EXHIBIT 2
SUBSCRIPTION AND SUPPORT AGREEMENT
THIS AGREEMENT made this 17th day of October, 2003.
BY AND AMONG:
ROYAL CAPITAL MANAGEMENT INC.
a corporation incorporated under the laws of the Province of
Ontario
(hereinafter referred to as the "PURCHASER")
OF THE FIRST PART;
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PERLE SYSTEMS LIMITED
a corporation incorporated under the laws of the Province of
Ontario
(hereinafter referred to as the "CORPORATION")
OF THE SECOND PART,
BACKGROUND:
WHEREAS the Corporation is engaged in the business of the development
manufacture and sale of networking products (the "BUSINESS");
AND WHEREAS the Corporation is indebted to the Purchaser in the
principal amount of $25,729,488 as of the 30th day of September, 2003 (the
"INDEBTEDNESS") plus interest thereon from September 30,2003;
AND WHEREAS the Purchaser has agreed to accept 500 million common
shares in the capital of the Corporation, at an issue price of $0.04 per share,
in satisfaction of $20 million of the Indebtedness (the "SUBSCRIPTION");
AND WHEREAS it is the intention of the parties to this Agreement that
the Subscription will be made pursuant to appropriate exemptions from the
registration and prospectus requirements contained in the Securities Act
(Ontario) (the "SECURITIES ACT");
NOW THEREFORE, in consideration of these premises, the mutual covenants
and agreements herein contained and for other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith, all terms defined in the Act and not otherwise defined
herein shall have the meanings ascribed thereto herein on the date hereof, and
the following terms shall have the meanings set forth below:
"ACT" means the Business Corporations Act (Ontario) as the same may be
amended or replaced from time to time;
"AGREEMENT" means this agreement, the background and all schedules
hereto, all as may be amended in writing from time to time;
"APPLICABLE LAW" means any domestic or foreign statute, law (including
the common law), ordinance, rule, regulation, restriction, regulatory
policy or guideline, by-law (zoning or otherwise), or order in any
consent, exemption, approval or licence of any Governmental Authority
that applies in whole or part, as the context requires, to the
Corporation or the Purchaser;
"ARTICLES" means the restated articles of incorporation of the
Corporation dated April 2, 1985;
"ASSETS" means all of the properties and assets, real and personal,
tangible and intangible, of the Corporation;
"BENEFIT PLANS" means all bonus, deferred compensation, incentive
compensation, share purchase, share appreciation and share option,
severance or termination pay, hospitalization or other medical
benefits, life or other insurance, dental, disability, salary
continuation, vacation, supplemental unemployment benefits,
profit-sharing, mortgage assistance, employee loan, employee
assistance, pension, retirement or supplemental retirement plan or
agreement (including without limitation any defined benefit or defined
contribution pension plan and any group registered retirement savings
plan), and each other employee benefit plan or agreement (whether oral
or written, formal or informal, funded or unfunded) sponsored,
maintained or contributed to or required to be contributed to by the
Corporation for the benefit of any of the Employees, whether or not
insured and whether or not subject to any Applicable Law, except that
the term "Benefit Plans" shall not include any statutory plans with
which the Corporation is required to comply, including without
limitation the Canada/Quebec Pension Plan or plans administered
pursuant to applicable provincial health tax, workers' compensation and
unemployment insurance legislation;
"BUSINESS" has the meaning ascribed thereto in the first recital to
this Agreement;
"BUSINESS DAY" means any day, other than a Saturday, Sunday or
statutory holiday in the Province of Ontario;
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"CLOSING" means completion of the subscription contemplated by and in
accordance with this Agreement;
"CLOSING DATE" means the 27th day of October, 2003 or such other date
as may be mutually agreed upon by the Parties hereto in writing;
"CLOSING DOCUMENT" means any document delivered at or subsequent to the
Time of Closing as provided in or as contemplated by this Agreement;
"COMMON SHARES" means the common shares in the capital of the
Corporation;
"CONFIDENTIAL INFORMATION" means all data and information relating to
the business and management of either Party, including proprietary and
trade secrets, financial information, technology and accounting
information to which access is obtained hereunder by the other Party,
provided, however, that Confidential Information shall not include any
data or information which: (i) is or becomes publicly available through
no fault of the other Party; (ii) is already in the rightful possession
of the other Party prior to its receipt from the disclosing Party;
(iii) is independently developed by the other Party; (iv) is rightfully
obtained by the other Party from a third party; (v) is disclosed with
the written consent of the Party whose information it is; or (vi) is
disclosed pursuant to court order or other legal or regulatory
compulsion;
"CORPORATION" shall mean Pearle Systems Limited;
"CORPORATION'S INFORMATION RECORD" means any material change report,
financial statement, annual information form or information circular of
the Corporation which has been or is publicly disseminated by or with
the consent of the Corporation, whether pursuant to any Securities Laws
or otherwise;
"EMPLOYEES" means the employees of the Corporation, employed by the
Corporation on or before the date hereof;
"ENCUMBRANCES" means any encumbrance of any nature, kind, or
description whatever and includes a security interest, mortgage, lien,
hypothecation, pledge, prior claim, assignment, charge, trust, or
deemed trust (whether contractual, statutory or howsoever arising),
voting trust, or pooling agreement with respect to securities, right of
first refusal, easement, servitude, restrictive covenant, encroachment
or other survey or title defect, any adverse claim or other right,
option, claim of any Person of any nature, kind or description
whatever, or any covenant or other agreement, restriction or limitation
on transferability;
"FINANCIAL STATEMENTS" means the unaudited draft financial statements
of the Corporation as at May 31,2003 (the "2003 STATEMENTS") which have
been delivered to the Purchaser, the audited financial statements of
the Corporation for the fiscal years ending May 31 in each of 2002 and
2001, consisting of a balance sheet, statements of operations,
statements of shareholders' equity and statements of cash flows and,
with the exception of the 2003 Statements, the notes thereto and the
report of the auditor thereon;
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"FORBEARANCE AGREEMENT" means the forbearance agreement dated July 2,
2003 among, inter alia, the Purchaser and the Corporation, as amended;
"GOVERNMENTAL AUTHORITY" means any domestic or foreign government,
whether federal, provincial, municipal or state and any governmental
agency, governmental authority, governmental tribunal or governmental
commission of any kind whatsoever;
"INCLUDING" means "INCLUDING WITHOUT LIMITATION" and the term
"INCLUDING" shall not be construed to limit any general statement which
it follows to the specific or similar items or matters immediately
following it;
"INDEBTEDNESS" has the meaning ascribed thereto on the first page of
this agreement;
"INTELLECTUAL PROPERTY" means (i) all trade marks, service marks, trade
▇▇▇▇ and service ▇▇▇▇ applications, rights under registered user
agreements, trade names and other trade ▇▇▇▇ and service ▇▇▇▇ rights;
(ii) all copyrights, industrial designs and registrations thereof and
applications therefor; (iii) all inventions, patents, patent
applications and patent rights (including any patents issuing on such
patent rights); (iv) all licenses, sub-licenses and franchises,
covenants not to ▇▇▇, grants, permits and other rights to use or
exploit the intellectual property rights of a third party; (v) all
computer software and rights related thereto; (vi) all renewals,
modifications, developments and extensions of any of the items listed
in (i) through (v) hereof; and (vii) all right, title, and interest of
the Corporation in and to all trade secrets and proprietary and
Confidential Information, research data, other proprietary know-how,
processes, drawings, technology, inventions, formulae, specifications,
performance data, quality control information, unattended blue prints,
flow sheets, equipment and parts lists, instructions, manuals, records
and procedures, and all licenses, agreements and other contracts and
commitments relating to any of the foregoing;
"MATERIAL" means, where the context permits, material to the
Corporation;
"MATERIAL ADVERSE EFFECT" means a change or event that is material and
adverse to the assets and properties, business, prospects, results of
operations or condition (financial or otherwise) of the Corporation and
its subsidiaries on a consolidated basis;
"MATERIAL FACT" means a fact that significantly affects, or would
reasonably be expected to have a significant effect on, the market
price or value of the Corporation's Common Shares;
"MATERIAL CONTRACTS" means any lease, contract or commitment, whether
oral or written, the termination of which has a Material Adverse Effect
or involves an aggregate payment to or by the Corporation in excess of
$100,000 or any commitment to or by the Corporation that may extend
beyond one year;
"MEETING" means the special meeting of shareholders of the Corporation
to be held in order for the shareholders of the Corporation to consider
and, if deemed advisable, to approve the Share Consolidation;
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"PARTY" means either one of the Purchaser or the Corporation; "PARTIES"
means both of the Purchaser and the Corporation;
"PENSION PLAN" means each of the Benefit Plans that is a "Registered
Pension Fund or Plan" as that term is defined in subsection 248( 1) of
the Income Tax Act (Canada);
"PERSON" shall be broadly interpreted and includes any individual,
partnership, limited partnership, joint venture, syndicate, sole
proprietorship, corporation with or without share capital,
unincorporated association, trust, trustee, executor, administrator or
other legal personal representative, regulatory body, Governmental
Authority or any other entity recognized by Applicable Laws;
"PURCHASED SHARES" means 500 million authorized and previously unissued
Common Shares;
"RULE 61-501" means Ontario Securities Commission Rule 61-501 - Insider
Bids, Issuer Bids, Share Consolidations and Related Party Transactions;
"REVISED CREDIT DOCUMENTS" has the meaning ascribed thereto in the
Forbearance Agreement;
"SECURITIES ACT" has the meaning ascribed thereto in the fourth recital
to this Agreement;
"SECURITIES LAWS" means the securities laws of the provinces of Canada,
including without limitation, the Securities Act, and the Securities
Act of 1933 of the United States of America, as any of them may be
amended or replaced by similar legislation from time to time, and
includes the regulations and rules under any such laws and all policy
statements, blanket orders and interpretation notes adopted or applied
by the Securities Commission of each such province and the Securities
and Exchange Commission of the United States of America;
"SHARE CONSOLIDATION" means the consolidation of the Common Shares on a
basis of one new Common Share for every 2,000,000 existing Common
Shares;
"TAXES" means all taxes, charges, levies, duties, assessments or other
governmental charges, including:
(i) Canadian federal, provincial, municipal and local,
foreign, state or other income, franchise, capital,
real property, tangible personal property,
withholding, payroll, employer, health, transfer,
sales, use, excise, goods and services, customs,
capital, capital gains, alternative, net worth,
profits, consumption, anti-dumping, countervail and
value added taxes, all other taxes of any kind for
which the Corporation may have any liability imposed
by Canada or any province, municipality, country or
foreign government or subdivision or agency thereof,
Canada Pension Plan and provincial pension plan
contributions, employment and unemployment insurance
payments, health insurance premiums and workers
compensation premiums; and
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(ii) interest, penalties, fines or additions associated
therewith;
all whether disputed or not;
"TAX RETURNS" means all reports, returns, and other documents filed or
required to be filed by the Corporation in respect of Taxes; and
"TIME OF CLOSING" means 10:00 a.m. (Toronto time) on the Closing Date.
