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EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made effective as of August 10, 2000 (the "Effective Date").
AMONG:
DEBORAH M. DEAN, an individual residing in the State of
Washington, U.S.A.
(the "Vendor");
AND:
JEFFREY W. DEAN, an individual residing in the State of
Washington, U.S.A.
(the "Founder") (collectively, the Vendor and the Founder are
defined as the "Deans");
AND:
SPECTRUM PRINT & MAIL SERVICES, LTD., a corporation
incorporated under the laws of the State of Delaware, U.S.A.
("Spectrum");
AND:
GLOBAL ELECTION SYSTEMS INC., a company incorporated under the
laws of British Columbia
("Global Canada");
AND:
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GLOBAL ELECTION SYSTEMS, INC., a corporation incorporated
under the laws of the State of Delaware, U.S.A.
("Global USA") (collectively, Global Canada and Global USA are
defined as "Global");
WHEREAS:
A. The authorized capital stock of Spectrum consists of 1,000 shares without par
value, of which 100 shares of the capital stock (the "Spectrum Shares") are
issued and outstanding;
B. The Vendor is the sole registered and beneficial owner of the Spectrum
Shares;
C. The Vendor has agreed to sell the Spectrum Shares to Global and Global has
agreed to purchase the Spectrum Shares from the Vendor on the terms and
conditions set forth in this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained, the parties hereto do covenant and agree (the
"Agreement") each with the other as follows:
2. REPRESENTATIONS AND WARRANTIES
2.1 In order to induce Global to enter into this Agreement and complete its
transactions contemplated hereunder, the Vendor and the Founder jointly and
severally represent and warrant to Global that:
(a) Spectrum was and remains duly incorporated and validly
subsisting under the laws of the State of Delaware, U.S.A. and
Spectrum:
(i) does not carry on business in any state of the United
States of America save and except for Washington and
California nor does it carry on business in any
territory or province of Canada save and except for
British Columbia; and
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(ii) is in good standing with respect to the filing of
annual reports with the Secretary of State for
Delaware;
(b) the authorized and issued share capital of Spectrum is as set
forth in paragraphs A and B of the recitals to this
Agreement;
(c) the Spectrum Shares are validly issued and outstanding fully
paid and non-assessable shares of the capital stock of
Spectrum registered in the names of, and beneficially owned
by, the Vendor free and clear of all voting restrictions,
trade restrictions, liens, charges or encumbrances of any
kind whatsoever;
(d) there are no outstanding securities convertible into or
exchangeable or exercisable for any shares of the capital
stock of Spectrum, nor does Spectrum have outstanding any
rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance
of, any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any
shares of its capital stock;
(e) the constating documents of Spectrum have not been altered
since the incorporation of Spectrum, save and except for the
amendment to the Certificate of Incorporation of Spectrum to
change the name of Spectrum, which amendment was evidenced by
the filing of a Certificate of Amendment of Certificate of
Incorporation with the Office of the Secretary of State for
the State of Delaware on July 3, 1996;
(f) Spectrum does not own, directly or indirectly, nor has it
agreed to acquire any of the outstanding shares or securities
convertible into shares of any other corporation, or any
participating interest in any partnership, joint venture or
other business enterprise;
(g) all of the material transactions of Spectrum have been
promptly and properly recorded or filed in or with the books
or records of Spectrum and the minute books of Spectrum
contain all records of the meetings and proceedings of
Spectrum's shareholders and directors since its
incorporation;
(h) Spectrum holds all material licences and permits that are
required for carrying on its business in the manner in which
such business has been carried on;
(i) Spectrum is the owner of all properties and assets
(collectively the "Assets") listed on Schedule "A" to this
Agreement, except to the extent any of the Assets are leased,
and such Assets represent all of the material property and
assets used by Spectrum and which are necessary or useful in
the conduct of its business and
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all owned Assets are free and clear of all liens, charges and
encumbrances of any kind whatsoever save and except those
specified as "Permitted Encumbrances" on Schedule "A" to this
Agreement;
(j) Spectrum has all necessary corporate power, authority and
capacity to own the Assets owned by it and carry on the
business carried on by it and Spectrum is duly registered,
licensed or otherwise qualified and in good standing to carry
on business in all jurisdictions in which it carries on
business;
(k) all machinery and equipment comprised in the Assets are in
reasonable operating condition and in a state of reasonable
maintenance and repair taking into account their age and use;
(l) all of the bank accounts and trust accounts of Spectrum, and
the names of all persons authorized to draw thereon or who
have access thereto, are listed on Schedule "A" to this
Agreement;
(m) Schedule "K" to this Agreement sets forth, with respect to
Spectrum, a true and complete list of all material equipment,
office equipment, furniture, machinery, vehicles, fixtures,
computer hardware and software and other personal property in
the possession or custody of Spectrum which is leased, held
under license or similar arrangement, or subject to an
agreement to lease, license or similar arrangement, together
with a description of each of the leases, license, agreements
or other documentation relating thereto;
(n) except as disclosed in Schedule "K" to this Agreement, each
such lease, license, agreement or arrangement set forth in
Schedule "K" to this Agreement is in good standing and in
full force and effect, and Spectrum is entitled to all
benefits, rights and privileges thereunder;
(o) each lease, license, agreement or arrangement set forth in
Schedule "K" to this Agreement constitutes a valid and
binding obligation of Spectrum and, to the Deans' knowledge,
of the other parties thereto, enforceable in accordance with
its terms subject to bankruptcy, insolvency and other laws
affecting creditors' rights generally and to general
principles of equity;
(p) the Deans have no knowledge that the other party to any
lease, license agreement or arrangement set forth in Schedule
"K" to this Agreement is in breach of its obligations
thereunder, and no act or event has occurred which, with
notice or lapse of time, or both, would constitute a breach
thereof by Spectrum or, to the Deans' knowledge, by any of
the other parties thereto;
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(q) each lease, license, agreement or arrangement set forth in
Schedule "K" to this Agreement was entered into in the
ordinary and normal course of business and Spectrum has not
received notice that any party has breached, intends to
breach or intends to discontinue any such lease, license,
agreement or arrangement;
(r) Schedule "L" to this Agreement sets forth, with respect to
Spectrum, a true and complete list and description of any
lease, sublease or license of real property (collectively,
"Spectrum Properties") to which Spectrum is a party or by
which Spectrum is bound (collectively, the "Non-Freehold
Agreements");
(s) all interests held by Spectrum under the Non-Freehold
Agreements are, and will be at the Time of Closing, free and
clear of all liens, charges and encumbrances of any kind
whatsoever;
(t) the Non-Freehold Agreements are in good standing and in full
force and effect and Spectrum is entitled to all benefits,
rights and privileges thereunder;
(u) all amounts of rent and other amounts presently owing under
the Non-Freehold Agreements have been paid;
(v) Spectrum has complied with all of its obligations under the
Non-Freehold Agreements, and neither Spectrum nor, to the
Deans' knowledge, the other parties to the Non-Freehold
Agreements, are in breach of their obligations thereunder and
no act or event has occurred which, with notice or lapse of
time, or both, would constitute a breach thereof;
(w) neither the leasing of the real property under the
Non-Freehold Agreements nor Spectrum's use of such real
property is, to Deans' knowledge, in violation of any
applicable material law, rule or regulation, including any
violation of any health, safety, zoning, subdivision or
building statute, ordinance or restriction, any Environmental
Laws (as defined herein), or any restrictive covenant,
affecting the real property;
(x) Spectrum has not received notice that any of the other
parties to the Non-Freehold Agreements has breached, intends
to breach or intends to discontinue the Non-Freehold
Agreements;
(y) the Non-Freehold Agreements constitute valid and binding
obligations of Spectrum, and to the Deans' knowledge, of the
other parties thereto, enforceable in accordance with their
terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights generally and to general
principles of equity;
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(z) Spectrum does not own any real property or, except pursuant
to the Non-Freehold Agreements, any interests in real
property;
(aa) Spectrum maintains insurance against loss of, or damage to,
the Assets by all usual insurable risks on a replacement cost
basis and reasonable insurance with respect to public
liability for a business of its size (collectively the
"Insurance Coverage"), and all of the policies (the
"Insurance Policies") in respect of such Insurance Coverage
are described on Schedule "D" to this Agreement and all such
Insurance Policies are in good standing in all respects and
not in default in any respects;
(bb) the unaudited financial statements of Spectrum for its fiscal
years ended December 31, 1999, 1998, 1997 and 1996 and the
unaudited financial statements of Spectrum for the interim
six month period of its current fiscal year (collectively the
"Spectrum Financial Statements"), a copy of which appear as
Schedule "B" to this Agreement, present fairly and accurately
the financial position and results of the operations of
Spectrum for the periods then ended;
(cc) the books and records of Spectrum disclose all material
financial transactions of Spectrum and such transactions have
been fairly and accurately recorded;
(dd) except as disclosed in the Spectrum Financial Statements:
(i) no dividends or other distributions of any kind
whatsoever on any shares in the capital of Spectrum
have been made, declared or authorized;
(ii) Spectrum is not indebted to the Vendor or to the
Founder except for reimbursable expenses incurred in
the ordinary course of business and for salaries and
benefits since the date thereof;
(iii) none of the Vendor, or the Founder, or any other
officer, director or employee of Spectrum is
indebted or under obligation to Spectrum on any
account whatsoever; and
(iv) Spectrum has not guaranteed or agreed to guarantee
any debt, liability or other obligation of any kind
whatsoever of any person, firm or corporation of any
kind whatsoever;
(ee) there are no material liabilities of Spectrum, whether
direct, indirect, absolute, contingent or otherwise which are
not disclosed or reflected in the Spectrum Financial
Statements except those incurred in the ordinary course of
business of
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Spectrum since June 30, 2000 to the Effective Date which are
recorded in the books and records of Spectrum;
(ff) the inventory shown on the Spectrum Financial Statements or
recorded in the books and records of Spectrum has been valued
at cost and none of the inventory is obsolete or unsaleable
in the ordinary course of the business of Spectrum;
(gg) the accounts receivable of Spectrum shown on the Spectrum
Financial Statements or recorded in the books and records of
Spectrum are bona fide, good and collectible without set-off
or counterclaim;
(hh) since June 30, 2000:
(i) there has not been any material adverse change of
any kind whatsoever in the financial position of
Spectrum or any damage or loss materially adversely
affecting the business or Assets of Spectrum or the
right or capacity of Spectrum to carry on its
business;
(ii) Spectrum has not waived or surrendered any right of
any kind whatsoever of material value;
(iii) except as permitted under this Agreement, Spectrum
has not discharged, satisfied or paid any lien,
charge or encumbrance of any kind whatsoever or
obligation or liability of any kind whatsoever other
than current liabilities in the ordinary course of
its business;
(iv) the business of Spectrum has been carried on in the
ordinary course;
(v) no new machinery or equipment of any kind whatsoever
has been ordered by, or installed or assembled on
the premises of, Spectrum except as disclosed to
Global on Schedule "A" to this Agreement; and
(vi) no capital expenditures have been authorized or made
by Spectrum in excess of US$50,000 in the aggregate;
(ii) the directors, officers and key employees of Spectrum and the
payment arrangements with Spectrum are as listed on Schedule
"C" to this Agreement;
(jj) no payments of any kind whatsoever have been made or
authorized by Spectrum since June 30, 2000 to or on
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behalf of the Vendor or the Founder or to or on behalf of any
of the directors, officers or key employees of Spectrum
except in accordance with those compensation arrangements
specified on Schedule "C" to this Agreement or except as
contemplated by this Agreement;
(kk) all wages (specifically including any severance or
termination payments due and owing), salaries, bonuses and
commissions relating to the directors, officers and employees
of Spectrum since June 30, 2000 to the Effective Date are
reflected and accrued in the books and records of Spectrum;
(ll) there is no outstanding, pending or, to the Deans' knowledge,
threatened or anticipated assessment, legal action, cause of
action, legal claim, order, prosecution or suit against
Spectrum, pursuant to or under any applicable material law,
statutes, rules, regulations, ordinances or orders, including
social security, unemployment insurance, income tax, employer
health tax, employment standards, labor relations,
occupational health and safety, human rights, workers'
compensation or pay equity, and Spectrum is in compliance
with all such applicable material law, statutes, rules,
regulations, ordinances or orders;
(mm) there are no pensions, profit sharing, group insurance or
similar plans or other deferred compensation plans of any
kind whatsoever affecting Spectrum other than those specified
on Schedule "C" to this Agreement, and Spectrum has no
unfunded or unpaid liability in respect of any such plan;
(nn) Spectrum is not now, and has never been, a party to any
collective agreement with any labour union or other
association of employees of any kind whatsoever;
(oo) Spectrum has not experienced any strikes, work stoppages,
claims of unfair labor practice or other material labor
disputes;
(pp) no officer or employee of Spectrum has given notice of any
claim alleging eligibility for short-term or long-term
disability benefits;
(qq) each of the officers and key employees of Spectrum is in good
standing under the terms and conditions of their respective
employment with Spectrum, and the Deans have no knowledge of
any material problem with any such officer or employee, or
the employment of any such officer or key employee with
Spectrum;
(rr) there have been no occupational health or safety violations
affecting Spectrum of the nature or type, including the
presence of any industrial disease or any long-term
occupational illness in the workplace or among any of the
employees or former employees, which could or did result in
any action or claim against
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Spectrum by any of its employees or former employees, or
their respective dependents, heirs or legal personal
representatives, under any applicable insurance programs,
workers' compensation laws or other law;
(ss) there are no toxic or hazardous substances in use in the
workplace of Spectrum except those used in the printing
business;
(tt) Spectrum has complied in all material respects with all legal
requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health,
and plant closing; and Spectrum is not liable for the payment
of any compensation, damages, taxes, fines, penalties or
other amounts, however designated, for failure to comply with
any of the foregoing legal requirements;
(uu) the contracts and agreements included on Schedules "A", "C",
"K", and "L" to this Agreement and those additional contracts
and agreements specified on Schedule "D" to this Agreement
(collectively the "Material Contracts") constitute all of the
material contracts and agreements of Spectrum. Each Material
Contract constitutes a valid and binding obligation of
Spectrum and, to the Deans' knowledge, of the other parties
thereto, enforceable in accordance with its terms subject to
bankruptcy, insolvency and other laws affecting creditors'
rights generally and to general principles of equity. None of
Spectrum and, to the Deans' knowledge, the other parties to
any such Material Contract, is in breach of its obligations
thereunder, and no act or event has occurred which, with
notice or lapse of time or both, would constitute a breach
thereof. All such Material Contracts were entered into in the
ordinary and normal course of business. Spectrum has not
received notice that any party has breached, intends to
breach or intends to discontinue any such contract or
agreement. None of the Material Contracts may be terminated
by the other party thereto as a result of the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(vv) true, correct and complete copies of all Material Contracts
have been delivered to Global Canada;
(ww) all tax returns and reports of Spectrum required by law to
have been filed have been filed and are substantially
complete and correct and all taxes required to be paid
thereunder have been timely paid or accrued in the Spectrum
Financial Statements;
(xx) Spectrum has been assessed for all federal and provincial
income tax in Canada for its full fiscal year ended December
31, 1999;
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(yy) there are no agreements, waivers or other arrangements of any
kind whatsoever providing for an extension of time with
respect to the filing of any tax return by, or payment of,
any tax or governmental charge of any kind whatsoever by
Spectrum;
(zz) they are not aware of any tax liabilities of Spectrum of any
kind whatsoever or any grounds which would prompt a
reassessment of Spectrum;
(aaa) Spectrum has made all collections, deductions, remittances
and payments of any kind whatsoever and filed all reports and
returns required by it to be made or filed under the
provisions of all applicable statutes requiring the making of
collections, deductions, remittances or payments of any kind
whatsoever in those jurisdictions in which Spectrum carries
on business;
(bbb) Spectrum is a registrant for purposes of the goods and
services tax provided for under the Excise Tax Act (Canada)
and its registration number is 891242430RT;
(ccc) Spectrum is, and has been at all times since its
incorporation, an S corporation for United States income tax
purposes;
(ddd) to the best of their knowledge, there are no material
actions, suits, judgments, investigations or proceedings of
any kind whatsoever outstanding, pending or threatened
against or affecting Spectrum at law or in equity or before
or by any federal, provincial, state, municipal or other
governmental department, commission, board, bureau or agency
of any kind whatsoever;
(eee) Spectrum, the Founder and the Vendor each have good and
sufficient right and authority to enter into this Agreement
and complete the transactions contemplated under this
Agreement on the terms and conditions set forth herein;
(fff) to the best of their knowledge, the execution and delivery of
this Agreement, the performance of their respective
obligations under this Agreement and the completion of the
transactions contemplated under this Agreement will not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or
constitute default under, any indenture, mortgage,
agreement, lease, licence or other instrument of any
kind whatsoever to which Spectrum, the Vendor or the
Founder is a party or by which any one of them is
bound, or any judgment or order of any kind
whatsoever of any court or administrative body of
any kind whatsoever by which any one of them is
bound; and
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(ii) result in the violation of any material law or
regulation of any kind by Spectrum;
(ggg) neither Spectrum nor the Deans have incurred any liability
for brokers' or finder's fees of any kind whatsoever with
respect to this Agreement or any transaction contemplated
under this Agreement other than payments for valuations;
(hhh) Schedule "M" to this Agreement contains an accurate, complete
and comprehensive list of:
(i) all trademarks, trademark applications, trademark
registrations, trade names, service marks, service
mark registrations and applications, designs,
graphics, logos and other commercial symbols of or
relating to Spectrum's business, including business
names;
(ii) all industrial designs or similar rights of or
relating to Spectrum's business, including
applications and registrations;
(iii) all patents, the inventions claimed therein and all
applications therefor of or relating to Spectrum's
business, including patents which may be issued out
of such applications (including divisions, reissues,
renewals, re-examinations, continuations,
continuations in part and extensions) applied for or
registered in any jurisdiction;
(iv) all domain names and websites used by Spectrum;
(v) all computer systems, including hardware, software,
firmware, middleware, software libraries, software
tools, the object and source codes relating thereto
and the design, technical and user documentation
relating thereto used by Spectrum in whatever form
and media in the conduct and operation of Spectrum's
business except such as are commercially available
in the marketplace (collectively, "Spectrum's
Computer Systems"), and also Spectrum's Computer
Systems that were created by the employees, officers
and directors of Spectrum and/or consultants under
contract with Spectrum ("Spectrum's In-house
Computer Systems") (collectively, Spectrum's
Computer Systems and Spectrum's In-house Computer
Systems are defined as "Spectrum's Computer
Programs"); and
(vi) all contracts between Spectrum and third parties
which relate to Spectrum's Computer Programs
licensed or leased by third parties to Spectrum and
used in connection with Spectrum's business,
including but not limited to development agreements,
consulting agreements,
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maintenance agreements, source code escrow
agreements, license agreements and distribution
agreements (collectively, the "Third-Party IT
Contracts");
(collectively, the "Intellectual Property Rights"), and such
list sets out, in detail, the relevant dates, reference
numbers and jurisdictions of each. Spectrum has all necessary
rights and is fully entitled to exercise the Intellectual
Property Rights as provided hereunder. The execution,
delivery and performance of this Agreement do not constitute
and will not constitute a breach of any of the Intellectual
Property Rights of Spectrum;
(iii) Spectrum's In-house Computer Systems set forth in Schedule
"M" are owned by Spectrum and are used in Spectrum's
business; and to the Deans' knowledge, Spectrum is not in
default of any of its obligations as licensee under any
licenses or any Third-Party IT Contracts listed in Schedule
"M" to this Agreement as at the date hereof;
(jjj) no source code for any of Spectrum's In-house Computer
Systems is in the possession of any person other than
Spectrum;
(kkk) except with respect to any Third-Party IT Contracts and the
licenses disclosed in Schedule "M" to this Agreement which
grant rights to Spectrum and are owned by other persons,
Spectrum is or at the time of Closing will be the sole legal
and beneficial owner of:
(i) the Intellectual Property Rights; and
(ii) all right, title and interest in and to all know-how
relating to Spectrum's business, including all
research data, trade secrets and other proprietary
know-how (whether patentable or non-patentable and
whether or not reduced to practice), techniques,
instructions, manuals, records, procedures,
financial, marketing and business data (including
pricing and cost information, business and marketing
plans and customer and supplier lists and
information),
(collectively, the "Proprietary Information")
(collectively, the Intellectual Property Rights and the
Proprietary Information are defined as the "Technology"), and
will hold all right, title and interest in and to the
Technology, free and clear of all liens, charges and
encumbrances whatsoever and to any licenses of the Technology
granted by Spectrum in the ordinary course
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of its business and Spectrum has no notice of any adverse
claim of ownership in any Technology;
(lll) no authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory
body is required for the assignment and/or transfer by
Spectrum of the Intellectual Property Rights or the
execution, delivery or performance of this Agreement by
Spectrum. There are no restrictions on the ability of
Spectrum to use and exploit all the Intellectual Property
Rights;
(mmm) except as disclosed in Schedule "M" to this Agreement,
Spectrum's In-house Computer Systems are original works and
Spectrum's use of Spectrum's In-house Computer Systems to the
best of their knowledge does not infringe the industrial or
intellectual property rights of any person in the United
States, Canada or any other country where Spectrum currently
has customers;
(nnn) Spectrum has made no filings with any governmental authority
in respect of the Intellectual Property Rights, except for the
filings identified in Schedule M;
(ooo) Spectrum utilizes industry standard software that searches all
computers and incoming electronic material for any harmful
programs or data incorporated into any computer program or
system with malicious intent to disrupt the proper operation
of a computer hardware system or its associated program,
including but not limited to clock, timer, counter or other
limiting or disabling code, design or routine that would cause
the computer program or system to be erased, made inoperable
in any material way or otherwise rendering incapable of
performing substantially in accordance with its applicable
user documentation and specifications or would prevent or
prohibit or otherwise diminish the use thereof by Global
(collectively, "Computer Viruses"). At the Closing Date the
Computer Programs used by Spectrum in Spectrum's business
shall be free of Computer Viruses incorporated into Spectrum's
In-house Computer Systems by the Vendor, the Founder or any
other employee of Spectrum;
(ppp) the documentation delivered by Spectrum in respect of
Spectrum's Computer Programs is sufficient to allow skilled
software professionals possessing experience in this industry
and some knowledge of Spectrum's Computer Programs to operate
Spectrum's business;
(qqq) all of Spectrum's Technology is "Year 2000 Compliant", which
means that, where relevant, it uses a method of sorting,
interpreting, manipulating, calculating, processing and
reporting dates based upon the full four digits for each year
such that all arithmetic operations, comparisons, sorts and
reporting involving dates yield correct results for all years
during and after the year 2000, provided that:
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(i) all information imported from other data sources
includes complete dates only;
(ii) linked tables and other shared data sources include
complete dates only; and
(iii) hardware that fails to correctly switch or change
dates is not used and no other source of date
inconsistency is entered into a Computer Program or
other Technology;
(rrr) the conduct of Spectrum and its use, ownership or rights in
respect of the Intellectual Property Rights do not infringe,
and to the Deans' knowledge Spectrum has not infringed or
breached, nor is infringing or breaching, any Intellectual
Property Rights of any other person;
(sss) Spectrum has not received any notice of a claim against
Spectrum alleging infringement of any Intellectual Property
Right;
(ttt) Spectrum has used commercially reasonable efforts to take
precautions and to protect Spectrum's proprietary information
from loss, damage and unauthorized use or disclosure;
(uuu) Spectrum is not a party to any agreement or arrangement which
restricts the freedom of Spectrum to carry on its business as
presently carried on or any contract or agreement which
contains covenants by Spectrum not to compete in any line of
business with any other person, except in favour of Global;
(vvv) the business of Spectrum has been and is being carried on, and
the processes and undertakings of Spectrum have been and are
being conducted in compliance with all applicable material
laws, regulations or orders of any governmental authority
relating to environmental matters (collectively,
"Environmental Laws"). The Deans have no knowledge of any fact
which could give rise to a potential claim against Spectrum or
any of its directors, officers or employees relating to
non-compliance with any Environmental Laws;
(www) to the Deans' knowledge, Spectrum is not required under
Environmental Laws to have any permits for the operation of
its business as it is presently being conducted;
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(xxx) Spectrum does not use the Spectrum Properties to generate,
manufacture, refine, treat, transport, handle, store, dispose,
transfer, produce or process hazardous waste or hazardous
substances, except as used in the normal printing business;
(yyy) neither Spectrum nor any of its officers or directors or
employees has ever been convicted of an offense or otherwise
cited, fined, penalized or been made subject to an enforcement
order for non-compliance with any Environmental Law;
(zzz) Spectrum has not caused or permitted any release of any
hazardous substances in the course of the conduct of
Spectrum's business that currently imposes or would in the
future impose any material cleanup or remediation obligations
on Spectrum under any Environmental Law;
(aaaa) to the Dean's knowledge, Spectrum is not required to make any
reports to governmental authorities under Environmental Laws
in connection with its business or the Spectrum Properties;
(bbbb) Spectrum has not incurred any material liability with respect
to the Spectrum Properties pursuant to Environmental Laws and,
to the Deans' knowledge, Spectrum is not now incurring any
liability with respect to the Spectrum Properties pursuant to
any Environmental Laws. To the Deans' knowledge, there is no
past or present fact, condition or circumstance in connection
with Spectrum's operations that could result in any material
liability or potential liability under any Environmental Laws;
(cccc) Schedule "N" to this Agreement sets forth a list of all of the
customers of Spectrum as of the Effective Date. No contract or
agreement with any such customer will terminate or be
terminable by the customer as a result of the consummation of
the transactions contemplated by this Agreement. The Deans
have no reason to believe that any customer intends to
terminate or seek a renegotiation of its relationship with
Spectrum as a result of the transactions contemplated by this
Agreement and Spectrum is not involved in any dispute or
disagreement with any of its customers which could have a
material adverse effect on the business of Spectrum. The Deans
do not have any knowledge that the relationship with any of
its customers will not continue after the Closing Date. No
customer has notified Spectrum that it intends not to do
business or that it intends to reduce the amount of business
it conducts with Spectrum as a result of the transaction
contemplated herein;
(dddd) there have been no sales or purchases by Spectrum of any
assets relating to the business of Spectrum which have
occurred since December 31, 1999 and which involve (i) an
obligation on behalf of Spectrum to indemnify the other party
thereto for liabilities in connection with such transaction;
(ii) an obligation on
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behalf of the other party thereto to indemnify Spectrum for
liabilities in connection with such transaction; or (iii) the
retention of any such liabilities or obligations by Spectrum
in connection with such transaction;
(eeee) neither Spectrum, nor any director, officer or employee
(including the Deans) or, to the Deans' knowledge, any agent
or other person acting on behalf of Spectrum has used any
corporate or other funds for unlawful contributions or
unlawful gifts with respect to customers or suppliers of
Spectrum, or has made any unlawful expenditures relating to
political activity of government officials or others, or
established or maintained any unlawful or unrecorded funds.
Neither Spectrum nor any director, officer or employee
(including the Deans) or, to the Deans' knowledge, any agent
or other person acting on behalf of Spectrum has accepted or
received any unlawful contributions, or unlawful payments, or
unlawful gifts; and
(ffff) the Vendor is acquiring Global's Shares for the Vendor's own
account for investment and not as a nominee or agent for or
for the benefit of any other person and that the Vendor has no
present intention of distributing or reselling any of Global's
Shares in violation of federal or state securities laws.
2.2 The representations and warranties of the Vendor and the Founder contained
in this Agreement shall be true at the Time of Closing as though they were made
at the Time of Closing and they shall survive the completion of the transactions
contemplated under this Agreement and remain in full force and effect thereafter
for the benefit of Global for a period of 36 months from the time of Closing
after which they shall expire and be of no further force or effect.
2.3 In order to induce the Vendor and the Founder to enter into this Agreement
and complete their respective transactions contemplated hereunder, Global Canada
represents and warrants to the Vendor and the Founder that:
(a) Global Canada was and remains duly incorporated and validly
subsisting under the laws of British Columbia and:
(i) Global Canada is a "reporting issuer" as that term is
defined in the Securities Act;
(ii) Global Canada will be in good standing with respect
to the filing of annual reports with the B.C.
