exv4w2






Exhibit 4.2




     EXECUTED VERSION



 

 






SHARE PURCHASE AGREEMENT




by and among



STEPHAN OUAKNINE



and



WINVEST INC.



and



EDIE LEDANY



and



9129-2144 QUEBEC INC.



and



9129-2136 QUEBEC INC.



and



MICHAEL ROSENTHAL



and



JOHN GROBSTEIN



and



POSITRON INC.



and



171033 CANADA INC.



and



171036 CANADA INC.



and



CAPITAL BRINVEST INC.



and



 









 





 

 






TEKELEC




and



TEKELEC CANADA INC.



Dated as of May 5, 2010



 

 










ii









 
















TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS	 	 	1	 
	Section 1.1
	 	Definitions	 	 	1	 
	ARTICLE II PURCHASE AND SALE OF SHARES	 	 	10	 
	Section 2.1
	 	Purchase and Sale of Shares; Escrow.	 	 	10	 
	Section 2.2
	 	Closing.	 	 	11	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS	 	 	15	 
	Section 3.1
	 	Corporate Status.	 	 	15	 
	Section 3.2
	 	Authorization	 	 	15	 
	Section 3.3
	 	No Conflict	 	 	15	 
	Section 3.4
	 	Consents and Approvals	 	 	15	 
	Section 3.5
	 	Capital Structure.	 	 	16	 
	Section 3.6
	 	Financial Statements	 	 	16	 
	Section 3.7
	 	Undisclosed Liabilities	 	 	17	 
	Section 3.8
	 	Indebtedness.	 	 	17	 
	Section 3.9
	 	Absence of Certain Changes.	 	 	17	 
	Section 3.10
	 	Accounts Receivable; Inventories.	 	 	18	 
	Section 3.11
	 	Insurance.	 	 	19	 
	Section 3.12
	 	Bank Accounts.	 	 	20	 
	Section 3.13
	 	Officers, Directors, Employees, Consultants and Agents; Compensation	 	 	20	 
	Section 3.14
	 	Labour.	 	 	21	 
	Section 3.15
	 	Customers and Suppliers.	 	 	22	 
	Section 3.16
	 	Product Liability Claims.	 	 	22	 
	Section 3.17
	 	Product and Service Warranties.	 	 	22	 
	Section 3.18
	 	Legal Proceedings.	 	 	23	 
	Section 3.19
	 	Compliance with Laws.	 	 	23	 
	Section 3.20
	 	Environmental Matters.	 	 	23	 
	Section 3.21
	 	Taxes.	 	 	24	 
	Section 3.22
	 	Employee Benefit Plans	 	 	27	 
	Section 3.23
	 	Corporation Contracts.	 	 	28	 
	Section 3.24
	 	Personal Property.	 	 	32	 
	Section 3.25
	 	Real Property.	 	 	32	 
	Section 3.26
	 	Intellectual Property.	 	 	33	 
	Section 3.27
	 	Affiliated Transactions.	 	 	38	 
	Section 3.28
	 	Assets Used in the Business.	 	 	39	 
	Section 3.29
	 	Books and Records.	 	 	39	 
	Section 3.30
	 	Brokers' Fees.	 	 	39	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER	 	 	39	 
	Section 4.1
	 	Corporate Status.	 	 	39	 
	Section 4.2
	 	Authorization.	 	 	39	 
	Section 4.3
	 	Legal Proceedings.	 	 	40	 
	Section 4.4
	 	Brokers' Fees.	 	 	40	 
	Section 4.5
	 	No Conflict.	 	 	40	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 4.6
	 	Consents and Approvals.	 	 	40	 
	Section 4.7
	 	No Vote Required.	 	 	40	 
	Section 4.8
	 	Financing.	 	 	40	 
	ARTICLE V COVENANTS	 	 	41	 
	Section 5.1
	 	Publicity.	 	 	41	 
	Section 5.2
	 	Further Actions.	 	 	41	 
	Section 5.3
	 	Filings; Authorizations.	 	 	41	 
	Section 5.4
	 	Termination of Agreements	 	 	42	 
	Section 5.5
	 	Tax Matters.	 	 	42	 
	Section 5.6
	 	Post-Closing Access.	 	 	44	 
	Section 5.7
	 	Non-Competition.	 	 	44	 
	Section 5.8
	 	Directors' and Officers' Indemnification and Insurance.	 	 	45	 
	Section 5.9
	 	Undertaking by Tekelec.	 	 	46	 
	Section 5.10
	 	Undertaking by Tekelec Parties.	 	 	46	 
	ARTICLE VI INDEMNIFICATION	 	 	46	 
	Section 6.1
	 	Survival	 	 	46	 
	Section 6.2
	 	Obligations of the Sellers	 	 	46	 
	Section 6.3
	 	Obligations of the Tekelec Parties.	 	 	48	 
	Section 6.4
	 	Indemnification Procedures.	 	 	48	 
	Section 6.5
	 	Principles of Indemnification	 	 	49	 
	ARTICLE VII MISCELLANEOUS	 	 	50	 
	Section 7.1
	 	Assignment; Binding Effect.	 	 	50	 
	Section 7.2
	 	Governing Law.	 	 	50	 
	Section 7.3
	 	Dispute Resolution.	 	 	50	 
	Section 7.4
	 	Notices.	 	 	52	 
	Section 7.5
	 	Headings.	 	 	55	 
	Section 7.6
	 	Fees and Expenses.	 	 	55	 
	Section 7.7
	 	Entire Agreement.	 	 	55	 
	Section 7.8
	 	Interpretation.	 	 	55	 
	Section 7.9
	 	Disclosure	 	 	56	 
	Section 7.10
	 	Waiver and Amendment.	 	 	56	 
	Section 7.11
	 	Counterparts; Facsimile Signatures.	 	 	56	 
	Section 7.12
	 	Third-Party Beneficiaries.	 	 	56	 
	Section 7.13
	 	Currency.	 	 	56	 
	Section 7.14
	 	Applicable Exchange Rate	 	 	56	 
	Section 7.15
	 	Specific Performance.	 	 	57	 
	Section 7.16
	 	Language.	 	 	57	 
	Section 7.17
	 	Severability.	 	 	57	 






2









 






LIST OF EXHIBITS




	 	 	 

	Exhibit A

	 	Ownership of Corporation’s Shares
	Exhibit B

	 	Disbursement of Purchase Price to Sellers
	Exhibit C

	 	Form of Escrow Agreement
	Exhibit D

	 	Form of Sellers’ Counsel and Corporation’s Counsel Legal Opinions
	Exhibit E

	 	Form of Release and Discharge






 









 






INDEX OF DEFINED TERMS




	 	 	 	 	 
	 	 	Page
	Accounts Receivable

	 	 	20	 
	Action

	 	 	1	 
	Affiliate

	 	 	2	 
	Agreement

	 	 	2	 
	Asserted Liability

	 	 	2, 51	 
	Basket

	 	 	2, 49	 
	Business

	 	 	2	 
	Business Day

	 	 	2	 
	Ceiling

	 	 	2, 49	 
	Claim Notice

	 	 	2, 51	 
	Closing

	 	 	2, 12	 
	Closing Date

	 	 	2	 
	Competitive Business

	 	 	2	 
	Contract

	 	 	2	 
	Corporate Sellers

	 	 	3	 
	Corporation

	 	 	1, 3	 
	Corporation Balance Sheet

	 	 	3	 
	Corporation Balance Sheet Date

	 	 	3	 
	Corporation Contracts

	 	 	3, 30	 
	Corporation Financial Statements

	 	 	3	 
	Corporation Intellectual Property

	 	 	3	 
	Corporation Intellectual Property Agreement

	 	 	3, 36	 
	Corporation Intellectual Property License

	 	 	3, 35	 
	Corporation Leases

	 	 	3, 34	 
	Corporation Manufacturing Tools

	 	 	3	 
	Corporation Plans

	 	 	3	 
	Corporation Software

	 	 	4	 
	Discharge

	 	 	4	 
	Dispute

	 	 	4, 53	 
	Draft Return

	 	 	4, 45	 
	Employment Agreement

	 	 	4	 
	Encumbrance

	 	 	4	 
	Environmental Laws

	 	 	4	 
	Escrow Agent

	 	 	4	 
	Escrow Agreement

	 	 	4	 
	Escrow Deposit

	 	 	4	 
	GAAP

	 	 	4	 
	Governmental Entity

	 	 	5	 
	Hazardous Substance

	 	 	5	 
	ICC Court

	 	 	5, 54	 






 









 






	 	 	 	 	 
	 	 	Page
	ICC Rules

	 	 	5, 53	 
	Identified Employees

	 	 	5	 
	Indebtedness

	 	 	5	 
	Indemnified Party

	 	 	6, 51	 
	Indemnifying Party

	 	 	6, 51	 
	Individual Sellers Representations and Warranties

	 	 	6	 
	Intellectual Property

	 	 	6	 
	Knowledge of Sellers

	 	 	6	 
	Knowledge of Tekelec

	 	 	7	 
	Labour Laws

	 	 	7	 
	Law

	 	 	7	 
	Leased Real Property

	 	 	7, 34	 
	Losses

	 	 	7, 49	 
	Material Adverse Effect

	 	 	7	 
	Notice

	 	 	7, 53	 
	Notice Period

	 	 	7, 51	 
	Owned Software

	 	 	7	 
	Paid-Out Indebtedness

	 	 	7	 
	Permits

	 	 	8, 24	 
	Permitted Encumbrance

	 	 	8	 
	Person

	 	 	8	 
	Public Software

	 	 	8	 
	Purchase Price

	 	 	9, 11	 
	Purchaser

	 	 	1, 9	 
	Real Property

	 	 	9	 
	Release and Discharge

	 	 	9	 
	Retained Indebtedness

	 	 	9	 
	Scheduled Corporation Intellectual Property

	 	 	9, 35	 
	Sellers

	 	 	1, 9	 
	Sellers Indemnified Parties

	 	 	9, 50	 
	Sellers’ Claim

	 	 	50	 
	Sellers’ Disclosure Schedule

	 	 	9	 
	Shares

	 	 	1, 9	 
	Software

	 	 	9	 
	Subsidiary

	 	 	9	 
	Tax

	 	 	10	 
	Tax Act

	 	 	10	 
	Tax Return

	 	 	10	 
	Taxing Authority

	 	 	10	 
	Tekelec

	 	 	1, 10	 
	Tekelec Claim

	 	 	10, 49	 
	Tekelec Indemnified Parties

	 	 	10, 49	 
	Tekelec Parties

	 	 	1, 10	 
	Terminating Contracts

	 	 	10, 44	 
	Third Party Intellectual Property License

	 	 	11, 36	 
	Transaction

	 	 	11	 






2









 






	 	 	 	 	 
	 	 	Page
	Unaudited Corporation Financial Statements

	 	 	11	 
	WEEE Directive

	 	 	11	 







3











 





SHARE PURCHASE AGREEMENT




          THIS SHARE PURCHASE AGREEMENT is made and entered into and effective as of the fifth
(5th) day of May, 2010, by and among Stephan Ouaknine (“Stephan”), Winvest Inc.
(“Winvest”), Edie Ledany (“Edie”), 9129-2144 Québec Inc. (“2144”), 9129-2136 Québec Inc. (“2136”),
Michael Rosenthal (“Michael”), John Grobstein (“John”), 171033 Canada Inc. (“171033”), 171036
Canada Inc. (“171036”), Capital Brinvest Inc. (“Capital”) and Positron Inc. (“Positron”)
(collectively, the “Sellers”), Tekelec, a California corporation (“Tekelec”), and Tekelec Canada
Inc., an Ontario corporation and a wholly-owned direct Subsidiary of Tekelec (“Purchaser” and,
together with Tekelec, the “Tekelec Parties”).




RECITALS




          WHEREAS, Sellers are the owners of the shares listed at Exhibit A (collectively, the
“Shares”) of Blueslice Networks Inc., a Canadian corporation (the “Corporation”);




          WHEREAS, the Shares constitute all of the issued and outstanding shares of the Corporation;
and




          WHEREAS, Purchaser desires to purchase, and Sellers desire to sell to Purchaser the Shares,
upon the terms and subject to the conditions set forth herein.




          NOW, THEREFORE, in consideration of the foregoing, the representations, warranties, covenants
and agreements set forth in this Agreement, and other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, the parties hereby agree as follows:




ARTICLE I




DEFINITIONS



          Section 1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings set forth in this
Agreement. In addition, for purposes of this Agreement, the following terms, when used in this
Agreement, shall have the meanings assigned to them in this Section 1.1.




          “Accounts Receivable” shall have the meaning set forth in Section 3.10.




          “Action” means any action, cause of action, demand, claim, charge, prosecution, complaint,
audit, investigation, suit, litigation, assessment, reassessment, grievance, arbitration, hearing
or other proceeding, whether civil, criminal or administrative, at Law or in equity, commenced,
brought, conducted or heard by or before, or otherwise involving, any Governmental Entity, Person
or arbitrator.








 









 








          “Affiliate” means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, a specified Person. A Person shall
be deemed to control another Person if such first Person possesses, directly or indirectly, the
power to direct, or cause the direction of, the management and policies of such other Person,
whether through the ownership of voting securities, by contract or otherwise.




          “Agreement” means this Share Purchase Agreement, as the same may be amended or supplemented,
together with all Exhibits and Schedules attached to this Share Purchase Agreement.




          “Asserted Liability” shall have the meaning set forth in Section 6.4(a).




          “Basket” shall have the meaning set forth in Section 6.2(b).




          “Business” means the evolved Subscriber Data Management (eSDM) solutions business for the
mobile, VoIP, fixed mobile convergence and machine-to-machine markets as such business is currently
conducted by the Corporation.




          “Business Day” means any day other than a Saturday, a Sunday or a day on which banks are
required to be closed in Montréal, Québec, Canada or in the State of North Carolina, United States.




          “Ceiling” shall have the meaning set forth in Section 6.2(b).




          “Claim Notice” shall have the meaning set forth in Section 6.4(a).




          “Closing” shall have the meaning set forth in Section 2.2(a).




          “Closing Date” shall have the meaning set forth in Section 2.2(a).




          “Competitive Business” shall have the meaning set forth in Section 5.7(b).




          “Contract” means any contract, agreement, commitment, indenture, evidence of Indebtedness,
lease, purchase order or license, including amendments thereto, whether written or oral.




          “Corporate Sellers” shall have the meaning set forth in Section 3.1.




          “Corporation” shall have the meaning set forth in the recitals to this Agreement.




          “Corporation Balance Sheet” means the audited consolidated balance sheet of the Corporation as
of March 31, 2010 included in the Corporation Financial Statements.




          “Corporation Balance Sheet Date” means March 31, 2010.







2









 








          “Corporation Contracts” shall have the meaning set forth in Section 3.23.




          “Corporation Financial Statements” means (i) the Corporation Balance Sheet and the audited
consolidated statements of income, retained earnings and cash flows of the Corporation for the
fiscal year ended March 31, 2010 and (ii) the audited consolidated balance sheet of the Corporation
as of March 31, 2009, 2008 and 2007 and the audited consolidated statements of income, retained
earnings and cash flows of the Corporation for the fiscal year then ended, including, in each case,
the notes thereto.




          “Corporation Intellectual Property” means all Intellectual Property that is owned by the
Corporation.




          “Corporation Intellectual Property Agreement” shall have the meaning set forth in Section
3.26(b).




          “Corporation Intellectual Property License” shall have the meaning set forth in Section
3.26(b).




          “Corporation Leases” shall have the meaning set forth in Section 3.25(a).




          “Corporation Manufacturing Tools” means methods of manufacture, process engineering, know-how,
schematics, trade secrets, methods, algorithms, machine settings and Software developed by or for
the Corporation and used in their ordinary course of business consistent with past practice.




          “Corporation Plans” means any retirement, pension, supplemental pension, savings, retirement
savings, retiring allowance, bonus, profit sharing, stock purchase, stock option, phantom stock,
share appreciation rights, deferred compensation, severance or termination pay, change of control,
life insurance, medical, hospital, dental care, vision care, drug, sick leave, short term or long
term disability, salary continuation, unemployment benefits, vacation, incentive compensation or
other employee benefit plan, program, arrangement, policy or practice whether written or oral,
formal or informal, funded or unfunded, registered or unregistered, insured or self-insured that is
maintained or otherwise contributed to, or required to be contributed to, by or on behalf of the
Corporation for the benefit of current or former employees, directors, officers, shareholders,
independent contractors or agents of the Corporation other than government sponsored pension,
employment insurance, workers compensation and health insurance plans.




          “Corporation Software” means all Software that (i) is material to the operation of the
Corporation, (ii) is distributed, sold, licensed, marketed or otherwise provided to third parties
by the Corporation, (iii) is used or held for use by the Corporation in connection with its work
for customers or its products or services, and/or (iv) is one of Corporation Manufacturing Tools.







3









 








          “Discharge” means any emission, discharge, release, deposit, issuance, spray, injection,
abandonment, escape, spill, leak, seepage, disposal or exhaust (other than exhaust from a vehicle
or non-stationary equipment).




          “Dispute” shall have the meaning set forth in Section 7.3(a).




          “Draft Return” shall have the meaning set forth in Section 5.5(d).




          “Employment Agreement” shall have the meaning set forth in Section 2.2(b)(vi).




          “Encumbrance” means any lien, encumbrance, security interest, pledge, mortgage, hypothecation,
charge, restriction on transfer of title, adverse claim, title retention agreement of any nature or
kind, or other encumbrance, except for any restrictions arising under any applicable securities
Laws.




          “Environmental Laws” shall have the meaning set forth in Section 3.20(g).




          “Escrow Agent” shall have the meaning set forth in Section 2.1(b).




          “Escrow Agreement” shall have the meaning set forth in Section 2.1(b).




          “Escrow Deposit” shall have the meaning set forth in Section 2.1(b).




          “GAAP” means generally accepted accounting principles in Canada, as in effect from time to
time.




          “Governmental Entity” means any Canadian federal, provincial, municipal or local government,
or any other governmental, regulatory or administrative authority, or any agency, board,
department, commission, court, tribunal or instrumentality thereof.




          “Hazardous Substance” shall have the meaning set forth in Section 3.20(g).




          “ICC Court” shall have the meaning set forth in Section 7.3(b)(i).




          “ICC Rules” shall have the meaning set forth in Section 7.3(b).




          “Identified Employees” means, collectively, Frédéric Bastien, Luc Mayrand and Stephan
Ouaknine.




          “Indebtedness” means, with respect to any Person, without duplication: (i) indebtedness for
borrowed money; (ii) indebtedness for borrowed money of any other Person guaranteed in any manner
by such Person (other than a standby letter of credit in the amount of US$100,000 issued in favour
of Kontron Canada Inc. by HSBC Canada Inc.); (iii) obligations of such Person to pay rent or other
amounts under any lease of real




4









 







property or personal property which obligations are required to be classified and accounted
for as capital leases in accordance with GAAP (excluding lease obligations of less than US$75,000
arising under (A) computer hardware and software leases, and (B) office equipment leases, and any
other lease of movable property); (iv) notes payable and drafts accepted representing obligations
for borrowed money (for the avoidance of doubt, excluding notes and drafts for any trade accounts
payable and checks payable to the Corporation, which have been endorsed by the Corporation for
collection in the ordinary course of business consistent with past practice); (v) guarantees
securing indebtedness for borrowed money; (vi) all costs and obligations incurred in connection
with a change of control of the Corporation, including amounts owing to any Person as a result of
the exercise of its options under the Corporation’s stock option plan, the details of which are set
forth on Section 1.1 of the Sellers Disclosure Schedule, including for greater certainty
any employer contribution or payroll taxes payable by the Corporation in relation thereto; (vii)
all bonuses payable to employees of the Corporation, the details of which are set forth on Section
1.1 of the Sellers Disclosure Schedule under the heading “Bonuses to Employees”, as well as
any employer contribution or payroll taxes payable by the Corporation in relation thereto (amounts
described in clauses (vi) and (vii) are hereafter referred to in this Agreement as the “Employee
Payments”); (viii) dividends payable on Shares, regardless of whether or not accrued; (ix) all
amounts owing to current or former shareholders or other equity holders, whether in their capacity
as shareholders or otherwise; (x) all indebtedness related to any bridge financing or similar
arrangement; (xi) legal and financial advisory fees and expenses related to the transaction
contemplated herein in an aggregate amount of US$1,041,285; and (xii) all interest, any premiums
payable or any other costs or charges (including any prepayment penalties) on any instruments or
obligations described in clauses (i) through (xi) hereof, all as the same may be payable upon the
complete and final payoff thereof, regardless of whether such payoff occurs prior to,
simultaneously with or following the Closing.




          “Indemnified Party” shall have the meaning set forth in Section 6.4(a).




          “Indemnifying Party” shall have the meaning set forth in Section 6.4(a).




          “Individual Sellers Representations and Warranties” means representations and warranties set
forth in the first sentence of Section 3.1, in Section 3.2, in Section 3.3, in Section 3.4 (only to
the extent the representations and warranties set forth therein relate to Sellers and not the
Corporation), in Section 3.5(b), in Section 3.18 (only to the extent the representations and
warranties set forth therein relate to Sellers and not the Corporation), in Section 3.21(n), in
Section 3.21(o), in Section 3.21(p) and in Section 3.27 (except with respect to the last sentence
thereto), each of which is given individually by each Seller and not jointly or solidarily.




          “Intellectual Property” means: intellectual property of any type throughout the world,
including, but not limited to: (i) patents, patent applications and statutory invention
registrations, including, but not limited to, continuations, continuations-in-part, divisions,
provisionals, non-provisionals, reexaminations, reissues and extensions; (ii) trademarks, service
marks, trade names, brand names, logos, distinguishing guises and corporate names, slogans and
other indicia of source of origin,




5









 







whether or not registered, including all common law rights thereto and all goodwill associated
therewith, and registrations and applications for registration thereof; (iii) works of authorship,
copyrights, whether registered or unregistered, and registrations and applications for registration
thereof; (iv) trade secrets, confidential information and know-how; (v) domain names; (vi) rights
of publicity and privacy, rights to personal information and moral rights; (vii) shop rights;
(viii) inventions (whether patentable or unpatentable), invention disclosures, mask works, designs,
discoveries, ideas, developments, data, Software, confidential or proprietary technical, business
and other information, including, but not limited to processes, techniques, methods, formulae,
designs, algorithms, prospect lists, customer lists, projections, analyses, and market studies, and
all rights therein and thereto; (ix) all rights pertaining to any of the foregoing arising under
international treaties and convention rights including the right to claim priority; (x) the right
and power to assert, defend and recover title to any of the foregoing; and (xi) all rights to
assert, defend and recover for any past, present and future infringement, misuse, misappropriation,
impairment, unauthorized use or other violation of any of the foregoing; and (xi) all
administrative rights arising from the foregoing, including the right to prosecute applications and
oppose, interfere with or challenge the applications of others, the rights to obtain renewals,
continuations, divisions, and extensions of legal protection pertaining to any of the foregoing.




          “Knowledge of Sellers” (or similar phrases) means the actual knowledge, after due inquiry, of
John or Stephan.




          “Knowledge of Tekelec” (or similar phrases) means the actual knowledge, after due inquiry, of
Stuart H. Kupinski, Senior Vice President, Corporate Affairs, General Counsel and Secretary of
Tekelec.




          “Labour Laws” shall have the meaning set forth in Section 3.14.




          “Law” means any statute, code, rule, regulation, order, ordinance, judgment, decree or other
pronouncement of any Governmental Entity having the effect of law.




          “Leased Real Property” shall have the meaning set forth in Section 3.25(b).




          “Losses” shall have the meaning set forth in Section 6.2(a).




          “Material Adverse Effect” means any change, event, circumstance, effect or state of facts
that, individually or in the aggregate, (A) has had, or would reasonably be expected to have, a
material adverse effect on the Business or results of operations or condition (financial or
otherwise) of the Corporation, taken as a whole, or (B) would prevent or impede the completion of
the purchase and sale of the Shares, other than any change, event, circumstance, effect or state of
facts relating to or arising out of: (i) general economic conditions (including changes or events
in the financial, banking, currency and capital markets) in Canada or the United States, other than
any such conditions that have a materially disproportionate adverse effect on the Corporation;







6









 







(ii) conditions generally affecting the industries in which the Corporation operates, other
than any such conditions that have a materially disproportionate adverse effect on the Corporation,
taken as a whole; (iii) changes in Law or in GAAP or in accounting standards except for judgments
or awards or decrees that relate specifically to the Corporation; or (iv) the commencement or any
material escalation or worsening of a war or armed hostilities or other national or international
calamity involving Canada or the United States whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist attack upon Canada or the
United States, or any of their respective territories, possessions, or diplomatic or consular
offices or upon any military installation, equipment or personnel of Canada or the United States.




          “Notice” shall have the meaning set forth in Section 7.3(a).




          “Notice Period” shall have the meaning set forth in Section 6.4(a).




          “Owned Software” means all Corporation Software that is owned or purported to be owned by the
Corporation.