1.2 EXTENDED MEANINGS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith: words importing the singular number shall include the
plural and vice versa; words importing a gender shall include the masculine,
feminine and neuter genders.
1.3 HEADINGS
The division of this Agreement into Articles, sections and subsections
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement. The terms "THIS
AGREEMENT", "HEREOF", "HEREUNDER" and similar expressions refer to this
Agreement in its entirety and not to any particular Article, section, subsection
or other portion hereof and include any agreement supplemental hereto. Unless
something in the subject matter or context is inconsistent therewith, references
herein to Articles, sections, subsections and Schedules are to Articles,
sections and subsections and Schedules of this Agreement.
1.4 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties
hereto with respect to the subject matter hereof and cancels and supersedes any
prior understandings and agreements between the Parties hereto with respect
thereto, there are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the Parties other than as expressly set forth or referred to in this Agreement.
No reliance is placed on any representation, warranty, opinion, advice or
assertion of fact made by any Party hereto or its directors, officers,
employees, legal counsel, accountants or other representatives, to any other
Party hereto or its directors, officers, employees, legal counsel, accountants
or other representatives, except to the extent that the same has been reduced to
writing and included as a term of this Agreement. Accordingly, there shall be no
liability, either in tort or in contract, assessed in relation to any such
representation, warranty, opinion, advice or assertion of fact, except to the
extent aforesaid.
1.5 SCHEDULES
The following are the Schedules, annexed hereto and incorporated by
reference and deemed to be part hereof:
Schedule Description
-------- -----------
3.1.11 Option Holders
3.1.25 Non-Arm's Length Indebtedness
3.1.26 Insurance Policies
3.1.30 Litigation
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3.1.32 Material Contracts
6.1.3 Management Agreements
6.1.8 Employment Contracts and Benefit Plans
1.6 ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be to the generally
accepted accounting principles from time to time approved by the Canadian
Institute of Chartered Accountants, or any successor institute, applicable as at
the date in respect of which such reference is made or required to be made in
accordance with generally accepted accounting principles.
1.7 CURRENCY
All references to currency herein are to lawful money of the Canada,
unless otherwise indicated.
1.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the province of Ontario and the federal laws of Canada applicable
therein.
ARTICLE 2
SUBSCRIPTION
2.1 PURCHASED SHARES AND PURCHASE PRICE
On the terms and subject to the conditions hereof, the Purchaser hereby
subscribes for and purchases from the Corporation and the Corporation agrees to
issue to the Purchaser on the Closing Date the Purchased Shares.
2.2 PAYMENT OF SUBSCRIPTION PRICE
In consideration of the subscription for the Purchased Shares and
subject to the conditions contained herein, the Purchaser hereby agrees to apply
$20 million of the Indebtedness as the subscription price for the Purchased
Shares. To evidence such payment, the Purchaser shall deliver to the Corporation
on the Closing Date and the Corporation shall accept a full and final release in
respect of $20 million of the Indebtedness and the Corporation shall thereupon
make all necessary accounting entries to reflect the addition of $20 million to
the stated capital account maintained in connection with Common Shares of the
Corporation.
2.3 DELIVERY OF CERTIFICATES
At the Time of Closing, the Corporation shall deliver to the Purchaser
share certificates representing the Purchased Shares registered in the name of
the Purchaser, accompanied, if requested, by a certificate of a senior officer
of the Corporation certifying that the Corporation has entered the Purchaser on
the books of the Corporation as the holder of the Purchased Shares.
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2.4 LOCATION AND TIME OF CLOSING
The transactions contemplated herein shall be completed at the Time of
Closing at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ or at such other place as may be agreed upon by
the Corporation and the Purchaser.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to the Purchaser as set forth
in the following Subsections of this Section and acknowledges that the Purchaser
is relying upon such representations and warranties in entering into this
Agreement.
(1) DUE INCORPORATION. The Corporation is a corporation duly incorporated,
organized validly existing and in good standing under the laws of the
Province of Ontario. No proceedings have been taken or authorized by
the Corporation, or, to the Corporation's knowledge by any other
Person, with respect to the bankruptcy, insolvency, liquidation,
dissolution or winding up of the Corporation or with respect to any
amalgamation, merger, consolidation, arrangement or reorganization
relating to the Corporation, other than the Share Consolidation.
(2) SECURITIES ACT. The sale of the Purchased Shares to the Purchaser will
be made in compliance with all Securities Laws and in reliance upon
registration and prospectus exemptions contained in the Securities Act.
(3) CORPORATE POWER AND CAPACITY. The Corporation has the corporate power
and capacity to own its assets and to carry on the Business as it is
presently being carried on. The Corporation has the corporate power and
capacity to enter into, deliver and perform its obligations under this
Agreement, including, without limitation, the issuance and delivery of
the Purchased Shares. Neither the nature of the Business nor the
location or character of any of its Assets requires the Corporation to
be registered, licensed or otherwise qualified as an out of province or
foreign corporation or to be in good standing in any jurisdiction other
than jurisdictions where it is duly registered, licensed or otherwise
qualified and in good standing.
(4) DUE AUTHORIZATION. This Agreement and all matters contemplated thereby
have been duly authorized by all necessary corporate action of the
Corporation. This Agreement has been duly executed and delivered by the
Corporation and is a valid and binding obligation of the Corporation,
enforceable against the Corporation in accordance with its terms,
subject to the qualifications set forth in Section 3.3.
(5) REPORTING ISSUER. The Corporation is a reporting issuer not in default
under the provisions of the securities legislation in each of the
Provinces of Canada.
(6) NO VIOLATION. Neither the entering into nor the delivery of this
Agreement nor the completion of the transactions and agreements
contemplated hereby by the Corporation will in any respect conflict
with or result in the breach or violation of any of the terms,
conditions or provisions of, or constitute a default under or result in
the
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creation of any Encumbrance under or relieve any other Person from its
obligations under:
(a) any of the provisions of the Articles or by-laws of the
Corporation;
(b) any material agreement or other instrument to which the
Corporation is a party or by which the Corporation or any of
its property or assets is bound; or
(c) any Applicable Law, rule, regulation, order, decree, judgment,
injunction or other restriction of any Governmental Authority
or court to which the Corporation is subject.
(7) CONSENTS AND FILINGS. No consents or approvals are required by the
Corporation from any Person whatsoever in connection with the
transactions contemplated hereby, other than receipt of shareholder
approval in respect of the Share Consolidation. No approvals of or
filings with any Governmental Authority or administrative agency are
necessary on the part of the Corporation to authorize the execution and
delivery of this Agreement or the consummation by the Corporation of
the transactions contemplated hereby.
(8) AUTHORIZED AND ISSUED CAPITAL. Immediately prior to the Time of
Closing, the authorized capital of the Corporation will consist of an
unlimited number of Common Shares of which 9,592,293 Common Shares are
validly issued and outstanding.
Immediately following the filing of the articles of amendment in
respect of the Share Consolidation, the authorized capital of the
Corporation will consist of an unlimited number of Common Shares, which
250 Common Shares will be validly issued and outstanding and all of
which will be owned by the Purchaser.
(9) TITLE TO PURCHASED SHARES. At the Time of Closing, the Purchaser shall
acquire good and valid title to the Purchased Shares, free and clear of
all Encumbrances of the Corporation, and with no restrictions on
transfer under Applicable Laws except those set forth in the Securities
Laws, and all such Purchased Shares shall be duly and validly issued
and non-assessable shares.
(10) INFORMATION RECORD. The statements comprising the Corporation's
Information Record were, at their respective dates of issue or filing,
true and correct in all material respects, contained no
misrepresentation and were prepared in accordance with Applicable Laws.
