APPLICATION SOFTWARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 30th day of September 1997 (the "Effective
Date").
BETWEEN:
[PURCHASER 2], an individual, having a business address at [ADDRESS],
FAX: [FAX] ("Purchaser")
OF THE FIRST PART AND
ALYA INTERNATIONAL, INC., a Delaware corporation, having a business
address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter
referred to as "Alya")
OF THE SECOND PART
WHEREAS:
1. Alya is the legal and beneficial owner of the Purchased Assets; and
2. Alya has agreed to sell and assign the Purchased Assets to Purchaser for
use in the Territory, and Purchaser has agreed to purchase the Purchased
Assets on the terms and conditions hereinafter set forth and contained.
NOW THEREFORE in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the recitals and the schedules, if any, the following
words, phrases and expressions shall have the following meanings:
a. "Application Software" means the computer programs consisting of the
modules and having the functional and technical specifications more
particularly described in Schedule A to this Agreement together with
Enhancements;
b. "Asset Valuation Report" means the software valuation dated as of September
15, 1997, prepared for Purchaser by [APPRAISER];
c. "Closing" has the meaning set out in Section 7.1;
d. "Closing Date" means September 30, 1997, or such other date as the parties
may agree;
e. "Confidential Information" of a party (the "Disclosing Party") shall mean
information of a confidential and proprietary nature relative to the
Disclosing Party or its business and other matters deemed confidential and
proprietary by the Disclosing Party, written notice of which is given to
the party receiving such information (the "Receiving Party"); provided
that the terms and subject matter of this Agreement and the Management
Agreement, including the Application Software and the Purchased Assets, are
deemed to be confidential without the need for written notice and shall at
all times remain confidential, notwithstanding the exception to
confidentiality noted in the next sentence. "Confidential Information" of
the Disclosing Party shall not include:
i. written information not clearly marked as confidential or oral
disclosures not subsequently confirmed in writing as confidential;
ii. information which the Receiving Party can demonstrate
A. was published or generally known in the industry at the time of
its disclosure by the Disclosing Party, or became published or
generally known in the industry without breach of this Agreement
by the Receiving Party;
B. was known to the Receiving Party at the time of disclosure by the
Disclosing Party, independently of the Disclosing Party and
without breach of an obligation of confidentiality to the
Disclosing Party;
C. is disclosed to the Receiving Party by a third party which had a
right to disclose such information and was not in breach of an
obligation of confidentiality to the Disclosing Party;
D. is independently developed by the Receiving Party without use,
directly or indirectly, of any Confidential Information of the
Disclosing Party; or
E. information required to be disclosed pursuant to applicable law,
regulation, judicial or administrative order, lawful subpoena or
enforceable discovery demand, provided the Receiving Party uses
commercially reasonable efforts to obtain confidential treatment
of such information and further provided that the Disclosing
Party receives prior written notice of any pending disclosure,
with sufficient time to protest disclosure or seek an adequate
protective order.
f. "Customers" means any person using or distributing the Security System in
the Territory;
g. "Documentation" has the meaning specified in Subsection v. of the
definition of Purchased Assets;
h. "Enhancement" means any improvement, revision or other modification made
to, or replacement of, the Application Software by Alya or any other
person, to be utilized in connection with providing the Security System,
including, without limitation, any improvement, revision or other
modification which is necessary:
i. to provide Customers with then current Application Software; or
ii. to maintain the Application Software as a state of the art or industry
leading technology,
including, without limitation, the changes set out in Appendix A.1 to
Schedule A to the extent that Purchaser's manager pursuant to the
Management Agreement continues to believe that they are commercially
reasonable in light of then current market conditions and technical
developments;
i. "Infringement Claims" has the meaning specified in Subsection 5.1.b.;
j. "Intellectual Property" has the meaning specified in Subsection iv. of the
definition of Purchased Assets";
k. "Letter of Representation" means a letter from Alya to [APPRAISER] in
substantially the form attached as Schedule B;
l. "Management Agreement" means the Management and Marketing Agreement to be
entered into by Purchaser and Alya on Closing for the management and
marketing of the Purchased Assets;
m. "Note" means the 6.0% Secured Term Note, secured by the Purchased Assets,
in substantially the form attached as Schedule D;
n. "Originality Certificate" means the Officer's Certificate in the form
attached as Schedule C;
o. "Purchase Price" has the meaning specified in Section 2.1;
p. "Purchased Assets" means the right to exclusively utilize, modify and
develop the Application Software within the Territory and to exclusively
distribute, market and sell the Application Software as incorporated in the
Security System, within the Territory, and to utilize all of Alya's
property and rights necessary for the operation of, or the realization of
benefits from, the Application Software within the Territory, including,
without limitation:
i. all products associated with or derivatives of the Application
Software;
ii. the benefit of all agreements necessary for the operation of, or the
realization of the benefit from, the Application Software within the
Territory, including, without limitation, a perpetual, non-exclusive,
royalty free right to use, modify, develop and distribute within the
Territory the OPEN cortex platform software, as described in Schedule
G hereto, and any modification or revision thereto, solely in
connection with the Application Software and the Security Systems, all
service agreements and third party license agreements and all
marketing and product business plans;
iii. all inventions necessary for the operation of, or realization of the
benefit from, the Application Software within the Territory,
including, without limitation, ideas, research, discoveries, designs,
systems, patterns, specifications, technology, know-how, formulae,
confidential information, data, computer software development tools,
operating systems, source code, object code, subroutines, algorithms,
methods and processes;
iv. all intellectual property rights necessary for the operation of, or
realization of the benefit from, the Application Software within the
Territory, including, without limitation, patents, trademarks,
copyrights and trade secrets and applications for and the right to
apply for any intellectual property (the items listed in
paragraph (iii) and (iv) are hereinafter collectively referred to
as the "Intellectual Property"); and
v. copies of all records, documents (including, without limitation, user
documentation and source code listings), correspondence, notes and
rights related to the foregoing ("Documentation");
q. "Purchase Price" has the meaning set out in Section 2.1;
r. "Section" means any section, subsection, article, clause, subclause,
paragraph or subparagraph of this Agreement;
s. "Security Agent Agreement" means the Security Agent Agreement to be entered
into by Alya, Purchaser and [SECURITY AGENT], as security agent, on the
Closing, for the purpose of holding the Purchased Assets pursuant to the
terms thereof;
t. "Security System" means the building access control system developed by
Alya and known as the O.P.E.N.centrix-Open Platform for Essential Network,
which includes, without limitation, the Application Software, the firmware
containing the Application Software, the O.P.E.N.cortex platform software
and all hardware related thereto; and
u. "Territory" means the geographical region of the United States as described
in Schedule F.
1.2 INTERPRETATION
a. The terms "this Agreement", "hereof", "hereunder" and similar expressions
refer to this Agreement and not to any particular Section, Subsection or
other portion of this Agreement and include any agreement amending or
supplementing this Agreement. Unless something in the subject matter or
context is inconsistent therewith, reference herein to Sections and
Subsections are to Sections and Subsections of this Agreement.
b. Except as specifically stated in this Agreement, all references to currency
are to Canadian dollars.
c. Wherever the singular, plural, masculine, feminine or neuter is used
throughout this Agreement the same will be construed as meaning the
singular, plural, masculine, feminine, neuter, body politic or body
corporate where the fact or context so requires.
d. Headings are inserted in the Agreement for convenience of reference only
and are not intended to affect the Agreement's interpretation.
1.3 SCHEDULES
The following schedules are incorporated into and made part of this
Agreement:
Schedule A - Application Software Specifications
Schedule B - Letter of Representation
Schedule C - Originality Certificate
Schedule D - Form of Note
Schedule E - Exceptions to the representations and warranties set out in
Article 4, if any.
Schedule F - Territory
Schedule G - Description of O.P.E.N.cortex platform
ARTICLE 2
AGREEMENT TO SELL, ASSIGN AND PURCHASE
2.1 Alya hereby sells, assigns and transfers all its right, title and interest
in the Purchased Assets to Purchaser and Purchaser hereby purchases the
entire right, title and interest of Alya therein, as of the Effective Date,
at and for Eight Million Four Hundred Thousand Canadian Dollars
(Cdn.$8,400,000)(the "Purchase Price") payable in accordance with Article 3
hereof.
2.2 The parties agree that the fair market value of the Purchased Assets is
equal to the Purchase Price and agree that this determination is final and
conclusive between them.
ARTICLE 3
PURCHASE PRICE AND PAYMENT
3.1 The Purchase Price will be payable partly in cash and partly by execution
and delivery of the Note for the balance of the Purchase Price as follows:
a. Cdn.$30,000 as a refundable deposit to be held in trust by Purchaser's
solicitors and credited against the Purchase Price on the Closing Date;
and
b. Cdn.$750,000 on Closing, by wire transfer; and
c. Cdn.$7,620,000 by execution and delivery of the Note.
3.2 Purchaser will deduct and remit any withholding tax required to be deducted
and remitted in connection with any payment made under Section 3.1.
3.3 Purchaser will not be responsible for any taxes, levies or other similar
assessments including, without limitation, sales or use taxes payable in
connection with the purchase and sale contemplated by this Agreement, if
any.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF ALYA
Alya hereby, undertakes, represents and warrants to Purchaser at the date
hereof and at the Closing Date, and acknowledges that Purchaser is relying on
such undertakings, representations and warranties that:
a. Alya is a corporation (i) duly incorporated and organized, validly
subsisting and in good standing under the laws of the jurisdiction of its
incorporation; (ii) duly authorized, with necessary and sufficient permits
and licenses to enable it to own its properties and to carry on its
business as presently owned and carried on by it; and (iii) having the
power and authority and right to enter into this Agreement and each and
every agreement and document to be executed and delivered by it pursuant
hereto and to perform each of its obligations as therein and herein
contained;
b. Alya has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the other documents
contemplated hereby;
c. this Agreement constitutes the legal, valid and binding obligation of Alya,
enforceable against it in accordance with its terms;
d. neither execution nor delivery of this Agreement and each and every other
agreement executed and delivered by Alya pursuant hereto nor the
fulfillment or compliance with any of the terms hereof or thereof will
conflict with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, the articles and by-laws, as amended, of
Alya or any material agreement or instrument to which Alya is subject or
will require any consent or other action by any person or administrative or
governmental body;
e. Alya now has and on the Closing Date will have good and marketable title,
free and clear of any and all claims, liens, encumbrances, mortgages,
security interests and charges, licenses or rights of other persons
whatsoever to all of the Purchased Assets except as set out in Subsection
4.1 e. of Schedule E;
f. there are no agreements or contracts or other documents pertaining to the
acquisition or development of the Purchased Assets except as set out in
Subsection 4.1 f. of Schedule E, copies of which have been delivered to
Purchaser and its counsel;
g. the individuals involved in the development of the Application Software,
the Purchased Assets or any element thereof, are or were:
i. employees of Alya Systems, Inc. ("Alya Systems") who worked within the
scope of their employment to develop the Application Software, the
Purchased Assets, or any element thereof, and who executed a written
waiver of their moral rights in the copyright to the foregoing in
favor of Alya Systems; or
ii. independent contractors or employees of independent contractors.
Except as set forth in subsection 4.1g of Schedule E, each contractor
was subject to agreements assigning their interest, if any, in the
Application Software, Purchased Assets, or any element thereof to Alya
Systems and executed a written waiver of their moral rights in the
copyright to the foregoing in favor of Alya. Copies of ALYA System's
standard Employee Invention Assignment and Confidentiality Agreement
and Consultant Invention Assignment and Confidentiality Agreement are
attached to Schedule E;
h. the Application Software does not contain any third party software.
However, certain third party software is required to operate the
Application Software and Alya has licenses for such third party software
which allow Alya to market such software, directly or indirectly through
sublicensees, as part of the Application Software and Alya will maintain
such licenses in good standing for the benefit of Purchaser. None of the
third party software is custom software developed specifically for use with
the Application Software. All of the third party software is readily
available in the open market and capable of being obtained by the Purchaser
in the event a license terminates, or if the particular software is not
capable of being obtained at such time, other software suitable for
substitution therefor is readily available in the open market and Alya will
modify, at its own cost and expense, the source code of the Application
Software, if necessary, to be compatible;
i. the Application Software was not derived from any third party's
pre-existing material except as set out in Subsection 4.1 i. of Schedule E;
j. Alya has not used or enforced or failed to use or enforce any Intellectual
Property rights or other rights associated with the Application Software or
Purchased Assets in any manner which could adversely affect the validity or
enforceability of the Intellectual Property;
k. there is not, and has not been, any infringement or violation of Alya's
rights in and to the Intellectual Property;
l. Alya has not received notice of any claim of adverse ownership, invalidity
or other opposition to or conflict with the Purchased Assets;
m. there are now no and at the Closing Date will be no action, claim or demand
or other proceedings pending or, to the best of its knowledge, threatened
against Alya before any court or administrative agency which could
materially adversely affect the financial condition or overall operations
of Alya or the Purchased Assets, nor any judgment, order or decree
enforceable against Alya which involves or may require the expenditure of
money as a condition to or a necessity for the right or ability of
Purchaser to conduct its business involving the Purchased Assets;
n. it has not entered into any agreement which would entitle any person to any
valid claim against Purchaser for a broker's commission, finder's fee or
any like payment in respect of the purchase and sale of the Purchased
Assets or any other matters contemplated by this Agreement;
o. the Application Software has been developed in accordance with good
professional standards applicable in the computer software industry
including, without limitation, using modern flexible programming languages
and development tools;
p. the Application Software operates in accordance with the applicable
associated user Documentation;
q. none of the Purchased Assets has been disclosed to any third party except
under obligations of confidentiality, the benefit of which obligations are
hereby assigned to Purchaser;
r. there are no licenses, agreements, approvals or consents required or
advisable to enable Alya to lawfully and properly market the Application
Software in the Territory and no such licenses, agreements, approvals or
consents will be required by Purchaser;
s. it has not done anything so as to preclude Purchaser from having full
enjoyment and quiet possession of the Purchased Assets, subject to the
terms and conditions herein;
t. there are no outstanding options, agreements of purchase and sale or other
agreements or commitments obligating Alya to sell the Purchased Assets or
any of them, except pursuant to this Agreement;
u. there are no taxes, levies or other similar assessments including, without
limitation, sales, use or other taxes payable by Alya in connection with
the purchase and sale contemplated by this Agreement;
v. the Application Software is available for use;
w. the assumptions, referred to in the Asset Valuation Report, are true and
correct;
x. the Application Software is application software and is not system software
as the terms "application software" and "system software" are generally
used and understood in the computer industry; and
y. all copyright, patent or trademark registrations or applications for
registration of the Application Software in any jurisdiction have been
disclosed to the Purchaser, including complete and accurate documentation
relating thereto.
