SHARE PURCHASE AGREEMENT
made in Toronto, Ontario on this 1st day of March, 2002
AMONG: COGNICASE INC., a body corporate duly incorporated under the Canada
Business Corporations Act, having its head office at ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇ in Montreal, Province of ▇▇▇▇▇▇, ▇▇▇ 2M1, herein acting and
represented by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, its Executive Vice President and Chief
Financial Officer, duly authorized as he so declares,
(hereinafter referred to as the "Purchaser")
AND: THINKPATH INC., a body corporate duly incorporated under the Business
Corporations Act (Ontario) having its head office at ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, herein acting and
represented by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, its Chief Financial Officer and
Secretary-Treasurer, duly authorized as she so declares,
(hereinafter referred to as the "Vendor")
AND: NJOYN SOFTWARE INCORPORATED, a body corporate duly incorporated under
Canada Business Corporations Act, having its head office at ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, herein acting
and represented by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, its Secretary-Treasurer, duly
authorized as she so declares,
(hereinafter referred to as the "Corporation").
THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants and
agreements herein set out and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto covenant
and agree as follows:
1. DEFINED TERMS
Where used herein, except where the context otherwise requires, the
following terms shall have the following meanings:
1.1 "Agreed Amount" has the meaning attributed to such term in
Subsection 8.4.2;
1.2 "Annual Financial Statements" means the unaudited financial
statements of the Corporation for the twelve (12) month period
ended December 31, 2001, copies of which are attached hereto
as Schedule 1.2;
1.3 "Business" means the business currently conducted by the
Corporation, being the business of developing, providing and
servicing one or more software programs, delivered to
customers by means of an Internet Browser, that provides
functionality to:
(a) manage a database of potential employees;
(b) use job-related career pages for potential employees
to access in order to apply for employment;
(c) manage the process associated with the evolution of
potential employees (including tests and
evaluations);
(d) integrate the customers' suppliers into the process
of supplying potential employees; and
(e) services such as training, project management,
application hosting and contracted programming
associated with the delivery of this service.
1.4 "Business Day" means a day other than a Saturday, Sunday or
legal holiday in the Province of Ontario or the Province of
Quebec;
1.5 "Claimed Amount" has the meaning attributed to such term in
Subsection 8.4.1;
1.6 "Claim Notice" has the meaning attributed to such term in
Subsection 8.4.1;
1.7 "Closing", "Closing Date" or "Date of Closing" means March 7,
2002, or such other date as the Parties may agree upon in
writing;
1.8 "Closing Financial Statements" has the meaning attributed to
such term in Section 3.2;
1.9 "COGNICASE Shares" means the First Tranche Shares and the
Second Tranche Shares;
1.10 "Computer Equipment" means the computer equipment and embedded
systems currently owned or used by the Corporation including,
without limitation, all ancillary and communication equipment
connected to it;
1.11 "Computer Software" means all computer software owned or used
by the Corporation including, without limitation, all
operating systems software comprised in the Computer Equipment
and all applications software and all other software owned or
used by the Corporation, or which the Corporation is entitled
to have or to use by virtue of its interest in the Computer
Equipment or in the software owned or used by it;
1.12 "Contested Amount" has the meaning attributed to such term in
Subsection 8.4.5;
1.13 "Contested Shares" has the meaning attributed to such term in
Subsection 8.4.8;
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1.14 "Dollars" and "$" mean the lawful money of the United States
of America, unless otherwise expressly stated;
1.15 "Environment" refers, but is not limited to, every layer of
the earth including the air and the atmosphere, land
(including the soil surface, subsurface and all underground
areas, including those submerged by water) and water
(including all surface water, subsurface water and ground
water), all organic and inorganic and all animate and
inanimate matter;
1.16 "Environmental Approval" means any permit, license,
certificate of authorization, authorization, approval,
attestation, consent or other instrument or document,
including, without limitation, those of an administrative
nature, required pursuant to Environmental Laws;
1.17 "Environmental Conditions" refers to any contamination or
damage to the Environment (including any contamination or
damage caused by or relating to the production, use, handling,
storage, treatment, recycling, generation, transportation,
elimination, release, spilling, leaking, pumping, pouring,
emptying, discharging, ejecting, escaping, leaching, disposal,
dumping or threatened release of Hazardous Materials by the
Corporation or any of its predecessors in interest), and
"Environmental Conditions" also includes the exposure of
Persons to Hazardous Materials at a work place of the
Corporation;
1.18 "Environmental Laws" means any law, by-law, regulation, rule,
policy, directive, protocol, order, guideline, decree, code,
sentence, decision or judgment of any jurisdiction, including
the provisions of any Environmental Approval, which applies to
any Facility, the Corporation or its operations, and which
concerns, in whole or in part, directly or indirectly, the
protection or maintenance of the quality of the Environment or
the health and safety of the public and of employees;
1.19 "Environmental Non-compliance" means any violation of any
Environmental Law or any Environmental Approval material to
the Corporation;
1.20 "Facilities" and "Facility" means any facility, land, property
or location currently or previously owned, occupied or leased
by the Corporation;
1.21 "First Tranche Shares" means a certain number of common shares
of the Purchaser issued to the Vendor as partial payment of
the Purchase Price, having an aggregate market value of
US$550,000, such number to be calculated on the basis of the
simple average closing prices of the COGNICASE shares on The
Toronto Stock Exchange for the period of twenty (20) trading
days ending on the trading day that is two (2) days before the
Closing Date;
1.22 "Hazardous Materials" means any substance, solid, liquid or
gaseous, constituent, contaminant, waste, waste material,
micro-organism, sound, vibration, odour, heat, radiance,
radiation or any combination thereof
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i. that has in the past or is likely to alter or cause
harm or damage or other impairment to the Environment
or to endanger or diminish human life, safety,
well-being or comfort; or
ii. that is deemed or presumed, in accordance with any
Environmental Law, to be potentially toxic or
hazardous;
1.23 "Indemnitee" and "Indemnitor" have the respective meanings
attributed to such terms in Subsection 8.5.1;
1.24 "Interim Financial Statements" means the draft internal income
statements and balance sheet of the Corporation for the period
ended January 31, 2002, copies of which are attached as
Schedule 1.24;
1.25 "Interim Period" means the period between the close of
business on this date and the Closing;
1.26 "Lien" means any prior claim, hypothec, mortgage, pledge,
lien, charge, encumbrance, security interest, ownership or
title retention agreements, conditional sale agreements,
leasing, sale and lease back or any other agreement that in
substance secures payment or performance of an obligation or
any option, claim or right of another;
1.27 "Loss" means any loss, liability, damage, cost or expense,
including, without limitation, reasonable solicitor's fees and
disbursements, interest and penalties;
1.28 "Notified Party" has the meaning attributed to such term in
Subsection 8.4.1;
1.29 "Offer" means the expression of interest to purchase the
Purchased Shares made February 14, 2002 by the Purchaser and
accepted the same day by the Vendor and the Corporation;
1.30 "Parties" shall collectively mean the Purchaser, the Vendor
and the Corporation and their respective successors and
permitted assigns or transferees, and "Party" means any one of
them individually;
1.31 "Pending Litigation" means any court proceedings, suit, action
or other proceeding or governmental investigation pending,
involving or threatened against the Corporation in or before
or by any court, board or administrative or other;
1.32 "Person" means an individual, partnership, joint venture,
association, corporation, legal person, trust or a government
or any department or agency thereof or any other entity
howsoever designated or constituted;
1.33 "Proprietary Intangibles" means all rights, whether registered
or not, held in virtue of any copyright, know-how, industrial
design, trademark, trade-name, trade secret, patent, logos,
computer software, tools, processes, techniques and
methodologies or other intellectual property or any
application therefor in any part of the world;
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1.34 "Purchase Price" means the price payable by the Purchaser to
the Vendor for the Purchased Shares as determined in
accordance with the provisions of Section 3 hereof;
1.35 "Purchased Shares" means all of the issued and outstanding
shares of the Corporation;
1.36 "Response Notice" has the meaning attributed to such term in
Subsection 8.4.2;
1.37 "Second Tranche Shares" means that certain number of common
shares of the Purchaser, to be issued to the Vendor as partial
payment of the Purchase Price, having an aggregate market
value of US$100,000, such number to be calculated on the basis
of the simple average of the closing prices of the COGNICASE
shares on The Toronto Stock Exchange for the period of twenty
(20) trading days ending on the trading day that is two (2)
days before their issuance (such average closing price being
the "issue price" of such shares);
1.38 "Taxes" means any tax (including, without limitation, any tax
on income, capital, excise, property, transfer, water,
business, goods and services, value added), duty, stamp,
deduction, deduction at source, charge, assessment, fees or
costs of any nature (including, without limitation, any
interest, penalty or additional costs relating thereto)
imposed by any competent authority;
1.39 "Third Party Claim" means any demand or statement or any
notice thereof which has been communicated to a Party by or on
behalf of any Person other than the Parties hereto and which,
if maintained or enforced, will or might result in a Loss;
1.40 "This Agreement", "herein", "hereby", "hereunder" and similar
expressions refer to this Share Purchase Agreement and the
accompanying schedules and exhibits;
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1.41 Schedules:
The following Schedules are attached to and form part of this
Agreement:
Schedule 1.2 Annual Financial Statements
Schedule 1.24 Interim Financial Statements
Schedule 4.1.4 Consents
Schedule 4.4.4 Shareholders' agreement
Schedule 4.4.5 Officers and directors
Schedule 4.5.2 Places of business
Schedule 4.5.3 Licenses, registrations and qualifications
Schedule 4.6.1 Material adverse changes
Schedule 4.6.2 Liabilities and obligations
Schedule 4.6.3 Liens
Schedule 4.6.5 Pending Litigation and litigious matters
Schedule 4.6.6 Loans and advances
Schedule 4.7 List of accounts receivable
Schedule 4.8 Transactions outside the ordinary course of business
Schedule 4.9.1 Material contracts
Schedule 4.9.5 Contracts limiting the Corporation's powers
Schedule 4.9.7 Special arrangements with employees
Schedule 4.9.8 Partnerships and joint ventures
Schedule 4.9.9 Non-arm's-length transactions
Schedule 4.10.1 Insurance
Schedule 4.12.1 Proprietary Intangibles
Schedule 4.15.4 Employees
Schedule 4.15.6 Employee contracts with indemnity clauses
Schedule 4.16 Banking matters
Schedule 7.1.6.4 Certain Closing Documents
2. PURCHASE OF SHARES
2.1 The Vendor agrees to sell, assign and transfer with full title
guarantee to the Purchaser, and the Purchaser agrees to
acquire from the Vendor, on the Closing Date, the Purchased
Shares, the whole in consideration of the payment of the
Purchase Price and upon the terms and conditions herein
provided.
