EXHIBIT 2.4
SHARE PURCHASE AGREEMENT
BETWEEN
LML PAYMENT SYSTEMS INC.
AND
XXXXX X. XXXXXX
XXXXX XXXXXX-XXXXXX
XXXX X. XXXXXX
X. XXXXXXX RUNNER
MADE AS OF
November 30, 1999
TABLE OF CONTENTS
-----------------
SHARE PURCHASE AGREEMENT
------------------------
ARTICLE 1 - INTERPRETATION
1.1 Definitions............................................................. 2
1.2 Headings................................................................ 7
1.3 Extended Meanings....................................................... 7
1.4 Accounting Principles................................................... 8
1.5 Currency................................................................ 8
1.6 Schedules............................................................... 8
ARTICLE 2 - PURCHASE AND SALE
2.1 Purchase and Sale and Purchase Price................................... 9
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 Majority Shareholders' Representations and Warranties................. 9
3.2 Minority Shareholders' Representations and Warranties................ 25
3.3 Survival of Vendors' Representations, Warranties and Covenants....... 30
3.4 Purchaser's Representations and Warranties........................... 31
3.5 Survival of Purchaser's Representations, Warranties and Covenants.... 33
ARTICLE 4 - CLOSING
4.1 Closing.............................................................. 33
4.2 Deliveries by the Vendors to the Purchaser........................... 33
4.3 Deliveries by the Purchaser to the Vendors........................... 34
4.4 Payments by the Purchaser............................................ 35
ARTICLE 5 - COVENANTS
5.1 Taxes................................................................ 36
5.2 Covenants of the Purchaser........................................... 36
5.3 Registration of LML Shares........................................... 36
5.4 Price Protection..................................................... 37
ARTICLE 6 - INDEMNIFICATION
6.1 By Majority Shareholders............................................. 37
6.2 By Minority Shareholders............................................. 38
6.3 By Purchaser......................................................... 38
6.4 Indemnification Procedure............................................ 39
6.5 Maximum Amount of Indemnification Obligations........................ 39
-i-
ARTICLE 7 - CONDITIONS
7.1 Conditions for the Benefit of the Purchaser.......................... 41
7.2 Conditions for the Benefit of the Vendors............................ 42
ARTICLE 8 - GENERAL
8.1 Further Assurances................................................... 43
8.2 Time of the Essence.................................................. 43
8.3 Commissions.......................................................... 43
8.4 Legal Fees........................................................... 43
8.5 Public Announcements................................................. 43
8.6 Benefit of the Agreement............................................. 43
8.7 Entire Agreement..................................................... 44
8.8 Amendments and Waiver................................................ 44
8.9 Assignment........................................................... 44
8.10 Notices.............................................................. 44
8.9 Severability......................................................... 45
8.11 Governing Law........................................................ 46
8.12 Attornment........................................................... 46
8.13 Counterparts and Facsimile Signatures................................ 46
-ii-
SHARE PURCHASE AGREEMENT
------------------------
THIS AGREEMENT made as of November 30, 1999;
BETWEEN:
LML PAYMENT SYSTEMS INC., a corporation continued under the laws
of the Yukon Territory of Canada
(the "Purchase"),
AND:
XXXXX X. XXXXXX, of the City of Kingsport in the State of
Tennessee
("Xx. Xxxxxx")
XXXXX XXXXXX-XXXXXX, of the City of Dallas in the State of Texas
("Xx. Xxxxxx-Xxxxxx")
XXXX X. XXXXXX, of the City of Fort Worth in the State of Texas
("Xx. Xxxxxx")
X. XXXXXXX RUNNER, of the City of Fort Worth in the State of
Texas
("Mr. Runner")
(Xx. Xxxxxx, Xx. Xxxxxx-Xxxxxx, Xx. Xxxxxx and Mr. Runner are
hereinafter referred to collectively as the "Vendors"),
WHEREAS:
A. The Vendors are the beneficial and registered owners of the Shares,
being all the issued and outstanding common shares of the capital stock of the
Corporation; and
B. The Vendors desire to sell and the Purchaser desires to purchase the
Shares upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained (and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged) the parties hereto agree as follows:
ARTICLE 1 - INTERPRETATION
--------------------------
1.1 Definitions.
-----------
In this Agreement, unless something in the subject matter or context
is inconsistent therewith:
(a) "1933 Act" has the meaning set out in Section 3.1(ggg)(ii);
(b) "Agreement" means this agreement and all amendments made hereto by
written agreement between the Vendors and the Purchaser;
(c) "Balance of Majority Shares" means as of the time in question, the
Majority Shares less (i) any Majority Shares previously pledged to
Purchaser and foreclosed upon, and (ii) any Majority Shares previously
sold, substantially all of the net proceeds from which were used to
pay all or part of an Indemnity Note obligation or all or part of an
Indemnification Claim against the Majority Shareholders;
(d) "Balance Sheet" means the audited consolidated balance sheet of the
Corporation and the Subsidiary as at the Balance Sheet Date;
(e) "Bank" means Bank of America, N.A., the successor by merger to
NationsBank, N.A.;
(f) "Bank Debt" means the outstanding principal balance under the Bank
Promissory Note as of the Time of Closing;
(g) "Bank Debt Interest" means all accrued and unpaid interest and other
amounts, if any, payable under the Bank Promissory Note as of the Time
of Closing;
(h) "Bank Promissory Note" means that certain Promissory Note dated
November 30, 1998 executed by the Corporation in favor of NationsBank
N.A. in the original principal amount of $1,250,000 with interest, and
other amounts, if any, payable thereon as contemplated in such
Promissory Note;
-2-
(i) "Balance Sheet Date" means December 31, 1998;
(j) "XXXX" means XXXX & Co., a corporation incorporated under the laws of
the State of Texas;
(k) "XXXX Warrant" means the Stock Purchase Warrant dated April 11, 1995
and issued by the Subsidiary to XXXX entitling XXXX to purchase 5
Subsidiary Shares from the treasury of the Subsidiary at a price of
$0.01 per Subsidiary Share;
(l) "XXXX Warrant Consideration" means the cash amount negotiated by the
Vendors with XXXX in order to obtain the Warrant Release in respect of
the XXXX Warrant;
(m) "Business Day" means a day other than a Saturday, Sunday or bank
holiday in Texas;
(n) "Closing" means the closing of all the transactions contemplated in
this Agreement at the Time of Closing on the Closing Date which shall
be effected by the deposit by the parties hereto and Finova, XXXX and
the Bank of all documents required to be delivered in order to effect
such Closing pursuant to the provisions hereof where upon the Closing
shall have occurred and the respective documents thus tabled will be
delivered to the respective parties and third parties in accordance
with a closing agenda to be agreed upon between the Purchaser Counsel
and the Vendor Counsel before the Time of Closing;
(o) "Closing Date" means November 30, 1999 or such other date as may be
agreed to in writing between the Vendors and the Purchaser;
(p) "Corporation" means CFDC Holdings Corp.;
(q) "Debt Releases" means collectively the releases of Finova and the Bank
in respect of the Finova Debt and the Bank Debt in substantially the
form, respectively, of the draft releases attached hereto as Schedule
1.1(q)1 and 2;
(r) "Environmental Laws" means any and all state, federal, and local
statutes, regulations and ordinances relating to the protection of
human health and the environment, including without limitation the
Federal Comprehensive Environmental Response, Compensation, and
Liability Act and the Toxic Substances Control Act;
(s) "Financial Statements" has the meaning set out in Section 3.1(n);
(t) "Finova" means Finova Mezzanine Capital Inc., formerly known as Sirrom
Capital Corporation;
(u) "Finova Debt" means the $1,750,000 in principal amount owed by the
Subsidiary to Finova pursuant to the Finova Loan Agreement dated March
17, 1995 made
-3-
between the Subsidiary and Sirrom repayment of which is secured by the
Finova Promissory Note, the Finova Security Agreement, the Finova
Pledge and Security Agreement, and the Finova Life Insurance
Assignment and in partial consideration for the making of which the
Finova Warrant was issued;
(v) "Finova Debt Interest" means all accrued and unpaid interest and other
amounts, if any, payable under the Finova Loan Agreement and the
Finova Promissory Note;
(w) "Finova Discharge" means, collectively, a discharge in registrable
form, of the UCC-1 filings in respect of the Finova Security
Agreement and Finova Pledge and Security Agreement, a reassignment or
cancellation of life insurance under the Finova Life Insurance
Assignment and a discharge under the Finova Pledge and Security
Agreement;
(x) "Finova Life Insurance Assignment" means the Life Insurance Assignment
Agreement dated as of March 17, 1995 between Sirrom and the Subsidiary
as partial security for the Finova Debt;
(y) "Finova Loan Agreement" means the loan agreement dated as of March 17,
1995 between Sirrom and the Subsidiary;
(z) "Finova Pledge and Security Agreement" means the Pledge and Security
Agreement dated March 17, 1995 made between Sirrom and the Corporation
as partial security for the Finova Debt;
(aa) "Finova Promissory Note" means the Secured Promissory Note dated March
17, 1995 made by the Subsidiary in favor of Sirrom in the principal
amount of $1,750,000;
(bb) "Finova Security Agreement" means the Security Agreement dated as of
March 17, 1995 made between Sirrom and the Subsidiary as partial
security for the Finova Debt;
(cc) "Finova Warrant" means the Stock Purchase Warrant dated March 17, 1995
and issued by the Subsidiary to Sirrom entitling Sirrom to purchase
324 Subsidiary Shares from the treasury of the Subsidiary at a price
of $0.01 per Subsidiary Share;
(dd) "Finova Warrant Consideration" means the number of LML Shares or the
cash amount negotiated by the Vendors with Finova in order to obtain
the Warrant Release in respect of the Finova Warrant;
(ee) "Hazardous Material" means any hazardous or toxic substance, material,
or waste, including, but not limited to those substances, materials,
pollutants, contaminants and wastes listed in the United States
Department of Transportation Hazardous
-4-
Materials Table (49 C.F.R. (S) 172.101) or by the United States
Environmental Protection Agency as hazardous substances (40 C.F.R.
Part 302 and amendments thereto), petroleum products (as defined in
Title I to the Resource Conservation and Recovery Act, 42 U.S.C. (S)
6991-6991(i)) and their derivatives;
(ff) "Indemnification Claim" has the meaning set out in Section 6.1;
(gg) "Indemnity Note" has the meaning set out in Section 6.5(a)(i);
(hh) "Interim Financial Statements" has the meaning set out in Section
3.1(o);
(ii) "Interim Balance Sheet Date" means October 31, 1999;
(jj) "Interim Balance Sheet" means the consolidated balance sheet of the
Corporation and the Subsidiary as at the Interim Balance Sheet Date;
(kk) "Knowledge of the Majority Shareholders" means with respect to the
existence or absence of facts, that neither Mr. Runner nor Xx. Xxxxxx,
without duty of inquiry or investigation, has had come to his
attention any information which would give him actual knowledge of the
existence or absence of such facts;
(ll) "LML" means LML Payment Systems Inc., a corporation continued under
the laws of the Yukon Territory of Canada;
(mm) "LML Share" means one common share without par value of the capital
stock of LML;
(nn) "LML Share Closing Value" means the closing offering price for the
purchase of an LML Share as reported by NASDAQ on November 29, 1999;
(oo) "Losses" has the meaning set out in Section 6.1;
(pp) "Majority Shareholders" means, collectively, Mr. Runner and Xx.
Xxxxxx;
(qq) "Majority Shareholders' Distribution Amount" means the product of the
LML Share Closing Value, times the number of LML Shares comprising the
Majority Shares;
(rr) "Majority Shares" means the LML Shares received by the Majority
Shareholders at the Closing;
(ss) "Material Contracts" has the meaning set out in Section 3.1(y);
(tt) "Minority Shareholders" means, collectively, Xx. Xxxxxx and Xx.
