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CO-OPERATION AGREEMENT
THIS AGREEMENT is made as of the 23rd day of August, 2002 (the
"Effective Date") between ADB SYSTEMS INTERNATIONAL INC. ("ADB"), ADB SYSTEMS
INTERNATIONAL LTD. ("NEW ADB"), a corporation having its principal place of
business at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx X0X 0X0, and THE
BRICK WAREHOUSE CORPORATION ("THE BRICK"), a corporation having its principal
place of business at 00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx, X0X 0X0.
BACKGROUND:
1. ADB is the registered owner of the url @ xxx.xxx.xxx and the DYN@MIC SELLER
(TM) proprietary software which is used for the purposes of conducting on-line
retail sales. The DYN@MIC SELLER(TM) proprietary software is state of the art
and provides for sales through fixed price, top bid (ascending) and dutch
(descending) auctions.
2. The Brick is Canada's largest volume retailer of home furnishings,
mattresses, bedding, appliances, televisions, video recorders, stereo equipment
and computers, and presently operates an on-line website through
xxx.xxxxxxxx.xxx.
3. The parties wish to jointly develop a profitable venture utilizing the
retail business of ADB and taking advantage of the synergies between ADB's
experience in the retail sector and technological expertise, together with The
Brick's retail experience and off-line presence, thus creating incremental
revenue streams for the parties and establishing a venture which would be
mutually beneficial to the parties.
NOW THEREFORE in consideration of the premises, the mutual covenants
contained in this Agreement, and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Parties agree as
follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS.
In this Agreement, unless the context otherwise requires, each
capitalized term shall have the meanings indicated below.
"ADB ASSETS" means those assets of ADB which are not Xxx.Xxx Assets.
"ADB COMMON SHARES" means common shares in the capital of ADB.
"ADB ESOP" means ADB's 1999 Stock Option Plan, as amended.
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"ADB LIABILITIES" means those Liabilities of ADB which are not Xxx.Xxx
Liabilities and includes, without limitation, those liabilities identified in
subsections 3.2(c)(i) to (v) inclusive.
"AGREEMENT" means this Co-Operation Agreement and all schedules annexed to this
Agreement as the same may be amended from time to time in accordance with the
provisions hereof; "hereof ", "hereto" and "hereunder" and similar expressions
mean and refer to this Agreement and not to any particular article or section;
except where the context specifically requires, "Article" or "Section" means and
refers to the specified article or section of this Agreement.
"ARRANGEMENT AGREEMENT" means the form of arrangement agreement between ADB and
New ADB attached hereto as Schedule A.
"XXX.XXX" means ADB Systems International Inc., following completion of the
Restructuring.
"XXX.XXX ASSETS" means those assets identified in Schedule B hereto.
"XXX.XXX LIABILITIES" means those liabilities identified in Schedule C hereto.
"BUSINESS DAY" means any day from Monday to Friday inclusive, except statutory
or civic holidays observed in Toronto, Ontario or Edmonton, Alberta.
"CONFIDENTIAL INFORMATION" means all information relating to any Party or to
such Party's business, products, sales, users, trade secrets, technology or
financial position to which access is obtained or granted hereunder, which is
treated by the disclosing Party as confidential provided, however, that
Confidential Information of the disclosing Party shall not include any data or
information which the receiving Party can demonstrate:
(a) is or becomes publicly available through no fault of the
receiving Party;
(b) is already in the rightful possession of the receiving Party
prior to its receipt from another Party;
(c) is independently developed by the receiving Party, as proven
by written documentation;
(d) is rightfully obtained by the receiving Party from a third
party not subject to an obligation of confidentiality;
(e) is disclosed by the Receiving Party with the written consent
of the disclosing Party whose information it is; or
(f) is disclosed by the Receiving Party pursuant to court order or
other legal compulsion, provided the receiving Party gives the
disclosing Party prior notice of any such requirement to
afford, if possible, the disclosing Party an opportunity to
obtain a protective order.
"EFFECTIVE DATE" has the meaning attributed thereto on the face page of this
Agreement.
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"EFFECTIVE TIME" has the meaning set out in Section 3.2.
"GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT" means the agreement between ADB
and New ADB pursuant to which ADB transfers the ADB Assets to New ADB and New
ADB assumes the ADB Liabilities, the form of which is attached as Schedule D
hereto.
"LIABILITIES" means any indebtedness, obligation or liability of any kind
(whether accrued, contingent or otherwise and whether due or to become due or
asserted or unasserted).
"LOAN" has the meaning ascribed thereto in the Loan Agreement.
"LOAN AGREEMENT" means the loan agreement dated the date hereof between The
Brick, as lender, and ADB and New ADB, as borrower.
"MANAGEMENT INFORMATION CIRCULAR" means the management circular of ADB to be
prepared in accordance with applicable corporate and securities legislation and
mailed to the shareholders of ADB in connection with the Special Meeting.
"NEW ADB COMMON SHARES" means common shares in the capital of New ADB.
"PARTIES" means ADB and The Brick and "Party" means any one of them.
"PERSON" includes an individual, company, corporation, partnership, government
or government agency, authority or entity howsoever designated or constituted.
"PLAN OF ARRANGEMENT" means the plan of arrangement attached as Appendix 1 to
the Arrangement Agreement.
"RESTRUCTURING" means the completion of the transactions contemplated by the
Arrangement Agreement.
"SCHEDULES" means the following schedules annexed to this Agreement, and such
other schedules as the Parties may append by mutual agreement, evidenced by
their initialing of same:
Schedule A - Arrangement Agreement
Schedule B - Xxx.Xxx Assets
Schedule C - Xxx.Xxx Liabilities
Schedule D - General Assignment and Assumption Agreement
Schedule E - Supply, Services and License Agreement
"SPECIAL MEETING" means the special meeting of the shareholders of ADB, to be
called to approve the Restructuring.
"SUPPLY, SERVICES AND LICENSE AGREEMENT" means the supply, services and license
agreement attached as Schedule E hereto.
"TERM" has the meaning set out in Section 6.1.
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"TRANSACTION DOCUMENTS" has the meaning defined in the Loan Agreement among the
parties hereto of even date herewith.
1.2 HEADINGS.
The use of headings in this Agreement is for convenience of reference
only and shall not affect its interpretation.
1.3 EXTENDED MEANINGS.
Words expressed in the singular include the plural and vice-versa and
words in one gender include all genders.
1.4 ENTIRE AGREEMENT.
The Transaction Documents, and any agreements or other documents to be
delivered pursuant to any Transaction Document, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, oral or written
between the Parties. The execution of this Agreement has not been induced by,
nor do either of the Parties rely upon or regard as material, any
representations, warranties, conditions, other agreements or acknowledgments not
expressly made in this Agreement, the Transaction Documents, or in the
agreements or other documents to be delivered pursuant hereto.
1.5 INVALIDITY.
If in any jurisdiction a provision contained in this Agreement is found
by a court of competent jurisdiction to be invalid, illegal or unenforceable in
any respect, the validity, legality or enforceability of the remaining
provisions contained herein, or of such provision in any other jurisdiction
shall not be affected or impaired thereby.
ARTICLE II
PROCESS OF CO-OPERATION
2.1 PREPARATORY TRANSACTION STEPS
ADB shall forthwith commence the Restructuring, in accordance with the
terms of Article III hereof, conditional upon the completion of the First
Advance and the Expenses Advance pursuant to the Loan Agreement.
2.2 UNDERTAKING OF XXX.XXX
As a result of the Restructuring, ADB will divest itself of the ADB
Assets and will focus its undertaking exclusively to selling and marketing
retail consumer goods on-line through the xxx.xxx.xxx and xxx.xxxxxxxx.xxx
websites (the "Sites"), in accordance with the terms of this Co-Operation
Agreement and appended Schedules. Subject to the terms and conditions of the
Supply, Services and License Agreement, (i) in conducting its activities,
Xxx.xxx will use
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exclusively the technology, supplies and services provided by New ADB and The
Brick in accordance with the terms thereof; (ii) Xxx.xxx will assume
responsibility for the operation of the Sites and will list products for auction
and fixed price sales and post all other content for the Sites; and (iii)
Xxx.xxx will be the seller of record of products sold through the Sites.
2.3 ADB LICENSE AND SERVICES
In accordance with and subject to the terms of the Supply, Services and
License Agreement, New ADB will license to Xxx.xxx use of its proprietary
consumer sales software and auction platform, and will provide Xxx.xxx with the
necessary customization and implementation services and on-going technical
support services in order to provide Xxx.xxx with the web-based platform
necessary to operate its on-line fixed price and auction retail venture.
2.4 THE BRICK'S SUPPLIES AND SERVICES
In accordance with and subject to the terms of the Supply, Services and
License Agreement, The Brick will provide to Xxx.xxx access to a supply channel
of consumer products and related accessories to be marketed through the Sites,
together with support services and use of related property including product
data and information, use of The Brick's product fulfillment and payment
systems, retail support, aftersale services and customer service.
2.5 LOAN BY THE BRICK
In order to enable ADB to proceed with the Restructuring and to provide
funds for future operations, The Brick shall enter into the Loan Agreement
whereby it shall agree to lend ADB $2,000,000 on the terms and conditions set
out therein. Amounts owing under the Loan Agreement shall be secured by the
security contemplated by the Loan Agreement.
ARTICLE III
IMPLEMENTATION OF THE RESTRUCTURING
3.1 MANAGEMENT INFORMATION CIRCULAR
(1) ADB covenants and agrees to forthwith commence preparation of the
Management Information Circular seeking the approval of its shareholders to the
Restructuring at the Special Meeting and describing the terms and conditions
upon which the Restructuring will be implemented. ADB agrees that the Management
Information Circular will describe tax implications of the Restructuring to
shareholders of ADB resident in Canada, the United States and Norway.
(2) The Brick will not be required to provide any representations and
warranties to ADB or to any other person in connection with any disclosure made
by ADB in connection with the Restructuring or the Management Information
Circular and ADB and New ADB shall indemnify and hold harmless The Brick for any
claim made against The Brick, its affiliates and their respective directors,
officers and employees with respect to any third party claim made against The
Brick in connection with such disclosure.
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(3) New ADB covenants and agrees to take all necessary actions at its
sole expense, including, without limitation, making applications to applicable
securities regulatory authorities, to ensure that Old ADB ceases to be a
reporting issuer or the equivalent thereof in each jurisdiction where it
maintains such status as of the Effective Time.
3.2 TRANSACTION STEPS
The Restructuring will be carried out in accordance with the
Arrangement Agreement. As part of the Restructuring, the following shall occur
and be deemed to occur without further act or formality in the following order
as at 12:01 a.m. on the date of the issuance of a certificate and articles of
arrangement by the Ontario Ministry of Consumer and Business Affairs (the
"Effective Time"):
(a) each ADB Common Share (other than such shares held by
dissenting shareholders) shall be and be deemed to be
exchanged with New ADB for the sole consideration of one New
ADB Common Share;
(b) pursuant to the General Assignment and Assumption Agreement,
ADB will transfer all of the ADB Assets to New ADB, some of
which will constitute a return of capital and some of which
will be in consideration of the assumption of ADB liabilities
and New ADB will assume, fulfill and perform all of the ADB
Liabilities. The transaction will be approved by the court
pursuant to the Bulk Sales Act. Upon such transfer:
(i) New ADB shall be liable for the obligations of ADB
(including any obligations that may arise under any
permit or agreement) under the ADB Liabilities
existing immediately before the Effective Time or
that arises after the Effective Time in respect of
facts or circumstances in existence immediately prior
to the Effective Time;
(ii) New ADB shall be liable for the obligations of ADB to
dissenting shareholders of ADB, if any;
(iii) any existing cause of action, claim or liability to
prosecution of or affecting ADB shall be assumed by
New ADB existing immediately before the Effective
Time or that arises after the Effective Time in
respect of facts or circumstances in existence
immediately prior to the Effective Time;
(iv) a civil, criminal or administrative action or
proceeding pending by or against ADB existing
immediately before the Effective Time or that arises
after the Effective Time in respect of facts or
circumstances in existence immediately prior to the
Effective Time shall be continued to be prosecuted by
or against New ADB;
(v) a conviction against ADB immediately before the
Effective Time may be enforced against New ADB or a
ruling, order or judgement in favour of or against
ADB existing immediately before the Effective Time or
that arises
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after the Effective Time in respect of facts or
circumstances in existence immediately prior to the
Effective Time shall be enforced by or against New
ADB;
(vi) the registered office of New ADB shall be located in
Mississauga, Ontario;
(vii) the articles of New ADB shall be the substantively
same as the articles of ADB;
(viii) the number of directors of New ADB shall be a minimum
of 3 and a maximum of 15, the actual number of
directors within the minimum and maximum number to be
determined from time to time by resolution of the
directors of New ADB;
(ix) the initial directors of New ADB shall be Xxxx
Xxxxxx, Xxxx Xxxxxxx and Xxxx Xxxxxxxxx, until their
respective successors have been duly elected or
appointed;
(x) the initial by-laws of New ADB shall be the by-laws
of ADB in effect immediately before the Arrangement
becomes effective, to be supplemented, amended or
repealed in accordance with the provisions of the Act
relating to the making, amending and repealing of
by-laws;
(c) New ADB shall adopt the ADB ESOP;
(d) each ADB option, whether vested or not vested, exercisable for
shares of ADB Common Shares outstanding at the Effective Time
shall, at the Effective Time, be exchanged for a New ADB
option having the same terms and conditions and subject to the
ADB ESOP, and the obligations of ADB under the ADB ESOP shall
thereafter terminate;
(e) each ADB warrant, whether vested or not vested, outstanding
prior to the Effective Time shall, be exchanged for a New ADB
warrant having the same terms and conditions following which
the exchanged ADB warrants shall be null and void; and
(f) the ADB convertible debt outstanding prior to the Effective
Time shall be exchanged for New ADB convertible debt on the
same terms and conditions following which the exchanged ADB
debt shall be null and void.
3.3 TIMING OF THE RESTRUCTURING
ADB agrees to prepare and mail, in accordance with applicable corporate
and securities laws, the Management Information Circular to the shareholders of
ADB by no later than September 15,2002, for a Special Meeting no later than
October 22,2002. The Parties shall use their reasonable commercial efforts to
ensure that the Restructuring shall be coordinated to take effect by no later
than October 31, 2002.
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3.4 INPUT BY THE BRICK
The Brick shall be entitled to receive and comment on drafts of the
Management Information Circular and approve the final form thereof and all
related public disclosure documentation prior to completion. The Brick shall not
withhold or delay its comments or approval unreasonably.
3.5 DIRECTORS OF ADB
From and after the Effective Time, (i) the board of directors of ADB
shall consist of five (5) members, and (ii) The Brick will be entitled to
nominate two (2) directors. The Brick shall exercise its right to nominate
director(s) by written notice to New ADB (a "Director Notice"). New ADB shall
cause such nominee or nominees, as applicable, to be appointed or elected within
10 days of receipt by New ADB of a Director Notice. No meeting of the directors
of ADB shall be held unless The Brick's nominees are present, unless at least 48
hours prior written notice thereof has been sent to such nominees.
ARTICLE IV
GENERAL MATTERS
4.1 CONFIDENTIALITY.
Each Party, on behalf of its advisors, agents, employees and
subcontractors (hereinafter in this section, the "Receiving Party") covenants
with the other Party (hereinafter in this section, the "Disclosing Party") that
it shall keep confidential the Confidential Information of the Disclosing Party
to which the Receiving Party obtains access as a consequence of entering into
this Agreement and that it will take all reasonable precautions to protect such
Confidential Information from any use, disclosure or copying except as expressly
authorized by this Agreement. This section shall survive the termination of the
Agreement. Upon termination of this Agreement, the Receiving Party shall, at the
choice of the Disclosing Party, either return to the Disclosing Party or destroy
all copies or partial copies of Confidential Information of the Disclosing Party
in any form which is in the possession of the Receiving Party or under its
control, and certify that all such Confidential Information has been returned or
otherwise destroyed, as rendered irrecoverable.
4.2 PUBLIC ANNOUNCEMENTS.
The Parties agree to jointly plan and coordinate a public announcement
of the transactions contemplated by this Agreement and to release it on the next
business day following execution of this Agreement. All other public
announcements or advertisements using the Parties' names or concerning the
transaction contemplated in this Agreement will be jointly planned coordinated
and approved by the Parties and no Party will act unilaterally in issuing either
the initial or subsequent announcements without the prior written approval of
the other Party except where required to do so by law or by the applicable
regulations or policies of any governmental or other regulatory agency of
competent jurisdiction or any stock exchange in circumstances where prior
consultation with others is not possible.
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ARTICLE V
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
5.1 REPRESENTATIONS AND WARRANTIES
Each of the Parties represents and warrants to each other that:
(a) it is a corporation duly incorporated, organized and
subsisting under the laws of its jurisdiction of incorporation
and has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement;
(b) the execution and delivery of this Agreement and the
performance of its obligations hereunder will not conflict
with or result in a breach of any of the terms, conditions or
provisions of its articles or by-laws, any law or regulation
or any contractual restriction binding on or affecting it or
its properties; and
(c) this Agreement has been duly executed and delivered and is an
enforceable obligation of it in accordance with its terms,
subject, however, to limitations with respect to enforcement
imposed by law in connection with bankruptcy or similar
proceedings and to the extent that equitable remedies such as
specific performance and injunction are in the discretion of
the court from which they are sought.
ARTICLE VI
DEFAULT AND TERMINATION
6.1 TERM.
This Agreement shall commence on the Effective Date and shall continue,
subject to early termination in accordance with the terms hereof, until the
earlier of (a) the acquisition by The Brick of all of the issued and outstanding
shares in the capital of ADB pursuant to the Loan Agreement or the Loan is
repaid or otherwise satisfied in full; and (b) the first anniversary of the date
of execution of this document. Thereafter, the Agreement shall be extended or
renewed only upon mutual agreement of the Parties (the "Term").
6.2 TERMINATION.
(1) This Agreement and the rights and obligations of each Party
contained herein may be terminated by one Party giving notice to the other
Parties forthwith upon the happening of any of the following events of default:
(a) by The Brick to the other Parties upon the happening of an
event of default under the Loan Agreement in circumstances
where The Brick determines to exercise its remedies in respect
of the occurrence of such default;
(b) by any non-defaulting Party to the other Parties if a Party
fails to perform or observe any of its obligations or
covenants under this Agreement and such failure
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continues unremedied for a period of thirty (30) days
following notice thereof (giving particulars of the failure in
reasonable detail);
(c) by The Brick to the other Parties if ADB and New ADB fail to
complete the Restructuring on or before October 31, 2002; and
(d) by The Brick to the other Parties if The Brick demands payment
of the Loan in accordance with the provisions of the Loan
Agreement.
(2) If an event of default under Section 6.2 (1) occurs (after taking into
account any applicable cure period), the non-defaulting Party may on 10
days notice to the defaulting Party, terminate this Agreement. The
provisions of this section as to termination do not limit or restrict
the rights of either Party, to seek other remedies or take measures
that may be otherwise available to it at law or equity in connection
with the enforcement and performance of obligations under this
Agreement.
6.3 SURVIVAL.
The terms of Articles 4.1,4.2 and Article VII shall survive any termination or
expiry of this Agreement and shall continue in force thereafter for the period
contemplated by the Agreement. Other provisions of this Agreement which, by the
nature of the rights or obligations set out therein, might reasonably be
expected to be intended to so survive shall survive termination or expiry of
this Agreement until they are satisfied or by their nature expire.
ARTICLE VII
DISPUTE RESOLUTION
7.1 DISPUTE RESOLUTION PROCESS.
If any dispute, disagreement, controversy or claim (a "Dispute") arises
out of or relating to this Agreement including, without limitation, its
application, interpretation, performance, breach, termination, enforcement or
damages, or remedies arising out of the breach of or non-compliance therewith,
the Dispute shall be referred immediately to the senior finance executive for
each Party. For the purposes of this Section 7.1, "senior finance executive"
means, in the case of THE BRICK, the Chief Financial Officer of THE BRICK, and
in the case of NEW ADB and ADB, the President of NEW ADB. If the Dispute remains
unresolved after 10 days of having been referred to such senior executives, then
the Parties shall proceed as set out below.
All Disputes and claims arising out of this Agreement shall be finally
determined by arbitration to be commenced and conducted in the English language
in Xxxxxxx, Xxxxxxx, Xxxxxx in accordance with the rules of the Arbitration Act,
1991 (Ontario) as amended hereby. The parties agree that:
(a) the parties shall agree on a single arbitrator (who shall be
trained as a professional arbitrator with expertise in
commercial and corporate law) within ten (10) days of notice
of reference to arbitration, failing which either party may
apply to a court of competent jurisdiction in the Province of
Ontario to appoint an arbitrator with the foregoing
qualifications;
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(b) the arbitration shall be held in private and no person except
the parties and their respective representatives and witnesses
shall be present unless authorized by the arbitrator;
(c) subject to the provisions of this Section 7.1, the parties
will agree, in consultation with the arbitrator, on the rules
of the arbitration. Absent such agreement, the arbitrator will
be entitled to establish the procedures to be followed,
provided that in doing so, the arbitrator shall be guided by
the parties' mutual intention that such procedures should be
designed to expedite the proceedings and minimize to the
extent practicable the expenses for the parties;
(d) the arbitration award shall be final and binding on the
parties and shall not be subject to any appeal (those
provisions of the Arbitration Act, 1991 (Ontario) necessary to
achieve such result are hereby expressly excluded);
(e) the costs of the arbitration shall be in the discretion of the
arbitrator;
(f) judgment upon any award may be entered in any court having
jurisdiction or application may be made to the court for a
judicial recognition of the award or an order of enforcement,
as the case may be;
(g) the arbitrator shall be instructed that time is of the essence
in the arbitration proceeding and, in any event, the
arbitration award must be made within 15 days of the
submission of the Dispute to arbitration;
(h) all Disputes referred to arbitration (including the scope of
the agreement to arbitrate, any statute of limitations,
set-off claims, conflict of laws rules, tort claims and
interest claims) shall be governed by the substantive law of
Ontario; and
(i) the parties agree that the arbitration shall be kept
confidential and that the existence of the proceeding and any
element of it (including any pleadings, briefs or other
documents submitted or exchanged, any testimony or other oral
submissions and any awards) shall not be disclosed beyond the
arbitrator, the parties, their counsel and any person
necessary to the conduct of the proceeding, except as may
lawfully be required in judicial proceedings relating to the
arbitration or otherwise.
ARTICLE VIII
GENERAL
8.1 NOTICE.
Any notice or other communication (a "Notice") required or permitted to
be given or made hereunder shall be in writing and shall be well and
sufficiently given or made if:
(a) delivered by overnight courier service; or
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(b) sent by facsimile transmission or other electronic
communication;
in the case of a Notice to The Brick addressed to The Brick at:
The Brick Warehouse Corporation
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxx Xxxxxxx,
Chief Financial Officer
Fax No.: (000) 000-0000
with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxxx Xxxxx
Fax No.: (000) 000-0000
and in the case of a Notice to ADB or New ADB addressed to it at:
c/o ADB Systems International Inc.
000 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxxxx
General Counsel
Fax No.: (000) 000-0000
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with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Any Notice given or made in accordance with this Section 8.1 shall be
deemed to have been given or made and to have been received on the next Business
Day after it was delivered, if delivered as aforesaid.
Either Party may from time to time change its address for notice by
giving Notice to other Party in accordance with the provisions of this Section
8.1.
8.2 ASSIGNMENT.
Neither ADB nor New ADB may assign its rights and obligations under
this Agreement, in whole or in part, without the prior consent in writing of The
Brick. Any purported assignment made by ADB or New ADB without required consent
is void and of no effect. The Brick may assign its rights and obligations under
this Agreement, in whole or in part, without the consent of ADB or New ADB
provided The Brick gives written notices to ADB and New ADB prior thereto. No
assignment of this Agreement shall relieve either Party from any obligation
under this Agreement.