          “Paid-Out Indebtedness” means, as of the date of this Agreement, the amount of Indebtedness of
the Corporation as of such date, minus the Retained Indebtedness as of such date, the
details of which are set out under the heading “Paid-Out Indebtedness” in Section 1.1 of the
Sellers’ Disclosure Schedule. For each item of Paid-Out Indebtedness, Section 1.1 of the
Sellers’ Disclosure Schedule (under the heading “Paid-Out Indebtedness”) correctly sets
forth the debtor, the principal amount of Indebtedness, the creditor, the maturity date and the
collateral, if any, securing the Indebtedness.




          “Permits” shall have the meaning set forth in Section 3.19.




          “Permitted Encumbrance” means: (i) mechanics’, carriers’, workers’, repairers’, materialmen’s,
warehousemen’s, construction and other Encumbrances arising or incurred in the ordinary course of
business not yet due and payable or being contested in good faith by appropriate proceedings; (ii)
Encumbrances for Taxes, utilities and other governmental charges that, in each case, are not yet
due and payable or being contested in good faith by appropriate proceedings; (iii) requirements and
restrictions of zoning, building and other applicable Laws and municipal by-laws, and development,
site plan, subdivision or other agreements with municipalities that do not in the aggregate
materially and adversely affect the use of the Real Property affected thereby as currently used in
the Business; (iv) Encumbrances arising under conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business; and (v) security given in the
ordinary course of business consistent with past practice to any Governmental Entity in connection
with the operations of the Business, other than security for borrowed money.




          “Person” means an association, a corporation, an individual, a partnership, a limited
partnership, a limited liability corporation, an unlimited liability corporation, a trust or any
other entity or organization, including a Governmental Entity.







7









 








          “Public Software” means any Software that contains, or is derived in any manner from, in whole
or in part, any Software that is distributed as freeware, shareware, open source Software (e.g.,
Linux) or similar licensing or distribution models that (i) require the licensing or distribution
of source code to licensees, (ii) prohibit or limit the receipt of consideration in connection with
sublicensing or distributing any Software, (iii) except as specifically required to be permitted by
applicable Law, allow any Person to decompile, disassemble or otherwise reverse-engineer any
Software, or (iv) require the licensing of any Software to any other Person for the purpose of
making derivative works. For the avoidance of doubt, “Public Software” includes, without
limitation, Software licensed or distributed under any of the following licenses or distribution
models (or licenses or distribution models similar thereto): (i) GNU’s General Public License (GPL)
or Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g., PERL); (iii) the Mozilla Public
License; (iv) the Netscape Public License; (v) the Sun Community Source License (SCSL); (vi) the
Sun Industry Standards License (SISL); (vii) the BSD License; (viii) Red Hat Linux; (ix) the Apache
License; and (x) any other license or distribution model described by the Open Source Initiative as
set forth on www.opensource.org.




          “Purchase Price” shall have the meaning set forth in Section 2.1(b).




          “Purchaser” shall have the meaning set forth in the first paragraph of this Agreement.




          “Real Property” means the Leased Real Property.




          “Release and Discharge” shall have the meaning set forth in Section 2.2(b)(xiii).




          “Retained Indebtedness” means, as of the date of this Agreement, the portion of Indebtedness
of the Corporation as of such date calculated in accordance with line items set forth under the
heading “Retained Indebtedness” and not forming part of the Paid-Out Indebtedness in Section 1.1 of
the Sellers’ Disclosure Schedule, which shall be equal to one million five hundred thousand
U.S. dollars (US$1,500,000). For each item of Retained Indebtedness, Section 1.1 of the
Sellers’ Disclosure Schedule (under the heading “Retained Indebtedness”) correctly sets
forth the debtor, the principal amount of Indebtedness, the creditor, the maturity date and the
collateral, if any, securing the Indebtedness.




          “Scheduled Corporation Intellectual Property ” shall have the meaning set forth in Section
3.26(a).




          “Sellers” shall have the meaning set forth in the first paragraph of this Agreement.




          “Sellers’ Disclosure Schedule” shall mean the disclosure schedule of the Sellers referred to
in, and delivered pursuant to, this Agreement.







8









 








          “Sellers Indemnified Parties” shall have the meaning set forth in Section 6.3.




          “Shares” shall have the meaning set forth in the recitals to this Agreement.




          “Software” means all computer software, firmware, programs, and data, in any form, including
without limitation, source code, object code, development tools, library functions, compilers,
Internet websites, web content and links, all versions, updates, corrections, enhancements,
replacements, and modifications thereof, and all documentation related thereto.




          “Subsidiary” of any Person means, on any date, any Person (i) the accounts of which would be
consolidated with and into those of the applicable Person in such Person’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP or (ii) of which
securities or other ownership interests representing more than fifty (50) percent of the equity or
more than fifty (50) percent of the ordinary voting power or, in the case of a partnership, more
than fifty (50) percent of the general partnership interests or more than fifty (50) percent of the
profits or losses of which are, as of such date, owned, controlled or held by the applicable Person
or one or more subsidiaries of such Person.




          “Tax” or, collectively, “Taxes” means (a) any and all federal, provincial, municipal, state,
local and foreign taxes, assessments, reassessments, deficiencies and other governmental charges,
duties, land transfer duties, impositions and liabilities imposed by any Taxing Authority
including, without limitation, Canada Pension Plan and provincial Pension Plan contributions,
unemployment insurance contributions and employment insurance contributions, social security,
workers’ compensation and deductions at source, Taxes based upon or measured by gross receipts,
income, profits, sales, capital use and occupation, goods and services, value added, ad valorem,
license, lease, severance, stamp, transfer, franchise, withholding, custom duties, payroll,
recapture, employment, excise, property, real estate and school taxes, together with all interest,
penalties, fines and additions imposed with respect to such amounts; and (b) any liability for the
payment of any amounts of the type described in clause (a) of this definition of Taxes as a result
of any express or implied obligation to indemnify any other Person or as a result of any
obligations under any agreement or arrangements with any other Person with respect to such amounts
and including any liability for Taxes of a predecessor entity.




          “Tax Act” means the Income Tax Act (Canada).




          “Tax Return” means any return, report, declaration, information return or other document
required to be filed with any Tax authority with respect to Taxes, including any amendments
thereof.







9









 








          “Taxing Authority” means the Canada Revenue Agency, the Minister of Revenue for Québec and any
other Governmental Entity having Taxing authority and their respective successors, if any.




          “Tekelec” shall have the meaning set forth in the first paragraph of this Agreement.




          “Tekelec Claim” shall have the meaning set forth in Section 6.2(b).




          “Tekelec Indemnified Parties” shall have the meaning set forth in Section 6.2(a).




          “Tekelec Parties” shall have the meaning set forth in the first paragraph of this Agreement.




          “Terminating Contracts” shall have the meaning set forth in Section 5.4.




          “Third Party Intellectual Property License” shall have the meaning set forth in Section
3.26(b).




          “Transaction” includes any transaction, circumstance, act, event or omission of whatever
nature and includes any change in the residence of any person for the purposes of the Tax Act and
any change of taxation year.




          “Unaudited Corporation Financial Statements ” means the unaudited consolidated balance sheet
of the Corporation as of April 30, 2010 and the unaudited consolidated statements of income,
retained earnings and cash flows of the Corporation for the period then ended.




          “WEEE Directive” shall have the meaning set forth in Section 3.20(f).




ARTICLE II




PURCHASE AND SALE OF SHARES



          Section 2.1 Purchase and Sale of Shares; Escrow.




               (a) The Tekelec Parties and Sellers hereby agree that the Purchaser hereby purchases, acquires
and accepts from Sellers, and Sellers hereby sell, transfer, assign and deliver to Purchaser, all
of the Shares, free and clear of Encumbrances.



               (b) In consideration for the purchase of the Shares pursuant to Section 2.1(a), Purchaser
hereby pays the aggregate amount of US$29,083,242, which is equal to the difference between
thirty-three million and five hundred thousand U.S. dollars (US$33,500,000) and the Paid-Out
Indebtedness (the “Purchase Price”), as follows: (i) first, to the Escrow Agent, an aggregate
amount equal to the Escrow Deposit, in accordance with Section 2.1(c), by wire transfer of
immediately available funds;



10









 




(ii) second, after payment of the amount specified in the immediately preceding clause (i), to such
account or accounts specified in writing by Sellers to Purchaser, an aggregate amount equal to the
remainder of the Purchase Price, by wire transfer of immediately available funds to be disbursed to
the Sellers as specified in Exhibit B.




               (c) At the Closing, Purchaser shall pay, on behalf of the Corporation (or in the case of the
Employee Payments, shall cause the Corporation to pay, no later than the time of the second payroll
of the Corporation following the Closing Date), to such account or accounts of the creditors of the
Paid-Out Indebtedness and Retained Indebtedness specified in writing to Purchaser in accordance
with the instructions provided by Sellers, an aggregate amount equal to the Paid-Out Indebtedness
plus Retained Indebtedness as set forth in Section 2.1(c) of the Sellers’ Disclosure
Schedule, by wire transfers of immediately available funds. For the avoidance of doubt, the
payment by Purchaser at Closing, on behalf of the Corporation, of the Retained Indebtedness shall
have no impact on the Purchase Price.



               (d) At the Closing, Purchaser shall deliver to Computershare Trust Company of Canada, which
shall serve as the escrow agent (the “Escrow Agent”), by wire transfer, an amount equal to five
million and twenty-five thousand U.S. dollars (US$5,025,000) (together with any earnings on such
deposited amount, the “Escrow Deposit”). Subject to the terms of Article VI, the Escrow Deposit
shall be the sole and exclusive source of funds to satisfy any Losses for which any Tekelec
Indemnified Parties are entitled to indemnification pursuant to Section 6.2. The Escrow Deposit
will be held by the Escrow Agent in accordance with the terms of an escrow agreement to be entered
into among the Escrow Agent, Purchaser and Sellers at Closing, in substantially the form attached
hereto as Exhibit C (the “Escrow Agreement”).



          Section 2.2 Closing.




               (a) The closing of the transactions contemplated by this Agreement (the “Closing”) shall be
held at the offices of Ogilvy Renault LLP, located at Suite 2500, 1, Place Ville Marie, Montréal,
Québec, simultaneously with the execution of this Agreement (the “Closing Date”). The Closing shall
be deemed to have become effective at 12:01 a.m. (Montréal time) on the Closing Date.



               (b) At the Closing, the Sellers shall deliver, or cause to be delivered, to the Tekelec
Parties:




               (i) a certificate or certificates evidencing all of the Shares duly endorsed
in blank for transfer, or accompanied by irrevocable security transfer powers of
attorney duly executed in blank, in either case by the holder of record, together
with evidence satisfactory to Purchaser that Purchaser or its nominee(s) have been
entered upon the books of the Corporation as the holder of the Shares;




               (ii) the Escrow Agreement, in substantially the form attached hereto as
Exhibit C, duly executed by Sellers;



11









 






               (iii) copies of all consents, approvals or waivers required in connection
with the consummation of the transactions contemplated by this Agreement, to the
extent obtained by the Sellers prior to the Closing;




               (iv) copies of the corporate records and minute books of the Corporation;




               (v) written resignations, effective as of the Closing Date, from each of the
directors and officers of the Corporation;




               (vi) employment-related and/or consultancy agreements, in a form satisfactory
to the Tekelec Parties (collectively referred to as the “Employment Agreements”),
duly executed by each of the Identified Employees;




               (vii) a certificate, of a reasonably recent date, of status, compliance, good
standing or like certificate with respect to each of the Corporate Sellers and the
Corporation issued by appropriate government officials of their respective
jurisdictions of incorporation or organization;




               (viii) certified copies of (i) the charter documents and by-laws of the
Corporation, (ii) all resolutions of the board of directors or analogous body of
each of the Corporate Sellers approving the entering into and completion of the
transactions contemplated by this Agreement, as applicable, and (iii) a list of
the officers and directors authorized to sign agreements on behalf of each of the
Corporate Sellers together with their specimen signatures;




               (ix) pay-off letters reasonably satisfactory to the Tekelec Parties in
connection with the Paid-Out Indebtedness and Retained Indebtedness, which pay-off
letters shall include a process for the release of related Encumbrances as of the
Closing;




               (x) an opinion of Heenan Blaikie LLP, counsel to the Corporation, dated the
date hereof, substantially in the form attached as Exhibit D;




               (xi) an opinion of Spiegel Sohmer, counsel to the Corporate Sellers other
than Positron, dated the date hereof, substantially in the form attached as
Exhibit D;




               (xii) an opinion of Vincenza La Greca, counsel to Positron, dated the date
hereof, substantially in the form attached as Exhibit D;



12









 






               (xiii) a release and discharge, substantially in the form attached as
Exhibit E (the “Release and Discharge”), from each of the Sellers;




               (xiv) written consent of 9143-7459 Québec Inc., the landlord of the Leased
Real Property located at 1751, Richardson Street, Montréal, as a result of the
change of control of the Corporation resulting from the transactions contemplated
herein;




               (xv) a written notice confirming the termination of the Unanimous
Shareholders’ Agreement dated March 31, 2006 relating to the Corporation, executed
by each of the Sellers, delivered in accordance with Section 7.2 of said
agreement, and the waiver of any and all rights by each of the parties thereunder;




               (xvi) a written notice confirming the termination of the Investment Agreement
dated March 19, 2004 among the Corporation, 2144 and 2136 and the waiver of any
and all rights by each of the parties thereunder;




               (xvii) a written notice confirming the termination of the Memorandum of
Agreement dated June 30, 2006 among the Corporation, Louis Barbeau and Stephan,
executed by each of the parties thereto and the waiver of any and all rights by
Louis Barbeau;




               (xviii) written consent of Hewlett Packard (Canada) Co., as licensor of
certain software programs to the Corporation, as a result of the change of control
of the Corporation resulting from the transactions contemplated herein;




               (xix) a certificate, from one of the Sellers in the name of and on behalf of
all the Sellers, in a form satisfactory to the Tekelec Parties, confirming that
the Blueslice Networks Inc. Share Option Plan has been terminated and that there
are no outstanding options relating to the share capital of the Corporation as of
the Closing;




               (xx) a certificate from one of the Sellers in the name and on behalf of all
of the Sellers, in a form satisfactory to the Tekelec Parties, acting reasonably,
confirming that, except as set forth in Section 3.26(k) of Sellers’ Disclosure
Schedule, each inventor, author, or creator of, or any other party that has
otherwise contributed to, the Corporation Intellectual Property or Owned Software
has executed an acknowledgement and assignment confirming the Corporation’s
ownership of such Intellectual Property to the Corporation and waived all moral
rights in favour of the Corporation;




               (xxi) written consent of HSBC Bank of Canada in accordance to the terms of
the April 8, 2010 letter of offer between the



13









 






Corporation and HSBC Bank of Canada as a result of the change of control of
the Corporation resulting from the transaction contemplated herein; and





               (xxii) such other documents and instruments as may be reasonably required by
Purchaser to complete the transactions contemplated herein.




               (c) At the Closing, the Tekelec Parties shall deliver, or cause to be delivered, to the
Sellers:




               (i) the Purchase Price pursuant to Section 2.1(b);



               (ii) evidence of the insurance provided in accordance with Section 5.8;



               (iii) a certificate, of a reasonably recent date, of status, compliance, good
standing or like certificate with respect to the Purchaser issued by appropriate
government officials of its jurisdiction of incorporation or organization;




               (iv) a certificate, of a reasonably recent date, of status, compliance, good
standing or like certificate with respect to Tekelec issued by appropriate
government officials of its jurisdiction of incorporation or organization;



               (v) the Escrow Agreement, in substantially the form attached hereto as
Exhibit C, duly executed by the Tekelec Parties;




               (vi) certified copy of the resolutions of the board of directors or analogous
body of each of the Tekelec Parties approving the entering into and completion of
the transactions contemplated by this Agreement and the purchase by the Purchaser
of the Shares; and



               (vii) certificate of a senior officer of Tekelec addressed to the Sellers
confirming that Tekelec has entered into (i) agreements with certain employees of
the Corporation or will make offers to certain employees of the Corporation within
five (5) Business Days of the Closing Date regarding the payment in cash of an
aggregate of US$1.5 million to said employees to be disbursed as determined by
Tekelec at its sole discretion upon completion of certain integration milestones
agreed between Tekelec and said employees, and (ii) grant agreements with certain
employees of the Corporation or will make offers to certain employees of the
Corporation within five (5) Business Days of the Closing Date regarding the
issuance of US$2 million worth of Tekelec restricted stock units to certain
employees of the Corporation upon completion of certain milestones agreed between
Tekelec and said employees.



14









 





ARTICLE III




REPRESENTATIONS AND WARRANTIES OF THE SELLERS



          Sellers jointly (pro rata to their shareholdings), and not solidarily, represent and warrant
to the Tekelec Parties as follows:




          Section 3.1 Corporate Status. Each of Winvest, 2144, 2136, 171033, 171036, Capital and Positron (collectively, the
“Corporate Sellers”) is duly incorporated and validly existing under the Laws of its governing
jurisdiction. The Corporation is duly incorporated or amalgamated and validly existing under the
Laws of its governing jurisdiction and (i) has all requisite corporate power and authority to carry
on its business as it is now being conducted and (ii) is duly qualified to do business in each of
the jurisdictions in which the ownership, operation or leasing of its properties and assets or the
conduct of its business requires it to be so qualified.




          Section 3.2 Authorization. Each of the Sellers has the full power, authority and capacity to enter into, and perform
its obligations under, this Agreement and the Escrow Agreement. This Agreement has been duly
executed and delivered by the Sellers, and (assuming due authorization, execution and delivery by
Purchaser) this Agreement constitutes, and the Escrow Agreement, when executed and delivered by the
Sellers (assuming due authorization, execution and delivery by the other parties thereto), will
constitute, a valid and binding obligation of Sellers, enforceable against Sellers in accordance
with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar Laws relating to or affecting creditors’ rights generally or by
general equitable principles (regardless of whether such enforceability is considered in a
proceeding in equity or at Law).




          Section 3.3 No Conflict. The execution and delivery of this Agreement and the Escrow Agreement by the Sellers and
the consummation of the transactions contemplated hereby or thereby, as applicable, by the Sellers
will not (A) violate any applicable Law to which any of the Sellers or the Corporation (or any of
their respective properties) is subject, (B) materially conflict with, result in a material
violation or material breach of, or constitute a material default under, result in the acceleration
of or create in any party the right to accelerate, terminate or cancel (i) any Corporation Contract
or material Corporation Lease or (ii) any material Contract to which a Seller is a party or by
which the assets of a Seller may be bound, or (C) violate the charter, bylaws or other
organizational documents of a Corporate Seller, the Corporation, other than in the case of clause
(B)(ii) above, any such violations, conflicts, breaches, defaults, accelerations or rights that
would not materially impair the Sellers’ ability to perform their obligations under this Agreement
or consummate the transactions contemplated hereby.




          Section 3.4 Consents and Approvals. No notice to, consent, waiver, agreement, approval, or authorization of, or declaration,
filing or registration with, or permit from, or assignment by any Governmental Entity or any other
Person, is required to be made or obtained by Sellers in connection with the execution, delivery or




15









 







performance of this Agreement or the Escrow Agreement or the consummation of the transactions
contemplated hereby or thereby or compliance by the Sellers with any of the provisions hereof or
thereof.




          Section 3.5 Capital Structure.




               (a) The authorized share capital of the Corporation consists of an unlimited number of common
shares, 6,600,000 Class A shares, 8,991,668 Class B Series 1 shares, 4,954,086 Class B Series 2
shares, 257,143 Class B Series 3 shares, 7,483,657 Class B Series 4 shares and an unlimited number
of Class C, Class D, Class E, Class F and Class G shares of which 6,600,000 Class A shares,
8,991,668 Class B Series 1 shares, 4,954,086 Class B Series 2 shares, 257,143 Class B Series 3
shares, 6,221,128 Class B Series 4 shares, 3,888,162 Class D shares and 5,100,000 Class G shares
are issued and outstanding as of the date hereof. The Shares are duly authorized, validly issued,
fully paid and non-assessable, and are held of record by Sellers, free and clear of Encumbrances.
The Shares constitute all of the issued and outstanding shares of the Corporation. Except as set
forth in Section 3.5(a) of the Sellers’ Disclosure Schedule, there are no (i) outstanding
obligations, options, warrants, convertible securities, exchangeable securities or other rights,
agreements or commitments relating to the share capital of the Corporation or obligating the
Corporation to issue or sell or otherwise transfer shares of the Corporation or any securities
convertible into or exchangeable for any shares of the Corporation, (ii) outstanding obligations of
the Corporation to repurchase, redeem or otherwise acquire shares of the Corporation or to make any
investment (in the form of a loan, capital contribution or otherwise) in any other Person or (iii)
voting trusts, shareholder agreements, proxies or other agreements or understandings in effect with
respect to the voting or transfer of shares of the Corporation.



               (b) The Sellers own the Shares listed opposite their name at Exhibit A. Upon
completion of the transactions contemplated by this Agreement, Purchaser will have good and valid
title to the Shares, free and clear of all Encumbrances other than (i) those restrictions on
transfer, if any, contained in the articles of the Corporation, and (ii) Encumbrances granted by
Purchaser.



               (c) The Corporation has no Subsidiaries and does not hold any shares or other ownership,
equity or proprietary interests in any other Person.



     Section 3.6 Financial Statements.



               (a) A true and complete copy of the Corporation Financial Statements and the Unaudited
Corporation Financial Statements have been made available to Tekelec. The Corporation Financial
Statements and the Unaudited Corporation Financial Statements were prepared in accordance with
GAAP, consistently applied throughout the periods indicated (except as disclosed in the notes
thereto), and fairly present the consolidated financial position, results of operations and cash
flows of the Corporation as of the dates thereof and for the periods covered thereby.



16









 





               (b) Section 3.6(b) of the Sellers’ Disclosure Schedule lists, and copies of the
documentation creating or governing all securitization transactions and “off-balance sheet
arrangements”, if any, have been made available to the Purchaser (as defined in Item 303(c) of
Regulation S-K under the Securities Act of 1933 and the rules and regulations thereunder).



          Section 3.7 Undisclosed Liabilities. Except as set forth in Section 3.7 of the Sellers’ Disclosure Schedule and except
for liabilities which are accrued or reserved against in the Corporation Balance Sheet (or
reflected in the notes thereto) and liabilities incurred since the Corporation Balance Sheet Date
in the ordinary course of business consistent with past practice, the Corporation does not have any
liabilities.




          Section 3.8 Indebtedness. The Corporation has no liabilities which constitutes Indebtedness, except as set forth under
the headings “Paid-Out Indebtedness” and “Retained Indebtedness” in Section 1.1 of the Sellers’
Disclosure Schedule.




          Section 3.9 Absence of Certain Changes. From the Corporation Balance Sheet Date through the date of this Agreement, there has not
occurred any Material Adverse Effect. From the Corporation Balance Sheet Date through the date of
this Agreement, the Corporation has conducted the Business in the ordinary course consistent with
past practice, and the Corporation has not:




               (a) amended its articles, bylaws or other organizational documents;



               (b) adopted a plan or agreement of liquidation, dissolution, restructuring, merger,
consolidation, restructuring, recapitalization or other reorganization;



               (c) except as set forth in Section 3.9(c) of the Sellers’ Disclosure Schedule, (i)
issued, sold, transferred, pledged, disposed of or suffered any Encumbrance on any shares of its
share capital or any securities convertible into or exchangeable for any shares of its share
capital, (ii) granted or issued any options, warrants or other rights to purchase or obtain any
shares of its share capital, (iii) split, combined, subdivided or reclassified any shares of its
share capital, (iv) declared, set aside or paid any dividend or other distribution with respect to
any shares of its share capital, (v) paid cash bonuses, deferred payment of accounts payable or
similar liabilities past their payment due date, invoiced customers in advance of contractual
terms, or otherwise impacted any working capital items in a manner inconsistent with past business
practice, or (vi) redeemed, purchased or otherwise acquired any shares of its share capital or
effected any reduction in capital;



               (d) except as disclosed in Section 3.9(d) of Sellers’ Disclosure Schedule, issued any
note, bond or other debt security or incurred or guaranteed any Indebtedness, other than in the
ordinary course of business consistent with past practice;



               (e) except in the ordinary course of business consistent with past practice or as required
under the terms of any Corporation Plan or any existing



17









 




employment Contract or Collective Agreement, increased (i) the benefits under any Corporation
Plan or (ii) the compensation payable to any officer or employee of the Corporation;




               (f) entered into or consummated any transaction involving the acquisition of the business,
share, assets or other properties of any other Person for consideration in excess of US$50,000
(other than purchases of inventory in the ordinary course of business consistent with past
practice);



               (g) sold, leased, licensed or otherwise disposed of any material amount of assets or property
for consideration in excess of US$50,000, except pursuant to existing Contracts and except in the
ordinary course of business consistent with past practice;



               (h) made any capital expenditures in excess of US$50,000;



               (i) initiated any Action or settled any Action involving a payment to or by the Corporation in
excess of US$50,000;



               (j) changed any of its accounting principles or practices;



               (k) made or rescinded any material Tax election with respect to the Corporation other than in
the ordinary course of business consistent with past practice;



               (l) increased its reserves for contingent liabilities;



               (m) effected any sale and leaseback transactions;



               (n) made any written commitment to, or entered into any written Contract with, customers,
other than as provided in the Corporation Contracts;



               (o) written up or written down any of its material assets or revalued its inventory in any
material respect;



               (p) suffered any extraordinary casualty losses, damages, destructions, whether or not covered
by insurance; or



               (q) agreed or committed by Contract or otherwise to do any of the foregoing.



