INVESTMENT AGREEMENT
THIS AGREEMENT is dated as of September 8, 2000.
AMONG:
PRION DEVELOPMENTAL LABORATORIES, INC., a privately-held
company duly incorporated under the laws of the State of
Maryland, having an office at 0000 Xxxxxx Xxxxx, Xxxxx 0,
Xxxxxxx Xxxxx, Xxxxxxxx 00000 (Fax No.: (000) 000-0000)
(the "COMPANY")
AND:
EFOORA, INC., a publically-held company duly incorporated
under the laws of the State of Delaware, having an office
at 000 Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxx 00000 (Fax
No.: (000) 000-0000)
("EFOORA")
AND:
BIOLABS, INC., a publically-held company duly
incorporated under the laws of the State of New York,
having an office at #0X, 0000 Xxxx Xxxxxx Xxxxxxx,
Xxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0 (Fax No.: (604)
542-0821)
(the "INVESTOR")
WHEREAS:
A. The Company is engaged in the business of developing rapid
diagnostic assays for the detection of prion disease in humans, animals, food
and related products and byproducts;
B. Efoora is a publically-held research and development company and is
the majority shareholder in the Company, and is engaged in the business of
developing, manufacturing and marketing rapid diagnostic assays (including
those for HIV and other infectious diseases); and
C. The Investor has agreed to subscribe for common shares in the
capital of the Company, and certain other securities, on the terms and
conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
in this Agreement, the parties hereby agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS. In this agreement, unless otherwise provided:
(a) "AGREEMENT" means this Investment Agreement, as amended or replaced
from time to time;
(b) "AFFILIATE" means any Person which directly or indirectly controls or
is controlled by or is under common control with a party to this
Agreement, including:
(i) any corporation which is directly or indirectly Controlled by
that Person;
(ii) if a corporation, any corporation which Controls that Person,
and any corporation which is directly or indirectly Controlled
by a corporation which Controls that corporate Person; and
(iii) if a partnership or limited partnership, any partner of the
partnership or any corporation which Controls that partner and
any corporation which is directly or indirectly Controlled by a
corporation that Controls that partner;
(c) "BALANCE SHEET DATE" means August 31, 2000;
(d) "BUSINESS" means the businesses currently and to be conducted by the
Company or by Efoora (as applicable), as described in Schedule
1.1(d);
(e) "CLOSING" means the concurrent closing of the purchase and sale of
the Purchased Securities and the execution and delivery of the
Transaction Documents, on the Closing Date;
(f) "CLOSING DATE" means the date set forth on the first page of this
Agreement or such other date as agreed in writing among the parties;
(g) "COMMON SHARES" means shares of any class of common shares in the
share capital of the Company or of Efoora, as appropriate;
(h) "CONSTATING DOCUMENTS" means the Articles of Incorporation,
continuance or amalgamation pursuant to which the Company or Efoora
or the Investor (as applicable) was incorporated, continued or
amalgamated, as the case may be, and the By-Laws of such
corporation, together with any amendments thereto or replacements
thereof;
(i) "CONTRACT" means any agreement, indenture, contract, lease, deed of
trust, license, strategic or collaborative research arrangements,
option, instrument or other commitment or obligation, whether
written or oral;
(j) "CONTROL" means:
(i) the right to cast a majority of the votes which may be cast
at a general meeting of a corporation or other Person; or
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(ii) the right or ability to elect or appoint, directly or
indirectly, a majority of the directors or equivalent governing
body of a corporation or other Person who has the right to
manage or supervise the management of the affairs and business
of the corporation;
and the words "CONTROLS", "CONTROLLED", or "CONTROLLING" have
corresponding meanings;
(k) "EMPLOYEE AGREEMENTS" means the proprietary information and invention
agreements, the non-competition agreements and the employment
agreements between the Company and each of its employees,
contractors, directors and officers, in a form satisfactory to the
Investor;
(l) "ENCUMBRANCE" means any encumbrance, lien, claim, charge, hypothec,
pledge, mortgage, title retention agreement, security interest of
any nature, adverse claim, exception, reservation, easement, right
of occupation, any matter capable of registration against title,
option, right of pre-emption, privilege or any Contract to create
any of the foregoing;
(m) "FULL-RATCHET ANTI-DILUTION PROTECTION" has the meaning set out in
section 2.1(c);
(n) "FULLY DILUTED BASIS" means that all options, warrants or other
rights of any kind to acquire Common Shares and all securities
convertible or exchangeable into Common Shares outstanding at that
time shall be deemed to have been fully exercised, converted or
exchanged, as the case may be, and the Common Shares issuable as a
result thereof shall be deemed to have been fully issued and to
form part of the holdings of the Person(s) entitled to receive such
Common Shares;
(o) "INDEMNITY AGREEMENTS" means the indemnity agreement between the
Company and the nominee director of the Investor, in a form
satisfactory to the Investor;
(p) "INTELLECTUAL PROPERTY" means all intellectual property of the
Company or of Efoora (as applicable) existing as of the Closing
Date and used or currently being developed for use in the Company
or in Efoora (as applicable) and all rights of the Company or of
Efoora (as applicable) therein, worldwide, whether registered or
unregistered, of any nature whatsoever, whether written or
otherwise, including without limitation:
(i) PATENTS -- all patents, patent applications and other patent
rights used in the Business, including any additions,
divisions, continuations, continuations-in-part, amendments,
amalgamations, renewals, extensions and reissues of such
applications or patents;
(ii) TRADE-MARKS -- all trade-marks, trade-names, service marks,
brand names, logos, domain names or the like used in the
Business, whether used in association with wares or with
services, including without limitation, those trade-marks (of
the Company) listed in Schedule 3.1(ax) and all applications,
registrations, renewals, modifications and extensions of such
trade-marks;
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(iii) COPYRIGHTS -- all copyrights used in the Business, including
without limitation, all copyrights in and to any Software and
all applications and registrations of such copyrights;
(iv) TECHNOLOGY -- all technology, knowledge, know-how and/or
techniques created, developed or acquired, being created,
developed or acquired by the Company or Efoora (as
applicable) whether or not patented or patentable and whether
or not fixed in any medium whatsoever, including without
limitation, all inventions, Software, processes, proprietary
manufacturing information and know-how, analytical
procedures, methods, trade secrets, research and technical
data, inventors notes, records, formulae, drawings and
designs, sketches, patterns, specifications, blue prints,
flow charts or sheets, equipment and parts lists and
descriptions, samples, reports, papers, studies, findings,
algorithms, instructions, guides, manuals, and plans for new
or revised products and/or services;
(q) "PERMITTED ENCUMBRANCES" means:
(i) liens for taxes, assessments and governmental charges due and
being contested in good faith and diligently by appropriate
proceedings (and for the payment of which adequate provision
has been made); and
(ii) the permitted encumbrances listed in Schedule 1.1(q) hereto;
(r) "PERSON" means any individual, partnership, unincorporated
association, joint venture, syndicate, sole proprietorship, company
or corporation with or without share capital, trust, trustee,
executor, administrator, or other legal personal representatives,
regulatory body or agency, government or governmental agency,
authority or entity, however designated or constituted;
(s) "PREFERRED SHARES" means the preferred shares authorized and issued
by Efoora, all of which have identical rights and obligations to the
Common Shares of Efoora;
(t) "PURCHASED COMMON SHARES" means two million (2,000,000) Common Shares
of the Company to be subscribed for by the Investor from the
Company at a price of one dollar ($1.00) per common share;
(u) "PURCHASED WARRANTS" means the warrants entitling the Investor to
acquire one million (1,000,000) Common Shares of the Company,
exchangeable for Common Shares of Efoora, to be subscribed for by
the Investor on the Closing Date, with terms and conditions as
provided in Schedule 1.1(u);
(v) "PURCHASED SECURITIES" means the Purchased Common Shares and the
Purchased Warrants;
(w) "SHAREHOLDERS' AGREEMENT" means the shareholders agreement dated
concurrently herewith among the Company and Efoora and the Investor
and certain others;
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(x) "SOFTWARE" means all computer programs used in the Business,
including all versions thereof, and all related documentation,
manuals, source code and object code, program files, data files,
computer related data, field and data definitions and
relationships, data definition specifications, data models, program
and system logic, interfaces, program modules, routines,
sub-routines, algorithms, program architecture, design concepts,
system designs, program structure, sequence and organization,
screen displays and report layouts, all as they exist at the
Closing Date;
(y) "SUBSCRIPTION PRICE" means the total sum of $2,000,000 payable by the
Investor to the Company, in the proportions and on the dates set
forth in Sections 2.1 and 2.2, in consideration of its subscription
for the Purchased Securities, the Full-Ratchet Anti-Dilution
Protection, and its option to purchase further warrants in PDL;
(z) "TAX" or "TAXES" means all federal, provincial, state, municipal,
foreign and other taxes (including, without limitation, income
taxes, sales taxes, excise taxes, value added taxes, capital taxes,
property taxes, and production, severance and similar taxes and
assessments) and includes all penalties, interest and fines with
respect thereto;
(aa) "TIME OF CLOSING" has the meaning set out in Section 6.1;
(ab) Transaction Documents means:
(i) this Agreement;
(ii) all consents and waivers required pursuant to this transaction;
(iii) the Termination of Employment Agreement(s);
(iv) the Indemnity Agreement, in a form satisfactory to the Investor;
(v) the Shareholders' Agreement;
(vi) the Registration Rights Agreement; and
(vii) the Warrant Certificate.
(ac) "WARRANT CERTIFICATE" means the warrant certificates evidencing the
Purchased Warrants in form satisfactory to the Investor and "Warrant
Certificate" means any one of them.
