ACQUISITION AGREEMENT
This Agreement is entered into by, between and among systems Assurance
Corporation, a corporation organized under the laws of the State of Delaware
(hereinafter the "Purchaser"), Xxxx X. Xxxxxx, the President of the Purchaser
entering into this Agreement in his personal capacity, and the equity owners
("the Shareholders") of Digital Commerce Inc., a Nevis corporation (hereinafter
"the Company").
WITNESSETH:
WHEREAS, Purchaser wishes to acquire, and Shareholders are willing to sell,
all of the outstanding equity ownership of the Company in exchange for common
stock of the Purchaser;
NOW, THEREFORE, in consideration of the mutual terms and covenants set
forth herein, Purchaser and Shareholders approve and adopt this Acquisition
Agreement and mutually covenant and agree with each other as follows:
ARTICLE I
Shares to be Transferred and Shares to be Issued
1.1 a. On the closing date the Shareholders shall transfer to Purchaser
certificates representing the equity of the Company described in Schedule "A",
attached hereto and incorporated herein, which in the aggregate shall represent
all of the issued and outstanding shares of the Company (the "Shares"). Such
certificates shall be duly endorsed to the Purchaser by Shareholders or
accompanied by duly executed certificate powers transferring to the Purchaser
with signatures guaranteed. Alternatively, the Shareholders may assign their
rights to the Shares if the Shares have not been physically issued in the form
of certificates.
b. In exchange for the transfer of the equity of the Company pursuant to
sub-section 101a. hereof, Purchaser shall on the closing date and
contemporaneously with such transfer of the equity of the Company to it by the
Shareholders, or rights thereto, issue and deliver to the Shareholders: (i)
5,000,000 of Common shares of the Purchaser in accordance with Schedule "B"
hereof; and (ii) 500,000 convertible Preference shares in accordance with
Schedule "C" hereof.
1.2 The parties intend that this acquisition and exchange of equity is to
be an exchange/transaction pursuant to Section 368(a)(1)(b) of the Internal
Revenue Code of the United States.
ARTICLE II
Representations and Warranties of Shareholders
2.1 Ownership of Equity.
Shareholders are the record owners and holders of the number of fully paid
and non-assessable Shares of the Company listed in Schedule "A" hereto, as of
the date hereof and will continue to own such Shares of the Company until the
delivery thereof to the Purchaser on the closing date and all such Shares are or
will be on the closing date owned free and clear of all liens, encumbrances,
charges and assessments of every nature and subject to no restrictions with
respect to transferability. The Shareholders will have full power and authority
to assign and transfer their Shares of the Company in accordance with the terms
hereof.
ARTICLE III
Representations and Warranties of the Company and its Shareholders
3.1 Capitalization.
Except for this Agreement, there are no outstanding options, contracts,
calls, commitments, agreements or demands of any character relating to the
Shares of the Company owned by its Shareholders.
3.2 Organization and Authority.
a. The Company currently is a corporation duly organized, validly existing
and in good standing under the laws of the Island of Nevis, with all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted, is duly qualified and in good
standing in every jurisdiction in which the property owned, leased or operated
by it, or the nature of the business conducted by it, makes such qualification
necessary to avoid material liability or material interference in its business
operations, and is not subject to any agreement, commitment or understanding
which restricts or may restrict the conduct of its business in any jurisdiction
or location.
b. The outstanding Shares of the Company are legally and validly issued,
fully paid and non-assessable.
c. The Company does not own five percent (5%) or more of the outstanding
stock of any corporation except as set out in the disclosure statement completed
by the Company and attached as Schedule "D" (the "Company Disclosure
Statement.").
d. The minute book of the Company made available to Purchaser contains
complete and accurate records of all meetings and other corporate actions of the
Shareholders and the directors (and any committee thereof) of the Company.
e. The Company Disclosure Statement contains a list of the directors,
officers, and Shareholders of Company and copies of the Certificates of
Incorporation and Bylaws currently in effect of the Company.
f. The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not, subject to the
approval and adoption by the Shareholders of the Company, violate any provision
of the certificate/articles of incorporation or bylaws of the Company, or any
provisions thereof, or result in the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, court order, arbitration award,
judgment or decree to which the Company is a party, or by which it is bound, and
will not violate any other restriction of any kind or character to which it is
subject.
g. The authorized capital of the Company is ten (10) shares of stock, of
which ten (10) share shall be outstanding at the time of the acquisition.
