EXHIBIT 3.9
LETTER OF INTENT DATED JANUARY 14, 2002 AMONG THE COMPANY,
OPTIMAL POWER SYSTEMS LTD., EYEKON TECHNOLOGIES INC. AND XXXXX XXXXXXXXXX.
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January 14, 2002
Optimal Power Systems Ltd.
Xxxxx 000, 00000, 000 Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
and to:
EYEKON Technologies Inc.
Xx. Xxxxx Xxxxxxxxxx
x/x Xxxxx 000, 00000, 000 Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Dear Sirs:
LETTER OF INTENT
This letter confirms our intent to complete transactions whereby California
Exploration Ltd. ("CalEx") will acquire all of the outstanding shares ("OPS
Shares") of Optimal Power Systems Ltd. ("OPS") from EYEKON Technologies Inc. and
Xx. Xxxxx Xxxxxxxxxx (the "Principal Shareholders") in exchange for common
shares of CalEx (the "CalEx Shares"). The terms of this letter of intent are as
follows:
1. Representations and Warranties of CalEx
---------------------------------------
CalEx represents and warrants to OPS and the Shareholders that:
(a) it has been duly continued under the laws of the Business Corporations
Act (Yukon), exists under the laws of the Yukon, and is in good
standing in respect of the filing of annual returns;
(b) it is a reporting issuer in British Columbia and Alberta and its
common shares are listed for trading on the Canadian Venture Exchange
("CDNX");
(c) its authorized capital consists of an unlimited number of common
shares without par value of which 7,591,085 shares are currently
issued and outstanding. CalEx also has outstanding options to purchase
an aggregate of 1,085,000 common shares;
(d) at the date hereof, its cash is not less than US $155,000, and its
liabilities, including accounts payable, do not exceed US $10,000;
(e) its filings, as required with the British Columbia Securities
Commission, the Alberta Securities Commission and CDNX, are up to date
and disclose all material facts relating to the Company and its
affairs; and
(f) it is not party to any action, suit, claim, or proceeding nor is there
any outstanding order, writ, injunction, or judgment issued against
it.
2. Representations and Warranties of OPS
-------------------------------------
OPS represents and warrants to CalEx that:
(a) it has been duly incorporated under the laws of Alberta and is in good
standing in respect of the filing of annual returns under the Business
Corporations Act (Alberta);
(b) it is a private company;
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(c) its currently issued share capital consists of 60,000 common shares,
all of which are owned by the Principal Shareholders. There are no
options, warrants or other rights to acquire shares of OPS
outstanding;
(d) it is not party to any action, suit, claim, or proceeding, nor is
there any outstanding order, writ, injunction, or judgment issued
against it; and
(e) the information contained in its Business Plan dated November 20,
2001, (not including future projected information), is true and
correct in all material respects.
3. Representations and Warranties of the Principal Shareholders
------------------------------------------------------------
Each of the Principal Shareholders separately represents and warrants to CalEx
that:
(a) each is the beneficial owner of his OPS Shares and has or will at the
time of Closing have good and sufficient right and authority to sell
his OPS Shares and to transfer legal and beneficial title and
ownership of his OPS Shares to CalEx;
(b) at the time of Closing, his OPS Shares will be free and clear of all
liens, charges and encumbrances;
(c) there are no agreements, options, rights or privileges being or
capable of becoming an agreement for the purchase of either of the
Shareholder's OPS Shares; and
(d) to the best of their knowledge, the representations and warranties of
OPS in paragraph 2 are true and correct.
4. Purchase and Sale/Earnout
-------------------------
(a) Based upon the foregoing representations and warranties and subject to
the terms herein, CalEx agrees to purchase 100% of the OPS Shares from
the Shareholders in consideration of an aggregate of 4,800,000 CalEx
Shares payable pro-rata to the Shareholders in proportion to the OPS
Shares held by them. The Principal Shareholders agree to sell all
their OPS Shares to CalEx, pursuant to this offer. 4,800,000 of the
CalEx Shares will be subject to the earnout and escrow provisions set
forth in paragraph (b) below.