(11) NO OPTIONS. Other than disclosed in writing to the Purchaser and the
listed option holders on Schedule 3.1.11 hereof, no Person has any oral
or written agreement, option, warrant, right, privilege or any other
right capable of becoming any of the foregoing, (whether legal,
equitable, contractual or otherwise), for the purchase, subscription,
or issuance of any unissued shares of the Corporation. Except for the
Share Consolidation, the Corporation has no agreement or obligation
(contingent or otherwise) to purchase, retain or otherwise acquire any
shares of the Corporation or any interest therein. There are no
pre-emptive rights, rights of first refusal, put or call
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rights or obligations or anti-dilution rights with respect to the
issuance, sale by the Corporation, or the redemption of the
Corporation's shares.
(12) SUBSIDIARIES AND JOINT VENTURES. Other than as disclosed in writing to
the Purchaser, the Corporation does not have any ownership interest, or
any agreements or commitments to acquire any ownership interest, in any
other corporation, partnership, joint venture or business whatsoever
and has no other investment interests in any business owned or
controlled by any third party.
(13) SHAREHOLDERS' AGREEMENT. The Corporation is not a party to, and the
Corporation is not aware of, any agreement which relates to any shares
in the capital of the Corporation.
(14) DELIVERY OF CONSTATING DOCUMENTS. A true copy of the Articles and all
by-laws of the Corporation have been delivered to the Purchaser on or
before the date hereof. The Articles and such by-laws of the
Corporation constitute all of the constituent documents and by-laws of
the Corporation, are complete and correct and are in full force and
effect.
(15) CORPORATE RECORDS. True copies of all corporate records of the
Corporation have been delivered to the Purchaser's solicitors for
review prior to the date hereof. Such corporate records have been
maintained in accordance with Applicable Laws and contain complete and
accurate:
(i) minutes of all meetings of the directors, any
committee thereof and the shareholders of the
Corporation held since the date of incorporation;
(ii) resolutions of the directors, any committee thereof
and the shareholders of the Corporation passed by
signature in writing since the date of incorporation;
and
(iii) all material waivers, notices and other documents
required by Applicable Laws to be contained therein,
and reflect all material actions taken and resolutions passed by the
directors and shareholders of the Corporation since the date of
incorporation.
All resolutions contained in such records have been duly passed and all
such meetings have been duly called and held.
(16) FINANCIAL STATEMENTS. The Financial Statements:
(a) have been prepared in accordance with generally accepted
accounting principles,
(b) are true and complete in all material respects,
(c) accurately disclose, in material respects, all assets and
liabilities (whether accrued, absolute, contingent or
otherwise) of the Corporation and present fairly, accurately
and completely, in all material respects, the financial
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condition and the results of the operations of the
Corporation, as at the dates thereof and for the periods
covered thereby,
(d) reflect all proper accruals, as at the date thereof and for
the periods covered thereby, including accruals of all amounts
and other remuneration arrangements for employees of the
Corporation, which though not payable until a time after the
end of the relevant period, are attributable to activities
undertaken during that period, and
(e) contain or reflect adequate reserves for all liabilities and
obligations of the Corporation, whether absolute, contingent
or otherwise, as at the dates thereof.
No information has become available to the Corporation that would
render the Financial Statements incomplete or inaccurate in any
material respect.
(17) ABSENCE OF CHANGES. Since May 31, 2003, other than as disclosed in
writing to the Purchaser:
(a) the Corporation has conducted the Business in the ordinary
course; and
(b) there has not been any termination, amendment or revocation of
any material licence or any material damage, destruction,
loss, labour dispute or other event, development or condition
of any character (whether or not covered by insurance) which
has had, or could have, a Material Adverse Effect on the
condition of the Business.
(18) QUALIFICATION AND COMPLIANCE WITH LAWS. The Corporation is conducting
its Business in compliance with all Applicable Laws, rules,
regulations, notices, approvals and orders of each jurisdiction in
which its Business is carried on, is not in breach of any such laws,
rules, regulations, notices, approvals or orders and is duly licensed,
registered or qualified, and duly possess all material permits
(environmental or otherwise) and quotas, in each jurisdiction in which
the Corporation carries on its Business to enable its Business to be
carried on as now conducted and its assets to be owned, leased and
operated, and all such licenses, registrations, qualifications, permits
and quotas are valid and subsisting and in good standing.
(19) DIVIDENDS. No dividends have been declared or paid on or in respect of
any shares and no other distribution on any of its shares has been made
by the Corporation since May 31,2003.
(20) ABSENCE OF UNDISCLOSED TAXES.
(a) The Corporation does not have any liability, obligation or
commitment, actual or contingent, for the payment of Taxes,
other than set out in the Financial Statements and those
incurred or accrued since May 31, 2003 in the ordinary course
of business. The Corporation is not in arrears with respect to
any required withholdings or instalment payments of any Tax,
and has not filed any waiver for a taxation year of the
Corporation under the Income Tax Act (Canada) or any other
legislation imposing Tax on the Corporation. To the knowledge
of the Corporation: (i) no examination of any Tax Return by
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Canada Customs and Revenue Agency is currently in progress and
(ii) there are no claims now threatened or pending against the
Corporation in respect of Taxes or any matters under
discussion with Canada Customs and Revenue Agency relating to
Taxes.
(b) There are no reassessments of Taxes that have been issued and
are outstanding and the Corporation has not received any
indication from any Governmental Authority that an assessment
or reassessment is proposed in respect of any Taxes. To the
knowledge of the Corporation no Governmental Authority has
challenged, disputed or questioned the Corporation in respect
of Taxes or of any Tax Returns. The Corporation is not
negotiating any draft assessment or reassessment with any
Governmental Authority.
(c) The Corporation has withheld from each payment made to any of
its present or former employees, officers and directors, and
to all Persons who are non- residents of Canada for the
purposes of the Income Tax Act (Canada) all amounts required
by Applicable Laws and has remitted such withheld amounts
within the prescribed periods to the appropriate Governmental
Authority. The Corporation has charged, collected and remitted
on a timely basis all Taxes as required by Applicable Laws on
any sale, supply or delivery whatsoever, made by the
Corporation.
(d) The Corporation is not a non-resident of Canada as defined in
the Income Tax Act (Canada). The Corporation is registered for
the purposes of goods and services tax provided for under the
Excise Tax Act.
(e) The Corporation has, when due, paid all Taxes imposed by the
Retail Sales Tax Act (Ontario) and all other Applicable Laws
relating to sales taxes on the acquisition of its tangible
personal property as defined in the Retail Sales Tax Act
(Ontario), and none of its tangible personal property has been
transferred at any time on a tax-exempt basis under the
provisions of section 13 of Regulation 1013 to the Retail
Sales Tax Act (Ontario) or any predecessor thereof.
(21) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed or accrued in
the Financial Statements and those liabilities incurred by the
Corporation in the ordinary course of business since May 31, 2003,
there are no outstanding material liabilities, actual or contingent,
against the Corporation.
(22) INTELLECTUAL PROPERTY.
(a) The Corporation validly and beneficially owns all of the
Intellectual Property set out in the escrow agreement forming
part of the Revised Credit Documents. Other than with respect
to standard off-the-shelf software, the Corporation has not
assigned or encumbered any of its rights to the Intellectual
Property, and has the sole and exclusive right to use and is
the sole and exclusive registered owner of all right, title
and interest in and to the Intellectual Property (with no
breaks in the chain of title thereof).
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(b) The Corporation has made all material registrations, filings
and issuances in respect of its Intellectual Property which
are required to be made by it and all such registrations,
filings and issuances remain in full force and effect. To the
knowledge of the Corporation, the Intellectual Property has
not been used or enforced or failed to be used or enforced by
it in a manner that would result in the abandonment,
cancellation or unenforceability of any of the Intellectual
Property.
(c) The Corporation is not aware of any claim of adverse
ownership, invalidity or other opposition to or conflict with
any Intellectual Property nor of any pending or threatened
suit, proceeding, claim, demand, action or investigation of
any nature or kind against the Corporation relating to the
Intellectual Property which, if determined adversely to the
Corporation might have a Material Adverse Effect.
(d) The Corporation is not aware that any activity in which the
Corporation is engaged or the use of any of the Intellectual
Property by it breaches, violates, infringes or interferes
with any rights of any third party or requires payment for the
use of any patent, trade name, trade secret, trade ▇▇▇▇,
copyright or other intellectual property right or technology
of another.
(e) The Corporation has taken all reasonable and practical steps
(including without limitation, entering into confidentiality
and non-disclosure agreements with all appropriate Employees,
former employees and independent contractors of the
Corporation or other Persons with access to or knowledge of
the Corporation's Intellectual Property) to safeguard and
maintain its rights in all of the Corporation's Intellectual
Property.
(23) LEASES. Other than disclosed in writing to the Purchaser, the
Corporation does not own or lease any real property and has not
committed to lease or purchase any other real property. ALL rent and
other payments required to be paid by the Corporation pursuant to the
said leases have been paid, when due, and the Corporation is not in
default or in breach of any material term or provision of the said
leases.
(24) NO GUARANTEES. The Corporation is not a party to or bound by any
guarantee, indemnification, surety or similar obligation, except those
arising in the usual and ordinary course of business.
