EXHIBIT 1.1
SOFTWARE ACQUISITION AGREEMENT
THIS AGREEMENT made as of the 14th day of December 2001.
BETWEEN:
CYOP SYSTEMS INC.,
a company formed under the laws of Barbados
(hereinafter referred to as "Vendor")
AND:
▇▇▇▇▇ ▇▇▇▇▇,
Residing in the Province of British Columbia
(hereinafter referred to as "Purchaser")
WHEREAS Vendor is owner of certain of the property rights in the Work as
hereinafter defined;
AND WHEREAS Purchaser desires to acquire an interest in the Work as specified in
Schedule "A" for the purposes of reproducing, marketing and distributing such
Work in order to obtain income therefrom;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants hereinafter contained, Vendor hereby agrees to sell to Purchaser and
Purchaser hereby agrees to purchase from Vendor an ownership interest in the
Work under the terms and conditions herein specified.
THE INTERESTS IN THE WORK (AS DEFINED AND REFERRED TO IN THIS AGREEMENT) HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO ANY "U. S. PERSON", AS
DEFINED IN REGULATION S UNDER SUCH ACT, UNLESS SUCH INTERESTS ARE REGISTERED
UNDER SUCH ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE.
PART I - DEFINITIONS
For the purposes of this Agreement, the following terms shall have the meanings
herein;
"Closing," means the date of closing, which is to be agreed upon by the parties.
"Ownership Percentage" means the Purchaser's undivided interest in the Work as
described on Schedule "A".
"Promissory Note" shall be the promissory note in the form as set forth in
Schedule "B".
"Purchase Price" means the price Purchaser shall pay Vendor, for its Ownership
Percentage of the Work.
"Pledge Agreement" means the security agreement in the form attached herein.
"Vendor Software" means the application software of the work described in
Schedule "A" hereto.
"Work" means:
(a) the Vendor Software;
(b) all trademarks, patents, copyrights, intellectual property,
applications and pending applications, routines and
subroutines, and all documentation in existence prior to or
after the date hereof relating to the Vendor Software which
are owned by the Vendor. Purchaser acknowledges,
notwithstanding anything to the contrary in this Agreement,
that with respect to the Vendor Software which is acquired by
Vendor from third party(ies), the Purchaser's rights in this
Work cannot exceed the rights obtained by Vendor from such
third party(ies) and will be subject to the limitations
imposed on the Vendor from such third party(ies) and that such
rights may be modified or amended by Vendor from time to time;
and
(c) any documentation made available by Vendor in support of the
Vendor Software;
but Work excludes:
(i) any software contained in the Vendor Software that is in the
public domain or owned by third parties; and
(ii) moral rights or copyrights held by the original creators; and
(iii) any intellectual property rights in titles, trademarks,
tradenames characters and other personal and proprietary
interests of third parties which are not being acquired
hereunder.
PART II - PURCHASE AND OWNERSHIP
1. Ownership
Vendor represents that it is the owner of the Work and holds legal and
beneficial title to the Work including any applicable pending trademarks, trade
secrets, patents, copyrights and intellectual property rights to the extent
specified in agreements entered into between Vendor and its developers as the
case may be and as may be modified or amended from time to time.
2. Acquisition of the Work
Vendor hereby agrees to sell to Purchaser and Purchaser hereby agrees to
purchase from the Vendor the Ownership Percentage (as described in Schedule "A")
at Closing for US$3,000,000.
3. Payment of Purchase Price
The Purchaser agrees to make payment of the Purchase Price to Vendor by:
(a) cash payment to Vendor of US$1,200,000.00 payable by
renunciation of loan account at Closing; and, subject to
verification of amount by external auditors
(b) payment to Vendor of the balance of the Purchase Price by
delivering on December 14, 2001 the amount of US$1,800,000 by
way of the attached Promissory Note;
Purchaser's obligation with respect to payment of the amounts referred to in
paragraph 3 (b) above shall be evidenced by the attached Promissory Note with
the relevant amounts and due dates.
