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EXHIBIT (6)k
EXCEED SYSTEMS LTD.
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AND
AXYN CANADA CORPORATION
AND
AXYN CORPORATION
PURCHASE AGREEMENT
GS:kd
1998-11-20
File No. 38908-1004
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BARRISTERS AND SOLICITORS
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PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT in duplicate this 20th day of November, 1998.
BETWEEN:
EXCEED SYSTEMS LTD. AND ▇▇▇▇▇▇ ▇▇▇▇▇
hereinafter referred to as the "VENDORS"
OF THE FIRST PART
AND:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
hereinafter referred to as "Rocco"
OF THE SECOND PART
AND:
AXYN CANADA CORPORATION
a company incorporated under the laws
of Ontario
hereinafter referred to as the "PURCHASER"
OF THE THIRD PART
AND:
AXYN CORPORATION
a company incorporated under the laws
of Colorado
hereinafter referred to as the "AXYN"
OF THE FOURTH PART
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THIS AGREEMENT WITNESSES that for and in consideration of the mutual
covenants and agreements contained in this Agreement and other good and valuable
consideration (the receipt and sufficiency of which are acknowledged), the
parties covenant and agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of this
Agreement, the Vendors agree to sell, assign and transfer to the Purchaser and
the Purchaser agrees to purchase from the Vendors as at and from the close of
business on November 20, 1998 (the "CLOSING DATE") all of the issued and
outstanding shares in the capital stock of Burlington Systems Integration Inc.
(the "PURCHASED SHARES").
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price and Payment. The purchase price payable to the Vendors
for the Purchased Shares shall be $600,000.00 Cdn. to be paid and
satisfied by the Purchaser issuing on the Closing Date 225,000 common
shares of AXYN (the "SHARES") subject to the adjustments as provided
pursuant to Section 2.2.
2.2 Adjustment to Purchase Price. In the event that the average closing
price of the common shares of AXYN issued to the Vendors on the NASD is
not at least $1.75 U.S. for the five (5) consecutive business days
immediately prior to the one year anniversary of the Closing Date (the
"Adjustment Period"), the Purchase Price shall be adjusted by way of
the issuance by AXYN to the Vendors, on a pro rata basis based on the
number of Shares issued to the Vendors on the Closing Date, of
additional common shares of AXYN in an amount determined by calculating
the difference between (i) the number of common shares of AXYN
determined by dividing 600,000 by the average of the closing prices of
the common shares of AXYN during the Adjustment Period converted to a
Canadian dollar equivalent using the exchange at the one year
anniversary of the Closing Date, and (ii) the Shares issued to the
Vendors on the Closing Date. The maximum adjustment will be 22,500
Shares.
2.3 Share Restrictions. The Vendors acknowledge that they will be subject
to restrictions on the sale of shares of AXYN, as the case may be, in
accordance with the laws of the United States and Canada and the
applicable securities regulations thereto. The Shares issued to the
Vendors shall bear such restrictions on the face of the share
certificates. The restrictions on the transfer of the common shares
issued by AXYN pursuant to this Agreement shall be removed upon AXYN's
compliance with applicable securities regulations in the relevant
jurisdiction and in proportion
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to all other issued common shares of AXYN.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Vendors. The Vendors represent
and warrant as follows to the Purchaser and acknowledges that the
Purchaser is relying on such representations and warranties in
connection with the purchase by it of the Purchased Shares:
a) Corporate Status. Burlington Systems Integration Inc. (the
"CORPORATION") is a corporation duly incorporated and organized and
validly subsisting in good standing under the laws of Ontario. The
Corporation has the corporate power, authority and capacity to own its
property and to carry on its business as now being conducted by it. No
bankruptcy, insolvency or receivership proceedings have been instituted
or are pending against the Corporation and the Corporation is able to
satisfy its liabilities as they become due.
b) Authorized and Issued Capital. The authorized capital of the
Corporation consists of an unlimited number of common shares of which
300 have been validly issued and are outstanding as fully paid and
non-assessable. No options, warrants or other rights for the purchase,
subscription or issuance of shares or other securities of the
Corporation or securities convertible into or exchangeable for shares
of the Corporation have been authorized or agreed to be issued or are
outstanding.
c) Purchased Shares. The Vendors are the legal and beneficial owners of
the Purchased Shares. On the Closing Date, the Purchaser shall acquire
good and marketable title to the Purchased Shares, free and clear of
all agreements, mortgages, liens, charges, pledges, hypothecs, security
interests, encumbrances or other rights or claims of others. The
Purchased Shares constitute all of the issued and outstanding shares in
the capital of the Corporation and there are no restrictions on the
transfer of the Purchased Shares except those set forth in the
constating documents of the Corporation.
d) No Other Agreements. No person, firm or corporation has any written or
oral agreement, option, understanding or commitment, or any right or
privilege capable of becoming an agreement, for the purchase from the
Vendors of any of the Purchased Shares.
e) Corporate Records. The corporate records and minute books of the
Corporation contain complete and accurate minutes of all meetings of
and copies of all by-laws and all resolutions passed by the directors
and shareholders of the Corporation since its incorporation. All such
meetings were duly called and held, all such by-laws and resolutions
were duly passed and the share certificate books, registers of
shareholders, registers of transfers and other corporate registers of
the Corporation are complete and accurate in all material respects.
