ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated for reference the 23rd day of April, 1999.
BETWEEN:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a company incorporated pursuant to the laws of the
State of Illinois, U.S.A. and having an office at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
(the "Vendor")
OF THE FIRST PART
AND:
▇▇▇▇▇ ▇▇▇▇▇▇▇, businessperson, of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and
▇▇▇▇▇▇▇ ▇▇▇▇▇, businessperson, of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
(the "Principals")
OF THE SECOND PART
AND:
SUNCOM TELECOMMUNICATIONS INC., a company incorporated pursuant to the federal
laws of Canada, and having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, U.S.A. 60602
(the "Purchaser")
OF THE THIRD PART
WITNESSES THAT WHEREAS:
A. The Vendor carries on the business comprised of providing turn-key
order processing of electronic commerce transactions for third parties selling
goods and/or services over the Internet (the "Business");
B. The Vendor owns certain assets used in the operation of the
Business;
C. The Vendor and the Purchaser entered into an exclusive worldwide
licensing agreement (the "License Agreement") to operate the Business and to use
the assets of the Business;
D. The Vendor and the Purchaser have mutually agreed to terminate the
License Agreement and to enter into this Agreement whereby the Vendor has agreed
to sell and the Purchaser has agreed to purchase all of the property, assets and
undertaking of the Business as a going concern on the terms and conditions as
set forth in this Agreement; and
E. The Principals are directors, officers and shareholders of the
Vendor and have a substantial proprietary and financial interest in the Vendor.
NOW THEREFORE in consideration of the premises and the respective covenants,
agreements representations, warranties and indemnities of the parties herein
contained and for other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged) the parties hereto covenant and
agree as follows:
1. DEFINED TERMS
1.1 For the purposes of this Agreement, unless the context otherwise
requires, the following terms shall have the respective meanings set out below
and grammatical variations of such terms shall have corresponding meanings:
(a) "Assumed Indebtedness" means the aggregate indebtedness of the Vendor
owing to the creditors which is being assumed by the Purchaser as described in
Schedule "7" hereto;
(b) "Financial Statements" means the financial statements of the Vendor as
at and for the period from January 1, 1999 to April 14, 1999, a copy of which is
annexed hereto as Schedule "1" - Financial Statements;
(c) "Business" means the business carried on by the Vendor consisting
primarily of the provision of turn-key order processing of electronic commerce
transactions for third parties selling goods and/or services over the Internet;
(d) "Business Assets" means all property and assets of the Business of every
kind and description and wherever situate, including, without limiting the
foregoing:
(i) all Equipment of the Business;
(ii) all Inventory of the Business;
(iii) all right, title, benefit, and interest under the Material Contracts;
(iv) all customer lists, brochures, samples, price lists, advertising
material, production records, employee manuals, personnel records, accounting
and other books and records, and all other information, correspondence,
documents, and material relating to the Business;
(v) all right, title, and interest of the Vendor in and to all the
Intellectual Property, including without limitation the Intellectual Property
described in Schedule "5" - Intellectual Property hereto;
(vi) all permits, licences, consents, authorizations, and approvals
pertaining to the Business;
(vii) all prepaid expenses;
(viii) all accounts receivable;
(ix) all computer hardware and software, including all rights and/or
licences and other agreements or instruments relating thereto; and
(x) the Goodwill of the Business.
(e) "Business Day" means any day, other than a Saturday, Sunday or statutory
holiday in either British Columbia, Canada or Illinois, United States;
(f) "Closing" means the completion of the transactions contemplated in this
Asset Purchase Agreement;
(g) "Closing Date" means the date that is no later than April 30, 1999, or
such other date as the Vendor and the Purchaser may mutually determine;
(h) "Contract" means any agreement, indenture, contract, lease, deed of
trust, license, option, instrument or other commitment, whether written or oral;
(i) "Encumbrance" means any encumbrance, lien, charge, hypothec, pledge,
mortgage, title retention agreement, security interest of any nature, adverse
claim, exception, reservation, easement, right of occupation, any matter capable
of registration against title, option, right of preemption, privilege or any
Contract to create any of the foregoing;
(j) "Environmental Laws" means all applicable federal, provincial, municipal
and local laws, statutes, ordinances, by-laws and regulations, and orders,
directives and decisions rendered by any ministry, department or administrative
or regulatory agency relating to the protection of the environment, occupational
health and safety or the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Hazardous Substances;
(k) "Environmental Permits" means all licences, permits, approvals,
consents, certificates, registrations and other authorizations under
Environmental Laws required for the operation of the Business.
(l) "Equipment" means all chattels, equipment, fixtures, furnishings,
machinery, vehicles and supplies used in connection with the Business as at the
date hereof including without limitation the items described in Schedule "3"
hereto;
(m) "Excluded Assets" means cash on hand or on deposit at the commencement
of business on the Closing Date;
(n) "Goodwill" means the goodwill of the Business, together with the
exclusive right of the Purchaser to represent itself as carrying on the Business
in continuation of and in succession to the Vendor, and the right to the name
Virtual ▇▇▇▇▇▇▇.▇▇▇ or any variation thereof as part of, or in connection with
the Business;
(o) "Intellectual Property" means all registered and unregistered patents,
trade or brand names, business names, trade-marks, trade-▇▇▇▇ registrations and
applications, copyrights, drawings, logos, designs, patents and all patent
rights, trade secrets, restrictive covenants, processes, technology, registered
user agreements, research data, inventions, instruction manuals, formulae, and
other industrial or intellectual property respecting the Business, including,
without limitation, the intellectual property described in Schedule "5" -
Intellectual Property hereto;
(p) "Leased Property" means all the leased real property that is used in the
Business and leased by the Vendor, including, without limitation, the real
property described in Schedule "2" - Leased Property herein;
(q) "Leases" means all of the leases of the Leased Property, whether as
lessor or lessee leased by the Vendor as set forth in Schedule "2" - Leased
Property and all leases of personal property as described in Schedule "4" -
Material Contracts;
(r) "Licences" means all licences, permits, approvals, consents,
certificates, registrations and authorizations (whether governmental,
regulatory, or otherwise) required for the conduct in the ordinary course of the
operations of the Business and the uses to which the Business Assets have been
put;
(s) "Material Contracts" means all agreements, indentures, contracts,
leases, deeds of trust, licences, options, instruments or other commitments,
whether written or oral, including the benefit of all unfilled orders received
by the Vendor and forward commitments to purchase made by the Vendor, which the
Vendor is entitled to or possessed of in connection with the Business and the
Business Assets, including, without limitation, all right, title, benefit and
interest in respect of the contracts, leases, engagements and commitments
described in Schedule "4" - Material Contracts hereto;
(t) "Permitted Encumbrances" means any encumbrances or liabilities of the
Vendor agreed to in writing by the Purchaser to be assumed pursuant to this
Agreement;
(u) "Purchase Price" means the aggregate sum payable by the Purchaser to the
Vendor for the Business Assets.
1.2 Currency
Unless otherwise indicated, all dollar amounts in this Agreement are
expressed in United States funds.
1.3 Sections and Headings
The division of this Agreement into articles, sections and subsections
and the insertion of headings are for convenience of reference only and shall
not affect the interpretation of this Agreement. Unless otherwise indicated,
any reference in this Agreement to an article, section, subsection or schedule
refers to the specified article, section or subsection of or schedule to this
Agreement.
1.4 Number, Gender and Persons
In this Agreement, words importing the singular number only shall
include the plural and vice versa, words importing gender shall include all
genders and words importing persons shall include individuals, corporations,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities of any kind whatsoever.