8.3 BINDING ON SUCCESSORS.
This Agreement shall ensure to the benefit of and be binding upon the
Parties and their respective successors and permitted assigns.
8.4 FURTHER ASSURANCES.
Each Party agrees that upon the written request of the other Party, it
will do all such acts and execute all such further documents, assignments, and
the like, and will cause the doing of all such acts and will cause the execution
of all such further documents as are within its power to cause the doing or
execution of, as any other Party hereto may from time to time reasonably request
be done and/or executed as may be reasonably necessary or desirable to give
effect to this Agreement.
8.5 INDEPENDENT CONTRACTORS.
It is understood and agreed that in giving effect to this Agreement, no
Party shall be or be deemed a partner, agent or employee of the other Party for
any purpose and that their relationship to each other shall be that of
independent contractors. Nothing in this Agreement
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shall constitute a partnership or a joint venture between the Parties. No Party
shall have the right to enter into contracts or pledge the credit of or incur
expenses of liabilities on behalf of the other Party.
8.6 WAIVER.
A waiver by a Party hereto of any of its rights hereunder or of the
performance by the other Party of any of its obligations hereunder shall be
without prejudice to all of the other rights hereunder of the Party so waiving
and shall not constitute a waiver of any such other rights or, in any other
instance, of the rights so waived, or a waiver of the performance by the other
Party of any of its other obligations hereunder or of the performance, in any
other instance, of the obligations so waived. No waiver shall be effective or
binding upon a Party unless the same shall be expressed in writing and executed
by the Party to be bound.
8.7 INTERPRETATION.
This Agreement has been negotiated by the parties hereto and their
respective counsel and shall be fairly interpreted in accordance with its terms
and without any rules of construction relating to which Party drafted the
Agreement being applied in favour or against either Party.
8.8 AMENDMENT.
No amendment of any provision of this Agreement shall be effective
unless such amendment is embodied in a written agreement which is: (i) expressly
stated to be intended to amend this Agreement; and (ii) executed by an
authorized signing officer of ADB and an authorized signing officer of The
Brick.
8.9 GOVERNING LAW.
This Agreement shall be governed and construed according to the laws of
the Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract. For the purposes of all legal
proceedings this Agreement will be deemed to have been performed in the Province
of Ontario and each of the parties hereby attorns to the jurisdiction of the
courts of the Province of Ontario.
8.10 TIME OF THE ESSENCE.
Time is of the essence of this Agreement.
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8.11 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Counterparts may be executed either in
original or faxed form and the Parties adopt any signatures received by a
receiving fax machine as original signatures of the Parties.
IN WITNESS WHEREOF this Agreement is executed by the Parties as of the
date first written, above.
ADB SYSTEMS INTERNATIONAL INC.
BY: /s/ [ILLEGIBLE]
---------------------------------
Name:
Title:
ADB SYSTEMS INTERNATIONAL LTD.
BY: /s/ [ILLEGIBLE]
---------------------------------
Name:
Title:
THE BRICK WAREHOUSE CORPORATION
BY: /s/ [ILLEGBLE]
---------------------------------
Name:
Title:
SCHEDULE A
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT dated as of the 23rd day of August, 0000
X X X X X X X:
ADB SYSTEMS INTERNATIONAL INC., a corporation
Amalgamated pursuant to the provisions of the Business
Corporations Act
(Ontario)
(hereinafter referred to as ("ADB")
OF THE FIRST PART
- and -
ADB SYSTEMS INTERNATIONAL LTD.,
a corporation incorporated
pursuant to the provisions
of the Business Corporations Act (Ontario)
(hereinafter referred to as ("New ADB")
OF THE SECOND PART
BACKGROUND:
1. The sole shareholder of New ADB has approved the Arrangement
in accordance with the provisions of the OBCA;
2. ADB proposes to convene a meeting of its shareholders to,
among other things, authorize and approve the Arrangement in accordance with the
provisions of the OBCA; AND
3. Upon the Arrangement becoming effective, the shareholders of
ADB will become the direct owners of all of the outstanding New ADB Shares and
will cease to hold any shares in ADB in accordance with the provisions of this
Agreement;
NOW THEREFORE, in consideration of the premises and the
respective covenants and agreement herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereto hereby covenant
and agree as follows:
2
ARTICLE 1
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS: In this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following capitalized
words and terms shall have the following meanings:
(a) "ADB CONVERTIBLE DEBT" means certain secured convertible debt
of ADB due December 21, 2004 having AN aggregate principal
amount of $1,000,000 and evidenced by promissory notes issued
in series, namely Series A, Series B, Series C and Series D;
(b) "ADB OPTIONS" means options in favour of directors, officers,
employees and other service providers to purchase ADB Shares
as more particularly described in the Information Circular and
issued pursuant and subject to the ADB Stock Option Plan;
(c) "ADB SHARES" means the issued and outstanding common shares of
ADB and common shares of ADB that are allotted pursuant to the
Subordinate Notes, as the same are constituted on the date
hereof;
(d) "ADB STOCK OPTION PLAN" means the incentive stock option plan
adopted by, as amended from time to time, and approved by its
shareholders which is in effect at the date hereof and more
particularly described in the Information Circular;
(e) "ADB WARRANTS" means warrants to purchase up to 2,170,100 ADB
Shares which are issued and outstanding on the date hereof and
are more particularly described in the Information Circular;
(f) "AGREEMENT" means this arrangement agreement including the
exhibits hereto as the same may be supplemented or amended
from time to time;
(g) "ARRANGEMENT" means the arrangement proposed to be effected
under the provisions of Section 182 of the OBCA on the terms
set out in the Plan of Arrangement;
(h) "BUSINESS DAY" means any day from Monday to Friday, inclusive
except statutory or civic holidays observed in Toronto, Ottawa
or Edmonton, Alberta which is not a Saturday, Sunday or
statutory holiday;
(i) "CHARTER DOCUMENTS" of any corporation means the articles and
by-laws of such corporation;
(j) "CORPORATIONS" means ADB and New ADB collectively;
(k) "COURT" means the Ontario Superior Court of Justice;
3
(l) "EFFECTIVE DATE" means the effective date of the Arrangement
pursuant to the certificate of arrangement issued by the
Director under the OBCA giving effect to the Arrangement;
(m) "EFFECTIVE TIME" has the meaning set out in Section 2.1;
(n) "FINAL ORDER" means the final order of the Court approving the
Arrangement;
(o) "INFORMATION CIRCULAR" means the management information
circular of ADB to be sent to the shareholders of ADB in
connection with the Meeting;
(p) "INTERLOCUTORY ORDER" means the interim order of the Court;
(q) "MEETING" means the special meeting of the shareholders of ADB
to be held to consider and, if deemed advisable, to approve
the Arrangement;
(r) "MRRS RELIEVING ORDER" means an order of the Ontario
Securities Commission as primary regulator under the Mutual
Reliance and Review System of the Canadian Securities
Administrators which order shall be applicable in such
jurisdictions of Canada as counsel for ADB deems necessary or
advisable which order shall:
(i) deem New ADB to be a reporting issuer in Ontario
pursuant to section 83.1 of the Securities Act
(Ontario); and
(ii) deem New ADB to be a qualifying issuer on and as of
the Effective Date written in the meaning of
Multilateral Instrument 45-102.
(s) "NEW ADB CONVERTIBLE DEBT" means convertible secured debt of
New ADB to be exchanged for and having the same denomination,
terms and conditions as the ADB Convertible Debt;
(t) "NEW ADB OPTIONS" means options to purchase new New ADB Shares
to be exchanged for and having the same terms and conditions
as the ADB Options. New ADB Options will be issued pursuant
and subject to the New ADB Stock Option Plan;
(u) "NEW ADB SHARES" means the common shares which New ADB is
authorized to issue, as the same are constituted on the date
hereof.
(v) "NEW ADB STOCK OPTION PLAN" means the incentive stock option
plan to be adopted by New ADB and having the same terms and
conditions as the ADB Stock Option Plan;
(w) "NEW ADB WARRANTS" means warrants to purchase new ADB Shares
to be exchanged for and having the same terms and conditions
as the ADB Warrants;
4
(x) "OBCA" means the Business Corporations Act, R.S.O. 1990, c.
B.16, as amended;
(y) "PERSON" includes an individual, sole proprietorship,
partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, body corporate,
a trustee, executor, administrator or other legal
representative and the Crown or any agency or instrumentality
thereof;
(z) "PLAN OF ARRANGEMENT" means the plan of arrangement attached
to this Agreement as Exhibit A, as it may be amended from time
to time;
(aa) "SUBSIDIARY" means, with respect to a specified body
corporate, a body corporate of which more than 50% of the
outstanding shares ordinarily entitled to elect a majority of
the directors thereof whether or not shares of any other class
or classes shall or might be entitled to vote upon the
happening of any event or contingency, are at the time owned,
directly or indirectly, by such specified body corporate, and
includes a body corporate in like relation to a Subsidiary;
and
(bb) "SUBORDINATE NOTES" means (i) the convertible secured notes
(including but not limited to Series A, Series B and Series C)
issued to Xxxxxxxxxxx Limited Partnership by ADB pursuant to a
subscription agreement dated as of August 30, 2002; (ii) the
convertible secured notes (including but not limited to Series
D) issued to Greenwich Growth Fund Ltd. by ADB pursuant to a
subscription agreement dated as of August 30, 2002; and (iii)
the convertible secured notes issued to subscribers other than
Greenwich Growth Fund Ltd. by ADB for an amount not greater
than $300,000.
5
SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADING: The division of this
Agreement into articles, sections, subsections, paragraphs and subparagraphs and
the insertion of the headings are for convenience of reference only and shall
not affect the construction or interpretation of the provisions of this
Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and
similar expressions refer to this Agreement and the exhibit hereto as a whole
and not to any particular article, section, subsection, paragraph or
subparagraph hereof and include any agreement or instrument supplementary or
ancillary hereto.
SECTION 1.3 NUMBER AND GENDER: Unless the context otherwise requires,
words importing the singular number only shall include the plural and vice versa
and words importing the use of either gender shall include both genders and
neuter.
SECTION 1.4 DATE FOR ANY ACTION: In the event that any date on which any
action is required to be taken hereunder by any of the Corporations is not a
Business Day in the place where the action is required to be taken, such action
shall be required to be taken on the next succeeding day which is a Business Day
in such place.
SECTION 1.5 MEANING: Words and phrases used and not defined herein and
defined in the OBCA shall have the same meaning herein as in the OBCA unless the
context otherwise requires.
SECTION 1.6 EXHIBITS: The following exhibits are attached to this
Agreement and shall be deemed to be incorporated in and form part hereof:
Exhibit Title
------- -----
EXHIBIT A PLAN OF ARRANGEMENT
EXHIBIT B GENERAL CONVEYANCE AND ASSUMPTION
AGREEMENT
ARTICLE 2
THE ARRANGEMENT
SECTION 2.1 ARRANGEMENT AND RELATED TRANSACTIONS: The Corporations agree
that as at 12:01 am on the Effective Date (the "Effective Time") the following
will occur and shall be deemed to occur in the following order on the terms and
subject to the conditions contained in this Agreement:
(a) Each ADB Common Share (other than such shares held by
dissenting shareholders) shall be and be deemed to be
exchanged with New ADB for the sole consideration of one New
ADB Common Share;
(b) pursuant to a general assignment and assumption agreement made
as of the date hereof between ADB and New ADB and attached as
Exhibit B, ADB will transfer all of the ADB Assets (as defined
in such agreement) to New ADB in part as a
6
return of capital and in part as in consideration of the
assumption of ADB Liabilities and New ADB will assume, fulfill
and perform all of the ADB Liabilities (as defined in such
agreement). The transaction will be approved by the Court
pursuant to the Bulk Sales Act. Upon such transfer:
(i) New ADB shall be liable for the obligations of ADB
(including any obligations that may arise under any
permit or agreement) under the ADB Liabilities
existing immediately before the Effective Time or
that arises after the Effective Time in respect of
facts or circumstances in existence immediately prior
to the Effective Time;
(ii) any existing cause of action, claim or liability to
prosecution of or affecting ADB existing immediately
before the Effective Time or that arises after the
Effective Time in respect of facts or circumstances
in existence immediately prior to the Effective Time
shall be assumed by New ADB;
(iii) New ADB shall be liable for the obligations of ADB to
dissenting shareholders, if any;
(iv) a civil, criminal or administrative action or
proceeding pending by or against ADB existing
immediately before the Effective Time or that arises
after the Effective Time in respect of facts or
circumstances in existence immediately prior to the
Effective Time shall be continued to be prosecuted by
or against New ADB;
(v) a conviction against ADB immediately before the
Effective Time may be enforced against New ADB or a
ruling, order or judgment in favour of or against ADB
existing immediately before the Effective Time or
that arises after the Effective Time in respect of
facts or circumstances in existence immediately prior
to the Effective Time shall be enforced by or against
New ADB;
(vi) the registered office of New ADB shall be located in
Mississauga, Ontario;
(vii) the articles of New ADB shall be substantively the
same as the articles of ADB;
(viii) the number of directors of New ADB shall be a minimum
of 3 and a maximum of 15, the actual number of
directors within the minimum and maximum number to be
determined from time to time by resolution of the
directors of New ADB;
(ix) the initial directors of New ADB shall be nominees of
ADB until their respective successors have been duly
elected or appointed; and
7
(x) the initial by-laws of New ADB shall be the by-laws
of ADB in effect immediately before the Effective
Time, to be supplemented, amended or repealed in
accordance with the provisions of the Act relating to
the making, amending and repealing of by-laws;
(c) New ADB shall have adopted the New ADB Stock Option Plan;
(d) each ADB Option, whether vested or not vested, outstanding on
the Effective Date shall be exchanged at the Effective Time
for a New ADB Option having the same terms and conditions and
subject to the New ADB Stock Option Plan. The obligations of
ADB under the ADB Stock Option Plan shall thereafter
terminate;
(e) each ADB Warrant, whether vested or not vested, outstanding
immediately prior to the Effective Date shall be exchanged for
an New ADB Warrant having the same terms and conditions
following which the ADB Warrants shall be null and void;
(f) the ADB Convertible Debt outstanding immediately prior to the
Effective Time shall be exchanged for New ADB Convertible Debt
having the same terms and conditions following which the ADB
Convertible Debt shall be null and void; and
(g) the articles of amalgamation of ADB shall be amended as
follows:
(i) to change the name of ADB to Xxx.Xxx International
Ltd. or such other name as may be permitted under the
OBCA;
(ii) to delete the authorized Preference Shares (as
defined in such articles), the terms and conditions
attaching to such Preference Shares and the
restrictions on transfer of such Preference Shares;
and
(iii) to add transfer restrictions and limits on the number
of shareholders.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE ADB: ADB hereby
represents and warrants to and in favour of New ADB that:
(a) ADB has been duly incorporated and is a valid and subsisting
corporation under the provisions of the OBCA, has all
requisite corporate power and authority to carry on its
business as now being carried on by it and to own or lease and
operate its properties and assets and is duly licensed or
otherwise qualified to carryon business in each jurisdiction
in which a material amount of its business is conducted or
wherein the character of the properties and assets now owned
by it makes such qualification necessary;
8
(b) As of the date hereof, the issued and outstanding share
capital of ADB consists of 41,583,628 ADB Shares, all of which
are outstanding as fully paid and non-assessable shares;
(c) The execution, delivery and performance of this Agreement and
the agreements, documents and transactions contemplated herein
are within the corporate power and authority of ADB and have
been duly authorized by all necessary corporate action and
this Agreement constitutes a valid and binding obligation of
ADB, enforceable in accordance with its terms;
(d) ADB does not have any outstanding agreements, subscriptions,
warrants, options or commitments, nor has it granted any
rights or privileges capable of becoming an agreement,
subscription, warrant, option or commitment, obligating ADB to
issue any additional shares, or other securities, except the
ADB Warrants, the ADB Options and the ADB Convertible Debt,
particulars of which are disclosed in the Information
Circular;
(e) Except as described in the Information Circular, there are no
material actions, suits, proceedings, investigations or
outstanding claims or demands, whether or not purportedly on
behalf of ADB, instituted, pending or, to the knowledge of
ADB, threatened against or affecting ADB at law or in equity
or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
or before any securities commission, stock exchange or
arbitrator, nor is there any judgment, order decree or award
of any court or other governmental or regulatory authority
having jurisdiction, obtained, pending or, to the knowledge of
ADB, threatened, against ADB, which would prevent or
materially hinder the consummation of the Arrangement or the
other transactions contemplated by this Agreement or which
would involve the reasonable possibility of any material
judgment or liability, whether or not covered by insurance, or
which in the aggregate would have a material adverse effect on
the business, operations, properties, assets or condition,
financial or otherwise, of ADB;
(f) The business of ADB is being conducted in all material
respects in compliance with all applicable laws, regulations
and ordinances of all authorities having jurisdiction;
(g) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or by the
fulfilment of or compliance with the terms and provisions
hereof do or will, nor will they with the giving of notice or
the lapse of time or both violate any provision of any law or
administrative regulation or any judicial or administrative
order, award, judgment or decree applicable to ADB and do not
conflict with any of the terms, conditions or provisions of
the Charter Documents of ADB.
9
SECTION 3.2 REPRESENTATIONS AND WARRANTS OF NEW ADB: New ADB hereby
represents and warrants to and in favour of ADB that:
(a) New ADB has been duly incorporated and is a valid and
subsisting corporation under the provisions of the OBCA, has
all requisite corporate power and authority to carry on its
business as now being carried on by it and to own or lease and
operate its properties and assets and is duly licensed or
otherwise qualified to carry on business in each jurisdiction
in which a material amount of its business is conducted or
wherein the character of the properties and assets now owned
by it makes such qualification necessary;
(b) As of the date hereof the issued and outstanding share capital
of New ADB consists of one (1) New ADB Shares, all of which
are outstanding as fully paid and non-assessable;
(c) New ADB has, or will have before the Effective Date taken all
necessary corporate action to authorize the New ADB Stock
Option Plan and the grant of Options to purchase New ADB
Shares thereunder in exchange for the ADB Options in
accordance herewith and as described in the information
Circular;
(d) New ADB has, or will have before the Effective Date taken all
necessary corporate action to create and authorize the issue
of the New ADB Warrants in exchange for the ADB Warrants in
accordance herewith and as described in the information
Circular;
(e) New ADB has, or will have prior to the Effective Date taken
all necessary corporate action to authorize the creation and
issue of the New ADB Convertible Debt in exchange for the ADB
Convertible Debt hereunder and as described in the information
Circular.
(f) The execution, delivery and performance of this Agreement and
the agreements, documents and transactions contemplated herein
are within the corporate power and authority of New ADB and
have been duly authorized by all necessary corporate action
and this Agreement constitutes a valid and binding obligation
of New ADB enforceable in accordance with its terms;
(g) New ADB does not have any outstanding agreements,
subscriptions, warrants, options or commitments, nor has it
granted any rights or privileges capable of becoming an
agreement, subscription, warrant, option or commitment,
obligating New ADB to issue any additional shares or other
securities, except as contemplated herein and disclosed in the
Information Circular;
(h) There are no actions, suits, proceedings, investigations or
outstanding claims or demands, whether or not purportedly on
behalf of New ADB instituted, pending, or, to the knowledge of
New ADB, threatened against or affecting New ADB at law or in
equity or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic
or foreign, or before any securities commission, stock
exchange or arbitrator, nor is there any judgment,
10
order, decree or award of any court of other governmental or
regulatory authority having jurisdiction, obtained, pending
or, to the knowledge of New ADB, threatened against New ADB,
which would prevent or materially hinder the consummation of
the Arrangement or the other transactions contemplated by this
Agreement or which would involve the reasonable possibility of
nay material judgment or liability, whether or not covered by
insurance, or which in the aggregate would have a material
adverse effect on the business, operations, properties, assets
or condition, financial or otherwise, of New ADB;
(i) The business of New ADB is being conducted in all material
respects in compliance with all applicable laws, regulations
and ordinances of all authorities having jurisdiction;
(j) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the
fulfilment of or compliance with the terms and provisions
hereof do or will, nor will they with the giving of notice or
the lapse of time or both, violate any provision of any law or
administrative regulation of any judicial or administrative
order, award, judgment or decree applicable to New ADB and do
not conflict with any of the terms, conditions or provisions
of the Charter Documents of New ADB;
ARTICLE 4
COVENANTS
SECTION 4.1 COVENANTS OF ADB: ADB hereby covenants and agrees with New ADB
as follows:
(a) ADB will not merge into or with, or amalgamate or consolidate
with, or enter into any other corporate reorganization with,
any other Person or perform any act or enter into any
transaction or negotiation which interferes or is inconsistent
with the consummation of the transactions contemplated in this
Agreement or in the Information Circular;
(b) ADB will not alter or amend its Charter Documents as the same
exist at the date of this Agreement, except as contemplated in
the Information Circular;
(c) Except as contemplated in the Information Circular, ADB will
not enter into any transaction or incur any obligation if the
same would have a material adverse effect on ADB or the
Arrangement, other than in the ordinary course of business,
except for transactions with or between and obligations to
wholly-owned Subsidiaries of ADB;
(d) ADB will convene the appropriate special shareholders' meeting
on October 22, 2002, or on such other date as is in accordance
with the Interlocutory Order and
11
will solicit proxies to be voted at such meeting in favour of
the approval of this Agreement, the Arrangement and the other
matters incidental to the Arrangement and disclosed in the
Information Circular;
(e) ADB will, in a timely and expeditious manner, file the
Information Circular in all jurisdictions where it is required
to be filed and mail the same to its shareholders in
accordance with applicable law and in accordance with the
Interlocutory Order;
(f) ADB will do all such other acts and things as may be necessary
or required in order to give effect to the Arrangement and,
without limiting the generality of the foregoing, ADB will use
its best efforts to apply for and obtain:
(i) The approvals of the shareholders of ADB required for
the implementation of the Arrangement;
(ii) The MRRS Relieving Order; and
(iii) The Final Order as provided in Section 4.4 hereof.
(g) ADB will use all reasonable commercial efforts to cause each
of the conditions precedent set forth in Article Five hereof
to be complied with on or before the Effective Date.
SECTION 4.2 COVENANTS OF NEW ADB: New ADB hereby covenants and agrees with
ADB as follows:
(a) New ADB will not merge into or with, or amalgamate or
consolidate with, or enter into any other corporate
reorganization with, any other Person or perform any act or
enter into any transaction or negotiation which interferes or
is inconsistent with the completion of the transactions
contemplated this Agreement or in the Information Circular;
(b) New ADB will not alter or amend its Charter Documents as the
same exist at the date of this Agreement, except as
contemplated in the Information Circular;
(c) Except as contemplated in the Information Circular, New ADB
will not enter into any transaction or incur any obligation if
the same would have a material adverse effect on New ADB or
the Arrangement other than in the ordinary course of business;
(d) New ADB will do all such other acts and things as may be
necessary or required in order to give effect to the
Arrangement and, without limiting he generality of the
foregoing, New ADB will use is best efforts to apply for and
obtain,
(i) The approval of the sole shareholder of New ADB
required for the implementation of the Arrangement;
(ii) The Final Order as provided in Section 4.4 hereof,
and
12
(iii) Such other consents, orders and approvals as counsel
may advise are necessary or desirable for the
implementation of the Arrangement, including those
referred to in Section 5.1 hereof;
(e) New ADB will use all reasonable efforts to cause each of the
conditions precedent set forth in Article Five hereof to be
complied with on or before the Effective Date; and
(f) New ADB covenants and agrees to take all necessary actions at
its sole expense, including, without limitation, making
applications to applicable securities and regulatory
authorities, to ensure that Old ADB ceases to be a reporting
issuer or the equivalent thereof in each jurisdiction where it
maintains such status as of the Effective Time.
