EXHIBIT 10.20
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into on
the 4th day of April, 2004 (the "Effective Date"), by and among Fujitsu
Transaction Solutions Inc., a Delaware corporation having its principal place of
business at 0000 Xxxxxxx Xxxx., Xxxxxx, XX 00000 X.X.X. ("FTXS" or "Buyer"), on
the one hand, and Optimal Robotics Corp., a Canadian corporation, having its
principal place of business at 0000 xx xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx
X0X 0X0 ("Optimal Corp."), and Optimal Robotics Inc., a Delaware corporation,
having its mailing address at 0000 xx xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx X0X
0X0 ("Optimal Inc.") (Optimal Corp. and Optimal Inc. being collectively referred
to herein as "Seller", and Optimal Corp., Optimal Inc. and Optimal Robotics Plc.
being collectively referred to herein as "Optimal"), on the other hand.
Capitalized terms not defined in the context of this Agreement shall have the
meanings specified in Section 31.
RECITALS:
A. Optimal carries on the business of developing, manufacturing,
assembling, marketing, selling and servicing self-checkout systems
(the "Business"); and
B. Seller has agreed to sell or cause to be sold to Buyer and Buyer has
agreed to purchase from Optimal the assets of Optimal needed to
operate the Business as currently operated by Optimal, on the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises above and of the mutual
covenants, representations, warranties and agreements set forth herein, the
parties hereby agree as follows:
AGREEMENT
1. Purchase and Sale of Purchased Assets. Subject to the terms and
conditions of this Agreement, except for the Excluded Assets, on the
Closing Date, Seller shall sell, assign, transfer, convey, and
deliver, and shall cause Optimal Plc. to sell, assign, transfer,
convey, and deliver, to Buyer, and Buyer shall purchase from Seller
and Optimal Plc., all of Seller's and Optimal Plc.'s right, title
and interest in and to the following property, undertakings and
assets, needed to operate the Business (collectively, the "Purchased
Assets"), free and clear of all Encumbrances, other than Permitted
Encumbrances:
(A) all customer contracts, whether written or oral, to which
Optimal is a party, including those customer contracts listed
in Section 1(A) of the Disclosure Schedule and including,
without limitation, service and maintenance contracts (the
"Customer Contracts");
(B) the supplier, subcontractor and vendor contracts that are
listed in Section 1(B) of the Disclosure Schedule (the "Vendor
Contracts");
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(C) the third party commercial computer software and related
maintenance contracts, to which Optimal is a party that are
listed in Section 1(C) of the Disclosure Schedule (the "Third
Party Licenses");
(D) all inventory, which shall consist of new and used, both in
and out of service, inventory held for rental and sale,
including, but not limited to, all inventory currently being
held to supply Optimal's contractual commitments, and all
other similar rental items or other items of inventory that
are listed in Section 1(D) of the Disclosure Schedule (the
"Inventory"), together with any express or implied warranty by
the manufacturer or seller of any item or component part
thereof;
(E) the lease of Optimal Corp.'s head office premises located at
0000 xx xx Xxxxxx, Xxxxxxxx, Xxxxxx, the lease of Optimal
Inc.'s assembly and warehousing facilities located at 000
Xxxxx 0 and 000 Xxxxx 0, Xxxx X, Xxxxxxxxxxx, Xxx Xxxx and the
leases pertaining to the service hubs identified in Section
1(E) of the Disclosure Schedule (the "Transferred Leases"),
including any fixtures thereon and leasehold improvements
thereto;
(F) any contracts (including any solicitation or outstanding
offers for contract), whether oral or written, other than the
Customer Contracts, the Vendor Contracts, the Third Party
Licenses and the Transferred Leases, to which Optimal is a
party that are listed in Section 1(F) of the Disclosure
Schedule (the Customer Contracts, Vendor Contracts,
Transferred Leases, Third Party Licenses and Contracts listed
in Section 1(F) of the Disclosure Schedule are sometimes
referred to collectively as the "Contracts" and individually
as a "Contract");
(G) all governmental licenses, permits, certificates, approvals,
exemptions, franchises, registrations, variances,
accreditations or authorizations or other similar rights)
(collectively, the "Permits");
(H) all Intellectual Property (the "Purchased Intellectual
Property");
(I) the machinery, equipment, furniture, fixtures, furnishings,
office equipment, accessories, vehicles, servers, network and
telecommunications equipment, personal computers, notebook
computers, workstations, printers, facsimile machines and
other equipment needed to operate the Business as currently
operated by Optimal that are listed in Section 1(I) of the
Disclosure Schedule, and all assembly plant tools, together
with the supplies, tools, and office equipment dedicated to or
used by any Eligible Employee (regardless of whether such
Eligible Employee accepts Buyer's offer of employment pursuant
to Section 9(B)) and owned or leased by Optimal, such as
cellular phones, pagers and calculators used by each of them
to operate the Business (the "Equipment");
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(J) the telephone numbers, fax numbers and uniform or universal
resource locators that are listed in Section 1(J) of the
Disclosure Schedule (the "Telephone, Fax and E-mail");
(K) all accounts, notes or other receivables of Optimal generated
in connection with the Business, existing as of the Closing
Date that are listed in Section 1(K) of the Disclosure
Schedule (the "Accounts Receivable");
(L) all deposits and pre-paid expenses of Optimal in connection
with the Business existing on the Closing Date that are listed
in Section 1(L) of the Disclosure Schedule, which shall be
updated as of the Closing Date;
(M) all books and records relating exclusively to the Business
(other than Optimal's Tax returns and Optimal's organizational
books and records) including, without limitation, lists of
customers, vendors and suppliers, records with respect to
pricing, volume, billing and payment history, cost, inventory,
machinery and equipment, mailing lists, distribution lists,
sales, purchasing and materials, technical processes,
production and testing techniques and procedures, marketing
research, design and manufacturing drawings and specifications
and other engineering data, promotional literature, training,
operations, equipment and other manuals, quotation,
correspondence, and other miscellaneous information, including
any such records which are maintained on computer;
(N) all service manuals, as well as all databases and knowledge
bases in their current forms listed in Section 1(N) of the
Disclosure Schedule; and
(O) all other rights, properties and assets of Optimal needed to
operate the Business as currently operated, except for the
Excluded Assets.
Notwithstanding the purchase obligation of FTXS set forth in the
introductory paragraph of this Section 1, Optimal Corp. shall sell,
assign, transfer, convey and deliver to a wholly-owned subsidiary or
affiliate of FTXS that is duly registered under Subdivision (d) of
Division V of Part IX of the Excise Tax Act (Canada) and under
Division I of Chapter VIII of Title I of the Quebec Sales Tax Act,
and FTXS shall cause such wholly-owned corporation or affiliate to
purchase, all of Optimal Corp.'s right, title and interest in and to
the Purchased Assets held by Optimal Corp.
2. Excluded Assets. Notwithstanding anything to the contrary contained
in Section 1 or elsewhere in this Agreement, the following property,
undertakings and assets of Optimal (collectively, the "Excluded
Assets") are not part of the sale and purchase contemplated
hereunder, are excluded from the Purchased Assets and shall remain
the property of Optimal after the Closing Date:
(A) all assets of Optimal and its Affiliates not needed to operate
the Business as currently operated;
(B) all rights of Optimal under this Agreement;
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(C) all real estate and real property leases other than the
Transferred Leases;
(D) all minute books, share transfer records and corporate seals;
(E) all insurance policies and rights thereunder;
(F) all Employee Benefit Plans and administration and services
contracts, or funding arrangements;
(G) all cash, marketable securities and other short-term
investments;
(H) head office furniture, equipment, etc. of non-Eligible
Employees;
(I) Excluded Intellectual Property;
(J) Tax refunds and Tax deductions; and
(K) telephone numbers and fax numbers listed in Section 2(K) of
the Disclosure Schedule.
3. Limited Assumption of Liabilities. Except as specifically set forth
in this Section 3, Buyer is not assuming and will not be liable for
any obligation to perform or pay for any of the debts, liabilities
or obligations of Optimal, whether known or unknown, now or
hereafter existing, absolute or contingent, liquidated or disputed
and whether or not arising out of or related to the Purchased
Assets, the Business or the consummation of the transactions
contemplated in this Agreement (the "Transaction"). As the sole
exception to the foregoing, as of the Closing Date, Buyer agrees to
assume and become responsible for, and pay and discharge as and when
due, all of the following liabilities and obligations of Optimal
(collectively, the "Assumed Liabilities"):
(A) Any debts, liabilities or obligations relating to the Business
or the Purchased Assets (including, without limitation, the
Contracts, the Permits and the Permitted Encumbrances), of
whatsoever nature or character, whether absolute or
contingent, liquidated or disputed, relating to any matters
arising after the Closing Date and any other liabilities to be
assumed by Buyer as specifically provided in this Agreement;
provided, however, in no event shall Buyer assume any
liabilities or obligations to the extent such liabilities or
obligations are attributable to any breach or default by
Optimal under such Purchased Assets occurring on or before the
Closing Date, except to the extent included in the Closing
Balance Sheet which are taken into account in calculating the
Net Asset Value pursuant to Section 5;
(B) Current liabilities of the Business, consisting solely of
accounts payable, (including interest, fees and penalties
accrued prior to the Closing Date) accrued expenses, deferred
revenues and other current liabilities included in the Closing
Balance Sheet and included in the calculation of Net Asset
Value pursuant to Section 5;
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(C) Obligations with respect to Eligible Employees who accept
employment with Buyer, to the extent set forth in Section
9(B);
(D) Any claims made against Buyer that the Purchased Assets
infringe on any intellectual property rights or fail to comply
with any applicable Laws, but only to the extent that such
matters are listed in Section 3(D) of the Disclosure Schedule;
and
(E) All other liabilities included in the Closing Balance Sheet
which are taken into account in calculating the Net Asset
Value pursuant to Section 5.
4. Purchase Price and Allocation.
(A) The aggregate purchase price for the Purchased Assets (the
"Purchase Price") shall be, exclusive of applicable sales and
transfer taxes, U.S. Thirty-Five Million Dollars
(US$35,000,000), subject to the adjustments set forth in
Section 5(C), plus the assumption of the Assumed Liabilities.
(B) Buyer shall satisfy the Purchase Price at Closing by the
assumption of the Assumed Liabilities pursuant to the
Assignment and Assumption Agreement and by payment to Optimal
of U.S. Thirty-Five Million Dollars (US$35,000,000) by wire
transfer in immediately available funds to the bank accounts
of Optimal as per written instructions of Seller given to
Buyer at least two (2) Business Days prior to the Closing.
(C) The Purchase Price shall be allocated among (i) Optimal Corp.,
Optimal Inc. and Optimal Plc., as sellers, and (ii) the
Purchased Assets and Assumed Liabilities, in each case, as
relected in the Closing Balance Sheet, and goodwill. Ninety
percent (90%) of the difference between Purchase Price and the
amounts allocated among the Purchased Assets reflected in the
Closing Balance Sheet shall be allocated to goodwill of
Optimal Inc. and the remaining ten percent (10%) shall be
allocated to goodwill of Optimal Corp. Seller and Buyer shall
be bound by such allocation for all purposes, shall prepare
and file (or cause to be prepared and filed) all tax returns
in a manner consistent with such allocations, including
Internal Revenue's Form 8594, and shall not take any position
inconsistent with such allocation in any Tax return,
proceeding before any Governmental Authority or otherwise
without the prior written consent of the other parties to this
Agreement or unless specifically required pursuant to a
determination by an applicable Tax Authority. Had the Closing
occurred on December 31, 2003, the parties agree that the
Purchase Price would have been allocated as set forth in
Schedule 4(C) of the Disclosure Schedule.
5. Purchase Price Adjustment.
(A) In determining the Purchase Price, Buyer assumed that the
difference between the book value of the Purchased Assets and
the Assumed Liabilities, but excluding product and service
replacement parts
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inventory ("Net Asset Value") on the Closing Date, will be
U.S. Fourteen Million Five Hundred Thousand dollars
(US$14,500,000) (the "Assumed Net Asset Value"). Within sixty
(60) days following the Closing Date, each Seller shall, and
shall cause Optimal Plc. to, prepare and deliver to Buyer a
balance sheet of its respective portion of the Business as of
the Closing Date, which balance sheets (collectively, the
"Closing Balance Sheet") shall be prepared in accordance with
Canadian generally accepted accounting principles, applied on
a basis that is consistent with prior periods and shall be
audited by KPMG LLP as described in Exhibit 5(A). The Purchase
Price shall be either increased by the amount by which the Net
Asset Value derived from the Closing Balance Sheet exceeds the
Assumed Net Asset Value or decreased by the amount by which
the Assumed Net Asset Value exceeds the Net Asset Value
derived from the Closing Balance Sheet. Subject to Section
5(C) below, in the event of an increase in the Purchase Price,
the amount of such increase shall be immediately paid by Buyer
to Optimal Corp. in cash, by certified check or bank wire
transfer. In the event of a decrease in the Purchase Price,
the amount of such decrease shall be immediately paid by
Seller to Buyer in cash, by certified check or bank wire
transfer. In the event of a dispute resolved in accordance
with the terms of Section 5(C) below, payment shall be made
within five (5) days of the determination of the Neutral
Accounting Firm.
(B) Prior to the Closing Date, Seller will inspect the product and
service replacement parts inventory to take into account
defective and obsolete inventory and inventory in excess of
Buyer's expected business requirements, which will be
written-off in accordance with Canadian generally accepted
accounting principles, and excluded for purposes of
determining the value of the inventory pursuant to this
paragraph (B). At Closing, Seller shall provide Buyer with a
detailed list of all inventory (including defective and
obsolete inventory, and inventory in excess of Buyer's
expected business requirements) included in the Purchased
Assets. Within sixty (60) days following the Closing Date,
Buyer will conduct a physical audit of all such inventory (the
"Inventory Audit"). In the event the Inventory Audit reflects
that the book value of the listed inventory as reflected on
the books and records of Seller as of the Closing Date exceeds
by more than U.S. Two Hundred Thousand dollars (US$200,000),
the book value of the inventory found during the physical
inventory, the Purchase Price shall be reduced by the amount
of such amount in excess of U.S. Two Hundred Thousand dollars
(US$200,000). No adjustment shall be made in the event the
book value of the listed inventory is less than the inventory
found during the physical inventory. Subject to Section 5(C)
below, in the event of a decrease in the Purchase Price, the
amount of such decrease shall be immediately paid by Seller to
Buyer in cash, by certified check or bank wire transfer. In
the event of a dispute resolved in accordance with the terms
of Section 5(C) below, payment shall be made within five (5)
days of the determination of the Neutral Accounting Firm.
(C) If Buyer disputes the Closing Balance Sheet, the write-off
Seller makes in accordance with Section 5(b) or the detailed
list of inventory provided
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by Seller, or if Seller disputes the Inventory Audit, the
parties shall work together to resolve any such disagreements,
including, but not limited to, providing each other with such
information regarding the financial position of Seller as of
the Closing Date and the condition of product and service
replacement parts inventory, as each may reasonably request.
