Exhibit 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 30th day of August, 2001
BETWEEN:
xx-xxxx.xxx inc., a corporation incorporated under the
laws of the Province of Ontario (hereinafter called the
"Vendor")
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000Xxxxxxx.xxx Inc., a corporation incorporated under the
laws of the State of Nevada (hereinafter called the
"Purchaser")
WHEREAS the Vendor has agreed to sell to the Purchaser and the
Purchaser has agreed to purchase from the Vendor, on the terms and subject to
the conditions hereinafter set forth, certain of the property and assets of the
Vendor arising from or used in connection with the Vendor's software development
business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants hereinafter set forth and the sum of one dollar ($1.00) of
lawful money of the United States now paid by the Purchaser to the Vendor (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
agree with each other as follows:
ARTICLE 1
INTERPRETATION
1.1 Currency. Unless otherwise stated, all dollar amounts referred to in this
Agreement are in United States dollars.
1.2 Headings. The division of this Agreement into articles, sections, paragraphs
and subparagraphs and the insertion of headings are for convenience of reference
only and shall not effect the construction or interpretation of this Agreement.
The terms "this Agreement", "hereof", "herein", "hereof", "hereunder" and
similar expressions refer to this Agreement and not to any particular article,
section or portion thereof and include any agreement or instrument supplementary
or ancillary hereto.
1.3 Number and Gender. Words importing the singular number only shall include
the plural and vice versa, and words importing the use of any gender shall
include all genders.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Agreement to Purchase and Sell. At 9:00a.m. (Ottawa time) on September 18,
2001 (the "Time of Transfer" ), or at such other time as may be agreed upon
orally or in writing by the parties, subject to the terms and provisions hereof
and based upon the representations and
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warranties herein contained, the Vendor shall sell, transfer, assign and convey
to the Purchaser, and the Purchaser shall purchase from the Vendor, all right,
title and interest in the following:
(a) the capital assets of the Vendor set out in Schedule 2.1(a)
hereto;
(b) all rights of the Vendor in and to all patents, trademarks, trade
names, service marks, Internet domain names, copyrights and any
renewal rights therefor, and all registrations and applications
for any of the foregoing, all computer software programs or
applications in both source and object code form, software
products, software design and development tools and scripts, and
all modifications, additions and enhancements to such software
programs, products, tools and scripts whether owned, licensed or
under development by the Vendor, and all technical documentation
with respect to such software programs, products, tools and
scripts, and all of the Vendor's other technology, trade secrets,
know-how, supplier lists, and other tangible or intangible
proprietary information or materials, and the following names:
"cs-live", "eSupport", "eMarketing", "eLearning" and "eSurveys",
including without limitation the intellectual property set out in
Schedule 2.1(b) (collectively, the "Intellectual Property"); and
(c) the customer list of the Vendor set out in Schedule 2.1(c) hereto
(collectively, the "Assets").
2.2 Agreement to Assume Liabilities. As and from the Time of Transfer, the
Purchaser hereby:
(a) assumes and, to the extent they become due and payable, covenants
to pay or otherwise discharge, satisfy and fulfill all
liabilities of the Vendor which arise relating to (i) the
Vendor's lease with 1202180 Ontario Limited for a three year term
from May 15, 2000, a copy of which is attached as Schedule
2.2(a)(i), for the premises located at 0 Xxxxxxx Xxxxx, Xxxxx 0,
Xxxx 0, Xxxxxx (xxxxxxxx Xxxxxx), Xxxxxxx, X0X 0X0, (ii) the
Vendor's lease with 1202180 Ontario Limited for a three year term
from March 1, 2000, a copy of which is attached as Schedule
2.2(a)(ii), for the premises located at 0 Xxxxxxx Xxxxx, Xxxxx 0,
Xxxxx 000, Xxxxxx (formerly Nepean), Ontario, K2E 8A9, (iii) the
Vendor's lease (#2081847) with FastCredit effective October 1,
2000, a copy of which is attached as Schedule 2.2(a)(iii), for
the Toshiba 2860 photocopier, and (iv) the Vendor's lease with
IKON effective September 1, 2000, a copy of which is attached as
Schedule 2.2(a)(iv), for the Ricoh 3006 photocopier, and to
indemnify the Vendor from and against all claims, demands or
costs in respect thereof; and
(b) agrees to perform and carry out to the best of its ability the
obligations set out in the various contracts with the value added
resellers (VARs) set out in Schedule 2.2(b) hereto
(collectively, the "Assumed Liabilities").
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2.3 Purchase Price. The purchase price (the "Purchase Price") payable by the
Purchaser to the Vendor for the Assets shall be the fair market value thereof.
2.4 Payment of Purchase Price. The Purchase Price shall be paid and satisfied by
the Purchaser as follows:
(a) by the delivery to the Vendor's solicitors, at the Time of
Transfer, of a certified cheque or bank draft in the amount of
fifty thousand dollars (US$50,000) in United States funds made
payable to the order of "Blake, Xxxxxxx & Xxxxxxx LLP in trust";
(b) by the assumption, at the Time of Transfer, of the Assumed
Liabilities set out in Section 2.2 above; and
(c) as to the balance of the Purchase Price: by the delivery to the
Vendor's solicitors, to be held in escrow in accordance with the
provisions set forth in Section 2.5 below, at the Time of
Transfer, of (i) a share certificate registered in the name of
the Vendor representing eighty thousand (80,000) common shares in
the capital of the Purchaser (the "October Shares") and subject
to Section 2.6 below, which shares shall be registered by the
Purchaser pursuant to the United States Securities Act of 1933
(the "1933 Act") and the Purchaser shall use its best efforts to
cause the registration statement covering such October Shares to
become effective ("Registration Condition" ) on or before October
31, 2001 such that the October Shares are not then subject to any
resale restrictions under United States securities legislation
and may be sold into the market; and (ii) by the delivery to the
Vendor at the Time of Transfer of a share certificate registered
in the name of the Vendor representing three hundred and seventy
thousand (370,000) common shares in the capital of the Purchaser,
which shares shall be subject to Rule 144 under the 1933 Act (the
"September Shares").
