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SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 20th day of January, 1998.
BETWEEN:
CORE VENTURES, INC., a corporation incorporated under the laws
of the State of Colorado and having an office at 618 - ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇.
(the "Purchaser")
AND:
FUTURELINK DISTRIBUTION CORP., a company incorporated under the
laws of Alberta, having an office at address at No. ▇▇▇, ▇▇▇ -
▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
(the "Corporation")
AND:
▇▇▇▇▇▇▇ ▇▇▇▇▇, a businessperson residing at ▇▇▇ - ▇▇ ▇▇. ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
AND:
▇▇▇▇▇ ▇▇▇▇▇▇▇, a businessperson residing at 2302 - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
(together the "Vendors")
WHEREAS:
1. The Corporation carries on the business of developing and marketing a
computer access process that allows computer users to avoid purchasing
hardware and software. It provides a computer user with the monitor,
keyboard and "▇▇▇▇▇" which together allow a user to access a remote
server farm which hosts a broad menu of software applications. Users
are charged a monthly fee for the software applications used from the
remote server farm.
2. ▇▇▇▇▇▇▇ ▇▇▇▇▇ is the registered and beneficial owner of 500,000 shares
in the share capital of FutureLink Distribution Corp. (the
"Corporation");
3. ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the registered and beneficial owner of 490,000 shares
in the share capital of the Corporation;
4. The Vendors wish to sell, and the Purchaser wishes to purchase the
shares of the Corporation owned by the Vendors (the "Purchased
Shares") on the terms and subject to the conditions contained in this
agreement;
THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINED TERMS. In this agreement and in the Schedules hereto, unless
there is something in the
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subject-matter or context inconsistent therewith, the following terms and
expressions will have the following meanings:
(a) "Affiliate" of any person means any corporation which, directly or
indirectly, is controlled by, controls or is under direct or indirect
common control with such person;
(b) "arm's length" will have the meaning ascribed to such term under the
Income Tax Act, R.S.C. 1952, c. 148 (Canada);
(c) "Audited Financial Statements" means the audited consolidated
financial statements of the Corporation as at and for the fiscal year
ended on December 31 1996, inclusive, including the balance sheets,
income statements, statements of changes in financial position
together with the notes to such financial statements and the opinion
of the Corporation' auditors on such financial statements, copies of
which are attached hereto as Schedule "A", all prepared in accordance
with generally accepted accounting principles, consistently applied;
(d) "Audited Statements Date" means December 31;
(e) "Business" means the business of developing and marketing a computer
access process that allows computer users to avoid purchasing hardware
and software. It provides a computer user with the monitor, keyboard
and "▇▇▇▇▇" which together allows a user to access a remote server
farm which hosts a broad menu of software applications. Users are
charged a monthly fee for the software applications used from the
remote server farm.;
(f) "Business Day" means any day other than a day which is a Saturday, a
Sunday or a statutory holiday in Vancouver, British Columbia;
(g) "Closing Date" means January 19, 1998, or such other date as the
Vendor and Purchaser may agree upon but no later than January 21,
1998.
(h) "Closing Time" means 10:00 a.m. in the City of Vancouver on the
Closing Date or such other time on the Closing Date as the parties
hereto may agree upon;
(i) "Condition" of the Corporation means the condition of the assets,
liabilities, operations, activities, earnings, prospects, affairs and
financial position of the Corporation;
(j) "Corporation" means FutureLink Distribution Corp. together with any
subsidiaries held by this company
(k) "Encumbrances" means mortgages, charges, pledges, security interests,
liens, encumbrances, actions, claims, demands and equities of any
nature whatsoever or howsoever arising and any rights or privileges
capable of becoming any of the foregoing;
(l) "Escrow Agreement" means the escrow agreement between the Vendor, the
Purchaser and a designated escrow agent governing the issuance and
release of all the shares in the capital stock of the Purchaser given
to the Vendor in satisfaction of the Purchase Price for the Purchased
Shares, a copy of which is attached to this agreement as Schedule "E";
(m) "generally accepted accounting principles" means the accounting
principles so described and promulgated by the Canadian Institute of
Chartered Accountants which are applicable as at the date on which any
calculation made hereunder is to be effective or as at the date of any
financial statements referred to herein, as the case may be;
(n) "Interim Financial Statements" means the Notice to Reader Report and
Financial Statements of the Corporation as at March 31, 1997 and
September 30, 1997 which are attached to this agreement as Schedule
"B";
(o) "Interim Period" means the period from and including the date of this
agreement to and including the Closing Date;
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(p) "Leased Premises" means all premises leased by the Corporation under
the Leases;
(q) "Leases" means the leases and the agreements to lease under which the
Vendor leases any real property, as listed in Schedule "C" attached to
this agreement;
(r) "Licenses" means all of the licenses, registrations, and
qualifications to do the business held by the Corporation;
(s) "New Business Entity" means the Corporation at the time the Purchaser
has control of the Corporation and is conducting the business of the
Corporation;
(t) "person" means and includes any individual, corporation, partnership,
firm, joint venture, syndicate, association, trust, government,
governmental agency or board or commission or authority, and any other
form of entity or organization;
(u) "Purchased Shares" means the 990,000 issued and outstanding shares in
the capital stock of FutureLink Distribution Corp. being those shares
sold by the Vendors to the Purchaser;
(v) "Real Properties" means the real properties owned by the Vendor, which
are described in Schedule "D" attached hereto; and
(w) "Warranty Claim" means a claim made by either the Purchaser or the
Vendor based on or with respect to the inaccuracy or non-performance
or non-fulfilment or breach of any representation or warranty made by
the other party contained in this agreement or contained in any
document or certificate given in order to carry out the transactions
contemplated hereby.
1.2 BEST OF KNOWLEDGE. Any reference herein to "the best of the knowledge"
of the Vendor will mean the actual knowledge of the Vendor and the knowledge
which they would have had if they had conducted a diligent inquiry into the
relevant subject-matter.
1.3 SCHEDULES. The Schedules which are attached to this agreement are
incorporated into this agreement by reference and are deemed to be part of this
agreement. These schedules are as follows:
Schedule "A" Audited Financial Schedule "T" Employees
Statements Schedule "U" Employee Benefit and
Schedule "B" Interim Financial Pension Plans
Statements Schedule "V" Insurance
Schedule "C" Leased Premises Schedule "W" Government Assistance
Schedule "D" Real Properties Schedule "X" Purchaser's
Schedule "E" Escrow Agreement Contractual and
Schedule "F" Employment Contract Regulatory Approvals
Schedule "G" Vendor's Contractual and Schedule "Y" Release by Vendor
Regulatory Approvals Schedule "Z" Vendor's Confirming
Schedule "H" Constating Documents Certificate
Schedule "I" Licences Schedule "AA" Estoppel Certificate
Schedule "J" Tax Matters Schedule "BB" Release by Directors
Schedule "K" Litigation and Officers
Schedule "L" Environmental Matters Schedule "CC" Opinion of Vendor's
Schedule "M" Encumbrances Counsel
Schedule "N" Bank Accounts Schedule "DD" Purchaser's Confirming
Schedule "O" Leases of Personal Certificate
Properties Schedule "EE" Release by the
Schedule "P" Intellectual Property Corporation
Schedule "Q" Guarantees, Warranties Schedule "FF" Opinion of Purchaser's
and Discounts Counsel
Schedule "R" Licences, Agency and
Distribution Agreements
Schedule "S" Material Contracts
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1.4 CURRENCY. Unless otherwise indicated, all dollar amounts referred to in
this agreement are in lawful money of Canada.
1.5 CHOICE OF LAW AND ATTORNMENT.
(1) This agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada applicable
therein.
(2) The parties agree that the courts of that province will have exclusive
jurisdiction to determine all disputes and claims arising between the parties.
1.6 INTERPRETATION NOT AFFECTED BY HEADINGS OR PARTY DRAFTING. The division
of this agreement into articles, sections, paragraphs, subparagraphs and clauses
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this agreement. The terms "this
agreement", "hereof", "herein", "hereunder" and similar expressions refer to
this agreement and the Schedules hereto and not to any particular article,
section, paragraph, subparagraph, clause or other portion hereof and include any
agreement or instrument supplementary or ancillary hereto. Each party hereto
acknowledges that it and its legal counsel have reviewed and participated in
settling the terms of this agreement, and the parties hereby agree that any rule
of construction to the effect that any ambiguity is to be resolved against the
drafting party shall not be applicable in the interpretation of this agreement.
1.7 NUMBER AND GENDER. In this agreement, unless there is something in the
subject matter or context inconsistent therewith,
(a) words in the singular number include the plural and such words shall
be construed as if the plural had been used,
(b) words in the plural include the singular and such words shall be
construed as if the singular had been used, and
(c) words importing the use of any gender shall include all genders where
the context or party referred to so requires, and the rest of the
sentence shall be construed as if the necessary grammatical and
terminological changes had been made.
1.8 TIME OF ESSENCE. Time shall be of the essence hereof.
1.9 JOINT AND SEVERAL OBLIGATIONS. If the Vendor is constituted by more
than one person, their obligations hereunder as the Vendor are joint and
several.
2. PURCHASE AND SALE
2.1 PURCHASED SHARES. On the terms and subject to the fulfilment of the
conditions hereof, the Vendor hereby agrees to sell, assign and transfer to the
Purchaser, and the Purchaser hereby agrees to purchase and accept from the
Vendor, the Purchased Shares.
2.2 PURCHASE PRICE AND PAYMENT. The purchase price will be satisfied by the
issuance of 990,000 shares in the Capital Stock of the Purchaser. These shares
shall be exchanged for the Purchased Shares. This shall be the sole
consideration to the vendors for the Purchased Shares. The shares issued in the
capital stock of the Purchaser will be subject to an escrow agreement as
attached as Schedule "E"
2.3 ESCROW AGREEMENT. All shares to be given to the Vendors in satisfaction
of the purchase price of the Purchased Shares are subject to a hold period and
will be released from escrow as follows:
(a) one half of the shares given to each of the Vendors are subject to a
six month hold period and will be released from escrow on the date six
months from the anniversary of this agreement,
(b) the balance of the shares are subject to a one year hold period and
will be released from escrow on the one year anniversary of this
agreement.
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2.8 EMPLOYEES.
(1) Continued Employment. The Purchaser will offer continued employment to
such employees of the Business as agreed on by the Purchaser and the Vendor on
the same terms and conditions as they had been employed by the Vendor.
(2) Vendor's Obligation to Employees. The Vendor will pay or provide for
all salary and other amounts (except for reasonable vacation pay) due to all
employees of the Business up to and including the closing. The Vendor will pay
all severance amounts due to employees of the Business not hired by the
Purchaser. The Purchaser will assume responsibility for reasonable amounts of
vacation pay accrued to employees of the Business up to the closing.
