SHARE PURCHASE AGREEMENT
Exhibit
2.2
THIS AGREEMENT is made this
4th day of December, 2009
BETWEEN:
SYSTEMS DESIGN, INC., a
corporation incorporated under the laws of Nebraska, (the “Purchaser”)
- and
-
VILLAGEEDOCS, INC., a corporation
incorporated under the laws of Delaware (the “Shareholder”).
RECITALS:
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A.
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The
Shareholder collectively owns all the issued and outstanding shares of the
Corporation (as such term is defined hereinafter);
and
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B.
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The
Purchaser, having purchased certain assets of the Corporation immediately
prior to the execution of this Agreement pursuant to the IP Purchase
Agreement (as such term is defined hereinafter), now wishes to purchase,
and the Shareholder wishes to sell, all of the issued and outstanding
shares of the Corporation.
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NOW,
THEREFORE, in consideration of premises, covenants, agreements, representations
and warranties contained herein and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE 1 –
DEFINITIONS
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1.01
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Definitions
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In this
Agreement, all capitalized terms shall have the meaning ascribed to them and the
following terms shall have the following meanings;
“Agreement” means this
agreement and all schedules and exhibits hereto and all amendments made hereto
and thereto by written agreement between all the parties hereto.
“Assets” means, at a particular
time, the assets, properties and undertakings of the Corporation at such time
whether real, personal, tangible or intangible, but excludes those assets that
are the subject matter of the IP Purchase Agreement.
“Benefit Plans” has the meaning
ascribed thereto in Section (1).
“Business” means the business
of the licensing of software and the provision of professional and maintenance
services (including without limitation, printing services) carried on by the
Corporation.
“Business Day” means a day
other than Saturday, Sunday or statutory or civic holiday in the State of
Georgia.
“Xxxxxxxx Employment Agreement”
means the Employment Agreement made February 16, 2007 between the Corporation
and Xxxxx X. Xxxxxxxx.
“Claims” means all claims,
demands, actions, suits, proceedings or investigations of whatever kind of
nature.
“Closing” has the meaning
ascribed thereto in Section 2.02.
“Closing Date” means the date
hereof.
“Closing Date Balance Sheet”
has the meaning ascribed thereto in Section 2.01(4)(a).
“Closing Payment” means
$95,000, subject to adjustment in accordance with Section 2.01.
“Contracts” has the meaning
ascribed thereto in Section 3.07(1).
“Control” (including, with
correlative meanings, the terms “Controlling”, “Controlled by” and “under common
Control with”) as applied to any person, means the possession, directly or
indirectly, of greater than 50% of the equity interest in, or the voting control
of, such person.
“Corporation” means Tailored
Business Systems, Inc., a corporation incorporated under the laws of
Georgia.
“Damages” means the direct
losses, damages and expenses suffered by a party entitled to indemnification
pursuant to Article 7 hereof and arising out of any Claim including the costs,
expenses or liabilities of any actions or suits relating thereto, including,
without limitation, all reasonable legal and professional fees and costs
incurred in connection therewith, excluding loss of profits and consequential
damages.
“Defending Party” has the
meaning ascribed thereto in Section 7.05.
“Direct Claim” means any Claim
by an Indemnified Party against an Indemnifying Party which does not result from
a Third Party Claim.
“Disclosure Schedule” means the
list of exceptions to the representations and warranties in Article 3 and
Article 4 attached hereto as Schedule
“C”.
“Environmental Laws” means all
statutes, regulations, municipal by laws, codes, ordinances, decrees, rules,
protocols, Orders, judicial or administrative or ministerial or regulatory
judgments, orders, decisions and rulings, guidelines and policies applicable to
the Corporation or any real property used, leased, or occupied primarily by the
Corporation, relating to the protection of the natural environment, health and
safety matters or conditions.
“Estimated Closing Date NTA
Amount” means the amount of $75,000.
“Final NTA Excess” has the
meaning ascribed thereto in Section 2.01(4)(d).
“Final NTA Shortfall” has the
meaning ascribed thereto in Section 2.01(4)(e).
“Financial Statements” means,
collectively, the Year-End Financial Statements and the Interim Financial
Statements.
“GAAP” has the meaning ascribed
thereto in Section 1.07.
“Xxxxxx Employment Agreement”
means the Employment Agreement made February 16, 2007 between the Corporation
and Xxxxxxx X. Xxxxxx.
“Governmental Authority” means
any government or any agency, public or regulatory authority, instrumentality,
ministry, bureau, board, arbitrator, commission, court, department, official,
political subdivision, tribunal or other instrumentality of any government,
whether foreign or domestic, and whether national, federal, provincial, state,
regional, local or municipal, and shall include any securities exchange or
self-regulatory body.
“Holdback 1” means the sum of
$200,000 to be adjusted and allocated in accordance with Section
2.01(4).
“Holdback 1 Release Date” means
July 15, 2010.
“Holdback 2” means the sum of
$200,000 to be adjusted and allocated in accordance with Section
2.01(5).
“Holdback 2 Discount Amount”
has the meaning ascribed thereto in Section 2.01(5).
“Holdback 2 Release Date” means
January 15, 2011.
“Holdback 3” means the sum of
$300,000 to be adjusted and allocated in accordance with Section
2.01(6).
“Holdback 3 Discount Amount”
has the meaning ascribed thereto in Section 2.01(6).
“Holdback 3 Release Date” means
January 15, 2012.
“Indemnity Payment” means any
amount of Damages required to be paid pursuant to Sections 7.01 or
7.02.
“Indemnified Party” means any
person entitled to indemnification under this Agreement.
“Indemnifying Party” means any
party obligated to provide indemnification under this Agreement.
“Intellectual Property” means
all intellectual property owned by, or purported to be owned by, the Corporation
and all rights of the Corporation therein, wherever in the world such rights may
exist, whether registered or unregistered.
“Interim Date” has the meaning
ascribed thereto in Section 3.05(2).
“Interim Financial Statements”
has the meaning ascribed thereto in Section 3.05(2).
“Interim Period” has the
meaning ascribed thereto in Section 3.05(2).
“IP Purchase Agreement” means
the intellectual property purchase agreement of even date executed immediately
prior to this Agreement among the Corporation, the Shareholder and the
Purchaser.
“Knowledge” means the actual
knowledge of an executive officer of the Shareholder, or awareness by such
officer of the existence or absence of a fact, provided such officer has made
reasonable enquiry in the circumstances.
“Law” or “Laws” means any law, statute,
order, decree, consent decree, judgment, rule, regulation, ordinance or other
pronouncement having the effect of law whether in the United States, any other
country, or any domestic or foreign state or province, county, city or other
political subdivision or of any Governmental Authority.
“Leased Properties” means the
lands and premises leased by the Corporation as of the Closing Date, as listed
and described in the Disclosure
Schedule.
“Leases” means all leases or
agreements in the nature of a lease and any interest therein, whether of real or
personal property, to which the Corporation is a party, whether as lessor or
lessee, all as more particularly described in the Disclosure Schedule,
but excluding Licenses.
“Licenses” means all licenses,
sub-licenses and franchises used in the Business in which the Corporation is a
licensee or a licensor of Intellectual Property.
“Lien” means any mortgage,
pledge, security interest, lien, charge or other encumbrance of any
kind.
“Notice Period” has the meaning
ascribed thereto in Section 7.04.
“NTA Adjustment Statement” has
the meaning ascribed thereto in Section 2.01(4)(a).
“Options” means options,
warrants, subscriptions or other rights to acquire, or securities convertible
into or exercisable for, any equity interest in the Corporation or any
Subsidiary, whether vested or not.
“Order” means any decree,
judgment, ruling, arbitration award, assessment, writ, injunction, notice or
similar requirement or order of any Governmental Authority (including building,
environmental, fire, health, labour, police or occupational health and safety
authorities), in each such case whether preliminary or final.
“Organizational Documents”
means any and all articles and by-laws prepared in connection with the
incorporation of the Corporation and all amendments thereto.
“Permitted Liens” means
mechanics’, materialmens’, carriers’, workmens’, repairmens’, contractors’ and
warehousemens’ Liens arising or incurred in the ordinary course of business and
for amounts which are not delinquent and which would not, individually, result
in a material adverse effect on the Business.
“Printing Services Base Amount”
means the amount of $2,950,000 U.S.
“Printing Services Business
Revenue” means the revenues of the Corporation recognized in accordance
with GAAP for performing the stuffing, sorting, and mailing of report output
such as (without limitation) statements, invoices and notices produced from the
following Software applications: Mobile Home (assessment notices); Property Tax
(invoices and delinquent notices); Utility Billing (invoices and delinquent
notices); Assessments (assessment notices) and Payroll (checks and W2
forms).
“Printing Services 2010
Revenue” means the Printing Services Business Revenue in the 2010
calendar year, determined in accordance with GAAP.
“Printing Services 2011
Revenue” means the Printing Services Business Revenue in the 2011
calendar year, determined in accordance with GAAP.
“Shares” means all of the
issued and outstanding shares of the Corporation of any class.
“Share Purchase Price” has the
meaning ascribed thereto in Section 2.01(2).
“Shares” has the meaning
ascribed thereto in Section 3.04(1).
“SLA” has the meaning ascribed
thereto in Section 3.07(1)(a).
“Software” means the computer
programs owned by, or purported to be owned by, the Corporation, including all
versions thereof, and all related documentation, manuals, source code and object
code (if any), program files, data files, data models, program logic,
interfaces, program modules, routines, sub-routines, algorithms, program
architecture, design concepts, system designs, program structure, sequence and
organization and screen displays and report layouts.
“Subsidiary” means any person
which the Corporation Controls or any person Controlled by a person which the
Corporation Controls.
