EXHIBIT 99.1 Merger Agreement
MERGER AGREEMENT
THIS AGREEMENT MADE THE 2nd DAY OF July, 1998.
BETWEEN:
AZTEK TECHNOLOGIES INC., a company incorporated under the laws of the
Province of British Columbia, and having its registered office at 505 - 000
Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0 ("ATI")
OF THE FIRST PART
AND:
AZTEK, INC., a company incorporated under the laws of the State of Nevada,
and having its registered office at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000 Xxxx,
Xxxxxx, 00000 ("the Corporation")
OF THE SECOND PART
WHEREAS:
A. Aztek Technologies Inc. shareholders are legal and beneficial owners of
all the issued and outstanding shares in the capital stock of Aztek
Technologies Inc., a corporation incorporated under the laws of British
Columbia as follows:
Description No. Of Registered Number of Shares
Shares Shareholders Outstanding
Common 347 2,051,109
Escrow 1 354,000
Options 5 175,000
Total *347 2,051,109
* The above shareholders are as of June 30, 1997. The current number of
shareholders is not available from the transfer agent at this time but will
be made available at a later date.
(the "ATI Shares").
B. Aztek, Inc. shareholders are legal and beneficial owners of all of the
issued and outstanding shares in the capital stock of Aztek, Inc., a
corporation incorporated under the laws of Nevada as follows:
Description No. of Shareholders Number of Shares
Shares
Outstanding
Common 6 1,025,000
Escrow 5 1,000,000
Options 0 0
Total 6 2,025,000
(the "Corporation Shares").
C. ATI has agreed to merge with the Corporation and the Corporation has
agreed to merge with ATI, through a pooling of Shares, all of the assets and
liabilities of the respective parties, on the terms and conditions as set out
in this Agreement.
BASED ON WHAT HAS BEEN SET OUT ABOVE THIS AGREEMENT WITNESSES that in
consideration of the premises and the mutual representations, warranties,
agreements and covenants contained in this Agreement (the receipt and
adequacy of such consideration is by this Agreement mutually admitted by each
party), the parties covenant and agree as follows:
1. INTERPRETATION
1.1 Definitions - In this Agreement the following words and phrases
shall have the meanings set out after each:
(a) "ATI" means Aztek Technologies Inc., a company incorporated under the
laws of the Province of British Columbia, and having its registered office at
505 - 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0;
(b) "ATI Shares" means all of the issued and outstanding shares in the
capital of ATI;
(c) "ATI's Certificates" means the stock certificates to be delivered at
Completion Date pursuant to paragraph 5.2(a).
(d) "ATI's Solicitor" means Xxxxxxx X. Xxxxxxx Law Corporation, Barristers
and Solicitors, of #000 - 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0;
(e) "Business" means the business carried on by ATI which primarily involves
the development, sale, and servicing of computer software;
(f) "Completion Date" means October 1, 1998, or will become effective the
date of the registration statement date, or such other date as may be agreed
upon in writing by the parties to this Agreement and accepted be the
regulatory authorities;
(g) "Corporation" means Aztek, Inc., a company incorporated under the laws
of the State of Nevada, and having its registered office at 0000 Xxxxxxxxx
Xxxxx, Xxxxx 000 Xxxx, Xxxxxx, 00000
(h) "Corporation Shares" means all of the issued and outstanding shares in
the capital of the Corporation;
(i) "Corporation's Solicitor" means Xxxxxxx X. Xxxxxxxx 0000 Xxxxxxxxx
Xxxxx, Xxxxx # 000 Xxxx, Xxxxxx 00000.
(j) "Financial Statements" means the Financial Statements of ATI for the
fiscal year of ATI ending on the 30th day of June, 1998 consisting of a
balance sheet, statement of retained earnings, an income statement and a
statement of changes in financial position of ATI including the notes to such
Financial Statements, a copy of which is attached to this Agreement as
Schedule "B";
(k) "Material Contracts" means those subsisting commitments, contracts,
agreements, instruments, leases or other documents entered into by ATI, by
which it is bound or to which it or its assets are subject which have total
payment obligations on the part of ATI in excess of $1,000;
(l) "Person" includes an individual, corporation, body corporate,
partnership, joint venture, association, trust or unincorporated organization
or any trustee, executor, administrator or other legal representative of such
entity;
(m) "Surviving Business" means the business to be carried on by the
Corporation.
