Exhibit 2.2
SHARE EXCHANGE AGREEMENT
BY AND AMONG WARP TECHNOLOGY HOLDINGS, INC., 6043577
CANADA INC., SPIDER SOFTWARE, INC., THE SPIDER INSIDERS
AND THE PERSONS IDENTIFIED ON SCHEDULE A HERETO.
Dated as of December __, 2002
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT (this "Agreement"), dated as of December __,
2002, by and among WARP TECHNOLOGY HOLDINGS, INC.(the "Purchaser), 6043577
CANADA INC., a Canadian corporation ("WARP"), SPIDER SOFTWARE, INC., a Canadian
corporation, ("SPIDER"), XXXX XXXXXX and XXXX XXXXXXXX (the "SPIDER Insiders"),
and the Persons identified on Schedule A hereto (the "SELLERS").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Purchaser, WARP and
SPIDER each has determined that it is in the best interests of their respective
shareholders for WARP to acquire SPIDER through an exchange of WARP Preferred
shares for one hundred percent (100%) of the issued and outstanding SPIDER
Common Stock (as more fully described in Article III below), in an acquisition
that will result in SPIDER becoming a direct wholly-owned subsidiary of WARP
upon the terms and conditions set forth herein; and
WHEREAS, Purchaser is a publicly held Nevada corporation engaged
principally in the information technology business and WARP is a wholly-owned
subsidiary of Purchaser; and
WHEREAS, the SPIDER Insiders and Sellers collectively own one hundred
percent (100%) of the issued and outstanding common stock of SPIDER (the "SPIDER
Common Stock"), and desire to sell to WARP, and WARP desires to acquire, on the
terms and subject to the conditions set forth in this Agreement, the SPIDER
Common Stock;
NOW, THEREFORE, in consideration of the premises and the respective
mutual covenants, representations and warranties herein contained, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Act" shall mean the Income Tax Act, R.S.C. 1985, c.1.
"Affiliate" shall mean with respect to a specified Person, any other
Person which, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes, with respect to a
Person (a) any other Person which beneficially owns or holds ten percent (10%)
or more of any class of voting securities or other securities convertible into
voting securities of such Person or beneficially owns or holds ten percent (10%)
or more of any other equity interests in such Person, (b) any other Person with
respect to which such Person beneficially owns or holds ten percent (10%) or
more of any class of voting securities or other securities convertible into
voting securities of such Person, or owns or holds ten percent (10%) or more of
the equity
interests of the other Person, and (c) any director or senior officer of such
Person. For purposes of this definition, the term "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" shall mean this Share Exchange Agreement together with all
exhibits and schedules referred to herein, which exhibits and schedules are
incorporated herein and made a part hereof.
"Certificates" shall have the meaning set forth in Section 2.3.
"Closing" shall have the meaning set forth in Section 2.5.
"Closing Date" shall mean the date that the Closing takes place.
"Consideration Shares" shall have the meaning set forth in Section 2.2.
"Employee Benefit Plans" shall have the meaning set forth in Section
4.18.
"Environmental Laws" shall mean any applicable laws, rules or
regulations relating to the disposal of waste or similar uses of real property
of Canada.
"Exchange Ratio" shall have the meaning set forth in Section 2.2.
"Financial Statements of SPIDER" shall mean the unaudited balance sheet
and the unaudited statements of income, cash flow and retained earnings of
SPIDER for the fiscal years ended December 31, 2001 and December 31, 2000 and
the unaudited balance sheet and statements of income, cash flow and retained
earnings of SPIDER for the six (6) month period ended June 30, 2002 prepared
according to GAAP consistently applied with prior periods, except as set forth
on Schedule 4.13.
"GAAP" shall mean the Generally Accepted Accounting Principles in the
United States of America when used in reference to Purchaser and the Generally
Accepted Accounting Principles in Canada when used in reference to SPIDER, as
applicable.
"Governmental Authorizations" shall have the meaning set forth in
Section 4.16.
"Guaranty" shall mean, as to any Person, all liabilities or obligations
of such Person, with respect to any indebtedness or other obligations of any
other Person, which have been guaranteed, directly or indirectly, in any manner
by such Person, through an agreement, contingent or otherwise, to purchase such
indebtedness or obligation, or to purchase or sell property or services,
primarily for the purpose of enabling the debtor to make payment of such
indebtedness or obligation or to guarantee the payment to the owner of such
indebtedness or obligation against loss, or to supply funds to or in any manner
invest in the debtor.
"Indemnified Party" shall have the meaning set forth in Section 5.4.
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"Indemnifying Party" shall have the meaning set forth in Section 5.4.
"Intellectual Property" shall mean the rights to any patent, trademark,
copyright, service xxxx, invention, software, software code, trade secret,
technology, product, composition, formula, method or process.
"Investments" shall mean, with respect to any Person, all advances,
loans or extensions of credit to any other Person (except for extensions of
credit to customers in the ordinary course of business), all purchases or
commitments to purchase any stock, bonds, notes, debentures or other securities
of any other Person, and any other investment in any other Person, including
partnerships or joint ventures (whether by capital contribution or otherwise) or
other similar arrangement (whether written or oral) with any Person, including,
but not limited to, arrangements in which (i) the first Person shares profits
and losses of the other Person, (ii) any such other Person has the right to
obligate or bind the first Person to any third party, or (iii) the first Person
may be wholly or partially liable for the debts or obligations of such
partnership, joint venture or other entity.
"Knowledge" shall mean, in the case of any Person who is an individual,
knowledge that a reasonable individual under similar circumstances would have
after such investigation and inquiry as such reasonable individual would under
such similar circumstances make, and in the case of a Person other than an
individual, the knowledge that a senior officer or director of such Person, or
any other Person having responsibility for the particular subject matter at
issue of such Person, would have after such investigation and inquiry as such
senior officer, director or responsible Person would under such similar
circumstances make.
"Liabilities" shall have the meaning set forth in Section 4.14.
"Litigation" shall have the meaning set forth in Section 3.6.
"Material Adverse Effect" shall mean any event or condition of any
character which has had or could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), results of operations,
assets, liabilities, properties, business or prospects of WARP, Purchaser or
SPIDER, as applicable.
"Material Agreements" shall have the meaning set forth in Section 4.20.
"Periodic Reports" shall have the meaning set forth in Section 3.9.
"Person" shall mean any natural person, corporation, unincorporated
organization, partnership, association, limited liability company, joint stock
company, joint venture, trust or government, or any agency or political
subdivision of any government or any other entity.
"Purchaser" shall mean WARP Technology Holdings, Inc., a publicly held
Nevada corporation.
"Purchaser Documents" shall have the meaning set forth in Section 3.2.
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"Put and Call Agreement" shall mean that agreement dated the date
hereof between WARP, Purchaser and all of the Sellers with respect to the
exchange of the Consideration Shares for shares of Purchaser Common stock.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Sellers" shall mean the SPIDER Insiders and the other Persons
identified on Schedule A hereto.
"SPIDER Common Stock" shall have the meaning set forth in Section 4.11
of this Agreement.
"SPIDER Insiders" shall mean Mr. Xxxx Xxxxxx and Mr. Xxxx Xxxxxxxx.
"Subsidiary" of any Person shall mean any Person, whether or not
capitalized, in which such Person owns, directly or indirectly, an equity
interest of more than fifty percent (50%), or which may effectively be
controlled, directly or indirectly, by such Person.
"Transaction" shall have the meaning set forth in Section 2.1.
"WARP" shall mean 6043577 Canada Inc., a Canadian corporation and
wholly-owned subsidiary of WARP Technology Holdings, Inc.
"WARP Preferred Stock" shall mean the preferred stock of WARP.
The words "hereof", "herein" and "hereunder" and the words of similar
import shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The terms defined in the singular shall have a
comparable meaning when used in the plural and vice versa.
ARTICLE II
TRANSACTION; TERMS OF EXCHANGE; MANNER OF CONVERTING SHARES
2.1 Exchange of Securities. Subject to the terms and conditions set
forth herein, on the Closing Date, each of the Sellers who have executed this
Agreement shall sell to WARP, and WARP shall purchase from such Sellers, all of
such Seller's right, title and interest in and to the SPIDER Common Stock
indicated next to such Seller's name on Schedule A hereto (the "Transaction").
At the Closing, each of such Sellers shall deliver to WARP all of the
certificates representing the SPIDER Common Stock indicated next to such
Seller's name on Schedule A, together with stock powers separate from the
certificates duly executed by each of the Sellers in blank and sufficient to
convey to WARP good and marketable title to the SPIDER Common Stock free and
clear of any and all claims, liens, charges, security interests, pledges or
encumbrances of any nature whatsoever.
2.2 Consideration. The purchase price for the SPIDER Common Stock shall
be paid by the issuance to each Seller of 0.197707 shares (the "Exchange Ratio")
of WARP Preferred Stock (collectively, the "Consideration Shares") for each
share of SPIDER Common Stock held by such Seller and tendered at the Closing.
The Consideration Shares shall, upon issuance and
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delivery to the Sellers in accordance with the terms hereof, be fully paid,
validly issued and non-assessable. The Exchange Ratio is based upon SPIDER
having 7,587,000 shares of common stock issued and outstanding at the Closing,
as detailed in Section 4.11 of this Agreement, and such Exchange Ratio shall be
lowered to reflect any increase in the number of shares of SPIDER Common Stock
issued and outstanding at the Closing and raised to reflect any decrease in the
number of shares of SPIDER Common Stock issued and outstanding at the Closing,
such that the aggregate number of Consideration Shares to be issued at the
Closing in exchange for 100% of the issued and outstanding common stock of
SPIDER equals 1,500,000 shares.
2.3 Exchange of Shares. At the Closing, the Sellers shall surrender
their certificate or certificates (the "Certificates") which represent their
shares of SPIDER Common Stock and shall promptly upon surrender thereof receive
in exchange therefore the number of whole Consideration Shares issuable in
respect to all shares of SPIDER Common Stock held by each Seller (rounded to the
nearest share). WARP shall not be obligated to deliver the Consideration Shares
which a Seller is entitled to pursuant to this Agreement until such Seller
surrenders their Certificate or Certificates for exchange as provided in this
Section 2.3 or delivers a lost stock certificate affidavit pursuant to Section
2.8 of this Agreement.
2.4 Fractional Shares. Notwithstanding any other provision of this
Agreement, if a Seller would otherwise have been entitled to receive a fraction
of a share of WARP Preferred Stock (after taking into account all Certificates
delivered by the Seller), the number of shares issuable to that Seller shall be
rounded up to the next whole number.