1.5 Accounting Principles
Any reference in this Agreement to generally accepted accounting
principles refers to generally accepted accounting principles that have been
established in the United States.
1.6 Entire Agreement
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There
are no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.
1.7 Time of Essence
Time shall be of the essence of this Agreement.
1.8 Applicable Law
This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties shall
be governed by, the laws of the State of Illinois and the federal laws of the
United States applicable therein, and each party irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such state and all
courts competent to hear appeals therefrom.
1.9 Amendments and Waivers
No amendment or waiver of any provision of this Agreement shall be
binding on either party unless consented to in writing by such party. No waiver
of any provision of this Agreement shall constitute a waiver of any other
provision, nor shall any waiver constitute a continuing waiver unless otherwise
provided.
1.10 Schedules
The following Schedules are attached to and form part of this
Agreement: All terms defined in the body of this Agreement will have the same
meaning in the Schedules attached hereto.
Schedule 1 - Financial Statements
Schedule 2 - Leased Real Property
Schedule 3 - Machinery and Equipment
Schedule 4 - Material Contracts
Schedule 5 - Intellectual Property
Schedule 6 - Consents
Schedule 7 - Assumed Indebtedness
2. PURCHASE AND SALE
2.1 Subject to the terms and conditions of this Agreement, effective as
at the Closing Date the Vendor will sell, transfer, and assign to the Purchaser
and the Purchaser agrees to purchase from the Vendor, free and clear of all
Encumbrances except as may be otherwise specifically provided for herein as
Permitted Encumbrances, the Business as a going concern and except for the
Excluded Assets, the Business Assets.
2.2 Except as provided herein and subject to the provisions of this
Agreement, the purchase and sale contemplated herein does not include assumption
of contracts with any employees or independent contractors of the Vendor used in
connection with the Business. The Vendor will at all times before and after the
Closing remain solely liable for all matters relating to such employees and
independent contractors, including without limitation all liabilities for wages,
severance pay, holiday pay, pensions, health, life, disability insurance and
other benefits of any kind, and all remittances payable to applicable
governmental authorities, in respect of such persons and the Vendor will at all
times prior to and after the Closing indemnify and save harmless the Purchaser
from and against any and all such liabilities.
2.3 All quotations for the sale or purchase of Inventory or supplies
made or received by the Vendor and not confirmed to contractual commitment will
be deemed to be assigned to the Purchaser at the Closing to be accepted,
confirmed or withdrawn or otherwise acted upon by the Purchaser in its own name,
for its own account and in accordance with its own business judgment.
3. PURCHASE PRICE AND ALLOCATION
3.1 The Purchase Price payable by the Purchaser to the Vendor for the
Business Assets will be the sum of $198,928.68, 500,000 common shares in the
capital of the Purchaser (the "Purchase Shares") issued at a deemed price of
$0.10 per common share, and 361,710 share purchase warrants (the "Warrants").
Each Warrant shall entitle the holder thereof to purchase one common share in
the capital of the Company at a price of $1.50 per common share for a period of
two (2) years commencing on the Closing Date.
3.2 The Purchase Price will be allocated among the various items
comprising the Business Assets and the Vendor and the Purchaser agree to report
the sale and purchase of the
Business Assets for all federal, state and local tax purposes in a manner
consistent with the following:
(a) to the Assumption of Indebtedness, the sum of $43,856;
(b) to the Current Assets, including Equipment and Inventory, the sum of
$6,448;
(c) to the Fixed Assets, including Leased Property, the sum of $82,637;
(d) to the Goodwill, the sum of $80,915; and
(e) to the remaining Business Assets, the sum of $35,072.
3.3 The Vendor makes no representation or warranty that the allocation
of the Purchase Price pursuant to Clause 3.2 herein will be accepted by the
Minister of National Revenue.
4. PAYMENT OF THE PURCHASE PRICE
4.1 The Vendor acknowledges that the Purchaser has, pursuant to the
License Agreement, advanced $170,000.00 (the "Advance") to the Vendor. The
Vendor hereby agrees to accept the Advance in full and final payment of $170,000
of the Purchase Price. The Purchaser agrees to assume current debt of the
Vendor in the amount of $28,928.68 (the "Assumption") and the Vendor hereby
acknowledges the Assumption as full and final payment of $28,928.68 of the
Purchase Price.
4.2 On the Closing Date, the Purchaser will deliver to the Vendor the
Purchase Shares and the Warrants.
4.3 The Vendor, the Principals and the Purchaser hereby mutually agree
that this Agreement will supersede and replace the License Agreement as of the
Closing Date.
4.4 The Vendor, the Principals and the Purchaser hereby agree that all
claims in connection with the License Agreement will be fully satisfied and
extinguished and each of the Vendor, the Principals and the Purchaser will
remise, release and forever discharge each other party to this Agreement and its
directors, officers and employees from any and all obligations of any kind
whatsoever in connection with the License Agreement.
4.5 The Vendor acknowledges that the Purchase Shares and the Warrants
have not been registered under the Unites States Securities Act of 1933 (the
"1933 Act"), or under any state securities or "blue sky" laws of any state of
the United States, and, unless so registered, may not be offered or sold in the
United States or to U.S. Persons, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the 1933 Act. The
Vendor further acknowledges that the Purchase Shares and the Warrants will be
subject to a one year hold period; however, the Purchaser agrees that it will
add registration of the Purchase Shares and the Warrants to any other share
registration that it may file with the Securities and Exchange Commission during
the year.
5. CLOSING, POSSESSION, AND ADJUSTMENTS
5.1 The Closing will take place by the exchange of appropriate
solicitors' undertakings, or at such other place, date, and time as may be
mutually agreed upon by the parties hereto but no later than April 30, 1999.
5.2 The Vendor will deliver possession of the Business Assets, free and
clear of any Encumbrances and of any other claim to possession and any
tenancies, to the Purchaser on the Closing Date.
5.3 All revenues and expenses, of the Business and relating to the
Business Assets will be adjusted between the Vendor and the Purchaser as at the
commencement of business on the Closing Date to the effect that in respect of
any period before that time the Vendor will bear all expenses and receive all
revenues relating to the Business and the Business Assets and that from and
after said time the Purchaser will bear all expenses and receive all revenues
relating to the Business and the Business Assets.
6. ASSUMPTION OF LIABILITY
6.1 Subject to the provisions of this Agreement, the Purchaser agrees
to assume, pay, satisfy, discharge, perform and fulfil, from and after the
Closing Date, all obligations and liabilities of the Business arising from and
after the Closing Date.
6.2 It is understood and agreed that from and after the Closing Date
the Purchaser will assume, pay, discharge and satisfy the Assumed Indebtedness
of the Vendor to the creditors described in Schedule "7" - Assumed Indebtedness,
and that at the Closing the Vendor and the Purchaser will execute and deliver an
Assumption Agreement whereby the Purchaser covenants to assume and pay the
Assumed Indebtedness and to indemnify and save harmless the Vendor in respect
thereof.
6.3 The Vendor hereby bargains, sells, assigns, transfers, and sets
over unto the Purchaser all right, title, benefit, and interest which the Vendor
is entitled to or possessed of, in, to, or under all contracts, engagements, and
commitments respecting the Business or the Business Assets to have and to hold
unto the Purchaser forever.
