Document:

ex105.htm

Exhibit 10.5

 

ESCROW AGREEMENT

 

Made as of June 4, 2012

 

Between

 

2314505 ONTARIO INC.

 

(the “Purchaser”)

 

and

 

DECISIONPOINT SYSTEMS INC.

 

(“DPS”)

 

and

 

KAREN DALICANDRO

 

(“Karen”)

 

and

 

2293046 ONTARIO INC.

 

(“Karenco”)

 

and

 

McMillan LLP

 

(the “Escrow Agent”)

 

 

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TABLE OF CONTENTS

 

 

	ARTICLE 1 – INTERPRETATION 	2
	 	Section 1.1 Definitions	2
	 	Section 1.2 Additional Rules of Interpretation	3
	 	 	 
	ARTICLE 2 – ESCROW AGENT	 
	 	Section 2.1 Appointment of Escrow Agent	3
	 	Section 2.2 Receipt of Escrow Payment 	3
	 	Section 2.3 Investment of Escrow Payment	3
	 	Section 2.4 Payment into Court	3
	 	Section 2.5 Release of Escrow Amount	3
	 	Section 2.6 Release of Holdback Amount	4
	 	Section 2.7 Residency	4
	 	Section 2.8 Escrow Agent’s Representation of Purchaser	4
	 	Section 2.9 Limitation of Escrow Agent’s Liability	4
	 	Section 2.10 Indemnity in Favour of Escrow Agent	5
	 	Section 2.11 Successors to Escrow Agent	5
	 	 	 
	ARTICLE 3 – GENERAL	6
	 	Section 3.1 Further Assurances	6
	 	Section 3.2 Notice	6
	 	Section 3.3 Entire Agreement	8
	 	Section 3.4 Governing Law and Submission to Jurisdiction	8
	 	Section 3.5 Provisions Incorporated by Reference 	8
	 	 	 
	Schedule 1.1(4)	10

 

 

 

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ESCROW AGREEMENT

 

This Agreement is made as of the 4th day of June, 2012 between

 

2314505 ONTARIO INC.,

a corporation formed under the laws of Ontario

(the “Purchaser”)

 

and

 

DECISIONPOINT SYSTEMS, INC.,

 

a corporation formed under the laws of Delaware

 

(“DPS”)

 

and

 

KAREN DALICANDRO

(the “Vendor”)

 

and

 

2293046 ONTARIO INC.,

 a corporation formed under the laws of Ontario

(“Karenco”)

 

and

 

McMILLAN LLP,

an Ontario limited liability partnership carrying on the practice of law in Ontario

(the “Escrow Agent”)

 

RECITALS

 

A. The Purchaser entered into a share purchase agreement dated the date hereof (as amended, supplemented or restated from time to time, the “Purchase Agreement”) regarding the sale to the Purchaser by the Vendors (as hereinafter defined) of all issued and outstanding shares in the capital of Apex Systems Integrators Inc. (the “Corporation”).

 

B. The Purchase Agreement requires the Purchaser to pay the sum of C$240,000 (the “Escrow Payment”) out of the Closing Amount to the Escrow Agent to be held, invested and distributed in accordance with this Agreement and the Purchase Agreement.

 

C. The parties desire to deposit the Escrow Payment with the Escrow Agent, subject to the terms of this Agreement.

 

FOR VALUE RECEIVED, the parties agree as follows:

 

 

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ARTICLE 1 – INTERPRETATION

 

Section 1.1 Definitions

 

In this Agreement, capitalized words which are not otherwise defined have the meaning given to them in the Purchase Agreement, and:

 

(1) “Agreement” means this agreement including any recitals and schedules to this agreement, as amended, supplemented or restated from time to time.

 

(2) “Escrow Amount” means the Escrow Payment together with all interest and compounded interest earned or accrued thereon.

 

(3) “Escrow Payment” has the meaning given to it in Recital B.

 

(4) “Joint Direction” means a joint direction of the Purchaser, DPS and the Vendors substantially in the form of Schedule 1.1(4).

 

(5) “Notice of Claim” means a statutory declaration of a senior officer of DPS verifying the facts in support of its claim pursuant to Section 6.5 of the Purchase Agreement and setting out in reasonable detail particulars of the calculations of the such claim.

 

(6) “Purchase Agreement” has the meaning given to it in Recital A.

 

(7) “Vendors” means, collectively, Karen and Karenco.

 

Section 1.2 Additional Rules of Interpretation

 

(1) Gender and Number.  In this Agreement, unless the context requires otherwise, words in one gender include all genders and words in the singular include the plural and vice versa.

 

(2) Headings and Table of Contents.  The inclusion in this Agreement of headings of Articles and Sections and the provision of a table of contents are for convenience of reference only and are not intended to be full or precise descriptions of the text to which they refer.

 

(3) Section References.  Unless the context requires otherwise, references in this Agreement to Sections or Schedules are to Sections or Schedules of this Agreement.

 

(4) Words of Inclusion.  Wherever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation” and the words following “include”, “includes” or “including” shall not be considered to set forth an exhaustive list.

 

(5) References to this Agreement.  The words “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions shall be construed as referring to this Agreement in its entirety and not to any particular Section or portion of it.

