Exhibit
4.7
ASSET PURCHASE
AGREEMENT
This
Asset Purchase Agreement (the “ Agreement ”) is
entered into as of January 27, 2004 by and among ACE*COMM
Corporation, a corporation organized under the laws of Maryland,
USA (“ Buyer ”), ACE*COMM Solutions Australia
Pty Limited ABN 95 107 588 938, a company registered under the
Australian Corporations Act 2001 (Cth) (“ ACE Australian
Subsidiary ”), Solutions ACE*COMM Corporation (“
ACE Canadian Subsidiary ”), Mamma.com Inc. (f/k/a
Intasys Corporation), a company organized under the laws of the
Province of Ontario, Canada (“ Mamma.com ”), and
the wholly owned subsidiaries of Mamma.com that are signatories to
this Agreement (referred to hereinafter as the “ Mamma.com
Subsidiaries ,” together with Mamma.com, “
Sellers ”).
Recitals
A. The
Mamma.com Subsidiaries are engaged interalia, in the business of
developing, marketing, selling, installing and maintaining
mediation, customer care and billing software for customers in the
telecommunications industry (the “ Business
”).
B. Buyer desires to
purchase from Sellers and Sellers desire to sell to Buyer, all of
Sellers’ assets and goodwill used in, or useful to and
related to the operation of the Business at the date of this
Agreement, on the terms and conditions set forth in this
Agreement.
C.
Buyer, in connection with such purchase, desires to assume certain
of the liabilities and obligations of Sellers relating to the
Business, as more specifically set forth herein.
Agreement
NOW,
THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants, agreements, terms and
conditions set forth below, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1
Definitions . In this Agreement, the following terms
have the meanings specified or referred to in this
Section 1.1 and shall be equally applicable in
both the singular and plural forms. Any agreement referred to below
shall mean such agreement as amended, supplemented and modified
from time to time to the extent permitted by the applicable
provisions thereof and by this Agreement.
277
“
$ ” means United States of America dollars.
“
ACE Australian Subsidiary ” has the meaning specified
in the first paragraph of this Agreement.
“
ACE Canadian Subsidiary ” has the meaning specified in
the first paragraph of this Agreement.
“
Acquired Assets ” has the meaning specified in
Section 2.1 .
“
Acquisition Transaction ” has the meaning specified in
Section 5.2 .
“
Affiliate ” means, with respect to any Person, any
other Person which directly or indirectly controls, is controlled
by or is under common control with such Person.
“
Agreement ” has the meaning specified in the first
paragraph of this Agreement.
“
Article 5 ” means Article 5 of the Value Added Tax
(Special Provisions) Order 1995 (SI 1995/1268).
“
Assumed Obligations ” has the meaning specified in
Section 2.3 .
“
Australian Acquired Assets ” means the Acquired Assets
that are owned or held by the Australian Subsidiary.
“
Australian Contracts ” has the meaning specified in
Section 2.5(a) .
“
Australian Duty ” means any stamp, transaction or
registration duty or similar charge imposed by any Australian
commonwealth, state, territory or local Governmental Body and
includes any interest, fine, penalty, charge or other amount
imposed in respect of the duty or charge.
“
Australian Employee Benefits ” means all wages,
salaries, remuneration, compensation and other employee benefits
(including, without limitation, accrued annual leave and long
service leave entitlements) payable by Sellers to any Australian
Employee other than any benefit due to a Transferring Australian
Employee under the governing rules of the superannuation or pension
plan of which the Transferring Australian Employee is a participant
on the termination of the Transferring Australian Employee’s
employment with a Seller.
278
“
Australian Employee Termination Benefits ” means all
compensation, leave or benefits to be paid or provided to any
Australian Employee (including without limitation, any entitlement
to severance, retrenchment or redundancy payments or payments in
lieu of notice) arising out of the termination of the employment of
such Australian Employee whether under any agreement, statute,
award or in any other way.
“
Australian Employee Termination Benefit Adjustment ”
means the sum of adjustment amounts set forth in Schedule
3.10(b) of the Seller Disclosure Schedule for each
Fixed-Term Australian Employee and Terminating Australian Employee
being the total of amounts payable in respect of Australian
Employee Termination Benefits payable to each such Australian
Employee.
“
Australian Employees ” means those Employees employed
by the Australian Subsidiary at the date of this
Agreement.
“
Australian Funds ” has the meaning specified in
Section 3.10(c) .
“
Australian GST ” means any tax imposed or levied under
the Australian GST Act, including any replacement or subsequent
similar tax.
“
Australian GST Act ” means the Australian A New Tax
System (Goods and Services Tax) Act 1999 (Cth.).
“
Australian Lease ” means the Registered Lease No.
704373781 in respect to premises leased thereunder by the
Australian Subsidiary situated at level 8 Zurich House 8 Karp Ct
Bundall, Queensland, Australia.
“
Australian Properties ” has the meaning specified in
Section 3.20 .
“
Australian Subsidiary ”means Intasys Billing
Technologies (Asia-Pacific) Pty Ltd
ABN 88 079 839 080.
“
Balance Sheet Date ” has the meaning specified in
Section 3.4 .
“
Business ” has the meaning specified in Recital
A of this Agreement.
“
Buyer ” has the meaning specified in the first
paragraph of this Agreement.
“
Buyer Disclosure Schedule ” means the disclosure
schedules of Buyer referenced herein or otherwise required of Buyer
pursuant to this Agreement.
“
Buyer Indemnified Parties ” has the meaning specified
in Section 7.1 .
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“
Buyer Indemnifiable Costs ” has the meaning specified
in Section 7.1 .
“
Canadian Acquired Assets ” means the Acquired Assets,
excluding any Intellectual Property, owned or held by Mamma.com or
the Canadian Subsidiary.
“
Canadian Employee Benefits ” means such sums payable
to Micheal Tinmouth and Lele Yang, including all wages and
salaries, sick pay, and liability for taxation, accrued holiday
pay, expenses, accrued bonuses, commission and other sums payable
in respect of any period up to the Closing Date.
“
Canadian Subsidiary ” means Intasys Billing
Technologies (Canada) Inc.
“
Canadian GST ” means taxes, interest, penalties and
fines imposed under Part IX of the Excise Tax Act (Canada) and the
regulations made thereunder.
“
Closing ” has the meaning specified in Section
2.10 .
“
Closing Date ” has the meaning specified in
Section 2.10 .
“
Code ” means the Internal Revenue Code of 1986, as
amended.
“
Confidentiality Provision ” has the meaning specified
in Section 5.3(a) .
“
Consents ” has the meaning specified in Section
2.5(a) .
“
Contracts ” means all written or oral contracts,
commitments, leases, and other agreements with respect to the
Business to which Mamma.com or any Mamma.com Subsidiary is a party
or by which Mamma.com, any Mamma.com Subsidiary, the Acquired
Assets or the Assumed Obligations are bound or under which
Mamma.com or any Mamma.com Subsidiary has acquired rights
(collectively, the “ Contracts ”).
“
Directive ” means EC Directive 77/187.
“
Earn-Out ” has the meaning specified in Section
2.7(c) .
“
EEP ” has the meaning specified in Section
3.10(d) .
“
Effective Time ” means 11:59 p.m. on December 31,
2003.
“
Elected Assets ” has the meaning specified in
Section 3.23 .
“
Employee ” means an individual currently employed by
Sellers in the conduct of the Business.
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“
Employee Plan ” includes any pension, retirement,
savings, disability, medical, dental, health, life (including,
without limitation, any individual life insurance policy under
which any Employee is the named insured and as to which Sellers
make premium payments, whether or not Sellers are the owner,
beneficiary or both of such policy), death benefit, group
insurance, profit-sharing, deferred compensation, stock option,
bonus, incentive, vacation pay, severance pay, or other employee
benefit plan, trust, arrangement, agreement, policy or whether or
not any of the foregoing is funded or insured and whether written
or oral, which is intended to provide or does in fact provide
benefits to any or all Employees, and as of the Closing Date
(i) to which any Seller is party or by which any Seller (or
any of the rights, properties or assets of any Seller) is bound,
(ii) with respect to which any Seller has made any payments,
contributions or commitments, or may otherwise have any liability
(whether or not any Seller still maintains such plan, trust,
arrangement, contract, agreement, policy or commitment) or
(iii) under which any director, Employee or agent of any
Seller is a beneficiary as a result of his or her employment or
affiliation with any Seller.