SECTION 4.3 INTERLOCUTORY ORDER AND FINAL ORDER: The Corporations
acknowledge that ADB has applied to the Court pursuant to Section 182 of the
OBCA the Interlocutory Order providing for, among other things, the calling and
holding of the Meeting for the purpose of considering and, if deemed advisable,
approving the Arrangement. The Corporations covenant and agree that, if the
approval of the Arrangement as set forth in the Interlocutory Order is obtained,
they will thereafter jointly take the necessary steps to submit the Arrangement
to the Court and apply for the Final Order in such fashion as the Court may
direct and, as soon as practicable thereafter, and subject to compliance with
any of the other conditions provided for in Article Five hereof and to the
rights of termination in Article Six hereof, file, pursuant to Subsection 183
(1) of the OBCA, articles of arrangement to give effect to the Arrangement.
ARTICLE 5
CONDITIONS
SECTION 5.1 MUTUAL CONDITIONS PRECEDENT: The respective obligations of the
Corporations to complete the transactions contemplated by this Agreement,
including the Arrangement and to file articles of arrangement pursuant to
Subsection 183(1) of the OBCA to give effect to the Arrangement shall be subject
to the satisfaction of the following conditions, Subsection 5.l(e) of which may
be waived by any of the Corporations in whole or in part without prejudice to
the right of such Corporation to rely on any other of them:
(a) This Agreement and the Arrangement, with or without amendment,
shall have been approved at the Meeting in accordance with the
Interlocutory Order and the Arrangement shall have otherwise
been approved by the requisite majorities of the shares
entitled or required to vote thereon as determined by the
Court;
(b) The Final Order and the MRRS Relieving Order shall have been
obtained in form and substance satisfactory to the
Corporations;
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(c) All other consents, orders, regulations and approvals,
including regulatory and judicial approvals and orders and the
consents of other securities regulatory authorities under
comparable securities legislation of the other provinces of
Canada, required or necessary or desirable for the completion
of the transactions provided for in this Agreement and the
Arrangement shall have been obtained or received from the
persons, authorities or bodies having jurisdiction in the
circumstances;
(d) There shall not be in force any order or decree restraining or
enjoining the consummation of the transactions contemplated by
this Agreement and the Arrangement;
(e) None of the consents, orders, approvals or assurances
contemplated herein or required for the implementation of the
Arrangement shall contain terms or conditions or require
undertakings or security deemed unsatisfactory or unacceptable
by any of the parties hereto;
(f) The number of shares held by dissenting shareholders shall not
have exceeded 5% of the then issued and outstanding ADB
Shares; and
(g) This Agreement shall not have been terminated under Article
Six.
SECTION 5.2 CONDITIONS TO OBLIGATIONS OF EACH PARTY: The obligation of
each of the Corporations to complete the transactions contemplated by this
Agreement is further subject to the condition, which may be waived by each such
Corporation without prejudice to its right to rely on any other condition in
favour of such Corporation, that the covenants of the other Corporations hereto
to be performed on or before the Effective Date pursuant to the provisions of
this Agreement shall have been duly performed by each of them and that, except
as affected by the transactions contemplated by this Agreement, the
representations and warranties of the Corporations shall be true and correct in
all material respects as at the Effective Date, with the same effect as if such
representations and warranties had been made at, and as of, such time and each
Corporation shall have received a certificate, dated the Effective Date, of a
senior officer of each other Corporation confirming the same.
SECTION 5.3 MERGER OF CONDITIONS: All conditions set out in Sections 5.1
and 5.2 shall be conclusively deemed to have been satisfied, waived or released
on receipt of the filing by the Corporations of articles of arrangement under
subsection 183(1) of the OBCA.
ARTICLE 6
AMENDMENT AND TERMINATION
SECTION 6.1 AMENDMENT: This Agreement may, at any time and from time to
time before and after the holding of the Meeting, but not later than the
Effective Date, be amended by written agreement of the Corporations without,
subject to applicable law, further notice to or
14
authorization on the part of the shareholders of ADB. Without limiting the
generality of the foregoing, any such amendment may:
(a) Change the time for the performance of any of the obligations
or acts of the Corporations;
(b) Waive any inaccuracies or modify any representation or
warranty contained herein or in any document to be delivered
pursuant hereto; or
(c) Waive compliance with or modify any of the covenants contained
herein or waive or modify the performance of any of the
obligations of the Corporations,
Provided, notwithstanding the foregoing, Subsection 5.l(a) of this Agreement
shall not be amended without the approval of the shareholders of ADB given in
the same manner as required for the approval of the Arrangement or as may be
ordered by the Court. This Agreement and the Plan of Arrangement may be amended
in accordance with the Final Order, but in the event that the terms of the Final
Order require any such amendment, the rights of the Corporations under Sections
5.1,5.2 and 6.2 hereof shall remain unaffected.
SECTION 6.2 RIGHTS OF TERMINATION: If any of the conditions contained in
Section 5.1 or 5.2 shall not be fulfilled or performed on or before the
Effective Date, either of the Corporations may terminate this Agreement by
notice to the other Corporation and in such event such Corporation shall be
released from all obligations under this Agreement, all rights of specific
performance by any of the Corporations shall terminate and, unless such
Corporation can show that the condition or conditions the non-performance of
which has caused such Corporation can show that the other Corporation could
reasonably have performed such condition or conditions then that Corporation
shall not be released from its obligations hereunder and further provided that
any of such conditions may be waived in full or in part by either of the
Corporations without prejudice to its rights of termination in the event of the
non-fulfilment or non-performance of any other condition.
SECTION 6.3 NOTICE OF UNFULFILLED CONDITIONS: If either of the
Corporations shall determine at any time prior to the Effective Date that it
intends to refuse to consummate the Arrangement or any of the transactions
contemplated under this Agreement or the Information Circular because of any
unfulfilled or unperformed condition precedent contained in this Agreement on
the part of the other Corporation to be fulfilled or performed, such Corporation
shall so notify the other Corporation forthwith upon making such determination
in order that the other Corporation shall have the right and opportunity to take
such steps, at its own expense, as may be necessary for the purpose of
fulfilling or performing such condition precedent within a reasonable period of
time, but in no event later than October 3 1,2002.
SECTION 6.4 MUTUAL TERMINATION: This Agreement may, at any time before or
after the holding of the Meeting, but no later than the Effective Date, be
terminated by unanimous agreement of the boards of directors of the Corporations
without further action on the part of their respective shareholders and if the
Effective Date does not occur on or before October 31, 2002 each of the
Corporations may unilaterally terminate this Agreement without further action on
the part of its shareholders, which termination will be effective upon a
resolution to that effect
15
being passed by the applicable board of directors and notice thereof being given
to the other Corporations.
ARTICLE 7
GENERAL
SECTION 7.1 NOTICES: All notices which may or are required to be given
pursuant to any provision of this Agreement shall be given or made in writing
and shall be served personally or by telecopy, in each case addressed to as
follows:
(a) In the case of ADB:
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx Xxxxxx
X0X 0X0
Attention: Xxxx Xxxxxxxxx, Chief Executive Officer
Telecopier: (000) 000-0000
(b) In the case of
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx Xxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx
Telecopier: (000) 000-0000
SECTION 7.2 ASSIGNMENT: No Corporation may assign its rights or
obligations under this Agreement or the Arrangement without the prior written
consent of the other Corporation.
SECTION 7.3 BINDING EFFECT: This Agreement and the Arrangement shall be
binding upon and shall ensure to the benefit of the Corporations and their
respective successors and permitted assigns.
SECTION 7.4 WAIVER: Any waiver or release of any of the provisions of this
Agreement, to be effective, must be in writing and executed by the Corporations
granting such waiver or release. Waivers may only be granted upon compliance
with the terms governing amendments set forth in Section 6.1 hereof.
SECTION 7.5 GOVERNING LAW: This Agreement shall be governed and construed
according to the laws of the Province of Ontario and the laws of Canada
applicable therein, and shall be treated, in all respects, as an Ontario
contract. For the purposes of all legal proceedings this
16
Agreement will be deemed to have been performed in the Province of Ontario and
each of the parties hereby attorns to the jurisdiction of the courts of the
Province of Ontario.
SECTION 7.6 COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
SECTION 7.7 ENTIRE AGREEMENT: This Agreement, together with the agreements
and other documents herein or therein referred to, constitutes the entire
agreement among the Corporations pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, between the Corporations with respect to the subject
matter hereof.
SECTION 7.8 TIME OF ESSENCE: Time is of the essence of this Agreement.
WITNESS WHEREOF the parties hereto have executed this
Agreement as of the date hereinbefore written.
ADB SYSTEMS INTERNATIONAL, INC.
Per: __________________________
Title:
Name:
ADB SYSTEMS INTERNATIONAL LTD.
Per: _________________________
Title:
Name:
17
EXHIBIT "A"
TO THE ARRANGEMENT AGREEMENT DATED AS OF THE 23RD DAY OF
AUGUST, 2002
BETWEEN ADB SYSTEMS INTERNATIONAL INC. AND ADB NEWCO INC.
PLAN OF ARRANGEMENT UNDER SECTION 182 OF THE
BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE 1
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions: In this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following capitalized
words and terms shall have the following meanings:
(a) "ADB CONVERTIBLE DEBT" means certain secured convertible debt
of ADB having an aggregate principal amount of $1,000,000 and
evidenced by promissory notes issued in series, namely Series
A, Series B, Series C and Series D;
(b) "ADB OPTIONS" means options in favour of directors, officers,
employees and other service providers to purchase ADB Shares
as more particularly described in the Information Circular and
issued pursuant and subject to the ADB Stock Option Plan;
(c) "ADB SHARES" means the issued and outstanding common shares of
ADB, and common shares of ADB that are allotted pursuant to
the Subordinate Notes as the same are constituted on the date
hereof;
(d) "ADB STOCK OPTION PLAN" means the incentive stock option plan
adopted by ADB, as amended form time to time, and approved by
its shareholders which is in effect at the date hereof and
more particularly described in the Information Circular;
(e) "ADB WARRANTS" means warrants to purchase up to 2,170,100 ADB
Shares which are issued and outstanding on the date hereof and
are more particularly described in the Information Circular;
(f) "AGREEMENT" means this arrangement agreement including the
exhibits hereto as the same may be supplemented or amended
from time to time;
(g) "ARRANGEMENT" means the arrangement proposed to be effected
under the provisions of Section 182 of the OBCA on the terms
set out in the Plan of Arrangement;
18
(h) "BUSINESS DAY" means a day which is not a Saturday, Sunday or
statutory holiday;
(i) "CHARTER DOCUMENTS" of any corporation means the articles and
by-laws of such corporation;
(j) "CORPORATION" means ADB and New ADB;
(k) "COURT" means the Ontario Superior Court of Justice;
(l) "EFFECTIVE DATE" means the effective date of the Arrangement
pursuant to the certificate of arrangement issued by the
Director under the OBCA giving effect to the Arrangement;
(m) "FINAL ORDER" means the final order of the Court approving the
Arrangement;
(n) "INFORMATION CIRCULAR" means the management information
circular of ADB to be sent to the shareholders of the ADB in
connection with the Meeting;
(o) "INTERLOCUTORY ORDER" means the interim order of the Court;
(p) "MEETING" means the special meeting of the shareholders of the
ADB to be held to consider and, if deemed advisable, to
approve the Arrangement;
(q) "NEW ADB CONVERTIBLE DEBT" means convertible secured debt of
New ADB to be exchanged for and having the same denomination,
terms and conditions as the ADB Convertible Debt;
(r) "NEW ADB OPTIONS" means options to purchase new New ADB Shares
to be exchanged for and having the same terms and conditions
as the ADB Options. New ADB Options will be issued pursuant
and subject to the ADB New Stock Option Plan;
(s) "NEW ADB SHARES" means the common shares which New ADB is
authorized to issue, as the same are constituted on the date
hereof.
(t) "NEW ADB STOCK OPTION PLAN" means the incentive stock option
plan to be adopted by New ADB and having the same terms and
conditions as the ADB Stock Option Plan;
(u) "NEW ADB WARRANTS" means warrants to purchase new ADB newco
Shares to be exchanged for and having the same terms and
conditions as the ld ADB warrants;
(v) "OBCA" means the Business Corporations Act, R.S.O. 1990, c.
B.16, as amended;
19
(w) "PERSON" includes an individual, sole proprietorship,
partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, body corporate,
a trustee, executor, administrator or other legal
representative and the Crown or any agency or instrumentality
thereof;
(x) "PLAN OF ARRANGEMENT" means the plan of arrangement attached
to this Agreement as Exhibit A, as it may be amended from time
to time;
(y) "SUBORDINATE NOTES" means (i) the convertible secured notes
(including but not limited to Series A, Series B and Series C)
issued to Xxxxxxxxxxx Limited Partnership by ADB pursuant to a
subscription agreement dated as of August 30, 2002; (ii) the
convertible secured notes (including but not limited to Series
D) issued to Greenwich Growth Fund Ltd. by ADB pursuant to a
subscription agreement dated as of August 30, 2002; and (iii)
the convertible secured notes issued to subscribers other than
Greenwich Growth Fund Ltd. by ADB for an amount not greater
than $300,000.
(z) "SUBSIDIARY" means, with respect to a specified body
corporate, a body corporate which more than 50% of the
outstanding shares ordinarily entitled to elect a majority of
the directors thereof whether or not shares of any other class
or classes shall or might be entitled to vote upon the
happening of any event or contingency, are at the time owned,
directly or indirectly, by such specified body corporate, and
includes a body corporate in like relation to a Subsidiary.
ARTICLE 2
THE ARRANGEMENT
SECTION 2.1 Arrangement Agreement: This Plan of Arrangement is made
pursuant and subject to the provisions of the Arrangement Agreement.
ARTICLE 3
THE ARRANGEMENT
SECTION 3.1 ARRANGEMENT AND RELATED TRANSACTIONS: The Corporations agree
that as at 12:01 am on the Effective Date (the "Effective Time") the following
will occur and shall be deemed to occur in the following order on the terms and
subject to the conditions contained in this Agreement:
(a) Each ADB Common Share (other than such shares held by
dissenting shareholders) shall be and be deemed to be
exchanged with New ADB for the sole consideration of one New
ADB Common Share;
(b) pursuant to a general assignment and assumption agreement, ADB
will transfer all of the ADB Assets (as defined in such
agreement) to New ADB in part as a return of capital and in
part as in consideration of the assumption of ADB Liabilities
and
20
New ADB will assume, fulfill and perform all of the ADB
Liabilities (as defined in such agreement). The transaction
will be approved by the court pursuant to the Bulk Sales Act.
Upon such transfer:
(i) New ADB shall be liable for the obligations of ADB
(including any obligations that may arise under any
permit or agreement) under the ADB Liabilities
existing immediately before the Effective Time or
that arises after the Effective Time in respect of
facts or circumstances in existence immediately prior
to the Effective Time;
(ii) any existing cause of action, claim or liability to
prosecution of or affecting ADB existing immediately
before the Effective Time or that arises after the
Effective Time in respect of facts or circumstances
in existence immediately prior to the Effective Time
shall be assumed by New ADB;
(iii) New ADB shall be liable for the obligations of ADB to
dissenting shareholders, if any;
(iv) a civil, criminal or administrative action or
proceeding pending by or against ADB existing
immediately before the Effective Time or that arises
after the Effective Time in respect of facts or
circumstances in existence immediately prior to the
Effective Time shall be continued to be prosecuted by
or against New ADB;
(v) a conviction against ADB immediately before the
Effective Time may be enforced against New ADB or a
ruling, order or judgment in favour of or against ADB
existing immediately before the Effective Time or
that arises after the Effective Time in respect of
facts or circumstances in existence immediately prior
to the Effective Time shall be enforced by or against
New ADB;
(vi) the registered office of New ADB shall be located in
Mississauga, Ontario;
(vii) the articles of New ADB shall be substantively the
same as the articles of ADB;
(viii) the number of directors of New ADB shall be a minimum
of 3 and a maximum of 15, the actual number of
directors within the minimum and maximum number to be
determined from time to time by resolution of the
directors of New ADB;
(ix) the initial directors of New ADB shall be nominees of
ADB until their respective successors have been duly
elected or appointed; and
(x) the initial by-laws of New ADB shall be the by-laws
of ADB in effect immediately before the Effective
Time, to be supplemented, amended or
21
repealed in accordance with the provisions of the Act
relating to the making, amending and repealing of
by-laws;
(c) New ADB shall have adopted the New ADB Stock Option Plan;
(d) each ADB Option, whether vested or not vested, outstanding on
the Effective Date shall be exchanged at the Effective Time
for a New ADB Option having the same terms and conditions and
subject to the New ADB Stock Option Plan. The obligations of
ADB under the ADB Stock Option Plan shall thereafter
terminate;
(e) each ADB Warrant, whether vested or not vested, outstanding
immediately prior to the Effective Date shall be exchanged for
an New ADB Warrant having the same terms and conditions
following which the ADB Warrants shall be null and void;
(f) the ADB Convertible Debt outstanding immediately prior to the
Effective Time shall be exchanged for New ADB Convertible Debt
having the same terms and conditions following which the ADB
Convertible Debt shall be null and void; and
(g) the articles of amalgamation of ADB shall be amended as
follows:
(i) to change the name of ADB to Xxx.Xxx International
Ltd. or such other name as may be permitted under the
OBCA;
(ii) to delete the authorized Preference Shares (as
defined in such articles), the terms and conditions
attaching to such Preference Shares and the
restrictions on transfer of such Preference Shares;
and
(iii) to add transfer restrictions and limits on the number
of shareholders.
22
ARTICLE 4
SHARE CERTIFICATES
SECTION 4.1 SHARE CERTIFICATES: Following the Effective Date, certificates
representing New ADB Shares to which each holder of ADB Shares is entitled will
be forwarded to each holder of New ADB Shares as soon as practicable and will be
registered in the same manner as such shareholder's ADB Shares are registered
immediately prior to the Effective Date. Certificates representing ADB Shares
held by each holder of ADB Shares issued and outstanding immediately prior to
the Effective Date shall thereafter represent the New ADB Shares held by such
holder immediately following the Effective Date.
ARTICLE 5
RIGHTS OF DISSENT
SECTION 5.1 RIGHTS OF DISSENT: Holders of ADB Shares may exercise rights
of dissent pursuant to and in the manner set forth in Section 185 of the OBCA
and this section 5.1 in connection with the Arrangement and holders who duly
exercise such right of dissent and who:
(a) are ultimately entitled to be paid fair value for their ADB
Shares, shall be deemed to have transferred their ADB Shares
to ADB for cancellation at the Effective Date of the
Arrangement; or
(b) for any reason, are ultimately not entitled to be paid fair
value for their ADB Shares, shall (unless clause 29(b) of
section 185 of the OBC applies) be deemed to have participated
in the Arrangement on the same basis as any non-dissenting
holder of ADB Shares as at and from the Effective Date and
shall receive New ADB Shares on the basis set forth in section
3.01(a) of this Plan of Arrangement, subject to Article Four
hereof,
but in no case shall ADB be required to recognize such persons as holding ADB
Shares on and after the Effective Date.
EXHIBIT "B"
GENERAL CONVEYANCE
AND ASSUMPTION AGREEMENT
THIS AGREEMENT is dated as of the 23(rd) day of August, 0000
X X X X X X X:
ADB SYSTEMS INTERNATIONAL INC., a
corporation incorporated under the laws of
the Province of Ontario, having its
principal place of business at 0000 Xxxxxxx
Xx., Xxxxxxxxxxx, Xxxxxxx X0X 0X0 ("ADB")
-and-
ADB SYSTEMS INTERNATIONAL LTD., a
corporation incorporated under the laws of
the Province of Ontario, having its
principal place of business at 6725
Xxxxxxxxxxx, Xxxxxxx X0X 0X0 ("New ADB")
BACKGROUND:
1. Pursuant to a co-operation agreement dated as of August 23,
2002, among ADB, New ADB and The Brick Warehouse Corporation (the "Co-Operation
Agreement"), ADB agreed to assign and transfer to New ADB certain of its assets
and New ADB agreed to assume certain of ADB's liabilities.
2. Pursuant to a resolution of the board of directors, it was
resolved to transfer such assets to new ADB as a return of capital and this
agreement is intended to implement such return of capital.
3. ADB's G.S.T. registration number is 88676-3960-RT0001 and
New ADB will apply for a G.S.T. registration number forthwith.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants contained in this Agreement and for other good and
valuable consideration (the receipt and adequacy of which are hereby mutually
acknowledged), the parties agree as follows:
1. DEFINITIONS - Unless otherwise specifically defined in this Agreement,
any capitalized terms used in this Agreement shall have the meanings ascribed to
them in the Co-Operation Agreement.
2. TRANSFER OF ASSETS - ADB hereby transfers, conveys, assigns and
delivers unto New ADB, its successors and assigns, effective as at the Effective
Time, all of ADB's right, title and
- 2 -
interest in all of its assets on a going concern basis and including goodwill,
except the Xxx.Xxx Assets as described in Schedule "A" hereto. For their
respective tax purposes, the parties agree that the fair market value of the
assets is as indicated on Schedule "C" hereto. In the event that Canada Customs
and Revenue Agency ("CCRA") should take the view, and it should be ultimately
determined by CCRA, the Tax Court of Canada or a higher tribunal that the fair
market value of the assets is an amount different than an amount set out on
Schedule C, then the parties agree to adopt such different amount for purposes
of determining their proceeds or cost amounts, as the case may be.
3. TAX - New ADB shall pay all retail sales tax and G.S.T. in respect of
the transactions contemplated hereby. ADB and New ADB shall jointly make and New
ADB shall file in prescribed form and manner an election pursuant to section 167
of the Excise Tax Act (Canada) in connection with the transfer of assets
hereunder. New ADB will indemnify and save harmless ADB from and against all
Liabilities incurred by ADB directly or indirectly as a result of ADB not
collecting or remitting any tax in respect of the transfer of assets hereunder
or as a result of any failure to file the election referred to in the last
sentence in a timely fashion.
4. EMPLOYEES - New ADB will offer employment to all employees of ADB on
substantially the same terms as they presently enjoy, except in respect of Xxx
Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx and will continue to be responsible for
and will discharge all Liabilities to such employees for wages, severance pay,
termination pay, notice of termination of employment or pay in lieu of such
notice, damages for wrongful dismissal or other employee benefits or claims,
including vacation pay, whether arising under a written contract of employment
or otherwise.
5. ASSUMPTION AND INDEMNIFICATION - New ADB hereby assumes all the ADB
liabilities except the Xxx.Xxx Liabilities as described in Schedule B hereto,
and undertakes to pay or discharge such liabilities in accordance with their
terms. New ADB shall indemnify and hold harmless ADB and its respective
Affiliates, officers, directors, shareholders, representatives and agents
(collectively the "INDEMNITEES") from and against and in respect of any and all
Losses incurred by, resulting from, arising out of, relating to, imposed upon or
incurred by any other Indemnitee by reason of any indebtedness, obligation or
liability of any kind in respect of the liabilities assumed pursuant to this
agreement. For purposes of this Agreement, the term, "LOSSES" means any and all
deficiencies, judgments, settlements, demands, claims, suits, actions or causes
of action, liabilities, losses, damages, interest, fines, penalties, costs and
expenses (including reasonable legal, accounting and other costs and expenses
incurred in connection with investigating, defending, settling or satisfying any
and all demands, claims, actions, causes of action, suits, proceedings,
assessments, judgments or appeals, and in seeking indemnification therefore.)
6. RETURN OF CAPITAL - The amount by which the fair market value of the
transferred assets exceeds the assumed liabilities shall be paid to New ADB as a
return of capital on its shares of ADB.
