1
Exhibit 2.1
XXXXXX TECHNOLOGIES, INC.
as XXXXXX
and
XXXXXX CANADA CORPORATION
as CANADIAN BUYER
and
INLOGIC SOFTWARE INC.
as INLOGIC
and
THE HOLDERS OF ALL OF THE SHARES
OF INLOGIC SOFTWARE INC.
as the INLOGIC SHAREHOLDERS
and
XXXXXXX.XXX INC.
as XXXXXXX.XXX
--------------------------------------------------------------------------------
SHARE PURCHASE AGREEMENT
December 16, 1999
--------------------------------------------------------------------------------
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
Section 1.1 Defined Terms.............................................................................. 1
Section 1.2 Other Defined Terms........................................................................ 7
ARTICLE 2
PURCHASE AND SALE OF PURCHASED SHARES
Section 2.1 Pre-Closing Steps......................................................................... 10
Section 2.2 Purchase of Purchased Securities.......................................................... 11
Section 2.3 Purchase Price of Purchased Securities.................................................... 11
Section 2.4 Satisfaction of Purchase Price............................................................ 12
ARTICLE 3
CLOSING
Section 3.1 Closing................................................................................... 13
Section 3.2 Closing Procedures........................................................................ 13
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE INLOGIC SHAREHOLDERS
Section 4.1 Organization and Qualification of Inlogic Software Inc.................................... 14
Section 4.2 Organization and Qualification of Inlogic Delaware........................................ 14
Section 4.3 Reserved.................................................................................. 14
Section 4.4 Capitalization; Beneficial Ownership of Inlogic........................................... 14
Section 4.5 Subsidiaries of Inlogic................................................................... 15
Section 4.6 Authority................................................................................. 15
Section 4.7 Assets.................................................................................... 17
Section 4.8 Real Property............................................................................. 17
Section 4.9 Minute Books; Corporate Documents......................................................... 18
Section 4.10 Financial Statements...................................................................... 19
Section 4.11 Absence of Certain Changes or Events...................................................... 20
Section 4.12 Contracts and Commitments................................................................. 22
Section 4.13 Permits:.................................................................................. 25
Section 4.14 Litigation................................................................................ 25
Section 4.15 Compliance with Law....................................................................... 26
Section 4.16 Ordinary Course........................................................................... 26
Section 4.17 Officers and Compensation................................................................. 26
Section 4.18 Employees; Labour Matters................................................................. 26
Section 4.19 Banking Relations......................................................................... 27
(i)
3
Section 4.20 No Brokers.............................................................................. 27
Section 4.21 No Other Agreements to Sell the Purchased Securities.................................... 27
Section 4.22 Customers............................................................................... 28
Section 4.23 Backlog................................................................................. 28
Section 4.24 Intellectual Property Rights of Inlogic................................................. 28
Section 4.25 Taxes................................................................................... 38
Section 4.26 Reserved................................................................................ 39
Section 4.27 Employee Benefit Programs............................................................... 39
Section 4.28 Insurance............................................................................... 41
Section 4.29 Accounts Receivable..................................................................... 42
Section 4.30 Environmental Matters................................................................... 42
Section 4.31 Warranty or Other Claims................................................................ 44
Section 4.32 Reserved................................................................................ 44
Section 4.33 Powers of Attorney...................................................................... 44
Section 4.34 Inlogic Disclosure...................................................................... 44
Section 4.35 Shareholders' Agent..................................................................... 44
Section 4.36 Offshore Investment Representations..................................................... 45
Section 4.37 Xxxx-Xxxxx-Xxxxxx....................................................................... 50
Section 4.38 Exchange Ratio.......................................................................... 50
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF XXXXXX AND CANADIAN BUYER
Section 5.1 Organization............................................................................ 51
Section 5.2 Authority............................................................................... 52
Section 5.3 SEC Documents; Financial Statements..................................................... 53
Section 5.4 Securities and Blue Sky Laws............................................................ 54
Section 5.5 Listing of Additional Shares............................................................ 54
Section 5.6 Issuance of Xxxxxx Common Stock......................................................... 54
Section 5.7 Exchangeable Shares..................................................................... 54
Section 5.8 Millennium Compliance................................................................... 55
ARTICLE 6
COVENANTS
Section 6.1 Further Assurances...................................................................... 56
Section 6.2 Exchangeable Documentation.............................................................. 57
Section 6.3 Conduct of Business..................................................................... 58
Section 6.4 Notification of Certain Matters......................................................... 59
Section 6.5 Options................................................................................. 60
Section 6.6 Preservation of Confidentiality......................................................... 61
Section 6.7 Activities of Canadian Buyer............................................................ 61
Section 6.8 Investment Canada Act................................................................... 61
(ii)
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Section 6.9 Board Seat................................................................................ 61
ARTICLE 7
CONDITIONS TO INLOGIC SHAREHOLDERS' OBLIGATIONS
Section 7.1 Representations, Warranties and Covenants of Xxxxxx and Canadian Buyer.................... 62
Section 7.2 No Actions or Court Orders................................................................ 62
Section 7.3 Consents.................................................................................. 62
Section 7.4 Material Changes.......................................................................... 62
Section 7.5 Opinions of Counsel....................................................................... 62
Section 7.6 Escrow Agreements......................................................................... 63
Section 7.7 Employment and Non-Competition Agreements................................................. 63
Section 7.8 Corporate Documents....................................................................... 63
Section 7.9 Exchangeable Documentation................................................................ 63
Section 7.10 Reserved.................................................................................. 63
Section 7.11 Registration Rights....................................................................... 63
ARTICLE 8
CONDITIONS TO CANADIAN BUYER'S AND XXXXXX 'S OBLIGATIONS
Section 8.1 Representations, Warranties and Covenants................................................. 63
Section 8.2 Consents; Regulatory Compliance and Approval.............................................. 64
Section 8.3 No Actions or Court Orders................................................................ 64
Section 8.4 Atevent Spinoff........................................................................... 64
Section 8.5 Resignation and Release of Inlogic Directors.............................................. 65
Section 8.6 Conversion of Class D Shares and Debenture................................................ 65
Section 8.7 Fairness Opinion.......................................................................... 65
Section 8.8 Opinions.................................................................................. 65
Section 8.9 Material Changes.......................................................................... 65
Section 8.10 Corporate Documents....................................................................... 65
Section 8.11 Permits................................................................................... 65
Section 8.12 Escrow Agreements......................................................................... 65
Section 8.13 Employment Agreements..................................................................... 66
Section 8.14 Reserved.................................................................................. 66
Section 8.15 Pre-Closing Steps......................................................................... 66
Section 8.16 Exchangeable Documentation................................................................ 66
Section 8.17 Section 116 of the Income Tax Act Certificate............................................ 66
Section 8.18 Delivery of Inlogic Share Certificates.................................................... 66
Section 8.19 Receipt of Full Funding for Equity Financing.............................................. 66
Section 8.20 Employment and Tax Law Issues............................................................. 67
Section 8.21 Invention Assignment Provisions........................................................... 67
(iii)
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ARTICLE 9
INDEMNIFICATION
Section 9.1 Indemnification by the Selling Parties.................................................... 67
Section 9.2 Limitations on Indemnification by the Inlogic Shareholders................................ 68
Section 9.3 Indemnification by Xxxxxx and Canadian Buyer............................................. 69
Section 9.4 Limitation on Indemnification by Xxxxxx and Canadian Buyer............................... 70
Section 9.5 Procedure for Indemnification--Third Party Claims......................................... 70
Section 9.6 Satisfaction of Inlogic Shareholders Indemnification Obligations.......................... 72
Section 9.7 Use of Xxxxxx Common Stock............................................................... 72
Section 9.8 Exclusive Remedy.......................................................................... 72
ARTICLE 10
TERMINATION OF AGREEMENT; RIGHTS TO PROCEED
Section 10.1 Termination............................................................................... 73
Section 10.2 Effect of Termination..................................................................... 73
ARTICLE 11
MISCELLANEOUS
Section 11.1 Fees and Expenses......................................................................... 73
Section 11.2 Governing Law............................................................................. 74
Section 11.3 Notices................................................................................... 74
Section 11.4 Entire Agreement.......................................................................... 76
Section 11.5 Assignability; Binding Effect............................................................. 76
Section 11.6 Captions and Gender....................................................................... 76
Section 11.7 Execution in Counterparts................................................................. 77
Section 11.8 Amendments................................................................................ 77
Section 11.9 Publicity and Disclosures................................................................. 77
Section 11.10 Specific Performance...................................................................... 77
Section 11.11 U.S. Currency............................................................................. 78
Section 11.12 Atevent Spinoff........................................................................... 78
Section 11.13 Release of Inlogic Shareholders........................................................... 79
Section 11.14 Lock-Up Agreement......................................................................... 80
Section 11.15 U.S. Tax Considerations................................................................... 81
(iv)
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SHARE PURCHASE AGREEMENT
Share Purchase Agreement dated December 16, 1999, among Xxxxxx
Technologies, Inc., a Delaware corporation ("XXXXXX"), XXXXXX CANADA
CORPORATION, a newly formed Nova Scotia unlimited liability company ("CANADIAN
BUYER"), INLOGIC SOFTWARE INC., a Nova Scotia limited liability company and the
holders, directly or indirectly, of all of the issued and outstanding shares of
INLOGIC SOFTWARE INC. as such (collectively, the "INLOGIC SHAREHOLDERS") and
XXXXXXX.XXX INC., an Ontario corporation. (Xxxxxxx.xxx")
RECITALS:
(a) The Inlogic Shareholders own of record and beneficially
directly or indirectly all of the issued and outstanding
shares in the capital of Inlogic Software Inc. and desire to
sell all of such shares to the Canadian Buyer free and clear
of all Encumbrances upon the terms and subject to the
conditions of this Agreement; and
(b) The Canadian Buyer is an indirect wholly-owned subsidiary of
Xxxxxx.
In consideration of the foregoing and the mutual agreements contained
herein (the receipt and adequacy of which are acknowledged), the parties agree
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
As used herein, the terms below shall have the following meanings. Any
of such terms, unless the context otherwise requires, may be used in the
singular or plural, depending upon the reference:
"ACTION" shall mean any action, claim, suit, litigation, proceeding,
arbitral action, governmental audit, criminal prosecution, governmental
investigation or unfair labour practice charge or complaint.
"AFFILIATE" shall have the meaning set forth in the Business
Corporations Act (Ontario), as amended, and the rules and regulations
thereunder.
"ASSETS" shall mean all of Inlogic's right, title and interest in and
to the business, properties, assets and rights of any kind, whether
tangible or intangible, real or personal and wherever located and
constituting, or used or useful in connection with, or related to, the
Business or in which Inlogic has any interest, including without
limitation all of Inlogic's right, title and interest in the following:
all accounts and notes receivable (whether current or
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non-current), refunds, deposits, prepayments or prepaid expenses
(including without limitation any prepaid insurance premiums) of
Inlogic; all cash and cash equivalents held by Inlogic; all equity
interests in other entities held by Inlogic; all Contract Rights; all
Leases; all Leasehold Estates; all Leasehold Improvements; all Fixtures
and Equipment; all Inventory; all Books and Records; all Proprietary
Rights relating to the Business; all Permits, all Insurance Policies;
all available supplies, sales literature, promotional literature,
customer, supplier and distributor lists, art work, display units,
telephone and fax numbers and purchasing records related to the
Business; all rights under or pursuant to all warranties,
representations and guarantees made by in connection with the Assets or
services furnished to Inlogic pertaining to the Business or affecting
the Assets; all claims, causes of action, causes in action, rights of
recovery and rights of set-off of any kind, against any person or
entity, including without limitation any liens, security interests,
pledges or other rights to payment or to enforce payment in connection
with service performed or products delivered by Inlogic on or prior to
the Closing Date; and the goodwill of Inlogic and the Business.
"BOOKS AND RECORDS" shall mean, (a) all records and lists of Inlogic
pertaining to Inlogic, the Business and the Assets, (b) all records and
lists of Inlogic pertaining to the Business, or personnel of Inlogic,
(c) all product, business and marketing plans of Inlogic and (d) all
books, ledgers, files, reports, plans, tax returns, source codes,
drawings and operating records of every kind maintained by Inlogic or
on behalf of Inlogic by its agents, accountants, investment bankers,
marketing firms, headhunting or placement firms, attorneys and other
representatives, including the originals of Inlogic's minute books.
"BUSINESS" shall mean all of Inlogic's current operations and business,
wherever carried on.
"BUSINESS DAY" shall mean any day of the year, other than a Saturday,
Sunday or any day on which banks are authorized or required to close in
Xxxxxxx, Xxxxxxx.
"CLOSING DATE" shall mean December 16, 1999, or such other date as
Canadian Buyer and Inlogic Shareholders shall mutually agree upon in
writing.
"CONTRACT" shall mean any agreement, contract, note, loan, evidence of
indebtedness, purchase order, letter of credit, indenture, security or
pledge agreement, franchise agreement, undertaking, covenant not to
compete, employment agreement, license agreement, instrument,
obligation or commitment to which Inlogic is a party or is bound,
whether oral or written, but excluding all Leases.
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"CONTRACT RIGHTS" shall mean all of Inlogic's rights and obligations
under the Contracts including, without limitation, those Contracts
listed on Schedules 4.8 and Section 4.12
"COPYRIGHTS" shall mean registered copyrights, copyright applications
and unregistered copyrights.
"COURT ORDER" shall mean any judgement, decision, consent decree,
injunction, ruling or order of any federal, provincial or local court
or governmental agency, department or authority that is binding on a
specified person, persons, entity or entities or its or their property
under applicable law.
"XXXXXX COMMON STOCK" shall mean the Common Stock, $.01 par value per
share, of Xxxxxx.
"XXXXXX DISCLOSURE SCHEDULE" shall mean a schedule and letters executed
and delivered by Xxxxxx and Buyer to the Selling Parties as of the date
hereof which sets forth the exceptions to the representations and
warranties contained in Article 5 hereof and certain other information
called for by this Agreement. Unless otherwise specified or the context
otherwise requires, each reference in this Agreement to any numbered
schedule is a reference to that numbered schedule which is included in
the Xxxxxx Disclosure Schedule.
"DAMAGES" shall mean damages, Liabilities, losses, Taxes, fines,
penalties, costs, and expenses (including, without limitation,
reasonable fees of counsel) of any kind or nature whatsoever (whether
or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing).
"DEFAULT" shall mean (1) a breach of or default under any Contract or
Lease, (2) the occurrence of an event that with the passage of time or
the giving of notice or both would constitute a breach of or default
under any Contract or Lease, or (3) the occurrence of an event that
with or without the passage of time or the giving of notice or both
would give rise to a right of termination, re-negotiation or
acceleration under any Contract or Lease.
"ENCUMBRANCE" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, conditional sales
agreement or other similar right of third parties, whether voluntarily
incurred or arising by operation of law, and includes, without
limitation, any agreement to give any of the foregoing in the future,
and any contingent sale or other title retention agreement or lease in
the nature thereof.
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"EXCHANGEABLE SHARES" shall mean the exchangeable preference shares in
the capital of the Canadian Buyer having attached thereto the rights,
privileges, restrictions and conditions set forth in Exhibit 1.1(A).
"FACILITY LEASES" shall mean all of the leases described on Inlogic
Schedule 4.8.
"FIXTURES AND EQUIPMENT" shall mean all of the furniture, fixtures,
furnishings, machinery, spare parts, supplies, equipment and other
tangible personal property owned by Inlogic and used in connection with
the Business, wherever located and including any such Fixtures and
Equipment in the possession of any of Inlogic's, including all warranty
rights with respect thereto.
"FORMER FACILITY" shall mean each plant, office, manufacturing
facility, store, warehouse, improvement, administrative building and
all real property and related facilities that was owned, leased or
operated by Inlogic at any time prior to the date hereof.
"INLOGIC" except where otherwise specifically mentioned, Inlogic shall
mean collectively Inlogic Software Inc., and its Subsidiaries
including, without limitation, Inlogic Software Inc., a Delaware
corporation ("INLOGIC DELAWARE"). "INLOGIC DELAWARE" shall mean the
Delaware corporation that is a wholly-owned subsidiary of Inlogic
Software Inc.
"INLOGIC DISCLOSURE SCHEDULE" shall mean an Inlogic Schedule executed
and delivered by the Inlogic Shareholders to Canadian Buyer as of the
date hereof which sets forth the exceptions to the representations and
warranties contained in Article IV hereof and certain other information
called for by this Agreement. Unless otherwise specified or the context
otherwise requires, each reference in this Agreement to any numbered
Inlogic Schedule is a reference to that numbered Inlogic Schedule which
is included in the Inlogic Disclosure Schedule.
"INLOGIC OPTIONS" shall mean the outstanding options of Inlogic
granted to the holders and upon the terms set out on Exhibit 1.1(B).
"INLOGIC SHAREHOLDERS" shall mean those individuals and entities
identified as such on Exhibit 1.1(C) hereto.
"INSURANCE POLICIES" shall mean the insurance policies related to
Inlogic, the Assets and the Business listed on Inlogic Schedule 4.27.
"INVENTORY" shall mean all of Inlogic's inventory held for resale and
all of Inlogic's raw materials, work in process, finished products,
wrapping, supply
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and packaging items and similar items with respect to the Business, in
each case wherever the same may be located.
"KNOWLEDGE OF XXXXXX", shall mean the actual knowledge of any member of
the Board of Directors, the Chief Executive Officer, or the Chief
Financial Officer of Xxxxxx or that which could be learned by any such
individual upon reasonable investigation.
"KNOWLEDGE OF INLOGIC SHAREHOLDERS" or "KNOWLEDGE OF INLOGIC" shall
mean the actual knowledge of Xxxxxxxx Xxxxx, and each of the other
Inlogic Shareholders (in the case of 1303949 Ontario Inc. include the
knowledge of its shareholders) or that which could be learned by any
such individual upon reasonable investigation.
"LEASED REAL PROPERTY" shall mean all leased plants, offices,
manufacturing facilities, stores, warehouses, improvements,
administration buildings, and all real property and related facilities
which are identified or listed on Inlogic Schedule 4.9 attached hereto.
"LEASEHOLD ESTATES" shall mean all of Inlogic's rights and obligations
as lessee under the Leases.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements situated
in or on the Leased Real Property and owned by Inlogic.
"LEASES" shall mean all of the existing leases with respect to the
personal or real property of Inlogic, including, without limitation,
those leases listed on Inlogic Schedule 4.9 and/or Inlogic Schedule
4.12.
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, guaranty or
endorsement of or by any person of any type, whether accrued, absolute,
contingent, matured, unmatured or other.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" shall mean with
respect to Inlogic, the Business or the Assets, any material adverse
effect or change in the condition (financial or other), business,
results of operations, prospects, assets, Liabilities or operations of
Inlogic, the Business and/or the Assets taken as a whole or on the
ability of the Inlogic Shareholders to consummate the transactions
contemplated hereby, or any event or condition which would, with the
passage of time, constitute a "MATERIAL ADVERSE EFFECT" or "MATERIAL
ADVERSE CHANGE." "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE"
shall mean with respect to Xxxxxx any material adverse effect or change
in the condition (financial or other), business, results of operations,
prospects, assets, liabilities or operations of Xxxxxx and its
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Subsidiaries taken as a whole or on the ability of Xxxxxx to consummate
the transactions contemplated hereby, or any event or condition which
would, with the passage of time, constitute a "MATERIAL ADVERSE EFFECT"
or "MATERIAL ADVERSE CHANGE."
"ORDINARY COURSE OF BUSINESS" or "ORDINARY COURSE" or any similar
phrase shall mean the ordinary course of the Business consistent with
Inlogic's past practice.
"PERMITS" shall mean all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any
governmental authority, whether foreign, federal, provincial or local,
or any other person, necessary for the present or currently anticipated
conduct of, or relating to the operation of the Business.
"PERMITTED LIEN" shall mean: (i) materialmen's, mechanics', carriers',
workmen's, repairmen's or other like liens arising in the ordinary
course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings, (ii) liens for current taxes
not yet due or any taxes being contested in good faith by appropriate
proceedings, (iii) liens to secure performance of statutory
obligations, (iv) any lien securing any purchase money indebtedness
incurred in the ordinary course of business and reflected in Inlogic's
financial statements and (v) liens of lessors under Leases.
The term "PERSON" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, or other entity or governmental body.
"PROPRIETARY RIGHTS" shall mean all of Inlogic's Copyrights,
Trademarks, patents, technology rights and licenses, computer software
(including without limitation any source or object codes therefor and
all documentation relating thereto), trade secrets, franchises,
know-how, inventions, designs, specifications, plans, drawings and
intellectual property rights. "PROPRIETARY RIGHTS" includes, without
limitation, all rights in and to the products known as "E-CARE",
"E-SERVICE", "E-PARTNER", "VOYAGER" LNP Suite, "PICWARE" Suite,
"SWITCHFLOW", "REQUESTFLOW" and "XXXXXXX.XXX."
"REGULATIONS" shall mean any laws, statutes, ordinances, regulations,
rules, court decisions, agency guidelines, principles of law and orders
of any foreign, federal, provincial or local government and any other
governmental department or agency, including without limitation all Tax
Acts (as defined herein), Environmental Laws, energy, motor vehicle
safety, public utility, zoning, building and health codes, and
occupational safety and health and
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laws respecting employment practices, employee documentation, terms and
conditions of employment and wages and hours.
"REPRESENTATIVE" shall mean any officer, director, principal, attorney,
agent, employee or other representative.
"SUBSIDIARY" shall mean a subsidiary within the meaning of the Business
Corporations Act (Ontario).
"TAX" shall mean all governmental taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, VAT, goods and services, ad
valorem, transfer, franchise, profits, withholding, social security,
payroll, employment, excise, estimated, severance, stamp, recording,
occupation, real and personal property, gift, windfall profits or other
taxes, customs duties, fees, assessments or charges of any kind
whatsoever, whether computed on a separate, consolidated, unitary,
combined or other basis, together with any interest, fines, penalties,
additions to tax or other additional amounts imposed thereon or with
respect thereto by any taxing authority (domestic or foreign) and shall
include any such or other amounts payable by a person pursuant to any
Regulation for failing to withhold, deduct and remit to the proper
authorities any amounts. Without limiting the generality of the
foregoing, "TAXES" shall include all taxes payable pursuant to the Tax
Acts, all Canada Pension Plan, Quebec Pension Plan and Employment
Insurance Premiums.
"TAX ACTS" shall mean the Income Tax Act (Canada), the Income Tax Act
(Ontario) and the Corporations Tax Act (Ontario) all as amended from
time to time.
"TRADEMARKS" shall mean registered trademarks, registered service
marks, trademark and service xxxx applications and unregistered
trademarks and service marks.
"UNAUDITED BALANCE SHEET"
"U.S. GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect as of the date hereof.
SECTION 1.2 OTHER DEFINED TERMS.