If the parties are unable to resolve their disagreement
regarding the Closing Balance Sheet or the Inventory Audit
within thirty (30) calendar days of Buyer's receipt of the
Closing Balance Sheet or Seller's receipt of the results of
the Inventory Audit, as the case may be, then the parties
shall submit the matter to an independent accounting firm
mutually acceptable to Buyer and Seller (the "Neutral
Accounting Firm"). The Neutral Accounting Firm shall act as an
arbitrator to determine only those issues still in dispute and
the Neutral Accounting Firm shall either adopt the position of
Seller or Buyer or determine an adjustment that is within the
range of positions of Seller and Buyer. If possible, the
Neutral Accounting Firm shall make its determination based
solely on presentations by Seller and Buyer; provided,
however, that if the Neutral Accounting Firm is unable to
reach a conclusion on this basis, the Neutral Accounting Firm
shall review such additional information and perform such
additional procedures as the Neutral Accounting Firm deems
reasonably necessary. The determination of the Neutral
Accounting Firm shall be made as promptly as practicable, but
in any event within thirty (30) days following the date on
which the dispute is submitted, shall be set forth in a
written statement delivered to Seller and Buyer, and shall be
final, binding and conclusive on the parties. The fees and any
expenses of the Neutral Accounting Firm shall be paid by Buyer
and Seller within fifteen (15) calendar days of such
determination as follows: (a) if the Neutral Accounting Firm
adopts the position of Seller, then Buyer shall bear such fees
and expenses; (b) if the Neutral Accounting Firm adopts the
position of Buyer, then Seller shall bear such fees and
expenses; or (c) if the Neutral Accounting Firm adopts a
position within the range of the positions of Buyer and
Seller, each party shall bear that percentage of such fees and
expenses deemed reasonable by the Neutral Accounting Firm in
light of the final determination and the original positions of
Buyer and Seller. If a retainer is required by the Neutral
Accounting Firm, the retainer shall be split equally between
Buyer and Seller; provided, however, that the retainer shall
be considered part of the fees and expenses of the Neutral
Accounting Firm and if either party has paid a portion of such
retainer, that party will be entitled to be reimbursed by the
other party to the extent required by this Section 5(C). In
the event a party does not comply with the procedure and time
requirements contained herein or such other procedure or time
requirements as the parties otherwise elect in writing, the
Neutral Accounting Firm shall render a decision based solely
on the evidence it has which was timely filed by either of the
parties.
6. Representations, Warranties and Covenants of Seller. Seller jointly
and severally hereby represents and warrants to Buyer as follows:
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(A) Disclosure Schedule. The Seller's disclosure schedule attached
hereto (the "Disclosure Schedule") is divided into sections
that correspond to the sections of this Agreement.
(B) Organization. Each of Optimal Corp., Optimal Inc. and Optimal
Plc. is a corporation duly organized and validly existing
under the Laws of its jurisdiction of incorporation, and each
has the necessary corporate power, capacity and authority to
operate the Business as currently operated by Optimal and to
enter into this Agreement and the Ancillary Agreements to
which it is a party and to consummate the transactions
contemplated herein and therein. Optimal is duly qualified to
do business in every jurisdiction in which it currently
operates the Business.
(C) Authority. Optimal now has, and at Closing will have, full and
complete authority to enter into and execute this Agreement
and any Ancillary Agreements to which Optimal is a party and
any and all agreements, documents and instruments required in
connection with this Agreement and to otherwise perform its
obligations and consummate the transactions contemplated under
this Agreement and the Ancillary Agreements to which it is a
party. Optimal shall, immediately following the execution and
delivery of this Agreement, provide a notice of termination to
XXX Xxxxxxxxxxx under the asset purchase agreement dated March
3, 2004 by and among Optimal and XXX Xxxxxxxxxxx and its
affiliates (the "NCR Agreement"). The execution and the
delivery of this Agreement and the Ancillary Agreements to
which Optimal is a party and, except for approval by the
shareholders of Optimal Corp., the performance of the
transactions contemplated herein and therein have been duly
authorized by Seller and all corporate actions by Seller for
the authorization and consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements to
which Optimal is a party have been taken. Subject to the
termination of the NCR Agreement, this Agreement has been
validly executed and delivered by and constitutes a valid and
binding obligation of Optimal, enforceable in accordance with
its terms and each of the Ancillary Agreements to which
Optimal is a party will be validly executed and delivered by
and will constitute valid and binding obligations of Optimal
enforceable, in each case, in accordance with their respective
terms, subject, however, to limitations with respect to
enforcement in connection with bankruptcy and to the extent
that equitable remedies such as specific performance and
injunctions are in the discretion of a court of competent
jurisdiction.
(D) Financial Statements. Attached hereto as Exhibit 6(D) is
Seller's unaudited balance sheet of the Business as of
December 31, 2003 (the "Unaudited Financial Statements"). The
Unaudited Financial Statements: (i) were prepared in
accordance with Canadian generally accepted accounting
principles, consistently applied, except for the absence of
notes and year-end adjustments; (ii) fairly represent in all
material respects the assets, liabilities, the results of
operations and cash flows of the Business
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(E) No Conflict or Default. Except as set forth in Section 6(E) of
the Disclosure Schedule, the execution and performance of this
Agreement and the Ancillary Agreements to which Optimal is a
party, the compliance with their provisions by Optimal, and
the transfer of the Purchased Assets to Buyer on the Closing
Date will not conflict with or result in any breach of any of
the terms, conditions or provisions of any agreement,
indenture, mortgage, or other instrument to which Optimal is a
party or by which it is bound, except such conflicts or
breaches which could not reasonably be expected to have a
Material Adverse Effect on the Business, and in any event
there are no breaches that would prevent Optimal from
performing its obligations under this Agreement or would give
any third party any right in the Purchased Assets. Further,
assuming (i) all required consents set forth in Section 6(E)
of the Disclosure Schedule have been obtained, (ii) Seller
Shareholders' approval, and (iii) all required authorizations,
approvals and consents of Governmental Authorities are
obtained, the execution and performance of this Agreement and
the Ancillary Agreements to which Optimal is a party, the
compliance with their respective provisions by Optimal, and
the transfer of the Purchased Assets to Buyer on the Closing
Date will Materially comply with all applicable Laws, and will
not conflict with, or result in the breach of, any of the
terms of Optimal's Articles, or other governing documents of
Optimal.
(F) Title to Assets. Optimal has good title to, or (in the case of
leases) a valid lease (in the Province of Quebec) or leasehold
interest (in all other jurisdictions) in, or right to use all
of the Purchased Assets and, at the Closing, Optimal's title
to the Purchased Assets will be free and clear of all security
interests, liabilities, conditions, pledges, liens, mortgages,
conditional sales contracts, attachments, hypothecations,
judgments, easements, claims and encumbrances of every kind
and nature (collectively, "Encumbrances"), other than
Permitted Encumbrances. Except as set forth in Section 6(F) of
the Disclosure Schedule, Optimal has the full and unrestricted
right and authority to sell the Purchased Assets, and at the
Closing will sell, assign, transfer, convey and deliver to
Buyer good title to the Purchased Assets, free and clear of
all Encumbrances, other than Permitted Encumbrances.
(G) Contracts. Except as set forth in Section 6(G)(i) of the
Disclosure Schedule, all of the Contracts are in full force
and are enforceable in accordance with their terms, and there
are no outstanding breaches or defaults (or which with or
without notice, lapse of time or both, could reasonably be
expected to, indirectly or in the aggregate, result in a
breach or default) under any of the Contracts on the part of
Optimal or to the Knowledge of Seller, on the part of the
other party (or parties) to such Contract which have had or
could reasonably be expected to have a Material Adverse Effect
on the Business. All duties and obligations required to be
performed by Optimal under each of the Contracts prior to
Closing have been so performed in all Material respects,
except to the extent that the liabilities relating to such
non-performance are Assumed Liabilities. Optimal has, in
respect of all Customer Contracts, Vendor Contracts and
Transferred Leases that are listed on Section 6(G)(ii) of
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the Disclosure Schedule, obtained the consent of the
contracting party prior to the Closing, or if the giving of
notice of such assignment is required under such Customer
Contracts, Vendor Contracts and Transferred Leases, the Seller
has provided such notice prior to the Closing. Except as set
forth in Section 6(G)(i) of the Disclosure Schedule, to the
Knowledge of Seller, no other party to any of the Contracts is
threatened with insolvency. Assuming all required consents are
obtained, the execution, delivery, consummation and
performance of this Agreement and the Ancillary Agreements to
which Optimal is a party and the transactions contemplated
herein and therein will not cause Optimal to be in material
breach of any of the Contracts. Sections 1(A), 1(B), 1(C),
1(E) and 1(F) of the Disclosure Schedule contain accurate,
correct and complete lists of the (i) customer contracts, (ii)
supplier, subcontractor and vendor contracts, (iii) third
party computer software and related maintenance contracts,
(iv) leases of real property and (v) other contracts of
Optimal needed to operate the Business as currently operated
by Optimal.
(H) Permits. Section 6(H) of the Disclosure Schedule contains an
accurate, correct and complete list of the Permits that are
Material to the operation of the Business as currently
operated by Optimal. The Permits are valid and in full force
and effect and there are no pending or, to the Knowledge of
Seller, threatened proceedings which could result in the
termination, revocation, limitation or impairment of any of
the Permits, except for any termination, revocation,
limitation or impairment which could not reasonably be
expected to have a Material Adverse Effect on the Business.
(I) Intellectual Property.
(i) Section 6(I)(i) of the Disclosure Schedule sets out
Optimal's issued patents, patent applications,
applications and registrations for Trade-marks,
applications and registrations for Copyright, Domain
Names, and the computer software, in each case, that are
Material to the operation of the Business as currently
operated by Optimal.
(ii) Except as set out in Section 6(I)(ii) of the Disclosure
Schedule, Optimal has all right, title and interest in
and to the Purchased Intellectual Property owned by
Optimal and the right to use the Purchased Intellectual
Property licensed by Optimal from third parties. To the
Knowledge of Seller, the Purchased Intellectual Property
owned by Optimal does not interfere with, infringe upon,
misappropriate or violate any intellectual property
rights of any Person except as set forth in Section
6(I)(ii) of the Disclosure Schedule. Except as set forth
in Section 6(I)(ii) of the Disclosure Schedule, Optimal
has not received any written charge, complaint, claim,
demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including
any claim that Optimal must license or refrain from
using any intellectual property rights of any Person
relating to
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the Purchased Intellectual Property). To the actual
knowledge of the senior officers of Optimal Corp. listed
in Section 6(I)(ii) of the Disclosure Schedule, without
inquiry, Optimal has not received any of the items set
forth in the prior sentence verbally. To the Knowledge
of Seller, no Person has interfered with, infringed
upon, misappropriated, or violated any Intellectual
Property owned by Optimal. Seller will make available to
Buyer complete and correct copies of all user and
technical documentation in its possession related to the
Intellectual Property.
(iii) All of the issued Patents, patent applications,
Trade-xxxx registrations and applications, Copyright
registrations and applications, Domain Names, if any,
owned by Optimal and listed in Section (I)(i) of the
Disclosure Schedule are currently in compliance in all
Material respects with formal legal requirements
(including payment of filing, examination and
maintenance fees and proofs of working or use), and, to
the Knowledge of Seller, are valid and enforceable, and
are not subject to any maintenance fees or actions
falling due after the Closing Date other than in the
ordinary course of the operation of the Business.
(iv) Except as set forth in Section 6(I)(iv) of the
Disclosure Schedule, Optimal has not transferred
ownership of or granted any exclusive or non-exclusive
license of or right to use any Purchased Intellectual
Property, to any Person.
(v) Seller has generally taken all appropriate actions to
protect the confidential and proprietory nature of the
Purchased Intellectual Property, including, without
limitation, by generally requiring its employees,
consultants and contractors to execute appropriate
confidentiality and assignment agreements. None of the
senior officers of Optimal Corp. listed in Section
6(I)(ii) of the Disclosure Schedule has actual
knowledge, without inquiry, of any violation or
unauthorized disclosure of any Trade Secret or other
confidential information related to the Business.
(vi) No employee or former employee of Optimal has claimed
any right in the U-Scan Software. The U-Scan Software
does not have embedded in its object or sources code any
freeware or open-source software.
(J) Inventory. All items of Inventory, including those set forth
in Section 1(D) of the Disclosure Schedule, other than product
service replacement parts inventory, consist of quality
finished goods in the ordinary course of the operations of the
Business. Except as set forth in Section 6(J) of the
Disclosure Schedule, to the Knowledge of Seller, Optimal is
not in possession of any Inventory that is not owned by
Optimal, including goods already sold.
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(K) Real Property Leased by Seller. All real property and
facilities used by Seller or its Affiliates in the conduct of
the Business are listed in Section 6(K) of the Disclosure
Schedule. None of the real property listed in Section 6(K) of
the Disclosure Schedule is owned by Optimal. In the case of
such real property located at 0000 xx xx Xxxxxx, Xxxxxxxx,
Xxxxxx and leased by Optimal Corp. as lessee, Optimal Corp.
has a valid lease in respect thereof and Optimal Corp.'s
right, title and interest thereunder is free and clear of all
liens, charges, purchase rights, claims, pledges, mortgages,
security interests or encumbrances, other than Permitted
Encumbrances. In the case of such real property located at 000
Xxxxx 0 and 000 Xxxxx 0, Xxxx X, Xxxxxxxxxxx, Xxx Xxxx and
leased by Optimal Inc. as lessee, Optimal Inc. has a valid
leasehold interest therein, free and clear of all liens,
charges, purchase rights, claims, pledges, mortgages, security
interests or encumbrances, other than Permitted Encumbrances.
Except as set forth in Section 6(K) of the Disclosure
Schedule, each of the Transferred Leases may be freely
assigned, assumed or sublet, is valid and in full force and
effect, and there is not pending or, to the Knowledge of
Seller, threatened any proceedings which could reasonably be
expected to result in the termination, revocation, limitation
or impairment of any of the Transferred Leases. All payments
required to be made by Seller pursuant to the Transferred
Leases have been duly made or shall otherwise have been
reflected or accounted for on the Closing Balance Sheet.
Except as set forth in Section 6(K) of the Disclosure
Schedule, the real property set forth therein (the "Real
Property"), (A) is, to the Knowledge of Seller, leased solely
by Seller; (B) is, to the Knowledge of Seller, in compliance
in all Material respects with all applicable Laws; and (C)
there are no pending or, to the Knowledge of Seller,
threatened condemnation proceedings, lawsuits, or
administrative actions relating to the Real Property which
could reasonably be expected to have a Material Adverse Effect
on the Business.
(L) Litigation. Except as set forth in Section 6(L) of the
Disclosure Schedule, there is no litigation, proceeding, or to
the Knowledge of Seller, governmental investigation pending,
or to the Knowledge of Seller, threatened in front of any
court, arbitration board, administrative agency, or tribunal
against or relating to Optimal which could affect the
Purchased Assets, the Business, or the consummation of this
Agreement or the sale, transfer or assignment of the Purchased
Assets by Optimal.
