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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
AXYN CORPORATION
(Name of Small Business Issuer in Its Charter)
STATE OF COLORADO 95-4754179
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number
#201-338 MONTREAL ROAD, VANIER, ONTARIO, CANADA K1L 6B3
(Address of Principal Executive Offices) (Zip code)
(613) 564-2996
(Registrant's Telephone Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title Of Each Class Name Of Each Exchange On Which
To Be So Registered Each Class Is To Be Registered
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.0001
(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS.
Forward Looking Statements
This Item contains forward-looking statements. Please review the information in
light of the risk factors and other cautionary statements identifying important
factors that could cause actual results to differ materially from those in the
forward-looking statements. In particular, please see "Risk Factors" in Item 1.
Currency Conversion.
All monetary amounts are expressed in United States Dollars, unless
specifically indicated otherwise. Where conversion from Canadian Dollars to
United States Dollars has been made, the conversion factor used is one and
one-half Canadian Dollars per one United States Dollar ($C1.50=$US1.00).
Business Development.
AXYN CORPORATION ("AXYN") is a Colorado corporation which owns 100% of
the outstanding shares of AXYN Canada Corporation ("ACC"), a Canadian
corporation, and AXYN TECHNOLOGIES CORPORATION, a Delaware corporation, which
are engaged in the development, marketing, licensing and sales of Y2K products
and services in Canada and the United States, respectively, which are explained
below. AXYN, ACC, and AXYN TECHNOLOGIES Corporation are hereafter referred to
collectively as the "Company".
The Company's Common Stock trades in the over-the-counter market on the
Electronic Bulletin Board ("EBB") under the symbol "AXYN" (previous
symbol:TMPG). AXYN's EBB listing resulted from a reverse share exchange
consummated on June 18, 1998, between ACC, and Thor Management Group, Inc.
("Thor"), which was the EBB listed company. As a result of the transaction, Thor
acquired all of the outstanding Common Stock of ACC and Thor changed its name to
AXYN CORPORATION (pronounced ak-shun).
Thor was incorporated under the laws of the State of Colorado on January
12, 1998 and was established as a real estate management company located at 1422
Delgany Street, Denver, CO. Thor never conducted any business prior to the
exchange of shares.
The Company's US corporate mailing address is AXYN Corporation, 1122
North Stanford Drive, Simi Valley, CA 93065-9455. The Subsidiary's address is
AXYN Canada Corporation, 201 - 338 Montreal Road, Vanier, Ontario, Canada K1L
6B3. Its telephone number is (613) 564-2996 and its fax number is (613)742-6068.
BUSINESS OF ISSUER.
ACC began business as a Year 2000 ("Y2K") solutions supplier for desktop
and embedded systems ("Y2K sectors"). A desktop system is typically a software
system that operates on desk-top computers, including servers, workstations, and
smaller computers. It is typically single-user computer, and may be either
networked or stand alone. These computers are often called "personal computers"
or "PCs". An embedded system is a software system that is embedded directly into
computer chips and is generally not subject to reprogramming. A Y2K problem
arises when dates and date codes in the software systems use only two digits to
identify the year, such "99", for the year 1999, with the first two digits "19"
implied. When the year 2000 commences, some computers and systems will read the
year as "1900" rather than "2000". The wrong date might cause numerous problems.
A system is Y2K compliant when it
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will recognize the right date. The Company established two separate strategies
to develop or acquire products and services for its two Y2K sectors.
Y2K DESKTOP SOLUTIONS The Company identified a requirement for PCs and
network workstations to be Y2K compliant. The Company identified several PC Y2K
vulnerabilities needing assessment and remediation tools. These were: 1)
hardware clocks in PCs, namely the real time clock, the BIOS and the system
clock; 2) operating systems software, such as DOS or Windows; 3) application
programs such as accounting systems and commercial-off-the-shelf software; 4)
custom software programs developed in languages such as C, C++, COBOL,
Microfocus COBOL, Visual Basic and Fortran; and 5) the need to fix data used by
or created from these applications. These potential Y2K failure risks could each
independently or in conjunction with each other cause the PC to malfunction as a
result of Y2K errors.
The Company developed software and acquired intellectual property rights
to tools that addressed these Y2K problems associated with PCs and network
workstations. The Company established a software support center in Ottawa and
manages product development and distribution from this center for its resellers
and customers.
The Company licenses two technologies from MPT Millennium Patent
Technologies Corporation Limited ("MPT"), Date Overloading and the DateManager
2000 product. Date Overloading was licensed to be integrated into a legacy Y2K
product that was abandoned by the Company. No sales were recorded for this
technology. The DateManager 2000 product is available on a CD-ROM and through a
downloadable version on its Web site for general distribution. The Company is
the exclusive distributor for DateManager 2000 in its territory. The Company
pays MPT 16% of net sales proceeds, and a cash fee of $10,000 annually for
upgrades and support. ACC and AXYN Technologies have entered into exclusive
distribution agreements for DateManager 2000 for their respective territories.
Marketing agreements with other vendors of desktop tools are included in a suite
of software tools to be distributed directly to existing large clients and the
tools are also distributed through a network of Canadian resellers and Value
Added Resellers. The principal revenues are generated from the sale of licenses
to these channels. The Company expects that sales of software will peak as the
year 2000 approaches.
The DateManager 2000 product is an assessment tool that analyses
software applications on PCs and compares executable programs and DLLs to a
database of over 23,000 software programs. All software in the DateManager 2000
database has been independently tested and the database is updated monthly.
Users of DateManager 2000 can rerun the software multiple times as they
introduce new software to their PC environment, thus allowing for continual
assessment of the PCs Y2K compliant software programs.
The Company's other PC and Network workstation tools include:
<TABLE>
<CAPTION>
TOOL MANUFACTURER FEATURES COST
<S> <C> <C> <C>
DateManager Pro BCS PC Software Assessment $ 49.95/PC Qty 1
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Evolution2000 The Penton Group PC hardware Fix Program $ 5.00/PC Qty 1
Excelsior Darkstar Systems EXCEL Repair tool $ 149.00/PC Qty 1
Network 2000 Netsuite Network Y2K Assessment $3050.00/Net Qty 1
DateManager 2000 AXYN PC Software Assessment $ 39.95/PC Qty 1
</TABLE>
The Company and its resellers have not been dependent on a single or
narrow customer base, as most commercial and government enterprises have
significant PC Y2K risks.
