ASSET SALE, PURCHASE AND TRANSFER AGREEMENT

ASSET SALE, PURCHASE AND TRANSFER AGREEMENT

 

 

This Asset Sale, Purchase and Transfer Agreement (this "Agreement") is made between MIAD Systems LTD, a Canada corporation  ("Seller"), and  MIAD INFORMATION SYSTEMS LTD. ("Buyer").

 

 

RECITALS:

 

 

A.  Seller currently owns or leases certain assets that are used in the conduct of Seller's computer distribution and  custom assembled personal computer system business located exclusively in Ontario, Canada (“Business”).

 

B.  Prior to the Closing Date, Seller may:  (i) transfer to BUYER all of its assets in the Business, and (ii) transfer to BUYER and BUYER, respectively accepts, all rights, liabilities and obligations of MIAD with respect to the assets transferred to them.  Notwithstanding the foregoing transfers, Seller shall be bound by the covenants made by and obligations imposed on Seller in this Agreement and shall be entitled to exercise the rights granted to Seller in this Agreement.  

 

It is therefore agreed as follows:

 

Definitions.  As used herein, the following terms shall have the following meanings:

 

A.  Assets.  The term "Assets" shall mean all of the rights, properties, and assets used in the conduct of the Seller's Business (including, without limitation, the real and personal property, Facility, Contracts, and other items and leases described in Sections 1.1, 1.2, 1.3, and 1.4.

 

B.  Contracts.  The term "Contracts" shall mean the contracts and leases (except for the long term leases described in Section 1.3), which are described in Sections 1.1 and 1.2 and 1.4.

 

C.  Closing.  The term "Closing" or "Closing Date" shall have the meaning ascribed to it in Section 3.1.

 

D.   Material Adverse Effect.  The term "Material Adverse Effect" shall mean events which have an adverse effect in the aggregate which, measured in dollars, exceeds the sum of $15,000.

 

E.  Material Contract.  The term "Material Contract" shall have the meaning ascribed to it in Section 5.3.

 

F.  Proration Date.  The term "Proration Date" shall mean the specific date set for Closing in Section 3.1, or any subsequent date set for Closing, provided that the actual date of Closing occurs within five (5) business days after said date set for Closing.

 

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G.  Affiliate of Seller.  The term "Affiliate of Seller" shall mean (i) any individual, partnership, corporation, or other entity or person which is owned or controlled directly or indirectly by Seller; (ii) any other individual, partnership, corporation, or other entity or person which controls or is controlled by or under common control with Seller; and (iii) any officer, director, partner, or owner of 10 percent or greater equity or voting interest in any such other corporation, partnership, or other entity or person.

 

H.  Code.  The term "Code" shall mean the Internal Revenue Code of 1986, as amended.

 

I.  Designee.  The term "Designee" shall mean a person designated by Buyer to whom particular Assets are to be transferred by Seller at Closing.  Buyer shall specify each Designee and Assets to be transferred to such Designee to Seller at least fifteen (15) business days in advance of Closing for purposes of the conveyance instruments described in Section 3.4, and shall specify each potential Designee and Assets to be transferred to such Designee to Seller within three (3) weeks of mutual execution of this Agreement for purposes of requesting consents for assignments of Contract, permits, licenses, and Long Term Leases.  Buyer may designate one or more of its subsidiaries and up to three additional persons or entities as Designees.  

 

J.  Agreement.  The term "Agreement" shall mean this instrument and all

Schedules and Exhibits attached hereto.

 

1.  Sale, Purchase and Transfer of Assets.

 

    Subject to the terms and conditions of this Agreement, at the Closing referred to herein, Seller agrees to sell, transfer and assign and Buyer agrees to purchase and accept on the terms stated herein, all of Seller's right, title and interest in and to the Assets, including, without limitation, the following:

 

        1.1  Real Property.  

 

          (a).  Any and all real property of Seller.

 

(b).  Buildings, Improvements and Easements. All buildings and improvements, all roads, bridges, permits, servitudes, and easements, owned or leased by Seller or which Seller has a right to use and on or appurtenant to the Properties.

 

(c).  Other Rights.  All other contracts and rights specifically relating to the Timberland Properties and operations thereon including, but not limited to, contracts, contract rights, leases, servitudes, permits, licenses, notifications, approvals and authorizations of governmental bodies, to the extent assignable.