          Section 3.10 Accounts Receivable; Inventories.




               (a) Set forth in Section 3.10(a) of the Sellers’ Disclosure Schedule are a list of all
the accounts receivable of the Corporation and an aging schedule relating thereto, each as of the
end of the last completed calendar month prior to the date hereof. Such accounts receivable and
any accounts receivable arising between such date and the Closing Date (collectively, “Accounts
Receivable”) are valid and subsisting,



18









 




and except as set forth in Section 3.10(a) of the Sellers’ Disclosure Schedule all
such Accounts Receivable arose in the ordinary course of business consistent with past practice.
Except to the extent of the allowance for doubtful accounts on the Corporation Balance Sheet, and
in the case of Accounts Receivable arising since the date of the Corporation Balance Sheet, to the
extent of an allowance for doubtful accounts which is not greater than the rate reflected on the
Corporation Balance Sheet and except for matters set fort in Section 3.10(a) of Sellers’
Disclosure Schedule, the invoiced Accounts Receivable are fully collectible as of the Closing
Date and no Account Receivable is subject to any counterclaim, set-off, defense, security interest,
claim, or other Encumbrance. For greater certainty, an invoiced Account Receivable will be
considered fully collectible as of the Closing Date even if the debtor pursuant thereto becomes
insolvent after the Closing Date causing such debtor to default on its obligations if such
insolvency was not reasonably foreseeable on such date. No agreement for deduction, free goods,
discount or other deferred price or quantity adjustment has been made with respect to any Account
Receivable except as set forth in 3.10(a) of the Sellers’ Disclosure Schedule. The
Corporation has not invoiced or otherwise charged any of its customers for amounts in excess of the
amounts that such customer had theretofore agreed to pay for the good and services provided to it
by the Corporation. Except as set forth in Section 3.10(a) of the Sellers’ Disclosure Schedule,
the Accounts Receivable do not include any amounts that represent invoices for products or services
not yet delivered or rendered, unless such amount was billed in accordance with the terms of the
respective customer contractual agreement and such amount has a corresponding amount that is
recorded in deferred revenue on the Corporation Balance Sheet. All amounts billed by the
Corporation have been billed in accordance with the terms of the respective customer Contracts and
are collectible in accordance with such terms. All penalties incurred under such customer
Contracts (whether or not assessed) have reduced the Accounts Receivable and the deferred revenue
balance as of the Closing Date.




               (b) The inventories of the Corporation are of a quality and quantity useable and saleable in
the ordinary course of business consistent with past practice, subject to appropriate and adequate
allowances reflected on the Corporation Financial Statements for obsolete, excess, slow-moving,
lower of cost or market and other reserves required under GAAP. Such allowances have been
calculated in accordance with GAAP and in a manner consistent with the past practice of the
Corporation. None of the inventory of the Corporation is held on consignment, or otherwise, by
third parties. Section 3.10(b) of the Sellers’ Disclosure Schedule sets forth any (i)
off-balance sheet inventory that is held as safety stock and owned by a supplier of the Corporation
which has not yet been delivered to the Corporation, (ii) inventory held by a reseller of any of
the Corporation which may be returned or put back to the Corporation if unsold by such reseller,
(iii) consignment inventory, and (iv) purchase volume commitments that obligate the Corporation.



          Section 3.11 Insurance.




               (a) Set forth in Section 3.11 of the Sellers’ Disclosure Schedule is a list of all
insurance policies and bonds currently in force covering or relating to the properties, operations
or personnel of the Corporation and, with respect to



19









 




insurance policies covering product liability and similar occurrence based risks, in force at
any time since January 1, 2007, and a detailed list of all claims filed by the Corporation with any
insurance carrier since January 1, 2007. Such schedule clearly indicates (i) which of such
policies are claims made and which of such policies are occurrence based, (ii) the deductibles of
each such policy and the amounts which have been applied to such deductibles in the current policy
period and (iii) the aggregate amount available under each such policy. All of such insurance
policies are in full force and effect (with respect to the applicable coverage periods), and the
Corporation is not in default with respect to any of its material obligations under any of such
insurance policies.




               (b) Since January 1, 2008, the Corporation has at all times maintained insurance as required
by Law or under any Contract to which the Corporation is or has been a party, including, without
limitation, comprehensive general liability, products liability and unemployment and workers’
compensation coverage. Such insurance insures the property of the Corporation against all
ordinary, insurable risks to the full replacement cost thereof.



          Section 3.12 Bank Accounts. Set forth in Section 3.12 of the Sellers’ Disclosure Schedule is a list of the
locations and numbers of all bank accounts, investment accounts and safe deposit boxes maintained
by the Corporation, together with the names of all persons who are authorized signatories or have
access thereto or control thereover.




          Section 3.13 Officers, Directors, Employees, Consultants and Agents;
Compensation.




               (a) Set forth in Section 3.13(a) of the Sellers’ Disclosure Schedule is a complete
list of: (i) all current directors of the Corporation, (ii) all current officers (with office
held) of the Corporation, (iii) all employees (active or other) of the Corporation, (iv) all
current paid consultants, sales representatives, commercial agents or other freelancers engaged by
the Corporation, and (v) all retirees and terminated employees of the Corporation for which the
Corporation has any benefits responsibility or other continuing or contingent obligation; together,
in each case, with the current rate of compensation (if any) payable to each and any paid vacation
time owing to such person, any incentive or bonus payments owing to such persons but not yet paid
and the date of employment, retirement or termination of each such person.



               (b) Exc#ept as set forth in Section 3.13(b) of the Sellers’ Disclosure Schedule: (i)
the Corporation is not indebted to any of its officers, directors, employees or consultants except
for amounts due in the ordinary course of business consistent with past practice as normal
salaries, wages, employee benefits and bonuses and in reimbursement of ordinary expenses in the
ordinary course of business consistent with past practice; and (ii) no officer, director, employee,
consultant, commercial agent or other freelancer of the Corporation is indebted to the Corporation
except for advances for ordinary business expenses in the ordinary course of business consistent
with past practice.




20











 





               (c) All payments to agents, consultants and others made by the Corporation or by any of the
Sellers in connection with the Business have been in payment of bona fide fees and commissions and
not as bribes, kickbacks or as otherwise illegal or improper payments. To the Knowledge of
Sellers, all such payments have been made directly to the parties providing the goods or services
for which such payments were made, and no such payment has been paid in a manner intended to avoid
currency controls or any party’s Tax reporting or Tax payment obligations. The Corporation has
properly, fairly and accurately reflected on its books and records: (i) all compensation paid to
and perquisites provided to or on behalf of its agents and employees; and (ii) all compensation and
perquisites that are due and payable or deferred and payable to such persons, but which have not
been paid or provided at the Closing Date. Such compensation and perquisites, to the extent they
were paid or occurred prior to March 31, 2010, have been properly and accurately disclosed in the
Corporation Financial Statements and other public or private reports, records or filings of the
Corporation, to the extent required by Law.



               (d) Except as set forth in Section 3.13(d) of Sellers’ Disclosure Schedule, no offer
of employment or engagement has been made by the Corporation that has not yet been accepted, or
which has been accepted but where the employment or engagement has not yet started.



               (e) No employees of the Corporation are on secondment, maternity, paternity, adoption or other
leave or absent due to ill-health or for any reason.



               (f) All Contracts between the Corporation and their employees are terminable at any time on
one year’s notice or less, or equivalent indemnity in lieu thereof, plus any claim for wages earned
through the date of termination, pay in lieu of accrued and untaken vacation, earned commission and
pension.



               (g) None of the individuals listed in Section 3.13(g) of the Sellers’ Disclosure
Schedule has indicated to the Corporation that he or she intends to resign or retire as a
result of the transactions contemplated by this Agreement or otherwise within one year after the
Closing Date.



               (h) Except as set forth in Section 3.13(h) of the Sellers’ Disclosure Schedule, every
employee of the Corporation has an effective confidentiality/non-disclosure agreement with the
Corporation, and the Corporation has a copy of all such agreements in its files.



          Section 3.14 Labour. (i) The Corporation is not a party to any collective bargaining agreement or any other
labour-related agreements with any labour union or labour organization applicable to employees of
the Corporation; (ii) no work stoppage involving the Corporation is pending or, to the Knowledge of
Sellers, threatened by any labor dispute or Action; (iii) to the Knowledge of Sellers, the
Corporation is operating the Business in compliance with all Labour Laws; (iv) to the Knowledge of
Sellers, there are no ongoing union certification drives or pending proceedings for certifying a
union with respect to employees of the Corporation; and (v) there has been no workplace accident



21









 







resulting in a fatality of any employee of the Corporation within 365 days prior to the date
hereof. “Labour Laws” means any applicable Law relating to employment standards, human rights,
health and safety, labour relations, workplace safety, language and insurance and/or pay equity.



          Section 3.15 Customers and Suppliers.



               (a) Section 3.15(a) of the Sellers’ Disclosure Schedule sets forth a true, complete
and correct list of the customers, resellers, distributors, and agents of the Corporation and the
10 largest suppliers of the Corporation, by volume of sales and purchases, respectively (by dollar
volume) for each of the years ended March 31, 2010 and 2009, provided, that if any Person noted in
Section 3.15(a) of the Sellers’ Disclosure Schedule is a reseller, then the Sellers shall
also include in Section 3.15(a) of the Sellers’ Disclosure Schedule a list of the end
customers related to such resellers. Except as disclosed in Section 3.15(a) of the Sellers’
Disclosure Schedule to the Knowledge of Sellers, the Corporation has not received any
indication from any customer, reseller or end-user of the Corporation (including those customers,
resellers and end-users listed in Section 3.15(a) of the Sellers’ Disclosure Schedule) to
the effect that such customer, reseller or end-user will stop or decrease the rate of buying
materials, products or services to the Corporation. Section 3.15(a) of the Sellers’ Disclosure
Schedule lists all significant goods or services necessary for the conduct of the business of
the Corporation with respect to which alternative sources of supply are not readily available on
comparable terms and conditions (including all significant goods and services for which there is
only one reasonably available source).



               (b) Except as set forth in Section 3.15(b) of the Sellers’ Disclosure Schedule or
expressly in the agreements disclosed in Section 3.15(b) of the Sellers’ Disclosure
Schedule, the Corporation has not made any offer, binding response to a request for proposal,
commitment or promise, in writing, orally or otherwise, under which the Corporation has any current
or future obligations (other than confidentiality or similar provisions which customarily survive
the termination of such an agreement) to customers, resellers, distributors, partners or agents
with respect to its products or services, including with respect to software development or other
product features.



          Section 3.16 Product Liability Claims.
The Corporation has not received a written claim or allegation of, or been a party or subject
to any Action relating to, bodily or personal injury, death, or property or economic damages, any
claim for punitive, exemplary or consequential damages, any claim for contribution or
indemnification, or any claim for injunctive relief in connection with any product manufactured,
sold or distributed by, or in connection with any service provided by, or based on any error or
omission or negligent act in the performance of services by, the Corporation, its employees,
agents, consultants or representatives.



          Section 3.17 Product and Service Warranties.
Set forth in Section 3.17 of the Sellers’ Disclosure Schedule are the standard forms
of product and service warranties and guarantees used by the Corporation and copies of all other
outstanding product and service warranties and guarantees. Except as set forth in



22









 







Section 3.17 of the Sellers’ Disclosure Schedule, no oral product or service
warranties or guarantees have been made by the Corporation. Except as specifically described in
Section 3.17 of the Sellers’ Disclosure Schedule, no product or service warranty or
indemnity claim or similar claims have been made in writing against the Corporation. The aggregate
loss and expense (including out-of-pocket expenses) attributable to all product and service
warranties and guarantees and similar claims now pending against the Corporation hereafter with
respect to products manufactured or services rendered on or prior to the date hereof will not
exceed the amount of the reserve therefor set forth on the Corporation Balance Sheet as current
liabilities.



          Section 3.18 Legal Proceedings.
There are no Actions pending, or, to the Knowledge of Sellers, threatened against any of the
Sellers or the Corporation. The Corporation is not subject to any judgment, decree, injunction or
order of any Governmental Entity which would impair the Sellers’ ability to perform their
obligations under this Agreement or consummate the transactions contemplated hereby.



          Section 3.19 Compliance with Laws.
The Corporation is operating the Business in compliance with applicable Laws, except for such
non compliance as would not, individually or in the aggregate, adversely affect the operations of
the Corporation and cause the Corporation to pay an amount of less than US$50,000 to remedy such
non compliance. All approvals, permits, licenses and registrations from Governmental Entities
(collectively, “Permits”) required to conduct the Business as currently conducted have been
obtained by the Corporation and all such Permits are in full force and effect and the Business is
being operated in compliance therewith, except where the failure to hold such Permits would not
adversely affect the operations of the Corporation and cause the Corporation to pay an amount of
less than US$50,000 to remedy such failure.



          Section 3.20 Environmental Matters.
(a) the Corporation has obtained all material Permits that are required under any
Environmental Law for the operation of the Business as currently being conducted and, all such
Permits are in full force and effect;



               (b) the Corporation has operated and is operating the Business in material compliance with
Environmental Laws;



               (c) Sellers have made available to Purchaser true, correct and complete copies of all material
environmental assessments, audits, studies and other material environmental reports of third party
consultants in its possession relating to the Corporation and the Real Property;



               (d) the Corporation has not (i) caused or permitted a Discharge of any Hazardous Substances
on, under, in, from, or about the Real Property or (ii) stored or maintained any Hazardous
Substances on, at or under any Real Property, in each case, except in compliance with Environmental
Laws;



               (e) (i) the Corporation has not received any written notice, demand, letter, claim or
remediation order alleging a violation of any Environmental



23









 







Law, and (ii) the Corporation is not party to any Action, order (including a remediation
order), decree or injunction alleging material liability under any Environmental Law;



               (f) the Corporation is not, nor has it been at any time, a “Producer” or a “Distributor” under
the terms of Directive 2002/96/EC on waste electrical and electronic equipment (“WEEE Directive”),
as implemented in each Member State of the European Union in which the Corporation has operated or
is operating the Business;



               (g) As used herein, “Environmental Law” means any Law applicable to the Business relating to
(i) the protection or enhancement of the natural environment, (ii) the protection of human health
and safety as it pertains to exposure to Hazardous Substances present in or Discharged into the
natural environment or (iii) the handling, use, presence, treatment, storage, Release or threatened
Release of any Hazardous Substance. “Hazardous Substance” means any substance that is (i) listed,
classified, regulated or defined pursuant to any Environmental Law applicable to the Corporation to
be a pollutant, contaminant, waste, hazardous waste, hazardous substance, hazardous material, toxic
substance, deleterious substance or dangerous good, (ii) any petroleum product or by-product, (iii)
any asbestos-containing material (including asbestos-containing vermiculite), chlorinated solvents,
lead, urea formaldehyde foam insulation or mould, or (iv) toxic, explosive, corrosive, flammable,
radioactive, carcinogenic, mutagenic, or is otherwise hazardous and is regulated by any
Environmental Laws applicable to the Corporation.



          Section 3.21 Taxes.
Except as set forth in Section 3.21 of the Sellers’ Disclosure Schedule,




               (a) The Corporation has prepared and filed all Tax Returns required to be filed by it within
the prescribed period with the appropriate Taxing Authority in accordance with applicable Laws.
Subject to Section 3.21(m), each Tax Return filed by the Corporation is true, correct and complete
in all material respects. The Corporation is not nor has ever been a member of a group of
corporations with which it has filed (or been required to file) consolidated, combined, unitary or
similar Tax Returns. The Corporation has delivered to the Purchaser complete and accurate copies of
all income Tax Returns and all notices of assessment or reassessment related thereto received by
the Corporation with respect to all tax periods ending on or after March 31, 2006 and before April
1, 2010.



               (b) The Corporation has paid, within the prescribed period, all Taxes and instalments of
Taxes, which were required to be paid to any Taxing Authority, before the Closing Date, pursuant to
applicable Law. No deficiency with respect to the payment of any Taxes or Tax instalments has been
asserted against the Corporation by any Taxing Authority. All unpaid Taxes of the Corporation
attributable to periods after the Corporation Balance Sheet Date arose in the ordinary course of
business consistent with past practice and are similar in nature and amount to Taxes which arose
during the comparable period of time in the immediately preceding fiscal year. Adequate provision
has been made in the books and records of the Corporation for all Taxes payable for all



24









 







taxable periods ending on or before the Closing Date, and where no taxable period ends or is
deemed to end on or immediately prior to the Closing Date, for all Taxes in respect of any time or
Transaction prior to the Closing Date.



               (c) The Corporation has duly and timely withheld and collected all Taxes required by
applicable Law to be withheld or collected by it and has duly and timely remitted to the
appropriate Taxing Authority all such Taxes as and when required by applicable Law. The amount of
any Taxes withheld or collected but not remitted by the Corporation has been retained in its
accounts and will be remitted by it to the appropriate Taxing Authority when due, save and except
for any Taxes withheld by the Corporation from the Employee Payments which Purchaser shall cause
the Corporation to pay in accordance with the provisions of this Agreement, such Taxes being
retained in the accounts of the Corporation.



               (d) There are no Actions pending or, to the Knowledge of Sellers, threatened against or
affecting the Corporation in respect of any Taxes and, in particular, there are no matters under
discussion, audit or appeal with any Taxing Authority relating to Taxes. All Tax Returns of the
Corporation for taxation periods ending on or before June 30, 2009 have been assessed by the
relevant Taxing Authority.



               (e) The Corporation has not requested, entered into any agreement or other arrangement or
executed any waiver providing for any extension of time within which (i) to file any Tax Return;
(ii) to file any election, designations or similar filing relating to Taxes; (iii) it is required
to pay or remit any Taxes or amounts on account of Taxes or (iv) any Taxing Authority may assess or
collect Taxes. The Corporation has not entered into any agreement with, or provided any undertaking
to, any Person pursuant to which it has assumed liability for the payment of Taxes owing by such
Person.



               (f) The Corporation is a resident of Canada for purposes of the Tax Act. The Corporation has,
at all relevant times, been and is a taxable Canadian corporation within the meaning of subsection
89(1) of the Tax Act. The Corporation has never been required to file any Tax Return with, and has
never been liable to pay any Taxes, to any Taxing Authority outside Canada. No request to file a
Tax Return has even been made by a Taxing Authority in a jurisdiction where the Corporation does
not file Tax Returns.



               (g) The Corporation has not made any elections pursuant to any Tax Law. The Corporation has
not entered into agreements contemplated by section 191.3 of the Tax Act.



               (h) No Person (other than the Purchaser) has ever acquired or had the right to acquire control
of the Corporation for purposes of the Tax Act.



               (i) The Corporation is not, nor has it been at any time, associated (within the meaning of the
Tax Act) with any other corporation (other than the Purchaser and corporations associated to it).



25









 





               (j) None of sections 78, 80, 80.01, 80.02, 80.03 and 80.04 of the Tax Act, or any equivalent
provision of the Laws of any other jurisdiction, has applied to the Corporation at any time on or
before the Closing Date.



               (k) The Corporation has not and has not been deemed to have for purposes of the Tax Act,
acquired property from a non-arm’s length Person, within the meaning of the Tax Act, for
consideration, the value of which is less than the fair market value of the property in
circumstances which could subject it to a liability under section 160 of the Tax Act. The value of
the consideration paid or received by the Corporation for the acquisition, sale, transfer, use or
provision of property (including intangibles) or the provision of services (including financial
transactions) from or to a non-arm’s length Person, within the meaning of the Tax Act, is equal to
the fair market value of such property acquired, provided or sold or services purchased or
provided.



               (l) The Corporation has not received any requirement pursuant to section 224 of the Tax Act
which remains unsatisfied in any respect. No circumstances exist and no transaction or event or
series of transactions or events has occurred which has resulted or could result in the
application, either before, on or after Closing, of section 17 of the Tax Act to the Corporation.
Paragraph 214(3)(a) of the Tax Act has not applied as a result of any transaction or event
involving the Corporation. For all Transactions between the Corporation and any non-resident Person
with whom the Corporation was not dealing at arm’s length on or before the Closing Date, the
Corporation has made or obtained records or documents that meet the requirements of paragraphs
247(4)(a) to (c) of the Tax Act.



               (m) All research and development investment tax credits (“ITCs”) and expenditures claimed by
the Corporation for tax periods ending on or before March 31, 2009 were claimed in accordance with
the Tax Act and the relevant provincial legislation and the Corporation satisfied at all relevant
times the relevant criteria and conditions entitling it to such ITCs and expenditures. All refunds
of ITCs received or receivable by the Corporation for tax periods ending on or before March 31,
2009 were claimed in accordance with the Tax Act and the relevant provincial legislation and the
Corporation satisfied at all relevant times the relevant criteria and conditions entitling it to
claim a refund of such ITCs. The Sellers make no representations on the amount of ITCs to which
the Corporation is entitled for the fiscal periods ending March 31, 2010 and thereafter, other than
to represent that the amount of such ITCs to which the Corporation is entitled for its taxation
year ended March 31, 2010 shall not be less than CDN$2,066,000. The amounts of ITCs and qualifying
scientific research and experimental development expenditures which are available, for purposes of
the Tax Act and the relevant provincial legislation, to be carried forward by the Corporation for
taxation years ending after March 31, 2009 are set out in Section 3.21(m) of the Sellers’
Disclosure Schedule.



               (n) Except for John, none of the Sellers is a non-resident of Canada for the purposes of the
Tax Act.



26









 





               (o) John is a resident of the United Kingdom for purposes of the Canada-United Kingdom Income
Tax Convention and is entitled to all the benefits thereof.



               (p) The Shares constitute “treaty-protected property” within the meaning of the Tax Act and do
not, pursuant to amendments to the Tax Act proposed on March 4, 2010, constitute “taxable Canadian
property” within the meaning of those amendments.



          Section 3.22 Employee Benefit Plans.




               (a) Section 3.22(a) of the Sellers’ Disclosure Schedule sets forth a list of each
Corporation Plan.



               (b) Sellers have made available to Purchaser the text of all Corporation Plans (where no text
exists, a summary has been provided) and any related trust agreements, insurance contracts or other
documents governing those plans, all as amended to the date hereof.



               (c) No Corporation Plan is a registered pension plan and the Corporation does not have and has
never had any obligation with respect to a defined benefit pension plan or arrangement.



               (d) Each Corporation Plan is and has been maintained in material compliance with its terms and
with the requirements prescribed by all applicable Law and is in good standing in respect of such
applicable Law and each Corporation Plan that is required to be registered under applicable Law is
duly registered with the relevant regulatory authorities.



               (e) All contributions or premiums required to be paid, deducted or remitted and all
obligations required to be performed by the Corporation pursuant to the terms of any Corporation
Plan or by applicable Law, have been paid, deducted, remitted or performed in accordance with such
plan or as required by Law and there are no outstanding material defaults or violations with regard
to same.



               (f) There is no action, suit, claim, trial, demand, arbitration or other proceeding pending
or, to the Knowledge of Sellers, threatened with respect to the Corporation Plans (other than
routine claims for benefits).



               (g) Except as disclosed in Section 3.22(g) of Sellers’ Disclosure Schedule, there is
no pending termination or winding-up procedure in respect of any of the Corporation Plans.



               (h) No commitments have been made by the Corporation to amend any Corporation Plan, to provide
increased benefits thereunder or to establish any new benefit plan, except as required by
applicable Law or as disclosed in Section 3.22(h) of the Sellers’ Disclosure Schedule.



27









 





               (i) Except as disclosed in Section 3.22(i) of Sellers’ Disclosure Schedule, the
transactions contemplated in this Agreement shall not, alone or upon the occurrence of any
additional or subsequent event, result in any payment, severance or otherwise, or acceleration,
vesting or increase in benefits under any Corporation Plan with respect to any employees or former
employees of the Corporation.



               (j) No Corporation Plan provides post-retirement or post-employment benefits for the former
employees of the Corporation.



               (k) None of the Corporation Plans require or permit retroactive increases or assessments in
premiums or payments.



               (l) The Corporation does not contribute and is not required to contribute to any
multi-employer pension or benefit plan. No Corporation Plan is a multi-employer pension or benefit
plan.



               (m) Except as disclosed in Section 3.22(m) of the Sellers’ Disclosure Schedule, all
Corporation Plans can be amended or terminated without any restrictions and the Corporation has the
unrestricted power to amend or terminate any of the Corporation Plans.



               (n) The liabilities of the Corporation under any unfunded Corporation Plan are accrued and
reflected in the financial statements of the Corporation.



          Section 3.23 Corporation Contracts.