4. Security
Purchaser hereby grants a security interest in all of his or its interest in the
Work to Vendor as security for payment of the Promissory Note in a manner
sufficient to grant Vendor a first priority lien and security interest under the
laws of Barbados and any other jurisdiction required by Vendor and in accordance
with the security agreement form required by Vendor. The Purchaser hereby
represents and warrants that it has the authority to grant such security
interest and such security interest shall not contravene any agreement to which
the Purchaser is a party. Purchaser agrees not to encumber or grant any other
liens or charges against the Work. Purchaser hereby agrees to enter into the
security agreement attached within as Schedule "C".
5. Transfer of Title to the Work
Vendor hereby acknowledges and agrees that on Closing Purchaser shall own
Vendor's interest to the extent of Purchaser's Ownership Percentage in to the
Work, as at before and after the date hereof, and Vendor covenants that, except
as otherwise provided in this Agreement it shall not (unless the Purchaser fails
to pay all amounts owing under the Promissory Note) directly or indirectly,
contest such ownership in any manner whatsoever, without prior notice to and
consent of Purchaser.
6. Covenants, Representations and Warranties
(A) Vendor represents and warrants that to the best of its knowledge:
(a) it has requisite authority, right and power to enter into this
Agreement;
(b) Vendor is a valid and subsisting corporation duly incorporated
and in good standing under the laws of Barbados;
(c) it is not insolvent, bankrupt or in receivership and there are
no bankruptcy proceedings threatened, pending or instituted
against it to affect its ability to carry out its obligations
hereunder;
(d) there are no judgments outstanding or litigation pending,
actual or threatened against it that will affect its ability
to carry out its obligations hereunder;
(e) it is the owner of and has title to the Work to the extent
specified in its agreements with its developers (that may be
modified or amended from time to time), and Vendor is not
aware of any claims made upon it nor actions pending on or
threatened upon Vendor regarding the ownership of the Vendor
Software.
(f) its entering into this Agreement does not constitute a breach
of any of its obligations under any other agreement, to which
it is a party;
(g) it has received no notice of infringement of the Work by a
third party;
(h) it with its affiliated entities has knowledge of the software
industry, including expertise, which will enable it to further
develop, distribute, market and maintain the Work;
(i) no order ceasing or suspending trading in securities of Vendor
or prohibiting the sale of such securities has been issued to
Vendor or its directors, officers and no investigations or
proceedings for such purposes are pending or threatened;
(B) Purchaser hereby certifies, represents and warrants to, and covenants with,
Vendor as follows:
(i) Purchaser will not sell, transfer, or assign all or any part
of its interest in the Work, except with the express written
consent of Vendor;
(ii) Purchaser and Vendor will cooperate each with the other to
exploit the Work, and will each do all things and execute all
documents as may be reasonably required to maintain, develop,
enhance, distribute, and market the Work world-wide.
(iii) Purchaser (if other than a natural person) is not organized
under the laws of any jurisdiction within the United States of
America, its territories or possessions, was not formed for
the purpose of investing in Regulation S securities. Purchaser
is not a U.S. person as that is defined in Regulation S
("Regulation S") under the United States Securities Act of
1933, as amended (the "1933 Act");
(iv) At the time the acquisition of the Work was originated, the
Purchaser was outside the United States, its territories and
possessions;
(v) No offer to purchase the Ownership Percentage was made by the
Purchaser in the United States, its territories or
possessions;
(vi) The Purchaser is purchasing the Ownership Percentage for its
own account and not for the account or benefit of any U. S.
person;
(vii) All offers and sales of the Ownership Percentage by the
Purchaser shall be made in compliance with Regulation S,
pursuant to registration of the Work under the 1933 Act, or
pursuant to an exemption from registration. In any case, the
Work will not be resold to a U.S. person (as defined in
Regulation S) or within the United States, its territories or
possessions, until after the end of the one year restricted
period determined in accordance with Regulation S;
(viii) Purchaser has not entered into any prearranged transaction
with any person in the United States for the sale or other
transfer of the Ownership Percentage in the Work.