“Tangible Assets” means,
without duplication, cash and cash equivalents, marketable securities, net
accounts receivable (excluding doubtful accounts), prepaid expenses, work in
process, inventories, and net book value (i.e. net of all accumulated
depreciation and amortization) of the following fixed assets: office furniture,
telecommunication systems, signage, computer equipment, printing equipment,
mailing equipment, supplies, paper stock and other tangible items relating to
operation of the Corporation’s business and leasehold
improvements. “Tangible Assets” excludes: (i) intangible assets such
as goodwill, acquired contracts, acquired software, financing costs and
capitalized software development costs; (ii) future tax assets; and (iii)
inter-company or shareholder loans.
“Tangible Liabilities” means,
without duplication, accounts payable and accrued liabilities and charges
(including all employee-related liabilities and withholdings up to the Closing
Date), accrued liability for annual bonus payments under each of the Xxxxxxxx
Employment Agreement and the Xxxxxx Employment Agreement (pro-rated to the
Closing Date), accrued expenses, Taxes, unearned maintenance and support
revenue, deferred revenue, customer deposits and all other
liabilities. Tangible Liabilities exclude all amounts owing to banks
and shareholders as well as third party personal loans to the Corporation and
items not related to the Business, including long-term debt and
redeemable/retractable shares, such debts and securities to be paid with full
release prior to the Closing Date.
“Tangible Net Assets” means the
aggregate value of all Tangible Assets of, owned or held by or for the account
of the Corporation, less the aggregate value of all Tangible Liabilities of the
Corporation as of the Closing Date.
“Tax Returns” means all
returns, reports, declarations, statements, bills, schedules, forms or written
information of, or in respect of, Taxes which are, or are required to be, filed
with or supplied to any Governmental Authority.
“Taxes” means all taxes,
duties, fees, premiums, assessments, imposts, levies and other charges of any
kind whatsoever imposed by any Governmental Authority, together with all
interest, penalties, fines, additions to tax or other additional amounts imposed
in respect thereof, including those levied on, or measured by, or referred to as
income, gross receipts, profits, capital, transfer, land transfer, recordation,
real estate conveyance, documentary, filing, sales, goods and services,
harmonized sales, use, value-added, excise, stamp, withholding, business,
franchising, property, employer health, payroll, employment, health, social
services, education and social security taxes, all surtaxes, all customs duties
and import and export taxes, government employment insurance, health insurance,
pension plan premiums or contributions.
“Terminated Employees” means
Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxx, and Xxxxx Xxxxx.
“Third Party Claim” means any
Claim asserted against an Indemnified Party, that is paid or payable to, or
claimed by, any person who is not a party to this Agreement or an affiliate of a
party to this Agreement.
“Time of Closing” means 5:01
p.m. (Eastern Standard Time) on the Closing Date.
“Transaction Expenses” means
any fees and expenses incurred and payable by the Shareholder, the Corporation
or on the Corporation’s behalf in connection with or related to the structuring,
authorization, preparation, negotiation, execution and performance of this
Agreement and all related agreements (including the IP Purchase Agreement),
whether or not billed or accrued, if and to the extent paid or payable as at the
Closing Date (and irrespective of whether invoiced before, or after, the Closing
Date).
“Year-End Date” has the meaning
ascribed thereto in Section 3.05(2).
“Year-End Financial Statements”
has the meaning ascribed thereto in Section 3.05(2).
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1.02
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Headings
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The
division of this Agreement into Articles and Sections and the insertion of
headings are for convenience of reference only and do 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.
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1.03
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Extended
Meanings
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Wherever
in this Agreement the context so requires, the singular number shall include the
plural number and vice versa and any gender herein used shall be deemed to
include the feminine, masculine or neuter gender and “person” shall include an
individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture, or other entity or a
government or any agency, department or instrumentality thereof. The term
“includes” or “such as” shall be construed as meaning includes “without
limitation” and such as “without limitation”, as the case may be.
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1.04
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Currency
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All
references to currency herein are to lawful money of the United
States.
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1.05
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Construction
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The
parties hereto agree that this Agreement is the product of negotiation between
sophisticated parties and individuals, all of whom were represented by counsel,
and each of whom had an opportunity to participate in, and did participate in,
the drafting of the provisions of this Agreement.
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1.06
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References to
Statutes
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Unless
otherwise expressly provided herein, any agreement, plan, instrument or statute
defined or referred to herein, or in any agreement or instrument that is
referred to herein, means such agreement, plan, instrument or statute as may be
from time to time amended, modified or supplemented.
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1.07
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Accounting
Principles
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Wherever
in this Agreement reference is made to a calculation to be made or an action to
be taken in accordance with generally accepted accounting principles (“GAAP”), such reference will be
deemed to be to the generally accepted accounting principles consistently
applied from time to time and approved by the American Institute of Certified
Public Accountants, or any successor institute, applicable as at the date on
which such calculation or action is made or taken or required to be made or
taken in accordance with generally accepted accounting
principles.
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1.08
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Schedules
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(1)
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The
following are the Schedules attached hereto and incorporated by reference
and deemed to be part hereof:
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Schedule
“A” –
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Financial
Statements
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Schedule
“B” –
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Equipment
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Schedule
“C” –
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Disclosure
Schedule
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Schedule
“D” –
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Employees
and Terms of Employment
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Schedule
“E” –
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Insurance
Policies
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Schedule
“F” –
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Organization
of Corporation
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Schedule
“G” –
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Capital
Stock and Ownership
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Schedule
“H” –
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Bank
Accounts
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Schedule
“I” -
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Examples
of Holdback Payments
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(2)
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The
disclosure contained in a specific section of the Disclosure Schedule is
applicable to the corresponding representation or warranty
only.
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ARTICLE 2 – PURCHASE AND
SALE
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2.01
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Purchase and Sale and
Share Purchase Price
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(1)
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Purchase and Sale of
Shares - Subject to the terms and conditions hereof, the
Shareholder agrees to sell, transfer and deliver to the Purchaser at
Closing, and the Purchaser agrees to purchase from the Shareholder at
Closing, all of the Shares.
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(2)
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Share Purchase
Price - Subject to adjustment (if any) pursuant to the terms of
this Agreement and any Claims by the Purchaser under the indemnification
provisions in Article 7, the aggregate purchase price for the Shares (the
“Share Purchase
Price”) shall be the sum of the Closing Payment, the Holdback 1
Amount, the Holdback 2 Amount, and the Holdback 3 Amount, all as finally
determined pursuant to this Article
2.
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(3)
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Payment at
Closing - On the Closing Date, the Purchaser shall pay to the
Shareholder the amount of the Closing Payment. Such amount
shall be paid and satisfied at the Time of Closing by a wire transfer in
accordance with the instructions provided by the Shareholder, against
delivery to the Purchaser of share certificates evidencing the Shares duly
endorsed for transfer to the
Purchaser.
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(4)
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Final NTA Adjustment
and Payment of Holdback 1
Amount
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(a)
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Within
sixty (60) days of the Closing Date, the Purchaser undertakes to cause the
Corporation to deliver to the Shareholder a balance sheet of the
Corporation as of the Closing Date (the “Closing Date Balance
Sheet”), along with any required schedules and supporting
documentation required for the determination of the Tangible Net Assets of
the Corporation as at the Closing Date. The Closing Date
Balance Sheet shall have been prepared in accordance with
GAAP. Along with the Closing Date Balance Sheet, the Purchaser
shall prepare and deliver a statement (the “NTA Adjustment
Statement”) setting forth a detailed calculation of the Tangible
Net Assets of the Corporation as at the Closing Date, prepared in
accordance with GAAP.
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(b)
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The
Purchaser shall work cooperatively with the Shareholder during the twenty
(20) Business Day period following the delivery of the Closing Date
Balance Sheet and NTA Adjustment Statement to verify the amounts on the
Closing Date Balance Sheet and NTA Adjustment Statement to all parties’
satisfaction. If the Shareholder and the Purchaser have not
been able to agree upon a resolution of any dispute with respect to any
material amounts on the Closing Date Balance Sheet and NTA Adjustment
Statement within 20 Business Days of receipt by the Shareholder of the
Closing Date Balance Sheet and NTA Adjustment Statement, then any such
dispute shall be resolved by an independent accounting firm (the “Reviewing Accountant”)
selected jointly by the Shareholder and the Purchaser. If the
parties cannot agree on a Reviewing Accountant within 10 days, either of
them may apply to a court to have one appointed by the
court. The Reviewing Accountant shall be instructed to resolve
any matters in dispute as promptly as practicable, but in no event more
than thirty (30) days after submission. The fees of the
Reviewing Accountant will be borne equally by the Shareholder and the
Purchaser. The determination of the dispute by the Reviewing
Accountant shall be resolved fully, finally and exclusively by the
Reviewing Accountant and shall be final and binding on the parties
hereto.
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(c)
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If
the NTA Adjustment Statement (as finally agreed or determined pursuant to
Section 2.01(4)(b) above) shows Tangible Net Assets as at the Closing Date
to be equal to the Estimated Closing Date NTA Amount, then the Purchaser
shall pay to the Shareholder the full amount of Holdback 1 on the Holdback
1 Release Date.
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(d)
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If
the NTA Adjustment Statement (as finally agreed or determined pursuant to
Section 2.01(4)(b) above) shows Tangible Net Assets as at the Closing Date
to be greater than the Estimated Closing Date NTA Amount, then the Share
Purchase Price shall be increased on a dollar for dollar basis by the
amount that the Tangible Net Assets is more than the Estimated Closing
Date NTA Amount (the “Final NTA Excess”) and the
Purchaser shall pay to the Shareholder on the Holdback 1 Release Date the
full amount of Holdback 1 plus an amount equal to the Final NTA
Excess.