7. FURTHER ASSURANCES - Upon the request from time to time of New ADB,
ADB shall execute all such conveyances, bills of sale, transfers, assignments,
notices and other documents and use all reasonable efforts to secure all
necessary consents and approvals as, in the reasonable opinion of New ADB, may
be necessary to effectively vest title to the assets in New ADB or
- 3 -
otherwise to protect or perfect any rights of New ADB in the assets. New ADB
shall be responsible for the costs of preparing, executing and registering with
all necessary offices of public record any such conveyance, xxxx of sale,
transfer, assignment, notice or other document in respect of the assets.
8. REMEDIES - The rights and remedies conferred under this Agreement are
not intended to be exclusive of any other rights or remedies available to either
New ADB or ADB in connection with the breach or failure of any of the covenants,
warranties, representations or other obligations of the other party given in
this Agreement or the Co-Operation Agreement, and nothing contained in this
Agreement shall be construed in any manner as restricting or derogating from any
other such rights or remedies.
9. CONFLICT - This General Conveyance and Assumption Agreement is
executed and delivered pursuant to the Co-operation Agreement, and ADB covenants
and agrees with New ADB that this General Conveyance and Assumption Agreement is
subject to every agreement, representation, warranty, indemnification, covenant
and provision contained in the provisions of the Co-operation Agreement. In the
event there is a conflict between the terms and the provisions of this Agreement
and the Co-operation Agreement, the terms and provisions of the Co-operation
Agreement shall govern.
10. TRUST - ADB hereby declares that, as to any of the ADB assets or
interest in any of the ADB assets intended to be hereby transferred, assigned,
conveyed and set over to New ADB, and the title to which may not have passed to
New ADB by virtue of this Agreement or any transfers or conveyances which may
from time to time be executed and delivered in connection with this Agreement,
ADB holds such property or interest in trust for New ADB to convey, assign and
transfer the same as ADB may from time to time direct. Any Liabilities
associated with ADB assets transferred or intended to be transferred hereunder
shall be assumed by New ADB even though title to such ADB assets may be held in
trust by ADB and New ADB will indemnify and save harmless ADB from and against
all such Liabilities.
11. NOTICE - Any notice or other communication (a "Notice") required or
permitted to be given or made hereunder shall be in writing and shall be well
and sufficiently given or made if:
(a) delivered by overnight courier service;
(b) sent by facsimile transmission or other means of electronic
communication;
in the case of a Notice to New ADB addressed to it at:
c/o The Brick Warehouse Corporation
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxx,
Chief Financial Officer
Fax No.: (000) 000-0000
- 4 -
with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx-Xxxxxxxx Bank Tower
Toronto, ON M5K 1E6
Attention: Xxxxxxxx Xxxxx
Fax No.: (000) 000-0000
and in the case of a Notice to ADB, addressed to it at:
ADB Systems International Inc.
000-0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X xX0
Attention: Xxxx Xxxxxx
Fax No.: (000) 000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Any Notice given or made in accordance with this Section 11
shall be deemed to have been given or made and to have been received on the next
Business Day after it was delivered, if delivered as aforesaid.
Either party may from time to time change its address for
notice by giving Notice to the other party in accordance with the provisions of
this Section 11.
12. ASSIGNMENT - Neither ADB or New ADB may assign its rights and
obligations under this Agreement, in whole or in part, without the prior consent
in writing of the other party. Any purported assignment made by ADB or New ADB
without required consent is void and of no effect. No assignment of this
Agreement shall relieve either party from any obligation under this Agreement.
- 5 -
13. BINDING ON SUCCESSORS - This Agreement shall ensure to the benefit of
and be binding upon the parties and their respective successors and permitted
assigns.
14. FURTHER ASSURANCES - Each party agrees that upon the written request of
the other party, it will do all such acts and execute all such further
documents, assignments, and the like, and will cause the doing of all such acts
and will cause the execution of all such further documents as are within its
power to cause the doing or execution of, as any other party hereto may from
time to time reasonably request be done and/or executed as may be reasonably
necessary or desirable to give effect to this Agreement.
15. INDEPENDENT CONTRACTORS - It is understood and agreed that in giving
effect to this Agreement, no party shall be or be deemed a partners, agent or
employee of the other party for any purpose and that their relationship to each
other shall be that of independent contractors. Nothing in this Agreement shall
constitute a partnership or a joint venture between the parties. No party shall
have the right to enter contracts or pledge the credit of or incur expenses of
liabilities on behalf of the other party.
16. WAIVER - A waiver by a party hereto of any its rights hereunder or of
the performance by the other party of any of its obligations hereunder shall be
without prejudice to all of the other rights hereunder of the party so waiving
and shall not constitute a waiver of any such other rights or, in any other
instance, of the rights so waived, or a waiver of the performance by the other
party of any of its other obligations hereunder or of the performance by the
other party of any of its other obligations hereunder or of the performance, in
any other instance, of the obligations waived. No waiver shall be effective or
binding upon a party unless the same shall be expressed in writing and executed
by the party to be bound.
17. INTERPRETATION - This Agreement has been negotiated by the parties
hereto and their respective counsel and shall be fairly interpreted in
accordance with its terms and without any rules of construction relating to
which party drafted the agreement being applied in favour or against either
party.
18. AMENDMENT - No amendment of any provision of this Agreement shall be
effective unless such amendment is embodied in a written agreement which is: (i)
expressly stated to be intended to amend this Agreement; and (ii) executed by an
authorized signing officer of ADB and an authorized signing officer of New ADB.
19. GOVERNING LAW - This Agreement shall be governed and construed
according to the laws of the Province of Ontario and the laws of Canada
applicable therein, and shall be treated, in all respects, as an Ontario
contract, without prejudice to or limitation of any rights or remedies available
under the laws of any jurisdiction where property or assets of either party may
be found. Each of the parties hereby attorns to the jurisdiction of the courts
of the Province of Ontario.
20. TIME OF THE ESSENCE - Time is of the essence of this Agreement.
21. COUNTERPARTS - This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the
- 6 -
same instrument. Counterparts may be executed either in original or faxed form
and the parties adopt any signatures received by a receiving fax machine as
original signatures of the Parties.
IN WITNESS WHEREOF this Agreement is executed by the Parties
as of the date first written, above.
ADB SYSTEMS INTERNATIONAL INC.
By: _________________________________
Name:
Title:
ADB SYSTEMS INTERNATIONAL LTD.
By: _________________________________
Name:
Title:
SCHEDULE "A"
XXX.XXX ASSETS
Old ADB Domain Names (as defined in the Loan Agreement)
Old ADB Trade-Marks (as defined in the Loan Agreement)
All goodwill associated with the Xxx.Xxx Assets and the Xxx.Xxx Liabilities
registered user data base for xxx.xxx.xxx
Employment Agreements with Xxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx
Employee Workstations (3 units)
- Personal computers: Hewlett Packard, 256 RAM
- Monitors
- Printer (1): Hewlett Packard 1100
- Cellular Phones: Xxxxxx
- Desk telephones
- Pagers
Office Furniture
- One workstation cluster (4 employee stations)
- Office chairs
- Filing cabinet unit
THE FOLLOWING ITEMS ARE SUBJECT TO A LEASE WITH HEWLETT- PACKARD:
WEB SERVER
- Quad CPU Intel Pentium Xeon 500 MHZ (2 MB L2 Cache)
- 2 GB Ram
- 2 -
- Raid Card
- 2 10/100 NIC's
- 2x18 Raid 0 HDD
- 3x18 Raid 5 HDD
- Tape Drive
- Floppy Drive
-
DATABASE (2 NODE CLUSTER)
- Node Configuration: 2 Units
- Dual CPU Intel Pentium Xeon 500 MHZ (2 MB L2 Cache)
- 1 GB Ram
- Raid Card
- 2 10/100 NIC's
- 3x18 Raid 5 HDD
- Tape Drive
- Floppy Drive
-
Shared Data Storage (1 Unit)
- Raid Xxxx Xxxxx
- 0x00 XX HDD
Domain Controllers (2 Units)
- Dual CPU 500 MHZ
- 512 MB RAM
- Raid Xxxx
- 0 -
- 0 XXX
- 0xx0 XX HDD
- Tape Backup
THE ITEMS LISTED BELOW ARE NOT INCLUDED IN THE XXX.XXX ASSETS BUT SHALL BE
ADDRESSED AS PART OF THE BUDGET PROCESS CONTEMPLATED BY THE SUPPLY, SERVICES AND
LICENSE AGREEMENT BETWEEN ADB, NEW ADB AND THE BRICK WAREHOUSE CORPORATION
Other Software
- MS Windows 2000 Server
- MS SQL 2000 Server
- Verisign secure certificate
- SA-FileUP
Other Hardware
- Internet Connection: T1 1.5 MB
- Router: Cisco 2500/2600 series
- Firewall: Cisco Pix 515 or 525 Series
- Switch: Cisco/HP/3Com
- 8 Leased IP addresses
- UPS'S
- Server Racks
- Monitor
- Cables
SCHEDULE B
XXX.XXX LIABILITIES
1. Employment obligations under agreements with Xxx Xxxxxx, Xxxxx Xxxxxx
and Xxxxxx Xxxxx.
2. Obligations to be assumed/retained by Xxx.Xxx under cell phone, pager
and office phone arrangements for the employees specified in 1. above.
3. Obligations to be assumed/retained by Xxx.Xxx in respect of hardware,
software and connectivity arrangements pursuant to the budgetary
process contemplated by the Supply, Services and License Agreement
between ADB, New ADB and The Brick Warehouse Corporation.
SCHEDULE "C"
ADB SYSTEMS INTERNATIONAL INC.
MARKET BASED VALUATION ESTIMATES
28/08/2002
ADB Systems International Inc
Market Based Valuation Estimates
28/08/2002
Estimated Accounting Values Estimated Tax Values
at August 22, 2002 at August 22, 2002
ASSETS
CURRENT
Cash $ 66,308 $ 66,308
Marketable securities $ 105,615 $ 105,615
Accounts receivable $ 35,312 $ 35,312
Intercompany receivable (payable) $ 5,796,667 $ 5,796,667
Deposits and prepaid expenses $ 207,670 $ 1,133,598
--------------------------------------
$ 6,211,572 $ 7,137,500
$ 0
CAPITAL ASSETS - AT COST $ 3,013,636
Less accumulated depreciation $ (2,680,893)
--------------------------------------
$ 332,743 3,332,168
STRATEGIC INVESTMENTS $ 80,078 2,806,400
INVESTMENT IN SUBSIDIARIES $ (2,581,412) 3,167,190
TRADEMARKS AND INTELLECTUAL PROPERTI $ 27,617 162,910
--------------------------------------
TOTAL ASSETS $ 4,070,598 $ 16,606,168
======================================
LIABILITIES
CURRENT
Accounts payable $ 468,663 $ 468,663
Accrued liabilities $ 23,294 $ 23,294
Current portion of long term capital
lease $ 16,714 $ 16,714
Current portion of deferred revenue $ 107,820 $ 107,820
--------------------------------------
$ 616,491 $ 616,491
Minority Interest $ 0 $ 0
SHAREHOLDERS' EQUITY
Share capital $ 94,516,037 $ 94,516,037
GE Warrants $ 1,348,994 0
Non Employee Options $ 115,967 0
Options Issued - Norway Employees $ 575,533 0
FTC Account $ 8,844 0
Deficit - Opening Balance $(87,592,746)
Deficit - Current Year $ (5,518,522)
Total Deficit $(93,111,268) (78,526,360)
--------------------------------------
Net Equity $ 3,454,107 $ 15,989,677
--------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,070,598 $ 16,606,168
======================================
Outstanding Share Capital at June 30, 2002 $ 41,494,400
Closing Share Price-Aug 22, 2002 0.12
FMV of ADB Systems
Estimated FMV
at August 22, 2002
ASSETS
CURRENT
Cash $ 66,308 FMV=Book Value
Marketable securities $ 105,615 FMV=Book Value
Accounts receivable $ 35,312 FMV=Book Value
Intercompany receivable (payable) 0 FMV of 0, as no subsidiary has the capacity to repay
Deposits and prepaid expenses $ 21,514 FMV reflects only amounts recoverable
----------
$ 228,749
CAPITAL ASSETS - AT COST
Less accumulated depreciation
----------
332,743 FMV=Book Value
STRATEGIC INVESTMENTS $ 80,078 Fair Market Value based on Trading Prices
INVESTMENT IN SUBSIDIARIES 3,042,415 FMV based book value of assets/liabilities plus
depreciated value of software since October purchase
TRADEMARKS AND INTELLECTUAL PROPERTI $1,295,343 FMV-Unallocated residual
----------
TOTAL ASSETS $4,979,328
==========
LIABILITIES
CURRENT
Accounts payable $ 468,663 FMV= Book Value
Accrued liabilities $ 23,294 FMV= Book Value
Current portion of long term capital
lease $ 16,714 FMV= Book Value
Current portion of deferred revenue $ 0 FMV=0 as no go forward obligation present
----------
$ 508,671
Minority Interest $ 0
SHAREHOLDERS' EQUITY
Share capital
GE Warrants
Non Employee Options
Options Issued - Norway Employees
FTC Account
Deficit - Opening Balance
Deficit - Current Year
Total Deficit
----------
Net Equity $4,470,657
----------
TOTAL LIABILITIES 8 SHAREHOLDERS EQUITY $4,979,328
==========
Outstanding Share Capital at June 30, 2002 $ 0
Closing Share Price-Aug 22. 2002
FMV of ADB Systems $4,979,328
For Discussion Purposes Only. Do Not Distribute
SCHEDULE B
XXX.XXX ASSETS
Old ADB Domain Names (as defined in the Loan Agreement)
Old ADB Trade-Marks (as defined in the Loan Agreement)
All goodwill associated with the Xxx.Xxx Assets and the Xxx.Xxx
Liabilities
registered user data base for xxx.xxx.xxx
Employment agreements with Xxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx
Employee Workstations (3 units)
- Personal computers: Hewlett Packard, 256 RAM
- Monitors
- Printer (1): Hewlett Packard 1100
- Cellular Phones: Xxxxxx
- Desk telephones
- Pagers
Office Furniture
- One workstation cluster (4 employee stations)
- Office chairs
- Filing cabinet unit
THE FOLLOWING ITEMS ARE SUBJECT TO A LEASE WITH HEWLETT- PACKARD:
WEB SERVER
- Quad CPU Intel Pentium Xeon 500 MHZ (2 MB L2 Cache)
- 2 GB Ram
- Raid Card
- 2 10/100 NIC's
- 2x18 Raid 0 HDD
- 3x18 Raid 5 HDD
- Tape Drive
- Floppy Drive
-
DATABASE (2 NODE CLUSTER)
- Node Configuration: 2 Units
- Dual CPU Intel Pentium Xeon 500 MHZ (2MB L2 Cache)
- 1GB Ram
- Raid Card
- 2 10/100 NIC's
- 3x18 Raid 5 HDD
- Tape Drive
- Floppy Drive
-
Shared Data Storage (1 Unit)
- Raid Xxxx Xxxxx
- 0xx0 XX HDD
Domain Controllers (2 Units)
- Dual CPU 500 MHZ
- 512 MB RAM
- Raid Card
- 1 NIC
- 3xl8 GB HDD
- Tape Backup
THE ITEMS LISTED BELOW ARE NOT INCLUDED IN THE XXX.XXX ASSETS BUT SHALL BE
ADDRESSED AS PART OF THE BUDGET PROCESS CONTEMPLATED BY THE SUPPLY, SERVICES AND
LICENSE AGREEMENT BETWEEN ADB, NEW ADB AND THE BRICK
Other Software
- MS Windows 2000 Server
- MS SQL 2000 Server
- Verisign secure certificate
- SA-FileUP
Other Hardware
- Internet Connection: T1 1.5 MB
- Router: Cisco 2500/2600 series
- Firewall: Cisco Pix 515 or 525 Series
- Switch: Cisco/HP/3Com
SCHEDULE C
XXX.XXX LIABILITIES
XXX.XXX LIABILITIES
1. Employment obligations under agreements with Xxx Xxxxxx. Xxxxx Xxxxxx
and Xxxxxx Xxxxx.
2. Obligations to be assumed/retained by Xxx.Xxx under cell phone, pager
and office phone arrangements for the employees specified in 1. above.
3. Obligations to be assumed/retained by Xxx.Xxx in respect of hardware,
software and connectivity arrangements pursuant to the budgetary
process contemplated by the Supply. Services and License Agreement
between ADB, New ADB and The Brick Warehouse Corporation.
APPENDIX A TO SCHEDULE A
COMPETITOR LIST FOR THE BRICK
Sears
Sears (Canada)
Leon's Furniture
Xxxxxx'x Bay Company
Xxxxxx'x
Wal-Mart
Wal-Mart Canada
Best Buy
Future Shop
Home Depot
Home Depot Canada
Sleep Country Canada
Visions
A&B Sound
Xxxxxxxx Furniture & Appliances
North West Company
Bad Boy Furniture & Appliances
Ikea
Ikea Canada
La-Z-Boy Furniture Galleries
Mattress Mattress
Palliser Rooms
Trail Appliances
XX Xxxxxx
Xxxxxx & Xxxxxxxxx
Centre Hi-Fi
Matelas Bon Heur
Radio Shack
2001 audiovideo
XxXxxxxx Xxxxxxxx LLP TDO-MCTET2 #3622767 V.3
CompuSmart
Dumoulin
Tangeay
International Stereo
Home & Rural Appliances
xxxxxxxxx.xxx (virtual space)
X-xxx.xx
Xxxxxx.xx
XXX.xxx
2
SCHEDULE A
SOFTWARE RESTRICTIONS, NEW ADB SERVICE DESCRIPTIONS
AND MINIMUM REQUIREMENTS
1.0 SOFTWARE RESTRICTIONS
1.1 LICENSE GRANTED TO XXX.XXX
Subject to the provisions of the Agreement, NEW ADB hereby grants to XXX.XXX a
non-exclusive, perpetual, personal, non-transferable right to use the Software
and U.S. Patent Nos. 5,890,138 and 6,266,652 for the on-line sale of Products
under, and for the Term of, the Agreement only, which right includes the right
to use such Software in the performance of XXX.XXX's obligations to the THE
BRICK pursuant to the Agreement. The right granted in this Section 1.1
specifically excludes, however, any and all rights NEW ADB has or will have
under the Patent License Agreement made between Old ADB and XXX Xxxxxxxxxxx
dated April 17th, 2002, including, for certainty, U.S. Patent No. 5,721,906,
provided that the Parties acknowledge and agree that it is their intention that
Old ADB's benefits under Section 11.2 of the Patent License Agreement shall be
afforded to XXX.XXX.
1.2 USE LIMITATIONS ON SOFTWARE.
(a) The Retailer and the Supplier understand and acknowledge that
this Agreement only permits the Software to be used:
(i) in respect of transactions where the buyer's address
for delivery is in Canada or the United States of
America, as determined pursuant to the registration
process for such transactions; and
(ii) in connection with transactions involving consumer
goods.
(b) Nothing herein shall be construed as permitting the Retailer
any right of resale of the Software. Without limitation to the
foregoing, throughout the Term of the Agreement of which this
Schedule forms a part, XXX.XXX and NEW ADB shall not license
or sub-license, or permit the licensing or sublicensing of,
the right to use the Software for retail sales purposes to a
Competitor of THE BRICK. For the purposes of this Section 1.2,
"Competitor" means any Person whose principal business to be
conducted through Dynamic Seller is comprised of sales at
retail of furniture, mattresses, appliances or consumer
electronics to customers for delivery in Canada and includes,
without limitation the competitors listed in Appendix A to
Schedule A. For greater certainty, current customers of NEW
ADB exercising their rights under existing agreements or any
renewal or replacement agreements are not Competitors.
Notwithstanding the foregoing, NEW ADB may license or
25
sub-license, or permit the licensing or sublicensing of, the
right to use the Software for retail sales purposes to a
Competitor of THE BRICK where such Competitor is not given the
right to use the Software for sales at retail of furniture,
appliances or consumer electronics to customers for delivery
in Canada.
1.3 OWNERSHIP OF SOFTWARE.
(a) The Supplier and the Retailer acknowledge that, subject to the
grant of an interest contemplated by Section 4.1(a) of the
Agreement and the license granted pursuant to Section 4.l(b)
of the Agreement, NEW ADB retains ownership of the Software,
that the Software comprises commercially valuable trade
secrets, Confidential Information and proprietary data of NEW
ADB, and that no provision of this Agreement shall be
construed to convey title in the Software to the Supplier or
to the Retailer save and except for the transfer of the
interest in the Software to THE BRICK to be granted pursuant
to Section 4.l(a) of the Agreement to which this Schedule
forms a part.
(b) Without limitation to any of the restrictions on the rights of
the Supplier or the Retailer with respect to the Software, the
Supplier and the Retailer each covenant and agree to disclose
to NEW ADB any desirable modifications or improvements to the
Software or any add-on computer programs or files, application
programming interfaces, bug fixes or patches as may come to
their attention. All right, title and interest in any of the
foregoing that NEW ADB first learns of from the Supplier or
the Retailer or creates for either or both of them pursuant to
this Agreement, including the Source Materials with respect
thereto, shall immediately vest as the property of NEW ADB
save and except that they shall be deemed to form part of the
Software hereunder which shall be subject to all the terms and
provisions of this Agreement with respect to the Software
including, for added certainty, Section 1.2 of this Schedule
A. Where applicable, the Supplier and/or the Retailer shall
cause their employees, agents or consultants to waive any
moral rights they may have in such modifications or
improvements and shall deliver written evidence thereof to NEW
ADB promptly.
(c) Notwithstanding paragraphs (a) and (b) of this Section 1.3,
but subject to Section 3.2 of the Agreement, the Parties
acknowledge that THE BRICK shall retain all of its
Intellectual Property Rights in the "look and feel" of
xxx.xxxxxxxx.xxx and in all the content provided by it
pursuant to Section 3.2 of the Agreement, of which this
Schedule forms a part.
26
2.0 SERVICE DESCRIPTIONS
2.1 IMPLEMENTATION AND CUSTOMIZATION SERVICES.
(a) NEW ADB will provide all implementation services described in
Appendix B to this Schedule A (the "IMPLEMENTATION").
(b) "ACTIVATION" means the completion by NEW ADB of a production
site incorporating the functionality set out in Appendix B to
this Schedule A. XXX.XXX agrees to provide to NEW ADB a
written acknowledgment of Activation, upon such functionality
being achieved. NEW ADB shall use commercially reasonable
efforts to achieve Activation before November 30,2002. In the
event XXX.XXX notifies NEW ADB in writing that it does not
accept that Activation has been achieved, it must set out in
writing the reasons for its non-acceptance and deliver such
reasons to NEW ADB within 2 Business Days after NEW ADB gave
it notice of Activation, failing which it shall be deemed to
have accepted the Activation. Any dispute over Activation
shall be settled amicably by the Project Managers as defined
herein, failing which the matter shall be referred to the
Presidents of each Party for resolution, failing which the
matter shall be referred to arbitration as outlined herein.
The scope of and the schedule for the completion of NEW ADB's
implementation of a production site and the resulting
functionality thereof shall be completed by mutual agreement
of the Project Managers, acting reasonably and diligently
after the date of this Agreement, in accordance with Appendix
B to this Schedule A. NEW ADB shall use its commercially
reasonable efforts to achieve the delivery dates to be agreed
by the Project Managers pursuant to such Appendix B.
(c) The Implementation will be conducted by NEW ADB personnel, on
dates and times and at such locations as mutually determined
by the Parties. The Project Managers will act reasonably and
diligently to prepare and mutually agree on a detailed set of
procedures and a time line for the completion of acceptance
testing of the Implementation in accordance with Appendix B to
this Schedule A.