 

(6) Statute References.  Unless otherwise indicated, all references in this Agreement to any statute include the regulations thereunder, in each case as amended, re-enacted, consolidated or replaced from time to time and in the case of any such amendment, re-enactment, consolidation or replacement, reference herein to a particular provision shall be read as referring to such amended, re-enacted, consolidated or replaced provision and also include, unless the context otherwise requires, all applicable guidelines, bulletins or policies made in connection therewith and which are legally binding.

 

(7) Document References.  All references herein to any agreement (including this Agreement), document or instrument mean such agreement, document or instrument as amended, supplemented, modified, varied, restated or replaced from time to time in accordance with the terms thereof and, unless otherwise specified therein, includes all schedules and exhibits attached thereto.

 

(8) Writing.  References to “in writing”, “written” and similar expressions include material that is printed, handwritten, typewritten, faxed, emailed, or otherwise capable of being visually reproduced at the point of reception.

 

 

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ARTICLE 2 – ESCROW AGENT

 

Section 2.1 Appointment of Escrow Agent

 

The Vendors and the Purchaser hereby jointly appoint the Escrow Agent as escrow agent and custodian for the receipt, investment and distribution of the Escrow Amount in accordance with this Agreement.  The Escrow Agent accepts such appointment and agrees to act as escrow agent in accordance with this Agreement.  In performing its duties, the Escrow Agent shall act honestly and in good faith and shall exercise that degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

 

Section 2.2 Receipt of Escrow Payment

 

The Escrow Agent acknowledges receipt of the Escrow Payment.

 

Section 2.3 Investment of Escrow Payment

 

The Escrow Agent shall deposit the Escrow Payment, in trust, in a Canadian-currency interest-bearing account, term deposit or guaranteed investment certificate, at Royal Bank of Canada in the name of the Escrow Agent or such other form of investment as the Vendors and the Purchaser may from time to time agree in a joint written direction sent to the Escrow Agent.  Any interest earned on the Escrow Payment or portion thereof while such funds are held by the Escrow Agent shall accrue in favour of the Vendors and be paid to the Parties in accordance with this Agreement.

 

Section 2.4 Payment into Court

 

At any time, the Escrow Agent may deposit the Escrow Amount with the Ontario Superior Court of Justice and, upon such deposit, will be automatically released and discharged from any and all further obligations to perform any and all duties and obligations imposed upon the Escrow Agent under this Agreement.

 

Section 2.5 Release of Escrow Amount

 

(1) DPS, the Purchaser and the Vendors may at any time issue a Joint Direction to the Escrow Agent, setting out the amounts to be paid from the Escrow Amount to the Purchaser and the Vendors as applicable. The Escrow Agent is irrevocably authorized and directed to pay the Escrow Amount upon receipt by the Escrow Agent of a written Joint Direction, in accordance with such written Joint Direction.

 

(2) The Escrow Agent shall release and deliver the entire amount of the Escrow Amount to the Vendors on October 16, 2013 unless, prior to October 16, 2013, the Escrow Agent receives a Notice of Claim from DPS.  The Escrow Agent will promptly provide a copy of any such Notice of Claim to the Vendors.

 

(3) If the Escrow Agent receives a Notice of Claim from DPS with the time required in Section 2.5(2), the Escrow Agent shall continue to hold the Escrow Amount (or such lesser amount as is equal to the amount of Damages set out in the Notice of Claim) until such time as the Escrow Agent receives:

 

	
(a)  

	
a Joint Direction in accordance with this Section 2.5;

 

	
(b)  

	
an order from the court having jurisdiction directing disbursement of the Escrow Amount; or

 

	
(c)  

	
the exercise by the Escrow Agent of its rights under Sections 2.4 or 2.10(3).

 

 

 

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(4)           To the extent that the amount of Damages set out in the Notice of Claim is less than the Escrow Amount, the Escrow Agent shall release such amount not in dispute to the Vendors in accordance with Section 2.5(2).

 

Section 2.6 Release of Holdback Amount

 

(1) The Purchaser shall release and deliver the entire amount of the Holdback Amount to the Vendors on December 3, 2013 unless, prior to December 3, 2013, the Purchaser receives a Notice of Claim from DPS.  DPS will promptly provide a copy of any such Notice of Claim to the Vendors.

 

(2) If the Purchaser receives a Notice of Claim from DPS with the time required in Section 2.6(1), the Purchaser shall continue to hold the Holdback Amount (or such lesser amount as is equal to the amount of Damages set out in the Notice of Claim) until such time as the Purchaser receives:

 

	
(a)  

	
a Joint Direction in accordance with this Section 2.6; or

 

	
(b)  

	
an order from the court having jurisdiction directing disbursement of the Holdback Amount.

 

(3) To the extent that the amount of Damages set out in the Notice of Claim is less than the Holdback Amount, the Purchaser shall release such amount not in dispute to the Vendors in accordance with Section 2.6(1).

 

Section 2.7 Residency

 

Each Vendor represents and warrants to the Escrow Agent that she is not a non-resident of Canada within the meaning of the Tax Act.  Each Vendor shall be deemed to confirm the accuracy of this representation and warranty at the time, and from time to time, that any payment is made to her pursuant to the terms of this Agreement, unless written notice is provided to the Escrow Agent indicating otherwise prior to payment being made.  The Purchaser represents and warrants to the Escrow Agent that it is not a non-resident of Canada within the meaning of the Tax Act.  The Purchaser shall be deemed to confirm the accuracy of this representation and warranty at the time, and from time to time, that any payment is made to it pursuant to the terms of this Agreement, unless written notice is provided to the Escrow Agent indicating otherwise prior to payment being made.