Xxxxxx-Xxxxxx;
-5-
(uu) "NASDAQ" means the National Association of Security Dealers Automated
Quotation System;
(vv) "New Working Capital" means the sum to be advanced or caused to be
advanced by the Purchaser to the Corporation and/or the Subsidiary as
working capital at the Time of Closing which is the result of
subtracting (A) the sum of adding (i) the Selling Expenses that are
legal fees and disbursements, (ii) the Bank Debt Interest, and (iii)
the Finova Debt Interest from (B) $500,000;
(ww) "Piggyback Registration" has the meaning set out in Section 5.3(a);
(xx) "Proprietary Software" means all software which is owned by the
Corporation or the Subsidiary as a result of it having been developed
by or for the Corporation or the Subsidiary;
(yy) "Public Documents" has the meaning set out in Section 3.1(ggg)(x);
(zz) "Purchase Price" has the meaning set out in Section 2.1(a);
(aaa) "Purchaser Counsel" means, collectively, in Canada, XxXxxxxx Xxxxxxxx
of Vancouver, British Columbia, Xxxxx Xxxxxx of Vancouver, British
Columbia and Xxxxx Xxxxxxxxxx of Whitehorse, Yukon Territory, and in
the United States of America, Van Xxxxx Xxxxxx III, of San Antonio,
Texas and Xxxxxxxx Xxxxxxxx L.L.P of New York;
(bbb) "Real Property" has the meaning set out in Section 3.1(gg)(i);
(ccc) "Registrable Securities" means LML Shares, excluding any such shares
that are (i) effectively registered under the 1933 Act and disposed of
in accordance with such registration, (ii) saleable by the holder
thereof pursuant to Rule 144, or (iii) actually distributed to the
public pursuant to Rule 144;
(ddd) "Restricted Securities" has the meaning set out in Section
3.1(ggg)(i);
(eee) "Rule 144" means Rule 144 under the 1933 Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
(fff) "SEC" has the meaning set out in Section 3.1(ggg)(vi);
(ggg) "Selling Expenses" means, collectively, the amount that is the sum,
expressed in dollars, of (i) the cost of discharging the Finova
Warrant at the Closing, (ii) the cost of discharging the XXXX Warrant
at the Closing, and (iii) the fees and disbursements of Vendor Counsel
and other legal counsel if any incurred by Vendors in the negotiation,
settlement and closing of the purchase and sale of the Shares
hereunder;
-6-
(hhh) "Shares" means the 13,879 issued and outstanding common shares of the
capital stock of the Corporation;
(iii) "Sharing Percentages" means for Xx. Xxxxxx 8.199%, for Xx. Xxxxxx-
Xxxxxx 1.801%, for Xx. Xxxxxx 45.183% and for Mr. Runner 44.817%;
(jjj) "Sirrom" means Sirrom Capital Corporation, a corporation incorporated
under the laws of the State of Tennessee;
(kkk) "Subsidiary" means CFData Corp., a corporation incorporated pursuant
to the laws of the State of Texas;
(lll) "Subsidiary Share" means one common share of the capital stock of the
Subsidiary;
(mmm) "Time of Closing" means 9:00 a.m. (Dallas Time) on the Closing Date;
and
(nnn) "Vendor Counsel" means Munsch, Hardt, Xxxx & Xxxx, P.C. of Dallas,
Texas;
(ooo) "Vendors' Certificates" means collectively, the certificates delivered
on Closing, in substantially the form of the draft certificate
attached hereto as Schedule 1.1(ooo) by each of the Vendors stating
under penalty of perjury each Vendor's United States taxpayer
identification number and that such Vendor is not a foreign person
within the meaning of Section 1445(b)(2) of the Internal Revenue Code
of the United States of America; and
(ppp) "Warrant Releases" means collectively the releases of Finova and XXXX
evidencing the termination of their rights, respectively, pursuant to
the Finova Warrant and the XXXX Warrant in substantially the forms of
the draft releases attached as Schedules 1.1(ppp)1 and 2.
1.2 Headings.
--------
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.3 Extended Meanings.
-----------------
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender shall
include the feminine and
-7-
neuter genders and vice versa and words importing persons shall include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations.
1.4 Accounting Principles.
----------------------
Wherever in this Agreement reference is made to a calculation to be
made in accordance with generally accepted accounting principles, such reference
shall be deemed to be to the generally accepted accounting principles from time
to time approved by the American Institute of Certified Public Accountants, or
any successor institute, applicable as at the date on which such calculation is
made or required to be made in accordance with generally accepted accounting
principles.
1.5 Currency
--------
All references to currency herein are to lawful money of the United
States of America.
1.6 Schedules.
---------
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:
Schedule 1.1(q)1 Debt Release (Finova Debt)
Schedule 1.1(q)2 Debt Release (Bank Debt)
Schedule 1.1(ooo) Vendors' Certificates
Schedule 1.1(ppp)1 Warrant Release (Finova Warrant)
Schedule 1.1(ppp)2 Warrant Release (XXXX Warrant)
Schedule 3.1(h) Liens on the Shares
Schedule 3.1(k) Encumbrances on the Shares
Schedule 3.1(n) Financial Statements
Schedule 3.1(o) Interim Financial Statements
Schedule 3.1(r) Liens and Encumbrances
Schedule 3.1(s) Outstanding Notices and Orders
Schedule 3.1(v) Tax Liability
Schedule 3.1(w) Tax Returns
Schedule 3.1(x) Liabilities Out of Normal Course
Schedule 3.1(y) Material Contracts
Schedule 3.1(z) Material Contract Defaults
Schedule 3.1(aa) Guarantees
Schedule 3.1(bb) Leases of Real Property
Schedule 3.1(ee) Leases of Personal Property
Schedule 3.1(jj) Royalty, License Fee, Management Fee
Schedule 3.1(ll) Collective Agreements and Employee Benefit Plans
Schedule 3.1(uu) Legal Actions
Schedule 3.1(zz) Licenses
Schedule 3.1(bbb) Intellectual Property
-8-
Schedule 3.1(ddd) Infringement of Intellectual Property Rights
Schedule 3.1(eee) Insurance Policies
Schedule 3.2(a) Liens on the Shares
Schedule 4.2(a) Vendors' Direction
Schedule 4.2(b)(i) Mr. Runner's Consulting Agreement
Schedule 4.2(b)(ii) Non-Competition Agreement
Schedule 4.2(b)(xvii) Opinion of Vendor Counsel
Schedule 4.3(a)(vii) Opinions of Purchaser Counsel
Schedule 6.5(a)(i) Indemnity Note and Pledge
ARTICLE 2 - PURCHASE AND SALE
-----------------------------
2.1 Purchase and Sale and Purchase Price.
------------------------------------
(a) The Vendors shall sell the Shares to the Purchaser and the Purchaser
shall purchase the Shares from the Vendors for a total purchase price which is
the amount that is equal to the result of subtracting (i) the Selling Expenses
from (ii) $1,500,000 (such result is hereinafter referred to as the "Purchase
Price") upon and subject to the terms and conditions hereof.
(b) The Purchase Price shall be paid and satisfied by issuance to each of
the Vendors on Closing such Vendor's Sharing Percentage of that number of LML
Shares that equals the amount that is equal to the product of dividing (i) the
Purchase Price by (ii) the LML Share Closing Value rounded down to the nearest
whole number.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
------------------------------------------
3.1 Majority Shareholders' Representations and Warranties.
------------------------------------------------------
The Schedules attached to this Agreement expressly qualify this
Agreement and the warranties and representations set forth herein. The
information contained in the Schedules or the agreements referred to in the
Schedules shall be deemed to qualify the entire Agreement and to the extent that
any disclosure set forth in a Schedule is applicable to more than one section of
the Agreement or more than one warranty or representation, such disclosure shall
be deemed to have been repeated with respect to each such warranty and
representation and section as if set forth completely herein. Except as may be
set forth on the Schedules, the Majority Shareholders jointly and severally
represent and warrant to the Purchaser that the following representations and
warranties are true as of the date hereof and will be true as of the Time of
Closing;
(a) the Corporation is a corporation duly organized and validly existing
under the laws of Texas with the corporate power to own its assets and
to carry on its business and has made all necessary filings under all
applicable corporate, securities and taxation laws or any other laws
to which the Corporation is subject;
-9-
(b) the entire authorized capital stock of the Corporation consists of
1,000,000 common shares, of which 13,879 have been validly issued and
are outstanding, fully paid and non-assessable;
(c) the articles of incorporation of the Corporation were filed with the
Office of Secretary of State of Texas on November 4, 1993, and the
only amendments thereto are amendments filed on May 17, 1995 and
October 28, 1999;
(d) the bylaws of the Corporation were adopted on November 4, 1993 and
there have been no amendments thereto;
(e) the authorized capital of the Subsidiary consists of 1,500 common
shares, of which 1,000 have been validly issued and are outstanding,
fully paid and non-assessable;
(f) the articles of incorporation of the Subsidiary were filed with the
Office of Secretary of State of Texas on November 3, 1993, and the
only amendments thereto are amendments filed on March 17, 1995 and
March 24, 1995;
(g) the bylaws of the Subsidiary were adopted on November 4, 1993, and the
only amendment thereto was adopted on March 15, 1995;
(h) each of the Majority Shareholders is the beneficial and registered
owner of the number of Shares shown in the table below opposite the
Majority Shareholder"s name free and clear of all liens, charges,
encumbrances and any other rights of others, except as set out in
Schedule 3.1(h);
Number of Shares Registered
Vendor's Name in the Name of the Vendor
--------------- -----------------------------
Xx. Xxxxxx 6271
Mr. Runner 6220
(i) each of the Majority Shareholders has good and sufficient power,
authority and right to enter into and deliver this Agreement and to
transfer the legal and beneficial title and ownership of the Shares
registered in his name to the Purchaser free and clear of all liens,
charges, encumbrances and any other rights of others;
(j) there is no contract, option or any other right of another binding
upon or which at any time in the future may become binding upon:
(i) the Majority Shareholders to sell, transfer, assign, pledge,
charge, mortgage or in any other way dispose of or encumber any
of the Shares other than pursuant to the provisions of this
Agreement; or
-10-
(ii) the Corporation to allot or issue any of the authorized but
unissued shares of the Corporation or to create any additional
class of shares;
(k) the Corporation is the beneficial and registered owner of all the
issued and outstanding Subsidiary Shares free and clear of all liens,
charges, encumbrances and any other rights of others except the pledge
of the Subsidiary Shares pursuant to the Finova Pledge and Security
Agreement, and except as set out in Schedule 3.1(k);
(l) there is no contract, option or any other right of another binding
upon or which at any time in the future may become binding upon:
(i) the Corporation to sell, transfer, assign, pledge, charge,
mortgage or in any other way dispose of or encumber any of the
issued and outstanding Subsidiary Shares other than pursuant to
the provisions of this Agreement except for the Finova Loan
Agreement and the Finova Pledge and Security Agreement; or
(ii) the Subsidiary to allot or issue any of the unissued Subsidiary
Shares except pursuant to the Finova Warrant and the XXXX
Warrant or to create any additional class of shares;
(m) to the Knowledge of the Majority Shareholders, neither the entering
into nor the delivery of this Agreement nor the completion of the
transactions contemplated hereby by the Vendors or by the Corporation
will result in the violation of:
(i) any of the provisions of the constating documents or bylaws of
the Corporation or the Subsidiary;
(ii) any agreement or other instrument to which the Corporation or
the Vendors are a party or by which the Corporation, the
Subsidiary or the Vendors are bound which will not be
terminated as of the Closing Date, or
(iii) any applicable law, rule or regulation;
(n) the audited consolidated financial statements of the Corporation and
the Subsidiary, consisting of the Balance Sheet and statement of
operations, statement of change in stockholder's equity (deficit) and
statement of cash flow for the period ended on the Balance Sheet Date,
together with the report of Xxxxxxx, Xxxxxx, Xxxxx & Bolt L.L.P.,
certified public accountants, thereon and the notes thereto
(hereinafter collectively referred to as the "Financial Statements"),
a copy of which is attached hereto as Schedule 3.1(n):
(i) are in accordance with the books and accounts of the
Corporation and the Subsidiary as at the Balance Sheet Date,
-11-
(ii) are true and correct and present fairly the financial position
of the Corporation and the Subsidiary as at the Balance Sheet
Date,
(iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, and
(iv) present fairly all of the assets and liabilities of the
Corporation and the Subsidiary as at the Balance Sheet Date
including, without limiting the generality of the foregoing,
all contingent liabilities of the Corporation and the
Subsidiary as at the Balance Sheet Date;
(o) the unaudited consolidated financial statements of the Corporation and
the Subsidiary, consisting of the Interim Balance Sheet and statement
of operations, statement of change in stockholder's equity (deficit)
and statement of cash flow for the period ended on the Interim Balance
Sheet Date and the notes thereto (hereinafter collectively referred to
as the "Interim Financial Statements"), a copy of which is attached
hereto as Schedule 3.1(o):
(i) are in accordance with the books and accounts of the
Corporation and the Subsidiary as at the Interim Balance Sheet
Date,
(ii) are true and correct and present fairly the financial position
of the Corporation and the Subsidiary as at the Interim Balance
Sheet Date,
(iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, and
(iv) present fairly all of the assets and liabilities of the
Corporation and the Subsidiary as at the Interim Balance Sheet
Date including, without limiting the generality of the
foregoing, all contingent liabilities of the Corporation and
