SHARE PURCHASE AGREEMENT
AMONG
HOMEBASE WORK SOLUTIONS LTD.
THE CONTROLLING SHAREHOLDERS NAMED HEREIN
AND
INFOCAST CANADA CORPORATION
AND
INFOCAST CORPORATION
DATED AS OF MAY 13, 1999
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS................................................................1
Section 1.01 Definitions................................................1
Section 1.02 Accounting Principles......................................4
ARTICLE II
AGREEMENT TO SELL AND PURCHASE THE PURCHASED SHARES........................9
Section 2.01 Sale and Purchase of the Purchased Shares..................9
Section 2.02 Purchase Price............................................10
ARTICLE III
CLOSING...................................................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE CONTROLLING SHAREHOLDERS..........................................10
Section 4.01 Organization, Good Standing and Qualification
of the Company............................................10
Section 4.02 Articles of Incorporation and By-Laws; Records............11
Section 4.03 Capitalization............................................12
Section 4.04 Authority; Binding Nature of Agreements...................13
Section 4.05 Non-Contravention; Consents...............................13
Section 4.06 Proprietary Rights; Proprietary Information
and Inventions Agreement..................................15
Section 4.07 Proceedings; Orders.......................................16
Section 4.08 Sale of Purchased Shares Valid............................16
Section 4.09 Financial Statements......................................17
Section 4.10 Title to Assets...........................................18
Section 4.11 Material Contracts........................................18
Section 4.12 Employees; Employee Benefits..............................20
Section 4.13 Receivables; Major Customers..............................21
Section 4.14 Major Suppliers...........................................22
Section 4.15 Compliance With Requirement of Laws.......................22
Section 4.16 Governmental Authorizations...............................23
Section 4.17 Tax Matters...............................................23
Section 4.18 Securities Laws Compliance;
Registration Rights.......................................26
Section 4.19 Finders and Brokers.......................................26
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Section 4.20 Environmental Compliance..................................26
Section 4.21 Insurance.................................................26
Section 4.22 Related Party Transactions................................28
Section 4.23 Absence of Changes........................................28
Section 4.24 Controlling Shareholders..................................30
Section 4.25 Powers of Attorney........................................31
Section 4.26 Full Disclosure...........................................32
Section 4.27 Investment Representations................................32
Section 4.28 Corporate Governance......................................33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND INFOCAST..............................................................33
Section 5.01 Organization, Good Standing and
Qualification of the Purchaser............................33
Section 5.02 Capitalization............................................33
Section 5.03 Authority; Binding Nature of Agreements...................34
Section 5.04 Non-Contravention; Consents...............................34
Section 5.05 Proceedings; Orders.......................................35
Section 5.06 Sale of Exchangeable Shares Valid.........................35
Section 5.07 Investment Representations................................35
Section 5.08 Consents..................................................36
Section 5.09 Organization, Good Standing
and Qualification of InfoCast.............................36
Section 5.10 Articles of Incorporation and By-Laws;
Records...................................................37
Section 5.11 Capitalization............................................38
Section 5.12 Authority; Binding Nature of Agreements...................38
Section 5.13 Non-Contravention; Consents...............................38
Section 5.14 Proprietary Rights; Proprietary
Information and Inventions Agreement......................39
Section 5.15 Proceedings; Orders.......................................40
Section 5.16 Sale of Purchased Shares Valid............................41
Section 5.17 Financial Statements......................................41
Section 5.18 Title to Assets...........................................42
Section 5.19 InfoCast Material Contracts...............................42
Section 5.20 Employees and Employee Benefits...........................43
Section 5.21 Compliance With Requirement of Laws.......................45
Section 5.22 Tax Matters...............................................45
Section 5.23 Securities Laws Compliance;
Registration Rights.......................................47
Section 5.24 Insurance.................................................48
Section 5.25 Absence of Changes........................................49
Section 5.26 Full Disclosure...........................................51
Section 5.27 Corporate Governance......................................51
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ARTICLE VI
PRE-CLOSING COVENANTS OF THE COMPANY
AND THE CONTROLLING SHAREHOLDERS..........................................52
Section 6.01 Access and Investigation..................................52
Section 6.02 Operation of Business.....................................52
Section 6.03 Filings and Consents......................................54
Section 6.04 Notification of Events or Conditions......................54
Section 6.05 Payment of Indebtedness by Related Parties................55
Section 6.06 No Negotiation............................................55
Section 6.07 Best Efforts..............................................56
Section 6.08 Confidentiality...........................................56
ARTICLE VII
PRE-CLOSING COVENANTS OF THE PURCHASER AND INFOCAST.......................56
Section 7.01 Filings and Consents......................................56
Section 7.02 Access and Investigation..................................57
Section 7.03 Operation of Business.....................................57
Section 7.04 Filings and Consents......................................59
Section 7.05 Notification of Events or Conditions......................59
Section 7.06 Best Efforts..............................................60
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING..........................60
Section 8.01 Representations and Warranties;
Performance of Obligations................................60
Section 8.02 Consents, Permits, Waivers and Approvals..................60
Section 8.03 Delivery of Certificates Evidencing
Purchased Shares..........................................61
Section 8.04 Delivery of Employment Agreements.........................61
Section 8.05 Compliance Certificate....................................61
Section 8.06 Corporate Documents.......................................61
Section 8.07 Exchange Agreement........................................61
Section 8.08 Proceedings and Documents.................................61
Section 8.09 Delivery of Non-Controlling Shareholder
Letters of Transmittal....................................62
ARTICLE IX
CONDITIONS TO THE SELLINGSHAREHOLDER'S OBLIGATIONS AT CLOSING.............62
Section 9.01 Representations and Warranties;
Performance of Obligations................................62
Section 9.02 Consents, Permits, Waivers and Approvals..................62
Section 9.03 Delivery of Certificates Evidencing
Exchangeable Shares.......................................62
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Section 9.04 Compliance Certificate of Purchaser.......................63
Section 9.05 Compliance Certificate of InfoCast........................63
Section 9.06 Corporate Documents.......................................63
Section 9.07 Exchange Agreement........................................63
Section 9.08 Proceedings and Documents.................................63
Section 9.09 Homebase Governance.......................................64
Section 9.10 Darcy Galvon - Co-Chairman of InfoCast....................64
ARTICLE X
INDEMNIFICATION, ETC......................................................64
Section 10.01 Survival of Representations and Warranties................64
Section 10.02 Indemnification by Controlling Shareholders...............64
Section 10.03 Indemnification by the Purchaser and InfoCast.............65
Section 10.04 Interest..................................................66
Section 10.05 Defense of Third Party Claims.............................66
ARTICLE XI
MISCELLANEOUS.............................................................67
Section 11.01 Tax Elections.............................................67
Section 11.02 Termination...............................................68
Section 11.03 Governing Law.............................................68
Section 11.04 Jurisdiction; Venue.......................................68
Section 11.05 Successors and Assigns....................................69
Section 11.06 Entire Agreement..........................................69
Section 11.07 Severability..............................................69
Section 11.08 Amendment and Waiver......................................69
Section 11.09 Notices...................................................69
Section 11.10 Counterparts..............................................71
Section 11.11 Attorney's Fees...........................................71
Section 11.12 Delays or Omissions.......................................71
Section 11.13 Remedies Cumulative.......................................72
Section 11.14 Ontario Securities Law Matters............................72
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SCHEDULES
Schedule 1 Name and Addresses of Selling Shareholders
Schedule 2.01 Purchased Shares
Schedule 2.02 Purchase Price
Schedule 4.01(b) Board of Directors; Committees; Officers
Schedule 4.01(d) Investments
Schedule 4.05(b) Consents
Schedule 4.06 Proprietary Assets
Schedule 4.10 Leases and Licensed Assets
Schedule 4.11 Material Contracts
Schedule 4.12 Employees; Employee Benefits
Schedule 4.13 Accounts Receivable; Major Customers
Schedule 4.14 Major Suppliers
Schedule 4.16 Government Authorizations
Schedule 4.17 Tax Matters
Schedule 4.21 Insurance
Schedule 4.22 Related Party Transactions
Schedule 4.23 Absence of Changes
Schedule 5.04 Purchaser Consents
Schedule 5.09(b) InfoCast Board of Directors; Committees; Officers
Schedule 5.14 InfoCast Proprietary Assets
Schedule 5.19 InfoCast Material Contracts
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Schedule 5.20 InfoCast Employees and Employee Benefits
Schedule 5.22 InfoCast Tax Matters
Schedule 5.24 InfoCast Insurance
Schedule 5.25 InfoCast Absence of Changes
Schedule 5.27 Corporate Governance of Homebase
Schedule 8.09 Non-Controlling Shareholder Letters of Transmittal
Schedule 9.09 Co-Chairmen Guidelines
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EXHIBITS
Exhibit A Rights and Designations of Exchangeable Shares
Exhibit B Form of Exchange Agreement
vii
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement is entered into as of May 13, 1999, by
and among Homebase Work Solutions Ltd., a corporation organized and existing
under the laws of Province of Alberta (the "Company"), the Controlling
Shareholders (as defined herein), InfoCast Canada Corporation, a corporation
organized and existing under the laws of Ontario (the "Purchaser"), and InfoCast
Corporation, a corporation organized and existing under the laws of Nevada
("InfoCast").
WITNESSETH:
WHEREAS the Selling Shareholders (as defined herein) own, in the
aggregate, a total of 955,000 common shares (the "Company Common Shares") in the
capital of the Company, and 45,000 first preferred shares, Series A (the
"Company Preferred Shares") which the holders thereof shall agree will be
treated as Company Common Shares (other than the exchange ratio therefor) for
purposes of this Agreement, which shares represent all of the issued and
outstanding shares in the capital of the Company;
AND WHEREAS the Purchaser desires to purchase from the Selling
Shareholders 100% of Company Common Shares and Company Preferred Shares
(collectively, the "Purchased Shares") owned by the Selling Shareholders (which
shall be accomplished by the direct purchases of such shares from the Selling
Shareholders) and the Selling Shareholders are willing to sell such Company
Purchased Shares, to the Purchaser, upon the terms and subject to the conditions
set forth herein;
AND WHEREAS InfoCast is the registered and beneficial owner of
10,000,000 common shares of the Purchaser, being all the issued and outstanding
common shares of the Purchaser;
NOW THEREFORE in consideration of the mutual promises and covenants
herein, the Purchaser, InfoCast, the Company and the Selling Shareholders, as
applicable, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Section 1.01:
"Acquisition Transaction" shall mean any transaction involving:
(a) the sale or other disposition of all or any portion of
the Company's business or assets (other than the sale of
goods or services in the Ordinary Course of Business);
(b) the issuance, sale or other disposition of (i) any
shares in the capital of the Company, (ii) any option,
call, warrant or right (whether or not immediately
exercisable) to acquire any shares in the capital of the
Company, or (iii) any security, instrument or obligation
that is or may become convertible into or exchangeable
for any capital stock of the Company; or
(c) any merger, consolidation, amalgamation, business
combination, share exchange, reorganization,
recapitalization or similar transaction involving the
Company.
"Agreement" shall mean this Share Purchase Agreement, dated as of May 13, 1999,
by and among the Company, InfoCast, the Selling Shareholders and the Purchaser,
together with all schedules and exhibits attached thereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Alberta Act" means the Securities Act (Alberta).
"Best Efforts" shall mean the efforts that a prudent Person desiring to achieve
a particular result would use in order to ensure that such result is achieved as
expeditiously as possible.
"Breach" shall mean, in respect of a representation, warranty, covenant,
obligation or other provision, that there is or has been (a) any material
inaccuracy in or breach of, or any failure to comply with or perform, such
representation, warranty, covenant, obligation or other provision, or (b) any
claim (by any Person) or other circumstance that is inconsistent with such
representation, warranty, covenant, obligation or other provision, which has the
effect of imposing material limitations on the transactions contemplated hereby,
or would if the transactions were consummated, materially and adversely affect
any of the parties hereto.
"CDN$" shall mean the lawful currency of Canada.
"Closing" shall have the meaning specified in Article III.
"Closing Date" shall have the meaning specified in Article III.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Homebase Work Solutions Ltd., as specified in the first
paragraph of this Agreement.
"Company Common Shares" shall have the meaning specified in the recitals of this
Agreement.
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"Company Contract" shall mean any Contract (a) to which the Company is a party,
(b) by which the Company or any of its assets is or may become bound or (c)
under which the Company has, or may become subject to, any obligation or under
which the Company has or may acquire any right or interest.
"Company Preferred Shares" shall have the meaning specified in the recitals of
this Agreement.
Company Principals" means Messrs. Darcy Galvon, Ken Maclean and Scott Fleming.
"Company Returns" shall have the meaning specified in Section 4.17(b) of the
Agreement.
"Company Warrants" has the meaning ascribed hereto in Section 4.03(b) of this
Agreement.
"Consent" shall mean any approval, consent, ratification, permission, waiver or
authorization (including any Governmental Authorization).
"Contract" shall mean, with respect to any Person, any written, oral, implied or
other agreement, contract, understanding, arrangement, instrument, note,
guaranty, indemnity, representation, warranty, deed, assignment, power of
attorney, certificate, purchase order, work order, insurance policy, benefit
plan, commitment, covenant, assurance or undertaking of any nature to which such
Person is a party or by which its properties or assets may be bound or affected
or under which it or its respective business, properties or assets receive
benefits.
"Controlling Shareholders" shall mean Darcy Galvon, Ken MacLean, Scott Fleming,
7863640 Alberta Ltd. and 786206 Alberta Ltd. all of Alberta, Canada and
principal shareholders of the Company.
"Damages" shall mean any loss, damage, injury, decline in value, lost
opportunity, Liability, claim, demand, settlement, judgment, award, fine,
penalty, Tax, fee (including any legal fee on a solicitor and his own client
basis, expert fee, accounting fee or advisory fee), charge, cost (including any
cost of investigation) or expense of any nature.
"Employee Benefit Plan" shall mean any and all bonus, deferred compensation,
incentive compensation, stock purchase, stock option, stock appreciation,
phantom stock, savings, profit sharing, severance or termination pay, health or
other medical, dental, life, disability or other insurance (whether insured or
self-insured), supplementary unemployment or employment benefit, pension,
retirement, registered retirement savings, supplementary retirement,
change-in-control and any other employment benefit or compensation plan,
program, agreement, arrangement, policy or practice (including any funding
mechanism therefore which is now in effect which will be required in the future
as a result of the Transactions), whether formal or informal, funded or
unfunded, registered or unregistered, oral or written, which are maintained or
contributed to or are required to be maintained, contributed to or provided by
the Company, under which any employee, former employee or independent contractor
(or any dependent of any such Persons) has any present or future right to
benefits or compensation or under which the Company has any present or future
liability or obligation.
3
"Entity" shall mean any corporation (including any non profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, cooperative, foundation, society, political party,
union, company (including any limited liability company or joint stock company),
firm or other enterprise, association, organization or entity.
"Environmental Law" shall mean any federal, provincial, state, local or foreign
Requirement of Law relating to pollution or protection of human health or the
environment.
"Exchange Agreement" shall mean a share exchange agreement among each Selling
Shareholder, the Purchaser and InfoCast, substantially in the form of Exhibit B,
as such agreement may be amended, supplemented or otherwise modified from time
to time, pursuant to which each Selling Shareholder agrees to sell to InfoCast
the Exchangeable Shares held by such Selling Shareholder for consideration in
the form of InfoCast Exchange Stock.
"Exchangeable Shares" shall mean the Exchangeable Shares in the capital of the
Purchaser having the rights and preferences described in Exhibit "A".
"Financial Statements" shall have the meaning specified in Section 4.9(a).
"Fleming Employment Agreement" shall mean an employment agreement, in form and
substance satisfactory to Scott Fleming, the Purchaser and InfoCast, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"GAAP" shall mean generally accepted accounting principles in effect in Canada,
applied on a basis consistent with the basis on which the Financial Statements
were prepared.
"Galvon Management Agreement" shall mean a management agreement, in form and
substance satisfactory to Darcy Galvon, the Purchaser and InfoCast, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"Governmental Authorization" shall mean any (a) permit, license, certificate,
franchise, concession, approval, consent, ratification, permission, clearance,
confirmation, endorsement, waiver, certification, designation, rating,
registration, qualification or authorization that is, has been or may in the
future be issued, granted, given or otherwise made available by or under the
authority of any Governmental Authority or pursuant to any Requirement of Law;
or (b) right under any Contract with any Governmental Authority.
4
"Governmental Authority" shall mean any (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature, (b) federal, provincial, state, local, municipal,
foreign or other government, (c) governmental or quasi governmental authority of
any nature (including any governmental division, subdivision, department,
agency, bureau, branch, office, commission, council, board, instrumentality,
officer, official, representative, organization, unit, body or Entity and any
court or other tribunal), (d) multi national organization or body, or (e)
individual, Entity or body exercising, or entitled to exercise, any executive,
legislative, judicial, administrative, regulatory, police, military or taxing
authority or power of any nature.
"Indemnified Party" shall have the meaning specified in Section 10.04.
"InfoCast" shall mean InfoCast Corporation, a Delaware corporation.
"InfoCast Acquisition Transaction" shall mean any transaction involving:
i. the sale or other disposition of all or any portion of
InfoCast's business or assets (other than the sale of
goods or services in the ordinary course of business);
ii. the issuance, sale or other disposition of (i) any
shares in the capital of InfoCast, (ii) any option,
call, warrant or right (whether or not immediately
exercisable) to acquire any shares in the capital of
InfoCast, or (iii) any security, instrument or
obligation that is or may become convertible into or
exchangeable for any capital stock of InfoCast; or
iii. any merger, consolidation, amalgamation, business
combination, share exchange, reorganization,
recapitalization or similar transaction involving
InfoCast.
"InfoCast Common Stock" shall mean the common stock of InfoCast.
"InfoCast Contract" shall mean any Contract (a) to which InfoCast is a party,
(b) by which InfoCast or any of its assets is or may become bound or (c) under
which InfoCast has, or may become subject to, any obligation or under which
InfoCast has or may acquire any right or interest.
"InfoCast Exchange Stock" shall mean the InfoCast Common Stock issuable to the
Selling Shareholders upon the exchange of the Exchangeable Shares in accordance
with the Exchange Agreement.
