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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
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