SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[ x ] Quarterly report under Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the quarterly period ended 31 March 1999
[ ] Transition report under Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the transition period from _________________ to _____________________
Commission file number: 000-22329
POWERTRADER, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 98-0163116
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
885 Dunsmuir Street, Suite 591 V6C 1N5
(Address of Principal Executive Offices)
(604) 685-1529
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of The Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes No X
----- -----
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Class Number of Shares Outstanding
----- ----------------------------
Common Stock, par value $0.01 22,283,115
Transitional Small Business Disclosure Format (check one):
Yes No X
------ -----
<PAGE>
POWERTRADER, INC.
QUARTERLY REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE QUARTER ENDED
March 31, 1999
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheet as of March 31, 1999
Unaudited Consolidated Interim Statement of Loss and Deficit for
the Nine months and Three ended March 31, 1999 and March 31,
1998
Unaudited Consolidated Interim Statement of Cash Flow for the
Nine months and Three months ended March 31, 1999 and 1998
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE PAGE
EXHIBIT INDEX
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
POWERTRADER, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
March 31, 1999
(Expressed in U.S. Dollars)
March 31, 1999 June 30, 1998
-------------- -------------
Assets
Current Assets:
Cash $ 50,955 $ 6,000
Due from related party 205,050 --
--------- -----------
Total current assets $ 256,005 $ 6,000
Fixed assets $ 85,448 $ 464,182
--------- -----------
Total assets $ 341,452 $ 470,182
Liabilities:
Current Liabilities:
Accounts payable and accrued
liabilities $ --- $ 507,352
Notes payable --- 15,000
Current portion of capital lease
obligations --- 2,657
--------- -----------
Total current liabilities $ --- $ 525,009
Due to related party. $ 426,208 --
---------- -----------
Total liabilities $ 426,208 $ 525,009
Shareholders' equity (Deficit)
Share capital $ 1,129,030 $ 992,530
Capital surplus 2,249,193 2,245,693
Accumulated deficit during
development stage (3,462,979) (3,293,050)
----------- ----------
Total shareholder equity (84,756) $ (54,827)
Total liabilities and
shareholder equity $ 341,452 $ 470,812
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENT
OF LOSS AND DEFICIT
For the Nine Months and Three Months ended March 31, 1999 and 1998
(Expressed in U.S. Dollars)
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 141,069 $ 40,852 $ 54,112 $ 20,503
Cost of sales 22,715 16,461 5,330 --
----------- ---------- ----------- ----------
$ 118,354 $ 24,391 $ 48,781 $ 20,503
Selling, general and
administrative costs $ 361,758 $ 642,653 $ 121,357 $ 180,639
Gain on sale of
Subsidiary (110,077) -- (110,077) --
Development costs 36,602 235,339 13,757 43,050
---------- --------- ----------- ----------
Net loss $ (169,929) $ (853,601) $ 23,745 $ (203,186)
Deficit beginning of
period $(3,293,050) $(1,953,330) $(3,486,723) $(2,603,745)
Deficit end of period (3,462,979) $(2,806,931) $(3,462,979) $(2,806,931)
Loss per share $ (0.01) $ (0.11) $ 0.00 $ (0.03)
Weighted average
shares of outstanding
common stock and
equivalent 15,313,115 7,908,948 16,090,893 8,016,448
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED INTERIM
STATEMENT OF CASH FLOW For the
Nine and Three months ended March 31, 1999 and 1998
(Expressed in U.S. Dollars)
Nine months Nine months Three months Three months
ended ended ended ended
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
----------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Cash provided (used) by
Operating Activities
Net loss for period $ (169,929) $ (853,601) $ 23,745 $ (203,186)
Items not involving cash
Amortization $ 152,857 $ 79,440 $ 79,780 $ 7,184
Gain on sale of subsidiary (110,077) -- (110,077) --
Increase (decrease) in:
Deposits and prepaids -- (19,866) -- 30,910
Accounts receivable -- (18,574) -- (11,008)
Accounts payable and
accrued liabilities (378,592) (47,434) (134,756) 50,041
Due from related party (205,050) -- (205,050) --
Due to related party 426,208 -- 78,756 --
----------- ---------- ---------- -----------
$ (284,583) $ (860,035) $ (267,602) $ (126,059)
Financing activities
Note payable financing
repaid (14,768) (74,248) -- --
Lease financing received -- -- -- --
Repayment of obligations
under capital lease (744) (5,035) -- (1,358)
Issuance of share capital
and subscription 140,000 875,385 -- 71,025
$ 124,488 $ 796,102 $ -- $ 69, 667
----------- ----------- --------- ----------
Investing activities
Investment in fixed assets -- (28,652) -- --
Proceeds on sale of
PowerTrader Software
Inc. 205,050 -- 205,050 --
----------- ---------- ---------- ----------
$ 205,050 $ (28,652) $ 205,050 $ --
Increase (decrease) in cash $ 44,955 $ (92,585) $ (62,552) $ (56,392)
Cash, beginning of period 6,000 99,986 113,507 63,793
Cash, end of period 50,955 7,401 50,955 7,401
</TABLE>
<PAGE>
POWERTRADER, INC.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
March 31, 1999
NOTE A: The accompanying unaudited consolidated financial statements of
PowerTrader, Inc. and its wholly-owned subsidiary PowerTrader
Software Inc., as of and for the three months and nine months ended
March 31, 1999 and March 31, 1998 have been prepared in accordance
with the rules and regulations of the Securities and Exchange
Commission and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. PowerTrader, Inc accounts are included in
these financial statements from January 2, 1997, the date it was
acquired by PowerTrader Software Inc.
In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of the interim periods have
been included. Operating results for any interim period are not
necessarily indicative of the results that may be expected for the
entire fiscal year. These statements should be read in conjunction
with the financial statements and notes thereto for the year ended
June 30, 1998 included in the Company's report in Form 10KSB as
filed with the Securities and Exchange Commission.
NOTE B: PowerTrader, Inc. (the "Company") designs, develops, markets and
supports informational and analytical dealing decision support
systems.
NOTE C: The Company records revenue from the sale of computer software upon
shipment.
NOTE D: Exchange Rates
Exchange Rates between the United States dollar and the Canadian
dollar for the period reported in these financial statements are as
follows:
1999 1998
---- ----
Average 1.5175 1.4304
As of March 31, 1999 1.5092 1.4163
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended and Section 27A
of the Securities Act of 1933, as amended. For this purpose, any statements
contained herein that are not statements of historical fact may be deemed
forward-looking statements. Without limiting the foregoing, the words
"believes", "anticipates", "plans", "expects" and similar expressions are
intended to identify forward-looking statements. Readers are cautioned not to
place undue reliance on forward-looking statements, which speak only as of the
date hereof. The Company undertakes no obligation to publicly release the
results of any revisions to these forward-looking statements which may be made
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. These forward-looking statements should be
read in conjunction with the Company's disclosures under the heading "Cautionary
Statements - Additional Important Factors to be Considered" in Exhibit 99.1 to
the Company's Form 10-KSB for the fiscal year ended June 30, 1998.
The following should be read in conjunction with the Financial
Statements and Notes thereto. Unless otherwise indicated, all dollar values are
expressed in U.S. Dollars.
Overview
PowerTrader, Inc. (the "Company"), through its subsidiary PowerTrader
Software Inc., was engaged in the design, development, marketing and support of
informational and analytical decision support systems for securities brokerage
firms, investment advisers, trust companies and individual investors. Revenues
until September 30, 1998 resulted from the distribution of Beta products.
Product development work continued during fiscal 1998; however, the Company
remains a development stage company.
To generate revenue, the Company explored other business opportunities
to either supplement or replace the Company's business and products. During the
third and fourth quarters of fiscal 1998, the Company devoted significant
resources to assess the possibility of developing and marketing a financial
Internet web site integrated and interactive with a traditional television
broadcast (the "Joint Venture") and the possibility of combining the Company's
web site technology with the information and print medium provided by a New
York-based print financial magazine (the "Combination").
The Joint Venture and the Combination never materialized and all
discussions had ended by the first quarter of fiscal 1999. During the first
quarter of fiscal 1999, the Company continued to suffer from an inability to
generate significant levels of revenue due, in part, to the allocation of
significant resources to the Joint Venture and Combination. In addition, the
Company had defaulted on a note payable to a creditor of the Company, which note
was secured by the Company's DataMill Software. As a result of the default, the
creditor took possession of DataMill, a significant asset of the Company. For
these reasons, the Company had begun to actively explore alternate methods of
raising capital for operations, including the merger with a financially stable
complimentary business, issuance of debt or equity or attracting venture
capital. Alternatively, management began reviewing the possibility of a sale of
all the assets of the Company or placing the Company into bankruptcy (see
"Liquidity and Capital Resources").
The Company elected to raise funds to satisfy its immediate cash needs
and protect its significant assets, including DataMill. The Company by
identifying and joining with a financially stable entity as an investor to
assist in the funding of operations. To effect this strategy, on October 16,
1998 the Company issued 14,000,000 shares of its Common Stock, at $0.01 per
share, to Financial Models Company Inc. ("FMC") in exchange for $140,000 cash.
On closing FMC advanced the further sum of Cdn$252,000 (approximately $172,000
U.S.) to the Company to allow it to discharge the promissory note, secured by a
General Security Agreement and Software Security Agreement, held by West Coast
Title Search Limited, and obtain clear title to the DataMill software. FMC
advanced the further sum of $100,000 to allow the Company to retire outstanding
accounts owed to 458468 B.C. Ltd. for consulting and other services provided to
the Company by Michael C. Withrow. Mr. Withrow and 458468 surrendered to the
Company certain stock options granted pursuant to the consulting agreement.
During the third quarter of fiscal 1999, FMC has advanced the further sum of
$152,708 to retire outstanding debts and provide working capital.
Subsequent to the acquisition of control of the Company by FMC, and as
a result of FMC's software development requirements, the Company's, commencing
in the second fiscal quarter, was shifted to the provision of professional
services for the design and development of enhancements to the DataMill software
under FMC's DataMill license.
As part of the continued restructuring efforts of the Company, on
February 28, 1999 the Company executed a Purchase Agreement whereby it agreed to
sell all its shares in its wholly owned subsidiary PSI to FMC. The completion of
the transaction is conditioned upon the Company obtaining a rectification order
from the Supreme Court of British Columbia to correct certain deficiencies
required under relevant B.C. legislation, as had been revealed from a review of
the corporate records of the subsidiary. Upon obtaining the order FMC will pay
to the Company the sum of Cdn$300,000 to complete the sale. Additionally, FMC
agreed to grant to the Company all right, title and interest to the source code
for the version of DataMill containing all enhancements developed for FMC under
its source code license and to provide to the Company a prototype of DataMill
ready for Beta testing as a commercial product by December 31, 1999. Upon
completion of such prototype, the Company has agreed to enter into an
arrangement granting to FMC certain marketing rights to DataMill and to provide
future upgrades of DataMill to FMC for its use in accordance with FMC's license.
Effective March 1, 1999 the operations and expenses of PSI were assumed
by FMC and all revenues and expenses for the continued operation of the
subsidiary became the responsibility of FMC.
Because of the Company's limited operating history, the Company's
results of operations to date are not necessarily indicative of future operating
results. Moreover, the Company believes that its developmental operations to
date render traditional accounting presentations meaningless.
Results of Operations
Sales
Sales increased by $33,609 for the three months ended 31 March 1999 and
by $100,217 for the nine months ended 31 March 1999 from the same respective
periods in 1998. The increase is predominantly due to the continuing contracting
by FMC of PSI's development personnel to effect certain changes and enhancements
to FMC's source code license for the Company's DataMill software. Such
development revenues have ceased effective March 1, 1999 as a result of the
acquisition by FMC of PSI from the Company. No revenues have been achieved from
the sales of any of the Company's other software products.
Cost of Sales
Cost of sales increased by $5,330 in the three month period ended March
31, 1999 over the same period in 1998. Similarly the Cost of Sales increased by
$6,254 for the nine month period ended March 31, 1999 compared to the same
period ending March 31, 1998. The increased Cost of Sales is due mainly to the
reinstatement of a data supply agreement which had previously lapsed for
non-payment of accounts. Such data is required for use in the continuing
research and development work on the Company's software.