6.4 The Vendor and the Purchaser agree that in respect of any of the
Material Contracts which are not assignable by the terms thereof or in respect
of which any consent or approval is required, the right, title, benefit, and
interest of the Vendor therein will be held by the Vendor in trust for the
Purchaser and will be performed by the Purchaser in the name of the Vendor.
6.5 Both before and after the Closing Date, the Vendor and the
Purchaser will make all reasonable efforts to obtain the release of the Vendor
and as may be applicable the Principals of the Vendor of their obligations in
respect of the Assumed Indebtedness and the Material Contracts, and without
limiting the generality of Clause 20.1 the Vendor and the Purchaser will execute
and deliver such documents and instruments and do such acts and things as may be
required for said purposes.
6.6 Without in any way limiting Clause 11.3, the Purchaser will not
assume, and the Vendor will be solely responsible for and will indemnify and
hold harmless the Purchaser from and against any and all liabilities relating to
the Business up to the Closing Date and including all product liability, product
warranty, intellectual property infringement and other claims and obligations
respecting services rendered by the Vendor in connection with the Business, any
and all obligations payable to or related to any past or present employees of
the Vendor and any and all indebtedness of or related to the Business. The
Purchaser may satisfy any such obligations not assumed by it where it is
required to do so by law or by order of any court or regulatory authority having
jurisdiction over it or where it determines in good faith to do so for valid
business reasons and, in any such case, the Vendor will reimburse the Purchaser
forthwith following demand for all expenses incurred by the Purchaser in
connection therewith including all legal and other professional fees and
disbursements, interest, penalties or other amounts.
7. ACKNOWLEDGEMENTS OF THE VENDOR AND THE PRINCIPALS
7.1 The Vendor and the Principals acknowledge and agree that each of
them have been advised to consult their own independent legal, tax and other
advisors with respect to the execution of this Agreement and the transactions
contemplated by this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND THE PRINCIPALS
8.1 The Vendor and the Principals represent and warrant to the
Purchaser, with the intent that the Purchaser will rely thereon in entering into
this Agreement and in concluding the transactions contemplated hereby, that:
(a) the Vendor is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Illinois, and has the power,
authority, and capacity to carry on the Business as presently conducted and to
enter into this Agreement and carry out its terms;
(b) the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Vendor, and this Agreement
constitutes a valid and binding obligation of the Vendor enforceable against the
Vendor in accordance with its terms;
(c) the Vendor is not a party to any lease or agreement to lease in respect
of any real property, whether as lessor or lessee, other than the Leases
described and attached in Schedule "2" - Leased Property. Except as described
in Schedule "2", the Vendor occupies the Leased Property and has the exclusive
right to occupy and use the Leased Property. Each of the Leases of both real
and personal property is in good standing and in full force and effect, and
neither the Vendor nor any other party thereto is in breach of any covenants,
conditions or obligations contained therein. The Vendor has provided a true and
complete of each Lease and all amendments thereto to the Purchaser;
(d) except as will be remedied by the consents, approvals, releases, and
discharges described in Schedule "6" - Consents hereto, neither the execution
and delivery of this Agreement nor the performance of the Vendor's obligations
hereunder will:
(i) violate or constitute default under the constating documents, by-laws,
or articles of the Vendor, any order, decree, judgment, statute, by-law, rule,
regulation, or restriction applicable to the Vendor, the Business or any of the
Business Assets, or any contract, agreement, instrument, covenant, mortgage, or
security, including in particular the Material Contracts and the instruments
described in Schedule "7"- Assumed Indebtedness, to which the Vendor is a party
or which are binding upon the Vendor,
(ii) give any person the right to terminate or cancel any of the Material
Contracts or the instruments described in Schedule "7" - Assumed Indebtedness,
(iii) give rise to the creation or imposition of any Encumbrance on any of
the Business Assets, or
(iv) result in the termination of any licence, permit, approval, consent or
authorization held by the Vendor or necessary to the operation of the Business.
(e) the Vendor owns and possesses and has good and marketable title to the
Business Assets free and clear of all Encumbrances of every kind and nature
whatsoever except the Permitted Encumbrances;
(f) except as otherwise disclosed in Schedule "3" - Machinery and Equipment,
and reasonable wear and tear excepted, the Business Assets are in good working
order and in a functional state of repair and to the best of the knowledge of
the Vendor there are no latent defects thereto;
(g) with the exception of the Excluded Assets, the Business Assets comprise
all property and assets used by the Vendor in connection with the Business;
(h) except for the Permitted Encumbrances, the Vendor does not have any
indebtedness which might by operation of law or otherwise now or hereafter
constitute an Encumbrance upon any of the Business Assets;
(i) no person other than the Purchaser has any written or oral agreement or
option or any right or privilege (whether by law, preemptive or contractual)
capable of becoming an agreement or option for the purchase or acquisition from
the Vendor of any of the Business Assets, other than pursuant to purchase orders
accepted by the Vendor in the ordinary course of the Business;
(j) the Vendor is not the beneficial or registered owner of and has not
agreed to acquire any real property or any interest in any real property. The
Vendor has the exclusive right to possess, use and occupy all of the Leased
Property. All
buildings, structures, improvements and appurtenances situated on the Leased
Property are in good operating condition and in a state of good maintenance and
repair and are adequate and suitable for the purposes for which they are
currently being used, and the Vendor has adequate rights of ingress and egress
for the operation of the Business in the ordinary course. None of such
buildings, structures, improvements or appurtenances (or any equipment therein),
nor the operation or maintenance thereof, violates any restrictive covenant or
any provision of any federal, provincial or municipal law, ordinance, rule or
regulation, or encroaches on any property owned by others. Without limiting the
generality of the foregoing:
(i) the Leased Property, the current uses thereof and the conduct of the
Business comply with all regulations, statutes, enactments, laws and by-laws,
including, without limitation, those dealing with zoning, parking, access,
loading facilities, landscaped areas, building construction, fire and public
health and safety and Environmental Laws,
(ii) no alteration, repair, improvement or other work has been ordered,
directed or requested in writing to be done or performed to or in respect of the
Leased Property or to any of the plumbing, heating, elevating, water, drainage
or electrical systems, fixtures or works by any municipal, provincial or other
competent authority, which alteration, repair, improvement or other work has not
been completed, and the Vendor knows of no written notification having been
given to it of any such outstanding work being ordered, directed or requested,
other than those that have been complied with,
(iii) all accounts for work and services performed and materials placed or
furnished upon or in respect of the Leased Property at the request of the Vendor
have been fully paid and satisfied, and no person is entitled to claim a lien
under any applicable builders lien or similar legislation in other provinces of
Canada against the Leased Property or any part thereof, other than current
accounts in respect of which the payment due date has not yet passed,
(iv) there is nothing owing in respect of the Leased Property by the Vendor
to any municipal corporation or to any other corporation or commission owning or
operating a public utility for water, gas, electrical power or energy, steam or
hot water, or for the use thereof, other than current accounts in respect of
which the payment due date has not yet passed,
(v) no part of the Leased Property has been taken or expropriated by any
federal, provincial, municipal or other competent authority, nor has any notice
or proceeding in respect thereof been given or commenced,
(vi) the Permitted Encumbrances constitute all of the Encumbrances,
agreements, indentures and other matters that affect the Leased Property,
(vii) the Leased Property (including all buildings, improvements and
fixtures) is fit for its present use, and there are no material or structural
repairs or replacements that are necessary or advisable and, without limiting
the foregoing, there are no repairs to, or replacements of, the roof or the
mechanical, electrical, heating, ventilating, air-conditioning, plumbing or
drainage equipment or systems that are necessary or advisable; and the Leased
Property is not currently undergoing any alteration or renovation nor are any
such alterations or renovations contemplated, and
(viii) the Leased Property is fully serviced and has suitable access to
public roads, and there are no outstanding levies, charges or fees assessed
against the Leased Property by any public authority (including development or
improvement levies, charges or fees);
