<PAGE>
EXHIBIT 2.7
EXECUTION COPY
================================================================================
ASSET PURCHASE AGREEMENT
BETWEEN
CGI-AMS INC.
AND
OS ACQUISITION CORP.
DATED AS OF MARCH 10, 2005
================================================================================
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TABLE OF CONTENTS
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PAGE
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1
DEFINITIONS.......................................................................
1
2 SALE OF ASSETS;
CLOSING...........................................................
6
2.1.
Sale of
Assets.............................................................
6
2.2.
Consideration..............................................................
6
2.3.
Net Current
Assets Adjustment to Purchase Price............................
6
2.4.
Accounts
Receivable Adjustment to Purchase Price...........................
7
2.5.
Release of
Escrow Funds....................................................
8
2.6.
Buyer's
Assumption of Liabilities..........................................
8
2.7.
Closing....................................................................
8
2.8.
Deliveries by
Seller at Closing............................................
9
2.9.
Deliveries by
Buyer at Closing.............................................
10
3 REPRESENTATIONS AND
WARRANTIES OF SELLER..........................................
10
3.1.
Organization and
Power.....................................................
10
3.2.
Authorization..............................................................
10
3.3.
No
Conflict................................................................
11
3.4.
Title to
Purchased Assets..................................................
11
3.5.
Condition of
Purchased Assets..............................................
11
3.6.
Financial
Statements.......................................................
11
3.7.
Accounts
Receivable; Credits...............................................
12
3.8.
Pre-Bill...................................................................
12
3.9.
Litigation.................................................................
12
3.10.
Compliance with
Law........................................................
12
3.11.
Absence of Undisclosed
Liabilities......................................... 12
3.12.
Absence of Certain
Changes.................................................
12
3.13.
Contracts..................................................................
13
3.14.
Intellectual
Property......................................................
14
3.15.
Real
Property..............................................................
16
3.16.
Environmental
Matters......................................................
17
3.17.
Labor;
ERISA...............................................................
17
3.18.
Taxes......................................................................
18
3.19.
Relationships with
Related Persons.........................................
19
3.20.
Brokers....................................................................
19
3.21.
Insurance..................................................................
19
3.22.
Powers of
Attorney.........................................................
19
3.23.
Debt.......................................................................
19
3.24.
Solvency...................................................................
19
3.25.
Corporate Predecessors
and Previous Names.................................. 20
3.26.
Affiliates of
Seller.......................................................
20
3.27.
No
Options.................................................................
20
3.28.
Statements not
Misleading..................................................
20
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4 REPRESENTATIONS AND
WARRANTIES OF BUYER...........................................
21
4.1.
Organization and
Power of Buyer............................................
21
4.2.
Authorization..............................................................
21
4.3.
No
Conflict................................................................
21
5
COVENANTS.........................................................................
21
5.1.
Conduct of
Business........................................................
21
5.2.
No
Contemporaneous
Negotiations............................................
23
5.3.
Consent of Third
Parties...................................................
23
5.4.
Insurance
Coverage.........................................................
23
5.5.
Further
Assurances; Cooperation............................................
23
5.6 Use of
Names...............................................................
24
5.7.
Passage of Title
and Risk of Loss..........................................
24
5.8.
Transfer of
Goodwill and Business..........................................
24
5.9.
Expenses;
Transfer Taxes...................................................
24
5.10.
Taxes......................................................................
24
5.11.
Employment
Matters.........................................................
25
6 CONDITIONS PRECEDENT
TO BUYER'S OBLIGATIONS.......................................
26
6.1.
Representations
and Warranties Accurate; Compliance with Covenants.........
26
6.2.
Litigation
Affecting Closing...............................................
26
6.3.
Instruments of
Sale, Etc...................................................
27
6.4
Consents...................................................................
27
6.5 No Material Adverse
Effect.................................................
27
6.6.
Deliveries at
Closing......................................................
27
7 CONDITIONS PRECEDENT
TO SELLER'S OBLIGATIONS......................................
27
7.1.
Representations
and Warranties Accurate; Compliance with Covenants.........
27
7.2.
Litigation
Affecting Closing...............................................
27
7.3.
Deliveries at
Closing......................................................
27
8
TERMINATION.......................................................................
28
8.1.
Termination
Events.........................................................
28
8.2.
Effect of
Termination......................................................
28
8.3.
Return of
Documents........................................................
28
9
INDEMNIFICATION...................................................................
28
9.1.
Indemnified
Losses.........................................................
28
9.2.
Indemnification
by Seller..................................................
28
9.3.
Indemnification
by Buyer...................................................
29
9.4.
Third Party
Claims Against Buyer...........................................
29
9.5 Third Party Claims
Against Seller..........................................
29
9.6.
Procedures; No
Waiver; Exclusivity.........................................
30
9.7.
Set-Off....................................................................
30
9.8.
Survival...................................................................
31
9.9.
Limitations on
Indemnification by Seller...................................