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f) Accurate Records. The books and records of the Corporation fairly and
correctly set out and disclose in all material respects, in accordance
with generally accepted accounting principles, the financial position
of the Corporation at the date of this Agreement and all financial
transactions relating to the Corporation have been accurately recorded
in those books and records.
g) Financial Statements. The financial statements of the Corporation as at
September 30, 1998 (the "BALANCE SHEET DATE") and for the period then
ended (copies of which are attached to this Agreement as Schedule 1)
have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with those of previous fiscal
years and are true and correct and present fairly the assets,
liabilities (whether accrued, absolute, contingent or otherwise) and
the financial condition of the Corporation as at the Balance Sheet
Date, and the sales and earnings of the Corporation during the period
covered by those financial statements.
h) Title to Assets. The Corporation has good and marketable title to all
of its properties and assets, free and clear of all mortgages, pledges,
charges, hypothecs, liens, title retention agreements, security
interests, encumbrances or rights of others of any kind or character,
other than those disclosed on the balance sheet of the Corporation.
i) Undisclosed Liabilities. The Corporation has no liabilities (whether
accrued, absolute, contingent or otherwise) of any kind except
liabilities incurred in the ordinary course of business since the
Balance Sheet Date which are not inconsistent with past practice, and
are not, in the aggregate, material and adverse to the business,
properties, assets, financial condition or results of operation of the
Corporation.
j) No Loans to Directors, etc. After the Closing Date, no loans by the
Corporation or other indebtedness due to the Corporation shall be
outstanding (other than the normal salaries, bonuses, fringe benefits
and the obligation to reimburse for expenses incurred on behalf of the
Corporation in the normal course of employment) to or from any
director, officer, shareholder or employee, to or from any former
director, officer, shareholder or employee of the Corporation or to or
from any person or corporation not dealing at arm's length or who is
affiliated (as those terms are used in the INCOME TAX ACT (Canada))
with any of the foregoing.
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k) Tax Returns. The Corporation has duly filed all tax returns required to
be filed by it (including all information returns as to which
non-filing or late filing could result in interest or penalties), has
made complete and accurate disclosure in such returns and has duly paid
all taxes due from it to federal, provincial or local taxing
authorities, including, without limitation, those due in respect of its
properties, income, capital, sales, use of property and payroll. The
Corporation has also paid all assessments and reassessments and all
other taxes, governmental charges, penalties, interest and fines due
and payable by the Corporation up to the date of this Agreement. The
Corporation has made adequate provision for the taxes which are payable
during the current fiscal period for which tax returns are not yet
required to be filed. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
assessment or reassessment of income tax or the filing of any tax
return by, or payment of any tax by, or levying of any governmental
charge against the Corporation. There are no actions, audits,
assessments, reassessments, suits, proceedings, investigations or
claims now threatened or pending against the Corporation in respect of
taxes or governmental charges or any matters under discussion with any
governmental authority relating to taxes or governmental charges
asserted by any such authority. The Corporation has withheld from each
payment made by it the amount of all taxes and other deductions
required to be withheld from it and has paid the same to the proper
taxing or other authority within the time prescribed under any
applicable legislation or regulation.
l) Ordinary Course. Since the Balance Sheet Date:
(i) the Corporation has not carried on any business, other than
its ordinary continuing business;
(ii) no capital expenditures have been made or authorized by the
Corporation;
(iii) there has been no change in the affairs, business, prospects,
operations or condition of the Corporation, financial or
otherwise;
(iv) the Corporation has not transferred, assigned, sold or
otherwise disposed of any of its property or assets other than
those disclosed in writing to the Purchaser;
(v) the Corporation has not suffered an extraordinary loss nor
waived any rights of material value nor entered into any
material commitment or transaction;
(vi) the Corporation has not declared or paid any dividends or
declared or made any other distribution on any of its
securities or shares, and has not, directly or indirectly,
redeemed, purchased or otherwise acquired any of its
securities or shares or agreed to do so except as disclosed in
writing and agreed to by the Purchaser;
(vii) the Corporation has not incurred or assumed any obligation or
liability (fixed or contingent), except secured and unsecured
current obligations and liabilities, particulars of which have
been disclosed in writing to the Purchaser or its
representatives; or
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(viii) the Corporation has not amended or changed or taken any action
to amend or change its constating documents.