Registrar of Companies on or before the Time of
Closing;
<PAGE> 17
-17-
(iii) Global Canada's common shares are listed and, as of
the Effective Date, posted for trading on The Toronto
Stock Exchange, and to the best of its knowledge,
Global Canada is not in material default of any of
the listing requirements of the TSE; and
(iv) Global Canada is a reporting issuer in British
Columbia and Ontario and Global Canada is not, to the
best of its knowledge, in material default of any of
the requirements of the applicable Securities Rules
of those jurisdictions;
(b) as of the Effective Date:
(i) the authorized share capital of Global Canada
consisted of 100,000,000 common shares without par
value and 20,000,000 convertible voting preferred
shares without par value, of which 18,583,673 common
shares were issued and outstanding;
(ii) there are no commitments, plans or arrangements of
any kind whatsoever to issue shares of Global Canada,
nor are there any outstanding options, warrants,
convertible securities or other rights of any kind
whatsoever calling for the issuance of any of the
unissued shares of Global Canada save and except as
disclosed in Schedule "O" to this Agreement;
(c) Global holds all material licences and permits that are
required for carrying on its business in the manner in which
such business has been and is now being carried on;
(d) the audited financial statements of Global for its fiscal year
ended June 30, 1999 and the unaudited financial statements of
Global for the interim nine month period of its current fiscal
year ending March 31, 2000 (collectively "Global's Financial
Statements"), copies of which appear as Schedule "E" to this
Agreement, present fairly and accurately the financial
position and results of the operations of Global for the
periods then ended and Global's Financial Statements have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis;
(e) the books and records of Global disclose all material
financial transactions of Global since March 31, 2000 and such
transactions have been fairly and accurately recorded;
<PAGE> 18
-18-
(f) except as disclosed in Global's Financial Statements, Global
has not guaranteed or agreed to guarantee any debt, liability
or other obligation of any kind whatsoever of any person, firm
or corporation of any kind whatsoever;
(g) since March 31, 2000, there has not been any material adverse
change of any kind whatsoever in the financial position of
Global or any damage or loss materially adversely affecting
the business or assets of Global or the right or capacity of
Global to carry on its business;
(h) there are no liabilities of Global, whether direct, indirect,
absolute, contingent or otherwise which are not disclosed or
reflected in Global's Financial Statements except those
incurred in the ordinary course of business of Global since
March 31, 2000 which are recorded in the books and records of
Global;
(i) all tax returns and reports of Global required by law to have
been filed have been filed and are substantially true,
complete and correct and all taxes and other government
charges of any kind whatsoever have been paid or accrued in
Global's Financial Statements;
(j) Global has been assessed for federal, state and provincial
income tax for all full or partial fiscal years to and
including its fiscal year ended June 30, 1999;
(k) adequate provision has been made for taxes payable by Global
for the current period for which tax returns are not yet
required to be filed and there are no agreements, waivers or
other arrangements of any kind whatsoever providing for an
extension of time with respect to the filing of any tax return
by, or payment of, any tax or governmental charge of any kind
whatsoever by Global;
(l) it is not aware of any contingent tax liabilities of any kind
whatsoever or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in
earlier tax returns filed;
(m) Global has made all collections, deductions, remittances and
payments of any kind whatsoever and filed all reports and
returns required by it to be made or filed under the
provisions of all applicable statutes requiring the making of
collections, deductions, remittances or payments of any kind
whatsoever in those jurisdictions in which it carries on
business;
(n) to the best of its knowledge, there are no material actions,
suits, judgments, investigations or proceedings of any kind
whatsoever outstanding, pending or threatened against or
affecting Global at law or in equity or before or by any
<PAGE> 19
-19-
federal, provincial, state, municipal or other governmental
department, commission, board, bureau or agency of any kind
whatsoever;
(o) to the best of its knowledge, Global is not in breach of any
law, ordinance, statute, regulation, by-law, order or decree
of any kind whatsoever;
(p) Global has good and sufficient right and authority to enter
into this Agreement and complete its transactions contemplated
under this Agreement on the terms and conditions set forth
herein;
(q) to the best of its knowledge, the execution and delivery of
this Agreement, the performance of its obligations under this
Agreement and the completion of its transactions contemplated
under this Agreement will not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or constitute
default under, the Memorandum or Articles of Global
Canada or any indenture, mortgage, agreement, lease,
licence or other instrument of any kind whatsoever to
which Global is a party or by which it is bound, or
any judgment or order of any kind whatsoever of any
court or administrative body of any kind whatsoever
by which Global is bound; and
(ii) result in the violation of any material law or
regulation of any kind by Global;
(r) Global has not incurred any liability for broker's or finder's
fees of any kind whatsoever with respect to this Agreement or
any transaction contemplated under this Agreement;
(s) Schedule "P" to this Agreement contains an accurate, complete
and comprehensive list of all computer systems, including
hardware, software, firmware, middleware, software libraries,
software tools, the object and source codes relating thereto
and the design, technical and user documentation relating
thereto used by Global in whatever form and media in the
conduct and operation of Global's business except such as are
commercially available in the marketplace (collectively,
"Global's Computer Systems"), and also Global's Computer
Systems that were created by the employees, officers and
directors of Global and/or consultants under contract with
Global ("Global's In-house Computer Systems") (collectively,
Global's Computer Systems and Global's In-house Computer
Systems are defined as "Global's Computer Programs");
<PAGE> 20
-20-
(t) Global's In-house Computer Systems set forth in Schedule "P"
are owned by Global and are used in Global's business;
(u) Global is the sole legal and beneficial owner of Global's
Computer Programs and holds all right, title and interest in
and to Global's Computer Programs free and clear of all liens,
charges and encumbrances whatsoever and to any licenses of
Global's Computer Programs granted by Global in the ordinary
course of its business and Global has no notice of any adverse
claim of ownership in any of Global's Computer Programs; and
(v) except as disclosed in Schedule "P" to this Agreement,
Global's In-house Computer Systems are original works and
Global's use of Global's In-house Computer Systems to the best
of their knowledge does not infringe the industrial or
intellectual property rights of any person in the United
States, Canada or any other country where Global currently has
customers.
2.4 The representations and warranties of Global contained in this Agreement,
except for those set forth in subparagraph 1.3(b) of this Agreement, shall be
true at the Time of Closing as though they were made at the Time of Closing and
they, together with those set forth in subparagraph 1.3(b), shall survive the
completion of the transactions contemplated under this Agreement and remain in
full force and effect thereafter for the benefit of the Vendor and the Founder
for a period of 36 months from the time of Closing after which they shall expire
and be of no further force or effect.
3. PURCHASE AND SALE
3.1 Subject to the terms and conditions of this Agreement, the Vendor agrees to
sell her Spectrum Shares to Global, and Global agrees with the Vendor to
purchase her Spectrum Shares, on the Closing Date for the sum of US$4,000,000
(the "Purchase Price").
3.2 Global shall pay the Purchase Price to the Vendor as follows:
(a) by the payment of US$1,600,000 (the "Cash Payment") as
follows:
<PAGE> 21
-21-
<TABLE>
<S> <C> <C>
(i) on the Closing Date: (the "Initial US$600,000
Payment")
(ii) on the first anniversary of the Closing US$333,334
Date:
(iii) on the second anniversary of the US$333,333
Closing Date:
(iv) on the third anniversary of the Closing US$333,333
Date:
Total Cash Payment: US$1,600,000
============
</TABLE>
(b) by the issuance on the Closing Date of a total of 1,600,000
common shares of Global Canada ("Global's Shares") at a deemed
price of CDN$2.09 per Global's Share, of which 500,000 common
shares (the "Escrowed Shares") will be held until the second
anniversary of the Closing Date by an escrow agent set forth
in, and on the terms and conditions set forth in, an escrow
agreement attached as Schedule "Q" to this Agreement.
3.3 The Vendor acknowledges to and agrees with Global that Global's Shares will
be subject to resale restrictions imposed under applicable securities laws and
the rules of regulatory bodies having jurisdiction and that the certificates
issued for Global's Shares will bear a legend in substantially the following
form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT") NOR THE SECURITIES ACT OF ANY
STATE OF THE UNITED STATES, THESE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED
UNLESS THEY ARE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED OR ASSIGNED (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE 1933 ACT, OR (C) PURSUANT TO AN EXEMPTION FROM
REGISTRATION AFTER PROVIDING A SATISFACTORY LEGAL OPINION TO
THE COMPANY. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE
"GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA. PROVIDED THAT THE COMPANY IS A "FOREIGN
ISSUER" AS THAT TERM IS DEFINED BY REGULATION S UNDER THE 1933
ACT AT THE TIME OF SALE, A NEW CERTIFICATE, BEARING NO LEGEND,
DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY", MAY BE
OBTAINED FROM PACIFIC CORPORATE TRUST COMPANY, UPON DELIVERY
OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO PACIFIC CORPORATE TRUST COMPANY, THE COMPANY
AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE U.S. SECURITIES ACT."
<PAGE> 22
-22-
3.4 The sale and purchase contemplated under this Agreement shall, when
completed on the Closing Date, take effect as of the close of business on the
Effective Date and from such time to the Closing Date the business of Spectrum
shall be carried on by the Vendor and the Founder in the ordinary course for
the account of Global.
4. COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS
4.1 The Vendor, the Founder and Spectrum jointly and severally covenant and
agree with Global that the Vendor, the Founder and Spectrum shall:
(a) from and including the Effective Date through to and including
the Time of Closing, permit Global, through its directors,
officers, employees and authorized agents and representatives
(collectively the "Purchaser's Representatives") at its own
cost, full access to Spectrum's books, records and property
including, without limitation, all of the Assets, contracts
and minute books of Spectrum, so as to permit Global to make
such investigation ("Global's Investigation") of Spectrum as
Global deems necessary;
(b) from and including the Effective Date through to and including
the Time of Closing, do all such acts and things reasonably
necessary to ensure that all of the representations and
warranties of the Vendor and the Founder contained in this
Agreement or any certificates or documents delivered by them
or any one of them pursuant to this Agreement remain true and
correct; and
(c) from and including the Effective Date through to and including
the Time of Closing, preserve and protect the goodwill,
Assets, business and undertaking of Spectrum and, without
limiting the generality of the foregoing, carry on the
business of Spectrum in a reasonable and prudent manner.
4.2 The Vendor, the Founder and Spectrum jointly and severally covenant and
agree with Global that, from and including the Effective Date through to and
including the Time of Closing, the Vendor, the Founder and Spectrum shall not
negotiate with any other person in respect of a purchase and sale of any of the
Spectrum Shares or all or substantially all of the Assets, other than a sale of
part of the Assets and inventory in the ordinary course of Spectrum's business.
4.3 The Vendor and the Founder jointly and severally acknowledge to and agree
with Global that Global's Investigation shall in no way limit or otherwise
adversely affect the rights of Global as provided for hereunder in respect of
the representations and warranties of the Vendor and the Founder contained in
this Agreement or any certificates or documents delivered by them pursuant to
this Agreement.
<PAGE> 23
-23-
4.4 Global covenants and agrees with the Vendor, the Founder and Spectrum that
Global shall:
(a) from and including the Effective Date through to and including
the Time of Closing, permit the Vendor and the Founder
themselves and through their authorized agents and
representatives (collectively the "Deans' Representatives") at
their own cost, full access to Global's property, books and
records including, without limitation, all of the assets,
contracts and minute books of Global, so as to permit the
Deans' Representatives to make such investigation (the "Deans'
Investigation") of Global as the Vendor and the Founder deem
necessary; and
(b) from and including the Effective Date through to and including
the Time of Closing, do all such acts and things necessary to
ensure that all of the representations and warranties of
Global contained in this Agreement or any certificates or
documents delivered by it pursuant to this Agreement remain
true and correct.
4.5 Global acknowledges to and agrees with the Vendor and the Founder that the
Deans' Investigation shall in no way limit or otherwise adversely affect the
rights of the Vendor and the Founder as provided for hereunder in respect of the
representations and warranties of Global contained in this Agreement or any
certificates or documents delivered by it pursuant to this Agreement.
4.6 Global acknowledges that the Vendor is a guarantor of obligations of
Spectrum (the "Guarantees") under the leases of personal property as more
particularly described in Schedule "K" to this Agreement and Global covenants
and agrees with the Vendor to use its best efforts to obtain a release of the
Vendor's personal liability under the Guarantees at the earliest time following
the Closing Date. Following the Closing Date, Global shall indemnify and save
harmless the Vendor from and against any and all liability, claims, debts,
demands, suits, actions, penalties, fines, losses, costs (including legal fees
and disbursements as charged by a lawyer to his own client), damages and
expenses of any kind whatsoever which may be brought or made against the Vendor
by any person, firm or corporation of any kind whatsoever or which may be
suffered or incurred by the Vendor, directly or indirectly, arising out of or as
a consequence of the Guarantees.
4.7 Global acknowledges that the Vendor shall continue as an employee of
Spectrum until December 31, 2000 on the terms set out in Schedule "C" hereto and
may thereafter enter a consulting arrangement with Spectrum on terms acceptable
to Purchaser.
5. INDEMNITY
5.1 Notwithstanding the completion of the transactions contemplated under this
Agreement or Global's Investigation, the representations, warranties and
acknowledgements of
<PAGE> 24
-24-
the Vendor and the Founder or any one of them contained in this Agreement or any
certificates or documents delivered by them or any one of them pursuant to this
Agreement shall survive the completion of the transactions contemplated by this
Agreement and shall continue in full force and effect thereafter for the benefit
of Global. If any of the representations, warranties or acknowledgements given
by the Vendor and the Founder or any one of them in this Agreement are found to
be untrue or there is a breach of any covenant or agreement in this Agreement on
the part of the Vendor and the Founder or any one of them, the Vendor and the
Founder shall jointly and severally indemnify and save harmless Global from and
against any and all liability, claims, debts, demands, suits, actions,
penalties, fines, losses, costs (including legal fees and disbursements as
charged by a lawyer to his own client), damages and expenses of any kind
whatsoever which may be brought or made against Global by any person, firm or
corporation of any kind whatsoever or which may be suffered or incurred by
Global, directly or indirectly, arising out of or as a consequence of any such
misrepresentation or breach of warranty, acknowledgement, covenant or agreement.
Without in any way limiting the generality of the foregoing, this shall include
any loss of any kind whatsoever which may be suffered or incurred by Global,
directly or indirectly, arising out of any material liability, assessment,
reassessment or similar item levied upon or incurred by Spectrum for any tax,
interest and/or penalties for any period up to and including the Closing Date
and all claims, demands, costs (including legal fees and disbursements as
charged by a lawyer to his own client) and expenses of any kind whatsoever in
respect of the foregoing.
5.2 Notwithstanding the completion of the transactions contemplated under this
Agreement or the Deans' Investigation, the representations, warranties and
acknowledgements of Global contained in this Agreement or any certificates or
documents delivered by it pursuant to this Agreement shall survive the
completion of the transactions contemplated by this Agreement and shall continue
in full force and effect thereafter for the benefit of the Deans. If any of the
representations, warranties or acknowledgements given by Global in this
Agreement are found to be untrue or there is a breach of any covenant or
agreement in this Agreement on the part of Global, Global shall indemnify and
save harmless the Deans from and against any and all liability, claims, debts,
demands, suits, actions, penalties, fines, losses, costs (including legal fees
and disbursements as charged by a lawyer to his own client), damages and
expenses of any kind whatsoever which may be brought or made against the Deans
by any person, firm or corporation of any kind whatsoever or which may be
suffered or incurred by the Vendor or the Founder, directly or indirectly,
arising out of or as a consequence of any such misrepresentation or breach of
warranty, acknowledgement, covenant or agreement.
6. CONDITIONS PRECEDENT
6.1 Global's obligation to carry out the terms of this Agreement and to complete
its transactions contemplated under this Agreement is subject to the fulfilment
to the satisfaction of Global of each of the following conditions that:
(a) on or before the Time of Closing, Global shall have directly,
or indirectly through Spectrum, entered into the following
agreements:
<PAGE> 25
-25-
(i) written employment agreements with Jeffrey Dean, Tae
Kim, John Elder and David Dean (the "Employment
Agreements"), the form of which appear in Schedule
"F" to this Agreement; and
(ii) written non-compete agreements with Jeffrey Dean and
Deborah Dean (the "Non-Compete Agreements"), the form
of which appear in Schedule "F" to this Agreement;
(b) at the Time of Closing, the directors of Spectrum shall
consist of Deborah M. Dean, T. Neil Dean and Jeffrey W. Dean;
(c) at the Time of Closing, the solicitors for the Vendor and the
Founder shall provide an opinion dated as of the Closing Date,
the form of which appears as Schedule "G" to this Agreement;
and
(d) as of the Time of Closing, the representations and warranties
of the Vendor and the Founder or any one of them referred to
in paragraph 1.1 of this Agreement, contained elsewhere in
this Agreement or contained in any certificates or documents
delivered by them or any one of them pursuant to this
Agreement shall be true and correct as if such representations
and warranties had been made by the Vendor and the Founder as
of the Time of Closing.
The conditions set forth above are for the exclusive benefit of Global and may
be waived by Global in whole or in part on or before the Time of Closing.
6.2 The Deans' respective obligations to carry out the terms of this Agreement
and to complete their respective transactions contemplated under this Agreement
are subject to the fulfilment to their satisfaction of each of the following
conditions that:
(a) at the Time of Closing, the solicitors for Global Canada shall
provide an opinion dated as of the Closing Date, the form of
which appears as Schedule "H" to this Agreement; and
(b) at the Time of Closing, the representations and warranties of
Global referred to in paragraph 1.3 of this Agreement,
contained elsewhere in this Agreement or contained in any
certificates or documents delivered by it pursuant to this
Agreement shall be true and correct as if such representations
and warranties had been made by Global as of the Time of
Closing.
The conditions set forth above are for the exclusive benefit of each of the
Vendor and the Founder and may be waived by each of them in whole or in part on
or before the Time of Closing.
<PAGE> 26
-26-
6.3 The parties acknowledge and agree each with the other that this Agreement
and all of the transactions contemplated under this Agreement have been approved
("Regulatory Approval") by the Toronto Stock Exchange ("TSE") and Global Canada
warrants that it has all requisite approvals to issue Global's Shares. The
parties also acknowledge that the TSE, by way of a letter dated August 28, 2000,
from the TSE to Global Canada, that the TSE accepted notice of this Agreement
and has conditionally approved for listing Global's Shares.
7. CLOSING
7.1 The completion of the transactions contemplated under this Agreement shall
be closed at the offices of Messrs. Gowling Lafleur Henderson LLP, P.O. Box
49122, 2300 - 1055 Dunsmuir Street, Vancouver, British Columbia at 9:00 o'clock
a.m. local time in Vancouver, B.C. (the "Time of Closing") on September 29, 2000
or such other date as the parties may agree upon in writing (the "Closing
Date").
7.2 At the Time of Closing, the Vendor and the Founder shall deliver to the
solicitors for Global:
(a) a certified true copy of the resolutions of the directors of
Spectrum evidencing that the directors of Spectrum have
approved this Agreement and all of the transactions of
Spectrum contemplated hereunder and the resolutions shall
include specific reference to:
(i) the approval of the sale and transfer of Spectrum
Shares from the Vendor to Global as provided for in
this Agreement;
(ii) the cancellation of the share certificate (the "Old
Share Certificate") representing Spectrum Shares held
as set forth in paragraph B of the recitals to this
Agreement; and
(iii) the issuance of a new share certificate (the "New
Share Certificate") representing Spectrum Shares
registered in the name of Global USA;
(b) the Old Share Certificate;
(c) the New Share Certificate;
(d) the Employment Agreements referred to in subparagraph 5.1(a)
of this Agreement;
<PAGE> 27
-27-
(e) the Non-Compete Agreement referred to in subparagraph 5.1(a)
of this Agreement;
(f) the solicitor's opinion referred to in subparagraph 5.1(c) of
this Agreement;
(g) a certificate of confirmation signed by the Vendor and the
Founder in the form attached as Schedule "I" to this
Agreement; and
(h) any other materials that are, in the opinion of the solicitors
for Global, reasonably required to complete the transactions
contemplated under this Agreement in the manner herein
provided.
7.3 At the Time of Closing, Global shall deliver to the solicitors for the
Vendor and the Founder:
(a) certified true copies of the resolutions of the directors of
Global Canada evidencing that the directors of Global Canada
have approved this Agreement and all of the transactions of
Global Canada contemplated hereunder;
(b) evidence that Regulatory Approval has been obtained;
(c) the Initial Cash Payment as provided for in subparagraph
2.2(a) of this Agreement by way of certified funds;
(d) share certificates representing Global's Shares registered in
the name of the Vendor as provided for in subparagraph 2.2(b)
of this Agreement;
(e) the solicitor's opinion referred to in subparagraph 5.2(a) of
this Agreement;
(f) a certificate of confirmation signed by two directors or
officers of Global Canada in the form attached as Schedule "J"
to this Agreement; and
(g) any other materials that are, in the opinion of the solicitors
for the Vendor, reasonably required to complete the
transactions contemplated under this Agreement in the manner
herein provided.
<PAGE> 28
-28-
8. GENERAL
8.1 Time and each of the terms and conditions of this Agreement shall be of the
essence of this Agreement and any waiver by the parties of this paragraph 7.1 or
any failure by them to exercise any of their rights under this Agreement shall
be limited to the particular instance and shall not extend to any other instance
or matter in this Agreement or otherwise affect any of their rights or remedies
under this Agreement.
8.2 The Schedules to this Agreement incorporated by reference and the recitals
to this Agreement constitute a part of this Agreement.
8.3 This Agreement constitutes the entire Agreement between the parties hereto
in respect of the matters referred to herein and there are no representations,
warranties, covenants or agreements, expressed or implied, collateral hereto
other than as expressly set forth or referred to herein.
8.4 The headings in this Agreement are for reference only and do not constitute
terms of the Agreement.
8.5 The provisions contained in this Agreement which, by their terms, require
performance by a party to this Agreement subsequent to the Closing Date of this
Agreement, shall survive the Closing Date of this Agreement.
8.6 No alteration, amendment, modification or interpretation of this Agreement
or any provision of this Agreement shall be valid and binding upon the parties
hereto unless such alteration, amendment, modification or interpretation is in
written form executed by the parties directly affected by such alteration,
amendment, modification or interpretation.
8.7 Whenever the singular or masculine is used in this Agreement the same shall
be deemed to include the plural or the feminine or the body corporate as the
context may require.
8.8 The parties hereto shall execute and deliver all such further documents and
instruments and do all such acts and things as any party may, either before or
after the Closing Date, reasonably require in order to carry out the full intent
and meaning of this Agreement.
8.9 Any notice, request, demand and other communication to be given under this
Agreement shall be in writing and shall be delivered by hand or by telecopier to
the parties at their following respective addresses:
<PAGE> 29
-29-
(a) To the Vendor, the Founder or Spectrum:
Deborah and Jeffrey Dean
22006 - 100th Avenue West
Edmonds, Washington
USA 98020
Telecopier: (425) 778-1163
with a copy to:
Borden Ladner Gervais
1200 Waterfront Centre
200 Burrard Street
Vancouver, BC
Canada V7X 1T2
Attention: Ron L. Bozzer, Esq.
Telecopier: (604) 622-5834
(b) To Global:
Global Election Systems Inc.
1611 Wilmeth Road
McKinney, Texas
USA 75069-8250
Attention: Robert J. Urosevich, President
Telecopier: (972) 542-6044
with a copy to:
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas
USA 75270
Attention: Brice Tarzwell, Esq.
Telecopier: (214) 745-5390
or to such other addresses as may be given in writing by the parties hereto in
the manner provided for in this paragraph, and shall be deemed to have been
received, if delivered by hand, on the date of delivery, or if delivered by
telecopier, on the date that it is sent.
8.10 This Agreement may not be assigned by any party hereto without the prior
written consent of all of the parties hereto.
8.11 This Agreement shall be subject to, governed by, and construed in
accordance with the laws applicable in the Province of British Columbia.
<PAGE> 30
-30-
8.12 This Agreement may be signed by the parties in as many counterparts as may
be deemed necessary, each of which so signed shall be deemed to be an original,
and all such counterparts together shall constitute one and the same
instrument.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals as of the
Effective Date first above written.
Signed, Sealed and Delivered by Signed, Sealed and Delivered by
DEBORAH M. DEAN in the presence of: JEFFREY W. DEAN in the presence of:
/s/ Ron L. Bozzer /s/ Ron L. Bozzer
----------------------------------- --------------------------------
Signature of Witness Signature of Witness
Name: Ron L. Bozzer Name: Ron L. Bozzer
------------------------------ --------------
Address: 1200 Waterfront Centre, Address: 1200 Waterfront Centre,
--------------------------- ------------------------
200 Burrard Street, Vancouver, 200 Burrard Street, Vancouver,
BC Canada BC Canada
----------------------------------- --------------------------------
Occupation: Lawyer Occupation: Lawyer
----------------------- --------------------
) )
) )
) )
) /s/ Deborah M. Dean ) /s/ Jeffrey W. Dean
) ---------------------------- ) -------------------------
) DEBORAH M. DEAN ) JEFFREY W. DEAN
) )
) )
) )
) )
) )
) )
) )
) )
<PAGE> 31
-31-
The Corporate Seal of SPECTRUM )
PRINT & MAIL SERVICES, LTD. was )
hereunto affixed in the presence of: )
)
/s/ Deborah M. Dean )
------------------------------------ ) C/S
Authorized Signatory )
)
)
------------------------------------ )
Authorized Signatory )
The Corporate Seal of GLOBAL
ELECTION SYSTEMS INC. was hereunto
affixed in the presence of:
/s/ Robert J. Urosevich
------------------------------------
Authorized Signatory
------------------------------------
Authorized Signatory
The Corporate Seal of GLOBAL )
ELECTION SYSTEMS, INC. was hereunto )
affixed in the presence of: )
)
/s/ Robert J. Urosevich )
------------------------------------ )
Authorized Signatory ) C/S
)
------------------------------------ )
Authorized Signatory )
<PAGE> 32
SCHEDULE "A"
LIST OF ASSETS OF SPECTRUM PRINT & MAIL SERVICES, LTD.
A. LIST OF ASSETS AND ENCUMBRANCES
<PAGE> 33
-2-
SPECTRUM LTD. FURNITURE & FIXTURES LIST
LOCATION: HEADQUARTERS
6920 220TH ST SW, STE 206
MOUNTLAKE TERRACE, WA 98043
<TABLE>
<CAPTION>
DESCRIPTION QTY
<S> <C>
3 drawer small roll-away file cabinet 1
5.5 ft standing book shelf 1
6' Black book case 1
Breakroom Table w/4 chairs 1
Coat Hanger 1
Cubicle Desk (front desk) 1
Dayton Standing 2dr Supply Cabinet 1
First Alert Combination Safe 1
Folding work table 1
HON 2 drawer lateral filing cabinet (Black) 1
HON 2 drawer lateral filing cabinet (White) 2
HON 4 drawer lateral filing cabinet 1
HON 2 door Supply Cabinet 1
Leather Couch 1
Leather Love Seat 1
Meeting/Guest table 1
Microwave Oven 1
Office Chair 11
Refrigerator 1
Sectional Desk 6 drawers (Grey) 1
Sectional Desk w/2 overhead filing cab (Black) 1
Small 2 shelf book shelf 1
Studio RTA Computer Desk 5
Waiting room end table 1
Waiting room/guest chairs 7
White board 1
White printer table 1
Wood & Metal supply shelves 1
Wooden Desk w/2 drawers 2
Wooden Desk w/5 drawers 1
Wooden desk w/6 drawers 2
Wooden roll-away office desk 1
Wooden Table 4 drawers, 2 cabinets 1
</TABLE>
<PAGE> 34
-3-
LOCATION: PARK TERRACE
22314 70TH AVE, STE F
MOUNTLAKE TERRACE, WA 98043
<TABLE>
<CAPTION>
DESCRIPTION QTY
<S> <C>
Bookshelf 1
Coat Hanger 1
Cork Board 1
Drafting Chairs 5
File Cabinets 3
Industrial Shelves 3 scts
Ladders 2
Lunch Table 1
Meeting/Guest table 1
Microwave 1
Office Cabinets 1
Office Chairs 2
Office Desks 1
Press Chairs 2
Propane Heater 1
Refrigerator 1
Rolling Tables 6
Space Heaters 2
Stationary Chairs 5
Stationary Tables 8
Stock Shelves 4 scts
Studio RTA Computer Desk 1
Toaster Oven 1
Tool Chest 1
Vacuum 1
Waiting Room/Guest Chairs 2
White Boards 3
</TABLE>
<PAGE> 35
-4-
LOCATION: SOUTH SAN FRANCISCO
471 LITTLEFIELD AVE SO. SAN FRANCISCO, CA 94080
<TABLE>
<CAPTION>
DESCRIPTION QTY
<S> <C>
2D Filling Cab. 1
36" round Table 1
Bissell Vacuum 1
Brother Fax Machine 1
Desk 1
Folding Chairs 4
Folding Tables 7
Microwave 1
Rack Shelving 24x48x72 4
Refrigerator 1
Rolling File Cab. 2
Rolling Work Carts 6
Shop Vacuum 1
Whiteboard 2
Work Station 1
Work Station Chairs 4
</TABLE>
CAPITAL EQUIPMENT LIST
3145 THUNDERBIRD CRESCENT
BURNABY, B.C.