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2.2 The Vendor agrees to sell, assign and transfer to the
Purchaser and the Purchaser agrees to acquire from the Vendor,
on the Closing Date, all Proprietary Intangibles owned by it
and used by the Corporation, the whole in consideration of the
payment of the Purchase Price to the Vendor and upon the terms
and conditions herein provided.
2.3 Each of the Purchased Shares and the Proprietary Intangibles
being bought and sold hereunder shall be bought and sold free
from any Lien, and, in the case of the Purchased Shares with
all rights, titles and interests attaching or accruing to
them, including all rights to any dividends or other
distributions declared, made or paid after the Closing Date.
2.4 After the sale by the Vendors of the Purchased Shares in
accordance with this Agreement, the Purchaser will hold,
directly or indirectly, 100% of all the issued and outstanding
shares of the Corporation.
3. PURCHASE PRICE
3.1 The purchase price (the "Purchase Price") payable by the
Purchaser to the Vendor for the Purchased Shares and on
account of the purchase and sale contemplated in Section 2
shall consist of:
3.1.1 the issue and allotment to the Vendor, on the Closing
Date, of the First Tranche Shares;
3.1.2 the payment to the Vendor, on the Closing Date, of
US$800,000 in cash (before deduction from such amount
of any amounts owing from the Vendor to the Purchaser
as described in Section 3.5); and
3.1.3 the issue and allotment to the Vendor, three (3)
months after the Closing Date, of the Second Tranche
Shares.
3.2 Within sixty (60) days of the Closing Date, the Vendor shall,
at its entire expense, (i) prepare or cause to be prepared and
delivered to the Purchaser the Corporation's unaudited
financial statements as of the Closing Date prepared in
accordance with generally accepted accounting principles in
Canada applied on a consistent basis throughout the period
specified therein (the "Closing Financial Statements"), and
(ii) prepare and file, or cause to be prepared and filed, the
corresponding corporate tax returns for the period ending on
the day preceding Closing.
3.3 Within thirty (30) days from receipt of the Closing Financial
Statements pursuant to Section 3.2, or as soon thereafter as
the Closing Financial Statements can reasonably be reviewed,
the Purchaser shall cause its financial advisors to review, at
the Purchaser's expense, the Closing Financial Statements.
Prior to the expiry of the same period, the Purchaser may
deliver to the Vendor a written statement describing its
objections, if any, to the results presented in the Closing
Financial Statements. Upon request by the Vendor, at any time
after receipt from the Purchaser of the aforementioned
statement, the Purchaser shall make available to the Vendor
and any representatives designated by the Vendor such
documents as the Vendor may reasonably request in connection
with the review of the Closing Financial Statements. If the
Purchaser raises any such objection within such period, the
Purchaser and the Vendor shall use reasonable efforts to
resolve any such dispute. If a final resolution is not
obtained within ten (10) days after the Vendor receives the
Purchaser's objections, any remaining dispute shall be
resolved by an accounting firm or accountant mutually
agreeable to the Purchaser and the Vendor. If the Parties
cannot agree on such an accounting firm or accountant within
eight (8) days after the expiration of said ten (10) day
period, the reasonable determination of an accounting firm or
accountant with whom the Purchaser has not directly dealt with
in the past eighteen (18) months shall be final and binding
upon the Parties. The fees and expenses of such accounting
firm or accountant shall be paid by the Party whose last offer
for settlement was farther from the determination of such
accounting firm or accountant.
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3.4 The Vendor further guarantees that, as of the Closing Date,
(i) the loans and advances to the Corporation's shareholders,
directors and officers shall have been reimbursed in full to
the Corporation, (ii) the Corporation shall not have any long
term indebtedness (being agreed that leasing of equipment
entered into by the Corporation shall not be considered as
"long term indebtedness"), and (iii) the Corporation shall not
have any used operating line of credit. In the event that the
review process described in Section 3.3 reveals that as of the
Closing Date such loans and advances have not been entirely
reimbursed and/or that the Corporation has any such long term
indebtedness and/or that the Corporation has any such used
operating line of credit, such loans and advances and such
indebtedness shall immediately be reimbursed by an injection
of funds by the Vendors, to the Company in cash on the basis
of One Dollar ($1) for each Dollar ($1) due in accordance with
this Section 3.4. Should the Vendor fail to so reimburse the
loans, advances and indebtedness in accordance herewith within
ten (10) days following the end of the review process
described in Section 3.3, the Vendor shall compensate the
Purchaser for the amounts not so reimbursed by a reduction of
the Purchase Price, to be made by a reduction in the number of
Second Tranche Shares remaining to be issued, and then by the
reimbursement by the Vendor to the Purchaser of the respective
portion of the Purchase Price previously paid, of an amount
calculated on the basis of One Dollar ($1) for each Dollar
($1) due in accordance with this Section 3.4. For greater
certainty, as to any remaining deficiency the Purchaser shall
be entitled to claim indemnification therefor in accordance
with this Agreement.
3.5 The Parties acknowledge the loans previously made by the
Purchaser to the Vendor in the principal amount of US$800,000.
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4. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor represents to, warrants to and covenants with the Purchaser
as follows:
4.1 Enforceability of the Agreement
4.1.1 The Vendor is the sole and absolute owner of the
Purchased Shares and the Proprietary Intangibles
being bought and sold hereunder, with good and
marketable title thereto free and clear of all Liens
and it has full power and authority (or upon the
Closing will have such authority) to sell, assign and
transfer the Purchased Shares and such Proprietary
Intangibles as herein provided.
4.1.2 Neither the entering into of this Agreement nor the
consummation of any of the transactions contemplated
hereby will:
4.1.2.1 result in the violation of (i) any of the
terms or provisions of the articles or
by-laws of the Vendor or the Corporation;
(ii) any agreement, written or oral, to
which the Vendor or the Corporation is a
party; (iii) any license, permit,
authorization, qualification or registration
held by or in respect of any of the Vendor
or the Corporation; or (iv) any law or
regulation of any jurisdiction to which the
Vendor or the Corporation is subject;
4.1.2.2 result in the creation or imposition of any
Lien on any of the Purchased Shares or any
of the property or assets of the Corporation
or the Proprietary Intangibles being bought
and sold hereunder; or
4.1.2.3 subject the Corporation to any financial or
contractual penalty or liability other than
pursuant to this Agreement.
4.1.3 There are no legal proceedings pending or threatened
and no circumstances which may reasonably be expected
to give rise to such proceedings which in any way
might interfere with any of the transactions herein
contemplated.
4.1.4 Except as disclosed in Schedule 4.1.4, there is not
any notice to, filing with, or authorization,
consent, permit or approval from, any Person,
including, without limitation, any government,
governmental agency or co-contractor of any of the
Corporation or the Vendor, required on the part of
any of the Vendor or the Corporation in connection
with the transactions contemplated by this Agreement.
All such consents that must be obtained by the
Corporation or the Vendor in order to consummate the
transactions contemplated herein shall have been
obtained as of the Closing Date.
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4.1.5 The transfer of the Purchased Shares contemplated
herein shall by the Closing have been duly authorized
by all corporate action required by the Corporation.
4.1.6 This Agreement has been duly executed and delivered
by each of the Vendor and the Corporation, and
constitutes a legal, valid and binding obligation of
each of them, enforceable against such Person in
accordance with its terms, subject only to any
limitation under applicable laws relating to (i)
bankruptcy, winding-up, insolvency, arrangement and
other laws of general application affecting the
enforcement of creditors' rights, and (ii) the
discretion that a court may exercise in the granting
of equitable remedies such as specific performance
and injunction.
4.2 Subsidiaries
4.2.1 The Corporation does not have and has never had any
subsidiaries.
4.2.2 The Corporation is not subject to any obligation or
requirement to provide funds to or make any
investment in any business or Person by way of loan,
capital contribution or otherwise.
4.3 Corporate Status
4.3.1 The Vendor (i) is duly incorporated and existing
under the laws of Ontario, (ii) is in good standing
under such laws, (iii) has full power and authority
(or upon the Closing will have such authority) to
sell the Purchased Shares and Proprietary Intangibles
as herein provided and (iv) has full power to perform
its obligations hereunder under all applicable laws
and regulations (including all required consents and
approvals).
4.3.2 The Corporation:
4.3.2.1 has been duly incorporated and organized
under the laws of Canada, is an existing
corporation in good standing under such laws
and has filed all due annual returns
required under the laws of each jurisdiction
where it is obliged to file such returns;
4.3.2.2 has the corporate power to own, lease,
occupy or otherwise hold the properties and
rights now owned, leased, occupied or
otherwise held by it and to conduct the
Business, and has the right to do business
in, and complies with applicable laws and
regulations of, each jurisdiction in which
the Business is conducted by it or the
properties or rights owned, leased, occupied
or otherwise held by it makes such
compliance necessary; and
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4.3.2.3 has full power to perform its obligations
hereunder under all applicable laws and
regulations (including all required consents
and approvals).
4.3.3 The Vendor shall at the Closing deliver to the
Purchaser true and complete copies of the certificate
of incorporation and bylaws of the Corporation as
then in effect, as well as the entire minute books of
the Corporation, updated up to and including the
Closing Date.
4.4 Share Capital and Records
4.4.1 The authorized share capital of the Corporation is as
indicated in its articles of incorporation dated July
4, 2000, and consists of an unlimited number of
common shares without par value, an unlimited number
of non-cumulative, non-voting, redeemable, Class A
special shares without par value, and an unlimited
number of non-cumulative, non-voting, redeemable,
Class B special shares without par value, of which
only one hundred (100) common shares have been issued
and are currently outstanding, and each such issued
share has been duly issued and is fully paid. On or
before Closing, the Vendor shall cause the
Corporation to issue to it such additional fully-paid
common shares as are necessary to convert into common
shares any indebtedness of the Corporation to be so
converted as described in Schedule 4.6.6.
