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EXHIBIT 10.2
PURCHASE AGREEMENT
AMONG
SIGNALSOFT CORPORATION,
SIGNALSOFT NS CO.,
AND THE
SHAREHOLDERS
OF
XXXXXX.XXX SERVICES, INC.
AS OF MARCH 22, 2000
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This Purchase Agreement is entered into as of March 22, 2000
among SignalSoft Corporation, a Delaware corporation ("SignalSoft"), SignalSoft
NS Co., an unlimited company formed under the laws of Nova Scotia (the
"Acquiror"), and Xxxxxxx X. Xxxxx, Tideline Investments SRL, Exceptional
Technologies Fund 4 (VCC), Inc., Exceptional Technologies Fund 5 (VCC), Inc.
Xxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx Xxxx, E. Xxxxxxx
Xxxxxx, Mats Gerschman, Xxxxx Xxxxxxxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxx
Xxxxx, Xxx Xxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxxxx, Art Xxxxxx and Xxx Klovance
(individually, a "Shareholder" and collectively, the "Shareholders").
Recitals
A. The Shareholders own, or hold options to acquire, all of the issued and
outstanding shares in the capital of Xxxxxx.xxx Services, Inc., a British
Columbia corporation (the "Company").
B. The Acquiror is a newly-formed, wholly-owned indirect subsidiary of
SignalSoft. The Acquiror desires to acquire all of the outstanding shares in the
capital of the Company, and the Shareholders desire to sell such shares, as
provided in this Agreement.
C. SignalSoft, the Acquiror and the Shareholders desire to make certain
representations, warranties and agreements in connection with such transaction
and also desire to set forth various conditions precedent thereto.
Agreement
NOW, THEREFORE, in consideration of the premises, the mutual representations,
warranties and covenants set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
1. Definitions. The terms defined in Exhibit 1.1(a) shall have the
meanings designated therein.
2. Purchase and Sale.
2.1. Basic Transaction. Subject to the terms and conditions
set forth in this Agreement, the Acquiror agrees to purchase from the
Shareholders, and the Shareholders agree to sell to the Acquiror, all of the
Company Shares free and clear of all Encumbrances for the consideration
specified in Section 2.2. The Acquiror will have no obligation under this
Agreement to purchase less than all of the Company Shares.
2.2. Purchase Price; Payment.
(a) The consideration payable by the Acquiror to the
Shareholders for the Company Shares will be as follows:
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(i) cash in an amount equal to US$1,500,000,
reduced by the amount (if any) of the Cash Shortfall and further reduced by the
amount (if any) of the Post-Closing Adjustment (the "Cash Consideration") will
be payable to the Shareholders (in proportion to the percentages set forth in
Exhibit 2.2(a)) in exchange for that number of Company Shares that is equal to
the total number of Company Shares multiplied by the percentage obtained by
dividing the Cash Consideration by the Adjusted Company Value; and
(ii) 558,323 NS Shares (as adjusted for cash
paid in lieu of fractional shares as described below) (the "Share
Consideration") will be payable to the Shareholders (in proportion to the
percentages set forth in Exhibit 2.2(a)) in exchange for that number of Company
Shares that is equal to the total number of Company shares less the number of
Company Shares determined under Section 2.2(a)(i) above.
On the Closing Date the Acquiror will (i) pay to the Shareholders in
cash by wire transfer to an account or accounts designated by the Shareholders
at least two Business Days prior to the Closing Date (in accordance with the
percentages set forth on Exhibit 2.2(a)), an amount equal to (A) US$1,500,000,
minus the sum of the Cash Shortfall and US$225,000; (ii) issue certificates
representing 558,323 NS Shares (adjusted for cash paid in lieu of fractional
shares as described below) to the Shareholders in the proportions set forth on
Exhibit 2.2(a), of which the Acquiror will deliver 474,575 (adjusted for cash
paid in lieu of fractional shares as described below) to the Shareholders at
Closing; (iii) deposit US$225,000 in cash and certificates representing the
remaining 83,748 NS Shares issued to the Shareholders pursuant to clause (ii)
(adjusted for fractional shares as described below) (collectively, the "Escrow
Deposit") into an Escrow Account (as defined in the Escrow Agreement) with the
Escrow Agent; and (iv) pay, or make provision for payment of, the Closing Date
Liabilities (including the Pre-Closing Income Tax Amount) set forth on the
Estimated Closing Date Balance Sheet. The Escrow Deposit will be held, invested,
administered and disbursed according to this Agreement and the Escrow Agreement.
To the extent any options to acquire Company Shares from the Company or
from other Shareholders as described in Exhibit 2.2(a) or in Exhibit 3.1(b)(i)
are not exercised at or prior to the Closing Date, the percentages set forth on
Exhibit 2.2(a) shall be adjusted to reflect, for each Shareholder, the
proportion of the total number of Company Shares owned on the Closing Date by
such Shareholder to the total number of Company Shares issued and outstanding on
the Closing Date.
In lieu of issuing fractional shares, the Acquiror will pay to each
Shareholder at Closing an amount of cash equal to the Per Share Amount
multiplied by the Applicable Fraction for such Shareholder. The Per Share Amount
shall be determined by (A) subtracting the Cash Shortfall from CDN$8,091,642,
(B) converting the resulting amount to its U.S. dollar equivalent by applying
the Agreed Conversion Rate, (C) subtracting US$1,500,000 from such U.S. dollar
equivalent, and (D) dividing the result by 558,323. The Applicable Fraction
shall be the fraction representing any fractional NS Share that otherwise would
be issued to such Shareholder at Closing.
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The Acquiror and the Shareholders agree that the number of NS Shares of
each Shareholder deposited into the Escrow Account in accordance with Section
2.2(a) shall, for each Shareholder, be rounded to the nearest whole share.
Each Shareholder shall have the right to elect, by notice delivered to
SignalSoft not later than five days prior to the Closing Date, to receive at
Closing that number of shares of SignalSoft Stock into which the NS Shares
otherwise deliverable to such Shareholder at Closing would be convertible,
except to the extent that such NS Shares are not convertible pursuant to any
restrictions contained in the Stockholders' Agreement or the articles of
association of the Acquiror.
(b) Estimated Closing Date Balance Sheet. No earlier
than ten Business Days, nor later than three Business Days, prior to the Closing
Date, the Shareholders will cause the Company to deliver a balance sheet for the
Company prepared as of the Closing Date (the "Estimated Closing Date Balance
Sheet"). The Estimated Closing Date Balance Sheet will be prepared in accordance
with GAAP on a basis consistent with the historical accounting practices of the
Company used in connection with the preparation of the Company's audited balance
sheet for the period ended October 31, 1999. The Estimated Closing Date Balance
Sheet will set forth, in addition to other items required by GAAP, the amount of
(i) cash held by the Company and (ii) the Closing Date Liabilities and each item
thereof.
(c) Closing Date Balance Sheet. Within 60 days after
the Closing Date an audited balance sheet for the Company will be prepared as of
the Closing Date (the "Closing Date Balance Sheet") and delivered to SignalSoft
and the Shareholders. The Closing Date Balance Sheet will be prepared by KPMG
Victoria in accordance with GAAP on a basis consistent with the historical
accounting practices of the Company used in connection with the preparation of
the Company's audited balance sheet for the year ended October 31, 1999.
SignalSoft will pay the fees and expenses of KPMG Victoria incurred in
connection with the preparation of the Closing Date Balance Sheet. The Closing
Date Balance Sheet will set forth, in addition to other items required by GAAP,
the amount of (i) cash on hand of the Company and (ii) the Closing Date
Liabilities (including the Pre-Closing Income Tax Amount) and each item thereof.
(d) Post-Closing Adjustment to the Purchase Price.
Following delivery of the Closing Date Balance Sheet in accordance with Section
2.2(c), the cash portion of the Purchase Price will be adjusted as follows:
(i) Within 20 days after receipt of the
Closing Date Balance Sheet, SignalSoft or the Shareholders, as the case may be,
will, by a written notice to the other, either accept the Closing Date Balance
Sheet or object to it by describing in reasonably specific detail any proposed
adjustments to the Closing Date Balance Sheet and the estimated amounts of and
reasons for such proposed adjustments. The failure by SignalSoft or the
Shareholders to object to the Closing Date Balance Sheet within such 20-day
period will be deemed to be an acceptance by such Person of the Closing Date
Balance Sheet.
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(ii) If any adjustments to the Closing Date
Balance Sheet are proposed, SignalSoft and the Shareholders will negotiate in
good faith to resolve any dispute, provided that if the dispute is not resolved
within 10 days following the receipt of the proposed adjustments described in
Section 2.2(d)(i), then SignalSoft and the Shareholders will retain the
accounting firm of Xxxxx Xxxxxxxx LLP to resolve such dispute, which resolution
will be final and binding. The fees and expenses of Xxxxx Xxxxxxxx LLP will be
shared equally by SignalSoft, on the one hand, and the Shareholders, on the
other hand, and Xxxxx Xxxxxxxx LLP will be retained under a retention letter
executed by the parties that specifies that the determination by said firm of
any such disputes concerning the Closing Date Balance Sheet will be resolved in
accordance with GAAP on a basis consistent with the historical accounting
practices of the Company used in connection with the preparation of the
Company's audited balance sheet for the year ended October 31, 1999, by choosing
the position of KPMG Victoria or the objecting party under Section 2.2(d)(i)
without change, within 30 days of the expiration of the 10-day period described
in this Section 2.2(d)(ii).
(iii) Within 10 Business Days after the
later of the acceptance of the Closing Date Balance Sheet by SignalSoft and the
Shareholders or the resolution of any disputes under Section 2.2(d)(ii), as the
case may be, the cash portion of the Purchase Price will be adjusted, if
necessary, as provided in this Section 2.2(d)(iii). If the Cash Shortfall
determined based on the Closing Date Balance Sheet exceeds the Cash Shortfall
determined based on the Estimated Closing Date Balance Sheet, the cash portion
of the Purchase Price will be reduced by the amount of such excess (the
"Post-Closing Adjustment") and the difference will be refunded in cash by the
Shareholders to SignalSoft within the time period set forth in the first
sentence of this Section 2.2(d)(iii).
(iv) All amounts payable by the Shareholders
to any accounting firm or, subject to the limitations described in Section 7.1,
to SignalSoft under Section 2.2(d) will be paid as follows: each Shareholder
will pay its pro rata share of such amount determined by multiplying the total
amount payable by a fraction, the numerator of which is the number of Company
Shares owned by such Shareholder immediately prior to the Closing, and the
denominator of which is the number of Company Shares outstanding immediately
prior to Closing; provided that, notwithstanding the foregoing, the Principal
Shareholders will be jointly and severally liable for any amounts payable to
SignalSoft under this Section 2.2(d) in excess of amounts actually paid by the
Other Shareholders to SignalSoft in respect of their obligations under this
Section 2.2(d)(iv), subject to the limitations described in Section 7.1. Any
Post-Closing Adjustment made under this Section 2.2(d) will be allocated as an
adjustment to the Cash Consideration.
2.3. Registration Rights. SignalSoft will grant to the
Shareholders, pursuant to the terms of the Registration Rights Agreement,
piggyback registration rights with respect to the SignalSoft Shares.
2.4. Value of Company Shares and NS Shares. The parties agree
that (a) the value of the Company Shares as of the Closing Date will be
CDN$8,091,642 (which, as of the date of this Agreement, equals US$5,519,538),
reduced by the Cash Shortfall (if any) and the Post-Closing
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Adjustment (if any), and (b) the value of the Share Consideration as of the
Closing Date will be CDN$8,091,642, minus the Cash Consideration (applying, as
necessary, the Agreed Conversion Rate). The Cash Consideration and any cash paid
in lieu of fractional shares will be payable in U.S. currency, with the U.S.
dollar equivalent of the Cash Shortfall (if any) and the Post-Closing Adjustment
(if any) determined by applying the Agreed Conversion Rate.
2.5. Sales Taxes, Etc. Each Shareholder will pay all sales,
use, transfer, licensing, recording, stamp and other Taxes, fees and charges
payable by such Shareholder in respect of or as a result of the sale and
transfer of the Company Shares to the Acquiror pursuant to this Agreement.
SignalSoft and the Acquiror will pay all sales, use, transfer, licensing,
recording, stamp and other Taxes, fees and charges, including securities filing
fees, payable by SignalSoft or the Acquiror, respectively, in respect of or as a
result of the sale and transfer of the SignalSoft Shares and the NS Shares,
respectively, to the Shareholders pursuant to this Agreement.
2.6. The Closing. The parties will use their best efforts to
cause the closing of the transactions contemplated by this Agreement (the
"Closing") to occur as soon as possible following the date of this Agreement but
no later than April 4, 2000. The Closing shall take place at the offices of
Xxxxx Xxxxx Xxxxxxxxxx Swan at 9:00 a.m. Victoria, British Columbia time on the
day of the Closing. All transactions contemplated by this Agreement will be
effective at 12:01 a.m. local time in Victoria, British Columbia on the day of
the Closing (such effective time being the "Closing Date").
2.7. Deliveries at the Closing. At the Closing, (a) the
Shareholders will deliver to SignalSoft the certificates, instruments and
documents, and take such actions, referred to in Section 6.1 and (b) SignalSoft
will deliver to the Shareholders the certificates, instruments and documents,
and take such actions, referred to in Section 6.2.
3. Representations and Warranties.
3.1. Representations and Warranties of the Shareholders.
Subject to the limitations described in Section 7.1, the Principal Shareholders
jointly and severally, and the Other Shareholders severally and separately,
represent and warrant to SignalSoft that the statements contained in this
Section 3.1 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were then substituted for the date of this Agreement
throughout this Section 3.1).
(a) Organization, Good Standing, Etc. The Company is
a corporation duly organized, validly existing and in good standing with the
Registrar of Companies in the Province of British Columbia with respect to the
filing of annual reports. To the best knowledge of the Shareholders, the nature
of the business conducted by the Company and the properties owned, leased or
operated by the Company do not require the Company to be, and the Company is
not, registered, qualified or authorized to do business as an extraprovincial
corporation in any jurisdiction. The Company has all requisite corporate power
and authority and capacity to own, lease and operate its
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properties and to carry on its business as now being conducted. The copies of
the memorandum and articles of the Company, both as amended to date, which have
been delivered to SignalSoft by the Shareholders and are attached as Exhibits
3.1(a)(i) and 3.1(a)(ii), respectively, are complete and correct, and the
Company is not in default under or in violation of any provision of its
memorandum or articles. The minute books provided to SignalSoft by the
Shareholders contain complete and accurate copies of the memorandum and articles
of the Company and the minutes of all meetings of the directors and shareholders
of the Company. The register of shareholders, register of transfers and register
of directors of the Company are complete and accurate in all material respects.
