|
|
|
|
Document Preview Asset Sale Agreement |
||||
|
|
||||
|
Click "Add to Cart" button to purchase document. |
||||
|
|
||||
|
Title: |
Asset Sale Agreement |
|||
|
Entities: |
Accpac International Inc.; Schlumberger Technology Corp.; Veritas DGC Inc. |
|||
|
Date: |
2002 |
|||
|
Size: |
Preview shows 69KB of 491KB total |
|||
|
Price: |
$99 |
|||
|
ID: |
#848561 |
|||
|
|
||||
|
||||
|
|
||||
|
Start of Preview |
||||
ASSET SALE AGREEMENT
THIS AGREEMENT made as of August 15, 2002,
AMONG:
VERITAS DGC INC., a body corporate incorporated under the laws of
Delaware ("Veritas DGC")
-and-
HAMPSON-RUSSELL LIMITED PARTNERSHIP, a limited partnership formed under
the laws of Alberta, by its general partner HAMPSON-RUSSELL GP INC., a
body corporate incorporated under the laws of Alberta (the "Canadian
Purchaser")
-and-
VERITAS GEOPHYSICAL CORPORATION, a body corporate incorporated under
the laws of Delaware (the "US Purchaser")
-and-
VERITAS DGC LTD., a body corporate incorporated under the laws of
England and Wales (the "UK Purchaser")
-and-
VERITAS DGC AUSTRALIA PTY LIMITED, a body corporate incorporated under
the laws of Australia (the "Australian Purchaser")
-and-
HAMPSON-RUSSELL SOFTWARE SERVICES LTD., a body corporate incorporated
under the laws of Alberta (the "Canadian Vendor")
-and-
HAMPSON-RUSSELL SOFTWARE SERVICES (U.S.) INC., a body corporate
incorporated under the laws of Texas (the "US Vendor")
-and-
HAMPSON-RUSSELL SOFTWARE SERVICES LTD., a body corporate incorporated
under the laws of England and Wales (the "UK Vendor")
-and-
{PAGE}
-2-
HAMPSON-RUSSELL SOFTWARE SERVICES PTY LTD., a body corporate
incorporated under the laws of Australia (the "Australian Vendor")
-and-
HAMPSON INVESTMENTS LTD., a body corporate incorporated under the laws
of Alberta ("HI")
-and-
RUSSELL SEISMIC TRAINING LTD., a body corporate incorporated under the
laws of Alberta ("RST")
-and-
DANIEL HAMPSON, an individual resident in Calgary, Alberta ("DH")
-and-
BRIAN RUSSELL, an individual resident in Calgary, Alberta ("BR")
-and-
VADA INDUSTRIES LTD., a body corporate incorporated under the laws of
Alberta ("Vada")
WHEREAS the Vendors own the Purchased Assets which they use in their
conduct of the Business;
AND WHEREAS the Vendors desire to sell the Purchased Assets to the
Purchasers and the Purchasers desire to purchase the Purchased Assets from the
Vendors all in accordance with the terms and provisions of this Agreement;
AND WHEREAS the Shareholders are all of the shareholders of the
Canadian Vendor and have agreed to guarantee the obligations of the Vendors as
contemplated in this Agreement;
AND WHEREAS DH is the majority shareholder of HI and has agreed to
guarantee the obligations of HI as contemplated in this Agreement;
AND WHEREAS BR is the majority shareholder of RST and has agreed to
guarantee the obligations of RST as contemplated in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the
premises and of the representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, agree as follows:
{PAGE}
-3-
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS
Unless the context otherwise requires, the following terms and
expressions shall have the meanings set forth below whenever used in this
Agreement including recitals and Schedules hereto:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common
control with the first Person. For the purposes of this Agreement,
"CONTROL," when used with respect to any Person, means the possession,
directly or indirectly, of the power to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
(or comparable positions) of such Person or (b) 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 meanings correlative
to the foregoing;
"AGREEMENT" means this asset sale agreement and all Schedules and
instruments in amendment or confirmation of it, the expressions
"HEREIN", "HEREOF", "HERETO", and similar expressions if used in any
Article or Section of this Agreement mean and refer to this Agreement
including the Schedules hereto and do not refer solely to a particular
Article or Section unless specifically stated herein and the
expressions "ARTICLE", "SECTION" and "SCHEDULE" followed by a number or
letter mean and refer to the specified Article or Section of, or
Schedule to, this Agreement;
"ASSUMED CONTRACTS" has the meaning set out in Section 2.6(a);
"ASSUMED LIABILITIES" has the meaning set out in Section 2.6(a);
"AUSTRALIAN BUSINESS" means the entire business carried on by the
Australian Vendor as at the Closing Date including, without limitation,
software marketing, support and training and all matters related or
ancillary thereto;
"BASE YEAR" has the meaning set out in Section 2.4(c)(i);
"BUSINESS" means, collectively, the Canadian Business, the US Business,
the UK Business and the Australian Business;
"BUSINESS DAY" means any day of the year, other than Saturday, Sunday
or any day on which banks in Calgary, Alberta or Houston, Texas are not
open for business;
"BUSINESS FINANCIAL STATEMENTS" means those consolidated financial
statements of the Canadian Vendor attached as Schedule G;
"CANADIAN BUSINESS" means the entire business carried on by the
Canadian Vendor as at the Closing Date including, without limitation,
software development, marketing, support and training and all matters
related or ancillary thereto;
{PAGE}
-4-
"CLAIM" has the meaning set out in Section 8.3;
"CLOSING" means the completion of the transaction of purchase and sale
contemplated in this Agreement;
"CLOSING DATE" means August 19, 2002, or such other date as the parties
may agree;
"CLOSING TRADING PRICE" has the meaning set out in Section 2.4(b);
"COMMISSION" has the meaning set out in Section 5.10(a);
"CONFIDENTIALITY AGREEMENT" means the confidentiality and
non-disclosure agreement dated May 7, 2002 between Veritas DGC and the
Canadian Vendor;
"CONTRACT LIST" has the meaning set out in the definition of Contracts;
"CONTRACTS" means all agreements, indentures, commitments, contracts,