(m) Non-Arm's Length Transactions. The Corporation has not entered into any
contracts, agreements, options or arrangements or incurred or assumed
any obligation or liability (whether fixed or contingent) with, on
behalf of or with respect to the Vendors or any other non-arm's length
person or any affiliate of the Vendors (as those terms are defined in
the INCOME TAX ACT (Canada)), whether jointly or severally.
(n) Material Contracts. The Corporation is not a party to nor bound by any
material agreement, contract or commitment, whether written or oral, of
any nature or kind whatsoever, other than those disclosed on Schedule
5. The Corporation is not in default or breach of any agreement,
contract or commitment and there exists no state of facts which after
notice or lapse of time or both would constitute a default or breach
and all agreements, contracts or commitments are now in good standing
and in full force and effect without amendment and the Corporation is
entitled to all benefits under them.
(o) Leases. The Corporation is not a party to any lease of real property or
agreement in the nature of a lease, whether as lessor or lessee, other
than those disclosed on Schedule 6.
(p) Consents. There are no consents, authorizations, licenses, franchise
agreements, permits, approvals or orders of any person or government
required to permit the Vendors to complete the transactions
contemplated by this Agreement.
(q) No Breaches of Charter or Other Agreements. Neither the Vendors nor the
Corporation are a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, statute, regulation,
arbitration award, charter or by-law provisions, order or judgment
which would be violated, contravened, breached by or under which any
default would occur as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated by it or
which might prevent or interfere with the use of the Corporation's
assets or which may limit or restrict or otherwise adversely affect the
Corporation's business, properties, assets or financial condition. The
entering into of this Agreement and the consummation of the
transactions contemplated in it will not:
(i) give rise to any right of acceleration by any person in
respect of any indebtedness or other obligation of the
Corporation; or
(ii) result in the loss of any rights, privileges or advantages
presently enjoyed by the Corporation.
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(r) No Actions. There is no suit, action, litigation, arbitration,
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or threatened against or
involving the Corporation or relating to the Purchased Shares
(collectively referred to as "actions") and the Vendors and Rocco are
not aware of any existing ground on which any actions might be
commenced with any reasonable likelihood of success. There is not
presently outstanding any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency,
instrumentality or arbitrator (collectively referred to as
"judgments")against the Corporation or which would affect the Vendors'
ability to sell the Purchased Shares as provided in this Agreement
other than those actions or judgments disclosed on Schedule 7.
(s) Employees and Contractors. There are no employees or contractors of the
Corporation other than the employees listed on Schedule 8.
(t) Banks. The Corporation has a bank account at the Bank of Montreal,
Oakville Place, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ and at
no other location. The only signing officers for the bank account are
▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇.
(u) Powers of Attorney. No person has any tax or other power of attorney
from the Corporation with respect to any matter.
(v) Guarantees. The Corporation has not given nor agreed to give nor is it
a party to or bound by any guarantee, indemnification, surety or other
similar obligation.
(w) Corporate Authorization. The completion of the transaction contemplated
in this Agreement has been duly and validly authorized by all necessary
corporate action on the part of the Corporation and on the part of any
corporate Vendor.
(x) Residency. The Vendors are not a non-resident of Canada within the
meaning of the INCOME TAX ACT (Canada).
(y) Subsidiaries. The Corporation does not own shares in any other
corporation and has not agreed to acquire any shares in the capital of
any other corporation or to acquire or lease or invest, directly or
indirectly, in any other business operation.
(z) Securities Legislation. The Corporation is a private company within the
meaning of the SECURITIES ACT (Ontario) and the sale of the Purchased
Shares by the Vendors to the Purchaser will be made in compliance with
all applicable securities legislation.
(aa) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Vendors and Rocco enforceable against them in
accordance with its terms, provided that enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and
other similar laws generally affecting creditors' rights and that
equitable remedies such as specific performance and injunction are in
the discretion of the Court from which they are sought.
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(bb) Family Law Act. No order has been given under the FAMILY LAW ACT
(Ontario) nor is there any application pending under that Act by the
spouse of Rocco or the spouse of ▇▇▇▇▇▇ ▇▇▇▇▇ which would or does
affect the Purchased Shares in any manner.
(cc) No Relevant Information. None of the representations and warranties in
this section 3.1 contains any untrue statement of material fact or
omits to state any material fact necessary to make any representation
or warranty not misleading to a prospective purchaser of the Purchased
Shares seeking full information concerning the matters which are the
subject of those representations and warranties.