(25) NON-ARM'S LENGTH INDEBTEDNESS. Other than disclosed in writing to the
Purchaser as listed on Schedule 3.1.25, no director, former director,
officer, shareholder or employee of the Corporation, or any Person not
dealing at arm's length with the Corporation, has any outstanding
indebtedness or obligations owing from the Corporation.
(26) INSURANCE POLICIES. All insurance policies maintained by the
Corporation or under which the Corporation is covered in respect of its
properties, assets, business or personnel are described on Schedule
3.1.26 hereof. As of the date hereof all such policies are in full
force and effect and the Corporation is not in default with respect to
the payment of any premium or compliance with any of the provisions
contained in
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any such policy. No insurance policies maintained by the Corporation
contain self- insurance or co-insurance obligations of the Corporation
other than the deductibles as set out in Schedule 3.1.26. There are no
pending or denied claims made under any of the Corporation's insurance
policies.
(27) ROYALTIES AND LICENSES. Other than as disclosed in writing to the
Purchaser, the Corporation is not a party to or bound by any contract
or commitment to pay any royalty, license fee or management fee
materially in excess of the amounts set out in the Financial
Statements.
(28) EMPLOYEES.
Except as set out in Schedule 6.1.8 hereof, the Corporation is
not a party to any written contracts of employment with any of its employees
employed on the date hereof. The Corporation is not a party to any written or
oral contracts of employment which are not terminable on the giving of
reasonable notice and/or severance pay in accordance with Applicable Law, and no
inducements to accept employment with the Corporation were offered to any such
employees which have the effect of increasing the period of notice of
termination to which any such employee is entitled. The Corporation has deducted
and remitted to the relevant governmental authority or entity all income taxes,
unemployment insurance contributions, Canada Pension Plan contributions,
employer health tax remittances, and any taxes or deductions or other amounts
which it is required by statute or contract to collect and remit to any
governmental authority or other entities entitled to receive payment of such
deduction. The Corporation has paid, when due, to the date of this Agreement all
amounts payable on account of salary, bonus payments, commission and vacation
pay to or on behalf of any and all Employees. All levies under the Workplace
Safety and Insurance Act, 1997 (Ontario), or under the workers' compensation
legislation of any other jurisdiction where the Corporation carries on the
Business, have been paid by the Corporation, when due. The Corporation has
complied in all material respects with all legal requirements relating to
employment, equal employment opportunity, pay equity, non-discrimination, human
rights, immigration, wages, hours, benefits, collective bargaining, the payment
of social security and similar taxes, occupational health and safety and plant
closings. Except as listed in Schedule 6.1.8 hereto, to the knowledge of the
Corporation there is no:
(a) unfair labour practice complaint under any labour
relations legislation against the Corporation pending
before any federal or provincial labour tribunals or
any similar agency or body having jurisdiction
therefor;
(b) labour strike threatened against or involving the
Corporation;
(c) certification application outstanding respecting the
Employees;
(d) grievance or arbitration proceeding or governmental
proceeding relating to the Employees pending, nor is
there any such proceeding threatened against the
Corporation;
(e) collective bargaining agreement currently being
negotiated by the Corporation or to which the
Corporation is bound including, without
- 15 -
limitation, benefit agreements, letters of
understanding, letters of intent or other written
communications with bargaining agents which impose
any obligations on the Corporation;
(f) Pension Plan or Benefit Plan for the benefit of the
Employees; and
(g) Employees in receipt of or who have claimed benefits
under any weekly indemnity, long term disability or
workers' compensation plan or arrangement or any
other form of disability benefit program.
(29) NO DEFAULTS. Except for defaults pursuant to the Revised Credit
Documents, the Corporation is not in default or breach of any material
contract or material commitment to which it is a party and there exists
no condition, event or act which, with the giving of notice or lapse of
time or both would constitute such a default or breach and all such
contracts and commitments are in good standing and in full force and
effect.
(30) ABSENCE OF LITIGATION. Except as set out in Schedule 3.1.30, there are
no claims, actions, suits or arbitration, governmental or other
proceedings whether or not purportedly on behalf of the Corporation in
progress, pending or threatened in writing against or involving the
Corporation or any of its assets before or by any Governmental
Authority or any federal, provincial, municipal or other court, whether
or not insured, in respect of which it has received notice and which
might involve the possibility of any judgement or liability against the
Corporation.
(31) OUTSTANDING VIOLATIONS. There are no outstanding orders, notices or
similar requirements relating to the Corporation issued by any
building, environmental, fire, health, labour or police authorities or
from any Governmental Authority with which the Corporation is not in
material compliance and there are no matters under discussion with any
such authorities relating to orders, notices or similar requirements.
(32) MATERIAL CONTRACTS. Except for the agreements listed Schedule 3.1.32,
the Corporation is not a party to or bound by any Material Contract.
The Material Contracts listed in Schedule 3.1.32 are all in full force
and effect unamended and no default exists in respect thereof on the
part of any of the parties to such Material Contracts.
(33) FULL DISCLOSURE. To the best of the Corporation's knowledge, the
Corporation has fully provided the Purchaser with all of the
information that the Purchaser has requested for deciding whether to
purchase the Purchased Shares and all information which the Corporation
believes is reasonably necessary to enable the Purchaser to make such
decisions. Neither this Agreement nor any of the ancillary agreements,
nor any other representations, statements or certificates made or
delivered in connection herewith or therewith, when taken together,
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not
misleading to a purchaser of securities of the Corporation seeking full
information as to the Corporation and its respective properties,
business and affairs.
- 16 -
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Corporation as set
forth in the following Subsections of this Section and acknowledges that the
Corporation is relying upon such representations and warranties in entering into
this Agreement.
(1) ORGANIZATION. The Purchaser is a corporation duly incorporated,
organized and validly existing under the laws of the Province of
Ontario. No proceedings have been taken or authorized by the Purchaser,
or by any other Person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of the Purchaser or with respect
to any amalgamation, merger, consolidation, arrangement or
reorganization relating to the Purchaser.
(2) POWER AND CAPACITY. The Purchaser has the power and capacity to enter
into, deliver and perform its obligations under this Agreement and each
Closing Document to which the Purchaser is a party.
(3) DUE AUTHORIZATION. This Agreement has been duly authorized by all
necessary action of the Purchaser. This Agreement and each Closing
Document to which the Purchaser is a party, has been duly executed and
delivered by the Purchaser and is a valid and binding obligations of
the Purchaser, enforceable in accordance with its terms, subject to the
qualifications set forth in Section 3.3.
(4) OFFERING DOCUMENTS. The Purchaser has not received an offering
memorandum (as such term is defined in the Securities Act) or similar
document in connection with its purchase of the Purchased Shares and
has not received, nor has the Purchaser requested, nor does the
Purchaser need to receive, any other document.
(5) ACCREDITED INVESTOR. The Purchaser is an accredited investor within the
meaning attributed thereto in the Securities Act.
(6) NO VIOLATION. Neither the entering into nor the delivery of this
Agreement nor the completion of the transactions and agreements
contemplated hereby by the Purchaser will in any respect conflict with
or result in the breach or violation of any of the terms, conditions or
provisions of, or constitute a default under:
(a) any of the provisions of the Articles or by-laws of the
Purchaser;
(b) any material agreement or other instrument to which the
Purchaser is a party or by which the Purchaser or any of its
property or assets is bound; or
(c) any Applicable Law, rule, regulation, order, decree,
judgement, injunction or other restriction of any Governmental
Authority or court to which the Purchaser is subject.
(7) INDEBTEDNESS. The Purchaser is the owner of the Indebtedness and the
Indebtedness has not been assumed be the Purchaser.
- 17 -
3.3 QUALIFICATIONS OF REPRESENTATIVES AND WARRANTIES
Any representation or warranty made by a Party as to the enforceability
of this Agreement or any Closing Document to which it is a party against such
Party is subject to the following qualifications:
(a) specific performance, injunctions and other equitable remedies
are discretionary and, in particular, may not be available
where damages are considered an adequate remedy; and
(b) enforcement may be limited by bankruptcy, insolvency,
liquidation reorganization, reconstruction and other laws
generally affecting enforceability of creditors' rights.
3.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, and statements set forth herein and in
any Closing Document shall survive the completion of the transactions herein
provided for as follows:
(a) the representations and warranties set forth in Subsections
3.1(4), 3.1(8), 3.1(9) and 3.1(11) shall survive the Closing
and continue without time limit;
(b) the representations and warranties relating to Tax matters
shall continue until expiration of the relevant period for the
assessment, reassessment or determination of the particular
Tax by the relevant taxation authority;
(c) all other representations and warranties shall survive for a
period of three (3) years from the Time of Closing.
3.5 SURVIVAL OF COVENANTS
The covenants of the Parties set forth in this Agreement and in any
Closing Document shall survive the completion of the transactions herein
provided for and, notwithstanding such completion, shall continue in full force
and effect for the benefit of the Person to whom they are made unless waived by
such Person.
ARTICLE 4
COVENANTS OF THE PARTIES
4.1 FILINGS
The Corporation shall make all necessary filings and pay all applicable
fees pursuant to the Securities Laws as may be required in connection with the
issuance and sale of the Purchased Shares. Such filings and payments shall be
made forthwith after Closing but in any event no later than such periods as may
be required by the Securities Laws.
4.2 SHARE CONSOLIDATION
The Corporation shall complete the Share Consolidation on or before
December 1, 2003 in such a manner as to not give rise to the requirement to
obtain minority approval in accordance with either Rule 61-501 or the Act.