 

Section 2.8 Escrow Agent’s Representation of Purchaser

 

The Vendors acknowledge that the Escrow Agent is corporate counsel to the Purchaser and has acted for the Purchaser in connection with the Purchase Agreement and this Agreement.  The Vendors hereby waive any objection or right that she has or may have by reason of this Agreement which would impair, hinder or eliminate the Escrow Agent’s right and ability to represent the Purchaser or the Corporation in connection with this Agreement, the Purchase Agreement or otherwise.  In addition, the Vendor acknowledges that, if there is any dispute under the Purchase Agreement or this Agreement, the Escrow Agent may represent the Purchaser or the Corporation and the Vendors waive any objection to such representation; provided, however, that, in exercising its duties in its capacity as Escrow Agent until any resignation pursuant to Section 2.11 and payment pursuant to Section 2.4, the Escrow Agent shall act in accordance with this Agreement and its fiduciary duties without regard for its representation of the Purchaser or the Corporation.

 

Section 2.9 Limitation of Escrow Agent’s Liability

 

The Escrow Agent:

 

	
(a)  

	
shall incur no liability under this Agreement for any act, or omission to act, under this Agreement if taken, or omitted, in good faith;

 

	
(b)  

	
shall be under no responsibility in respect of the sufficiency of the interest earned on the Escrow Amount;

 

	
(c)  

	
may employ experts, advisors and counsel and act on the advice of such Persons to carry out the terms of this Agreement and shall be fully protected in acting in accordance with such advice;

 

	
(d)  

	
shall not be required to defend any legal proceedings which may be instituted against it in respect of anything herein contained unless requested so to do by a Party and provided that the Escrow Agent is indemnified to its reasonable satisfaction against the cost and expense of such defence;

 

	
(e)  

	
shall have no responsibility for, and shall have no duty to inquire into, the genuineness, validity or veracity of any direction, letter, instrument or document delivered to it, including, a Joint Direction, and shall be fully protected in acting in accordance with any written instructions given to it under this Agreement reasonably believed by it to have been signed by the proper Person, Party or Parties; and

 

	
(f)  

	
shall not be bound by any agreement or contract (except for the Purchase Agreement) between the Vendors and the Purchaser (whether or not the Escrow Agent has any knowledge thereof), and the duties of the Escrow Agent shall be limited to those expressly set out in this Agreement and the Purchase Agreement.

 

 

 

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Section 2.10 Indemnity in Favour of Escrow Agent

 

(1) Provision of Indemnity.  The Purchaser shall fully indemnify the Escrow Agent against any and all claims arising from the carrying out by the Escrow Agent of its obligations under this Agreement except for such claims that are directly attributable to the gross negligence, breach of fiduciary responsibilities or wilful misconduct of the Escrow Agent.

 

(2) Court Order.  Notwithstanding any other provision of this Agreement, the Escrow Agent shall comply with such notices and instructions as are provided for in this Agreement and any order, judgment or decree of any court of competent jurisdiction.  If any part or all of the Escrow Amount held in escrow by the Escrow Agent is at any time attached or seized under any court order or in case any judicial order, judgment or decree shall be made affecting this Agreement or any part hereof, then, in any event, the Escrow Agent is authorized to rely upon and comply with such order, judgment or decree.  In the case of such compliance, the Escrow Agent shall not be liable by reason thereof to any of the parties or to any other Person even if thereafter any such order, judgment or decree is reversed, modified, annulled, set aside or vacated.  The Escrow Agent is not bound to enquire into the authority of any Person signing any notices, instructions, orders, judgments or decrees in connection with this Agreement.

 

(3) Options of Escrow Agent.  Notwithstanding any term in this Agreement, in the event of any conflicting demands or claims with respect to the subject matter of this Agreement, the Escrow Agent may:

 

	
(a)  

	
discontinue all further acts until such conflicts are resolved;

 

	
(b)  

	
commence or defend any action or proceeding for the determination of such conflict; or

 

	
(c)  

	
exercise the Escrow Agent’s rights under Section 2.11.

 

(4) Effect of Deposit into Court.  If the Escrow Agent commences or defends any action to resolve any such conflict between the Vendor and the Purchaser, the Escrow Agent shall, upon deposit of all the Escrow Amount with a court of competent jurisdiction, be automatically released and discharged from any and all further obligations to perform any and all duties and obligations imposed upon the Escrow Agent under this Agreement with respect to the subject matter of such action.

 

(5) Fees.  Notwithstanding any term in this Agreement, all fees of the Escrow Agent for acting as escrow agent and custodian under this Agreement plus any costs or expenses incurred by it in connection with its handling of the Escrow Amount (except bank charges payable from time to time out of the Escrow Amount) shall be payable solely by the Purchaser and shall not be payable out of the Escrow Amount.

 

Section 2.11 Successors to Escrow Agent

 

The Escrow Agent may resign and be discharged from all further duties and obligations hereunder by giving to the Vendors and the Purchaser 10 Business Days notice in writing or such shorter notice as the Vendors and DPS may accept as sufficient.  On the Escrow Agent’s resignation, the Escrow Agent may appoint a new escrow agent acceptable to both DPS and the Vendors.  If the Escrow Agent fails to make such an appointment, the Vendors, the Purchaser and DPS shall by agreement (if necessary) appoint a new escrow agent.  Any new escrow agent appointed pursuant to this Section 2.11 shall be a law firm authorized to practice in the Province of Ontario or a corporation authorized to carry on the business of a trust company in the Province of Ontario.  On any new appointment, the new escrow agent shall be vested with the same powers, rights, duties and obligations as if it had been originally named as Escrow Agent under this Agreement, without any further assurance, conveyance, act or deed.