1.2 Schedules - The following are the schedules to this Agreement:
SCHEDULE DESCRIPTION
"A" Authorized Share Capital and Issued Shares
"B" Financial Statements
"C" Material Contracts
"D" Encumbrances
"E" Assets other than Real Property
"F" Equipment Leases
"G" Real Property
"H" Tax Elections
"I" Service Marks, Trade Marks, Trade
Names,
Intellectual Property, Codes, Designs
"J" Litigation
"K" License, Agency & Distribution Agreements
2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF ATI
2.1 Representations and Warranties - In order to induce the Corporation to
enter into and to consummate the transactions contemplated by this Agreement,
ATI by this Agreement represents and warrants to the Corporation as follows:
(a) Organization and Good Standing of ATI - ATI is duly incorporated and is
validly existing and in good standing with respect to the filing of annual
reports under the British Columbia Company Act and has all necessary
corporate power, authority and capacity to own its property and assets and to
carry on its business as presently conducted. Neither the nature of the
business of ATI nor the location or character of the property owned or leased
by it requires that ATI be registered or otherwise qualified or to be in good
standing in any other jurisdiction;
(b) Capitalization of ATI - The issued share capital of ATI together with the
names and the number, class and kind of shares held by each director,
officer, insider, or major shareholders (greater than 10%) of ATI is as set
out in Schedule "A" to this Agreement;
(c) Authority - ATI has due and sufficient right and authority to enter into
this Agreement on the terms and conditions set out in this Agreement;
(d) Agreement Valid - This Agreement constitutes a valid and binding
obligation of ATI. On the Completion Date, ATI shall not be a party to, bound
by or subject to any indenture, mortgage, lease, agreement, instrument,
statute, regulation, order, judgment, decree or law which would be violated,
contravened or breached by or under which any default would occur as a result
of the execution and delivery by ATI of this Agreement or the performance by
ATI of any of the terms of this Agreement;
(e) Absence of Options, etc. - The
Shares represent all of the issued and outstanding shares in the capital of
ATI and no Person has any agreement or option, present or future, contingent,
absolute or capable of becoming an agreement or option or which with the
passage of time or the occurrence of any event could become an agreement or
option:
(i) to require ATI to issue any further or other shares in its capital
or any other security convertible or exchangeable into shares in its capital
or to convert or exchange any securities into or for shares in the capital of
ATI;
(ii) for the issue and allotment of any of the authorized but unissued
shares in the capital of ATI;
(iii) to require ATI to purchase, redeem or otherwise acquire any of
the issued and outstanding shares in the capital of ATI; or
(iv) to acquire the Shares or any of them;
(f) Absence of Other Interest - ATI does not own any shares in or other
securities of, or have any interest in the assets or business of any other
Person;
(g) Financial Statements - The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of prior fiscal years. To the best of the knowledge of
ATI, such Financial Statements present fairly the financial position of ATI
as at the date of such Financial Statements and the results of ATI's
operations
and the changes in ATI's financial position for the period then ending;
(h) Absence of Undisclosed Liabilities - Except to the extent reflected or
reserved against in the Financial Statements or the Schedules hereto or
incurred subsequent to the date of such Financial Statements in the ordinary
and usual course of the business of ATI, to the best of the knowledge of ATI,
ATI does not have any outstanding indebtedness or any liabilities or
obligations (whether accrued, absolute, contingent, or otherwise);
(i) Absence of Changes - To the best of the knowledge of ATI, prior to the
Completion Date, there has not been any damage, destruction or loss, labour
trouble or other event, development or condition, of any character (whether
or not covered by insurance) which is not generally known or which has not
been disclosed to the Corporation, which has or may materially and adversely
affect the business, assets, properties or future prospects of ATI;
(j) Accuracy of Records - To the best of the knowledge of ATI, all material
financial transactions of ATI have been accurately recorded in the books and
records of ATI and such books and records fairly present the financial
position and the corporate affairs of ATI;
(k) Absence of Unusual Transactions - Prior to the Completion Date, ATI has
not:
(i) transferred, assigned, sold or otherwise disposed of any of the
assets shown in the Financial Statements or canceled any debts or claims
except in each case in the ordinary and usual course of business;
(ii) incurred or assumed any obligation or liability (fixed or
contingent), except unsecured current obligations and liabilities incurred in
the ordinary and normal course of business;
(iii) issued or sold any shares in its capital stock or any warrants,
bonds, debentures or other corporate securities or issued, granted or
delivered any right, option or other commitment for the issuance of any such
or other securities;
(iv) discharged or satisfied any lien or encumbrance, or paid any
obligation or liability (fixed or contingent), other than current liabilities
in the ordinary and normal course of business;
(v) declared or made, or committed itself to make, any payment of any
dividend or other distribution in respect of any of its shares or purchased
or redeemed any of its shares or split, consolidated or reclassified any of
its shares;
(vi) entered into any material commitment or transaction not in the
ordinary and usual course of business;
(vii) waived or surrendered any right of substantial value;
(viii) made any gift of money or of any property or assets to any
Person;
(ix) purchased or sold any fixed assets;
(x) amended or changed or taken any action to amend or change its
memorandum or articles of incorporation;
(xi) increased or agreed to increase the pay of, or paid or agreed to
pay any pension, bonus, share of profits or other similar benefit of, any
director, employee or officer or former director, employee or officer of ATI;
(xii) made payments of any kind to or on behalf of ATI or any affiliate
or associate of ATI or under any management agreement with ATI save and
except business related expenses and salaries in the ordinary course of
business and at the regular rates payable to them;
(xiii) mortgaged, pledged, subjected to lien, granted a security
interest in or otherwise encumbered any of its assets or property, whether
tangible or intangible; or
(xiv) authorized or agreed or otherwise have become committed to do any
of the foregoing;
(l) Title to Properties - ATI has good and marketable title to all of its
properties, interests in properties and assets, real and personal including
those referred to in Schedules "E" and "G" hereto, including those reflected
in the Financial Statements or acquired since the date of the Financial
Statements (except as since transferred, sold or otherwise disposed of in the
ordinary and usual course of business), free and clear of all mortgages,
pledges, liens, title retention agreements, encumbrances or charges of any
kind or character whatsoever except as shown in Schedule "D" to this
Agreement, and none of ATI's assets or properties are in the possession of or
under the control of any other Person;
(m) Leased Equipment - Schedule "F" sets out a true and complete list of
all equipment, other personal property and fixtures in the possession or
custody of ATI which, as of the date of this Agreement, are leased or are
held
under license or similar arrangement and accurately describes the leases,
licenses, agreements or other documentation relating to such personal
property. Except as set out in Schedule "B", all rental or other payments
required to be paid by ATI pursuant to such leases or licenses have been duly
paid and ATI is not otherwise in default in meeting its obligations under any
such leases or licenses;
(n) Collectability of Accounts Receivable - The accounts receivable shown in
the Financial Statements of ATI have been recorded by ATI in accordance with
its usual accounting practices. The reserves taken for doubtful or bad
accounts is adequate based on the past experience of ATI and is consistent
