SHARE EXCHANGE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 9th day of January, 1997,
BETWEEN:
XXXXXX XXXXX and XXXXXXX XXXXX
(hereinafter called the "Shareholders")
OF THE FIRST PART,
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SYMIX SYSTEMS, INC.
(hereinafter called "Symix")
OF THE SECOND PART,
WHEREAS the Shareholders are the owners of all of the issued and
outstanding shares (the "Visual Shares") in the capital of Visual Applications
Software, Inc. ("Visual");
AND WHEREAS by agreement dated December 31, 1996 entitled "Share Purchase
Agreement" (the "Purchase Agreement") the Shareholders agreed to sell and Symix
Systems (Ontario) Inc. (the "Corporation") of which Symix indirectly holds all
of the issued and outstanding Common Shares, agreed to purchase the Visual
Shares upon and subject to the terms and conditions therein set out;
AND WHEREAS the authorized capital of the Corporation consists of an
unlimited number of Class A Preference Shares, an unlimited number of Preference
Shares and an unlimited number of Common Shares;
AND WHEREAS pursuant to the Purchase Agreement the Shareholders have sold
and transferred the Visual Shares to the Corporation, have received from the
Corporation as part of the consideration therefor the sum of $1,000,000 Canadian
in cash and have subscribed for and have accepted as the balance of the
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consideration for the sale of the Visual Shares, 250,000 Class A Preference
Shares and 500,000 Class B Preference Shares of the Corporation which have been
issued by the Corporation to the Shareholders as fully paid and nonassessable;
AND WHEREAS the aforementioned transfer of the Visual Shares is being
carried out pursuant to the provisions of subsection 85(l) of the INCOME TAX ACT
(Canada);
AND WHEREAS a subsidiary of Symix subscribed for 10 Common Shares of the
Corporation in consideration of the payment by Symix to the Corporation of
$1,000,000 Canadian in cash, which Common Shares have been duly issued to Symix;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants herein and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged by each of the parties from the
other, the parties agree as follows:
1. Defined Terms:
In this Agreement the following terms shall have the following meanings:
"Business Day" means a day which is not a Saturday or Sunday or civic or
statutory holiday at the place where Symix has its registered office;
"Class A Preference Shares" means the 250,000 Class A Preference Shares issued
by the Corporation to the Shareholders or if the Corporation should become
bankrupt or insolvent or the Corporation or such shares should cease to exist,
the rights of the Holder thereof derived from such shares;
"Common Shares" means the common shares of the Corporation;
"Exercise Date" has the meaning attributed thereto in section 4.2 (b);
"Exercising Holder" means a Holder of Class A Preference Shares who exercises
the Right to Exchange by depositing a certificate for or other evidence of its
rights with respect to Class A Preference Shares with Symix pursuant to the
provisions of subsection 4.2 (a) hereof;
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"Holder" means the registered holder from time to time of a Class A Preference
Share or person entitled to the rights derived therefrom;
"registered" means qualified in all of the respects referred to in subsection 3
(a) hereof;
"Registration Statement" means a registration statement on Form S-3 (or any
similar form then in effect) filed with the U.S. Securities and Exchange
Commission evidencing each registration of Symix Shares referred to in
subsection 3 (a) hereof;
"Right to Exchange" means the right of Holders of Class A Preference Shares to
acquire Symix Shares and Symix Distributions Equivalent as provided for in
section 4.1 hereof;
"Symix" means Symix Systems, Inc., a corporation incorporated under the laws of
the State of Ohio and includes any successor corporation thereof;
"Symix Cash Dividend" means any cash dividend declared and paid by Symix on
Symix Common Shares;
"Symix Common Shares" means common shares of Symix, and includes any shares,
securities or other property substituted therefor as contemplated by section 4.6
hereof;
"Symix Distributions" means Symix Cash Dividends, Symix Stock Dividends,
options, rights or warrants to purchase any securities or securities convertible
into or exchangeable for securities, property or other assets, whether of Symix
or of any other corporation, evidences of indebtedness and any other property or
assets in each case distributed with respect to Symix Common Shares at any time
from and after the date hereof up to each Exercise Date;
"Symix Distributions Equivalent" means the aggregate, in U.S. funds, of the
amount of cash, in the case of distributions in cash, and the fair market value
at the time of distribution, in the case of distributions other than in cash, of
the Symix Distributions;
"Symix Shares" means 250,000 Symix Common Shares or any part of them to be
issued in exchange for 250,000 Class A Preference Shares and includes any
shares, securities or other property substituted therefor as contemplated by
section 4.6 hereof;
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"Symix Stock Dividend" means a dividend declared on Symix Common Shares payable
by the issuance or distribution of Symix Common Shares or other securities of
Symix;
"Date of Expiry" means December 31, 2006;
2. Symix shall accept all or any part or parts of the Class A Preference Shares,
in blocks of not fewer than 50,000 Class A Preference Shares which may but need
not be from the combined holdings of Exercising Holders, at any time and from
time to time on or after the date hereof and prior to the Date of Expiry, and
provide in exchange therefor a corresponding number of the Symix Shares upon
request therefor by the Exercising Holders as herein provided.