 

 

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ARTICLE 3 – GENERAL

 

Section 3.1 Further Assurances

 

Each Party shall from time to time promptly execute and deliver all further documents and take all further action necessary or appropriate to give effect to the provisions and intent of this Agreement.

 

Section 3.2 Notice

 

Unless otherwise specified, each Notice required or permitted by the terms hereof to be given to the Purchaser, DPS, the Vendors or the Escrow Agent must be given in writing and delivered personally or by courier, sent by prepaid registered mail or transmitted by fax to such Party as follows:

 

(a)           if to the Purchaser or DPS:

 

19655 Descartes

Foothill Ranch, California

USA

92610

 

Attention:                      Mr. Nicholas Toms, Chief Executive Officer

Fax number:                   949-215-9642

 

with a copy (which will not constitute notice) to:

 

McMillan LLP

Brookfield Place, 181 Bay Street

Suite 4400

Toronto, Ontario

M5J 2T3

 

 

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Attention:                      Mr. Wayne D. Gray

Fax number:                   416-865-7048

 

(b)           if to the Vendors:

 

3170 Harvester Road

Burlington, Ontario

L7H 3W8

 

Attention:                      Ms. Karen Dalicandro

Fax number:                   905-634-7271

 

with a copy (which will not constitute notice) to:

 

Gardiner Roberts LLP

Scotia Plaza, 40 King Street West

Suite 3100

Toronto, Ontario

M5H 3Y2

 

Attention:                      Mr. Robert J. Picard

Fax number:                  416-865-6636

 

(c)           if to the Escrow Agent:

 

McMillan LLP

Brookfield Place, 181 Bay Street

Suite 4400

Toronto, Ontario

M5J 2T3

 

Attention:                      Mr. Wayne D. Gray

Fax number:                   416-865-7048

 

 

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or to any other address, fax number or Person that the respective party hereto designates.  Any notice, if delivered personally or by courier, will be deemed to have been given when actually received, if transmitted by fax on a Business Day, will be deemed to have been given on the next Business Day.

 

Section 3.3 Entire Agreement

 

This Agreement and the Purchase Agreement constitute the entire agreement between the parties with respect to the subject matter and supersede all prior negotiations and understandings.  No provision may be amended or waived except in writing.

 

Section 3.4 Governing Law and Submission to Jurisdiction

 

This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein, and each of the parties irrevocably attorns to the exclusive jurisdiction of the courts of Ontario.

 

Section 3.5 Provisions Incorporated by Reference

 

The following provisions of the Purchase Agreement shall be incorporated by reference mutatis mutandis into this Agreement:

 

	
(a)  

	
Section [8.5 - Time];

 

	
(b)  

	
Section [8.8 - Amendment];

 

	
(c)  

	
Section [8.10 – Severability];

 

	
(d)  

	
Section [8.12 – Assignment and Enurement]; and

 

	
(e)  

	
Section [8.13 – Counterparts and Facsimile].

 

 

 

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The parties have executed this Agreement.

 

	 	
2314505 ONTARIO INC.

	 
	 	 	 
	 	
By:

	
/s/ Nicholas R. Toms

	 
	 	  	
Name:

	 
	 	  	
Title:

	 

	 	
DECISIONPOINT SYSTEMS, INC.

	 
	 	 	 
	 	
By:

	
/s/ Nicholas R. Toms

	 
	 	  	
Name:

	 
	 	  	
Title:

	 

 

	
[illegible]

	  	
/s/ Karen Dalicandro

	 
	
Signature of Witness

	  	
KAREN DALICANDRO

	 

	 	
2293046 ONTARIO INC.

	 
	 	 	 	 
	 	
By:

	
/s/ Karen Dalicandro

	 
	 	  	
Name:

	 
	 	  	
Title:

 

	 
	 	
By:

	
/s/ Donald Dalicandro

	 
	 	  	
Name: Donald Dalicandro

	 
	 	  	
Title:

	 

	 	
McMILLAN LLP

	 
	 	 	 	 
	 	
By:

	
/s/ Wayne D. Gray

	 
	 	  	
Wayne D. Gray, Partner

	 
	 	  	  	 

 

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Schedule 1.1(4)

 

JOINT DIRECTION

 

To:           McMILLAN LLP (the “Escrow Agent”)

 

	
Re:

	
Escrow Agreement dated June l, 2012 (the “Closing Date”) between 2314505 Ontario Inc. (the “Purchaser”), DecisionPoint Systems, Inc. (“DPS”), Karen Dalicandro (“Karen”), 2293046 Ontario Inc. (“Karenco” and, together with Karen, the “Vendors”) and the Escrow Agent, and the Share Purchase Agreement dated the Closing Date between the Purchaser, DPS, the Vendors and Donald Dalicandro (collectively, the “Agreements”)

 

In accordance with the terms of the Agreements, the Vendors, the Purchaser and DPS hereby irrevocably authorize and direct the Escrow Agent to pay from the “Escrow Amount” (as that term is defined in the Escrow Agreement) CAD$___________ to the Purchaser and the ____________ to the Vendors and this shall be the Escrow Agent’s good and sufficient authority for doing so.  This direction may be executed and delivered in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument.