3.3 Financials.
a. Financial statements (hereafter "financial statements") of the Company
will be delivered by Company to the Purchaser within thirty days of this
Agreement. Said financial statements are true and correct in all material
respects and present an accurate and complete disclosure of the financial
condition of the Company as of its date and for the periods covered.
b. All accounts receivable, if any, (net of reserves for doubtful accounts)
of the Company shown on the books of account on the statement date and as
incurred in the normal course of business since that date, are collectible in
the normal course of business.
c. The Company has good and marketable title to all of its assets, business
and properties including, without limitation, all such properties reflected in
the balance sheet as of the statement date except as disposed of in the normal
course of business, free and clear of any mortgage, lien, pledge, charge, claim
or encumbrance, except as shown on said balance sheet as of the statement date
and, in the case of real properties except for rights-of-way and easements which
do not adversely affect the use of such property.
d. All currently used property and assets of the Company, or in which it
has an interest, or which it has in possession, are in good operating condition
and repair subject only to ordinary wear and tear.
3.4 Changes Since the Statement Date. Since the financial statement date,
except as disclosed in the Company disclosure Statement, there will not have
been any material negative change in the financial position or assets of the
Company.
3.5 Liabilities. There are no material liabilities of the Company, whether
accrued, absolute, contingent or otherwise, which arose or relate to any
transaction of the Company, its agents or servants occurring prior to the
statement date, which are not disclosed by or reflected in said financial
statements, except as disclosed in the Company Disclosure Statement. There are
no such liabilities of the Company which have arisen or relate to any
transaction of the Company, its agents or servants, occurring since the
statement date, other than normal liabilities incurred in the normal conduct of
the business of the Company, and none of which have a material adverse effect on
the business or financial condition of the Company, except as disclosed in the
Company Disclosure Statement. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may hereafter give rise to liabilities, except in the normal
course of business of the Company, except as disclosed in the Company Disclosure
Statement.
3.6 Taxes. All federal, provincial, county and local income, ad valorem,
excise, profits, franchise, occupation, property, sales, use gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by the Company, and there are no unpaid taxes which are,
or could become a lien on the properties and assets of the Company, except as
provided for in the financial statements of their date, or have been incurred in
the normal course of business of the Company since that date. All tax returns of
any kind required to be filed have been filed and the taxes paid or accrued.
3.7 Accuracy of All Statements Made by The Company. No representation or
warranty by the Company and Shareholders in this Agreement, nor any statement,
certificate, schedule or exhibit hereto furnished or to be furnished by or on
behalf of the Shareholders pursuant to this Agreement, nor any document or
certificate delivered to Purchaser pursuant to this Agreement or in connection
with actions contemplated hereby, contains or shall contain any untrue statement
of material fact or omits or shall omit a material fact necessary to make the
statement contained therein not misleading.
ARTICLE IV
Representations and Warranties of Purchaser
The Purchaser and Xxxx X. Xxxxxx, acting in his personal capacity,
represent and warrant as follows:
4.1 Organization and Authority.
The Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full power and authority
to enter into and perform the transactions contemplated by this Agreement, and
with all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted, is duly
qualified and in good standing in every jurisdiction in which the property
owned, leased or operated by it, or the nature of the business conducted by it,
makes such qualification necessary to avoid material liability or material
interference in its business operations, and is not subject to any agreement,
commitment or understanding which restricts or may restrict the conduct of its
business in any jurisdiction or location.
a. The Purchaser is currently not operating any business.
b. The Purchaser does not own five percent (5%) or more of the outstanding
stock of any corporation.
c. The minute book of the Purchaser made available to the Company and
Shareholders contains complete and accurate records of all meetings and other
corporate actions of the shareholders and the Board of Directors (and any
committee thereof) of the Purchaser.
d. The disclosure statement prepared by the Purchaser and attached as
Schedule "E" (the "Purchaser's Disclosure Statement") contains a list of the
officers, directors and shareholders of the Purchaser and copies of the articles
of incorporation and by-laws currently in effect of the Purchaser.
e. The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not, violate any
provision of the certificate/articles of incorporation or bylaws of the
Purchaser, or result in a default or the acceleration of any obligation under,
any mortgage, lien, lease, agreement, instrument, court order, arbitration
award, judgment or decree to which the Purchaser is a party, or by which it is
bound, and will not violate any other restriction of any kind or character to
which it is subject.