Selling, General and Administrative Costs
Selling, General and Administrative ("SGA") Costs decreased from
$642,563 to $361,758 for the nine months ended March 31, 1998 and 1999,
respectively. Similarly, SGA Costs decreased from $180,639 to $121,357 for the
three months ended March 31, 1998 and 1999 respectively. The decrease reflects
staff reductions existing at the time of FMC's acquisition of the controlling
interest in the Company and is consistent with the new hirings made to
facilitate the ongoing efforts to reorganize the Company. SGA Costs include
salary and benefits for personnel as well as rent expenses for the Company's
office premises. Effective March 1, 1999, as the result of the acquisition of
PSI by FMC, the SGA Costs will decrease substantially as salaries and operating
expenses are now borne by FMC.
Gain on Sale
On February 28, 1999 the Company sold all the shares of PSI, its fully
owned subsidiary, to Financial Models Company Inc. This transaction resulted in
a gain to the Company of $110,077 over the book value of PSI at the time of
sale.
Development Costs
Development Costs decreased from $235,339 to $235,339 for the nine
months ended March 31, 1998 and 1999 respectively. Similarly, development costs
decreased from $43,050 to $13,757 for the three months ended March 31, 1998 and
1999 respectively. The decrease represents the reduction in wages and associated
costs assumed by FMC with the sale of PSI to FMC on February 28, 1999. As a
result of that sale it is anticipated that future development costs will relate
primarily to wages and benefits of personnel contracted from FMC to perform
further research and development on the Company's software.
Net Loss
As a result of the foregoing, the Company experienced a net gain of
$23,745 for the quarter ending 31 March, 1999. This gain results from the sale
of the Company's subsidiary PSI rather than reflecting an increase in sales
revenue. Consequently, cumulative losses for the nine months ended March 31,
1999 were $169,929, a decrease from $853,601 over the similar nine months ending
March 31, 1998. Such losses may be offset in part by the use of net loss tax
carry forwards in future years. The Company believes that additional research
and development expense and additional personnel expense will be necessary to
reorganize and attempt to establish a competitive and market position and build
the organizational infrastructure required to implement the Company's future
growth strategy. Such losses will likely have a negative impact on the Company's
results of operation, particularly if sales of the Company's current products
fail to materialize.
Liquidity and Capital Resources
The principal source of funds to the Company and PSI since their
respective formation has been derived from the net proceeds of certain private
offerings of securities which, together with the proceeds of sales, have been
used to fund continued research and development expenses as well as necessary
SGA costs. The Company's principal source of funds currently is those received
from FMC. The Company believes that provided FMC continues to provide cash for
payment of outstanding liabilities and to meet current operating requirements,
its current cash position will be sufficient to fund its continued operations
and planned capital expenditures for the next twelve months. However, FMC is not
committed or otherwise obligated to provide such financing. The failure of FMC
to continue to supply funds or the inability of the Company to obtain additional
financing on acceptable terms will have a material adverse effect on the
Company's business, financial condition and results of operations. Monies
advanced by FMC are secured by a debenture convertible at FMC's option to shares
of Common Stock at a price of $0.01US per share, on the basis of one share for
each $0.01U.S. of monies received by the company. If the conversion is exercised
by FMC or if additional funds are raised by the issuance of equity securities
further dilution to existing stockholders could result. Financing from a lender
will cause the Company to incur additional debt. In view of the Company's
limited success in marketing its Beta products and its reliance on the continued
funding by FMC, there can be no assurance that the Company will not require
additional financing prior to the collection of revenue from sales in order to
fund its operations from this point and in the future.
The Company's limited capital resources have caused the Company's
independent accountants to issue a report which indicates that substantial doubt
exists as to the Company's ability to continue as a going concern.
Income Taxes
The Company did not have any material current or deferred income tax
liabilities at June 30, 1998, 1997 and 1996. However, the Company did have
available tax benefits of loss carry-forwards for 1998 totalling $3,293,050,
including a total in 1997 of $1,953,330. The Company did not record these tax
benefits in the Financial Statements because the Company believes that it is
more likely than not that the tax benefits would not be realized. Accordingly
the tax benefits have been reduced by a valuation allowance of $1,368,000 in
1998 and $899,300 in 1997.
Year 2000 Readiness Disclosure
Many existing information systems may not be capable of accurately
processing dates which include the Year 2000 or any subsequent year ("Year 2000
Issue"). Based on internal assessment of the Company's current information
systems and in view of the fact that the Company has discontinued any product
offerings and is solely engaged in the provision of professional development
services to other parties, the Company believes that its current information
systems and third party supplied data and services will be capable of accurately
processing such dates. For this reason the Company does not expect to require
the expenditure of significant funds or resources to address the Year 2000 Issue
nor for such Issue to materially affect the Company's future financial results.
However, the Company will continue to fully consider all issues related to the
Year 2000.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 6. Exhibit and Reports on Form 8-K
(a) See Exhibit Index
(b) No reports on Form 8-K were filed with the Commission during
the third quarter of fiscal 1999.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
POWERTRADER, INC.
Dated: March 22 , 2000 By: /s/ Stamos D. Katotakis
----- ----------------------------------
Stamos D. Katotakis
President, Chief Executive
Officer and Principal Financial
Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.1 Bill of Sale between PowerTrader Software Inc.
and PowerTrader, Inc. dated as of February 28, 1999
10.2 Agreement between PowerTrader Software Inc. and
PowerTrader, Inc. dated as of February 28, 1999 with
respect to the transfer of intellectual property.
10.3 Purchase Agreement between PowerTrader, Inc. and
Financial Models Company Inc. dated as of
February 28, 1999.
27.1 Financial Data Schedule
BILL OF SALE AND ASSIGNMENT
FOR VALUE RECEIVED, PowerTrader Software Inc., a corporation
incorporated pursuant to the laws of the Province of British Columbia
("Seller"), to PowerTrader, Inc., a Delaware corporation and parent of Seller
("Buyer"), the receipt and sufficiency of which consideration is hereby
acknowledged, Seller by these presents does hereby convey, grant, bargain, sell,
transfer, set over, assign, deliver and confirm unto Buyer and its successors
and assigns, forever, all of Seller's right, title and interest in and to the
assets set forth Exhibit A attached hereto (the "Assets");
TO HAVE AND TO HOLD the same unto Buyer and its successors and assigns
forever. Seller hereby covenants and agrees, from time to time as reasonably
requested by Buyer, its successors and assigns, that Seller will do, execute,
acknowledge and deliver such documents and instruments and take such further
actions as may be reasonably proper and necessary with respect to the conveying,
transferring and assigning of the Assets to Buyer and to carry out the intent of
the Agreement, and to vest in Buyer the entire right, title and interest of
Seller in and to all of the Assets, subject to the terms of the Agreement.
Seller hereby warrants that: (i) Seller is the owner of the Assets and
has full right and title thereto and authority to convey the same; (ii) the
Assets are free and clear of all liens and encumbrances; and (iii) Seller will
WARRANT AND DEFEND Buyer's title to the Assets against the lawful claims of all
persons.
This Bill of Sale shall be governed by and construed in accordance with
the internal substantive laws of the State of Delaware.
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be
executed as of the ______ day of February 1999.
PowerTrader Software Inc.
By:
---------------------------------
<PAGE>
EXHIBIT "A"
1. All right, title and interest in and to the following software
components:
o PowerTrader Pro-Vision
o PowerTrader Analyst
o Server
o Data Manager
o Formula One
o Financial Wire Internet Software
2. All right, title and interest in and to the following tradenames and
registration thereof
o PowerTrader
o PowerTrader Analyst
THIS AGREEMENT made in duplicate this 28th day of February, 1998 ("Effective
Date")
B E T W E E N:
POWERTRADER SOFTWARE INC.
a corporation incorporated pursuant to the
laws of the Province of British Columbia
(hereinafter "PSI")
- and -
POWERTRADER, INC.
a corporation incorporated under the laws of
the State of Delaware, USA
(hereinafter the "PTI")
WHEREAS PSI is the owner of all right, title and interest in (i) in certain
computer application programs, associated information processing technology,
databases, procedures and data files (the "Software") and (ii) certain
intellectual property rights, all as identified in Exhibit A, and know-how
relating to the aforesaid; and
WHEREAS PSI is willing to transfer, assign, grant, convey and sell to PTI, and
PTI is willing to purchase and acquire, all such right, title and interest in
and to the Software and intellectual property, subject to the terms and
conditions of this Agreement;
NOW THEREFORE WITNESSETH that in consideration of the mutual covenants and
conditions contained herein, and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement, unless the context demands otherwise, the following terms
shall be as defined below:
1.01 "Affiliate or Affiliates" shall mean any corporation, firm,
partnership, or other entity, whether de jure or de facto, that directly or
indirectly owns, is owned by, or is under common ownership with a party to this
Agreement to the extent of at least 50 percent of the equity having the power to
vote on or direct the affairs of the entity and any person, firm, partnership,
corporation, or other entity actually controlled by, controlling, or under
common control with a party to this Agreement.
1.02 "Agreement" means this agreement, and all schedules attached to
this Agreement, in each case as they may be amended or supplemented from time to
time. Unless otherwise indicated, references to Articles and Sections are to
Articles and Sections of this Agreement.
1.03 "Effective Date" is February 28, 1998, as is defined immediately
prior to the Recitals at the beginning of this Agreement.
1.04 "Enhanced Software Property" means any information, invention,
idea, know-how, concept, improvement, design modification or development,
enhancement or other use or application of or in respect of the Software
(whether or not capable of intellectual property protection) discovered,
developed, made or acquired as a result of scientific, research and development
or other activities undertaken in accordance with terms and conditions of this
Agreement.
1.05 "Intellectual Property" means all copyright, trade name, trademark
and similar proprietary property rights and includes, without limitation,
application in the United States Patent and Trademark Office for registration of
the mark "PowerTrader Analyst" and registration with the Canadian Trademarks
Office of the trademark "PowerTrader.
1.06 "Know-How" shall mean any and all technical information presently
available or generated during the terms of this Agreement that relates to
Software and useful for the development, manufacture or effectiveness of
Software.
1.07 "Purchaser" means PowerTrader, Inc.. and its Affiliates.
1.08 "Reverse Engineering" means improvements, modifications or
derivatives of the Software.
1.09 "Software" means all rights to and interest in the computer
application programs, associated information processing technology, database,
procedures and data files comprising, without limitation, PowerTrader Analyst,
PowerTrader Pro, Investors On-Line, the QuoteDesk, DataManager, Server,
Financial Wire provided by PSI all as listed in Exhibit "A" to this Agreement.
1.10 "Third Party or Third Parties" means any entity other than a party
to this Agreement or an Affiliate.
ARTICLE 2
SALE OF THE SOFTWARE
2.1 PSI hereby transfers, grants, conveys, assigns and relinquishes to
PTI all of PSI's right, title and interest in and to both the tangible and the
intangible property constituting the Software and Intellectual Property and all
other proprietary rights attaching thereto, in perpetuity, including the
following corporeal and incorporeal incidents to Software:
(i) all right, title, interest and benefit of PSI and all
privileges of PSI in, to and under all technical data, drawings,
prototypes, engineering files, system documentation, flow charts, and
design specifications acquired or developed by PSI in connection with
the development of the programming, inventions, processes and apparti
entailed by Software.
(ii) all right, title, interest and benefit (including to make,
use or sell under patent law; and to use and disclose under trade
secret law) of PSI in and to all Canadian and foreign patents and
patent applications, patent licence rights, trade names (including in
the case of trademarks, service marks and trade names, all goodwill
appertaining thereto), copyrights, technological licences, Know-How,
confidential information, shop rights, and all other intellectual
property rights owned or claimed by PSI embodied in Software and
Intellectual Property.
(iii) all right, title, interest and benefit of PSI in, to and
under all agreements, contracts, licences and lease entered into by
PSI, or having PSI as a beneficiary, pertaining to Software,
including, without limitation, PSI's rights, if any, as a licensee of
Third Party software
2.2 To effectuate the terms of this Section 2, PSI hereby names and
irrevocably constitutes and appoints PTI, with the full power of substitution
therein, as PSI's true and lawful attorney-in-fact to exercise the rights
assigned hereby.
2.3 PTI shall have the right to (i) copy and distribute to the public,
(ii) prepare derivative programs; (iii) make a public performance of the
Software and (iv) publicly display the Software.
ARTICLE 3
COMPENSATION
3.1 The consideration for the transfer and conveyance of the Software
and the Intellectual Property to PTI shall be:
(i) the payment to PSI of the sum of One ($1.00) Dollar U.S.; and
(ii) for a period of five (5) years from the Effective Date the
commitment to contract exclusively with PSI, or any successor
corporation thereto, howsoever formed, for all future development or
enhancement of Software, related and successor technology (whether or
not foreseen at the time hereof), and such other areas or items as the
parties may agree to from time to time, including both basic or
experimental research and product-specific research (whether relating
to new product development or the improvement, adaptation, enhancement
or modification of existing products, the development of prototypes, as
well as process technology) which PTI undertakes to make part of the
Software research and development.