2.5 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 10:00 A.M. on or about
January 2, 2003, or at such other time as the parties, acting through their
authorized officers, may mutually agree. The Closing shall be held at the
offices of the Purchaser, or at such other location as may be mutually agreed
upon by the parties, or at multiple locations with signature pages and documents
being exchanged via facsimile transmission with originals then to follow by
overnight mail.
2.6 Directors and Officers. Xxxx Xxxxxxx and Xxxx Xxxx, current
directors of WARP, together with Xxxx Xxxxxx and such additional Persons as may
thereafter be elected or appointed, shall serve as the directors of SPIDER from
and after the Closing, in accordance with the Bylaws of SPIDER. With the
exception of Xxxx Xxxxxx, the directors of SPIDER in office immediately prior to
the Closing shall resign their respective positions as directors of SPIDER, as
shown on Schedule B , effective at the Closing, in accordance with the Bylaws of
SPIDER.
2.7 Tax Consequences. It is the intention of the parties hereto that no
taxable income or gain shall be recognized by any of the Sellers and that the
Transaction be deemed a tax-free exchange pursuant to the Act.
2.8 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by such Seller (setting forth the number of shares of
SPIDER Common Stock represented by such lost, stolen or destroyed Certificates),
WARP shall pay such Seller the Consideration Shares to which such Seller is
entitled.
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2.9 Stock Options. Purchaser will make available stock options for the
purchase of up to an aggregate of 81,653 shares of the common stock of Purchaser
to the employees of SPIDER under Purchaser's 2002 Stock Incentive Plan in
exchanges for all the outstanding options to purchase SPIDER Common Stock held
by such employees. The allocation of such options to the employees of SPIDER
will be made as set forth in Schedule 2.9 hereto. The terms of such options
shall be as described in the Award Agreements (as defined in the 2002 Stock
Incentive Plan) entered into by Purchaser and the employees of SPIDER who
participate in this exchange of options. The number of options to be issued
under this Section 2.9 is determined by the Exchange Ratio. In the event that
the Exchange Ratio is lowered or raised pursuant to the provisions of Section
2.2 above to reflect any change in the number of shares of SPIDER Common Stock
issued and outstanding at the Closing, then the number of options to be issued
shall equal the revised Exchange Ratio multiplied by the number of SPIDER
options held by each Person listed on Schedule 2.9 hereto.
2.10 Rights of Holders of Consideration Shares. Until surrendered for
exchange in accordance with the terms and conditions of the Put and Call
Agreement, each of the Consideration Shares shall from and after the Closing
Date represent for all purposes only the right to receive the consideration
provided for in Sections 1.03 and 2.03 of such Put and Call Agreement. Whenever
a stock-split, dividend or other distribution is declared by Purchaser on the
Purchaser Common Stock, the record date for which is at or after the Closing
Date, the declaration shall include all shares of Purchaser Common Stock
issuable pursuant to the Put and Call Agreement, but no shares, dividend or
other distribution payable to the holders of Purchaser Common Stock as of any
time subsequent to the Closing Date shall be delivered to the holder of any
Consideration Shares until such holder surrenders such Consideration Shares for
exchange as provided in the Put and Call Agreement. However, upon surrender of
such Consideration Shares, both the Purchaser Common Stock and any undelivered
shares or dividends payable in respect thereof (without interest) shall be
delivered and paid with respect to each share represented by such Consideration
Shares. In the event of a reverse stock-split of the Purchaser Common Stock by
Purchaser subsequent to the Closing Date, the conversion provisions of Sections
1.03 and 2.03 of the Put and Call Agreement shall be adjusted to reflect the
effects of such reverse stock-split.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND WARP
In order to induce SPIDER, the SPIDER Insiders and the Sellers to enter
into this Agreement and to consummate the transactions contemplated hereby, each
of Purchaser and WARP, jointly and severally, makes the representations and
warranties set forth below to SPIDER, the SPIDER Insiders and each of the
Sellers.
3.1 Organization; Standing and Power. Each of Purchaser and WARP is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and Canada, respectively. Purchaser and WARP have all
requisite right, power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. Purchaser and
WARP have all corporate right, power and authority to own or lease and operate
its properties, and to conduct its business as presently conducted and as
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proposed to be conducted. Purchaser and WARP are duly qualified to transact
business as a foreign corporation in all jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect on WARP or Purchaser.
3.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by Purchaser and WARP and all other agreements to
be executed, delivered and performed by Purchaser and WARP pursuant to this
Agreement (collectively, the "Purchaser Documents") and the consummation by
Purchaser and WARP of the transactions contemplated hereby and thereby have been
duly authorized by all requisite corporate action on the part of Purchaser and
WARP, as applicable. This Agreement and the Purchaser Documents have been duly
executed and delivered by Purchaser and WARP, and constitute legal, valid and
binding obligations of Purchaser and WARP, enforceable in accordance with their
respective terms, except to the extent that their enforcement is limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity.
3.3 Investment Representations. WARP is acquiring the securities
hereunder for its own account, for investment purposes only and not with a
present view or purpose for the resale or other distribution thereof.
3.4 No Violation or Conflict. The execution, delivery and performance
of this Agreement and the Purchaser Documents by Purchaser and WARP, and the
consummation by Purchaser and WARP of the transactions contemplated hereby and
thereby: (a) do not violate or conflict with any provision of law or regulation
(whether federal, provincial, state or local), or any writ, order or decree of
any court or governmental or regulatory authority, or any provision of Purchaser
or WARP's Articles of Incorporation or Bylaws or the equivalent organizational
documents thereof; and (b) except as set forth on Schedule 3.4 hereto, do not
and will not, with or without the passage of time or the giving of notice,
result in the breach of, or constitute a default (or an event that with notice
or lapse of time or both would become a default), cause the acceleration of
performance, give to others any right of termination, amendment, acceleration or
cancellation of or require any consent under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of Purchaser or WARP or
any of its Subsidiaries pursuant to any instrument or agreement to which
Purchaser or WARP is a party or by which Purchaser or WARP or its properties may
be bound or affected, other than instruments or agreements as to which consent
shall have been obtained at or prior to the Closing, each of which instruments
or agreements is listed in Schedule 3.4 hereto.
3.5 Consents of Governmental Authorities and Others. No consent,
approval, order or authorization of, or registration, declaration, qualification
or filing with any federal, provincial, state or local governmental or
regulatory authority, or any other Person, is required to be made by Purchaser
or WARP in connection with the execution, delivery or performance of this
Agreement by Purchaser or WARP or the consummation by Purchaser or WARP of the
transactions contemplated hereby.
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3.6 Litigation. Except as set forth on Schedule 3.6, there are no
actions, suits, investigations, claims or proceedings ("Litigation") pending or,
to the Knowledge of Purchaser or WARP, threatened before any court or by or
before any governmental or regulatory authority or arbitrator, (a) affecting
Purchaser or WARP (as plaintiff or defendant) which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Purchaser or (b) against WARP relating to WARP's Preferred shares or the
transactions contemplated by this Agreement. Schedule 3.6 sets forth a list of
any Litigation commenced against Purchaser or WARP in the last five (5) years.
3.7 Brokers. Purchaser and WARP have not employed any broker or finder,
and none of them has incurred or will incur, directly or indirectly, any
broker's, finder's, investment banking or similar fees, commissions or expenses
in connection with the transactions contemplated in this Agreement or the
Purchaser Documents.
3.8 Subsidiaries and Investments. Except as described on Schedule 3.8,
Purchaser has no Subsidiaries or Investments.
3.9 Commission Filings and Financial Statements. Attached hereto as
Schedule 3.9 is a true and complete list of all the Forms 10KSB, 10QSB, 8-K and
other required filings filed by Purchaser with the United States Securities and
Exchange Commission (collectively the "Periodic Reports") during Purchaser's
last fiscal year. The Periodic Reports, including the financial statements of
Purchaser therein: (a) have been prepared in accordance with the books of
account and records of Purchaser; (b) fairly present, and are true, correct and
complete statements, in all material respects, of Purchaser's financial
condition and the results of its operations at the dates and for the periods
specified in those statements; and (c) have been prepared in accordance with
GAAP consistently applied with prior periods, except as set forth on Schedule
3.9.
3.10 Conduct of Business. Except as disclosed on Schedule 3.10 hereto,
since September 30, 2002, Purchaser has conducted its businesses in the ordinary
and usual course consistent with past practices and there has not occurred any
adverse change in the condition (financial or otherwise), results of operations,
properties, assets, liabilities, business or prospects of Purchaser, and no such
change is threatened. Without limiting the generality of the foregoing, except
as disclosed on Schedule 3.10, since September 30, 2002, Purchaser has not: (a)
amended its Articles of Incorporation or Bylaws; (b) suffered any damage,
destruction or loss, whether or not covered by insurance, which has had or could
reasonably be expected to have a Material Adverse Effect on any of its
properties, assets, business or prospects; (c) granted or made any mortgage or
pledge or subjected itself, its Subsidiaries, or any of their properties or
assets to any lien, charge or encumbrance of any kind; (d) become subject to any
Guaranty; (e) been named as a party in any litigation, or become the focus of
any investigation by any government or regulatory agency or authority; or (f)
experienced any other event or condition of any character which has had or could
reasonably be expected to have a Material Adverse Effect on WARP or Purchaser.
3.11 Compliance. To the knowledge of each, Purchaser and WARP are in
compliance with all federal, provincial, state, local and foreign laws,
ordinances, regulations, judgments,
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rulings, orders and other requirements applicable to it including, without
limitation, those relating to (a) the development, manufacture, packaging,
distribution and marketing of its products, (b) the employment, safety and
health of its employees, and (d) Environmental Laws, the failure to comply with
any of which could reasonably be expected to have a Material Adverse Effect on
WARP. Purchaser and WARP are not subject to any judicial, governmental or
administrative order, judgment or decree.
3.12 Capitalization. The authorized capital stock of Purchaser consists
of 100,000,000 shares of common stock, par value $.00001 per share, of which
60,129,080 shares are issued and outstanding (the "Purchaser Common Stock"). The
Purchaser Common Stock constitutes one hundred percent (100%) of the issued and
outstanding capital stock of Purchaser. All of the Purchaser Common Stock has
been duly authorized, is validly issued and outstanding, and is fully paid and
non-assessable. The authorized capital stock of WARP consists of an unlimited
number of shares of common stock, no par value per share, of which 100 shares
are issued and outstanding and owned by Purchaser and an unlimited number of
shares of preferred stock of which no shares were issued and outstanding prior
to the Closing Date (the "WARP Preferred Stock"). All of WARP's common stock has
been duly authorized, is validly issued and outstanding, and is fully paid and
non-assessable. Upon issuance pursuant to this Agreement, the shares of WARP
Preferred Stock issued to the SPIDER Insiders and the Sellers shall have been
duly authorized, validly issued, and fully paid and non-assessable. Except as
set forth on Schedule 3.12 hereto, all taxes required to be paid in connection
with the issuance and any transfers of WARP's capital stock have been paid.
