Text version of this Form
THIS AGREEMENT is made as of ________________, 20____ between __________________________, a company having its principal place of business at __________________________ (the Purchaser”) and __________________________ , a company having its principal place of business at __________________________ (the “Vendor”) and __________________________, a principal of the Vendor having a residential address of __________________________ (the “Principal”)(the Principal and the Vendor being referred to together herein as the “Warrantors”)
AND WHEREAS the Principal is the controlling shareholder of the Vendor;
AND WHEREAS the Vendor desires to sell to the Purchaser the Software (as hereafter defined) upon and subject to the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE 1 –
1.1 Definitions. In this Agreement, unless something in the subject matter or context is inconsistent therewith:
(a) “Agreement” means this agreement and all schedules attached hereto and all amendments made hereto and thereto by written agreement between the Vendor, the Principal and the Purchaser;
(b) “Business Day” means a day other than a Saturday, Sunday or statutory holiday in _______________________;
(c) “Claims” means all losses, damages, expenses, liabilities (whether accrued, actual, contingent, latent or otherwise), claims and demands of whatever nature or kind including, without limitation, all legal fees and costs on a solicitor and client basis;
(d) “Closing Date” means __________________________, 20__________________________ or such other date as may be agreed to in writing between the Vendor and the Purchaser;
(e) “Disclosure Schedule” means the list, set out in Schedule B, of exceptions to the Warrantors’ representations and warranties;
(f) “Lien” includes any security interest, mortgage, encumbrance, option, lien or charge of any kind, including any limitation on transfer, use, receipt of income or other exercise of any attributes of ownership of the Software, and includes a license for use or possession of the Software;
(g) “Purchase Price” has the meaning set out in section 2.4;
(h) “Software” means assets as more particularly described in section 2.1(a); and
(i) “Time of Closing” means 10:00 a.m. (local __________________________ Time) on the Closing Date.
1.2 Extended Meanings. In this Agreement words importing any gender include all genders and words importing persons include individuals, partnerships, associations, trusts, unincorporated organizations and corporations.
1.3 Currency. All references to currency herein are to lawful money of Canada.
1.4 Schedules. The following are the Schedules attached hereto and incorporated by reference and deemed to be part hereof:
Schedule A – Contracts;
Schedule B – Disclosure Schedule;
Schedule C – Software and Intellectual Property; and
Schedule D – Opinion of Vendor’s Counsel.
ARTICLE 2 –
SALE AND PURCHASE
2.1 Purchase and Sale of Software.
(a) Upon and subject to the terms and conditions hereof, the Vendor will sell, assign and transfer in perpetuity to the Purchaser free and clear of all Liens, and the Purchaser will purchase:
(i) the computer programs known by the names as set out in Schedule C, including all versions thereof, and all related documentation, manuals, source code and object code, program files, data files, computer related data, field and data definitions and relationships, data definition specifications, data models, program and system logic, interfaces, program modules, routines, sub-routines, algorithms, program architecture, design concepts, system designs, program structure, sequence and organization, screen displays and report layouts, and all other material including all user documentation, programming documentation, notes, flowcharts and any other information or documents related to the said computer programs, all as they exist at the Time of Closing, whether under development or as currently being marketed by the Vendor; and
(ii) all intellectual property of the Vendor existing as of the Time of Closing and used or currently being developed for use and all rights of the Vendor therein, worldwide, whether registered or unregistered, which relate to the computer programs referred to in paragraph 2.1(a)(i) above including without limitation:
(1) Copyrights – all copyrights, including without limitation, all copyrights in and to the computer software programs listed in Schedule C and all applications and registrations of such copyrights;
(2) Trade-marks – all trade-marks, trade-names, service marks, brand names, logos or the like, whether used in association with wares or services, including without limitation, those trade-marks listed in Schedule C and all applications, registrations, renewals, modifications and extensions of such trade-marks;
(3) Patents – all patents, patent applications and other patent rights, if any, including divisional and continuation patents;
(4) Technology – all technology created, developed or acquired whether or not patented or patentable and whether or not fixed in any medium whatsoever, including without limitation, all inventions, know how, techniques, processes, procedures, methods, trade secrets, research and technical data, records, formulae, designs, sketches, patterns, specifications, schematics, blue prints, flow charts or sheets, equipment and parts lists and descriptions, samples, reports, studies, findings, algorithms, instructions, guides, manuals, and plans for new or revised products and/or services; and
(5) Licenses – all licenses, sub-licenses and franchises in which the Vendor is a licensee or a licensor of intellectual property of a nature described in above.
