SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made as of the 28th day of June, 2000.
B E T W E E N :
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GALAXY ONLINE INC., a corporation continued under the laws
of Yukon Territory, Canada
(the "Purchaser")
- and -
ENEXI, INC., a Public Corporation incorporated under the
laws of the State of Delaware, U.S.A.
(the "Vendor")
- and -
VIADUCT II, INC., a corporation incorporated under the laws
of the State of Indiana, U.S.A.,
("Viaduct II")
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WHEREAS the authorized capital of Viaduct II consists of 1,000
shares of common stock, 1000 shares of which is issued as fully paid and
non-assessable;
AND WHEREAS the Vendor is the registered and beneficial owner
of all of the issued Common Shares of Viaduct II:
AND WHEREAS the Purchaser has offered and agreed to purchase,
and the Vendor has accepted such offer and agreed to sell, 1000 Common Shares,
representing 100% of the issued and outstanding Common Shares, on the terms and
conditions set out in this agreement;
NOW THEREFORE in consideration of the mutual covenants herein
contained and of other good and valuable consideration, the receipt and
sufficiency of which each of the parties hereto hereby acknowledges, the parties
hereto covenant and agree as follows:
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Article One
Definitions and Schedules
Section 1.1 Definitions
In this agreement, the following words and terms shall have
the following meanings:
(a) "Agreement", "hereto", "hereof", "herein", "hereby", "hereunder" and
similar expressions mean this agreement, as it may be amended from time to time;
(b) "Business" means the business currently carried on by Viaduct II;
(c) "CDN" means the Canadian Dealing Network, Inc.;
(d) "Closing" means the completion of the purchase by the Purchaser of the
Purchased Shares as provided for in this agreement;
(e) "Closing Date" means June 28, 2000, or such other date, not later than
June 28, 2000, as the parties may agree upon as the date on which the Closing
shall take place upon the transfer of the freely tradable shares of stock as so
outlined in this agreement;
(f) "Common Shares" means the shares of common stock in the capital of
Viaduct II, as such shares are currently constituted;
(g) "Material" for purposes of Subsection 3.2(p) means any contract
involving an amount, expenditure, disbursement or payment of more than $3,000 on
a one time or annual basis;
(h) "Products" means:
(i) All assets of Viaduct II, Inc., Schedule A.
(i) "Purchased Share" means 1,000 Common Shares, representing 100% of the
issued and outstanding Common Shares of Viaduct II;
(j) "Purchaser Shares" means the common shares in the capital of the
Purchaser, as such shares are currently constituted; and
(k) "Year 2000 Compliant" means:
(i) the Product accepts, calculates, compares, sorts, extracts,
sequences, and otherwise processes data inputs and date values (whether
forward or backward), and returns, generates and processes date output and
date values, accurately, without interruptions, and in a consistent manner
(without errors or omissions due to date selection), regardless of the date
used, and whether before, on or after January 1, 2000 and whether or not
the dates are affected by leap years; and
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(ii) the Product stores, processes and displays date information
(including in user interfaces and data fields) in ways that are unambiguous
as to the determination of the century in a defined, predetermined and
appropriate manner.
Section 1.2 Construction of Agreement
In this Agreement:
(a) all usage of the word "including" in this Agreement shall mean
"including, without limitation," throughout this Agreement;
(b) the division of this Agreement into separate Articles, Sections
and Subsections and the insertion of headings is for convenience of
reference only and shall not affect the construction or interpretation of
this Agreement;
(c) unless otherwise indicated, all references to currency herein are
to the lawful money of the United States of America; and
(d) words importing the singular include the plural and vice versa;
and words importing gender include all genders.
Article Two
Purchase of Shares
Section 2.1 Purchase and Sale of Shares
Subject to the terms and conditions hereof, the Purchaser
offers and agrees to purchase from the Vendor, and the Vendor accepts such offer
and agrees to sell, assign and transfer to the Purchaser, the Purchased Shares.