3. (a) Upon receipt of a written demand for registration from one or more
of the Shareholders and the items specified in subsection 3 (b), Symix
shall endeavour, at one time or from time to time, to cause the Symix
Shares issued pursuant to section 4 to be registered at its expense on
a Registration Statement as soon as practicable and to keep such
Registration Statement in effect for 365 days or such shorter period
as may be required to sell the Symix Shares covered thereby. Symix
will, during the term of this Agreement, use its reasonable best
efforts to qualify for registration on a Registration Statement. If
common shares of Symix are listed on an exchange or are traded on the
National Association of Securities Dealers Automated Quotation System
National Market or a similar medium of trading, Symix shall also
endeavour to list or otherwise secure trading privileges for the Symix
Shares so registered. The Shareholders agree that they will only sell
or transfer such Symix Shares pursuant to a Registration Statement or
an opinion of counsel acceptable to Symix.
(b) The Shareholders shall provide to Symix in connection with each
registration all relevant information concerning themselves and as to
the method proposed by them to dispose of the Symix Shares (which
shall be by selling the Symix Shares upon a nationally recognized
medium for trading Symix Common Shares in the United States of America
if such a medium then exists), shall agree to indemnify and save
harmless Symix with respect to all damages, loss, costs and expenses
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which Symix may sustain as a result of any inaccuracy in any such
information, pursuant to an agreement satisfactory to Symix's counsel
acting reasonably.
4. The following provisions shall govern the exchange by the Holders of Class A
Preference Shares for Symix Shares:
4.1 RIGHT TO EXCHANGE
The Holder of each Class A Preference Share shall have the right, at
any time on or after the date hereof and prior to the Date of Expiry, to require
Symix to accept such Class A Preference Share and to transfer to such Holder in
exchange for each Class A Preference Share one (1) Symix Share plus the Symix
Distributions Equivalent attributable thereto determined as at the close of
business on the Exercise Date of such Right to Exchange, less the amount, if
any, of cash dividends theretofore received by the Holder from the Corporation
upon such Class A Preference Share, all upon and subject to the conditions
provided herein.
4.2 EXERCISE OF RIGHT TO EXCHANGE
(a) Each Holder may exercise the Right to Exchange by depositing with
Symix at its principal office in the City of Columbus, Ohio the certificates
representing, or other evidence of the rights of the Holder with respect to, the
Class A Preference Shares in respect of which such Holder desires to exercise
the Right to Exchange, with a written notice of exercise of the exchange
privilege, executed by the Holder or his executors or administrators or other
legal representatives or his or their attorney duly appointed by instrument in
writing.
(b) A certificate representing Class A Preference Shares or other evidence
of the rights of the Holder with respect thereto with an executed form of
exercise of exchange privilege shall be deemed to be deposited upon delivery to
Symix or, if sent by mall or other means of transmission, upon actual receipt
thereof at, in each case, the office of Symix specified in subsection 4.2 (a).
The date of receipt by Symix of such deposit is the "Exercise Date".
(c) The form of exercise of exchange privilege referred to in subsection
4.2 (a) shall specify the number of Class A Preference Shares in respect of
which the Right to Exchange is being exercised (being not more than the number
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of Class A Preference Shares represented by the certificate(s) or other evidence
deposited).
(d) All Exercising Holders who duly exercise a Right to Exchange as
provided hereunder on the same Exercise Date shall be treated equally, without
preference or distinction, regardless of any differences in the respective times
on such Exercise Date at which they exercise such Right to Exchange.
4.3 DELIVERY OF SYMIX SHARES AND SYMIX DISTRIBUTIONS EQUIVALENT
(a) Upon receipt of the certificates for or other evidence of the rights
of the Holder with respect to the Class A Preference Shares, Symix shall as soon
as practicable send to the Exercising Holder certificates for Symix Shares and a
cheque representing the Symix Distributions Equivalent, if any, to which the
Exercising Holder is entitled. Upon each issuance of Symix Shares by Symix in
accordance with this Section, all Class A Preference Shares in respect of which
such Symix Shares are issued shall be recorded by Symix in the name of Symix or
its designee and the Holders thereof shall cease to be Holders of record of such
Class A Preference Shares and shall not be entitled to exercise any rights with
respect thereto.
