EXHIBIT 2.1
Form of Sale of Assets Agreement
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SALE OF ASSETS AGREEMENT
THIS SALE OF ASSETS AGREEMENT (this "Agreement") made and entered into as
of this 12 day of February, 2001 by and among ▇▇▇▇▇▇ Technologies Ltd., a
company organized and registered under the laws of the State of Israel, having
its principal place of business at of ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ Hantsis, the founders and executive
officers of ▇▇▇▇▇▇ (collectively, the "Executives"), Paradigm Advanced
Technologies, Inc., a Delaware corporation, having its principal place of
business at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇-▇▇▇
("Paradigm") and 1462492 Ontario Inc., a company organized and registered under
the laws of the Province of Ontario, Canada and a wholly-owned subsidiary of
Paradigm, having its registered office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇-▇▇▇ ("Paradigm Sub").
W I T N E S S E T H
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WHEREAS, ▇▇▇▇▇▇ is engaged in the development, manufacturing and
marketing of interactive navigational and fleet management devices, including,
inter alia, a map compression format, and owns certain intellectual property
rights pertaining thereto; and
WHEREAS, Paradigm, a public company listed on the Nasdaq OTCBB market,
owns certain licensing rights to a broad-based wireless location apparatus and
is engaged, both directly and indirectly, in the development of a specific
application for the location of people and assets; and
WHEREAS, Paradigm Sub desires to acquire and assume from ▇▇▇▇▇▇, and
▇▇▇▇▇▇ desires to sell and transfer to Paradigm Sub, all of the Purchased Assets
(as defined below) on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, and conditions contained herein, and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Preamble; Definitions
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1.1 The preamble of, and all exhibits and schedules attached to, this
Agreement, comprise an integral part hereof.
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1.2 The paragraph headings are included solely for the sake of convenience
and shall not serve in any way for interpretive purposes.
1.3 Definitions
In this Agreement, the following terms shall have the meanings
ascribed to them below:
(a) "Executive" is defined in the preamble to this Agreement.
(b) "Inventions" means any and all inventions, discoveries, improvements,
trade secrets, formulas, techniques, processes and know-how, whether or not
patentable and whether or not reduced to practice, conceived, developed,
invented or learned by ▇▇▇▇▇▇, its shareholders, directors, officers, employees
or service providers, which either relate to the Technology (as defined below),
or result from the business, work, research or investigations of ▇▇▇▇▇▇.
(c) "Paradigm Group" means Paradigm and entities which are under the
control of Paradigm or are under common control with Paradigm, whether now or
hereafter existing.
(d) "Patents" means the patents, whether registered or pending, listed on
Schedule 1.3(d) hereto.
(e) "Proprietary Rights" means any and all proprietary rights relating to
the Technology (as defined below) or the Inventions, whether now or hereafter
existing, including, without limitation, any and all patents, copyrights,
trademarks, trade names, service marks, design marks, trade secrets and other
proprietary rights relating to the Technology, all whether perfected or
imperfected, registered or unregistered.
(f) "Purchased Assets" means any and all of ▇▇▇▇▇▇'▇ assets, including but
not limited to, the Technology, Inventions, Patents, any and all Proprietary
Rights and intellectual property pertaining thereto, and the Tangible Assets (as
defined below).
(g) "Tangible Assets" means the assets and equipment listed on Schedule
1.3(g).
(h) "Technology" means any and all technology and know-how relating to
interactive navigational and fleet management devices, Global Positioning System
("GPS") devices, and data communication and handheld devices, including, inter
alia, a map compression developed by ▇▇▇▇▇▇ or on its behalf, including any and
all prototypes, products, product portfolios, components, patents and inventions
(whether patentable or not), mask works, ideas, designs, procedures, processes,
formulas, source and object codes, data, software programs, including all
know-how, hardware, trade secrets, copyrights, documentation, reports, and other
data or materials, works of
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authorship, know-how, technologies, improvements, discoveries, developments,
designs, and all techniques, upgrades and configurations relating thereto.