(3) Termination of Long-Standing Employees. If any long-standing employees
of the Business (being those identified on Schedule "T" attached hereto) do not
perform satisfactorily and their employment is terminated by the Purchaser,
then, subject to the following limitations, the Vendor will be liable for that
portion of all severance amounts and/or damages for wrongful dismissal owing to
such employees which is based on their employment in the Business up to the time
of closing. The Vendor will have no liability under this paragraph if the
employment of any such long-standing employee is terminated due to disability
and the amounts owing to such employee are covered by insurance.
(4) Indemnification to Vendor . Except for the foregoing, the Purchaser
agrees to indemnify the Vendor against all claims and demands by employees who
accept the Purchaser's offer of employment which claims and demands are based on
events arising after the Closing Date (including termination of such employees
from employment by the Purchaser). Without limiting the generality of the
foregoing, such indemnity shall include any claims or demands by such employees
with respect to wages, severance pay, notice of termination or pay in lieu
thereof, benefits, damages for wrongful dismissal or other employee benefits or
claims under the employment legislation in the Province of Alberta, or at common
law and including any costs or expenses incurred by the Vendor in defending any
such claim or demand.
3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES BY THE VENDORS. The Vendors represents
and warrants to the Purchaser as follows, and confirm that the Purchaser is
relying upon the accuracy of each of such representations and warranties in
connection with the purchase of the Purchased Shares and the completion of the
other transactions hereunder:
(1) Corporate Authority and Binding Obligation. The Vendors have good
right, full power and absolute authority to enter into this agreement and to
sell, assign and transfer the Purchased Shares to the Purchaser in the manner
contemplated herein and to perform all of the Vendors' obligations under this
agreement. Each of the Corporation and their respective shareholders and boards
of directors have taken all necessary or desirable actions, steps and corporate
and other proceedings to approve or authorize, validly and effectively, the
entering into of, and the execution, delivery and performance of, this agreement
and the sale and transfer of the Purchased Shares by the Vendor to the
Purchaser. This agreement is a legal, valid and binding obligation of the
Vendors and enforceable against the Vendors in accordance with its terms subject
to:
(a) bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditors' rights
generally, and
(b) the fact that equitable remedies, including the remedies of specific
performance and injunction, may only be granted in the discretion of a
court.
(2) No Other Purchase Agreements. No person has any agreement, option,
understanding or commitment, or any right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement, option or
commitment, including convertible securities, warrants or convertible
obligations of any nature, for:
(a) the purchase, subscription, allotment or issuance of, or conversion
into, any of the unissued
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shares in the capital of the Corporation or any securities of the
Corporation,
(b) the purchase from the Vendor of any of the Purchased Shares, or
(c) the purchase or other acquisition from the Corporation of any of its
undertaking, property or assets, other than in the ordinary course of
the Business.
(3) Contractual and Regulatory Approvals. Except as specified in Schedule
"G" attached hereto, neither the Corporation nor the Vendor is under any
obligation, contractual or otherwise, to request or obtain the consent of any
person, and no permits, licences, certifications, authorizations or approvals
of, or notifications to, any federal, state, municipal or local government or
governmental agency, board, commission or authority are required to be obtained
by the Corporation or the Vendor,
(a) in connection with the execution, delivery or performance by the
Vendor or the Corporation of this agreement or the completion of any
of the transactions contemplated herein,
(b) to avoid the loss of any permit, licence, certification or other
authorization, or
(c) in order that the authority of the Corporation to carry on the
Business in the ordinary course and in the same manner as presently
conducted remains in good standing and in full force and effect as of
and following the closing of the transactions contemplated hereunder.
Complete and correct copies of any agreements under which the Corporation or the
Vendor is obligated to request or obtain any such consent have been provided to
the Purchaser.
(4) Status, Constating Documents and Licences.
(a) The Corporation is a corporation duly incorporated and validly
subsisting in all respects under the laws of Alberta. The Corporation
is a non-reporting private corporation. The Corporation and the Vendor
has all necessary corporate power to own its properties and to carry
on its business as it is now being conducted.
(b) The articles, by-laws and other constating documents of the
Corporation, as amended to the date hereof, are listed in Schedule "H"
attached hereto, and complete and correct copies of each of those
documents have been delivered to the Purchaser.
(c) The Corporation is duly licensed, registered and qualified as a
corporation to do business, is up-to-date in the filing of all
required corporate returns and other notices and filings and is
otherwise in good standing in all respects, in each jurisdiction in
which:
(i) it owns or leases property, or
(ii) the nature or conduct of its business or any part thereof,
or the nature of the property of the Corporation or any part
thereof, makes such qualification necessary or desirable to
enable the Business to be carried on as now conducted or to
enable the property and assets of the Corporation to be
owned, leased and operated by it.
All of the Corporations' Licences are listed in Schedule "I" attached hereto and
are valid and subsisting. Complete and correct copies of the Licences have been
delivered to the Purchaser. The Corporation is in compliance with all terms and
conditions of the Licences. There are no proceedings in progress, pending or, to
the best of the knowledge of the Vendor threatened, which could result in the
revocation, cancellation or suspension of any of the Licences.
(5) Compliance with Constating Documents, Agreements and Laws. The
execution, delivery and performance of this agreement and each of the other
agreements contemplated or referred to herein by the Vendor and the Corporation,
and the completion of the transactions contemplated hereby, will not constitute
or result in a violation or breach of or default under, or cause the
acceleration of any obligations of the Corporation under:
(a) any term or provision of any of the articles, by-laws or other
constating documents of the
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Corporation,
(b) subject to obtaining the contractual consents referred to in
Schedule "G" hereof, the terms of any agreement (written or
oral), indenture, instrument or understanding or other obligation
or restriction to which the Corporation or the Vendor is a party
or by which either of them is bound, or
(c) subject to obtaining the regulatory consents referred to in
Schedule "G" hereof, any term or provision of any of the Licences
or any order of any court, governmental authority or regulatory
body or any law or regulation of any jurisdiction in which the
Business is carried on.
(6) Corporate Records. The corporate records and minute books of the
Corporation, all of which have been provided to the Purchaser, contain complete
and accurate minutes of all meetings of the directors and shareholders of the
Corporation held since its incorporation, and original signed copies of all
resolutions and by-laws duly passed or confirmed by the directors or
shareholders of the Corporation other than at a meeting. All such meetings were
duly called and held. The share certificate books, register of security holders,
register of transfers and register of directors and any similar corporate
records of the Corporation is complete and accurate. All exigible security
transfer tax or similar tax payable in connection with the transfer of any
securities of the Corporation has been duly paid.
(7) Authorized and Issued Capital. The authorized capital of the FutureLink
Distribution Corp. consists of an unlimited number of class A voting Shares,
unlimited number of Class B non-voting Shares and an unlimited of First
Preferred Shares, of which no more than 3,080,000 class A voting shares have
been duly issued. The issued shares are outstanding as fully paid and
non-assessable shares. A maximum of 500,000 options have been issued in the
Corporation. Each option entitles the holder to purchase one Class A voting
share for $1.00. No shares or other securities of the Corporation have been
issued in violation of any laws, the articles of incorporation, by-laws or other
constating documents of the Corporation or the terms of any shareholders'
agreement or any agreement to which the Corporation is a party or by which they
are bound. The Vendors own 990,000 of the issued and outstanding shares of the
Corporation as the shareholders of record and as the beneficial owners, with
good and marketable title thereto, free and clear of any and all Encumbrances.
(8) Shareholders' Agreements, etc. There are no shareholders' agreements,
pooling agreements, voting trusts or other similar agreements with respect to
the ownership or voting of any of the shares of the Corporation.
(9) Financial Statements.
(a) The Audited Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent
with that of the previous fiscal year, are true, correct and complete
in all material respects and present fairly the consolidated financial
condition of the Corporation as of December 31, 1996, including the
consolidated assets and liabilities of the Corporation as of December
31, 1996, and the consolidated revenues, expenses and results of the
operations of the Corporation for the fiscal year ended on December
31, 1996.
(b) The Interim Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent
with the Audited Financial Statements, are true, correct and complete
in all material respects and present fairly in all material respects
the consolidated financial condition of the Corporation as of December
31, 1997.
(c) The financial condition of the Corporation is now at least as good as
the financial condition reflected in the Interim Financial Statements.
(10) Financial Records. All material financial transactions of the
Corporation has been recorded in the financial books and records of the
Corporation in accordance with good business practice, and such financial books
and records,
(a) accurately reflect in all material respects the basis for the
financial condition and the revenues, expenses and results of
operations of the Corporation shown in the Audited Financial
Statements and the Interim Financial Statements, and
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(b) together with all disclosures made in this agreement or in the
Schedules hereto, present fairly in all material respects the
financial condition and the revenues, expenses and results of the
operations of the Corporation as of and to the date hereof.
No information, records or systems pertaining to the operation or administration
of the Business are in the possession of, recorded, stored, maintained by or
otherwise dependent on any other person.
(11) Liabilities of the Corporation. There are no liabilities (contingent
or otherwise) of the Corporation of any kind whatsoever, and to the best of the
knowledge of the Vendor there is no basis for assertion against the Corporation
of any liabilities of any kind, other than:
(a) liabilities disclosed or reflected in or provided for in the Audited
Financial Statements or the Interim Financial Statements;
(b) liabilities incurred since the Audited Statements Date which were
incurred in the ordinary course of the routine daily affairs of the
Business and, in the aggregate, are not materially adverse to the
Business;
(c) liabilities incurred for lease of office equipment and computer
hardware used in the Business; and
(d) other liabilities disclosed in this agreement or in the Schedules
attached hereto.
(12) Indebtedness. Except as disclosed in the Audited Financial Statements,
the Corporation has no bonds, debentures, mortgages, promissory notes or other
indebtedness maturing more than one year after the date of their original
creation or issuance, and is not under any obligation to create or issue any
bonds, debentures, mortgages, promissory notes or other indebtedness maturing
more than one year after the date of their original creation or issuance.