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(e)
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If
the NTA Adjustment Statement (as finally agreed or determined pursuant to
Section 2.01(4)(b) above) shows Tangible Net Assets as at the Closing Date
to be less than the Estimated Closing Date NTA Amount, then the Share
Purchase Price shall be reduced on a dollar for dollar basis by the amount
that the Tangible Net Assets is less than the Estimated Closing Date NTA
Amount (the “Final NTA
Shortfall”), and the Purchaser shall pay to the Shareholder an
amount equal to Holdback 1 less the amount of the Final NTA Shortfall on
the Holdback 1 Release Date; provided that, if the Final NTA Shortfall is
equal to or greater than the amount of Holdback 1, then the Purchaser
shall be entitled to retain Holdback 1 and the Shareholder shall, on the
Holdback 1 Release Date, pay to the Purchaser the full amount of the Final
NTA Shortfall less the amount of Holdback
1.
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(5)
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Payment of Holdback
2 - On the Holdback 2 Release Date, the Purchaser shall pay to the
Shareholder the full amount of Holdback 2 less the Holdback 2 Discount
Amount, which shall be calculated as
follows:
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Holdback
2 Discount Amount = (Printing Services Base Amount – Printing Services
2010 Revenue) * 65%.
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For
greater certainty the parties agree that in the event that the Holdback 2
Discount Amount is equal to or greater than the amount of Holdback 2, no
payment shall be due or paid by either party in respect of Holdback
2. For greater clarity, an example of a calculation of Holdback
2 is set out in Schedule I.
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(6)
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Payment of Holdback
3 - On the Holdback 3 Release Date, the Purchaser shall pay to the
Shareholder the full amount of Holdback 3 less the Holdback 3 Discount
Amount which shall be calculated as
follows:
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Holdback
3 Discount Amount = (Printing Services Base Amount – Printing Services
2011 Revenue) * 65%.
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For
greater certainty the parties agree that in the event that the Holdback 3
Discount Amount is equal to or greater than the amount of Holdback 3, no
payment shall be due or paid by either party in respect of Holdback
3. For greater clarity, an example of a calculation of Holdback
3 is set out in Schedule I.
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2.02
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Closing
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The sale
and purchase of the Shares (the “Closing”) shall be completed
at the Time of Closing at the offices of the Purchaser.
ARTICLE 3 – CORPORATE
REPRESENTATIONS
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3.01
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General
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The
Shareholder represents and warrants to the Purchaser that the representations
and warranties set forth in this Article 3 are true and correct as of the Time
of Closing.
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3.02
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Organization,
Organizational Documents and
Authority
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(1)
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Incorporation of the
Corporation – The Corporation is a corporation duly incorporated
under the laws of the State of Georgia and has not been
dissolved. The Corporation has all requisite corporate power
and authority to own the Assets and carry on the
Business. Neither the Corporation nor the Shareholder have
commenced any proceedings or taken any steps to wind up or dissolve the
Corporation. Schedule “F”
sets out the incorporation details relating to the
Corporation.
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(2)
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Subsidiaries –
The Corporation does not have any Subsidiaries or any agreements, options
or commitments to acquire any
Subsidiaries.
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(3)
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Minute Books –
All resolutions of the board of directors of the Corporation and the
shareholders of the Corporation, whether passed at a meeting or consented
to in writing, are respectively filed in the minute books of the
Corporation.
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(4)
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Filings – The
Corporation has made all necessary filings under all applicable corporate
laws to which it is subject.
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(5)
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Registrations –
The Corporation is duly registered to conduct business in each
jurisdiction where the character of its properties owned or held under
lease or the nature of its activities made such registration
mandatory.
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(6)
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No Insolvency –
No order has been made or petition presented or resolution passed for the
winding up of the Corporation nor has any distress, execution or other
process been levied against the Corporation or action taken to repossess
goods in the possession of Corporation. No
steps have been taken for the appointment of an administrator or receiver
of any part of the property of the Corporation. The Corporation
has not made or proposed any arrangement or composition with its creditors
or any class of its creditors. The Corporation is not a party to a
transaction pursuant to or as a result of which an asset owned,
purportedly owned or otherwise held by it could reasonably be expected to
be transferred or re-transferred to another person as a result of any
Claim involving fraudulent conveyance or any similar
action.
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3.03
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No
Conflict
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(1)
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No Conflict –
Neither the execution, delivery or performance of this Agreement by the
Shareholder nor the consummation of the transactions contemplated hereby
will:
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(a)
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conflict
with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default (with or without notice or lapse of
time, or both) under, the Organizational Documents of the
Corporation;
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(b)
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conflict
with, or result in a violation or breach of the terms, conditions or
provisions of, constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to the loss of a benefit under any
Material Contract to which the Corporation is party, under which the
Corporation is bound or to which any of the Assets are subject, or result
in the creation or imposition of any Lien upon any of the Assets;
or
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(c)
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violate
or conflict with any material Order or Law of any Governmental Authority
applicable to the Corporation.
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(2)
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No Reporting –
The Corporation is not required to submit any notice, report, registration
or other filing with any Governmental Authority in connection with the
execution or delivery by it of this Agreement or the consummation by the
Corporation of the transactions contemplated hereby, and no consent,
approval or authorization of any Governmental Authority is required to be
obtained by the Corporation in connection with the Corporation’s
execution, delivery and performance of this Agreement or the transactions
contemplated hereby.
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3.04
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Capitalization
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(1)
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Authorized and Issued
Capital – Schedule “G”
sets out the authorized and issued capital of the Corporation, which
consists of the number of classes of shares and the number of shares
issued and outstanding as set forth in Schedule “G”
(the “Shares”). All
Shares have been validly issued and are outstanding as fully paid and non
assessable. All other previously issued shares in the capital
of the Corporation have been repurchased or redeemed by the Corporation
and have been cancelled. No shares in the capital of the
Corporation are owned by the Corporation in treasury. No shares
in the capital of the Corporation have been issued in violation of any
pre-emptive rights, rights of first refusal or similar rights of any
persons. The Corporation has no bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or are
convertible into or are exercisable for or exchangeable into securities
having the right to vote) with the shareholders of the Corporation on any
matter.
|
|
(2)
|
Share Conditions
- The rights, privileges, restrictions and attributes of the shares
of the capital of the Corporation are as set out in the Organizational
Documents of the Corporation, copies of which are attached as Schedule
“F”.
|
|
(3)
|
Number of
Shares – The Shares comprise all the currently issued and
outstanding shares of the
Corporation.
|
|
(4)
|
Conveyance of
Shares – The conveyance of Shares contemplated hereby has been duly
and validly authorized and approved by all necessary corporate action
(including all regulatory, board of director and shareholder approvals) on
the part of the Corporation.
|
|
(5)
|
Commitments regarding
Shares – There is no Option, contract or any other right of another
binding upon or which at any time in the future may become binding upon
the Corporation:
|
|
|
(a)
|
allot
or issue any of the unissued shares the Corporation or to create any
additional class of shares;
|
|
|
(b)
|
purchase,
redeem or otherwise acquire any shares in its capital or any interests
therein; or
|
|
|
(c)
|
pay
any dividend or make any distribution in respect
thereof.
|
|
(6)
|
Distributions –
Since the date of incorporation, no distribution, payment or dividend of
any kind has been declared or paid by the Corporation on any of the shares
issued from its authorized capital.
|
|
|
3.05
|
Books and Records;
Financial Statements
|
|
(1)
|
Books and
Records – The books and records of the Corporation reflect in all
material respects the financial position of the
Corporation.
|
|
(2)
|
Financial
Statements – The audited financial statements of the Corporation
(the “Year-End Financial
Statements”) for the twelve-month period ended on December 31, 2008
(the “Year-End
Date”), a copy of which is attached hereto as Schedule “A”,
and the financial statements of the Corporation (the “Interim Financial
Statements”) for the ten 10-month period commencing on January 1,
2009 (the “Interim
Date”) and ending on October 31, 2009 (the “Interim Period”), a copy
of which is also attached hereto as Schedule “A, as
at the Year-End Date and the end of the Interim Period,
respectively:
|
|
|
(a)
|
are
in accordance with the books and accounts of the
Corporation;
|
|
|
(b)
|
present
fairly in all respects the financial position and operating results of the
Corporation; and
|
|
|
(c)
|
have
been prepared in accordance with GAAP, consistently
applied.
|
|
(3)
|
Transactions Since the
Interim Date – During the Interim Period the Corporation has
carried on its business in the usual and ordinary course and the
Corporation has not entered into any transaction (including any transfer
or sale of assets) out of the usual and ordinary course of business
consistent with past practice. Without limiting the generality
of the foregoing, since the Interim Date and during the Interim Period,
except as disclosed in the Disclosure
Schedule, the Corporation has
not:
|
|
|
(a)
|
sold,
transferred or otherwise disposed of any assets, except for assets which
are obsolete or which individually or in the aggregate do not exceed
$10,000;
|
|
|
(b)
|
made
any capital expenditure or commitment therefor (including without
limitation entering into capital or operating leases) which individually
exceeded $10,000 or in the aggregate exceeded
$50,000;
|
|
|
(c)
|
increased
its indebtedness for borrowed money or made any
loan;
|
|
|
(d)
|
except
in the usual and ordinary course of the business consistent with past
practice, granted any increase in the rate of wages, salaries, bonuses or
other remuneration or benefits of any employees (including executives) of
the Corporation;
|
|
|
(e)
|
suffered
any extraordinary loss (as defined under GAAP), whether or not covered by
insurance;
|
|
|
(f)
|
cancelled
or waived any claims or rights which would reasonably be expected to
result in a cumulative adverse financial impact to the Corporation of
$10,000 or more;
|
|
|
(g)
|
except
in the usual and ordinary course of the business consistent with past
practice, made any change in its price
lists;
|
|
|
(h)
|
entered
into any non-arms’ length transaction or advanced money to or borrowed
money from any of the shareholders of the Corporation;
or
|
|
|
(i)
|
authorized,
agreed or otherwise committed, whether or not in writing, to do any of the
foregoing.