All of the representations, warranties and covenants contained in this
Agreement made and to be made by Alya will survive the Closing Date and continue
in full force and effect for the benefit of Purchaser until full payment of all
amounts owing under the Note.
4.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser undertakes, represents and warrants to Alya at the date hereof
and at the Closing Date and acknowledges that Alya is relying on such
undertakings, representations and warranties that Purchaser is now and on the
Closing Date
will be an individual who has the power, authority and right to enter into
this Agreement and each and every agreement to be executed and delivered by
Purchaser pursuant hereto and to perform each of his obligations as therein
and herein contained to purchase the Purchased Assets in accordance with the
terms of this Agreement.
The representations, warranties and covenants contained in this
Agreement and made and to be made by Purchaser will survive the Closing Date
and continue in full force and effect for the benefit of Alya while any money
due on the Note is outstanding.
ARTICLE 5
COVENANTS
5.1 ALYA'S ASSUMPTION OF LIABILITY AND INDEMNITY
Alya hereby covenants and agrees to be liable to Purchaser for and to
indemnify and save harmless Purchaser from and against, effective as and from
the Closing Date, any claims, demands, actions, causes of action, damages,
losses, costs (including legal costs of a solicitor on a full indemnity
basis), liabilities or expenses which may be made or brought against
Purchaser and which it may suffer or incur as a result of, in respect of, or
arising out of:
a. any non-fulfillment of or breach of any covenant, undertaking,
representation or warranty on the part of Alya, under this Agreement or any
document or instrument contemplated by this Agreement; and
b. subject to Section 5.2, infringement of any third party rights to the
Intellectual Property as a result of the use of the Intellectual Property
by Purchaser in accordance herewith on or after the Closing Date
("Infringement Claims").
5.2 INDEMNIFICATION PROCEDURE
Upon the occurrence of an event giving rise to indemnification
hereunder, Purchaser shall (i) give prompt notice to Alya of such events,
(ii) permit Alya's attorneys to handle and control the defense of such
claims, at Alya's expense, and (iii) shall cooperate in the defense thereof.
Purchaser may, at its own expense, participate in such defense, provided
however, that, if Alya has agreed in writing to assume the defense of such
claims, such participation expenses shall not become part of the
indemnification claim. There shall be no settlements, whether agreed to in
court or out of court, without the prior written consent of Alya and
Purchaser, except that Alya may settle a claim without the consent of
Purchaser if
(i) the settlement is purely monetary, (ii) Alya hereunder admits in writing
its liability to Purchaser hereunder, and (iii) concurrently with such
settlement, Alya pays the full amount owed thereunder. Notwithstanding the
foregoing, in the event Alya does not assume the defense of any such claim or
litigation in accordance with the terms hereof within the earlier of (i)
thirty (30) days following written notice from Purchaser or (ii) the due date
for response to any complaint filed, then Purchaser may defend against such
claim or litigation in such manner as it may deem appropriate, including, but
not limited to, settling such claim or litigation, after giving notice of the
same to Alya, on such terms as Purchaser may deem appropriate. In any action
by Purchaser seeking indemnification from Alya in accordance with the
provisions hereof, Alya shall not be entitled to object to the manner in
which Purchaser defended such claim or the amount of or nature of any such
settlement.
5.3 COVENANT NOT TO COMPETE
Purchaser acknowledges that the Purchased Assets have a territorial
limitation, and Purchaser covenants that it will only market, distribute and
sell the Application Software within the Territory. Alya covenants and
agrees that it shall not market, distribute and/or sell the Application
Software within the Territory or to any person that may use it in the
Territory, except as agent for Purchaser, as contemplated in the Management
Agreement. Alya retains the exclusive rights to use, modify, market,
distribute and sell the Application Software, the Enhancements and the
Intellectual Property in all regions of the world, other than the Territory.
Nothing herein precludes Alya from selling the O.P.E.N.cortex platform and
associated hardware as a stand-alone development platform.
5.4 OTHER COVENANTS
Alya (and with respect to Section 5.4 d. only, Purchaser) covenants and
agrees as follows:
a. until the Closing Date, Alya will not sell, license or otherwise dispose of
any of the Purchased Assets or any part thereof or interest therein, or
agree to do so, or enter into any negotiations with a view to any of the
foregoing, without the prior approval of Purchaser;
b. Alya will make available to Purchaser for due diligence investigations, all
information, documents and agreements pertaining to the development,
acquisition and marketing of the Application Software, including, without
limitation, computer code and related documentation, marketing and product
business plans and the full cooperation of Alya management;
c. Alya will complete the Originality Certificate and deliver it to Purchaser
and Purchaser's counsel on or before Closing;
d. each Receiving Party that receives Confidential Information from the
Disclosing Party shall maintain such Confidential Information in
confidence, shall not reveal the same to any third party (other than its
employees on a need to know basis in connection with the Receiving Party's
performance under this Agreement or the Management Agreement) and shall not
use such Confidential Information, directly or indirectly, for any purpose
other than as required in the performance of this Agreement or the
Management Agreement; and
e. Alya will acquire, at its expense and in Purchaser's name, licenses for any
third party software comprising part of the Purchased Assets not assignable
or assigned by Alya to Purchaser.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser hereunder will be subject to the satisfaction
or compliance with, at or before Closing, of each of the following conditions
precedent (each of which is hereby acknowledged to be included for the exclusive
benefit of Purchaser and may be waived in writing in whole or in part):
a. the execution and delivery of all of the closing deliveries identified in
Section 7.3;
b. all legal and regulatory approvals and consents, whether from shareholders,
governmental authorities or other third parties necessary to the completion
of the transactions contemplated by the terms of this Agreement have been
obtained;
c. there will have been no material adverse change, financial or otherwise, in
Alya or the Purchased Assets;
d. Alya will have performed or complied with, in all respects, all of its
undertakings, covenants and agreements hereunder to be performed or
complied with; and
e. the representations and warranties of Alya contained in Section 4.1 will be
true and correct on Closing.
6.2 CONDITIONS TO ALYA'S OBLIGATIONS
The obligations of Alya hereunder will be subject to the satisfaction or
compliance with, at or before Closing, of each of the following conditions
precedent (each of which is hereby acknowledged to be included for the exclusive
benefit of Alya and may be waived in writing in whole or in part):
a. delivery of the Purchase Price, and the execution and delivery of all
closing deliveries identified in Section 7.4;
b. Purchaser will have performed or complied with, in all respects, all of its
undertakings, covenants and agreements hereunder to be performed or
complied with; and
c. the representations and warranties of Purchaser contained in Section 4.2
will be true and correct on Closing.
ARTICLE 7
CLOSING
7.1 CLOSING DATE
The transaction of purchase and sale contemplated by this Agreement will be
completed at or about 3:00 P.M. on the Closing Date at the offices of
Purchaser's Solicitors ("Closing").
7.2 SURVIVAL
This Agreement and its component parts will not merge upon Closing or on
execution, delivery or registration of any documents executed, delivered or
registered pursuant to this Agreement or otherwise, but will survive Closing.
7.3 ALYA'S CLOSING DELIVERIES
At the Closing, Alya will duly execute and deliver or cause to be executed
and delivered to Purchaser the following:
a. a ▇▇▇▇ of sale assigning the Purchased Assets to Purchaser;
b. the Management Agreement;
c. the Originality Certificate;
d. the Letter of Representation;
e. the Security Agent Agreement;
f. an electronic copy of the Application Software, including, without
limitation, a copy of all Documentation, each of which shall be delivered
to Purchaser or his designee by electronic transfer;
g. a certified copy of the resolutions of the directors of Alya authorizing
the transactions;
h. such other agreements and documents as Purchaser may reasonably request to
give effect to the terms and conditions of this Agreement;
i. a copy of all authors' assignments of copyright, patent and trademark and
waivers of moral rights in the Application Software; and
j. a copy of all patent, trademark and copyright registrations in respect of
the Application Software.
7.4 PURCHASER'S CLOSING DELIVERIES
At Closing, Purchaser will execute and deliver or cause to be executed and
delivered the following:
a. wire transfer, bank draft or solicitor's trust cheque for the cash amount
of the Purchase Price payable on Closing pursuant to Section 3.1, subject
to any withholding tax payable in connection with such payment;
b. the Note;
c. the Management Agreement;
d. the Security Agent Agreement; and
e. such other agreements and documents as Alya may reasonably request to give
effect to the terms and conditions of this Agreement.
7.5 DELIVERY TO SECURITY AGENT
At Closing and as security for its obligations under the Note, Purchaser
will electronically deliver to the Security Agent, under the Security Agent
Agreement, the source code for the Application Software delivered to Purchaser
by Alya.
ARTICLE 8
GENERAL
8.1 VALIDITY
If any one or more of the provisions or parts thereof contained in this
Agreement should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, such provision shall be construed so as to most
closely reflect the original intent of the parties, but still be enforceable,
and the validity, legality or enforceability of such remaining provisions or
parts thereof will not in any way be affected or impaired thereby. The
invalidity, illegality or unenforceability of any provision or part thereof
contained in this Agreement in any jurisdiction will not affect or impair
such provision or part thereof or any other provisions of this Agreement in
any other jurisdiction.
8.2 FURTHER ASSURANCES
Each of the parties will, at any time and from time to time at the
request of the other, execute and deliver any and all such further
instruments or assurances as may be necessary or desirable to give effect to
the terms and conditions of this Agreement.
8.3 COUNTERPART AND FACSIMILE EXECUTION
This Agreement, and any and all ancillary documents contemplated herein,
may be executed in one or more counterparts and may be executed by facsimile
signatures and all such counterparts and facsimile signatures taken together
will constitute one and the same Agreement and will be binding on the parties
as if they had originally signed one copy of this Agreement.
8.4 ASSIGNMENT
Purchaser may assign any part of its interest in this Agreement or the
Purchased Assets, except that any assignment to a competitor of Alya requires
the prior written consent of Alya. Such assignment shall be effected by:
a. giving written notice of the name and address of the assignee; and
b. by delivering to Alya a written undertaking of the assignee, acknowledging
receipt of a copy of this Agreement and agreeing to be bound by the terms
and conditions of this Agreement.
Alya may not assign this Agreement, without the prior written consent of
Purchaser, except that Alya may assign this Agreement in whole, but not in
part, and only with an
assignment of all of its rights and obligations under the Note and the
Security Agent Agreement, to (i) any corporation, partnership or other entity
which is controlled by, controlling or under common control with, Alya; or
(ii) a purchaser of all or substantially all the assets of Alya, or any
person or entity into which Alya is merged or consolidated by:
a. giving written notice of the name and address of the assignee; and
b. by delivering to Purchaser a written undertaking of the assignee,
acknowledging receipt of a copy of this Agreement and agreeing to be bound
by the terms and conditions of this Agreement.
8.5 BINDING EFFECT
This Agreement and all of its provisions will enure to the benefit of
the parties and their respective successors and permitted assigns, and will
be binding upon the parties and their respective successors and permitted
assigns. The expressions "Alya" and "Purchaser", as used herein will include
Alya's and Purchaser's permitted assigns whether immediate or derivative,
respectively.
8.6 ARBITRATION OF DISPUTES
Any dispute arising between the parties under this Agreement will be
settled by initially escalating the dispute to senior management of the
parties for resolution and, in the event that senior management cannot
resolve the dispute within 30 days of escalation of the dispute to such
level, then the parties agree that such dispute shall be settled by final
and binding arbitration in Vancouver, British Columbia, before a single
arbitrator mutually acceptable to Owner and Manager, in accordance with the
Commercial Arbitration Act, S.B.C. 1979c.3 then existing, except as otherwise
specifically provided herein. The arbitrator shall apply the laws of British
Columbia for the purposes of construing and enforcing this Agreement and any
dispute arising hereunder. The arbitration award shall be specifically
enforceable; judgment upon any arbitration award may be entered in any court
with personal jurisdiction over the parties and subject matter of the
disputes. Unless otherwise determined by the arbitrator, all expenses in
connection with such arbitration will be divided equally between the parties,
with the exception of expenses of counsel, witnesses and employees of the
parties which will be borne by the parties incurring them. Notwithstanding
anything to the contrary herein, either party will always be entitled to seek
preliminary or provisional remedies or release (including attachments and
preliminary injunctions) from any court of competent jurisdiction.
8.7 AMENDMENT
This Agreement may be altered or amended in any of its provisions when
any such changes are reduced to writing and signed by the parties hereto but
not otherwise. Time will be of the essence of this Agreement.
8.8 COSTS
Each party hereto will bear its own legal, accounting and other costs
relating to all matters involved in this transaction.
8.9 CONFIDENTIALITY
Each of the parties will treat this Agreement and all information
relating to this Agreement and the transactions contemplated by this
Agreement confidentially and no public disclosure by any party will be made
without the prior approval of the other, not to be unreasonably withheld,
except as legally required by a party to satisfy disclosure obligations to
shareholders and regulators, in which case simultaneous notice of such
disclosure will be given to the other party.
8.10 ENTIRE AGREEMENT
This Agreement, the Management Agreement, the Security Agent Agreement,
the Note and the exhibits and schedules referenced in each of the foregoing
constitute the entire Agreement among the parties and supersedes all
proposals, letters of intent, representations or agreements, oral or written,
among them relating to the subject matter hereof.
