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TECHNOLOGY PURCHASE AGREEMENT made as of the 12th day of November, 2002.
B E T W E E N:
XXXXX X. XXXXXX, an individual resident in the City of Xxxxxxxxxx,
Xxxxxxxx xx Xxxxxxx, Xxxxxx,
(hereinafter referred to as the "Vendor")
OF THE FIRST PART;
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XXXXXXXX.XXX, INC., a corporation incorporated under the laws of the
State of Delaware,
(hereinafter referred to as the "Purchaser")
OF THE SECOND PART.
WHEREAS the Vendor has developed various computer software programs and
applications relating to digital telephony services, as more particularly
described in Schedule "A" (the "Computer Programs"), and owns the Computer
Programs including the Intellectual Property Rights related thereto and all
Technical Information (collectively the "Technology");
AND WHEREAS the Purchaser wishes to purchase and the Vendor wishes to sell
the Technology upon the terms and conditions contained herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of
Ten Dollars ($10.00) now paid by each of the parties hereto to the other, the
respective covenants of the parties herein contained, and other good and
valuable consideration, the receipt and sufficiency whereof is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS AND SCHEDULES
1.1 In addition to the other defined words and phrases contained in the
agreement, as used in this agreement, the following words and phrases shall
have the following meanings, respectively;
"Computer Programs" has the meaning attributed thereto in the first recital
of this agreement, including the Source Code and the Object Code;
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"Date of Closing" means November 12, 2002, or such earlier or later date as
may be agreed to in writing by the parties hereto;
"Derivative Works" means works that are based on one or more pre-existing
works, such as a revision, modification, translation, abridgement,
condensation, expansion or any other form in which such pre-existing works
may be recast, transformed or adopted.
"Earn-out Warrants" has the meaning attributed thereto in Section 4.2
hereof;
"Employment Agreement" means the employment agreement to be entered into
between the Purchaser and the Vendor to be dated the date hereof or such
other date as the parties may agree to;
"Encumbrances" means claims, liens, security interests, mortgages, pledges,
charges or encumbrances of any nature or kind whatsoever, howsoever
created;
"Holdback Warrants" has the meaning attributed thereto in Section 4.2
hereof;
"Intellectual Property Rights" means patents, trade marks, service marks,
registered designs, applications for any of the foregoing, copyright,
know-how, trade secrets, confidential information, trade or business names
and any other similar protected right, whether by statute or otherwise, in
any country;
"Object Code" means the machine readable form of the Computer Programs;
"Purchase Price" means the amount payable by the Purchaser to the Vendor
for the Transferred Assets as set forth in Section 3.1 hereof;
"Source Code" means the human readable form of the Computer Programs
(either in electronic or written form);
"Technical Information" means all know-how and related technical knowledge
relating to the Computer Programs including, without limitation:
(a) all trade secrets and other proprietary know-how, confidential
information, public information, non-proprietary know-how and
invention disclosures;
(b) any information of a scientific, technical or business nature
regardless of its form;
(c) all documented research, developmental, demonstration or engineering
work;
(d) all information that can be or is used to define a design or process
or procure, produce, support or operate material and equipment;
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(e) methods of production; and
(f) all other drawings, blueprints, patterns, plans, flow charts,
equipment, parts lists, software and procedures, specifications,
formulas, designs, technical data, descriptions, related instructions,
manuals, records and procedures;
"Technology" has the meaning attributed thereto in the first recital of
this agreement;
"Time of Closing" means 10:00 a.m. (Toronto time) on the Date of Closing,
or if the transaction is not completed at such time, then such other time
on the Date of Closing on which the transaction is completed;
"Transferred Assets" means all of the property and assets described in
Section 2.1 hereof; and
"Warrants" means an aggregate of 2,175,000 non-transferable unregistered
warrants of the Purchaser, each Warrant exercisable to acquire one share of
common stock in the capital of the Purchaser at a price of US$0.065 per
share for a period of 10 years from the Date of Closing, subject to the
terms of Section 4.2 hereof.
ARTICLE 2 - AGREEMENT TO PURCHASE
2.1 Subject to the terms and conditions hereof, the Vendor hereby agrees to
sell, assign, grant and convey to the Purchaser exclusively, for and
throughout the entire world and for all languages, including all "computer
languages", now or hereafter developed, all rights in and to the
Technology, and all versions thereof for any and all computers, devices and
equipment and all other media of every nature, now or hereafter developed,
in or by means of which the Computer Programs or any version thereof may be
capable of being embodied, shown, expressed, communicated or utilized,
including all the exclusive rights of the Vendor under copyright laws to
and to authorize others to:
(i) prepare Derivative Works based on the Computer Programs;
(ii) reproduce the Technology and all such Derivative Works in any and all
forms, including magnetic tapes, hard and floppy discs, and solid
state forms such as ROM chips and printed circuitry;
(iii) distribute the Technology and all such Derivative Works in any and
all forms to the public by any and all means, including the sale or
other transfer of ownership, rental, lease, lending and licensing
thereof, and
(iv) publicly perform and display the Technology and all such Derivative
Works. The grant of right includes the exclusive rights to and to
authorize others to do any and all of the foregoing with respect to
the Technology, all parts thereof, all such Derivative Works and all
parts thereof, to do so separately, in combination with
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any other technologies and in and as part of any collective works, and
to do so in any and all forms, including magnetic tapes, hard and
floppy discs, and solid state forms such as ROM chips and printed
circuitry, and to do so by all means and for all media, including all
computers, peripheral equipment, computer systems, dedicated machines,
equipment and devices, and all print media including books and
magazines, and any motion pictures, radio broadcast, and cable
television, videotex, and all broadcasts, wire or cable data
transmission system and networks.
In the event the Technology, when used in conjunction with a computer for
which designed, produces, demonstrates, or shows any audiovisual work, the
Vendor hereby also grants and conveys to the Purchaser exclusively all of
the Vendor's Intellectual Property Rights in and to such audiovisual work.