|
|
|
3.06
|
Assets
|
|
(1)
|
Title by the
Corporation – Except for Permitted Liens, the Corporation has good
and valid title to the Assets.
|
|
(2)
|
Bank
Accounts –
Schedule
“H” sets out all of the bank accounts held by the
Corporation.
|
|
(3)
|
No Options to Acquire
Assets – Except as disclosed in the Disclosure Schedule, there
is no contract, option or any other right of another binding upon or which
at any time in the future may become binding upon the Corporation to sell,
transfer, assign, pledge, charge, mortgage or in any other way dispose of
or encumber any of the Assets, except for any Permitted Liens and the
assets sold pursuant to the IP Purchase Agreement or pursuant to purchase
orders/purchase agreements for end user licenses accepted by the
Corporation in the usual and ordinary course of its
business.
|
|
(4)
|
Sufficiency –
the Assets plus those assets that are the subject matter of the IP
Purchase Agreement constitute all property used in the conduct of the
Business as it was operated immediately prior to the Closing Date, except
for minor consumables that are purchased regularly in the usual course of
business.
|
|
(5)
|
No Liens – None
of the Assets are subject to any Liens, except for Permitted
Liens;
|
|
(6)
|
Equipment –
Schedule
“B” sets out a complete list of the material equipment used in the
business of the Corporation; all such equipment is owned by the
Corporation free and clear of all liens or other encumbrances, and such
equipment comprises the only equipment used by the Corporation to carry on
the business of the Corporation prior to the Closing Date. All
such equipment has been maintained and is in good working order for the
purposes of on-going operation of the Business, subject to ordinary wear
and tear for machinery and equipment of comparable
age.
|
|
(7)
|
Inventory – The
inventory included in the Assets is good and usable and is capable of
being processed and sold in the ordinary course of business within a period of
nine (9) months from the Closing Date, and without significant cost to
upgrade. The inventory levels of the Business have been
maintained at levels sufficient for the continuation of the Business in
the ordinary course of business.
|
|
(8)
|
Real Property –
The Corporation is not the owner of, nor is it subject to any agreement or
option to own any real property. The Corporation is not the
lessee of, nor is it subject to any agreement or option to lease, any real
property or any interest in any real property, other than the Leased
Properties listed in Section 3.06(8) of the Disclosure
Schedule.
|
|
|
3.07
|
Contracts
|
|
(1)
|
Material Contracts and
Contracts – For purposes of this Agreement, a “Material Contract”
means:
|
|
|
(a)
|
each
software license agreement or software maintenance agreement (“SLA”) between the
Corporation and each end user whom the Corporation has licensed to use the
Software; and
|
|
|
(b)
|
each
agreement (whether written or oral) under which the Corporation has spent
or will spend $10,000 or more on an
annual basis (for the 2009 calendar year),
other than a SLA or an employment agreement (collectively, the “Significant
Contracts”).
|
For the
purposes of this Agreement, the term “Contracts” means all
Significant Contracts and every other contract (whether written or oral) to
which the Corporation is a party.
|
(2)
|
Disclosure of
SLAs –
|
|
|
(a)
|
All
third party end users of the Software who have been given the right to use
the Software by the Corporation have signed a license agreement with the
Corporation, copies of which have been made available to the
Purchaser.
|
|
|
(b)
|
Except
as set out in the Disclosure
Schedule, (i) the maintenance term is annual for each user of the
Software, and (ii) there is no restriction on the Corporation increasing
the annual maintenance fee upon the expiry of the current annual
maintenance period for each user of the
Software.
|
|
|
(c)
|
All
users of the Software have, under each SLA, a non-transferable (without
the consent of the Corporation), non-exclusive license to use the Software
to process the data of only the customer who has signed such
SLA.
|
|
(3)
|
Disclosure of
Significant Contracts – Section 3.07(3) of the Disclosure
Schedule contains a list of all Significant Contracts and all
Leases. Except as set out in the Disclosure
Schedule, there are no Contracts limiting the freedom of the
Corporation to engage in any line of business or compete with any person
or which contain provisions (i) which restrict in any manner
whatsoever the right for the Corporation to assign the Contracts, or
(ii) which constitute a change of control clause to which the
Corporation is subject.
|
|
(4)
|
Validity – All
Material Contracts are in full force and effect and the Corporation is
entitled to all benefits thereunder, and the Corporation has performed all
material obligations required to be performed by it under such Material
Contracts. With respect to all Leases for the Leased
Properties, no waiver, indulgence or postponement of the lessee’s
obligations has been granted by the lessor, and all rents and additional
rents that are due have been paid or accrued for by the
Corporation.
|
|
(5)
|
Consents – All consents,
approvals or authorizations set out in the Material Contracts that are
required to be obtained by the Corporation in connection with the
execution, delivery and performance of this Agreement and the IP Purchase
Agreement or the transactions contemplated hereby and thereby have been
obtained prior to the Closing.
|
|
(6)
|
No Default
–
|
|
|
(a)
|
The
Corporation is not in default or breach of any of the Material Contracts
and there exists no condition, event or act, including the transactions
contemplated hereby and pursuant to the IP Purchase Agreement that, with
the giving of notice or lapse of time or both, would constitute such a
default or breach. None of the counterparties to any of the
Material Contracts are in default or in breach of the terms thereof, and
all Material Contracts are in good standing and there exists no condition,
event or act that, with the giving of notice or lapse of time or both,
would constitute such a default or
breach.
|
|
|
(b)
|
The
consummation of the transactions contemplated hereby and under the IP
Purchase Agreement will not result in a default or a breach by the
Corporation of the terms, conditions or provisions of the Material
Contracts.
|
|
(7)
|
No Termination
– The consummation of the transactions contemplated hereby will not give
rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a benefit under any Material
Contract.
|
|
(8)
|
No Warranty
Claims – Since the Interim Date and during the Interim Period, the
Corporation has not received notice of the intention of any customer or
any distributor to make any warranty Claims in respect of the Software in
excess of current reserves provided therefor or to terminate any: (a)
license agreement; or (b) support agreement, prior to the end of its
stated term.
|
|
(9)
|
No Commitments
– Except as disclosed in the Disclosure
Schedule, the Corporation has no current commitments to release or
develop any material updates, versions or releases of the
Software.
|
|
(10)
|
No Guarantees –
The Corporation has not guaranteed the obligations of any third
party.
|
|
(11)
|
No Royalties –
Except as disclosed in the Disclosure
Schedule, the Corporation is not a party to or bound by any
contract or commitment to pay any royalty or license fee pertaining to the
Corporation or the Intellectual Property or the third party intellectual
property used by the Corporation and there are no outstanding royalties or
obligations of whatever nature owing by the Corporation as a result of any
and all acquisitions consummated prior to the Closing
Date.
|
|
|
3.08
|
Operations
|
|
(1)
|
Accounts
Receivable – All current accounts receivable of the Corporation
were created in its usual and ordinary course of business and are good and
collectible within 120 days following the Closing
Date.
|
|
(2)
|
Unusual
Promotions – There have been no unusual promotions or discounts
offered to customers during the Interim Period and from the Interim
Date.
|
|
(3)
|
Prepaid
Expenses and Work in Process –
The prepaid expenses and work in process of the Corporation shown on the
Financial Statements (i) are valid and genuine, and (ii) have
arisen solely out of bona fide Licenses, sales and delivery of goods,
performance of services, and other business transactions including
contract xxxxxxxx in the ordinary course of
business.
|
|
|
3.09
|
Employment
Matters
|
|
(1)
|
The
Corporation has no employment contract with any person whomsoever except
such contracts as are listed in Schedule D and
such Schedule
D correctly sets out whether such contracts are in writing and
the employee's most recent salary with the Corporation, and his or her
start date with the Corporation. Schedule
D also sets out a complete list of the contracts between the
Corporation and independent contractors. Except for
remuneration paid to employees, directors and independent contractors in
the ordinary course of business and made at current rates of remuneration,
no payments have been made or authorized since the Interim Date and as of
the Closing Date by the Corporation to officers, directors, employees or
independent contractors of the Corporation. No current or
former director, officer, shareholder, employee or independent contractor
of the Corporation or any person not dealing at arm's length within the
meaning of the Internal Revenue Code with any such person is indebted to
the Corporation.
|
|
(2)
|
Schedule
D contains a complete and accurate list of all bonus, deferred
compensation, share purchase, share appreciation and share option,
hospitalization or other medical benefits, life or other insurance,
dental, disability, salary continuation, vacation, supplemental
unemployment benefits, profit-sharing, mortgage assistance, employee loan,
employee assistance, pension, retirement or supplemental retirement plan
or agreement (including any defined benefit or defined contribution
pension plan and any group registered retirement savings plan), and each
other employee benefit plan or agreement (whether oral or written, formal
or informal, funded or unfunded) sponsored, maintained or contributed to
or required to be contributed to by the Corporation for the benefit of any
employees of the Corporation, whether or not insured and whether or not
subject to any law (the “Benefit Plans”) and the
Corporation has no Benefit Plans beyond those listed in Schedule
D. Copies of all plan descriptions provided by the third
party carrier to the Corporation, describing the group health benefit
plans, have been made available for review by the
Purchaser.