(b) Ownership and Capitalization. The authorized
share capital of the Company consists of 102,000,000 shares of Company Stock.
The Company Shares reflected on Exhibit 2.2(a) constitute all of the issued and
outstanding shares in the capital of the Company and unissued shares in the
capital of the Company that are subject to options held by the Shareholders. All
of the issued and outstanding shares in the capital of the Company have been
duly authorized and validly issued, and are fully paid and nonassessable. Except
as set forth on Exhibit 2.2(a) or 3.1(b)(i), there are no authorized or
outstanding shares or other securities convertible into or exchangeable for, nor
any authorized or outstanding option, warrant or other Right to subscribe for or
to purchase, or convert any obligation into, any unissued shares in the capital
of the Company or any treasury stock, and the Company has not agreed to issue
any security so convertible or exchangeable or any such option, warrant or other
Right. There are no authorized or outstanding stock appreciation, phantom stock,
profit participation or similar Rights with respect to the Company. Except as
are set forth on Exhibit 2.2(a) or Exhibit 3.1(b)(i), there are no voting
trusts, voting agreements, proxies or other agreements or understandings with
respect to any shares in the capital of the Company, and the Shareholders shall
cause all such agreements and understandings identified in Exhibit 2.2(a) or
Exhibit 3.1(b)(i) to be terminated (or, with respect to options to acquire
unissued shares in the capital of the Company, exercise or permit to expire in
accordance with Section 4.10) prior to the Closing. Except as set forth on
Exhibit 2.2(a) or Exhibit 3.1(b)(i), there are no existing Rights of first
refusal, buy-sell arrangements, options, warrants, Rights, calls, or other
commitments or restrictions of any character relating to any of the Company
Shares except those restrictions on transfer imposed by the articles of the
Company, and the Shareholders hereby irrevocably waive such restrictions and
such other commitments or restrictions contained in any document identified on
Exhibit 2.2(a) or Exhibit 3.1(b)(i) as of the Closing Date.
(c) No Subsidiaries. The Company has no Subsidiaries
and no shares, securities convertible into shares, or any other equity interest
in any other corporation, partnership, limited partnership, limited liability
company, association, joint venture or other Person.
(d) Financial Statements; Absence of Liabilities. (i)
To the best knowledge of the Shareholders, the unaudited balance sheet of the
Company as of October 31, 1998, the audited balance sheet of the Company as of
October 31, 1999, the audited statements of income, shareholders' equity and
cash flows for the fiscal year ended October 31, 1999, the unaudited statements
of income, shareholders' equity and cash flows for the fiscal year ended October
31, 1998, the unaudited balance sheet of the Company as of January 31, 2000 (the
latter being referred to as
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the "Latest Balance Sheet"), and the related statements of income, shareholders'
equity and cash flows for the three-month period then ended are true and correct
in all material respects, have been prepared in accordance with GAAP on a
consistent basis (except that the Latest Balance Sheet and the related
statements of income, shareholders' equity and cash flows for the three-month
period ended January 31, 2000 may be subject to customary year-end adjustments,
which adjustments will not, individually or in the aggregate, be material in
amount), are in accordance with the books and records of the Company (which
books and records are complete and correct in all material respects), and fairly
present the financial position and results of operations of the Company in all
material respects as of such dates and for each of the periods indicated. To the
best knowledge of the Shareholders, as of the date of each of such balance
sheet, the Company had no Liabilities other than those set forth on each such
balance sheet. Copies of the financial statements described in the first
sentence of this Section 3.1(d) are attached as Exhibit 3.1(d)(i)(A). The
expenses itemized on Exhibit 3.1(d)(i)(B) and reflected in the Company's
financial performance for the 12-month period ended October 31, 1999 will not be
realized on an on-going basis after the Closing Date. The revenues of the
Company for the fiscal year ended October 31, 1999 (with revenues from sales in
the United States separately shown) are set forth in Exhibit 3.1(d)(i)(C).
(ii) Since the date of the Latest Balance
Sheet, the Company has not incurred or become subject to any Liability other
than Liabilities incurred in the ordinary course of business. To the best
knowledge of the Shareholders, as of the Closing, the Company will have no
Liability (and there is no basis for the assertion of any Liability), except for
the Closing Date Liabilities and Retained Liabilities and a Liability in the
approximate amount of CDN $160,000 (estimated as of April 4, 2000), representing
unearned revenues of the Company attributable to the provision of goods and
services to SignalSoft.
(e) Absence of Certain Agreements, Changes or Events.
The Company is not, except as set forth on Exhibit 3.1(e)(i), a party to or
otherwise bound by any material contract or agreement (i) pursuant to which the
Company is obligated to furnish any service, product or equipment and (ii) that
has been prepaid with respect to any period after the Closing Date. Since
January 31, 2000, the Company has not (i) incurred any debt, indebtedness or
other Liability, except current Liabilities incurred in the ordinary course of
business; (ii) delayed or postponed the payment of accounts payable or other
Liabilities beyond stated, normal terms; (iii) sold or otherwise transferred any
of its assets or properties; (iv) canceled, compromised, settled, released,
waived, written-off or expensed any account or note receivable, right, debt or
claim involving more than CDN$5,000 in the aggregate or accelerated the
collection of any account or note receivable; (v) changed in any significant
manner the way in which it conducts its business; (vi) made or granted any
individual wage or salary increase in excess of the greater of 10% or CDN$1.00
per hour, any general wage or salary increase, or any additional benefits of any
kind or nature; (vii) except as otherwise expressly permitted by this Section
3.1(e), (A) entered into any contracts or agreements, or made any commitments,
involving more than CDN$10,000 individually or in the aggregate or (B)
accelerated, terminated, delayed, modified or canceled any agreement, contract,
lease or license (or series of related agreements, contracts, leases and
licenses) involving more than CDN$10,000 individually or in the aggregate;
(viii) suffered any material adverse fact or change, including,
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without limitation, to or in its business, assets or financial condition or
customer or service provider relationships; mortgaged, pledged, subjected to
lien, granted a security interest in or otherwise encumbered any of its assets
or property, whether tangible or intangible; (ix) made any payment or transfer
to or for the benefit of any shareholder, officer or director or any Relative or
Affiliate thereof or permitted any Person, including, without limitation, any
shareholder, officer, director or employee or any Relative or Affiliate thereof,
to withdraw assets from the Company or pay dividends to shareholders (other than
payment to the Shareholders of the proportionate monthly amount of (A) their
respective normal annualized salaries due and payable during such period or (B)
rent due under pre-existing real property leases between the Company and a
Shareholder which are disclosed on Exhibit 3.1(g)(i)); or (x) agreed to incur,
take, enter into, make or permit any of the matters described in clauses (i)
through (ix).
(f) Tax Matters.
(i) The Company has duly and timely filed
all Tax Returns that it was required to file. To the best knowledge of the
Shareholders, all such Tax Returns were correct and complete in all material
respects. To the best knowledge of the Shareholders, all Taxes owed by the
Company (whether or not shown on any Tax Return) have been paid. The Company is
not currently the beneficiary of any extension of time within which to file any
Tax Return. The Company has not received from any Governmental Authority any
assessment, reassessment, or notice of underpayment of any Taxes. No claim has
ever been made by an authority in a jurisdiction where the Company does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction. There
are no Encumbrances on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) To the best knowledge of the
Shareholders, the Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party.
(iii) To the best knowledge of the
Shareholders, there is no basis for any authority to assess any additional Taxes
for any period for which Tax Returns have been filed. There is no pending or
threatened dispute or claim concerning any Tax Liability of the Company. Exhibit
3.1(f)(iii) lists all income Tax Returns filed with respect to the Company for
taxable periods ended on or after December 31, 1994, indicates those Tax Returns
that have been audited and indicates those Tax Returns that currently are the
subject of audit. The Company has delivered to SignalSoft correct and complete
copies of all federal income Tax Returns, examination reports, and statements of
deficiencies filed or assessed against or agreed to by the Company since
December 31, 1994.
(iv) The Company has not waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
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(v) Exhibit 3.1(f)(v) sets forth the
following information with respect to the Company as of the most recent
practicable date (as well as on an estimated pro forma basis as of the Closing
giving effect to the consummation of the transactions contemplated hereby): (A)
the basis of the Company in its assets; and (B) the amount of any net operating
loss, net capital loss, unused investment or other credit, unused foreign tax
credit or excess charitable contribution allocable to the Company.
(vi) To the best knowledge of the
Shareholders, there is no misrepresentation that is attributable to neglect,
carelessness, willful default or fraud in Tax Returns of the Company previously
filed.
(vii) No consent extending or waiving the
time limited for reassessment of any Taxes or any statutes of limitations
related thereto have been filed with respect to the Company for any fiscal year.
(viii) To the best knowledge of the
Shareholders, the Company has withheld from each payment made to any of its
officers, directors, former directors, employees and former employees the amount
of all Taxes and other deductions (including without limitation, unemployment,
disability, and other required taxes and contributions) required to be withheld
and has paid the same together with the employer's share of same, to the proper
Tax or other receiving officers within the prescribed times and has filed, in
complete and accurate form all information and other Tax Returns required
pursuant to any applicable legislation within the prescribed times.
(ix) To the best knowledge of the
Shareholders, the provisions made for current and deferred Taxes included in the
Latest Balance Sheet are sufficient for the payment of all accrued and unpaid
Taxes of and payable by the Company, whether or not disputed, for the period
ended the date thereof and for all periods prior thereto.
(x) Except for those Shareholders listed on
Exhibit 3.1(f)(x), no Shareholder is a non-resident of Canada for the purposes
of the Tax Act. Each Shareholder listed on Exhibit 3.1(f)(x) is not, for
purposes of Section 116 of the Tax Act, a resident of Canada.
(xi) The Company does not hold any U.S. real
property interests (as defined in Section 897 of the Code).
(g) Assets and Properties.
(i) Exhibit 3.1(g)(i) sets forth a
description of the Premises, which is the only asset or property subject to an
agreement for the lease of real property to which the Company is a party. The
Company has good and marketable title to, or a valid leasehold interest or
interest as a licensee in, the properties and assets used or held for use by it,
located on its Premises, or shown on the Latest Balance Sheet or acquired after
the date thereof. The lease of the Premises is legally valid and binding on the
parties thereto and is in full force and effect, and, to the best
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knowledge of the Shareholders, there exists no default thereunder on the part of
the Company or, to the knowledge of the Shareholders, the lessor. As of the
Closing, all of the Acquired Assets will be owned by the Company, free and clear
of all Encumbrances. The Company has not entered into any contract or made any
commitment to sell all or any part of its assets outside of the ordinary course
of its business. The Acquired Assets constitute all of the real and personal
property, both tangible and intangible, including, to the best knowledge of the
Shareholders, Intellectual Property, which are being used or held for use by the
Company in the conduct of, and which are necessary for the conduct of, the
business and operations of the Company, as presently conducted and as presently
proposed to be conducted. The Company does not own or lease any assets or
properties that are located outside of Canada, including any assets or
properties located in the United States. The Company owns or leases all
equipment and other tangible assets necessary for the conduct of its business.
To the best knowledge of the Shareholders, each such tangible asset that is
material to the Company's operations has been maintained in accordance with
normal industry practice and is in good operating condition and repair (subject
to normal wear and tear). None of the Shareholders, nor any Relative or
Affiliate thereof, own any asset, tangible or intangible, which is used in, or
leased to the Company for use in, the business of the Company.
(ii) The Premises constitute all of the real
property, buildings and improvements used by the Company in its business. To the
best knowledge of the Shareholders, the Premises have been occupied, operated
and maintained in accordance with applicable Legal Requirements. The Company has
not received notice of violation of any Legal Requirement or Permit relating to
its operations or its owned or leased properties.
(iii) No party to any lease with respect to
any Premises has repudiated any provision thereof, and there are no disputes,
oral agreements or forbearance programs in effect as to any such lease.
(h) Lists of Contracts and Other Matters. Attached as
Exhibit 3.1(h) is a correct and complete list setting forth the following items:
(i) the following contracts and other
agreements in effect as of the Closing Date to which the Company is a party:
(A) any agreement (or group of
related agreements) for the lease of personal property to or from any Person
providing for lease payments in excess of CDN$5,000 per year;
(B) any agreement pursuant to which
the Company, or any of the Shareholders on behalf of the Company, has made a
deposit in an amount greater than CDN$5,000;
(C) any agreement (or group of
related agreements) for the purchase or sale of supplies, products or other
personal property, or for the furnishing or receipt of
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services, the performance of which will extend over a period of more than one
year, result in a material loss to the Company or involve consideration in
excess of CDN$10,000;
(D) any agreement concerning a
partnership or joint venture;
(E) any agreement (or group of
related agreements) under which the Company has created, incurred, assumed or
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of CDN$10,000 or under which it has granted any
Encumbrances on any of its assets, tangible or intangible;
(F) any agreement concerning
confidentiality or noncompetition;
(G) any agreement with any of its
Shareholders or any Relative or Affiliate thereof (other than the Company);
(H) any profit sharing, stock
option, stock purchase, phantom stock, stock appreciation, profit participation,
deferred compensation, severance or other plan or arrangement;
(I) any collective bargaining
agreement;
(J) any agreement for the employment
of any individual on a full-time, part-time, consulting or other basis or any
agreement providing severance benefits in excess of any applicable statutory
minimums;
(K) any agreement under which the
Company has advanced or loaned any amount to any of its directors, officers and
employees;
(L) any agreement obligating the
Company to meet another party's unspecified requirements for goods or services
or obligating it to purchase an unspecified amount of goods or services based on
another party's ability to supply them;
(M) any agreement under which the
consequences of a default or termination could have a material adverse effect on
the business, financial condition, operations, results of operations or future
prospects of the Company; or
(N) any other agreement (or group of
related agreements) the performance of which involves consideration in excess of
CDN$10,000.
(ii) All material claims, deposits, causes
of action, choses in action, rights of recovery, rights of setoff and rights of
recoupment of the Company.
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(iii) All material franchises, approvals,
Permits, licenses, Orders, registrations, certificates, variances and similar
rights of the Company (all of which are in full force and effect).
(iv) Each material item of Intellectual
Property owned by the Company or which is used by the Company in its business
and, in each case where the Company is not the owner, the owner of the
Intellectual Property.
(v) The name of each bank or other financial
institution or entity in which the Company has an account or safe deposit box
(with the identifying account number or symbol) and the names of all persons
authorized to draw thereon or to have access thereto.