leases, deeds of trust, licences, options, instruments or other
commitments (including, without limitation, Software Contracts) whether
written or oral, binding upon the Vendors in connection with the
Business (other than Equipment Contracts) a list of which will be
provided to the Vendors at Closing (the "Contract List");
"CORPORATE VENDOR OBLIGATIONS" has the meaning set out in Section 9.18;
"CUSTOMER AND SUPPLIERS LIST" means a list of certain information about
the Vendors' customers and suppliers to be provided by the Vendors to
the Purchasers at Closing;
"DEFERRED REVENUE" means, as at the Effective Date, all amounts
relating to Software leases and maintenance which would be reflected in
the Canadian Vendor's consolidated balance sheet as "deferred revenue"
at such date;
"DEFERRED REVENUE PREPARATION DATE" has the meaning set out in Section
2.5(a);
"DEFERRED REVENUE STATEMENT" has the meaning set out in Section 2.5(a);
"DIRECT CLAIM" has the meaning set out in Section 8.3;
"DOCUMENTATION" means all documentation for or related to the Software,
including but not limited to all documentation intended for use by the
end-user of an executable copy of the Software, all technical
documentation, system designs and specifications, flow charts, record
and file layouts, memoranda, correspondence and other such
documentation containing or relating to the design, structure or coding
or testing of, or algorithms or routines used in, or errors discovered
or corrected in, the Software and any other type of information or
material (in whatever form, whether human or machine readable, and in
whatever media, existing) relating to the Software that was prepared by
or for any of the Vendors;
"EFFECTIVE DATE" means August 1, 2002;
{PAGE}
-5-
"EMPLOYEE PLANS" has the meaning set out in Section 4.1(w);
"EMPLOYEES" has the meaning set out in Section 4.1(y);
"EMPLOYMENT AGREEMENTS" means the employment agreements to be entered
into by the Canadian Purchaser and DH and BR, respectively, on the
Closing Date;
"ENCUMBRANCE" means any encumbrance, lien, charge, hypothec, pledge,
mortgage, title retention agreement, security interest of any nature,
adverse claim, exception, reservation, easement, right of occupation,
any matter capable of registration against title, option, right of
pre-emption, privilege or other preferential arrangement having a
similar effect or any contract to create any of the foregoing other
than normal course non-material security filings related to Equipment
Contracts;
"ENVIRONMENTAL LAWS" has the meaning set out in Section 4.1(s)(i);
"EQUIPMENT CONTRACTS" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other
agreements binding upon the Vendors relating to assets used by the
Vendors in connection with the Business which are listed in the
Contract List;
"EXCEPTION LETTER" has the meaning set out in Section 4.1(g)(ii);
"EXCLUDED ASSETS" means those assets listed in Schedule B;
"EXCLUDED EMPLOYEES" has the meaning set out in Section 5.1(a);
"EXCLUDED LIABILITIES" has the meaning set out in Section 2.6;
"GAAP" means Canadian generally accepted accounting principles,
consistently applied;
"GST" means all taxes payable under Part IX of the Excise Tax Act
(Canada) or any provincial legislation similar to the Excise Tax Act
(Canada), or any successor provisions respectively thereto which are of
similar or like effect;
"HAZARDOUS SUBSTANCES" means any pollutants, contaminants, chemicals or
industrial toxic or hazardous wastes or substances;
"INDEMNIFIED PARTY" has the meaning set out in Section 8.3;
"INDEMNIFYING PARTY" has the meaning set out in Section 8.3;
"INITIAL PAYMENT" has the meaning set out in Section 8.8(a);
"INTELLECTUAL PROPERTY" means all right, title or interest of any of
the Vendors in and to all intellectual property in respect of the
Business including, without limitation, all right, title and interest
in and to all intellectual property of the Vendors necessary to carry
on the Business as currently being carried out by the Vendors as at the
date hereof and as of Closing including but not limited in and to:
{PAGE}
-6-
(i) any and all inventions, improvements or discoveries, whether
or not reduced to practice and whether or not patentable or
made the subject of a pending patent application or
applications;
(ii) national and multinational statutory invention registrations,
patents, patent registrations and patent applications
(including, without limitation, all reissues, divisions,
continuations, continuations in part, extensions and
reexaminations) and all rights therein provided by applicable
international treaties or conventions and all improvements to
the inventions disclosed in each such registration, patent or
application;
(iii) trademarks, service marks, trade dress, get-up, logos, brand
names, trade names and corporate names (to the extent
permissible by applicable law and regulatory practice),
whether or not registered, including, without limitation, all
marks registered in the trademark offices or authorities of
all nations throughout the world, and all rights therein
provided by international treaties and conventions, including
without limitation, the tradenames and trademarks set out in
Schedule D;
(iv) copyrights (registered or otherwise) and registrations and
applications for registration thereof, and all rights therein
provided by international treaties or conventions including
without limitation those which relate to computer software
(including, without limitation, the Software), source codes,
web pages, internet addresses, data, databases, files and
documentation;
(v) trade secrets and confidential or proprietary technical and
business information (including, without limitation, formulas,
compositions, inventions and conceptions of inventions,
whether patentable or unpatentable and whether or not reduced
to practice);
(vi) all rights to obtain and rights to apply for patents, and to
register trademarks and copyrights or other intellectual