The following terms shall have the meanings defined for such terms in
the Sections set forth below:
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TERM SECTION
---- -------
Amalgamation 2.1(1)(d)
Amalgamation Order 2.1(1)(c)
Audited Financial Statements 6.8
Base Balance Sheet 4.7(1)
Base Balance Sheet Date 4.7(1)
Buyer Indemnified Party 9.1
Buyer Indemnified Parties 9.1
Buyer Option Plan 6.6
Canadian Buyer Recitals
Clients 4.18
Closing 3.1
Company Hardware 4.24(4)(b)
Confidential Information 6.10
Customer Contracts 4.24(3)(p)
Customer Software 4.24(2)(c)(ii)
Customers 4.22
Xxxxxx Recitals
Xxxxxx Additional Options 6.5(2)
Xxxxxx Balance Sheet 5.7(1)
Xxxxxx Common Stock 4.35
Xxxxxx Exchanged Options 2.1(6)
Xxxxxx Financial Statements 5.7(1)
Xxxxxx Option Plan 6.5(2)
Xxxxxx SEC Documents 5.3
Distributor 4.24(1)(c)
Employee Program 4.23(11)(a)
Employment Agreement 8.10
Environmental Law 4.27(5)
Escrow Agreement 2.4(b)
Escrow Amount 2.4(b)
Exchange Trust Agreement 6.2
Facility Lease 4.6(2)
Financial Statements 4.7(1)
Fraud Claims 9.1(a)
General Claims 9.1(e)
Hazardous Material 4.27(5)
Hazardous Waste 4.27(5)
Indemnified Party 9.5(1)
Indemnifying Party 9.5(1)
Individual Claims 9.1(f)
Individual Fraud Claims 9.1
Individual General Claims 9.1(f)
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Inlogic 4.27(5)
Inlogic Delaware
Inlogic Shareholders Indemnified Party 9.3
Inlogic Shareholders Recitals
Inlogic Shareholders Indemnified Parties 9.3
Inlogic Software 4.24(2)(c)(ii)
Intangibles 4.24(1)(b)
ITA 6.1
Interim Financial Statements 6.8
Leased Real Property 4.6(2)
License Agreement 4.24(2)(b)
Material Contracts 4.10(1)
Millennium Compliant 4.24(4)(a)
NS Act 2.1(1)(a)
Other Software 4.24(2)(c)(iii)
Owned Software 4.24(2)(c)(i)
Ownership Claims 9.1(b)
Pre-Closing Steps 2.1
Principals 7.9
Pro Forma Financial Statements 5.7(3)
Proceeding 9.5(2)
Processes 4.24(4)(a)(i)
Purchased Securities 2.2
Registration Rights Agreement 7.11
Registrations 4.24(2)(a)
Restricted Period 4.35
SEC 4.10
Securities 4.35(d)
Securities Act 4.36(a)
Share Exchange Agreement 7.16
Shareholders' Agent 4.35(1)
Software 4.24(1)(a)
Source Code Agreement 4.24(2)(b)
Support Agreement 6.2
Tax Claims 9.1(c)
Tax Returns 4.22(a)
Technology 4.26(1)
Third Party License Agreement 4.24(2)(b)
Unaudited Balance Sheet 4.10
U.S. Person 4.36(a)
Year 2000 Complaint 4.26(1)
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ARTICLE 2
PURCHASE AND SALE OF PURCHASED SHARES
SECTION 2.1 PRE-CLOSING STEPS.
(1) As soon as practicable after the date hereof, but in any event prior to
the Closing Date, the parties hereto shall have caused the following
actions to have occurred (the "Pre-Closing Steps"):
(a) Inlogic shall be continued under the Companies Act (Nova
Scotia) ("NS ACT") as a limited liability company;
(b) Inlogic shall have effected the Atevent Transaction as
described in Section 11.12 hereof.
(c) Prior to the Closing Date, the board of directors of Inlogic
shall declare the "Inlogic Dividend," which shall be payable
on January 4, 2000 (the "Inlogic Dividend Payment Date") to
shareholders of Inlogic of record at the close of business on
December 16, 1999 (the "Dividend Record Date"). The Inlogic
Dividend shall be an amount of cash (in Canadian dollars)
equal to (i) all of Inlogic's cash and accounts receivable as
of the Closing Date, less (ii) all debts, accounts payable,
severance payments due to the employees of Inlogic identified
on Inlogic Schedule 4.18 whose employment shall be terminated
prior to the Closing, payroll expense and consulting fees
payable (and related accruals) for periods on or prior to the
Closing Date, travel and living expenses payable by Inlogic
for periods on or prior to the Closing Date, taxes accrued
through the Closing Date (including any taxes due in
connection with the purchase, lease or other acquisition of
computer systems and equipment on or around September 1999),
all bonuses payable by Inlogic to its employees, consultants
and independent contractors for calendar year 1999, all
commissions payable by Inlogic to its employees, consultants
and independent contractors for sales or services in calendar
1999, amounts payable or anticipated to be payable (including
attorney fees) in connection with the settlement or resolution
of the matters disclosed on Inlogic Schedule 4.14, and the
amount of cash contributed to the Atevent Corporation in
connection with the Atevent Transaction. No later than
December 31, 1999, Inlogic shall prepare a balance sheet dated
as of the Closing Date (the "Closing Balance Sheet"), which
balance sheet shall be used for purposes of calculating the
amount of the Inlogic Dividend. Inlogic shall afford Xxxxxx
and the Inlogic Shareholders and their representatives the
opportunity to review the work papers and other documentation
used by Inlogic in preparing the Closing Balance Sheet. The
Inlogic Dividend shall be allocated among the Inlogic
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Shareholders as set forth on Inlogic Schedule 2.1(c).
Notwithstanding the foregoing, 15% of the aggregate Inlogic
Dividend shall be paid into escrow and included in the
Indemnity Escrow Amount.
(2) The parties acknowledge and agree that the Representations and
Warranties of the Inlogic Shareholders will be based upon the
assumption that following the continuance of Inlogic under the NS Act
all of the property rights, assets and liabilities of Inlogic continue
to be the property rights, assets and liabilities of the continued
company.
(3) Except where the context otherwise requires, any reference herein to
"INLOGIC" shall be deemed to refer collectively to Inlogic Software
Inc. prior to and after its continuance under the NS Act and Inlogic
Software Inc., a Delaware corporation.
(4) The Exchangeable Shares, by virtue of their terms, the Support
Agreement and the Exchange Trust Agreement, entitle the holders thereof
to acquire Xxxxxx Common Stock on certain terms and conditions.
(5) All Inlogic Options will be exchanged as soon as practicable following
the Closing Date for options to purchase Xxxxxx Common Stock (the
"XXXXXX EXCHANGED OPTIONS") upon the terms set out on Exhibit 2.1(5)
herein.
SECTION 2.2 PURCHASE OF PURCHASED SECURITIES.
Upon the terms and subject to the conditions contained herein, at the
Closing, the Inlogic Shareholders will sell and the Canadian Buyer will purchase
all of the issued and outstanding shares of Inlogic Software Inc. consisting of
8,555,000 common shares, 685,000 Class A shares, 710,000 Class C shares and
3,564,163 Class D shares and 1,020,000 Inlogic Options (collectively, the
"PURCHASED SECURITIES") free and clear of all Encumbrances.
SECTION 2.3 PURCHASE PRICE OF PURCHASED SECURITIES.
In consideration of the sale, and delivery of the Purchased Securities
to Canadian Buyer free and clear of all Encumbrances and in reliance upon the
representations and warranties of the Inlogic Shareholders herein contained and
made at the Closing and upon the terms and subject to the satisfaction or waiver
of the party entitled thereto of all of the conditions set forth herein,
Canadian Buyer agrees at the Closing to pay to Inlogic Shareholders for the
Purchased Securities an aggregate of 2,160,239 Exchangeable Shares and 57,435
shares of Xxxxxx Common Stock and Xxxxxx Exchange Options to purchase an
aggregate of 167,326 shares of Xxxxxx Common Stock, which Xxxxxx Exchanged
Options will have the terms set forth in Exhibit 2.1(5).
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SECTION 2.4 SATISFACTION OF PURCHASE PRICE.
The Canadian Buyer shall satisfy the purchase consideration for the
Purchased Securities as follows:
In reliance upon the representations and warranties of Inlogic
Shareholders herein contained and made at the Closing and upon
the terms and subject to the satisfaction or waiver of all of
the conditions set forth herein, Canadian Buyer agrees that at
the Closing (except that the Inlogic Dividend shall be
delivered on December 31, 1999), it will (i) deliver to the
Escrow Agent (A) 348,485 Exchangeable Shares, (B) 9,265 shares
of Xxxxxx Common Stock, and (C) 15% of the aggregate Inlogic
Dividend (such Exchangeable Shares, Xxxxxx Common Stock and
cash from the Inlogic Dividend are collectively referred to as
the "INDEMNITY ESCROW AMOUNT") in the Inlogic Shareholders'
names as set out in Exhibit 2.4(A) and to be held in the
manner described in the Indemnity Escrow Agreement to be
executed in substantially the form attached hereto as Exhibit
2.4(B); and (ii) deliver to the Escrow Agent 661,242
Exchangeable Shares and 33,812 shares of Xxxxxx Common Stock
(such Exchangeable Shares and Xxxxxx Common Stock are referred
to collectively as the "EMPLOYEE/SHAREHOLDER ESCROW AMOUNT")
in the Inlogic Shareholders' names as set out in Exhibit
2.4(C) and to be held in the manner described in the
Employee/Shareholder Escrow Agreement to be executed in
substantially the form attached hereto as Exhibit 2.4(D) (the
"EMPLOYEE/SHAREHOLDER ESCROW AGREEMENT"), provided however
that 18,953 Xxxxxx Common Stock issuable hereunder to Xxxxxx
Xxxxxx shall be initially withheld by Canadian Buyer until
receipt of a section 116 certificate under the Income Tax Act
(Canada) from Xx. Xxxxxx Xxxxxx at which point the 18,953
shares of Xxxxxx Common Stock withheld shall be delivered to
the Escrow Agent to be governed by the Employee/Shareholder
Escrow Agreement and (iii) deliver the balance of the
Exchangeable Shares (1,150,512 shares) and Xxxxxx Common Stock
(14,358 shares) to, and in the name of, the Inlogic
Shareholders as set forth on Exhibit 2.4(E) hereto. Xxxxxx
shall deliver the Xxxxxx Exchanged Options to the holders of
Inlogic Options identified on Exhibit 1.1(B) hereto (which
Exhibit
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includes the name of each holder of Inlogic Options, the
number and class or series of Inlogic capital stock underlying
such Inlogic Options and the number of shares of Xxxxxx Common
Stock underlying the Xxxxxx Exchanged Options to be granted to
such Inlogic Option holder) as soon as practicable following
the Closing Date upon the execution by such holders of
agreements substantially in the form of Exhibit 6.5(1) hereto.
ARTICLE 3
CLOSING
SECTION 3.1 CLOSING.
The Closing of the transactions contemplated herein (the "CLOSING")
shall be held at Stikeman, Xxxxxxx in Toronto on December 16, 1999 or at such
other date and location as may be mutually agreed upon by the parties but in any
event no later than December 31, 1999.
SECTION 3.2 CLOSING PROCEDURES.
Subject to the satisfaction or waiver by the relevant party of the
conditions of closing in its favour, at the Closing, the Inlogic Shareholders
shall deliver actual possession of the certificates evidencing the Purchased
Securities to the Canadian Buyer and record the Canadian Buyer or its nominee as
the registered owner and thereupon the Canadian Buyer shall pay or satisfy the
Purchase Price in accordance with Section 2.3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE INLOGIC
SHAREHOLDERS
As a material inducement to Xxxxxx and Canadian Buyer to enter into
this Agreement and consummate the transactions contemplated hereby, the Inlogic
Shareholders hereby severally represent and warrant to Xxxxxx and Canadian Buyer
that (provided that the each Inlogic Shareholder shall not be deemed to have
made the representations and warranties set forth in the second and third
sentences of Section 4.4, Section 4.6(1) and (2), Section 4.6(3)(b) and (c) (but
only to the extent such representation relates to the individual Inlogic
Shareholder, ,Section 4.14(a)(iii), Section 4.21, Section 4.25(i), Section
4.33(b), or Section 4.36 to the extent, but only to the extent, such
representations relate to another Inlogic Shareholder except that
representations made herein by Xxxxxxxx Xxxxx, and 1303949 Ontario Inc. (the
"AFFILIATED SHAREHOLDERS") shall be deemed to include representations as to each
Affiliated Shareholder) (such representations and warranties described above are
referred to as the "INDIVIDUAL REPRESENTATIONS").
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SECTION 4.1 ORGANIZATION AND QUALIFICATION OF INLOGIC SOFTWARE INC.
Immediately prior to its continuance into Nova Scotia, Inlogic Software
Inc. was a corporation duly organized and validly existing under the laws of the
Province of Ontario with corporate power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. Attached hereto as Inlogic Schedule 4.1 are (i)
accurate and complete copies of the Certificate and Articles of Incorporation
and Bylaws of Inlogic Software Inc., together with all amendments thereto, in
each case, as in effect as of the date of continuance and (ii) an accurate and
complete list of the members of the board of directors as of the date hereof and
of Inlogic Software Inc. as of the date of continuance. Inlogic Software Inc.
was not in violation of any terms of its Certificate and Articles of
Incorporation or Bylaws as of the date of, or in connection with, the
continuance. Inlogic Software Inc. was not required to be licensed or qualified
to conduct its business in any other jurisdiction where it is not so licensed or
qualified in which failure to be so licensed or qualified would have a material
adverse effect on Inlogic, the Assets or the Business;
SECTION 4.2 ORGANIZATION AND QUALIFICATION OF INLOGIC DELAWARE.
Inlogic Delaware is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with corporate power
and authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is currently conducted or proposed to be conducted. Attached hereto as
Inlogic Schedule 4.2 are (i) accurate and complete copies of the Certificate of
Incorporation and Bylaws of Inlogic Delaware, together with all amendments
thereto, in each case, as in effect as of the date hereof and (ii) an accurate
and complete list of the members of the board of directors of Inlogic Delaware
as of the date hereof, and (iii) an accurate and complete list of the
shareholders of Inlogic Delaware. Inlogic Delaware is not in violation of any
terms of its Certificate and Articles of Incorporation or Bylaws. Inlogic
Delaware is not required to be licensed or qualified to conduct its business in
any other jurisdiction where it is not so licensed or qualified in which failure
to be licensed or qualified would have a material adverse effect on Inlogic, the
Assets or the Business.
SECTION 4.3 RESERVED.
SECTION 4.4 CAPITALIZATION; BENEFICIAL OWNERSHIP OF INLOGIC.
The authorized capital of Inlogic Software Inc. consists of an
unlimited number of common shares, an unlimited number of Class A shares, an
unlimited number of Class B shares, an unlimited number of Class C shares and an
unlimited number of Class D shares of which 8,555,000 common shares, 685,000
Class A shares, no Class B shares, 710,000 Class C shares and 3,564,163 Class D
shares are duly and validly issued, and outstanding, and are fully paid and
non-assessable.
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Inlogic Schedule 4.4 sets forth a complete and accurate list of all of the
holders of capital shares of Inlogic Software Inc. (previously defined as the
"INLOGIC SHAREHOLDERS"), including the name of each Inlogic Shareholder and the
number and class or series of shares of Inlogic capital stock held by each such
Inlogic Shareholder. All of such shares are owned by the Inlogic Shareholders
free and clear of any Encumbrances. Each Inlogic Shareholder is the owner of
record and beneficially of the number of common shares, Class A shares, Class C
shares and Class D shares set forth opposite such Inlogic Shareholder's name on
Inlogic Schedule 4.4. Inlogic Schedule 4.4 includes a true and complete copy of
each stock option plan governing the terms of the outstanding Inlogic Options
(it being understood that each amendment to a stock option plan shall be deemed
to be a separate stock option plan for purposes of this Section). Inlogic has
previously provided to Xxxxxx and Xxxxxx Canada true and correct copies of each
option agreement governing the outstanding stock options. Other than as set out
on Exhibit 1.1(B), there are no outstanding options, warrants, rights,
commitments, pre-emptive rights or agreements of any kind for the issuance or
sale of, or outstanding securities convertible into, any additional equity of
any class of Inlogic Software Inc. Exhibit 1.1(B) includes an accurate
description of the outstanding options, including the number and class of shares
underlying each such option or other right, the date of grant or proposed grant,
the exercise price per share, vesting schedule, the term date, the name of each
holder thereof and the identity of the stock option plan pursuant to which the
option was granted. None of the shares in the capital of Inlogic has been issued
in violation of any Regulation. There are no voting trusts, voting agreements,
proxies or other agreements, instruments or undertakings with respect to the
voting of the shares of Inlogic except for the existing shareholders agreement
between the Inlogic Shareholders as set out in Inlogic Schedule 4.4;
SECTION 4.5 SUBSIDIARIES OF INLOGIC.
Except for Inlogic Delaware which is a wholly-owned Subsidiary of
Inlogic Software Inc. and Xxxxxxx.xxx Inc., Inlogic Software Inc. has no
Subsidiaries, or investments in any other corporations or business organization
or businesses. There are no outstanding options, warrants, rights, commitments,
pre-emptive rights or agreements of any kind for the issuance or sale of, or
outstanding securities convertible into, any additional equity of any class of
any Subsidiary of Inlogic Software Inc. The business of Xxxxxxx.xxx has been
carried out as a division of Inlogic Software Inc.;
SECTION 4.6 AUTHORITY.
(1) Inlogic and each of the Inlogic Shareholders has full, right, authority
and power to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by Inlogic or the Inlogic
Shareholders, as the case may be, pursuant to this Agreement and to
carry out the transactions contemplated hereby or thereby. The
execution, delivery
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and performance by Inlogic and each Inlogic Shareholder of this
Agreement and each such other agreement, document and instrument have
been duly authorized by all necessary action of Inlogic and each
Inlogic Shareholder and no other action on the part of any of Inlogic
or any Inlogic Shareholder is required in connection therewith.
(2) This Agreement and each agreement, document and instrument executed and
delivered by Inlogic and/or any of the Inlogic Shareholders pursuant to
this Agreement constitutes, or when executed and delivered will
constitute, valid and binding obligations of each of them that is a
party thereto enforceable in accordance with their terms (assuming the
due authorization, execution and delivery by Xxxxxx and Canadian
Buyer), subject to the effect of any applicable bankruptcy,
re-organization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject to the effect of general
principles of equity, including, without limitation, the possible
unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law.
(3) The execution, delivery and performance by Inlogic and the Inlogic
Shareholders of this Agreement and each such other agreement, document
and instrument:
(a) With respect to Inlogic, does not and will not violate any
provision of the Certificate or Articles of Incorporation (as
amended) or the Bylaws of Inlogic;
(b) Does not and will not violate any applicable laws or require
any Inlogic or any Inlogic Shareholder to obtain any approval,
consent or waiver of, or make any filing with, any person or
entity (governmental or otherwise) that has not been obtained
or made on or prior to the date hereof; and
(c) Except such consents as disclosed on Inlogic Schedule
4.6(3)(c), does not and will not result in (a) a breach of,
constitute a default under, accelerate any obligation under,
or give rise to a right of termination of any indenture or
loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgement, injunction, decree, determination or
arbitration award to which any of the Inlogic Shareholders or
Inlogic is a party or by which the property of any Inlogic
Shareholders or Inlogic is bound or affected and which is
material to any Inlogic Shareholder or Inlogic (as
applicable), or the Assets or the Business, taken as a whole,
or (b) result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance
on any equity interest in any Inlogic Shareholder or Inlogic.
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SECTION 4.7 ASSETS.
Excluding the Leased Real Property and any leases of personal property
and except as set forth on Inlogic Schedule 4.7(A), Inlogic has title to the
tangible Assets free and clear of any Encumbrances other than the Permitted
Liens. The Assets of Inlogic excluding the Atevent Assets (as hereinafter
defined) are referred to as the "Retained Assets". The Retained Assets include
all assets necessary for the conduct of the Business as currently conducted and
currently proposed to be conducted. Inlogic Schedule 4.7(A) contains an accurate
list as of the date hereof and as of the Closing Date by general category of all
tangible Retained Assets where the book value or fair market value of an
individual item exceeds $1,000 or where an aggregate of similar items exceeds
$5,000 except for tangible Retained Assets that have been fully depreciated for
tax purposes. All tangible assets and properties which are part of the Retained
Assets and are material to the operation of the Business are in good operating
condition and repair (normal wear and tear excepted) and are usable in the
ordinary course of business. The Retained Assets include a minimum of $7,000,000
Cdn of cash a portion of which will be distributed as the Inlogic Dividend to
the Inlogic Shareholders. The Atevent Assets have been used solely for the
Atevent Business.
SECTION 4.8 REAL PROPERTY.
(1) OWNED REAL PROPERTY. Inlogic does not own any real property.
(2) LEASES. All of the real property leased or sub-leased by Inlogic is
identified on Inlogic Schedule 4.8 (herein referred to as the "LEASED
REAL PROPERTY" and such leases are herein referred to as the "FACILITY
LEASES"). Inlogic Schedule 4.8 includes with respect to each Facility
Lease, the names of the lessor and any sub-lessor, the expiration date
of the lease together with any renewal provisions, the address of the
Leased Real Property (including the floor), the square footage of the
Leased Real Property and the price of the lease.
(3) True and complete copies of the Facility Leases have been delivered to
the Canadian Buyer. The Facility Leases have been duly authorized and
executed by Inlogic and, to the knowledge of the Inlogic Shareholders,
the other parties thereto and are in full force and effect and binding
and enforceable against the parties thereto (assuming due
authorization, execution and delivery by the other parties thereto),
subject to the effect of any applicable bankruptcy, re-organization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject to the effect of general principles of equity,
including, without limitation, the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law. Inlogic is not in material default
under any Facility Lease, nor has any event occurred which, with notice
or the passage of time, or both, would give rise to such a default. To
the knowledge of the Inlogic Shareholders, none of the other parties to
any
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Facility Lease is in default under such Facility Lease and there is no
event which, with notice or the passage of time, or both, would give
rise to such a default.
(4) LEASES OR OTHER AGREEMENTS. Except for the Facility Leases listed on
Inlogic Schedule 4.8, neither Inlogic nor any of its Subsidiaries
holds, or is obligated under or a party to, any leases, subleases,
licenses, occupancy agreements, options, rights, concessions or other
agreements or arrangements, written or oral, granting to any person the
right to purchase, use or occupy any real property in connection with
the Business or any portion thereof or interest in any such real
property.
(5) FACILITY LEASES AND LEASED REAL PROPERTY. With respect to the Facility
Leases to which Inlogic is a party, as lessee or sublessee, Inlogic has
an unencumbered leasehold interest as a lessee or a sub-lessee in the
Leasehold Estate subject to the Permitted Liens. The actions
contemplated by this Agreement do not violate the terms or result in
the termination of, or create a right to terminate, such Facility
Lease. Inlogic enjoys peaceful and undisturbed possession of all the
Leased Real Property, as applicable.