32
9.10.
Exclusive
Remedy...........................................................
32
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10
MISCELLANEOUS.....................................................................
32
10.1.
Notices....................................................................
32
10.2.
Entire
Agreement...........................................................
33
10.3.
Counterparts...............................................................
33
10.4.
Parties in Interest;
Assignment............................................ 33
10.5.
Governing
Law..............................................................
33
10.6.
Schedules and
Headings.....................................................
33
10.7.
Amendment..................................................................
34
10.8.
Waiver.....................................................................
34
10.9.
Facsimile
Signatures.......................................................
34
10.10
Press
Release..............................................................
34
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EXHIBITS AND SCHEDULES
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Exhibit A
-- Escrow
Agreement
Exhibit B
Opinion of Counsel to Seller
Exhibit C
-- Bill of
Sale, Assignment and Conveyance
Exhibit D
-- Lease
Assignments
Exhibit E
-- Assumption
of Liabilities
Exhibit F-1 --
Transition
Services Agreement
Exhibit F-2 --
Master
Services Agreement
Exhibit G
--
Non-Competition Agreement
Exhibit H
-- Assignment
and Assumption Agreement
Schedule 1A --
Assumed
Liabilities
Schedule 1B --
Purchased
Assets
Schedule 3.3 --
Consents,
Etc.
Schedule 3.4 --
Title to
Purchased Assets
Schedule 3.6 --
Reference
Date Balance Sheet
Schedule 3.13 --
Contracts
Schedule 3.14 --
Intellectual Property
Schedule 3.15 -- Real
Property
Schedule 3.17 -- Labor;
ERISA
Schedule 3.20 --
Brokers
Schedule 3.21 -- Insurance
Policies
Schedule 3.23 -- Debt
Schedule 3.25 -- Previous
Names
Schedule 5.3 --
Consents
Schedule 5.11 -- Severance
Obligations
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<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET
PURCHASE AGREEMENT (the "Agreement") is executed as of March
10, 2005, by and between CGI-AMS INC., a
Delaware corporation ("Seller"), and OS
ACQUISITION CORP., a Delaware corporation
("Buyer") (collectively, the
"parties").
RECITALS
WHEREAS,
Seller owns assets comprising the U.S. division of a business
unit known as the Services to Credit Union
(SCU) business, which business unit
provides core banking, data processing,
loan origination, loan decisioning, home
banking, Internet banking, website hosting,
call center and related services to
credit unions in the United States, on both
a licensed, in-house basis and an
outsourced basis (the "Business"); and
WHEREAS,
Buyer wishes to purchase from Seller, and Seller wishes to sell
to Buyer, the assets of the Business, which
assets are hereinafter defined as
the Purchased Assets, upon the terms and
conditions of this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants
and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For
purposes of this Agreement, the following terms shall have the
following meanings:
"Accounts
Receivable" shall mean the aggregate of (a) all trade accounts
receivable and other rights to payment from
customers of the Business and the
full benefit of all security for such
accounts or rights to payment, including
all trade accounts receivable representing
amounts receivable in respect of
goods shipped or products sold or services
rendered to customers of the
Business, (b) all other accounts or notes
receivable of the Business and the
full benefit of all security for such
accounts or notes, and (c) any cash or
payment-in-transit, claim, remedy or other
right related to any of the
foregoing, in each case, as at the Closing
Date.
"Affiliate" of any Person means any other Person directly or
indirectly:
i) controlling; ii) controlled by; or iii)
under common control with such
Person. For the purposes of this
definition, "control", when used with respect
to any Person, means the possession,
directly or indirectly, of the power to
direct or cause the direction of the
management and policies of such Person,
whether through the ownership of voting
securities, by contract or otherwise;
and the terms "controlling" and
"controlled" have correlative meanings;
<PAGE>
"Agreement" means this purchase agreement, as the same may be
amended from
time to time, and all schedules and
instruments in amendment or confirmation of
it; "hereof", "hereto" and "hereunder" and
similar expressions mean and refer to
this Agreement and not to any particular
Article, Section, Subsection or other
subdivision; "Article", "Section",
"Subsection" or other subdivision of this
Agreement followed by a number means and
refers to the specified Article,
Section, Subsection or other subdivision of
this Agreement;
"Assumed
Liabilities" shall mean only the duties, liabilities or
obligations of the Business, if any,
arising after the Closing Date in
connection with the items identified on
Schedule 1A, except as otherwise noted
on Schedule 1A, and shall specifically
exclude, among other things, (i) any
liabilities for employment, income, sales,
property or other Taxes incurred or
accrued by the Business prior to the
Closing Date or Seller, including without
limitation as a result of this transaction;
(ii) any fees or expenses incurred
by the Business or Seller in connection
with this transaction; (iii) any debt,
payables or other liabilities to Related
Persons other than salary and other
payroll related expenses that may be
specifically set forth on Schedule 1A; (iv)
any liabilities related to any Benefit
Plan; (v) any and all liability related
to any real property owned or used by the
Business or Seller except as
specifically set forth in the Lease
Assignments; (vi) any litigation pending
against the Business or Seller on the
Closing Date; (vii) any warranty liability
to customers of the Business or Seller
arising out of or relating to any breach
by the Business or Seller of any obligation
to a customer that occurred prior to
the Closing; and (viii) any liability or
obligation constituting or arising out
of any Debt of the Business or Seller that
required payment or performance prior
to the Closing Date except to the extent
specifically set forth on Schedule 1A.