Y2K EMBEDDED SYSTEMS During the fiscal quarter ending June 30, 1999, the
Company completed the development of its AXYN Corporation Embedded Systems
("ACES") software that allows the Company's engineers to 1) inventory, 2)
assess, 3) recommend, 4) test, and 5) provide contingency plans for
organizations with embedded systems. The ACES is a testing based methodology.
ACES complies to the Institute of Electrical Engineers of the UK (IEE) and the
British Standard Institute definition for Y2K compliance, which is generally
accepted worldwide.
ACES evolved from initial work completed for the World Bank where the
Company, and its affiliate, Axyn Technologies Corporation, a Delaware
corporation, provided on-site per diem personnel to provide embedded systems
analysis to the World Bank's entire office complex including all structures in
the block bordered by 18th, 19th, H and G streets located in Washington DC,
totaling approximately five million square feet of office space. The Company and
Axyn Technology Corporation developed a database program that allows the
embedded systems program manager to collect data on facilities and potential
microprocessor devices and to apply risk priorities that are used to catalogue,
categorize and prioritize risks to organizations with embedded systems.
The Company acquired all of the outstanding stock of Axyn Technology
Corporation in the fiscal quarter ending June 30, 1999. See Part I, Item 7, and
Part II, Item 4.
In the fiscal quarter ending June 30, 1999, the Company bid and won a
supply contract with the Canadian Government giving the Company first rights of
refusal on the Y2K building assets of the Canadian government, coast-to-coast.
While individual departments are required to complete assessments and
contingency plans, all departments coordinate these activities through a central
organization called Public Works and Government Services Canada ("PWGSC"). PWGSC
awarded the Company a blanket Supply Agreement with individual call-ups
(purchase orders) in amounts not to exceed $C200,000. While no ceiling amount
was set in this agreement, the Company expects that quarterly call-ups will
establish a baseline as to the number of buildings to be assessed and ongoing
backlog of work to be completed. Estimates of the government of between 2,000
and 5,000 buildings at an average per building cost of between $C5,000 and
$C10,000 could generate demand in excess of $C5 million should the government
elect to undertake all of this work under the Company's agreement.
The Company, as the prime contractor, working with nine subcontractors
located across Canada, collectively have a team in excess of 700 experienced Y2K
engineers and technicians. This single contract is a significant contract and
the Company's reliance on
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PWGSC and the Canadian Government to undertake this work is critical to the
Company's revenue and earnings in the future. Work was initiated in June, 1999,
and while early in the contract cycle, the Company has received call-ups valued
in excess of $C1,000,000 as of July 31, 1999.
PWGSC received in excess of ten bids for this work. Two other Supply
Agreements were awarded but are subject to the Company having first rights to
complete any and all work, subject to the availability of resources and the
Company's track record in delivery of call-ups to date. Management of the
Company expect that the Company can undertake 200 buildings per month with its
existing team and the Company has identified other subcontractors that could
increase its delivery capacity to over 500 buildings per month. Gross margins on
Y2K embedded services are expected to exceed 30% for direct work and 25% on
subcontracted work. The Company is responsible for program management, which
includes scheduling and coordination of all project tasks, contract work,
logistics and report coordination.
In addition to the Company's Y2K business unit, the Company has
established additional business lines: Systems Integration; Mobile
Communications and Computing; and the Internet/e-Commerce business unit. These
are described below.
SYSTEM INTEGRATION - In November, 1998, the Company acquired Burlington
Systems Integration, a systems integration company with offices located in
Toronto, Canada. Established in 1993, Burlington Systems Integration provided
systems integration, network management, and hardware and software
implementation services to both public and private sector clients. As part of
the Company, the Toronto office of Burlington Systems Integration will oversee
the systems integration opportunities for the Company. As a complement to
systems integration, network management, and hardware and software
implementation services, the Company has established a hardware commodity
brokerage capability providing for the resale of high volume computer systems,
components and parts to large integrators and end-users seeking access to volume
buying channels. The Company maintains technical and sales reseller status with
leading technology suppliers and companies. Currently the Company has
established reseller relationships with Microsoft, IBM, Hewlett-Packard, Sun
Microsystems, Merisel, Ingram and Corel.
MOBILE COMMUNICATIONS AND COMPUTING - In the fiscal quarter ending June
30, 1999, the Company acquired a controlling interest in SYSCAN International
through the acquisition of 57.6% of the shares of the Corporation held by it's
founder, Mr. Daniel C. Benoit. SYSCAN is a manufacturer of mobile communications
and computing devices such as rugged printers, cradles for cellular
communication devices, global positioning system equipment, data capture devices
such as scanners and optical readers, and specialized software for
communications and routing of mobile assets such as trucks and automobiles.
SYSCAN, a public company on the Canadian Dealers Network (CDN), symbol `SYSN',
had completed development of a number of products and sought a partner to
provide, sales, marketing, and financial support to launch its latest products.
The Company seeks to develop total turnkey solutions for large government and
Fortune 500 clients who require a solutions company to build systems to manage
and control their mobile assets.
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The Company has established a business plan to develop its mobile
communications and computing ("MC&C") business in fiscal year 2000 and expects
revenues from this business to be a significant portion of the Company's overall
revenues within three years. The Company will utilize existing sales channels to
develop MC&C solutions and will seek government, commercial and industrial
contracts in the areas of public safety and security, logistics, healthcare and
distance education sectors.
In discussion with SYSCAN's original equipment manufacturer ("OEM")
customers, the Company has established that traditional equipment suppliers to
MC&C markets, such as TELXON, PSION, NORAND/INTERMEC, TEKLOGIX and SYMBOL, seek
integrators to build "total solutions" for their customers. These OEMs have
strong customer loyalties and seek to apply the latest technology innovations to
gain competitive advantage for their products. The Company seeks to build on
these relationships to deliver unique "made by AXYN" solutions to satisfy the
need to utilize the latest MC&C hardware and software solutions. Existing
clients of SYSCAN and the Company's OEM customers include Coca Cola, Pepsi,
McDonalds, Bell, Wal-Mart, Giant Tiger, A & P, Randalls, Walgreens, Labatts and
others.
