EXHIBIT 2.1
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is entered into as of June
27, 2003 (the "Agreement Date"), by and among WAVERIDER COMMUNICATIONS INC., a
Nevada corporation ("WaveRider"), and AVENDO WIRELESS INC., an Ontario
corporation ("Avendo"), and each of the persons signing this Agreement which
constitute all the stockholders of Avendo (each, a "Stockholder" and
collectively, the "Stockholders").
RECITALS
A. The parties desire that WaveRider acquire the capital stock and
debentures of Avendo as set out herein in an exchange (the "Exchange") pursuant
to which WaveRider shall issue a number of shares of its common stock, $.001 par
value per share ("WaveRider Common Stock"), and a number of warrants
("Warrants") to purchase shares of WaveRider Common Stock at an exercise price
equal to 105% of the closing price for WaveRider Common Stock on the last
trading day preceding the Closing Date (as defined in Section 7.1) and otherwise
in the terms of Exhibit A hereto, in each case determined on the basis set forth
in Section 1 of this Agreement.
B. As a result of the Exchange, Avendo shall become a wholly-owned
subsidiary of WaveRider and the shareholders of Avendo shall become shareholders
of WaveRider.
NOW, THEREFORE, in consideration of this Agreement and intending to be
legally bound herby the parties hereto agree as follows:
1. Exchange
1.1 Exchange. Subject to the terms and conditions of this Agreement,
each outstanding Avendo common share ("Avendo Common Stock") as set out on
Exhibit B hereto, each outstanding Avendo Series A Convertible Preferred Share
as set out on Exhibit B hereto ("Avendo Preference Stock"), each issued and
outstanding option (the "Avendo Options") to purchase shares of Avendo Common
Stock as set out on Exhibit B hereto, and the entire outstanding principal
(without interest) on the outstanding debentures of Avendo as set out on Exhibit
B hereto (the "Avendo Debentures") will be exchanged for shares of WaveRider
Common Stock, Warrants and/or options to purchase WaveRider Common Stock as
follows:
(a) Sale of Additional Debentures. Prior to the Closing (as
defined in Section 7.1), the holders of Avendo Preference Stock shall purchase
from Avendo CDN $792,667 of Avendo Debentures, based on the allocation set out
in Exhibit B.
(b) Exchange of Avendo Debentures. The entire outstanding
principal (without interest) of the Avendo Debentures shall be exchanged for
that number of shares of WaveRider Common Stock, which equals $1,017,751.48
divided by the Conversion Amount (defined as the average of the closing prices
for WaveRider Common Stock for each of the twenty consecutive trading days
immediately preceding the Agreement Date), and the WaveRider Common Stock shall
be issued based on the allocation set out in Exhibit B. The holders of the
Avendo Debentures hereby waive any entitlement to be paid interest accrued on
the Avendo Debentures since the time of their issue.
(c) Exchange of Avendo Preference Stock. The outstanding
Avendo Preference Stock shall be exchanged for: (i) that number of shares of
WaveRider Common Stock which equals $2,371,301.80 divided by the Conversion
Amount and issued based on the allocation set out in Exhibit B; and (ii)
1,800,000 Warrants based on the allocation set out in Exhibit B.
(d) Exchange of Avendo Common Stock. The outstanding shares of
Avendo Common Stock as set out in Exhibit B shall be exchanged for: (i) that
number of shares of WaveRider Common Stock which equals $110,946.75 divided by
the Conversion Amount and issued based on the allocation set out in Exhibit B;
and (ii) 1,200,000 Warrants based on the allocation set out in Exhibit B .
(e) Outstanding Avendo Options. All issued and outstanding
options, warrants or other rights to purchase Avendo Common Stock granted under
any plan, agreement or other arrangement (the "Avendo Options"), whether vested
or unvested, shall be exchanged at the Closing for 863,000 options (the
"WaveRider Options") under the WaveRider Employee Stock Option (2002) Plan (the
"WaveRider Option Plan") with an exercise price per share equal to the closing
price for WaveRider Common Stock on the trading day immediately preceding the
Closing Date to the former holders of Avendo Options pro rata in accordance with
the number of Avendo Options formerly held by them (the "WaveRider Options").
The WaveRider Options shall be subject to three (3) year vesting and to the
terms and conditions of the WaveRider Option Plan.
(f) Adjustment for Stock Splits. The Conversion Amount and the
Warrants shall be appropriately adjusted for any stock split or combination of
WaveRider Common Stock, any reclassification or recapitalization of WaveRider
Common Stock, or any dividend on WaveRider Common Stock payable in securities of
WaveRider, with a record date on or after the date hereof and on or before the
Closing Date.
1.2 Fractional Shares. No fractional shares of WaveRider Common Stock
shall be issued in connection with the Exchange. In lieu thereof, each Avendo
shareholder or debenture holder who would otherwise be entitled to receive a
fraction of a share of WaveRider Common Stock or Warrants will receive from
WaveRider, promptly after the Closing Date, an amount of cash equal to the
Conversion Amount multiplied by the fraction of a share of WaveRider Common
Stock to which such shareholder would otherwise be entitled.
1.3 Further Assurances. Avendo, WaveRider and each Stockholder hereby
agree that they will cause to be executed and filed and record any document or
documents prescribed by the laws of the Province of Ontario, Canada, or any
other jurisdiction and that they will cause to be performed all necessary or
desirable acts within the Province of Ontario, Canada, and elsewhere to
effectuate the Exchange. The Board of Directors and the proper officers of
WaveRider and Avendo are authorized, empowered and directed to do any and all
acts and things, and to make, execute, deliver, file and record any and all
instruments, papers and documents which shall be or become necessary, proper or
convenient to carry out or put into effect any of the provisions of this
Agreement or the Exchange provided for herein.
2. Representations and Warranties of Avendo
Avendo hereby represents and warrants that, except as set forth on the
Avendo Schedule of Exceptions attached hereto as Schedule 2:
2.1 Organization and Good Standing. Avendo is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Ontario, Canada, has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted. Avendo does not own real property, have employees or
conduct intrastate business, nor is it required to be qualified to do business,
in any jurisdictions other than Ontario, Canada.
2.2 Power, Authorization and Validity.
(a) Avendo has the corporate right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement, and
all agreements to which it is or will be a party that are required to be
executed pursuant to this Agreement (the "Avendo Ancillary Agreements"). The
execution, delivery and performance of this Agreement and the Avendo Ancillary
Agreements has been duly and validly approved and authorized by the Board of
Directors of Avendo.
(b) No filing, authorization or approval, governmental or
otherwise, other than that set forth in Section 2.2(a) above, is necessary to
enable Avendo to enter into, and to perform its obligations under, this
Agreement and the Avendo Ancillary Agreements, except for notification under the
Investment Canada Act (Canada).
(c) This Agreement and the Avendo Ancillary Agreements are, or
when executed by Avendo will be, valid and binding obligations of Avendo
enforceable in accordance with their respective terms, except as to the effect,
if any, of: (a) applicable bankruptcy and other similar laws affecting the
rights of creditors generally; (b) rules of law governing specific performance,
injunctive relief and other equitable remedies; and (c) the enforceability of
provisions requiring indemnification in connection, with the offering, issuance
or sale of securities.
2.3 Capitalization. A true, correct and complete schedule of the entire
capitalization of Avendo is set forth on Schedule 2.3. All issued and
outstanding shares of Avendo Common Stock, Avendo Preference Stock and Avendo
Debentures are owned of record by the persons set forth on Schedule 2.3 and have
been duly authorized and validly issued, are fully paid and nonassessable, are
not subject to any right of rescission, and have been offered, issued, sold and
delivered in compliance with applicable Ontario securities laws. Except as set
forth on Schedule 2.3, there are no shares of Avendo Preference Stock, Avendo
Debentures, capital stock, convertible instruments (of any kind), options,
warrants, conversion privileges or preemptive or other rights or agreements of
any kind outstanding to purchase or otherwise acquire any of Avendo's authorized
but unissued capital stock, and there is no liability for dividends accrued but
unpaid. Except as disclosed in Schedule 2.3, there are no voting agreements,
rights of first refusal or other restrictions (other than normal restrictions on
transfer under applicable federal and state securities laws) applicable to any
of Avendo's outstanding securities.
2.4 Subsidiaries. Avendo has no subsidiaries nor any equity interest,
direct or indirect, in any corporation, partnership, joint venture or other
business entity.
2.5 No Violation of Existing Agreements. Neither the execution nor
delivery of this Agreement or any Avendo Ancillary Agreement, nor the
consummation of the transactions contemplated hereby or thereby, will conflict
with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of: (a) any provision of the
Articles of Incorporation or Bylaws of Avendo, as currently in effect; (b) in
any material respect, any material instrument or contract to which Avendo is a
party or by which Avendo is bound except as disclosed in Schedule 2.5; or (c)
any Canadian, provincial, local or foreign judgment, writ, decree, order,
statute, rule or regulation applicable to Avendo or its assets or properties.
The consummation of the Exchange will not require the consent of any third party
and will not have a material adverse effect upon any rights, licenses,
franchises, leases or agreements of Avendo pursuant to the terms of those
agreements.