2.5 October Shares. The parties hereto agree that the October Shares shall be
held in escrow by the Vendor's solicitor, subject to the terms of an escrow
agreement (the "Escrow Agreement") to be entered into at the Time of Transfer by
the Vendor, Purchaser and the Vendor's solicitors, on terms satisfactory to the
parties thereto, which Escrow Agreement shall provide for the release of the
October Shares in the following manner: (i) if the Registration Condition is
satisfied before October 31, 2001 and the Loan is not advanced, the October
Shares shall be released to the Vendor; and (ii) if the Registration Condition
is satisfied after October 31, 2001 and the Loan is advanced as provided in
Section 2.7 below, as soon as possible following the date of the satisfaction of
the Registration Condition the October Shares shall be released to the
stockbroker of the Vendor for sale by the stockbroker into the market and the
proceeds therefore shall be paid to the Purchaser until the Loan is paid in
full, and the balance, if any, shall be paid to the Vendor.
2.6 Allocation of the Purchase Price. The Purchaser and Vendor shall, as soon as
reasonably practicable after the Time of Transfer, enter into an agreement to
allocate the Purchase Price among the Assets.
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2.7 Debentures. The Purchaser shall use its best efforts to register the October
Shares under the 1933 Act and to have the Registration Condition completed on or
before October 31, 2001 or as soon as possible thereafter and such registration
statement to remain effective until all of the October Shares have been
transferred or sold or until such October Shares can be resold pursuant to Rule
144 under the 1933 Act. In the event that the Registration Condition has not
been satisfied, and the October Shares are still subject to resale restrictions
under United States securities legislation, on or before October 31, 2001, the
Purchaser, on November 1, 2001, shall pay to the person or persons as directed
by the Vendor (by delivering a certified cheque or bank draft), on behalf of the
Vendor, on account of the payment of amounts due by the Vendor to such person or
persons under secured convertible debentures previously issued by the Vendor, an
aggregate of $477,500 in Canadian funds, such amount being paid by the Purchaser
hereunder to be an interest-free loan (the "Loan"). Notwithstanding the above,
the advance of the Loan by the Purchaser to the Vendor shall be conditional on
the Vendor providing to the Purchaser evidence that any party holding a security
interest registered under the Personal Property Security Registration System
(Ontario) over the assets of the Vendor has postponed its security interest in
the September Shares and/or October Shares and any proceeds from the sale
thereof until the Loan is repaid in full. The Loan shall be repaid by the Vendor
only following that date that the Vendor receives written notice (the
"Registration Notice") from the Purchaser that the registration statement
covering the October Shares is effective and the October Shares are not subject
to any resale restrictions under United States securities legislation. In order
to secure the repayment of the Loan, the Vendor will agree to pledge the October
Shares in favour of the Purchaser until the Loan is paid in full. Following
receipt of the Registration Notice, the Vendor agrees to promptly sell such
October Shares in an orderly fashion into the market and all net proceeds form
such sale shall be paid to the Purchaser until the Loan is repaid in full. In
the event that there is insufficient net proceeds from the sale of the October
Shares to repay the Loan in full, the Purchaser agree to register, from time to
time, under the 1933 Act such of the September Shares as would be necessary to
ensure that once the registration statement covering the additional shares
becomes effective, such additional shares will be sold by the Vendor into the
market in an orderly fashion until such time as the Vendor has repaid the Loan
in full. Following the receipt of the above written notice, the Vendor shall use
its best efforts to sell the October Shares as soon as possible thereafter until
the Loan is repaid in full.
2.8 Right to Use Intellectual Property. The Vendor agrees to grant to the
Purchaser the right to use the Intellectual Property effective as of the date of
the execution of this Agreement. In consideration for such right, the Vendor
shall, immediately following the execution of this Agreement, invoice the
Purchaser in the amount of at least twenty five thousand dollars (US$25,000) in
United States funds, which amount shall be payable by the Purchaser upon
execution of this Agreement. In the event the transactions contemplated by this
Agreement are not completed by the Time of Transfer, the right of the Purchaser
to use the Intellectual Property shall immediately terminate and the Purchaser
shall immediately cease using the Intellectual Property, the Intellectual
Property shall immediately be returned by the Purchaser to the Vendor and the
Purchaser shall not be entitled to the return of any funds paid to the Vendor
pursuant to this Section 2.8.
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2.9 Instrument of Conveyance. It is the intention of the parties that the
execution of this Agreement shall operate as an effective conveyance, assignment
and transfer of the Assets and assumption of Assumed Liabilities by the
Purchaser, as contemplated herein effective as of the Time of Transfer. However,
in order to effectuate more fully and completely the assignment, transfer and
conveyance of the Assets and the assumption of the Assumed Liabilities pursuant
to the terms and conditions hereof, each party shall upon reasonable request
from the other party after execution hereof, deliver to the other party such
bills of sale, assignments and instruments of conveyance and assumption
agreements, and make such filings including but not limited to filing an
assignment of patent and patent applications and trademarks and trademark
applications, as may be requested by the other party, acting reasonably.
2.10 Releases of Xxxxxx Karpovits and Xxxxx Kavoun. At the Time of Transfer,
against delivery of the payment of the Purchase Price pursuant to Section 2.4
hereof, the Vendor agrees to deliver duly executed releases by each of Xxxxxx
Karpovits and Xxxxx Kavoun in favour of the Purchaser, which releases shall be
in a form acceptable to the Vendor and the Purchaser and shall release any
interest that Mr. Karpovits and Mr. Kavoun have in the Assets, including but not
limited to the intellectual property of the Vendor set out in Section 2.1(b)
hereof.