2. Representations and Warranties of ▇▇▇▇▇▇
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▇▇▇▇▇▇ and each of the Executives, jointly and severally, represents and
warrants to Paradigm and Paradigm Sub as follows:
2.1 ▇▇▇▇▇▇ acknowledges and understands that (a) Paradigm and Paradigm Sub
are entering into this Agreement in reliance upon and on the basis of ▇▇▇▇▇▇'▇
representations, warranties and undertakings set forth in this Agreement; and
(b) should any of the warranties and/or representations and/or undertakings of
▇▇▇▇▇▇ be untrue, misleading or inaccurate, Paradigm and Paradigm Sub shall have
the rights and remedies set forth in Section 6 below, which rights and remedies
shall not derogate from and shall be in addition to any and all other rights
and/or remedies available to Paradigm and Paradigm Sub under any applicable law
or this agreement.
2.2 (a) Except as set forth on Schedule 2.2(a):
(i) ▇▇▇▇▇▇ owns, free and clear of all claims, liens, mortgages,
pledges, security interests and other encumbrances of any nature whatsoever
(collectively, "Liens"), or has a valid right to use, all of the Purchased
Assets;
(ii) there is no pending or threatened claim, suit, arbitration or
other adversarial proceeding before any court, agency, arbitral tribunal, or
registration authority in any jurisdiction (x) involving the Technology or the
Inventions or (y) alleging that the use of the Technology and/or the Inventions
infringes upon, violates or constitutes the unauthorized use of the intellectual
property rights of any third party or challenging the ownership, use, validity,
enforceability or registrability of any part of the Technology; and
(iii) ▇▇▇▇▇▇ has taken reasonable measures to protect the
confidentiality of the Technology and Inventions, and no material part of the
Technology and Inventions has been disclosed or authorized to be disclosed to
any third party other than pursuant to a non-disclosure agreement, and no party
to any such non-disclosure agreement is in breach or default thereof.
(b) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of ▇▇▇▇▇▇'▇ rights to own or use any of the
Technology (other than the sale of the Purchased Assets to Paradigm Sub), nor
will it require the consent of any Governmental Authority (as defined in Section
2.5(b)) or third party in respect of any such Technology.
(c) Any and all ideas and/or intellectual property and/or Proprietary
Rights and inventions developed and/or made by the Executives, employees or the
founders of ▇▇▇▇▇▇ in connection with the Technology, were invented and/or
developed and/or made for the sole and absolute benefit of ▇▇▇▇▇▇ and belong
exclusively to ▇▇▇▇▇▇.
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2.3 Organization. ▇▇▇▇▇▇ is a corporation duly organized and validly
existing under the laws of the State of Israel.
2.4 Authorization; Validity of Agreement. ▇▇▇▇▇▇ has the requisite
corporate power and authority to execute, deliver and perform this Agreement and
each of the other agreements, instruments and documents executed or to be
executed and delivered by ▇▇▇▇▇▇ pursuant to this Agreement (collectively with
this Agreement, the "▇▇▇▇▇▇ Transaction Documents"). ▇▇▇▇▇▇ has the requisite
corporate power and authority to assume and perform its obligations under the
▇▇▇▇▇▇ Transaction Documents and to consummate the transactions contemplated
thereby. Each of this Agreement and the other ▇▇▇▇▇▇ Transaction Documents has
been duly executed, authorized and delivered by ▇▇▇▇▇▇ and is a valid and
binding obligation of ▇▇▇▇▇▇, enforceable against it in accordance with its
terms. The execution, delivery and performance by ▇▇▇▇▇▇ of the ▇▇▇▇▇▇
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the board of directors and
shareholders of ▇▇▇▇▇▇ and no other corporate proceedings are necessary to
authorize the execution, delivery and performance of the ▇▇▇▇▇▇ Transaction
Documents and the consummation of the transactions contemplated thereby.
2.5 No Violations; Consents and Approvals
(a) The execution, delivery and performance of this Agreement and of the
other ▇▇▇▇▇▇ Transaction Documents by ▇▇▇▇▇▇ do not, and the consummation by
▇▇▇▇▇▇ of the transactions contemplated hereby and thereby will not: (i) violate
any provision of the memorandum and articles of associations of ▇▇▇▇▇▇, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, license, lease, option, contract, undertaking, understanding,
covenant, agreement or other instrument or document (each, a "Contract") to
which ▇▇▇▇▇▇ is a party or by which ▇▇▇▇▇▇ or any of the Purchased Assets may be
bound or otherwise subject, except for such items referred to as Required
Consents, as hereinafter defined and set forth on Schedule 2.5(b), or (iii)
violate any laws, statutes, ordinances, orders, codes, rules, regulations,
policies, guidance documents, writs, judgments, decrees, injunctions or
agreements of any Governmental Entity (as hereinafter defined) (collectively,
"Laws") applicable to ▇▇▇▇▇▇ or any of the Purchased Assets.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any legislative or executive agency or department or
other regulatory service, authority or agency or any court, arbitration panel or
other tribunal or judicial authority of any jurisdiction, political entity,
body, organization, subdivision or branch (each, a "Governmental Entity") or any
other individual or other entity (a "Person") is required in connection with the
execution, delivery and performance of this Agreement or the other ▇▇▇▇▇▇
Transaction Documents by ▇▇▇▇▇▇ or the consummation by ▇▇▇▇▇▇ of the
transactions contemplated hereby and thereby.