<TABLE>
<CAPTION>
EQUIPMENT DESCRIPTION SERIAL NUMBER ACQUISITION DATE
--------------------- ------------- ----------------
<S> <C> <C>
Gateway 2000 Server 0006761966 08/21/96
Gateway 2000 WorkStation 1 0005663223 11/18/95
Gateway 2000 WorkStation 2 0008260465 06/19/97
Gateway 2000 WorkStation 3 0007375413 03/12/97
Gateway 2000 WorkStation 4 8260466 03/12/97
Euroline Printer 1 147297 08/01/98
Euroline Printer 2 100108 08/01/98
Super Stack II Dual Speed Hub 7YAF005635 10/28/97
Sun SPARCstation 20 538F0524 11/30/95
Xerox DocuPrint 390HC 4V1-015985 11/30/95
Xerox Xprint 4915 Plus 1WW-012479 11/12/96
XeroxDocuPrint N40 A W7F-035657 07/30/99
Northstar Key Telephone System n/a 05/15/97
</TABLE>
<PAGE> 36
-5-
CAPITAL EQUIPMENT LIST
22314 - 70TH AVENUE WEST
MOUNTLAKE TERRACE, WA
<TABLE>
<CAPTION>
EQUIPMENT DESCRIPTION SERIAL NUMBER ACQUISITION DATE
--------------------- ------------- ----------------
<S> <C> <C>
Xeikon DCP50/D A 01-01128 06/12/98
Xeikon DCP50/D B 01-01256 09/23/98
Spartanics T-30/M500 A 8653 06/12/98
Spartanics T-30/M500 B 9704 12/17/99
Winder/Re-winder unit A 101 06/12/99
Winder/Re-winder unit B 102 12/17/99
Champion 305XD manual cutter 98X298 06/12/98
Rosback 223 perf machine 22383996 10/07/98
Beseler shrinkwrap table 2016-MB-SL 798624 10/23/98
Beseler shrinkwrap tunnel T-16-8-D 898633 10/23/98
Stahl folder w/right angle attachment FS49A 12/17/99
Craftsman 40gal air compressor 301549 08/23/98
Craftsman 40gal air compressor 9916143686 12/17/99
Gateway E4200 Computer (S) 10405316 07/27/98
Gateway E4200 Computer (WS) 10403487 07/27/98
Apple Mac G-3 Computer (WS) 56909BX6FQ2 04/21/99
Brother MFC 1970 Message Centre D97883552 07/22/99
Cisco 1600 Router 7959630 07/07/98
Asante 10T Hub/8 339M1120 06/12/98
Adtram TSU LT 822B1120 06/12/98
Nissan Forklift 74279 06/12/98
Attrix HCTV Toner Vac H-2118 06/12/98
Pallet Jack 3593 07/13/98
Iomega 250 Zip drive P9GW070140 03/12/99
Pelouze 4010 Scale 9903 56994 11/17/99
</TABLE>
<PAGE> 37
-6-
CAPITAL EQUIPMENT
22314 - 70TH AVENUE WEST
MOUNTLAKE TERRACE, WA
<TABLE>
<CAPTION>
EQUIPMENT DESCRIPTION SERIAL NUMBER ACQUISITION DATE
--------------------- ------------- ----------------
<S> <C> <C>
XeroxDocuPrint N40 B W7F-037983 09/09/99
Lexmark Optra K 1220 1106847 09/11/98
Static Bar n/a 01/11/99
Static Bar n/a 04/05/99
GTE Phones 36701238 07/01/98
GTE Phones 36701405 07/01/98
GTE Phones 35700293 07/01/98
GTE Phones 31700076 07/01/98
GTE Phones 40900172 07/01/98
ADT Security Keypad System n/a 07/17/98
</TABLE>
CAPITAL EQUIPMENT LIST
6920 - 220TH STREET S.W., SUITE 206
MOUNTLAKE TERRACE, WA
<TABLE>
<CAPTION>
EQUIPMENT DESCRIPTION SERIAL NUMBER ACQUISITION DATE
--------------------- ------------- ----------------
<S> <C> <C>
3 Comm Hub TP 16c 06/27/97
Astrocom NXI Model CSU/DSU 06/27/97
CD-R 4012 00361-008275 11/15/98
Cisco 2514 Router n/a 06/27/97
Compucare P333 Computer n/a 08/11/98
Epson Color 800 Printer 3HR0008286 10/28/97
Gateway E-3100 Computer 8260465 10/27/97
Gateway E-3100 Computer 8260466 10/28/97
Gateway E-3110 Computer 8977338 03/05/98
Gateway E-3110 Computer 8977337 03/06/98
Gateway E-3110 Computer 8977174 03/07/98
Gateway E-4200 Computer 11396721 07/22/98
</TABLE>
<PAGE> 38
-7-
<TABLE>
<S> <C> <C>
Gateway E-4200 Computer 10403486 07/23/98
Gateway P5-166 Computer 6386322 09/09/96
Gateway E4200 Computer (WS) 11396953 07/27/98
Gateway Solo Laptop1 898158 02/14/98
Gateway Solo Laptop2 898158 01/19/00
General Datacom Model CSU/DSU 07/07/998
HP Magnetic Tape Drive 91040720 10/28/97
HP OfficeJet Fax Machine US664a10c5 10/28/97
HP SureStore DAT24 Tape Drive GB00531541 11/15/98
Lexmark Optra-N RS5-8728 07/31/97
Meridian Key Telephone System n/a 06/13/97
Umax Astra 1200s Scanner H7502766300 10/28/97
HP882C Deskjet Printer MY929111FX 12/10/99
Zip Drive PMAJ4428A2 12/11/98
Dell Poweredge 2400 Server Many 03/24/00
WEB Server Cabinets, Components Many 03/24/00
Laser Scanner n/a 05/05/97
</TABLE>
<PAGE> 39
-8-
CAPITAL EQUIPMENT LIST
12400 IMPERIAL HWY
NORWALK, CA
<TABLE>
<CAPTION>
EQUIPMENT DESCRIPTION SERIAL NUMBER ACQUISITION DATE
--------------------- ------------- ----------------
<S> <C> <C>
Phillipsburg Inserter #1 11-194190-6 01/01/00
Phillipsburg Inserter #2 01-190191-6 01/01/00
MCS Pro 600 Inkjet System-Computer 5323912 01/01/00
MCS Pro 600 Inkjet System-Monitor IJE572 01/01/00
MCS Pro 600 Inkjet System-Keyboard 7000573 01/01/00
MCS Pro 600 Inkjet system-Mouse 63618-OEM 01/01/00
Inkjet Printer A-10933 01/01/00
Stream Feeder 27300237 01/01/00
Server-Computer 17174684 01/01/00
Server-Monitor P912183024 01/01/00
Server-Keyboard Q9320A3619 01/01/00
Server-Mouse LZE02052348 01/01/00
Hub DS14C98010676 01/01/00
</TABLE>
CAPITAL EQUIPMENT LIST
471 LITTLEFIELD
SOUTH SAN FRANCISCO, CA
<TABLE>
<CAPTION>
EQUIPMENT DESCRIPTION SERIAL NUMBER ACQUISITION DATE
--------------------- ------------- ----------------
<S> <C> <C>
Stall Folder W/ Right Angle 24134 01/01/2000
Beseler Shrink Warp 11999938 01/01/2000
Beseler Feed Table 11999953 01/01/2000
MCS Ink Jet A10418 01/01/2000
ISP Stapler 7258 15/01/2000
Yale Forklift Y437227 01/01/2000
Pallet Jack - 01/01/2000
Gateway Computer - Server 0077175367 01/01/2000
Gateway Monitor P912186142 01/01/2000
</TABLE>
<PAGE> 40
-9-
<TABLE>
<S> <C> <C>
Gateway Computer - Work Station 0017175366 01/01/2000
Gateway Monitor P912186142 01/01/2000
Lexmark Printer 4069-212 01/01/2000
Flowpoint Router 905-00433-06 15/01/2000
SMC Hub T184200349 15/01/2000
HP Pavilion Computer US94756341 01/02/2000
Sylvania Monitor F74 LCAA1201397 05/04/2000
Sylvania Monitor F74 LCAA1201700 05/04/2000
</TABLE>
The following are the "Permitted Encumbrances" on the Assets:
<TABLE>
<CAPTION>
SECURED PARTY BASE REGISTRATION NUMBER GENERAL COLLATERAL
------------- ------------------------ ------------------
<S> <C> <C>
U.S. Bank All inventory, chattel paper, accounts,
Business Banking Finance Centre equipment and general intangibles; whether
1420 Fifth Avenue any of the foregoing is owned now or acquired
Seattle, Washington 98101 later; all accessions, additions,
replacements, and substitutions relating to
any of the foregoing; all records of any kind
relating to any of the foregoing; all proceeds
relating to any of the foregoing (including
insurance, general intangibles and accounts
proceeds) encumbrances in favour of those lessors
of personal property set forth in Schedule "K"
</TABLE>
B. BANK ACCOUNTS, TRUST ACCOUNTS OF SPECTRUM PRINT & MAIL SERVICES, LTD.,
AND THE NAMES OF ALL PERSONS AUTHORIZED TO DRAW THEREON OR WHO HAVE
ACCESS THERETO.
Spectrum maintains four (4) US dollar bank accounts with the U.S. Bank, account
numbers:
<TABLE>
<CAPTION>
ACCOUNT NUMBER ACCOUNT TYPE ADDRESS AUTHORIZED SIGNATURES
-------------- ------------ ------- ---------------------
<S> <C> <C> <C>
8333292446 Line of Credit 1420 Fifth Avenue Deborah M. Dean
Seattle, WA 98101
1-535-0112-8406 Checking 140 Fourth Avenue South Deborah M. Dean
Edmonds, WA 98020
1-535-9033-2984 Checking 140 Fourth Avenue South Deborah M. Dean
Edmonds, WA 98020 David W. Dean
1-535-9072-7506 Money Market 140 Fourth Avenue South Deborah M. Dean
Edmonds, WA 98020
</TABLE>
<PAGE> 41
-10-
Spectrum maintains one (1) US dollar bank account with Merrill Lynch, account
number:
<TABLE>
<CAPTION>
ACCOUNT NUMBER ACCOUNT TYPE ADDRESS AUTHORIZED SIGNATURES
-------------- ------------ ------- ---------------------
<S> <C> <C> <C>
62A-07211 Working Capital Bank One Columbus, NA Deborah M. Dean
Management Columbus, OH 43271 Jeffrey W. Dean
</TABLE>
Spectrum maintains one (1) US dollar postage permit account with the USPS,
permit number:
<TABLE>
<CAPTION>
PERMIT NUMBER ACCOUNT TYPE ADDRESS
------------- ------------ -------
<S> <C> <C>
1034 Postage Permit Seattle, WA 98101
</TABLE>
Spectrum maintains one (1) CDN dollar bank account with the Royal Bank, account
number:
<TABLE>
<CAPTION>
ACCOUNT NUMBER ACCOUNT TYPE ADDRESS AUTHORIZED SIGNATURES
-------------- ------------ ------- ---------------------
<S> <C> <C> <C>
103-841-3 Checking 1025 West Georgia Street Deborah M. Dean
Vancouver, BC V6E 3N9
</TABLE>
<PAGE> 42
-11-
SCHEDULE "B"
FINANCIAL STATEMENTS FOR SPECTRUM PRINT & MAIL SERVICES, LTD.
Unaudited financial statements for the years ended December 31, 1996, 1997,
1998 and 1999. Unaudited financial statements for the six months ended June 30,
2000.
<PAGE> 43
SPECTRUM LTD.
09/05/00 BALANCE SHEET
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
JUN 30, `00
------------
<S> <C>
ASSETS
Current Assets
Checking/Savings
Royal Bank 40,784.58
U S Bank (General) 55,036.50
U S Bank (Money Mkt) 716.69
U S Bank (Shop) 1,999.96
WCMA 409.67
------------
Total Checking/Savings 98,947.40
Accounts Receivable
Accounts Receivable
A/R Canadian 34,150.68
A/R US 108,236.30
------------
Total Accounts Receivable 142,386.98
------------
Total Accounts Receivable 142,386.98
Other Current Assets
Inventory 97,413.75
USPS 4,085.05
------------
Total Other Current Assets 101,498.80
------------
Total Current Assets 342,833.18
Fixed Assets
Computer Equipment
Original Cost 95,732.60
------------
Total Computer Equipment 95,732.60
Furniture & Fixtures
Original Cost 22,472.01
------------
Total Furniture & Fixtures 22,472.01
Production Equipment
Original Cost 385,623.84
------------
Total Production Equipment 385,623.84
------------
Total Fixed Assets 503,828.45
Other Assets
Prepaid Expense 20,108.00
Software Products 556,615.00
------------
Total Other Assets 576,723.00
------------
TOTAL ASSETS 1,423,384.63
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
Accounts Payable
A/P Canadian 8,864.15
A/P US 18,674.12
------------
Total Accounts Payable 27,538.27
------------
Total Accounts Payable 27,538.27
Other Current Liabilities
Payroll Liabilities 24,700.60
Postage Trust Account 3,593.44
US Bank Line of Credit 47,546.50
------------
Total Other Current Liabilities 75,840.54
------------
Total Current Liabilities 103,378.81
------------
</TABLE>
Page 1
<PAGE> 44
SPECTRUM LTD.
09/05/00 PROFIT AND LOSS
JANUARY THROUGH JUNE 2000
<TABLE>
<CAPTION>
JAN - JUN '00
-------------
<S> <C>
Ordinary Income/Expense
Income
Income
Canadian Operations 126,372.72
Commercial Print & Mail 22,129.95
Election Services 1,694,088.70
------------
Total Income 1,842,591.37
------------
Total Income 1,842,591.37
Cost of Goods Sold
Canadian COGS 14,364.15
Contract Labor 38,666.26
Election COGS 432,343.43
Purchased Print & Mail Services 2,174.39
VAR Purchases 6,206.85
------------
Total COGS 493,755.08
------------
Gross Profit 1,348,836.29
Expense
Automobile Expense 7,978.99
Bank Service Charges 560.56
Communications
Telephone 10,314.52
Communications - Other 4,170.66
------------
Total Communications 14,485.18
Dues and Subscriptions 39.97
Employment Fee 4,056.00
Equipment Leases
AT&T Lease 78,591.55
IFC Lease 45,856.76
Xerox Lease 15,166.40
Equipment Leases - Other 113,649.66
------------
Total Equipment Leases 253,264.37
Equipment Rental 6,555.82
Facilities
CAM 1,206.00
Garbage & Recycle 6,617.03
Gas and Electric 5,306.53
Improvements 391.14
Rent 74,395.25
Security 671.35
Facilities - Other 445.00
------------
Total Facilities 89,032.30
Fuel 691.90
Insurance
Insurance - Medical 10,845.90
Liability Insurance 7,277.12
Life Insurance 2,149.44
------------
Total Insurance 20,272.46
Interest Expense 3,994.60
Licenses and Permits 739.00
Maintenance 27,064.17
Miscellaneous 72.75
Payroll - Advance 1,493.50
Payroll - Gross 317,392.73
Payroll Taxes 4,928.93
Professional Development 109.00
Professional Fees
Legal Fees 287.25
------------
</TABLE>
Page 2
<PAGE> 45
SPECTRUM LTD.
09/05/00 PROFIT AND LOSS
JANUARY THROUGH JUNE 2000
<TABLE>
<CAPTION>
JAN - JUN '00
-------------
<S> <C>
Total Professional Fees 287.25
Repairs
Computer Repairs 161.81
Equipment Repairs 1,252.47
Facility 13,056.51
----------
Total Repairs 14,470.79
Supplies
Office Supplies 11,342.37
Production Supplies 57,107.06
----------
Total Supplies 68,449.43
Taxes
WA State B&O 7,865.55
----------
Total Taxes 7,865.55
Temporary Help 19,104.72
Transportation
Courier 5,945.28
Customs Brokerage 2,667.37
Freight 17,478.53
Postage 215.57
Transportation - Other 220.19
----------
Total Transportation 26,526.94
Travel & Ent
Entertainment 126.62
Lodging 12,667.80
Meals 2,624.43
Parking 1,837.96
Travel 44,599.86
Travel & Ent - Other 7,850.37
----------
Total Travel & Ent 69,707.04
----------
Total Expense 959,143.95
----------
Net Ordinary Income 389,692.34
Other Income/Expense
Other Income
Interest Income 56.14
----------
Total Other Income 56.14
----------
Net Other Income 56.14
----------
Net Income 389,748.48
==========
</TABLE>
Page 3
<PAGE> 46
SPECTRUM LTD.
09/28/00 BALANCE SHEET
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEC 31, '99
------------
<S> <C>
ASSETS
Current Assets
Checking/Savings
U S Bank (General) 232,544.52
U S Bank (Money Mkt) 713.14
U S Bank (Shop) 2,227.06
WCMA 86.09
------------
Total Checking/Savings 235,570.81
Other Current Assets
Inventory 29,178.75
USPS 4,085.05
------------
Total Other Current Assets 33,263.80
------------
Total Current Assets 268,834.61
Fixed Assets
Computer Equipment
Original Cost 62,422.71
------------
Total Computer Equipment 62,422.71
Furniture & Fixtures
Original Cost 16,588.92
------------
Total Furniture & Fixtures 16,588.92
Production Equipment
Original Cost 310,768.28
------------
Total Production Equipment 310,768.28
------------
Total Fixed Assets 389,779.91
Other Assets
Prepaid Expense 9,808.00
Software Products 324,615.00
------------
Total Other Assets 334,423.00
------------
TOTAL ASSETS 993,037.52
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Payroll Liabilities 23,454.42
Postage Trust Account 3,593.44
US Bank Line of Credit 44,120.63
------------
Total Other Current Liabilities 71,168.49
------------
Total Current Liabilities 71,168.49
------------
Total Liabilities 71,168.49
Equity
Accumulated Earnings 663,158.30
Net Income 561,457.10
Distributions (Prior Years) (357,641.30)
Opening Bal Equity 54,894.93
------------
Total Equity 921,869.03
------------
TOTAL LIABILITIES & EQUITY 993,037.52
============
</TABLE>
Page 4
<PAGE> 47
SPECTRUM LTD.
09/28/00 PROFIT AND LOSS
JANUARY THROUGH DECEMBER 1999
<TABLE>
<CAPTION>
JAN - DEC '99
-------------
<S> <C>
Accounting 8,500.00
Legal Fees 4,573.25
Professional Fees - Other 10,200.00
------------
Total Professional Fees 23,273.25
Repairs
Computer Repairs 200.00
------------
Total Repairs 200.00
Supplies
Office Supplies 6,259.29
Production Supplies 27,322.99
------------
Total Supplies 33,582.28
Taxes
WA State B&O 30,807.47
------------
Total Taxes 30,807.47
Temporary Help 1,505.86
Transportation
Courier 6,187.84
Customs Brokerage 6,527.98
Freight 3,126.26
Postage 3,760.27
Transportation - Other 569.79
------------
Total Transportation 20,172.14
Travel & Ent
Entertainment 2,427.55
Lodging 2,552.12
Meals 1,765.29
Parking 1,895.94
Travel 20,515.39
Travel & Ent - Other 4,953.36
------------
Total Travel & Ent 34,109.65
------------
Total Expense 1,269,722.03
------------
Net Ordinary Income 560,167.54
Other Income/Expense
Other Income
Interest Income 1,289.56
------------
Total Other Income 1,289.56
------------
Net Other Income 1,289.56
------------
Net Income 561,457.10
============
</TABLE>
Page 5
<PAGE> 48
--------------------------------------------------------------------------------
SPECTRUM LTD.
09/28/00 PROFIT AND LOSS
JANUARY THROUGH DECEMBER 1999
<TABLE>
<CAPTION>
JAN - DEC `99
-------------
<S> <C>
Ordinary Income/Expense
Income
Income
Canadian Operations 240,063.00
Commercial Print & Mail 140,786.01
Consulting Fees 267,952.51
Election Services 1,523,965.00
------------
Total Income 2,172,766.52
------------
Total Income 2,172,766.52
Cost of Goods Sold
Canadian COGS 2,000.00
Contract Labor 9,996.50
Election COGS 175,266.36
Purchased Print & Mail Services 66,664.95
VAR Purchases 88,949.14
------------
Total COGS 342,876.95
------------
Gross Profit 1,829,889.57
Expense
Automobile Expense 15,385.12
Bank Service Charges 682.13
Communications
Internet Provider 2,125.00
Telephone 20,431.77
Communications - Other 3,974.00
------------
Total Communications 26,530.77
Contributions 125.00
Employment Fee 9,760.00
Equipment Leases
AT&T Lease 204,338.03
IFC: Lease 55,595.60
Xerox Lease 36,399.36
Equipment Leases - Other 123,448.71
------------
Total Equipment Leases 419,781.70
Equipment Rental 14,357.56
Facilities
Fire & Safety 142.80
Garbage & Recycle 4,218.02
Gas and Electric 3,686.96
Rent 85,786.19
Security 359.40
------------
Total Facilities 94,193.37
Fuel 40.76
Insurance
Automobile Insurance 231.00
Insurance - Medical 14,316.83
Liability Insurance 9,839.15
Life Insurance 4,298.88
Insurance - Other 198.30
------------
Total Insurance 28,884.16
Interest Expense 10,863.35
Licenses and Permits 1,074.00
Maintenance 40,331.87
Marketing 192.50
Miscellaneous 3,530.88
Moving Expense 300.00
Payroll - Gross 459,333.87
Payroll Taxes 704.34
Professional Amw
</TABLE>
Page 6
<PAGE> 49
SPECTRUM LTD.
09/28/00 BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
DEC 31, '98
--------------
<S> <C>
ASSETS
Current Assets
Checking/Savings
U S Bank (General) 9,958.95
WCMA 303.39
--------------
Total Checking/Savings 10,262.34
Other Current Assets
Inventory 27,395.42
USPS 200.00
--------------
Total Other Current Assets 27,595.42
--------------
Total Current Assets 37,857.76
Fixed Assets
Computer Equipment
Original Cost 62,422.71
--------------
Total Computer Equipment 62,422.71
Furniture & Fixtures
Original Cost 16,588.92
--------------
Total Furniture & Fixtures 16,588.92
Production Equipment
Original Cost 175,916.99
--------------
Total Production Equipment 175,916.99
--------------
Total Fixed Assets 254,928.62
Other Assets
Software Products 50,000.00
--------------
Total Other Assets 50,000.00
--------------
TOTAL ASSETS 342,786.38
==============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Payroll Liabilities 16,362.48
US Bank Line of Credit 3,392.61
--------------
Total Other Current Liabilities 19,755.09
--------------
Total Current Liabilities 19,755.09
--------------
Total Liabilities 19,755.09
Equity
Accumulated Earnings 286,226.40
Net Income 376,931.90
Distributions (Current Year) -158,311.57
Distributions (Prior Years) -236,710.37
Opening Bal Equity 54,894.93
--------------
Total Equity 323,031.29
--------------
TOTAL LIABILITIES & EQUITY 342,786.38
==============
</TABLE>
Page 7
<PAGE> 50
SPECTRUM LTD.
09/28/00 PROFIT AND LOSS
JANUARY THROUGH DECEMBER 1998
<TABLE>
<CAPTION>
JAN - DEC '98
--------------
<S> <C>
Ordinary Income/Expense
Income
Income
Canadian Operations 231,655.49
Commercial Print & Mail 46,278.00
Consulting Fees 39,000.00
Election Services 1,167,777.49
VAR Sales 2,510.00
--------------
Total Income 1,487,220.98
Reimbursed Expenses 413.50
--------------
Total Income 1,487,634.48
Cost of Goods Sold
Canadian COGS 59,508.64
Contract Labor 37,228.25
Election COGS 342,219.83
Purchased Print & Mail Services 21,867.88
VAR Purchases 3,094.64
--------------
Total COGS 463,919.24
--------------
Gross Profit 1,023,715.24
Expense
Automobile Expense 13,510.55
Bank Service Charges 1,148.25
Communications
Internet Provider 5,009.00
Network PTP 6,718.40
Telephone 15,558.07
--------------
Total Communications 27,285.47
Director's Fee 4,500.00
Dues and Subscriptions 144.97
Equipment Leases
AT&T Lease 86,228.41
IFC Lease 23,133.18
Truck Lease 1,484.33
Xerox Lease 36,399.36
--------------
Total Equipment Leases 147,245.28
Equipment Rental 9,333.63
Facilities
Fire & Safety 332.86
Garbage & Recycle 3,046.40
Gas and Electric 1,836.37
Rent 58,361.85
Security 154.74
--------------
Total Facilities 63,732.22
Insurance
Insurance - Medical 8,338.32
Liability Insurance 3,376.50
Life Insurance 1,074.73
--------------
Total Insurance 12,789.55
Interest Expense 5,318.63
Licenses and Permits 727.00
Maintenance 7,933.48
Marketing 5,000.00
Miscellaneous 5,199.30
Payroll - Gross 240,026.27
Payroll Taxes 336.00
Petty Cash 101.50
Professional Fees
Legal Fees 2,500.00
--------------
</TABLE>
Page 8
<PAGE> 51
SPECTRUM LTD.
09/28/00 PROFIT AND LOSS
JANUARY THROUGH DECEMBER 1998
<TABLE>
<CAPTION>
JAN - DEC '98
--------------
<S> <C>
Total Professional Fees 2,500.00
Repairs
Computer Repairs 595.64
Equipment Repairs 3,452.55
--------------
4,048.19
Total Repairs
Supplies
Office Supplies 10,075.29
Production Supplies 44,618.68
--------------
54,693.97
Total Supplies
Taxes
WA State B&O 4,064.62
--------------
4,064.62
Total Taxes
Transportation
Courier 4,303.07
Customs Brokerage 3,297.63
Freight 5,820.28
Postage 145.64
--------------
13,566.62
Total Transportation
Travel & Ent
Entertainment 3,297.89
Meals 1,276.20
Travel 11,797.35
Travel & Ent - Other 7,266.30
--------------
Total Travel & Ent 23,637.74
--------------
Total Expense 646,843.24
--------------
Net Ordinary Income 376,872.00
Other Income/Expense
Other Income
Interest Income 59.90
--------------
Total Other Income 59.90
--------------
Net Other Income 59.90
--------------
Net Income 376,931.90
==============
</TABLE>
Page 9
<PAGE> 52
SPECTRUM LTD.