3.2 Notwithstanding the foregoing, during the currency of this
Agreement, in the event that PTI determines, acting reasonably, that PSI, or any
successor corporation thereto, is unable to effect the development or
enhancement of Software requested by PTI, PTI shall have the right to contract
with a third party for such development or enhancement as required.
ARTICLE 4
WARRANTIES
4.1 PSI represents and warrants that PTI shall receive, pursuant to
this Agreement, as of the Effective Date, complete and exclusive right, title
and interest in and to all tangible and intangible property rights existing in
Software and Intellectual Property. PSI represents and warrants that it has
developed Software entirely through its own efforts for its own account and that
Software is free and clear of all liens, claims, encumbrances, rights or
equities whatsoever of any third party, and that the execution, delivery and
performance of this Agreement by PSI does not violate any security agreement to
which PSI is a party or by which any of PSI's assets are bound.
4.2 PSI represents and warrants that Software does not infringe any
patent, copyright, or trade secret of any third party and that, to PSI's
knowledge, there are no claims pending alleging any infringement of third party
rights and that the source code and system specifications for Software have been
maintained in confidence.
4.3 PSI represents and warrants that all personnel, including
employees, agents, consultants and contractors, who have contributed to or
participated in the conception and development of Software and Intellectual
Property, exclusive of any development of third party software, either (i) have
been party to a for-hire relationship with PSI that has accorded PSI effective
and exclusive original ownership of all tangible and intangible property thereby
arising or incorporated with respect to Software or (ii) have executed
appropriate instruments of assignment in favour of PSI as assignee that have
conveyed to PSI full, effective and exclusive ownership of all tangible and
intangible property thereby arising with respect to Software and Intellectual
Property.
4.4 PSI represents and warrants that there are no agreements or
arrangements in effect with respect to the marketing, distribution, licensing or
promotion of Software or Intellectual Property by any third party, independent
salesperson, distributor, sublicensor or other remarketer or sales organization
and that PSI has not entered into any agreement that restricts, or would
restrict, PTI's right to exploit Software and the Intellectual Property.
ARTICLE 5
CONFIDENTIALITY
5.1 The parties hereto, or any successor corporation thereto, shall
treat the Know-How, Software and all information, data, reports and other
records as secret, confidential and proprietary and shall not disclose or use
such information without the prior written consent of the non-disclosing party,
except as provided in this Agreement. The parties shall implement such
procedures as may be required to prevent the intentional or negligent disclosure
to third parties of confidential information.
5.2 Nothing in this Agreement shall prevent the disclosure by either
party or its employees of confidential information that:
(i) prior to the transmittal thereof was of general public
knowledge;
(ii) becomes, subsequent to the time of transmittal, a matter of
general public knowledge otherwise than as a consequence of a breach by
the disclosing Party of any obligation under this Agreement;
(iii) is made public by a Party;
(iv) was in the possession of a Party in documentary form prior
to the time of disclosure thereof, and is held free of any obligation
of confidence to any third party; and
(iv) is received in good faith from a third party having the
right to disclose it, who, did not obtain the same under an obligation
of secrecy with respect to such information.
ARTICLE 6
INDEMNIFICATION
6.1 PSI shall save, hold harmless and defend PTI, its directors,
officers, employees and agents from and against any and all costs, expenses,
damages and judgements or settlements entered against any of them in any action
or claim by third parties alleging infringement of any existing Software or
Intellectual Property, or misappropriation of any trade secret or other
intellectual property right with respect to the Software. PSI shall defend any
such claim or action at its own expense provided that PTI promptly notifies PSI
on learning of any such claim or action and cooperates with PSI in defending any
such claim or action. PSI's obligations hereunder shall be limited to the
reimbursement to, or indemnification of PTI for direct losses or damages imposed
upon PTI as a direct consequence of such infringement and PSI shall have no
obligations for any indirect losses incurred by PTI as a result of the
discontinuance of Software.
6.2 It is understood and agreed that PSI's indemnity shall only apply
to any claims as same relate to the source code for Software as at the Effective
Date and shall not extend to any further development work to the source code
undertaken by PTI.
ARTICLE 7
SOFTWARE PROPERTY AND PRODUCT OWNERSHIP
7.1 PSI acknowledges PTI's exclusive right, title and interest in and
to the Software and Intellectual Property and PSI shall not at any time do or
cause to be done, or fail to do or cause to be done, any act or thing, directly
or indirectly, contesting or in any way impairing PTI's right, title or interest
in the Software and Intellectual Property. Every use of any Software and
Intellectual Property on or after the Effective Date by PTI shall inure to the
benefit of PTI.
ARTICLE 8
TERM AND TERMINATION
8.1 With respect to the provisions of Section 3.1(ii):
(i) this Agreement shall remain in effect for a period of five
(5) years from the Effective Date and shall automatically be renewed
for additional one-year terms thereafter unless either Party gives
thirty (30) days written notice to the other prior to the end of the
term of its intent to terminate this Agreement or unless otherwise
terminated under the provisions of this Section 8; and
(ii) either Party shall have the right to terminate the
provisions of section 3.1(ii) at any time by giving written notice to
the party in default on the occurrence of any of the following events:
(a) a Party fails or neglects to perform covenants or
provisions of this Agreement if such default is not
corrected within ten (10) days after receiving written
notice from the other Party with respect to such default;
(b) any act, determination, filing, judgement, declaration,
notice, appointment of receiver or trustee, failure to pay
debts, or other events under any law applicable to a Party
indicating the insolvency or bankruptcy of such Party;
(c) any extraordinary governmental action, including, without
limitation, seizure or nationalisation of assets, stock, or
other property relating to a Party; or
(d) any other event that shall cause PTI to have concern about
the stability of PSI or any successor corporation to fulfil
the provisions of section 3.1(ii).
8.3 Upon termination of this Agreement PSI or its successor shall have
the right to retain any sums already paid by PTI under this Agreement, and PTI
shall pay all sums accrued that are then due for work performed in accordance
with section 3.1(ii) of this Agreement.
ARTICLE 9
MISCELLANEOUS
9.1 Force Majeure. If the performance of any part of this Agreement by
either Party, or of any obligation under this Agreement, is prevented,
restricted, interfered with, or delayed by reason of any cause beyond the
reasonable control of the Party liable to perform, unless conclusive evidence to
the contrary is provided, the Party so affected shall, on giving written notice
to the other Party, be excused from such performance to the extent of such
prevention, restriction, interference or delay, provided that the affected Party
shall use its reasonable best efforts to avoid or remove such causes of
non-performance and shall continue performance with the utmost dispatch whenever
such causes removed. When such circumstances arise, the Parties shall discuss
what, if any, modification of the terms of this Agreement may be required to
arrive at an equitable solution.
9.2 Binding Effect, Assignment, Etc. This Agreement shall be binding
upon, and shall inure to the benefit of, the Parties hereto and their permitted
assigns and successors-in-interest. Neither Party may assign any right, or
delegate any obligation hereunder without he express prior written consent of
the other, which consent shall be strictly at the discretion of such other Party
and may be contingent, if given, upon such terms and conditions as it sees fit.
9.3 Amendment. No change, modification or amendment of this Agreement
shall be valid or binding on the parties unless such change or modification
shall be in writing signed by the Party or Parties against whom the same is
sought to be enforced.
9.4 Remedies Cumulative. The remedies of the parties under this
Agreement are cumulative and shall not exclude any other remedies to which the
party may be lawfully entitled.
9.5 Notices. Any notice or other communication required or permitted to
be given by this Agreement shall be in writing and shall be effectively given
and made if (i) delivered personally; or (ii) sent by prepaid courier service;
or (iii) sent by registered mail; or (iv) sent by prepaid fax, telecopier, telex
or other similar means of electronic communications, in each case to the
applicable address set out below:
To PSI: 885 Dunsmuir Avenue, Ste. 591
Vancouver, British Columbia V6C 1N5
Attention: President/CEO
Facsimile Number: (604)
To PTI:
Any notice or other communication so given shall be deemed to have been
given and received on the day of delivery if delivered, or on the day of faxing
or sending by other means of recorded electronic communication, provided that
such day is a business day and such notice or other communication is so
delivered, faxed or sent prior to 4:30 p.m. on such day. Otherwise, such notice
or communication shall be deemed to have been given and received on the next
following business day. Any notice or other communication sent by registered
mail shall be deemed to have been given and received on the fifth business day
following the mailing thereof; provided however that no such notice or other
communication shall be mailed during any actual or apprehended disruption of
postal services. Any such notice or other communication given in any other
matter shall be deemed to have been given and received only upon actual receipt.
9.6 Further Assurances. Each Party hereby covenants and agrees that it
shall execute and deliver such deeds and other documents as may be required to
implement any of the provisions of this Agreement.
9.7 No Waiver. The failure of any Party to insist on strict performance
of a covenant hereunder or of any obligation hereunder shall not be a waiver of
such party's right to demand strict compliance therewith in the future, nor
shall the same be construed as a novation of this Agreement.
9.8 Integration. This Agreement constitutes the full and complete
agreement of the Parties.
9.9 Captions. Titles or captions of articles and paragraphs contained
in this Agreement are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
9.10 Number and Gender. Whenever required by the context, the singular
number shall include the plural, the plural number shall include the singular,
and the gender of any pronoun shall include all genders.
9.11 Counterparts. This Agreement may be executed in multiple copies,
each of which shall for all purposes constitute an Agreement, binding on the
Parties, and each Party hereby covenants and agrees to execute all duplicates or
replacement counterparts of this Agreement as may be required.
9.12 Computation of Time. Whenever the last day for the exercise of any
privilege or the discharge of any duty hereunder shall fall on a Saturday,
Sunday or any public or legal holiday, whether local or national, the person
having such privilege or duty shall have until 5:00 p.m. Eastern time on the
next succeeding business day to exercise such privilege, or to discharge such
duty.
9.13 Costs and Expenses. Unless otherwise provided in this Agreement,
each Party shall bear all fees and expenses incurred in performing its
obligations under this Agreement.
9.14 Jurisdiction. This Agreement shall be governed by, and construed
in accordance with the law of the Province of British Columbia. Any dispute
arising hereunder shall be subject to the jurisdiction of the courts of the
Province of British Columbia. The Parties hereto expressly submit to the
jurisdiction of said courts and irrevocably waive any objections to jurisdiction
or venue.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be
executed on the date hereinafter written.
POWERTRADER SOFTWARE INC. POWERTRADER, INC.
Name: Name:
------------------------ -----------------------------------
Title: Title:
----------------------- -----------------------------------
Signature: Signature:
------------------- ------------------------------
Date: Date:
------------------------ ----------------------------------
<PAGE>
[ATTACH EXHIBIT A, SOFTWARE AND INTELLECTUAL PROPERTY]
PURCHASE AGREEMENT
This Agreement made in duplicate this 5th day of January, 1999
B E T W E E N:
POWERTRADER, INC., a corporation
incorporated under the laws of the State of
Delaware, U.S.A.
(hereinafter called "PTI")
OF THE FIRST PART
- and -
FINANCIAL MODELS COMPANY INC.
a corporation incorporated under the laws of
the Province of Ontario
(hereinafter called "FMC")
OF THE SECOND PART
RECITALS
A. Vendor is, or will be at Closing, directly or indirectly, the registered and
beneficial owner of [insert number] shares being all of the issued and
outstanding Common Stock of PowerTrader Software Inc. (hereinafter "PTSI");
B. At Closing FMC is willing to purchase and the Vendor is willing to sell its
respective interest in the shares of Common Stock of PowerTrader Software Inc.
on the terms and conditions contained in this Agreement;
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions. In this Agreement, the following terms shall have the
meanings set out below unless the context requires otherwise:
(1) "Affiliate" means, with respect to any Person, any other Person
who directly or indirectly controls, is controlled by, or is
under direct or indirect common control with, such Person, and
includes any Person in like relation to an Affiliate. A Person
shall be deemed to control a Person if such Person possesses,
directly or indirectly, the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or
otherwise; and the term "controlled" shall have a similar
meaning.
(2) "Agreement" means this Agreement, including the Exhibits and the
Schedules to this Agreement, as it or they may be amended or
supplemented from time to time, and the expressions "hereof",
"herein", "hereto", "hereunder", "hereby" and similar expressions
refer to this Agreement and not to any particular Section or
other portion of this Agreement.