The Company believes that the accelerating growth in the MC&C market
offers the Company and its shareholders opportunities for growth in the future.
Many companies and service organizations are turning to mobile technologies to
improve performance levels and bottom-line cost-effectiveness. The MC&C field
demands the highly specialized capability to integrate new hardware devices that
take advantage of both existing and emerging wireless portals with the many new
software applications that will bring these new technologies together in the
everyday lives of an increasingly mobile workforce.
The Company's focus is on cutting edge MC&C technology applications
(utilizing wireless portal technology) requiring rugged, reliable solutions that
can withstand the extremes of distance, the environment and heavy use.
The Company's business plan also includes the provision of specialized
computer, communication and monitoring equipment to support both local and
remote asset management, including mobile assets found in vehicles, handheld
two-way digital paging systems, such as Research In Motion's data pager, and
portable electronic suitcase solutions.
NEW BUSINESSES.
The Company completed the purchase of three companies on June 30, 1999,
that provide an entry into the Internet and e-Commerce services business. The
Company acquired Le Groupe Mobitech, Inc., Profil CDI, Inc., and Services
Internet Quebec, Inc., all of which are Canadian corporations. The acquisitions
were completed as an exchange of stock between ACC and the shareholders of the
acquired companies. The shares of ACC issued to the shareholders of the acquired
companies are convertible on a share for share basis into the Common Stock of
the Company. See Part II, Item 4 for more information about the issuance of
shares. The Company believes that the growth of Internet sales and e-commerce
provides new opportunities for the Company. A brief description of each business
follows:
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Le Groupe Mobitech Inc. is a Quebec based holding company that acquired
the business of Tandberg's Quebec operations in early June 1999. Tandberg is a
leading video conferencing manufacturer. The Company's acquisition of Mobitech
establishes Mobitech and the Tandberg sales and support business as part of the
Company.
Profil CDI is a Quebec company operating since 1995 providing Web based
multimedia design and consulting services. Profile CDI acts as a technology
partner to its clients, by offering complete, professional services in the
design of interactive presentations, design of commercial web sites, electronic
commerce and security transactions.
Services Internet Quebec is a Quebec company operating since 1997 as an
Internet Service Provider providing Web access, site hosting, secure e-commerce
transactions over the Internet, Web design services and consulting for Internet
and intranets.
Diversification of Business
The Company is not dependent on any one customer or group of customers,
any one business line or product, or any one economy. The Company has a broad
range of products and services in five primary market sectors in North America,
and through its resellers in many other parts of the world. However, the
Company's business plan calls for a significant increase in sales to its primary
markets. See Item 1, Risk Factors: "The Company Has No Assurance of Market
Acceptance Of Its Solutions, Products or Services" and "The Company Has No
Assurance That Its Marketing and Distribution Methods Will Be Successful".
Backlog of Orders
The Company currently has a backlog of orders of approximately $1.6
million. This comes from Syscan with a supply contract with TELXON Corporation
for approximately 2,500 ZFP-2 printers over the next 18 months in the amount of
$C1,710,000, and call-ups for Y2K work with the Canadian Government in the
amount of $C750,000.
Revenue Recognition Policies
Revenue from consulting, and other services is recognized at the time
such services are rendered. Revenue from software license sales are recognized
upon delivery, if collectability is assured. Revenue from maintenance or support
contracts is deferred and recognized ratably over the term of the contract.
Competition
The Y2K desktop and PC remediation tools market is very competitive with
large PC vendors such as COMPAQ re-branding and selling competing products.
Price and
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functionality are major competitive factors with Y2K software being sold as a
commodity software product. Competitors include Norton's Utility 2000, GMT's
Check 2000 and Check 2000 Pro, Viasoft and Platinum competitive offerings.
The Y2K embedded systems market is more focused on original equipment
manufacturers and engineering /facility managers with knowledge of the systems
typically found in buildings and in factories. In the US, Litton, Tava and
Raytheon are major competitors and in Canada Oerlikon, System 2000 and local
engineering companies compete with the Company.
The Company competes in the market for mobile communications and
computing solutions. Many players are now entering this sector. Some of note
include:
- - MSN Mobile is Microsoft's entry into the mobile software applications arena.
Microsoft acquired OmniBrowse Inc. in June 1999, a company developing
applications for handheld devices
- - Tegic Communications is a software developer of T9 and other software that
allows wireless devices to enter text and send and receive email, messages and
access to the web. Tegic has 60 employees and relationships with Ericsson,
Nokia, Motorola, Siemens Sony, Qualcomm and other license partners.
- - Riverbed Technologies is a developer of software applications for the mobile
workforce. Applications have been built for the exchange of mission critical
data, healthcare and asset management between mobile devices and servers to
allow for data synchronisation.
- - SnapTrack is a software developer providing a DSP interface to existing
handheld devices by providing software linked to a ground-based server for
locating a wireless caller. SnapTrack is more accurate, sensitive and
cost-effective than standalone GPS technology.
- - Saraide.com's technology allows consumers to connect e-mail and Internet data
to wireless devices such as phones, pagers and personal digital assistants.
- - Research in Motion has had two successful new mobile devices launched within
the last 12 months, "RIM" and their latest product "Blackberry". These devices
communicate to e-mail, pagers, faxes and Internet systems.
- - Descartes is a software developer building applications for the supply-chain
management sector.
The opportunity for the Company is not to compete directly with these
companies, but to build and supply products to them, build applications for
them, build solutions for clients that take advantage of their generic products
or provide the management and technical expertise to implement their products.
The market supports both direct sales to these product companies and
also allows the Company to provide solutions that build upon our knowledge of
the limits of mobile technology. This allows the Company to take a leadership
position in delivering advanced mobile solutions. The challenge is not the
technology; the challenge is generating value to our customers in using this
technology. This allows the Company to have a competitive advantage over other,
much larger wireless players such as AT&T who focus on a single wireless
component
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such as providing basic infrastructure. A number of companies are building the
pieces and the Company believes it can create value for wireless users by
identifying, integrating, and delivering value-added solutions.