If such audiovisual work incorporates any fictional characters, places or
devices, this grant includes all of the Vendor's Intellectual Property
Rights in and to all such characters, places or devices, including all
merchandising and licensing rights thereto for toys, apparel, posters,
greeting cards, and other products of every nature and for media including
motion pictures, televisions, video game devices, books and magazines.
The foregoing property is collectively referred to herein as the
"Transferred Assets".
ARTICLE 3 - PURCHASE PRICE
3.1 The purchase price for the Transferred Assets shall be payable solely in
the form of the Warrants, subject to the provisions of Section 4.2 hereof,
and shall for purposes of this agreement be valued by the parties at
US$42,000.00 (the "Purchase Price"), plus applicable sales taxes payable in
cash, if any.
ARTICLE 4 - PAYMENT OF PURCHASE PRICE, HOLDBACK AND EARN-OUT
4.1 The Purchase Price shall be paid and satisfied by the issuance and delivery
of 1,750,000 of the Warrants at the Time of Closing registered in the name
of the Vendor.
4.2 At the Time of Closing 1,312,500 of the Warrants comprising the Purchase
Price shall be delivered to the Vendor and 437,500 of the Warrants (the
"Holdback Warrants") shall be retained by the Purchaser. The Holdback
Warrants shall be held by the Purchaser for a period of 12 months following
the Date of Closing (or such longer period as a claim for which the
Purchaser has provided notice to the Vendor in accordance with Section 11.3
hereof during the 12 month period may be outstanding ("Pending Claim")) and
cancelled by the Purchaser in the event a claim is successfully made by the
Purchaser against the Vendor for indemnity within such period pursuant to
Article 11 hereof on the basis of one Warrant for every US$0.024 of
indemnity claimed, however, any such cancellation will not otherwise alter
or diminish any rights of the Purchaser under this agreement or at law. Any
Holdback Warrants remaining in escrow at the completion of the 12 month
holdback period (or such longer period as a Pending Claim may be
outstanding) shall be forthwith released by the Purchaser to the Vendor.
The Purchaser shall at the Time of
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Closing issue and retain a further 425,000 Warrants (the "Earn-out
Warrants") registered in the name of the Vendor and shall release that
portion of the Earn-out Warrants, if any, to the Vendor upon the attainment
of the subscriber milestones during the 2003 calendar year, and to the
extent, provided for in Schedule B attached hereto or immediately to the
Vendor in the event that the Vendor's employment with the Purchaser is
terminated by the Purchaser "Without Cause", as such term is defined in the
Employment Agreement, prior to January 1, 2004. Any Earn-out Warrants which
do not qualify for release to the Vendor in accordance with Schedule B
hereto shall be cancelled by the Purchaser. The Vendor acknowledges and
agrees that the Purchaser shall have the sole and absolute discretion as to
the amount and duration of resources (financial, managerial and otherwise),
if any, devoted to the Transferred Assets or any business related thereto
for which subscribers may be solicited.
4.3 For greater certainty the parties hereby declare that the Purchaser is not
assuming and shall not be responsible for any of the liabilities, debts or
obligations of the Vendor, whether present or future, absolute or
contingent and whether or not relating to the Transferred Assets, and the
Vendor shall indemnify and save harmless the Purchaser and any of its
officers, directors and employees from and against all such liabilities,
debts and obligations.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE VENDOR
5.1 The Vendor hereby represents and warrants as follows and hereby
acknowledges and confirms that the Purchaser is relying on such
representations and warranties in connection with the purchase by it of the
Transferred Assets:
(a) The Vendor is legally competent and has all necessary capacity to
execute this agreement, together with all other agreements the
execution of which by the Vendor is herein contemplated, and to take
all actions required under such agreements;
(b) The execution and delivery of this agreement by the Vendor, together
with all other agreements the execution of which by the Vendor is
herein contemplated, and the sale of the Transferred Assets herein
provided constitute valid and binding obligations of the Vendor
enforceable against him in accordance with their respective terms;
(c) The execution and delivery of this agreement by the Vendor and the
observance and performance of the terms and provisions of this
agreement on the part of the Vendor to be observed and performed do
not constitute a violation or breach of any provision or any contract
or other instrument to which the Vendor is a party or by which he or
any of the Transferred Assets are bound, or any order, writ,
injunction or decree applicable to him or any of the Transferred
Assets, or constitute a default (or would with the passage of time or
the giving of notice, or
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both, constitute a default) under any contract, agreement or
instrument to which the Vendor is a party or by which he or any of the
Transferred Assets are bound;
(d) The Vendor has not proposed a compromise or arrangement to his
creditors generally, has not had any petition for a receiving order in
bankruptcy filed against him, has not made a voluntary assignment in
bankruptcy, has not taken any proceeding with respect to a compromise
or arrangement, has not taken any proceeding to have himself declared
bankrupt or wound-up, has not taken any proceeding to have a receiver
appointed of any part of his assets, has not had any encumbrancer take
possession of any of his property and has not had any execution or
distress become enforceable or become levied upon any of his property
or, to the best of the Vendor's knowledge, had any petition for a
receiving order in bankruptcy made against him;
(e) The Vendor is the sole and absolute registered and beneficial owner of
all right, title and interest in and to the Transferred Assets, with
no breaks in chain of title, with good and marketable title, free and
clear of any and all Encumbrances of any kind whatsoever or rights of
others, or of any rights or privileges capable of becoming
Encumbrances, and the Vendor is entitled to sell, transfer and assign
good and marketable title to the Transferred Assets to the Purchaser,
free and clear of any such Encumbrances;
(f) No natural person, corporation, limited liability company, business,
trust, firm, association, partnership, joint venture, entity or other
organization ("Person") other than the Purchaser has any agreement,
option, right or privilege capable of becoming an agreement for the
purchase from the Vendor of any of the Transferred Assets;
(g) Schedule A sets forth a complete and correct list and brief
description of all Intellectual Property Rights that are owned by the
Vendor and pertain to the Transferred Assets. The Intellectual
Property Rights consist solely of items and rights which are: (i)
owned by the Vendor; or (ii) in the public domain. The Vendor has all
rights to make use, reproduce, adopt, create Derivative Works based
on, translate, distribute (directly or indirectly), transmit, display
and perform publicly, license, rent and lease, modify, assign and
sell, the Intellectual Property Rights;