the Subsidiary as at the Interim Balance Sheet Date;
(p) since the Interim Balance Sheet Date, there has been no material
adverse change in the assets, liabilities or financial position of the
Corporation or the Subsidiary;
(q) since the Interim Balance Sheet Date, the businesses of the
Corporation and the Subsidiary have been carried on in their usual and
ordinary course and neither the Corporation nor the Subsidiary has
entered into any transaction out of the usual and ordinary course of
their respective businesses;
(r) the Corporation and the Subsidiary are the respective owners with a
good and indefeasible title, free and clear of all liens, charges,
encumbrances and any other rights of others, of all assets of the
Corporation and the Subsidiary shown or reflected on the Interim
Balance Sheet, except as noted in such Schedule 3.1(r) and for (A)
such of the assets of the Corporation and the Subsidiary as have been
disposed of in the usual and ordinary course of business since the
Interim Balance
-12-
Sheet Date, (B) assets being leased, (C) statutory and contractual
landlords liens, (D) liens which are to be released by the Closing
Date or which are not listed in such Schedule 3.1(r) because they (i)
are not substantial in character amount or extent, and do not
materially detract from the value of the assets subject thereto, (ii)
do not materially interfere with either the present or intended use of
such assets, and (iii) do not, individually or in the aggregate,
materially interfere with the conduct of the Corporation's or the
Subsidiary's business;
(s) to the Knowledge of the Majority Shareholders, except as described in
Schedule 3.1(s), there are no outstanding orders, notices or similar
requirements relating to the Corporation and the Subsidiary issued by
any building, environmental, fire, health, labor or police authorities
or from any other federal, state or municipal authority and there are
no matters under discussion with any such authorities relating to
orders, notices or similar requirements;
(t) no single capital expenditure in excess of $5,000 or capital
expenditures in the aggregate in excess of $10,000 have been made or
authorized by either the Corporation or the Subsidiary since the
Interim Balance Sheet Date;
(u) no dividends have been declared or paid on or in respect of the Shares
and no other distribution on any of its securities or shares has been
made by the Corporation since the Interim Balance Sheet Date and all
dividends which to the date hereof have been declared or paid by the
Corporation have been duly and validly declared or paid;
(v) to the Knowledge of the Majority Shareholders, neither the Corporation
nor the Subsidiary has any liability, obligation or commitment for the
payment of income taxes, corporation taxes ad valorem taxes, personal
property taxes and franchise taxes, or any other taxes or duties of
whatever nature or kind, or interest or penalties with respect
thereto, except such as are disclosed in the Interim Financial
Statements or such taxes or duties not yet due and payable as have
arisen since the Interim Balance Sheet Date in the usual and ordinary
course of business and for which adequate provision in the accounts of
the Corporation or the Subsidiary, as the case may be, has been made,
and neither the Corporation nor the Subsidiary are in arrears with
respect to any required withholdings or installment payments of any
tax or duty of any kind and has not filed any waiver for a taxation
year of the Corporation under the Internal Revenue Code of the United
States of America or any other legislation imposing tax on the
Corporation except as disclosed in Schedule 3.1(v);
(w) the tax returns of the Corporation and the Subsidiary as disclosed in
Schedule 3.1(w) attached hereto are true and complete in all material
respects;
(x) to the Knowledge of the Majority Shareholders, except as disclosed in
Schedule 3.1(x) there are no outstanding liabilities against the
Corporation or the Subsidiary except trade debts incurred in the usual
and ordinary course of business
-13-
which could be reasonably expected to have a material adverse effect
on the Corporation or the Subsidiary;
(y) All contracts and commitments (other than leases of real or personal
property) to which the Corporation or the Subsidiary is a party or
bound, meeting any of the descriptions set forth below (collectively,
the "Material Contracts"), are listed in Schedule 3.1(y) attached
hereto.
(i) any contract or agreement for the purchase of any materials or
supplies in excess of Five Thousand and 00/100 Dollars
($5,000.00);
(ii) any instrument evidencing or related to indebtedness,
obligation or liability for borrowed money (irrespective of
amount), or any liability for the deferred purchase price of
property (excluding normal trade payables arising out of the
ordinary course of business), or any instrument guaranteeing
any indebtedness, obligation or liability, or any obligation to
incur any indebtedness, obligation or liability;
(iii) any joint venture, partnership or other cooperative arrangement
or any other cooperative agreement involving a sharing of
profits with any other party;
(iv) any sales agency, representative, brokerage, distribution or
similar contract;
(v) all agreements and relationships with any individual or entity
entitled to fees, commissions, royalties or any other payments;
(vi) any plan or contract for officers, directors, consultants, or
employees, with respect to salaries, fees, royalties,
insurance, bonuses, incentive compensation, pensions, deferred
compensation, hospitalization, retirement payments, profit
sharing, severance benefit by contract, paid vacations or other
benefit which is not otherwise listed on a Schedule to this
Agreement;
(vii) any contract or agreement with any labor union;
(viii) any contract, agreement or commitment upon which the business
of the Corporation or the Subsidiary is materially dependent;
(ix) any agreement or contract concerning confidentiality or non-
competition or any restriction on the ability of the
Corporation or the Subsidiary to conduct business in the
ordinary course;
(x) any other contract, commitment or agreement related to the
business of the Corporation or the Subsidiary (other than
contracts, commitments or
-14-
agreements excluded by an express exception from the
descriptions set forth above) which (i) provides for payment or
performance by either party thereto having an aggregate value
of Five Thousand and 00/100 Dollars ($5,000.00) or more, or
(ii) is not terminable by the Company without payment or
penalty on 30 days (or less) notice.
(z) to the Knowledge of the Majority Shareholders, except as disclosed in
Schedule 3.1(z), neither the Corporation nor the Subsidiary is in
default or breach of any Material Contract to which either is a party
and to the Knowledge of the Majority Shareholders, there exists no
condition, event or act which, with the giving of notice or lapse of
time or both would constitute such a default or breach and all such
Material Contracts are in good standing and in full force and effect
in accordance with their terms and the Corporation or the Subsidiary,
as the case may be, are each entitled to all material benefits under
the Material Contract to which they are respectively parties;
(aa) except as set out in Schedule 3.1(aa), neither the Corporation nor the
Subsidiary is a party to or bound by any guarantee, indemnification,
surety or similar obligation;
(bb) neither the Corporation nor the Subsidiary owns any real property nor
are they a party to any lease or agreement in the nature of a lease
for real property, whether as lessor or lessee except as set out in
Schedule 3.1(bb);
(cc) the leases of real property listed on Schedule 3.1(bb) constitute all
the real property leases to which either the Corporation or the
Subsidiary is a party (either as lessor or lessee), and true and
complete copies of such leases and all amendments and modifications
thereof have been provided to the Purchaser. To the Knowledge of the
Majority Shareholders, no changes have been made to any leasehold
premises following the commencement date of the lease which would
result in any material remediation or restoration obligation on the
part of the Corporation or the Subsidiary upon the expiration or
earlier termination of the lease;
(dd) to the Knowledge of the Majority Shareholders, with respect to the
leases of real property listed on Schedule 3.1(bb), (i) the leases are
in full force and effect, and are valid, binding and enforceable in
accordance with their respective terms, (ii) all accrued and currently
payable rents and other payments required by such leases have been
paid, (iii) such leases were entered into in the ordinary course of
business and the Corporation or the Subsidiary has been in peaceable
possession since the beginning of their respective possession (either
as lessor or lessee) under any such lease, and (iv) neither the
Corporation, the Subsidiary nor any other party is in material default
in any respect under any such leases;
(ee) neither the Corporation nor the Subsidiary is a party to any lease or
agreement in the nature of a lease for personal property, whether as
lessor or lessee except as set out in Schedule 3.1(ee);
-15-
(ff) the leases of personal property listed in Schedule 3.1(ee) constitute
all the personal property leases to which the Corporation or the
Subsidiary is a party (either as lessor or lessee) true and complete
copies of such leases and all amendments and modifications thereof
have been provided to the Purchaser;
(gg) Environmental Representations and Warranties of the Majority
Shareholders:
(i) to the Knowledge of the Majority Shareholders, all activities
of the Corporation and the Subsidiary with respect to real
property now or formerly owned or leased by the Corporation or
the Subsidiary ("Real Property") have been and are being
conducted in material compliance with all Environmental Laws;
(ii) to the Knowledge of the Majority Shareholders, there has been
no release or presence of any Hazardous Materials on, in, from
or onto the Real Property in violation of any Environmental
Law;
(iii) neither the Corporation or the Subsidiary has generated,
manufactured, refined, transported, stored, handled, disposed
of or released any Hazardous Material on the Real Property in
violation of any Environmental Law;
(iv) to the Knowledge of the Majority Shareholders, the Corporation
and the Subsidiary have obtained all approvals and caused all
notifications to be made with respect to the Real Property as
required by Environmental Laws, if any;
(v) to the Knowledge of the Majority Shareholders, the Corporation
has delivered to the Purchaser a true and complete list of all
registrations with, licenses from, or permits issued by
governmental agencies or authorities material to the operations
of the business of the Corporation and the Subsidiary pursuant
to environmental, health and safety laws, and all such
registrations, licenses or permits are in full force and
effect;
(vi) neither the Corporation nor the Subsidiary has received any
written notice of any violation of any Environmental Laws with
respect to the Real Property;
(vii) no action has been commenced or to the Knowledge of the
Majority Shareholders threatened regarding the Corporation"s or
the Subsidiary"s compliance with any Environmental Laws with
respect to the Real Property;
(viii) to the Knowledge of the Majority Shareholders, no tanks used
for the storage of any Hazardous Material above or below ground
are present or to
-16-
the Knowledge of the Majority Shareholders were at any time
present on or about the Real Property;
(ix) no action has been commenced or to the Knowledge of the
Majority Shareholders threatened regarding the presence of any
Hazardous Material on or about the Real Property;
(x) to the Knowledge of the Majority Shareholders, no Hazardous
Materials are present in any medium in the operations of the
business of the Corporation and the Subsidiary and/or at the
Real Property in such a manner as requires investigation or
remediation under any applicable law;
(xi) to the Knowledge of the Majority Shareholders, no
polychlorinated biphenyls or substances containing
polychlorinated biphenyls are present on the Real Property; and
(xii) to the Knowledge of the Majority Shareholders, no friable
asbestos is present in the operations of the business of the
Corporation and the Subsidiary and/or the Real Property;
(xiii) to the Knowledge of the Majority Shareholders, neither the
Corporation nor the Subsidiary has released or waived the
liability of any previous owner, lessee, or operator of the
Real Property or any party who may be potentially responsible
for the presence or removal of Hazardous Material on or about
the Real Property;
(hh) the Corporation does not have any subsidiaries other than the
Subsidiary or agreements, options or commitments to acquire any
shares, securities or substantially all the assets of any corporation
or other entity or partnership;
(ii) there is no unexpired agreement, option, understanding or commitment,
or any right or privilege capable of becoming an agreement, for the
purchase from the Corporation or the Subsidiary of its business or any
of its assets other than in the usual and ordinary course of business;
(jj) except as set out in Schedule 3.1(jj), neither the Corporation nor the
Subsidiary is a party to or bound by any contract or commitment to pay
any royalty, license fee or management fee;
(kk) neither the Corporation nor the Subsidiary has any written or
unwritten employment contract with any person whomsoever except such
contracts for all the employees of the Corporation and the Subsidiary
as are listed in employee listing dated November 29, 1999 and
delivered to the Purchaser at the Closing, which listing truly and
correctly sets out whether such contracts are or are not in writing
and the annual salary, annual vacation entitlement, position and date
of
-17-
hire of each of the employees of the Corporation or the Subsidiary,
as the case may be;
(ll) neither the Corporation nor the Subsidiary is bound by or a party to:
(i) any collective bargaining agreement, or
(ii) any health, dental, life and disability insurance, retirement,
pension, bonus, profit-sharing or similar plan or incentive