(d) NEW ADB shall develop and implement all interface requirements
reasonably necessary to permit remote electronic transfer by
XXX.XXX of product and transactional information to and from
NEW ADB's platform site in accordance with the mutual
agreement of the Project Managers pursuant to Appendix B to
this Schedule A.
2.2 FEES FOR IMPLEMENTATION AND CUSTOMIZATION SERVICES
(a) XXX.XXX shall pay NEW ADB $800 per man day for the Services of
NEW ADB pursuant to Section 2.1 of this Schedule A. NEW ADB
estimates it will take
27
approximately 57 man days of work to achieve Activation. If
Activation is achieved on or before November 15, 2002, XXX.Xxx
shall pay NEW ADB an additional $200 per man day that was
required to achieve Activation.
2.3 ADDITIONAL SERVICES
(a) In the event XXX.XXX wishes to retain NEW ADB for additional
consulting, customization or implementation services beyond
those described in this Schedule at any time during the Term
of the Agreement to which this Schedule forms a part, XXX.XXX
shall provide no less than 15 days prior written notice of
each such change order, and the specific details of such
additional work must be defined and agreed in writing through
a change request in ADB's standard form, signed by all Parties
before the commencement of work. NEW ADB shall provide change
order services, subject to availability of the relevant NEW
ADB personnel, at ADB's Daily Rates, plus expenses (travel,
per diem and lodging) if travel is required. ADB's Daily Rate
is CDN $1,000 per day for intermediate developers, for senior
developers and for Project Managers.
(b) Nothing herein shall obligate NEW ADB to provide any services
in connection with the Software, including without limitation
video streaming, specific functionality or customization
changes to the Software, or any additional or specific
branding requirements, beyond those specified herein. Retailer
must contract separately with NEW ADB for any such services,
failing which NEW ADB assumes no responsibility for such
services.
2.4 TRAINING
(a) Where appropriate, NEW ADB agrees to provide training, at a
site designated by NEW ADB, to up to two (2) employees each of
XXX.XXX and THE BRICK for one full Business Day with respect
to remote transfer of product and transactional information to
and from NEW ADB's platform site, show production and
transaction fulfilment. NEW ADB shall reasonably determine the
resources to be made available for such consultation and
training, provided that NEW ADB shall use its commercially
reasonable efforts to ensure that Retailer and Supplier have
sufficient training prior to Activation to conduct
transactions through the platform on an ongoing basis. In the
event that either Retailer or Supplier determines that more
training is necessary, NEW ADB shall provide such training at
$800 per day, plus travel, lodging and expenses.
(b) The training will be conducted by NEW ADB personnel, on dates
and times and at such locations as mutually determined by the
parties.
2.5 TECHNICAL SUPPORT AND ESCALATION PROCEDURES
28
New ADB agrees to provide ongoing technical support for the Sites. It
is the general intention of the Parties that this will include:
(a) Monitoring dedicated circuit to ensure that it is operational
at all times.
(b) Maintain configuration on internet access routers and make
changes where necessary.
(c) Load balancing.
(d) Security monitoring.
(e) Ensuring HTTPS access to the Supplier for access to program
reports;
however the Parties agree that the Project Managers will work together
diligently and reasonably after the Effective Date to determine
specifically what ongoing technical support will be provided for the
Sites and whether items (a) to (e) above, and/or other items, will be
provided.
2.6 SECURITY
(a) NEW ADB agrees to cooperate with XXX.XXX in the implementation
of security protocols and procedures as they are developed
during the term of this Agreement. NEW ADB shall establish
reasonable and appropriate security functionality permitting
the regulation of access to the Software and the transaction
platform. XXX.XXX shall be responsible for issuing and
terminating passwords and/or usernames and verifying the
status of authorized users.
(a) NEW ADB and XXX.XXX agree to cooperate in the collection and
sharing of information about the use of the platform
consistent with applicable privacy laws and confidentiality
requirements of each Party. NEW ADB will not be required to
obtain consents from users of the Sites to the collection,
retention, disclosure and use of such user's personal
information, which shall be the responsibility and at the sole
cost of XXX.XXX.
3.0 INFRINGING SOFTWARE
NEW ADB agrees that, in the event that during the Term of the Agreement the
Software or any portion thereof is held to infringe another person's rights, and
use thereof is enjoined during such Term, NEW ADB shall, at its election and
expense: (i) procure the right to use the infringing element thereof; (ii)
procure the right to an element which performs the same function without any
material loss of functionality; or (iii) replace or modify the element thereof
so that the infringing portion is no longer infringing and still performs the
same function without any material loss of functionality, performance or
efficiency, provided that NEW ADB shall not be required to take any of the
foregoing steps and shall bear no liability with respect to such an infringement
that is caused, in whole or in part, by the actions or direction of XXX.XXX or
THE
29
BRICK, including any content displayed or data processed by the Software that
was provided by either of them.
4.0 COVENANTS OF RETAILER AND SUPPLIER
(a) Without limitation to Section 5.2 of the Agreement to which
this Schedule is attached, the Retailer and the Supplier shall
not disclose, or permit any of their officers, employees,
representatives, or legal advisors to disclose, any
information, data, plans or specifications of a confidential
nature concerning the Software or the Services, during the
Term or at any time thereafter, including, without limiting
the generality of the foregoing, any designs, drawings,
technical specifications or other such information, service
manuals, commercial data or quotations, this Agreement or the
terms hereof, to anyone or assist or permit anyone in
obtaining knowledge of any part of the Software or the
Services other than such as may be necessary for competent
operators trained or approved by NEW ADB to utilize the
Software as contemplated hereby, or as may be required by law.
(b) Commencing from Activation, the Retailer and the Supplier,
jointly and severally, shall indemnify and hold harmless NEW
ADB from and against any and all liabilities, claims and
judgments for damage arising out of, or for injury to or death
of persons, or damage to property occasioned by the operation
or use of the Software by them and shall obtain appropriate
comprehensive general liability insurance in this regard
naming NEW ADB as an additional insured in form and with
limits reasonably acceptable to NEW ADB. The Retailer and the
Supplier hereby acknowledge that they are solely responsible
for all show production, product placement, collection,
customer service, fulfilment and other non-technical aspects
of each auction or transaction conducted through the Software.
(c) The Retailer and the Supplier hereby acknowledge and agree
that, during the Term of the Agreement to which this Schedule
forms a part, they shall not directly or indirectly solicit,
offer employment to, or otherwise attempt to engage the
services of any employee of NEW ADB or any Affiliate of NEW
ADB, and NEW ADB hereby acknowledges and agrees that, during
the Term of the Agreement to which this Schedule forms a part,
it shall not directly or indirectly solicit, offer employment
to, or otherwise attempt to engage the services of any
employee of the Retailer or the Supplier. Nothing in this
paragraph shall prevent a Party from soliciting the employment
of, or from offering employment to, the other Parties'
employees in accordance with the Transaction Documents or
through generalized searches for employees through the
publication of advertisements or other public announcements
that are not specifically targeted at the other Party's
employees.
30
5.0 FORCE MAJEURE
Provided that prompt notice of the delay or failure is given to the other
Parties, NEW ADB shall not be liable for delays or failure in their performance
or observation of their covenants or obligations under the Agreement to which
this Schedule is attached including for certainty this Schedule and any other
Schedule thereto, where such delays or failure are beyond its control,
respectively, including, but not limited to, delays caused by the Payment System
or the Fulfillment System's lack of functionality for any reason, fire,
carriers, acts of God, war, insurrection, riot, e-sabotage, spamming or any
governmental authority.
31
SCHEDULE "A"
XXX.XXX ASSETS
Old ADB Domain Names (as defined in the Loan Agreement)
Old ADB Trade-Marks (as defined in the Loan Agreement)
All goodwill associated with the Xxx.Xxx Assets and the Xxx.Xxx Liabilities
registered user data base for xxx.xxx.xxx
Employment Agreements with Xxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx
Employee Workstations (3 units)
- Personal computers: Hewlett Packard, 256 RAM
- Monitors
- Printer (1): Hewlett Packard 1100
- Cellular Phones: Xxxxxx
- Desk telephones
- Pagers
Office Furniture
- One workstation cluster (4 employee stations)
- Office chairs
- Filing cabinet unit
THE FOLLOWING ITEMS ARE SUBJECT TO A LEASE WITH HEWLETT-PACKARD:
WEB SERVER
- Quad CPU Intel Pentium Xeon 500 MHZ (2 MB L2 Cache)
- 2 GB Ram
- 2 -
- RaidCard
- 2 10/100 NIC's
- 2x18 Raid 0 HDD
- 3x18 Raid 5 HDD
- Tape Drive
- Floppy Drive
-
DATABASE (2 NODE CLUSTER)
- Node Configuration: 2 Units
- Dual CPU Intel Pentium Xeon 500 MHZ (2 MB L2 Cache)
- 1 GB Ram
- Raid Card
- 2 10/100 NIC's
- 3x18 Raid 5 HDD
- Tape Drive
- Floppy Drive
-
Shared Data Storage (1 Unit)
- Raid Xxxx Xxxxx
- 0xx0 XX HDD
Domain Controllers (2 Units)
- Dual CPU 500 MHZ
- 512 MB RAM
- Raid Card
-0-
- 0 XXX
- 0xx0 XX HDD
- Tape Backup
THE ITEMS LISTED BELOW ARE NOT INCLUDED IN THE XXX.XXX ASSETS BUT SHALL BE
ADDRESSED AS PART OF THE BUDGET PROCESS CONTEMPLATED BY THE SUPPLY, SERVICES AND
LICENSE AGREEMENT BETWEEN ADB, NEW ADB AND THE BRICK WAREHOUSE CORPORATION
Other Software
- MS Windows 2000 Server
- MS SQL 2000 Server
- Verisign secure certificate
- SA-FileUP
Other Hardware
- Internet Connection: T1 1.5 MB
- Router: Cisco 2500/2600 series
- Firewall: Cisco Pix 515 or 525 Series
- Switch: Cisco/HP/3Com
- 8 Leased IP addresses
- UPS's
- Server Racks
- Monitor
- Cables
- 4 -
SCHEDULE B
XXX.XXX LIABILITIES
1. Employment obligations under agreements with Xxx Xxxxxx, Xxxxx Xxxxxx
and Xxxxxx Xxxxx.
2. Obligations to be assumed/retained by Xxx.Xxx under cell phone, pager
and office phone arrangements for the employees specified in 1. above.
3. Obligations to be assumed/retained by Xxx.Xxx in respect of hardware,
software and connectivity arrangements pursuant to the budgetary
process contemplated by the Supply, Services and License Agreement
between ADB, New ADB and The Brick Warehouse Corporation.
APPENDIX B TO SCHEDULE A
SOFTWARE FUNCTIONALITIES, SCOPE OF NEW ADB IMPLEMENTATION
SERVICES AND SOFTWARE AND HARDWARE CONNECTIVITY REQUIREMENTS
As soon as reasonably possible after the Effective Date, the Project Managers
shall work together diligently and using reasonable commercial efforts to
supplement this Appendix by mutual agreement. This Appendix, when fully
supplemented, shall set out:
1. the scope of the Implementation services to be provided by NEW ADB and
the schedule for completion thereof;
2. Acceptance testing procedures with respect to the Implementation and
the Activation;
3. the software and hardware connectivity requirements of each Party for
all purposes of the Services including detailed plans as to how such
requirements will be fulfilled; and
4. the functionality to be provided by NEW ADB for the Site,
all subject to and in accordance with the terms and provisions of the Agreement
and the Schedules thereto.
The Scope of the Implementation services to be provided by NEW ADB shall include
the following, subject to amendment or supplementation by mutual agreement of
the Project Managers:
Site Construction
- Conduct review sessions with Retailer to identify where and
how the existing Dyn@mic Seller software meets Retailers'
requirements and where enhancements will be required to meet
Retailers' unique methods of operation
- Design, develop, test and deploy the enhanced Dyn@mic Seller
as defined above
- Design, source, test and deploy a computing hardware,
operating system, database, and Dyn@mic Seller application
software infrastructure capable of supporting Retailer's
business processes and volume
Site Operation
- Provide computer hardware, operating system and database
software, Dyn@mic Seller web site application software and
communications infrastructure to support the operation of the
Sites on an on-going basis
3
- Conduct facilities monitoring activities to ensure that the
sites are available to Retailer's customers in an
uninterrupted manner 24X7, and report on site activity and
availability on a periodic basis
- Provide the necessary repair and remediation services should
the sites become unavailable to Retailer's customers
The Project Managers will develop the scope for the functionality of the Site,
and supplement this Appendix to reflect the same, based on the following
objectives:
Corporate Communication
- Communicate promotional activities of Supplier's
bricks-and-mortar stores
- Communicate the Supplier's general warranties, policies and
procedures, and the special capabilities of the Supplier's
specific business units including, but not limited to,
Commercial Sales, Consumer Credit, Franchise operations, T.V.
and Appliance Service, and Customer Service.
- Communicate employment opportunities with the Supplier
- Communicate other static corporate information regarding the
Supplier as required
- Enable internet users to locate the Supplier's facilities
across Canada
- Enable connections with other third-party sites including the
Supplier's vendors and other partners as required
On-line Shopping
- Display the Supplier's Products' pictures, features and
benefits, prices, terms and conditions of sale, availability
and purchase instructions
- Organize the Supplier's Products into a number of flexible
hierarchical product groups to enable the Retailer's customers
a number of paths to quickly identify Products of interest
- Enable a site-wide search capability to assist Retailer's
internet visitors to directly access product information
and/or other material of interest to them
- Support a number of pricing models for product sale including
time-sensitive and geography-specific fixed and auction (a la
xxx.xxx) pricing
- Enable Retailer's customers to build and modify product orders
including any number of specific products with the appropriate
price
4
- Solicit product-specific sale of optional add-on products and
services
- Collect xxxx-to and ship-to information from Retailer's
customers to enable subsequent order fulfillment
- Display order summary information for Retailer's customer's to
enable review of products, pricing, tax and delivery
information
- Collect credit card information to enable order funding
- Communicate completed order information to Supplier's
Fulfillment System
- Process delivery or cancellation confirmations from Supplier's
fulfillment system
5
SCHEDULE B
NEW ADB SERVICES,
SERVICE LEVEL COMMITMENT
1.0 STATEMENT OF INTENT
The purpose of this Schedule is to establish service level objectives,
negotiated in good faith, and to provide best in class service to meet the
expectations of the end user(s). This Schedule represents a Schedule between THE
BRICK (the "Supplier") and XXX.XXX (the "Retailer") and NEW ADB (the "Service
Provider"), describes the responsibilities of the participants named in this
Schedule, and outlines the objectives by which attainment is measured.
2.0 CHANGES TO THIS SCHEDULE
This Schedule can be re-negotiated at any time due to changes in business
requirements, operating environment, needs of the Supplier and/or the ability of
the Retailer and the Service Provider to consistently and satisfactorily meet
the objectives. Any Party can initiate renegotiations.
3.0 SYSTEM DESIGN
3.1 The Service Provider agrees that the equipment hosted by the Retailer
for the purposes of this Agreement is for the sole use of the Sites and
will not be shared with any existing or future clientele.
3.2 The Service Provider agrees to provide the Retailer and the Supplier
with 24 hours of notice prior to any change of an externally visible
TCPIP address at the hosting facility.
4.0 TECHNICAL SUPPORT PLAN AND ESCALATION PROCEDURES
4.1 The Service Provider agree to provide ongoing Software support for the
Sites throughout the Term of the Agreement. The Parties agree that the
Project Managers will work together diligently and reasonably after the
Effective Date to determine specifically what ongoing Software support
will be provided for the Sites.
4.2 The Service Provider will provide ongoing access to consulting talent,
with the general intention that such consulting talent relate to:
(a) Software Troubleshooting
6
(b) Internal Software audits
(d) Software changes and enhancements
however the Parties agree that the Project Managers will work together
diligently and reasonably after the Effective Date to determine more
specifically what shall constitute "access" and whether items (a) to
(d) above, and/or access to other consulting talent, is to be provided.
4.3 NEW ADB shall respond to any report that the Software is failing to
operate within normal operating parameters within the time frames set
out below. The severity of any particular failure shall be determined
by Retailer, acting reasonably, and communicated to the other Parties,
based on the following definitions:
SEVERITY 1: total inability to use any material part of the
Software, resulting in a critical impact on user objectives.
SEVERITY 2: ability to use the Software, but user operation is
severely restricted.
SEVERITY 3: ability to use the Software; failures relate to
functions that are not critical to overall user operations.
SEVERITY 4: failure has been bypassed or temporarily corrected
and is not affecting customer operations.
The Service Provider shall respond to each of the other Parties within
the following time frames:
SEVERITY 1: within 2 hours of notification by Retailer
SEVERITY 2: within 4 hours of notification by Retailer
SEVERITY 3: within 2 Business Days of notification by Retailer
SEVERITY 4: within 5 Business Days of notification by Retailer
The Service Provider shall use best efforts to resolve the failure promptly upon
response to the other Parties.
7
SCHEDULE C
XXX.XXX PERFORMANCE COMMITMENT
1.0 STATEMENT OF INTENT
The purpose of this Schedule is to establish performance criteria objectives,
negotiated in good faith, and to provide best functionality to meet the
expectations of the end user(s). This Schedule represents a Schedule between THE
BRICK (the "Supplier") and XXX.XXX (the "Retailer") and NEW ADB (the "Service
Provider"), describes the responsibilities of the participants named this
Schedule, and outlines the objectives by which attainment is measured.
2.0 CHANGES TO THIS SCHEDULE
THIS SCHEDULE CAN BE RE-NEGOTIATED AT ANY TIME DUE TO CHANGES IN BUSINESS
REQUIREMENTS, OPERATING ENVIRONMENT, NEEDS OF THE SUPPLIER AND/OR THE ABILITY OF
THE RETAILER AND THE SERVICE PROVIDER TO CONSISTENTLY AND SATISFACTORILY MEET
THE OBJECTIVES. ANY PARTY CAN INITIATE RENEGOTIATIONS.
3.0 SOFTWARE HOSTING
3.1 The Retailer shall host and maintain the Software and the related
hardware throughout the Term of this Agreement. The Supplier specifically
acknowledges that the Retailer's hosting and maintenance obligations hereunder
extend to the Retailer and the Supplier's complete web presence at the Sites and
to the hosting and maintenance of the server(s) hosting the same, and that the
service level commitments contained herein shall extend to all elements of the
Sites.
3.2 The Retailer agrees that the servers, hardware and third party software
used to host or service the Software shall be maintained by the Retailer at its
sole cost and expense, in accordance with the budgets prepared pursuant to the
Agreement.
3.3 The Retailer shall provide monthly reports regarding site activity in
such detail and by such means as Supplier may reasonably require.
3.4 The Supplier shall not have any access to the hosting servers, the
Software or the facilities in which same are maintained except: (a) Supplier
shall have the ability to post and access electronically "real-time"
transaction-specific; and (b) Supplier shall have the right, upon reasonable
notice and during normal business hours, to have representatives escorted by the
Retailer's employees tour the premises where the hosting servers and Software
are located to the extent reasonably necessary to ensure the Retailer's
compliance with this Agreement.
8
3.5 The Retailer shall be responsible for input of transaction-specific
data into the Software as is necessary for the purposes of this
Agreement through such means as specified by the Service Provider from
time to time. The Retailer and the Supplier, as the case may be, hereby
grant the Service Provider a royalty-free right and license to use and
to modify such data as may be necessary in the provision of the
Services to be provided by the Service Provider under the Agreement to
which this Schedule is attached.
4.0 SERVICE COMMITMENTS
4.1 The Retailer will ensure that the Sites will be available for use 24
hours a day, 7 days per week, excluding periods for Scheduled
Maintenance or Emergency Maintenance.
4.2 SCHEDULED MAINTENANCE: The Retailer will ensue that one scheduled
maintenance window per week will be available from 3:00 am to 5:00 am
ET each Sunday.
4.3 EMERGENCY MAINTENANCE: When emergency maintenance is required, the
Retailer will provide the greatest amount of lead-time and arrange, a
solution that minimises the impact on the Supplier and the Service
Provider.
4.4 AVAILABILITY COMMITMENT: The Sites will be monitored and managed to
ensure that the Sites will be available 99.5% of the time, excluding
the scheduled maintenance periods.
4.5 RESPONSE TIME COMMITMENT: The Sites and the Software will be monitored
and managed to ensure that on a monthly basis, the response time to
users will not exceed a level to be agreed on by the Project Managers
pursuant to the agreement to be made by them pursuant to paragraph
2.l(b) of Schedule A with respect to the scope and functionality of the
production site.
4.6 FILE BACKUP: The Retailer will maintain operative processes that ensure
data safekeeping and recovery and will run daily backup of user files
and system files necessary for system recovery and send them to secure
off site vault storage on a weekly basis
5.0 SYSTEM DESIGN
5.1 The Retailer will agree to provide certain hardware for operation of
the Sites as soon as reasonably possible after the Effective Date. The
Project Managers shall work together diligently and reasonably to
determine the hardware that will be necessary and how it will be
provided, and the costs thereof shall be reflected in the budgets to be
prepared pursuant to Section 5.5 of the Agreement to which this
Schedule forms a part.
5.2 The Retailer agrees to provide and maintain adequate Internet firewalls
at the selected hosting facility to ensure security of website against
unauthorized attacks and intrusions.
9
5.3 The Retailer agrees to maintain/upgrade/replace components as necessary
to meet all service level expectations outlined in this Schedule and
the Agreement.
5.4 The Retailer agrees to the system architecture detailed in Appendix B
to Schedule A. The Retailer agrees not to deviate from is design at any
time without written consent from the Supplier and the Service
Provider.
5.5 The Retailer agrees that the equipment listed above is for the sole use
of the Sites and will not be shared with any existing or future
clientele.
5.6 The Retailer agrees to provide suitable hosting facilities at its
expense for the duration of the Term of the Agreement.
5.7 The Retailer agrees to provide the Supplier access to the system
components upon request, provided that the Retailer is given a minimum
of 24 hours notice where each of such 24 hours is on a Business Day.
5.8 The Retailer agrees to provide the Supplier with 24 hours of notice
prior to any change of an externally visible TCPIP address at the
hosting facility.
6.0 DATA INTEGRITY
6.1 The Retailer shall back-up transaction data daily onto tapes at the
hosting facility. Tapes to be stored offsite and overwritten every
5th day.
7.0 TECHNICAL SUPPORT PLAN AND ESCALATION PROCEDURES
7.1 The Retailer will provide ongoing access to consulting talent, with the
general intention that such consulting talent relate to:
(a) Troubleshooting
(b) System inquiries
(c) Internal audits
(d) Hardware, infrastructure and/or connectivity changes and
enhancements
however the Parties agree that the Project Managers will work together
diligently and reasonably after the Effective Date to determine more
specifically what shall constitute "access" and whether items (a) to
(d) above, and/or access to other consulting talent, is to be provided.
7.2 Retailer shall respond to any report that the Software or the Sites are
failing to operate within normal operating parameters within the time
frames set out below. The severity of
10
any particular failure shall be determined by Supplier, acting
reasonably, and communicated to the other Parties, based on the
following definitions:
SEVERITY 1: total inability to use any material part of the
Software or the Site, resulting in a critical impact on user
objectives.
SEVERITY 2: ability to use the Software or the Site, but user
operation is severely restricted.
SEVERITY 3: ability to use the Software or the Site; failures
relate to functions that are not critical to overall user
operations.
SEVERITY 4: failure has been bypassed or temporarily corrected
and is not affecting customer operations.