3.2 Representations and Warranties of the Purchaser. The Purchaser and AXYN
represent and warrant as follows to the Vendors and acknowledge that the Vendors
are relying on such representations and warranties in connection with the sale
of the Purchased Shares:
(a) Corporate Status. The Purchaser is a corporation duly continued and
organized and validly subsisting in good standing under the laws of
Ontario. The Purchaser has the corporate power, authority and capacity
to own its property and to carry on its business as now being conducted
by it. No bankruptcy, insolvency or receivership proceedings have been
instituted or are pending against the Purchaser and the Purchaser is
able to satisfy its liabilities as they become due.
(b) Corporate Authorization. The completion of the transactions
contemplated by this Agreement has been duly and validly authorized by
all necessary corporate and other action of the Purchaser and AXYN.
(c) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against it in
accordance with its terms, provided that enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and
other similar laws generally affecting creditors' rights and that
equitable remedies such as specific performance and injunction are in
the discretion of the Court from which they are sought.
(d) Issued Capital. Effective immediately after closing of the transactions
contemplated by this agreement, the Shares issued to the Vendors on the
Closing Date pursuant to Section 2.1 hereof shall be duly and validly
issued and outstanding as fully paid and non-assessable shares of AXYN
and will have been issued in full compliance with the Ontario
Securities Act and all applicable state and federal laws of the United
States of America.
4. COVENANTS
4.1 Covenants of the Vendors. The Vendors covenant and agree with the Purchaser
as follows:
(a) Non-Arm's Length Payables and Receivables. By the Closing Date, the
Corporation shall have satisfied or caused to be satisfied (i) all
amounts owed by it to persons with which it does not deal at arm's
length (as that term is used in the INCOME TAX ACT (Canada)) and (ii)
all amounts owed by
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such persons to the Corporation.
(b) Actions to Satisfy Closing Conditions. The Vendors and Rocco shall
diligently take all actions and do all things necessary to ensure
compliance with the conditions set forth in section 6.1 of this
Agreement prior to the Closing Date.
(c) Transfer of Purchased Shares. The Vendors shall take, and will cause
the Corporation to take, all necessary steps and proceedings as
approved by counsel for the Purchaser to permit the Purchased Shares to
be duly and validly transferred to the Purchaser.
(d) Resignation of Directors and Officers. Rocco and ▇▇▇▇▇▇ ▇▇▇▇▇ agree to
resign as officers and directors of the Corporation in favour of
nominees of the Purchaser, such resignations to be effective on such
date as specified by the Purchaser.
(e) Releases. The Vendors and Rocco shall cause to be executed and
delivered to the Purchaser at the Closing Date a release in the form
attached to this Agreement as Schedule 3.
(f) Tax Returns. The Vendors and Rocco shall cause the Corporation to duly
and timely file all tax returns required to be filed up to and
including the Closing Date and promptly pay all taxes, assessments and
governmental charges shown on those tax returns to be due and payable
and shall cause the Corporation not to enter into any agreement, waiver
or other arrangement providing for an extension of time with respect to
the filing of a tax return or the payment or assessment of any tax or
governmental charge.
(g) Employment and Non-Compete Agreements. The Vendors shall enter into
consulting and non-compete agreements with the Purchaser in accordance
with Section 8.1(e) of this Agreement.
(h) Employee Agreements. The Corporation shall cause all key employees of
the Corporation, as determined by the Purchaser, to enter into
employment and non-compete agreements with the Purchaser.
4.2 Covenants of the Purchaser and AXYN. The Purchaser and AXYN covenant and
agree with the Vendors as follows:
(a) Release. The Purchaser shall cause to be executed and delivered to the
Vendors at the Closing Date a release in the form attached to this
Agreement as Schedule 4.
(b) Issuance of Shares. AXYN shall issue the Shares to the Vendors in
proportion to their shareholdings in the Corporation.
(c) Guarantee of Axyn. AXYN guarantees the obligations of the Purchaser in
respect of the matters set out in Sections 10.1, 10.2, 10.3 and 8.1(e)
of this Agreement.
5. CONDITIONS
5.1 Conditions for the Benefit of the Purchaser. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Purchaser to be fulfilled or performed at or prior to
the times specified in this section:
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(a) Covenants and Warranties. The covenants, representations and warranties
of the Vendors and Rocco contained in this Agreement or in any other
document delivered pursuant to it shall be true and correct as of the
Closing Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
(b) Compliance. The Vendors and Rocco shall have performed or complied with
all covenants and agreements in this Agreement to be performed or
caused to be performed or complied with by them prior to the time
specified in this Agreement for performance or compliance.