4.4.2 No Person has any agreement or option or any right or
privilege (whether by law or by contract) capable of
becoming an agreement or option:
4.4.2.1 to acquire any of the Purchased Shares;
4.4.2.2 to acquire any of the issued and outstanding
shares of the Corporation;
4.4.2.3 to subscribe for or otherwise acquire any of
the unissued shares of the Corporation;
4.4.2.4 to purchase or otherwise acquire from the
Corporation any of its undertaking, property
or assets, other than in the ordinary course
of business.
4.4.3 The corporate records and minute book of each of the
Company contain, in all material respects, complete
and accurate minutes of all meetings of the directors
and shareholders of said corporations held since
their respective date of incorporation, and all such
meetings were duly called and held. The share
certificate books, registers of shareholders,
registers of stocks, registers of transfers and
registers of directors of the Corporation are
complete and accurate. There exists no resolution or
by-law relating to material transactions or decisions
of the directors or shareholders of the Corporation
which are not reflected in such corporate records and
minute books.
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4.4.4 Except as disclosed in Schedule 4.4.4, there is no
shareholders' or similar agreement in respect of the
Corporation.
4.4.5 Schedule 4.4.5 contains a complete list of all of the
officers and directors of the Corporation as of the
date hereof.
4.4.6 The Corporation does not exist as a result or
incident of any amalgamation or merger between the
Corporation and any other Person or between other
Persons pursuant to which the properties or rights of
the Corporation became or remained subject to the
rights of the creditors of such previously existing
Person or Persons.
4.4.7 Upon completion of the transactions contemplated by
this Agreement, all of the issued and outstanding
shares of the Corporation will be owned, directly or
indirectly, by the Purchaser as the beneficial owner
of record, with a good and marketable title thereto.
4.5 Business and Goodwill
4.5.1 The Business is as described in Section 1.3 and the
Corporation has not conducted any other business.
4.5.2 There is no location or jurisdiction where the
Corporation presently has a place of business other
than the location and jurisdiction where its
registered offices are located, and save as disclosed
in Schedule 4.5.2, the Corporation has not conducted
business in any other place or jurisdiction otherwise
than in carrying out contracts or negotiations
therefore.
4.5.3 The Corporation is conducting its business in
compliance with all applicable laws, rules and
regulations of each jurisdiction in which such
business is being carried on; is not in breach of any
such laws, rules or regulations, except for breaches
which in the aggregate are immaterial; is duly
licensed, registered or qualified in each
jurisdiction in which it owns or leases property or
conducts its business to enable such business to be
conducted as now conducted, and its properties and
assets to be owned, leased and operated, and all such
licenses, registrations and qualifications are valid,
subsisting and in good standing, and none of the same
contains any burdensome term, provision, condition or
limitation which has or reasonably may be expected to
have an adverse effect on the operation of such
business. Schedule 4.5.3 contains a list of all
licenses, registrations or qualifications held by the
Corporation and said licenses, registrations or
qualifications will not be terminated, modified or
otherwise affected by the transactions contemplated
herein.
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4.5.4 The Corporation is not conducting nor has it
conducted its business, including the Business, under
any name other than its corporate name.
4.5.5 To the best of the Vendor's knowledge, information
and belief, no event has occurred that might tarnish
or diminish the goodwill and good reputation
currently enjoyed by the Corporation.
4.6 Assets and Liabilities
4.6.1 The Annual Financial Statements disclosed in Schedule
1.1 and the Interim Financial Statements disclosed in
Schedule 1.24 are accurate in all material respects
and give a true and fair view of the financial
position of the Corporation as at the date specified
therein and the related profit and loss accounts and
cash flow statements for the period then ended fairly
present the results of the operations for the period
then ended of the Corporation and have been prepared
in accordance with generally accepted accounting
principles in Canada applied on a consistent basis
throughout the periods specified therein and applied
on a basis consistent with each other. Except as
disclosed in Schedule 4.6.1, since the date of the
Annual Financial Statements there has been no
material adverse change in the condition (financial
or otherwise), assets, liabilities, licenses,
permits, operations or business (including
relationships with suppliers, customers, and others)
of the Corporation.
4.6.2 Except to the extent reflected in the Annual
Financial Statements and in the Interim Financial
Statements (for which appropriate provisions have
been taken) or in Schedule 4.6.2 or as may be
otherwise stated herein or except for warranties that
may be given in the ordinary course of business, the
Corporation does not have any liabilities or
obligations whether accrued, absolute, contingent or
otherwise (including, without limitation, product
liability as manufacturer, supplier or otherwise,
liabilities as guarantor or otherwise with respect to
obligations of others or lease liabilities or
liabilities for Taxes) and whether due or to become
due. The Corporation does not have any used operating
line of credit or long term indebtedness (it being
agreed that leases of equipment entered into by the
Corporation shall not be considered as "long term
indebtedness").
4.6.3 The Corporation has good and marketable legal and
beneficial title to all its assets, including,
without limitation, all those referred in the balance
sheets included in the Annual Financial Statements
and in the Interim Financial Statements (other than
any thereof which was disposed of in the ordinary
course of business) free and clear of any Liens,
except for Liens specifically referred to in the
Annual Financial Statements and in the Interim
Financial Statements or disclosed in Schedule 4.6.3.
All properties, equipment and machinery and all other
tangible personal property either owned or leased by
the Corporation are in good operating condition and
repair, except for normal wear and tear and normal
usage, and are in each case adequate for the conduct
of the Business.
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4.6.4 Except for the Liens disclosed in Schedule 4.6.3, the
Corporation has valid leasehold interests in all its
properties (moveable or immovable, personal or real),
equipment and machinery free and clear of any Liens.
All such leases (complete and correct copies of which
have been made available to the Purchaser) are valid,
subsisting and effective in accordance with their
respective terms and no event or condition exists
which constitutes or after notice or lapse of time or
both would constitute a default thereunder by the
lessor or the lessee.
4.6.5 Except as disclosed in Schedule 4.6.5, there is no:
4.6.5.1 Pending Litigation;
4.6.5.2 order, decree, injunction or judgment of any
court, administrative agency or board or
administrative or other tribunal against or
affecting the Corporation;
4.6.5.3 legal impediment to the continued operation
of the Business; or
4.6.5.4 material violation by the Corporation of any
law, by-law, regulation, rule, policy,
directive or protocol of any competent
authority.
4.6.6 Except as disclosed in Schedule 4.6.6, the
Corporation has not granted any loan or advance to
any Person. The Corporation has no right to receive
any sum from the Vendor (whether as shareholder,
director, officer or otherwise) or any Person related
to it. All shareholder loans and advances, if any,
have been converted to equity prior to the Closing
Date.
4.7 Accounts Receivable and Ongoing Contracts
Schedule 4.7 contains a complete list of all of the
Corporation's accounts receivable. Such accounts receivable
and the ongoing contracts of the Corporation described in
Schedule 4.9.1 (including those reflected in the balance
sheets included in the Annual Financial Statements and in the
Interim Financial Statements) are bona fide, have been
properly recorded in the financial or accounting records of
the Corporation and represent amounts due to the Corporation
for goods or services duly sold or rendered by the Corporation
in the ordinary course of business, and no claim has been made
or threatened with respect to the quality or warranty of such
goods and services which has not been settled, and the said
accounts receivable as well as the amounts of the said ongoing
contracts are good and collectible in the normal course of
business, free from any claim or right of set off or
counterclaim, except to the extent of any provisions for bad
debts reflected in said balance sheets and which are in
compliance with normal past practices of the Corporation, and
all accounts receivable which have accrued to the Corporation
subsequent to the date of the Annual Financial Statements
comply with the foregoing in all respects except to the extent
of provisions for bad debts maintained at the same respective
rates as reflected in the said balance sheets. Notwithstanding
the generality of the foregoing, the Vendor covenants that the
accounts receivable (net of such provisions for bad debts)
described in Schedule 4.7 have been fully recovered, or are in
the process (except to the extent not fully provisioned for)
of being fully recovered, or shall be fully recovered, by
payments in cash to the Corporation prior to the Closing Date
or at the latest within four (4) months after the Closing
Date. In the event that any such account receivable is not
fully recovered by the Corporation at the expiry of the four
(4) month period, such outstanding amount shall constitute a
Loss for which the Purchaser shall be entitled to compensation
in accordance herewith. Upon being indemnified for such Loss
by the Vendor, the Purchaser, at the Vendor's request, shall
assign to the Vendor any account receivable for which it has
received payment from the Vendor.
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4.8 Conduct of Business
Except as disclosed in Schedule 4.8, since the date of its
incorporation, or unless indicated otherwise, the Corporation
has been conducting its business in the normal course and it
has not entered into any transaction other than in the normal
course of its business consistent with past practice. Without
limiting the generality of the foregoing, and except as
disclosed in Schedule 4.8, since the date of its incorporation
the Corporation has not:
4.8.1 purchased or redeemed directly or indirectly any
securities issued by it;
4.8.2 except for the Purchased Shares, issued or sold or
agreed to issue or sell any shares of its share
capital or any option, warrant, conversion or other
right to acquire any such share or any securities
convertible into or exchangeable for such shares, or
amended its articles of incorporation or by-laws;
4.8.3 acquired or sold, assigned, transferred, licensed,
terminated, leased or disposed of any assets
otherwise than in the ordinary course of business in
accordance with its normal practices;
4.8.4 suffered or incurred any damage, destruction, loss or
liability (whether or not covered by any insurance),
any strike or other labor trouble, or any loss of
employees or customers;
4.8.5 authorized or made any expenditure other than
expenditures incurred in the normal course of
business in accordance with its normal practices;
15
4.8.6 incurred any indebtedness or extended any credit,
except in the ordinary course of its business and in
accordance with its normal practices; or
4.8.7 agreed to take any of the actions described in
Subsections 4.8.1 through 4.8.6.
Furthermore, still without limiting the generality of the
foregoing, and except as disclosed in Schedule 4.8, the
Corporation has not, since the date of the Annual Financial
Statements:
4.8.8 declared or paid any dividend or declared or made any
other distribution on any of the shares of any class
of its share capital or on any other of its
securities;
4.8.9 made or authorized any payment (including any bonus
payment) to any of its officers, directors or
employees otherwise than at the regular rates payable
to it in the ordinary course of business in
accordance with its normal practices; or
4.8.10 agreed to take any of the actions described in
Subsections 4.8.8 and 4.8.9.
4.9 Contracts
4.9.1 Except as may be otherwise disclosed herein, Schedule
4.9.1 sets out all contracts or agreements, either
written or oral, express or implied (including leases
of real property), to which the Corporation is a
party and which involve a material commitment,
whether contingent or otherwise, by the Corporation.