8.11 JURISDICTION, VENUE AND GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of British Columbia and Canada (regardless of either
jurisdiction's or any other jurisdiction's choice of law principles). To the
extent permitted by law, the parties hereto agree that all actions or
proceedings arising in connection herewith, shall be arbitrated or litigated
in ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, and each party hereby waives any
right it may have to assert the doctrine of Forum Non Conveniens or to object
to venue. The parties each hereby stipulate that the courts located in
Vancouver, British Columbia, shall have personal jurisdiction and venue over
each party for the purpose of litigating any such dispute, controversy or
proceeding arising out of or related to this Agreement.
8.12 NOTICES
Except as expressly provided herein, all notices, requests or other
communications required hereunder shall be in writing and shall be given by
personal delivery, international overnight courier service, or by facsimile
(subject to confirmation of receipt), addressed to the respective party at
the applicable address set forth above, or to any party at such other
addresses as shall be specified in writing by such party to the other parties
in accordance with the terms and conditions of this Section. All notices,
requests or communications shall be deemed effective upon personal delivery,
or two (2) business days following deposit with any international overnight
courier service, or upon confirmation of receipt if sent by facsimile
transmission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day first above written.
ALYA: ALYA INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
President and
Chief Executive Officer
PURCHASER:
/s/ [PURCHASER 2]
-----------------------------------
[PURCHASER 2]
MANAGEMENT AND MARKETING AGREEMENT
THIS AGREEMENT made as of September 30, 1997.
BETWEEN:
[PURCHASER2], an individual, having a business address at
[PURCHASER'S ADDRESS], FAX [PURCHASER'S FAX] (hereinafter referred to as
"Owner")
OF THE FIRST PART AND
ALYA INTERNATIONAL, INC., a California corporation, having a business
address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, FAX: (650)
▇▇▇-▇▇▇▇ (hereinafter referred to as "Manager")
OF THE SECOND PART
WHEREAS:
A. Owner has acquired or developed and owns all of the right, title and
interest to use, distribute and sell the Assets in the Territory; and
B. Owner wishes to appoint Manager, as Owner's agent, to manage, market,
distribute and sell the Security System in the Territory on the terms and
conditions set out in this Agreement.
NOW THEREFORE in consideration of the entitlements to receive certain
cash distributions under this Agreement, and the covenants, agreements and
premises herein contained, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the recitals and the schedules, if any, the following
words, phrases and expressions will have the following meanings:
a. "Application Software" means the computer programs consisting of the
modules and having the functional and technical specifications more
particularly described in Schedule A to this Application Software Purchase
Agreement together with Enhancements;
b. "Application Software Purchase Agreement" means the application software
purchase agreement made as of September 30, 1997, between Owner and
Manager;
c. "Assets" means "Purchased Assets" as that term is defined in the
Application Software Purchase Agreement;
d. "Confidential Information" of a party (the "Disclosing Party") shall mean
information of a confidential and proprietary nature relative to the
Disclosing Party or its business and other matters deemed confidential and
proprietary by the Disclosing Party, written notice of which is given to
the party receiving such information (the "Receiving Party"); provided
that the terms and subject matter of this Agreement and the Application
Software Purchase Agreement, including the Application Software, the
Security System and the Purchased Assets, are deemed to be confidential
without the need for written notice and shall at all times remain
confidential, notwithstanding the exception to confidentiality noted in the
next sentence. "Confidential Information" of the Disclosing Party shall not
include:
i. written information not clearly marked as confidential or oral
disclosures not subsequently confirmed in writing as confidential;
ii. information which the Receiving Party can demonstrate
A. was published or generally known in the industry at the time of
its disclosure by the Disclosing Party, or became published or
generally known in the industry without breach of this Agreement
by the Receiving Party;
B. was known to the Receiving Party at the time of disclosure by the
Disclosing Party, independently of the Disclosing Party and
without breach of an obligation of confidentiality to the
Disclosing Party;
C. is disclosed to the Receiving Party by a third party which had a
right to disclose such information and was not in breach of an
obligation of confidentiality to the Disclosing Party;
D. is independently developed by the Receiving Party without use,
directly or indirectly, of any Confidential Information of the
Disclosing Party; or
E. information required to be disclosed pursuant to applicable law,
regulation, judicial or administrative order, lawful subpoena or
enforceable discovery demand, provided the Receiving Party uses
commercially reasonable efforts to obtain confidential treatment
of such information and further provided that the Disclosing
Party receives prior written notice of any pending disclosure,
with sufficient time to protest disclosure or seek an adequate
protective order.
e. "Customer" means any person using or distributing the Security System in
the Territory;
f. "Documentation" has the meaning set out in Subsection v. of the definition
of "Purchased Assets" as defined in the Application Software Purchase
Agreement;
g. "Enhancement" means any improvement, revision or other modification made
to, or replacement of, the Application Software by Manager, or any employee
or subcontractor of Alya, to be utilized in connection with providing the
Security System, including, without limitation, any improvement, revision
or other modification which is necessary:
i. to provide Customers with the then current Security System; or
ii. to maintain the Application Software as a state of the art or industry
leading technology,
including, without limitation, the changes set out in Appendix A.1 to
Schedule A of the Application Software Purchase Agreement, to the extent
that Manager continues to believe they are commercially reasonable in light
of then current market conditions and technical developments;
h. "Expenses" has the meaning specified in Subsection
3.1 c.;
i. "Gross Sales" has the meaning specified in Subsection 3.1 c.;
j. "Intellectual Property" has the meaning specified in Subsection iv. of the
definition of "Purchased Assets" as defined in the Application Software
Purchase Agreement;
k. "Interest Amount" means an amount equal to the annual interest payable
under the Note;
l. "Management Fee" has the meaning specified in Subsection 3.1.c;
m. "Manager" means Alya International, Inc. and its permitted assigns in its
capacity as the agent for Owner and manager of the Assets appointed by
Owner under this Agreement;
n. "Net Revenue" has the meaning specified in Subsection 3.1 c.;
o. "Net Sales" has the meaning specified in Subsection 3.1 c.;
p. "Note" means the 6.0% Secured Term Note dated as of the date hereof issued
by Owner to Manager in connection with the purchase of the Assets;
q. "Overhead and Administrative Costs" has the meaning specified in Subsection
3.1 c.;
r. "Owner's Return" has the meaning specified in Subsection 3.1 c.;
s. "Security Agent" means [SECURITY AGENT], the security agent under the
Security Agent Agreement;
t. "Security Agent Agreement" means the security agent agreement made as of
September 30, 1997, among Owner, Manager and Security Agent;
u. "Security System" means the building access control system developed by
Manager and known as the O.P.E.N.centrix - Open Platform for Essential
Networks, which includes, without limitation, the Application Software, the
firmware containing the Application Software, the O.P.E.N.cortex platform
software and all hardware related thereto;
v. "Territory" means the geographic region of the United States as described
in Schedule B; and
x. "year" means fiscal year ending September 30.
1.2 INTERPRETATION
a. The terms "this Agreement", "hereof", "hereunder" and similar expressions
refer to this Agreement and not to any particular Section, Subsection or
other portion of this Agreement and include any agreement amending or
supplemental to this Agreement. Unless something in the subject matter or
context is inconsistent therewith,
reference herein to Sections and Subsections are to Sections and
Subsections of this Agreement;
b. Except as specifically stated in this Agreement, all references to currency
are to United States of America dollars. Any currency conversion required
or contemplated by this Agreement with respect to Canadian and United
States of America currency will be based on the rate published by the Bank
of Canada as the noon spot rate of exchange applicable for such currencies
on the business day immediately before the date of conversion;
c. Wherever the singular, plural, masculine, feminine or neuter is used
throughout this Agreement the same will be construed as meaning the
singular, plural, masculine, feminine, neuter, body politic or body
corporate where the fact or context so requires and the provisions hereof.
d. Headings are inserted in the Agreement for convenience of reference only
and are not intended to affect the Agreement's interpretation.
1.3 SCHEDULES
The following schedules are incorporated into and made part of this
Agreement:
a. Schedule A - Specifications of Application Software; and
b. Schedule B - Territory.
ARTICLE 2
MANAGEMENT SERVICES
2.1 APPOINTMENT OF AGENT/MANAGER
Owner hereby appoints Manager as its sole and exclusive agent for the
purpose of managing the marketing, distribution, sale, Enhancement and
support of the Security System within the Territory, subject to the terms and
conditions of this Agreement, and Manager hereby accepts such appointment.
2.2 MANAGEMENT DUTIES
a. Manager will, in good faith, observe and perform the following obligations
in respect of the marketing, distribution, sale, Enhancement and support,
within the Territory, of the Security System in a good and workmanlike
manner, utilizing its capable management and technical expertise:
i. MARKETING, DISTRIBUTION AND SALE. Manager will be responsible for the
marketing and selling of the Security System, within the Territory,
including, without limitation, developing marketing materials,
organizing product demonstrations, establishing distribution channels,
pricing, promotion and sale of the Security System. Manager will use
commercially reasonable efforts to maximize sales of the Security
System within the Territory. Manager will be responsible for
developing and negotiating the contracts required to sell the Security
System to Customers within the Territory. Owner will be entitled to
receive copies of and to comment on standard form sales and support
service contracts and Manager shall address all such comments with
Owner and take into account all of Owner's directions and instructions
forming a part of such comments. All such contracts will contain
provisions of confidentiality acceptable to Owner. In addition,
Manager will have responsibility for the billing and collection of
fees and payments from Customers and for the payment of fees to Owner.
Manager shall comply with all applicable laws and regulations and
obtain all appropriate government approvals pertaining to the sale,
distribution and advertising of good and services utilizing the
trademark "O.P.E.N.centrix";
Owner will be entitled to conduct an inspection of the management of
the marketing, distribution, sale, Enhancement and support of the
Security System at any time during regular business hours upon
reasonable notice to Manager. Notwithstanding any other provision in
this Agreement, Manager will take into account any and all
commercially reasonable directions and/or specifications given by
Owner pertaining to the marketing, distribution, sale, Enhancement and
support of the Security System which Manager may receive from Owner
from time to time in writing;
ii. SUPPORT, TRAINING AND CONSULTING. Manager will have complete
responsibility for delivery and installation of the Security System
within the Territory. Manager will provide all support services for
Customers including telephone and on-site support. Manager will also
provide all required training and consulting support;
iii. MAINTENANCE AND ENHANCEMENTS. All maintenance necessary to correct
any errors in the Assets
found by any Customer will be provided by Manager pursuant to the
terms of its support services agreements. Manager will prepare and
provide all Enhancements to Owner; and
iv. With respect to any third party software required to operate the
Security System, Alya has licenses for such third party software which
allow Alya to market such software, directly or indirectly through
sublicensees, in conjunction with the Security System and will
maintain such licenses in good standing for the benefit of Owner.
b. In addition to the duties referred to in Subsection 2.2 a., Manager will,
in good faith and in satisfaction of its fiduciary duty to Owner do the
following:
i. REVIEWS. Manager will review and report to Owner or its duly appointed
agent on Manager's performance under this Agreement on a quarterly
basis. Such reviews will be scheduled by mutual agreement of all
parties;
ii. COMPUTER CODE. Upon request, Manager will deliver computer code (in
object code and source code form) together with all related
documentation and development tools necessary or desirable to enable
the Application Software and all Enhancements to operate properly to
Owner or its duly appointed agent quarterly, within thirty (30) days
of the end of each calendar quarter. Manager will assist Owner or its
agent in verifying that the computer code delivered to Owner is fully
functional Application Software and Enhancements; and
iii. CONFLICT OF INTEREST. Manager acknowledges and agrees that it is
acting in a fiduciary capacity as agent of Owner, it will act in good
faith and in the best interest of Owner, and will conduct itself as
such in all dealings on behalf of Owner and in connection with the
performance of its obligations under this Agreement. In particular,
Manager will avoid conflicts of interest between itself and Owner in
connection with the business of marketing, distribution, sale and
support of the Security System in the Territory.
2.3 INSURANCE
a. Without in any way limiting the liability of Manager under this Agreement,
Manager will be responsible to maintain and keep in force during the term
of this Agreement the following insurance coverage:
i. automobile liability insurance on all vehicles used in connection with
this Agreement. In respect of such vehicles not owned by Manager, it
will maintain and keep in force as aforesaid non-owned automobile
liability insurance protecting its liability including that assumed
under this Agreement. The limits of such insurance will be at least;
for bodily injury (including passenger hazard) and property damages,
one million dollars ($1,000,000.00) inclusive for any one accident;
ii. comprehensive general liability insurance (including liability under
this Agreement) with inclusive limits of not less than two million
dollars ($2,000,000.00) for bodily injury and property damage;
iii. employer's liability insurance with limits of not less than one
million dollars ($1,000,000.00) for each employee where Workers'
Compensation does not exist; and
iv. unless otherwise directed by Owner, in writing, insurance covering
loss of or damage to all machinery, tools, equipment, supplies and
structures owned by Manager and/or rented or leased from a third party
or parties and used by Manager or its sub-contractors in performing
its obligations under this Agreement.
b. The above insurance policies will not be changed in any manner which could
affect the interests of the Owner without thirty (30) days' prior written
notice by registered mail to the Owner.
c. For greater certainty, the parties agree and understand that the
obligations of Manager, as set forth in this Section 2.3, may be fulfilled
if Manager's existing insurance policy satisfies the requirements of this
Section.
d. Upon request Manager will supply Owner with certificates evidencing the
above insurance. Any insurance carried by Manager will name Manager as an
additional insured and loss payee, and will contain a waiver of subrogation
in favor of Owner.