09/28/00 BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
DEC 31, '97
---------------
<S> <C>
ASSETS
Current Assets
Checking/Savings
U S Bank (General) 21,218.87
WCMA 1,450.14
---------------
Total Checking/Savings 22,669.01
---------------
Total Current Assets 22,669.01
Fixed Assets
Computer Equipment
Original Cost 39,744.39
---------------
Total Computer Equipment 39,744.39
Furniture & Fixtures
Original Cost 11,913.79
---------------
Total Furniture & Fixtures 11,913.79
Production Equipment
Original Cost 6,151.21
---------------
Total Production Equipment 6,151.21
---------------
Total Fixed Assets 57,809.39
Other Assets
Software Products 50,000.00
---------------
Total Other Assets 50,000.00
---------------
TOTAL ASSETS 130,478.40
===============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Payroll Liabilities 4,466.81
US Bank Line of Credit 13,972.27
---------------
Total Other Current Liabilities 18,439.08
---------------
Total Current Liabilities 18,439.08
---------------
Total Liabilities 18,439.08
Equity
Accumulated Earnings 143,350.90
Net Income 142,875.50
Distributions (Current Year) -229,082.01
Opening Bal Equity 54,894.93
---------------
Total Equity 112,039.32
---------------
TOTAL LIABILITIES & EQUITY 130,478.40
===============
</TABLE>
Page 10
<PAGE> 53
SPECTRUM LTD.
09/28/00 PROFIT AND LOSS
JANUARY THROUGH DECEMBER 1997
<TABLE>
<CAPTION>
JAN - DEC '97
-------------
<S> <C>
Total Transportation (116.50)
Travel & Ent
Entertainment 1,055.50
Meals 455.39
Travel 6,870.95
Travel & Ent - Other 1,348.86
-------------
Total Travel & Ent 9,730.70
-------------
Total Expense 218,370.48
-------------
Net Ordinary Income 142,045.12
Other Income/Expense
Other Income
Interest Income 830.38
-------------
Total Other Income 830.38
-------------
Net Other Income 830.38
-------------
Net Income 142,875.50
=============
</TABLE>
Page 11
<PAGE> 54
SPECTRUM LTD.
09/28/00 PROFIT AND LOSS
JANUARY THROUGH DECEMBER 1997
<TABLE>
<CAPTION>
JAN - DEC '97
-------------
<S> <C>
Ordinary Income/Expense
Income
Income
Canadian Operations 301,312.20
Commercial Print & Mail 69,815.81
Consulting Fees 40,507.58
Election Services 115,785.71
MailWare Sales 38,260.79
-------------
Total Income 565,682.09
Reimbursed Expenses 561.37
-------------
Total Income 566,243.46
Cost of Goods Sold
Canadian COGS 144,481.26
Contract Labor 31,736.39
VAR Purchases 29,610.21
-------------
Total COGS 205,827.86
-------------
Gross Profit 360,415.60
Expense
Automobile Expense 7,582.94
Bank Service Charges 946.23
Communications
Internet Provider 2,929.96
Telephone 16,063.53
-------------
Total Communications 18,993.49
Contributions 100.00
Dues and Subscriptions 74.94
Equipment Leases
Xerox Lease 36,967.63
-------------
Total Equipment Leases 36,967.63
Facilities
Rent 25,548.83
-------------
Total Facilities 25,548.83
Insurance
Insurance - Medical 5,936.20
Insurance - Other 168.15
-------------
Total Insurance 6,104.35
Interest Expense 2,020.69
Licenses and Permits 474.00
Marketing 2,534.04
Miscellaneous 2,154.68
Payroll - Gross 93,981.15
Repairs
Computer Repairs 569.63
-------------
569.63
Total Repairs
Supplies
Office Supplies 7,355.72
Production Supplies 1,977.85
-------------
Total Supplies 9,333.57
Taxes
Other 637.82
WA State B&O 732.29
-------------
1,370.11
Total Taxes
Transportation
Courier (116.50)
-------------
</TABLE>
Page 12
<PAGE> 55
SPECTRUM LTD.
09/28/00 BALANCE SHEET
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
DEC 31, '96
-------------
<S> <C>
ASSETS
Current Assets
Checking/Savings
WCMA 24,019.58
-------------
Total Checking/Savings 24,019.58
-------------
Total Current Assets 24,019.58
Fixed Assets
Computer Equipment
Original Cost 12,738.56
-------------
Total Computer Equipment 12,738.56
Furniture & Fixtures
Original Cost 789.13
-------------
Total Furniture & Fixtures 789.13
Production Equipment
Original Cost 1,279.40
-------------
Total Production Equipment 1,279.40
-------------
Total Fixed Assets 14,807.09
Other Assets
Software Products 50,000.00
-------------
Total Other Assets 50,000.00
-------------
TOTAL ASSETS 88,826.67
=============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Payroll Liabilities 1,553.88
-------------
Total Other Current Liabilities 1,553.88
-------------
Total Current Liabilities 1,553.88
-------------
Total Liabilities 1,553.88
Equity
Net Income 143,350.90
Distributions (Current Year) (110,973.04)
Opening Bal Equity 54,894.93
-------------
Total Equity 87,272.79
-------------
TOTAL LIABILITIES & EQUITY 88,826.67
=============
</TABLE>
Page 13
<PAGE> 56
SPECTRUM LTD.
09/28/00 PROFIT AND LOSS
JANUARY THROUGH DECEMBER 1996
<TABLE>
<CAPTION>
JAN - DEC '96
-------------
<S> <C>
Travel & Ent
Meals 1,504.84
Travel 4,125.07
Travel & Ent - Other 3,076.87
-------------
Total Travel & Ent 8,706.78
-------------
Total Expense 85,690.23
-------------
Net Ordinary Income 142,707.33
Other Income/Expense
Other Income
Interest Income 643.57
-------------
Total Other Income 643.57
-------------
Net Other Income 643.57
Net Income 143,350.90
=============
</TABLE>
Page 14
<PAGE> 57
SCHEDULE "C"
LIST OF DIRECTORS, OFFICERS AND KEY EMPLOYEES
OF SPECTRUM PRINT & MAIL SERVICES, LTD.
<TABLE>
<CAPTION>
NAME POSITION COMPENSATION ARRANGEMENT
---- -------- ------------------------
<S> <C> <C>
Jeffrey W. Dean General Manager and Director no compensation
Deborah M. Dean President, Secretary and Director US$144,000 per annum
T. Neil Dean Director no compensation
Tae Kim Vice-President, Technical US$70,000 plus bonus/profit sharing
John Elder Vice President, Election Products and US$70,000 plus bonus/profit sharing
Services
David Dean Production Manager US$70,000 plus bonus/profit sharing
Brian Clubb Senior Software Engineer US$55,000 plus bonus/profit sharing
</TABLE>
<PAGE> 58
-2-
<TABLE>
<CAPTION>
NAME POSITION COMPENSATION ARRANGEMENT
---- -------- ------------------------
<S> <C> <C>
Erica Cardas Operations Manager - Canada CDN$46,000 plus bonus/profit sharing
Karen Rhea CA Counties Project Manager US$50,000 plus bonus/profit sharing
</TABLE>
EXPLANATION OF BONUS/PROFIT SHARING PROGRAM
Since 1996, Spectrum has distributed a portion (8-10 % average) of its profits
to each salaried employee. Distribution takes place during early December. The
total amount of the pool has been determined by Deborah Dean. The individual
amounts have been determined by a combination of formula (normalized pool %
based upon salary and length of service) and then adjusted on a discretionary
basis.
<PAGE> 59
SCHEDULE "D"
LIST OF ADDITIONAL MATERIAL CONTRACTS OF
SPECTRUM PRINT & MAIL SERVICES, LTD.
1. Spectrum is a party to an agreement with the Insurance Corporation of
British Columbia ("ICBC") dated June 30, 1997, as amended by two
Modification Agreements executed on July 12, 1998 and May 5, 1999,
pursuant to which Spectrum provides printing and other services to ICBC
and is paid CDN$49,860 per month. The agreement is to terminate March
31, 2001.
2. Spectrum is a party to an agreement with the U.S. Bank dated September
12, 1997 pursuant to which the U.S. Bank has agreed to provide a line of
credit to Spectrum of up to US$50,000. Spectrum and the U.S. Bank have
also entered into a Commercial Security Agreement dated September 12,
1997, pursuant to which Spectrum has granted to the U.S. Bank a security
interest in certain collateral to secure any amounts to which Spectrum
may be indebted to the U.S. Bank.
3. Spectrum is a party to a Joint Participation Agreement with PSI of
Washington Inc. dated August 18, 1997 pursuant to which both parties
have agreed to provide certain services to each other in respect of the
"Vote-by-Mail" business in King County and Snohomish County, Washington.
4. King County Records and Elections-Ballot Production 7/15/98
5. King County Records and Elections-Absentee Process 7/10/98
6. Fresno County Elections-Ballot Production 2/28/99
7. Fresno County Elections-Absentee Process 2/28/99
8. Tulare County Elections-Ballot Production 9/03/99
9. Los Angeles Elections-Absentee Process 8/01/00
10. Santa Clara County Elections-Absentee Process 9/12/00
11. Sacramento County Elections-Absentee Process 9/05/00
Purchase Orders based upon Spectrum's ballot production and absentee Statements
of Work
Santa Barbara County
San Luis Obispo County
Marin County
Lassen County
Siskiyou County
Humboldt County
Trinity County
Insurance Policies:
FARMERS INSURANCE GROUP: WASHINGTON
Commercial Umbrella Policy
Policy #: 60210-40-55,54
FARMERS INSURANCE GROUP: CALIFORNIA
Commercial Umbrella Policy
Policy #: 60164-98-74
<PAGE> 60
SCHEDULE "E"
FINANCIAL STATEMENTS FOR GLOBAL ELECTION SYSTEMS INC.
(omitted)
<PAGE> 61
SCHEDULE "F"
EMPLOYMENT AGREEMENTS AND NON-COMPETE AGREEMENT
<PAGE> 62
EMPLOYMENT AGREEMENT
This Agreement is between Jeffrey W. Dean (hereinafter referred to as
"Employee") and GLOBAL ELECTION SYSTEMS, INC., a corporation incorporated under
the laws of the State of Delaware, U.S.A. (hereinafter referred to "Employer" or
the "Company").
WITNESSETH:
WHEREAS, Employer desires to employ Employee; and
WHEREAS, Employee desires to accept employment by Employer pursuant to
all of the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is AGREED as follows:
1. PURPOSE. The purpose of this Agreement is to formalize the terms and
conditions of Employee's employment with Employer. The recitals contained herein
represent both parties' intentions with respect to the terms and conditions
covered and cannot be amended during the term of the Agreement except by written
addendum to the Agreement signed by both parties.
2. DEFINITIONS. For the purposes of this Agreement, the following words
shall have the following meanings:
(a) "Employer" means Global Election Systems, Inc., a
corporation incorporated under the laws of the State
of Delaware, together with its subsidiaries,
including, without limitation, Spectrum Print & Mail
Services, Ltd;
(b) "Confidential Information" means information (1)
disclosed to or known by the undersigned Employee as
a consequence of or through his or her employment
with the Employer; (2) not generally known outside
the Employer; and (3) which relates to the Employer
or its business, or its research and development
activities. "Confidential Information" includes, but
is not limited to, all of Employer's technical
information, trade secrets, proprietary information,
business plans, marketing plans, financial
information, compensation and benefit information,
personnel records, cost and pricing information,
customer contacts, customer lists, information
relating to suppliers and vendors, information
relating to accounts, and information provided to the
Employer by a third party under restrictions against
disclosure or use by the Employer or others;
EMPLOYMENT AGREEMENT PAGE 1
<PAGE> 63
"Copyright Works" are materials relating to the
Employee for which copyright protection may be
obtained including, but not limited to: literary
works (including all written material), computer
programs, artistic and graphic works (including
designs, graphs, drawings, blueprints, and other
works), recordings, models, photographs, slides,
motion pictures, and audio-visual works, regardless
of the form or manner in which documented or
recorded;
(d) "Inventions" means inventions (whether patentable or
not), discoveries, improvements, designs, and ideas
(whether or not shown or described in writing or
reduced to practice) including, and in addition to
any such Confidential Information or Copyright Works;
and
(e) "Patents" means any domestic or foreign patents and
patent applications, including any Inventions or
other subject matter described or protected by such
patents and patent applications.
(f) "Copyright Registrations" means any domestic or
foreign copyright registration and applications for
such registration, including all or any portion of
the Copyright Works or other subject matter
identified by any such registration or application.
3. DURATION. This Agreement shall become effective on January 1, 2001
and, unless terminated as hereinafter provided, extend until December 31, 2002.
Unless Employee or Employer gives notice of his or her or its intention not to
renew this Agreement no later than thirty (30) days prior to its expiration,
this Agreement shall automatically continue in effect for successive additional
one-year terms subject to all other terms and conditions contained herein.
4. DUTIES AND RESPONSIBILITIES. Upon execution of this Agreement,
Employee shall diligently render his or her services to Employer in accordance
with the directives of Employer's President, and shall use his or her best
efforts and good faith in accomplishing such directives. Employee agrees to
devote his or her full-time efforts, abilities, and attention (defined to mean
not less than forty (40) hours/week) to the business of the Employer, and shall
not engage in any activities which will interfere with such efforts.
5. COMPENSATION.
(a) In consideration for such services, Employer shall
compensate Employee at an annual salary of $144,000,
payable in installments in accordance with the
standard payroll practices of Employer for its
employees, for the first twelve (12) months of this
Agreement.
(b) Employer shall review Employee's salary as provided
for above no less frequently than each anniversary of
this Agreement; however, nothing
EMPLOYMENT AGREEMENT PAGE 2
<PAGE> 64
shall prevent the Employer from making such
adjustments more frequently if determined necessary.
6. REIMBURSEMENT FOR EXPENSES. Employer shall reimburse Employee for
all reasonable expenses incurred by him or her while performing services for
Employer pursuant to this Agreement, but only after Employee submits a written,
itemized, and signed list of such expenses on a form supplied by Employer for
such purpose.
7. BENEFITS. Employer agrees to provide and/or make available to
Employee all benefits generally provided to its management employees.
8. TERMINATION.
(a) Employer may terminate Employee's employment upon his
or her death, or if he or she is unable to perform
the essential functions of his or her position with
reasonable accommodation for three (3) consecutive
months, or for a total of four (4) months during any
twelve (12) month period.
(b) Employer may also terminate Employee's employment
immediately for "Cause." Cause is defined to include,
but is not limited to:
(1) fraud, misappropriation, or embezzlement
involving Employer;
(2) felony conviction;
(3) Employee's repeated failure to obey or carry
out reasonable directives from Employer
senior management which are consistent with
this Agreement and pertain to Employee's
employment with Employer;
(4) Employee's repeated failure to devote his or
her full-time efforts, abilities, and
attention to the business of the Employer;
(5) repeated poor performance by Employee; or
(6) any breach or threatened breach of Paragraph
9 (a), (b), (d), (e), (f), (g) or (h), or
Paragraph 10 (a), (b), (c), (d), (e) or (i)
below.
(c) Prior to January 1, 2003, if Employee is terminated other than
pursuant to Section 8(a) and without cause, Employee shall be
entitled to receive a lump sum payment equal to the amount
which would have been paid to Employee had he remained
employed until December 31, 2002, at his then current annual
rate (the "Make Whole Payment"); provided, however, that
EMPLOYMENT AGREEMENT PAGE 3
<PAGE> 65
until January 1, 2003, the term Cause shall not include
Section 8(b)(6). After December 31, 2002, Employer may
terminate this Agreement without Cause upon ten (10) days
written notice to Employee. In the event Employee is
terminated pursuant to this provision after December 31, 2002,
Employer can either require Employee to remain in its employ
for the duration of the ten (10) days, or compensate Employee
his or her normal salary for the duration of the ten (10) day
period and terminate his or her employment effective
immediately. If Employee is terminated pursuant to this
provision after December 31, 2002, he or she will receive
compensation and benefits through the end of a 90 day period
commencing on the date Employee is notified of his or her
termination (the "Severance Benefit").
(d) Employee may terminate this Agreement upon ten (10) days
written notice to Employer. In the event Employee terminates
his or her employment in this manner, he or she shall remain
in Employer's employ subject to all terms and conditions of
this Agreement for the entire ten (10) day period, unless
instructed otherwise by the President, but shall not be
entitled to any Make Whole Payment or any Severance Benefit.
(e) In the event Employee is terminated for Cause, his or her
salary and benefits will cease immediately without payment of
any Make Whole Payment or Severance Benefit.
9. INVENTIONS, CONFIDENTIAL INFORMATION, PATENTS, AND COPYRIGHT WORKS.
(a) NOTIFICATION OF COMPANY. Upon conception, all Inventions,
Confidential Information, and Copyright Works shall become the
property of the Employer (or the United States Government
where required by law) whether or not patent or copyright
registration applications are filed for such subject matter.
Employee will communicate to the Employer promptly and fully
all Inventions, or suggestions (whether or not patentable),
all Confidential Information or Copyright Works made,
designed, created, or conceived by Employee (whether made,
designed, created, or conceived solely by Employee or jointly
with others) during the period of his or her employment with
the Employer: (a) which relate to the actual or anticipated
business, research, activities, or development of the Employer
at the time of the conception; or (b) which result from or are
suggested by any work which Employee has done or may do for or
on behalf of the Employer; or (c) which are developed, tested,
improved, or investigated either in part or entirely on time
for which Employee was paid by the Employer, or using any
resources of the Employer.
EMPLOYMENT AGREEMENT PAGE 4
<PAGE> 66
(b) TRANSFER OF RIGHTS. Employee agrees, during his or her
employment with the Employer, to assign and transfer to the
Employer Employee's entire right, title, and interest in all
Inventions, Confidential Information, Copyright Works and
Patents prepared, made or conceived by or in behalf of
Employee (solely or jointly with others): (a) which relate in
any way to the actual or anticipated business of the Employer,
or (b) which relate in any way to the actual or anticipated
research or development of the Employer, or (c) which are
suggested by or result, directly or indirectly, from any task
assigned to Employee or in which Employee otherwise engages in
behalf of the Employer. Employee also agrees to do all things
necessary to transfer to the Employer Employee's entire right,
title, and interest in and to all such Inventions,
Confidential Information, Copyright Works or Patents as the
Employer may request, on such forms as the Employer may
provide, at any time during or after Employee s employment.
Employee will promptly and fully assist the Employer during
and subsequent to his or her employment in every lawful way to
obtain, protect, and enforce the Employer's patent,
copyrights, trade secret or other proprietary rights for
Inventions, Confidential Information, Copyright Works or
Patents in any and all countries.
(c) NOTICE OF RIGHTS UNDER STATE STATUTES. No provision in this
Agreement is intended to require assignment of any of the
Employee's rights in an Invention for which no equipment,
supplies, facilities, Confidential Information, Copyright
Works, Inventions, Patents or information of the Employer was
used, and which was (1) developed entirely on the Employee's
own time; (2) does not relate to the business of the Employer
or to the actual or demonstrably anticipated research or
development of the Employer; and (3) does not result from any
work performed by the Employee for the Employer or assigned to
the Employee by the Employer.
(d) RIGHTS IN COPYRIGHTS. Unless otherwise agreed in writing by
the Employer, all Copyright Works prepared wholly or partially
by Employee (alone or jointly with others) within the scope of
his or her employment with the Employer, shall be deemed a
"work made for hire" under the copyright laws and shall be
owned by the Employer. Employee understands that any
assignment or release of such works can only be made by the
Employer. Employee will do everything reasonably necessary to
enable the Employer or its nominee to protect its rights in
such works. Employee agrees to execute all documents and to do
all things necessary to vest in the Employer Employee's right
and title to copyrights in such works. Employee shall not
assist or work with any third party that is not an employee of
Employer to create or prepare any Copyright Works without the
prior written consent of Employer.
EMPLOYMENT AGREEMENT PAGE 5
<PAGE> 67
(e) ASSISTANCE IN PREPARATION OF APPLICATIONS. Employee
will promptly and fully assist, if requested by the
Employer, in the preparation and filing of Patents
and Copyright Registrations in any and all countries
selected by the Employer and will assign to the
Employer Employee's entire right, title, and interest
in and to such Patents and Copyright Registrations,
as well as all Inventions or Copyright Works to which
such Patents and Copyright Registrations pertain, to
enable any such properties to be prosecuted under the
direction of the Employer and to ensure that any
Patent or Copyright Registration obtained will
validly issue to the Employer.
(f) EXECUTE DOCUMENTS. Employee will promptly sign any
and all lawful papers, take all lawful oaths, and do
all lawful acts, including testifying, at the request
of Employer, in connection with the procurement,
grant, enforcement, maintenance, exploitation, or
defense against assertion of any patent, trademark,
copyright, trade secret or related rights, including
applications for protection or registration thereof.
Such lawful papers include, but are not limited to,
any and all powers, assignments, affidavits,
declarations and other papers deemed by the Employer
to be necessary or advisable.
(g) KEEP RECORDS. Employee will keep and regularly
maintain adequate and current written records of all
Inventions, Confidential Information, and Copyright
Works in which he or she participates in creating,
conceiving, developing or manufacturing. Such records
shall be kept and maintained in the form of notes,
sketches, drawings, reports, or other documents
relating thereto, bearing at least the date of
preparation and the signatures or name of each
employee contributing to the subject matter reflected
in the record. Such records shall be and shall remain
the exclusive property of the Employer and shall be
available to the Employer at all times.
(h) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings,
records, and other documents and things comprising,
containing, describing, discussing, explaining, or
evidencing any Inventions, Confidential Information,
or Copyright Works and all equipment, components,
parts, tools, and the like in Employee's custody or
possession that have been obtained or prepared in the
course of Employee's employment with the Employer
shall be the exclusive property of the Employer,
shall not be copied and/or removed from the premises
of the Employer, except in pursuit of the business of
the Employer, and shall be delivered to the Employer,
without Employee retaining any copies, upon
notification of the termination of Employee's
employment or at any other time requested by the
Employer. The Employer shall have the right to
retain, access, and inspect all property of the
Employee of any kind in the office, work area, and on
the premises of
EMPLOYMENT AGREEMENT PAGE 6
<PAGE> 68
the Employer upon termination of Employee's
employment and at any time during employment by the
Employer, to ensure compliance with the terms of this
Agreement.
(i) OTHER CONTRACTS. Employee represents and warrants
that he or she is not a party to any existing
contract relating to the granting or assignment to
others of any interest in Inventions, Confidential
Information, Copyright Works or Patents hereafter
made by Employee except insofar as copies of such
contracts, if any, are attached to this Agreement.
(j) ASSIGNMENT AFTER TERMINATION. Employee recognizes
that ideas, Inventions, Confidential Information,
Copyright Works, Copyright Registrations or Patents
relating to his or her activities while working for
the Employer that are conceived or made by Employee,
alone or with others, within one (1) year after
termination of his or her employment may have been
conceived in significant part while Employee was
employed by the Employer. Accordingly, Employee
agrees that such ideas, Inventions, Confidential
Information, Copyright Works, Copyright Registrations
or Patents shall be presumed to have been conceived
and made during his or her employment with the
Employer and are to be assigned to the Employer.
(k) PRIOR CONCEPTIONS. At the end of this Agreement,
Employee has set forth what he or she represents and
warrants to be a complete list of all Inventions, if
any, patented or unpatented, or Copyright Works,
including a brief description thereof (without
revealing any confidential or proprietary information
of any other party) which Employee participated in
the conception, creation, development, or making of
prior to his or her employment with the Employer and
for which Employee claims full or partial ownership
or other interest, or which are in the physical
possession of a former employer and which are
therefore excluded from the scope of this Agreement.
If there are no such exclusions from this Agreement,
Employee has so indicated by writing "None" below in
his or her own handwriting.
10. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Employee
recognizes and agrees that a portion of the compensation he or she is to receive
pursuant to this Agreement is provided in consideration for the agreements
contained in this Paragraph. Employee further acknowledges and agrees that while
employed pursuant to this Agreement, he or she will have access to confidential
information of Employer, will be provided with specialized training on how to
perform his or her duties; and will be provided with contact with Employer's
customers and potential customers. In consideration of all of the foregoing,
Employee agrees as follows:
EMPLOYMENT AGREEMENT PAGE 7
<PAGE> 69
(a) NON-COMPETITION DURING EMPLOYMENT. Employee agrees
that for the duration of this Agreement, he or she
will not compete with the Employer by engaging in the
conception, design, development, production,
marketing, or servicing of any product or service
that is substantially similar to the products or
services which the Employer provides, and that he or
she will not work for, in any capacity, assist, or
become affiliated with as an owner, partner, etc.,
either directly or indirectly, any individual or
business which offers or performs services, or offers
or provides products substantially similar to the
services and products provided by Employer.
(b) CONFLICTS OF INTEREST. Employee agrees that for the
duration of this Agreement, he or she will not
engage, either directly or indirectly, in any
activity (a "Conflict of Interest") which might
adversely affect Employer or its affiliates,
including ownership of a material interest in any
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business or accepting any payment, service, loan,
gift, trip, entertainment, or other favor in each
case having a value exceeding US $200 from a
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business, and that Employee will promptly inform
Employer's President, or a corporate officer of
Employer designated by the President, as to each
offer received by Employee to engage in any such
activity. Employee further agrees to disclose to
Employer any other facts of which Employee becomes
aware which might involve or give rise to a Conflict
of Interest or potential Conflict of Interest.
(c) NON-COMPETITION AFTER TERMINATION. Employee agrees
that Employee shall not, directly or indirectly, at
any time during the period of two (2) years after the
termination of this Agreement for any reason,
including expiration of the Agreement, within a
geographical area encompassing 200 miles surrounding
any of Employer's offices, as an employee,
consultant, or director, provide any services to, or
engage in or contribute Employee's knowledge to any
work which is competitive with or similar to a
product, process, apparatus or services provided by
the Employer. Following the expiration of said two
(2) year period, Employee shall continue to be
obligated under the Nondisclosure of Confidential
Information section of this Agreement not to use or
to disclose Confidential Information of the Employer
so long as it shall not be publicly available. It is
understood that the geographical area set forth in
this covenant is divisible so that if this clause is
invalid or unenforceable in an included geographic
area, that area is severable and the clause remains
in effect for the remaining included geographic areas
in which the clause is valid.
EMPLOYMENT AGREEMENT PAGE 8
<PAGE> 70
(d) NON-SOLICITATION OF CUSTOMERS. Employee further
agrees that for the duration of this Agreement, and
for a period of two (2) years after the termination
of this Agreement for any reason, including
expiration of the Agreement, he or she will not
solicit or accept any business from any customer or
client or prospective customer or client with whom
Employee dealt or solicited while employed by
Employer.
(e) NON-SOLICITATION OF EMPLOYEES. Employee agrees that
for the duration of this Agreement, and for a period
of two (2) years after the termination of this
Agreement for any reason, including expiration of the
Agreement, he or she will not either directly or
indirectly, on his or her own behalf or on behalf of
others, solicit, attempt to hire, or hire any person
employed by Employer to work for Employee or for
another entity, firm, corporation, or individual.
(f) CONFIDENTIAL INFORMATION. Employee further agrees
that Employee will not, except as the Employer may
otherwise consent or direct in writing, reveal or
disclose, sell, use, lecture upon, publish or
otherwise disclose to any third party any
Confidential Information or proprietary information
of the Employer, or authorize anyone else to do these
things at any time either during or subsequent to his
or her employment with the Employer. This section
shall continue in full force and effect after
termination of Employee's employment and after the
termination of this Agreement for any reason,
including expiration of this Agreement. Employee's
obligations under this section of this Agreement with
respect to any specific Confidential Information and
proprietary information shall cease when that
specific portion of the Confidential Information and
proprietary information becomes publicly known, in
its entirety and without combining portions of such
information obtained separately. It is understood
that such Confidential Information and proprietary
information of the Employer include matters that
Employee conceives or develops, as well as matters
Employee learns from other employees of Employer.