property rights;
(vii) any and all registrations or applications for registration of
intellectual property with any governmental authority;
(viii) any and all rights and benefits under any Software Contracts
and under any intellectual property or software license or
lease arrangements or agreements with any third parties
whether express, implied or by reason of conduct or nature of
trade;
(ix) any and all rights or interests derived in respect of waivers
by third parties of moral rights, whether express or implied
or by reason of conduct or nature of trade;
(x) any and all rights, whether arising at law, in equity or by
course of conduct or under any agreement, under which any of
the Vendors may make any claim to
{PAGE}
-7-
any right, title or interest in any intellectual property or
other proprietary right of any third party;
(xi) any and all rights to obtain injunctive relief for present and
past infringement of any intellectual property;
(xii) any and all rights to any Encumbrances in or to or relating to
any intellectual property of any third party;
(xiii) any and all goodwill or reputation arising in or relating to
the Intellectual Property or the Business;
(xiv) customer lists and supplier lists; and
(xv) any and all other intellectual property owned and used by the
Vendors in connection with the Business, including industrial
designs and integrated circuit topographies;
and shall include, but not be limited to, any and all intellectual
property and any and all other proprietary right, title or interest of
any of the Vendors that may exist or arise in the items set out in
Schedule A;
"INTERIM PERIOD" means the period or time between the close of business
on the date hereof and the Time of Closing;
"LEASED PREMISES" means the premises leased by the Vendors, used in
their operation of the Business and legally described in Schedule H;
"LICENCES" has the meaning set out in Section 4.1(j);
"MAXIMUM CLAIMS AMOUNT" has the meaning set out in Section 8.12;
"NUMBER OF SHARES" has the meaning set out in Section 8.13;
"PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization or governmental authority;
"PURCHASE PRICE" has the meaning set out in Section 2.2;
"PURCHASED ASSETS" has the meaning set out in Section 2.1;
"PURCHASERS" means, collectively, the US Purchaser, the Canadian
Purchaser, the UK Purchaser and the Australian Purchaser;
"PURCHASERS' INDEMNIFIED PARTIES" has the meaning set out in Section
8.1;
"PURCHASERS' SOLICITORS" means Bennett Jones LLP, Barristers and
Solicitors;
"REGISTRATION EXPENSES" has the meaning set out in Section 5.10(f)(v);
{PAGE}
-8-
"REGISTRATION STATEMENT" has the meaning set out in Section 5.10(a);
"RIGHTS" has the meaning set out in the Rights Transfer Agreement;
"RIGHTS TRANSFER AGREEMENT" means that Rights Transfer Agreement dated
the date hereof between Veritas DGC and Veritas Energy Services Inc.;
"SECURITIES ACT" has the meaning set out in Section 5.10(a);
"SELLING EXPENSES" has the meaning set out in Section 5.10(f)(v);
"SHAREHOLDERS" means HI, RST and Vada;
"SHARE PROCEEDS" has the meaning set out in Section 8.14;
"SHARES" has the meaning set out in Section 2.4(b);
"SOFTWARE" means all the software, source code, configuration files and
related Documentation and materials developed by or for the Vendors and
used as of the date hereof and as of Closing in connection with the
Business (other than off-the-shelf software and other than software
licensed or leased by the Vendors as disclosed in the Contract List but
for the purposes of this definition the rights granted to the Vendors
to such licensed or leased software shall be included in this
definition) including, but not limited to the software listed in
Schedule M;
"SOFTWARE CONTRACTS" means all Contracts (including, but not limited
to, all escrow, licence, lease, support, service, maintenance, dealer,
marketing, distributor, agent, supplier and manufacturer agreements),
whether oral or written, between one or more of the Vendors and any
third party which relate to the Software or the Documentation, a list
of same being included in the Contract List;
"SUBJECT SALES" has the meaning set out in Section 2.4(c)(i);
"SUPPLEMENTAL PAYMENT" has the meaning set out in Section 8.8(a);
"TAX ACT" means the Income Tax Act (Canada) and all the amendments
thereto;
"THIRD PARTY" has the meaning set out in Section 8.5(b)(ii);
"THIRD PARTY CLAIM" has the meaning set out in Section 8.3;
"TIME OF CLOSING" means 10:00 a.m. (Calgary time) on the Closing Date
or such other time on the Closing Date as the parties may agree;
"TRANSFER REGULATIONS" has the meaning set out in Section 5.1(e);
"TRANSITION PERIOD" has the meaning set out in Section 2.4(c)(i);
"UK" means the United Kingdom of Great Britain and Northern Ireland;
{PAGE}
-9-
"UK BUSINESS" means the entire business carried on by the UK Vendor as
at the Closing Date including, without limitation, software marketing,
support and training and all matters related or ancillary thereto;
"UK EMPLOYEES" means the employees identified at Schedule I under the
heading "London";
"US BUSINESS" means the entire business carried on by the US Vendor as
at the Closing Date including, without limitation, software marketing,
support and training and all matters related or ancillary thereto;
"VAT" means value added tax as provided for in the VAT Act (and
legislation supplemental thereto) and includes any other tax from time
to time replacing it;
"VAT ACT" means the United Kingdom Value Added Tax Act 1994;
"VENDORS" means, collectively, the Canadian Vendor, the US Vendor, the
UK Vendor and the Australian Vendor;
"VENDORS' TAXES" has the meaning set out in Section 8.12(a);
"VENDORS' INDEMNIFIED PARTIES" has the meaning set out in Section 8.2;
"VENDORS' SOLICITORS" means Fraser Milner Casgrain LLP, Barristers and
Solicitors; and
"VERITAS COMMON STOCK" means the shares of common stock of Veritas DGC,
with a par value of $0.01 per share.