4.9.2 Each of the contracts set out in Schedule 4.9.1 has
been duly authorized and executed by or on behalf of
the Corporation, is a valid and binding obligation of
the Corporation, is in full force and effect and has
not been the subject of a notice of termination,
cancellation or non-renewal.
4.9.3 Neither the Corporation nor any other party to any of
the contracts and agreements set out in Schedule
4.9.1 is in default or in breach of any such contract
or agreement, nor does there exist any state of facts
which, after notice or lapse of time or both, would
constitute such a breach or default.
4.9.4 Pursuant to any agreement, contract, franchise,
lease, license or permit, the Corporation does not
hold, possess, use or have access to any special or
material property or right of any nature belonging to
any other Person which is necessary in the conduct of
the Business, other than any such property or right
for which an alternative or substitute property or
right is reasonably expected to be available to the
Corporation, upon the termination of any such
agreement, contract, franchise, lease, license or
permit, on terms and conditions substantially
equivalent or more favorable to the Corporation.
16
4.9.5 Except as provided in Schedule 4.9.5, the Corporation
is not bound by any contract or agreement which
constrains or limits the Corporation in the conduct
of its business and affairs, including the Business,
or purports to do so, including, without limitation,
any agreement concerning confidentiality,
non-competition, non-solicitation or exclusivity
otherwise than for those contracts and agreements
entered into by the Corporation in the ordinary
course of business.
4.9.6 The Corporation does not enjoy the benefit of any
grant or other similar benefit, and may not become
entitled to receive same from any government or
municipality or any department, board or other
instrumentality thereof, other than any such grants
or other similar benefits which accrue or become
available by operation of the law generally to
Persons conducting businesses similar to those
conducted by the Corporation, and the Corporation is
complying with the terms and conditions upon which it
is or may become entitled to receive any such grant,
subvention or other benefit.
4.9.7 Except as provided for in Schedule 4.9.7, the
Corporation is not a party to or bound by (i) any
collective bargaining agreement or any other
agreement with any union of employees, (ii) any
agreement, written or oral, for the benefit of or
with its employees, directors, officers or
shareholders or any of the latter persons, including
any written employment contract, (iii) any pension,
bonus, profit sharing, compensation, retirement,
deferred compensation, illness or other plan,
agreement, trust, fund, or arrangement for the
benefit of or with its employees, directors, officers
or shareholders or any of the latter persons, or (iv)
any agency, proxy consultation, mandate or
representation contract, whether written or oral.
4.9.8 Except as disclosed in Schedule 4.9.8, the
Corporation has not entered into any partnership,
joint venture or other business arrangement or
association with another Person whereby the
Corporation shares business risks, profits or losses
with such Person.
4.9.9 Except as disclosed in Schedule 4.9.9, all
outstanding contracts, agreements and other
outstanding transactions entered into by the
Corporation have been entered into on an arm's length
basis.
4.9.10 The Corporation has not given any guarantee or
warranty in respect of any of the products sold or
the services provided by it, except warranties made
in the ordinary course of business and in the form of
the Corporation's standard warranties and except for
warranties implied by applicable law.
17
4.9.11 No claim has been made against the Corporation within
the past three (3) years for breach of warranty or
contract requirement or negligence or for a price
adjustment or other concession in respect of any
defect in or failure to perform or deliver any
product, service or work.
4.9.12 The Corporation is not required to provide any letter
of credit, bonds or other financial security
arrangements in connection with any transactions with
its suppliers or customers.
4.10 Insurance
4.10.1 Each of the Corporation and its business and
properties are insured with financially sound and
reputable insurers against claims and losses from all
such liabilities, hazards and risks, to such extent
and in such amounts and with such deductible amounts
therefrom as is customary for Persons operating like
businesses and owning like properties, all as
provided for in and by the policies and contracts of
insurance described in Schedule 4.10.1 (which
describes types of coverage, amount, deductible
amount and policy numbers). Complete and correct
copies of all such policies and contracts have been
provided to the Purchaser.
4.10.2 All such policies and contracts of insurance are in
full force and effect up to and including the Closing
Date, and the Corporation is in good standing with
respect to each such policy or contract to which it
is a party, and all premiums thereof have been paid
when due. The Vendor is not aware of any fact or
event which may invalidate such policies.
4.10.3 The Corporation has not received a notice of a claim
against it or its properties which would not be
entirely covered (subject, as the case may be, to a
deductible disclosed in Schedule 4.10.1) by the
insurance policies it holds and the Vendor is not
aware of any fact or circumstance which could give
rise to such a claim.
4.11 Taxes
4.11.1 The Corporation has duly and timely filed all tax
returns required to be filed by it and has paid all
Taxes which are due and payable on or prior to the
date hereof. There are no agreements, waivers, or
other arrangements providing for an extension of time
with respect to the filing of any tax return or the
payment of any Taxes by the Corporation. In addition,
the Corporation has been, at all relevant times,
legally entitled to all credits for, or refunds of,
any Taxes received by it and has no obligation to
repay or reimburse such credits or refunds.
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4.11.2 There are no actions, suits, proceedings,
investigations or claims, threatened or pending
against the Corporation in respect of Taxes nor are
there any matters under discussion with any
governmental or municipal authority relating to Taxes
by any such authority.
4.11.3 The Corporation has withheld from each payment made
to any of its officers, directors, employees,
shareholders or creditors, all Taxes and other
amounts which it is required by the laws to withhold
or deduct and has duly remitted all Taxes and amounts
so withheld or deducted to the proper recipients
thereof within the delays and in the manner required
by such laws.
4.12 Intellectual Property
4.12.1 The Corporation owns, free and clear of any Liens (or
otherwise has the lawful right to use in the manner
that the same is now being used) each of the
Proprietary Intangibles set out in Schedule 4.12.1
and the Corporation has not granted any license,
permit or right to use any such Proprietary
Intangibles other than in the ordinary course of the
Business. The only Proprietary Intangibles used by
the Corporation and belonging to the Vendor or any
other Person are disclosed in Schedule 4.12.1 and (i)
the same are lawfully used by the Corporation
pursuant to proper licenses or similar rights of use,
(ii) the Corporation has paid, if applicable, all
royalties, costs and expenses relating thereto and
(iii) the Corporation is not in default under such
licenses and rights.
4.12.2 Each of the trademarks included in the Proprietary
Intangibles is in use or has been in use during the
three (3) years immediately preceding the Closing
Date.
4.12.3 All statements contained in any applications for
registrations of the Proprietary Intangibles were
true and correct as of the date of such applications.
4.12.4 The Proprietary Intangibles do not infringe, and the
Corporation has not received any notice, complaint,
threat or claim alleging infringement of any patent,
trademark, trade-name, copyright, industrial design,
trade secret or any other intellectual property
rights of any other person, and the Business does not
include any activity which may constitute passing
off.
4.12.5 The Corporation has in its possession all necessary
drawings, artwork, specifications, prototypes and
other documents and things necessary to establish the
Corporation's ownership of those of the Corporation's
Proprietary Intangibles referred to in Subsection
4.12.1 which are not capable of registration and to
prove that such Proprietary Intangibles referred to
in Subsection 4.12.1 are original and/or novel.
19
4.12.6 The Corporation is not a party to any contract for
the sharing, exchanging or developing of, or for
passing on or otherwise transferring to any Person,
any trade secrets (or other confidential information
relating to the Corporation) or any of the
Corporation's Proprietary Intangibles.
4.13 Computer Equipment and Software
4.13.1 The Corporation has not infringed or currently
infringes any rights of any Person in using the
Computer Equipment or the Computer Software and the
continued use of such Computer Equipment and Computer
Software following any change of ownership of the
share capital of the Corporation will not give rise
to any such infringement.
4.13.2 No Person has any right to prevent the Corporation
from continuing to use the Computer Equipment or the
Computer Software.
4.13.3 All material obligations of the suppliers, licensers,
maintainers and repairers of the Computer Equipment
and the Computer Software have been duly discharged
(and in particular maintenance response times have
been complied with) and the Vendor has no reason to
believe that this will not continue to be the case.
4.14 Environmental Matters
4.14.1 There are no investigations, inquiries,
administrative proceedings, remedial orders, actions,
suits, claims, legal proceedings or any other
proceeding pending or threatened against the
Corporation which involve, or relate to,
Environmental Conditions, Environmental
Non-compliance or the release, use or disposal of any
Hazardous Materials at any Facility.
4.14.2 There are no conditions, activities, procedures or
other facts or circumstances at any Facility which
constitute or could be reasonably expected to
constitute in the future an Environmental
Non-compliance or an Environmental Condition.
4.14.3 The Corporation has all Environmental Approvals that
are presently required in order to carry on its
operations and activities, including the Business,
and said Environmental Approvals are in full force
and effect; the Corporation is in compliance with all
said Environmental Approvals.
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4.15 Labour Relations
Without restricting the provisions of Subsections 4.8.4, 4.9.7
and 4.11.3:
4.15.1 There is no collective agreement governing the labor
relations of the Corporation with its employees, and
no union has been recognized in respect thereof, nor
is any proceeding in process for the recognition of a
union or the conclusion of a collective agreement
with respect to such employees.
4.15.2 Except as set out in the Annual Financial Statements
and except for sums due to employees in the ordinary
course of business which are accrued as of the
Closing Date but payable at a later date, the
Corporation has paid all sums due to its employees
and has observed in all respects the provisions of
(i) all agreements, written or oral, for the benefit
of or with its employees, directors and officers;
(ii) any pension, bonus, profit sharing,
compensation, retirement, deferred compensation,
illness or other plan, agreement, trust, fund or
arrangement for the benefit of or with its employees,
directors or officers; and (iii) all applicable laws
and regulations respecting employment, including, but
not limited to, labor standards legislation and
regulations and legislation and regulations
prohibiting discrimination; and, without limiting the
generality of the foregoing, the Corporation has
performed all its monetary or financial obligations
under applicable workers' compensation or
occupational health and safety legislation or other
applicable labor legislation and has not received any
remedial order or notice of offense under applicable
legislation; and there is no complaint, civil action
or other proceeding in process alleging a violation
of any such agreement, plan, trust, fund,
arrangement, law or regulation.