ARTICLE 3
ALLOCATION AND DISTRIBUTION OF FEES
3.1 DISTRIBUTION OF FEES
a. Manager will distribute, annually, the Net Revenues for the preceding year
in the following order of priority:
i. to pay the Interest Amount, plus any other accrued and unpaid interest
on the Note; and
ii. to pay the Owner's Return, including any cumulative amount of the
Owner's Return not paid in prior years.
b. Thereafter, Manager will distribute, annually, the Net Revenue less the
amounts set forth in Section 3.1.a., payable in the year in the following
order of priority:
i. 45% to Owner, for payment against the principal sum outstanding from
time to time under the Note and in accordance with the Note; and
ii. 55% to Owner for retention by Owner; and
c. For the purposes of this Agreement the following terms have the following
meanings:
i. "Management Fee" means an annual marketing and management fee payable
to Manager by Owner and calculated at the end of each year pursuant to
the following formula:
Formula:
Management Fee=(N - I - U/.55 -Cdn.$240,000) X .45,
[but not less than zero]
Where,
N = Net Revenues less the Management Fee;
I = the Interest Amount in such year, plus any other accrued and
unpaid interest on the Note;
U = the outstanding principal on the Note at the end of such year;
ii. "Expenses" means the following cumulative costs and fees to the extent
not previously recouped by Manager in accordance herewith:
A. the cost of goods sold relating to the Application Software,
including without limitation, costs of material, manufacturing,
quality assurance and testing, costs of third party licenses, but
excluding any costs of
goods sold relating to the hardware incorporated in the
Security System;
B. direct costs of marketing, distributing and selling the Security
System in the Territory;
C. the pro rata share of the cost of Enhancements in a year,
determined by multiplying the cost of Enhancements in such year
by a fraction, the numerator of which is the Net Sales in such
year and the denominator of which is the gross amount paid to
Alya in such year for the purchase, installation and support of
the Security System in the United States and Canada, less normal
course of business selling credits for discounts and rebates in
such year and less return adjustments for which a refund has been
paid or credited to the customer to the extent of the payment or
credit in such year;
D. Overhead and Administrative Costs; and
E. Management Fee.
iii. "Gross Sales" means gross amounts paid by Customers in the Territory,
in a year, to purchase, install, and receive support for the Security
System less the price of the hardware incorporated therein, applying
Manager's standard prices charged to similar customers, as in effect
from time to time;
iv. "Net Revenue" means Net Sales less Expenses;
v. "Net Sales" means Gross Sales less:
A. normal course of business selling credits for discounts or
rebates to Customers for the year; and
B. returns or adjustments for the Security System for which a refund
has been paid or credited to the Customer, or any distributor or
other reseller, to the extent of the payment or credit in the
year;
vi. "Overhead and Administrative Costs" means the overhead and
administrative costs of Manager to manage and market the Security
System in the Territory, for a year, determined by multiplying
Manager's total overhead and administrative costs for marketing and
managing the Security System in the United States and Canada in such
year by a
fraction, the numerator of which is the Net Sales for such year and
the denominator of which is the aggregate gross amount paid to Alya in
such year, for the purchase, installation and support of the Security
System in the United States and Canada, less normal course of business
selling credits for discounts and rebates in such year and less return
adjustments for which a refund has been paid or credited to the
customer, to the extent of the payment or credit in such year; and
vii. "Owner's Return" means an annual cumulative preferential return to
Owner of Two Hundred Forty Thousand Canadian Dollars (Cdn.$240,000)
(prorated for any partial year);
d. Notwithstanding anything else contained in this Agreement, in no event,
without the prior written consent of Owner, will fees or other amounts for
the Security System:
i. be set below competitive prices prevailing in the market for similar
products or services as determined by Manager acting in the best
interests of Owner; or
ii. be discounted for any other consideration granted to Manager, its
affiliates or associates that is not provided to Owner; and
e. All amounts to be determined for the purposes of the calculations required
pursuant to this Article 3 will be determined in accordance with United
States generally accepted accounting principles consistently applied from
year to year and consistently applied between the Security System sold by
Manager hereunder and the other services sold by Manager outside the scope
of this Agreement.
3.2 TIMING AND PAYMENT OF DISTRIBUTIONS
Amounts payable to Owner for a year pursuant to Section 3.1 will be paid
within 60 days following the year end.
3.3 SET OFF
Manager will have the right to set off amounts payable by Manager to
Owner under this Agreement against amounts payable to Manager by Owner under
the Note except that Manager will have no right of set off and will pay the
following amounts to Owner without regard to the equities between Manager or
its affiliates and Owner:
i. amounts payable to Owner pursuant to Subsections 3.1 a.ii. and 3.1 b.
ii. for his retention; and
ii. amounts payable by Owner as sales taxes or goods and services taxes,
which amounts will be remitted forthwith upon their being due, by
Manager to the appropriate authorities on behalf of Owner.
3.4 REPORTS
a. Manager will give Owner, on a confidential basis, annual reports within 90
days following the end of each fiscal year, setting forth the details in
respect of all sales and support of the Security System in the Territory
during such year, including the name and address of all Customers, the
amount and type of all fees and other amounts payable to date, potential
Customers and projected revenues in the Territory. Manager will give
Owner, on a confidential basis, quarterly reports within forty-five (45)
days following the end of each fiscal quarter, which quarterly reports
shall set forth Gross Sales and Net Sales received by Manager from
Customers in the Territory for the immediately preceding quarter.
Additionally, Manager will give Owner, on a confidential basis, the Gross
Sales, Net Sales, Net Revenues, Expenses, and Overhead and Administrative
Costs for the quarter ending December 31st on or before the following
February 28th.
b. In addition, Manager will give Owner, on a confidential basis, the detailed
calculations necessary to establish Gross Sales, Net Sales, Expenses,
Overhead and Administrative Costs and Net Revenues including, without
limitation, the component parts thereof annually, within 90 days following
the end of each fiscal year.
3.5 FINANCIAL STATEMENTS
Manager will provide the following financial statements, for the business
pertaining to the Security System, to Owner, annually, within 90 days following
the end of each fiscal year of Manager:
i. the annual reports referred to in Section 3.4;
ii. an audited income statement; and
iii. an audited balance sheet.
3.6 BOOKS AND RECORDS
Manager will keep and maintain complete and accurate books and records
related to the business of selling the
Security System in the Territory, separate and apart from the books and
records maintained for its own sales or other business. These will include
records of all sales and support of the Security System in the Territory, all
costs of providing the Security System and the appropriate fees accruing and
collected. These books and records will be maintained according to U.S.
generally accepted accounting principles and practices respecting all matters
pertinent to this Agreement. Owner will have the right, at his own expense,
to audit the books and records of Manager pertaining to marketing the
Security System in the Territory, and the performance of its other
obligations hereunder, once each year. For this purpose, Owner or its
nominee will have, during normal business hours, access to and the right to
copy and remove copies of all books and accounting records relating to the
calculation of fees accrued and collected from the sale of the Security
System in the Territory. All information obtained by Owner or its nominee
will be subject to the confidentiality obligations of this Agreement.
3.7 TAXES
a. Manager will charge and collect from Customers any and all taxes of any
type that are imposed on the use, sale or support of the Security System in
the Territory by Manager by any federal, state, local or any other taxing
authority in which the Security System is sold and Manager will pay and
duly remit on a timely basis to the appropriate taxation authority the tax
so charged and collected;
b. Manager is responsible to withhold and remit on a timely basis the amount
of any income, sales or any other tax imposed on the Management Fee or any
other amount paid or credited to the Manager hereunder by any federal,
provincial, state, local or any other taxation authority in any country
regardless of whether the obligation to withhold and remit such amount is
on the Owner;
c. Subject to subsections 3.7(b) hereof, the Owner and Manager are required to
pay their respective taxes of any type imposed on them for fees paid or
credited to the Owner or Manager hereunder; and
d. Manager will prepare or provide the Owner with any and all information or
other documentation on a timely basis required by the Owner to enable the
Owner to prepare any return required to be filed by it with any taxing
authority in connection with an amount withheld or payable in accordance
with this Agreement or alternately, the Manager shall prepare and file such
a return on the Owner's behalf in the name of the Owner
within the time required to file such return and shall provide a copy
thereof to the Owner.
ARTICLE 4
GRANT OF RIGHTS
4.1 In consideration of the Owner's Return and other good and valuable
consideration (the receipt and sufficiency of which is acknowledged by
Owner), Owner hereby grants Manager, during the term of this Agreement and
subject to the restrictions imposed in this Agreement, an exclusive
Territory-wide right to use, modify, market, distribute and sell the right to
use the Application Software, the Intellectual Property and the Documentation
in the Territory, but only with products or services that are not competitive
with the Security System.
4.2 Owner shall own the exclusive rights to use, market, distribute and
sell the right to use within the Territory any modification to the
Application Software made by Manager which constitutes an Enhancement.
Manager shall retain the exclusive right to use, market, distribute and sell
the right to use, in all regions of the world other than the Territory, any
Enhancement. Any modification to the Application Software which does not
constitute an Enhancement will be owned by Manager. Any modification to the
Intellectual Property or the Documentation that does not relate to an
Enhancement will be owned by Manager.
4.3 During the term of this Agreement, neither Manager nor any of its
affiliates or associates will, directly or indirectly, market, distribute or
sell any product or service within the Territory, which product or service
directly or indirectly competes with the Security System. Nothing precludes
Manager from selling the O.P.E.N.cortex platform and associated hardware as a
stand-alone development platform.
4.4 Manager will have, upon termination of this Agreement, an
exclusive, Territory-wide, paid up right to use, market, promote, distribute
and sell the right to use the Application Software in accordance with Section
4.1:
a. upon termination of this Agreement by Owner pursuant to Subsection 5.4, if
Manager is not then in default of this Agreement; or
b. upon termination of this Agreement by Owner, pursuant to Section 5.3, if
Manager pays Owner, an amount calculated as the difference between Two
Million Four Hundred Thousand Canadian Dollars (Cdn. $2,400,000) and the
amount of Owner's Return credited to Owner to the date of termination.
4.5 PROTECTION OF PROPRIETARY RIGHTS
Each party hereto shall promptly notify the other party in writing of
any infringement by a third party of a patent, copyright or trademark or
misappropriation of any trade secret relating to the Security System or the
Assets within the Territory. In the case of an infringement,
misappropriation or other action described herein, Manager is hereby
authorized to, but shall not be required to, institute an action against the
infringer, misappropriator or other third party, and to defend or prosecute
such action in whatever manner deemed appropriate by Manager, in its sole
discretion. The reasonable costs and expenses relating thereto shall be
deemed to be included within the definition of "Expenses". If Manager elects
not to commence such an action, then Owner may, but shall not be required to,
institute such an action, and the reasonable costs and expenses relating
thereto shall be deemed to be included within the definition of Expenses.
Any recoveries obtained as a result of instituting such an action shall be
deemed to be Net Revenues for the purposes of distributing such funds. Owner
shall cooperate with and generally assist Manager in taking any action
authorized hereunder. This provision shall survive any termination or
expiration of this Agreement, to the extent Manager retains any license to
the Application Software.
ARTICLE 5
TERM AND TERMINATION
5.1 TERM
This Agreement will be for an initial term expiring September 30, 2007,
(the "initial term") and may be extended, for two additional two year terms,
each term expiring on the respective second anniversary date of the beginning
of such term.
5.2 AUTOMATIC EXTENSION
The initial term or any-extension term of this Agreement will be
automatically extended to the next extension term without notice or election
by Manager. Manager may, during any extension term, terminate this Agreement
on 90 days notice given to Owner.
5.3 TERMINATION
Owner may, during the initial term or any extension term, terminate this
Agreement as follows:
a. upon 10 days written notice by Owner to Manager of a breach of any of
Manager's obligations to pay Owner
under this Agreement, subject to Section 3.4, if such breach has not
been remedied;
b. upon 30 days written notice by Owner to Manager of a material breach by
Manager (other than a failure to pay referred to in SubSection a.) of this
Agreement if such breach is not remedied within the 30 day notice period,
or if steps are not being taken by Manager within the 30 days notice period
which can reasonably be expected to remedy such breach within 60 days of
the date of the notice; or
c. forthwith upon written notice to Manager, in the case of the petitioning
into bankruptcy of Manager, the appointment of a receiver or the
liquidation of the business and affairs of Manager or the commencement of
or ordering of the winding-up of the business and affairs of Manager.
5.4 TERMINATION BY NON-RENEWAL
Owner may, at the end of the initial term or during any extension term,
terminate this Agreement upon 90 days notice given to Manager and upon payment
of all outstanding principal and accrued and unpaid interest under the Note.
5.5 RIGHTS AND DUTIES ON TERMINATION
Should the Agreement terminate pursuant to this Article 5, Manager will:
a. provide the Owner with copies of any additional Enhancements not yet
deposited into escrow;
b. forthwith give the Security Agent under the Security Agent Agreement notice
to release all deposited source code and other materials to Owner and
refrain from objecting to the release of the source code and other
materials by the Security Agent;
c. cease marketing the Security System in the Territory and the rights of the
Manager under Section 4.1 shall also terminate;
d. pay all accrued fees to Owner (subject to Manager's right to set-off
amounts owed to Manager by Owner in accordance with Section 3.4) and
provide a full accounting to Owner for fees payable to Owner under this
Agreement; and
e. within 90 days of the termination date, provide to Owner, a final report
setting forth the details in respect of all sales and support of the
Security System in the Territory during the period from the end of the
last year to the termination date including the amount and type of all fees
and other amounts payable to date, potential Customer and projected
revenues, and all other information necessary and relevant to marketing and
supporting the Security System.
5.6 SURVIVING OBLIGATIONS
Section 5.5 and Articles 6, 7, 8, 9, 10 and 11 will survive the
termination of this Agreement.
ARTICLE 6
OWNERSHIP OF TECHNOLOGY
6.1 OWNERSHIP OF ASSETS
Manager acknowledges that Owner owns all right, title and interest to
utilize the Assets and the Enhancements in the Territory.
ARTICLE 7
LIABILITY
7.1 INDEMNIFICATION BY MANAGER
Manager will be liable to Owner for and indemnify and hold Owner
harmless from any and all claims, losses, liabilities, costs, taxes
(including penalties and interest thereon), expenses (including reasonable
legal costs of a solicitor) and damages which may arise pursuant to this
Agreement including misrepresentations made by Manager, improper installation
of, improper support of, improper use of or infringement of any third party
right by, the Assets (whether in negligence or otherwise), failure to comply
with Section 3.8 herein or any other material breach of this Agreement.