 

         1.2  Personal Property. All of the personal property of Business, shall be transferred, sold and assigned to Buyer, including, without limitation, the following:

 

(a).  Records. Seller's management and other records relating to the Business and other Assets which, in the reasonable judgment and discretion of Seller, are

 

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segregated or segregatable by Seller from the overall records of Seller, including but not limited to inventory systems, hardware, software, records, customer lists, computers, office equipment and furniture.

 

(b).  Mobile Equipment, Machinery and Equipment.  The mobile equipment, machinery, equipment, tools, fixtures and furniture used  by Seller exclusively or primarily in connection with the Business as such items listed thereon may have been sold, replaced, deleted or added in the ordinary course of business, together with certificates of title for motor vehicles which are licensed and owned by Seller.

 

(c).  Office Supplies.  The office supplies and forms, packaging materials and similar miscellaneous tangible personal property used by Seller exclusively or primarily in connection with the Business.

 

(d).  Contracts.  All rights and obligations under those instruments not related to real property, including the contracts, leases, permits and licenses to the extent the same are assignable, including sales orders and commitments, purchase orders and commitments, agreements and contracts of Seller which relate to work or services to be performed for the Business or Assets.

 

(e).  all of Seller's bank accounts, depository accounts, lockbox and other accounts and deposit books and all cash therein, and all other cash, cash equivalents, and securities, including securities of Affiliates of Seller;

 

          (f).  pension, retirement savings or other funded employee benefit

plan assets of Seller or the Business;

 

(g).  tax refunds, security deposits and pledges and releases thereof, bonds and undertakings and releases thereof, all prepaid and deferred items (including prepaid rent and other prepaid expenses) and other credits, reimbursements and refunds to be made by third parties to Seller attributable in each case to periods prior to the Closing Date, whether such credits, reimbursements and refunds occur before or after the Closing Date;

 

(h).  accounts receivables reflected on Seller's books for goods invoiced, shipped, or delivered, and advance payments generated or incurred by or in connection with the (including allowances for deductions from remittances, employee advances, rebates, receivables, deposits on bids) and other receivables and claims including claims against third parties which arise from acts or events occurring prior to the Closing Date;

 

(i).  minute books, stock ledger records and related corporate records and partnership records of the Seller, or Affiliates of Seller, and all trade marks, trade names, and logos owned by Seller, and intellectual ;

 

(j).  any insurance policies, premiums, refunds and proceeds relating to the Business;

 

 

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(k).  all of Seller's personal property, rights and interests which are related primarily to the headquarters or partnership or corporate management of the Business, including but not limited to the all office equipment, and  machinery, fixtures, furniture, office supplies, all computer hardware, software peripherals, computer programs and supplies, and computer licenses relating to the foregoing items, and all other similar personal property, rights and interests located at the Business.

    

(l).  all personal property which is owned by a third party but not leased by Seller which is in the custody of Seller, together with all other non-operating assets owned by any Affiliate of Seller which may be held by Seller.

 

          1.3  Assignment of Contracts.

 

(a).  Contracts Assignable Without Consent.  Seller agrees to assign or cause to be assigned to Buyer or a Designee, as of the Closing, all of the rights of Seller under the Contracts that are assignable without consent of any third party and Buyer shall assume, as of the Closing, all obligations of Seller thereunder which arise before, at or after Closing.

 

(b).  Seller to Use Reasonable Efforts.  Anything in this Agreement to the contrary notwithstanding, Seller shall not be obligated to sell, assign, transfer or convey or cause to be sold, assigned, transferred or conveyed to Buyer or a Designee, if applicable, any of its rights in and to any of the Contracts without first obtaining all necessary approvals, consents or waivers.  Seller shall use all reasonable efforts, and Buyer shall reasonably cooperate with Seller, to obtain all necessary approvals, consents or waivers, or to resolve any impracticalities of transfer necessary to assign or convey to Buyer or a Designee, if applicable, each such Contract as soon as practicable; provided, however, that neither Seller nor Buyer shall be obligated to pay any consideration therefor except for filing fees and other ordinary administrative charges which shall be paid by Seller to the third party from whom such approval, consent or waiver is requested.  Such approvals, consents, and waivers shall be in favor of both Buyer and, if applicable, a Designee.  In the event Seller obtains consent to assignment of a Contract prior to the Closing, Buyer shall assume, as of Closing, all obligations of Seller thereunder which arise before, at or after the Closing, as though no consent was required.