(3) "Applicable Employee Benefit Plans" has the meaning given in
Section 7.1(24)
(4) "Applicable Law" means, with respect to any Person, property,
transaction, event or other matter, any law, rule, statute,
regulation, order, judgement, decree, treaty or other requirement
having the force of law (collectively, the "Law") relating or
applicable to such Person, property, transaction, event or other
matter. Applicable Law also includes, where appropriate, any
interpretation of the Law (or any part thereof) by any Person
having jurisdiction over it, or charged with its administration
or interpretation.
(4) "Assets" means all the properties, assets, interests and rights
of PTI in PTSI and of PTSI including the following:
(a) all rights and interests of PTI and PTSI to and in the
Leased Premises and under the Premises Leases, including
prepaid rents, security deposits and options to renew or
purchase, rights of first refusal under the Premises Leases
and all leasehold improvements owned by PTI and PTSI and
forming part of the Leased Premises;
(b) the inventories;
(c) the Receivables;
(d) all rights and interest under or pursuant to all
warranties, representations and guarantees, express,
implied or otherwise, of or made by suppliers or others in
connection with the Assets;
(e) the Intellectual Property;
(f) the Contracts;
(g) the Books and Records of PTSI;
(h) all prepaid charges, sums and fees paid by PTSI before the
Closing Time;
(i) all goodwill of PTSI including the present telephone
numbers, internet domain addresses and other communications
numbers and addresses
(j) all of the issued and outstanding shares in the capital of
any subsidiaries of PTSI; and
(k) all proceeds of any or all of the foregoing received or
receivable after the Closing Time.
(6) "Books and Records" means all books, records, files and papers of
PTSI including (to the extent assignable) computer programs used
by PTSI in connection with the above, manuals and data, sales and
advertising materials, sales and purchases correspondence, trade
association files, research and development records, lists of
present and former customers and suppliers, personnel, employment
and other records, and the minute and share certificate books of
PTSI, and all copies and recordings of the foregoing.
(7) "Business" means the business carried on by PTSI which primarily
involves the design, development and provision of software
products, internet services and related services to the financial
services sector.
(8) "Business Day" means any day except Saturday, Sunday or any day
on which banks are generally not open for business in the City of
Toronto.
(9) "Canadian Dollar" means the lawful currency of Canada.
(10) "Claim" has the meaning given in Section 8.1.
(11) "Closing" means the completion of the purchase and sale of the
Shares in accordance with the provisions of this Agreement.
(12) "Closing Date" means the Business Day as soon as practicable
after completion of all conditions and due diligence, but in no
event later than March 1, 1999 unless the parties shall otherwise
agree.
(13) "Closing Time" means the time of closing on the Closing Date
provided for in
Section 5.1.
(14) "Common Stock" means the common shares of PTSI [ ] par value per
share.
(15) "Consents and Approvals" means all consents and approvals
required to be obtained in connection with the execution and
delivery of this Agreement and the completion of the transactions
contemplated by this Agreement or required to carry on the
Business after the Closing Date as the Business is currently
carried on by PTSI.
(16) "Contracts" means all rights and interests of PTSI in all pending
and/or executory contracts, agreements, leases and arrangements
to which PTSI is a party or by which PTSI or any of the Assets or
the Business is bound or affected, as defined in section 7.1(14)
and 7.1(15).
(17) "Corporation" is defined in Section 7.1(8).
(18) "Direct Claim" has the meaning given in Section 8.5.
(19) "Director" means a director of PTI; and "Directors" means every
Director.
(20) "Employee" means an individual who is or has been employed by
either PTI or PTSI; and "Employees" means every Employee.
(21) "Employee Plans" has the meaning given in Section 7.1(24).
(22) "Financial Statements" has the meaning given in Section 7.1(12).
(23) "GAAP" means those accounting principles which are recognized as
being generally accepted in the United States from time to time
as set out in the handbook published by the American Institute of
Certified Public Accountants, consistently applied.
(24) "Indemnified Party" means a Person whom the Vendors or FMC, as
the case may be, has agreed to indemnify under Article 8.
"Indemnifying Party" means, in relation to an Indemnified Party,
the Party to this Agreement that has agreed to indemnify that
Indemnified Party under Article 8.
(25) "Intellectual Property" means all of PTI's and PTSI's rights to
and interests in:
(a) all business and trade names, corporate names, brand names
and slogans Related to the Business;
(b) all patents, patent rights, patent applications (including
all reissues, divisions continuations, continuations
-in-part and extensions of any patent or patent
application), industrial designs and applications for
registration or industrial designs and trade secrets
Related to the Business;
(c) all copyrights and trade-marks (whether used with software
or services and including the goodwill attaching to such
trade-marks), registrations and applications for
trade-marks and copyrights Related to the Business; and
(d) all licenses of the intellectual property listed in items
(a) to (c) above.
(26) "Interim Period" means the period from the date of this Agreement
to the date of Closing.
(27) "Knowledge" of any Person means in the case of an individual, the
knowledge of that individual after reasonable inquiry of those
persons who ought reasonably to have knowledge of the matter and
in the case of a corporation, the knowledge of any of the
officers or directors of such corporations after reasonable
inquiry of those persons who ought reasonably to have knowledge
of the matter.
(28) "Leased Premises" means all real property that is leased or
occupied by PTI or PTSI under the Premises Leases.
(29) "Liabilities" means all costs, expenses, charges, debts,
liabilities, claims, demands and obligations, whether primary or
secondary, direct or indirect, fixed, contingent, absolute or
otherwise, under or in respect of any contract, agreement,
arrangement, lease commitment or undertaking, Applicable Law and
Taxes.
(30) "Lien" means any lien, mortgage, charge, hypothec, pledge,
security interest, prior assignment, option, warrant, lease,
sublease, right to possession, encumbrance, claim, right or
restriction which affects, by way of a conflicting ownership
interest or otherwise, the right, title or interest in or to any
particular property.
(31) "Material Adverse Change" means a change in the Business, Assets
or capital of PTSI which has had or is reasonably likely to have
a significant adverse effect on the value of the Shares.
(32) "Notices" means the notices required to be given to any Person
under Applicable Law or pursuant to any contract or other
obligation to which either of PTI or PTSI is a party or by which
either of PTI or PTSI is bound or which is applicable to any of
the Assets in connection with the execution and delivery of this
Agreement or the completion of the transactions contemplated by
this Agreement or the carrying on of the Business after the
Closing as the Business is currently carried on by PTSI.
(36) "Officer" means an officer of any of PTSI.; and "Officers" means
every Officer.
(38) "Party" means a party to this Agreement and any reference to a
Party includes its successors and permitted assigns; and
"Parties" means every Party.
(39) "Permitted Liens" means the mortgages, charges and other liens
listed in Schedule 1.1(39)
(40) "Person" is to be broadly interpreted and includes an individual,
a corporation, a partnership, a trust, an unincorporated
organization, the government of a country or any political
subdivision thereof or any agency or department of any such
government, and the executors, administrators or other legal
representatives of an individual in such capacity.
(41) "Preferred Stock" means the [insert number] of issued shares of
Preferred Stock having those rights and privileges as are set
forth in Schedule 1.1(41).
(42) "Premises Leases" means all the leases, agreements to lease,
subleases, licence agreements and occupancy or other agreements
relating to the Leased Premises.
(43) "Purchase Price" has the meaning given in Section 2.1.
(44) "Purchaser's Solicitors" means McCarthy, Tetrault and Skadden,
Arps.
(45) "Receivables" means all accounts receivable, bills receivable,
trade accounts, book debts and insurance claims of PTI and PTSI
together with any unpaid interest accrued on such items and any
security or collateral for such items, including recoverable
deposits, but excluding any amounts owing to or from Affiliates.
(46) "Related to the Business" means used in, arising from or relating
in any manner to the Business.
(47) "Shares" means collectively, the Common Stock and the Preferred
Stock of PTSI and "Share" means any such shares.
(48) "Software" means all rights to and interest in the computer
application programs, associated information processing
technology, databases, procedures and data files, comprising
[?????],provided by PTSI and all copyrights therein, and
technology, computer programs and other computer software
(including systems and applications), source code, object code,
algorithms and architecture related thereto.
(49) "Taxes" (individually, "Tax") means all taxes, charges, fees,
levies, imposts, and other assessments, including all income,
sales, use, goods and services, value added, capital, capital
gains, alternative, net worth, transfer, profits, withholding,
payroll, employer health, excise, franchise, real property and
personal property taxes, and any other taxes, custom duties,
fees, assessments or similar charges in the nature of a tax
including Canada Pension Plan and provincial pension plan
contributions, unemployment insurance payments and workers'
compensation premiums, together with any instalments with respect
thereto, and any interest, fines and penalties imposed by any
governmental authority, (including federal, state, provincial,
municipal and foreign governmental authorities), and whether
disputed or not.
(50) "Third Party Claim" has the meaning given in Section 8.5.
(54) "Vendor" means PowerTrader Inc..
(55) "Vendor's Solicitors" means Gallop, Johnson & Neuman, L.C.
1.2 Headings and Table of Contents. The division of this Agreement into
Articles and Sections, the insertion of headings, and the provision of any table
of contents are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.3 Number and Gender. Unless the context requires otherwise, words
importing the singular include the plural and vice versa and words importing
gender include all genders.
1.4 Business Days. If any payment is required to be made or other
action is required to be taken pursuant to this Agreement on a day which is not
a Business Day, then such payment or action shall be made or taken on the next
Business Day.
1.5 Currency and Payment Obligations. Except as otherwise expressly
provided in this Agreement:
(1) all dollar amounts referred to in this Agreement are stated in
Canadian Dollars; and
(2) any payment contemplated by this Agreement shall be made by cash,
certified cheque or any other method that provides immediately
available funds.
1.6 Statute References. Any reference in this Agreement to any statute
or any section thereof shall, unless otherwise expressly stated, be deemed to be
a reference to such statute or section as amended, restated or re-enacted from
time to time.
1.7 Section and Schedule References. Unless the context requires
otherwise, references in this Agreement to Sections, Exhibits or Schedules are
to Sections, Exhibits or Schedules of this Agreement. The Exhibits and Schedules
to this Agreement are as follows:
SCHEDULES
1.1(39) Permitted Liens
1.1(41) Preferred Stock
7.1(2) Authorized Capital
7.1(6) Ownership of Shares
7.1(8) Organization of Corporations
7.1(12) Financial Statements
7.1(13) Assets
7.1(14) Leased Premises
7.1(15) Material Contracts
7.1(17) Intellectual Property and Software
7.1(20) Consents and Approvals
7.1(22) Litigation
7.1(23) Employment Contracts
7.1(24) Employees Plans
7.1(25) Suppliers
7.1(26) Product Warranties
7.1(27) Affiliated Transactions
7.1(28) Intercompany Services
7.1(29) Filings
7.1(31) Tax Paid
ARTICLE 2
PURCHASE OF SHARES
2.1 Agreement to Purchase Vendor's Shares. At the Closing Time, subject
to the terms and conditions of this Agreement, the Vendor shall sell to FMC, and
FMC shall purchase from the Vendor, [insert number] Common Shares at a price of
[insert price] per Common Share and [insert number] Preferred Shares at a price
of [insert price] per Preferred Share for aggregate proceeds to the Vendor of
[insert number] (the "Purchase Price").
2.2 Payment of Purchase Price and Subscription Price. The Purchase
Price shall be paid and satisfied by FMC by certified cheque, bank draft or wire
transfer at the Closing Time.
ARTICLE 3
QUALIFICATION
3.1 PTI shall, on or before the Closing Time, take or cause to be
taken, including the passing of requisite resolutions of the directors of PTI,
all actions to provide for the sale of the shares of Common Stock and of the
Preferred Stock
3.2 All actions required to be taken by or on behalf of PTI so as to
permit FMC to purchase the Vendor's Shares pursuant to regulatory exemptions
pursuant to the Securities Laws shall have occurred on or prior to the Closing
Time.
ARTICLE 4
CLOSING ARRANGEMENTS
4.1 Closing. The Closing shall take place at 10:00 a.m. on the Closing
Date at the offices of FMC's Solicitors, or at such other time on the Closing
Date or such other place as may be agreed orally or in writing by the Vendor and
FMC.
4.2 Vendors' Closing Deliveries. At the Closing, the Vendor shall
deliver or cause to be delivered to FMC the following documents, as applicable:
(1) a transfer of the Shares in a form to be agreed upon by the
Parties, acting reasonably, duly executed by the Vendor;
(2) a bring-down certificate of PTI in a form to be agreed upon by
the Parties, acting reasonably;
(3) a corporate certificate of the Secretary or other officer of PTI,
in a form to be agreed upon by the Parties, acting reasonably;
(5) evidence in form satisfactory to FMC, acting reasonably, that the
Consents and Approvals required to be obtained by the Vendor have
been obtained;
(6) an opinion of the Vendor's Solicitors addressed to FMC in a form
to be agreed upon by the Parties, acting reasonably; and
(7) all such other assurances, consents, agreements, documents and
instruments as may be reasonably required by FMC to complete the
transactions provided for in this Agreement.