“
Encumbrance ” means any lien, claim, charge, security
interest, mortgage, hypothec, pledge, easement, conditional sale or
other title retention agreement, defect in title or restrictive
covenant.
“
Environmental Requirements ” has the meaning set forth
in Section 3.20 .
“
Escrow Agent ” has the meaning specified in
Section 2.9 .
“
Escrow Agreement ” has the meaning specified in
Section 2.9 .
“
Escrow Sum ” has the meaning specified in
Section 2.9 .
“
Excluded Assets ” has the meaning specified in
Section 2.2 .
“
Excluded Liabilities ” has the meaning specified in
Section 2.4 .
“
Financial Statements ” has the meaning specified in
Section 3.4 .
“
Fixed-Term Australian Employee ” means an Australian
Employee who accepts an offer of employment with the ACE Australian
Subsidiary as contemplated by Section 5.5(b)(i)(2)
.
“
GAAP ” has the meaning specified in Section
3.4 .
“
General Taxes ” has the meaning specified in
Section 8.1 .
“
Goodwill ” means the goodwill of Sellers in relation
to the Acquired Assets together with the exclusive right, insofar
as Sellers can grant it, for Buyer to represent itself as carrying
on the Business in succession to Sellers from Closing.
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“
Governmental Body ” means any foreign, national,
federal, provincial, state, local or other governmental authority
or regulatory body.
“
Governmental Permits ” has the meaning specified in
Section 3.6 .
“
Indemnified Parties ” means a Buyer Indemnified Party
or a Seller Indemnified Party.
“
Intellectual Property ” means all technology,
Software, data and documentation (including electronic media),
trade secrets (technical and non-technical), know-how, customer
lists and other confidential business information and proprietary
rights, including, without limitation, inventions, patents, patent
disclosures, works of authorship, copyrights, software rights,
database rights, moral rights, mask works, integrated circuit
topography, trademarks, service marks, domain names, URL addresses
and Internet Web pages, trade dress, trade names, corporate names
(including “Intasys” and “IBT”) and
licenses or other agreements to or from third parties regarding the
foregoing, which are necessary for or used in connection with the
Business (including applications and registrations and the goodwill
associated with any such patent, copyright, trademark or trade
name) and which are not Excluded Assets.
“
IRS ” means the United States Internal Revenue
Service.
“
Know ” or “ Knowledge ” (whether or
not capitalized) shall mean, in respect of Sellers, the actual
knowledge of David Goldman, Michael Tinmouth, Iain Wilson or Ian
MacLennan after a reasonable investigation, and, in respect of
Buyer, the actual knowledge of George Jimenez, Steven Delmar or
Joseph Chisholm after a reasonable investigation.
“
Mamma.com Subsidiary ” has the meaning specified in
the first paragraph of this Agreement.
“
Material Adverse Change ” or “ Material
Adverse Effect ” means a material adverse change or
effect on the assets, properties, business, operations or financial
condition of the Business, Acquired Assets or Assumed Obligations,
other than as a result of (i) changes in laws or regulations or
accounting rules of general applicability or interpretations
thereof, (ii) the entering into or consummation of the transactions
contemplated by this Agreement, (iii) general economic conditions,
(iv) conditions prevalent in the industry, in general, or (v)
currency fluctuations.
“
Nonassignable Items ” has the meaning specified in
Section 2.5(b) .
“
Party ” means Buyer or any Seller (collectively, the
“ Parties ”).
282
“
Permitted Exceptions ” means (a) liens for Taxes
and other governmental charges and assessments which are not yet
due and payable, (b) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens
arising in the ordinary course of business for sums not yet due and
payable, (c) liens on financed machinery and equipment, (d) liens
created by, arising out of or specifically contemplated or
permitted by this Agreement, or (e) other liens or
imperfections on property or assets which are not material in
amount or do not materially detract from the value or the existing
use of the property or assets affected by such lien or
imperfection.
“
Person ” means any individual, corporation,
partnership, joint venture, association, joint-stock company,
limited liability company, trust, unincorporated organization or
other legal entity.
“
Pre-Effective Time Accounts Payable ” has the meaning
specified in Section 5.4(a) .
“
Pre-Effective Time Accounts Receivable ” has the
meaning specified in Section 5.4(a) .
“
Pre-Paid Amounts ” has the meaning specified in
Section 3.11(g) .
“
Post-Effective Time Payments ” has the meaning
specified in Section 5.4(b) .
“
Proration Statement ” has the meaning specified in
Section 2.8 .
“
Purchase Price ” has the meaning specified in
Section 2.7(a) .
“
Requirements of Laws ” means any foreign, national,
federal, provincial, state and local laws, statutes, regulations,
rules, codes or ordinances enacted, adopted, issued or promulgated
by any Governmental Body or common law.
“
Restricted Entity ” has the meaning specified in
Section 5.9(a) .
“
Restricted Products or Services ” has the meaning
specified in Section 5.9(a) .
“
Sellers ” has the meaning specified in the first
paragraph of this Agreement.
“
Seller Disclosure Schedule ” means the disclosure
schedules of Sellers referenced herein or otherwise required of
Sellers pursuant to this Agreement.
“
Seller Indemnifiable Costs ” has the meaning set forth
in Section 7.2 .
“
Seller Indemnified Parties ” has the meaning set forth
in Section 7.2 .
“
Software ” means all of the computer software owned or
utilized by the Business or any Seller.
“
Stanplan ” means Stanplan A (currently governed by a
Declaration of Trust and General Rules (incorporating amendments
made up to December 9, 1998).
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“
Tax ” or “ Taxes ” means any tax
(including any income tax, gross receipts tax, payroll tax,
employment tax, excise tax, severance tax, stamp tax, unemployment
tax, withholding tax, social security tax, inheritance tax, capital
gains tax, Australian GST, Canadian GST, value-added tax, sales
tax, use tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty or Australian
Duty, but excluding Australian Duty arising as a result of the
transactions contemplated herein), deficiency, or other fee or
other tax of any kind whatsoever, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, and
any related charge or amount (including any fine, penalty,
interest, or addition to tax), imposed, assessed, or collected by
or under the authority of any Taxing Authority or payable pursuant
to any tax-sharing agreement or any other contract relating to the
sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency, or fee.
“
Taxing Authority ” means any (a) nation, state,
county, city, town, village, district, or other jurisdiction of any
nature; (b) national, federal, provincial, state, local, municipal,
foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and
any court or other tribunal); (d) multi-national organization or
body; or (e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
“
Tax Return ” means any return, report or similar
statement required to be filed with respect to any Taxes (including
any attached schedules), including, without limitation, any
information return, claim for refund, amended return and
declaration of estimated Tax.
“
Terminating Australian Employe e” means an Australian
Employee who either (i) is not offered employment with the ACE
Australian Subsidiary, or (ii) does not accept an offer of
employment with the ACE Australian Subsidiary as contemplated by
Section 5.5(b)(i) on or before Closing.
“
Transaction Documents ” means all documents executed
in connection with this Agreement, including those documents set
forth on Schedule 1.1(a) .
“
Transferring Australian Employee ” means an Australian
Employee who accepts an offer of employment with the ACE Australian
Subsidary as contemplated by
Section 5.5(b)(i)(1) on or before
Closing.
“
Transition Period ” has the meaning specified in
Section 5.2 .
“
TUPE ” means the Transfer of Undertakings (Protection
of Employment) Regulations 1981 (as amended) (enacted to comply
with the Directive).
“
UK Employee Benefits ” means such sums payable to an
UK Employee, including all wages and salaries, sick pay, maternity
pay and liability to taxation, accrued holiday pay, expenses,
accrued bonuses, commission and other sums payable in respect of
any period.
284
“
UK Employee Benefits Adjustment ” means the amount
equal to the monetary value of the UK Employee Benefits accrued by
the UK Employees as at the Effective Time, as set forth in
Schedule 3.10(b) of Seller Disclosure
Schedule.
