EXHIBIT 10.1
WAVERIDER COMMUNICATIONS INC.
and
TTI MERGER, INC.
and
TRANSFORMATION TECHNIQUES, INC.
and
XXXXX XXXX
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MERGER AGREEMENT
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Dated as of June 11, 1999
iii
I N D E X
Article 1 - MERGER.............................................................1
SECTION 1.1 DEFINED TERMS................................................1
SECTION 1.2 THE MERGER AND THE SURVIVING CORPORATION.....................1
SECTION 1.3 EFFECTIVE TIME OF MERGER.....................................2
SECTION 1.4 MERGER CONSIDERATION.........................................2
SECTION 1.5 SURRENDER OF SHARE CERTIFICATES..............................3
Article 2 - REPRESENTATIONS AND WARRANTIES.....................................3
SECTION 2.1 BY XXXX AND TTI..............................................3
(a) Corporate Qualification:...........................................3
(b) Law, Charter Documents and Other Agreements:.......................3
(c) Due Authorization:.................................................3
(d) Corporate Records:.................................................4
(e) Capital:...........................................................4
(f) No Options:........................................................4
(g) Ownership:.........................................................4
(h) Financial Statements:..............................................4
(i) Conduct of Business:...............................................4
(j) Environmental Liabilities:.........................................4
(k) Title to Assets:...................................................5
(l) Lands:.............................................................5
(m) Intellectual Property:.............................................5
(n) Licences: Permits: Compliance with Law: Consents and Approvals:....7
(o) Liabilities:.......................................................7
(p) Accrued Warranty Obligations:......................................7
(q) Material Contracts:................................................7
(r) Litigation:........................................................7
(s) Taxes:.............................................................7
(t) Collectibility of Accounts Receivable:.............................8
(u) Inventory:.........................................................8
(v) Employment Contracts:..............................................9
(w) Status:............................................................9
(x) Disability Benefits:...............................................9
(y) Pension Plans:.....................................................9
(z) Key Customers:.....................................................9
(aa) Shareholdings of TTI:..............................................9
(bb) FCC Approvals:....................................................10
(cc) Material Adverse Change:..........................................10
(dd) Full Disclosure:..................................................11
SECTION 2.2 BY THE PARENT AND THE SUBSIDIARY............................11
(a) Corporate Qualification of the Parent:............................11
(b) Law, Charter Documents and Other Agreements of the Parent:........11
(c) Due Authorization of the Parent:..................................11
(d) Litigation of the Parent:.........................................11
(e) Corporate Qualification of the Subsidiary:........................12
(f) Law, Charter Documents and Other Agreements of the Subsidiary:....12
(g) Due Authorization of the Subsidiary:..............................12
(h) Litigation of the Subsidiary:.....................................12
(i) Share Consideration:..............................................12
(j) Electronic Bulletin Board:........................................12
(k) Title to Assets:..................................................13
(l) Material Contracts:...............................................13
(m) No Material Adverse Effect:.......................................13
(n) Absence of Undisclosed Liabilities:...............................13
(o) Compliance with Law:..............................................13
(p) Capitalization:...................................................13
(q) Solvency:.........................................................14
(r) Disclosure Documents:.............................................14
(s) Consents and Approvals:...........................................14
(t) Full Disclosure:..................................................14
SECTION 2.3 SURVIVAL....................................................14
SECTION 2.4 DISCLOSURE IN SCHEDULES.....................................15
Article 3 - COVENANTS.........................................................15
SECTION 3.1 COVENANTS OF TTI AND XXXX...................................15
(a) Access:...........................................................15
(b) Operation of Business:............................................15
SECTION 3.2 COVENANTS OF THE PARENT.....................................16
(a) Release of Xxxx'x Personal Obligations:...........................16
(b) Registration Statement:...........................................16
SECTION 3.3 MUTUAL COVENANTS............................................16
(a) Satisfaction of Conditions; Co-operation:.........................16
(b) Notice with Respect to Conditions of Closing:.....................16
Article 4 - CLOSING CONDITIONS................................................16
SECTION 4.1 CONDITIONS OF THE PARENT AND THE SUBSIDIARY.................16
(a) Warranties and Covenants:.........................................17
(b) Proceedings:......................................................17
(c) Legal Opinion:....................................................17
(d) Consents:.........................................................17
(e) Injunctions:......................................................17
(f) FCC Opinion:......................................................17
(g) Employees:........................................................17
(h) Lock-Up Letter....................................................17
(i) Other Closing Documents:..........................................18
SECTION 4.2 TTI'S AND XXXX'X CONDITIONS.................................18
(a) Warranties and Covenants:.........................................18
(b) Proceedings:......................................................18
(c) Release of Xxxx'x Personal Obligations:...........................18
(d) Legal Opinion:....................................................18
(e) Consents:.........................................................18
(f) Injunctions:......................................................19
(g) Merger Consideration:.............................................19
(h) Other Closing Documents:..........................................19
SECTION 4.3 WAIVER......................................................19
Article 5 - Closing...........................................................19
SECTION 5.1 MERGER DATE.................................................19
Article 6 - INDEMNITY.........................................................19
SECTION 6.1 TTI'S AND XXXX'X INDEMNITY..................................19
SECTION 6.2 THE PARENT'S INDEMNITY......................................21
SECTION 6.3 LIMITATION ON INDEMNITY.....................................22
Article 7 -CONFIDENTIALITY, NON-SOLICITATION AND NON-COMPETITION..............22
SECTION 7.1 CONFIDENTIALITY.............................................22
SECTION 7.2 NON-SOLICITATION............................................23
SECTION 7.3 NON-COMPETITION COVENANT....................................23
SECTION 7.4 ENFORCEMENT.................................................23
Article 8 - Expenses and Taxes................................................23
SECTION 8.1 EXPENSES AND TAXES..........................................23
SECTION 8.2 TAX RETURNS.................................................24
Article 9 - Miscellaneous.....................................................24
SECTION 9.1 ANNOUNCEMENTS...............................................24
SECTION 9.2 FINDERS'FEES................................................24
SECTION 9.3 NOTICES: APPROVALS: ETC.:...................................25
SECTION 9.4 ASSIGNMENT..................................................26
SECTION 9.5 FURTHER ASSURANCES..........................................26
SECTION 9.6 NO WAIVER OF BREACH OR RIGHT................................26
SECTION 9.7 GOVERNING LAW...............................................26
SECTION 9.8 DEFINITIONS.................................................26
SECTION 9.9 DISPUTE RESOLUTION..........................................26
SECTION 9.10 GENERAL.....................................................27
SCHEDULES
1.1 DEFINITIONS
1.1(l) FINANCIAL STATEMENTS
1.2(a) ARTICLES OF MERGER
1.4(b) LOCK-UP AGREEMENT
2.1(b) LAW, CHARTER DOCUMENTS AND OTHER AGREEMENTS
2.1(k) ASSETS
2.1(l) LANDS
2.1(m) INTELLECTUAL PROPERTY
2.1(n) LICENCES, PERMITS; COMPLIANCE WITH LAW
2.1(o) LIABILITIES
2.1(q) MATERIAL CONTRACTS
2.1(r) LITIGATION
2.1(t) COLLECTIBILITY OF ACCOUNTS RECEIVABLE
2.1(v) EMPLOYMENT CONTRACTS
2.1(y) PENSION PLANS
2.1(z) KEY CUSTOMERS
2.1(bb) FCC APPROVALS
3.2(a) XXXX'X PERSONAL OBLIGATIONS
4.1(c) LEGAL OPINION
4.1(g) EMPLOYEES
4.2(d) LEGAL OPINION
MERGER AGREEMENT
THIS MERGER AGREEMENT AND PLAN OF MERGER (the "Agreement") has been made
and entered into as of June 11, 1999, by and among WAVERIDER COMMUNICATIONS
INC., a Nevada corporation (the "Parent"), TTI MERGER, INC., a Nevada
corporation (the "Subsidiary"), TRANSFORMATION TECHNIQUES, INC., an Ohio
corporation ("TTI"), and XXXXX XXXX ("Xxxx"), an individual residing in the City
of Strongsville, in the State of Ohio.
R E C I T A L S:
1. The Parent has organized the Subsidiary as its wholly-owned subsidiary for
the purpose of merging with TTI;
2. TTI and the Subsidiary have agreed that TTI will be merged with and into the
Subsidiary in exchange for cash and shares of the Parent, in the manner and on
the terms and conditions set forth herein (the "Merger");
3. The parties hereto intend for the Merger to qualify as a plan of merger for
federal income tax purposes within the meaning of IRC ss.368(a), and the
regulations promulgated thereunder;
NOW THEREFORE, in consideration of the mutual agreements and covenants
contained herein, the parties hereby agree that TTI shall be merged with and
into the Subsidiary and that the terms and conditions of the Merger and the mode
of carrying the same into effect shall be as follows:
ARTICLE 1 - MERGER
Section 1.1 Defined Terms
Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to such terms in Schedule 1.1.
Section 1.2 The Merger and the Surviving Corporation
(a) At the Effective Time, the articles of merger (the "Articles of
Merger") in the form attached as Schedule 1.2(a) shall be filed
with the Secretaries of State of Ohio and Nevada, and TTI shall
be merged with and into the Subsidiary. The separate existence of
TTI shall cease and the existence of the Subsidiary shall
continue unaffected and unimpaired by the Merger, with all of the
rights, privileges, immunities and powers, and subject to all of
the duties and liabilities of a corporation organized under the
corporation laws of the State of Nevada. The Subsidiary, as the
Surviving Corporation, shall succeed to and assume all the rights
and obligations of TTI. In all other respects, the effect of the
Merger shall be as set forth in Section 92A.250 of the Nevada
Statutes Mergers and Exchange of Interest Section (the "NS"). It
is intended by the parties hereto that the Merger shall
constitute a merger for federal income tax purposes within the
meaning of IRCss.368(a). The parties hereto hereby adopt this
Agreement as a "plan of merger" within the meaning of the United
States Treasury Regulations.