4.3 FMC's Closing Deliveries. At the Closing, FMC shall deliver or
cause to be delivered to the Vendor the following documents and payments:
(1) a bring-down certificate of the President or other senior officer
of FMC dated as of the Closing Date in a form to be agreed upon
by the Parties, acting reasonably;
(2) a corporate certificate of the Secretary or other officer of FMC
in a form to be agreed upon by the Parties, acting reasonably;
(3) the payments referred to in Section 2.2;
(4) evidence in form satisfactory to the Vendor, acting reasonably,
that the Consents and Approvals required to be obtained by FMC
have been obtained;
(8) an opinion of FMC's Solicitors addressed to the Vendor in a form
to be agreed upon by the Parties, acting reasonably;
(9) all such other assurances, consents, agreements, documents and
instruments as may reasonably be required by the Vendor to
complete the transactions provided for in this Agreement.
ARTICLE 5
CONDITIONS OF CLOSING
5.1 FMC's Conditions. FMC shall not be obliged to complete the purchase
and sale of Shares pursuant to this Agreement unless, at or before the Closing
Time, each of the following conditions has been satisfied, it being understood
that the following conditions are included for the exclusive benefit of FMC and
may be waived, in whole or in part, only in writing by FMC at any time; and the
Vendor agrees with FMC to take all such actions, steps and proceedings as are
reasonably within their control as may be necessary to ensure that the following
conditions are fulfilled at or before the Closing Time:
(1) Representations and Warranties. The representations and
warranties of the Vendor in Section 6.1 shall be true and correct
at the Closing in all material respects.
(2) Vendor's Compliance. The Vendor shall have materially performed
and complied with all of the terms and conditions in this
Agreement on its part to be performed or complied with at or
before Closing and shall have furnished or caused to have been
furnished to FMC such certificates, affidavits or statutory
declarations of the Vendor or of officers of the Vendor as FMC
or FMC's counsel may reasonably think necessary in order to
establish that the terms, covenants and conditions contained in
this Agreement to have been performed or complied with by the
Vendor at or prior to the time of Closing have been performed and
complied with and that the representations and warranties of the
Vendor herein given are true and correct at the Closing.
(3) Material Adverse Change. During the Interim Period, there shall
have been no Material Adverse Change.
(4) No Litigation. There shall be no litigation or proceedings other
than as herein disclosed:
(a) pending or threatened against any of the Vendor or against
any of its respective Affiliates or any of its respective
directors or officers, for the purpose of enjoining,
preventing or restraining the completion of the
transactions contemplated by this Agreement; or
(b) pending or threatened against the Vendor or against any of
its respective Affiliates or any of its respective
directors or officers which:
(i) in the result, could adversely affect the right of
FMC to acquire or retain the Shares; or
(ii) in the reasonable judgment of FMC, would have a
substantial and adverse impact on the Business.
(5) Transfer of Shares. All necessary steps and proceedings shall
have been taken to permit the Shares to be duly and regularly
transferred to and registered in the name of FMC.
(6) Consents and Approvals. All the Consents and Approvals have been
obtained, including Consents and Approvals:
(a) in connection with any shareholders agreement, indenture,
lease, deed of trust, mortgage, loan agreement, or other
material agreements Related to the Business; and
(b) in connection with any credit agreement and any related
security agreements entered into by the Vendor or its
Affiliates; and
(7) Form and Legality. The form and legality of all matters
incidental to the sale by the Vendor and the purchase by FMC of
the Shares shall be subject to the approval of FMC's Solicitors.
5.2 Condition not Fulfilled. If any condition in Section 5.1 has not
been fulfilled in all material respects at or before the Closing Time, and
unless the Parties have agreed to extend the Closing Date, then FMC may, in its
sole discretion, without limiting any rights or remedies available to FMC at law
or in equity, either:
(1) terminate this Agreement by notice to the Vendor in which event
FMC shall be released from its obligations under this Agreement
to complete the purchase of the Shares e; or
(2) waive compliance with any such condition without prejudice to its
right of termination in the event of non-fulfilment of any other
condition.
5.3 Vendors'/Corporations' Conditions. The Vendor shall not be
obligated to complete the transactions contemplated by this Agreement unless, at
or before the Closing Time, each of the following conditions has been satisfied,
it being understood that the following conditions are included for the exclusive
benefit of the Vendor, and may be waived, in whole or in part, only in writing
by the Vendor at any time; and FMC agrees with the Vendor to take all such
actions, steps and proceedings as are reasonably with FMC's control as may be
necessary to ensure that the following conditions are fulfilled at or before the
Closing Time:
(1) Representations and Warranties. The representations and
warranties of FMC in Section 6.2 shall be true and correct at the
Closing in all material respects.
(2) FMC's Compliance. FMC shall have materially performed and
complied with all of the terms and conditions in this Agreement
on its part to be performed or complied with at or before the
Closing Time and shall have furnished or caused to have been
furnished to the Vendor such certificates, affidavits or
statutory declarations of FMC or of officers of FMC as the Vendor
or its counsel may reasonably thing necessary in order to
establish that the terms, covenants and conditions contained in
this Agreement to have been performed or complied with by FMC at
or prior to the time of Closing have been performed and complied
with and that the representations and warranties of FMC herein
given are true and correct at closing.
(3) Consents and Approvals. All of the Consents and Approvals to be
obtained by FMC shall have been obtained.
5.4 Condition not Fulfilled. If any condition in Section 5.3 shall not
have been fulfilled at or before the Closing Time, and unless the Parties have
agreed to extend the Closing Date, and without limiting any rights or remedies
available to the Vendor at law or in equity, then:
(1) the Vendor may, in its sole discretion, terminate this Agreement
by notice to FMC, in which event the Vendor shall be released
from all obligations under this Agreement; or
(2) the Vendors may, in its sole discretion, waive compliance with
any such condition without prejudice to any right of termination
they may have in the event of non-fulfillment of any other
condition.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of the Vendor. As a material
inducement to FMC's entering into this Agreement and completing the transactions
contemplated by this Agreement, and acknowledging that FMC is entering into this
Agreement in reliance upon the representations and warranties set out in this
Section 6.1, the Vendor and PTSI jointly and severally represent and warrant to
FMC as follows:
(1) Incorporation and Authorization. Each of PTI and PTSI is a
corporation duly incorporated under the laws of the jurisdiction
of its organization and is duly organized, validly subsisting and
in good standing under such laws, and each has all necessary
corporate power, authority and capacity to enter into this
Agreement and all other agreements and instruments to be executed
by them as contemplated by this Agreement and carry out their
obligations under this Agreement and such other agreements and
instruments. The Vendor has all necessary capacity and authority
to execute this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and such
other agreements and instruments and the completion of the
transactions contemplated by this Agreement and such other
agreements and instruments have been duly authorized by all
necessary corporate action on the part of PTI and PTSI.
(2) Authorized Capital. As of the date hereof, the only issued and
outstanding shares in the capital of PTSI are set out in Schedule
6.1(2). Except as set forth in Schedule 6.1(2), there are
outstanding no other shares, warrants, rights or securities
convertible into shares or other evidence whatsoever of an
interest in PTSI and no shares of PTSI are under option or are
agreed to be conditionally or unconditionally issued, except
pursuant to this Agreement. The rights, privileges, restrictions
and conditions attached to the Shares as are set out in Schedule
1.1(42) and the shares of Common Stock and Preferred Stock
outstanding are as set out in Schedule 6.1(2).
(3) Dividends. No dividends have been declared or paid on or in
respect of the Shares and no other distribution on any of its
securities or shares has been made by PTSI since June 30, 1998
and all dividends which to the date hereof have been declared or
paid by PTSI have been duly and validly declared or paid.
(4) Enforceability of Obligations. This Agreement constitutes a valid
and binding obligation of the Vendor enforceable against the
Vendor in accordance with its terms, subject, however, to
limitations on enforcement imposed by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of the
rights of creditors and others and to the extent that equitable
remedies such as specific performance and injunctions are only
available in the discretion of the court from which they are
sought. The Vendor is not an insolvent person within the meaning
of the Bankruptcy and Insolvency Act (Canada) and the U.S.
Bankruptcy Code and will not become an insolvent person as a
result of the Closing.
(5) Residence of Vendor. The Vendor is a non-resident of Canada for
purposes of Section 116 of the Income Tax Act (Canada).
(6) Ownership of Common Shares. The Vendor will be at the Closing
Time the registered and beneficial holder of the number of shares
of Common Stock and Preferred Stock specified in Section 2.1 with
good and marketable title thereto, free and clear of all Liens
and at the Closing shall transfer to FMC good and valid title to
such Common Stock and Preferred Stock, and such shares are all of
the issued and outstanding Shares owned beneficially by the
Vendor in PTSI. Except as set out in Schedule 6.1(6), no Person
other than FMC has any agreement, option, right or privilege
capable of becoming an agreement for the purchase from the Vendor
any of the Common Stock or Preferred Stock.
(7) Organization of the Corporations.
(a) The information set out in Schedule 6.1(8) concerning the
name and jurisdiction of incorporation, and the directors
and officers of each of PTSI. (the "Corporation") is true
and complete.
PTI owns all of the issued and outstanding shares of PTSI.;
(b) The Corporation is incorporated and validly subsisting
under the laws of its jurisdiction of incorporation.
(c) The Corporation is licensed or qualified to do business
under the laws of the jurisdictions specified in Schedule
6.1(8) and neither the character nor the location of the
properties owned by any Corporation nor the nature of the
business conducted by it requires licensing or
qualification under the laws of any other jurisdiction. The
Corporation has full corporate power to carry on its
business and to own and operate its assets, properties and
business as now carried on and owned and operated. Except
as set forth in Schedule 6.1(2), there are no rights,
subscriptions, warrants, options, conversion rights, calls,
commitments or plans or agreements of any kind outstanding
which would enable any Person to purchase or otherwise
acquire any shares or other securities of any Corporation
including, without limitation, any securities convertible
into or exchangeable or exercisable for shares or other
securities of any Corporation.
(8) Corporate Records. The minute book of each of PTI and PTSI, save
as noted in Schedule 6.1(9) hereto, contains true, correct and
complete copies, in all material aspects, of its articles, its
by-laws, the minutes of meetings of its board of directors and
every committee thereof and of its shareholders and written
resolutions of its directors and shareholders. The share register
of shareholders, register of transfers and register of directors
and officers of the Corporation are complete and accurate in all
material respects. In those matters where any minute book
aforesaid requires the execution of further documents, the Vendor
undertakes and agrees to provide such assistance as is reasonably
requested by FMC in order to make such minute book true, correct
and complete.
(9) Bankruptcy. Neither PTI nor PTSI has made an assignment in favour
of its creditors nor a proposal in bankruptcy to its creditors or
any class thereof nor had any petition for a receiving order
presented in respect of it. Neither the Vendor nor PTSI has
initiated proceedings with respect to a compromise or arrangement
with its creditors or for its winding up, liquidation or
dissolution. No receiver has been appointed in respect of the
Vendor or PTSI or any of the Assets and no execution or distress
has been levied upon any of the Assets.
(10) Financial Statements. The Vendor has furnished FMC with the
annual audited consolidated financial statements of PTI for the
fiscal year ended June 30, 1997, together with unaudited
consolidated financial statements for the periods ended June 30,
1998 and August 31, 1998 (the "Financial Statements"), true and
complete copies of which are annexed as Schedule 6.1(12). The
balance sheets contained in such Financial Statements present
fairly, in all material respects, the financial position of the
Corporations as of their respective dates and the results of its
operations for the periods indicated, in accordance with U.S.
GAAP consistently applied.
(11) Title to Assets. The Corporation has good and marketable title to
all the Assets, free and clear of any and all Liens, except for
Permitted Liens. The Assets are sufficient to permit the
continued operation of the Business in substantially the same
manner as conducted on the date of this Agreement. Schedule
6.1(11) sets out a complete and accurate list of all locations
where the Assets are situate. There is no agreement, option or
other right or privilege outstanding in favour of any Person for
the purchase from the Corporation of the Business or of any of
the Assets out of the ordinary course of business.
(12) Leased Premises. Schedule 6.1(12) lists all the Premises Leases
and describes accurately the lease agreements relating thereto.