“
UK Employees ” means those Employees employed by the
UK Subsidiary at the Closing Date in the conduct of the Business in
Scotland as set forth on Schedule 3.18 of the Seller
Disclosure Schedule as designated to be in the UK
office.
“
UK Pension Plans ” has the meaning specified in
Section 3.10(d) .
“
UK Subsidiary ” means Intasys Billing Technologies
Limited (Co. No. 02998610), organized under the laws of England and
Wales with a registered office at 95 Station Road, Hampton,
Middlesex, England, UK TW12 2BD.
A RTICLE II
SALE AND PURCHASE OF THE BUSINESS
2.1 Acquired Assets . On the
terms and subject to the conditions and exceptions contained
herein, Sellers (including the Australian Subsidiary and Canadian
Subsidiary) as owners of the Business hereby sell, transfer,
convey, assign and deliver to Buyer, the ACE Australian Subsidiary
and the ACE Canadian Subsidiary, as applicable, in each case with
full title guarantee, and Buyer, the ACE Australian Subsidiary and
the ACE Canadian Subsidiary hereby purchase, accept and acquire
from Sellers (including the Australian Subsidiary and the Canadian
Subsidiary) with the benefit of the representations, warranties,
and undertakings contained in this Agreement as a going concern all
the tangible, corporeal, intangible and incorporeal assets relating
to the Business, including without limitation Contracts, customer
lists, Intellectual Property, fixed assets and the assets set forth
on Schedule 2.1 , except as provided in
Section 2.2 with respect to the Excluded Assets (the
“ Acquired Assets ”) and the Goodwill free of
all Encumbrances.
2.2 Excluded Assets .
Notwithstanding anything to the contrary in this Agreement, the
Acquired Assets do not include, and Buyer and the ACE Australian
Subsidiary are not purchasing or assuming any liability therefore,
the following assets (the “Excluded Assets”), ownership
of which is retained by Sellers:
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(a) All cash and
cash equivalents;
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(b) Except as set
forth on Schedule 3.9(ii) of the Seller Disclosure
Schedule, all rights of Seller with respect to any insurance
policies, deposits thereunder, and all claims of Seller under such
policies and contracts through the Closing Date;
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(c) All claims or
causes of action and benefits to the extent they arise therefrom
prior to the Closing Date;
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(d) All rights of
Sellers under this Agreement, including the proceeds of the sale
contemplated herein and other payments to Seller contemplated
herein or under any other agreement between Sellers and Buyer
entered into on or after the date of this Agreement;
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(e) All original
financial and accounting records not related exclusively to the
Business, provided that a copy of all such records related to the
Business are made available to Buyer;
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(f) All
Pre-Effective Time Accounts Receivable;
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(g) Income tax
refunds and other tax refunds or credits receivable by any
Seller;
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(h) The share
capital of the UK Subsidiary and the Australian Subsidiary;
and
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(i) Any other
assets listed in Schedule 2.2 as Excluded
Assets.
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2.3 Assumed
Obligations . On the terms and subject to the
conditions and exceptions contained herein, Buyer shall assume and
pay, perform and discharge, as and when due, the following
liabilities and obligations of Sellers (insofar as such obligations
relate to the Business and the Acquired Assets) as they exist on
the Closing Date, pursuant to this Agreement and such instruments
of sale, transfer, assignment and delivery as are required, and
other than the Excluded Liabilities (collectively, the “
Assumed Obligations ”):
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(a) Sellers’
obligations to customers of the Business expressed in the
Contracts;
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(b) Sellers’
obligations under equipment and facility leases assigned to Buyer
and associated with equipment or facilities used in the Business
and acquired or leased by Buyer hereunder and included in the
Acquired Assets;
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(c) Sellers’
obligations to Michael Tinmouth and Lele Yang in respect of
Canadian Employee Benefits as and from Closing;
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(d) Obligations to
the UK Employees under TUPE including obligations to pay UK
Employee Benefits as and from the Closing and contractual
obligations to make contributions to the UK Pension Plans as and
from the Closing;
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(e) Seller’s
obligations to Transferring Australian Employees in respect of (i)
unaccrued long-service leave and accrued sick leave benefits, (ii)
Employee Benefits accrued after Closing, and (iii) required
contributions to the Australian Funds after Closing;
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(f) Seller’s
obligations under any Intellectual Property licenses, which are
included in the Acquired Assets and set forth on Schedule
2.3(f) of the Seller Disclosure Schedule, excluding any
breaches or defaults of such licenses that have occurred prior to,
up to and including the Closing; and
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(g) Sellers’ obligations
under the insurance policies listed on Schedule
3.9(ii) of the Seller Disclosure Schedule.
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2.4 Excluded Liabilities
. Notwithstanding anything to the contrary contained in
this Agreement, Buyer shall not assume or be liable for and Sellers
shall retain and remain responsible for all of Sellers’
debts, liabilities and obligations of any nature whatsoever, other
than the Assumed Obligations, whether accrued, absolute or
contingent, whether known or unknown, whether due or to become due
and whether related to the Business and the Acquired Assets or
otherwise, and regardless of when asserted, including, without
limitation, the following liabilities or obligations of Sellers
(none of which shall constitute Assumed Obligations) (collectively,
the “ Excluded Liabilities ”):
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(a) All of
Sellers’ liabilities or obligations under this Agreement or
under any other agreement between Sellers and Buyer entered into on
or after the date of this Agreement;
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(b) All of
Sellers’ liabilities arising out of or relating to an
Excluded Asset;
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(c) All of
Sellers’ liabilities under any Contract not assumed by Buyer
under Section 2.3 , including without limitation the
Indemnity for Bank Guarantee by and among Australian Subsidiary,
National Australia Bank Limited and Chong Ming Investment Pty
Ltd;
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(d) Except as
specifically set forth in Section 2.3 , any liability
of Sellers to the extent arising out of or relating to the
operation of the Business prior to Closing, including without
limitation any claims arising after Closing related to any Software
sold to third parties prior to Closing or Sellers’ use of
unlicensed software;
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(e) Except for
Taxes specifically included as Assumed Obligations, all liabilities
and obligations of Sellers for Taxes for any period, and any
liability of Sellers for the unpaid Taxes of any Person under
Treas. Reg. § 1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by
contract, or otherwise;
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(f) Unless
otherwise specifically payable by Buyer pursuant to this Agreement,
all of Sellers’ liabilities or obligations for expenses,
Taxes or fees incident to or arising out of the negotiation,
preparation, approval, or authorization of this Agreement or the
consummation (or preparation for the consummation) of the
transactions contemplated hereby, including all attorneys’
and accountants’ fees and disbursements, brokerage fees,
consultants’ fees and finders’ fees;
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(g) Any liability
or obligation pertaining to any discontinued operation owned or
operated by Sellers and related to the Business as it was operated
and discontinued by Sellers prior to the Closing Date other than
liabilities and obligations which are Assumed
Obligations;
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(h) Any
obligation of Sellers to indemnify any Person by reason of the fact
that such Person was a shareholder, director, officer, employee
(other than a UK employee but only to the extent such obligation
arises pursuant to a UK Employee’s terms of employment), or
agent of any of Sellers or was serving at the request of Sellers as
a partner, trustee, director, officer, employee (other than a UK
employee but only to the extent such obligation arises pursuant to
a UK Employee’s terms of employment), or agent of another
entity (regardless of whether such indemnification is for
judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and regardless of
whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement, or otherwise);
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(i) Sellers’
obligations to Employees terminated prior to Closing, including,
without limitation, Kevin Hickey, George Langford, Sami Shamma, and
any Terminating Australian Employees (except with respect to
liability to Mamma.com and the Australian Subsidiary for Australian
Employee Termination Benefits to be paid to such Terminating
Australian Employees);
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(j) All
intercompany accounts, including intra-group loan balances,
relating to the Business or Acquired Assetsthe;
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(k) Any
liabilities of Sellers based on acts or omissions occurring after
the Closing;
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(l) Any
liabilities of Sellers under the Civil Code of Quebec, the Act
respecting Labour Standards, the Charter of Human Rights and
Freedoms, the Labour Code, the Act respecting occupational health
and safety, the Workplace Health and Safety Act 1995 (Qld), any
other law in relation to occupational health and safety the Act
respecting industrial accidents and occupational diseases, the
Charter of the French language, the Pay Equity Act or any other
applicable law in the Province of Quebec, any other law in relation
to anti-discrimination or equal opportunity any other law in
relation to anti-discrimination or equal opportunity or any
employment, commission, severance, retention or termination
agreement between any Seller and any employee of any Seller arising
prior to the Closing Date other than those liabilities for which
Buyer shall become responsible at law as a result of offering
employment to such Employees or as a result of such Employees being
transferred to Buyer by operation of law as and from the Closing
Date. For the avoidance of doubt, this Section 2.4(l)
shall not apply to the UK Employees, the liabilities in respect of
which shall be subject to Section 5.5(c) ;
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(m) Any
liabilities of Sellers to the extent arising out of or resulting
from any Sellers’ compliance or non-compliance with any law
or order of any Governmental Body, including without limitation any
bulk sales laws related to the transactions contemplated herein and
TUPE requirements relating to required consultation with UK
Employees prior to Closing;
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(n) Any liability
or obligation of Sellers for indebtedness for borrowed
money;
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(o) All
Pre-Effective Time Accounts Payable and accrued liabilities other
than those liabilities for which Buyer is responsible following the
adjustment pursuant to Section 2.8 ; and
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(p) Any liability
related to Sellers’ indebtedness to any of the
Sellers’shareholders, officers, directors or
Employees;
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(q) Any liability
related to the termination by Buyer of an employment contract,
which contract has the effect of a contract made between the Buyer
and the employee concerned as a result of TUPE, and which is not
disclosed in the Seller Disclosure Schedule or which is an
employment contract with any Employee in the UK that is not listed
on Schedule 3.18 of the Seller Disclosure Schedule as
a UK Employee;
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(r) Any liability
in connection with or as a result of any claim (including any
individual employee entitlement under or consequent on such claim)
by any trade union or staff association or any other employee
representatives (whether or not recognised by Sellers in respect of
all or any of the UK Employees) within the meaning of TUPE and/or
the Directive arising from or connected with any failure by the
Sellers to comply with any legal obligations to such trade unions,
staff associations or employee representatives within the meaning
of TUPE and/or the Directive whether under Regulation 10 of TUPE or
under the Directive or otherwise whether any such claim arises or
has its origin before, on or after Closing;
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(s) Any liability
in respect of any Employee for the period prior to the Closing
Date; and
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(t) Any
liabilities arising out of the tax liabilities set forth on
Schedule 3.17 of the Seller Disclosure
Schedule.