(ad) "WARRANT SHARES" means the Common Shares of the Company or the
Common Shares of Efoora (as applicable) resulting from the exercise
of the Purchased Warrants and "Warrant Share" means any one of them.
1.2 GENERAL INTERPRETATION. Any words defined elsewhere in the
Agreement shall have the particular meaning ascribed thereto. Words
(including defined terms) using or importing the singular number include the
plural and vice versa and words importing one gender only shall include all
genders and words importing persons in this Agreement shall include
individuals, partnerships, corporations and
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any other entities, legal or otherwise. The headings used in this Agreement
are for ease of reference only and shall not affect the meaning or the
interpretation of this Agreement.
1.3 ACCOUNTING PRINCIPLES. Wherever in this Agreement reference is made
to a calculation to be made or an action to be taken in accordance with
generally accepted accounting principles, such reference will be deemed to be
to the generally accepted accounting principles from time to time approved by
the American Institute of Certified Public Accountants, or any successor
institute, applicable as at the date on which such calculation or action is
made or taken or required to be made or taken in accordance with generally
accepted accounting principles.
1.4 SCHEDULES. The following Schedules are attached to and form part of
this Agreement:
1.1(d) - Description of Businesses of Company and Efoora
1.1(q) - Permitted Encumbrances
1.1(u) - Terms and Conditions of Purchased Warrants
3.1 - General Exceptions to Representations and Warranties of the
Company
3.1(f) - Issued Shares of the Company Immediately Prior to the
Completion of Closing
3.1(l) - Brokers/Finders and Related Fees of the Company
3.1(m) - Options and Warrants of the Company
3.1(n) - Affiliates/Subsidiaries of the Company
3.1(s) - List of Assets and Property of the Company
3.1(t) - Contracts of the Company
3.1(y) - Accounts Payable, Accounts Receivable and Loans of the
Company
3.1(ae) - Financial Statements and Balance Sheet of the Company
3.1(ak) - Non-arms-length Company Debt Obligations
3.1(al) - Non-arms-length Company Contracts
3.1(am) - Owners of Substantial Interests in Competitors to the
Company, Property Used by the Company, or Causes of Action
in Connection with the Company
3.1(an) - Employees and Contractors of the Company
3.1(ax) - Intellectual Property of the Company
3.2 - General Exceptions to Representations and Warranties of
Efoora
3.2(f) - Issued Shares (to major shareholders) in Efoora
3.2(l) - Options and Warrants in Efoora
3.2(m) - Affiliates/Subsidiaries of Efoora
3.2(z) - Financial Statements of Efoora
3.2(ac) - Intellectual Property Licenses of Efoora
6.2(i) - Form of Legal Opinion by Company's Solicitor
ARTICLE 2 - SUBSCRIPTION FOR AND SALE OF SHARES AND WARRANTS
2.1 Subject to and in reliance upon the representations, warranties,
covenants, terms and conditions in this Agreement:
(a) ON THE CLOSING DATE, the Investor hereby subscribes for and agrees
to purchase from the Company, and the Company hereby agrees to
allot from treasury and issue to the
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Investor and/or transfer to the Investor at the Closing, the Purchased
Securities as set out below:
(i) One million (1,000,000) Common Shares in the Company, at a
price/share of one dollar ($1.00); and
(ii) One million (1,000,000) Warrants in the Company, for an
aggregate price of $10.00; and
(b) On September 30, 2000, or upon completion of the performance
milestone provided in Article 2.2(b) herein (whichever is later,
provided that such date is no later than December 30, 2000), the
Investor hereby subscribes for and agrees to purchase from the
Company, and the Company hereby agrees to allot from treasury and
issue to the Investor and/or transfer to the Investor, the
Purchased Securities as set out below:
(i) One million (1,000,000) Common Shares in the Company, at a
price/share of one dollar ($1.00); and
(c) as an integral part of the subscription and purchase of the
Purchased Securities by the Investor, and the allotment and
issuance of same by the Company and Efoora (as applicable), and as
provided in Sections 2.1(a) and 2.1(b) above, on the Closing Date
the Investor hereby also purchases from the Company and the Company
hereby also agrees to provide to the Investor, Full-Ratchet
Anti-Dilution Protection in the event the Company receives any
additional capital investments and/or issues any additional Common
Shares within the twelve (12) month period following the Closing
Date.
For the purposes of this Agreement "FULL-RATCHET ANTI-DILUTION
PROTECTION" means that, in regard to the Purchased Common Shares,
the Investor shall receive full ratchet anti-dilution protection,
and any Purchased Common Shares issued to the Investor on the
Closing Date will be repriced (if appropriate) and additional
Common Shares will be issued forthwith to the Investor accordingly,
at no additional cost to BioLabs, so that the Investor at all times
will continue to have a twenty-five percent (25%) equity share in
the Company, on a Fully Diluted Basis; and
(d) for a six (6) month period following the Closing Date, the Investor
has the option to purchase up to one million (1,000,000) additional
warrants in the Company, on terms and conditions equivalent to
those attached to the Purchased Warrants herein, except for the
strike price and exercise price and expiration date, each of which
will be negotiated by the parties in good faith at that time.
2.2 PAYMENT FOR SHARES. The Subscription Price for the Purchased Common
Shares and the Purchased Warrants and the Full-Ratchet Anti-Dilution
Protection shall be paid in full by the Investor to the Company on the dates
shown below as follows:
(a) On the Closing Date: One Million and Ten Dollars ($1,000,010.00) of
which:
(i) One Hundred and Fifty Thousand Dollars ($150,000.00) shall be
paid by the Company to XxXxxxxx Xxxxxxxx, solicitors for the
Investor, pursuant to a
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direction delivered by the Company at Closing, where such
monies shall be held by XxXxxxxx Xxxxxxxx in trust for the
Company, to be released to the Company promptly following the
Company's satisfactory delivery to the Investor of final and
executed Research Agreements between the Company and each of
the University of Maryland Biotechnology Institute, the
Institute for Basic Research in Mental Retardation and
Developmental Disabilities and Case Western Reserve
University, in forms satisfactory to the Investor ("the
RESEARCH AGREEMENTS"); and
(ii) the remaining Eight Hundred and Fifty Thousand and Ten
Dollars ($850,010.00) will be forwarded by wire transfer
directly to the Company on the Closing Date; and
(b) Promptly following the Investor's receipt of the Research
Agreements and the Investor's receipt of all other post-closing
documents listed in Article 6.5 herein, or on September 30, 2000,
whichever is later (provided that such date is no later than
December 30, 2000): One million dollars ($1,000,000.00) will be
forwarded by wire transfer directly to the Company by the Investor.
2.3 COMPLETION OF CONDITIONS. All parties agree that the Investor shall
have the sole authority to determine whether, and when, the Company has met
the conditions set forth in Article 2.2(a)(i) herein, and that, upon making a
determination that said conditions have been successfully completed by the
Company, the Investor shall then promptly advise the Company accordingly in
writing ("the Advisory"). Upon receipt of such Advisory, and only upon said
receipt, (and not in any circumstances before said receipt), the Company will
then have the authority to direct XxXxxxxx Xxxxxxxx to release the funds held
in trust to the Company.
2.4 FAILURE TO MEET CONDITIONS. In the event the Company fails to meet
the conditions provided herein under Article 2.2(a)(i)and Article 2.3 by
December 30, 2000, in such event all parties agree and direct that XxXxxxxx
Xxxxxxxx shall immediately release and transfer the monies held in trust to
the Investor, and upon said release and transfer from XxXxxxxx Xxxxxxxx to
the Investor, the Company shall have no further right or interest to those
monies, and the Subscription Price for those Purchased Common Shares that
were issued pursuant to Article 2.1(a) will be adjusted accordingly.
2.5 CONCURRENT CLOSINGS. The purchase and sale of the Purchased
Securities to the Investor will be closed concurrently at the same time and
place on the Closing Date as the execution and closing of the Transaction
Documents and no part of the purchase and sale of the Purchased Securities
will be considered closed until all parts of that transaction are closed.
2.6 USE OF PROCEEDS. Unless otherwise agreed in writing by the
Investor, the Company will use the Subscription Price for the following
purposes, in accordance with its business plans: to recruit senior
management, recruit development and support staff, fund continued research
and development, expand sales and marketing functions and provide general
working capital, provided, however, that the Company shall not use any of the
funds provided by the Investor to pay down any debt owing to shareholders or
third parties other than normal trade credit incurred in the operations of
the Business.