(collectively, paragraphs 2.1(a)(i) and (ii) define the “Software”)
(b) The purchase price payable to the Vendor by the Purchaser for the Software shall be $__________________________. Such purchase price shall be paid and satisfied by________________________________________ . Any Goods and Service Tax and/or _______________________ Social Service Tax payable with respect to the sale and purchase of the Software hereunder shall be the responsibility of the Purchaser.
2.2 Obligations and Liabilities Not Assumed. Notwithstanding that the Vendor has assigned certain benefits to the Purchaser pursuant to section 2.1, the Purchaser does not assume and will not be liable for any obligations or liabilities of the Vendor whatsoever including, without limiting the generality of the foregoing,(i) any taxes whatsoever that may be or become payable by the Vendor including any income or corporation taxes resulting from or arising as a consequence of the sale by the Vendor to the Purchaser of the Software herein contemplated,(i) any indebtedness of the Vendor,(i) any obligations owing by the Vendor to end users or licensees of the Software, or (ii) any Claims arising out of the conduct of the Vendor prior to the Time of Closing.
ARTICLE 3 –
REPRESENTATIONS AND WARRANTIES
3.1 Warrantors’ Representations and Warranties. The Warrantors, jointly and severally, represent and warrant to the Purchaser that:
(a) Corporate. The Vendor is a corporation duly incorporated, organized and subsisting under the laws of ____________________ with the corporate power to own its assets and to carry on its business and has made all necessary filings under all applicable corporate, securities and taxation laws or any other laws to which the Vendor is subject.
(b) Authority. The Vendor has good and sufficient power, authority and right to enter into and deliver this Agreement and to transfer the legal and beneficial title and ownership of the Software to the Purchaser free and clear of all Liens, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated under this Agreement have been duly and validly authorized and approved by all necessary corporate action on the part of the Vendor.
(c) Binding Agreement. This Agreement and all other agreements, documents and instruments to be executed by the Vendor constitute a valid and legally binding obligation of the Vendor, enforceable against the Vendor in accordance with their terms.
(d) No Options. There is no contract, option or any other right of another binding upon or which at any time in the future may become binding upon the Vendor to sell, transfer, assign, pledge, charge, mortgage or in any other way dispose of or encumber any of the Software other than pursuant to the provisions of this Agreement.
(e) No Conflict. Neither the entering into nor the delivery of this Agreement nor the completion of the transactions contemplated hereby by the Vendor will result in the violation of:
(i) any of the provisions of the Memorandum or Articles of the Vendor;
(ii) any agreement or other instrument to which the Vendor is a party or by which the Vendor is bound; or
(iii) any applicable law, rule or regulation.
(i) The Vendor owns all of the Software. Schedule C sets forth a full, complete and true list of all patents, trade-marks, registered and unregistered copyrights, trade names and service marks, and any applications therefor included in the Software, and specifies the jurisdictions in which such Software has been issued or registered or in which an application for such issuance and registration has been filed, including the respective registration or application numbers and the names of all registered owners, together with a list of all of the Vendor’s currently marketed software products and an indication as to which, if any, of such software products have been registered for copyright protection with any relevant Copyright Office by whom such items have been registered. The Vendor is the sole and exclusive owner of, with all right, title and interest in and to (free and clear of any Liens), the Software, and has sole and exclusive rights (and is not contractually obligated to pay any compensation to any third party in respect thereof) to the use thereof or the material covered thereby in connection with the services or products in respect of which the Software is being used. There is no and has not been any unauthorized use, infringement or misappropriation of any of the Software by any person, former employee or other third party.