|
|
(3)
|
All
benefit plans listed in Schedule D have
been duly registered where required by, and are in compliance in all
material respects and in good standing under, all applicable legislation
including, without limiting the generality of the foregoing, the Employee
Retirement Income Security Act of 1974 ("ERISA"), as amended, and
the Internal Revenue Code 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. The Corporation has current
determination letters from the Internal Revenue Service for any 401(a) or
501(a) plans. Neither the Corporation nor any "party in
interest" (within the meaning of Section 4975 of the Code) has engaged in
a transaction or transactions in connection with which the Corporation
could be subject, individually or in the aggregate, to other civil
penalties assessed pursuant to Section 502(i) of ERISA or tax liabilities
imposed by Section 4975 of the Code. At no time has the
Corporation or an ERISA Affiliate ever been obligated to contribute to a
“multiemployer plan” as defined in Section 3(37) of ERISA. At
no time has the Corporation or an ERISA Affiliate ever maintained,
contributed or been obligated to contribute to a plan subject to Title IV
or ERISA. Neither the Corporation nor any ERISA Affiliate has
any outstanding liability under Title IV of ERISA. There is no
pending or to the knowledge of the Shareholder threatened claim against or
otherwise involving any plan, or any fiduciary thereof, by or on behalf of
any participant or beneficiary under any plan (other than routine claims
for benefits), nor is there any pending or to the knowledge of the
Shareholder threatened claim by or on behalf of any of the plans, which
has or could have a material adverse effect on the
Corporation;
|
|
(4)
|
other
than any obligation listed on the Financial Statements, the Corporation
has withheld from any amount paid or credited by it to or for the account
or benefit of any person, including any employee, shareholder, creditor,
non-resident person or other third party, the amount of all taxes and
other deductions required by any applicable laws to be withheld from any
such amount and has remitted the same to the appropriate
authority;
|
|
(5)
|
from
the enactment of the Worker Adjustment and Retraining Notification Act of
1988 (the “WARN
Act”) to the date of this Agreement, the Corporation has not
effectuated a “mass layoff” (as defined in the WARN Act) affecting any
site of employment or facility of the Corporation, nor has the Corporation
been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar
state or local law. None of the employees of the Corporation
has suffered an “employment loss” (as defined in the WARN Act) during the
ninety (90) day period prior to the execution of this
Agreement;
|
|
(6)
|
with
respect to the employees and former employees of the Corporation, there
are no employee post-employment life insurance, medical or health plans in
effect;
|
|
(7)
|
subject
to any applicable governmental statutes, rules or regulations, nothing in
the terms and conditions of the benefit plans listed in the Disclosure
Schedule, or otherwise, prohibits or limits the ability of the Purchaser
or the Corporation, to terminate all such benefit
plans;
|
|
(8)
|
the
Corporation has complied with all laws, rules and regulations relating to
the employment of labor, including those relating to wages, hours,
overtime, occupational safety, discrimination and the payment of social
security and other payroll related taxes, and has not received any written
notice alleging failure to comply in any material respect with any such
laws, rules or regulations. No controversies, disputes or
proceedings are pending or threatened between the Corporation and any
employee of the Corporation. There is no labor strike, dispute,
slowdown, representation campaign or work stoppage actually pending or
threatened with respect to the Corporation’s employees;
and
|
|
(9)
|
since
the Interim Date and as of the Closing Date, except as
disclosed in the Disclosure
Schedule, there has not been any increase in the rate or terms
of compensation payable by the Corporation to, or any increase in the rate
or terms of any bonus, insurance, pension, or other employee benefit plan
on behalf of its employees, except increases occurring in the ordinary
course of business in accordance with its customary practices (which shall
include normal period performance reviews and related compensation and
benefit increases).
|
|
|
3.10
|
Taxes
|
All Tax
Returns filed by the Business were in all material respects true, complete and
correct and prepared in accordance with the requirements of the income tax or
other tax laws applicable to the Corporation. At the Time of Closing: (a) all
Taxes which the Corporation is obligated to pay on or prior to the Time of
Closing shall have been paid or accrued; and (b) the Closing Date Balance Sheet
shall reflect, in accordance with GAAP, all Taxes relating to periods ending on
or prior to the Closing Date which are: (i) due and payable and which have not
been paid on or prior to the Time of Closing; or (ii) required under GAAP to be
accrued or recorded. The Corporation has filed at the Time of Closing
all Tax Returns required to be filed by it on or before the Time of
Closing. The Corporation does not have any liability, obligation or
commitment for the payment of Taxes or interest or penalties with respect
thereto, except such as are disclosed in the Financial Statements and in the
Closing Date Balance Sheet. The Corporation is not in arrears with
respect to any required withholdings or instalment payments of any tax or duty
of any kind and has not filed any waiver for a taxation year of the Corporation
under any legislation imposing Tax on the Corporation. The
Corporation has not made any payments and is not obligated to make any payments
that will not be deductible under 280G of the Code. To the Knowledge
of the Shareholder, there are no pending audits by any federal, state, local or
foreign taxing authority of any payment, return or report made or filed by the
Corporation. There has not been any claimed failure to pay or report
any kind of Tax which could reasonably be expected to be assessed by any such
taxing authority against the Corporation. Without limiting the
foregoing:
|
|
(a)
|
the
Corporation is not subject to any Tax sharing, indemnity or allocation
agreement;
|
|
|
(b)
|
during
the 24 months prior to the Closing Date, the Corporation has not acquired
property or services from, or disposed of property or provided services
to, a non-arm’s length person, for consideration which is less than the
fair market value of such property or services in circumstances which
could subject the Corporation to liability under applicable Tax
laws;
|
|
|
(c)
|
the
paid-up capital of all issued and outstanding shares of the share capital
of the Corporation is identical to the stated capital of such shares as
reflected in the financial statements of the Corporation;
and
|
|
|
(d)
|
the
tax basis to the Corporation of its assets (and the undepreciated capital
costs of such assets) is accurately reflected on the Tax Returns of the
Corporation.
|
|
|
3.11
|
Insurance
|
Attached
hereto as Schedule
“E” is a true and complete list of all insurance policies maintained by
the Business and a complete list of any pending claims thereunder.
|
|
3.12
|
Compliance with
Rules
|
Immediately
prior to the Closing Date, the Corporation was conducting its business in
compliance in all material respects with all applicable Laws of the
jurisdictions where the Corporation carries on business, and was not in breach
in any material respect of any such Laws, and, where required, was duly
licensed, registered or qualified in such jurisdictions, to carry on its
business and to own its assets, including, in the case of the Corporation, the
Business and the Assets.
|
|
3.13
|
Brokers / Success
Fees
|
The
Corporation has not engaged any broker or finder in connection with the
transactions contemplated by this Agreement and by the IP Purchase Agreement,
and no broker or finder is entitled to any fee or other compensation from the
Corporation with respect to this Agreement, the IP Purchase Agreement or the
transactions contemplated herein and therein. No bonus payment,
success fee or any similar amount is payable by the Corporation to any Key
Employee or other person as a result of the sale of the
Corporation.
|
|
3.14
|
Prior
Transactions
|
There are
no outstanding obligations of the Corporation or due to the Corporation in
connection with any transaction concluded prior to the Closing Date involving
the acquisition by the Corporation of shares or assets of any
company.
|
|
3.15
|
Litigation and
Orders
|
|
(1)
|
No Claims –
There are no legal actions commenced and ongoing against the Corporation
of which the Corporation has received written notice. There are
no Claims threatened against the Corporation that adversely affect or that
could adversely affect the Corporation, the Assets, the Business or the
Shares. To the Knowledge of the Shareholder, there is no basis for any
legal action, administrative proceeding or investigation of any kind
against the Corporation which may be commenced with a reasonable
likelihood of success.
|
|
(2)
|
No Orders –
There are no outstanding Orders and there are no matters under discussion
with any Governmental Authority relating to
Orders.
|
|
|
3.16
|
Environmental
Matters
|
|
(1)
|
To
the Knowledge of the Shareholder, all premises leased or owned or ever
leased or owned by the Corporation (the “Premises”) were and are
in compliance with all current Environmental Laws. Section 3.16
of the Disclosure Schedule contains a list of all such
Premises.
|
|
(2)
|
The
Corporation has not released or emitted into the natural environment or
discharged or disposed of, at or on, or otherwise knowingly acquiesced or
participated in the discharge or disposal of, at or on, the Premises or
any adjoining properties of any hazardous substances regulated by the then
applicable Environmental Laws other than in a manner that complies with
the then current Environmental
Laws.
|
|
(3)
|
There
are no hazardous substances regulated by the then applicable Environmental
Laws brought in or produced by the Corporation existing at, in, on or
within the Premises other than in a manner that complies with the then
applicable Environmental Laws.
|
|
(4)
|
There
are not any notices of non-compliance, complaints, summons, legal actions,
charges, work orders, control orders, stop orders, remedial and waste
removal or other orders relating to the natural environment made in
writing against the Corporation under Environmental Laws by any court,
governmental authority or third party and, there is no judicial,
governmental or third party complaint, action or
investigation.
|
|
(5)
|
To
the Knowledge of the Shareholder, any polychlorinated biphenyls in use, in
storage or existing on the Premises are being used, have been stored or
exist in such concentration or quantities as, in each case, to comply with
all Environmental Laws.
|
|
(6)
|
To
the Knowledge of the Shareholder, there is no asbestos or
asbestos-containing materials in or on the Premises in contravention of
current Environmental Laws.