f. The authorized capital stock of the Purchaser consists of: (i) thirty
million (30,000,000) Common shares, each with a par value of $.001, of which ***
(***) shares of such stock will be issued and outstanding at the time of closing
(exclusive of the shares issued pursuant to the acquisition as set out in
Schedule "B"); and (ii) *** (***) Preferred shares, $.001 par value, of which
500,000 (five hundred thousand) shares of class A stock will be issued and
outstanding at the time of closing (inclusive of the shares issued pursuant to
the acquisition as set out in Schedule "C"). As at the time of closing, all such
issued share capital will have been duly and validly allotted and issued and
will be outstanding as fully paid and non-assessable shares in the capital of
the Purchaser. Except for this Agreement, no options, warrants or other rights
to purchase shares or other securities of the Purchaser have been authorized or
agreed to be issued or are outstanding.
g. There is no suit, action, litigation, arbitration proceeding or
governmental proceeding, including appeals and applications for review, in
progress, pending or threatened against or relating to or affecting the
Purchaser or affecting its business which might materially and adversely affect
the properties, business, future prospects or financial condition of the
Purchaser, and there is not presently outstanding against the Purchaser any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator.
h. Except to the extent reflected in or reserved against in the Purchaser's
financial statements attached to the Purchaser's Disclosure Statement, such
financial statements comprising (i) financial statements dated October 31, 1998
and audited by certified public accountants, and (ii) unaudited financial
statements for the period beginning November 1, 1998 and ending February 29,
1999 and examined and certified by certified public accountants (the
"Purchaser's Financial Statements"), the Purchaser is not liable for any
federal, state, provincial or municipal or local taxes, assessments or other
imposts in respect of its income, business or property or for the payment of any
tax installment due in respect of its current taxation year and, except as
aforesaid, no such taxes, assessments, imposts or penalties are required to be
reserved against. The Purchaser is not, except in respect of the current
taxation year, required to file or in default in filing any tax returns or
reports, including, without limitation, any returns or reports covering any of
the aforementioned taxes. Federal income tax assessments have been issued to the
Purchaser covering all past periods through the fiscal year ended October 31,
1998 (and such assessments, if any amounts were owing in respect thereof, have
been paid) and only the fiscal years subsequent to such year remain open for
reassessment of additional taxes.
i. Except as set out in the Purchaser's Disclosure Statement, the Purchaser
is not a party to or bound by any presently existing oral or written contract or
commitment which obligates the Purchaser to make expenditures or exposes the
Purchaser to liabilities in excess of $10,000 or which imposes obligations on
the Purchaser for a period of 30 days or more, including without limitation,
liens, charges or encumbrances, or equipment or other personal property leases
and agreements. The contracts and agreements listed in the Purchaser's
Disclosure Statement are all in full force and effect unamended and no material
default exists in respect thereof on the part of any of the parties thereto.
Such contracts and agreements include all the presently outstanding material
contracts entered into by the Purchaser in the course of carrying on its
business and all quotations, orders or tenders for such contracts which remain
open for acceptance. The Purchaser has the capacity, including the necessary
personnel, equipment and supplies, to perform all its obligations thereunder.
j. There are no written contracts of employment entered into with any
employees employed by the Purchaser.
k. The Purchaser has not given or agreed to give, and is not a party or
bound by, any guarantee of indebtedness or other obligations of third parties.
l. Liabilities. There are no material liabilities of the Purchaser, whether
accrued, absolute, contingent or otherwise, which arose or relate to any
transaction of the Purchaser, its agents or servants occurring prior to the
Purchaser Financial Statement date, which are not disclosed by or reflected in
said financial statements, except as disclosed in the Purchaser" Disclosure
Statement. There are no such liabilities of the Purchaser which have arisen or
relate to any transaction of the Purchaser, its agents or servants, occurring
since the last date covered by the Purchaser" Financial Statements, other than
normal liabilities incurred in the normal conduct of the business of the
Purchaser, and none of which have a material adverse effect on the business or
financial condition of the Purchaser, except as disclosed in the Purchaser's
Disclosure Statement. As of the date hereof, there are no known circumstances,
conditions, happenings, events or arrangements, contractual or otherwise, which
may hereafter give rise to liabilities, except in the normal course of business
of the Purchaser, except as disclosed in the Purchaser's Disclosure Statement.
4.02 Performance of This Agreement. The execution and performance of this
Agreement and the issuance of stock contemplated hereby have been duly and
properly authorized by the board of directors of Purchaser.