2.6 Litigation. There is no action, proceeding, claim or investigation
of any kind pending against Avendo before any court or administrative agency,
and, to the best of the knowledge of Avendo, no such action, proceeding claim or
investigation has been threatened. There is no basis for any shareholder or
former shareholder of Avendo, or any other person, firm, corporation or entity,
to assert a claim against Avendo or WaveRider based upon: (a) ownership or
rights to ownership of any shares of Avendo Common Stock, Avendo Preference
Stock or Avendo Debentures; or (b) any rights as or to become an Avendo
shareholder, between Avendo and any of its shareholders or former shareholders
in their capacity as such.
2.7 Avendo Financial Statements. Attached hereto as Schedule 2.7 are
copies of Avendo's audited balance sheet as of December 31, 2002 and the related
audited statements of income, shareholders' equity and changes in cash flow for
the year then ended and Avendo's unaudited balance sheet as of May 31, 2003 and
the related statements of income, shareholders' equity, and changes in cash flow
for the period then ended (collectively, "Avendo Financial Statements"). The
Avendo Financial Statements: (a) have been prepared in accordance with Canadian
generally accepted accounting principles ("GAAP") except that the unaudited
statements do not contain notes, and (b) fairly present, in all material
respects, the financial condition of Avendo at the respective dates therein
indicated and the results of operations for the respective periods therein
specified. Avendo has no debt, liability or obligations of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
that is not reflected, reserved against or disclosed in the most recent balance
sheet included in the Avendo Financial Statements (the "Financial Statement
Date"), except for (i) those that are not required to be reported in accordance
with generally accepted accounting principles and are disclosed by Avendo in
writing to WaveRider; (ii) those that may have been incurred after the Financial
Statement Date in the ordinary course of Avendo's business, consistent with past
practice; and (iii) the Avendo Debentures to be issued immediately prior to
Closing.
2.8 Taxes. (a) Avendo has filed all Canadian, provincial, local and
foreign tax and information returns required to be filed, has paid all taxes
required to be paid in respect of all periods for which returns have been filed,
has established an adequate accrual or reserve for the payment of all taxes
payable in respect of the periods subsequent to the periods covered by the most
recent applicable tax returns, has made all necessary estimated tax payments,
and has no liability for taxes in excess of the amount so paid or accruals or
reserves so established in the applicable Avendo Financial Statements. True,
correct and complete copies of all such tax and information returns have been
provided or made available by Avendo to WaveRider. Avendo is not delinquent in
the payment of any tax or the filing of any tax returns, and no deficiencies for
any tax have been threatened, claimed, proposed, assessed which have not been
settled or paid nor is Avendo aware of any basis for such. No tax return of
Avendo has ever been audited by any taxing agency or authority, except for the
2001 tax return with respect to research and development tax credits. For the
purpose of this Section, the terms "tax" and "taxes" include all Canadian,
provincial, excise, state, local and foreign income, gains, franchise, property,
sales, use, employment, license, payroll, occupation, according, goods and
services, value added or transfer taxes, governmental charges, fees, levies or
assessments (whether payable directly or by withholding), and, with respect to
such taxes, any estimated tax, interest and penalties or additions to tax and
interest on such penalties and additions to tax. Avendo will not, as a result of
the Exchange, become liable for any income tax not adequately reserved against
on the Avendo Financial Statements.
(a) For income tax purposes, Schedule 2.8 sets forth the
following information with respect to Avendo as of the beginning of its current
taxable year: (a) the cost amount of its assets; (b) the amount of any
non-capital loss, net capital loss, unused investment or other tax credit,
unused foreign tax credit, or excess charitable contribution of Avendo; (c) the
paid-up capital of the shares of Avendo to be sold by Avendo Shareholders; (d)
the cumulative eligible capital accounts; and (e) the tax elections or
designations of Avendo affecting the character, source, timing and computation
of income, gain, loss, deduction and credits of Avendo.
(b) Avendo has not discontinued carrying on any business in
respect of which any of its non-capital losses were incurred, or any of its tax
credits were earned.
(c) Avendo has not acquired or had the use of any property
from a person who did not deal at arm's length with Avendo for income tax
purposes.
(d) Avendo has not disposed of any property to a person who
did not deal at arm's length with Avendo for income tax purposes for proceeds of
disposition less than fair market value.
(e) There are no amounts outstanding and unpaid for which
Avendo has previously claimed a deduction for income tax purposes.
(f) There has been no acquisition or change of control, for
income tax purposes,
of Avendo that would affect the last seven taxation years ending immediately
before Closing, except as a result of transactions contemplated by this
Agreement.
(g) There are no currently outstanding requests made by any of
Avendo or Avendo's shareholders for tax rulings, determinations or information
that could affect the taxes of Avendo.
(h) No taxing authority has asserted, or threatened to assert,
any adjustment, deficiency or assessment for any taxes against Avendo, and to
the best of Avendo's knowledge no basis exists for any such adjustment,
deficiency or assessment which would result in additional taxes owed by Avendo
for any period for which returns have been filed.
(i) Avendo has not waived any statute of limitations in
respect of taxes or agreed to any extension of time with respect to a tax
adjustment, assessment or deficiency except for such waivers or extensions
which, by their terms, have elapsed as of the date of this Agreement.
2.9 Title to Properties. Avendo has good and marketable title to all of
its assets as shown on its balance sheet as of the Financial Statement Date
included in the Avendo Financial Statements, free and clear of all liens,
charges, encumbrances, other than for taxes not yet due and payable, and those
security interests set forth in Schedule 2.9. The machinery and equipment
included in such properties are in all material respects in good condition and
repair, normal wear and tear excepted, and all leases real or personal property
to which Avendo is a party are fully effective and afford Avendo, as the case
may be, peaceful and undisturbed possession of the subject matter of the lease.
Avendo is not in violation of any zoning, building, safety, environmental
ordinance, regulation or requirement or other law or regulation applicable to
the operation of its owned or leased properties (the violation of which would
have a material adverse effect on its business), and Avendo has not received any
notice of such violation with which it has not complied or had waived.
2.10 Absence of Certain Changes. Since the Financial Statement Date,
except as contemplated by this transaction or disclosed on Schedule 2.10,
Avendo:
(a) has operated its business in the normal, usual and
customary manner in the ordinary and regular course of business;
(b) has not sold or otherwise disposed of any of its
properties or assets, other than inventory sold in the ordinary course of
business;
(c) except in each case in the ordinary course of business,
(i) has not amended or terminated any outstanding
lease, contract or agreement,
(ii) has not incurred any obligations or liabilities
(fixed, contingent or other), and
(iii) has not entered any commitments;
(d) has not mortgaged, pledged or subjected to lien or any
other encumbrances, any of its assets, tangible or intangible;
(e) has not sold, assigned or transferred any patents,
trademarks, trade names, trade secrets, copyrights or other intangible assets;
(f) has not increased the compensation payable or to become
payable to any of its officers, employees, or agents;
(g) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of property
by any governmental authority;
(h) has not declared, set aside, or paid any cash or stock
dividend or other distribution in respect of its capital stock, or redeemed or
otherwise acquired any of its capital stock;
(i) except for $500,000 plus CDN$116,667 in principal amount
of Avendo Debentures, has not issued or sold any shares of its capital stock of
any class, or any other of its securities, or issued or created any warrants;
obligations, subscriptions, options, convertible securities or other commitments
to issue capital stock;
(j) has not split or combined its outstanding shares of
capital stock or entered into any recapitalization or reclassification affecting
the number of outstanding shares of its capital stock or affecting any other of
its securities; or
(k) has not entered into any agreement to do any of the
foregoing.
2.11 Agreements and Commitments. Except as set forth in Schedule 2.11
attached hereto, or as listed in Schedule 2.12 or Schedule 2.15, Avendo is not a
party or subject to any material, oral or written agreement, obligation or
commitment which is described below.
(a) Contract, commitment, letter contract, quotation, purchase
order, bid or proposal providing for, or with a reasonable possibility of
resulting in, payments by or to Avendo in an aggregate amount of (i) $10,000 or
more in the ordinary course of business; or (ii) $5,000 or more not in the
ordinary course of business.
(b) License agreement as licensor or licensee providing for,
or with a reasonable possibility of resulting in, payment by or to Avendo in an
aggregate amount of: (i) $10,000 or more in the ordinary course of business; or
(ii) any amount if not in the ordinary course of business (including all
licenses to Avendo, but excluding licenses where Avendo is a licensee of
standard non-exclusive software licenses granted to end user customers by third
parties in the ordinary course of business).
(c) Except as described in Schedule 2.9, agreement by Avendo
to encumber, transfer or sell rights in or with respect to any Intellectual
Property (as defined in Section 2.12 hereof).
(d) Agreement for the sale or lease of real or personal
property involving more than $10,000 per year.
(e) Dealer, distributor, sales representative, original
equipment manufacturer, value added remarketer or other agreement for the
distribution of Avendo's products.
(f) Franchise agreement or financing statement.