The Retailer shall respond to each of the Parties within the following
time frames:
SEVERITY 1: within 2 hours of notification by Supplier
SEVERITY 2: within 4 hours of notification by Supplier
SEVERITY 3: within 2 Business Days of notification by Supplier
SEVERITY 4: within 5 Business Days of notification by Supplier
In each case the Retailer shall use best efforts to resolve the failure promptly
upon response to the other Parties.
11
SCHEDULE D
DYN@MIC SELLER(TM) JOINT OWNERSHIP AGREEMENT
THIS AGREEMENT is made as of the 23rd day of August, 2002 between ADB SYSTEMS
INTERNATIONAL INC. ("OLD ADB"), corporation having its principal place of
business at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx X0X 0X0, and THE
BRICK WAREHOUSE CORPORATION ("THE BRICK"), a corporation having its principal
place of business at 00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx, X0X 0X0.
RECITALS
WHEREAS, OLD ADB is the owner of the DYN@MIC SELLER(TM) proprietary
software (the "Software") which enables the completion of on-line retail
transactions;
WHEREAS, OLD ADB, ADB Systems International Inc. ("XXX.XXX") and THE
BRICK have entered into a Supply, Services and License Agreement dated as of
August 23rd, 2002 (the "SUPPLY AND SERVICES AGREEMENT"); and
WHEREAS, OLD ADB wishes to convey to THE BRICK certain rights and grant
certain licenses in and to the Software pursuant to the Supply and Services
Agreement and subject to the terms and conditions of this Agreement;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties hereby agree as follows:
1. Defined Terms
All capitalized terms not otherwise defined herein shall have the
meaning attributed thereto in the Supply and Services Agreement.
2. Assignment and License
(a) OLD ADB hereby assigns, conveys and transfers irrevocably,
perpetually and exclusively to THE BRICK an equal one-half interest as a tenant
in common in and to all of OLD ADB's Intellectual Property Rights including, for
greater certainty, copyright and all patent rights, if any, whether such patent
rights are now in existence or hereafter acquired, in and to the Software solely
for use by THE BRICK and its Affiliates for their internal business purposes
limited to the on-line sale of Products to buyers with addresses for delivery in
the United States of America or Canada only but such assignment, conveyance and
transfer specifically excludes any and all rights OLD ADB has under the Patent
License Agreement made between it and XXX
00
Corporation dated April 17th, 2001 (the "PATENT LICENSE AGREEMENT") including,
for certainty, U.S. Patent No. 5,721,906 and also excludes any and all
Intellectual Property Rights of OLD ADB under U.S. Patent Nos. 5,890,138 and
6,266,652 and, in addition, OLD ADB grants to THE BRICK a royalty-free,
irrevocable, perpetual, worldwide license to use the Software and all of OLD
ADB's Intellectual Property Rights therein, including for greater certainty all
copyrights, patent rights (whether such patent rights are now existing or
hereafter acquired) and trade secrets, including the right to copy, prepare
derivative works, modify, adapt and combine the Software, for use by THE BRICK
and its affiliates for the aforesaid use only, subject to the terms and
conditions of this Agreement, including any and all Intellectual Property Rights
of OLD ADB under U.S. Patent Nos. 5,890,138 and 6,266,652 but excluding any and
all rights OLD ADB has under the Patent License Agreement including, for
certainty, U.S. Patent No. 5,721,906, but provided that the Parties acknowledge
and agree that it is their intention that OLD ADB's benefits under Section 11.2
of the Patent License Agreement shall be afforded to THE BRICK; and further
provided that OLD ADB hereby reserves for itself an equal interest as tenant in
common with THE BRICK in the rights granted to THE BRICK hereunder, whether such
rights are now existing or hereafter acquired, in and to the Software and all
other Intellectual Property Rights and other property rights in and to the
Software, including the right of OLD ADB to use the Software for any purpose it
sees fit and the right to license, sub-license, convey and grant security
interests in the Software in whole or in part (but subject to the rights of THE
BRICK hereunder) to third parties and to keep all royalties and other moneys
earned through licensing and sublicensing of the Software; and provided that
nothing in the assignments and grants contained herein shall restrict the rights
of OLD ADB or its affiliates to use the Software.
(b) OLD ADB and NEW ADB covenant and agree to assign, convey and
transfer irrevocably, perpetually and exclusively to THE BRICK and its
Affiliates from time to time, upon reasonable request of THE BRICK, all
Intellectual Property Rights in all software, including graphic user interfaces
and code created specifically to display the contents of the Site, created by
OLD ADB and NEW ADB pursuant to the Supply and Services Agreement with respect
to the Site, provided this paragraph 2(b) shall exclude the Software and any
Intellectual Property Rights in the Software and, for added certainty, shall
exclude any Intellectual Property Rights of OLD ADB that existed prior to the
commencement of its Services under the Supply and Service Agreement.
(c) In addition to the license granted by OLD ADB to THE BRICK
pursuant to paragraph 2(a) above, OLD ADB agrees to provide the rights in
connection with the Software that it does for its current customers to THE
BRICK, in perpetuity, for THE BRICK's purposes limited to the on-line sale of
Products to buyers with addresses for delivery in the United States of America
or Canada. For greater certainty, this paragraph 2(c) does not constitute a
license, sublicense, transfer or assignment of any of the licenses or rights
granted to OLD ADB under the Patent License Agreement including, for certainty,
U.S. Patent No. 5,721,906, provided that the Parties acknowledge and agree that
it is their intention that OLD ADB's benefits under Section 11.2 of the Patent
License Agreement shall be afforded to THE BRICK.
13
3. Transfer of Source and Executable Code
(a) Within a reasonable period of time after execution of this
Agreement, OLD ADB will deposit an executable version of the Software and
related Source Materials to THE BRICK at the address noted above, and from time
to time within a reasonable time after request by THE BRICK will deposit
compiled versions of the software described in 2(b) hereof and related Source
Materials, to THE BRICK at such address, in which THE BRICK shall have the
rights provided in Section 2(a) and 2(b) of this Agreement, respectively.
(b) In this Agreement, "SOURCE MATERIALS" means, in relation to
the Software, all materials that would enable a reasonably skilled programmer to
compile, debug, and make Improvements to such software in a reasonable manner
including: (i) all source code related thereto, reasonably annotated; (ii) all
technical and system documentation including specifications, flowcharts,
diagrams, business rules, data and database models and structures, and
compilation instructions related to such software; (iii) listings by name,
version and developer of all third-party compilers, utilities and other software
relating to the software, including sufficient information to procure a license,
from such developers; (iv) a listing of all relevant equipment necessary to
operate the Software (but not any of such equipment itself); and (v) copies, in
source and object code form, of all compilers, utilities and other software that
are proprietary to the developer that is the owner of software and which are
used in relation to the Software.
4. Representations and Warranties
OLD ADB represents and warrants that:
(a) Except as has been disclosed to THE BRICK, OLD ADB has no
actual knowledge of any alleged or actual infringement by any version of the
Software, of any copyright, patent right, trademark, trade secret or other
intellectual property rights of any third party; and
(b) OLD ADB has the right and authority to assign, convey and
transfer an equal undivided interest in and to the Software in accordance with
Section 1, and otherwise enter into this Agreement and perform its obligations
hereunder.
5. Enforcement
(a) THE BRICK shall promptly bring to the attention of OLD ADB any
improper or wrongful use or infringement or suspected or threatened infringement
or violation of any Intellectual Property Right in the Software (an
"Infringement") which comes to its attention and shall assist OLD ADB, at OLD
ADB's expense, in taking all necessary steps to enforce, defend and protect such
rights. In the event of an Infringement of any Intellectual Property Right in
the Software by a third party, OLD ADB shall decide in its absolute discretion
whether and what steps should be taken to prevent or terminate such Infringement
including the institution of legal
14
proceedings where necessary and OLD ADB shall notify THE BRICK of any such
Infringement and its intended response. OLD ADB shall have sole control over and
shall conduct any such actions as it shall deem necessary and THE BRICK shall,
at OLD ADB's expense provide or procure such assistance including the furnishing
of documents and information and the execution of all necessary documents to or
conducting any legal proceedings as OLD ADB may request to protect and defend
such rights.
(b) Notwithstanding Section 5(a), THE BRICK, with the consent of
OLD ADB in writing, which consent will not be unreasonably withheld or delayed,
shall have the right, at its expense, to bring a claim, action or other
proceeding against third parties alleging infringement of copyright in the
Software. OLD ADB will, if desired, be entitled to participate in such claim at
its own expense.
6. Warranty Disclaimer
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES AND
THE OTHER PARTY RECEIVES NO WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY,
HEREUNDER AND ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS OF ANY KIND OR
NATURE, EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES
AND CONDITIONS OF MERCHANTABILITY, MERCHANTABLE OR SATISFACTORY QUALITY, FITNESS
FOR A PARTICULAR PURPOSE, DURABILITY, TITLE, AND THOSE ARISING BY STATUTE OR
OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USE OF TRADE ARE HEREBY
DISCLAIMED AND EXCLUDED.
7. Consequential Damages
WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, IN NO EVENT
SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES, INCLUDING
WITHOUT LIMITATION LOST PROFITS OR REVENUES, LOSS OF GOODWILL, WORK STOPPAGE,
LOST DATA OR COMPUTER HARDWARE OR SOFTWARE DAMAGE, FAILURE OR MALFUNCTION,
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
8. Assignment
(a) Nothing in this Agreement shall prevent OLD ADB from assigning
its interest, in whole or in part, in this Agreement and the subject matter
hereof at any time and from time to time. THE BRICK and its Affiliates may not
assign this Agreement nor any rights or licenses granted hereby without OLD
ADB's written consent, which consent may be withheld by NEW ADB at its sole and
unfettered discretion, and any such assignment shall be null and void; provided
that, nothing in this subsection 8(a) shall be construed as prohibiting any
assignment of this Agreement by THE BRICK without the consent of OLD ADB if such
assignment is part of a
15
sale of substantially all of the assets of, or a majority interest in the voting
shares of, THE BRICK, or the merger or amalgamation of THE BRICK with any
entity.
(b) Subject to paragraph 8(a) above, this Agreement shall ensure
to the benefit of and be binding upon any successor or assign of each party.
9. Independent Contractors
It is understood and agreed that in giving effect to this Agreement, no
party shall be or be deemed a partner, agent or employee of the other party for
any purpose and that their relationship to each other shall be that of
independent contractors. Nothing in this Agreement shall constitute a
partnership or a joint venture between the parties. No party shall have the
right to enter contracts or pledge the credit of or incur expenses of
liabilities on behalf of the other party.
10. Further Assurances
Upon the request from time to time of THE BRICK, OLD ADB shall execute
all such conveyances, bills of sale, transfers, assignments, notices and other
documents and use all reasonable efforts to secure all necessary consents and
approvals as, in the reasonable opinion of THE BRICK, may be necessary to
effectively vest title to the interest in the Software granted hereunder in
THE BRICK or otherwise to protect or perfect any rights of THE BRICK in the
Software. THE BRICK shall be responsible for the costs of preparing, executing
and registering with all necessary offices of public record any such conveyance,
xxxx of sale, transfer, assignment, notice or other document in respect of the
Software, including OLD ADB's legal and consultant's costs with respect thereto.
11. Waiver
A waiver by a party hereto of any its rights hereunder or of the
performance by the other party of any of its obligations hereunder shall be
without prejudice to all of the other rights hereunder of the party so waiving
and shall not constitute a waiver of any such other rights or, in any other
instance, of the rights so waived, or a waiver of the performance by the other
party of any of its other obligations hereunder or of the performance by the
other party of any of its other obligations hereunder or of the performance, in
any other instance, of the obligations waived. No waiver shall be effective or
binding upon a party unless the same shall be expressed in writing and executed
by the party to be bound.
12. Interpretation
This Agreement has been negotiated by the parties hereto and their
respective counsel and shall be fairly interpreted in accordance with its terms
and without any rules of construction relating to which party drafted the
agreement being applied in favour or against either party.
16
13. Amendment
No amendment of any provision of this Agreement shall be effective
unless such amendment is embodied in a written agreement which is: (i) expressly
stated to be intended to amend this Agreement; and (ii) executed by an
authorized signing officer of OLD ADB and an authorized signing officer of THE
BRICK.
14. Governing Law
This Agreement shall be governed and construed according to the laws of
the Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract, without prejudice to or
limitation of any rights or remedies available under the laws of any
jurisdiction where property or assets of either party may be found. Each of the
parties hereby attorns to the jurisdiction of the Courts of the Province of
Ontario.
15. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Counterparts may be executed either in
original or faxed form and the parties adopt any signatures received by a
receiving fax machine as original signatures of the Parties.
16. Entire Agreement
This Agreement, and any Schedules and Exhibits attached hereto,
constitute 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, licenses granted,
or collateral agreements, expressed, implied or statutory, between the parties
related to the subject matter hereof other than as expressly set forth in this
Agreement.
17
IN WITNESS WHEREOF, the parties have executed this Joint Ownership Agreement,
with all required authority, this 23rd day of August, 2002.
ADB SYSTEMS INTERNATIONAL LTD.
By:
__________________________________
Name:
Title:
By:
__________________________________
Name:
Title:
ADB SYSTEMS INTERNATIONAL INC.
By:
__________________________________
Name:
Title:
By:
__________________________________
Name:
Title:
18
THE BRICK WAREHOUSE CORPORATION
By:
__________________________________
Name:
Title:
By:
__________________________________
Name:
Title:
19
SCHEDULE "C"
ADB SYSTEMS INTERNATIONAL INC.
MARKET BASED VALUATION ESTIMATES
28/08/2002
ADB Systems international Inc
Market Based Valuation Estimates
28/08/2002
Estimated Accounting Values Estimated Tax Values
at August 22, 2002 at August 22, 2002
ASSETS
CURRENT
Cash $ 66,308 $ 66,308
Marketable securities $ 105,615 $ 105,615
Accounts receivable $ 35,312 $ 35,312
Intercompany receivable (payable) $ 5,796,667 $ 5,796,667
Deposits and prepaid expenses $ 207,670 $ 1,133,598
--------------------------------------
$ 6,211,572 $ 7,137,500
$ 0
CAPITAL ASSETS AT COST $ 3,013,636
Less accumulated depreciation $ (2,680,893)
--------------------------------------
$ 332,743 3,332,168
STRATEGIC INVESTMENTS $ 80,078 2,806,400
INVESTMENT IN SUBSIDIARIES $ (2,581,412) 3,167,190
TRADEMARKS AND INTELLECTUAL PROPERTI $ 27,617 162,910
--------------------------------------
TOTAL ASSETS $ 4,070,598 $ 16,606,168
======================================
LIABILITIES
CURRENT
Accounts payable $ 468,663 $ 468,663
Accrued liabilities $ 23,294 $ 23,294
Current portion of long term capital
lease $ 16,714 $ 16,714
Current portion of deferred revenue $ 107,820 $ 107,820
--------------------------------------
$ 616,491 $ 616,491
Minority Interest $ 0 $ 0
SHAREHOLDERS' EQUITY
Share capital $ 94,516,037 $ 94,516,037
GE Warrants $ 1,348,994 0
Non Employee Options $ 115,967 0
Options Issued - Norway Employees $ 575,533 0
FTC Account $ 8,844 0
Deficit - Opening Balance $(87,592,746)
Deficit - Current Year $ (5,518,522)
Total Deficit $(93,111,268) (78,526,360)
--------------------------------------
Net Equity $ 3,454,107 $ 15,989,677
--------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,070,598 $ 16,606,168
======================================
Outstanding Share Capital at June
30, 2002 $ 41,494,400
Closing Share Price Aug 22, 2002 0.12
FMV of ADB Systems
Estimated FMV
at August 22, 2002
ASSETS
CURRENT
Cash $ 66,308 FMV=Book Value
Marketable securities $ 105,615 FMV=Book Value
Accounts receivable $ 35,312 FMV=Book Value
Intercompany receivable (payable) 0 FMV of 0 as no subsidiary has the capacity, to repay
Deposits and prepaid expenses $ 21,514 FMV reflects only amounts recoverable
------------
$ 228,749
CAPITAL ASSETS AT COST
Less accumulated depreciation
------------
332,743 FMV=Book Value
STRATEGIC INVESTMENTS $ 80,078 Fair Market Value based on Trading Prices
INVESTMENT IN SUBSIDIARIES 3,042,415 FMV based book value of assets/liabilities plus depreciated value of
software since October purchase
TRADEMARKS AND INTELLECTUAL PROPERTI $ 1,295,343 FMV=Unallocated residual
------------
TOTAL ASSETS $ 4,979,328
============
LIABILITIES
CURRENT
Accounts payable $ 468,663 FMV=Book Value
Accrued liabilities $ 23,294 FMV=Book Value
Current portion of long term capital
lease $ 16,714 FMV=Book Value
Current portion of deferred revenue $ 0 FMV=0 as no go forward obligation present
------------
$ 508,671
Minority Interest $ 0
SHAREHOLDERS' EQUITY
Share capital
GE Warrants
Non Employee Options
Options Issued - Norway Employees
FTC Account
Deficit - Opening Balance
Deficit - Current Year
Total Deficit
------------
Net Equity $ 4,470,657
------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,979,328
============
$ 0
Outstanding Share Capital at June
30, 2002
Closing Share Price-Aug 22, 2002
FMV of ADB Systems $ 4,979,328
For Discussion Purposes Only. Do Not Distribute
SCHEDULE D
GENERAL CONVEYANCE
AND ASSUMPTION AGREEMENT
THIS AGREEMENT is dated as of the 23rd day of August, 2002
BETWEEN:
ADB SYSTEMS INTERNATIONAL INC., a
corporation incorporated under the laws of
the Province of Ontario, having its
principal place of business at 0000 Xxxxxxx
Xx., Xxxxxxxxxxx, Xxxxxxx X0X 0X0 ("ADB")
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ADB SYSTEMS INTERNATIONAL LTD., a
corporation incorporated under the laws of
the Province of Ontario, having its
principal place of business at 6725
Xxxxxxxxxxx, Xxxxxxx X0X 0X0 ("New ADB")
BACKGROUND:
1. Pursuant to a co-operation agreement dated as of August 23,
2002, among ADB, New ADB and The Brick Warehouse Corporation (the "Co-Operation
Agreement"), ADB agreed to assign and transfer to New ADB certain of its assets
and New ADB agreed to assume certain of ADB's liabilities.
2. Pursuant to a resolution of the board of directors, it was
resolved to transfer such assets to new ADB as a return of capital and this
agreement is intended to implement such return of capital.
3. ADB's G.S.T. registration number is 88676-3960-RT0001 and
New ADB will apply for a G.S.T. registration number forthwith.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants contained in this Agreement and for other good and
valuable consideration (the receipt and adequacy of which are hereby mutually
acknowledged), the parties agree as follows:
1. DEFINITIONS - Unless otherwise specifically defined in this Agreement,
any capitalized terms used in this Agreement shall have the meanings ascribed to
them in the Co-Operation Agreement.
2. TRANSFER OF ASSETS - ADB hereby transfers, conveys, assigns and
delivers unto New ADB, its successors and assigns, effective as at the Effective
Time, all of ADB's right, title and
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interest in all of its assets on a going concern basis and including goodwill,
except the Xxx.Xxx Assets as described in Schedule "A" hereto. For their
respective tax purposes, the parties agree that the fair market value of the
assets is as indicated on Schedule "C" hereto. In the event that Canada Customs
and Revenue Agency ("CCRA") should take the view, and it should be ultimately
determined by CCRA, the Tax Court of Canada or a higher tribunal that the fair
market value of the assets is an amount different than an amount set out on
Schedule C, then the parties agree to adopt such different amount for purposes
of determining their proceeds or cost amounts, as the case may be.
3. TAX - New ADB shall pay all retail sales tax and G.S.T. in respect of
the transactions contemplated hereby. ADB and New ADB shall jointly make and New
ADB shall file in prescribed form and manner an election pursuant to section 167
of the Excise Tax Act (Canada) in connection with the transfer of assets
hereunder. New ADB will indemnify and save harmless ADB from and against all
Liabilities incurred by ADB directly or indirectly as a result of ADB not
collecting or remitting any tax in respect of the transfer of assets hereunder
or as a result of any failure to file the election referred to in the last
sentence in a timely fashion.
4. EMPLOYEES - New ADB will offer employment to all employees of ADB on
substantially the same terms as they presently enjoy, except in respect of Xxx
Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxx and will continue to be responsible for
and will discharge all Liabilities to such employees for wages, severance pay,
termination pay, notice of termination of employment or pay in lieu of such
notice, damages for wrongful dismissal or other employee benefits or claims,
including vacation pay, whether arising under a written contract of employment
or otherwise.
5. ASSUMPTION AND INDEMNIFICATION - New ADB hereby assumes all the ADB
liabilities except the Xxx.Xxx Liabilities as described in Schedule B hereto,
and undertakes to pay or discharge such liabilities in accordance with their
terms. New ADB shall indemnify and hold harmless ADB and its respective
Affiliates, officers, directors, shareholders, representatives and agents
(collectively the "INDEMNITEES") from and against and in respect of any and all
Losses incurred by, resulting from, arising out of, relating to, imposed upon or
incurred by any other Indemnitee by reason of any indebtedness, obligation or
liability of any kind in respect of the liabilities assumed pursuant to this
agreement. For purposes of this Agreement, the term, "LOSSES" means any and all
deficiencies, judgments, settlements, demands, claims, suits, actions or causes
of action, liabilities, losses, damages, interest, fines, penalties, costs and
expenses (including reasonable legal, accounting and other costs and expenses
incurred in connection with investigating, defending, settling or satisfying any
and all demands, claims, actions, causes of action, suits, proceedings,
assessments, judgments or appeals, and in seeking indemnification therefor.)
6. RETURN OF CAPITAL - The amount by which the fair market value of the
transferred assets exceeds the assumed liabilities shall be paid to New ADB as a
return of capital on its shares of ADB.
7. FURTHER ASSURANCES - Upon the request from time to time of New ADB, ADB
shall execute all such conveyances, bills of sale, transfers, assignments,
notices and other documents and use all reasonable efforts to secure all
necessary consents and approvals as, in the reasonable opinion of New ADB, may
be necessary to effectively vest title to the assets in New ADB or
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otherwise to protect or perfect any rights of New ADB in the assets. New ADB
shall be responsible for the costs of preparing, executing and registering with
all necessary offices of public record any such conveyance, xxxx of sale,
transfer, assignment, notice or other document in respect of the assets.
8. REMEDIES - The rights and remedies conferred under this Agreement are
not intended to be exclusive of any other rights or remedies available to either
New ADB or ADB in connection with the breach or failure of any of the covenants,
warranties, representations or other obligations of the other party given in
this Agreement or the Co-Operation Agreement, and nothing contained in this
Agreement shall be construed in any manner as restricting or derogating from any
other such rights or remedies.
9. CONFLICT - This General Conveyance and Assumption Agreement is executed
and delivered pursuant to the Co-operation Agreement, and ADB covenants and
agrees with New ADB that this General Conveyance and Assumption Agreement is
subject to every agreement, representation, warranty, indemnification, covenant
and provision contained in the provisions of the Co-operation Agreement. In the
event there is a conflict between the terms and the provisions of this Agreement
and the Co-operation Agreement, the terms and provisions of the Co-operation
Agreement shall govern.
10. TRUST - ADB hereby declares that, as to any of the ADB assets or
interest in any of the ADB assets intended to be hereby transferred, assigned,
conveyed and set over to New ADB, and the title to which may not have passed to
New ADB by virtue of this Agreement or any transfers or conveyances which may
from time to time be executed and delivered in connection with this Agreement,
ADB holds such property or interest in trust for New ADB to convey, assign and
transfer the same as ADB may from time to time direct. Any Liabilities
associated with ADB assets transferred or intended to be transferred hereunder
shall be assumed by New ADB even though title to such ADB assets may be held in
trust by ADB and New ADB will indemnify and save harmless ADB from and against
all such Liabilities.