4.03 Financials.
a. True copies of the Purchaser's Financial Statements as described in
subsection 4.01(h) are attached to the Purchaser's Disclosure Statement. The
Purchaser's Financial Statements are true and correct in all material respects
and present an accurate and complete disclosure of the financial condition and
earnings of the Purchaser for the periods covered, in accordance with generally
accepted accounting principles applied on a consistent basis.
b. All accounts receivable, if any, (net of reserves for doubtful accounts)
of the Purchaser shown on the Purchaser's Financial Statements, and as incurred
in the normal course of business since that date, are collectible in the normal
course of business.
c. The Purchaser has good and marketable title to all of its assets,
business and properties including, without limitation, all such properties
reflected in the Purchaser's Financial Statements, except as disposed of in the
normal course of business, free and clear of any mortgage, lien, pledge, charge,
claim or encumbrance, except as shown in the Purchaser's Financial Statements,
and, in the case of real properties, except for rights-of-way and easements
which do not adversely affect the use of such property.
4.04 Absence of Change. Since the latest date covered by the Purchaser's
Financial Statements there has not been:
a. any change in the condition or operations of the business, assets or
financial condition of the Purchaser other than changes in the ordinary and
normal course of business, none of which has been materially adverse; or
b. any damage, destruction or loss, labour trouble or other event,
development or condition of any character (whether or not covered by insurance)
materially and adversely affecting the business, assets, properties or future
prospects of the Purchaser.
4.05 Absence of Unusual Transactions. Since the latest date covered by the
Purchaser's Financial Statements the Purchaser has not:
a. transferred, assigned, sold or otherwise disposed of any of the assets
shown in the Purchaser's Disclosure Statement and except unsecured current
obligations and liabilities incurred in the ordinary and normal course of
business;
b. incurred or assumed any obligation or liability (fixed or contingent),
except those listed in the Purchaser's Disclosure Statement and except unsecured
current obligations and liabilities incurred in the ordinary and normal course
of business;
c. issued or sold any shares in its capital stock or any warrants, bonds,
debentures or other corporate securities of the Purchaser or issued, granted or
delivered any right, option or other commitment for the issuance of any such or
other securities (other than as contained in this Agreement);
d. discharged or satisfied any lien or encumbrance, or paid any obligation
or liability (fixed or contingent) other than current liabilities included in
the Purchaser's Financial Statements, current liabilities incurred since the
date thereof in the ordinary and normal course of business and liabilities
required to be satisfied hereunder prior to the Closing Time;
e. declared or made any payment of any dividend or other distribution in
respect of its capital or purchased or redeemed any of the shares thereof or
split; consolidated or reclassified any such shares in its capital, except as
set out in the Purchaser's Disclosure Statement;
f. suffered an operating loss or any material extraordinary loss, or waived
any rights of substantial value, or entered into any material commitment or
transaction not in the ordinary and usual course of business;
g. amended or changed or taken any action to amend or change its charter or
by-laws, except as set out in the Purchaser's Disclosure Statement;
h. made any general wage or salary increases in respect of personnel which
it employs;
i. mortgaged, pledged, subjected to lien, granted a security interest in or
otherwise encumbered any of its assets or property, whether tangible or
intangible; or
j. authorized or agreed or otherwise have been committed to do any of the
foregoing.
4.06 Accuracy of All Statements Made by Purchaser. No representation or
warranty by the Purchaser in this Agreement, nor any statement, certificate,
schedule or exhibit hereto furnished or to be furnished by the Purchaser
pursuant to this Agreement, nor any document or certificate delivered to the
Company or the Shareholders pursuant to this Agreement or in connection with
actions contemplated hereby, contains or shall contain any untrue statement of
material fact or omits or shall omit a material fact necessary to make the
statement contained therein not misleading to a prospective purchaser of the
shares of the Purchaser seeking full information as to the Purchaser and its
properties, business and affairs.
4.07 No Covenant as to Tax Consequences. It is expressly understood and
agreed that neither Purchaser nor its officers or agents has made any warranty
or agreement, expressed or implied, as to the tax consequences of the
transactions contemplated by this Agreement or the tax consequences of any
action pursuant to or growing out of this Agreement.
4.08 Securities Matters. The Purchaser is not aware of any formal or
informal investigation of the Purchaser or its securities by any governmental or
non-governmental regulatory agency.
ARTICLE V
Additional Covenants
5.01 Access to Information. The Purchaser and the Company shall have full
access during normal business hours to all properties, books, records, contracts
and documents of each other, and shall furnish or cause to be furnished to each
other all information with respect to their respective affairs and business as
the other may reasonably request.
5.02 Actions Prior to Closing. From and after the date of this Agreement
and until the closing date, the Purchaser and the Company shall not materially
alter their respective business or affairs except as contemplated by this
Agreement.