(b) The Articles of Incorporation of the Subsidiary, as in effect
immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, immediately following
the Effective Time, until the same shall be altered or amended.
(c) The by-laws of the Subsidiary, as in effect immediately prior to
the Effective Time, shall be the by-laws of the Surviving
Corporation, immediately following the Effective Time, until the
same shall be altered or amended.
(d) From and after the Effective Time, until successors are duly
elected or appointed in accordance with applicable law, the
directors and officers of the Subsidiary shall be the directors
and officers of the Surviving Corporation.
(e) The name of the Surviving Corporation shall be "WaveRider
Communications (USA) Inc.".
Section 1.3 Effective Time of Merger
(a) Following the approval of the Merger by the director of TTI and
Xxxx, the directors of the Parent and the shareholder and the
directors of the Subsidiary, and upon the fulfilment or waiver of
the conditions specified in Article 4, TTI and the Subsidiary
shall cause the Articles of Merger to be filed with the
Secretaries of State of Nevada and Ohio.
(b) The Merger shall become effective at the Effective Time.
Section 1.4 Merger Consideration
(a) At the Effective Time, the TTI Shares issued and outstanding
immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Xxxx, be converted
into and represent the right to receive, in the aggregate,
$794,985 (such aggregate consideration hereinafter referred to as
the "Merger Consideration").
(b) The Merger Consideration will be payable as follows:
(i) by the payment of $253,985 in cash at the
Effective Time, of which $94,985 will be directed
to be paid to the Surviving Corporation in
satisfaction of all amounts owing by Xxxx to TTI;
(ii) by the delivery of the Note at the Effective Time;
and
(iii) by the delivery of the WaveRider Merger Shares at
the Effective Time, subject to the terms of a
lock-up agreement in letter form attached as
Schedule 1.4(b), and as subject to the adjustments
hereafter described.
(c) In the event of any reclassification of the WaveRider Shares or a
capital reorganization of the Parent or a consolidation,
amalgamation or merger of the Parent with or into any other body
corporate at any time prior to the delivery of the WaveRider
Merger Shares, the Parent shall deliver at the Effective Time in
lieu of the number of WaveRider Shares otherwise deliverable, the
number of shares or securities of the Parent resulting from such
reclassification or capital reorganization or of the body
corporate resulting from such merger, amalgamation or
consolidation that Xxxx would have been entitled to receive upon
such reclassification, capital reorganization, consolidation,
amalgamation or merger, if the delivery of the WaveRider Merger
Shares could have been and had been effected immediately prior to
the date of such reclassification, capital reorganization,
consolidation, amalgamation or merger.
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(d) As consideration for the payment of the Merger Consideration by
the Parent, at the Merger Date, the Surviving Corporation will
issue to the Parent that number of shares of common stock of the
Surviving Corporation that has a monetary value equivalent to the
aggregate value of the consideration provided by the Parent to
Xxxx as part of the Merger Consideration.
Section 1.5 Surrender of Share Certificates
At the Effective Time, the TTI Shares shall be surrendered to the
Subsidiary and the applicable number of shares of common stock of the Surviving
Corporation shall be delivered to the Parent.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
Section 2.1 By Xxxx and TTI
Xxxx and TTI jointly and severally represent and warrant to the
Parent and the Subsidiary as follows, and acknowledge that the Parent and the
Subsidiary are relying upon such representations and warranties in connection
with the transactions contemplated under this Agreement:
(a) Corporate Qualification:
TTI is duly incorporated and validly existing under the laws of
the State of Ohio and is in good standing under the laws of the
State of Ohio and has all necessary corporate power and authority
to carry on the Business and own its property and assets in the
State of Ohio, which is the only jurisdiction where TTI owns or
uses any property or assets or carries on the Business in such a
manner that failure to qualify as a corporation doing business in
such a jurisdiction would have a material adverse effect upon
TTI's Business or Assets, and is not subject to any proceedings,
pending or, to Xxxx'x Knowledge, threatened for liquidation,
dissolution or the benefit of its creditors.
(b) Law, Charter Documents and Other Agreements:
The execution and delivery of this Agreement and performance of
the obligations of TTI and Xxxx under this Agreement or any
agreement herein provided for do not conflict with, contravene,
result in any breach of or constitute a default under:
(i) any law, regulation, judgment, order, writ,
injunction, decree, award or ruling to which Xxxx,
TTI or any of its properties or assets are
subject, except as disclosed on Schedule 2.1(b)
hereto;
(ii) the charter or by-laws of TTI; or
(iii) any provision of any Material Contract or
instrument to which Xxxx or TTI is a party or by
which TTI or its property or assets is bound or
affected, except as disclosed on Schedule 2.1(b)
hereto.
(c) Due Authorization:
TTI has all necessary corporate power and authority to enter into
this Agreement and carry out its obligations hereunder. The
execution and delivery of this Agreement and the
3
consummation of the transactions contemplated under this
Agreement will have been duly authorized by all necessary
corporate action of TTI as of the Merger Date. This Agreement or
any agreement herein provided for are enforceable in accordance
with their respective terms.
(d) Corporate Records:
TTI has delivered to the Parent originals or copies of all of the
charter documents and corporate records of directors' and
shareholders' actions pertaining to TTI that are in its
possession, under its control or of which it has any knowledge
and the charter documents, by-laws and corporate records of
directors and shareholders actions of TTI are accurate and
complete.
(e) Capital:
The authorized capital of TTI consists of 2,000 no par value
shares of common stock, of which 850 such shares are issued and
outstanding and are fully paid and non-assessable.
(f) No Options:
No third party has any right to acquire any of the TTI Shares.
Neither Xxxx nor any third party has any right to acquire any of
the unissued shares of common stock or any other securities of
TTI.
(g) Ownership:
At the Effective Time, Xxxx will be the legal and beneficial
owner of the TTI Shares and will have good and marketable title
to the TTI Shares free and clear of all liens, charges and
encumbrances.
(h) Financial Statements:
The Financial Statements present fairly in all material respects
the financial position of TTI as at the respective dates thereof
and the results of its operations and the changes in its
financial position during the periods covered thereby.
(i) Conduct of Business:
Except as contemplated by this Agreement, since April 30, 1999
the Business has been carried on in the ordinary course and since
April 30, 1999 the Business has in all material respects been
conducted in compliance with all applicable laws, regulations,
by-laws and ordinances relating to TTI and its respective assets
and the conduct of the Business.
(j) Environmental Liabilities:
(i) TTI has operated the Business and, to Xxxx'x
Knowledge, the Prior Owners operated any business
on the Lands, in material compliance with all
Environmental Laws applicable to the Business.
Neither TTI, nor, to Xxxx'x Knowledge, any Prior
Owner, has received any written notice of any
non-compliance with the Environmental Laws. TTI
has never operated any business at any sites other
than on the Lands;
4
(ii) Neither TTI, nor, to Xxxx'x Knowledge, any Prior
Owner, has never used any of the facilities on the
Lands or used the Lands, or permitted them to be
used, to generate, manufacture, refine, treat,
transport, store, handle, dispose, transfer,
produce or process Hazardous Material, except in
material compliance with all Environmental Laws;
(iii) Except for Hazardous Materials used in the
ordinary course of business, there are no
Hazardous Materials located on the Lands which
were placed there by TTI, or, to Xxxx'x Knowledge,
any Prior Owner, the existence of which would have
a material adverse effect on the financial
position of TTI;
(iv) Neither TTI, nor, to Xxxx'x Knowledge, any Prior
Owner, has caused or permitted the Release of
Hazardous Materials in violation of Environmental
Laws such that the Release would have a material
adverse effect on the financial position of TTI.
All wastes and other materials or substances
disposed from or treated or stored on the Lands,
whether hazardous or non-hazardous, have been
disposed, treated and stored by TTI, and, to
Xxxx'x Knowledge, by all Prior Owners, in
substantial compliance with all Environmental Laws
applicable to the Business.
(k) Title to Assets:
Subject to the permitted liens identified on Schedule 2.1(k), TTI
owns and has legal and beneficial title to, or has a legal and
beneficial leasehold interest in, all personal property that
constitute part of the Assets, including, without limitation, all
Intellectual Property and all of the Assets are owned by TTI free
and clear of all encumbrances, adverse claims and interests
whatsoever.
(l) Lands:
All of the Lands are fully and accurately described on Schedule
2.1(l).
(m) Intellectual Property:
Without limiting the generality of any other representation or
warranty contained in this Section 2.1, TTI and Xxxx specifically
represent and warrant as follows:
(i) Schedule 2.1(m) contains a complete and accurate
list of all:
(A) the patents and patent
applications;
(B) trade marks and service marks; and
(C) trade xxxx applications and service
xxxx applications owned, used, made or applied for
by TTI, setting out, in detail, the relevant
dates, reference numbers and jurisdictions of
each;
(ii) TTI has not exclusively licensed any of its
Intellectual Property to any third party;
5
(iii) TTI has not granted any rights of distribution or
licenses for any of its Intellectual Property or
the technology represented thereby that are not
revocable by TTI upon reasonable notice not to
exceed 3 months;
(iv) The Intellectual Property is owned solely by TTI
and is valid and enforceable as TTI's property,
and there exists no infringement or violation of
any law, regulation or ruling relating in any way
to the Intellectual Property;
(v) To Xxxx'x Knowledge and TTI's Knowledge, the use
or licensing of any Intellectual Property will not
infringe the industrial, commercial or
intellectual property rights of any other person;
(vi) Except as disclosed on Schedule 2.1(m), to TTI's
Knowledge and Xxxx'x Knowledge, there are no
existing or threatened legal proceedings, claims,
or allegations (formal or informal) in respect of
TTI's use or ownership of any Intellectual
Property or TTI's ability to license its use, or
that the use of any Intellectual Property
infringes the intellectual property rights of
others or that the use of TTI's trade marks
constitutes Passing Off;
(vii) Schedule 2.1(m) contains a list of each Contract
(and amendments thereto) that comprise or relate
to the Intellectual Property, including, without
limitation, all development agreements, consulting
agreements, maintenance agreements, source code
escrow agreements, license agreements and
distribution agreements relating thereto;
(viii) No claim for release of technology has been made
pursuant to any source code escrow agreement or
other technology escrow agreement by any third
party;
(ix) TTI is not in default of any of its obligations as
licensee under any technology license pursuant to
which it is an exclusive licensee;
(x) TTI is not in default of any of its obligations as
distributor under any technology distribution
agreement;
(xi) All of TTI's proprietary computer related
technology, including but not limited to,
information technology, embedded systems, or any
other electro-mechanical or processor-based
system, produced or sold since February of 1997,
when used in accordance with its associated
documentation, is capable of accurately
processing, providing, and/or receiving date data
from, into, and between the twentieth and
twenty-first centuries, and the years 1999 and
2000, including leap year calculations, provided
that all other technology properly exchanges date
data with it;
(xii) neither the entering into of this Agreement nor
the completion of the transactions contemplated
hereby constitute or will constitute a breach of
any agreement in respect of the Intellectual
Property; and
(xiii) Except as disclosed on Schedule 2.1(m) hereto, no
past or present Employee nor any past or present
affiliate of TTI has any right, title, or interest
in or to any of any Intellectual Property.