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2.5 Assignability and Consents
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(a)
Schedule 2.5(a) of the Seller Disclosure Schedule
sets forth a list of all material Contracts, licenses and permits
that (by their terms or otherwise) are non-assignable or
non-transferable or that cannot be subleased to Buyer, or in the
case of Contracts, licenses and permits that are Australian
Acquired Assets (“ Australian Contracts ”) that
cannot be subleased to the ACE Australian Subsidiary, without the
consent of some other Person. As soon as reasonably practicable
after the date hereof, Sellers shall take, or cause to be taken by
others, commercially reasonable efforts in an effort to obtain or
satisfy prior to Closing the consents, novations, approvals,
authorizations, requirements, waivers and agreements (collectively,
“ Consents ”) required from any Person necessary
to authorize, approve or permit the full and complete sale,
conveyance, assignment, sublease or transfer of the Contracts,
licenses and permits, and to consummate and make effective the
transactions contemplated by this Agreement.
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(b)
Notwithstanding anything
in this Agreement to the contrary, this Agreement does not
constitute an Agreement to sell, convey, assign, sublease or
transfer any Acquired Assets or Assumed Obligations, including the
Contracts, permits or licenses, if an attempted sale, conveyance,
assignment, assumption, sublease or transfer of such assets or
liabilities, without the Consent of another Person to such transfer
would constitute a breach by Sellers, Buyer or the ACE Australian
Subsidiary with respect to such Acquired Assets or Assumed
Obligations (“ Nonassignable Items ”). If any of
the Consents set forth on Schedule 2.5(a) of the
Seller Disclosure Schedule are not obtained and satisfied, or if an
attempted sale, conveyance, assignment, assumption, sublease or
transfer would be ineffective, Sellers, Buyer and the ACE
Australian Subsidiary shall enter into such arrangements at the
Closing as the parties shall mutually agree in order to provide to
Buyer the full benefit of any such Nonassignable Items (and to the
ACE Australian Subsidiary the full benefit of any such
Nonassignable Items in relation to Australian Contracts) providing
that without prejudice to the generality of the foregoing Sellers
shall be deemed to hold the benefit of such Nonassignable Items in
trust for Buyer (and such Nonassignable Items in relation to
Australian Contracts in trust for the ACE Australian Subsidiary)
absolutely and Buyer and the ACE Australian Subsidiary as the case
may be shall be entitled to use and enjoyment of the Nonassignable
Items as against Sellers and to receive the income therefrom (if
any) to the extent that Sellers are not constrained by operation of
law or contract from granting use or enjoyment or the right to
receive any income to Buyer or the ACE Australian Subsidiary (as
the case may be), subject always to Buyer or the ACE Australian
Subsidiary maintaining any such Nonassignable Items in a good state
of repair (fair wear and tear excepted). Notwithstanding the
foregoing, after the Closing, Sellers shall continue to take, or
cause to be taken, commercially reasonable efforts to (i) obtain
any Consents that are not obtained prior to Closing, and (ii)
cooperate with Buyer and the ACE Australian Subsidiary in good
faith to ensure that renewals of any Contracts for which Consents
were not obtained will be entered into with Sellers.
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289
2.6 Title to the Acquired Assets;
Documents of Conveyance.
(a) As of the Closing Date, Sellers
shall with full title guarantee and any other legal warranties (i)
convey all of their right, title and interest in and to the
Acquired Assets other than the Australian Acquired Assets and the
Canadian Acquired Assets to Buyer free and clear of all
liabilities, obligations or Encumbrances (excepting only the
Assumed Obligations and Permitted Exceptions); (ii) convey all of
their right, title and interest in the Australian Acquired Assets
to the ACE Australian Subsidiary free and clear of all liabilities,
obligations or Encumbrances (excepting only the Assumed Obligations
and Permitted Exceptions) and (iii) convey all of their right,
title and interest in the Canadian Acquired Assets to the ACE
Canadian Subsidiary free and clear of all liabilities, obligations
or Encumbrances (excepting only the Assumed Obligations and
Permitted Exceptions). Title to the Acquired Assets shall be
conveyed pursuant to the terms and conditions of this Agreement and
such documents as are reasonably acceptable to counsel for Buyer.
Sellers, Buyer, the ACE Australian Subsidiary and the ACE Canadian
Subsidiary agree to use commercially reasonable efforts to take or
cause to be taken all action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable, whether before or
after Closing, to ensure that transfer of title to the Acquired
Assets to Buyer, the ACE Australian Subsidiary and the ACE Canadian
Subsidiary occurs as contemplated hereunder.
(b) Notwithstanding anything to the
contrary contained herein, Buyer shall have the option to designate
one or more direct or indirect subsidiaries of Buyer to acquire
certain of the Acquired Assets (other than the Australian Acquired
Assets and the Canadian Acquired Assets) and assume the Assumed
Obligations, provided, however , that any such designation
under the foregoing clause shall not be permitted if such
designation would materially delay the Closing and no such
designation shall relieve Buyer of any obligations or liability
hereunder and Buyer shall remain jointly and severally (solidarily)
responsible with such subsidiary.
290
2.7
Purchase Price .
(a) The purchase price paid by
Buyer, the Canadian Subsidiary and the ACE Australian Subsidiary,
as applicable, for the Acquired Assets shall equal $1,350,000,
plus $59,220 for security deposit adjustment, plus
$130,000 (the agreed upon fair market value of Sellers’ fixed
assets), minus $11,000 for sick leave adjustment,
minus the Pre-Paid Amounts, and minus the UK Employee
Benefits Adjustment (the “Purchase Price”) and shall be
payable in full on the Closing Date. Any sum payable by the Buyer
or the ACE Australian Subsidiary to Sellers under the Agreement
shall be exclusive of any applicable VAT.