2.11 Opinion of Counsel of Vendor. At the Time of Transfer, against delivery of
the payment of the Purchase Price pursuant to Section 2.4 hereof, the Vendor
also agrees to deliver to the Purchaser an opinion of Vendor's solicitors
addressed to the Purchaser dealing with matters relating to the transfer of the
Assets in a form satisfactory to the Vendor and the Purchaser, acting
reasonably.
2.12 Covenant. The Vendor agrees that, with respect to the September Shares
and/or October Shares, it will not take, directly or indirectly, any action
designed to cause or result in, or which might reasonably be expected to
constitute, the manipulation or stabilisation of the price of the common shares
of the Purchaser including but not limited to the taking a short position in the
common share of the Purchaser. In addition, the Vendor shall endeavour, in good
faith, to maintain an orderly market when distributing the September Shares
and/or October Shares. Prior to any distribution of the September Shares and the
October Shares, the Vendor will provide the Purchaser with notice of its
intentions to so distribute the same.
2.13 Employment of Vendor's Employees. As soon as possible after the execution
of this Agreement and in any event prior to the Time of Transfer, the Purchaser
shall provide written notice to the Vendor as to which of the employees (the
"Employees") of the Vendor that the Purchaser wishes to hire following the
Closing, and the Purchaser shall enter into employment agreements with each of
the Employees, such employment agreements to come into effect at the Time of
Transfer. The Vendor agrees to assist the Purchaser to conclude employment
arrangements with all such Employees on terms acceptable to each Employee and
the Purchaser. The Vendor shall be responsible for the salary of such Employees
until the Time of Transfer, and the Purchaser shall be responsible for the
salary and accrued benefits (accrued to the Time of Transfer, including accrued
vacation and sick leave), of such Employees following the Time of Transfer.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Vendor. The Vendor hereby represents
and warrants to the Purchaser, and acknowledges that the Purchaser is entering
into this Agreement in reliance upon such representations and warranties, as
follows:
(a) Corporate Status. The Vendor is a corporation incorporated and
validly existing under the laws of the Province of Ontario.
(b) Authorization. The Vendor has all necessary power, authority and
capacity to enter into this Agreement and all other agreements
and instruments to be executed by it as contemplated by this
Agreement and to carry out its obligations under this Agreement
and such other agreements and instruments.
(c) Ownership of Assets. The Vendor is as of the date hereof, and
will be at the Time of Transfer, the sole owner of the Assets
free and clear of any and all liens, pledges, charges, mortgages,
security interests, claims and other encumbrances. As of the date
hereof, the Vendor has granted security interests over the Assets
to those parties set out in Schedule 3.1(c) hereto, which
interests will be released in respect of the Assets prior to the
Time of Transfer.
(d) No Options. No Person other than the Purchaser has any agreement,
option, right or privilege capable of becoming an agreement for
the purchase from the Vendor of any of the Assets.
(e) Enforceability of Obligations. This Agreement constitutes a valid
and binding obligation of the Vendor enforceable in accordance
with its terms, subject however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy,
insolvency, reorganization or other laws affecting creditors'
rights generally and to the extent that equitable remedies such
as specific performance and injunction are only available in the
discretion of the court from which they are sought.
(f) Litigation. There are no claims, proceedings or actions in
existence or threatened, or to the best of the Vendor's
knowledge, contemplated against the Vendor or the Vendor's
interest in the Assets which would prevent, delay or hinder the
transaction contemplated by this Agreement.
(g) Taxes. The Vendor has duly and timely filed all federal, state,
provincial, county, local and foreign income, excise, sales,
property, withholding, unemployment, social security, franchise,
license, escheat, information returns and other tax returns and
reports required by law to have been filed by the Vendor to the
date hereof. Each such return is true, correct and complete in
all material respects and the taxes shown as due thereon have
been fully paid. The Vendor has paid all taxes, interest and
penalties (including without limitation any customs duties or
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related charges) which the Vendor is required by law to pay with
respect to all periods through the date of August 15, 2001 or has
created sufficient reserves or made provisions for all taxes
accrued but not yet due and payable by it through such date.
(h) Intellectual Property.
(i) Schedule 2.1(b) hereto lists the Vendor's patents, patent
applications, registered trademarks, trademark
applications, trade names, registered service marks,
services xxxx applications, Internet domain names,
Internet domain name applications, registered copyrights
and copyright registrations that constitute Intellectual
Property, and applications and other filings and formal
actions made or taken pursuant to federal, state,
provincial, county, local and foreign laws by the Vendor
to protect its respective interests in the Intellectual
Property.
(ii) The Intellectual Property consists solely of items and
rights which are: (i) owned by the Vendor; (ii) in the
public domain; or (iii) rightfully used by the Vendor
pursuant to a valid license, contract or other agreement
(the "Licensed Intellectual Property"), the parties, date,
term and subject matter of each such license, contract or
other agreement being set forth in Schedule 2.1(b) hereto,
except for desk-top office software generally available at
retail. The Vendor has all rights in the Intellectual
Property necessary to carry out the business currently
being carried out by it, including without limitation, to
the extent required to carry out such business, all
necessary rights to make, use, reproduce, adopt, create
derivative works based on, translate, distribute (directly
or indirectly), transmit, display and perform publicly,
license, rent and lease and, other than with respect to
the Licensed Intellectual Property, modify, assign and
sell, the Intellectual Property.