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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as expressly set
forth in Schedule 3.1, the Company hereby represents and warrants to the
Investor as follows, and acknowledges that the Investor is relying on such
representations and warranties in completing its subscription for the
Purchased Securities:
(a) the Company has been duly incorporated and is validly existing and
in good standing under the laws of Maryland;
(b) the Company has all corporate power and capacity to own its
properties and assets and to carry on its Business as now being
conducted and as presently proposed to be carried on by it;
(c) the Company is duly qualified as a company to do business in each
jurisdiction in which the nature of the Business or the property or
assets owned or leased by it makes such qualification necessary;
(d) each of the Transaction Documents has been duly authorized by all
requisite corporate proceedings, and executed and delivered by, the
Company, as applicable, and is enforceable against the Company in
accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency and other laws
affecting the rights of creditors generally and except that
equitable remedies may be granted only in the discretion of a court
of competent jurisdiction;
(e) there has been no amendment to the Constating Documents since the
date of the Company's incorporation other than the amendments to
Article V and Article VI of the Company's Articles which amendment
was effective July 26, 1999, and the amendment to the Company's
Articles of Incorporation, effective September 1, 2000, which
increased the number of Common Shares the Company is authorized to
issue to twenty-five million (25,000,000) shares;
(f) the authorized capital of the Company consists of twenty-five
million (25,000,000) shares in one class, all of which have been
duly and validly created, and of which, immediately prior to the
completion of the Closing, a total of six million (6,000,000)
Common Shares (the "ISSUED SHARES") are duly and validly issued and
outstanding as fully paid and non-assessable and are registered in
the names of the persons set forth in Schedule 3.1(f) hereto and are
not subject to any Encumbrance, or pledge of any nature or kind;
(g) the Company has no debt capital of any kind;
(h) the Issued Shares have been offered, issued, sold and delivered in
compliance with all applicable federal, state, and provincial
securities laws in the USA and Canada;
(i) upon receipt of the Subscription Price by the Company:
(i) the Purchased Common Shares will be duly and validly created,
authorized, allotted and issued as fully paid and
non-assessable;
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(ii) the Purchased Warrants will be duly and validly created,
authorized and issued as fully paid and non-assessable; and
(iii) the Warrant Shares will, upon receipt by the Company of payment
therefor, be duly and validly allotted and issued as fully paid
and non-assessable,
in compliance with all applicable securities laws and the Investor
will be the legal and registered owner of and will have good and
marketable title to the Purchased Common Shares and the Purchased
Warrants, and upon issuance, the Warrant Shares, free and clear of
all pre-emptive rights, mortgages, liens, charges, security
interests, adverse claims, pledges and demands whatsoever arising by
reason of the acts or omissions of the Company, other than the sale
restrictions imposed by the Shareholders Agreement or applicable USA
or Canadian securities laws;
(j) no existing shareholder of the Company has any pre-emptive right or
right of first refusal that has not been waived in respect of the
allotment and issuance of the Purchased Securities and there are no
existing shareholder agreements or Contracts of a similar nature
relating to the Company or any Issued Shares, other than the
Shareholders' Agreement;
(k) the sale and issuance of the Purchased Securities will neither:
(i) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Contract
to which the Company is a party or by which it or its property
is bound; nor
(ii) give any Person the right to
A. declare a default or exercise any remedy under any Contract
to which the Company is a party;
B. accelerate the maturity or performance of any Contract, or
any provision in any Contract, to which the Company is a
party; or
C. cancel, terminate or modify any Contract to which the
Company is party;
(l) except as set forth in Schedule 3.1(l), no broker or finder acted
directly for the Company or one or more of its principals or
shareholders in connection with this Agreement, and no broker or
finder is entitled to any brokerage or finder's fee or any
commission or fee in respect of this Agreement or the transactions
contemplated by this Agreement;
(m) except as set forth in Schedule 3.1(m), no Person has any agreement,
option or any right or privilege, or any right capable of becoming
an agreement, option or any right or privilege, for the
acquisition, purchase, subscription, allotment or issuance of any
shares of the Company or any of its subsidiaries including, but not
limited to, any convertible securities, warrants, stock options or
convertible obligations; or to require the Company or any of its
subsidiaries to purchase, redeem or otherwise acquire any of its
issued and outstanding shares;
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(n) except as set forth in Schedule 3.1(n), the Company has no Affiliates
or any subsidiaries;
(o) all action on the part of the Company and its directors and
shareholders necessary for the allotment, issuance and delivery of
the Purchased Securities to the Investor has been taken;
(p) the Purchased Common Shares will be duly and validly created,
authorized, allotted and issued as fully paid and non-assessable
shares in the capital of the Company, and the Purchased Warrants
will be duly and validly created, authorized and issued as fully
paid and non-assessable warrants to purchase shares in the capital
of the Company, and the Investor will be the legal and registered
owner of all the Purchased Securities set out in Section 2.1 and
will have good and marketable title thereto free and clear of all
Encumbrances arising by, through or under the Company, subject only
to the terms and conditions of the Shareholders' Agreement;
(q) the execution and delivery of the Transaction Documents by the
Company and the consummation of the transactions contemplated
thereby (except as expressly set forth therein) will not result in
either:
(i) the breach or violation of any of the provisions of, or
constitute a default under or conflict with or cause the
acceleration of any obligation of the Company under:
A. any Contract to which the Company or by which any of its
property is bound;
B. the Constating Documents or any resolution of the
shareholders or directors (or any committee thereof) of
the Company;
C. any judgment, decree, order or award of any court,
government, governmental agency, stock exchange, regulatory
authority or any other third party having jurisdiction over
the Company;
D. any license, permit, approval, consent or authorization
held by the Company or necessary to the operation of the
Business; or
E. any applicable USA or Canadian law, statute, ordinance,
regulation or rule; or
(ii) the creation or imposition of any Encumbrance on any of the
Purchased Securities or any property or assets of the Company;
(r) the Business is the only business operation carried on by the
Company;
(s) Schedule 3.1(s) lists all of the property and assets of the Company
(excluding any Intellectual Property) and the Company has good,
valid and marketable title to all of its property and assets free
and clear of all Encumbrances, except Permitted Encumbrances and
there is no Contract, option or any other right of another binding
upon or which at any time in the future may become binding upon the
Company to sell, transfer, assign,
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pledge, charge, mortgage or in any other way dispose of or encumber
any of the assets of the Company, except pursuant to purchase orders
accepted by the Company in the usual and ordinary course of its
business;
(t) the Contracts listed in Schedule 3.1(t), the Contracts with
independent contractors referred to in Schedule 3.1(an), the
financial commitments listed in Schedule 3.1(y) and the customer
licenses and other Contracts described in Schedule 3.1(ax) hereof,
represent all of the Contracts which the Company is party to as of
the date hereof. All such Contracts are not in default or breach but
rather are in good standing and, to the knowledge of the Company,
there exists no condition, event or act that, with the giving of
notice or lapse of time or both, would constitute such a default or
breach, and the Company has received no notification of termination
or notification of an intent to terminate any of said Contracts. All
such Contracts are in full force and effect without amendment thereto
and the Company is entitled to all benefits thereunder, and the
Company has performed all obligations required to be performed by its
under such Contracts.
(u) to the best of the knowledge of the Company:
(i) the Company has complied, in all material respects, with all
USA and Canadian laws, statutes, ordinances, regulations,
rules, judgments, decrees or orders applicable to the Company
or the Business; and
(ii) no proceeding is pending or threatened to revoke or limit any
License (as defined in Section 3.1(v));
(v) the Company has obtained all material licenses, permits, approvals,
consents, certificates, registrations or authorizations necessary
to carry on the Business or to own or lease any of the property or
assets used by the Company (collectively, the "LICENSES" and
individually "LICENSE"). Each License is valid and subsisting and
the Company is not in default or in breach, in any material
respect, of any License;
(w) there is no requirement for the Company to make any filing with,
give any notice to or to obtain any license, permit, certificate,
registration, authorization, consent or approval of, any USA or
Canadian governmental or regulatory authority as a condition to the
lawful consummation of the transactions contemplated by the
Transaction Documents;
(x) there is no requirement under any Contract relating to the Business
or to the Company to give any notice to, or to obtain the consent
or approval of, any party to such agreement, instrument or
commitment relating to the consummation of the transactions
contemplated by the Transaction Documents;
(y) Schedule 3.1(y) contains a complete list of the accounts payable and
the accounts receivable of the Company as at the Closing Date.