1.2 SCHEDULES
The following Schedules are expressly incorporated into and form part
of this Agreement:
{Table}
{S} {C} {C}
Schedule A - Purchased Assets;
Schedule B - Excluded Assets;
Schedule C - Additional Assumed Liabilities;
Schedule D - Intellectual Property;
Schedule E - Material Business Licences;
Schedule F - Consents and Approvals;
Schedule G - Business Financial Statements;
Schedule H - Leased Premises;
Schedule I - Employees;
Schedule J - Form of Vendors' Solicitors' Opinion;
Schedule K - Excluded Employees;
Schedule L - Form of Joint Notice of Termination and Offer of
Employment;
Schedule M - Software; and
Schedule N - Form of Purchasers' Solicitors' Opinion.
{/Table}
{PAGE}
-10-
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF ASSETS
Subject to the terms and conditions set forth in this Agreement and
with effect from and as of the Effective Date, the Vendors hereby agree to sell,
assign, transfer, convey and deliver to the Purchasers, and the Purchasers
hereby agree to purchase from the Vendors, free and clear of any and all
Encumbrances whatsoever on the Closing Date, all of the undertaking of the
Business and all of the assets, properties, rights and interests owned, claimed,
used or held by the Vendors in connection with the Business to the extent
existing as of the Closing Date, other than the Excluded Assets, (all of such
assets, properties, rights and interests being hereinafter collectively referred
to as the "Purchased Assets") including, without limitation, all right, title
and interest of the Vendors in the following, certain of which are described in
Schedule A:
(a) the Software;
(b) all personal property, together with the fixtures,
furnishings, furniture, equipment, motor vehicles, tools,
supplies, spare parts, computers, printers, third party
off-the-shelf software licensed to the Vendors, and all other
tangible personal property owned, licensed or leased by the
Vendors, wherever located, or acquired or used by the Vendors;
(c) all inventory, wherever located, including related stores and
supplies of the Vendors;
(d) all Contracts;
(e) all Intellectual Property of the Vendors including, without
limitation, the tradenames and trademarks described in
Schedule D;
(f) all business licenses, permits, registrations, and
authorizations of the Vendors;
(g) all books and records of the Vendors relating to the Purchased
Assets and the Assumed Liabilities, including all customer and
supplier files and lists, sales information, equipment
maintenance and warranty information, operating manuals, all
correspondence with any customers, suppliers, Employees or
governmental authorities, all personnel records related to the
Employees (other than Excluded Employees), and any other
reports, promotional materials, marketing studies, plans and
documents prepared by or on behalf of the Vendors, including
data stored electronically;
(h) all prepaid claims, prepaid expense items and deferred
charges, credits, advance payments, security and other
deposits made by the Vendors to any other Person relating to
the Purchased Assets or the conduct of the Business, in each
case other than to the extent relating to the Excluded
Liabilities or Excluded Assets;
{PAGE}
-11-
(i) all third-party assignable indemnities where one or more of
the Vendors is an indemnified party and the proceeds afforded
thereby, in each case other than to the extent relating to the
Excluded Liabilities or Excluded Assets;
(j) all assignable rights of the Vendors to manufacturers'
warranties and indemnities with respect to the Purchased
Assets;
(k) the right to use the names set forth in Schedule A, and all
variants thereof to the extent permissible by applicable law
and regulatory practice;
(l) the goodwill of the Vendors in the Business;
(m) all telephone and facsimile numbers (together with all other
similar numbers), electronic mail addresses, web sites and
domain names of the Vendors (to the extent permissible by the
applicable domain name registries);
(n) to the extent permissible by applicable law, all rights of the
Vendors pertaining to any causes of action, lawsuits,
judgments, claims, demands, counterclaims, set-offs or
defenses the Vendors may have with respect to the Assumed
Liabilities or any of the Purchased Assets, except to the
extent relating to the Excluded Liabilities or Excluded
Assets; and
(o) except for the Excluded Assets, all other assets, properties
and rights of every kind and nature of the Vendors or in which
the Vendors have an interest (but only to the extent of such
interest) at the Time of Closing, known or unknown, fixed or
unfixed, accrued, absolute, contingent or otherwise, whether
or not specifically referred to in this Agreement, that, in
each case, relate to the Business.