Based upon the shares of Purchaser Common Stock issued and outstanding on the
date of this Agreement, less than ten percent (10%) of the Purchaser's issued
and outstanding common stock would, upon the exchange of the Consideration
Shares for Purchaser Common Stock pursuant to the Put and Call Agreement, be
held by residents of Canada.
3.13 Rights, Warrants, Options. Except as set forth on Schedule 3.13
and pursuant to the Put and Call Agreement, there are no outstanding (a)
securities or instruments convertible into or exercisable for any of the capital
stock or other equity interests of Purchaser; (b) options, warrants,
subscriptions or other rights to acquire capital stock or other equity interests
of Purchaser; or (c) except as set forth on Schedule 3.13 hereto and pursuant to
the Put and Call Agreement, commitments, agreements or understandings of any
kind, including employee benefit arrangements, relating to the issuance or
repurchase by Purchaser of any capital stock or other equity interests of
Purchaser, or any instruments convertible or exercisable for any such securities
or any options, warrants or rights to acquire such securities.
3.14 Absence of Undisclosed Liabilities. Other than as disclosed by the
Periodic Reports of Purchaser, Purchaser, WARP and its Subsidiaries do not have
any direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, known or unknown, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise, including, without limitation, liabilities on account
of taxes or other governmental charges or Litigation, whether or not of a kind
required by GAAP to be set forth on a financial statement ("Liabilities") which
were not fully and adequately reflected in the Periodic Reports of Purchaser or
Schedule 3.14. Except as listed on Schedule 3.14, Purchaser and its Subsidiaries
do not have any Liabilities, other than (i) Liabilities fully and
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adequately reflected in the Periodic Reports of WARP and (ii) those incurred
since September 30, 2002 in the ordinary course of business.
3.15 Licenses. Schedule 3.15 lists all material authorizations,
consents, approvals, franchises, licenses and permits ("Governmental
Authorizations") required under applicable law or regulation for the operation
of the business of Purchaser and WARP and its Subsidiaries as presently
operated. All the Governmental Authorizations have been duly issued or obtained
and are in full force and effect, and Purchaser and WARP and its Subsidiaries
are in material compliance with the terms of all the Governmental
Authorizations. Except as set forth on Schedule 3.15, no fact or condition
exists which could cause the Governmental Authorizations not to be renewed by
the appropriate governmental authorities in the ordinary course. No material
violations have been recorded in respect of any Governmental Authorization and
no proceeding is pending or threatened, to revoke any Governmental
Authorization. The execution, delivery or performance by Purchaser and WARP of
this Agreement and the other documents contemplated hereby shall not adversely
affect the status of any of the Governmental Authorizations.
3.16 Tax Matters. Except as set forth on Schedule 3.16, all tax returns
and tax reports required to be filed with respect to the income, operations,
business or assets of Purchaser and WARP and its Subsidiaries have been timely
filed (or appropriate extensions have been obtained which extensions are listed
on Schedule 3.16) with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be filed, all of
the foregoing as filed are true, correct and complete in all material respects,
and reflect accurately all liability for taxes of Purchaser and WARP and its
Subsidiaries for the periods to which such returns relate, and all amounts shown
as owing thereon have been paid. Except as set forth on Schedule 3.16, all
income, profits, franchise, sales, use, value added, occupancy, property,
excise, payroll, withholding, FICA, FUTA and other taxes (including interest and
penalties), if any, collectible or payable by Purchaser and WARP or its
Subsidiaries or relating to or chargeable against any of their assets, revenues
or income or relating to any employee, independent contractor, creditor,
stockholder or other third party through the date hereof which were required to
be collected and/or paid by Purchaser and WARP and its Subsidiaries, were fully
collected and paid by such date or provided for by adequate reserves. Except as
set forth on Schedule 3.16, no taxation authority has sought to audit the
records of Purchaser or WARP or its Subsidiaries for the purpose of verifying or
disputing any tax returns, reports or related information and disclosures
provided to such taxation authority, or for Purchaser or WARP or its
Subsidiaries' alleged failure to provide any such tax returns, reports or
related information and disclosure. Except as provided on Schedule 3.16, no
claims or deficiencies have been asserted against or inquiries raised with
Purchaser or WARP or its Subsidiaries with respect to any taxes or other
governmental charges or levies which have not been paid or otherwise satisfied,
including claims that, or inquiries whether, Purchaser or WARP or its
Subsidiaries have not filed a tax return that they were required to file, and
there exists no reasonable basis for the making of any such claims or inquiries.
3.17 Intellectual Property Rights. Except as set forth on Schedule
3.17, to its Knowledge, Purchaser has all right, title and interest in each item
of its Intellectual Property necessary for Purchaser to be legally entitled to
conduct its business as presently being
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conducted. Except as otherwise indicated on Schedule 3.17, Purchaser has not
received any written notice that it is in conflict with or infringing upon the
asserted rights of others in connection with its Intellectual Property and
neither the use of such Intellectual Property by Purchaser nor the operation of
its business is, to Purchaser's Knowledge, infringing on nor has infringed upon
any rights of others, and the consummation of the transactions contemplated
hereby will not alter or impair any of its Intellectual Property.
3.18 Absence of Certain Business Practices. Neither Purchaser, WARP nor
its Subsidiaries, to its Knowledge, has with respect to the business or
activities of Purchaser or WARP: (a) received, directly or indirectly, any
rebates, payments, commissions, promotional allowances or any other economic
benefits, regardless of their nature or type, from any customer, supplier,
trading company, shipping company, governmental employee or other Person with
whom Purchaser or WARP or its Subsidiaries have done business directly or
indirectly; or (b) directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, supplier, trading company, shipping company,
governmental employee or other Person who is or may be in a position to help or
hinder the business of Purchaser or WARP or its Subsidiaries (or assist them in
connection with any actual or proposed transaction) which (i) may subject
Purchaser or WARP or its Subsidiaries to any material damage or any penalty in
any civil, criminal or governmental litigation or proceeding, (ii) if not given
in the past, may have had a Material Adverse Effect on the assets, business or
operations of WARP as reflected in the Periodic Reports of WARP or (iii) if not
continued in the future, may materially adversely affect the assets, business or
operations of WARP or subject Purchaser or WARP or its Subsidiaries to suit or
penalty in any private or governmental litigation or proceeding.
3.19 Disclosure. No representation or warranty of Purchaser or WARP
contained in this Agreement, and no statement, report, or certificate furnished
by or on behalf of Purchaser or WARP to SPIDER, the SPIDER Insiders and the
Sellers or their agents pursuant hereto or in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading or omits or will omit to state a material fact
necessary in order to provide SPIDER, the SPIDER Insiders and the Sellers with
full and proper information as to the business, financial condition, assets,
liabilities, results of operation or prospects of Purchaser or WARP and the
value of its properties and the ownership and operation of Purchaser or WARP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPIDER, SPIDER INSIDERS
AND THE SELLERS
Representations and Warranties of SPIDER and the SPIDER Insiders
In order to induce Purchaser and WARP to enter into this Agreement and
to consummate the transactions contemplated hereby, SPIDER and the SPIDER
Insiders make the representations and warranties set forth below to Purchaser
and WARP.
4.1 Organization. SPIDER is a corporation duly organized, validly
existing and in good standing under the laws of Canada. SPIDER and its
Subsidiaries are duly qualified to
11
transact business as a foreign corporation in all jurisdictions where the
ownership or leasing of their properties or the conduct of their business
requires such qualification, except where the failure to so qualify would not
have a Material Adverse Effect on SPIDER. Each jurisdiction in which SPIDER and
its Subsidiaries are so qualified are listed on Schedule 4.1 hereto. SPIDER and
its Subsidiaries have the requisite power and authority to (a) own or lease and
operate their properties and (b) conduct their business as presently conducted.
4.2 Authorization; Enforceability. SPIDER has the capacity to execute,
deliver and perform this Agreement. This Agreement and all other documents
executed and delivered by SPIDER and the SPIDER Insiders pursuant to this
Agreement have been duly executed and delivered and constitute the legal, valid
and binding obligations of SPIDER and the SPIDER Insiders, assuming the due
authorization, execution and delivery of this Agreement by WARP and the
Purchaser, enforceable in accordance with their respective terms, except to the
extent that their enforcement is limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights generally and by general principals of equity.
4.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement and the other documents contemplated hereby by SPIDER and the
SPIDER Insiders, and the consummation by SPIDER and the SPIDER Insiders of the
transactions contemplated hereby: (a) do not violate or conflict with any
provision of law or regulation (whether federal, provincial or local), or any
writ, order or decree of any court or governmental or regulatory authority, or
any provision of SPIDER's Certificate of Incorporation or Bylaws; and (b) except
as set forth on Schedule 4.3 hereto, do not, with or without the passage of time
or the giving of notice, result in the breach of, or constitute a default, cause
the acceleration of performance or require any consent under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of
SPIDER pursuant to any instrument or agreement to which SPIDER is a party or by
which SPIDER or its properties may be bound or affected, other than instruments
or agreements as to which consent shall have been obtained at or prior to the
Closing, each of which instruments or agreements is listed in Schedule 4.3
hereto.
4.4 Consents of Governmental Authorities and Others. No consent,
approval or authorization of, or registration, qualification or filing with any
federal, provincial or local governmental or regulatory authority, or any other
Person, is required to be made by SPIDER or the SPIDER Insiders in connection
with the execution, delivery or performance of this Agreement by SPIDER and the
SPIDER Insiders or the consummation by them of the transactions contemplated
hereby, excluding the execution, delivery and performance of this Agreement by
the Sellers.