Research and Development
The Company's recent acquisitions have been based in Quebec and as such
the Company now has a strong development capability in the province of Quebec.
Recently introduced incentives by the Quebec government, seeking to attract high
tech firms, provides an additional cost incentive for the Company. Two recent
programs provide for a) up to $C25,000 per developer/researcher, per year for up
to seven years to develop products in the province; and b) an ability to fund
research and development through special income tax write-offs for start-up
research and development ventures. The Company intends to take advantage of
these incentives.
Employees
The Company currently has 76 employees as follows:
<TABLE>
<S> <C>
AXYN Corporation 5
AXYN Technologies Corporation 4
AXYN Canada Corporation 20
Burlington Systems Integration 3
Syscan International 35
Mobitech/SIQ/Profil CDI 9
---
Total 76
</TABLE>
REPORTS TO SECURITY HOLDERS.
The Company has audited financial statements for its fiscal years ended
June 30, 1998. The Company regularly reports its unaudited quarterly reports to
market makers and provides copies to Standard & Poors and Dun and Bradstreet.
Upon effective date of the FORM 10 SB, the Company will send its audited
annual report to all shareholders of record. All SEC, NASD/NASDAQ and CDN/TSE
reporting requirements will be complied with and filed with EDGAR and SEDAR
electronic database services for public access.
The public is hereby authorized by the Corporation to read and make
copies of any materials filed with the SEC and may be reviewed at the SEC's
Public Reference Room at 450 Fifth Street, N. W., Washington, D.C. The public
may obtain information on the operations of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The Company also submits electronic filings of all
SEC documentation requirements and reports, and these can be accessed through
the SEC's Internet site (at http://www.sec.gov). The Company maintains corporate
information, press releases, investor relations information, products, services,
demo software and corporate contact information at its Internet site at
www.axyn.com.
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The Company provides its financial results in the form of consolidated
financial statements, audited for each fiscal period of operations and these
statements comply with United States generally accepted accounting principles.
Available Information
Prior to the effectiveness of this Registration Statement, the Company
has not been required to file periodic reports with the Securities and Exchange
Commission. Syscan International Inc. is a fully reporting company on the
Toronto Canadian Dealing Network (CDN) trading under the symbol: SYSN. Audited
statements for the past three years for Syscan are included.
RISK FACTORS
THE COMPANY INCURRED SIGNIFICANT OPERATING LOSSES.
For the three quarters ending March 31, 1999, the Company incurred a
loss of $883,765 as compared to a loss of $2,242 for the initial fiscal year
from February 24, 1998 to June 30, 1998 which was the first five months ended
June 30, 1998. For the three quarters ending March 31, 1999, on the Company's
pro forma statement of net loss, the Company incurred a loss of $756,997 as
compared to a loss of $2,242 for the initial fiscal year from February 24, 1998
to June 30, 1998 which was the first five months ended June 30, 1998. There can
be no assurance that the Company will be able to generate sufficient revenues to
operate profitably in the future or to pay the Company's debts as they become
due. The Company is dependent upon successful completion of future capital
infusions to continue operations. See " Management's Discussion and Analysis of
Financial Condition" and "Financial Statements".
THE COMPANY MIGHT NOT BE SUCCESSFUL IN IMPLEMENTING ITS DOMESTIC AND WORLDWIDE
PROPOSED TRANSITION FROM Y2K AND EXPANSION.
The Company intends to transition from the provision of Y2K products and
services to the provision of products, services and solutions in the mobile
communications and computing, control centers, Internet and e-Commerce and
systems integration and expand its operations domestically and internationally;
however, the Company has limited experience in effectuating rapid expansion or
in managing operations which are geographically dispersed. There can be no
assurance the Company's current management, personnel and other corporate
infrastructure will be adequate to manage the Company's growth. Expansion
internationally will require business relationships outside North America who
will provide capital and personnel to fund the operations internationally. There
can be no assurance business partners will perform its contemplated duties in
Europe and will be able to raise the capital and employ the personnel required
to successfully implement worldwide operations. Accordingly, there is
significant risk that the Company will not be able to meet its goal of
substantial domestic and international expansion within the next twelve months.
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THE COMPANY LACKS A LONG OPERATING HISTORY.
The Company has a limited operating history upon which an evaluation of
the Company can be based. The Company's prospects are subject to the risks,
expenses and uncertainties frequently encountered by companies in the new and
rapidly evolving markets for Internet, communications and computer systems. In
addition, the Company will be subject to all of the risks, uncertainties,
expenses, delays, problems and difficulties typically encountered in the growth
of an emerging business and the development and commercialization of new
products. There can be no assurance that unanticipated expenses, problems or
technical difficulties will not occur which would result in material delays in
product commercialization or that the Company's efforts will result in
successful product commercialization.
THE COMPANY MAY HAVE INSUFFICIENT CAPITAL FOR FUTURE OPERATIONS.
The Company anticipates, based on its current proposed plans and
assumptions relating to its operations, that current cash reserves, together
with projected cash inflow from operations and access to debt financing, will be
sufficient to satisfy its contemplated cash requirements for the next fiscal
year. The expansion of operations through acquisitions and expanded requirements
for research and development relating to new product development will require
substantial financial funding. The failure to acquire additional funding when
required will have a material adverse effect on the Company's business
prospects. Delays in funding will delay new product development and acquisitions
postponed until sufficient capital resources are in place to meet expected cash
requirements. The Company currently has an established line of bank credit but
additional acquisitions and growth in contracts will necessitate increases to
these lines of credit. As the Company grows financing of contracts and
receivables will become critical to its growth. Changes in the economy
generally, or in the mobile communications and computing and the electronic
commerce field in particular, might make financing of customer contracts
unavailable, or if available, at unfavorable rates. Without the proper financing
of customer contracts by a finance company, the Company is likely to have
difficulty in funding its on-going operations.
THE COMPANY HAS NO ASSURANCE OF MARKET ACCEPTANCE OF ITS PRODUCTS.
The Company is at an early stage of growth and its earnings growth
depends primarily upon market acceptance of its products and services, including
the Y2K products, MC&C systems, Internet and electronic commerce services and
solutions and systems integration solutions. There can be no assurance that the
Company's product and service development efforts will progress further with
respect to any potential new products and services or that they will be
successfully completed. In addition, there can be no assurance that the
Company's potential new products will be capable of being produced in commercial
quantities at reasonable costs or that they will achieve customer acceptance.