(g) Stock redemption or purchase agreement.
(h) Joint venture contract or arrangement or any other
agreement that involves a sharing of profits with other persons.
(i) Instrument evidencing indebtedness for borrowed money by
way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise, except for trade indebtedness and
advances to employees incurred in the ordinary course of business, and except as
disclosed in the Avendo Financial Statements dated as of, or for the period
ending, on the Financial Statement Date.
(j) Contract containing covenants purporting to limit Avendo's
freedom to compete in any line of business in any geographic area.
(k) Warranty, indemnity or guaranty agreements.
All agreements, obligations and commitments listed in Schedule 2.11,
Schedule 2.12 or Schedule 2.15 (the "Material Contracts") are valid and in full
force and effect in all material respect and a true and complete copy of each
has been made available to WaveRider's counsel. Avendo is not, and to the best
knowledge of Avendo, no other party is, in breach or fault in any material
respect under the terms of any such agreement, obligation or commitment, which
breach or default may reasonably be expected to have a material adverse effect
on Avendo. Avendo is not a party to any contract or arrangement which it
reasonably expects will have a material adverse effect on its business or
prospects. Avendo has no material liability for renegotiation of government
contracts or subcontracts, if any. Each Material Contract can be performed
without a loss to Avendo.
2.12 Intellectual Property. To the best knowledge of Avendo, Avendo
owns or has the right to use on commercially reasonable terms all right, title
and interest in all patents, trademarks, service marks, trade names, mask works,
copyrights, trade secrets, know-how, technology and other intellectual property
and proprietary rights necessary to the conduct of its business as presently
conducted and as proposed to be conducted ("Intellectual Property"). All
copyrighted works created by or for Avendo were created solely by full-time,
regular employees of Avendo, including those consultants under contract, that
are listed in Schedule 2.15 of the Schedule of Exceptions. Avendo has taken
measures which it believes are reasonable to protect all Intellectual Property,
and Avendo is not aware of any infringement of such Intellectual Property by any
third party. Schedule 2.12 attached hereto is a true and complete list of all
copyright, mask work, trademark, trade name and service xxxx registrations and
all patents and patent applications for Intellectual Property owned by Avendo,
and no material loss, cancellation, termination or expiration of any such
registration or patent is reasonably foreseeable by Avendo except as set forth
on Schedule 2.12. Avendo represents that it has timely paid all maintenance fees
for all patents listed on Schedule 2.12 and that no patents listed on Schedule
2.12 have expired for failure to pay maintenance fees. Avendo represents and
warrants that it is the owner of the entire right, title and interest of all
patents listed on Schedule 2.12. Avendo is not using any trademarks, tradenames
or service marks in commerce other than those listed on Schedule 2.12. Copies of
all forms of non-disclosure or confidentiality agreements utilized to protect
such Intellectual Property have been provided to WaveRider's counsel. The
business of Avendo as presently conducted and as proposed to be conducted by
Avendo, to the best knowledge of Avendo, does not and will not cause Avendo to
infringe or violate any of the patents, trademarks, service marks, trade names,
mask works, copyrights, trade secrets, proprietary rights or other intellectual
property of any other person, and Avendo has not received any claim or notice of
infringement or potential infringement of the intellectual property of any other
person which could be expected to have a material adverse effect on Avendo's
business. Avendo has the right to reproduce and distribute all of its products
and the right to use all of its registered user lists. To the best knowledge of
Avendo and except for the matter described in the opinion of Xxxxxxx & Yallen
dated January 25, 2001 provided to WaveRider, Avendo is not using any
confidential information or trade secrets of any former employer of any past or
present employees.
2.13 Compliance with Laws. Avendo has complied with all applicable
laws, ordinances, regulations and rules, and all orders, writs injunctions,
awards, judgments and decrees, applicable to Avendo or to its assets, properties
and business (the violation of which would have a material adverse effect upon
Avendo), including, without limitation: (a) all applicable securities laws and
regulations of Canada and Ontario; and (b) all applicable Canadian, provincial
and local laws, ordinances and regulations, and all orders, writs, injunctions,
awards, judgments and decrees, pertaining to (i) the sale, licensing, leasing,
ownership or management of Avendo's owned, leased or licensed real or personal
property, products and technical data, (ii) employment and employment practices,
terms and conditions of employment, and wages and hours, and (iii) safety,
health, fire prevention, environmental protection, building standards, zoning
and other similar matters. Avendo has received all material permits and
approvals from, and has made all material filings with, third parties, including
government agencies and authorities, that are necessary in connection with its
present businesses.
2.14 Certain Transactions and Agreements. None of the officers or
directors of Avendo, nor any member of any officer's or director's immediate
family, has any direct or indirect ownership interest in any firm or corporation
that competes with Avendo (except with respect to any interest that is not a
material portion of the assets of such person, and is less than one percent of
the stock of any corporation whose stock is publicly traded). None of such
officers or directors, or any member of any officer's or director's immediate
family, is or has been directly or indirectly interested in any contract or
informal arrangement with Avendo, within the last three years, except for
compensation for services as an officer, director or employee of Avendo. None of
such officers or directors or family members has any interest in any property,
real or personal, tangible or intangible, including but not limited to
Intellectual Property, used in the business of Avendo, except for the normal
rights of a shareholder.
2.15 Employees.
(a) Schedule 2.15(a) contains a list of all written employment
contracts currently in effect that are not terminable at will without cost to
Avendo (other than agreements with the sole purpose of providing for the
confidentiality of proprietary information or assignment of inventions). Avendo
has no oral employment contracts. Each officer, employee and consultant of
Avendo having access to proprietary information of Avendo has executed and
delivered to Avendo an agreement regarding the protection of such proprietary
information and the assignment of inventions to Avendo; copies of the forms of
all such agreements have been delivered to WaveRider's counsel.
(b) Avendo has: (i) never been and is not now subject to a
union organizing effort; (ii) is not subject to any collective bargaining
agreement with respect to any of its employees; (iii) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization; and (iv) has no material current labor
dispute. Avendo has good labor relations, and has no knowledge of any facts
indicating that the consummation of the transactions contemplated hereby will
have a material adverse effect on such labor relations, and has no knowledge
that any of its key employees intends to leave its employ.
(c) Schedule 2.15 contains a list of all pension, retirement,
disability, medical, dental or other health plans, life insurance or other death
benefit plans, profit sharing, deferred compensation agreements, stock, option,
bonus or other incentive plans, vacation, sick, holiday or other paid leave
plans, severance plans or other similar employee benefit plans maintained by
Avendo (the "Employee Plans"). Each of the Employee Plans, and its operation and
administration, is, in all material respects, in compliance with all applicable
Canadian, provincial, local and other governmental laws and ordinances, orders,
rules and regulations.
(d) To the best knowledge of Avendo, no employee of Avendo is
in material violation of: (a) any term of any employment contract, patent
disclosure agreement or noncompetition agreement; or (b) any other contract or
agreement, or any restrictive covenant, relating to the right of any such
employee to be employed by Avendo or to use trade secrets or proprietary
information of others. To the best knowledge of Avendo, the employment of any
employee of Avendo does not subject Avendo to any liability to any third party.
(e) Except for employment agreements with Xxxxxx Xxxxx and
Xxxx Xxxxx, Avendo is not a party to any: (a) agreement with any executive
officer or other key employee of Avendo (i) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving Avendo in the nature of any of the transactions
contemplated by this Agreement and the Avendo Ancillary Agreement, (ii)
providing any term of employment or compensation guarantee, or (iii) providing
severance benefits or other benefits after the termination of employment of such
employee regardless of the reason for such termination of employment; or (b)
agreement or plan, including, without limitation, any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be calculated on the
basis of any of the transactions by this Agreement and the Avendo Ancillary
Agreements.
(f) A list of ongoing employees, officers and technical,
engineering and development consultants of Avendo and their current compensation
is set forth on Schedule 2.15 attached hereto.
(g) All contributions due from Avendo with respect to any of
the Employee Plans have been made or accrued on Avendo's financial statements,
and no further contributions will be due or will have accrued thereunder as of
the Closing Date.
2.16 Corporate Documents. Avendo has made available to WaveRider for
examination all material documents and information of Avendo, including, without
limitation, the documents and agreements referenced in the Schedules to this
Agreement and the following: (a) copies of Avendo's Articles of Incorporation,
Bylaws as currently in effect; (b) Avendo's Minute Book containing all records
of all proceedings, consents, actions and meeting of Avendo's board of directors
and shareholders; (c) Avendo's stock ledger and journal reflecting all stock
issuances and transfers; and (d) all permits, orders and consents issued by any
regulatory agency with respect to Avendo, or any securities of Avendo, and all
applications for such permits, orders and consents.
2.17 No Brokers. Avendo is not obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
origin, negotiations or execution of this Agreement or the Avendo Ancillary
Agreements or in connection with any transaction contemplated hereby or thereby.
2.18 Disclosure. Neither this Agreement, its exhibits and schedules,
nor any of the certificates or documents to be delivered by Avendo to WaveRider
under this Agreement, contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which such statements
were made, not misleading.