(6) CONDITION OF LEASED REAL PROPERTY. There are no material defects in the
physical condition of any portion of the Leased Real Property and all
such Leased Real Property is in good operating condition and repair
(reasonable wear and tear excepted) and are adequate to the uses to
which they are being put and for which they are planned to be put.
(7) COMPLIANCE WITH THE LAW. Inlogic has not received any written notice
from any governmental authority of any violation of any law, ordinance,
regulation, license, permit or authorization issued with respect to the
Leased Real Property that has not been heretofore corrected. None of
the Inlogic Shareholders nor Inlogic has received any written notice of
any real estate tax deficiency or assessment and is not aware of any
proposed deficiency, claim or assessment with respect to any of the
Leased Real Property, or any pending or threatened condemnation
thereof.
SECTION 4.9 MINUTE BOOKS; CORPORATE DOCUMENTS.
The minute books of Inlogic Software Inc. and its Subsidiaries made
available to Xxxxxx and Canadian Buyer contain a complete and accurate summary
of all meetings of directors and stockholders or actions by written resolutions
since the time of incorporation of Inlogic and the respective subsidiaries
through the date of this Agreement, and reflect all transactions referred to in
such minutes or resolutions accurately. The actions recorded in the corporate
records of Inlogic are complete and accurate and all corporate proceedings and
actions reflected in such records have been conducted or taken in compliance
with all applicable Regulations and the
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articles and by-laws of Inlogic. The Inlogic Shareholders have made available
for inspection and copying by the Canadian Buyer and its counsel true and
correct copies of all documents referred to in this Section or in the Schedules
delivered to the Canadian Buyer pursuant to this Agreement. The Board of
Directors of Inlogic has adopted resolutions as to its interpretation of
Inlogic's Employee Stock Option Plan with respect to the effect of the
transactions contemplated hereby on the vesting provisions of the Employee Stock
Option Plan as previously discussed with, and agreed to by, Xxxxxx, and such
interpretation is within the powers of the Board of Directors under such plan.
SECTION 4.10 FINANCIAL STATEMENTS.
(1) The Inlogic Shareholders have delivered to Xxxxxx and the Canadian
Buyer the following financial statements of Inlogic, copies of which
are attached hereto as Inlogic Schedule 4.10: audited balance sheets
and statements of earnings, retained earnings and changes in financial
position for its fiscal years ended December 31, 1997, and 1998 and
unaudited balance sheet as at September 30, 1999 and the statements of
earnings, retained earnings and changes in financial position for the
nine months ended September 30, 1999 (such financial statements are
referred to collectively as the "FINANCIAL STATEMENTS"). The unaudited
balance sheet as of September 30, 1999 is referred to as the "Unaudited
Balance Sheet." The December 31, 1998 balance sheet is hereinafter
referred to as the "Base Balance Sheet" and December 31, 1998 is
hereafter referred to as the "Base Balance Sheet Date." The Financial
Statements, present fairly and accurately and, in all material
respects, completely the financial condition of Inlogic at the dates of
said statements and the results of its operations for the periods
covered thereby. In connection with the preparation of the Financial
Statements, Inlogic has made available to KPMG Peat Marwick LLP all
accounting and financial records and related data, and all minute books
including all board and shareholder actions taken by Inlogic, all of
which are true, correct and accurate, and all in accordance with the
representations contained in the Inlogic letter to KPMG Peat Marwick
LLP delivered in connection with the review and audit of the Financial
Statements. Prior to the Closing, Inlogic Shareholders will prepare and
deliver to Xxxxxx and the Canadian Buyer an unaudited balance sheet of
Inlogic as at the Closing Date and such balance sheet shall present
fairly and completely the information purported to be shown thereon.
(2) Inlogic's fiscal year 1999 and fiscal year 2000 operating budgets are
attached hereto as Inlogic Schedule 4.10(1), have previously been
supplied by the Inlogic Shareholders to the Canadian Buyer and Xxxxxx
and have been prepared in good faith on the basis of assumptions by
Inlogic which Inlogic and the Inlogic Shareholders reasonably believed
were reasonable at the time of the preparation of such budget and as of
the date hereof.
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(3) Except as set forth on Inlogic Schedule 4.10 as of the date hereof
Inlogic does not have any Liabilities of any nature, whether accrued,
absolute or contingent (including without limitation Liabilities as
guarantor or otherwise with respect to obligations of others, or
Liabilities for any Tax due or then accrued or to become due or
contingent or potential Liabilities relating to activities of Inlogic
or the conduct of the Business prior to the date hereof or the Closing,
as the case may be, regardless of whether claims in respect thereof had
been asserted as of such date), except Liabilities (i) stated or
adequately reserved against on the Unaudited Balance Sheet or the notes
thereto, (ii) incurred or arising in the ordinary course of business
under Contracts, Leases, Permits and other business arrangements
described in the Disclosure Schedule (and under those Contracts, Leases
and Permits which are not required to be disclosed on the Inlogic
Disclosure Schedule) none of which relates to any Default under any
Contract or Lease, breach of warranty, tort, infringement or violation
of any Regulation or Court Order or that arose out of any Action and
none of which, individually or in the aggregate, has or would have a
material adverse effect, (iii)incurred or arising in the ordinary
course of the Business subsequent to the September 30, 1999 consistent
with the terms of this Agreement (none of which relates to any Default
under any Contract or Lease, breach of warranty, tort, infringement or
violation of any Regulation or Court Order or arose out of any Action)
and none of which, individually or in the aggregate, has or would have
a material adverse effect, (iv) disclosed in or pursuant to this
Article IV or on the Inlogic Disclosure Schedule or (v) future
performance under Contracts or Leases, none of which relates to any
default, breach of warranty, tort, infringement or violation of any
Regulation or Court Order or arose out of any action and none of which
individually or in the aggregate has or would have a material adverse
effect.
SECTION 4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in Inlogic Schedule 4.11 and other than the
transactions expressly contemplated by Section 2.1(1) hereof, since the Base
Balance Sheet Date, there has not been any:
(a) Except as specifically disclosed in the Inlogic Schedules,
actual or threatened material adverse change;
(b) Change in accounting methods, principles or practices of
Inlogic affecting the Assets, its Liabilities or the Business;
(c) Revaluation by Inlogic of any of the Assets, including without
limitation writing down the value of inventory or writing off
notes or accounts receivable;
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(d) Damage, destruction or loss (whether or not covered by
insurance) which has had or will have a material adverse
effect;
(e) Cancellation of any indebtedness owing to Inlogic or waiver or
release of any right or claim of Inlogic relating to its
activities or properties which had or will have a material
adverse effect;
(f) Change in Inlogic's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital
stock of Inlogic; issuance of any security convertible into
such capital stock; grant of any registration rights;
declaration, setting aside, or payment of dividends or
distributions by Inlogic or any redemption, purchase or other
acquisition of any of the securities of Inlogic;
(g) Reserved;
(h) Adverse change in employee relations which has or is
reasonably likely to have a material adverse effect on the
productivity, the financial condition, results of operations
or Business of Inlogic or the relationships between the
employees of Inlogic and the management of Inlogic;
(i) With the exception of notice of termination of the Facility
Lease in September 1999, (x) amendment, cancellation or
termination of any Contract, commitment, agreement, Lease,
transaction or Permit relating to the Assets or the Business,
or (y) with the exception of this Agreement and the other
agreements entered into in connection herewith, and an offer
to lease on new premises, entry into any Contract, Lease,
transaction or Permit which is not in the ordinary course of
business, including without limitation any employment or
consulting agreements;
(j) Mortgage, pledge or other encumbrance of any Assets, except
Permitted Liens;
(k) Sale, assignment or transfer of any of the Assets, except to
the extent Assets are sold or disposed of in the ordinary
course of business;
(l) Incurrence of indebtedness by Inlogic for borrowed money or
commitment to borrow money entered into by Inlogic, or loans
made or agreed to be made by Inlogic which is outstanding as
of the date hereof, or indebtedness guaranteed by Inlogic,
except for endorsements for collection or deposit in the
ordinary course of business;
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(m) Except as provided in this Agreement or the other agreements
contemplated hereby or as described in the Inlogic Disclosure
Schedule, incurrence by Inlogic of Liabilities, except
Liabilities relating to normal trade payables incurred in the
ordinary course of business, or increase or change in any
assumptions underlying or methods of calculating, any doubtful
account contingency or other reserves of Inlogic;
(n) Payment, discharge or satisfaction of any Liabilities of
Inlogic other than the payment, discharge or satisfaction in
the ordinary course of business of Liabilities set forth or
reserved for on the Base Balance Sheet or incurred in the
ordinary course of business;
(o) Capital expenditure by Inlogic in excess of Cdn.$5,000
individually or Cdn.$20,000 in the aggregate, or the incurring
of any obligation by Inlogic to make any capital expenditures
or execute any Lease;
(p) Failure to pay or satisfy when due any Liability of Inlogic;
(q) Disposition or lapsing of any Intangibles or any disposition
or disclosure to any person of any Intangibles not theretofore
a matter of public knowledge; or
(r) Agreement whether written or oral, by Inlogic or any Inlogic
Shareholder to do any of the things described in the preceding
clauses (a) through (s) other than as expressly provided for
herein.
SECTION 4.12 CONTRACTS AND COMMITMENTS.
(1) CONTRACTS. Inlogic Schedules 4.8 and 4.12 set forth the following
Contracts (or descriptions thereof, in the case of oral Contracts) to
which Inlogic is a party or by which it is bound (collectively, the
"MATERIAL CONTRACTS"):
(a) Other than in connection with Atevent Transaction, contracts
not made in the ordinary course of business;
(b) Other than obligations relating solely to notice of
termination or severance payments required by applicable law,
(A) Employment contracts and severance agreements, to employ
or terminate present or former executive officers or other
personnel (including without limitation present and former
employees, independent contractors and consultants) and other
contracts with present or former officers, directors,
employees, consultants, independent contractors, or
shareholders of Inlogic, (B) employment contracts and
severance agreements that will result in the payment by, or
the creation of any Liability to pay on behalf of Inlogic or
Canadian Buyer, any severance,
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termination, "GOLDEN PARACHUTE", or other similar payments to
any present or former personnel following termination of
employment or otherwise as a result of the consummation of the
transactions contemplated by this Agreement, (C) any
agreements or commitments, or pending agreements or
commitments, to hire any person or entity as an employee,
independent contractor or consultant, or (D) any contracts,
commitments or other obligations with respect to the payment
of any referral or other fees in connection with the hiring or
proposed hiring of any employee, independent contractor or
consultant;
(c) Labour or union contracts;
(d) Distribution, franchise, license, technical assistance, sales,
service, OEM (either pursuant to which Inlogic licenses its
Proprietary Rights to third parties or pursuant to which
Inlogic licenses Proprietary Rights from third parties),
reseller, value added reseller (VAR), commission, agency or
advertising Contracts, or consultant Contracts (where a third
party is providing services to Inlogic), excluding (A) "SHRINK
WRAP" software licenses from third parties that are not
material to the Business and (B) consultant Contracts
involving aggregate fees of less than $25,000 per annum and
that are terminable by Inlogic on no more than 30 days notice;
(e) Contracts or agreements with a customer of Inlogic providing
for an aggregate payment by such customer in excess of $25,000
or pursuant to which Inlogic has, or reasonably anticipates
that it will, derive revenues in excess of $25,000;
(f) Options with respect to any property, real or personal,
whether Inlogic is the grantor thereunder;
(g) Contracts (excluding real property leases) involving actual
future expenditures or other Liabilities (including without
limitation, potential or contingent Liabilities), in excess of
$25,000 in the aggregate (excluding Liabilities for indirect
expenditures such as salaries and overhead expenses and any
contingent or potential Liability) to the Business or the
Assets;
(h) Contracts or commitments relating to commission arrangements
with others;
(i) Promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation in respect of borrowed
money whether Inlogic
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shall be the borrower, lender or guarantor thereunder or
whereby any Assets are pledged;
(j) Contracts containing covenants limiting the freedom of Inlogic
or any of its respective officers, directors, shareholders or
affiliates, to engage in any line of business or compete with
any person other than Inlogic;
(k) Any Contract to supply services to the Canadian federal,
provincial, or local government or any other foreign
government or any agency or department thereof;
(l) Leases of real property; or
(m) Leases of personal property not cancellable (without
Liability) within 30 calendar days, excluding leases of
personal property involving the expenditure of less than
$5,000 in the aggregate annually.
(2) MATERIAL CONTRACTS. The Inlogic Shareholders have delivered to Canadian
Buyer true, correct and complete copies (or descriptions thereof with
respect to oral Material Contracts) of all of the Material Contracts,
including all amendments and supplements thereto. Other than the
Material Contracts, the Inlogic Shareholders have no other Contracts of
the type described in clauses (a) through (m) above.
(3) ABSENCE OF DEFAULTS. Inlogic has fulfilled, or taken all action
necessary to enable it to fulfill when due, all of its respective
material obligations under each such Material Contract. To the
knowledge of the Inlogic Shareholders, all other parties to such
Material Contracts are currently in compliance in all material respects
with the provisions thereof, no party is in Default in any respect
thereunder or has threatened Default or termination thereof and no
notice of any such claim of Default relating thereto has been given to
Inlogic or the Inlogic Shareholders. To the knowledge of the Inlogic
Shareholders, there is no reason to believe that the services called
for by any Material Contract between Inlogic and a client of Inlogic
cannot be supplied substantially in accordance with the terms of such
Material Contract, including time specifications, and Inlogic has no
reason to believe that any Material Contract will upon performance by
Inlogic result in a net loss to Inlogic or that any customer will
refuse to pay for services rendered or products sold or licensed
thereunder. Without limiting the generality of the foregoing, Inlogic
is in full and complete compliance with, and is not in default or
breach under, the terms and conditions of the Alliance Software License
Agreement dated August 12, 1999, by and between MetaSolv Software, Inc.
and Inlogic Software Inc., including without limitation Section 3(c) of
such agreement, and accordingly has had its employees and
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consultants execute an explicit non-disclosure agreements containing
the provisions required by such Section 3(c).
(4) MISCELLANEOUS CONTRACT MATTERS. Except as disclosed on Inlogic Schedule
4.12(4), Inlogic has not granted ownership or other intellectual
property rights to any derivative works created by third parties
related to the Proprietary Rights. In the case of AT&T Canada, AT&T
Canada has not created any such derivative works. Inlogic has prepared
and delivered to Metronet Communications Group, Inc. a letter
consistent in all material respects with the letter prepared and
delivered to Inlogic by Xxxxxx on October 5, 1999, and Metronet
Communications Group, Inc. has agreed to comply with the statements
contained therein. A copy of such letter, as delivered to Metronet
Communications Group, Inc., is attached to Inlogic Schedule 4.12(4). In
addition, Metronet Communications Group, Inc. has not challenged any of
the provisions of such letter.
SECTION 4.13 PERMITS:
(1) Inlogic has, and at all times has had, all Permits required under any
Regulation (including Environmental Laws) in the operation of the
Business or in the ownership of the Assets, except for those Permits
the absence of which would not individually or in the aggregate have a
material adverse effect. Inlogic is not in Default, nor has it received
any notice of any claim of Default, with respect to any such Permit. No
present or former shareholder, director, officer or employee of Inlogic
or any affiliate thereof, or any other person, firm, corporation or
other entity, owns or has any proprietary, financial or other interest
(direct or indirect) in any such Permit.
(2) Except as disclosed on Inlogic Schedule 4.13 hereto, no notice to,
declaration, filing or registration with, or Permit from, any domestic
or foreign governmental or regulatory body or authority, or any other
person or entity, is required to be made or obtained by Inlogic in
connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 4.14 LITIGATION.
Except as set forth on Inlogic Schedule 4.14, there are no Actions
outstanding or, to the knowledge of the Inlogic Shareholders, pending or
threatened (a) against, (i) Inlogic, the Business or the Assets (including with
respect to Environmental Laws), (ii) to the knowledge of the Inlogic
Shareholders, any officers or directors of Inlogic, as such, or (iii) to the
knowledge of the Inlogic Shareholders, any Inlogic Shareholder in such Inlogic
Shareholder's capacity as a shareholder of Inlogic or as an employee of Inlogic,
(b) against Inlogic seeking to delay, limit or enjoin the transactions
contemplated by this Agreement (c) against Inlogic, or any of its officers or
directors or Inlogic Shareholders, in their capacity as such that involves the
risk of
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criminal liability to any such entity or person or (d) in which Inlogic is a
plaintiff, including any derivative suits brought by or on behalf of Inlogic
nor, to the knowledge of the Inlogic Shareholders, is there any reasonable basis
for any such Action. Inlogic is not in Default with respect to or subject to any
Court Order, and there are no unsatisfied judgements against Inlogic, the
Business or the Assets. There is not a reasonable likelihood of an adverse
determination of any pending Actions that would have a material adverse effect.
There are no Court Orders or agreements with, or liens by, any governmental
authority or quasi-governmental entity relating to any Environmental Law which
regulate, obligate, bind or in any way affect the Inlogic Shareholders, the
Assets or the Business, other than the Permitted Liens.
SECTION 4.15 COMPLIANCE WITH LAW.
Except as set forth on Inlogic Schedule 4.15, Inlogic and the conduct
of the Business have been and are in compliance with all Regulations and Court
Orders relating to the Assets or the Business or operations of Inlogic except in
each case for such non-compliance as would not, individually or in the
aggregate, have a material adverse effect. Within the last five years, Inlogic
has not received any notice to the effect that it is not in such compliance with
any such Regulations or Court Orders.
SECTION 4.16 ORDINARY COURSE.
Except for the transactions contemplated by this Agreement, including
the transactions expressly contemplated by Section 2.1(1) hereof and as set
forth on Inlogic Schedule 4.16, since December 31, 1998, Inlogic has conducted
its business only in the ordinary course and consistently with its prior
practices.
SECTION 4.17 OFFICERS AND COMPENSATION.
Inlogic Schedule 4.17 hereto contains a true and complete list of all
current officers and directors of Inlogic. In addition, Inlogic Schedule 4.17
hereto contains a list of all managers, employees, independent contractors and
consultants of Inlogic. In each case Inlogic Schedule 4.17 includes the current
job title and aggregate annual compensation (including base salary and bonus
reflected separately) of each such individual.
SECTION 4.18 EMPLOYEES; LABOUR MATTERS.
As of the date of this Agreement, Inlogic employs a total of 108
full-time employees, no part-time employees and 28 independent contractors.
Except as set forth in Inlogic Schedule 4.18, Inlogic has not received any
notice, written or otherwise, that any employee or independent contractor
intends to terminate his or her employment or business relationship with Inlogic
following the Closing whether as a result of this Agreement or otherwise.
Inlogic is not delinquent in payments to any of its employees or independent
contractors for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it
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to the date hereof or amounts required to be reimbursed to such employees or
independent contractors. Except as set forth in Inlogic Schedule 4.18, Inlogic
does not have a policy, practice, plan or program of paying severance pay or any
form of severance compensation in connection with the termination of employment,
other than employees and independent contractors may be terminated with notice
or pay in lieu thereof as required by applicable law in the absence of a written
or oral agreement. Inlogic is in compliance in all material respects with all
applicable laws and regulations respecting labour, employment, fair employment
practices, work place safety and health, terms and conditions of employment, and
wages and hours. There are no charges of employment discrimination or unfair
labour practices pending or, to the knowledge of Inlogic Shareholders,
threatened and there exists no basis for any such claim, nor are there any
strikes, slowdowns, stoppages of work, or any other concerted interference with
normal operations which are existing, pending or threatened against or involving
Inlogic. There are no pending grievances, complaints or charges that have been
filed against Inlogic under any dispute resolution procedure (including, but not
limited to, any arbitration or similar proceedings) and no such claim of which
Inlogic or any Inlogic Shareholder has received written notice. No collective
bargaining agreement is in effect or is currently being or is about to be
negotiated by Inlogic. There are no current or, to the knowledge of the Inlogic
Shareholders, threatened attempt to organize or establish any trade union or
employee association with respect to Inlogic. Inlogic has not received any
written notice indicating that any of its employment policies or practices is
currently being audited or investigated by any federal, provincial or local
government agency. Since November 11, 1999, Inlogic has complied with the
requirements of Section G of the Term Sheet dated November 11, 1999, between
Xxxxxx and Inlogic.
SECTION 4.19 BANKING RELATIONS.
Inlogic Schedule 4.19 contains a complete and correct list of the names
and locations in which Inlogic has accounts or safe deposit boxes and the names
of all persons authorized to draw thereon or have access thereto.
SECTION 4.20 NO BROKERS.
Neither Inlogic nor any of the Inlogic Shareholders nor any of their
respective officers, directors, employees, or affiliates has employed or made
any agreement with any broker, finder, investment banker or similar agent or any
person or firm which will result in the obligation of Xxxxxx, Canadian Buyer,
Inlogic, or any of their affiliates to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
SECTION 4.21 NO OTHER AGREEMENTS TO SELL THE PURCHASED SECURITIES.
Other than the transactions expressly contemplated by Section 2.1(1)
hereof and as described on Inlogic Schedule 4.21 neither the Inlogic
Shareholders nor any
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of Inlogic's officers, directors, employees or affiliates have any commitment or
legal obligation, absolute or contingent, to any other person or firm other than
Canadian Buyer and Xxxxxx under this Agreement or the Term Sheet signed November
11, 1999 as revised on November 26, 1999 to sell, assign, transfer or effect a
sale of any of the Assets or Business (other than inventory or services in the
ordinary course of business), to sell or effect a sale of the equity of Inlogic,
to effect any merger, consolidation, liquidation, dissolution or other
reorganization of Inlogic or to enter into any agreement or cause the entering
into of an agreement with respect to any of the foregoing.
SECTION 4.22 CUSTOMERS.
Inlogic Schedule 4.22 sets forth all customers which (i) accounted for
more than $25,000 in revenue for Inlogic for the nine months ended September 30,
1999 and or (ii) accounted for more than $25,000 in revenue for Inlogic in the
twelve months ended December 31, 1998 (collectively, the "CUSTOMERS"). The
relationships of Inlogic with its Customers are good commercial working
relationships and no Customer has given notice, written or oral, of its intent
to terminate its business relationship with Inlogic.
SECTION 4.23 BACKLOG.
As of the date hereof, Inlogic has a backlog of orders for the sale or
lease of services, or for the licensing or manufacture of software, for which
potential revenues have not been recognized by Inlogic, as set forth in Inlogic
Schedule 4.23.
SECTION 4.24 INTELLECTUAL PROPERTY RIGHTS OF INLOGIC.