(13) Absence of Certain Changes or Events. Since the Audited Statements
Date, the Corporation has not:
(a) incurred any obligation or liability (fixed or contingent), except
normal trade or business obligations incurred in the ordinary course
of the Business, none of which is materially adverse to the
Corporation;
(b) paid or satisfied any obligation or liability (fixed or contingent),
except
(i) current liabilities included in the Audited Financial Statements,
(ii) current liabilities incurred since the Audited Statements Date in
the ordinary course of the Business, and
(iii) scheduled payments pursuant to obligations under loan agreements
or other contracts or commitments described in this agreement or
in the Schedules hereto;
(c) created any Encumbrance upon any of its properties or assets, except
as described in this agreement or in the Schedules hereto;
(d) sold, assigned, transferred, leased or otherwise disposed of any of
its properties or assets, except in the ordinary course of the
Business;
(e) purchased, leased or otherwise acquired any properties or assets,
except in the ordinary course of the Business;
(f) waived, cancelled or written-off any rights, claims, accounts
receivable or any amounts payable to the Corporation, except in the
ordinary course of the Business;
(g) entered into any transaction, contract, agreement or commitment,
except in the ordinary course of the Business;
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(h) terminated, discontinued, closed or disposed of any plant, facility or
business operation;
(i) had any supplier terminate, or communicate to the Corporation the
intention or threat to terminate, its relationship with the
Corporation, or the intention to substantially reduce the quantity of
products or services it sells to the Corporation, except in the case
of suppliers whose sales to the Corporation is not, in the aggregate,
material to the Business or the Condition of the Corporation;
(j) had any customer terminate, or communicate to the Corporation the
intention or threat to terminate, its relationship with the
Corporation, or the intention to substantially reduce the quantity of
products or services it purchases from the Corporation, or its
dissatisfaction with the products or services sold by the Corporation,
except in the case of customers whose purchases from the Corporation
is not, in the aggregate, material to the Business or the Condition of
the Corporation;
(k) made any material change in the method of billing customers or the
credit terms made available by the Corporation to its customers;
(l) made any material change with respect to any method of management,
operation or accounting in respect of the Business;
(m) suffered any damage, destruction or loss (whether or not covered by
insurance) which has materially adversely affected or could materially
adversely affect the Business or the Condition of the Corporation;
(n) increased any form of compensation or other benefits payable or to
become payable to any of the employees of the Corporation, except
increases made in the ordinary course of the Business which do not
exceed 2%, in the aggregate, of the amount of the aggregate salary
compensation payable to all of the Corporation's employees prior to
such increase;
(o) suffered any extraordinary loss relating to the Business;
(p) made or incurred any material change in, or become aware of any event
or condition which is likely to result in a material change in, the
Business or the Condition of the Corporation or its relationships with
its customers, suppliers or employees; or
(q) authorized, agreed or otherwise become committed to do any of the
foregoing.
(14) Commitments for Capital Expenditures. The Corporation has not
committed to make any capital expenditures, nor have any capital expenditures
been authorized by the Corporation at any time since the Interim Statements
Date, except for capital expenditures made in the ordinary course of the routine
daily affairs of the Business which, in the aggregate, do not exceed $
50,000.00.
(15) Dividends and Distributions. Since the Audited Statements Date, the
Corporation has not declared or paid any dividend or made any other distribution
on any of its shares of any class, or redeemed or purchased or otherwise
acquired any of its shares of any class, or reduced its authorized capital or
issued capital, or agreed to do any of the foregoing.
(16) Tax Matters.
(a) For purposes of this agreement, the term "Governmental Charges" means
and includes all taxes, customs duties, rates, levies, assessments,
reassessments and other charges, together with all penalties, interest
and fines with respect thereto, payable to any federal, state,
municipal, local or other government or governmental agency,
authority, board, bureau or commission, domestic or foreign.
(b) The Corporation has duly and on a timely basis prepared and filed all
tax returns and other documents required to be filed by them in
respect of all Governmental Charges and such returns and documents are
complete and correct. Complete and correct copies of all such returns
and
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other documents filed in respect of the one fiscal year of the
Corporation ending prior to the date hereof have been provided to the
Purchaser.
(c) The Corporation has paid all Governmental Charges which are due and
payable by them on or before the date hereof. Adequate provision was
made in the Audited Financial Statements and Interim Financial
Statements for all Governmental Charges for the periods covered by the
Audited Financial Statements and Interim Financial Statements,
respectively. The Corporation has no liability for Governmental
Charges other than those provided for in the Audited Financial
Statements and those arising in the ordinary course of the operation
of the Business since the Audited Statements Date.
(d) Canadian federal and provincial income tax assessments have been
issued to the Corporation covering all past periods up to and
including the fiscal year ended 1996. There are no actions, suits,
proceedings, investigations, inquiries or claims now pending or made
or, to the best of the knowledge of the Vendor, threatened against the
Corporation in respect of Governmental Charges.
(e) There are no agreements, waivers or other arrangements providing for
any extension of time with respect to the filing of any tax return or
other document or the payment of any Governmental Charges by the
Corporation or the period for any assessment or reassessment of
Governmental Charges. Only the fiscal years of the Corporation
subsequent to 1996 remain open for reassessment for additional taxes.
(f) The Corporation has withheld from each amount paid or credited to any
person the amount of Governmental Charges required to be withheld
therefrom and have remitted such Governmental Charges to the proper
tax or other receiving authorities within the time required under
applicable legislation.
(g) Schedule "J" attached hereto accurately sets out as at December 31,
1996, for purposes of the Income Tax Act, the following:
(i) the paid-up capital of all issued and outstanding shares in
the capital of the Corporation;
(ii) all non-capital losses of the Corporation;
(ii) all net capital losses of the Corporation;
(iv) the amount of all investment tax credits available to the
Corporation;
(v) the adjusted cost base of the Corporation' capital
properties;
(vi) the cost of the Corporation' depreciable properties, the
capital cost allowance taken in respect of each class of
such properties and the undepreciated capital cost of each
class of such properties;
(vii) the amount (if any) of the Corporation' capital dividend
account;
(viii) the amount (if any) of the Corporation' cumulative eligible
capital account; and
(ix) the amount (if any) of the Corporation' refundable dividend
tax on hand.
(17) Litigation. Except for the matters referred to in Schedule "K"
attached hereto, there are no actions, suits or proceedings, judicial or
administrative (whether or not purportedly on behalf of the Corporation or the
Vendor) pending or, to the best of the knowledge of the Vendor threatened, by or
against or affecting the Corporation, at law or in equity, or before or by any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.
Except for the matters referred to in Schedule "K" there are no grounds on which
any such action, suit or proceeding might be commenced with any reasonable
likelihood of success.
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(18) Environmental Matters.
(a) For purposes of this agreement, the following terms and expressions
will have the following meanings:
(i) "Environmental Laws" means all applicable federal, state,
municipal and local laws, regulations and orders issued by
any governmental or regulatory agency relating to the
environment, occupational health and safety, product safety,
product liability and storage and transportation of goods;
(ii) "Hazardous Substances" means any waste, pollutant,
contaminant, material or substance which is or may be
dangerous, hazardous, toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic or
mutagenic or which could otherwise pose a risk to health,
safety or the environment or the value of the properties
owned by the Corporation or which is the subject of any
Environmental Laws governing its Release, use, storage or
identification, including without limitation any substance
which contains polychlorinated biphenyls (PCBs), asbestos,
lead, urea formaldehyde or radon gas; and
(iii) "Release" means any release, spill, leak, emission,
discharge, ▇▇▇▇▇, dumping, emission, escape or other
disposal.
(b) Except as disclosed in Schedule "L" attached hereto, the Corporation,
the operation of the Business, the property and assets owned or used
by the Corporation and the use, maintenance and operation thereof have
been and are in compliance with all Environmental Laws. The
Corporation has complied with all reporting and monitoring
requirements under all Environmental Laws. The Corporation has not
received any notice of any non-compliance with any Environmental Laws.
(c) The Corporation has obtained all permits, certificates, approvals,
registrations and licences necessary to conduct the Business and to
own, use and operate the properties and assets of the Corporation is
in compliance with all Environmental Laws. All such permits,
certificates, approvals, registrations and licences are listed in
Schedule "L", and complete and correct copies thereof have been
provided to the Purchaser.
(d) Except as disclosed in Schedule "L", there are no Hazardous Substances
located on or in any of the properties or assets owned or used by the
Corporation, and no Release of any Hazardous Substances has occurred
on or from the properties and assets of the Corporation or have
resulted from the operation of the Business and the conduct of all
other activities of the Corporation. Except as disclosed in Schedule
"L", the Corporation has not used any of its properties or assets to
produce, generate, store, handle, transport or dispose of any
Hazardous Substances and none of the Real Properties or Leased
Premises has been or is being used as a landfill or waste disposal
site.
(e) Without limiting the generality of the foregoing, except as disclosed
in Schedule "L", there are no underground or surface storage tanks or
urea formaldehyde foam insulation, asbestos, polychlorinated biphenyls
(PCBs) or radioactive substances located on or in any of the
properties or assets owned or used by the Corporation. The Corporation
is not, and there is no basis upon which the Corporation could become,
responsible for any clean-up or corrective action under any
Environmental Laws. The Corporation has never conducted or had
conducted an environmental audit, assessment or study of any of the
properties or assets of the Corporation.
(19) Title to Assets. The Corporation is the owners of and have good and
marketable title to all of their properties and assets, including, without
limitation, all properties and assets reflected in the Audited Financial
Statements and all properties and assets acquired by the Corporation after the
Audited Statements Date, free and clear of all Encumbrances whatsoever, except
for:
(a) the properties and assets disposed of, utilized or consumed by the
Corporation since the Audited Statements Date in the ordinary course
of the Business;
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(b) the Encumbrances disclosed or reflected in the Interim Financial
Statements;
(c) liens for taxes not yet due and payable; and
(d) the Encumbrances described in Schedule "M" attached hereto.
No other person owns any assets which are being used in the Business, except for
the Leased Premises and personal property leased by the Corporation. There are
no agreements or commitments to purchase property or assets by the Corporation,
other than in the ordinary course of the Business.
(20) Deposit Accounts and Safe Deposit Boxes of the Corporation. The name
and address of each bank, trust company or similar institution with which the
Corporation has one or more accounts or one or more safe deposit boxes, the
number of each such account and safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto are as set forth in
Schedule "N" attached hereto.
(21) Accounts Receivable. The accounts receivable of the Corporation
reflected in the Interim Financial Statements and all accounts receivable of the
Corporation arising since the date of the Interim Financial Statements arose
from bona fide transactions in the ordinary course of the Business and are
valid, enforceable and fully collectible accounts (subject to a reasonable
allowance, consistent with past practice, for doubtful accounts as reflected in
the Interim Financial Statements or as previously disclosed in writing to the
Purchaser). Such accounts receivable are not subject to any set-off or
counterclaim.
(22) Inventory. The current inventory of the Corporation, subject to a
reasonable allowance for obsolete inventory (consistent with the allowances
reflected in the Audited Financial Statements and the Interim Financial
Statements), is good and usable and is capable of being processed and sold in
the ordinary course of the Business at normal profit margins.
(23) Real Properties.
(a) Schedule "D" attached hereto lists all real properties owned by the
Corporation.
(24) Leased Premises. Schedule "C" attached hereto describes all leases or
agreements to lease under which the Corporation leases any real property.
Complete and correct copies of the Leases have been provided to the Purchaser.