2.2 PURCHASE PRICE
The aggregate purchase price (the "Purchase Price") payable by the
Purchasers to the Vendors for the Purchased Assets shall be, subject to
adjustments as herein stated, $25,000,000.
2.3 PURCHASED ASSETS/PURCHASE PRICE
It is acknowledged and agreed by the parties hereto that the specific
Purchased Assets being sold hereunder by each of the Vendors, the specific
Purchased Assets being purchased hereunder by each of the Purchasers and the
related aggregate purchase price to be paid by each Purchaser are as follows:
{Table}
{Caption}
RELATED AGGREGATE
VENDOR PURCHASER SPECIFIC PURCHASED ASSETS PURCHASE PRICE
------ --------- ------------------------- ----------------
{S} {C} {C} {C}
Canadian Vendor Canadian Purchaser all Purchased Assets owned or $24,312,013
used by the Canadian Vendor in
connection with its
participation in the operation ($15,812,013 on
of the Canadian the Closing Date)
{/Table}
{PAGE}
-12-
{Table}
{Caption}
RELATED AGGREGATE
VENDOR PURCHASER SPECIFIC PURCHASED ASSETS PURCHASE PRICE
------ --------- ------------------------- ----------------
{S} {C} {C} {C}
Business and in connection
with its operations in
Indonesia, certain of which
are described in Part I of
Schedule A
US Vendor US Purchaser all Purchased Assets owned or $318,113
used by the US Vendor in
connection with its participation ($318,113 on the
in the operation of the US Closing Date)
Business, certain of which are
described in Part II of Schedule A
UK Vendor UK Purchaser all Purchased Assets owned or $335,846
used by the UK Vendor in
connection with its participation ($335,846 on the
in the operation of the UK Closing Date)
Business, certain of which are
described in Part III of Schedule
A
Australian Vendor Australian all Purchased Assets owned or $34,028
Purchaser used by the Australian Vendor in
connection with its participation ($34,028 on the
in the operation of the Closing Date)
Australian Business, certain of
which are described in Part IV of
Schedule A
{/Table}
2.4 PAYMENT OF PURCHASE PRICE
The Purchase Price for the Purchased Assets, subject to adjustments as
herein contemplated, shall be paid as follows:
(a) $9,250,000 by the delivery by the Purchasers to the Vendors on
the Closing Date of certified cheques, bank drafts or wire
transfers as follows:
(i) from the Canadian Purchaser, $8,562,013 payable to
the Canadian Vendor or as it directs;
{PAGE}
-13-
(ii) from the US Purchaser, $318,113 payable to the US
Vendor or as it directs;
(iii) from the UK Purchaser, $335,846 payable to the UK
Vendor or as it directs; and
(iv) from the Australian Purchaser, $34,028 payable to the
Australian Vendor or as it directs;
(b) $7,250,000 by the delivery by the Canadian Purchaser to the
Canadian Vendor of a number of shares of Veritas Common Stock
(as such number may be adjusted, the "Shares"), to be
registered with the Commission, which number will be
calculated by dividing $7,250,000 by the average closing price
of Veritas Common Stock on the New York Stock Exchange (the
"Closing Trading Price") for the 5 trading days ending on
August 19, 2002. In the event that the Closing Trading Price
is $10.00 or less, the Canadian Purchaser can elect to limit
the number of Shares to be delivered to 725,000 Shares. If the
Canadian Purchaser makes this election, the Canadian Vendor
may terminate this Agreement by notice in writing to the
Purchasers, and in such event the parties shall be released
from all of their obligations hereunder. If, prior to the Time
of Closing, Veritas DGC undertakes a merger, amalgamation,
arrangement or other business combination or recapitalizes
through a subdivision of its outstanding shares into a greater
number of shares, or a combination of its outstanding shares
into a lesser number of shares, or reorganizes, reclassifies
or otherwise changes its outstanding shares into the same or a
different number of shares of other classes, or declares a
dividend on its outstanding shares payable in shares of its
capital stock or securities convertible or exchangeable into
shares of its capital stock, then the number of Shares will be
adjusted appropriately. The delivery of Shares to the Canadian
Vendor contemplated in this Section 2.4(b) shall be
accomplished through the transfer by the Canadian Purchaser to
the Canadian Vendor of a number of Rights equal to the number
of such Shares which Rights would be immediately converted to
Shares at the Time of Closing in accordance with the Rights
Transfer Agreement. Immediately upon receipt by the Canadian
Vendor of the Shares at the Time of Closing, it shall
distribute part of such Shares by way of a dividend in specie
as follows:
(A) HI - 30% of the total number of such Shares;
(B) RST - 30% of the total number of such
Shares; and
(C) Vada - 20% of the total number of such
Shares; and
(c) $8,500,000 in accordance with the payment Schedule set forth
below.