7.2 INDEMNIFICATION PROCEDURE
Upon the occurrence of an event giving rise to indemnification
hereunder, Owner shall (i) give prompt notice to Manager of such events, (ii)
permit Manager's attorneys to handle and control the defense of such claims,
at Manager's expense, and (iii) shall cooperate in the defense thereof.
Owner may, at its own expense, participate in such defense, provided however,
that, if Manager has agreed in writing to assume the defense of such claims,
such participation expenses shall not become part of the indemnification
claim. There shall be no settlements, whether agreed to in court or out of
court, without the prior written consent of Manager and Owner, except that
Manager may settle a claim without the consent of Owner if (i) the settlement
is purely monetary, (ii) Manager hereunder admits in writing its liability to
Owner
hereunder, and (iii) concurrently with such settlement, Manager pays the full
amount owed thereunder. Notwithstanding the foregoing, in the event Manager
does not assume the defense of any such claim or litigation in accordance
with the terms hereof within the earlier of (i) thirty (30) days following
written notice from Owner or (ii) the due date for response to any complaint
filed, then Owner may defend against such claim or litigation in such manner
as it may deem appropriate, including, but not limited to, settling such
claim or litigation, after giving notice of the same to Manager, on such
terms as Owner may deem appropriate. In any action by Owner seeking
indemnification from Manager in accordance with the provisions hereof,
Manager shall not be entitled to object to the manner in which Owner defended
such claim or the amount of or nature of any such settlement.
7.3 LIMITATION OF LIABILITY
Except with respect to Manager's indemnification obligations relating to
third party claims as set forth in Section 7.1 hereof, neither party shall be
liable for any indirect, incidental, special or consequential damages
including, without limitation, damages for loss of data, loss of business or
failure to realize expected profits or savings or other economic or
commercial loss of any kind or loss of use of the Application Software or the
Assets or costs of substituted technology or services, whether under any
theory of contract (even in the nature of a breach of a condition or a
fundamental term or a fundamental breach), tort (including negligence or
misrepresentation), strict liability or any other legal or equitable theory,
even if such party has been advised of the possibility thereof, all of which
liability is hereby expressly waived by each party.
ARTICLE 8
CONFIDENTIALITY AND NON-DISCLOSURE
8.1 Each party that receives Confidential Information shall maintain
such Confidential Information in confidence, shall not reveal the same to any
third party (other than its employees on a need to know basis in connection
with the receiving party's performance under this Agreement or the Agreement)
and shall not use such Confidential Information, directly or indirectly, for
any purpose other than as required in the performance of this Agreement or
the Application Software Purchase Agreement.
8.2 All memoranda, notes, records, reports, papers and any other
documents and all copies thereof about any party's business in any way
obtained by any other party pursuant to this Agreement will be the disclosing
party's property and
will be returned promptly to the disclosing party upon termination of this
Agreement or at any time upon request.
8.3 The contents of this Agreement and any agreements entered into
pursuant to this Agreement are hereby declared proprietary and confidential
to the parties hereto.
8.4 Each of the parties (the "Indemnifying Party") agrees to indemnify
the other (the "Indemnified Party") for all damages, costs, and expenses
(including court costs and reasonable legal fees) incurred by the Indemnified
Party as a result of a failure of the Indemnifying Party to comply with its
obligations under this Article 8.
ARTICLE 9
RIGHT OF FIRST REFUSAL
In the event that Owner desires to transfer all or any part of the
Assets (or is required by operation of law or other involuntary transfer to
do so), Owner shall first offer such Assets to Manager in accordance with the
following provisions:
a. Owner shall deliver a written notice (the "Notice") to Manager, stating i.
Owner's bona fide intention to transfer the Assets; ii. the purchase price
and terms of payment for which Owner proposes to transfer the Assets; and
iii. the name and address of the proposed transferee;
b. Within thirty (30) days after receipt of the Notice, Manager shall have the
right, but not the obligation, to elect to purchase the Assets upon the
price and terms of payment designated in the Notice, by delivering written
notice to Owner of such election (the "Election Notice"). If the Notice
provides for the payment of non-cash consideration, Manager may elect to
pay the consideration in cash equal to the good faith estimate of the
present fair market value of the non-cash consideration offered;
c. If Manager elects to purchase or obtain the Assets designated in the
Notice, then the closing of such purchase shall occur within thirty (30)
days after delivery of the Election Notice, and each of Owner and Manager
shall execute such documents and instruments and make such deliveries as
may be reasonably required to consummate such purchase and sale; and
d. If Manager elects not to purchase or acquire the Assets, then Owner may
transfer the Assets to the transferee proposed in the Notice, provided that
such transfer: i. is completed within thirty (30) days after
the expiration of Manager's right to elect to purchase the Assets, ii. is
made on terms no less favorable to Owner than as designated in the Notice,
and iii. complies with all of the terms and conditions of this Agreement,
the Application Software Purchase Agreement and the Note. If the Assets
are not so transferred, Owner must give notice in accordance with this
Section prior to any other or subsequent transfer of the Assets.
ARTICLE 10
ARBITRATION
10.1 ARBITRATION OF DISPUTES
Any dispute arising between the parties under this Agreement will be
settled by initially escalating the dispute to senior management of the
parties for resolution and, in the event that senior management cannot
resolve the dispute within 30 days of escalation of the dispute to such
level, then the parties agree that such dispute shall be settled by final
and binding arbitration in Vancouver, British Columbia, before a single
arbitrator mutually acceptable to Owner and Manager, in accordance with the
Commercial Arbitration Act, S.B.C. 1979c.3 then existing, except as otherwise
specifically provided herein. The arbitrator shall apply California law for
the purposes of construing and enforcing this Agreement and any dispute
arising hereunder. The arbitration award shall be specifically enforceable;
judgment upon any arbitration award may be entered in any court with personal
jurisdiction over the parties and subject matter of the disputes. Unless
otherwise determined by the arbitrator, all expenses in connection with such
arbitration will be divided equally between the parties, with the exception
of expenses of counsel, witnesses and employees of the parties which will be
borne by the parties incurring them. Notwithstanding anything to the
contrary herein, either party will always be entitled to seek preliminary or
provisional remedies or release (including attachments and preliminary
injunctions) from any court of confident jurisdiction.
ARTICLE 11
GENERAL
11.1 VALIDITY
If any one or more of the provisions or parts thereof contained in this
Agreement should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, such provision shall be construed so as to most
closely reflect the original intent of the parties, but still be enforceable,
and the validity, legality or enforceability of such remaining provisions or
parts thereof will not in any
way be affected or impaired thereby. The invalidity, illegality or
unenforceability of any provision or part thereof contained in this Agreement
in any jurisdiction will not affect or impair such provision or part thereof
or any other provisions of this Agreement in any other jurisdiction.
11.2 FURTHER ASSURANCES
The parties will, at any time and from time to time at the request of
the other, execute and deliver any and all such further instruments or
assurances as may be necessary or desirable to give effect to the terms and
conditions of this Agreement.
11.3 COUNTERPART AND FACSIMILE EXECUTION
This Agreement, and any and all ancillary documents contemplated herein,
may be executed in one or more counterparts and may be executed by facsimile
signatures and all such counterparts and facsimile signatures taken together
will constitute one and the same Agreement and will be binding on the parties
as if they had originally signed one copy of this Agreement.
11.4 ASSIGNMENT
a. Owner may assign all or any part of its interest in this Agreement or the
Assets, provided however, that any assignment to a competitor of Manager,
shall require the prior written consent of Manager. Any assignment shall
be effected by:
i. giving written notice of the name and address of the assignee; and
ii. by delivering to Manager a written undertaking of the assignee,
acknowledging receipt of a copy of this Agreement and agreeing to be
bound by the terms and conditions of this Agreement; and
b. Manager may not assign this Agreement, without the prior written consent of
Owner, except that Manager may assign this Agreement in whole, but not in
part, and only with an assignment of all of its rights and obligations
under the Note and the Security Agent Agreement, to (i) any corporation,
partnership or other entity which is controlled by, controlling or under
common control with, Manager; or (ii) a purchaser of all or substantially
all the assets of Manager, or any person or entity into which Manager is
merged or consolidated by:
i. by giving written notice of the name and address of the assignee; and
ii. by delivering to Owner a written undertaking of the assignee
acknowledging receipt of a copy of this Agreement and agreeing to be
bound by the terms and conditions of this Agreement.
11.5 BINDING EFFECT
This Agreement and all of its provisions will enure to the benefit of
the parties and their respective successors and permitted assigns, and will
be binding upon the parties and their respective successors and permitted
assigns. The expressions the "Manager" and the "Owner" as used herein will
include Manager's and Owner's permitted assigns whether immediate or
derivative, respectively.
11.6 RELATIONSHIP OF THE PARTIES
This Agreement is not a joint venture or other such business arrangement
and any agreement between the parties as to joint business activities will be
set forth in subsequent written agreements. Each party is acting
independently and not as partner, or joint venturer with the other parties
for any purpose. Except as provided in this Agreement none of the parties
will have any right, power, or authority to act or to create any obligations,
express or implied, on behalf of the other parties hereto.
11.7 TIME OF THE ESSENCE
Time will be of the essence of this Agreement.
11.8 AMENDMENT
This Agreement may be altered or amended in any of its provisions when
any such changes are reduced to writing and signed by the parties hereto but
not otherwise.
11.9 COSTS
Each party hereto will bear its-own legal, accounting and other costs
relating to all matters involved in this transaction.
11.10 CONFIDENTIALITY
The parties will treat this Agreement and all information relating to
this Agreement and the transactions contemplated by this Agreement
confidentially and no public disclosure by either party will be made without
the prior approval of the other, not to be unreasonably withheld, except as
legally required by a party to satisfy disclosure
obligations to shareholders and regulators, in which case simultaneous notice
of such disclosure will be given to the other party.
11.11 ENTIRE AGREEMENT
This Agreement, the Application Software Purchase Agreement, the Note,
the Security Agent Agreement and the exhibits and schedules referred to in
each of the foregoing, constitute the entire Agreement among the parties and
SUPERSEDE all proposals, letters of intent, oral or written, and all other
communications among them relating to the subject matter hereof.
11.12 EQUITABLE REMEDIES
The parties acknowledge that money damages would not be a sufficient
remedy for certain violations of the terms of this Agreement and,
accordingly, either party will be entitled to specific performance and
injunctive relief as remedies for such violations of the Agreement by the
other party. These remedies will not be exclusive remedies but will, in
addition to all other remedies, be available to such party, at law or equity.
11.13 JURISDICTION, VENUE AND GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of British Columbia and of Canada (regardless of
either jurisdiction's or any other jurisdiction's choice of law principles).
To the extent permitted by law, the parties hereto agree that all actions or
proceedings arising in connection herewith, shall be arbitrated or litigated
in ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, and each party hereby waives any
right it may have to assert the doctrine of Forum Non Conveniens or to object
to venue. The parties each hereby stipulate that the courts located in
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, shall have personal jurisdiction and
venue over each party for the purpose of litigating any such dispute,
controversy or proceeding arising out of or related to this Agreement.
11.14 NOTICES
Except as expressly provided herein, all notices, requests or other
communications required hereunder shall be in writing and shall be given
personal delivery, international overnight courier service, or by facsimile
(subject of confirmation of receipt), addressed to the respective party at
the applicable address set forth above, or to any party at such other
addresses as shall be specified in writing by such party to the other parties
in accordance with the terms and conditions of this Section.
All notices, requests or communications shall be deemed effective upon
personal delivery, or two (2) business days following deposit with any
international overnight courier service, or upon confirmation of receipt if
sent by facsimile transmission.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by their duly authorized representatives as of the date first above
written.
ALYA INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
President and
Chief Executive Officer
/s/ [PURCHASER 2]
-----------------------------------
[PURCHASER 2]
6% SECURED TERM NOTE
IN FAVOR OF
ALYA INTERNATIONAL INC.
6% SECURED TERM NOTE MADE AS OF SEPTEMBER 30, 1997.
PRINCIPAL SUM: CDN.$7,620,000
DUE DATE: SEPTEMBER 30, 2007,
SUBJECT TO SECTION 1.1.C.
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Note, unless the context otherwise requires:
a. "Application Software Purchase Agreement" means the application software
purchase agreement made as of September 30, 1997, among [PURCHASER 2] and
the Holder;
b. "[PURCHASER 2]" means [PURCHASER 2] and his permitted assignees;
c. "Due Date" shall be September 30, 2007, provided that any renewal or
extension of the managing and Marketing Agreement shall automatically
extend the Due Date for the same period, and subject to acceleration
pursuant to Section 5.4 of the Management and Marketing Agreement;
d. "Default" means any event which after notice or lapse of time or both,
would constitute an Event of Default;
e. "Event of Default" means any of the events specified in Section 8.1;
f. "Holder" means Alya International, Inc. or its permitted assignees;
g. "Interest Amount" means the amount equal to the annual interest payable
under this Note;
h. "Management and Marketing Agreement" means the management and marketing
agreement dated September 30, 1997, between [PURCHASER 2] and Alya
International Inc. ;
i. "Note" means this 6% Secured Term Note as originally executed, or as
amended or supplemented as herein provided;
j. "Person" includes any individual, firm, corporation, company, joint
venture, partnership, association, trust or unincorporated body of persons;
k. "Principal Sum" has the meaning specified above;
l. "Sale Proceeds" has the meaning specified in Section 8.4(b);
m. "Product Proceeds" means the amounts paid or credited to [PURCHASER 2]
under the Management and Marketing Agreement which are allocated to pay the
principal sum outstanding under the Note.
n. "Security Agent Agreement" means the Security Agent Agreement entered into
by [PURCHASER 2], the Holder and [SECURITY AGENT], as security agent, on
the date hereof for the purpose of holding the Purchased Assets pursuant to
the terms hereof; and
o. "Purchased Assets" means the Purchased Assets, as defined in the
Application Software Purchase Agreement;
p. "year" means fiscal year ending September 30.