(g) REAFFIRM OBLIGATIONS. Upon termination of his or her
employment with the Employer, Employee, if requested
by Employer, shall reaffirm in writing Employee's
recognition of the importance of maintaining the
confidentiality of the Employer's Confidential
Information, disclose the identity of his or her new
employer or business ventures, and reaffirm any other
obligations set forth in this Agreement.
(h) PRIOR DISCLOSURE. Employee represents and warrants
that he or she has not used or disclosed any
Confidential Information he or she may have
EMPLOYMENT AGREEMENT PAGE 9
<PAGE> 71
obtained from Employer prior to signing this
Agreement, in any way inconsistent with the
provisions of this Agreement.
(i) CONFIDENTIAL INFORMATION OF PRIOR EMPLOYERS. Employee
will not disclose or use during the period of his or
her employment with the Employer any proprietary or
confidential information or copyright works which
Employee may have acquired because of employment with
an employer other than the Employer or Spectrum or
acquired from any other third party, whether such
information is in Employee's memory or embodied in a
writing or other physical form.
(j) TIME PERIOD. The time periods referenced in this
Paragraph shall not include any period of time during
which Employee is in breach of this Agreement.
(k) BREACH. Employee agrees that any breach of Paragraphs
10(a), (b), (c), (d), (e) or (f) above cannot be
remedied solely by money damages, and that in
addition to any other remedies Employer may have,
Employer is entitled to obtain injunctive relief
against Employee. Nothing herein, however, shall be
construed as limiting Employer's right to pursue any
other available remedy at law or in equity, including
recovery of damages and termination of this
Agreement; provided further, that any breach of
Paragraphs 10(a), (c), (d), (e) or (f) by Employee
subsequent to his or her employment with Employer
will result in forfeiture of all rights to pension
benefits and other severance and retirement benefits.
(l) INDEPENDENT COVENANTS. All covenants contained in
Paragraph 10 of this Agreement shall be construed as
agreements independent of any other provision of this
Agreement, and the existence of any claim or cause of
action by Employer against the Employee, whether
predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the
Company of such covenants.
11. RIGHT TO ENTER AGREEMENT. Employee represents and covenants to
Employer that he or she has full power and authority to enter into this
Agreement and that the execution of this Agreement will not breach or constitute
a default of any other agreement or contract to which he or she is a party or by
which he or she is bound.
12. ASSIGNMENT. This Agreement may be assigned by Employer, but cannot
be assigned by Employee.
13. BINDING AGREEMENT. Employee understands that his or her obligations
under Section 10 of this Agreement are binding upon Employee's heirs,
successors, personal representatives, and legal representatives.
EMPLOYMENT AGREEMENT PAGE 10
<PAGE> 72
14. NOTICES. All notices pursuant to this Agreement shall be in writing
and sent certified mail, return receipt requested, addressed as follows:
If to Employee: Jeffrey W. Dean
22006 - 100th Avenue West
Edmonds, Washington USA 98020
with a copy to: Ron L. Bozzer
Borden Ladner Gervais LLP
1200 Waterfront Centre
200 Burrard Street
P.O.Box 48600
Vancouver, Canada V7X 1T2
If to Employer: Global Election Systems, Inc.
1611 Wilmeth Road
McKinney, Texas U.S.A. 75069
With a copy to: Brice Tarzwell, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
15. WAIVER. No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.
16. SEVERABILITY. If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions shall
be deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect. Furthermore, any
breach by Employer of any provision of this Agreement shall not excuse
Employee's compliance with the requirements of Paragraphs 9 or 10, to the extent
they are otherwise enforceable.
17. ARBITRATION. In the event any dispute arises out of Employee's
employment with Employer, or separation therefrom, which cannot be resolved by
the parties to this Agreement, such dispute shall be submitted to final and
binding arbitration. The arbitration shall be conducted in accordance with the
American Arbitration Association ("AAA"). If the parties cannot agree on an
arbitrator, a list of seven (7) arbitrators will be requested from AAA, and the
arbitrator will be selected using alternate strikes with Employee striking
first. The cost of the arbitration will be shared equally by Employee and
Employer. Arbitration of such disputes is mandatory and in lieu of any and all
civil causes of action and lawsuits either party may have
EMPLOYMENT AGREEMENT PAGE 11
<PAGE> 73
against the other arising out of Employee's employment with Employer, or
separation therefrom; provided, however, that any claim Employer has for breach
of the covenants contained in Paragraphs 9 and 10 of this Agreement shall not be
subject to mandatory arbitration, and may be pursued in a court of law or
equity.
18. ENTIRE AGREEMENT. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Employee's
employment with Employer during the time period covered by this Agreement. This
Agreement replaces and supersedes any and all existing Agreements entered into
between Employee and the Company relating generally to the same subject matter,
if any, and shall be binding upon Employee's heirs, executors, administrators,
or other legal representatives or assigns.
19. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Employee and
an officer or other authorized executive of Employer.
20. UNDERSTAND AGREEMENT. Employee represents and warrants that he or
she has read and understood each and every provision of this Agreement, and
Employee understands that he or she is free to obtain advice from legal counsel
of choice, if necessary and desired, in order to interpret any and all
provisions of this Agreement, and that Employee has freely and voluntarily
entered into this Agreement.
21. EFFECTIVE DATE. It is understood by Employee that this Agreement
shall be effective when signed by both Employer and Employee, and that the terms
of this Agreement shall remain in full force and effect both during the
continuation of Employee's employment and, except for paragraphs 4, 5, 6 and 7,
after the termination of Employee's employment for any reason.
22. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
[The balance of this page left blank intentionally.]
EMPLOYMENT AGREEMENT PAGE 12
<PAGE> 74
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EMPLOYEE GLOBAL
Jeffrey W. Dean GLOBAL ELECTION SYSTEMS, INC.
/s/ Jeffrey W. Dean By: /s/ Robert J. Urosevich
------------------------ --------------------------------
Employee's Name Robert J. Urosevich
President and Chief Operating Officer
Dated: 09/29/00 Dated: 09/29/00
--------- ---------
EMPLOYMENT AGREEMENT PAGE 13
<PAGE> 75
EMPLOYMENT AGREEMENT
This Agreement is between David W. Dean (hereinafter referred to as
"Employee") and SPECTRUM PRINT & MAIL SERVICES, LTD., a corporation incorporated
under the laws of the State of Delaware, U.S.A. (hereinafter referred to
"Employer" or the "Company"), and Global Election Systems, Inc., a corporation
incorporated under the laws of the State of Delaware ("Global").
WITNESSETH:
WHEREAS, Employer desires to employ Employee; and
WHEREAS, Employee desires to accept employment by Employer pursuant to
all of the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is AGREED as follows:
1. PURPOSE. The purpose of this Agreement is to formalize the terms
and conditions of Employee's employment with Employer. The recitals contained
herein represent both parties' intentions with respect to the terms and
conditions covered and cannot be amended during the term of the Agreement except
by written addendum to the Agreement signed by both parties.
2. DEFINITIONS. For the purposes of this Agreement, the following
words shall have the following meanings:
(a) "Employer" means Global Election Systems, Inc., a
corporation incorporated under the laws of the State
of Delaware, together with its subsidiaries,
including, without limitation, Spectrum Print & Mail
Services, Ltd;
(b) "Confidential Information" means information (1)
disclosed to or known by the undersigned Employee as
a consequence of or through his or her employment
with the Employer; (2) not generally known outside
the Employer; and (3) which relates to the Employer
or its business, or its research and development
activities. "Confidential Information" includes, but
is not limited to, all of Employer's technical
information, trade secrets, proprietary information,
business plans, marketing plans, financial
information, compensation and benefit information,
personnel records, cost and pricing information,
customer contacts, customer lists, information
relating to suppliers and vendors, information
relating to
EMPLOYMENT AGREEMENT PAGE 1
<PAGE> 76
accounts, and information provided to the Employer by
a third party under restrictions against disclosure
or use by the Employer or others;
(c) "Copyright Works" are materials relating to the
Employee for which copyright protection may be
obtained including, but not limited to: literary
works (including all written material), computer
programs, artistic and graphic works (including
designs, graphs, drawings, blueprints, and other
works), recordings, models, photographs, slides,
motion pictures, and audio-visual works, regardless
of the form or manner in which documented or
recorded;
(d) "Inventions" means inventions (whether patentable or
not), discoveries, improvements, designs, and ideas
(whether or not shown or described in writing or
reduced to practice) including, and in addition to
any such Confidential Information or Copyright Works;
and
(e) "Patents" means any domestic or foreign patents and
patent applications, including any Inventions or
other subject matter described or protected by such
patents and patent applications.
(f) "Copyright Registrations" means any domestic or
foreign copyright registration and applications for
such registration, including all or any portion of
the Copyright Works or other subject matter
identified by any such registration or application.
3. DURATION. This Agreement shall become effective on September 29,
2000 and, unless terminated as hereinafter provided, extend until December 31,
2000. Unless Employee or Employer gives notice of his or her or its intention
not to renew this Agreement no later than thirty (30) days prior to its
expiration, this Agreement shall automatically continue in effect for successive
additional one-year terms subject to all other terms and conditions contained
herein.
4. DUTIES AND RESPONSIBILITIES. Upon execution of this Agreement,
Employee shall diligently render his or her services to Employer in accordance
with the directives of Employer's President, and shall use his or her best
efforts and good faith in accomplishing such directives. Employee agrees to
devote his or her full-time efforts, abilities, and attention (defined to mean
not less than forty (40) hours/week) to the business of the Employer, and shall
not engage in any activities which will interfere with such efforts.
5. COMPENSATION.
(a) In consideration for such services, Employer shall
compensate Employee at an annual salary of $70,000,
payable in installments in accordance with the
standard payroll practices of Employer for its
employees, for the first twelve (12) months of this
Agreement.
EMPLOYMENT AGREEMENT PAGE 2
<PAGE> 77
(b) Employer shall review Employee's salary as provided
for above no less frequently than each anniversary of
this Agreement; however, nothing shall prevent the
Employer from making such adjustments more frequently
if determined necessary.
6. REIMBURSEMENT FOR EXPENSES. Employer shall reimburse Employee for
all reasonable expenses incurred by him or her while performing services for
Employer pursuant to this Agreement, but only after Employee submits a written,
itemized, and signed list of such expenses on a form supplied by Employer for
such purpose.
7. BENEFITS. Employer agrees to provide and/or make available to
Employee all benefits generally provided to its management employees.
8. TERMINATION.
(a) Employer may terminate Employee's employment upon his
or her death, or if he or she is unable to perform
the essential functions of his or her position with
reasonable accommodation for three (3) consecutive
months, or for a total of four (4) months during any
twelve (12) month period.
(b) Employer may also terminate Employee's employment
immediately for "Cause." Cause is defined to include,
but is not limited to:
(1) fraud, misappropriation, or embezzlement
involving Employer;
(2) felony conviction;
(3) Employee's repeated failure to obey or carry
out reasonable directives from Employer
senior management which are consistent with
this Agreement and pertain to Employee's
employment with Employer;
(4) Employee's repeated failure to devote his or
her full-time efforts, abilities, and
attention to the business of the Employer;
(5) repeated poor performance by the Employee;
or
(6) any breach or threatened breach of Paragraph
9 (a), (b), (d), (e), (f), (g) or (h), or
Paragraph 10 (a), (b), (c), (d), (e) or (f)
below.
(c) Employer may terminate this Agreement without cause
upon ten (10) days written notice to Employee. In the
event Employee is terminated pursuant to this
provision, Employer can either require Employee to
remain in its
EMPLOYMENT AGREEMENT PAGE 3
<PAGE> 78
employ for the duration of the ten (10) days, or
compensate Employee his or her normal salary for the
duration of the ten (10) day period and terminate his
or her employment effective immediately. If Employee
is terminated pursuant to this provision, he or she
will receive compensation and benefits through the
end of a 30 day period commencing on the date
Employee is notified of his or her termination (the
"Severance Benefit").
(d) Employee may terminate this Agreement upon ten (10)
days written notice to Employer. In the event
Employee terminates his or her employment in this
manner, he or she shall remain in Employer's employ
subject to all terms and conditions of this Agreement
for the entire ten (10) day period, unless instructed
otherwise by the President, but shall not be entitled
to any Severance Benefit.
(e) In the event Employee is terminated for Cause, his or
her salary and benefits will cease immediately
without payment of any Severance Benefit.
9. INVENTIONS, CONFIDENTIAL INFORMATION, PATENTS, AND COPYRIGHT
WORKS.
(a) NOTIFICATION OF COMPANY. Upon conception, all
Inventions, Confidential Information, and Copyright
Works shall become the property of the Employer (or
the United States Government where required by law)
whether or not patent or copyright registration
applications are filed for such subject matter.
Employee will communicate to the Employer promptly
and fully all Inventions, or suggestions (whether or
not patentable), all Confidential Information or
Copyright Works made, designed, created, or conceived
by Employee (whether made, designed, created, or
conceived solely by Employee or jointly with others)
during the period of his or her employment with the
Employer: (a) which relate to the actual or
anticipated business, research, activities, or
development of the Employer at the time of the
conception; or (b) which result from or suggested by
any work which Employee has done or may do for or on
behalf of the Employer; or (c) which are developed,
tested, improved, or investigated either in part or
entirely on time for which Employee was paid by the
Employer, or using any resources of the Employer.
(b) TRANSFER OF RIGHTS. Employee agrees, during his or
her employment with the Employer, to assign and
transfer to the Employer Employee's entire right,
title, and interest in all Inventions, Confidential
Information, Copyright Works and Patents prepared,
made or conceived by or in behalf of Employee (solely
or jointly with others): (a) which relate in any way
to the actual or anticipated business of the
Employer, or (b) which relate in any way to the
actual or anticipated research or development of the
EMPLOYMENT AGREEMENT PAGE 4
<PAGE> 79
Employer, or (c) which are suggested by or result,
directly or indirectly, from any task assigned to
Employee or in which Employee otherwise engages in
behalf of the Employer. Employee also agrees to do
all things necessary to transfer to the Employer
Employee's entire right, title, and interest in and
to all such Inventions, Confidential Information,
Copyright Works or Patents as the Employer may
request, on such forms as the Employer may provide,
at any time during or after Employee's employment.
Employee will promptly and fully assist the Employer
during and subsequent to his or her employment in
every lawful way to obtain, protect, and enforce the
Employer's patent, copyrights, trade secret or other
proprietary rights for Inventions, Confidential
Information, Copyright Works or Patents in any and
all countries.
(c) NOTICE OF RIGHTS UNDER STATE STATUTES. No provision
in this Agreement is intended to require assignment
of any of the Employee's rights in an Invention for
which no equipment, supplies, facilities,
Confidential Information, Copyright Works,
Inventions. Patents or information of the Employer
was used, and which was (1) developed entirely on the
Employee's own time; (2) does not relate to the
business of the Employer or to the actual or
demonstrably anticipated research or development of
the Employer; and (3) does not result from any work
performed by the Employee for the Employer or
assigned to the Employee by the Employer.
(d) RIGHTS IN COPYRIGHTS. Unless otherwise agreed in
writing by the Employer, all Copyright Works prepared
wholly or partially by Employee (alone or jointly
with others) within the scope of his or her
employment with the Employer, shall be deemed a "work
made for hire" under the copyright laws and shall be
owned by the Employer. Employee understands that any
assignment or release of such works can only be made
by the Employer. Employee will do everything
reasonably necessary to enable the Employer or its
nominee to protect its rights in such works. Employee
agrees to execute all documents and to do all things
necessary to vest in the Employer Employee's right
and title to copyrights in such works. Employee shall
not assist or work with any third party that is not
an employee of Employer to create or prepare any
Copyright Works without the prior written consent of
Employer.
(e) ASSISTANCE IN PREPARATION OF APPLICATIONS. Employee
will promptly and fully assist, if requested by the
Employer, in the preparation and filing of Patents
and Copyright Registrations in any and all countries
selected by the Employer and will assign to the
Employer Employee's entire right, title, and interest
in and to such Patents and Copyright Registrations,
as well as all Inventions or Copyright Works to which
such Patents and Copyright Registrations pertain, to
enable any such properties to be
EMPLOYMENT AGREEMENT PAGE 5
<PAGE> 80
prosecuted under the direction of the Employer and to
ensure that any Patent or Copyright Registration
obtained will validly issue to the Employer.
(f) EXECUTE DOCUMENTS. Employee will promptly sign any
and all lawful papers, take all lawful oaths, and do
all lawful acts, including testifying, at the request
of Employer, in connection with the procurement,
grant, enforcement, maintenance, exploitation, or
defense against assertion of any patent, trademark,
copyright, trade secret or related rights, including
applications for protection or registration thereof.
Such lawful papers include, but are not limited to,
any and all powers, assignments, affidavits,
declarations and other papers deemed by the Employer
to be necessary or advisable.
(g) KEEP RECORDS. Employee will keep and regularly
maintain adequate and current written records of all
Inventions, Confidential Information, and Copyright
Works in which he or she participates in creating,
conceiving, developing or manufacturing. Such records
shall be kept and maintained in the form of notes,
sketches, drawings, reports, or other documents
relating thereto, bearing at least the date of
preparation and the signatures or name of each
employee contributing to the subject matter reflected
in the record. Such records shall be and shall remain
the exclusive property of the Employer and shall be
available to the Employer at all times.
(h) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings,
records, and other documents and things comprising,
containing, describing, discussing, explaining, or
evidencing any Inventions, Confidential Information,
or Copyright Works and all equipment, components,
parts, tools, and the like in Employee's custody or
possession that have been obtained or prepared in the
course of Employee's employment with the Employer
shall be the exclusive property of the Employer,
shall not be copied and/or removed from the premises
of the Employer, except in pursuit of the business of
the Employer, and shall be delivered to the Employer,
without Employee retaining any copies, upon
notification of the termination of Employee's
employment or at any other time requested by the
Employer. The Employer shall have the right to
retain, access, and inspect all property of the
Employee of any kind in the office, work area, and on
the premises of the Employer upon termination of
Employee's employment and at any time during
employment by the Employer, to ensure compliance with
the terms of this Agreement.
(i) OTHER CONTRACTS. Employee represents and warrants
that he or she is not a party to any existing
contract relating to the granting or assignment to
others of any interest in Inventions, Confidential
Information, Copyright
EMPLOYMENT AGREEMENT PAGE 6
<PAGE> 81
Works or Patents hereafter made by Employee except
insofar as copies of such contracts, if any, are
attached to this Agreement.
(j) ASSIGNMENT AFTER TERMINATION. Employee recognizes
that ideas, Inventions, Confidential Information,
Copyright Works, Copyright Registrations or Patents
relating to his or her activities while working for
the Employer that are conceived or made by Employee,
alone or with others, within one (1) year after
termination of his or her employment may have been
conceived in significant part while Employee was
employed by the Employer. Accordingly, Employee
agrees that such ideas, Inventions, Confidential
Information, Copyright Works, Copyright Registrations
or Patents shall be presumed to have been conceived
and made during his or her employment with the
Employer and are to be assigned to the Employer.
(k) PRIOR CONCEPTIONS. At the end of this Agreement,
Employee has set forth what he or she represents and
warrants to be a complete list of all Inventions, if
any, patented or unpatented, or Copyright Works,
including a brief description thereof (without
revealing any confidential or proprietary information
of any other party) which Employee participated in
the conception, creation, development, or making of
prior to his or her employment with the Employer and
for which Employee claims full or partial ownership
or other interest, or which are in the physical
possession of a former employer and which are
therefore excluded from the scope of this Agreement.
If there are no such exclusions from this Agreement,
Employee has so indicated by writing "None" below in
his or her own handwriting.
10. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Employee
recognizes and agrees that a portion of the compensation he or she is to receive
pursuant to this Agreement is provided in consideration for the agreements
contained in this Paragraph. Employee further acknowledges and agrees that while
employed pursuant to this Agreement, he or she will have access to confidential
information of Employer, will be provided with specialized training on how to
perform his or her duties; and will be provided with contact with Employer's
customers and potential customers. In consideration of all of the foregoing,
Employee agrees as follows:
(a) NON-COMPETITION DURING EMPLOYMENT. Employee agrees
that for the duration of this Agreement, he or she
will not compete with the Employer by engaging in the
conception, design, development, production,
marketing, or servicing of any product or service
that is substantially similar to the products or
services which the Employer provides, and that he or
she will not work for, in any capacity, assist, or
become affiliated with as an owner, partner, etc.,
either directly or indirectly, any individual
EMPLOYMENT AGREEMENT PAGE 7
<PAGE> 82
or business which offers or performs services, or
offers or provides products substantially similar to
the services and products provided by Employer.
(b) CONFLICTS OF INTEREST. Employee agrees that for the
duration of this Agreement, he or she will not
engage, either directly or indirectly, in any
activity (a "Conflict of Interest") which might
adversely affect Employer or its affiliates,
including ownership of a material interest in any
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business or accepting any payment, service, loan,
gift, trip, entertainment, or other favor in each
case having a value exceeding US $200 from a
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business, and that Employee will promptly inform
Employer's President, or a corporate officer of
Employer designated by the President, as to each
offer received by Employee to engage in any such
activity. Employee further agrees to disclose to
Employer any other facts of which Employee becomes
aware which might involve or give rise to a Conflict
of Interest or potential Conflict of Interest.
(c) NON-COMPETITION AFTER TERMINATION. Employee agrees
that Employee shall not, directly or indirectly, at
any time during the period of two (2) years after the
termination of this Agreement for any reason,
including expiration of the Agreement, within a
geographical area encompassing 200 miles surrounding
any of Employer's offices, as an employee,
consultant, or director, provide any services to, or
engage in or contribute Employee's knowledge to any
work which is competitive with or similar to a
product, process, apparatus or services provided by
the Employer. Following the expiration of said two
(2) year period, Employee shall continue to be
obligated under the Nondisclosure of Confidential
Information section of this Agreement not to use or
to disclose Confidential Information of the Employer
so long as it shall not be publicly available. It is
understood that the geographical area set forth in
this covenant is divisible so that if this clause is
invalid or unenforceable in an included geographic
area, that area is severable and the clause remains
in effect for the remaining included geographic areas
in which the clause is valid.
(d) NON-SOLICITATION OF CUSTOMERS. Employee further
agrees that for the duration of this Agreement, and
for a period of two (2) years after the termination
of this Agreement for any reason, including
expiration of the Agreement, he or she will not
solicit or accept any business from any customer or
client or prospective customer or client with whom
Employee dealt or solicited while employed by
Employer.
EMPLOYMENT AGREEMENT PAGE 8
<PAGE> 83
(e) NON-SOLICITATION OF EMPLOYEES. Employee agrees that
for the duration of this Agreement, and for a period
of two (2) years after the termination of this
Agreement for any reason, including expiration of the
Agreement, he or she will not either directly or
indirectly, on his or her own behalf or on behalf of
others, solicit, attempt to hire, or hire any person
employed by Employer to work for Employee or for
another entity, firm, corporation, or individual.
(f) CONFIDENTIAL INFORMATION. Employee further agrees
that Employee will not, except as the Employer may
otherwise consent or direct in writing, reveal or
disclose, sell, use, lecture upon, publish or
otherwise disclose to any third party any
Confidential Information or proprietary information
of the Employer, or authorize anyone else to do these
things at any time either during or subsequent to his
or her employment with the Employer. This section
shall continue in full force and effect after
termination of Employee's employment and after the
termination of this Agreement for any reason,
including expiration of this Agreement. Employee's
obligations under this section of this Agreement with
respect to any specific Confidential Information and
proprietary information shall cease when that
specific portion of the Confidential Information and
proprietary information becomes publicly known, in
its entirety and without combining portions of such
information obtained separately. It is understood
that such Confidential Information and proprietary
information of the Employer include matters that
Employee conceives or develops, as well as matters
Employee learns from other employees of Employer.
(g) REAFFIRM OBLIGATIONS. Upon termination of his or her
employment with the Employer, Employee, if requested
by Employer, shall reaffirm in writing Employee's
recognition of the importance of maintaining the
confidentiality of the Employer's Confidential
Information, disclose the identity of his or her new
employer or business ventures, and reaffirm any other
obligations set forth in this Agreement.
(h) PRIOR DISCLOSURE. Employee represents and warrants
that he or she has not used or disclosed any
Confidential Information he or she may have obtained
from Employer prior to signing this Agreement, in any
way inconsistent with the provisions of this
Agreement.
(i) CONFIDENTIAL INFORMATION OF PRIOR EMPLOYERS. Employee
will not disclose or use during the period of his or
her employment with the Employer any proprietary or
confidential information or copyright works which
Employee may have acquired because of employment with
an employer other than the Employer or Spectrum or
acquired from any other
EMPLOYMENT AGREEMENT PAGE 9
<PAGE> 84
third party, whether such information is in
Employee's memory or embodied in a writing or other
physical form.
(j) TIME PERIOD. The time periods referenced in this
Paragraph shall not include any period of time during
which Employee is in breach of this Agreement.
(k) BREACH. Employee agrees that any breach of Paragraphs
10(a), (b), (c), (d), (e) or (l) above cannot be
remedied solely by money damages, and that in
addition to any other remedies Employer may have,
Employer is entitled to obtain injunctive relief
against Employee. Nothing herein, however, shall be
construed as limiting Employer's right to pursue any
other available remedy at law or in equity, including
recovery of damages and termination of this
Agreement; provided further, that any breach of
Paragraphs 10(a), (c), (d), (e) or (f) by Employee
subsequent to his or her employment with Employer
will result in forfeiture of all rights to pension
benefits and other severance and retirement benefits.
(l) INDEPENDENT COVENANTS. All covenants contained in
Paragraph 10 of this Agreement shall be construed as
agreements independent of any other provision of this
Agreement, and the existence of any claim or cause of
action by Employer against the Employee, whether
predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the
Company of such covenants.
11. RIGHT TO ENTER AGREEMENT. Employee represents and covenants to
Employer that he or she has full power and authority to enter into this
Agreement and that the execution of this Agreement will not breach or constitute
a default of any other agreement or contract to which he or she is a party or by
which he or she is bound.
12. ASSIGNMENT. This Agreement may be assigned by Employer, but cannot
be assigned by Employee.
13. BINDING AGREEMENT. Employee understands that his or her obligations
under Section 10 of this Agreement are binding upon Employee's heirs,
successors, personal representatives, and legal representatives.
14. NOTICES. All notices pursuant to this Agreement shall be in writing
and sent certified mail, return receipt requested, addressed as follows:
If to Employee:
-------------------------------
-------------------------------
-------------------------------
EMPLOYMENT AGREEMENT PAGE 10
<PAGE> 85
with a copy to:
-------------------------------
-------------------------------
-------------------------------
If to Employer: Global Election Systems, Inc.
1611 Wilmeth Road
McKinney, Texas U.S.A. 75069
with a copy to: Brice Tarzwell, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
15. WAIVER. No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.
16. SEVERABILITY. If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions shall
be deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect. Furthermore, any
breach by Employer of any provision of this Agreement shall not excuse
Employee's compliance with the requirements of Paragraphs 9 or 10, to the extent
they are otherwise enforceable.
17. ARBITRATION. In the event any dispute arises out of Employee's
employment with Employer, or separation therefrom, which cannot be resolved by
the parties to this Agreement, such dispute shall be submitted to final and
binding arbitration. The arbitration shall be conducted in accordance with the
American Arbitration Association ("AAA"). If the parties cannot agree on an
arbitrator, a list of seven (7) arbitrators will be requested from AAA, and the
arbitrator will be selected using alternate strikes with Employee striking
first. The cost of the arbitration will be shared equally by Employee and
Employer. Arbitration of such disputes is mandatory and in lieu of any and all
civil causes of action and lawsuits either party may have against the other
arising out of Employee's employment with Employer, or separation therefrom;
provided, however, that any claim Employer has for breach of the covenants
contained in Paragraphs 9 and 10 of this Agreement shall NOT be subject to
mandatory arbitration, and may be pursued in a court of law or equity.