(1) CERTAIN DEFINED TERMS. For the purposes of this Agreement:
(a) "SOFTWARE" means any computer program, operating system,
applications system, microcode, firmware or software of any
nature, whether operational, under development or inactive,
including all object code, source code, technical manuals,
compilation procedures, execution procedures, flow charts,
programmers notes, user manuals and other documentation
thereof, whether in machine-readable form, programming
language or any other language or symbols and whether stored,
encoded, recorded or written on disk, tape, film, memory
device, paper or other media of any nature;
(b) "INTANGIBLES" means:
(i) Patents, patent applications, patent disclosures, all
re-issues, divisions, continuations, renewals,
extensions and continuation-in-parts thereof and
improvements thereto;
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(ii) Trademarks, service marks, trade dress, logos, trade
names, and corporate names and registrations and
applications for registration thereof and all
goodwill associated therewith;
(iii) Copyrights and registrations and applications for
registration thereof;
(iv) Maskworks and registrations and applications for
registration thereof;
(v) All right, title and interest in all computer
software, data and documentation (including, without
limitation, modifications, enhancements, revisions or
versions of or to any of the foregoing and prior
releases of any of the foregoing applicable to any
operating environment);
(vi) Trade secrets and confidential business information
(including ideas, formulas, compositions, inventions,
whether patentable or unpatentable and whether or not
reduced to practice, know-how, manufacturing and
production processes and techniques, research and
development information, drawings, flow charts,
processes ideas, specifications, designs, plans,
proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and
cost information, business and marketing plans, and
customer and supplier lists and information);
(vii) Other proprietary rights, including, without
limitation moral rights;
(viii) All rights necessary to prevent claims of invasion of
privacy, right of publicity, defamation, infringement
of moral rights, or any other causes of action
arising out of the use, adaptation, modification,
reproduction, distribution, sale, or exhibition of
the Software;
(ix) All income, royalties, damages and payments due at
Closing or thereafter with respect to the Owned
Software or the Intangibles therein and all other
rights thereunder including, without limitation,
damages and payments for past, present or future
infringements or misappropriations thereof, the right
to xxx and recover for past, present or future
infringements or misappropriations thereof;
(x) All rights to use all of the foregoing; and
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(xi) All other rights in, to, and under the foregoing in
all countries; and
(c) "DISTRIBUTOR" means Inlogic and any other person or entity
that has been authorized by Inlogic to sell, license or offer
to sell or license any Inlogic Software, other than an
employee of Inlogic. Distributors may include, without
limitation, value added resellers, original equipment
manufacturers, dealers, sales agents, and distributors.
(2) LISTS OF INTELLECTUAL PROPERTY RIGHTS AND CONTRACTS:
(a) Inlogic Schedule 4.24(2)(a) contains a complete list of each
governmental filing, whether federal, state, local, foreign or
otherwise, related to patents, copyrights, trademarks, service
marks, trade names, maskworks, other Intangibles and Software
(collectively "REGISTRATIONS") of Inlogic; (ii) identifies
each pending Registration of Inlogic with respect to the
Intangibles and Software; (iii) identifies all of Inlogic's
applications for or Registrations regarding the Intangibles
and Software which have been withdrawn, abandoned, or have
lapsed or been denied; and (iv) specifies any advice to
Inlogic with respect to such Registration or protectability of
the Intangibles and Software, summarizing such advice;
(b) Inlogic Schedule 4.24(2)(b) also identifies (i) each license
agreement or other written or oral agreement or permission
("LICENSE AGREEMENT") in which Inlogic has granted to any
third party any right with respect to any of the Intangibles
or Software; (ii) each item of the Intangibles and Software
used or possessed by Inlogic that any third party owns and the
license, sublicense, agreement or other permission in
connection therewith (the "THIRD PARTY LICENSE AGREEMENT"),
together with the term thereof, and all royalties or other
amounts due thereon and (iii) each agreement entered into by
Inlogic that provides for the sale, license or access to any
source code of the Software, including, without limitation,
any source code escrow agreement ("SOURCE CODE AGREEMENT");
(c) Inlogic Schedule 4.24(2)(c) is an accurate and complete list
and description (including a name, product description, the
language in which it is written and the type of hardware
platform(s) on which it runs) of all of the following:
(i) All Software owned by Inlogic, whether purchased from
a third party, developed by or on behalf of Inlogic,
currently under development or otherwise ("OWNED
SOFTWARE") other than Software generally available
for license at retail;
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(ii) All Software, other than the Owned Software, that is
either (x) offered or provided by Inlogic, directly
or through Distributors, to customers of Inlogic or
(y) used by Inlogic to provide information or
services to customers of Inlogic for a fee
(collectively, "CUSTOMER SOFTWARE"; the Owned
Software and the Customer Software are collectively
referred to as the "INLOGIC SOFTWARE"); and
(iii) All Software, other than Inlogic Software, that is
licensed or marketed to or from third parties or
otherwise used by Inlogic for any purpose whatsoever
(collectively, "OTHER SOFTWARE") other than software
generally available for license at retail;
(d) To the extent not set forth in Inlogic Schedule 4.24(2)(a),
Inlogic Schedule 4.24(d) separately sets forth an accurate and
complete list and description of each copyright, trademark,
trademark application or registration, service xxxx, service
xxxx application or registration, patent application or
registration, and name and logo included in the Intangibles
(as defined below in this Section) owned, marketed or licensed
by Inlogic or from third parties, used or under development by
Inlogic. Inlogic Schedule 4.24(d) indicates Inlogic's
ownership of such items or the source of Inlogic's right to
use such items; and
(e) Inlogic Schedule 4.24(2)(e) identifies all individuals who
have materially contributed to the development of the Owned
Software.
(3) WARRANTIES:
(a) Inlogic has supplied Xxxxxx and the Canadian Buyer with
correct and complete copies of all License Agreements, Third
Party License Agreements and Source Code Agreements, and
except as specified in Inlogic Schedule 4.24(3)(a) all License
Agreements, Third Party License Agreements and Source Code
Agreements do not and will not require the consent or approval
of any other persons as a result of the transactions
contemplated hereby or any subsequent amalgamation or other
merger or combination of Inlogic and Canadian Buyer or other
Affiliate of Xxxxxx, in each case, free of cost or expense.
(b) Inlogic has complied with all License Agreements, Third Party
License Agreements and Source Code Agreements, and to the best
of Inlogic's knowledge, all other parties to such agreements
have complied with all provisions thereof; and no default or
event of default exists under any of the License Agreements,
Third Party License Agreements and Source Code Agreements,
except as set forth in Inlogic Schedule 4.24(3)(b).
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(c) No Software other than the Owned Software, Customer Software
and Other Software is required to operate Inlogic's business
as currently conducted and as contemplated by existing Inlogic
product and service plans.
(d) Except as explained on Inlogic Schedule 4.24(3)(d), Inlogic
owns and has good and marketable title to the Owned Software
and Intangibles attributable to the Owned Software, and has
the full right to use all of the Customer Software and Other
Software, and Intangibles attributable thereto, as used or
required to operate Inlogic's business as currently conducted
and as contemplated in the future in accordance with Inlogic's
written business plans, free and clear of any liens, claims,
charges or encumbrances which would affect the use of such
Software in connection with the operation of Inlogic's
business as currently conducted and as contemplated in the
future in accordance with Inlogic's written business plans.
(e) No rights of any third party not previously obtained are
necessary to market, license, sell, modify, update, and/or
create derivative works for any Software as to which Inlogic
takes any such action in its business as currently conducted.
(f) With respect to Software which is licensed by Inlogic to third
parties or used in connection with the providing of services
to third parties:
(i) Inlogic maintains machine-readable
master-reproducible copies, reasonably complete
technical documentation and/or user manuals for the
most current releases or versions thereof and for all
earlier releases or versions thereof currently being
supported by Inlogic;
(ii) In each case, the machine-readable copy substantially
conforms to the corresponding source code listing;
(iii) Such Software is written in the language set forth on
Inlogic Schedule 4.24(2)(c), for use on the hardware
set forth on Inlogic Schedule 4.24(2)(c) with
standard operating systems;
(iv) Such Software can be maintained and modified by
reasonable competent programmers familiar with such
language, hardware and operating systems; and
(v) In each case the Software operates in accordance with
the user manual thereof without operating defects of
any material nature;
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(g) None of the Software or Intangibles listed on Inlogic
Schedules 4.24(3)(a), 4.24(3)(b) or 4.24(2)(d), or their
respective past or current uses by or through Inlogic has
violated or infringed upon, or is violating or infringing
upon, any patent, copyright, trade secret or other Intangible
of any person. Inlogic has adequately maintained all trade
secrets and copyrights with respect to the Inlogic Software
and Other Software. Inlogic has performed all obligations
imposed upon it with regard to the Customer Software and Other
Software which are required to be performed by it on or prior
to the date hereof, and neither Inlogic nor, to the knowledge
of Inlogic, any other party, is in breach of or default
thereunder in any respect, nor to Inlogic's knowledge, is
there any event which with notice or lapse of time or both
would constitute a default thereunder;
(h) To the knowledge of the Inlogic Shareholders, no person is
violating or infringing upon, or has violated or infringed
upon at any time, any of Inlogic's proprietary rights to any
of the Software or Intangibles listed on Inlogic Schedules
4.24(3)(a), 4.24(3)(b) or 4.24(3)(d);
(i) None of the Software or Intangibles listed on Inlogic
Schedules 4.24(3)(a), 4.24(3)(c) or 4.24(3)(d) are owned by or
registered in the name of any of Inlogic's shareholders, any
current or former owner or shareholder, partner, director,
executive, officer, employee, salesperson, agent, customer,
contractor of Inlogic or its representative nor does any such
person have any interest therein or right thereto, including,
but not limited to, the right to royalty payments. Except as
listed on Inlogic Schedule 4.24(3)(i), Inlogic has granted no
third party any exclusive rights related to any Owned
Software;
(j) No litigation is pending and no claim has been made against
Inlogic or, to the knowledge of the Inlogic Shareholders, is
threatened, which contests the right of Inlogic to sell or
license to any person or entity or use any of the Owned
Software, Customer Software or Other Software. Except as
described in Inlogic Schedule 4.24(3)(j), no former employer
of any employee or consultant of Inlogic has made a claim
against Inlogic or, to the knowledge of Inlogic, against any
other person, that Inlogic or such employee or consultant is
misappropriating or violating the Intangibles of such former
employer;
(k) Inlogic is not a party to or bound by and, upon the
consummation of the transactions contemplated by this
Agreement, neither Inlogic nor the Canadian Buyer (in the case
of the Canadian Buyer, as a result of any action or inaction
of Inlogic or any Inlogic Shareholder), will be a party to or
bound by any license or other agreement requiring the
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payment by Inlogic, the Canadian Buyer or its assigns of any
royalty or license payment, excluding such agreements relating
to the Customer Software to the extent such royalty or license
payment is expressly set forth on Inlogic Schedule 4.24(3)(k);
(l) Except as set forth in Inlogic Schedule 4.24(3)(1), the Owned
Software, Customer Software, and Other Software and the
information used by Inlogic, and the Intangibles thereunder,
are fully transferable to the Canadian Buyer following the
Closing Date (in, object code, and if applicable, source code
forms, including all related documentation, to the extent that
such documentation has been created);
(m) Without limiting any of the foregoing, to the best knowledge
of Inlogic, none of Inlogic's current or former officers,
executives, directors, partners, shareholders, employees,
salespersons, customers, or independent contractors have
disclosed to (without proper obligation of confidentiality) or
otherwise used or utilized on behalf of any person other than
Inlogic, any trade secrets or proprietary information,
including, without limitation, the source codes for Inlogic
Software;
(n) All License Agreements, Third Party License Agreements, Source
Code Agreements, software development agreements, and any
other written agreement between Inlogic and any third party in
which trade secrets or confidential information of Inlogic,
Inlogic's customers, agents, or suppliers, are disclosed binds
the recipient thereof to take reasonable steps to protect the
proprietary rights of Inlogic and its customers, agents, and
suppliers in such trade secrets and confidential information;
(o) Except as set forth on Inlogic Schedule 4.24(3)(o), none of
Inlogic's shareholders have an ownership right or other
interest in any Inlogic Software, Other Software or
Intangibles, and no claims have been made or, to the knowledge
of the Inlogic, is threatened, that the Inlogic Software
substantially fails to perform as set forth in Section
4.24(5);
(p) All Inlogic's contracts with customers (collectively "CUSTOMER
CONTRACTS"), whether completed or outstanding, were or are
evidenced by written agreements containing provisions
reasonably equivalent to those contained in Inlogic Schedule
4.24(3)(p) hereto, with only such changes as would not affect
the rights of Inlogic or the Canadian Buyer as assignee
thereof and would not impose on Inlogic or the Canadian Buyer,
as assignee thereof, any additional obligations; and
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(q) No Customer Contract provides for the transfer to the customer
therein of any Intangibles relating to Inlogic Software as to
which Inlogic thereafter shall have no further rights. No
current Customer Contract provides that the customer therein
shall be entitled to sublicense or otherwise transfer to a
third party any of the Intangibles relating to Inlogic
Software unless such third party agrees to be bound by the
confidentiality provisions thereof and agrees to pay Inlogic
royalties and other amounts comparable to those under such
Customer Contract:
(i) Except as set forth on Inlogic Schedule 4.24(3)(q),
each past or present customer of Inlogic and each
past or present customer of Inlogic to whom Inlogic
disclosed any of the Intangibles relating to Inlogic
Software is bound by a confidentiality provision
which requires such past or present customer to take
reasonable steps to protect the rights of Inlogic in
the Intangibles relating to Inlogic Software; and
(ii) None of the Intangibles owned by Inlogic were in
existence prior to August 11, 1993.
(4) MILLENNIUM COMPLIANCE:
(a) Except as noted in Inlogic Schedule 4.24(4)(a), the Owned
Software and to the knowledge of the Inlogic Shareholders, the
Customer Software and Other Software, are "MILLENNIUM
COMPLIANT." For the purposes of this Agreement "MILLENNIUM
COMPLIANT" means:
(i) The functions, calculations, and other computing
processes of the Owned Software, Other Software and
Customer Software (collectively, "PROCESSES") perform
in an accurate manner regardless of the date in time
on which the Processes are actually performed and
regardless of the date input to the Owned Software,
Other Software, and Customer Software, whether
before, on, or after January 1, 2000, and whether or
not the dates are affected by leap years;
(ii) The Owned Software, Other Software, and Customer
Software accept, store, sort, extract, sequence, and
otherwise manipulate date inputs and date values, and
return and display date values, in an accurate manner
regardless of the dates used, whether before, on, or
after January 1, 2000;
(iii) The Owned Software, Other Software, and Customer
Software will function without interruptions caused
by the date in time
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on which the Processes are actually performed or by
the date input to the Owned Software, Other Software,
and Customer Software, whether before, on, or after
January 1, 2000;
(iv) The Owned Software, Other Software, and Customer
Software accept and respond to two (2) digit year and
four (4) digit year date input in a manner that
resolves any ambiguities as to the century in a
defined, predetermined, and accurate manner;
(v) The Owned Software, Other Software, and Customer
Software display, print, and provide electronic
output of date information in ways that are
unambiguous as to the determination of the century;
and
(vi) The Owned Software, Customer Software, and Other
Software have been tested by Inlogic to determine
whether the Owned Software, Customer Software, and
Other Software are Millennium Compliant. Inlogic
shall deliver the test plans and results of such
tests upon written request from Xxxxxx or the
Canadian Buyer. Inlogic shall notify Xxxxxx and the
Canadian Buyer immediately of the results of any
tests or any claim or other information that
indicates the Owned Software, Customer Software, and
Other Software are not Millennium Complaint;
(b) Except as set forth in Inlogic Schedule 4.24(4)(b) and except
as described in the next following sentence, the Company has
inquired as to the Millennium Compliance of the Customer
Software and any computer hardware and devices owned or leased
by the Company that operates any of the Company Software
("COMPANY HARDWARE") with the vendor thereof, has obtained
assurances that such Customer Software and Company Hardware is
Millennium Compliant, and has tested such Customer Software
and Company Hardware in conjunction with the Owned Software to
determine whether the operation of the Owned Software would
result in dated-related failures or errors in such Customer
Software or Company Hardware. In the event that the Company
obtains information that such Customer Software or Company
Hardware is not Millennium Compliant or such Customer Software
or Company Hardware fails the testing as described above, the
Company has established and has timely implemented written
plans to migrate the Company and all Company customers off of
such Customer Software or Company Hardware before the Company
anticipates that errors or failures in such Customer Software
or Company Hardware will occur;
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(c) Except as set forth in Inlogic Schedule 4.24(4)(c) and except
as described in the next following sentence, the Company has
inquired as to the Millennium Compliance of the Other Software
with the vendor thereof and has obtained assurances that such
Other Software is Millennium Compliant. In the event that the
Company obtains information that such Other Software is not
Millennium Compliant, the Company has established and has
timely implemented written plans to migrate the Company off of
such Other Software before the Company anticipates that errors
or failures in such Other Software will occur;
(d) Each customer of Company identified on Inlogic Schedule
4.24(4)(d) has received a copy of the correspondence attached
to such Inlogic Schedule
(e) Except as set forth on Schedule 4.24(4)(e), no Intangibles are
used by Inlogic which are owned by Atevent or to which Atevent
has rights;
(f) Except as set forth on Schedule 4.24(4)(f), all Software
included in the Atevent Assets, including Third Party
Software, shall be properly licensed to and paid for by
Atevent;
(g) Immediately prior to the Atevent Transaction, the Atevent
Corporation had no assets or liabilities.
(5) MILLENNIUM COMMUNICATION. Inlogic has provided to Xxxxxx :
(a) Copies of all material forms of correspondence and statements
relating to the Millennium Compliance of the Business which
have been made by or on behalf of Inlogic to suppliers,
auditors, investors, customers or other third parties;
(b) Copies of all material reports and test plans provided to the
board or senior management that were prepared for, by or on
behalf of the Corporation relating to the Millennium
Compliance of the Business, and any deficiencies or require
remediation relating thereto;
(c) All material copies of plans for Year 2000 remediation
provided to the board of directors or senior management that
were prepared by the Corporation or third parties; and
(d) Copies of or reports summarizing the material information from
all material correspondence, statements and reports sent or
received by Inlogic with respect to the Year 2000 Compliance
of the Business' suppliers.
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(6) PERFORMANCE. The Inlogic Software:
(a) Performs in accordance with all published specifications for
such Software;
(b) Complies with all other published documentation, descriptions
and literature with respect to such Software; and
(c) Complies with all representations, warranties and other
requirements specified in all of Inlogic's License Agreements.
SECTION 4.25 TAXES.
Except as otherwise set forth on Inlogic Schedule 4.25:
(a) All returns, declarations, reports, estimates, statements,
schedules or other information or documents with respect to
Taxes (collectively, "TAX RETURNS") required to be filed by or
with respect to Inlogic have been timely filed (giving effect
to extensions granted with respect thereto), with the
appropriate tax authorities and all such Tax Returns are true,
correct, and complete in all material respects;
(b) Inlogic has paid all Taxes when due to any federal,
provincial, local, foreign or other taxing authority;
(c) There are no liens for Taxes upon any of the assets of, or
interests in Inlogic, except liens for Taxes not yet due and
payable;
(d) Other than a review of claims for research and development tax
credits by Revenue Canada, no Tax Return of Inlogic has been
audited by the relevant taxing authority. No deficiency for
any Taxes has been proposed, asserted or assessed against
Inlogic that has not been resolved and paid in full. Other
than a review of claims for research and development tax
credits by Revenue Canada, there are no outstanding waivers,
objections, extensions, or comparable consents regarding the
application of the statute of limitations or period of
reassessment with respect to any Taxes or Tax Returns that
have been given or made by Inlogic (including the time for
filing of Tax Returns or paying Taxes) and Inlogic has no
pending requests for any such waivers, extensions, or
comparable consents;
(e) Other than a review of claims for research and development tax
credits by Revenue Canada, no audit or other proceeding by any
federal, provincial, local or foreign court, governmental,
regulatory, administrative or similar authority is presently
pending with respect to
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any Taxes or Tax Return of Inlogic and Inlogic has not
received written notice of any pending audits or proceedings;
(f) Except as set forth on Inlogic Schedule 4.25(f), Inlogic has
not received a ruling from any taxing authority or signed an
agreement with any taxing authority that could reasonably be
expected to have a material adverse effect on Inlogic or the
Assets or the Business;
(g) Inlogic has complied in all material respects with all
applicable Regulations relating to the payment and withholding
of Taxes and has, within the time and the manner prescribed by
law, paid over to the proper governmental authorities all
amounts so withheld;
(h) There is no reason to suspect that any taxing authority may
claim or assess any material amount of Taxes payable by
Inlogic for any period ending on or prior to the Closing Date
and there are no facts of which Inlogic or the Inlogic
Shareholders are aware which would constitute grounds for the
assessment of any material amount of Taxes payable by Inlogic
for any period ending on or prior to the Closing Date;
(i) Except for Xxxxxx Xxxxxx each of the Inlogic Shareholders is a
resident of Canada for purposes of the Tax Acts; and
(j) No issue has been raised in writing by a federal, provincial,
local or foreign taxing authority in any examination relating
to Inlogic which could reasonably be expected to result in a
proposed deficiency for any subsequent taxable period.
SECTION 4.26 RESERVED.
SECTION 4.27 EMPLOYEE BENEFIT PROGRAMS.
(1) Inlogic Schedule 4.27 lists every Employee Program (as defined below)
that has been maintained (as defined below) by Inlogic at any time
during the three-year period ending on the date of the Closing.
(2) To the knowledge of the Inlogic Shareholders, there has been no failure
of any party to comply in any material respects with any laws
applicable to the Employee Programs that have been maintained by
Inlogic. With respect to any Employee Program ever maintained by
Inlogic, there has occurred no material violation of, or breach of any
duty under applicable law or any Tax law requirements, or conditions to
favourable Tax treatment, applicable to such plan), which could result,
directly or indirectly, in any Taxes, penalties or other liability to
Inlogic. No litigation, arbitration, or governmental administrative
proceeding (or investigation) or other proceeding (other than those
relating to routine claims for benefits) is pending or, to the
knowledge
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of the Inlogic Shareholders, threatened with respect to any Employee
Program.
(3) With respect to each Employee Program maintained by Inlogic within the
three years preceding the Closing, complete and correct copies of the
following documents (if applicable to such Employee Program) have
previously been delivered to Canadian Buyer: (i) all documents
embodying or governing such Employee Program, and any funding medium
for the Employee Program (including, without limitation, trust
agreements) as they may have been amended; (ii) the summary plan
description for such Employee Program (or other descriptions of such
Employee Program provided to employees) and all modifications thereto;
(iii) any insurance policy (including any fiduciary liability insurance
policy) related to such Employee Program; (iv) any documents evidencing
any loan to an Employee Program that is an employee stock ownership
plan; and (v) all other materials reasonably necessary for Canadian
Buyer to perform any of its responsibilities with respect to any
Employee Program subsequent to the Closing (including, without
limitation, health care continuation requirements).