               (a) Except as set forth in Section 3.23(a) of the Sellers’ Disclosure Schedule (such
Contracts required to be listed, referred to herein as the “Corporation Contracts”), the
Corporation is not a party to or otherwise obligated under any of the following, whether written or
oral:




               (i) any Contract providing for the sale of products, the provision of
services or warranty liability by the Corporation to any other person or entity or
otherwise pursuant to which the Corporation has accepted the terms and conditions
of the other party thereto in value in excess of US$75,000;




               (ii) except as set forth in Section 3.13(a) and Section 3.13(d) of
Sellers’ Disclosure Schedule, any employment, consulting or similar
Contract requiring payment by the Corporation of compensation in excess of
US$50,000;




               (iii) any Contract with any customer, reseller or agent, which may require
payment by the Corporation or by a customer, reseller or agent of an amount in
excess of US$50,000;




               (iv) any Contract containing any most favored customer or similar provision;



28









 






               (v) any support service level Contract with any customer, reseller or agent;




               (vi) any single Contract providing for an expenditure by the Corporation in
excess of US$50,000 or any Contracts with the same or affiliated vendor(s)
providing for an expenditure by the Corporation in excess of US$50,000;




               (vii) except as set forth in Section 3.25 of the Sellers’ Disclosure
Schedule, any Contract providing for an expenditure by the Corporation for the
purchase, lease or sale of any real property;




               (viii) any Contract, bid or offer to sell products or to provide services to
third parties which (i) the Corporation knows or has reason to believe is at a
price which would result in a net loss to the Corporation on the sale of such
products or provision of such services, (ii) contains terms or conditions which
the Corporation cannot reasonably expect the Corporation to satisfy or fulfill in
whole or in part (including, without limitation, any software development
deadline), or (iii) would permit such a third party to seek or recover
consequential damages;




               (ix) any purchase commitment for materials, supplies, component parts or
other items or services in excess of the normal, ordinary, usual and current
requirements of the Corporation or at a price materially in excess of the current
reasonable market price at the time of such commitment or at the time of expected
delivery of such materials, supplies, component parts or other items or services;




               (x) any Contract pursuant to which the Corporation is the lessee or sublessee
of, or holds or operates, any personal property owned or leased by any other
Person or entity (other than leases of personal property leased in the ordinary
course of business consistent with past practice with annual lease payments no
greater than US$50,000);




               (xi) any Contract pursuant to which the Corporation is the lessor, sublessor
or lessee of, or permits any third party to operate, any real or personal property
owned or leased by any of the Sellers or an officer or employee of the Corporation
or any Affiliate thereof;




               (xii) any revocable or irrevocable power of attorney granted to any Person
for any purpose whatsoever;




               (xiii) any loan agreement, indenture, promissory note, conditional sales
agreement, mortgage, security agreement, pledge, letter of credit arrangement,
guarantee, endorsement, foreign exchange contract, commodity contract, interest
rate or other derivative contract,



29









 







accommodation or other similar type of contract or agreement, and in any
event, including each instrument, contract or agreement evidencing or relating to
Indebtedness (together, in each applicable case, with the outstanding principal
balance thereof, accrued but unpaid interest thereon, prepayment penalties
associated therewith and total payoff amount as of the payoff date specified
thereon);




               (xiv) any assumption, surety, guarantee, support, indemnity or other similar
type of Contract guaranteeing or supporting the obligations of or indemnifying
another Person;




               (xv) any arrangement or other agreement which involves (i) a sharing of
profits, or (ii) any joint venture, partnership or similar Contract or
arrangement.




               (xvi) any sales agency, sales representation, consulting, distributorship or
franchise agreement that is not terminable in 30 days or less without cost or
penalty and which may require payment by the Corporation of compensation in excess
of US$50,000;




               (xvii) any contract (i) prohibiting competition by the Corporation, (ii)
prohibiting the Corporation or its employees from freely engaging in any business
anywhere in the world, other than the Corporation’s standard employee
confidentiality and employee non-compete agreements, or (iii) prohibiting the
disclosure of trade secrets or other confidential or proprietary information (in
the case of (iii), other than employee non-disclosure agreements and other
non-disclosure agreements entered into in the ordinary course of business
consistent with past practice);




               (xviii) any Contract providing for the payment of cash or other benefits upon
the sale, merger or other change of control of the Corporation or a substantial
portion of the respective assets of any of them;




               (xix) any Contract pursuant to which the Corporation has entered into or has
agreed to enter into any hedging or similar transactions;




               (xx) any Contract pursuant to which the Corporation has acquired or disposed
of or has agreed to acquire or dispose of any securities or any business or
product line or the like;




               (xxi) other than as set forth in Section 3.26(b) of the Sellers’
Disclosure Schedule, any license, sublicense, assignment or agreement that is
included in or related to the Corporation Intellectual Property or another’s
Intellectual Property, except for any Corporation Software that is distributed,
sold or licensed by the Corporation to third



30









 







parties in the ordinary course of business consistent with past practice,
provided, however, that Sellers shall have provided Purchaser with copies of all
standard form software license agreements, distribution agreements and like
agreements pursuant to which such Corporation Software is so distributed, sold or
licensed;




               (xxii) any (i) Contract pursuant to which a penalty, incurred or explicit,
has been incurred or assessed, (ii) no charge sales order which is a sales order
where there is no charge for an item on such order, (iii) Contract pursuant to
which any service level agreement penalties, incurred or explicit, have been
incurred or assessed or to the Knowledge of Sellers will be incurred or assessed
within twelve (12) months of the date hereof, or (iv) Contract pursuant to which a
service credit has been provided, however, that any such Contract or sales order
that has a value of US$50,000 or less shall not be required to be disclosed in
Section 3.23(a) of the Sellers’ Disclosure Schedule;




               (xxiii) any other material Contract which is not cancelable without penalty
on 30 days notice or less and which is not specifically described on any other
Schedule to this Agreement and which is a commitment (whether an expenditure,
receivable or otherwise) in excess of US$50,000 over next 12 months;




               (xxiv) any Contract obligating the Corporation to deliver future product
enhancements involving costs to the Corporation of in excess of US$50,000 or which
may entitle the Corporation to receive in excess of US$50,000; and




               (xxv) any Contract pursuant to which the Corporation has undertaken to
deliver, or pursuant to which the receipt of revenue is contingent upon the
delivery of, products or services not in commercial existence as of the date
hereof that may require payment by the Corporation of an amount in excess of
US$50,000 or that may entitle the Corporation to receive an amount in excess of
US$50,000.



               (b) Except as set forth in Section 3.23(a) and 3.23(b) of the Sellers’ Disclosure
Schedule, (i) each Corporation Contract (A) constitutes a valid and binding obligation of the
Corporation and, to the Knowledge of Sellers, the other parties thereto, enforceable against the
Corporation and, to the Knowledge of Sellers, the other parties thereto, in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting the enforcement of creditors’ rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding at law or in
equity), and (B) is in full force and effect, and (ii) neither the Corporation, nor, to the
Knowledge of Sellers, any other party to any of the Corporation Contracts, is in breach or default
under any Corporation Contract and there are no material disputes pending or threatened with regard
to any Corporation Contracts. The Corporation has delivered or made available to Purchaser, a



31









 







true, complete and accurate copy of each written Corporation Contract required to be disclosed
in Section 3.23(a) of the Sellers’ Disclosure Schedule and a true, complete and accurate
description of each oral Contract required to be disclosed in Section 3.23(a) of the Sellers’
Disclosure Schedule, and none of such Contracts has been modified or amended in any respect
(including with respect to any customer requirements or expectations that are different than, or in
addition to, those set forth in such Contracts), except as reflected in such disclosure to
Purchaser.



               (c) The Corporation has no commitments or other obligations of value greater than US$50,000
(including with respect to software feature or development obligations or commitments), written or
oral, to any customer, reseller, agent or other third party, except for those explicitly and
expressly set forth in the Contracts required to be disclosed in Section 3.23(a), Section 3.26 or
Section 3.15 of the Sellers’ Disclosure Schedule. All deliverables required to be
delivered by the Corporation under any Contract, have been delivered in accordance with customer,
reseller or agent requirements set forth in such Contract or as set forth in Section 3.23(c) of the
Sellers’ Disclosure Schedule. Except as set forth in Section 3.23(c) of the Sellers’
Disclosure Schedule, all work for each Contract that has been fully invoiced (i.e., the
aggregate amount of invoices with respect to each such Contract equals or exceeds the total
contract price) has been fully and completely performed in accordance with the Contract
specifications with respect to the required scope of work.



          Section 3.24 Personal Property.
Except as may be reflected in the Corporation Balance Sheet, the Corporation owns or leases,
free and clear of any Encumbrances (except for Permitted Encumbrances), all the tangible personal
property reflected in the Corporation Balance Sheet used or held for use by the Corporation in the
Business and all such tangible personal property acquired by the Corporation since the Corporation
Balance Sheet Date, except for inventory or other tangible personal property that has been sold or
otherwise disposed of in the ordinary course of business consistent with past practice.




          Section 3.25 Real Property.




               (a) The Corporation has never owned nor does it currently own any real property (immovables).



               (b) Section 3.25(b) of the Sellers’ Disclosure Schedule sets forth a list of all of
the leases or subleases pursuant to which the Corporation holds a leasehold or subleasehold estate
or other right to use or occupy any interest in real property (the “Corporation Leases”) and each
leased or subleased parcel of real property in which Corporation is a tenant or subtenant
thereunder (the “Leased Real Property”). Other than the Corporation Leases, the Corporation has
not leased any other real property (immovable). True and complete copies of the Corporation Leases
have been made available to Tekelec. There are no restrictive covenants, municipal by-laws or other
Laws that in any way materially restrict or prohibit the use of any material Leased Real Property
for the purposes for which it is used in the Business as of the date hereof, other than Permitted
Encumbrances. Except as set forth in Section 3.25(b) of the Sellers’



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Disclosure Schedule, (i) each Corporation Lease (A) constitutes a valid and binding
obligation of the Corporation (B) assuming such material Corporation Lease is a legal, valid and
binding obligation of, and enforceable against the other parties thereto, is enforceable against
the Corporation, except as limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforcement of creditors’ rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in a proceeding at
law or in equity), and (C) is in full force and effect, (ii) the Corporation is not in breach or
default under any Corporation Lease (iii) to the Knowledge of Sellers, none of the landlords or
sublandlords under any Corporation Leases is in breach or default of its obligations under any such
Corporation Lease, (iv) to the Knowledge of Sellers, each Leased Property is free from structural
or material defaults and no Leased Property is currently under construction, (vi) the Corporation
has not received any work orders required from any fire department or any other Government Entity
and to the Knowledge of Sellers, there are no matters under discussion with or by the Corporation
relating to work orders on or in respect of the Leased Property, and (vii) no rent under any
Corporation Lease has been prepaid nor are there any amounts payable by a lessee under any
Corporation Lease in the future for a retroactive period. Copies of all material Corporation
Leases, together with any material amendments thereto, have heretofore been made available to
Purchaser.



               (c) Except as set forth in Section 3.25(c) of the Sellers’ Disclosure Schedule, the
Corporation is not a party to any lease, sublease, concession agreement, use and occupancy
agreement, assignment or similar arrangement under which the Corporation is a sub-lessor or
assignor of the Leased Real Property.



          Section 3.26 Intellectual Property.




               (a) Section 3.26(a) of the Sellers’ Disclosure Schedule contains a true, complete and
accurate list of each of the following items of Corporation Intellectual Property: patents and
patent applications, trademarks, service marks, trade names, corporate names, whether or not
registered, and the registrations of and applications for registration of the foregoing; registered
copyrights and applications for copyright registration; and registrations of such copyrights;
registered industrial designs and applications therefor; and domain names and registrations
thereof, and Owned Software (such items required to be listed, referred to herein as “Scheduled
Corporation Intellectual Property”). Section 3.26(a)(i) of the Sellers’ Disclosure
Schedule accurately summarizes, where applicable, the following for each item of Scheduled
Corporation Intellectual Property: status (e.g. issued, pending, abandoned, in reinstatement)
patent number, application number, registration number, filing date, date of issuance, applicant,
mark or name, owner(s), owner(s) as registered at the national intellectual property office,
country of filing, and the next maintenance fee and other administrative obligations required to
maintain or prosecute such Intellectual Property, and the due date therefor. Section 3.26(a)(ii) of
the Sellers’ Disclosure Schedule contains a true, complete and accurate list of material
Software (indicating current version number) included in the Owned Software. There is no
proceeding or action before any court or tribunal (including the Canadian Intellectual Property
Office, the United States Patent and Trademark Office or similar authorities anywhere in the world)
related to any



33









 







Scheduled Corporation Intellectual Property other than prosecution proceedings entered into in
the ordinary course of business consistent with past practice with the applicable issuing or
granting authorities. All such Scheduled Intellectual Property is currently in compliance with
formal legal requirements (including payment of filing, examination and maintenance fees and proofs
of use) and are not subject to any unpaid maintenance or other fees or taxes or actions due within
90 days after the Closing.



               (b) Section 3.26(b) of the Sellers’ Disclosure Schedule contains a list of all
Contracts relating to Intellectual Property or Software (including Corporation Software and any
other Software used in the ordinary course of business consistent with past practice of the
Corporation) to which the Corporation is a party or is otherwise obligated, including without
limitation any agreement by which the Corporation (i) (A) licensed any Person under any Corporation
Intellectual Property or sublicensed any Person under any Intellectual Property owned by another
Person, (such agreement, a “Corporation Intellectual Property License”); (B) is licensed under any
Intellectual Property owned by another Person (such agreement, a “Third Party Intellectual Property
License”); (C) uses, owns, assigned or is assigned any right or interest in, settled any dispute,
or released or was released from any claim pertaining to, any Intellectual Property; (D) is
restricted in or obligated with respect to, or has restricted or obligated another with respect to,
the disclosure, use, development, enforcement, prosecution, maintenance, transfer, licensing or
other exploitation of any Intellectual Property; (E) granted or was the beneficiary of a covenant
not to sue or other restrictive covenant or agreement with respect to Intellectual Property; or (F)
has other than in the ordinary course of business consistent with statutory provisions governing
the sale of goods, given, obtained or permitted the disclaimer of a warranty, indemnity or hold
harmless obligation with respect to any Intellectual Property, or (ii) is obligated or committed,
or has obtained an obligation or commitment from any Person, to enter into an agreement pertaining
to any of the categories set forth in subpart (i), (each such agreement described in this Section
3.26(b), a “Corporation Intellectual Property Agreement”).



               (c) The Corporation has good, valid and legal title to, and is the sole and exclusive owner of
all right, title and interest in and to, Corporation Intellectual Property, free and clear of all
Liens (other than restrictions on Corporation Intellectual Property that are set forth in the terms
and conditions of Third Party Intellectual Property Licenses listed in Section 3.23(a) of the
Sellers’ Disclosure Schedule). The Corporation has the right to use and otherwise exploit
in the manner currently used or exploited, or as proposed, or reasonably expected, to be used or
exploited, by the Corporation, Corporation Manufacturing Tools, Corporation Software and all other
Intellectual Property used or exploited by the Corporation that is material to the operation of the
Business and the Corporation will continue to have the right to use and exploit such Corporation
Manufacturing Tools, Corporation Software and Intellectual Property in the same manner and to the
same extent as it was just prior to Closing.



               (d) To the Knowledge of Sellers, each item of Corporation Intellectual Property is valid and
enforceable. There is no pending action or claim or allegation asserting the invalidity or
unenforceability of any item of Corporation



34









 







Intellectual Property. In no instance has copyright protection in the Corporation Software
been dedicated to the public domain or become subject to an obligation to freely license all third
parties or publicly disclose source code.



               (e) The Corporation Intellectual Property and Third Party Intellectual Property Licenses
include all rights of the Corporation in Intellectual Property used or exploited in or necessary
for the operations or conduct of the Business (as such operations are currently conducted). There
are no change of control or other provisions of such Third Party Intellectual Property Licenses
that may prevent or inhibit the Purchaser from exploiting the Third Party Intellectual Property
Licenses.



               (f) No Corporation Intellectual Property or Owned Software is subject to any judgment, order,
writ, injunction, or decree of any court or other Governmental Entity that restricts, impairs or
otherwise imposes any obligation with respect to the validity, enforceability, disclosure, use,
enforcement, prosecution, maintenance, transfer, licensing or other exploitation of, or that
otherwise relates to or affects Corporation Intellectual Property or Owned Software.



               (g) The Corporation (including, without limitation, directly, as a contributory infringer,
through inducement or otherwise), the products and services offered by or on behalf of or through
the Corporation (whether by sale, license or otherwise), the processes or business methods used by
or at the direction of the Corporation, and the operation of the business of the Corporation has
not and have not infringed, misappropriated or otherwise violated, and does not and do not
infringe, misappropriate or otherwise violate, any Intellectual Property of any Person. There has
not been any unauthorized disclosure of any third party Intellectual Property by the Corporation,
or by any employees or officers of the Corporation. The use of the Corporation Intellectual
Property or Corporation Software by the Corporation does not conflict with any rights of any
Person.



               (h) There is not and has not been any unauthorized use, exploitation or disclosure,
infringement, misappropriation or other violation of any Corporation Intellectual Property by any
Person.



               (i) There has been no claim made, or to the Knowledge of Sellers, threatened, by or against
the Corporation (and the Corporation has not been a party to any Action including such a claim),
and the Corporation has not received or provided notice of any such claim or other communication:
(i) asserting the invalidity, misuse or unenforceability, infringement, misappropriation or other
violation of any third party Intellectual Property or Corporation Intellectual Property; (ii)
challenging the Corporation’s ownership of or rights to use, license or otherwise exploit any
Intellectual Property; (iii) asserting that the Corporation has engaged in unfair competition,
false advertising or other unfair business practices; (iv) offering an “invitation to license” as a
means to avoid infringement or potential infringement of any Intellectual Property; or (v)
otherwise asserting claims or allegations asserting the misappropriation, violation or infringement
of Intellectual Property, or that would, if established, affect Corporation Intellectual Property,
Corporation Intellectual Property Agreements, or the ability of the



35









 







Corporation to carry out the business of the Corporation in the future without infringing,
misappropriating or violating the Intellectual Property of any Person.



               (j) Except as described in Section 3.26(j) of the Sellers’ Disclosure Schedule, the
Corporation has taken all actions reasonably necessary to maintain and protect Corporation
Intellectual Property, including without limitation, (i) paying all application, examination,
registration, issue, renewal and maintenance or other fees that have become due, (ii) filing all
necessary responses (including responses to Office actions), documents and certificates including
statements of use with the relevant patent, copyright, trademark or other authorities, (iii)
recording documents of title and releases of security interests required to perfect rights in
Corporation Intellectual Property, (iv) marking its products to indicate ownership of Intellectual
Property embodied in such products and to preserve the right to seek and obtain damages for the
violation of such Intellectual Property, and (v) exercising reasonable care, including taking all
reasonable steps, to protect the Corporation’s rights in confidential information and trade secrets
and to protect the confidential information and trade secrets of others who have provided such
confidential information and trade secrets to the Corporation in confidence.



               (k) Except as set forth in Section 3.26(k) of the Sellers’ Disclosure Schedule, the
Corporation’s current and former employees, officers and independent contractors and consultants
who have created any Intellectual Property used or held for use or exploitation by the Corporation
(including without limitation any Intellectual Property incorporated in Corporation Software), have
assigned ownership of such Intellectual Property to Corporation through a Corporation Intellectual
Property Agreement, waived in writing all moral rights in favour of the Corporation, and entered
into agreements with the Corporation preventing them from disclosing confidential information to
any third party or making any improper use of confidential information.



               (l) None of the Corporation Intellectual Property was developed by or on behalf of, pursuant
to a Contract with, or using grants or any other subsidies of, any governmental or public entity or
authority, university, corporate sponsor, or other third party.



               (m) The consummation of the transaction contemplated by this Agreement will not alter, impair
or extinguish any of the Corporation Intellectual Property or rights or obligations under any
Corporation Intellectual Property Agreement.



               (n) Except as set forth in Section 3.26(n) of the Sellers’ Disclosure Schedule, none
of the Corporation Software: (i) incorporates any Public Software, includes any modifications to
any Public Software, or is subject to any Public Software license or is subject to any license or
other contractual obligation that (A) requires the Corporation to divulge to any Person any source
code or trade secret that is part of Corporation Software, (B) licenses a third party to create any
derivative work based on Corporation Software or any part thereof, or (C) licenses a third party to
distribute or redistribute Corporation Software or any part thereof at no charge; or (ii) contains
any time bomb, virus, worm, Trojan horse, back door, drop dead device, or



36









 







any other Software that would interfere with its normal operation, would allow circumvention
of security controls, or is intended to cause damage to hardware, Software or data.



               (o) The Corporation owns or has the right to exploit, and after Closing will continue to own
or have the right to exploit, each item of Corporation Software and the Corporation Manufacturing
Tools in the same manner and to the same extent as it was used prior to the Closing, including,
without limitation, the uninterrupted right to continue to distribute after the Closing in the same
manner and to the same extent as prior to Closing, all Software embedded in or otherwise
distributed with or distributed for use in connection with products and services distributed in the
ordinary course of business. Corporation Software constitutes all Software necessary to conduct
the business and operations of the Corporation as currently conducted and reasonably anticipated to
be conducted following the Closing.



               (p) All Corporation Manufacturing Tools and Corporation Software (i) is in the possession,
custody and control of the Corporation, along with all hardware and software tools, documentation,
and other materials necessary to exploit Corporation Manufacturing Tools and Corporation Software
in the ordinary course of business, and such Corporation Manufacturing Tools and Corporation
Software and related tools and materials will remain so immediately after the Closing, (ii) has
been catalogued and documented as reasonably necessary to enable competently skilled programmers
and engineers to use, update and enhance such items by readily using the existing source code,
engineering drawings, machine settings and documentation, and (iii) is stored in electronic form
with up-to-date appropriately catalogued versions, in at least two separate geographical locations
for effective disaster recovery. No Corporation Software in source code form has been provided to
the Corporation persons except on a need-to-know basis. The Owned Software has not been presented
or disclosed in source code form to any third party (including without limitation, employees and
officers of the Corporation) except under written confidentiality agreements or written source code
escrow agreements listed in Section 3.26(b) of the Sellers’ Disclosure Schedule. There has
been no security breach relating to, no violation of any security policy regarding, and no
unauthorized access to, the Corporation proprietary data or Corporation Software.



               (q) Except as set forth in Section 3.26(q) of the Sellers’ Disclosure Schedule, the
Corporation is not obligated to support or maintain any Corporation Software except pursuant to
agreements that will terminate by their terms or are terminable at will by the Corporation (and
other than for cause) on a periodic basis and that provide for periodic payments to the Corporation
for such services.



               (r) The Corporation Software is free of material defects and material errors, and functions in
substantial conformity with documentation therefor.



               (s) The Corporation has not undertaken any commitment to commit any Corporation Intellectual
Property to the public domain, to the free and unrestricted use of any trade group or association,
or to be licensed freely on any predetermined terms (including any commitment to grant licenses of
“reasonable and



37









 







non-discriminatory” terms), including, without limitation, any commitment or obligation
arising from participation by the Corporation in any standards-setting activities or any
standards-setting organizations including patent pools and the like. The participation, conduct and
activities of the Corporation in any standards-setting activities or any standards-setting
organizations prior to the Closing shall not cause the validity, enforceability, disclosure, use,
enforcement, prosecution, maintenance, transfer, licensing or other exploitation of, any
Corporation Intellectual Property or Owned Software to be limited, restricted, impaired or
otherwise adversely affected, whether as a result of compliance or non-compliance by the
Corporation with any intellectual property policy and practices (whether or not written or formally
adopted) of any such activities or organization.



               (t) Except as set forth in Section 3.26(t) of the Sellers’ Disclosure Schedule, the
Corporation does not use, rely on or contract with any Person to provide services bureau,
outsourcing or other computer processing services and the Corporation provides no such services to
others.



               (u) The Corporation maintains policies and/or procedures regarding data security and privacy
that are commercially reasonable and, in any event, in compliance with all their obligations under
applicable Law, except for such non-compliance as would not, individually or in the aggregate,
adversely affect the operations of the Corporation and cause the Corporation to pay an amount of
less than US$50,000 to remedy such non-compliance. The Corporation has operational business
continuity plans addressing the possibility of future significant business disruptions, including
but not limited to procedures to follow in the event of the loss of key personnel, equipment and
facilities. There has been no security breach relating to, violation of any security policy
regarding, or unauthorized access or unauthorized use of, any data in the possession of the
Corporation that contains the personally identifiable information of natural persons. The use and
dissemination of any and all data and information concerning individuals by the Corporation is in
compliance with all applicable privacy policies, terms of use, customer agreements and Law, except
for such non compliance as would not, individually or in the aggregate, result in a Material
Adverse Effect on the Corporation.