4.15.3 The Corporation has not received any remedial order
or notice of offense under any applicable laws and
regulations respecting employment except in respect
of matters which have been settled or remedied since
the issuance of such order or notice, and the
Corporation has performed all of its financial or
monetary obligations under such laws and regulations
towards its employees and there are no facts which
may give rise to a claim for which the Corporation
might be held liable under the provisions of the said
laws or regulations.
4.15.4 Schedule 4.15.4 contains (i) the list of all
permanent or regular payroll employees as well as all
personnel hired on a permanent or regular contractual
basis by the Corporation and reflects accurately the
salary (or remuneration, in the case of contractual
persons), seniority, vacation entitlement and
benefits (including any bonus, contribution, general
expense or travel expense account) of each such
employee and (ii) a description of the relationships
between the Corporation and personnel hired
occasionally on a contractual basis, either on a
personal basis or on a secondment basis.
21
4.15.5 Since the date of the Annual Financial Statements no
change has been made in the terms of employment of
any employee of the Corporation otherwise than in the
normal course of business and in accordance with
normal practices, and the Corporation has not agreed
to make any such change.
4.15.6 Except as disclosed in Schedule 4.15.6, all contracts
of employment or service between the Corporation and
its directors and employees are terminable by the
Corporation without compensation except for
compensation under applicable law, by giving the
applicable minimum notice specified under the law.
4.15.7 All accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, accrued
wages, salaries and commissions and employees benefit
plan payments have been reflected in the books and
records of the Corporation.
4.15.8 There is no unfunded liability under any employee
retirement plan or other similar plan of the
Corporation.
4.15.9 There is no person previously employed by the
Corporation who now has or may have a right to return
to work or to be re-instated or re-engaged by the
Corporation under the provisions of any applicable
law or regulation.
4.15.10 The Corporation is not involved, and has not been
involved in any strike, lock-out, industrial or trade
dispute or any negotiations with any trade union or
body of employees.
4.15.11 There are no job share arrangements, flextime
arrangements or early retirement schemes applicable
to any employees of the Corporation.
4.15.12 The Corporation has not introduced or does not intend
to introduce any short time working scheme or any
redundancy scheme under which payments greater than
those required by statute are payable.
4.16 Bank Accounts, Financing and Security
Schedule 4.16 sets out:
4.16.1 the name of each bank, trust company or other Person
with which the Corporation has an account or
safekeeping arrangement or safety deposit box, the
account numbers and the names of each Person
authorized to operate or have access to such account,
arrangement or box on behalf of the Corporation;
22
4.16.2 a list of all outstanding guarantees,
indemnification, financing agreements, letters of
credit or security documents to which the Corporation
is a party or which are binding upon it and of all
credit cards for which the Corporation is liable; and
4.16.3 the name of each Person holding a general or special
power of attorney from the Corporation with a summary
of the terms thereof.
4.17 Conflicting Interests
4.17.1 Except that the extent that the Vendor operated the
Business before it was transferred to the
Corporation, the Vendor nor the Corporation owns, or
during the last three (3) years has owned, directly
or indirectly, or has, or during the last three (3)
years has had, a substantial ownership interest in
any business, corporate or otherwise, which is a
party to, or in any property which is the subject of,
business arrangements with the Corporation or which
is competitive with any business or property of the
Corporation, except through ownership of less than 5%
of the outstanding shares of any entity whose
securities are listed on a recognized securities
exchange.
4.17.2 Neither any officer, director or shareholder of the
Corporation nor any member of the family of any
officer, director or shareholder of the Corporation
owns directly or indirectly, or has a substantial
ownership interest in any business, corporate or
otherwise, which is a party to, or in any property
which is the subject of, business arrangements with
the Corporation or which is competitive with any
business or property of the Corporation, except
through ownership of less than 5% of the outstanding
shares of any entity whose securities are listed on a
recognized securities exchange.
4.18 No Debts or Advances
Except as disclosed in Schedule 4.6.6, the Corporation does
not have any outstanding liabilities, obligations, debts or
accounts payable to the Vendor or any Person related to it.
4.19 No Finder's or Broker's Fee
No Person has, or as a result of any of the transactions
contemplated hereby will have, as a result of any commitment
of the Vendor or the Corporation towards such Person, any
right, interest or valid claim against or upon the Purchaser,
the Corporation or any of their respective properties for any
commission, fee or other compensation as broker or finder or
for services in any similar capacity.
23
4.20 Withholding Taxes
There are no Taxes which should be withheld by the Purchaser
from the Purchase Price by reason of the residency of the
Vendor or otherwise.
4.21 Full Disclosure
4.21.1 The Vendor has made or caused to be made due inquiry,
where appropriate, with personnel having proper
knowledge of the business of the Corporation, with
respect to each of the representations, warranties,
and statements contained in this Agreement and in
each of the Schedules or documents referred to herein
or furnished to the Purchaser hereunder, and none of
the same contains any untrue statement of a material
fact or omits to state a material fact necessary to
make the statements contained herein and therein not
misleading.
4.21.2 There is no fact or circumstance known to the Vendor:
(i) which materially and adversely or in the
future may (so far as the Vendor can now
reasonably foresee) materially and adversely
affect the condition (financial or
otherwise), property, assets, liabilities,
business or operations of the Corporation;
or
(ii) relating to the business of the Corporation
which, if known to the Purchaser, might
reasonably be expected to deter the
Purchaser from consummating the transaction
hereby contemplated or from consummating
same at the Purchase Price.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendor as follows:
5.1 The Purchaser (i) is duly incorporated and existing under the
laws of Canada, (ii) is in good standing under such laws,
(iii) has full power and authority (or upon the Closing will
have such authority) to purchase and acquire the Purchased
Shares as herein provided and (iv) has full power to perform
its obligations hereunder under all applicable laws and
regulations (including all required consents and approvals).
5.2 This Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding
obligation of the Purchaser, enforceable against its in
accordance with its terms, subject only to any limitation
under applicable laws relating to (i) bankruptcy, winding-up,
insolvency, arrangement and other laws of general application
affecting the enforcement of creditors' rights, and (ii) the
discretion that a court may exercise in the granting of
equitable remedies such as specific performance and
injunction.
24
5.3 The COGNICASE Shares to be issued to the Purchaser hereunder
shall be issued as fully paid and non-assessable common shares
in the capital of the Purchaser and shall by such issuance
have been duly approved for listing on the Toronto Stock
Exchange. Upon their issuance, the COGNICASE Shares shall not
be subject to any restrictions as to the resale thereof in
Ontario through persons registered, if required, under
applicable laws and provided that no unusual effort is made to
prepare the market or to create a demand for such shares and
no extraordinary commission or consideration is paid in
respect of the trade. Furthermore, the Purchaser shall not be
liable to the Vendor in the event that the COGNICASE Shares
become subject to restrictions on their resale if such
restrictions arise due to changes in the applicable
legislation or regulations.
5.4 The Purchaser is not aware of any legal proceedings pending or
threatened or of any circumstances which may reasonably be
expected to give rise to such proceedings which in any way
might interfere with the purchase of or payment for the
Purchased Shares.
6. PRE-CLOSING COVENANTS OF THE PARTIES
6.1 Conduct of Business Prior to Closing
6.1.1 During the Interim Period, the Vendor will cause the
Corporation to conduct the Business in the ordinary
course.
6.1.2 Without limiting the generality of Section 6.1.1,
during the Interim Period the Vendor will cause the
Corporation to:
6.1.2.1 use its best efforts to preserve intact the
current business organization of the
Corporation, keep available the services of
the present employees and agents of the
Corporation and maintain good relations
with, and the goodwill of, suppliers,
customers, landlords, creditors,
distributors and all other Persons having
business relationships with the Corporation;
6.1.2.2 confer with the Purchaser concerning
operational matters of a material nature;
6.1.2.3 use its best efforts consistent with past
practice to cause the Corporation to retain
possession and control of its assets and
preserve the confidentiality of any
confidential or proprietary information of
the Business or the Corporation;
6.1.2.4 conduct the Business in such a manner that
on the Closing Date, the representations and
warranties of the Vendor contained in this
Agreement shall be true, correct and
complete as if such representations and
warranties were made on and as of such date;
and
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6.1.2.5 otherwise periodically report to the
Purchaser concerning the state of the
Business and the Corporation.
6.2 Access for Due Diligence
6.2.1 During the Interim Period, the Vendor and the
Corporation shall furnish to the Purchaser or its
employees, agents, counsel, accountants or other
representatives, such financial and operating data
and other information with respect to the Corporation
and the Purchased Shares as the Purchaser shall from
time to time reasonably request.
6.3 Actions to Satisfy Closing Conditions
6.3.1 The Vendor shall take all such actions as are within
its power to control and to use its best efforts to
cause other actions to be taken which are not within
its power to control, so as to ensure compliance with
all of the conditions set forth in Section 7.1
including ensuring that during the Interim Period and
at Closing, there is no breach of any of its
representations and warranties.
6.3.2 The Purchaser shall take all such actions as are
within its power to control and to use its best
efforts to cause other actions to be taken which are
not within its power to control, so as to ensure
compliance with all of the conditions set forth in
Section 7.2 including ensuring that during the
Interim Period and at Closing, there is no breach of
any of its representations and warranties.
6.4 Transfer of the Purchased Shares, etc.
6.4.1 During the Interim Period the Vendor shall take all
necessary steps and corporate proceedings to permit
good title to the Purchased Shares to be duly and
validly transferred and assigned to the Purchaser at
the Closing, and to permit good title to any property
of the Business held by the Vendor to be duly and
validly transferred and assigned to the Corporation
prior to Closing, in each case free of all Liens, and
in the case of the Purchased Shares other than the
restrictions on transfer, if any, contained in the
articles of the Corporation.
6.5 Request for Consents
The Vendor will use its best efforts to obtain, prior to
Closing, all consents of third parties necessary or advisable
to effect the transactions contemplated herein. Such consents
shall be upon such terms as are acceptable to the Purchaser,
acting reasonably. The Purchaser will co-operate in obtaining
such consents.
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6.6 Notice of Untrue Representation or Warranty
The Vendor shall promptly notify the Purchaser, and the
Purchaser shall promptly notify the Vendor, upon any
representation or warranty made by it contained in this
Agreement or any ancillary agreement becoming untrue or
incorrect during the Interim Period and for the purposes of
this Section each representation and warranty shall be deemed
to be given at and as of all times during the Interim Period.