(ii) The Software was written only by the individuals (the “Developers”) listed in section 3.1(f)(ii) of the Disclosure Schedule.
(iii) Except as disclosed in section 3.1(f)(iii) of the Disclosure Schedule, all Developers, at the time they wrote the Software, were either full-time employees of the Vendor employed as software programmers, or they were contractors who assigned their intellectual property rights in the Software to the Vendor pursuant to written agreements.
(iv) The Developers have waived their moral rights in the Software.
(v) Except for the third party software (“Third Party Programs”) listed in section 3.1(f)(v) of the Disclosure Schedule, the Software was developed solely and entirely by the Vendor and the Software neither contains nor embodies nor uses nor requires any third party software, including development tools and utilities, and the Software, together with the Third Party Programs, contains all materials necessary for the continued maintenance and development of the Software.
(vi) Copies of all the license, distribution and maintenance agreements for the Third Party Programs have been provided by the Vendor to the Purchaser and such license and distribution agreements give the Vendor the right to grant unlimited run-time licenses of the respective Third Party Program to the customers of the Vendor for the royalties set out in section 3.1(f)(vi) of the Disclosure Schedule.
(vii) Only object code versions of the Software have been provided to those licensee customers of the Software listed in section 3.1(f)(vii) of the Disclosure Schedule, and no person except for such licensees have been provided with a copy of the object code of the Software.
(viii) Except as disclosed in section 3.1(f)(viii) of the Disclosure Schedule, the source code for the Software has not been delivered or made available to any person and the Vendor has not agreed to or undertaken to or in any other way promised to provide such source code to any person. Except as disclosed in section 3.1(f)(viii) of the Disclosure Schedule, the source code is currently stored only in the Vendor’s premises in __________________________, _______________________. The sale of the Software as contemplated by this Agreement will not entitle any customer to obtain a copy of the source code for the Software.
(ix) Section 3.1(f)(ix) of the Disclosure Schedule lists all the other licenses, maintenance or support agreements, development contracts and all other agreements, whether written or oral between the Vendor and users of the Software, copies of each of which have been provided to the Purchaser. With respect to the users of the Software listed in section 3.1(f)(vii) of the Disclosure Schedule, all such users have non-transferable, non-exclusive, single-site licenses to use only object code versions of the Software subject to such sub-licensing rights as expressly described in section 3.1(f)(ix) of the Disclosure Schedule. With respect to the users of the Software listed in section 3.1(f)(viii) of the Disclosure Schedule, all such users have non-transferable, non-exclusive, signal-site licenses to use the source code versions of the Software.
(x) Except as listed in section 3.1(f)(x) of the Disclosure Schedule, there are no known problems or defects in the Software including bugs, logic errors or failures of the Software to operate as described in their related documentation or specifications, and, except for such disclosed problems or defects, the Software operates in accordance with its documentation and specifications and has no other problems or defects.
(xi) Section 3.1(f)(xi) of the Disclosure Schedule accurately describes the current development plans for the Software.
(xii) Except as listed in section 3.1(f)(xiii) of the Disclosure Schedule, there are no distributors, sales agents, representatives or any other persons, including VARs, OEMs or resellers, who have rights to market or license the Software. No entity listed on section 3.1(f)(xiii) of the Disclosure Schedule has been guaranteed pricing for the Software. No entity listed in section 3.1(f)(xiii), and no entity that previously had rights to distribute the Software, has or had exclusive rights to do so in any geographic, product or customer market.
(xiii) The Vendor has obtained all applicable government, regulatory, technical and similar approvals in all jurisdictions where the Software is sold or may otherwise be required.
(g) Infringement. The Software does not infringe upon or violate any intellectual property right, including copyrights, patents, trade secrets or other proprietary rights, of any third party. The Vendor has not entered into any agreement to indemnify any other person against any charge of infringement of any of the Software.