(b) The Purchase Price shall be
allocated among the Acquired Assets as set forth in an appraisal of
the tangible assets to be performed (at Buyer’s sole expense)
within thirty days of the Closing (the “ Allocation
Statement ”). The Allocation Statement shall include an
allocation of the Purchase Price among the different countries in
which the Acquired Assets are located. If any dispute arises
between the parties hereto in connection with the Allocation
Statement and such dispute cannot be resolved by the parties within
sixty days after Buyer’s delivery of the Allocation Statement
to Sellers, it shall be referred to a mutually satisfactory
third-party appraisal firm which has not been engaged by any party
hereto during the two years preceding the date of such referral.
The determination of such firm shall be conclusive and binding on
each party, and judgment upon any such determination may be entered
in any court having jurisdiction over the matter. One-half of the
fees of such firm shall be borne by Sellers, and one-half shall be
borne by Buyer.
Buyer
and Sellers and their Affiliates shall report, act and file Tax
Returns (including, but not limited to Internal Revenue Service
Form 8594) in all respects and for all purposes consistent with
such allocation. Neither Buyer nor Sellers shall take any position
(whether in audits, tax returns or otherwise) that is inconsistent
with such allocation unless required to do so by applicable
law.
(c) As of the Closing Date and upon
receipt of the Purchase Price, the Sellers shall thereafter be
entitled to receive up to an additional $250,000 in cash subject to
the performance objectives set forth in Appendix A on
the terms and conditions set forth therein (the “
Earn-Out ”).
2.8 Interim Operations;
Proration. It is the intent of the
parties that the operations of the Business from and after the
Effective Time be for the account of the Buyer and the ACE
Australian Subsidiary notwithstanding the fact that the Closing
Date is after the Effective Time. Buyer and the ACE Australian
Subsidiary shall be entitled to all income, monetary and other
economic rights and benefits of the Business and shall be
responsible for all obligations incurred with respect to the
Business arising in the ordinary course after the Effective Time as
if the Closing had occurred at the Effective Time. The Parties
agree to prorate all income and prepaid assets from the operation
of the Business and all expenses and liabilities incurred
(including without limitation liabilities for annual leave and long
service leave entitlements accrued by Transferring Australian
Employees after the Effective Time, and in respect of Australian
Employee Termination Benefits, the Australian Employee Termination
Benefit Adjustment) as of and following the Effective Time in order
that Sellers shall have the benefit of and bear all such income and
expense with respect to the Business through and including the
period preceding the Effective Time, and Buyer and the ACE
Australian Subsidiary shall have the benefit of and bear all such
income and expense with respect to the Business on and after the
Effective Time. Without limiting the generality of the foregoing,
the parties agree that the Buyer or the ACE Australian Subsidiary,
as applicable, shall be responsible for all salaries, remuneration,
compensation, wages and commissions of the Employees and all
related benefits, pensions and accruals on and after the Effective
Time.
291
Initial
prorations shall be made pursuant to a statement (the “
Proration Statement ”) prepared by Sellers and
delivered to Buyer not less than three business days prior to the
Closing Date. The items to be prorated shall include, but not be
limited to, payments and charges under the Contracts (including any
payments, refunds, rights of set-offs or deduction, rebates or
similar rights or credits), power and utilities charges, real,
immovable, personal and movable property taxes upon the basis of
the most recent tax bills and information available, property and
equipment rentals, prepayments under customer contracts, security
deposits and similar prepaid and deferred items. Items that
constitute amounts owing or payable for specified periods of time
(such as property taxes) shall be prorated on the basis of the days
of the applicable time period before and after the Effective Time.
The Proration Statement shall be based upon the latest available
information and the calculations thereof, and shall otherwise be in
form and substance reasonably satisfactory to both parties, and
shall identify in reasonable detail the items that have been
prorated. To the extent not inconsistent with the express
provisions hereof, the prorations made pursuant to this
Section 2.8 shall be made in accordance with
GAAP.
Within
forty five days after the Closing Date, Buyer shall prepare and
deliver to Seller a final Proration Statement prepared as of the
Effective Time, and final adjustments pursuant to this
Section 2.8 and any required refund or payment to
Sellers or Buyer, as the case may be, shall be made on the basis of
the final Proration Statement. If any dispute arises under this
Section 2.8 over the amount to be refunded or
paid, such refund or payment shall nonetheless be promptly made to
the extent such amount is not in dispute. If any such dispute
cannot be resolved by the parties within sixty days after
Buyer’s delivery of the final Proration Statement to Sellers,
it shall be referred to a mutually satisfactory independent public
accounting firm which has not been the regular audit firm of the
parties hereto for the two years preceding the date of such
referral. The determination of such firm shall be conclusive and
binding on each party, and judgment upon any such determination can
be entered in any court having jurisdiction over the matter.
One-half of the fees of such firm shall be borne by Sellers, and
one-half shall be borne by Buyer.
Any
amounts collected or receivable by Sellers (including the
Australian Subsidiary) relating to the period between the Effective
Time and the Closing Date on account of sales taxes, Canadian GST,
Australian GST, value-added tax or other taxes shall either (i) be
credited to Buyer, the Canadian Subsidiary or the ACE Australian
Subsidiary, as applicable, as part of the Proration Statement in
which case Buyer, the Canadian Subsidiary or the ACE Australian
Subsidiary, as applicable, shall assume, to the complete
exoneration of Sellers (including the Australian Subsidiary), any
obligations to remit such taxes to the relevant taxation authority
and shall hold Sellers (including the Australian Subsidiary)
harmless in this regard; or (ii) be remitted to the relevant
taxation authority on behalf of the Buyer, the Canadian Subsidiary
or the ACE Australian Subsidiary, as applicable.
With
respect to the period between the Effective Time and the Closing
Date, any amounts collected or receivable by the Sellers or
credited or applied in any other manner to the Sellers’
benefit that relate to any expenses incurred in the conduct of the
Sellers’ business, and which represent Australian GST input
tax credits shall be either (i) debited to Buyer or the ACE
Australian Subsidiary, as applicable, as part of the Proration
Statement; or (ii) be paid to the Buyer or the ACE Australian
Subsidiary, as applicable, by the Sellers.
292
2.9 Escrow Arrangements
. Pursuant to the escrow agreement to be
entered into among Mamma.com, Buyer and Fraser Milner Casgrain LLP
(the “ Escrow Agent ”), in substantially the
form attached hereto as Exhibit A (the “
Escrow Agreement ”) ten (10%) percent of the Purchase
Price shall be delivered to the Escrow Agent at Closing. Such
amount (which, together with all interest accrued thereon, is
hereinafter referred to as the “ Escrow Sum ”)
shall be held pursuant to the terms of the Escrow Agreement for
payment of amounts, if any, owed by Sellers to Buyer pursuant to
Article VII hereof. Sellers and Buyer agree that each will execute
and deliver such instruments and documents as are reasonably
necessary and furnished by any other party to enable such
furnishing party to receive those portions of the Escrow Sum to
which the furnishing party is entitled under the provisions of the
Escrow Agreement and this Agreement.
2.10 Closing
. Subject to the terms and conditions of
this Agreement, the closing of the transactions contemplated hereby
(the “ Closing ”) will take place by
correspondence as soon as reasonably practicable following
satisfaction or waiver of all conditions precedent specified under
Article VI hereof (other than conditions with respect
to actions the respective parties will take at the Closing itself),
but no later than February 11, 2004, or on such other date, place
and time as the parties may agree in writing (the “
Closing Date ”).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers,
jointly and severally (solidarily), hereby make the following
representations and warranties to Buyer as set forth in this
Article III , each of which is being relied upon by
Buyer as a material inducement to enter into and perform this
Agreement.
3.1 Organization
.
(a) Mamma.com is a corporation duly
organized, validly existing, and registered in the Province of
Ontario, Canada and is validly existing with its registered office
address at 388 St. Jacques Street West, 8th Floor, Montreal,
Quebec, Canada, H2Y 1S1, and has all requisite corporate power and
authority to execute, deliver and perform this Agreement and the
Transaction Documents, to perform the transactions contemplated
hereby and thereby, to operate and own or lease, as the case may
be, those of the Acquired Assets being sold by it, and to carry on
those aspects of the Business as it now conducts, and is duly
licensed or qualified to do business in each jurisdiction in which
the nature of any material business conducted by it or the
character or location of any material properties or assets owned or
leased by it makes such licensing or qualification
necessary.