(b) The 4,800,000 CalEx Shares will be issued to the Shareholders of OPS
in accordance with the following schedule:
Number
of Shares
OPS Gross Revenues (from all sources) Issuable
------------------------------------- ---------
$4 million 800,000
$8 million cumulative 800,000
$13 million cumulative 800,000
$18 million cumulative 800,000
$23 million cumulative 800,000
$28 million cumulative 800,000
---------
4,800,000
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In addition, the Shareholders will comply with any escrow restrictions
imposed by CDNX on the CalEx Shares. Earned shares will be subject to
a maximum escrow period of 4 (four) months from the date of release.
5. Closing
-------
The closing of the transactions contemplated hereby (the "Closing") will take
place at 11:00 a.m. (Vancouver time) on the 2nd business day following receipt
of all required regulatory approvals at the offices of CalEx, or at such other
time and place as the parties hereto may agree. If the transactions contemplated
hereby are not completed before May 31, 2002, this letter of intent will
terminate and be of no further force or effect, unless otherwise extended by the
parties hereto.
6. Covenants of CalEx
------------------
Between now and Closing, CalEx will:
(a) provide full access during normal business hours to its books and
records to OPS and the Shareholders for the purposes of conducting due
diligence;
(b) maintain any information acquired from OPS or the Shareholders and
this letter of intent and the transactions to which it relates as
confidential and not disclose the details of such transactions to any
third party except as required by law or to obtain all necessary
approvals;
(c) forthwith apply for all necessary approvals;
(d) use its best efforts to gain approval from the Principal Shareholders
to the purchase and sale contemplated hereby;
(e) not enter into any new transactions whatsoever including, without
limitation, any new financings or new commitments or make any
expenditures outside of its ordinary day to day ongoing business,
without the prior approval of OPS;
(f) do everything else reasonably required to give effect to this letter
of intent; and
(g) arrange for the transfer at Closing of 1,600,000 CalEx Shares from
existing principals of CalEx to principals of OPS at nil proceeds and
which does not form part of section 4a.
7. Covenants of OPS
----------------
Between now and Closing, OPS will:
(a) provide full access during normal business hours to its books and
records to CalEx for the purposes of conducting due diligence;
(b) maintain any information acquired from CalEx and this letter of intent
and the transactions to which it relates as confidential and not
disclose the details of such transactions to any third party except as
required by law or to obtain all necessary approvals;
(c) not enter into any new transactions whatsoever including, without
limitation, any new financings or new commitments or make any
expenditures outside of its ordinary day to day ongoing business,
without the prior approval of CalEx;
(d) do everything else reasonably required to give effect to this letter
of intent; and
(e) provide full, true and plain disclosure of its business and affairs to
CalEx for the purposes of obtaining shareholder and regulatory
approval.
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8. Covenants of Principal Shareholders
-----------------------------------
Between now and Closing, the Principal Shareholders will:
(a) not enter into any transaction for the sale, transfer or other
disposition of their OPS Shares; and
(b) comply with any escrow, hold period or other restrictions as may be
imposed by the CDNX or under applicable securities laws.
9. Conditions for the Benefit of CalEx
-----------------------------------
The obligation of CalEx to complete the transactions contemplated hereby is
subject to the following conditions which are for the exclusive benefit of CalEx
and may be waived by CalEx at any time:
(a) approval by CDNX to the transactions contemplated hereby;
(b) approval of the shareholders of CalEx of the transactions contemplated
hereby;
(c) completion of a diligence review of the business and affairs of OPS
with results satisfactory to CalEx, such review to be completed not
later than January 31, 2002;
(d) the representations and warranties of OPS and the Principal
Shareholders in Sections 2 and 3 being true as of the Closing;
(e) OPS and the Principal Shareholders not being in default of any
material term of this letter of intent as of the Closing; and
(f) On or prior to Closing, OPS will have obtained the rights to certain
software and other technologies pertaining to the Power + System from
EYEKON Technologies Inc. in a form acceptable to CalEx.