 

(c).  If Waivers or Consents Cannot be Obtained.  To the extent that any of the approvals, consents or waivers referred to in have not been obtained by Seller as of the Closing, or until the impracticalities of transfer are resolved, Seller shall, during the remaining term of such Contracts, use all reasonable efforts to (i) obtain the consent of any such third party with the filing fees and ordinary administrative charges payable to such third party to be split equally by the parties; (ii) cooperate with Buyer in any reasonable and lawful arrangements designed to provide the benefits of such Contracts to Buyer or a Designee, if applicable, so long as Buyer fully cooperates with Seller in such arrangements; and (iii) enforce, at the request of Buyer and at the expense and for the account of Buyer, any rights of Seller arising from such Contracts against such issuer thereof

 

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or the other party or parties thereto (including the right to elect to terminate any such Contracts in accordance with the terms thereof upon the request of, and indemnification from, Buyer).

 

(d).  Non-assignability.   The rights and obligations of either party is not capable of being sold, assigned, transferred or conveyed without the approval, consent or waiver of the issuer thereof or the other party thereto, or any third person (including a government or governmental unit), or if such sale, assignment, transfer or conveyance or attempted assignment, transfer or conveyance would constitute a breach thereof or a violation of any law, decree, order, regulation or other governmental edict, this Agreement shall not constitute a sale, assignment, transfer or conveyance thereof, or an attempted assignment, transfer or conveyance thereof.

 

          1.4  Transferring Permits and Licenses.  Seller will assign, transfer or convey, or cause to be assigned, transferred or conveyed to Buyer or a Designee, if applicable, at the Closing those permits and licenses, to the extent that any Contract or any claim, right or benefit arising thereunder are held or used by the Seller in connection with the Assets and which can be assigned without having to obtain the consent of any third party with respect thereto.  Seller will cooperate with Buyer in obtaining any third party consents necessary to the assignment or transfer of any other permits or licenses used or held by Seller in connection with the Assets which are so assignable or transferable; however, neither Seller nor Buyer shall be obligated to pay any consideration therefor except for filing fees and other ordinary administrative charges which shall be paid by Buyer to the third party from whom such approval, consent or waiver is requested.  Buyer shall assume, as of Closing, all obligations of Seller arising prior to, at or after Closing under those permits and licenses which can be transferred without having to obtain the consent of any third party and those permits and licenses for which consent to transfer is obtained prior to Closing.  Subsequent to the Closing, to the extent permitted by law, upon ninety (90) days prior written notice, Seller shall have the right to cancel any permits or licenses or any bonds, guarantees or undertakings by Seller applicable to the Assets or the

Business to the extent such are not so assigned or transferred to Buyer or to a Designee pursuant to this Section.

 

          1.5.  Liabilities Assumed by Buyer; Liabilities Not Assumed by

Buyer.  

 

(a).  Assumed Liabilities.  Buyer shall, effective as of the Closing and without any further responsibility or liability of or recourse to Seller, or its directors, shareholders, officers, partners, employees, agents, consultants, representatives, successors, transferees or assignees, absolutely and irrevocably assume and shall be liable and responsible for the claims, liabilities, and obligations of Seller with respect to the Business, whether or not disclosed to Buyer, and whether or not occurring or arising prior to, at or after Closing.

 

          

Without limiting the foregoing, Buyer shall assume the following:

 

 

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(i).  Buyer shall assume the Long Term Leases of the Company and all other Contracts assigned to Buyer or a Designee pursuant to permits and licenses assigned to Buyer;

 

(ii).  Buyer shall assume the employee matters that include but are not limited to contracts, benefits, stock option plan and other benefits, insurance, health care, dental and other plans;

 

(iii.) Buyer shall assume all undertakings of, and liabilities and obligations of Seller included all notes, loan payable, accounts payable and accrued liabilities, and all supplier contracts including Ingram Micro Canada, Inc. and Synnex Canada, Inc.

