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EXHIBIT 1
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made as of the 19th day of May, 1999.
BETWEEN:
COLUMBIA DIVERSIFIED SOFTWARE FUND LIMITED
PARTNERSHIP, a limited partnership formed under the laws of
the Province of British Columbia by its managing partner,
Columbia Management (Software) Corp., a company formed under
the laws of the Province of British Columbia
(hereinafter referred to as "Columbia");
AND:
XXXXXXXXXXXX.XXX INC., a company duly incorporated under the
laws of the State of Colorado, having a corporate office
located at 3100 Bank One Center, 0000 Xxxx Xxxxxx, Xxxxxx,
Xxxxx, Xxxxxx Xxxxxx of America 75201-4681
(hereinafter referred to as "SmartSources")
AND:
ORIGIN SOFTWARE CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia having an address at 000 - 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(hereinafter referred to as "Origin")
WHEREAS:
A. Columbia is the registered and beneficial owner of 5,000,000 Class B
Preferred shares without par value in the capital of Origin (the "Origin
Shares");
B. Origin is a wholly-owned subsidiary of SmartSources.
C. In order to facilitate the acquisition of certain software by Origin from
Columbia (the "Software Acquisition") SmartSources has agreed to grant to
Columbia certain exchange rights under which Columbia is entitled to receive
SmartSources common shares issued from treasury (the "SmartSources Shares")
immediately upon delivery to SmartSources of the Origin Shares held by Columbia,
in accordance with the terms of this Agreement.
THIS AGREEMENT WITNESSES that in consideration for Columbia completing the
Software Acquisition for the benefit of both Origin and SmartSources, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
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1. Columbia hereby represents and warrants to SmartSources that Columbia
has good and sufficient authority to enter into this Agreement.
2. Subject to the terms and conditions hereof, SmartSources hereby grants
to Columbia the right to exchange all or any part of the Origin Shares
for SmartSources Shares, at any time after October 1, 1999 (the
"Exchange"). SmartSources agrees to allot, issue and deliver to
Columbia on the Exchange Date (as defined below) such number of
SmartSources Shares having an aggregate value equal to the value of the
Origin Shares being exchanged by Columbia, as determined in accordance
with paragraph 3 below.
3. The price of each SmartSources Share to be allotted, issued, and
delivered to Columbia (the "Exchange Price") shall be equal to the
average trading price of SmartSources common shares on the NASD
bulletin board over the fourteen (14) day period (the "Pricing Period")
immediately preceding the date of delivery by Columbia to SmartSources
of a written notice of its intention to fix the Exchange Price (the
"Pricing Notice"). The average trading price will be determined by
dividing the cumulative price of all SmartSources common shares traded
on the NASD bulletin board over the Pricing Period, by the total number
of SmartSources common shares traded on the NASD bulletin board over
that same period. Columbia will not directly or indirectly trade in
SmartSources common shares during the Pricing Period. The price of each
Origin Share will be equal to its redemption amount converted to U.S.
currency at a rate of exchange of Canadian currency into U.S. currency
prevailing at the close of business on the last business day
immediately preceding the date of delivery of the Pricing Notice.
4. Columbia may fix the Exchange Price at any time by delivery of the
Pricing Notice. The Pricing Notice may fix the date on which the
Exchange will take place and the SmartSources Shares will be issued
(the "Exchange Date"), which will be not less than three business days
following the date of the Pricing Notice. If no Exchange Date is fixed
in the Price Notice, a further notice in writing must be given by
Columbia to SmartSources (the "Exchange Notice"), setting out the
number of Origin Shares to be exchanged and providing SmartSources with
three business days notice to deliver the SmartSources Shares.
5. Columbia's obligation to deliver Origin Shares, and SmartSources'
obligation to allot and issue the SmartSources Shares pursuant to the
Exchange and this Agreement is subject to Columbia's delivery to
SmartSources of the Pricing Notice and if applicable, the Exchange
Notice.
6. Upon completion of the Exchange and the issuance of the SmartSources
Shares, Columbia will deliver or cause to be delivered to a mutually
agreeable trustee (the "Trustee"), certificates for 80% of the
SmartSources Shares, to be held by the Trustee and released on the
following basis:
(a) 25% of the SmartSources Shares delivered to the
Trustee, one year from the Exchange Date;
(b) 25% of the SmartSources Shares delivered to the
Trustee, two years from the Exchange Date;
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(c) 25% of the SmartSources Shares delivered to the
Trustee, three years from the Exchange Date; and
(d) the balance of the SmartSources Shares delivered to
the Trustee, four years from the Exchange Date.
7. The SmartSources Shares delivered to the Trustee and the beneficial
ownership of or any interest in them shall not be sold, assigned,
hypothecated, alienated, or otherwise dealt with in any manner
whatsoever until released by the Trustee.
8. All voting rights attached to the SmartSources Shares held by the
Trustee may at all times be exercised by Columbia.
9. During the period in which any of the SmartSources Shares are held by
the Trustee, any dividend paid in respect of such shares shall be paid
to Columbia.
10. SmartSources hereby represents and warrants to Columbia as follows:
(a) SmartSources has good and sufficient authority to enter into
this Agreement;
(b) SmartSources has sought and received all required regulatory
approvals for the transactions, contemplated by this
Agreement;
(c) SmartSources has allotted and reserved for issuance in
accordance with this Agreement up to a maximum of 5,000,000
common shares in its capital;
(d) subject only to the restrictions referred to in paragraph 6
above, the SmartSources Shares, when issued, will be free from
resale restrictions and will be freely tradable on the NASD
bulletin board market;
(e) SmartSources is in compliance in all material respects with
its continuous disclosure obligations under all applicable
securities laws;
(f) the allotment and issuance of the SmartSources Shares will not
conflict with or result in any breach of any terms, conditions
or provisions of SmartSources constating documents or any
agreements or instruments to which it is a party, or any
applicable law;
(g) this Agreement has been duly authorized by all necessary
corporate action on the part of SmartSources and constitutes a
valid and legally binding obligation upon it, enforceable in
accordance with its terms; and
(h) except for the Origin Shares, SmartSources is the legal and
beneficial owner of all of Origin's issued and outstanding
shares.
9. SmartSources covenants and agrees to maintain the existence of Origin
and not to assign, transfer or otherwise dispose of any of its interest
in Origin for so long as Columbia holds the Origin Shares.
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10. Columbia shall, from time to time as and when requested by SmartSources
and at the sole expense of SmartSources, do, execute and cause to be
made done and executed all such further conveyances, assignments,
assurances, and other documents as may be necessary and that may be
reasonably required by SmartSources to carry out the terms and intent
of this Agreement.
11. Columbia may assign its rights under this Agreement to its Limited
Partners or to an affiliate of Columbia, without the consent or
authorization of SmartSources.
12. This Agreement shall be governed and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada where
applicable.
13. Time is expressly declared to be of the essence of this Agreement and
each of the terms and conditions of this Agreement.
14. This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
COLUMBIA DIVERSIFIED SOFTWARE FUND LIMITED PARTNERSHIP
by its Managing Partner
COLUMBIA MANAGEMENT (SOFTWARE) CORP.
Per: /s/ XXXXX X. XXXXXXXXX
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Authorized Signatory
XXXXXXXXXXXX.XXX INC.
Per: /s/ XXXXXX XXXXX
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Authorized Signatory
Per: /s/
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Authorized Signatory
ORIGIN SOFTWARE CORPORATION
Per: /s/ XXXXXX XXXXX
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Authorized Signatory
Per:
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Authorized Signatory
