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1.
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Purchase and Sale of Assets
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1.1
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Description of Assets
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2.
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Purchase Price and Allocation
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3.
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Payment of the Purchase Price
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3.1
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Purchase Price
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3.2
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Vendor Goods and Services
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4.
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Assumption of Liabilities
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5.
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Representations and Warranties of the
Vendor
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5.1
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Capacity to Sell
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5.2
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Authority to Sell
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5.3
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Sale Will Not Cause Default
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5.4
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Assets
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5.5
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Intangible Property
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5.6
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Material Change
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5.7
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Litigation
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5.8
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Conformity with Laws
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5.9
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Terms of Employment
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5.10
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Material Contracts
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5.11
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No Defaults
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5.12
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Deferred Revenue
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5.13
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Accuracy of Representations
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6.
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Covenants of the Vendor
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6.1
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Conduct of Business
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6.2
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Access by Purchaser
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6.3
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Taxes
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6.4
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Termination of Employees
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6.5
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Exclusivity
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7.
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Representations and Warranties of the
Purchaser
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7.1
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Status of Purchaser
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7.2
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Authority to Purchase
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8.
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Covenants of the Purchaser
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8.1
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Offer Employment
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8.2
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Consents
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9.
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Survival of Representations, Warranties and
Covenants; Indemnification
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9.1
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Survival of Representations, Warranties and
Covenants
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9.2
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Indemnification
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- 2 -
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10.
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Conditions Precedent to the Obligations of the
Purchaser
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10.1
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Vendor’s Representations and
Warranties
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10.2
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Vendor’s Covenants
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10.3
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Vendor’s Certificate
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11.
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Conditions Precedent to the Obligations of the
Vendor
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11.1
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Purchaser’s Representations and
Warranties
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11.2
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Purchaser’s Covenants
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12.
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Closing
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12.1
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Closing Date
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12.2
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Place of Closing
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12.3
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Documents to be Delivered by the
Vendor
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12.4
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Documents to be Delivered by the
Purchaser
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20.
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Mediation and Arbitration
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21.
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Successors and Assigns
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- 3 -
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
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A.
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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”).
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B.
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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.
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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:
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1.
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Purchase and Sale of Assets
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1.1
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Description of Assets
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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:
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(a)
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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)
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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
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(c)
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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.
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all of which are collectively called
the “Assets”.
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2.
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Purchase Price and Allocation
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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).
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3.
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Payment of the Purchase Price
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The purchase price shall be paid and
satisfied as follows:
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(a)
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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:
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(i)
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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
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(ii)
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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.
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(b)
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The Purchase Price shall be deemed
paid in full if any of the following events occur:
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(i)
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Gross Revenue falls below USD$15,000
(Fifteen Thousand Dollars) a month; or
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(ii)
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USD$200,000 (Two Hundred Thousand
Dollars) in fees have been paid; or
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(iii)
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Two years from the Closing
Date.
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(c)
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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.
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(d)
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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.
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(e)
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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.
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3.2
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Vendor Goods and
Services
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As part of the Purchase Price, the
Vendor shall provide the following:
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(i)
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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
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(ii)
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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.
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4.
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Assumption of Liabilities
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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.
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.
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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.
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5.
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Representations and Warranties of the
Vendor
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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.
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.
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.
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5.3
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Sale Will Not Cause Default
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Neither the execution and delivery of this
Agreement nor the completion of the purchase and sale contemplated
by this Agreement will:
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(a)
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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;
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(b)
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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)
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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.
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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.
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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.
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.
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.
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.
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.
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:
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(a)
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contracts or commitments out of the
ordinary course of business;
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(b)
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contracts or commitments involving an obligation
to pay in the aggregate $100 or more or of a duration greater than
one year;
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(c)
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contracts or commitments in respect of the
Intangible Property;
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(d)
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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;
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(e)
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employment contracts or commitments other than
unwritten employment contracts of indefinite duration entered into
in the ordinary course of the Vendor’s Business;
and
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(f)
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contracts or commitment in respect to vendors of
the Vendor.
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Except as otherwise expressly
disclosed in this Agreement or in any Schedule to this Agreement
there has not been any default in any obligation to be performed
under any Material Contract, each of which is in good standing and
in full force and effect, unamended, except as set forth in the
Schedule of Material Contracts.
There are no deferred revenues or
any other future obligation related to the Vendor’s Financial
Data Business nor does the Vendor know of any reasonable basis for
any such deferred revenue obligation. The Vendor shall indemnify
and save harmless the Purchaser from and against all deferred
revenue obligations related to the Vendor or the Vendor’s
Financial Data Business.
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5.13
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Accuracy of Representations
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No certificate or statement
furnished by or on behalf of the Vendor to the Purchaser at Closing
in respect of the representations, warranties or covenants of the
Vendor will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
misleading.
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6.
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Covenants of the Vendor
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Until Closing, the Vendor shall
conduct the Vendor’s Financial Data Business diligently and
only in the ordinary course and will use its best efforts to
preserve the Assets intact, to keep available to the Purchaser its
present employees and to preserve for the Purchaser its
relationship with its suppliers, customers and others having
business relations with it.
The Vendor shall give to the
Purchaser and Purchaser’s counsel, accountants and other
representatives full access, during normal business hours
throughout the period prior to Closing, to all of the properties,
books, contracts, commitments and records of the Vendor relating to
the Vendor’s Financial Data Business and the Assets, and
shall furnish to the Purchaser during that period all such
information as the Purchaser may reasonably request.
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The Vendor has withheld and paid all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party pertaining to the
Assets or otherwise pertaining to the Vendor’s Financial Data
Business.
The Vendor shall diligently take all
reasonable steps required to obtain all consents to the assignments
of the Material Contracts and any other of the Assets for which a
consent is required.
The Sellers will not:
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(a)
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solicit, initiate, or encourage the
submission of any proposal or offer from any entity or person
relating to the acquisition of the Assets or any substantial
portion of the Assets.
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(b)
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The Vendor will notify Stockgroup
immediately if any entity or person makes any proposal, offer,
inquiry, or contact with respect to any of the
foregoing.
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7.
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Representations and Warranties of the
Purchaser
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The Purchaser represents and
warrants to the Vendor as follows, with the intent that the Vendor
will rely on these representations and warranties in entering into
this Agreement, and in concluding the purchase and sale
contemplated by this Agreement.
The Purchaser is a corporation duly
incorporat