2.19 Books and Records.
(a) The books, records and accounts of Avendo: (a) are in all
material respects true, complete and correct; (b) have been maintained in
accordance with good business practices on a basis consistent with prior years;
(c) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of Avendo; and (d) accurately and
fairly reflect the basis for the Avendo Financial Statements.
(b) Avendo has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary (1) to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements and
(2) to maintain accountability for assets; and (iii) the amount recorded for
assets on the books and records of Avendo is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
2.20 Insurance. Avendo maintains the insurance policies listed on
Schedule 2.20. The insurance policies listed and described briefly on Schedule
2.20 constitute all of the policies in force and effect in respect of the
business, properties and assets, including, without limitation, insurance on
personnel, of Avendo. Avendo is not in default under any such policy. The
insurance policies so listed and identified are sufficient in nature, scope and
amounts to insure adequately (and, in any event, in amounts sufficient to
prevent Avendo from becoming a co-insurer within the terms of such policies) the
business, properties and assets of Avendo. Avendo has not been refused insurance
by any insurance carrier to which it has applied for insurance.
2.21 Environmental Matters.
Avendo has complied in all respects with all Canadian, provincial, and
local laws, rules, ordinances and regulations applicable to environmental
protection and related matters.
2.22 Exempt Take-Over Bid. For the purposes of enabling WaveRider to
rely upon the exemptions from sections 95 to 100 of the Securities Act (Ontario)
(the "OSA") provided for in section 93(1)d thereof, Avendo represents and
warrants that (a) it is not a reporting issuer as defined in the Securities Act,
(b) there is not a published market in respect of the Avendo Common Stock, the
Avendo Preference Stock or the Avendo Debentures, and (c) the number of holders
of each of the aforesaid classes of Avendo securities is not more than 50,
exclusive of holders who are in the employment of Avendo and exclusive of
holders who were formerly in the employment of Avendo and who, while in that
employment were, and have continued after that employment to be, security
holders of Avendo.
2A. Representations of the Stockholders.
The following representations are made severally, and not jointly, by
the applicable Stockholders.
(a) Title. Each Stockholder is the sole record and beneficial owner of
the shares of Avendo Common Stock and Avendo Preference Stock and Debentures set
forth opposite his or her name on Exhibit B hereof and has good and marketable
title to all such shares, free and clear of all mortgages, liens, claims,
charges, security interests, or other encumbrances or rights of third parties,
except for the Stock Restriction Agreement and Shareholders Agreement of Avendo.
(b) Investment Representations.
(i) Acquired for Investment. Each Stockholder is acquiring the
shares of WaveRider Common Stock to be received by the Stockholder in the
Exchange for the Stockholder's own account for investment and not for, with a
view to or in connection with any resale or distribution thereof that would be
in violation of the registration requirements of the securities laws of the
United States of America or any state thereof.
(ii) Accredited Investor. The "accredited investor"
Stockholders set out in Exhibit B (each individually, a "Group A Investor") (a)
are "accredited investors" within the meaning of Rule 501 promulgated under the
Securities Act of 1933, as amended (the "Securities Act") and (b) by reason of
the Group A Investor's business and financial experience, and the business and
financial experience of those persons retained by the Group A Investor to advise
the Group A Investor with respect to the Group A Investor's investment in the
shares of WaveRider Common Stock to be received by such Group A Investor
pursuant to the Exchange, the Group A Investor, together with such advisors, has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the prospective
investment, and is able to bear the economic risk of such investment and is able
to afford a complete loss of such investment.
(iii) All Stockholders. Each of the Stockholders (a)
understands that the shares of WaveRider Common Stock issuable upon exchange of
the Avendo Common Stock, Avendo Preference Stock and Avendo Debentures have not
been, and will not be, registered under the Securities Act or any state
securities law, by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act and such laws, that the
WaveRider Common Stock must be held indefinitely unless it is subsequently
registered under the Securities Act and such laws or a subsequent disposition
thereof is exempt from registration, that the certificates for the WaveRider
Common Stock shall bear a legend to such effect, and that appropriate stop
transfer instructions may be issued; (b) understands that the exemptions under
which the WaveRider Common Stock and Warrants are being issued depend upon,
among other things, the bona fide nature of such Stockholder's investment intent
expressed herein; (c) warrants that such Stockholder has not been formed for the
specific purpose of acquiring the WaveRider Common Stock pursuant to this
Agreement; (d) has sufficient knowledge and experience in business and financial
matters and with respect to investment in securities of publicly held companies
so as to enable it to analyze and evaluate the merits and risks of the
investment contemplated hereby and is capable of protecting its interest in
connection with this transaction, and is able to bear the economic risk of such
investment, including a complete loss of the investment; (e) acknowledges that
such Stockholder has received or will receive the package provided or to be
provided by WaveRider containing SEC Documents from January 1, 2002 through June
26, 2003 (the "Investor's Package") and has reviewed or will review prior to
Closing such Investor's Package personally; (f) acknowledges that such
Stockholder and its representatives have had the opportunity to ask questions
and receive answers from officers and representatives of WaveRider concerning
WaveRider and its proposed business and the transactions contemplated by this
Agreement and to obtain any additional information which WaveRider possesses or
can acquire that is necessary to verify the accuracy of the information
regarding WaveRider herein set forth or otherwise desired in connection with its
purchase of the WaveRider Common Stock purchasable by it hereunder; and (g)
accepts, acknowledges and understands that (1) the proposed business of
WaveRider is subject to risks and uncertainties, including but not limited to
those described in the Investor's Package, and (2) any of the risks and
uncertainties described in the Investor's Package, as well as other risks not
described therein, could negatively affect the value of the WaveRider Common
Stock.
2.23 Residence of Stockholders. None of the Stockholders is a
non-resident of Canada within the meaning of the Income Tax Act (Canada).
3. Representations and Warranties of WaveRider.
WaveRider hereby represents and warrants, that, except as set forth on
the WaveRider Schedule of Exceptions attached hereto as Schedule 3:
3.1 Organization and Good Standing. WaveRider is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. WaveRider has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted. WaveRider does not own or lease real property, have
employees or conduct business, nor is required to be qualified to do business in
any jurisdiction other than those set forth in Schedule 3.1.
3.2 Power, Authorization and Validity.
(a) WaveRider has the corporate right, power, legal capacity
and authority to enter into and perform its obligations under this Agreement,
and all agreements to which WaveRider is or will be a party that are required to
be executed pursuant to this Agreement (the "WaveRider Ancillary Agreements").
The execution, delivery and performance of this Agreement and the WaveRider
Ancillary Agreements has been duly and validly approved and authorized by
WaveRider's Board of Directors. The approval of the shareholders of WaveRider is
not required for such actions.
(b) No filing, authorization or approval, governmental or
otherwise, is necessary to enable WaveRider to enter into or perform its
obligations under this Agreement and the WaveRider Ancillary Agreements, except
for such filings and permits as may be required to comply with Canadian and U.S.
securities laws and the Investment Canada Act (Canada).
(c) This Agreement and the WaveRider Ancillary Agreements are,
or when executed by WaveRider will be, valid and binding obligations of
WaveRider, enforceable in accordance with their respective terms, except as to
the effect, if any, of: (i) applicable bankruptcy and other similar laws
affecting the rights of creditors generally; (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies; and (iii)
the enforceability of provisions requiring indemnification in connection with
the offering, issuance or sale of securities.
3.3 Capitalization. The authorized capital stock of WaveRider is as set
forth in the WaveRider SEC documents (as defined in Section 3.4). The WaveRider
Common Stock, Warrants and WaveRider Options, issuable in the Exchange and the
shares of WaveRider Common Stock issuable upon exercise of the Warrants and the
WaveRider Options upon issuance in accordance with this Agreement will be duly
and validly issued, fully paid and non-assessable, and not subject to any right
of rescission, liens, charges, restrictions, claims or encumbrances and will
have been offered, issued, sold and delivered by WaveRider in compliance with
all registration or qualification requirements (or applicable exemptions
therefrom) of applicable Canadian and U.S. securities laws.
3.4 SEC Documents; Financial Statements. WaveRider has made available
to Avendo a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by WaveRider with the U.S.
Securities and Exchange Commission ("SEC") since January 1, 2002 (as such
documents have since the time of their filing been amended, the "WaveRider SEC
Documents"), which are all the documents (other than preliminary material) that
WaveRider was required to file with the SEC since such date. As of their
respective dates, the WaveRider SEC Documents and any forms, reports and other
documents filed by WaveRider after the date of this Agreement complied or will
comply in all material respects with the requirements of the U.S. Securities Act
of 1933, as amended (the "Securities Act"), or the U.S. Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC thereunder applicable to such WaveRider SEC Documents or such other
forms, reports or other documents, and none of the WaveRider SEC Documents
contained, or will contain at the time they are filed, any untrue statement of a
material fact or omitted, or will omit at the time they are filed, to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of WaveRider included in the WaveRider SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Form
10-Q of the SEC) and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments, which were not individually
or in the aggregate material) in all material respects the financial position of
WaveRider as at the dates thereof and the results of its operations and cash
flows for the periods then ended.