5.03 Limitation of Subsequent Corporation Actions. It is expressly
understood and agreed that the Company, the Shareholders, and their affiliates,
will use their best efforts to ensure that for a period of eighteen months:
a. There shall be no reverse split of the Company's common stock;
b. that the assets of the Company shall remain in the Company as part of
its business operations;
c. that the Company will not issue shares for any consideration less than
$2 per share.
ARTICLE VI
Conditions Precedent to Purchaser's Obligations
Each and every obligation of Purchaser to be performed on the closing date
shall be subject to the satisfaction of the Purchaser of the following
conditions (each of which is hereby acknowledged to be inserted for the
exclusive benefit of the Purchaser and may be waived by it in whole or in part):
6.01 Truth of Representations and Warranties. The representations and
warranties made by the Company and Shareholders in this Agreement or given on
its behalf hereunder shall be substantially accurate in all material respects on
and as of the closing date with the same effect as though such representations
and warranties had been made or given on and as of the closing date.
6.02 compliance with Covenants. Shareholders shall have performed and
complied with all obligations under this Agreement which are to be performed or
complied with by them prior to or on the closing date, including the delivery of
the closing documents specified hereafter.
6.03 Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced, against the Shareholders, the Company or any of the affiliates,
associates, officers or directors of any of them, seeking to restrain, prevent
or change the transactions contemplated hereby, or questioning the validity or
legality of any such transactions, or seeking damages in connection with any of
such transactions.
6.04 Receipt of Approvals, Etc. All approvals, consents and/or waivers that
are necessary to effect the transactions contemplated hereby shall have been
received.
6.05 No Material Adverse Change. As of the closing date there shall not
have occurred any material adverse change which materially impairs the ability
of the Company to conduct its business or the earning power thereof on the same
basis as in the past.
6.06. Accuracy of Financial Statement. Purchaser and its representatives
shall be satisfied as to the accuracy of all balance sheets, statements of
income and other financial statements of the Company furnished to Purchaser.
6.07 Proceedings and Instruments Satisfactory: Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as Purchaser may request shall have been
delivered to Purchaser. The Company and the Shareholders shall have delivered
certificates in such detail as Purchaser may request as to compliance with the
conditions set forth in this Article.
ARTICLE VII
Conditions Precedent to Obligations of the Company and Shareholders
Each and every obligation of the Company and Shareholders to be performed
on the closing date shall be subject to the satisfaction prior thereto of the
following conditions (each of which is hereby acknowledged to be inserted for
the exclusive benefit of the Purchaser and may be waived by it in whole or in
part):
7.01 Truth of Representations and Warranties. The representations and
warranties or Purchaser and Xxxx X. Xxxxxx, contained in this Agreement shall be
true at and as of the closing date as though such representations and warranties
were made at and as of the transfer date.
7.02 Purchaser's Compliance with Covenants. Purchaser shall have performed
and complied with its obligations under this Agreement which are to be performed
or complied with by it prior to or on the closing date.
7.03 Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced against Purchaser, or any of the affiliates, associates, officers
or directors of the Purchaser seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with any of such
transactions.
7.04 Receipt of Approvals, Etc. All approvals, consents and/or waivers that
are necessary to effect the transactions contemplated hereby shall have been
received.
7.05 No Material Adverse Change. As of the closing date there shall not
have occurred any material adverse change which materially impairs the ability
of the Purchaser to conduct its business or the earning power thereof on the
same basis as in the past.
7.06 Accuracy of Financial Statements. The Company and the Shareholders
shall be satisfied as to the accuracy of all balance sheets, statements of
income and other financial statements of the Purchaser furnished to the Company
herewith.
7.07 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as Company may request shall have been
delivered to the Company. The Purchaser shall have delivered certificates in
such detail as the Shareholders may request as to compliance with the conditions
set forth in this Article.
7.08 Settlement of Claims. The Purchaser shall deliver to the Company and
the Shareholders, and the Company and the Shareholders shall be satisfied with,
the following:
a. Documentation evidencing the settlement and release of the Bureau of
Land Management claim identified in the Purchaser's Financial Statements;
b. Documentation evidencing the settlement and release of the directors'
fees claim identified in the Purchaser's Financial Statements;
c. Documentation evidencing the Purchaser's discharge from bankruptcy.
7.09 Legal Opinion. The Company and the Shareholders shall have received an
opinion dated the date of Closing, in form and substance satisfactory to them,
acting reasonably, from counsel for the Purchaser, confirming the matters
warranted in the first paragraph of Section 4.01 and the following subsections
of Section 4.01:(c), (d), (e), and (f), and in Section 4.02 hereof and such
other matters as the Vendor may reasonably request, provided that, insofar as
the opinions expressed with respect to such matters are based on matters of
fact, such opinions may be based upon certificates of public officials and
officers of the Purchaser and such other evidence as such counsel may reasonably
deem appropriate and, as to matters involving the laws of jurisdictions in which
such counsel is not qualified to practice, on opinions of recognized local
counsel in such jurisdictions.