11. NOTICE - Any notice or other communication (a "Notice") required or
permitted to be given or made hereunder shall be in writing and shall be well
and sufficiently given or made if:
(a) delivered by overnight courier service;
(b) sent by facsimile transmission or other means of electronic
communication;
in the case of a Notice to New ADB addressed to it at:
c/o The Brick Warehouse Corporation
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxx,
Chief Financial Officer
Fax No.: (000) 000-0000
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with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx-Xxxxxxxx Bank Tower
Toronto, ON M5K 1E6
Attention: Xxxxxxxx Xxxxx
Fax No.: (000) 000-0000
and in the case of a Notice to ADB, addressed to it at:
ADB Systems International Inc.
000-0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx
Fax No.: (000) 000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Any Notice given or made in accordance with this Section 11
shall be deemed to have been given or made and to have been received on the next
Business Day after it was delivered, if delivered as aforesaid.
Either party may from time to time change its address for
notice by giving Notice to the other party in accordance with the provisions of
this Section 11.
12. ASSIGNMENT - Neither ADB or New ADB may assign its rights and
obligations under this Agreement, in whole or in part, without the prior consent
in writing of the other party. Any purported assignment made by ADB or New ADB
without required consent is void and of no effect. No assignment of this
Agreement shall relieve either party from any obligation under this Agreement.
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13. BINDING ON SUCCESSORS - This Agreement shall ensure to the benefit of
and be binding upon the parties and their respective successors and permitted
assigns.
14. FURTHER ASSURANCES - Each party agrees that upon the written request of
the other party, it will do all such acts and execute all such further
documents, assignments, and the like, and will cause the doing of all such acts
and will cause the execution of all such further documents as are within its
power to cause the doing or execution of, as any other party hereto may from
time to time reasonably request be done and/or executed as may be reasonably
necessary or desirable to give effect to this Agreement.
15. INDEPENDENT CONTRACTORS - It is understood and agreed that in giving
effect to this Agreement, no party shall be or be deemed a partners, agent or
employee of the other party for any purpose and that their relationship to each
other shall be that of independent contractors. Nothing in this Agreement shall
constitute a partnership or a joint venture between the parties. No party shall
have the right to enter contracts or pledge the credit of or incur expenses of
liabilities on behalf of the other party.
16. WAIVER - A waiver by a party hereto of any its rights hereunder or of
the performance by the other party of any of its obligations hereunder shall be
without prejudice to all of the other rights hereunder of the party so waiving
and shall not constitute a waiver of any such other rights or, in any other
instance, of the rights so waived, or a waiver of the performance by the other
party of any of its other obligations hereunder or of the performance by the
other party of any of its other obligations hereunder or of the performance, in
any other instance, of the obligations waived. No waiver shall be effective or
binding upon a party unless the same shall be expressed in writing and executed
by the party to be bound.
17. INTERPRETATION - This Agreement has been negotiated by the parties
hereto and their respective counsel and shall be fairly interpreted in
accordance with its terms and without any rules of construction relating to
which party drafted the agreement being applied in favour or against either
party.
18. AMENDMENT - No amendment of any provision of this Agreement shall be
effective unless such amendment is embodied in a written agreement which is: (i)
expressly stated to be intended to amend this Agreement; and (ii) executed by an
authorized signing officer of ADB and an authorized signing officer of New ADB.
19. GOVERNING LAW - This Agreement shall be governed and construed
according to the laws of the Province of Ontario and the laws of Canada
applicable therein, and shall be treated, in all respects, as an Ontario
contract, without prejudice to or limitation of any rights or remedies available
under the laws of any jurisdiction where property or assets of either party may
be found. Each of the parties hereby attorns to the jurisdiction of the courts
of the Province of Ontario.
20. TIME OF THE ESSENCE - Time is of the essence of this Agreement.
21. COUNTERPARTS - This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the
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same instrument. Counterparts may be executed either in original or faxed form
and the parties adopt any signatures received by a receiving fax machine as
original signatures of the Parties.
IN WITNESS WHEREOF this Agreement is executed by the Parties
as of the date first written, above.
ADB SYSTEMS INTERNATIONAL INC.
By: __________________________________
Name:
Title:
ADB SYSTEMS INTERNATIONAL LTD.
By: __________________________________
Name:
Title:
SCHEDULE E
SUPPLY, SERVICES AND LICENSE AGREEMENT
THIS AGREEMENT is made as of the 23rd day of August, 2002 (the "EFFECTIVE DATE")
between ADB SYSTEMS INTERNATIONAL INC. ("XXX.XXX"), a corporation having its
principal place of business at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxx X0X 0X0, THE BRICK WAREHOUSE CORPORATION ("THE BRICK"), a corporation
having its principal place of business at 00000 - 000 Xxxxxx, Xxxxxxxx, Xxxxxxx,
X0X 0X0, and ADB SYSTEMS INTERNATIONAL LTD. ("NEW ADB"), a corporation having
its principal place of business at 0000 XXXXXXX XXXX, XXXXX 000, Xxxxxxxxxxx,
Xxxxxxx X0X 0X0.
WHEREAS:
1. XXX.XXX is the registered owner of the url at xxx.xxx.xxx which is used
for the purposes of conducting on-line retail sales, and has skill and expertise
in operating on-line retail websites;
2. THE BRICK is Canada's largest volume retailer of home furnishings,
mattresses, bedding, appliances, televisions, video recorders, stereo equipment
and computers, and presently operates an on-line retail website through
xxx.xxxxxxxx.xxx;
3. XXX.XXX and THE BRICK wish to combine their respective web resources,
to establish a profitable venture which would be mutually beneficial to them;
4. XXX.XXX wishes to access THE BRICK's supply channel to operate the
combined website that will be accessible through each of the respective URLs;
5. NEW ADB (after restructuring) is the owner of the DYN@MIC SELLER(TM)
proprietary software, which enables the completion of on-line retail
transactions;
6. XXX.XXX wishes to license the DYN@MIC SELLER(TM) proprietary software
for XXX.XXX's sale of products supplied by THE BRICK, and NEW ADB wishes to
license the software to XXX.XXX for such purpose;
7. XXX.XXX wishes to have the DYN@MIC SELLER(TM) proprietary software
power the combined website;
8. THE BRICK wishes to purchase an interest in the DYN@MIC SELLER(TM)
proprietary software to ensure continued availability of the software and
XXX.XXX (prior to Restructuring) wishes to sell an interest in the software to
THE BRICK for such purpose.
NOW THEREFORE in consideration of the premises, the mutual covenants
contained in this Agreement, and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Parties agree as
follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS.
In this Agreement, unless the context otherwise requires, each capitalized term
shall have the meanings indicated below.
"AGREEMENT" means this Supply, Services and License Agreement and all schedules
annexed to this Agreement as the same may be amended from time to time in
accordance with the provisions hereof or thereof, "hereof" "hereto" and
"hereunder" and similar expressions mean and refer to this Agreement and not to
any particular article or section; except where the context specifically
requires, "Article" or "Section" means and refers to the specified article or
section of this Agreement.
"AFFILIATE" means any entity controlled by, controlling or under common control
of a Party.
"BUSINESS DAY" means any day from Monday to Friday inclusive, except statutory
or civic holidays observed in Toronto, Ontario or Edmonton, Alberta.
"CONFIDENTIAL INFORMATION" means all information relating to any Party or to
such Party's business, products, sales, users, trade secrets, technology or
financial position to which access is obtained or granted hereunder, which is
treated by the disclosing Party as confidential provided, however, that
Confidential Information of the disclosing Party shall not include any data or
information which the receiving Party can demonstrate:
(a) is or becomes publicly available through no fault of the
receiving Party;
(b) is already in the rightful possession of the receiving Party
prior to its receipt from another Party;
(c) is independently developed by the receiving Party, as proven
by written documentation;
(d) is rightfully obtained by the receiving Party from a third
party not subject to an obligation of confidentiality;
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(e) is disclosed by the Receiving Party with the written consent
of the disclosing Party whose information it is; or
(f) is disclosed by the Receiving Party pursuant to court order or
other legal compulsion, provided the receiving Party gives the
disclosing Party prompt notice of any such requirement to
afford, if possible, the disclosing Party an opportunity to
obtain a protective order.
"DISCLOSING PARTY" has the meaning attributed thereto in Section 5.2(a) of this
Agreement.
"EFFECTIVE DATE" has the meaning attributed thereto on the face page of this
Agreement.
"FULFILLMENT SYSTEM" means THE BRICK's system of software commonly called the
"Brick Retail System", warehouses, logistics procedures and know-how, and other
assets that establish and maintain its capability to acquire, warehouse and
deliver the Products, as currently carried out in its retail business in Canada.
"IMPROVEMENTS" means, in relation to any software, any changes, corrections,
modifications, improvements, adaptations, enhancements, and derivative works
based upon or derived from, and additions to, such software.
"INTELLECTUAL PROPERTY RIGHTS" means (A) any and all proprietary rights provided
under (i) patent law, (ii) copyright law, (iii) trademark law, (iv) design
patent or industrial design law, (v) semi-conductor chip or mask work law, or
(vi) any other statutory provision or common law principle including without
limiting the generality of the foregoing, laws protecting confidential
information, applicable to this Agreement including trade secret law, which may
provide a right in either (a) ideas, formulae, algorithms, concepts, inventions
or know-how generally, or (b) the expression or use of such ideas, formulae,
algorithms, concepts, inventions or know-how; and (B) any and all applications,
registrations, renewals, extensions, continuations, continuations-in- part,
divisions, re-issues, licenses, sub-licenses, franchises, agreements or any
other evidence of a right in any of the foregoing.
"NOTICE" has the meaning attributed thereto in Section 9.1 hereof.
"PARTIES" means XXX.XXX, THE BRICK and NEW ADB and "PARTY" means any one of
them.
"PAYMENT SYSTEM" means THE BRICK's custom point of sale system and its methods,
procedures and technology used to fund consumer sales as currently used in its
retail business in Canada.
"PERSON" includes an individual, company, corporation, partnership, government
or government agency, authority or entity howsoever designated or constituted.
"PRODUCTS" means consumer goods and related accessories as determined by THE
BRICK from time to time.
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"PROJECT MANAGER" means an individual officer or employee of a Party holding one
of the positions described in Section 5.1.
"RECEIVING PARTY" has the meaning attributed thereto in Section 5.2(a) hereof.
"RESTRUCTURING" has the meaning attributed thereto in the Co-Operation Agreement
made among the Parties dated as of the date hereof.
"RETAILER" means XXX.XXX.
"SCHEDULES" means the following schedules annexed to this Agreement, and such
other schedules as the Parties may append by mutual agreement, evidenced by
their initialing of same:
Schedule A - Software Restrictions, NEW ADB Service Descriptions and
minimum requirements.
Schedule B - NEW ADB Services, Service Level Commitment
Schedule C - XXX.XXX Services, Performance Criteria
Schedule D - DYN@MIC SELLER(TM) Joint Ownership Agreement
"SENIOR FINANCIAL EXECUTIVE" means, in the case of THE BRICK, the Senior Vice
President and Treasurer of THE BRICK and in the case of XXX.XXX, the Director of
Finance for XXX.XXX, or their respective appointees.
"SERVICES" means the services to be provided by NEW ADB pursuant to this
Agreement.
"SERVICE PROVIDER" means NEW ADB.
"SITES" means the web-sites operated at xxx.xxx.xxx and xxx.xxxxxxxx.xxx and
"SITE" means either of them.
"SOFTWARE" has the meaning attributed thereto in Section 4.1 of this Agreement.
"SOURCE MATERIALS" means, in relation to any software, all materials that would
enable a reasonably skilled programmer to compile, debug, and make Improvements
to such software in a reasonable manner including: (a) all source code related
thereto, reasonably annotated; (b) all technical and system documentation
including specifications, flowcharts, diagrams, business rules, data and
database models and structures, and compilation instructions related to such
software; (c) listings by name, version and developer of all third-party
compilers, utilities and other software relating to the software, including
sufficient information to procure a license from such developers; (d) a listing
of all relevant equipment necessary to operate the software; and (e) copies, in
source and object code form, of all compilers, utilities and other software that
are proprietary to the developer that is the owner of software and which are
used in relation to the software.
"SUPPLIER" means THE BRICK.
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"TERM" means the term during which this Agreement is in force, as set out in
Section 7.1.
"TRANSACTION DOCUMENTS" has the meaning attributed thereto in the Loan Agreement
made among the Parties and dated as of the date hereof. Transaction Documents
include, Inter alia, this Agreement and the aforesaid Loan Agreement.
1.2 HEADINGS.
The use of headings in this Agreement is for convenience of reference only and
shall not affect its interpretation.
1.3 EXTENDED MEANINGS.
Words expressed in the singular include the plural and vice-versa and words in
one gender include all genders.
1.4 ENTIRE AGREEMENT.
The Transaction Documents, and any agreements and other documents to be
delivered pursuant to any Transaction Document, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, oral or written
between the Parties. The execution of this Agreement has not been induced by,
nor do either of the Parties rely upon or regard as material, any
representations, warranties, conditions, other agreements or acknowledgments not
expressly made in this Agreement, the Transaction Documents or in the agreements
or other documents to be delivered pursuant hereto.
1.5 INVALIDITY.
If in any jurisdiction a provision contained in this Agreement is found by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein, or of such provision in any other jurisdiction shall not be
affected or impaired thereby.
1.6 CONSENT.
Wherever any Party is required to obtain consent or approval from another Party,
such consent or approval shall not be unreasonably withheld or delayed and shall
be obtained in writing or electronically.
1.7 INTERPRETATION.
This Agreement has been negotiated by the parties hereto and their respective
counsel and shall be fairly interpreted in accordance with its terms and without
any rules of construction relating to which Party drafted the Agreement being
applied in favour or against any Party.
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1.8 CURRENCY.
Unless otherwise specifically provided herein, all amounts expressed or
described hereunder are in lawful currency of Canada.
ARTICLE II
XXX.XXX RESPONSIBILITIES
2.1 OPERATION OF SITES
(a) XXX.XXX will continue to operate its website at xxx.xxx.xxx.
(b) Immediately upon completion of the Restructuring, THE BRICK
will license to XXX.XXX the xxx.xxxxxxxx.xxx website for sale
of Products supplied by THE BRICK pursuant to a license
agreement, the terms of which will be agreed upon by THE BRICK
and XXX.XXX.
(c) At a time to be agreed upon by the Project Managers, XXX.XXX
will combine the xxx.xxx.xxx website and the xxx.xxxxxxxx.xxx
website. At the time the Sites are combined, the combined
website will be accessible through each of the respective
URL's.
(d) XXX.XXX will ensure it has the appropriate employees and
equipment to operate the Sites in accordance with the terms of
this Agreement.
(e) XXX.XXX will ensure the performance criteria for the Sites as
set out in Schedule C will be met to ensure continued and
uninterrupted sale of Product through the Sites. XXX.XXX shall
not be responsible for its failure to comply with these
criteria in a timely way or at all, as the case may be, where
such performance criteria depend, directly or indirectly, on
the functioning of the Fulfillment System and/or the Payment
System and where there is delay due to limits on the
functionality, or the lack of functioning, of such systems.
2.2 POSTING OF PRODUCTS AND OTHER CONTENT.
XXX.XXX will list Products for auction and fixed price sales, and post all other
content for the Sites received by it from THE BRICK pursuant to Section 3.2
hereof. XXX.XXX shall create the graphical user interfaces for the Sites through
the population of the display templates for the web pages created by NEW ADB.
2.3 TITLE TO PRODUCTS.
XXX.XXX shall be the retailer of Products sold on the Sites. THE BRICK, as
supplier, will deliver Products to XXX.XXX's customers. XXX.XXX will acquire
title to the Products from THE BRICK immediately before such purchaser accepts
delivery thereof. Risk of loss or
6
damage shall follow title, and the Parties shall each be responsible for
maintaining insurance on Products as they deem appropriate.
2.4 FINANCIAL SETTLEMENT.
When a purchase is made of a Product, XXX.XXX will process the retail customer's
credit card information and receive the order information. Credit card
information will be processed by XXX.XXX using THE BRICK's existing Payment
Systems, and order information will link directly into THE BRICK's Fulfillment
System.
2.5 SHIPPING AND HANDLING.
XXX.XXX shall be responsible for paying all third party shipping and handling
charges for shipping and handling of Products in fulfillment of customer orders
accepted by XXX.XXX.
2.6 PRODUCT RETURNS.
XXX.XXX shall be responsible for processing returns of Products to retail
customers and shall remit credits and refunds as may be required. Credits and
refunds to retail customers' credit cards will be processed by XXX.XXX using THE
BRICK's Payment System.
2.7 TAX REMITTANCES.
XXX.XXX shall be responsible for collecting and remitting to the proper tax
authorities, any tax arising from the sale of Products.
2.8 FINANCIAL RESPONSIBILITIES.
XXX.XXX shall be responsible for maintaining such books and records with respect
to the Sites, for producing such financial statements and for all other
bookkeeping with respect to the Sites as would a prudent owner and operator of
such commercial web sites in Canada.
2.9 REGISTERED USER DATABASE.
XXX.XXX shall e-mail those individuals presently in its registered user database
and through an "opt-in" procedure shall allow such individuals to become
registered users of the Sites. THE BRICK shall e-mail those individuals
presently in its registered user database and through an "opt-in" procedure
shall allow such individuals to become registered users of the Sites. The
registered user database for the Sites, as modified after the "opt in" procedure
has been completed, shall be a joint asset of XXX.XXX and THE BRICK, and the
terms and conditions of the Sites shall specify as such. In furtherance of the
foregoing, each of XXX.XXX and THE BRICK hereby grants to the other a perpetual,
royalty-free, personal right to use such database for the purposes disclosed to,
and consented to by, the individuals that become registered users of the Sites.
Each of THE BRICK and XXX.XXX shall obtain the other's prior approval of the
procedures used by it to obtain the consent of the individuals presently in its
registered user databases to registration in the database for the Sites. Such
prior approval shall also be obtained
7
with respect to the content of the terms communicated to such users for the
aforesaid purpose. Each of XXX.XXX and THE BRICK shall not unreasonably withhold
the granting of the aforesaid consents to the other.
2.10 NEW ADB FEES FOR SERVICES
XXX.XXX will pay all fees for NEW ADB services as provided in Schedule A.
2.11 TRADE-MARKS
The Parties acknowledge and agree that XXX.XXX will use THE BRICK's name,
trademarks, trade names, branding and "look and feel" in developing the
graphical user interfaces for the Software. XXX.XXX shall not make any of the
foregoing uses or any other use of THE BRICK's name, trademarks, trade names,
branding and "look and feel" in such a way as to significantly harm the goodwill
or reputation of THE BRICK and will not alter THE BRICK's trademarks, trade
names or branding.
ARTICLE III
THE BRICK RESPONSIBILITIES
3.1 PRODUCT SELECTION.
THE BRICK shall make available for sale through the Site the Products and THE
BRICK shall advise XXX.XXX of any minimum price applicable to each such Product
in advance of the listing of such Product on the Site. THE BRICK shall assign a
Project Manager who shall be responsible for the daily selection and management
of Products to be sold through the Site.
3.2 PRODUCT INFORMATION.
THE BRICK shall, at its expense, provide and maintain all content of the Sites
that is not otherwise specified herein as to be provided by another Party. The
content to be provided by THE BRICK shall include, without limitation, the data
required to list Products on the Site including the number of such Products
available for sale on the Site, the dates of their availability for sale, a
stock keeping unit number for each such Product and any other similar
information that is necessary, all in such form and by such means as XXX.XXX
shall advise from time to time. THE BRICK hereby grants to each of XXX.XXX and
to NEW ADB a personal, royalty-free right to use, copy, prepare derivative works
from, modify, adapt and combine throughout the Term of this Agreement all
content provided by it pursuant to this Section as necessary for the provision
of the Services pursuant to, and in accordance with, the terms and provisions of
this Agreement.
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3.3 CUSTOMER SERVICE.
THE BRICK shall be responsible for all customer relations with retail customers
purchasing Products from the Site, except that THE BRICK will refer disputes
related to the Sites and related technical issues to XXX.XXX for resolution.
3.4 ADVERTISING
THE BRICK will identify the Sites in its regularly scheduled media advertising
and will encourage customers, in such advertising and by other appropriate
marketing vehicles, to visit the Sites and to purchase Products.
3.5 TRADE-MARKS
The Parties acknowledge and agree that THE BRICK will use XXX.XXX's name,
trademarks, trade names, branding and "look and feel" in its advertising and
other appropriate communications. THE BRICK shall not make any of the foregoing
uses or any other use of XXX.XXX's name, trademarks, trade names, branding and
"look and feel" in such a way as to significantly harm the goodwill or
reputation of XXX.XXX and will not alter XXX.XXX's trademarks, trade names or
branding.
3.6 FINANCIAL SETTLEMENT.
THE BRICK shall remit all monies received on financial settlement through the
Payment System with a retail customer to a bank account for XXX.XXX (the
"XXX.XXX ACCOUNT") at such times as agreed to by the Senior Financial
Executives..
3.7 SHIPPING AND HANDLING.
Upon a customer order being entered into THE BRICK's Fulfilment System by
XXX.XXX, THE BRICK shall generate a shipping order, and pick, pack and deliver
such Product for shipping. THE BRICK shall confirm all shipments to XXX.XXX in
electronic form within 24 hours of shipment.
3.8 RIGHTS OF USE
(a) Subject to the provisions of this Agreement, THE BRICK hereby
grants to XXX.XXX a personal, royalty-free right to use the
Payment System and the Fulfillment System for the purposes set
out in this Agreement throughout the Term of this Agreement.
(b) Subject to the provisions of this Agreement, THE BRICK hereby
grants, and covenants and agrees to grant from time to time
throughout the Term of this Agreement as necessary, to each of
XXX.XXX and to NEW ADB a personal, royalty-free right to use,
copy, prepare derivative works from, modify, adapt and combine
all software, including graphic user interfaces and code
created
9
specifically to display the contents of the Site, conveyed and
transferred to THE BRICK pursuant to Section 2(b) of Schedule
D, for the sole purpose of the performance of obligations as
required by them pursuant to this Agreement.
3.9 THE BRICK CHARGES
In consideration of THE BRICK's provision of the services and the supply of
Products as set out in Section 3.1 to 3.8(a) hereof, THE BRICK will charge
XXX.XXX, and XXX.XXX will pay, charges as set by the Brick from time to time.
THE BRICK agrees that the charges will be on commercial terms.
ARTICLE IV
NEW ADB RESPONSIBILITIES
4.1 GRANT OF RIGHTS
(a) On the Effective Date, XXX.XXX will grant certain rights to
the use of the most recent version, as of the date hereof, of
the DYN@MIC SELLER(TM) software, including all modifications
and add-ons created by it pursuant to this Agreement (the
"SOFTWARE"), to THE BRICK pursuant to the agreement attached
hereto as Schedule D.
(b) Immediately upon completion of the Restructuring, NEW ADB will
grant the licence of the most recent version of the Software
to XXX.XXX as described in Section 1.1 of Schedule A.
4.2 SERVICES
NEW ADB will perform those services specified as being its responsibility in
Schedule A to this Agreement, as well as the pertinent Service Provider
responsibilities specified in Schedule B and C. Payment for such Services will
be as provided in Schedule A. NEW ADB, as the Service Provider, will provide the
Services specified in Schedule B as to be provided by it, at the Service levels
specified in that Schedule. The Service Provider shall not be responsible for
its failure to provide Services, in a timely way or at all, as the case may be,
where such Services depend, directly or indirectly, on the functioning of the
Fulfillment System and/or the Payment System and where the provision of such
Services is delayed due to limits on the functionality, or the lack of
functioning, of such systems.