Section 2.2 Purchase Price
The purchase price payable by the Purchaser to the Vendor for
the Purchased Share shall be $468,000.00 and shall be satisfied in full by the
issuance to the Vendor of 342,253 fully paid and non-assessable Purchaser Shares
as follows:
(a) 85,563 shares shall be delivered to the Vendor unrestricted.
(b) That said shares were determined at the share price of $1.42 per share,
the closing price on June 27, 2000.
(c) Galaxy Online, Inc. common stock shall be delivered at the closing,
said delivery being a condition concurrent for the closing.
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Section 2.3 Escrow and Release of Purchaser Shares
Of the Purchaser Shares issued by the Purchaser to the Vendor
pursuant to this Agreement, 259,690 shares shall be delivered to and held by
Purchaser for a period of 24 months from the date of closing until June 28,
2002.
(a) At the Purchaser's sole discretion, the balance of $364,500.00 or
the remaining shares of stock shall be paid to Vendor on or before June 28,
2002.
Article Three
Closing
Section 3.1 Closing
The sale and purchase of the Purchased Shares shall be
completed at such time and at such place on the Closing Date as may be agreed
upon by the parties. At the Closing, in addition to the other documents required
to be delivered under this agreement or as may be reasonably requested by the
Purchaser:
(a) the Vendor shall deliver to the Purchaser certificates representing the
Purchased Shares duly endorsed in blank for transfer, or accompanied by
irrevocable transfer powers of attorney duly executed in blank, in either case
by the holder of record thereof, with the signatures guaranteed to the
satisfaction of the Purchaser, all in form and substance sufficient to permit
the valid registration of the Purchaser as the owner of record of the Purchased
Shares; and
(b) the Purchaser shall deliver to the Vendor 1 certificate representing
25% of total Purchaser Shares registered in the name of the Vendor. The
Purchaser Shares are not subject to any statutory hold period in Canada and,
unless required by applicable law in the jurisdiction where the Vendor resides,
the certificates representing the Purchaser Shares which are escrowed shall not
contain any legend, and will be freely trading upon issuance in the Provinces of
Ontario and Alberta, and will be freely trading on such other exchanges that the
Purchaser Shares shall be listed with in the future.
Article Four
Representations and Warranties
Section 4.1 Representations and Warranties of the Vendor re the Purchased Shares
The Vendor hereby represents and warrants to the Purchaser
that:
(a) Authority and Enforceability: this agreement has been duly authorized,
executed and delivered by the Vendor and is a valid and binding obligation of
the Vendor enforceable in accordance with its terms subject only to limitations
with respect to enforcement imposed by law in connection with bankruptcy or
similar proceedings and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which they
are sought;
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(b) Absence of Conflicting Agreements: the Vendor is not a party to, bound
or affected by or subject to any agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law which would be
violated, contravened or breached by, or under which any default would occur as
a result of, the execution and delivery of this agreement or the performance of
any of the terms of this agreement;
(c) Consents and Approvals: there are no consents, approvals, orders or
authorizations of any person or any municipal, state or federal governmental
authority in the United States or elsewhere or registrations, declarations,
notices, filings or recordings with any authorities required to be obtained by
the Vendor in connection with the completion of the transaction contemplated by
this agreement, the execution and delivery of this agreement, the Closing or the
performance of any of the terms and conditions of this agreement;
(d) Ownership of Shares: the Vendor owns beneficially and of record the
Purchased Share free and clear of any lien, security interest, charge, hypothec,
privilege or encumbrance or rights of others, other than the rights of the
Purchaser under this agreement;
(e) Pre-emptive Rights: no person, firm or corporation has any agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
which at any time in the future may become binding upon the Vendor in respect of
the sale, transfer, assignment, pledge, charge, mortgage, hypothecation or other
disposition or encumbrance of the Purchased Share, other than in respect of the
provisions of this agreement;
(f) Litigation: there is no suit, action, litigation, enquiry,
investigation, arbitration proceeding or governmental proceeding, including
appeals and applications for review, in progress or pending against or relating
to the Vendor which affects the ownership of the Purchased Share or the ability
of the Vendor to complete the transactions contemplated by this agreement, and
there is not presently outstanding against the Vendor any judgment, decree,
injunction, rule or order of any court or governmental or regulatory authority;
(g) Non-Arm's Length Agreements: there are no contracts, agreements or
arrangements to which Viaduct II is a party with the Vendor or with any person
or corporation with which the Vendor does not deal at arm's length; and
(h) Finder's Fees: no person, firm or corporation is entitled to any
finder's fee or other payment or compensation from the Vendor in respect of the
transactions contemplated by this agreement.