(h) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in the Transferred
Assets, as now conducted by such Vendor, to the best of the Vendors'
knowledge without any investigation having been made, does not
infringe on any patent, copyright, trade secret, trademark, service
xxxx, trade name, firm name, Internet domain name, logo or other
intellectual property or proprietary right of any person in the United
States of America or Canada, nor are there any valid grounds for any
bona fide claim of any kind;
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(i) No claims (i) challenging the validity, effectiveness or ownership by
the Vendor of any of the Transferred Assets, or (ii) to the effect
that the use, distribution, licensing, sublicensing, sale or any other
exercise of rights in any of the Transferred Assets as now conducted
by the Vendor infringes or will infringe on any intellectual property
or other proprietary right of any person have been asserted in writing
or, to the knowledge of the Vendor, are threatened by any person, nor
are there, to the knowledge of the Vendor without any investigation
having been made, any valid grounds for any bona fide claim of any
such kind;
(j) To the knowledge of the Vendor, there is no unauthorized use,
infringement or misappropriation of any of the Transferred Assets by
any third party;
(k) Other than Kaf Networks LLC, Xxxxxx X. Xxxxxxx, The Giblett Family
Trust, DAT Enterprises Inc., PJMC Family Enterprises Inc., Xxxxxxx
Xxxxx, Xxx Danilini, Xxxxx Xxx Xxxxxx and 1002390 Ontario Inc. (the
"Releases"), who have provided written releases in favour of the
Purchaser, no Person other than the Vendor has contributed to or
participated in the conception and development of the Computer
Programs. The Releases are binding and enforceable in accordance with
their terms;
(l) The execution and delivery of this agreement, and the performance of
each Vendor's obligations thereunder, will not cause the termination
or forfeiture, or diminution, of any of the Intellectual Property
Rights;
(m) The source code and system documentation relating to the Computer
Programs (i) have at all times been maintained in strict confidence,
(ii) except to representatives of the Purchaser, have been disclosed
by a Vendor only to employees or representatives who have a "need to
know" the contents thereof in connection with the performance of their
duties to such Vendor and who have executed nondisclosure agreements,
(iii) have not been disclosed to any third party without executed
nondisclosure agreements, copies of which have been provided to the
Purchaser, and (iv) have not been placed in escrow under any
arrangement whereby the occurrence or failure to occur of any event
would entitle any third party to use or access such source code or
system documentation;
(n) The Computer Programs do not contain any "backdoor" or concealed
access or any "software locks" or similar undocumented devices which,
upon the occurrence of a certain event, the passage of a certain
amount of time or the taking of any action (or the failure to take any
such action) by or on behalf of the Vendor or any third party, will
cause the software, or information in the software to be destroyed,
erased, damaged or otherwise rendered inoperable or inaccessible;
(o) The Vendor is a resident of the Province of Ontario, Canada and has
such knowledge and experience in financial and business matters and,
in particular, concerning investments, or has obtained such advice, as
is necessary to enable him to evaluate the merits and risks of making
an investment in the Purchaser's
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securities in the manner as provided in this agreement. The Vendor has
no immediate need for liquidity in the Purchaser's securities and is
able to bear the risk of making an investment in the Purchaser's
securities for an indefinite period. The Purchaser's securities which
the Vendor will receive pursuant to this agreement are being acquired
by the Vendor for investment purposes only, for his own account and
not with a present view to the offer, sale or distribution thereof in
violation of applicable securities laws;
(p) The Purchaser has afforded, or otherwise caused to afford, to the
Vendor and his professional advisors full and complete access to all
information with respect to the Purchaser and its business,
operations, financial condition and management which the Vendor has
deemed necessary and material for an evaluation of the merits and
risks of the Vendor acquiring and making an investment in Purchaser's
securities hereunder. The Vendor and his respective advisors have had
adequate opportunity to ask questions of, and receive answers from,
persons acting on behalf of the Purchaser regarding the terms and
conditions of the issuance of the Purchaser's securities hereunder and
to obtain any additional information which the Purchaser possesses or
can acquire without unreasonable effort or expense that is necessary
to verify the accuracy of the information furnished to the Vendor and
his professional advisors. All such questions have been answered to
the full satisfaction of the Vendor and his professional advisors;
(q) In evaluating the merits and risks of making an investment in the
Purchaser's securities hereunder, the Vendor has relied on the advice
of his own legal, financial and accounting advisors. The Vendor
understands that there are substantial risks pertaining to the making
of an investment in the Purchaser's securities hereunder. The Vendor
is fully able to bear the economic risk of an investment in the
Purchaser's securities for an indefinite period of time and can afford
a complete loss of such investment;
(r) The Vendor understands and acknowledges that the Warrants and shares
of common stock issuable upon the exercise of the Warrants have not
been registered for offer or sale under the United States Securities
Act of 1933, as amended (the "Securities Act") or registered or
qualified under any state, provincial or other securities act, and are
being sold on the basis of exemptions from registration under the
federal and applicable state, provincial or other securities laws.
Reliance on such exemption is based in part on the accuracy of the
representations, warranties and agreements made by the Vendor herein,
and the Vendor acknowledges and agrees that the Purchaser has relied
on such representations, warranties and agreements. The Vendor further
understands and acknowledges that the Warrants and shares of common
stock issuable upon the exercise of the Warrants may not be sold,
assigned or otherwise transferred unless so registered or qualified or
unless, in the opinion of counsel to the Vendor (which counsel and
which opinion is reasonably acceptable to Purchaser) or to the
Purchaser, an exemption from registration and any such qualification
is available;
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(s) There is no suit, action, litigation, investigation, claim, complaint
or proceeding, including appeals, in progress, pending or, to the best
of the knowledge, information and belief (after due enquiry) of the
Vendor, threatened, relating to the Transferred Assets before any
court, domestic or foreign, or arbitration panel which, if determined
adversely to the Vendor, might materially adversely affect the
Transferred Assets and there is not presently outstanding against the
Vendor any judgment, covenant not to xxx, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator pertaining to the Transferred Assets.