(c) No Changes. On the Closing Date, there shall have been no material
adverse change in the properties, assets, liabilities, affairs,
financial condition or prospects of the Corporation from that shown on
or reflected in the financial statements attached to in this Agreement
as Schedule 1 and Schedule 2, except as otherwise disclosed in this
Agreement. The title of the Vendors to the Purchased Shares and all
other matters in the opinion of the Purchaser's counsel which are
material in connection with the transactions contemplated in this
Agreement shall be subject to the favourable opinion of that counsel.
(d) No Actions. On the Closing Date, no action or proceeding in Canada or
the United States by law or in equity shall be existing or threatened
by any person, company, firm, governmental authority, regulatory body
or agency to enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated by this Agreement.
(e) Consents. On or before the Closing Date, there shall have been obtained
from all appropriate federal, provincial, municipal or other
governmental, non-governmental or administrative bodies all such
approvals, licences and consents in form and terms satisfactory to the
Purchaser as may be required in order to permit the implementation of
the transactions contemplated in this Agreement without affecting or
resulting in the cancellation or termination of any licence or permit
required in the conduct of the Corporation's business.
(f) Closing Deliveries. The Vendors shall deliver to the Purchaser on the
Closing Date those items set forth in section 8.1 of this Agreement in
form and content satisfactory to the Purchaser and its counsel.
(g) Change of Control Filing. The Vendors shall prepare at their expense to
be filed within the time period prescribed by the INCOME TAX ACT
(Canada) and any other applicable legislation, all tax returns and tax
filings required to be made by the Corporation consequent upon the
acquisition of control of the Corporation by the Purchaser, within 60
days of the Closing Date.
If any of the foregoing conditions is not fulfilled or performed as at the
Closing Date unless otherwise specified in this section to the satisfaction of
the Purchaser, the Purchaser may:
(a) give notice thereof to the Vendors, whereupon this Agreement shall be
terminated and each of the parties shall be released from all of its
obligations under it without further liability whatsoever; or
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(b) waive compliance with any of these conditions in whole or in part if it
sees fit to do so without prejudice to any of its rights of termination
in the event of non-performance of any other condition in whole or in
part, provided that any waiver shall be binding upon the Purchaser only
if it is in writing; or
(c) require the Vendors to indemnify the Purchaser in respect of any costs
incurred in fulfilling or performing the conditions outlined in this
Section.
5.2 Conditions for the Benefit of the Vendors. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Vendors to be fulfilled or performed at or prior to the
times specified in this section:
(a) Covenants and Warranties. The covenants, representations and warranties
of the Purchaser and AXYN contained in this Agreement or in any other
document delivered pursuant to it shall be true and correct as of the
Closing Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
(b) Compliance. The Purchaser and AXYN shall have performed or complied
with all covenants and agreements in this Agreement to be performed or
caused to be performed or complied with by it prior to the time
specified in this Agreement for performance or compliance.
(c) Audited Statements. The Purchaser shall cause the Corporation to
complete audited financial statements at the cost of the Purchaser for
the periods ending on the Balance Sheet Date and the Closing Date as a
result of the acquisition of control of the Corporation by the
Purchaser.
6. INDEMNIFICATION AND SET-OFF
6.1 Indemnification of Purchaser. The Vendors covenant and agree to
indemnify and save harmless the Purchaser of and from any loss
whatsoever arising out of or pursuant to:
(a) any reassessment for income, sales, excise, corporate or other tax of
the Corporation (and all interest or penalties relating to it) for any
period up to and including the Closing Date;
(b) all judgements and awards against the Corporation, including all
interest and penalties, in consequence of any action, suit or
proceeding, whether or not disclosed to the Purchaser and whether or
not commenced after the Closing Date, if based upon any acts or
omissions or other circumstances which occurred or arose prior to the
Closing Date;
(c) any loss, costs and expenses suffered by the Purchaser as a result of
any breach of any representation, warranty or covenant on the part of
the Vendors contained in this Agreement or in any schedule to it; and
(d) all claims, demands, costs and expenses, including all reasonable
legal,
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audit and other professional fees, incurred in respect of any of the
foregoing.
6.2 Indemnification of Vendors. The Purchaser and Axyn covenant and agree to
indemnify and save harmless the Vendors of and from any loss whatsoever arising
out of or pursuant to:
(a) any loss, costs and expenses suffered by the Vendors as a result of any
breach of any representation, warranty or covenant on the part of the
Purchaser; and
(b) all claims, demands, costs and expenses, including all reasonable
legal, audit and other professional fees, incurred in respect of any of
the foregoing.