(4) Other than as set forth on Inlogic Schedule 4.27(4), Inlogic has not
announced any plan or legally binding commitment to create any
additional Employee Program which is intended to cover employees or
former employees of Inlogic or to amend or modify any existing Employee
Program which covers or has covered employees or former employees of
Inlogic.
(5) Reserved.
(6) No event has occurred in connection with which Inlogic or any Employee
Program, directly or indirectly, could be subject to any material
liability (A) under any Regulation or governmental order relating to
any Employee Programs or (B) pursuant to any obligation of Inlogic to
indemnify any person against liability incurred under any such
Regulation or order as they relate to the Employee Programs.
(7) Except as described on Inlogic Schedule 4.27(7), neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will result in the acceleration or creation of any
rights of any person to benefits under any Employee Program (including,
without limitation, the acceleration of the vesting or exercisability
of any stock options, the acceleration of the vesting of any restricted
stock, or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).
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(8) Each Employee Program and related trust agreement or other funding
instrument, as applicable, which covers or has covered employees or
former employees of Inlogic (with respect to their relationship with
such entities) is legally valid and binding and in full force and
effect.
(9) There is no contract, agreement, plan or arrangement covering any
employee or former employee of Inlogic, other than stock option plans,
that, individually or collectively, provides for the payment by Inlogic
of any amount that is not deductible under the Income Tax Act (Canada).
(10) All contributions required to be made by Inlogic with respect to any
Employee Program due as of any date through and including the Closing
Date have been made when due.
(11) For purposes of this section:
(a) "EMPLOYEE PROGRAM" means (A) any employee benefit plan,
including, but not limited to, health, dental, insurance, and
similar plans and programs for the benefit of employees and
(B) any employment, consulting, severance or other similar
contract, arrangement or policy, any stock option plan,
phantom stock plan, bonus or incentive award plan, deferred
compensation agreement, supplemental income arrangement, and
vacation plan, and any other employee benefit plan, agreement,
or arrangement not described in (A) above. In the case of an
Employee Program funded through a trust, each reference to
such Employee Program shall include a reference to such trust;
and
(b) An entity "MAINTAINS" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to
provide) benefits under such Employee Program, or has any
obligation (by agreement or under applicable law) to
contribute to or provide benefits under such Employee Program,
or if such Employee Program provides benefits to or otherwise
covers employees of such entity, or their spouses, dependants,
or beneficiaries.
(12) There are no pension plans existing in respect of the employees of
Inlogic.
SECTION 4.28 INSURANCE.
Inlogic Schedule 4.28 contains a complete and accurate list of all
policies or binders of fire, liability, title, worker's compensation, directors
and officers liability, errors and omissions, product liability and other forms
of insurance maintained by Inlogic. All such insurance coverage applicable to
Inlogic, the Business and the Assets is in full force and effect and provides
coverage as may be required by applicable Regulation and by any and all
Contracts to which Inlogic is a party. There is no Default under any such
coverage nor is there presently any failure to
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give notice or present any claim under any such coverage in a due and timely
fashion. There are no outstanding unpaid premiums except in the ordinary course
of business and no notice of cancellation or non-renewal of any such coverage
has been received. There are no provisions in such insurance policies for
retroactive or retrospective premium adjustments. All products liability,
general liability and workers' compensation insurance policies maintained by
Inlogic are presently occurrence policies and not claims made policies except
for Inlogic's professional liability (error and admissions), fiduciary liability
and employment practices policies. There are no outstanding performance bonds
covering or issued for the benefit of Inlogic. To the knowledge of the Inlogic
Shareholders, no insurer has advised Inlogic that it intends to reduce coverage,
increase premiums or fail to renew existing policy or binder.
SECTION 4.29 ACCOUNTS RECEIVABLE.
Inlogic Schedule 4.29 includes an accurate and complete list of
accounts receivable, including the days outstanding of such accounts receivable,
as of the date hereof and as of the Closing Date. Inlogic Schedule 4.29
indicates the number of days such accounts receivable have been outstanding as
of the respective date of the information. The accounts receivable set forth on
Inlogic Schedule 4.29 and the accounts receivable set forth on the Base Balance
Sheet, represent, and the accounts receivable to be set forth in the Closing
Balance Sheet will represent, bona fide claims of Inlogic against debtors for
sales, services performed or other charges arising on or before such date, and
all the goods delivered and services performed which gave rise to said accounts
where delivered or performed in all material respects in accordance with the
applicable orders, Contracts or customer requirements. Said accounts receivable
are subject to no defenses, counterclaims or rights of setoff and are fully
collectible in the ordinary course of business without cost in collection
efforts therefor, except to the extent of the appropriate reserves for bad debts
on accounts receivable as set forth on the Base Balance Sheet and, in the case
of accounts receivable arising since the Base Balance Sheet Date, to the extent
of a reasonable reserve rate for bad debts on accounts receivable which is not
greater than the rate reflected by the reserve for bad debts on the Base Balance
Sheet.
SECTION 4.30 ENVIRONMENTAL MATTERS.
(1) Except for Hazardous Materials contained in cleaning and other office
products used in the ordinary course of Inlogic's business (i) Inlogic
has not ever generated, transported, used, stored, treated, disposed
of, or managed any Hazardous Waste (as defined below); (ii) to the
knowledge of the Inlogic Shareholders, no Hazardous Material (as
defined below) has ever been or is threatened to be spilled, released,
or disposed of at any site presently or formerly owned, operated,
leased, or used by Inlogic or has ever been located in the soil or
groundwater at any such site; (iii) to the knowledge of the Inlogic
Shareholders, no Hazardous Material has ever been transported from
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any site presently or formerly owned, operated, leased, or used by
Inlogic for treatment, storage, or disposal at any other place; (iv) to
the knowledge of the Inlogic Shareholders, Inlogic does not presently
own, operate, lease, or use, nor has it previously owned, operated,
leased, or used any site on which underground storage tanks are or were
located; and (v) to the knowledge of the Inlogic Shareholders no lien
has ever been imposed by any governmental agency on any property,
facility, machinery, or equipment owned, operated, leased, or used by
Inlogic in connection with the presence of any Hazardous Material.
(2) (i) Inlogic does not have liability under, of has ever violated in any
material respect, any Environmental Law (as defined below); (ii) to the
knowledge of the Inlogic Shareholders, Inlogic does not have any
property owned, operated, leased, or used by it, and any facilities and
operations of Inlogic thereon, are presently in compliance in all
material respects with all applicable Environmental Laws; (iii) Inlogic
has not ever entered into or been subject to any judgement, consent
decree, compliance order, or administrative order with respect to any
environmental or health and safety matter or received any request from
any governmental authority or agency for information, notice, demand
letter, administrative inquiry, or formal or informal complaint or
claim with respect to any environmental or health and safety matter or
the enforcement of any Environmental Law; and (iv) the Inlogic
Shareholders have no reason to believe that any of the items enumerated
in clause of this subsection will be forthcoming.
(3) The Inlogic Shareholders have made available to the Canadian Buyer
copies of all documents and records, and information in the possession
of Inlogic Shareholders and Inlogic concerning any environmental or
health and safety matter relevant to Inlogic, whether generated by
Inlogic or others, including, without limitation, environmental audits,
environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control
plans, and reports, correspondence, Permits, licenses, approvals,
consents, and other authorizations related to environmental or health
and safety matters issued by any governmental agency.
(4) For purposes of this Section 4.30, (i) "HAZARDOUS MATERIAL" shall mean
and include any hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, toxic substance, pollutant,
contaminant, or other substance which may pose a threat to the
environment or to human health or safety, as defined or regulated under
any Environmental Law except for any Hazardous Material contained in
cleaning and other office products used in the ordinary course of
Inlogic's Business; (ii) "HAZARDOUS WASTE" shall mean and include any
contaminant or hazardous waste as defined or regulated under any
Environmental Law; (iii) "ENVIRONMENTAL LAW" shall mean any
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environmental or health and safety-related Regulation, including,
without limitation, the Environmental Protection Act (Ontario) and the
Occupational Health and Safety Act (Ontario), whether existing as of
the date hereof, previously enforced, or subsequently enacted; (iv)
"INLOGIC" shall mean and include Inlogic and all other entities for
whose conduct Inlogic is or may be held responsible under any
Environmental Law.
SECTION 4.31 WARRANTY OR OTHER CLAIMS.
There are no existing or, to the knowledge of the Inlogic Shareholders
(which knowledge shall be unrebuttably presumed with respect to any customer
that has not paid all amounts owed to Inlogic when due) threatened service
liability, warranty or other similar claims, or any reasonable basis upon which
a material claim of such nature could be based, against Inlogic for services
which are negligent, defective or fail to meet any service warranties. Since the
Balance Sheet Date, no claim has been asserted against Inlogic for
re-negotiation or price re-determination of any business transaction, and, to
the knowledge of the Inlogic Shareholders, there are no facts known to the
Inlogic Shareholders upon which any such claim could be based.
SECTION 4.32 RESERVED.
SECTION 4.33 POWERS OF ATTORNEY.
(1) Inlogic does not have any outstanding power of attorney with respect to
or affecting any transaction contemplated by this Agreement.
(2) The Inlogic Shareholders do not have any outstanding power of attorney
with respect to or affecting any transaction contemplated by this
Agreement
SECTION 4.34 INLOGIC DISCLOSURE.
The representations, warranties and statements contained in this
Agreement and in the Exhibits and Schedules hereto do not contain any untrue
statement of a material fact, and, when taken together, do not omit to state a
material fact required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
SECTION 4.35 SHAREHOLDERS' AGENT.
(1) Xxxxxxxx Xxxxx shall be constituted and appointed as agent
("SHAREHOLDERS' AGENT") for and on behalf of the Inlogic Shareholders
to give and receive notices and communications under this Agreement, to
authorize delivery to Xxxxxx of the Indemnity Escrow Shares or other
property from the Escrow Fund in satisfaction of claims by Xxxxxx, to
object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of
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arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgement of the Shareholders' Agent
for the accomplishment of the foregoing. Such agency may be changed by
the holders of a majority in interest of the Indemnity Escrow Fund from
time to time upon not less than 10 days' prior written notice to
Xxxxxx. No bond shall be required of the Shareholders' Agent, and the
Shareholders' Agent shall receive no compensation for his services.
Notices or communications to or from the Shareholders' Agent shall
constitute notice to or from each of the Inlogic Shareholders for this
Agreement and for the other agreements contemplated hereby.
(2) The Shareholders' Agent shall not be liable for any act done or omitted
hereunder as Shareholders' Agent while acting in good faith and in the
exercise of reasonable judgement, and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good
faith. The Inlogic Shareholders shall severally indemnify the
Shareholders' Agent and hold him harmless against any loss, liability
or expense incurred without gross negligence or bad faith on the part
of the Shareholders' Agent and arising out of or in connection with the
acceptance or administration of his duties hereunder.
(3) The Shareholders' Agent shall have reasonable access to information
about Inlogic and the reasonable assistance of Inlogic's officers and
employees for purposes of performing its duties and exercising its
rights hereunder, provided that the Shareholders' Agent shall treat
confidentially and not disclose any nonpublic information from or about
Inlogic to anyone (except on a need to know basis to individuals who
agree to treat such information confidentially).
SECTION 4.36 OFFSHORE INVESTMENT REPRESENTATIONS.
Each Inlogic Shareholder hereby represents, warrants and covenants as
set forth below, and all such representations and warranties shall be true and
correct as of the Closing Date as if then made and shall survive the Closing:
(a) Such Inlogic Shareholder (other than Xxxxxx Xxxxxx) is not a
U.S. Person (as defined in Regulation S under the Securities
Act of 1933 Act, as amended (the "SECURITIES ACT")), is not an
affiliate (as defined in Rule 501(b) under the Securities Act,
of Xxxxxx and is not a corporation that has been formed
principally for the purpose of investing in securities not
registered under the Securities Act. Except for Xxxxxx Xxxxxx,
none of the shareholders or other equity owners of each
Inlogic Shareholder that is a corporation are U.S. Persons.
Pursuant to Regulation S, Rule 903(k)(1), a "U.S. PERSON"
means:
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(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or
incorporated under the laws of the States;
(iii) Any estate of which any executor or administrator is
a U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in
the United States;
(vi) Any non-discretionary account or similar account
(other than an estate or trust held by a dealer or
other fiduciary for the benefit or account of a U.S.
person;
(vii) Any discretionary account or similar account (other
than an estate or trust) held by a dealer or other
fiduciary organized, incorporated, or (if an
individual) resident in the United States; and
(viii) Any partnership or corporation if:
(A) Organized or incorporated under the laws of
any foreign jurisdiction; and
(B) Formed by a U.S. person principally for the
purpose of investing in securities not
registered under the Securities Act, unless
it is organized or incorporated, and owned,
by accredited investors (as defined in Rule
501(a)) who are not natural persons, estates
or trusts;
(b) Such Inlogic Shareholder is purchasing the Exchangeable Shares
or, in the case of Xxxxxx Xxxxxx, the Xxxxxx Common Stock and
will exchange such Exchangeable Shares for Xxxxxx Common Stock
for its own account for the purpose of investment and not (A)
with a view to, or for sale in connection with, any
distribution thereof or (B) for the account of, as a nominee
or agent for, or on behalf of any U.S. Person, and has no
current intent to exchange the Exchangeable Shares for Xxxxxx
Common Stock;
(c) Except for Xxxxxx Xxxxxx, at the time of the origination of
contact concerning this Agreement and the date of the
execution and delivery of this Agreement such Inlogic
Shareholder was outside the United States;
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(d) Such Inlogic Shareholder:
(i) Understands that the Exchangeable Shares shall be
exchangeable upon request by such Inlogic Shareholder
into Xxxxxx Common Stock (the "SECURITIES"). Such
Exchangeable Shares shall be non-voting and
non-transferable until exchanged into the Securities;
(ii) Understands that the Securities are distributed under
Regulation S under the Securities Act, or under
another exemption from the registration requirements
of the Securities Act and the Inlogic Shareholders
will not, during the period commencing on the date of
the exchange of the Exchangeable Shares into the
Securities and ending on the first anniversary of
such date, or such shorter period as may be permitted
by Regulation S or other applicable securities law,
(the "RESTRICTED PERIOD"), offer, sell, pledge or
otherwise transfer the Securities in the United
States, or to a U.S. Person for the account or
benefit of a U.S. Person;
(iii) Understands that the Securities are being offered in
a transaction not involving any public offering
within the meaning of the Securities Act and that
neither the Exchangeable Shares nor the Securities
have been registered under the Securities Act, and
will, during the Restricted Period, offer, sell,
pledge or otherwise transfer the Securities only in
accordance with Rule 904 of Regulation S under the
Securities Act, pursuant to registration under the
Securities Act or pursuant to an available exemption
from the registration requirements of the Securities
Act (and based upon an opinion of counsel if the
Company so requests), and in accordance with all
applicable state and foreign securities laws;
(iv) Will, after expiration of the Restricted Period,
offer, sell, pledge or otherwise transfer the
Securities only pursuant to registration under the
Securities Act or an available exemption therefrom
(and based upon an opinion of counsel, if the Company
so requests) and, in any case, in accordance with all
applicable state and foreign securities laws; and
(v) Has not in the United States, engaged in, and prior
to the expiration of the Restricted Period will not
engage in, any short selling of any equity security
issued by Xxxxxx (including, without limitation, the
Xxxxxx Common Stock) or any hedging transaction with
respect to any such equity security, including
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without limitation, put, call or other option
transaction, option writing and equity swaps;
(e) None of the Inlogic Shareholders, its affiliates or any person
acting on behalf of any Inlogic Shareholder or any such
affiliates has engaged, or will engage, in any directed
selling efforts (within the meaning of Rule 901(b) of
Regulation S under the Securities Act) with respect to the
Securities and they, their affiliates and all persons acting
on their behalf have complied and will comply with the
"OFFERING RESTRICTIONS" requirements of Regulation S under the
Securities Act;
(f) The transactions contemplated by this Agreement have not been
pre-arranged with a buyer (other than Xxxxxx) located in the
United States or with a U.S. Person, and are not part of a
plan or scheme to evade the registration requirements of the
Securities Act;
(g) Neither such Inlogic Shareholder, any affiliate of such
Inlogic Shareholder, nor any person acting on their behalf has
undertaken or carried out any activity for the purpose of, or
that could reasonably be expected to have the effect of,
conditioning the market in the United States, its territories
or possessions, for any of the Securities. The Inlogic
Shareholder agrees not to cause any advertisement of the
Securities to be published in any newspaper or periodical or
posted in any public place and not to issue any circular
relating to the Securities;
(h) Such Inlogic Shareholder understands that the Securities have
not been registered under the Securities Act by reason of a
specific exemption therefrom, and may not be transferred or
resold except pursuant to an effective registration statement
or exemption from registration (and based upon an opinion of
counsel, if Xxxxxx so requests) and each certificate
representing the Securities will be endorsed with the
following legends (provided the certificates issued to Xxxxxx
Xxxxxx shall not include the reference to Regulation S):
(i) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS,
BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER
HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON
EXEMPTIONS UNDER THE SECURITIES ACT INCLUDING
REGULATION S, AND STATUTORY EXEMPTIONS UNDER
APPLICABLE STATE AND FOREIGN SECURITIES LAWS. THESE
SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED
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OR ASSIGNED, EXCEPT IN A TRANSACTION IN ACCORDANCE
WITH REGULATION S OR WHICH IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER PROVISIONS OF THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT THEREUNDER;
AND IN THE CASE OF AN EXEMPTION, ONLY IF THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH TRANSACTION
DOES NOT REQUIRE REGISTRATION OF ANY SUCH SECURITIES.
THESE SECURITIES MAY NOT BE A PART OF ANY HEDGING
TRANSACTIONS THAT DO NOT COMPLY WITH THE SECURITIES
ACT; and
(ii) Any legend required to be placed thereon by
applicable federal or state securities laws;
(i) Such Inlogic Shareholder has substantial experience in
business and finance and in evaluating and investing in
securities in companies similar to Xxxxxx so that he is
capable of evaluating the merits and risks of acquiring the
Securities to be issued to such Inlogic Shareholder and has
the capacity to protect his own interests. Such Inlogic
Shareholder must bear the economic risk of holding the
Securities indefinitely unless such securities are registered
pursuant to the Securities Act, or an exemption from
registration is available for the disposition thereof. Such
Inlogic Shareholder understands that there is no assurance
that any exemption from registration under the Securities Act
will be available;
(j) Such Inlogic Shareholder understands that the availability of
the exemptions from registration under the Securities Act
depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of such Inlogic
Shareholder's representations as expressed herein;
(k) Such Inlogic Shareholder understands that a public market has
recently been created for the Securities but that there is no
assurance that a public market will be maintained for the
Securities;
(l) Such Inlogic Shareholder has received and read the Xxxxxx SEC
reports and financial statements and has had an opportunity to
discuss Daleen's business, management and financial affairs
with its management. Such Inlogic Shareholder has also had an
opportunity to ask questions of and receive answers from
officers of Xxxxxx regarding
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the terms and conditions of acquiring the Securities pursuant
to this Agreement, which questions were answered to such
Inlogic Shareholder's satisfaction; however, such discussions
with officers of Xxxxxx shall not affect the Inlogic
Shareholders' right to rely on the representations and
warranties of Xxxxxx and Canadian Buyer set forth in Article 5
hereof;
(m) Xxxxxx Xxxxxx represents and warrants that he is a resident of
the State of Georgia and that he has:
(i) An individual net worth or joint net worth with his
spouse in exceeding $1,000,000.00 at the Closing
Date; or,
(ii) Individual income in excess of $200,000.00 in each of
fiscal 1997 and 1998 or joint income with his spouse
in excess of $300,000 in each of fiscal 1997 and 1998
and who has a reasonable expectation of reaching the
same income level in the current year; or
In determining "INCOME," any amounts attributable to
tax-exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for
depletion, contributions to XXX or Xxxxx retirement plans,
alimony payments and any amount by which income from long-term
capital gains has been reduced in arriving at adjusted gross
income should be added to the gross income .
SECTION 4.37 XXXX-XXXXX-XXXXXX.
In the previous fiscal year and the current fiscal year of Inlogic (i)
Inlogic has not and does not hold assets located in the United States having an
aggregate book value of U.S. $15 million or more, and (ii) Inlogic has not made
aggregate sales in or into the United States equalling U.S. $25 million or more
in revenues.
SECTION 4.38 EXCHANGE RATIO.
The Inlogic Shareholders acknowledge and agree that the Purchase Price
to be paid per share of the Purchased Securities set forth in Article II hereof
is properly allocated among the outstanding shares of Inlogic common shares,
Class A shares, Class C shares and Class D shares.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF XXXXXX AND CANADIAN
BUYER
As a material inducement to the Inlogic Shareholders to enter into this
Agreement and consummate the transactions contemplated hereby, Xxxxxx and
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Canadian Buyer jointly and severally hereby make the representations and
warranties to the Inlogic Shareholders as follows, which representations and
warranties are, as of the date hereof, and will be, as of the Closing Date, true
and correct:
SECTION 5.1 ORGANIZATION.
(1) XXXXXX. Xxxxxx is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate
power to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or
such business is conducted by it. Each of Daleen's Subsidiaries is duly
organized or incorporated (as applicable) and in good standing under
the laws of the state of its organization or incorporation with full
corporate power (as applicable) to own or lease its properties and to
conduct its business in the manner and in the places where such
properties are owned or leased or such business is conducted by it.
(2) CANADIAN BUYER. Canadian Buyer is an unlimited liability company
incorporated, organized and in good standing under the NS Act with full
corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such
properties are owned or leased or such business is or is proposed to be
conducted. Canadian Buyer is an indirect wholly-owned subsidiary of
Xxxxxx.
(3) CAPITAL STRUCTURE OF XXXXXX. (a) The authorized capital stock of Xxxxxx
consists of (i) 70,000,000 shares of Common Stock, $.01 par value per
share, of which 19,036,072 shares are issued and outstanding (not
including shares reserved for issuance upon the exercise of outstanding
warrants and options) and no shares were held as treasury shares, in
each case as of December 1, 1999 and (ii) 10,000,000 shares of serial
preferred stock none of which are issued and outstanding. Xxxxxx has
reserved 4,444,390 shares of Xxxxxx Common Stock for issuance upon the
exercise of outstanding options or warrants to purchase Xxxxxx Common
Stock.
(4) CAPITAL STRUCTURE OF CANADIAN BUYER. The authorized capital of Canadian
Buyer consists of 10,000,000 Common Shares without par value and
100,000,000 Exchangeable Shares. Immediately after Closing the issued
capital of Canadian Buyer will consist of 1 common share and 2,160,239
Exchangeable Shares.