(M) Compliance with Law. Optimal has conducted the Business in
compliance in all Material respects with all Laws.
Additionally, Optimal has not received any written notice of
any violation or alleged violation of any Law or of the
commencement of any investigation with respect to Optimal's
compliance with all Laws. Optimal has not had any
environmental audits, reports and other material environmental
documents or safety inspection reports prepared by any
employees or consultants of Optimal or by any governmental
authorities relating to the Business since December 31, 2003.
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(N) Brokers' Fees. Optimal has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
(O) No Material Adverse Change. Since December 31, 2003, there
have been no changes affecting the Business which have had or
could reasonably be expected to have a Material Adverse Effect
on the Business or the Purchased Assets, and Optimal has
operated the Business only in the ordinary course of business
consistent with past practices.
(P) Accounts Receivable. All Accounts Receivable to be transferred
to Buyer under this Agreement arose from valid transactions
for goods sold or services rendered. The list of Accounts
Receivable listed in Section 1(K) of the Disclosure Schedule
is a true, accurate and complete list of such accounts
generated in the operation of the Business and existing as of
the date hereof and, as updated as of the Closing Date.
(Q) Tax Matters.
(i) No failure, in any material respect, of Seller to duly
and timely pay all Taxes, including all installments on
account of Taxes for the current year, that are due and
payable by it will result in an Encumbrance on the
Purchased Assets.
(ii) To the Knowledge of Seller, there are no material
proceedings, investigations, audits or claims now
pending or threatened against Optimal in respect of any
Taxes and there are no material matters under
discussion, audit or appeal with any Governmental
Authority relating to Taxes, which will result in an
Encumbrance on the Purchased Assets, and Optimal has not
been informed in writing by any jurisdiction in which it
currently does not file a Tax Return that it is or may
be subject to taxation.
(iii) Optimal, in all material respects, has duly and timely
withheld all Taxes and other amounts required by Law to
be withheld by it (including Taxes and other amounts
required to be withheld by it in respect of any amount
paid or credited or deemed to be paid or deemed to be
credited by it or for the account or benefit of any
Person, including any Employees, officers or directors
and any non-resident Person), and has duly and timely
remitted to the appropriate Governmental Authority such
Taxes and other amounts required by Law to be remitted
by it.
(iv) Optimal, in all material respects, has duly and timely
collected all amounts on account of any sales or
transfer taxes, including goods and services, harmonized
sales and provincial or territorial sales taxes,
required by Law to be collected by it and has duly and
timely remitted to the appropriate Governmental
Authority any such amounts required by Law to be
remitted by it.
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(v) Optimal Corp. is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada) and the Taxation
Act (Quebec).
(vi) All Purchased Assets which are taxable Canadian property
within the meaning of the Income Tax Act (Canada) or
taxable Quebec property within the meaning of the
Taxation Act (Quebec) will be sold by Optimal Corp.
(vii) Any Purchased Asset which is a United States real
property interest as defined in Section 897(c) of the
Internal Revenue Code of 1986, as amended (the "Code"),
is owned and will be transferred to Buyer by a "United
States person" within the meaning of Section 7701(a)(30)
of the Code.
(R) Absence of Undisclosed Liabilities. Except as disclosed in
Section 6(R) of the Disclosure Schedule, there is no Material
liability of Optimal relating to the operation of the Business
or the Purchased Assets that is not reflected or reserved
against in the Unaudited Financial Statements, and current
liabilities incurred in the ordinary course of the operation
of the Business since the Unaudited Financial Statements.
(S) Environmental, Health & Safety Compliance. Neither the conduct
nor operation of the Business, nor, to the Knowledge of
Seller, any condition of the Transferred Leases violates any
Law concerning public health and safety, worker health and
safety, and pollution or protection of the environment
("Environmental, Health and Safety Requirements"), except for
any violation which could not reasonably be expected to have a
Material Adverse Effect on the Business, and Optimal has not
received any written notice stating that the operation or
condition of any of the property underlying the Transferred
Leases is in violation of any Environmental, Health, and
Safety Requirements.
(T) Relationships with Affiliates. Except as disclosed in Section
6(T) of the Disclosure Schedule, following the Closing neither
Optimal nor any of its Affiliates will have any interest in
any of the Purchased Assets. Neither Optimal nor any of its
Affiliates owns, of record or as a beneficial owner, an equity
interest or any other financial or profit interest in any
Person that has (a) business dealings or a material financial
interest in any transaction with Optimal other than business
dealings or transactions disclosed in Section 6(T) of the
Disclosure Schedule, or (b) engaged in competition with
Optimal with respect to the Business in any market presently
served by Optimal.
(U) Employees.
(i) Each plan, program, compensation plan, or employee
benefit arrangement, whether written or oral, for the
benefit of employees and maintained by Optimal is listed
in Section 6(U)(i) of the Disclosure Schedule (the
"Employee Benefit Plan") and
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copies or descriptions of each such Employee Benefit
Plan have been delivered or made available to Buyer.
During the last six years, neither Optimal, nor any
member of a controlled group of organizations (within
the meaning of Sections 414(b), (c), (m) and (o) of the
Code) of which Optimal is a member has maintained or has
been obligated to make contributions to, any plan
subject to Title IV of ERISA. Buyer shall be responsible
only for the severance obligations with respect to those
Eligible Employees who accept employment with Buyer in
accordance with Section 9, recognizing the years of
service of such Eligible Employee(s) with Seller, but
otherwise determined in accordance with severance
obligations under Buyer's benefit plans or employment
agreements which Buyer enters into with such Eligible
Employees; provided, however, that Buyer's
responsibility shall in no event be for less than the
amount that any such Eligible Employee shall be entitled
to under applicable Law, Seller hereby representing that
Optimal has not agreed to any severance arrangements
with any Eligible Employees, except for those Eligible
Employees listed in Section 6(U)(i)(a) of the Disclosure
Schedule. Seller will comply with the health care
continuation requirements of Section 601 et seq. of
ERISA ("COBRA") with respect to Eligible Employees and
their eligible covered dependents.
(ii) Section 6(U)(ii) of the Disclosure Schedule contains:
(1) a list of the Eligible Employees; (2) except as set
forth in Section 6(U)(ii) of the Disclosure Schedule,
the current annual total compensation provided by
Optimal to each such Eligible Employee; (3) a list of
any increase presently scheduled (including the
effective date thereof) in the rate of base or other
compensation of any the Eligible Employees; and (4) the
title and location of each such Eligible Employee. Each
Eligible Employee is currently employed in the Business.
(iii) Optimal is not a party to or bound by any union contract
or collective bargaining agreement with respect to the
operation of the Business and has not experienced with
respect to the operation of the Business any strike,
grievance or any arbitration proceeding, Material claim
of unfair labour or compensation practices filed or
threatened to be filed or any other Material labour
difficulty.
(iv) All of the Eligible Employees are United States,
Canadian or the United Kingdom citizens, or lawful
permanent residents of the United States, Canada or the
United Kingdom.
(v) All payroll records provided by Seller to Buyer for
Eligible Employees for the period from January 1, 2003
to the Closing Date, are accurate.
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(V) Customers and Vendors.
(i) Section 6(V)(i) of the Disclosure Schedule contains a
true and complete list of the top ten purchasers of the
Business's products and services by dollar volume, and
the dollar amount of purchases by each such purchaser
during the 12 months ended December 31, 2003 and the
aggregate dollar amount of all such purchases from
January 1, 2004 to the most recent fiscal month end
prior to the date hereof. Except as set forth in Section
6(V)(i) of the Disclosure Schedule, since January 1,
2004, no such purchaser has terminated its relationship
with the Optimal, or notified Optimal in writing of its
intention (for any reason) to terminate its relationship
with Optimal.
(ii) Section 6(V)(ii) of the Disclosure Schedule contains a
true and complete list of the top ten suppliers to the
Business by dollar volume during the 12 months ended
December 31, 2003 and the aggregate dollar amount of the
Business's purchases from such suppliers during 2003 and
from January 1, 2004 to the most recent fiscal month end
prior to the date hereof. Since January 1, 2004, no such
supplier has terminated its relationship with the
Business or notified the Seller in writing of its
intention (for any reason) to terminate such
relationship with Seller.
(iii) To the actual knowledge of the senior officers of
Optimal Corp. listed in Section 6(I)(ii) of the
Disclosure Schedule, without inquiry, Optimal has not
received any verbal notice referred to in (i) and (ii)
above.
(W) Insurance. Optimal maintains insurance policies covering the
Business and the Purchased Assets in amounts and in scope of
coverage that are typical and customary for similarly situated
businesses and, except as set forth in Section 6(W) of the
Disclosure Schedule, all such insurance policies are in full
force and effect.
(X) Equipment. Each item of property, plant, equipment and other
tangible personal property included in the Purchased Assets is
in good working order and repair (normal wear and tear
excepted, and having regard to their use and age).
(Y) Purchased Assets. Other than the Purchased Assets and the
Excluded Assets, no other assets or Intellectual Property are
needed to carry out the operation of the Business
substantially in the manner operated by Optimal in the
ordinary course prior to the Closing.
(Z) The summary of the provisions of the NCR Agreement contained
under the headings "No Solicitation and Break Fee" and
"Termination of U-Scan Purchase Agreement" on page 91 of the
joint management circular and proxy statement dated March 5,
2004 forming part of the Proxy Materials is true, accurate and
complete.
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7. Buyer's Representations and Warranties. Buyer jointly and severally
represents and warrants to Seller as follows:
(A) Buyer's Disclosure Schedule. The Buyer's disclosure schedule
attached hereto (the "Buyer's Disclosure Schedule") is divided
into sections that correspond to the sections of this
Agreement.
(B) Organization. FTXS is a corporation validly existing, and in
good standing under the Laws of its jurisdiction of
incorporation, and has the necessary corporate power and
authority to enter into this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated
herein and therein.
(C) Authority. Buyer now has, and at Closing will have, full and
complete authority to enter into and execute this Agreement,
the Ancillary Agreements and all agreements and instruments
required in connection with this Agreement and to otherwise
perform its obligations hereunder and thereunder. The
execution and the delivery of this Agreement, the Ancillary
Agreements and the performance of the transactions
contemplated herein and therein have been duly authorized by
Buyer, and all corporate actions by Buyer for the
authorization and consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements
have been taken. This Agreement has been validly executed and
delivered by and constitutes a valid and binding obligation of
Buyer, and each of the Ancillary Agreements will be validly
executed and delivered and will constitute valid and binding
obligations of Buyer enforceable, in each case, in accordance
with their respective terms, subject, however, to limitations
with respect to enforcement in connection with bankruptcy and
to the extent that equitable remedies such as specific
performance and injunctions are in the discretion of a court
of competent jurisdiction.
(D) Approvals. No consent or approval of any Person or
Governmental Authority is required for the execution, delivery
and performance of this Agreement and the Ancillary Agreements
and the documents to be delivered at the Closing by Buyer, and
neither the execution, delivery or performance, nor the
consummation of the transactions contemplated herein or
therein, will result in a breach of any provision of Buyer's
organizational documents or any Law that would have a Material
Adverse Effect on Buyer's ability to perform its obligations
hereunder or thereunder.
(E) Broker or Finder's Fee. Buyer has no liability or obligation
to pay any fees or commissions to any broker, finder or agent
with respect to the transactions contemplated by this
Agreement.
(F) No Conflict or Default. The execution and performance of this
Agreement, the compliance with its provisions by Buyer, the
purchase of the Purchased Assets, the assumption of the
Assumed Liabilities and the payment of the Purchase Price to
Seller on the Closing Date will not conflict with or result in
any breach of any of the terms, conditions, or
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provisions of any agreement, indenture, mortgage, or other
instrument to which Buyer is a party or by which it is bound,
except such breaches which could not reasonably be expected to
have a Material Adverse Effect on Buyer, and in any event
there are no breaches that would prevent Buyer from performing
under this Agreement. Further, the execution and performance
of this Agreement and the Ancillary Agreements, the compliance
with their respective provisions by Buyer, and the purchase of
the Purchased Assets by Buyer on the Closing Date will
Materially comply with all applicable Laws and will not
conflict with, or result in the breach of, any of the terms of
Buyer's Articles of Incorporation, or other governing
documents of Buyer. The consummation of the transactions
comtemplated in this Agreement will not require the consent of
any Person with respect to any Material rights, licenses,
leases, contracts or agreements of Buyer and will not result
in any breach of or default under any such rights, licenses,
leases, contracts or agreements.
(G) Knowledge. Buyer has no Knowledge of any fact or circumstance
which would constitute a breach by Seller of Seller's
representations and warranties in this Agreement and, except
as disclosed prior to Closing, as of the Closing Date, Buyer
will have no Knowledge of any fact or circumstance which would
constitute a breach by Seller of Seller's representations and
warranties in this Agreement or in any Ancillary Agreement or
Closing documents delivered to Buyer pursuant to this
Agreement.
8. Pre-Closing Covenants of Seller. Seller hereby jointly and severally
covenants and agrees as follows:
(A) Maintenance of the Purchased Assets. Until the earlier of
Closing and termination of this Agreement, Seller shall not,
and shall cause Optimal Plc. not to, lease, sell or dispose of
any of the Purchased Assets other than in the ordinary course
of the operation of the Business consistent with past practice
or otherwise except with the prior written consent of Buyer,
which consent shall not be unreasonably withheld, conditioned
or delayed.
(B) Continuity. Until the earlier of Closing and termination of
this Agreement, Seller shall take or refrain, and cause
Optimal Plc. to take or refrain from taking, the following
actions:
(i) Optimal will carry on the operation and maintenance of
the Business only in the ordinary course of the
operation of the Business consistent with past
practices;
(ii) Optimal will use all commercially reasonable efforts to
maintain and preserve relationships with the present
customers and vendors of the Business and the Eligible
Employees;
(iii) Optimal will maintain its books, accounts and records
relating to the Business on a basis consistent with that
of prior periods;
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(iv) Optimal will not do any act or omit to do any act or
permit any act or omission to act that will cause a
breach of any Customer Contract or Material Vendor
Contract, nor will Optimal terminate, accelerate, cancel
or modify any such contract, without Buyer's consent,
not to be unreasonably withheld;
(v) Optimal will maintain in full force and effect the
insurance covering the Purchased Assets currently in
force or their substantial equivalent;
(vi) Optimal will use all commercially reasonable efforts to
cooperate with Buyer and provide reasonable access to
Buyer to the Business and operations of Optimal in
relation to the Business during ordinary business hours
and upon reasonable advance written notice to Xxxx
Xxxxxxxxx from the Effective Date to the earlier of the
Closing Date and the date of termination of this
Agreement, it being understood that Optimal will provide
Buyer immediate reasonable access to the service part of
the Business so as to assist Buyer in preparing to
provide uninterrupted service to Customers of the
Business following Closing;
(vii) Optimal will not incur any Material obligation or
liability in relation to the Business or enter into any
transaction Material to the Business, other than in the
ordinary course of the operation of the Business and
consistent with past practices;
(viii) Optimal will not mortgage, pledge or subject to any
Encumbrance any of the Purchased Assets, other than
Permitted Encumbrances;
(ix) Optimal will not enter into any Material contracts in
relation to the Business, except in the ordinary course
of the operation of the Business consistent with past
practices, without the prior written consent of Buyer,
not to be unreasonably withheld;
(x) Optimal will not discontinue the sales of any products
or services of the Business;
(xi) Optimal will not increase any salary or wage or declare
or pay any bonus, or enter into any new employment
agreement with any Eligible Employee or make new
commitments or promises to any Eligible Employee; and
(xii) Optimal will not enter into any agreement or make any
commitment to do any of the foregoing.