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Section 4.2 Representations and Warranties of the Vendor re Viaduct II, Inc.
The Vendor hereby represents and warrants to the Purchaser
that:
(a) Organization, Good Standing and Records:
(i) Status: Viaduct II is duly incorporated, organized and validly
subsisting under the laws of the State of Indiana, with all necessary
corporate power, authority and capacity to own its property and assets and
to carry on the Business as presently conducted, and has made all necessary
filings and has all required registrations under all applicable corporate,
securities and taxation laws or any other laws to which Viaduct II is
subject; and
(ii) Minute Books and Records: the minute books of Viaduct II contain
all resolutions of, and minutes of all meetings of, the directors and the
sole shareholder of Viaduct II and the books and records of Viaduct II are
in good standing and are true and accurate;
(b) Absence of Conflicting Agreements: Viaduct II is not a party to, bound
or affected by or subject to any agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law which would be
violated, contravened or breached by, or under which any default would occur as
a result of, the execution and delivery of this agreement or the performance of
any of the terms of this agreement;
(c) Compliance with Laws: Viaduct II is in compliance in all material
respects with all applicable laws, holds all governmental and regulatory
approvals, licenses and authorizations required to conduct its Business, all
such governmental and regulatory approvals, licenses and authorizations are in
good standing and Viaduct II is in compliance with all requirements of such
governmental and regulatory approvals, licenses and authorizations;
(d) Consents and Approvals: there are no consents, approvals, orders or
authorizations of any person or any municipal, state or federal governmental
authority in the United States or elsewhere or registrations, declarations,
notices, filings or recordings with any authorities required to be obtained by
Viaduct II in connection with the completion of any of the transactions
contemplated by this agreement, the execution and delivery of this agreement,
the Closing or the performance of any of the terms and conditions of this
agreement;
(e) Subsidiaries: Viaduct II does not have any subsidiaries and Viaduct II
is not a party to any agreements, options or commitments to acquire any shares
or securities of any corporation or person or to acquire or lease any business
operations, real property or assets;
(f) Capitalization: the authorized capital of Viaduct II is as stated in
the recitals hereof and 1,000 Common Shares are duly and validly issued and
outstanding as a fully paid and non-assessable share;
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(g) Options: no options, warrants or other rights to purchase shares or
other securities of Viaduct II has been authorized, there are no agreements in
place as to the issue of any such options, warrants or other rights and no such
option, warrants or other rights are outstanding;
(h) Pre-emptive Rights: no person, firm or corporation has any agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
which at any time in the future may become binding upon Viaduct II in respect of
the allotment or issue of any of the authorized but unissued shares of Viaduct
II or of any debt or other securities of Viaduct II;
(i) Financial Statements:
(i) the financial statements of Viaduct II provided to the Purchaser
have been prepared in accordance with United States generally accepted
accounting principles applied on a basis consistent with that of prior
periods; and
(ii) such financial statements present fairly the assets, liabilities
and the financial condition of Viaduct II as at the dates thereof and the
income and results of the operations of Viaduct II during the periods
covered by such statements;
(j) Absence of Material Changes: since the date of the financial statements
referred to in paragraph (i) above, there has not been:
(i) any change in the condition or operation of the Business, assets,
management, financial condition or future prospects of Viaduct II which has
been materially adverse to its continued operation or viability; or
(ii) a transaction of a nature material to Viaduct II, other than
transactions in the ordinary and normal course of business or as
contemplated by this Agreement;
(k) Subscriber: As of the date of closing, Viaduct II has not less than
1,250 subscribers; if, however, there are fewer than 1,250 subscribers, the
total purchase price shall be adjusted downward by an equal percentage amount to
reflect the lower active subscriber base.