18. ENTIRE AGREEMENT. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Employee's
employment with Employer during the time period covered by this Agreement. This
Agreement replaces and supersedes any
EMPLOYMENT AGREEMENT PAGE 11
<PAGE> 86
and all existing Agreements entered into between Employee and the Company
relating generally to the same subject matter, if any, and shall be binding upon
Employee's heirs, executors, administrators, or other legal representatives or
assigns.
19. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Employee and
an officer or other authorized executive of Employer.
20. UNDERSTAND AGREEMENT. Employee represents and warrants that he or
she has read and understood each and every provision of this Agreement, and
Employee understands that he or she is free to obtain advice from legal counsel
of choice, if necessary and desired, in order to interpret any and all
provisions of this Agreement, and that Employee has freely and voluntarily
entered into this Agreement.
21. EFFECTIVE DATE. It is understood by Employee that this Agreement
shall be effective when signed by both Employer and Employee, and that the terms
of this Agreement shall remain in full force and effect both during the
continuation of Employee's employment and, except for paragraphs 4, 5, 6 and 7,
after the termination of Employee's employment for any reason.
22. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
23. BENEFICIARY OF AGREEMENT. This Agreement is being made for the
benefit of Global, which shall have all rights and remedies available to it
under this Agreement as the Company, and shall be able to claim all rights and
remedies available to the Company hereunder.
[The balance of this page left blank intentionally.]
EMPLOYMENT AGREEMENT PAGE 12
<PAGE> 87
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EMPLOYEE GLOBAL
David W. Dean GLOBAL ELECTION SYSTEMS, INC.
/s/ David W. Dean By: /s/ Robert J. Urosevich
---------------------- ----------------------------------
Employee's Name Robert J. Urosevich
President and Chief Operating Officer
Dated: 09/29/00 Dated: 09/29/00
-------- --------
EMPLOYMENT AGREEMENT PAGE 13
<PAGE> 88
EMPLOYMENT AGREEMENT
This Agreement is between Tae Yon Kim (hereinafter referred to as
"Employee") and SPECTRUM PRINT & MAIL SERVICES, LTD., a corporation incorporated
under the laws of the State of Delaware, U.S.A. (hereinafter referred to
"Employer" or the "Company"), and Global Election Systems, Inc., a corporation
incorporated under the laws of the State of Delaware ("Global").
WITNESSETH:
WHEREAS, Employer desires to employ Employee; and
WHEREAS, Employee desires to accept employment by Employer pursuant to
all of the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is AGREED as follows:
1. PURPOSE. The purpose of this Agreement is to formalize the terms
and conditions of Employee's employment with Employer. The recitals contained
herein represent both parties' intentions with respect to the terms and
conditions covered and cannot be amended during the term of the Agreement except
by written addendum to the Agreement signed by both parties.
2. DEFINITIONS. For the purposes of this Agreement, the following words
shall have the following meanings:
(a) "Employer" means Global Election Systems, Inc., a
corporation incorporated under the laws of the State
of Delaware, together with its subsidiaries,
including, without limitation, Spectrum Print & Mail
Services, Ltd;
(b) "Confidential Information" means information (1)
disclosed to or known by the undersigned Employee as
a consequence of or through his or her employment
with the Employer; (2) not generally known outside
the Employer; and (3) which relates to the Employer
or its business, or its research and development
activities. "Confidential Information" includes, but
is not limited to, all of Employer's technical
information, trade secrets, proprietary information,
business plans, marketing plans, financial
information, compensation and benefit information,
personnel records, cost and pricing information,
customer contacts, customer lists, information
relating to suppliers and vendors, information
relating to
EMPLOYMENT AGREEMENT PAGE 1
<PAGE> 89
accounts, and information provided to the Employer by
a third party under restrictions against disclosure
or use by the Employer or others;
(c) "Copyright Works" are materials relating to the
Employee for which copyright protection may be
obtained including, but not limited to: literary
works (including all written material), computer
programs, artistic and graphic works (including
designs, graphs, drawings, blueprints, and other
works), recordings, models, photographs, slides,
motion pictures, and audio-visual works, regardless
of the form or manner in which documented or
recorded;
(d) "Inventions" means inventions (whether patentable or
not), discoveries, improvements, designs, and ideas
(whether or not shown or described in writing or
reduced to practice) including, and in addition to
any such Confidential Information or Copyright Works;
and
(e) "Patents" means any domestic or foreign patents and
patent applications, including any Inventions or
other subject matter described or protected by such
patents and patent applications.
(f) "Copyright Registrations" means any domestic or
foreign copyright registration and applications for
such registration, including all or any portion of
the Copyright Works or other subject matter
identified by any such registration or application.
3. DURATION. This Agreement shall become effective on September 29,
2000 and, unless terminated as hereinafter provided, extend until December 31,
2000. Unless Employee or Employer gives notice of his or her or its intention
not to renew this Agreement no later than thirty (30) days prior to its
expiration, this Agreement shall automatically continue in effect for successive
additional one-year terms subject to all other terms and conditions contained
herein.
4. DUTIES AND RESPONSIBILITIES. Upon execution of this Agreement,
Employee shall diligently render his or her services to Employer in accordance
with the directives of Employer's President, and shall use his or her best
efforts and good faith in accomplishing such directives. Employee agrees to
devote his or her full-time efforts, abilities, and attention (defined to mean
not less than forty (40) hours/week) to the business of the Employer, and shall
not engage in any activities which will interfere with such efforts.
5. COMPENSATION.
(a) In consideration for such services, Employer shall
compensate Employee at an annual salary of $70,000,
payable in installments in accordance with the
standard payroll practices of Employer for its
employees, for the first twelve (12) months of this
Agreement.
EMPLOYMENT AGREEMENT PAGE 2
<PAGE> 90
(b) Employer shall review Employee's salary as provided
for above no less frequently than each anniversary of
this Agreement; however, nothing shall prevent the
Employer from making such adjustments more frequently
if determined necessary.
6. REIMBURSEMENT FOR EXPENSES. Employer shall reimburse Employee for
all reasonable expenses incurred by him or her while performing services for
Employer pursuant to this Agreement, but only after Employee submits a written,
itemized, and signed list of such expenses on a form supplied by Employer for
such purpose.
7. BENEFITS. Employer agrees to provide and/or make available to
Employee all benefits generally provided to its management employees.
8. TERMINATION.
(a) Employer may terminate Employee's employment upon his
or her death, or if he or she is unable to perform
the essential functions of his or her position with
reasonable accommodation for three (3) consecutive
months, or for a total of four (4) months during any
twelve (12) month period.
(b) Employer may also terminate Employee's employment
immediately for "Cause." Cause is defined to include,
but is not limited to:
(1) fraud, misappropriation, or embezzlement
involving Employer;
(2) felony conviction;
(3) Employee's repeated failure to obey or carry
out reasonable directives from Employer
senior management which are consistent with
this Agreement and pertain to Employee's
employment with Employer;
(4) Employee's repeated failure to devote his or
her full-time efforts, abilities, and
attention to the business of the Employer;
(5) repeated poor performance by the Employee;
or
(6) any breach or threatened breach of Paragraph
9 (a), (b), (d), (e), (f), (g) or (h), or
Paragraph 10 (a), (b), (c), (d), (e) or (f)
below.
(c) Employer may terminate this Agreement without cause
upon ten (10) days written notice to Employee. In the
event Employee is terminated pursuant to this
provision, Employer can either require Employee to
remain in its
EMPLOYMENT AGREEMENT PAGE 3
<PAGE> 91
employ for the duration of the ten (10) days, or
compensate Employee his or her normal salary for the
duration of the ten (10) day period and terminate his
or her employment effective immediately. If Employee
is terminated pursuant to this provision, he or she
will receive compensation and benefits through the
end of a 30 day period commencing on the date
Employee is notified of his or her termination (the
"Severance Benefit").
(d) Employee may terminate this Agreement upon ten (10)
days written notice to Employer. In the event
Employee terminates his or her employment in this
manner, he or she shall remain in Employer's employ
subject to all terms and conditions of this Agreement
for the entire ten (10) day period, unless instructed
otherwise by the President, but shall not be entitled
to any Severance Benefit.
(e) In the event Employee is terminated for Cause, his or
her salary and benefits will cease immediately
without payment of any Severance Benefit.
9. INVENTIONS, CONFIDENTIAL INFORMATION, PATENTS, AND COPYRIGHT WORKS.
(a) NOTIFICATION OF COMPANY. Upon conception, all
Inventions, Confidential Information, and Copyright
Works shall become the property of the Employer (or
the United States Government where required by law)
whether or not patent or copyright registration
applications are filed for such subject matter.
Employee will communicate to the Employer promptly
and fully all Inventions, or suggestions (whether or
not patentable), all Confidential Information or
Copyright Works made, designed, created, or conceived
by Employee (whether made, designed, created, or
conceived solely by Employee or jointly with others)
during the period of his or her employment with the
Employer: (a) which relate to the actual or
anticipated business, research, activities, or
development of the Employer at the time of the
conception; or (b) which result from or suggested by
any work which Employee has done or may do for or on
behalf of the Employer; or (c) which are developed,
tested, improved, or investigated either in part or
entirely on time for which Employee was paid by the
Employer, or using any resources of the Employer.
(b) TRANSFER OF RIGHTS. Employee agrees, during his or
her employment with the Employer, to assign and
transfer to the Employer Employee's entire right,
title, and interest in all Inventions, Confidential
Information, Copyright Works and Patents prepared,
made or conceived by or in behalf of Employee (solely
or jointly with others): (a) which relate in any way
to the actual or anticipated business of the
Employer, or (b) which relate in any way to the
actual or anticipated research or development of the
EMPLOYMENT AGREEMENT PAGE 4
<PAGE> 92
Employer, or (c) which are suggested by or result,
directly or indirectly, from any task assigned to
Employee or in which Employee otherwise engages in
behalf of the Employer. Employee also agrees to do
all things necessary to transfer to the Employer
Employee's entire right, title, and interest in and
to all such Inventions, Confidential Information,
Copyright Works or Patents as the Employer may
request, on such forms as the Employer may provide,
at any time during or after Employee's employment.
Employee will promptly and fully assist the Employer
during and subsequent to his or her employment in
every lawful way to obtain, protect, and enforce the
Employer's patent, copyrights, trade secret or other
proprietary rights for Inventions, Confidential
Information, Copyright Works or Patents in any and
all countries.
(c) NOTICE OF RIGHTS UNDER STATE STATUTES. No provision
in this Agreement is intended to require assignment
of any of the Employee's rights in an Invention for
which no equipment, supplies, facilities,
Confidential Information, Copyright Works,
Inventions. Patents or information of the Employer
was used, and which was (1) developed entirely on the
Employee's own time; (2) does not relate to the
business of the Employer or to the actual or
demonstrably anticipated research or development of
the Employer; and (3) does not result from any work
performed by the Employee for the Employer or
assigned to the Employee by the Employer.
(d) RIGHTS IN COPYRIGHTS. Unless otherwise agreed in
writing by the Employer, all Copyright Works prepared
wholly or partially by Employee (alone or jointly
with others) within the scope of his or her
employment with the Employer, shall be deemed a "work
made for hire" under the copyright laws and shall be
owned by the Employer. Employee understands that any
assignment or release of such works can only be made
by the Employer. Employee will do everything
reasonably necessary to enable the Employer or its
nominee to protect its rights in such works. Employee
agrees to execute all documents and to do all things
necessary to vest in the Employer Employee's right
and title to copyrights in such works. Employee shall
not assist or work with any third party that is not
an employee of Employer to create or prepare any
Copyright Works without the prior written consent of
Employer.
(e) ASSISTANCE IN PREPARATION OF APPLICATIONS. Employee
will promptly and fully assist, if requested by the
Employer, in the preparation and filing of Patents
and Copyright Registrations in any and all countries
selected by the Employer and will assign to the
Employer Employee's entire right, title, and interest
in and to such Patents and Copyright Registrations,
as well as all Inventions or Copyright Works to which
such Patents and Copyright Registrations pertain, to
enable any such properties to be
EMPLOYMENT AGREEMENT PAGE 5
<PAGE> 93
prosecuted under the direction of the Employer and to
ensure that any Patent or Copyright Registration
obtained will validly issue to the Employer.
(f) EXECUTE DOCUMENTS. Employee will promptly sign any
and all lawful papers, take all lawful oaths, and do
all lawful acts, including testifying, at the request
of Employer, in connection with the procurement,
grant, enforcement, maintenance, exploitation, or
defense against assertion of any patent, trademark,
copyright, trade secret or related rights, including
applications for protection or registration thereof.
Such lawful papers include, but are not limited to,
any and all powers, assignments, affidavits,
declarations and other papers deemed by the Employer
to be necessary or advisable.
(g) KEEP RECORDS. Employee will keep and regularly
maintain adequate and current written records of all
Inventions, Confidential Information, and Copyright
Works in which he or she participates in creating,
conceiving, developing or manufacturing. Such records
shall be kept and maintained in the form of notes,
sketches, drawings, reports, or other documents
relating thereto, bearing at least the date of
preparation and the signatures or name of each
employee contributing to the subject matter reflected
in the record. Such records shall be and shall remain
the exclusive property of the Employer and shall be
available to the Employer at all times.
(h) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings,
records, and other documents and things comprising,
containing, describing, discussing, explaining, or
evidencing any Inventions, Confidential Information,
or Copyright Works and all equipment, components,
parts, tools, and the like in Employee's custody or
possession that have been obtained or prepared in the
course of Employee's employment with the Employer
shall be the exclusive property of the Employer,
shall not be copied and/or removed from the premises
of the Employer, except in pursuit of the business of
the Employer, and shall be delivered to the Employer,
without Employee retaining any copies, upon
notification of the termination of Employee's
employment or at any other time requested by the
Employer. The Employer shall have the right to
retain, access, and inspect all property of the
Employee of any kind in the office, work area, and on
the premises of the Employer upon termination of
Employee's employment and at any time during
employment by the Employer, to ensure compliance with
the terms of this Agreement.
(i) OTHER CONTRACTS. Employee represents and warrants
that he or she is not a party to any existing
contract relating to the granting or assignment to
others of any interest in Inventions, Confidential
Information, Copyright
EMPLOYMENT AGREEMENT PAGE 6
<PAGE> 94
Works or Patents hereafter made by Employee except
insofar as copies of such contracts, if any, are
attached to this Agreement.
(j) ASSIGNMENT AFTER TERMINATION. Employee recognizes
that ideas, Inventions, Confidential Information,
Copyright Works, Copyright Registrations or Patents
relating to his or her activities while working for
the Employer that are conceived or made by Employee,
alone or with others, within one (1) year after
termination of his or her employment may have been
conceived in significant part while Employee was
employed by the Employer. Accordingly, Employee
agrees that such ideas, Inventions, Confidential
Information, Copyright Works, Copyright Registrations
or Patents shall be presumed to have been conceived
and made during his or her employment with the
Employer and are to be assigned to the Employer.
(k) PRIOR CONCEPTIONS. At the end of this Agreement,
Employee has set forth what he or she represents and
warrants to be a complete list of all Inventions, if
any, patented or unpatented, or Copyright Works,
including a brief description thereof (without
revealing any confidential or proprietary information
of any other party) which Employee participated in
the conception, creation, development, or making of
prior to his or her employment with the Employer and
for which Employee claims full or partial ownership
or other interest, or which are in the physical
possession of a former employer and which are
therefore excluded from the scope of this Agreement.
If there are no such exclusions from this Agreement,
Employee has so indicated by writing "None" below in
his or her own handwriting.
10. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Employee
recognizes and agrees that a portion of the compensation he or she is to receive
pursuant to this Agreement is provided in consideration for the agreements
contained in this Paragraph. Employee further acknowledges and agrees that while
employed pursuant to this Agreement, he or she will have access to confidential
information of Employer, will be provided with specialized training on how to
perform his or her duties; and will be provided with contact with Employer's
customers and potential customers. In consideration of all of the foregoing,
Employee agrees as follows:
(a) NON-COMPETITION DURING EMPLOYMENT. Employee agrees
that for the duration of this Agreement, he or she
will not compete with the Employer by engaging in the
conception, design, development, production,
marketing, or servicing of any product or service
that is substantially similar to the products or
services which the Employer provides, and that he or
she will not work for, in any capacity, assist, or
become affiliated with as an owner, partner, etc.,
either directly or indirectly, any individual
EMPLOYMENT AGREEMENT PAGE 7
<PAGE> 95
or business which offers or performs services, or
offers or provides products substantially similar to
the services and products provided by Employer.
(b) CONFLICTS OF INTEREST. Employee agrees that for the
duration of this Agreement, he or she will not
engage, either directly or indirectly, in any
activity (a "Conflict of Interest") which might
adversely affect Employer or its affiliates,
including ownership of a material interest in any
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business or accepting any payment, service, loan,
gift, trip, entertainment, or other favor in each
case having a value exceeding US $200 from a
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business, and that Employee will promptly inform
Employer's President, or a corporate officer of
Employer designated by the President, as to each
offer received by Employee to engage in any such
activity. Employee further agrees to disclose to
Employer any other facts of which Employee becomes
aware which might involve or give rise to a Conflict
of Interest or potential Conflict of Interest.
(c) NON-COMPETITION AFTER TERMINATION. Employee agrees
that Employee shall not, directly or indirectly, at
any time during the period of two (2) years after the
termination of this Agreement for any reason,
including expiration of the Agreement, within a
geographical area encompassing 200 miles surrounding
any of Employer's offices, as an employee,
consultant, or director, provide any services to, or
engage in or contribute Employee's knowledge to any
work which is competitive with or similar to a
product, process, apparatus or services provided by
the Employer. Following the expiration of said two
(2) year period, Employee shall continue to be
obligated under the Nondisclosure of Confidential
Information section of this Agreement not to use or
to disclose Confidential Information of the Employer
so long as it shall not be publicly available. It is
understood that the geographical area set forth in
this covenant is divisible so that if this clause is
invalid or unenforceable in an included geographic
area, that area is severable and the clause remains
in effect for the remaining included geographic areas
in which the clause is valid.
(d) NON-SOLICITATION OF CUSTOMERS. Employee further
agrees that for the duration of this Agreement, and
for a period of two (2) years after the termination
of this Agreement for any reason, including
expiration of the Agreement, he or she will not
solicit or accept any business from any customer or
client or prospective customer or client with whom
Employee dealt or solicited while employed by
Employer.
EMPLOYMENT AGREEMENT PAGE 8
<PAGE> 96
(e) NON-SOLICITATION OF EMPLOYEES. Employee agrees that
for the duration of this Agreement, and for a period
of two (2) years after the termination of this
Agreement for any reason, including expiration of the
Agreement, he or she will not either directly or
indirectly, on his or her own behalf or on behalf of
others, solicit, attempt to hire, or hire any person
employed by Employer to work for Employee or for
another entity, firm, corporation, or individual.
(f) CONFIDENTIAL INFORMATION. Employee further agrees
that Employee will not, except as the Employer may
otherwise consent or direct in writing, reveal or
disclose, sell, use, lecture upon, publish or
otherwise disclose to any third party any
Confidential Information or proprietary information
of the Employer, or authorize anyone else to do these
things at any time either during or subsequent to his
or her employment with the Employer. This section
shall continue in full force and effect after
termination of Employee's employment and after the
termination of this Agreement for any reason,
including expiration of this Agreement. Employee's
obligations under this section of this Agreement with
respect to any specific Confidential Information and
proprietary information shall cease when that
specific portion of the Confidential Information and
proprietary information becomes publicly known, in
its entirety and without combining portions of such
information obtained separately. It is understood
that such Confidential Information and proprietary
information of the Employer include matters that
Employee conceives or develops, as well as matters
Employee learns from other employees of Employer.
(g) REAFFIRM OBLIGATIONS. Upon termination of his or her
employment with the Employer, Employee, if requested
by Employer, shall reaffirm in writing Employee's
recognition of the importance of maintaining the
confidentiality of the Employer's Confidential
Information, disclose the identity of his or her new
employer or business ventures, and reaffirm any other
obligations set forth in this Agreement.
(h) PRIOR DISCLOSURE. Employee represents and warrants
that he or she has not used or disclosed any
Confidential Information he or she may have obtained
from Employer prior to signing this Agreement, in any
way inconsistent with the provisions of this
Agreement.
(i) CONFIDENTIAL INFORMATION OF PRIOR EMPLOYERS. Employee
will not disclose or use during the period of his or
her employment with the Employer any proprietary or
confidential information or copyright works which
Employee may have acquired because of employment with
an employer other than the Employer or Spectrum or
acquired from any other
EMPLOYMENT AGREEMENT PAGE 9
<PAGE> 97
third party, whether such information is in
Employee's memory or embodied in a writing or other
physical form.
(j) TIME PERIOD. The time periods referenced in this
Paragraph shall not include any period of time during
which Employee is in breach of this Agreement.
(k) BREACH. Employee agrees that any breach of Paragraphs
10(a), (b), (c), (d), (e) or (l) above cannot be
remedied solely by money damages, and that in
addition to any other remedies Employer may have,
Employer is entitled to obtain injunctive relief
against Employee. Nothing herein, however, shall be
construed as limiting Employer's right to pursue any
other available remedy at law or in equity, including
recovery of damages and termination of this
Agreement; provided further, that any breach of
Paragraphs 10(a), (c), (d), (e) or (f) by Employee
subsequent to his or her employment with Employer
will result in forfeiture of all rights to pension
benefits and other severance and retirement benefits.
(l) INDEPENDENT COVENANTS. All covenants contained in
Paragraph 10 of this Agreement shall be construed as
agreements independent of any other provision of this
Agreement, and the existence of any claim or cause of
action by Employer against the Employee, whether
predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the
Company of such covenants.
11. RIGHT TO ENTER AGREEMENT. Employee represents and covenants to
Employer that he or she has full power and authority to enter into this
Agreement and that the execution of this Agreement will not breach or constitute
a default of any other agreement or contract to which he or she is a party or by
which he or she is bound.
12. ASSIGNMENT. This Agreement may be assigned by Employer, but cannot
be assigned by Employee.
13. BINDING AGREEMENT. Employee understands that his or her obligations
under Section 10 of this Agreement are binding upon Employee's heirs,
successors, personal representatives, and legal representatives.
14. NOTICES. All notices pursuant to this Agreement shall be in writing
and sent certified mail, return receipt requested, addressed as follows:
If to Employee:
-------------------------------
-------------------------------
-------------------------------
EMPLOYMENT AGREEMENT PAGE 10
<PAGE> 98
with a copy to:
-------------------------------
-------------------------------
-------------------------------
If to Employer: Global Election Systems, Inc.
1611 Wilmeth Road
McKinney, Texas U.S.A. 75069
with a copy to: Brice Tarzwell, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
15. WAIVER. No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.
16. SEVERABILITY. If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions shall
be deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect. Furthermore, any
breach by Employer of any provision of this Agreement shall not excuse
Employee's compliance with the requirements of Paragraphs 9 or 10, to the extent
they are otherwise enforceable.
17. ARBITRATION. In the event any dispute arises out of Employee's
employment with Employer, or separation therefrom, which cannot be resolved by
the parties to this Agreement, such dispute shall be submitted to final and
binding arbitration. The arbitration shall be conducted in accordance with the
American Arbitration Association ("AAA"). If the parties cannot agree on an
arbitrator, a list of seven (7) arbitrators will be requested from AAA, and the
arbitrator will be selected using alternate strikes with Employee striking
first. The cost of the arbitration will be shared equally by Employee and
Employer. Arbitration of such disputes is mandatory and in lieu of any and all
civil causes of action and lawsuits either party may have against the other
arising out of Employee's employment with Employer, or separation therefrom;
provided, however, that any claim Employer has for breach of the covenants
contained in Paragraphs 9 and 10 of this Agreement shall NOT be subject to
mandatory arbitration, and may be pursued in a court of law or equity.
18. ENTIRE AGREEMENT. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Employee's
employment with Employer during the time period covered by this Agreement. This
Agreement replaces and supersedes any
EMPLOYMENT AGREEMENT PAGE 11
<PAGE> 99
and all existing Agreements entered into between Employee and the Company
relating generally to the same subject matter, if any, and shall be binding upon
Employee's heirs, executors, administrators, or other legal representatives or
assigns.
19. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Employee and
an officer or other authorized executive of Employer.
20. UNDERSTAND AGREEMENT. Employee represents and warrants that he or
she has read and understood each and every provision of this Agreement, and
Employee understands that he or she is free to obtain advice from legal counsel
of choice, if necessary and desired, in order to interpret any and all
provisions of this Agreement, and that Employee has freely and voluntarily
entered into this Agreement.
21. EFFECTIVE DATE. It is understood by Employee that this Agreement
shall be effective when signed by both Employer and Employee, and that the terms
of this Agreement shall remain in full force and effect both during the
continuation of Employee's employment and, except for paragraphs 4, 5, 6 and 7,
after the termination of Employee's employment for any reason.
22. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
23. BENEFICIARY OF AGREEMENT. This Agreement is being made for the
benefit of Global, which shall have all rights and remedies available to it
under this Agreement as the Company, and shall be able to claim all rights and
remedies available to the Company hereunder.
[The balance of this page left blank intentionally.]
EMPLOYMENT AGREEMENT PAGE 12
<PAGE> 100
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EMPLOYEE GLOBAL
Tae Yon Kim GLOBAL ELECTION SYSTEMS, INC.
/s/ Tae Yon Kim By: /s/ Robert J. Urosevich
-------------------- ----------------------------------
Employee's Name Robert J. Urosevich
President and Chief Operating Officer
Dated: 09/29/00 Dated: 09/29/00
-------- --------
COMPANY
SPECTRUM PRINT & MAIL SERVICES, LTD.
BY: /s/ Tae Yon Kim
-----------------------
Title: V.P. MBR Tech Group
EMPLOYMENT AGREEMENT PAGE 13
<PAGE> 101
EMPLOYMENT AGREEMENT
This Agreement is between John L. Elder (hereinafter referred to as
"Employee") and SPECTRUM PRINT & MAIL SERVICES, LTD., a corporation incorporated
under the laws of the State of Delaware, U.S.A. (hereinafter referred to
"Employer" or the "Company"), and Global Election Systems, Inc., a corporation
incorporated under the laws of the State of Delaware ("Global").
WITNESSETH:
WHEREAS, Employer desires to employ Employee; and
WHEREAS, Employee desires to accept employment by Employer pursuant to
all of the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is AGREED as follows:
1. PURPOSE. The purpose of this Agreement is to formalize the terms
and conditions of Employee's employment with Employer. The recitals contained
herein represent both parties' intentions with respect to the terms and
conditions covered and cannot be amended during the term of the Agreement except
by written addendum to the Agreement signed by both parties.
2. DEFINITIONS. For the purposes of this Agreement, the following
words shall have the following meanings:
(a) "Employer" means Global Election Systems, Inc., a
corporation incorporated under the laws of the
State of Delaware, together with its subsidiaries,
including, without limitation, Spectrum Print &
Mail Services, Ltd;
(b) "Confidential Information" means information (1)
disclosed to or known by the undersigned Employee
as a consequence of or through his or her
employment with the Employer; (2) not generally
known outside the Employer; and (3) which relates
to the Employer or its business, or its research
and development activities. "Confidential
Information" includes, but is not limited to, all
of Employer's technical information, trade
secrets, proprietary information, business plans,
marketing plans, financial information,
compensation and benefit information, personnel
records, cost and pricing information, customer
contacts, customer lists, information relating to
suppliers and vendors, information relating to
EMPLOYMENT AGREEMENT PAGE 1
<PAGE> 102
accounts, and information provided to the Employer
by a third party under restrictions against
disclosure or use by the Employer or others;
(c) "Copyright Works" are materials relating to the
Employee for which copyright protection may be
obtained including, but not limited to: literary
works (including all written material), computer
programs, artistic and graphic works (including
designs, graphs, drawings, blueprints, and other
works), recordings, models, photographs, slides,
motion pictures, and audio-visual works,
regardless of the form or manner in which
documented or recorded;
(d) "Inventions" means inventions (whether patentable
or not), discoveries, improvements, designs, and
ideas (whether or not shown or described in
writing or reduced to practice) including, and in
addition to any such Confidential Information or
Copyright Works; and
(e) "Patents" means any domestic or foreign patents
and patent applications, including any Inventions
or other subject matter described or protected by
such patents and patent applications.