(C) Exclusivity. Until the earlier of Closing and termination of
this Agreement, Seller will not, and will not permit Optimal
Plc. or any of its or Optimal Plc.'s officers, directors,
employees or agents (Seller
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Representatives) to solicit, initiate, encourage, entertain,
participate in or respond to inquiries or proposals, or
provide any information or participate in any negotiations or
discussions concerning any proposal, acquisition or purchase
of all or any substantial portion of the assets or stock of
Optimal, any merger or consolidation of Optimal or any of its
subsidiaries with any third party, which might reasonably be
expected to interfere with the completion of the Transaction.
Seller agrees that it will immediately notify FTXS regarding
any inquiries made to Optimal, its subsidiaries, or their
respective Representatives and any other person or entity
regarding any such offer or proposal or any related inquiry.
Nothing in this Agreement shall limit Optimal's ability to
take any action (i) to defend itself against any dispute or
claim made by XXX Xxxxxxxxxxx or its affiliates in connection
with the NCR Agreement or (ii) in connection with the
termination of the NCR Agreement.
(D) Meeting of Seller Shareholders.
(i) Seller will take all action necessary in accordance with
applicable Law, its Certificate of Continuance and
By-laws, and the rules of the Nasdaq Stock Market to
duly call, give notice of, convene and hold, as promptly
as reasonably practicable after the date hereof, a
meeting (the "Shareholders' Meeting") of the holders of
Optimal Corp. shares (the "Seller Shareholders") for the
purpose of seeking approval of this Agreement and the
Transaction and shall submit this Agreement and the
Transaction for approval by Seller Shareholders at such
meeting or any adjournment thereof.
(ii) The board of directors of Optimal Corp. (the "Optimal
Board") shall recommend approval of the Transaction by
the Seller Shareholders at the Shareholders' Meeting or
any adjournment thereof and shall include such
recommendation in the Proxy Materials, subject only to
the right of the Optimal Board to withdraw its
recommendation upon termination of this Agreement in
accordance with its terms.
(iii) As promptly as practicable after the execution of this
Agreement, Seller shall prepare proxy materials or such
other documentation as is required by applicable Laws to
solicit from the Seller Shareholders proxies in favour
of the approval of this Agreement and the Transaction
(together with any amendment or supplement thereto, the
"Proxy Materials"), which Proxy Materials shall be in
compliance with applicable Laws. Prior to distributing
the Proxy Materials, Buyer shall be given the
opportunity to review and comment on the accuracy of the
disclosure contained in the sections of the Proxy
Materials relating exclusively to the background to the
Transaction and the description of this Agreement and
any Ancillary Agreements.
(E) Notification. Until the earlier of Closing and termination of
this Agreement, Seller shall promptly notify Buyer in writing
if it becomes
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aware of any fact or condition that, in Seller's reasonable
determination, causes or constitutes a breach of any of
Seller's representations and warranties made as of the
Effective Date.
9. Additional Covenants. Each of the parties hereto, as the case maybe,
hereby covenant and agree as follows:
(A) Taxes. Notwithstanding anything herein to the contrary:
(i) Sales and Transfer Taxes. Buyer shall be liable for, and
shall indemnify and save Seller and its directors,
officers, employees, agents and managers harmless from,
any and all sales and transfer Taxes, registration
charges and transfer fees payable in respect of the
purchase and sale of the Purchased Assets. To the exent
required by applicable Law, Seller shall collect from
Buyer and Seller shall pay directly to the appropriate
Governmental Authority, all such Taxes.
(ii) Goods and Services Tax and Quebec Sales Tax Election.
Optimal and Buyer shall jointly elect, under subsection
167(1) of Part IX of the Excise Tax Act (Canada) (the
"ETA"), section 75 of the Quebec Sales Tax Act, and any
equivalent or corresponding provision under any
applicable provincial or territorial legislation
imposing a similar value added or multi-staged Tax, that
no Tax be payable with respect to the purchase and sale
of the Purchased Assets under this Agreement. Optimal
and Buyer shall make such election(s) in prescribed form
containing prescribed information and Buyer shall, on a
timely basis, file such election(s) in compliance with
the requirements of the applicable Laws. Buyer shall
indemnify and save harmless Optimal from and against any
such Tax imposed on Optimal as a result of any failure
or refusal by any Governmental Authority to accept any
such election.
(iii) Accounts Receivable Election. In accordance with the
requirements of the Income Tax Act (Canada), the
regulations thereunder, the administrative practice and
policy of the Canada Revenue Agency and any applicable
equivalent or corresponding provincial or territorial
legislative, regulatory and administrative requirements,
Optimal and Buyer shall make and file, in prescribed
form and in a timely manner, a joint election to have
the rules in section 22 of the Income Tax Act (Canada),
and any equivalent or corresponding provision under
applicable provincial or territorial Tax legislation,
apply in respect of the Accounts Receivable, and shall
designate therein that portion of the Purchase Price
allocated to the Accounts Receivable.
(iv) Filing of Tax Returns. Buyer and Optimal shall prepare
and file their respective Tax Returns in a manner
consistent with the elections referred to in this
Section 9(A). If a party fails to file its Tax Returns
in such manner, it shall indemnify and save
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harmless the other party in respect of any resulting
Taxes and legal and accounting expenses paid or incurred
by the other party.
(v) Certain U.S. Sales and Use Taxes. Optimal may invoice
Buyer the amount of any U.S. state or local sales or use
taxes imposed on Optimal under applicable law in
connection with the sale of equipment and inventory
under this Agreement, and if applicable, will list the
taxing jurisdiction imposing the Tax on such invoice.
Buyer agrees to pay all such U.S. state or local sales
or use Taxes to Optimal which are stated on an invoice
submitted by Optimal promptly upon receipt of such
invoice. Optimal agrees to timely remit such Taxes to
the appropriate taxing authorities.
(vi) U.S. Sales Tax Exemptions. If the applicable Law
permits, Buyer shall provide Seller with a certificate
or other mandated document evidencing Buyer's exemption
from payment of, or liability for sales and use taxes as
authorized or required by statute, regulation,
administrative pronouncement, or other Law of the
jurisdiction providing said exemption. If the applicable
Law permits the exemption but does not also provide an
exemption procedure, then Optimal will not collect such
Taxes if Buyer furnishes Optimal with a letter from a
Director or higher level executive that describes the
exemption, identifies the applicable statute,
regulation, administrative pronouncement, or other Law
of the jurisdiction that both allows such exemption and
does not require an exemption certificate; provided,
however, that Buyer shall indemnify Optimal for any such
Taxes subsequently determined to be due and payable.
(vii) Personal and Real Property Taxes. Buyer and Optimal
agree that personal and real property Taxes and
assessments levied or assessed upon the Purchased Assets
(excluding any sales, use, transfer or similar Taxes
covered by Sections 9(A)(i) through 9(A)(vi), the
apportionment and payment of which shall be governed by
those sections) shall be prorated between the Buyer and
Optimal in direct proportion to the number of days each
party has ownership of the subject property during the
current Tax year. The total amount to be prorated shall
represent one full years Taxes and assessments resulting
from the assessment date or Tax lien date occurring
during the current Tax year, including all Taxes and
special assessments assessed upon the subject property
and included on the property Tax bills that are payable
to the appropriate state and local agencies during the
current or future Tax years. This proration shall be
based upon the current tax year's actual Taxes and
assessments, if known, or upon a reasonable estimate of
the current Tax year's taxes and assessments if the
current Tax year's Taxes and assessments are not known
at the time of closing. Buyer shall pay to Optimal at
Closing its pro rata share of personal and real property
Taxes as
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determined under the terms of this paragraph. Optimal
shall remain responsible for filing all property Tax
returns, paying all Tax bills and assessments, and
addressing all audits pertaining to property Taxes
assessed upon the assets subject to this agreement for
Tax years with an assessment date or Tax lien date
occurring before the Closing Date of the transaction
proposed within this agreement. Optimal shall also
reimburse the Buyer for all Taxes and other expenses
which are the responsibility of Optimal pursuant to this
paragraph 9(A)(vii) and which are paid by Buyer to
remedy any unpaid property Taxes assessed upon the
subject assets for the current tax year, should the
Buyer find it necessary to make such payment(s) on
behalf of Optimal to protect clear title of the subject
assets and avoid any liens or encumbrances resulting
from such unpaid Taxes.
(B) Employee Matters.
(i) At Closing, Buyer shall have extended offers of
employment to those employees of Optimal identified on
Section 6(U)(ii) of the Disclosure Schedule (the
"Eligible Employees"), on comparable but not less
favorable terms and conditions of employment in the
aggregate as Optimal employed such individuals on the
Closing Date. Buyer shall not, however, in any event
have any responsibility for any employee litigation or
potential litigation matters listed in Section 9(B)(i)
of the Disclosure Schedule, nor for any other
employment-related claims, including but not limited to
claims for severance, asserted by any employee of Seller
(except for claims brought by Eligible Employees who
accept Buyer's offer of employment and related to
Buyer's actions occurring after such acceptance). The
parties hereto agree to coordinate their efforts in
order to effect a smooth transition of the payroll for
the Eligible Employees from Optimal to Buyer.
(ii) Accordingly, pursuant to Rev. Proc. 96-60, 1996-2 C.B.
399, provided that Optimal provides Buyer with all
necessary payroll records for the calendar year which
includes the Closing Date, Buyer shall furnish a Form
W-2 or similar form, as applicable in the given country,
to each Eligible Employee employed by Buyer who had been
employed by Optimal disclosing all wages and other
compensation paid for such calendar year.
(iii) Each of the Eligible Employees who accepts employment
with Buyer shall be eligible to participate in all
health, defined and welfare benefits and retirement
plans on the same terms currently offered by Buyer to
its similarly situated employees, including, but not
limited to, medical, dental, life, disability, vacation
and retirement plans (subject to complying with
eligibility requirements). For purposes of administering
such plans or programs, past service with Seller shall
be deemed to be service with Buyer for purposes of
determining eligibility to
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participate in such health and welfare plans and
programs, but shall not count for vesting in retirement
plans.
(iv) Seller shall, and shall cause Optimal Plc., to terminate
employment of all of the Eligible Employees prior to or
as of Closing. In connection therewith, at Closing,
Seller shall, and shall cause Optimal Plc. to, release
each of the Eligible Employees who becomes employed by
Buyer at Closing from any confidentiality,
non-competition, non-solicitation or other restrictive
covenants in favor of Optimal. Buyer and Seller agree to
cooperate in jointly notifying the Eligible Employees of
the termination of their employment by Optimal and the
offer of employment by Buyer. Eligible Employees who
accept employment with Buyer shall become employed by
Buyer on the Closing Date. Buyer shall be responsible
only for the severance obligations with respect to those
Eligible Employees who accept employment with Buyer from
and after Closing, and who are subsequently terminated
by Buyer, recognizing the years of service of such
employees with Optimal, but otherwise determined in
accordance with severance obligations under Buyer
benefit plans or employment agreements which Buyer
enters into with such Eligible Employees; provided,
however, that Buyer's responsibility shall in no event
be for less than the amount that any such employee shall
be entitled to under applicable Law.
(v) For each Eligible Employee who accepts employment with
Buyer, Seller shall, and shall cause Optimal Plc. to,
provide Buyer with the number of vacation days accrued
under Optimal's vacation policy but not used as of the
Closing Date. Buyer agrees that Eligible Employees who
accept employment with Buyer will be permitted to take
such accrued but unused vacation during 2004 in
accordance with Buyer's vacation policy, and will
provide such Eligible Employees with a pro-rated number
of additional vacation days in 2004 that shall accrue
after the Closing Date (or the first day of employment
with Buyer, if later), pursuant to Buyer's vacation
policy.
(vi) Optimal shall remain solely liable or responsible for
all COBRA obligations of Seller arising from any
qualifying event as defined under Section 4980B(f)(3) of
the Code and ERISA Section 603 occurring on or before
the Closing Date.
(vii) The parties acknowledge that Buyer does not hereby
assume and shall not have any liability related in any
way to any Eligible Employee with respect to any such
Eligible Employees' outstanding options to purchase
shares of Optimal Corp. or the administration of any of
such options.
(C) Payment of Liabilities. Seller shall, and shall cause Optimal
Plc. to, pay or otherwise satisfy in the ordinary course of
business all Excluded
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Liabilities and Buyer shall pay or otherwise satisfy in the
ordinary course of business all Assumed Liabilities. The
parties hereby waive compliance with any applicable bulk sales
legislation.
(D) Removing Excluded Assets. Within thirty (30) days after the
Closing Date, Seller shall remove all Excluded Assets from all
facilities and other real property to be occupied by Buyer.
Such removal shall be done in such manner as to avoid any
Material damage to the facilities and other properties to be
occupied by Buyer and any Material disruption of the business
operations to be conducted by Buyer after the Closing. Any
Material damage to the Purchased Assets or to the facilities
resulting from such removal shall be paid promptly by Seller
to Buyer. Should Seller fail to remove the Excluded Assets as
required by this Section, Buyer shall have the right, but not
the obligation, to remove the Excluded Assets at Seller's sole
reasonable cost and expense to store the Excluded Assets and
to charge Seller all reasonable storage costs associated
therewith. Seller shall promptly reimburse Buyer for all
reasonable costs and expenses incurred by Buyer in connection
with any Excluded Assets not removed by Seller on or before
the 30th day following the Closing Date upon presentation of
reasonable evidence of same.
(E) Non-competition and Non-solicitation.
(i) Non-competition. In order to induce Buyer to enter into
this Agreement, and for other good and valuable
consideration, the sufficiency of which is hereby
acknowledged, Seller agrees that for a period of five
(5) years following the Closing Date, none of Seller
,Optimal Plc., or their Affiliates shall, anywhere in
the world (the "Restricted Area"), directly or
indirectly, invest in, own, manage, operate, finance,
control, advise, aid or assist, act as a broker for,
render services to, be employed by or guarantee the
obligations of any Person engaged in or planning to
become engaged in the Business; provided, however, that
nothing in this Agreement shall restrict Seller, Optimal
Plc. and their Affiliates' right to, directly or
indirectly own an equity interest in any Person engaged
in the Business whose securities are listed on a
recognized stock exchange, so long as the interest of
Seller, Optimal Plc. and their Affiliates in such Person
does not exceed ten percent (10%) of the outstanding
securities of any class of such Person. With respect to
the covenants and agreements set forth in this Section
9(E), Seller agrees that it may be impossible to measure
in monetary terms the damages which will accrue to Buyer
by reason of an actual breach by it of such covenants
and agreements, that a violation of such covenants and
agreements will cause irreparable injury to Buyer, and
that Buyer shall be entitled, in addition to any other
rights and remedies it may have, at Law or in equity, to
apply to a court of competent jurisdiction for an
injunction to restrain Seller from violating, or
continuing to violate, such covenants and agreements.