Any such notification shall set out particulars of the untrue
or incorrect representation or warranty and details of any
actions being taken by the Vendor or the Purchaser, as the
case may be, to rectify that state of affairs.
7. CONDITIONS OF CLOSING
7.1 Conditions for the Benefit of the Purchaser
The purchase and sale of the Purchased Shares is subject to
the following conditions to be fulfilled or performed prior to
Closing, which conditions are for the exclusive benefit of the
Purchaser and may be waived, in whole or in part, by the
Purchaser in its sole discretion:
7.1.1 Truth of Representations and Warranties
The representations and warranties of the Vendor
contained in this Agreement or in any ancillary
agreement shall be true and correct as of the Closing
Date with the same force and effect as if such
representations and warranties had been made on and
as of such date and the Vendor shall have executed
and delivered a certificate of a senior officer to
that effect. The receipt of such certificate and the
Closing shall not constitute a waiver by the
Purchaser of any of the representations and
warranties of the Vendor which are contained in this
Agreement or in any ancillary agreement. Upon the
delivery of such certificates, the representations
and warranties of the Vendor in this Agreement shall
be deemed to have been made on and as of the Closing
Date with the same force and effect as if made on and
as of such date.
7.1.2 Performance of Covenants
Each of the Vendor and the Corporation shall have
fulfilled or complied with all covenants contained in
this Agreement and in any ancillary agreement to be
fulfilled or complied with by it at or prior to the
Closing, and shall have executed and delivered a
certificate of a senior officer to that effect. The
receipt of such certificate and the Closing shall not
constitute a waiver by the Purchaser of any of the
covenants of the Vendor which are contained in this
Agreement or any ancillary agreement.
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7.1.3 Consents
All consents of third parties necessary or advisable
to effect the transactions contemplated herein shall
have been obtained on terms acceptable to the
Purchaser acting reasonably.
7.1.4 Due Diligence
The Purchaser shall have completed its investigation
into the Corporation, the Business, the Vendor's
title to the Purchased Shares, and all other matters
it deems relevant and such investigation shall not
have disclosed any matter which the Purchaser, acting
reasonably, considers to be materially adverse to the
Corporation, the Business or materially adverse to
its decision to acquire the Purchased Shares.
7.1.5 Board Approval.
The Board of Directors of the Purchaser shall have
approved the transactions contemplated herein.
7.1.6 Deliveries
The Vendor shall deliver or cause to be delivered to
the Purchaser the following in form and substance
satisfactory to the Purchaser acting reasonably:
7.1.6.1 share certificates representing the
Purchased Shares duly endorsed in blank for
transfer, or accompanied by irrevocable
security transfer powers of attorney duly
executed in blank, in either case by the
Vendor, together with evidence satisfactory
to the Purchaser that the Purchaser or its
nominee(s) have been entered upon the books
of the Corporation as the holder of the
Purchased Shares;
7.1.6.2 certified copies of (i) the charter
documents and by-laws of each of the Vendor
and the Corporation, (ii) all resolutions of
the shareholders and the board of directors
of each of the Vendor and the Corporation
approving the entering into and completion
of the transaction contemplated by this
Agreement and the ancillary agreements, and
(iii) a list of the officers and directors
authorized to sign agreements together with
their specimen signatures;
7.1.6.3 a certificate of status, compliance, good
standing or like certificate with respect to
the Vendor and the Corporation issued by
appropriate government officials of their
respective jurisdictions of incorporation
and, in the case of the Corporation, of each
jurisdiction in which the Corporation
carries on its business as listed in
Schedule 4.5.2; and
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7.1.6.4 the documents and other deliveries referred
to Schedule 7.1.6.4 under the heading
"Purchaser", as applicable fully executed
and delivered by the parties thereto.
7.1.7 Proceedings
All proceedings to be taken in connection with the
transactions contemplated in this Agreement and any
ancillary agreement shall be satisfactory in form and
substance to the Purchaser, acting reasonably, and
the Purchaser shall have received copies of all
instruments and other evidence as it may reasonably
request in order to establish the consummation of
such transactions and the taking of all necessary
proceedings in connection therewith; and
7.2 Conditions for the Benefit of the Vendor
The purchase and sale of the Purchased Shares is subject to
the following conditions to be fulfilled or performed prior to
the Closing, which conditions are for the exclusive benefit of
the Vendor and may be waived, in whole or in part, by the
Vendor in its sole discretion:
7.2.1 Truth of Representations and Warranties.
The representations and warranties of the Purchaser
contained in this Agreement and in any ancillary
agreement shall be true and correct as of the Closing
Date with the same force and effect as if such
representations and warranties had been made on and
as of such date and the Purchaser shall have executed
and delivered a certificate of a senior officer to
that effect. The receipt of such certificate and the
Closing shall not constitute a waiver of the
representations and warranties of the Purchaser which
are contained in this Agreement or any ancillary
agreement. Upon delivery of such certificates, the
representations and warranties of the Purchaser in
Section 5 shall be deemed to have been made on and as
of the Closing Date with the same force and effect as
if made on and as of such date.
7.2.2 Performance of Covenants.
The Purchaser shall have fulfilled or complied with
all covenants contained in this Agreement and in any
ancillary agreement to be fulfilled or complied with
by it at or prior to the Closing and the Purchaser
shall have executed and delivered a certificate of a
senior officer to that effect. The receipt of such
certificate and the Closing shall not constitute a
waiver by the Vendor of the covenants of the
Purchaser which are contained in this Agreement or
any ancillary agreement.
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7.2.3 Deliveries
The Purchaser shall deliver or cause to be delivered
to the Vendor, in form and substance satisfactory to
the Vendor acting reasonably, the documents and other
deliveries referred to Schedule 7.1.6.4 under the
heading "Vendor", as applicable fully executed and
delivered by the parties thereto.
7.2.4 Proceedings
All proceedings to be taken in connection with the
transactions contemplated in this Agreement and any
ancillary agreement shall be satisfactory in form and
substance to the Vendor, acting reasonably, and the
Vendor shall have received copies of all the
instruments and other evidence as it may reasonably
request in order to establish the consummation of
such transactions and the taking of all proceedings
in connection therewith.
8. SURVIVAL AND RELIANCE ON REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION
8.1 Survival Notwithstanding Investigation
The representations and warranties set forth herein and the
obligations of the Parties hereto with respect thereto shall
survive the date hereof and shall be effective as of the date
hereof and continue in full force and effect in accordance
with the terms of this Agreement, notwithstanding any
investigation conducted by the Purchaser or its
representatives before the Closing Date.
8.2 Indemnification by the Vendor
The Vendor shall be liable to each of the Purchaser and the
Corporation and shall defend, indemnify and hold them harmless
against any and all Losses arising out of or related to:
8.2.1 the breach of any agreement, covenant, representation
or warranty of the Vendor contained in this Agreement
or in any document required to be furnished by the
Vendor to the Purchaser hereunder;
8.2.2 the non-fulfillment of any agreement, covenant or
obligation of any of the Vendor contained in this
Agreement, to the extent not waived in writing by the
Purchaser; and
8.2.3 any amount payable by the Corporation or the
Purchaser under any Pending Litigation.
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8.3 Indemnification by the Purchaser
The Purchaser shall be liable to the Vendor and shall defend,
indemnify and hold it harmless against any and all Losses
arising out of:
8.3.1 the breach of any agreement, covenant, representation
or warranty of the Purchaser contained in this
Agreement or in any document required to be furnished
by the Purchaser to the Vendor hereunder;
8.3.2 the non-fulfillment of any agreement, covenant or
obligation of the Purchaser contained in this
Agreement, to the extent not waived in writing by the
Vendor.
8.4 Claim Notice
8.4.1 If, during the term of this Agreement, either Party
believes that it has incurred or suffered a Loss
pursuant to Section 8.2 or 8.3 hereof, it shall give
a written notice of such claim (a "Claim Notice") to
the other Party (the "Notified Party"). Each Claim
Notice shall state the amount of claimed damages (the
"Claimed Amount") and the basis for such claim.
8.4.2 Within ten (10) calendar days after delivery of a
Claim Notice, the Notified Party shall provide to the
other Party a written response (the "Response
Notice") in which the Notified Party shall: (i) agree
to the Claimed Amount, (ii) agree to part, but not
all, of the Claimed Amount (such part being the
"Agreed Amount"), or (iii) contest all of the Claimed
Amount. If no Response Notice is delivered by the
Notified Party within such ten (10) day period, he
shall be deemed to have agreed to the full value of
the Claimed Amount.
8.4.3 If the Notified Party agrees (or is deemed to have
agreed) to the full value of the Claimed Amount, the
Notified Party shall, promptly following the earlier
of the required delivery date for the Response Notice
or the delivery of the Response Notice, deliver to
the other Party a certified cheque representing the
Claimed Amount.
8.4.4 If the Notified Party agrees to part, but not all, of
the Claimed Amount, the Notified Party shall
promptly, following the delivery of the Response
Notice, deliver to the other Party a certified cheque
representing the Agreed Amount set forth in such
Response Notice.
8.4.5 The Parties agree that if the Notified Party contests
all or part of the Claimed Amount (the "Contested
Amount"), the Parties shall attempt in good faith to
agree upon their respective rights with respect to
the Claimed Amount. If no such agreement can be
reached after good faith negotiations, the matter
shall be settled by arbitration in accordance with
Section 11.10 hereof.
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8.4.6 The final decision of the arbitrator pursuant to
Section 11.10 hereof shall be furnished to the
Parties in writing and shall constitute a conclusive
determination of the issue in question, binding upon
the Parties and shall not be contested by any of
them. Such decision may be used in a court of law
only for the purpose of seeking enforcement of the
arbitrator's award.
8.4.7 If a claim is made by the Purchaser pursuant to
Subsection 8.2 and the Vendor (i) agrees to the
Claimed Amount or to an Agreed Amount, (ii) comes to
an agreement with the Purchaser with regard to the
claim whereby an amount is due to the Purchaser, or
(iii) is required to pay an amount to the Purchaser
in accordance with a final decision of the arbitrator
pursuant to Section 11.10 hereof, then the Purchaser
shall be entitled to reduce the number of Second
Tranche Shares by such number of shares calculated by
dividing the amount due to the Purchaser by the
Vendor (including any interest thereon) by the issue
price of the Second Tranche Shares.