3.5 Absence of Certain Changes. Since the date of the most recent
WaveRider SEC Document, except as contemplated by this transaction or as
disclosed on Schedule 3.5, there has not been with respect to WaveRider any
material adverse change in the business, results of operations or creditors of
WaveRider.
3.6 Intellectual Property. To the best knowledge of WaveRider,
WaveRider owns or has the right to use on commercially reasonable terms all
right, title and interest in all patents, trademarks, service marks, trade
names, mask works, copyrights, trade secrets, know-how, technology and other
intellectual property and proprietary rights necessary to the conduct of its
business as presently conducted and as proposed to be conducted ("WaveRider
IP"). All copyrighted works created by or for WaveRider were created solely by
full-time, regular employees of WaveRider. WaveRider has taken measures which it
believes are reasonable to protect all WaveRider IP, and WaveRider is not aware
of any infringement of such WaveRider IP by any third party. Schedule 3.6
attached hereto is a true and complete list of all copyright, mask work,
trademark, trade name and service xxxx registrations and all patents and patent
applications for WaveRider IP owned by WaveRider, and no material loss,
cancellation, termination or expiration of any such registration or patent is
reasonably foreseeable by WaveRider except as set forth on Schedule 3.6.
WaveRider represents that it has timely paid all maintenance fees for all
patents listed on Schedule 3.6 and that no patents listed on Schedule 3.6 have
expired for failure to pay maintenance fees. WaveRider represents and warrants
that it is the owner of the entire right, title and interest of all patents
listed on Schedule 3.6. WaveRider is not using any trademarks, tradenames or
service marks in commerce other than those listed on Schedule 3.6. Copies of all
forms of non-disclosure or confidentiality agreements utilized to protect such
Intellectual Property have been made available to Avendo's counsel. The business
of WaveRider as presently conducted and as proposed to be conducted by
WaveRider, to the best knowledge of WaveRider, does not and will not cause
WaveRider to infringe or violate any of the patents, trademarks, service marks,
trade names, mask works, copyrights, trade secrets, proprietary rights or other
intellectual property of any other person, and WaveRider has not received any
claim or notice of infringement or potential infringement of the intellectual
property of any other person which could be expected to have a material adverse
effect on WaveRider's business. WaveRider has the right to reproduce and
distribute all of its products and the right to use all of its registered user
lists. To the best knowledge of WaveRider, WaveRider is not using any
confidential information or trade secrets of any former employer of any past or
present employees.
3.7 No Brokers. WaveRider is not obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
origin, negotiation or execution of this Agreement or the WaveRider Ancillary
Agreements, or in connection with any transaction contemplated hereby or
thereby.
3.8 No Violation of Existing Agreements. Neither the execution nor
delivery of this Agreement or any WaveRider Ancillary Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with, or
(with or without notice or lapse of time, or both) result in a termination,
breach, impairment or violation of: (a) any provision of the Certificate of
Incorporation or Bylaws of WaveRider as currently in effect; (b) in any material
respect, any material instrument or contract to which WaveRider is a party or by
which WaveRider is bound or which WaveRider will become a party to or be bound
by prior to the Closing; or (c) any Canadian or U.S. federal, provincial, state,
local or foreign judgment, writ, decree, order, statute, rule or regulation
applicable to WaveRider or its assets or properties.
3.9 Compliance with Applicable Laws. WaveRider is in compliance in all
material respects of each law, ordinance, regulation, rule or order of any
applicable governmental entity. WaveRider has not been notified by any
applicable governmental entity that any investigation or review with respect to
WaveRider is pending or threatened, nor has any governmental entity notified
WaveRider of its intention to conduct the same (except for review by the U.S.
Securities and Exchange Commission of WaveRider's regular filings). WaveRider
has all material permits, licenses and franchises from governmental entities
required to conduct its business as now being conducted, and is in material
compliance with all such permits, licenses and franchises.
3.10 Litigation. There is no suit, action, arbitration, demand, claim
or proceeding (collectively, a "Proceeding") pending or, to the knowledge of
WaveRider, threatened against WaveRider; nor is there any judgment, decree,
injunction, rule or order of any governmental entity or arbitrator outstanding
against WaveRider.
3.11 Certain Proceedings. There is no pending Proceeding that has been
commenced against WaveRider and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
transactions contemplated by this Agreement. To WaveRider's knowledge, no such
Proceedings has been threatened.
3.12 Suspension in Trading. No order ceasing or suspending the trading
in securities of WaveRider is currently outstanding and no proceedings for this
purpose have been instituted or, to the knowledge of WaveRider are pending,
contemplated or threatened.
3.13 NASD Trading. The WaveRider Common Stock currently trades in the
over-the-counter market on the OTC Electronic Bulletin Board by the National
Association of Securities Dealers, Inc ("NASD").
3.14 Prospectus Exemptions. WaveRider has been a "reporting issuer" (as
defined in the OSA) in Ontario for the twelve (12) months immediately preceding
the Agreement Date.
4. Avendo and Stockholders Preclosing Covenants.
During the period from the date of this Agreement until the Effective
Time, each of Avendo and the Stockholders covenants and agrees as follows:
4.1 Notice of Changes. Avendo and each Stockholder shall promptly
notify WaveRider in writing: (a) of any event occurring subsequent to the date
of this Agreement that would render any representation or warranty of Avendo or
such Stockholder contained in this Agreement, if made on or as of the date of
such event or the Closing Date, untrue or inaccurate in any material respect;
and (b) of any material adverse change in Avendo's business, results of
operations or financial condition. Avendo shall deliver to WaveRider within 15
days after the end of each monthly accounting period ending after the date of
this Agreement and before the Closing Date, an unaudited balance sheet and
statement of operations, which financial statements shall be prepared in the
ordinary course of business, in accordance with the corporation's books and
records and generally accepted accounting principles and shall fairly present
the financial position of the corporation as of their respective dates and the
results of the corporation's operations for the periods then ended.
4.2 Maintenance of Business. Avendo shall use best efforts to carry on
and preserve its goodwill, business and its relationships with customers,
suppliers, employees and others in substantially the same manner as it has prior
to the date hereof. If Avendo becomes aware of a material deterioration in the
relationship with any customer, supplier or key employee, it will promptly bring
such information to the attention of WaveRider in writing (provided, however,
that Avendo shall not be required to disclose to WaveRider confidential
information of a third party so long as Avendo informs WaveRider in writing that
it is unable to provide such information in a specific case and the reason
therefor, and provides such information to WaveRider's counsel, on an
"attorney-only basis,") if requested by WaveRider and, if requested by
WaveRider, will exert all reasonable efforts to restore the relationship.
4.3 Conduct of Business. Avendo from the date hereof to the Closing
Date.
(a) will operate its business in the normal, usual and
customary manner in the ordinary and regular course of business;
(b) will not sell or otherwise dispose of any of its
properties or assets, other than inventory of finished goods sold in the
ordinary course of business;
(c) except in each case in the ordinary course of business,
(i) will not amend or terminate any outstanding lease,
contract or agreement,
(ii) will not incur any obligations or liabilities
(fixed, contingent or other), and
(iii) will not enter into any commitments;
(d) will not mortgage, pledge or subject to lien or any other
encumbrances, any of its assets, tangible or intangible unless such mortgage,
pledge, lien or encumbrance is discharged before the Closing;
(e) will not sell, assign or transfer any patents, trademarks,
trade names, trade secrets, copyrights or other intangible assets;
(f) will not increase the compensation payable or to become
payable to any of its officers, employees, or agents;
(g) will not suffer any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of property
by any governmental authority;
(h) will not declare, set aside, or pay any cash or stock
dividend or other distribution in respect of its capital stock, or redeem or
otherwise acquire any of its capital stock;
(i) will not issue or sell any shares of its capital stock of
any class, or any other of its securities (except for the Avendo Debentures), or
issue or create any warrants; obligations, subscriptions, options, convertible
securities or other commitments to issued capital stock;
(j) will not split or combine its outstanding shares of
capital stock or enter into any recapitalization or reclassification affecting
the number of outstanding shares of its capital stock or affecting any other of
its securities;
(k) will not amalgamate, consolidate with or reorganize with
or acquire any other entity;
(l) will not enter into any other transaction or transactions
which individually or in the aggregate are material to Avendo; or
(m) will not enter into any agreement to do any of the
foregoing.
4.4 Regulatory Approvals. Avendo shall execute and file, or join in the
execution and filing, of any application or other document that may be necessary
or desirable to obtain the authorization, approval or consent of any
governmental body, Canadian or U.S. Federal, provincial, local or foreign which
may be reasonably required, or which WaveRider may reasonably request, in
connection with the consummation of the transactions contemplated by this
Agreement. Avendo will use all reasonable efforts to obtain all such
authorizations, approvals and consents.
4.5 Necessary Consents. Avendo shall use all reasonable efforts to
obtain such written consents and take such other actions as may be necessary or
appropriate for Avendo to allow the consummation of the transactions
contemplated hereby and to carry on Avendo's business after the Closing.