(ix) It has requisite authority, right and power to enter into this
Agreement;
(x) Purchaser is not insolvent, bankrupt or in receivership and
there are no bankruptcy or creditor proceedings threatened,
pending or instituted against Purchaser to affect its ability
to carry out its obligations hereunder;
Vendor covenants and agrees that Vendor shall not permit, recognize or register
any transfer of Purchaser's Ownership Percentage in the Work unless such
transfer is made in accordance with Regulation S and the terms and conditions of
this Agreement. The parties agree that Vendor has not made any representations
or warranties other than as specified in this Agreement.
PART II - GENERAL
1. Insurance
Vendor shall obtain and maintain product liability and general liability
insurance on the Work in accordance with industry standards so long as the Work
continues to earn sufficient revenues and add Purchaser as an additional named
insured.
2. Assignment
Except as specified below, neither party may assign this Agreement or any of its
interests herein without the prior written consent of the other party. Vendor
however may assign any of its rights, obligations or interests hereunder to
Vendor's subsidiaries, partnerships, joint ventures, or any affiliated entities
or to any entity which succeeds, by way of merger, consolidation or sale of
substantially all the assets to the business of Vendor in whole or in
substantial part, without the written consent of Purchaser,
Notwithstanding any provision of this Agreement, Vendor may sell, transfer,
assign, pledge, hypothecate or mortgage the Promissory Note referred to in Part
II, paragraph 3(b)(i) without the consent of Purchaser. Also Purchaser shall
upon Vendor's request register the source code of the Work in the Canadian, US
or any international copyright office in order to satisfy Vendor and meet
Vendor's bank and financing requirements and Purchaser hereby grants Vendor
power and attorney to act and file on Purchaser's behalf all such filings.
3. Notice
Unless otherwise expressly provided in this Agreement, any notice, request,
direction, consent, waiver, extension, agreement or other communication that is
or may be given or made hereunder shall be in writing and either personally
delivered to a responsible officer of the addressee or sent by mail, courier or
confirmed facsimile transmission to:
CYOP Systems Inc. Purchaser
Attention: Business Affairs Attention: ▇▇▇▇▇ ▇▇▇▇▇
Suite 29, 1st Floor, ▇▇▇▇▇▇▇▇ Mall, 5469 Wildwood Crescent
Lower Broad Street, Tsawwassen, British Columbia
Bridgetown, Barbados
The parties hereto may change their respective address for notice by notice
given in the manner aforesaid. Any notice given by mail, courier or confirmed
facsimile transmission shall be deemed to have been received on the next
business day after transmission. Any notice given by personal delivery shall be
deemed to have been received on the business day on which it is delivered and
left at the recipient's address for notice.
4. Law of Agreement
This Agreement shall be governed by and interpreted in accordance with the
Province of British Columbia applicable therein, as interpreted by the Courts of
such Province, and the parties irrevocably attorn to the jurisdiction of the
courts of such Province.
5. Currency
Any dollar amounts noted herein are represented in United States currency.
6. Successors and Assigns
Subject to the restrictions and conditions of assignment and transfer herein
contained, this Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators and other
legal representatives, successors and permitted assigns.
7. Severability
Each provision of this Agreement is intended to be severable. If any provision
hereof is illegal or invalid, such illegality or invalidity shall not effect the
validity of the remainder hereof.
8. Entire Agreement
This Agreement and the Marketing, Development & Distribution Agreement sets
forth all (and is intended by all parties to be an integration of all) of the
representations, promises, agreements and understandings among the parties
hereto with respect to the purchase, sale, maintenance and development of the
Work, and there are no representations, promises, agreements or understandings,
oral or written, express or implied, among them other than as set forth,
referred to, or incorporated herein.
9. Further Assurances
The parties hereto will execute such other and further documents and assurances
or cause the same to be executed and delivered in order to give full effect to
the provisions of this Agreement upon written request.