"InfoCast Financial Statements" shall have the meaning specified in Section
5.17(a).
"InfoCast Material Contract" shall have the meaning specified in Section 5.19
(a).
"InfoCast Returns" shall have the meaning specified in Section 5.22(b) of the
Agreement.
5
"Knowledge" shall mean, in respect of a particular fact or other matter by an
individual that (a) such individual is actually aware of such fact or other
matter, or (b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a diligent
and comprehensive investigation concerning the truth or existence of such fact
or other matter. A Person shall be deemed to have "Knowledge" of a particular
fact or other matter if any officer, employee or other Representative of such
Person has Knowledge of such fact or other matter.
"KPMG" means KPMG LLP, Chartered Accountants of Toronto, Canada.
"Liability" shall mean any debt, obligation, duty or liability of any nature
(including any unknown, undisclosed, uncaptured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet prepared
in accordance with GAAP and regardless of whether such debt, obligation, duty or
liability is immediately due and payable.
"Lien" shall mean any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, equity, trust, equitable interest, claim, preference,
right of possession, lease, tenancy, license, encroachment, covenant,
infringement, interference, Order, proxy, option, right of first refusal,
preemptive right, community property interest, legend, defect, impediment,
exception, reservation, limitation, impairment, imperfection of title, condition
or restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
"MacLean Employment Agreement" shall mean an employment agreement, in form and
substance satisfactory to Ken MacLean, the Purchaser and InfoCast, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"Material Contract" shall have the meaning specified in Section 4.11.
"Non-Controlling Shareholders" means those Selling Shareholders who are not
Controlling Shareholders.
"Non-Controlling Shareholder Letters of Transmittal" means those Letters of
Transmittal substantially in the form of Schedule 8.08 hereto.
"Ontario Act" shall mean the Securities Act (Ontario), as amended.
"Order" shall mean any (a) order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, verdict, sentence, subpoena,
writ or award that is, has been or may in the future be issued, made, entered,
rendered or otherwise put into effect by or under the authority of any court,
administrative agency or other Governmental Authority or any arbitrator or
arbitration panel, or (b) Contract with any Governmental Authority that is, has
been or may in the future be entered into in connection with any Proceeding.
6
"Ordinary Course of Business" shall mean, in respect of any action taken by or
on behalf of the Company, that (a) such action is recurring in nature, is
consistent with the Company's past practices and is taken in the ordinary course
of the Company's normal day to day operations, (b) such action is taken in
accordance with sound and prudent business practices, (c) such action is not
required to be authorized by any of the Company's shareholders, the Company's
board of directors or any committee of the Company's board of directors and does
not require any other separate or special authorization of any nature, and (d)
such action is similar in nature and magnitude to actions customarily taken,
without any separate or special authorization, in the ordinary course of the
normal day to day operations of other Entities that are engaged in businesses
similar to the Company's business.
"Person" shall mean any individual, Entity or Governmental Authority.
"Pre-Closing Period" shall mean the period commencing as of the date of the
Agreement and ending on the Closing Date.
"Proceeding" shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding and any informal proceeding), prosecution, contest, hearing, inquiry,
inquest, audit, examination or investigation that is, has been or may in the
future be commenced, brought, conducted or heard by or before, or that otherwise
has involved or may involve, any Governmental Authority or any arbitrator or
arbitration panel.
"Proprietary Asset" shall mean any patent, patent application, trademark
(whether registered or unregistered and whether or not relating to a published
work), trademark application, trade name, fictitious business name, service mark
(whether registered or unregistered), service mark application, copyright
(whether registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know how, franchise, system, computer software,
invention, design, blueprint, proprietary product, technology, proprietary right
or other intellectual property right or intangible asset.
"Purchase Price" shall have the meaning specified in Section 2.02.
"Purchased Shares" shall have the meaning specified in Section 2.01.
"Purchaser" shall have the meaning specified in the first paragraph of this
Agreement.
"Related Party" shall mean (a) each Controlling Shareholder, (b) each individual
who is, or who has at any time been, an officer of the Company, (c) each member
of the family of each of the individuals referred to in clause (b) above; and
(d) any Entity (other than the Company) in which any one of the Persons referred
to in clauses (a), (b) and (c) above holds (or in which more than one of such
individuals collectively hold), beneficially or otherwise, a material voting,
proprietary or equity interest.
7
"Representatives" shall mean as to any Person, the officers, directors,
employees, attorneys, accountants, advisors and representatives of such party.
Messrs Ken MacLean, Darcy Galvon, Scott Fleming and Richard Shannon shall be
deemed to be "Representatives" of the Company.
"Requirement of Law" shall mean any federal, provincial, state, local,
municipal, foreign or other law, statute, legislation, constitution, principle
of common law, resolution, ordinance, code, edict, decree, proclamation, treaty,
convention, rule, regulation, ruling, directive, pronouncement, requirement,
specification, determination, decision, opinion or interpretation that is, has
been or may in the future be issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Authority.
"Galvon" shall mean Darcy Galvon, an individual.
"MacLean" shall mean Ken MacLean, an individual.
"Fleming" shall mean Scott Fleming, an individual.
"Selling Shareholders" shall mean each of those entities and individuals listed
on Schedule I attached hereto.
"Tax" shall mean any tax (including any income tax, franchise tax, capital gains
tax, estimated tax, gross receipts tax, value added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, occupation tax, inventory tax, occupancy tax, withholding tax, capital tax,
land transfer tax, goods and services tax or payroll tax), levy, assessment,
tariff, impost, imposition, toll, duty (including any customs duty), deficiency
or fee, and any related charge or amount (including any fine, penalty or
interest), that is, has been or may in the future be (a) imposed, assessed or
collected by or under the authority of any Governmental Authority, or (b)
payable pursuant to any tax sharing agreement or similar Contract and all
unemployment insurance, health insurance and Canada, provincial or other
government pension plan premiums.
"Tax Act" means the Income Tax Act (Canada).
"Tax Return" shall mean any return (including any information return), report,
statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or may
in the future be filed with or submitted to, or required to be filed with or
submitted to, any Governmental Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any
Requirement of Law relating to any Tax.
8
"Transaction Documents" shall mean this Agreement, the Non-Controlling
Shareholder Letters of Transmittal, the Galvon Management Agreement, the MacLean
Employment Agreement, the Employment Agreement, the Fleming Employment
Agreement, the Exchange Agreement and all other agreements, certificates and
instruments executed or contemplated to be executed by any of the Parties in
connection with the Transactions.
"Transactions" shall mean all of the transactions contemplated by this Agreement
and each of the other Transaction Documents, including, without limitation, (a)
the sale of the Purchased Shares by the Selling Shareholders and the purchase
thereof by the Purchaser in accordance with this Agreement, (b) the issuance by
the Purchaser of the Exchangeable Shares to the Selling Shareholders in
connection with such purchase in accordance with this Agreement, (c) the
exchange of Exchangeable Shares by the Selling Shareholders for shares of
InfoCast Exchange Stock in accordance with the Exchange Agreement, and (d) the
execution and delivery of, and the performance under, the Galvon Management
Agreement, the MacLean Employment Agreement, the Fleming Employment Agreement.
"Unaudited Interim Balance Sheet" shall have the meaning specified in Section
4.9(a).
"US GAAP" shall mean generally accepted accounting principles in effect in the
United States, applied on a basis consistent with the basis on which the
InfoCast Financial Statements were prepared.
"US$" shall mean the lawful currency of the United States of America.
"U.S. Securities Act" shall mean the United States Securities Act of 1933, as
amended.
Section 1.02 Accounting Principles
All references to generally accepted accounting principles or GAAP
means references to principles recommended, from time to time, in the Handbook
of the Canadian Institute of Chartered Accountants and all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
such generally accepted accounting principles.
ARTICLE II
AGREEMENT TO SELL AND PURCHASE THE PURCHASED SHARES
Section II.1 Sale and Purchase of the Purchased Shares
Subject to the terms and conditions of this Agreement, at the
Closing, the Selling Shareholders shall sell, assign, transfer and deliver to
the Purchaser an aggregate of 955,000 Company Common Shares and 45,000 Company
Preferred Shares (collectively, the "Purchased Shares"). Set forth on Schedule
2.01 is a list of the number of shares of Purchased Shares to be so sold,
assigned, transferred and delivered to Purchaser by each Selling Shareholder.
9
Section II.2 Purchase Price
At the Closing, the Purchaser shall pay to the Selling Shareholders
an aggregate purchase price (subject to adjustment as provided below) for the
Purchased Shares (the "Purchase Price") as follows:
(a) Exchangeable Shares. On the Closing Date, the Purchaser shall
issue to the Selling Shareholders an aggregate of three million four hundred
thousand (3,400,000) Exchangeable Shares. Set forth on Schedule 2.02 is a list
of the number of shares of Exchangeable Shares to be issued, transferred and
delivered to each of the Selling Shareholders.
(b) Allocation of Purchase Price. The Purchase Price shall be
allocated among the Selling Shareholders in accordance with the provisions of
Schedule 2.02. Each Selling Shareholder and the Purchaser agree to report the
purchase and sale of their Purchased Shares in any returns required to be filed
under the Tax Act and any other taxation statutes in accordance with the
provisions of Schedule 2.02.
ARTICLE III
CLOSING
The closing (the "Closing") shall take place at the offices of
InfoCast Canada Corporation, 1 Richmond Street West, Suite 901 Toronto, Ontario,
Canada at 10:00 A.M. (Eastern Standard Time) on May 13, 1999 or on such other
date or at such other place or time as the Company, the Selling Shareholders and
the Purchaser may mutually agree (such date is hereinafter referred to as the
"Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE CONTROLLING SHAREHOLDERS
The Company and each of the Controlling Shareholders, jointly and
severally, hereby represents and warrants to the Purchaser and InfoCast as
follows:
Section 4.01 Organization, Good Standing and Qualification of the Company
10
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Province of Alberta and is duly
qualified to conduct business and in corporate and tax good standing under the
laws of each jurisdiction in which the nature of its business or the ownership
or leasing of its properties require such qualification. The Company has all
requisite corporate power and authority to own and operate its properties and
assets, to execute, deliver and perform its obligations under this Agreement,
and to carry on its business as presently conducted and as presently proposed to
be conducted.
(b) Schedule 4.01(b) accurately sets forth (i) the names of the
members of the Company's board of directors, (ii) the names of the members of
each committee of the Company's board of directors and (iii) the names and
titles of the Company's officers.
(c) The Company is not insolvent within the meaning of applicable
laws, rules regulation or similar requirement, and has not made any assignment
in favour of its creditors nor a proposal in bankruptcy to its creditors or any
class thereof, nor has any petition for a receiver order been presented in
respect of the Company. The Company has not initiated any proceedings with
respect to a compromise or arrangement with its creditors or for the
dissolution, liquidation or reorganization of the Company or the winding up or
cessation of the business or affairs of the Company. No receiver has been
appointed in respect of the Company or any of its assets and no execution or
distress has been levied upon any of its assets.
(d) The Company has no subsidiaries, and, except as set forth in
Schedule 4.01(d), has never owned, beneficially or otherwise, any shares or
other securities of, or any direct or indirect interest of any nature in, any
Entity.
Section 4.02 Articles of Incorporation and By-Laws; Records
(a) The Company has delivered to the Purchaser accurate and
complete copies of:
(i) the articles of incorporation and bylaws,
including all amendments thereto of the
Company;
(ii) the share transfer register of the Company;
and
(iii) the minutes and other records of the
meetings and other proceedings (including
any actions taken by written consent or
otherwise without a meeting) of the
stockholders, board of directors and all
committees of the board of directors of the
Company.
(b) There have been no meetings or other proceedings of the
stockholders, the board of directors or any committee of the board of directors
of the Company, that are not fully reflected in such minutes or other records.
(c) The Company has never conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or other name, other than the name "Homebase Work Solutions Ltd.".
11
(d) There has not been any material violation of any of the
provisions of the articles of incorporation or bylaws of the Company or of any
resolution adopted by the shareholders, board of directors or any committee of
the board of directors of the Company and no event has occurred, and no
condition or circumstance exists that might (with or without notice or lapse of
time) constitute or result directly or indirectly in such a violation.
(e) The books of account, stock records, minute books and other
records of the Company are accurate, up to date and complete in all material
respects, and have been maintained in accordance with sound and prudent business
practices. All of the records of the Company are in the actual possession and
direct control of the Company.
Section 4.03 Capitalization
(a) The authorized capital stock of the Company consists of an
unlimited number of Company Common Shares, an unlimited number of first
preferred shares and an unlimited number of second preferred shares of which
955,000 Company Common Shares and 45,000 Company Preferred Shares have been
issued and are outstanding, and will be the only Company Common Shares and
Company Preferred Shares issued and outstanding on the Closing Date, and are
owned and held beneficially and of record by the Selling Shareholders as set
forth on Schedule I hereto. All issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued in full compliance
with all applicable securities laws and other applicable Requirement of Laws,
and are outstanding as fully paid and non-assessable.
(b) There are no: (i) outstanding subscriptions, options, calls,
warrants or rights (whether or not currently exercisable) to acquire any shares
in the capital or other securities of the Company, other than 67,500 outstanding
share purchase warrants and 33,750 outstanding "penalty" share purchase warrants
(collectively, the "Company Warrants") associated with the Company Preferred
Shares, which Warrants shall be tendered for cancellation on the Closing Date,
(ii) outstanding security, instrument or obligation that is or may become
convertible into or exchangeable for any shares in the capital or other
securities of the Company, (iii) Contract under which the Company is or may
become obligated to sell or otherwise issue any shares of its capital stock or
any other securities, or (iv) condition or circumstance that may directly or
indirectly give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares in the capital, or other securities of, the Company.
(c) The Company has never repurchased, redeemed or otherwise
reacquired (and has not agreed, committed or offered (in writing or otherwise)
to reacquire) any shares of capital stock or other securities of the Company.
(d) Upon the acquisition by Purchaser of the Purchased Shares,
Purchaser will own 100% of the issued and outstanding shares of capital stock of
the Company.
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Section 4.04 Authority; Binding Nature of Agreements
(a) Subject to completion of the Non-Controlling Shareholder Letters
of Transmittal and the tender of the same at closing, the Company has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under this Agreement and each of the other Transaction
Documents to which it is a party, and the execution, delivery and performance by
the Company of this Agreement and each of such other Transaction Documents have
been duly authorized by all necessary action on the part of the Company and its
shareholders, board of directors and officers. Each of this Agreement and such
other Transaction Documents constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and to general principles of
equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law).
(b) Each of the Controlling Shareholders has the absolute and
unrestricted right, power and capacity to enter into and to perform its
obligations under this Agreement and each of the other Transaction Documents to
which it is a party, and the execution, delivery and performance by each
Controlling Shareholder of this Agreement and such other Transaction Documents
have been duly authorized by all necessary action on the part of such
Controlling Shareholder. Each of this Agreement and such other Transaction
Documents constitutes, or upon execution and delivery will constitute, the
legal, valid and binding obligation of each Controlling Shareholder party
thereto, enforceable against such Controlling Shareholder in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
to general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
Section IV.5 Non-Contravention; Consents
(a) Neither the execution and delivery of this Agreement or any
other Transaction Document to which the Company or any of the Controlling
Shareholders is a party, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a
violation of (i) any of the provisions of
the articles of incorporation or bylaws of
the Company, or (ii) any resolution adopted
by the shareholders, board of directors or
any committee of the board of directors of
the Company, or (iii) the provision of any
agreement, whether or not written, between
the holders of Company Common Shares of
which the Company or the Controlling
Shareholders have knowledge;
13
(ii) to the Knowledge of the Company or the
Controlling Shareholders, contravene,
conflict with or result in a violation of,
or give any Governmental Authority or other
Person the right to challenge any of the
Transactions or to exercise any remedy or
obtain any relief under, any Requirement of
Law or any Order to which the Company or any
of the Controlling Shareholders, or any of
the assets owned or used by the Company or
any of the Controlling Shareholders, is
subject;
(iii) to the Knowledge of the Company or the
Controlling Shareholders, cause the Company
to become subject to, or to become liable
for the payment of, any Tax;
(iv) to the Knowledge of the Company or the
Controlling Shareholders, cause any of the
assets owned or used by the Company or to be
reassessed or revalued by any taxing
authority or other Governmental Authority;
(v) contravene, conflict with or result in a
violation of any of the terms or
requirements of, or give any Governmental
Authority the right to revoke, withdraw,
suspend, cancel, terminate or modify, any
Governmental Authorization that is held by
the Company or any of its employees or that
otherwise relates to the business of the
Company or to any of the assets owned or
used by the Company;
(vi) contravene, conflict with or result in a
violation or breach of, or result in a
default under, any provision of any of the
Company Contracts;
(vii) give any Person the right to (i) declare a
default or exercise any remedy under any
Company Contract (ii) accelerate the
maturity or performance of any Company
Contract or (iii) cancel, terminate or
modify any Company Contract;
(viii) give any Person the right to any payment by
the Company or give rise to any acceleration
or change in the award, grant, vesting or
determination of options, warrants, rights,
severance payments or other contingent
obligations of any nature whatsoever of the
Company in favour of any Person, in any such
case as a result of the change in control of
the Company, or otherwise resulting from the
Transactions;
(ix) contravene, conflict with or result in a
violation or breach of or a default under
any provision of, or give any Person the
right to declare a default under, any
Contract to which any of the Controlling
Shareholders is a party or by which any of
the Controlling Shareholders is bound; or
14
(x) result in the imposition or creation of any Lien
upon or with respect to any asset owned or used by the Company.
(b) Except as set forth on Schedule 4.05(b), and assuming the
completion and tender of the Non-Controlling Shareholder Letters of Transmittal
on Closing, neither the Company nor any of the Controlling Shareholders was, is
or will be required to make any filing with or give any notice to, or to obtain
any Consent from, any Person in connection with the execution and delivery of
this Agreement or any of the other Transaction Documents or the consummation or
performance of any of the Transactions.
Section 4.06 Proprietary Rights; Proprietary Information and Inventions
Agreement
(a) Except as set forth in Schedule 4.06, there is no Proprietary
Asset that is owned by or licensed to the Company or that is otherwise used or
useful in connection with the Company's business.
(b) The Company has taken all reasonable measures and precautions to
protect the confidentiality and value of each Proprietary Asset identified or
required to be identified in Schedule 4.06.