(l) Liabilities: Viaduct II does not have any outstanding liabilities,
contingent or otherwise (including by way of guarantee, indemnification, surety
or similar obligation), other than those set out in the financial statements
referred to in paragraph (i) above and trade or business obligations incurred
after the date thereof in the ordinary course of business consistent with past
practice, none of which is (A) in an aggregate amount not greater than $10,000,
or (B) materially adverse to the nature, results of operations, assets or
financial condition of, or manner of conducting the Business;
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(m) Tax Matters: Viaduct II is not in default in filing any tax returns or
reports required to be filed as at the date of this Agreement covering any
federal, state, municipal or local taxes or assessments in respect of its
capital, income, business or property, and all such returns and reports have
been duly filed and are true, complete and correct and all taxes and assessments
shown on such reports or returns have been paid;
(n) Title to Properties and Assets: Viaduct II has good and marketable
title to all its properties, interests in properties and assets, real and
personal free and clear of all mortgages, pledges, liens, title retention
agreements, security agreements, encumbrances or charges of any nature or kind
whatsoever and no person or company has any agreement, option, privilege,
license or right (whether by law, pre-emptive or contractual) which obliges
Viaduct II to sell, transfer, assign, or in any other way dispose of any such
property or assets;
(o) Employment Agreements and Benefit Plans:
(i) Viaduct II has no employment agreements with its salaried
employees, employee benefit plans, pension plans, deferred profit sharing
plans, bonus plans or any other similar plan, scheme or arrangement
established for employees; and
(ii) Viaduct II is not a party to a collective agreement with a trade
union or council of trade unions, the employees of Viaduct II are not
members of a trade union or council of trade unions which has been
certified as bargaining agent and there is no process of certification or
effort to organize a union currently in progress;
(p) Material Contracts: Viaduct II is not a party to or bound by any
presently existing oral or written contract or commitment which is material;
(q) Related Party Loans: Viaduct II does not have any loans outstanding to
directors, former directors, officers, shareholders or employees or to any
person or corporation not dealing with it at arm's length;
(r) Litigation: there is no suit, action, litigation, enquiry,
investigation, arbitration proceeding or governmental proceeding, including
appeals and applications for review, in progress or pending against or relating
to Viaduct II or affecting its properties or business and there is not presently
outstanding against Viaduct II any judgment, decree, injunction, rule or order
of any court or governmental or regulatory authority;
(s) Finder's Fees: no person, firm or corporation is entitled to any
finder's fee or other payment or compensation from Viaduct II in respect of the
transactions contemplated by this agreement; and
(t) No Disabling Code: no software contained in the Products contains any
software code that is intended to disable the software, such as computer
viruses, back doors, time bombs, Trojan horses and the like, other than copy
protection allowing Products to be remotely disabled by Viaduct II to prevent
unauthorized use;
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(u) Year 2000 Compliance: the Products are Year 2000 Compliant, and the
technology used by Viaduct II is Year 2000 Compliant where necessary, but not
all such technology is Year 2000 Compliant;
(v) Products:
(i) Development: the Products have been developed by the Vendor on
behalf of Viaduct II, using and incorporating, with modifications, software
of third parties which has been made available on the basis that such
software may be freely used, modified and incorporated in other software,
provided that certain disclosure is included in such other software;
(ii) Disclosure of Third Parties: except to the extent that any
failure to make required disclosure is not material to Viaduct II, the
Products contain all disclosure required by third parties as a condition of
permission to use, modify and incorporate software of such third parties in
connection with the development and sale of the Products;
(iii) Notice of Claims: Viaduct II has not received notice from any
third party of, or threatening, any claim or action by that party alleging
that any of the Products infringe any patent, trademark, copyright or other