management or deferred compensation plan of any kind whatsoever
or any benefit plan including, without limitation maintained by
or on behalf of the Corporation or the Subsidiary for any of
its employees;
except such agreements and plans as are listed in Schedule 3.1(ll)
attached hereto;
(mm) to the Knowledge of the Majority Shareholders, all benefit plans
listed in Schedule 3.1(ll) have been duly registered where required
by, and are in good standing under, all applicable legislation and all
required employer contributions under any such plans have been made
and the applicable funds have been funded in accordance with the terms
thereof of the plans and no past service funding liabilities exist
thereunder;
(nn) to the Knowledge of the Majority Shareholders, no trade union, council
of trade unions, employee bargaining agency or affiliated bargaining
agent:
(i) holds bargaining rights with respect to any of the
Corporation's or the Subsidiary's employees by way of
certification, interim certification, voluntary recognition,
designation, successor rights or other means,
(ii) has applied to be certified as the bargaining agent of any of
the Corporation's or the Subsidiary's employees, or
(iii) has applied to have the Corporation or the Subsidiary declared
a related employer pursuant to any law which would allow it to
hold bargaining rights with respect to any of the Corporation
or the Subsidiary's employees;
(oo) except for remuneration paid to employees in the usual and ordinary
course of business including, without limitation, holiday or other
bonus remuneration or severance payments and made at current rates of
remuneration no payments have been made or authorized since the
Interim Balance Sheet Date by the Corporation or the Subsidiary,
respectively, to officers, directors or employees of the Corporation
or the Subsidiary;
(pp) to the Knowledge of the Majority Shareholders, there are no
outstanding or threatened or pending actions, claims, grievances or
proceedings pertaining to the
-18-
businesses of the Corporation or the Subsidiary pursuant to any
taxation, health, employment or other law relating to employees or
independent contractors;
(qq) the Corporation and the Subsidiary have made or paid all payments,
premiums, assessments, penalties and/or remittances in a timely
fashion in respect of their respective employees;
(rr) to the Knowledge of the Majority Shareholder, there are no actual or
threatened or pending organizing activities of any trade union,
council of trade unions, employee bargaining agency or affiliated
bargaining agent or any actual, or, threatened or pending unfair labor
practice complaints pertaining to the businesses of the Corporation or
the Subsidiary;
(ss) all vacation pay for employees of the Corporation and the Subsidiary
is properly reflected and in the Financial Statements;
(tt) no current or former director, officer, shareholder, employee or
consultant of the Corporation or the Subsidiary or any other person
who may be deemed to be not dealing at arm's length with the
Corporation with any such person is indebted to the Corporation or the
Subsidiary, as the case may be;
(uu) the Majority Shareholders have received no notice of any actions,
suits or proceedings (whether or not purportedly on behalf of the
Corporation or the Subsidiary) pending against the Corporation or the
Subsidiary or any of their assets before or by any federal, state,
municipal or other governmental court, department, commission, board,
bureau, agency or instrumentality, domestic or foreign, whether or not
insured, including without limitation, any claim, litigation or
liabilities in any way relating to the Fair Credit Reporting Act, any
federal or state equal employment opportunity law or any other law,
and which might involve the possibility of any judgment or liability
against the Corporation or the Subsidiary, except such actions, suits
or proceedings as are disclosed in Schedule 3.1(uu) attached hereto
and neither the Corporation nor the Subsidiary has been operating
under or subject to, or in default with respect to, any order, writ,
injunction or decree of any court or federal, state, municipal or
other governmental department, commission, board, agency or
instrumentality, foreign or domestic;
(vv) there are no outstanding or unsatisfied judgements against the
Majority Shareholders, the Corporation or the Subsidiary;
(ww) neither of the Majority Shareholders has filed for bankruptcy
protection under United States bankruptcy laws within the last seven
(7) years nor, to the Knowledge of the Majority Shareholders, do they
know of any circumstances which might reasonably lead either of them
to seek such protection during the period of ninety (90) days after
the Closing;
-19-
(xx) to the Knowledge of the Majority Shareholders, the Corporation and
the Subsidiary have complied with all applicable laws, rules,
regulations, notices, approvals and orders of the United States of
America and all jurisdictions and municipalities thereof in which its
business is carried on, the non-compliance with which could be
reasonably expected to have a material adverse effect on the
Corporation or the Subsidiary and neither the Corporation nor the
Subsidiary has received notice of the breach of any such laws, rules,
regulations, notices, approvals or orders and is not in breach of any
such laws, rules, regulations, notices, approvals or orders;
(yy) the Corporation and the Subsidiary each is duly qualified or licensed
to do business in each jurisdiction in which the nature of its
business requires such qualification or license, except such
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the financial condition of the Corporation
or the Subsidiary;
(zz) listed in Schedule 3.1(zz) are the license numbers for the licenses
possessed by either the Corporation or the Subsidiary for the
jurisdictions noted, and each listed license is current;
(aaa) to the Knowledge of the Majority Shareholders, the operation of the
Corporation and the Subsidiary on any lands from which it conducts
the operations of its business is not in contravention of any
restriction or limitation applicable to such lands and is not in
contravention of any law or regulation or of any decree or order of
any court or other body having jurisdiction;
(bbb) attached hereto as Schedule 3.1(bbb) is a list of all registered
trade marks, trade names, patents and copyrights, of all unregistered
trade marks, trade names and copyrights and of all patent
applications, trade xxxx registration applications and copyright
registration applications, both domestic and foreign, owned or made
by the Corporation or the Subsidiary;
(ccc) all trade marks and trade names used in or required for the proper
carrying on of the Corporation's business and the Subsidiary's
business are listed in Schedule 3.1(bbb), and together with all
Proprietary Software are validly and beneficially owned,
respectively, by the Corporation and the Subsidiary and are, to the
extent indicated in such Schedule 3.1(bbb) duly registered in the
United States Patent and Trademark Office;
(ddd) to the Knowledge of the Majority Shareholders, except as set forth in
Schedule 3.1(ddd), neither the conduct of the Corporation nor the
Subsidiary infringes upon the trade marks, trade names, patents or
copyrights, domestic or foreign, of any other person;
(eee) attached hereto as Schedule 3.1(eee) is a true and complete list of
all insurance policies maintained by the Corporation and the
Subsidiary that also specifies the
-20-
insurer, the amount of the coverage, the type of insurance, the
policy number and any pending claims thereunder;
(fff) the Subsidiary has conducted an internal assessment of certain of the
Subsidiary's equipment and software in an effort to identify
potential "Y-2K" problems, the written results of which assessment
have been delivered to Purchaser; however, the assessment was
conducted for internal purposes only and the Majority Shareholders
make no representation or warranty as to the contents or accuracy of
such assessment, the Corporation or the Subsidiary's Year 2000
readiness status or compliance, or whether any of the software or
other assets of the Corporation or the Subsidiary are fully compliant
for Year 2000 purposes;
(ggg) Investment Representations and Covenants of the Majority
Shareholders Regarding U.S. and British Columbia Securities Law:
(i) the Majority Shareholders acknowledge that this Agreement is
made by the Purchaser with the Majority Shareholders in
reliance upon the representations and warranties made by the
Majority Shareholders in this Section 3.1(ggg). The Majority
Shareholders represent that the LML Shares issued by the
Purchaser to the Majority Shareholders will be acquired by the
Majority Shareholders for investment for their own accounts,
not as nominees or agents, and not with a view to the sale or
distribution of any part thereof, and that they have no present
intention of selling, transferring, pledging or granting any
participation in or otherwise distributing same. The Majority
Shareholders further represent that they do not have any
contract, undertaking, agreement or arrangement with any person
to sell, transfer, pledge or grant participation to such person
or to any third person, with respect to any of the LML Shares
received by them (collectively, "Restricted Securities");
(ii) the Majority Shareholders understand and acknowledge that the
issuance of the LML Shares pursuant to this Agreement will not
be registered under the Securities Act of 1933 of the United
States of America, as amended (the "1933 Act") or any state
securities laws on the ground that the sale of the LML Shares
as provided for in this Agreement are exempt pursuant to
Section 4(2) of the 1933 Act, and that the reliance of the
Purchaser on such exemption is predicated on the
representations made by the Majority Shareholders herein;
(iii) the Majority Shareholders covenant that in no event will they
make any disposition of any Restricted Securities, except in
accordance with applicable United States federal and state
securities laws and the rules and regulations promulgated
thereunder and with applicable securities laws of British
Columbia;
-21-
(iv) the Majority Shareholders represent that they have knowledge
and experience in financial and business matters, that they are
capable of evaluating the merits and risks of their investment
in the Purchaser, and that they have the ability to bear the
economic risks of the investments;
(v) the Majority Shareholders acknowledge and understand that the
Restricted Securities must be held indefinitely unless they are
subsequently registered under the 1933 Act or an exemption from
such registration is available, and, subject to the provisions
of this Section 3.1(ggg) and Section 5.3, that the Purchaser is
under no obligation to register the Restricted Securities for
sale by the Majority Shareholders;
(vi) the Majority Shareholders acknowledge that they are familiar
with Rule 144 promulgated under the 1933 Act, which permits
limited public resales of securities acquired in a non-public
offering, subject to the satisfaction of certain conditions.
The Majority Shareholders understand that before Restricted
Securities may be sold under Rule 144 as currently in effect,
the following conditions must be fulfilled, except as otherwise
described below: (a) certain public information about the
Purchaser must be available, (b) the sale must occur at least
one year after the date the Restricted Securities were acquired
by the Majority Shareholders, (c) the sale must be made in a
broker's transaction (as defined in Rule 144) or directly with
a market maker, (d) the number of Shares sold must not exceed
certain volume limitations, and (e) a Form 144 receipt, under
certain circumstances be filed with the Security and Exchange
Commission (the "SEC") prior to such sale;
(vii) the Majority Shareholders acknowledge that in the event the
applicable requirements of Rule 144 are not met, registration
under the 1933 Act or compliance with another exemption from
such registration will be required for any disposition of
Restricted Securities, the Majority Shareholders understand
that although Rule 144 is not exclusive, the SEC has expressed
its opinion that persons proposing to sell restricted
securities received in a private offering other than in a
registered offering or pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption
from registration is available for such offers or sales and
that such persons and the brokers who participate in the
transactions do so at their own risk;
(viii) the Majority Shareholders agree to comply in all respects with
the provisions of this Section 3.1(ggg)(viii). Prior to any
proposed sale, assignment, transfer or pledge of any Restricted
Securities, unless there is in effect a registration statement
under the 1933 Act covering the proposed transfer, the Majority
Shareholders shall give written notice to the Purchaser of the
Majority Shareholders' intention to effect such transfer, sale,
assignment or pledge. Each such notice shall describe the
manner and circumstances of the proposed transfer, sale,
assignment or pledge in
-22-
sufficient detail and, if the Purchaser so requests, shall be
accompanied at the Majority Shareholders' expense either by (a)
an opinion of legal counsel which shall be reasonably
satisfactory to the Purchaser and its legal counsel, which
opinion shall be addressed to the Purchaser, to the effect that
the proposed transfer of the Restricted Securities may be
effected without registration under the 1933 Act, or (b) a "no
action" letter from the SEC to the effect that the transfer of
such securities without registration will not result in a
recommendation by the staff of the SEC that action be taken
with respect thereto;
(ix) Legends on Certificates. The Majority Shareholders consent to
the placement of legends on the certificates for the LML Shares
issued hereunder in substantially the following forms:
(1) THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ("1933 ACT"), AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION
UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAW
UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT SUCH
TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT
OR ANY OTHER STATE SECURITIES LAWS.