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2.6 Litigation. Except as disclosed on Schedule 2.6, there is no claim,
suit, action, investigation, arbitration, alternative dispute resolution
proceeding or other proceeding (each, a "Proceeding") pending, nor is there any
investigation or Proceeding threatened, that involves or affects the Purchased
Assets or which in any material way relates to the transactions contemplated
hereby, by or before any Governmental Entity, court, arbitration panel or any
other Person.
2.7 Investment Undertaking.
(a) ▇▇▇▇▇▇ acknowledges that the Paradigm Shares (as defined below) will
be "restricted securities" within the meaning of Rule 144 ("Rule 144") of the
General Rules and Regulations under the Securities Act of 1933, as amended (the
"1933 Act"). ▇▇▇▇▇▇ is acquiring such shares for its own account and not with a
view to the distribution of such shares within the meaning of Section 2(11) of
the 1933 Act. ▇▇▇▇▇▇ understands that, until registered as described below, such
shares may not be disposed of except in accordance with the terms of Rule 144.
▇▇▇▇▇▇ understands that it must bear the economic risk of the investment in the
Paradigm Shares indefinitely because, other than pursuant to the provisions of
Section 5.3(a), such shares may not be sold, hypothecated or otherwise disposed
of unless registered under the 1933 Act and applicable state securities laws or
an exemption from such registration is available.
(b) ▇▇▇▇▇▇ is (i) an "accredited investor" as that term is defined under
Rule 501 of the 1933 Act or (ii) a sophisticated investor who either (x) has
such knowledge and experience in financial and business matters such that it or
he is capable of evaluating the merits and risks of the investment in the
securities being acquired hereunder, or (y) has obtained independent
professional financial advice sufficient to enable him or it to evaluate the
merits and risks of the investment in the securities being acquired hereunder.
2.8 No Misstatements or Omissions. No representation or warranty by ▇▇▇▇▇▇
contained in this Agreement and no statement contained in any certificate, list,
schedule, exhibit or other instrument specified or referred to in this
Agreement, whether heretofore furnished to Paradigm or Paradigm Sub or hereafter
furnished to Paradigm or Paradigm Sub pursuant to this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
3. Representations and Warranties of Paradigm Sub and Paradigm
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Each of Paradigm Sub and Paradigm hereby represents and warrants to ▇▇▇▇▇▇
as follows:
3.1 Organization. Each of Paradigm and Paradigm Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
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3.2 Authorization; Validity of Agreement. Each of Paradigm and Paradigm
Sub has the requisite corporate power and authority to execute, deliver and
perform this Agreement and each of the other agreements, instruments, documents
and certificates to be executed and delivered by it pursuant to this Agreement
(collectively with this Agreement, the "Paradigm Transaction Documents" and
"Paradigm Sub Transaction Documents", respectively). Each of Paradigm and
Paradigm Sub has the requisite corporate power and authority to assume and
perform its obligations under the Paradigm Transaction Documents and Paradigm
Sub Transaction Documents, as applicable, and to consummate the transactions
contemplated thereby. Each of this Agreement and the other Paradigm Transaction
Documents and Paradigm Sub Transaction Documents has been duly executed,
authorized and delivered by Paradigm and Paradigm Sub, as applicable, and is a
valid and binding obligation thereof, enforceable against Paradigm or Paradigm
Sub, as applicable, accordance with its terms. The execution, delivery and
performance by each of Paradigm and Paradigm Sub of the Paradigm Transaction
Documents and the Paradigm Sub Transaction Documents, as applicable, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by their boards of directors, and no other corporate
proceedings on the part of Paradigm or Paradigm Sub, as applicable, are
necessary to authorize the execution, delivery and performance of the Paradigm
Transaction Documents and the Paradigm Sub Transaction Documents, as applicable,
and the consummation of the transactions contemplated hereby and thereby.