The Vendor is not aware (after due enquiry) of any claim of adverse
ownership, invalidity or other opposition to or conflict with any of
the Transferred Assets nor of any pending or threatened suit,
proceeding, claim, demand, action or investigation of any nature or
kind against the Vendor relating to the Transferred Assets;
(t) No governmental or regulatory authorization, approval, order, consent
or filing is required on the part of the Vendor, in connection with
the execution, delivery and performance of this agreement or any other
documents and agreements to be delivered under this agreement or the
performance of the Vendor's obligations under this agreement or any
other documents and agreements to be delivered under this agreement;
(u) The Vendor is not a party to, nor is he bound by or subject to any
contract or commitment, whether oral or written, in connection with
the Transferred Assets nor are the Transferred Assets bound by or
subject to any contract or commitment;
(v) The Vendor is not a non-resident of Canada within the meaning of the
Income Tax Act (Canada);
(w) The Vendor has carried on all negotiations relating to this agreement
and the transactions contemplated in this agreement directly and
without intervention on its behalf of any other party in such manner
as to give rise to any valid claim for a brokerage commission,
finder's fee or other like payment; and
(x) None of the foregoing representations and statements of fact contains
any untrue statement of material fact or omits to state any material
fact necessary to make any such statement or representation not
misleading to a prospective purchaser of the Transferred Assets
seeking full information.
ARTICLE 6 - COVENANTS OF THE VENDOR
6.1 The Vendor hereby covenants that, at the Time of Closing, the Vendor shall:
(a) deliver to the Purchaser all necessary deeds, conveyances, bills of
sale, assurances, transfers, assignments and consents and any other
documents, necessary or reasonably required in the opinion of the
Purchaser, to transfer effectively to the Purchaser good and
marketable title to the Transferred Assets free and clear of all
Encumbrances;
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(b) execute and deliver all such other instruments and agreements, the
execution and delivery of which is contemplated by the terms of this
agreement; and
(c) use its reasonable best efforts to cause each of the conditions of
closing specified in Article 9 to be satisfied at or prior to the Time
of Closing.
6.2 The Vendor hereby covenants that prior to, on or subsequent to the Date of
Closing, as the case may be, the Vendor will:
(a) at the request of the Purchaser, execute and deliver such additional
conveyances, transfers and other assurances as may, in the opinion of
the Purchaser, acting reasonably, be required to carry out the intent
of this agreement and to transfer the Transferred Assets to the
Purchaser;
(b) have paid or caused to be paid when due all amounts owing by the
Vendor to any creditors claiming an interest in the Transferred Assets
and shall indemnify and hold the Purchaser harmless with respect to
any interest held by any party;
(c) enter into an Employment Agreement with the Purchaser on terms and
conditions satisfactory to the Purchaser;
(d) enter into a non-competition agreement with the Purchaser on terms and
conditions satisfactory to the Purchaser; and
(e) use his reasonable best efforts to obtain releases of all rights in
the Technology from all parties reasonably requested by the Purchaser,
in form and substance satisfactory to the Purchaser. Nothing herein
shall be deemed to modify the Vendor's representations and warranties
in Section 5.1(e) as to title to the Technology nor to limit
Purchaser's remedies (or any member of the Purchaser Group, as
hereinafter defined) in the event of any breach of such
representations and warranties.
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
7.1 The Purchaser hereby represents and warrants as follows and hereby
acknowledges and confirms that the Vendor is relying on such
representations and warranties in connection with the transactions provided
for in this agreement:
(a) The Purchaser is a corporation incorporated and validly existing under
the laws of the State of Delaware. The Purchaser files reports
pursuant to the Securities Exchange Act of 1934 and certain of its
eligible shares of common stock trade on the OTC electronic bulletin
board under the stock symbol "TGLO";
(b) The execution and delivery of this agreement, together with all other
agreements the execution of which by the Purchaser is herein
contemplated, have been duly authorized by all necessary action and
the Purchaser has all requisite power and authority to enter into all
such agreements and to perform and discharge its obligations
thereunder in accordance with their respective terms and such
agreements constitute valid and binding obligations of the Purchaser
enforceable
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against it in accordance with their respective terms; and
(c) The Purchaser has an authorized capital of 103,000,000 shares divided
into 100,000,000 shares of common stock and 3,000,000 shares of
preferred stock, and as of November 8, 2002, 31,081,574 shares of
common stock and no shares of preferred stock were issued and
outstanding. All regulatory approvals and consents required to issue
the Warrants and to complete the obligations of the Purchaser
hereunder have been obtained or will be obtained prior to the issuance
thereof. On completion of the transactions contemplated hereby and in
accordance with this agreement, the Warrants will be validly created
and issued to the Vendor and except as provided herein, upon the
exercise of the Warrants in accordance with their terms and payment of
the exercise therefor, the shares of common stock of the Vendor
issuable upon such exercise shall be validly issued as fully paid and
non-assessable shares, free and clear of all charges, liens, pledges
or other encumbrances and rights of others.
(d) The Purchaser has neither assets in Canada, nor gross revenues from
sales in, from or into Canada, exceeding C$400,000,000.
ARTICLE 8 - COVENANTS OF THE PURCHASER
8.1 The Purchaser hereby covenants that the Purchaser shall:
(a) at the Time of Closing deliver to the Vendor evidence satisfactory to
the Vendor, acting reasonably, that all necessary authorizations
authorizing and approving the transactions contemplated herein have
been obtained;
(b) at the Time of Closing pay the Purchase Price for the Transferred
Assets in accordance with Article 4;
(c) enter into the Employment Agreement with the Vendor on terms and
conditions satisfactory to the Purchaser and the Vendor; and
(d) at the request of the Vendor, execute and deliver such additional
documents and do and perform and cause to be done and performed such
further and other acts and things as may, in the opinion of the
Vendor, acting reasonably, be required to carry out the intent of this
agreement and the issuance of the Warrants to the Vendor.