(k) except as otherwise provided herein, Schedule "4" - Material Contracts,
discloses all Contracts, engagements, and commitments, whether oral or written,
relating to the Business or the Business Assets including in particular
contracts, engagements, and commitments:
(i) out of the ordinary course of Business,
(ii) which entail the payment of in excess of $1,000.00 during any one year
period,
(iii) respecting ownership of or title to any interest or claim in or to any
property making up the Business Assets,
(iv) respecting Intellectual Property,
(v) respecting any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with respect to, the
obligations, liabilities (whether accrued, absolute, contingent or otherwise) or
indebtedness of any other person except for cheques endorsed for collection in
the ordinary course of the Business,
(vi) any trust indenture, mortgage, promissory note, loan agreement,
guarantee or other contracts for the borrowing of money or a leasing transaction
of the type required to be capitalized in accordance with generally accepted
accounting principles,
(vii) any contracts for capital expenditures in excess of $1,000.00 in the
aggregate,
(viii) any contract for the sale of any assets other than sales of inventory
to customers in the ordinary course of the Business,
(ix) any contract pursuant to which the Vendor is a lessor of any machinery,
equipment, motor vehicles, furniture, fixtures or other personal property, or
(x) any confidentiality, secrecy or non-disclosure contract, (whether the
Vendor is a beneficiary or obligant thereunder) relating to any proprietary or
confidential information or any non-competition or similar contract;
(l) Schedule "4" - Material Contracts, contains an accurate and complete
description of all material particulars respecting the Material Contracts and
except as disclosed in said Schedule:
(i) there has not been any default in any obligation or liability in respect
of said Contracts, engagements, or commitments by the Vendor and the Vendor has
performed all of the obligations required to be performed by it and is entitled
to all benefits under the Material Contract,
(ii) there has not been any amendment, modification, variation, surrender,
or release of said Contracts, engagements, and commitments, and
(iii) each of said Contracts, engagements, and commitments is in good
standing and in full force and effect and the Vendor has performed all of the
obligations required to be performed by it and is entitled to all benefits
thereunder, and as is not in default or alleged to be in default in respect of
any Material Contract or any other Contracts, engagements or commitments
provided for in this Agreement, to which the Vendor is a party or by which it is
bound;
(m) Schedule "7" - Assumed Indebtedness, contains an accurate and complete
description of all instruments evidencing or pertaining to and all material
particulars respecting the Assumed Indebtedness including the amounts thereof as
at the dates therein specified (or where the exact amount cannot be obtained,
reasonably accurate estimates thereof) and the material terms of repayment and
interest rates applicable thereto;
(n) the amount of Assumed Indebtedness as at the Closing Date will not
exceed $30,000;
(o) all Licences required for the conduct in the ordinary course of the
operations of the Business and the uses to which the Business Assets have been
put have been obtained and are in good standing and such conduct and uses are in
compliance with such licences and permits and with all laws, zoning and other
bylaws, building and other restrictions, rules, regulations, and ordinances
applicable to the Business and the Business Assets and neither the execution and
delivery of this Agreement nor the completion of the purchase and sale hereby
contemplated will give any person the right to terminate or cancel the said
licenses or permits or affect such compliance;
(p) there are no actions, suits, proceedings, investigations, complaints,
orders, directives, or notices of defect or non-compliance by or before any
court, governmental or domestic commission, department, board, tribunal, or
authority, or administrative, licensing, or regulatory agency, body, or officer
issued, pending, or to the best of the Vendor's knowledge threatened against or
affecting the Vendor or in respect of the Business or any of the Business
Assets;
(q) the Financial Statements of the Vendor attached hereto as Schedule "1"
-Financial Statements, were prepared in accordance with generally accepted
accounting principles consistently applied and are true and correct and present
fairly and completely the assets, liabilities (whether accrued, absolute,
contingent or otherwise), and the financial condition of the Vendor and the
results of the operation of the Business for the periods reported thereby. The
financial position and condition of the Vendor is now at least as good as that
shown on or reflected in the Financial Statements provided to the Purchaser;
(r) all outstanding commitments by or on behalf of the Vendor for the
purchase or sale of inventory and supplies have been made in accordance with
established price lists of the Vendor or its suppliers or if otherwise then in
accordance with the Vendor's normal business custom in varying therefrom;
(s) the books and records of the Vendor present fairly and completely in all
material respects, in accordance with generally accepted accounting practices
consistently applied, the matters which said books and records purport to
present, and all material financial transactions of the Vendor relating to the
Business have been accurately recorded in said books and records;
(t) there is no requirement to make any filing with, give any notice to or
to obtain any licence, permit, certificate, registration, authorization, consent
or approval of, any governmental or regulatory authority as a condition to the
lawful consummation of the transactions contemplated by this Agreement, except
for the filings, notifications, licences, permits, certificates, registrations,
consents and approvals described in Schedule "6" - Consents, or that relate
solely to the identity of the Purchaser or the nature of any business carried on
by the Purchaser;
(u) there is no requirement under any Material Contract relating to the
Business or the Business Assets to which the Vendor is a party or by which it is
bound to give any notice to, or to obtain the consent or approval of, any party
to such agreement, instrument or commitment relating to the consummation of the
transactions contemplated by this Agreement except for the notifications,
consents and approvals described in Schedule "6" - Consents;
(v) since April 1, 1999, the Business has been carried on only in the
ordinary and normal course consistent with past practices and there has not
been:
(i) any change, event, or circumstance which would materially adversely
affect the affairs, assets, liabilities, earnings, prospects, operation, or
condition of the Business,
(ii) any loss, damage, or destruction, whether or not covered by insurance,
which would materially adversely affect the affairs, prospects, operations, or
condition of the Business or the Business Assets,
(iii) any material increase in the compensation or benefits payable or to
become payable by the Vendor to any of its officers, directors, employees, or
agents,
(iv) any obligation or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due) incurred by the Vendor in connection
with the Business, other than those incurred in the ordinary and normal course
of the Business and consistent with past practice,
(v) any licence, sale, assignment, transfer, disposition, pledge, mortgage
of granting of a security interest or other Encumbrance on or over any of the
Business Assets, other than sales of inventory to customers in the ordinary and
normal course of the Business,
(vi) any capital expenditures or commitments relating to the Business or
Business Assets in excess of $1,000.00,
(vii) any cancellation of any debts or claims or any amendment, termination
or waiver of any rights of value to the Business in amounts exceeding $1,000.00
in each instance or $5,000.00 in the aggregate, or
(viii) any change in the accounting or tax practices followed by the Vendor;
(w) the Vendor has duly filed on a timely basis all tax returns and reports
required to be filed by it including all federal, state and municipal income tax
returns and has paid all taxes that are due and payable, and all assessments,
re-assessments, governmental charges, penalties, interest and fines due and
payable by it prior to the Closing Date. The Vendor has made adequate provision
for taxes payable in respect of the Business for the current period and any
previous period for which tax returns are not yet required to be filed. The
Vendor has remitted to the appropriate tax authority, when required by law to do
so, all amounts collected by it on account of any state, municipal or local
sales tax;
(x) all required tax returns have been filed and are true, complete and
correct, and all taxes and other government charges including all income,
excise, sales, business and property taxes and other rates, charges,
assessments, levies, duties, taxes, contributions, fees and licenses required to
be paid have been paid for all periods prior to the Closing Date and the Company
does not have any deferred tax liability;
(y) there are no agreements, waivers or other arrangements providing for an
extension of time with respect to the filing of any tax return by or payment of
any tax, governmental charge or deficiency by the Vendor, and to the knowledge
of the Vendor there are no contingent tax liabilities or any grounds which would
prompt a reassessment, including aggressive treatment of income and expenses in
filing earlier tax returns;
(z) the Vendor, in respect of the Business and the Business Assets, has been
and is in compliance with all Environmental Laws;
(aa) the Vendor has obtained all necessary Environmental Permits, if any.