6.3 Right of Set Off. The Purchaser shall have the right to satisfy any amount
from time to time owing by them to the Vendors, including amounts payable under
the management fee, the team sales performance bonus and the profit sharing plan
by way of set off against any amount owing from time to time by the Vendors to
the Purchaser, arising out of this Agreement.
7. SURVIVAL OF CONDITIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES
7.1 Survival. The conditions, covenants, representations and warranties of the
parties to this Agreement or in any certificates or documents delivered pursuant
to it or in connection with the transactions contemplated in it and the rights
of Indemnification and set off set out in Section 6 of this Agreement shall
continue in full force and effect after the Closing Date, and shall not merge
for a period of three (3) years from the Closing Date, except for the
representations contained in Section 3.1(k) and 3.1(cc) and the covenants
contained in Section 4.1(f) which shall not merge for a period of five (5) years
from the Closing Date.
8. CLOSING ARRANGEMENTS
8.1 Deliveries. On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Purchaser, the
Vendor shall deliver to the Purchaser:
(a) certificates representing the Purchased Shares duly endorsed in blank
for transfer or accompanied by a duly executed stock transfer power;
(b) all necessary directors' and shareholders' resolutions of the
Corporation consenting to and authorizing the sale of the Purchased
Shares
(c) a certificate of status for the Corporation dated a current date;
(d) release of the Vendor outlined in the form attached as Schedule 3;
(e) consulting and non-competition agreements for the Vendors in the form
attached as Schedules 10 and 11;
(f) employment and non-competition agreements for key employees;
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(g) signed resignation of Rocco and ▇▇▇▇▇▇ ▇▇▇▇▇ as officers and directors
of the Corporation in the form attached as Schedule 9; and
(h) such further and other documents as the Purchaser's counsel may
consider reasonably necessary or advisable to implement the
transactions contemplated in this Agreement.
8.2 On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Vendors,
the Purchaser shall deliver to the Vendors:
(a) two share certificates, one issued to Exceed Systems Ltd. for 50% of
the Shares and the second issued to ▇▇▇▇▇▇ ▇▇▇▇▇ for 50% of the Shares;
(b) copies of all necessary directors' resolutions of AXYN authorizing the
issuance of the Shares; and
(c) a certificate of status for the Purchaser and a comparable document for
AXYN, each dated a current date.
8.3 Place of Closing. The closing shall take place at Toronto on the Closing
Date at the offices of the Corporation.
9. GENERAL MATTERS
9.1 Schedules. The following are the schedules attached to and incorporated in
this Agreement by reference and deemed to be part of this Agreement:
Schedule 1 - September 30, 1998 Financial Statements
S Schedule 2 - Intentionally Deleted
Schedule 3 - Release of the Vendors
Schedule 4 - Release of Purchaser
Schedule 5 - Material Contracts
Schedule 6 - Leases
Schedule 7 - Actions against Corporation
Schedule 8 - List of Employees and Contractors
Schedule 9 - Resignations as officers and directors
Schedule 10 - Consulting Agreement
Schedule 11 - Non-compete and Confidentiality Agreements
9.2 Currency. All dollar amounts referred to in this agreement are in Canadian
funds unless otherwise specified.
9.3 Entire Agreement. This Agreement, including the schedules to it, together
with the agreements and other documents to be delivered pursuant to it,
constitute the entire agreement between the parties pertaining to the subject
matter of this Agreement and supersede all prior agreements, understandings,
negotiations and discussions, whether written or oral, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter of it. No
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amendment, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound by it. No waiver of
any provision of this Agreement shall be deemed to constitute a waiver of any
other provision (whether or not similar) nor shall that waiver constitute a
continuing waiver unless expressly provided.
9.4 Governing Laws. This Agreement shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable in it and
shall be treated in all respects as an Ontario contract. The parties attorn to
the exclusive jurisdiction of the courts of the Province of Ontario with respect
to any matter arising under this Agreement or any of the schedules or documents
to be entered into or delivered pursuant to it.
9.5 Expenses. Unless otherwise specified herein, all costs and expenses
(including, without limitation, the fees and disbursements of legal counsel)
incurred in connection with this Agreement and the transactions contemplated by
it shall be paid by the party incurring the cost or expense.
9.6 Notices. Any notice or other writing required or permitted to be given under
this Agreement may be delivered personally or sent by prepaid registered mail or
transmitted by telex, facsimile or other form of recorded telecommunication
transmission:
(a) to the Vendors at:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) to the Purchaser and AXYN at:
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or at such other address as the parties may from time to time deliver pursuant
to this section. Any notice delivered or transmitted by telex, facsimile or
other form of recorded telecommunication shall be deemed to be given and
received on the date of its delivery or transmission, as the case may be,
provided that such day is not a Saturday, Sunday or statutory holiday. Any
notice mailed shall be deemed to have been given and received on the third
business day following the date of its mailing.