ARTICLE 9 - CONDITIONS
9.1 The respective obligations of each party to complete the transactions
contemplated by this agreement are subject to the following conditions
which are to be performed or complied with at or prior to the Time of
Closing:
(a) neither of the Purchaser nor the Vendor shall be subject to any
statute, rule or regulation of any government or governmental or other
regulatory body in Canada or the United States or to any order, decree
or injunction of a court of competent jurisdiction in Canada or the
United States which (i) makes illegal, enjoins or
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prevents the purchase and sale of the Transferred Assets or any of the
other transactions contemplated by this agreement, or (ii) materially
limits or restricts, or which may materially limit or restrict, the
use or exploitation of the Technology by the Purchaser following the
Time of Closing;
(b) there shall not have been commenced or threatened any action or
proceeding by any government or governmental or other regulatory body
in Canada or the United States which (i) seeks to make illegal, enjoin
or prevent the consummation of the transactions contemplated by this
agreement, or (ii) materially limits or restricts, or which may
materially limit or restrict, the use or exploitation of the
Technology by the Purchaser following the Time of Closing; and
(c) the parties shall have entered into the Employment Agreement for the
services of the Vendor on satisfactory terms and conditions.
Each of the Purchaser and the Vendor may, without limiting any of its other
rights, at its sole option waive compliance with any of the foregoing
conditions in whole or in part on such terms as may be agreed upon in the
event of non-performance of any other condition in whole or in
part.
9.2 The obligations of the Purchaser to complete the transactions contemplated
by this agreement are subject to the following conditions which are for the
exclusive benefit of
the Purchaser to be performed or complied with at or prior to the Time of
Closing (unless otherwise specified):
(a) the representations and warranties of the Vendor set forth in Article
6 shall be true and correct at the Time of Closing with the same force
and effect as if made at such time, other than the breaches of such
representations and warranties that, alone or in the aggregate, do not
and will not have a material adverse effect on the Purchaser, any
permitted assignee, the Vendor, or the Transferred Assets and will not
have a material adverse effect on the consummation of the transactions
contemplated by this agreement;
(b) there shall have occurred no breach of the terms, covenants and
conditions of this agreement to be performed or complied with by the
Vendor at or prior to the Time of Closing that, alone or in the
aggregate have had or are likely to have a material adverse effect on
the Purchaser or could in the good faith judgment of the Purchaser
have a material adverse effect on the Purchaser, any permitted
assignee, the Vendor, or the Transferred Assets;
(c) there shall have been compliance with the covenants and obligations on
the part of the Vendor contained herein which are to be complied with
at or prior to the Time of Closing, each and every one of which are
hereby deemed to be a condition of the closing of the transactions
contemplated herein;
(d) all instruments of conveyance and other documentation relating to the
sale and purchase of the Transferred Assets including, without
limitation, proceedings
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taken on or prior to the Time of Closing in connection with the
performance by the Vendor of its obligations under this agreement
shall be satisfactory to the Purchaser and the Purchaser shall have
received copies of all such documentation or other evidence as it may
reasonably request in order to establish the consummation of the
transactions contemplated by this agreement and the taking of all
proceedings in connection with such transactions in compliance with
these conditions, in form (as to certification and otherwise) and
substance satisfactory to the Purchaser;
(e) the Vendor shall have entered into a non-competition agreement with
the Purchaser on terms and conditions satisfactory to the Purchaser;
(f) the Vendor shall have obtained releases of all rights in the
Technology from all parties reasonably requested by the Purchaser, in
form and substance satisfactory to the Purchaser; and
(g) all consents, waivers and acknowledgements of third parties which are
necessary or, in the opinion of the Purchaser, acting reasonably,
desirable in connection with the purchase of the Transferred Assets
and completion of the other transactions contemplated by this
agreement shall have been obtained on terms and in form and substance
satisfactory to the Purchaser.
The Purchaser may, without limiting any other right that the Purchaser may
have, at its sole option waive compliance with any such term, covenant or
condition to be performed or complied with for the benefit of the Purchaser
in whole or in part on such terms as may be agreed upon in the event of
non-performance of any other term, covenant or condition in whole or in
part.
9.3 The obligations of the Vendor to complete the transactions contemplated by
this agreement are subject to the following conditions which are for the
exclusive benefit of the Vendor to be performed or complied with at or
prior to the Time of Closing (unless otherwise specified):
(a) the representations and warranties of the Purchaser set forth in
Article 7 shall be true and correct at the Time of Closing with the
same force and effect as if made at such time, other than the breaches
of such representations and warranties that, alone or in the
aggregate, do not and will not have a material adverse effect on the
Vendor and will not have a material adverse effect on the consummation
of the transactions contemplated by this agreement;
(b) there shall have been compliance with the covenants and obligations on
the part of the Purchaser contained herein which are to be complied
with at or prior to the Time of Closing, each and every one of which
is hereby deemed to be a condition of the closing of the transactions
contemplated herein; and
(c) the Purchaser shall have paid the Purchase Price for the Transferred
Assets in accordance with Article 4.
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The Vendor may, without limiting any other right that the Vendor may have,
at its sole option waive compliance with any such term, covenant or
condition to be performed or complied with for the benefit of the Vendor in
whole or in part on such terms as may be agreed upon in the event of
non-performance of any other term, covenant or condition in whole or in
part.
ARTICLE 10 - NON-WAIVER; SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 No investigations made by or on behalf of the Purchaser at any time shall
have the effect of waiving, diminishing the scope or otherwise affecting
any representation or warranty made by the Vendor in or pursuant to this
agreement. No waiver by any of the parties of any condition, in whole or in
part, shall operate as a waiver of any other condition.
10.2 The representations, warranties, covenants and indemnities contained in
this agreement, in any schedule hereto, in any documents to be executed and
delivered pursuant to this agreement and in any documents executed and
delivered in connection with the completion of the transactions
contemplated herein, and notwithstanding such closing and notwithstanding
any investigations made by or on behalf of the parties hereto, shall
continue in full force and effect with respect to the representations and
warranties contained herein for a period of three years from the Time of
Closing.