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4.3 VALUATION
The Corporation shall obtain a formal valuation of the Common Shares
substantially in accordance with Rule 61-501.
4.4 MEETING
The Corporation shall call the Meeting to be held on or before November
28, 2003 in order for the shareholders of the Corporation to consider and, if
deemed advisable, pass a resolution approving the Share Consolidation.
4.5 MEETING MATERIALS
The Corporation shall prepare an information circular in respect of the
Meeting which shall comply in all material respects with all Applicable Laws and
the Act, in a form acceptable to the Purchaser, acting reasonably.
4.6 RECOMMENDATION
The information circular prepared in respect of the Meeting shall
include a recommendation of the board of directors of the Corporation to the
shareholders of the Corporation to approve the Share Consolidation.
Notwithstanding the foregoing, in the event that another bonafide transaction is
proposed to the shareholders of the Corporation, which, in the opinion of the
Corporation's board of directors after consultation with its financial advisors
would result, directly or indirectly, in such holders receiving greater value
for their shares than would result from the Share Consolidation, then the board
of directors of the Corporation may withdraw or modify any recommendation
regarding the Share Consolidation if, in the opinion of the board of directors
acting in good faith, on the advice of its outside counsel, failure to do so
would be inconsistent with the directors' fiduciary duties under Applicable Law.
Nothing in this section 4.6 shall prevent the board of directors of the
Corporation from making any disclosure to the shareholders of the Corporation
if, in the opinion of the board of directors of the Corporation acting in good
faith, on the advice of its outside counsel, that failure to do so would be
inconsistent with the director's fiduciary duties under Applicable Law.
4.7 RULE 13e-3
The Corporation shall file with the Securities and Exchange Commission
all disclosure materials necessary to comply with Rule 13e-3 on or before
October 27,2003.
4.8 CORPORATE AUTHORITY AND CONSENTS
The Corporation shall take or obtain (as applicable), on or before the
date of the Meeting, all necessary corporate steps and proceedings required to
authorize, and all required consents in respect OF, the Share Consolidation.
4.9 CERTIFICATES
ALL certificates as may be reasonably requested by the Purchaser, in
form and substance satisfactory to the Purchaser's counsel, acting reasonably,
shall be delivered to the Purchaser on or before the completion of the Share
Consolidation.
- 19-
4.10 VOTING
Provided that the Corporation complies with its covenants set forth in
this Agreement and provided that the representations and warranties of the
Corporation continue to be true and correct in all material respects as at the
date of the Meeting, the Purchaser hereby covenants to vote the Purchased Shares
in favor of the Share Consolidation.
4.11 PURCHASED SHARES
Provided that the Corporation complies with its covenants set forth in
this Agreement and provided that the representations and warranties of the
Corporation continue to be true and correct in all material respects as at the
date of the Meeting, the Purchaser hereby covenants not to sell, transfer,
pledge, dispose of, encumber or agree sell, transfer, pledge, dispose, of or
encumber the Purchased Shares, prior to the date of the Meeting.
4.12 CONFIDENTIALITY
(a) The Corporation shall keep confidential all of the Purchaser's
Confidential Information. The Corporation shall use such
Confidential Information solely for the purpose of evaluating
and completing the transactions contemplated hereby and shall
not use such information for any other purpose, including
without limitation any competitive purpose. The Corporation
shall not duplicate or distribute any of such Confidential
Information to anyone other than its directors, officers,
employees, legal counsel and other representatives, as
applicable, who need to know such information for purposes of
evaluating and completing the transactions contemplated
hereby. The Corporation agrees that if the transactions
contemplated hereby do not close, the Corporation shall return
to the Purchaser, within five (5) Business Days of written
demand by the Purchaser, all such Confidential Information or
cause the same to be destroyed, such destruction to be
certified in writing by an authorized officer of the
Corporation who supervises the destruction thereof, without
retaining any copies or extracts therefrom.
(b) The Purchaser shall keep confidential all of the Corporation's
Confidential Information received by the Purchaser prior to
the Time of Closing. The Purchaser shall use such Confidential
Information solely for the purpose of evaluating and
completing the transactions contemplated hereby and shall not
use such information for any other purpose, including without
limitation any competitive purpose. The Purchaser shall not
duplicate or distribute any of such Confidential Information
to anyone other than its directors, officers, employees, legal
counsel and other representatives who need to know such
information for purposes of evaluating and completing the
transactions contemplated hereby. The Purchaser agrees that if
the transactions contemplated hereby do not close, the
Purchaser shall return to the Corporation, within five (5)
Business Days of written demand by the Corporation, all such
Confidential Information or cause the same to be destroyed,
such destruction to be certified in writing by an authorized
officer of the Purchaser who supervises the destruction
thereof, without retaining any copies or extracts therefrom.
- 20 -
(c) The provisions of this Section 4.12 shall survive any
termination or expiration of this Agreement.
4.13 FORBEARANCE
The Purchaser hereby agrees to extend the term of the Forbearance
Agreement until the Closing Date so long as the Corporation complies with its
covenants set forth in this Agreement and the Forbearance Agreement so long as
the representations and warranties of the Corporation contained herein continue
to be true and correct in all material respects. On the Closing Date, the
Revised Credit Documents will be amended to reduce the Credits (as such term is
defined in the Revised Credit Documents) available to the Borrower to an amount
equal to the amount of the Credits outstanding immediately following the closing
of the transactions contemplated hereby. In addition, no additional drawings
under the Revised Credit Documents will be permitted and the balance of the
Credits will be a non-revolving credit facility due on demand with interest and
all other terms applicable to the Credit B Loan (as such term is defined in the
Revised Credit Documents);
ARTICLE 5
CLOSING CONDITIONS
5.1 CLOSING CONDITIONS FOR THE BENEFIT OF THE PURCHASER
The obligation of the Purchaser to complete the transactions
contemplated by this Agreement shall be subject to the satisfaction or
compliance with, at or before the Time of Closing, of each of the following
conditions precedent (each of which is hereby acknowledged to be inserted for
the exclusive benefit of the Purchaser and may be waived by the Purchaser in
whole or in part):
(1) CORPORATE AUTHORITY AND CONSENTS. All necessary corporate steps and
proceedings required to authorize, and all required consents in respect
of, the transactions contemplated hereby shall have been taken.
(2) SECURITIES LAWS COMPLIANCE. All consents or other authorizations and
filings required by Securities Laws shall have been obtained or, if
applicable, filed.
(3) CERTIFICATES. All certificates as may be requested by the Purchaser and
in form and substance satisfactory to the Purchaser's counsel acting
reasonably shall have been delivered to the Purchaser.
(4) DELIVERY OF SHARE CERTIFICATES. An original Common Share certificate
evidencing the Purchased Shares shall have been issued to the
Purchaser.
(5) LEGAL OPINION. An opinion regarding this Agreement and the transactions
contemplated hereby prepared by counsel for the Corporation in form and
substance satisfactory to the Purchaser's counsel, acting reasonably.
(6) REVISED DOCUMENTS. The Borrower shall have executed the amendments to
the Revised Credit Documents as contemplated by section 4.13 hereof in
a form satisfactory to the Purchaser.
- 21 -
(7) CORPORATE ACTION. The following documents in respect of the
transactions contemplated hereby, in form and substance satisfactory to
the Purchaser, acting reasonably shall have been delivered to the
Purchaser:
(a) certified copies of all resolutions of the board of directors
and the Special Committee of the Corporation approving the
entering into of this Agreement and the completion of all
transactions contemplated hereunder; and
(b) all other instruments evidencing necessary corporate action of
the Corporation, if any, with respect to such matters.
(8) DUE DILIGENCE. The Purchaser shall be satisfied with the results of its
due diligence.
(9) OPTIONS. All outstanding options held by persons other than the
Purchaser shall be surrendered and cancelled on terms satisfactory to
the Purchaser.
5.2 FAILURE TO SATISFY PURCHASER'S CONDITIONS
If any condition set forth in section 5.1 hereof is not satisfied on or
before the Time of Closing, the Purchaser may terminate this Agreement by notice
in writing to the Corporation, and, in such event, the Purchaser shall be
released from all obligations under this Agreement, and, unless the Purchaser
can show that the condition or conditions which have not been satisfied and for
which the Purchaser has terminated this Agreement are reasonably capable of
being performed or caused to be performed by the Corporation, the Corporation
shall also be released from all obligations under this Agreement, except that
the Purchaser shall be entitled to waive compliance with any such conditions,
obligations or covenants in whole or in part if it sees fit to do so without
prejudice to any of its rights of termination in the event of non-performance of
any other condition, obligation or covenant, in whole or in part.
5.3 CLOSING CONDITIONS FOR THE BENEFIT OF THE CORPORATION
The obligation of the Corporation to complete the transactions
contemplated by this Agreement shall be subject to the satisfaction or
compliance with, at or before the Time of Closing of each of the following
conditions precedent (each of which is hereby acknowledged to be inserted for
the exclusive benefit of the Corporation and may be waived by the Corporation in
whole or in part):
(1) RELEASE. The Purchaser shall deliver a full and final release in
respect of $20 million of the Indebtedness in a form satisfactory to
the Corporation, acting reasonably.