Nothing in this Section 9(E) shall be deemed to limit
Buyer's right to recover damages caused by any actual
breach by Seller. Seller
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acknowledges and agrees that the current market for the
Business extends throughout the entire world, and it is
therefore reasonable to prohibit Optimal from competing
with Buyer anywhere in the world directly or indirectly,
or invest in, engage (either directly or indirectly, on
its own behalf or as a partner, member, owner, director,
officer, employee, agent, contractor, shareholder or
otherwise), in any enterprise competing directly or
indirectly with the Business.
(ii) Non-solicitation. For a period of three (3) years
following the Closing Date, Optimal and its Affiliates
shall not, directly or indirectly, on its own behalf or
that of another Person: hire or retain any of the
Eligible Employees who become employees of Buyer,
provided, however, that the foregoing provision will not
prevent Optimal or its Affiliates from hiring any
Eligible Employee who becomes an employee of Buyer if
such employee has been terminated by Buyer.
(iii) Modification of Covenant. If a final judgment of a court
or tribunal of competent jurisdiction determines that
any term or provision contained in this Section 9(E) is
invalid or unenforceable, then the parties agree that
the court or tribunal will have the power to reduce the
scope, duration or geographic area of the term or
provision, to delete specific words or phrases or to
replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of
the invalid or unenforceable term or provision. This
Section 9(E) will be enforceable as so modified after
the expiration of the time within which the judgment may
be appealed. This Section 9(E) is reasonable and
necessary to protect and preserve Buyer's legitimate
business interests in the geographical locations in
which the business operates and the value of the
Purchased Assets and to prevent any unfair advantage
conferred on Seller. In the event that the provisions of
this Section 9(E)(iii) are invoked and a court or
tribunal finally determines that the geographical scope
of the Section 9(E)(iii) provisions are not enforceable
or are invalid, then the parties mutually agree to
select to reduce the geographical scope restrictions
contained in Section 9(E)(i) to solely the United States
of America and Canada.
(F) Further Assurances. The parties hereto agree to cooperate
reasonably with each other and with their respective
authorized representatives in connection with any steps
required to be taken as part of their respective obligations
under this Agreement, and shall: (i) furnish upon request to
each other such further information; (ii) execute and deliver
to each other such other documents; and (iii) do such other
acts and things, all as the other party may reasonably request
for the purpose of carrying out the intent of this Agreement
and the Transaction contemplated hereby.
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(G) Change of Address. On the Closing Date, Seller shall change
its principal place of business from its current location to
an alternate location. As soon as reasonably practicable after
the Closing but no later than 30 days, Seller, its employees,
and any of its Affiliates shall vacate the Real Property
premises, and the Purchased Assets. Optimal shall amend its
Articles of Continuance to reflect its new address and shall
promptly notify the Buyer of the same.
(H) Collection of Accounts Receivable. Seller shall, and shall
cause Optimal Plc. to, promptly remit to Buyer any payments it
receives in respect of Accounts Receivable generated by the
Business prior to Closing and received by Optimal after the
Closing Date. After the Closing Date, Buyer shall have the
right to notify any customers who owe Optimal any amounts
properly payable to Buyer to send their payments directly to
Buyer. Buyer shall be entitled to retain all payments received
after the Closing Date for the Accounts Receivable.
(I) Product name; Trade-marks. On or promptly following the
Closing Date, Seller shall, and shall cause Optimal Plc. to:
(i) take all actions necessary to terminate its use of the
product name "U-Scan", and (ii) take all actions reasonably
requested by Buyer to enable Buyer to use this name. Seller
and its Affiliates shall not use any name that is
significantly similar to the product name being purchase
hereunder, nor shall Seller or any of its Affiliates use any
trademark, service xxxx, logo, domain name or other indication
of origin that is significantly similar to any Trade-xxxx that
is part of the Purchased Assets.
(J) Optimal names. On or promptly following the Closing Date,
Buyer shall take all actions necessary to terminate the use by
the Business of the trade-marks and trade names "Optimal" and
"Optimal Robotics" and any other names related to the Excluded
Intellectual Property. Buyer shall not use any name that is
significantly similar to the Excluded Intellectual Property.
(K) Notification. Each of Seller and Buyer agrees to promptly
notify the other party in the event such party receives notice
(whether verbal or in writing) of any investigation, inquiry
or proceeding by any Governental Authority concerning the
Transactions contemplated by this Agreement.
(L) Proration of Expenses. All charges, fuels, rental expenses,
rents, utility and maintenance expenses, tenant or property
insurance premiums, prepaid service contracts, special
assessments and other similar items relating to the Business
which are not in the Unaudited Financial Statements or the
Closing Balance Sheet shall be prorated as of the Closing
Date.
(M) Access and Assistance. The parties agree that in the event
that any legal or arbitral proceedings are commenced in any
forum by any third party in any way arising out of or related
to the negotiation, execution or completion of this Agreement,
each party shall assist and make available to the other access
to relevant personnel for the purposes of witness
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preparation, discovery and trial testimony, as reasonably
requested by counsel for the affected party or parties.
10. Indemnification.
(A) Seller Indemnification. Seller jointly and severally agrees to
indemnify and hold harmless Buyer and its directors, officers,
employees, agents, managers and successors from any and all
losses, claims, liabilities, obligations, deficiencies,
assessments, fines, costs, and damages (including, without
limitation, interest, penalties, reasonable legal fees and
reasonable accounting fees), (collectively, "Damages"),
resulting from, arising from or relating to:
(i) any debts, liabilities or obligations of Optimal or the
Business, whether known or unknown, now existing or
hereafter arising of whatsoever nature or character,
whether absolute or contingent, liquidated or disputed,
relating to any matters listed in Schedule 10(A)(i) of
the Disclosure Schedule and any matters arising on or
before the Closing Date other than the Assumed
Liabilities, with all such liabilities other than the
Assumed Liabilities being collectively referred to as
the "Excluded Liabilities";
(ii) any employees or assets not being transferred to Buyer
or (b) any Eligible Employees who accept employment with
Buyer and make a claim regarding actions occurring while
employed by Seller (other than in respect of accrued
vacation days but not used during 2004);
(iii) any misrepresentation, inaccuracy or breach of any
warranty or representation by Seller (or other parties
not affiliated with Buyer) in this Agreement or the
Ancillary Agreements to which it is a party;
(iv) any failure of Seller to perform any covenant or
agreement in this Agreement or any Ancillary Agreement
to which it is a party in a timely manner and the
failure of which remains uncured for a period of thirty
(30) days after receipt of written notice from Buyer
setting forth in reasonable detail the nature of such
failure; or
(v) Seller's failure to comply with applicable bulk sales or
bulk transfer laws in connection with the Transactions,
except to the extent resulting from, arising out of or
with respect to Buyer's obligation to pay or discharge
the Assumed Liabilities.
(B) Buyer's Indemnification. Buyer shall indemnify and hold
harmless Optimal and its directors, officers, employees,
agents, managers and successors from and against any and all
Damages resulting from, arising from or relating to: (i) the
Assumed Liabilities; (ii) the Eligible Employees who accept
employment with Buyer regarding actions
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occurring while employed by Buyer; (iii) any failure by Buyer
to perform of any of its covenants in this Agreement or any
Ancillary Agreement in a timely manner and the failure of
which remains uncured for a period of thirty (30) days after
receipt of written notice from Optimal setting forth in
reasonable detail the nature of such failure; and (iv) any
breach of any warranty or the inaccuracy of any representation
of Buyer contained or referred to in this Agreement or any
certificate delivered by or on behalf of Buyer pursuant
hereto.
(C) Limitations on Certain Indemnity Obligations. Buyer and Seller
agree that any claims related to : (i) the Excluded
Liabilities; (ii) failure of Seller or Buyer to perform any
covenant in this Agreement or in any Ancillary Agreement or to
comply with any applicable bulk sales or bulk transfer Laws,
except to the extent resulting from, arising out of or with
respect to Buyer's obligation to pay or discharge the Assumed
Liabilities; (iii) breach of the representations and
warranties contained in Sections 6(C), 6(F), or 7(C); or (iv)
any breach of any representation or warranty involving fraud
or fraudulent misrepresentation, shall be unlimited and not
subject to the Basket or the Cap. Except as provided above, in
no event shall either party:
(i) make a claim for Damages pursuant to this Section 10
unless and until the total amount of such claim
individually exceeds U.S. Twenty-five Thousand Dollars
(US$25,000) or such claim and any other current or prior
claims, in the aggregate, exceed U.S. Two Hundred Fifty
Thousand Dollars (US$250,000) (the "Basket"), and in
such event, then the Indemnifying Party shall reimburse
the Indemnified Party for the amount of all Damages
incurred by the Indemnified Party under this Agreement
without regard to the Basket; and
(ii) be required to pay any Damages in excess of U.S.
Thirty-Five Million Dollars (US$35,000,000) (the "Cap").
(D) Survival.
(i) With respect to any and all claims among the parties
hereto arising in connection with this Agreement: (a)
the representations and warranties set forth in this
Agreement shall be continuing and shall survive the
Closing until December 31, 2006; (b) the covenants set
forth in the Agreement, the Ancillary Agreements and any
claim for any breach of the representations and
warranties contained in Sections 6(C), 6(F), or 7(C), or
any of the representations and warranties contained in
this Agreement involving fraud or fraudulent
misrepresentation, shall survive the Closing and
continue in full force and effect without limitation of
time, subject only to applicable limitation periods
contained in this Agreement and limitations imposed by
Law (the period during which the representations and
warranties and covenants and agreements shall survive
being referred to herein with respect to such
representations and warranties and
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covenants and agreements as the "Survival Period"), but
shall thereafter terminate and be of no further force
and effect unless a written notice asserting a claim
shall have been made pursuant to this Section 10(D)
within the Survival Period with respect to such matter.
(ii) All claims made hereunder prior to the expiration of the
applicable survival period stated above, but not yet
settled, shall be subject to the indemnification
provisions hereunder.
(E) Obligation to Reimburse. The party providing indemnification
hereunder (the "Indemnifying Party") shall reimburse, within
five (5) Business Days of demand thereof, to the Person being
indemnified hereunder (the "Indemnified Party"), the amount of
Damages suffered or incurred by the Indemnified Party.
(F) Notification. Promptly upon (i) an officer of either party (or
any other Indemnified Party) obtaining actual knowledge after
the Closing of a breach of a representation or warranty of the
other party in this Agreement, (ii) an Indemnified Party
receiving notice of a Third Party Claim or (iii) an
Indemnified Party otherwise becoming aware of any matter which
could give rise to indemnification under this Section 10, the
Indemnified Party shall forthwith notify the Indemnifying
Party of such matter with as much detail as is reasonably
available. The omission to so notify the Indemnifying Party
(or any other Indemnified Party) shall not relieve the
Indemnifying Party from any duty to indemnify and hold
harmless which otherwise might exist with respect to such
cause unless (and only to that extent) the omission to notify
prejudices the ability of the Indemnifying Party to exercise
its right to defend or otherwise increases the amount to be
indemnified, pursuant to this Section 10, in which case the
indemnification may be reduced to the extent that such delay
prejudiced the defence of the claim or increased the amount of
liability or cost of defence.
(G) Defence of Third Party Claim. If any legal proceeding shall be
instituted or any claim or demand shall be asserted by a third
party against the Indemnified Party (each a "Third Party
Claim"), then the Indemnifying Party shall have the right,
after receipt of the Indemnified Party's notice under Section
10(F) and upon giving notice to the Indemnified Party within
fourteen (14) Business Days of such receipt, to defend (and to
control the defence of) the Third Party Claim, provided the
Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party for such Third Party Claim.
The Indemnifying Party shall thereafter keep each Indemnified
Party reasonably informed with respect to the status of such
Claim. Amounts payable by the Indemnifying Party pursuant to a
Third Party Claim shall be paid in accordance with the terms
of the settlement or the judgement, as the case may be, but in
any event prior to the expiry of any delay for a judgement to
become executory.
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(H) Defence Procedures. Upon the assumption of control of any
Third Party Claim by the Indemnifying Party as set out in
Section 10(G), the Indemnifying Party shall diligently proceed
with the defence, compromise or settlement of the Third Party
Claim at its sole expense, including, if necessary, employment
of counsel reasonably satisfactory to the Indemnified Party
and, in connection therewith, the Indemnified Party shall
cooperate fully, but at the expense of the Indemnifying Party
with respect to any out-of-pocket expenses incurred, to make
available to the Indemnifying Party all pertinent information
and witnesses under the Indemnified Party's control, make such
assignments and take such other steps as in the opinion of
counsel for the Indemnifying Party are reasonably necessary to
enable the Indemnifying Party to conduct such defence. The
Indemnifying Party shall not settle such Third Party Claim
unless such settlement includes as an unconditional term
thereof the giving by the claimant or plaintiff of a full and
complete unconditional release of all Indemnified Parties from
any and all liability with respect to such Third Party Claim
and does not require any Indemnified Party to take or refrain
from taking any action and does not involve any restrictive or
other covenants or any other injunctive relief. As long as the
Indemnifying Party is diligently proceeding with the defence,
compromise or settlement of any such Third Party Claim in good
faith and on a timely basis, the Indemnified Party shall not
pay or settle any such Third Party Claim without the consent
of the Indemnifying Party. Notwithstanding the assumption by
the Indemnifying Party of the defence of such Third Party
Claim as provided in this Section 10(H), the Indemnified Party
shall also have the right to participate in (but not to
control) the negotiation, settlement or the defence of any
Third Party Claim at its own expense; provided, however, that
if the defendants in any such Third Party Claim shall include
both an Indemnified Party and an Indemnifying Party and such
Indemnified Party shall have reasonably concluded that counsel
selected by the Indemnifying Party has a conflict of interest
because of the availability of different or additional
defences to such Indemnified Party, such Indemnified Party
shall have the right to select separate counsel to participate
in the defence of such Third Party Claim on its behalf, at the
expense of the Indemnifying Party; and provided, further, that
the Indemnifying Party shall not be obligated to pay the
expenses of more than one separate counsel for all Indemnified
Parties.