The Shareholders have delivered to SignalSoft a correct and complete copy of
each written agreement and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3.1(h)(i). With respect
to each such agreement: (A) to the best knowledge of the Shareholders, the
agreement is legal, valid, binding, enforceable and in full force and effect;
(B) the agreement will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither the Company nor, to the best
knowledge of the Shareholders, any other party is in breach or default, and, to
the best knowledge of the Shareholders, no event has occurred which, with notice
or lapse of time, would constitute a breach or default, or permit termination,
modification or acceleration, under the agreement; and (D) to the best knowledge
of the Shareholders, no party has repudiated any provision of the agreement.
(i) Litigation; Compliance with Applicable Laws and
Rights.
(i) Except as set forth in Exhibit 3.1(i),
to the best knowledge of the Shareholders, there is no outstanding Order
against, nor is there any litigation, proceeding, claim, suit, action,
arbitration, investigation or hearing before an administrative tribunal or by
any Governmental Authority or other Person in progress, pending or threatened
against, the Company, its assets or its business or relating to the transactions
contemplated by this Agreement, nor, to the best knowledge of the Shareholders,
is there any basis for any such action.
(ii) To the best knowledge of the
Shareholders, neither the Company nor the Company's assets are in violation of
any applicable Legal Requirement or Right. To the best knowledge of the
Shareholders, the Company has not received notice from any Governmental
Authority or other Person of any violation or alleged violation of any Legal
Requirement or Right, and to the best knowledge of the Shareholders no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand or
notice has been filed or commenced or is pending or threatened against the
Company alleging any such violation.
(j) Notes and Accounts Receivable. To the best
knowledge of the Shareholders, the notes and accounts receivable of the Company
reflected on its Latest Balance
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Sheet, and all notes and accounts receivable arising on or prior to the Closing
Date, arose and will arise from bona fide transactions by the Company in the
ordinary course of business, are valid receivables with trade customers subject
to no setoffs or counterclaims, and are good and collectible in full at the
aggregate recorded amounts thereof.
(k) Product Quality, Warranty and Liability. To the
best knowledge of the Shareholders, all services and products sold, leased,
provided or delivered by the Company to customers on or prior to the Closing
Date conform to applicable contractual commitments, express and implied
warranties, product and service specifications and quality standards, and there
is no basis for any Liability for replacement or repair thereof or other damages
in connection therewith. To the best knowledge of the Shareholders, no service
or product sold, leased, provided or delivered by the Company to customers on or
prior to the Closing is subject to any guaranty, warranty or other indemnity
beyond the applicable standard terms and conditions of sale or lease. To the
best knowledge of the Shareholders, the Company has no Liability and there is no
basis for any Liability arising out of any injury to a Person or property as a
result of the ownership, possession, provision or use of any service or product
sold, leased, provided or delivered by the Company on or prior to the Closing
Date. All product or service liability claims that have been asserted against
the Company since December 31, 1996 whether covered by insurance or not and
whether litigation has resulted or not, are listed and summarized on Exhibit
3.1(k).
(l) Insurance. The Company has policies of insurance
(i) covering risk of loss on the Acquired Assets, (ii) covering liability for
fire, property damage, personal injury and workers' compensation coverage and
(iii) for business interruption, all, to the best knowledge of the Shareholders,
with responsible and financially sound insurance carriers in adequate amounts
and in compliance with governmental requirements and in accordance with good
industry practice. All such insurance policies are valid, in full force and
effect and enforceable in accordance with their respective terms and no party
has repudiated any provision thereof. All such policies will remain in full
force and effect until the Closing Date. The Company is not in breach or default
(including with respect to the payment of premiums or the giving of notices) in
the performance of any of its obligations thereunder, and, to the best knowledge
of the Shareholders, no event exists which, with the giving of notice or the
lapse of time or both, would constitute a breach, default or event of default,
or permit termination, modification or acceleration under any such policy. There
are no claims, actions, proceedings or suits arising out of or based upon any of
such policies nor, to the best knowledge of the Shareholders, does any basis for
any such claim, action, suit or proceeding exist. All premiums due and payable
as of or prior to the date of this Agreement have been paid on such policies,
and all premiums which become due prior to the Closing Date will be paid on such
policies through the Closing Date. The Company has been covered during the three
years prior to the date of this Agreement by insurance in scope and amount
customary and reasonable for the businesses in which it has engaged during the
aforementioned period. All claims made during such three-year period with
respect to any insurance coverage of the Company, other than those described on
Exhibit 3.1(k), are set forth on Exhibit 3.1(l).
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(m) Pension and Employee Benefit Matters. Except as
disclosed in Exhibit 3.1(m), the Company has not established or maintained any
pension plans or benefit plans for its employees. All such plans set forth in
Exhibit 3.1(m) are duly registered where required by, and are in good standing
under, all applicable legislation, all required employer contributions
thereunder to the date hereof have been made, the respective pension funds and
benefit plans are funded in accordance with the rules thereof and no past
service funding Liabilities exist thereunder. The Company is not subject to any
Liability arising under any applicable law or employee benefit plan, any
Liability resulting from a prohibited transaction, any Liability for failure to
meet minimum funding requirements, any Liability related to the termination of a
multi-employer pension plan or any Liability caused by the non-qualification of
any plan under the Tax Act. The Company has no obligation to provide material
post-retirement benefits of any nature to its employees, former employees or
their survivors, dependents or beneficiaries, nor will any such obligation to
provide such post-retirement benefits be incurred solely as a result of the
consummation of the transactions described herein.
(n) Employees/Independent Contractors. Listed in
Exhibit 3.1(n) are the names and titles of all personnel employed or engaged by
the Company including the rates of remuneration, positions held and date of
commencement of employment. The employment records of the Company are true,
complete and correct. No employee of the Company is on leave of absence from the
Company. Also set forth in Exhibit 3.1(n)(i) is a complete list of all
independent contractors, sub-contractors and agents which are presently engaged
by the Company on a basis which involves a commitment which cannot be canceled
by the Company on 30 days' notice or less and which requires the expenditure by
the Company of more than CDN$5,000 per year. The Company has no employee who is
located in, or who performs the duties of his or her employment with the Company
on a full-time basis, in the United States. Except as set out in Exhibit
3.1(n)(ii), the Company does not have any written employment contracts, union or
collective labor, pension, deferred profit sharing, retirement, employee
benefit, stock option or other similar agreements or plans nor has it had any
such plan or agreement in the past, nor does it have any written contracts of
employment with any employees or any oral contracts of employment which are not
terminable on the giving of reasonable notice in accordance with applicable law.
The Company has not, in the last five years, experienced any labor disputes
which were of a material nature, work stoppages or strikes (legal or otherwise).
To the best knowledge of the Shareholders, there is not now any circumstance or
conduct which could result in the filing of an unfair labor practice complaint
or unjust dismissal claim against the Company; any such complaints and claims
previously raised and currently ongoing and the current status thereof are
particularized in Exhibit 3.1(n)(iii). As of the date of this Agreement, there
are no grievances filed against the Company or grievance adjudications presently
ongoing or outstanding. To the knowledge of the Shareholders, no attempts have
(within the last 60 days) been made by any trade union or employee association
to organize or represent any employees of the Company. The Company has paid all
wages, income and any other sums due and owing to its employees as at the end of
the most recent completed pay period and the Company has complied at all times
with minimum wage, overtime, statutory holiday and vacation obligations under
applicable provincial and federal laws.
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(o) Customer and Service Provider Relationships.
Exhibit 3.1(o)(i) lists each customer that individually or with its Affiliates
was, based on the Company's revenues during the fiscal year ended October 31,
1999, one of the Company's ten largest customers during such fiscal year or
accounted for 2% or more of the Company's revenues during such fiscal year (the
"Principal Customers"). Exhibit 3.1(o)(ii) lists each Person who is a material
provider of services to the Company as of the date of this Agreement (the
"Principal Providers"). Since October 31, 1999, no Principal Customer or
Principal Provider has canceled or otherwise terminated its relationship with
the Company, materially decreased its purchases from or services supplied to the
Company, or threatened to take any such action. The Shareholders have no basis
to anticipate any problems with the Company's customer or service provider
relationships. To the best knowledge of the Shareholders, no Principal Customer
or Principal Provider has any plans to terminate its relationship with the
Company.
(p) Compliance with Environmental Laws. To the best
knowledge of the Shareholders, except as disclosed in Exhibit 3.1(p), the
Company, the business of the Company, the Premises and any other real property
presently or previously owned or leased by the Company are in compliance with
and have always been in compliance with all, and do not violate and have not
violated any, Environmental Laws. The Company has not received any written
notice, nor do the Shareholders have any knowledge, of any facts which could
give rise to any notice that the Company is a "responsible person" for a waste
disposal site pursuant to the Waste Management Act (British Columbia) or any
other Environmental Laws. The Company and the Shareholders have fully disclosed
to the Acquiror all environmental reports, investigations, assessments, audits,
studies, Permits and records in the possession or control of the Shareholders or
the Company with respect to the Premises or other real property presently or
previously owned or leased by the Company and relating to Environmental Laws and
none of the Shareholders or the Company has obtained or performed any
environmental investigations, assessments, audits, reports or other studies with
respect thereto.
(q) Intellectual Property. The Company owns and, to
the best knowledge of the Shareholders, has the legal right to use each item of
Intellectual Property required to be identified on Exhibit 3.1(h). To the best
knowledge of the Shareholders, the continued operation of the business of the
Company as currently conducted will not interfere with, infringe upon,
misappropriate or conflict with any Intellectual Property rights of another
Person. To the best knowledge of the Shareholders, no other Person has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of the Company or any Intellectual
Property included in the Acquired Assets. Except as disclosed in Exhibit 3.1(q),
the Company has not granted any license, sublicense or permission with respect
to any Intellectual Property owned or used in the Company's business. Except as
disclosed in Exhibit 3.1(i), no claims are pending or, to the knowledge of the
Shareholders, threatened, that the Company is infringing or otherwise adversely
affecting the rights of any Person with regard to any Intellectual Property. To
the best knowledge of the Shareholders, all of the Intellectual Property that is
owned by the Company is owned free and clear of all Encumbrances and was not
misappropriated from any Person, and all portions of the Intellectual Property
as to which the Company is licensor or licensee are licensed
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pursuant to valid and existing license agreements. The consummation of the
transactions contemplated by this Agreement will not result in the loss or
material diminution of any Intellectual Property or rights in Intellectual
Property.
(r) Year 0000 Xxxxxxxx. To the best knowledge of the
Shareholders, the computer software owned by the Company and all other
Intellectual Property used or held for use by the Company in its business
accurately processes date/time data (including calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first centuries,
and the years 1999 and 2000 and leap year calculations when either (i) used as a
standalone application, or (ii) integrated into or otherwise used in conjunction
with the third party hardware, software, firmware and data over which the
Shareholders and the Company have no control ("Third Party Products") with which
such Company software or other Intellectual Property was designated or intended
to operate at the time such Company software was (i) developed or (ii) first
provided to the Company's customers, or tested by the Company for such
customers, whichever is later. Notwithstanding the foregoing, the Company shall
not be considered to be in breach of the representation and warranty in the
immediately preceding sentence if the failure of such Company software to comply
with such representation and warranty is attributable solely to (x) a failure by
any Third Party Product to accurately process date/time data (including but not
limited to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations; or (y) any modification of the Company software by any party other
than the Company (unless such modification was made at the direction of the
Company).
(s) Brokers' Fees. The Company does not have, and
will not have as a result of the consummation of this Agreement, any Liability
to pay any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated by this Agreement.
(t) Guarantees. The Company is not a guarantor or
otherwise liable for any Liability (including indebtedness for borrowed money)
of any other Person, nor has the Company agreed to enter into such arrangement.
Except as set forth on Exhibit 3.1(t), no Person is a guarantor or otherwise
liable for any Liability (including indebtedness for borrowed money) of the
Company.
(u) Disclosure. None of the documents or information
provided to SignalSoft by the Company, any Shareholder or any agent or employee
thereof in the course of SignalSoft's due diligence investigation and the
negotiation of this Agreement and pursuant to Sections 3.1 and 3.2 of this
Agreement and the disclosure Exhibits referred to therein, including the
financial statements referred to above in Section 3.1, contains any untrue
statement of any material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
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(v) Export Countries. Each country to which the
Company has, at any time during the five years ending on the date of this
Agreement, exported goods or services is set forth on Exhibit 3.1(v).
(w) No Reporting Issuer. The Company is not a
"reporting issuer" (as that term is defined in the Securities Act, R.S.B.C., as
amended).
3.2. Representations, Warranties and Covenants of Each
Shareholder. Each Shareholder, severally and separately, but not jointly,
represents and warrants to SignalSoft that the statements contained in this
Section 3.2 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.2).
(a) Investment. Each Shareholder acknowledges and
agrees that:
(i) Neither SignalSoft nor the Acquiror is a
reporting issuer in any jurisdiction in North America, and the NS Shares and
SignalSoft Shares (collectively, the "Securities") issued to such Shareholder,
other than pursuant to a prospectus, may be subject to indefinite resale
restrictions imposed under the laws of the jurisdiction in which such
Shareholder is resident.
(ii) Such Shareholder has been advised to
consult his or her own legal advisors with respect to the merits and risks of an
investment in the Securities and with respect to applicable resale restrictions,
and he or she is solely responsible for compliance with applicable resale
restrictions.
(iii) To the knowledge of such Shareholder,
the sale of the Securities was not accompanied by any advertisement in printed
media of general and regular paid circulation, radio or television.
(iv) Such Shareholder has not received nor
been provided with, nor has he or she requested, nor does he or she have any
need to receive, any offering memorandum or any other document describing the
business and affairs of SignalSoft or the Acquiror.
(v) No prospectus has been filed or will be
filed by SignalSoft or the Acquiror with respect to the offering of the
Securities under any applicable securities legislation, and accordingly:
(A) such Shareholder is restricted
from using certain civil remedies available under such legislation;
(B) such Shareholder may not receive
information that might otherwise be required to be provided to it under such
legislation; and
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(C) SignalSoft and the Acquiror are
relieved from certain obligations that would otherwise apply under such
legislation.
(vi) No Person has made to such Shareholder
any written or oral representations:
(A) that any Person will resell or
repurchase the Securities;
(B) that any Person will refund the
purchase price for the Securities;
(C) as to the future price or valued
of the Securities; or
(D) that the NS Shares or the
SignalSoft Shares will be listed and posted for trading or any stock exchange or
that application has been made to list the common shares of SignalSoft or the
Acquiror on any stock exchange.
(vii) Except for the Shareholders listed on
Exhibit 3.2(a)(vii):
(A) such Shareholder is not a U.S.
Person; and
(B) such Shareholder is not
acquiring the Securities for the account of a U.S. Person;
(viii) Such Shareholder will not sell any
SignalSoft Shares except in accordance with the provisions of Regulation S
promulgated under the Securities Act, pursuant to registration under the
Securities Act or an available exemption therefrom and will not engage in any
hedging transactions with regard to such Securities unless in compliance with
the Securities Act.