(f) "Copyright Registrations" means any domestic or
foreign copyright registration and applications
for such registration, including all or any
portion of the Copyright Works or other subject
matter identified by any such registration or
application.
3. DURATION. This Agreement shall become effective on September 29,
2000 and, unless terminated as hereinafter provided, extend until December 31,
2000. Unless Employee or Employer gives notice of his or her or its intention
not to renew this Agreement no later than thirty (30) days prior to its
expiration, this Agreement shall automatically continue in effect for successive
additional one-year terms subject to all other terms and conditions contained
herein.
4. DUTIES AND RESPONSIBILITIES. Upon execution of this Agreement,
Employee shall diligently render his or her services to Employer in accordance
with the directives of Employer's President, and shall use his or her best
efforts and good faith in accomplishing such directives. Employee agrees to
devote his or her full-time efforts, abilities, and attention (defined to mean
not less than forty (40) hours/week) to the business of the Employer, and shall
not engage in any activities which will interfere with such efforts.
5. COMPENSATION.
(a) In consideration for such services, Employer shall
compensate Employee at an annual salary of
$70,000, payable in installments in accordance
with the standard payroll practices of Employer
for its employees, for the first twelve (12)
months of this Agreement.
EMPLOYMENT AGREEMENT PAGE 2
<PAGE> 103
(b) Employer shall review Employee's salary as provided
for above no less frequently than each anniversary of
this Agreement; however, nothing shall prevent the
Employer from making such adjustments more frequently
if determined necessary.
6. REIMBURSEMENT FOR EXPENSES. Employer shall reimburse Employee for
all reasonable expenses incurred by him or her while performing services for
Employer pursuant to this Agreement, but only after Employee submits a written,
itemized, and signed list of such expenses on a form supplied by Employer for
such purpose.
7. BENEFITS. Employer agrees to provide and/or make available to
Employee all benefits generally provided to its management employees.
8. TERMINATION.
(a) Employer may terminate Employee's employment upon
his or her death, or if he or she is unable to
perform the essential functions of his or her
position with reasonable accommodation for three
(3) consecutive months, or for a total of four (4)
months during any twelve (12) month period.
(b) Employer may also terminate Employee's employment
immediately for "Cause." Cause is defined to
include, but is not limited to:
(1) fraud, misappropriation, or embezzlement
involving Employer;
(2) felony conviction;
(3) Employee's repeated failure to obey or
carry out reasonable directives from
Employer senior management which are
consistent with this Agreement and
pertain to Employee's employment with
Employer;
(4) Employee's repeated failure to devote
his or her full-time efforts, abilities,
and attention to the business of the
Employer;
(5) repeated poor performance by the
Employee; or
(6) any breach or threatened breach of
Paragraph 9 (a), (b), (d), (e), (f), (g)
or (h), or Paragraph 10 (a), (b), (c),
(d), (e) or (f) below.
(c) Employer may terminate this Agreement without
cause upon ten (10) days written notice to
Employee. In the event Employee is terminated
pursuant to this provision, Employer can either
require Employee to remain in its
EMPLOYMENT AGREEMENT PAGE 3
<PAGE> 104
employ for the duration of the ten (10) days, or
compensate Employee his or her normal salary for
the duration of the ten (10) day period and
terminate his or her employment effective
immediately. If Employee is terminated pursuant to
this provision, he or she will receive
compensation and benefits through the end of a 30
day period commencing on the date Employee is
notified of his or her termination (the "Severance
Benefit").
(d) Employee may terminate this Agreement upon ten
(10) days written notice to Employer. In the event
Employee terminates his or her employment in this
manner, he or she shall remain in Employer's
employ subject to all terms and conditions of this
Agreement for the entire ten (10) day period,
unless instructed otherwise by the President, but
shall not be entitled to any Severance Benefit.
(e) In the event Employee is terminated for Cause, his
or her salary and benefits will cease immediately
without payment of any Severance Benefit.
9. INVENTIONS, CONFIDENTIAL INFORMATION, PATENTS, AND COPYRIGHT WORKS.
(a) NOTIFICATION OF COMPANY. Upon conception, all
Inventions, Confidential Information, and
Copyright Works shall become the property of the
Employer (or the United States Government where
required by law) whether or not patent or
copyright registration applications are filed for
such subject matter. Employee will communicate to
the Employer promptly and fully all Inventions, or
suggestions (whether or not patentable), all
Confidential Information or Copyright Works made,
designed, created, or conceived by Employee
(whether made, designed, created, or conceived
solely by Employee or jointly with others) during
the period of his or her employment with the
Employer: (a) which relate to the actual or
anticipated business, research, activities, or
development of the Employer at the time of the
conception; or (b) which result from or suggested
by any work which Employee has done or may do for
or on behalf of the Employer; or (c) which are
developed, tested, improved, or investigated
either in part or entirely on time for which
Employee was paid by the Employer, or using any
resources of the Employer.
(b) TRANSFER OF RIGHTS. Employee agrees, during his or
her employment with the Employer, to assign and
transfer to the Employer Employee's entire right,
title, and interest in all Inventions,
Confidential Information, Copyright Works and
Patents prepared, made or conceived by or in
behalf of Employee (solely or jointly with
others): (a) which relate in any way to the actual
or anticipated business of the Employer, or (b)
which relate in any way to the actual or
anticipated research or development of the
EMPLOYMENT AGREEMENT PAGE 4
<PAGE> 105
Employer, or (c) which are suggested by or result,
directly or indirectly, from any task assigned to
Employee or in which Employee otherwise engages in
behalf of the Employer. Employee also agrees to do
all things necessary to transfer to the Employer
Employee's entire right, title, and interest in
and to all such Inventions, Confidential
Information, Copyright Works or Patents as the
Employer may request, on such forms as the
Employer may provide, at any time during or after
Employee's employment. Employee will promptly and
fully assist the Employer during and subsequent to
his or her employment in every lawful way to
obtain, protect, and enforce the Employer's
patent, copyrights, trade secret or other
proprietary rights for Inventions, Confidential
Information, Copyright Works or Patents in any and
all countries.
(c) NOTICE OF RIGHTS UNDER STATE STATUTES. No
provision in this Agreement is intended to require
assignment of any of the Employee's rights in an
Invention for which no equipment, supplies,
facilities, Confidential Information, Copyright
Works, Inventions. Patents or information of the
Employer was used, and which was (1) developed
entirely on the Employee's own time; (2) does not
relate to the business of the Employer or to the
actual or demonstrably anticipated research or
development of the Employer; and (3) does not
result from any work performed by the Employee for
the Employer or assigned to the Employee by the
Employer.
(d) RIGHTS IN COPYRIGHTS. Unless otherwise agreed in
writing by the Employer, all Copyright Works
prepared wholly or partially by Employee (alone or
jointly with others) within the scope of his or
her employment with the Employer, shall be deemed
a "work made for hire" under the copyright laws
and shall be owned by the Employer. Employee
understands that any assignment or release of such
works can only be made by the Employer. Employee
will do everything reasonably necessary to enable
the Employer or its nominee to protect its rights
in such works. Employee agrees to execute all
documents and to do all things necessary to vest
in the Employer Employee's right and title to
copyrights in such works. Employee shall not
assist or work with any third party that is not an
employee of Employer to create or prepare any
Copyright Works without the prior written consent
of Employer.
(e) ASSISTANCE IN PREPARATION OF APPLICATIONS.
Employee will promptly and fully assist, if
requested by the Employer, in the preparation and
filing of Patents and Copyright Registrations in
any and all countries selected by the Employer and
will assign to the Employer Employee's entire
right, title, and interest in and to such Patents
and Copyright Registrations, as well as all
Inventions or Copyright Works to which such
Patents and Copyright Registrations pertain, to
enable any such properties to be
EMPLOYMENT AGREEMENT PAGE 5
<PAGE> 106
prosecuted under the direction of the Employer and
to ensure that any Patent or Copyright
Registration obtained will validly issue to the
Employer.
(f) EXECUTE DOCUMENTS. Employee will promptly sign any
and all lawful papers, take all lawful oaths, and
do all lawful acts, including testifying, at the
request of Employer, in connection with the
procurement, grant, enforcement, maintenance,
exploitation, or defense against assertion of any
patent, trademark, copyright, trade secret or
related rights, including applications for
protection or registration thereof. Such lawful
papers include, but are not limited to, any and
all powers, assignments, affidavits, declarations
and other papers deemed by the Employer to be
necessary or advisable.
(g) KEEP RECORDS. Employee will keep and regularly
maintain adequate and current written records of
all Inventions, Confidential Information, and
Copyright Works in which he or she participates in
creating, conceiving, developing or manufacturing.
Such records shall be kept and maintained in the
form of notes, sketches, drawings, reports, or
other documents relating thereto, bearing at least
the date of preparation and the signatures or name
of each employee contributing to the subject
matter reflected in the record. Such records shall
be and shall remain the exclusive property of the
Employer and shall be available to the Employer at
all times.
(h) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings,
records, and other documents and things
comprising, containing, describing, discussing,
explaining, or evidencing any Inventions,
Confidential Information, or Copyright Works and
all equipment, components, parts, tools, and the
like in Employee's custody or possession that have
been obtained or prepared in the course of
Employee's employment with the Employer shall be
the exclusive property of the Employer, shall not
be copied and/or removed from the premises of the
Employer, except in pursuit of the business of the
Employer, and shall be delivered to the Employer,
without Employee retaining any copies, upon
notification of the termination of Employee's
employment or at any other time requested by the
Employer. The Employer shall have the right to
retain, access, and inspect all property of the
Employee of any kind in the office, work area, and
on the premises of the Employer upon termination
of Employee's employment and at any time during
employment by the Employer, to ensure compliance
with the terms of this Agreement.
(i) OTHER CONTRACTS. Employee represents and warrants
that he or she is not a party to any existing
contract relating to the granting or assignment to
others of any interest in Inventions, Confidential
Information, Copyright
EMPLOYMENT AGREEMENT PAGE 6
<PAGE> 107
Works or Patents hereafter made by Employee except
insofar as copies of such contracts, if any, are
attached to this Agreement.
(j) ASSIGNMENT AFTER TERMINATION. Employee recognizes
that ideas, Inventions, Confidential Information,
Copyright Works, Copyright Registrations or
Patents relating to his or her activities while
working for the Employer that are conceived or
made by Employee, alone or with others, within one
(1) year after termination of his or her
employment may have been conceived in significant
part while Employee was employed by the Employer.
Accordingly, Employee agrees that such ideas,
Inventions, Confidential Information, Copyright
Works, Copyright Registrations or Patents shall be
presumed to have been conceived and made during
his or her employment with the Employer and are to
be assigned to the Employer.
(k) PRIOR CONCEPTIONS. At the end of this Agreement,
Employee has set forth what he or she represents
and warrants to be a complete list of all
Inventions, if any, patented or unpatented, or
Copyright Works, including a brief description
thereof (without revealing any confidential or
proprietary information of any other party) which
Employee participated in the conception, creation,
development, or making of prior to his or her
employment with the Employer and for which
Employee claims full or partial ownership or other
interest, or which are in the physical possession
of a former employer and which are therefore
excluded from the scope of this Agreement. If
there are no such exclusions from this Agreement,
Employee has so indicated by writing "None" below
in his or her own handwriting.
10. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Employee
recognizes and agrees that a portion of the compensation he or she is to receive
pursuant to this Agreement is provided in consideration for the agreements
contained in this Paragraph. Employee further acknowledges and agrees that while
employed pursuant to this Agreement, he or she will have access to confidential
information of Employer, will be provided with specialized training on how to
perform his or her duties; and will be provided with contact with Employer's
customers and potential customers. In consideration of all of the foregoing,
Employee agrees as follows:
(a) NON-COMPETITION DURING EMPLOYMENT. Employee agrees
that for the duration of this Agreement, he or she
will not compete with the Employer by engaging in
the conception, design, development, production,
marketing, or servicing of any product or service
that is substantially similar to the products or
services which the Employer provides, and that he
or she will not work for, in any capacity, assist,
or become affiliated with as an owner, partner,
etc., either directly or indirectly, any
individual
EMPLOYMENT AGREEMENT PAGE 7
<PAGE> 108
or business which offers or performs services, or
offers or provides products substantially similar
to the services and products provided by Employer.
(b) CONFLICTS OF INTEREST. Employee agrees that for
the duration of this Agreement, he or she will not
engage, either directly or indirectly, in any
activity (a "Conflict of Interest") which might
adversely affect Employer or its affiliates,
including ownership of a material interest in any
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business or accepting any payment, service, loan,
gift, trip, entertainment, or other favor in each
case having a value exceeding US $200 from a
supplier, contractor, distributor, subcontractor,
customer or other entity with which Employer does
business, and that Employee will promptly inform
Employer's President, or a corporate officer of
Employer designated by the President, as to each
offer received by Employee to engage in any such
activity. Employee further agrees to disclose to
Employer any other facts of which Employee becomes
aware which might involve or give rise to a
Conflict of Interest or potential Conflict of
Interest.
(c) NON-COMPETITION AFTER TERMINATION. Employee agrees
that Employee shall not, directly or indirectly,
at any time during the period of two (2) years
after the termination of this Agreement for any
reason, including expiration of the Agreement,
within a geographical area encompassing 200 miles
surrounding any of Employer's offices, as an
employee, consultant, or director, provide any
services to, or engage in or contribute Employee's
knowledge to any work which is competitive with or
similar to a product, process, apparatus or
services provided by the Employer. Following the
expiration of said two (2) year period, Employee
shall continue to be obligated under the
Nondisclosure of Confidential Information section
of this Agreement not to use or to disclose
Confidential Information of the Employer so long
as it shall not be publicly available. It is
understood that the geographical area set forth in
this covenant is divisible so that if this clause
is invalid or unenforceable in an included
geographic area, that area is severable and the
clause remains in effect for the remaining
included geographic areas in which the clause is
valid.
(d) NON-SOLICITATION OF CUSTOMERS. Employee further
agrees that for the duration of this Agreement,
and for a period of two (2) years after the
termination of this Agreement for any reason,
including expiration of the Agreement, he or she
will not solicit or accept any business from any
customer or client or prospective customer or
client with whom Employee dealt or solicited while
employed by Employer.
EMPLOYMENT AGREEMENT PAGE 8
<PAGE> 109
(e) NON-SOLICITATION OF EMPLOYEES. Employee agrees
that for the duration of this Agreement, and for a
period of two (2) years after the termination of
this Agreement for any reason, including
expiration of the Agreement, he or she will not
either directly or indirectly, on his or her own
behalf or on behalf of others, solicit, attempt to
hire, or hire any person employed by Employer to
work for Employee or for another entity, firm,
corporation, or individual.
(f) CONFIDENTIAL INFORMATION. Employee further agrees
that Employee will not, except as the Employer may
otherwise consent or direct in writing, reveal or
disclose, sell, use, lecture upon, publish or
otherwise disclose to any third party any
Confidential Information or proprietary
information of the Employer, or authorize anyone
else to do these things at any time either during
or subsequent to his or her employment with the
Employer. This section shall continue in full
force and effect after termination of Employee's
employment and after the termination of this
Agreement for any reason, including expiration of
this Agreement. Employee's obligations under this
section of this Agreement with respect to any
specific Confidential Information and proprietary
information shall cease when that specific portion
of the Confidential Information and proprietary
information becomes publicly known, in its
entirety and without combining portions of such
information obtained separately. It is understood
that such Confidential Information and proprietary
information of the Employer include matters that
Employee conceives or develops, as well as matters
Employee learns from other employees of Employer.
(g) REAFFIRM OBLIGATIONS. Upon termination of his or
her employment with the Employer, Employee, if
requested by Employer, shall reaffirm in writing
Employee's recognition of the importance of
maintaining the confidentiality of the Employer's
Confidential Information, disclose the identity of
his or her new employer or business ventures, and
reaffirm any other obligations set forth in this
Agreement.
(h) PRIOR DISCLOSURE. Employee represents and warrants
that he or she has not used or disclosed any
Confidential Information he or she may have
obtained from Employer prior to signing this
Agreement, in any way inconsistent with the
provisions of this Agreement.
(i) CONFIDENTIAL INFORMATION OF PRIOR EMPLOYERS.
Employee will not disclose or use during the
period of his or her employment with the Employer
any proprietary or confidential information or
copyright works which Employee may have acquired
because of employment with an employer other than
the Employer or Spectrum or acquired from any
other
EMPLOYMENT AGREEMENT PAGE 9
<PAGE> 110
third party, whether such information is in
Employee's memory or embodied in a writing or
other physical form.
(j) TIME PERIOD. The time periods referenced in this
Paragraph shall not include any period of time
during which Employee is in breach of this
Agreement.
(k) BREACH. Employee agrees that any breach of
Paragraphs 10(a), (b), (c), (d), (e) or (l) above
cannot be remedied solely by money damages, and
that in addition to any other remedies Employer
may have, Employer is entitled to obtain
injunctive relief against Employee. Nothing
herein, however, shall be construed as limiting
Employer's right to pursue any other available
remedy at law or in equity, including recovery of
damages and termination of this Agreement;
provided further, that any breach of Paragraphs
10(a), (c), (d), (e) or (f) by Employee subsequent
to his or her employment with Employer will result
in forfeiture of all rights to pension benefits
and other severance and retirement benefits.
(l) INDEPENDENT COVENANTS. All covenants contained in
Paragraph 10 of this Agreement shall be construed
as agreements independent of any other provision
of this Agreement, and the existence of any claim
or cause of action by Employer against the
Employee, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the
enforcement by the Company of such covenants.
11. RIGHT TO ENTER AGREEMENT. Employee represents and covenants to
Employer that he or she has full power and authority to enter into this
Agreement and that the execution of this Agreement will not breach or constitute
a default of any other agreement or contract to which he or she is a party or by
which he or she is bound.
12. ASSIGNMENT. This Agreement may be assigned by Employer, but cannot
be assigned by Employee.
13. BINDING AGREEMENT. Employee understands that his or her
obligations under Section 10 of this Agreement are binding upon Employee's
heirs, successors, personal representatives, and legal representatives.
14. NOTICES. All notices pursuant to this Agreement shall be in
writing and sent certified mail, return receipt requested, addressed as follows:
EMPLOYMENT AGREEMENT PAGE 10
<PAGE> 111
If to Employee:
-------------------
-------------------
-------------------
with a copy to:
-------------------
-------------------
-------------------
If to Employer: Global Election Systems, Inc.
1611 Wilmeth Road
McKinney, Texas U.S.A. 75069
with a copy to: Brice Tarzwell, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
15. WAIVER. No waiver by either party to this Agreement of any right
to enforce any term or condition of this Agreement, or of any breach hereof,
shall be deemed a waiver of such right in the future or of any other right or
remedy available under this Agreement.
16. SEVERABILITY. If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions shall
be deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect. Furthermore, any
breach by Employer of any provision of this Agreement shall not excuse
Employee's compliance with the requirements of Paragraphs 9 or 10, to the extent
they are otherwise enforceable.
17. ARBITRATION. In the event any dispute arises out of Employee's
employment with Employer, or separation therefrom, which cannot be resolved by
the parties to this Agreement, such dispute shall be submitted to final and
binding arbitration. The arbitration shall be conducted in accordance with the
American Arbitration Association ("AAA"). If the parties cannot agree on an
arbitrator, a list of seven (7) arbitrators will be requested from AAA, and the
arbitrator will be selected using alternate strikes with Employee striking
first. The cost of the arbitration will be shared equally by Employee and
Employer. Arbitration of such disputes is mandatory and in lieu of any and all
civil causes of action and lawsuits either party may have against the other
arising out of Employee's employment with Employer, or separation therefrom;
provided, however, that any claim Employer has for breach of the covenants
contained in Paragraphs 9 and 10 of this Agreement shall NOT be subject to
mandatory arbitration, and may be pursued in a court of law or equity.
18. ENTIRE AGREEMENT. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Employee's
employment with Employer during the time period covered by this Agreement. This
Agreement replaces and supersedes any
EMPLOYMENT AGREEMENT PAGE 11
<PAGE> 112
and all existing Agreements entered into between Employee and the Company
relating generally to the same subject matter, if any, and shall be binding upon
Employee's heirs, executors, administrators, or other legal representatives or
assigns.
19. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Employee and
an officer or other authorized executive of Employer.
20. UNDERSTAND AGREEMENT. Employee represents and warrants that he or
she has read and understood each and every provision of this Agreement, and
Employee understands that he or she is free to obtain advice from legal counsel
of choice, if necessary and desired, in order to interpret any and all
provisions of this Agreement, and that Employee has freely and voluntarily
entered into this Agreement.
21. EFFECTIVE DATE. It is understood by Employee that this Agreement
shall be effective when signed by both Employer and Employee, and that the terms
of this Agreement shall remain in full force and effect both during the
continuation of Employee's employment and, except for paragraphs 4, 5, 6 and 7,
after the termination of Employee's employment for any reason.
22. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
23. BENEFICIARY OF AGREEMENT. This Agreement is being made for the
benefit of Global, which shall have all rights and remedies available to it
under this Agreement as the Company, and shall be able to claim all rights and
remedies available to the Company hereunder.
[The balance of this page left blank intentionally.]
EMPLOYMENT AGREEMENT PAGE 12
<PAGE> 113
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EMPLOYEE GLOBAL
John L. Elder GLOBAL ELECTION SYSTEMS, INC.
/s/ John L. Elder By: /s/ Robert J. Urosevich
---------------------- -------------------------------------
Employee's Name Robert J. Urosevich
President and Chief Operating Officer
Dated: 09/29/00 Dated: 09/29/00
--------- --------
EMPLOYMENT AGREEMENT PAGE 13
<PAGE> 114
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
This Agreement is made with effect as of August 10, 2000, by and
between Global Election Systems, Inc., a corporation incorporated under the laws
of the State of Delaware, USA, and having its principal place of business in
McKinney, Texas, USA ("Purchaser"), and Jeffrey W. Dean ("Founder"), an
individual residing in the State of Washington, and Deborah M. Dean ("Vendor"),
an individual residing in the State of Washington (Founder and Vendor are
sometimes collectively referred to herein as the "Deans").
WITNESSETH:
WHEREAS, Purchaser has entered into a Share Purchase Agreement (the
"Purchase Agreement") made effective as of August 10, 2000, among Vendor,
Founder, Spectrum Print and Mail Services Ltd., a corporation incorporated under
the laws of the State of Delaware ("Spectrum") Global Election Systems Inc., a
corporation incorporated under the laws of British Columbia, and the Purchaser,
pursuant to which Purchaser has agreed to purchase all of the issued and
outstanding shares of Spectrum capital stock (hereinafter, the transactions
contemplated by the Purchase Agreement being referred to as the "Acquisition");
and
WHEREAS, Deans are husband and wife; and
WHEREAS, Deans, prior to the execution of the Purchase Agreement, had
control over Spectrum and are each familiar with the Business (as herein
defined), affairs, finances, management, marketing programs, philosophy, and
methods of operation of Spectrum; and
WHEREAS, competition by either of the Deans with Purchaser or use of
such knowledge, information, and business acumen, or disclosure by either of the
Deans of confidential and proprietary information of Spectrum will result
directly in damage to Purchaser and its business, properties, assets, and
goodwill, and will cause the loss by Purchaser of some of the benefits of the
Acquisition; and
WHEREAS, Purchaser would suffer irreparable harm if either of the Deans
were to use such knowledge, information, and business acumen in competition with
Purchaser; and
WHEREAS, as a condition to the consummation of the Acquisition, each of
the Deans has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the above premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
1. DEFINITIONS.
(a) "Area" means the United States of America.
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT - PAGE 1
<PAGE> 115
(b) "Business" means the business of Spectrum before the
consummation of the Acquisition including, but not
limited to the design and implementation of solutions
for the printing and distribution of election
materials using variable database applications that
control the process.
(c) "Competing Business" means any business or enterprise
which is engaged in a business that is the same or
essentially the same as the Business; provided,
however, Competing Business shall not include any
operations of Purchaser or Spectrum.
(d) "Confidential Information" means all technical
information, secret processes, all customer lists,
sales and marketing information, personnel records,
costs and pricing information, financial information,
and information relating to accounts, customers and
employees relating to or arising out of the Business
or Founder's employment with Purchaser or Vendor's
employment with Spectrum, and all physical
embodiments of the foregoing, but Confidential
Information shall not include any of the foregoing to
the extent the same is or becomes publicly known
through no fault or breach of this Agreement by the
Deans or to the extent the Deans or Purchaser are
required by applicable law or judicial, regulatory,
or governmental proceeding to disclose such
information.
(e) "Trade Secrets" means Confidential Information which
(i) derives economic value, actual or potential, from
not being generally known to other person who can
obtain economic value from its disclosure or use;
(ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or
confidentiality; and (iii) is protected as a Trade
Secret under applicable law.
2. AGREEMENT NOT TO COMPETE. Each of the Deans agrees that for a period
of five (5) years from the date hereof, or two (2) years after his or her
employment terminates with Purchaser for any reason, whichever is longer, he or
she will not become engaged within the Area, either directly or indirectly, on
his or her own behalf or on behalf of others as a shareholder (other than
ownership of less than five percent (5%) of the outstanding voting securities of
an entity whose voting securities are traded on a national securities exchange
or quoted on the NASDAQ/NMS but not including Global Canada), officer, director,
partner, joint venturer, trustee, consultant, or executive employee for any
Competing Business.
3. AGREEMENT NOT TO SOLICIT CUSTOMERS. Each of the Deans agrees that
for a period of five (5) years from the date hereof, or two (2) years after his
or her employment terminates with Purchaser for any reason, whichever is longer,
he or she will not, either directly or indirectly, on his or her own behalf or
on behalf of others (other than Purchaser or its affiliates), solicit or accept
business from any customer or prospective customer who he worked with or
solicited while employed by Purchaser or by Spectrum.
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT - PAGE 2
<PAGE> 116
4. AGREEMENT NOT TO SOLICIT EMPLOYEES. Each of the Deans agrees that
for a period of five (5) years from the date hereof, or two (2) years after his
or her employment terminates with Purchaser for any reason, whichever is longer,
he or she will not, either directly or indirectly, on his or her own behalf or
in the service or on behalf of others solicit or hire, or attempt to solicit or
hire, or make an offer of employment to any person employed by Purchaser or that
was employed by Spectrum at the time of the Acquisition, whether or not a
full-time or temporary employee.
5. OWNERSHIP AND NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL
INFORMATION.
(a) Each of the Deans acknowledges and agrees that all
Confidential Information, and all physical
embodiments thereof, are confidential to and shall be
and remain the sole and exclusive property of
Purchaser.
(b) Each of the Deans agrees that he or she will not
disclose or make available any Confidential
Information to any person or entity, nor shall he or
she make or cause to be made, or permit or allow (to
the extent within his or her control), either on his
or her own behalf or on behalf of others, any use of
such Confidential Information except in the ordinary
course of their employment or consulting arrangement
with the Purchaser or its affiliates. The obligations
of confidentiality contained in this Agreement will
apply (i) with respect to Trade Secrets so long as
the information remains Trade Secret; and (ii) for
Confidential Information for a period of five (5)
years from the date hereof, or two (2) years after
his or her employment with the Purchaser ceases for
any reason, whichever is longer.