1.2 INTERPRETATION
a. The terms "this Note, "hereof" thereunder" and similar expressions refer to
this Note and not to any particular Section, Subsection or other portion of
this Note and include any agreement amending or supplementing this Note.
Unless something in the subject matter or context is inconsistent
therewith, reference herein to Sections and Subsections are to Sections and
Subsections of this Note;
b. Except as specifically stated in this Agreement, all references to currency
are to Canadian dollars. Any currency conversion required or contemplated
by this Agreement with respect to Canadian and United States of America
currency will be based on the rate published by the Bank of Canada as the
noon spot rate of exchange applicable for such currencies on the business
day immediately before the date of conversion;
c. Wherever the singular, plural, masculine, feminine or neuter is used
throughout this Note the same will be construed as meaning the singular,
plural, masculine, feminine, neuter, body politic or body corporate where
the fact or context so requires and the provisions hereof; and
d. Headings are inserted in the Note for convenience of reference only and are
not intended to affect the Note's interpretation.
ARTICLE 2
PROMISE TO PAY
2.1 [PURCHASER 2], for value received, and in consideration of these
premises hereby acknowledges himself indebted to the Holder and promises and
covenants with the Holder, subject to Section 8.3, to pay to the Holder:
a. the Principal Sum outstanding from time to time;
b. interest on the Principal Sum outstanding from time to time, such interest
to be calculated, payable and paid as set forth in Section 3.2; and
c. all other moneys which may be owing by [PURCHASER 2] to the Holder pursuant
to this Note, subject to the terms and conditions of this Note.
ARTICLE 3
PAYMENT OF PRINCIPAL AND INTEREST
3.1 PRINCIPAL
a. The Principal Sum outstanding will be paid in full on the Due Date; and
b. Prepayment of the Principal Sum outstanding, from time to time for each
year will be made annually, within sixty (60) days of receipt of Product
Proceeds for the year, if the amount of Product Proceeds received for such
year exceeds the amount of accrued and unpaid interest as at the end of
such year. The amount of the annual prepayment, if any, against the
Principal Sum outstanding from time to time will be equal to the difference
between the Product Proceeds received for the year and the amount of
accrued and unpaid interest as at the end of such year.
3.2 INTEREST
a. Interest on the Principal Sum outstanding from time to time pursuant to
this Note will accrue from the date hereof up to and including the date of
payment at the rate of 6% per annum calculated, but not compounded, yearly,
and not in advance;
b. Interest accrued and unpaid at the Due Date will be paid on the Due Date;
c. Interest accrued and unpaid at the end of each year, will be paid annually
within thirty (30) days of receipt by [PURCHASER 2] of Product Proceeds for
the year, to the extent of the Product Proceeds, if any;
d. Accrued interest, if any, that is not paid in any year will continue to
accrue and be outstanding until paid but will not be added to the Principal
Sum payable under this Note and will not bear interest; and
e. The covenant of [PURCHASER 2] to pay interest at the rate provided herein
will not merge in any judgment in respect of any obligation of [PURCHASER
2] hereunder and such judgment will bear interest as aforesaid and be
payable in the same manner.
3.3 PRINCIPAL AND INTEREST ACCELERATION
Notwithstanding Section 3.2 c., but subject to the limitation of
liability set forth in sections 8.3 and 8.4 upon the occurrence of a
Management Agreement Termination Event, outstanding Principal Sum and accrued
and unpaid interest at the Management Agreement Termination Date will be
repaid within 30 days of the Management Agreement Termination Date.
For the purposes of Section 3.3, the following terms have the meanings
set out below:
"Management Agreement Termination Date" means the date of the occurrence of
a Management Agreement Termination Event; and
"Management Agreement Termination Event" means the termination of the
Management and Marketing Agreement by [PURCHASER 2], pursuant to Article 5
(except a termination pursuant to Section 5.3), of the Management and
Marketing Agreement.
ARTICLE 4
ASSIGNMENT
4.1 ASSIGNMENT OF PRODUCT PROCEEDS
[PURCHASER 2] hereby assigns the Product Proceeds to the Holder as
security for payment of [PURCHASER 2]'s obligations to the Holder under this
Note.
The provisions of this Section 4.1 and the rights of the Holder
hereunder will, notwithstanding any other provisions of this Note, wholly
terminate on the earlier of the date upon which this Note is retired or the
indebtedness hereunder is extinguished.
ARTICLE 5
SECURITY
5.1 SECURITY FOR THE NOTE
In consideration for the premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
[PURCHASER 2], and the due payment of all principal and interest on this Note
from time to time outstanding and on all other monies from time to time owing
on the security hereof and to secure the due performance by [PURCHASER 2] of
obligations herein contained, [PURCHASER 2] does hereby grant, assign,
mortgage, pledge, charge, hypothecate and create a security interest in, to
and in favor of the Holder in the Purchased Assets provided that the charge
hereby created will in no way hinder or prevent [PURCHASER 2] at any time and
from time to time (until an Event of Default occurs pursuant to Article 8
hereof and the Holder will have determined to enforce the same) from
managing, developing, utilizing or dealing with all or any part of the
subject matter of the said charge in the ordinary course of his business and
for the purpose of carrying on or extending the same or from entering into
the Management and Marketing Agreement; provided further that during any
period in which there is any outstanding principal or any accrued and unpaid
interest on this Note, [PURCHASER 2] will not, and [PURCHASER 2] hereby
covenants that he will not, without the prior written consent of the Holder,
sell or transfer all or any part of the Purchased Assets, or make, give,
create, assume or allow to subsist any mortgage, pledge, hypothecation, lien,
charge, encumbrance, assignment or other security, whether fixed or floating,
upon the Purchased Assets or any part thereof.
TO HAVE AND TO HOLD such assets and interests and all rights hereby
conferred unto the Holder, its successors and assigns forever, but in trust
nevertheless, for the uses and purposes and with the powers and authorities
subject to the terms and conditions mentioned and set forth in this Note.
5.2 FURTHER ASSURANCES
[PURCHASER 2] will forthwith, and from time to time at his sole cost and
expense, execute and do or cause to be
executed and done all deeds, documents and things which, in the reasonable
opinion of the Holder, are necessary or advisable for giving the Holder (so
far as may be possible under the local laws of the places where the Purchased
Assets are situated) a valid mortgage, pledge, charge and hypothecation of
the nature herein specified upon the Purchased Assets to secure payment of
monies intended to be secured by this Note, and for better assuring,
mortgaging, pledging, charging, assigning, hypothecating and confirming unto
the Holder the Purchased Assets, and for conferring upon the Holder such
power of sale and other powers over the Purchased Assets as are hereby
expressed to be conferred.
5.3 DEFEASANCE
The Holder will at the written request and sole cost and expense of
[PURCHASER 2] cancel and discharge the lien of this Note and execute and
deliver to [PURCHASER 2] such deeds or other instruments as will be requisite
to discharge the lien hereof and to reconvey to [PURCHASER 2] any part of the
Purchased Assets subject to the lien of this Note and to release [PURCHASER 2]
from the covenants herein contained and upon delivery of such written request
to the Holder, rights hereby granted will cease, terminate and be void,
provided that [PURCHASER 2] will have satisfied the payment of all principal
monies, and interests due or to become due on this Note.
5.4 POSSESSION AND USE OF PURCHASED ASSETS
Until an Event of Default occurs pursuant to Article 8 hereof and the
Holder will have determined to enforce the same pursuant to the provisions of
this Note, [PURCHASER 2] will, subject however to the express terms hereof,
be suffered and permitted to possess, manage, develop, operate and enjoy the
Purchased Assets, and freely to control the conduct of its business and to
take and use any income, rents, issues and profits thereof in the same
manner, to the same extent and with the same effect, except as provided
herein, as if this Note had not been made.
5.5 ESCROW
Notwithstanding Section 5.4 hereof the source code version of the
Application Software, as defined in the Application Software Purchase
Agreement, will be held by the Security Agent pursuant to the terms and
conditions of the Security Agent Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 [Purchaser 2]'S REPRESENTATIONS AND WARRANTIES
[PURCHASER 2] hereby represents and warrants to the Holder for the benefit
of the Holder as follows:
a. [PURCHASER 2] has the requisite power and authority to execute and deliver
this Note, to consummate the transactions contemplated hereby and to duly
observe and perform all his covenants and obligations herein set forth;
b. the execution and delivery of this Note does not and will not conflict with
or result in a breach of or violate any of the terms, conditions or
provisions of any terms, conditions or provisions of any law, judgment,
order, injunction, decree, regulation or ruling of any court or
governmental authority, domestic or foreign, to which [PURCHASER 2] is
subject or constitute or result in a default under any agreement, contract
or commitment to which [PURCHASER 2] is a party;
c. the execution and delivery of this Note will not constitute an event of
default or an event which, with the giving of notice or lapse of time or
both, would constitute an event of default, under any agreement, contract,
indenture or other instrument relating to any indebtedness (whether for
borrowed money or otherwise) of [PURCHASER 2] which would give any party to
any such agreement, contract, indenture or other instrument the right to
accelerate maturity for the payment of any monies under any such agreement,
contract, indenture or other instrument; and
d. no authorization, approval, order, license, permit or consent of any
governmental authority, regulatory body or court, and no registration,
declaration or filing by [PURCHASER 2] with any such governmental
authority, regulatory body or court is required in order for [PURCHASER 2]:
i. to incur the obligations expressed to be incurred by [PURCHASER 2] in
or pursuant to this Note;
ii. to execute and deliver all documents and instruments to be delivered
by [PURCHASER 2] pursuant to this Note;
iii. to duly perform and observe the terms and provisions of this Note; and
iv. to render this Note legal, valid, binding and enforceable against
[PURCHASER 2] in accordance with its terms.
ARTICLE 7
COVENANTS OF [PURCHASER 2]
[PURCHASER 2] hereby covenants and agrees with the Holder for the
benefit of the Holder as follows:
7.1 TO PAY PRINCIPAL AND INTEREST
[PURCHASER 2] will duly and punctually pay or cause to be paid to the
Holder the Principal Sum and accrued interest thereon and all other moneys
from time to time owing hereunder, on the dates, at the places, in the moneys
and in the manner mentioned herein.
7.2 TO CARRY ON BUSINESS
[PURCHASER 2] will carry on and conduct his business involving the
Purchased Assets in a proper and efficient manner; and at all reasonable
times he will furnish or cause to be furnished to the Holder or its duly
authorized agent or attorney such information relating to the business of
[PURCHASER 2]involving the Purchased Assets as the Holder may reasonably
require.
ARTICLE 8
DEFAULT
8.1 EVENTS OF DEFAULT
If any one or more of the following events has occurred and is
continuing:
a. the non-payment when due of the Principal Sum, accrued interest thereon and
any other amounts due under this Note, except as a result of the Holder's
breach of the Managing and Marketing Agreement;
b. the breach by [PURCHASER 2] of any material provision of this Note;
c. any representation or warranty made by [PURCHASER 2] herein or in any
financial statements, reports or other documents supplied to the Holder by
[PURCHASER 2] hereunder is false, incorrect or inaccurate in any materially
adverse respect; or
d. If proceedings for bankruptcy or receivership are commenced, unless such
proceedings are being actively and diligently contested by [PURCHASER 2] in
good faith;
provided that [PURCHASER 2] will not have remedied such default within thirty
(30) days (ten (10) days in the case of a monetary default) following receipt
by [PURCHASER 2] from the Holder of notice of the default, the Holder may, by
written notice declare the Principal Sum and accrued interest thereon and any
other amounts payable to it under this Note to be immediately due and payable
without further presentation, notice or demand and [PURCHASER 2] will
immediately pay to the Holder all indebtedness of [PURCHASER 2] owing to it
pursuant to this Note.
8.2 REMEDIES
If an Event of Default has occurred and is continuing and [PURCHASER 2]
has failed forthwith to pay the amounts owing hereunder, or remedy any breach
of any of his obligations secured by this Note as herein outlined, the Holder
shall have all of the rights and remedies of a secured party under the
California Uniform Commercial Code or other applicable California law then in
effect. Without limiting the generality of the foregoing, the Holder, in
addition to any other rights and remedies it may have, in its own name will
be entitled and empowered to sell the Purchased Assets as provided in Section
8.4 below, as well as institute action or proceeding at law or in equity for
the collection of the sums so due and unpaid and may prosecute any such
action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against [PURCHASER 2] or other obligor upon this
Note and collect in the manner provided by law out of the Purchased Assets,
as provided for in this Note wherever situated the monies adjudged or decreed
to be payable.
8.3 LIMITED RECOURSE
Notwithstanding anything else contained in this Note, the Holder
covenants and agrees with [PURCHASER 2] that all of its recourse rights,
powers and remedies for payment of any obligations of [PURCHASER 2] to the
Holder under this Note is limited to the Product Proceeds and the Sale
Proceeds which will be applied in the following order of priority:
a. to pay interest due and payable under this Note;
b. to pay the Principal Sum outstanding from time to time; and
c. to pay any other amounts owing by [PURCHASER 2] to the Holder under this
Note.
8.4 SALE OF PURCHASED ASSETS
a. If an Event of Default has occurred and is continuing as provided in
Section 8.2 hereof or the indebtedness created hereby either with respect
to principal or interest remains in whole or in part unpaid as of the Due
Date, the Holder will be entitled and empowered to dispose of the Purchased
Assets or any part thereof: i. at public sale, which public sale may be
conducted at the location designated by the Holder for cash or on credit
and on such terms as the Holder may in its sole discretion, elect after
giving at least five days notice of the time and place of sale in the
manner provided by law, or ii. at private sale upon like notice for cash or
on credit and on such other terms as the Holder may in its sole discretion
elect;
b. The proceeds of the sale ("Sale Proceeds") of the Purchased Assets will be
allocated as follows:
i. to reimburse the Holder (to a maximum of 20% of the gross proceeds of
sale), for all costs and expenses incurred as the result of an Event
of Default and in connection with re-possession, storing, advertising,
marketing and selling the Purchased Assets including, without
limitation, reasonable attorneys' fees and costs;
ii. to the Holder as a reduction of amounts owing by [PURCHASER 2] under
this Note allocated firstly as to interest and the remainder as to
principal; and
iii. the balance to [PURCHASER 2];
c. Any balance owing by [PURCHASER 2] under this Note after the allocation of
the Sale Proceeds will be forgiven by the Holder and [PURCHASER 2] will
have no further liability under this Note; and
d. This Note is non-negotiable. The Holder will have no right or recourse
against any legal person in respect of the covenants contained in this Note
other than, subject to Section 8.3, [PURCHASER 2], and his assigns but only
severally and not jointly and only to the extent of each person's interest
in the Purchased Assets.