10. Conditions of Benefit of OPS and Shareholders
---------------------------------------------
The obligations of OPS and the Shareholders to complete the transactions
contemplated hereby are subject to the following conditions which are for the
exclusive benefit of OPS and the Principal Shareholders and may be waived by OPS
and the Shareholders at any time:
(a) approval of the shareholders of OPS of the transactions contemplated
hereby;
(b) completion of a due diligence review of the business and affairs of
CalEx with results satisfactory to OPS and Shareholders, such review
to be completed not later than January 31, 2002;
(c) the representations and warranties of CalEx in Section 1 being true as
of the Closing Date;
(d) CalEx not being in default of any material terms of this letter of
intent as of the Closing Date; and
(e) OPS and the Principal Shareholders being satisfied that there are no
material adverse tax consequences to them arising from the
transactions contemplated herein.
11. Financial Matters
-----------------
As soon as practicable after the signing of this agreement, CalEx or one of it's
shareholders, agrees to forward to OPS a $100,000 cash loan to be used for costs
associated with this agreement and any operational costs associated with further
development and marketing of OPS. The loan will be secured by the assets of OPS
and will be guaranteed by the Principal Shareholders. The guaranntee will be
secured by a pledge of the share of OPS held by the Prinipal Shareholders. OPS
represents that these funds will be sufficient for it to meet its commitments to
the end of February, 2002. CalEx will arrange for additional funds for OPS on a
loan basis to meet operating expenses incurred after February, 2002 and prior to
Closing. CalEx will use reasonable commercial efforts to arrange financing for
CalEx/OPS after Closing.
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12. Closing Deliveries
At Closing:
(a) CalEx will deliver to OPS or the Principal Shareholders, as
applicable:
(i) evidence of all necessary regulatory, legal and shareholder
approvals to this letter of intent and the transactions
contemplated hereby;
(ii) certificates representing the CalEx Shares issued to the
Principal Shareholders in the proper denominations; and
(iii)such other documents as may be reasonably requested by OPS and
the Principal Shareholders.
(b) OPS or the Principal Shareholders will deliver to CalEx:
(i) certificates representing the OPS Shares duly endorsed for
transfer or accompanied by instruments of transfer;
(ii) a certified copy of resolutions of the directors of OPS approving
the transfer of the OPS Shares to CalEx and issuing a new share
certificate in the name of CalEx;
(iii)new share certificate registered in the name of CalEx
representing all of the outstanding shares of OPS; (iv) all
minute books and records of OPS; and (v) such other documents as
may be reasonably requested by CalEx.
13. Each of CalEx and OPS will pay its own costs incurred in completing the
transactions contemplated hereby.
14. This Agreement supersedes the signed Letter of Intent dated December 20,
2001 among CalEx, ZeroHype Technolgoies Inc., EYEKON Technologies Inc. and Xx.
Xxxxx Xxxxxxxxxx.
15. No party hereto will issue a press release or otherwise publicly disclose
this agreement or transactions contemplated hereby without giving the other
parties hereto a reasonable opportunity to comment on such disclosure.
16. OPS and the Shareholders may give CalEx notice in writing under this letter
of intent by physically delivering or faxing such notice addressed to us care
of:
California Exploration Ltd.
Xxxxx 0000, 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attention: President
Facsimile No.: (000) 000-0000
17. CalEx may give OPS or the Shareholders notice in writing under this letter
of intent by physically delivering or faxing such notice addressed to OPS care
of:
Optimal Power Systems Ltd.
Xxxxx 000, 00000, 000 Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: President
Facsimile No. (000) 000-0000
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18. Any notice delivered in accordance with Section 14 or 15 will be deemed to
have been given and received on the day it was delivered or faxed, as the case
may be. Any party may at any time give to the other notice in writing of any
change of address of the party giving such notice and from and after the giving
of such notice the address therein specified will be deemed to be the address of
such party for the purpose of giving notice hereunder.
19. Each party will at any time and from time to time, upon the reasonable
request of the other party, execute and deliver such further documents and do
such further acts and things as the other party may reasonably request in order
to evidence, carry out and give full effect to the terms, conditions, interest
and meaning of this letter of intent.