(i) If in any year of the five year period beginning
August 1, 2002 (the "Transition Period"), revenue
earned by the Purchasers from software sales, leases,
rentals and maintenance sales and training revenue
generated by the Purchased Assets (the "Subject
Sales") exceeds the amount
{PAGE}
-14-
calculated by multiplying the Subject Sales in the
year ended July 31, 2002 (the "Base Year") by the
relevant percentage from the chart below, the
Canadian Purchaser shall, upon such determination,
pay to the Canadian Vendor, not more than 90 days
after the end of the particular year, in cash an
amount equal to 28.05% of such excess. The Base Year
Subject Sales shall be no less than $5,750,000.
{Table}
{Caption}
Percent of Base Year
Subject Sales
{S} {C}
Year ended July 31, 2003 110%
Year ended July 31, 2004 121%
Year ended July 31, 2005 133%
Year ended July 31, 2006 146%
Year ended July 31, 2007 160%.
{/Table}
For such purposes, "revenue" shall be determined in a manner
consistent with the historical determination thereof by the
Canadian Vendor.
(ii) If in any one year of the Transition Period, sales of
any one of the Pro4D, ProMC or Emerge Software
packages included in the Purchased Assets generates
revenue of $4,000,000 or more, the Canadian Purchaser
shall, upon determination of that amount, pay to the
Canadian Vendor in cash an amount equal to $850,000
in respect of such sales, provided that the aggregate
amount of all such payments contemplated under this
Section 2.4(c)(ii) shall not exceed $1,700,000.
(iii) If by making a payment described in Sections
2.4(c)(i) or (ii) at any point during the Transition
Period, the aggregate of the payments described in
Sections 2.4(c)(i) and (ii) would otherwise exceed
$8,500,000, the payment to be made pursuant to
Section 2.4(c) and all subsequent payments to be made
pursuant to Section 2.4(c) shall be reduced such that
the aggregate of all such payments equals $8,500,000.
(iv) If the aggregate of the payments described in
Sections 2.4(c)(i) and (ii) is, or is anticipated by
the Canadian Vendor to be, less than $8,500,000 at
the end of the Transition Period, the Purchase Price
payable by the Canadian Purchaser shall be reduced by
the amount of the shortfall or the anticipated
shortfall, as the case may be. The timing and manner
of any such reduction shall be mutually agreed in
writing by the Canadian Vendor and the Canadian
Purchaser, acting reasonably.
The Canadian Purchaser shall make available to DH and BR and the
President of Vada and their respective professional advisors at
reasonable times on reasonable notice such
{PAGE}
-15-
of its financial statements, books and records as are necessary to
verify the accuracy of the matters and calculations contemplated by
this Section 2.4(c). In the event the Canadian Vendor disputes any
calculation made pursuant to this Section 2.4(c), it shall notify the
Canadian Purchaser in writing to such dispute within 30 days after
receiving the applicable calculation. If no dispute is notified within
such time period then the applicable calculation is deemed to be agreed
upon by the parties.
If within 15 days of such notification such dispute is not resolved,
either party may refer the matter to PriceWaterhouseCoopers, Chartered
Accountants, or another nationally recognized firm of chartered
accountants selected by mutual agreement (who will be given full access
by the parties to the necessary records) for resolution as soon as
practicable and the determination of such, chartered accountants, shall
be final and conclusive (save in the event of fraud or manifest error).
The sharing of costs of dispute resolution among the parties shall be
determined by such chartered accountants.
2.5 ADJUSTMENTS/AUDIT
(a) As soon as reasonably practicable after the Closing Date, but
in any event within 60 days thereafter (the "Deferred Revenue
Preparation Date") the Canadian Vendor shall, at its cost,
prepare and provide to the Canadian Purchaser a statement
setting out the Deferred Revenue (the "Deferred Revenue
Statement"). The Deferred Revenue Statement shall be prepared
on a basis consistent with accounting practices previously
employed by the Canadian Vendor and shall be certified to be
true and correct by DH, BR, HI, RST, the Canadian Vendor and
the corporate accountant of the Canadian Vendor. In the event
that the Canadian Purchaser disputes the Deferred Revenue
Statement it shall notify the Canadian Vendor in writing of
such dispute within 30 days after the Deferred Revenue
Preparation Date. If no dispute is notified within 30 days
after the Deferred Revenue Date, then the Deferred Revenue
Statement is deemed to be agreed upon by the parties (save in
the event of fraud or manifest error). If within 15 days of
such notification such dispute is not resolved, either party
may refer the matter to PriceWaterhouseCoopers, Chartered
Accountants, or another nationally recognized firm of
chartered accountants selected by mutual agreement (who will
be given full access by the parties to the necessary records)
for resolution as soon as practicable and the determination of
such, chartered accountants, shall be final and conclusive
(save in the event of fraud or manifest error). The sharing of
costs of dispute resolution among the parties shall be
determined by such chartered accountants.
(b) The amount of the cash payment to the Canadian Vendor in
Section 2.4(a)(i) will be reduced by the amount that Deferred
Revenue of the Canadian Vendor as reflected in the Deferred
Revenue Statement is in excess of $1,141,000 or increased by
the amount that such Deferred Revenue is less than $1,141,000.