8.4.8 If a Claim Notice has been notified by the Purchaser
or the Corporation and has not been resolved prior to
the issuance of the Second Tranche Shares, the number
of Second Tranche Shares to be issued by the
Purchaser shall be reduced by such number of shares
calculated by dividing the Contested Amount by the
issue price of the Second Tranche Shares (the
"Contested Shares").
8.4.9 If the parties come to an agreement with regard to
the claim underlying the Contested Shares, the
Purchaser shall, within five (5) Business Days of
such agreement, issue such number of shares as is
obtained by dividing the amount which the parties
have agreed has to be remitted to the Vendor, if any,
by the issue price of the Second Tranche Shares.
8.4.10 Alternatively, within five (5) Business Days of the
notification to the Purchaser of the final decision
of the arbitrator pursuant to Section 11.10 hereof,
the Purchaser shall issue such number of shares as is
obtained by dividing the amount awarded to the Vendor
under such decision, if any, by the issue price of
the Second Tranche Shares.
8.4.11 If the Vendor becomes liable to pay the Purchaser any
sum pursuant to Section 8.2, the Vendor will be
liable to pay interest on such sum, from the date of
receipt by the Vendor of a Claim Notice, at the
annual rate of seven percent (7%), accruing on a
daily basis until payment is made.
8.5 Indemnification against Third Party Claims
8.5.1 Promptly upon receipt by a Party (herein referred to
as the "Indemnitee") of a notice of any Third Party
Claim in respect of which the Indemnitee proposes to
demand indemnification from the other Party (the
"Indemnitor"), the Indemnitee shall give a reasonably
detailed notice to that effect together with all
relevant supporting documents to the Indemnitor with
reasonable promptness; provided, however, that
failure to give or delay in giving such notice shall
not relieve the Indemnitor of its obligations
hereunder except and solely to the extent of any
prejudice caused to the Indemnitor by such failure or
delay.
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8.5.2 The Indemnitor shall have the right, by notice to the
Indemnitee not later than ten (10) days after receipt
of the notice described in Subsection 8.4.1, to
assume the control of the defense, compromise or
settlement of the Third Party Claim, provided that:
8.5.2.1 such assumption shall, by its terms, be
without cost to the Indemnitee; and
8.5.2.2 the Indemnitor shall at the Indemnitee's
request furnish it with reasonable security
against any costs or other liabilities to
which it may be or become exposed by reason
of such defense, compromise or settlement.
8.5.3 Upon the assumption of control by the Indemnitor as
aforesaid, the Indemnitor shall, at its expense,
diligently proceed with the defense, compromise or
settlement of the Third Party Claim at the
Indemnitor's sole expense, including employment of
counsel reasonably satisfactory to the Indemnitee
and, in connection therewith, the Indemnitee shall
co-operate fully, but at the expense of the
Indemnitor, to make available to the Indemnitor all
pertinent information and witnesses under the
Indemnitee's control, make such assignments and take
such other steps as in the opinion of counsel for the
Indemnitor are necessary to enable the Indemnitor to
conduct such defense, provided always that the
Indemnitee (i) shall be entitled to reasonable
security from the Indemnitor for any expense, costs
or other liabilities to which it may be or may become
exposed by reason of such co-operation, and (ii)
shall not be obliged to take any measures which, in
the opinion of the Indemnitee's legal counsel, could
be prejudicial or unfavorable to the Indemnitee.
8.5.4 The final determination of any such Third Party
Claim, including all related costs and expenses, will
be binding and conclusive upon the Parties hereto and
upon the Corporation as to the validity or
invalidity, as the case may be, of such Third Party
Claim against the Indemnitor hereunder.
8.5.5 Should the Indemnitor fail to give notice to the
Indemnitee as provided in Subsection 8.4.2, the
Indemnitee shall be entitled to make such settlement
of the Third Party Claim as in its sole discretion
may appear advisable, and such settlement or any
other final determination of the Third Party Claim
shall be binding upon the Indemnitor, subject to the
right of the Indemnitor to dispute in accordance with
Section 11.10 herewith that an indemnification is due
pursuant to Section 8.2 or Section 8.3.
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8.6 Calculation of Indemnification
8.6.1 The amount of the indemnification for any Loss which
the Purchaser or the Vendor shall be entitled to
receive from any Party hereto pursuant to this
Agreement shall be payable on demand and shall be
determined on a pre-tax basis (that is, without
taking into account any tax savings by the Party
requesting such indemnification and including legal
fees and costs incurred by the party who incurred or
suffered a Loss or by an Indemnitee in connection
with a claim) but after giving effect to any
insurance recoveries and recoveries from third
parties.
8.7 Expiry of Liability
8.7.1 Except as set out in Subsections 8.7.2 and 8.7.3, the
representations and warranties of the Parties herein
shall terminate upon the expiry of the period of
three (3) years following the Closing Date, except
(i) in the case of fraud, intentional
misrepresentation or a deliberate or willful breach
in which case they shall survive indefinitely or (ii)
to the extent that, during such period, a claim in
respect of any such representation or warranty is
made and communicated to the Party from which the
indemnification is requested by notice in writing
(containing details of the event giving rise to the
claim and, where possible, an estimate of the amount
of the claim which results), in which case such
representation and warranty shall continue in full
force and effect until the final determination of
such claim.
8.7.2 The representations and warranties contained in
Section 4.11 shall terminate six (6) months after the
expiry of the limitation or prescription period under
the relevant taxing statutes, but the Purchaser
covenants that, from and after the date hereof, it
will exercise reasonable efforts to ensure that it
does not, without the prior consent of the Vendor
(which consent shall not be unreasonably withheld),
enter into any agreement, waiver or other arrangement
which provides for an extension of time with respect
to the filing of any tax return or the payment or
assessment of any Taxes dealt with by any such
representation or warranty.
8.7.3 The representations and warranties contained in
Sections 4.1, 4.2, 4.3, 4.12 and 4.20 and Subsections
4.4.1, 4.4.2, 4.4.3, 4.4.4, 4.4.6 and 4.4.7 shall
survive indefinitely.
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9. CLOSING
The sale and purchase of the Purchased Shares herein provided for shall
be consummated and completed on the Closing Date.
9.1 On the Closing Date, the Vendor shall deliver or cause to be
delivered to the Purchaser free and clear of all Liens:
9.1.1 duly executed certificates for the Purchased Shares,
registered in the name of the Purchaser or its duly
appointed nominee; and
9.1.2 all such other agreements, contracts, certificates,
opinions, consents, approvals, and other documents
required hereunder to be delivered by any of the
Corporation or the Vendor and not received by the
Purchaser or which the Purchaser, acting reasonably,
may require any of the Corporation or the Vendor to
deliver, the whole for the purposes of completing the
transfer of the Purchased Shares and the Proprietary
Intangibles or setting it up against third parties
and completing the other transactions provided for
herein.
9.2 On the Closing Date, the Purchaser shall pay to the Vendor the
cash portion of the Purchase Price payable on Closing (after
deduction therefrom of any amounts owing to the Purchaser by
the Vendor as described in Section 3.5) and shall deliver or
cause to be delivered to the Vendor, free and clear of all
Liens, the certificates for the First Tranche Shares,
registered in its name, and all other agreements, contracts,
certificates, opinions, consents, approvals, and other
documents required hereunder to be delivered by the Purchaser
and not received by the Vendor.
9.3 Subject to the terms and conditions of this Agreement, three
(3) months following the Closing Date, the Purchaser shall
deliver or cause to be delivered to the Vendor, free and clear
of all Liens, the certificates for the Second Tranche Shares,
registered in its name.
10. TERMINATION
10.1 Termination by Purchaser
If any of the conditions set forth in Section 7.1 have not
been fulfilled or waived at or prior to Closing or any
obligation or covenant of the Vendor or the Corporation to be
performed at or prior to Closing has not been observed or
performed by such time, the Purchaser may terminate this
Agreement by notice in writing to the Vendor, and in such
event the Purchaser shall be released from all obligations
hereunder save and except for its obligations under Section
11.4 which shall survive. The Vendor shall only be released
from its obligations hereunder if the condition or conditions
for the non-performance of which the Purchaser has terminated
this Agreement are not reasonably capable of being performed
or caused to be performed by the Vendor. If the Purchaser
waives compliance with any of the conditions, obligations or
covenants contained in this Agreement, the waiver will be
without prejudice to any of its rights of termination in the
event of non-fulfillment, non-observance or non-performance of
any other condition, obligation, or covenant in whole or in
part.
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10.2 Termination by Vendor
If any of the conditions set forth in Section 7.2 have not
been fulfilled or waived at or prior to Closing or any
obligation or covenant of the Purchaser to be performed at or
prior to Closing has not been observed or performed by such
time, the Vendor may terminate this Agreement by notice in
writing to the Purchaser, and in such event the Vendor shall
be released from all obligations hereunder save and except for
its obligations under Section 11.4, which shall survive. The
Purchaser shall only be released from its obligations
hereunder if the condition or conditions for the
non-performance of which the Vendor has terminated this
Agreement are not reasonably capable of being performed or
caused to be performed by the Purchaser. If the Vendor waives
compliance with any of the conditions, obligations or
covenants contained in this Agreement, the waiver will be
without prejudice to any of its rights of termination in the
event of non-fulfillment, non-observance or non-performance of
any other condition, obligation or covenant in whole or in
part.
10.3 Other Termination Rights
This Agreement may, prior to or on the Closing Date, be
terminated by written agreement of the Vendor and the
Purchaser.
10.4 Effect of Termination
Each Party's right of termination under this Section is in
addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will
not be an election of remedies. Nothing in this Section shall
limit or affect any other rights or causes of action either
the Purchaser or the Vendor may have with respect to the
representations, warranties, covenants and indemnities in its
favour contained in this Agreement. For greater certainty,
upon the termination or non-completion of this Agreement for
any reason, the agreements between the Parties governing the
indebtedness of the Vendor to the Purchaser shall continue to
have full force and effect in accordance therewith.
11. MISCELLANEOUS
11.1 Notices
Any notice, consent or other communication (a "Notice") given
pursuant to or in connection with this Agreement shall be in
writing and shall be sufficiently given to the Person to whom
it is addressed if transmitted by facsimile (and confirmed by
mail), delivered in person or sent by prepaid registered mail
to or for such Person at the address of such Person indicated
below or at such other address as such Person shall have
theretofore notified to a Party or Parties hereto in
accordance herewith. Notwithstanding the foregoing, in case of
strike, lock-out or other event, real or apprehended, which
causes or would cause the interruption of the postal service,
the Notice shall be delivered in person or transmitted by
facsimile.