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(n) Licences: Permits: Compliance with Law: Consents and Approvals:
Except as disclosed on Schedule 2.1(n) hereto, to TTI's Knowledge
and Xxxx'x Knowledge, all material licences, permits,
authorizations, consents or approvals required for the operation
of the Business have been obtained and are in full force and
effect and TTI is not in default in any material respect or
alleged to be in default in any material respect thereunder. To
TTI's Knowledge and Xxxx'x Knowledge, there is no condition or
event that, after notice or lapse of time or both, would
constitute a default thereunder in any material respect by any
party thereto. Except as listed on Schedule 2.1(n) hereto, no
consent, approval or authorization of any governmental authority
or other party is necessary in order for TTI or Xxxx to perform
their respective obligations hereunder and to consummate the
transactions contemplated hereby.
(o) Liabilities:
Except for the Liabilities recorded or disclosed in the Financial
Statements, and liabilities and obligations disclosed on Schedule
2.1(o), TTI does not have any outstanding liability or
indebtedness of any nature, whether accrued, absolute, contingent
or otherwise in an-aggregate amount of more than $5,000.
(p) Accrued Warranty Obligations:
TTI's obligations for support, maintenance, repair and
replacement of all equipment it has sold up to and including the
date hereof have been fully provided for in the Financial
Statements.
(q) Material Contracts:
Schedule 2.1(q) is a list of all Material Contracts. All Material
Contracts are in full force and effect, and neither TTI nor, to
TTI's Knowledge or Xxxx'x Knowledge, any other party to any
Material Contract is in default, or alleged to be in default, and
to TTI's Knowledge and Xxxx'x Knowledge there is no condition or
event that, after notice or lapse of time or both, would
constitute a default by TTI and which would have a material
adverse affect on TTI.
(r) Litigation:
Except as disclosed on Schedule 2.1(r), there are no actions,
suits, claims, proceedings or governmental investigations of
which TTI or Xxxx have received notice, or to TTI's Knowledge or
Xxxx'x Knowledge, which are threatened against or affecting TTI
or any Asset which have a reasonable prospect of succeeding and
which, if adversely determined or settled, alone or in the
aggregate, might result in any material adverse change in the
value of the Assets, or impair the ability of TTI to perform its
obligations under this Agreement or any agreement provided for
herein.
(s) Taxes:
(i) TTI has filed or has caused to be filed, within
the times and within the manner prescribed by law,
all returns and reports which are required to be
filed by it with respect to all Taxes. TTI has or
will have fully paid or fully accrued in the
Financial Statements, as of April 30, 1999 (to the
extent such provision is required under U.S.
generally accepted accounting principles applied
7
on a consistent basis) all Taxes payable by or due
from TTI for all periods ended on or prior to
April 30, 1999, as if April 30, 1999 were a fiscal
year end of TTI for Tax purposes and TTI will have
fully paid on or before the Merger Date all
deficiencies and assessments of Tax of which
notice has been received by it on or before the
date hereof that are or may become payable by TTI
and are not being contested in good faith by
appropriate proceedings; and TTI has paid all
other Taxes for which it has received a notice of
assessment or demand for payment. All returns or
reports filed by TTI on or before the Merger Date
are true, correct and complete in all material
respects. TTI has withheld or collected and paid
over to the appropriate person, or is properly
holding for such payment, all Taxes required by
law to be withheld or collected by TTI. There are
no Liens for Taxes upon the assets or properties
of TTI other than Liens for Taxes not due and
those which are being contested in good faith by
appropriate proceedings;
(ii) The federal income tax returns of TTI have been
examined by the U.S. Internal Revenue Service or
closed by applicable statutes for all periods
through 1994, and any deficiencies asserted as a
result of such examinations have been paid or
finally settled. Any additional income finally
determined as a result of a federal income tax
examination has been reported, to the extent
required, to the appropriate state taxing
authorities on amended state income tax returns
and any additional taxes due to state taxing
authorities thereon have been paid. There are no
outstanding agreements or waivers extending the
statutory period of limitation applicable to any
federal, state or local income tax return for any
period with respect to TTI; and
(iii) TTI made an election to be treated as an "S"
corporation as of September 30, 1993 for United
States federal income tax purposes and this
election has not been revoked.
(iv) Xxxx does not have any present plan, intention, or
arrangement to dispose, or otherwise reduce the
risk of loss by short sales or otherwise, of any
of the WaveRider Merger Shares if such disposition
would reduce the fair value at the Effective Time
of the WaveRider Merger Shares retained by Xxxx to
an amount less than 50% of the fair value of the
TTI Shares held by Xxxx immediately before the
Effective Time.
(t) Collectibility of Accounts Receivable:
All of the accounts receivable of TTI as of April 30, 1999 are
listed on Schedule 2.1(t) hereto, and to the best of TTI's
Knowledge and Xxxx'x Knowledge are valid accounts receivable.
(u) Inventory:
Since April 30, 1999, TTI has maintained its Inventory in a
normal and customary manner consistent with prior practice and
the value of Inventory is as reflected in the Financial
Statements and the books and records of TTI.
8
(v) Employment Contracts:
Except as disclosed on Schedule 2.1(v) hereto, TTI does not have
any employment, union or collective bargaining, pension, deferred
profit sharing, retirement, employee benefit or stock option
agreements, or any other similar agreements or plans and, without
limiting the foregoing, there are no agreements or commitments to
unionized workers and there are no agreements for the payment to
any Employee of any bonus, pension, share of profits, retirement
allowance, shares, insurance or any other employee benefits in
addition to wages or salary. There are no employment contracts
that would produce a payment that would be classified under IRC
sections 280G and 4999 as "excess parachute payments".
(w) Status:
TTI is not a "collapsible corporation" within the meaning of IRC
section 341, or an "investment company" as defined in IRC section
368(a)(2)(F)(iii) and (iv).
(x) Disability Benefits:
None of the Employees are receiving short term or long term
disability benefits.
(y) Pension Plans:
(i) Except as disclosed on Schedule 2.1(y) hereto, the
Employees are not subject to or covered under any
registered or non-registered Pension Plan of TTI.
(ii) Each Pension Plan is duly registered with the
appropriate federal and state regulatory
authorities, and all material obligations required
to be performed in connection with each Pension
Plan to the Merger Date, including, without
limitation, all material reports and disclosures
required with respect to each Pension Plan by
applicable federal and state pension legislation,
to be filed or distributed prior to the Merger
Date, have been or will be performed by TTI and
there are no outstanding defaults or violations by
any party of any material obligation required to
be performed in connection with each Pension Plan.
(iii) There is no unfunded liability due in respect of
any Pension Plan.
(z) Key Customers:
Attached hereto as Schedule 2.1(z) is a list of TTI's top ten
customers which, based upon historic and anticipated dollar
volume of sales and other factors considered relevant by TTI, TTI
believes to be its ten most material customers. To TTI's
Knowledge and Xxxx'x Knowledge there are no circumstances which
would lead to the loss of any such customer.
(aa) Shareholdings of TTI:
TTI does not own any shares in the capital of, or any ownership
interest in, any person or entity.
9
(bb) FCC Approvals:
The products listed on Schedule 2.1(bb) comply with all
applicable government statutes, rules and regulations, including
those of the FCC, and any sales or importation of such products
have been in compliance with all such statutes, rules and
regulations. There are no products of TTI for which FCC approval
is required but not obtained except as noted on Schedule 2.1(bb).
(cc) Material Adverse Change:
Since April 30, 1999 TTI has not:
(i) created, incurred, assumed or suffered to exist
any Lien on any of the Assets;
(ii) other than in the ordinary course of business,
sold, assigned, transferred, or otherwise disposed
of any part of its Assets to any other party;
(iii) materially contravened any Environmental Laws;
(iv) incurred any capital expenditures in excess of
$1,000;
(v) created, incurred, assumed or permitted to exist
any debt, liability or obligation (including any
guarantee) in an amount greater than $1,000, in
the aggregate except trade payables incurred in
the normal course of business;
(vi) incorporated or acquired any subsidiary;
(vii) declared or paid any dividends on any shares of
its capital or made any other distribution in
respect thereof, either directly or indirectly,
whether in cash or property, or made any other
payments to shareholders of TTI;
(viii) issued any additional shares of its capital stock
or any additional securities convertible into or
exchangeable for, or any warrants, options or
other rights to purchase or otherwise acquire, any
shares in its capital stock;
(ix) defaulted under any obligation to repay borrowed
money or interest thereon or under any Material
Contract;
(x) been subject to any proceeding commenced by or
against TTI, whether voluntary or involuntary,
seeking to have an order for relief entered
against TTI as debtor or to adjudicate it a
bankrupt or insolvent, or seeking liquidation,
winding-up, reorganization, arrangement,
adjustment or composition under any law relating
to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a
receiver, trustee, custodian or other similar
official for TTI or a substantial part of its
Assets;
(xi) been subject to any judgement entered by any court
enforceable against TTI;
(xii) settled any deficiencies or assessments of Tax or
otherwise incurred any obligation to pay any Tax;
(xiii) had any change of control of TTI.