 

DATED                                                      ,.                      .

 

	 	
APEX SYSTEMS INTEGRATORS INC.

	 
	 	 	 	 
	 	
By:

	  	 
	 	  	
Name:

	 
	 	  	
Title:

	 

 

	 	
DECISIONPOINT SYSTEMS, INC.

	 
	 	 	 
	 	
By:

	  	 
	 	  	
Name:

	 
	 	  	
Title:

	 

	  	  	  	 
	
Signature of Witness

	  	
KAREN DALICANDRO

	 

	 	
2293046 ONTARIO INC.

	 
	 	 	 	 
	 	
By:

	  	 
	 	  	
Name:

	 
	 	  	
Title:

	 

 

 

 

 

10ex106.htm

Exhibit 10.6

 

NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

Made as of June 4, 2012

 

Between

 

2314505 ONTARIO INC.

 

(the “Purchaser”)

 

and

 

KAREN DALICANDRO

 

(“Karen”)

 

 

and

 

DONALD DALICANDRO

 

(“Don”)

 

 

 

 

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TABLE OF CONTENTS

 

	RECITALS	1
	 	 
	ARTICLE 1 – DEFINITIONS	2
	 	Section 1.1 Definitions	2
	 	Section 1.2 Defined Terms in Purchase Agreement	3
	 	Section 1.3 Additional Rules of Interpretation	 3
	 	 	 
	ARTICLE 2 – CONFIDENTIALITY	4
	 	Section 2.1 Acknowledgement	4
	 	Section 2.2 Don's Obligation Not to Disclose	4
	 	
Section 2.3 Karen's Obligation Not to Disclose

	4
	 	Section 2.4 Obligation to Return Property	4
	 	 	 
	ARTICLE 3 – NON-COMPETITION	5
	 	Section 3.1 Non-Competition by Don	5
	 	Section 3.2 Non-Competition by Karen	5
	 	 	 
	ARTICLE 4 – NON-SOLICITATION 	6
	 	Section 4.1 Non-Solicitation of Employees	6
	 	 	 
	ARTICLE 5 – GENERAL 	6
	 	Section 5.1 Restrictions Reasonable	6
	 	Section 5.2 Termination of Agreement	6
	 	Section 5.3 Equitable Remedies	7
	 	Section 5.4 Survival	7
	 	Section 5.5 Severability	7
	 	Section 5.6 Representation by Counsel	7
	 	Section 5.7 Governing Law and Forum 	7
	 	Section 5.8 Assignment and Enurement	7
	 	Section 5.9 General	7
	 	Section 5.10 Entire Agreement 	7

 

 

 

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NON-COMPETITION AND NON-SOLICITATION AGREEMENT

 

This Agreement (the “Agreement”) dated as of  June 4, 2012 (the “Closing Date”) between:

 

2314505 ONTARIO INC., a corporation formed under the laws of the Province of Ontario

 

(the “Purchaser”)

 

- and -

 

KAREN DALICANDRO, an individual residing in Burlington, Ontario

 

(“Karen”)

 

- and -

 

DONALD DALICANDRO, an individual residing in Burlington, Ontario

 

(“Don”)

 

RECITALS

 

A. By a share purchase agreement dated the date hereof (the “Purchase Agreement”) by and among Don, the Purchaser, DPS, Karen and 2293046 Ontario Inc. (“Karenco” and, together with Karen, the “Vendors”), the Vendors agreed to sell, and the Purchaser agreed to purchase, all shares held by the Vendors in the capital of Apex Systems Integrators Inc. (the “Corporation”).

 

B. Don is Karen’s husband, is the president of the Corporation and will receive a significant indirect financial benefit from the transactions contemplated under the Purchase Agreement.

 

C. In connection with the sale of the Corporation to the Purchaser, Don wishes to be employed by the Corporation under his Employment Agreement following the closing of the transactions contemplated in the Purchase Agreement and the Corporation wishes to employ Don under the Employment Agreement.

 

D. Karen’s employment with the Corporation was terminated, effective December 31, 2011.

 

E. Karen and Don each have had access to confidential information customer lists and other proprietary assets of the Corporation, the use of which would diminish the value to the Purchaser of the Purchased Shares.

 

F. The Purchaser would not complete the Purchase contemplated by the Purchase Agreement unless each Principal executes and delivers this Agreement.

 

FOR VALUE RECEIVED, the Parties agree as follows:

 

 

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ARTICLE 1 – DEFINITIONS

 

Section 1.1 Definitions

 

In this Agreement:

 

(1) “Agreement” has the meaning given to it in the Preamble.

 

(2) “Business” means the business of licensing, selling and installing wireless mobile workforce software solutions (which software applications are limited to warehouse management, merchandizing, sales and delivery, field service and logistics and transportation) in Canada and the United States as conducted by the Corporation on the Closing Date.

 

(3) “Closing Date” has the meaning given to it in the Preamble.