(I) Failure to Defend. If the Indemnifying Party fails within
fourteen (14) Business Days from receipt of the notice of a
Third Party Claim to give notice of its intention to defend
the Third Party Claim in accordance with Section 10(G), then
the Indemnifying Party shall be deemed to have waived its
right to defend the Third Party Claim and the Indemnified
Party shall have the right (but not the obligation) to
undertake the defence of the Third Party Claim and compromise
and settle the Third Party Claim on behalf, for the account
and at the risk and expense of the Indemnifying Party. In no
event shall the Indemnified Party settle such Third Party
Claim unless such settlement includes as an unconditional term
thereof the giving by the claimant or plaintiff of a full and
complete unconditional release of all Indemnifying Parties
from any and all
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liability with respect to such Third Party Claim and does not
require any Indemnifying Party to take or refrain from taking
any action and does not involve any restrictive or other
covenants or any other injunctive relief.
(J) Indemnification Sole Remedy. After the Closing, the provisions
of this Section 10 shall constitute the sole remedy of the
Parties against each other with respect to any breach or
non-fulfilment of any representation, warranty, agreement,
covenant, condition or any other obligation contained in this
Agreement, the Ancillary Agreements and any other document
delivered pursuant to this Agreement.
(K) Tax Status of Indemnification Claims. Any payment made by
Seller as an Indemnifying Party pursuant to this Section 10
shall constitute a reduction of the Purchase Price and any
payment made by Buyer as an Indemnifying Party pursuant to
this Article shall constitute an increase in the Purchase
Price. In either case, each of Seller and Buyer shall, as
required under applicable U.S., Canadian or U.K. Law, request
all amendments to its current or past Tax Returns as may be
necessary to reflect the foregoing. For greater certainty, any
such reduction of, or increase in, the Purchase Price shall be
allocated among the Purchased Assets to which such payment by
Seller or Buyer, respectively, can reasonably be considered to
relate. If any payment made by Seller or Buyer as an
Indemnifying Party is deemed by the Excise Tax Act (Canada) to
include goods and services tax or harmonized sales Tax, or is
deemed by any applicable provincial or territorial legislation
to include a similar value added or multi-staged Tax, the
amount of such payment shall be increased accordingly.
11. Conditions Precedent to Buyer's Obligation to Perform. The
obligation of Buyer to consummate the transaction contemplated in
this Agreement is subject to the satisfaction or express waiver by
Buyer at or prior to the Closing of the following conditions:
(A) All representations and warranties by Seller in this Agreement
qualified by "Material" or "Material Adverse Effect" shall be
true and correct on and as if made as of the Closing Date and
all representations and warranties by Seller in this Agreement
or in any document delivered by Seller pursuant to this
Agreement not so qualified shall be true and correct in all
Material respects on and as if made as of the Closing Date;
(B) All covenants of Seller qualified by "Material" or "Material
Adverse Effect" and the covenant set forth in Section 8(C)
shall have been performed, satisfied and complied with on or
before the Closing Date and all covenants, agreements and
conditions required by this Agreement to be performed or
complied with but not so qualified have been Materially
performed, satisfied or complied with by it on or before the
Closing Date;
(C) Optimal shall have delivered all of the documents, agreements,
instruments and other items that Optimal is required to
deliver at the Closing pursuant to Section 13(B) of this
Agreement;
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(D) Seller Shareholders shall have approved this Agreement and the
transactions contemplated hereby;
(E) Seller shall have delivered the U-Scan Software source code in
a machine readable format, including architectural maps, and
all copies thereof in its possession;
(F) Since the Effective Date, there shall not have been commenced
against Buyer or any of its Affiliates, any proceeding (a)
involving any challenge to, or seeking damages or injunctive
relief in connection with, any of the Transactions
contemplated under this Agreement or (b) that may have the
effect of preventing, Materially delaying, making illegal,
imposing Material limitations or conditions on or otherwise
Materially interfering with the Transaction;
(G) Prior to or at Closing, Seller shall have provided updates to
the Disclosure Schedule through the Closing Date to reflect
changes thereto, and changes to any representations and
warranties in Section 6 as to which no reference was made on
the Disclosure Schedule as of the Effective Date but as to
which a reference on the Disclosure Schedule would have been
required to have been created on or before the Effective Date
if such changes existed on the Effective Date, which must have
been approved by Buyer acting reasonably. Notwithstanding the
foregoing, the delivery of any updated references to the
Disclosure Schedule pursuant to this Section 11(G) shall not
cure any Material breach of any representation and warranty
requiring disclosure of any matter prior to or on the
Effective Date or otherwise limit or affect the remedies
available hereunder to Buyer.
(H) Seller shall have used its best efforts to receive executed
non-competition agreements from the senior officers of Optimal
Corp. listed in Section 6(I)(ii) of the Disclosure Schedule of
Seller as reasonably requested by Buyer.
(I) Seller shall have agreed to provide, to the extent Buyer
reasonably believes necessary, short-term product support,
parts rework services and short-term Canadian field technician
support on commercially reasonable mutually agreeable terms.
12. Conditions Precedent to Seller's Obligation to Perform. The
obligation of Seller to consummate the Transaction contemplated in
this Agreement is subject to the satisfaction or express waiver by
Seller at or prior to the Closing of the following conditions:
(A) All representations and warranties by Buyer in this Agreement
qualified by "Material" or "Material Adverse Effect" shall be
true and correct on and as if made as of the Closing Date and
all representations and warranties by Seller in this Agreement
or in any document delivered by Buyer pursuant to this
Agreement not so qualified shall be true and correct in all
Material respects on and as if made as of the Closing Date;
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(B) All covenants of Buyer qualified by "Material" or "Material
Adverse Effect" shall have been performed, satisfied and
complied with on or before the Closing Date and all covenants,
agreements and conditions required by this Agreement to be
performed or complied with but not so qualified have been
Materially performed, satisfied or complied with by it on or
before the Closing Date;
(C) Buyer shall have delivered all of the documents, agreements,
instruments and other items that Buyer is required to deliver
at the Closing pursuant to Section 13(C) of this Agreement;
(D) Seller Shareholders shall have approved this Agreement and the
transactions contemplated in this Agreement;
(E) Since the Effective Date, there shall not have been commenced
against Seller or its Affiliates, any proceeding (a) involving
any challenge to, or seeking damages or injunctive relief in
connection with the Transaction or (b) that may have the
effect of preventing, materially delaying, making illegal,
imposing material limitations or conditions on or otherwise
materially interfering with the Transaction contemplated in
this Agreement; and
(F) All required consents of Governmental authorities listed in
Section 6(E)of the Disclosure Schedule shall have been
obtained.
13. Closing.
(A) The closing of the transactions contemplated in this Agreement
(the "Closing") shall take place on the third Business Day
following satisfaction of the condition precedent set forth in
Sections 11(D) and 12(D) (the "Closing Date") at the offices
of Osler, Xxxxxx & Harcourt LLP, in Montreal, Quebec; provided
that all of the conditions precedent in Section 11 and 12 have
been satisified or waived. If any of the parties determines
prior to the Closing Date that any of the conditions set forth
in Sections 11 or 12 have not been met, such party shall
notify the other in writing at the address set forth in
Section 17 below prior to the Closing Date and the Closing
shall then take place on the third Business Day after
satisfaction of the last condition precedent in Section 11 and
12 has been satisfied or waived.
(B) At the Closing, Seller shall deliver or cause to be delivered
to Buyer the following documents, instruments, certificates
and agreements (which shall be in form and substance
reasonably satisfactory to Buyer and its counsel):
(i) The Bills of Sale, duly executed by Optimal;
(ii) A counterpart to the Assignment and Assumption
Agreement, duly executed by Optimal;
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(iii) Resolutions of the Boards of Directors of Optimal Corp.,
Optimal Inc. and Optimal Plc., approving this Agreement
and the Transaction, certified by a duly authorized
officer;
(iv) A certificate signed by an authorized officer of Seller
and dated as of the Closing Date, certifying that the
representations and warranties of Seller contained in
this Agreement qualified by "Material" or "Material
Adverse Effect" are true and correct on the Closing Date
and that representations and warranties of Seller
contained in this Agreement not so qualified are true
and correct in all Material respects on the Closing Date
as if such representations and warranties were made on
the Closing Date; and all covenants qualified by
"Material" or "Material Adverse Effect" have been
complied with and all covenants not so qualified have
been complied with in all Material respects;
(v) An incumbency and specimen certificate with respect to
the officer(s) of Optimal executing this Agreement and
any Ancillary Agreement to which Optimal is a party;
(vi) A Certificate of Good Standing for each of Optimal
Corp., Optimal Inc. and Optimal Plc. issued not earlier
than thirty (30) days prior to the Closing Date;
(vii) An opinion of Osler, Xxxxxx & Harcourt LLP, counsel to
Optimal, substantially in the form annexed hereto as
Exhibit 13(B)(vii);
(viii) An enforceability opinion of Ropes & Xxxx, U.S. counsel
to Optimal, in form and substance reasonably acceptable
to Purchaser;
(ix) Evidence reasonably acceptable to Buyer of the approval
of the transactions contemplated by this Agreement by
Seller Shareholders;
(x) All of the required consents from third parties set
forth in Section 13(B)(x) of the Disclosure Schedule;
and
(xi) Any related documents as the Buyer may reasonably
request or as may be otherwise necessary to evidence and
effect the sale, transfer, assignment, conveyance and
delivery of the Purchased Assets to Buyer in connection
with items (i) - (ix) above, which shall not include any
additional consents.
(C) At the Closing, Buyer shall deliver or cause to be delivered
to Optimal the following documents, instruments, certificates
and agreements (which shall be in form and substance
reasonably satisfactory to Seller and its counsel):
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(i) A certificate signed by an authorized officer of Buyer
and dated as of the Closing Date, certifying that the
representations and warranties of Buyer contained in
this Agreement qualified by "Material" or "Material
Adverse Effect" are true and correct on the Closing Date
and that representations and warranties of Buyer
contained in this Agreement not so qualified are true
and correct in all Material respects on the Closing Date
as if such representations and warranties were made on
the Closing Date; and all covenants qualified by
"Material" or "Material Adverse Effect" have been
complied with and all covenants not so qualified have
been complied with in all Material respects;
(ii) The Purchase Price;
(iii) A counterpart of the Assignment and Assumption Agreement
duly executed by Buyer;
(iv) Resolutions of the Board of Directors of Buyer approving
this Agreement and the transactions contemplated by this
Agreement, certified by a duly authorized officer;
(v) An incumbency certificate and specimen certificate with
respect to the officer(s) of Buyer executing this
Agreement and any Ancillary Agreements to which the
Buyer is a party; and
(vi) Any related documents as Seller may reasonably request
or as may be reasonably necessary to fully consummate
the transactions contemplated by this Agreement.
14. Termination.
(A) This Agreement may be terminated on or prior to the Closing
Date:
(i) By mutual written consent of Seller and Buyer; or
(ii) by either Seller on one hand, or Buyer on the other
hand, by written notice to the other party if:
(1) the Transaction has not been consummated by May
31, 2004, unless such date shall have been
extended by the mutual written consent of Seller
and Buyer; provided, however, that this right to
terminate shall not be available to any party
whose failure to fulfill in any Material respect
any covenant or obligation under this Agreement
has been the cause of, or results in, the failure
of the Closing to occur on or before May 31, 2004;
or
(2) any court of competent jurisdiction in (i) the
United States or other United States federal or
state
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governmental entity, or (ii) Canada, or (iii) any
other country shall have issued an interlocutory
or final order, decree or ruling, or taken any
other interlocutory, final or non-appealable
action, restraining, enjoining or otherwise
prohibiting the transactions contemplated by this
Agreement.
(iii) by Seller if:
(1) there shall have been a Material breach of any
representations or warranties set forth in this
Agreement on the part of Buyer, which breach shall
remain uncured for a period of thirty (30) days,
or any representations or warranties of Buyer
shall have become and remain untrue in any
Material respect for a period of thirty (30) days,
provided that Seller has not Materially breached
any of its obligations hereunder; or
(2) there shall have been a Material breach by Buyer
of any of its covenants or agreements hereunder
and such breach would result in a Material Adverse
Effect on Buyer or materially adversely affecting
(or materially delaying) the ability of Buyer or
Seller to consummate the Transaction and Buyer has
not cured such breach within ten (10) Business
Days after notice by Seller thereof setting forth
in reasonable detail the nature of such breach;
provided that Seller has not Materially breached
any of its obligations hereunder; or
(3) any condition to Closing set forth in Section 12
shall not have been fulfilled or waived by Seller
by May 31, 2004.
(iv) by Buyer if:
(1) there shall have been a Material breach of any
representations or warranties set forth in this
Agreement on the part of Seller, which breach
shall remain uncured for a period of thirty (30)
days, or any representations or warranties of the
Seller shall have become and remain untrue in any
Material respect for a period of thirty (30) days
provided that Buyer has not Materially breached
any of its obligations hereunder; or
(2) there shall have been a Material breach by Seller
of one or more of its covenants or agreements
hereunder having a Material Adverse Effect on the
Business or Materially adversely affecting (or
materially delaying) the ability of Seller and
Buyer to consummate the Transaction and Seller has
not cured such breach within ten (10) Business
Days after notice by Buyer thereof
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setting forth in reasonable detail the nature of
such breach, provided that Buyer has not
Materially breached any of its obligations
hereunder or
(3) any condition to Closing set forth in Section 11
shall not have been fulfilled or waived by Buyer
by May 31, 2004.
(B) Procedures Upon Termination. In the event of termination
pursuant to this Section 14, written notice shall forthwith be
given to the other party or parties, and the Transaction shall
be abandoned, without further action by any party hereto;
provided, however, that, nothing contained herein shall be
construed to prevent any parties hereto from pursuing any
remedy available at law or in equity for any breach,
violation, default or other failure of performance of any
other party hereto prior to Closing.
15. Confidentiality.
(A) Except: (i) as required by Law; (ii) as required by a
Governmental Authority or stock exchange; (iii) in connection
with the Shareholders' Meeting pursuant to Section 8(D); (iv)
to XXX Xxxxxxxxxxx in connection (1) with any dispute or claim
made by XXX Xxxxxxxxxxx or its affiliates in connection with
the NCR Agreement or (2) with termination of the NCR
Agreement; or (v) in the ordinary course of the operation of
the Business, the parties shall deem as Confidential
Information (as defined below) all matters of the Business and
shall not disclose the same, unless in accordance with this
Agreement. The term "Confidential Information" includes any
and all of the following information of Optimal or Buyer that
has been or may hereafter be disclosed in any form, whether in
writing, orally, electronically or otherwise, or otherwise
made available by observation, inspection or otherwise by
either party (Buyer on the one hand or Optimal on the other
hand) or its representatives (collectively, a "Disclosing
Party") to the other party or its representatives
(collectively, a "Receiving Party"): (i) all information that
is a trade secret under applicable trade secret or other law;
all information concerning product specifications, data,
know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current and planned research and development,
current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans,
computer hardware, computer software and database
technologies, systems, structures and architectures; (ii) all
information concerning the business and affairs of the
Disclosing Party (which includes historical and current
financial statements, financial projections and budgets, tax
returns and accountants' materials, historical, current and
projected sales, capital spending budgets and plans, business
plans, strategic plans, marketing and advertising plans,
publications, client and customer lists and files, contracts,
the names and backgrounds of key personnel and personnel
training techniques and materials, however documented), and
all information obtained from review of the Disclosing Party's
documents
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or property or discussions with the Disclosing Party
regardless of the form of the communication; and (iii) and all
notes, analyses, compilations, studies, summaries and other
material prepared by the Receiving Party to the extent
containing or based, in whole or in part, upon any information
included in the foregoing.