(c) The Canadian Vendor or the Canadian Purchaser, as applicable,
shall, within five Business Days of finalization of the
Deferred Revenue Statement pay to the other
{PAGE}
-16-
by way of certified cheque, bank draft or wire transfer any
amount required to adjust the Purchase Price in accordance
with Section 2.5(b).
(d) Unless otherwise specifically provided herein, the parties
shall, as among themselves, account for the purchase and sale
of the Purchased Assets as if such transaction had closed on
the Effective Date and the date for adjustment of accounts
between the parties shall be the Effective Date. The corporate
accountant of the Canadian Vendor shall determine in
consultation with a representative of the Purchasers such
adjustments between the parties and shall deliver a statement
of adjustments as soon as reasonably practicable after the
Closing Date, but in any event within 60 days thereafter. Such
adjustments shall include, without limitation, reconciliation
of accounts (including income taxes) from the Effective Date
to the Closing Date. In the event of disagreement between the
parties with respect to such adjustments the dispute shall
forthwith be referred to PriceWaterhouseCoopers, Chartered
Accountants, or another nationally recognized firm of
chartered accountants selected by mutual agreement (who will
be given full access by the parties to the necessary records)
for resolution as soon as practicable whose determination
shall be final and conclusive (save in the event of fraud or
manifest error). The sharing of costs of dispute resolution
among the parties shall be determined by such chartered
accountants. The obligation to complete such adjustments after
the Closing shall survive the Closing.
2.6 ASSUMPTION OF LIABILITIES
(a) Subject to Section 2.6(b), effective at and from the Effective
Date, each of the Purchasers hereby assumes: (i) the
obligations and liabilities of the Vendors under those
Contracts and Equipment Contracts which are described on in
the Contract List (collectively, the "Assumed Contracts") save
any such obligations and liabilities that were under the terms
of the relevant Assumed Contract to be performed prior to the
Effective Date or any such obligations that the relevant
Vendor is in breach of as at the Effective Date, and (ii)
those additional liabilities and obligations specifically
indicated on Schedule C to be assumed by such Purchaser
(collectively the "Assumed Liabilities"). Except for the
Assumed Liabilities and other liabilities specifically
contemplated in Section 5.1 herein, the Purchasers shall not
assume and shall have no obligation to discharge, perform or
fulfill any other liabilities or obligations, contingent or
otherwise, known or unknown, of the Vendors or related to the
Purchased Assets (collectively the "Excluded Liabilities")
including, without limitation:
(i) any assessment or reassessment for income, corporate,
capital, sales, excise or other taxes, duties or
imposts of any kind whatsoever of the Vendors or
relating to the Business or the Purchased Assets in
respect of a period prior to the Effective Date;
(ii) any third party product liability or warranty
liability arising at any time in respect of products
or services of the Business, provided, processed or
{PAGE}
-17-
shipped on or prior to the Effective Date, even
though a claim therefor may be made or filed after
the Time of Closing;
(iii) any liability of the Vendors to the employees of the
Business including, without limitation, severance or
other similar payments, other than as specifically
contemplated by Section 5.1;
(iv) any liability of the Vendors with respect to accounts
payable;
(v) any environmental liability relating to the Vendors,
the Business or the Purchased Assets arising before
or on the Effective Date or caused by the Vendors or
their employees, agents, contractors, representatives
or predecessors before or on the Closing Date;
(vi) any liability arising out of any default, breach or
penalty by, of or against the Vendors under any
Contract prior to or on the Effective Date;
(vii) any liability relating to the execution, delivery and
consummation of this Agreement by the Vendors and the
transactions of the Vendors contemplated hereby,
including without limitation any and all federal,
state, foreign and local income taxes incurred by the
Vendors as a result of the transactions contemplated
by this Agreement, except as may otherwise be
expressly assumed herein;
(viii) any liability relating to or arising out of the
conduct or operation of the Business by the Vendors
prior to or on the Effective Date, including without
limitation those arising from (A) personal injury
(including death) or property damage claims; (B) any
third party relationship, representation agreement or
joint venture not specifically assumed hereunder; (C)
any indebtedness of the Vendors other than that
expressly assumed hereunder; (D) other than as set
forth in Section 5.1, any employment relationship or
employee related obligation; or (E) obligations or
liabilities under any agreement, contract or
commitment of the Vendors which accrued prior to or
on the Effective Date, including without limitation,
the provision of services prior to or on the
Effective Date under any service contract of the
Vendors; and
(ix) any liability of the Vendors under any insurance
contracts.
(b) (i) Effective at and from the Effective Date, the
Vendors shall assign to and in favour of the
Purchasers the Assumed Contracts. The Vendors shall
use commercially reasonable efforts to obtain, by the
Time of Closing (or as soon thereafter as is
practicable), all required third party consents to
the assignment of the Assumed Contracts.