4.6 Litigation. Avendo shall notify WaveRider in writing promptly after
learning of any actions, suits, proceedings or investigations by or before any
court, board or governmental agency, initiated by or against Avendo, or known by
Avendo to be threatened against it.
4.7 No Other Negotiations. From the date hereof until the termination
of this Agreement (provided such termination is not in breach of this Agreement)
or consummation of the Exchange, (i) Avendo shall not, and shall not authorize
or permit any officer, director, employee or affiliate of Avendo, or any other
person, on its behalf to, directly or indirectly, solicit or encourage any offer
from any party or encourage any offer from any party or consider any inquiry or
proposal received from any party other than WaveRider, concerning the possible
disposition of all or any material portion of Avendo's business, assets or
capital stock by Exchange, sale or any other means (a "Competing Transaction")
and (ii) Avendo shall not consummate a Competing Transaction or agree to
consummate a Competing Transaction. Avendo shall promptly notify WaveRider
orally and in writing of any such offer, inquiry or proposal.
4.8 Access to Information. Until the Closing, Avendo will allow
WaveRider and its agents full and complete access to the files, books, records
and offices of Avendo, including, without limitation, any and all information
relating to Avendo's taxes, commitments, contracts, leases, licenses, and real,
personal and intangible property and financial condition. Avendo will cause its
accountants to cooperate with WaveRider and its agents in making available all
financial information reasonably requested, including without limitation the
right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants. Notwithstanding the foregoing, Avendo
shall not be required to provide WaveRider with access to competitive
information, and may provide that such information shall only be available to
WaveRider's outside accountants or legal counsel.
4.9 Satisfaction of Conditions Precedent. Avendo shall use all
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Section 7, and Avendo will use all reasonable
efforts to cause the transactions contemplated by this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part to effect the transactions contemplated hereby.
5. WaveRider Preclosing Covenants.
During the period from the date of this Agreement until the Effective
Time, WaveRider covenants and agrees as follows:
5.1 Conduct of Business. WaveRider will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course.
5.2 Satisfaction of Conditions Precedent. WaveRider shall use all
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Section 8 and WaveRider shall use all
reasonable efforts to cause the transactions contemplated by this Agreement to
by consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part to effect the transactions contemplated hereby.
5.3 Regulatory Approvals. WaveRider shall execute and file, or join in
the execution and filing, of any application or other document that may be
necessary to obtain the authorization, approval or consent of any governmental
body, Canadian or U.S. federal, provincial, state, local or foreign, which may
be reasonably required, or which the Stockholders and Avendo may reasonably
request, in connection with the consummation of the transactions contemplated by
this Agreement. WaveRider shall use all reasonable efforts to obtain all such
authorizations, approvals and consents.
5.4 Canadian Approvals. WaveRider shall have filed all notices and
information (if any) required under: (i) the Investment Canada Act (Canada) and
(ii) Part IX of the Competition Act (Canada) and WaveRider, acting reasonably,
shall be satisfied that the transaction may proceed without approval under
either statute or that all such approvals have been obtained.
5.5 Necessary Consents. WaveRider shall use all reasonable efforts to
obtain such written consents and take such other actions as may be necessary or
appropriate for WaveRider, to allow the consummation of the transactions
contemplated hereby.
6. Indemnification.
6.1 Indemnification.
(a) Subject to Section 6.2, each Stockholder hereby agrees to
severally and not jointly indemnify, defend and hold WaveRider harmless from and
against the amount of any actual (or potential in the case of any litigation or
claims by any person not a party to this Agreement) damage, loss, cost or
expense (including reasonable attorneys' fees and settlement costs) to WaveRider
("Loss") occasioned or caused by, resulting from or arising out of:
(i) Any failure by such Stockholder or by Avendo to
perform, abide by or fulfill any of the agreements, covenants or obligations set
forth in or entered into, in connection with this Agreement to be so performed
or fulfilled by such Stockholder or Avendo.
(ii) Any inaccuracy in or breach of any of the
representations or warranties of such Stockholder or Avendo set forth in this
Agreement, or any certificate or Schedule or other writing furnished to
WaveRider pursuant hereto.
(iii) Any failure on the part of WaveRider to withhold
from the Purchase Price any amount due by Avendo or such Stockholder to any
governmental authority or other person which results in a loss to the Purchasing
Parties.
(iv) Any claim, known or unknown, arising out of or by
virtue of or based upon any liability or obligation of Avendo which is not
expressly disclosed in the Schedules to this Agreement.
(v) Any claim, known or unknown, arising out of or by
virtue of or based upon any contract or agreement of Avendo which (i) is not set
forth in the Schedules hereto, or (ii) is connected with any breach by Avendo of
a contract or any failure by Avendo to have performed any obligation or
satisfied any liability thereunder to the extent required to be performed or
satisfied at or prior to the Closing or (iii) is not set forth (or described) in
writing and furnished or made available to WaveRider pursuant hereto.
(vi) Any liability or obligation for any tort or any
breach or violation of any contractual, quasi-contractual, legal, fiduciary or
equitable duty by Avendo, before the Closing.
(b) WaveRider hereby agrees to defend and hold each
Stockholder harmless from and against the amount of any actual Loss to such
Stockholder occasioned or caused by, resulting from or arising out of:
(i) Any failure by WaveRider to perform, abide by or
fulfill any of the agreements, covenants or obligations set forth in or entered
into, in connection with this Agreement to be so performed or fulfilled by
either WaveRider.
(ii) Any inaccuracy in or breach of any of the
representations or warranties set forth in this Agreement, or any certificate or
Schedule or other writing furnished to the Stockholders pursuant hereto.
The amount of any Loss shall be the amount of cash reimbursement or
set-off that, when received by the indemnified party incurring such loss, shall
place such indemnified party in the same financial position it or they would
have been in if such Loss has not occurred.
6.2 Limitations on Liability.
(a) An Indemnifying Party shall be required to indemnify any
Indemnified Party with respect to Losses only if the aggregate amount of all
Losses sustained by such party shall exceed $50,000 (the "Indemnity Threshold");
provided that if the Indemnity Threshold is exceeded the Indemnifying Party
shall be liable for the entire amount of such losses from the first dollar.
(b) The liability of the Stockholders to indemnify WaveRider
under this Section 6 is several and not joint. For greater certainty, each of
the Stockholders shall only severally indemnify and save harmless WaveRider of
and from any Loss suffered by, imposed upon or asserted against WaveRider as a
result of, in respect of, connected with or arising out of, under or pursuant
to: (i) any of the matters identified in Section 6.1(a); and (ii) any matter
described in the opinion of Xxxxxxx and Xxxxxx dated January 25, 2001 provided
to WaveRider. In no event shall an individual Stockholder indemnify and save
harmless WaveRider of and from any claim arising from any failure by another
Stockholder to (a) perform and fulfill such other Stockholder's covenants under
this Agreement; (b) any breach or inaccuracy of any representation or warranty
given by such other Stockholder contained in this Agreement to the extent such
representation or warranty relates to such other Stockholder; and (c) any
failure by such other Stockholder to fulfill its obligations under this Section
6.
(c) In no event shall the aggregate liability of any of the
Stockholders (taken collectively) or WaveRider pursuant to this Section 6 exceed
$3,500,000; and (ii) in no event shall the aggregate liability of any
Stockholder exceed a dollar amount equal to $3,500,000 multiplied by a fraction,
the numerator of which is the number of shares of WaveRider Common Stock
(exclusive of Warrants and WaveRider Options) issued to such Stockholder in the
Exchange, and the denominator of which is the total number of shares of
WaveRider Common Stock (exclusive of Warrants and WaveRider Options) issued in
the Exchange.
6.3 Notice of Claim. The party or parties claiming indemnification
under Section 6.1 above (the "Indemnified Parties") shall give prompt written
notice to the party or parties from whom indemnification is sought (the
"Indemnifying Parties") of any claim (actual or threatened) or other event which
in the judgment of the Indemnified Parties might result or has resulted in a
Loss by the Indemnified Parties hereunder, and the Indemnifying Parties shall
have the right to assume the defense of such claim or any litigation resulting
therefrom; provided that counsel for the Indemnifying Parties, who shall conduct
the defense of such claim (actual, threatened or asserted) or litigation, shall
be reasonably satisfactory to the Indemnified Parties, and the Indemnified
Parties may participate in such defense at their expense, and provided, further,
that the omission by the Indemnified Parties to give notice as provided herein
shall not relieve the Indemnifying Parties of their obligations hereunder except
to the extent that the omission results in a failure of actual notice to the
Indemnifying Parties and the Indemnifying Parties are damaged solely as a result
of the failure to give notice. Each such notice shall be accompanied (or
followed as promptly as is reasonably practicable after the amount of such Loss
becomes determinable) by a certificate signed by the Indemnified Party and
setting forth in reasonable detail the calculation of the amount of such Loss in
accordance with the provisions hereof, and accompanied by copies of all relevant
documents and records. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to the entry of any judgment or decree or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to Indemnified Parties of a release from all liability in respect to
such claim or litigation, and no Indemnifying Party shall have liability, and no
Loss shall be considered to have occurred, with respect to any payment made by
an Indemnified Party in connection with the settlement, satisfaction or
compromise of any claim unless the Indemnifying Parties shall have approved
thereof in advance in writing; provided that such approval shall not
unreasonably be withheld or delayed. If the Indemnified Parties shall not have
received notice that the Indemnifying Parties shall assume the defense of such
claim within twenty (20) days after the notice is sent to the Indemnifying
Parties of the existence of such claim, the Indemnified Parties shall be free to
proceed with the defense of such claim at the cost and expense of the
Indemnifying Parties.