               (v) The Corporation has taken commercially reasonable steps to establish and protect its
ownership of Corporation Intellectual Property, including, without limitation, taking reasonable
steps to protect the confidential status of all trade secret or confidential information, including
entering into written agreements with (or, with regard to employees, establishing binding policies)
all Persons who receive any confidential or trade secret information restricting the disclosure of
such information or material to any third party and preventing the improper or unauthorized use of
such information or material.



          Section 3.27 Affiliated Transactions.
As of the date hereof, except as set forth in Section 3.27 of the Sellers’ Disclosure
Schedule, there are no Contracts providing for the provision or sharing of services or tangible
or intangible assets or any other matter between the Corporation, on the one hand, and the Sellers
or their Affiliates (other than the Corporation), on the other hand. Except as set forth in
Section 3.27 of the



38









 







Sellers’ Disclosure Schedule, there are no letters of credit, guarantees or similar
obligations given by the Corporation in respect of Indebtedness or liabilities of any Person (other
than the Corporation).



          Section 3.28 Assets Used in the Business.
The assets, properties, rights and interests of the Corporation constitute in all material
respects all assets, properties, rights and interests of the Corporation used in the Business as of
the date hereof.



          Section 3.29 Books and Records.
The books and records of the Corporation (including, for greater certainty, financial,
operations, sales, accounts, and purchase books and records) present in all material respects the
respective financial positions of the Corporation as at the relevant dates, and all material
financial transactions of the Corporation have been accurately recorded in all material respects in
such books and records.



          Section 3.30 Brokers’ Fees.
Except as set forth in Section 3.30 of the Sellers’ Disclosure Schedule, no broker,
investment banker, financial advisor or other Person is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with this Agreement or the
transactions contemplated hereby based upon arrangements made by or on behalf of Sellers or any of
their Affiliates.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF PURCHASER



          The Tekelec Parties solidarily represent and warrant to Sellers as follows:



          Section 4.1 Corporate Status.
Each of the Tekelec Parties is duly incorporated and validly existing under the Laws of its
governing jurisdiction and each (i) has all requisite corporate power and authority to carry on its
business as it is now being conducted and (ii) is duly qualified to do business in each of the
jurisdictions in which the ownership, operation or leasing of its properties and assets or the
conduct of its business requires it to be so qualified.



          Section 4.2 Authorization.
Each of the Tekelec Parties has all the requisite corporate power and authority to enter into,
and to perform its obligations under, this Agreement and the Escrow Agreement. The execution and
delivery of this Agreement and the Escrow Agreement by the Tekelec Parties and the consummation by
the Tekelec Parties of the transactions contemplated hereby or thereby (as applicable) have been
duly and validly authorized by the Boards of Directors of the Tekelec Parties and no other
corporate proceedings of either of the Tekelec Parties, including approval of the shareholders of
Tekelec, are necessary to authorize this Agreement or the Escrow Agreement or to consummate the
transactions contemplated hereby or thereby (as applicable). This Agreement has been duly executed
and delivered by the Tekelec Parties, and (assuming due authorization, execution and delivery by
the Sellers) this Agreement constitutes, and the Escrow Agreement, when executed and delivered by
the Tekelec Parties (assuming due authorization, execution and delivery by the other parties



39









 







thereto) will constitute, a valid and binding obligation of the Tekelec Parties, enforceable
against the Tekelec Parties in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar Laws relating to or
affecting creditors’ rights generally or by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at Law).



          Section 4.3 Legal Proceedings.
There are no Actions pending, or, to the Knowledge of Tekelec, threatened against any of the
Tekelec Parties or their Affiliates, which if adversely determined, (i) would materially impair the
Tekelec Parties’ ability to perform their obligations under this Agreement or the Escrow Agreement
(as applicable) or consummate the transactions contemplated hereby or thereby (as applicable) or
(ii) would challenge the validity or enforceability of this Agreement or the Escrow Agreement or
seek to enjoin or prohibit consummation of the transactions contemplated hereby or thereby.



          Section 4.4 Brokers’ Fees.
No broker, investment banker, financial advisor or other Person is entitled to any broker’s,
finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement
or the transactions contemplated hereby based upon arrangements made by or on behalf of the Tekelec
Parties or any of their Affiliates.



          Section 4.5 No Conflict.
The execution and delivery of this Agreement and the Escrow Agreement by the Tekelec Parties
and the consummation of the transactions contemplated hereby or thereby (as applicable) will not
(i) violate any applicable Law to which any of the Tekelec Parties (or any of their respective
Subsidiaries) is subject or (ii) violate the charter, bylaws or other organizational documents of a
Tekelec Party.



          Section 4.6 Consents and Approvals.
No notice to, consent, waiver, agreement, approval, or authorization of, or declaration,
filing or registration with, or permit from, or assignment by any Governmental Entity or any other
Person, is required to be made or obtained by the Tekelec Parties in connection with the execution,
delivery or performance of this Agreement or the Escrow Agreement or the consummation of the
transactions contemplated hereby or compliance by the Tekelec Parties with any of the provisions
hereof.



          Section 4.7 No Vote Required.
No vote of the shareholders of Tekelec is required by applicable Law, Tekelec’s Certificate or
Articles of Incorporation or by-laws or otherwise in order for Tekelec and Purchaser to consummate
the transactions contemplated herein.



          Section 4.8 Financing.
Tekelec has, and will have prior to the Closing Date, sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to pay the Purchase Price in
connection with the transactions contemplated herein and to pay all fees and expenses in connection
therewith.




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ARTICLE V




COVENANTS



          Section 5.1 Publicity. The Tekelec Parties and the Sellers shall communicate with
each other and cooperate with each other prior to any public disclosure of the transactions
contemplated by this Agreement. The Tekelec Parties and the Sellers agree that no public release
or announcement concerning the terms of the transactions contemplated hereby shall be issued by any
party without the prior consent of the Tekelec Parties and the Sellers, except as such release or
announcement may be required by Law or the rules and regulations of any share exchange upon which
the securities of Sellers or Tekelec, as applicable, are listed, in which case the party required
to make the release or announcement shall consult with the other party about, and allow the other
party reasonable time to comment on such release or announcement in advance of such issuance.




          Section 5.2 Further Actions. Sellers and the Tekelec Parties shall use commercially
reasonable efforts to take, or cause to be taken, all other actions necessary, proper or advisable
in order for them to fulfill their obligations in respect of this Agreement and the transaction
contemplated hereby. Sellers and the Tekelec Parties will coordinate and cooperate with each other
in exchanging such information and supplying such reasonable assistance as may be reasonably
requested by Sellers or the Tekelec Parties, as the case may be, in connection with the filing and
other actions contemplated by Section 5.3.




          Section 5.3 Filings; Authorizations.




               (a) Sellers, on the one hand, and Tekelec, on the other hand, shall promptly provide or file
or cause to be provided or filed all necessary filings and any additional information requested by
any Governmental Entity in connection with the transactions contemplated hereby. Each of Tekelec
and Sellers shall, and shall cause its Subsidiaries to, comply with any applicable post-Closing
notification or filing requirements, as well as with other requirements of any antitrust, trade,
competition, investment or similar Law. Each of Tekelec and Sellers shall promptly cooperate and
consult with respect to the preparation and submission of any filings with a Governmental Entity
that may be required by Law or be considered by either party to be reasonably required, as well as
with respect to the preparation and submission of any information requested by a Governmental
Entity, in connection with the transactions contemplated hereby, including by providing to the
other party or its counsel (i) an opportunity to review and input into drafts of such filings and
other written communications with a Governmental Entity prior to their finalization, (ii) any
reasonably available information that may be requested for such purpose and (iii) copies of all
filings and other information provided to any Governmental Entity. Any such information marked or
designated as “Highly Confidential” shall be exchanged only
between legal counsel to the parties and shall be redacted from any copies of filings or



41









 







other
materials that may be provided to other representatives of the recipient party. Each of Tekelec
and Sellers shall also cooperate with respect to, and provide counsel to the other party with an
opportunity to attend and/or participate in, any meetings, conference calls or other communications
that may be held with any Governmental Entity in connection with the transactions contemplated
hereby.



               (b) Tekelec and Sellers shall cooperate with one another in determining whether any action by
or in respect of, or filing with, any Governmental Entity is required or reasonably appropriate, or
any action, consent, approval or waiver from any party to any Corporation Contract is required or
reasonably appropriate, in connection with the consummation of the transactions contemplated by
this Agreement. Subject to the terms and conditions of this Agreement, in taking such actions or
making any such filings, the parties shall furnish such information as may be required in
connection therewith and timely seek to obtain any such actions, consents, approvals or waivers.



          Section 5.4 Termination of Agreements. As of the Closing, except for those Contracts
set forth in Section 5.4 of the Sellers’ Disclosure Schedule, all Contracts between the
Corporation, on the one hand, and any of the Sellers or Affiliates (other than the Corporation), on
the other hand (the “Terminating Contracts”), shall be terminated as between them and shall be
without any further force and effect, and there shall be no further obligations of any of the
relevant parties thereunder. Tekelec agrees to take and to cause the Corporation to take any
action following the Closing that would be required to give effect to the termination of the
Terminating Contracts.




          Section 5.5 Tax Matters. (a) If the amount of any capital dividend (within the
meaning of subsection 83(2) of the Tax Act) paid by the Corporation prior to the Closing Date is in
excess of the capital dividend account (as defined in the Tax Act) of the Corporation immediately
before such dividend became payable, the Sellers shall, and shall exercise commercially reasonable
efforts to cause any other shareholder of the Corporation who has been paid such dividend to,
prepare and file the necessary election forms to treat such dividend as two distinct dividends,
namely: (i) a “capital dividend” equal to the balance of the capital dividend account of the
Corporation immediately before such dividend became payable, and (ii) a “taxable dividend” for any
excess. The Sellers shall, and shall exercise commercially reasonable efforts to cause such other
shareholder to, comply with the provisions of subsection 184(3) of the Tax Act and related
regulations and the equivalent provisions of any applicable provincial tax statute and ensure that
such election is made in the prescribed manner and filed with the appropriate Taxing Authorities
together with all require supporting documents. The Sellers shall, and shall exercise commercially
reasonable efforts to cause other shareholder to, execute and deliver, make or cause to be made all
such further acts, deeds, assurances and things as
may be required or necessary to implement and carry out the true intent and meaning of this
Section 5.5(a).




               (b) If the Corporation made an eligible dividend designation (as defined in the Tax Act) for
any dividends paid or payable prior to the opening of business on the Closing Date in excess of
what is permitted pursuant to the Tax Act, the



42









 




Sellers shall, and shall exercise commercially
reasonable efforts to cause any other shareholder who has been paid such dividends to, comply with
the provisions of subsection 185.1 (2) of the Tax Act and the equivalent provisions of any
applicable provincial tax statute to treat such excess as taxable dividends and not as eligible
dividends and ensure that such election is made in the prescribed manner and filed with the
appropriate Taxing Authorities together with all the required supporting documents. The Sellers
shall, and shall exercise commercially reasonable efforts to cause such other shareholder to,
execute and deliver, make or cause to be made all such further acts, deeds, assurances and things
as may be required or necessary to implement and carry out the true intent and meaning of this
Section 5.5(b).




               (c) The Purchaser and the Sellers confirm that no portion of the Purchase Price payable to the
Sellers is attributable to non-compete and non-solicitation covenants. The Purchaser and the
Sellers confirm that the covenants set forth in Section 5.7 hereof have been granted to maintain or
preserve the value of the Shares acquired by Purchaser hereunder. At the request of the Sellers,
the Purchaser shall execute an election with the Sellers containing prescribed information under
section 56.4 of the Tax Act and any other comparable applicable provision under the Taxation Act
(Québec).



               (d) The Purchaser will cause the Corporation to prepare and file all Tax Returns for the
Corporation due after the Closing Date in respect of periods ending on or before or which include
the Closing Date, which Tax Returns will be prepared and filed on a timely basis. Not less than 30
days prior to the due date of any such Tax Return, the Purchaser will provide the Sellers with a
substantially final draft of the Tax Return (the “Draft Return”). The Sellers and its accountants
have the right to review the Draft Return and any working papers relating to its preparation.
Within 15 days after the date that the Sellers receive the Draft Return, the Sellers will advise
the Purchaser in writing that they either agree with the Draft Return or do not agree with the
Draft Return, in which case the Seller will set out, in reasonable detail, the basis for such
disagreement.



               (e) If the Sellers notify the Purchaser of a disagreement pursuant to Section 7.4, the Sellers
and the Purchaser will attempt to resolve such disagreement; provided, however, that if the Sellers
and the Purchaser fail to reach agreement, and notwithstanding Section 7.3 of this Agreement, then
the disagreement will be resolved by a nationally recognized firm of independent public accountants
to be designated by mutual agreement of the Sellers and the Purchaser, failing which the firm will
be PricewaterhouseCoopers LLP. The fees and expenses of the accountants in making any such
determination will be borne 50% by the Seller and 50% by the Purchaser. Upon request by Sellers,
the Purchaser shall cause the Corporation to make the election under subsection 256(9) of the Tax
Act and the corresponding provincial
election in respect of the taxation year of the Corporation ending as a result of the
completion of the transactions contemplated in this Agreement.



43









 





               (f) The Corporation shall pay or cause to be paid on a timely basis all Taxes shown as due on
the Tax Returns prepared in accordance with Section 5.5(d), including Taxes to be remitted in
respect of the Employee Payments.



               (g) The Tekelec Parties and the Sellers shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other party’s request), subject to Section 5.6 hereof, the provision of records and
information reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Tekelec Parties shall (i) retain all books and
records with respect to Tax matters pertinent to the Corporation relating to any taxable period
beginning before the Closing Date until expiration of the statute of limitations of the respective
taxable periods, and to abide by all record retention requirements stipulated by the relevant Law
and agreements entered into with any Taxing Authority and (ii) to give the Sellers reasonable
written notice prior to transferring, destroying or discarding any such books and records and, if
the Sellers so request, shall allow the requesting party to take possession of such books and
records.



               (h) Neither Tekelec nor any of its Affiliates (including, after the Closing, the Corporation)
shall, without the prior written consent of the Sellers, which consent shall not be unreasonably
withheld or delayed, (i) make or change any Tax election affecting any pre-Closing Tax period of
the Sellers or any of their Affiliates, (ii) amend, refile or otherwise modify (or grant an
extension of any applicable statute of limitations with respect to) any Tax Return prepared by the
Sellers or any of their Affiliates relating to a pre-Closing Tax period or (iii) take any action
that results in any increased Tax liability (including a reduction in a refund) or reduction of any
Tax asset of any of the Corporation (or the Sellers or any of their Affiliates) in respect of a
pre-Closing Tax period.



          Section 5.6 Post-Closing Access. After the Closing, upon reasonable notice and
provided that such Persons (if they are not Sellers) sign non-disclosure agreements in form and
substance acceptable to Purchaser, Purchaser will give, or will cause to be given, to the
accountants and/or tax advisors and/or legal counsel of each of the Sellers, access, during normal
business hours, to the books and records which relate to the Corporation and the Business and which
relate to periods prior to the Closing, and will permit such Persons to examine and copy such books
and records to the extent reasonably requested by any Seller in connection strictly with the
preparation of Tax Returns and financial reporting matters, audits, legal proceedings, Actions,
governmental investigations and other business purposes.




          Section 5.7 Non-Competition.




               (a) For a period of three (3) years from and after the Closing, each Seller, shall not, and
shall cause any of its Affiliates not to, directly or indirectly, engage in or own any interest
(other than an interest of less than five (5) percent of the



44









 







voting securities of a publicly traded
corporation) in a Competitive Business, provided, however, that, except with respect to Stephan
Ouaknine, the covenant set forth in this Section 5.7 shall not be applicable to and enforceable
against a Seller that is an employee or a consultant of the Corporation immediately prior to
Closing and remains an employee or a consultant of the Corporation immediately following Closing.



               (b) As used in this Agreement, “Competitive Business” means any entity or business that
engages, directly or indirectly, in the development or sale of subscriber data management systems
for mobile or fixed communications operators, except with respect to the development of
such systems that is (i) incidental to the principal business of said entity or business, (ii) for
internal use only, and (iii) not for sale or licensing in anyway.



               (c) For a period of two (2) years from and after the Closing, each of the Sellers shall not,
and shall cause each of its Affiliates not to directly (i) induce or attempt to induce any employee
of the Corporation to leave the employ of the Corporation and its Affiliates, (ii) in any way
interfere with the relationship between Purchaser and its Affiliates and any such employee, or
(iii) employ or otherwise engage as an employee, independent contractor or otherwise, any such
employee, without the prior written consent of Purchaser, provided, however, that such undertakings
shall not apply to general solicitations by any of the Sellers or any of their Affiliates and
solicitations undertaken by a third party on behalf of a Seller or any of its Affiliates without
Seller or any of its Affiliates requesting the recruiting of such Person.



          Section 5.8 Directors’ and Officers’ Indemnification and Insurance.




               (a) The Tekelec Parties shall cause the provisions of the certificate and articles of
incorporation and by-laws of the Corporation relating to indemnification of the directors and
officers (or former directors and officers) of the Corporation to remain in full force and effect
and such provisions shall not be amended, repealed or otherwise modified for a period of six (6)
years from the Closing Date in any manner that would affect adversely the rights thereunder of
individuals who, at or prior to the Closing Date, were directors or officers of the Corporation.
The obligations set out in the previous sentence shall also apply to any successors or assigns of
the Corporation.



               (b) The Tekelec Parties shall cause the Corporation or their successors or assigns to maintain
in effect for six (6) years from the Closing Date directors’ and officers’ liability insurance,
provided such insurance is reasonably available, covering the present directors and officers of the
Corporation, which policy shall (i) have the same dollar limit coverage as is applicable to the
Corporation’s present directors and officers and (ii) contain terms and conditions that are
substantially
equivalent to such insurance maintained by the Corporation for the benefit of its directors
and officers for matters occurring prior to the Closing Date.



               (c) The obligations of Tekelec, the Corporation (or their respective successors and assigns)
under this Section 5.8 shall not be terminated or modified in such a manner as to adversely affect
any indemnified party to whom this



45









 







Section 5.8 applies without the consent of such indemnified
party (it being expressly agreed that the indemnified parties to whom this Section 5.8 applies
shall be third party beneficiaries of this Section 5.8).



          Section 5.9 Undertaking by Tekelec. Tekelec expressly undertakes that it shall cause
Purchaser to comply with its obligations under this Agreement.




          Section 5.10 Undertaking by Tekelec Parties. The Tekelec Parties expressly undertake
to cause the Corporation to make the Employee Payments no later than the Corporation’s second
payroll following the Closing Date.




ARTICLE VI




INDEMNIFICATION



          Section 6.1 Survival.




               (a) The representations and warranties contained herein shall survive the Closing until the
date that is fifteen (15) months following the Closing Date and shall thereupon terminate;
provided, however, that the representations and warranties made by (i) the Sellers
in Section 3.1, Section 3.2 and Section 3.5, and (ii) the Tekelec Parties in Section 4.1 and
Section 4.2, shall survive the Closing indefinitely. Notwithstanding anything to the contrary
contained in this Section 6.1(a), in the case of fraud, intentional misrepresentation or willful
misconduct, the applicable representation and warranty shall survive the Closing indefinitely.



               (b) All covenants and agreements contained herein that by their terms are to be performed in
whole or in part, or which prohibit actions, subsequent to the Closing Date, shall survive the
Closing in accordance with their terms. All other covenants and agreements contained herein shall
not survive the Closing and shall thereupon terminate.



          Section 6.2 Obligations of the Sellers.




               (a) Subject to the terms of this Article VI, the Sellers shall jointly (pro rata to their
shareholdings), and not solidarily, indemnify and hold harmless the Tekelec Parties, their
Affiliates (including, for greater certainty, as at and from the date hereof, the Corporation) and
their respective directors and officers (collectively, the “Tekelec Indemnified Parties”), from and
against any losses, damages, liabilities, claims, interest, penalties, judgments, settlements and
costs and expenses (including reasonable attorneys’ fees and court costs) (collectively, “Losses”)
suffered by, imposed upon, asserted against or incurred by any Tekelec Indemnified Party as a
result of, in respect of, in connection with or arising out of (i) any breach of any of the
representations or warranties of the Sellers in this Agreement; or (ii) subject to Section 6.2(b),
any breach of any of the covenants or agreements of the Sellers in this Agreement that by their
terms are to be performed in whole or in part, or which prohibit actions, subsequent to the Closing
Date.



46









 





               (b) In the event of a breach by a Seller of any of his, her or its covenants, agreements and
obligations pursuant to Section 5.7 of this Agreement, the Seller in breach thereof, and only such
Seller, shall individually, and not jointly or solidarily with any other Seller, indemnify and hold
harmless the Tekelec Indemnified Parties, from and against any Losses suffered by, imposed upon,
asserted against or incurred by any Tekelec Indemnified Party as a result of, in respect of, in
connection with or arising out of such breach.



               (c) The obligation of the Sellers to indemnify any Tekelec Indemnified Party for Losses is
subject to the following limitations: (i) no Tekelec Indemnified Party shall be entitled to make a
claim against the Sellers for indemnification under Section 6.2(a) (“Tekelec Claim”) unless and
until the aggregate amount of Losses incurred by all the Tekelec Indemnified Parties in respect of
Tekelec Claims exceeds US$200,000 (the “Basket”), and then the Tekelec Indemnified Parties shall be
entitled to indemnification for only the amount in excess of US$50,000; and (ii) in no event shall
the aggregate amount of Losses for which the Sellers are obligated to indemnify the Tekelec
Indemnified Parties pursuant to under Section 6.2(a) exceed the amount of the Escrow Deposit (the
"Ceiling”). Notwithstanding the foregoing, the provisions of this Section 6.2(c) shall not apply
to any claims for indemnification (A) in respect of a breach of any of the representations and
warranties set forth in Section 3.1, Section 3.2, Section 3.5 or Section 3.8 (provided, however,
that in the aggregate, indemnification for any such claim shall not exceed the amount of the
Purchase Price) or (B) as a result of fraud, intentional misrepresentation or willful misconduct by
any of the Sellers. In any of the instances referred to in subsection (B) in the immediately
preceding sentence, the obligation of the Sellers to so indemnify shall be as follows: (i)
unlimited with respect to any Seller who committed the fraud, intentional misrepresentation or
wilful misconduct; and (ii) limited in such event in the aggregate to the amount of the Purchase
Price in respect of the other Sellers, jointly, prorata to their respective shareholdings.



               (d) Notwithstanding anything to the contrary in Section 6.2(a), but subject always to the
provisions of Section 6.2(b) and (c), the obligation of the Sellers to indemnify any Tekelec
Indemnified Party for Losses in respect of a breach of any of
the Individual Sellers Representations and Warranties shall at all times be limited to the
individual Seller and only to such Seller or Sellers, who were in breach of the applicable
Individual Sellers Representations and Warranties.



               (e) Notwithstanding anything to the contrary in this Article VI, but subject always to the
provisions contained in Section 6.2(c), in no event shall the aggregate amount for which Sellers
are obligated to indemnify the Tekelec Indemnified Parties pursuant to this Agreement exceed the
amount of the Purchase Price, save and except (i) in the event of fraud, intentional
misrepresentation or wilful misconduct by a Seller, in which case, the liability of the Seller
having been responsible for such fraud, intentional misrepresentation or wilful misconduct shall
not be limited in any way, or (ii) in the event of a breach by a Seller of any of his, her or its
covenants, agreements or obligations pursuant to Section 5.7, in which case the provisions of
Section 6.2(b) shall apply.



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               (f) For greater certainty, the provisions of this Article VI shall not apply to any breach by
a Seller of any Employment Agreement to which he or she may be a party, it being understood that
the Sellers shall not have any liability as regards such breach hereunder and that any claims
resulting from such breach shall be governed entirely by the provisions of such Employment
Agreement and directed solely against the party in breach thereof.



          Section 6.3 Obligations of the Tekelec Parties.




               (a) Subject to the terms of this Article VI, the Tekelec Parties shall solidarily indemnify
and hold harmless the Sellers, their Affiliates and their respective directors and officers
(collectively, the “Sellers Indemnified Parties”) from and against any (i) Losses incurred by any
Sellers Indemnified Party resulting from any breach of any of the representations or warranties of
the Tekelec Parties in this Agreement, and (ii) Losses incurred by any Sellers Indemnified Party
resulting from any breach of any of the covenants or agreements of the Tekelec Parties in this
Agreement that by their terms are to be performed in whole or in part, or which prohibit actions,
subsequent to the Closing Date.



               (b) The obligation of the Tekelec Parties to indemnify any Sellers Indemnified Party for
Losses is subject to the following limitations: (i) no Sellers Indemnified Parties shall be
entitled to make a claim against the Tekelec Parties for indemnification under Section 6.3(a)(i)
(“Sellers’ Claim”) unless and until the aggregate amount of Losses incurred by all the Sellers
Indemnified Parties in respect of Sellers’ Claims exceeds the Basket, and then the Sellers
Indemnified Parties shall be entitled to indemnification for only the amount in excess of
US$50,000; and (ii) in no event shall the aggregate amount of Losses for which the Tekelec Parties
are obligated to indemnify the Sellers Indemnified Parties pursuant to Section 6.3(a)(i) of this
Agreement exceed the Ceiling. Notwithstanding the preceding, the provisions of this Section 6.3(b)
shall not apply to any claims for indemnification (A) in respect of a breach
of any of the representations and warranties set forth in Section 4.1, Section 4.2 and Section
4.7 (provided, however, that in the aggregate, indemnification for any such claims shall not exceed
the amount of the Purchase Price) or (B) as a result of fraud, intentional misrepresentation or
willful misconduct by the Tekelec Parties.