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(dd) Full Disclosure:
No representation or warranty made herein by TTI or Xxxx contains
any untrue statement of a material fact or omits to include any
material fact necessary to make such representation or warranty
not misleading to the Parent or the Subsidiary in light of the
circumstances in which such representation or warranty is made.
Section 2.2 By the Parent and the Subsidiary
The Parent and the Subsidiary jointly and severally represent
and warrant to TTI and Xxxx as follows, and acknowledge that TTI and Xxxx are
relying on such representations and warranties in connection with the
transactions contemplated under this Agreement:
(a) Corporate Qualification of the Parent:
The Parent is duly incorporated, validly existing and in good
standing under the laws of the State of Nevada and has all
necessary corporate power and authority to carry on its business
and to own its property and assets in each jurisdiction in which
it owns or uses any property, assets or carries on its business
and is not subject to any proceedings, pending or, to the
Parent's Knowledge threatened, for liquidation, dissolution or
the benefit of its creditors.
(b) Law, Charter Documents and Other Agreements of the Parent:
The execution, delivery and performance of the Parent's
obligations under this Agreement or any agreement herein provided
for do not conflict with, contravene, result in any breach of or
constitute a default under:
(i) any law, regulation, judgment, order, writ,
injunction, decree, award or ruling to which the
Parent or any of its properties or assets are
subject;
(ii) the charter or by-laws of the Parent; or
(iii) as referenced in the Parent's Form 10-K filed with
the Securities and Exchange Commission (the "SEC")
for the year ended 1998, any provision of any
material agreement or instrument to which the
Parent is a party or by which it or any of its
properties or assets is bound or affected, or any
licenses to which the Parent is a party or any
intellectual property or rights thereto of the
Parent.
(c) Due Authorization of the Parent:
The Parent has all necessary corporate power and authority to
enter into this Agreement and carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated under this
Agreement will have been duly authorized by all necessary
corporate action of the Parent as of the Merger Date.
(d) Litigation of the Parent:
There are no actions, suits, claims, proceedings or
investigations pending, or to the best of the Parent's knowledge
threatened, against or affecting the Parent, which alone or in
the aggregate might impair the ability of the Parent to perform
its obligations under this Agreement or any agreement provided
for herein.
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(e) Corporate Qualification of the Subsidiary:
The Subsidiary is duly incorporated, validly existing in good
standing under the laws of the State of Nevada, has all necessary
corporate power and authority to carry on its business and to own
its property and assets in each jurisdiction in which it owns or
uses any property, assets or carries on its business and is not
subject to any proceedings, pending or, to the Parent's Knowledge
threatened, for liquidation, dissolution or the benefit of its
creditors.
(f) Law, Charter Documents and Other Agreements of the Subsidiary:
The execution, delivery and performance of the Subsidiary's
obligations under this Agreement or any agreement herein provided
for do not conflict with, contravene, result in any breach of or
constitute a default under:
(i) any law, regulation, judgment, order, writ,
injunction, decree, award or ruling to which the
Subsidiary or any of its properties or assets are
subject;
(ii) the charter or by-laws of the Subsidiary; or
(iii) any provision of any material agreement or
instrument to which the Subsidiary is a party or
by which it or any of its properties or assets is
bound or affected.
(g) Due Authorization of the Subsidiary:
The Subsidiary has all necessary corporate power and authority to
enter into this Agreement and carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated under this
Agreement will have been duly authorized by all necessary
corporate action of the Subsidiary as of the Merger Date.
(h) Litigation of the Subsidiary:
There are no actions, suits, claims, proceedings or
investigations pending, or to the best of the Subsidiary's
knowledge threatened, against or affecting the Subsidiary, which
alone or in the aggregate might impair the ability of the
Subsidiary to perform its obligations under this Agreement or any
agreement provided for herein.
(i) Share Consideration:
The Share Consideration to be issued to Xxxx will, upon issuance,
be validly issued and outstanding as fully paid and
non-assessable.
(j) Electronic Bulletin Board:
The Parent is a company quoted on the National Association of
Securities Dealers' OTC Bulletin Board.
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(k) Title to Assets:
Except as described in the Parent's public filings with the SEC
within the past 6 months, the Parent and the Subsidiary have good
and marketable title to or a valid, binding and enforceable
leasehold interest in all of their respective properties and
assets, whether real, personal or mixed, tangible or intangible,
including those reflected on their financial statements (except
those subsequently disposed of in the ordinary course of
business), free and clear of all mortgages, liens, pledges,
charges, encumbrances, title defects or third party claims of a
material nature.
(l) Material Contracts:
All contracts which materially affect the business, operations,
assets or prospects, financial or otherwise of the Parent and/or
the Subsidiary are accurately and completely described in the
Parent's public filing with the SEC within the past 6 months.
(m) No Material Adverse Effect:
There are no facts that would materially adversely affect the
properties, assets, condition (financial or otherwise), business
or operations of the Parent or the Subsidiary that is not
disclosed in the Parent's public filings with the SEC within the
past 6 months.
(n) Absence of Undisclosed Liabilities:
Neither the Parent nor the Subsidiary has any obligation or
liability (contingent or otherwise) that is material, either
individually or in the aggregate, to the financial condition,
results of operations, or prospects of the Parent or the
Subsidiary, or that when combined with all similar obligations or
liabilities would, either individually or in the aggregate, be
material to the financial condition, results of operation or
prospects of the Parent or the Subsidiary. Since the most recent
SEC filing by the parent, neither the Parent nor the Subsidiary
has incurred or paid any obligation or liability which would,
either individually or in the aggregate, be material to the
financial condition, results of operations, or prospects of the
Parent or the Subsidiary.
(o) Compliance with Law:
Neither the Parent nor the Subsidiary is in violation (or, with
notice or lapse of time or both, would be in violation) of any
term or provision of any law applicable to it or any of its
assets, the violation of which is, individually or in the
aggregate with all other such violations, is reasonably likely to
have a material adverse affect on the Parent or the Subsidiary.
(p) Capitalization:
The authorized capital stock of the Parent consists of
100,000,000 common shares, $0.001 par value per share, of which
approximately 43,630,804 shares are issued and outstanding, and
5,000,000 shares of preferred stock of which 800,000 have been
designated as series C preferred stock (the "Series C Preferred
Stock") and 800,000 shares of the Series C Preferred Stock are
issued and outstanding. All of the outstanding WaveRider Shares
and Series C Preferred Stock have been duly and validly
authorized and issued and are fully paid and non-assessable. No
WaveRider Shares are entitled to preemptive or similar rights.
Except as specifically disclosed in documents filed with the SEC,
there are no outstanding options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to,
or rights or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire, any
shares of common stock, or contracts, commitments,
understandings, or arrangements by which the Parent or the
Subsidiary is or may become bound to issue additional shares of
common stock or securities or rights convertible or exchangeable
into shares of common stock. Except as disclosed in SEC filings,
to the knowledge of the Parent or the Subsidiary, no person or
group of person beneficially owns (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) or has the right to
acquire by agreement with or by obligation binding upon the
Parent or the Subsidiary beneficial ownership of in excess of 5%
of the Parent.
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(q) Solvency:
The Parent is a solvent corporation and generally paying its
obligations as they become due. The Parent is not, has not been,
nor reasonably foresees in the future that it shall become the
subject of any proceeding in bankruptcy in either the United
States or Canada, subject to receivership; nor has Parent made
any attempt to seek protection from its creditors, nor does it
have any plans to do so in the foreseeable future.
(r) Disclosure Documents:
All Current Disclosure Documents are in all material respects
accurate and complete, and no adverse material change in the
position of the Parent has taken place since the applicable dates
of such Current Disclosure Documents.
(s) Consents and Approvals:
No consent, approval or authorization of any governmental
authority or other party unless contemplated herein is necessary
in order for the Parent or the Subsidiary to perform their
respective obligations hereunder and to consummate the
transactions contemplated hereby.
(t) Full Disclosure:
No representation or warranty herein made by the Parent or the
Subsidiary contains any untrue statement of a material fact or
omits to state any material fact necessary to make such
representation or warranty not misleading to TTI or Xxxx in light
of the circumstances in which such representation or warranty is
made.
Section2.3 Survival
(a) Section 2.1:
(i) Except as otherwise provided in Section
2.3(a)(ii), (iii) and (iv) below, the
representations and warranties contained in
Section 2.1 shall continue in full force and
effect for a period of two years after the Merger
Date.
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(ii) The representations and warranties contained in
Section 2.1(k) and (s) shall, notwithstanding any
investigation made by or on behalf of the Parent,
continue in full force and effect for a period of
four years after the Merger Date.
(iii) The representations and warranties contained in
Section 2.1(f) and (g) shall, notwithstanding any
investigation made by or on behalf of the Parent,
continue in full force and effect in perpetuity.
(iv) The representation and warranty contained in
Section 2.1 (dd) shall, notwithstanding any
investigation made by or on behalf of the Parent,
continue full force and effect for a period of two
years, except to the extent that such
representation and warranty in Section 2.1 (dd)
relates to a representation and warranty referred
to in Section 2.1(a)(ii), in which event the
representation and warranty contained in Section
2.1 (dd) shall continue in full force and effect
for a period of four years, and except to the
extent that such representation and warranty in
Section 2.1 (dd) relates to a representation and
warranty referred to in Section 2.3(a)(iii), in
which event the representation and warranty
contained in Section 2.1 (dd) shall continue in
full force and effect in perpetuity.