 

(iv)  trade accounts payable for items purchased and delivered as of the Closing Date, and all accrued expenses of the type set forth or under generally accepted accounting principles should be, accrued at Closing;

 

                      (v)  all liabilities and obligations for taxes;

 

                      (vi)  all liabilities and obligations of Seller to any Affiliate of Seller;

 

                      (vii)  any liabilities or obligations to or with respect to employees of Seller;

 

(viii)  any obligations for borrowed funds which seller has disclosed; the term "borrowed funds" shall not be construed to include purchase money contracts and similar security interests for personal property;

 

(ix)  all bodily injury claims occurring on or in connection with the Assets prior to Closing and all product liability claims arising from sale or operation of the Assets prior to Closing;

 

(x)  all undertakings of, and liabilities and obligations assumed by, BUYER, and all indemnity obligations of BUYER, contemplated by or set forth in the Transaction Agreement/Undertaking, except for the undertakings, assumed liabilities and obligations, and indemnity obligations described in this Agreement.

 

2.  Purchase Price.  Subject to adjustment in accordance with the provisions of this Agreement, the purchase price for the Assets ("Purchase Price") shall be the dollar value by which Seller's assets exceed Seller's liabilities on the date of closing. Buyer will pay the difference to Seller. If Seller's liabilities exceed Seller's assets on the date of closing, Buyer will assume the additional liabilities without further consideration.

 

3.  Closing.

 

         

3.1  Date of Closing.  The Closing shall take place at the offices of Seller at 43 Riviera Drive, Unit 6, Markham, Ontario, Canada. or at such other place as the parties may agree in writing, on October 10, 2006, unless an earlier or later date are mutually

 

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designated by Seller and Buyer.  The foregoing date is the date on which the Seller's deed(s) to Buyer and any Designees are to be recorded immediately prior to the delivery of the Purchase Price to Seller and is referred to in this Agreement as the "Closing" or "Closing Date".  Seller shall deliver possession of the Assets to Buyer on the Closing Date.

 

    3.2  Documents to be Delivered by Seller .  At or prior to the Closing, Seller shall deliver, or cause to be delivered, the following:

 

(a).  documents of transfer, bills of sale, certificates of title and other instruments of transfer, dated the Closing Date, transferring to Buyer and any Designees title to the Assets.

 

(b).  documents evidencing the assignment and assumption of the Contracts to Buyer or a Designee (together with any third-party consents required for such transfers) and the assignment and assumption of any permits and licenses (together with any third-party consents required for such transfers) not transferred pursuant to Section 3.4(a), and the Assignment, Acceptance, and Assumption Agreement described in Section 1.8;

 

          

3.3  Documents to be Delivered by Buyer.  At or prior to the Closing Date, Buyer shall deliver the following:

 

(a).  documents evidencing the assignment and assumption of all Contracts and the assignment and assumption of all permits and licenses transferred by Seller to Buyer pursuant to Section 3.

 

(b).  a copy of the resolutions of the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement by Buyer.

 

3.4 Transfer Taxes; Prorations.  Any recording fees, transfer taxes, or sales taxes payable as a result of the sale of the Assets shall be paid by Seller.

 

4. Conduct of the Seller Pending Closing.

 

(a)  Between the date hereof and the Closing Date, Seller shall continue to    operate the Business in the ordinary course and in a manner reasonably consistent with its present operating plan.  

 

(b)  Seller will not take any action, (I) the result of which will be to create a Material Adverse Effect on the value of the Assets, or (ii) which is both not reasonably consistent with its normal operating plan and not in the ordinary course of business, except as otherwise set forth in this Section 4.  

 

(c) Notwithstanding the foregoing, the parties agree that, if the Closing Date is     extended beyond November 1, 2006, Seller shall be deemed to be operating the Business in the ordinary course of business from November 1, 2006, to the date the Closing actually occurs.

 

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5.  Representations of Seller.  Seller represents to Buyer that:

 

5.1

Organization, Standing and Authority.  Seller is a corporation organized,

existing, and in good standing under the laws of Canada.    

 

5.2

Authorization of Agreement; Authority.  The execution, delivery and

 performance of this Agreement by Seller has been duly authorized by all necessary corporate action of Seller, and this Agreement constitutes the valid and binding obligation of Seller, enforceable in accordance with its terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights in general and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding inequity or at law).  The execution, delivery and performance of this Agreement by Seller will not (a) violate or conflict with the Sel