 

(4) “Confidential Information” means collectively all proprietary information, information treated as confidential by the Corporation, and information not generally known to the public, concerning the Corporation, the Business and its Customers, including writings, equipment, processes, sales literature and data, control systems, operations, drawings, notes, manuscripts, consulting methods and materials, reports, manuals, invention records, surveys and survey forms, financial data and information, business plans, customer lists, contact persons, the identity of or other data about Customers, prices, pricing lists and policies, inventory lists, financing requirements and services, wages, arrangements with Suppliers and Customers or product information programs, systems, software, source code, object code, algorithms, formats, formulas, data bases, electronically stored or compiled data, plans, projects, designs, methodologies, procedures, technology, concepts and techniques, ideas, advances over general common knowledge, copyrights, trade secrets or other materials embodying trade secrets, Customer or product information or technical, managerial or business information of the Corporation.  Confidential Information does not include general technical skills or general experience gained by me during my contact with the Corporation.

 

(5) “Corporation” has the meaning given to it in Recital A and includes the corporation resulting from any amalgamation between the Corporation and the Purchaser.

 

(6) “Customer” means all Persons who, during the 6-month period before the commencement of the applicable Restrictive Period, were invoiced by the Corporation and in respect of Don’s Restrictive Period, and any customers of DPS invoiced by DPS in the twenty-four month period prior to the commencement of Don’s Restrictive Period.

 

(7) “Don’s Restrictive Period” has the meaning given to it in Section 3.1.

 

(8) “DPS” means DecisionPoint Systems, Inc. and its successors and assigns.

 

(9) “Event of Default” means any one or more of the following:

 

	
(a)  

	
a failure by the Purchaser to:

 

	
(i)  

	
pay that part of the 2013 EBITDA Basic Earn-Out Amount, if any, owing to the Vendors under Section 2.4(2)(a) of the Purchase Agreement;

 

	
(ii)  

	
deliver that part of the consideration in respect of the 2013 EBITDA Basic Earn-Out Amount, if any, owing to the Vendors under Section 2.4(2)(b) of the Purchase Agreement or the 2013 EBITDA Additional Earn-Out Amount, if any, owing to the Vendors under Section 2.5 of the Purchase Agreement; or

 

	
(iii)  

	
pay to the Vendors any principal or interest due under the Convertible Note,

 

 

 

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and, in each such case, such failure continues for a period of 10 Business Days after the Principals deliver a written notice of default to the Purchaser and DPS;

 

	
(b)  

	
failure by the Corporation to pay to Don any salary due to Don under Section 3.1 of the Employment Agreement or any Bonus Payments due to Don under Article 4 of the Employment Agreement, and, in each such case, such failure continues for a period of 10 Business Days after Don delivers a written notice of default to the Corporation and DPS; and

 

	
(c)  

	
Don has terminated the Employment Agreement and his employment thereunder pursuant to Section 12.1(1)(b) of the Employment Agreement, and Don has given the Corporation and DPS not less than 10 Business Days written notice to cure the cause or Deemed Cause specified in such notice;

 

	
(d)  

	
the Corporation has terminated the Employment Agreement and Don’s employment thereunder pursuant to Section 12.1(2)(b) thereof and the Arbitrator has issued an arbitral award under Article 15 of the Employment Agreement determining that: (i) the Corporation terminated the Employment Agreement and Don’s employment thereunder pursuant to Section 12.1(2)(b) thereof; and (ii) the Corporation did not have cause to terminate the Employment Agreement and Don’s employment thereunder pursuant to Section 12.1(2)(b) thereof.

 

(10) “Karen’s Restrictive Period” has the meaning given to it in Section 3.1.

 

(11) “Person” is to be broadly interpreted and includes an individual, a partnership, a corporation, a trust, a joint venture, any Governmental Authority or any incorporated or unincorporated entity or association of any nature and the executors, administrators or other legal representatives of an individual in such capacity.

 

(12) “Principals” means, collectively, Karen or Don, and “Principal” means any one of them.

 

(13) “Purchase Agreement” has the meaning given to it in Recital A.

 

(14) “Restrictive Period” means Don’s Restrictive Period or Karen’s Restrictive Period, as the case may be.

 

(15) “Supplier” means all Persons who, during the 6-month period before the commencement of the applicable Restrictive Period, invoiced the Corporation.

 

(16) “Vendors” means, collectively, Karen and Karenco, and “Vendor” means any one of them

 

Section 1.2 Defined Terms in Purchase Agreement

 

Any other capitalized terms used in this Agreement but not defined herein shall have the meanings given to them in the Purchase Agreement.

 

Section 1.3 Additional Rules of Interpretation

 

(1) Gender and Number.  In this Agreement, unless the context requires otherwise, words in one gender include all genders and words in the singular include the plural and vice versa.

 

(2) Headings and Table of Contents.  The inclusion in this Agreement of headings of Articles and Sections and the provision of a table of contents are for convenience of reference only and are not intended to be full or precise descriptions of the text to which they refer.

 

(3) Section References.  Unless the context requires otherwise, references in this Agreement to Sections or Schedules are to Sections or Schedules of this Agreement.

 

(4) Words of Inclusion.  Wherever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation” and the words following “include”, “includes” or “including” shall not be considered to set forth an exhaustive list.

 

(5) References to this Agreement.  The words “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions shall be construed as referring to this Agreement in its entirety and not to any particular Section or portion of it.

 

(6) Statute References.  Unless otherwise indicated, all references in this Agreement to any statute include the regulations thereunder, in each case as amended, re-enacted, consolidated or replaced from time to time and in the case of any such amendment, re-enactment, consolidation or replacement, reference herein to a particular provision shall be read as referring to such amended, re-enacted, consolidated or replaced provision and also include, unless the context otherwise requires, all applicable guidelines, bulletins or policies made in connection therewith and which are legally binding.