Schedule 3.1(y) also contains a complete list of all loans, credit
facilities, debt obligations and other monetary commitments of the
Company as at the Closing Date. The accounts receivable of the
Company are good accounts receivable collectible in accordance with
the respective customer contract and are not subject to any defence,
counterclaim or set-off;
- 12 -
(z) the Company has no work-in-progress ("WIP") as of the Closing Date;
(aa) there are no judgments which remain unsatisfied against the Company
or consent decrees or injunctions to which the Company is subject;
(ab) there are no actions, suits or proceedings at law or in equity or
by or before any governmental agency, arbitrator or arbitration
board now pending, or to the best of the Company's knowledge,
threatened against or affecting the Company or any of the Company's
properties or assets and the Company is not aware of any ground on
which any such action, suit or proceeding might be commenced with
any reasonable likelihood of success;
(ac) the corporate records and minute books of the Company contain
complete and accurate minutes, in all material respects, of all
meetings of the directors and shareholders of the Company held
since its incorporation, and all such meetings were duly called and
held and the share certificate books, register of members, register
of transfers and register of directors of the Company are complete
and accurate in all material respects;
(ad) the books of account, ledgers, order books, records and documents
of the Company fairly and accurately disclose, in all material
respects, in accordance with generally accepted accounting
principles the financial position of the Company as at the date
hereof and all material information relating to the Business of the
Company, the location and collection of its assets and the nature
of all transactions giving rise to the obligations or accounts
receivable of the Company have been accurately recorded in such
books of account, ledgers, order books, records and documents in
all material respects;
(ae) the financial statements of the Company for its fiscal year ended
on the Balance Sheet Date were prepared in accordance with
generally accepted accounting principles applied on a basis
consistent with those of previous years and those financial
statements, together with the balance sheet of the Company as of
the Balance Sheet Date, copies of which are attached as Schedule
3.1(ae) hereto (collectively, the "COMPANY FINANCIAL STATEMENTS"):
(i) present fairly the assets, liabilities, (whether accrued,
absolute, contingent or otherwise) and the financial condition
of the Company as at the Balance Sheet Date;
(ii) present fairly the sales, earnings and the results of the
operations of the during the 12 month period ending on the
Balance Sheet Date;
(iii) are in accordance with the books and accounts of the Company,
as of the date thereof; and
(iv) are true and correct in all material respects;
(af) since the Balance Sheet Date the Company has carried on its
business in the usual and ordinary course and the Company has not
entered into any transaction (including any transfer or sale of
assets) out of the usual and ordinary course of business. Since the
Balance Sheet Date there has been no material change in the
affairs, business, prospects,
- 13 -
operations or condition of the Company, financial or otherwise,
whether arising as a result of any legislative or regulatory
change, revocation of any licence or right to do business, fire,
explosion, accident, casualty, labour dispute, flood, drought,
riot, storm, condemnation, act of God, public force or otherwise,
except changes occurring in the usual and ordinary course of
business which have not adversely affected the affairs, business,
prospects, operations or condition of the Company, financial or
otherwise. No single capital expenditure in excess of Five thousand
dollars ($5,000) or capital expenditures in the aggregate in excess
of Ten thousand dollars ($10,000) have been made or authorized by
the Company since the Balance Sheet Date;
(ag) prior to the date of this Agreement, the Company has not:
(i) declared or paid any dividends or made any other distribution
on any of its shares;
(ii) redeemed, purchased or otherwise acquired or agreed to
acquire any of its shares;
(iii) transferred, assigned, sold or otherwise disposed of any of
its assets or cancelled any debts or claims except, in each
case, in the ordinary and usual course of business;
(iv) incurred or assumed any obligations or liability (fixed or
contingent), except unsecured current obligations and
liabilities incurred in the ordinary and usual course of
business;
(v) except as set forth in Schedule 3.1(f) and Schedule 3.1(m),
issued or sold any shares or any warrants, bonds, debentures
or other corporate securities of the Company or issued,
granted or delivered any right, option or other commitment
for the issuance of any such securities;
(vi) discharged or satisfied any lien or paid any obligation or
liability (fixed or contingent) other than liabilities
incurred in the ordinary and usual course of business;
(vii) waived or omitted to take any action in respect of any rights
of substantial value, or entered into any commitment or
transaction not in the ordinary and usual course of business;
(viii) made or otherwise authorized or agreed to any changes in any
material Contract;
(ix) increased or agreed to increase the pay of, or paid or agreed
to pay any pension, bonus (whether monetary or otherwise),
share of profits, or other similar benefit to, any present or
former director, employee, or officer;
(x) mortgaged, pledged, subjected to lien, granted a security
interest in or otherwise encumbered any of its assets or
property, whether tangible or intangible;
(xi) waived or surrendered any right of substantial value;
- 14 -
(xii) made any gift of money or of any property or assets to any
individual, corporation, body corporate, partnership, joint
venture, association, trust or unincorporated organization or
any trustee, executor, administrator or other legal
representative thereof;
(xiii) obligated the Company to pay any royalty fee, license fee or
management fee pertaining to the Company; or
(xiv) authorized, agreed or otherwise become committed to do any of
the foregoing;
(ah) the Company has not, prior to the date of this Agreement:
(i) acquired or had the use of any property from a person with
whom it was not dealing at arm's length other than at fair
market value;
(ii) disposed of anything to a person with whom it was not dealing
at arm's length for proceeds other than the fair market value
thereof; or
(iii) discontinued carrying on any business in respect of which
non-capital losses were incurred;
(ai) the Company does not have any contingent tax liabilities;
(aj) the Company has filed all tax returns with the appropriate taxing
authorities and made all remittances required and such tax returns
were true and complete in all material respects as of filing;
(ak) except as set forth in Schedule 3.1(ak), the Company is not indebted
or obligated, contingently or otherwise, to any director, officer or
shareholder of the Company or any other corporation with whom any
director, officer or shareholder of the Company does not deal at
arm's length, except for current liabilities or obligations in
favour of any director or officer for director's fees, salaries,
wages or benefits arising from services provided to the Company
which are fair and reasonable for such services;
(al) except as set forth in Schedule 3.1(al), and except for Contracts of
employment and confidentiality and proprietary rights agreements
with the Company's employees, the Company is not a party to any
Contract with any director, officer, employee, shareholder or any
other person not dealing at arm's length with the Company;
(am) except as set forth in Schedule 3.1(am), no director, officer or
shareholder of the Company and no person, firm or corporation that
is an Affiliate of one or more of them:
(i) owns, directly or indirectly, any interest in (except for
shares representing less than one percent (1%) of the
outstanding shares of any class or series of any publicly
traded company), or is a director, officer, employee or
consultant of, any person which is, or is engaged in
business as, a competitor of the Business of the Company or
a lessor, lessee, supplier, distributor, sales agent or
customer of the Business or the Company;
- 15 -
(ii) owns, directly or indirectly, in whole or in part, any
property that the Company uses in the operation of the
Business;
(iii) has any cause of action or any claim whatsoever against, or
owes any amount to, the Company in connection with the
Business, except for any claims in the ordinary course of
business;
(an) Schedule 3.1(an) contains a complete and accurate list of all
individuals who are employees or sales or other agents or
representatives or contractors of the Company specifying each such
person's total compensation;
(ao) all accruals for unpaid vacation pay, premiums for (un)employment
insurance, health premiums, Pension Plan premiums, accrued wages,
salaries and commissions and employee benefit plan payments have
been reflected in the books and records of the Company;
(ap) to the best of the knowledge of the Company, after inquiry, no
employee or contractor of the Company has breached any agreement
such that the Company, as the case may be, if it had knowledge
thereof, would be liable to other parties to the breached agreement
for employing or continuing to employ the employee;
(aq) there is no controversy pending between the Company and any of
their respective present or past employees or contractors that may
require payment by the Company;
(ar) no notice has been received by the Company of any complaint filed
by any employee against the Company claiming that the Company has
violated the applicable employee or human rights or similar
legislation in the jurisdictions in which the Company conducts or
carries on its Business or operates, or of any complaints or
proceedings of any kind involving the company or any employee of
the Company before any labour relations board or other similar
authority;
(as) the Company is not an owner of real property or a party to or bound
by or obligated under any agreement or commitment to own any real
property or any interest in real property, except leases for its
business premises;
(at) the Company is a not party to or bound by any agreement of
guarantee, assumption or endorsement or any like commitment of the
obligations, liabilities (contingent or otherwise) or indebtedness
of any other Person;
(au) since the date of incorporation of the Company, there has not been,
occurred or arisen any material adverse change in, or any event or
consideration or state of fact of any character peculiar to the
Company as to its operations which has, or may have, a material
adverse affect on the financial condition, results of operations or
business or prospects of the Company, including:
(i) any damage, destruction or loss of any of its property
(whether or not covered by insurance) materially adversely
affecting the Business; or
- 16 -
(ii) any labour disruption or threatened disruption or proceeding
or investigation being carried on by the U.S. Department of
Labor or similar body, or other proceeding against or
involving the Company which might result in a materially
adverse change in the Business;
(av) the Company maintains in force, and will continue to maintain in
force, general comprehensive and business liability insurance and
insurance against loss on such of its properties, equipment and
assets against such risks and to such limits as is in accordance
with general business practice prevailing in the Business and
having regard to the location, age and character of such property,
asset or equipment and the nature of the Business;
(aw) to the best of the knowledge of the Company, the Company and its
officers, directors and employees have complied with all laws
relating to the protection of the environment (including, without
limitation, laws with respect to the handling, disposal or emission
of hazardous materials or substances) and are not subject to any
claim, action, order, review or investigation of any nature
whatsoever, whether by any government or agency thereof or any
other person or group, and to the best of the knowledge of the
Company, no complaint has been made or filed with any government or
agency thereof, with respect to environmental damage, contamination
or injury or alleged environmental damage, contamination or injury
by the Company or its officers, directors or employees or arising
from or relating to any of the Company's property or assets and
there is no matter, thing or condition, which could give rise to
any such claim, action, order, review, investigation or complaint;
(ax) Schedule 3.1(ax) hereto contains a full, complete and accurate list
and description of all Intellectual Property used in connection with
the Business including, without limitation, all patents,
trade-marks, copyrights, trade names and service marks, whether
registered or unregistered, and any applications therefor included
in the Intellectual Property, including specifications regarding
the jurisdictions in which each such Intellectual Property has been
issued or registered or in which an application for such issuance
and registration has been filed, including the respective
registration or application numbers and the names of all registered
owners and the Company has protected its interest in the
Intellectual Property in the manner and to the extent described in
Schedule 3.1(ax);
(ay) the Company owns all of the Intellectual Property, free and clear
of all Encumbrances, except Permitted Encumbrances and except for
any Intellectual Property licensed to the Company as disclosed in
Schedule 3.1(ax);
(az) except as disclosed in Schedule 3.1(ax):
(i) the Company has the exclusive right to use all of the
Intellectual Property and has not granted any license or
other rights to any other person in respect of the
Intellectual Property,
(ii) the Company is not required to pay any royalty or other fee
to any person in respect of the use of any of the
Intellectual Property,
- 17 -
(iii) there is no restriction on the ability of the Company to use
or exploit all of the rights in the Intellectual Property,
(iv) each of the trade-marks and trade names included in the
Intellectual Property is in use;
(v) to the best knowledge of the Company, there is no and has
not been any unauthorized use, infringement or
misappropriation of any of Intellectual Property by any
person, former employee or other third party; and
(vi) all statements contained in all applications for
registration of the Intellectual Property were true and
correct in all material respects as of the date of such
applications;
(ba) to the best of the knowledge of the Company, the conduct of the
Business does not infringe and the use of the Intellectual Property
does not infringe, and the Company has not received any notice,
complaint, threat or claim alleging infringement of, any copyright,
patent, trade-xxxx, trade name, industrial design, trade secret or
other intellectual property or proprietary right of any other
person, and the conduct of the Business does not include any
activity which may constitute passing off;
(bb) neither the Company nor any employee or contractor of the Company
is in violation in any material respect of any term of any
employment contract, general non-disclosure agreement,
non-competition agreement or any other covenant or any other common
law obligation to a former employer or anyone else which relates to
the right of any such employee to be employed by the Company or to
the use of trade secrets or proprietary information of any third
party;
(bc) the Company is not a party to any pension plan, profit sharing
plan, retirement plan, compensation deferral plan or other plan or
arrangement of a similar nature;
(bd) to the best of the knowledge of the Company, all technical
information developed by and belonging to the Company for which a
patent application has not been filed, which has not otherwise been
deliberately or consciously made public, has been kept confidential;
(be) all employees of, and contractors to, the Company have entered into
proprietary rights or similar agreements with the Company, pursuant
to which the employee/contractor assigns to the Company all
Intellectual Property, technical information and other information
developed and/or worked on by the employee/contractor while
employed or engaged by the Company;
(bf) all persons having access to or knowledge of the Intellectual
Property or a confidential nature that is necessary or required or
otherwise used for or in connection with the conduct or operation
or proposed conduct or operation of the Business have entered into
appropriate non-disclosure agreements with the Company;
(bg) the Company has adequate liability insurance, in accordance with
generally accepted industry standards in this regard, for companies
of similar size with similar businesses, such protection applicable
to directors, officers, employees, and agents while acting
- 18 -
within the scope of their employment by the Company. Subject to
Article 3.3 herein, the Company further covenants to assume any and
all risks of personal injury and property damage attributable to the
negligent acts or omissions of the Company and its officers,
employees and agents;
(bh) within three (3) years following the Date of Closing, the Company
shall promptly direct its best efforts to acquiring a Nasdaq Small
Cap listing or American Stock Exchange listing and make application
for the registration of the Company's stock through appropriate SEC
Regulations;
(bi) to the best of the knowledge of the Company, the Intellectual
Property of the Company comprises all of the intellectual property
necessary for the conduct of the Business as it has been conducted
in the last year and as it anticipates its Business being conducted
in the next five (5) years;
(bj) to the best of the knowledge of the Company, there is no matter,
thing, information, fact, data or interpretation thereof relative
to the Company or any of its property and assets which has not been
disclosed to the Investor which could reasonably be expected to
have a material adverse effect on the Company, its condition,
financial or otherwise, or property and assets; and
(bk) all documents and information delivered by the Company to the
Investor as part of the Investor's due diligence in connection with
the Transaction Documents are complete and accurate in all material
respects.