"Benefit
Plans" means with respect to any of the employees of the
Business, any group registered retirement
savings plan, 401(k), any profit
sharing or pension plan, oral or written,
whether or not sponsored by Seller,
any deferred compensation payables, accrued
bonus payables, other accrued
liabilities, and any COBRA-related
obligations, any phantom stock option, stock
option, stock bonus, employee stock
purchase, bonus, retirement, severance,
deferred compensation, annuity, executive
compensation, incentive compensation,
educational assistance, health or insurance
or other plan, policy or arrangement
providing benefits to or with respect to
employees or former employees of or
independent contractors to the Business,
all of which are disclosed as benefit
plans on Schedule 3.17.
"Books and
Records" means Seller's material technical, business and
financial records, financial books and
records of account (other than any
document forming part of the Financial
Statements), quality control data,
machinery and equipment maintenance
records, warranty information, sales and
marketing information, books, reports,
files, lists, drawings, plans, logs,
briefs, customer and supplier lists, deeds,
certificates, contracts, surveys,
title opinions or any other material
documentation and information in any form
whatsoever (including written, printed,
electronic or computer printout form)
relating to the Business; provided however
that the foregoing shall not be
deemed to include the corporate records of
Seller comprised of the articles,
by-laws, any unanimous share/stockholders
agreements and any amendments thereto;
minutes of meetings and resolutions of
stockholders, directors and any committee
thereof; and the stock certificate books,
register of shareholders, register of
transfers and register of directors.
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<PAGE>
"Business"
shall have the meaning assigned to it in the preamble.
"Closing"
shall mean the consummation of the purchase and sale
transaction
described herein.
"Closing
Date" shall mean the date on which the Closing occurs, as
specified in Section 2.7.
"Code"
means the United States Internal Revenue Code of 1986, as
amended.
"Current
Assets" shall mean all Accounts Receivable and prepaid expenses
of Seller and other assets of Seller
classified as current assets in accordance
with GAAP, to the extent included in the
Purchased Assets.
"Current
Liabilities" shall mean all trade accounts payable and deferred
revenue obligations (whether categorized as
deferred revenue or as customer
deposits), accrued sales commissions,
accrued costs of sales and amounts owing
by Seller to vendors and suppliers for
goods and services provided in respect of
the Business before the Closing Date but
invoiced after the Closing Date, and
other debts, liabilities and obligations of
Seller in respect of the Business
that are classified as current liabilities
in accordance with GAAP, to the
extent included in the Assumed
Liabilities.
"Debt", as
applied to any Person, means: (a) indebtedness or liability of
such Person for borrowed money, or with
respect to deposits or advances of any
kind, or for the deferred purchase price of
property or services; (b) all
obligations of such Person evidenced by
notes, bonds, debentures or similar
instruments, (c) all obligations of such
Person under conditional sale or other
title retention agreements relating to
property or assets purchased by such
Person, (d) all obligations of such Person
for the deferred purchase price of
property or services; (e) all obligations
of such Person as lessee under capital
leases; (f) current liabilities of such
Person in respect of the present value
of unfunded vested benefits under any
employee Benefit Plan; (g) obligations of
such Person under letters of credit,
bankers acceptances, or comparable
arrangements; (h) obligations of such
Person arising under acceptance
facilities; (i) guaranties; endorsements
(other than for collection or deposit
in the ordinary course of business), and
other contingent obligations of such
Person to purchase, to provide funds for
payment, to supply funds to invest in
any Persons, or otherwise to assure a
creditor against loss; (j) all obligations
of such Person secured by any Lien on any
of such Person's assets or property,
whether or not the obligations have been
assumed, and (k) all obligations of
such Person in respect of interest rate
protection agreements, foreign currency
exchange agreements or other interest or
exchange rate hedging arrangements.
"ERISA"
shall mean the U.S. Employee Retirement Income Security Act of
1974, as amended.
"Excluded
Assets" shall mean those items listed as such on Schedule 1B
hereto.
"Financial
Statements" shall have the meaning assigned to it in Section
3.6.
- 3 -
<PAGE>
"GAAP" shall
mean Canadian generally accepted accounting principles
consistently applied.