 

(7) Document References.  All references herein to any agreement (including this Agreement), document or instrument mean such agreement, document or instrument as amended, supplemented, modified, varied, restated or replaced from time to time in accordance with the terms thereof and, unless otherwise specified therein, includes all schedules and exhibits attached thereto.

 

(8) Writing.  References to “in writing”, “written” and similar expressions include material that is printed, handwritten, typewritten, faxed, emailed, or otherwise capable of being visually reproduced at the point of reception.

 

 

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ARTICLE 2 – CONFIDENTIALITY

 

Section 2.1 Acknowledgement

 

Each Principal acknowledges and agrees that he or she is now and will become aware of Confidential Information relating to the Business during his or her past employment with the Corporation and, in the case of Don, his continued employment with the Corporation, and that such Confidential Information is a valuable, special and unique asset of the Corporation, which has commercial and competitive value that can be used to the detriment of the Purchaser, if disclosed.

 

Section 2.2 Don’s Obligation Not to Disclose

 

Except with the prior written consent of the Purchaser, Don agrees during Don’s Restrictive Period:

 

	
(a)  

	
to hold in strict confidence and not use, discuss or disclose, directly or indirectly, to any other person or entity, any Confidential Information, save and except in the proper discharge of his employment duties for the Corporation (while taking appropriate steps to guard the confidentiality of such information) or as may be specifically required by law; and

 

	
(b)  

	
to not remove any articles or copies, facsimiles, reproductions or originals of any documents or computer software containing Confidential Information from the premises of the Corporation, save and except in the proper discharge of his employment duties for the Corporation (while taking appropriate steps to guard the confidentiality of such information).

 

Section 2.3 Karen’s Obligation Not to Disclose

 

Except with the prior written consent of the Purchaser, Karen agrees during Karen’s Restrictive Period, to hold in strict confidence and not use, discuss or disclose, directly or indirectly, to any other person or entity, any Confidential Information, save and except as may be specifically required by law.

 

Section 2.4 Obligation to Return Property

 

Karen agrees that, upon the Closing Date, she will, (a) deliver all Confidential Information to the Corporation, (b) not take with her or retain without advance written authorization of DPS any documents, files or other property of the Corporation, and (c) deliver to the Corporation any such documents, files or property in her possession or custody.  In connection with this Agreement, Karen recognizes that all documents, files and property that she has received from the Corporation, including customer or subscriber lists, handbooks, memoranda, policy manuals, product specifications, and other materials, are for the exclusive use of the Corporation and the employees thereof who are properly discharging their responsibilities on behalf of the Corporation, and that she has no claim or right to the continued use, possession or custody of such documents, files or property following the termination of her employment relationship with the Corporation.

 

 

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ARTICLE 3 – NON-COMPETITION

 

Section 3.1 Non-Competition by Don

 

Don undertakes and agrees that, for the period until the later of the date that is three (3) years from the Closing Date and the date that is two (2) years after the end of Don’s employment with the Corporation pursuant to the Employment Agreement (“Don’s Restrictive Period”), he will not, either individually or in partnership or otherwise in connection with any Person, directly or indirectly:

 

	
(a)  

	
operate, perform, or carry on business;

 

	
(b)  

	
render advice to, be employed by, provide services to or for, or permit his name or any part thereof to be used or employed by or associated with, or otherwise be engaged in or concerned with a business; or

 

	
(c)  

	
lend money to, guarantee the debts or obligations of, have any interest in or become interested in any capacity in, any Person connected with or interested in any business,

 

which performs, sells or otherwise provides products or services, similar to or the same as, or which develops, creates or offers products and services anywhere in Canada or the United States in competition with the Business of the Corporation without the prior written consent of DPS, acting reasonably.  For these purposes, ownership of securities of DPS or any other company whose securities are publicly traded under a recognized securities regime not in excess of 5% of any class of such securities shall not be considered to be a breach of this Section 3.1.  Any activities performed by Don in good faith in fulfillment of his duties to the Corporation or DPS or the directorships permitted under the Employment Agreement shall not be considered a breach of the foregoing covenants.

 

Section 3.2 Non-Competition by Karen

 

Karen undertakes and agrees that, for the period until the date that is three (3) years from the Closing Date (“Karen’s Restrictive Period”), she will not, either individually or in partnership or otherwise in connection with any Person, directly or indirectly:

 

	
(a)  

	
operate, perform, or carry on business;

 

	
(b)  

	
render advice to, be employed by, provide services to or for, or permit her name or any part thereof to be used or employed by or associated with, or otherwise be engaged in or concerned with a business; or

 

	
(c)  

	
lend money to, guarantee the debts or obligations of, have any interest in or become interested in any capacity in, any Person connected with or interested in any business,

 

which performs, sells or otherwise provides products or services, similar to or the same as, or which develops, creates or offers products and services anywhere in Canada or the United States in competition with the Business of the Corporation without the prior written consent of DPS, acting reasonably.  For these purposes, ownership of securities of DPS or any other company whose securities are publicly traded under a recognized securities regime not in excess of 5% of any class of such securities shall not be considered to be a breach of this Section 3.2.