          Section 6.4 Indemnification Procedures.




               (a) In the event that any Action is commenced by a third party involving a claim for which a
party required to provide indemnification hereunder (an “Indemnifying Party”) may be liable to a
party entitled to indemnification (an “Indemnified Party”) hereunder (an “Asserted Liability”), the
Indemnified Party shall promptly notify the Indemnifying Party in writing of such Asserted
Liability (the “Claim Notice”)(and, in any event, within fifteen (15) days of service of the
Action); provided that no delay on the part of the Indemnified Party in giving any such
Claim Notice shall relieve the Indemnifying Party of any indemnification obligation hereunder
except to the extent that the Indemnifying Party is prejudiced by such delay. The Indemnifying
Party shall have 30 days from its receipt of the Claim Notice (the “Notice Period”) to notify



48









 







the
Indemnified Party whether or not the Indemnifying Party desires, at the Indemnifying Party’s sole
cost and expense and by counsel of its own choosing, to defend against such Asserted Liability. If
the Indemnifying Party undertakes to defend against such Asserted Liability, (i) the Indemnifying
Party shall use its reasonable best efforts to defend and protect the interests of the Indemnified
Party with respect to such Asserted Liability and (ii) the Indemnifying Party shall not, without
the prior written consent of the Indemnified Party, consent to any settlement which does not
contain an unconditional release of the Indemnified Party from the subject matter of the settlement
or that contains an admission of liability or wrongdoing. The Indemnified Party shall have the
right to participate in the defence against any Asserted Liability at its own expense.
Notwithstanding the foregoing, in any event, the Indemnified Party shall have the right to control,
pay or settle any Asserted Liability which the Indemnifying Party shall have undertaken to defend
so long as the Indemnified Party shall also waive any right to indemnification therefore by the
Indemnifying Party. If the Indemnifying Party undertakes to defend against such Asserted
Liability, the Indemnified Party shall fully render to the Indemnifying Party and its counsel such
assistance and cooperation as may be required to ensure the proper and adequate defence and
settlement of such claim or demand.



               (b) If the Indemnifying Party does not undertake within the Notice Period to defend against
such Asserted Liability, then the Indemnified Party shall defend the Asserted Liability and the
Indemnifying Party shall bear the reasonable costs and expenses of the Indemnified Party of such
defence. In such case, the Indemnified Party shall control the investigation and defence and may
settle or take any other actions the Indemnified Party deems reasonably advisable without in any
way waiving or otherwise affecting the Indemnified Party’s rights to indemnification pursuant to
this Agreement. The Indemnified Party and the Indemnifying Party agree to make available
to each other, their counsel and other representatives, all information and documents
available to them which relate to such claim or demand. The Indemnified Party and the Indemnifying
Party also agree to render to each other such assistance and cooperation as may reasonably be
required to ensure the proper and adequate defence and settlement of such claim or demand.



          Section 6.5 Principles of Indemnification.




               (a) In calculating amounts payable to an Indemnified Party, the amount of any indemnified
Losses shall be determined without duplication of any other Loss for which an indemnification claim
has been made or could be made under any other representation, warranty, covenant, or agreement and
shall be computed net of payments recoverable by the Indemnified Party under any insurance policy
with respect to such Losses.



               (b) Notwithstanding any other provision of this Agreement, in no event shall any Indemnified
Party be entitled to indemnification pursuant to this Article VI to the extent any Losses were
attributable to such Indemnified Party’s own gross negligence or willful misconduct.



49









 





               (c) Notwithstanding any other provision of this Agreement, claims pursuant to Section 6.2(a)
and Section 6.3(a) for indemnification with respect to the representations, warranties and
covenants made by the Sellers or the Tekelec Parties may not be made after the expiration of the
applicable time period set forth in Section 6.1(a). All representations, warranties, covenants and
indemnification obligations set forth in this Agreement shall survive only for the periods set
forth in Section 6.1(a), except to the extent a notice shall have been given prior to such date in
accordance with this Article VI by the Indemnified Party to the Indemnifying Party, in which case
the representation or warranty alleged in such notice to have been breached shall survive, to the
extent of the claim set forth in such notice only, until such claim is resolved.



               (d) Any Losses payable to a Tekelec Indemnified Party under this Article VI shall be paid by a
payment from the Escrow Deposit and then, to the extent that the then current Escrow Deposit, if
any, is not equal to or greater than the amount of any Losses to which a Tekelec Indemnified Party
is entitled to indemnification for (A) a breach of any of the representations and warranties set
forth in Section 3.1, Section 3.2, Section 3.5 or Section 3.8 or (B) as a result of fraud,
intentional misrepresentation or willful misconduct, by a payment directly from the Sellers.



               (e) No information or knowledge acquired, or investigations conducted, by the Tekelec Parties
or their representatives, of the Corporation or otherwise, shall in any way limit, or constitute a
waiver of, or a defence to, any claim for indemnification by any Tekelec Indemnified Party under
this Agreement.



ARTICLE VII




MISCELLANEOUS



          Section 7.1 Assignment; Binding Effect. This Agreement and the rights hereunder are
not assignable unless such assignment is consented to in writing by each of the Tekelec Parties and
the Sellers; provided, however, that the Tekelec Parties may without such consent
in writing, assign, directly or indirectly, their respective rights (but not their respective
obligations) hereunder to any of their respective wholly owned Subsidiaries, provided that no such
assignment shall relieve such parties of their obligations hereunder. Subject to the preceding
clause, this Agreement and all the provisions hereof shall be binding upon and shall inure to the
benefit of the parties and their respective successors and permitted assigns.




          Section 7.2 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the Laws of the Province of Québec and the federal laws of Canada
applicable therein without regard to the conflicts of law principles.




          Section 7.3 Dispute Resolution.




50









 








               (a) Notice; Negotiation. Any dispute, difference, disagreement, controversy or claim
arising out of or in connection with this Agreement, including any question regarding its
negotiation, existence, validity, interpretation, performance, breach or termination (“Dispute”),
which cannot be resolved by the Parties within 14 days of receipt by a party of a written notice of
dispute (“Notice”), shall be referred to the Chief Executive Officer of Tekelec and Maks Wulkans,
as representative of the Sellers, who shall meet within 30 days of receipt of Notice, to attempt to
resolve such Dispute, subject to obtaining any necessary corporate approvals of such resolution.



               (b) Arbitration. Any Dispute not resolved for any reason pursuant to the process
contemplated by Section 7.3(a) within 45 days of receipt of Notice shall be finally settled under
the Rules of Arbitration of the International Chamber of Commerce (“ICC Rules”).




               (i) Number of Arbitrators. Where the amount in Dispute (including
all claims and counterclaims) is less than or equal to two million U.S. dollars
(US$2,000,000) exclusive of interest and costs, the Dispute shall be finally
settled by a sole arbitrator nominated by the parties within 30 days of receipt by
respondent of the request for arbitration, or, in default thereof appointed in
accordance with the ICC Rules. Where the amount in Dispute is greater than two
million U.S.
dollars (US$2,000,000), exclusive of interest and costs, the Dispute shall be
finally settled by three (3) arbitrators. Each Party shall nominate one
arbitrator in accordance with the ICC Rules. The two (2) arbitrators so nominated
shall appoint the presiding arbitrator within 20 days of the confirmation of the
appointment of the second arbitrator. If either Party fails to timely nominate an
arbitrator, such arbitrator shall be appointed by the ICC International Court of
Arbitration (“ICC Court”). If the two (2) arbitrators nominated by the parties
fail to agree upon a third arbitrator within 30 days of the confirmation of the
appointment of the second arbitrator, the presiding arbitrator shall be appointed
by the ICC Court.




               (ii) Place and Language of Arbitration. The arbitration shall take
place in Montreal, Quebec. The language of the arbitration shall be English.




               (iii) Commencement of Arbitration. Either party shall commence the
arbitration by filing a Request for Arbitration (as defined in the ICC Rules).



               (c) Hearing; Award. The Parties shall use their reasonable efforts to cause the
hearing on the merits to take place within 120 days of the appointment of either the sole
arbitrator or the last of the three (3) arbitrators, as the case may be. The arbitration award
shall be in writing, shall set forth in reasonable detail the basis for the decision and shall be
rendered within 30 days of the end of the hearing where there is a sole arbitrator, and within 60
days of the end of the hearing where there



51









 







are three (3) arbitrators. Judgment upon any award(s)
rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.



               (d) Costs of the Arbitration. Subject to any award of costs by the arbitrator(s),
each of the parties shall bear one-half of the costs of the arbitration, including the fees and
expenses of the arbitrator(s) and any expert appointed by the arbitrator(s), and each party shall
bear all legal and other costs incurred by it in connection with the arbitration.



               (e) Provisional Measures. For the purposes of any provisional or interim measure in
aid of the arbitration proceedings, the parties hereby submit to the exclusive jurisdiction of the
competent court in the Province of Québec, City of Montréal. Without prejudice to such provisional
or interim remedies in aid of arbitration as may be available under the jurisdiction of a competent
court, the arbitrator(s) shall have full authority to grant provisional or interim remedies and to
award damages for the failure of a party to respect any order of the arbitrator(s) to that effect.



               (f) Consolidation. In order to facilitate the comprehensive resolution of related
Disputes, all claims between any of the parties to this Agreement that arise under or in connection
with this Agreement may be brought in a single arbitration. Upon the request of any party to such
arbitration, the arbitral tribunal for such
proceeding shall consolidate any arbitration proceeding constituted under this Agreement with
any other arbitration proceeding constituted under this Agreement, if the arbitral tribunal
determines that (i) there are issues of fact or law common to the proceedings so that a
consolidated proceeding would be more efficient than separate proceedings, and (ii) no party would
be unduly prejudiced as a result of such consolidation through undue delay or otherwise. In the
event of different rulings on this question by the arbitral tribunal constituted hereunder and
another arbitral tribunal constituted under this Agreement, the ruling of the arbitral tribunal
constituted first in time shall control. Such arbitral tribunal shall serve as the tribunal for
any consolidated arbitration. Any such order of consolidation issued by such arbitral tribunal
shall be final and binding upon the parties to the arbitrations. The parties to such arbitrations
waive any right they have to appeal or to seek interpretation, revision or annulment of such order
of consolidation under the ICC Rules or in any court. The parties agree that upon receipt of such
an order of consolidation, they will promptly dismiss any arbitration brought under this Section
7.3, the subject of which has been consolidated into another arbitral proceeding under this Section
7.3.



          Section 7.4 Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if
delivered personally, (ii) when sent by cable, telecopy, telegram or facsimile (which is confirmed
by the intended recipient), and (iii) when sent by overnight courier service or when mailed by
certified or registered mail, return receipt requested, with postage prepaid to the parties at the
following addresses (or at such other address for a party as shall be specified by like notice):





52









 







If to Tekelec or the Purchaser, to:



Tekelec

5200 Paramount Parkway

Morrisville, NC 27560

Attn: Stuart H. Kupinsky

Fax: (919) 461-6845



with copies, in the case of notice to Tekelec or the Purchaser, to:



Ogilvy Renault LLP

Suite 2500

1, Place Ville Marie

Montréal, Québec H3B 1R1

Attn: Niko Veilleux

Fax: (514) 286-5474






53









 







with copies, in the case of notice to the Sellers, to:



Spiegel Sohmer

5 Place Ville Marie

Suite 1203

Montréal, Québec H3B 2G2

Attn: L. Michael Blumenstein

          and

          Frank M. Schlesinger

Fax: (514) 875-8237



and to:



Vincenza La Greca Legal Services Inc.

32 Maplewood ave.

Outremont, Quebec

H2V 2M1

Attn : Vincenza La Greca



and to :



Heenan Blaikie LLP

Suite 2500

1250 René-Lévesque Blvd. West

Montréal, Québec H3B 4W8

Attn: Eric Levy

Fax: (514) 921-1256





54









 








          Section 7.5 Headings. The headings contained in this Agreement are inserted for
convenience only and shall not be considered in interpreting or construing any of the provisions
contained in this Agreement.




          Section 7.6 Fees and Expenses. Except as otherwise specified in this Agreement, each
party shall bear its own costs and expenses (including investment advisory and legal fees and
expenses) incurred in connection with this Agreement and the transactions contemplated hereby.




          Section 7.7 Entire Agreement. This Agreement (including the Escrow Agreement,
Exhibits and Schedules) constitute the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings between the parties
with respect to such subject matter.




          Section 7.8 Interpretation.




               (a) When a reference is made in this Agreement to an Article, Section, Exhibit or Schedule,
such reference shall be to an Article, Section, Exhibit or Schedule of or to this Agreement unless
otherwise indicated.



               (b) Whenever the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.”



               (c) When a reference in this Agreement is made to a “party” or “parties,” such reference shall
be to a party or parties to this Agreement unless otherwise indicated.



               (d) Unless the context requires otherwise, the terms “hereof,” “herein,” “hereby,” “hereto”
and derivative or similar words in this Agreement refer to this entire Agreement.



               (e) Unless the context requires otherwise, words in this Agreement using the singular or
plural number also include the plural or singular number, respectively, and the use of any gender
herein shall be deemed to include the other genders.



               (f) Except as otherwise specifically provided herein, where any action is required to be taken
on a particular day and such day is not a Business Day and, as a result, such action cannot be
taken on such day, then this Agreement shall be deemed to provide that such action shall be taken
on the first Business Day after such day.



               (g) This Agreement was prepared jointly by the parties and no rule that it be construed
against the drafter will have any application in its construction or interpretation.



55









 





          Section 7.9 Disclosure. Any matter disclosed in any Section of the Sellers’
Disclosure Schedule sets out, with specific reference to the Section of this Agreement to which
the information stated in such disclosure relates, the disclosures, exceptions and exclusions
contemplated or permitted by this Agreement, including certain exceptions and exclusions to the
representations and warranties and covenants of the Sellers contained in this Agreement. The
disclosure of any item in a specific section of the Sellers’ Disclosure Schedule shall
constitute disclosure or, as applicable, exclusion of that item for the purposes of any other
section of the Sellers’ Disclosure Schedule where the relevance of that item as an
exception to (or a disclosure for the purposes of) any such other section of the Sellers’
Disclosure Schedule is manifest on the face of such disclosure. The Sellers shall be permitted
to include an express cross-reference to another section or item of the Sellers’ Disclosure
Schedule where the relevance of that
item as an exception to (or a disclosure for the purposes of) any such other section of the
Sellers’s Disclosure Schedule is manifest on the face of such disclosure.




          Section 7.10 Waiver and Amendment. This Agreement may be amended, modified or
supplemented only by a written mutual agreement executed and delivered by the Sellers and the
Tekelec Parties. Except as otherwise provided in this Agreement, any failure of any party to
comply with any obligation, covenant, agreement or condition herein may be waived by the party
entitled to the benefits thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such obligations,
covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.




          Section 7.11 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts, each of which when executed, shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument binding upon all of the parties
notwithstanding the fact that all of the parties are not signatory to the original or the same
counterpart. For purposes of this Agreement, facsimile signatures shall be deemed originals.




          Section 7.12 Third-Party Beneficiaries. This Agreement is for the sole benefit of the
parties and their successors and permitted assigns and, except as specifically stipulated in
Section 5.8, nothing herein express or implied shall give or be construed to give to any Person,
other than the parties and such successors and permitted assigns, any legal or equitable rights
hereunder.




          Section 7.13 Currency. All references in this Agreement to dollars, unless otherwise
specifically indicated, are expressed in United States currency.




          Section 7.14 Applicable Exchange Rate




          For purposes of calculating the Purchase Price, and, incidentally, the Paid-Out Indebtedness
(including the Employee Payments) and the Retained Indebtedness, any amounts denominated in
Canadian dollars shall be converted into U.S. dollars at the exchange rate of US$0.9789/Cdn$1.00.





56









 








          Section 7.15 Specific Performance. The parties agree that if any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise
breached, irreparable damage would occur, no adequate remedy at Law would exist and damages would
be difficult to determine, and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at Law or in equity.




          Section 7.16 Language. The parties confirm that it is their wish that this Agreement,
as well as any other documents relating to this Agreement, including notices, schedules and
authorizations, have been and shall be drawn up in the English language only. Les signataires
confirment leur volonté que la présente convention, de même que tous les documents s’y rattachant,
y compris tout avis, annexe et autorisation, soient rédigés en anglais seulement.




          Section 7.17 Severability. If any provision of this Agreement or the application of
any such provision to any Person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof. The parties shall engage in good faith negotiations
to replace any provision which is declared invalid, illegal or unenforceable with a valid, legal
and enforceable provision, the economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provision which it replaces.






57









 














          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and
year first above written.




	 	 	 	 	 
	 	 	 
	 	/s/ Stephan Ouaknine
 	 
	 	STEPHAN OUAKNINE 	 
	 	 	 
	 
	 	 	 
	 	/s/ Edie Ledany
 	 
	 	EDIE LEDANY 	 
	 	 	 
	 



	 	 	 	 	 
	 	WINVEST INC.

 	 
	 	By:  	/s/ Maks Wulkan
 	 
	 	 	Name:  	Maks Wulkan 	 
	 	 	Title:  	President 	 
	 
	 	9129-2144 QUEBEC INC.

 	 
	 	By:  	/s/ Howard Stottland
 	 
	 	 	Name:  	Howard Stottland 	 
	 	 	Title:  	President & Secretary-Treasurer 	 
	 
	 	9129-2136 QUEBEC INC.

 	 
	 	By:  	/s/ William Lassner
 	 
	 	 	Name:  	William Lassner 	 
	 	 	Title:  	President & Secretary-Treasurer 	 
	 



	 	 	 	 	 
	 	 	 
	 	/s/ Michael Rosenthal
 	 
	 	MICHAEL ROSENTHAL 	 
	 	 	 
	 
	 	 	 
	 	/s/ John Grobstein
 	 
	 	JOHN GROBSTEIN 	 
	 	 	 



58









 






	 	 	 	 	 



	 	 	 	 	 
	 	171033 CANADA INC.

 	 
	 	By:  	/s/ Maks Wulkan
 	 
	 	 	Name:  	Maks Wulkan 	 
	 	 	Title:  	President 	 
	 
	 	171036 CANADA INC.

 	 
	 	By:  	/s/ Anna Brojde
 	 
	 	 	Name:  	Anna Brojde 	 
	 	 	Title:  	President 	 
	 
	 	CAPITAL BRINVEST INC.

 	 
	 	By:  	/s/ Anna Brojde
 	 
	 	 	Name:  	Anna Brojde 	 
	 	 	Title:  	President 	 
	 
	 	POSITRON INC.

 	 
	 	By:  	/s/ Reginald Weiser
 	 
	 	 	Name:  	Reginald Weiser 	 
	 	 	Title:  	President 	 
	 



59









 






	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 



	 	 	 	 	 
	 	TEKELEC

 	 
	 	By:  	/s/ Frank Plastina
 	 
	 	 	Name:  	Frank Plastina 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	TEKELEC CANADA INC.

 	 
	 	By:  	/s/ Stuart H. Kupinsky
 	 
	 	 	Name:  	Stuart H. Kupinsky 	 
	 	 	Title:  	Vice President and Secretary 	 



60









 








EXHIBIT A




Ownership of Corporation’s Shares






	 	 	 	 	 	 	 	 	 
	Shareholder	 	Number and class of shares	 







	 	 	 	 	 	 	 	 	 
	Winvest Inc.
	 	 	4,495,834	 	 	Class B Series 1
	 
	 	 	809,400	 	 	Class D
	9129-2136 Québec Inc.
	 	 	1,172,160	 	 	Class A
	 
	 	 	2,477,043	 	 	Class B Series 2
	 
	 	 	445,926	 	 	Class D
	 
	 	 	905,829	 	 	Class G
	9129-2144 Québec Inc.
	 	 	1,172,160	 	 	Class A
	 
	 	 	2,477,043	 	 	Class B Series 2
	 
	 	 	445,926	 	 	Class D
	 
	 	 	905,829	 	 	Class G
	Stephan Quaknine
	 	 	587,437	 	 	Class B Series 4
	 
	 	 	72,815	 	 	Class D
	John Grobstein
	 	 	257,143	 	 	Class B Series 3
	 
	 	 	1,651,891	 	 	Class B Series 4
	 
	 	 	574,195	 	 	Class D
	Michael Rosenthal
	 	 	181,800	 	 	Class B Series 4
	Positron Inc.
	 	 	730,500	 	 	Class D
	 
	 	 	2,127,840	 	 	Class A
	171033 Canada Inc.
	 	 	1,644,171	 	 	Class G
	171036 Canada Inc.
	 	 	2,127,840	 	 	Class A
	 
	 	 	1,644,171	 	 	Class G
	Brinvest Capital Inc.
	 	 	4,495,834	 	 	Class B Series 1
	 
	 	 	809,400	 	 	Class D
	Edie Ledany
	 	 	3,800,000	 	 	Class B Series 4







61









 





EXHIBIT B




Disbursement of Purchase Price to Sellers



See attached.



62









 





EXHIBIT C




Form of Escrow Agreement



See attached.



63









 





 





EXECUTION VERSION




ESCROW AGREEMENT




ESCROW AGREEMENT made as of this fifth (5th) day of May, 2010.




	 	 	 

	BY AND AMONG:

	 	Each of the Persons listed in Schedule I hereto
(collectively, “Sellers”);
	 
	 	 
	AND:

	 	TEKELEC, a corporation governed by the laws of California (“Tekelec”).
	 
	 	 
	AND:

	 	TEKELEC CANADA INC., a corporation governed by the laws of
Ontario and a wholly-owned direct subsidiary of Tekelec (“Purchaser” and, together with Tekelec, the “Tekelec
Parties”).
	 
	 	 
	AND:

	 	COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
licensed to carry on business in all Provinces of Canada
(the “Escrow Agent” or “Computershare”).






     WHEREAS this Escrow Agreement is being entered into in connection and concurrently with that
certain Share Purchase Agreement, dated as of May 5, 2010, by and among each of the Sellers,
Tekelec and Purchaser (the “Purchase Agreement”), a copy of which is attached as Schedule
II hereto.



     AND WHEREAS under the Purchase Agreement, the Tekelec Parties and Sellers have agreed that a
certain portion of the purchase price payable by Purchaser to Sellers in connection with the
transactions contemplated by the Purchase Agreement shall be deposited and held in escrow to act as
a source of funds to cover indemnification claims made by a Tekelec Indemnified Party pursuant to
Article VI of the Purchase Agreement, to be held and distributed on the terms and subject to the
conditions set forth herein.



     AND WHEREAS the Escrow Agent has agreed to serve in the capacity described herein on the terms
and subject to the conditions of this Agreement.



     NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sellers, the
Tekelec Parties and the Escrow Agent hereby agree as follows:









 



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     1. Interpretation.



          (a) Definitions. For purposes hereof, capitalized words, expressions and phrases used herein
shall have the meanings ascribed thereto in the Purchase Agreement unless otherwise specified
herein, and the following terms shall have the following meanings, respectively, unless the context
dictates otherwise:





          (i) “Agreement” means this agreement and all instruments supplemental hereto or in
amendment or confirmation hereof; “hereof”, “hereto”, “hereunder” and similar expressions
mean and refer to this Agreement and not to any particular article, section or other
subdivision; “Section” or other subdivision of this Agreement mean and refer to the
specified Section or other subdivision of this Agreement;




          (ii) “Approved Bank” shall have the meaning ascribed thereto in Section 4(a).




          (iii) “Business Day” means any day other than a Saturday, a Sunday or a day on which
banks are required to be closed in Montréal, Québec, Canada or in the State of North
Carolina, United States;




          (iv) “Claim Notice” shall have the meaning ascribed thereto in Section 5;




          (v) “Court of Competent Jurisdiction” shall have the meaning ascribed thereto in
Section 7(o);




          (vi) “Escrow Deposit” shall have the meaning ascribed thereto in Section 3;




          (vii) “Escrow Funds” shall have the meaning ascribed thereto in Section 3;




          (viii) “Escrow Income” shall have the meaning ascribed thereto in Section 11;




          (ix) “Escrow Termination Date” shall have the meaning ascribed thereto in Section 6;




          (x) “Final Order” shall have the meaning ascribed thereto in Section 7(n);




          (xi) “Indemnity Payment” shall have the meaning ascribed thereto in Section 5;




          (xii) “Joint Direction” shall have the meaning ascribed thereto in Section 5;









 



-3-



          (xiii) “Objection Notice” shall have the meaning ascribed thereto in Section 5;




          (xiv) “Open Claim Amounts” shall have the meaning ascribed thereto in Section 6;




          (xv) “Parties” shall mean Sellers, the Tekelec Parties and the Escrow Agent; and
“Party” shall mean any one of them; and




          (xvi) “Receiving Party” shall have the meaning ascribed thereto in Section 4(a).