3.2 REPRESENTATIONS AND WARRANTIES OF EFOORA. Except as expressly set forth in
Schedule 3.2, the Company hereby represents and warrants to the Investor as
follows, and acknowledges that the Investor is relying on such representations
and warranties in completing its subscription for the Purchased Securities:
(a) Efoora has been duly incorporated and is validly existing and in
good standing under the laws of Delaware;
(b) Efoora has all corporate power and capacity to own its properties
and assets and to carry on its Business as now being conducted and
as presently proposed to be carried on by it;
(c) Except as set forth in Section 3.2, Efoora is duly qualified as a
company to do business in each jurisdiction in which the nature of
the Business or the property or assets owned or leased by it makes
such qualification necessary;
(d) each of the Transaction Documents has been duly authorized by all
requisite corporate proceedings, and executed and delivered by
Efoora, as applicable, and is enforceable against Efoora in
accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency and other laws
affecting the rights of creditors generally and except that
equitable remedies may be granted only in the discretion of a court
of competent jurisdiction;
- 19 -
(e) there has been no amendment to the Constating Documents since the
date of Efoora's incorporation other than those amendments
effective on the dates following: December 26, 1991; November 14,
1994; June 27, 1995; October 17, 1995; April 18, 1997; June 19,
1997; July 10, 1997; June 16, 1999; and March 24, 2000.
(f) the authorized capital of Efoora consists of Ninety-million
(90,000,000) Common Shares and Five million (5,000,000) Preferred
Shares, all of which have been duly and validly created, and of
which, immediately prior to the completion of the Closing, a total
of approximately 80,000,000 Common Shares and 5,000,000 Preferred
Shares (the "EFOORA ISSUED SHARES") are duly and validly issued and
outstanding as fully paid and non-assessable and are registered in
the names of approximately [1,500] persons in total and are not
subject to any Encumbrance, or pledge of any nature or kind and
Schedule 3.1(f) hereto lists the names of all persons who hold
greater than or equal to a [five percent (5%)] equity share in
Efoora, on a Fully Diluted Basis;
(g) Efoora has no debt capital of any kind;
(h) except as otherwise provided herein under Schedule 3.2, the Efoora
Issued Shares have been offered, issued, sold and delivered in
compliance with all applicable federal, state, and provincial
securities laws in the USA and Canada;
(i) upon receipt of the Subscription Price by the Company, as
applicable:
(i) the Purchased Common Shares will be duly and validly created,
authorized, allotted and issued as fully paid and
non-assessable;
(ii) the Purchased Warrants will be duly and validly created,
authorized and issued as fully paid and non-assessable; and
(iii) the Warrant Shares will, upon receipt by the Company of
payment therefor, be duly and validly allotted and issued as
fully paid and non-assessable,
in compliance with all applicable securities laws and the Investor
will be the legal and registered owner of and will have good and
marketable title to the Purchased Common Shares and the Purchased
Warrants, and upon issuance, the Warrant Shares, free and clear of
all pre-emptive rights, mortgages, liens, charges, security
interests, adverse claims, pledges and demands whatsoever arising by
reason of the acts or omissions of the Company or of Efoora, other
than the sale restrictions imposed by the Shareholders' Agreement or
applicable USA or Canadian securities laws;
(j) no existing shareholder of Efoora has any pre-emptive right or
right of first refusal that has not been waived in respect of the
allotment and issuance of the Purchased Warrants and there are no
existing shareholder agreements or Contracts of a similar nature
relating to the Company or any Efoora Issued Shares, other than the
Shareholders' Agreement;
(k) the sale and issuance of the Purchased Warrants will neither:
- 20 -
(i) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any
Contract to which Efoora is a party or by which it or its
property is bound; nor
(ii) give any Person the right to
A. declare a default or exercise any remedy under any Contract
to which Efoora is a party;
B. accelerate the maturity or performance of any Contract, or
any provision in any Contract, to which Efoora is a party;
or
C. cancel, terminate or modify any Contract to which the
Company is party;
(l) except as set forth in Schedule 3.2(e), no Person has any agreement,
option or any right or privilege, or any right capable of becoming
an agreement, option or any right or privilege, for the
acquisition, purchase, subscription, allotment or issuance of any
shares of the Company or any of its subsidiaries including, but not
limited to, any convertible securities, warrants, stock options or
convertible obligations; or to require the Company or any of its
subsidiaries to purchase, redeem or otherwise acquire any of its
issued and outstanding shares;
(m) except as set forth in Schedule 3.2(m), Efoora has no Affiliates or
any subsidiaries;
(n) all action on the part of Efoora and its directors and shareholders
necessary for the allotment, issuance and delivery of the Purchased
Warrants to the Investor has been taken;
(o) The Purchased Warrants will be duly and validly created, authorized
and issued as fully paid and non-assessable warrants to purchase
shares in the capital of the Company, exchangeable for shares in
Efoora, and the Investor will be the legal and registered owner of
all the Purchased Securities set out in Section 2.1 and will have
good and marketable title thereto free and clear of all
Encumbrances arising by, through or under the Company or Efoora,
subject only to the terms and conditions of the Shareholders
Agreement;
(p) the execution and delivery of the Transaction Documents by Efoora
and the consummation of the transactions contemplated thereby
(except as expressly set forth therein) will not result in either:
(i) the breach or violation of any of the provisions of, or
constitute a default under or conflict with or cause the
acceleration of any obligation of Efoora under:
A. any Contract to which Efoora or by which any of its
property is bound;
B. the Constating Documents or any resolution of the
shareholders or directors (or any committee thereof) of
Efoora;
- 21 -
C. any judgment, decree, order or award of any court,
government, governmental agency, stock exchange,
regulatory authority or any other third party having
jurisdiction over Efoora;
D. any license, permit, approval, consent or authorization
held by Efoora or necessary to the operation of the
Business; or
E. any applicable USA or Canadian law, statute, ordinance,
regulation or rule; or
(ii) the creation or imposition of any Encumbrance on any of the
Purchased Securities or any property or assets of Efoora;
(q) the Business is the only business operation carried on by Efoora;
(r) to the best of the knowledge of Efoora:
(i) Efoora has complied, in all material respects, with all USA
laws, statutes, ordinances, regulations, rules, judgments,
decrees or orders applicable to Efoora or the Business; and
(ii) no proceeding is pending or threatened to revoke or limit any
License (as defined in Section 3.2(s));
(s) Efoora has obtained all material licenses, permits, approvals,
consents, certificates, registrations or authorizations necessary
to carry on the Business or to own or lease any of the property or
assets used by Efoora (collectively, the "LICENSES" and individually
"LICENSE"). Each License is valid and subsisting and Efoora is not
in default or in breach, in any material respect, of any License;
(t) there is no requirement for Efoora to make any filing with, give
any notice to or to obtain any license, permit, certificate,
registration, authorization, consent or approval of, any USA or
Canadian governmental or regulatory authority as a condition to the
lawful consummation of the transactions contemplated by the
Transaction Documents;
(u) there is no requirement under any Contract relating to the Business
or to Efoora to give any notice to, or to obtain the consent or
approval of, any party to such agreement, instrument or commitment
relating to the consummation of the transactions contemplated by
the Transaction Documents;
(v) there are no judgments which remain unsatisfied against Efoora or
consent decrees or injunctions to which Efoora is subject;
(w) except as otherwise provided herein under Schedule 3.2, there are no
actions, suits or proceedings at law or in equity or by or before
any governmental agency, arbitrator or arbitration board now
pending, or to the best of the knowledge of Efoora, threatened
against or affecting Efoora or any of Efoora's properties or assets
and Efoora is not aware of any ground on which any such action,
suit or proceeding might be commenced with any reasonable
likelihood of success;
- 22 -
(x) the corporate records and minute books of Efoora contain complete
and accurate minutes, in all material respects, of all meetings of
the directors and shareholders of Efoora held since its
incorporation, and all such meetings were duly called and held and
the share certificate books, register of members, register of
transfers and register of directors of Efoora are complete and
accurate in all material respects;
(y) the books of account, ledgers, order books, records and documents
of Efoora fairly and accurately disclose, in all material respects,
in accordance with generally accepted accounting principles the
financial position of Efoora as at the date hereof and all material
information relating to the Business of Efoora, the location and
collection of its assets and the nature of all transactions giving
rise to the obligations or accounts receivable of Efoora have been
accurately recorded in such books of account, ledgers, order books,
records and documents in all material respects;
(z) the financial statements of Efoora for its fiscal year ending
December 31, 1999 were prepared in accordance with generally
accepted accounting principles applied on a basis consistent with
those of previous years and those financial statements, copies of
which are attached as Schedule 3.2(z) hereto (collectively, the
"FINANCIAL STATEMENTS"):
(i) present fairly the assets, liabilities, (whether accrued,
absolute, contingent or otherwise) and the financial
condition of Efoora as at December 31, 1999;
(ii) present fairly the sales, earnings and the results of the
operations of the during the 12 month period ending on
December 31, 1999;
(iii) are in accordance with the books and accounts of the Company,
as of the date thereof; and
(iv) are true and correct in all material respects;
(aa) since December 31, 1999 Efoora has carried on its Business in the
usual and ordinary course and the Company has not entered into any
transaction (including any transfer or sale of assets) out of the
usual and ordinary course of business. Since December 31, 1999
there has been no material change in the affairs, business,
prospects, operations or condition of Efoora, financial or
otherwise, whether arising as a result of any legislative or
regulatory change, revocation of any licence or right to do
business, fire, explosion, accident, casualty, labour dispute,
flood, drought, riot, storm, condemnation, act of God, public force
or otherwise, except changes occurring in the usual and ordinary
course of business which have not adversely affected the affairs,
business, prospects, operations or condition of Efoora, financial
or otherwise.