4.5 Conduct of Business. Except as disclosed on Schedule 4.5 hereto,
since June 30, 2002, SPIDER has conducted its businesses in the ordinary and
usual course consistent with past practices and there has not occurred any
adverse change in the condition (financial or otherwise), results of operations,
properties, assets, liabilities, business or prospects of SPIDER, and no such
change is threatened. Without limiting the generality of the foregoing, except
as disclosed on Schedule 4.5, since June 30, 2002, SPIDER has not: (a) amended
its Certificate of Incorporation or Bylaws; (b) issued, sold or authorized for
issuance or sale, shares of any class of its securities (including, but not
limited to, by way of stock split or dividend) or any subscriptions, options,
12
warrants, rights or convertible securities or entered into any agreements or
commitments of any character obligating it to issue or sell any such securities;
(c) redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of its capital stock or any option, warrant or other right to purchase or
acquire any such capital stock; (d) suffered any damage, destruction or loss,
whether or not covered by insurance, which has had or could reasonably be
expected to have a Material Adverse Effect on any of its properties, assets,
business or prospects; (e) granted or made any mortgage or pledge or subjected
itself, its Subsidiaries, or any of their properties or assets to any lien,
charge or encumbrance of any kind; (f) made or committed to make any capital
expenditures in excess of $10,000; (g) become subject to any Guaranty; (h)
granted any increase in the compensation payable or to become payable to
directors, officers or employees (including, without limitation, any such
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment); (i) amended or terminated any existing Material Agreement; (j) been
named as a party in any litigation, or become the focus of any investigation by
any government or regulatory agency or authority; (k) declared or paid any
dividend or other distribution with respect to its capital stock; or (l)
experienced any other event or condition of any character which has had or could
reasonably be expected to have a Material Adverse Effect on SPIDER. Schedule 4.5
sets forth a true and complete list of all bonuses or other distributions made
by SPIDER or its Subsidiaries since June 30, 2002.
4.6 Litigation. Except as set forth on Schedule 4.6, there are no
Litigations pending before any court or by or before any governmental or
regulatory authority or arbitrator, (a) affecting SPIDER or its Subsidiaries (as
plaintiff or defendant) which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on SPIDER or (b)
against SPIDER relating to the SPIDER Common Stock or the transactions
contemplated by this Agreement. Schedule 4.6 sets forth a list of all Litigation
commenced against SPIDER or its Subsidiaries since the date of its
incorporation.
4.7 Brokers. SPIDER and the SPIDER Insiders have not employed any
broker or finder, and have not incurred and will not incur any broker's,
finder's, investment banking or similar fees, commissions or expenses in
connection with the share exchange memorialized by this Agreement.
4.8 Compliance. To the knowledge of the SPIDER Insiders, SPIDER is in
compliance with all federal, provincial, local and foreign laws, ordinances,
regulations, judgments, rulings, orders and other requirements applicable to it
including, without limitation, those relating to (a) the development,
manufacture, packaging, distribution and marketing of its products, (b) the
employment, safety and health of its employees, and (d) Environmental Laws, the
failure to comply with any of which could reasonably be expected to have a
Material Adverse Effect on SPIDER. SPIDER and the SPIDER Insiders are not
subject to any judicial, governmental or administrative order, judgment or
decree.
4.9 Charter, Bylaws and Corporate Records. A true, correct and complete
copy of (a) the Certificate of Incorporation of SPIDER and its Subsidiaries, as
amended and in effect on the date hereof, and (b) the Bylaws of SPIDER and its
Subsidiaries, as amended and in effect on the date hereof, are attached hereto
as Schedule 4.9.
13
4.10 Subsidiaries and Investments. Except as described on Schedule
4.10, SPIDER has no Subsidiaries or Investments. SPIDER owns one hundred percent
(100%) of the issued and outstanding capital stock of the Subsidiaries listed on
Schedule 4.10.
4.11 Capitalization. The authorized capital stock of SPIDER consists of
an unlimited number of shares of common stock, no par value per share, of which
7,587,000 shares are issued and outstanding (the "SPIDER Common Stock"). The
SPIDER Common Stock constitutes one hundred percent (100%) of the issued and
outstanding capital stock of SPIDER. The SPIDER Common Stock is owned by the
Sellers in the amounts set forth on Schedule A. All of the SPIDER Common Stock
has been duly authorized, is validly issued and outstanding, and is fully paid
and nonassessable. No securities issued by SPIDER from the date of its
incorporation to the date hereof were issued in violation of any Canadian or
United States federal or state securities laws or any statutory or common law
pre-emptive rights. There are no dividends which have accrued or been declared
but are unpaid on the capital stock of SPIDER. Except as set forth on Schedule
4.11 hereto, all taxes required to be paid in connection with the issuance and
any transfers of SPIDER's capital stock have been paid. All permits or
authorizations required to be obtained from or registrations required to be
effected with any Person in connection with any and all issuances of securities
of SPIDER from the date of its incorporation to the date hereof have been
obtained or effected and all securities of SPIDER have been issued and are held
in accordance with the provisions of all applicable securities or other laws.
4.12 Rights, Warrants, Options. Except as set forth on Schedule 4.12,
there are no outstanding (a) securities or instruments convertible into or
exercisable for any of the capital stock or other equity interests of SPIDER;
(b) options, warrants, subscriptions or other rights to acquire capital stock or
other equity interests of SPIDER; or (c) except as set forth on Schedule 4.12
hereto, commitments, agreements or understandings of any kind, including
employee benefit arrangements, relating to the issuance or repurchase by SPIDER
of any capital stock or other equity interests of SPIDER, or any instruments
convertible or exercisable for any such securities or any options, warrants or
rights to acquire such securities.
4.13 Financial Statements. Attached hereto as Schedule 4.13 are true
and complete copies of the Financial Statements of SPIDER. The Financial
Statements of SPIDER: (a) have been prepared in accordance with the books of
account and records of SPIDER; (b) fairly present, and are true, correct and
complete statements, in all material respects, of SPIDER's financial condition
and the results of its operations at the dates and for the periods specified in
those statements; and (c) have been prepared in accordance with GAAP
consistently applied with prior periods, except as set forth on Schedule 4.13.
4.14 Absence of Undisclosed Liabilities. Other than as disclosed by the
Financial Statements of SPIDER, SPIDER and its Subsidiaries do not have any
direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, known or unknown, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise, including, without limitation, liabilities on account
of taxes or other governmental charges or Litigation, whether or not of a kind
required by GAAP to be set forth on a financial statement ("Liabilities") which
were not fully and adequately reflected on the Financial Statements of SPIDER or
Schedule 4.14. Except as listed on Schedule 4.14,
14
SPIDER and its Subsidiaries do not have any Liabilities, other than (i)
Liabilities fully and adequately reflected on the Financial Statements of SPIDER
and (ii) those incurred since June 30, 2002 in the ordinary course of business.
4.15 Real Property. SPIDER and its Subsidiaries do not own any fee
simple interest in real property. SPIDER and its Subsidiaries do not lease or
sublease any real property other than as set forth on Schedule 4.15. Schedule
4.15 sets forth the street address of each parcel of real property leased or
subleased by SPIDER and its Subsidiaries. SPIDER and its Subsidiaries enjoy
peaceful and undisturbed possession of its leased property. No Person other than
SPIDER and its Subsidiaries have any right to use or occupy any part of their
leased property. SPIDER and its Subsidiaries' leases are valid, binding and in
full force and effect. SPIDER and its Subsidiaries have not received any notice
of any pending, threatened or contemplated eviction or condemnation proceeding
affecting any of its leased property or any part thereof. There are no
Liabilities (other than rent and other sums and charges regularly payable)
associated with any of properties identified on Schedule 4.15 including, without
limitation, any Liability under any Environmental Law or regulation.
4.16 Licenses. Schedule 4.16 lists all material authorizations,
consents, approvals, franchises, licenses and permits ("Governmental
Authorizations") required under applicable law or regulation for the operation
of the business of SPIDER and its Subsidiaries as presently operated. All the
Governmental Authorizations have been duly issued or obtained and are in full
force and effect, and SPIDER and its Subsidiaries are in material compliance
with the terms of all the Governmental Authorizations. Except as set forth on
Schedule 4.16, no fact or condition exists which could cause the Governmental
Authorizations not to be renewed by the appropriate governmental authorities in
the ordinary course. No material violations have been recorded in respect of any
Governmental Authorization and no proceeding is pending or threatened, to revoke
any Governmental Authorization. The execution, delivery or performance by SPIDER
of this Agreement and the other documents contemplated hereby shall not
adversely affect the status of any of the Governmental Authorizations.
4.17 Intellectual Property Rights. Except as set forth on Schedule
4.17, SPIDER and its Subsidiaries have all right, title and interest in each
item of the Intellectual Property necessary for SPIDER and its Subsidiaries to
be legally entitled to conduct their business as presently being conducted.
Except as otherwise indicated on Schedule 4.17: (i) SPIDER and its Subsidiaries
are the sole and exclusive owner of all right, title and interest in and to all
of their Intellectual Property, and have the exclusive right to use and license
the same, free and clear of any claim or conflict with the rights of others;
(ii) no royalties or fees (license or otherwise) are payable by SPIDER or its
Subsidiaries to any Person by reason of the ownership or use of any of SPIDER or
its Subsidiaries' Intellectual Property; (iii) there have been no claims made
against SPIDER or its Subsidiaries asserting the invalidity, abuse, misuse, or
unenforceability of any of their Intellectual Property, (iv) SPIDER and its
Subsidiaries have not made any claim of any violation or infringement by others
of their rights in their Intellectual Property; (v) SPIDER and its Subsidiaries
have not received any written notice that they are in conflict with or
infringing upon the asserted rights of others in connection with their
Intellectual Property and neither the use of the Intellectual Property by SPIDER
or its Subsidiaries nor the operation of their business is infringing on nor has
infringed upon any rights of others; and (vi) the consummation of the
15
transactions contemplated hereby will not alter or impair any of SPIDER or its
Subsidiaries' Intellectual Property.
4.18 Employment Agreements and Employee Benefit Plans.
(a) Except as set forth in Schedule 4.18, SPIDER and its Subsidiaries
are not a party to any employment contracts and have not had any defined
contribution plan and are not part of a controlled group contributing to any
defined contribution plan and are not a party to any collective bargaining
agreements. SPIDER and its Subsidiaries have not, nor do they, contribute to any
pension, profit-sharing, option, other incentive plan, or any other type of
employee benefit plan, or any health, dental, vision, long term disability,
short term disability, life insurance or other welfare benefits plan, or have
any obligation to or customary arrangement with employees for bonuses, incentive
compensation, severance pay, insurance, or other benefits (collectively
"Employee Benefit Plans"), except as set forth in Schedule 4.18 and are not part
of a controlled group with regard to any of the foregoing. Schedule 4.18 also
contains a true and correct statement of the names, relationship with SPIDER or
its Subsidiaries, and present rates of annual compensation (showing the
components of salary, bonuses, commissions, or other supplemental compensation)
as of June 30, 2002 of each director, officer, consultant or employee of SPIDER
and its Subsidiaries. Except as set forth on Schedule 4.18, since June 30, 2002,
SPIDER and its Subsidiaries have not changed the rate of compensation of any of
their directors, officers, consultants or employees.