          (xvii) “Resignation Date” shall have the meaning ascribed thereto in Section 8(a).



     The terms “Escrow Agent”, “Purchase Agreement”, “Purchaser”, “Sellers”, “Tekelec” and “Tekelec
Parties” shall have the respective meanings contained in the appearance and recitals to this
Agreement.



          (b) Calculation of Delays. For the purpose of computing any delay provided for in this
Agreement, the day which marks the start of the delay shall not be counted, but the terminal day
shall be. Unless otherwise provided, non-Business Days are counted. However, where the last day
of any delay herein is a non-Business Day, such delay shall be extended to the next following
Business Day.




          (c) Gender. Any reference in this Agreement to any gender shall include all genders and words
used herein importing the singular number only shall include the plural and vice versa.




          (d) Headings. The division of this Agreement into Sections and other subdivisions and the
insertion of headings are for convenience of reference only and shall not affect or be utilized in
the construction or interpretation thereof.




          (e) Currency. All references in this Agreement to dollars, unless otherwise specifically
indicated, are expressed in Canadian currency.




          (f) Severability. Any Section or other subdivision of this Agreement or any other provision
of this Agreement which is, or becomes, illegal, invalid or unenforceable or results in the
occurrence of any material violation of any law or regulation shall be severed herefrom and shall
be ineffective to the extent of such illegality, invalidity, unenforceability or violation and
shall not affect or impair the remaining provisions hereof, which provisions shall be severed from
any Section or other subdivision of this Agreement or any other provision of this Agreement.




          (g) Amendments. This Agreement may not be amended except in writing executed by the Parties.












 



-4-




          (h) Entire Agreement. This Agreement (including the Schedules) together with the applicable
provisions of the Purchase Agreement constitute the entire agreement between the Parties pertaining
to the subject matter hereof and otherwise supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, in such respect between or among the
Parties.




          (i) Construction. The Parties have participated jointly in the negotiations and drafting of
this Agreement and in the event of any ambiguity or question of intent or interpretation, no
presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.




          (j) Governing Law. This Agreement shall be interpreted and construed in accordance with the
laws of the Province of Québec and the federal laws of Canada applicable therein.




          (k) Attornment. For the purpose of all legal proceedings, this Agreement will be deemed to
have been performed in the Province of Québec and the courts of the Province of Québec will have
exclusive jurisdiction to entertain any action arising under this Agreement. Each of the Parties
attorns to the exclusive jurisdiction of the courts of the Province of Québec, Judicial District of
Montreal.




          (l) Preamble. The preamble to this Agreement is incorporated herein by reference and shall
form an integral part hereof in its entirety.




     2. Appointment of Escrow Agent. Sellers and the Tekelec Parties hereby appoint the
Escrow Agent as escrow agent in accordance with the terms and conditions set forth herein, and the
Escrow Agent hereby accepts such appointment.



     3. Escrow Funds. Simultaneously with the execution and delivery of this Agreement,
Purchaser is depositing with the Escrow Agent the sum of five million and twenty five thousand U.S.
dollars (US$5,025,000) in immediately available funds (the “Escrow Deposit”). The Escrow Agent
shall hold the Escrow Deposit and, subject to the terms and conditions hereof, shall invest and
reinvest the Escrow Deposit and the proceeds thereof (collectively, the “Escrow Funds”) as directed
in Section 4 below. Upon receipt of the Escrow Deposit, the Escrow Agent shall, in writing with a
separate receipt, acknowledge receipt of the Escrow Deposit.



     4. Investment of Escrow Funds.



          (a) Until released in accordance with this Agreement, the Escrow Funds deposited with the
Escrow Agent shall be kept in trust segregated in the records of the Escrow Agent and shall be
deposited in one or more interest-bearing trust accounts, such accounts to be denominated in U.S.
dollars, to be maintained by the Escrow Agent in the name of the Escrow Agent at one or more banks
listed in Schedule III hereto (each such bank, an “Approved Bank”). The Escrow Agent shall
pay to the party to whom such portion of the Escrow Deposit is released and is disbursed under this
Agreement (the “Receiving Party”), interest at an annual rate which is equal to the 90 day T-Bill
announced from time to time by The Bank of Nova











 



-5-



Scotia on U.S. dollars loans. Such payment obligation shall be calculated daily and paid to
the account(s) within three (3) Business Days of each month-end.




          (b) All amounts held by the Escrow Agent pursuant to this Agreement shall be held in trust by
the Escrow Agent for the Tekelec Parties and the Sellers, as applicable, and the delivery of the
Escrow Funds to the Escrow Agent shall not give rise to a debtor-creditor or other similar
relationship between the Escrow Agent and the Tekelec Parties and the Sellers, as applicable. The
amounts held by the Escrow Agent pursuant to this Agreement are at the sole risk of the Tekelec
Parties and the Sellers, as applicable, and, without limiting the generality of the foregoing, the
Escrow Agent shall have no responsibility or liability for any diminution of the Escrow Fund which
may result from any deposit made with an Approved Bank pursuant to this Section 4, including any
losses resulting from a default by the Approved Bank or other credit losses (whether or not
resulting from such a default) and any credit or other losses on any deposit liquidated or sold
prior to maturity. Each of the Tekelec Parties and the Sellers acknowledges and agrees that the
Escrow Agent acts prudently in depositing the Escrow Fund at any Approved Bank, and that the Escrow
Agent is not required to make any further inquiries in respect of any such bank.




          (c) At any time and from time to time, any of the Tekelec Parties and the Sellers, acting
together, shall be entitled to direct the Escrow Agent by written notice (i) not to deposit any new
amounts in any Approved Bank specified in the notice and/or (ii) to withdraw all or any of the
Escrow Fund that may then be deposited with any Approved Bank specified in the notice. With
respect to any withdrawal notice, the Escrow Agent will endeavour to withdraw such amount specified
in the notice as soon as reasonably practicable and the Tekelec Parties and the Sellers each
acknowledge and agree that such specified amount remains at the sole risk of the Tekelec Parties
and the Sellers prior to and after such withdrawal.




     5. Claims Procedure.



          (a) Purchaser or Tekelec, either for itself or on behalf of any Tekelec Indemnified Party, may
make a claim for payment from the Escrow Funds for indemnification pursuant to Article VI of the
Purchase Agreement by delivering a written notice (a “Claim Notice”) to Sellers and the Escrow
Agent that describes, in reasonable detail, such claim and the nature and amount of the Indemnity
Payment (as defined below) sought in good faith by such Tekelec Indemnified Party. For the purpose
of this Escrow Agreement, “Indemnity Payment” shall mean any Losses for which such Tekelec
Indemnified Party is entitled to indemnification as a result of a matter giving rise to an
indemnity obligation in accordance with Article VI of the Purchase Agreement. On the date that is
thirty (30) calendar days after the Escrow Agent and Sellers have received a Claim Notice, the
Escrow Agent shall deliver to such Tekelec Indemnified Party that portion of the Escrow Funds
described in, and in accordance with the terms of, the Claim Notice, plus all accrued interest and
other earnings earned on such portion from the Closing Date to the date of such distribution,
unless within such thirty (30) calendar day period, the Escrow Agent and Purchaser have received a
written notice (an “Objection Notice”) from Sellers, or a duly authorized representative thereof,
that sets forth an objection to delivery of all or any portion of the Escrow Funds in accordance
with the terms of such Claim Notice. The Tekelec Parties acknowledge that as a result of the
allocation in the previous sentence of accrued interest and other earnings earned on the portion of
the Escrow Funds to be delivered to











 



-6-



a Tekelec Indemnified Party, Claim Notices shall not include any sum relating to interest or
other earnings; such sum relating to interest and other earnings shall be calculated and determined
by the Escrow Agent on the basis of the portion of the Escrow Funds to be delivered to the Tekelec
Indemnified Party identified in the Claim Notice and delivered to such Tekelec Indemnified Party
concurrently with such portion of the Escrow Funds. Upon receipt of an Objection Notice in
accordance with this Section 5, the Escrow Agent shall not make the delivery of that portion of an
Indemnity Payment objected to therein except in accordance with either (i) a written notice from,
and executed by, Purchaser and Sellers to the Escrow Agent (a “Joint Direction”) or (ii) a final
decision of an arbitrator pursuant to the provisions of Section 7.3 of the Purchase Agreement;
provided, however, that any portion of the Indemnity Payment that is not disputed
in the Objection Notice shall be paid as if no Objection Notice had been delivered with respect
thereto. For purposes of clarification, and notwithstanding any contrary term contained herein,
any Claim Notice submitted by Purchaser as a claim against the Escrow Funds after the close of
business on the date which is fifteen (15) months after the Closing Date (or the first Business Day
thereafter if such date does not fall on a Business Day) shall be null and void and have no force
or effect whatsoever for purposes of this Escrow Agreement.




          (b) Notwithstanding the foregoing, at any time upon receipt of a written joint notice from the
Tekelec Parties and the Sellers, the Escrow Agent shall pay from the Escrow Funds to the Party
specified in such notice the amount specified therein.




     6. Release of Escrow Funds; Termination of Escrow. On the Escrow Termination Date (as
defined below), the Escrow Agent shall distribute to Sellers the then-remaining balance (plus all
accrued interest and other earnings thereon earned from the Closing Date to the date of such
distribution), less any Open Claim Amounts (as defined below). The distribution shall be paid by
wire transfer of immediately available funds to the account or accounts specified in writing to the
Escrow Agent by Sellers; provided that in the absence of any written instructions from
Sellers, the Escrow Agent will make such distribution to the account or accounts specified on
Schedule IV. Any Open Claim Amounts shall be subject to this Escrow Agreement and shall be
distributed in accordance herewith. For purposes of this Escrow Agreement: (i) the “Escrow
Termination Date” shall mean the date which is fifteen (15) months after the Closing Date (or the
first Business Day thereafter if such date does not fall on a Business Day); and (ii) “Open Claim
Amounts” shall mean the aggregate dollar amount of the Escrow Funds, if any, which is the subject
of one or more pending Claim Notices made against such fund that were duly provided to the Escrow
Agent and Sellers prior to the close of business on the Escrow Termination Date.



     7. Conditions to Escrow. The Escrow Agent agrees to hold the Escrow Funds and to
perform its obligations in accordance with the terms and provisions of this Agreement. The
acceptance by the Escrow Agent of its responsibilities hereunder is subject to the following terms
and conditions which the Parties agree shall govern and control with respect to the Escrow Agent’s
rights, duties and liabilities hereunder:



          (a) The Escrow Agent shall be protected in acting upon any written notice, request, waiver,
consent, receipt or other paper or document furnished to it, not only as to its due execution and
validity and the effectiveness of its provisions, but also as to the truth and accuracy of any
information therein contained, which the Escrow Agent in good faith believes to











 



-7-



be genuine and what it purports to be. Should it be necessary for the Escrow Agent to act
upon any instructions, directions, documents or instruments issued or signed by or on behalf of any
corporation, partnership, fiduciary or individual acting on behalf of Sellers or the Tekelec
Parties, it shall not be necessary for the Escrow Agent to inquire into such corporation’s,
partnership’s, fiduciary’s or individual’s authority. The Escrow Agent is also relieved from the
necessity of satisfying itself as to the authority of the persons executing this Agreement in a
representative capacity on behalf of Sellers and the Tekelec Parties.




          (b) The Escrow Agent acts hereunder solely as a mandatory and depositary and: (i) shall not be
responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or
validity of any instrument deposited with it (including, without limitation, the Purchase
Agreement), for the form or execution of such instruments, for the identity, authority or right of
any Person or party executing or depositing such instruments or for determining or compelling
compliance therewith, and shall not otherwise be bound thereby; (ii) shall not be required to take
notice of any default or to take any action with respect to such default involving any expense or
liability, unless notice in writing of such default is formally given to the Escrow Agent, and
unless it is indemnified and funded, in a manner reasonably satisfactory to it, against such
expense or liability; (iii) may employ and consult counsel satisfactory to it, including in-house
counsel, and the opinion of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance
with the opinion of such counsel; and (iv) shall not be responsible for delays or failures in
performance resulting from acts beyond its control, including without limitation, acts of God,
strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the
fact, fire, communication line failures, computer viruses, power failures, earthquakes or other
disasters.




          (c) The Escrow Agent may employ such counsel, accountants, appraisers, other experts, agents,
agencies and advisors as it may reasonably require for the purpose of discharging its duties under
this Agreement, and the Escrow Agent may act and shall be protected in acting in good faith on the
opinion or advice or on information obtained from any such parties and shall not be responsible for
any misconduct on the part of any of them. The reasonable costs of such services shall be added to
and be part of the Escrow Agent’s fee hereunder.




          (d) The Escrow Agent shall retain the right not to act and shall not be held liable for
refusing to act unless it has received clear and reasonable documentation which complies with the
terms of this Agreement. Such documentation must not require the exercise of any discretion or
independent judgment on the part of the Escrow Agent.




          (e) No provision of this Agreement shall require the Escrow Agent to expend or risk its own
funds or otherwise incur financial liability in the performance of its duties or the exercise of
any of its rights or powers unless indemnified as provided for herein, other than as a result of
its own negligence, fault, willful misconduct, fraud or bad faith.




          (f) The Escrow Agent shall not be liable for any error of judgment, or for any act done or
step taken or omitted by it in good faith, or for any mistake of fact or law, or for











 



-8-



anything which it may do or refrain from doing in connection herewith, except for its own
negligence, fault, willful misconduct, fraud or bad faith.




          (g) The Escrow Agent shall incur no liability with respect to the delivery or non-delivery of
any cash whether delivered by hand, wire transfer, registered mail or bonded courier, provided that
in the case of non-delivery same does not result from the Escrow Agent’s fault or negligence.




          (h) Sellers, on the one hand, and the Tekelec Parties, on the other, shall jointly indemnify
the Escrow Agent and its officers, directors, employees, agents, successors and assigns and hold it
and them harmless from and against any loss, fee, claim, demand, penalty, liability, damage, cost
and expense of any nature incurred by the Escrow Agent and its officers, directors, employees,
agents, successors and assigns arising out of or in connection with this Agreement or with the
performance of its duties hereunder, including but not limited to, reasonable attorneys’ fees and
other costs and expenses of defending or preparing to defend against any claim of liability, unless
and except to the extent such loss, liability, damage, cost and expense shall be caused by the
Escrow Agent’s or its officers’, directors’, employees’, agents’, successors’ or assigns’
negligence, fault, willful misconduct, fraud or bad faith. The foregoing indemnification and
agreement to hold harmless shall survive the resignation or removal of the Escrow Agent or the
termination of this Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, in no event will the collective liability of the Escrow Agent under or in connection
with this Agreement to any one or more parties exceed the amount of its annual fees collected under
this Agreement or the amount of two thousand dollars ($2,000.00), whichever amount shall be
greater, except in the case of negligence, fault, willful misconduct, fraud or bad faith of the
Escrow Agent.




          (i) Notwithstanding any other provision of this Agreement, and whether such losses or damages
are foreseeable or unforeseeable, the Escrow Agent shall not be liable under any circumstances
whatsoever for any (a) breach by any other party of securities law or other rule of any securities
regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential,
exemplary, aggravated or punitive losses or damages.




          (j) The Escrow Agent does not have any interest in the Escrow Funds but is serving as escrow
agent only. This Section 7 shall survive notwithstanding any termination of this Agreement or the
resignation or removal of the Escrow Agent.




          (k) The Escrow Agent shall have no duties except those which are expressly set forth herein,
and it shall not be bound by any notice of a claim or demand with respect to, or any waiver,
modification, amendment, termination or rescission of this Agreement, unless received by it in
writing, and signed by the Parties hereto and if its duties herein are affected, unless it shall
have given its prior written consent thereto.




          (l) The Escrow Agent accepts the duties and responsibilities under this Agreement as agent,
and no trust is intended to be, or is or will be, created hereby and the Escrow Agent shall owe no
duties hereunder as trustee.












 



-9-




          (m) The Escrow Agent will have no responsibility for seeking, obtaining, compiling, preparing
or determining the accuracy of any information or document, including the representative capacity
in which a party purports to act, that the Escrow Agent receives as a condition to a release from
escrow or a transfer of the Escrow Funds within escrow under this Agreement and the Purchase
Agreement.




          (n) Upon delivery of all of the Escrow Funds pursuant to the terms of this Agreement or to a
successor Escrow Agent, the Escrow Agent shall thereafter be discharged from any further
obligations hereunder. The Escrow Agent is hereby authorized, in any and all events, to comply
with and obey any and all final and non-appealable orders of an arbitrator pursuant to the
provisions of Section 7.3 of the Purchase Agreement (a “Final Order”) and, if it shall so comply or
obey, it shall not be liable to any other person by reason of such compliance or obedience. The
Escrow Agent shall be entitled to receive and may conclusively rely upon an opinion of counsel as
to the effect of any Final Order.




          (o) In the event that (i) any dispute shall arise between or among the Tekelec Parties,
Sellers or any other Persons with respect to the distribution or release of any of the Escrow Funds
held hereunder or (ii) the Escrow Agent shall be uncertain as to how to proceed in a situation not
explicitly addressed by the terms of this Agreement whether because of conflicting demands or
otherwise, the Escrow Agent shall be permitted to deposit all of the Escrow Funds held hereunder
into a court of competent jurisdiction, which, for purposes of this Agreement, shall be the
Superior Court for the Province of Québec, Commercial Division, for the Judicial District of
Montreal (a “Court of Competent Jurisdiction”), and thereafter be fully relieved from any and all
liability or obligation with respect to such Escrow Funds. Sellers and the Tekelec Parties further
agree to pursue any recourse in connection with such a dispute, without making the Escrow Agent a
party to the same.




          (p) The Escrow Agent shall have the right to perform any of its duties hereunder through
agents, attorneys, custodians or nominees provided that none of the foregoing may do so if it has a
legal or ethical conflict of interest in doing so.




          (q) In the event that any of the Escrow Funds shall be attached, seized, garnished or levied
upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a
court, or any order, judgment or decree shall be made or entered by any court affecting the Escrow
Funds under this Agreement, the Escrow Agent shall promptly notify Sellers and the Tekelec Parties
of such event and the Escrow Agent is hereby expressly authorized to obey and comply with all
writs, orders or decrees lawfully entered or issued, and in the event that the Escrow Agent obeys
or complies with any such lawful writ, order or decree, it shall not be liable to Sellers, the
Tekelec Parties or to any other Person by reason of such compliance notwithstanding such writ,
order or decree being subsequently reversed, modified, annulled, set aside or vacated.




     8. Resignation of Escrow Agent; Successor by Merger



          (a) The Escrow Agent may at any time resign as such, subject to this Section 8, by delivering
written notice of resignation to Sellers and the Tekelec Parties and by delivering the Escrow Funds
(less any portion thereof previously distributed in accordance with











 



-10-



this Agreement) to any successor escrow agent designated by Sellers, the Tekelec Parties or by a
Court of Competent Jurisdiction, whereupon the Escrow Agent shall be discharged of and from any and
all further obligations arising in connection with this Agreement. The resignation of the Escrow
Agent will take effect on the earlier to occur of (the “Resignation Date”): (i) the appointment of
a successor escrow agent as aforesaid or by a Court of Competent Jurisdiction; or (ii) the day
which is 30 days after the date of delivery of the Escrow Agent’s written notice of resignation to
Sellers and the Tekelec Parties, or such shorter notice as Sellers and the Tekelec Parties accept
as sufficient. If the Escrow Agent has not received written notice of the designation of a
successor escrow agent by the Resignation Date, the Escrow Agent’s sole responsibility after such
time shall be to retain and safeguard the Escrow Funds until receipt of written notice of the
designation of a successor escrow agent hereunder or pursuant to a final non-appealable order of a
Court of Competent Jurisdiction. If a successor escrow agent has not been appointed within 90 days
of the date of the delivery of its written notice of resignation, the Escrow Agent shall deliver
the Escrow Funds (less any portion thereof previously distributed in accordance with this
Agreement) to the legal counsel designated by Sellers and the Tekelec Parties and all of the Escrow
Agent’s duties and obligations under this Agreement shall thereupon cease immediately. Failing
such designation by Sellers and the Tekelec Parties, the Escrow Agent shall deposit such Escrow
Funds with the Superior Court for the Province of Québec, Commercial Division, for the Judicial
District of Montreal whereupon the Escrow Agent shall have no further duties and obligations under
this Agreement.




          (b) If the Escrow Agent resigns or is removed pursuant to this Section 8, the Escrow Agent
shall be entitled, prior to delivery to any Party of the Escrow Funds, to deduct any amounts owing
to it in respect to outstanding fees, disbursements and interest thereon whereupon this Agreement
shall terminate and the Escrow Agent shall have no further duties and obligations under this
Agreement.




          (c) If the Escrow Funds are to be released hereunder to a party who has become bankrupt, has
gone into liquidation or has otherwise become incapable of enforcing its rights to receive Escrow
Funds under this Agreement, the Escrow Agent shall forthwith deliver the Escrow Funds to a Court of
Competent Jurisdiction. If any of the Sellers or the Tekelec Parties have become bankrupt, have
gone into liquidation or have otherwise become incapable of enforcing their rights and performing
their responsibilities under this Agreement, the Escrow Agent shall forthwith deliver the Escrow
Funds to a Court of Competent Jurisdiction and provide written notice to Sellers or the Tekelec
Parties, as applicable, of the deposit into such court of such Escrow Funds. Upon such delivery of
the Escrow Funds, the Escrow Agent shall have no further duties and obligations hereunder.




          (d) In the event of the Escrow Agent resigning or being removed as aforesaid or being
dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting
hereunder, Sellers and the Tekelec Parties shall forthwith appoint a successor escrow agent;
failing such appointment by Sellers and the Tekelec Parties, the retiring Escrow Agent, acting
alone, may apply, at the expense of Sellers and the Tekelec Parties, to a justice of the Québec
Superior Court on such notice as such justice may direct, for the appointment of a successor escrow
agent; but any successor escrow agent so appointed by the Court shall be subject to removal as
aforesaid by the Tekelec Parties.












 



-11-




          (e) Any successor escrow agent appointed under any provision of this Section 8 shall be a
corporation authorized to carry on the business of a trust company in the Province of Québec and,
if required by the applicable legislation for any other jurisdiction, in such other jurisdictions.
On any such appointment, the successor escrow agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named herein as Escrow Agent hereunder. At
the request of Sellers, the Tekelec Parties or the successor escrow agent, the retiring Escrow
Agent, upon payment of the amounts, if any, due to it pursuant to this Agreement, including any
amounts owing to it in respect to outstanding fees, disbursements and interest thereon, shall duly
assign, transfer and deliver to the successor escrow agent all money held, and all records kept, by
the retiring Escrow Agent hereunder or in connection herewith.




          (f) Any firm, partnership, association or corporation into which the Escrow Agent may be
merged, converted or with which the Escrow Agent may be consolidated, or any entity resulting from
any merger, conversion or consolidation to which the Escrow Agent shall be a party, shall succeed
to all the Escrow Agent’s rights, obligations and immunities hereunder without the execution or
filing of any paper or any further act on the part of any of the parties, provided that such entity
would be eligible for appointment as successor escrow agent hereunder, anything herein to the
contrary notwithstanding.




     9. Tax Reporting. The Tekelec Parties and the Sellers agree that, for tax reporting
purposes, the Escrow Funds and all interest or other taxable income distributed from the investment
of the Escrow Funds in any tax year shall be taxable to the Sellers, except for such portion of
said interest or other taxable income which has been distributed to the Tekelec Parties which shall
be taxable to the Tekelec Parties.



     10. Escrow Costs. The Tekelec Parties, on the one hand, and the Sellers, on the other
hand, shall equally bear and pay the costs and expenses of the Escrow Agent’s services hereunder,
as set out in Schedule V hereto, and the costs and expense reasonably incurred by the
Escrow Agent in connection with the administration of the escrow created hereby or the performance
or observance of its duties hereunder which are in excess of its compensation for normal services
hereunder and covered by the remuneration, including without limitation, all out-of-pocket expenses
and disbursements incurred or made by the Escrow Agent in the administration of its services and
duties created hereby (including the reasonable fees and disbursements of its outside counsel and
other outside advisors required for discharge of its duties hereunder). Any amount owing under
this Section 10 and unpaid thirty (30) days after request for such payment will bear interest from
the expiration of such thirty (30) days at a rate per annum equal to the then current rate charged
by the Escrow Agent, payable on demand. If payment is not received when due, the Escrow Agent
shall be entitled to draw down on the Escrow Funds in order to effect such payment and may sell,
liquidate, convey or otherwise dispose of any investment for such purpose.



     11. Ownership of Escrow Income for Tax Purposes. The Tekelec Parties and Sellers
agree that, for all tax purposes, Sellers shall be treated as the owner of the Escrow Funds and of
100% of the income earned with respect to the Escrow Funds (the “Escrow Income”) and that Sellers
will report all Escrow Income, if any, as their income in the taxation year or years in which such
Escrow Income is properly includible and pay any taxes attributable thereto.