(h) Non-Disclosure. Section 3.1(h) of the Disclosure Schedule contains a list of each current and former employee of and consultant to the Vendor and identifies whether such person was or is an employee or an independent contractor. Each person listed in Section 3.1(h) of the Disclosure Schedule has signed a non-disclosure agreement and copies of all such non-disclosure agreements have been delivered to the Purchaser, and, except as disclosed in the Disclosure Schedule, the Vendor is not aware of any breaches of any of such non-disclosure agreements. The employment by the Vendor of any of such employees does not violate any non-disclosure or non-competition agreement between an employee and a third party.
(i) Litigation. There are no actions, suits or proceedings (whether or not purportedly on behalf of the Vendor) pending or, to the knowledge of the Vendor, threatened against or adversely affecting, or which could adversely affect, or which relate directly or indirectly to, the Software except such actions, suits or proceedings as are disclosed in section 3.1(i) of the Disclosure Schedule.
(j) No Encumbrances. The Vendor is the owner of the Software with a good and marketable title, free and clear of all Liens and any other rights of others.
(k) No Royalties. Except as disclosed in section 3.1(k) of the Disclosure Schedule, the Vendor is not a party to or bound by any contract or commitment to pay any royalty, licence fee or management fee pertaining to the Software.
(l) No Other Information. None of the Warrantors has information or knowledge of any facts relating to the Software which, if known to the Purchaser might reasonably be expected to deter the Purchaser from completing the transactions contemplated hereby and no information relating to the Software which is known, or which on reasonable inquiry ought to be known and which would materially affect a purchase for value of the Software have been withheld from the Purchaser.
3.2 Survival of Representations, Warranties and Covenants of the Warrantors. The representations and warranties of the Warrantors set forth in section 3.1 will survive the completion of the transactions contemplated by this Agreement and, notwithstanding such completion, will continue in full force and effect for the benefit of the Purchaser. No investigations made by or on behalf of the Purchaser at any time, nor any disclosure of information made to the Purchaser (except as set out in this Agreement and the Schedules hereto), shall have the effect of waiving, diminishing the scope or otherwise affecting any representation or warranty made by a Warrantor. The covenants of the Warrantors set forth in this Agreement will survive the completion of the sale and purchase of the Software herein provided for and, notwithstanding such completion, will continue in full force and effect for the benefit of the Purchaser in accordance with the terms thereof.
ARTICLE 4 –
4.1 Covenants of the Principal and Vendor.
(a) In addition to the other indemnities provided by the Warrantors herein, the Warrantors, jointly and severally, shall indemnify, save, hold harmless, discharge and release the Purchaser from and against any and all Claims arising from or based on:
(i) any inaccuracy in any representation or warranty made by the Warrantors and/or the Vendor in this Agreement or any other agreement to be entered into in connection with the transactions contemplated hereby or any certificates delivered or to be delivered by or on behalf of the Warrantors and/or the Vendor pursuant to the terms of this Agreement (collectively, the “Vendor’s Documents”); or
(ii) any breach of any covenant of any Warrantor set forth in this Agreement or in the Vendor’s Documents.
(b) The Warrantors will ensure that the representations and warranties of the Warrantors are true and correct at the Time of Closing and that the conditions of closing for the benefit of the Purchaser have been performed or complied with by the Time of Closing.
4.2 Notice; Right to Defend. The Purchaser shall give prompt written notice to the Warrantors of the assertion or commencement of any Claim in respect of which indemnity is or may be sought hereunder, other than Claims in which the parties are litigating claims against each other. The Warrantors shall have the right and obligation to assume the defence or settlement of any third-party Claim in respect of which it is obligated to provide indemnity hereunder; provided, however, that the Warrantors shall not settle or compromise any such Claim without the Purchaser’s prior written consent thereto, unless the terms of such settlement or compromise discharge and release the Purchaser from any and all liabilities and obligations thereunder. Notwithstanding the foregoing: (i) the Purchaser at all times shall have the right, at its option and expense, to participate fully in the defence or settlement of such Claim; and (ii) if the Warrantors do not proceed diligently to defend or settle such Claim within 10 days after its receipt of notice of the assertion or commencement thereof, then (a) the Purchaser shall have the right, but not the obligation, to undertake the defence or settlement of such Claim for the account and at the risk of the Warrantors, and (b) the Warrantors shall be bound by any defence or settlement that the Purchaser may make as to such Claim.