rights of that party;
(iv) Patents: Viaduct II has not obtained or applied for any patents
in respect of the Products;
(v) Trademarks: Viaduct II has used the trademarks [listed in Schedule
A], but has not registered or applied to register any trademarks;
(vi) Copyright: Viaduct II has not registered any copyrights or
industrial designs;
(vii) Licenses and Distribution Agreements: Viaduct II has not
exclusively licensed any of the Products to any third party and has not
granted any rights of distribution or licenses for any of the Products or
its technology incorporated therein that are not revocable by Viaduct II
upon reasonable notice not to exceed three months, except for licenses to
end users of the Products;
(viii) Agreements: Viaduct II is not a party to any development
agreements, consulting agreements, maintenance agreements, source code
escrow agreements, license agreements, services agreements, applications
service provider agreements, outsourcing agreements or distribution
agreements relating directly or indirectly to the Products, except for
warranty obligations to end users; and
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(ix) Employees: no past or present employee or contractor of Viaduct
II, other than the Vendor, has contributed to the creation of the software
incorporated in the Products.
(x) Infringement: the use or licensing of the Products does not
infringe the trade-mark, copyright, trade secret right or, to the knowledge
of the Vendor, any registered patent in Canada or the U.S.; and
(xi) No Default: Viaduct II is not in default of any of its
obligations as a licensee under any technology licence and does not use or
possess any illegal or counterfeit software; and
(w) all services that have been provided by Viaduct II in connection with
the Products and their development, have been provided in accordance with
applicable laws, ordinances and regulations.
Section 4.3 Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Vendor
that:
(a) the Purchaser is a corporation duly continued and subsisting under the
laws of the Yukon Territory;
(b) the Purchaser is quoted on CDN and is a reporting issuer in good
standing under the securities legislation in the Province of Ontario;
(c) the Purchaser has good and sufficient power, authority and right to
enter into and deliver this agreement and to perform its obligations hereunder;
(d) this agreement constitutes a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms
subject, however, to limitations with respect to enforcement imposed by law in
connection with bankruptcy or similar proceedings and to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought;
(e) the Purchaser is not a party to, bound or affected by or subject to any
agreement, instrument, charter or by-law provision, statute, regulation, order,
judgment, decree or law which would be violated, contravened or breached by, or
under which any default would occur as a result of, the execution and delivery
by it of this agreement or the performance by it of any of the terms of this
agreement; and
(f) other than CDN, there are no consents, approvals, orders or
authorizations of any persons or governmental authorities in Canada or elsewhere
(or registrations, declarations, filings or recording with any such authorities)
required to be obtained by the Purchaser in connection with the completion of
any of the transactions contemplated by this agreement, the execution of this
agreement, the Closing or the performance of any of the terms and conditions of
this agreement.
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Article Five
Pre-Closing Matters
Section 5.1 CDN Approval
Prior to the Closing Date, the Purchaser shall apply for and
use its diligent best efforts to obtain the approval of CDN for the transaction
contemplated herein. The Vendor shall provide any information reasonably
requested by CDN in connection with the granting of its approval.
Section 5.2 Costs
Whether or not the Closing occurs, the Vendor and the
Purchaser agree that all costs and expenses incurred in connection with this
agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 5.3 Actions to Satisfy Closing Conditions
Each of the parties agrees to sign all agreements, documents
and resolutions and to take all actions as are within its power or control, and
to use its best efforts to cause other actions to be taken which are not within
its power or control, to complete the transactions provided for in this
agreement and to ensure compliance with any of the conditions set forth in
Article Six which are for the benefit of any other party and that all of its
representations and warranties contained herein are true and correct on Closing.