6. ACKNOWLEDGMENT BY FOUNDER OF IRREPARABLE HARM.
(a) Each of the Deans acknowledges and agrees that he or
she has acquired unique knowledge of the Business and
operations of Spectrum; that each of the covenants
and agreements contained in Sections 2, 3, 4, and 5
of this Agreement is made by him or her in
consequence of and as an inducement to Purchaser to
enter into the Purchase Agreement and to protect and
preserve to Purchaser the benefit of the Acquisition,
whereby Purchaser acquires the Shares of Spectrum;
that each of the covenants contained in Sections 2,
3, 4, and 5 of this Agreement is reasonable and
necessary to protect and preserve the benefits of
such Acquisition; that Purchaser is engaged in and
throughout the Area in the Business and beyond; that
irreparable loss and damage will be suffered by
Purchaser should either of the Deans breach any of
such covenants and agreements; that each of such
covenants and agreements is separate, distinct and
severable not only from the other of such covenants
and this Agreement; that the unenforceability of any
such covenant or other such covenant or agreements or
any other provision or provisions of this Agreement;
and that, in addition to other remedies available to
it, Purchaser shall be
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT - PAGE 3
<PAGE> 117
entitled to both temporary and permanent injunctions
to prevent a breach or contemplated breach by Founder
of any of such covenants or agreements. In the event
that Purchaser should seek an injunction hereunder,
each of the Deans hereby waives any requirement that
Purchaser submit proof of the economic value of any
Confidential Information or that Purchaser post a
bond or any other security.
(b) In the event that either of the Deans shall breach
any of the covenants set forth in Sections 2, 3, 4,
or 5 hereof, the running of the period of the
restriction set forth in such Section shall be tolled
during the continuation of any such breach by either
of the Deans.
7. NOTICES.
(a) All notices, requests, demands, and other
communications hereunder shall be in writing and
effective when delivered, whether by hand, by United
States registered or certified mail, return receipt
requested, first class postage prepaid, or by Federal
Express or similar overnight courier service to the
parties or their permitted assignees, addressed as
follows:
If to the Deans: Deborah M. Dean and
Jeffrey W. Dean
------------------------------
------------------------------
with a copy to: Ron L. Bozzer, Esq.
Borden Ladner Gervais L.L.P.
1200 Waterfront Centre
200 Burrad Street
P.0. Box 48600
Vancouver, B.C., Canada V7XJT2
If to Purchaser: Global Election Systems, Inc.
1611 Wilmeth Road
McKinney, TX 75069
with a copy to: Brice Tarzwell, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas, USA 75270
(b) Any party hereto may change its address specified for
notices herein by designating a new address in
writing.
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT - PAGE 4
<PAGE> 118
8. MISCELLANEOUS.
(a) Assignment. This Agreement may be assigned by
Purchaser solely to a company, firm, or person that
acquires substantially all the assets or voting
securities of Purchaser and shall inure to the
benefit of such assignee. Neither this Agreement nor
any right to either of the Deans hereunder may be
assigned by the Deans, nor may either of the Deans in
any way delegate the performance of his or her
covenants and obligations hereunder.
(b) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
(c) Entire Agreement. This Agreement and the Share
Purchase Agreement together constitute the entire
agreement of the parties hereto concerning the
transactions contemplated herein and supersede all
prior agreements or understandings among the parties
hereto relating to the subject matter hereof. The
parties recognize that the Employment Agreement
between Purchaser and the Founder being executed
contemporaneously with this Agreement contains in
Section 10 thereof similar provision to those found
in this Agreement. As between the Founder and the
Purchaser, the provision of this Agreement shall
govern in the event of any conflict between Section
10 of the Employment Agreement and this Agreement. No
oral representation, agreement or understandings made
by any party hereto shall be valid or binding upon
such party or any other party hereto. Any amendment
to this Agreement must be in writing and executed by
both parties. The failure of any party to exercise
any power or right hereunder or to insist upon strict
compliance with the obligations hereunder shall not
constitute a waiver of a party's right to demand
exact compliance with the terms hereof.
(d) Severability. Each of the covenants and agreements
hereinabove contained shall be deemed separate,
severable, and independent covenants, and in the
event that any covenant shall be declared invalid by
any court of competent jurisdiction, such invalidity
shall not in any manner affect or impair the validity
or enforceability of any other part or provision of
such covenant or of any other covenant contained
herein. If a covenant is deemed to be unenforceable,
the court or the parties shall modify the covenant to
make it enforceable pursuant to applicable law and
the intent of the parties.
(e) Captions and Section Headings. Captions and section
headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in
construing it.
[The balance of this page intentionally left blank.]
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT - PAGE 5
<PAGE> 119
IN WITNESS WHEREOF, Purchaser and Founder have each executed and
delivered this Agreement as of the date first shown above.
PURCHASER: FOUNDER:
GLOBAL ELECTION SYSTEMS, INC.
By: /s/ Robert J. Urosevich /s/ Jeffrey W. Dean
--------------------------------- ---------------------------
Robert J. Urosevich, President Jeffrey W. Dean
And Chief Operating Officer
Dated: Sept. 29th/2000 Dated: Sept. 29th/2000
VENDOR:
/s/ Deborah M. Dean
---------------------------
Deborah M. Dean
Dated: Sept. 29, 2000
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT - PAGE 6
<PAGE> 120
SCHEDULE "G"
FORM OF VENDOR AND FOUNDER'S SOLICITOR'S OPINION
(omitted)
<PAGE> 121
SCHEDULE "H"
FORM OF PURCHASER'S SOLICITOR'S OPINION
(omitted)
SCHEDULE "I"
CERTIFICATE OF CONFIRMATION
Pursuant to subparagraph 6.2(g) of the Share Purchase Agreement made effective
as of the 10th day of August, 2000 (the "Agreement") among Deborah M. Dean (the
"Vendor"), Jeffrey W. Dean (the "Founder"), Spectrum Print & Mail Services,
Ltd., Global Election Systems Inc. ( "Global Canada") and Global Election
Systems, Inc. ("Global USA") (collectively, Global Canada and Global USA are
referred to as "Global"), the Vendor and the Founder jointly and severally
confirm to Global that the representations and warranties of the Vendor and the
Founder contained in paragraph 1.1 of the Agreement, elsewhere in the Agreement
or contained in any certificates or documents delivered by them pursuant to the
Agreement are true and correct in every respect as of the Time of Closing of the
Agreement being 12 o'clock p.m. local time in Vancouver, B.C. on the 29th day of
September, 2000.
Dated at Vancouver, British Columbia, this 29th day of September, 2000.
Deborah M. Dean
Jeffrey W. Dean
<PAGE> 122
SCHEDULE "J"
CERTIFICATE OF CONFIRMATION
Pursuant to subparagraph 6.3(f) of the Share Purchase Agreement made the 10th
day of August, 2000 (the "Agreement") among Deborah M. Dean (the "Vendor"),
Jeffrey W. Dean (the "Founder"), Spectrum Print & Mail Services, Ltd., Global
Election Systems Inc. ("Global Canada") and Global Election Systems Inc., Global
Canada confirms to the Vendor and the Founder that the representations and
warranties of the Purchaser contained in paragraph 1.3 of the Agreement,
elsewhere in the Agreement or contained in any certificates or documents
delivered by it pursuant to the Agreement are true and correct in every respect
as of the Time of Closing of the Agreement, being 12 o'clock p.m. local time in
Vancouver, B.C. on the 29th day of September, 2000
Dated at McKinney, Texas and Vancouver, British Columbia, this 29th day of
September, 2000.
GLOBAL ELECTION SYSTEMS INC.
Per:
-------------------------------------------
Robert J. Urosevich, Director and President
Per:
-------------------------------------------
Clinton H. Rickards, Director
<PAGE> 123
SCHEDULE "K"
PERSONAL PROPERTY LEASES
1. Lease dated July 8, 1998 between Spectrum, as lessee, and IFC Credit
Corporation for Model 500 Ballot Die Cutting System. The term of the
lease for this equipment is sixty months beginning October 1,1998. The
lease requires one payment of US$7,438.00 and fifty-nine payments at
US$3,719.00, plus applicable taxes.
2. Lease dated November 24, 1999 between Spectrum, as lessee, and IFC
Credit Corporation for Model 500 Decorated Material Blanking System.
The term of the lease for this equipment is sixty-one months beginning
December 1,1999. The lease requires one payment of US$1,973.70 and
sixty payments at US$3,948.70, plus applicable taxes.
3. Lease dated July 8, 1998 between Spectrum, as lessee, and IFC Credit
Corporation for two Phillipsburg High-Speed 6 Station Inserters, two
Ink Jetters and one Stahl 20' x 26' RA Folder. The term of the lease
for this equipment is sixty-one months beginning on December 1, 1999.
The lease requires one payment of US$316.35 and sixty monthly payments
at US$3,240 plus applicable taxes.
4. Lease dated July 8, 1998 between Spectrum, as lessee, and IFC Credit
Corporation for Model 500 Ballot Die Cutting System. The term of the
lease for this equipment is sixty months beginning September 1, 2000.
The lease requires sixty months payments at US$3,901.00, plus
applicable taxes.
5. Lease dated July 8, 1998 between Spectrum, as lessee, and IFC Credit
Corporation for Model 500 Ballot Die Cutting System. The term of the
lease for this equipment is sixty months beginning September 1, 2000.
The lease requires one payment of US$7,438.00 and fifty-nine payments
at US$3,901.00, plus applicable taxes.
6. Lease dated March 1, 2000 between Spectrum, as lessee, and Copelco
Capital, Inc. for two Xeikon DCP 50D. The term of the lease for this
equipment is forty-eight months beginning March 1, 2000. The lease
requires three monthly payments of US$8,000.00 and forty-five monthly
payments of US$21,751.45, plus applicable taxes.
7. Lease dated July 2, 1998 between Spectrum, as lessee, and Newcourt
Financial for Xeikon D50. The term of the lease for this equipment is
forty-one months beginning August 1, 1998. The lease requires one
payment of US$31,436.58 and forty payments at US$15,718.31, plus
applicable taxes.
8. Lease dated December 4, 1998 between Spectrum, as lessee, and BankVest
Capital Corp. for Xeikon DCP/50D. The term of the lease for this
equipment is forty-two months
<PAGE> 124
-2-
beginning January 1,1999. The lease requires one payment of
US$80,000.00 and forty-one payments at US$11,222.61, plus applicable
taxes.
9. Lease dated November 10, 1995 between Spectrum, as lessee, and Xerox
for DP390HCZ. The term of the lease for this equipment is sixty months
beginning January 1, 1996. The lease requires one payment of US$16,600
and fifty-nine payments at US$3,033.28, plus applicable taxes.
<PAGE> 125
SCHEDULE "L"
REAL PROPERTY LEASES
1. Lease dated May 19, 1997, by and between First Commercial Management
on behalf of Washington Credit Union, a partnership, as the landlord,
and Spectrum, as tenant, pursuant to which Spectrum leases certain
premises on land commonly known by the street address of 6950 - 220th
Street SW, Suite 206, Mountlake Terrace, Washington. Such premises
consist of office space totaling approximately 2,412 square feet. The
lease commenced May 5, 1997 and is for the term of 4 years. Monthly
rent payable under the lease is US$5,624.00.
2. Lease dated June 16, 1998, by and between Castle Harbor, L.L.C., a
partnership, as the landlord, and Spectrum, as tenant, pursuant to
which Spectrum leases certain premises on land commonly known by the
street address of 22314 70th Avenue W, Suite F, Mountlake Terrace,
Washington. Such premises consist of warehouse space totaling
approximately 7,200 square feet and including seven parking spaces.
The lease commenced July 1, 1998 and is for the term of 4 years.
Monthly rent payable under the lease is US$4,844.14.
3. Lease dated December 23, 1999, by and between Encore Properties, a
partnership, as the landlord, and Spectrum, as tenant, pursuant to
which Spectrum leases certain premises on land commonly known by the
street address of 471 Littlefield Avenue, South San Francisco,
California. Such premises consist of warehouse and office space
totaling approximately 5,120 square feet, including approximately 724
square feet of office space and including four parking spaces. The
lease commenced January 1, 2000 and is for the term of 5 years.
Monthly rent payable under the lease is US$4,608.00.
<PAGE> 126
SCHEDULE "M"
LIST OF SPECTRUM'S INTELLECTUAL PROPERTY RIGHTS
A. TRADEMARKS
As of the Effective Date, Spectrum has no registered trademarks and has not
filed any applications therefor.
Spectrum uses the following trade name in addition to its corporate name:
Spectrum Ltd.
Spectrum currently uses the unregistered trademarks "FrontEnd", "VoteRemote"and
"MailWare" in connection with its business. Spectrum does not utilize any brand
names of its own not otherwise disclosed in this Schedule. The Vendor and the
Founder do not make any representation, warranty or covenant that all or any of
such marks are capable of registration.
Spectrum Logo:
[SPECTRUM LOGO]
B. COMPUTER PROGRAMS, COPYRIGHTS AND INDUSTRIAL DESIGNS
FrontEnd(TM)
A collection of software utilities supporting a methodology
that 1) allows print objects, in an extensive variety of
formats, to be placed on an electronic "virtual page," from a
source database, in postscript format; 2) controls the RIP,
printing, finishing and distribution of the printed material.
VoteRemote(TM)
A software application that organizes the entire Absentee
Ballot Process with data management, that produces envelopes
by any data supported grouping, encodes voter specific
information for the outgoing mail process and decodes
returned absentee voter data in the incoming process. These
data are uploaded to the county's voter registration database
system with updated voter information for
<PAGE> 127
-2-
signature verification. This software drives the entire
Absentee Ballot Process methodology.
MailWare(TM)
MailWare is a product which simplifies and automates address
coding without having to go through complicated and
time-consuming import/export routines. MailWare uses the
United States Postal Service ("USPS") database to lookup and
code addresses. The Postal Coding Wizard allows you to code
any data file structure with the necessary information to
create an eleven-digit barcode, which means significant
postage savings and delivery time on mailings. MailWare
creates a Coding Accuracy Support System (CASS) report, which
is recognized by the USPS in determining the qualification
accuracy of your mailing. All necessary bar code fonts are
included. The unique feature of MailWare is the integration
with Microsoft Access database as an add-on.
Ballot Production
Optical Scan Ballot production requires the ability to
produce a ballot with accurate, complete front-to-back
registration, which can be read by an optical scanner.
Printing and setup times are limited and controlled by
arbitrary state government regulations. This fact, coupled
with ever increasing voter populations, continues the trend
away from traditional printing methods due to their need for
costly setup time and plate charges. Offset press methodology
does not support proofs and/or last minute changes. Ballot
styles (precinct specific variations) and ballot types
(absentee, precinct, or mail) mandate the use of variable
data and unlimited use of color. Spectrum's FrontEnd software
produces quality ballots with little human intervention.
FrontEnd controls page layout, merging of variable data
overlays to correct postscript files, unlimited use of color
for county coding purposes, red ovals and the ability to
produce proofs and on-demand reprints. Spectrum's XEIKON 50D
Digital Press provides the accuracy, flexibility, and
reliability needed to insure that all types and styles of
ballots can be produced on-time with complete registration
and accuracy.
RealTimeBallots(TM)
Real Time Ballots is a software system and methodology to
produce Global ballots on demand by using a desktop PC and a
postscript laser printer. The functional goal of Real Time
Ballots is to produce a ballot in "real time" for a voter by
entering a criteria. The criteria can be a voter ID, name,
address, or birth date. Once a criteria is selected and
entered, the system produces a ballot and a corresponding
reply envelope that is printed to a desktop printer. This
process is most useful for counties that have many precincts
and have different issues per precinct.
<PAGE> 128
-3-
C. PATENTS
None.
D. DOMAIN NAMES
Spectrumltd.com
Vote-Remote.com
Vote-Remote.net
Vote-Remote.org
VoteRemote.net
VoteRemote.org
E. THIRD PARTY IP CONTRACT AND OPERATIONAL CONTRACTS
None.
<PAGE> 129
SCHEDULE "N"
CUSTOMERS
(omitted)
<PAGE> 130
SCHEDULE "O"
OPTIONS, WARRANTS AND AGREEMENTS TO ISSUE SECURITIES
OF GLOBAL CANADA
Incentive Stock Options outstanding as at August 10, 2000:
<TABLE>
<CAPTION>
NO. OF SHARES SUBJECT EXERCISE PRICE PER
NAME OF HOLDER TO OPTION COMMON SHARE EXPIRY DATE
-------------- --------------------- ------------------ -----------
<S> <C> <C> <C>
Ken Clark 40,000 $2.05 October 15, 2001
Cathleen Colgan 40,000 1.25 August 22, 2002
Brian Courtney 50,000 1.25 August 2, 2005
Robert Diekmann 25,000 2.05 October 15, 2001
Larry Dix 50,000 2.05 October 15, 2001
Larry Ensminger 50,000 1.25 August 22, 2002
J. Gregory Forsythe 50,000 1.25 August 22, 2002
Ingrid Giordano 25,000 1.25 August 22, 2002
Nicholas Glass 50,000 1.49 December 17, 2002
Barry Herron 50,000 1.25 August 22, 2002
Jeff Hintz 15,000 1.25 August 22, 2002
Frank Kaplan 50,000 1.25 August 22, 2002
Steve Knecht 50,000 1.25 August 22, 2002
Wes Krivanek 15,000 1.25 August 22, 2002
Sin Din Eric Lau 20,000 1.25 August 22, 2002
Mark Langer 40,000 1.25 August 22, 2002
John W. Larmer II 50,000 1.69 February 8, 2005
Sophia Lee 30,000 1.25 August 22, 2002
John McLaurin 50,000 1.25 August 22, 2002
Mickey Martin 50,000 1.25 August 22, 2002
Josef Mueller 50,000 1.25 August 22, 2002
Robert Pickett 50,000 1.25 August 22, 2002
Clint Rickards 50,000 1.25 August 22, 2002
Juan Rivera 40,000 2.05 October 15, 2001
Sherry Rose 50,000 2.05 October 15, 2001
Maurice Sokulski 100,000 1.25 August 22, 2002
Bob Urosevich 120,000 1.25 August 22, 2002
Howard T. Van Pelt 50,000 1.25 August 22, 2002
Donald Vopalensky 40,000 1.25 August 22, 2002
TOTAL: 1,350,000
</TABLE>
<PAGE> 131
-2-
Warrants outstanding as at August 10, 2000:
<TABLE>
<CAPTION>
NO. OF SHARES AVAILABLE ON EXERCISE PRICE PER
NAME OF HOLDER EXERCISE OF WARRANTS COMMON SHARE EXPIRY DATE
-------------- -------------------------- ------------------ -----------
<S> <C> <C> <C>
David Ross 83,333 $1.88 March 31, 2001
Victoria Ross 83,334 1.88 March 31, 2001
TOTAL: 166,667
</TABLE>
<PAGE> 132
SCHEDULE "P"
LIST OF GLOBAL'S COMPUTER PROGRAMS
Computer Programs
ES-2000 AccuVote optical scan voting system
AccuVote touch screen voting system
GEMS application software
Voter Tally System (VTS) application software
<PAGE> 133
SCHEDULE "Q"
ESCROW AGREEMENT
<PAGE> 134
ESCROW AGREEMENT
This is an Agreement respecting certain securities (the "Securities") described
in Schedule A.
AMONG:
BORDEN LADNER GERVAIS LLP Lawyers P.O. Box 48600, Waterfront Centre 1200 -
200 Burrard Street Vancouver, B.C. V7X 1T2
(the "Depository")
AND:
DEBORAH M. DEAN 22006 - 100th Avenue West Edmonds, Washington USA 98020
(the "Owner")
AND:
GLOBAL ELECTION SYSTEMS INC. AND GLOBAL ELECTION SYSTEMS, INC.
1611 Wilmeth Road McKinney, Texas USA 75069
(collectively, "Global")
The Depository acknowledges receipt from the Owner of the Securities and an
irrevocable stock power of attorney executed by the Owner in favour of Global
Canada (the "Power of Attorney") (collectively, the Securities and the Power of
Attorney are defined as the "Escrow Documents") which are received by the
Depository for the purposes of Section 2.2(b) of the Share Purchase Agreement
described in Schedule B (the "Escrow Provisions").
The following are the terms and conditions on which the Escrow Documents are
received by the Depository:
1. The Depository shall exercise the same degree of care respecting the
Escrow Documents and safeguard them to the same extent as the
Depository does with respect to securities held by the Depository for
its own benefit, but the Depository shall not be construed or deemed to
be an insurer of the Escrow Documents and shall not be liable for any
damage thereto or loss thereof unless such damage or loss is caused by
the gross negligence or wilful misconduct of the Depository.
2. In caring for and safeguarding the Escrow Documents, the Depository may
use the services of any agent or employee.
3. Where the Escrow Documents are being held as a security for performance
of any obligation by the Owner,
<PAGE> 135
(1) particulars of the obligation secured are as set out in
Schedule B to this Agreement;
(2) the Escrow Documents shall remain in the possession of the
Depository until the complete performance of the Owner's
obligations in accordance with the respective agreements and
the terms and covenants therein contained; and
(3) any loss of or in respect of securities received by the
Depository from the Owner, whether occasioned through the
fault of the Depository or otherwise, shall not discharge or
limit or lessen the liability of the Owner under any loan or
other credit facility agreement or any guarantee agreement
executed in favour of the Depository.
4. The Depository shall forthwith cause the Escrowed Documents to be
delivered to the persons entitled as per the procedure set out in
Schedule C to this Agreement.
5. The Owner indemnifies and shall save the Depository harmless against
any cost (including legal costs on a solicitor and client basis),
liability, claim, damage or expense arising from any claim brought by
any third party by reason of the Depository having possession of the
Securities or by reason of the Depository complying with the terms of
this Agreement.
6. (1) Any notice required or permitted by law or this Agreement to
be given to or served upon either of the parties shall be
sufficiently served if given personally or if sent by telex or
fax (where the intended recipient is equipped to receive such
a form of telecommunication) or by prepaid courier or
certified or registered mail,
(1) in the case of the Depository, to the office of the Depository
set forth on the first page hereof; and
(2) in the case of the Owner, to the address of the Owner set
forth on the first page hereof;
and either party may by notice given in accordance with this section
change its address for the purposes of this Agreement.
(2) Any notice shall be deemed (in the absence of evidence of
prior receipt) to have been received by the intended recipient
the same day if personally served, the next business day if
sent by telex or fax, and on the third business day next
following where sent by prepaid courier or by registered or
certified mail.
SIGNED, SEALED AND DELIVERED as of the date first above written.
BORDEN LADNER GERVAIS
"Ron L. Bozzer"
-----------------------------
Per: "Deborah M. Dean"
DEBORAH M. DEAN
<PAGE> 136
GLOBAL ELECTION SYSTEMS INC.
"Clinton H. Rickards"
----------------------------------
Per: Clinton H. Rickards, Director
GLOBAL ELECTION SYSTEMS, INC.
"Clinton H. Rickards"
----------------------------------
Per: Clinton H. Rickards, Director
<PAGE> 137
SCHEDULE A
SECURITIES
<TABLE>
<CAPTION>
DESCRIPTION OF ITEM MATURITY DATE
<S> <C>
500,000 Common Shares of Global Election Systems Inc. September 27, 2002
</TABLE>
<PAGE> 138
SCHEDULE B
OBLIGATION SECURITY BY SECURITIES
Any Claims against Owner of shares for breach of representations and warranties
under the Share Purchase Agreement made as of August 10, 2000, among Deborah M.
Dean, Jeffrey W. Dean, Spectrum Print & Mail Services, Ltd., Global Election
Systems Inc. and Global Election Systems, Inc.
<PAGE> 139
SCHEDULE C
ESCROW RELEASE PROCEDURE
1. Pursuant to section 4.1 of the Share Purchase Agreement described in Schedule
B (the "SHARE PURCHASE AGREEMENT"), if any of the representations, warranties or
acknowledgements given by the Owner in the Share Purchase Agreement are found to
be untrue during the period of 36 months following the closing or there is a
breach of any covenant or agreement in the Share Purchase Agreement on the part
of the Owner, the Owner has indemnified Global from and against any and all
liability, claims, debts, demands, suits, actions, penalties, fines, losses,
costs (including legal fees and disbursements as charged by a lawyer to his own
client), damages and expenses of any kind whatsoever which may be brought or
made against Global by any person, firm or corporation of any kind whatsoever or
which may be suffered or incurred by Global, directly or indirectly, arising out
of or as a consequence of any such misrepresentation or breach of warranty,
acknowledgement, covenant or agreement (the "INDEMNIFICATION RIGHT").
2. In the event that Global, on or prior to the Maturity Date set forth in
Schedule A, claims to be entitled to a payment under the Indemnification Right
it may exercise such claim by delivering written notice to the Owner (with a
copy to the Depository) demanding from the Owner a specified dollar amount (the
"CLAIM"), as being the amount covered by the Indemnification Right. Such Claim
shall specify the breach alleged and the calculation of the amount of the
damages claimed. Such Claim shall be denominated in Canadian Dollars based upon
the average of the buy and sell rate for US Dollars of Bank of Nova Scotia main
branch in Vancouver at noon on the day prior to the date of the Claim. If the
Claim is not disputed in accordance with section 4 of this Schedule C, Global
shall have the right to satisfy the Claim by the transfer to Global of such
number of the Securities as is equal to the amount of the Claim based upon the
Market Value (as defined below) of Global's shares at the time of the Claim.
3. The Market Value of Global's shares for a particular date on which a Claim is
made (the "CLAIM DATE") shall be determined as follows:
(a) for each organized trading facility on which Global's shares
are listed, "Market Value" will be the average of the closing
prices of Global's shares on the 10 trading days immediately
preceding the Claim Date;
(b) if Global's shares trade on an organized trading facility
outside of Canada, then the "Market Value" determined for that
organized trading facility will be converted into Canadian
dollars at a conversion rate determined by the Depository
having regard for the published conversion rates as of the
Claim Date;
(c) if Global's shares are listed on more than one organized
trading facility, then "Market Value" shall be the simple
average of the Market Values determined for each organized
trading facility on which those Global shares are listed as
determined for each organized trading facility in accordance
with subparagraphs (a) and (b) above;
(d) if Global's shares are listed on one or more organized trading
facility but have not
<PAGE> 140
traded during the ten trading day period immediately preceding
the Claim Date, then the "Market Value" will be, subject to
the necessary approvals of the applicable regulatory
authorities, such value as is determined by the auditors of
Global, acting reasonably; and
(e) if Global's shares are not listed on any organized trading
facility, then the Market Value will be, subject to the
necessary approvals of the applicable regulatory authorities,
such value as is determined by the auditors of Global, acting
reasonably.
4. If the Owner has delivered to the Depository and to Global a written
objection to a Claim (an "OBJECTION") within 10 business days of Global's
delivery of notice of the Claim to the Owner, or there is otherwise a dispute
between Global and the Owner as to the amount of the Claim, the Depository's
sole obligation will be to hold the Escrow Documents until such dispute has been
settled by agreement between the parties or by adjudication and all rights of
review or appeal of any decision resulting from such adjudication have been
exhausted. Upon receipt by the Depository of a certified copy of any such final
decision or agreement, the Depository will act in accordance with the terms of
such final decision or agreement.
5. If the Owner has not delivered to the Depository and to Global an Objection
to a Claim within 10 business days of delivery of notice of the Claim to the
Owner, the Depository shall forthwith deliver such number of Securities, as
calculated by the auditors of Global as are required to fully satisfy the Claim
to Global's Registrar and Transfer Agent. Prior thereto, the Depository shall
complete the Power of Attorney by inserting on the Power of Attorney the number
of Global shares transferable by the Owner to Global in satisfaction of the
Claim (the "CLAIMED SHARES"), based upon the Market Value of Global's shares and
the amount of the Claim and shall deliver same to Global's Registrar and
Transfer Agent.
6. If the number of Claimed Shares is less than the number of Global shares
which the Depository holds (the "SECURITY SHARES"), Global shall require the
Transfer Agent to return to the Depository a Global share certificate
representing such number of Global shares as is equal to the number of Security
Shares less the Claimed Shares (the "REMAINING SHARES"). The Depository shall
forthwith provide written notice to the Owner of its receipt of the Remaining
Shares. Within 10 business days of the Owner's receipt of such written notice,
the Owner shall provide to the Depository another duly executed Power of
Attorney in favour of Global leaving blank the number of shares to be
transferred.
7. At noon, Vancouver time, on September 30, 2002, provided that there is no
outstanding Claim, the Depository is hereby authorized and shall deliver to the
Owner all Escrowed Documents and any remaining Security Shares and any Power of
Attorney it holds pursuant to this Escrow Agreement without further act of any
party.