293
(b) Each of the Mamma.com
Subsidiaries is a corporation duly organized, validly existing,
registered and in good standing under the laws of the jurisdiction
of its incorporation and has all requisite corporate power and
authority to operate and own or lease, as the case may be, the
assets now owned by such Mamma.com Subsidiary, and to carry on
those aspects of the Business as now conducted. The charter or
other constitutive documents of each Mamma.com Subsidiary, copies
of which have previously been delivered to Buyer, are true, correct
and complete copies of such documents in all material respects as
in effect as of the date of this Agreement.
(c) Except as set forth on
Schedule 3.1(c) of the Seller Disclosure Schedule,
each Mamma.com Subsidiary has kept all necessary statutory
registers for corporate bodies and has correctly made all the
necessary returns or filings that are required by company law or
regulations in each of the jurisdictions in which the Mamma.com
Subsidiaries are incorporated or conduct business.
(d) Schedule 3.1(d)
of the Seller Disclosure Schedule sets forth a true and correct
listing of each Seller’s relevant jurisdiction of formation
and other jurisdictions in which it is authorized to do
business.
(e) Intasys Billing Technologies
(Canada) Inc. and Mamma.com are the only Sellers transferring
taxable Canadian property (as defined under the Income Tax Act
(Canada)) and neither is a non-resident of Canada under the Income
Tax Act (Canada).
3.2 Conduct of Business . The
Business and the operation of the Acquired Assets are currently
carried on solely by Sellers. Sellers have performed all material
obligations arising prior to Closing pursuant to the Contracts and
any other agreements related to the Business. Except as set forth
on Schedule 3.2(a) of the Seller Disclosure Schedule,
the Acquired Assets constitute all the properties, assets and
rights forming a part of or used in the Business, and all
such properties, assets and rights as are necessary and sufficient
for the continued conduct of the Business in substantially the same
manner as conducted on the date hereof and immediately prior to the
Closing.
3.3 Authorization . The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly approved by the Boards of Directors of Mamma.com and
each of the Mamma.com Subsidiaries. Neither the approval of the
shareholders of Mamma.com nor any other corporate proceeding on the
part of Sellers is necessary to approve this Agreement nor to
consummate the transactions contemplated hereby. This Agreement and
the Transaction Documents have been duly and validly executed and
delivered by Sellers and constitute the valid and binding
obligations of Sellers, enforceable against Sellers in accordance
with their terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
creditors’ rights and except as may be limited by the
exercise of judicial discretion in applying principles of
equity.
294
3.4 Financial Statements .
Sellers have delivered to Buyer (i) the audited consolidated
financial statements of the Business as of December 31, 2002 (the
“ Balance Sheet Date ”), accompanied by the
audit report of PricewaterhouseCoopers LLP,
Sellers’independent auditors, and (ii) the unaudited
consolidated financial statements of Sellers as of and for the
period ended September 30, 2003 (collectively, the “
Financial Statements ”) concerning the Business. The
Financial Statements (including the related notes, where
applicable) present fairly in all material respects (subject, in
the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) the results of the
operations and financial condition of Sellers for the respective
fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where
applicable) have been prepared on a basis consistent with the
Financial Statements for the preceding three fiscal years and
comply with applicable accounting requirements and each of such
statements (including the related notes, where applicable) has been
prepared in accordance with generally accepted accounting
principles in Canada with respect to its consolidated financial
statements and the United Kingdom or Australia with respect to the
financial statements concerning such locations (“ GAAP
”) consistently applied during the periods involved, except
in each case as indicated in such statements or in the notes
thereto. The books and records of Sellers have been, and are being,
maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements.
3.5 Absence of Changes or
Events . Except as set forth on
Schedule 3.5 of the Seller Disclosure Schedule, since the
Balance Sheet Date, (i) Sellers have conducted the Business
only in the ordinary course, (ii) there has been no Material
Adverse Change or Material Adverse Effect, and (iii) no Seller has
disposed of or acquired any material assets or engaged in a
material transaction other than in the ordinary course of business
or as contemplated by this Agreement.
3.6 Licenses and Permits
. Schedule 3.6 of the Seller
Disclosure Schedule contains an accurate and complete list of all
permits, certificates, registrations, licenses, accreditations,
approvals and authorizations that are required by any Governmental
Body to permit Sellers to conduct the Business as now conducted
(“Governmental Permits”). Sellers hold and are in
compliance with all such Governmental Permits, and each
Governmental Permit is in full force and effect.
3.7 Intellectual Property
.
(a) Attached at
Schedule 3.7(a) of the Seller Disclosure
Schedule is a list of all Intellectual Property (other than
know-how and other similar rights which cannot be listed) owned or
utilized by Sellers in connection with the Business that is
material to the operation of the Business as presently conducted or
proposed to be conducted (including the expected new product
release), listing in each case whether such item is owned or
licensed by Sellers, and the registration or application numbers
where applicable. All of such Intellectual Property are subsisting,
valid, unencumbered and enforceable. Except as set forth on
Schedule 3.7(a) , all necessary registration,
maintenance and renewal fees in connection with any such registered
Intellectual Property have been paid and all necessary documents
and certificates in connection therewith have been filed with the
relevant patent, copyright, trademark or other governmental
authorities.
295
(b) Except for
“shrink wrap,” “click to accept,”
“off-the-shelf” or similar license arrangements,
Sellers have furnished Buyer with copies of all license agreements
to which any Seller is a party, either as licensor or licensee,
with respect to any Intellectual Property related to the Business
and such agreements are described on
Schedule 3.7(b) of the Seller Disclosure
Schedule.
(c) Except as set
forth on Schedule 3.7(c) of the Seller Disclosure
Schedule, Sellers have legal and beneficial right, title and
interest to or license to use all the Intellectual Property without
the payment of any royalty or similar payment.
(d) Except as set
forth on Schedule 3.7(d) , no Seller is infringing
on, misappropriating or otherwise violating, and the conduct of the
Business by Sellers does not infringe, misappropriate, or otherwise
violate any Intellectual Property right of others and no Seller has
received any written notice regarding same. Sellers are not subject
to any outstanding injunction, judgment, order, decree, ruling,
charge, settlement or other dispute involving any intellectual
property right or other legally protectable right of another.
Sellers are not aware of any infringement, misappropriation, or
violation by others of any such rights owned by any
Sellers.
(e) All
intellectual property licenses described on
Schedule 3.7(e) of the Seller Disclosure
Schedule are valid and binding obligations of Sellers and, to the
Knowledge of Sellers, valid and binding on the other parties
thereto and enforceable against Sellers, and, to the Knowledge of
Sellers, enforceable against the other parties thereto in
accordance with their respective terms.
(f) Except as set
forth in Schedule 3.7(f) of the Seller Disclosure
Schedule, no third party has any claim of ownership of the
Intellectual Property. In each case in which any Seller has
acquired the Intellectual Property or Software from any person,
such Seller has obtained a valid and enforceable assignment
sufficient to assign all rights in such Intellectual Property or
Software to Seller.
(g) Sellers have
taken all commercially reasonable steps that are required to
protect Sellers’ rights in confidential information and trade
secrets of Sellers or provided by any other person to Sellers.
Without limiting the foregoing, except as set forth on
Schedule 3.7(g) of the Seller Disclosure Schedule,
each Seller has and enforces a policy requiring each Employee,
consultant or contractor to execute a proprietary information,
confidentiality and assignment agreement, substantially in the form
previously provided to Buyer, and each present and former Employee,
consultant and contractor of each Seller has executed such
agreement.