with the accounting procedures used by ATI in previous fiscal periods. There
is nothing which would indicate that such reserve is not adequate or that a
higher reserve should be taken;
(o) Real Property - Schedule "G" contains accurate descriptions of all real
property in respect of which ATI holds an interest, whether freehold,
leasehold or otherwise. ATI is not party to or bound by any leases of real
property other than those referred to in Schedule "G" to this Agreement and
all interests held by ATI whether as owner or as lessee are free and clear of
any and all liens, charges and encumbrances of any nature and kind whatsoever
except as set out in Schedule "D". All rental and other payments required to
be paid by ATI pursuant to such leases have been duly paid and ATI is not
otherwise in default in meeting its obligations under any such lease;
(p) Material Contracts - Except for the liens, charges and encumbrances
listed in Schedule "D", the equipment and other personal property leases and
agreements listed in Schedule "F", the real property leases listed in
Schedule "G", and the contracts and agreements listed in Schedule "C", ATI is
not party to or bound by any Material Contract, whether oral or written, and
the contracts and agreements listed in Schedule "C" are all in full force and
effect and unamended, no material default exists in respect of such
agreements on the part of any of the other parties to such agreements, ATI is
not aware of any intention on the part of any of the other parties to such
agreements to terminate or materially alter any such contracts or agreements,
and Schedule "C" lists all the present outstanding Material Contracts entered
into by ATI in the course of carrying on its business;
(q) Absence of Guarantees - ATI has no guarantees with respect to the
obligations of any other Person. ATI has no indemnities or contingent or
indirect obligations with respect to the obligation of any other Person
(including any obligation to service the debt of or otherwise acquire an
obligation of another Person or to supply funds to, or otherwise maintain any
working capital or other balance sheet condition of any other Person);
(r) Absence of Conflicting Agreements - ATI is not party to, bound by or
subject to any indenture, mortgage, lease, agreement, instrument, judgment or
decree which would be violated or breached by, or under which default would
occur or which could be terminated, cancelled or accelerated, in whole or in
part, as a result of the execution and delivery of this Agreement or the
consummation of any of the transactions provided for in this Agreement;
(s) Litigation - Other than as set out in Schedule "J", to the best of the
knowledge of ATI there is not any suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and applications for
review, in progress, pending or threatened against, or relating to ATI or
affecting its assets, properties or business which might materially and
adversely affect the assets, properties, business, future prospects or
financial condition of ATI; and there is not presently outstanding against
any of ATI any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator;
(t) Copies of Agreements, etc. - True, correct and complete copies of all
mortgages, leases, agreements, instruments and other documents listed in
Schedules "B", "C", "D", "F", "G", and "I" have been delivered to the
Corporation;
(u) Corporate Records - To the best of the knowledge of ATI, ATI has kept
the records required to be kept by ATI and any other applicable corporate
legislation and such records are complete and accurate and contain all
minutes of all meetings of directors and members of ATI;
(v) Absence of Approvals Required - Relying upon the Corporation's
representations and warranties with respect to the Investment Canada Act and
the Competition Act as set out in subsection 3.1(b) of this Agreement, no
authorization, approval, order, license, permit or consent of any
governmental authority, regulatory body or court, and no registration,
declaration or filing by ATI with any such governmental authority, regulatory
body or court is required in order for ATI:
(i) to incur the obligations expressed to be incurred by ATI pursuant
to this Agreement;
(ii) to execute and deliver all of the documents and instruments to be
delivered by ATI pursuant to this Agreement;
(iii) to duly perform and observe the terms and provisions of this
Agreement; and
(iv) to render this Agreement legal, valid, binding and enforceable in
accordance with its terms;
(w) Permits and Licenses - ATI holds all permits, licenses, consents and
authorities issued by any governmental authority of Canada or any Province of
Canada, or any municipal, regional or other authority, or any subdivision of
the same, including without limitation, any governmental department,
commission, bureau, board or administrative agency, which are necessary or
desirable in connection with the conduct and operation of ATI's business and
the ownership or leasing of its assets and the conduct and operation of ATI's
business as the same are now owned, leased, conducted or operated is not in
breach of or in default under any term or condition of any such permits,
licenses, consents and authorities:
(x) Filings - ATI:
(i) has duly filed in a timely manner all federal and provincial income
tax returns and election forms and the tax returns of any other jurisdiction
required to be filed and to the best of the knowledge of ATI all such returns
and forms have been completed accurately and correctly in all respects;
(y) Additional Tax Matters - Except as specified in Schedule "H", ATI has
not:
(i) made any election under Section 85 of the Income Tax Act with
respect to the acquisition or disposition of any property;
(ii) made any election under Section 83 of the Income Tax Act with
respect to the payment out of the capital dividend account of ATI;
(iii) acquired or had the use of any property from a person with whom
it was not dealing at arm's length other than at fair market value;
(iv) disposed of anything to a person with whom it was not dealing at
arm's length for proceeds less than fair market value of such thing; or
(v) discontinued carrying on any business in respect of which
non-capital losses were incurred, and any non-capital losses which ATI has
are not losses from property or business investment losses;
(z) Tax Elections - ATI has made all elections required to be made pursuant
to Part III of the Income Tax Act in connection with any distributions by ATI
and all such elections were true and correct and in the prescribed form and
were made within the prescribed time periods;
(aa) Statements Attached to Tax Returns - To the best of the knowledge of
ATI, the financial statements and schedules attached to the corporate income
tax returns as filed by ATI for each of its taxation years reflect and
disclose all transactions to which ATI was party as required by the Income
Tax Act or other applicable revenue laws and all of the transactions to which
ATI was or is a party are reflected or disclosed in such financial statements
and schedules and the corporate income tax returns and schedules have been
duly and accurately completed as required by such Act;
(bb) Intellectual Property -
(i) Schedule "I" attached hereto lists and contains a description of:
(1) all patents, patent applications and registrations, trade marks, trade
xxxx applications and registrations, copyrights, copyright applications and
registrations, trade names and industrial designs, domestic or foreign, owned
or used by ATI or relating to the operation of the Business,
(2) all trade secrets, know-how, inventions and other intellectual property
owned or used by ATI or relating to the Business, and
(3) all computer systems and application software, including without
limitation all documentation relating thereto and the latest revisions of all
related object and source codes therefor, owned or used by ATI or relating to
the Business,
(all of the foregoing being collectively called the "Intellectual Property");
(ii) ATI has good and valid title to all of the Intellectual Property, free
and clear of any and all encumbrances. Complete and correct copies of all
agreements whereby any rights in any of the Intellectual Property have been
granted or licensed to ATI have been provided to the Corporation. No royalty
or other fee is required to be paid by ATI to any other person in respect of
the use of any of the Intellectual Property except as provided in such
agreements delivered to the Corporation.