(iii) to the knowledge of the Vendor, the reproduction,
manufacturing, distribution, licensing, sublicensing, sale
or any other exercise of rights in the Intellectual
Property, as now used or proposed for use, licensing or
sale by the Vendor does not infringe on any patent,
copyright, trade secret, trademark, service xxxx, trade
name, firm name, Internet domain name, logo or other
intellectual property or proprietary right of any person,
except where such infringement would not have a material
adverse effect on the Vendor's business or any of the
Assets. No claims (i) challenging the validity,
effectiveness or, other than with respect to the Licensed
Intellectual Property, ownership by the Vendor of any of
the Intellectual Property, or (ii) to the effect that the
use, distribution, licensing, sublicensing, sale or any
other exercise of rights in any of the Intellectual
Property as now used or proposed for use, licensing,
sublicensing or sale by the Vendor infringes or will
infringe on any intellectual property or other proprietary
right of any person have been asserted in writing or, to
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the knowledge of the Vendor, are threatened by any person,
nor are there, to the knowledge of the Vendor, any valid
grounds for any bona fide claim of any such kind. To the
knowledge of the Vendor, all registered, granted or issued
patents, trademarks, Internet domain names and copyrights
held by the Vendor that pertain to the Vendor's business
or the Assets are enforceable and subsisting. To the
knowledge of the Vendor, there is no unauthorized use,
infringement or misappropriation of any of the
Intellectual Property by any third party, employee or
former employee.
(iv) Except as set forth in Schedule 2.1(b) hereto, all
personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in
the conception and development of the Intellectual
Property on behalf of the Vendor, have executed
nondisclosure agreements and either (i) have been a party
to an arrangement or agreements with the Vendor in
accordance with applicable federal, state, provincial
and/or foreign law that has accorded the Vendor full,
effective, exclusive and original ownership of all
tangible and intangible property thereby arising, or (ii)
have executed appropriate instruments of assignment in
favour of the Vendor as assignee that have conveyed to the
Vendor effective and exclusive ownership of all tangible
and intangible property thereby arising.
(v) The execution and delivery of this Agreement, and the
performance of the Vendor's obligations thereunder, will
not cause the diminution, termination or forfeiture of any
of the Intellectual Property.
(vi) Schedule 2.1(b) hereto contains a true and complete list
of all software programs used, sold, licensed or marketed
by the Vendor that constitutes an Asset, other than desk
top office software generally available at retail (the
"Software Programs "). The Vendor has the rights to
license or owns full and unencumbered right and good,
valid and marketable title to the Software Programs free
and clear of all mortgages, pledges, liens, security
interests, conditional sales agreements, encumbrances or
charges of any kind. All unexpired representations and
warranties made or given by any seller to any of its
respective customers respecting any of the Software
Programs or its respective Intellectual Property are true
and correct in all material respects.
(vii) The source code and system documentation relating to the
Software Programs (i) have at all times been maintained in
strict confidence, (ii) except to representatives of the
Purchaser, have been disclosed by the Vendor owning such
Software Program only to employees or representatives who
have a "need to know" the contents thereof in connection
with the performance of their duties to the Vendor and who
have executed nondisclosure agreements, (iii) have not
been disclosed to any third party, and (iv) have not been
placed in escrow under any
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arrangement whereby the occurrence or failure to occur of
any event would entitle any third party to use or access
such source code or system documentation.
(viii) All license agreements permit the Vendor to make all
modifications, bypasses, de-bugging, work-arounds,
repairs, replacements, conversions or corrections
necessary to permit the components of all Software
Programs to operate compatibly and reliably, in
conformance with their respective specifications.
(ix) No Software Program contains any "backdoor" or concealed
access or any "software locks" or similar undocumented
devices which, upon the occurrence of a certain event, the
passage of a certain amount of time or the taking of any
action (or the failure to take any such action) by or on
behalf of the Vendor or any third party, will cause any
software, database, or information in any database to be
destroyed, erased, damaged or otherwise rendered
inoperable or inaccessible.
(x) No component of any Software Program is subject to any
federal, state, provincial, county, local or foreign
export control laws or regulations.
(i) Investment Risks.
(i) The Vendor has such knowledge and experience in financial
and business matters and, in particular, concerning
investments, as is necessary to enable it to evaluate the
merits and risks of making an investment in the
Purchaser's common shares in the manner as provided in
this Agreement. The Vendor has no immediate need for
liquidity in the Purchaser's common shares and is able to
bear the risk of making an investment in the Purchaser's
common shares for an indefinite period. The Purchaser's
common shares which the Vendor will receive pursuant to
this Agreement are being acquired by the Vendor for
investment purposes only, for its own account and not with
a present view to the offer, sale or distribution thereof;
provided, however, that, in the event that such common
shares are registered on a registration statement under
the 1933 Act for resale by the Vendor or the Purchaser,
the Vendor may, at its sole discretion, offer and sell all
or any portion of such shares pursuant to such
registration statement, subject, however, to compliance
with any applicable state, provincial or other law. The
Vendor may also offer and sell such common shares in
accordance with any other applicable securities laws. The
Vendor has not taken, nor will it take or cause to be
taken, any action that would cause the Vendor to be deemed
to be an "underwriter", as defined in Section 2(11) of the
Securities Act, with respect to those common shares except
in connection with the offer and sale of such shares
pursuant to such registration statement.
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(ii) The Purchaser has afforded, or otherwise caused to afford,
to the Vendor and its professional advisors full and
complete access to all information with respect to the
Purchaser and its business, operations, financial
condition and management which the Vendor has deemed
necessary and material for an evaluation of the merits and
risks of the Vendor acquiring and making an investment in
the Purchaser's common shares hereunder. The Vendor and
its advisors have had adequate opportunity to ask
questions of, and receive answers from, persons acting on
behalf of the Purchaser regarding the terms and conditions
of the issuance of the Purchaser's common shares hereunder
and to obtain any additional information which the
Purchaser possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy
of the information furnished to the Vendor and its
professional advisors. All such questions have been
answered to the full satisfaction of the Vendor and its
professional advisors.