9.7 Further Assurances. The parties shall with diligence do all things and
provide all such assurances as may be required to consummate the transactions
contemplated by this Agreement, and each party shall provide such further
documents or instruments required by any other party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing Date.
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9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original of this Agreement and fully binding upon the
signatory to it, but all counterparts shall together constitute one and
the same instrument.
9.9 Time of Essence. Time shall be of the essence of this Agreement.
9.10 Successors and Assigns. This Agreement shall enure to the benefit of
and be binding upon the parties to it and their respective heirs,
successors, executors, administrators and assigns, as applicable. This
Agreement may not be assigned or transferred by the Vendors without the
prior written consent of the Purchaser, such consent not to be
unreasonably withheld.
10. OTHER MATTERS
10.1 Profit Sharing. The Purchaser shall establish a profit sharing plan
equivalent to 12% of the pre-tax earnings generated by the Burlington
unit of the Corporation for each of the three years following the
Closing Date, commencing on October 31, 1999 and terminating on October
31, 2001. The target revenue and income for the Burlington Unit of the
Corporation for these three fiscal years is as set out in the following
chart:
-----------------------------------------------------------------------------------------------
Performance Target Target Year 1 Year 2 Year 3 Total
Revenues Income
-----------------------------------------------------------------------------------------------
On target Year 1 $2,750,000 $1,200,000 $144,000 $144,000
-----------------------------------------------------------------------------------------------
On target Year 2 $3,440,000 $1,600,000 $192,000 $192,000
-----------------------------------------------------------------------------------------------
On target Year 3 $4,170,000 $1,864,000 $216,000 $216,000
-----------------------------------------------------------------------------------------------
$552,000
-----------------------------------------------------------------------------------------------
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10.2 Team Sales Performance Bonus. The Purchaser shall cause to be implemented a
team sales performance bonus by the Burlington unit of the Corporation for the
purposes of making bonus payments to the employees and contractors of the
Corporation for the successful achievement of target revenue and income after
the payment of any profit sharing plans outlined in Section 10.1 above. The team
sales performance bonus shall be payable for the three years following the
Closing Date commencing October 31, 1999 and ending October 31, 2001 in
accordance with the targeted revenue and income schedules attached below:
-----------------------------------------------------------------------------------------------
Performance Target Target Year 1 Year 2 Year 3 Total
Revenues Income
-----------------------------------------------------------------------------------------------
On target Year 1 $2,750,000 $1,056,000 $105,600 $105,600
-----------------------------------------------------------------------------------------------
On target Year 2 $3,440,000 $1,408,000 $140,800 $140,800
-----------------------------------------------------------------------------------------------
On target Year 3 $4,170,000 $1,584,000 $158,400 $158,400
-----------------------------------------------------------------------------------------------
$404,800
-----------------------------------------------------------------------------------------------
The team sales performance bonus shall be payable to the Vendors and to other
employees of the Corporation as the Vendors see fit. To the extent that the
Vendors achieve less than 100% of target revenue but greater than 80% of target
revenue, the team sales performance bonus will be 50% of that set out on the
table.
10.3 Management Fees. Each of the Vendors will be entitled to management fees
payable quarterly in the amounts set out in the table below:
------------------------------------------------------------------------
12 Months 24 Months 36 Months
------------------------------------------------------------------------
$100,000 $140,000 $180,000
------------------------------------------------------------------------
These payments will be made quarterly on the first day of each quarter starting
upon the Closing Date and will be allocated between the Vendors equally, unless
otherwise indicated. The management fees payable pursuant to this Agreement will
be paid to the Vendors regardless of the employment or consulting arrangement
between the Purchaser and the parties. In the event that in any quarter the
pre-tax earnings of the Corporation are not at least 1.5 times the quarterly
management fee set out above, and provided that the consulting contracts
referred to in Section 8.1(e) have not been terminated, then the Vendors agree
to defer any such payments in that quarter until such time as there is
sufficient profit in the Corporation to pay out that management fee.
Notwithstanding this, regardless of the pre-tax earnings of the Corporation in
the first two quarters following the Closing Date, the full management fee will
be paid out.
10.4 Employee Stock Purchase Plan. Rocco and ▇▇▇▇▇▇ ▇▇▇▇▇ shall be entitled to
participate in the employee stock purchase plan established by AXYN.
10.5 Stock Options. Each of Rocco and ▇▇▇▇▇▇ ▇▇▇▇▇ will be granted initial
options for 25,000 shares in AXYN in accordance with the terms of the AXYN
employee stock option plan.