4.3 Bulk Sales Legislation. The parties hereto believe that, assuming compliance with this Agreement by both the Vendor and the Purchaser, it is unnecessary to comply with the bulk sales provisions of the Social Service Tax Act(_______________________). In the event that any claim is subsequently made with respect to such legislation, the Warrantors agree, jointly and severally, to indemnify and save the Purchaser harmless in principal, interest and costs, including reasonable legal fees, against and from any such claim or expenses.
ARTICLE 5 –
5.1 Conditions for the Benefit of the Purchaser. The sale by the Vendor and the purchase by the Purchaser of the Software is subject to the following conditions, which are for the exclusive benefit of the Purchaser and which are to be performed or complied with at or prior to the Time of Closing:
(a) the representations and warranties of the Warrantors set forth in section 3.1 will be true and correct at the Time of Closing with the same force and effect as if made at and as of such time;
(b) the Vendor will have performed or complied with all of the terms, covenants and conditions of this Agreement to be performed or complied with by the Vendor at or prior to the Time of Closing;
(c) the Purchaser will be furnished with such certificates or other instruments (including, without limiting the generality of the foregoing, a certified copy of resolutions of the shareholders and board of directors of the Vendor approving the sale of the Software to the Purchaser, instruments of conveyance with respect to the Software, etc.) of the Vendor or of officers of the Vendor as the Purchaser or the Purchaser’s counsel may reasonably think necessary in order to establish that the terms, covenants and conditions contained in this Agreement to have been performed or complied with by the Vendor at or prior to the Time of Closing have been performed or complied with and that the representations and warranties of the Warrantors herein given are true and correct at the Time of Closing;
(d) there will have been obtained from all appropriate federal, provincial, municipal or other governmental or administrative bodies such approvals or consents as are required to permit the change of ownership of the Software contemplated hereby;
(e) the Vendor shall have obtained from the parties to all contracts, engagements, commitments or licenses referred to in the Disclosure Schedule or otherwise, where required, the consent to the assignment of the benefit of such contracts, engagements, commitments or licenses to the Purchaser;
(f) no action or proceeding will be pending or threatened by any person, government, governmental authority, regulatory body or agency to enjoin, restrict or prohibit the sale and purchase of the Software contemplated hereby;
(g) no material damage by data loss, virus or other hazard to the Software will have occurred from the date hereof to the Time of Closing and no material defect in the Software will have been discovered from the date hereof to the Time of Closing;
(h) all necessary steps and proceedings will have been taken to permit the Software to be duly and regularly transferred to and registered in the name of the Purchaser;
(i) on or before the Time of Closing, the Purchaser shall be fully satisfied, in its sole discretion, with the results of its due diligence inquiries;
(j) the Vendor will have delivered to the Purchaser a favourable opinion of the Vendor’s counsel substantially in the form attached hereto as Schedule D;
(k) the Vendor will have delivered to the Purchaser all copies of the Software within their possession or control and a certificate signed by the President of the Vendor attesting that the Vendor no longer retains any copies of the Software; and
5.2 Conditions for the Benefit of the Vendor. The sale by the Vendor and the purchase by the Purchaser of the Software is subject to the following conditions, which are for the exclusive benefit of the Vendor and which are to be performed or complied with at or prior to the Time of Closing:
(a) the Purchaser will have performed or complied with all of the terms, covenants and conditions of this Agreement to be performed or complied with by the Purchaser at or prior to the Time of Closing; and
(b) the Vendor will be furnished with such certificates or other instruments of the Purchaser or of officers of the Purchaser as the Vendor or the Vendor’s counsel may reasonably think necessary in order to establish that the terms, covenants and conditions contained in this Agreement to have been performed or complied with by the Purchaser at or prior to the Time of Closing have been performed or complied with and that the representations and warranties of the Purchaser herein given are true and correct at the Time of Closing.