(b) Upon delivery of Symix Shares and any related Symix Distributions
Equivalent to an Exercising Holder pursuant to subsection 4.3 (a), the
Exercising Holder shall be deemed to have acquired the Symix Shares and such
Symix Distributions Equivalent effective immediately after the close of business
on the Exercise Date and to have become entitled to all substitutions, all
income earned thereon or accretions thereto and all dividends or distributions
(including stock dividends and dividends or distributions in kind) arising
thereafter upon the Symix Shares.
(c) The Symix Shares will be issued and delivered in accordance with
applicable laws. The certificates for the Symix Shares shall be legended in
compliance with U.S. securities laws.
4.4 PARTIAL EXERCISE OF RIGHT TO EXCHANGE
Subject to section 2, a Holder may exercise his Right to Exchange in
respect of only part of the Class A Preference Shares represented by a
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certificate or other evidence deposited in accordance with subsection 4.2 (a)
and Symix shall, within 5 Business Days after the Exercise Date, cause the
Corporation to send to that Holder a certificate representing his Class A
Preference Shares in respect of which the Right to Exchange hereby conferred has
not been exercised.
4.5 ADJUSTMENT UPON CONSOLIDATION OR SUBDIVISION OF SYMIX COMMON SHARES
If and whenever at any time after the date hereof and prior to the Date of
Expiry the outstanding Symix Common Shares are subdivided or redivided into a
greater number of Symix Common Shares or are reduced, combined or consolidated
into a smaller number of Symix Common Shares, (each such event being referred to
in this section 4.5 as a "change"), a Holder who exercises his Right to Exchange
and to receive Symix Shares hereunder after the effective date of the change
shall be entitled to receive and shall accept and Symix shall deliver on or
after such effective date upon the exercise of the Right to Exchange and deposit
of certificates for or other evidence with respect to Class A Preference Shares,
in lieu of the number of Symix Shares deliverable prior to the effective date,
the number of Symix Shares which such Holder would have been entitled to receive
as a result of the change if, on the effective date thereof, he had been the
registered holder of the number of Symix Common Shares which he would have
received had he exercised his Right to Exchange immediately before the effective
date.
4.6 ADJUSTMENT UPON CHANGE OR RECLASSIFICATION OF SYMIX COMMON SHARES OR
REORGANIZATION
If and whenever at any time after the date hereof and prior to the Date of
Expiry the outstanding Symix Common Shares shall be reclassified, changed,
exchanged or converted into other shares, securities or property, otherwise than
as provided in section 4.5, or if the designation of or rights, privileges,
restrictions and conditions attached to Symix Common Shares are changed, or if
there shall be an amalgamation, merger, reorganization, liquidation,
dissolution, winding-up or other similar transaction affecting Symix (other than
a transaction which does not result in any reclassification of the outstanding
Symix Common Shares or a change of the Symix Common Shares into other shares,
securities or property), or a transfer of the undertaking or assets of Symix as
an entirety or substantially as an entirety to another corporation or entity
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(any of such events being referred to in this subsection as a "Reorganization"),
then a Holder who exercises his Right to Exchange and to receive Symix Shares
hereunder after the effective date of the Reorganization shall be entitled to
receive and shall accept and Symix shall deliver, on or after such effective
date upon the exercise of the Right of Exchange and deposit of certificates for
or other evidence with respect to Class A Preference Shares, in lieu of the
number of Symix Shares deliverable prior to the effective date of the
Reorganization, the aggregate number and kind of shares or other securities or
amount of other property which such Holder would have been entitled to receive
as a result of the Reorganization if, on the effective date thereof, he had been
the registered holder of the number of Symix Common Shares which he would have
received had he exercised his Right to Exchange immediately before the effective
date of the Reorganization.
4.7 RULES APPLICABLE TO ADJUSTMENTS
(a) The adjustments provided for in this section 4 shall be cumulative.
(b) If a dispute shall at any time arise with respect to the adjustments
provided for in sections 4.5 or 4.6 Symix shall cause such dispute to be
conclusively determined by the board of directors of Symix acting in good faith
and any such determination shall be binding upon Symix and the Holders.
(c) Whenever an event described in subsection 4.6 occurs, Symix shall
forthwith give notice to Holders briefly describing the event.
5. Symix agrees to give to the Holders not less than two business days' notice
of the first day upon which each block of Symix Shares is registered and
accordingly can be transferred by the Holders in accordance with the applicable
Registration Statement.
6. Concurrently with each issuance of the Symix Shares or each part thereof to
the Holders by Symix, Symix agrees to provide to the Holders at its expense
opinions of counsel to Symix in its jurisdiction of incorporation satisfactory
to the Holder's counsel acting reasonably, to the effect that the Symix Shares
transferred are validly issued, fully paid and non-assessable. Upon the
effective date of each Registration Statement, Symix shall provide to the
holders of the Symix Shares subject thereto at its expense opinions of counsel
to Symix to the effect that the Registration Statement has become effective
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under the SECURITIES Act of 1933, as amended (the "1933 Act"), and complies as
to form in all material respects with the 1933 Act and that the Symix Shares so
registered can be sold under the 1933 Act as described in the Registration
Statement. A corresponding opinion will be provided by Symix with respect to
compliance with applicable Ohio securities laws.