(5) EXCHANGEABLE SHARES. On the Closing Date, all necessary corporate
action will have been taken by the Canadian Buyer to duly authorize the
issuance and delivery of the Exchangeable Shares to the Inlogic
Shareholders pursuant to Section 2.3 and upon the satisfaction of the
terms and conditions hereof
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and the consummation of the transactions contemplated hereby and the
issue of such Exchangeable Shares, such Exchangeable Shares will be
issued as fully paid and non-assessable free and clear of any and all
Encumbrances, and Xxxxxx and Canadian Buyer have no knowledge of any
reason why Inlogic Shareholders should not be entitled to acquire
Xxxxxx Common Stock.
SECTION 5.2 AUTHORITY.
(1) Xxxxxx and Canadian Buyer have full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be
executed and delivered by Xxxxxx and Canadian Buyer pursuant to this
Agreement and to carry out the transactions contemplated hereby. The
execution, delivery and performance by Xxxxxx and Canadian Buyer of
this Agreement and each such other agreement, document and instrument
have been duly authorized by all necessary organizational action of
Xxxxxx and Canadian Buyer and no other action on the part of Xxxxxx and
Canadian Buyer is required in connection therewith.
(2) This Agreement and each other agreement, document and instrument
executed and delivered by Xxxxxx and Canadian Buyer pursuant to this
Agreement constitutes, or when executed and delivered will constitute,
valid and binding obligations of Xxxxxx and Canadian Buyer enforceable
in accordance with their terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject to the effect of
general principles of equity, including, without limitation, the
possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
The execution, delivery and performance by Xxxxxx and Canadian Buyer of
this Agreement and each such agreement, document and instrument:
(a) Does not and will not violate any provision of the Memorandum
and Articles of Association of Canadian Buyer;
(b) Does not and will not violate any provision of the Certificate
of Incorporation of Xxxxxx and the Bylaws;
(c) Except as set forth on Xxxxxx Schedule 5.2(2)(c), does not and
will not violate any laws of Canada or of any province or the
laws of the United States or of any state or any other
jurisdiction applicable to Xxxxxx and Canadian Buyer or
require Xxxxxx and Canadian Buyer to obtain any approval,
consent or waiver of, or make any filing with, any person or
entity (governmental or otherwise) which has not been obtained
or made or opinion to Closing other than any such approval,
consent or waiver of or filing with respect to which the
failure to so
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obtain will not have a material adverse effect on the business
and operation of Canadian Buyer, individually, or Xxxxxx and
its Subsidiaries, taken as a whole, following the Closing; and
(d) Does not and will not result in a breach of, constitute a
Default under, accelerate any obligation under, or give rise
to a right of termination of any indenture, loan or credit
agreement, or other agreement mortgage, lease, permit, order,
judgement or decree to which Xxxxxx, its Subsidiaries or the
Canadian Buyer is bound or affected, or result in the creation
or imposition of any mortgage, pledge, lien, security interest
or other charge or similar encumbrance on any of the assets or
capital stock of Xxxxxx or Canadian Buyer and which is
material to the business and financial condition of Xxxxxx or
Canadian Buyer on a consolidated basis, except in the case of
clause (b), for such breaches, defaults, accelerations or
terminations as would not, individually or in the aggregate,
have a material adverse effect.
SECTION 5.3 SEC DOCUMENTS; FINANCIAL STATEMENTS.
(1) Xxxxxx has made available to Inlogic a true and complete copy of each
statement, report, registration statement (with the prospectus in the
form filed pursuant to Rule 424(b) of the Securities Act), and other
filing filed with the SEC by Xxxxxx since July 6, 1999, and, prior to
the Closing Date, Xxxxxx will have furnished Inlogic with true and
complete copies of any additional reports, including the exhibits
thereto, filed with the SEC by Xxxxxx prior to the Closing Date
(collectively, the "XXXXXX SEC DOCUMENTS"). All documents required to
be filed as exhibits to the Xxxxxx SEC Documents have been so filed,
and all material contracts so filed as exhibits are in full force and
effect, except as disclosed in the Xxxxxx SEC Documents and those which
have expired in accordance with their terms, and neither Xxxxxx nor any
of its subsidiaries is in default thereunder. As of their respective
filing dates, the Xxxxxx SEC Documents complied in all material
respects with the requirements of the Exchange Act and the Securities
Act, and none of the Xxxxxx SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed
Xxxxxx SEC Document. The financial statements of Xxxxxx, including the
notes thereto, included in the Xxxxxx SEC Documents (the "XXXXXX
FINANCIAL STATEMENTS") were complete and correct in all material
respects as of their respective dates, complied as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto as of
their respective dates, and have been prepared in accordance with U.S.
GAAP applied on a basis consistent throughout the periods indicated and
consistent with each other
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(except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements included in the Xxxxxx SEC
Documents, as permitted by Form 10-Q of the SEC). The Xxxxxx Financial
Statements fairly present in all material respects the consolidated
financial condition and operating results of Xxxxxx and its
subsidiaries at the dates and during the periods indicated therein
(subject, in the case of unaudited statements, to normal, recurring
year-end adjustments). There has been no change in Xxxxxx accounting
policies except as described in the notes to the Xxxxxx Financial
Statements.
(2) Except as set forth in Xxxxxx SEC Documents from September 30, 1999
through the date hereof there has not been any material adverse change
in the business, operations, properties, assets, liabilities, condition
(financial or other), results of operations or prospects of Xxxxxx and
its Subsidiaries, taken as a whole.
SECTION 5.4 SECURITIES AND BLUE SKY LAWS.
Xxxxxx shall take such steps as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable to the
issuance of the Xxxxxx Common Stock in connection with the transactions
contemplated hereby. Inlogic shall use its best efforts to assist Xxxxxx as may
be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Xxxxxx
Common Stock in connection with the Reorganization.
SECTION 5.5 LISTING OF ADDITIONAL SHARES.
Xxxxxx shall file with the Nasdaq National Market a listing application
for and use reasonable efforts to obtain a listing of additional shares with
respect to Xxxxxx Common Stock underlying the Exchangeable Shares.
SECTION 5.6 ISSUANCE OF XXXXXX COMMON STOCK.
On or prior to the Closing Date, Xxxxxx shall execute and deliver the
Exchange Trust Agreement and the Support Agreement with respect to that number
of Shares of Xxxxxx Common Stock issuable upon the exchange of the Exchangeable
Shares outstanding at the Closing Date.
SECTION 5.7 EXCHANGEABLE SHARES.
Xxxxxx and Canadian Buyer shall refuse to recognize on its books any
sale, pledge or other transfer of the Exchangeable Shares that is not conducted
(i) in accordance with Regulation S of the Securities Act, (ii) pursuant to
registration pursuant to the Securities Act or (iii) in accordance with another
available exemption other than Regulation S.
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SECTION 5.8 MILLENNIUM COMPLIANCE.
(a) Except as noted in Xxxxxx Schedule 5.8, all Software (as
defined in this Section 5.8) owned and released by Xxxxxx,
whether developed by or on behalf of Xxxxxx, currently under
development or otherwise ("Xxxxxx Owned Software") other than
Software generally available for license at retail, is
"Millennium Compliant" except where the failure to be
Millennium Compliant will not result in a Material Adverse
Effect on Xxxxxx. For purposes of this Section, "Software"
means any computer program, operating system, applications
system, microcode, firmware or software of any nature, whether
operational, under development or inactive, including all
object code, source code, technical manuals, compilation
procedures, execution procedures, flow charts, programmers
notes, user manuals and other documentation thereof, whether
in machine-readable form, programming language or any other
language or symbols and whether stored, encoded, recorded or
written on disk, tape, film, memory device, paper or other
media of any nature.
For the purposes of this Section "Millennium Compliant" means:
(i) The functions, calculations, and other computing
processes of the Xxxxxx Owned Software,
(collectively, "PROCESSES") perform in an accurate
manner regardless of the date in time on which the
Processes are actually performed and regardless of
the date input to the Xxxxxx Owned Software, whether
before, on, or after January 1, 2000, and whether or
not the dates are affected by leap years;
(ii) The Xxxxxx Owned Software accept, store, sort,
extract, sequence, and otherwise manipulate date
inputs and date values, and return and display date
values, in an accurate manner regardless of the dates
used, whether before, on, or after January 1, 2000;
(iii) The Xxxxxx Owned Software will function without
interruptions caused by the date in time on which the
Processes are actually performed or by the date input
to the Xxxxxx Owned Software whether before, on, or
after January 1, 2000;
(iv) The Xxxxxx Owned Software accept and respond to two
(2) digit year and four (4) digit year date input in
a manner that resolves any ambiguities as to the
century in a defined, predetermined, and accurate
manner;
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(v) The Xxxxxx Owned Software display, print, and provide
electronic output of date information in ways that
are unambiguous as to the determination of the
century; and
(vi) The Xxxxxx Owned Software has been tested by Xxxxxx
to determine whether the Xxxxxx Owned Software is
Millennium Compliant. Xxxxxx shall notify the Inlogic
Shareholders immediately of the results of any tests
or other information that indicates the Xxxxxx Owned
Software is not Millennium Complaint.
ARTICLE 6
COVENANTS
SECTION 6.1 FURTHER ASSURANCES.
(1) Upon the terms and subject to the conditions contained herein, Xxxxxx
and Canadian Buyer on the one hand, and the Inlogic Shareholders on the
other hand, agree, both before and after the Closing, (a) to use all
reasonable efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement, (b) to execute any documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out
any of the transactions contemplated hereunder, and (c) to co-operate
with each other in connection with the foregoing. Without limiting the
foregoing, the Inlogic Shareholders, on the one hand, and Canadian
Buyer on the other hand, agree to use their respective commercially
reasonable efforts (i) to obtain the consents of each relevant party
with respect to license agreements between any third party, and Inlogic
(as listed in Schedule 6.1); provided, however, that to the extent
Canadian Buyer fails to co-operate (i) by providing on a timely basis
any financial or similar information reasonably requested by the party
whose consent is sought, including, without limitation, any pro forma
financial statements with respect to Buyer reflecting the consummation
of the transactions contemplated hereby, or (ii) executing and
delivering any assumption agreement or similar instrument requested by
any lessor or sub-lessor and which is reasonably acceptable to Buyer in
connection with the obtaining of any consent with respect to a Contract
or Facility Lease listed on Schedules 4.8 and/or 4.12, Inlogic
Shareholders shall not be required to obtain said consent hereunder and
the obtaining of said consent shall no longer be deemed a condition to
Closing under Article IX hereof; provided, further that no party shall
be required to make any payments, commence litigation or agree to
modifications of the terms thereof in order to obtain any such waivers,
consents or approvals, (ii) to obtain all necessary Permits as are
required to be
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obtained under any Regulations, (iii) to give all notices to, and make
all registrations and filings with third parties, including without
limitation submissions of information requested by governmental
authorities, and (iv) to fulfill all conditions to this Agreement.
(2) Xxxxxx agrees to (i) cause Canadian Buyer to fulfill its obligations
under this Agreement and (ii) take such actions as may be reasonably
necessary to cause Canadian Buyer to take such actions as it is
required to take hereunder.
(3) The Canadian Buyer and each of the Inlogic Shareholders agree to elect
jointly under Section 85 of the Income Tax Act (Canada) (the "ITA") and
under comparable provisions of any applicable provincial tax
legislation, in the prescribed form in connection with the purchase and
sale hereunder.
(4) In order to make this election, an Inlogic Shareholder must provide to
the Canadian Buyer at Suite 230, 000 Xxxxx Xxxxx Xxxx, Xxxx Xxxxx,
Xxxxxxx 00000 two signed copies of the necessary election forms on or
before 120 days after the Closing Date, duly completed with the details
of the number of Purchase Shares transferred and the applicable agreed
amount for purposes of the election (which agreed amount shall be
determined in the sole discretion of the relevant Inlogic Shareholder
subject only to the limits imposed by applicable law). Subject to the
election forms complying with the provisions of the applicable law, the
forms will be returned within 30 days of receipt to the Inlogic
Shareholder signed by the Canadian Buyer for filing by the Inlogic
Shareholder with the appropriate taxing authorities. With the exception
of the execution of the election by the Canadian Buyer, compliance with
requirements for a valid election will be the sole responsibility of
the Inlogic Shareholder making the election. Except for the obligation
set forth herein the Canadian Buyer is not responsible or liable for
taxes, interests, penalties, damages or expenses resulting from the
failure by anyone to properly complete any election or to properly file
it within the time prescribed and in the form prescribed under the
relevant Tax Acts.
SECTION 6.2 EXCHANGEABLE DOCUMENTATION.
Xxxxxx, Canadian Buyer and Inlogic Shareholders agree to execute and
deliver or cause to be executed and delivered on Closing (i) a support agreement
between Xxxxxx and the Canadian Buyer and the Inlogic Shareholders in the form
or substantially in the form of Exhibit 6.2(A) (the "SUPPORT AGREEMENT") and
(ii) an exchange trust agreement among Xxxxxx, Canadian Buyer and Inlogic
Shareholders and a trustee in the form or substantially in the form of Exhibit
6.2(B) (the "EXCHANGE TRUST AGREEMENT")
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SECTION 6.3 CONDUCT OF BUSINESS.
Except as set forth on Inlogic Schedule 6.3, between the date of this
Agreement and the date of the Closing, Inlogic will, and the Inlogic
Shareholders will cause Inlogic to:
(a) Conduct its business only in the ordinary course consistent
with past operations and refrain from changing or introducing
any method of management or operations except in the ordinary
course of business;
(b) With the exception of the termination of the Facility Lease
and an offer to lease of Inlogic, not enter into, extend,
modify, amend, terminate or renew any Contract or Lease,
except in the ordinary course of business;
(c) Not sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Assets, or any
interests therein;
(d) Not incur any Liability for indebtedness, guarantee the
obligations of others, indemnify others or, except
endorsements for collection of deposits in the ordinary course
of business, incur any other Liability;
(e) Refrain from making any change or incurring any obligation to
make a change in its charter document other than are required
to effect the steps referred to in Section 2.1 hereof;
(f) Refrain from issuing any capital stock or securities, options
or other instruments convertible into or exchangeable for
capital stock, declaring, setting aside or paying any
dividend, making any other distribution in respect of its
capital stock or making any direct or indirect redemption,
purchase or other acquisition of its capital stock;
(g) Refrain from making any material change in the method of
determining compensation (whether salary or bonus) payable or
to become payable to any of its employees and use all
reasonable efforts in the ordinary course of business to
maintain Inlogic's workforce at its current level and make no
material adjustment in wages or hours of work, nor enter into
any employment agreement, or adopt any new Employee Programs
or other benefit or severance plan or amend or otherwise
modify in any material respect any existing employment
agreement, Employee Programs or other benefit or severance
plan;
(h) Refrain from entering into any arrangement or amending any
existing arrangement between Inlogic and any officer,
director, or any of the Inlogic Shareholders (or any entity
affiliated with such persons), except for arrangements
contemplated by this Agreement or the Disclosure Schedule;
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(i) Refrain from prepaying any loans (if any) from its
shareholders, officers or directors, borrowing any funds
(other than borrowings in the ordinary course of business
under Inlogic's revolving credit facility) or making any other
change in its borrowing arrangements;
(j) Prevent any change with respect to its management and
supervisory personnel and banking arrangements;
(k) Keep intact its business organization, to keep available its
present officers and employees and to preserve the goodwill of
all independent contractors and others having business
relations with it;
(l) Have in effect and maintain at all times all insurance of the
kind, in the amount and with the insurers set forth in the
Schedule 4.28 hereto or equivalent insurance with any
substitute insurers approved in writing by the Canadian Buyer;
(m) Maintain the working capital of Inlogic in the ordinary course
of business at levels consistent with past operations;
(n) Permit Xxxxxx, Canadian Buyer and its authorized
representatives during normal business hours to have full
access to all its properties, assets, records, tax returns,
contracts and documents and furnish to the Xxxxxx and Canadian
Buyer or its authorized representatives such financial and
other information with respect to its business or properties
as Xxxxxx or Canadian Buyer may from time to time reasonably
request;
(o) Refrain from incurring any capital expenditures which,
individually or in the aggregate, exceed $10,000.
SECTION 6.4 NOTIFICATION OF CERTAIN MATTERS.
(1) From the date hereof through the Closing, the Inlogic Shareholders on
the one hand, and Xxxxxx and Canadian Buyer on the other hand, shall
give prompt notice to the other of (i) the occurrence, or failure to
occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement or in
any exhibit or Schedule hereto to be untrue or inaccurate in any
respect and (ii) any failure of such party, or any of its respective
affiliates or Representatives, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under
this Agreement or any exhibit or Schedule hereto; provided, however,
that such disclosure shall not be deemed to cure any breach of a
representation, warranty, covenant or agreement or to satisfy any
condition except as otherwise provided in Section 6.4(2) hereof. The
Inlogic Shareholders shall promptly notify Xxxxxx and the Canadian
Buyer of any Default, the threat or
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commencement of any Action, or any development that occurs before the
Closing that could in any way materially affect Inlogic, the Assets or
the Business or the consummation of the transactions contemplated
hereby. The Canadian Buyer and Xxxxxx shall promptly notify the Inlogic
Shareholders of any default, the threat or commencement of any action,
or any development that occurs before the Closing that could in any way
materially affect the consummation of the transactions contemplated
hereby.
(2) Anything in Section 6.5(1) to the contrary notwithstanding, if any
event not expressly contemplated by this Agreement occurs at any time
between the date hereof and the Closing Date that would result in any
representation or warranty made by the Inlogic Shareholders, on the one
hand, and Canadian Buyer and Xxxxxx, on the other hand, not being true
in any material respect on the Closing Date, such parties shall
promptly give written notice of such event to such other parties.
Following receipt of such notice, the parties receiving notice shall
have no obligation to consummate the transactions contemplated hereby
and the Inlogic Shareholders, on the one hand, or Canadian Buyer and
Xxxxxx, on the other hand, may terminate this Agreement pursuant to
Article XIII hereof; provided, however, that if such parties consummate
the transactions contemplated hereby, such parties shall continue to
have any indemnification rights hereunder relating to or arising out
of, the subject matter of the event described in any written notice
given pursuant to this Section 6.4(2) to the same extent as if such
notice had not been given and; provided, further, that the giving of
any notice by a party pursuant to this Section 6.4(2) shall not relieve
such party of any liability for breach of any covenant hereunder or the
failure of any representation or warranty of such party hereunder to be
true and correct as of the date hereof.
SECTION 6.5 OPTIONS.
(1) As soon as practicable following the Closing Date, the Inlogic Options
shall be exchanged for options to purchase Xxxxxx Common Stock pursuant
to the exchange ratio used to calculate the number of Exchangeable
Shares issued in consideration for each outstanding share of Inlogic
Software Inc. (the "XXXXXX EXCHANGED OPTIONS"). The Xxxxxx Exchanged
Options shall be granted upon the terms set on Schedule 6.5(1)
notwithstanding the foregoing, Xxxxxx shall not be required to grant
the Xxxxxx Exchanged Options to any holder of Inlogic Options who does
not execute an agreement substantially in the form of Exhibit 6.5(1)
hereto.
(2) As soon as possible the Closing Date, in addition to the Xxxxxx
Exchanged Options, Xxxxxx agrees to grant to certain of the employees
who execute agreements substantially in the form of Exhibit 6.5(1)
hereto of Inlogic options under the Xxxxxx stock option plan (the
"XXXXXX OPTION PLAN") a true and correct copy of which is attached
hereto as Exhibit 6.5(2) of options to
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purchase in the aggregate 370,000 shares of Xxxxxx Common Stock the
("XXXXXX ADDITIONAL OPTIONS") to be distributed as set forth in a
letter of even date herewith from Xxxxxx to the Inlogic Shareholders
which letter makes specific reference to this Section 6.5. Such options
shall have an exercise price per share equal to the fair market value
of the Xxxxxx Common Stock on the date of grant and shall vest at the
rate of twenty-five percent (25%) per year over four (4) years with
vesting commencing on the first anniversary of the date of grant.
SECTION 6.6 PRESERVATION OF CONFIDENTIALITY.
The terms and provisions of Sections l and 3 of the Non-Disclosure
Agreement dated August 16, 1999 between Xxxxxx and Inlogic shall remain in full
force and effect after the date hereof.
SECTION 6.7 ACTIVITIES OF CANADIAN BUYER.
Xxxxxx and Canadian Buyer agree that for so long as the Inlogic
Shareholders are holders of Exchangeable Shares the Canadian Buyer will not
engage in any activities other than holding shares or other securities of
Inlogic and capital or loan transactions with Xxxxxx or its Subsidiaries.
SECTION 6.8 INVESTMENT CANADA ACT.
Xxxxxx and the Canadian Buyer, as promptly as practicable after the
Closing Date will make, or cause to be made, all such filings and submissions
applicable to it, as may be required for it to consummate the purchase of
Inlogic, including the filing of notice pursuant to the Investment Canada Act.
Each of the Inlogic Shareholders and Xxxxxx and Canadian Buyer will co-ordinate
and co-operate with one another in exchanging such information and supplying
such assistance as may be reasonably requested in connection with the foregoing.
Xxxxxx and Canadian Buyer agree to provide evidence of the Investment Canada Act
notification to the Inlogic Shareholders.
SECTION 6.9 BOARD SEAT.
As soon as practicable after the Closing Date, Xxxxxx shall nominate
Xxxxxxxx Xxxxx to the Board of Directors of Xxxxxx and use its reasonable
efforts to elect him to the Board of Directors.
ARTICLE 7
CONDITIONS TO INLOGIC SHAREHOLDERS' OBLIGATIONS
The obligations of Inlogic Shareholders to consummate the transactions
provided for hereby are subject, in the discretion of the Inlogic Shareholders,
to the satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by the Inlogic Shareholders.
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SECTION 7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXXX AND CANADIAN
BUYER.
All representations and warranties of Xxxxxx and Canadian Buyer
contained in this Agreement shall be true and correct at and as of the date of
this Agreement and at and as of the Closing Date as if made as of the Closing
Date, except as and to the extent that the facts and conditions upon which such
representations and warranties are based are expressly required or permitted to
be changed by the terms hereof, and Xxxxxx and Canadian Buyer shall have
performed and satisfied all agreements and covenants required hereby to be
performed by it prior to or on the Closing Date. The Inlogic Shareholders shall
have received a certificate to the foregoing effect from the President or any
Vice President of Xxxxxx.
SECTION 7.2 NO ACTIONS OR COURT ORDERS.
No Action by any governmental authority or other person shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby and which could reasonably be expected to (a)
materially affect the right or ability of Xxxxxx or Canadian Buyer to purchase
and own the Purchased Securities or to permit Inlogic to operate, possess or
transfer the Assets after the Closing or (b) materially damage the business or
financial condition of Xxxxxx or Canadian Buyer on a consolidated basis if the
transactions contemplated hereunder are consummated. There shall have been no
determination by the Inlogic Shareholders, acting in good faith, that the
consummation of the transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or threat by any
person or any federal, provincial or other governmental authority of litigation.