(2) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A HOLD PERIOD AND MAY NOT BE TRADED IN BRITISH COLUMBIA
UNTIL DECEMBER 1, 2000 EXCEPT AS PERMITTED BY THE
SECURITIES ACT (BRITISH COLUMBIA) AND REGULATIONS MADE
UNDER THE SECURITIES ACT (BRITISH COLUMBIA).
(x) Receipt of Information. The Majority Shareholders and their
respective attorneys, accountants and other advisors (A) have
received and reviewed this Agreement (including exhibits), the
documents filed by LML with the SEC (the "Public Documents")
which include LML's financial statements; and (B) have had
access to, and an opportunity to review all documents and other
materials requested of, the Purchaser; (C) have been given an
opportunity to ask any and all questions of, and receive
answers from, the Purchaser concerning the terms and conditions
of the offering and to obtain all information the Majority
Shareholders or their attorneys, accountants and other advisors
believe necessary or appropriate to verify the accuracy of the
information provided and to evaluate the suitability of an
investment in the LML Shares; and (D) in evaluating the
suitability of
-23-
an investment in the LML Shares issued hereunder, have not
relied upon any representations or other information (whether
oral or written) other than as set forth herein or in the
Public Documents;
(xi) Brokers or Finders. The Majority Shareholders have not
incurred, and will not incur directly or indirectly, any
liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this
Agreement or any transactions contemplated hereby. The
Majority Shareholders hereby indemnify the Purchaser for any
claims, losses, and expenses incurred by the Purchaser as a
result of the representation in this Section 3.1(ggg)(xi)
being untrue;
(xii) Accredited Investor. Each of the Majority Shareholders is an
"accredited investor" as that term is defined in Rule 501
promulgated under the Securities Act by virtue of being either
(i) an individual whose net worth, or joint net worth with
that person's spouse, on the date hereof exceeds, and on the
Closing Date will exceed, $1,000,000; or (ii) an individual
who had income in excess of $200,000 in each of the two most
recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year. For purposes hereof, "individual income" means adjusted
gross income as reported for federal income tax purposes, less
any income attributable to the spouse or to property owned by
a spouse, increased by the following amounts (but not
including any amounts attributable to a spouse or to property
owned by a spouse): (i) the amount of any interest income
received which is tax-exempt under Section 103 of the Internal
Revenue Code, (ii) the amount of losses claimed as a limited
partner in a limited partnership (as reported on Schedule E of
Form 1040), (iii) any deduction claimed for depletion under
Section 611 et eq. of the Internal Revenue Code, and (iv) any
amount by which income from long-term capital gains has been
reduced in arriving at adjusted gross income pursuant to the
provisions of Section 1202 of the Internal Revenue Code. For
purposes hereof, "net worth" means the excess of total assets
at fair market value, including home and personal property,
over total liabilities, including all home mortgages;
(xiii) No Review. The Majority Shareholders acknowledge that no
securities commission or similar regulatory authority has
reviewed or passed on the merits of the LML Shares;
(xiv) No Insurance. The Majority Shareholders acknowledge that there
is no government or other insurance covering the LML Shares;
(xv) Risks. The Majority Shareholders acknowledge that there are
risks associated with an investment in the LML Shares;
-24-
(xvi) Exemption From Prospectus Requirement. The Majority
Shareholders acknowledge that the Purchaser has advised them
that the Purchaser is relying on an exemption from the
requirements to provide the Majority Shareholders with a
prospectus and to distribute the LML Shares through a person
registered to sell securities under the Securities Act
(British Columbia) and, as a consequence of acquiring the LML
Shares pursuant to this exemption, certain protections,
rights and remedies provided by the Securities Act (British
Columbia), including statutory rights of rescission or
damages, will not be available to the Majority Shareholders;
(xvii) Resale Restrictions. The Majority Shareholders acknowledge
that, as provided for elsewhere in this Agreement, there are
restrictions on each Majority Shareholders' ability to resell
the LML Shares and it is the responsibility of each Majority
Shareholder to find out what those restrictions are and to
comply with them before selling the LML Shares; and
(xviii) Not Resident. The Majority Shareholders are not resident in
British Columbia and are not acquiring the LML Shares for
such residents.
(hhh) The Majority Shareholders acknowledge that the Purchaser has agreed
to pay a finders' fee as disclosed in Section 3.4(i);
3.2 Minority Shareholders' Representations and Warranties
-----------------------------------------------------
The Schedules attached to this Agreement expressly qualify this
Agreement and the warranties and representations set forth herein. The
information contained in the Schedules or the agreements referred to in the
Schedules shall be deemed to qualify the entire Agreement and to the extent that
any disclosure set forth in a Schedule is applicable to more than one section of
the Agreement or more than one warranty or representation, such disclosure shall
be deemed to have been repeated with respect to each such warranty and
representation and section as if set forth completely herein. Except as may be
set forth on the Schedules, the Minority Shareholder represents and warrants to
the Purchaser that the following representations and warranties are true as of
the date hereof and will be true as of the Time of Closing:
(a) he is the beneficial and registered owner of the number of Shares
shown in the table below opposite his name free and clear of all
liens, charges, encumbrances and any other rights of others, except
as set out in Schedule 3.2(a);
Number of Shares Registered
Vendor's Name in the Name of the Vendor
------------------- --------------------------------
Xx. Xxxxxx 1138
Xx. Xxxxxx-Xxxxxx 250
-25-
(b) he has good and sufficient power, authority and right to enter into
and deliver this Agreement and to transfer the legal and beneficial
title and ownership of the Shares registered in his name to the
Purchaser free and clear of all liens, charges, encumbrances and any
other rights of others; and
(c) there is no contract, option or any other right of another binding
upon or which at any time in the future may become binding upon him to
sell, transfer, assign, pledge, charge, mortgage or in any other way
dispose of or encumber any of his Shares other than pursuant to the
provisions of this Agreement.
(d) neither of the Minority Shareholders has filed for bankruptcy
protection under United States bankruptcy laws nor, to the Knowledge
of the Majority Shareholders, do they know of any circumstances which
might reasonably lead either of them to seek such protection during
the period of ninety (90) days after the Closing;
(e) there are no outstanding or unsatisfied judgements against the
Minority Shareholders;
(f) Investment Representations and Covenants of the Minority Shareholders
Regarding U.S. and British Columbia Securities Law:
(i) the Minority Shareholders acknowledge that this Agreement is
made by the Purchaser with the Minority Shareholders in
reliance upon the representations and warranties made by the
Minority Shareholders in this Section 3.2(f). The Minority
Shareholders represent that the LML Shares issued by the
Purchaser to the Minority Shareholders will be acquired by the
Minority Shareholders for investment for their own accounts,
not as nominees or agents, and not with a view to the sale or
distribution of any part thereof, and that they have no present
intention of selling, transferring, pledging or granting any
participation in or otherwise distributing same. The Minority
Shareholders further represent that they do not have any
contract, undertaking, agreement or arrangement with any person
to sell, transfer, pledge or grant participation to such person
or to any third person, with respect to any of the Restricted
Securities;
(ii) the Minority Shareholders understand and acknowledge that the
issuance of the LML Shares pursuant to this Agreement will not
be registered under the 1933 Act or any state securities laws
on the ground that the sale of the LML Shares as provided for
in this Agreement are exempt pursuant to Section 4(2) of the
1933 Act, and that the reliance of the Purchaser on such
exemption is predicated on the representations made by the
Minority Shareholders herein;
(iii) the Minority Shareholders covenant that in no event will they
make any disposition of any Restricted Securities, except in
accordance with
-26-
applicable federal securities laws and the sales and
regulations promulgated thereunder;
(iv) the Minority Shareholders represent that they have knowledge
and experience in financial and business matters, that they are
capable of evaluating the merits and risks of their investment
in the Purchaser, and that they have the ability to bear the
economic risks of the investments;
(v) the Minority Shareholders acknowledge and understand that the
Restricted Securities must be held indefinitely unless they are
subsequently registered under the 1933 Act or an exemption from
such registration is available, and, subject to the provisions
of this Section 3.2(f), that the Purchaser is under no
obligation to register the Restricted Securities for sale by
the Minority Shareholders;
(vi) the Minority Shareholders acknowledge that they are familiar
with Rule 144 promulgated under the 1933 Act, which permits
limited public resales of securities acquired in a non-public
offering, subject to the satisfaction of certain conditions.
The Minority Shareholders understand that before Restricted
Securities may be sold under Rule 144 as currently in effect,
the following conditions must be fulfilled, except as otherwise
described below: (A) certain public information about the
Purchaser must be available, (B) the sale must occur at least
one year after the date the Restricted Securities were acquired
by the Minority Shareholders; (C) the sale must be made in a
broker's transaction (as defined in Rule 144) or directly with
a market maker, (D) the number of Shares sold must not exceed
certain volume limitations, and (E) a Form 144 receipt, under
certain circumstances be filed with the SEC prior to such sale.
(vii) the Minority Shareholders acknowledge that in the event the
applicable requirements of Rule 144 are not met, registration
under the 1933 Act or compliance with another exemption from
registration will be required for any disposition of Restricted
Securities, the Minority Shareholders understand that although
Rule 144 is not exclusive, the SEC has expressed its opinion
that persons proposing to sell restricted securities received
in a private offering other than in a registered offering or
pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available
for such offers or sales and that such persons and the brokers
who participate in the transactions do so at their own risk;
(viii) the Minority Shareholders agree to comply in all respects with
the provisions of this Section 3.2(f). Prior to any proposed
sale, assignment, transfer or pledge of any Restricted
Securities, unless there is in effect a registration statement
under the 1933 Act covering the proposed transfer, the Minority
Shareholders shall give written notice to the Purchaser of the
Minority Shareholders' intention to effect such transfer, sale,
assignment
-27-
or pledge. Each such notice shall describe the manner and
circumstances of the proposed transfer, sale, assignment or
pledge in sufficient detail and, if the Purchaser so requests,
shall be accompanied at the Minority Shareholders' expense
either by (A) an opinion of legal counsel which shall be
reasonably satisfactory to the Purchaser and its legal counsel,
which opinion shall be addressed to the Purchaser, to the
effect that the proposed transfer of the Restricted Securities
may be effected without registration under the 1933 Act, or (B)
a "no action" letter from the SEC to the effect that the
transfer of such securities without registration will not
result in a recommendation by the staff of the SEC that action
be taken with respect thereto;
(ix) Legends on Certificates. The Minority Shareholders consent to
the placement of legends on the certificates for the LML Shares
issued hereunder in substantially the following forms:
(1) THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ("1933 ACT"), AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION
UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAW
UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT SUCH
TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT
OR ANY OTHER STATE SECURITIES LAWS.
(2) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A HOLD PERIOD AND MAY NOT BE TRADED IN BRITISH COLUMBIA
UNTIL DECEMBER 1, 2000 EXCEPT AS PERMITTED BY THE
SECURITIES ACT (BRITISH COLUMBIA) AND REGULATIONS MADE
UNDER THE SECURITIES ACT (BRITISH COLUMBIA).