(b) Section 2.2: The representations and warranties contained in
Section 2.2 shall continue in full force and effect for a period
of two years from the Merger Date.
Section 2.4 Disclosure in Schedules
The disclosure of any instrument, action, event, circumstance or
other matter in any Schedule shall constitute valid disclosure of such matter
for the purposes of all other Schedules.
ARTICLE 3 - COVENANTS
Section 3.1 Covenants of TTI and Xxxx
(a) Access:
TTI and Xxxx shall permit the employees and representatives of
the Parent reasonable access to all facilities, books, records,
business plans and other information pertaining to the Assets,
Liabilities and the Business (including the provision of
authorizations and directions to third parties to release
information) reasonably requested by the Parent to enable it to
assure itself as to: (i) the financial and business condition of
TTI, including, without limitation, all Liabilities; (ii) the
future prospects of the Business; (iii) any environmental risks
associated with the Business; (iv) the title of TTI to the
Assets; and (v) any other matter the Parent reasonably considers
material to its decision to consummate the transactions
contemplated hereby. TTI and Xxxx shall cause TTI's appropriate
officers and employees, agents and accountants, and such other
persons (including customers), where reasonable, to be available
to discuss with the Parent and its representatives matters
relating to TTI.
(b) Operation of Business:
Prior to the Merger Date, TTI shall, except as otherwise
contemplated by this Agreement, carry on its Business only in the
ordinary course, consistent with past practice.
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Section 3.2 Covenants of the Parent
(a) Release of Xxxx'x Personal Obligations:
The Parent shall secure the release of Xxxx from his personal
obligations with respect to all debts of TTI as disclosed on
Schedule 3.2(a) and indemnify and hold Xxxx harmless from any
liability related to such obligations as of the Effective Time,
other than from any obligations arising from this Agreement, or
any other obligation of Xxxx arising out of or relating to the
transactions contemplated hereby. Notwithstanding the immediately
preceding sentence, in recognition of factors outside the control
of the Parent and the Subsidiary, Xxxx agrees to grant to the
Parent and the Surviving Corporation the right to obtain, and the
Parent and the Surviving Corporation covenant and agree to pursue
diligently, the release as soon as practicable following the
Effective Time, but in no event later than 6 months after the
Effective Time, Xxxx'x personal guarantee of TTI's indebtedness
with FirstMerit Bank, N.A. In the event that the Parent and the
Surviving Corporation fail to secure the release of said
guarantee with the FirstMerit Bank, N.A. within 6 months of the
Effective Time, the Parent shall pay to Xxxx as liquidated
damages and not as a penalty the sum of $10,000 for each day
following for which said release is not obtained, to a maximum of
$400,000 plus interest.
(b) Registration Statement:
The Parent shall use its best efforts to file the Registration
Statement with the SEC within 10 days of the Merger Date but in
no event later than 30 days after the Merger Date.
Section 3.3 Mutual Covenants
(a) Satisfaction of Conditions; Co-operation:
Xxxx, TTI, the Subsidiary and the Parent will: (i) pursue in a
timely manner, to the extent reasonably within their control, the
satisfaction of the conditions to the consummation of the
transactions contemplated by this Agreement; (ii) pursue and
assist the other parties in obtaining as soon as possible, all
governmental approvals and in making, as soon as possible, all
filings with any governmental authority required on the part of
such party or such other party to consummate the transactions
contemplated hereby; and (iii) use its reasonable best efforts to
obtain from each other party to, or holder of, each Material
Contract, all approvals, consents, waivers, modifications,
discharges and amendments that may be necessary to effect the
transactions contemplated by this Agreement.
(b) Notice with Respect to Conditions of Closing:
Each of the parties to this Agreement shall provide prompt notice
to the other parties if it reasonably concludes that any of the
conditions precedent to the Merger are not capable of fulfilment
and the party is not prepared to waive such condition.
ARTICLE 4 - CLOSING CONDITIONS
Section 4.1 Conditions of the Parent and the Subsidiary
The following shall be conditions precedent to the respective
obligations of the Parent and the Subsidiary to consummate the transactions
contemplated hereby.
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(a) Warranties and Covenants:
The representations and warranties in Section 2.1 shall be true
and correct in all material respects as of the Merger Date, all
covenants to be carried out or to be complied with on or before
the Merger Date for the benefit of the Parent or the Subsidiary
contained in Article 3 shall have been carried out or complied
with, and Xxxx and TTI shall have delivered to the Parent a
certificate certifying thereto, subject only to such
modifications as may be agreed upon by the Parent.
(b) Proceedings:
All corporate and other action on the part of TTI shall have been
taken to authorize the entering into, and the performance of its
obligations under, the agreements contemplated hereby.
(c) Legal Opinion:
The Parent shall have received the opinion of Xxxx Xxxxxx & Parks
LLP, counsel to Xxxx and TTI, in form and content satisfactory to
the Parent and its legal counsel, acting reasonably, and
substantially in the form as in Schedule 4.1(c).
(d) Consents:
TTI shall have obtained all applicable consents and assurances,
from third parties which are material to the transactions
contemplated hereby.
(e) Injunctions:
No injunction shall be in place and no injunctive proceeding
which has a reasonable prospect of succeeding shall have been
commenced restricting or prohibiting any transaction contemplated
by this Agreement.
(f) FCC Opinion:
The Parent shall have obtained, at its sole expense, an opinion
from counsel satisfactory to the Parent, in its absolute
discretion, confirming the matters in Section 2.1 (cc) of this
Agreement. Xxxx and TTI will co-operate with the Parent in
connection with the preparation of such opinion, including the
delivery of necessary information.
(g) Employees:
As determined by the Parent, certain officers and employees of
TTI as identified on Schedule 4.1(g), including Xx. Xxxxx Xxxx
and Xx. Xxxxxx Xxxxxxxx, will become employees or consultants of
the Parent or an affiliate thereof, on terms acceptable to the
Parent.
(h) Lock-Up Letter
Xxxx shall have executed the Lock-Up Letter.
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(i) Other Closing Documents:
Xxxx and TTI shall have delivered all such other executed
customary closing documentation reasonably requested by counsel
for the Parent, duly executed by all parties thereto which shall
be necessary or desirable to complete the transactions
contemplated by this Agreement.
Section 4.2 TTI's and Xxxx'x Conditions
The following shall be conditions precedent to TTI's and Xxxx'x
obligations to consummate the transactions contemplated by this Agreement.
(a) Warranties and Covenants:
The Parent's and the Subsidiary's representations and warranties
in Section 2.2 shall be true and correct in all material respects
as of the Merger Date, all covenants to be carried out or
complied with on or before the Merger Date contained in Article 3
for the benefit of TTI and Xxxx shall be carried out or complied
with, and the Parent and the Subsidiary shall have delivered to
TTI and Xxxx a certificate of a senior officer certifying
thereto, without personal liability thereto, subject only to such
modifications as may be agreed upon by TTI.
(b) Proceedings:
All corporate and other action on the part of the Parent and the
Subsidiary shall have been taken to authorize the entering into,
and performance of the obligations of the Parent and the
Subsidiary under this Agreement and the agreements contemplated
hereby.
(c) Release of Xxxx'x Personal Obligations:
The Parent shall have committed to the release of Xxxx from his
personal obligations with respect to all debts of TTI, as
disclosed on Schedule 3.2(a), subject to the provisions of
Section 3.2(a), other than from any obligations arising from this
Agreement, the Xxxx Employment Agreement or any other obligation
of Xxxx arising out of or relating to the transactions
contemplated hereby.
(d) Legal Opinion:
Xxxx and TTI shall have received the opinion of counsel to the
Parent and the Subsidiary, in form and content satisfactory to
Xxxx and its legal counsel, acting reasonably, and substantially
in the form as in Schedule 4.2(d).
(e) Consents:
The Parent and Xxxx shall have obtained all applicable consents
and assurances from third parties which are material to the
transactions contemplated hereby, except as otherwise provided in
this Agreement.
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(f) Injunctions:
No injunction shall be in place and no injunctive proceeding
which has a reasonable prospect of succeeding shall have been
commenced, restricting or prohibiting any transaction
contemplated by this Agreement.
(g) Merger Consideration:
Xxxx shall have received the Merger Consideration, as applicable.
(h) Other Closing Documents:
The Parent and the Subsidiary shall have delivered all such other
customary closing documentation reasonably requested by counsel
for Xxxx and TTI, duly executed by all parties thereto, which
shall be necessary or desirable to complete the transactions
contemplated by this Agreement.
Section 4.3 Waiver
If any condition referred to in this Article 4 is not fulfilled or performed on
or before the Merger Date, the party in whose favour such condition is expressed
may rescind this Agreement by notice to the other party and in such event the
rescinding party and the other parties hereto (to the extent such other parties
are not in breach of any other Section hereof) shall be released from all
obligations and liabilities arising herefrom. Any one or more of the said
conditions may be waived in whole or in part without prejudice to the waiving
party's right of rescission in the event of the non-fulfilment of any other
condition or part thereof or of any other remedy that such party may have as a
result of any of the other conditions not being fulfilled.
ARTICLE 5 - Closing
Section 5.1 Merger Date
The merger of TTI and the Subsidiary shall take place at the offices of Xxxx
Xxxxxx & Parks LLP at 10:00 a.m. on June 15, 1999, or at such other place and/or
time and/or date as the parties may agree in writing. Upon the successful
completion of the transactions contemplated hereby, such transactions shall (to
the extent possible and appropriate) be deemed for all purposes to have closed
on the Merger Date at the Effective Time.