(b) There are no complaints, charges, claims, allegations, grievances,
or litigations pending or threatened which reflect or pertain to: (i) any
federal, state or local labor, employment, anti-discrimination, workers
compensation, disability or unemployment law, regulation or ordinance; (ii) any
claim for wrongful discharge, harassment, discrimination, or employment related
tort; or (iii) any employment agreement, restrictive covenant, non-competition
agreement or employee confidentiality agreement, which, in any such case, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on SPIDER.
4.19 Tax Matters. All tax returns and tax reports required to be filed
with respect to the income, operations, business or assets of SPIDER and its
Subsidiaries have been timely filed (or appropriate extensions have been
obtained which extensions are listed on Schedule 4.19) with the appropriate
governmental agencies in all jurisdictions in which such returns and reports are
required to be filed, all of the foregoing as filed are true, correct and
complete in all material respects, and reflect accurately all liability for
taxes of SPIDER and its Subsidiaries for the periods to which such returns
relate, and all amounts shown as owing thereon have been paid. Except as set
forth on Schedule 4.19, all income, profits, franchise, sales, use, value added,
occupancy, property, excise, payroll, withholding and other taxes (including
interest and penalties), if any, collectible or payable by SPIDER or its
Subsidiaries or relating to or chargeable against any of their assets, revenues
or income or relating to any employee, independent contractor, creditor,
stockholder or other third party through the date hereof which were required to
be collected and/or paid by SPIDER and its Subsidiaries, were fully collected
and paid by such date or provided for by adequate reserves in the December 31,
2001 Financial Statements of SPIDER. Except as set forth on Schedule 4.19, no
taxation authority has sought to
16
audit the records of SPIDER or its Subsidiaries for the purpose of verifying or
disputing any tax returns, reports or related information and disclosures
provided to such taxation authority, or for SPIDER or its Subsidiaries' alleged
failure to provide any such tax returns, reports or related information and
disclosure. Except as provided on Schedule 4.19, no claims or deficiencies have
been asserted against or inquiries raised with SPIDER or its Subsidiaries with
respect to any taxes or other governmental charges or levies which have not been
paid or otherwise satisfied, including claims that, or inquiries whether, SPIDER
or its Subsidiaries have not filed a tax return that they were required to file,
and there exists no reasonable basis for the making of any such claims or
inquiries. SPIDER and its Subsidiaries have not waived any restrictions on
assessment or collection of taxes or consented to the extension of any statute
of limitations relating to taxation other than filing extensions as set forth on
Schedule 4.19.
4.20 Material Agreements.
(a) Schedule 4.20 sets forth a brief description of all material
written and oral contracts or agreements relating to SPIDER and its Subsidiaries
(except with respect to the leases, which are set forth on Schedule 4.15, which
is hereby incorporated by reference into Schedule 4.20 and made a part thereof),
including without limitation any: (i) contract resulting in a commitment or
potential commitment for expenditure or other obligation or potential
obligation, or which provides for the receipt or potential receipt, involving in
excess of Ten Thousand Dollars ($10,000.00) in any instance, or series of
related contracts that in the aggregate give rise to rights or obligations
exceeding such amount; (ii) indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment for the borrowing or
lending of money or encumbrance of assets involving more than Ten Thousand
Dollars ($10,000.00) in each instance; (iii) agreement which restricts SPIDER or
its Subsidiaries from engaging in any line of business or from competing with
any other Person; (iv) warranties made with respect to products manufactured,
packaged, distributed or sold by SPIDER or its Subsidiaries; or (v) any other
contract, agreement, instrument, arrangement or commitment that is material to
the condition (financial or otherwise), results of operation, assets,
properties, liabilities, business or prospects of SPIDER or its Subsidiaries
(collectively, and together with the leases, employment agreements, Employee
Benefit Plans and all other agreements required to be disclosed on any Schedule
to this Agreement, the "Material Agreements").
(b) Except as set forth on Schedule 4.20, none of the Material
Agreements were entered into outside the ordinary course of business of SPIDER
or its Subsidiaries, contain any provisions that will impair or adversely effect
in any material way the operations of SPIDER or its Subsidiaries, or is
reasonably likely to be performed at a material loss.
(c) The Material Agreements are each in full force and effect and are
the valid and legally binding obligations of SPIDER and its Subsidiaries and the
other parties thereto, enforceable in accordance with their respective terms,
subject only to bankruptcy, insolvency or similar laws affecting the rights of
creditors generally and to general equitable principles. SPIDER and its
Subsidiaries have not received notice of default by them under any of the
Material Agreements. Neither SPIDER, nor its Subsidiaries nor any of the other
parties to any of the Material Agreements are in default thereunder. SPIDER and
its Subsidiaries have not
17
received notice of the pending or threatened cancellation, revocation or
termination of any of the Material Agreements.
(d) Except as otherwise indicated on Schedule 4.20, the continuation,
validity and effectiveness of the Material Agreements under the current terms
thereof will in no way be adversely affected by the consummation of the
transactions contemplated by this Agreement.
4.21 Guaranties. Except as set forth on Schedule 4.21, SPIDER and its
Subsidiaries are not a party to any Guaranty, and no Person is a party to any
Guaranty for the benefit of SPIDER or its Subsidiaries.
4.22 Accounts and Notes Receivable. Except as set forth on Schedule
4.22, all accounts and notes receivable of SPIDER and its Subsidiaries have
arisen in the ordinary course of business, represent valid obligations to SPIDER
or its Subsidiaries and, subject only to reserves for bad debts on the books of
SPIDER, have been collected or are collectible in the aggregate recorded amounts
thereof in accordance with their terms. All items which are required by GAAP to
be reflected as accounts and notes receivable on the Financial Statements of
SPIDER and on the books of SPIDER and its Subsidiaries are so reflected.
4.23 Absence of Certain Business Practices. Neither SPIDER, nor its
Subsidiaries nor the SPIDER Insiders, to the Knowledge of each, has with respect
to the business or activities of SPIDER: (a) received, directly or indirectly,
any rebates, payments, commissions, promotional allowances or any other economic
benefits, regardless of their nature or type, from any customer, supplier,
trading company, shipping company, governmental employee or other Person with
whom SPIDER or its Subsidiaries have done business directly or indirectly; or
(b) directly or indirectly, given or agreed to give any gift or similar benefit
to any customer, supplier, trading company, shipping company, governmental
employee or other Person who is or may be in a position to help or hinder the
business of SPIDER or its Subsidiaries (or assist them in connection with any
actual or proposed transaction) which (i) may subject SPIDER or its Subsidiaries
to any material damage or any penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, may have had a Material
Adverse Effect on the assets, business or operations of SPIDER as reflected in
the Financial Statements of SPIDER or (iii) if not continued in the future, may
materially adversely affect the assets, business or operations of SPIDER or
subject SPIDER or its Subsidiaries to suit or penalty in any private or
governmental litigation or proceeding.
4.24 Disclosure. No representation or warranty of SPIDER or the SPIDER
Insiders contained in this Agreement, and no statement, report, or certificate
furnished by or on behalf of SPIDER or the SPIDER Insiders to WARP or its agents
pursuant hereto or in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading or omits or will omit to state a material fact necessary in order to
provide WARP with full and proper information as to the business, financial
condition, assets, results of operation or prospects of SPIDER and the value of
its properties or the ownership or operation of SPIDER.
18
Representations and Warranties of Sellers.
In order to induce Purchaser and WARP to enter into this Agreement and
to consummate the transactions contemplated hereby, each of the Sellers,
severally and not jointly and only as to itself, makes the representations and
warranties set forth below to Purchaser and WARP.
4.25 Title to Securities. Except for 3994 Investments, Ltd. which holds
its SPIDER Common Stock as bear trustee for the partnership of Fasken Xxxxxxxxx
XxXxxxxx LLP, such Seller is the recorded and beneficial owner of the SPIDER
Common Stock listed opposite its name on Schedule A, and such shares of SPIDER
Common Stock are owned free and clear of any liens, encumbrances, pledges,
security interests and claims whatsoever.
4.26 Authority. Such Seller has full right, power and authority to
enter into this Agreement.
4.27 Knowledge and Experience. Such Seller, individually and/or
together with its professional advisors, has evaluated the merits and risks of
acquiring the Consideration Shares, and has such knowledge and experience in
financial, tax and business matters, including substantial experience in
evaluating financial statements and investing in securities (including the
securities of new and speculative companies) so as to enable such Seller to
evaluate the information made available by SPIDER, the SPIDER Insiders and
Purchaser to such Seller in order to evaluate the merits and risks of acquiring
the Consideration Shares and to make an informed decision with respect to such
Seller's execution of this Agreement.
4.28 Non-U.S. Resident. Such Seller represents and warrants that if
such Seller is an individual, he or she is not a citizen of the United States of
America and is not domiciled in nor a resident of the United States of America
and, if such Seller is not an individual, that its jurisdiction of incorporation
or formation is other than the United States of America and that its principle
executive offices are outside the United States of America.
4.29 Opportunity to Question; Adequate Information. Such Seller has had
the opportunity to ask questions of SPIDER, the SPIDER Insiders and Purchaser
and their appropriate executive officers and has, to the extent desired by such
Seller, received answers and additional information from them which was
necessary to evaluate the merits and risks of acquiring the Consideration Shares
pursuant to this Agreement.
4.30 Risks Relating to Exchange. Such Seller understands the risks
associated with the acquisition of the Consideration Shares. Further, such
Seller has carefully read and considered the matters set forth herein and has
taken full cognizance of and understands the terms of this Agreement.
4.31 Investment Intent. Such Seller is acquiring the Consideration
Shares solely for investment purposes for its own account and not with a view
to, or for, resale in connection with any distribution thereof. Such Seller
understands that the issuance by WARP of the Consideration Shares hereunder has
not been registered under the Securities Act by reason of their contemplated
issuance in a transaction exempt from the registration and prospectus delivery
19
requirements of the Securities Act and that the reliance of WARP on such
exemption from registration is predicated in part on the representations and
warranties of the Seller set forth in this Agreement. Such Seller acknowledges
that a restrictive legend consistent with the foregoing will be placed on the
certificates representing the Consideration Shares.