(x) Receipt of Information. The Minority Shareholders and their
respective attorneys, accountants and other advisors (A) have
received and reviewed this Agreement (including exhibits), the
Public Documents which include LML's financial statements; and
(B) have had access to, and an opportunity to review all
documents and other materials requested of, the Purchaser; (C)
have been given an opportunity to ask any and all questions of,
and receive answers from, the Purchaser concerning the terms
and conditions of the offering and to obtain all information
the Minority Shareholders or their attorneys, accountants and
other advisors believe necessary or appropriate to verify the
accuracy of the information
-28-
provided and to evaluate the suitability of an investment in
the LML Shares; and (D) in evaluating the suitability of an
investment in the LML Shares issued hereunder, have not relied
upon any representations or other information (whether oral or
written) other than as set forth herein or in the Public
Documents;
(xi) Brokers or Finders. The Minority Shareholders have not
incurred, and will not incur directly or indirectly, any
liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this
Agreement or any transactions contemplated hereby. The
Minority Shareholders hereby indemnify the Purchaser for any
claims, losses, and expenses incurred by the Purchaser as a
result of the representation in this Section 3.2(f)(xi) being
untrue;
(xii) Accredited Investor. Each of the Minority Shareholders is an
"accredited investor" as that term is defined in Rule 501
promulgated under the 1933 Act by virtue of being either (i)
an individual whose net worth, or joint net worth with that
person's spouse, on the date hereof exceeds, and on the
Closing Date will exceed, $1,000,000; or (ii) an individual
who had income in excess of $200,000 in each of the two most
recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year. For purposes hereof, "individual income" means adjusted
gross income as reported for federal income tax purposes, less
any income attributable to the spouse or to property owned by
a spouse, increased by the following amounts (but not
including any amounts attributable to a spouse or to property
owned by a spouse): (i) the amount of any interest income
received which is tax-exempt under Section 103 of the Internal
Revenue Code, (ii) the amount of losses claimed as a limited
partner in a limited partnership (as reported on Schedule E of
Form 1040), (iii) any deduction claimed for depletion under
Section 611 et eq. of the Internal Revenue Code, and (iv) any
amount by which income from long-term capital gains has been
reduced in arriving at adjusted gross income pursuant to the
provisions of Section 1202 of the Internal Revenue Code. For
purposes hereof, "net worth" means the excess of total assets
at fair market value, including home and personal property,
over total liabilities, including all home mortgages.
(xiii) No Review. The Minority Shareholders acknowledge that no
securities commission or similar regulatory authority has
reviewed or passed on the merits of the LML Shares;
(xiv) No Insurance. The Minority Shareholders acknowledge that there
is no government or other insurance covering the LML Shares;
-29-
(xv) Risks. The Minority Shareholders acknowledge that there are
risks associated with an investment in the LML Shares;
(xvi) Exemption From Prospectus Requirement. The Minority
Shareholders acknowledge that the Purchaser has advised them
that the Purchaser is relying on an exemption from the
requirements to provide the Minority Shareholders with a
prospectus and to distribute the LML Shares through a person
registered to sell securities under the Securities Act
(British Columbia) and, as a consequence of acquiring the LML
Shares pursuant to this exemption, certain protections, rights
and remedies provided by the Securities Act (British
Columbia), including statutory rights of rescission or
damages, will not be available to the Minority Shareholders;
(xvii) Resale Restrictions. The Minority Shareholders acknowledge
that, as provided for elsewhere in this Agreement, there are
restrictions on each Minority Shareholders's ability to resell
the LML Shares and it is the responsibility of each Minority
Shareholder to find out what those restrictions are and to
comply with them before selling the LML Shares; and
(xviii) Not Resident. The Minority Shareholders are not resident in
British Columbia and are not acquiring the LML Shares for such
residents.
(g) The Minority Shareholders acknowledge that the Purchaser has agreed to
pay a finders' fee as disclosed in Section 3.4(i).
3.3 Survival of Vendors' Representations, Warranties and Covenants
--------------------------------------------------------------
(a) Subject to the limitations set forth below, the representations and
warranties of the Vendors set forth in Sections 3.1 and 3.2 shall survive the
Closing and, notwithstanding such Closing:
(i) the representations and warranties of the Vendors relating to the tax
liability of the Corporation and the Subsidiary set forth in Sections
3.1(v) and 3.1(w) and shall, unless Section 3.3(a)(ii) applies,
continue in full force and effect for the benefit of the Purchaser
until the expiration of the last of the limitation periods contained
in the Internal Revenue Code of the United States of America and any
other legislation imposing tax on the Corporation and the Subsidiary
subsequent to the expiration of which an assessment, reassessment or
other form or recognized document assessing liability for tax,
interest or penalties thereunder for the period ended on the Balance
Sheet Date cannot be issued to the Corporation or the Subsidiary;
(ii) the representations and warranties of the Vendors relating to the tax
liability of the Corporation and the Subsidiary set forth in Sections
3.1(v) and 3.1(w) which prove to be false as a result of any
intentional misrepresentation made or fraud
-30-
committed in filing a return or in supplying information for the
purposes of the Internal Revenue Code of the United States of
America or any other legislation imposing tax on the Corporation
and the Subsidiary, shall continue in full force and effect for the
benefit of the Purchaser and be unlimited as to duration; and
(iii) the remaining representations and warranties of the Vendors set
forth in Sections 3.1 and 3.2 shall continue in full force and
effect for the benefit of the Purchaser for a period of one (1)
year from the Closing Date.
(b) The covenants of the Vendors set forth in this Agreement shall
survive the completion of the sale and purchase of the Shares herein provided
for and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Purchaser in accordance with the terms thereof.
3.4 Purchaser's Representations and Warranties
------------------------------------------
The Purchaser represents and warrants to the Vendors that the
following representations and warranties are true as of the date hereof and will
be true as of the Time of Closing:
(a) the Purchaser is a corporation duly continued, organized and
subsisting under the laws of the Yukon Territory of Canada; and
(b) the Purchaser has good and sufficient power, authority and right to
enter into and deliver this Agreement and to complete the
transactions to be completed by the Purchaser contemplated hereby.
(c) the financial statements of the Purchaser, as filed with the SEC:
(i) are in accordance with the books and accounts of the
Purchaser as of the dates thereof,
(ii) are true and correct and present fairly the financial
position of the Purchaser as of the dates thereof, and
(iii) have been prepared in accordance with generally accepted
accounting principles consistently applied;
(d) since the date of the latest balance sheet of the Purchaser filed
with the SEC, (i) there has been no material adverse change in the
assets, liabilities or financial position of the Purchaser, and
(ii) the businesses of the Purchaser have been carried on in their
usual and ordinary course, and (iii) the Purchaser has not entered
into any transaction out of the usual and ordinary course of its
businesses that has not been disclosed in its public filings;
-31-
(e) the LML Shares when issued and delivered to the Vendors in accordance
with the terms of this Agreement will be validly issued, fully paid
and non-assessable shares of common stock of the Purchaser, free and
clear of any liens, claims or encumbrances; and
(f) with respect to the Shares acquired by Purchaser pursuant to the
terms of this Agreement:
(i) Purchaser is acquiring the Shares for investment for its own
accounts, not as nominees or agents, and not with a view to the
sale or distribution of any part thereof, and that it has no
present intention of selling, granting any participation in or
otherwise distributing same;
(ii) Purchaser will not make any disposition of any of the Shares,
except in accordance with applicable U.S. federal securities
and Blue Sky laws;
(iii) Legends on Certificates. The Purchaser consents to the
placement of legends on the certificates for the Shares issued
hereunder in substantially the following forms:
A. THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ("1933 ACT"), AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION
UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAW
UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT SUCH
TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT
OR ANY OTHER STATE SECURITIES LAWS.
(g) the Purchaser is an "accredited investor" as that term is defined in
Rule 501 promulgated under the 1933 Act;
(h) the Purchaser acknowledges that the Vendors have made no
representations or warranties regarding (i) the ability of the
Corporation or the Purchaser to utilize after the Closing any of the
net operating losses generated by the Corporation prior to the
Closing, or (ii) the value after the Closing of the Corporation's net
operating losses; and
(i) the Purchaser has entered into no agreement to pay a finder's fee or
any commission in respect of the transactions contemplated in this
Agreement other than a finders fee in the amount of $157,500 to
Xxxxxxx Xxxxxxx Consulting of Omaha, Nebraska, which is payable in LML
Shares by the Purchaser;
-32-
provided that it is understood and acknowledged by the Vendors that, (i) at the
instant immediately following the Purchaser becoming the registered owner of the
Shares, the Purchaser is going to sell and transfer the Shares to ChequeMark
Holdings Inc., (ii) ChequeMark Holdings Inc. is a wholly-owned subsidiary of the
Purchaser incorporated under the laws of the State of Delaware and (iii) such
sale and transfer of the Shares will be effected pursuant to a separate
agreement between the Purchaser and its subsidiary.
3.5 Survival of Purchaser's Representations, Warranties and Covenants
-----------------------------------------------------------------
(a) The representations and warranties of the Purchaser set forth in
Section 3.4 shall survive the completion of the sale and purchase of the Shares
herein provided for and, notwithstanding such completion, shall continue in full
force and effect for the benefit of the Vendors for a period of one (1) year
from the Closing Date.
(b) The covenants of the Purchaser set forth in this Agreement shall
survive the completion of the sale and purchase of the Shares herein provided
for and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Vendors in accordance with the terms thereof.
ARTICLE 4 - CLOSING
-------------------
4.1 Closing
-------
The sale and purchase of the Shares shall be completed at the Time of
Closing at the offices of Vendors' Counsel, 0000 Xxxxxxxx Xxxxx, 0000 Xxxx
Xxxxxx, Xxxxxx, Xxxxx.
4.2 Deliveries by the Vendors to the Purchaser
------------------------------------------
(a) Before the Closing, the Vendors shall deliver or cause to be delivered
to the Purchaser a direction of the Vendors in the form of Schedule 4.2(a)
stating the cash value of the discharge of the Selling Expenses and that cash
paid or LML Shares be issued, as the case may be, to the persons to whom the
Selling Expenses are owed in part payment for the Shares;
(b) At the Closing, the Vendors shall deliver or cause to be delivered to
the Purchaser the following:
(i) an agreement executed by Mr. Runner, Cumberland Capital
Corporation, the Purchaser, the Corporation and the Subsidiary
substantially in the form attached hereto as Schedule 4.2(b)(i);
(ii) a non-competition agreement executed by Xx. Xxxxxx and the
Purchaser, the Corporation and the Subsidiary in the form
attached hereto as Schedule 4.2(b)(ii) (the "Non-Competition
Agreement");
-33-
(iii) the resignations of Mr. Runner as the President and a
director of the Corporation and the Subsidiary;
(iv) the Warrant Releases executed by Finova and XXXX in the form
of Schedules 1.1(ppp)1 and 2, respectively, together with the
cancelled warrants relating thereto;
(v) the Finova Discharges executed by Finova;
(vi) the Debt Releases executed by the Bank and Finova;
(vii) the Vendors' Certificates;
(viii) the certificates evidencing the Shares being purchased by the
Purchaser, which shall be delivered free and clear of all
liens, registered in the name of the Purchaser;
(ix) certificates of each of the Vendors as to the accuracy of
their respective representations and warranties hereunder at
Closing;
(x) certificate of the secretary of the Corporation certifying a
copy of the resolution of the directors of the Corporation
authorizing transfer of the Shares to LML and issuance of a
share certificate to LML;
(xi) the certificate of status of the Corporation;
(xi) the certificate of status of the Subsidiary;
(xiii) the certified copy of the constating documents of the
Corporation;
(xiv) the certified copy of the constating documents of the
Subsidiary;
(xv) incumbency certificate certifying as to the authority of the
signatory of the Corporation to execute certificates on
behalf of the Corporation;
(xvi) incumbency certificate certifying as to the authority of the
signatory of the Subsidiary to execute certificates on behalf
of the Subsidiary; and
(xvii) an opinion of Vendor Counsel, substantially in the form
attached hereto as Schedule 4.2(b)(xvii).
4.3 Deliveries by the Purchaser to the Vendors
------------------------------------------
(a) At the Closing, the Purchaser shall deliver or cause to be delivered
to the Vendors the following:
-34-
(i) the portion of the Purchase Price payable by the Purchaser to
each of the Vendors in the form of certificates evidencing the
LML Shares as provided in Section 2.1(b), which shall be
delivered free and clear of all liens and shall be registered
in the name of each Vendor;
(ii) certified copy of the constating documents of the Purchaser;
(iii) certificate of status of the Purchaser;
(iv) certificate of the President of LML as to the accuracy of the
representations and warranties of LML at Closing;
(v) certificate of the President of the Purchaser certifying copies
of the Board of Directors' resolutions and/or meeting minutes,
evidencing authorization of the transaction contemplated
herein;
(vi) incumbency certificate certifying as to the authority of the
signatory of the Purchaser to execute this Agreement; and
(vii) Opinions of Purchaser Counsel, substantially in the forms
attached hereto as Schedule 4.3(a)(vii).