(ab) there is no controversy pending between Efoora and any of their
respective present or past employees or contractors that may
require payment by Efoora;
(ac) Efoora owns all Intellectual Property used in its Business, free
and clear of all Encumbrances, except Permitted Encumbrances and
except for any Intellectual Property licensed to the Company as
disclosed in Schedule 3.2(ac);
(ad) except as disclosed in Schedule 3.2(ac);
- 23 -
(i) Efoora has the exclusive right to use all of the Intellectual
Property and has not granted any license or other rights to
any other person in respect of the Intellectual Property,
(ii) Efoora is not required to pay any royalty or other fee to any
person in respect of the use of any of the Intellectual
Property,
(iii) there is no restriction on the ability of Efoora to use or
exploit all of the rights in the Intellectual Property,
(iv) each of the trade-marks and trade names included in the
Intellectual Property is in use;
(v) to the best knowledge of Efoora, there is no and has not been
any unauthorized use, infringement or misappropriation of any
of Intellectual Property by any person, former employee or
other third party; and
(vi) all statements contained in all applications for registration
of the Intellectual Property were true and correct in all
material respects as of the date of such applications;
(ae) to the best of the knowledge of Efoora, the conduct of the Business
does not infringe and the use of the Intellectual Property does not
infringe, and Efoora has not received any notice, complaint, threat
or claim alleging infringement of, any copyright, patent,
trade-xxxx, trade name, industrial design, trade secret or other
intellectual property or proprietary right of any other person, and
the conduct of the Business does not include any activity which may
constitute passing off;
(af) to the best of the knowledge of Efoora, the Intellectual Property
of Efoora comprises all of the intellectual property necessary for
the conduct of the Business as it has been conducted in the last
year and as it anticipates its Business being conducted in the next
five (5) years;
(ag) to the best of the knowledge of Efoora, there is no matter, thing,
information, fact, data or interpretation thereof relative to
Efoora or any of its property and assets which has not been
disclosed to the Investor which could reasonably be expected to
have a material adverse effect on Efoora, its condition, financial
or otherwise, or property and assets;
(ah) all documents and information delivered by Efoora to the Investor
as part of the Investor's due diligence in connection with the
Transaction Documents are complete and accurate in all material
respects; and
(ai) Efoora acknowledges that its current equity position in the Company
(as provided herein under Schedule 3.1(f)) reflects Efoora's
investment, as of the Closing Date, of Two Hundred Twenty Thousand,
Seven Hundred Twenty-Three Dollars ($220,723.00) in the Company,
and also reflects Efoora's future commitment to invest, at minimum,
an additional One Million Dollars ($1,000,000.00) in the Company,
within eighteen (18) months of the Closing Date.
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3.3 MEANING OF "TO THE BEST OF THE KNOWLEDGE". For the purposes of the
representations and warranties contained in Section 3.1 and 3.2, whenever "TO
THE BEST OF THE KNOWLEDGE OF THE COMPANY" OR "TO THE BEST OF THE KNOWLEDGE OF
EFOORA" is used, it means to the best of the knowledge of the respective
party after making due inquiry concerning the factual matter in question.
3.4 INDEMNITY BY THE COMPANY. The Company hereby covenants to
indemnify the Investor from and against:
(a) any inaccuracy in any representation or warranty made by the
Company in this Agreement, the Transaction Documents or any other
agreement to be entered into in connection with the transactions
contemplated hereby or any certificates delivered or to be
delivered by or on behalf of the Company pursuant to the terms of
this Agreement (collectively, the "DOCUMENTS");
(b) any breach of any covenant of the Company set forth in this
Agreement or in the Documents;
(c) any liability or other Claims or obligations, except for those
disclosed in the Financial Statements or the schedules hereto,
respecting the Company or any of its assets (including, without
limitation, the Intellectual Property) which arose prior to the
Time of Closing or respecting services performed or products
supplied to customers of the Company before the Time of Closing or
any other claims or liabilities in any way arising from the Company
that are not disclosed in the Financial Statements; and
(d) all actions, suits, proceedings, demands, assessments, judgments,
costs and legal and other expenses incident to any of the foregoing.
3.5 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants and acknowledges to the Company and Efoora as follows:
(a) the Investor has been duly incorporated and is validly existing and
in good standing under the laws of New York;
(b) the Investor has good and sufficient power, authority and right to
enter into and deliver this Agreement and to contemplate the
transactions to be completed by the Investor contemplated hereby;
(c) the Investor has all corporate power and capacity to own its
properties and assets and to carry on its business as now being
conducted and as presently proposed to be carried on by it;
(d) each of the Transaction Documents has been duly authorized by all
requisite corporate proceedings, and executed and delivered by, the
Investor, as applicable, and is enforceable against the Investor in
accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency and other laws
affecting the rights of creditors generally and except that
equitable remedies may be granted only in the discretion of a court
of competent jurisdiction;
- 25 -
(e) the execution and delivery of the Transaction Documents by the
Investor and the consummation of the transactions contemplated
thereby (except as expressly set forth therein) will not result in
either:
(i) the breach or violation of any of the provisions of, or
constitute a default under or conflict with or cause the
acceleration of any obligation of the Investor under:
A. any Contract to which the Investor or by which any of its
property is bound;
B. the Constating Documents or any resolution of the
shareholders or directors (or any committee thereof) of
the Investor;
C. any judgment, decree, order or award of any court,
government, governmental agency, stock exchange,
regulatory authority or any other third party having
jurisdiction over the Investor;
D. any license, permit, approval, consent or authorization
held by the Investor or necessary to the operation of the
Business; or
E. any applicable USA or Canadian law, statute, ordinance,
regulation or rule; or
(ii) the creation or imposition of any Encumbrance on any of the
Purchased Securities or any property or assets of the
Investor;
(f) to the best of the knowledge of the Investor:
(i) the Investor has complied, in all material respects, with all
USA and Canadian laws, statutes, ordinances, regulations,
rules, judgments, decrees or orders applicable to the
Investor or the Business; and
(ii) no proceeding is pending or threatened to revoke or limit any
license;
(g) there is no requirement for Investor to make any filing with, give
any notice to or to obtain any license, permit, certificate,
registration, authorization, consent or approval of, any USA or
Canadian governmental or regulatory authority as a condition to the
lawful consummation of the transactions contemplated by the
Transaction Documents;
(h) there is no requirement under any Contract relating to the business
of the Investor to give any notice to, or to obtain the consent or
approval of, any party to such agreement, instrument or commitment
relating to the consummation of the transactions contemplated by
the Transaction Documents;
(i) The Investor has such knowledge and experience in financial
business matters that the Investor is capable of evaluating the
merits and risks of the purchase of the Purchased Securities and of
protecting the Investor's interests in connection therewith. The
Investor is capable of evaluating the merits and risks of an
investment in the Purchased Securities and of the transactions
contemplated by this Agreement and has the ability to
- 26 -
bear the economic risk of the investment, including complete loss
of the investment and the loss of the Investor's entire investment
in the Purchased Securities would not adversely affect the
Investor. The Investor is experienced in evaluating and investing
in new companies such as the Company in the first stage of
implementing a business plan. The Investor has either secured
independent tax advice with respect to an investment in the
Purchased Securities, upon which it is relying, or it is
sufficiently familiar with the income taxation of U.S. corporations
that it deemed such independent advice to be unnecessary;
(j) The Investor is acquiring the Purchased Securities for investment
as principal for its own account, not as a nominee or agent, and
not with a view to, or for resale in connection with, any
distribution thereof, and the Investor has no contract,
undertaking, agreement or arrangement with any person to sell,
transfer or pledge or otherwise distribute all or any part of the
Purchased Securities, and the Investor has no plan or intent to
enter into any such contract, undertaking or arrangement. The
Investor understands that the Purchased Securities have not been
registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon,
among other things, the bona fide nature of the investment intent
and the accuracy of the Investor's representations as expressed
herein;
(k) The Investor understands that the purchased securities will be
"restricted securities" under the U.S. securities laws since they
are being acquired from the Company in a transaction involving an
offering solely to non-U.S. residents and citizens and that under
such laws and applicable regulations the Purchased Securities may
be resold without registration under the Securities Act only in
limited circumstances. The Investor: (a) acknowledges that the
purchased securities must be held for at least one year unless
registered under the Securities Act or an exemption from such
registration is available; and (b) understands that no public
market now exists for any of the securities issued by the Company
and that there is no assurance that a public market will ever exist
for the Purchased Securities;
(l) The Investor represents that it is a corporation formed under the
laws of the State of New York. The Investor's principal office is
located in Vancouver, British Columbia, Canada. The Investor
represents that it is not purchasing any of the Purchased
Securities on behalf of any person who is either a U.S. citizen or
resident;
(m) In evaluating the suitability of an investment in the Company, the
Investor has had an opportunity to obtain copies of any and all
documents requested by it from the Company and to discuss the
Company's business, management and financial affairs with the
Company's management and the opportunity to review the Company's
facilities and has received all information requested from the
Company regarding the investment in the Company.