The Corporation has exclusively entitled to all rights and benefits as lessee
under the Leases and the Corporation has not sublet, assigned, licensed or
otherwise conveyed any rights in the Leased Premises or in the Leases to any
other person. The names of the other parties to the Leases, the description of
the Leased Premises, the term, rent and other amounts payable under the Leases
and all renewal options available under the Leases are accurately described in
Schedule "C". All rental and other payments and other obligations required to be
paid and performed by the Corporation pursuant to the Leases have been duly paid
and performed; the Corporation is not in default of any of its obligations under
the Leases; and, to the best of the knowledge of the Vendor none of the
landlords or other parties to the Leases are in default of any of their
obligations under the Leases. The terms and conditions of the Leases will not be
affected by, nor will any of the Leases be in default as a result of, the
completion of the transactions contemplated hereunder. The use by the
Corporation of the Leased Premises is not in breach of any building, zoning or
other statute, by-law, ordinance, regulation, covenant, restriction or official
plan. The Corporation has adequate rights of ingress to and egress from the
Leased Premises for the operation of the Business in the ordinary course.
(25) Work Orders and Deficiencies. There are no outstanding work orders,
non-compliance orders, deficiency notices or other such notices relative to the
Real Properties, the Leased Premises, the other properties and assets of the
Corporation or the Business which have been issued by any regulatory authority,
police or fire department, sanitation, environment, labour, health or other
governmental authorities or agencies. There are no matters under discussion with
any such department or authority relating to work orders, non-compliance orders,
deficiency notices or other such notices. The Business is not being carried on,
and none of the Real Properties, the Leased Premises or the other properties or
assets of the Corporation is being operated, in a manner which is in
contravention of any statute, regulation, rule, code, standard or policy. No
amounts are owing by the Corporation in respect of the Real Properties or the
Leased Premises to any governmental authority or public utility, other than
current accounts which are not in arrears.
(26) Condition of Properties and Equipment. The buildings and structures
comprising the Real Properties
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and, to the best of the knowledge of the Vendor those comprising the Leased
Premises, are free of any structural defect. The heating, ventilating, plumbing,
drainage, electrical and air-conditioning systems and all other systems used in
the Real Properties and the Leased Premises and all machinery, equipment, tools,
furniture, furnishings and materials used in the Business are in good working
order, fully operational and free of any defect, except for normal wear and
tear.
(27) Leases of Personal Property. Except as set out in Schedule "O"
attached hereto, the Corporation is not the lessee under any lease of personal
property in respect of which the annual financial obligation exceeds $6,000.
Complete and correct copies of each of the leases referred to in Schedule "O"
have been provided to the Purchaser.
(28) Intellectual Property.
(a) Schedule "P" attached hereto lists and contains a description of:
(i) all patents, patent applications and registrations, trade marks,
trade ▇▇▇▇ applications and registrations, copyrights, copyright
applications and registrations, trade names and industrial
designs, domestic or foreign, owned or used by the Corporation or
relating to the operation of the Business,
(ii) all trade secrets, know-how, inventions and other intellectual
property owned or used by the Corporation or relating to the
Business, and
(iii) 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 the Corporation or relating to the Business,
(all of the foregoing being collectively called the "Intellectual
Property").
(b) The Corporation has good and valid title to all of the Intellectual
Property, free and clear of any and all Encumbrances, except in the
case of any Intellectual Property licensed to the Corporation as
disclosed in Schedule "P". Complete and correct copies of all
agreements whereby any rights in any of the Intellectual Property have
been granted or licensed to the Corporation has been provided to the
Purchaser. No royalty or other fee is required to be paid by the
Corporation to any other person in respect of the use of any of the
Intellectual Property except as provided in such agreements delivered
to the Purchaser. The Corporation has protected their rights in the
Intellectual Property in the manner and to the extent described in
Schedule "P". Except as indicated in Schedule "P", the Corporation has
the exclusive right to use all of the Intellectual Property and have
not granted any licence or other rights to any other person in respect
of the Intellectual Property. Complete and correct copies of all
agreements whereby any rights in any of the Intellectual Property have
been granted or licensed by the Corporation to any other person have
been provided to the Purchaser.
(c) Except as disclosed in Schedule "P", there are no restrictions on the
ability of the Corporation or any successor to or assignee from the
Corporation 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
the Corporation in the Intellectual Property will be impaired or
affected in any way by the transactions contemplated by this
agreement.
(d) The conduct of the Business and the use of the Intellectual Property
does not infringe, and the Corporation has not received any notice,
complaint, threat or claim alleging infringement of, any patent, trade
▇▇▇▇, 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.
(29) Subsidiaries and Other Interests. The Corporation has no subsidiaries
and do not own any securities issued by, or any equity or ownership interest in,
any other person. The Corporation is not subject to any obligation
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to make any investment in or to provide funds by way of loan, capital
contribution or otherwise to any person.
(30) Partnerships or Joint Ventures. The Corporation 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 the
Corporation agrees to carry on any part of the Business or any other activity in
such manner or by which the Corporation agrees to share any revenue or profit
with any other person.
(31) Customers. The Vendor has previously delivered to the Purchaser a true
and complete list of all customers of the Business as of the date hereof. The
Corporation is the sole and exclusive owners of, and have 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
Purchaser. The Vendor does not have any 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 the Corporation.
(32) Restrictions on Doing Business. The Corporation 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 the Corporation may
determine. The Corporation is not subject to any legislation or any judgment,
order or requirement of any court or governmental authority which is not of
general application to persons carrying on a business similar to the Business.
To the best of the knowledge of the Vendor there are no facts or circumstances
which could materially adversely affect the ability of the Corporation to
continue to operate the Business as presently conducted following the completion
of the transactions contemplated by this agreement.
(33) Guarantees, Warranties and Discounts. Except as described in Schedule
"Q" attached hereto,
(a) the Corporation 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;
(b) the Corporation 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 the Corporation' standard written warranty, a copy of which has
been provided to the Purchaser, and except for warranties implied by
law;
(c) during each of the three fiscal years of the Corporation ended
immediately preceding the date hereof, no claims have been made
against the Corporation 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 $5,000
(d) there are no repair contracts or maintenance obligations of the
Corporation in favour of the customers or users of products of the
Business, except obligations incurred in the ordinary course of the
Business and in accordance with the Corporation' standard terms, a
copy of which has been provided to the Purchaser;
(e) the Corporation is not now subject to any agreement or commitment, and
the Corporation 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 the Corporation to repurchase any
products sold to such customers or to adjust any price or grant any
refund, discount or other concession to such customer; and
(f) the Corporation 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.
(34) Licences, Agency and Distribution Agreements. Schedule "R" attached
hereto lists all agreements to which the Corporation is a party or by which they
are 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 the Corporation or
by the Corporation to any other person, or under
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which the Corporation has been appointed or any person has been appointed by the
Corporation as an agent, distributor, licensee or franchisee for any of the
foregoing. Complete and correct copies of all of the agreements listed in
Schedule "R" have been provided to the Purchaser. None of the agreements listed
in Schedule "R" grant to any person any authority to incur any liability or
obligation or to enter into any agreement on behalf of the Corporation.
(35) Outstanding Agreements. The Corporation is not a party to or bound by
any outstanding or executory agreement, contract or commitment, whether written
or oral, except for:
(a) any contract, lease or agreement described or referred to in this
agreement or in the Schedules hereto,
(b) any contract, lease or agreement made in the ordinary course of the
routine daily affairs of the Business under which the Corporation has
a financial obligation of less than $70,000.00 per annum and which can
be terminated by the Corporation without payment of any damages,
penalty or other amount by giving not more than 30 days' notice, and
(c) the contracts, leases and agreements described in Schedule "S"
attached hereto.
Complete and correct copies of each of the contracts, leases and agreements
described in Schedule "S" have been provided to the Purchaser.
(36) Good Standing of Agreements. The Corporation is not in default or
breach of any of its obligations under any one or more contracts, agreements
(written or oral), commitments, indentures or other instruments to which they
are a party or by which they are bound and there exists no state of facts which,
after notice or lapse of time or both, would constitute such a default or
breach. All such contracts, agreements, commitments, indentures and other
instruments are now in good standing and in full force and effect without
amendment thereto, the Corporation is entitled to all benefits thereunder and,
to the best of the knowledge of the Vendor the other parties to such contracts,
agreements, commitments, indentures and other instruments are not in default or
breach of any of their obligations thereunder. There are no contracts,
agreements, commitments, indentures or other instruments under which the
Corporation' rights or the performance of its obligations are dependent on or
supported by the guarantee of or any security provided by any other person.
(37) Employees. Schedule "T" attached hereto sets forth the name, job
title, duration of employment, vacation entitlement, employee benefit
entitlement and rate of remuneration (including bonus and commission
entitlement) of each employee of the Corporation. Schedule "T" also sets forth
the names of all employees of the Corporation who are now on disability,
maternity or other authorized leave or who are receiving workers' compensation
or short-term or long-term disability benefits.
(38) Employment Agreements. The Corporation is not a party to any written
or oral employment, service or consulting agreement relating to any one or more
persons, except for oral employment agreements which are of indefinite term and
without any special arrangements or commitments with respect to the continuation
of employment or payment of any particular amount on termination of employment.
The Corporation do not have any employee who cannot be dismissed on such period
of notice as is required by law in respect of a contract of hire for an
indefinite term.
(39) Labour Matters and Employment Standards.
(a) The Corporation is not subject to any agreement with any labour union
or employee association and have not made any commitment to or
conducted negotiations with any labour union or employee association
with respect to any future agreement and, to the best of the knowledge
of the Vendor during the period of five years preceding the date of
this agreement there has been no attempt to organize, certify or
establish any labour union or employee association in relation to any
of the employees of the Corporation.
(b) There are no existing or, to the best of the knowledge of the Vendor
threatened, labour strikes or labour disputes, grievances,
controversies or other labour troubles affecting the Corporation or
the Business.
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(c) The Corporation has complied with all laws, rules, regulations and
orders applicable to them relating to employment, including those
relating to wages, hours, collective bargaining, occupational health
and safety, workers' hazardous materials, employment standards, pay
equity and workers' compensation. There are no outstanding charges or
complaints against the Corporation relating to unfair labour practices
or discrimination or under any legislation relating to employees. The
Corporation has paid in full all amounts owing under any government
required employee worker's compensation program, and the workers'
compensation claims experience of the Corporation would not permit a
penalty reassessment under such legislation.
(40) Employee Benefit and Pension Plans.
(a) Except as listed in Schedule "U" attached hereto, the Corporation do
not have, and is not subject to any present or future obligation or
liability under, any pension plan, deferred compensation plan,
retirement income plan, stock option or stock purchase plan, profit
sharing plan, bonus plan or policy, employee group insurance plan,
hospitalization plan, disability plan or other employee benefit plan,
program, policy or practice, formal or informal, with respect to any
of its employees, other than any Government Required Pension Plan and
any health plans established pursuant to state or federal statute.