(ix) Such Shareholder will comply with the
applicable securities legislation concerning the purchase and holding of the
Securities and any resale of the Securities.
(x) (A) Such Shareholder is acquiring (and
upon the acquisition of SignalSoft Shares, will acquire) the Securities for such
Shareholder's own account and not on behalf of any other Person; such
Shareholder is aware and acknowledges that the Securities have not been
registered under the Securities Act, or applicable state securities laws, and
may not be offered, sold, assigned, exchanged, transferred, pledged or otherwise
disposed of in the United States unless so registered under the Securities Act
and applicable state securities laws or an exemption from the registration
requirements thereof is available;
(B) such Shareholder has been
furnished all information that such Shareholder deems necessary to enable such
Shareholder to evaluate the merits and risks of an investment in SignalSoft or
the Acquiror; such Shareholder has had a reasonable opportunity
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to ask questions of and receive answers from SignalSoft and the Acquiror
concerning SignalSoft, the Acquiror, the Securities and any and all matters
relating to the transactions described herein, and all such questions, if any,
have been answered to the full satisfaction of such Shareholder;
(C) no Person other than such
Shareholder has
(1) any rights in and to
the Securities, which rights were obtained through or from such Shareholder; or
(2) any rights to acquire
the Securities, which rights were obtained through or from such Shareholder;
(D) such Shareholder is aware that
the acquisition of the Securities is an investment involving a risk of loss and
that there is no guarantee that such Shareholder will realize any gain from this
investment, and that such Shareholder could lose the total amount of its
investment;
(E) such Shareholder understands
that no United States federal or state agency nor Canadian provincial securities
commission has made any finding or determination regarding the fairness of the
offering of the Securities for investment, or any recommendation or endorsement
of the offering of the Securities;
(F) such Shareholder is acquiring
(or, upon the acquisition of SignalSoft Shares, will acquire) the Securities for
investment, with no present intention of dividing or allowing others to
participate in such investment or of reselling, or otherwise participating,
directly or indirectly, in a distribution of the Securities, and shall not make
any sale, transfer or pledge thereof without registration under the Securities
Act and any applicable securities laws of any state or province of Canada,
unless an exemption from registration is available, as established to the
reasonable satisfaction of SignalSoft, by opinion of counsel or otherwise;
(G) except as set forth herein, no
representations or warranties have been made to such Shareholder by SignalSoft,
the Acquiror or any agent, employee or Affiliate of either of them, and in
entering into this transaction such Shareholder is not relying upon any
information, other than from the results of independent investigation by such
Shareholder; and
(H) such Shareholder understands
that the Securities are being offered to such Shareholder in reliance on
specific exemptions from the registration requirements of United States federal
and state, and Canadian provincial, securities laws and that SignalSoft and the
Acquiror are relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Shareholder
set forth herein in order to determine the applicability of such exemptions and
the suitability of such Shareholder to acquire the Securities;
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(xi) as to each Shareholder listed on
Exhibit 3.2(a)(xi), such Shareholder (A) is an "accredited investor" as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act, (B) has
such knowledge and expertise in financial and business matters (including
knowledge and expertise in the business and proposed business of SignalSoft and
the Acquiror) that such Shareholder is capable of evaluating the merits and
risks involved in an investment in the Securities; and such Shareholder is
financially able to bear the economic risk of the investment in the Securities,
including a total loss of such investment, and (C) such Shareholder represents
that it has adequate means of providing for its current needs and has no need
for liquidity in its investment in the Securities; such Shareholder has no
reason to anticipate any material change in its financial condition for the
foreseeable future.
Each Shareholder, upon the conversion of NS Shares into SignalSoft Shares, will
deliver to SignalSoft a certificate executed by such Shareholder (and, if such
Shareholder is not an "accredited investor," such Shareholder's Purchaser
Representative) containing the representations, warranties and covenants
contained in (A) Section 3.2(a)(x) and (B) as to any Shareholder listed on
Exhibit 3.2(a)(vii), the representations and warranties contained in Section
3.2(a)(xi), or (B) as to any Shareholder not listed on Exhibit 3.2(a)(vii), the
representations and warranties contained in Section 3.2(a)(vii) hereof,
effective as of the date of such conversion.
All certificates representing the NS Shares shall bear a legend indicating that
the NS Shares are subject to transfer restrictions set forth in the Acquiror's
articles of association and the Stockholders' Agreement.
All certificates representing SignalSoft Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") NOR UNDER ANY STATE SECURITIES LAWS AND CAN
NOT BE TRANSFERRED, SOLD, ASSIGNED OR HYPOTHECATED IN THE UNITED STATES OR FOR
THE ACCOUNT OF A U.S. PERSON UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS DECLARED EFFECTIVE UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, (II) THE COMPANY (A) RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY, WHICH OPINION IS SATISFACTORY TO THE COMPANY AND ITS COUNSEL, OR (B) IS
OTHERWISE SATISFIED, THAT SUCH SECURITIES MAY BE TRANSFERRED, SOLD, ASSIGNED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES
LAWS, OR (III) SUCH TRANSFER, SALE, ASSIGNMENT OR HYPOTHECATION IS IN COMPLIANCE
WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE ACT. HEDGING
TRANSACTIONS INVOLVING THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. AS USED HEREIN, "UNITED STATES" AND
"U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE ACT.
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All certificates representing NS Shares or SignalSoft Shares also shall bear any
legend provided for under the securities laws of any applicable jurisdiction.
(b) Ownership of Company Shares. Each Shareholder
owns, legally, beneficially, and free and clear of any Encumbrance, or owns
options to acquire, the number of Company Shares set forth opposite such
Shareholder's name on Exhibit 2.2(a). Such Shareholder does not own, and has no
right to acquire, any Company Shares other than the Company Shares or options to
acquire Company Shares set forth opposite such Shareholder's name in Section
2.2(a) and the Company Shares or options to acquire Company Shares set forth
opposite such Shareholder's name on Exhibit 3.1(b)(i). Such Shareholder has not
contributed tangible property to the Company as consideration for any Company
Shares, or options to acquire Company Shares, owned by such Shareholder.
(c) Authority; No Violation. Each Shareholder, each
Relative of any Shareholder, and each Affiliate of the Company or of a
Shareholder who is a party to any Other Seller Agreement has full and absolute
right, power, authority and legal capacity to execute, deliver and perform this
Agreement and all Other Seller Agreements to which such Shareholder, Relative or
Affiliate is a party, and this Agreement constitutes, and the Other Seller
Agreements will when executed and delivered constitute, the legal, valid and
binding obligations of, and shall be enforceable in accordance with their
respective terms against, each such Shareholder, Relative or Affiliate who is a
party thereto. The execution, delivery and performance of this Agreement and the
Other Seller Agreements and the consummation of the transactions contemplated
hereby and thereby will not (i) violate any Legal Requirement to which the
Company, any Shareholder, or any Relative or Affiliate of the Company or of any
Shareholder who is a party to any Other Seller Agreement is subject or any
provision of the memorandum or articles of the Company or of any such Affiliate,
or (ii) violate, with or without the giving of notice or the lapse of time or
both, or conflict with or result in the breach or termination of any provision
of, or constitute a default under, or give any Person the right to accelerate
any obligation under, or result in the creation of any Encumbrance upon any
properties, assets or business of the Company, of any Shareholder, or of any
such Relative or Affiliate pursuant to, any indenture, mortgage, deed of trust,
lien, lease, license, Permit, agreement, instrument or other arrangement to
which the Company, any Shareholder or any such Relative or Affiliate is a party
or by which the Company, any Shareholder, or any such Relative or Affiliate or
any of their respective assets and properties is bound or subject. Except for
notices that will be given and consents that will be obtained by the
Shareholders prior to the Closing (each of which is set forth in Exhibit
3.2(c)), neither the Company, any Shareholder, nor any such Relative or
Affiliate need give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority or other Person
in order for the parties to consummate the transactions contemplated by this
Agreement and the Other Seller Agreements. All share transfer restrictions
affecting the transfer of the Company Shares to the Acquiror shall have been
complied with or effectively waived and on the transfer thereof at Closing the
Acquiror will acquire valid title to such Company Shares free and clear of all
Encumbrances whatsoever.
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(d) Citizenship and Residency. Such Shareholder
legally resides at the address, and is a citizen only of the jurisdiction, set
forth opposite such Shareholder's name on Exhibit 3.2(d).
(e) Withholding. Each Shareholder listed on Exhibit
3.1(f)(x) covenants and agrees with the Acquiror as follows:
(i) such Shareholder shall deliver to the
Acquiror at least three Business Days prior to the Closing Date a certificate
issued by the Minister of National Revenue (the "Minister") under subsection
116(2) of the Tax Act;
(ii) if a certificate is so delivered to the
Acquiror, the Acquiror shall be entitled to withhold from the Purchase Price
payable to such Shareholder at the time of Closing 33 1/3 percent of the amount,
if any, by which the Purchase Price payable by the Acquiror to such Shareholder
for the Company Shares so acquired from such Shareholder exceeds the certificate
limit as defined in subsection 116(2) of the Tax Act and fixed by the Minister
in such certificate (or, if the provisions of Section 3.2(e)(vi) are applicable,
the amount of the Purchase Price specified in Section 3.2(e)(vi));
(iii) if a certificate is not so delivered,
the Acquiror shall be entitled to withhold from the Purchase Price payable to
such Shareholder at the time of Closing an amount equal to 33 1/3 percent of the
Purchase Price payable to such Shareholder (or, if the provisions of Section
3.2(e)(vi) are applicable, the amount of the Purchase Price specified in Section
3.2(e)(vi));
(iv) where the Acquiror has withheld any
amount under the provisions of Section 3.2(e)(iii) above or Section 3.2(e)(vi)
below and such Shareholder delivers to the Acquiror, after the Closing Date and
within 30 days after the end of the month in which the Acquiror acquired the
Company Shares (the "Remittance Deadline"), a certificate issued by the Minister
under subsection 116(2) of the Tax Act, the Acquiror:
(A) shall pay forthwith to the
Receiver General 33 1/3 percent of the amount, if any, by which the Purchase
Price payable to such Shareholder exceeds the certificate limit fixed in such
certificate, and the amount so paid shall be credited to the Acquiror as a
payment on account of the Purchase Price; and
(B) shall pay forthwith to such
Shareholder any amount that the Acquiror has withheld and is not required to pay
to the Receiver General in accordance with the provisions of Section
3.2(e)(iv)(A) above;
(v) where the Acquiror has withheld any
amount under the provisions of Section 3.2(e)(ii) or (iii) above or Section
3.2(e)(vi) below and no certificate has been delivered to the Acquiror by such
Shareholder in accordance with the provisions of Section 3.2(e)(iv) above, such
amount shall be paid by the Acquiror to the Receiver General, on or prior (not
earlier
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than three Business Days prior) to the Remittance Deadline, on account
of the Acquiror's liability for tax pursuant to subsection 116(5) of the Tax
Act, and the amount so paid shall be credited to the Acquiror as a payment to
such Shareholder on account of the Purchase Price payable to such Shareholder;
and
(vi) to the extent possible, any amounts
withheld by the Acquiror pursuant to the provisions of this Section 3.2(e) shall
be withheld from the portion of the total Cash Consideration payable to such
Shareholder (reduced by the portion of such Cash Consideration to be deposited
into the Escrow Account with respect to such Shareholder in accordance with the
provisions of Section 2.2(a)) (the "Available Cash"). If the amount to be
withheld by the Acquiror with respect to a Shareholder pursuant to the
provisions of this Section 3.2(e) exceeds such Shareholder's Available Cash, the
Acquiror shall withhold with respect to such Shareholder, in addition to all of
such Shareholder's Available Cash, that number of NS Shares (or, if such
Shareholder has elected to receive SignalSoft Shares in lieu of NS Shares,
SignalSoft Shares) which, when multiplied by the Per Share Amount, equals the
excess of the withholding obligation applicable to such Shareholder over such
Shareholder's Available Cash ("Excess Withholding"), divided by .667. To the
extent that the Acquiror's obligation with respect to a Shareholder to remit
withholding to the Receiver General under the provisions of subsections
3.2(e)(i) through (v) above exceeds such Shareholder's Available Cash,
SignalSoft, upon three Business Days' prior notice to such Shareholder, shall
purchase, at the Per Share Amount, NS Shares or SignalSoft Shares so withheld
from the Shareholder by remitting the appropriate amount to the Receiver General
on behalf of the Acquiror or SignalSoft, including any amount required to be
withheld by SignalSoft with respect to the purchase of NS Shares under this
Section 3.2(e), unless the Shareholder discharges the appropriate amount of the
Liability to the Receiver General and provides the Acquiror, not later than
three Business Days' prior to the Remittance Deadline, with proof thereof that
is satisfactory to the Acquiror. Such Shareholder agrees to execute and deliver
such further documents as reasonably may be required to effect such purchase of
NS Shares or SignalSoft Shares. Any NS Shares or SignalSoft Shares withheld but
not so purchased will be delivered to the Shareholder in accordance with
subsections 3.2(e)(i) through (v) above.
(f) Capital Property. Such Shareholder holds the
Company Shares, or options to acquire Company Shares, set forth opposite such
Shareholder's name on Exhibit 2.2(a) or 3.1(b)(i), respectively, as capital
property (as defined in the Tax Act).
3.3. Representations and Warranties of SignalSoft and the
Acquiror. SignalSoft and the Acquiror jointly and severally represent and
warrant to the Shareholders that the statements contained in this Section 3.3
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 3.3).
(a) Organization, Good Standing, Power, Etc.
SignalSoft is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and
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is qualified to do business as a foreign corporation and is in good standing in
all jurisdictions in which the nature of the business conducted by it or the
properties owned, leased or operated by it to make such qualification necessary.
The Acquiror is an unlimited company duly organized, validly existing and in
good standing under the laws of the province of Nova Scotia and is qualified to
do business as an extraprovincial unlimited company in all jurisdictions in
which the nature of the business conducted by it or the properties owned, leased
or operated by it make such qualification necessary. This Agreement and the
Other SignalSoft Agreements and the transactions contemplated hereby and thereby
have been duly approved by all requisite corporate action. Each of SignalSoft
and the Acquiror have full corporate power and authority to execute, deliver and
perform this Agreement and the Other SignalSoft Agreements to which it is a
party, and this Agreement constitutes, and the Other SignalSoft Agreements will
when executed and delivered constitute, the legal, valid and binding obligations
of SignalSoft or the Acquiror, as the case may be, and shall be enforceable in
accordance with their respective terms against SignalSoft or the Acquiror, as
the case may be.
(b) Capitalization.