Section 5.4 Press Release
Forthwith after the execution and delivery of this agreement,
the Vendor and the Purchaser shall issue a joint press release announcing the
execution of this agreement and disclosing its material terms (other than the
purchase price payable by the Purchaser, which may be disclosed only by the
Purchaser in its sole discretion), in such form as the Vendor and the Purchaser
may reasonably require.
Section 5.5 Directors/Officers
Prior to the Closing, the Vendor shall cause all
directors/officers of Viaduct II to resign or be terminated, effective as of the
Closing Date, from such position, without payment by or liability to Viaduct II
of any kind and the Purchaser shall nominate Jim Eiteljorg and Tim Shelburn to
become directors of Viaduct II.
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Section 5.6 No Other Negotiations
The Vendor agrees that, until the transactions provided for in
this agreement have been completed or this agreement has been terminated, the
Vendor shall not, directly or indirectly, or through agents or brokers, continue
or enter into any discussions or negotiations with any other party regarding the
possible sale, transfer, assignment, merger or consolidation of Viaduct II, the
Purchased Shares or the Business or any part of it.
Section 5.7 Conduct of Business Prior to Closing
During the period from the date of this Agreement to the
Closing, the Vendor will cause the Business to be carried on in the usual and
ordinary course.
Section 5.8 Post-Closing Deliveries
As soon as reasonably possible following Closing, counsel for
the Seller shall obtain a UCC certificate issued by the Secretary of State of
the State of California with respect to the Vendor, in the event such
certificate discloses registrations other than those specifically provided to
Purchaser which the Purchaser is not willing to accept, the Purchaser shall
deliver the UCC certificate(s) to the Vendor, and the Vendor shall, not later
than 15 business days following receipt of the certificate(s), take such steps
and pay such amounts as may be necessary to discharge or have such registrations
removed and satisfied in full.
(a) Vendor will provide written confirmation from Security Holder of
release of its security interest in those cases Purchaser is not willing to
accept.
Article Six
Conditions of Closing
Section 6.1 The Purchaser's Conditions
The obligation of the Purchaser to complete the purchase of
the Purchased Shares shall be subject to the satisfaction of or compliance with,
at or before the Closing Date, each of the following conditions precedent, each
of which is acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by the Purchaser in whole or in part by notice in
writing to the Vendor:
(a) Representations and Warranties: all of the representations and
warranties of the Vendor made in this agreement shall be true and correct as at
the Closing Date with the same effect as if made at and as of the Closing Date
and the Purchaser shall have received at the Closing Date certificate of the
Vendor confirming the truth and correctness of such representations and
warranties;
(b) Performance of Obligations: the Vendor shall have performed or complied
with, in all material respects, all obligations, covenants and agreements in
this agreement to be performed or complied with by him by the Closing Date; and
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(c) Certificate re Finder's Fee: the Vendors shall have provided a
certificate in a form acceptable to the Purchaser confirming that it has no
claim against the Purchaser, the Corporation or the Business as to any fees
whatsoever in connection with the transactions contemplated in this Agreement;
(d) CDN Approval: the Purchaser shall have received the conditional
approval of CDN to complete the transaction contemplated by this Agreement;
(e) Vendor will provide connectivity at their cost for unmigrated
subscribers for a maximum period of 30 days from the date of closing with Buyer
agreeing to pay $6.50 per unmigrated subscriber during this period;
(f) If Vendor fails to provide connectivity during the 30 day period,
Vendor will reimburse Purchaser the purchase price per subscriber lost pro rated
over the 30 day period;
(g) Vendor verifies it will maintain a minimum ratio of one dial up line
for every 8 customers per location;
(h) Vendor verifies that it will maintain a minimum ratio of one T-1 line
to the Internet back bone for every 8 P.R.I.'s or channelized T-1's per
location.