(c) The Company does not believe it is or will be necessary to
utilize any inventions, trade secrets or proprietary information of any of its
employees made prior to their employment by the Company, except for inventions,
trade secrets or proprietary information that have been assigned to the Company
or are licensed by any of the Selling Shareholders as described in Schedule
4.06.
(d) To the Knowledge of the Controlling Shareholders, the Company
has conducted its business without infringement or claim of infringement of any
license, patent, copyright, service mark, trademark, trade name, trade secret or
other intellectual property right of others. The Company is not infringing, and
has not at any time infringed or received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential infringement
of, any Proprietary Asset owned or used by any other Person. To the Knowledge of
the Company and each of the Controlling Shareholders, no other Person is
infringing, and no Proprietary Asset owned or used by any other Person infringes
or conflicts with, any Proprietary Asset owned or used by the Company.
(e) The Company owns, licenses or has rights to all of the
Proprietary Assets owned or used by the Company which are material to the
business of the Company. The Proprietary Assets identified in Schedule 4.06
constitute all of the Proprietary Assets necessary to enable the Company to
conduct its business in the manner in which its business is currently being
conducted.
15
Section 4.07 Proceedings; Orders
(a) There is no pending Proceeding and, to the Knowledge of the
Company and the Controlling Shareholders, no Person has threatened to commence
any Proceeding:
(i) that involves the Company or that otherwise
relates to or might affect the business of
the Company or any of the assets owned or
used by the Company (whether or not the
Company is named as a party thereto); or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal or
otherwise interfering with, any of the
Transactions.
(b) No event has occurred, and no claim, dispute or other condition
or circumstance exists, that might directly or indirectly give rise to or serve
as a basis for the commencement of any material Proceeding of the type described
in Section 4.07(a).
(c) No Proceeding has ever been commenced by or against the Company
and no Proceeding otherwise involving or relating to the Company has been
pending or threatened at any time.
(d) There is no Order to which the Company or any of the assets
owned or used by the Company is subject, and to the Knowledge of the Company and
the Controlling Shareholders, none of the Selling Shareholders is subject to any
Order that relates to the business of the Company or to any of the assets owned
or used by the Company.
(e) No officer or employee of the Company is subject to any Order
that prohibits such officer or employee from engaging in or continuing any
conduct, activity or practice relating to the business of the Company.
(f) To the knowledge of the Company and the Controlling
Shareholders, there is no proposed Order that, if issued or otherwise put into
effect, (i) may have a material adverse effect on the business, condition,
assets, liabilities, operations, financial performance, net income or prospects
(or on any aspect or portion thereof) of the Company or on the ability of the
Company or any of the Controlling Shareholders to comply with or perform any
covenant or obligation under this Agreement or any of the other Transactional
Documents, or (ii) may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the Transactions.
Section 4.08 Sale of Purchased Shares Valid
16
Assuming the accuracy of the representations and warranties of the
Purchaser and InfoCast contained in Section 5.07, the offer and sale of the
Purchased Shares will be exempt from the prospectus and registration
requirements of the Ontario Act. Neither the Company nor any of the Controlling
Shareholders nor any agent on behalf of any such party has solicited or will
solicit any offers to sell or has offered to sell or will offer to sell all or
any part of such shares to any person or persons so as to bring the offer or
sale of the Purchased Shares to the Purchaser within such requirements.
Section 4.09 Financial Statements
(a) The Company has delivered to the Purchaser the unaudited balance
sheet of the Company as at March 31, 1999 (the "Unaudited Interim Balance
Sheet"), and the related unaudited statements of operations, changes in
shareholders' equity and cash flows of the Company for the six months then
ended, together with the notes thereto (collectively, the "Financial
Statements").
(b) All of the Financial Statements are accurate and complete in all
material respects, and the dollar amount of each line item included in the
Financial Statements is accurate in all material respects. The Financial
Statements and notes referred to in Section 4.09(a) are in accordance with the
books and records of the Company and present fairly the financial position of
the Company as of the respective dates thereof and the results of operations,
changes in stockholder's equity and cash flows of the Company for the periods
covered thereby. The Financial Statements have been prepared in accordance with
GAAP, applied on a consistent basis throughout the periods covered.
(c) At the date of the Unaudited Interim Balance Sheet, (i) the
Company had no Liabilities of any nature (matured or unmatured, fixed or
contingent) required by GAAP to be provided for in the Unaudited Interim Balance
Sheet or described in the notes thereto which were not provided for in the
Unaudited Interim Balance Sheet, described in the notes thereto, or set forth in
Schedule 4.17 hereto, (ii) the Company had no material Liabilities of any nature
(matured or unmatured, fixed or contingent) which were not required by GAAP to
be provided for in the Unaudited Interim Balance Sheet or described in the notes
thereto and (iii) all reserves established by the Company and set forth in the
Unaudited Interim Balance Sheet were adequate for the purposes for which they
were established. As of the date of this Agreement, the Company has no
Liabilities, except for:
(i) Liabilities identified as such in the
"liabilities" column of the Unaudited
Interim Balance Sheet;
(ii) accounts payable (of the type required to be
reflected as current liabilities in the
"liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred
by the Company in the Ordinary Course of
Business since the date of the Unaudited
Interim Balance Sheet; and
(iii) the Company's obligations under the
Contracts listed in Schedule 4.11 and
potential liabilities set forth on Schedule
4.17 hereof.
17
Section 4.10 Title to Assets
(a) The Company owns and has good and valid title to all assets
purported to be owned by it, including:
(i) with respect to the Company, all assets
reflected on the Unaudited Interim Balance
Sheet (except for inventory sold by the
Company since the date of the Unaudited
Interim Balance Sheet in the Ordinary Course
of Business);
(ii) all of the Company's rights under Company
Contracts; and
(iii) all other assets reflected in the Company's
books and records as being owned by the
Company.
(b) Except as set forth in Schedule 4.10, all of said assets are
owned by the Company free and clear of any Liens except liens for current taxes
and assessments not delinquent.
(c) Schedule 4.10 identifies all assets that are being leased or
licensed to the Company. All leases pursuant to which the Company leases real or
personal property are in good standing and are valid and effective in accordance
with their respective terms and there exists no default thereunder or occurrence
or condition which could result in a default thereunder or termination thereof.
The buildings, equipment and other tangible assets of the Company are in good
operating condition (normal wear and tear excepted) and are useable in the
ordinary course of business, and the Company owns, or has valid leasehold
interests in, all assets necessary for the conduct of its business as presently
conducted.
Section 4.11 Material Contracts
(a) Schedule 4.11 identifies and provides an accurate and complete
description of each Company Contract which involves future payments, performance
of services or delivery of goods or materials to or by the Company of an
aggregate amount or value in excess of CDN$5,000, or which otherwise is material
to the business or prospects of the Company (collectively, the "Material
Contracts"). All nonmaterial contracts of the Company do not in the aggregate
represent a material portion of the assets or liabilities of the Company. The
Company has delivered to the Purchaser accurate and complete copies of all
Material Contracts, including all amendments thereto.
(b) Each Material Contract is valid and in full force and effect,
and is enforceable by the Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and to general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
18
(c) The Company is not in default under any Material Contract in any
material respect, and to the Knowledge of the Company and each of the
Controlling Shareholders, no Person has violated or breached, or declared or
committed any default under, any Material Contract;
(d) No event has occurred, and no circumstance or condition exists,
that might (with or without notice or lapse of time) (i) result in a material
violation or breach of any of the provisions of any Material Contract, (ii) give
any Person the right to declare a default or exercise any remedy under any
Material Contract, (iii) give any Person the right to accelerate the maturity or
performance of any Material Contract, or (iv) give any Person the right to
cancel, terminate or modify, any Material Contract.
(e) the Company has not waived any of its rights under any Material
Contract.
(f) The Company has never guaranteed or otherwise agreed to cause,
insure or become liable for, and has never pledged any of its assets to secure,
the performance or payment of any obligation or other Liability of any other
Person.
(g) Except as set forth in Schedule 4.11, the Company has never been
a party to or bound by (i) any joint venture agreement, partnership agreement,
profit sharing agreement, cost sharing agreement, loss sharing agreement or
similar Contract, or (ii) any Contract that creates or grants to any Person, or
provides for the creation or grant of, any share appreciation right, phantom
share right or similar right or interest.
(h) To the knowledge of the Company and the Controlling
Shareholders, the performance of the Material Contracts will not result in any
violation of, or failure to comply with, any Requirement of Law.
(i) No Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to the Company under any Material Contract or any other
term or provision of any Material Contract.
(j) The Contracts identified in Schedule 4.11 collectively
constitute all of the Contracts necessary to enable the Company to conduct its
business in the manner in which such business is currently being conducted and
in the manner in which such business is proposed to be conducted.
(k) Schedule 4.11 identifies and provides an accurate and complete
description of each proposed Contract as to which any bid, offer, written
proposal, term sheet or similar document has been submitted or received by the
Company.
(l) No party to any Material Contract has made a claim to the effect
that the Company has failed to perform an obligation thereunder. There is no
known plan, intention or indication of any contracting party to any Contract to
cause the termination, cancellation or modification of such Contract or to
reduce or otherwise change its activity thereunder so as to adversely affect the
benefits derived or expected to be derived therefrom by the Company.
19
(m) The Company is neither a party to, nor bound by, any contract,
agreement, commitment or restriction which obligates the Company to perform
services or to produce products unprofitably.
Section IV.12 Employees; Employee Benefits
(a) Schedule 4.12 contains a list of all employees of the Company as
of the date hereof and their material terms and conditions of employment
including salary or wages, bonus, position title and seniority date. Except as
disclosed on Schedule 4.12, no employee of the Company is on long-term
disability leave or extended absence or in receipt of workers' compensation
benefits.
(b) Schedule 4.12 contains a list of individuals who are currently
performing services for the Company related to its business and are classified
as "consultants" or "independent contractors".
(c) The Company is not a party to or subject to any collective
bargaining agreements with any trade union or collective bargaining agent
representing any of its employees. There is no labour union organizing activity
pending or, to the Company's or the Controlling Shareholders' knowledge,
threatened with respect to any employees of the Company. Except as specified on
Schedule 4.12, no employee of the Company has any agreement or contract, written
or verbal, regarding his employment, other than those deemed to exist at common
law.
(d) To the Knowledge of the Company and the Controlling
Shareholders, no employee of the Company, nor any consultant with whom the
Company has contracted, is in violation of any term of any employment contract,
proprietary information agreement or any other agreement relating to the right
of any such individual to be employed by, or to contract with, the Company
because of the nature of the business to be conducted by the Company, and to the
Company's knowledge the continued employment by the Company of its present
employees, and the performance of the Company's contracts with its independent
contractors, will not result in any such violation. The Company has not received
any notice alleging that any such violation has occurred. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate his, her or their employment with the Company, nor does the
Company have a present intention to terminate the employment of any officer, key
employee or group of key employees.
(e) Except as set forth in Schedule 4.12 there are no employment
policies or plans, including policies or plans regarding incentive compensation,
stock options, severance pay or other terms or conditions of employment or terms
or conditions upon which Employees may be terminated, which are binding upon the
Company.
(f) The Company has been and is being operated in full compliance
with all Requirements of Law relating to employees, including employment
standards, occupational health and safety, pay equity and employment equity.
There have been no complaints under such laws against the Company.
20
(g) There are no complaints nor, to the Knowledge of the Company and
the Controlling Shareholders, are there any threatened complaints, against the
Company, before any employment standards branch or tribunal or human rights
tribunal. To the Knowledge of the Company and the Controlling Shareholders,
nothing has occurred which might lead to a complaint against the Company, under
any human rights legislation or employment standards legislation. There are no
outstanding decisions or settlements or pending settlements under the employment
standards legislation which place any obligation upon the Company, to do or
refrain from doing any act.
(h) All current assessments under the Workers' Compensation Act
(Alberta) in relation to the Company have been paid or accrued and the Company
has not been subject to any special or penalty assessment under such legislation
which has not been paid.
(i) To the knowledge of the Company and the Controlling
Shareholders, there are no outstanding labour tribunal proceedings of any kind,
including any proceedings which could result in certification of a trade union
as bargaining agent for any employees or independent contractors of the Company.
Section 4.13 Receivables; Major Customers
(a) Schedule 4.13 provides an accurate and complete breakdown and
aging of all accounts receivable, notes receivable and other receivables of the
Company as of March 31, 1999.
(b) All existing accounts receivable of the Company (including those
accounts receivable reflected on the Unaudited Interim Balance Sheet that have
not yet been collected and those accounts receivable that have arisen since
March 31, 1999 and have not yet been collected):
(i) represent valid obligations of customers of
the Company arising from bona fide
transactions entered into in the Ordinary
Course of Business; and
(ii) are current and will be collected in full
(without any counterclaim or setoff) in the
Ordinary Course of Business;
(c) Schedule 4.13 accurately identifies, and provides an accurate
and complete breakdown of the revenues received from, each customer or other
Person that accounted for more than CDN$5,000 of the gross revenues of the
Company from September, 1998 through March 31, 1999 on an annualized basis. The
Company has not received any notice or other communication (in writing or
otherwise), and has not received any other information, indicating that any
customer or other Person identified in Schedule 4.13 may cease dealing with the
Company or may otherwise reduce the volume of business transacted by such Person
with the Company below historical levels.
21
Section 4.14 Major Suppliers
(a) Schedule 4.14:
(i) provides an accurate and complete breakdown
and aging of the Company's accounts payable
as of March 31, 1999;
(ii) provides an accurate and complete breakdown
of all customer deposits and other deposits
held by the Company as of the date of this
Agreement; and
(iii) provides an accurate and complete breakdown
of the Company's long term debt as of the
date of this Agreement.
(b) Schedule 4.14 accurately identifies, and provides an accurate
and complete breakdown of the amounts paid to, each supplier or other Person
that received more than CDN$5,000 from the Company from September, 1998 through
March 31, 1999 on an annualized basis.
Section 4.15 Compliance With Requirement of Laws
(a) To the Knowledge of the Company and the Controlling
Shareholders, the Company is in full compliance with each Requirement of Law
that is applicable to it or to the conduct of its business or the ownership or
use of its assets.
(b) To the Knowledge of the Company and the Controlling
Shareholders, no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) constitute or result
directly or indirectly in a material violation by the Company of, or a material
failure on the part of the Company to comply with, any Requirement of Law.
(c) The Company has not received, at any time, any notice or other
communication (in writing or otherwise) from any Governmental Authority or any
other Person regarding (i) any actual, alleged, possible or potential violation
of, or failure to comply with, any Requirement of Law, or (ii) any actual,
alleged, possible or potential obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any cleanup or any
remedial, corrective or response action of any nature.
(d) To the Knowledge of the Company and each of the Controlling
Shareholders, no Governmental Authority has proposed or is considering any
Requirement of Law that, if adopted or otherwise put into effect, (i) may have
an material adverse effect on the business, condition, assets, liabilities,
operations, financial performance, net income or prospects of the Company, or on
the ability of the Company or any of the Controlling Shareholders to comply with
or perform any covenant or obligation under any of the Transactional Documents,
or (ii) may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the Transactions.
21
Section 4.16 Governmental Authorizations
(a) Schedule 4.16 identifies:
(i) each Governmental Authorization that is held
by the Company; and
(ii) each other Governmental Authorization that,
to the Knowledge of the Company and each of
the Controlling Shareholders, is held by any
of the Company's employees and relates to or
is useful in connection with the Company's
business.
(b) The Company has delivered to the Purchaser accurate and complete
copies of all of the Governmental Authorizations identified in Schedule 4.16,
including all renewals thereof and all amendments thereto. Each Governmental
Authorization identified or required to be identified in Schedule 4.16 is valid
and in full force and effect.
(c) The Governmental Authorizations identified in Schedule 4.16
constitute all of the Governmental Authorizations necessary (i) to enable the
Company to conduct its business in the manner in which its business is currently
being conducted, and (ii) to permit the Company to own and use its assets in the
manner in which they are currently owned and used.
Section 4.17 Tax Matters
(a) Each Tax required to have been paid, or claimed by any
Governmental Authority to be payable, by the Company (whether pursuant to any
Tax Return or otherwise) has been duly paid in full on a timely basis including
all installments on account of Tax for the current year that are due and payable
by it. Any Tax required to have been withheld or collected by the Company has
been duly withheld and collected, and (to the extent required) each such Tax has
been paid to the appropriate Governmental Authority.
(b) Schedule 4.17 accurately identifies all Tax Returns required to
be filed by or on behalf of the Company with any Governmental Authority with
respect to any taxable period ending on or before the Closing Date ("Company
Returns"). All Company Returns (i) have been or will be filed when due, and (ii)
have been or will be, when filed, accurately and completely prepared in full
compliance with all applicable Requirement of Laws, and the Company have
completely and accurately reported all income and all other amounts of
information required to be reported thereon. All amounts shown on the Company
Returns to be due on or before the Closing Date, and all amounts otherwise
payable in connection with the Company Returns on or before the Closing Date,
have been or will be paid on or before the Closing Date. The Company, having
been incorporated in September 1998, has not yet been required to file a Tax
Return.
22
(c) The Company's liability for unpaid Taxes for all periods ending
on or before March 31, 1999 does not, in the aggregate, exceed the amount of the
current liability accruals for Taxes (excluding reserves for deferred taxes)
reported in the Unaudited Interim Financial Statements. The Company will
establish, in the Ordinary Course of Business, reserves adequate for the payment
of all Taxes for the period from September 30, 1998 through the Closing Date in
addition to those not included on the Company's Unaudited Interim Balance Sheet,
and the Company will disclose the dollar amount of such reserves to the
Purchaser on or prior to the Closing Date.
(d) Schedule 4.17 accurately identifies each examination or audit of
any Company Return that has been conducted by any Governmental Authority since
the Company's inception. The Company has delivered to the Purchaser accurate and
complete copies of all material audit reports (to which the Company has access)
relating to Company Returns, elections, designations or similar things relating
to Taxes for which the Company is or may be liable. No extension or waiver of
the limitation period applicable to any of the Company Returns has been granted
(by the Company or any other Person), and no such extension or waiver has been
requested from the Company.