"Governmental Entity" shall mean (i) any multinational,
federal,
provincial, state, municipal, local or
other governmental or public department,
court, commission, board, bureau, agency or
instrumentality, domestic or
foreign; (ii) any subdivision, agent,
commission, board, or authority of any of
the foregoing; or (iii) any
quasi-governmental or private body exercising any
regulatory, expropriation or taxing
authority under or for the account of any of
the foregoing;
"Knowledge" - an individual will be deemed to have "Knowledge" of a
fact
or other matter if:
(a) such
individual is actually aware of that fact or matter; or
(b) a
prudent individual could be expected to discover or otherwise
become
aware of that fact or matter in the course
of conducting a reasonably
comprehensive investigation regarding the
accuracy of any representation or
warranty contained in this Agreement.
Seller will be deemed to have "Knowledge"
of a particular fact or other matter
if any of the following persons
(collectively, the "Listed Persons") has
Knowledge of that fact or other matter (as
set forth in (a) and (b) above):
Carole
Kalil - Director, Business Development and Marketing
Jay Kamp -
Director, Application Development
Paul
Mackley - Director, Application Services and Consulting
Rodney
Matlock - Vice President, Service Delivery
Susan
Spakowski - Director, Finance and Admin
Mark Stuart - Senior
Vice President, Services to Credit Unions
"Lease
Assignments" shall have the meaning assigned to it in Section
2.8(i).
"Leases"
shall mean the real property leases listed on Schedule 3.15.
"Liens"
shall mean all liabilities, claims, liens, charges, pledges,
security interests, options, restrictions
or other encumbrances of any kind.
"Material
Adverse Effect" means any circumstance, change in, or effect
on,
the Business that, individually or in the
aggregate with any other
circumstances, changes in, or effects on,
the Business: (a) is, or could be,
materially adverse to the business,
operations, assets or liabilities
(including, without limitation, contingent
liabilities), employee relationships,
customer or supplier relationships, results
of operations or the condition
(financial or otherwise) of the Business,
or (b) could materially adversely
affect the ability of Buyer to operate or
conduct the Business in the manner in
which it is currently operated or
conducted, or contemplated to be conducted, by
Seller, or (c) could impair the ability of
Seller to consummate the transactions
contemplated by this Agreement.
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<PAGE>
"Net
Current Assets" shall mean the amount of Current Assets included
in
the Purchased Assets minus the amount of
Current Liabilities included in the
Assumed Liabilities.
"Permitted
Liens" shall have the meaning assigned to it in Section 3.4.
"Person"
shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited
liability company, an association, a joint
stock company, a trust, a joint venture, an
unincorporated organization or a
Governmental Entity (or any department,
agency or political subdivision
thereof).
"Purchase
Price" shall mean the aggregate amount to be paid by Buyer to
Seller for the Purchased Assets and
includes the cash consideration payable
pursuant to Section 2.2(a) and the Escrow
Funds payable pursuant to Section
2.2(b).
"Purchased
Assets" shall mean all of Seller's property and assets, whether
real, personal or mixed, tangible and
intangible, of every kind and description,
wherever located, that arise from, relate
to, or are used in or necessary for
the conduct of the Business including
without limitation those items identified
on Schedule 1B, but excluding the Excluded
Assets.
"Records"
shall mean all books of account, general, financial and
accounting records, files, invoices,
payment authorizations, correspondence to
and from customers, suppliers and payors,
and other data and information owned
by Seller in respect of the Business.
"Reference
Date" shall mean September 30, 2004.
"Reference
Date Balance Sheet" shall have the meaning assigned to it in
Section 3.6.
"Related
Person" shall mean any officer, director, stockholder of Seller
or any holder of five percent (5%) or more
of any class of stock of Seller or
any member of the immediate family of any
such officer, director, stockholder or
any entity controlled by any such officer,
director, stockholder or by a family
member of any such officer, director,
stockholder.
"Taxes"
(or "Tax" where the context requires) shall mean all federal,
provincial, state, county, city, local,
foreign and other taxes (including,
without limitation, premium, excise, GST,
value added, sales, use, consumption,
occupancy, gross receipts, franchise, ad
valorem, severance, capital tax,
capital levy, production, transfer,
withholding, employment, unemployment
compensation, payroll-related and property
taxes, import duties and other
governmental charges and assessments),
whether or not measured in whole or in
part by net income, including deficiencies,
interest, additions to tax or
interest or penalties with respect
thereto.
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ARTICLE 2
SALE OF ASSETS; CLOSING
SECTION
2.1. SALE OF ASSETS. At the Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer, free
and clear of all Liens (except
Permitted Liens), good and marketable title
to all of the Purchased Assets.
SECTION
2.2. CONSIDERATION. The Purchase Price shall be US$24,000,000,
subject to the adjustments set forth in
this Agreement, including without
limitation in Sections 2.3 and 2.4 and 5.11
hereof. Buyer shall pay the Purchase
Price by delivery in the following
manner:
(a)
US$22,200,000.00 in cash by wire transfer of immediately
available
funds from Buyer to Seller at Closing;
and
(b)
US$1,800,000.00 (the "Escrow Funds") in cash by wire transfer
of
immediately available funds at Closing to
U.S. Bank National Association (the
"Escrow Agent"), to be held under an escrow
agreement in substantially the form
of Exhibit A (the "Escrow Agreement"), said
Escrow Funds to be paid to Seller on
the one (1) year anniversary of the Closing
Date in accordance with the Escrow
Agreement, but subject to the terms and
conditions described in this Agreement,
including, without limitation, in Sections
2.3, 2.4, 2.5 and 9.7 hereof.