There shall not be any Regulation or Court Order that makes the purchase and
sale of the Purchased Securities contemplated hereby illegal or otherwise
prohibited.
SECTION 7.3 CONSENTS.
All Permits, consents, approvals and waivers from governmental
authorities and other parties necessary to the consummation of the transactions
contemplated hereby shall have been obtained.
SECTION 7.4 MATERIAL CHANGES.
Since September 30, 1999, there shall not have been any material
adverse change with respect to the financial or business condition of Xxxxxx or
its Subsidiaries except as disclosed in the Xxxxxx SEC Documents.
SECTION 7.5 OPINIONS OF COUNSEL.
(1) Xxxxxx and Canadian Buyer shall have delivered to the Inlogic
Shareholders an opinion of Stikeman, Xxxxxxx and Xxxxxxx XxXxxxxx
Stirling Scales, counsel to Canadian Buyer, dated as of the Closing
Date, in the form attached hereto as Exhibit 7.5(A);
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(2) Xxxxxx shall have delivered to the Inlogic Shareholders an opinion of
Xxxxxx, Xxxxxxx & Xxxxxx counsel to Xxxxxx, dated as of Closing Date,
in the form attached hereto as Exhibit 7.5(B).
SECTION 7.6 ESCROW AGREEMENTS.
The Canadian Buyer, Xxxxxx, the Inlogic Shareholders and the Escrow
Agent shall have executed and delivered the Indemnity Escrow Agreement and the
Employee/Shareholder Escrow Agreement in substantially in the forms attached as
Exhibits 2.4(B) and 2.4(D).
SECTION 7.7 EMPLOYMENT AND NON-COMPETITION AGREEMENTS.
Canadian Buyer shall have executed and delivered to each of l and l
(the "PRINCIPALS") an Employment and Non-Competition Agreement as hereinafter
defined in substantially the forms attached as Exhibit 7.7(A) and 7.7(B).
SECTION 7.8 CORPORATE DOCUMENTS.
The Inlogic Shareholders shall have received from Canadian Buyer and
Xxxxxx resolutions adopted by the boards of directors of Canadian Buyer and
Xxxxxx, approving this Agreement and the agreements and the transactions
contemplated hereby and thereby, certified by an officer of Canadian Buyer and
Xxxxxx, as applicable, respectively.
SECTION 7.9 EXCHANGEABLE DOCUMENTATION.
The parties thereto shall have executed and delivered the Support
Agreement and the Exchange Trust Agreement.
SECTION 7.10 RESERVED.
SECTION 7.11 REGISTRATION RIGHTS.
Xxxxxx shall have granted to each Inlogic Shareholder registration
rights in the form of the registration rights agreement attached as Exhibit 7.11
(the "REGISTRATION RIGHTS AGREEMENT").
ARTICLE 8
CONDITIONS TO CANADIAN BUYER'S AND DALEEN'S OBLIGATIONS
The obligations of Xxxxxx and Canadian Buyer to consummate the
transactions provided for hereby are subject, in the discretion of Xxxxxx and
Canadian Buyer to the satisfaction, on or prior to the Closing Date, of each of
the following conditions, any of which may be waived by Xxxxxx and Canadian
Buyer.
SECTION 8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
All representations and warranties of the Inlogic Shareholders or
Inlogic Shareholder contained in this Agreement shall be true and correct at and
as of the
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date of this Agreement and at and as of the Closing Date, except as and to the
extent that the facts and conditions upon which such representations and
warranties are based are expressly required or permitted to be changed by the
terms hereof, and each Inlogic Shareholder shall have performed and satisfied
all agreements and covenants required hereby to be performed by it prior to or
on the Closing Date. Xxxxxx and the Canadian Purchaser shall have received a
certificate to the foregoing effect from both the President and Chief Executive
Officer and from the Chief Financial Officer of Inlogic.
SECTION 8.2 CONSENTS; REGULATORY COMPLIANCE AND APPROVAL.
All Permits, consents, approvals and waivers from governmental
authorities necessary to the consummation of the transactions contemplated
hereby and for the operation of the Business by Canadian Buyer shall have been
obtained. The parties agree that the consents to be obtained prior to Closing
shall be satisfied and that all approvals required under any Regulations to
carry out the transactions contemplated by this Agreement shall have been
obtained and that the parties shall have complied with all Regulations
applicable to this Agreement and the transactions contemplated hereby.
SECTION 8.3 NO ACTIONS OR COURT ORDERS.
No Action by any governmental authority or other person shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby or which could reasonably be expected (a) to
materially damage Xxxxxx or the Canadian Buyer or (b) to materially damage the
Assets or the Business or otherwise have a material adverse effect on Inlogic.
There shall have been no determination by Xxxxxx or the Canadian Buyer, acting
in good faith, that the consummation of the transactions contemplated by this
Agreement has become inadvisable or impracticable by reason of the institution
or threat by any person or any federal, provincial or other governmental
authority of litigation. There shall not be any Regulation or Court Order that
makes the purchase and sale of the Purchased Securities contemplated hereby
illegal or otherwise prohibited. The exemption from registration provided by
Regulation S of the SEC shall be available with respect to the issuance of all
of the Exchangeable Securities and the Xxxxxx Common Stock issuable in exchange
therefore.
SECTION 8.4 ATEVENT TRANSACTION
The Atevent Transaction shall have been effected in the manner set
forth in Section 11.12 hereof. Each of the Atevent Employees shall have executed
and delivered to Inlogic and Xxxxxx the Atevent Employee Release. The Atevent
Corporation shall have executed and delivered to Inlogic and Xxxxxx the Atevent
License Agreement.
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SECTION 8.5 RESIGNATION AND RELEASE OF INLOGIC DIRECTORS.
Each of the directors of Inlogic shall have executed and delivered to
Canadian Buyer a resignation and release in the form of Exhibit 8.5 hereto.
SECTION 8.6 CONVERSION OF CLASS D SHARES AND DEBENTURE.
All Inlogic Shareholders shall have waived all rights to any other
contractual agreements they may have with Inlogic or Inlogic's Shareholders
including without limitation any rights they may have under the registration
rights agreement and under the shareholder agreement entered into on September
27, 1999. The Vengrowth Investment Fund Inc. shall have converted the Debenture
dated September 27, 1999 into Class D Shares pursuant to the terms of such
Debenture.
SECTION 8.7 FAIRNESS OPINION.
Xxxxxx shall have received from its investment banker a fairness
opinion dated within five (5) business days of the Closing Date with respect to
the terms of the transaction referred to herein and to the effect that the
transactions contemplated hereby are fair to Xxxxxx and its shareholders from a
financial point of view.
SECTION 8.8 OPINIONS.
Inlogic Shareholders shall have delivered to the Canadian Buyer and
Xxxxxx an opinion of Blake, Xxxxxxx & Xxxxxxx, counsel to Inlogic Shareholders,
dated as of the Closing Date, in the form attached hereto as Exhibit 8.8.
SECTION 8.9 MATERIAL CHANGES.
Since the Base Balance Sheet Date, there shall not have been any
material adverse change with respect to Inlogic, the Business or the Assets
except as disclosed on the Inlogic Disclosure Schedule.
SECTION 8.10 CORPORATE DOCUMENTS.
Canadian Buyer shall have received from the Inlogic shareholders
resolutions adopted by the board of directors of Inlogic and Inlogic Holdco
approving this Agreement and the agreements and the transactions contemplated
hereby and thereby, certified by an officer of Inlogic.
SECTION 8.11 PERMITS.
Inlogic shall continue to own or shall have obtained or been granted
the right to use all Permits necessary to its continued operation of the
Business.
SECTION 8.12 ESCROW AGREEMENTS.
The Inlogic Shareholders and the Escrow Agent shall have executed and
delivered the Indemnity Escrow Agreement and the Employee/Shareholder Escrow
Agreement.
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SECTION 8.13 EMPLOYMENT AGREEMENTS.
Each of the individuals listed on Schedule 8.13 shall have executed and
delivered to Canadian Buyer an employment and non-competition agreement in
substantially the form attached hereto as Exhibit 8.13 (individually and
including Exhibits 7.7(A) and 7.7(B), an "EMPLOYMENT AGREEMENT" and
collectively, the "EMPLOYMENT AGREEMENTS") and the Principals shall have
executed and delivered to Canadian Buyer his Employment Agreement substantially
in the form of Exhibit 7.7(A) or 7.7(B), as the case may be.
SECTION 8.14 RESERVED.
SECTION 8.15 PRE-CLOSING STEPS.
All the Pre-Closing Steps referred to in Section 2.1 hereof shall have
been completed to the satisfaction of Canadian Buyer and true copies of all
documents evidencing such steps, including the Amalgamation Order, shall have
been delivered to Canadian Buyer.
SECTION 8.16 EXCHANGEABLE DOCUMENTATION.
The parties thereto shall have executed and delivered the Support
Agreement and the Exchange Trust Agreement in the form, or substantially in the
form, attached hereto as Exhibits 6.2(A) and 6.2(B), respectively.
SECTION 8.17 SECTION 116 OF THE INCOME TAX ACT CERTIFICATE.
Each of the Inlogic Shareholders who is not a Canadian resident shall
(i) have executed and delivered a certificate under Section 116 of the Income
Tax Act (Canada) and such other documentation as Xxxxxx shall reasonably request
in connection with compliance with applicable securities and other laws; or have
allowed Canadian Buyer to withhold one-third of the consideration each such
Inlogic shareholder receives hereunder until such certificate is delivered to
Xxxxxx, at which point the withheld shares shall be given to the Escrow Agent
under the Employee/Shareholder Escrow agreement.
SECTION 8.18 DELIVERY OF INLOGIC SHARE CERTIFICATES.
Each of the Inlogic Shareholders shall have delivered actual possession
of the certificates evidencing the Purchased Securities to the Canadian Buyer
and record the Canadian Buyer or its nominee as the registered owner thereof.
SECTION 8.19 RECEIPT OF FULL FUNDING FOR EQUITY FINANCING.
Inlogic shall have received payment in full for all of its issued and
outstanding capital shares, in each case pursuant to the terms of the
subscription agreement relating to such capital shares, including without
limitation the equity investment transaction entered into by Inlogic in the
second quarter of 1999. The Inlogic Shareholders shall pay in full all amounts
owed by them to Inlogic, whether or not then due and payable.
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SECTION 8.20 EMPLOYMENT AND TAX LAW ISSUES.
Inlogic shall resolve to the satisfaction of Xxxxxx and the Canadian
Buyer all matters relating to tax and employment law issues.
SECTION 8.21 INVENTION ASSIGNMENT PROVISIONS.
All employees, independent contractors and consultants of Inlogic shall
have executed and delivered to Inlogic invention assignment agreements conveying
ownership of all inventions, patents and other Proprietary Rights to Inlogic.
ARTICLE 9
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION BY THE SELLING PARTIES.
The Inlogic Shareholders severally agree subsequent to the Closing to
indemnify and hold Xxxxxx, Canadian Buyer and its Subsidiaries, affiliates,
successors and assigns and persons serving as officers, directors, partners,
managers, shareholders, members, employees and agents thereof (other than the
Inlogic Shareholders, except to the extent of Liabilities incurred in their
capacities as an officer, director or employee of Canadian Buyer after the
Closing) (individually a "BUYER INDEMNIFIED PARTY" and collectively the "BUYER
INDEMNIFIED PARTIES") harmless from and against any Damages which may be
sustained or suffered by any of them attributable to, arising out of or based
upon any of the following matters:
(a) Any failure by that Inlogic Shareholder to convey to the
Canadian Buyer title to the Purchased Securities free and
clear of any Encumbrances (collectively, "OWNERSHIP CLAIMS");
(b) Any liability of Inlogic for Taxes arising from its respective
activities, assets and all events and transactions on or prior
to the Closing Date, including with respect to risks and other
matters disclosed in Section 4.25, (to the extent there is no
reserve contained in the Financial Statements) and any breach
of the representations and warranties set forth in Section
4.25 hereof and any covenant with respect to Taxes or tax
related matters set forth herein or in any related agreement
(collectively, "TAX CLAIMS"); and
(c) Other than Ownership Claims or Tax Claims, any other breach of
any representation, warranty or covenant of Inlogic or the
Inlogic Shareholders under this Agreement or in any
certificate, Schedule or Exhibit delivered pursuant hereto by
Inlogic Shareholders (collectively "GENERAL CLAIMS") provided
that with respect to breaches of Individual Representations,
only the Inlogic Shareholder who has
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breached such Individual Representation shall be liable under
this Section 9.1(c).
(d) Any claim from a holder of Inlogic Options to the effect that
any unvested Inlogic Option as of the date hereof, has vested
as a result of the transaction contemplated herein or of the
Amalgamation to be completed immediately following the
Closing.
(e) Any liability of Inlogic to the extent they are Atevent
Liabilities and any claim arising out of or relating to the
Atevent Business, the Atevent Liabilities, the Atevent Assets
the Atevent Corporation or the Atevent Employees including
without limitation any tax liability incurred by Inlogic as a
result of or in connection with, the Atevent Transaction.
(f) Any liabilities of Inlogic arising in connection with the
Inlogic Dividend.
SECTION 9.2 LIMITATIONS ON INDEMNIFICATION BY THE INLOGIC SHAREHOLDERS.
Anything contained in this Agreement to the contrary notwithstanding,
the liability of the Inlogic Shareholders to provide any indemnification to any
Buyer Indemnified Party and right of Buyer Indemnified Parties to
indemnification under Section 9.1 (or otherwise) shall be subject to the
following provisions:
(a) Subject to Section 9.2(b), (e) and (f) no claims for
indemnification shall be made under this Agreement against any
Inlogic Shareholder, and no indemnification shall be payable
to any Buyer Indemnified Party, with respect to General Claims
asserted after the date which is eighteen (18) months
following the Closing;
(b) No claims for indemnification shall be made under this
Agreement against any Inlogic Shareholder, and no
indemnification shall be payable to any Buyer Indemnified
Party, with respect to any Tax Claim asserted after expiration
of all applicable statutes of limitation or periods of
reassessment with respect to the Tax that is the subject of
the indemnification claim and the expiration of all applicable
statutes of limitation or periods of reassessment taking into
account any actual or effective extensions thereof with
respect to the assessment or collection of the Tax; provided
that the Inlogic Shareholders shall have no obligation for
indemnification with respect to Tax Claims to the extent such
claims, together with General Claims and Ownership Claims,
exceed a maximum aggregate amount of $64,842,187.
(c) With respect to General Claims, the amount payable by an
Inlogic Shareholder to all Buyer Indemnified Parties for
claims for
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indemnification hereunder shall in no event exceed such
Inlogic Shareholder's pro rata share of the total amount to be
paid to all Buyer Indemnified Parties for claims for
indemnification hereunder. The pro rata shares of the Inlogic
Shareholders for purposes of this paragraph shall be the same
percentages as the Inlogic Shareholders' respective ownership
interests listed on Schedule 4.2;
(d) The Inlogic Shareholders shall have no obligation for
indemnification with respect to General Claims hereunder until
aggregate claims for indemnification with respect to General
Claims hereunder exceed $50,000, in which case the Inlogic
Shareholders shall be obligated for indemnification of all
General Claims including the initial $50,000 of such claims
and then only up to a maximum aggregate amount of the
Indemnity Escrow Amount; provided that with respect to any
breach of a representation and warranty set forth in Section
4.7, Section 4.18, Section 4.24, and Section 4.25, the
aggregate maximum amount of such claims together with Tax
Claims and Ownership Claims shall be $64,842,187. However,
this Section 9.2(d) shall not apply to any breach of the
Inlogic Shareholders' representations and warranties which
constitutes fraud by any Inlogic Shareholder or any
intentional breach by the Inlogic Shareholders of any covenant
or obligation, and the Inlogic Shareholders will be liable for
all damages with respect to such breaches;
(e) Claims for indemnification with respect to claims based on
fraud or intentional misrepresentation, Ownership Claims under
this Agreement, and claims for any breach of Section 4.4
(Capitalization; Beneficial Ownership of Inlogic), Section 4.6
(Authority), or Section 4.21 (No Other Agreements to Sell the
Purchased Securities), by any Buyer Indemnified Party shall
not be subject to any of the limitations set forth in this
Section 9.2(a) but shall be subject to applicable statutory
limitations.
(f) Claims for indemnification with respect to claims referred to
in Section 9.1(d), Section 9.1(e) and Section 9.1(f) shall not
be subject to any of the limitations set forth in this Section
9.2.
SECTION 9.3 INDEMNIFICATION BY XXXXXX AND CANADIAN BUYER.
Xxxxxx and Canadian Buyer agree to indemnify and hold the Inlogic
Shareholders and their affiliates and persons serving as officers, directors,
partners, managers, shareholders, members, employees and agents thereof
(individually a "INLOGIC SHAREHOLDERS INDEMNIFIED PARTY" and collectively the
"INLOGIC SHAREHOLDERS INDEMNIFIED PARTIES") harmless from and against any
Damages which may be sustained or suffered by any of them attributable to
arising out of or
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based upon (i) any breach or inaccuracy of any representation, warranty or
covenant made by Xxxxxx and/or Canadian Buyer in this Agreement or in any
certificate or Schedule delivered by Xxxxxx and/or the Canadian Buyer hereunder
or (ii) by the continuance of Inlogic under the NS Act as contemplated in
Section 2.1(1)(a) hereof.
SECTION 9.4 LIMITATION ON INDEMNIFICATION BY XXXXXX AND CANADIAN BUYER.
Notwithstanding the foregoing, (a) no indemnification shall be payable
to the Inlogic Shareholders Indemnified Parties with respect to claims asserted
pursuant to Section 9.3 above after the date which is eighteen (18) months after
the Closing, and (b) Xxxxxx and Canadian Buyer shall have no obligation for
indemnification hereunder until aggregate claims for indemnification hereunder
exceed $50,000, in which case Xxxxxx and Canadian Buyer shall be obligated for
indemnification of all claims, including the initial $50,000 of such claims, and
then only up to a maximum aggregate amount of $64,842,187. Claims for
indemnification with respect to fraud, intentional misrepresentation or the
cause or knowledge of a deliberate or wilful breach of any representations,
warranties or covenants of Canadian Buyer under this Agreement or in any
certificate, Schedule or exhibit delivered pursuant hereto or a breach of
Section 6.7 and Section 6.8 shall not be subject to any of the limitations set
forth in this Section 9.4.
SECTION 9.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(1) Promptly after receipt by an indemnified party (an "INDEMNIFIED PARTY")
under Section 9.1 or Section 9.3 of a notice of the commencement of any
proceeding against it by a third party, the Indemnified Party will, if
a claim is to be made against an indemnifying party under such Section,
give notice to the Indemnifying Party (an "INDEMNIFYING PARTY") of the
commencement of such claim. The failure to notify the Indemnifying
Party will not relieve the Indemnifying Party of any liability that it
may have to any Indemnified Party, except to the extent that the
Indemnifying Party demonstrates that the defense of such action is
prejudiced by the Indemnified Party's failure to give such notice.
(2) If any proceeding referred to in Section 9.5(1) (a "PROCEEDING") is
brought against an Indemnified Party and it gives notice to the
Indemnifying Party of the commencement of the Proceeding, the
Indemnifying Party will be entitled to participate in the Proceeding.
Subject to the next following sentence, to the extent that the
Indemnifying Party wishes to assume the defense of the Proceeding with
counsel satisfactory to the Indemnified Party, it may do so provided it
reimburses the Indemnified Party for all of its out-of-pocket expenses
arising prior to or in connection with such assumption. The
Indemnifying Party may not assume defence of the Proceeding if (i) the
Indemnifying Party is also a party to the Proceeding and the
Indemnified Party determines in good faith that joint representation
would be inappropriate, or (ii) the Indemnifying Party fails to provide
reasonable
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assurance to the Indemnified Party of its financial capacity to defend
the Proceeding and provide indemnification with respect to the
Proceeding. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of the Proceeding, the
Indemnifying Party will not, as long as it diligently conducts such
defense, be liable to the Indemnified Party under this Section 9.5 for
any fees of other counsel or any other expenses with respect to the
defense of the Proceeding, in each case subsequently incurred by the
Indemnified Party in connection with the defense of the Proceeding,
other than reasonable costs of investigation approved in advance by the
Indemnifying Party. If the Indemnifying Party assumes the defense of a
Proceeding (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope
of, and subject to, indemnification, (ii) no compromise or settlement
of such claims may be made by the Indemnifying Party without the
Indemnified Party's consent unless (y) there is no finding or admission
of any violation of Laws or any violation of the rights of any Person
and no effect on any other claims that may be made against the
Indemnified Party, and (z) the sole relief provided is monetary damages
that are paid in full by the Indemnifying Party, and (iii) the
Indemnified Party will have no liability with respect to any compromise
or settlement of such claims effected without its consent. If notice is
given to an Indemnifying Party of the commencement of any Proceeding
and the Indemnifying Party does not, within ten days after receipt of
such notice, give notice to the Indemnified Party of its election to
assume the defense of the Proceeding, the Indemnifying Party will be
bound by any determination made in the Proceeding or any compromise or
settlement effected by the Indemnified Party.
(3) Reserved.
(4) Where the defence of a Proceeding is being undertaken and controlled by
the Indemnifying Party, the Indemnified Party will use all reasonable
efforts to make available to the Indemnifying Party those employees
whose assistance, testimony or presence is necessary to assist the
Indemnifying Party in evaluating and defending any such claims.
However, the Indemnifying Party shall be responsible for the expense
associated with any employees made available by the Indemnified Party
to the Indemnifying Party pursuant to this Section 9.5(4), which
expense shall be equal to an amount to be mutually agreed upon per
person per hour or per day for each day or portion thereof that the
employees are assisting the Indemnifying Party and which expenses shall
not exceed the actual cost to the Indemnified Party associated with the
employees.
(5) With respect to any Proceeding, the Indemnified Party shall make
available to the Indemnifying Party or its representatives on a timely
basis all documents,
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records and other materials in the possession of the Indemnified Party,
at the expense of the Indemnifying Party, reasonably required by the
Indemnifying Party for its use in defending any such claim and shall
otherwise cooperate on a timely basis with the Indemnifying Party in
the defence of such claim.
(6) With respect to any re-assessment for Tax or other liability
enforceable by Lien against the property of the Indemnified Party, the
Indemnifying Party's right to so contest shall only apply after payment
of the re-assessment or the provision of such security as is necessary
to avoid a Lien being placed on the property of the Indemnified Party.
SECTION 9.6 SATISFACTION OF INLOGIC SHAREHOLDERS INDEMNIFICATION OBLIGATIONS.