(e) There are no unsatisfied Liabilities for Taxes (including
liabilities for interest, additions to tax and penalties thereon and related
expenses) with respect to any notice of deficiency or similar document received
by the Company.
(f) There are no actions, suits, proceedings, investigations, audits
or claims now pending or, to the knowledge of the Company and the Controlling
Shareholders threatened, against the Company in respect of any Taxes and there
are no matters under discussion, audit or appeal with any Governmental Authority
relating to Taxes.
(g) Except as specifically disclosed in writing to the Purchaser,
for purposes of the Tax Act or any applicable provincial or municipal taxing
statute, no Person or group of Persons has ever acquired or had the right to
acquire control of the Company.
(h) The transfer pricing practices of the Company have not been the
subject of a review or audit by any revenue or other taxing authority and there
are no agreements, waivers or other agreement providing for an extension of time
with respect to the assessment or collection of any Tax against the Company with
respect to any matter relating to transfer pricing issues or the transfer
pricing practices of the Company. There are no suits or similar proceedings now
pending or threatened against the Company with respect to any transfer pricing
issue or transfer pricing practice of the Company. There are currently no
matters under discussion with any taxation or other authority relating to any
transfer pricing issue, transfer pricing practices of the Company, or any
advance pricing agreement or similar process or agreement concerning transfer
pricing practices and issues of the Company.
(i) No reserves are required to be taken by the Company for purposes
of the Tax Act.
23
(j) There are no reassessments of the Company that are issued and
outstanding and there are no outstanding issues which have been raised and
communicated to the Company by any governmental body for any taxation year in
respect of which a Tax Return of the Company has been audited. No Governmental
Authority has challenged, disputed or questioned the Company in respect of Taxes
or of any returns, filings or other reports filed under any statute providing
for Taxes. The Company is not negotiating any draft assessment or reassessment
with any Governmental Authority. To the Knowledge of the Company and each of the
Controlling Shareholders, there are no grounds for an assessment or reassessment
of the Company of an amount which would have a material adverse effect on the
Company other than as disclosed in the Financial Statements. The Company has not
received any indication from any governmental body that an assessment (other
than an assessment accepting a Tax Return as filed) or reassessment of the
Company is proposed in respect of any Taxes, regardless of its merits. The
Company has not executed or filed with any governmental body any agreement or
waiver extending the period for assessment, reassessment or collection of any
Taxes.
(k) The Company has withheld from each payment made to any of its
present or former employees, officers and directors, and to all persons who are
non-residents of Canada for the purposes of the Tax Act, all amounts required by
law to be withheld, and furthermore, have remitted such withheld amounts within
the prescribed periods to the appropriate Governmental Authority. The Company
has remitted all Canada Pension Plan contributions, provincial pension plan
contributions, employment insurance premiums, employer health taxes, worker's
compensation premiums and other Taxes payable by it in respect of its employees
and has remitted such amounts to the proper governmental body within the time
required under the applicable legislation. Other than as set forth in Schedule
4.17, the Company has charged, collected and remitted on a timely basis all
Taxes as required under applicable legislation on any sale, supply or delivery
whatsoever it has made; and for any late filings disclosed on Schedule 4.17, no
penalties or fines will or have become due and owing as a result of such late
filings.
(l) The Company has not deducted any material amounts in computing
its income in a taxation year that are currently unpaid and that could, if they
remain unpaid, be required to be included in income in a subsequent taxation
year under Section 78 of the Tax Act.
(m) The Company will not at any time be deemed to have a capital
gain pursuant to subsection 80.03(2) of the Tax Act as a result of any
transactions or event taking place in any fiscal period or portion thereof
ending on or before the Closing Date.
(n) The Company (i) does not have a permanent establishment in any
jurisdiction other than Canada, (ii) is not subject to any form of taxation in
any jurisdiction other than Canada, and (iii) has never filed or is now or has
ever been required to file any federal, state, local, provincial or other form
of tax return in any jurisdiction other than Canada.
24
Section 4.18 Securities Laws Compliance; Registration Rights
The offer and sale of the Purchased Shares to the Purchaser has
complied and will comply with all securities laws of the Province of Alberta.
The Company has complied with all applicable provincial securities laws of
Canada in connection with all offers and sales of securities of the Company
prior to the date of this Agreement. The Company has not heretofore granted any
purchaser of its securities the right to qualify the distribution of its
securities by prospectus in any province of Canada.
Section 4.19 Finders and Brokers
Neither the Company or any Controlling Shareholder nor any person
acting on behalf of the Company or any Controlling Shareholder has negotiated
with any finder, broker, intermediary or any similar person in connection with
the transactions contemplated herein. The Company and the Controlling
Shareholders will indemnify the Purchaser and hold it harmless from any
liability or expense arising from any claim for brokerage commissions, finder's
fees or other similar compensation based upon any agreement, arrangement or
understanding made by or on behalf of the Company or any Controlling
Shareholder.
Section 4.20 Environmental Compliance
The Company is in compliance in all material respect with all
applicable Environmental Laws. The Company has not received any notice or other
communication (in writing or otherwise) that alleges that the Company is not in
compliance with any Environmental Law, and, to the best Knowledge of the Company
and the Controlling Shareholders, there are no circumstances that may prevent or
interfere with the Company's compliance with any Environmental Law in the
future.
Section 4.21 Insurance
(a) Schedule 4.21 accurately sets forth, with respect to
each insurance policy maintained by or at the expense of, or for the direct or
indirect benefit of, the Company:
(i) the name of the insurance carrier that
issued such policy and the policy number of
such policy;
(ii) whether such policy is a "claims made" or an
"occurrences" policy;
(iii) a description of the coverage provided by
such policy and the material terms and
provisions of such policy (including all
applicable coverage limits, deductible
amounts and co-insurance arrangements and
any non customary exclusions from coverage);
25
(iv) the annual premium payable with respect to
such policy, and the cash value (if any) of
such policy; and
(v) a description of any claims pending, and any
claims that have been asserted in the past,
with respect to such policy.
(b) Schedule 4.21 also identifies (i) each pending application for
insurance that has been submitted by or on behalf of the Company, and (ii) each
self-insurance or risk-sharing arrangement affecting the Company or any of its
assets. The Company has delivered to the Purchaser accurate and complete copies
of all of the insurance policies identified in Schedule 4.21 (including all
renewals thereof and endorsements thereto) and all of the pending applications
identified in Schedule 4.21.
(c) Each of the policies identified in Schedule 4.21 is valid,
enforceable and in full force and effect, and has been issued by an insurance
carrier that, to the Knowledge of the Company and the Controlling Shareholders,
is solvent, financially sound and reputable. All of the information contained in
the applications submitted in connection with said policies was (at the times
said applications were submitted) accurate and complete, and all premiums and
other amounts owing with respect to said policies have been paid in full on a
timely basis. The nature, scope and dollar amounts of the insurance coverage
provided by said policies are similar to the coverage customarily carried by
companies of similar size and character of the Company. Each of the policies
identified in Schedule 4.21 will continue in full force and effect following the
Closing. The Company has paid all premiums due, and has otherwise performed all
of its obligations, under each policy to which it is a party or that provides
coverage to it or any of its directors or officers in connection with their
performance of services to the Company.
(d) There is no pending material claim under or based upon any of the
policies identified in Schedule 4.21, and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such
claim.
(e) The Company has not received:
(i) any notice or other communication (in
writing or otherwise) regarding the actual
or possible cancellation or invalidation of
any of the policies identified in Schedule
4.21 or regarding any actual or possible
adjustment in the amount of the premiums
payable with respect to any of said
policies;
(ii) any notice or other communication (in
writing or otherwise) regarding any actual
or possible refusal of coverage under, or
any actual or possible rejection of any
claim under, any of the policies identified
in Schedule 4.21; or
26
(iii) any indication that the issuer of any of the
policies identified in Schedule 4.21 may be
unwilling or unable to perform any of its
obligations thereunder.
Section 4.22 Related Party Transactions
Except as set forth in Schedule 4.22:
(a) no Related Party has, and no Related Party has at any time since
September 1998 had, any direct or indirect interest of any nature in any asset
used in or otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since September 1998
been, indebted to the Company;
(c) since September 1998, no Related Party has entered into, or has
had any direct or indirect financial interest in, any Contract, transaction or
business dealing of any nature involving the Company;
(d) to the Knowledge of the Company and the Controlling
Shareholders, no Related Party is competing, or has at any time since September
1998 competed, directly or indirectly, with the Company in any market served by
the Company;
(e) to the Knowledge of the Company and the Controlling
Shareholders, no Related Party has any claim or right against the Company; and
(f) to the Knowledge of the Company and the Controlling
Shareholders, no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) directly or indirectly give
rise to or serve as a basis for any material claim or right in favour of any
Related Party against the Company.
Section 4.23 Absence of Changes
Except as set forth in Schedule 4.23, since January 1, 1999:
(a) there has not been any material adverse change in the Company's
business, condi tion, assets, liabilities, operations, financial performance,
net income or prospects (or in any aspect or portion thereof), and no event has
occurred that might have a material adverse effect on the Company's business,
condition, assets, liabilities, operations, financial performance, net income or
prospects (or on any aspect or portion thereof);
(b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of the Company's assets (whether or not covered
by insurance);
27
(c) the Company has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Company has not sold or otherwise issued any shares of
capital stock or any other securities;
(e) the Company has not amended its articles of incorporation or
bylaws and has not effected or been a party to any Acquisition Transaction,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) the Company has not purchased or otherwise acquired any asset
from any other Person, except for supplies acquired by the Company in the
Ordinary Course of Business;
(g) the Company has not leased or licensed any asset from any other
Person;
(h) the Company has not made any material capital expenditure;
(i) the Company has not sold or otherwise transferred, and has not
leased or licensed, any asset to any other Person except for products sold by
the Company from its inventory in the Ordinary Course of Business;
(j) the Company has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) the Company has not pledged or hypothecated any of its assets or
otherwise permitted any of its assets to become subject to any Lien;
(l) the Company has not made any loan or advance to any other
Person;
(m) the Company has not (i) established or adopted any employee
benefit plan, or (ii) paid any bonus or made any profit sharing or similar
payment to, or increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees;
(n) the Company has not increased the compensation of any of its
officers, or the rate of pay of its employees as a group, except as part of
regular compensation increases in the ordinary course of its business;
(o) there has been no resignation or termination of employment of
any officer or key employee of the Company;
28
(p) there has been no labour dispute involving the Company or its
employees and none is pending or, to the Company's Knowledge, threatened;
(q) the Company has not entered into, and neither the Company nor
any of the assets owned or used by the Company has become bound by, any Material
Contract;
(r) no Material Contract by which the Company or any of the assets
owned or used by the Company is or was bound, or under which the Company has or
had any rights or interest, has been amended or terminated;
(s) the Company has not incurred, assumed or otherwise become
subject to any Liability, other than accounts payable (of the type required to
be reflected as current liabilities in the "liabilities" column of a balance
sheet prepared in accordance with GAAP) incurred by the Company in the Ordinary
Course of Business;
(t) the Company has not discharged any Lien or discharged or paid
any indebtedness or other Liability, except for accounts payable that (i) are
reflected as current liabilities in the "liabilities" column of the Unaudited
Interim Balance Sheet or have been incurred by the Company since March 31, 1999
in the Ordinary Course of Business, and (ii) have been discharged or paid in the
Ordinary Course of Business;
(u) the Company has not forgiven any debt or otherwise released or
waived any right or claim;
(v) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
(w) the Company has not entered into any transaction or taken any
other action outside the Ordinary Course of Business; and
(x) the Company has not agreed, committed or offered (in writing or
otherwise), and has not attempted, to take any of the actions referred to in
clauses "(c)" through "(w)" above.
Section 4.24 Controlling Shareholders
(a) Each Controlling Shareholder has the capacity and financial
capability to comply with and perform all of his covenants and obligations under
each of the Transaction Documents to which it is or may become a party.
29
(b) Each Controlling Shareholder is, and at the Closing will be, the
registered and beneficial owner and holder of the Purchased Shares set forth
beside its name on Schedule 2.01, free and clear of any Liens. Each Controlling
Shareholder has delivered to the Purchaser accurate and complete copies of the
stock certificates evidencing the Purchased Shares owned by such Controlling
Shareholder.
(c) Each Controlling Shareholder:
(i) has not, at any time, (A) made a general
assignment for the benefit of creditors, (B)
filed, or had filed against him, any
bankruptcy petition or similar filing, (C)
suffered the attachment or other judicial
seizure of all or a substantial portion of
his assets, (D) admitted in writing its
inability to pay his debts as they become
due, (E) been convicted of, or pleaded
guilty to, fraud or criminal dishonesty or
(F) taken or been the subject of any action
that may have an adverse effect on his
ability to comply with or perform his
respective covenants or obligations under
any of the Transaction Documents; and
(ii) is not subject to any Order that may have an
adverse effect on his ability to comply with
or perform its covenants or obligations
under any of the Transaction Documents.
(d) There is no Proceeding pending, and no Person has threatened to
commence any Proceeding, that may have an adverse effect on the ability of any
Controlling Shareholder to comply with or perform his covenants or obligations
under any of the Transaction Documents. No event has occurred, and no claim,
dispute or other condition or circumstance exists, that might directly or
indirectly give rise to or serve as a basis for the commencement of any such
Proceeding.
(e) No consent, approval, authorization, order, registration or
qualification of or by any Person is required in connection with the execution,
delivery and performance by any Controlling Shareholder of this Agreement or the
consummation of the Transactions contemplated hereby.
(f) To the Knowledge of the Company and the Controlling
Shareholders, each of the Selling Shareholders is not a non-resident of Canada
for purposes of the Tax Act and accordingly, Section 116 of the Tax Act has no
application to the transactions contemplated herein, with the exception of
Messrs. Dave Olson, Scott Grim, Don Ritter, Shirley Crow and Ian Morrison.
Section 4.25 Powers of Attorney
Neither the Company nor any of the Controlling Shareholders has or
have given a power of attorney to any Person.
30
Section 4.26 Full Disclosure
(a) The representations and warranties of the Company and each
Controlling Shareholder contained in this Agreement, each of the other
Transaction Documents and each of the documents delivered or provided to the
Purchaser by or on behalf of the Company or any Controlling Shareholder in
connection with this Agreement or any of the Transactions (i) do not contain any
untrue statement of a material fact, or (ii) omit to state any material fact of
which the Company or any of the Controlling Shareholders has Knowledge, which
fact is necessary in order to make the statements and information contained in
this Agreement, the other Transaction documents and such documents not
misleading.
(b) The Company and the Controlling Shareholders have provided the
Purchaser and the Purchaser's Representatives with full and complete access to
all of the Company's records and other documents and data.
Section 4.27 Investment Representations
(a) Each Selling Shareholder has been advised by the Company and
understands that none of the Exchangeable Shares or the InfoCast Exchange Stock
issuable upon the exchange thereof has been registered under the U.S. Securities
Act or qualified by prospectus for distribution under the Securities Act or the
comparable registration in the other provinces of Canada. Each Selling
Shareholder has been advised by the Company and understands that the
Exchangeable Shares and the InfoCast Exchange Stock are being offered and sold
pursuant to an exemption from registration contained in the U.S. Securities Act,
and upon exemptions (which, in the case of trades in the InfoCast Exchange
Stock, may be unavailable unless and until a discretionary ruling is made by the
Ontario Securities Commission in respect thereof) from the prospectus and
registration requirements of the Securities Act, based in part upon each Selling
Shareholder's representations contained in this Agreement and the
Non-Controlling Shareholder Letters of Transmittal.
31
(b) Each Selling Shareholder has been advised by the Company and
acknowledged that it must bear the economic risk of the investment in the
Exchangeable Shares and/or the InfoCast Exchange Stock indefinitely unless the
Exchangeable Shares or the InfoCast Exchange Stock, as the case may be, are
registered pursuant to the U.S. Securities Act, or an exemption from
registration is available, or are qualified for distribution by prospectus in
Canada, or an exemption from applicable prospectus requirements in respect of
the resale thereof is available. Each Selling Shareholder has been advised by
the Company and acknowledged that its right to obtain InfoCast Exchange Stock
upon the exchange of the Exchangeable Shares is subject to the availability of
exemptions from the prospectus and registration requirements under applicable
securities laws in respect of trades in the InfoCast Exchange Stock. Each
Selling Shareholder understands that there is no assurance that any exemption
from registration under the U.S. Securities Act or any exemption from the
prospectus requirements of the Securities Act will be available and that, even
if available, such exemption may not allow any Selling Shareholder to transfer
all or any portion of the Exchangeable Shares or the InfoCast Exchange Stock
under the circumstances, in the amounts or at the times such Selling Shareholder
might propose.
(c) Each Controlling Shareholder is acquiring the Exchangeable
Shares and the InfoCast Exchange Stock for such Controlling Shareholder's own
account for investment only, and not with the current intention of making a
public distribution thereof.
(d) Each Controlling Shareholder represents that by reason of its
business or financial experience, each Controlling Shareholder has the capacity
to protect its own interests in connection with the transactions contemplated in
this Agreement.
Section 4.28 Corporate Governance
The Company and each of the Controlling Shareholders agrees to and
agrees to be bound by the provisions and governance guidelines prescribed in
Schedule 5.27, which agreement and obligation shall survive the completion of
the transactions contemplated herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND INFOCAST
Each of the Purchaser and InfoCast, jointly and severally, hereby
represents and warrants to the Company and the Selling Shareholders as follows:
Section 4.1 Organization, Good Standing and Qualification of the Purchaser
(a) The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of Ontario and is duly qualified to conduct
business and in corporate and tax good standing under the laws of each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties requires such qualification. The Purchaser has all requisite
corporate power and authority to own and operate its properties and assets, to
execute, deliver and perform its obligations under this Agreement, and to carry
on its business as presently conducted and as presently proposed to be
conducted.
Section 4.2 Capitalization
32
The authorized capital of the Purchaser consists of (a) an unlimited
number of common shares, 10,000,000 of which are issued and outstanding and
owned beneficially and of record by InfoCast, and (b) an unlimited number of
Exchangeable Shares, of which 1,500,000 are issued and outstanding as of the
date hereof and, after giving effect to the issuance of the Exchangeable Shares
in accordance with Section 2.02(b) on the Closing Date, a further 3,400,000 of
which shall be issued and outstanding. All issued and outstanding common shares
of the Purchaser have been, and on the Closing Date, all of the Exchangeable
Shares will be, duly authorized and validly issued in full compliance with all
applicable securities laws and other applicable Requirement of Laws, and are
fully paid and non-assessable.