(iii) In evaluating the merits and risks of making an investment
in the Purchaser's common shares hereunder, the Vendor has
relied on the advice of its own legal, financial and
accounting advisors. The Vendor understands that there are
substantial risks pertaining to the making of an
investment in the Purchaser's common shares hereunder. The
Vendor is fully able to bear the economic risk of an
investment in the Purchaser's common shares for an
indefinite period of time and can afford a complete loss
of such investment.
(iv) Subject to the terms and conditions set forth in Section
2.6(d) and Article 5, the Vendor understands and
acknowledges that the Purchaser's common shares have not
been registered for offer or sale under the 1933 Act or
registered or qualified under any state, provincial or
other securities act, and are being sold on the basis of
exemptions from registration under the federal and
applicable state, provincial or other securities laws.
Reliance on such exemption is based in part on the
accuracy of the representations, warranties and agreements
made by the Vendor herein, and the Vendor acknowledges and
agrees that the Purchaser has relied on such
representations, warranties and agreements. The Vendor
further understands and acknowledges that the Purchaser's
common shares may not be sold, assigned or otherwise
transferred unless so registered or qualified or unless,
in the opinion of counsel to the Vendor, which opinion is
reasonably acceptable to the Purchaser, an exemption from
registration and any such qualification is available.
(j) Leased Premises. Schedules 2.2(a)(i) and 2.2(a)(ii) contain
copies of the premise leases (the "Premise Leases"). The Premise
Leases are in full force and effect, unamended by oral or written
agreement and the Vendor is entitled to the full benefit and
advantage of the Premise Leases in accordance with the terms
thereof.
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The Premise Leases are in good standing and there has not been
any default by the Vendor under the Premise Leases nor has
there been any disputes between the Vendor and the landlord
under the Premise Leases. The Premise Leases have not been
assigned by the Vendor in favour of any person.
(k) Personal Property Leases. Schedules 2.2(a)(iii) and
2.2(a)(iv) contain copies of the personal property leases
(the "Personal Property Leases"). The Personal Property
Leases are in full force and effect and have not been
amended and the Vendor is entitled to the full benefit and
advantage of the Personal Property Leases in accordance
with their terms. The Personal Property Leases are in good
standing and there has not been any default by the Vendor
nor has there been any disputes between the Vendor and any
other party under the Personal Property Leases. The
Personal Property Leases have not been assigned by the
Vendor in favour of any person.
3.2 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Vendor, and acknowledges that the Vendor is
entering into this Agreement in reliance upon such representations and
warranties, as follows:
(a) Corporate Status. The Purchaser is a corporation incorporated and
validly existing under the laws of the State of Nevada. The
Purchaser is a public company in the United States and its common
shares trade on the over-the-counter bulletin board under the
stock symbol ACCO. The Purchaser is in good standing and not in
default of any of its reporting obligations under applicable
securities and corporate legislation. The Purchaser is current
with all filings required to be made under applicable securities
and corporate legislation, including all filings required to be
made with the United States Securities and Exchange Commission.
(b) Authorization. The Purchaser has all necessary power, authority
and capacity to enter into this Agreement and all other
agreements and instruments to be executed by it as contemplated
by this Agreement and to carry out its obligations under this
Agreement and such other agreements and instruments.
(c) Enforceability of Obligations. This Agreement constitutes a valid
and binding obligation of the Purchaser enforceable in accordance
with its terms, subject however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy,
insolvency, reorganization or other laws affecting creditors'
rights generally and to the extent that equitable remedies such
as specific performance and injunction are only available in the
discretion of the court from which they are sought.
(d) Litigation. There are no claims, proceedings or actions in
existence or threatened, or to the best of the Purchaser's
knowledge, contemplated against the Purchaser which would
prevent, delay or hinder the transaction contemplated by this
Agreement.
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(e) Absence of Conflicting Agreements. The execution and delivery by
the Purchaser of, and the performance of its obligations under,
this Agreement and the completion by the Purchaser of the
transactions contemplated hereby will not result in the violation
of any of the terms and provisions of the constating documents or
by-laws of the Purchaser or of any indenture or other agreement,
written or oral, to which the Purchaser is a party or by which it
is bound or the violation of any applicable law by the Purchaser.
(f) Authorized Capital. The Purchaser has an authorized capital of 50
million shares, and as of August 2, 2001 16,911,627 are issued
and outstanding, and on completion of the transactions
contemplated hereby, the October Shares and September Shares
shall be validly issued to the Vendor with good title thereto,
free and clear of all charges, liens, pledges or other
encumbrances and rights of others.
(g) Resale Restrictions. The October Shares are subject to resale
restrictions under the 1933 Act until such time as the Purchaser
is able, acting reasonably, to register the October Shares under
the 1933 Act or is able to sell such shares under Rule 144 of the
1933 Act. The September Shares are also subject to resale
restrictions under the 1933 Act and will not be able to be sold
into the market pursuant to Rule 144 of the 1933 Act until the
date which is twelve (12) months from the Time of Transfer. Until
such time as the Vendor sells or otherwise transfers all of the
October Shares and September Shares, the Purchaser shall remain
in good standing and not be in default of any of its reporting
obligations under applicable securities and corporate legislation
and shall remain current with all filings required to be made
under applicable securities and corporate legislation, including
all filings required to be made with the United States Securities
and Exchange Commission and the rules of any quotation system or
stock exchange that is applicable to the common shares of the
Purchaser. The Purchaser shall also provide all reasonable
assistance, including providing any necessary consents or
opinions, to the Vendor to assist the Vendor to sell the
applicable October Shares and September Shares pursuant to Rule
144 of the 1933 Act.