|
|
|
3.17
|
Representations Under
IP Purchase Agreement
|
The
Shareholder hereby repeats the representations and warranties made by
Shareholder in favour of the Purchaser under the IP Purchase Agreement, in order
to permit the administration of Claims to proceed in the manner contemplated by
Sections 7.01 and 7.02
ARTICLE 4– REPRESENTATIONS
AND COVENANTS OF THE SHAREHOLDER
|
|
4.01
|
Representations of the
Shareholder
|
The
Shareholder represents and warrants to the Purchaser as follows:
|
(1)
|
Solvency – No
distress, execution or other process has been levied against the
Shareholder or action taken to repossess the Shares. No steps
have been taken for the appointment of an administrator or receiver in
respect of the Shares held by the Shareholder. The Shareholder
has not made or proposed any arrangement or composition with its creditors
or any class of its creditors.
|
|
(2)
|
Ownership – The
Shareholder is the sole, exclusive, direct, registered and beneficial
owner and holder of the Shares free and clear of all
Liens.
|
|
(3)
|
Share Legends –
No legend or other reference to any purported Lien appears on any
certificate representing the
Shares.
|
|
(4)
|
Conveyance –
The Shareholder has full power, authority and capacity to convey to
Purchaser good, legal and beneficial title in and to the Shares and will
convey at Closing good, marketable, legal and beneficial title to the
Shares to Purchaser, free and clear of all
Liens.
|
|
(5)
|
No Options – No
person has any agreement, option, right or privilege which is capable of
becoming an agreement or option for the purchase from the Shareholder of
the Shares or any of them, nor is the Shareholder subject to any
restriction of any kind which would prevent the Closing of the
transactions contemplated herein, nor is there any shareholders agreement,
voting trust or similar agreement, or any rights of first refusal, in
respect of the Shares.
|
|
(6)
|
No Conflict –
Neither the execution, delivery or performance of this Agreement by the
Shareholder, nor the consummation of the transactions contemplated hereby,
will:
|
|
|
(a)
|
conflict
with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default (with or without the lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a benefit under any
agreement under which the Shareholder is bound or to which any of the
Shares are subject, or result in the creation or imposition of any Lien or
other encumbrance upon any of the Shares;
or
|
|
|
(b)
|
violate
or conflict with any material Order or Law of any Governmental Authority
applicable to the Shareholder or the
Shares.
|
|
(7)
|
No Claims –
There are no Claims pending or, to the Knowledge of the Shareholder,
threatened against the Shareholder (whether alone or involving the
Corporation as well) that adversely affect or that could adversely affect
the ability of the Shareholder to effect the transactions contemplated
hereby.
|
|
(8)
|
Duly Executed –
This Agreement has been duly executed and delivered by the Shareholder and
constitutes legal, valid and binding obligations of the Shareholder,
enforceable against such party in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency and other laws
affecting the rights of creditors generally and except that equitable
remedies may be granted only in the discretion of a court of competent
jurisdiction.
|
|
(9)
|
No Consents –
The Shareholder is not required to submit any notice, report, registration
or other filing with any Governmental Authority in connection with the
execution or delivery by it of this Agreement or the consummation by the
Shareholder of the transactions contemplated hereby, and no consent,
approval or authorization of any Governmental Authority or any other party
or person is required to be obtained by the Shareholder in connection with
the Shareholder’s execution, delivery and performance of this Agreement or
the transactions contemplated
hereby.
|
|
(10)
|
No Brokers or Success
Fees – The Shareholder has not incurred any obligation for any
finder’s, broker’s or agent’s fee in connection with the transactions
contemplated hereby. No bonus payment, success fee or any
similar amount is payable by the Shareholder to any Key Employee or other
person as a result of the sale of the
Corporation.
|
ARTICLE 5 – REPRESENTATIONS
AND WARRANTIES OF PURCHASER
The
Purchaser represents and warrants to the Shareholder that:
|
|
5.01
|
Corporate
|
The
Purchaser is duly incorporated, organized, subsisting and is in good standing
under the laws of the State of Nebraska.
|
|
5.02
|
Authority
|
The
Purchaser has the requisite power, authority and right to enter into and deliver
this Agreement and to complete and perform the transactions contemplated
hereunder, and the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated under this Agreement have been
duly and validly authorized and approved by all necessary corporate
action.
|
|
5.03
|
Binding
Agreement
|
This
Agreement constitutes a valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies may be
granted only in the discretion of a court of competent
jurisdiction.
|
|
5.04
|
No
Conflict
|
Neither
the execution, delivery or performance of this Agreement by the Purchaser nor
the consummation of the transactions contemplated hereby, will:
|
|
(a)
|
conflict
with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default (with or without notice or lapse of
time, or both) under, the constating documents of the Purchaser (including
articles, by-laws, shareholders agreements, voting trusts or trust deeds,
as applicable);
|
|
|
(b)
|
conflict
with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default (with or without the lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a benefit under any
agreement, indenture or other instrument under which the Purchaser is
bound; or
|
|
|
(c)
|
violate
or conflict with any Order or Law of any Governmental Authority by which
the Purchaser is bound.
|
|
|
5.05
|
Brokers
|
The
Purchaser has not engaged any broker or finder in connection with the
transactions contemplated by this Agreement, and no person or entity is entitled
to any fee or other compensation with respect to this Agreement or the
transactions it contemplates.
|
|
5.06
|
No
Consents
|
No
consent, sanction, ruling, order, exemption, permit, declaration, approval,
waiver, filing, registration, authorization, assumption agreement or notice is
required from or needs to be given by or obtained by the Purchaser from any
person or Governmental Authority in order to satisfy any pre-condition to the
completion of the transactions contemplated herein, except as any requirements
to which the Purchaser’s parent company is subject as a result of its status as
a reporting issuer.
ARTICLE 6 – SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
|
|
6.01
|
Survival of
Shareholder’s Representations, Warranties and
Covenants
|
|
(1)
|
The
representations, warranties and covenants set forth in Article 3 and
Article 4 will survive the completion of the transactions contemplated by
this Agreement and, notwithstanding such completion, will continue in full
force and effect for the benefit of the
Purchaser:
|
|
|
(a)
|
in
the case of the representations and warranties in Section 3.10 concerning
Taxes, for the applicable statutorily prescribed period for reassessment
of the taxation year in question;
and
|
|
|
(b)
|
in
the case of all other representations and warranties, for a period
of three (3) years after the Closing
Date.
|
|
(2)
|
The
covenants of the Corporation and the Shareholder set forth in this
Agreement will survive the completion of transactions contemplated by this
Agreement and, notwithstanding such completion, will continue in full
force and effect for the benefit of the Purchaser in accordance with the
terms thereof.
|
|
|
6.02
|
Survival of
Purchaser’s Representations, Warranties and
Covenants
|
|
(1)
|
The
representations and warranties of the Purchaser set forth in Article 5
will survive the completion of transactions contemplated by this Agreement
and, notwithstanding such completion, will continue in full force and
effect for the benefit of the Shareholder for a period of two (2) years
after the Closing Date.
|
|
(2)
|
The
covenants of the Purchaser set forth in this Agreement will survive the
completion of transactions contemplated by this Agreement and,
notwithstanding such completion, will continue in full force and effect
for the benefit of the Shareholder in accordance with the terms
thereof.
|
ARTICLE 7 – COVENANTS AND
INDEMNIFICATION
|
|
7.01
|
Indemnification by the
Shareholder
|
|
(1)
|
Subject
to Sections 6.01(1) and 7.01(2):
|
|
|
(a)
|
The
Shareholder shall indemnify, save and hold harmless, discharge and release
the Purchaser from and against any and all Damages arising from or based
on:
|
|
|
(i)
|
any
inaccuracy in any representation or warranty made by the Shareholder in
Article 3 or Article 4 of this
Agreement;
|
|
|
(ii)
|
any
breach of any covenant of the Shareholder set forth in this
Agreement;
|
|
|
(iii)
|
any liability
arising from any Taxes it may be required to pay as a result of the
failure of the Corporation to make the appropriate filings, registrations
or payments in respect of Taxes (for greater certainty, including any
Taxes relating or arising from the sale of the Shares, Software, and
Intellectual Property to the Purchaser);
or
|
|
|
(iv)
|
any
Claims made by or on behalf of Xxxxxxx X. Xxxxxx in respect of his rights
and entitlements set out in the Xxxxxx Employment Agreement, including
without limitation any payment(s) which may become due pursuant to
paragraph 7(a) thereof or any other form of severance
payments.
|
|
(2)
|
The
following limitations will apply with regard to the Damages for which the
Shareholder would otherwise have indemnification obligations under this
Agreement:
|
|
|
(a)
|
The
indemnities of the Shareholder set forth in this Agreement shall not apply
until the aggregate of all Damages suffered by the Purchaser, both
hereunder and pursuant to the IP Purchase Agreement, total more than
$20,000, in the aggregate, in which event the indemnities of the
Shareholder under this Agreement shall apply to all Damages and not only
those Damages which in the aggregate are in excess of
$20,000. For greater certainty, the parties hereby agree that
the $20,000 threshold does not apply to the calculation of the
Tangible Net Assets.
|
|
|
(b)
|
With
respect to the indemnification by the Shareholder under this Section 7.01,
including a Claim under the IP Purchase Agreement, the maximum aggregate
liability of the Shareholder shall not exceed the aggregate amount of the
Share Purchase Price and the Purchase Price under the IP Purchase
Agreement.
|
|
|
(c)
|
Any
Claim made against the Shareholder hereunder or pursuant to the IP
Purchase Agreement, to which the Purchaser hereunder or under the IP
Purchase Agreement is entitled to indemnity from the Shareholder, shall
first be satisfied from any amounts of Share Purchase Price which are at
that time due and payableto the Shareholder pursuant to the terms of this
Agreement.
|
|
|
(d)
|
For
the avoidance of doubt, the prosecution of a Claim by Purchaser under this
Agreement shall preclude Purchaser from pursuing a Claim with the same
basis under the IP Purchase Agreement, and the prosecution of a Claim by
Purchaser under this Agreement shall preclude Purchaser from pursuing a
Claim with the same basis under the IP Purchase
Agreement.