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IN WITNESS WHEREOF the parties have executed this Agreement as of
the day, month and year first above written.
AXYN CANADA CORPORATION
PER _________________________c/s
PER _________________________c/s
AXYN CORPORATION
PER _________________________c/s
PER _________________________c/s
EXCEED SYSTEMS LTD. (VENDOR)
PER _________________________c/s
PER _________________________c/s
SIGNED SEALED AND DELIVERED
in the presence of
)
___________________ )___________________________
WITNESS )▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - VENDOR
)
)
)
___________________ )___________________________
WITNESS )▇▇▇▇▇▇ ▇▇▇▇▇ - VENDOR
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SCHEDULE 1
FINANCIAL STATEMENTS OF THE CORPORATION
SEPTEMBER 30, 1998
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SCHEDULE 2
INTENTIONALLY DELETED
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SCHEDULE 3
RELEASE
TO: AXYN Canada Corporation and AXYN Corporation (the "Purchaser")
AND TO: Burlington Systems Integration Inc. (the "Corporation")
RE: AXYN Canada Corporation purchase of all of the issued and
outstanding shares in the capital of the Corporation
In consideration of the sum of One Dollar ($1.00) and of other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
the Purchaser and the Corporation from all manner of actions, causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, claims or demands
whatsoever which the undersigned may now have or hereafter can have, against the
Purchaser or the Corporation existing up to the date of this release, including
by virtue of them being or ceasing to be an officer, director, employee or
contractor of the Corporation as the case may be, provided that nothing herein
contained shall be construed so as to release the Purchaser from its obligations
and covenants arising out of or in respect of a Purchase Agreement made the 20th
day of November, 1998 in respect of the sale by the undersigned to the Purchaser
of all of the issued and outstanding shares in the capital of the Corporation or
any documents delivered pursuant to such agreement.
DATED at Ottawa this day of November, 1998.
_________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_________________________________
▇▇▇▇▇▇ ▇▇▇▇▇
EXCEED SYSTEMS LTD.
Per:
Per:
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SCHEDULE 4
RELEASE
TO: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇ and ▇▇▇▇▇▇")
RE: AXYN Canada Corporation purchase of all of the issued and
outstanding shares in the capital of Burlington Integration Systems
Inc. (the "Corporation")
In consideration of the sum of One Dollar ($1.00) and of other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
Rocco and ▇▇▇▇▇▇ of and from all manner of actions, causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts, claims or demands whatsoever
which the undersigned may now have or hereafter can have, against Rocco and
▇▇▇▇▇▇ existing up to the date of this release, by virtue of them being an
officer, director, employee or contractor of the Corporation as the case may be,
except those actions, causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, claims or demands arising from the terms of the Purchase
Agreement between the parties dated November , 1998.
DATED at Ottawa this day of November, 1998.
AXYN Canada Corporation
Per: _____________________________c/s
AXYN Corporation
Per: _____________________________c/s
Burlington Systems Integration Inc.
Per: _____________________________c/s
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SCHEDULE 5
MATERIAL CONTRACTS
NIL
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SCHEDULE 6
LEASES
1. Lease dated October 11, 1996 with ▇▇▇▇▇ Vehicle Leasing with respect to
a 1997 Pontiac Grand Prix VIN ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ with a monthly payment
of $646.82.
2. Lease dated October 11, 1996 with Pine View Pontiac Buick Sales Ltd.
for a 1997 Pontiac Grand Prix GTP VIN ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ with a monthly
payment of $626.75.
3. Lease dated March 1, 1997 for space at ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, originally signed in the name of Logitek
Technology Ltd.
4. Lease with Teleteck Financial Corporation for office furniture used by
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, Contract No. 83956-00. Lease is in
the name of Logitech Data Sciences Ltd. with Burlington responsible for
only a portion equal to $178.00/month. Parties are attempting to have
lease formally split and Burlington is withholding payments until the
split is completed.
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SCHEDULE 7
ACTIONS OR JUDGMENTS AGAINST CORPORATION
1. Writ of Execution No. 98-012459 filed against Burlington Systems
Integration Inc. in favour of Access Graphics Inc. in the amount of
$16,994.10 plus interest and costs, effective September 21, 1998.
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SCHEDULE 8
LIST OF EMPLOYEES AND CONTRACTORS
- ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
- ▇▇▇▇▇▇ ▇▇▇▇▇
- Exceed Systems Ltd.
- Rocmar Systems Inc.
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SCHEDULE 9
RESIGNATIONS OF OFFICERS AND DIRECTORS
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SCHEDULE 10
CONSULTING AGREEMENT
29
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SCHEDULE 11
NON-COMPETE & CONFIDENTIALITY AGREEMENTS