7. Symix agrees upon request by the Shareholders or any of them to cause the
Corporation to sanction any transfer of Class A Preference Shares of the
Corporation sought to be effected by the Shareholders, their heirs, personal
representatives or assigns, subject to compliance with section 11 if applicable.
8. If the closing price per Symix Common Share on the National Association of
Securities Dealers Automated Quotation System National Market (or if Symix
Common Shares are not then listed on such medium, on such other exchange on
which said shares are then listed) on the last trading day preceding the
effective date of the Registration Statement is less than 90% of such closing
price per Symix Common Share on the last trading day prior to the Exercise Date,
Symix shall issue forthwith to the Exercising Holder such additional number of
Symix Common Shares as results from dividing such difference by the closing
price per Symix Common Share on such last trading day preceding the effective
date of the Registration Statement, applied to the total number of Symix Shares
delivered upon each exchange, rounded up to the next highest Symix Common Share.
Symix agrees to cause a Registration Statement with respect to such additional
Symix Common Shares to be filed as soon as practicable to the extent that Symix
determines that any of such additional Symix Common Shares cannot be added under
applicable S.E.C. rules to an existing Registration Statement still effective
for a period of at least 60 days. Symix shall notify the Exercising Holder
accordingly.
9. (a) If the Symix Shares exchanged for Class A Preference Shares are not
registered within 180 days of request therefor, Symix shall purchase from the
Exercising Holder if requested by the Exercising Holder upon 5 Business Days
notice to Symix each Symix Share with respect to which such requirement to
purchase is exercised at a price equal to 90% of. the closing price of Symix
Common Shares on the last trading day preceding the Exercise Date.
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(b) If any of the additional number of Symix Common Shares required to be
delivered to an Exercising Holder is not registered within 180 days of such
additional delivery requirement arising pursuant to section 8, Symix shall
purchase from the Exercising Holder if requested by the Exercising Holder upon 5
Business Days notice to Symix each such Symix Common Share with respect to which
such requirement to purchase is exercised at a price equal to the closing price
of Symix Common Shares on the last trading day preceding the effective date of
the Registration Statement referred to in section 8.
10. In each case of acquisition of Class A Preference Shares or Class B
Preference Shares by Symix, Symix shall provide to the holder of such shares in
conjunction with such acquisition and at its expense legal opinions of counsel
in appropriate jurisdictions, satisfactory to the holder's counsel acting
reasonably, to the effect that the transferring of such shares by the holders
and their acquisition by Symix or the Corporation is in compliance with all
corporate laws of Ontario and Ohio applicable to the Corporation or Symix and
all U.S. federal securities laws and the securities laws of the State of Ohio
and the Province of Ontario applicable to the holder, the Corporation and Symix.
11. The Shareholders agree with Symix that
(a) they will not transfer the Class A Preference Shares or any rights
with respect thereto except by way of security, unless the Right to
Exchange has first been exercised with respect to such Class A
Preference Shares, and if they are transferred by the Shareholders
by way of security each such transfer shall be upon the basis that
the secured party will not acquire beneficial title thereto or
further transfer such Class A Preference Shares or any rights with
respect thereto to anyone other than the Shareholders unless the
Right to Exchange has first been exercised with respect to such
Class A Preference Shares;
(b) if the Right to Exchange has been exercised they will cause the
transferee to tender immediately all Class A Preference Shares to be
acquired by the transferee for exchange into Symix Shares in
accordance with section 2 hereof; and
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(c) any transferee of the Class A Preference Shares or any rights with
respect thereto will be a resident of Ontario, not a U.S. Person as
defined in the Purchase Agreement, and will agree to be bound by
this Agreement, except if the transferee is a Canadian Chartered
Bank it may be a resident of any Canadian province.
12. This Agreement shall be governed by the laws of the Province of Ontario and
may be enforced in the Courts of that Province or in the Courts of the State of
Ohio.
13. This agreement shall enure to the benefit of the Shareholders, their heirs,
personal representatives and assigns and shall be binding upon Symix and its
successors.
IN WITNESS WHEREOF the parties have executed this agreement as of
the date first mentioned above.
________________________________ _____________________________________
Xxxxxx Xxxxx
________________________________ _____________________________________
Xxxxxxx Xxxxx
SYMIX SYSTEMS, INC.
Per:___________________________________
(Authorized Signing Officer)
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