3.3 No Violations; Consents and Approvals.
(a) The execution, delivery and performance of this Agreement, the
Paradigm Transaction Documents and the Paradigm Sub Transaction Documents, by
Paradigm and/or Paradigm Sub, as applicable, do not, and the consummation by
them of the transactions contemplated hereby and thereby will not, (i) violate
any provision of the certificate of incorporation or bylaws of Paradigm or
Paradigm Sub, as applicable, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any Contract to which Paradigm or
Paradigm Sub, as the case may be, is a party or by which Paradigm or Paradigm
Sub, as the case may be, or any of their properties or assets may be bound or
otherwise subject, or (iii) violate any Law applicable to Paradigm or Paradigm
Sub, as the case may be, or any of their properties or assets, except, in the
case of (ii) and (iii), those that would not have a material adverse effect on
the business, operations, properties, assets, liabilities, commitments,
earnings, financial condition or prospects of Paradigm or Paradigm Sub, as the
case may be.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity or Person is required in
connection with the execution, delivery and performance of the Paradigm
Transaction Documents by Paradigm, the Paradigm Sub Transaction Documents by
Paradigm Sub, or the consummation by them of the transactions contemplated
hereby and thereby, other than the filing of a registration statement as
contemplated in Section 5.3 below.
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4. Purchase and Sale of the Purchased Assets
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▇▇▇▇▇▇ hereby sells, transfers and conveys to Paradigm Sub, and Paradigm
Sub hereby purchases, acquires and accepts all of rights, title to and interest
in the Purchased Assets.
5. The Consideration and Transfer of the Purchased Assets
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In consideration for the sale of the Purchased Assets to Paradigm Sub,
Paradigm is hereby issuing to ▇▇▇▇▇ ▇▇▇▇▇ & Co. Trust Company Ltd., as escrow
agent for ▇▇▇▇▇▇:
5.1 (a) 3,000,000 (three million) shares of common stock of Paradigm, par
value $.0001 per share, none of which has been registered with the Securities
and Exchange Commission ("SEC") as of the date hereof (the "Acquisition
Shares").
(b) Upon the effectiveness of the Initial Registration Statement (as
defined in Section 5.3(b)), and provided that on such date the Aggregate Fair
Market Value (as defined below) of the Paradigm Shares that may be resold by
▇▇▇▇▇▇ in accordance with the terms of Section 5.3(b) (such shares, the
"Resalable Shares") does not exceed the product of (i) $1.66 and (ii) the number
of Resalable Shares (such product, the "Guaranteed Return"), Paradigm shall
issue to ▇▇▇▇▇▇ an additional number of shares of common stock of Paradigm (the
"Additional Shares") whose Aggregate Fair Market Value, together with the
Aggregate Fair Market Value of the Resalable Shares, will equal the Guaranteed
Return; provided, however, that in no event shall the number of Additional
Shares exceed the product of (i) 2,000,000 (two million) and (ii) a fraction,
the numerator of which shall be the number of Resalable Shares and the
denominator of which shall be 3,000,000 (three million) (subject to appropriate
adjustments for any stock dividend, subdivision, combination, reclassification
or similar event affecting the Acquisition Shares).
The foregoing computation shall only be in effect until an aggregate of
3,000,000 Acquisition Shares shall be available for resale under Section 5.3(b),
and thereafter no Additional Shares will be issued.
As used herein, the term "Aggregate Fair Market Value" means the average
closing bid for a share of Paradigm's common stock over the last three trading
days immediately prior to the date on which the Resalable Shares may be sold by
▇▇▇▇▇▇, multiplied by the number of Resalable Shares.
(c) The procedure described in paragraph (b) will be repeated on the first
day of each 30-day period throughout the Lock Up Period (as defined in Section
5.3(b)), and the term "Resalable Shares" will relate in each such 30-day period
to the number of Paradigm Shares that may be resold by ▇▇▇▇▇▇ during each such
30-day period in accordance with the terms of Section 5.3(b).