10. Gender, Etc.
Words importing the singular number only include the plural, and words in the
plural include the singular, and the words importing the masculine gender shall
include the feminine gender and the neuter gender where the context so requires,
and wording importing Person shall include Persons or vice versa.
11. Headings
The division of this Agreement into sections and the article headings are for
convenience or reference only and shall not affect the interpretation or
construction of this Agreement.
12. Time of the Essence
Time shall be of the essence in this Agreement.
13. Waiver
No waiver of any provision of this Agreement shall constitute a waiver of any
other provision nor shall any waiver of any provision of this Agreement
constitute a continuing waiver unless otherwise expressly provided.
14. Resale Restriction
Purchaser hereby acknowledges that he or it is subject to resale restrictions
respecting his or its interest in the Ownership Percentage. Since the Vendor is
not a reporting issuer in any province in Canada and is not expected to become a
reporting issuer, the interest in the Ownership Percentage may be subject to an
indefinite hold period under applicable Canadian or United States securities
legislation.
The parties have read and agree to the terms and conditions of this Agreement
and acknowledge by way of signature below.
PURCHASER:
▇▇▇▇▇ ▇▇▇▇▇
VENDOR:
CYOP SYSTEMS INC.
Per:
Authorized Signatory
SCHEDULE "A"
VENDOR SOFTWARE ACQUIRED
Working Title Purchase Price % Interest Acquired
1. Crediplay US$3,000,000 100%
SCHEDULE "B"
PROMISSORY NOTE
December 14, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
MATURITY DATE: December 14, 2010
FOR VALUE RECEIVED, the undersigned (the "Maker") acknowledges himself or
itself, indebted to and promises to pay to the order of CYOP SYSTEMS INC. and
its assigns (the "Holder") on November *14, 2010 at ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Street, Bridgetown, Barbados (or at such other place
as the Holder may from time to time designate in writing to the Maker), the
principal sum of US$1,800,000 One million ,eight hundred thousand US Dollars(the
"Principal Sum")
The principal sum shall bear interest at the rate of five (5) percent per annum,
compounded annually.
All payments of principal and interest due to the Holder pursuant to this
Promissory Note, if not paid when due, shall bear interest calculated and
compounded annually, from the date upon which they were respectively due until
paid in full at the cumulative annual rate of the above stated five percent
(5%).
Upon default in payment of any sum due hereunder on the part of the Maker then
the Principal Sum then outstanding, together with accrued but unpaid interest,
may, at the Holder's option be accelerated and immediately become due and
payable in full, with interest thereon from such date at the rate as specified
herein plus Maker shall pay Holder for all costs incurred by Holder in the
collection of any amounts due under this promissory note.
For so long as the Maker is not in default in the making of any payment due
hereunder, it shall have the right to prepay at any time and from time to time
all or any part of the Principal Sum then outstanding without notice, bonus or
penalty provided that the right of the Maker to make any such prepayments shall
be conditional upon payment by the Maker to the Holder of all accrued interest
owing in respect of the Principal Sum to the date of any such prepayment.
The provisions of this Promissory Note shall enure to the benefit of the Holder
and its successors and assigns and shall be binding upon the Maker and his, her
or its heirs, executors, administrators, successors and assigns as the case may
be.
The Maker hereby waives presentment protest demand notice of protest and notice
of dishonour of this Promissory Note and expressly agrees that this Promissory
Note or any payment due hereunder may be extended from time to time by the
Holder without in any way affecting the liability of the Maker.
This promissory note is issued by the Maker and accepted by the Holder as
partial payment for the consideration due under the Software Acquisition
Agreement.
The Holder shall be permitted to assign its rights and benefits of this
promissory note to any of Holder's affiliated companies or entities and to
Holder's bank or lender.
This Promissory Note shall be governed by and construed in accordance with the
laws of the Province of British Columbia applicable therein.
Dated at Vancouver, British Columbia, this 14th day of December, 2001.
(Maker)
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Per:
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Signature of "Maker" or by
his or her agent and attorney,
▇▇▇▇▇ ▇▇▇▇▇
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Name of Maker (Please Print)