THE COMPANY HAS NO ASSURANCE THAT ITS MARKETING AND DISTRIBUTION METHODS WILL BE
SUCCESSFUL.
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There can be no assurance that the Company's products will be
successfully marketed. The Company is dependent on value-added resellers, VARs
and distributors (business partners) in addition to its direct sales force to
market its products and services. There is no assurance that the Company's
business partners will be successful in marketing the Company's products and
services.
The Company's success is dependent in part on its ability to sell its
products to governmental agencies, including police forces, healthcare
organizations, educational institutions, and large business organizations.
Selling to governmental agencies and larger companies generally requires a long
sales process, with multiple layers of review and approval. Often non-business
factors enter into the decision to purchase products. Such factors might include
the residence and origin of the supplier of the products, the nature of the
supplier and the distributor, the ethnic and gender characteristics of personnel
and owners of the Company selling or distributing the products, political and
other contacts, and other peculiar factors. Accordingly, the success of selling
to these potential customers is uncertain.
The Company does not have sufficient experience in marketing its
products to determine the optimum distribution methods. Accordingly, the Company
might be in a position requiring change in its sales, distribution, and
marketing strategies and implementation.
THE COMPANY IS DEPENDENT ON SUCCESSFUL NEW PRODUCTS AND PRODUCT ENHANCEMENTS
INTRODUCTIONS AND MAY SUFFER PRODUCT DELAYS.
The Company's success depends on, among other things, the timely
introduction of successful new products and services or enhancements of existing
products to replace declining revenues from products at the latter stage of a
product cycle. Consumer preferences for software products are difficult to
predict, and few consumer software products achieve sustained market acceptance.
If revenues from new products or enhancements do not replace declining revenues
from existing products, the Company's business, operating results and financial
condition could be materially adversely affected. The process of developing
software products and electronic and communications systems such as those
offered by the Company is extremely complex and is expected to become more
complex. A significant delay in the introduction of one or more new products or
enhancements could have a material adverse effect on the ultimate success of
such products and on the Company's business, operating results and financial
condition.
THE COMPANY MUST DO BUSINESS IN A DEVELOPING MARKET AND FACE NEW ENTRANTS
The market for Wireless and Internet products and solutions is rapidly
evolving and is characterized by an increasing number of market entrants who
have introduced or developed products and services. The diverse segments of the
Internet market might not provide opportunities for more than one supplier of
products and services similar to those of the Company. It is possible that a
single supplier may dominate one or more market segments.
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THE COMPANY FACES FORMIDABLE COMPETITION
The Company competes with many other Y2K, mobile communications and
computing, Internet and electronic commerce and systems integration providers.
The Company will face competition from numerous sources including communications
and computer companies, software houses, manufacturers, integrators and others
with the technical capabilities and expertise which would encourage them to
develop and commercialize competitive products and services. Certain of such
competitors have substantially greater financial, technical, marketing,
distribution, personnel and other resources than the Company. Increased
competition, resulting from, among other things, the timing of competitive
product releases and the similarity of such products to those of the Company,
may result in significant price competition, any of which could have a material
adverse effect on the Company's business, operating results or financial
condition. Current and future competitors with greater financial resources than
the Company may be able to carry larger inventories, undertake more extensive
marketing campaigns, adopt more aggressive pricing policies and make higher
offers or guarantees to software developers and co-development partners than the
Company. There can be no assurance that the Company will have the resources
required to respond effectively to the market or technological changes or to
compete successfully with current or future competitors or that competitive
pressures faced by the Company will not materially and adversely affect the
Company's business, operating results or financial condition.
THE COMPANY MIGHT BE OVERTAKEN BY TECHNOLOGICAL CHANGE WHICH COULD MAKE THE
COMPANY'S PRODUCTS AND SERVICES OBSOLETE.
The markets for mobile communications and computing, Internet and
electronic commerce products and services are characterized by rapidly changing
technology which results in product obsolescence and short product life cycles.
Accordingly, the Company's success is dependent upon the ability of the
subsidiaries to anticipate technological changes in the industry and to
conditionally identify, obtain and successfully market new products and services
that satisfy evolving technologies, customer preferences and industry
requirements. There can be no assurance that competitors will not market
products and services which have perceived advantages over those of the
subsidiary or which render the subsidiary's products and services obsolete or
less marketable.
THE COMPANY MIGHT BE SUBJECT TO GOVERNMENT REGULATION WHICH COULD HARM THE
COMPANY'S PROSPECTS.
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<PAGE> 14
The Company is not currently subject to direct regulation by any
government agency in the United States, other than regulations applicable to
businesses generally, and there are currently few laws or regulations directly
applicable to access to or commerce on the Internet. Due to the increasing
popularity and use of the Internet, it is possible that laws and regulations may
be adopted with respect to the Internet, covering issues such as user privacy,
pricing and characteristics and quality of products and services. For example,
although the Communications Decency Act was held to be unconstitutional, there
can be no assurance that similar legislation will not be enacted in the future.
Such laws or regulations could also limit the growth of the Internet, which
could in turn decrease the demand for the Company's proposed products and
services and increase the Company's cost of doing business. Inasmuch as the
applicability to the Internet of the existing laws governing issues such as
property ownership, libel and personal privacy is uncertain, any such new
legislation or regulation or the application of existing laws and regulations to
the Internet could have an adverse effect on the Company's business and
prospects.
THE SUCCESS OF THE COMPANY IS DEPENDENT ON EXECUTIVE OFFICERS AND KEY MANAGEMENT
PERSONNEL
The Company's success is dependent upon the continued contributions of
its executive officers and key management personnel in the subsidiary, many of
whom would be difficult to replace. The success of the Company is also dependent
upon its ability to hire and retain additional qualified management, marketing,
technical, financial and other personnel. Competition for qualified personnel is
intense and there can be no assurance that the Company will be able to hire or
retain qualified personnel. Any inability to attract and retain qualified
management and other personnel could have a material adverse effect on the
Company.
THE COMPANY MIGHT FACE LIABILITY FOR INFORMATION SERVICES.