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To the Vendor:
ThinkPath Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Chief Executive Officer and Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Purchaser:
COGNICASE Inc.
▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Corporate Secretary
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
11.2 Interpretation
11.2.1 The article, section, subsection and paragraph
headings contained herein are included for
convenience of reference only, are not intended to be
full or accurate descriptions of the content thereof
and shall not affect or be utilized in the
construction or interpretation of this Agreement.
11.2.2 Words importing the singular include the plural and
vice versa; and words importing gender include all
genders.
11.2.3 This Agreement shall in all respects be governed by
and construed in accordance with laws of the Province
of Ontario and the laws of Canada applicable therein,
including all matters of construction, validity and
performance.
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11.3 Time of the Essence
Time shall be of the essence of this Agreement. The mere lapse
of time for performing an obligation shall constitute the
debtor of said obligation in default. Whenever any payment is
to be made or any action is to be taken hereunder on a day
other than a Business Day, such payment shall be made or such
action shall be taken on the next succeeding Business Day.
11.4 Expenses
Each Party shall pay its own costs and expenses incurred in
connection with the authorization, preparation, execution and
performance of this Agreement, including, without limitation,
all fees and expenses of its legal counsel, accountant,
employees, agents and representatives.
11.5 Successors and Assigns
This Agreement shall inure to the benefit of and be binding
upon the Parties hereto and their respective successors,
heirs, executors, administrators, representatives and
permitted assigns provided that no benefit or obligation under
this Agreement may be voluntarily assigned by any Party other
than in accordance with the present Agreement. This Agreement
shall only be assigned by a Party with the prior written
authorization of the other Parties.
11.6 Further Assurances
Each Party hereto shall, upon the request of the other Party,
do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged or delivered all such further acts,
deeds, assignments, transfers, conveyances, agreements or
other documents as in the opinion of counsel for the
requesting Party may be reasonably necessary or desirable to
effect complete consummation of the transactions contemplated
by this Agreement.
11.7 Severability
If any provision of this Agreement shall be held illegal,
invalid or unenforceable by any competent court in any
relevant jurisdiction, such illegality, invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and such provision shall be severed herefrom and
be ineffective to the extent of such illegality, invalidity or
unenforceability and shall not affect or impair or render
illegal, invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Agreement in any
jurisdiction.
11.8 Entire Agreement
This Agreement embodies the entire agreement and understanding
among the Parties hereto and supersedes all prior
negotiations, agreements and term sheets (including the Offer)
between such Parties with respect to the subject matter
hereof). For greater certainty, this Agreement does not
supersede the loan agreements between the Vendor and the
Purchaser for the indebtedness referred to in Section 3.5.
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11.9 Amendments, Waivers and Consents
Neither this Agreement nor any of the terms hereof may be
changed, waived, discharged or terminated otherwise than by an
instrument in writing signed by the Party against which
enforcement of such change, waiver, discharge or termination
is sought. Any waiver of any term or condition or any breach
of any covenant of this Agreement shall not operate as a
waiver of any other such term or condition or breach, nor
shall any failure to enforce any provision hereof operate as a
waiver of such provision or of any other provision hereof.
11.10 Arbitration
Any controversy, claim or dispute arising out of or in
connection with the negotiation, performance or
non-performance of this Agreement shall be solely and finally
settled by arbitration under the provisions of the Arbitration
Act, (Ontario), which provisions are deemed to be incorporated
by reference into this clause subject however to the
following:
11.10.1 the Parties shall appoint one arbitrator;
11.10.2 if the Parties fail to agree to an arbitrator, such
arbitrator shall be appointed by a judge of the
Superior Court of Justice (Ontario);
11.10.3 should the arbitrator die, resign, refuse to act, or
become incapable of performing his or her functions,
a new arbitrator shall be appointed as set out
herewith. When a vacancy is filled, the newly
appointed arbitrator shall exercise his or her
discretion to determine whether any hearings shall be
repeated;
11.10.4 as soon as practicable after the appointment of the
arbitrator and in any event no later than thirty (30)
days after the arbitrator has been appointed, the
claimant shall deliver to the respondent (with copy
to the arbitrator) a statement of case, containing
particulars of his or its claims and written
submissions in support thereof, together with any
documents relied on;
11.10.5 within thirty (30) days of the receipt of the
claimant's statement of case, the respondent shall
deliver to the claimant (with copy to the arbitrator)
a statement of case in answer, together with any
counterclaim and any documents relied upon;
11.10.6 within thirty (30) days of the receipt by the
claimant of any statement of counterclaim by the
respondent, the claimant may deliver to the
respondent (with copy to the arbitrator) a reply to
counterclaim together with any additional documents
relied upon;
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11.10.7 as soon as practicable after his or her appointment,
the arbitrator shall convene a meeting with the
Parties or their representatives to determine the
procedure to be followed in the arbitration. The
procedure shall be as agreed by the Parties or, in
default of agreement, as determined by the
arbitrator. However, the following procedural matters
shall in any event be taken as agreed:
11.10.7.1 the arbitrator may in his or her
discretion hold a hearing and make an
award in relation to any preliminary issue
at the request of either party and shall
do so at the joint request of both
Parties;
11.10.7.2 the arbitrator shall hold a hearing, or
hearings, relating to substantive issues
unless the Parties agree otherwise in
writing;
11.10.7.3 the arbitrator shall issue his or her
final award within thirty (30) days of the
last hearing of the substantive issues in
dispute between the Parties, but shall not
lose jurisdiction by reason of its failure
to respect this deadline;
11.10.7.4 in the event of default by either party in
respect of any procedural order made by
the arbitrator, the arbitrator shall have
power to proceed with the arbitration and
to make his or her award.
All expenses and fees relating to the arbitration process set
out in this Section 11.10 shall be, unless decided otherwise
by the arbitrator, split equally between all Parties.
11.11 Articles, Sections and Schedules
References to Articles, Sections and Schedules are to
Articles, Sections of and Schedules to this Agreement. The
Schedules form part of this Agreement and will have the same
force and effect as if expressly set out in the body of this
Agreement.
11.12 Interest
If the Vendor becomes liable to pay the Purchaser any sum
pursuant to this Agreement, whether a liquidated sum or by way
of damages or otherwise, the Vendor will be liable to pay
interest on such sum from the due date for payment at the
annual rate of seven percent (7%), accruing on a daily basis
until payment is made, whether before or after any judgment.
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11.13 Partial release
A Party may release or compromise the liability of, or grant
time or any other indulgence to, any Party without in any way
prejudicing or affecting the liability (whether joint and
several or otherwise) of any other Party.
11.14 Cumulative Remedies
The rights and remedies expressly provided for by this
Agreement shall not exclude any rights or remedies provided by
law.
11.15 Counterparts
This Agreement may be executed by the Parties hereto in
several counterparts, each of which when so executed and
delivered shall be an original and all such counterparts shall
together constitute one and the same instrument.
11.16 Language
The parties hereto have specifically required that this
Agreement, to the exclusion of the Schedules, and all related
documents be drafted in English. Les parties aux presentes ont
expressement exige que la presente convention soit redigee en
anglais.
[Signature page follows]
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IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the
date first hereinbefore written.
COGNICASE Inc.
By:
---------------------------------------
Name:
Title:
THINKPATH INC. NJOYN SOFTWARE INCORPORATED
By: By:
--------------------------------------- ---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer Title: Secretary-Treasurer
and Secretary-Treasurer
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SCHEDULE 7.1.6.4
CERTAIN CLOSING DOCUMENTS
Purchaser
1. Agreement under which the Purchaser shall act as the Vendor's exclusive
provider of payroll services, including payroll processing
2. Consulting Agreement between ThinkPath and COGNICASE re ▇▇▇▇ ▇▇▇▇
3. Non-Competition/Non-Solicitation Agreement between COGNICASE, ThinkPath
and Njoyn
4. Releases of security interests in respect of Purchased Shares and in
respect of the assets of Njoyn, and release from Guarantee
5. Intellectual Property assignments by current employees and outside
contractors of Njoyn
6. Assignment and Assumption Agreements, including related consents, for
transfer of certain property from ThinkPath to Njoyn:
o Q9 agreement
o Northstar lease*
o Pemberton lease*
▇ ▇▇▇▇▇▇ Global lease*
▇ ▇▇▇▇▇▇ Financial lease*
o Quartet agreement
o CIBC agreement**
o Softchoice agreement*
7. Documentation evidencing conversion of debt to equity in accordance
with Share Purchase Agreement
8. Documentation concerning resolution of current and future license of
Njoyn software to ThinkPath
9. Assignments of trademark applications listed in Schedule 9.12.1 from
ThinkPath to Njoyn
10. COGNICASE form of employment/contractor agreement signed by each of
Njoyn's employees and contractors
11. Copies of all software on computers used in connection with the
Business, but owned or leased by Thinkpath and not to be assigned to
Njoyn in connection with this transaction
12. Releases in favour of the Corporation by persons who are directors and
officers of the Corporation now or until the Closing
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Vendor
1. Agreement under which the Purchaser shall act as the Vendor's exclusive
provider of payroll services, including payroll processing
2. Non-Competition/Non-Solicitation Agreement between COGNICASE, ThinkPath
and Njoyn
3. Documentation concerning resolution of current and future license of
Njoyn software to ThinkPath
Note: Items mailed with an asterisk (*) shall, notwithstanding Section 7.1.6.4,
not be closing conditions in favour of the Purchaser. However, the Vendor shall
use its reasonable commercial efforts to deliver such documents (in form and
substance satisfactory to the Purchaser acting reasonably) to the Purchaser at
the Closing, together with any related consents.
Note: With respect to the assignment to and assumption by the Corporation of the
CIBC agreement (marked with a double asterisk - **), notwithstanding Section
7.1.6.4, the condition of Closing in favour of the Purchaser in this regard
shall be as follows:
(i) the Vendor shall on or before the Closing deliver or cause to
be delivered to the Purchaser an assignment and assumption
agreement, including the related consents (in each case in
form and substance satisfactory to the Purchaser acting
reasonably), assigning to the Corporation the Vendor's
interest in the CIBC agreement; or
(ii) the Vendor shall on or before the Closing provide to the
Purchaser such other comfort as to the continuation after the
Closing of the CIBC business relationship as the Purchaser
determines to be appropriate, acting reasonably.
44