Please confirm your agreement to the above terms by signing below. Forthwith
after execution of this letter of intent, the parties will use their best
efforts to complete a formal agreement incorporating the terms of this letter of
intent and such other provisions as are customary in a transaction of this
nature, within 21 days of the date hereof.
Yours truly,
CALIFORNIA EXPLORATION LTD.
/s/ Des X'Xxxx
--------------------------
Per: Authorized Signatory
ACKNOWLEDGED AND AGREED as of the date first above written.
OPTIMAL POWER SYSTEMS LTD.
/s/ Xxxxx Xxxxxxxxxx
--------------------------
Per: Authorized Signatory
ACKNOWLEDGED AND AGREED TO this 14 day of January, 2002 by:
EYEKON TECHNOLOGIES INC.
/s/ Xxx Xxxxx /s/ Xxxxx Xxxxxxxxxx
-------------------------- --------------------------
Per: Authorized Signatory Xxxxx Xxxxxxxxxx
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INTUITION License Agreement
This Agreement made effective the 14th day of January, 2002, between EYEKON
Technologies Inc. (the "Licensor"), and Optimal Power Systems (the "Licensee").
WHEREAS:
1. The Licensor is the sole owner and original developer of a technology
called INTUITION. The Licensor holds a copyright, and trade secret understanding
on the INTUITION, and the INTUITION is a software based technology;
2. Under this Agreement, the Licensor is prepared to grant and the Licensee
desires to obtain a licence exclusive to the Licensee for use of INTUITION
within the Licensee's business and or services being the 'Power+' systems.
3. The Licensor may at any time in the future and at its own cost, make an
application for patent protection of the INTUITION technology. If secured by the
Licensor, the patent of the INTUITION technology will be added to the security
of the licensee within this Agreement but will not affect any other element of
this License Agreement.
IN CONSIDERATION of the premises and of the mutual covenants set out together
with other good and valuable consideration, the parties agree as follows:
1. Grant of Licence
1.1 The Licensor gives and grants to the Licensee a worldwide license to
practice the INTUITION technology for use within the Licensee's products and or
services being the 'Power+' system. The Power+ System is defined as a web based
distributed power generation and oil and gas well site monitoring, control and
optimization system.
1.2 The Licensee shall be permitted to grant sublicenses of the INTUITION
Technology, or any part thereof, with written permission from EYEKON only.
2. Warranty
The Licensor warrants to the Licensee that it is the owner of the
INTUITION software technology covered by its copyright and trade secret
understanding, and that it has the sole right to grant the licence free from all
encumbrances.
3. Validity of Ownership
The Licensee covenants with the Licensor that it will not during the
subsistence of this Licence raise or cause to be raised any question concerning
or any objection to the validity of any claim in the copyright and trade secret
understanding on any grounds whatsoever.
4. Sales Promotion
(1) The Licensee covenants with the Licensor that it will with all
reasonable dispatch manufacture and sell products/services embodying the
INTUITION, and will use its best efforts to promote, continue and increase the
sales to the best of it's ability during the continuance of this Agreement.
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(2) The Licensee agrees to display the Licensor's corporate branding logo,
as supplied by the Licensor, on all software CD's, websites, promotional and
marketing material and hardware. Licensors logo not to be displayed smaller then
1 (one) and 1/5 (one half) inches in width.
(3) The Licensor shall not do or permit anything to be done to prejudice
the market image of the technologies and or branding logo of the licensor.
5. Improvements
(1) If the Licensee shall discover or invent an improvement to the
INTUITION during the term of this Agreement, the Licensee agrees promptly to
disclose the same or cause the same to be disclosed to the Licensor and to
furnish to the Licensor a!l information pertaining thereto, including all source
code, designs, descriptions and other data. At the Licensor's option the
Licensee agrees to assign or cause to be assigned to the Licensor any discovery
or invention and to assist the Licensor, at the Licensor's expense, to secure
letters patent (or other) covering discovery or invention in any and all
countries required by the Licensor. In connection therewith, the Licensee shall
furnish to the Licensor, all pertinent information and have executed any patent
applications, assignments or other instruments necessary or desirable, without
expense to the Licensor. Any discovery or invention as to which the Licensor
shall have exercised its option as mentioned shall be the property of the
Licensor, and any letters patent (or other) issued thereon shall be included as
subject matter as to which the Licensee is licensed under this agreement.