4.3 TRANSITION
Should the computer hardware on which the Software shall operate be physically
moved at any time during the Term of this Agreement NEW ADB will cooperate in
good faith with, and provide reasonable assistance to, the other Parties hereto
in order to help minimize the resulting disruption to the other activities
contemplated by this Agreement.
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ARTICLE V
GENERAL MATTERS
5.1 MANAGEMENT AND IMPLEMENTATION.
(a) NEW ADB shall appoint a Project Manager who shall be
responsible for the implementation, management and enforcement
of the technical aspects of this Agreement on behalf of NEW
ADB, including working with the other Parties to mutually
develop a Project Charter and a Design Document, to prepare
Progress/Open Issues reports and to achieve first-line
resolution of disputes between the Parties regarding the
performance or non-performance of their technical obligations
under this Agreement. The Project Manager shall be responsible
for attending all Project Review Committee meetings and
Development Team meetings and shall cooperate with the other
Parties' Project Managers in resolving all outstanding issues
in a timely manner. Upon such designation, NEW ADB shall
concurrently provide the other Parties with details with
respect to its Project Manager, including name, work and home
address, work and home telephone number, and e-mail address.
(b) The Retailer and the Supplier shall each appoint a Project
Manager from their respective companies. Upon such
designations, each of XXX.XXX and THE BRICK shall concurrently
provide the other Parties with details with respect to its
Project Manager, including name, work and home address, work
and home telephone number, and e-mail address. The Project
Managers for the Retailer and the Supplier shall each:
(i) work with the other Project Managers to develop a
Project Charter, participate in Project Review
Committee meetings in order to ensure that all
Parties shall have the right to rely upon the
instructions and decisions made in the Project Review
Committee meetings, and shall be available for the
first-line resolution of disputes between the Parties
regarding the performance or non-performance of their
obligations with respect to the technical aspects of
their relationship under this Agreement; and
(ii) work with the other Project Managers to develop a
Design Document, participate in the Development Team
meetings, assist NEW ADB's Project Manager in
preparing Progress/Open Issues Reports and shall
cooperate in resolving all outstanding issues in a
timely manner.
(c) Each of the Project Managers may, on written notice to the
others, delegate his or her responsibilities under this
Agreement to one or more individuals and may exercise his or
her responsibilities as a member of a committee that includes
representatives of the other Parties.
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(d) Each Party shall be entitled to replace its Project Manager on
notice to the other Parties. In the event that any Party
replaces its Project Manager it shall be the responsibility of
such Party to ensure an orderly transition and to ensure that
the replacement does not adversely affect the timely provision
of the Services.
5.2 CONFIDENTIALITY.
(a) Each Party, on behalf of its advisors, agents, employees and
subcontractors (hereinafter in this section, the "RECEIVING
PARTY") covenants with the Party that has disclosed
Confidential Information to it (hereinafter in this section,
the "DISCLOSING PARTY") that it shall keep confidential the
Confidential Information of the Disclosing Party to which the
Receiving Party obtains access as a consequence of entering
into this Agreement and that it will take all reasonable
precautions to protect such Confidential Information from any
use, disclosure or copying except as expressly authorized by
this Agreement. This Section 5.2 shall survive the termination
of this Agreement.
(b) Confidential Information that is provided by the Disclosing
Party and all rights in and to such Confidential Information
shall remain the property of the Disclosing Party and shall be
held by the Receiving Party for the benefit of the Disclosing
Party. The Receiving Party shall not, except as permitted by
Section 5.2(c), directly or indirectly, use or exploit such
Confidential Information or disclose such Confidential
Information to any third party, for any purpose unless
explicitly permitted by this Agreement or otherwise authorized
in writing by the Disclosing Party.
(c) The Receiving Party may disclose Confidential Information to:
i) such of its directors, officers and employees who
need to know such information for the purposes of
this Agreement;
ii) its professional advisors engaged to advise in
connection with the purposes of this Agreement or its
potential sources of financing;
iii) anyone whom the Disclosing Party has agreed in
writing may receive the information;
iv) any competent judicial, governmental or regulatory
body (including any stock exchange) which requires or
can require the Confidential Information to be
disclosed; or
v) the public where required by any specific, applicable
requirement of law or pursuant to the requirements of
any securities regulatory body having jurisdiction.
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(d) The Receiving Party may only disclose Confidential Information
under Clauses 5.2(c)(iv) and 5.2(c)(v) if, insofar as
permitted by law, it has:
i) informed the Disclosing Party;
ii) obtained legal advice in writing that disclosure is
required;
iii) advised the recipient of the confidentiality of the
information being disclosed; and
iv) in the case of disclosure to the public, used its
reasonable commercial efforts to agree on the wording
of such disclosure with the Disclosing Party.
(e) The Receiving party may only disclose Confidential Information
under Section 5.2(c) to the extent strictly necessary for the
purposes of this Agreement.
(f) The Receiving Party shall inform anyone to whom it is allowed
to disclose Confidential Information that the contents are
confidential and procure that the recipient complies with this
Section 5.2 as if the recipient was also bound by it. If
required by the Disclosing Party, the Receiving Party shall
make the recipient bound by a Confidentiality Agreement on
terms equivalent to this Section 5.2.
(g) Upon expiry or earlier termination of this Agreement, at the
written request of the Disclosing Party, the Receiving Party
shall, so far as reasonably practical:
i) return all written Confidential Information which has
been supplied;
ii) destroy or erase all Confidential Information in
electronic form or incorporated into other material
and procure that anyone to whom the Receiving Party
has disclosed Confidential Information also does so;
and
iii) confirm in writing that the provisions of this Clause
have been complied with.
(h) A violation of any obligation hereunder will result in
immediate and irreparable harm and damage. In the event of
such violation by a Party hereto, the Party harmed will, in
addition to any other right to relief, be entitled to
equitable relief by way of temporary or permanent injunction
and to such other relief as any court of competent
jurisdiction may deem just and proper.
5.3 AUDIT RIGHTS.
Each Party shall provide each other Party hereto, its internal auditors and
external auditors and regulators, with access to the Party's service locations
and such records and documents as may be reasonably required to audit the fees
and expenses hereunder. Each Party shall also provide
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such persons with any assistance that they may reasonably require in connection
with such audits.
5.4 PAYMENT TERMS
In respect of all payments to be made by a Party to another Party pursuant to
this Agreement:
(a) all such payments shall be invoiced by the payee Party to the
payor Party at a minimum on a monthly basis, setting out the
Services and/or expenses in respect of which the invoice
relates, and detailing the calculation thereof. The payor
Party shall pay the payee Party the amount of each invoice
within the terms agreed to between the Parties from time to
time;
(b) any overdue payment hereunder shall accrue interest at the
rate of the prime rate of interest quoted by the Royal Bank of
Canada for its best commercial customers, from time to time,
plus 3% per annum calculated monthly from the date it is due
until date of payment;
(c) the payor Party shall pay all taxes, duties, customs and
similar charges respecting the Service fees and other payments
to be made by it to another Party, provided that if under
local law it may not make such payments, it shall reimburse
the payee Party on demand for all such payments made by the
payee Party; and
(d) the amounts due under this Agreement by the Retailer and/or
the Supplier shall be paid without any deduction, abatement or
setoff except for income taxes required by law to be deducted
at source.
5.5 BUDGET
XXX.XXX Shall formalize, with THE BRICK's input, the draft budget with respect
to the revenues, expenses, changes in working capital, investments (including
capital expenditures), sources of financing and timing thereof for the initial
period commencing September, 2002 and ending December, 2003. Thereafter, the
budget will be prepared on at least an annual basis by XXX.XXX, with THE BRICK's
input. The budgets shall include the fees payable by XXX.XXX to NEW ADB for the
implementation and customization Services provided by NEW ADB as contemplated by
Section 2.2 (a) of Schedule A and the charges payable by XXX.XXX to THE BRICK
pursuant to Section 3.9 of this Agreement. The budgets shall also reflect
XXX.XXX's costs of obtaining, hosting and maintaining necessary computer
hardware.
5.6 TRADE PRACTICES
Each Party shall conduct its business in relation to this Agreement and any
Services provided by them hereunder in a professional manner that will reflect
favourably on the good name and reputation of the Sites and the Parties. In
particular, each Party shall comply with all applicable national, international
and local laws, ordinances, and regulations in its dealings with the other
Parties and in performing its obligations under this Agreement and each Party
will refrain from
14
engaging in any unfair, or deceptive trade practice, or unethical business
practice whatsoever, or any other practice that could unfavourably reflect upon
the Sites or the other Parties hereto.
5.7 OTHER RETAIL BUSINESS
(a) Neither NEW ADB nor XXX.XXX shall be permitted to enter into
any other online retail business where either NEW ADB or
XXX.XXX are the vendor of any products without the prior
written consent of THE BRICK. THE BRICK shall not operate
another combined website with another retailer without the
prior written consent of XXX.XXX.
(b) THE BRICK shall be the only supplier of furniture, mattresses,
bedding, appliances and consumer electronics for resale by
XXX.XXX.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
6.1 REPRESENTATIONS AND WARRANTIES.
(a) Each Party hereby represents and warrants to the others that
it is legally constituted and validly existing, in good
standing, under the laws of the jurisdiction of its
constitution, with adequate power to enter into this
Agreement.
(b) Each Party hereby represents and warrants to the others that
all necessary action on the part of such Party has been taken
to approve and authorize the execution and delivery of this
Agreement, and that this Agreement constitutes a legal and
valid agreement binding upon such Party, enforceable in
accordance with its terms.
(c) Each Party represents, warrants and covenants to each other
Party that:
(1) it is and will be free to enter into, and to fully
perform its obligations under this Agreement and that
no agreement or understanding with any other person
exists or will exist which would interfere with its
obligations hereunder;
(2) all Intellectual Property used by it in the course of
fulfilling its obligations hereunder will not
infringe any Intellectual Property Rights or moral
rights of any third party;
(3) there is no outstanding litigation, arbitration or
other dispute to which the Party is a party which if
decided unfavourably to the Party could have a
material adverse effect on the Party's ability to
carry out its obligations hereunder; and
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(4) it shall render all services to be provided by it
under this Agreement honestly and in good faith and
cause its obligations hereunder to be performed in a
professional manner consistent with industry
standards and practices by fully trained, qualified
and competent personnel who have the appropriate
skills and experience to perform the duties assigned
to them with the highest possible degree of care,
skill, diligence and responsiveness and in any case
no less than a reasonable degree of care, skill,
diligence and responsiveness.
(5) NEW ADB represents and warrants that the Software
will meet the functionalities specified in Appendix B
to Schedule A.
6.2 INDEMNIFICATION
Each Party will severally, and not jointly, indemnify, defend and save each
other Party harmless from and against any and all claims, damages, liabilities,
costs and expenses including legal fees in respect of, arising from, or relating
to: (a) any breach by such Party of any representation, warranty, provision,
covenant or agreement made by such Party herein; (b) any claim or action brought
against that other Party to the extent that such claim or action is based on a
claim that the use of such indemnifying Party's Intellectual Property or other
material, documents or information provided by such Party infringes the
Intellectual Property Rights or moral rights of a third party; or (c) any death,
personal injury or loss of or damage to property caused by such Party.
6.3 GENERAL LIMITATION ON LIABILITY.
(a) UNDER NO CIRCUMSTANCES WILL ANY PARTY BE LIABLE TO ANOTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES) ARISING FROM BREACH OF THIS
AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR
ANTICIPATED PROFITS OR LOST BUSINESS.
(b) NO PARTY WILL BE LIABLE TO THE ANOTHER PARTY FOR MORE THAN
$200,000 IN DAMAGES PURSUANT TO THIS AGREEMENT.
(c) NOTWITHSTANDING SECTION 6.3(a) AND (b) OF THIS AGREEMENT,
THERE WILL BE NO LIMITATION OF LIABILITY FOR ANY PARTY WITH
RESPECT TO ANY DAMAGES ARISING AT ANY TIME IF THE DAMAGES
ARISE FROM THE INFRINGEMENT OF ANY INTELLECTUAL PROPERTY
RIGHTS BELONGING TO A THIRD PARTY.
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6.4 LIMITATION ON REPRESENTATIONS AND WARRANTIES.
Except for those representations and warranties otherwise provided in any
Transaction Document, no Party makes any representations or warranties, and
there are no conditions, express or implied, in fact or in law, including
without limitation, the implied warranties or conditions of merchantable quality
and fitness for a particular purpose and those arising by statute or otherwise
in law or from a course of dealing or usage of trade.
ARTICLE VII
DEFAULT AND TERMINATION
7.1 TERM.
This Agreement shall commence on the Effective Date and shall continue, subject
to early termination in accordance with the terms hereof, until the 10th
anniversary of the date of execution of this document (the "INITIAL TERM").
Thereafter, the Agreement shall be extended or renewed (any such extension or
renewal being a "SUBSEQUENT TERM") only upon mutual agreement of the Parties.
7.2 TERMINATION.
(a) Each of the following shall constitute an "EVENT OF DEFAULT"
for the purposes of this Agreement:
(i) if a Party fails to perform any material obligation
set forth in this Agreement and such default
continues for a period of thirty (30) days after
written notice of such failure has been given by a
non-defaulting Party to all other Parties; or
(ii) if a Party declares bankruptcy or becomes insolvent
or if it is put into receivership or a trustee is
appointed for the benefit of its creditors or it
ceases the operation of its business without a
successor acceptable to the remaining Parties.
(b) Whenever an Event of Default has occurred, the non-defaulting
Party may, at its election, terminate this Agreement in
writing, in which event the non-defaulting Party shall be
entitled to pursue all legal remedies available to it, subject
to the terms and conditions hereof.
(c) In an Event of Default by the Retailer or the Supplier, the
non-defaulting Retailer or Supplier shall have the right by
written notice to assume all rights and obligations of the
defaulting Retailer or Supplier and cure such default, or, if
such default is bankruptcy or insolvency, declare a
willingness to continue to meet the obligations of the
bankrupt or insolvent Retailer or Supplier, in which case the
17
Agreement shall become one between NEW ADB and the solvent
Retailer or Supplier.
7.3 SURVIVAL.
The terms of Sections 5.2, 5.3, 5.6, 7.3 and Articles 6 and 8 shall survive any
termination or expiry of this Agreement and shall continue in force thereafter
for the period contemplated by the Agreement. Other provisions of this Agreement
which, by the nature of the rights or obligations set out therein, might
reasonably be expected to be intended to so survive, shall survive termination
or expiry of this Agreement until they are satisfied or by their nature expire.
ARTICLE VIII
DISPUTE RESOLUTION
8.1 DISPUTE RESOLUTION PROCESS.
If any dispute, disagreement, controversy or claim (a "DISPUTE") arises out of
or relating to this Agreement including, without limitation, its application,
interpretation, performance, breach, termination, enforcement or damages, or
remedies arising out of the breach of or non-compliance therewith, the Dispute
shall be referred immediately to the senior finance executive for each Party.
For the purposes of this Article 9, "senior finance executive" means, in the
case of THE BRICK, the Chief Financial Officer of THE BRICK, and in the case of
NEW ADB, the President of New ADB and in the case of XXX.XXX, a Senior Officer
of XXX.XXX. If the Dispute remains unresolved after 10 days of having been
referred to such senior executives, then the Parties shall proceed as set out
below.
All Disputes and claims arising out of this Agreement shall be finally
determined by arbitration to be commenced and conducted in the English language
in Xxxxxxx, Xxxxxxx, Xxxxxx in accordance with the rules of the Arbitration Act,
1991 (Ontario) as amended hereby. The Parties agree that:
(a) the parties shall agree on a single arbitrator (who shall be
trained as a professional arbitrator with expertise in
commercial and corporate law) within ten (10) days of notice
of reference to arbitration, failing which either party may
apply to a court of competent jurisdiction in the Province of
Ontario to appoint an arbitrator with the foregoing
qualifications;
(b) the arbitration shall be held in private and no person except
the Parties and their respective representatives and witnesses
shall be present unless authorized by the arbitrator;
(c) subject to the provisions of this Section 9.1, the Parties
will agree, in consultation with the arbitrator, on the rules
of the arbitration. Absent such agreement, the arbitrator will
be entitled to establish the procedures to be followed,
provided that
18
in doing so, the arbitrator shall be guided by the Parties'
mutual intention that such procedures should be designed to
expedite the proceedings and minimize to the extent
practicable the expenses for the Parties;
(d) the arbitration award shall be final and binding on the
Parties and shall not be subject to any appeal (those
provisions of the Arbitration Act, 1991 (Ontario) necessary to
achieve such result are hereby expressly excluded);
(e) the costs of the arbitration shall be in the discretion of the
arbitrator;
(f) judgment upon any award may be entered in any court having
jurisdiction or application may be made to the court for a
judicial recognition of the award or an order of enforcement,
as the case may be;
(g) the arbitrator shall be instructed that time is of the essence
in the arbitration proceeding and, in any event, the
arbitration award must be made within 15 days of the
submission of the Dispute to arbitration;
(h) all Disputes referred to arbitration (including the scope of
the agreement to arbitrate, any statute of limitations,
set-off claims, conflict of laws rules, tort claims and
interest claims) shall be governed by the substantive law of
Ontario; and
(i) the Parties agree that the arbitration shall be kept
confidential and that the existence of the proceeding and any
element of it (including any pleadings, briefs or other
documents submitted or exchanged, any testimony or other oral
submissions and any awards) shall not be disclosed beyond the
arbitrator, the Parties, their counsel and any person
necessary to the conduct of the proceeding, except as may
lawfully be required in judicial proceedings relating to the
arbitration or otherwise.
ARTICLE IX
GENERAL
9.1 NOTICE.
Any notice or other communication (a "NOTICE") required or permitted to be given
or made hereunder shall be in writing and shall be well and sufficiently given
or made if:
(a) delivered by overnight courier service; or
(b) sent by facsimile transmission and confirmed by prepaid first
class mail or overnight courier service.
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in the case of a Notice to THE BRICK addressed to THE BRICK at:
The Brick Warehouse Corporation
00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxx Xxxxxxx,
Chief Financial Officer
Fax No.: 000-000-0000
with a copy to:
XxXxxxxx Xxxxxxxx XXX
Xxx 00, Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxxx Xxxxx
Fax No.: 000-000-0000
and in the case of a Notice to XXX.XXX addressed to it at:
ADB Systems International Inc.
000 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxxxx
General Counsel
Fax No.: (000) 000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
and in the case of a Notice to NEW ADB, addressed to it at:
ABD Systems International Ltd.
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201 - 0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxx Xxxxxx
General Counsel
Fax No.: (000) 000-0000
with a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 0000
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Any Notice given or made in accordance with this Section 8.1 shall be deemed to
have been given or made and to have been received on the Business Day after it
was delivered, if delivered as aforesaid.
Either Party may from time to time change its address for notice by giving
Notice to other Party in accordance with the provisions of this Section 9.1.
9.2 MERGER, AMALGAMATION AND DISSOLUTION
Except as contemplated by the Restructuring, XXX.XXX shall not amalgamate,
merge, consolidate or otherwise enter into any form of business combination with
any other Person. XXX.XXX shall not liquidate, dissolve, or windup or take any
steps or proceedings in connection therewith.
9.3 ASSIGNMENT.
No Party may assign its rights and obligations under this Agreement, in whole
or in part, without the prior consent in writing of the other Parties. Any
purported assignment by a Party made without required consent is void and of no
effect. No assignment of this Agreement by THE BRICK or NEW ADB shall relieve
such Party from any obligation under this Agreement. Notwithstanding the
foregoing, THE BRICK may, without the prior consent of XXX.XXX or NEW ADB at any
time, assign its rights and obligations under this Agreement to an Affiliate of
THE BRICK or to a bona fide purchaser of all or substantially all of THE BRICK'S
business. NEW ADB may, without the prior consent of any other Party at any time,
assign its rights and obligations under this Agreement to a bona fide purchaser
of all or substantially all of NEW ADB's business.
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9.4 BINDING ON SUCCESSORS.
This Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns.
9.5 FURTHER ASSURANCES.
Each Party agrees that upon the written request of any Party, it will do all
such acts and execute all such further documents, assignments, and the like, and
will cause the doing of all such acts and will cause the execution of all such
further documents as are within its power to cause the doing or execution of, as
any other Party hereto may from time to time reasonably request be done and/or
executed as may be reasonably necessary or desirable to give effect to this
Agreement or as may be requisite to enable them to have the full benefit of all
rights and remedies intended to be reserved or created hereby or as may be
required under local laws.
9.6 INDEPENDENT CONTRACTORS.
It is understood and agreed that in giving effect to this Agreement, no Party
shall be or be deemed a partner, agent or employee of any other Party for any
purpose and that their relationship to each other shall be that of independent
contractors. Nothing in this Agreement shall constitute a partnership or a joint
venture between the Parties. No Party shall have the right to enter into
contracts or pledge the credit of or incur expenses of liabilities on behalf of
any other Party.
9.7 WAIVER.
A waiver by a Party hereto of any of its rights hereunder or of the performance
by any other Party of any of its obligations hereunder shall be without
prejudice to all of the other rights hereunder of the Party so waiving and shall
not constitute a waiver of any such other rights or, in any other instance, of
the rights so waived, or a waiver of the performance by such other Party of any
of its other obligations hereunder or of the performance, in any other instance,
of the obligations so waived. No waiver shall be effective or binding upon a
Party unless the same shall be expressed in writing and executed by the Party to
be bound. Notwithstanding any forbearance or indulgence by any Party, until
complete performance of a term or condition, the waiving Party shall be entitled
to invoke any remedy available to it under this Agreement or at law.
9.8 COMPLIANCE WITH LAW.
Each Party shall, in the performance of this Agreement, fully comply with, and
abide by, all laws, regulations, regulatory rulings or directives, court orders,
and decisions of administrative tribunals of competent jurisdiction, that may,
in any manner or extent, concern, govern, or affect any Party's respective
performance of, and obligations under, this Agreement.
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9.9 EFFECTIVE DATE.
This Agreement shall not become a valid and binding contract unless and until
each Party has duly executed and delivered this Agreement.
9.10 AMENDMENT.
No amendment of any provision of this Agreement shall be effective unless such
amendment is embodied in a written agreement which is: (i) expressly stated to
be intended to amend this Agreement; and (ii) executed by an authorized signing
officer of each of the Parties. For greater certainty, the parties acknowledge
and agree that no representations, warranties, conditions, covenants or other
statements or commitments, in each case except for those made pursuant to a
Transaction Document, whether made orally, in writing, by course of conduct or
otherwise, and whether made prior to the Effective Date of this Agreement or
thereafter, shall be binding on either of the parties.
9.11 GOVERNING LAW.
This Agreement shall be governed and construed according to the laws of the
Province of Ontario and the laws of Canada applicable therein, and shall be
treated, in all respects, as an Ontario contract. Each of the Parties hereby
attorns to the jurisdiction of the Courts of the Province of Ontario.
9.12 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument. Counterparts may be executed either in original or faxed
form and the Parties may adopt any signatures received by a receiving fax
machine as original signatures of the Parties.
9.13 SEVERABILITY.
If any Article, Section or any portion of any Section of this Agreement is
determined to be unenforceable or invalid for any reason whatsoever, that
unenforceability or invalidity shall not affect the enforceability or validity
of the remaining portions of this Agreement and such unenforceable or invalid
Article, Section or portion thereof shall be severed from the remainder of this
Agreement.
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IN WITNESS WHEREOF this Agreement is executed by the Parties as of the date
first written above.
ADB SYSTEMS INTERNATIONAL INC.
By: ______________________________
(Duly Authorized Officer)
THE BRICK WAREHOUSE CORPORATION
By: ______________________________
(Duly Authorized Officer)
ADB SYSTEMS INTERNATIONAL LTD.
By: ______________________________
(Duly Authorized Officer)
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