a partnership or
participating interest, in each case, relating to or involving the Software
Business, except, in each instance, for existing compensation arrangements
listed in the Disclosure Schedule. Each such contract, agreement, license,
lease, arrangement, and commitment was entered into by the Seller in the
ordinary course of business upon terms that are fair and reasonable to the
Software Business without regard to the status and relationship of such other
parties.
3.32 Real Property
The Corporation is not the owner of, or under any agreement or option to own,
any real property or any interest therein.
3.33 Bank Accounts and Powers of Attorney
The Disclosure Schedule contains an accurate list showing (i) the name of each
bank in which the Corporation has an account or safe deposit box and the names
of all persons authorized to draw thereon or to have access thereto; and (ii)
the names of any persons holding powers of attorney from the Corporation and a
summary statement of the terms thereof.
3.34 Amalgamation
The Amalgamation has not and will not cause or result in any material adverse
change in the ability of the Buyer to conduct the Software Business after the
Closing Date on substantially the same terms as currently conducted, whether as
a result of the right of any person to terminate any Material Contract, assert
any Claim against any Material Asset or against the Corporation, discontinue its
relationship to or dealings with the Corporation, or otherwise.
3.35 Disclosure.
No representation, warranty, or statement made by the Seller or the Principals
in this Agreement or in any Ancillary Agreement contains or will contain any
untrue statement or omits or will omit to
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state any fact necessary to make the statements contained herein or therein not
misleading. None of this Agreement or any Ancillary Agreement or any certificate
or statement in writing which has been supplied by or on behalf of the
Corporation, the Seller or the Principals, or by any of the directors, officers
or employees of the Corporation or the Seller in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact, or omits any statement of a material fact necessary in order to make the
statements contained herein or therein not misleading.
3.36 Software AG Canada.
Software AG Canada does not have any material assets, liabilities (actual or
contingent), commitments, or other obligations whatsoever, and has been used
solely for purposes of preserving the rights of the Principals to the name
"Software AG". Software AG Canada is currently in good standing in respect of
its obligations under all applicable laws, including tax and similar laws, and
is not in default of any material filing or other obligation under such laws.
3.37 Truth at Closing.
Except as otherwise disclosed to and agreed to by the Buyer in writing after the
date hereof, all of the representations, warranties, and agreements of the
Seller and Principals contained in this Article III shall be true and correct
and in full force and effect on and as of the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTOR
The Buyer and Guarantor hereby jointly and severally represent and warrant to
the Seller acknowledging the Seller is relying thereon in entering into this
Agreement and completing the transactions contemplated hereby, as follows:
4.01 Organization.
The Buyer and the Guarantor are corporations validly existing and in good
standing under the laws of their jurisdictions of incorporation with the
corporate power and authority to conduct their business and to own and lease its
properties and assets, and are duly qualified or licensed to do business and in
good standing in each jurisdiction in which the failure to be so qualified or
licensed would have a material adverse effect on its financial condition or
operations.
4.02 Power and Authority.
Each of the Buyer and the Guarantor has the power and authority to execute,
deliver, and perform this Agreement and the Ancillary Agreements to be executed
and delivered by it in connection with the transactions contemplated hereby and
thereby, and each of the Buyer and the Corporation has taken all necessary
corporate action to authorize the execution and delivery of this Agreement and
the Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby. This Agreement is, and, when such other and Ancillary
Agreements are executed and
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delivered, such other Ancillary Agreements to be executed and delivered by the
Buyer and the Guarantor in connection with the transactions contemplated hereby
and thereby shall be, the legal, valid, and binding obligation of the Buyer or
the Guarantor, as the case may be, enforceable in accordance with their terms.
4.03 Broker's or Finder's Fees.
Neither the Buyer nor the Guarantor has authorized any person to act as broker,
finder, or in any other similar capacity in connection with the transactions
contemplated by this Agreement.
4.04 No Conflict.
Neither the execution and delivery by the Buyer and the Guarantor of this
Agreement and of the Ancillary Agreements to be executed and delivered by them
in connection with the transactions contemplated hereby or thereby, nor the
consummation by them of the transactions contemplated hereby or thereby will
violate or conflict with any law applicable to the Buyer or the Guarantor, or
any provision of any charter, bylaw, or other governing or organizational
instrument of the Buyer or the Guarantor.
4.05 Interim Financial Statements.
The interim financial statements of the Guarantor for the period ended July 31,
1997, a copy of which is attached as Schedule "5", have been prepared in
accordance with US generally accepted accounting principles, consistently
applied with the principles and procedures employed in prior periods. Such
interim financial statements properly reflect all properties, assets and
liabilities of the Guarantor and fairly present the results of operation and the
financial position of the Guarantor as of the Interim Statement Date in
conformity with US generally accepted accounting principles consistently applied
with the principles and procedures employed in prior periods.
ARTICLE V
CONDUCT OF THE SOFTWARE BUSINESS PRIOR TO CLOSING
5.01 Ordinary Course of Business.
The Principals and the Seller shall cause the Corporation to conduct the
Software Business during the Interim Period diligently and substantially in the
same manner as heretofore conducted, and not to institute any new methods of
accounting or operation or engage in any transaction or activity, enter into any
agreement, or make any commitment, except in the ordinary course of such
business and consistent with past practice.