ARTICLE VIII
Indemnification
8.01 The Company shall indemnify Purchaser for any loss, cost, expense or
other damage suffered by Purchaser resulting from, arising out of, or incurred
with respect to the falsity or the breach of any representation, warranty or
covenant made by the Company herein, and any claims arising from the operations
of the Company prior to the closing date. Purchaser shall indemnify and hold the
Company and Shareholders harmless from and against any loss, cost, expense or
other damage (including, without limitation, attorneys' fees and expenses)
resulting from, arising out of, or incurred with respect to, or alleged to
result from, arise out of or have been incurred with respect to, the falsity or
the breach of any representation, covenant, warranty or agreement made by
Purchaser herein and any claims arising from the operations of the Purchaser
prior to the closing date.
ARTICLE IX
Security Act Provisions
9.01 Restrictions on Disposition of Shares. Shareholders covenant and
warrant that the shares received are acquired for their own accounts and not
with the present view towards the distribution thereof and will not dispose of
such shares except (i) pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or (ii) in any other transaction which, in
the opinion of counsel, acceptable to Purchaser, is exempt from registration
under the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder. In order to effectuate the
covenants of this sub-section, an appropriate endorsement will be placed upon
each of the certificates of stock of the Purchaser at the time of distribution
of such shares pursuant to this Agreement, and stop transfer instructions shall
be placed with the transfer agent for the securities.
9.02 Notice of Limitation Upon Disposition. Each Shareholder is aware that
the shares distributed pursuant to this Agreement will not have been registered
pursuant to the Securities Act of 1933, as amended; and, therefore, under
current interpretations and applicable rules, the shareholder will probably have
to retain such shares for a period of at least one year and at the expiration of
such one year period sales may b confined to brokerage transactions of limited
amounts requiring certain notification filings with the Securities and Exchange
Commission and such disposition may be available only if the Purchaser is
current in its filings with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or other public disclosure requirements, and
the other limitations imposed thereby on the disposition of shares of the
Purchaser. Additionally, "affiliates" owning shares will be subject to
additional restrictions limiting sales.
9.03 Limited Public Market for Common Shares. Each Shareholder acknowledges
that the common shares being issued pursuant to this agreement currently has a
limited public market in which the shares may be liquidated and there is no
assurance that such public market will grow or develop.
ARTICLE X
Closing
10.01 Time. The closing of this transaction ("closing") shall be effective
June 15, 1999, or such other date as the parties may agree in writing. Such date
is referred to in this agreement as the "closing date." Provided, however, that
additional documents necessary to complete the transaction may be executed and
provided subsequent to the closing date.
10.02 Documents to be Delivered by Shareholders. At the closing
Shareholders shall deliver to Purchaser the following documents:
a. Certificates or assignments for all Shares of ownership of the Company
in the manner and form required by sub-section 1.01 hereof.
b. A certificate signed by the directors of the Company that the
representations and warranties made by the Company in this Agreement are true
and correct on and as of the closing date with the same effect as though such
representations and warranties had been mad eon or given on and as of the
closing date and that Shareholders have performed and complied with all of their
obligations under this Agreement which are to be performed or complied with by
or prior to or on the closing date.
c. A copy of the Bylaws of the Company certified by its secretary and a
copy of the Articles of Incorporation of the Company certified by the applicable
governmental authority.
d. Certificates or letters from Shareholders evidencing the receipt of the
Common and Preference Shares of the Purchaser in accordance section 1.01 of this
Agreement and their understanding of the restrictions thereunder.
e. Such other documents of transfer, certificates of authority and other
documents as Purchaser may reasonably request.