5.2 (a) A warrant (the "Warrant"), in substantially the form attached
hereto as
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Exhibit A, to purchase shares of Paradigm Common Stock (collectively, the
"Warrant Shares") as follows (all subject to the terms, conditions and
restrictions included in the Warrant):
(i) Up to 2,000,000 (two million) shares of Paradigm common stock at
an exercise price of $1.00 (one United States dollar) per share, which may be
purchased immediately upon receipt by the Paradigm Group of $1,000,000 (one
million United States dollars) in revenues from the commercialization of the
Purchased Assets;
(ii) Up to an additional 1,000,000 (one million) shares of Paradigm
common stock at an exercise price of $2.00 (two United States dollars) per
share, which may be purchased immediately upon receipt by the Paradigm Group of
$2,000,000 (two million United States dollars) in revenues from the
commercialization of the Purchased Assets;
(iii) Up to an additional 1,000,000 (one million) shares of Paradigm
common stock at an exercise price of $3.00 (three United States dollars) per
share, which may be purchased immediately upon receipt by the Paradigm Group of
$3,000,000 (three million United States dollars) in revenues from the
commercialization of the Purchased Assets;
(iv) Up to an additional 3,000,000 (three million) shares of Paradigm
common stock at an exercise price of $6.00 (six United States dollars) per
share, which may be purchased immediately upon receipt by the Paradigm Group of
$4,000,000 (four million United States dollars) in revenues from the
commercialization of the Purchased Assets; and
(v) Up to 3,000,000 (three million) shares of Paradigm common stock at
an exercise price of to $9.00 (nine United States dollars) per share, which may
be purchased immediately upon receipt by the Paradigm Group of $5,000,000 (five
million United States dollars) in revenues from the commercialization of the
Purchased Assets.
(b) The number of Warrant Shares set forth in paragraphs (i) through (v)
of sub-section 5(a) shall be subject to appropriate adjustments in the event of
a stock dividend, subdivision, combination or reclassification or any similar
event affecting the Paradigm Shares.
(c) Commencing on the date hereof and until the accomplishment of the
financial milestones set forth in Section 5(a)(i) through (v), ▇▇▇▇▇▇ and each
of its successors shall have the right to receive (i) a copy of the audited
financial statements of Paradigm as filed with the SEC on Form 10-K, and (ii) a
copy of the unaudited financial statements of Paradigm as filed with the SEC on
Form 10-Q along with a certificate of the Chief Financial Officer of Paradigm
certifying the revenues from the commercialization of the Purchased Assets.
(d) Paradigm shall notify ▇▇▇▇▇▇ of the accomplishment by Paradigm of each
of the financial milestones set forth in Section 5.2(a)(i) through (v), and will
advise ▇▇▇▇▇▇ of its eligibility to exercise the Warrant in accordance with its
terms.
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(e) Any dispute with respect to the accomplishment by Paradigm of any of
the financial milestones set forth in Section 5.2(a)(i) through (v) shall be
resolved exclusively by a singular arbitrator, whose decision shall be final and
binding on all parties hereto. The arbitrator shall be mutually selected by the
parties hereto from among partners of one of the "Big Five" accounting firms.
5.3 (a) The parties acknowledge that the Acquisition Shares, the
Additional Shares and the shares that may be issued as a result of the exercise
of the Warrant (collectively, the "Paradigm Shares") may not be resold unless an
exemption from registration thereof under the 1933 Act exists or a registration
statement covering the Paradigm Shares is filed with the SEC and declared
effective. Paradigm undertakes to include the Paradigm Shares in the first
registration statement on form SB-2 or S-3 filed with the SEC subsequent to the
issuance of the Paradigm Shares, or any part thereof, and the parties hereto
agree that in any event all Paradigm Shares must be included in such
registration statement in preference or with the same priority as that of shares
being originally issued by Paradigm. Paradigm hereby undertakes to use its best
efforts to obtain the registration of the Paradigm Shares for resale no later
than 12 months after the date hereof, and to use its best reasonable efforts to
seek the requisite approvals for such registration.