(B) Each Receiving Party acknowledges the confidential and
proprietary nature of the Confidential Information of the
Disclosing Party and agrees that, subject to the proviso
contained in paragraph (A) of this Section 15, such
Confidential Information (i) shall be kept confidential by the
Receiving Party; (ii) shall not be used for any reason or
purpose other than to evaluate and consummate the Transaction;
and (iii) without limiting the foregoing, shall not be
disclosed by the Receiving Party to any Person, except in each
case as otherwise expressly permitted by the terms of this
Agreement or with the prior written consent of an authorized
representative of Seller with respect to Confidential
Information of Optimal (each, a "Seller Contact") or an
authorized representative of Buyer with respect to
Confidential Information of Buyer (each, a "Buyer Contact").
Each of Buyer and Seller shall disclose the Confidential
Information of the other party only to its representatives who
require such material for the purpose of evaluating the
Transaction and are informed by Buyer or Seller, as the case
may be, of the obligations of this Section 15 with respect to
such Confidential Information. Each of Buyer and Seller shall
(i) enforce the terms of this Section 15 as to its respective
representatives; (ii) take such action to the extent necessary
to cause its representatives to comply with the terms and
conditions of this Section 15; and (iii) be responsible and
liable for any breach of the provisions of this Section 15 by
it or its representatives.
(C) Unless and until this Agreement is terminated as provided in
Section 14, Seller shall maintain as confidential any
Confidential Information of Seller relating to the Business,
the Purchased Assets or the Assumed Liabilities.
Notwithstanding the preceding sentence, Seller may use any
Confidential Information of Optimal before the Closing in the
ordinary course of the operation of the Business in connection
with the transactions permitted by Section 10.
(D) From and after the Closing, the provisions of Section 15(B)
above shall not apply to or restrict in any manner Buyer's use
of any Confidential Information relating to the Business, the
Purchased Assets or the Assumed Liabilities.
(E) This Section 15 does not apply to that portion of the
Confidential Information of a Disclosing Party that a
Receiving Party demonstrates (a) was, is or becomes generally
available to the public other than as a result of a breach of
this Section 15 or that certain Confidentiality Agreement by
and between Seller and Buyer; (b) was or is developed by the
Receiving Party independently of and without reference to any
Confidential Information of the Disclosing Party; or (c) was,
is or becomes available to the Receiving Party on a
nonconfidential basis from
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a Person not bound by a confidentiality agreement or any
legal, fiduciary or other obligation restricting disclosure.
(F) If a Receiving Party becomes compelled in any proceeding or is
requested by a Governmental Authority having regulatory
jurisdiction over this Agreement to make any disclosure that
is prohibited or otherwise constrained by this Section 15,
that Receiving Party shall provide the Disclosing Party with
prompt notice of such compulsion or request so that it may
seek an appropriate protective order or other appropriate
remedy or waive compliance with the provisions of this Section
15. In the absence of a protective order or other remedy, the
Receiving Party may disclose that portion (and only that
portion) of the Confidential Information of the Disclosing
Party that, based upon advice of the Receiving Party's
counsel, the Receiving Party is legally compelled to disclose
or that has been requested by such Governmental Authority,
provided, however, that the Receiving Party shall use
reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded by any Person to whom
any Confidential Information is so disclosed. The provisions
of this Section 15 do not apply to any proceedings between the
parties to this Agreement.
(G) If this Agreement is terminated, each Receiving Party shall
(a) destroy all Confidential Information of the Disclosing
Party prepared or generated by the Receiving Party without
retaining a copy of any such material; (b) promptly deliver to
the Disclosing Party all other Confidential Information of the
Disclosing Party, together with all copies thereof, in the
possession, custody or control of the Receiving Party or,
alternatively, with the written consent of a Seller Contact or
a Buyer Contact (whichever represents the Disclosing Party)
destroy all such Confidential Information; and (c) certify all
such destruction in writing to the Disclosing Party, provided,
however, that the Receiving Party may retain a list that
contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any
controversies after the Disclosing Party's Confidential
Information is returned.
(H) Except as otherwise set forth in this Section 15, the
obligations of each party under this Section 15 in respect of
(i) Intellectual Property of the Business shall survive the
Closing or any termination of this Agreement for a period of
two (2) years and (ii) all other matters shall survive the
Closing for a period of one (1) year.
16. Dispute Resolution.
(A) Injunction. Each of the parties hereto acknowledges and agrees
that a party may be irreparably damaged if an Intellectual
Property, non-compete or non-solicitation provision of this
Agreement is not performed in accordance with their specific
terms and that such breach of this Agreement by the other
party could not be adequately compensated in all cases by
monetary damages alone. Accordingly, in addition to any other
right or remedy to which any party may be entitled, at law or
in equity, any of the parties hereto shall be entitled to seek
to enforce such
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provision of this Agreement by a decree of specific
performance and to temporary, preliminary and permanent
injunctive relief to prevent any breach or threatened breach
of any of the provisions of this Agreement, without posting
any bond or other undertaking and without regard to the
provisions of Section 16(B).
(B) Notice; Negotiation. Any dispute, disagreement, controversy or
claim arising out of or in connection with this Agreement or
any of the Ancillary Agreements, including any question
regarding their negotiation, existence, validity,
interpretation, performance, breach or termination, which
cannot be resolved by the parties within fourteen (14) days of
receipt of a notice of dispute, shall be referred to the Chief
Executive Officers (CEOs) of Optimal Corp. and FTXS who shall
meet within thirty (30) days of receipt of said notice of
dispute, to attempt to resolve such dispute, disagreement,
controversy or claim within such thirty (30) day period,
subject to obtaining any necessary corporate approvals of such
resolution.
(C) Arbitration. Any dispute, difference, disagreement,
controversy or claim arising out of or in connection with this
Agreement or any of the Ancillary Agreements not resolved
pursuant to the process contemplated by Section 16(B)
("Dispute") including any question regarding their existence,
negotiation, interpretation, application, performance, breach,
validity or termination, but excluding any dispute,
difference, disagreement, controversy or claim arising out of
or in connection with any of the matters referred to in
Section 9(E) ("Disputes not subject to Arbitration"), shall be
finally settled under the Rules of Arbitration of the
International Chamber of Commerce ("ICC Rules") by a sole
arbitrator. The arbitration shall commence at the expiration
of the thirty (30) day period contemplated by Section 16(B) ,
unless the Parties otherwise agree. On or prior to the
expiration of such thirty (30) day period, each Party shall
nominate one selector. The two (2) selectors so nominated
shall appoint the presiding arbitrator. If either party fails
to nominate a selector by the end of the thirty (30) day
period referred to in Section 16(B), such arbitrator shall be
appointed by the party who appointed a selector. If the two
(2) selectors nominated by the Parties fail to agree upon a
presiding arbitrator within thirty (30) days of the
appointment of the second arbitrator, the presiding arbitrator
shall be appointed by the ICC International Court of
Arbitration ("ICC Court").
(D) Place and Language of Arbitration. The arbitration shall take
place in Montreal, Quebec. The language of the arbitration
shall be English.
(E) Hearing; Award. The Parties shall use their reasonable efforts
to cause the hearing on the merits to take place within one
hundred and twenty (120) days of the appointment of the
presiding arbitrator. The arbitration award shall be in
writing, shall set forth in reasonable detail the basis for
the decision and shall be rendered within thirty (30) days of
the end of the hearing.
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(F) Costs of the Arbitration. Each of the Parties shall bear
one-half of the costs of the arbitration, including the fees
and expenses of the arbitrator and any expert appointed by the
arbitrator, and each party shall bear all legal and other
costs incurred by it in connection with the arbitration.
(G) Provisional Measures. For the purposes of any provisional or
interim measure in aid of the arbitration proceedings, the
parties hereby submit to the non-exclusive jurisdiction of the
competent court in the judicial district of Montreal, Quebec.
Without prejudice to such provisional or interim remedies in
aid or arbitration as may be available under the jurisdiction
of a competent court, the arbitrator shall have full authority
to grant provisional or interim remedies and to award damages
for the failure of a party to respect any order of the
arbitrator to that effect.
(H) Governing Law. This Agreement and the Ancillary Agreements
shall be treated in all respects as a New York contract and
shall be governed by and construed in accordance with the Laws
of the State of New York (to the exclusion of its conflict of
law rules).
(I) Forum and Jurisdiction. The Parties hereby submit to the
exclusive jurisdiction of the competent court in the judicial
district of Montreal, Quebec for all Disputes not subject to
Arbitration.
17. Notices. Any notice, consent, authorization, direction or other
communication required or permitted to be delivered or given
hereunder shall be in writing and shall be delivered either by
personal delivery, by registered mail or by telecopier or similar
telecommunications device and addressed as follows:
If to Buyer: With a copy to (which such copy shall not
constitute notice):
FUJITSU TRANSACTION SOLUTIONS INC.
000 Xxxxxxxxxx Xxxxxx, XXXXXXXX & XXXXXXXX XXX
0xx Xxxxx, 0000 Avenue of the Americas
Xxxxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
U.S.A.
Attn: Xxxx Xxxx
Fax No.: (000) 000-0000 Attn: Xxxxxxx X. Xxxxx
Fax No.: (000) 000-0000
If to Seller: With a copy to (which such copy shall not
constitute notice):
OPTIMAL ROBOTICS CORP.
c/o Osler, Xxxxxx & Harcourt LLP OSLER, XXXXXX & HARCOURT LLP
0000 xx Xx Xxxxxxxxxxx Xxxxxx Xxxx, 0000 de La Xxxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxx 0000 Xxxxxxxx, Xxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0 H3B 4W5
Attn: Xxxxxx X. Xxxx Attn: Xxxxxx X. Xxxx
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
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Any notice, consent, authorization, direction or other communication
delivered as aforesaid shall be deemed to have been effectively
delivered and received, if sent by telecopier on the day of receipt
as stipulated on the acknowledgement of receipt (confirmation of
receipt by confirmed facsimile transmission being deemed receipt)
or, if delivered in any other manner, to have been delivered and
received on the date of such delivery or, if sent by registered mail
with acknowledgement of receipt requested, to have been delivered
and received on the day of receipt as stipulated on the
acknowledgement of receipt. Either party may change its address for
service by notice delivered as aforesaid.
18. Assignment of Rights.
(A) Nothing in this Agreement shall be construed as a sale,
assignment, conveyance or transfer of, or an attempt to, where
applicable, sell, assign, convey or transfer, directly or
indirectly, any Contracts, Accounts Receivable, Transferred
Leases, Intellectual Property, Permits or other Purchased
Assets (collectively, the "Rights") if:
(i) such Right is not saleable, assignable, conveyable or
transferable by Optimal without the consent of another
Person (if such consent has not been obtained) or such
sale, assignment, conveyance or transfer or attempted
sale, assignment, conveyance or transfer would
constitute a breach or termination of such Right without
the consent of another Person (if such consent has not
been obtained), or
(ii) the remedies for the enforcement of such Right available
to Optimal would not pass to Buyer.
(B) If Optimal fails to obtain a consent to assign any Right to
Buyer such that the full value of any such Right may not be
realized for the benefit of Buyer, Optimal shall no later than
at Closing, to the extent permitted by Law and using its
reasonable efforts, take all such action and do or cause to be
done all such things (including entering into sub-contract or
service agreements) which are necessary or advisable in order
that the obligations of Optimal in connection with such Right
may be performed in such manner that the full value of such
Right to Optimal (or its Affiliates, as the case may be) is
preserved and enures to the benefit of Buyer.
(C) If Optimal provides to Buyer, the full value under any Right
pursuant to Section (B) above, Buyer shall be responsible for,
and shall pay or perform, all obligations relating thereto on
the same basis as if such Right had been assigned to and
assumed by Buyer.
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19. Preservation of Records. Each of Buyer and Seller agrees to retain
possession of, and cause its respective Affiliates to retain the
possession of, all records, and information (i) relating to the
Business in existence on the Closing Date and (ii) coming into
existence within eight (8) years after the Closing Date which relate
to the Business before the Closing Date; provided that eight (8)
years after the Closing Date, each of Buyer and Seller, and their
respective Affiliates, may dispose of any records or information
that it reasonably believes is no longer needed to be retained. In
addition, from and after the Closing Date, each of Buyer and Seller
undertakes to provide access, and cause its respective Affiliates to
provide access, to the other and the other's respective attorneys,
accountants and other representatives (after reasonable notice and
during normal business hours without interference with the ordinary
conduct of the business and with reasonable charge) to the officers,
directors, employees, attorneys, accountants and other
representatives of the other and to such records and information
(excluding Tax Returns and records and information pertaining to the
period as and from the Closing Date) including information stored on
computerized information retrieval systems, relating to the Business
as each may reasonably deem necessary to properly prepare for, file,
prove, answer, prosecute and/or defend any claim (including an
assessment) or proceeding or in order to comply with or to evaluate
any obligation or liability (under Law, by contract or otherwise).
20. No Assignment. This Agreement, and the covenants herein contained,
shall be binding upon, shall inure to the benefit of, and shall be
enforceable by the parties hereto and their respective successors
and permitted assigns. Neither party may assign this Agreement,
either in part or in whole, without the prior written consent of the
other party.
21. Public Announcements. Except as otherwise permitted in Section 15,
any public announcement, press release or similar publicity with
respect to this Agreement will be issued, if at all, at such time
and in such manner as the parties may mutually determine. Seller and
Buyer will consult with each other concerning the means by which
Seller's employees, customers, suppliers and others having dealings
with Seller will be informed of the Transactions contemplated by
this Agreement, and Buyer will have the right to be present for any
such communication.
22. Cumulative Remedies. The rights and remedies available to any of the
parties under this Agreement shall be deemed to be in addition to,
and not in lieu of, any other rights and remedies available in law
or equity.
23. Waiver. The waiver by either party to this Agreement of any breach
of any provision of this Agreement shall not constitute a continuing
waiver or a waiver of any breach of any other provision of this
Agreement.
24. Severability. Any Section, Subsection or other subdivision of this
Agreement or any other provision of this Agreement which is, or
becomes, illegal, invalid or unenforceable in any situation in any
jurisdiction, as determined in accordance with Section 16, shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other
jurisdiction. In the event that
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any provision of this Agreement is determined in accordance with
Section 16 to be invalid or unenforceable under applicable Law in
any respect, each party hereto intends that such provision will be
construed by modifying or limiting it so as to be valid and
enforceable to the maximum extent compatible with, and possible
under, applicable Law.
25. Governing Law. This Agreement shall be governed in all respects
including its validity, construction, interpretation, breach,
performance and termination by the Laws of the State of New York and
any applicable federal Laws of the United States of America.