(i) The authorized, issued and outstanding
shares of the capital stock of SignalSoft are as set forth on Exhibit 3.3(b)(i).
(ii) The authorized, issued and outstanding
shares of the capital stock of the Acquiror as of the date of this Agreement are
as set forth on Exhibit 3.3(b)(ii). At the time of issuance thereof and delivery
to the Shareholders, the NS Shares to be delivered to the Shareholders pursuant
to this Agreement will be duly authorized and validly issued shares of NS Stock,
and will be fully paid and nonassessable. Such NS Shares shall at the time of
such issuance and delivery be free and clear of any Encumbrances of any kind or
character, other than those arising under applicable federal and provincial
securities laws, under this Agreement or under any Other Seller Agreement to
which such Shareholder is a party and shall have the rights, restrictions and
privileges set forth on Exhibit 3.3(b)(ii).
(iii) All of the issued and outstanding
capital stock of the Acquiror is owned, directly or indirectly, by SignalSoft.
(iv) Subject to any restrictions on
conversion that are set forth in the Stockholders' Agreement or the articles of
association of the Acquiror, the NS Shares shall, upon issuance pursuant to this
Agreement, be convertible into fully-paid and non-assessable SignalSoft Stock.
(c) No Violation of Agreements, Etc. The execution,
delivery and performance of this Agreement and the Other SignalSoft Agreements,
and the consummation of the transactions contemplated hereby and thereby will
not (i) violate any Legal Requirement to which SignalSoft or the Acquiror is
subject or any provision of the certificate of incorporation or bylaws of
SignalSoft or the constituent documents of the Acquiror or (ii) violate, with or
without the giving
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of notice or the lapse of time or both, or conflict with or result in the breach
or termination of any provision of, or constitute a default under, or give any
Person the right to accelerate any obligation under, or result in the creation
of any Encumbrance upon any properties, assets or business of SignalSoft or of
the Acquiror pursuant to, any indenture, mortgage, deed of trust, lien, lease,
license, agreement, instrument or other arrangement to which SignalSoft or the
Acquiror is a party or by which SignalSoft or the Acquiror or any of their
respective assets and properties is bound or subject. Except for notices and
consents that will be given or obtained by SignalSoft prior to the Closing,
neither SignalSoft nor the Acquiror need to give any notice to, make any filing
with or obtain any authorization, consent or approval of any Governmental
Authority or other Person in order for the parties to consummate the
transactions contemplated by this Agreement.
(d) Financial Statements; Absence of Liabilities.
(i) To the best knowledge of SignalSoft, the
audited financial statements of SignalSoft for the years ended December 31, 1998
and December 31, 1999 (the "Financial Statements"), which are attached as
Exhibit 3.3(d) are true and correct in all material respects, are in accordance
with U.S. GAAP on a consistent basis, have been prepared in accordance with the
books and records of SignalSoft (which books and records are complete and
correct in all material respects), and fairly present the financial position and
results of operations of SignalSoft in all material respects as of such dates
and for each of the periods indicated. To the best knowledge of SignalSoft, as
of the date of each Financial Statement, Signal Soft had no Liabilities other
than those set forth on each such Financial Statement.
(ii) Since the date of the most recent
Financial Statement, SignalSoft has not incurred or become subject to any
Liability other than (A) Liabilities incurred in the ordinary course of
business, (B) Liabilities to holders of preferred stock of SignalSoft pursuant
to the terms of such preferred stock, and (C) any Liabilities created hereunder
or pursuant to applicable law.
(iii) As of the date of this Agreement, the
Acquiror has not commenced business operations. As of the date of this Agreement
the Acquiror has, and as of the Closing Date the Acquiror shall have, no
Liabilities save and except for (A) organizational expenses incurred in the
incorporation of Acquiror or (B) any Liabilities created hereunder or pursuant
to applicable law.
(e) Tax Matters.
(i) SignalSoft has duly and timely filed all
Tax Returns that it was required to file. To the best knowledge of SignalSoft,
all such Tax Returns were correct and complete in all material respects. To the
best knowledge of SignalSoft, all Taxes owed by SignalSoft (whether or not shown
on any Tax Return) have been paid.
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(ii) To the best knowledge of SignalSoft,
there is no basis for any authority to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no pending or threatened
dispute or claim concerning any Tax Liability of SignalSoft.
(iii) To the best knowledge of SignalSoft,
there is no misrepresentation that is attributable to neglect, carelessness,
willful default or fraud in Tax Returns of SignalSoft previously filed.
(iv) To the best knowledge of SignalSoft,
the provisions made for current and deferred Taxes included in the most recent
Financial Statement are sufficient for the payment of all accrued and unpaid
Taxes of and payable by SignalSoft, whether or not disputed, for the period
ended the date thereof and for all periods prior thereto.
(f) Litigation; Compliance with Applicable Laws and
Rights.
(i) To the best knowledge of SignalSoft,
there is no outstanding Order against, nor is there any litigation, proceeding,
claim, suit, action, arbitration, investigation or hearing before an
administrative tribunal or by any Governmental Authority or other Person in
progress, pending or threatened against SignalSoft, its assets or its business
or relating to the transactions contemplated by this Agreement, nor to the best
knowledge of SignalSoft, is there any basis for any such action.
(ii) To the best knowledge of SignalSoft,
neither SignalSoft nor SignalSoft's assets are in violation of any applicable
Legal Requirement or Right. To the best knowledge of SignalSoft, the Company has
not received notice from any Governmental Authority or other Person of any
violation or alleged violation of any Legal Requirement or Right, and, to the
best knowledge of SignalSoft, no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has been filed or
commenced or is pending or is threatened against SignalSoft alleging any such
violation.
(g) Intellectual Property. SignalSoft owns or, to the
best knowledge of SignalSoft, has the legal right to use all material items of
its Intellectual Property. To the best knowledge of SignalSoft, the continued
operation of the business of SignalSoft as currently conducted will not
interfere with, infringe upon, misappropriate or conflict with any Intellectual
Property rights of another Person. To the best knowledge of SignalSoft, no other
Person has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of SignalSoft. SignalSoft
has not granted any license, sublicense or permission with respect to any
Intellectual Property owned or used in the Company's business. No claims are
pending or, to the best knowledge of SignalSoft, threatened that SignalSoft is
infringing or otherwise adversely affecting the rights of any Person with regard
to any Intellectual Property. To the best knowledge of SignalSoft, all of the
Intellectual Property that is owned by SignalSoft is owned free and clear of all
Encumbrances and was not misappropriated from any Person, and all portions of
the Intellectual Property as to which SignalSoft is licensor or licensee are
licensed pursuant to valid and
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existing license agreements. The consummation of the transactions contemplated
by this Agreement will not result in the loss or material diminution of any
Intellectual Property or rights in Intellectual Property.
(h) Year 0000 Xxxxxxxx. To the best knowledge of SignalSoft, the
computer software owned by SignalSoft and all other Intellectual Property used
or held for use by SignalSoft in its business accurately processes date/time
data (including calculating, comparing, and sequencing) from, into, and between
the twentieth and twenty-first centuries, and the years 1999 and 2000 and leap
year calculations when either (i) used as a standalone application, or (ii)
integrated into or otherwise used in conjunction with the third party hardware,
software, firmware and data over which SignalSoft has no control ("Third Party
Products") with which such SignalSoft software or other Intellectual Property
was designated or intended to operate at the time such SignalSoft software was
(i) developed or (ii) first provided to the SignalSoft's customers, or tested by
SignalSoft for such customers, whichever is later. Notwithstanding the
foregoing, SignalSoft shall not be considered to be in breach of the
representation and warranty in the immediately preceding sentence if the failure
of such SignalSoft software to comply with such representation and warranty is
attributable solely to (x) a failure by any Third Party Product to accurately
process date/time data (including but not limited to, calculating, comparing,
and sequencing) from, into, and between the twentieth and twenty-first
centuries, and the years 1999 and 2000 and leap year calculations; or (y) any
modification of SignalSoft software by any party other than SignalSoft (unless
such modification was made at the direction of SignalSoft).
(i) Brokers' Fees. SignalSoft does not have, and will
not have as a result of the consummation of this Agreement, any Liability to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
(j) Disclosure. None of the documents or information
provided to the Shareholders or to the Company by SignalSoft or any agent or
employee thereof in the course of the Shareholder's due diligence investigation
and the negotiation of this Agreement, including the Financial Statements
referred to above in Section 3.3(d), contains any untrue statement of any
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
(k) No Reporting Issuer. Neither SignalSoft nor the
Acquiror is a "reporting issuer" (as that term is defined in the Securities Act,
R.S.B.C., as amended), or has offered consideration to any one Shareholder
outside or collateral to the terms of the Purchase Agreement and the Other
Seller Agreements.
3.4 Survival of Representations. The representations and
warranties contained in Sections 3.1, 3.2 and 3.3 and the Liabilities of the
parties with respect thereto shall survive any investigation thereof by the
parties and shall survive the Closing for four years, except that (a) the
Liabilities of the Shareholders with respect to the representations and
warranties set forth in Sections 3.1(a), 3.1(b), and 3.1(c) and 3.2 and the
Liabilities of SignalSoft with respect to the
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representations and warranties set forth in Sections 3.3(a) and 3.3(b) shall
survive without termination, (b) the Liabilities of the Shareholders with
respect to the representations and warranties set forth in Section 3.1(f) and
the Liabilities of SignalSoft with respect to the representations and warranties
set forth in Section 3.3(e) shall survive for thirty days following the
expiration of any period of limitation on the assessment and collection of Taxes
of the Company or SignalSoft, as applicable, with respect to any period ending
prior to the Closing Date, and (c) the Liabilities of the Shareholders with
respect to the representations and warranties set forth in Sections 3.1(d), (e),
and (g) through (t) and the Liabilities of SignalSoft with respect to the
representations and warranties set forth in Sections 3.3(c), 3.3(d) and 3.3(f)
through (i) shall survive the Closing for two years.
3.5. Representations as to Knowledge. The representations and
warranties contained in Article 3 hereof will in each and every case where an
exercise of discretion or a statement to the "best knowledge," "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith after reasonable investigation (including, in the case of the
Shareholders, inquiry of the applicable directors, officers and employees of the
Company), with due diligence, to the best efforts of such party and be exercised
always in a reasonable manner and within reasonable times.
4. Pre-Closing Covenants. The parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
4.1. General. Each of the parties will use its reasonable best
efforts to take all actions necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including the satisfaction, but not the waiver, of the closing conditions set
forth in Section 6) and the other agreements contemplated hereby. Without
limiting the foregoing, the Shareholders will, and will cause the Company to,
give any notices, make any filings and obtain any consents, authorizations or
approvals needed to consummate the transactions contemplated by this Agreement.
4.2. Operation and Preservation of Business. The Shareholders
will not cause or permit the Company to engage in any practice, take any action
or enter into any transaction outside the ordinary course of its business;
provided, however, that in no event will any action be taken or fail to be taken
or any transaction be entered into which would result in a breach of any
representation, warranty or covenant of any Shareholder. The Shareholders will
cause the Company to keep its business and properties, including its current
operations, physical facilities, working conditions and relationships with
customers, service providers, lessors, licensors and employees, intact and will
cause the Company to conduct its business in the ordinary and normal course
thereof.
4.3. Full Access. The Shareholders will cause the Company to
permit SignalSoft and its agents to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
the Company, to all premises, properties, personnel, books, records (including
Tax records), contracts and documents of or pertaining to the Company. Prior to
Closing, SignalSoft will permit the Shareholders and their agents to have full
access at all
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reasonable times, and in a manner so as not to interfere with the normal
business operations of SignalSoft, to all premises, properties, personnel,
books, records (including Tax records), contracts and documents of or pertaining
to SignalSoft.
4.4. Notice of Developments. Each of SignalSoft and the
Shareholders will give prompt written notice to the other of any substantial
development which occurs after the date of this Agreement and before the Closing
that has a material adverse effect on the business, assets, Liabilities,
financial condition, operations, results of operations, future prospects,
representations, warranties, covenants or disclosure Exhibits of SignalSoft (as
to the notice require of SignalSoft) or the Company (as to the notice required
of the Shareholders). No such written notice, however, will be deemed to amend
or supplement any disclosure Exhibit or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
4.5. Exclusivity. No Shareholder will, and the Shareholders
will not cause or permit the Company or any director, officer, employee or agent
of the Company to, (a) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any portion of the assets of, the Company
(including any acquisition structured as a merger, consolidation or share
exchange) or (b) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing. No Shareholder will vote shares of the Company's stock or sign a
written consent in favor of any such transaction. Each Shareholder will notify
SignalSoft immediately if any Person makes any proposal or offer to, inquiry of
or contact with such Shareholder with respect to any of the foregoing.
4.6. Announcements; Securities Law Restrictions. Except for
limited disclosure made by the Company and by SignalSoft prior to the date of
this Agreement, neither any Shareholder nor the Company nor SignalSoft shall
disclose to any Person the existence, terms or subject matter of this Agreement
without the prior written approval of SignalSoft and the Shareholders' Agent,
except (and only to the extent) previously publicly announced by SignalSoft and
the Shareholders' Agent, and any press release or public announcement relating
to the subject matter of this Agreement shall be made only as SignalSoft and the
Shareholder Agent shall agree, subject to any requirements imposed upon any of
the parties under the stock exchange rules or securities disclosure laws of any
applicable jurisdiction. Further, neither any Shareholder nor the Company shall
violate any United States or Canadian securities laws which restrict each
Shareholder and the Company, as Persons with material non-public information
concerning SignalSoft obtained directly or indirectly from SignalSoft, from
purchasing or selling securities of SignalSoft or from communicating such
information to any other Person under any circumstances in which it is
reasonably foreseeable that such Person is likely to purchase or sell such
securities.
4.7. Closing Date Liabilities. Prior to the Closing Date, the
Shareholders shall pay, or shall cause the Company to pay prior to the Closing
Date, in full all Closing Date Liabilities in excess of the amounts set forth on
the Estimated Closing Date Balance Sheet. Effective as of the
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time immediately prior to the Closing Date, without further action by the
Shareholders, the Company or any other Person, the Principal Shareholders hereby
jointly and severally assume, and the Other Shareholders severally assume
(subject, in both cases, to the limitations set forth in Section 7.1) all
Closing Date Liabilities (other than Liabilities relating to Unknown
Infringement Claims) in excess of the amount by which the cash set forth on the
Estimated Closing Date Balance Sheet exceeds the Closing Date Liabilities and
the Retained Liabilities; provided that the exclusion of Liabilities relating to
Unknown Infringement Claims in this sentence and in Section 7.1(a) shall not
relieve any Shareholder from Liability for any Adverse Consequences suffered by
SignalSoft or the Company as the result of a breach by such Shareholder of any
representation, warranty or covenant by such Shareholder to the extent otherwise
provided in this Agreement.
