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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
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1. PURCHASE AND SALE OF ASSETS
1.1 Description of Assets
2. PURCHASE PRICE AND ALLOCATION
3. PAYMENT OF THE PURCHASE PRICE
3.1 Purchase Price
3.2 Vendor Goods and Services
4. ASSUMPTION OF LIABILITIES
5. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
5.1 Capacity to Sell
5.2 Authority to Sell
5.3 Sale Will Not Cause Default
5.4 Assets
5.5 Intangible Property
5.6 Material Change
5.7 Litigation
5.8 Conformity with Laws
5.9 Terms of Employment
5.10 Material Contracts
5.11 No Defaults
5.12 Deferred Revenue
5.13 Accuracy of Representations
6. COVENANTS OF THE VENDOR
6.1 Conduct of Business
6.2 Access by Purchaser
6.3 Taxes
6.4 Termination of Employees
6.5 Exclusivity
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
7.1 Status of Purchaser
7.2 Authority to Purchase
8. COVENANTS OF THE PURCHASER
8.1 Offer Employment
8.2 Consents
9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
9.1 Survival of Representations, Warranties and Covenants
9.2 Indemnification
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10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER
10.1 Vendor's Representations and Warranties
10.2 Vendor's Covenants
10.3 Vendor's Certificate
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE VENDOR
11.1 Purchaser's Representations and Warranties
11.2 Purchaser's Covenants
12. CLOSING
12.1 Closing Date
12.2 Place of Closing
12.3 Documents to be Delivered by the Vendor
12.4 Documents to be Delivered by the Purchaser
13. RISK OF LOSS
14. FURTHER ASSURANCES
15. SET-OFF
16. NOTICE
17. ENTIRE AGREEMENT
18. TIME OF THE ESSENCE
19. APPLICABLE LAW
20. MEDIATION AND ARBITRATION
21. SUCCESSORS AND ASSIGNS
22. HEADINGS
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THIS AGREEMENT is made May 8, 2007.
BETWEEN:
SEMOTUS SOLUTIONS INC. WITH OFFICES LOCATED AT SUITE 202, 718
UNIVERSITY
AVE., LOS GATOS, CALIFORNIA 95032
(the "Vendor")
AND:
STOCKGROUP SYSTEMS LTD., WITH OFFICES LOCATED AT SUITE 500 - 750
WEST
PENDER STREET, VANCOUVER, B.C. V6C 2T7
(the "Purchaser")
BACKGROUND
A. The Vendor carries on the business of providing software for
wireless
enterprise applications, more specifically the Vendor's software
connects
customers wirelessly to critical business systems, information
and
processes (the "Vendor's Business").
B. The Vendor has agreed to sell, and the Purchaser has agreed to
purchase,
subject to certain exceptions listed in this Agreement, certain
assets and
undertakings of the Vendor's Business related to its financial
data
wireless services and software (the "Vendor's Financial Data
Business") on
the terms and subject to the conditions provided in this
Agreement.
TERMS OF AGREEMENT
In consideration of the premises and the covenants, agreements,
representations,
warranties and payments contained in this Agreement, the parties
agree with the
others as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 DESCRIPTION OF ASSETS
Upon the terms and subject to the conditions of this Agreement, the
Vendor
agrees to sell, assign and transfer to the Purchaser, and the
Purchaser agrees
to purchase from the Vendor at Closing, the undertaking and certain
assets of
the Vendor's Financial Data Business, including, without limiting
the foregoing:
(a) all contracts, engagements or commitments to which the Vendor
is entitled
in connection with the Vendor's Financial Data Business, and in
particular
all right, title and interest of the Vendor in, to and under the
material
agreements and contracts (the "Material Contracts") described in
the
Schedule of Material Contracts;
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(b) all right and interest of the Vendor to all registered and
unregistered
trademarks, trade or brand names, copyrights, designs,
restrictive
covenants, domain names, proprietary software (including source
code) and
other industrial or intellectual property used in connection with
the
Vendor's Financial Data Business (the "Intangible Property"),
including,
without limitation, the intangible property described in the
Schedule of
Intangible Property; and
(c) the accounts receivable and all other debts owed to the Vendor
in
connection with the Vendor's Financial Data Business. The
accounts
receivable of the Business as of Closing ("Closing Accounts
Receivable")
shall remain the property of the Vendor. Closing Accounts
Receivable shall
be accounted for on a basis consistent with past practices of the
Vendor's
Financial Data Business in recognizing sales and billings. Vendor
shall
have the right to allow the Vendor's Financial Data Business to
continue to
receive and collect Closing Accounts Receivable in the ordinary
course of
business. Purchaser shall use commercially reasonable efforts to
collect
the Closing Accounts Receivable and promptly (end of each month)
remit such
collections to the Vendor. Following a period of 120 days from the
Closing,
the Purchaser shall remit back to the Vendor any uncollected
Closing
Accounts Receivable balance and records and the Vendor shall have
the right
to pursue commercially reasonable collection efforts against such
customers
for the outstanding Closing Accounts Receivable amounts still
owed.
all of which are collectively called the "Assets".