(h) Except as set
forth on Schedule 3.7(h) of the Seller Disclosure
Schedule, Sellers have not placed or become obligated to place any
Software into source code escrow, and Seller has not provided the
source code to such Software to any third party nor granted to any
third party any rights to obtain a copy of such source code. To the
extent that any source code has been placed in escrow, neither this
Agreement nor the transactions contemplated hereby shall trigger
any rights of third parties that are a party to any applicable
escrow agreement related to source code to access the source code
or release the source code from escrow. Sellers have a copy of the
object code and source code for all of the Software, and have taken
all such actions that are necessary and appropriate to document the
features, functionality, and operation of the Software. All such
documentation has been written in a manner such that it may be
understood, modified, and maintained in an efficient manner by
reasonably competent programmers. All the Software operates in
accordance with its documentation, is free of any material bugs or
defects, and does not contain any Trojan horses or viruses or
other components designed to permit unauthorized access or disable
or erase software, hardware or data. All Known bugs or defects in
the Software are listed in Schedule 3.7(h) of the
Seller Disclosure Schedule. All unexpired representations and
warranties made or given by any Seller to any of its customers
respecting the Software or Intellectual Property are true and
correct in all material respects. No Software or any Intellectual
Property contains any GNU or “copyleft” software
or any modifications thereof, nor was otherwise developed using any
GNU or “copyleft” software in a manner that would
require Seller under the terms of the license for such GNU or
“copyleft” software to distribute the Software (or the
source code thereof) without charge or otherwise materially
adversely impact the value of the Software.”
296
(i) Neither
this Agreement nor the transactions contemplated by this Agreement
will result in Sellers granting to any third party any right to
(including any escrow rights to or any rights to access the source
code of any Software), or with respect to, any Intellectual
Property right owned by, or licensed to Sellers or cause
Sellers or Buyer to forfeit or terminate any rights in such
Intellectual Property or give rise to a right of such forfeiture or
termination.
(j)
Schedule 3.7(j) of the Seller Disclosure Schedule
sets forth (i) the current schedule for the expected new product
release by the Sellers (including alpha and beta tests and features
expected to be added by the new release schedule), and (ii) any
significant hurdles Known to Sellers, which would result in any
significant delay in achieving such schedule of the new release or
any significant limitations on the capabilities of the new
release.
3.8
Compliance with Laws and Other Instruments; Governmental
Authorization .
(a) Except as set
forth on Schedule 3.8(a) of the Seller Disclosure
Schedule, in the conduct of the Business and operation of the
Acquired Assets and the Assumed Obligations, (i) Sellers have
complied in all material respects with all Requirements of Laws
(including without limitation all requirements of the Workplace
Health and Safety Act 1995 (Qld)) as they relate to the operation
of the Business and the Acquired Assets and the Assumed
Obligations, and (ii) Sellers have not been issued any
citations, notices or orders of non-compliance of a material nature
under any Requirements of Laws (including without limitation all
requirements of the Workplace Health and Safety Act 1995 (Qld))
within the two years preceding the Closing Date. Neither the
ownership nor use of the Acquired Assets nor the conduct of the
Business conflicts with the rights of any other Person, violates
or, with or without the giving of notice or the passage of time, or
both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any terms or provisions of its
organization documents, if any, as presently in effect, or any
lien, encumbrance, mortgage, hypothec, deed of trust, lease,
license, agreement, understanding, law, ordinance, rule or
regulation, or any order, judgment or decree to which any Seller is
a party or by which they may be bound or affected. Sellers have no
Knowledge of any proposed law, governmental taking, condemnation or
other proceeding which would be applicable to the Business,
operations or Acquired Assets and which might have a Material
Adverse Effect. Except as set forth on Schedule
3.8(a) of the Seller Disclosure Schedule, no consent,
qualification, order, approval or authorization of, or filing with,
any Governmental Body is required in connection with Sellers’
execution, delivery and performance of this Agreement and the
consummation of any transaction contemplated hereby.
297
(b) Set forth on
Schedule 3.8(b) of the Seller Disclosure Schedule are
any legal limitations that within the two years preceding the
Closing Date (i) have imposed significant monetary costs of
compliance on the Sellers with respect to the Business or (ii) have
restricted, in any material respect, the business activity of any
Seller with respect to the Business.
3.9 Insurance . With
respect to the Business, Sellers have maintained in full force and
effect adequate insurance policies. Schedule 3.9(i)
of the Seller Disclosure Schedule sets forth a true and complete
list of all insurance policies maintained by Sellers in respect of
the Business. Schedule 3.9(ii) of the Seller
Disclosure Schedule sets forth a true and complete list of all
insurance policies maintained by Sellers in respect of the Business
that are included in the Acquired Assets specifying the insurer,
the amount of the coverage (including applicable deductibles), the
type of insurance, the annual premium, the policy liability limits,
the policy number, any pending claims thereunder and a summary of
all material claims made in the twelve months immediately preceding
the date hereof. Sellers have paid all premiums due under such
policies listed on Schedule 3.9(ii) of the Seller
Disclosure Schedule and such policies are in full force and effect
and Sellers are not in possession of any written notices of
cancellation of such policies issued by any of such insurance
carriers, and to the Knowledge of Sellers, there exists no valid
basis for cancellation of such policies listed on Schedule
3.9(ii) of the Seller Disclosure Schedule by the insurance
carriers.
3.10
Employee Plans .
(a)
Schedule 3.10(a) of the Seller Disclosure
Schedule sets forth a true and correct list of all Employee Plans
or other material employee benefits. Except as disclosed on
Schedule 3.10(a) of the Seller Disclosure
Schedule, each Seller has, with respect to the Business and all
current and former Employee Plans (and all related trusts,
insurance contracts and funds), at all times up to the Closing
Date, complied in all material respects with the applicable
requirements of any relevant Employee Plan and all other applicable
Requirements of Laws. No unfulfilled obligation to contribute with
respect to an Employee Plan exists with respect to any Employee
Plan, except as shown on Schedule 3.10(a) of the
Seller Disclosure Schedule. Except as disclosed on
Schedule 3.10(a) of the Seller Disclosure
Schedule, any Employee Plan (other than with respect of the UK
Employees) may be terminated at the discretion of Sellers, as
applicable, at any time, subject to applicable Requirements of
Laws. There are no pending or, to the Knowledge of Sellers,
threatened or anticipated claims (other than routine claims for
benefits) by, or behalf of or against any of the Employee Plans or
any trust related thereto.
(b)
Schedule 3.10(b) of the Seller Disclosure Schedule
sets forth the accrued and unpaid (i) Australian Employee Benefits
(including Australian Employee Termination Benefits) for each
Australian Employee, (ii) the Canadian Employee Benefits, and (iii)
the UK Employee Benefits for each of the UK Employees, each as of
the Effective Time and the Closing Date. Schedule
3.10(b) of the Seller Disclosure Schedule also sets forth,
as at the Effective Time and the Closing Date, for each Australian
Employee, all accrued sick leave and accrued and unaccrued long
service leave, and any other leave benefits which have vested or
accrued in respect of such Australian Employee, including on a pro
rata basis with respect to length of service whether or not any
minimum period of service has been met. The Australian long service
leave set forth on Schedule 3.10(b) of the Seller
Disclosure Schedule has been calculated on the basis that the long
service leave accrued by Sellers for the Australian Employees is in
accordance with the greater of the legislative requirements of the
Australian state or territory in which the Australian Employee is
employed as at the Closing Date and the Australian Employee’s
long service leave entitlement under any contract or Award
applicable to that Australian Employee.
298
(c)
Schedule 3.10(c) of the Seller Disclosure Schedule
sets forth a true and complete list of all superannuation funds for
Australian Employees (in this section referred to as the “
Australian Funds ”), which are the only superannuation
schemes or pension arrangements in operation in relation to the
Australian Employees to which any Seller contributes or is obliged
to contribute. Sellers have no obligation to any of the Australian
Employees or directors, whether under a deed, contract, award or
any other arrangement, either express or implied or whether
enforceable or otherwise, to: (A) make superannuation contributions
in respect of the Australian Employee or director at a rate above
the prescribed minimum of superannuation support under the
Superannuation Guarantee (Administration) Act 1992; or (B)
otherwise make periodic or lump sum payments in relation to that
person’s superannuation benefit and/or benefit on retirement
or termination of employment. With respect to each Australian Fund,
(i) the relevant Sellers have provided in respect of the period up
to Closing at least the prescribed minimum level of superannuation
support for each Australian Employee so as not to incur a shortfall
amount under the Australian Superannuation Guarantee
(Administration) Act 1992 (Cth), (ii) there are no outstanding and
unpaid contributions on the part of any Seller, (iii) there are no
unfunded liabilities, and (iv) all contributions to any Australian
Fund on the part of any Seller on behalf of any Australian Employee
have been made at the relevant Australian Employee’s request.