Because materials may be downloaded by the online or Internet services
operated or facilitated by the Company and may be subsequently distributed to
others, there is a potential that claims will be made against the Company for
defamation, negligence, copyright or trademark infringement, personal injury or
other theories based on the nature and content of such materials. Such claims
have been brought, and sometimes successfully pressed, against online service
providers in the past. The Company's general liability insurance might not cover
potential claims of this type or might not be adequate to indemnify the Company
for all liability that may be imposed. Any imposition of liability or legal
defense expenses that are not covered by insurance or in excess of insurance
coverage could have a material adverse effect on the Company's business,
operating results and financial condition.
AUTHORIZATION OF PREFERRED STOCK ALLOWS THE COMPANY TO ISSUE PREFERRED STOCK
WITHOUT THE INVESTORS' CONSENT.
The Company's Board of Directors is authorized to issue up to 1,000,000
shares of preferred stock without any need for approval of shareholders. The
Board of Directors has the power to establish the dividend rates, liquidation
preferences and voting rights of any series of preferred stock and these rights
may be superior to the rights of holders of the Common Stock.
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The Board also may establish redemption and conversion terms and privileges with
respect to any shares of preferred stock. The issuance of any shares of
preferred stock having rights superior to those of the Common Stock may result
in a decrease in the value or market price of the Common Stock, should such a
market develop, and could be used by the Board as a device to prevent a change
in control of the Company.
ELIMINATION OF DIRECTOR LIABILITY MAY INSULATE DIRECTORS AGAINST LIABILITY FOR
ACTIONS.
The Company's Articles of Incorporation contains a provision eliminating
a director's liability to the Company or its stockholders for monetary damages
for a breach of fiduciary duty, except in circumstances involving certain
wrongful acts, such as the breach of a director's duty of loyalty or acts or
omissions which involve intentional misconduct or a knowing violation of law.
The Company's Bylaws contain provisions obligating the Company to indemnify its
directors and officers to the fullest extent permitted under Colorado law. While
the Company believes that these provisions will assist the Company in attracting
and retaining qualified individuals to serve as directors, they could also serve
to insulate directors of the Company against liability for actions which damage
the Company or its stockholders.
THE COMPANY WILL PAY NO DIVIDENDS TO THE INVESTORS.
The Company has not paid and does not expect to pay any dividends in the
foreseeable future.
MANY SHARES WILL BECOME ELIGIBLE FOR FUTURE SALE, WHICH MIGHT ADVERSELY AFFECT
THE MARKET PRICE FOR THE SHARES.
As of March 31, 1999, there are 10,755,000 restricted shares' of the
Company's Common Stock issued and outstanding as that term is defined under Rule
144 promulgated under the Act. Restricted shares are those shares issued without
being registered with the SEC. Such shares may not be resold unless an exemption
is available, or unless the requirements of Rule 144 are met. Of these shares,
8,803,408 shares are held by directors, officers, or 10% shareholders. 10%
shareholders are shareholders who have beneficial ownership of 10% or more of
the outstanding shares, including shares subject to an option held by them.
1,951,592 restricted shares and 1,772,033 free trading shares are held by other
shareholders. The Company has issued 602,033 shares of the Company's Common
Stock pursuant to the exemption from registration provided under Rule 504
promulgated under Regulation D of the Securities and Exchange Act of 1933, as
amended (the `Act') (`Rule 504"). Ninety days after this Form 10 Registration
Statement becomes effective, the shares held by the nonaffiliate shareholders
will become eligible for trading, subject to the volume limitations and other
applicable limitations of Rule 144. The Company is unable to predict the effect
that sales of such shares may have on the then prevailing market price of the
Common Stock. Nonetheless, the possibility exists that the sale of these shares
may have a depressive effect on the price of the Company's Common Stock.
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<PAGE> 16
THE COMPANY WILL REMAIN IN THE CONTROL OF PRESENT SHAREHOLDERS.
The officers and directors are the largest shareholders of the Company
and have in the aggregate beneficial ownership of 70.2% of the outstanding
shares of Common Stock of the Company, and 60.4% of shares on a fully diluted
basis. These shareholders are described under `Item 4 ` Security Ownership of
Certain Beneficial Owners and Management'. The Company does not have cumulative
voting in the election of directors; and the minority shareholders will not be
able to elect any director to the Company's Board of Directors.
ANTI-TAKEOVER PROVISIONS MAY THWART TAKE-OVER OR ACQUISITION OFFERS WHICH
INVESTORS MIGHT OTHERWISE WISH TO ACCEPT.
The Company's Board of Directors can, without obtaining shareholder
approval, issue shares of Preferred Stock having rights that could adversely
affect the voting power of the Common Stock. The possible issuance of shares of
Preferred Stock can be used to oppose hostile takeover attempts.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward Looking Statements
This Item contains forward-looking statements. Please review the
information in light of the risk factors and other cautionary statements
identifying important factors that could cause actual results to differ
materially from those in the forward-looking statements.
PLAN OF OPERATION
OVERVIEW
The Company derives its revenues through its operating subsidiaries, ACC
and Axyn Technologies Corporation from the sale of software licenses and
services to provide Y2K solutions to its clients, and from the sale of
integrated computer, communications and software solutions.
The Company's products and services are marketed through a direct sales
force located in Ottawa and Toronto, Canada and through business partners,
distributors and resellers in Canada, the US, Europe, Australia, South America
and Africa
The Company anticipates a continued demand for Y2K products and services
particularly relating to personal computers, embedded systems and contingency
planning through the end of 1999 and continuing beyond the year 2000. As such
the Company will continue sales and product support activities with an expected
reduction in demand towards the end of the year. Much of the Company's Y2K
business is to well-established clients through government standing offers or
open contracts. This means that the cost of sales will be lower in the next six
to nine months of operation. The Company's Y2K business is structured to operate
with a small core staff and the Company does not
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anticipate such staff dislocation or cost impact with the diminishing volume of
Y2K business.
To date the Company has invested in the development and support of
technology and products to support its Y2K business. These investments include:
Date Overloading - a process to assist tools vendors in fixing
legacy code for multi-language and multi-platform applications.