3.3 Survival of Covenants, Representations and Warranties. The covenants,
representations and warranties of each of the Vendor and the Purchaser contained
in this Agreement shall survive the Time of Transfer and, notwithstanding the
transfer of the Assets to the Purchaser, shall continue in full force and
effect.
ARTICLE 4 CLOSING
4.1 Closing Deliveries. At or before the Time of Transfer, each party shall
deliver, or cause to be delivered, to the other party the items referenced
elsewhere in this Agreement together with such other documents as may be
reasonably requested by a party hereto.
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4.2 Conditions of Closing. The Vendor shall not be obligated to complete the
transactions contemplated hereby if it has not obtained: (i) the approval of the
transactions contemplated herein from its shareholders (which approval is being
sought at a special meeting of shareholders to be held on September 17, 2001);
and (ii) regulatory approval of the transactions contemplated herein (which
approval is being sought concurrently with the execution and delivery of this
Agreement by the parties) prior to the Time of Transfer. The Purchaser shall not
be obligated to complete the transactions contemplated hereby unless the Vendor
has delivered to the Purchaser evidence that all security interests registered
against the Assets have been released.
ARTICLE 5
PIGGYBACK REGISTRATION RIGHTS
5.1 Piggyback Registration.
(a) If (but without any obligation to do so) at any time, or from
time to time, the Purchaser shall determine to register any of
its securities under the 1933 Act, for its own account or the
account of any of its shareholders, other than a registration
relating solely to employee benefit plans, or a registration
relating solely to a United States Securities and Exchange
Commission Rule 145 transaction, a transaction relating solely to
the sale of debt or convertible debt instruments or a
registration on any form which does not include substantially the
same information as would be required to be included in a
registration statement covering the sale to the public of
securities of the Purchaser, the Purchaser will:
(i) promptly give to the Vendor written notice thereof prior
to filing the registration statement; and
(ii) include in such registration and in any underwriting
involved therein, all the September Shares and/or October
Shares, if applicable, specified in a written request or
requests, made within twenty (20) days after receipt of
such written notice from the Purchaser, by the Vendor,
except as set forth in Section 5.1(b) below.
(b) If the registration is for a registered public offering involving
an underwriting, the Purchaser shall so advise the Vendor as a
part of the written notice given pursuant to subsection 5.1(a)(i)
above. In such event, the right of the Vendor to registration
pursuant to Section 5.1 shall be conditioned upon the Vendor's
participation in such underwriting and the inclusion of the
Vendor's September Shares and/or October Shares, if applicable,
in the underwriting to the extent provided herein. If the Vendor
proposes to distribute the September Shares and/or October
Shares, if applicable, through such underwriting it shall
(together with the Purchaser and the other holders distributing
their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Purchaser. If
the Vendor disapproves of the terms of any such underwriting, it
may elect to withdraw therefrom by written notice to the
Purchaser and the managing
-14-
underwriter. Any September Shares and/or October Shares, if
applicable, excluded or withdrawn from such underwriting shall
be withdrawn from such registration.
(c) The Vendor shall be entitled to participate in an unlimited
number of registrations pursuant to this Section 5.1 until all of
the September Shares and/or October Shares are eligible to be
resold pursuant to Rule 144 under the 1933 Act.
(d) The provisions of this Article Five shall survive the Time of
Transfer, and notwithstanding the transfer of the Assets to the
Purchaser, shall continue in full force and effect until all of
the October Shares and September Shares are sold by the Vendor.
(e) For greater certainty and without limiting the registration
obligations of the Purchaser related to the October Shares, the
piggyback registration rights of the Vendor with respect to the
September Shares contained in this Article 5 shall not be
applicable only to the registration statement that the Purchaser
is currently preparing which registration statement will include
the October Shares. The piggyback rights of the Vendor with
respect to the September Shares contained in this Article 5 shall
be applicable to all subsequent registration statements of the
Purchaser subject to section 5.1(d) hereof.
ARTICLE 6 MISCELLANEOUS
6.1 Further Assurances. The Vendor and the Purchaser will each execute and
deliver such further documents and instruments and do such acts and things as
may before and after the Time of Transfer be reasonably required by the other to
carry out the intent and meaning of this Agreement.
6.2 Non-Solicitation. Until the Time of Transfer or the date that the Vendor is
not able to obtain the approvals necessary in order to complete the transaction
as contemplated herein, whichever occurs first, the Vendor agrees:
(a) that is shall immediately cease and cause to be terminated any
existing discussions or negotiations (directly or indirectly,
through any insider, officer, director, employee, investment
banker, agent or otherwise) with any person (other than the
Purchaser) with respect to any material or potentially material
transaction involving the Vendor and/or any of its assets or any
of its securities, whether issued or unissued (each, an
"Acquisition Proposal");
(b) that is shall not waive or vary any terms or conditions of any
confidentiality agreements that it entered into with any persons
that were considering Acquisition Proposals (except to the extent
expressly required by those agreements) and shall forthwith
request the return (or the deletion from retrieval systems and
data bases or the destruction) of all confidential information as
contemplated by those confidential agreements; and
-15-
(c) that it shall not (directly or indirectly, through any insider,
officer, director, employee, investment banker, agent or
otherwise) solicit, initiate or encourage inquiries or
submissions of, or participate in any discussions or negotiations
regarding, or furnish to any other person any information with
respect to, enter into any agreement or understanding concerning,
or otherwise co-operate in any way with, or assist or participate
in, or facilitate or encourage any effort or attempt by any other
person to do or seek to do any of the foregoing.