Section 5.3 Authority; Binding Nature of Agreements
The Purchaser has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement and
each of the other Transaction Documents to which it is a party, and the
execution, delivery and performance by the Purchaser of this Agreement and each
of such other Transaction Documents have been duly authorized by all necessary
action on the part of the Purchaser, its shareholders, board of directors and
officers. Each of this Agreement and such other Transaction Documents
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and to general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
Section 5.4 Non-Contravention; Consents
(a) Neither the execution and delivery of this Agreement or any
other Transaction Document to which the Purchaser is a party, nor the
consummation or performance of any of the Transactions, will directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with or result in a
violation of (i) any of the provisions of
the Purchaser's articles of incorporation or
bylaws, or (ii) any resolution adopted by
the Purchaser's stockholders, the
Purchaser's board of directors or any
committee of the Purchaser's board of
directors;
(ii) to the Knowledge of the Purchaser and
InfoCast, contravene, conflict with or
result in a violation of, or give any
Governmental Authority or other Person the
right to challenge any of the Transactions
or to exercise any remedy or obtain any
relief under, any Requirement of Law or any
Order to which the Purchaser or any of the
assets owned or used by the Purchaser is
subject; or
(iii) contravene, conflict with or result in a
violation or breach of, or result in a
default under, any provision of any of
Contract to which the Purchaser is a party;
(b) Except as set forth on Schedule 5.04, the Purchaser was, is and
will not be required to make any filing with or give any notice to, or to obtain
any Consent from, any Person in connection with the execution and delivery of
any of this Agreement or any of the other Transaction Documents or the
consummation or performance of any of the Transactions.
33
Section 5.5 Proceedings; Orders
(a) There is no pending Proceeding, and, to the Knowledge of the
Purchaser, no Person has threatened to commence any Proceeding that challenges,
or that may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the Transactions.
(b) No event has occurred, and no claim, dispute or other condition
or circumstance exists, that might directly or indirectly give rise to or serve
as a basis for the commencement of any Proceeding of the type described in
Section 5.05(a).
(c) To the Knowledge of the Purchaser and InfoCast, there is no
proposed Order that, if issued or otherwise put into effect may have the effect
of preventing, delaying, making illegal or otherwise interfering with any of the
Transactions.
Section 5.6 Sale of Exchangeable Shares Valid
Assuming the accuracy of the representations and warranties of the
Company and the Company Principals contained in Section 4.08, and of the Selling
Shareholders set forth in the Letters of Transmittal, and of the Non-Controlling
Shareholders set forth in the Non-Controlling Shareholder Letters of
Transmittal, the offer and sale of the Exchangeable Shares and the issuance of
the InfoCast Exchange Stock upon the exchange thereof in accordance with the
Exchange Agreement will be exempt from the registration requirements of the U.S.
Securities Act and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. The issuance of the
Exchangeable Shares to the Selling Shareholders is exempt from the prospectus
requirements of the Ontario Act. Neither the Purchaser nor any agent on behalf
of the Purchaser has solicited or will solicit any offers to sell or has offered
to sell or will offer to sell all or any part of the Exchangeable Shares or the
InfoCast Exchange Stock to any person or persons, so as to bring the offer or
sale of the Exchangeable Shares or the InfoCast Exchange Stock to the Selling
Shareholders within the registration provisions of the U.S. Securities Act or
any state securities laws.
Section 5.7 Investment Representations
(a) The Purchaser understands that none of the Purchased Shares have
been registered under the U.S. Securities Act. The Purchaser also understands
that the Purchased Shares are being offered and sold pursuant to an exemption
from registration contained in the U.S. Securities Act and upon an exemption
from the prospectus requirements of the Ontario Act based in part upon the
Purchaser's representations contained in this Agreement.
34
(b) The Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests. The
Purchaser must bear the economic risk of this investment indefinitely unless the
Purchased Shares are registered pursuant to the U.S. Securities Act or qualified
for distribution by prospectus in Canada, or an exemption from registration or
prospectus requirements is available. The Purchaser understands that there is no
assurance that any exemption from registration under the U.S. Securities Act or
from the prospectus requirements of Canadian securities legislation will be
available and that, even if available, such exemption may not allow Purchaser to
transfer all or any portion of the Purchased Shares under the circumstances, in
the amounts or at the times Purchaser might propose.
(c) The Purchaser is acquiring the Purchased Shares for the
Purchaser's own account for investment only, and not with the current intention
of making a public distribution thereof.
(d) The Purchaser represents that by reason of its, or of its
management's business or financial experience, the Purchaser has the capacity to
protect its own interests in connection with the transactions contemplated in
this Agreement.
Section 5.8 Consents
All consents, approvals, orders, or authorizations of, or
registration, qualification, designation, declaration or filing with any
Governmental Authority or banking authority required on the part of Purchaser in
connection with the consummation of the transactions contemplated in this
Agreement have been or shall have been obtained prior to and shall be effective
as of the Closing.
In addition to the joint and several representations and warranties
set forth above, InfoCast alone hereby represents and warrants to the Company
and each of the Selling Shareholders as follows:
Section 5.9 Organization, Good Standing and Qualification of InfoCast
(a) InfoCast is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada and is duly qualified to
conduct business and in corporate and tax good standing under the laws of each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties require such qualification. InfoCast has all requisite corporate
power and authority to own and operate its properties and assets, to execute,
deliver and perform its obligations under this Agreement, and to carry on its
business as presently conducted and as presently proposed to be conducted.
(b) Schedule 5.09(b) accurately sets forth (i) the names of the
members of InfoCast's board of directors, (ii) the names of the members of each
committee of InfoCast's board of directors and (iii) the names and titles of
InfoCast's officers.
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(c) InfoCast is not insolvent within the meaning of applicable laws,
rules regulation or similar requirement, and has not made any assignment in
favour of its creditors nor a proposal in bankruptcy to its creditors or any
class thereof, nor has any petition for a receiver order been presented in
respect of InfoCast. InfoCast has not initiated any proceedings with respect to
a compromise or arrangement with its creditors or for the dissolution,
liquidation or reorganization of InfoCast or the winding up or cessation of the
business or affairs of InfoCast. No receiver has been appointed in respect of
InfoCast or any of its assets and no execution or distress has been levied upon
any of its assets.
(d) InfoCast has no subsidiaries other than the Purchaser, Virtual
Performance Systems Inc. and Cheltenham Technologies (Bermuda) Ltd.
Section 5.10 Articles of Incorporation and By-Laws; Records
(a) InfoCast has delivered to the Company accurate and complete
copies of:
(i) the articles of incorporation and bylaws,
including all amendments thereto of
InfoCast;
(ii) the minutes and other records of the
meetings and other proceedings (including
any actions taken by written consent or
otherwise without a meeting) of the
stockholders, board of directors and all
committees of the board of directors of
InfoCast.
(b) There have been no meetings or other proceedings of the
stockholders, the board of directors or any committee of the board of directors
of InfoCast, that are not fully reflected in such minutes or other records.
(c) InfoCast has never conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or other name, other than the name "InfoCast Corporation" and "Grant
Reserve Corporation".
(d) There has not been any material violation of any of the
provisions of the articles of incorporation or bylaws of InfoCast or of any
resolution adopted by the shareholders, board of directors or any committee of
the board of directors of InfoCast and no event has occurred, and no condition
or circumstance exists that might (with or without notice or lapse of time)
constitute or result directly or indirectly in such a violation.
(e) The books of account, stock records, minute books and other
records of InfoCast are accurate, up to date and complete in all material
respects, and have been maintained in accordance with sound and prudent business
practices. All of the records of InfoCast are in the actual possession and
direct control of InfoCast.
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Section 5.11 Capitalization
(a) The authorized capital stock of InfoCast consists of an
unlimited number of common shares of which 16,672,333 shares have been issued
and are outstanding, and will be the only shares issued and outstanding on the
Closing Date. All issued and outstanding shares of capital stock of InfoCast
have been duly authorized and validly issued in full compliance with all
applicable securities laws and other applicable Requirement of Laws, and are
outstanding as fully paid and non-assessable.
(b) There are no: (i) outstanding subscriptions, options, calls,
warrants or rights (whether or not currently exercisable) to acquire any shares
in the capital or other securities of InfoCast, other than 2,075,000 options to
acquire 2,075,000 shares at exercise price of US$1.00 per share, (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares in the capital or other securities of
InfoCast, other than 1,500,000 shares of InfoCast Common Stock reserved for
issuance upon exercise of outstanding Exchangeable Shares, (iii) contracts under
which InfoCast is or may become obligated to sell or otherwise issue any shares
of its capital stock or any other securities, or (iv) condition or circumstance
that may directly or indirectly give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares in the capital, or other securities of, InfoCast.
(c) InfoCast has never repurchased, redeemed or otherwise reacquired
(and has not agreed, committed or offered (in writing or otherwise) to
reacquire) any shares of capital stock or other securities of InfoCast.
Section 5.12 Authority; Binding Nature of Agreements
(a) InfoCast has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement and
each of the other Transaction Documents to which it is a party, and the
execution, delivery and performance by InfoCast of this Agreement and each of
such other Transaction Documents have been duly authorized by all necessary
action on the part of InfoCast and its shareholders, board of directors and
officers. Each of this Agreement and such other Transaction Documents
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of InfoCast enforceable against InfoCast in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and to general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law).
Section 5.13 Non-Contravention; Consents
(a) Neither the execution and delivery of this Agreement or any
other Transaction Document to which InfoCast is a party, nor the consummation or
performance of any of the Transactions, will directly or indirectly (with or
without notice or lapse of time):
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(i) contravene, conflict with or result in a
violation of (i) any of the provisions of
the articles of incorporation or bylaws of
InfoCast, or (ii) any resolution adopted by
the shareholders, board of directors or any
committee of the board of directors of
InfoCast, or (iii) the provision of any
agreement, whether or not written, between
the holders of InfoCast Common Stock;
(ii) contravene, conflict with or result in a
violation of, or give any Governmental
Authority or other Person the right to
challenge any of the Transactions or to
exercise any remedy or obtain any relief
under, any Requirement of Law or any Order
to which InfoCast or any of the assets owned
or used by InfoCast is subject;
(iii) contravene, conflict with or result in a
violation of any of the terms or
requirements of, or give any Governmental
Authority the right to revoke, withdraw,
suspend, cancel, terminate or modify, any
Governmental Authorization that is held by
InfoCast or any of its employees or that
otherwise relates to the business of
InfoCast or to any of the assets owned or
used by InfoCast;
(iv) contravene, conflict with or result in a
violation or breach of, or result in a
default under, any provision of any of
InfoCast Contracts;
(v) give any Person the right to (i) declare a
default or exercise any remedy under any
InfoCast Contract (ii) accelerate the
maturity or performance of any InfoCast
Contract or (iii) cancel, terminate or
modify any InfoCast Contract;
(vi) give any Person the right to any payment by
InfoCast or give rise to any acceleration or
change in the award, grant, vesting or
determination of options, warrants, rights,
severance payments or other contingent
obligations of any nature whatsoever of
InfoCast in favour of any Person, in any
such case as a result of the change in
control of InfoCast, or otherwise resulting
from the Transactions; or
(vii) result in the imposition or creation of any
Lien upon or with respect to any asset owned
or used by InfoCast.
Section 5.14 Proprietary Rights; Proprietary Information
and Inventions Agreement
(a) Except as set forth in Schedule 5.14, there is no Proprietary
Asset that is owned by or licensed to InfoCast or that is otherwise used or
useful in connection with InfoCast's business.
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(b) InfoCast has taken all reasonable measures and precautions to
protect the confidentiality and value of each Proprietary Asset identified or
required to be identified in Schedule 5.14.
(c) To the Knowledge of InfoCast, InfoCast has conducted its
business without infringement or claim of infringement of any license, patent,
copyright, service mark, trademark, trade name, trade secret or other
intellectual property right of others. InfoCast is not infringing, and has not
at any time infringed or received any notice or other communication (in writing
or otherwise) of any actual, alleged, possible or potential infringement of, any
Proprietary Asset owned or used by any other Person. To the Knowledge of
InfoCast no other Person is infringing, and no Proprietary Asset owned or used
by any other Person infringes or conflicts with, any Proprietary Asset owned or
used by InfoCast.
(d) InfoCast owns, licenses or has rights to all of the Proprietary
Assets owned or used by InfoCast. The Proprietary Assets identified in Schedule
5.14 constitute all of the Proprietary Assets necessary to enable InfoCast to
conduct its business in the manner in which its business is currently being
conducted.
Section 5.15 Proceedings; Orders
(a) There is no pending Proceeding and, to the Knowledge of
InfoCast, no Person has threatened to commence any Proceeding:
(i) that involves InfoCast or that otherwise
relates to or might affect the business of
InfoCast or any of the assets owned or used
by InfoCast (whether or not InfoCast is
named as a party thereto); or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal or
otherwise interfering with, any of the
Transactions.
(b) No event has occurred, and no claim, dispute or other condition
or circumstance exists, that might directly or indirectly give rise to or serve
as a basis for the commencement of any material Proceeding of the type described
in Section 5.15(a).
(c) No Proceeding has ever been commenced by or against InfoCast and
no Proceeding otherwise involving or relating to InfoCast has been pending or
threatened at any time.
(d) There is no Order to which InfoCast or any of the assets owned
or used by InfoCast is subject that relates to the business of InfoCast or to
any of the assets owned or used by InfoCast.
39
(e) To the knowledge of InfoCast, there is no proposed Order that,
if issued or otherwise put into effect, (i) may have a material adverse effect
on the business, condition, assets, liabilities, operations, financial
performance, net income or prospects (or on any aspect or portion thereof) of
InfoCast or on the ability of InfoCast to comply with or perform any covenant or
obligation under this Agreement or any of the other Transactional Documents, or
(ii) may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the Transactions.
Section 5.16 Sale of Purchased Shares Valid
Assuming the accuracy of the representations and warranties of the
Controlling Shareholders and the Selling Shareholders contained herein and in
the Non-Controlling Shareholder Declarations, the issue of the Exchangeable
Shares and the InfoCast Exchange Stock will be exempt from the prospectus and
registration requirements of the Ontario Act and the Alberta Act.
Section 5.17 Financial Statements
(a) InfoCast has delivered to the Company the audited balance sheet
of InfoCast as at March 31, 1999 (the "InfoCast Balance Sheet"), and the related
audited statements together with the notes thereto (collectively, the "InfoCast
Financial Statements").
(b) The InfoCast Financial Statements are accurate and complete in
all material respects, and the dollar amount of each line item included in the
InfoCast Financial Statements is accurate in all material respects. The
Financial Statements and the notes thereto are in accordance with the books and
records of InfoCast and present fairly the financial position of InfoCast as of
the respective dates thereof and the results of operations, changes in
stockholder's equity and cash flows of InfoCast for the periods covered thereby.
The Financial Statements have been prepared in accordance with US GAAP, applied
on a consistent basis throughout the periods covered.
(c) At the date of the InfoCast Balance Sheet, (i) InfoCast had no
Liabilities of any nature (matured or unmatured, fixed or contingent) required
by US GAAP to be provided for in the InfoCast Balance Sheet or described in the
notes thereto which were not provided for in the InfoCast Balance Sheet, or
described in the notes thereto, (ii) InfoCast had no material Liabilities of any
nature (matured or unmatured, fixed or contingent) which were not required by US
GAAP to be provided for in the InfoCast Balance Sheet or described in the notes
thereto and (iii) all reserves established by InfoCast and set forth in the
InfoCast Balance Sheet were adequate for the purposes for which they were
established. As of the date of this Agreement, InfoCast has no Liabilities,
except for:
(i) Liabilities identified as such in the
"liabilities" column of the InfoCast Balance
Sheet;
(ii) accounts payable (of the type required to be
reflected as current liabilities in the
"liabilities" column of a balance sheet
prepared in accordance with US GAAP)
incurred by InfoCast in the ordinary course
of business since the date of the InfoCast
Balance Sheet; and
(iii) InfoCast's obligations under the Contracts
listed in Schedule 5.19.
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Section 5.18 Title to Assets
(a) InfoCast owns and has good and valid title to all assets
purported to be owned by it, including:
(i) with respect to InfoCast, all assets
reflected on the InfoCast Balance Sheet
(except for inventory sold by InfoCast since
the date of the InfoCast Balance Sheet in
the ordinary course of business);
(ii) all of InfoCast's rights under InfoCast
Contracts; and
(iii) all other assets reflected in InfoCast's
books and records as being owned by
InfoCast.
Section 5.19 InfoCast Material Contracts
(a) Schedule 5.19 identifies and provides an accurate and complete
description of each InfoCast Contract which involves future payments,
performance of services or delivery of goods or materials to or by InfoCast of
an aggregate amount or value in excess of US$100,000, or which otherwise is
material to the business or prospects of InfoCast (collectively, the "InfoCast
Material Contracts"). All nonmaterial contracts of InfoCast do not in the
aggregate represent a material portion of the assets or liabilities of InfoCast.
InfoCast has delivered to the Company accurate and complete copies of all
InfoCast Material Contracts, including all amendments thereto.
(b) Each InfoCast Material Contract is valid and in full force and
effect, and is enforceable by InfoCast in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and to general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
(c) InfoCast is not in default under any InfoCast Material Contract
in any material respect, and to the Knowledge of InfoCast, no Person has
violated or breached, or declared or committed any default under, any InfoCast
Material Contract.
(d) No event has occurred, and no circumstance or condition exists,
that might (with or without notice or lapse of time) (i) result in a material
violation or breach of any of the provisions of any InfoCast Material Contract,
(ii) give any Person the right to declare a default or exercise any remedy under
any InfoCast Material Contract, (iii) give any Person the right to accelerate
the maturity or performance of any InfoCast Material Contract, or (iv) give any
Person the right to cancel, terminate or modify, any InfoCast Material Contract.
(e) InfoCast has not waived any of its rights under any InfoCast
Material Contract.
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(f) InfoCast has never guaranteed or otherwise agreed to cause,
insure or become liable for, and has never pledged any of its assets to secure,
the performance or payment of any obligation or other Liability of any other
Person.