(iii) Except as disclosed in Schedule "I" or "K", there are no restrictions
on the ability of ATI or any successor to or assignee from ATI to use and
exploit all rights in the Intellectual Property. All statements contained in
all applications for registration of the Intellectual Property were true and
correct as of the date of such applications. Each of the trade marks and
trade names included in the Intellectual Property is in use. None of the
rights of ATI in the Intellectual Property will be impaired or affected in
any way by the transactions contemplated by this Agreement;
(iv) To the best of the knowledge of ATI, the conduct of the Business and
the use of the Intellectual Property does not infringe, and ATI has not
received any notice, complaint, threat or claim alleging infringement of, any
patent, trade xxxx, trade name, copyright, industrial design, trade secret or
other Intellectual Property or proprietary right of any other person, and the
conduct of the Business does not include any activity which may constitute
passing-off;
(v) Partnerships or Joint Ventures - Except as disclosed in the Schedules
hereto, ATI is not a partner or participant in any partnership, joint
venture, profit-sharing arrangement or other association of any kind and is
not party to any agreement under which ATI agrees to carry on any part of the
Business or any other activity in such manner or by which ATI agrees to share
any revenue or profit with any other person;
(vi) Customers - ATI has previously delivered to the Corporation a true and
complete list of all customers of the Business as of the date hereof. ATI is
the sole and exclusive owner of, and has the unrestricted right to use, such
customer list. Neither the customer list nor any information relating to the
customers of the Business have, within three years prior to the date of this
Agreement, been made available to any person other than the Corporation and
ATI's User Group. ATI has no knowledge of any facts which could reasonably be
expected to result in the loss of any customers or sources of revenue of the
Business which, in the aggregate, would be material to the Business or the
condition of ATI;
(vii) Restrictions on Doing Business - Except as disclosed in the Schedules
hereto, ATI is not a party to or bound by any agreement which would restrict
or limit its right to carry on any business or activity or to solicit
business from any person or in any geographical area or otherwise to conduct
the Business as ATI may determine.
(viii) No Breach of Material Contracts - All Material Contracts are valid
and subsisting and no material default exists under the Material Contracts
except as disclosed in Schedule "B";
(ix) Indebtedness to ATI - The Business shall not at Completion be indebted
to ATI or any directors, officers, or employees of ATI or any affiliate or
associate of any of them, on any account whatsoever;
(x) Condition of Assets - All assets and all other plant, machinery,
facilities and equipment used by ATI in connection with its business is in
good operating condition and in a good state of maintenance and repair for
equipment of similar age relative to the standards of maintenance and repair
maintained by other companies carrying on similar Business in Canada;
(xi) Undisclosed Information - ATI has no specific information relating to
ATI which is not generally known or which has not been disclosed to the
Corporation and which if known could reasonably be expected to have a
materially adverse effect on the value of the Shares;
(xii) Conduct of Business - The conduct of business by ATI on any lands
from which they operate their business is not subject to any restriction or
limitation other than those registered against title to the lands, contained
in applicable zoning regulations or that are of general application and the
conduct of any such business is not in contravention of any law, regulation
or order or any court or other body having jurisdiction including zoning
requirements;
(xiii) Licenses, Agency and Distribution Agreements - Schedule "K" attached
hereto lists all agreements to which ATI is a party or by which it is bound
under which the right to manufacture, use or market any product, service,
technology, information, data, computer hardware or software or other
property has been granted, licensed or otherwise provided to ATI or by ATI to
any other person, or under which ATI has been appointed or any person has
been appointed by ATI as an agent, distributor, licensee or franchisee for
any of the foregoing. Complete and correct copies of all of the agreements
listed in Schedule "K" have been provided to the Corporation. None of the
agreements listed in Schedule "K" grant to any person any authority to incur
any liability or obligation or to enter into any agreement on behalf of ATI;
(xiv) Outstanding Agreements - ATI is not a party to or bound by any
outstanding or executory agreement, contract or commitment, whether written
or oral, except for:
(1) any contract, lease or agreement described or referred to in this
Agreement or in the Schedules hereto,
(2) any contract, lease or agreement made in the ordinary course of the
routine daily affairs of the Business under which ATI has a financial
obligation of less than One Thousand Dollars ($1,000) per annum and which can
be terminated by ATI without payment of any damages, penalty or other amount
by giving not more than thirty (30) days' notice, and
(3) the contracts, leases and agreements described in Schedule "K" attached
hereto. Complete and correct copies of each of the contracts, leases and
agreements described in Schedule "K" have been provided to the Corporation;
and ATI covenants, represents and warrants to the Corporation that all
of the representations and warranties set forth in this paragraph shall be
true and correct at the Completion Time as if made on that date.