6.3 Indemnity by the Vendor. The Vendor shall indemnify and hold the Purchaser,
its directors, officers, employees, agents, representatives and the Purchaser's
affiliates and their respective directors, officers and employees harmless in
respect of any claim, demand, action, cause of action, damage, loss, cost,
liability or expense (hereinafter referred to as "Claim") which may be made or
brought against an Indemnified Party or which it may suffer or incur directly or
indirectly as a result of, in respect of or arising out of:
(a) any incorrectness in or breach of any representation or warranty
of the Vendor contained in this Agreement or in any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement; or
(b) any breach of or any non-fulfilment of any covenant or agreement
on the part of the Vendor under this Agreement or under any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement.
6.4 Indemnity by the Purchaser. The Purchaser shall indemnify and hold the
Vendor, its directors, officers, employees, agents, representatives and the
Vendor's affiliates and their respective directors, officers and employees
harmless in respect of any Claim which may be made or brought against an
Indemnified Party or which it may suffer or incur directly or indirectly as a
result of in respect of or arising out of:
(a) any incorrectness in or breach of any representation or warranty
of the Purchaser contained in this Agreement or in any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement; or
(b) any breach of or any non-fulfilment of any covenant or agreement
on the part of the Purchaser under this Agreement or under any
other agreement, certificate or instrument executed and delivered
pursuant to this Agreement.
6.5 Applicable Law. This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the
Province of Ontario and the federal laws of Canada applicable therein. The
parties hereby attorn to the jurisdiction of the courts of the Province of
Ontario.
-16-
6.6 Binding Agreement. This Agreement shall enure to the benefit of and be
binding upon the parties and their respective successors, heirs and legal
representatives, as the case may be, and permitted assigns.
6.7 Assignment. Neither party may assign this Agreement without the prior
written consent of the other party.
6.8 Entire Agreement. This Agreement together with Schedules attached hereto
constitutes the entire agreement among the parties hereto and except as herein
stated and in the instruments and documents to be executed and delivered
pursuant hereto, contains all of the representations and warranties of the
parties hereto. There are no oral representations or warranties among the
parties hereto of any kind. This Agreement may not be amended or modified in any
respect except by written instrument signed by all the parties hereto.
6.9 Severability. Any covenant or provision hereof determined to be void or
unenforceable in whole or in part shall not be deemed to affect or impair the
validity of any other covenant or provision hereof and the covenants and
provisions hereof are declared to be separate and distinct.
6.10 Time of Essence. Time shall be of the essence in this Agreement.
6.11 Counterparts and Facsimile. This Agreement may be executed by the parties
in any number of separate counterparts each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument. Counterparts may be executed either in
original or faxed form and the parties adopt any signatures received by a
receiving fax machine as original signatures of the parties, provided, however
that any party providing its signature in such manner shall promptly forward to
the other party an original of the signed copy of this Agreement which was so
faxed.
[Remainder of this page left intentionally blank]
-17-
IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first written above.
xx-xxxx.xxx Inc.
Per:
----------------------------------------
Name: Xxxx Xxxxxxx
Title: President and Chief Executive Officer
000XXXXXXX.XXX INC.
Per:
---------------------------------------
Name:
Title:
SCHEDULE 2.1(a)
LIST OF CAPITAL ASSETS
Description of Assets Quantity
--------------------- --------
Dell 533 Personal Computer 3
IBM Personal Computer 4
IMAC Personal Computer 1
No Name Personal Computer 5
Packard Xxxx Personal Computer 1
PHLABS 733 Personal Computer 7
SDI Personal Computer 1
SDI 600E Personal Computer 5
SDI 650 Personal Computer 3
SDI 996A 466 Personal Computer 2
SDIPP6A 500 Personal Computer 1
SDIPP6A 533 Personal Computer 7
IBM Laptop Computer 1
Toshiba Laptop Computer 1
Daewoo Personal Computer 1
Sony Laptop Computer 1
Toshiba CD Burner 1
Rebel 3 Server 1
CTX 17" Computer Monitor 1
Eone 15" Computer Monitor 1
KPS 15" Computer Monitor 1
NEC Computer Monitor 3
No Name Computer Monitor 3
Optiquest Computer Monitor 5
Samsung Computer Monitor 2
Samsung Computer Monitor 12
SeaNix Computer Monitor 3
Viewsonic Computer Monitor 4
Belkin F1D074 Switch 5
Belkin F1D074 Adapter 2
Supercom Hub 1
Netgear Hub 1
APC UPS 1
Blackberry PDA 1
Brother HL 127ON Printer 1
Smartlink Hub 1
3M 9050 Projector 1
A Color 3006 Printer 1
Epson 670 Printer 1
Notepad 5 PDA 1
Norstar Base 1
Norstar Telephone Switch 1
Norstar Telephones 23
Fuji 2700 Digital Camera 1
Nortel Conference Phone 1
Qualcomm Cellphone 1
Motorolla Cellphone 1
Samsung Cellphone 1
GBC Shredder 1
Toshiba 2860 Copier 1
List of Capital Assets - continued
Description of Assets Quantity
--------------------- --------
Fridge 2
Microwave 2
Boardroom Table 2
Boardroom Chairs 18
Costco Work Stations 14
Office Chairs 22
IKEA Chairs 5
IKEA Work Stations 7
Book Shelves 4
4 Drawer File Cabinets 2
2 Drawer File Cabinet 1
Storage Closets 2
IKEA Computer Desk 4
IKEA Coffee Table 1
SCHEDULE 2.1(b)
LIST OF INTELLECTUAL PROPERTY
Description of Intellectual Property
cs-live engine is fully proprietary and highly scalable technology, based on
standard technologies, such as Java and JSP. Data exchange protocol is built on
top of the HTTP protocol and creates a scalable infrastructure for data exchange
between two clients. Server has a concept of Enterprise, which allows for
hosting of multiple independent Enterprise on single server instance.
cs-live Helpdesk Operator's Interface is a Win32 application to provide native
Windows UI and is very friendly application, which includes numerous usability
features for higher Operator's productivity.
cs-live Helpdesk provides highly configurable Visitor HTML(JSP)-based Interface.