5.02 Preservation of Goodwill.
The Principals and the Seller shall use their best efforts to cause the
Corporation, during the Interim Period, to:
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(i) keep available the services of the present employees and
agents of the Corporation and maintain existing relationships
and goodwill with the suppliers, customers, distributors,
partners and any others having business relations with it;
(ii) preserve the possession and control of the Corporation's
properties and assets and to preserve the confidentiality of
any confidential or proprietary information of the Software
Business; and
(iii) conduct the Software Business in such a manner that on the
Closing Date, the representations and warranties of the Seller
and Principals contained in this Agreement shall be true,
correct and complete as if such representations and warranties
were made on and as of such date.
5.03 Prohibited Actions.
In no event, without the prior written consent of the Buyer, shall the Seller or
Principals during the Interim Period cause, permit or suffer the Corporation to:
(a) Liabilities. Incur any material liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), increase its indebtedness
for borrowed money, or make any loan to any person, except current borrowings
from banks in the ordinary course of business;
(b) Liens. Permit any of the Material Assets to be subjected to any Encumbrance,
except for Permitted Encumbrances.
(c) Disposition of Material Assets. Waive any Claims of substantial value
respecting the Material Assets, or sell, transfer, or otherwise dispose of any
of the Material Assets, except in the ordinary course of business and consistent
with past practice, including writing off as uncollectable any notes or accounts
receivable or cancelling or waiving any material Claims or rights against third
parties, other than the use of its cash reserves to fund the payment of the
Special Dividend and the Special Share Redemption.
(d) Licenses. Other than in the ordinary course of its licensing activities and
consistent with past practice, dispose of, license, or permit to lapse any
rights in any Intellectual Property.
(e) Increases in Compensation. Increase the compensation of the officers,
employees, or consultants of the Corporation, make any bonus or profit sharing
commitment, distribution or payment of any kind, other than as contemplated by
this Agreement, or grant any general increase in the rate of wages, salaries,
bonuses or other remuneration of any executive or other employee, other than as
contemplated by this Agreement.
(f) Software Contracts. Enter into any new (or materially amend the terms of
existing) Software Contracts other than in the ordinary course of business and
consistent with past practice.
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(g) Capital Expenditures. Make any material capital expenditure or commitment
therefor, other than the replacement of equipment in the ordinary course
of business;
(h) Accounting Changes. Make any material change in any method of accounting
or auditing practice from those reflected in the Interim Financial
Statements;
(i) Maintain Insurance. Cancel or reduce any of its insurance coverage; or
(j) Agreements. Agree, whether or not in writing, to do any of the foregoing.
5.04 Access.
From the date of this Agreement to the Closing Date, the Seller shall (1)
provide the Buyer with such information as the Buyer may from time to time
reasonably request with respect to the Software Business and the transactions
contemplated by this Agreement; (2) provide the Buyer and its officers, counsel,
and other authorized representatives (including without limitation its advisors
in connection with the Public Offering) access during regular business hours and
upon reasonable notice to the books, records, and offices of the Corporation, as
the Buyer may from time to time reasonably request; and (3) permit the Buyer to
make such inspections thereof as the Buyer may reasonably request. Any
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Corporation. No
investigations made by or on behalf of the Buyer, whether under this Section
5.04 or any other provision of this Agreement or any Ancillary Agreement, shall
have the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made in this Agreement.
5.05 Updating of Information.
From the date of this Agreement to the Closing Date, the Seller shall deliver
revised or supplementary schedules to this Agreement, containing accurate
information as of the Closing Date, in order to enable the Buyer to confirm the
accuracy of the Seller's representations and warranties and otherwise to give
full effect to the provisions of this Agreement. Such revised or supplementary
schedules shall not modify or be deemed part of this Agreement unless agreed by
the Buyer in writing with reference to the specific schedules to be so treated.
The foregoing obligation to furnish updated information shall apply to such
Disclosure Schedule only insofar as material events or changes occur such as to
make the contents of such Disclosure Schedule unreliable or misleading.
5.06 Approvals of Third Parties.
The Seller and the Buyer shall make good faith efforts, and shall cooperate with
one another, to secure all required Consents, and to obtain the satisfaction of
the conditions specified in Articles VI and VII, as shall be required in order
to enable the Seller and the Buyer to effect the transactions contemplated
hereby in accordance with the terms and conditions hereof.
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5.07 Filings and Authorizations.
Each of the Seller and the Buyer, as promptly as practicable after the execution
hereof, (i) will make, or cause to be made, all such filings and submissions
under all laws applicable to it, as may be required for it to consummate the
purchase and sale of the Purchased Securities in accordance with the terms of
this Agreement; (ii) will use all reasonable efforts to obtain, or cause to be
obtained, all material Consents from all persons and all material Authorizations
from all Governmental Entities necessary or advisable to be obtained by it in
order to consummate such transfer; and (iii) will use all reasonable efforts to
take, or cause to be taken, all other actions necessary, proper or advisable in
order for it to fulfill its obligations hereunder. The Seller and the Buyer will
co-ordinate and co-operate with one another in exchanging such information and
supplying such assistance as may be reasonably requested by each in connection
with the foregoing.
5.08 Notice of Untrue Representation or Warranty.
The Seller and the Principals shall notify the Buyer and the Guarantor, upon
becoming aware that any representation or warranty of the Seller and Principals
contained in this Agreement or any Ancillary Agreement is untrue or incorrect in
any material respects during the Interim Period and for the purposes of this
Section each representation and warranty shall be deemed to be given at and as
of all times during the Interim Period.