(2) The Licensee shall, to the best of its ability, cause its employees to
disclose any discovery or invention made or developed by them during the term of
this agreement and falling within the terms of subparagraph (I) and to assign
discovery or invention of the Licensor as provided.
(3) The Licensor shall promptly disclose to the Licensee any discovery or
invention which is an improvement on the INTUITION technology which it develops
or acquires during the term of this agreement within a reasonable time and shall
make available to the Licensee all information relating thereto, including
source code, designs, descriptions and other data, and discovery or invention
shall be deemed to be part of the licensed subject-matter for all purposes of
this agreement.
6. Infringement
If either party has knowledge that a third party is making, using or
selling a product or services which incorporate or use the INTUITION Technology
or any part thereof, or which is within the scope of a valid patent or patent
application filed by the Licensor or the rights under the copyright and or trade
secret understanding, such knowledge shall be promptly transmitted to the other
party, and the Licensor shall have the exclusive right to commence legal
proceedings against the alleged infringer to assert and enforce all of the
rights related to the INTUITION Technology and to prevent infringement or
further infringement. For that purpose the Licensor may with the consent of the
Licensee add the Licensee as a party to any legal proceedings and the Licensee
covenants with the Licensor to co-operate with the Licensor and to render all
reasonable assistance, including providing all documents in their possession and
any witnesses as are or may be required, in the conduct of any proceedings
referred to herein.
7. Impeachment
The Licensor shall be entitled but shall not be bound to defend at its
own cost every action, suit or proceeding instituted for the impeachment or a
declaration of non-infringement of the INTUITION, its copyright and/or its trade
secret understanding; provided that, if the Licensor shall decide not to defend
any action, suit or proceeding it shall so advise the Licensee who shall be
entitled but shall not be bound to defend at its own cost the action, suit or
proceeding.
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8. Confidentiality
The parties shall hold in strict confidence the confidential and
proprietary information included in or related to the INTUITION Technology,
including technical or business trade secrets and other confidential and
proprietary information related to this Agreement, and will treat such
information with the same degree of care that each exercises with regard to its
own confidential and proprietary information.
9. Term and Termination
(1) Should the Licensee become insolvent or bankrupt or commit a material
breach of this Agreement, this Agreement shall automatically terminate and any
rights granted to the Licensee within this agreement shall return to the
Licensor at nil proceeds.
(2) This Agreement may be terminated by the Licensee by delivery of a
notice in writing to the Licensor at least sixty days prior to any anniversary
date.
10. Notices
Any notice or other communication required or authorized to be given
by either party under this agreement shall be in writing and shall be delivered
personally or sent by pre-paid mail or facsimile transmission address as
follows:
Optimal Power Systems Inc.
404, 00000 - 000 Xxxxxx
Xxxxxxxx, XX.
EYEKON Technologies Inc.
x/x Xxxxxx-Xxxxx
Xxxxx 000, 00000 000 Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
or to any other address as shall have been given by the Licensee or Licensor in
writing for that purpose, and any notice shall be deemed to have been given if
delivered, when delivered, and if mailed, within five days after the mailing of
the notice by prepaid registered post in any government post.
11. General
(1) This Agreement shall enure to the benefit of and be binding upon each
of the parties and their respective heirs, administrators, legal
representatives, successors and assign.
(2) This Agreement shall be governed and interpreted in accordance with
the laws in force in the Province of Alberta and the parties agree to attorn to
the jurisdiction of the Courts of Alberta.
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(3) If a court of applicable jurisdiction determines that any provision of
this Agreement is invalid or unenforceable, such detern1ination shall not affect
the validity or enforceability of the remaining provisions of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement on the 14th day of
January, 2002.
EYEKON Technologies Inc.
/s/ Xxx Xxxxx
-------------------------
OPTIMAL POWER SYSTEMS INC.
/s/ Xxxxx Xxxxxxxxxx
-------------------------