 

 

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ARTICLE 4 – NON-SOLICITATION

 

Section 4.1 Non-Solicitation and No Hire of Employees

 

Each Principal agrees that, during his or her Restrictive Period, as applicable, that he or she shall not directly or indirectly, anywhere in Canada or the United States:

 

	
(a)  

	
induce, advise or encourage any employee, agent, consultant or independent contractor of the Corporation to terminate his or her relationship with the Corporation; or

 

	
(b)  

	
hire or retain, attempt to hire or retain or cause the hiring or retaining of, any such employee, agent, consultant or independent contractor, with another Person, except with the specific, advance written consent of DPS.

 

ARTICLE 5  – GENERAL

 

Section 5.1 Restrictions Reasonable

 

Each Principal acknowledges and agrees that the type and periods of restrictions imposed in this Agreement are fair and reasonable, and that such restrictions are intended solely to protect the legitimate interests of the Purchaser and the Corporation, rather than to prevent him from earning a livelihood.

 

Section 5.2 Termination of Agreement

 

(1) Where an Event of Default occurs, then the obligations of the Principals under Article 2 of this Agreement shall be terminated and be of no further force or effect.

 

(2) For greater certainty:

 

	
(a)  

	
the Principals shall not deliver a written notice of default in respect of:

 

	
(i)  

	
a failure to pay the 2013 EBITBA Basic Earn-Out Amount until the expiry of not less than 21 days after the final determination of the 2013 EBITBA Basic Earn-Out Amount and the 2013 EBITBA Additional Earn-Out Amount pursuant to Section 2.6(3) of the Purchase Agreement; and

 

	
(ii)  

	
a failure to deliver that part of the consideration in respect of the 2013 EBITBA Basic Earn-Out Amount under Section 2.4(2)(b) of the Purchase Agreement and 2013 EBITBA Additional Earn-Out Amount under Section 2.5 of the Purchase Agreement until the expiry of not less than 30 days after the final determination of the 2013 EBITBA Basic Earn-Out Amount and the 2013 EBITBA Additional Earn-Out Amount pursuant to Section 2.6(3) of the Purchase Agreement; and

 

	
  

	
(b)   

	
Don shall not deliver a written notice of default in respect of a failure to pay the 2013 Bonus Amount, 2014 Bonus Amount and 2015 Bonus Amount until the expiry of not less than 10 Business Days after the final determination of the applicable Bonus Amount pursuant to Section 4.4 of the Employment Agreement.

 

 

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Section 5.3 Equitable Remedies

 

Each Principal acknowledges and agrees that a breach by him of any of the provisions hereof would cause substantial and irreparable harm to the Purchaser and the Corporation, which could not be adequately compensated for by damages.

 

Section 5.4 Survival

 

Notwithstanding the termination of this Agreement for any reason, the aforementioned restrictive covenants and restrictions contained in this Agreement shall survive and continue in force to the extent specifically set out in this Agreement.

 

Section 5.5 Severability

 

Whenever possible, each provision and term of this Agreement will be interpreted in a manner to be effective and valid but if any provision or term of this Agreement is held to be prohibited or invalid, then such provision or term will be ineffective only to the extent of such prohibition or invalidity, without invalidating or affecting in any manner whatsoever the remainder of such provision or term or the remaining provisions or terms of this Agreement.  If any of the covenants set forth this Agreement are held to be unreasonable, arbitrary or against public policy, such covenants will be considered divisible with respect to scope, time and geographic area, and in such lesser scope, time and geographic area, will be effective, binding and enforceable against each Principal.  Specifically, and without limiting the generality of the foregoing, to the extent that any provision contained in Sections 3.1, 3.2 or 4.1 is held by a court of competent jurisdiction to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining provisions, or part thereof, and such remaining provisions, or part thereof, shall remain enforceable and binding.

 

Section 5.6 Representation by Counsel

 

Each Principal hereby states that he has read this Agreement in its entirety, that he has been given an opportunity to consider the Agreement and seek legal counsel and advice and that he enters into this Agreement voluntarily and intending to be legally bound.

 

Section 5.7 Governing Law and Forum

 

This Agreement (and any claim or controversy arising out of or relating to this Agreement) is governed by, the laws of the Province of Ontario and the federal laws of Canada applicable therein, and each of the Parties irrevocably attorns to the exclusive jurisdiction of the courts of Ontario.

 

Section 5.8 Assignment and Enurement

 

Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Principal without the prior written consent of the board of directors of DPS, and any purported assignment or other transfer without such consent shall be void and unenforceable.  This Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties to this Agreement and their respective successors and assigns.  No such assignment shall release the assignor from any of its obligations hereunder.

 

Section 5.9 General

 

Sections 8.4, 8.5, 8.8, 8.9 and 8.13 of the Purchase Agreement are incorporated by reference into this Agreement as if set out in full herein.

 

Section 5.10 Entire Agreement

 

This Agreement constitutes the entire agreement between the Parties with respect to the subject matter and supersedes all prior agreements, negotiations, discussions, undertakings, representations, warranties and understandings, whether written or oral.

 

 

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The parties have executed this Agreement.

 

	 	
2314505 ONTARIO INC.

	 
	 	 	 	 
	 	
By:

	
/s/ Nicholas R. Toms

	 
	 	  	
Name:

	 
	 	  	
Title:

	 

	
[illegible]

	  	
/s/ Karen Dalicandro

	 
	
Signature of Witness

	  	
KAREN DALICANDRO

	 

 

	
[illegible]

	  	
/s/ Donald Dalicandro

	 
	
Signature of Witness

	  	
DONALD DALICANDRO

	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

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