8.5 LIMITATION OF LIABILITY
Notwithstanding anything contained in this Note, [PURCHASER 2] will not
have any obligation to pay the Principal Sum outstanding from time to time
under the Note if there occurs a default under Section 5.3 of the Management
and Marketing Agreement or the Management and Marketing Agreement is
terminated as a result of the occurrence of an event described in Section 5.3
thereof.
ARTICLE 9
WAIVER
9.1 Either the Holder or [PURCHASER 2] may waive any breach of any of
the provisions contained in this Note or any default by the other person in
the observance or performance of any covenant, condition or obligation
required to be observed or performed by such person under the terms of this
Note, provided any such waiver shall only be effective upon the delivery of
written notice by the waiving party. No waiver, consent, act or omission by
the Holder or [PURCHASER 2] will extend to or be taken in any manner
whatsoever to affect any subsequent breach or default or the rights resulting
therefrom and no waiver or consent by the Holder or [PURCHASER 2] will be
binding unless it is in writing. The inspection or approval by the Holder or
[PURCHASER 2] of any document or matter or thing done by the other will not
be deemed to be a warranty or holding out of the adequacy, effectiveness,
validity, or binding effect of such document, matter or thing or a waiver of
the obligations of the other.
ARTICLE 10
TIME OF THE ESSENCE
10.1 Time will be of the essence of this Note.
ARTICLE 11
NOTICES
11.1 Except as expressly provided herein, all notices, requests or other
communications required hereunder shall be in writing and shall be given
personal delivery, international overnight courier service, or by facsimile
(subject of confirmation of receipt), addressed to the respective party at
the applicable address set forth above, or to any party at such other
addresses as shall be specified in writing by such party to the other parties
in accordance with the terms and conditions of this Section. All notices,
requests or communications shall be deemed effective upon personal delivery,
or two (2) business days
following deposit with any international overnight courier service, or upon
confirmation of receipt if sent by facsimile transmission.
ARTICLE 12
GENERAL
12.1 VALIDITY
If any one or more of the provisions or parts thereof contained in this
Agreement should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, such provision shall be construed so as to most
closely reflect the original intent of the parties, but still be enforceable,
and the validity, legality or enforceability of such remaining provisions or
parts thereof will not in any way be affected or impaired thereby. The
invalidity, illegality or unenforceability of any provision or part thereof
contained in this Agreement in any jurisdiction will not affect or impair
such provision or part thereof or any other provisions of this Agreement in
any other jurisdiction.
12.2 FURTHER ASSURANCES
[PURCHASER 2] and the Holder will, at any time and from time to time at
the request of the other, execute and deliver any and all such further
instruments or assurances as may be necessary or desirable to give effect to
the terms and conditions of this Note.
12.3 COUNTERPART EXECUTION
This Note, and any and all ancillary documents contemplated herein, may
be executed in one or more counterparts and may be executed by facsimile
signatures and all such counterparts and facsimile signatures taken together
will constitute one and the same Note and will be binding on [PURCHASER 2]
and the Holder as if they had originally signed one copy of this Note.
12.4 ASSIGNMENT
[PURCHASER 2] may assign all or any part of its interest in Purchased
Assets, except that any assignment to a competitor of Alya requires the prior
written consent of the Holder. An assignment shall be effected by:
a. by giving written notice of the names and addresses of the assignees; and
b. by delivering to the Holder a written undertaking of the assignees
acknowledging receipt of a copy of the Note
and agreeing to be bound by the terms and conditions of the Note.
The Holder may assign this Note in whole, but not in part, and only with
an assignment of all of its rights and obligations under, and as permitted by
the Management and Marketing Agreement by giving [PURCHASER 2] written notice
of the name and address of the assignee.
12.5 BINDING EFFECT
This Note and all of its provisions will enure to the benefit of the
Holder and [PURCHASER 2] and will be binding upon the Holder and [PURCHASER 2]
. The expressions the "Holder" and the "[PURCHASER 2]" as used herein will
include the Holder's and [PURCHASER 2]'s assigns, whether immediate or
derivative, respectively.
12.6 AMENDMENT
This Note may be altered or amended in any of its provisions when any
such changes are reduced to writing and signed by the parties hereto but not
otherwise.
12.7 COSTS
Each party hereto will bear its own legal, accounting and other costs
relating to all matters involved in the preparation, delivery and enforcement
of this Note.
12.8 REMEDIES NOT EXCLUSIVE
No right or remedy herein is exclusive of any other right or remedy.
Each and every right and remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or
in equity, and may be exercised from time to time as often as deemed
expedient, separately or concurrently.
12.9 JURISDICTION, VENUE AND GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of California (regardless of that
jurisdiction or any other jurisdiction's choice of law principles). To the
extent permitted by law, the parties hereto agree that all actions or
proceedings arising in connection herewith, shall be arbitrated or litigated
in the state and federal courts located in the State of California, and each
party hereby waives any right it may have to assert the doctrine of Forum Non
Conveniens or to object to venue. The parties each hereby stipulate that the
state and federal courts located in the County of Santa ▇▇▇▇▇, State of
California, shall
have personal jurisdiction and venue over each party for the purpose of
litigating any such dispute, controversy or proceeding arising out of or
related to this Agreement.
IN WITNESS WHEREOF [PURCHASER 2] and the Holder have duly executed these
presents under the hands of their proper officers in that behalf.
[PURCHASER 2]: /s/ [PURCHASER 2]
-----------------------------------
[PURCHASER 2]
HOLDER: ALYA INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
President and
Chief Executive Officer
SECURITY AGENT AGREEMENT
THIS AGREEMENT made as of the 30th day of September, 1997, is by and
AMONG:
[SECURITY AGENT], Barristers and Solicitors, having a business address
at [SECURITY AGENT'S ADDRESS] ("Security Agent");
OF THE FIRST PART
AND
[PURCHASER 2], an individual, having a business address at [PURCHASER
2'S ADDRESS] ("[PURCHASER 2]")
OF THE SECOND PART
ALYA INTERNATIONAL INC., a corporation incorporated pursuant to the
laws of Delaware, having a business address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇. ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Alya")
OF THE THIRD PART
WHEREAS:
A. Pursuant to that certain Application Software Purchase Agreement
dated as of September 30, 1997, by and between [PURCHASER 2] and Alya (the
APurchase Agreement"), [PURCHASER 2] purchased the Purchased Assets, as more
particularly described in Schedule A to the Purchase Agreement;
B. The Purchase Agreement provided that [PURCHASER 2] would purchase
and acquire the Purchased Assets for cash and a Note deliverable at Closing;
C. Pursuant to the terms of the Note, [PURCHASER 2] granted a security
interest in the Purchased Assets to Alya as a means of securing performance
of [PURCHASER 2]'s obligations under the Note. In connection therewith, the
parties hereto have agreed to establish and maintain this Security Agent
Agreement; and
D. This Security Agent Agreement provides, INTER ALIA, that
[PURCHASER 2]shall deliver, or cause to be delivered, to the Security Agent
the source code version of the Application Software, and that the Security
Agent shall hold the source code version of the Application Software subject
to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing , recitals and the
terms, conditions and covenants contained herein, [PURCHASER 2], the Security
Agent and Alya hereby agree as follows:
ARTICLE 1
Definitions
Except as otherwise set forth herein, capitalized terms shall have
the meanings ascribed to them in the Purchase Agreement:
1. "Management Agreement" means the management and marketing agreement made as
of September 30, 1997 between [PURCHASER 2] and Alya;
2. "Note" means the 6.0% Secured Term Note dated as of September 30 1997
issued by [PURCHASER 2] to Alya in connection with the purchase of the
Purchased Assets;
3. "Release Notice" means a notice to the Security Agent in the form attached
as Schedule A to this Agreement; and
4. "Software" means the source code for the Application Software.
Interpretation
5. The terms "this Agreement", "hereof", "hereunder" and similar expressions
refer to this Agreement and not to any particular Section, Subsection or
other portion of this Agreement and include any agreement amending or
supplemental to this Agreement. Unless something in the subject matter or
context is inconsistent therewith, reference herein to Sections and
Subsections are to Sections and Subsections of this Agreement;
6. Except as specifically stated in this Agreement, all references to currency
are to Canadian dollars. Any
currency conversion required or contemplated by this Agreement with respect
to Canadian and United States of America currency will be based on the rate
published by the Bank of Canada as the noon spot rate of exchange
applicable for such currencies on the business day immediately before the
date of conversion; and
7. Wherever the singular, plural, masculine, feminine or neuter is used
throughout this Agreement the same will be construed as meaning the
singular, plural, masculine, feminine, neuter, body politic or body
corporate where the fact or context so requires.
ARTICLE 2
DEPOSIT OF SECURITY
Original Deposit
Concurrently with the Closing, [PURCHASER 2] shall deliver, or
cause to be delivered, to the Security Agent, the Software as security for
[PURCHASER 2]'s obligations to Alya under the Note. Alya shall examine the
Software as delivered, and certify the completeness and accuracy of the
Software in a letter, the form and content of which is acceptable to
[PURCHASER 2], forwarding the same to the Security Agent with a copy to
[PURCHASER 2]. Subsequent Deposits
Alya shall deliver or cause to be delivered to the Security Agent
the source code for any Enhancements to the Software quarterly in accordance
with the Management Agreement as security for [PURCHASER 2]'s obligations to
Alya under the Note. Alya, at the time of delivering source code for
Enhancements to the Security Agent, shall certify the completeness and
accuracy of the Software in a letter, the form and content of which is
acceptable to [PURCHASER 2], forwarding same to the Security Agent with a
copy to [PURCHASER 2].
Retention of Security
The Security Agent shall hold the Software and shall release the
same upon the terms and conditions provided in this Agreement.
ARTICLE 3
RELEASE OR RETURN OF SOFTWARE BY SECURITY AGENT
Delivery to [PURCHASER 2]
The Security Agent shall deliver all Software which has been
deposited with the Security Agent to [PURCHASER 2] upon the occurrence of
either of the following events:
8. Alya and [PURCHASER 2] deliver a Release Notice, executed by each of Alya
and [PURCHASER 2], to the Security Agent; or
9. Subject to compliance with Section 3.2 hereof, the Security Agent has
received from [PURCHASER 2] each of the following items:
1. notice that (x) the Management Agreement has been terminated or (y)
that all outstanding principal and accrued interest under the Note has
been paid;
2. written demand that all Software deposited with the Security Agent be
delivered to [PURCHASER 2]; and
3. specific instructions from [PURCHASER 2] for delivery of the Software.
Procedure for Delivery to [PURCHASER 2]
10. If the provisions of Section 3.1 b. are met, the Security Agent shall,
within five days following receipt of all of the items specified in
Section 3.1 b., send by overnight courier to Alya a copy of all such
documents received by the Security Agent pursuant to Section 3.1 b. Alya
shall have twenty (20) days from the date that the Security Agent shall
have delivered the documents to Alya to send to the Security Agent written
notice of its objection to the release of all the Software and to request
that the issue of [PURCHASER 2]'s entitlement to the Software be submitted
to arbitration in accordance with the provisions of this Agreement;
11. If Alya shall request arbitration, the matter shall be submitted to and
settled by arbitration in accordance with Article 7 hereof; and
12. If within twenty (20) days following delivery of the items specified in
Section 3.1 b. to Alya, the Security Agent has not received written notice
of Alya's objection to the release of the Software and its request for
arbitration, then the Security Agent shall release the Software to
[PURCHASER 2] in accordance with the instructions specified in Section 3.1
b. iii.
Delivery to Alya
The Security Agent shall deliver all Software which has been
deposited with the Security Agent to Alya upon the occurrence of either of
the following events:
13. [PURCHASER 2] and Alya deliver a Release Notice executed by each of
[PURCHASER 2] and Alya to the Security Agent; or
14. Subject to compliance with Section 3.4 hereof, the Security Agent has
received from Alya each of the following items:
1. written notification that [PURCHASER 2] is in breach of the Note;
2. a written demand that all Software deposited with the Security Agent
be delivered to Alya; and
3. specific instructions from Alya for delivery of the Software.
Procedure for Delivery to Alya
15. If the provisions of Section 3.3 b. are met, the Security Agent shall,
within five days following receipt of all of the items specified in Section
3.3 b., send by overnight courier to [PURCHASER 2] a copy of all such
documents received by the Security Agent pursuant to Section 3.3 b.
[PURCHASER 2] shall have twenty (20) days from the date the Security Agent
shall have delivered the documents to [PURCHASER 2] to send to the Security
Agent written notice of its objection to the release of all the Software
and to
request that the issue of Alya's entitlement to the Software be
submitted to arbitration in accordance with the provisions of this
Agreement;
16. If [PURCHASER 2] shall request arbitration, the matter shall be submitted
to and settled by arbitration in accordance with Article 7 hereof; and
17. If within twenty (20) days following delivery of the items specified in
Section 3.3 b. to [PURCHASER 2], the Security Agent has not received
written notice of [PURCHASER 2]'s objection to the release of the Software
and its request for arbitration, then the Security Agent shall release the
Software to Alya in accordance with the instructions specified in
Section 3.3 b. iii.