5.09 Transfer of the Purchased Securities.
The Seller shall take all necessary and reasonable steps and proceedings to
permit good and marketable title to the Purchased Securities to be duly and
validly transferred and assigned to the Buyer at the Time of Closing, free of
all Encumbrances.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE SELLER AND THE PRINCIPALS
The obligations of the Seller and Principals to be performed hereunder shall be
subject to the satisfaction (or waiver by the Seller and Principals) at or prior
to the Closing Date of each of the following conditions:
6.01 Representations and Warranties True at Closing Date.
The representations and warranties of the Buyer and the Guarantor contained in
this Agreement shall be true on and as of the Closing Date with the same force
and effect as though made on and as of such date; the Buyer and the Guarantor
shall have complied with the covenants and agreements set forth herein to be
performed by it on or before the Closing Date; and the Buyer and the Guarantor
shall have delivered to the Seller a certificate dated the Closing Date and
signed by a duly authorized officer of each of the Buyer and the Guarantor to
all such effects.
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6.02 Authorization, Execution, Delivery, and Enforceability.
All corporate action by the Buyer and the Guarantor required in order to
authorize the transactions contemplated by this Agreement and the Ancillary
Agreements in connection with the transactions contemplated hereby and thereby
has been duly and validly taken; and this Agreement and such Ancillary
Agreements have been duly executed and delivered by the Buyer and the Guarantor
and constitute the valid and binding obligations of the Buyer and the Guarantor
enforceable in accordance with their terms, except as to (1) such enforcement's
being subject to bankruptcy, insolvency, reorganization, moratorium, or other
laws relating to creditors' rights, or debtor's moratorium, and (2) the
availability of the remedy of specific performance and other forms of equitable
relief.
6.03 No Conflict.
Neither the execution and delivery of this Agreement by the Buyer and the
Guarantor, and the other agreements and instruments to be executed and delivered
by them in connection with the transactions contemplated hereby and thereby, nor
the consummation of the transactions contemplated hereby and thereby will
violate the Certificate of Incorporation or Bylaws of the Buyer and the
Guarantor or, contravene any statute or law, or any judgment, decree, order,
regulation, or rule of any court or governmental authority pertaining to the
Buyer and the Guarantor.
(a) Deliveries for the Closing Date. The Buyer and the Guarantor shall have
delivered or caused to be delivered to the Seller and the Principals on the
Closing Date, the following in form and substance satisfactory to the Seller and
the Principals, acting reasonably:
(i) duly executed copies of the Ancillary Agreements required to be
executed and delivered by either or both of the Buyer and the
Guarantor as of the Closing Date;
(ii) certified copies of (i) the charter documents and extracts from
the by-laws of the Buyer and the Guarantor relating to the
execution of documents; (ii) all resolutions of the shareholders,
the board of directors or any duly authorized committee thereof,
of each of the Buyer and the Guarantor approving the entering
into of this Agreement and the Ancillary Agreements and the
completion of all transactions contemplated hereunder and
thereunder; and (iii) all other instruments evidencing necessary
action of the Buyer and the Guarantor and of Authorizations, if
any, with respect to such matters;
(iii) certificates of the Secretary or an Assistant Secretary of each
of the Buyer and the Guarantor certifying the names and true
signatures of its officers authorized to sign this Agreement and
the Ancillary Agreements to be delivered hereunder;
(iv) a certificate of status, compliance, good standing or like
certificate with respect to each of the Buyer and the Guarantor
issued by appropriate government officials of the jurisdiction of
its incorporation;
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(v) favourable opinions of counsel to the Buyer and the Guarantor as
to the matters contemplated by this Agreement in form customary
for transactions of this nature; and
(vi) releases by the Corporation in favour of the Seller and the
Principals in respect of all claims against them in their
capacities as shareholders, officers, directors and employees of
the Corporation for matters arising prior to the Closing Date,
but specifically excluding any Claims that may be made by the
Buyer under this Agreement or any Ancillary Agreement.
If any condition, obligation or covenant of the Buyer or the Guarantor to be
performed at or prior to the Time of Closing on the Closing Date shall not have
been fulfilled or performed by such time, the Seller and the Principals may
terminate this Agreement by notice in writing to the Buyer and the Guarantor,
and in such event the Seller and the Principals shall be released from all
obligations hereunder. The Buyer and the Guarantor shall only be released from
their obligations hereunder if the condition or conditions for the
non-performance of which the Seller and the Principals have terminated this
Agreement are not reasonably capable of being performed or caused to be
performed by the Buyer and the Guarantor. Notwithstanding the foregoing, the
Seller and the Principals, shall be entitled to waive compliance with any of
such conditions, obligations or covenants in whole or in part if they see fit to
do so without prejudice to any of their rights of termination in the event of
non-performance of any other condition, obligation or covenant in whole or in
part.
6.04 Performance of Covenants.
The Buyer and Guarantor shall have fulfilled or complied with all covenants
herein contained to be performed or caused to be performed by them at or prior
to the Time of Closing, and the Buyer and the Guarantor shall have delivered
certificates to that effect. The receipt of such certificate and the Closing
shall not be a waiver of the covenants of the Buyer and the Guarantor which are
contained in this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE GUARANTOR
Each of the obligations of the Buyer and the Guarantor to be performed hereunder
shall be subject to the satisfaction (or the waiver by the Buyer and the
Guarantor) at or prior to the Closing Date of each of the following conditions:
7.01 Representations and Warranties True at Closing Date.
The representations and warranties of the Seller and the Principals contained in
this Agreement shall be true on and as of the Closing Date with the same force
and effect as though made on and as of such date; the Seller and the Principals
shall have complied with the covenants and agreements set forth herein to be
performed by them on or before the Closing Date; and the Seller and the
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Principals shall have delivered to the Buyer and the Guarantor a certificate
dated the Closing Date and signed by a duly authorized officer of the Seller and
the Principals to all such effects.