Schedule "U" also lists the general policies, procedures and
work-related rules in effect with respect to employees of the
Corporation, whether written or oral, including but not limited to
policies regarding holidays, sick leave, vacation, disability and
death benefits, termination and severance pay, automobile allowances
and rights to company-provided automobiles and expense reimbursements.
(The plans, programs, policies, practices and procedures listed in
Schedule "U" are collectively called the "Benefit Plans".) Complete
and correct copies of all documentation establishing or relating to
the Benefit Plans listed in Schedule "U" or, where such Benefit Plans
are oral commitments, written summaries of the terms thereof, and the
most recent financial statements and actuarial reports related thereto
and all reports and returns in respect thereof filed with any
regulatory agency within three years prior to the date hereof have
been provided to the Purchaser.
(b) The pension plans included in the Benefit Plans are registered under
and are in compliance with all applicable federal and state
legislation and all reports, returns and filings required to be made
thereunder have been made. Such pension plans have been administered
in accordance with their terms and the provisions of applicable law.
Each pension plan has been funded in accordance with the requirements
of such plans and based on actuarial assumptions which are appropriate
to the employees of the Corporation and the Business. Based on such
assumptions, there is no unfunded liability under any such pension
plan. No changes have occurred since the date of the most recent
actuarial report provided to the Purchaser in respect of such pension
plans which makes such report misleading in any material respect and,
since the date of such report, the Corporation has not made or granted
or committed to make or grant any benefit improvements to which
members of the pension plans are or may become entitled which are not
reflected in such actuarial report. No funds have been withdrawn by
the Corporation from any such pension plan or other Benefit Plans.
(c) There are no pending claims by any employee covered under the Benefit
Plans or by any other person which allege a breach of fiduciary duties
or violation of governing law or which may result in liability to the
Corporation and, to the best of the knowledge of the Vendor there is
no basis for such a claim. There are no employees or former employees
of the Corporation who are receiving from the Corporation any pension
or retirement payments, or who are entitled to receive any such
payments, not covered by a pension plan to which the Corporation is a
party.
(41) Insurance. Schedule "V" attached hereto contains a true and complete
list of all insurance policies maintained by the Corporation or under which the
Corporation is covered in respect of its properties, assets, business or
personnel as of the date hereof. Complete and correct copies of all such
insurance policies have been provided to the Purchaser. Such insurance policies
are in full force and effect and the Corporation is not in default with respect
to the payment of any premium or compliance with any of the provisions contained
in any such insurance policy. To the best of the knowledge of the Vendor, there
are no circumstances under which the Corporation would be required to or, in
order to maintain its coverage, should give any notice to the insurers under any
such insurance policies which has not been given. The Corporation has not
received notice from any of the insurers regarding cancellation of such
insurance policies. The Corporation has not failed to present any claim
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under any such insurance policy in due and timely fashion. The Corporation has
not received notice from any of the insurers denying any claims.
(42) Non-Arm's Length Matters. The Corporation is not a party to or bound
by any agreement with, is not indebted to, and no amount is owing to the
Corporation by the Vendor or any of the Vendor's Affiliates or any officers,
former officers, directors, former directors, shareholders, former shareholders,
employees (except for oral employment agreements with employees) or former
employees of the Corporation or any person not dealing at arm's length with any
of the foregoing. The exception to this are Shareholders loans made to the
Corporation by ▇▇▇▇▇▇▇ ▇▇▇▇▇. Since the Audited Statements Date, the Corporation
has not made or authorized any payments to the Vendor or any of the Vendor's
Affiliates or any officers, former officers, directors, former directors,
shareholders, former shareholders, employees or former employees of the
Corporation or to any person not dealing at arm's length with any of the
foregoing, except for salaries and other employment compensation payable to
employees of the Corporation in the ordinary course of the routine daily affairs
of the Business and at the regular rates payable to them.
(43) Government Assistance. Schedule "W" attached hereto describes all
agreements, loans, other funding arrangements and assistance programs
(collectively called "Government Assistance Programs") which are outstanding in
favour of the Corporation from any federal, state, municipal or other government
or governmental agency, board, commission or authority, domestic or foreign
(collectively called "Government Agencies"). Complete and correct copies of all
documents relating to the Government Assistance Programs have been delivered to
the Purchaser. The Corporation has performed all of its obligations under the
Government Assistance Programs, and no basis exists for any Government Agencies
to seek payment or repayment by the Corporation of any amount or benefit
received by them under any Government Assistance Programs.
(44) Compliance with Laws. The Corporation is not in violation of any
federal, state, municipal or other law, regulation or order of any government or
governmental or regulatory authority, domestic or foreign, including, without
limitation, any law, regulation or order relating to any specific area of
regulation applicable to the Corporation.
(45) Vendor's Residency. The Vendors are residents of Canada within the
meaning of the Income Tax Act.
(46) Copies of Documents. Complete and correct copies (including all
amendments) of all contracts, leases and other documents referred to in this
agreement or any Schedule hereto or required to be disclosed hereby have been
delivered to the Purchaser.
(47) Disclosure. No representation or warranty contained in this Section,
and no statement contained in any Schedule, certificate, list, summary or other
disclosure document provided or to be provided to the Purchaser pursuant hereto
or in connection with the transactions contemplated hereby contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact which is necessary in order to make the statements contained
therein not misleading.
(48) Statutory Liens.
(a) The Corporation has paid in full all amounts owing to employees under
the Labour Standards Act or applicable state statute, and there are no
claims or potential claims against the Corporation by former employees
for wrongful dismissal.
(b) The Corporation has kept current all amounts owing for the supply of
utilities or telephone services.
(c) The Corporation has deducted and paid to the appropriate governmental
authorities all payroll source deductions as required, including
workers' compensation, unemployment insurance, government regulated
pension plan and income tax.
(d) The Corporation have collected and remitted all amounts required by
all governmental authorities as state sales tax, education and health
tax and other taxes of similar nature.
(e) There are no land taxes or local improvement levies owing with respect
to the Real Properties except as otherwise permitted under this
Agreement.
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3.2 REPRESENTATIONS AND WARRANTIES BY THE PURCHASER. The Purchaser hereby
represents and warrants to the Vendor as follows, and confirms that the Vendor
are relying on the accuracy of each of such representations and warranties in
connection with the sale of the Purchased Shares and the completion of the other
transactions hereunder:
(1) Corporate Authority and Binding Obligation. The Purchaser is a
corporation duly incorporated and validly subsisting in all respects under the
laws of Colorado and is in good standing with the State of Colorado. The
Purchaser has good right, full corporate power and absolute authority to enter
into this agreement and to purchase the Purchased Shares from the Vendor in the
manner contemplated herein and to perform all of the Purchaser's obligations
under this agreement. The Purchaser and its shareholders and board of directors
have taken all necessary or desirable actions, steps and corporate and other
proceedings to approve or authorize, validly and effectively, the entering into
of, and the execution, delivery and performance of, this agreement and the
purchase of the Purchased Shares by the Purchaser from the Vendor. This
agreement is a legal, valid and binding obligation of the Purchaser, enforceable
against them in accordance with its terms subject to
(a) bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditors' rights
generally and
(b) the fact that equitable remedies, including the remedies of specific
performance and injunction, may only be granted in the discretion of a
court.
(2) Contractual and Regulatory Approvals. Except as specified in Schedule
"X" attached hereto, the Purchaser is not under any obligation, contractual or
otherwise, to request or obtain the consent of any person, and no permits,
licences, certifications, authorizations or approvals of, or notifications to,
any federal, state, municipal or local government or governmental agency, board,
commission or authority are required to be obtained by the Purchaser in
connection with the execution, delivery or performance by the Purchaser of this
agreement or the completion of any of the transactions contemplated herein.
Complete and correct copies of any agreements under which the Purchaser is
obligated to request or obtain any such consent have been provided to the
Vendor.
(3) Compliance with Constating Documents, Agreements and Laws. The
execution, delivery and performance of this agreement and each of the other
agreements contemplated or referred to herein by the Purchaser, and the
completion of the transactions contemplated hereby, will not constitute or
result in a violation or breach of or default under:
(a) any term or provision of any of the articles, by-laws or other
constating documents of the Purchaser,
(b) subject to obtaining the contractual consents referred to in Schedule
"X" hereof, the terms of any indenture, agreement (written or oral),
instrument or understanding or other obligation or restriction to
which the Purchaser is a party or by which they are bound, or
(c) subject to obtaining the regulatory consents referred to in Schedule
"X" hereof, any term or provision of any licences, registrations or
qualification of the Purchaser or any order of any court, governmental
authority or regulatory body or any applicable law or regulation of
any jurisdiction.
(4) Corporate Records. The corporate records and minute books of the
Purchaser, all of which have been provided to the Vendors, contain complete and
accurate minutes of all meetings of the directors and shareholders of the
Purchaser held since its incorporation, and original signed copies of all
resolutions and by-laws duly passed or confirmed by the directors or
shareholders of the Purchaser other than at a meeting. All such meetings were
duly called and held. The share certificate books, register of security holders,
register of transfers and register of directors and any similar corporate
records of the Purchaser is complete and accurate. All exigible security
transfer tax or similar tax payable in connection with the transfer of any
securities of the Corporation has been duly paid.
(5) Authorized and Issued Capital. The authorized capital of the Purchaser
consists of 30,000,000 shares in the common stock with a par value of $.0001 per
share and 1,000,000 preferred shares with a par value of $.10, of which
10,203,500 shares in the common stock and no preferred shares have been duly
issued and are outstanding as fully paid and non-assessable shares. The
Purchaser has received shareholder approval to issue 1,000,000 Preferred shares
to ▇▇▇▇▇▇▇ ▇▇▇▇▇ which are convertible to Common Shares at $.10 per share. The
Purchaser has also received shareholder approval to issue 3,500,000 shares of
144 stock to various employees of
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the Corporation. No shares or other securities of the Corporation has been
issued in violation of any laws, the articles of incorporation, by-laws or other
constating documents of the Corporation or the terms of any shareholders'
agreement or any agreement to which the Corporation is a party or by which they
are bound. There are no outstanding subscriptions, options, warrants,
convertible securities or rights or commitments of any nature in regard to the
Purchasers authorized but unissued common stock.
(6) Shareholders' Agreements, etc. There are no shareholders' agreements,
pooling agreements, voting trusts or other similar agreements with respect to
the ownership or voting of any of the shares of the Purchaser.
(7) Assets and Liabilities. The Purchaser will have no assets or
liabilities at the time of Closing.