10.03 Documents to be Delivered by Purchaser. At the closing Purchaser
shall deliver to Shareholders the following documents;
a. Certificates for the number of shares of stock of Purchaser as
determined in Article 1 hereof.
b. A certified copy of the duly adopted resolutions of the Board of
Directors of Purchaser authorizing or ratifying the execution and performance of
this Agreement and authorizing or ratifying the acts of its officers and
employees in carrying out the terms and provisions hereof..
c. A copy of the Bylaws of the Purchaser certified by its current secretary
and a copy of the Articles of Incorporation of the Purchaser certified by the
applicable governmental authority.
d. A certificate signed by the current directors and officers of the
Purchaser that the representations and warranties made by the Purchaser and Xxxx
X. Xxxxxx in this Agreement are true and correct on and as of the closing date
with the same effect as though such representations and warranties had been made
on or given on and as of the closing date and that the Purchaser has performed
and complied with all of its obligations under this Agreement which are to be
performed or complied with by or prior to or on the closing date.
e. The opinion from counsel for the Purchaser referred to in Section 7.09.
f. Documents evidencing the resignations of the Purchaser's current board
of directors and the appointment of the Shareholders as the only directors of
the Purchaser as at the closing date.
g. Such other documents of issuance, certificates of authority and other
documents as the Shareholders may reasonably request.
ARTICLE XI
Termination and Abandonment
11.01 This Agreement may be terminated and the transaction provided for by
this Agreement may be abandoned without liability on the part of any part to any
other, at any time before the closing date:
a. By mutual consent of Purchaser, the Company and the Shareholders;
b. By Purchaser if any of the conditions provided for in Article 6 of this
Agreement have not been met and have not been waived in writing by Purchaser.
c. By the Company if any of the conditions provided for in Article 7 of
this Agreement have not been met and have not been waived in writing by the
Company.
In the event of termination and abandonment by any party as above provided
in this Article, written notice shall forthwith be given to the other party, and
each party shall pay its own expenses incident to preparation for the
consummation of this Agreement and the transactions contemplated hereunder.
ARTICLE XII
Miscellaneous
12.01 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given, if delivered by hand or
mailed, certified or registered mail with postage prepaid:
a. If to The Company, Inc., or its Shareholders, to Xxxxxxx Xxxx at 000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX X0X 0X0, or to such other person and
place as the Company and its Shareholders shall furnish to Purchaser in writing.
b. If to Purchaser, to Xxxxxx X. Xxxxx at 0000 Xxxxx Xxxxx Xxxx Xxxxxx,
Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000, or to such other person and place as
Purchaser shall furnish to Company in writing.
12.02 Announcements. Announcements concerning the transactions provided for
in this Agreement by either the Company or Purchaser shall be subject to the
approval of the other in all essential respects, except that the approval of the
Company shall not be required as to any statements and other information which
Purchaser may submit to its shareholders.
12.03 Default. Should any party to this Agreement default in any of the
covenants, conditions, or promises contained herein, the defaulting party shall
pay all costs and expenses, including a reasonable attorney's fee, which may
arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by the statutes of the State of Utah, United States or
America.
12.04 Assignment. This Agreement may not be assigned in whole or in part by
the parties hereto without the prior written consent of the other party or
parties, which consent shall not be unreasonably withheld.
12.05 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their successors and assigns.
12.06 Holidays. If any obligation or act required to be performed hereunder
shall fall due on a Saturday, Sunday or other day which is a legal holiday
established by the State of Utah, such obligation or act may be performed on the
next succeeding business day with the same effect as if it had been performed
upon the day appointed.
12.07 Computation of Time. The time in which any obligation or act provided
by this Agreement is to be performed is computed by excluding the first day and
including the last, unless the last day is a holiday, in which event such day
shall also be excluded.
12.08 Governing Law and Venue. This Agreement shall be governed by and
interpreted pursuant to the laws of the State of Utah. Any action to enforce the
provisions of this Agreement shall be brought in a court of competent
jurisdiction within the State of Utah and in no other place.
12.09 Partial Invalidity. If any term, covenant, condition or provision of
this Agreement or the application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of this Agreement or
application of such term of provision to persons or circumstances other than
those as to which it is held to be invalid or unenforceable shall not be
affected thereby and each term, covenant, condition or provision of this
Agreement shall be valid and shall be enforceable to the fullest extent
permitted by law.
12.10 No Other Agreements. This Agreement constitutes the entire Agreement
between the parties and there are and will be no oral representations which will
be binding upon any of the parties hereto.
12.11 Rights are Cumulative. The rights and remedies granted hereunder
shall be in addition to and cumulative of any other rights or remedies provided
under the laws of the State of Utah.
12.12 Waiver. No delay or failure in the exercise of any power or right
shall operate as a waiver thereof or as an acquiescence in default. No single or
partial exercise of any power or right hereunder shall preclude any other or
further exercise thereof or the exercise of any other power or right.