4.32 Resale of the Securities. Such Seller understands that the
Consideration Shares received pursuant to this Agreement may not be transferred,
encumbered, sold, hypothecated, or otherwise disposed of unless such transfer or
other disposition has been registered under the Securities Act or, in the
opinion of counsel reasonably satisfactory to WARP, is exempt from registration
under the Securities Act, and has been registered or qualified or, in the
opinion of such counsel, is exempt from registration or qualification under
applicable provincial securities laws. Such Seller understands that WARP and
SPIDER are under no obligation to register or seek an exemption under the
federal securities laws, state securities laws, or any foreign securities laws
or to cause or permit such Consideration Shares to be transferred in the absence
of any such registration or exemption.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Survival of the Representations and Warranties. The representations
and warranties contained in Sections 3.1, 3.2, 3.12, 4.1, 4.2, 4.11 and 4.12 and
the covenants in Section 7.1, 7.2 and 7.4 shall survive the Closing and remain
in effect indefinitely. The representations and warranties contained in Section
4.15 (relating to environmental matters), shall survive the Closing until the
expiration of three (3) years from the Closing Date. The representations and
warranties contained in Section 4.19 (relating to taxes), shall survive the
Closing until the later of the expiration of twenty four months from the Closing
Date or the expiration of the last day of the statute of limitations applicable
to any action against SPIDER based upon the non-payment of taxes, or other
violation of the Act, which occurred prior to the Closing Date. Except as set
forth above, the representations and warranties and covenants of Purchaser,
WARP, SPIDER, the SPIDER Insiders and the Sellers contained in this Agreement
shall survive the Closing until the expiration of twenty-four months from the
Closing Date. No claim for indemnity with respect to breaches of representations
and warranties may be brought by any party hereto, other than a claim for fraud
or intentional misrepresentation, after expiration of the applicable survival
period therefore as set forth in this Section 5.1.
5.2 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. All statements contained herein or in any
schedule, certificate, exhibit, list or other document required to be delivered
pursuant hereto, shall be deemed to be representations and warranties for
purposes of this Agreement; provided, that any knowledge or materiality
qualifications contained herein shall be applicable to such other documents.
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5.3 Indemnification.
(a) Purchaser agrees to indemnify and hold harmless each of SPIDER, the
SPIDER Insiders, their Affiliates, each of their officers, directors, employees
and agents and their respective successors and assigns and the Sellers and each
of their officers, directors, employees and agents and their respective
successors and assigns, from and against any losses, damages, costs or expenses
(including reasonable legal fees and expenses) which are caused by or arise out
of (i) any breach or default in the performance by Purchaser or WARP of any
covenant or agreement made by Purchaser or WARP in this Agreement; (ii) any
breach of warranty or representation made by Purchaser or WARP in this
Agreement; and (iii) any and all Litigations incident to any of the foregoing.
SPIDER and the SPIDER Insiders agree to indemnify and hold harmless Purchaser,
WARP, its Affiliates, each of its officers, directors, employees and agents and
their respective successors and assigns, from and against any losses, damages,
or expenses which are caused by or arise out of (i) any breach or default in the
performance by any of the SPIDER Insiders, SPIDER or the Sellers of any covenant
or agreement made by any of the SPIDER Insiders, SPIDER or the Sellers in this
Agreement; (ii) any breach of warranty or representation made by any of the
SPIDER Insiders, SPIDER or the Sellers in this Agreement; and (iii) any and all
Litigations incident to any of the foregoing. No party to this Agreement shall
be entitled to indemnification from any of the Sellers pursuant to Section 5.3
hereto or any other provision of this Agreement or of the Purchaser Documents.
(b) The maximum liability of each of the SPIDER Insiders to Purchaser
or WARP for any and all claims arising from or relating to this Agreement or the
transaction contemplated hereby, whether asserted as breach of contract, tort,
violation of statute or otherwise, irrespective of the theory or basis of such
claim, shall be limited to the portion of the Consideration Shares received by
each such SPIDER Insider, provided however, that the limitation set forth in
this section shall not apply to (i) any breach by Xxxx Xxxxxx of the
representations, warranties or covenants contained in Sections 4.2, 4.11, 4.12,
4.25 through 4.32, 7.1 and 7.2, or by Xxxx Xxxxxxxx of the representations,
warranties or covenants contained in Sections 4.25 through 4.32, 7.1 and 7.2 or,
(ii) the commission of fraud or any intentional misrepresentations by each such
SPIDER Insider with respect to any matters pertaining to this Agreement and the
consummation of the transactions contemplated hereby, which shall be indemnified
by such SPIDER Insider to Purchaser or WARP dollar for dollar to the extent any
liability with respect to such matter exists.
5.4 Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
(a) An Indemnified Party under this Agreement shall, with respect to
claims asserted against such party by any third party, give written notice to
the Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement within sixty (60) business days of the receipt of
any written claim from any such third party, but not later than twenty (20) days
prior to the date any answer or responsive pleading is due, and with respect to
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity;
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provided, however, that any failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are materially prejudiced.
(b) The Indemnifying Party shall have the right, at its election, to
take over the defense or settlement of such claim by giving written notice to
the Indemnified Party at least fifteen (15) days prior to the time when an
answer or other responsive pleading or notice with respect thereto is required.
If the Indemnifying Party makes such election, it may conduct the defense of
such claim through counsel of its choosing (subject to the Indemnified Party's
approval of such counsel, which approval shall not be unreasonably withheld),
shall be solely responsible for the expenses of such defense and shall be bound
by the results of its defense or settlement of the claim. The Indemnifying Party
shall not settle any such claim without prior notice to and consultation with
the Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties and
representation of both parties by the same counsel would be inappropriate. If
the Indemnifying Party does not make such election then the Indemnified Party
may (after written notice to the Indemnifying Party), at the expense of the
Indemnifying Party, elect to take over the defense of and proceed to handle such
claim in its discretion and the Indemnifying Party shall be bound by any defense
or settlement that the Indemnified Party may make in good faith with respect to
such claim. In connection therewith, the Indemnifying Party will fully cooperate
with the Indemnified Party should the Indemnified Party elect to take over the
defense of any such claim.
(c) The parties agree to cooperate in defending such third party claims
and the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party shall reasonably request
with respect to any matter for which indemnification is sought hereunder; and
the parties hereto agree to cooperate with each other in order to ensure the
proper and adequate defense thereof.
(d) With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, provided that there is no dispute as
to the applicability of indemnification, the reasonable expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party if such expenses are a liability of the Indemnifying Party.
5.5 General Release. As additional consideration for the issuance of
the Consideration Shares pursuant to this Agreement, each of the SPIDER Insiders
hereby
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unconditionally and irrevocably releases and forever discharges, effective as of
the Closing Date, SPIDER, its Subsidiaries and its officers, directors,
employees and agents, from any and all rights, claims, demands, judgments,
obligations, liabilities and damages, whether accrued or unaccrued, asserted or
unasserted, and whether known or unknown, relating to SPIDER which ever existed
or now exist, by reason of any tort, breach of contract, violation of law or
other act or failure to act which shall have occurred at or prior to the Closing
Date, or in relation to any other liabilities of SPIDER to the SPIDER Insiders.
The SPIDER Insiders expressly intend that the foregoing release shall be
effective regardless of whether the basis for any claim or right hereby released
shall have been known to or anticipated by the SPIDER Insiders. Notwithstanding
the foregoing or anything else to the contrary contained herein, the foregoing
provisions of this Section 5.5 shall not apply to claims against Purchaser or
WARP for indemnification pursuant to this Article V to the extent applicable.
ARTICLE VI
CLOSING; DELIVERIES; CONDITIONS PRECEDENT
6.1 Closing; Effective Date. All proceedings taken and all documents
executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
6.2 Deliveries
(a) At Closing, Purchaser and WARP shall deliver the following
documents to SPIDER, the SPIDER Insiders and the Sellers:
(i) the certificates representing the Consideration Shares to
be issued at the Closing;
(ii) certificate issued by the Secretary of State of Nevada as
to the good standing of Purchaser in its jurisdiction of incorporation;
(iii) the certificates referred to in Section 6.3(c); and
(iv) such other documents and instruments as SPIDER may
reasonably request.
(b) At Closing, SPIDER, the SPIDER Insiders and the Sellers shall
deliver the following documents to Purchaser and WARP:
(i) the Certificates of SPIDER Common Stock to be converted to
Consideration Shares at the Closing, together with Stock Powers
separate from such Certificates duly executed by each of the Sellers in
blank and sufficient to convey to WARP good and marketable title to the
SPIDER Common Stock free and clear of any and all claims, liens,
charges, security interests, pledges or encumbrances of any nature
whatsoever;
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(ii) a certificate of Industry of Canada, as of a recent date,
as to the good standing of SPIDER in its jurisdiction of incorporation
and certifying SPIDER's Articles of Incorporation;
(iii) a certificate, dated the Closing Date, of an officer of
SPIDER setting forth that authorizing resolutions were adopted by
SPIDER's Boards of Directors approving the terms and conditions of this
Agreement and the other documents contemplated hereby and the
transactions contemplated hereby and thereby, with such resolutions
attached as an exhibit thereto;
(iv) with the exception of Xxxx Xxxxxx, the written
resignations of all the directors of SPIDER and SPIDER's Subsidiaries
from all of their director's positions held at SPIDER and its
Subsidiaries, all to be effective upon Closing;
(v) the minute books of SPIDER and its Subsidiaries, including
its corporate seals, unissued stock certificates, stock registers,
Certificates of Incorporation, Bylaws and corporate minutes;
(vi) the consents of any third party including, but not
limited to, parties to any of the Material Agreements whose consent is
required under the terms of any such Material Agreement or otherwise;
(vii) the certificates referred to in Section 6.4(d); and
(viii) such other documents and instruments as WARP may
reasonably request.
6.3 Conditions Precedent to the Obligations of SPIDER, the SPIDER
Insiders and Each of the Sellers. Each and every obligation of SPIDER, the
SPIDER Insiders and each of the Sellers to consummate the transactions described
in this Agreement and any and all liability of SPIDER or the SPIDER Insiders to
Purchaser and WARP shall be subject to the fulfillment on or before the Closing
Date of the following conditions precedent:
(a) Representations and Warranties True. Each of the representations
and warranties of Purchaser and WARP contained herein or in any certificate or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though made on
and as of such date.
(b) Performance. Purchaser and WARP shall have performed and complied
in all material respects with all of the agreements, covenants and obligations
required under this Agreement to be performed or complied with by them on or
prior to the Closing Date.
(c) Purchaser's Certificate. Purchaser shall have delivered to SPIDER a
certificate dated the Closing Date, certifying that the conditions specified in
Section 6.3(a) and (b) above have been fulfilled and as to such other matters as
SPIDER may reasonably request.