(8) Debt and Other Obligations. The Purchaser has no outstanding debt or
obligations whatsoever except for any items which have already been expressly
disclosed to the Buyer by the Sellers. There are no outstanding judgments of UCC
financing instruments or UCC Securities Interests filed against the Purchaser.
(9) Litigation. Except for the matters referred to in Schedule "K" attached
hereto, there are no actions, suits or proceedings, judicial or administrative
(whether or not purportedly on behalf of the Purchaser) pending or, to the best
of the knowledge of the Purchaser threatened, by or against or affecting the
Purchaser, at law or in equity, or before or by any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. Except for the matters referred to in
Schedule "K" there are no grounds on which any such action, suit or proceeding
might be commenced with any reasonable likelihood of success.
(10) Real Properties. The Purchaser does not own any real estate or any
interests in real estate.
(11) Subsidiaries and Other Interests. The Purchaser has no subsidiaries or
other interests.
(12) Outstanding Agreements. The Purchaser is not a party to any contract,
lease or agreement which would subject it to any performance or business
obligations in the future after the closing of this Agreement. The Purchaser is
not in default under any contract, or any other document
(13) Employees, Employee Benefit and Pension Plans. The Purchaser has no
employment contracts or agreements with any of its officers, directors, or with
any consultants, employees or other such parties. The Company has no insurance
or employee benefit plans whatsoever
(14) Tax Matters. The Purchaser is not liable for any income, real or
personal property taxes to any governmental agencies whatsoever.
(15) Compliance with Laws. The Purchaser is not in violation of any
federal, state, municipal or other law, regulation or order of any government or
governmental or regulatory authority, domestic or foreign, including, without
limitation, any law, regulation or order relating to any specific area of
regulation applicable to the Purchaser.
4. SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES
4.1 SURVIVAL OF WARRANTIES BY THE VENDOR. The representations and
warranties made by the Vendor and contained in this agreement, or contained in
any document or certificate given in order to carry out the transactions
contemplated hereby, will survive the closing of the purchase of the Purchased
Shares provided for herein and, notwithstanding such closing or any
investigation made by or on behalf of the Purchaser or any other person or any
knowledge of the Purchaser or any other person, shall continue in full force and
effect for the benefit of the Purchaser, subject to the following provisions of
this section.
(a) Except as provided in paragraphs (b) and (c) of this section, no
Warranty Claim may be made or brought by the Purchaser after the date
which is 3 months following the Closing Date.
(b) Any Warranty Claim which is based on or relates to the tax liability
of the Corporation for a particular taxation year may be made or
brought by the Purchaser at any time prior to the expiration of the
period (if any) during which an assessment, reassessment or other form
of
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recognized document assessing liability for tax, interest or penalties
in respect of such taxation year under applicable tax legislation
could be issued, assuming that the Corporation do not file any waiver
or similar document extending such period as otherwise determined.
(c) Any Warranty Claim which is based on or relates to the title to the
Purchased Shares or which is based on intentional misrepresentation or
fraud by the Vendor may be made or brought by the Purchaser at any
time.
After the expiration of the period of time referred to in paragraph (a) of this
section, the Vendor will be released from all obligations and liabilities in
respect of the representations and warranties made by the Vendor and contained
in this agreement or in any document or certificate given in order to carry out
the transactions contemplated hereby, except with respect to any Warranty Claims
made by the Purchaser in writing prior to the expiration of such period and
subject to the rights of the Purchaser to make any claim permitted by paragraph
(b) or paragraph (c) of this section.
4.2 SURVIVAL OF WARRANTIES BY PURCHASER. The representations and warranties
made by the Purchaser and contained in this agreement or contained in any
document or certificate given in order to carry out the transactions
contemplated hereby will survive the closing of the purchase and sale of the
Purchased Shares provided for herein and, notwithstanding such closing or any
investigation made by or on behalf of the Vendor or any other person or any
knowledge of the Vendor or any other person, shall continue in full force and
effect for the benefit of the Vendor.
4.3 LIMITATIONS ON WARRANTY CLAIMS.
(1) The Purchaser shall not be entitled to make a Warranty Claim if the
Purchaser has been advised in writing or otherwise has actual knowledge prior to
the Closing Time of the inaccuracy, non-performance, non-fulfilment or breach
which is the basis for such Warranty Claim and the Purchaser completes the
transactions hereunder notwithstanding such inaccuracy, non-performance,
non-fulfilment or breach.
(2) The amount of any damages which may be claimed by the Purchaser
pursuant to a Warranty Claim shall be calculated to be the cost or loss to the
Purchaser after giving effect to
(a) any insurance proceeds available to the Corporation in relation to the
matter which is the subject of the Warranty Claim, and
(b) the value of any related, determinable tax benefits realized, or which
will (with reasonable certainty) be realized within a 3 year period
following the date of incurring such cost or loss, by the Corporation
or the Purchaser in relation to the matter which is the subject of the
Warranty Claim.
(3) The Purchaser shall not be entitled to make any Warranty Claim until
the aggregate amount of all damages, losses, liabilities and expenses incurred
by the Purchaser as a result of all misrepresentations and breaches of
warranties contained in this agreement or contained in any document or
certificate given in order to carry out the transactions contemplated hereby,
after taking into account paragraph (2) of this section, is equal to $
100,000.00. After the aggregate amount of such damages, losses, liabilities and
expenses incurred by the Purchaser exceeds $100,000.00, the Purchaser shall only
be entitled to make Warranty Claims to the extent that such aggregate amount,
after taking into account the provisions of paragraph (2) of this section,
exceeds $ 100,000.00.
(4) Notwithstanding any other provisions of this agreement or of any
agreement, certificate or other document made in order to carry out the
transactions contemplated hereby, the maximum aggregate liability of the Vendor
together in respect of all Warranty Claims by the Purchaser will be limited to
$100,000.00.
5. COVENANTS
5.1 COVENANTS BY THE VENDOR. The Vendor covenants to the Purchaser that he
will do or cause to be done the following:
(a) Investigation of Business and Examination of Documents. During the
Interim Period, the
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Vendor will provide and will cause the Corporation to provide access
to, and will permit the Purchaser, through its representatives, to
make such investigation of, the operations, properties, assets and
records of the Corporation and of its financial and legal condition as
the Purchaser deems necessary or advisable to familiarize itself with
such operations, properties, assets, records and other matters.
Without limiting the generality of the foregoing, during the Interim
Period the Vendor will permit the Purchaser and its representatives to
have access to the premises used in connection with the Business [at
such reasonable times as may be designated by the Vendor so as not to
disrupt the routine daily affairs of the Business], and will produce
for inspection and provide copies to the Purchaser of:
(i) all agreements and other documents referred to in Section
3.1 hereof or in any of the Schedules attached hereto and
all other contracts, leases, licences, title documents,
title opinions, insurance policies, pension plans,
information relating to employees of the Corporation,
customer lists, information relating to customers and
suppliers of the Corporation, documents relating to all
indebtedness and credit facilities of the Corporation,
documents relating to legal or administrative proceedings
and all other documents of or in the possession of the
Corporation or relating to the Business;
(ii) all minute books, share certificate books, registers of
security holders, registers of transfers of securities,
registers of directors and other corporate documents of the
Corporation;
(iii) all books, records, accounts, tax returns and financial
statements of the Corporation; and
(iv) all other information which, in the reasonable opinion of
the Purchaser's representatives, is required in order to
make an examination of the Corporation and the Business.
All such investigations and inspections shall not mitigate or affect
the representations and warranties of the Vendor contained in this agreement,
which shall continue in full force and effect.
(b) Conduct of Business. Except as contemplated by this agreement or with
the prior written consent of the Purchaser, during the Interim Period
the Vendor will, and will cause the Corporation to:
(i) operate the Business only in the ordinary course thereof,
consistent with past practices;
(ii) take all actions within their control to ensure that the
representations and warranties in Section 3.1 hereof remain
true and correct at the Closing Time, with the same force
and effect as if such representations and warranties were
made at and as of the Closing Time, and to satisfy or cause
to be satisfied the conditions in Section 6.1 hereof;
(iii) promptly advise the Purchaser of any facts that come to
their attention which would cause any of the Vendor's
representations and warranties contained in this agreement
to be untrue in any respect;
(iv) take all action to preserve the Business and the goodwill of
the Corporation and their relationships with customers,
suppliers and others having business dealings with it, to
keep available the services of its present officers and
employees and to maintain in full force and effect all
agreements to which the Corporation is a party, and take all
other action reasonably requested by the Purchaser in order
that the Business and the Condition of the Corporation will
not be impaired during the Interim Period;
(v) promptly advise the Purchaser in writing of any material
adverse change in the Business or the Condition of the
Corporation during the Interim Period;
(vi) maintain all of the Corporation' tangible properties and
assets in the same condition as they now exist, ordinary
wear and tear excepted;
(vii) maintain the books, records and accounts of the Corporation
in the ordinary course and record all transactions on a
basis consistent with past practice;
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(viii) ensure that the Corporation do not create, incur or assume
any long-term debt (including obligations in respect of
leases) or create any Encumbrance upon any of its properties
or assets or guarantee or otherwise become liable for the
obligations of any other person or make any loans or
advances to any person;
(ix) ensure that the Corporation do not sell or otherwise dispose
of any of its properties or assets except in the ordinary
course of the Business;
(x) ensure that the Corporation do not terminate or waive any
right of substantial value of the Business;
(xi) ensure that the Corporation do not make any capital
expenditure in excess of $ 5,000.00 in respect of any
particular item or in excess of $ 10,000.00 in the
aggregate;
(xii) maintain the inventories of the Business in accordance with
past practice;
(xiii) keep in full force all of the Corporation' current insurance
policies;
(xiv) take all actions within their control to ensure that the
Corporation performs all of its obligations falling due
during the Interim Period under all agreements to which the
Corporation is a party or by which they are bound;
(xv) ensure that the Corporation do not enter into any agreement
other than agreements made in the ordinary course of the
Business consistent with past practice and which involve
obligations of less than $ 10,000;
(xvi) not take any action to amend the articles of incorporation
or by-laws of the Corporation;
(xvii) ensure that the Corporation do not declare or pay any
dividends, redeem or repurchase any shares in the capital of
the Corporation; and
(xviii) ensure that the Corporation do not increase, in any manner,
the compensation or employee benefits of any of its
directors, officers or employees, or pay or agree to pay to
any of its directors, officers or employees any pension,
severance or termination amount or other employee benefit
not required by any of the employee benefit plans and
programs referred to in the Schedules attached hereto.
(c) Transfer of Purchased Shares. At or before the Closing Time, the
Vendor will cause all necessary steps and corporate proceedings to be
taken in order to permit the Purchased Shares to be duly and regularly
transferred to the Purchaser.