ARTICLE 11 - INDEMNITY AND SET-OFF
11.1 The Vendor covenants and agrees to indemnify and save harmless the
Purchaser and each of its officers, directors, agents, affiliates and
assignees (including, without limitation, any assignee pursuant to Section
14.11 hereof) (collectively, the "Purchaser Group")from and against any
loss, liability, cost, expense or damage, including, without limiting the
generality of the foregoing, all costs and expenses (including legal fees
incurred in connection with any such loss or damage and in connection with
any claim under this Article) suffered, incurred or paid by any member of
the Purchaser Group as a result of any breach of or non-compliance with, or
untruth of any of the warranties, representations or covenants of the
Vendor contained in this agreement, in any schedule hereto, in any
documents to be executed and delivered pursuant to this agreement or in any
documents executed and delivered in connection with the completion of the
transactions contemplated herein.
11.2 The Purchaser covenants and agrees to indemnify and save harmless the
Vendor from and against any loss, liability, cost, expense or damage,
including, without limiting the generality of the foregoing, all costs and
expenses (including legal fees incurred in connection with any such loss or
damage and in connection with any claim under this Article) suffered,
incurred or paid by the Vendor as a result of any breach of or
non-compliance with, or untruth of any of the warranties, representations
or covenants of the Purchaser contained in this agreement, in any schedule
hereto, or in any documents executed and delivered pursuant to this
agreement or in any documents executed and delivered in connection with the
completion of the transactions contemplated herein.
11.3 The Purchaser (or any member of the Purchaser Group) or the Vendor, as the
case may be, shall give notice to the party (the "Indemnifier") liable to
it pursuant to Section 11.1
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or 11.2, as the case may be, as soon as reasonably practicable (provided
that failure to so timely notify shall not relieve the Indemnifier of its
obligations hereunder, except and only to the extent that such Indemnifier
is prejudiced by the delay) of any claims asserted by third parties for
which the Indemnifier may be liable pursuant to this Article and shall
provide reasonable particulars thereof and the Indemnifier shall have the
right, at its sole expense, to participate in any negotiations with respect
thereto and to dispute and contest any such claims provided that it
notifies the party giving such notice within ten (10) days of receiving
such notice and furnishes to the party giving notice such security or other
assurances as such party may reasonably request in connection therewith and
provided further that such dispute is prosecuted or negotiations are
conducted by the Indemnifier in good faith and with due diligence. The
party giving notice will fully cooperate with the Indemnifier and its
solicitors in any proceedings with respect to any such claims. Provided
further that in the event that the party giving notice shall be unable to
obtain timely advice from the Indemnifier with respect to any such matter,
the party giving notice shall be entitled to deal with same in such manner
as it, in the reasonable exercise of its judgement, deems appropriate.
11.4 The Purchaser shall have the right to satisfy any amount from time to time
owing by it (or any member of the Purchaser Group) to the Vendor under this
agreement or any other agreement to be executed and delivered in connection
with the completion of the transactions contemplated herein (including,
without limitation, the Employment Agreement) by way of set-off against any
amount from time to time owing by the Vendor to the Purchaser, including,
without limitation, any amount owing to the Purchaser pursuant to the
Vendor's indemnification pursuant to Section 11.1 hereof.
11.5 The rights and benefits provided in this Article are supplemental to any
other rights, actions or causes of action which may arise pursuant to any
other section of this agreement or at law or in equity.
ARTICLE 12- CONFIDENTIAL INFORMATION
12.1 The parties shall keep confidential all confidential Technology and any
other confidential information (unless readily available from public or
published information or sources or required to be disclosed by law)
obtained from or with respect to the Transferred Assets. If this agreement
is terminated without completion of the transactions contemplated then, the
Purchaser shall, promptly after such termination, return all documents,
work papers and other written material obtained from the Vendor in
connection with this agreement and not previously made public (including
all copies of such material).
12.2 The Vendor acknowledges that confidential Technical Information shall be
sold to Purchaser and that such information shall be confidential
information and a trade secret of the Purchaser. The Vendor agrees to use
his best efforts to maintain the confidentiality of any such information
that remains within his knowledge as of the Time of Closing and shall not,
other that in connection with his employment with the Purchaser, for any
reason without the prior written consent of the Purchaser, directly or
indirectly provide any other person with access to the confidential
information or make use of the confidential information for the benefit of
any person or assist others in doing so. Without limiting
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the generality of the foregoing, providing access includes disclosure,
sale, copying, dissemination, publishing, broadcasting or reproduction by
any means whatsoever.
ARTICLE 13- PIGGYBACK REGISTRATION RIGHTS
13.1 If (but without any obligation to do so) at any time, or from time to time,
the Purchaser shall determine to register any of its securities under the
Securities Act for its own account or the account of any of its
shareholders, other than a registration relating solely to employee benefit
plans (or any other registration on Form S-8 or any successor form), or a
registration relating solely to a United States Securities and Exchange
Commission Rule 145 transaction, a transaction relating solely to the sale
of debt or convertible debt instruments or a registration on any form which
does not include substantially the same information as would be required to
be included in a registration statement covering the sale to the public of
securities of the Purchaser, the Purchaser will:
(a) promptly give to the Vendor written notice thereof at least 30
calendar days prior to filing the registration statement; and
(b) include in such registration and in any underwriting involved therein,
all of the shares of common stock of the Purchaser issuable upon the
exercise of the Warrants (the "Vendor's Shares") that are not then
subject to escrow restrictions pursuant to this agreement specified in
a written request or requests, made within twenty (20) days after
receipt of such written notice from the Purchaser by the Vendor (such
shares, the "Piggyback Registration Shares"), subject to a maximum
number of shares that is not greater than the pro-rata number of
shares being registered for the account of any other shareholder of
the Purchaser and except as set forth in Section 13.2 below.