DateTool for COBOL - a remediation tool available to assist end
users with software code remediation
DateManager 2000 - a personal computer software Y2K compliance
assessment tool
ACES - The Company's Embedded Systems methodology and supporting
data base tool.
DateManager and ACES are the basis for the Company's desktop and
embedded systems business and will continue to be supported as long as demand
for product and services continue.
The systems integration business was acquired in November 1998. Since
then it has delivered integrated computer solutions to support government and
commercial clients in Toronto and Ottawa. This unit is also providing
professional services for software development, system and network installation
and testing. Since the acquisition, the Company has reinforced the relationships
with key suppliers and has established new relationships with suppliers for
computer components such as memory chips. The Company anticipates growth in
sales from both integrated solutions and computer components in the next fiscal
year.
Over the next 12 months the Company anticipates an increase in staff of
15 of which it is likely that 9 will be full time staff and 6 will be term
employees and 14 of the 15 will be employed to support new contracts.
To date the business has been financed through the proceeds from the
sale of the Company shares and from shareholder loans to the Corporation. As
workload increases, there will be a need for bank financing to support the
Company's working capital needs and steps will be taken to secure financing
against firm contracts and receivables.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FULL FISCAL YEAR
The results for the first fiscal year were for the period from February
24, 1998 (inception) to June 30, 1998. During this period the Company was
primarily a research and development company. The Company developed and applied
for a patent on the Date Overloading algorithm, acquired Date Arithmetic
Remediation Technology (D.A.R.T) and
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<PAGE> 18
the associated DATETOOL for COBOL from the Monroe Group and started the
assessment of methodologies, tools and factories to form the foundation for the
Company's Y2K business. The Company prepared marketing materials and developed a
Web site to support the business. Market research was started to determine
market size and opportunity for the Company in the Y2K business.
The statements for the period ended June 30, 1998, show no revenues and
a loss of $283,706 or $0.02 per share and principal liquid resources comprising
cash and receivables of $154,721. These results were in line with management's
expectations at the time.
In the first half of fiscal 1999 from July 1, 1998 to December 31, 1998,
the Company focused on Y2K desktop and embedded systems.
For the Y2K desktop business the Company assessed and tested products to
support personal computer and network hardware and software Y2K assessment and
the remediation of common desktop software packages. Distribution agreements
were negotiated for the following products:
- - DateManager 2000 for software application Y2K assessment;
- - PCAP (renamed DateManager Pro) for software application Y2K assessment and
inventory management;
- - Evolution PC 2000 for PC hardware Y2K assessment and remediation;
- - Network 2000 for data communications network hardware, software and firmware
Y2K assessment; and
- - Excelsior for the assessment and automated remediation of Microsoft Excel work
books.
The product suite was selected and agreements were finalized by December
1998.
During this period, the Company established the basis for its Y2K
product reseller network with resellers and businesses in Canada, the US,
Europe, India and Australia.
The Company recognized the opportunity to support public and private
enterprises in the inventory, assessment, remediation and testing of embedded
systems. The Company developed a methodology and started the development of the
necessary supporting tools for Y2K embedded systems projects. The development
was done in parallel with, and in support of, the embedded systems assessment
and testing of the World Bank facilities in Washington, DC.
In November 1998, the Company acquired Burlington Systems Integrators,
Inc. a systems integration company based in Toronto, Canada. This gives the
Company the experience, expertise and track record to provide computer and
communication system solutions for business applications. Burlington is
continuing to pursue its traditional business while providing services to
support the Company's Y2K customers in the Toronto region.
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In the third quarter ending March 31 1999, the Company launched its
marketing and sales campaign for Y2K products and embedded systems services and
continued to build the systems integration business.
The Company developed marketing materials for each Y2K desktop product
and a mailer that included a CD with each of the Company's desktop products and
the associated manuals and product specifications. An experienced
product-marketing manager was added to develop the new Web site and put in place
an electronic commerce system to purchase the Company's desktop products over
the Internet. Sales staff were added to make direct sales to larger customers
and to put in place additional distribution agreements with businesses for
indirect sales. A training manager was added to develop comprehensive training
packages for each product and to train businesses and customers.
Development of ACES, the Company's Embedded Systems methodology and
supporting database tool, continued and formed the foundation for the Company's
embedded systems service offering.
Milestones achieved during this period include:
- - The Company signed Computer World Services (CWS) as the lead business
partner for product sales to the US federal government. CWS is also listing the
Company products on its GSA (General Supply Agreement)) schedule to make it
easier for government departments to purchase them. The Company has received no
revenues from this agreement at this time.
- - The Company released Version 4.0 of DateManager 2000 that now determines the
compliance for over 23,000 software applications in over 30 languages.
- - New Brunswick Power Corporation contracted with the Company for planning and
training service.
The Company submitted proposals and by the Company's resellers for a
number of large programs including:
- - Public Technologies Inc., a company representing state, county and city
governments across the United States for desktop and embedded systems products
and services.
- - The State of Colorado for desktop products and services.
- - Air Touch, Inc., for the Company's Excelsior tool to remediate Excel
workbooks.
The Company's products and services were selected in each of the above
competitions and the Company's products are authorized for use by each of these
organizations. No orders have been received at this time.
During the period revenues increased to $137,000 and the Company
incurred a
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loss of $280,285 or $.02 per share.
The Company completed a private placement under the terms of Regulation
D 504 private placement raising $847,250.
Management had anticipated much higher Y2K sales for the period.
Interest in the products was high, evaluation of the Company's products against
competing products was usually favorable and yet this converted into only a
small number of relatively small sales. This experience was consistent with that
of a number of the Company's competitors as potential customers deferred
decisions and/or chose to follow less comprehensive approaches to address their
Y2K issues. The Company also suffers from not being recognized as a `name' brand
in the market place and some potential clients have chosen to buy from name
brand companies even though their products may be less effective.
Looking forward, management anticipates a modest increase in revenues
in Q4 1999 and substantial growth in the first quarter of FY 2000. This growth
will come from:
- - The National Individual Standing Offer with Public Works Canada for embedded
systems work for Canadian Government owned buildings across Canada. This work
has started and initial assignments include work for Health Canada, RCMP,
National Research Council and Public Works and Government Services Canada.