4.8 Investment Canada Act Filing. Promptly following the
execution of this Agreement, the Shareholders will, and will cause the Company
to, cooperate with SignalSoft in making, and furnish such information as may be
required to make, any and all necessary filings under the Investment Canada Act
as soon as practicable following the date of this Agreement.
4.9 Adjusted Cost Base Election. At the election of the
Shareholders, the Shareholders and the Acquiror will cooperate to prepare,
within 60 days following the Closing Date, such forms as may be required to
cause each Shareholder and the Acquiror, with respect to the NS Shares
transferred to the Shareholders pursuant to this Agreement, to elect jointly,
pursuant to subsection 85(1) of the Tax Act, in prescribed form and within the
time referred to in subsection 85(6) of the Tax Act, so that for income tax
purposes, the elected amount of the proceeds of disposition to such Shareholder
and the cost of the NS Shares transferred to such Shareholder will be the
"adjusted cost basis" (as defined in the Tax Act) of the Shareholder's NS Shares
or such higher amount as may be elected pursuant to the Tax Act, as determined
by such Shareholder.
4.10 Exercise of Options. Each Shareholder listed on Exhibit
2.2(a) having options set forth opposite such Shareholder's name on Exhibit
2.2(a), to the extent he or she has not previously exercised such options, shall
provide to SignalSoft, not later than two Business Days prior to the Closing
Date, notice of such Shareholder's intent to exercise, or to permit to expire in
accordance with the following sentence, such options. If or to the extent that
such Shareholder fails to provide such notice in a timely manner as provided in
the preceding sentence, such Shareholder agrees that such options will expire
automatically at the end of the second Business Day preceding the Closing Date
without further action on the part of the Company or such Shareholder.
4.11 Non-Solicitation of Employees. Prior to Closing, or if
this Agreement is terminated pursuant to Section 8.1, for a period of one year
from the date of termination of this Agreement, each of SignalSoft and the
Company will refrain from soliciting, inducing, offering or contacting any
employee of the other for the purpose of offering employment.
5. Post-Closing Covenants. The parties agree as follows with respect to
the period following the Closing.
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5.1. Further Assurances. In case at any time after the Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor under
Section 7).
5.2. Transition. No Shareholder will take any action at any
time that is designed or intended to have the effect of discouraging any
customer, supplier, lessor, licensor or other business associate of the Company
from establishing or continuing a business relationship with SignalSoft or the
Acquiror after the Closing.
5.3. Cooperation. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(a) any transaction contemplated by this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving any of the Acquired Assets or the Company's business, each of the
other parties will cooperate with such party and its counsel in the contest or
defense, make available their personnel, and provide such testimony as shall be
reasonably necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Section 7).
5.4. Confidentiality. The Shareholders will treat and hold as
confidential all Confidential Information concerning SignalSoft, the Company's
business or the Acquired Assets, refrain from using any such Confidential
Information and deliver promptly to SignalSoft or destroy, at the request and
option of SignalSoft, all of such Confidential Information in its or their
possession.
5.5. Post-Closing Announcements. Following the Closing, any
press release or public announcement relating to the subject matter of this
Agreement shall be made only as SignalSoft and the Shareholders' Agent shall
agree, subject to any requirements imposed upon any of the parties under the
stock exchange rules or securities disclosure laws of any applicable
jurisdiction.
5.6. Financial Statements. After the Closing, the Shareholders
will, upon request of SignalSoft, cooperate with SignalSoft and render such
reasonable assistance to SignalSoft and its accountants as may be required to
produce such historical and on-going financial statements and audits as
SignalSoft may request, all at the sole cost and expense of SignalSoft, but
without additional consideration to the Shareholders. The Shareholders
acknowledge that SignalSoft may be required by applicable law to include audited
financial statements with respect to the business of the Company in reports
filed with governmental agencies and that the inability to audit the financial
statements as of the Closing Date promptly after the Closing could have a
material adverse effect on SignalSoft.
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5.7. Satisfaction of Liabilities.
(a) Promptly following the Closing, each Shareholder
will pay any Tax for which such Shareholder is responsible and which is
attributable to the transactions contemplated by this Agreement.
(b) The Shareholders, at their expense, promptly will
take or cause to be taken any action necessary to remedy any failure of the
Premises or the Acquired Assets to comply at the Closing Date with any Legal
Requirement, upon receipt of notice from SignalSoft at any time.
(c) SignalSoft will pay and perform (or cause the
Company to pay and perform), as and when due (except to the extent the validity
thereof or the liability therefor is being contested by SignalSoft), the Closing
Date Liabilities and Retained Liabilities.
5.8. Termination of Obligations. Effective as of the Closing
Date, neither the Company nor SignalSoft shall have any Liability to any
Shareholder or any Relative or Affiliate thereof or of the Company, except as
otherwise provided in this Agreement, in any Other Seller Agreement or by reason
of the employment of such Person by SignalSoft or the Company. Effective as of
the Closing Date, the Shareholders shall not have any Liability to the Company
or SignalSoft, except as otherwise provided in this Agreement, in any Other
Seller Agreement or by reason of the employment of such Person by SignalSoft or
the Company.
5.9. Transfer Restrictions; Call Provisions. The NS Shares
will be subject to the transfer restrictions and the call provisions set forth
in this Agreement, the Stockholders' Agreement and the Acquiror's articles of
association. Certificates for the NS Shares delivered to the Shareholders
pursuant to this Agreement and for the SignalSoft Shares into which NS Shares
are converted will bear the applicable legend substantially in the form set
forth in the Stockholders' Agreement as long as such Stockholders' Agreement
applies to such NS Shares or SignalSoft Shares, as the case may be.
The restrictions set forth in this Section 5.9 and the Stockholders'
Agreement shall be in addition to any restrictions on transfer imposed by U.S.
federal and applicable state securities and Canadian federal laws and applicable
provincial securities laws. Each Shareholder also agrees to comply with such
restrictions.
5.10 Intent to Maintain Facility. SignalSoft and the Acquiror
acknowledge that it is their present intention to maintain and expand the
current Company development facility located in Victoria, British Columbia
provided that there are no significant changes in the business conditions
relating to the operation of such a development facility.
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6. Conditions to Closing.
6.1. Conditions to Obligation of SignalSoft. The obligation of
SignalSoft to consummate the transactions contemplated by this Agreement is
subject to satisfaction of the following conditions:
(a) each Shareholder's representations and warranties
shall be correct and complete at and as of the Closing Date and any written
notices delivered to SignalSoft pursuant to Section 4.5 and the subject matter
thereof shall be satisfactory to SignalSoft;
(b) the Shareholders shall have performed and
complied with all of their covenants hereunder through the Closing;
(c) the Shareholders shall have given, or shall have
caused the Company to give, all notices and procured, or shall have caused the
Company to procure, all of the third-party consents, authorizations and
approvals required to consummate the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to SignalSoft;
(d) no action, suit or proceeding shall be pending or
threatened before any Governmental Authority or any other Person wherein an
unfavorable Order would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (iii) affect
adversely the right of the Acquiror to own the Company or the Acquired Assets or
to conduct the Company's business, and no such Order shall be in effect;
(e) there shall have been no material adverse change
in the Company, the Acquired Assets or the Company's business between the date
of execution of this Agreement and the Closing;
(f) the Shareholders shall have delivered to
SignalSoft (i) a certificate to the effect that each of the conditions specified
above in Sections 6.1(a) through (e) and, as to the Company and the
Shareholders, the condition specified below in Section 6.1(o), is satisfied in
all respects, (ii) a good standing certificate, dated within 10 days of the
Closing, from the Registrar of Companies of British Columbia and each other
province in which the Company is registered, qualified or authorized to do
business as an extraprovincial corporation and (iii) a certificate setting forth
the amount of Closing Date Liabilities and the Retained Liabilities, which
amount shall not exceed CDN$250,000;
(g) the Other Seller Agreements shall have been
executed and delivered by the Shareholders, as applicable;
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(h) SignalSoft shall have received from counsel to
the Company and the Shareholders an opinion in form and substance as set forth
in Exhibit 6.1(h) addressed to SignalSoft and NS Co. dated as of the Closing;
(i) SignalSoft shall have received from counsel to
each Shareholder who is not a citizen and resident of either the United States
or Canada an opinion from counsel to such Shareholder (which counsel and which
opinion are satisfactory to SignalSoft) that the transactions described in this
Agreement are in compliance with the securities laws of such jurisdiction;
(j) SignalSoft shall have received from the
Shareholders evidence of the termination of all Encumbrances against the
Acquired Assets;
(k) SignalSoft shall have received the resignations,
effective as of the Closing, of each director and officer of the Company;
(l) a new share certificate representing the Company
Shares shall have been delivered by the Shareholders to SignalSoft and all
existing share certificates representing the Company Shares shall have been
canceled;
(m) the Shareholders shall have delivered to
SignalSoft possession and control of the Company and the Acquired Assets,
including, without limitation, all stock certificate books, minute books,
corporate seals, and all other corporate and financial records of the Company;
(n) the Shareholders shall have delivered, or caused
the Company to deliver, to SignalSoft such other instruments, certificates and
documents as are reasonably requested by SignalSoft in order to consummate the
transactions contemplated by this Agreement, all in form and substance
reasonably satisfactory to SignalSoft, including copies of the memorandum and
articles of the Company, both as amended through the Closing Date, as certified
by the Registrar of Companies of British Columbia; and
(o) on or before the Closing Date, none of
SignalSoft, the Acquiror, the Company or any Shareholder shall have received a
notice pursuant to paragraph 13(1)(b)(ii) of the Investment Canada Act in
respect of any of the transactions contemplated by this Agreement.
SignalSoft may waive any condition specified in this Section 6.1 at or
prior to the Closing by notice in writing to the Shareholders' Agent.
6.2. Conditions to Obligation of the Shareholders. The
obligation of the Shareholders to consummate the transactions contemplated by
this Agreement is subject to satisfaction of the following conditions:
(a) SignalSoft's representations and warranties shall
be correct and complete at and as of the Closing Date;
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(b) SignalSoft shall have performed and complied with
all of its covenants hereunder through the Closing;
(c) SignalSoft shall have given all notices and
procured all of the third-party consents, authorizations and approvals required
to consummate the transactions contemplated by this Agreement, all in form and
substance reasonably satisfactory to the Shareholders' Agent;
(d) no action, suit or proceeding shall be pending or
threatened before any Governmental Authority or any other Person wherein an
unfavorable Order would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (iii) affect
adversely the right of the Shareholders to own the NS Shares, and no such Order
shall be in effect;
(e) there shall have been no material adverse change
in SignalSoft or SignalSoft's business between the date of execution of this
Agreement and the Closing;
(f) SignalSoft shall have delivered to the
Shareholders a certificate to the effect that each of the conditions specified
above in Sections 6.2(a) and (b) is satisfied in all respects;
(g) the Other SignalSoft Agreements shall have been
executed and delivered by SignalSoft;
(h) the Shareholders shall have received from Xxxxxxx
& Xxxxxx L.L.C. an opinion in form and substance as set forth in Exhibit 6.2(h),
addressed to the Shareholders and dated as of the Closing;
(i) the Shareholders shall have received from Xxx
Xxxxxx X'Xxxxxx Xxxxxxxx an opinion in form and substance as set forth in
Exhibit 6.2(i), addressed to the Shareholders and dated as of the Closing;
(j) SignalSoft shall have paid and deposited the
Purchase Price pursuant to Section 2.2(a);
(k) SignalSoft shall have delivered to the
Shareholders such other instruments, certificates and documents as are
reasonably requested by the Shareholders in order to consummate the transactions
contemplated by this Agreement, all in form and substance reasonably
satisfactory to the Shareholders' Agent; and
(l) the articles of the Acquiror shall have been
amended to include the provisions set forth in Exhibit 3.3(b)(ii).
The Shareholders' Agent may waive any condition specified in this
Section 6.2 at or prior to the Closing by notice in writing to SignalSoft.
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7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of SignalSoft and
the Company.
(a) If any Shareholder breaches (or if any Person
other than SignalSoft alleges facts that, if true, would mean any Shareholder
has breached) any of the representations or warranties of any Shareholder
contained herein and SignalSoft gives notice thereof to the Shareholders' Agent
within the Survival Period, or if any Shareholder breaches (or if any Person
other than SignalSoft alleges facts that, if true, would mean any Shareholder
has breached) any of the covenants of any Shareholder contained herein or any
representations, warranties or covenants of any Shareholder contained in any
Other Seller Agreement and SignalSoft gives notice thereof to the Shareholders'
Agent, then the Principal Shareholders agree jointly and severally (except that
each Principal Shareholder's Liability with respect to Section 3.2 only shall be
several and not joint), and the Other Shareholders agree severally, to indemnify
and hold harmless SignalSoft, the Acquiror and the Company from and against any
Adverse Consequences SignalSoft, the Acquiror or the Company may suffer
resulting from, arising out of, relating to or caused by any of the foregoing
regardless of whether the Adverse Consequences are suffered during or after the
Survival Period. In determining whether there has been a breach of any
representation or warranty contained in Section 3.1 or 3.2 and in determining
for purposes of the preceding sentence the amount of Adverse Consequences
suffered by SignalSoft, the Acquiror or the Company, such representations and
warranties shall not be qualified (other than by (A) the reference to
"knowledge" set forth in the last sentence of Section 3.1(o) and (B) the
references to "material" set forth in Section 3.1(u)) by "material,"
"materiality," "in all material respects," "best knowledge," "best of knowledge"
or "knowledge" or words of similar import, or by any phrase using any such terms
or words. The Principal Shareholders also jointly and severally, and the Other
Shareholders also severally, indemnify and hold harmless SignalSoft, the
Acquiror and the Company against any Adverse Consequences SignalSoft, the
Acquiror or the Company may suffer which result from, arise out of, relate to or
are caused by (i) any Liability of the Company or any Shareholder not included
in the Closing Date Liabilities or Retained Liabilities shown on the Estimated
Closing Date Balance Sheet (other than Liabilities relating to Unknown
Infringement Claims) or (ii) any condition, circumstance or activity existing
prior to the Closing Date which relates to any Legal Requirement or any act or
omission of the Company or any Shareholder or any predecessor with respect to,
or any event or circumstance related to, the Company's, any Shareholder's or any
predecessor's ownership, use or operation of any of the Acquired Assets, the
Premises or any other assets or properties or the conduct of its or their
business, regardless, in the case of (i) or (ii), of (A) whether or not such
Liability, act, omission, event, circumstance or matter was known or disclosed
to SignalSoft, was disclosed on any Exhibit hereto or is a matter with respect
to which any Shareholder did or did not have knowledge, (B) when such Liability,
act, omission, event, circumstance or matter occurred, existed, occurs or exists
and (C) whether a claim with respect thereto was asserted before or is asserted
after the Closing Date. If any dispute arises concerning whether any
indemnification is owing which cannot be resolved by negotiation among the
parties within 30 days of notice of claim for indemnification from the party
claiming indemnification to the party against whom such claim is asserted, the
dispute will be resolved by arbitration pursuant to this Agreement.