(n) No consent, approval or authorization of or designation,
declaration or filing with any Canadian federal or provincial
governmental authority on the part of the Investor is required in
connection with the valid execution and delivery of this Agreement
by the Investor, and the consummation by the Investor of the
transactions contemplated hereby. No U.S. or Canadian federal or
provincial agency has reviewed or passed upon the adequacy of the
- 27 -
information set forth in the Agreement, made any finding or
determination as to the fairness for investment, or any
recommendation or endorsement of the purchased securities as an
investment;
(o) It is understood that each certificate representing the Purchased
Securities and any securities issued in respect thereof or exchange
therefor shall bear legends substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE "SHARES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT WITH
RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION AND FROM ANY APPLICABLE SECURITIES LAWS IS
AVAILABLE.
(p) No prospectus has been filed by the Company with the British
Columbia Securities Commission in connection with the issuance of
the Purchased Securities, as it is acknowledged that such issuance
is exempted from the prospectus requirements of the SECURITIES ACT
(British Columbia) (the "B.C. Act") and that:
(i) the Investor is restricted from using most of the civil
remedies that would otherwise be available under the B.C. Act;
(ii) the Investor may not receive information that would otherwise
be required to be provided to him under the B.C. Act;
(iii) the Company is relieved from certain obligations that would
otherwise apply under the B.C. Act;
(q) The Investor is purchasing sufficient Purchase Securities so that
the aggregate acquisition cost of the Investor's Purchased
Securities to the Investor is not less than $97,000, and the
Investor is not a corporation, syndicate, partnership or other form
of incorporated or unincorporated entity or organization created
solely to permit the purchase of the Investor's Purchased
Securities (or other similar purchases) by a group of individuals
whose individual share of the aggregate acquisition cost of such
Purchased Securities is less than $97,000;
(r) To the best of the Investor's knowledge, the Purchased Securities
were not advertised;
(s) No person has made to the Investor any written or oral
representations:
(i) that any person will resell or repurchase the Purchased
Securities;
(ii) that any person will refund the purchase price of the
Purchased Securities;
(iii) as to the future price or value of any of the Purchased
Securities; or
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(iv) that the Purchased Securities will be listed and posted for
trading on a stock exchange or that application has been made
to list and post the Purchased Securities for trading on a
stock exchange; and
(t) The Investor understands and acknowledges that, with respect to any
trade of the Purchased Securities acquired pursuant to a trade
which occurs in British Columbia, if the Investor trades any of the
Purchased Securities, then the Investor must file a report in the
form attached to British Columbia Securities Commission Blanket
Order #95/17, a copy of which may be obtained from the Company
within 10 days of the initial trade of such securities, but where
the Investor has so filed such report, the Investor is not required
to file a further report in respect of additional trades of
Purchased Securities acquired on the same date as the security
which is the subject of such initial report.
ARTICLE 4 - COVENANTS BY COMPANY AND EFOORA
4.1 COVENANTS BY COMPANY. The Company and Efoora, respectively, hereby
covenant with the Investor that it will take or has taken all corporate
action and will obtain or has obtained all other necessary or desirable
authorizations and approvals for the sale and issuance of the Purchased
Securities and for the execution, delivery and performance of the Transaction
Documents.
4.2 STATUTORY WITHHOLDINGS. The Company and Efoora (as applicable) will
withhold from each amount to be paid or to be credited to any person the
amount of all Taxes or other amounts required to be withheld by the Company
or Efoora by law and will pay the same to the proper Tax or other receiving
officer or authority within the time required under applicable legislation.
4.3 COMPLIANCE WITH SECURITIES LAWS. The Company and Efoora shall file all
documents and take all proceedings to be taken to permit the Purchased
Securities to be sold to the Investor in compliance with all applicable USA and
Canadian securities laws.
ARTICLE 5 - CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE INVESTOR. The
obligations of the Investor to complete the purchase and sale of the
Purchased Shares under this Agreement are subject to the fulfilment at or
prior to the Closing of the following conditions:
(a) the Investor will be satisfied in its sole and unfettered
discretion with the results of their ongoing due diligence work
concerning the Company, and without limiting the generality of the
foregoing, the Investor shall be satisfied in its sole and
unfettered discretion that there have been no material or
substantive changes to the Company's or Efoora's business plans or
financial situations, as represented by the Company and Efoora to
the Investor and further satisfied in its sole and unfettered
discretion with its review of the audit and tax files of the
Company;
(b) the Investor shall have received all necessary approvals in order
to make the investment contemplated by this Agreement, and without
limiting the generality of the foregoing, the Investor shall have
received approval from its board of directors;
- 29 -
(c) the Investor shall have received sufficient funding, as determined
in its sole and unfettered discretion, to maintain its operations
and complete the transactions herein contemplated;
(d) the Investor and its legal counsel will be satisfied with the legal
documentation related to the investment contemplated by this
Agreement, including the legal opinions to be provided by counsel
for the Company and Efoora at the Closing;
(e) the Investor is satisfied with the disclosure as to the
capitalization of the Company made in Section 3.1(f) and further
satisfied that such shares and all rights to acquire shares as
described in Schedule 3.1(m) are not subject to any Encumbrance or
pledge of any nature or kind;
(f) the Company's board of directors and, if required, shareholders
shall have approved of the Transaction Documents and the
transactions contemplated thereunder;
(g) if applicable, the existing shareholders of the Company will have
waived all pre-emptive rights or rights of first refusal in respect
of the allotment and issuance of the Purchased Shares;
(h) no legal or regulatory action or proceeding will be pending or
threatened by any person, firm or corporation to enjoin, restrict
or prohibit the purchase and sale of the Purchased Securities
contemplated by this Agreement;
(i) the representations and warranties of the Company contained in this
Agreement and in any certificate or document delivered pursuant to
the provisions of this Agreement or in connection with the
transactions contemplated by this Agreement will be true and
correct in all material respects at and as of the Closing Date as
though such representations and warranties were made at and as of
such date;
(j) the Company will have performed and complied with all covenants,
conditions and agreements required by this Agreement to be
performed or complied with by them prior to or at the Closing;
(k) no substantial damage to the assets of the Company will have
occurred prior to the Closing Date; and
(l) the Company will have delivered to the Investor the documents
contemplated by Section 6.2.
The foregoing conditions are for the exclusive benefit of the Investor and
any such condition may be waived in whole or in part by the Investor at or
prior to the Closing by delivering to the Company a written waiver to that
effect executed by the Investor and whether or not the Investor is satisfied
or unsatisfied shall be determined by the Investor in its sole, absolute and
unfettered discretion. If one or more of such conditions precedent in Section
5.1 is not satisfied on or before the Closing Date and the Investor fails to
waive in writing strict compliance therewith, then the Investor shall not be
obligated to subscribe for and purchase the Purchased Securities and the
Closing will not proceed and the Investor shall be released from all of its
obligations hereunder. Notwithstanding the foregoing, all conditions
- 30 -
precedent will be deemed to have been fulfilled or waived, by the Investor
completing the subscription for the Purchased Securities.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company and Efoora to complete the issuance of the
Purchased Securities under this Agreement are subject to the fulfilment at or
prior to the Closing of the following conditions:
(a) no legal or regulatory action or proceeding will be pending or
threatened by any person, firm or corporation to enjoin, restrict
or prohibit the issuance of the Purchased Securities contemplated
by this Agreement;
(b) the Investor will have performed and complied with all covenants,
conditions and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing; and
(c) the Investor will have delivered to the Company and Efoora the
documents contemplated by Section 6.5.
The foregoing conditions are for the exclusive benefit of the Company and any
such condition may be waived in whole or in part by the Company at or prior
to the Closing by delivering to the Investor a written waiver to that effect
executed by the Company and whether or not the Company is satisfied or
unsatisfied shall be determined by the Company in its sole, absolute and
unfettered discretion. If one or more of such conditions precedent in Section
5.2 are not satisfied on or before the Closing Date and the Company fails to
waive in writing strict compliance therewith, then the Investor shall not be
obligated to subscribe for and purchase the Purchased Securities and the
Closing will not proceed and the Company will be released from all remaining
obligations hereunder. Notwithstanding the foregoing, all conditions
precedent will be deemed to have been fulfilled or waived, by the Company
completing the issuance of the Purchased Securities.