(g) Except as set forth in Schedule 5.19, InfoCast has never been a
party to or bound by (i) any joint venture agreement, partnership agreement,
profit sharing agreement, cost sharing agreement, loss sharing agreement or
similar Contract, or (ii) any Contract that creates or grants to any Person, or
provides for the creation or grant of, any share appreciation right, phantom
share right or similar right or interest.
(h) The performance of the InfoCast Material Contracts will not
result in any violation of, or failure to comply with, any Requirement of Law.
(i) No Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to InfoCast under any InfoCast Material Contract or any
other term or provision of any InfoCast Material Contract.
(j) The Contracts identified in Schedule 5.19, collectively
constitute all of the Contracts necessary to enable InfoCast to conduct its
business in the manner in which such business is currently being conducted and
in the manner in which such business is proposed to be conducted.
(k) Schedule 5.19 identifies and provides an accurate and complete
description of each proposed Contract as to which any bid, offer, written
proposal, term sheet or similar document has been submitted or received by
InfoCast.
(l) No party to any InfoCast Material Contract has made a claim to
the effect that InfoCast has failed to perform an obligation thereunder. There
is no known plan, intention or indication of any contracting party to any
Contract to cause the termination, cancellation or modification of such Contract
or to reduce or otherwise change its activity thereunder so as to adversely
affect the benefits derived or expected to be derived therefrom by InfoCast.
(m) InfoCast is neither a party to, nor bound by, any contract,
agreement, commitment or restriction which obligates InfoCast to perform
services or to produce products unprofitably.
Section 5.20 Employees and Employee Benefits
(a) Schedule 5.20 contains a list of all employees of InfoCast as of
the date hereof and their material terms and conditions of employment including
salary or wages, bonus, position title and seniority date. Except as disclosed
on Schedule 5.20, no employee of InfoCast is on long-term disability leave or
extended absence or in receipt of workers' compensation benefits.
(b) Schedule 5.20 contains a list of individuals who are currently
performing services for InfoCast related to its business and are classified as
"consultants" or "independent contractors".
42
(c) InfoCast is not a party to or subject to any collective
bargaining agreements with any trade union or collective bargaining agent
representing any of its employees. There is no labour union organizing activity
pending or, to InfoCast's knowledge, threatened with respect to any employees of
InfoCast. Except as specified on Schedule 5.20, no employee of InfoCast has any
agreement or contract, written or verbal, regarding his employment, other than
those deemed to exist at common law.
(d) To the Knowledge of InfoCast, no employee of InfoCast, nor any
consultant with whom InfoCast has contracted, is in violation of any term of any
employment contract, proprietary information agreement or any other agreement
relating to the right of any such individual to be employed by, or to contract
with, InfoCast because of the nature of the business to be conducted by
InfoCast, and to InfoCast's knowledge the continued employment by InfoCast of
its present employees, and the performance of InfoCast's contracts with its
independent contractors, will not result in any such violation. InfoCast has not
received any notice alleging that any such violation has occurred. InfoCast is
not aware that any officer or key employee, or that any group of key employees,
intends to terminate his, her or their employment with InfoCast, nor does
InfoCast have a present intention to terminate the employment of any officer,
key employee or group of key employees.
(e) Except as set forth in Schedule 5.20 there are no employment
policies or plans, including policies or plans regarding incentive compensation,
stock options, severance pay or other terms or conditions of employment or terms
or conditions upon which Employees may be terminated, which are binding upon
InfoCast.
(f) InfoCast has been and is being operated in full compliance with
all Requirements of Law relating to employees, including employment standards,
occupational health and safety, pay equity and employment equity. There have
been no complaints under such laws against InfoCast.
(g) There are no complaints nor, to the Knowledge of InfoCast, are
there any threatened complaints, against InfoCast, before any employment
standards branch or tribunal or human rights tribunal. To the Knowledge of
InfoCast nothing has occurred which might lead to a complaint against InfoCast,
under any human rights legislation or employment standards legislation. There
are no outstanding decisions or settlements or pending settlements under the
employment standards legislation which place any obligation upon InfoCast, to do
or refrain from doing any act.
(h) To the knowledge of InfoCast, there are no outstanding labour
tribunal proceedings of any kind, including any proceedings which could result
in certification of a trade union as bargaining agent for any employees or
independent contractors of InfoCast.
43
Section 5.21 Compliance With Requirement of Laws
(a) InfoCast is in full compliance with each Requirement of Law that
is applicable to it or to the conduct of its business or the ownership or use of
any of its assets.
(b) No event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) constitute or result
directly or indirectly in a material violation by InfoCast of, or a material
failure on the part of InfoCast to comply with, any Requirement of Law.
(c) InfoCast has not received, at any time, any notice or other
communication (in writing or otherwise) from any Governmental Authority or any
other Person regarding (i) any actual, alleged, possible or potential violation
of, or failure to comply with, any Requirement of Law, or (ii) any actual,
alleged, possible or potential obligation on the part of InfoCast to undertake,
or to bear all or any portion of the cost of, any cleanup or any remedial,
corrective or response action of any nature.
(d) To the Knowledge of InfoCast, no Governmental Authority has
proposed or is considering any Requirement of Law that, if adopted or otherwise
put into effect, (i) may have an material adverse effect on the business,
condition, assets, liabilities, operations, financial performance, net income or
prospects of InfoCast, or on the ability of InfoCast to comply with or perform
any covenant or obligation under any of the Transactional Documents, or (ii) may
have the effect of preventing, delaying, making illegal or otherwise interfering
with any of the Transactions.
Section 5.22 Tax Matters
(a) Each Tax required to have been paid, or claimed by any
Governmental Authority to be payable, by InfoCast (whether pursuant to any Tax
Return or otherwise) has been duly paid in full on a timely basis including all
installments on account of Tax for the current year that are due and payable by
it. Any Tax required to have been withheld or collected by InfoCast has been
duly withheld and collected, and (to the extent required) each such Tax has been
paid to the appropriate Governmental Authority.
(b) Schedule 5.22 accurately identifies all Tax Returns required to
be filed by or on behalf of InfoCast with any Governmental Authority with
respect to any taxable period ending on or before the Closing Date ("InfoCast
Returns"). All InfoCast Returns (i) have been or will be filed when due, and
(ii) have been or will be, when filed, accurately and completely prepared in
full compliance with all applicable Requirement of Laws, and InfoCast have
completely and accurately reported all income and all other amounts of
information required to be reported thereon. All amounts shown on InfoCast
Returns to be due on or before the Closing Date, and all amounts otherwise
payable in connection with InfoCast Returns on or before the Closing Date, have
been or will be paid on or before the Closing Date.
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(c) InfoCast's liability for unpaid Taxes for all periods ending on
or before March 31, 1999 does not, in the aggregate, exceed the amount of the
current liability accruals for Taxes (excluding reserves for deferred taxes)
reported in the InfoCast Financial Statements. InfoCast will establish, in the
ordinary course of business, reserves adequate for the payment of all Taxes for
the period from March 31, 1999 through to the Closing Date in addition to those
included on the InfoCast Balance Sheet, and InfoCast will disclose the dollar
amount of such reserves to the Company on or prior to the Closing Date.
(d) Schedule 5.22 accurately identifies each examination or audit of
any InfoCast Return that has been conducted by any Governmental Authority since
InfoCast's inception. InfoCast has delivered to the Purchaser accurate and
complete copies of all material audit reports (to which InfoCast has access)
relating to InfoCast Returns, elections, designations or similar things relating
to Taxes for which InfoCast is or may be liable. No extension or waiver of the
limitation period applicable to any of InfoCast Returns has been granted (by
InfoCast or any other Person), and no such extension or waiver has been
requested from InfoCast.
(e) To the knowledge of InfoCast, there are no unsatisfied
Liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by InfoCast.
(f) To the knowledge of InfoCast, there are no actions, suits,
proceedings, investigations, audits or claims now pending or, to the knowledge
of InfoCast threatened, against InfoCast in respect of any Taxes and there are
no matters under discussion, audit or appeal with any Governmental Authority
relating to Taxes.
(g) Except as specifically disclosed in writing to the Company, for
purposes of the Tax Act or any applicable provincial or municipal taxing
statute, no Person or group of Persons has ever acquired or had the right to
acquire control of InfoCast.
(h) The transfer pricing practices of InfoCast have not been the
subject of a review or audit by any revenue or other taxing authority and there
are no agreements, waivers or other agreement providing for an extension of time
with respect to the assessment or collection of any Tax against InfoCast with
respect to any matter relating to transfer pricing issues or the transfer
pricing practices of InfoCast. To the knowledge of InfoCast, there are no suits
or similar proceedings now pending or threatened against InfoCast with respect
to any transfer pricing issue or transfer pricing practice of InfoCast. There
are currently no matters under discussion with any taxation or other authority
relating to any transfer pricing issue, transfer pricing practices of InfoCast,
or any advance pricing agreement or similar process or agreement concerning
transfer pricing practices and issues of InfoCast.
(i) No reserves are required to be taken by InfoCast for purposes of
the Tax Act.
45
(j) There are no reassessments of InfoCast that are issued and
outstanding and there are no outstanding issues which have been raised and
communicated to InfoCast by any governmental body for any taxation year in
respect of which a Tax Return of InfoCast has been audited. No governmental body
has challenged, disputed or questioned InfoCast in respect of Taxes or of any
returns, filings or other reports filed under any statute providing for Taxes.
InfoCast is not negotiating any draft assessment or reassessment with any
governmental body. To the Knowledge of InfoCast, there are no grounds for an
assessment or reassessment of InfoCast of an amount which would have a material
adverse effect on InfoCast other than as disclosed in the Financial Statements.
InfoCast has not received any indication from any governmental body that an
assessment (other than an assessment accepting a Tax Return as filed) or
reassessment of InfoCast is proposed in respect of any Taxes, regardless of its
merits. InfoCast has not executed or filed with any governmental body any
agreement or waiver extending the period for assessment, reassessment or
collection of any Taxes.
(k) InfoCast has withheld from each payment made to any of its
present or former employees, officers and directors, and to all persons who are
non-residents of Canada for the purposes of the Tax Act, all amounts required by
law to be withheld, and furthermore, have remitted such withheld amounts within
the prescribed periods to the appropriate governmental body. InfoCast has
remitted all Taxes payable by it in respect of its employees and has remitted
such amounts to the proper governmental body within the time required under the
applicable legislation. Other than as set forth in Schedule 5.22, InfoCast has
charged, collected and remitted on a timely basis all Taxes as required under
applicable legislation on any sale, supply or delivery whatsoever it has made;
and for any late filings disclosed on Schedule 5.22, no penalties or fines will
or have become due and owing as a result of such late filings.
(l) InfoCast has not deducted any material amounts in computing its
income in a taxation year that are currently unpaid and that could, if they
remain unpaid, be required to be included in income in a subsequent taxation
year.
(m) InfoCast will not at any time be deemed to have a capital gain
pursuant to subsection 80.03(2) of the Tax Act as a result of any transactions
or event taking place in any fiscal period or portion thereof ending on or
before the Closing Date.
Section 5.23 Securities Laws Compliance; Registration Rights
The issue of the Exchangeable Shares to the Selling Shareholders has
complied and will comply with all securities laws of the Provinces of Alberta
and Ontario, and applicable securities laws of the United States. InfoCast has
complied with all applicable securities laws of Canada and the United States in
connection with all offers and sales of securities of InfoCast prior to the date
of this Agreement.
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Section 5.24 Insurance
(a) Schedule 5.24 accurately sets forth, with respect to each
insurance policy maintained by or at the expense of, or for the direct or
indirect benefit of, InfoCast:
(i) the name of the insurance carrier that
issued such policy and the policy number of
such policy;
(ii) whether such policy is a "claims made" or an
"occurrences" policy;
(iii) a description of the coverage provided by
such policy and the material terms and
provisions of such policy (including all
applicable coverage limits, deductible
amounts and co-insurance arrangements and
any non customary exclusions from coverage);
(iv) the annual premium payable with respect to
such policy, and the cash value (if any) of
such policy; and
(v) a description of any claims pending, and any
claims that have been asserted in the past,
with respect to such policy.
(b) Schedule 5.24 also identifies (i) each pending application for
insurance that has been submitted by or on behalf of InfoCast, and (ii) each
self-insurance or risk-sharing arrangement affecting InfoCast or any of its
assets. InfoCast has delivered to the Company accurate and complete copies of
all of the insurance policies identified in Schedule 5.24 (including all
renewals thereof and endorsements thereto) and all of the pending applications
identified in Schedule 5.24.
(c) Each of the policies identified in Schedule 5.24 is valid,
enforceable and in full force and effect, and has been issued by an insurance
carrier that, to the Knowledge of InfoCast, is solvent, financially sound and
reputable. All of the information contained in the applications submitted in
connection with said policies was (at the times said applications were
submitted) accurate and complete, and all premiums and other amounts owing with
respect to said policies have been paid in full on a timely basis. The nature,
scope and dollar amounts of the insurance coverage provided by said policies are
similar to the coverage customarily carried by companies of similar size and
character of InfoCast. Each of the policies identified in Schedule 5.24 will
continue in full force and effect following the Closing. InfoCast has paid all
premiums due, and has otherwise performed all of its obligations, under each
policy to which it is a party or that provides coverage to it or any of its
directors or officers in connection with their performance of services to
InfoCast.
(d) There is no pending material claim under or based upon any of
the policies identified in Schedule 5.24(a), and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such
claim.
47
(e) InfoCast has not received:
(i) any notice or other communication (in
writing or otherwise) regarding the actual
or possible cancellation or invalidation of
any of the policies identified in Schedule
5.24 or regarding any actual or possible
adjustment in the amount of the premiums
payable with respect to any of said
policies;
(ii) any notice or other communication (in
writing or otherwise) regarding any actual
or possible refusal of coverage under, or
any actual or possible rejection of any
claim under, any of the policies identified
in Schedule 5.24; or
(iii) any indication that the issuer of any of the
policies identified in Schedule 5.24 may be
unwilling or unable to perform any of its
obligations thereunder.
Section 5.25 Absence of Changes
Except as set forth in Schedule 5.25, since March 31, 1999:
(a) there has not been any material adverse change in InfoCast's
business, condition, assets, liabilities, operations, financial performance, net
income or prospects (or in any aspect or portion thereof), and no event has
occurred that might have an adverse effect on InfoCast's business, condition,
assets, liabilities, operations, financial performance, net income or prospects
(or on any aspect or portion thereof);
(b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of InfoCast's assets (whether or not covered by
insurance);
(c) InfoCast has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) InfoCast has not sold or otherwise issued any shares of capital
stock or any other securities;
(e) InfoCast has not amended its articles of incorporation or bylaws
and has not effected or been a party to any InfoCast Acquisition Transaction,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) InfoCast has not purchased or otherwise acquired any asset from
any other Person, except for supplies acquired by InfoCast in the ordinary
course of business;
48
(g) InfoCast has not leased or licensed any asset from any other
Person;
(h) InfoCast has not made any material capital expenditure;
(i) InfoCast has not sold or otherwise transferred, and has not
leased or licensed, any asset to any other Person except for products sold by
InfoCast from its inventory in the ordinary course of business;
(j) InfoCast has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) InfoCast has not pledged or hypothecated any of its assets or
otherwise permitted any of its assets to become subject to any Lien;
(l) InfoCast has not made any loan or advance to any other Person;
(m) InfoCast has not (i) established or adopted any employee benefit
plan, or (ii) paid any bonus or made any profit sharing or similar payment to,
or increased the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors, officers or
employees;
(n) InfoCast has not increased the compensation of any of its
officers, or the rate of pay of its employees as a group, except as part of
regular compensation increases in the ordinary course of its business;
(o) there has been no resignation or termination of employment of
any officer or key employee of InfoCast;
(p) there has been no labour dispute involving InfoCast or its
employees and none is pending or, to InfoCast's Knowledge, threatened;
(q) InfoCast has not entered into, and neither InfoCast nor any of
the assets owned or used by InfoCast has become bound by, any InfoCast Material
Contract;
(r) no InfoCast Material Contract by which InfoCast or any of the
assets owned or used by InfoCast is or was bound, or under which InfoCast has or
had any rights or interest, has been amended or terminated;
(s) InfoCast has not incurred, assumed or otherwise become subject
to any Liability, other than accounts payable (of the type required to be
reflected as current liabilities in the "liabilities" column of a balance sheet
prepared in accordance with US GAAP) incurred by InfoCast in the ordinary course
of business;
49
(t) InfoCast has not discharged any Lien or discharged or paid any
indebtedness or other Liability, except for accounts payable that (i) are
reflected as current liabilities in the "liabilities" column of the InfoCast
Balance Sheet or have been incurred by InfoCast since March 31, 1999 in the
Ordinary Course of Business, and (ii) have been discharged or paid in the
Ordinary Course of Business;
(u) InfoCast has not forgiven any debt or otherwise released or
waived any right or claim;
(v) InfoCast has not changed any of its methods of accounting or
accounting practices in any respect;
(w) InfoCast has not entered into any transaction or taken any other
action outside the ordinary course of business; and
(x) InfoCast has not agreed, committed or offered (in writing or
otherwise), and has not attempted, to take any of the actions referred to in
clauses "(c)" through "(w)" above.
Section 5.26 Full Disclosure
(a) The representations and warranties of InfoCast contained in this
Agreement, each of the other Transaction Documents and each of the documents
delivered or provided to the Company and the Selling Shareholders by or on
behalf of InfoCast in connection with this Agreement or any of the Transactions
(i) do not contain any untrue statement of a material fact, or (ii) omit to
state any material fact of which InfoCast has Knowledge, which fact is necessary
in order to make the statements and information contained in this Agreement, the
other Transaction documents and such documents not misleading.
(b) InfoCast has provided the Company with full and complete access
to all of InfoCast's records and other documents and data.
Section 5.27 Corporate Governance
InfoCast and the Purchaser agree to be bound by the provisions and
governance guidelines prescribed in Schedule 5.27, which agreement and
obligation shall survive the completion of the transactions contemplated herein.