Each Environmental Permit is valid, subsisting and in good standing, and the
Vendor is not in default or breach of any Environmental Permit and no proceeding
is pending or threatened to revoke or limit any Environmental Permit;
(bb) the Vendor, in connection with the Business, has not used or permitted
to be used, except in compliance with all Environmental Laws, any of its
property (including any of the Leased Property) or facilities to generate,
manufacture, process, distribute, use, treat, store, dispose of, transport or
handle any hazardous substance;
(cc) no building, structure or improvement located on Leased Property is or
ever has been insulated with urea formaldehyde insulation, nor do such buildings
or structures contain any aluminium wiring or friable asbestos or any other
substance containing asbestos;
(dd) the Vendor has never received any notice of or been prosecuted for
non-compliance with any Environmental Laws, nor has the Vendor settled any
allegation of non-compliance short of prosecution. There are no orders or
directions relating to environmental matters requiring any work, repairs or
construction or capital expenditures to be made with respect to the Business or
the Business Assets, nor has the Vendor received notice of any of the same;
(ee) the Vendor has not caused or permitted, nor does it have any knowledge
of, the release, in any manner whatsoever, of any hazardous substance on or from
any of its properties or assets (including any of the Leased Property) utilized
in the Business, or any such release on or from a facility owned or operated by
third parties, but with respect to which the Vendor in connection with the
Business is or may reasonably be alleged to have liability. All hazardous
substances and all other wastes and other materials and substances used in whole
or in part by the Vendor in connection with the Business or resulting from the
Business have been disposed of, treated and stored in compliance with all
Environmental Laws;
(ff) the Vendor has not received any notice that the Vendor is potentially
responsible for a federal, state, municipal or local clean-up site or corrective
action under any Environmental Laws in connection with the Business. The
Vendor, in connection
with the Business, has not received any request for information in connection
with any federal, state, municipal or local inquiries as to disposal sites;
(gg)
i) Schedule "5" - Intellectual Property, sets out details of all
licences and other contracts that relate to Intellectual Property,
(ii) the Intellectual Property comprises all intellectual property assets
necessary to conduct the Business,
(iii) the Vendor is the legal and beneficial owner of the Intellectual
Property, free and clear of all Encumbrances, and is not a party to or bound by
any contract or any other obligation whatsoever that limits or impairs its
ability to sell, transfer, assign or convey, or that otherwise affects, the
Intellectual Property,
(iv) no person other than the Purchaser has been granted any interest in or
right to use all or any portion of the Intellectual Property,
(v) to the Vendor's knowledge, the Vendor's use, sale and licence of the
Intellectual Property and the conduct of the Business does not infringe upon, or
induce or contribute to the infringement of, the intellectual property rights,
domestic or foreign, of any other person,
(vi) the Vendor is not aware of any claim of infringement (or the inducing
of or contribution to the infringement) of any intellectual property rights of
any other person arising from the use of the Intellectual Property, nor has the
Vendor received any notice that the conduct of the Business, including the use
of the Intellectual Property, infringes upon or breaches any intellectual
property rights of any other person. The Vendor, after due inquiry, has no
knowledge of any infringement or violation by any third party of any of the
Vendor's rights in the Intellectual Property,
(vii) the Vendor is not aware of any fact, reason, action or inaction that
adversely affects the scope, validity or enforceability of any of the
Intellectual Property,
(viii) the Vendor has provided to the Purchaser a true and complete copy of
all contracts, applications (including prosecution history), registrations and
amendments thereto that comprise or relate to the Intellectual Property, and
(ix) no funding used in the research, development and testing of the
invention, originated from a governmental source or any other person outside of
Vendor;
(hh) the Vendor has the Business Assets insured against loss or damage by
all insurable hazards or risks on a replacement cost basis and such insurance
coverage will be continued in full force and effect to and including the Closing
Date. The Vendor is not in default with respect to any of the provisions
contained in any such insurance policy and has not failed to give any notice or
present any claim under any such insurance policy, in due and timely fashion.
The Vendor has provided or will provide upon request a true copy of each such
insurance policy to the Purchaser;
(ii) no officer, director or shareholder of the Vendor and no entity that is
affiliated or associated with one or more of such individuals:
(i) owns, directly or indirectly, any interest in (except for shares
representing less than one per cent of the outstanding shares of any class or
series of any publicly traded company), or is an officer, director, employee or
consultant of, any person that is, or is engaged in business as, a competitor of
the Business or a lessor, lessee, supplier, distributor, sales agent or customer
of the Business,
(ii) owns, directly or indirectly, in whole or in part, any property that
the Vendor uses in the operations of the Business, or
(iii) has any cause of action or other claim whatsoever against, or owes any
amount to, the Vendor in connection with the Business, except for any
liabilities reflected in the Financial Statements and claims in the ordinary
course of business;
(jj) there has been no termination or cancellation of, and no modification
or change in, the Vendor's business relationship with any major customer or
group of major customers. The Vendor has no reason to believe that the benefits
of any relationship with any of the major customers or suppliers of the Business
will not continue after the Closing Date in substantially the same manner as
prior to the date of this Agreement;
(kk) there are no liabilities of the Vendor or its associates or affiliates,
whether or not accrued and whether or not determined or determinable, in respect
of which the Purchaser may become liable on or after the Closing Date, other
than the Assumed Indebtedness; and
(ll) neither this Agreement nor any document to be delivered by the Vendor
nor any certificate, report, statement or other documents furnished by the
Vendor in connection with the negotiation of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statement contained herein or therein not
misleading. The Vendor had disclosed to the Purchaser everything material or
cogent in connection with the business and affairs of the Vendor and its status,
and nothing stated to the Purchaser has been misleading.
9. REPRESENTATIONS OF THE PURCHASER
9.1 The Purchaser represents and warrants to the Vendor as follows,
with the intent that the Vendor will rely thereon in entering into this
Agreement and in concluding the purchase and sale contemplated hereby, that:
(a) the Purchaser is a corporation duly incorporated, validly existing, and
in good standing under the laws of Canada and has the power, authority, and
capacity to enter into this Agreement and to carry out its terms;
(b) the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby has been duly and validly authorized by all
necessary corporate action on the part of the Purchaser, and this Agreement
constitutes a valid and binding obligation of the Purchaser in accordance with
its terms;
(c) there is no requirement for the Purchaser to make any filing with, give
any notice to or obtain any licence, permit, certificate, registration,
authorization, consent or approval of, any government or regulatory authority as
a condition to the lawful consummation of the transactions contemplated by this
Agreement; and
(d) the Purchaser has received and agreed with the terms of the agreement
between ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Vendor.