(b) Lock-Up Agreement
▇▇▇▇▇▇ agrees, with respect to the first registration statement pursuant
to Section 5.3(a) in which any Paradigm Shares are included (the "Initial
Registration Statement") and for a period of 10 consecutive months commencing on
the date on which the Initial Registration Statement becomes effective (the
"Lock Up Period"), that it will not, without the prior written consent of
Paradigm, directly or indirectly, (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant for the sale of, or otherwise dispose
of or transfer (each of the foregoing, a "Transfer") any Paradigm Shares
included in such Initial Registration Statement, or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of such Paradigm
Shares, whether any such swap or transaction is to be settled by delivery of
Paradigm Shares or other securities, in cash or otherwise; provided, however,
that commencing on the date of effectiveness of the Initial Registration
Statement, the foregoing restrictions shall not apply to a Transfer by ▇▇▇▇▇▇ of
Paradigm Shares registered pursuant to a registration statement in a number per
each 30-day period during the Lock Up Period that shall not exceed the greater
of (i) 10% of the Paradigm Shares, and (ii) 20% of the weekly reported volume of
trading in shares of Paradigm common stock on the OTCBB during the week
immediately preceding such Transfer by ▇▇▇▇▇▇. Following the lapse of the Lock
Up Period, the foregoing restrictions shall expire and have no further force of
effect.
(c) Permitted Transfer. The restrictions set forth in Section 5.3(b) shall
not apply to the Transfer of Paradigm Shares to an entity that consents in
writing to be subject to and bound by such restrictions.
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(d) Stop Order. Subject to the exceptions set forth in this Section 5.3(b)
and (c), ▇▇▇▇▇▇ consents to Paradigm's making a notation on its records and
giving instructions to any transfer agent of its common stock in order to
implement the restrictions in this Section 5.3.
5.4 Simultaneously herewith, ▇▇▇▇▇▇ is executing and delivering to
Paradigm and Paradigm Sub all documentation necessary to authorize and effect
the immediate and unconditional transfer of the Purchased Assets to Paradigm
Sub, including but not limited to the deed of assignment with respect to the
full title, rights and interest of ▇▇▇▇▇▇ in and to the Purchased Assets (the
"Deed of Assignment") in substantially the form attached hereto as Exhibit B. In
addition, ▇▇▇▇▇▇ is hereby delivering to Paradigm and Paradigm Sub all
documentation necessary to authorize and effect the transactions contemplated
hereby, including without limitation, a true and correct copy of resolutions of
▇▇▇▇▇▇'▇ board of directors and shareholders authorizing ▇▇▇▇▇▇ to enter into
this Agreement and authorizing the delivery, in accordance with the terms of
this Agreement, of the Deed of Assignment to Paradigm and Paradigm Sub against
receipt of the Acquisition Shares and the Warrant.
5.5 Paradigm is hereby delivering to ▇▇▇▇▇▇ all documentation necessary to
authorize and effect the transactions contemplated hereby, including without
limitation, a true and correct copy of resolutions of the board of directors of
each of Paradigm and Paradigm Sub authorizing them to enter into this Agreement,
and, with respect to Paradigm, the issuance and delivery, in accordance with the
terms of this Agreement, of the Acquisition Shares, and Additional Shares (if
applicable) and the Warrant to ▇▇▇▇▇▇ against receipt of the Deed of Assignment.
5.6 Paradigm is hereby delivering to ▇▇▇▇▇▇ (i) one or more stock
certificates representing the Acquisition Shares and (ii) the Warrant.
6. Indemnification
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6.1 ▇▇▇▇▇▇ and the Executives, jointly and severally, shall indemnify and
defend Paradigm, Paradigm Sub and their representatives (each, a "Paradigm
Indemnitee") against, and hold each Paradigm Indemnitee harmless from, any
damages (including incidental and consequential damages), claims, suits,
actions, judgments, assessments, loss, liability, obligation, deficiency, tax,
cost or expense including, without limitation, interest, penalties, reasonable
attorneys' and consultants' fees and disbursements (collectively, "Damages")
that the Paradigm Indemnitee may suffer or incur, arising from, related to or in
connection with any of the following:
(a) any breach of any representation or warranty made by ▇▇▇▇▇▇ and/or the
Executives contained in this Agreement or in any ▇▇▇▇▇▇ Transaction Document in
respect of any claim made based upon facts alleged that would constitute any
such breach;
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(b) the failure of ▇▇▇▇▇▇ to perform or to comply with any covenant,
obligation or condition required to be performed or complied with by ▇▇▇▇▇▇
contained in this Agreement or in any ▇▇▇▇▇▇ Transaction Document;
(c) any claim filed against Paradigm or Paradigm Sub by a third party
relating to the Purchased Assets.