Section 6.2 Vendor's Conditions
The obligations of the Vendor to complete the transactions
provided for in this agreement shall be subject to the satisfaction of or
compliance with, at or before the Closing Date, each of the following conditions
precedent, each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendor and may be waived by the Vendor in whole or in part by
notice in writing to the Purchaser:
(a) Representations and Warranties: all of the representations and
warranties of the Purchaser made in or pursuant to this agreement shall be true
and correct as at the Closing Date with the same effect as if made at and as of
the Closing Date, and the Vendor shall have received a certificate from a senior
officer of the Purchaser confirming the truth and correctness in all respects of
such representations and warranties;
(b) Performance of Obligations: the Purchaser shall have performed or
complied with, in all material respects, all obligations, covenants and
agreements in this agreement to be performed or complied with by the Purchaser
by the Closing Date;
(c) Purchaser Shares: except as set forth in Section 2.3, the Purchaser
Shares shall not be subject to any escrow or statutory hold period; and
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Section 6.3 Mutual Condition
The obligations of the Vendor and the Purchaser to complete
the transactions provided for in this agreement shall be subject to the
Purchaser having received the approval of CDN therefor prior to the Closing
Time.
Article Seven
Indemnification
Section 7.1 Indemnification
(a) The Vendor hereby covenants and agrees to indemnify and save harmless
the Purchaser, effective as and from the time of the completion of the
transactions provided for in this agreement, from and against any claims,
demands, actions, causes of action, damage, loss, costs, liabilities or expenses
(for greater certainty on an after-tax basis) including, without limitation,
legal fees (in this Article Seven called "Claims") which may be made or brought
against the Purchaser or Viaduct II or which the Purchaser or Viaduct II may
suffer or incur as a result of, in respect of, or arising out of any
incorrectness in or breach of any representation or warranty of the Vendor
contained in this agreement provided that the obligations of the Vendor shall be
limited to the value of the proceeds received by the Vendor.
The foregoing obligation of indemnification in respect of any Claims shall
be subject to the limitations contained in this Agreement respecting the
survival of representations and warranties and to the provisions of paragraphs
(b), (c) and (d) below.
(b) The Purchaser shall promptly give notice to the Vendor of any Claim.
Such notice shall specify whether the Claim arises as a result of a claim (i)
made by a person against the Purchaser or Viaduct II, as the case may be (a
"Third Party Claim"), or (ii) made otherwise (a "Direct Claim"). Such notice
shall also specify with reasonable particularity (to the extent that the
information is available) the factual basis for the Claim and the amount of the
Claim or, if an amount is not then determinable, an approximate and reasonable
estimate of the likely amount of the Claim.
(c) With respect to Direct Claims, following receipt of notice from the
Purchaser of a Claim, the Vendor shall have 60 days to make such investigation
of the Claim as the Vendor considers necessary or desirable. For the purpose of
such investigation, the Purchaser shall make available to the Vendor and his
authorized representatives the information relied upon by the Purchaser to
substantiate the Claim. Any payments to be made hereunder by the Vendor shall be
made not later than 65 days from receipt of a notice from the Purchaser as
hereinbefore provided.
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(d) With respect to any Third Party Claim, the Vendor shall have the right,
at his own expense and with the consent of the Purchaser, to participate in or
assume control of the negotiation, settlement or defence of such Third Party
Claim and, in such event, the Vendor shall reimburse the Purchaser for all of
the Purchaser's out-of-pocket expenses as a result of such participation or
assumption. If the Vendor elects to assume such control, the Purchaser shall
cooperate with the Vendor, shall have the right to participate in the
negotiation, settlement or defence of such Third Party Claim at his own expense
and shall have the right to disagree on reasonable grounds with the selection
and retention of counsel, in which case counsel satisfactory to the Vendor and
the Purchaser shall be retained by the Vendor. If the Vendor, having elected to
assume such control thereafter fails to defend any such Third Party Claim within
a reasonable time, the Purchaser shall be entitled to assume such control at the
Vendor's expense and the Vendor shall be bound by the results obtained by the
Purchaser with respect to such Third Party Claim.