10. COVENANTS OF THE VENDOR
10.1 Between the date of this Agreement and the Closing Date, the
Vendor:
(a) will not sell or dispose of any of the Business Assets, except only the
sale of Inventory in the ordinary course of business and will preserve the
Business Assets intact without any further Encumbrances;
(b) will not make or agree to make any payment to any of the officers,
directors, employees, or agents of the Vendor except in the ordinary course of
business and at the regular rates of compensation now in effect or as reasonable
reimbursement for expenses incurred by such persons in connection with the
Business;
(c) will conduct the Business diligently and only in the ordinary course
consistent with past practice, keep the Business Assets in their present state,
and endeavour to preserve the organization of the Business intact and the
goodwill of the suppliers and customers and others having business relations
with the Vendor relating to the Business;
(d) will maintain insurance coverage of the scope and in the amounts
presently held in full force and effect and shall take out, at the expense of
the Purchaser, such additional insurance as may reasonably be requested by the
Purchaser and shall give all notices and present all claims under all policies
of insurance in a due and timely fashion;
(e) will afford the Purchaser and its authorized representatives full access
during normal business hours to the Business Assets and all other property and
assets utilized in the Business and without limitation all title documents,
abstracts of title, deeds, leases, contracts, financial statements, policies,
reports, licenses, books, records, and other such material relating to the
Business, and furnish such copies thereof and other information, as the
Purchaser may reasonably request;
(f) will use its best efforts to procure and obtain at or prior to the
Closing Date all such consents, approvals, releases, and discharges as may be
required to effect the transactions contemplated hereby from all federal, state,
municipal or other governmental or regulatory bodies and from all other third
parties as necessary;
(g) will use its best efforts to obtain the acknowledgement of ▇▇▇▇▇▇ ▇▇▇▇▇
that this Agreement supersedes and replaces the License Agreement as of the
Closing Date;
(h) will use its best efforts to obtain a release of the Vendor, the
Business and ▇▇▇▇▇▇ ▇▇▇▇▇ from any liability with respect to the ▇▇▇▇ ▇▇▇▇▇▇
Bank Line of Credit;
(i) will, deliver to the Purchaser true copies of the Material Contracts and
full particulars of and true copies of all instruments evidencing or pertaining
to the Assumed Indebtedness;
(j) at the request of the Purchaser, the Vendor shall execute such consents,
authorizations and directions as may be necessary to permit any inspection of
the Business or any of the Business Assets or to enable the Purchaser or its
authorized representatives to obtain full access to all files and records
relating to the Business or the Business Assets maintained by governmental or
other public authorities;
(k) the Vendor shall pay and discharge the liabilities of the Vendor
relating to the Business in the ordinary course and consistent with the previous
practice of the Vendor, except those contested in good faith by the Vendor;
(l) the Vendor shall use its best efforts to take or cause to be taken all
necessary corporate action, steps and proceedings to approve and authorize
validly and effectively the transfer of the Business Assets to the Purchaser and
the execution and delivery of this Agreement and any other Agreements or
documents contemplated hereby including, if necessary, the passing of a special
resolution of shareholders and to cause all necessary meetings of directors and
shareholders of the Vendor to be held for such purpose; and
(m) will not, without the prior written consent of the Purchaser, enter into
any transaction or refrain from doing any action that, if effected before the
date of this Agreement, would constitute a breach of any representation,
warranty, covenant or other obligation of the Vendor contained herein, and the
Vendor shall not enter into any material supply agreements relating to the
Business or make any material decisions or enter into any material contracts
with respect to the Business without the consent of the Purchaser, which consent
shall not be unreasonably withheld.
10.2 The Vendor will within 30 days after the Closing Date, change its
name and the names of any of its associated or affiliated businesses that
include the words "▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" to a name dissimilar to the Business
name. The Vendor agrees that from and after the Closing Date neither the Vendor
nor any of its associated or affiliated businesses, if any, will use the words
"▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" or any part thereof or any similar words in any business
name or business venture.
10.3 The Vendor and the Principals covenant and agree to indemnify and
hold harmless the Purchaser from and against:
(a) except as to the Assumed Indebtedness which by the terms hereof are
specifically to be assumed or paid by the Purchaser, any and all debts,
obligations, and liabilities, whether accrued, absolute, contingent, or
otherwise, existing at the time of Closing, respecting the Business or the
Business Assets; and the Purchaser may, but will not be bound to, pay or perform
same and all moneys so paid by the Purchaser in doing so will constitute
indebtedness of the Vendor to the Purchaser hereunder;
(b) any and all damage or deficiency resulting from any misrepresentation,
misstatement, breach of warranty, or the non-fulfilment of any covenant on the
part of the Vendor under this Agreement or under any document or instrument
delivered pursuant hereto or in connection herewith;
(c) any and all claims, actions, suits, proceedings, demands, assessments,
judgments, charges, penalties, costs, and expenses (including the full amount of
any legal expenses invoiced to the Purchaser) which arise or are made or claimed
against or are suffered or incurred by the Purchaser in respect of any of the
foregoing; and
(d) any and all losses suffered or incurred by the Purchaser as a result of
or arising directly or indirectly out of or in connection with the operation of
the Business up to the Closing Date.
10.4 The exercise of any rights or inspection by or on behalf of the
Purchaser under Clause 11.1 shall not mitigate or otherwise affect any of the
representations and warranties of the Vendor hereunder which shall continue in
full force and effect as provided in Clause 9.1.
11. COVENANTS OF THE PURCHASER
11.1 Between the date of this Agreement and the Closing Date, the
Purchaser will make all reasonable efforts to obtain and procure in co-operation
with the Vendor all consents, approvals, releases, and discharges required to
effect the transactions contemplated hereby.
11.2 Subject to the provisions of this Agreement, the Purchaser will,
from and after the Closing Date, pay as and when same become due and payable all
debts and liabilities of the Business which arise after the Closing Date and
punctually observe and perform all obligations to be performed in respect of the
Business which relate to any period after said date.
11.3 Subject to the provisions of this Agreement, from and after the
Closing Date, the Purchaser will indemnify and hold the Vendor harmless from and
against all liabilities of the Business arising after the Closing Date, provided
that such liabilities are in no way due to any misrepresentation, breach of
warranty, misstatement or breach of covenant or obligation hereunder by the
Vendor.
12. NON-MERGER
12.1 The representations, warranties, covenants, and agreements of the
Vendor contained herein and those contained in the documents and instruments
delivered pursuant hereto or in connection herewith will survive the Closing
Date, and notwithstanding the completion of the transactions contemplated
hereby, the waiver of any condition contained herein (unless such waiver
expressly releases the Vendor of such representation, warranty, covenant, or
agreement), or any investigation by the Purchaser, same will remain in full
force and effect.
12.2 The representations, warranties, covenants, and agreements of the
Purchaser contained herein and those contained in the documents and instruments
delivered pursuant hereto or in connection herewith will survive the Closing
Date, and notwithstanding the completion of the transactions contemplated
hereby, the waiver of any condition contained herein (unless such waiver
expressly releases the Purchaser of such representation, warranty, covenant, or
agreement), or any investigation by the Vendor, same will remain in full force
and effect.