ARTICLE 6 - INDEMNITY
Section 6.1 TTI's and Xxxx'x Indemnity
(a) Without limiting any remedy of the Parent, the Subsidiary or the
Surviving Corporation which may have arisen from this Agreement
and the agreements contemplated hereby, Xxxx and TTI shall
indemnify the Parent, the Subsidiary and the Surviving
Corporation against any and all liability, loss, damage or
expense (including reasonable legal fees and disbursements) which
the Parent, the Subsidiary or the Surviving Corporation suffers
or incurs, directly or indirectly, by reason of any of the
following:
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(i) any breach of any representation or warranty by
Xxxx or TTI contained in Section 2.1 when made or
provided;
(ii) any breach of any covenant or agreement of TTI or
Xxxx contained herein or in any agreement provided
for herein being breached or not fulfilled;
(iii) any misrepresentations or material omissions from
any certificate, instrument or schedule prepared
by or on behalf of TTI or Xxxx and delivered to
the Parent or the Subsidiary on the Merger Date
pursuant to this Agreement; or
(iv) any and all liability, loss, damage or expense
(including reasonable legal and other professional
fees and disbursements) which the Parent or the
Surviving Corporation suffers or incurs as a
result of any Tax assessment or reassessment of
TTI in respect of any fiscal period ending prior
to the Merger Date;
provided, however, the Parent, the Subsidiary or the Surviving
Corporation shall promptly, and in any event not later than 30
days from when the Parent, the Subsidiary or the Surviving
Corporation has knowledge of any such claim for indemnity
hereunder, notify Xxxx and TTI, with all reasonable particulars,
of the basis for each claim for indemnity hereunder, shall take
no action to prejudice the right of Xxxx and TTI to contest same
and shall afford Xxxx and TTI an opportunity within the 30 day
period following receipt by them of such notice to decide
whether, and to what extent, any such claim shall be contested or
compromised, including the right to retain and instruct counsel;
the whole at the expense of Xxxx and TTI. Notwithstanding the
foregoing, each of the Parent, the Subsidiary or the Surviving
Corporation shall be entitled to take interim measures prior to a
response from Xxxx or TTI to the said notice that are required to
protect its interests. Provided that Xxxx and TTI have
acknowledged in writing to the Parent, the Subsidiary or the
Surviving Corporation the obligation of Xxxx and TTI to indemnify
the Parent, the Subsidiary or the Surviving Corporation, Xxxx and
TTI shall, after having consultation with each of the Parent, the
Subsidiary and the Surviving Corporation and obtaining their
input, have the sole right to determine whether, and to what
extent, any such claim shall be contested or compromised and to
appoint counsel with respect to such claim. Each of the Parent,
the Subsidiary and the Surviving Corporation shall, at its sole
cost, have the right to appoint co-counsel, but in such event,
counsel appointed by Xxxx and TTI shall have primary conduct of
the action respecting such claim and no settlement shall be
entered into without the written consent of Xxxx and TTI. Each of
the Parent, the Subsidiary and the Surviving Corporation shall at
all times fully co-operate with Xxxx and TTI in respect of the
contesting of any claim and to minimize any loss, damage or
expense for which indemnity is claimed hereunder, with all
reasonable expenses incurred by the Parent, the Subsidiary and
the Surviving Corporation excluding any costs or expenses
associated with the appointment of co-counsel in connection
therewith to be forthwith paid by Xxxx and TTI, jointly and
severally, after demand. Xxxx and TTI release the Surviving
Corporation from any obligation to contribute to the amount of
any indemnity owing hereunder by Xxxx.
(b) The obligation of indemnification contained in Section 6.l(a)(i)
and Section 6.l(a)(iii) shall be subject to the limitation in
Section 2.3(a) respecting the survival of the applicable
representations and warranties of TTI and Xxxx. The obligation of
indemnification contained in Section 6.l(a)(ii) and Section
6.l(a)(iv) shall continue in perpetuity.
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(c) Neither Xxxx nor TTI shall be liable to the Parent, the
Subsidiary or the Surviving Corporation under Section 6.1 for any
damages or claims brought hereunder unless the aggregate amount
of such damages exceeds $10,000 (the "Floor"), in which case Xxxx
and TTI shall be liable for only those damages exceeding the
Floor. Notwithstanding anything to the contrary herein contained,
absent wilful fraud on the part of Xxxx or TTI, Xxxx and TTI
collectively shall not be liable for any damages, and shall not
be responsible to indemnify the Parent, the Subsidiary and/or the
Surviving Corporation for any damages or claims in excess of
$794,985.
(d) Notwithstanding Section 6.1(c), with respect to the
representations and warranties contained in Section 2.1(h), if it
is discovered within 90 days of the Effective Time that the net
liabilities of TTI (the "Actual Net Liabilities") exceed the net
liabilities presented in the Financial Statements by more than
$250,000 (the "Liability Cushion"), Xxxx shall indemnify the
Parent for the amount by which the Actual Net Liabilities exceed
the Liability Cushion; however, the Parent will not seek to be
indemnified by Xxxx for any amount less than $10,000 under this
Section 6.1(d).
Section 6.2 The Parent's Indemnity
(a) Without limiting any remedy which Xxxx or TTI may have arising
out of this Agreement and the agreements contemplated hereby, the
Parent, the Subsidiary and the Surviving Corporation shall
jointly and severally indemnify Xxxx and TTI against any and all
liability, loss, damage or expense (including reasonable legal
fees and disbursements) which Xxxx or TTI suffer or incur,
directly or indirectly, through the merger of TTI and the
Subsidiary by reason of any of the following:
(i) any breach by the Parent or the Subsidiary of any
representation or warranty contained in Section
2.2 when made or provided;
(ii) any breach by the Parent or the Subsidiary of any
covenant or agreement of the Parent or the
Subsidiary contained herein or in any agreement
provided for herein being breached or not
fulfilled; or
(iii) any misrepresentations or material omissions from
any certificate, instrument or schedule prepared
by or on behalf of the Parent, the Subsidiary
and/or the Surviving Corporation and delivered to
Xxxx or TTI on the Merger Date pursuant to this
Agreement;
provided, however, Xxxx or TTI shall promptly, and in any event
not later than 30 days from when either Xxxx or TTI has
knowledge, notify the Parent, with all reasonable particulars, of
the basis for each claim for indemnity hereunder, shall take no
action to prejudice the Parent's, the Subsidiary's and/or the
Surviving Corporation's right to contest same and shall afford
the Parent, the Subsidiary and/or the Surviving Corporation an
opportunity within the 30 day period following receipt by them of
such notice to decide whether, and to what extent, any such claim
shall be contested or compromised, including the right to retain
and instruct counsel; the whole at the expense of the Parent, the
Subsidiary and/or the Surviving Corporation. Notwithstanding the
foregoing, Xxxx or TTI shall be entitled to take interim measures
prior to a response from the Parent, the Subsidiary and/or the
Surviving Corporation to the said notice that are required to
protect their interests. Provided that the Parent acknowledged in
writing to Xxxx or TTI the obligation of the Parent to indemnify
Xxxx or TTI as, the Parent, the Subsidiary and/or the Surviving
Corporation shall, after having consultation with Xxxx or TTI and
obtaining their input, have the sole right to determine whether,
and to what extent, any such claim shall be contested or
compromised and to appoint counsel with respect to such claim.
Xxxx or TTI shall, at their sole cost, have the right to appoint
co-counsel, but in such event, counsel appointed by the Parent,
the Subsidiary and/or the Surviving Corporation shall have
primary conduct of the action respecting such claim and no
settlement shall be entered into without the written consent of
the Parent. Xxxx or TTI shall at all times fully co-operate with
the Parent in respect of the contesting of any claim and to
minimize any loss, damage or expense for which indemnity is
claimed hereunder, with all reasonable expenses incurred by Xxxx
or TTI in connection therewith to be forthwith paid by the
Parent, after written demand therefor by Xxxx or TTI.
21
(b) The obligation of indemnification contained in Section 6.2(a)(i)
and Section 6.2(a)(iii) shall be subject to the limitation in
Section 2.3(b) respecting the survival of the applicable
representations and warranties of the Parent. The obligation of
indemnification contained in Section 6.2(a)(ii) shall continue in
perpetuity.
Section 6.3 Limitation on Indemnity
The parties intend that the Merger qualify as a merger under IRC ss. 368(a).
Each of the parties acknowledges hereto that it has received its own Tax advice
and has satisfied itself as to the status of the Merger. Notwithstanding
anything herein to the contrary neither the Parent, the Subsidiary, the
Surviving Corporation nor TTI shall be liable for any loss or damage accruing to
Xxxx as a result of a determination that the Merger does not qualify as a merger
under IRC ss.368(a), and Xxxx shall not be liable for any loss or damage
accruing to the Parent, the Subsidiary, the Surviving Corporation or TTI as a
result of a determination that the Merger does not qualify as a merger under IRC
ss. 368(a); unless, in either case, such adverse determination results from the
breach by the Parent, the Subsidiary, the Surviving Corporation, TTI or Xxxx of
any provision hereof, or of any provision of any agreement relating hereto, or
of any representation or warranty made herein or in any document delivered
pursuant hereto.
ARTICLE 7 - CONFIDENTIALITY, NON-SOLICITATION AND NON-COMPETITION
Section 7.1 Confidentiality
The parties to this Agreement agree that the terms hereof are
confidential and, except to the extent required by law, each party will not
disclose and will cause its respective officers, employees, accountants,
counsel, financial advisors and other representatives and affiliates not to
disclose, the terms of this Agreement without the prior written consent of the
other parties hereto. Xxxx and TTI acknowledge that the proprietary and
financial information, observations and data concerning the business and affairs
of TTI (the "Confidential Information") is confidential and shall become at the
Effective Time the property of the Surviving Corporation and, except as
permitted by the Xxxx Employment Agreement, Xxxx agrees not to disclose such
Confidential Information to any person, except to the extent required by law, or
to use such Confidential Information for his or its own use, without the prior
written consent of the Surviving Corporation and the Parent. The Parent, the
Subsidiary and the Surviving Corporation acknowledge and agree that the
proprietary and financial information, observations and data concerning the
Business are, until the Effective Time, the property of TTI and shall not be
disclosed to any third party except as expressly permitted in writing by TTI and
Xxxx.