SECTION
2.3. NET CURRENT ASSETS ADJUSTMENT TO PURCHASE PRICE.
(a)
Estimated Net Current Assets. Within sixty (60) days following
the
Closing Date, Buyer will prepare, or cause
to have prepared, and deliver to
Seller a balance sheet of the Business and
a statement of the Net Current Assets
of the Business as of the Closing Date. As
prepared by Buyer, this statement of
the Net Current Assets shall be referred to
as the "Estimated Net Current
Assets." The Estimated Net Current Assets
shall be prepared in accordance with
GAAP.
(b)
Objection. The Estimated Net Current Assets shall be deemed
accepted
by Seller and binding unless Seller sends
Buyer a written objection thereto
within twenty-one (21) days following
Seller's receipt thereof. In the event
that Seller delivers a timely written
objection as aforesaid, and Buyer and
Seller are unable to resolve such objection
within twenty-one (21) days after
Buyer is notified of Seller's objection,
the matters in dispute shall be
submitted for final and binding
determination to a firm of independent certified
public accountants jointly selected by
Buyer and Seller (the "Accountants"). The
Accountants shall prepare their resolution
statement within forty-five (45) days
of appointment. In the event that the
parties are required to agree on the
identity of the Accountants but are unable
to do so, then the firm to be used
shall be selected by lot from among the
"Big 4" accounting firms having offices
in the Hartford, Connecticut area, other
than those firms which have had a
material relationship with Buyer or Seller.
The Estimated Net Current Assets
proposed by Buyer, as adjusted by agreement
of Seller and Buyer or finally
determined by the Accountants, as
applicable, to reflect the resolution of any
timely objections made thereto by Seller in
accordance with this paragraph,
shall constitute the "Final
- 6 -
<PAGE>
Net Current Assets" and shall be binding on
the parties hereto. Buyer and Seller
shall each pay their own expenses of
preparing and analyzing the Estimated Net
Current Assets and resolving objections
thereto. The fees and expenses of the
Accountants used to resolve objections will
be borne equally by Buyer on the one
hand and Seller on the other hand.
(c) Access
to Information. Solely in connection with the preparation of
the Estimated Net Current Assets and the
Final Net Current Assets:
(i) Buyer and Seller shall give each other and each other's
accountants reasonable access to the books and records of the
Business,
and shall
cause employees of the Business to cooperate and provide each
other with
all information reasonably requested, all after receiving
reasonable notice from
the other party of its requirements and reaching
agreement
as to mutually convenient times for review; and
(ii) Buyer and Seller, to the extent within their respective
control,
shall give to each other and their agents access to the books,
financial
records, work papers and other materials and documents used or
produced
in connection with the preparation of the Estimated Net Current
Assets and
the Final Net Current Assets.
(d) Final
Net Current Assets. In the event that the Final Net Current
Assets are less than US$2,000,000 (the
difference is referred to as a "Reduction
in Net Current Assets"), Seller shall be
liable for such difference as a
reduction of the Purchase Price. Buyer
shall be entitled to set-off the amount
of such Reduction in Net Current Assets
from the Escrow Funds in accordance with
Section 2.5 and Section 9.7 of this
Agreement, and, to the extent the Reduction
in Net Current Assets exceeds the amount of
the Escrow Funds then available
under the Escrow Agreement, Seller shall
pay the difference to Buyer within
twenty (20) days after receipt of written
demand therefor. In the event that the
Final Net Current Assets are greater than
US$2,000,000 (the excess is referred
to as an "Excess in Net Current Assets"),
the Purchase Price shall be increased
by such difference. Buyer shall pay the
difference to Seller within twenty (20)
days following the determination of Final
Net Current Assets.
SECTION
2.4. ACCOUNTS RECEIVABLE ADJUSTMENT TO PURCHASE PRICE.
(a)
Receivable Shortfall. Buyer and Seller agree that the Purchase
Price
payable to Seller shall be reduced to the
extent that the Accounts Receivable
have not been collected by Buyer within one
hundred eighty (180) days following
the Closing Date (the "Collection
Period").
(b)
Adjustment to Purchase Price. Within thirty (30) days following
the
end of the Collection Period, Buyer shall
prepare and furnish to Seller a
statement setting forth the Accounts
Receivable and all payments made thereon,
calculated as of the end of the Collection
Period, and the amount, if any, owing
from Seller to Buyer pursuant to Section
2.4(a) (a "Receivable Shortfall").