Each Australian Fund is a complying superannuation fund under the
Australian Superannuation Industry (Supervision) Act of 1993 (Cth)
(in this section referred to as the “ SIS Act ”)
and satisfies the requirements of the SIS Act. The governing rules
of each Australian Fund permit the Buyer or its Affiliates to make
contributions on behalf of the Australian Employees that are
participants in the relevant Australian Fund. All of the Australian
Funds are accumulation funds.
(d)
UK Pension Plans
(i)
The Sellers have complied with their duty to facilitate access to a
stakeholder pension scheme under section 3 of the Welfare Reform
and Pensions Act 1999 and have complied with all their obligations
to the UK Employees pursuant to the Welfare Reform and Pensions
Act, 1999 and the Stakeholder Pensions Regulations 2000, as
amended. In particular, the Sellers have: (1) after appropriate
consultation, designated one stakeholder scheme for those UK
Employees who are relevant employees (as defined under the
legislation above); (2) supplied information about the designated
scheme to the UK Employees who are relevant employees; (3) allowed
the scheme representatives reasonable access to the UK Employees
who are relevant employees; and (4) deducted and paid over employee
contributions and employer contributions (if any) to the designated
scheme.
299
(ii)
Schedule 3.10(d) of the Seller Disclosure Schedule
sets out a true, complete and accurate list of all UK Employees
(including those to whom the arrangement has been made available
but are not relevant employees under the legislation, if different)
in respect of whom the UK Subsidiary has undertaken to contribute
to a stakeholder pension plan (as envisaged by the Welfare Reform
and Pensions Act 1999 and the Stakeholder Pension Scheme
Regulations 2000, as amended) and the Standard Life Executive
Pension Plan (the “EEP”) and the rate and amount of the
contributions made by the Sellers in respect of each such Scottish
Employee which have been made during the last three
years.
(iii)
True, complete and accurate copies of the Scottish Widows
Stakeholder Scheme and the EEP (collectively, the “ UK
Pension Plans ”) held by the UK Employees have been
delivered to the Buyer.
(iv)
No assurance, promise or guarantee (oral or written) has been made
or given to a UK Employee of a particular level or amount of
benefits to be provided in respect of him or her pursuant to the UK
Pension Plans on retirement, death or leaving employment. The UK
Pension Plans provide only money purchase benefits as defined in
section 181 of the Pension Schemes Act 1993.
(v)
The Sellers have complied with all their contractual obligations
(whether oral or written) to make contributions to the UK Pension
Plans and all contributions in respect of all periods up to and
including Closing shall have been paid by the Seller on or before
the Closing.
(vi)
Except for the UK Pension Plans, there is not in operation, and no
proposal has been announced to enter into or establish, an
agreement, arrangement, custom or practice (whether legally
enforceable or not and approved or not by the Inland Revenue for
the purposes of Chapter 1 of Part XIV or Chapter IV part XIV of the
Income and Corporation Taxes Act 1988, as it was formerly known)
for the payment of, or payment of a contribution towards, a
pension, allowance, lump sum or other similar benefit on retirement
death, termination of employment (whether voluntary or not) or
during periods of sickness of disablement, for the benefit of a UK
Employee or a UK Employee’s dependents.
(vii)
All contributions (including fees and charges and expenses of
whatever nature) which are payable by the Sellers under the UK
Pension Plans and all contributions from the UK Employees have been
made and remitted and those employees have fulfilled all their
obligations in respect of the UK Pension Plans.
(viii)
The Sellers are not aware of any actual, pending or threatened
civil, criminal, arbitration, administrative or other proceedings,
complaints or disputes (which includes without limitation, contact
with OPRA, or OPAS or the Pensions Ombudsman) concerning the
pension rights of the UK Employees. The Sellers are not aware of
any matter which might give rise to such a claim.
300
(ix)
No separate promises regarding the provision of life assurance have
been made to any of the UK Employees. No UK Employee has been
excluded from membership of the UK Pension Plans or provided with
different benefits because of their sex or because they were
employed part-time.
(x)
None of the UK Employees have transferred to the Sellers under a
TUPE transfer in the past.
3.11
Contracts and Agreements .
(a)
Schedule 3.11(a) of the Seller Disclosure Schedule
sets forth a true, correct and complete list of the Contracts with
an annual value in excess of $10,000;
(b) Sellers have
delivered to Buyer true, correct and complete copies (in the case
of each written Contract) or accurate and materially complete
written summaries (in the case of each oral Contract) of each
Contract;
(c) Except as
disclosed on Schedule 3.11(c) of the Seller
Disclosure Schedule, each Contract is in full force and effect and
is valid and enforceable in accordance with its terms. Sellers
have, and to the Knowledge of Sellers, each third party has, in all
material respects, performed all material obligations required to
be performed by it to date under each Contract. Neither any Seller
nor, to Sellers’ Knowledge, any other party to a Contract has
contravened any of the applicable material terms of a Contract. To
the Sellers’ Knowledge, except as disclosed on Schedule
3.11(c) of the Seller Disclosure Schedule, no event has
occurred or circumstance exists that (with or without notice or
lapse of time) is reasonably likely to constitute or result
directly or indirectly in contravention of any Contract. No Seller
has given or received notice or other communication (written or
oral) regarding any actual, alleged or potential contravention of
any Contract.
(d) Except as
disclosed on Schedule 3.11(d) of the Seller
Disclosure Schedule, no party to a Contract has repudiated any
provision of it in writing. There currently are no renegotiations
of, attempts to renegotiate or outstanding rights to renegotiate,
any Contracts, nor has any written demand for renegotiations been
made. No Seller has Knowledge that any party to a Contract does not
intend to renew it.
(e) Except as
disclosed on Schedule 3.11(e) of the Seller
Disclosure Schedule, no Seller has Knowledge of facts or trends
indicating that the cost of performing any of the Contracts shall
materially exceed the revenue generated thereunder. To
Sellers’ Knowledge, there are no liabilities under the
Contracts that are not apparent from the express language of such
Contract.
301
(f) Set forth at
Schedule 3.11(f) of the Seller Disclosure Schedule
are projected revenues for the Business for the twelve-month period
following the Closing and the assumptions upon which such
projections are based. No Seller has Knowledge of any event,
termination, negotiations or circumstances that would be expected
to result in a significant variance from such projections other
than such assumptions. Schedule 3.11(f) of the Seller
Disclosure Schedule also sets forth the revenues committed under
each Contract, and the provisions (if any) permitting any material
shortfall in such commitments.
(g) Set forth at
Schedule 3.11(g) of the Seller Disclosure Schedule
are any fees paid to Sellers prior to the date hereof on any
Contract with respect to any period following the Closing Date as
required to be reflected and accrued on the books and records of
Sellers in accordance with GAAP (the “ Pre-Paid
Amounts ”).
3.12
Claims and Proceedings
. Except as set forth in
Schedule 3.12 of the Seller Disclosure Schedule,
there are no actions, suits, legal or administrative proceedings or
investigations pending or, to the Knowledge of Sellers, threatened,
against or relating to Sellers (as it relates to the Business), the
Business, the Acquired Assets, or the Assumed Obligations or the
transactions contemplated by this Agreement, and Sellers do not
Know of any basis for the same.
3.13
Taxes .
(a) Sellers have
timely filed all Tax Returns required to be filed by them on or
prior to the date hereof (all such Tax Returns being accurate and
complete in all material respects). All Taxes owed by Sellers
(whether or not shown any Tax Return), which are due as at the date
hereof, have been paid. The reserves with respect to Taxes as they
relate to the Acquired Assets set forth in the Financial Statements
of Sellers (other than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) are
adequate and are at least equal to its liability for such Taxes.
There exists no proposed tax assessment against Seller relating to
the Acquired Assets except as disclosed in the Financial Statements
and no director or officer (or employee responsible for Tax
matters) of Sellers expects any Taxing Authority to assess any
additional Taxes for any period for which Tax Returns have been
filed. All Taxes that Sellers are or were required to withhold or
collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body. There are
no material disputes pending, or claims asserted for, Taxes or
assessments upon Sellers and all deficiencies proposed as a result
of any examinations have been paid or settled for all periods
endin