|
|
(3)
|
Notwithstanding
the foregoing, the limitations in this Section 7.01(2) do not apply to
Section 7.01(1)(iv), or where there has been fraud or wilful
misrepresentation by the
Shareholder.
|
|
(4)
|
The
Purchaser may only bring an indemnity claim under Section 7.01(1) if the
Purchaser brings such claim prior to the expiry of the relevant survival
period in Section 6.01(1) related to such
Claim.
|
|
|
7.02
|
Indemnification by the
Purchaser
|
|
(1)
|
Subject
to Sections 6.02(1) and 7.01(2), the Purchaser shall indemnify, save, hold
harmless, discharge and release the Shareholder from and against any and
all Damages arising from or based
on:
|
|
|
(a)
|
any
inaccuracy in any representation or warranty made by the Purchaser in this
Agreement; and
|
|
|
(b)
|
any
breach of any covenant of the Purchaser set forth in this
Agreement.
|
|
(2)
|
The
following limitations will apply with regard to the Damages for which the
Purchaser would otherwise have indemnification obligations under this
Agreement:
|
|
|
(a)
|
The
indemnities of the Purchaser set forth in this Agreement shall not apply
until the aggregate of all Damages suffered by the Shareholder, both
hereunder and pursuant to the IP Purchase Agreement, total more than
$20,000.
|
|
|
7.03
|
Notice of Third Party
Claims
|
If an
Indemnified Party receives notice of the commencement or assertion of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party reasonably
prompt notice thereof, but in any event no later than thirty (30) days
after receipt of such notice of such Third Party Claim unless it is proven that
it was impossible in fact for the Indemnified Party to act within such
delay. Such notice to the Indemnifying Party shall describe the Third
Party Claim in reasonable detail and shall indicate the estimated amount of the
Damages that have been or may be sustained by the Indemnified
Party.
|
|
7.04
|
Defence of Third Party
Claims
|
The
Indemnified Party may participate in or assume the defence of any Third Party
Claim assisted by counsel of its own choice, provided that the Indemnifying
Party and its legal counsel may, at their choice and sole discretion, lead the
defence, by giving
notice to that effect to the Indemnified Party not later than thirty
(30) days after receiving notice of such Third Party Claim or sooner if the
nature of the Third Party Claim so requires it and if so specified in the notice
of such Third Party Claim delivered by the Indemnified Party to the Indemnifying
Party (the “Notice
Period”). The Indemnified Party agrees to pay all of its own expenses of
participating in such defence. The Indemnifying Party shall act in
good faith in the defence of each Third Party Claim. Subject to Section
7.06, the
Indemnifying Party shall not settle or compromise any Third Party Claim without
the prior written consent of the Indemnified Party which consent shall not
unreasonably be withheld. The Indemnified Party shall have five (5) Business
Days following the written notice of the Indemnifying Party to notify in writing
the Indemnifying Party of its consent or refusal. In the event that the
Indemnified Party does not provide any written response within said period, the
parties agree that the Indemnified Party will be deemed to have agreed to the
settlement or compromise.
|
|
7.05
|
Assistance for Third
Party Claims
|
The
Indemnified Party shall make available to the Indemnifying Party which is undertaking
and controlling the defence of any Third Party Claim (the “Defending Party”) on a timely
basis:
|
|
(a)
|
those
employees whose assistance, testimony or presence is necessary to assist
the Defending Party in evaluating and in defending any Third Party Claim;
and
|
|
|
(b)
|
all
documents, records and other materials in the possession of such Party
reasonably required by the Defending Party for its use in defending any
Third Party Claim,
|
and shall
otherwise cooperate with the Defending Party.
|
|
7.06
|
Settlement of Third
Party Claims
|
If an
Indemnifying Party elects to assume the defence of any Third Party Claim as
provided in Section 7.04, the Indemnifying Party shall not be liable for
any legal expenses subsequently incurred by the Indemnified Party in connection
with the Indemnified Party’s continued participation in the defence of such
Third Party Claim. However, if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim within a reasonable
time based on the nature of the Third Party Claim and, in any event, not later
than thirty (30) days after receiving notice from the Indemnified Party and
the Indemnified Party bona
fide believes on reasonable grounds that the Indemnifying Party has
failed to take such steps, the Indemnified Party may, at its option, elect to
assume the defence of and to compromise or settle the Third Party Claim assisted
by counsel of its own choosing and the Indemnifying Party shall be liable for
all reasonable costs and expenses paid or incurred in connection therewith and
the Indemnifying Party shall be bound by the results. Without the prior written
consent of the Indemnified Party, the Indemnifying Party shall not enter into
any compromise or settlement of any Third Party Claim which would lead to
liability or create any financial or other material obligation on the part of
the Indemnified Party or materially affect the Business.
|
|
7.07
|
Direct
Claims
|
Any
Direct Claim shall be asserted by giving the Indemnifying Party reasonably
prompt written notice thereof. The Indemnifying Party shall then have a period
of thirty (30) days within which to make such investigations as the
Indemnifying Party considers necessary or desirable and to respond in writing to
such Direct Claim. For the purpose of such investigation, the Indemnified Party
shall make available to the Indemnifying Party the information relied upon by
the Indemnified Party to substantiate its rights to be indemnified pursuant to
this Article 7, together with all other information as the Indemnifying Party
may reasonably request. If the Indemnifying Party does not so respond within
such thirty (30) day period, the Indemnifying Party shall be deemed to have
rejected such Claim, and in such event the Indemnified Party shall be free to
pursue such remedies as may be available to the Indemnified Party.
|
|
7.08
|
Failure to Give Timely
Notice
|
A failure
to give timely notice as provided in this Article 7 shall not affect the rights
or obligations of any party except and only to the extent that, as a result of
such failure, any party which was entitled to receive such notice was deprived
of its right to recover any payment under its applicable insurance coverage or
was otherwise directly and materially prejudiced as a result of such failure to
give timely notice.
|
|
7.09
|
Exclusive
Remedy
|
With the
exception of injunctive relief or specific performance, the rights of indemnity
set forth in this Article 7 are the sole and exclusive remedies of each party in
respect of any inaccuracy of a representation or a warranty or any breach of a
covenant by the other party hereunder.
|
|
7.10
|
General
Limitations
|
An
Indemnifying Party shall have no liability to an Indemnified Party hereunder for
any of the following:
|
|
(a)
|
for
any liability which arises solely by reason of a proposed or actual
enactment or change of any applicable Law or any proposed or actual change
in the interpretation or administration of such legislation after the date
hereof;
|
|
|
(b)
|
for
any liability that arises as a result of any Law not in force on the date
hereof which takes effect retrospectively or occurs as a consequence of a
change in the interpretation of any Law after the date
hereof;
|
|
|
(c)
|
in
respect of any matter or thing done or omitted to be done by or at the
written direction of or with the written consent of the Indemnified Party;
or
|
|
|
(d)
|
in
respect of more than one representation, warranty or covenant that relates
to the same matter or thing; or
|
|
|
(e)
|
to
the extent that provision or reserve in respect of the matter giving rise
to such liability is included in the Tangible Liabilities for the purpose
of calculating the Tangible Net
Assets.
|
|
|
7.11
|
Resolution of
Disputes
|
|
(1)
|
Any
dispute, controversy or claim arising out of or relating to this Agreement
or the breach hereof involving only a Direct Claim that cannot be settled
by negotiation, shall be settled by arbitration in accordance with the
commercial rules of the American Arbitration Act. Arbitration proceedings
conducted pursuant to this Section 7.11 shall be held in New York
City.
|
|
(2)
|
Arbitrations
shall be conducted by a single arbitrator (the “Arbitrator”) selected by
the parties consensually or in the event of a failure to agree within ten
(10) days, any party may, upon notice to the other party, apply to a court
to appoint an arbitrator. The Arbitrator must have served as an
arbitrator in at least one prior commercial arbitration involving
primarily questions of commercial or corporate law. The
Arbitrator must be a person who has never been an affiliate of or legal
counsel for any party or for any of their respective affiliates and, if
possible, must be a person experienced in mergers and
acquisitions.
|
|
(3)
|
Any
provisional remedy that would be available from a court of law shall be
available from the Arbitrator to the parties pending
arbitration. Any party may, without inconsistency with this
Agreement, apply to any court of proper jurisdiction and seek injunctive
relief to maintain the status quo until the arbitration award is rendered
or the controversy is otherwise
resolved.
|
|
(4)
|
The
Arbitrator’s award shall be made in writing and shall make written
findings of fact and conclusions of law. The Arbitrator shall
have no authority to award punitive or other damages not measured by the
prevailing party’s actual damages and may not, in any event, make any
ruling, finding, or award that does not conform to the terms and
conditions of this Agreement. Judgment on any arbitration award
may be entered by the Arbitrator or by any party in any court having
jurisdiction thereof. No party or Arbitrator may disclose the
existence, content, or results of any arbitration or arbitration award
without the prior written consent of both parties except to the extent
necessary to enter and enforce a judgment based upon such an
award.
|
|
(5)
|
The
award of the Arbitrator shall be final, binding and not subject to
appeal. Each party hereby waives the benefit of any applicable
law which would permit it to appeal the decision of the Arbitrator to any
court or other authority.
|
|
(6)
|
All
fees and expenses of the arbitration shall be borne by the parties
equally. However, each party shall bear the expense of its own
counsel, experts, witnesses, and preparation and presentation of
proofs. Notwithstanding the foregoing, the Arbitrator shall be
entitled to tax and assess costs against any party (including the fees of
attorneys and Arbitrator) to the extent that the Arbitrator find that such
party’s claim or any portion thereof was unreasonable, speculative or
primarily for the purpose of delaying the exercise of rights by the
prevailing party.