12.13 Survival. All representations, warranties, covenants and agreements
herein contained on the part of each of the parties hereto shall survive the
closing date, the execution and delivery hereunder of share or security transfer
instruments or other documents of title and the payment of the consideration
therefor, provided that such representations and warranties, except with respect
to tax matters (which shall continue without limitation), shall only survive for
a period of five years from the closing date after which time, if no claim
shall, prior to the expiry of the said five-year-period, have been made
hereunder against a party hereto with respect to any incorrectness in or breach
of any representation or warranty made herein by such party, such party shall
have no further liability hereunder with respect to such representation or
warranty.
12.14 Further Action. The parties hereto agree to execute and deliver such
additional documents and to take such other and further action as may be
required to carry out fully the transaction(s) contemplated herein.
12.15 Amendment. This Agreement or any provision hereof may not be changed,
waived, terminated or discharged except by means of a written supplemental
instrument signed by the party or parties against whom enforcement of the
change, waiver, termination, or discharge is sought.
12.16 Headings. The descriptive headings of the various Sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
12.17 Counterparts. This agreement may be executed in two or more partially
or fully executed counterparts, each of which shall be deemed an original and
shall bind the signatory, but all of which together shall constitute but one and
the same instrument, provided that Purchaser shall have no obligations hereunder
until all Shareholders have become signatories hereto.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Acquisition
Agreement effective the _____ day of June, 1999.
Purchaser:
SYSTEMS ASSURANCE CORPORATION
By: ________________________________
Xxxx X. Xxxxxx, President
Company:
DIGITAL COMMERCE INTERNATIONAL, INC.
By: ________________________________
Xxxxxxx Xxxx, President
____________________________________
Xxxx Xxxxxx (in his personal
capacity)
Shareholders:
____________________________________
Xxxxxxx Xxxx
____________________________________
Xxxx Xxxxx
List of Schedules to be Attached
--------------------------------
Schedule "A" Equity of the Company
Schedule "B" Common Shares of the Purchaser to be issued
Schedule "C" preference shares of the Purchaser to be issued
Schedule "D" Company Disclosure Statement
Schedule "E" Purchaser Disclosure Statement
SCHEDULE A
NAME SHARES TO BE PURCHASED
Xxxxxxx Xxxx (or his nominee) 5
Xxxx Xxxxx (o his nominee) 5
Total 10
SCHEDULE B
COMMON SHARES IN THE CAPITAL STOCK OF
NAME THE PURCHASER TO BE ISSUED
---- --------------------------
Xxxxxxx Xxxx (or his nominee) 2,000,000
Xxxx Xxxxx (or his nominee) 2,000,000
Oro Gold International Ltd. 500,000
WFM, Inc. Profit Sharing Plan 250,000
Cambridge Industries Corporation 250,000
Total 5,000,000
SCHEDULE C
CONVERTIBLE PREFERENCE SHARES IN THE
NAME CAPITAL STOCK OF THE PURCHASER TO BE ISSUED
---- -------------------------------------------
Xxxxxxx Xxxx (or his nominee) 250,000
Xxxx Xxxxx (or his nominee) 250,000
Total 500,000
Each convertible Preference share in the capital stock of the Purchaser will
have the following attributes:
1. It will carry the right of ten votes at meetings of shareholders of the
Purchaser;
2. It will carry the same rights to dividends and other distributions as a
Common share in the capital stock of the Purchaser;
3. It will have no par value.
4. a. Subject to subsection (b), once the Company has achieved a cumulative
gross transaction processing volume equaling in the aggregate $240 Million (the
"Trigger Event"), each Preference share will be convertible, at the option of
its holder and for no additional consideration, into 10 common shares in the
capital stock of the Purchaser (the "Conversion Right"). (For greater clarity,
upon the occurrence of the Trigger Event a holder of Preference shares may at
his sole option from time to time exercise the Conversion Right in respect of
all or a portion of those shares).
b. The conversion Right will expire and become null and void if the Trigger
Event has not occurred by the end of the Company's second complete fiscal year
following the closing of the Acquisition Agreement between the purchaser and the
Company to which this Schedule C is attached (the "Expiry Date").
5. Upon the Trigger Event occurring on or before the Expiry Date, each
Preference share will become transferable and assignable by its holder, and
unless and until the Trigger Event occurs on or before the Expiry Date each
Preference share will not be transferable or assignable by its holder.
6. For purposes of this Schedule and the terms and conditions, rights and
obligations associated with the preference shares and specifically for the
purposes of Section 4(a) of the Schedule, "Company" shall mean and include the
purchaser (Systems Assurance Corporation, Digital Commerce International, Inc.,
Digital Commerce Inc., Digital Commerce Bank Card, Caribbean Inc., and Digital
Commerce Merchant Services Inc.).