Seller shall be liable for the Receivable
Shortfall. Buyer shall set-off the
Receivable Shortfall from the Escrow Funds
in accordance with Section 2.5 and
Section 9.7 and, to the extent the amount
of the Receivable Shortfall exceeds
the amount of the Escrow Funds then
available under the Escrow Agreement, Seller
shall pay the difference to Buyer
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within (10) days after receipt of written
demand therefor. Upon payment of the
Receivable Shortfall, Buyer shall assign to
Seller those Accounts Receivable
which were uncollected at the end of the
Collection Period.
(c)
Collection of Accounts Receivable. Between the Closing Date and
the
end of the Collection Period, Buyer shall
use reasonable efforts consistent with
its usual and customary collection
practices to collect the Accounts Receivable,
provided that Buyer shall not be obligated
to resort to litigation.
(d)
Payments in Transit after the Closing. Any payments that are
received
by Seller after the Closing Date in respect
of Accounts Receivable shall be
owned by and deemed the property of Buyer,
and Seller shall receive such
payments in trust for Buyer and shall turn
over to Buyer, all such amounts
within thirty (30) days of receipt
thereof.
SECTION
2.5. RELEASE OF ESCROW FUNDS.
(a)
Initial Release. Within ten (10) days after the Final Net
Current
Assets has been determined in accordance
with Section 2.3(b) of this Agreement,
Buyer shall instruct the Escrow Agent in
writing to release to Seller a portion
of the Escrow Funds in an amount equal to
the lesser of (1) the Net Escrow Funds
Available determined as of the date that
the Final Net Current Assets amount is
determined and after giving effect to any
disbursements or required
disbursements of Escrow Funds to Buyer on
account of a Reduction in Net Current
Assets, and (2) the amount of US$350,000
less the Reduction in Net Current
Assets, if any (the lesser of (1) and (2)
is referred to as the "Initial Release
Amount").
(b)
Subsequent Release. Within forty (40) days after the end of the
Collection Period, Buyer shall instruct the
Escrow Agent in writing to release
Escrow Funds in an amount equal to the
lesser of (1) the Net Escrow Funds
Available as of the last day of the
Collection Period, determined after giving
effect to any disbursements or required
disbursements of Escrow Funds to Buyer
on account of a Reduction in Net Current
Assets and on account of any Receivable
Shortfall, and (2) US$450,000 less the
Receivable Shortfall, if any (the lesser
of (1) and (2) is referred to herein as the
"Subsequent Release Amount").
(c) Net
Escrow Funds Available. For purposes of this Section 2.5, "Net
Escrow Funds Available" shall mean, as of
any date, the Escrow Funds then held
by the Escrow Agent less the amount of all
Claimed Set-Offs (as defined in
Section 9.7 hereof) as of such date.
SECTION
2.6. BUYER'S ASSUMPTION OF LIABILITIES. On the terms and
subject
to the conditions set forth in this
Agreement, and in further consideration of
the transfer of the Purchased Assets, at
the Closing, Buyer shall assume only
those duties, liabilities or obligations of
the Business included in the Assumed
Liabilities and as specifically set forth
on Schedule 1A.
SECTION
2.7. CLOSING. The Closing shall take place at the offices of
Buyer's counsel, Shipman & Goodwin LLP,
at One Constitution Plaza, Hartford,
Connecticut on the date hereof or at such
other time and location as the parties
hereto shall agree in writing.
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SECTION
2.8. DELIVERIES BY SELLER AT CLOSING. At the Closing, Seller
shall
convey, transfer, assign and deliver to
Buyer all of the Purchased Assets,
including in each case good and
merchantable title to all personal property
included therein, free and clear of all
Liens (except Permitted Liens). Seller
shall deliver to Buyer:
(a)
Evidence of fulfillment of each of the conditions set forth in
Article
6.0;
(b) The
Escrow Agreement fully executed by Seller and Escrow Agent;
(c) An
opinion of counsel to Seller, dated the Closing Date, to the
effect
and substantially in the form of Exhibit B
to this Agreement;
(d) Bill
of Sale and General Conveyance in the form of Exhibit C and
such
assignments and other instruments of
transfer as may be reasonably satisfactory
to Buyer's counsel, and with such consents
to the conveyance, transfer and
assignment thereof as may be necessary to
effect the conveyance, transfer,
assignment and delivery of the Purchased
Assets to Buyer and to vest in Buyer
the title to the Purchased Assets and to
assure to Buyer the full benefit of the
Purchased Assets, including without
limitation:
(i) the transfer of all registered Proprietary Rights of Seller
(as
such term
is defined in Section 3.14 hereof) included in the Purchased
Assets and
applications therefor; and
(ii) the consent(s) listed on Schedule 5.3;
(e)
Releases of all Liens (other than Permitted Liens) on the
Purchased
Assets;
(f) A
Lease Assignment and Assumption Agreement with respect to each
Lease, in the form attached hereto as
Exhibit D executed by Seller (the "Lease
Assignment");
(g) A Good
Standing Certificate of current date for Seller from the
jurisdiction of its organization confirming
that Seller exists and has not been
dissolved;
(h) A
Secretary's Certificate with respect to Seller's Certificate of
Incorporation, By-laws, director resolution
and officer incumbency, in form and
substance satisfactory to Buyer;
(i) A
Transition Services Agreement in the form attached hereto as
Exhibit
F-1, and a Master Services Agreement in the
form attached hereto as Exhibit F-2,
each fully executed by Seller;
(j) A
Non-Competition Agreement in the form attached hereto as Exhibit
G,
fully executed by each of Seller and the
other parties set forth in such
agreement (the "Non-Competition
Agreement");
(k) An
assignment and assumption agreement with respect to the
contracts
set forth on Schedule 3.13 in the form
attached hereto as Exhibit H, fully
executed by CGI Group, Inc. and Seller (the
"Assignment and Assumption
Agreement"); and
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<PAGE>
(l) Such
other documents and instruments as Buyer or Buyer's counsel may
reasonably request to better evidence or
effectuate the transactions
contemplated hereby.