All configuration is done through the protected JSP-based portal, where
Administrators configure the look-and-feel of the Visitor Interface, as well as
access online product documentation, use Data Mining tools, etc.
cs-live Helpdesk stores all Interaction data into DB and makes it available for
later retrieval through either Operator's application or through HTML-based
search engine to mine session data.
cs-live Helpdesk provides Web Monitoring functionality for operators to see who
is currently browsing their Web Sites and proactively start Instant Messaging
sessions. For repetitive Visitors the application provides the profile with the
reference of previous interactions with the Visitor.
cs-live Helpdesk provides FAQ hosting feature for customers. The benefits of
FAQs hosting with cs-live include sophisticated interface, FAQs availability for
the Operators, integrated Search Engine and reporting functions and unsatisfied
customers escalation process to Chat sessions.
cs-live Helpdesk application provides set of canned reports presented in text
and graphical format, which cover most important access and sessions statistics.
Custom reports could be designed with 3rd party tools.
Corporate Name
--------------
xx-xxxx.xxx Inc.
Domain Name
-----------
xx-xxxx.xxx
-2-
Trademarks
----------
-----------------------------------------------------------------------------------------------------
Country Trademark or Application Requirement or Status of Remarks
Application
-----------------------------------------------------------------------------------------------------
Canada CS-LIVE & DESIGN Filed Filing Date:
April 10, 2000
Serial No. 1,054, 342 Awaiting Examination
-----------------------------------------------------------------------------------------------------
Canada HAND & DESIGN Filed Filing Date:
April 10, 2000
Serial No. 1,054,345 Awaiting Examination
-----------------------------------------------------------------------------------------------------
Canada REAL HELP.REAL TIME. Filed Filing Date:
ONE CLICK April 10, 2000
Awaiting Examination
Serial No. 1,054,344
-----------------------------------------------------------------------------------------------------
Canada CS-LIVE Filed Filing Date:
April 10, 2000
Serial No. 1,054,343 Awaiting Examination
-----------------------------------------------------------------------------------------------------
Canada TALK TO THE HAND Filed Filing Date:
BECAUSE THE WEB IS May 31, 2000
NOT LISTENING Awaiting Examination
Serial No. 1,061,253
-----------------------------------------------------------------------------------------------------
Canada WE MAKE IT EASY FOR Filed Filing Date:
YOU TO GIVE YOUR May 31, 2000
CUSTOMERS THE Awaiting Examination
SERVICE THEY DESERVE
Serial No. 1,061,252
-----------------------------------------------------------------------------------------------------
Canada CS-LIVE LITE Filed Filing Date:
May 31, 2000
Serial No. 1,061,251 Awaiting Examination
-3-
-----------------------------------------------------------------------------------------------------
United CS-LIVE & DESIGN Official Letter received Filing Date:
States (Objections not yet reviewed) October 10, 2000
Serial No. 76/144,094
Reply due September 28, 2001
-----------------------------------------------------------------------------------------------------
United HAND & DESIGN Official Letter received Filing Date:
States (Formal objections only) October 10, 2000
Serial No. 76/144,151
Reply due October 19, 2001
-----------------------------------------------------------------------------------------------------
United REAL HELP.REAL TIME. Official Letter received Filing Date:
States ONE CLICK (Formal objections only) October 10, 2000
Serial No. 76/144,093 Reply due October 26, 2001
-----------------------------------------------------------------------------------------------------
United CS-LIVE Official Letter received Filing Date:
States (Formal objections only) October 10, 2000
Serial No. 76/144,095
Reply due September 28, 2001
-----------------------------------------------------------------------------------------------------
Canada ePEOPLE Filed Filing Date:
November 7, 2000
Serial No. 1,081,838 Awaiting Examination
-----------------------------------------------------------------------------------------------------
SCHEDULE 2.1(c)
LIST OF CLIENTS
Name of Client
--------------
Yamaha
Bearskin Lake Air Service LTD
GTN Communications Corp.
Roofers Annex
Best Fund
Direct Funitive
Eworld Online
JGB Hose
Pioneer Military Lending of Nevada Inc.
Ipros Corporation
Specialty Merchandise Corporation
Prudential Maximum Realty
HMC Group
Watchbuys
Archaio
SCHEDULE 2.2(a)(i)
LEASE
Copy of the lease for the premises located at 0 Xxxxxxx Xxxxx, Xxxxx 0, Xxxx 0,
Xxxxxx (xxxxxxxx Xxxxxx), Xxxxxxx, X0X 0X0 is attached.
SCHEDULE 2.2(a)(ii)
LEASE
Copy of the lease for the premises located at 0 Xxxxxxx Xxxxx, Xxxxx 0, Xxxxx
000, Xxxxxx (formerly Nepean), Ontario, K2E 8A9 is attached.
SCHEDULE 2.2(a)(iii)
COPIER LEASE
Copy of the Toshiba 2860 photocopier lease is attached.
SCHEDULE 2.2(a)(iv)
COPIER LEASE
Copy of the Ricoh 3006 photocopier lease is attached.
SCHEDULE 2.2(b)
LIST OF VARs
Name of VAR
-----------
Webdiscovery
Red Caddy
I4DESIGN
Cyberlandtech
Cata Alliance
Baytek systems
Ecasystems
WebCall Europe
Media Trends
CrossDraw
Omni Sales
Xxxxxxx Sezlik Group
SCHEDULE 3.1(c)
LIST OF SECURITY INTERESTS
Name of Secured Party PPSA Registration File Number
--------------------- -----------------------------
Royal Bank of Canada 000000000
864448776
869990778
National Leasing Group Inc. 865483992
Tau Capital Corp. 869099022
Blake, Xxxxxxx & Xxxxxxx LLP 875347578