ARTICLE 6 –
6.1 Non-Competition. In consideration of the completion of the transaction contemplated hereunder, each Warrantor agrees that it will not, directly or indirectly, or through any person or entity for a period of five (5) years following the Closing Date in Canada or the United States, or any where else where the Purchaser carries on its business at the Time of Closing:
(a) own, manage, operate, join, control, finance or participate in the ownership (exclusive of holding 5% or less of the shares of a publicly traded company with which the Warrantor is otherwise not associated), management, operation, control or financing of any business or enterprise that develops or markets products or services competitive with the Software; or
(b) develop, sell, offer or provide products or services that are competitive with the Software.
6.2 Non-Disclosure. Each Warrantor acknowledges and agrees that the Software and any and all data, trade secrets, documents or other information related thereto is confidential information. Each Warrantor covenants and agrees that he or it will not, directly or indirectly, disclose, divulge or communicate orally, in writing or otherwise any such confidential information to any other person, firm or corporation. Each Warrantor acknowledges that a breach of this Section 6.2 after the Time of Closing may result in irreparable and immediate harm to the Purchaser and agrees that in the event of such breach, the Purchaser, in addition to any other right or relief, may be entitled to equitable relief by way of temporary or permanent injunction and to seek such other relief that any court may deem just and proper.
ARTICLE 7 –
7.1 Further Assurances. Each Warrantor and the Purchaser will from time to time execute and deliver all such further documents and instruments and do all acts and things as the other party may, either before or after the Closing Date, reasonably require to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement.
7.2 Time of the Essence. Time is of the essence of this Agreement.
7.3 Commissions. The Warrantors, jointly and severally, will indemnify and save harmless the Purchaser from and against all Claims for any commission or other remuneration payable or alleged to be payable to any person in respect of the sale and purchase of the Software, whether such person purports to act or have acted for any Warrantor or the Purchaser in connection with the sale of the Software.
7.4 Benefit of the Agreement. This Agreement will enure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the parties hereto.
7.5 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the parties other than as expressly set forth in this Agreement.
7.6 Amendments and Waivers. No amendment to this Agreement will be valid or binding unless set forth in writing and duly executed by both of the parties hereto. No waiver of any breach of any provision of this Agreement will be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided, will be limited to the specific breach waived.
7.7 Assignment. This Agreement may not be assigned by the Vendor without the written consent of the Purchaser but may be assigned by the Purchaser without the consent of the other parties to an associated nominee of the Purchaser provided that such associated nominee enters into a written agreement with the other parties to be bound by the provisions of this Agreement in all respects and to the same extent as the Purchaser are bound.
7.8 Notices. Any demand, notice or other communication to be given in connection with this Agreement will be given in writing and will be given by personal delivery, by registered mail or by electronic means of communication addressed to the recipient as follows:
To the Purchaser: __________________________
To the Vendor: __________________________
To the Principal: __________________________
or to such other address, individual or electronic communication number as may be designated by notice given by either party to the other. Any demand, notice or other communication given by personal delivery will be conclusively deemed to have been given on the day of actual delivery thereof and, if given by registered mail, on the fifth Business Day following the deposit thereof in the mail and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the Business Day during which such normal business hours next occur if not given during such hours on any day. If the party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such demand, notice or other communication may not be mailed but must be given by personal delivery or by electronic communication.
7.9 Counterparts. This Agreement may be executed by the parties in separate counterparts each of which when so executed and delivered (by facsimile transmission or otherwise) shall be an original, but all such counterparts shall together constitute one and the same instrument.
7.10 Announcements. All announcements, public notices and any other communication regarding this Agreement and the transactions contemplated hereby to be made by the Vendor must be approved in writing in advance by the Purchaser.
7.11 Governing Law. This Agreement is governed by and will be construed in accordance with the laws of the Province of _______________________ and the laws of Canada applicable therein.
IN WITNESS WHEREOF the parties have executed this Agreement.