(ii) In the event any of the Assumed Contracts are not
assignable due to any required third party consent
thereto not being obtained as aforesaid this
Agreement does not constitute an assignment or an
attempted assignment
{PAGE}
-18-
of the Assumed Contracts if the assignment or
attempted assignment would constitute a breach of the
Assumed Contracts, the Purchasers shall complete the
obligations of the Vendors thereunder (save for any
such obligations and liabilities that were under the
terms of the relevant Assumed Contract to be
performed prior to the Effective Date or any such
obligations that a Vendor is in breach of as at the
Effective Date) as a subcontractor to the Vendors
provided further, that if such subcontract
relationship requires third party consent, the
Vendors will use commercially reasonable efforts to
obtain such consents.
(iii) Notwithstanding the foregoing:
(A) until an Assumed Contract is validly
assigned with third party consent thereto as
applicable or validly subcontracted with
third party consent thereto as applicable,
as the case may be; and
(B) for any Assumed Contract which is not
capable of being assigned or subcontracted
to the Purchasers due to the inability of
the Vendors to obtain third party consent
thereto respectively as hereinbefore stated;
it shall be deemed, without further action or notice,
that effective at and from the Effective Date all
necessary management, employees and other resources
and equipment of the Purchasers have been seconded to
the Vendors to enable them to perform, at the
Purchaser's sole cost and risk, the obligations of
the Vendors under such Assumed Contracts from and
after the Effective Date. In such case, the Vendors
shall cause such Assumed Contracts to be completed
according to their respective terms and shall invoice
for such work and pay the Purchaser those amounts
that they receive from the third parties in respect
of the applicable Assumed Contracts.
(iv) The Purchasers and the Vendors hereby agree to
cooperate in the completion of all the Assumed
Contracts and to proceed, in good faith, with the
implementation of the intent of this Article.
(v) It is acknowledged and agreed that until it is
determined in which manner the Vendors' obligations
are to be completed under the Assumed Contracts as
hereinbefore set forth, that from and after the
Effective Date, said obligations are being carried on
by the Purchasers as set forth in Section
2.6(b)(iii).
(vi) Subject to the foregoing, from the Closing Date the
Purchasers shall perform all the Vendors' obligations
to be performed after the Closing Date under each
Assumed Contract in accordance with the terms of the
Assumed Contracts.
{PAGE}
-19-
(vii) The Purchasers and the Vendors shall use commercially
reasonable efforts to ensure that the involvement of
the Vendors in the Assumed Contracts contemplated by
Section 2.6(b) is terminated as soon as practicable
after Closing.
(c) In the event that, at any time after the Closing, the Vendors
discover any other contracts which are Contracts (as defined)
except that they were inadvertently not listed in the Contract
List, at the option of the Vendors, the Contract List shall be
amended to include such contracts and such Contracts shall be
deemed to be Assumed Contracts hereunder.
2.7 ALLOCATION OF PURCHASE PRICE
The parties agree that the purchase price for the Purchased Assets will
be allocated as agreed at Closing.
2.8 CERTAIN TAX MATTERS
(a) The Canadian Purchaser acknowledges and agrees that it is
responsible for and shall pay, and shall indemnify and hold
the Canadian Vendor harmless with respect to, all GST
pertaining to this transaction. The parties shall execute and
deliver such documents, notices and elections and do such
lawful things, to endeavour to minimize or eliminate, as the
case may be, any and all GST payable by the Canadian Purchaser
on the purchase described herein including, without
restriction, execution and delivery of a completed GST Form 44
election (to be prepared and filed in the prescribed manner
within the prescribed time by the Canadian Purchaser) pursuant
to subsection 167(1) of the Excise Tax Act (Canada). In
addition, subject to Section 2.8(b), any sales, use, transfer,
vehicle transfer, stamp, conveyance, value added or other
similar taxes that may be imposed by any governmental
authority, and all recording or filing fees, notarial fees and
other similar costs of Closing or on account of this Agreement
or the transactions contemplated hereby, shall be borne by the
applicable Purchaser.
(b) (i) The UK Vendor and the UK Purchaser intend that
the sale of the UK Business is one to which the
provisions of Section 49 of the VAT Act and Article 5
(1) of the Value Added Tax (Special Provisions) Order
1995 shall apply and accordingly that no VAT shall be
charged by the UK Vendor on the consideration. The UK
Vendor and the UK Purchaser agree to use reasonable
commercial efforts to ensure that the sale of the UK
Business is treated under Article 5 (1) of the Value
Added Tax (Special Provisions) Order 1995 as neither
a supply of goods nor a supply of services for UK VAT
purposes.
(ii) The UK Purchaser warrants and undertakes that it will
after the Closing Date use the assets comprising the
UK Business to carry on the same kind of business for
UK VAT purposes as that carried on by the UK Vendor.
{PAGE}
-20-
(iii) The UK Vendor may seek a direction pursuant to
Section 49 of the VAT Act for the records referred to
in that section (the "VAT Records") to be preserved
by the UK Vendor after Closing. If such direction is
not sought or, if sought, is not given before
Closing, the UK Vendor shall on Closing deliver the
VAT Records to the UK Purchaser. If, following
Closing, the UK Vendor obtains a direction as
aforesaid, the UK Purchaser shall forthwith after
written request for the same return the VAT Records
to the UK Vendor. The party with final custody of the
VAT Records shall, during the period for which such
records are required to be preserved under paragraph
6 of Schedule 11 to the VAT Act, preserve such
|
End of Preview |
Home Intelligence Services Subscriptions News About Us