ARTICLE EIGHT
General
Section 8.1 Notices
Any notice or other writing required or permitted to be given
under this agreement shall be sufficiently given if delivered to the party to
whom it is given if delivered by prepaid courier to the party to whom it is
given or if transmitted by telecopier or other form of recorded communication,
addressed to that party:
(e) in the case of a notice to the Vendor to the attention of the Vendor at
COL as follows:
Viaduct II, Inc.
20 Corporate Park, Suite 110
Irvine, California 92606
U.S.A.
Attention: Dr. Roger Miller
Telephone: 949-300-6759
Facsimile: 949-756-8233
(f) in the case of a notice to the Purchaser, as follows:
Galaxy Online Inc.
Suite 2008
390 Bay Street
Toronto, Ontario
M5H 2Y2
Attention: Stan Bharti
Telephone: (416) 861-1031
Facsimile: (416) 861-8165
<PAGE>
or at such other address as the party to whom a notice is to be given shall have
last notified to the party giving it in the manner provided in this section. Any
notice delivered or transmitted by telecopier or other method of recorded
communication to the party to whom it is addressed shall be deemed to have been
given and received on the day it is delivered or transmitted, provided that if
such day is not a business day in the city of the addressee then the notice
shall be deemed to have been given and received on the business day next
following such day.
Section 8.2 Public Notices
The parties agree that, except as contemplated in Section 5.4,
all public notices to third parties and employees and all other publicity
concerning the transactions contemplated by this agreement shall be jointly
planned and coordinated and no party shall act unilaterally in this regard
without the prior approval of the other party, such approval not to be
unreasonably withheld.
Section 8.3 Survival of Representations and Warranties
All representations and warranties, covenants and agreements
on the part of each of the parties contained in this agreement shall survive the
Closing, provided that such representations and warranties, covenants and
agreements, except those with respect to title to the Purchased Shares, shall
survive for a period of two years from the Closing Date. The representations and
warranties of the Vendor relating to title matters of the Purchased Shares shall
continue in full force and effect for the benefit of the Purchaser and be
unlimited as to duration.
Section 8.4 Further Assurances
The parties shall with reasonable diligence do all acts and
things and provide all reasonable assurances as may be required to consummate
the transactions contemplated by this agreement, and each party shall provide
all further documents or instruments required by the other party as may be
reasonably necessary or desirable to effect the purpose of this agreement and
carry out is provisions whether before or after the Closing.
Section 8.5 Entire Agreement
This agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, oral or written,
including the Letter Agreement dated May 12, 2000, by and between any of the
parties with respect to the subject matter of this agreement. No supplement,
modification or waiver of this agreement shall be binding unless executed in
writing by the party to be bound by it.
Section 8.6 Assignment
The parties agree that their rights and obligations under this
agreement may not be assigned without the written consent of the other party
hereto.
<PAGE>
Section 8.7 Severability
The invalidity or enforceability of any provision of this
agreement or any covenant contained herein shall not affect the validity or
enforceability of any other provisions or covenants hereof and any such invalid
provision or covenant shall be deemed to be severable.
Section 8.8 Business Day
Whenever under the terms of this agreement an event is to
occur on any day that is not a business day in the relevant city, the occurrence
of that event shall be deferred to the next business day in such city.
Section 8.9 Time
Time shall be of the essence of this agreement.
Section 8.10 Governing Law
This agreement shall be governed and construed in accordance
with the laws of the Province of Ontario and the federal laws of Canada
applicable therein, and each of the parties agrees to attorn to the Courts of
the Province of Ontario and shall be treated in all respects as a Ontario
contract.
Section 8.11 Counterparts
This agreement may be executed by the parties in separate
counterparts each of which when so executed and delivered shall be an original,
and all counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the parties have duly executed this agreement as of the
date first above written.
GALAXY ONLINE INC.
Per: /s/ Kevin Foster
Witness
VIADUCT II, INC.
Per: /s/ Roger Miller