7.02 Performance.
(a) Performance of Covenants. The Seller and Principals shall have fulfilled
or complied with all covenants herein contained to be performed or caused to be
performed by them at or prior to the Time of Closing, and the Seller and the
Principals shall have delivered certificates to that effect. The receipt of such
certificate and the Closing shall not be a waiver of the covenants of the Seller
and the Principals which are contained in this Agreement.
(b) Consents and Authorizations. All Consents and Authorizations shall have
been obtained on terms acceptable to the Buyer and the Guarantor acting
reasonably, in order to permit the Closing of the sale of the Purchased
Securities on the terms and conditions set out in this Agreement without
adversely affecting any Material Asset, or resulting in the violation or a
breach of or a default under or any termination, cancellation, amendment or
acceleration of any obligation under any Material Contract.
(c) Due Diligence. The Buyer and the Guarantor shall have completed their
investigation into the books, records and affairs of the Corporation and such
investigation shall not have disclosed any matter not previously disclosed in
the Disclosure Schedule which the Buyer, acting reasonably, considers to be
material to its decision to acquire the Purchased Securities. Neither any
investigation of the Seller by the Buyer, nor the Disclosure Schedule hereto,
nor any other document delivered to the Buyer as contemplated by this Agreement,
shall have revealed any facts or circumstances that, in the good faith judgment
of the Buyer, reflect in a material adverse way on the Material Assets, or the
business, operations, or prospects of the Software Business.
(d) Deliveries for the Closing Date. The Seller and the Principals shall have
delivered or caused to be delivered to the Buyer on the Closing Date, the
following in form and substance satisfactory to the Buyer and the Guarantor,
acting reasonably:
(i) share certificates representing the Purchased Securities duly
endorsed in blank for transfer, or accompanied by irrevocable
security transfer powers of attorney duly executed in blank, in
either case by the holders of record thereof, together with
evidence of satisfactory to the Buyer that the Buyer or its
nominee(s) have been duly entered upon the books of the
Corporation as the holder of the Purchased Securities;
(ii) duly executed copies of the Ancillary Agreements required to be
executed and delivered by the Seller and the Principals as of the
Closing Date;
(iii) certified copies of (i) the charter documents and extracts from
the by-laws of the Seller and the Corporation relating to the
execution of documents; (ii) all resolutions of the shareholders,
the board of directors or any duly authorized committee thereof,
of each of the Seller and the Corporation approving the
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entering into of this Agreement and the Ancillary Agreements and the
completion of all transactions contemplated hereunder and thereunder;
and (iii) all other instruments evidencing necessary action of the
Seller and the Corporation and of Authorizations, if any, with respect
to such matters;
(iv) certificates of the Secretary or an Assistant Secretary of each of the
Seller and the Corporation certifying the names and true signatures of
its officers authorized to sign this Agreement and the Ancillary
Agreements to be delivered hereunder;
(v) a certificate of status, compliance, good standing or like certificate
with respect to each of the Seller, the Predecessor Corporation, the
Subsidiary and Software AG Canada, issued by appropriate government
officials of the jurisdiction of its incorporation and, in the case of
the Corporation of each other jurisdiction in which it carries on
business as listed in the Disclosure Schedule;
(vi) a favourable opinion of counsel to the Seller, the Principals and the
Corporation as to the matters contemplated by this Agreement in form
customary for transactions of this nature;
(vii) all the originals of the books and records and the corporate records of
the Corporation, the Predecessor Corporation, the Subsidiary and
Software AG Canada;
(viii) evidence that all necessary steps and proceedings as approved by
counsel for the Buyer, acting reasonably, to permit all of the
Purchased Securities to be fully and regularly transferred to the Buyer
or its nominee(s) have been taken;
(ix) a duly executed resignation, undated, of each director and officer of
the Corporation (other than Xxxxxx Xxxxxx) and Software AG Canada as
the Buyer may specify;
(x) a duly executed release in favour of the Corporation and Software AG
Canada of the Seller, the Principals and of such officers and directors
of the Corporation as the Buyer may specify with respect to the period
prior to the Closing Date;
(xi) a duly executed resignation and release in favour of the Corporation of
the auditor or accountant to become effective following the completion
of the filing of the tax returns of the Corporation for the tax year
ended as of the Closing Date;
(xii) duly executed resolutions of the Seller, in its capacity as shareholder
of the Corporation, consenting to the Amalgamation and authorizing the
completion of all related transactions, and of the shareholders and
directors of Software AG Canada to the transfer of the shares thereof
by the Principals to the Corporation;
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(xiii) all necessary assurances, transfers, assignments and Consents,
including all necessary Consents other than those excluded under
Section 3.10, and any other instruments necessary or reasonably
required effectively to transfer the Purchased Securities to the
Buyer with a good title, free and clear of all Encumbrances;
(xiv) evidence satisfactory to the Buyer that all Encumbrances other
than Permitted Encumbrances have been discharged or released as
of the Closing Date;
(xv) evidence that the Amalgamation, Special Dividend and Special
Share Redemption have been completed, in the manner contemplated
by this Agreement or in such other manner as is acceptable to the
Buyer, acting reasonably;
(xvi) share certificates representing the securities of Software AG
Canada duly endorsed in blank for transfer, or accompanied by
irrevocable security transfer powers of attorney duly executed in
blank, in either case by the holders of record thereof, together
with evidence of satisfactory to the Buyer that the Corporation
or its nominee(s) has been duly entered upon the books of
Software AG Canada as the holder of all of such securities for
nominal consideration; and
(xvii) complete and unrestricted access to the facilities of the
Software Business, located at 000 Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxx, and at sites subject to the Leases.