(b) Notwithstanding the requirement in Section 4.3(a)(i) above, the
certificates evidencing the LML Shares may be delivered by the Purchaser at the
Closing to Montreal Trust Company, provided that Montreal Trust Company delivers
to Vendors a written acknowledgement of its receipt of such certificates and
provided further that it delivers such certificates to Vendor Counsel on the
next business day following the Closing Date.
4.4 Payments by the Purchaser
-------------------------
(a) At the Closing, the Purchaser shall:
(i) discharge by paying cash, as directed by the Vendors, all
Selling Expenses that are legal fees or disbursements, provided
that the funds for some or all of the Selling Expenses may be
wired to the Corporation or the Subsidiary, in which case the
Corporation or the Subsidiary, as applicable, shall be directed
and authorized to pay such Selling Expenses on behalf of the
Purchaser;
(ii) discharge by paying cash, or through the issuance of LML Shares
(the medium of discharge as between cash and Shares being at the
option of the Purchaser), all Selling Expenses that are not
legal fees or disbursements and the Finova Warrant and the XXXX
Warrant;
(iii) pay the New Working Capital to the Subsidiary; and
-35-
(iv) pay the Finova Debt and the Bank Debt.
ARTICLE 5 - COVENANTS
---------------------
5.1 Taxes
-----
The Purchaser does not assume and shall not be liable for any taxes
under the Internal Revenue Code of the United States of America or any other
taxes whatsoever which may be or become payable by the Vendors including,
without limitation, any taxes resulting from or arising as a consequence of the
sale by the Vendors to the Purchaser of the Shares herein contemplated, and each
Vendor shall indemnify and save harmless the Purchaser from and against all such
taxes to which such Vendor is subject.
5.2 Covenants of the Purchaser
--------------------------
The Purchaser covenants and agrees to pay the Finova Debt, the Bank
Debt, the Finova Warrant Consideration and the XXXX Warrant Consideration at the
Time of Closing by wiring of funds or tabling checks in amounts equal to the
Finova Debt and the Bank Debt and checks or share certificates appropriate to
satisfy the Finova Warrant Consideration and the XXXX Warrant Consideration in
return for the Debt Releases, the Finova Discharge, the cancelled Finova
Promissory Note, the cancelled Bank Promissory Note, the cancelled Finova
Warrant, the cancelled XXXX Warrant, the return of any life insurance documents
or share certificates held by Finova pursuant, respectively, to the Finova Life
Insurance Assignment or the Finova Pledge and Security Agreement and the Warrant
Releases. The Purchaser acknowledges and agrees that the life insurance policy
covered by the Finova Life Insurance Assignment and any and all rights incident
thereto belong to and will be retained by Mr. Runner. The Purchaser shall pay
all policy premiums up through the Closing Date and shall execute such documents
and take such steps, if any, as shall be necessary to assure continued ownership
of such policy by Mr. Runner.
5.3 Registration of LML Shares
--------------------------
(a) If while the Vendors hold Registrable Securities, the Purchaser
proposes to file a registration statement under the 1933 Act with respect to an
underwritten Public offering of any class of equity securities for its own
account (other than a registration statement (i) on Form F-4, F-8 or any
successor form thereto or (ii) filed solely in connection with an offering made
solely to employees of the Purchaser), then the Purchaser will give written
notice of such proposed filing to the Vendors at least 30 days before the
anticipated filing date. Such notice will set forth the aggregate number of
securities proposed to be included in the registration and offer the Vendors the
opportunity to register such amount of Registrable Securities as each such
holder may request (a "Piggyback Registration"). Subject to Section 5.3(b)
hereof, the Purchaser will use its best efforts to include in each such
Piggyback Registration all Registrable Securities with respect to which the
Purchaser has received written requests for inclusion therein from any of the
Vendors within fifteen (15) days after the mailing date of the notice. The
Vendors will be permitted to withdraw all or part of the Registrable Securities
from a Piggyback Registration at any time prior to the effective date of such
Piggyback Registration.
-36-
(b) Priority on Piggyback Registrations. The Purchaser will use its best
efforts to cause the underwriters of a proposed underwritten offering to permit
the Vendors to include in the Piggyback Registration all such Registrable
Securities requested to be so included on the same terms and conditions as any
similar securities included therein. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such offering deliver an opinion to the
holders of Registrable Securities to the effect that the total amount of
securities which such holders, the Purchaser and any other persons having rights
to participate in such registration propose to include in such offering is such
as to materially and adversely affect the success of such offering, then the
amount of securities to be included therein (x) for the account of the Vendors
on the one hand (allocated pro rata among such holders on the basis of the
--------
amount of Registrable Securities requested to be included therein by each such
holder), and (y) for the account of all other shareholders having rights to
participate (exclusive of the Purchaser), on the other hand, will be reduced (to
zero if necessary) pro rata in proportion to the respective amounts of
--------
securities requested to be included therein to the extent necessary to reduce
the total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters.
5.4 Price Protection
----------------
(a) LML covenants and agrees that if, at any time during the first ninety
(90) days that the LML Shares issued hereunder are, by effluxion of time or
otherwise not subject to any resale provisions under any applicable securities
legislation, any of the Vendors sells any such LML Shares through the facilities
of NASDAQ at a price per LML Share that is less than the LML Share Closing
Value, then, upon such Vendor supplying proof to the Purchaser of the relevant
circumstances of such sale in form acceptable to the Purchaser, then the
Purchaser shall issue additional LML Shares to such Vendor equal to the lessor
of (A) the maximum number of shares that may be issued by the Purchaser without
obtaining shareholder approval under the rules and regulations applicable to
issues listed on the NASDAQ small-cap market and (B) remainder obtained by
subtracting the number of LML Shares sold from the product of (i) multiplying
the number of LML Shares sold by (ii) the fraction in which the numerator is
equal to the LML Share Closing Value and the denominator is equal to the price
per LML Share obtained by such Vendor in such sale.
ARTICLE 6 - INDEMNIFICATION
---------------------------
6.1 By Majority Shareholders
------------------------
Subject to Section 6.5(a), the Majority Shareholders shall indemnify
and hold harmless the Purchaser from and against any and all loss, damage,
expense (including, without limitation, court costs, interest, penalties,
reasonable legal fees and expenses), suit, action, claim, liability or
obligation suffered by the Purchaser, the Corporation or the Subsidiary
(collectively, "Losses") related to, caused by or arising from any
misrepresentation, breach of warranty or failure to fulfill any covenant or
agreement of the Majority Shareholders contained in this Agreement or any
agreement ancillary hereto (an "Indemnification Claim"); provided, however, that
the Majority Shareholders shall not have any obligation to indemnify the
Purchaser from and
-37-
against any Losses until the Purchaser, the Corporation and the Subsidiary have
collectively suffered Losses by reason of all such breaches (or alleged
breaches) in excess of a fifty thousand dollars ($50,000) aggregate threshold
(in which case the Majority Shareholders will be obligated to indemnify the
Purchaser from the first dollar of Loss resulting from, arising out of, or
relating to an Indemnification Claim against the Majority Shareholders. In
computing the extent of any Loss under this Agreement, the liability of the
Majority Shareholders for the Indemnification Claim shall be taken into account,
if appropriate, and provided further that upon the Purchaser being satisfied
hereunder (by way of execution of an Indemnity Note as provided in Section 6.5
or otherwise) in respect of any Indemnification Claim or Indemnification Claims
from the first dollar of Loss, the provisions of the first proviso to this
Section 6.1 shall once again become in full force and effect so that the Vendors
would not be liable to satisfy further Indemnification Claims from the Purchaser
in respect of Losses suffered by the Purchaser, the Corporation or the
Subsidiary from the first dollar of Loss until they once again shall have
collectively suffered Losses by reason of all such breaches (or alleged
breaches) in excess of the fifty thousand dollars ($50,000) aggregate threshold.
Since the Purchaser is acquiring all of the outstanding shares of the
Corporation, the parties acknowledge and agree that Indemnification Claims may
arise as a result of Losses suffered, in whole or in part, by the Corporation or
the Subsidiary, in which case the Purchaser shall be entitled to indemnification
for such Losses in accordance with the provisions of this Article 6 the same as
if it had suffered such Losses directly.
6.2 By Minority Shareholders.
------------------------
Subject to Section 6.5(c), each Minority Shareholder shall indemnify
and hold harmless the Purchaser, the Corporation and the Subsidiary from and
against any and all Losses related to, caused by or arising from any
misrepresentation, breach of warranty or failure to fulfill any covenant or
agreement of the Minority Shareholder contained in this Agreement.
6.3 By Purchaser.
------------
Subject to Section 6.5(c), the Purchaser shall indemnify and hold
harmless the Vendors from and against any and all Losses related to, caused by
or arising from any misrepresentation, breach of warranty or failure to fulfill
any covenant or agreement of the Purchaser contained in this Agreement;
provided, however, that the Purchaser shall not have any obligation to indemnify
the Vendors from and against any Losses until the Vendors have collectively
suffered Losses by reason of all such breaches (or alleged breaches) in excess
of a fifty thousand dollar ($50,000) aggregate threshold (in which case the
Purchaser will be obligated to indemnify the Vendors from the first dollar of
Loss resulting from, arising out of, or relating to an Indemnification Claim
against the Purchasers. In computing the extent of any Loss under this
Agreement, the liability of the Purchaser for the Indemnification Claim shall be
taken into account, if appropriate, and provided further that upon the Vendors
being satisfied hereunder in respect of any Indemnification Claim or
Indemnification Claims from the first dollar of Loss, the provisions of the
first proviso to this Section 6.3 shall once again become in full force and
effect so that the Purchaser would not be liable to satisfy further
Indemnification Claims from the Vendors in respect of Losses suffered by the
Vendors from the first dollar of Loss until they once again shall have
collectively suffered Losses by reason of all such breaches (or alleged
breaches) in excess of the fifty thousand dollars ($50,000) aggregate threshold.
-38-
6.4 Indemnification Procedure.
-------------------------
(a) Any party seeking indemnification must have a good faith belief that
it is entitled to such indemnification and shall give prompt (and, in any event,
within thirty (30) days after receipt of actual notice of the claim) written
notice (in accordance with the provisions of Section 8.10 hereof) to the
indemnifying party of the facts and circumstances giving rise to the claim, and
the amount of the claim for which it is seeking indemnification. The
indemnifying party shall be relieved of the duty to indemnify for any damages
which are incurred as a result of the failure to give such notice within the
time required by the preceding sentence, however, except for such reductions,
the failure to provide such notice within the time required by the preceding
sentence, without the incurrence of damages as a result, will not reduce such
indemnification obligation. Such notice shall contain a description in
reasonable detail of the basis for such claim for indemnification. With respect
to any claim for which indemnification is sought, the party seeking
indemnification has an obligation to exercise its best efforts to mitigate the
amount of any such indemnification claim.
(b) Any indemnifying party will have the right to defend the indemnified
party against any third party claim with counsel of the indemnifying party's
choice reasonably satisfactory to the indemnified party so long as (i) the
indemnifying party notifies the indemnified party in writing within fifteen (15)
days after the indemnified party has given notice of the third party claim that
the indemnifying party will, subject to the limitation of this Agreement,
indemnify the indemnified party from and against such claims, and (ii) the
indemnifying party conducts the defense of such third party claim actively and
diligently. The indemnified party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the third party claim. In
addition, if a legitimate conflict of interests exists such that one firm of
attorneys cannot ethically represent both the indemnified party and the
indemnifying party or the counsel retained by the indemnifying party otherwise
advises the indemnifying party that separate counsel should be obtained, then
the indemnified party may select its own counsel with the reasonable fees and
expenses thereof to be paid by the indemnifying party.
(c) The indemnified party will not consent to the entry of any judgment or
enter into any settlement with respect to the third party claim without the
prior written consent of the indemnifying party (not to be delayed, conditioned
or withheld unreasonably), and the indemnifying party will not consent to the
entry of any judgment or enter into any settlement with respect to the third
party claim without the prior written consent of the indemnified party (not to
be delayed, conditioned or withheld unreasonably).