Simultaneously with the delivery referred to in this Section,
Seller shall
take or cause to be taken all such actions
as may reasonably be required to put
Buyer in actual possession and operating
control of the Purchased Assets.
SECTION
2.9. DELIVERIES BY BUYER AT CLOSING. At the Closing, Buyer
shall
deliver to Seller:
(a) The
Escrow Agreement fully executed by Buyer;
(b) An
Assumption Agreement in the form attached hereto as Exhibit E
fully
executed by Buyer, pursuant to which Buyer
assumes, as of the Closing Date, the
Assumed Liabilities;
(c) The
Lease Assignments, fully executed by Buyer;
(d) In
accordance with Section 2.2(a) of this Agreement, Buyer shall
deliver to Seller an amount equal to
US$22,200,000.00, constituting the cash
portion of the Purchase Price;
(e) In
accordance with Section 2.2(b) of this Agreement, Buyer shall
deliver to the Escrow Agent the Escrow
Funds;
(f) The
Transition Services Agreement in the form attached hereto as
Exhibit F-1, and the Master Services
Agreement in the form attached hereto as
Exhibit F-2, each fully executed by Buyer;
and
(g) The
Non-Competition Agreement fully executed by Buyer.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller
hereby represents and warrants to Buyer as follows:
SECTION
3.1. ORGANIZATION AND POWER. Seller is a corporation duly
organized, validly existing and in good
standing under the laws of the
jurisdiction of its formation. Seller has
full power and authority to own its
properties and conduct the business
presently being conducted by it. Seller has
full legal power, authority and capacity to
execute this Agreement and to
consummate the transactions contemplated by
this Agreement.
SECTION
3.2. AUTHORIZATION. The execution, delivery and performance of
this Agreement by Seller have been duly
authorized and approved by all requisite
action on the part of Seller's directors
and stockholders. This Agreement
constitutes the valid and binding
obligation of Seller and is enforceable
against Seller in accordance with its
terms, except as such
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<PAGE>
enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium, and other similar laws relating
to or limiting creditors' rights
generally and by equitable principles.
SECTION
3.3. NO CONFLICT. The execution and delivery of this Agreement
does not, and the consummation of the
transactions contemplated hereby and the
compliance with the terms hereof will not
(a) violate any law, judgment, order,
decree, statute, ordinance, rule or
regulation applicable to Seller or the
Business, or any permit, license or
approval of any Governmental Entity in
respect of Seller or the Business, (b)
conflict with any provision of the
Certificate/Articles of Incorporation,
By-laws or other organizational document
of Seller, (c) result in any violation of,
and will not conflict with, or result
in a material breach of any terms of, or
constitute a default under, any
mortgage, charge, license, instrument or
agreement to which Seller is a party or
by which Seller or any of the Purchased
Assets is bound or create any Lien upon
any of the Purchased Assets, or (d) except
as set forth on Schedule 3.3, require
any notice to, or consent, approval, order
or authorization of, or the
registration, declaration or filing with,
any Governmental Entity or other
Person, including, without limitation,
under any Contract.
SECTION
3.4. TITLE TO PURCHASED ASSETS. Seller has good, valid and
marketable title to all of the Purchased
Assets, free and clear of all Liens,
except those Liens set forth on Schedule
3.4 ("Permitted Liens"). No other party
has any rights or claims to possession of
any of the Purchased Assets. None of
the Purchased Assets are subject to any
option, contract, arrangement or
understanding that would restrict Seller's
ability to transfer the Purchased
Assets to Buyer as contemplated herein.
Except as set forth on Schedule 3.4, the
Purchased Assets constitute all assets,
rights and properties used by Seller to
operate, or necessary to operate the
Business as operated by Seller prior to
Closing. No Related Person of Seller owns,
leases or licenses assets, properties
or other rights used in the conduct of the
Business. All employees engaged in
conducting the Business are employees of
Seller.