(2) CORPORATE ACTION. The following documents in respect of the
transactions contemplated hereby, in form and substance satisfactory to
the Corporation, acting reasonably shall have been delivered to the
Corporation:
(a) certified copies of all resolutions of the board of directors
of the Purchaser approving the entering into of this Agreement
and the completion of all transactions contemplated hereunder;
and
(b) all other instruments evidencing necessary corporate action of
the Purchaser, if any, with respect to such matters.
- 22 -
5.4 FAILURE TO SATISFY CORPORATION'S CONDITIONS
If any condition set forth in section 5.3 hereof is not satisfied on or
before the Time of Closing, the Corporation may terminate this Agreement by
notice in writing to the Purchaser, and, in such event, the Corporation shall be
released from all obligations under this Agreement, and, unless the Corporation
can show that the condition or conditions which have not been satisfied and for
which the Corporation has terminated this Agreement are reasonably capable of
being performed or caused to be performed by the Purchaser, the Purchaser shall
also be released from all obligations under this Agreement.
ARTICLE 6
GENERAL MATTERS
6.1 FURTHER ASSURANCES
Each of the Parties hereto shall from time to time execute and deliver
all such further documents and instruments and do all acts and things as the
other Party may, either before or after the Closing Date, reasonably required to
effectively carry out or better evidence or perfect the full intent and meaning
of this Agreement.
6.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
6.3 PUBLIC ANNOUNCEMENTS
A11 public announcements or press releases concerning the transactions
contemplated hereby shall be made by the Purchaser or the Corporation with the
prior consent and approval of the other Party, subject to any required legal or
regulatory consent.
6.4 ENUREMENT
This Agreement shall enure to the benefit of and, except as otherwise
provided herein, be binding upon the respective heirs, executors,
administrators, successors and permitted assigns of the Parties hereto.
6.5 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by each of the Parties
hereto and no waiver of any breach of any term or provision of this Agreement
shall be effective or binding unless made in writing and signed by the Party
purporting to give the same and, unless otherwise provided, shall be limited to
the specific breach waived.
6.6 ASSIGNMENT
This Agreement may not be assigned by either the Purchaser or the
Corporation without the prior written consent of the other.
6.7 NOTICES
Unless specified otherwise, all notices under this Agreement shall be
in writing and shall be sufficiently given if delivered personally to such
Party, or if sent by prepaid registered mail, or if sent by courier, or if
delivered electronically via a means permitting
- 23 -
electronic acknowledgement or confirmation of receipt, or if transmitted by
fax to such Party at the address and fax number as follows:
To the Purchaser: ROYAL CAPITAL MANAGEMENT INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director
Facsimile: 416.221.1253
To the Corporation: PERLE SYSTEMS LIMITED
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: ▇▇▇ ▇▇▇ ▇▇▇▇
or to such other address, individual or electronic communication number as may
be designated by notice given by either Party to the others in accordance
herewith. Any demand, notice or other communication given by personal delivery
shall be conclusively deemed to have been given on the day of actual delivery
thereof and, if given by registered mail, on the fifth (5th) Business Day
following the deposit thereof in the mail and, if given by electronic
communication or fax, at the time of electronic confirmation of successful
transmission, (unless delivered after 4:30 p.m., Toronto time, in which case the
notice will be deemed to have been delivered on the immediately following
business day). If the Party giving any demand, notice or other communication
knows or ought reasonably to know of any difficulties with the postal system
which might affect the delivery of mail, any such
- 24 -
demand, notice or other communication shall not be mailed but shall be given by
personal delivery or by electronic communication.
6.8 COUNTERPARTS
This Agreement may be executed in several counterparts and each of
which, so executed shall be deemed to be an original and such counterparts
together shall be one and the same instrument. A copy of this Agreement executed
by any Party and transmitted by facsimile shall be binding upon the Parties in
the same manner as an original executed copy and delivered in Person.
6.9 REMEDIES CUMULATIVE
The rights and remedies of the Parties under this Agreement are
cumulative and in addition to and not in substitution for any rights or remedies
provided by law.
6.10 EXPENSES
The Corporation shall pay the Purchaser's reasonable out-of pocket fees
and expenses, including legal and due diligence costs associated with the
purchase of the Purchased Shares and the other Closing Documents.
6.11 CURRENCY
All dollar amounts expressed herein refer to lawful currency of Canada.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as
of the date first above written.
ROYAL CAPITAL MANAGEMENT INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
PERLE SYSTEMS LIMITED
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President and Chief Executive Officer
Schedules Revised October 21, 2003
SCHEDULE 3.1.11
OPTIONS AND WARRANTS
WARRANTS
Royal Capital Management (formerly Canadian Imperial Bank of Commerce ("CIBC")
500,000 warrants at an issue price of CDN$1.50 - 5 year warrants expiring May
31,2006.
OPTIONS
AS OF 10/14/2003
1995 STOCK OPTION PLAN
--------------------------------------------------------------------------------------------------------
DATE GRANTED PRICE EXERCISED CANCELLED EXERCISABLE OUTSTANDING
--------------------------------------------------------------------------------------------------------
11/7/93 14,400 $ 2.05 4,820 8,380 1,200 1,200
11/7/93 8,900 $ 4.00 2,000 6,900 0 0
5/31/95 58,250 $ 2.05 13,650 43,800 800 800
5/31/95 75,000 $ 6.25 10,000 45,000 20,000 20,000
4/4/96 93,000 $ 2.05 37,870 48,230 6,900 6,900
4/4/96 32,000 $ 5.75 10,800 13,200 8,000 8,000
10/18/96 5,000 $ 3.75 0 0 5,000 5,000
12/16/96 49,000 $ 2.05 19,000 24,500 5,500 5,500
12/16/96 5,500 $ 4.00 1,600 3,500 400 400
7/18/97 156,000 $ 2.55 41,400 76,800 37,800 37,800
9/22/97 40,000 $ 2.15 24,000 16,000 0 0
10/1/97 5,000 $ 2.50 3,000 0 2,000 2,000
10/6/97 63,000 $ 2.50 16,200 39,600 7,200 7,200
6/2/98 31,250 $ 2.75 2,500 0 28,750 28,750
6/15/98 100,940 $ 2.70 21,418 65,016 14,506 14,506
9/1/98 13,000 $ 2.35 4,800 8,200 0 0
9/10/98 10,000 $ 2.60 4,000 6,000 0 0
9/30/98 7,000 $ 2.70 1,600 3,200 2,200 2,200
11/30/98 4,202 $ 3.95 1,200 2,200 802 802
11/30/98 798 $ 3.95 0 0 798 798
1/29/99 133,295 $ 4.70 5,940 35,060 92,295 92,295
1/29/99 19,005 $ 4.70 0 0 19,005 19,005
3/1/99 34,000 $ 3.90 9,400 18,200 6,400 6,400
3/1/99 4,000 $ 3.90 0 0 4,000 4,000
6/1/99 136,100 $ 3.00 21,146 92,914 22,040 22,040
6/1/99 800 $ 3.00 0 0 800 800
6/28/99 38,434 $ 3.45 6,600 22,038 9,796 9,796
OPTION TABLE CONTINUED
14
Schedules Revised October 21, 2003
DATE GRANTED PRICE EXERCISED CANCELLED EXERCISABLE OUTSTANDING
6/28/99 4,566 $ 3.45 0 0 4,566 4,566
9/2/99 50,000 $ 3.70 0 0 50,000 50,000
9/16/99 35,000 $ 4.30 7,000 0 28,000 28,000
10/6/99 10,000 $ 3.60 1,000 0 9,000 9,000
2/25/00 5,000 $ 12.40 0 0 4,000 5,000
3/31/00 64,500 $ 9.40 0 42,250 17,800 22,250
5/17/00 2,500 $ 5.95 0 2,500 0 0
6/2/00 157,250 $ 5.00 1,500 99,900 44,600 55,850
8/31/00 10,000 $ 4.00 0 0 8,000 10,000
1/25/01 22,000 $ 1.65 0 22,000 0 0
6/27/01 593,752 $ 1.20 0 321,124 222,260 272,628
6/27/01 59,998 $ 1.20 0 12,501 47,497 47,497
12/31/01 9,127 $ 0.71 0 0 2,983 9,127
12/31/01 2,499 $ 0.71 0 0 1,665 2,499
2/26/02 265,000 $ 0.63 0 0 88,000 265,000
2/26/02 30,000 $ 0.63 0 0 30,000 30,000
3/27/02 2,083 $ 0.70 0 2,083 0 0
------------------------------------------------------------------------------------------------------
PLAN TOTALS 2,588,149 336,568 1,143,972 854,563 1,107,609
15
Schedules Revised October 21, 2003
SCHEDULE 3.1.25
NON-ARM'S LENGTH INDEBTEDNESS
Shareholder Loan - ▇▇▇▇▇▇ ▇▇▇▇▇
Schedule Attached
PERLE SYSTEMS LIMITED interest rate fixed at 2.5%
SHAREHOLDER LOANS
May 31, 2002
INTEREST
INDIVIDUAL DATE OF LOAN DUE DATE Date Repaid AMOUNT RATE SHARES
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇.▇▇▇▇▇
OCTOBER 19, 1990 DEMAND U.S. $ 54,517.81 2.50% 27,000
JAN 4, 1991 DEMAND U.S. $ 6,000.00 2.50% 2,000
MAY 2, 1991 DEMAND U.S. $ 11,565.66 2.50% 3,300
NOV 4, 1991 DEMAND U.S. $ 12,697.50 2.50% 3,386
April 15, ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇. $ 30,000.00 2.50% 5,000
July 28, 1998 DEMAND CDN. $ 49,936.21 5.00% 18,000
------------
Sub-total US $ 114,780.97
------------
Sub-total Cdn $ 49,936.21
------------
Current balance sheet value of CDN$ 180,470.