2. PURCHASE PRICE AND ALLOCATION
The purchase price payable by the Purchaser to the Vendor for the
Assets will be
up to Three-Hundred Fifty Thousand Dollars (USD$ 350,000).
3. PAYMENT OF THE PURCHASE PRICE
3.1 PURCHASE PRICE
The purchase price shall be paid and satisfied as follows:
(a) The Purchase Price shall be up to a total of USD$350,000 (Three
Hundred and
Fifty Thousand Dollars) for the Assets, payable as follows:
(i) USD$150,000 (One Hundred Fifty Thousand) payable by certified
cheque,
wire transfer or bankers draft payable to or to the order of
the
Vendor and delivered at the Closing; and
(ii) 30% of Gross Revenue payable monthly to the Vendor, up to a
total of
$200,000 (Two Hundred Thousand Dollars) as defined in 3(c) below.
If
Gross Revenue falls below twenty-five (25%) within six (6) months
of
Closing, fifteen percent (15%) per month of Gross Revenue will
be
payable to the Vendor, up to a total of $200,000.
(b) The Purchase Price shall be deemed paid in full if any of the
following
events occur:
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(i) Gross Revenue falls below USD$15,000 (Fifteen Thousand Dollars)
a
month; or
(ii) USD$200,000 (Two Hundred Thousand Dollars) in fees have been
paid; or
(iii) Two years from the Closing Date.
(c) Gross Revenue shall mean total revenues (as determined in
accordance with
the generally accepted accounting principles) that are earned by,
or
generated from the Vendor's Financial Data Business, and including
the
amount paid on behalf of subscribers for per device and/or per
quote stock
exchange fees up to a maximum total of USD$2500 a month.
(d) Purchaser shall pay to the Vendor all monthly data feed costs
per month for
the Transition Services Period in accordance with the Transition
Services
Agreement, attached hereto and incorporated herein.
(e) Vendor shall pay to Purchaser all fees collected by the Vendor
as it
relates to a Vendor's customer that refuses assignment of a
Material
Contract to the Purchaser. Vendor shall maintain the right to
invoice the
customer under the existing agreement and remit all monies
collected under
the agreement to the Purchaser.
3.2 VENDOR GOODS AND SERVICES
As part of the Purchase Price, the Vendor shall provide the
following:
(i) moving and functioning set-up of the production environment to
the
Purchaser's facility located at 11460 Cronridge Drive, Owings
Mills,
MD, U.S.A.; and
(ii) two key employees, as listed in the Schedule 3.2(ii) attached
hereto
and incorporated herein, (the "Key Employees") will be hired
directly
by Purchaser.
4. ASSUMPTION OF LIABILITIES
4.1 ASSUMED INDEBTEDNESS
Purchaser shall be responsible for liabilities under any of the
Material
Contracts after the Closing (described in Section 12 below). All
other
obligations and liabilities of Vendor shall be expressly excluded.
Vendor shall
be responsible for all liabilities and administrative obligations
related to the
Vendor's Financial Data Business for the period up to and including
the Closing
(collectively, the "Assumed Indebtedness") and the Vendor shall
indemnify and
save the Purchaser harmless from all claims, demands, suits and
actions in
respect of the Assumed Indebtedness.
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4.2 OTHER OBLIGATIONS
On and after closing the Purchaser shall assume, perform and
discharge all
obligations arising under the Material Contracts (except as
provided in section
4.3) and all other contracts, commitments or engagements which are
entered into
by the Vendor between the date of this Agreement and closing in the
ordinary
course of the Vendor's Financial Data Business and which are not
prohibited by
this Agreement or are consented to in writing by the Purchaser, and
the
Purchaser shall indemnify and save the Vendor harmless from all
claims, demands,
suits and actions under the Material Contracts in respect of events
after
closing.