(e) Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and any Ancillary Agreement shall be
reasonably satisfactory in form and substance to the Buyer and the Buyer shall
have received copies of all such instruments and other evidence as it may
reasonably request in order to establish the consummation of such transactions
and the taking of all proceedings in connection therewith.
(f) No Legal Action. No action or proceeding shall be pending or threatened by
any person in any jurisdiction, to enjoin, restrict or prohibit any of the
transactions contemplated hereby or the right of the Corporation to conduct the
Software Business after Closing on substantially the same basis as operated
prior to Closing.
(g) Change in Law. Since the date hereof, no law, proposed law, any change in
any law, or the interpretation or enforcement of any law shall have been
introduced, enacted or announced (including the introduction, enactment or
announcement of any law respecting taxes or environmental matters or any change
therein or in the interpretation or enforcement thereof), the effect of which
will be to prevent or to increase, in any material respect (i) the cost to the
Buyer of the completion of the transactions contemplated in this Agreement; or
(ii) the cost of the Corporation of operating the Software Business after
Closing on substantially the same basis as heretofore operated.
If any condition, obligation or covenant of the Seller or the Principals to be
performed at or prior to the Time of Closing on the Closing Date shall not have
been fulfilled or performed by such time, the Buyer may terminate this Agreement
by notice in writing to them, and in such event the
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Buyer shall be released from all obligations hereunder. The Seller and the
Corporation shall only be released from their obligations hereunder if the
condition or conditions for the non-performance of which the Buyer has
terminated this Agreement are not reasonably capable of being performed or
caused to be performed by them. Notwithstanding the foregoing, the Buyer shall
be entitled to waive compliance with any of such conditions, obligations or
covenants in whole or in part if it sees fit to do so without prejudice to any
of its rights of termination in the event of non-performance of any other
condition, obligation, or covenant in whole or in part.
ARTICLE VIII
CLOSING
8.01 Closing.
The closing of the purchase and transfer of the Purchased Securities (the
"Closing") shall take place at the law offices of Gowling, Strathy & Xxxxxxxxx,
Suite 1020, 00 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx, at the Time of Closing on
the Closing Date.
8.02 Actions at Closing.
Subject to satisfaction or waiver by the relevant Party of the conditions of
Closing set forth herein, at the Time of Closing the transactions contemplated
by this Agreement shall be completed. The transfer of the Purchased Securities
shall be deemed to take effect as at the time of Closing on the Closing Date.
8.03 Further Assurances.
At and after the Closing, without further consideration, the Buyer and the
Seller shall take all such other action and shall procure or execute,
acknowledge, and deliver all such further certificates, conveyance instruments,
Consents, and other documents as the other party or its counsel may reasonably
request to ensure more effectively the compliance of such party with its
agreements, covenants, warranties, and representatives under this Agreement.
8.04 Tax Matters.
(a) The Seller's Right and Responsibility for Preclosing Tax Matters. The
Seller shall have the right and responsibility to direct the handling of all tax
matters affecting or relating to the conduct of the Software Business prior to
the Closing Date, subject to the review and reasonable approval of the Buyer
including the prosecution of all administrative and judicial remedies, the
settlement of all issues, and the execution of agreements, Consents, or waivers,
extending the statute of limitations. In this regard, in preparing tax returns
for the Corporation for the taxation year immediately preceding the taxation
year in which the Special Share is redeemed, credit for foreign income taxes
will be claimed against provincial corporate income taxes to the maximum extent
possible before any claim for foreign tax credits to reduce federal income
taxes.
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(b) The Buyer's Cooperation. The Buyer shall use its reasonable efforts to
provide the Seller such assistance as it may reasonably request in connection
with matters relating to taxes, including information with respect to the
Seller's preparation of any returns of taxes, any audit or other examination by
any taxing authority, any judicial or administrative proceeding relating to the
Seller's liability for taxes, or any Claims arising hereunder after the Closing
Date. The Buyer shall retain and provide the Seller with reasonable access
during normal business hours to records or information pertaining to periods
prior to the Closing Date which may be relevant to any such return, audit,
examination, proceeding, or determination, and the Buyer shall retain all such
books and records for so long as necessary in keeping with applicable statutes
of limitations.
8.05 Post-Closing Covenants of the Buyer and Guarantor.
The Buyer and the Guarantor covenant and agree with the Seller and Principals as
follows:
(a) They shall, in connection with any potential future completion of a Public
Offering, to the extent permitted under applicable securities laws cause
the Corporation to permit the employees of the Corporation to participate
in any stock option plan adopted by the entity pursuing such Public
Offering on the same basis as employees of such entity and its other
affiliates, and, in the event no Public Offering is completed, permit
Xxxxxx Xxxxxx and Xxxxx Xxxxxxxx to be eligible to participate in any
employee equity incentive plan in place for Software AG Systems Inc. and
its affiliates on the same basis as employees of the Guarantor and its
affiliates.
(b) They shall cause the Corporation to continue to operate the Software
Business in the ordinary course following the Closing Date consistent with
past practise.