6.2 Notwithstanding section 6.1 above, (i) the Paradigm Group shall not be
entitled to be indemnified hereunder unless the Damages exceed US $50,000 (in
the aggregate); (ii) the aggregate amount payable to the Paradigm Group pursuant
to this section (the "Indemnification Amount") shall not exceed the aggregate of
(A) the Aggregate Fair Market Value of the Acquisition Shares, any Additional
Shares issued to ▇▇▇▇▇▇ and any shares of Paradigm common stock issued upon the
exercise of the Warrant which have not yet been sold, all as at the time of
Paradigm's request for indemnification under this Section 6, and (B) if the
Paradigm Shares or any part thereof are sold by ▇▇▇▇▇▇ and/or a permitted
assignee thereof and/or on its behalf, the actual proceeds of such sale; and
(iii) the Paradigm Group shall not be entitled to make a claim for
indemnification pursuant to this section after 12 months have elapsed from the
date hereof.
6.3 In order to make available funds to cover claims by Paradigm pursuant
to this Section 6, ▇▇▇▇▇▇ shall, through the date that is the later of (i) 12
months following the date hereof and (ii) the date on which all claims of
Paradigm pursuant to this Section 6 (if any) shall have been settled, (A)
maintain in its bank account, and shall not distribute to its shareholders,
proceeds from the Transfer of any Warrant Shares, and (B) retain all Warrant
Shares not yet Transferred.
6.4 In addition to the foregoing, it is hereby agreed that (i) the
Purchased Assets shall not include, (ii) Paradigm and/or Paradigm Sub are not
assuming, and (iii) ▇▇▇▇▇▇ shall remain responsible for and shall promptly pay,
perform and discharge, all of the liabilities and obligations of ▇▇▇▇▇▇ such
that Paradigm and Paradigm Sub will incur no liability in connection therewith,
and ▇▇▇▇▇▇ and the Executives shall indemnify each Paradigm Indemnitee with
respect to and shall hold such Paradigm Indemnitee harmless from and against all
such liabilities.
6.5 In addition to any other remedy provided by Law or equity, injunctive
relief may be obtained to enjoin the breach, or threatened breach, of any
provision of this Agreement and each party shall be entitled to the specific
performance by the others of their obligations hereunder. All remedies, either
under this Agreement, by Law or as may otherwise be afforded to the parties, as
the case may be, shall be cumulative.
7. Miscellaneous
-------------
7.1 Costs. Each party shall bear its own costs related to the negotiation,
examination, preparation of agreements and other documents and any other matter
relating to this Agreement.
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7.2 Remedies Cumulative. Each right, power and remedy provided for herein
or now or hereafter existing at Law, in equity or otherwise, shall be
cumulative, and the exercise or the forbearance of exercise by any party of one
or more of such rights, powers or remedies shall not preclude the simultaneous
or later exercise by such party of any or all of such other rights, powers or
remedies.
7.3 Severability. If any provision of this Agreement, or the application
thereof to any person or circumstance, shall, for any reason or to any extent,
be invalid or unenforceable, such invalidity or unenforceability shall not in
any manner affect or render invalid or unenforceable the remainder of this
Agreement and the application of that provision to other persons or
circumstances shall not be affected but rather shall be enforced to the extent
permitted by Law.
In the event of the invalidity or unenforceability of any provisions of
this Agreement or the application thereof to any person or circumstance, the
parties shall, at the request of any of the parties, negotiate in good faith to
agree on changes or amendments to this Agreement which are required to carry out
the intent and accomplish the purpose of this Agreement in light of such
invalidity or unenforceability.
7.4 Further Actions. Each party shall cooperate and take such further
reasonable action and shall execute and deliver such further documents as may be
reasonably requested by any of the other parties in order to carry out the
intent and accomplish the purpose of this Agreement.
7.5 Successors. All the provisions of this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties;
provided that nothing contained in this section 7.5 shall be construed as
granting to any party the right to assign or transfer any right and/or
obligation under this Agreement, without the prior written consent of the other
parties hereto.
7.6 Entire Agreement, Amendment
(a) This Agreement, including the exhibits and schedules attached hereto,
contains the complete statement of all the agreements among the parties with
respect to the subject matter hereof and all prior agreements among the parties
with respect to the subject matter hereof, whether written or oral, are merged
herein and shall be considered superseded hereby.
(b) Any amendment, modification, waiver or revision hereof shall be
considered effective only if in writing signed by each of the parties or their
respective successors.
7.7 Governing Law. This Agreement and all rights and obligations of the
parties under this Agreement shall be governed by and construed in accordance
with the laws of the Province of Ontario, Canada.