SECTION
3.5. CONDITION OF PURCHASED ASSETS. All of the tangible
property
included in the Purchased Assets is in good
operating condition and repair,
ordinary wear and tear excepted, and in the
state of maintenance, repair and
operating condition required for the proper
operation and use thereof in the
ordinary and usual course of business.
SECTION
3.6. FINANCIAL STATEMENTS. Seller has delivered to Buyer
financial
information respecting the Business (the
"Financial Statements"), as follows:
(i) an unaudited balance sheet as of the
Reference Date (the "Reference Date
Balance Sheet"), a copy of which is
attached hereto as Schedule 3.6; and (ii)
unaudited profit and loss statement of the
Business for the twelve (12) months
ended as of the Reference Date. The
Financial Statements fairly present the
financial position and results of
operations of the Business for the periods
then ended and the financial position of
the Business at the dates thereof and
were prepared in accordance with GAAP;
provided, however, the unaudited
Financial Statements (i) are subject to
normal recurring year-end adjustments
and (ii) do not contain all footnote
disclosures required by GAAP. The books of
account for the Business are and, during
the period covered by the Financial
Statements were, correct and complete in
all material respects, fairly and
accurately reflect or reflected the income,
expenses, assets and liabilities of
the Business, including the
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nature thereof and the transactions giving
rise thereto, and provide or provided
a fair and accurate basis for the
preparation of the Financial Statements.
SECTION
3.7. ACCOUNTS RECEIVABLE; CREDITS. The Accounts Receivable are
bona fide and good, and are collectible in
the amounts shown on the books of
account of Seller. No Account Receivable
has been released by Seller, in whole
or in part, so as to reduce its value.
There are no outstanding customer credits
or allowances (including allowances for bad
debts) which have been authorized by
Seller prior to the Closing Date. The
uncollectibility of any Accounts
Receivable resulting in an adjustment to
the Purchase Price based on a
Receivable Shortfall in accordance with
Section 2.4 shall not be considered a
breach of the representation and warranty
of collectibility contained in this
Section 3.7.
SECTION
3.8. PRE-BILL. Seller has not pre-billed or received prepayment
for products to be sold, services to be
rendered, or expenses to be incurred by
the Business subsequent to the Closing
Date, except in the ordinary course of
the Business and consistent with Seller's
prior practices with respect to the
Business, with a corresponding current
liability included on the Reference Date
Balance Sheet.
SECTION
3.9. LITIGATION. There is no suit, action or proceeding pending
against or affecting Seller or the
employees of Seller or its Affiliates
relating to the Business, the Purchased
Assets, or the transactions contemplated
hereby, nor is there any such suit, action
or proceeding threatened against
Seller or any of the employees of Seller or
its Affiliates. Neither Seller nor
the Business are subject to any order of a
Governmental Entity.
SECTION
3.10. COMPLIANCE WITH LAW. Seller has all necessary licenses,
permits and other approvals of Governmental
Entities necessary to operate the
Business as now conducted, each of which is
in good standing, and Seller has
conducted the Business and properly filed
all necessary reports in accordance
with applicable laws and regulations.
SECTION
3.11. ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no
liabilities or obligations, either accrued,
contingent or otherwise, related to
or arising from the Business, nor are there
other liabilities or obligations of
the Business, which are not reflected in
(i) the Reference Date Balance Sheet or
(ii) this Agreement or the Schedules
hereto, except as have been incurred in the
ordinary course of business since the
Reference Date.
SECTION
3.12. ABSENCE OF CERTAIN CHANGES. Since the Reference Date,
neither Seller, with respect to the
Business, nor the Business have or will have
as of the Closing:
(a)
suffered any adverse change in its financial condition, assets,
liabilities, net worth or business from
that shown on the Reference Date Balance
Sheet that, either individually or in the
aggregate, has had a Material Adverse
Effect;
(b)
suffered any damage, destruction or loss, whether or not covered
by
insurance, materially adversely affecting
its properties or the Business;
(c)
declared or paid or agreed to declare or pay any dividends or
distributions of any cash or other assets
of any kind whatsoever;
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<PAGE>
(d)
mortgaged, pledged, hypothecated or otherwise encumbered any of
the
Purchased Assets, tangible or
intangible;
(e) sold
or transferred any assets, property or rights related to or
used
in the Business, or canceled or agreed to
cancel any of debts or claims related
to or arising from the Business, except for
fair value, in the ordinary course
of business;
(f)
suffered any Material Adverse Effect with respect to the
Business'
relationships with customers or employees,
or with respect to the Business'
contracts with customers;
(g)
incurred any commitment (through negotiations or otherwise) or
any
liability to any labor organization, or
been involved in any labor dispute in
each case with respect to employees
assigned to or who perform services related
to the Business;
(h)
increased the amount of Debt or other obligations or
liabilities
related to the Business by more than
US$100,000 in the aggregate;
(i)
entered or