4.3 RELEASE OF VENDOR
At or before the Closing the Purchaser shall execute and deliver
all such
covenants and assurances with respect to the Assumed Indebtedness
and with
respect to the obligations assumed under section 4.2 as may
reasonably be
required as a condition to the release of the Vendor from any
liability in
respect of the Assumed Indebtedness.
5. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor represents and warrants to the Purchaser as follows,
with the intent
that the Purchaser will rely on these representations and
warranties in entering
into this Agreement, and in concluding the purchase and sale
contemplated by
this Agreement.
5.1 CAPACITY TO SELL
The Vendor is a corporation duly incorporated, validly existing and
in good
standing under the laws of Nevada with respect to the filing of
annual reports,
and has the power and capacity to own and dispose of the Assets and
to carry on
the Vendor's Business as now being conducted by it, and to enter
into this
Agreement and carry out its terms to the full extent.
5.2 AUTHORITY TO SELL
The execution and delivery of this Agreement and the completion of
the
transaction contemplated by this Agreement have been duly and
validly authorized
by all necessary corporate action on the part of the Vendor, and
this Agreement
constitutes a legal, valid and binding obligation of the Vendor
enforceable
against the Vendor in accordance with its terms except as may be
limited by laws
of general application affecting the rights of creditors.
5.3 SALE WILL NOT CAUSE DEFAULT
Neither the execution and delivery of this Agreement nor the
completion of the
purchase and sale contemplated by this Agreement will:
(a) violate any of the terms and provisions of the memorandum or
articles
of the Vendor, or any order, decree, statute, by-law,
regulation,
covenant or restriction applicable to the Vendor or any of the
Assets;
(b) give any person the right to terminate, cancel or remove any of
the
Assets, except to the extent that the consents of the other parties
to
the Material Contracts are required to assign the Material
Contracts;
or
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(c) result in any fees, duties, taxes, assessments or other
amounts
relating to any of the Assets becoming due or payable by the
Purchaser
in connection with the purchase and sale.
5.4 ASSETS
The Vendor owns and possesses and has a good marketable title to
the Assets free
and clear of all mortgages, liens, charges, pledges, security
interest,
encumbrances and other claims except as described in the Schedule
of Material
Contracts.
5.5 INTANGIBLE PROPERTY
The Schedule of Intangible Assets is a true and correct listing of
all
Intangible Property and the Vendor owns and possesses the
Intangible Assets free
and clear of any and all encumbrances.
5.6 MATERIAL CHANGE
Since the date of the Letter of Intent there has not been and
change to the
Assets as described in Section 1.1 of this Agreement.
5.7 LITIGATION
There is no litigation or administrative or governmental proceeding
or inquiry
pending, or to the knowledge of the Vendor, threatened against or
relating to
the Vendor, the Vendor's Business or any of the Assets, nor does
the Vendor know
of any reasonable basis for any such action, proceeding or
inquiry.
5.8 CONFORMITY WITH LAWS
All governmental licences and permits required for the conduct in
the ordinary
course of the operations of the Vendor's Business and the uses to
which the
Assets have been put, have been obtained and are in good standing
and such
conduct and uses are not in breach of any order, decree, statute,
by-law,
regulation, covenant, restriction, plan or permit, including those
regulating
the discharge of materials into the environment and the storage,
treatment and
disposal of waste or otherwise relating to the protection of the
environment and
the health and safety of persons. For greater certainty, the Assets
have not
been used in a manner which does or will give rise to any
obligation of
restoration or removal or any liability for the costs of
restoration or removal
or for the payment of damages to any third party.
5.9 TERMS OF EMPLOYMENT
The Vendor is not a party to any collective agreement relating to
the Vendor's
Business with any labour union or other association of employees,
and no part of
the Vendor's Business has been certified as a unit appropriate for
collective
bargaining. The Vendor's Business has employees and group employee
termination
legislation would not apply to a termination of all employees at
one time.
Additionally, the Key Employees may be dismissed on one year's
notice or less,
without further liability.
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5.10 MATERIAL CONTRACTS
The Schedule of Material Contracts contains a true and correct
listing of each
written or oral contract of the following types to be acquired or
assumed by the
Purchaser:
(a) contracts or commitments out of the ordinary course of
business;
(b) contracts or commitments involving an obligation to pay in
the
aggregate $100 or more or of a duration greater than one year;
(c) contracts or commitments in respect of the Intangible
Property;
(d) except as required by statute or regulation, contracts or
commitments
in respect of bonuses, incentive compensation, pensions, group
insurance or employee welfare plans, all of which are fully funded
as
determined by an independent and reputable firm of actuaries
employed
by the Vendor;
(e) employment co
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