7.8 Counterparts. This Agreement may be executed in any number of
counterparts, each
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of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
7.9 Waiver. No course of dealing of any party hereto, no omission, failure
or delay on the part of any party hereto in asserting or exercising any right
hereunder, and no partial or single exercise of any right hereunder by any party
hereto shall constitute or operate as a waiver of any such right or any other
right hereunder. No waiver of any provision hereof shall be effective unless in
writing and signed by or on behalf of the party to be charged therewith. No
waiver of any provision hereof shall be deemed or construed as a continuing
waiver, as a waiver in respect of any other or subsequent breach or default of
such provision, or as a waiver of any other provision hereof unless expressly so
stated in writing and signed by or on behalf of the party to be charged
therewith.
7.10 Taxation. Each party shall bear the taxes imposed upon it by Law with
respect to this Agreement.
7.11 Allocation of Purchase Price. For purposes of complying with Section
1060 of the Internal Revenue Code of 1986, as amended, the consideration payable
to ▇▇▇▇▇▇ pursuant to Section 5 hereof shall be allocated among the Purchased
Assets and the non-competition covenant provided for in the Executives'
confirmation attached hereto using the allocation method and principles required
by Section 1060 of the Code and the regulations promulgated thereunder. The
allocation schedule shall, no later than sixty (60) days after the date hereof,
be prepared by Paradigm with ▇▇▇▇▇▇'▇ assistance and provided to ▇▇▇▇▇▇ for its
approval, which approval shall not be unreasonably withheld.
7.12 Notices. Any notice, demand, request or other communication which is
required, called for or contemplated to be given or made hereunder to or upon
any party hereto shall be deemed to have been duly given or made for all
purposes if (a) in writing and sent by (i) messenger or a recognized national
overnight courier service for next day delivery with receipt therefor, or (ii)
certified or registered mail, postage paid, return receipt requested, or (b)
sent by facsimile transmission with a written copy thereof sent on the same day
by postage paid first-class mail or (c) by personal delivery to such party at
the following address:
If to ▇▇▇▇▇▇, to:
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇ Hantsis
Fax: (▇▇▇-▇▇▇) ▇-▇▇▇-▇▇▇▇
with a copy to:
Hamburger, Evron, ▇▇▇▇▇-▇▇▇▇▇▇ & Co.
Law Offices and Notary
Paz Towers, ▇▇ ▇▇▇▇▇▇▇ ▇▇.
-▇▇-
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Israel
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇, Adv.
If to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
with a copy to:
Hamburger, Evron, ▇▇▇▇▇-▇▇▇▇▇▇ & Co.
Law Offices and Notary
Paz Towers, ▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Israel
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇, Adv.
If to Elie Hantsis, to:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
with a copy to:
Hamburger, Evron, ▇▇▇▇▇-▇▇▇▇▇▇ & Co.
Law Offices and Notary
Paz Towers, ▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Israel
Fax: ▇▇▇-▇-▇▇▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇, Adv.
If to Paradigm, to:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ L4B-4N4
Attn.: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Paradigm Sub, to:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ L4B-4N4
Attn.: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may designate to the other in
accordance with the aforesaid procedure. All notices and other communications
delivered in person or by courier service shall be deemed to have been given as
of three business days after sending thereof, those given by facsimile
transmission shall be deemed given the first business day following transmission
with confirmed answer back and all notices and other communications sent by
registered mail shall be deemed given 10 days after posting.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
▇▇▇▇▇▇ Technologies Ltd.
By: _____________________
Name
Title:
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Elie Hantsis
1462492 Ontario Inc.
By: ____________________
Name
Title:
Paradigm Advanced Technologies, Inc.
By: ___________________
Name
Title:
-20-
CONFIRMATION
The Executives hereby irrevocably waive, renounce and disclaim any and
all Proprietary Rights relating to the Purchased Assets, if and to the extent
that they have any such rights, and hereby undertake not to compete, directly or
indirectly, for a period of at least 5 (five) years after the date hereof, with
the Technology hereby assigned to Paradigm Sub, or in the field of mapping
technologies, GPS and/or navigation applications, as more specifically set forth
in a non-competition, non-disclosure and non-solicitation agreement between
Paradigm and Paradigm Sub, on the one hand, and each of the Executives.
------------------------- ------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Elie Hantsis
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