Xxxxxx shall bring and control all indemnification claims hereunder and
under the Escrow Agreements on behalf of the Buyer Indemnified Parties,
including without limitation Canadian Buyer. In order to satisfy the
indemnification obligations of the Inlogic Shareholders hereunder and under the
Escrow Agreements, Xxxxxx shall proceed first directly against the Escrow Amount
as further set forth in the Escrow Agreements and then may proceed directly
against the Inlogic Shareholders subject to the limitations set forth herein. A
Buyer Indemnified Party may proceed against the Inlogic Shareholder(s) of its
choosing subject to the limitations set forth in the Agreement.
SECTION 9.7 USE OF XXXXXX COMMON STOCK.
To the extent indemnification claims exceed the Escrow Deposit (as
defined in the Escrow Agreement), the Inlogic Shareholders may, at their option,
elect to satisfy any indemnification claims under this Agreement by delivering
to the indemnified party Exchangeable Shares issued pursuant to Section 2.3 or
any securities which such Exchangeable Shares may be converted into, or
exchanged for, including, without limitation Xxxxxx Common Stock. To the extent
that Exchangeable Shares (or such other securities) are used to satisfy
indemnification obligations under this Agreement, such shares shall be valued in
accordance with the terms of the Escrow Agreement. No statement of value in this
Agreement shall affect such valuation under the Escrow Agreement.
SECTION 9.8 EXCLUSIVE REMEDY.
The parties hereto acknowledge and agree that the remedies set forth in
this Article 9 shall be the exclusive remedy for a breach of any representation
and warranty herein. This provision is not intended to preclude any proceeding
by any party against any other party based on a cause of action or right,
including any statutory right, other than a cause of action in contract for
breach of a representation or warranty.
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ARTICLE 10
TERMINATION OF AGREEMENT; RIGHTS TO PROCEED
SECTION 10.1 TERMINATION.
At any time prior to the Closing, this Agreement may be terminated as
follows:
(a) By mutual written consent of all of the parties to this
Agreement;
(b) By Xxxxxx or Canadian Buyer, pursuant to written notice to the
Inlogic Shareholders, if any of the conditions set forth in
Article 8 of this Agreement have not been satisfied at or
prior to the Closing, or if it has become reasonably and
objectively certain that any of such conditions, other than a
condition within the control of Xxxxxx or the Canadian Buyer,
will not be satisfied at or prior to the Closing, such written
notice to set forth such conditions which have not been or
will not be so satisfied;
(c) By the Inlogic Shareholders, pursuant to written notice to
Xxxxxx and the Canadian Buyer, if any of the conditions set
forth in Article 7 of this Agreement have not been satisfied
at or prior to the Closing, or if it has become reasonably and
objectively certain that any of such conditions, other than a
condition within the control of the Inlogic Shareholders or
Inlogic, will not be satisfied at or prior to the Closing,
such written notice to set forth such conditions which have
not been or will not be so satisfied; and
(d) By Xxxxxx and the Canadian Buyer if the Closing shall not have
occurred on or before December 31, 1999.
SECTION 10.2 EFFECT OF TERMINATION.
All obligations of the parties hereunder shall cease upon any
termination pursuant to Section 10.1, provided, however, that the provisions of
Article 9 and Article 10, Section 4.36, Section 6.6, Section 11.1, and Section
11.9 hereof shall survive any termination of this Agreement. No termination
shall relieve any party of any liability for breach of this Agreement prior to
termination except as otherwise provided for herein.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 FEES AND EXPENSES.
(1) Except as otherwise specified below, each party hereto shall pay its
own legal, accounting, out-of-pocket and other expenses incident to
this Agreement and
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to any action taken by such party in preparation for carrying this
Agreement into effect, provided, however, that except as set forth
below the Inlogic Shareholders, jointly and severally, shall pay the
expenses of Inlogic incurred in connection with the transactions
contemplated hereby including without limitation the costs and expenses
of any investment bankers, brokers and consultants engaged by Inlogic
or any Inlogic Shareholder at any time in connection with pursuing or
consummating the transactions contemplated hereby but excluding
ordinary salary expense and overhead expenses associated with Inlogic's
employees who have provided assistance in the transactions contemplated
hereby.
(2) The fees and expenses incurred by Inlogic for the transactions
contemplated herein shall on Closing be reimbursed or assumed by Xxxxxx
as follows: (i) up to $60,000 Cdn. of costs for the special product
accounting analysis report by KPMG; (ii) up to $60,000 Cdn. of costs
and expenses for the audit opinion on Inlogic's financial statements
issued by KPMG; (iii) up to $60,000 Cdn. for Inlogic's legal counsel,
Blake, Xxxxxxx & Graydon's legal fees. Notwithstanding the foregoing,
in the event that the transaction does not close and Inlogic
Shareholders are not otherwise in breach of any of the Binding
Provisions of the Letter Agreement dated November 11, 1999, each of
Xxxxxx and Inlogic Shareholders shall pay one half of Inlogic's actual
professional fees due to obtaining the special accounting analysis by
KPMG LLP.
SECTION 11.2 GOVERNING LAW.
This Agreement shall be construed under and governed by the internal
laws of Province of Ontario without regard to its conflict of laws provisions.
The parties irrevocably attorn to the exclusive jurisdiction of the courts of
the Province of Ontario for any legal action arising out of this Agreement.
SECTION 11.3 NOTICES.
Any notice, request, demand or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
if delivered or sent by facsimile transmission, upon receipt, or if sent by
registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in their post office
facilities properly addressed with postage prepaid. All notices to a party will
be sent to the addresses set forth below or to such other address or person as
such party may designate by notice to each other party hereunder:
TO XXXXXX: Xxxxxx Technologies, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
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Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxx, Xxxxxxx & Xxxxxx
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
TO CANADIAN BUYER: c/o Inlogic Software Inc. L.L.C.
00 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxx Xxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxx, Xxxxxxx & Xxxxxx
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
With an additional copy to: Stikeman, Xxxxxxx
Xxxxx 0000
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx, X0X 0X0
Attention: Xxxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
TO THE INLOGIC SHAREHOLDERS: c/o Xxxxxxxx Xxxxx
000-000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
With a copy to: Xxxxx Xxxxxxx & Xxxxxxx
Commerce Court West
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P.O. Box 25
Stn. Commerce Court
Toronto, Ontario
M5L 1A9
Attention: Xxxx Xxxxx, Esq.
Fax: (000) 000-0000
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
SECTION 11.4 ENTIRE AGREEMENT.
This Agreement, including the Escrow Agreement, Employment Agreements,
Support Agreement, Exchange Trust Agreement, Indemnity Escrow Agreement,
Employee/Shareholder Escrow Agreement, Registration Rights Agreement, the
Canadian Buyer Operating Agreement, Letter Agreement Non-Disclosure Agreement
and all other documents delivered herewith or contemplated hereby, constitute
the entire agreement of the parties with respect to its subject matter, and
supersedes all previous written or oral negotiations, commitments and writings
including without limitation the Term Sheet dated November 11, 1999, as revised
by Revised Term Sheet dated November 26, 1999, between Xxxxxx and Inlogic. No
promises, representations, understandings, warranties and agreements have been
made by any of the parties hereto except as referred to herein or in such
Inlogic Schedules and exhibits; and all inducements to the making of this
Agreement relied upon by either party hereto have been expressed herein or in
such Inlogic Schedules or exhibits.
SECTION 11.5 ASSIGNABILITY; BINDING EFFECT.
This Agreement shall only be assignable by Canadian Buyer to an entity
controlling, controlled by or under common control with Canadian Buyer upon
written notice to the Inlogic Shareholders; provided, however, that Canadian
Buyer shall remain liable for all obligations hereunder to the extent such
obligations are not satisfied by the transferee. This Agreement may not be
assigned by the Inlogic Shareholders without the prior written consent of the
Canadian Buyer. This Agreement shall be binding upon and enforceable by, and
shall inure to the benefit of, the parties hereto and their respective legal
personal representation successors and permitted assigns. Assignment of this
Agreement by any party shall not relieve such party from its obligations
hereunder.
SECTION 11.6 CAPTIONS AND GENDER.
The captions in this Agreement are for convenience only and shall not
affect the construction or interpretation of any term or provision hereof. The
use in this
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Agreement of the masculine pronoun in reference to a party hereto shall be
deemed to include the feminine or neuter, as the context may require.
SECTION 11.7 EXECUTION IN COUNTERPARTS.
For the convenience of the parties and to facilitate execution, this
Agreement, and any documents in connection herewith, may be executed by
facsimile, with originals to follow, in two or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
document.
SECTION 11.8 AMENDMENTS.
This Agreement may not be amended or modified, nor may compliance with
any condition or covenant set forth herein be waived, except by a writing duly
and validly executed by each party hereto, or in the case of a waiver, the party
waiving compliance, provided that l may consent to any such amendment or
modification or waiver on behalf of the Inlogic Shareholders provided further
that the Shareholder Representative may not enter into any such amendment or
modification or waive any condition or covenant that materially and adversely
affects any Inlogic Shareholder differently than all other Inlogic Shareholders
affected thereby without the consent of such Inlogic Shareholder.
SECTION 11.9 PUBLICITY AND DISCLOSURES.
No press releases or public disclosure, either written or oral, of the
transactions contemplated by this Agreement, shall be made by Xxxxxx or any
other a party to this Agreement without the prior knowledge and consent of
Canadian Buyer and Inlogic, except to the extent Xxxxxx determines, upon advice
of counsel, that such disclosure is necessary or appropriate under applicable
law and regulations.
SECTION 11.10 SPECIFIC PERFORMANCE.
(1) The parties agree that it would be difficult to measure damages which
might result from a breach of this Agreement by the Inlogic
Shareholders and that money damages would be an inadequate remedy for
such a breach. Accordingly, if there is a breach or proposed breach of
any provision of this Agreement by any Inlogic Shareholder, and
Canadian Buyer do not elect to terminate under Article 10, Xxxxxx and
Canadian Buyer shall be entitled, in addition to any other remedies
which it may have, to an injunction or other appropriate equitable
relief to restrain such breach without having to show or prove actual
damage to Xxxxxx or Canadian Buyer.
(2) The parties agree that it would be difficult to measure damages which
might result from a breach of this Agreement by the Canadian Buyer or
Xxxxxx and that money damages would be an inadequate remedy for such a
breach. Accordingly, if there is a breach or proposed breach of any
provision of this Agreement by Canadian Buyer or Xxxxxx, and the
Inlogic Shareholders do
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not elect to terminate under Article 10, the Inlogic Shareholders shall
be entitled, in addition to any other remedies which it may have, to an
injunction or other appropriate equitable relief to restrain such
breach without having to show or prove actual damage to Xxxxxx or
Canadian Buyer.
SECTION 11.11 U.S. CURRENCY.
Any reference herein to dollar amounts shall refer to lawful currency
of the United States of America except as indicated, otherwise herein.
SECTION 11.12 ATEVENT SPINOFF
Prior to the Closing, Inlogic shall transfer to Xxxxxxx.xxx Inc. (the
"ATEVENT CORPORATION") and transfer to the Atevent Corporation (i) the assets of
Inlogic set forth on Inlogic Schedule 11.12(A) hereto (the "ATEVENT ASSETS"),
which assets are those Assets of Inlogic used by Inlogic solely in connection
with the Atevent Business (as defined below), (ii) at least U.S.$200,000 in cash
and (iii) all liabilities of Inlogic to the extent they relate to the Atevent
Business, including without limitation the sublease identified on Inlogic
Schedule 11.12(A), all accounts payable, payroll expenses, payroll taxes,
indebtedness and other liabilities, contingent or otherwise relating to the
Atevent Business (collectively, the "ATEVENT LIABILITIES"). The "ATEVENT
BUSINESS" means the business of providing event planning and invitation services
over the web site "XXXXXXX.XXX". The capital shares of the Atevent Corporation
shall consist solely of common shares. Prior to the Closing, the employees of
Inlogic identified on Inlogic Schedule 11.12(B) (the "ATEVENT EMPLOYEES") shall
become employees of the Atevent Corporation and all liabilities of Inlogic with
respect to the Atevent Employees, including any employment agreements and/or
termination or severance obligations shall be included in the Atevent
Liabilities. Prior to the Closing, Inlogic shall distribute 75% of the common
shares of the Atevent Corporation to the Inlogic Shareholders based on the
allocation set forth on Inlogic Schedule 11.12(C) hereto. Prior to the Closing,
an aggregate of 5.1% of the common shares of the Atevent Corporation (or options
representing such shares) shall be issued to the Atevent Employees with the
allocation set forth on Inlogic Schedule 11.12(B) hereto; provided, however,
that it shall be a condition to the transactions contemplated by this Section
11.12 that the Atevent Employees execute a release in the form of Exhibit
11.2(A) hereto (the "ATEVENT EMPLOYEE Release"), pursuant to which each Atevent
Employee releases Inlogic, Xxxxxx and their respective affiliates from any and
all claims and agrees to the cancellation of any options or other rights to
acquire capital shares of Inlogic. Inlogic shall continue to own the remaining
19.9% of the capital of the Atevent Corporation (calculated on a fully diluted
basis as if all options or other rights to acquire capital shares of the Atevent
Corporation had been exercised). The transactions described above in this
Section 11.12 are referred to herein as the "ATEVENT TRANSACTION". From and
after Atevent Transaction, Inlogic shall have the right (the "DIRECTOR ELECTION
RIGHT") to elect such number of directors of the
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Atevent Corporation as would represent at least the same percentage of all
directors as Inlogic's percentage ownership of the capital shares of the Atevent
Corporation. For example, so long as Inlogic owns 19.9% of the capital shares of
the Atevent Corporation, Inlogic shall have the right to elect a number of
directors equal to at least 19.9% of the total number of directors (i.e. on a
five member board of directors, Inlogic shall be entitled to elect one of the
five directors). Additionally, in the event that at any time after the Atevent
Transaction the Atevent Corporation issues or sells any additional capital
shares to any person or entity, Inlogic shall be entitled to acquire a number of
such additional capital shares as would be required to maintain its level of
ownership interest in the Atevent Corporation on the same terms as the proposed
issuance to the other person or entity (such right is referred to as "INLOGIC'S
PREEMPTIVE Right"). The articles and other charter documents of the Atevent
Corporation shall include the Director Election Right and Inlogic's Preemptive
Right.
The Inlogic Shareholders agree to take such actions, including without
limitation, voting their shares of the Atevent Corporation capital shares, as
may be necessary to preserve and protect Inlogic's rights with respect to the
Director Election Right and Inlogic's Preemptive Right and shall vote their
capital shares of the Atevent Corporation for the election of Inlogic's nominees
for director nominated pursuant to the Director Election Right. In addition to
the foregoing, Inlogic shall have registration rights with respect to capital
shares of the Atevent Corporation (now owned or hereafter acquired) that are the
same as the Inlogic Shareholders' registration rights with respect to their
shares of Xxxxxx Common Stock set forth in the Registration Rights Agreement.
The Atevent Corporation shall be required to obtain the prior written consent of
Xxxxxx in the event that it grants registration rights to any other person or
entity that dilute Inlogic's registration rights hereunder. Attached hereto as
Inlogic Schedule 11.12(D) is a true, correct and complete copy of the articles
and bylaws of the Atevent Corporation as in effect on the date hereof. The
Atevent Corporation shall execute and deliver to Inlogic and Xxxxxx the License
Agreement in the form of Exhibit 11.12(B) (the "Atevent License Agreement").
SECTION 11.13 RELEASE OF INLOGIC SHAREHOLDERS.
Each Inlogic Shareholder, for itself, its successors and assigns, now
and forever, hereby waives, releases and discharges Xxxxxx, Xxxxxx Canada,
Inlogic and their officers, directors, stockholders, employees, agents, parent
corporations, subsidiaries, affiliates, successors, assigns and attorneys (the
"RELEASEES"), from any and all claims, legal or equitable actions, liability or
litigation, real or contemplated, known or unknown, that such Inlogic
Shareholder may now have or may later claim to have had against any of the
Releasees. Subject to but without limiting the foregoing, each Inlogic
Shareholder hereby releases those claims that could have been asserted by such
Inlogic Shareholder in connection with any agreement pursuant to which it has
rights against any Releasee, such Inlogic Shareholder
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acknowledges that it may have sustained or may yet sustain damages, costs or
expenses that are presently unknown and that relate to claims between such
Inlogic Shareholder and the parties released by this Section and it agrees that
it is waiving all such claims which arise against the Releasees. For the purpose
of implementing a full and complete release and discharge of the Releasees, each
Inlogic Shareholder expressly acknowledges the waiver and release set forth in
this Section is intended to include in its effect, without limitation, all
claims that such Inlogic Shareholder does not know or suspect to exist in its
favor at the time it signs this Agreement, and that the waiver and release set
forth in this Section contemplates the extinguishment of any such claim or
claims which are released hereunder. Each Inlogic Shareholder shall forever
refrain and forbear from commencing, instituting or prosecuting any lawsuit,
action, claim or proceeding before or in any court, regulatory, governmental,
arbitral or other authority against the parties released hereby or naming or
joining such Releasees as parties to collect or enforce any claims or causes of
action which are released and discharged hereby. Each Inlogic Shareholder hereby
acknowledges and agrees that it has knowingly relinquished, waived and forever
released any and all other remedies that might be available to it with respect
to claims released hereby, including without limitation, claims for contract
damages, punitive damages and attorneys' fees or expenses of litigation.
The foregoing release and covenant not to xxx is not, however, intended
to release or apply to, and shall not release or apply to, any rights of any
Inlogic Shareholder (i) under this Agreement, or (ii) under (A) the Provisions
Attaching to the Exchangeable Shares of Xxxxxx Canada, (B) the Registration
Rights Agreement (C) the Indemnity Escrow Agreement, (D) the
Employee/Shareholder Escrow Agreement, (E) the Support Agreement, (F) the
Exchange Trust Agreement, and (G) the respective Inlogic Shareholder's
Employment Agreement executed pursuant to this Agreement.
SECTION 11.14 LOCK-UP AGREEMENT.
Each Inlogic Shareholder hereby agrees, until April 1, 2000 (the
"Lock-Up Period"), not to offer to sell, contract to sell or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively, a
"DISPOSITION") any shares of Xxxxxx Common Stock, any options or warrants to
purchase any shares of Xxxxxx Common Stock or any securities convertible into or
exchangeable for shares of Xxxxxx Common Stock (collectively, "XXXXXX
SECURITIES"), now owned or hereafter acquired directly by the undersigned or
with respect to which the undersigned has or hereafter acquires the power of
disposition, otherwise than with the prior written consent of Xxxxxx, unless
pursuant to a registration pursuant to the Registration Rights Agreement. The
foregoing restriction is expressly agreed to preclude the holder of the Xxxxxx
Securities from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a Disposition of Xxxxxx
Securities during the Lock-Up Period even if such Xxxxxx Securities would be
disposed of by someone other than such Inlogic Shareholder. Such prohibited
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hedging or other transactions would include without limitation any short sale
(whether or not against the box) or any purchase, sale or grant of any right
(including without limitation any put or call option) with respect to any Xxxxxx
Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from Securities.
Furthermore, each Inlogic Shareholder hereby agrees and consents to the
entry of stop transfer instructions with Daleen's transfer agent against the
transfer of the Xxxxxx Securities held by the undersigned except in compliance
with this Lock-Up Agreement.
SECTION 11.15 U.S. TAX CONSIDERATIONS.
1. The parties hereto agree as follows:
(a) Xxxxxx is the authorized representative of Xxxxxx Canada for
purposes of making elections for U.S. federal tax purposes.
(b) The Inlogic Shareholders will receive interests in Xxxxxx
Canada that are recognized as ownership interests under
Canadian law. However, none of the parties intend that Xxxxxx
Canada will be treated as a partnership for U.S. tax purposes.
If the U.S. tax authorities conclude that Xxxxxx Canada is a
partnership owned by the Inlogic Shareholders and Xxxxxx, the
parties intend that the provisions contained in this addendum
will apply to that partnership and to them as members
(Members) of that partnership for U.S. tax purposes.
(i) Except as otherwise provided in the paragraphs below,
all income, gain, loss, deduction, and credit of
partnership will be allocated to Xxxxxx as the
holder, for U.S. tax purposes, of an interest in
Xxxxxx Canada.
(ii) In accordance with Internal Revenue Code Section
704(c) and the regulations thereunder, income, gain,
loss, and deduction with respect to any property
contributed to the capital of Xxxxxx Canada shall,
solely for U.S. income tax purposes, be allocated
among the Members so as to take account of any
variation between the adjusted basis of such property
to Xxxxxx Canada for U.S. income tax purposes and its
fair market value at the time of contribution.
Allocations pursuant to this section are solely for
U.S. tax purposes and shall not affect, or in any way
be taken into account in computing, any Member's
share of net profit, loss, or distributions.
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(iii) Holders will be allocated income equal to the fair
market value of any cash or other property
distributed to them by Xxxxxx Canada pursuant to
Article 3 of the Exchangeable Share Provisions as a
result of a dividend declared by Xxxxxx.
2. Xxxxxx agrees to indemnify and hold harmless the Inlogic Shareholders
in the event they incur any liability or suffer any Damages as a result
of the agreement set forth in Section 11.15(1).
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives, as of the date first written
above.
XXXXXX TECHNOLOGIES, INC.
By:
------------------------------------------
Name: Xxxxx Xxxxxx
Title:
CANADIAN BUYER:
XXXXXX CANADA CORPORATION.
By:
------------------------------------------
Name: Xxxxx Xxxxxx
Title:
INLOGIC
INLOGIC SOFTWARE INC.
By:
------------------------------------------
Name: Xxxxxxxx Xxxxx
Title:
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INLOGIC SHAREHOLDERS:
---------------------------------------------
Xxxxxxxx Xxxxx
---------------------------------------------
Xxxx Xxxxx
---------------------------------------------
Xxxxxxxx Xxxxxxx
---------------------------------------------
Xxxx Xxx
---------------------------------------------
Xxxxxxx Xxxxxx
---------------------------------------------
Xxxxxxx Xxxxx
---------------------------------------------
Nahla Rashad
---------------------------------------------
Xxxxxx Xxxxxx
1303949 ONTARIO INC.
By:
------------------------------------------
Name:
Title:
XXXXXXX.XXX INC.
By:
------------------------------------------
Name:
Title:
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SIGNATURES CONTINUED
THE VENGROWTH INVESTMENT FUND INC.:
By:
------------------------------------
Name:
Title:
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EXHIBIT "A"
SHAREHOLDERS
3. Xxxxxxxx Xxxxx
4. Xxxx Xxxxx
5. Xxxxxxxx Xxxxxxx
6. Xxxxxxx Xxxxx
7. 1303949 Ontario Inc.
8. Xxxx Xxx
9. Xxxxxxx Xxxxxx
10. Xxxxxxx Xxxxx
11. Nahl Rashad
12. Xxxxxx Xxxxxx
13. The Vengrowth Investment Fund Inc.
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SCHEDULE 8.13
KEY EMPLOYEES