(c) They shall cause the Corporation to provide each employee of the
Corporation who remains with the business as of the end of the 1997 fiscal
year with a year end cash bonus. The total year-end cash bonus will not
exceed $1.3 million. The payments of such bonus to employees of the
Corporation shall be made forthwith following the completion of the fiscal
year ended November 30, 1997 in accordance with the provisions of Schedule
6, provided that in the event that any such employee ceases to be an
officer or employee of the Corporation the obligation of the Corporation
to make such payment shall terminate and the amount otherwise payable to
such employee shall be allocated among such other employees of the
Corporation as are mutually agreed by the Buyer and Xxxxxx Xxxxxx, each
acting reasonably (other than in the case of employees terminated by the
Corporation without cause who shall be entitled to a pro rated portion of
the amount set forth in Schedule "6" to the date of such termination and
the balance of such amount shall be allocated among other employees as
provided above). The payment and performance by the Corporation of its
obligation to pay the employee bonuses as set forth herein shall be
secured pursuant to the guarantees and security of the Guarantor, the
Buyer and the Corporation forming part of the Ancillary Documents
--39--
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITIES
9.01 Survival of Representations and Warranties.
(1) The representations and warranties of the Seller and Principals
contained in this Agreement or any Ancillary Agreement shall survive the Closing
and, notwithstanding such or any investigation made by or on behalf of the Buyer
and the Guarantor, shall continue in full force and effect for the benefit of
the Buyer and the Guarantor for a period of two (2) years from the Closing Date
and any Claim in respect thereof (except a Claim based on tax matters under
Section 3.27, which shall continue until the expiry of the relevant limitation
period, or a Claim based on a breach of Sections 3.04, 3.05 or 3.06 or on fraud,
which shall have no restriction) shall be made in writing within such time
period.
(2) The representations and warranties of the Buyer and Guarantor contained
in this Agreement or in any Ancillary Agreement shall survive the Closing and,
notwithstanding such Closing or any investigation made by or on behalf of the
Seller and the Principals, shall continue in full force and effect for the
benefit of the Seller and the Principals for a period of two (2) years from the
Closing Date and any Claim in respect thereof (except a Claim based on fraud,
which shall have no restriction) shall be made in writing within such time
period.
9.02 Indemnification in Favour of the Buyer and Guarantor.
Subject to Section 9.05, the Seller and Principals shall jointly and severally
indemnify and save the Buyer and Guarantor, and their respective shareholders,
directors, officers, employees, agents and representatives, (in respect of whom
the Buyer hereby acts as agent and trustee with respect thereto) harmless of and
from any Claim or loss suffered by, imposed upon or asserted against the Buyer
or Guarantor as a result of, in respect of, connected with or arising out of,
under or pursuant to:
(a) any failure of the Seller or Principals to perform or fulfil
any covenant of the Seller or Principals under this Agreement
or any Ancillary Agreement;
(b) subject to the limitation periods set forth in Section 9.01,
any breach or inaccuracy of any representation or warranty
given by the Seller contained in this Agreement or in any
Ancillary Agreement; and
(c) any failure to obtain any material Consent or Authorization.
9.03 Indemnification in Favour of the Seller.
Subject to Section 9.05, the Buyer and the Guarantor shall jointly and severally
indemnify and save the Principals and the Seller and its shareholders,
directors, officers, employees, agents and representatives (in respect of whom
the Buyer hereby acts as agent and trustee with respect thereto) harmless of and
from any Claim or loss suffered by, imposed upon or asserted against
--40--
the Principals or the Seller as a result of, in respect of, connected with or
arising out of, under or pursuant to:
(a) any failure by the Buyer to perform and fulfil any covenant
of the Buyer under this Agreement or any Ancillary Agreement;
and
(b) subject to the limitation period set forth in Section 9.01
hereof, any breach or inaccuracy of any representation or
warranty given by the Buyer contained in this Agreement or in
any Ancillary Agreement.
9.04 Indemnification Proceedings.
(1) Any Party seeking indemnification under this Article (the "indemnified
party") shall forthwith notify the Party against whom a Claim for
indemnification is sought hereunder (the "indemnifying party") in writing, which
notice shall specify, in reasonable detail, the nature and estimated amount of
the Claim provided that, in so doing, it may restrict or condition any
disclosure in the interest of preserving privileges of importance in any
foreseeable litigation. If a Claim by a third party is made against an
indemnified party, and if the indemnified party intends to seek indemnity with
respect thereto under this Article, the indemnified party shall promptly (and in
any case within 15 days of such Claim being made) notify the indemnifying party
of such with reasonable particulars. The indemnifying party shall have 30 days
after receipt of either such notice to undertake, conduct and control, through
counsel of its own choosing and at its expense, the settlement or defence
thereof, and the indemnified party shall co-operate with it in connection
therewith; except that with respect to settlements entered into by the
indemnifying party (i) the consent of the indemnified party shall be required if
the settlement provides for equitable relief against the indemnified party,
which consent shall not be unreasonably withheld or delayed; and (ii) the
indemnifying party shall obtain the release of the indemnified party. If the
indemnifying party undertakes, conducts and controls the settlement or defence
of such Claim (i) the indemnifying party shall permit the indemnified party to
participate in (subject to the indemnifying party's right to conduct and
control) such settlement or defence through counsel chosen by the indemnified
party, provided that the fees and expenses of such counsel shall be borne by the
indemnified party; and (ii) the indemnifying party shall promptly reimburse the
indemnified party for the full amount of any loss resulting from any Claim and
all related expenses (other than the fees and expenses of counsel as aforesaid)
incurred by the indemnified party upon the final settlement or adjudication of
such claims. The indemnified party shall not pay or settle any Claim so long as
the indemnifying party is reasonably contesting any such Claim in good faith on
a timely basis. Notwithstanding the two immediately preceding sentences, the
indemnified party shall have the right to pay or settle any such Claim, provided
that in such event it shall waive any right to indemnity therefor by the
indemnifying party.