(d) Releases by the Vendor. At the Closing Time, the Vendor will execute
and deliver to the Purchaser and Corporation a release in the form of
the draft release attached hereto as Schedule "Y".
5.2 COVENANTS BY THE PURCHASER. The Purchaser covenants to the Vendor that
prior to the Closing Time and, if the transaction contemplated hereby is not
completed, at all times after the Closing Time, the Purchaser will keep
confidential all information obtained by them relating to the Corporation and
the Business, except such information which
(a) prior to the date hereof was already in the possession of the
Purchaser, as demonstrated by written records,
(b) is generally available to the public, other than as a result of a
disclosure by the Purchaser, or
(c) is made available to the Purchaser on a non-confidential basis from a
source other than the Vendor or his representatives.
The Purchaser further agrees that such information will be disclosed only to
those of its employees and
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representatives of its advisors who need to know such
information for the purposes of evaluating and implementing the transaction
contemplated hereby. Notwithstanding the foregoing provisions of this paragraph,
the obligation to maintain the confidentiality of such information will not
apply to the extent that disclosure of such information is required in
connection with governmental or other applicable filings relating to the
transactions hereunder, provided that, in such case, unless the Vendor otherwise
agrees, the Purchaser will, if possible, request confidentiality in respect of
such governmental or other filings. If the transactions contemplated hereby are
not consummated for any reason, the Purchaser will return forthwith, without
retaining any copies thereof, all information and documents obtained from the
Vendor and the Corporation.
6. CONDITIONS
6.1 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. Notwithstanding
anything herein contained, the obligation of the Purchaser to complete the
transactions provided for herein will be subject to the fulfilment of the
following conditions at or prior to the Closing Time, and the Vendor covenants
to use his best efforts to ensure that such conditions are fulfilled.
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Vendor contained
in this agreement or in any documents delivered in order to carry out
the transactions contemplated hereby shall be true and accurate on the
date hereof and at the Closing Time with the same force and effect as
though such representations and warranties had been made as of the
Closing Time (regardless of the date as of which the information in
this agreement or in any Schedule or other document made pursuant
hereto is given). In addition, the Vendor shall have complied with all
covenants and agreements herein agreed to be performed or caused to be
performed by them at or prior to the Closing Time. In addition, the
Vendor shall have delivered to the Purchaser a certificate in the form
of Schedule "Z" attached hereto confirming that the facts with respect
to each of such representations and warranties by the Vendor are as
set out herein at the Closing Time and that the Vendor have performed
all covenants required to be performed by them in this agreement.
(b) Material Adverse Changes. During the Interim Period there will have
been no change in the Business or the Condition of the Corporation,
howsoever arising, except changes which have occurred in the ordinary
course of the Business and which, individually or in the aggregate,
have not affected and may not affect the Business or the Condition of
the Corporation in any material adverse respect. Without limiting the
generality of the foregoing, during the Interim Period:
(i) no damage to or destruction of any material part of the
property or assets of the Corporation shall have occurred,
whether or not covered by insurance;
(ii) none of the employees of the Corporation shall have resigned
or have indicated their intention to resign from employment
with the Corporation; and
(iii) none of the 5 largest customers of the Business will have
ceased, or advised the Corporation or the Purchaser of their
intention to cease, purchasing from or doing business with
the Corporation.
(c) No Restraining Proceedings. No order, decision or ruling of any court,
tribunal or regulatory authority having jurisdiction shall have been
made, and no action or proceeding shall be pending or threatened
which, in the opinion of counsel to the Purchaser, is likely to result
in an order, decision or ruling,
(i) to disallow, enjoin, prohibit or impose any limitations or
conditions on the purchase and sale of the Purchased Shares
contemplated hereby or the right of the Purchaser to own the
Purchased Shares; or
(ii) to impose any limitations or conditions which may have a
[material] adverse affect on the Business or the Condition
of the Corporation.
(d) Consents. All consents required to be obtained in order to carry out
the transactions contemplated hereby in compliance with all laws and
agreements binding on the parties hereto
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shall have been obtained, including the consents referred to in
Schedules "G" and "X" attached hereto.
(e) Estoppel Certificates. Prior to the Closing Time, the Purchaser shall
have received from the landlords of the Leased Premises executed
copies of estoppel certificates in the form of the draft certificate
attached hereto as Schedule "AA".
(f) Opinion of Vendor's Counsel. At the Closing Time, the Purchaser shall
have received an opinion of legal counsel for the Vendor in the form
of the draft opinion attached hereto as Schedule "CC, which opinion
may rely on certificates of one or more senior officers of the Vendor
and the Corporation as to factual matters and may rely on opinions of
local counsel with respect to matters governed by laws other than the
laws of the Province of Alberta and the federal laws of Canada
applicable in the Province of Alberta.
6.2 WAIVER OR TERMINATION BY PURCHASER. The conditions contained in Section
6.1 hereof are inserted for the exclusive benefit of the Purchaser and may be
waived in whole or in part by the Purchaser at any time. The Vendor acknowledge
that the waiver by the Purchaser of any condition or any part of any condition
shall constitute a waiver only of such condition or such part of such condition,
as the case may be, and shall not constitute a waiver of any covenant,
agreement, representation or warranty made by the Vendor in this agreement that
corresponds or is related to such condition or such part of such condition, as
the case may be. If any of the conditions contained in Section 6.1 hereof are
not fulfilled or complied with as herein provided, the Purchaser may, at or
prior to the Closing Time at its option, rescind this agreement by notice in
writing to the Vendor and in such event the Purchaser shall be released from all
obligations hereunder and, unless the condition or conditions which have not
been fulfilled are reasonably capable of being fulfilled or caused to be
fulfilled by the Vendor or the Corporation, then the Vendor shall also be
released from all obligations under this agreement.
6.3 CONDITIONS TO THE OBLIGATIONS OF THE VENDOR. Notwithstanding anything
herein contained, the obligations of the Vendor to complete the transactions
provided for herein will be subject to the fulfilment of the following
conditions at or prior to the Closing Time, and the Purchaser will use its best
efforts to ensure that such conditions are fulfilled.
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Purchaser
contained in this agreement or in any documents delivered in order to
carry out the transactions contemplated hereby will be true and
accurate on the date hereof and at the Closing Time with the same
force and effect as though such representations and warranties had
been made as of the Closing Time (regardless of the date as of which
the information in this agreement or any such Schedule or other
document made pursuant hereto is given). In addition, the Purchaser
shall have complied with all covenants and agreements herein agreed to
be performed or caused to be performed by them at or prior to the
Closing Time. In addition, the Purchaser shall have delivered to the
Vendor a certificate in the form of Schedule "DD attached hereto
confirming that the facts with respect to each of the representations
and warranties of the Purchaser are as set out herein at the Closing
Time and that the Purchaser has performed each of the covenants
required to be performed by it hereunder.
(b) No Restraining Proceedings. No order, decision or ruling of any court,
tribunal or regulatory authority having jurisdiction shall have been
made, and no action or proceeding shall be pending or threatened
which, in the opinion of counsel to the Vendor is likely to result in
an order, decision or ruling, to disallow, enjoin or prohibit the
purchase and sale of the Purchased Shares contemplated in this
agreement.
(c) Consents. All consents required to be obtained in order to carry out
the transactions contemplated hereby in compliance with all laws and
agreements binding on the parties hereto shall have been obtained,
including the consents referred to in Schedules "G" and "X" attached
hereto.
(d) Releases from Guarantees, etc. The Vendor will have received releases
from all necessary parties, in form acceptable to the Vendor's
counsel, whereby the Vendor is unconditionally released from all
guarantees, covenants and other arrangements providing financial
assistance or
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support to or on behalf of the Corporation.
(e) Release by the Corporation. The Vendor will have received a release
from the Corporation in the form of the draft release attached hereto
as Schedule "EE" releasing the Vendor from all claims, demands,
covenants and obligations whatsoever based on any matter or thing
arising prior to the Closing Time, except for the performance of the
Vendor's obligations under this agreement.
(f) Opinion of Purchaser's Counsel. At the Closing Time, the Vendor shall
have received an opinion of the Purchaser's counsel in the form of the
draft opinion attached hereto as Schedule "FF", which opinion may rely
on certificates of senior officers of the Purchaser as to factual
matters and may rely upon opinions of local counsel with respect to
matters governed by laws other than the laws of the Province of
British Columbia and the federal laws of Canada applicable in the
Province of British Columbia.
6.4 WAIVER OR TERMINATION BY VENDOR. The conditions contained in Section
6.3 hereof are inserted for the exclusive benefit of the Vendor and may be
waived in whole or in part by the Vendor at any time. The Purchaser acknowledges
that the waiver by the Vendor of any condition or any part of any condition
shall constitute a waiver only of such condition or such part of such condition,
as the case may be, and shall not constitute a waiver of any covenant,
agreement, representation or warranty made by the Purchaser herein that
corresponds or is related to such condition or such part of such condition, as
the case may be. If any of the conditions contained in Section 6.3 hereof are
not fulfilled or complied with as herein provided, the Vendor may, at or prior
to the Closing Time at their option, rescind this agreement by notice in writing
to the Purchaser and in such event the Vendor shall each be released from all
obligations hereunder and, unless the condition or conditions which have not
been fulfilled are reasonably capable of being fulfilled or caused to be
fulfilled by the Purchaser, then the Purchaser shall also be released from all
obligations hereunder.
7. CLOSING
7.1 CLOSING ARRANGEMENTS. Subject to the terms and conditions hereof, the
transactions contemplated herein shall be closed at the Closing Time at the
offices of Venture Law Corporation at 618 - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in person
or by telephone or at such other place or places as may be mutually agreed on by
the Vendor and the Purchaser.
7.2 DOCUMENTS TO BE DELIVERED. At or before the Closing Time, the Vendor
shall execute, or cause to be executed, and shall deliver, or cause to be
delivered, to the Purchaser all documents, instruments and things which are to
be delivered by the Vendor pursuant to the provisions of this agreement, and the
Purchaser shall execute, or cause to be executed, and shall deliver, or cause to
be delivered, to the Vendor all documents, instruments and things which the
Purchaser is to deliver or to cause to be delivered pursuant to the provisions
of this agreement.
8. INDEMNIFICATION AND SET-OFF
8.1 INDEMNITY BY THE VENDOR.
(1) The Vendor agrees to indemnify and save the Purchaser harmless from and
against any claims, demands, actions, causes of action, damage, loss,
deficiency, cost, liability and expense which may be made or brought against the
Purchaser or which the Purchaser may suffer or incur as a result of, in respect
of or arising out of:
(a) any non-performance or non-fulfilment of any covenant or agreement on
the part of the Vendor contained in this agreement or in any document
given in order to carry out the transactions contemplated hereby;
(b) any misrepresentation, inaccuracy, incorrectness or breach of any
representation or warranty made by the Vendor contained in this
Agreement or contained in any document or certificate given in order
to carry out the transactions contemplated hereby, and
(c) all costs and expenses including, without limitation, legal fees on a
solicitor and client basis,
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incidental to, arising from or in respect of the foregoing.