FMC has received a true and complete copy of such lease
agreements. Each Premises Lease is in full force and effect,
unamended by oral or written agreement, and the Corporation is
entitled to the full benefit and advantage of such Premises Lease
in accordance with the terms thereof. Except as set forth in
Schedule 6.1(14) each Premises Lease is in good standing and
there has not been any material default by the Corporation, and
to the Knowledge of the Vendor, by any other party thereto under
any Premises Lease nor is the Vendor aware of any material
dispute between any Corporation and any landlord under any of the
Premises Leases. None of the Premises Leases has been assigned by
a Corporation in favour of any Person. The current uses of the
Leased Premises comply with Applicable Law.
(13) Contracts. Schedule 6.1(13) lists all the Contracts other than
the Premises Leases and the Vendor has provided true and complete
copies of same to FMC. Except as set forth in Schedule 6.1(13) no
Corporation is in material default under any Contract and there
has not occurred any event which, with the lapse of time or
giving of notice or both, would constitute a default under any
Contract by the Corporation or to the Knowledge of the Vendor,
any other party to the Contract. Except as set forth in Schedule
6.1(13) each Contract is in full force and effect, unamended by
written or oral agreement, and the Corporation is entitled to the
full benefit and advantage of each Contract in accordance with
its terms. No Corporation has received any notice of a default by
the Corporation or a dispute between the Corporation and any
other party in respect of any Contract. The Corporation is not a
party to or bound by any contract or commitment to pay any
royalty, licence fee or management fee, save as disclosed in
Schedule 6.1(13).
(14) Receivables. The Receivables are valid obligations which arose in
the ordinary course of business and to the Knowledge of the
Vendor will be collected in the ordinary course of business, in
the aggregate, at their full face value subject to the usual
reservation for bad debts, which reservation is adequate for all
reasonably foreseeable events.
(15) Intellectual Property and Software.
(a) Schedule 6.1(15) lists all of the registrations and
applications for registration of any material Intellectual
Property and Software. All of the registrations and
applications for registration of any material Intellectual
Property are valid and subsisting in good standing and are
recorded in the name of the Corporation.
(b) The Corporation has the exclusive right to use, sell,
license and dispose of, and has the right to bring actions
for infringement of any material Intellectual Property and
Software.
(c) The Corporations is the sole owner, except as set out in
Schedule 6.1(16), of the Intellectual Property and the
Software free of any and all claims of interest by any
third party, and is entitled to the exclusive and
uninterrupted use of the Intellectual Property and Software
without payment of any royalty or other fees.
(d) The Corporation has made every reasonable effort to protect
their legal rights to the use of the Intellectual Property
and the Software. Subject to the licenses granted by the
Corporation, no other Person has any right, title or
interest in any of the Software. Except as described in
Schedule 6.1(15), all copies of any software forming a part
of the Software have been disclosed or distributed solely
in Object Code form and subject to agreements with
appropriate copyright and confidentiality restrictions and
limitations of liability. Except as described in Schedule
6.1(15), the Source Code for any of the Software has not
been delivered to any Person by or on behalf of the
Corporation.
(e) Schedule 6.1(15 ) lists all current litigation, including
all pending or to the Knowledge of the Vendor, threatened
actions, suits or claims, relating to the Intellectual
Property and/or the Software.
(e) Except as listed in Schedule 6.1(15), all employees and
independent contractors of the Corporation and other
Persons involved in the development of the Software and the
trade secrets included in the Intellectual property since
[insert date] have entered into non-disclosure agreements
pursuant to which they have agreed to maintain the
confidentiality of the Software and of such trade secrets
included in the Intellectual Property, have assigned all
rights they may have in such Software and trade secrets to
the Corporation and no shareholder, officer, director or
employee of the Corporation, or any other Person, has any
right, title or interest in any of the Software or the
Intellectual Property.
(f) To the Knowledge of the Vendor, no Person has infringed or
misappropriated the Corporation's rights to the
Intellectual Property.
(g) To the Knowledge of the Vendor, there is no governmental
prohibition or restriction on the use of the Intellectual
Property.
(h) All of the Corporation's permissions and licences to use
intellectual property of other Persons in relation to or in
connection with the Software which is embodied in the
Software and which is material to the operation of the
Software (excluding commercial off-the-shelf software) are
disclosed in Schedule 6.1(15). Except as disclosed in
Schedule 6.1(15), the Software does not contain nor embody
any third party intellectual property, including software,
development tools and utilities material to the performance
of the Software. All such licences referred to in Schedule
6.1(15) are in full force and effect and neither the
Corporation nor the other party to any such licence is in
default of its obligations thereunder.
(i) To the Knowledge of the Vendor, neither the manufacture,
marketing, sale, license or use of any Software or services
based upon the Software currently manufactured, marketed,
licensed, sold, provided or used by the Corporation
violates, in any material way, any licence or agreement of
the Corporation with any Person or infringes upon, or
constitutes misappropriation of, the intellectual property
rights of any other Person, whether common law or
statutory, including rights relating to defamation, rights
of privacy or publicity and contractual rights.
(l) The computer software comprising part of the Software is in
good operating condition and functions in accordance with
the specifications described in the documentation related
thereto, and to the Knowledge of the Vendor, is free from
material errors in design and material operating defects.
All source code for the computer software comprising part
of the Software is sufficiently documented in the source
code or in the associated documentation to enable a
software developer reasonably skilled in such environment
to understand, modify, compile and otherwise utilize all
aspects of the Software within a reasonable time.
(16) Licences and Permits. The Corporation holds all Licences and
Permits required to carry on the Business free and clear of any
and all Liens, other than Permitted Liens, and all such Licences
and Permits are in full force and effect, no Corporation is in
violation of any term or provision or requirement of any such
Licences and Permits, and no Person has threatened to revoke,
amend or impose any condition in respect of, or commenced
proceedings to revoke, amend or impose conditions in respect of,
any such Licence or Permit.
(17) Undisclosed Liabilities. The Corporation does not have any
liabilities, obligations, indebtedness or commitments, whether
accrued, absolute, contingent or otherwise, which are not
disclosed in the Financial Statements or referred to or disclosed
herein, other than liabilities, obligations and indebtedness
incurred in the normal course of business since the date of the
Financial Statements.
(18) Consents and Approvals. All the Consents and Approvals are listed
in Schedule 6.1(18). Except for the Consents and Approvals, no
consent or approval of any Person is required in connection with
the execution and delivery of this Agreement and the completion
of the transactions contemplated by this Agreement or to permit
the Corporation to carry on the Business after the Closing as the
Business is currently carried on by the Corporation.
(19) Absence of Conflicting Agreements. The execution, delivery and
performance of this Agreement by the Vendor and the completion
(with any required Consents and Approvals) of the transactions
contemplated by this Agreement do not and will not result in or
constitute any of the following:
(a) a material default, breach or violation or an event that,
with notice or lapse of time or both, would be a material
default, breach or violation of any of the terms,
conditions or provisions of the articles or by-laws of the
Vendor or the Corporation;
(b) an event which, pursuant to the terms of any Contract or
Licence or Permit, causes any right or interest of any
Corporation to come to an end or be amended in any way that
is detrimental to the Business or entitles any other Person
to terminate or amend any such right or interest;
(c) the creation or imposition of any Lien on any Asset; or
(d) the violation of any Applicable Law by either of the Vendor
or the Corporation.
(20) Litigation. Except as set out in Schedule 6.1(20), there is no
action, suit, proceeding, claim, application, complaint or
investigation in any court or before any arbitrator or before or
by an regulatory body or governmental or non-governmental body
pending or threatened by or against any Corporation Related to
the Business or affecting the Business or the operation or
capital of the Corporations or the transactions contemplated by
this Agreement, and, to the Knowledge of the Vendor, there is no
factual or legal basis which is reasonably likely to give rise to
any such action, suit, proceeding, claim, application, complaint
or investigation.
(21) Employment Contracts. Schedule 6.1(21) lists, as of the date of
this Agreement, the compensation and benefit of each of the
senior employees and directors of the Corporation and the Vendor
has provided true and complete copies of same to FMC. To the
Knowledge of the Vendor the Corporation is in compliance with all
Applicable Laws relating to Employees and terms of employment
and, except as set out in Schedule 6.1(21) is not a party to or
bound by any additional or other contracts for the employment of
any senior employee or director or any bonus, deferred
compensation, profit sharing, retirement, hospitalization
insurance or other plans or arrangements providing employee
benefits, except for the plans providing employee benefits
described in Schedule 6.1(21). Except for remuneration paid to
employees in the usual and ordinary course of business and made
at current rates of remuneration no payments have been made or
authorized by the Corporation to officers, directors or employees
of the Corporation other than in the ordinary course of business.
(22) Employee Plans. The Vendor has made available to FMC all the
employee benefit, health, welfare, supplemental unemployment
benefit, bonus, pension, profit sharing, deferred compensation,
stock compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability and similar plans
or arrangements or practices relating to the Employees or former
Employees of the Corporation, more particularly set out in
Schedule 6.1(22), which are currently maintained or were
maintained at any time in the last five calendar years (the
"Employee Plans"). All obligations regarding the Employee Plans
have been satisfied, there are no outstanding defaults or
violations by any party to any Employee Plan and no Taxes,
penalties or fees are owing or exigible under any of the Employee
Plans.
(23) Customers and Suppliers. Schedule 6.1(23) lists all customers and
the largest suppliers of the Corporation (or such additional
customers or suppliers of such Corporation which are sufficient
to constitute twenty per cent or more of total sales or
purchases, as the case may be) for the 12 month period
immediately before the date of this Agreement, and the aggregate
amount which each customer was invoiced and each supplier charged
and was paid during such period. Except as set out in Schedule
6.1(23), the Vendor is not aware of, nor has it received notice
of, any intention on the part of any such customer or supplier to
cease doing business with the Corporation or to modify or change
in any material manner any existing arrangement with the
Corporation for the purchase or supply of any products or
services. To the Knowledge of the Vendor the relationships of the
Corporation with each of its principal suppliers, shippers and
customers are satisfactory and, except as set out in Schedule
6.1(23), there are no unresolved disputes with any such supplier,
shipper or customer
(24) Product Warranties. To the Knowledge of the Vendor, and except as
disclosed in Schedule 6.1(24) there are no existing, pending or
threatened claims against the Corporation on account of product
warranties or with respect to the production or sale of defective
or inferior products.
(25) Affiliated Transactions. Except as described in Schedule 6.1(25),
the Corporation is not liable in respect of advances, loans,
guarantees to or on behalf of any shareholder, officer, director,
Employee or Affiliate of the Corporation or any other Person with
whom the Corporation does not deal at arm's length.
(26) Intercompany Services. Except as described in Schedule 6.1(26),
there are no material intercompany services provided to the
Corporation by the Vendor or by any Affiliate of the Vendor.
(27) Filings. Except as set out in Schedule 6.1(27), the Corporation
has prepared and filed on time with all appropriate government
bodies including, without limitation, all securities commissions
and regulatory bodies, all tax returns, declarations,
remittances, information returns, reports and other such
documents of every nature required to be filed by or on behalf of
the Corporations in respect of any Taxes or in respect of any
other provision in any domestic or foreign, federal, provincial,
municipal, state, territorial or other relevant statute for all
fiscal periods ending prior to the date hereof and will continue
to do so in respect of any fiscal period ending on or before the
Closing Date. All such filed returns, declarations, remittances,
information returns, reports and other documents are correct and
complete in all material respects, and no material fact has been
omitted therefrom. The Vendor is a "reporting issuer" in the
United States and is not in default or on the list of defaulting
reporting issuers maintained under any Applicable Laws.
(28) Taxes Paid. Except as set out in Schedule 6.1(28), the
Corporation has paid in full all Taxes required to be paid on or
prior to the date hereof and has made adequate provision in the
Financial Statements in accordance with generally accepted
accounting principles for the payment of all Taxes in respect of
all fiscal periods ending on or before the Closing Date.