7. Closing Matters.
7.1 The Closing. Subject to termination of this Agreement as provided
in Section 10 below, the closing of the transactions provided for herein (the
"Closing") will take place at the offices of WaveRider at 1:00 p.m., Eastern
Standard Time on or before July 2, 2003, or, if all conditions to closing have
not been satisfied or waived by such other place, time and date as WaveRider and
the Stockholders may mutually select (the "Closing Date").
(a) At the Closing, the Avendo shareholders shall surrender
the certificate(s) for their shares of Avendo Common Stock, Avendo Preference
Stock and Avendo Debentures (the "Avendo Certificates"), duly endorsed as
requested by WaveRider, to WaveRider and WaveRider shall issue certificates for
the number of shares of WaveRider Common Stock and Warrants to be delivered
hereunder. The WaveRider Options shall also be issued at the Closing.
(b) All WaveRider Common Stock, WaveRider Warrants and
Waverider Options delivered upon the surrender of Avendo Certificates and Avendo
Options in accordance with the terms hereof (and any cash paid for fractional
shares) shall be deemed to have been delivered in full satisfaction of all
rights pertaining to such Avendo Common Stock, Avendo Preference Stock, Avendo
Debentures and the Avendo Options.
8. Conditions To Obligations Of The Stockholders.
The Stockholders' obligations hereunder are subject to the fulfillment
or satisfaction, on and as of the Closing, of each of the following conditions
(any one or more of which may be waived by the Stockholders, but only in a
writing signed by the Stockholders):
8.1 Accuracy of Representations and Warranties. The representations and
warranties of WaveRider set forth in set forth in this Agreement shall be true
and accurate in every material respect on and as of the Closing with the same
force and effect as if they had been made at the Closing.
8.2 Covenants. WaveRider shall have performed and complied in all
material respects with all of its covenants set forth in this Agreement on or
before the Closing.
8.3 Absence of Adverse Business Change. There shall not have been any
material adverse change in the business or financial condition of WaveRider.
8.4 WaveRider Compliance Certificate. Avendo shall have received a
certificate signed by the president or Chief Executive Officer or Chief
Financial Officer of WaveRider certifying that the conditions set forth in
Sections 8.1, 8.2 and 8.3 have been fulfilled.
8.5 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
8.6 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other action, as may be required to consummate the Exchange by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
Canadian and U.S. federal, provincial and state securities laws.
8.7 No Litigation. No litigation or proceeding shall be threatened or
pending which could be reasonably expected to have a material adverse effect on
the present or future operations or financial condition of WaveRider.
8.8 New Director. Xxxxxxx Xxxxxxxx shall have been appointed to the
Board of Directors of WaveRider.
8.9 Opinions. The Stockholders shall have received opinions dated as of
the Closing Date from Xxxxx Xxxx LLP, with respect to U.S. law issues, and
Xxxxxxx Xxxxx & Xxxxxxxxx LLP with respect to Canadian law issues, consisting of
opinions substantially in the form as attached hereto as Exhibit C.
9. Conditions to Obligations of Waverider.
The obligations of WaveRider hereunder are subject to the fulfillment
or satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be waived by WaveRider, but only in a writing
signed by WaveRider):
9.1 Accuracy of Representations and Warranties. The representations and
warranties of Avendo and each of the Stockholders set forth in this Agreement
shall be true and accurate in every material aspect on and as of the Closing
with the same force and effect as if they had been made at the Closing.
9.2 Covenants. Avendo and each of the Stockholders shall have performed
and complied in all material respects with all of its covenants set forth in
this Agreement on or before the Closing.
9.3 Absence of Adverse Business Change. There shall not have been any
material adverse change in the employees, business or financial condition of
Avendo.
9.4 Avendo Compliance Certificate. WaveRider shall have received a
certificate signed by the President of Avendo certifying that the conditions set
forth in Sections 9.1, 9.2 and 9.3 have been fulfilled.
9.5 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
9.6 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other action, as may be required to consummate the Exchange, by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
Canadian and U.S. federal, provincial and state securities laws.
9.7 Documents. WaveRider shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by WaveRider to provide for the continuation in full force and effect
of any and all material contracts and leases of Avendo after consummation of the
transactions contemplated hereby.
9.8 No Litigation. No litigation or proceeding shall be threatened or
pending which could be reasonably expected to have a material adverse effect on
the present or future operations of financial condition of Avendo.
9.9 Avendo Debentures. Avendo shall have raised an aggregate of
$500,000 plus CDN$116,667 through the sale of Avendo Debentures.
9.10 Securityholders. The only holders of issued and outstanding
securities of Avendo at the time of Closing shall be as set out in Exhibit B
hereto and in the denominations set out in Exhibit B.
9.11 Opinions. WaveRider shall have received an opinion dated as of the
Closing Date from Xxxxxxxxx Xxxx Thomson Apps & Dellelce, LLP consisting of the
opinion substantially in the form as attached hereto as Exhibit D.
10. Termination of Agreement.
10.1 Termination.
(a) This Agreement may be terminated at any time prior to the
Closing by the mutual written consent of each of the parties hereto.
(b) Either party may terminate this Agreement if the Exchange
is not consummated by July 9, 2003, provided, however, that such termination
shall not release any party hereto from any liability they might have on account
of the breach of any of their obligations under this Agreement (including,
without limitation, their obligations to use all reasonable effort to cause the
transactions contemplated by this Agreement to be consummated).
(c) If there is a material adverse change in the business, or
financial condition, of WaveRider or Avendo, the other party may, at its option,
terminate this Agreement.
10.2 Notice. Any termination of this Agreement under this Section 10
will be effective upon the delivery of written notice by the terminating party
to the other party hereto.
10.3 Certain Continuing Obligations. Following any termination of this
Agreement pursuant to this Section 10, the parties hereto will continue to
perform their respective obligations under Sections 12.15 and 12.16 but will not
be required to continue to perform their other covenants under this Agreement.
11. Survival of Representations; Post Closing Covenants.
11.1 Unless otherwise specified herein, the respective representations,
warranties and covenants of Avendo, the Stockholders and WaveRider contained in
this Agreement shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the parties to this Agreement,
until the date that is the earlier of: (i) the termination of this Agreement in
accordance with its terms or (ii) twelve (12) months after the Closing Date,
upon which date (the "Release Date") such representations, warranties and
covenants will expire (except for covenants that by their terms survive for a
longer period), provided that the representations and warranties set forth in
Section 2.3 (Capitalization), 2.12 (Intellectual Property) and 2A.1(a) (Title)
shall continue in full force and effect for eighteen (18) months after the
Closing Date and Section 2.8 (Taxes) shall continue in full force and effect for
five (5) years after the Closing Date.
11.2 Registration Statement. Promptly, following the Closing Date but
in any event no later than 30 days thereafter, WaveRider shall file with the SEC
a registration statement on Form S-2 (or such other form as shall be available
to register the resale of the WaveRider Common Stock being issued in the
Exchange) providing for the resale of the shares of WaveRider Common Stock
issued in the Exchange or issuable upon exercise of the Warrants by the
stockholders of Avendo and upon the exercise of WaiveRider Options from time to
time (the "Registration Statement"). WaveRider shall use its best efforts,
subject to receipt of necessary information from the stockholders of Avendo, to
cause the Registration Statement to become effective within 90 days of the
filing date and to keep such Registration Statement effective until the earlier
of (i) such time as all such shares of WaveRider Common Stock have been sold or
(ii) such time as all such shares of WaveRider Common Stock may be sold without
Restriction under Rule 144 promulgated under the Securities Act. WaveRider shall
provide to Avendo as many copies of the SEC filings as Avendo shall reasonably
request to be used by Avendo in connection with its solicitation of written
consents or proxies of the Avendo shareholders approving the Exchange. Each of
the Stockholders understands and agrees that there may be periods of time when
there is material undisclosed information concerning WaveRider and that during
such periods the Registration Statement will not comply with applicable U.S.
securities law requirements and may not be used. At least two business days
prior to any sales of WaveRider Common Stock pursuant to the Registration
Statement by a Stockholder, such Stockholder shall inform WaveRider of his
intent to use the Registration Statement. If WaveRider does not object to such
use within such period, the Stockholder may make the proposed sale. If WaveRider
timely objects, then the Stockholder shall not sell until WaveRider informs the
Stockholder that the Registration Statement is again compliant with U.S.
Securities Laws.