13.2 If the registration is for a registered public offering involving an
underwriting, the Purchaser shall so advise the Vendor as a part of the
written notice given pursuant to section 13.1(a) above. In such event, the
right of the Vendor to registration pursuant to Section 13.1 shall be
conditioned upon the Vendor's participation in such underwriting and the
inclusion of the Vendor's Piggyback Registration Shares in the underwriting
to the extent provided herein. If the Vendor proposes to distribute the
Piggyback Registration Shares through such underwriting he shall (together
with the Purchaser and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Purchaser. If the Vendor disapproves of the terms of
any such underwriting, the Vendor may elect to withdraw therefrom by
written notice to the Purchaser and the managing underwriter.
Notwithstanding the foregoing, should the managing underwriter determine in
their sole judgment that all of the Piggyback Registration Shares will not
be included in the proposed public offering, then the Vendor shall be
permitted to register such shares, if any, that the managing underwriter
may determine and agree to such other terms such as a lock up which would
not exceed ninety (90) days, as the managing underwriter may determine. Any
Piggyback Registration
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Shares excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
13.3 The Vendor shall be entitled to participate in up to two (2) registrations
pursuant to this Article 13 until all of the Vendor's Shares are eligible
to be resold pursuant to Rule 144 under the Securities Act, at which time
the Vendor's registration rights shall cease.
13.4 Upon any registration becoming effective pursuant to this Article 13, the
Purchaser shall keep such registration statement current and effective
until the earlier of: (i) the Piggyback Registration Shares registered for
sale thereunder have been sold or may otherwise be freely traded by
operation of law; and (ii) for a period of one hundred and twenty (120)
days.
13.5 The Purchaser shall be responsible for the preparation of any registration
statement, agreements or documents and related papers and filings in
connection with Article 13 hereof and except to the extent otherwise
required by law, shall pay all expenses relating to such registration,
provided however that the Vendor hereby agrees to be liable for and pay
directly its own legal fees and disbursements, if any, and any underwriting
discounts and commissions applicable to any sale of Piggyback Registration
Shares by the Vendor which shall be disclosed in advance.
13.6 In connection with any offering of Piggyback Registration Shares registered
pursuant to this agreement, the Purchaser (i) shall furnish to the Vendor
such number of copies of any registration statement and prospectus or
registration statement supplement or amendment as it may reasonably request
in order to effect the offering and sale of Piggyback Registration Shares
to be offered and sold, but only while the Purchaser shall be required
under the provisions of this agreement to cause such registration statement
to remain current, and (ii) take such action as shall be necessary to
qualify the Piggyback Registration Shares covered by such registration
under such blue sky or other U.S. state laws for offer and sale as the
Vendor shall reasonably request; provided, however, that the Purchaser
shall not be obligated to qualify as a foreign corporation to do business
under the laws of any jurisdiction in which it shall not then be qualified
or to file any general consent to service of process. If requested in
connection with an offering in accordance with Section 13.2, the Vendor
shall enter into an underwriting agreement with a nationally recognized
investment banking firm or firms containing representations, warranties,
indemnities and agreements then customarily included by an issuer in
underwriting agreements with respect to secondary distributions. In
connection with any offering of Piggyback Registration Shares registered
pursuant to this agreement, the Purchaser shall, subject to applicable law,
(i) furnish the Vendor, at the Purchaser's expense, upon a valid exercise
of the corresponding Warrants and sale of the underlying shares of common
stock, with unlegended certificates representing ownership of the Piggyback
Registration Shares actually sold in such denominations as the Vendor shall
request and (ii) instruct the transfer agent and registrar of the Piggyback
Registration Shares to release any stop transfer orders with respect to the
Piggyback Registration Shares actually sold.
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13.7 In the event of any qualification of Piggyback Registration Shares pursuant
to this Article 13, the Purchaser shall hold harmless and indemnify the
Vendor from and against any losses, claims, damages or liabilities to which
he may be subject under any applicable laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Piggyback Registration Shares were distributed, or any
document incidental to the qualification or sale of such Piggyback
Registration Shares, or which arise out of or are based upon the omission
or alleged omission to state therein any material fact required to be
stated therein or necessary to make the statement not misleading, or any
violation by the Purchaser of any applicable securities laws relating to
action or inaction required by the Purchaser in connection with such
qualification or sale under such securities laws; provided, however, that
the Purchaser will not be liable in any case to any extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in any such registration statement or document in reliance upon and in
conformity with information furnished to the Purchaser by the Vendor
specifically for use in the preparation thereof.
13.8 In the event of any qualification of Piggyback Registration Shares pursuant
to this Article 13, the Vendor agrees, in the same manner and to the same
extent as set forth in Section 13.7 hereof, to indemnify and hold harmless
the Purchaser and any of its officers, directors and employees from and
against any losses, claims, damages or liabilities to which any of them may
be subject under any applicable securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Piggyback Registration Shares were distributed, or any
document incidental to the qualification or sale of such Piggyback
Registration Shares, or which arise out of or are based upon the omission
or alleged omission to state therein any material fact required to be
stated therein or necessary to make the statement not misleading, if such
statement or omission shall have been made in reliance upon and in
conformity with information furnished to the Purchaser by the Vendor
specifically for use in such registration statement, or (b) any violation
by the Vendor of any applicable securities laws.
13.9 Each of the parties entitled to indemnification pursuant to Section 13.7 or
13.8 hereof (collectively, the "Piggyback Indemnified Parties") shall,
promptly after receipt of notice of the commencement of any action against
such Piggyback Indemnified Party in respect of which indemnity may be
sought pursuant to Section 13.7 or 13.8 hereof, notify the indemnifying
party in writing of the commencement thereof. The omission of any Piggyback
Indemnified Party so to notify an indemnifying party of any such action
shall not relieve the indemnifying party from any liability in respect of
such action which it may have to such Piggyback Indemnified Party on
account of the indemnity pursuant to Section 13.7 or 13.8 hereof, as the
case may be, unless the indemnifying party was prejudiced by such omission,
and in no event shall relieve the indemnifying party from
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any other liability which it may have to such Piggyback Indemnifying Party.