(2) The obligations of indemnification by the Vendor pursuant to paragraph
(1) of this section will be:
(a) subject to the limitations referred to in Section 4.1 hereof with
respect to the survival of the representations and warranties by the
Vendor;
(b) subject to the limitations referred to in Section 4.3; and
(c) subject to the provisions of Section 8.2.
8.2 PROVISIONS RELATING TO INDEMNITY CLAIMS. The following provisions will
apply to any claim by the Purchaser for indemnification by the Vendor pursuant
to Section 8.1 hereof (an "Indemnity Claim").
(a) Promptly after becoming aware of any matter that may give rise to an
Indemnity Claim, the Purchaser will provide to the Vendor written
notice of the Indemnity Claim specifying (to the extent that
information is available) the factual basis for the Indemnity Claim
and the amount of the Indemnity Claim or, if an amount is not then
determinable, an estimate of the amount of the Indemnity Claim, if an
estimate is feasible in the circumstances.
(b) If an Indemnity Claim relates to an alleged liability of the
Corporation to any other person (a "Third Party Liability"), including
without limitation any governmental or regulatory body or any taxing
authority, which is of a nature such that the Corporation is required
by applicable law to make a payment to a third party before the
relevant procedure for challenging the existence or quantum of the
alleged liability can be implemented or completed, then the Purchaser
may, notwithstanding the provisions of paragraphs (c) and (d) of this
section, make such payment or cause the Corporation to make such
payment and forthwith demand reimbursement for such payment from the
Vendor in accordance with this agreement; provided that, if the
alleged Third Party Liability as finally determined on completion of
settlement negotiations or related legal proceedings is less than the
amount which is paid by the Vendor in respect of the related Indemnity
Claim, then the Corporation or the Purchaser, as the case may be,
shall forthwith following the final determination pay to the Vendor
the amount by which the amount of the Third Party Liability as finally
determined is less than the amount which is so paid by the Vendor.
(c) The Purchaser shall not negotiate, settle, compromise or pay (except
in the case of payment of a judgment) any Third Party Liability as to
which it proposes to assert an Indemnity Claim, except with the prior
consent of the Vendor (which consent shall not be unreasonably
withheld or delayed), unless there is a reasonable possibility that
such Third Party Liability may materially and adversely affect the
Business, the Condition of the Corporation or the Purchaser, in which
case the Purchaser shall have the right, after notifying the Vendor to
negotiate, settle, compromise or pay such Third Party Liability
without prejudice to its rights of indemnification hereunder.
(d) With respect to any Third Party Liability, provided the Vendor first
admit the Purchaser's right to indemnification for the amount of such
Third Party Liability which may at any time be determined or settled,
then, in any legal, administrative or other proceedings in connection
with the matters forming the basis of the Third Party Liability, the
following procedures will apply:
(i) except as contemplated by subparagraph (iii) of this
paragraph, the Vendor will have the right to assume carriage
of the compromise or settlement of the Third Party Liability
and the conduct of any related legal, administrative or
other proceedings, but the Purchaser and the Corporation
shall have the right and shall be given the opportunity to
participate in the defence of the Third Party Liability, to
consult with the Vendor in the settlement of the Third Party
Liability and the conduct of related legal, administrative
and other proceedings (including consultation with counsel)
and to disagree on reasonable grounds with the selection and
retention of counsel, in which case counsel satisfactory to
the Vendor and the Purchaser shall be retained by the
Vendor;
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(ii) the Vendor will co-operate with the Purchaser in relation to
the Third Party Liability, will keep it fully advised with
respect thereto, will provide it with copies of all relevant
documentation as it becomes available, will provide it with
access to all records and files relating to the defence of
the Third Party Liability and will meet with representatives
of the Purchaser at all reasonable times to discuss the
Third Party Liability; and
(iii) notwithstanding subparagraphs (i) and (ii) of this
paragraph, the Vendor will not settle the Third Party
Liability or conduct any legal, administrative or other
proceedings in any manner which could, in the reasonable
opinion of the Purchaser, have a material adverse affect on
the Business, the Condition of the Corporation or the
Purchaser, except with the prior written consent of the
Purchaser.
(e) If, with respect to any Third Party Liability, the Vendor do not admit
the Purchaser's right to indemnification or decline to assume carriage
of the settlement or of any legal, administrative or other proceedings
relating to the Third Party Liability, then the following provisions
will apply:
(i) the Purchaser, at its discretion, may assume carriage of the
settlement or of any legal, administrative or other
proceedings relating to the Third Party Liability and may
defend or settle the Third Party Liability on such terms as
the Purchaser, acting in good faith, considers advisable;
and
(ii) any cost, loss, damage or expense incurred or suffered by
the Purchaser and the Corporation in the settlement or
defence of such Third Party Liability or the conduct of any
legal, administrative or other proceedings shall be added to
the amount of the Indemnity Claim.
8.3 RIGHT OF SET-OFF. Each of the Purchaser and the Corporation shall have
the right to satisfy any amount from time to time owing by each of them to the
Vendor by way of set-off against any amount from time to time owing by the
Vendor the Purchaser or the Corporation, including any amount owing to the
Purchaser pursuant to the Vendor's indemnification pursuant to Section 8.1
hereof.
9. GENERAL PROVISIONS
9.1 FURTHER ASSURANCES. Each of the Vendor and the Purchaser hereby
covenants and agrees that at any time and from time to time after the Closing
Date they will, on the request of the other, do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all such
further acts, deeds, assignments, transfers, conveyances and assurances as may
be required for the better carrying out and performance of all the terms of this
agreement.
9.2 NOTICES.
(1) Any notice, designation, communication, request, demand or other
document, required or permitted to be given or sent or delivered hereunder to
any party hereto shall be in writing and shall be sufficiently given or sent or
delivered if it is:
(a) delivered personally to an officer or director of such party,
(b) sent to the party entitled to receive it by registered mail, postage
prepaid, mailed in North America, or
(c) sent by fax machine.
(2) Notices shall be sent to the following addresses or fax numbers:
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(a) in the case of the Vendors,
Beaumont Church
Barristers & Solicitors
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) in the case of the Purchaser,
Venture Law Corporation
618 - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(c) in the case of the Corporation,
FutureLink Distribution Corp.
▇▇. ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address or fax number as the party entitled to or receiving
such notice, designation, communication, request, demand or other document
shall, by a notice given in accordance with this section, have communicated to
the party giving or sending or delivering such notice, designation,
communication, request, demand or other document.
(3) Any notice, designation, communication, request, demand or other
document given or sent or delivered shall:
(a) if delivered, be deemed to have been given, sent, delivered and
received on the date of delivery;
(b) if sent by mail, be deemed to have been given, sent, delivered and
received (but not actually received) on the fourth Business Day
following the date of mailing, unless at any time between the date of
mailing and the fourth Business Day thereafter there is a
discontinuance or interruption of regular postal service, whether due
to strike or lockout or work slowdown, affecting postal service at the
point of dispatch or delivery or any intermediate point, in which case
the same shall be deemed to have been given, sent, delivered and
received in the ordinary course of the mails, allowing for such
discontinuance or interruption of regular postal service; and
(c) if sent by fax machine, be deemed to have been given, sent, delivered
and received on the date the sender receives the fax machine
confirmation receipt confirming receipt by the recipient.
9.3 COUNTERPARTS. This agreement may be executed in several counterparts,
each of which so executed shall be deemed to be an original, and such
counterparts together shall constitute but one and the same instrument.
9.4 EXPENSES OF PARTIES. Each of the parties hereto shall bear all expenses
incurred by it in connection with this agreement including, without limitation,
the charges of their respective counsel, accountants, financial advisors and
finders.
9.5 BROKERAGE AND FINDER'S FEES. The Vendor agrees to indemnify the
Purchaser and the Corporation and
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hold each of them harmless in respect of any claim for brokerage or other
commissions relative to this agreement or the transactions contemplated hereby
which is caused by actions of the Vendor. The Purchaser will indemnify the
Vendor and hold him harmless in respect of any claim for brokerage or other
commissions relative to this agreement or to the transactions contemplated
hereby which is caused by actions of the Purchaser or any of its Affiliates.
9.6 ANNOUNCEMENTS. No announcement with respect to this agreement will be
made by any party hereto without the prior approval of the other parties. The
foregoing will not apply to any announcement by any party required in order to
comply with laws pertaining to timely disclosure, provided that such party
consults with the other parties before making any such announcement.
9.7 ASSIGNMENT. The rights of the Vendor under this agreement must not be
assignable without the written consent of the Purchaser. The rights of the
Purchaser under this agreement may not be assigned without the written consent
of the Vendor.
9.8 SUCCESSORS AND ASSIGNS. This agreement shall be binding on and enure to
the benefit of the parties and their respective successors and permitted
assigns. Nothing in this agreement, express or implied, is intended to confer on
any person, other than the parties and their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
agreement.
9.9 ENTIRE AGREEMENT. This agreement and the Schedules attached constitute
the entire agreement between the parties hereto and supersede all prior
agreements, representations, warranties, statements, promises, information,
arrangements and understandings, whether oral or written, express or implied,
with respect to the subject matter hereof. None of the parties hereto shall be
bound or charged with any oral or written agreements, representations,
warranties, statements, promises, information, arrangements or understandings
not specifically set forth in this agreement or in the Schedules, documents and
instruments to be delivered on or before the Closing Date pursuant to this
agreement. The parties hereto further acknowledge and agree that, in entering
into this agreement and in delivering the Schedules, documents and instruments
to be delivered on or before the Closing Date, they have not in any way relied,
and will not in any way rely, on any oral or written agreements,
representations, warranties, statements, promises, information, arrangements or
understandings, express or implied, not specifically set forth in this agreement
or in such Schedules, documents or instruments.
9.10 WAIVER. Any party hereto which is entitled to the benefits of this
agreement may, and has the right to, waive any term or condition hereof at any
time on or prior to the Closing Time; provided, however, that such waiver shall
be evidenced by written instrument duly executed on behalf of such party.
9.11 AMENDMENTS. No modification or amendment to this agreement may be made
unless agreed to by the parties hereto in writing.
IN WITNESS WHEREOF the parties hereto have duly executed this agreement
under seal as of the day and year first above written.
CORE VENTURES, INC. FUTURELINK DISTRIBUTION CORP.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ ------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇, President By ▇▇▇▇▇▇▇ ▇▇▇▇▇, President &
Chairman
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ ------------------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------ ------------------------------------
Witness ▇▇▇▇▇ ▇▇▇▇▇▇▇
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