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The Liability of each Other Shareholder under the provisions
of this Section 7.1(a) will be limited to such Shareholder's proportionate share
of Liability for such Adverse Consequences based upon the percentages set forth
on Exhibit 2.2(a), and the maximum aggregate Liability of each Other Shareholder
under this Section 7.1(a) will not exceed the value of the Cash Consideration
plus the Share Consideration (determined as of the Closing Date pursuant to
Section 2.4) payable to such Other Shareholder in respect of the transactions
contemplated in this Agreement. The Liability of each Principal Shareholder
under the provisions of this Section 7.1(a) will be limited to the total
Liability for such Adverse Consequences reduced by the amount of any recovery
SignalSoft, the Acquiror or the Company actually receives from any Other
Shareholder in satisfaction of such Shareholder's Liability for such Adverse
Consequences, and the maximum aggregate Liability of each Principal Shareholder
under this Section 7.1(a) will not exceed the value of the Cash Consideration
plus the Share Consideration payable to all Shareholders in respect of the
transactions contemplated in this Agreement, determined pursuant to Section 2.4.
The cumulative Liability of the Shareholders under the
provisions of this Section 7.1(a) shall be subject to a minimum threshold equal
to the Minimum Claims Amount, such that no demand or recovery shall be made
hereunder until all such claims, on a cumulative basis, exceed the Minimum
Claims Amount. The Minimum Claims Amount shall equal the sum of (i) US$25,000,
plus (ii) the lesser of (A) US$75,000, or (B) the U.S. dollar equivalent
(determined by applying the Agreed Conversion Rate) of the amount (if any) by
which the cash set forth on the Closing Date Balance Sheet exceeds the sum of
the Closing Date Liabilities and the Retained Liabilities set forth on the
Closing Date Balance Sheet.
(b) Amounts needed to cover any indemnification
claims resolved in favor of SignalSoft or the Acquiror against any Shareholder
during the Escrow Period will be paid to SignalSoft first out of the funds
escrowed pursuant to the Escrow Agreement, along with interest from the date of
the Closing at the rate applicable to the escrowed funds. If indemnification
claims resolved in favor of SignalSoft or the Acquiror against any Shareholder
during the Escrow Period, plus interest, exceed the escrowed funds (an "Excess
Claim Recovery"), such Excess Claim Recovery will be paid by releasing to
SignalSoft NS Shares held in escrow ("Escrowed Shares") equal in value to the
amount of such Excess Claim Recovery. If, at the relevant determination date,
SignalSoft Stock is publicly traded, the value of each Escrowed Share will be
equal to the last reported sales price of a share of SignalSoft Stock on the
Business Day preceding the release of such Escrowed Shares from escrow, as
reported by the principal U.S. securities exchange on which SignalSoft Stock is
traded. If SignalSoft Stock is not publicly traded at the relevant determination
date, then the value of the Escrowed Shares will be determined by agreement
between SignalSoft and the Shareholders' Agent, provided that, if they are
unable to agree on the value of the Escrowed Shares within two weeks following
the resolution of indemnification claims in favor of SignalSoft or the Acquiror
or the expiration of the Escrow Period (whichever is applicable) (the
"Applicable Date"), the value of the Escrowed Shares will be determined by a
qualified independent appraiser selected jointly by SignalSoft and the
Shareholders' Agent. If they are unable to agree on the selection of a qualified
independent appraiser within three weeks following the Applicable Date, then
each of SignalSoft and the Shareholders' Agent will select a qualified
independent appraiser. If the
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value of the Escrowed Shares as determined by the appraisal indicating the lower
value is at least 90% of the value of the Escrowed Shares as determined by the
appraisal indicating the higher value, the value of the Escrowed Shares will be
deemed to be the average of the two values. If the value of the Escrowed Shares
as determined by the appraisal indicating the lower value is less than 90% of
the value of the Escrowed Shares as determined by the appraisal indicating the
higher value, the two appraisers performing such valuations will appoint a third
appraiser, whose determination of value will control. Each of SignalSoft and the
Shareholders (as a group) will bear the cost of any appraiser appointed by such
party, and each of SignalSoft and the Shareholders (as a group) will bear
one-half of the cost of any appraiser appointed jointly by SignalSoft and the
Shareholders' Agent or the third appraiser. For purposes of this Section 7.1(b),
SignalSoft Stock will be considered to be publicly traded if it is traded on a
U.S. national securities exchange or recognized over-the-counter market. The
Shareholders will have joint and several Liability for any additional amounts
needed to cover such claims, which amounts will be paid directly to SignalSoft.
At the end of the Escrow Period funds and Escrowed Shares that may be needed to
cover pending indemnification claims made by SignalSoft and the Acquiror (such
amounts to be determined by SignalSoft based upon the reasonable exercise of its
business judgment) will be retained in the Escrow Account until such claims are
resolved, and any excess funds and Escrowed Shares on deposit therein, including
any accrued interest, will be paid and released to the Shareholders. Nothing in
this Section 7.1(b) will be construed to limit SignalSoft's or the Acquiror's
right to indemnification to amounts on deposit in the Escrow Account. SignalSoft
and the Shareholders' Agent will jointly give instructions to the Escrow Agent
to carry out the intent of this Section 7.1(b). Any disputes concerning the
escrowed funds will be settled by arbitration as provided in this Agreement.
SignalSoft, on the one hand, and the Shareholders jointly and severally, on the
other hand, will each be responsible for one-half of the fees, charges and
expenses payable to the Escrow Agent pursuant to the Escrow Agreement.
7.2. Indemnification Provisions for Benefit of the
Shareholders. If SignalSoft breaches (or if any Person other than a Shareholder
alleges facts that, if true, would mean SignalSoft has breached) any of its
representations or warranties contained herein and the Shareholders' Agent gives
notice of a claim for indemnification against SignalSoft within the Survival
Period, or if SignalSoft breaches (or if any Person other than a Shareholder
alleges facts that, if true, would mean SignalSoft has breached) any of its
covenants contained herein or any of its representations, warranties or
covenants contained in any Other SignalSoft Agreement and the Shareholders'
Agent gives notice thereof to SignalSoft, then SignalSoft agrees to indemnify
and hold harmless the Shareholders from and against any Adverse Consequences the
Shareholders may suffer which result from, arise out of, relate to, or are
caused by the breach or alleged breach, regardless of whether the Adverse
Consequences are suffered during or after the Survival Period. In determining
whether there has been a breach of any representation or warranty contained in
Section 3.3 and in determining the amount of Adverse Consequences suffered by
the Shareholders for purposes of this Section 7.2, such representations and
warranties will not be qualified by "material," "materiality," "in all material
respects," "best knowledge," "best of knowledge" or "knowledge" or words of
similar import, or by any phrase using any such terms or words. If any dispute
arises concerning whether any indemnification is owing which cannot be resolved
by negotiation among the parties within 30 days
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of notice of claim for indemnification from the party claiming indemnification
to the party against whom such claim is asserted, the dispute will be resolved
by arbitration pursuant to this Agreement.
The cumulative Liability of SignalSoft under the provisions of
this Section 7.2 shall be limited to the Adjusted Company Value (determined as
of the Closing Date) and shall be subject to a minimum threshold equal to
US$25,000, such that no demand or recovery shall be made hereunder until all
such claims, on a cumulative basis, exceed US$25,000.
7.3. Matters Involving Third Parties.
(a) If any Person not a party to this Agreement
(including, without limitation, any Governmental Authority) notifies any party
(the "Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other party (the
"Indemnifying Party"), then the Indemnified Party will notify each Indemnifying
Party thereof in writing within 15 days after receiving such notice. No delay on
the part of the Indemnified Party in notifying any Indemnifying Party will
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right, at
its sole cost and expense, to defend the Indemnified Party against the Third
Party Claim with counsel of its choice satisfactory to the Indemnified Party so
long as (i) the Indemnifying Party notifies the Indemnified Party in writing
within 10 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and fulfill
its indemnification obligations hereunder, (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable relief,
(iv) settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (v) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently. If the
Indemnifying Party does not assume control of the defense or settlement of any
Third Party Claim in the manner described above, it will be bound by the results
obtained by the Indemnified Party with respect to the Third Party Claim.
(c) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with Section 7.3(b) above,
(i) the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not
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consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section
7.3(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not consult with, or obtain
any consent from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable legal and accounting fees and expenses), and (iii) the Indemnifying
Parties will remain responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to or caused by the
Third Party Claim to the fullest extent provided in this Section 7.
7.4. Right of Offset. SignalSoft will have the right to offset
any Adverse Consequences it or the Acquiror may suffer against any amounts
payable pursuant to this Agreement, any Other Seller Agreement or otherwise to
any Shareholder or any Relative or Affiliate of any Shareholder at or after the
Closing. Each Shareholder will have the right to offset any Adverse Consequences
it may suffer against any amounts payable pursuant to this Agreement, any Other
Seller Agreement or otherwise to SignalSoft or the Acquiror at or after the
Closing.
7.5. Other Remedies. The foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory, equitable or common
law remedy any party may have.
8. Termination.
8.1. Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) SignalSoft and the Shareholders' Agent may
terminate this Agreement by mutual written consent at any time prior to the
Closing;
(b) SignalSoft may terminate this Agreement by giving
written notice to the Shareholders' Agent at any time prior to the Closing (i)
in the event any Shareholder has breached any representation, warranty or
covenant contained in this Agreement in any material way, SignalSoft has
notified the Shareholders' Agent of the breach, and the breach has not been
cured within 10 days after the notice of breach or (ii) if the Closing has not
occurred on or before April 26, 2000, because of the failure of any condition
precedent to SignalSoft's obligations to consummate the Closing (unless the
failure results primarily from SignalSoft breaching any representation, warranty
or covenant contained in this Agreement in any material way); and
(c) the Shareholders' Agent may terminate this
Agreement by giving written notice to SignalSoft at any time prior to the
Closing (i) if SignalSoft has breached any
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representation, warranty or covenant contained in this Agreement in any material
way, the Shareholders' Agent has notified SignalSoft of the breach, and the
breach has not been cured within 10 days after the notice of breach or (ii) if
the Closing has not occurred on or before April 26, 2000, because of the failure
of any condition precedent to the Shareholders' obligations to consummate the
Closing (unless the failure results primarily from any Shareholder breaching any
representation, warranty or covenant contained in this Agreement in any material
way).
8.2. Effect of Termination. The termination of this Agreement
by a party pursuant to Section 8.1 will in no way limit any obligation or
liability of any party based on or arising from a breach or default by such
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement, and the terminating party will be
entitled to seek all relief to which it is entitled under applicable law.
8.3. Confidentiality. If this Agreement is terminated, each
party will treat and hold as confidential all Confidential Information
concerning the other parties which it acquired from such other parties in
connection with this Agreement and the transactions contemplated hereby. The
Shareholders will cause the Company to comply with the provisions of this
Section 8.3 as fully as if it were a party to this Agreement.
9. Miscellaneous.
9.1. No Third-Party Beneficiaries. This Agreement will not
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
9.2. Entire Agreement. This Agreement (including the Exhibits,
the Other Seller Agreements and the Other SignalSoft Agreements) constitutes the
entire agreement among the parties and supersedes any prior understandings,
agreements or representations by or among the parties, written or oral, to the
extent they relate in any way to the subject matter hereof.
9.3. Succession and Assignment. This Agreement will be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. No Shareholder may assign this Agreement or any of his or her
rights, interests or obligations hereunder without the prior written approval of
SignalSoft. SignalSoft may not assign this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
Shareholders' Agent.
9.4. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which together shall be deemed to be one and the same instrument. The execution
of a counterpart of the signature page to this Agreement will be deemed the
execution of a counterpart of this Agreement. This Agreement may be delivered by
facsimile and facsimile signatures will be treated as original signatures for
all purposes.
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9.5. Headings. The section headings contained in this
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement.
9.6. Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is sent
by registered or certified mail, return receipt requested, postage prepaid, or
by courier, telecopy or facsimile, and addressed to the intended recipient as
set forth below:
If to any
Shareholder:
Addressed to the
Shareholders' Agent at:
Xxxxx Xxxxx Xxxxxxxxxx Swan
Suite 1212
1175 Xxxxxxx Street
Victoria, British Columbia, Canada V8W 2E1
Attn: Xxxxxxx Trelawny
Telecopy: (000) 000-0000
If to SignalSoft or the Acquiror: Copy to:
SignalSoft Corporation Xxxxxxx & Xxxxxx L.L.C.
0000 Xxxxxx Xxxx. 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer Attn: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
Notices will be deemed given three days after mailing if sent by
certified mail, when delivered if sent by courier, and upon receipt of
confirmation by person or electronic device if sent by telecopy or facsimile
transmission. Any party may change the address to which notices, requests,
demands, claims and other communications hereunder are to be delivered by giving
the other parties notice in the manner herein set forth.
9.7. Governing Law. This Agreement will be governed by and
construed in accordance with the domestic laws of the State of Colorado without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Colorado or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Colorado.
9.8. Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same is in writing and signed by
SignalSoft and the
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Shareholders' Agent. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, will be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence, and no waiver will be
effective unless set forth in writing and signed by the party against whom such
waiver is asserted.
9.9. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
9.10. Expenses. Except as otherwise provided in Section 8.2,
(a) SignalSoft shall bear its own costs and expenses (including, without
limitation, legal fees and expenses) incurred either before or after the date of
this Agreement in connection with this Agreement and the transactions
contemplated hereby and (b) the Shareholders will bear all costs and expenses
(including, without limitation, all legal, accounting and tax related fees and
expenses, all fees, commissions, expenses and other amounts payable to any
broker, finder or agent) incurred by or for the benefit of the Company prior to
the Closing or by any Shareholder either before or after the Closing in
connection with this Agreement and the transactions contemplated hereby
(collectively, "Seller Transaction Expenses"); provided, however, that prior to
the Closing Date the Company may use any cash to pay Seller Transaction
Expenses.