(cc) Guarantees, Warranties and Discounts
(i) ATI is not a party to or bound by any agreement of guarantee,
indemnification, assumption or endorsement or any other like commitment of
the obligations, liabilities (contingent or otherwise) or indebtedness of any
person;
(ii) ATI has not given any guarantee or warranty in respect of any of the
products sold or the services provided by it, except warranties made in the
ordinary course of the Business and in the form of ATI's standard written
warranty, a copy of which has been provided to the Corporation, and except
for warranties implied by law;
(iii) during each of the three fiscal years of ATI ended immediately
preceding the date hereof, no claims have been made against ATI for breach of
warranty or contract requirement or negligence or for a price adjustment or
other concession in respect of any defect in or failure to perform or deliver
any products, services or work which had, in any such year, an aggregate cost
exceeding $25,000;
(iv) there are no repair contracts or maintenance obligations of ATI in
favor of the customers or users of products of the Business, except
obligations incurred in the ordinary course of the Business and in accordance
with ATI's standard terms, a copy of which has been provided to the
Corporation;
(v) ATI is not now subject to any agreement or commitment, and ATI has not,
within three years prior to the date hereof, entered into any agreement with
or made any commitment to any customer of the Business which would require
ATI to repurchase any products sold to such customers or to adjust any price
or grant any refund, discount or other concession to such customer;
(vi) ATI is not required to provide any letters of credit, bonds or other
financial security arrangements in connection with any transactions with its
suppliers or customers; and
2.2 Other Representations - All statements contained in any
certificate or other instrument delivered by or on behalf of ATI pursuant to
this Agreement or in connection with the transactions contemplated by this
Agreement shall be deemed to be representations and warranties by ATI under
this Agreement.
2.3 Survival - The representations and warranties of ATI contained
in this Agreement shall survive the Completion and the Share exchange and,
notwithstanding the Completion and the Share exchange, notwithstanding any
investigations or inquiries made by the Corporation prior to the Completion
and notwithstanding the waiver of any condition by the Corporation, the
representations, warranties, covenants and agreements of ATI shall (except
where otherwise specifically provided in this Agreement) survive the
Completion and shall continue in full force and effect for a period of two
(2) years from the Completion Date for all matters except income tax
liability or other tax matters. With respect to income tax liability of ATI
or other tax matters, the representations, warranties, covenants and
agreements of ATI shall survive the Completion and continue in full force and
effect for six (6) years from the later of the date of mailing of a notice of
original assessment by the Minister of National Revenue and the date of
mailing of a notification from the Minister of National Revenue that no tax
is payable by ATI for the fiscal year of ATI ending on the Completion Date.
2.4 Reliance - ATI acknowledges and agrees that the Corporation has
entered into this Agreement relying on the warranties and representations and
other terms and conditions of this Agreement notwithstanding any independent
searches or investigations that may be undertaken by or on behalf of the
Corporation and that no information which is now known or should be known or
which may from the date of this Agreement become known to the Corporation or
its agents or professional advisers shall limit or extinguish the right to
indemnification under this Agreement.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
3.1 Representations and Warranties - In order to induce ATI to enter into
and to consummate the transactions contemplated by this Agreement, the
Corporation represents and warrants to ATI that:
(a) Organization and Good Standing - The Corporation is a company duly
organized, validly existing and in good standing under the laws of Nevada
with respect to the filing of annual reports;
(b) Authority Relative to this Agreement - The Corporation has all
necessary corporate power, authority and capacity to acquire the Shares and
to
perform its obligations under this Agreement. The execution and delivery of
this Agreement has been duly authorized by all necessary corporate action on
the part of the Corporation and this Agreement constitutes a valid and
binding obligation of the Corporation. The Corporation is not a party to,
bound by or subject to any indenture, mortgage, lease, agreement, instrument,
statute, regulation, order, judgment, decree or law which would be violated,
contravened or breached by or under which any default would occur as a result
of the execution and delivery by the Corporation of this Agreement or the
performance by the Corporation of any of the terms of this Agreement; and the
Corporation covenants, represents and warrants to ATI that all of the
representations and warranties set forth in this paragraph 3.1 shall be true
and correct at the Completion Time as if made on that date;
3.2 Survival - The representations and warranties of the Corporation
contained in this Agreement shall survive the Completion and the exchange of
the Shares and notwithstanding the Completion and the exchange of the Shares,
the representations and warranties of the Corporation shall continue in full
force and effect for the benefit of ATI for a period of three (3) years from
the Completion Date;
3.3 Reliance - The Corporation acknowledges and agrees that ATI has entered
into this Agreement relying on the warranties and representations and other
terms and conditions of this Agreement notwithstanding any independent
searches or investigations that may be undertaken by or on behalf of ATI, and
that no information which is now known or which should be known or which may
after the date of this Agreement become known to ATI or its agents or
professional advisers shall limit or extinguish the right to indemnification
under this Agreement.