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(d) No Litigation. No litigation, arbitration or other legal or
administrative proceeding shall have been commenced or be pending by or before
any court, arbitration panel or governmental authority or official, and no
statute, rule or regulation of any foreign or domestic, national or local
government or agency thereof shall have been enacted after the date of this
Agreement, and no judicial or administrative decision shall have been rendered
which enjoins or prohibits, or seeks to enjoin or prohibit, the consummation of
all or any of the transactions contemplated by this Agreement.
(e) Due Diligence Review. SPIDER shall have completed its due diligence
investigation of Purchaser and WARP to its satisfaction.
(f) Appointment. Mr. Xxxx Xxxxxx shall have been appointed to the Board
of Directors of WARP and Purchaser effective at the Closing or as soon
thereafter as permitted by federal and/or state securities and corporate laws.
6.4 Conditions Precedent to the Obligations of Purchaser and WARP. Each
and every obligation of Purchaser and WARP to consummate the transactions
described in this Agreement and any and all liability of Purchaser and WARP to
SPIDER, the SPIDER Insiders and the Sellers shall be subject to the fulfillment
on or before the Closing Date of the following conditions precedent:
(a) Representations and Warranties True. Each of the representations
and warranties of SPIDER, the SPIDER Insiders and the Sellers contained herein
or in any certificate or other document delivered pursuant to this Agreement or
in connection with the transactions contemplated hereby shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as though made on and as of such date.
(b) Performance. SPIDER and the SPIDER Insiders shall have performed
and complied in all material respects with all of the agreements, covenants and
obligations required under this Agreement to be performed or complied with by it
on or prior to the Closing Date.
(c) No Material Adverse Change. Except as expressly permitted or
contemplated by this Agreement, no event or condition shall have occurred which
has adversely affected or may adversely affect in any respect the condition
(financial or otherwise) of SPIDER.
(d) SPIDER's Certificate. SPIDER shall have delivered to WARP, a
certificate addressed to WARP executed by SPIDER's President, dated the Closing
Date, certifying that the conditions specified in Sections 6.4(a), (b) and (c)
above have been fulfilled.
(e) Due Diligence Review. Purchaser shall have completed its due
diligence investigation of SPIDER to its satisfaction.
(f) No Litigation. No litigation, arbitration or other legal or
administrative proceeding shall have been commenced or be pending by or before
any court, arbitration panel or governmental authority or official, and no
statute, rule or regulation of any foreign or domestic, national or local
government or agency thereof shall have been enacted after the date of this
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Agreement, and no judicial or administrative decision shall have been rendered
which enjoins or prohibits, or seeks to enjoin or prohibit, the consummation of
all or any of the transactions contemplated by this Agreement.
(g) Appointment. Messrs. Xxxx Xxxxxxx and Xxxx Xxxx shall have been
appointed to the Board of Directors of SPIDER effective at the Closing.
(h) Consents. SPIDER shall have obtained all authorizations, consents,
waivers and approvals as may be required to consummate the transactions
contemplated by this Agreement, including but not limited to, those with respect
to any Material Agreement of SPIDER.
(i) Signatures of Sellers. Sellers representing a minimum of eighty
percent (80%) of the SPIDER Common Stock issued and outstanding at the Closing
Date shall have executed this Agreement.
(j) Assignments of Intellectual Property. Each of the SPIDER Insiders
and SPIDER's other officers and employees shall have executed and delivered an
Assignment of Intellectual Property Agreement in favour of SPIDER dated at or
prior to the date of Closing in the form attached hereto as Exhibit C.
6.5 Best Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties shall use their respective best efforts in good
faith to take or cause to be taken as promptly as practicable all reasonable
actions that are within its power to cause to be fulfilled those of the
conditions precedent to its obligations or the obligations of the other parties
to consummate the transactions contemplated by this Agreement that are dependent
upon its actions, including obtaining all necessary consents, authorizations,
orders, approvals and waivers.
6.6 Termination. This Agreement and the transactions contemplated
hereby may be terminated (i) at any time by the mutual consent of the parties
hereto; (ii) by WARP, or by SPIDER, if the Closing has not occurred on or prior
to ____________, 2003 (such date of termination being referred to herein as the
"Termination Date"), provided the failure of the Closing to occur by such date
is not the result of the failure of the party seeking to terminate this
Agreement to perform or fulfill any of its obligations hereunder; (iii) by WARP
at any time at or prior to Closing in its sole discretion if (1) any of the
representations or warranties of SPIDER, the SPIDER Insiders, or the Sellers in
this Agreement are not in all material respects true, accurate and complete or
if SPIDER or the SPIDER Insiders breach in any material respect any covenant
contained in this Agreement, provided that such misrepresentation or breaches is
not cured within ten (10) business days after notice thereof, but in any event
prior to the Termination Date or (2) any of the conditions precedent to WARP's
obligations to conduct the Closing have not been satisfied by the date required
thereof; (iv) by SPIDER at any time at or prior to Closing in its sole
discretion if (1) any of the representations or warranties of Purchaser or WARP
in this Agreement are not in all material respects true, accurate and complete
or if Purchaser or WARP breaches in any material respect any covenant contained
in this Agreement, provided that such misrepresentation or breach is not cured
within ten (10) business days after notice thereof, but in any event prior to
the Termination Date or (2) any of the conditions precedent to SPIDER's
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obligations to conduct the Closing have not been satisfied by the date required
thereof. If this Agreement is terminated pursuant to this Section 6.6, written
notice thereof shall promptly be given by the party electing such termination to
the other party and, subject to the expiration of the cure periods provided in
clauses (iii) and (iv) above, if any, this Agreement shall terminate without
further actions by the parties and no party shall have any further obligations
under this Agreement. Notwithstanding the preceding sentence, the respective
obligations of the parties under Section 7.1 shall survive the termination of
this Agreement. Notwithstanding anything to the contrary contained herein, if
the termination of this Agreement is a result of the wilful misrepresentation,
wilful inaccuracy or omission in a representation, wilful breach of warranty,
fraud or any wilful failure to perform or comply with any covenant or agreement
contained herein, the aggrieved party shall be entitled to recover from the
non-performing party all out-of-pocket expenses which such aggrieved party has
incurred and the termination of this Agreement shall not be deemed or construed
as limiting or denying any other legal or equitable right or remedy of such
party.
ARTICLE VII
COVENANTS
7.1 Non-competition. For purposes of this Section 7.1, all references
to SPIDER shall be deemed to include all of SPIDER's Subsidiaries and
Affiliates, as the case may be. The SPIDER Insiders acknowledge that in order to
assure Purchaser that it will retain the value of SPIDER as a "going concern,"
the SPIDER Insider's agree, on the terms set forth in this Section 7.1, not to
utilize their special knowledge of the business of SPIDER and their
relationships with customers, suppliers and others to compete with Purchaser,
WARP or SPIDER, subject to the terms hereafter set forth. For a period of two
(2) years beginning on the Closing Date, the SPIDER Insiders shall not engage or
have an interest, anywhere in the United States of America or Canada or any
other geographic area where Purchaser, WARP or SPIDER do business at the date
hereof or in which its services are marketed at the date hereof, alone or in
association with others, as principal, officer, agent, employee, director,
partner or stockholder (except as an employee or consultant of Purchaser, WARP
or SPIDER or any of their Affiliates or as an owner of two percent (2%) or less
of the stock of any company listed on a national securities exchange or traded
in the over-the-counter market), or through the investment of capital, lending
of money or property, rendering of services or capital, or otherwise, in any
business involving, relating or similar to, directly or indirectly, the business
of Purchaser, WARP or SPIDER. During the same period, the SPIDER Insiders and
their Affiliates shall not (except as an employee or consultant of Purchaser,
WARP or SPIDER or their Affiliates), and shall not permit any of their
respective employees, agents or others then under their control to, directly or
indirectly, on behalf of themselves or any other Person, (i) call upon, accept
competitive business from, or solicit the competitive business of any Person who
is, or who had been at any time during the preceding two (2) years, a customer
or supplier of Purchaser, WARP or SPIDER, or (ii) recruit or otherwise solicit
or induce any person who is an employee or consultant of, or otherwise engaged
by Purchaser, WARP or SPIDER or any successor to the businesses thereof to
terminate his or her employment or other relationship with Purchaser, WARP or
SPIDER or such successor, or hire any person who has left the employ of
Purchaser, WARP or SPIDER or any such successors during the preceding two (2)
years. The SPIDER Insiders shall not at any time, directly or
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indirectly, use or purport to authorize any Person to use any name, xxxx, logo,
a trade dress or other identifying words or images which are the same as or
similar to those used currently or in the past by Purchaser or SPIDER in
connection with any product or service, whether or not such use would be in a
business competitive with that of Purchaser, WARP or SPIDER. The SPIDER Insiders
acknowledge that compliance with the restrictions set forth in this Section 7.1
will not prevent them from earning a livelihood. As used herein, the phrase
"competitive business" means any business competitive with the type of business
engaged in by Purchaser, WARP or SPIDER or any of their Subsidiaries or
Affiliates at the date hereof.
7.2 General Confidentiality. The parties hereto acknowledge that the
Intellectual Property and all other confidential or proprietary information with
respect to the business and operations of the other party (the "Protected
Party") are valuable, special and unique assets. The party receiving such
confidential information (the "Receiving Party") shall not, at any time after
the Closing Date, disclose, directly or indirectly, to any Person, or use or
purport to authorize any Person to use any confidential or proprietary
information with respect to the Protected Party, whether or not for their own
benefit, without the prior written consent of that party, or unless required by
law, including without limitation, (i) trade secrets, designs, formulae,
drawings, Intellectual Property, diagrams, techniques, research and development,
specifications, data, know-how, formats, marketing plans, business plans,
budgets, strategies, forecasts and client data; (ii) information relating to
product development, (iii) the names of customers and contacts, marketing
strategies, the names of vendors and suppliers, the cost of materials and
labour, the prices obtained for products or services sold (including the methods
used in price determination, manufacturing and sales costs), lists or other
written records used in business, compensation paid to employees and consultants
and other terms of employment, production operation techniques or any other
confidential information of, about or pertaining to the business of the
Protected Party, and any other information and material relating to any
customer, vendor, licensor, licensee, or other Person transacting business with
the Protected Party, (iv) all tangible material that embodies any confidential
and proprietary information as well as all records, files, memoranda, reports,
price lists, drawings, plans, sketches and other written and graphic records,
documents, equipment, and the like, relating to the business of the Protected
Party, and (vi) any other confidential information or trade secrets relating to
the business or affairs of the Protected Party which the Receiving Party may
acquire or develop in connection with or as a result of the performance of his
or its performance of the terms and conditions of this Agreement, excepting only
such information as is already known to the public or which may become known to
the public without any fault of the Receiving Party or in violation of any
confidentiality restrictions; provided, however, that the restrictions of this
Section 7.2 shall not be applicable to any Receiving Party in connection with
such Parties' enforcement of its rights under this Agreement.