13. CONDITIONS PRECEDENT
13.1 The obligation of the Purchaser to consummate the transactions
herein contemplated is subject to the fulfilment of each of the following
conditions precedent at the times stipulated:
(a) that the representations and warranties of the Vendor contained herein
are true and correct on and as at the Closing Date with the same force and
effect as if such representations and warranties were made as at the Closing
Date, except as may be in writing disclosed to and approved by the Purchaser;
(b) that all the terms, covenants, conditions, agreements, and obligations
hereunder on the part of the Vendor to be performed or complied with at or prior
to the Closing Date;
(c) that between the date hereof and the Closing Date no change, event, or
circumstance has occurred which materially adversely affects the Business Assets
or the prospects, operation, or condition of the Business or which,
significantly reduces the value of the Business or the Business Assets to the
Purchaser;
(d) that between the date hereof and the Closing Date there has not been any
substantial loss, damage, or destruction, whether or not covered by insurance,
to any of the Business Assets;
(e) no legal or regulatory action or proceeding shall be pending or
threatened by any person to enjoin, restrict or prohibit the purchase and sale
of the Business Assets contemplated hereby;
(f) that at the Closing Date, there shall have been obtained from all
appropriate federal, state, municipal or other governmental or administrative
bodies such licences, permits, consents, approvals, certificates, registrations
and authorizations as are required to be obtained by the Vendor to permit the
change of ownership of the Business Assets contemplated hereby, and all notices,
consents and approvals with respect to the transfer or assignment of the
Material Contracts, including, without limitation those described in Schedule
"4" hereof have been obtained;
(g) that at the Closing Date, the Vendor shall have given or obtained the
notices, consents and approvals described in Schedule "6" - Consents, in each
case in form and substance satisfactory to the Purchaser, acting reasonably;
(h) that at the Closing Date, the Vendor will have agreed to the termination
of the License Agreement; and
(i) that at the Closing Date, there will have been obtained from each of
Principals executed employee agreements with the Purchaser in a form
satisfactory to the Purchaser and containing the terms customary for this type
of agreement.
The foregoing conditions of this Clause 14.1 are for the exclusive benefit of
the Purchaser and may be waived in whole or in part by the Purchaser at any
time. If any of the conditions contained in this Clause 14.1 shall not be
performed or fulfilled at or prior to the Closing Date to the satisfaction of
the Purchaser, acting reasonably, the Purchaser, may, by notice to the Vendor,
terminate this Agreement and the obligations of the Vendor and the Purchaser
under this agreement, provided that the Purchaser may also bring an action
pursuant to Clause 11.3 against the Vendor for damages suffered by the Purchaser
where the non-performance or non-fulfilment of the relevant condition is as a
result of a breach of covenant, representation or warranty by the Vendor.
13.2 The obligation of the Vendor to consummate the transactions herein
contemplated is subject to the fulfilment of each of the following conditions
precedent at the times stipulated:
(a) that the representations and warranties of the Purchaser contained
herein are true and correct on and as of the Closing Date with the same force
and effect as if such representations and warranties were made as at the Closing
Date, except as may be in writing disclosed to and approved by the Vendor;
(b) that all terms, covenants, conditions, agreements, and obligations
hereunder on the part of the Purchaser to be performed or complied with at or
prior to the Closing, including in particular the Purchaser's obligation to
deliver the documents and instruments herein provided for in Clause 16, have
been performed and complied with as at the Closing.
The foregoing conditions of this Clause 14.2 are for the exclusive benefit of
the Vendor and may be waived in whole or in part by the Vendor at any time. If
any of the conditions contained in this Clause 14.2 shall not be performed or
fulfilled at or prior to the Closing Date to the satisfaction of the Vendor
acting reasonably, the Vendor may, by notice to the Purchaser, terminate this
Agreement and the obligations of the Vendor and the Purchaser under this
Agreement, provided that the Vendor may also bring an action pursuant to Clause
11.3 against the Purchaser for damages suffered by it where the non-performance
or non-fulfilment of the relevant condition is as a result of a breach of
covenant, representation or a warranty by the Purchaser.
14. TRANSACTIONS OF THE VENDOR AT THE CLOSING
14.1 At the Closing Date, the Vendor will execute and deliver or cause
to be executed and delivered all deeds, conveyances, bills of sale, transfers,
assignments, agreements, certificates, documents, and instruments as may be
necessary to effectively vest good and marketable title to the Business Assets
in the Purchaser free and clear of any Encumbrances (except the Permitted
Encumbrances or as may be otherwise specifically provided herein) and without
limiting the foregoing, will execute and deliver or cause to be executed and
delivered:
(a) a ▇▇▇▇ of sale (Absolute) for the Equipment;
(b) a general conveyance of the Business Assets;
(c) all consents, approvals, releases, and discharges as may be required to
effect the transactions contemplated hereby, including in particular those
described in Schedule "6" - Consents;
(d) a certificate of the Principals dated as of the Closing Date, acceptable
in form and content to the solicitors for the Purchaser, certifying that:
(i) the conditions set out in Clause 14.1 have been satisfied,
(ii) the Directors of the Vendor have passed a resolution duly authorizing
the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby,
(iii) the shareholders of the Vendor have passed a resolution duly
authorizing and approving the sale of the Business Assets as contemplated
hereby, and
(iv) the shareholders of the Vendor have passed a resolution duly
authorizing the Vendor to change its name to permit the Business Name to be used
by the Purchaser and all such other documents and instruments as may be
required;
(e) for the purposes of Clauses 6.1 hereof, an affidavit of one of the
Principals setting forth the names and addresses of the creditors pertaining to
the Assumed Indebtedness and the amount of the indebtedness or liability due or
payable to each such creditor;
(f) unless waived by the Purchaser, the favourable legal opinion of the
solicitors for the Vendor, in form satisfactory to solicitors for the Purchaser,
to the effect that all necessary steps and corporate proceedings have been taken
by the Vendor to permit the sale of the Business and the Business Assets as
contemplated hereby, that this Agreement and all documents and instruments
delivered pursuant hereto have been duly and validly authorized, executed, and
delivered by the Vendor and will constitute valid and legally binding
obligations of the Vendor, and confirming such other matters as the Purchaser's
solicitors may reasonably require;
(g) an employment agreement duly executed by each of the Principals;
(h) all such documents and instruments as may be necessary to transfer or
assign the Intellectual Property;
(i) executed releases by any third parties which have any Encumbrances
against the Business Assets other than the Permitted Encumbrances;
(j) unless waived by the Purchaser, certified copies of any and all
insurance policies relating to the Business and Business Assets with transfer
and consent forms duly endorsed;
(k) executed assignments of all Leases described under the heading Leased
Property in Schedule "2" and all leases of personal property as described in
Schedule "4" - Material Contracts; and
(l) all such other documents and instruments as the Purchaser's solicitors
may reasonably require.
15. TRANSACTIONS OF THE PURCHASER AT THE CLOSING
15.1 At the Closing the Purchaser will deliver or cause to be delivered
to the Vendor:
(a) a certificate of the secretary of the Purchaser dated as of the Closing
Date, acceptable in form and content to the solicitors for the Vendor,
certifying that:
(i) the conditions set out in Clause 14.2 have been satisfied, and
(ii) the Directors of the Vendor have passed a resolution duly authorizing
the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby;
(b) share certificates representing the Purchase Shares and warrant
certificates representing the Warrants; and
(c) all such other documents and instruments as the Vendor or its solicitors
may reasonably require.
16. TAXES
16.1 All taxes arising out of the purchase of the Business Assets as
contemplated hereby will be paid by the Purchaser.
16.2 The Purchaser shall be liable for and shall pay all federal, state
and local sales taxes (including any retail sales taxes and land transfer taxes)
and all other taxes, duties, fees or other like charges of any jurisdiction
properly payable in connection with the transfer of the Business Assets by the
Vendor to the Purchaser.