5. POOLING OF SHARES
4.1 Shares - Based and relying on the representations and warranties set
forth in paragraphs 2 and 3, the Corporation agrees to exchange the Shares of
ATI and ATI agrees to accept the exchange of Shares from the Corporation,
free and clear of all liens, claims, charges, options and encumbrances
whatsoever and the Corporation agrees to exchange ATI Shares on the terms and
conditions set out in this Agreement.
5. COMPLETION
5.1 Completion Date - The transactions contemplated in this Agreement shall
be completed effective as of the Completion Date. The Completion Date is
October 1st, 1998 subject to shareholder and regulatory approval of ATI and
the Corporation. In the event that the Vancouver Stock Exchange does not
approve the merger in an ordinary fashion, ATI may request the Vancouver
Stock Exchange to de-list ATI from the Exchange in order to complete the
merger transaction.
5.2 Completion Deliveries - On or before the Completion Date:
(a) ATI will deliver to the Corporation:
(i) resignations in writing, dated as of the Completion Date, of the
officers and directors of ATI with the exception of ATI President, Xxxx
Sintichakis, which will be delivered when all or any outstanding matters have
been resolved and the merger has been totally completed;
(ii) certified copies of directors and members resolutions of ATI approving
this Agreement; (b) Corporation will deliver to ATI:
(i) certified copy of directors resolutions of the Corporation approving
this Agreement and the completion of the transaction contemplated hereby;
5.3 Share Exchange and Pooling of Assets and Liabilities - Upon Completion
Date, the Corporation will;
(a) Exchange the Shares of ATI for Shares of the Corporation as
follows:
(i) One (1) Common share of the Corporation will be issued in exchange for
each Common share of ATI;
(ii) One (1) Common share option of the Corporation will be issued in
exchange for each Common share option of ATI under existing restrictions;
(iii) One (1) Escrow share of the Corporation will be issued in exchange for
each Escrow share of ATI under existing restrictions.
(b) Transfer all assets and liabilities of ATI to the
Corporation;
6. CONDITIONS PRECEDENT TO THE PERFORMANCE BY CORPORATION OF ITS
OBLIGATIONS UNDER THIS AGREEMENT
6.1 Corporation's Conditions - The obligations of the Corporation to
complete the exchange of the Shares shall be subject to the satisfaction of,
or compliance with, on or before the Completion Date, each of the following
conditions precedent:
(a) Truth and Accuracy of Representations of ATI at Completion - The
representations and warranties of ATI made in paragraph 2.1 shall be true and
correct in all material respects as at the Completion Date and with the same
effect as if made at and as of the Completion Date and ATI shall have
complied in all material respects with its obligations and covenants under this
Agreement;
(b) Performance of Obligations - ATI shall have caused the Corporation to
have performed and complied with all the obligations to be performed and
complied with by ATI under this Agreement;
(c) Absence of Injunctions, etc. - No injunction or restraining order of
any Court or administrative tribunal of competent jurisdiction shall be in
effect prohibiting the transactions contemplated by this Agreement and no
action or proceeding shall have been instituted or be pending before any
Court or administrative tribunal to restrain or prohibit the transactions
between the parties contemplated by this Agreement;
(d) Absence of Change of Conditions - No event shall have occurred or
condition or state of facts of any character shall have arisen or legislation
(whether by statute, rule, regulation, by-law or otherwise) shall have been
introduced which might reasonably be expected to have a materially adverse
effect upon the financial condition, results of operations or business
prospects of ATI.
6.2 The conditions set out in this paragraph 6 are for the exclusive
benefit of the Corporation and may be waived by the Corporation in writing in
whole or in part on or before the Completion Date. Notwithstanding any such
waiver, the completion of merger contemplated by this Agreement by the
Corporation shall not prejudice or affect in any way the rights of the
Corporation in respect of the warranties and representations of ATI set out
in paragraph 2.1 of this Agreement, and the representations and warranties of
ATI set out in paragraph 2.1 of this Agreement shall survive the completion
of the merger.
7. CONDITIONS PRECEDENT TO THE PERFORMANCE OF ATI OF ITS OBLIGATIONS
UNDER THIS AGREEMENT
7.1 The obligations of ATI to complete the exchange of Shares under
this Agreement shall be subject to the satisfaction of or compliance with, at
or before the Completion Time, of each of the following conditions precedent:
(a) Truth and Accuracy of Representations of the Corporation at Completion -
All of the representations and warranties of the Corporation set out in
paragraph 3.1 of this Agreement shall be true and correct in all material
respects as at the Completion Date and with the same effect as if made at and
as of the Completion Date;
(b) Performance of Agreements - The Corporation shall have complied with
and/or performed all its obligations, covenants and agreements contained in
this Agreement.
7.2 The conditions set out in this paragraph 7 are for the exclusive
benefit of ATI and may be waived by ATI in writing in whole or in part on or
before the Completion Date. Notwithstanding any such waiver, completion of
the merger contemplated by this Agreement by ATI shall not prejudice or
affect in any way the rights of ATI in respect of the warranties and
representations of the Corporation set out in paragraph 3.1 of this
Agreement, and the representations and warranties of the Corporation set out
in paragraph 3.1 of this Agreement shall survive for a period of two (2)
years from the date of this Agreement.