In case any such action shall be brought against a Piggyback Indemnified
Party and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such Piggyback Indemnified Party, and after notice from the
indemnifying party to such Piggyback Indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable
to such Piggyback Indemnified Party under Section 13.7 or 13.8 hereof for
any legal or other expenses subsequently incurred by such Piggyback
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation. No admission of liability shall be made
by the Piggyback Indemnified Party without the consent of the indemnifying
party, such consent not to be unreasonably withheld. If, after having been
notified by the Piggyback Indemnifying Party of the commencement of any
action against such Piggyback Indemnifying Party in respect of which
indemnity may be sought, the indemnifying party fails to assume the defense
of such suit on behalf of the Piggyback Indemnified Party within 10 days of
receiving notice thereof, the Piggyback Indemnified Party shall have the
right to employ counsel in respect of the defense of such suit and the fees
and expenses of such counsel shall be at the expense of the indemnifying
party.
ARTICLE 14- GENERAL CONTRACT PROVISIONS
14.1 The closing of the transactions contemplated herein shall take place at the
Time of Closing, on the Date of Closing, at such place as may be agreed to
by the parties hereto.
14.2 Any tender of documents or money hereunder may be made upon the parties
themselves or upon their respective solicitors.
14.3 All notices, requests, demands or other communications by the parties
hereof required or permitted to be given by one party to another shall be
given in writing by personal delivery, by telecopier or by registered mail,
postage paid, addressed to such other party or delivered to such other
party as follows:
(a) to the Vendor at:
000 XX 000 Xxxx
Xxxxxxx, Xxxxxxx
00000
(b) to the Purchaser at:
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
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Attention: Xxxxxx X. Xxxxxxxx
or at such other address as may be given by either of them to the other in
writing from time to time and such notices, requests, demands or other
communications shall be deemed to have received when delivered, or if
telecopied, on the business day following the date of telecopying thereof,
or if mailed, five (5) business days following the date of mailing thereof;
provided that if any such notice, request, demand or other communication
shall have been mailed and if regular mail service shall be interrupted by
strikes or other irregularities, such notices, requests, demands or other
communications shall be deemed to have been received five (5) business days
after the day following the resumption of normal mail service.
14.4 The parties hereby covenant and agree to sign such other papers, do and
perform and cause to be done and performed such further and other acts and
things as may be necessary or desirable in order to give full effect to
this agreement and every part thereof.
14.5 This agreement shall be governed by the laws of the State of Delaware
(without regard to conflict of laws principles) and the laws of United
States applicable therein. Notwithstanding the foregoing, Ontario law and
the laws of Canada applicable therein shall apply to all conveyance and
transfer of title matters and the Vendor's obligations in connection
therewith shall be governed by Ontario law.
14.6 Except as otherwise stated herein, dollar amounts referred to in this
agreement shall be in United States funds.
14.7 All words and personal pronouns relating thereto shall be read and
construed as the number and gender of the party or parties referred to in
each case require and the verb shall be construed as agreeing with the
required word and/or pronoun.
14.8 The divisions of this agreement into articles, sections, subsections and
schedules are for convenience of reference only and shall not affect the
interpretation or construction of this agreement.
14.9 Time shall be of the essence of this agreement and of every part hereof and
not extension or variation of this agreement shall operate as a waiver of
this provision.
14.10 This agreement constitutes the entire agreement between the parties hereto
with respect to all matters herein. This agreement supersedes any and all
agreements, understandings and representations made between the parties
prior to the date hereof, and this agreement shall not be amended except by
a memorandum in writing signed by all of the parties hereto, and any
amendment hereof shall be null and void and shall not be binding upon any
party which has not given its consent as aforesaid.
14.11 The Purchaser shall be entitled, upon giving notice to the Vendor at any
time prior to the Time of Closing, to assign this agreement to any
affiliate of the Purchaser in which case
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such assignee shall have and may exercise all the rights, and shall assume
all of the obligations, of the Purchaser under this agreement, other than
the obligation to issue the Warrants and the Employment Agreement which
shall remain obligations of the Purchaser, and any reference to the
Purchaser in this agreement shall in such case be deemed to refer to such
assignee (and the assignee shall also be entitled to all of the benefits
under this agreement, including, without limitation, reliance on the
Vendor's representations and warranties and the indemnification provisions
of Article 11), provided that in any such case the Vendor and such assignee
shall execute an agreement confirming such assignment and such assumption
of obligations and provided further that no such assignment shall release
the Purchaser from liability for its obligations as purchaser of the
Transferred Assets under this agreement. Except as hereinbefore provided,
neither this agreement nor any rights or obligations under this agreement
shall be assignable by any party without the prior written consent of each
of the other parties. Subject thereto, this agreement shall enure to the
benefit of and be binding upon the parties and their respective successors
(including any successor by reason of amalgamation of any party) and
permitted assigns.
14.12 In the event that any of the warranties, representations or covenants or
any portion of them contained in this agreement are unenforceable or are
declared invalid for any reason whatsoever, such unenforceability or
invalidity shall not affect the enforceability or validity of the remaining
terms or portions thereof of this agreement, and such unenforceable or
invalid warranty, representations or covenant or portion thereof shall be
servable from the remainder of this agreement.
14.13 This agreement may be executed in counterparts and the parties acknowledge
and agree that facsimile transmission ("fax") of executed documents shall
be accepted as original executed copies of such documents. For the purpose
of this agreement and any notices required hereunder, an original signature
transmitted by fax shall be as effective as the original signature itself.
14.14 All costs and expenses (including, without limitation, the fees and
disbursement of legal counsel) incurred in connection with this agreement
and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
IN WITNESS WHEREOF the parties hereto have duly executed this agreement as
of the date set forth at the top of the first page hereof.
SIGNED, SEALED AND DELIVERED )
In the Presence of )
)
)
)
) XXXXX X. XXXXXX
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XXXXXXXX.XXX, INC.
By: _____________________________
Authorized Signing Officer