26. Captions. Section captions used herein are for reference purposes
only and shall not in any way affect the meaning or interpretation
of this Agreement.
27. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed on original, but all of
which taken together shall constitute one Agreement.
28. Entire Agreement; Amendment; Third Party Beneficiaries. This
Agreement, together with the Disclosure Schedule, the Buyer's
Disclosure Schedule and other Schedules and Exhibits attached hereto
and the Guaranty of Fujitsu Limited dated the date hereof in favour
of Optimal, supersede all other agreements and understandings
between the parties, either oral or written, constitute the entire
agreement of the parties with respect to the subject matter hereof,
and may be amended only by an instrument in writing executed by all
of the parties hereto. Except as provided in Article 10, this
Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is
intended or shall confer upon any other Person or entity any legal
or equitable right, benefit or remedy of any nature under or by
reason of this Agreement.
29. Consents to Assignments. Nothing in this Agreement or the documents
to be executed and delivered at the Closing shall be deemed to
constitute an assignment or an attempt to assign any Permit,
Contract or other agreement to which Optimal is a party, if the
attempted assignment thereof without the consent of the other party
to such Permit, Contract or other agreement would constitute a
breach thereof or affect in any way the rights of Optimal
thereunder.
30. Expenses. Each party shall pay all expenses and costs incurred or to
be incurred by it in negotiating, closing, and carrying out this
Agreement, including, without limitation, all legal, accounting and
printing fees and expenses; provided, at Closing, Buyer shall pay
Seller U.S. Three Million dollars (US$3,000,000), representing the
break fee under the agreement(s) between Seller and XXX Xxxxxxxxxxx
(and certain of its affiliates) disclosed in the proxy circular
filed by Optimal Corp. on March 11, 2004; and further, provided,
that Buyer shall reimburse Seller at the Closing for all reasonable
costs up to a maximum of U.S. Three Hundred and Fifty Thousand
Dollars (US$350,000) in the aggregate related to (x) obtaining
shareholder approval of the transactions contemplated herein and (y)
obtaining the enforceability opinion under Section 13(B)(viii); and
further provided that if any amount paid to Seller for the NCR break
fee is not paid to NCR, Seller shall return such unpaid amounts to
Buyer.
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31. Definitions. As used herein, the following capitalized terms have
the following meanings:
(A) "Accounts Receivable" has the meaning ascribed thereto in
Section 1(K).
(B) "Affiliate" has the meaning ascribed thereto in the Canada
Business Corporations Act.
(C) "Ancillary Agreements" means the Assignment and Assumption
Agreement and the Bills of Sale.
(D) "Assignment and Assumption Agreement" means an assignment and
assumption agreement relating to the assumption of the Assumed
Liabilities by Buyer, in form and substance satisfactory to
the parties, acting reasonably,
(E) "Assumed Net Asset Value" has the meaning ascribed thereto in
Section 5.
(F) "Basket" has the meaning ascribed thereto in Section 10(C)(i).
(G) "Bills of Sale" means the bills of sale relating to the
transfer of the Purchased Assets by each of Optimal Corp.,
Optimal Inc. and Optimal Plc., in form and substance
satisfactory to the parties, acting reasonably,
(H) "Business" has the meaning ascribed thereto in Recital A.
(I) "Buyers Contact" has the meaning ascribed thereto in Section
15(B).
(J) "Buyer's Disclosure Schedule" has the meaning ascribed thereto
in Section 7(A).
(K) "Cap" has the meaning ascribed thereto in Section 10(C)(ii).
(L) "Closing" means the delivery, by Optimal to Buyer of the
Purchased Assets, the execution of the Bills of Sale and the
Assignment and Assumption Agreement and the payment by Buyer
to Optimal of the Purchase Price and the amounts payable under
Section 30.
(M) "Closing Balance Sheet" has the meaning ascribed thereto in
Section 5.
(N) "Closing Date" has the meaning ascribed thereto in Section 13.
(O) "COBRA" has the meaning ascribed thereto in Section 6(U).
(P) "Code" means the Internal Revenue Code of 1986, as amended and
the rules and regulations adopted thereunder.
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(Q) "Confidential Information" has the meaning ascribed thereto in
Section 15(A).
(R) "Contract" or "Contracts" has the meaning ascribed thereto in
Section 1(F).
(S) "Customer Contracts" has the meaning ascribed thereto in
Section 1(A).
(T) "Damages" has the meaning ascribed thereto in Section 10(A).
(U) "Disclosing Party" has the meaning ascribed thereto in Section
15(A).
(V) "Disclosure Schedule" has the meaning ascribed thereto in
Section 6(A).
(W) "Dispute" and "Disputes not subject to arbitration" shall have
the meaning ascribed to them in Section 16(C).
(X) "Eligible Employees" has the meaning ascribed thereto in
Section 9(B)(i).
(Y) "Encumbrances" has the meaning ascribed thereto in Section
6(F).
(Z) "Environmental, Health and Safety Requirements" has the
meaning ascribed thereto in Section 6(S).
(AA) "Equipment" has the meaning ascribed thereto in Section 1(I).
(BB) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended and the rules and regulations adopted
pursuant thereto.
(CC) "Excluded Assets" has the meaning ascribed thereto in Section
2.
(DD) "Excluded Intellectual Property" means the Intellectual
Property listed in Section 31(DD) of the Disclosure Schedule.
(EE) "Excluded Liabilities" has the meaning ascribed thereto in
Section 10(A)(i).
(FF) "Employee Benefit Plans" has the meaning ascribed thereto in
Section 6(U).
(GG) "Governmental Authority" means any federal, state, provincial,
municipal, local or foreign government or governmental
regulatory body and any of their respective subdivisions,
agencies, instrumentalities, authorities, courts or tribunals.
(HH) "ICC Rules" and "ICC Court" shall have the meaning ascribed to
them in Section 16(C).
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(II) "Indemnified Party" has the meaning ascribed thereto in
Section 10(E).
(JJ) "Indemnifying Party" has the meaning ascribed thereto in
Section 10(E).
(KK) "Intellectual Property" means all:
(i) information, including the whole or any portion or phase
of any scientific or technical information, design,
process, procedure, formula, pattern, compilation,
program, device, method, technique, know-how,
technology, invention, discovery, concept, improvement
or other intangible asset, or any business information
or plans, financial information, or listing of names,
addresses, or telephone numbers, that satisfies both of
the following: (1) it derives economic value, actual or
potential, from not being generally known to, and not
being readily ascertainable by proper means by, other
persons who can obtain economic value from its
disclosure or use, and (2) it is the subject of efforts
that are reasonable under the circumstances to maintain
its secrecy ("Trade Secrets");
(ii) patents, patent applications and like protections
including without limitation statutory invention
registrations, provisionals, divisions, continuations,
substitutions, renewals, reissues, extensions,
continuations-in-part and reexaminations of the same and
patentable inventions and/or improvements thereto
("Patents");
(iii) trade-marks, service marks, brands designs, trade dress,
logos, slogans, symbols, product names and other source
identifiers whether registered or not, applications to
register or renew and registrations, extensions and
renewals of the same, and the entire goodwill of the
business of Seller connected with and symbolized by such
rights ("Trade-marks");
(iv) copyrights and registrations and applications therefor
in each work or authorship and derivative work thereof,
whether published or unpublished, as well as the parts
of the website screens related to the Purchased Assets
including, without limitation, those website screens
listed in Section 31(KK) of the Disclosure Schedule
("Copyright");
(v) domain names, web addresses and Internet locators
("Domain Names"); and
(vi) computer programs and software in object and source code
forms, operating and other systems, applications,
hardware and databases, whether operational or under
development or design, including source code and object
code for Seller's U-Scan product and documentation
corresponding thereto and any
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software and source code necessary to support the U-Scan
and all firmware, development tools, compilers' notes,
comment code, instructions, scripts, commands, screen
designs, interfaces, menus, structures and arrangements,
algorithms, buttons and icons, enhancements, version
releases and updates thereto; and all files, data,
manuals, notes and other documentation related to or
associated with any of the foregoing, whether in
machine-readable form, programming language, or any
other language or symbols, whether stored, encoded,
recorded or written on disk, tape, film, memory device,
paper or any other medium, and improvements to any of
the foregoing; and technology used in the Business and
not embodied in any of the foregoing ("Technology").
(LL) "Inventory" has the meaning ascribed thereto in Section 1(C).
(MM) "Inventory Audit" has the meaning ascribed thereto in Section
5(B).
(NN) "Knowledge" means, in the case of Seller, information any of
the officers of Optimal Corp. listed in Section 31(NN) of the
Disclosure Schedule knew after due inquiry by such individuals
within Optimal, and in the case of Buyer, information any of
the individuals listed in Section 31(NN) of Buyer's Disclosure
Schedule knew after due inquiry by such individuals.
(OO) "Law" means any federal, state, provincial, municipal, local
or foreign law, ordinance, order, rule, regulation, license or
permit, and any order, writ, judgment, award, injunction, or
decree of any court or arbitrator or any Governmental
Authority having the force of law.
(PP) "Material", "Materially" or "Material Adverse Effect" means an
event or occurrence, the impact of which exceeds U.S.
Twenty-five Thousand Dollars (U.S.$25,000) or a series of
events or occurrences, the impact of which exceeds in the
aggregate U.S. Two Hundred Fifty Thousand Dollars
(U.S.$250,000).
(QQ) "NCR Agreement" has the meaning ascribed thereto in Section
6(C).
(RR) "Net Asset Value" has the meaning ascribed thereto in Section
5.
(SS) "Optimal Board" has the meaning ascribed thereto in Section
8(D).
(TT) "Permits" has the meaning ascribed thereto in Section 1(G).
(UU) "Permitted Encumbrances" means:
(i) encumbrances of mechanics, labourers, workmen, builders,
contractors, suppliers of material or architects or
other similar encumbrances incidental to construction,
maintenance or repair operations which have either been
registered or filed pursuant to
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Laws against the Business or not yet registered or filed
and which, in any such case, relate to obligations not
due and payable as at the Closing Date;
(ii) statutory encumbrances relating to obligations not due
and payable as at the Closing Date;
(iii) encumbrances for Taxes, assessments, charges of
Governmental Authorities or levies not due and payable
as at the Closing Date;
(iv) encumbrances for public utilities not due and payable as
at the Closing Date;
(v) rights of equipment lessors under equipment leases
included in the Contacts provided however that such
rights shall be a Permitted Encumbrances only if the
terms of such equipment leases have been complied with
in all material respects through the Closing Date;
(vi) financing statements evidencing the rights of equipment
lessors under equipment leases included in the Contracts
in and to the equipment or vehicles which are subject of
such Contracts provided that such financing statements
shall be Permitted Encumbrances only if the terms of
such equipment leases have been complied with in all
material respects through the Closing Date; and
(vii) any privilege in favour of any lessor, licensor or
permitter for rent to become due or for other
obligations or acts, the performance of which is
required under Contracts so long as the payment of or
the performance of such other obligation or act is not
delinquent and provided that such Encumbrances or
privileges do not adversely affect the use or value of
the assets affected thereby.
(VV) "Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock
company, trust, or unincorporated association, or any
Governmental Authority, officer, department, commission,
board, bureau or instrumentality thereof.
(WW) "Proxy Materials" has the meaning ascribred thereto in Section
8(D)(iii).
(XX) "Purchase Price" has the meaning ascribed thereto in Section
4(A).
(YY) "Purchased Assets" has the meaning ascribed thereto in Section
1.
(ZZ) "Purchased Intellectual Property" has the meaning ascribed
thereto in Section 1(H).
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(AAA) "Real Property" has the meaning ascribed thereto in Section
6(K).
(BBB) "Receiving Party" has the meaning ascribed thereto in Section
15(A).
(CCC) "Restricted Area" has the meaning ascribed thereto in Section
9(E).
(DDD) "Rights" has the meaning ascribed thereto in Section 18(A).
(EEE) "Sellers Contact" has the meaning ascribed thereto in Section
15(B).
(FFF) "Seller Representatives" has the meaning ascribed thereto in
Section 8(C).
(GGG) "Seller Shareholders" has the meaning ascribed thereto in
Section 8(D).
(HHH) "Shareholders' Meeting" has the meaning ascribed thereto in
Section 8(D).
(III) "Survival Period" has the meaning ascribed thereto in Section
10(D).
(JJJ) "Tax Returns" means all returns, reports, declarations,
elections notices, filings, forms, statements and other
documents (whether in tangible, electronic or other form) and
including any amendments, schedules, attachments, supplements,
appendices and exhibits thereto, made, prepared, filed or
required to be made, prepared or filed by Law in respect of
Taxes.
(KKK) "Taxes" means any taxes, duties, fees, premiums, assessments,
imposts, levies and other similar charges imposed by any
Governmental Authority under applicable Law, including all
interest, penalties, fines, additions to tax or other
additional amounts imposed by any Governmental Authority in
respect thereof, and including those levied on, or measured
by, or referred to as, income, gross receipts, profits,
capital, transfer, land transfer, sales, goods and services,
harmonized sales, use, value-added, excise, stamp,
withholding, business, franchising, property, development,
occupancy, employer health, payroll, employment, health,
social services, education and social security taxes, all
surtaxes, all customs duties and import and export taxes,
countervail and anti-dumping, all licence, franchise and
registration fees and all employment insurance, health
insurance and Canada, Quebec and other government pension plan
premiums or contributions, and any such Taxes individually is
a "Tax".
(LLL) "Telephone, Fax and E-Mail" has the meaning ascribed thereto
in Section 1(J).
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(MMM) "Third Party Claim" has the meaning ascribed thereto in
Section 10(G).
(NNN) "Third Party Licences" has the meaning ascribed thereto in
Section 1(C).
(OOO) "Transaction" has the meaning ascribed thereto in Section 3.
(PPP) "Transferred Leases" has the meaning ascribed thereto in
Section 1(E).
(QQQ) "Unaudited Financial Statements" has the meaning ascribed
thereto in Section 6(D).
(RRR) "U-Scan Software" means the proprietary software of Optimal
Corp. that is part of the U-Scan system and which is contained
in the SourceSafe database and the PVCS server located at the
0000 xx xx Xxxxxx, Xxxxxxxx premises of Optimal Corp.
(SSS) "Vendor Contracts" has the meaning ascribed thereto in Section
1(B).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
FUJITSU TRANSACTION SOLUTIONS INC. OPTIMAL ROBOTICS CORP.
By: /s/ Xxxx Xxxx By: /s/ Xxxx Xxxxxxxx
--------------------------- ---------------------------
(Signature) (Signature)
Name: Xxxx Xxxx Name: Xxxx Xxxxxxxx
--------------------------- ---------------------------
(Please print) (Please print)
Title: Executive Vice-President Title: Co-Chairman & CEO
--------------------------- ---------------------------
OPTIMAL ROBOTICS INC.
By: /s/ Xxxxx Xxxx
---------------------------
(Signature)
Name: Xxxxx Xxxx
---------------------------
(Please print)
Title: President & COO
---------------------------
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