8
Schedules Revised October 21, 2003
SCHEDULE 3.1.26
INSURANCE POLICIES
1. COMMERCIAL PROPERTY
--------------------------------------------------------------------------------------------------------------------------------
COMPANY Zurich Insurance Company
--------------------------------------------------------------------------------------------------------------------------------
NAME INSURED Perle Systems Limited - Policy Number 8557549
--------------------------------------------------------------------------------------------------------------------------------
PERIOD OF From: June 15, 2003 to June 15, 2004
INSURANCE
--------------------------------------------------------------------------------------------------------------------------------
DETAILS OF COVERAGE 1 - PROPERTY
COVERAGE
Limits of Liability:
CDN$6,351,584 SCHEDULED LIMITS
as per SOV filed with insurer but converted to Canadian Values at 1.35 rate
CDN$ 500,000 LIMIT OF LIABILITY
Extra Expense
CDN$ 100,000 LIMIT OF LIABILITY
Valuable Papers
CDN$ 100,000 LIMIT OF LIABILITY
Professional Fees
CDN$ 25,000 LIMIT OF LIABILITY
Master Key Coverage
--------------------------------------------------------------------------------------------------------------------------------
DEDUCTIBLES POED including Tenants Improvements
CDN$ 5,000 PER OCCURRENCE
Earthquake
3.0% PER OCCURRENCE
of TIV or $100,000 minimum whichever is greater
Flood
CDN$ 25,000 PER OCCURRENCE
Sewer Back UP
CDN$ 10,000 PER OCCURRENCE
All Other Losses including EDP
CDN$ 1,000 PER OCCURRENCE
--------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL DETAILS Extensions
- $25,000 - Personal Property of Employees (on Building premises)
- $25,000 - Fire Department Service charges
- $50,000 - Tenant Improvements
- $50,000 - Exhibition Floater
- $50,000 - Off Premises Power
--------------------------------------------------------------------------------------------------------------------------------
1
Schedules Revised October 21, 2003
-----------------------------------------------------------------------------------------------------------------------
- $ 5,000 - Electric and Neon sign
- $ 20,000 - Unnamed Locations
- $100,000 - Ammonia Contamination
$100,000 - Valuable Papers
-----------------------------------------------------------------------------------------------------------------------
MAJOR EXCLUSIONS - Boiler and Machinery exposure
- Pollution of land, air or water
- Rust, wear & tear, latent defect except for resulting damage from insured perils
- Faulty material, workmanship of design but resulting damage covered
- Nuclear Exclusion
- Mould Fungi Exclusion
-----------------------------------------------------------------------------------------------------------------------
TERMS AND 60 DAYS' NOTICE OF CANCELLATION
CONDITIONS
2. COMMERCIAL GENERAL LIABILITY
--------------------------------------------------------------------------------------------------------------------------------
COMPANY ZURICH INSURANCE COMPANY
--------------------------------------------------------------------------------------------------------------------------------
Perle Systems Limited - Policy Number 35791320
--------------------------------------------------------------------------------------------------------------------------------
PERIOD OF June 15, 2003 to June 15, 2004
INSURANCE
--------------------------------------------------------------------------------------------------------------------------------
DETAILS OF COVERAGE 1 - COMMERCIAL GENERAL LIABILITY
COVERAGE
Limits of Liability:
US $3,000,000 USA General Aggregate
CDN$ 2,000,000 LIMIT OF LIABILITY
Per Occurrence -Third Party Liability, Property Damage and Bodily Injury
CDN$ 2,000,000 LIMIT OF LIABILITY
Annual Aggregate Products/Completed Operations
CDN$ 2,000,000 LIMIT OF LIABILITY
Personal and Advertising Injury
CDN$ 2,000,000 LIMIT OF LIABILITY
Tenants Legal Liability-All Risk
CDN$ 2,000,000 EACH CLAIM
Employee Benefits Errors & Omissions, Claims-Made Retro Date: July 6, 2001
CDN$ 2,000,000 AGGREGATE
Employee Benefits Errors & Omissions
CDN$ 2,000,000 LIMIT OF LIABILITY
Employer's Liability (Excludes USA employees) (per occurrence and aggregate)
---------------------------------------------------------------------------------------------------------------------------------
2
Schedules Revised October 21, 2003
--------------------------------------------------------------------------------------------------------------------------------
CDN$ 2,000000 EACH ACCIDENT
Non-Owned Automobile Liability
CDN$ 10,000 LIMIT OF LIABILITY
Medical Expense
CDN$ 50,000 EACH ACCIDENT
Legal Liability for Damage to Hired Vehicles
--------------------------------------------------------------------------------------------------------------------------------
DEDUCTIBLES Bodily Injury and Property Damage including Expenses
CDN$ 25,000 PER OCCURRENCE
Employee Benefits Liability.
CDN$ 1,000 EACH CLAIM
Legal Liability for Damage to Hired Vehicles.
CDN$ 1,000 PER ACCIDENT
--------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL DETAILS - Products/Completed Operations (Broad Form)
- Personal Injury
- Occurrence Property Damage
- Broad Form Vendors as Additional Insureds
- Additional Insureds: Lessors of premises, Lessors of Leased Equipment
- Employees as Insureds
- Employer's Liability
- Blanket Contractual
- Broad Form Property Damage
- Non-Owned Aircraft
- Host Liquor Liability
- Incidental Malpractice
- Intentional Acts coverage for BI resulting from reasonable force to protect persons or property
- Non-Owned Watercraft under 16 meters
- SEF #96 Contractual Liability
- SEF #99 Excluding Long Term Leased Vehicles
- SEF #94 Legal Liability for Damage to Non-owned Vehicles ($50,000 All Perils)
- 90 Days Notice of Cancellation
- Cross Liability
- Coverage applies anywhere in the world (Employer's Liability: Canada Only)
- Newly operated or acquired companies
--------------------------------------------------------------------------------------------------------------------------------
3
Schedules Revised October 21, 2003
--------------------------------------------------------------------------------------------------------------------------------
- PI and BI to employees coverage for officers and supervisors
- Deductible Liability Endorsement
- Non Accumulation of Limits Endorsement
- Worldwide Territory provided suits brought in Canada or the United States
- Exclusion - Professional Liability Endorsement
- Absolute Pollution Exclusion Endorsement
- Asbestos Exclusion Endorsement
- USA AI/PI Provision Endorsement
- Liability Endorsement - War or Terrorism Exclusion
- International Commercial General Liability
- DIC/DIL -Primary CGL for U.K. based subsidiaries of Perle Systems Limited, place in the U.K.
--------------------------------------------------------------------------------------------------------------------------------
MAJOR EXCLUSIONS - Pollution (except "hostile fire")
- Workers' Compensation
- Nuclear
- Asbestos
- War or Terrorism
- Exclusion-Professional Liability
- Intellectual Property Exclusion
Millenium Date Change Total Exclusion
--------------------------------------------------------------------------------------------------------------------------------
3. UMBRELLA POLICY
--------------------------------------------------------------------------------------------------------------------------------
CHUBB INSURANCE COMPANY OF CANADA
--------------------------------------------------------------------------------------------------------------------------------
NAME INSURED Perle Systems Limited - Policy Number 79218499
--------------------------------------------------------------------------------------------------------------------------------
PERIOD OF From: June 15,2003 to June 15,2004
INSURANCE
--------------------------------------------------------------------------------------------------------------------------------
DETAILS OF COVERAGE 1 - UMBRELLA LIABILITY
COVERAGE
Limits of Liability: (including Sublimits, Aggregates)
CDN$ 15,000,000 LIMIT OF LIABILITY
Excess of Underlying policies
--------------------------------------------------------------------------------------------------------------------------------
DEDICTIBLES Self Insured Retension: NIL
--------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL UNDERLYING POLICIES
DETAILS
- Coverage: Commercial General Liability incl. Personal and Advertising Injury Products Completed
--------------------------------------------------------------------------------------------------------------------------------
4
Schedules Revised October 21, 2003
--------------------------------------------------------------------------------------------------------------------------------
Operations, Blanket Contractual, Non-owned Automobile, Employee Benefits, Employers Liability,
Tenants Legal Liability, including International Commercial General Liability
SUBJECT TO:
- SEF No. 7 Standard Excess Automobile Policy
- Care, Custody or Control Exclusions - Personal Property
- Foreign Exclusion Coverage
- 90 Days Cancellation Notice
- Defense Provision Endorsement
- Electronic Errors & Omissions Exclusion
- Non Accumulation of limits Endorsement - Coverage A and B
- Duties in the Even of Occurrence, Claim or Suit Condition
- USA Provision
- Extended Reporting Period Endorsement
--------------------------------------------------------------------------------------------------------------------------------
MAJOR - Pollution
EXCLUSIONS
- Workers' Compensation
- Nuclear
- Professional Liability Errors & Omissions
- Intellectual Property Exclusion
--------------------------------------------------------------------------------------------------------------------------------
TERMS AND - 90 DAYS' CANCELLATION NOTICE
CONDITIONS
- DIC/DIL Primary Umbrella Liability policy place in U.K. for U.K. subsidiaries of Perle Systems
Limited
--------------------------------------------------------------------------------------------------------------------------------
4. MARINE CARGO/TRANSIT
--------------------------------------------------------------------------------------------------------------------------------
COMPANY ZURICH INSURANCE COMPANY
--------------------------------------------------------------------------------------------------------------------------------
NAME INSURED Perle Systems Limited - Policy 8557549
--------------------------------------------------------------------------------------------------------------------------------
PERIOD OF From: June 15,2003 to June 15,2004
INSURANCE
--------------------------------------------------------------------------------------------------------------------------------
DETAILS OF COVERAGE 1 - MARINE
COVERAGE
Limits of Liability:)
CDN$ 5,000,000 LIMIT OF LIABILITY
Any one vessel, aircraft, railcar, truck, common carrier, courier or any
one connecting conveyance
--------------------------------------------------------------------------------------------------------------------------------
DEDUCTIBLES CDN$ 5,000 Any one shipment (excepting Total Loss, General Average, etc., which is
payable in full
--------------------------------------------------------------------------------------------------------------------------------
5
Schedules Revised October 21, 2003
--------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL SHIPPING AREAS:
DETAILS
- Worldwide
INSURING CONDITIONS:
- To insure all goods during transit from seller's inland warehouse, during overseas transit until
delivered into buyer's inland warehouse, against "All Risks" of physical loss or damage
WAR & STRIKES:
- The risks of physical loss or damage CAUSED BY WAR, STRIKES, RIOTS AN CIVIL COMMOTIONS TO BE
INCLUDED AS PER THE INSTITUTE CLAUSES
--------------------------------------------------------------------------------------------------------------------------------
VALUATION A) IMPORTED RAW MATERIALS:
CLAUSES Merchandise to be valued at amount of manufacturer's commercial invoice, including all charges
included in the invoice, and including prepared and/or advanced freight payable; plus 10% added
thereto.