ARTICLE 4
OWNERSHIP OF PURCHASED ASSETS
Acknowledgement
Alya and [PURCHASER 2] each hereby recognize and acknowledge that
[PURCHASER 2] owns all right, title and interest in and to the Purchased
Assets, subject only to the security interest created pursuant to the Note in
favor of Alya and the rights of Alya under the Management Agreement.
ARTICLE 5
DUTIES AND RESPONSIBILITIES OF THE SECURITY AGENT
Duties
The Security Agent shall not be bound in any way by an agreement or
contract between [PURCHASER 2] and Alya (whether or not the Security Agent
has knowledge thereof), and the Security Agent's only duties and
responsibilities shall be to hold the Software it receives and to deliver
same in accordance with the terms of this Agreement. The Security Agent
shall have no duties except those which are expressly set forth herein and it
shall not be bound by any waiver, modification, amendment, termination or
rescission of this Agreement, unless received by it in writing and signed by
Alya and [PURCHASER 2] and, if its duties are affected, unless it shall have
given its prior written consent thereto.
Authority to Act
The Security Agent has the absolute authority to accept or act upon
each executed Release Notice and any other document received pursuant to this
Agreement, without any obligation of inquiry as to the validity, authenticity
or accuracy thereof. Should it be necessary for the Security Agent to accept
or act upon any instructions, directions, documents or instruments signed or
issued by or on behalf of any corporation, partnership, fiduciary or
individual, it shall not be necessary for the Security Agent to inquire into
the authority of the signer(s). The Security Agent shall be protected in
acting upon any notice, request, waiver, consent, receipt, statutory
declaration or other paper or document furnished to it, signed by any of the
parties hereto, not only as to its due execution and validity and
effectiveness of its provisions but also as to the truth and accuracy of any
information therein contained. Unless otherwise directed in a writing
mutually executed by Alya and [PURCHASER 2], the Security Agent is hereby
authorized to make deliveries pursuant hereto by the commercial courier,
which the Security Agent, in its sole discretion, selects. The Security Agent
shall not be liable in any manner for the acts, omissions, delays or failures
to deliver by any such selected commercial couriers.
Amendment, Resignation and/or Termination
This Agreement may be altered or amended only with the consent of
each of Alya, [PURCHASER 2] and Security Agent. The Security Agent may resign
as Security Agent at any time upon 30 days' prior written notice to
[PURCHASER 2]and Alya. [PURCHASER 2] and Alya may remove the Security Agent
as security agent at any time upon 30 days' prior written notice to the
Security Agent. In the event of resignation or removal of the Security
Agent, Alya and [PURCHASER 2] shall attempt to mutually agree upon the
selection of a new security agent. In the event that they are unable to
agree, the new security agent shall be another firm of barristers and
solicitors authorized to practice law in Canada or an independent, qualified
trust or escrow company or organization selected by [PURCHASER 2]. From the
date the Security Agent receives notice of termination or gives notice of
resignation and until a successor Security Agent shall have been appointed
and shall have accepted such appointment, the Security Agent's only duty
shall be to hold any deposited Software then in the Security Agent's
possession in accordance with the provisions of this Agreement (but without
regard to any notices, requests, instructions or demands received by the
Security Agent from any party hereto after the Security Agent's notice of
resignation shall have been given or notice of termination shall be
received). Upon the appointment of, and acceptance by, a successor security
agent, the former Security
Agent shall deliver to the successor security agent any Software and other
documents or instruments relating thereto then in its possession.
No Action Required
In the event that any of the notices and/or Software or other
documents or instruments to be delivered pursuant to the terms hereof are not
delivered to the Security Agent, Security Agent shall have no duty whatsoever
to take any action with respect to procurement of the same. The Security
Agent shall have no obligation or responsibility to verify that any Software
or other documents or instruments delivered hereunder are the Enhancements or
other documents required to be delivered by Alya pursuant to the Purchase
Agreement or the Management Agreement. The Security Agent may, however,
allow such verification to be obtained at, or within a reasonable time of,
such delivery by a qualified employee or agent of [PURCHASER 2] and may
permit such employee or agent reasonable access to such Software, document or
other instrument for the purposes of making such verification. For the
purpose of this paragraph, the parties agree that such Software documents or
other instrument may be initially delivered to such employee or agent for the
sole purpose of making such verification followed by immediate delivery to
the Security Agent.
Expense Reimbursement
In addition to the indemnification obligations set forth herein,
Alya hereby agrees to reimburse Security Agent for all expenses incurred in
connection with performing and carrying out its responsibilities hereunder,
including without limitation, legal and professional fees and expenses.
Disclaimer of Liability
Except for fraud or intentional misconduct, neither the Security
Agent nor its partners, employees or agents shall be liable to Alya,
[PURCHASER 2] or any other party claiming beneficiary status under this
Agreement for any act, or failure to act, by the Security Agent in connection
with this Agreement. The Security Agent will not be liable for special,
indirect, incidental or consequential damages hereunder.
Indemnity and Liability
[PURCHASER 2], Alya and any party claiming beneficiary status under
this Agreement hereby, jointly and severally, agree to indemnify and hold
harmless and be liable to
Security Agent and each of its partners, employees and agents, absolutely and
forever, from and against any and all claims, actions, damages, suits,
liabilities, obligations, costs, fees, charges, and any other expenses
whatsoever, including legal and professional fees and expenses, that may be
asserted against or incurred by Security Agent or any of its partners,
employees or agents, with respect to the performance of its duties under this
Agreement. This indemnity shall survive the termination of this Agreement
and the resignation or removal of the Security Agent.
Disputes and Interpleader
In the event of any dispute between [PURCHASER 2] and Alya or any
third party claiming beneficiary status under this Agreement, Security Agent
may submit this matter to any court of competent jurisdiction in an
interpleader or similar action. Any and all costs incurred by Security Agent
in connection therewith shall be borne by the party seeking a copy of the
Software deposited with Security Agent. Without limiting the generality of
the foregoing, if Security Agent shall be uncertain as to its duties or
rights hereunder, shall receive any notice, advice, schedule, report,
certificate, direction or other document from any person or entity with
respect to the Software, that in the opinion of the Security Agent, in its
sole discretion, is in conflict with any provisions of this Agreement, or
shall be advised that a dispute has arisen with respect to the ownership or
right of possession of the Software or any part thereof, Security Agent shall
be entitled, without liability to anyone, to refrain from taking any action
other than to exercise best efforts to keep safely the Software until
Security Agent shall be directed otherwise in writing by an order, decree, or
judgment of a court of competent jurisdiction that is then finally affirmed
on appeal or that by the lapse of time or otherwise is no longer subject to
appeal; but Security Agent shall be under no duty to institute or defend any
such proceeding.
No Conflict
Alya and [PURCHASER 2] acknowledge that (a) the Security Agent or
its partners, employees, agents or associates have provided counsel to
[PURCHASER 2]in connection with the transactions contemplated by the Purchase
Agreement; (b) the duties of the Security Agent hereunder are purely
mechanical; and (c) the Security Agent is acting hereunder for the
convenience of Alya and [PURCHASER 2]and shall not be impeachable or
accountable because of any conflicting or potentially conflicting duty to
[PURCHASER 2] or any advice provided to him.
Legal Counsel
If the Security Agent believes it to be reasonably necessary to
consult with counsel concerning any of its duties hereunder, or if the
Security Agent becomes involved in litigation relating to this Agreement,
Alya and [PURCHASER 2] shall be jointly and severally responsible for the
costs, expenses and legal fees incurred by the Security Agent, and the
Security Agent is authorized to act on the instructions of such counsel
without being liable.
ARTICLE 6
NOTICES
All notices and other communications hereunder or in connection herewith
shall be in writing and shall be given by personal delivery, international
overnight courier service or facsimile, to the respective party at the
address set forth below, or to any party at such other addresses as shall be
specified in writing by such party to the other parties in accordance with
the terms and conditions of this Section. All notices, requests or
communications shall be deemed effective upon personal delivery, or upon the
next business day after sending by facsimile or two (2) business days
following deposit with any international overnight courier service.
If to Alya to:
Alya International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to [PURCHASER 2] to:
[PURCHASER 2]
[PURCHASER 2'S ADDRESS]
Fax No.: [PURCHASER 2'S FAX]
If to Security Agent to:
[SECURITY AGENT]
[SECURITY AGENT'S ADDRESS]
Attention: [SECURITY AGENT EMPLOYEE]
Fax No.: [SECURITY AGENT FAX]
ARTICLE 7
ARBITRATION
In the event that either party disputes the release of the Software in
accordance with Article 3 hereof, and such dispute cannot be resolved
informally, such dispute shall be settled by final and binding arbitration in
Calgary, Alberta, before a single arbitrator, in accordance with the
Arbitration Act (Alberta), except as otherwise specifically provided herein.
The arbitrator shall apply Alberta law for the purposes of construing and
enforcing this Agreement and any dispute arising hereunder. The arbitration
award shall be specifically enforceable; judgment upon any arbitration award
may be entered in any court with personal jurisdiction over the parties and
subject matter of the disputes.
ARTICLE 8
NO WAIVER OF RIGHTS
The delay or failure of either party to enforce at any time any provision of
this Agreement shall in no way be considered a waiver of any such provision,
or any other provision, of this Agreement. No waiver of, or delay or failure
to enforce any provision of this Agreement shall in any way be considered a
continuing waiver or be construed as a subsequent waiver of any such
provision, or any other provision of this Agreement. No waiver or
modification of this Agreement shall be binding unless it is in writing
signed by the parties hereto.
ARTICLE 9
BINDING EFFECT; ASSIGNMENT
This Agreement shall be binding upon, and enure to the benefit of, all the
parties hereto and their respective successors, legal representatives and
assigns permitted under the Purchase Agreement. Each of the parties hereto
acknowledges and accepts that any assignee permitted under the Purchase
Agreement, which assignee has agreed to abide by and be bound by all the
applicable conditions set forth in each of the Purchase Agreement, the
Management Agreement and the Note, shall constitute an intended third party
beneficiary under this Agreement, and be entitled to all the rights of an
intended third party beneficiary. The parties will amend this agreement to
include such persons, if requested to do so by [PURCHASER 2] or Alya, and in
any event [PURCHASER 2] and Alya will notify the Security Agent of the name
of any assignee.
ARTICLE 10
AUDIT RIGHTS
During the term of this Agreement, [PURCHASER 2] shall have the right, upon
not less than ten days prior written notice to Alya, to examine all of the
items which have been deposited with, and are being held by, the Security
Agent, pursuant to the terms and conditions of this Agreement, for the
purpose of ascertaining the completeness and accuracy of the deposited items.
ARTICLE 11
GENERAL
Validity
If any one or more of the provisions or parts thereof contained in
this Agreement should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, such provision shall be construed so as to most
closely reflect the original intent of the parties but still be enforceable,
and the validity, legality or enforceability of such remaining provisions or
parts thereof will not in any way be affected or impaired thereby. The
invalidity, illegality or unenforceability of any provision or part thereof
contained in this Agreement in any jurisdiction will not affect or impair
such provision or part thereof or any other provisions of this Agreement in
any other jurisdiction.
Further Assurances
The parties will, at any time and from time to time at the request
of the other, execute and deliver any and all such further instruments or
assurances as may be necessary or desirable to give effect to the terms and
conditions of this Agreement.
Counterpart and Facsimile Execution
This Agreement, and any and all ancillary documents contemplated
herein, may be executed in one or more counterparts and may be executed by
facsimile signatures and all such counterparts and facsimile signatures taken
together will constitute one and the same Agreement and will be binding on
the parties as if they had originally signed one copy of this Agreement.
Time of the Essence
Time will be of the essence of this Agreement.
Costs
Except as specifically provided in this Agreement, each party
hereto will bear its own legal, accounting and other costs relating to all
matters involved in this transaction.
Confidentiality
The parties will treat this Agreement and all information relating
to this Agreement and the transactions contemplated by this Agreement
confidentially and no public disclosure by either party will be made without
the prior approval of the other, not to be unreasonably withheld, except as
legally required by a party to satisfy disclosure obligations to shareholders
and regulators, in which case simultaneous notice of such disclosure will be
given to the other party.
Entire Agreement
This agreement, constitutes the entire Agreement among the parties
and supersede all proposals, oral or written, and all other communications
among them relating to the subject matter hereof.
Jurisdiction, Venue and Governing Law
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Province of Alberta (regardless of that
jurisdiction or any other jurisdiction's choice of law principles). To the
extent permitted by law, the parties hereto agree that all actions or
proceedings arising in connection herewith, shall be arbitrated or litigated
in the courts located in the Province of Alberta, and each party hereby
waives any right it may have to assert the doctrine of Forum Non Conveniens
or to object to venue. The parties each hereby stipulate
that the provincial and federal courts located in the Province of Alberta,
shall have personal jurisdiction and venue over each party for the purpose of
litigating any such dispute, controversy or proceeding arising out of or
related to this Agreement.
IN WITNESS WHEREOF the undersigned have executed this Security
Agent Agreement as of the date first set forth above.
ALYA INTERNATIONAL INC.
By:
--------------------------------
Name:
Title:
-----------------------------------
[PURCHASER 2]
[SECURITY AGENT]
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
SCHEDULE "A" to the Security Agent Agreement dated September 30, 1997
RELEASE NOTICE
[SECURITY AGENT]
[SECURITY AGENT'S ADDRESS]
Dear Sirs:
RE: SECURITY AGENT AGREEMENT
This Release Notice is being delivered pursuant to the Security Agreement
dated as of September 30, 1997 ("Security Agent Agreement"), among
[PURCHASER 2]("[PURCHASER 2]"), Alya International Inc. ("Alya") and
[SECURITY AGENT]("Security Agent"). Except as otherwise set forth herein,
capitalized terms shall have the meanings ascribed to them in the Security
Agent Agreement.
Security Agent is hereby authorized and directed to deliver all the Software
and all documents, instruments and other items delivered to it by
[PURCHASER 2] or Alya in its capacity as Security Agent to [______________].
Dated: ALYA INTERNATIONAL INC.
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By:
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Dated:
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[PURCHASER 2]