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ARTICLE VI
PRE-CLOSING COVENANTS OF THE COMPANY
AND THE CONTROLLING SHAREHOLDERS
Section 6.1 Access and Investigation
The Company shall ensure that, at all times during the Pre-Closing
Period:
(a) The Company and its Representatives provide the Purchaser and
its Representatives with free and complete access to the Company's
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to the
Company;
(b) The Company and its Representatives provide the Purchaser and
its Representatives with such copies of existing books, records, Tax Returns,
work papers and other documents and information relating to the Company as the
Purchaser may request in good faith; and
(c) The Company and its Representatives compile and provide the
Purchaser and its Representations with such additional financial, operating and
other data and information regarding the Company as the Purchaser may request in
good faith.
Section 6.2 Operation of Business
The Company and the Controlling Shareholders shall ensure that
during the Pre-Closing Period:
(a) The Company conducts its operations exclusively in the Ordinary
Course of Business and in the same manner as such operations have been conducted
prior to the date of this Agreement;
(b) The Company preserves intact its current business organization,
keeps available the services of its current officers and employees and maintains
its relations and good will with all suppliers, customers, landlords, creditors,
licensors, licensees, employees and other Persons having business relationships
with the Company;
(c) The Company keeps in full force all insurance policies
identified in Schedule 4.21;
(d) The Company's officers confer regularly with the Purchaser
concerning operational matters and otherwise report regularly to the Purchaser
concerning the status of the Company's business, condition, assets, liabilities,
operations, financial performance and prospects;
(e) The Company immediately notifies the Purchaser of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
51
(f) The Company does not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares in its capital,
and does not repurchase, redeem or otherwise reacquire any such shares or other
securities (except as expressly contemplated by this Agreement);
(g) The Company does not sell or otherwise issue any shares or any
other securities;
(h) The Company does not amend its articles of incorporation or
bylaws, and does not effect or become a party to any Acquisition Transaction,
reclassification of shares, share split, reverse share split or similar
transaction;
(i) The Company does not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(j) The Company does not make any capital expenditure, except for
capital expenditures that are made in the Ordinary Course of Business and that,
when added to all other capital expenditures made on behalf of the Company
during the Pre-Closing Period, do not exceed CDN$25,000 in the aggregate;
(k) The Company does not enter into or permit any of the assets
owned or used by the Company to become subject to any Lien;
(l) The Company does not incur, assume or otherwise become subject
to any Liability, except for current liabilities (of the type required to be
reflected in the "liabilities" column of a balance sheet prepared in accordance
with GAAP) incurred in the Ordinary Course of Business;
(m) The Company does not establish or adopt any employee benefit
plan, and does not pay any bonus or make any profit sharing or similar payment
to, or increase the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors, officers or
employees;
(n) The Company does not change any of its methods of accounting or
accounting practices in any respect;
(o) The Company does not make any Tax election;
(p) The Company does not commence any Proceeding;
(q) The Company does not enter into any transaction or take any
other action of the type referred to in Section 4.23;
(r) The Company does not enter into any transaction or take any
other action outside the Ordinary Course of Business;
52
(s) The Company does not enter into any transaction or take any
other action that might cause or constitute a Breach of any representation or
warranty made by the Company or any of the Selling Shareholders in this
Agreement any of the Non-Controlling Shareholder Letters of Transmittal or in
any other Transaction Document; and
(t) The Company does not agree, commit or offer (in writing or
otherwise), and does not attempt, to take any of the actions described in
clauses (g) through (t) of this Section 6.02.
Section 6.3 Filings and Consents
The Company and the Controlling Shareholders shall use its Best
Efforts to ensure that:
(a) each filing or notice required to be made or given (pursuant to
any applicable Requirement of Law, Order or Material Contract, or otherwise) by
the Company or any of the Selling Shareholders in connection with the execution
and delivery of any of the Transaction Documents or in connection with the
consummation or performance of any of the Transactions (including each of the
filings and notices identified in Schedule 4.05) is made or given as soon as
possible after the date of this Agreement;
(b) each Consent required to be obtained (pursuant to any applicable
Requirement of Law, Order or Material Contract, or otherwise) by the Company or
any of the Selling Shareholders in connection with the execution and delivery of
any of the Transactional Documents or in connection with the consummation or
performance of any of the Transactions (including each of the Consents
identified in Schedule 4.05) is obtained as soon as possible after the date of
this Agreement and remains in full force and effect through the Closing Date;
(c) The Company promptly delivers to the Purchaser a copy of each
filing made, each notice given and each Consent obtained by the Company or any
Selling Shareholders during the Pre-Closing Period; and
(d) during the Pre-Closing Period, the Company and its
Representatives cooperate with the Purchaser and with the Purchaser's
Representatives, and prepare and make available such documents and take such
other actions as the Purchaser may request in good faith, in connection with any
filing, notice or Consent that the Purchaser is required or elects to make, give
or obtain.
Section 6.4 Notification of Events or Conditions
During the Pre-Closing Period, the Company and the Controlling
Shareholders shall promptly notify the Purchaser in writing of:
53
(a) the discovery by the Company or any of the Controlling
Shareholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or constitutes
a Breach of any representation or warranty made by the Company or any of the
Selling Shareholders in this Agreement or any of the Non-Controlling Shareholder
Letters of Transmittal;
(b) any event, condition, fact or circumstance that occurs, arises
or exists after the date of this Agreement and that would cause or constitute a
Breach of any representation or warranty made by the Company or any of the
Selling Shareholders in this Agreement or any of the Non-Controlling Shareholder
Letters of Transmittal if (A) such representation or warranty had been made as
of the time of the occurrence, existence or discovery of such event, condition,
fact or circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement;
(c) any Breach of any covenant or obligation of the Company or any
of the Selling Shareholders; and
(d) any event, condition, fact or circumstance that may make the
timely satisfaction of any of the conditions set forth in Article VIII
impossible or unlikely.
Section 6.5 Payment of Indebtedness by Related Parties
The Company and the Controlling Shareholders shall cause all
indebtedness and other Liabilities owing to each Related Party to the Company by
the Company to be discharged and paid in full prior to the Closing, other than
liabilities incurred in the Ordinary Course of Business which are not due at the
Closing Date, or are to be assumed by InfoCast at Closing.
Section 6.6 No Negotiation
The Company and the Controlling Shareholders shall ensure that,
during the Pre-Closing Period, neither the Company nor any of the Company's
Representatives directly or indirectly:
(a) solicits or encourages the initiation of any inquiry, proposal
or offer from any Person (other than the Purchaser) relating to any Acquisition
Transaction;
(b) participates in any discussions or negotiations with, or
provides any non public information to, any Person (other than the Purchaser)
relating to any Acquisition Transaction; or
(c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than the Purchaser) relating to any Acquisition
Transaction.
54
Section 6.7 Best Efforts
During the Pre-Closing Period, the Company and the Controlling
Shareholders shall use their respective Best Efforts to cause the conditions set
forth in Articles VIII and Article IX to be satisfied on a timely basis, and
shall not take any action or omit to take any action, the taking or omission of
which would or could reasonably be expected to result in any of the
representations and warranties set forth in this Agreement or any of the other
Transaction Documents becoming untrue, in any of the conditions of Closing set
forth in Article VIII or Article IX not being satisfied or in the business of
the Company becoming materially less valuable.
Section 6.8 Confidentiality
The Company and the Controlling Shareholders shall ensure that,
during the Pre-Closing Period:
(a) The Company and its Representatives keep strictly confidential
the existence and terms of this Agreement;
(b) neither the Company nor any of its Representatives issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature (to any of the Company's suppliers, customers,
landlords, creditors or employees or to any other Person) regarding any of the
Transactions, except to employees of the Company involved in the consummation of
the Transactions or to the extent that the Company is required by law to make
any such disclosure regarding the Transactions; and
(c) if the Company is required by law to make any disclosure
regarding the Transactions, the Company advises the Purchaser, at least five
business days before making such disclosure, of the nature and content of the
intended disclosure.
ARTICLE VII
PRE-CLOSING COVENANTS OF THE PURCHASER AND INFOCAST
Section 7.1 Filings and Consents
The Purchaser and InfoCast shall ensure that:
(a) each filing or notice required to be made or given (pursuant to
any applicable Requirement of Law or Order) by the Purchaser in connection with
the execution and delivery of any of the Transaction Documents or in connection
with the consummation or performance of any of the Transactions is made or given
as soon as possible after the date of this Agreement;
55
(b) each Consent required to be obtained (pursuant to any applicable
Requirement of Law or Order) by the Purchaser in connection with the execution
and delivery of any of the Transaction Documents or in connection with the
consummation or performance of any of the Transactions is obtained as soon as
possible after the date of this Agreement and remains in full force and effect
through the Closing Date;
(c) the Purchaser promptly delivers to the Company a copy of each
filing made, each notice given and each Consent referred to in this Section 7.01
obtained by the Purchaser during the Pre-Closing Period; and
(d) during the Pre-Closing Period, the Purchaser and its
Representatives cooperate with the Company, the Controlling Shareholders and
their respective Representatives, and prepare and make available such documents
and take such other actions as the Company or any of the Controlling
Shareholders may request in good faith, in connection with any filing, notice or
Consent that the Company or the Selling Shareholders is required or elects to
make, give or obtain.
Section 7.2 Access and Investigation
InfoCast shall ensure that, at all times during the Pre-Closing
Period:
(a) InfoCast and its Representatives provide the Company and its
Representatives with free and complete access to InfoCast's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to InfoCast;
(b) InfoCast and its Representatives provide the Purchaser and its
Representatives with such copies of existing books, records, Tax Returns, work
papers and other documents and information relating to InfoCast as the Purchaser
may request in good faith; and
(c) InfoCast and its Representatives compile and provide the
Purchaser and its Representations with such additional financial, operating and
other data and information regarding InfoCast as the Purchaser may request in
good faith.
Section 7.3 Operation of Business
InfoCast shall ensure that during the Pre-Closing Period:
(a) InfoCast conducts its operations exclusively in the ordinary
course of business and in the same manner as such operations have been conducted
prior to the date of this Agreement;
(b) InfoCast keeps in full force all insurance policies identified
in Schedule 5.24;
(c) InfoCast immediately notifies the Company of any inquiry,
proposal or offer from any Person relating to any InfoCast Acquisition
Transaction;
56
(d) InfoCast does not declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares in its capital, and does
not repurchase, redeem or otherwise reacquire any such shares or other
securities (except as expressly contemplated by this Agreement);
(e) InfoCast does not sell or otherwise issue any shares or any
other securities;
(f) InfoCast does not amend its articles of incorporation or bylaws,
and does not effect or become a party to any InfoCast Acquisition Transaction,
reclassification of shares, share split, reverse share split or similar
transaction;
(g) InfoCast does not make any capital expenditure, except for
capital expenditures that are made in the ordinary course of business and that,
when added to all other capital expenditures made on behalf of InfoCast during
the Pre-Closing Period, do not exceed CDN$100,000 in the aggregate;
(h) InfoCast does not incur, assume or otherwise become subject to
any Liability, except for current liabilities (of the type required to be
reflected in the "liabilities" column of a balance sheet prepared in accordance
with US GAAP) incurred in the ordinary course of business;
(i) InfoCast does not establish or adopt any employee benefit plan,
and does not pay any bonus or make any profit sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees;
(j) InfoCast does not change any of its methods of accounting or
accounting practices in any respect;
(k) InfoCast does not make any Tax election;
(l) InfoCast does not commence any Proceeding;
(m) InfoCast does not enter into any transaction or take any other
action of the type referred to in Section 5.25;
(n) InfoCast does not enter into any InfoCast Acquisition
Transaction or take any other action outside the ordinary course of business;
(o) InfoCast does not enter into any transaction or take any other
action that might cause or constitute a Breach of any representation or warranty
made by InfoCast or the Purchaser in this Agreement or in any other Transaction
Document; and
(p) InfoCast does not agree, commit or offer (in writing or
otherwise), and does not attempt, to take any of the actions described in
clauses (e) through (o) of this Section 7.03.
57
Section 7.4 Filings and Consents
InfoCast shall ensure that:
(a) each filing or notice required to be made or given (pursuant to
any applicable Requirement of Law, Order or InfoCast Material Contract, or
otherwise) by InfoCast or the Purchaser in connection with the execution and
delivery of any of the Transaction Documents or in connection with the
consummation or performance of any of the Transactions is made or given as soon
as possible after the date of this Agreement;
(b) each Consent required to be obtained (pursuant to any applicable
Requirement of Law, Order or InfoCast Material Contract, or otherwise) by
InfoCast or the Purchaser in connection with the execution and delivery of any
of the Transactional Documents or in connection with the consummation or
performance of any of the Transactions is obtained as soon as possible after the
date of this Agreement and remains in full force and effect through the Closing
Date;
(c) InfoCast promptly delivers to the Company a copy of each filing
made, each notice given and each Consent obtained by InfoCast or the Purchaser
during the Pre-Closing Period; and
(d) during the Pre-Closing Period, InfoCast and its Representatives
cooperate with the Purchaser and with the Purchaser's Representatives, and
prepare and make available such documents and take such other actions as the
Purchaser may request in good faith, in connection with any filing, notice or
Consent that the Purchaser is required or elects to make, give or obtain.
Section 7.5 Notification of Events or Conditions
During the Pre-Closing Period, InfoCast and the Purchaser shall
promptly notify the Company in writing of:
(a) the discovery by InfoCast or the Purchaser of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a Breach of any representation
or warranty made by InfoCast or the Purchaser in this Agreement or any of the
Transaction Documents;
(b) any event, condition, fact or circumstance that occurs, arises
or exists after the date of this Agreement and that would cause or constitute a
Breach of any representation or warranty made by InfoCast or the Purchaser in
this Agreement or any of the Transaction Documents if (A) such representation or
warranty had been made as of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance, or (B) such event, condition,
fact or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement;
(c) any Breach of any covenant or obligation of InfoCast or the
Purchaser; and
58
(d) any event, condition, fact or circumstance that may make the
timely satisfaction of any of the conditions set forth herein impossible or
unlikely.
Section 7.6 Best Efforts
During the Pre-Closing Period, InfoCast and the Purchaser shall use
their respective Best Efforts to cause the conditions set forth in Article VIII
and Article IX to be satisfied on a timely basis, and shall not take any action
or omit to take any action, the taking or omission of which would or could
reasonably be expected to result in any of the representations and warranties
set forth in this Agreement or any of the other Transaction Documents becoming
untrue, in any of the conditions of Closing set forth in Article VIII or Article
IX not being satisfied or in the business of InfoCast becoming materially less
valuable.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING
The Purchaser's obligation to purchase the Purchased Shares and to
take the other actions required to be taken by the Purchaser at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions:
Section 8.1 Representations and Warranties; Performance of Obligations
The representations and warranties of the Company and the Selling
Shareholders contained in this Agreement and the Non-Controlling Shareholder
Letters of Transmittal and in each of the other Transaction Documents shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date and the Company shall have performed in all material
respects all obligations herein required to be performed or observed by it on or
prior to the Closing.
Section 8.2 Consents, Permits, Waivers and Approvals
The Company, the Selling Shareholders, the Purchaser and InfoCast
shall have obtained any and all consents, permits, waivers and approvals
necessary or appropriate for consummation of the transactions contemplated
hereunder (except for such as may be properly obtained subsequent to the
Closing).
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Section 8.3 Delivery of Certificates Evidencing Purchased Shares
The Selling Shareholders shall have delivered to the Purchaser
certificates representing 100% of the Purchased Shares, duly endorsed for
transfer.
Section 8.4 Delivery of Employment Agreements
Each of Darcy Galvon, Scott Fleming and Ken McLean shall have
delivered to the Purchaser the Galvon Management Agreement, MacLean Employment
Agreement or the Fleming Employment Agreement, as the case may be, duly executed
by Galvon, MacLean and Fleming, respectively.
Section 8.5 Compliance Certificate
The Company shall have delivered to the Purchaser a certificate,
executed by the President of the Company, dated the Closing Date, setting forth
the Company's representation and warranty that (i) each of the representations
and warranties made by the Company and, to the Knowledge of the Company, each of
the Selling Shareholders in this Agreement and the Non-Controlling Shareholder
Letters of Transmittal was accurate in all material respects as of the date of
this Agreement, (ii) each of the representations and warranties made by the
Company in this Agreement and in each of the other Transaction Documents is
accurate in all material respects as of the Closing, and (iii) each of the
covenants and obligations that the Company is required to have complied with or
performed pursuant to this Agreement at or prior to the Closing has been duly
complied with and performed in all material respects.
Section 8.6 Corporate Documents
The Company shall have delivered to the Purchaser or its counsel,
copies of all corporate documents of the Company as the Purchaser shall
reasonably request.
Section 8.7 Exchange Agreement
The Company, on behalf of each of the Selling Shareholders, shall
have duly executed and delivered to the Purchaser and InfoCast the Exchange
Agreement.
Section 8.8 Proceedings and Documents
All corporate and other proceedings in connection with the
transactions contemplated at the Closing hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchaser and its counsel, and the Purchaser and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
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Section 9.9 Delivery of Non-Controlling Shareholder Letters of Transmittal
Each of the Non-Controlling Shareholders shall have delivered to the
Purchaser, on or before the Closing Date, a duly executed Non-Controlling
Shareholder Declaration substantially in the form of Schedule 8.09 hereto.
ARTICLE IX
CONDITIONS TO THE SELLING
SHAREHOLDER'S OBLIGATIONS AT CLOSING
The Selling Shareholders' obligation to sell, assign, transfer and
deliver the Purchased Shares to the Purchaser and the Selling Shareholders'
obligation to take the other actions required to be taken on their part at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions:
Section 9.1. Representations and Warranties; Performance of Obligations
The representations and warranties of the Purchaser and InfoCast
contained in this Agreement and in each of the other Transaction Documents shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of the Closing Date and the Purchaser and InfoCast shall have performed
in all material respects all obligations herein required to be performed or
observed by them on or prior to the Closing.
Section 9.2 Consents, Permits, Waivers and Approvals
The Company, the Selling Shareholders, the Purchaser and InfoCast
shall have obtained any and all consents, permits, waivers and approvals
necessary or appropriate for consummation of the transactions contemplated
hereunder (except for such as may be properly obtained subsequent to the
Closing).