(29) Absence of Certain Changes or Events. Except as otherwise
disclosed herein the Corporation has not:
(a) suffered any Material Adverse Change;
(b) amended its certificate or articles of incorporation;
(c) declared or made any payment of any dividend or other
distribution in respect of its shares and has not redeemed,
purchased or otherwise acquired any shares;
(d) issued or sold any shares or other securities or issued,
sold or granted any option, warranty or right to purchase
any shares or other securities;
(e) disposed of any of the Assets reflected on the balance
sheet forming part of the Financial Statements, except
sales of inventories in the normal course of business;
(f) changed any accounting or costing systems or methods
(including, without limitation) revenue recognition
methods) in any material respect;
(g) suffered any extraordinary loss or cancelled or waived any
material debt, claim or other right other than as
specifically agreed to herein;
(h) incurred or assumed any liabilities, obligations or
indebtedness (whether accrued, absolute, contingent or
otherwise) or extended any guarantee except current
liabilities, obligations and indebtedness in the normal
course of business;
(i) made or granted any bonus, increased the compensation paid
(other than for normal merit and cost of living increases)
or made or guaranteed any loans or advances to any
Director, Officer, senior employee or Affiliate in any
material way;
(j) mortgaged, pledged, granted a security interest in or
otherwise encumbered any of the Assets, except in the
normal course of business;
(k) entered into any Contract or any other transaction that was
not in the normal course of business; or
(l) terminated, cancelled or modified in any material respect
or received notice or a request for termination,
cancellation or modification in any material respect of any
Contract, except in the normal course of business.
(30) Full Disclosure. The foregoing resolutions and warranties
(including the Schedules) do not contain any untrue statement of
a material fact or omit to state any material fact necessary to
make any such statement or representation not misleading to a
prospective purchaser of the Shares seeking full information as
to the Corporation and its properties, businesses and affairs.
6.2.1 Representations and Warranties of FMC. FMC represents and
warrants to the Vendor as follows:
(1) Incorporation and Power. FMC is a corporation duly incorporated
under the laws of the jurisdiction of its incorporation and is
duly organized, validly subsisting and in good standing under
such laws.
(2) Due Authorization. FMC has all necessary corporate power,
authority and capacity to enter into this Agreement and all other
agreements and instruments to be executed by it as contemplated
by this Agreement and to carry out its obligations under this
Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other
agreements and instruments and the completion of the transactions
contemplated by this Agreement and such other agreements and
instruments have been duly authorized by all necessary corporate
action on the part of FMC.
(3) Enforceability of Obligations. This Agreement constitutes a valid
and binding obligation of FMC enforceable against FMC in
accordance with its terms subject, however, to limitations on
enforcement imposed by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally and to the
extent that equitable remedies such as specific performance and
injunctions are only available in the discretion of the court
from which they are sought.
(4) Consents and Approvals. No consent or approval of any Person is
required by FMC in connection with the execution and delivery of
this Agreement and the completion of the transactions
contemplated by this Agreement.
6.2.1 Survival of Representations and Warranties.
(1) The representations and warranties contained in Section 6.1 or
any other agreement, certificate or instrument delivered pursuant
to this Agreement shall survive the Closing for a period of two
years from the Closing Date, and notwithstanding the Closing and
any inspection or inquiries made by or on behalf of FMC, shall
continue in full force and effect for the benefit of FMC, after
which time the Vendor shall be released from all obligations in
respect of such representations and warranties except with
respect to any Claims asserted by FMC in writing (setting out in
reasonable detail the nature of the Claim and the approximate
amount of such Claim) before the expiration of such period, but
(a) there shall be no time limit on the representations and
warranties of the Vendor which relate to the enforceability of
the Vendor's obligations under this Agreement in Section 6.1(3),
the incorporation of the Corporation in Section 6.1(7), the due
authorization of this Agreement by the Vendor and the Corporation
in Section 6.1(2) or to the title of the Vendor to the Shares in
Section 6.1(5}, and (b) the time limit in connection with the
representations and warranties relating to Intellectual Property
and Software matters in Section 6.1(15) shall be five years.
(2) The representations and warranties of FMC contained in Section
6.2 or any other agreement, certificate or instrument delivered
pursuant to this Agreement shall survive the Closing for a period
of two years from the Closing Date, and notwithstanding the
Closing, shall continue in full force and effect for the benefit
of the Vendor, after which time FMC shall be released from all
obligations in respect of such representations and warranties
except with respect to any Claims asserted by the Vendor in
writing (setting out in reasonable detail the nature of the Claim
and the appropriate amount thereof) before the expiration of such
period, but there shall be no time limit on the representations
and warranties of FMC which relate to the incorporation of FMC in
Section 6.2(1), the due authorization of this Agreement by FMC in
Section 6.2(2) and the enforceability of FMC's obligations under
this Agreement in Section 6.2(3).
(2) Despite Sections 6.3(1) and 6.3(2), in the event that any
representation or warranty of any Party under Section 6.1 or 6.2
is made with the intent to deceive in reckless disregard of the
accuracy of such representation and warranty, such representation
and warranty shall survive the Closing in perpetuity.
ARTICLE 7
INDEMNIFICATION
7.1.1 Indemnity by the Vendors. The Vendor shall indemnify and hold
FMC, its directors, officers, employees, agents and representatives harmless in
respect of any claim, demand, action, cause of action, damage, loss, cost,
liability or expense (hereinafter referred to as a "Claim") which may be made or
brought against an Indemnified Party or which it may suffer or incur directly or
indirectly as a result of, in respect of or arising out of:
(1) any incorrectness in or breach of any representation or warranty
of the Vendor contained in this Agreement or under any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement; or
(2) any breach of or any non-fulfillment of any covenant or agreement
on the part of the Vendor under this Agreement or under any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement,
provided however that the Vendor shall not be liable for any Claim by FMC in
connection with the breach of any representation or warranty of the Vendor
contained in this Agreement or under any other agreement, certificate or
instruments executed and delivered pursuant to this Agreement relating to the
enforceability of the Vendors' obligations under this Agreement in Section
6.1(3), or to the title of each Vendor to the Shares in Section 6.1(5) or the
breach or non-fulfillment of any covenant or agreement on the part of the Vendor
under this Agreement or any other agreement, certificate or instrument executed
and delivered pursuant to this Agreement.
7.2 Indemnity by FMC. FMC shall indemnify and hold the Vendor, its
directors, officers, employees, agents, representatives and Affiliates and their
respective directors, officers, employees, agents and representatives harmless
in respect of any Claim which may be made or brought against an Indemnified
Party or which it may suffer or incur directly or indirectly as a result of, in
respect of or arising out of:
(1) any incorrectness in or breach of any representation or warranty
of FMC contained in this Agreement or under any other agreement,
certificate or instrument executed and delivered pursuant to this
Agreement; or
(2) any breach or non-fulfilment of any covenant or agreement on the
part of FMC under this Agreement or under any other agreement,
certificate or instrument executed and delivered pursuant to this
Agreement.
7.3 Limitation. Except to the extent relating to any fraud, no Party
shall have any Liability for indemnification pursuant to Sections 7.1 and 7.2,
save as follows: (a) the Vendor shall not have any Liability for indemnification
pursuant to Section 7.1(1) in any amount in excess of the portion of the
Purchase Price received by such Vendor or Corporation; and (b) FMC shall have no
Liability for indemnification pursuant to Section 7.2 in any amount in excess of
the portion of the Purchase Price paid by FMC to each Vendor.
7.4 Notice of Claim. If an Indemnified party becomes aware of a Claim
in respect of which indemnification is provided for pursuant to any of Sections
7.1 or 7.32 as the case may be, the Indemnified Party shall promptly give
written notice of the Claim to the Indemnifying Party. Such notice shall specify
whether the Claim arises as a result of a claim by a Person against the
Indemnified Party (a "Third Party Claim") or whether the Claim does not so arise
(a "Direct Claim"), and shall also specify with reasonable particularity (to the
extent the information is available):
(a) the factual basis of the Claim; and
(b) the amount of the Claim, if known.
If through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time effectively to contest the determination of
any liability susceptible of being contested, then the Liability of the
Indemnifying Party to the Indemnified Party under this Article shall be reduced
by the amount of any losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.
7.5 Direct Claims. In the case of a Direct Claim, the Indemnifying
Party shall have 60 days from receipt of notice of the Claim within which to
make such investigation of the Claim as the Indemnifying Party considers
necessary or desirable. For the purpose of such investigation, the Indemnified
Party shall make available to the Indemnifying Party the information relied upon
by the Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or before the expiration of such 60 day period (or any mutually agreed
upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim, failing which the matter shall be referred to
non-binding mediation in such manner as the parties may agree or shall be
determined by a court of competent jurisdiction.
7.6 Third Party Claims. In the case of a Third Party Claim, the
Indemnifying Party shall have the right, at its expense, to participate in or
assume control of the negotiation, settlement or defence of the Claim. If the
Indemnifying Party elects to assume such control, the Indemnifying Party shall
reimburse the Indemnified Party for all of the Indemnified Party's out-of-pocket
expenses incurred as a result of such participation or assumption. The
Indemnified Party shall have the right to participate in the negotiation,
settlement or defence of such Third Party Claim and to retain counsel to act on
its behalf, provided that the fees and disbursements of such counsel shall be
paid by the Indemnified Party unless the Indemnifying Party consents to the
retention of such counsel at its expense or unless the named parties to any
action or proceeding include both the Indemnifying Party and the Indemnified
Party and a representation of both the Indemnifying Party and the Indemnified
Party by the same counsel would be inappropriate due to the actual or potential
differing interests between them (such as the availability of different
defences). The Indemnified Party shall cooperate with the Indemnifying Party so
as to permit the Indemnifying Party to conduct such negotiation, settlement and
defence and for this purpose shall preserve all relevant documents in relation
to the Third Party Claim, allow the Indemnifying Party access on reasonable
notice to inspect and take copies of all such documents and require its
personnel to provide such statements as the Indemnifying Party may reasonably
require and to attend and give evidence at any trial or hearing in respect of
the Third Party Claim. If, having elected to assume control of the negotiation,
settlement or defence of the Third Party claim, the Indemnifying Party
thereafter fails to conduct such negotiation, settlement or defence with
reasonable diligence, then the Indemnified Party shall be entitled to assume
such control and the Indemnifying Party shall be bound by the results obtained
by the Indemnified Party with respect to such Third Party Claim. If any Third
Party Claim is of a nature such that (i) the Indemnified Party is required by
Applicable Law or the order of any court, tribunal or regulatory body having
jurisdiction, or (ii) it is necessary in the reasonable view of the Indemnified
Party acting in good faith and in a manner consistent with reasonable commercial
practices, in respect of (A) a Third Party Claim by a customer relating to
products or services supplied by the Business or (B) a Third Party Claim
relating to any Contract which is necessary to the ongoing operations of the
Business or any material part thereof in order to avoid material damage to the
relationship between the Indemnified Party and any of its major customers or to
preserve the rights of the Indemnified Party under such an essential Contract,
to make a payment to any person (a "Third Party") with respect to the Third
Party Claim before the completion of settlement negotiations or related legal
proceedings, as the case may be, then the Indemnified Party may make such
payment and the Indemnifying Party shall, promptly after demand by the
Indemnified Party, reimburse the Indemnified Party for such payment. If the
amount of any liability of the Indemnified Party under the Third Party Claim in
respect of such a payment was made, as finally determined, is less than the
amount which was paid by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, promptly after receipt of the difference from the Third
Party, pay the amount of such difference to the Indemnifying Party. If such a
payment, by resulting in settlement of the Third Party Claim, precludes a final
determination of the merits of the Third Party Claim and the Indemnified Party
and the Indemnifying Party are unable to agree whether such payment was
unreasonable in the circumstances having regard to the amount and merits of the
Third Party Claim, then such dispute shall be referred to and finally settled by
binding arbitration from which there shall be no appeal.
7.7 Settlement of Third Party Claims. If the Indemnifying Party fails
to assume control of the defence of any Third Party Claim, the Indemnified Party
shall have the exclusive right to contest, settle or pay the amount claimed.
Whether or not the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Third Party Claim, the Indemnifying Party shall not
settle any Third Party Claim without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that the liability of the Indemnifying Party shall be limited to the
proposed settlement amount if any such consent is not obtained for any reason
within a reasonable time after the request therefor.
7.8 Interest on Claims. The amount of any Claim submitted under Section
7.1 or 7.2 as damages or by way of indemnification shall bear interest from and
including the date any Indemnified Party is required to make payment in respect
thereof at the Prime Rate calculated from and including such date to but
excluding the date reimbursement of such Claim by the Indemnifying Party is
made, and the amount of such interest shall be deemed to be part of such Claim.
7.9 Tax Adjustments. The amount of any Claim submitted under Section
7.1 or 7.2 as damages or by way of indemnification shall be determined on an
after-Tax basis, and without limiting the generality of the foregoing shall (a)
be net of the present value of any Tax benefits to the Indemnified Party
resulting from the claim for indemnity and (b) include the amount necessary to
hold the Indemnified Party harmless after Tax. The present value of any Tax
benefits shall be the amount, calculated on the date that is the Business Day
immediately preceding the date of payment of the Claim, that is required to
provide a yield from such date to the last day of the latest taxation year of
the Indemnified Party to which the Tax benefits relate that is equal to the sum
of the yield to maturity on such date, assuming semi-annual compounding, that a
non-callable Government of Canada bond would carry if issued in Canadian dollars
in Canada at 100% of its principal amount on such date and maturing
approximately on the last day of the latest taxation year of the Indemnified
Party to which the Tax benefits relate, plus five per cent.