17. ASSETS AT RISK
17.1 From the date hereof to the Closing Date, the Business Assets will
remain at the risk of the Vendor. If any of the Business Assets are lost,
damaged, or destroyed prior to the time of Closing, the Purchaser may in lieu of
terminating this Agreement pursuant to Clause 14.1 elect by notice in writing to
the Vendor to complete the purchase to the extent possible, and at the option of
the Purchaser, either:
(a) the Purchase Price will be reduced by an amount equal to the cost of
making good such loss, damage, or destruction; or
(b) the Vendor will assign and pay over to the Purchaser all insurance
moneys payable in respect of such loss, damage, or destruction.
18. AGENTS
18.1 The Vendor warrants to the Purchaser that no agent or other
intermediary has been engaged by the Vendor in connection with the purchase and
sale herein contemplated, and if there are any agent's commissions which become
due and payable such costs and expenses will be the sole liability of the
Vendor.
19. FURTHER ASSURANCES
19.1 From time to time subsequent to the Closing Date, the parties
covenant and agree, at the expense of the requesting party, to promptly execute
and deliver all such further documents and instruments and do all such further
acts and things as may be required to carry out the full intent and meaning of
this Agreement and to effect the transactions contemplated hereby.
20. ASSIGNMENT
20.1 This Agreement may not be assigned by any party hereto without the
prior written consent of the other parties hereto.
21. SUCCESSORS AND ASSIGNS
21.1 This Agreement will enure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
22. COUNTERPARTS
22.1 This Agreement may be executed in several counterparts, each of
which will be deemed to be an original and all of which will together constitute
one and the same instrument. Regardless of the date of execution by any of the
parties hereto, this Agreement will be dated for reference as of the date first
above written.
23. ELECTRONIC MEANS
23.1 Delivery of an executed copy of this Agreement by electronic
facsimile transmission, telecopy, telex, or other means of electronic
communication producing a printed copy will be deemed to be execution and
delivery of this Agreement on the date of such communication by the party so
delivering such copy.
24. NOTICES
24.1 Any notice required or permitted to be given under this Agreement
will be in writing and may be given by personal service or by prepaid registered
mail, posted in Canada, and addressed to the proper party at the address stated
below:
(a) if to the Vendor:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇.▇.▇.
(b) if to the Purchaser:
SUNCOM TELECOMMUNICATIONS INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇.▇.▇. 60602
(c) if to the Principals:
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as any party may specify by notice in writing to the
other parties. Any notice delivered on a Business Day will be deemed
conclusively to have been effectively given on the date notice was delivered and
any notice given by facsimile transmission will be deemed conclusively to have
been given on the date of such transmission. Any notice sent by prepaid first
class mail will be deemed conclusively to have been effectively given on the
fifth Business Day after posting, but if at the time of posting or between the
time of posting and the tenth Business Day thereafter there is a strike, lockout
or other labour disturbance affecting postal service, then the notice will not
be effectively given until actually delivered.
25. REFERENCE DATE
25.1 This Agreement is dated for reference the 23rd day of April, 1999,
but will become binding as of the date of execution and delivery by all parties
hereto and subject to compliance with the terms and conditions hereof, the
transfer and possession of the Business Assets will be deemed to take effect as
at the close of business on the Closing Date.
26. REFERENCES TO AGREEMENT
26.1 The terms "this Agreement", "hereof", "herein", "hereby",
"hereto", and similar terms refer to this Agreement and not to any particular
clause, paragraph or other part of this Agreement. References to particular
clauses are to clauses of this Agreement unless another document is specified.
27. DISCLOSURE
27.1 The Vendor acknowledges that the Purchaser is a publicly traded
Company and as a result must publicly disclose information with respect to this
Agreement and the transactions contemplated herein. The Vendor agrees to
cooperate with the Purchaser in this regard to the extent required by the
Purchaser and any applicable regulatory body and hereby consents to public
disclosure of the terms of this Agreement and the transactions contemplated
herein.
IN WITNESS WHEREOF the parties have executed and delivered these presents on
April _____, 1999.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
Per: /s/ signed
Authorized Signatory
SUNCOM TELECOMMUNICATIONS INC.
Per: /s/ signed
Authorized Signatory
)
SIGNED, SEALED AND DELIVERED by ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the presence of:. )
)
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . )
------------------------------------------------------------------ )
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
▇▇▇▇ ▇. ▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . )
------------------------------------------------------------------ ) /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Print Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) -----------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ #▇▇▇▇ ) ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------------------------------ )
Address. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ )
------------------------------------------------------------------ )
VP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
------------------------------------------------------------------ )
Occupation . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
)
SIGNED, SEALED AND DELIVERED by ▇▇▇▇▇▇▇ ▇▇▇▇▇ in the presence of:. )
)
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . )
------------------------------------------------------------------ )
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
▇▇▇▇ ▇. ▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . )
------------------------------------------------------------------ ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Print Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . ) -----------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ #1905) ) ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------------------------------ )
Address. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ )
------------------------------------------------------------------ )
VP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
------------------------------------------------------------------ )
Occupation . . . . . . . . . . . . . . . . . . . . . . . . . . . . )
LIST OF SCHEDULES
Schedule Description
1 Financial Statements
2 Leased Real Property
3 Machinery and Equipment
4 Material Contracts
5 Intellectual Property
6 Consents
7 Assumed Indebtedness
SCHEDULE 1
FINANCIAL STATEMENTS
(See attached)
SCHEDULE 2
LEASED PROPERTY
(See attached)
SCHEDULE 3
MACHINERY AND EQUIPMENT
(See Attached)
SCHEDULE 4
MATERIAL CONTRACTS
1. Lease Agreement, dated January 26, 1998, between OEC Building, L.L.C. and
Internet Presence Coordinators, Inc.
2. Lease Agreement, dated January 8, 1998, between G-▇▇▇▇ Leasing Ltd. and
Internet Presence Coordinators, Inc.
3.
SCHEDULE 5
INTELLECTUAL PROPERTY
1. Unregistered trademark "▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇".
2. Domain Names registered with Network Solutions, Inc. (InterNic):
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇-▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
3. Any software associated with or used in connection with the Business.
4. Any source code prepared on behalf of the Business.
SCHEDULE 6
CONSENTS
1. Consent of ▇▇ ▇▇▇▇▇ ▇▇, L.P. regarding the assignment of the Lease
Agreement, dated January 26, 1998, between OEC Building, L.L.C. and Internet
Presence Coordinators, Inc.
2. Consent of G-▇▇▇▇ Leasing Ltd. Lease Agreement, dated January 8, 1998,
between G-▇▇▇▇ Leasing Ltd. and Internet Presence Coordinators, Inc.
3. Discharge of Internet Presence Coordinators, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇ with
respect to any continuing liability regarding the ▇▇▇▇ ▇▇▇▇▇▇ Bank Line of
Credit.
SCHEDULE 7
ASSUMED INDEBTEDNESS
1. The following indebtedness to American Express Capital Finance in
connection with the purchase of Equipment for the Business:
$1812.36 payable in monthly instalments of $61.05 until February, 2001
$3363.38 payable in monthly instalments of $114.79 until April, 2001
$10,345.20 payable in monthly instalments of $353.07 until April, 2001
2. Indebtedness of $18,044.00 to Citibank Visa of ▇▇▇▇▇▇▇ ▇▇▇▇▇ in
connection with the purchase of Equipment for the Business.
3. Current accounts payable of $10,291.