22
Section 7.2 Non-Solicitation
Xxxx agrees that for a period of three years from the Effective
Time, he shall not for any reason whatsoever without the written consent of the
Surviving Corporation and the Parent, whether as principal, agent, employee,
employer, director, officer, shareholder (other than as the beneficial owner or
registered holder of not more than 5% of a company's issued and outstanding
shares of the relevant class in the capital stock of any such company listed on
any recognized stock exchange) or in any other individual or representative
capacity, solicit or induce employees, consultants, suppliers or customers of
the Surviving Corporation, the Parent or any affiliate thereof, either directly
or indirectly, to leave their employment or engagement with the Surviving
Corporation, the Parent or such affiliate or otherwise sever or alter their
association with the Surviving Corporation, the Parent or such affiliate.
Section 7.3 Non-Competition Covenant
Xxxx agrees with the Surviving Corporation and the Parent that,
for a period of three years from the Effective Time, he will not, without the
prior written consent of the Surviving Corporation and the Parent, either
individually or in partnership, or in conjunction with any other person or
persons, firm, association, syndicate, company or other legal entity, as
principal, agent, shareholder (other than as the beneficial owner or registered
holder of not more than 5% of a company's issued and outstanding shares of the
relevant class in the capital stock of any such company listed on any recognized
stock exchange), officer, employee, or in any other manner whatsoever, directly
or indirectly, be employed or engaged in, concerned with or interested in or
with, or employed by, any person, firm, association, syndicate, company or
corporation concerned with or engaged in or interested in any business or
undertaking which is the same as or substantially similar to that of the
Surviving Corporation and which is being carried on within the United States of
America or Canada.
Section 7.4 Enforcement
If, at the time of enforcement of Article 7 of this Agreement, a
court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period or
scope reasonable under such circumstances shall be substituted for the stated
period, scope or area. The parties hereto agree that money damages would be an
inadequate remedy for any breach of Article 7 of this Agreement by any party
hereto. Therefore, in the event a breach or threatened breach of Article 7 of
this Agreement, the aggrieved party or parties or their successors or assigns
may, in addition to other rights and remedies existing in their favour, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
ARTICLE 8 - EXPENSES AND TAXES
Section 8.1 Expenses and Taxes
(a) In addition to any other obligations in this Agreement, Xxxx
shall be responsible for the following expenses and taxes:
(i) all fees and expenses incurred by Xxxx and TTI and
all legal and other advisor's fees and
disbursements, and all other extraordinary
expenses, incurred by Xxxx and TTI in connection
with this Agreement;
23
(ii) all Taxes of TTI for any taxable period (or
portion thereof) ending on or prior to the
Effective Time, including all federal and state
income and capital taxes, all land transfer taxes
and retail sales taxes; and
(iii) all Taxes of Xxxx.
(b) The Parent shall be responsible for all fees and expenses which
the Parent, the Subsidiary and the Surviving Corporation incurs
in connection with this Agreement.
Section 8.2 Tax Returns
The Surviving Corporation shall prepare or cause to be prepared
and file or cause to be filed any Tax returns of TTI for Tax periods which begin
before the Effective Time and end on or after the Effective Time, which returns
shall be prepared in a manner consistent with TTI's past practice, unless
otherwise required by law and shall be subject to review by Xxxx. Xxxx shall pay
to the Surviving Corporation within fifteen (15) days after the date on which
any such Taxes are paid with respect to such periods an amount equal to the
portion of such Taxes which relates to the portion of such period up to and
including the Effective Time to the extent such Taxes are not accrued on the
Financial Statements, unless such amount shall be in dispute in which case the
amount shall be due upon the agreement of the parties to an amount, or by
resolution pursuant to Section 9.9. For purposes of this Section, in the case of
any Taxes that are imposed on a periodic basis and are payable for a period that
includes (but does not end at) the Effective Time, the portion of such Tax which
relates to the portion of such period to and including the Effective Time (a)
shall in the case of any Taxes other than Taxes based upon or related to income
or receipts, be deemed to be the amount of such Tax for the entire period
multiplied by a fraction, the numerator of which is the number of days in the
period to and including the Effective Time, and the denominator of which is the
number of days in the entire period and (b) in the case of any Tax based upon or
related to income or receipts be deemed equal to the amount which would be
payable if the relevant period ended at the Effective Time.
ARTICLE 9 - MISCELLANEOUS
Section 9.1 Announcements
Neither the Parent, the Subsidiary, TTI, Xxxx or the Surviving
Corporation shall make any public announcement respecting the transactions
contemplated hereby except as required by applicable law; it being acknowledged
that the Parent may describe the said transaction in public documents that
describe the Parent's operations provided, however, that prior to the Merger
Date, the Parent shall provide Xxxx and his counsel an opportunity to review and
comment on any such announcement prior to its issuance. Announcements to trade
suppliers, customers and employees respecting the said transactions shall be
approved in writing by Xxxx and the Parent.
Section 9.2 Finders' Fees
Each party to this Agreement shall indemnify the other parties
against any claim for brokerage commission or finder's fees that may be made by
any person who has been engaged or alleges to have been engaged by the
indemnifier or any agent thereof in connection with this transaction.
24
Section 9.3 Notices: Approvals: Etc.:
Every notice, consent, approval or other communication required
or permitted to be given under this Agreement shall be in writing and may be
delivered personally or sent by prepaid registered mail, return receipt
requested, by overnight courier or by fax, in each case if receipt of such
delivery or fax is confirmed, to the recipient at the following addresses:
(a) in the case of Xxxx and TTI:
Xx. Xxxxx Xxxx
Transformation Techniques, Inc.
Unit 1
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx
00000
Fax: (000) 000-0000
with a copy to:
Xxxx Xxxxxx & Parks LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx
00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
(b) in the case of the Parent and the Subsidiary:
WaveRider Communications Inc.
Suite 1101
000 Xxxxxxxx Xxxx.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxxxxx
Fax: (000) 000-0000
WaveRider Communications (USA) Inc.
Suite 1101
000 Xxxxxxxx Xxxx.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxx
Xxxxx 0000, Xxxxxx Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
25
Any notice given in accordance with this Section 9.3 shall be deemed to have
been received on the date of receipt indicated on the registered mail receipt
and anything so faxed shall be deemed to have been received at the time of
confirmation of receipt thereof. Any party may change their address for notice
hereunder by giving notice thereof to all the other parties in accordance with
this Section.
Section 9.4 Assignment
No part of this Agreement is capable of assignment by any party
at law or in equity without the prior written consent of the other party.
Section 9.5 Further Assurances
Each party shall from time to time at the request and expense of
the party making such request, execute and deliver such further documents and do
such further acts as any other party may reasonably require for carrying out
this Agreement.
Section 9.6 No Waiver of Breach or Right
No failure of any party to this Agreement to pursue any remedy
resulting from a breach of this Agreement or to exercise any right herein
granted shall be construed as a waiver of that breach or right or as a waiver of
any subsequent or other breach or other right.
Section 9.7 Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio. This Agreement shall be subject to the
non-exclusive jurisdiction of the courts of the State of Ohio and all parties
irrevocably submit to the jurisdiction of such courts with respect to any claims
arising out of this Agreement.
Section 9.8 Definitions
All references to $ are to United States dollars unless otherwise
indicated. References to this Agreement include all Schedules and Exhibits
annexed hereto. Words utilized herein importing the singular number include the
plural and vice versa and words importing any gender include the other gender.
Section 9.9 Dispute Resolution
(a) Subject to Section 7.2, any and all disputes arising under this
Agreement, whether as to interpretation, performance or
otherwise, shall be subject to binding arbitration and any such
dispute shall not be the subject of an action in any court of law
or equity by any party hereto unless the dispute has first been
submitted to arbitration and finally determined in accordance
with the International Arbitration Rules of the American
Arbitration Association. In any such action, the decision of the
arbitrator (or arbitrators, as the case may be) shall be
conclusively deemed to determine the rights and liabilities of
the parties to the arbitration in respect of the matter in
dispute, and any court action in any court of law or equity
subsequently commenced by any party shall only be for judgment
based upon the decision of the arbitrator (or arbitrators, as the
case may be) and costs incidental to such action.
26
(b) The language of the arbitration shall be in English. The place of
the arbitration shall be Cleveland, Ohio if the arbitration is
requested or initiated by the Parent or the Surviving Corporation
and Toronto, Ontario if the arbitration is requested or initiated
by any of Xxxx.
(c) Any arbitration shall be conducted by one arbitrator appointed by
the mutual agreement of the parties within 30 days after the date
on which notice of arbitration is received by each of the parties
hereto from another party hereto. The arbitrator shall be a
lawyer qualified to practice law in the United States of America.
If the parties fail to agree upon the appointment of the
arbitrator, each of the parties shall appoint one arbitrator
within a further 15 days, and the two such arbitrators so
appointed shall, within 15 days after their appointments, select
a third arbitrator who shall act as the presiding arbitrator. If
the two arbitrators appointed by the parties hereto fail to agree
upon the appointment of the third arbitrator, such arbitrator
shall be appointed by the American Arbitration Association (or,
if such Association fails to make such appointment, by a court of
competent jurisdiction) at the request of the party who gave
notice of the arbitration, and such selection shall be final and
binding upon each of the parties hereto.
(d) The arbitrator or arbitrators, as the case may be, shall take
evidence directly from witnesses and documents presented by the
parties and all witnesses shall be made available for
cross-examination. The arbitrator or arbitrators, as the case may
be, shall render a written decision, stating reasons therefor,
within one month after the appointment of such arbitrator, or
within two months after the appointment of the last arbitrator,
if the arbitration is conducted by a panel of three arbitrators,
and such award shall be final and binding upon parties to such
arbitration.
(e) Each party shall be responsible for all costs incurred by such
party in respect of the preparation for the arbitration
proceedings and the appointment of the arbitrator or arbitrators.