ARTICLE 6 - CLOSING
6.1 CLOSING. The purchase and sale of the Purchased Securities will be
completed at the Closing to be held at Xxxxx 0000, 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, X.X. at 2:00 p.m. Vancouver Time on the Closing Date.
6.2 DOCUMENTS TO BE DELIVERED BY COMPANY AT CLOSING. At the Closing,
the Company will deliver, or will cause to be delivered, to the Investor the
following documents in form satisfactory to the Investor:
(a) a certified copy of the Constating Documents of the Company and
Efoora;
(b) a Certificate of Good Standing with respect to the Company and with
respect to Efoora;
(c) an incumbency certificate certifying as to the authority of the
respective signatories of the Company and Efoora to execute
certificates on behalf of the Company or Efoora, as appropriate;
- 31 -
(d) certified copies of a resolution of the directors of the Company
and Efoora authorizing the allotment and issuance of the Purchased
Securities to the Investor and the execution, delivery and
performance of the Transaction Documents;
(e) share certificates representing the Purchased Securities, duly and
validly registered in the Investor's name;
(f) the Transaction Documents, duly executed, by the Company and Efoora
and others, as applicable;
(g) certified copy of a resolution of the members of the Company
electing the Investor's nominee to the Company's board of directors;
(h) a Company cheque payable to the Investor in the amount of ten
thousand dollars ($10,000), for due diligence, negotiations and
closing costs of the Investor;
(i) legal opinion from counsel in the form attached as Schedule 6.2(i)
hereto; and
(j) such other documentation as the Investor or its counsel may
reasonably request.
6.3 DOCUMENTS TO BE DELIVERED BY COMPANY AFTER CLOSING. On or before
September 30, 2000, or such later date as the parties may otherwise mutually
agree to in writing, the Company will deliver, or will cause to be delivered,
to the Investor the following documents in form satisfactory to the Investor:
(a) Employment Agreement of Xxxxx X. Xxxxxx;
(b) Employment Agreement of Xxxxxx Xxxxxxxx;
(c) Employment Agreement of Xxxxx Xxxxxx;
(d) Certificate of Good Standing in the State of Illinois of the
Company; and
(e) Research Agreements between the Company and each of:
(i) the University of Maryland Biotechnology Institute ("UMBI");
(ii) the Institute for Basic Research in Mental Retardation and
Developmental Disabilities ("IBR"); and
(iii) Case Western Reserve University,
in form satisfactory to the Investor.
6.4 DOCUMENTS TO BE DELIVERED BY EFOORA AFTER CLOSING. On or before
September 30, 2000, or such later date as the parties may otherwise mutually
agree to in writing, Efoora will deliver, or will cause to be delivered, to
the Investor the following documents in form satisfactory to the Investor:
(a) Certificate of Good Standing in the State of Illinois of Efoora.
- 32 -
6.5 DOCUMENTS TO BE DELIVERED BY INVESTOR AT CLOSING. At the Closing,
the Investor will, as applicable, deliver, or will cause to be delivered, to
the Company the following documents in form satisfactory to the Company:
(a) as partial payment of the Subscription Price for the Purchased
Securities, the sum of One million dollars ($1,000,000.00), by wire
transfer payable to the Company pursuant to the terms and
conditions provided in Article 2.2(a) herein;
(b) the Transaction Documents, duly executed in counterpart where
applicable by an authorized signatory of the Investor; and
(c) such other documentation as the Company or its legal counsel may
reasonably request.
ARTICLE 7 - GENERAL PROVISIONS
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties, covenants and agreements made by the Company in
or pursuant to this Agreement will survive the completion of the transactions
contemplated by this Agreement and, notwithstanding such completion or any
investigation at any time made by or on behalf of the Investor, shall
continue in full force and effect for the benefit of the Investor.
7.2 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
7.3 FURTHER ACTS. Each of the parties will, at the request of and at
the expense of any party to this Agreement, execute and deliver any further
documents and do all acts and things as that party may reasonably require in
order to carry out the true intent and meaning of this Agreement.
7.4 LEGAL AND ACCOUNTING FEES. With the exception of the payment herein
provided for under Article 6.2(h), each party shall pay its respective legal
and accounting costs and expenses incurred in connection with the
preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant hereto, and any other costs and expenses
whatsoever and howsoever incurred, including any applicable excise taxes and
all attorney's fees and costs. Each party shall also be responsible for any
income tax obligation incurred by them, respectively, as a result of this
transaction.
7.5 ENUREMENT. This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective heirs, personal
representatives, administrators, successors and assigns.
7.6 GOVERNING LAW AND ATTORNMENT. This Agreement and the other
Transaction Documents (with the exception of the Employee Agreements) shall
be governed and construed in accordance with by the laws of the Province of
British Columbia and the laws of Canada applicable therein. The parties
hereby irrevocably submit to the non-exclusive jurisdiction of the Courts of
the Province of British Columbia and agree that any legal proceedings arising
out of or in connection with this Agreement may be brought before the courts
of the Province of British Columbia.
7.7 ENTIRE AGREEMENT. This Agreement and the Transaction Documents
constitute the entire agreement among the parties with respect to the
transactions contemplated hereby and supersede
- 33 -
all prior negotiations, proposals representations, warranties and agreements,
whether oral or written, with respect thereto including, without limitation,
the Memorandum of Understanding between the parties dated as of July 19, 2000.
7.8 NOTICES. Any notice required or permitted to be given under this
agreement by any party will be deemed to have been well and sufficiently
given if mailed by prepaid registered mail, or sent by facsimile machine
("FAXED") to, or delivered at, the address or fax number of the party to whom
it is directed set forth on page one, or at such other reasonable address at
which personal delivery may be effected as such party may from time to time
give notice of, and any such notice shall be deemed to have been received, if
mailed, 3 business days after the time of mailing and, if delivered or faxed,
upon the date of delivery or faxing.
7.9 CURRENCY. All references in this Agreement to dollars are
references to USA dollars.
7.10 BUSINESS DAY. Any obligation required to be performed by a party
under this Agreement on a Saturday, Sunday or statutory holiday will be
properly discharged if performed by such party on the next following day
which is not a Saturday, Sunday or statutory holiday.
7.11 WAIVER. The failure by any party to insist in any one or more
instances upon the strict performance of any one of the covenants contained
in this Agreement will not be construed as a waiver or relinquishment of such
covenant. No waiver by any party of any such covenant will be deemed to have
been made unless expressed in writing and signed by the waiving party.
7.12 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction will be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability, in any
jurisdiction, will not invalidate or render unenforceable such provision in
any other jurisdiction.
7.13 AMENDMENTS. No term or provision of this Agreement may be amended
except by an instrument in writing signed by all of the parties to this
Agreement.
7.14 ASSIGNMENT. No party shall assign its rights under this Agreement
without the consent of the other parties hereto.
7.15 PUBLIC ANNOUNCEMENTS. No public announcement or press release
concerning this transaction shall be made by either party without the prior
consent and joint approval of the Investor and the Company. Notwithstanding
the foregoing, the Investor will have the right to issue a news release,
jointly or otherwise, with respect to the completion of the transactions
contemplated by this Agreement and the Transaction Documents, as required by
law. The Investor will allow the Company to review such press release and
will consider corrections thereto suggested by the Company but will not be
bound to publish in such press release anything except as is finally
determined in the sole discretion of the Investor.
7.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts (including fax) each of which when so executed will be deemed to
be an original and when taken together shall constitute the entire and same
agreement.
- 34 -
7.17 INDEPENDENT LEGAL ADVICE. Each of the parties to this Agreement
acknowledges and agrees that XxXxxxxx Xxxxxxxx has acted as counsel only to
the Investor and that Xxxxxxx & Xxxxxxxx Ltd. has acted only for the Company
and Efoora, and that none of the aforementioned legal firms or legal counsel
are protecting the rights and interests of any other party to this Agreement.
7.18 ARBITRATION. In the event of any dispute under this Agreement or
the other Transaction Documents which does not involve a party seeking a
court injunction, that dispute will promptly be referred to and finally
resolved by arbitration by a single arbitrator in accordance with the
COMMERCIAL ARBITRATION ACT (British Columbia). The place of arbitration will
be Vancouver, British Columbia, Canada.
7.19 NO PARTNERSHIP. Nothing in this Agreement or in the relationship of
the parties hereto shall be construed as in any sense creating a partnership
among the parties or as giving to any party any of the rights or subjecting
any party to any of the creditors of the other parties.
7.20 CONFIDENTIALITY. The Company covenants and agrees that all
information relating to this Agreement, the Transaction Documents, the
Memorandum of Understanding between the parties hereto dated as of July 19,
2000 and all negotiations and discussions with the Investor (collectively,
the "Confidential Information") shall be held in strict confidence and not
disclosed to any Person at any time without the prior written consent of the
Investor.
7.21 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered is an original but
all of which taken together constitute one and the same instrument and any
party may execute this Agreement by signing any counterpart of it.
7.22 FAX DELIVERY. This Agreement may be executed by the parties and
transmitted by facsimile and if so executed and transmitted this Agreement
will be for all purposes as effective as if the parties had delivered an
executed original Agreement.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the date first above written.
PRION DEVELOPMENTAL LABORATORIES, INC.
Per: /s/ XXXXX X. XXXXXX
____________________________
Authorized Signatory
BIOLABS, INC.
Per: /s/ E. XXXX XXXXXXXXX
____________________________
Authorized Signatory
EFOORA, INC.
Per: /s/ XXXXX X. XXXXXX
____________________________
Authorized Signatory
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