 



-12-


     12. Limitations on Rights to the Escrow Funds. Except as otherwise provided herein,
none of the Parties shall have any right, title or interest in or to, or possession of, the Escrow
Funds and therefore shall not have the ability to pledge, convey, hypothecate or grant as security
all or any portion of the Escrow Funds. Accordingly, the Escrow Agent shall be in sole possession
of the Escrow Funds, if any, and shall not act as custodian of any Person for the purposes of
perfecting a security interest therein, and no creditor of any Person shall have any right to have
or to hold or otherwise attach or seize all or any portion of the Escrow Funds as collateral for
any obligation and shall not be able to obtain a security interest in any of the Escrow Funds
unless and until such property has been released pursuant to this Agreement.



     13. Force Majeure. Except for the payment obligations of the Tekelec Parties and the
Sellers contained herein, neither party shall be liable to the other, or held in breach of this
Agreement, if prevented, hindered, or delayed in the performance or observance of any provision
contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental
action or judicial order, earthquakes, or any other similar causes (including, but not limited to,
mechanical, electronic or communication interruptions, disruptions or failures). Performance times
under this Agreement shall be extended for a period of time equivalent to the time lost because of
any delay that is excusable under this Section.



     14. Notices. Any notice, direction, certificate, consent, determination or other
communication required or permitted to be given or made under this Agreement shall be in writing
and shall be effectively given and made if (i) delivered personally, (ii) sent by prepaid courier
service or mail, or (iii) sent prepaid by fax or other similar means of electronic communication,
in each case to the applicable address set out below:


(i) If to the Tekelec or Purchaser:



Tekelec

5200 Paramount Parkway

Morrisville, NC 27560

United States

Attention: SeniorVice-President, Corporate Affairs, General Counsel
and Secretary

Fax: (919) 461-6845



With a copy to:



Ogilvy Renault LLP

Suite 2500

1 Place Ville Marie

Montreal, Québec

H3B 1R1

Attention: Niko Veilleux

Fax: (514) 286-5474












 



-13-



(ii) If to Sellers:



l

Attention: l

Fax: l



With a copy to:



Spiegel Sohmer

5 Place Ville Marie

Suite 1203

Montreal, Québec

H3B 2G2

Attention: L. Michael Blumenstein and

              
         Frank M. Schlesinger

Fax: (514) 875-8237



(iii) If to the Escrow Agent:



Computershare Trust Company of Canada

1500 University Street, Suite 700

Montreal, Quebec H3A 3S8


Attention: Manager, Corporate Trust

Fax: (514) 982-7677




     15. Anti-money Laundering.



          (a) Each Party (other than the Escrow Agent) hereby represents to the Escrow Agent that any
account to be opened by, or interest to be held by, the Escrow Agent in connection with this
Agreement, for or to the credit of such party, either (i) is not intended to be used by or on
behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in
which case such party hereto agrees to complete and execute forthwith a declaration in the Escrow
Agent’s prescribed form as to the particulars of such third party.




          (b) The Escrow Agent shall retain the right not to act and shall not be liable for refusing to
act if, due to a lack of information or for any other reason whatsoever, the Escrow Agent, in its
sole judgment, determines that such act might cause it to be in non-compliance with any applicable
anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the
Escrow Agent, in its sole judgment, determine at any time that its acting under this Agreement has
resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist
legislation, regulation or guideline, then it shall have the right to resign on ten (10) days
written notice to Sellers and the Tekelec Parties, provided: (i) that the Escrow Agent’s written
notice shall describe the circumstances of such non-compliance; and (ii) that if such circumstances
are rectified to the Escrow Agent’s satisfaction within such ten (10) day period, then such
resignation shall not be effective.












 



-14-




     16. Privacy.



          (a) Sellers and the Tekelec Parties acknowledge that the Escrow Agent may, in the course of
providing services hereunder, collect or receive financial and other personal information about
Sellers, the Tekelec Parties and/or their representatives, as individuals, or about other
individuals related to the subject matter hereof, and use such information for the following
purposes: (i) to provide the services required under this Agreement and other services that may be
requested from time to time; (ii) to help the Escrow Agent manage its servicing relationships with
such individuals; (iii) to meet the Escrow Agent’s legal and regulatory requirements; and (iv) if
Social Insurance Numbers are collected by the Escrow Agent, to perform tax reporting and to assist
in verification of an individual’s identity for security purposes.




          (b) Sellers and the Tekelec Parties acknowledge and agree that the Escrow Agent may receive,
collect, use and disclose personal information provided to it or acquired by it in the course of
this Agreement for the purposes described above. Furthermore, Sellers and the Tekelec Parties agree
that they shall not provide or cause to be provided to the Escrow Agent any personal information
relating to an individual who is not a party to this agreement unless that party has assured itself
that such individual understands and has consented to the aforementioned uses and disclosures.




     17. Assigns and Assignment. This Agreement and all actions taken hereunder shall
inure to the benefit of and shall be binding upon each of the Parties and upon all of their
respective successors and permitted assigns; provided that (a) the Escrow Agent shall not be
permitted to assign its obligations hereunder except as provided in Section 8 hereof, and (b) no
such assignment of any of the Sellers, Tekelec or Purchaser shall be opposable to the Escrow Agent
unless and until written notice of such assignment is delivered to and acknowledged by the Escrow
Agent. The Escrow Agent acknowledges and agrees that Tekelec shall have the right to assign this
Agreement or any interest hereunder to (a) any entity with which Tekelec may merge or consolidate,
(b) any entity which controls, is controlled by, or under common control with, Tekelec, and/or (c)
any entity which acquires all or substantially all of the assets of Tekelec.



     18. No Other Third Party Beneficiaries. This Agreement is solely for the benefit of
the Parties and each of their heirs, executors, administrators, other legal representatives,
successors and permitted assigns and this Agreement will not be deemed to confer upon or give to
any other Person any remedy, claim, liability, reimbursement, cause of action or other right.



     19. No Waiver. No failure or delay by a party hereto in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise thereof
shall preclude any right of further exercise or the exercise of any other right, power or
privilege.



     20. Counterparts. This Agreement may be executed in any number of counterparts, each
of which will be deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.









 



-15-


     21. Electronic Execution. Delivery of an executed signature page to this Agreement by
any Party by electronic transmission will be as effective as delivery of a manually executed copy
of this Agreement by such Party.



     22. Conflict. The Parties agree and acknowledge that to the extent any terms and
provisions of this Agreement are in any way inconsistent with or in conflict with any term,
condition or provision of the Purchase Agreement, the Purchase Agreement shall govern and control.



     23. Termination. This Agreement shall terminate when all of the Escrow Funds, if any,
has been released and distributed in accordance with this Agreement.



* * * *




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]









 



-16-


     IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the date
first written above.



TEKELEC




Per:

 


Name: Stuart H. Kupinsky

Title: Senior Vice President, Corporate Affairs, General Counsel and Secretary




TEKELEC CANADA INC.




Per:

 


Name: Stuart H. Kupinsky

Title: Vice President and Secretary




WINVEST INC.




Per:

 


Name:

Title:




9129-2144 QUÉBEC INC.




Per:

 


Name:

Title:




9129-2136 QUÉBEC INC.




Per:

 


Name:

Title:




POSITRON INC.




Per:

 


Name:

Title:










 



-17-


171033 CANADA INC.




Per:

 


Name:

Title:




171036 CANADA INC.




Per:

 


Name:

Title:




CAPITAL BRINVEST INC.




Per:

 


Name:

Title:




 


STEPHAN OUAKNINE




 


JOHN GROBSTEIN




 


MICHAEL ROSENTHAL




 


EDIE LEDANY













 



-18-




COMPUTERSHARE TRUST COMPANY OF CANADA




Per:

 


Name:

Title:




Per:

 


Name:

Title:




Signature page of Escrow Agreement





 











 





SCHEDULE I




LIST OF SELLERS


Stephan Ouaknine



Winvest Inc.



9129-2144 Québec Inc.



9129-2136 Québec Inc.



Michael Rosenthal



John Grobstein



Positron Inc.



171033 Canada Inc.



171036 Canada Inc.



Capital Brinvest Inc.



Edie Ledany






 









 








SCHEDULE II




SHARE PURCHASE AGREEMENT



See attached.



 









 





SCHEDULE III




APPROVED BANKS



See attached.



 









 





Approved Banks




	 	 	 
	 	 	Relevant S&P
	 	 	Issuer Credit
	 	 	Rating
	 	 	(as at
	Bank	 	September 30, 2009)
	Bank of Montreal

	 	A+
	Citibank NA

	 	A+
	Bank of America NA

	 	A+
	Harris Bancorp Inc.

	 	A+
	PNC Bank NA

	 	A+
	The Bank of Nova Scotia

	 	AA-
	Royal Bank of Canada

	 	AA-
	The Toronto-Dominion Bank

	 	AA-
	Bank of Ireland*

	 	AA
	Allied Irish Bank*

	 	AA








 




			
	*	 	Deposit is fully guaranteed by the Irish Government therefore the
Republic of Ireland Credit Rating used as the relevant rating.




 









 










SCHEDULE IV




SELLERS’ DEFAULT PAYMENT INSTRUCTIONS



See attached.



 









 





SCHEDULE V




FEES OF THE ESCROW AGENT



See attached.



 









 










TEKELEC




CASH ESCROW SERVICES

U.S. $5,025,000



SCHEDULE OF FEES


Initial Services




	 	 	 
	For review of draft
agreement, liaison with
counsel, execution of
Escrow Agreement in its
final form, receipt of
escrow funds by certified
cheque, wire transfer or
bank draft, setting up
records and all
correspondence and other
matters in connection
therewith.

	 	$3,500.00*
	 
	 	 
	Identity ascertainment
and verification in
accordance with the
Proceeds of Crime
(Money Laundering) and
Terrorist Financing Act.

	 	$250.00








 




			
	(*	 	All professional
services, including those
described in the Initial
Services, and attendances
rendered at closing, if
necessary, will be
charged at our prevailing
hourly rate per person,
after the first 5 hours.)




Annual Retainer (For each year or any part thereof, and non refundable.) This fee is
payable in advance each year and will be charged at the beginning of the calendar year. The first
year’s fee will be pro rated to December 31 and is due and payable in advance of closing.




	 	 	 

	For basic administrative duties and responsibilities
during the term of the agency, including the
maintenance of a segregated escrow account and record
of transactions.

	 	$2,500.00
	 
	 	 
	Additional escrow accounts

	 	$500 per account






Investment of Funds (For each year, billed monthly in arrears.)




	 	 	 

	For receipt of funds on closing,
each purchase or sale of an
investment (depending on investment
option as set out below), settlement
of all trades and maturities:
	 	 
	 
	 	 
	a)  Non-investment account — no
investment of funds, with funds
remaining in our trust account and
earning interest at the prevailing
rate earned on similar deposits at
any given time

	 	No Charge
	 
	 	 
	b)  Investment account — investment
in Fixed Income Securities issued by
a Canadian institution in U.S.
currency

	 	2 basis points of the net asset
value of the investments each month,
subject to a minimum fee of
$2,000.00 per year (or part
thereof), plus $100.00 per
investment transaction. Any
uninvested funds will be held in a
non-interest bearing account.






 









 






Transactional Activity




	 	 	 

	Releases of funds upon receipt of required documentation

	 	$25.00 per cheque,
$100.00 per wire transfer and
$275.00 per hour, all subject to a
minimum fee of $350.00 per
event of release
	 
	 	 
	Replacement of lost cheques

	 	$30.00 each






Tax Reporting




	 	 	 

	a) T5, R3, NR4B, T3, IRS 1099INT preparation

	 	$2.00 per slip

(Minimum Fee $300.00)
	 
	 	 
	b) T5008 and R18 preparation

	 	$11.00 per supplemental

(Minimum Fee $300.00)
	 
	 	 
	c) Completion and filing of each summary

	 	$130.00 for each filing
	 
	 	 
	d) Replacement of tax forms

	 	$16.00 for each form
	 
	 	 
	e) Initial solicitation of U.S. holders for TIN/W9 Declarations
and recording of responses

	 	$6.00 per U.S. holder
solicited, subject to a
minimum fee of $100.00 per
issue
	 
	 	 
	f) Follow up solicitations or solicitation to new holders of
TIN/W9 Declarations

	 	$6.00 per U.S. holder solicited
	 
	 	 
	g) Communication on incorrect/incomplete replies and special
notices relating to TIN/W9 Declarations

	 	$20.00 per communication
	 
	 	 
	h) IRS tax withholding/establishing IRS accounts/remitting to IRS

	 	$1.00 per U.S. holder for
which IRS taxes withheld,
subject to a minimum of
$100.00 per issue per payment
	 
	 	 
	i) Audit Confirmations

	 	$75.00






Unsuccessful Transaction





In the event that the proposed transaction fails to close, for any reason, an appropriate fee
based on time and effort expended will be charged, calculated at our prevailing hourly rate,
subject to a minimum fee of $1,500.00.



Special Services






 









 









For any amendments or other unanticipated services, an appropriate fee will be charged based on
time, effort and responsibility at our prevailing hourly rate.




 




The foregoing fees are exclusive of all applicable taxes and of legal and out-of-pocket expenses
incurred in the administration of the agency and are subject to revision if warranted by changes in
economic conditions during the term of the agency. Our fees are also subject to revision based on
time, effort and responsibility should the factors on which these fees have been based subsequently
change. Interest will be charged on overdue accounts.





 











 





EXHIBIT D




Forms of Legal Opinions of Counsel

to the Corporation and Counsel to the Corporate Sellers



See attached.





64









 








MATTERS TO BE ADDRESSED IN THE OPINION OF COUNSEL TO THE

CORPORATION (HEENAN BLAIKIE LLP)




     Terms used below and not otherwise defined shall have the same meanings as ascribed thereto in
the Share Purchase Agreement.




	1.	 	The Corporation is a corporation existing under the Canada Business Corporations Act and is
in good standing with respect to the filing of the annual returns required to be filed by it
under the said Act.
	 
	2.	 	The Corporation is registered under An Act respecting the legal publicity of sole
proprietorships, partnerships and legal persons (Québec) and is not in default to file an
annual declaration pursuant thereto.
	 
	3.	 	The Corporation has an authorized share capital consisting of an unlimited number of common
            shares, 6,600,000 Class A shares, 8,991,668 Class B Series 1 shares, 4,954,086 Class B Series
2 shares, 257,143 Class B Series 3 shares, 7,483,657 Class B Series 4 shares and an unlimited
number of Class C, Class D, Class E, Class F and Class G shares, of which 6,600,000 Class A
            shares, 8,991,668 Class B Series 1 shares, 4,954,086 Class B Series 2 shares, 257,143 Class B
Series 3 shares, 6,221,128 Class B Series 4 shares, 3,888,162 Class D shares and 5,100,000
Class G shares are issued and outstanding as of the date hereof.
	 
	4.	 	All of the shares issued by the Corporation prior to the date hereof have been duly
authorized and validly issued as fully paid and non-assessable shares.
	 
	5.	 	The Corporation has the requisite corporate power and authority under the Canada Business
Corporations Act to do business in the Province of Québec.
	 
	6.	 	The Corporation has taken all necessary corporate action to approve and authorize the
transfer of the Shares by the Sellers to the Purchaser.
	 
	7.	 	The transfer of the Shares by the Sellers to the Purchaser does not (A) violate any
applicable Law of the Province of Québec or Canada of general application to which the
Corporation is subject or any of the provisions of its constating documents, or (B) violate
the charter, bylaws or other organizational documents of the Corporation.
	 
	8.	 	The execution and delivery of this Agreement and the Escrow Agreement by the Sellers and the
consummation of the transactions contemplated thereby by the Sellers will not violate the
charter, bylaws or other organizational documents of the Corporation.




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MATTERS TO BE ADDRESSED IN THE OPINION OF COUNSEL TO EACH

OF THE CORPORATE SELLERS OTHER THAN POSITRON




     Terms used below and not otherwise defined shall have the same meanings ascribed thereto as
set forth in the Share Purchase Agreement.




	1.	 	Each of the Corporate Sellers (other than Positron) is duly incorporated and validly existing
under the Laws of its governing jurisdiction.
	 
	2.	 	Each of the Corporate Sellers (other than Positron) has the full power, authority and
capacity to enter into and perform its obligations under, the Agreement and the Escrow
Agreement to which it is a party.
	 
	3.	 	The Agreement and the Escrow Agreement constitute a legal, valid and binding obligation of
Corporate Sellers (other than Positron), enforceable against Corporate Sellers (other than
Positron) by each other party thereto in accordance with its terms.
	 
	4.	 	The execution and delivery of this Agreement and the Escrow Agreement by the Corporate
Sellers (other than Positron) will not (A) violate any applicable Law to which any of the
Corporate Sellers (other than Positron) is subject, (B) violate the charter, bylaws or other
organizational documents of a Corporate Seller (other than Positron), as same appear in the
minute book.




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MATTERS TO BE ADDRESSED IN THE OPINION OF COUNSEL TO

POSITRON




     Terms used below and not otherwise defined shall have the same meanings ascribed thereto as
set forth in the Share Purchase Agreement.




	1.	 	Positron is duly incorporated and validly existing under the Laws of its governing
jurisdiction.
	 
	2.	 	Positron has the full power, authority and capacity to enter into and perform its
obligations under, the Agreement and the Escrow Agreement to which it is a party.
	 
	3.	 	The Agreement and the Escrow Agreement constitute a legal, valid and binding obligation
of Positron, enforceable against Positron by each other party thereto in accordance with
its terms.
	 
	4.	 	The execution and delivery of this Agreement and the Escrow Agreement by Positron will
not (A) violate any applicable Law to which Positron is subject, (B) violate the charter,
bylaws or other organizational documents of Positron, as same appear in the minute book.




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EXHIBIT E




Form of Release and Discharge



See attached.



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FORM OF MUTUAL RELEASE AND DISCHARGE




          The undersigned (the “Seller”) is the owner of shares of Blueslice Networks, Inc., a
Canadian corporation (the “Corporation”).




          WHEREAS, Tekelec, Tekelec Canada Inc. (“Purchaser”), Stephan Ouaknine, Winvest Inc., 4148711
Canada Inc., 9129-2144 Québec Inc., 9129-2136 Québec Inc., Michael Rosenthal, John Grobstein,
171033 Canada Inc., 171036 Canada Inc., Capital Brinvest Inc. and Positron Inc. (collectively, the
"Sellers”) are entering into a Share Purchase Agreement (the “Share Purchase Agreement”), dated as
of May 5, 2010, pursuant to which, among other things, Purchaser agrees to purchase from Sellers,
and Sellers agree to sell to Purchaser the issued and outstanding shares of the Corporation owned
by them (the “Shares”), upon the terms and subject to the conditions set forth therein,
contemporaneously with the execution of this Release and Discharge (the “Release”);




          WHEREAS, Tekelec and Purchaser have required that, as a condition to Tekelec and Purchaser
entering into the Share Purchase Agreement and the transactions contemplated thereby, Seller must
enter into this Release;




          WHEREAS, Seller has required that, as a condition to its entering into the Share Purchase
Agreement, the transactions contemplated thereby and this Release, the Corporation must also enter
into this Release;




          NOW, THEREFORE, Seller and the Corporation mutually agree as follows:




          Unless otherwise defined herein, all capitalized terms used herein shall have the meanings
attributed to them in the Share Purchase Agreement.




          Upon the Closing, and save as specifically set forth herein, the Seller, in its capacity as a
shareholder, manager, officer, director or employee of the Corporation or any other capacity,
hereby unconditionally and irrevocably agrees to, and does, remise, release and forever discharge
the Corporation, Tekelec, Purchaser and each of their respective affiliates and current and former
subsidiaries, shareholders and owners of each of the foregoing, and the directors, officers,
partners, employees, assigns, agents, representatives, heirs, administrators, predecessors,
attorneys, successors and assigns of each of the foregoing, in each case now or hereafter existing
(the “Corporation Releasees”), from any and all liabilities, claims, demands, actions, causes of
action, debt, account, bond, judgments, suits, interest, penalties, expenses, and/or litigation
costs, including reasonable attorneys’ fees, expert fees, and appellate fees and costs, whether
absolute or contingent, liquidated or unliquidated, known or unknown, suspected or unsuspected,
foreseen or unforeseen, which arise or have arisen, or the basis for which occurs or has occurred,
at or prior to the Closing at law or equity, including, without limitation, with respect to any and
all (i)amounts payable to holders of Class A, Class D and Class G shares upon the occurrence of a
Liquidity Event (as defined in Section 2.4 of the Corporation’s articles of amendment) and (ii)
rights set forth in that certain Investment Agreement, dated March 19, 2004, among the Corporation,
9129-2144 Quebec Inc. and 9129-2136 Quebec Inc. (collectively, “Corporation Claims”).






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          Upon the Closing, and save as specifically set forth herein, the Corporation hereby
unconditionally and irrevocably agrees to, and does, remise, release and forever discharge the
Seller, and, in the case of a Seller that is a corporation, each of its affiliates and current and
former subsidiaries, shareholders and owners of each of the foregoing, and the directors, officers,
partners, employees, assigns, agents, representatives, heirs, administrators, predecessors,
attorneys, successors and assigns of each of the foregoing, in each case now or hereafter existing
(the “Seller Releasees”), from any and all liabilities, claims, demands, actions, causes of action,
debt, account, bond, judgments, suits, interest, penalties, expenses, and/or litigation costs,
including reasonable attorneys’ fees, expert fees, and appellate fees and costs, whether absolute
or contingent, liquidated or unliquidated, known or unknown, suspected or unsuspected, foreseen or
unforeseen, which arise or have arisen, or the basis for which occurs or has occurred, at or prior
to the Closing (collectively, “Seller Claims”), except as regards any action taken in Seller’s
capacity as manager, shareholder, officer, director or employee of the Corporation (i) giving rise
to a financial benefit received by the Seller to which the Seller was not entitled; (ii)
constituting a breach by the Seller of its duty of loyalty, as an employee, or its fiduciary duty,
as a director or officer, to the Corporation; or (iii) that is not in good faith or involves fraud,
intentional misrepresentation or willful misconduct or a violation of applicable Law.




          For the avoidance of doubt, the parties hereto acknowledge and agree that the remise, release
or discharge of any liability with respect to the Corporation Releasees by the Seller or with
respect to the Seller Releasees by the Corporation, as the case may be, as provided for herein (i)
shall be limited to acts, omissions, events and so forth that occurred prior to Closing, and (ii)
shall in no way impact any of the rights of Tekelec or Tekelec Canada (whether in its capacity as a
Tekelec Indemnified Party or otherwise) or the Seller (whether in its capacity as a Seller
Indemnified Party or otherwise) under or pursuant to the Share Purchase Agreement or the Escrow
Agreement, and (iii) shall in no way impact any of the rights of a Seller who was employed by the
Corporation immediately prior to Closing and who will continue to be so employed after the Closing,
as an employee, consultant or otherwise (collectively, “Employment”), with respect to such
Employment arising after the Closing or any matters related thereto arising after the Closing.




          Each of the Seller and the Corporation acknowledges that he, she or it understands this
Release, the claims he, she or it is releasing, the promises and agreements he, she or it is
making, and the effect of his signing this Release. This Release shall be governed by and
interpreted and enforced in accordance with the Laws of the Province of Québec and the federal laws
of Canada applicable therein without regard to the conflicts of law principles.




          Each of the Seller and the Corporation hereby waives the benefit of any statute or rule of law
which, if applied to this Release, would exclude from its binding effect any Claim against the
Corporation Releasees not now known by Seller to exist or against the Seller Releases not now known
by the Corporation to exist, as the case may be. This Release is intended to be a general release
and a covenant not to sue that extinguishes all Claims released above and precludes any attempt by
such Seller to initiate any litigation against the Corporation Releasees or by the Corporation to
initiate any litigation against the Seller Releasees, in each case with respect to the Corporation
Claims or Seller Claims released above. If either the Seller or the Corporation commences any
Claim in violation of this Release, the Corporation Releasees or the Seller Releasees, as the case
may be, shall be entitled to assert this Release as a complete bar. This Release is binding on the
Corporation, the Seller, and his, her or its respective heirs,


70









 







          legal representatives, successors, and assigns, in their own right, and in the rights of
others.




          Each of the Seller and the Corporation hereby acknowledges that he, she or it has been advised
to consult with an attorney before executing this Release and that such Seller has done so or,
after careful reading and consideration, has chosen not to do so of such Seller’s own volition.
Seller hereby acknowledges that he, she or it has signed this Release knowingly and voluntarily and
with the advice of any counsel retained to advise such Seller with respect to it.




          This Release has been drafted in English at the express request of the parties. Cette
Quittance a été rédigée en anglais à la demande expresse des parties.




[Remainder of page left intentionally blank. Signature page follows.]





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          Dated: May ___, 2010 to be effective immediately prior to the Closing.




	 	 	 	 	 
	 	[Please fill in Seller name]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BLUESLICE NETWORKS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




72