Section 9.3 Delivery of Certificates Evidencing Exchangeable Shares
The Purchaser shall issue certificates representing the Exchangeable
Shares issuable to the Selling Shareholders specified in Section 2.02(b),
bearing such legends as counsel may advise are necessary or desirable and
deposit same with legal counsel of the Purchaser until Section 116 Certificates
are issued in respect of the transaction contemplated herein, at which time they
will be delivered.
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Section 9.4 Compliance Certificate of Purchaser
The Purchaser shall have delivered to the Company and each of the
Selling Shareholders a certificate, executed by the President of the Purchaser,
dated the Closing Date, setting forth the Purchaser's representation and
warranty that (i) each of the representations and warranties made by the
Purchaser in this Agreement was accurate in all material respects as of the date
of this Agreement, (ii) each of the representations and warranties made by the
Purchaser in this Agreement and in each of the other Transaction Documents is
accurate in all material respects as of the Closing, and (iii) each of the
covenants and obligations that the Purchaser is required to have complied with
or performed pursuant to this Agreement at or prior to the Closing has been duly
complied with and performed in all material respects.
Section 9.5 Compliance Certificate of InfoCast
InfoCast shall have delivered to the Company and each of the Selling
Shareholders a certificate, executed by the President of InfoCast, dated the
Closing Date, setting forth InfoCast's representation and warranty that (i) each
of the representations and warranties made by InfoCast in this Agreement was
accurate in all material respects as of the date of this Agreement, (ii) each of
the representations and warranties made by InfoCast in this Agreement and in
each of the other Transaction Documents is accurate in all material respects as
of the Closing, and (iii) each of the covenants and obligations that InfoCast is
required to have complied with or performed pursuant to this Agreement at or
prior to the Closing has been duly complied with and performed in all material
respects.
Section 9.6 Corporate Documents
The Purchaser and InfoCast shall have delivered to the Company or
its counsel, copies of all corporate documents of the Purchaser and InfoCast as
the Controlling Shareholders shall reasonably request.
Section 9.7 Exchange Agreement
Each of the Purchaser and InfoCast shall have duly executed and
delivered to the Company and the Controlling Shareholders the Exchange
Agreement.
Section 8.8 Proceedings and Documents
All corporate and other proceedings in connection with the
transactions contemplated at the Closing hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Company, the Selling Shareholders and their respective
counsel, and the Company, the Selling Shareholders and their respective counsel
shall have received all such counterpart originals or certified or other copies
of such documents as they may reasonably request.
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Section 9.9 Homebase Governance
A resolution of the directors of each of InfoCast and InfoCast
Canada shall have been passed approving the terms of governance and support of
the Company prescribed in the memorandum attached hereto as Schedule 9.09.
Section 9.10 Darcy Galvon - Co-Chairman of InfoCast
All corporate proceedings shall have been taken and all necessary
resolutions of the directors of InfoCast shall have been duly passed to appoint
Darcy Galvon as a director and Co-Chairman of InfoCast, with the acknowledgement
that all decisions of the Co-Chairman must be unanimous.
ARTICLE X
INDEMNIFICATION, ETC.
Section 10.1 Survival of Representations and Warranties
The representations and warranties of each party contained in this
Agreement, the Non-Controlling Shareholder Letters of Transmittal and in each of
the other Transaction Documents shall survive the Closing for a period of one
year; provided that (i) each of the representations contained in Section 4.17,
and (ii) any representation the Breach of which the Company or any Selling
Shareholder had Knowledge on or prior to the Closing and any covenants or
obligations to be performed after the Closing, shall, in each case, survive and
continue for the applicable statute of limitation period or periods legally
applicable to them.
Section 10.2 Indemnification by Controlling Shareholders
(a) Each of the Controlling Shareholders shall, jointly and
severally in respect of representations, warranties or covenants made by or on
behalf of the Company, and severally only in respect of representations,
warranties or covenants made in respect of such Controlling Shareholders, hold
harmless and indemnify the Purchaser and its officers, directors, employees,
agents and representatives (collectively, the "Purchaser-Related Indemnitee" and
individually each a "Purchaser-Related Indemnitee") from and against, and shall
compensate and reimburse each of the Purchaser Indemnitees for, any Damages
which are suffered or incurred by any of the Purchaser-Related Indemnitees or to
which any of the Purchaser-Related Indemnitees may otherwise become subject at
any time (regardless of whether or not such Damages relate to any third party
claim) and which arise from or as a direct or indirect result of, or are
directly or indirectly connected with:
(i) any Breach of any representation or warranty
made by the Company or such Controlling
Shareholder in this Agreement or in any of
the other Transaction Documents;
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(ii) any Breach of any covenant or obligation of
the Company or such Controlling
Shareholders;
(iii) any Proceeding relating to any Breach, or
Liability or matter of the type referred to
in any of the clauses listed above
(including any Proceeding commenced by any
Purchaser-Related Indemnitee for the purpose
of enforcing any of its rights under this
Article X); or
(iv) the failure by the Company or such
Controlling Shareholder to obtain any
necessary consents in connection with any
Material Contracts.
(b) Each Controlling Shareholder acknowledges and agrees that, if
there is any Breach of any representation, warranty or other provision relating
to the Company or the Company's business, condition, assets, liabilities,
operations, financial performance, net income or prospects (or any aspect or
portion thereof), then the Purchaser itself shall be deemed, by virtue of its
ownership of Purchased Shares, to have incurred Damages as a result of such
Breach or Liability. Nothing contained in this Section 10.02(b) shall have the
effect of (i) limiting the circumstances under which the Purchaser may otherwise
be deemed to have incurred Damages for purposes of this Agreement, (ii) limiting
the other types of Damages that the Purchaser may be deemed to have incurred
(whether in connection with any such Breach or Liability or otherwise), or (iii)
limiting the rights of the Company under this Section 10.02.
(c) Notwithstanding anything to the contrary contained in this
Agreement, any liability of the Controlling Shareholders hereunder shall be
limited to the greater of: (i) the value of the Exchangeable Shares issued to
all the Selling Shareholders on closing of the transactions contemplated hereby
or (ii) the value of the Exchangeable Shares or any securities into which they
may have been exchanged at the time the liability giving rise to indemnification
hereunder is determined and notice of same is communicated to the Controlling
Shareholders.
Section 10.3 Indemnification by the Purchaser and InfoCast
(a) The Purchaser and InfoCast shall, jointly and severally, hold
harmless and indemnify each Selling Shareholder and each of their respective
agents and representatives (collectively, the "Selling Shareholder-Related
Indemnitees" and individually each a "Selling Shareholder-Related Indemnitee")
from and against, and shall compensate and reimburse each of the Selling
Shareholder-Related Indemnitees for, any Damages which are suffered or incurred
by any of the Selling Shareholder-Related Indemnitees or to which any of the
Selling Shareholder-Related Indemnitees may otherwise become subject at any time
(regardless of whether or not such Damages relate to any third party claim) and
which arise from or as a direct or indirect result of, or are directly or
indirectly connected with:
(i) any Breach of any representation or warranty
made by the Purchaser and InfoCast in this
Agreement or in any of the other Transaction
Documents;
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(ii) any Breach of any covenant or obligation of
the Purchaser and InfoCast; or
(iii) any Proceeding relating to any Breach, or
Liability or matter of the type referred to
in any of the clauses listed above
(including any Proceeding commenced by any
Selling Shareholder-Related Indemnitee for
the purpose of enforcing any of its rights
under this Section 10.03).
(b) Notwithstanding anything to the contrary contained in this
Agreement, any liability of the Purchaser or InfoCast hereunder, in respect of
any particular Selling Shareholder-Related Indemnitee, be limited to the greater
of:
(i) the value of the Exchangeable Shares issued
to such Selling Shareholder- Related
Indemnitee on Closing of the transactions
contemplated hereby or;
(ii) the value of the Exchangeable Shares or any
securities into which they may have been
exchanged at the time of the liability
giving rise to indemnification hereunder is
determined and notice of same is
communicated to such Selling
Shareholder-Related Indemnitee.
Section 10.4 Interest
Any party (the "Indemnifying Party") that is required to indemnify
any other Person (the "Indemnified Party") pursuant to this Article X with
respect to any Damages shall also be required to pay such Indemnified Party
interest on the amount of such Damages (for the period commencing as of the date
on which such Indemnified Party first incurred or otherwise became subject to
such Damages and ending on the date on which the applicable indemnification
payment is made by such party) at a rate per annum equal to 7%.
Section X.5 Defense of Third Party Claims
(a) In the event of the assertion or commencement by any Person of
any claim or Proceeding (whether against the Purchaser, any Selling Shareholder,
any other Indemnitee or any other Person) with respect to which any of the
Company, any Selling Shareholder, InfoCast or the Purchaser, as an Indemnifying
Party, may become obligated to indemnify, hold harmless, compensate or reimburse
any Indemnitee pursuant to this Article X, the Indemnified Party shall
reasonably promptly, following the Indemnified Party's actual knowledge thereof,
notify such Indemnifying Party of such claim or Proceeding. The Indemnified
Party shall have the right, at its election, to designate such Indemnifying
Party to assume the defense of such claim or Proceeding at the sole expense of
one or more of such Indemnifying Party. If the Indemnified Party so elects to
designate an Indemnifying Parties to assume the defense of any such claim or
Proceeding:
(i) such Indemnifying Party shall proceed to
defend such claim or Proceeding in a
diligent manner with counsel satisfactory to
the Indemnified Party;
65
(ii) the Indemnifying Party shall keep the
Indemnified Party informed of all material
developments and events relating to such
claim or Proceeding;
(iii) the Indemnified Party shall have the right
to participate in the defense of such claim
or Proceeding at its sole expense, except
that in the event the defense is not being
conducted by the Indemnifying Party in a
diligent manner as recommended by the
Company's legal counsel, paragraph (b) below
shall apply; and
(iv) the Indemnifying Party shall not settle,
adjust or compromise such claim or
Proceeding without the prior written consent
of the Indemnified Party.
(b) If the Indemnified Party so proceeds with the defense of any
such claim or Proceeding on its own:
(i) all expenses incurred and relating to the
defense of such claim or Proceeding (whether
or not incurred by the Indemnified Party)
shall be borne and paid exclusively by the
Indemnifying Party;
(ii) the Indemnifying Party shall make available
to the Indemnified Party any documents and
materials in the possession or control of
the Indemnifying Party that may be necessary
to the defense of such claim or Proceeding;
(iii) the Indemnified Party shall keep the
Indemnifying Party informed of all material
developments and events relating to such
claim or Proceeding; and
(iv) the Indemnified Party shall have the right
to settle, adjust or compromise such claim
or Proceeding with the consent of the
Indemnifying Party, provided, that the
Indemnifying Party shall not unreasonably
withhold such consent.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Tax Elections
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The Selling Shareholders and the Purchaser shall elect in prescribed
form and manner to have the provisions of subsection 85(1) of the Tax Act apply
to the transfer of the Purchased Shares and the Selling Shareholders shall
through the facilities of KPMG, deliver to and file the same with Revenue
Canada, Customs, Excise and Taxation within the time prescribed in accordance
with the Tax Act. The Selling Shareholders shall pay any late filing fees or
penalties and shall provide the Purchaser with a copy of such forms as filed.
For this purpose the Parties shall elect amounts in respect of such Purchased
Shares equal to an amount to be determined by the Selling Shareholders in
accordance with the limits set out in the Tax Act. The Selling Shareholders and
the Purchaser shall file all necessary elections or filings under all
corresponding provincial legislation to make the transfer effective on the same
basis as contemplated under the Tax Act.
Section 11.2 Termination
This Agreement may be terminated:
(a) by the written agreement of each of the Parties;
(b) by the Purchaser, the Company or any Selling Shareholder if
there shall be in effect a non-appealable order of a court of competent
jurisdiction permanently prohibiting the consummation of the Transactions; or
(c) by the Purchaser, the Company or any Selling Shareholder if the
Closing shall not have occurred on or before May 31, 1999.
Section 11.3 Governing Law
This Agreement shall be construed in accordance with, and governed
in all respects by, the laws of the Province of Ontario.
Section 11.4 Jurisdiction; Venue
Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any provincial or federal court located in the
Province of Ontario, Canada. Each party to this Agreement:
(a) expressly and irrevocably consents and submits to the
jurisdiction of each provincial and federal court located in the Province of
Ontario, Canada (and each appellate court located in the Province of Ontario,
Canada) in connection with any such legal proceeding;
(b) agrees that each provincial and federal court located in the
Province of Ontario, Canada shall be deemed to be a convenient forum; and
(c) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any provincial or federal
court located in the Province of Ontario, Canada, any claim that such party is
not subject personally to the jurisdiction of such court, that such legal
proceeding has been brought in an inconvenient forum, that the venue of such
proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
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Section 11.5 Successors and Assigns
This Agreement shall inure to the benefit of, and be binding upon,
the successors, assigns, heirs, executors and administrators of each of the
parties hereto. No Party may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other Parties; provided, however, that the Purchaser may (i) assign any or all
of its rights and interests hereunder to one or more of its affiliates and (ii)
designate one or more of its affiliates to perform its obligations hereunder (in
any or both of which cases the Purchaser nonetheless shall remain responsible
for the performance of all of its obligations hereunder).
Section 11.6 Entire Agreement
This Agreement, the other Transaction Documents and the other
documents delivered pursuant hereto and thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
Section 11.7 Severability
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 11.8 Amendment and Waiver
(a) This Agreement may be amended or modified only upon the mutual
written consent of the Company, InfoCast, the Purchaser and each of the Selling
Shareholders.
(b) Any amendment, modification or waiver effected pursuant to this
Section 11.07 shall be binding upon the Company, InfoCast, Purchaser and each of
the Selling Shareholders.
Section 11.9 Notices
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the parties hereto
at the respective addresses set forth below, or as notified by such party from
time to time at least ten (10) days prior to the effectiveness of such notice:
68
if to the Company: Homebase Work Solutions Ltd.
639-5th Avenue S.W.
Suite 820
Calgary, Alberta T2P 0M9
Attention: Ken MacLean
Telecopier: (403) 265-8626
with a copy to: Burnet, Duckworth & Palmer
1400, 350-7th Avenue S.W.
Calgary, Alberta T2P 3N9
Attention: Jeff Lawson
Telecopier: (403) 260-0332
if to the Selling Shareholders: Shareholders of Homebase Work Solutions Ltd.
c/o Homebase Work Solutions Ltd.
639 - 5th Avenue S.W.
Suite 820
Calgary, Alberta T2P 0M9
Attention: Ken MacLean
Telecopier: (403) 265-8626
with a copy to: Burnet, Duckworth & Palmer
1400, 350-7th Avenue S.W.
Calgary, Alberta T2P 3N9
Attention: Jeff Lawson
Telecopier: (403) 260-0332
if to the Purchaser: InfoCast Canada Inc.
1 Richmond Street West
Suite 901
Toronto, Ontario M5H 3W4
Attention: A.T. Griffis
Telecopier: (416) 867-1681
with a copy to: Aird & Berlis
181 Bay Street, BCE Place
Suite 1800, P.O. Box 754
Toronto, Ontario M5J 2T9
Attention: M.C.G. Brown
Telecopier: (416) 863-1515
69
if to InfoCast: InfoCast Corporation
1 Richmond Street West
Suite 901
Toronto, Ontario M5H 3W4
Attention: A.T. Griffis
Telecopier: (416) 867-1681
with a copy to: Aird & Berlis
181 Bay Street, BCE Place
Suite 1800, P.O. Box 754
Toronto, Ontario M5J 2T9
Attention: M.C.G. Brown
Telecopier: (416) 863-1515
Section 11.10 Counterparts
This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
Section 11.11 Attorney's Fees
InfoCast shall bear all reasonable legal fees and expenses incurred
by the Purchaser's Canadian counsel, Aird & Berlis, Toronto, Canada, in
connection with the negotiation and closing of the transaction contemplated
hereby. If any action at law or in equity (including arbitration) is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled. The Company
shall bear all reasonable legal fees and expenses incurred by Canadian counsel
to the Company and the Selling Shareholders, Burnet, Duckworth & Palmer,
Calgary, Alberta, in connection with the negotiation and closing of the
transaction contemplated hereby.
Section 11.12 Delays or Omissions
No delay or omission to exercise any right, power or remedy accruing
to any party hereto, upon any breach or default of any other party hereto, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this Agreement, must be made in writing and
shall be effective only to the extent specifically set forth in such writing.
70
Section 11.13 Remedies Cumulative
All remedies, either under this Agreement or by law or otherwise
afforded to any party hereto, shall be cumulative and not alternative.
Section 11.14 Ontario Securities Law Matters
The Purchaser hereby covenants and agrees to use its best efforts to
obtain, as promptly as practicable following the Closing Date, a discretionary
ruling of each of the Ontario Securities Commission and the Alberta Securities
Commission granting an exemption from the prospectus and registration
requirements of the Ontario Act and the Alberta Act in connection with any and
all trades of securities contemplated by or under the terms of the Exchangeable
Shares or the Exchange Agreement, on such terms and in such form as is customary
for transactions of this nature. The Controlling Shareholders covenant and agree
(and each Selling Shareholder has agreed in the Non-Controlling Shareholder
Letters of Transmittals) not to exercise any rights arising under the terms of
the Exchangeable Shares or the Exchange Agreement that would cause the Purchaser
or InfoCast to be required to effect a trade in securities that would constitute
a contravention of the Ontario Act or the Alberta Act. This Section shall also
operate as a waiver of the rights of a holder of Exchangeable Shares under the
terms thereof such that no holder of Exchangeable Shares may exercise such
rights in a manner contrary to the covenants provided for in this Section. Each
Selling Shareholder agrees not to transfer any Exchangeable Shares to any person
who does not first agree to be bound by the provisions of this Section, and to
cause any subsequent transferee to become so bound as a condition of any
subsequent transfer.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the date set forth in the first paragraph hereof.
COMPANY:
HOMEBASE WORK SOLUTIONS LTD.
By: /s/ (signature is illegible)
-----------------------------
Name:
Title:
SELLING SHAREHOLDERS:
Witness: KEN MACLEAN
71
Witness: DARCY GALVON
Witness: SCOTT FLEMING
786364 ALBERTA LTD.
By:
Name:
Title:
786206 ALBERTA LTD.
By:
Name:
Title:
PURCHASER:
INFOCAST CANADA CORPORATION
By:
Name:
Title:
INFOCAST CORPORATION
By:
Name:
Title:
71