9.11. Arbitration. Any disputes arising under or in connection
with this Agreement, including, without limitation, those involving claims for
specific performance or other equitable relief, will be submitted to binding
arbitration in Seattle, Washington before an arbitral body selected by
SignalSoft and the Shareholders' Agent (or, if they cannot agree on an arbitral
body, the American Arbitration Association) under the Commercial Arbitration
Rules of the American Arbitration Association under the authority of federal and
state arbitration statutes, and shall not be the subject of litigation in any
forum. EACH PARTY, BY SIGNING THIS AGREEMENT, VOLUNTARILY, KNOWINGLY AND
INTELLIGENTLY IRREVOCABLY WAIVES ANY RIGHTS SUCH PARTY MAY OTHERWISE HAVE TO
SEEK REMEDIES IN COURT OR OTHER FORUMS, INCLUDING THE RIGHT TO JURY TRIAL. The
arbitrator shall have full authority to order specific performance and other
equitable relief and award damages and other relief available under this
Agreement or applicable law, but shall have no authority to add to, detract
from, change or amend the terms of this Agreement or existing law. All
arbitration proceedings, including settlements and awards, shall be
confidential. The decision of the arbitrators will be written, final and
binding, and judgment on the award by the arbitrators may be entered in any
court of competent jurisdiction. THIS SUBMISSION AND AGREEMENT TO ARBITRATE WILL
BE SPECIFICALLY ENFORCEABLE IN ANY COURT OF COMPETENT JURISDICTION. The
prevailing party or parties in any such arbitration or in any action to enforce
this Agreement will be entitled to recover, in addition to any other relief
awarded by the arbitrator, all reasonable costs and expenses, including fees and
expenses of the arbitrators and attorneys, incurred in connection
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therewith. If each party prevails on specific issues in the arbitration, the
arbitrator may allocate the costs incurred by all parties on a basis the
arbitrator deems appropriate.
9.12. Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" will mean including
without limitation. The parties intend that each representation, warranty and
covenant contained herein will have independent significance. If any party
breaches any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the party has not breached will not detract from or mitigate
the fact that the party is in breach of the first representation, warranty or
covenant.
9.13. Incorporation of Exhibits. The Exhibits identified in
this Agreement are incorporated herein by reference and made a part hereof.
9.14. Shareholders' Agent. Each Shareholder hereby authorizes
and appoints the Shareholders' Agent as its, his or her exclusive agent and
attorney-in-fact to act on behalf of each of them with respect to all matters
which are the subject of this Agreement, including, without limitation, (a)
receiving or giving all notices, instructions, other communications, consents or
agreements that may be necessary, required or given hereunder and (b) asserting,
settling, compromising, or defending, or determining not to assert, settle,
compromise or defend, (i) any claims which any Shareholder may assert, or have
the right to assert, against SignalSoft or the Acquiror, or (ii) any claims
which SignalSoft may assert, or have the right to assert, against any
Shareholder. The Shareholders' Agent hereby accepts such authorization and
appointment. Upon the receipt of written evidence satisfactory to SignalSoft to
the effect that the Shareholders' Agent has been substituted as agent of the
Shareholders by reason of his death, disability or resignation, SignalSoft shall
be entitled to rely on such substituted agent to the same extent as they were
theretofore entitled to rely upon the Shareholders' Agent with respect to the
matters covered by this Section 9.14. No Shareholder shall act with respect to
any of the matters which are the subject of this Agreement except through the
Shareholders' Agent. The Shareholders acknowledge and agree that SignalSoft may
deal exclusively with the Shareholders' Agent in respect of such matters, that
the enforceability of this Section 9.14 is material to SignalSoft, and that
SignalSoft has relied upon the enforceability of this Section 9.14 in entering
into this Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SIGNALSOFT:
SIGNALSOFT CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ACQUIROR:
SIGNALSOFT NS CO.
By: /s/ Xxxxx Hose
--------------------------------
Name: Xxxxx Hose
------------------------------
Title: President
-----------------------------
SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
TIDELINE INVESTMENTS SRL
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
--------------------
Title: Director
-------------------
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EXCEPTIONAL TECHNOLOGIES FUND 4 (VCC), INC.
By: /s/ Xxxx XxXxxx
-------------------------------
Name: Xxxx XxXxxx
-------------------
Title: Director
-------------------
EXCEPTIONAL TECHNOLOGIES FUND 5 (VCC), INC.
By: /s/ Xxxx XxXxxx
------------------------------
Name: Xxxx XxXxxx
------------------
Title: Director
------------------
/s/ Xxxx Xxxx
/s/ Xxxxx Xxxxxxx
/s/ Xxxx Xxxxxx
/s/ E. Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxx
/s/ Xxxxxxxx Xxxx
/s/ Mats Gerschman
/s/ Xxxxx Xxxxxxxxxxx
00
00
/s/ Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxx
/s/ Xxxxx Xxxxx
/s/ Xxx Xxxxx
/s/ Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxx
/s/ Art Wynans
/s/ Xxx Klovance
ACCEPTANCE BY SHAREHOLDERS' AGENT
I hereby accept the appointment as Shareholders' Agent
pursuant to Section 9.14 and agree to carry out the duties set forth in Section
9.14 with all due fidelity.
/s/ Xxxxx Xxxxx Hargreaves Swan
Shareholders' Agent
For: Xxx Trelawny
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Exhibit 1.1(a)
DEFINED TERMS
Acquiror has the meaning given it in the preamble to this Agreement.
Acquired Assets means all right, title and interest in and to all of the
tangible and intangible assets of the Company.
Adjusted Company Value means CDN$8,091,642, reduced by the sum of the Cash
Shortfall and the Post-Closing Adjustment.
Adverse Consequences means all actions, suits, proceedings, investigations,
complaints, claims, demands, Orders, Liabilities, liens, losses, damages,
penalties, fines, settlements, costs, remediation costs, expenses and fees
(including court costs and reasonable fees and expenses of counsel and other
experts), plus interest at a rate equal to two percentage points above the prime
rate quoted by SignalSoft's principal lender from time to time accrued from the
date of such Adverse Consequence.
Affiliate means "affiliate" as defined in the Company Act (B.C.) as amended
from time to time.
Agreed Conversion Rate means the U.S./Canada currency conversion rate
offered by the Royal Bank of Canada for its commercial customers ("noon rate")
as in effect on the second Business Day preceding the Closing Date.
Business Day means any day on which commercial banks are open for business
in Denver, Colorado.
Cash Consideration has the meaning given in Section 2.2(a)(i).
Cash Covered Accrued Commission Liability means accrued sales commissions
payable by the Company resulting from any sale by the Company prior to the
Closing Date, if and only to the extent that the Company has not received
payment prior to the Closing Date from the service provider of the amount in
respect of which such accrued sales commission was earned.
Cash Shortfall means the amount (if any) by which the sum of the Closing
Date Liabilities and the Retained Liabilities exceeds the Company's cash set
forth on the applicable balance sheet of the Company.
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Closing Accounts Receivable means all accounts (including late fees and
interest charges thereon) and notes receivable of the Company which are in
existence as of the Closing Date.
Closing and Closing Date have the meanings given in Section 2.4.
Closing Date Balance Sheet has the meaning given it in Section 2.2(c).
Closing Date Liabilities means all Liabilities of the Company, but
excluding Retained Liabilities and any unearned revenues of the Company
attributable to the provision of goods and services to the SignalSoft.
Code means the Internal Revenue Code of 1986, as amended.
Company has the meaning given it in Recital A, except that for purposes of
Sections 3.1 and 3.2, the term the "Company" shall mean the Company and all of
its Subsidiaries.
Company Shares means shares of Company Stock.
Company Stock means common shares, without nominal par value, of the
Company.
Confidential Information means any information concerning the subject
Person or the subject Person's business, products, financial condition,
prospects and affairs that is not already generally available to the public.
Encumbrance means any mortgage, pledge, conditional sale agreement, charge,
claim, interest of another Person, lien, security interest, title defect or
other encumbrance.
Environmental Laws means all applicable federal, provincial, regional,
municipal or local laws, ordinances, bylaws, codes, rules, regulations, orders,
approvals, licenses, Permits, governmental decrees or any and all other
legislation or regulatory instruments with respect to the environmental or
health matters including, without limitation, the regulation or the imposition
of liability or standards of conduct with respect to any hazardous or toxic
materials, pollutants, effluents, contaminants, radioactive materials, flammable
explosives, hazardous or toxic emissions, wastes and all other chemicals,
materials and substances the handling, storage, release, transportation, or
disposal of which is prohibited, limited or regulated by any federal, provincial
or municipal authority.
Escrow Account means the account established pursuant to the Escrow
Agreement.
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Escrow Agreement means the Escrow Agreement among SignalSoft, the Acquiror,
the Shareholders' Agent, the Shareholders and Bank One Colorado, N.A.(the
"Escrow Agent") substantially in the form of Exhibit 1.1(b) with respect to the
period commencing on the Closing and ending on the first anniversary of the
Closing (or, if any indemnification claims are pending at the first anniversary
of the Closing, the date all such claims are finally resolved in accordance with
the provisions of this Agreement) (the "Escrow Period").
Escrow Deposit has the meaning given it in Section 2.2(a).
Estimated Closing Date Balance Sheet has the meaning given it in Section
2.2(b).
GAAP means generally accepted accounting principles as in effect from time
to time in Canada.
Governmental Authority means any federal, provincial, municipal or regional
government and governmental authority, domestic or foreign, and includes any
department, commission, bureau, board, administrative agency, or regulatory
board of any of the foregoing, including the United States of America, any
state, commonwealth, territory or possession of the United States of America,
any political subdivision thereof (including counties, municipalities, home-rule
cities and the like), and any agency, authority or instrumentality of any of the
foregoing, including, without limitation, any court, tribunal, department,
bureau, commission or board.
Intellectual Property means all trade, corporate, business and product
names, trademarks, trademark rights, service marks, copyrights, patents, patent
rights, trade secrets, business, customer and technical information, and
computer software, all registrations, licenses and applications pertaining
thereto, and all related documentation and goodwill.
Latest Balance Sheet has the meaning given it in Section 3.1(d).
Legal Requirement means any constitution, statute, ordinance, code, or
other law (including common law), rule, regulation, Order, notice, standard,
procedure or other requirement enacted, adopted, applied or issued by any
Governmental Authority, including, without limitation, judicial decisions
applying or interpreting any such Legal Requirement.
Liability means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
NS Stock means Class B common shares, without nominal par value, of the
Acquiror.
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NS Shares means shares of NS Stock.
Orders means all judgments, injunctions, orders, rulings, decrees,
directives, notices of violation or other requirements of any Governmental
Authority or arbitrator having jurisdiction in the matter, including a
bankruptcy court or trustee.
Other Shareholders means all Shareholders other than the Principal
Shareholders.
Other SignalSoft Agreements means the Escrow Agreement, the Registration
Rights Agreement, the Stockholders' Agreement and the other documents and
instruments to be executed and delivered by SignalSoft or the Acquiror pursuant
to this Agreement.
Other Seller Agreements means the Escrow Agreement, the Registration Rights
Agreement, the Stockholders' Agreement and other documents and instruments to be
executed and delivered by any Shareholder or any Relative or Affiliate of the
Company or of any Shareholder pursuant to this Agreement.
Permits means all permits, licenses, consents, franchises, authorizations,
approvals, privileges, waivers, exemptions, variances, exclusionary or
inclusionary Orders and other concessions, whether governmental or private,
including, without limitation, those relating to environmental, public health,
welfare or safety matters.
Per Share Amount has the meaning given in Section 2.2(a).
Person means an individual, partnership, corporation, association, joint
stock company, trust, joint venture, limited liability company, unincorporated
organization or Governmental Authority.
Post-Closing Adjustment has the meaning given in Section 2.2(d)(iii).
Premises means the real property, buildings and improvements thereon
constituting the business premises of the Company located at 000 Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx Xxxxxxxx.
Pre-Closing Income Tax Amount means an amount equal to the U.S. federal and
state income Taxes of the Company and the Canadian federal and provincial income
taxes of the Company relating to all periods from the end of the last tax year
for which the Company's U.S. federal and state income Tax Returns and Canadian
federal and provincial income tax returns have been filed to the Closing Date
(the "Pre-Closing Income Tax Amount"), to the extent that such amount exceeds
the aggregate estimated Tax payments made by the Company on or before the
Closing Date that would be applicable to the Taxes included in the Pre-Closing
Income Tax Amount.
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Principal Shareholders means Xxxxxxx X. Xxxxx, Xxxxx Xxxxxxx and Xxxx
Xxxxxx.
Purchase Price means the sum of the Cash Consideration plus the value of
the Share Consideration.
Registration Rights Agreement means the Registration Rights Agreement
between SignalSoft and the Shareholders in the form of Exhibit 1.1(c).
Relative means "related person" as defined in Section 251(2) of the Tax
Act.
Retained Liabilities means (a) trade payables incurred in the ordinary
course of business which are not past due based upon their normal, stated terms,
(b) accrued liabilities incurred in the ordinary course of business which are
not past due based upon their normal, stated terms (e.g., payroll), but
excluding accrued bonus, accrued profit sharing, accrued rent and accrued
Liabilities for Taxes and (c) Cash Covered Accrued Commission Liabilities.
Retained Liabilities will not include any other Liability.
Right means any right, property interest, concession, patent, trademark,
trade name, copyright, know-how or other proprietary right of any Person.
Securities has the meaning given in Section 3.2(a)(i).
Securities Act means the Securities Act of 1933, as amended.
Share Consideration has the meaning given in Section 2.2(a)(ii).
Shareholders has the meaning given it in the preamble to this Agreement.
Shareholders' Agent means Xxxxx Xxxxx Hargreaves Swan (or the substituted
agent described in Section 9.14) acting as agent for the Shareholders pursuant
to Section 9.14.
SignalSoft Shares means shares of SignalSoft Stock into which NS Shares are
converted.
SignalSoft Stock means the common stock, US$0.001 par value, of SignalSoft.
Stockholders' Agreement means the Stockholders' Agreement among SignalSoft
and the Shareholders in the form of Exhibit 1.1(d).
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Subsidiary means, with respect to a Person, any Person controlled (meaning
possession of the direct or indirect power to direct or cause the direction of
the management and policies, whether through the ownership of voting securities,
by contract or otherwise) by such first Person directly or through one or more
intermediaries.
Survival Period means, with respect to a representation or warranty, the
applicable period after the Closing Date during which such representation or
warranty survives pursuant to Section 3.4.
Tax means any Canadian, U.S. or foreign federal, provincial, state or local
income, goods and services, social services, capital, sales or use, payroll,
withholding, property or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not.
Tax Act means the Income Tax Act (Canada), as amended.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
Unknown Infringement Claim means a claim asserted against the Company by a
third party for patent or trademark infringement, the basis for which no
Shareholder has knowledge as of or prior to the Closing Date, or a claim the
basis for which is disclosed on Exhibit 3.1(i).
U.S. GAAP means generally accepted accounting principles as in effect from
time to time in the Untied States.
U.S. Person means "U.S. Person" as defined in Regulation S promulgated
under the Securities Act.
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