11.3 NASD Trading. Following the Closing Date, WaveRider shall use its
best efforts to maintain the trading of the WaveRider Common Stock in the
over-the-counter market on the OTC Electronic Bulletin Board by the NASD or
another nationally recognized exchange or market.
11.4 Prospectus Exemptions. Following the Closing Date, WaveRider shall
use its best efforts to maintain its status as a "reporting issuer" in Ontario
(as defined in the OSA).
12. Miscellaneous.
12.1 Governing Law. The internal laws of the Province of Ontario,
Canada, (irrespective of its choice of law principles) will govern the validity
of this Agreement, the construction of terms, and the interpretation and
enforcement of the rights and duties of the parties hereto.
12.2 Assignment. No party hereto may assign any of its rights or
obligations hereunder without the prior written consent of the other parties
hereto. This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
12.3 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto.
12.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
12.5 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
12.6 Amendment and Waivers. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default.
12.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
12.8 Currency. Unless otherwise specified, all dollar amounts in this
Agreement are stated in, and shall be interpreted to be, dollars of the currency
of the United States of America.
12.9 Expenses. Each party will bear its respective expenses and fees of
its own accountants, attorneys, investment bankers, brokers, finders and other
professionals incurred with respect to this Agreement and the transactions
contemplated hereby. If the Exchange is consummated, Avendo will pay (or reserve
for payment) at or immediately before the Closing all accounting fees and
expenses incurred by Avendo in connection with the Exchange. Attorneys' fees and
Stockholders' expenses are to be paid by the Stockholders individually.
12.10 Notices. Any notice or other communication required or permitted
to be given under this Agreement shall be in writing, and shall be delivered
personally or sent by certified or registered mail, return receipt requested, or
by a nationally recognized express courier service, postage or other fees
prepaid, and will be deemed given upon actual delivery or, if mailed by
registered or certified mail, three business days after deposit in the mails,
or, if sent by courier service, one business day after delivery to the courier
service, addressed as follows:
(a) If to WaveRider:
WaveRider Communications, Inc.
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxx, X0X 0X0
Attention: Xxxxx Xxxxxxxxxxx
with a copy to:
Xxxxx Xxxx LLP
000 Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
(b) If to Stockholders:
Xxxxxx Xxxxx, Xxxx Xxxxx or
The Xxxxx Family (2001) Trust
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Xxxx Xxxxx, Xxxxx Xxxxx or Xxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Primaxis Technology Ventures Inc.
0 Xxxxxxxx Xxxxxx Xxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
Business Development Bank of Canada
000 Xxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxx
Venture Coaches Fund LP
000-000 Xxxxx Xxxx
Xxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
Temple Ridge Capital Corporation
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
with a copy to:
Xxxxxxxxx Xxxx Xxxxxxx Apps & Dellelce, LLP
1 First Xxxxxxxx Xxxxx
Xxxxx 000, Xxx 0, Xxxxxxx, Xxxxxxx, Xxxxxx M5X 1A9
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
or to such other address as a party may have furnished to the other parties by
written notice given in accordance with this Section 12.10.
12.11 Construction of Agreement. This Agreement has been negotiated by
the respective parties hereto and their attorneys, and the language hereof will
not be construed for or against either party. A reference to a section or an
exhibit will mean a section or exhibit to this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement which
will be considered as a whole.
12.12 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section.
12.13 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
12.14 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or employee of any party hereto or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely between the
parties to this Agreement.
12.15 Public Announcement. Avendo will not issue any press release or
make any other public disclosure regarding the matters set forth herein without
the prior express written approval of WaveRider, which approval shall not be
unreasonably withheld. WaveRider may issue such press releases, and make such
other disclosures regarding the this transaction, as it determines are required
under applicable securities laws. WaveRider and Avendo will take all reasonable
precautions to prevent any trading in the securities of WaveRider by officers,
directors, employees and agents of WaveRider or Avendo, as the case may be,
having knowledge of any material information regarding WaveRider or Avendo
provided hereunder until the information in question has been publicly
disclosed.
12.16 Confidentiality. The parties hereto agree that all information,
whether printed, written or oral, in answer to specific inquiry or voluntarily
furnished, concerning the other party, its customers, personnel, products,
financial performance or business, disclosed to the other party or its
representatives in the course of meetings, conversations, negotiations or due
diligence investigations in connection with the transactions contemplated by
this Agreement, and the terms and conditions of this Agreement, shall be held in
confidence and not used by the receiving party or its representatives, except as
contemplated by this Agreement. Each party shall exercise the same standard of
care to protect such information as is used to protect its own confidential
information.
12.17 Arbitration.
(a) Best Endeavors to Settle Disputes - In the event of any
dispute, claim, question or difference arising out of or relating to this
Agreement or any breach hereof, the Parties shall use their best endeavors to
settle such dispute, claim, question or difference. To this effect, they shall
consult and negotiate with each other, in good faith and understanding of their
mutual interests, to reach a just and equitable solution satisfactory to all
Parties.
(b) Arbitration - Except as is expressly provided in this
Agreement, if the Parties do not reach a solution pursuant to Section 12.17(a)
within a period of fifteen (15) Business Days (which shall mean any day that is
not a Saturday, Sunday or holiday in Toronto, Ontario), then upon written notice
by any Party to the others, the dispute, claim, question or difference shall be
finally settled by arbitration in accordance with the provisions of the
Arbitration Act (Ontario) and any amendments thereto, based upon the following:
(i) the arbitration tribunal shall consist of one
arbitrator appointed by mutual agreement of the Parties who is qualified by
education and training to pass upon the particular matter to be decided, or in
the event of failure to agree within ten (10) Business Days, any Party may apply
to a judge of the Ontario court having jurisdiction to appoint an arbitrator;
(ii) the arbitrator shall be instructed that time is of
the essence in proceeding with the determination of any dispute, claim, question
or difference and, in any event, the arbitration award must be rendered within
thirty (30) days of the submission of such dispute to arbitration;
(iii) the arbitration shall take place in Toronto,
Ontario;
(iv) the arbitration shall be conducted, and the
arbitral award shall be written, in the English language;
(v) the arbitration award shall be given in writing and
shall be final and binding on the Parties, not subject to any appeal, and shall
deal with the question of costs of arbitration and all matters related thereto;
and
(vi) judgment upon the award rendered may be entered in
any court having jurisdiction, or, application may be made to such court for a
judicial recognition of the award or an order of enforcement thereof, as the
case may be.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WAVERIDER COMMUNICATIONS INC.
By: /s/ Xxxxx Xxxxxxxxxxx June 27, 2003
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President and Chief Financial Officer
AVENDO WIRELESS INC.
By: /s/ Xxxxxx Xxxxx June 27, 2003
Name: Xxxxxx Xxxxx
Title: President and Chief Executive Officer
PRIMAXIS TECHNOLOGY VENTURES INC.
Per: /s/ Xxxxx Xxxxxx June 27, 2003
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
BUSINESS DEVELOPMENT BANK OF CANADA
Per: /s/ Xxx Xxxxxx June 27, 2003
Name: Xxx Xxxxxx
Title: Director
VENTURE COACHES FUND LP
Per: /s/ Xxxxx Xxxxxx June 27, 2003
Name: Xxxxx Xxxxxx
Title: Secretary
TEMPLE RIDGE CAPITAL CORPORATION
Per: /s/ Xxxxxxx Xxxxxxxx June 27, 2003
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President
SIGNED, SEALED AND DELIVERED )
In the presence of: )
/s/ ) /s/ Xxxxxx Xxxxx June 27, 2003
------------------------------------ ---------------------------------
(Signature of Witness) ) Xxxxxx Xxxxx
SIGNED, SEALED AND DELIVERED )
In the presence of: )
/s/ ) /s/ Xxxx Xxxxx June 27, 2003
------------------------------------ ---------------------------------
(Signature of Witness) ) Xxxx Xxxxx
SIGNED, SEALED AND DELIVERED )
In the presence of: )
/s/ ) /s/ Xxxx Xxxxx June 27, 2003
------------------------------------ ---------------------------------
(Signature of Witness) ) Xxxx Xxxxx
SIGNED, SEALED AND DELIVERED )
In the presence of: )
/s/ ) /s/ Xxxxx Xxxxx June 27, 2003
------------------------------------ ---------------------------------
(Signature of Witness) ) Xxxxx Xxxxx
THE XXXXX FAMILY (2001) TRUST
Per: /s/ Xxxxxx Xxxxx June 27, 2003
---------------------------------
Name: Xxxxxx Xxxxx
In his capacity as trustee
Per: /s/ Xxxx Xxxxx June 27, 2003
---------------------------------
Name: Xxxx Xxxxx
In her capacity as trustee
SIGNED, SEALED AND DELIVERED )
In the presence of: )
/s/ ) /s/ Xxxxx Xxxxx June 27, 2003
------------------------------------ ---------------------------------
(Signature of Witness) ) Xxxxx Xxxxx
EXHIBIT A - Form of WaveRider Warrant
EXHIBIT B - Avendo Securityholders
EXHIBIT C - Opinions of U.S. and Canadian Counsel to WaveRider
EXHIBIT D - Opinion of Counsel to Avendo and the Stockholders