Duty declared and insured separated at the actual amount payable.
B) SOLD PRODUCTS:
Selling Price Foreign currencies of invoices to be converted into Canadian Currency at Bankers'
sight rate exchange in Toronto on date of receipt of invoice
--------------------------------------------------------------------------------------------------------------------------------
INSURING - Institute Cargo Clauses (A) 1/1/82
CONDITIONS
- Institute Cargo Clauses (Air) (excluding sendings by Post) 1/1/82
- Institute War Clauses (Air Cargo) (excluding sendings by Post) 1/1/82
- Institute Strikes Clauses (Cargo) 1/1/82
- Institute Strikes Clauses (Air Cargo) 1/1/82
- Institute Classification Clause 01/01/01
- Excluding Electrical and Mechanical Derangement unless caused by an insured peril
- Excluding the cost of recalibration unless caused by an insured peril
- Coverage extended to cover loading and unloading
Termination of Transit Clause (Terrorism)
5. MOTOR POLICY
Perle Systems Europe Limited, Chase Research Limited and Specialix International
Limited and or subsidiary companies.
Insurer: Summit Insurance
Policy No: FCMN0811975
Period: 1st December 2002 - December 1, 2003
Cover: Comprehensive
Insured Vehicles: Any Private Type Motor Car the property of or Hired, Lent
or Leased to the Insured
Limitation of Use: Social Domestic and Pleasure
Excess: AD, Fire, Theft Windscreen, Rings, Coats and Personal
Effects
6
Schedules Revised October 21, 2003
6. DIRECTORS & OFFICERS LIABILITY POLICY
American Home Assurance Company
Term: December 10, 2002 to December 10, 2003
Limit of liability: $1,000,000
$100,000 - Retention applicable to Oppressive Conduct Claims, Employees
Practice claims, Canadian Pollution claims, all other claims, except
$250,000 - Retention applicable to Securities claims
7. KEYMAN LIFE INSURANCE
The Canada Life Assurance Company - Life Insurance Policy
Policy Numbers:
05121880 - ▇▇▇ ▇▇▇▇▇ - Coverage 2,000,000
3464344 - ▇▇▇▇ ▇▇▇▇▇▇ - Coverage 1,000,000
05794913 - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Coverage 500,000
Owner and Beneficiary: Perle Systems Limited
Term: June 1999 to June 2009 - 10-year term
8. TRADE CREDIT INSURANCE
A) EULER AMERICAN CREDIT INDEMNITY
Policy Number: 3750720
Term: December 1, 2002 - December 1, 2003
PENDING CLAIMS
a) China National Railway ("CS&S"). Approximately US$133,000
B) GNCM INTERNATIONAL (UNITED KINGDOM)
Policy number: 30878
Insurance terminated: August 31, 2001
a) Logitek Distribution Limited - GBP158,493.65
b) Sinosoft Company Limited - US$39,570.00
c) Open Technologies Inc. - US$32,710.27
7
Schedules Revised October 21, 2003
SCHEDULE 3.1.30
LITIGATION
Litigation
1. Italy: Employment law claim with former employee, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
Settlement offered at E6500.
2. USA: Gaedecke Holdings: Nashville, Tennessee landlord. Papers filed for
non- payment of rent, settlement at 18 months agreed, papers will be
withdrawn. Total exposure $48K.
3. Litigation instituted by Perle Systems GmbH to recover outstanding
amount from Dataset Computer Peripherals in the amount EUR176,290.
Threatened litigation:
4. USA: AESP Inc, formerly NCS Inc. - Former Chase Research PLC supplier,
litigation threatened for payment of $38K in respect of non take up of
component part production run.
9
Schedules Revised October 21, 2003
SCHEDULE 3.1.32
MATERIAL CONTRACTS
ASIA
C S & S
55 Xueyuan South Road
Hiaden Diist In Beijing
▇▇▇▇▇ ▇▇▇▇▇
Cayee Computer Limited
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇
Beijing Mudan Pentium
Rm 1627 Haitan Building
No. 229 Beisihuan
Hai ▇▇▇▇ District
Beijing, P.R. China
Inter Solution Marketing Co.
Exos, Ebis ▇▇▇▇ ▇▇, ▇-▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇
150-0013 Japan
USA
Express Systems Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ #▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Micro
▇▇▇▇ ▇. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
10
Schedules Revised October 21, 2003
Tech Data
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EMEA
Open Computing Ltd
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Sphinx CTS
▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, LS 12 6HH
England
Risc Technology
Parc Des Barbabbiers
▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Strhold SPA
▇▇▇ ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ GmbH & Co.
Schlachte 39/40
Bremen
D28195 Germany
Frame
▇▇ ▇▇▇▇▇▇ ▇▇ ▇'▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇
11
Schedules Revised October 21, 2003
Active Solutions SAS
Di ▇▇▇▇▇ ▇'▇▇▇▇▇▇ & C
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇
Ipvista
Service Des Achats
▇▇-▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Logistics Contracts
Tomauri Inc.
▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Supplier Contracts
Connor Solutions
▇▇▇▇▇▇▇ Road
Rainton Bridge
5 Businee Park, Houghtonle Spring
Tyne & Wear
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
IDSM Electronics Sdn. Bhd.
▇▇ ▇▇ &▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Ulu Tiram
Singapore
12
Schedules Revised October 21, 2003
SCHEDULE 6.1.3
MANAGEMENT AGREEMENTS
BSI MANAGEMENT SYSTEMS COMPANY
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇
-Agreement for - ISO audits / consultation
MANDUKWE
c/o HO Financial
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
- ▇▇▇▇▇ ▇▇▇▇▇ - financial consulting services
COTTONWOOD COMPUTER CONSULTANTS
St. Malo, Manitoba
- ▇▇▇▇ ▇▇▇▇▇▇▇▇ - computer consulting services
13
Schedules Revised October 21, 2003
SCHEDULE 6.1.8
EMPLOYMENT CONTRACTS
A. Refer to Severance Contracts letters (copies forwarded) for the
following employees:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
New Contracts
To be negotiated
B. Benefit Plans Under Perle
CANADA
The Canada Life Assurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Group Insurance Life and Health Plan for all employees in Canada
Premium depends on number of employees
Policy No. GH 28965 Division: 0000
The Provident Life and Accident Insurance Company
Toronto, Ontario
Group Long-term Disability Plan
Premium changes depending on number of employees)
Policy ▇▇. ▇▇▇▇▇▇▇
▇▇▇
Coverage for all employees in USA
Group Life & Health Insurance for employees
BlueCross BlueShield of Illinois (See policy attached)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
PPO Plan outside Illinois
Policy Number: P71691
16
Schedules Revised October 21, 2003
Premium depends on number on employees and if family or single coverage
required.
Group Life Insurance, Long-term and Short-term Disability Plan
The Guardian Life Insurance Company of America
Policy number. G- 343442 -F-02
Premium based on number of employees of the company
401 (K) for employees in USA
Benefits Street
Premium plus monthly costs varies depending on maintenance required.
For Specialix Inc. US Employees Only
Pan America Retirement and Investment Services
- Pension Plan
- No one on plan - closing plan
EUROPE
Specialix Plc
Specialix Plc 1994 Pension Plan Scheme - Broker: Jardine ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Dormant scheme for former employees. In the process of canceling.
Perle Systems Europe Limited
UK Employees Pension Scheme- Broker: Norwich Union
Group personal pension - non-contributory plan, individual policies held by
employees
Group Health Plan
AXA Healthcare
Administered by Healthwise, Hampshire, UK
Policy No. 80925
17