7.10 Set-0ff. FMC shall be entitled to set-off the amount of any Claim
submitted under Section 7.1 as damages or by way of indemnification against the
Corporation, once finally determined, against any other amounts payable by FMC
to the Corporation whether under this Agreement or otherwise.
7.11 Dispute Resolution. In the event that any Party shall have any
disagreement, dispute, controversy or claim arising out of or relating to this
Agreement, the performance or interpretation hereof, the relationship
contemplated hereby, or the breach, termination or invalidity hereof or thereof
( a "Dispute"), then such Party shall notify each other in a writing setting
forth briefly the nature of the Dispute and the amount involved, if any. Within
ten (10) days of receipt of such notice, the Parties shall each designate a
representative with full power and authority to resolve the Dispute, who shall
meet within fifteen (15) days of their designation to attempt through good faith
negotiation to reach an amicable resolution. If the Parties are unable to
resolve the Dispute within sixty (60) days following the date on which
negotiations commenced, any Party can submit the Dispute to mediation in
accordance with the procedures of the American Arbitration Association. Nothing
in this Agreement is intended to limit a Party's right to seek, at any time,
injunctive or other provisional judicial relief if in the circumstances such
relief is necessary to avoid irreparable harm or other injury for which there is
no adequate remedy at law.
ARTICLE 8
INTERIM PERIOD
8.1 Investigation. Until the Closing, FMC and its representatives and
advisers shall be permitted to make such investigations, inspections, surveys or
tests of the properties and assets of the Corporation, its predecessor companies
and Affiliates and of its respective financial and legal condition as FMC deems
necessary or desirable to familiarize itself with such properties, assets and
other matters. Without limiting the generality of the foregoing, FMC shall be
permitted complete access to all documents relating to information scheduled or
required to be disclosed under this Agreement, to the Books and Records, the
Contracts, the Leased Premises, the Employees, records regarding suppliers,
customers and regulators and environmental reports, surveys, inspection reports
and all other reports prepared by advisers of the Corporation, its predecessor
companies and its Affiliates and the Corporation shall provide to FMC
photocopies of all such written information and documents as may be reasonably
requested by FMC. Any such investigations, inspections, surveys or tests shall
not, however, affect or mitigate the representations and warranties of the
Vendor under this Agreement which shall continue in full force and effect as
provided under this Agreement.
8.2 Authorizations. The Vendor shall execute and deliver any
authorizations required to permit the investigations, inspections, surveys or
tests described in Section 8.1.
8.3 Confidentiality.
(1) Each party shall hold in strictest confidence and not use in any
manner, other than as expressly contemplated by this Agreement,
any Confidential Information (as defined below) of the other
Party.
(2) Section 8.3(1) shall not apply to the disclosure of any
Confidential Information where such disclosure is required by
Applicable Law. In that case, the Party required to disclose
shall, as soon as possible in the circumstances, notify the other
Party of the requirement. Upon receiving such notification, the
other Party may take any reasonable action to challenge the
requirement, and the affected Party shall, at the expense of the
other Party, assist the other Party in taking such reasonable
action.
(3) Following the termination of this Agreement, each Party shall
promptly, upon request from the other Party, return to the
requesting Party all copies of any tangible items (other than
this Agreement), if any, which are or which contain Confidential
Information of the requesting Party; provided that if the Party
so obligated to return Confidential Information has prepared
summaries or analyses containing or concerning Confidential
Information, then such Party may, instead of returning the
summaries or analyses, destroy them and provide a certificate to
that effect to the requesting Party.
(3) For the purposes of this Section 8.3:
(a) "Confidential Information" of a Party at any time means all
information relating to the business of such Party and its
Affiliates (including business plans, way of doing
business, business results and prospects and customer
lists) which,
(i) at the time is of a confidential nature (whether or
not specifically identified as confidential) and is
known or should be known by the other Party as being
confidential, and
(ii) has been or is from time to time made known to or is
otherwise learned by the other Party as a result of
the matters provided for in this Agreement,
including the following information:
(iii) the terms of this Agreement;
(iv) a Party's proprietary software and Intellectual
Property; and
(v) a Party's business records,
but not including any information that at such time:
(vi) has become generally available to the public other
than as a result of a disclosure by the other Party.
8.4 Action During Interim Period. During the Interim Period, the
Corporation shall be operated and managed in the usual and ordinary course of
business such that the Corporation shall:
(1) other than changes to compensation or other benefits which have
been approved by a majority of the board of directors or in
accordance with existing agreements, not make or agree to make
any material change in the compensation of any Senior Employee
and not pay or agree to pay or set aside any bonus, profit
sharing, retirement, insurance, death, severance or fringe
benefit or other extraordinary or indirect compensation to, for
or on behalf of any Senior Employee;
(2) not dispose of any of the Assets, except for sales of inventories
in the normal course of business;
(3) not enter into any Material Contract that is not in the normal
course of business;
(4) not issue any shares or other securities of the Corporation in
connection with the warrant transactions or the exercise of
options already granted;
(4) not declare or cause to be paid any dividend or make any other
form of distribution or payment on the Shares or any other
securities of the Corporation;
(5) use all reasonable efforts not to default in the performance of
any term or condition of any Material Contract or Licences and
Permits;
(6) not cancel any policy of insurance which relates to the
Corporation or any of the Assets, except with the prior written
consent of FMC;
(7) use all reasonable efforts to maintain relations with the
suppliers, customers and landlords of the Corporation in
accordance with past custom and practice; and
(8) except as otherwise disclosed herein, pay before delinquency all
Taxes and other obligations which become due and payable by the
Corporation.
8.5 Exclusive Dealings. During the Interim Period neither the Vendor
nor the Corporation without the consent of FMC, not to be unreasonably withheld,
shall take any action, directly or indirectly, to encourage, initiate or engage
in discussions or negotiations with, or provide any information to, any Person,
other than FMC and the designated and authorized representatives of either
party, concerning any sale, transfer or assignment of the Shares or the Assets
(other than sales in the ordinary course of business) involving the Corporation.
The Vendor and the Corporation shall notify FMC promptly if any such discussions
or negotiations are sought or if any proposal for a sale, transfer or assignment
of the Shares or the Assets is received or being considered. Notwithstanding the
foregoing, the restrictions set out in this Section 8.5 shall not apply
following the termination of this Agreement.
8.6 Regulatory Approvals. The Vendor shall cooperate, and shall cause
the Corporation to cooperate, with FMC and render all necessary assistance
required by FMC in connection with any application, notification or filing of
FMC to or with any regulatory agency, at FMC's expense.
8.7 Updates to Information. The Vendor shall update on or before
Closing, by amendment or supplement, any of the information disclosure schedules
referred to in this Agreement and any other disclosure in writing to FMC as soon
as reasonably possible after new or conflicting information comes to the
attention of the Vendor. FMC shall not be obligated to accept any such amendment
or supplement if it results in a Material Adverse Change in the Business and
receipt of any such amendment or supplement shall not be deemed to be a waiver
or release by FMC of any provision of this Agreement.
ARTICLE 9
GENERAL
9.1 Expenses. FMC and the Vendor shall each be solely responsible for
and bear all of its own respective expenses, including, without limitation,
expenses of legal counsel, accountants, and other advisors incurred at any time
in connection with pursuing or consummating the transactions contemplated in
this Agreement.
9.2 Public Announcements. Except to the extent otherwise required by
law or with the prior consent of the other Party, no Party shall make any public
announcement regarding this Agreement or the transactions contemplated by this
Agreement. The parties shall mutually agree upon an appropriate public
announcement to be made after execution of this Agreement.
9.3 Notices. Any notice, certificate, consent, determination or other
communication required or permitted to be given or made under this Agreement
shall be in writing and shall be effectively given and made if (i) delivered
personally, (ii) sent by prepaid courier service or mail, or (iii) sent prepaid
by fax or other similar means of electronic communication, in each case to the
applicable address set out below:
(i) if to the Vendor, to:
Mr. Douglas J. Bates
c/o Gallop, Johnson & Neuman, L.C.
101 South Hanley Road, Suite 1600
St. Louis, Missouri 63105
Fax: (314) 862-1219
(ii) Financial Models Company Inc. 2355 Skymark Avenue
Mississauga, Ontario L4W 4Y6
Attention: Richard W. Arnold
Fax: (905) 629-0022
with a copy to:
McCarthy Tetrault
Suite 4700
Toronto Dominion Bank Tower
Toronto Dominion Centre
Toronto, Ontario M5K 1E6
Attention: Christa Wessel
Fax: (416) 868-1853
Any such communication so given or made shall be deemed to have been given or
made and to have been received on the day of delivery if delivered, or on the
day of faxing or sending by other means of recorded electronic communication,
provided that such day in either event is a Business Day and the communication
is so delivered, faxed or sent before 4:30 p.m. local time of the recipient on
such day. Otherwise, such communication shall be deemed to have been given and
made and to have been received on the next following Business Day. Any such
communication sent by mail shall be deemed to have been given and made and to
have been received on the fifth Business Day following the mailing thereof;
provided however that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made and to have been
received only upon actual receipt. Any Party may from time to time change its
address under this Section by notice to the other Party given in the manner
provided by this Section.
9.4 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties pertaining to the subject matter of this Agreement and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written. There are no conditions, warranties, representations or
other agreements between the Parties in connection with the subject matter of
this Agreement, whether oral or written, express or implied, statutory or
otherwise) except as specifically set out in this Agreement.
9.5 Waiver. A waiver of any default, breach or non-compliance under
this Agreement is not effective unless in writing and signed by the party to be
bound by the waiver. No waiver shall be inferred from or implied by any failure
to act or delay in acting by a party in respect of any default, breach or
non-observance or by anything done or omitted to be done by the other party. The
waiver by a party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that party's rights under this Agreement in
respect of any continuing or subsequent default, breach or non-observance
(whether of the same or any other nature).
9.6 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such prohibition or unenforceability and shall be
severed from the balance of this Agreement, all without affecting the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
9.7 Non-Merger. Each party hereby agrees that all provisions of this
Agreement, other than (a) the conditions in Article 5 and (b) the
representations and warranties contained in Article 6 and the indemnities in
Sections 8.1 and 8.2 hereof (which shall be subject to the arrangements made in
such Articles or Sections) shall forever survive the execution, delivery and
performance of this Agreement, Closing and the execution, delivery and
performance of any and all documents delivered in connection with this
Agreement.
9.8 Further Assurances. Each Party shall promptly do, execute, deliver
or cause to be done, executed and delivered all further acts, documents and
things in connection with this Agreement that the other Party may reasonably
require for the purposes of giving effect to this Agreement.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Provinces of Ontario and British Columbia and
the laws of Canada applicable in such Province.
9.10 Successors and Assigns. This Agreement shall enure to the benefit
of, and be binding on, the Parties and their respective successors and permitted
assigns. No Party may assign or transfer, whether absolutely, by way of security
or otherwise, all or any part of its respective rights or obligations under this
Agreement without the prior written consent of the other Parties, provided,
however, that from and after the Closing, FMC shall be entitled to transfer all
or a portion of the Shares, and all ancillary rights therein and thereto,
without the prior written consent of any other Party.
9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument.
Counterparts may be executed either in original or faxed form and the Parties
adopt any signatures received by a receiving fax machine as original signatures
of the Parties; provided, however, that any Party providing its signature in
such manner shall promptly forward to the other Parties an original of the
signed copy of the Agreement which was so faxed.
<PAGE>
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
6th day of January, 1999.
FINANCIAL MODELS COMPANY INC. POWERTRADER, INC.
Per: Per:
------------------------------ ----------------------------------
Name: Name:
Title: Title:
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 50,955
<SECURITIES> 0
<RECEIVABLES> 205,050
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 256,005
<PP&E> 85,448
<DEPRECIATION> 0
<TOTAL-ASSETS> 341,452
<CURRENT-LIABILITIES> 426,208
<BONDS> 0
0
0
<COMMON> 3,378,223
<OTHER-SE> (3,462,979)
<TOTAL-LIABILITY-AND-EQUITY> 341,452
<SALES> 54,112
<TOTAL-REVENUES> 54,112
<CGS> 5,330
<TOTAL-COSTS> 5,330
<OTHER-EXPENSES> 25,037
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (23,745)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,745)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,745)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