(2) With respect to third party Claims, if the indemnifying party does not
notify the indemnified party within 30 days after the receipt of the indemnified
party's notice of a Claim of indemnity hereunder that it elects to undertake the
defence thereof, the indemnified party shall have the right, but not the
obligation, to contest, settle or compromise the Claim in the exercise of its
reasonable judgement at the expense of the indemnifying party.
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(3) In the event of any Claim by a third party against an indemnified
party, the defence of which is being undertaken and controlled by the
indemnifying party, the indemnified party will use all reasonable efforts to
make available to the indemnifying party those employees whose assistance,
testimony or presence is necessary to assist the indemnifying party in
evaluating and in defending any such Claims; provided that the indemnifying
party shall be responsible for the expense associated with any employees made
available by the indemnified party to the indemnifying party hereunder, which
expense shall be equal to a reasonable amount to be mutually agreed upon per
person per hour or per day for each day or portion thereof that such employees
are assisting the indemnifying party and which expenses shall not exceed the
actual cost to the indemnified party associated with such employees.
(4) With respect to third party Claims, the indemnified party shall make
available to the indemnifying party or its representatives on a timely basis all
documents, records and other materials in the possession of the indemnified
party, at the expense of the indemnifying party, reasonably required by the
indemnifying party for its use in defending any Claim and shall otherwise
co-operate on a timely basis with the indemnifying party in the defence of such
Claim.
(5) With respect to any re-assessment for income, corporate sales, excise,
or other tax or other liability enforceable by Encumbrance against the property
of the indemnified party, the indemnifying party's right to so contest shall
only apply after the payment of such re-assessment or the provision of such
security, in each case as is necessary to avoid an Encumbrance being placed on
the property of the indemnified party, or the taking of such other steps as are
acceptable to the indemnified party, acting reasonably.
(6) In the event that the indemnified party and indemnifying party do not
agree as to the amount of a Claim asserted hereunder with respect to a breach of
a representation or misrepresentation under this Agreement within a period of 30
days following notification of such Claim, and the amount of such Claim
(together with all other Claims in respect of which indemnification has been
sought), exceeds $100,000, either of the parties shall be entitled forthwith
thereafter to refer all of such Claims in dispute to arbitration before a single
arbitrator in Toronto, Ontario pursuant to the provisions of the Arbitration Act
(Ontario) which determination shall be final, conclusive and binding on the
parties with respect to the subject matter of such Claim. The party prevailing
in such proceeding shall be entitled to be reimbursed for all of its costs and
expenses incurred in connection therewith by the other party in addition to such
other relief as may be granted as a result of such proceeding.
9.05 Limitations.
Notwithstanding anything in this Article IX to the contrary:
(a) Maximum Liability. The total liability of the Seller and the Principals
to the Buyer and the Guarantor for indemnification pursuant to this Article IX,
exclusive of Claims based on any breach of the representations and warranties
contained in Section 3.27, the covenants and agreements of the Seller contained
in this Agreement, or if attended by fraud or any knowing or willful breach
--42--
thereof, any other representations and warranties, shall not exceed $4,000,000;
but the liability of the Seller and the Principals to the Buyer for
indemnification for Claims based on tax matters under Section 3.27 and such
other excluded matters shall not be limited in amount. Notwithstanding the
foregoing, no Claims may be made until the aggregate of the Claims of the Buyer
and the Guarantor exceed $25,000, but in such event the entire amount of such
Claims may be sought.
(b) Exclusive Remedy. The Parties hereto acknowledge and agree that this
Article IX is the exclusive remedy of the parties hereto for damages for breach
or misrepresentation of or under this Agreement. This provision is not intended
to preclude any proceeding by any Party against any other Party based on a cause
of action or right, including any statutory right, other than a cause of action
in contract for breach of a representation, warranty or agreement contained in
this Agreement provided that (i) such Claim involves an amount in excess of
$250,000; (ii) such Claim must be made within a period of two years following
the date hereof; and (iii) the aggregate liability of the Seller or the
Principals in respect of such Claim shall not exceed the $4,000,000 limitation
set forth in 9.05(a) after taking into account all Claims made for breaches of
representations as of the date of such Claim. In the event of any such Claim,
the Principals and the Seller shall have the benefit of (i) the provisions of
this Article IX in the event of Claims as to procedural matters based on third
party claims; and (ii) the arbitration provisions of Section 9.04(6).
ARTICLE X
CONFIDENTIALITY
10.01 Confidentiality Obligation of the Buyer Prior to Closing.
Until Closing (and, if this Agreement is terminated for any reason, forever
thereafter), the Buyer shall, and shall use its best efforts to cause its
personnel, agents and professional advisors to, hold in strict confidence, not
disclose to any person without the prior written consent of the Seller, and not
use in any manner except in connection with the transactions contemplated
hereby, any confidential business, financial or technical information obtained
from the Seller or the Corporation in connection with the transactions
contemplated hereby. This obligation shall cease to apply to the Buyer upon the
occurrence of Closing. In the event that this Agreement terminates for any
reason, the Buyer shall return to the Seller or destroy all materials in its
possession containing any such confidential information, including all copies,
extracts, adaptations, and transcriptions thereof.