The costs of the arbitration proceedings and all related expenses
shall be borne by the losing party to the arbitration or, if no
party is clearly the losing party, the costs of the arbitration
proceedings and all related expenses shall be shared equally by
each party, unless the arbitrator or arbitrators, as the case may
be, determine that the costs should be allocated differently, in
which case the decision of the arbitrator or arbitrators, as the
case may be, shall be final.
Section 9.10 General
This Agreement and the attached Schedules and Exhibits constitute
the entire agreement between the parties and supersede all prior and other
understandings or agreements among them, written or oral, respecting the within
subject matter. The provisions hereof shall survive the closing of the
transactions herein contemplated and remain enforceable in accordance with their
terms. This Agreement may be amended only in writing, shall be read without
regard to headings and shall benefit and bind the parties hereto and their
respective successors and permitted assigns. This Agreement may be separately
signed in counterparts but shall only be binding when signed counterparts have
been delivered by each party to the others.
27
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the date first written above.
----------------------------- --------------------------------------
Witness XXXXX XXXX
WAVERIDER COMMUNICATIONS INC.
-------------------------------------
Name: D. Xxxxx Xxxxxxxx
Office: President and Chief Executive Officer
TTI MERGER INC.
-------------------------------------
Name: D. Xxxxx Xxxxxxxx
Office: President
TRANSFORMATION TECHNIQUES, INC.
-------------------------------------
Name: Xxxxx Xxxx
Office: President
28
SCHEDULE 1.1 - DEFINITIONS
Definitions
(a) "Assets" means all property, assets and rights of TTI of every
kind and description and wheresoever situated, including without
limitation:
(i) all Intellectual Property owned by TTI;
(ii) all rights under licenses of technology of which
TTI is a licensee;
(iii) all furniture, furnishings, fixtures, office
equipment and other fixed assets owned by TTI;
(iv) all goodwill;
(v) all know-how;
(vi) all customer and supplier lists;
(vii) all books and records of TTI, including, without
limitation, corporate documents, financial
records, employee records, sales records, price
lists, sales literature, advertising material,
production data and records, employee manuals,
supply records inventory records and
correspondence files; and
(viii) all contracts, agreements or arrangements which
pertain to the use and enjoyment of any of the
foregoing.
(b) "Xxxx" means Xxxxx Xxxx, an individual residing in the City of
Strongsville, in the State of Ohio;
(c) "Xxxx Employment Agreement" means the agreement described in
Schedule 4.2(d);
(d) "Xxxx'x Knowledge" means the knowledge, information and belief
respecting the facts and circumstances represented in this
Agreement that Xxxx has after making due inquiry, including
reviewing his own files and having discussions with senior
management of TTI who have responsibility for the relevant
operations or matters relating to such facts and circumstances;
(e) "Business" means the business of TTI which includes designing,
manufacturing and distributing high speed communications
products;
(f) "Contract" means any agreement, obligation, license, distribution
agreement, joint venture agreement, contract, understanding,
engagement, indenture, deed of trust, option, instrument or other
commitment, whether written or oral;
(g) "Current Disclosure Documents" means all information relating to
the Parent that is disclosed in the annual report, material
change reports and press releases filed with the Securities and
Exchange Commission on or during the six months preceding the
date hereof;
1
(h) "Effective Time" means the time at which the certificate of
merger in respect of the Merger is filed with the Secretaries of
State of Nevada and Ohio;
(i) "Employees" means all of the employees of TTI (including those
who may be on long term disability, sick leave or workers'
compensation);
(j) "Environmental Laws" means any applicable federal, state or local
laws, regulations, ordinances, remediation policies, certificates
of approval or permits issued, promulgated or entered, relating
to the protection of the environment (including the Release of
any Hazardous Material into the environment and the regulation of
occupational health and safety) that are or were in effect on or
before the Merger Date;
(k) "FCC' means the United States Federal Communications Commission;
(l) "Financial Statements" means the unaudited financial statements
of TTI prepared by management for the 4 month period ended April
30, 1999, a copy of each of which is attached hereto as Schedule
1.1(l);
(m) "Hazardous Material" means any "hazardous substance", "toxic
material", "pollutant", "contaminant", "hazardous waste" or
"special waste" as those terms are defined in any applicable
Environmental Law and any radioactive waste or radioactive
material, and without restricting the generality of the
foregoing, Hazardous Material includes any hydrocarbon, petroleum
and petroleum products, including crude oil, asbestos and
materials containing asbestos, polychlorinated biphenyls,
radioactive substances, urea-formaldehyde foam type insulation,
radon gas, or any other contaminants or toxic substances in such
concentrations or quantities as exceed the clean-up criteria for
industrial sites specified by the State of Ohio as its guidelines
for clean-up of contaminated sites in effect on the Merger Date;
(n) "Intellectual Property" means all copyrights, copyright
registrations and applications, trade names or brand names,
business names, trade marks, trade xxxx registrations and
applications, service marks, service xxxx registrations and
applications, trade secrets, proprietary programming information
and know-how, patents, patent registrations and applications, and
other patent rights, processes, technology, software (in both
source code and object code format), firmware and other
intellectual property, together with all rights as licensor under
licences, registered user agreements, technology transfer
agreements, and other agreements or instruments relating to any
of the foregoing, owned by TTI or otherwise used in connection
with the Business, including, without limitation, any technology
of which TTI is the exclusive licensee and the intellectual
property described on Schedule 2.1(m);
(o) "Inventory" means TTI's inventory of raw materials,
work-in-progress and finished products;
(p) "IRC" means United States of America Internal Revenue Code of
1986, as amended, including relevant Treasury Regulations,
judicial authority and Internal Revenue Service Interpretations
thereof;
2
(q) "Lands" means all of the freehold and leasehold properties owned,
leased or otherwise used by TTI as of the Merger Date or at any
time prior thereto, including all buildings erected thereon;
(r) "Liabilities" means all liabilities of TTI disclosed on the
Financial Statements;
(s) "Lien" means any mortgage, hypothecation, title retention,
pledge, lien, right of set-off, charge, security interest or
other encumbrance whatsoever, whether fixed or floating and
howsoever created or arising;
(t) "Material Contracts" means any Contract relating to TTI and which
on the date of determination thereof (i) has a remaining term of
one year or more, or (ii) is a lease, or (iii) involves or may
involve expenditures or receipts of an aggregate amount greater
than $5,000 during the remaining term thereof, (iv) has as its
subject matter Intellectual Property or other technology upon
which TTI materially relies for the conduct of its Business, or
(v) otherwise materially affects the Business, operations, assets
or prospects, financial or otherwise, of TTI;
(u) "Merger" means the merger of TTI with and into the Subsidiary, in
exchange for cash and WaveRider Shares, in accordance with and
subject to the terms of this Agreement;
(v) "Merger Consideration" has the meaning given to that term in
Section 1.4;
(w) "Merger Date" means the date referred to in Section 5.1;
(x) "Note" means a promissory note of the Parent payable to Xxxx as
to $9,000 per month, on the 1st day of every month, for 11 months
beginning on July 1, 1999 and ending on May 1, 2000, such Note
secured by a secondary security interest in the Intellectual
Property in favour of Xxxx;
(y) "Parents' Knowledge" means the knowledge, information and belief
of the Parent respecting the facts and circumstances represented
in this Agreement after making due inquiry, including a review of
its own files and after making enquiry of senior management of
the Parent who have responsibility for the relevant operations or
matters relating to such facts and circumstances;
(z) "Passing Off" means selling a good or service or carrying on a
business in such a manner, under such a name, xxxx, description
or otherwise as to mislead the public into believing that said
good, service or business are those of another person or entity;
(aa) "Pension Plans" means all plans respecting bonus, deferred
compensation, profit sharing, pension, retirement, stock option,
stock purchase and hospitalization insurance and any other plans,
policies or arrangements, written or oral, providing benefits
other than regular salary, wages and commissions to the
Employees;
(bb) "Prior Owner" means any person that owned, leased or operated any
business on the Lands;
(cc) "Registration Date" means the date that the Registration
Statement filed with the SEC becomes effective;
3
(dd) "Registration Statement" means the registration statement that is
to be filed with the SEC to qualify the WaveRider Merger Shares;
(ee) "Release" means any release, spill, emission, leaking, pumping,
injection, radiation, deposit, disposal, discharge, dispersal,
leaching or migration into the environment or on, or out of, any
property, including the movement of any Hazardous Material
through or in the air, soil, surface water or ground water;
(ff) "Subsidiary" means TTI Merger Inc., a corporation incorporated
under the laws of the State of Nevada;
(gg) "Surviving Corporation" means the Subsidiary after the Effective
Time;
(hh) "Taxes" means all taxes, including but not limited to, all United
States federal, state, local and foreign income, payroll,
employment, unemployment, withholding, excise, sales, personal
property, use, business and occupation, franchise, occupancy,
real estate, property transfer or other taxes (including interest
and penalties thereon and any estimated taxes) and "Tax" means
any of the foregoing;
(ii) "TTI" means Transformation Techniques, Inc., a corporation
created under the laws of the State of Ohio;
(jj) "TTI's Knowledge" means the knowledge, information and belief of
TTI respecting the facts and circumstances represented in this
Agreement after making due inquiry, including a review of its own
files and after making enquiry of senior management of TTI who
have responsibility for the relevant operations or matters
relating to such facts and circumstances;
(kk) "TTI Shares" means all of the issued and outstanding shares of
common stock of TTI;
(ll) "Trade Accounts" means all trade accounts and accrued expenses
payable by TTI;
(mm) "WaveRider Shares" means shares of the common stock of the
Parent;
(nn) "WaveRider Merger Shares" mean 256,232 WaveRider Shares, having
an issue price equal to $1.725 per share, being the average of
the closing price for the WaveRider Shares for the five
consecutive trading days ending June 9, 1999, and having an
aggregate value of $442,000.
4