8. CONDUCT OF BUSINESS PRIOR TO COMPLETION
8.1 Conduct - Except as otherwise contemplated or permitted by this
Agreement, during the period from the date of this Agreement to the
Completion Date, the Corporation shall cause ATI to do the following:
(a) Conduct Business in Ordinary Course - Conduct ATI's business in the
ordinary and normal course of such business and not, without the prior
written consent of the Corporation, enter into any transaction which would
constitute a breach of the representations, warranties or agreements
contained in this Agreement;
(b) Continue Insurance - Continue in force all existing policies of
insurance presently maintained by ATI;
(c) Perform Obligations - Comply with all laws affecting the operation of
ATI's businesses and pay all required taxes;
(d) Prevent Certain Changes - Not, without the prior written consent of the
Corporation, take any of the actions, do any of the things or perform any of
the acts described in sub-paragraph 2.1(k) except as specifically permitted
under such sub-paragraph; and
(e) Compliance with Paragraph 9 - Comply with the provisions of paragraph 9
of this Agreement.
9. EXAMINATIONS AND WAIVERS
9.1 Access for Investigation - ATI shall permit the Corporation and
its agent, legal counsel, accountants and other representatives, between the
date of this Agreement and the Completion Date, to have access during normal
business hours to the premises and to all the key employees, books, accounts,
records and other data of ATI computer designs and codes, (including without
limitation, all corporate, accounting and tax records and any electronic or
computer accessed data) and to the properties and assets of ATI and ATI will
furnish, and require that ATI's principal bankers, appraisers and independent
auditors and other advisors furnish, to the Corporation such financial and
operating data and other information with respect to the business, properties
and assets of ATI as the Corporation shall from time to time reasonably
request to enable confirmation of the matters warranted in paragraph 2 of
this Agreement. It is also the intention of the parties that the Corporation
shall be entitled to meet with ATI's major clients, customers and suppliers
prior to Completion.
9.2 Disclosure of Information - Until the Completion Date and, in the event
of the termination of this Agreement without consummation of the transactions
contemplated by this Agreement, the Corporation shall use its best efforts to
keep confidential any information (unless otherwise required by law or such
information is readily available or becomes readily available, from public or
published information or sources) obtained from ATI. If this Agreement is so
terminated, promptly after such termination all documents, work papers and
other written material obtained from a party in connection with this
Agreement and not previously made public (including all copies and
photocopies thereof), shall be returned to the party which provided such
material.
10. INDEMNITIES
10.1 Indemnification of the Corporation - Subject to the limitations
set out in this Agreement, ATI agrees with the Corporation to indemnify the
Corporation against all liabilities, claims, demands, actions, causes of
action, damages, losses, costs or expenses (including legal fees on a
solicitor and its own client basis) suffered or incurred by the Corporation,
directly or indirectly, by reason of or arising out of:
(a) any warranties or representations on the part of ATI set out in this
Agreement being materially untrue;
(b) a material breach of any agreement, term or covenant on the part of ATI
made or to be observed or performed pursuant to this Agreement;
which liabilities, claims, demands, actions, causes of action, damages,
losses, costs and expenses are collectively referred to as the "Corporation's
Losses";
10.2 Indemnification of ATI - Subject to the limitations set out in
this Agreement, the Corporation covenants and agrees with ATI to indemnify
ATI against all liabilities, claims, demands, actions, causes of action,
damages, losses, costs or expenses (including legal fees on a solicitor and
its own client basis) suffered or incurred by ATI, directly or indirectly, by
reason of or arising out of:
(a) any warranties or representations on the part of the
Corporation set out in this Agreement being materially untrue;
(b) a material breach of any agreement, term or covenant on the
part of the Corporation made or to be observed or performed pursuant to this
Agreement;
which liabilities, claims, demands, actions, causes of action, damages,
losses, costs and expenses are collectively referred to as "ATI's Losses".
10.3 Claims under ATI's Indemnity - If any claim is made by any
Person against the Corporation in respect of which the Corporation may incur
or suffer damages, losses, costs or expenses that might reasonably be
considered to be subject to the indemnity obligation of ATI as provided in
paragraph 10.1, the Corporation shall notify ATI as soon as reasonably
practicable of the nature of such claim and ATI shall be entitled (but not
required) to assume the defense of any suit brought to enforce such claim.
The defense of any such claim (whether assumed by ATI or not) shall be
through legal counsel and shall be conducted in a manner acceptable to the
Corporation and ATI, acting reasonably, and no settlement may be made by ATI
or the Corporation without the prior written consent of the other. If ATI
assumes the defense of any claim then the Corporation and the Corporation's
counsel shall cooperate with ATI and its counsel in the course of the
defense, such cooperation to include using reasonable best efforts to provide
or make available to ATI and its counsel documents and information and
witnesses for attendance at examinations for discovery and trials. The
reasonable legal fees and disbursements and other costs of such defense
shall, from and after such assumption, be borne by ATI. If ATI assumes the
defense of any claim and the Corporation retains additional counsel to act on
its behalf, ATI and his counsel shall cooperate with the Corporation and its
counsel, such cooperation to include using reasonable best efforts to provide
or make available to the Corporation and its counsel documents and
information and witnesses for attendance at examinations for discovery and
trials. All fees and disbursements of such additional counsel shall be paid
by the Corporation. If ATI and the Corporation are or become parties to the
same action, and the representation of all parties by the same counsel would
be inappropriate due to a conflict of interest, then the Corporation and ATI
shall be represented by separate counsel and, subject to the indemnity
obligations of ATI as set out in paragraph 10.1, the costs associated with
the action shall be borne by the parties incurring such costs.