10.02 Confidentiality Obligation of the Seller and Principals Following
Closing.
Following the occurrence of Closing, the Seller and Principals shall, and shall
use their best efforts to cause their personnel, agents and professional
advisors to, hold in strict confidence, not disclose to any person without the
prior written consent of the Buyer, and not use in any manner whatsoever, any
confidential business, financial or technical information remaining in their
possession concerning the Software Business or the Material Assets. Such
confidential information specifically includes all source code, system and user
documentation, and other Technical Documentation pertaining to the Software
Programs, including any proposed design and specifications for future products
and products in development, marketing plans, and all other
--43--
technical and business information concerning the Software Business. Promptly
following Closing, the Seller shall surrender to the Buyer or destroy all
materials remaining in their possession containing any such confidential
information, including all copies, extracts, adaptations, and transcriptions
thereof.
10.03 Permitted Disclosures.
Notwithstanding Sections 10.01 and 10.02, either party may disclose confidential
information (1) where necessary to any Governmental Entity as required by law or
(2) if otherwise required by court order or decree.
10.04 Scope of Confidential Information.
For purposes of this Agreement, information shall not be deemed confidential (1)
if such information is available in full from public sources; (2) if such
information is received from a third party not under an obligation to keep such
information confidential; or (3) if the recipient can conclusively demonstrate
that such information was independently developed by the recipient.
ARTICLE XI
MISCELLANEOUS
11.01 Parties Bound by Agreement; Successors and Assigns.
The terms, conditions, and obligations of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and the respective successors
and assigns thereof. Without the prior written consent of the other party, the
Buyer may assign its rights, duties, or obligations hereunder or any part
thereof to any other person, which shall thereupon become the Buyer, provided
that at the time of such assignment the Buyer unconditionally and irrevocably
guarantees the payment and performance of any duties or obligations so assigned.
None of the rights or obligations hereunder shall be assignable or transferable
by any Party without the prior written consent of the other Parties.
11.02 Time of the Essence.
Time shall be of the essence of this Agreement.
11.03 Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original and all of which shall constitute
the same instrument and by telecopier or other similar means of electronic
reproducible transmission and if so executed shall be legal, valid and binding
on the party so signing as if originally signed.
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11.04 Headings.
The headings of the Sections and paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof.
11.05 Expenses.
The Seller and the Buyer shall each pay all costs and expenses incurred by it or
on its behalf in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accounts, and counsel.
11.06 Notices.
Any notice, request, instruction, or other document to be given hereunder by any
party hereto to any other party hereto shall be in writing and delivered
personally, or sent by telecopy, registered or certified mail, postage prepaid,
if to the Seller or the Principals prior to the Closing to its
attention at:
000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
and, after Closing, to its attention at:
R.R. # 2
Puslinch, Ontario
N0B 2J0
with a copy to:
Gowling, Strathy & Xxxxxxxxx
Suite 1020
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: W. Xxxxx Xxxxxx
Telecopier: (000) 000-0000
--45--
if to the Buyer or the Guarantor to its attention at:
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000
with a copy to:
Software AG Americas, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Legal Department
Telecopier: (000) 000-0000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
delivered by telecopier or other similar form of telecommunications shall be
deemed to have been duly given to the party to whom it is directed on the next
business day following such transmission. Any notice that is addressed and
mailed in the manner herein provided shall be conclusively presumed to have been
duly given to the party to which it is addressed at the close of business, local
time of the recipient, on the seventh business day after the day it is so placed
in the mail.
11.07 Public Announcements.
The Seller and the Buyer shall consult with each other before issuing any press
releases or otherwise making any public statements with respect to this
Agreement and the transactions contemplated hereby. Neither the Seller nor the
Buyer shall issue any such press release or make any public statement without
the agreement of the other party, except as such party's counsel advises in
writing may be required by law.
11.08 Third-Party Beneficiaries.
With the exception of (1) the Parties and (2) the other persons with respect to
the matters inuring to their benefit under Article IX, there shall exist no
right of any person to claim a beneficial interest in this Agreement or any
rights arising by virtue of this Agreement.
11.09 Non-Merger.
Except as otherwise expressly provided in this Agreement, the covenants,
representations and warranties of the Parties contained in this Agreement and
the Ancillary Agreements shall not
--46--
merge on and shall survive the Closing for the periods specified in Section 9.01
and, notwithstanding such Closing, or any investigation made by or on behalf of
any Party, shall continue in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed on its behalf as of the date first above written
[SIGNATURE ILLEGIBLE] /s/ Xxxxxx X. Xxxxxx
--------------------------- ----------------------------------
Witness: Xxxxxx X. Xxxxxx
[SIGNATURE ILLEGIBLE] /s/ Xxxxx Xxxxxx
--------------------------- ----------------------------------
Witness: Xxxxx Xxxxxx
SOFTWARE AG AMERICAS, INC.
By:/s/ Xxxxx Xxxx
-------------------------------
Xxxxx Xxxx
Vice-President and Secretary
SOFTWARE AG SYSTEMS (CANADA) INC.
By:/s/ Xxxxxxx Xxxx
-------------------------------
Xxxxxxx Xxxx
Executive Vice-President
CAELUM INVESTMENTS INC.
By:/s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
President