6.5 Maximum Amount of Indemnification Obligations.
---------------------------------------------
(a) Notwithstanding anything in this Agreement to the contrary, the
aggregate potential liability of the Majority Shareholders for a breach of this
Agreement, or otherwise arising from the transaction contemplated hereby,
including, but not limited to, any liability arising under Article 6 of this
Agreement or any liability arising for breach of contract, indemnity claims,
tort claims or otherwise, is hereby expressly limited to the Majority
Shareholders' Distribution Amount. The Majority Shareholders shall be
personally liable for the payment of Indemnification Claims for which Purchaser
is entitled to payment pursuant to and in accordance
-39-
with this Article 6 ("Recoverable Indemnification Claims"), unless the Majority
Shareholders elect to limit Purchaser's recourse to the recovery of the Majority
Shares by proceeding in the following manner;
(i) In lieu of the payment of cash to immediately satisfy all or any
part of a Recoverable Indemnification Claim, the Majority
Shareholders may collectively (but not individually) elect to
satisfy the Recoverable Indemnification Claim (or portion
thereof) by executing and delivering to the Purchaser a non-
recourse promissory note and security agreement in the form
attached hereto as Schedule 6.5(a)(i) (an "Indemnity Note"). The
Indemnity Note shall be for the amount of the Recoverable
Indemnification Claim and shall mature on the date which is the
later of (x) eighteen (18) months from the Closing Date, or (y)
six months from the date of its execution. Pursuant to and in
connection with the Indemnity Note, the Majority Shareholders
shall pledge and deliver to the Purchaser all of the Majority
Shares (less those that may have been sold to directly satisfy an
Indemnification Claim). The Majority Shareholders shall have no
personal liability for the payment of any Indemnity Note or any
Indemnification Claim satisfied by an Indemnity Note and
Purchaser shall look solely to the security (i.e., the Majority
Shares pledged pursuant to the Indemnity Note) for payment
thereof; and
(ii) The Majority Shareholders may execute multiple Indemnity Notes
from time to time as Recoverable Indemnification Claims arise.
The Purchaser agrees to the release and return of Majority Shares
pledged under the Indemnity Note for the purpose of realizing
upon the Purchaser's security interest in such Majority Shares to
the extent that such Majority Shares are sold and the proceeds
therefrom are paid to Purchaser in full or partial satisfaction
of one or more Indemnity Notes or a Recoverable Indemnification
Claim not satisfied by the execution and delivery of an Indemnity
Note.
(b) Notwithstanding the limitation of the potential aggregate liability of
the Majority Shareholders to the Majority Shareholders' Distribution Amount, the
Majority Shareholders may at any time pledge to Purchaser pursuant to an
Indemnity Note and deliver an irrevocable written permission to foreclose to
Purchaser the Balance of the Majority Shares in full and complete satisfaction
of, and release and discharge from, any and all liability under this Agreement
or otherwise, even if the value of the LML Shares pledged is less than the
Majority Shareholders' Distribution Amount or the Majority Shareholders' maximum
remaining potential liability.
(c) Notwithstanding anything in this Agreement to the contrary, the
aggregate potential liability of the Purchaser, Xx. Xxxxxx and Xx. Xxxxxx-Xxxxxx
for a breach of this Agreement, or otherwise arising from the transaction
contemplated hereby, including, but not limited to, any liability arising under
Article 6 of this Agreement or any liability arising for breach of contract,
indemnity claims, tort claims or otherwise, is hereby expressly limited (i) with
respect to the Purchaser, to the Majority Shareholders' Distribution Amount,
(ii) with respect to
-40-
Xx. Xxxxxx, to twenty-five thousand dollars ($25,000), and (iii) with respect to
Xx. Xxxxxx-Xxxxxx, to ten thousand dollars ($10,000).
ARTICLE 7 - CONDITIONS
----------------------
7.1 Conditions for the Benefit of the Purchaser.
-------------------------------------------
(a) The sale by the Vendors and the purchase by the Purchaser of the
Shares is subject to the following conditions which are for the exclusive
benefit of the Purchaser to be performed or complied with at or prior to the
Time of Closing:
(i) the representations and warranties of the Vendors set forth in
Sections 3.1 and 3.2 shall be correct at the Time of Closing with the
same force and effect as if made at and as of such time;
(ii) the Vendors shall have performed or complied with all the terms,
covenants and conditions of this Agreement to be performed or
complied with by the Vendors at or prior to the Time of Closing;
(iii) the Purchaser shall be furnished with such certificates, affidavits
or statutory declarations of the Corporation and the Subsidiary and
of the Vendors or of officers of the Corporation and the Subsidiary
and of the Vendors as the Purchaser or the Purchaser's Counsel may
deem reasonably necessary in order to establish that the terms,
covenants and conditions contained in this Agreement have been
performed or complied with by the Vendors, the Corporation or the
Subsidiary, as the case may be, at or prior to the Time of Closing
and that the representations and warranties of the Vendors herein are
true and correct at the Time of Closing;
(iv) the Vendors will have provided written directions to the Purchaser as
contemplated in Section 4.2 as to the satisfaction of the Finova
Warrant and the XXXX Warrant and there shall be tabled in the Closing
by Finova and XXXX their respective Warrant Releases and the canceled
Finova Warrant and XXXX Warrant or one or more affidavits of loss in
respect thereof if one or both such documents have been lost, all as
contemplated in Section 4.2 upon the Purchaser tabling either checks
or share certificates, as the case may be, pursuant to such written
directions.
(b) In case any term or covenant of the Vendors or condition to be
performed or complied with for the benefit of the Purchaser at or prior to the
Time of Closing shall not have been performed or complied with at or prior to
the Time of Closing, the Purchaser may, without limiting any other right that
the Purchaser may have, at its sole option, either:
(i) rescind this Agreement by notice to the Vendors, and in such event
the Purchaser shall be released from all obligations hereunder; or
-41-
(ii) waive compliance with any such term, covenant or condition in whole
or in part on such terms as may be agreed upon without prejudice to
any of its rights of rescission in the event of non-performance of
any other term, covenant or condition in whole or in part.
7.2 Conditions for the Benefit of the Vendors.
-----------------------------------------
(a) The sale by the Vendors and the purchase by the Purchaser of the
Shares is subject to the following conditions which are for the exclusive
benefit of the Vendors to be performed or complied with at or prior to the Time
of Closing:
(i) the representations and warranties of the Purchaser set forth in
Section 3.4 shall be true and correct at the Time of Closing with the
same force and effect as if made at and as of such time;
(ii) the Purchaser shall have performed or complied with all of the terms,
covenants and conditions of this Agreement to be performed or
complied with by the Purchaser at or prior to the Time of Closing;
and
(iii) the Vendors shall be furnished with such certificates, affidavits or
statutory declarations of the Purchaser or of officers of the
Purchaser as the Vendors or the Vendors' counsel may reasonably think
necessary in order to establish that the terms, covenants and
conditions contained in this Agreement to have been performed or
complied with by the Purchaser at or prior to the Time of Closing
have been performed and complied with and that the representations
and warranties of the Purchaser herein given are true and correct at
the Time of Closing.
(b) In case any term or covenant of the Purchaser or condition to be
performed or complied with for the benefit of the Vendors at or prior to the
Time of Closing shall not have been performed or complied with at or prior to
the Time of Closing, the Vendors may, without limiting any other right that the
Vendors may have, at its sole option, either:
(i) rescind this Agreement by notice to the Purchaser, and in such event
the Vendors shall be released from all obligations hereunder; or
(ii) waive compliance with any such term, covenant or condition in whole
or in part on such terms as may be agreed upon without prejudice to
any of its rights of rescission in the event of non-performance of
any other term, covenant or condition in whole or in part.
-42-
ARTICLE 8 - GENERAL
-------------------
8.1 Further Assurances.
------------------
Each of the Vendors and the Purchaser shall from time to time execute
and deliver all such further documents and instruments and do all acts and
things as the other party may, either before or after the Closing Date,
reasonably require to effectively carry out or better evidence or perfect the
full intent and meaning of this Agreement.
8.2 Time of the Essence.
-------------------
Time shall be of the essence of this Agreement.
8.3 Commissions.
-----------
The Majority Shareholders shall indemnify and save harmless the
Purchaser from and against any claims whatsoever for any commission or other
remuneration payable or alleged to be payable to any person in respect of the
sale and purchase of the Shares, if such person purports to act or have acted
for the Vendors in connection with the sale of the Shares.
8.4 Legal Fees.
----------
Subject to payment of Selling Expenses that are legal fees and
expenses, each of the parties hereto shall pay their respective legal and
accounting costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant hereto and any other costs and expenses whatsoever and
howsoever incurred.
8.5 Public Announcements.
--------------------
No public announcement or press release concerning the sale and
purchase of the Shares shall be made by the Vendors without the prior consent
and joint approval of the Vendors and the Purchaser. The Purchaser will publish
a press release concerning the sale and purchase of the Shares as required by
law. The Purchaser will allow the Vendors to review such press release and will
consider corrections thereto suggested by the Vendors but will not be bound to
publish in such press release anything except as is finally determined in the
sole discretion of the Purchaser.
8.6 Benefit of the Agreement.
------------------------
This Agreement shall enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and permitted assigns of
the parties hereto.
-43-
8.7 Entire Agreement.
----------------
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and cancels and supersedes any
prior understandings and agreements between the parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties other than as expressly set forth in this Agreement.
8.8 Amendments and Waiver.
---------------------
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by both of the parties
hereto and no waiver of any breach of any term or provision of this Agreement
shall be effective or binding unless made in writing and signed by the party
purporting to give the same and, unless otherwise provided, shall be limited to
the specific breach waived.
8.9 Assignment.
----------
This Agreement may not be assigned by the Vendors without the written
consent of the Purchaser or by the Purchaser without the written consent of the
Vendors.
8.10 Notices.
-------
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by personal
delivery, by registered mail or by electronic means of communication addressed
to the recipient as follows:
To the Vendors:
XXXXX X. XXXXXX
000 Xxxxxxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Fax No.: (000) 000-0000
XXXXX XXXXXX-XXXXXX
c/o Everest Software
00000 Xxxxxxx Xx.
Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
-44-
XXXX X. XXXXXX
c/o Cumberland Capital
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
X. XXXXXXX RUNNER
c/o Cumberland Capital
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
To the Purchaser:
LML Payment System Inc.
Suite 200
0000 Xxxxx Xxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Fax No.: 000-000-0000
Attention: President
---------
or to such other address, individual or electronic communication number as may
be designated by notice given by either party to the other. Any demand, notice
or other communication given by personal delivery shall be conclusively deemed
to have been given on the day of actual delivery thereof and, if given by
registered mail, on the seventh Business Day following the deposit thereof in
the mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
Business Day during which such normal business hours next occur if not given
during such hours on any day. If the party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties with the
postal system which might affect the delivery of mail, any such demand, notice
or other communication shall not be mailed but shall be given by personal
delivery or by electronic communication.
8.11 Severability.
------------
The parties agree that if one or more provisions contained in this
Agreement shall be deemed or held to be invalid, illegal or unenforceable in any
respect under any applicable law, this Agreement shall be construed with the
invalid, illegal and unenforceable provision deleted, and the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected or impaired thereby.
-45-
8.12 Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas and the laws of the United States of America
applicable therein.
8.13 Attornment.
----------
For the purpose of all legal proceedings this Agreement shall be
deemed to have been performed in the State of Texas and the courts of the State
of Texas shall have jurisdiction to entertain any action arising under this
Agreement. The Vendors and the Purchaser each hereby attorns to the
jurisdiction of the courts of the State of Texas.
8.14 Counterparts and Facsimile Signatures.
-------------------------------------
This Agreement may be executed in any number of counterparts with the
same effect as if the parties had all signed the same document. All
counterparts shall be construed together and shall constitute one instrument.
In making proof of this Agreement, it shall not be necessary to account for more
than one counterpart executed by the party against whom enforcement is sought.
Facsimile Signatures are binding on the party providing the facsimile signature.
-46-
IN WITNESS WHEREOF the parties have executed this Agreement.
LML PAYMENT SYSTEMS INC.
Per: __________________________________
c/s
__________________________________
_______________________________________
XXXXX X. XXXXXX
_______________________________________
XXXXX XXXXXX-XXXXXX
_______________________________________
XXXX X. XXXXXX
_______________________________________
X. XXXXXXX RUNNER
-47-