10.4 Claims under the Corporation's Indemnity - If any claim is made
by any Person against ATI in respect of which ATI may incur or suffer
damages, losses, costs or expenses that might reasonably be considered to be
subject to the indemnity obligation of the Corporation as provided in
paragraph 10.2, ATI shall notify the Corporation as soon as reasonably
practicable of the nature of such claim and the Corporation shall be entitled
(but not required) to assume the defense of any suit brought to enforce such
claim. The defense of any such claim (whether assumed by the Corporation or
not) shall be through legal counsel and shall be conducted in a manner
acceptable to ATI and the Corporation, acting reasonably, and no settlement
may be made by the Corporation or ATI without the prior written consent of
the other. If the Corporation assumes the defense of any claim, ATI and ATI's
counsel shall cooperate with the Corporation and his counsel in the course of
the defense, such cooperation to include using reasonable best efforts to
provide or make available to the Corporation and its counsel documents and
information and witnesses for attendance at examinations for discovery and
trials. The reasonable legal fees and disbursements and other costs of such
defense shall be borne by the Corporation. If the Corporation assumes the
defense of any claim and ATI retains additional counsel to act on its behalf,
then the Corporation and its counsel shall cooperate with ATI and its
counsel, such cooperation to include using reasonable best efforts to provide
or make available to ATI and its counsel documents and information and
witnesses for attendance at examinations for discovery and trials. All fees and
disbursements of such additional counsel shall be paid by ATI. If the
Corporation and ATI are or become parties to the same action, and the
representation of all parties by the same counsel would be inappropriate due
to a conflict of interest, then ATI and the Corporation shall be represented
by separate counsel and, subject to the indemnity obligations of the
Corporation as set out in paragraph 10.2, the costs associated with the
action shall be borne by the parties incurring such costs.
11. GENERAL
11.1 Public Notices - The parties agree that all notices to third
parties and all other publicity concerning the transactions contemplated by
this Agreement shall be jointly planned and coordinated and no party shall
act unilaterally in this regard without the prior approval of the others,
such approval not to be unreasonably withheld.
11.2 Expenses - All costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such expenses.
11.3 Time - Time shall be of the essence of this Agreement.
11.4 Notices - Any notice or other writing required or permitted to
be given under this Agreement or for the purposes of this Agreement shall be
sufficiently given if delivered or telecopied to the party to whom it is
given or if mailed, by prepaid registered mail, addressed to such party at:
(a) If to Aztek, Inc. at:
Meadow Wood Crown Plaza
0000 Xxxxxxxx Xxxx, Xxxxx # 00
Xxxx, Xxxxxx 00000
with a copy to the Corporation's Solicitors at:
Xxxxxxx X. Xxxxxxxx Attorney and Counselor at Law
0000 Xxxxxxxxx Xxxxx Xxxxx 000,
Xxxx Xxxxxx 00000
(b) If to Aztek Technologies Inc. at:
#0 -000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
with a copy to ATI's Solicitors at:
Xxxxxxx X. Xxxxxxx Law Corporation
#000 - 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
or at such other address as the party to whom such writing is to be given
shall have last notified to the party giving the same in the manner provided
in this paragraph. Any notice mailed as set out above shall be deemed to have
been given and received on the fifth (5th) business day next following the
date of its mailing unless at the time of mailing or within five (5) business
days after the date of such mailing there occurs a postal interruption which
could have the effect of delaying the mail in the ordinary course, in which
case any notice shall only be effectively given if actually delivered or sent
by telecopy. Any notice delivered or telecopied to the party to whom it is
addressed shall be deemed to have been given and received on the day it was
delivered, provided that if such day is not a business day then the notice
shall be deemed to have been given and received on the business day next
following such day.
11.5 Governing Law - This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada and the parties
submit and attorn to the jurisdiction of the Courts of the State of Nevada.
11.6 Severability - If any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect
in any jurisdiction, the validity, legality and enforceability of such
provision or provisions shall not in any way be affected or impaired as a
result of such event in any other jurisdiction and the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall
not in any way be affected or impaired as a result of such event, unless in
either case as a result of such determination this Agreement would fail in
its essential purpose.
11.7 Entire Agreement - This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral or written, by and between any of the parties with
respect to the subject matter of this Agreement.
11.8 Further Assurances - The parties shall with reasonable
diligence do all such things and provide all such reasonable assurances as
may be required to consummate the transactions contemplated by this Agreement,
and each party shall provide such further documents or instruments required by
the other party as may be reasonably necessary or desirable to effect the
purpose of this Agreement and carry out its provisions whether before or
after the Completion Date.
11.9 Enurement - This Agreement and each of its terms and provisions
shall enure to the benefit of and be binding upon the parties and their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
11.10 Counterparts - This Agreement may be executed in as many
counterparts as may be necessary or by facsimile and each such agreement or
facsimile so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument.
IN WITNESS TO THIS AGREEMENT the parties have duly executed this Agreement as
of the day and year first above written.
SIGNED, SEALED AND DELIVERED )
BY AZTEK TECHNOLOGIES INC. )
in the presence of: )
)
) /s/ Xxxxx Xx
______________________________) -------------------------
Name of Witness ) XXXXX XX
)
______________________________)
Address of Witness )
)
______________________________ )
SIGNED, SEALED AND DELIVERED )
BY AZTEK, INC. )
in the presence of: )
)
) /s/ Xxxx Sintichakis
______________________________ )
----------------------------------- Name of Witness )
) XXXX X. SINTICHAKIS
)
______________________________ )
Address of Witness )
)
______________________________ )