7.3 Continuing Obligations. The restrictions set forth in Sections 7.1
and 7.2 are considered by the parties to be reasonable for the purposes of
protecting the value of the business and goodwill of the Protected Party. The
parties acknowledge that the Protected Party could be irreparably harmed and
that monetary damages would not provide an adequate remedy in the event the
covenants contained in Section 7.1 and 7.2 were not complied with in accordance
with their terms. Accordingly, the parties agree that any breach or threatened
breach by the Receiving Party of any provision of Section 7.1 and 7.2 shall
entitle the Protected Party to injunctive and other equitable relief to secure
the enforcement of these provisions, in addition to any other
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remedies (including damages) which may be available thereto. It is the desire
and intent of the parties that the provisions of Section 7.1 and 7.2 be enforced
to the fullest extent permissible under the laws and public policies of each
jurisdiction in which enforcement is sought. If any provision of Section 7.1 and
7.2 are adjudicated to be invalid or unenforceable, the invalid or unenforceable
provisions shall be deemed amended (with respect only to the jurisdiction in
which such adjudication is made) in such manner as to render them enforceable
and to effectuate as nearly as possible the original intentions and agreement of
the parties. In addition, if any party brings an action to enforce Section 7.1
and 7.2 hereof or to obtain damages for a breach thereof, the prevailing party
in such action shall be entitled to recover from the non-prevailing party all
reasonable attorney's fees and expenses incurred by the prevailing party in such
action.
7.4 Payment of Certain Loan Obligations of SPIDER. Purchaser
acknowledges that SPIDER has certain outstanding loan obligations to Seraphim
Ventures Inc. in the amount of $100,000, as described in greater detail in
Schedule 7.4(a) hereto, and that the repayment of those loan obligations is a
material term to this Agreement. Purchaser, therefore, undertakes and agrees to
repay the loan obligations of SPIDER identified in Schedule 7.4(a) in the
amounts and on the payment terms as identified in Schedule 7.4(b) hereto.
7.5 Tax Treatment. Neither Purchaser, WARP, SPIDER, the SPIDER Insiders
nor the Sellers will knowingly take any action, written or otherwise, which
would result in the transactions contemplated by this Agreement not being
accounted for as a tax-free exchange pursuant to the Act.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. Any notice, demand, claim or other communication under
this Agreement shall be in writing and delivered personally or sent by certified
mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses as follows (or at such other
addresses as shall be specified by the parties by like notice):
If to Purchaser
or WARP: WARP Technology Holdings, Inc.
000 Xxxx 00 Xxxxxx, 0xx Xxxxx
Xxx Xxxx, X.X. 10001
Attn: Xxxx Xxxxxxx
Phone: (000) 000-0000
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, X.X. 00000
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
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If to SPIDER or
SPIDER Insiders: SPIDER SOFTWARE, Inc.
204-1529 Xxxx 0xx Xxxxxx
Xxxxxxxxx, XX Xxxxxx X0X LRL
Attn: Xxxx Xxxxxx
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
With a copy to: Fasken Xxxxxxxxx DuMoulin LLP
Suite 2100
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
Attn: Xxxxxx X. Xxxxx
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
If to Sellers: To address as shown on Schedule A
attached hereto.
Such notice shall be deemed delivered upon receipt against
acknowledgment thereof if delivered personally, on the third business day
following mailing if sent by certified mail, upon transmission against
confirmation if sent by facsimile and on the next business day if sent by
overnight courier.
8.2 Entire Agreement; Incorporation. This Agreement and the documents
and instruments and other agreements among the parties hereto as contemplated by
or referred to herein contain every obligation and understanding between the
parties relating to the subject matter hereof. All schedules, exhibits and other
documents and agreements executed and delivered pursuant hereto are incorporated
herein as if set forth in their entirety herein.
8.3 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives, legal representatives, and permitted assigns.
8.4 Assignment. This Agreement may not be assigned by any party without
the written prior consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
8.5 Waiver and Amendment. Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereof
(including, without limitation, the period during which any condition is to be
satisfied or any obligation performed) may be amended by the parties thereto at
any time. Any such waiver, extension or amendment shall be evidenced by an
instrument in writing executed on behalf of the party against whom such waiver,
extension or amendment is sought to be charged. No waiver by any party hereto,
whether express or implied, of its rights under any provision of this Agreement
shall constitute a waiver of such party's rights
30
under such provisions at any other time or a waiver of such party's rights under
any other provision of this Agreement. No failure by any party thereof to take
any action against any breach of this Agreement or default by another party
shall constitute a waiver of the former party's right to enforce any provision
of this Agreement or to take action against such breach or default or any
subsequent breach or default by such other party.
8.6 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement, except as otherwise
provided herein.
8.7 Severability. In the event that any one or more of the provisions
contained in this Agreement, or the application thereof, shall be declared
invalid, void or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect and the
application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such invalid, void or unenforceable provision
with a valid and enforceable provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid, void or
unenforceable provision.
8.8 Expenses. Except as otherwise provided herein, Purchaser agrees to
pay, without right of reimbursement from SPIDER or the SPIDER Insiders, its
costs and the commercially reasonable costs incurred by SPIDER and the SPIDER
Insiders incident to the consummation of the transactions contemplated hereby,
including, without limitation, costs incident to the preparation of this
Agreement, and the fees and disbursements of counsel, accountants and
consultants employed by such party in connection herewith.
8.9 Headings. The table of contents and the section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of any provisions of this Agreement.
8.10 Other Remedies; Injunctive Relief. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. In any action at law or suit in equity to enforce this Agreement or the
rights of the parties hereunder, the prevailing party in any such action or suit
shall be entitled to receive a reasonable sum for its attorneys' fees and all
other reasonable costs and expenses incurred in such action or suit.
31
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed valid and binding.
8.12 Remedies Exclusive. Except in the case of fraud or equitable
remedies expressly provided for herein, the parties acknowledge and agree that
the indemnification provisions set forth in Article V of this Agreement
constitute the parties' sole and exclusive remedy with respect to any and all
claims relating to the transactions contemplated by this Agreement.
8.13 Governing Law. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of New York,
without reference to the choice of law principles thereof.
8.14 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the courts of New York County, New York. The parties
to this Agreement agree that any breach of any term or condition of this
Agreement shall be deemed to be a breach occurring in the State of New York by
virtue of a failure to perform an act required to be performed in the State of
New York and irrevocably and expressly agree to submit to the jurisdiction of
the courts of the State of New York for the purpose of resolving any disputes
among the parties relating to this Agreement or the transactions contemplated
hereby. The parties irrevocably waive, to the fullest extent permitted by law,
any objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement, or any
judgment entered by any court in respect hereof brought in New York County, New
York, and further irrevocably waive any claim that any suit, action or
proceeding brought in New York County, New York has been brought in an
inconvenient forum.
8.15 Participation of Parties. The parties hereby agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding,
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.16 Further Assurances. The parties hereto shall deliver any and all
other instruments or documents reasonably required to be delivered pursuant to,
or necessary or proper in order to give effect to, all of the terms and
provisions of this Agreement including, without limitation, all necessary stock
powers and such other instruments of transfer as may be necessary or desirable
to transfer ownership of the SPIDER Common Stock.
8.17 Publicity. No public announcement or other publicity concerning
this Agreement or the transactions contemplated hereby shall be made without the
prior written consent of both WARP and SPIDER as to form, content, timing and
manner of distribution. Nothing contained herein shall prevent any party or its
Affiliates or Subsidiaries from making any filing required by federal or state
securities laws or stock exchange rules.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
WARP TECHNOLOGY HOLDINGS, INC.
By:
------------------------------------
Name: Xxxx Xxxxxxx
Title: CEO and President
6043577 CANADA INC.
By:
------------------------------------
Name: Xxxx Xxxxxxx
Title: President
SPIDER SOFTWARE, INC.
By:
------------------------------------
Name: Xxxx Xxxxxx
Title: President
SPIDER INSIDERS
---------------------------------------
Xxxx Xxxxxx
---------------------------------------
Xxxx Xxxxxxxx
SELLERS
----------------------------------------
----------------------------------------
----------------------------------------
33
Schedule A to Share Exchange Agreement
--------------------------------------
Name SPIDER Common Stock Consideration Shares
--------- ------------------- ---------------------
Xxxx Xxxxxx 2,500,000 494,268
Xxxxxxx Xxxxxxxx 1,193,500 235,964
Xxxxx Xxxxx 900,000 177,937
LaHouge 865,000 171,017
Xxxxx Xxxxxxxx 721,500 142,646
Seraphim Ventures 571,000 112,891
Trinity Pacific Investments 250,000 49,427
JavX Productions 200,000 39,542
3994 162,000 32,029
Cutwater 88,000 17,399
Strand Properties 72,000 14,235
Xxxxx Xxxxxxx 22,000 4,350
RBC Dominion 22,000 4,350
Xxx Xxxxx 20,000 3,955
-------------- --------------
Totals 7,587,000 1,500,010
34
Schedule 2.9 to Share Exchange Agreement
----------------------------------------
SpiderSoftware Options Conversion to Warp
Stock Options - December 2002
Total Options Pool 1,000,000
Total Options Granted 413,000 Conversion Ratio 0.197707
---------- (Applied to shares and Original
Total Options Remain 587,000 Strike Price)
Grant 0.197707 ratio (as per shares) Strike Proce ($US)
Granted to Date of Grant Spider Amount Warp Amount Original Warp Vesting Period
JJ. Xxxxx 9-Apr-01 75,000 14,828 $ 0.32 $ 1.63 immediate
Xxxx Xxxxxxx 9-Apr-01 75,000 14,828 $ 0.32 $ 1.63 immediate
Xxxxx Xxxxxxxx 24-Aug-01 60,000 11,862 $ 0.08 $ 0.39 immediate
Xxxxx Xxxxxxxx 17-Oct-01 40,000 7,908 $ 0.08 $ 0.39 immediate
Xxxxx Xxxxxxx 11-Jul-01 75,000 14,828 $ 0.32 $ 1.63 immediate
Xxxxx Xxxxxxx 1-Jan-02 88,000 17,398 $ 0.08 $ 0.39 immediate
--------------------------
413,000 81,653
35