|
|
(7)
|
The
Arbitrator shall be entitled to join any arbitration proceedings under
this Agreement with any arbitration proceedings under the IP Purchase
Agreement.
|
|
(8)
|
The
provisions of this Section 7.11 shall survive termination of this
Agreement. Any dispute regarding the applicability of this
Section 7.11 to a particular claim or controversy shall be arbitrated as
provided in this Section 7.11.
|
|
|
7.12
|
Accounts
Receivable
|
The
Purchaser agrees to procure that the Corporation shall use commercially
reasonable efforts to collect all accounts receivable of the Corporation within
120 days following the Closing Date.
|
|
7.13
|
Not
Used
|
|
|
7.14
|
Covenants of the
Purchaser
|
Prior to
December 31, 2011, the Purchaser undertakes to the Shareholder that it
will:
(i) not
require or do any act the sole or main purpose or effect of which is to
adversely affect the Printing
Services Business Revenue;
(ii) use
good faith business judgment relating to the continued development, marketing,
servicing and contracting with respect to the Printing Services Business
Revenue;
(iii) provide
the Shareholder with financial reports solely in respect of the Printing
Services Business Revenue for the applicable accounting period within 30 days of
the end of each financial quarter, and within 45 days of the end of the
applicable calendar year; and
(iv) invoice
or charge any affiliates or related business divisions in respect to any use or
purchase by such parties of the printing services of the Corporation on an
arms-length basis.
unless in
the reasonable opinion of the board of directors of the Purchaser, the
continuation of the printing services business unchanged will result in
unreasonable costs or the Corporation no longer having a reasonable prospect of
achieving profitability, or a material adverse change in the market or outlook
of the printing services business having occurred.
In the
event that the Purchaser sells all or substantially all of the Assets or greater
than 50% of the equity interest in the Corporation to a party other than an
affiliate of the Purchaser prior to the Holdback 3 Release Date, then such
action shall result in an acceleration and immediate payment of Holdback 2 and
Holdback 3 to the Shareholder.
ARTICLE 8–
MISCELLANEOUS
|
|
8.01
|
Terminations and
Severance Payments
|
Prior to
the Time of Closing, the Corporation shall (i) have terminated all Terminated
Employees, and (ii) have entered into written agreements providing for the
payment of any and all severance or termination-related payments (including any
outstanding accrued vacation or other similar benefits) to all Terminated
Employees, in full satisfaction of all termination, severance or vacation pay
amounts owing to each of them. Prior to receiving such payment, the
Terminated Employees will sign the Purchaser’s standard release
form. The Shareholder will indemnify and hold the Corporation
and the Purchaser harmless from and against any claims made by the Terminated
Employees in respect of their employment with the Corporation (including the
termination thereof).
|
|
8.02
|
Further
Assurances
|
Each
party hereto will from time to time execute and deliver all such further
documents and instruments and do all acts and things as the other party may,
either before or after the Closing Date, reasonably require to effectively carry
out or better evidence or perfect the full intent and meaning of this
Agreement.
|
|
8.03
|
Public
Announcements
|
After the
Closing, any press release or public statement or announcement with respect to
the transaction contemplated in this Agreement shall be made only with the prior
written consent and approval of the Shareholder provided that no consent shall
be required in relation to any filings or notices required to be filed in
compliance with applicable securities laws.
|
|
8.04
|
Entire Agreement;
Modification
|
This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and cancels and supersedes all prior and
contemporaneous agreements and understandings of the parties with respect
thereto but should be read together with the IP Purchase Agreement to avoid any
conflict. No amendment of this Agreement will be valid or binding
unless set forth in writing and duly executed by each of the
parties.
|
|
8.05
|
Assignment
|
Neither
this Agreement nor any right created hereby or in any agreement entered into in
connection with the transactions contemplated hereby shall be assignable by any
party hereto without the prior written consent of the other parties hereto until
the date on which all payments owing as Share Purchase Price hereunder and the
Purchase Price under the IP Purchase Agreement have been paid or settled in
full. Notwithstanding the foregoing, the Purchaser may assign this
Agreement at any time to any of its affiliates in the context of a
reorganization upon written notice to each of the other parties it being
understood that, in this context only of an assignment pursuant to a
reorganization, the Purchaser shall remain jointly liable with such affiliate
assignee under this Agreement.
|
|
8.06
|
Benefit of the
Agreement
|
This
Agreement shall inure to the benefit of and be binding upon the respective
heirs, legal representatives, successors and permitted assigns of the parties
hereto.
|
|
8.07
|
Specific
Performance
|
Subject
to the other provisions of this Agreement, the parties hereto agree that, if any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage may occur, no
adequate remedy at Law would exist and damages would be difficult to
determine. It is agreed that the parties hereto, subject to the other
provisions of this Agreement, shall be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court having jurisdiction, this being in addition to
any other remedy to which they are entitled at Law or in equity.
|
|
8.08
|
Governing
Law
|
This
Agreement is governed by and will be construed in accordance with the laws of
the State of New York applicable therein without regard to its laws of
conflict. The parties hereto hereby agree to submit to the
jurisdiction of the courts of the State of New York. The parties
further agree that venue will be proper in such courts, and further agree to
waive removal of any action, suit or proceeding to the courts of any other
jurisdiction.
|
|
8.09
|
Notice
|
Any
demand, notice or other communication to be given in connection with this
Agreement will be given in writing and will be given by personal delivery, by
registered mail or by electronic means of communication addressed to the
recipient as follows:
|
To
the Purchaser:
|
Systems
Design, Inc
|
|
|
c/o
Harris Computer Systems
|
||
|
0
Xxxxxxx Xxxxx
|
||
|
Xxxxx
000
|
||
|
Xxxxxx,
Xxxxxxx X0X 0X0
|
|
Attention: Xxxx
Xxxxxx, Chief Executive Officer
|
||
|
Fax:
(000) 000-0000
|
||
|
with a copy to:
|
||
|
Constellation
Software
|
||
|
00
Xxxxxxxx Xxxxxx Xxxx
|
||
|
Xxxxxxx
Xxxxxxx
|
||
|
Xxxxxx
X0X 0X0
|
|
Attention:
Xxxx Xxxxxxxx, Counsel
|
||
|
Fax:
000-000-0000
|
||
|
To
the Shareholder:
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VillageEDOCS,
Inc.
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0000
X. Xxxxxx Xxxxxx, Xxxxx 000
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Xxxxx
Xxx, XX 00000
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Attention:
K. Xxxxx Xxxxxx, CEO
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Fax: (000)
000-0000
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with a copy to:
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Johnson,
Pope, Xxxxx, Xxxxxx & Xxxxx, LLP
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000
Xxxxxxxx Xxxxxx
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Xxxxxxxxxx,
XX 00000
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Attention:
Xxxxxxx X. Xxxxxx, Esq.
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Fax: (000)
000-0000
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or to
such other address, individual or electronic communication number as may be
designated by notice given by either party to the other. Any demand, notice or
other communication given by personal delivery will be conclusively deemed to
have been given on the day of actual delivery thereof and, if given by
registered mail, on the fifth Business Day following the deposit thereof in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
Business Day during which such normal business hours next occur if not given
during such hours on any day. If the party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties with the
postal system that might affect the delivery of mail, any such demand, notice or
other communication may not be mailed but must be given by personal delivery or
by electronic communication.
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8.10
|
Waiver;
Remedies
|
No party
hereto shall by any act (except by written instrument), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any default in or breach of any of the terms and
conditions hereof, unless such waiver shall be executed in writing by the party
making the waiver. No failure to exercise, nor any delay in
exercising, on the part of any party hereto, any right, power or privilege
hereunder shall operate as a waiver thereof, except as otherwise provided
herein. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. No remedy set forth
in this Agreement or otherwise conferred upon or reserved to any party shall be
considered exclusive of any other remedy available to any party, but the same
shall be distinct, separate and cumulative and may be exercised from time to
time as often as occasion may arise or as may be deemed expedient.
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8.11
|
Counterparts
|
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument. Counterparts may be executed either in original or faxed
form.
|
|
8.12
|
Costs and
Expenses
|
The
Purchaser will bear its own 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. The
Shareholder will bear all Transaction Expenses incurred in connection with the
preparation, execution and delivery of this Agreement.
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8.13
|
Short Period
Returns
|
The
Shareholder shall prepare or cause to be prepared all tax returns with respect
to the Corporation for taxable periods ending on or before the Closing Date
(“Short-Period Returns”) and shall provide
the Short-Period Returns to the Purchaser at least fifteen (15) business days
before the due date thereof including any extensions through September 15, 2010
(if the due date will fall after the Closing Date). The Shareholder
shall include on the Short-Period Returns the income of the Corporation for all
applicable periods ending on or before the Closing Date. The
Purchaser may review the Short-Period Returns but shall not change their content
without the Shareholder’s consent, which shall not be unreasonably withheld, and
shall cause each of the Corporation to timely file the Short-Period
Returns. The Purchaser shall not amend any tax returns of the
Corporation for any period prior to the Closing Date without the prior written
permission of the Shareholder, which permission shall not be unreasonably
withheld.
(THIS
SPACE INTENTIONALLY LEFT BLANK)
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date first written above.
|
SYSTEMS
DESIGN, INC.
|
|||
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By:
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/s/ Xxxx Xxxxxxxxx
|
||
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Name: Xxxx Xxxxxxxxx
|
|||
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Title: Director
|
|||
| VILLAGEEDOCS, INC. | |||
|
By:
|
/s/ K. Xxxxx Xxxxxx
|
||
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Name: K. Xxxxx Xxxxxx
|
|||
|
Title: Chief Executive
Officer
|
|||