- - Y2K desktop product sales through resellers around the world. There are a
number of significant opportunities that give management confidence that sales
will materialize in the calendar year 1999. For example, the Company's reseller
in Australia, Millennium 2000, has purchased 4,800 licenses from the Company.
- - Increase in sales of integrated systems and related services. Additional sales
staff have been added and supplier relationships established to position the
Company to build this business.
Although the Company's business is not seasonal, the Y2K business is
finite and will decline quickly in the year 2000. The Company is repositioning
the business to take advantage of the growth of other technology fields. The
focus is shifting to mobile communications and computing and electronic
commerce.
For the three quarters ending March 31, 1999, the Company incurred a
loss of $883,765 as compared to a loss of $283,706 for the initial fiscal year
from February 24, 1998 to June 30, 1998 which was the first five months ended
June 30, 1998. For the three quarters ending March 31, 1999, on the Company's
pro forma statement of net loss, the Company incurred a loss of $756,997 as
compared to a loss of $283,706 for the initial fiscal year from February 24,
1998 to June 30, 1998 which was the first five months ended June 30, 1998. The
loss was primarily due to: (i) the company being in a developmental stage and
incurred costs associated with employee compensation and expenses for
development for products and methodology, (ii) expenses for licensing technology
and tools for the Y2K assessment, remediation and contingency planning, (iii)
employee compensation and expenses for marketing and development of the
electronic commerce web site, (iv) employee compensation and expenses for
establishing the network of resellers in North America and Internationally, and
(v) employee compensation of sales and operations staff.
Cost of Sales
The cost of sales includes selling software items with a minimal cost
during this period.
Sales and Marketing
Sales and Marketing expenses consist primarily of hiring sales staff,
web site development, marketing materials, e.g., brochure development and
printing costs, and hiring marketing staff.
General and Administrative
General and Administrative expenses consist primarily of costs
associated with the accounting and human resources needs, professional expenses,
leasing of facilities, insurance, legal, depreciation expenses, and payroll. The
General and Administrative expenses from July 1, 1998, to March 31, 1999, were
$1,173,167.
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Selected Financial Data
Set forth below are selected financial data for the Company from
February 24, 1998 (inception) to the third quarter of fiscal 1999 (March 31,
1999).
<TABLE>
<CAPTION>
July 1, 1998 to Feb 24 to
March 31, 1999 June 30, 1998
--------------- -------------
<S> <C> <C>
Net Sales $ 289,402 $ 2,242
Income (loss) from continuing operations $(883,765) $(283,706)
Income (loss) from continuing operations per share (0.07) (0.02)
Total Assets $ 280,734 $ 162,835
Total Current Assets $ 243,062 $ 154,721
Long Term Liabilities 0 0
Cash Dividends 0 0
</TABLE>
The Company's Common Stock trades in the over-the-counter market on the
Electronic Bulletin Board ("EBB") under the symbol "AXYN" (previously "TMPG").
The Company's EBB listing resulted from a reverse share exchange consummated on
June 18, 1998 between ACC and Thor Management Group, Inc. ("Thor"), the EBB
listed company. As a result of the transaction, Thor acquired all of the
outstanding Common Stock of ACC and Thor changed its name to AXYN Corporation.
Results Of Operations
<TABLE>
<CAPTION>
Interim 9 months Feb 24 to
to March 31, 1999 June 30, 1998
----------------- -------------
<S> <C> <C> <C>
Revenue $ 289,402 $ 2,242 N/A
Cost of Sales 0 0
Gross Profit $ 289,402 $ 2,242
Sales and Marketing, General and Administrative,
and other operating expens $ 1,173,167 $ 285,948
Net Loss (Basic and Diluted) $ (883,765) $(283,706)
</TABLE>
Liquidity
At March 31, 1999, the Company had cash and receivables on hand of
$232,132. The current short-term cash needs of the Company are approximately
$130,350 per month without accounting for sales revenue. Depending on the amount
and timing of future sales and receipts, the company may need additional capital
prior to the beginning of the second quarter FY2000 (October 1, 1999).
Currently, the Company has no commercial lines of credit established, other than
that mentioned in the following paragraphs under Revenue.
Except as discussed in this Item, there are no material trends, needs,
requirements or commitments which would require further disclosure or analysis.
The Company plans to
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finance growth through internally generated cash derived primarily from custom
solutions delivered to the Company's government and institutional clients and
global Fortune 500 customers, utilizing core technologies owned or controlled by
the Company. In addition, management expects strong revenue and earnings growth
from its investment in Syscan International, a manufacturer of custom mobile
communication products to telephone companies and telecommunications equipment
suppliers.
The Company expects to continue to seek out acquisitions that
complement its existing lines of business. Specific acquisitions will also be
targeted that allow the company to gain better entry into existing and new
markets. The Company has identified both the US and European markets as targets
for future acquisitions. To fund these acquisitions, the Company anticipates
that it will raise capital through the sale of securities and through debt
financing.
Capital Resources
The Company has not generated net cash from its operations since
inception. The Company has funded its operations and development of its product
and services primarily through sales of Y2K, systems integration products and
services, private sales of equity securities, and loans from shareholders. Cash
used in operations are $1,210,839 and $291,345 for the two reporting periods
ending March 31, 1999, and June 30, 1998, respectively.
Year 2000 Compliance.
The Company has established a formal program to address any potential
Y2K compliance issues relating to its internal operating systems, products,
distributors, resellers and vendors. The Company is currently reviewing all of
its major internal operating systems and is continuing to monitor any new
additions to its internal operating systems
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for Y2K compliance. Substantially all of the Company's internally-developed
products have been designed and tested to satisfy the Company's Y2K
specifications. The Company is currently reviewing the status of its
distributors, resellers and vendors with regards to Y2K compliance. The cost of
the Company's Y2K compliance program is not expected to have a material effect
on the Company's results of operations or liquidity. However, there can be no
assurance that the Company will not experience material adverse consequences in
the event that the Company's Y2K compliance program is not successful, or its
distributors, resellers or vendors are unable to resolve their Y2K compliance
issues in a timely manner.
The Company has purchased or procured its essential equipment,
software, systems, and inventory within the past 18 months. The Company has
sought and received confirmation from its key third-party suppliers and vendors
that the hardware, software, products, and services furnished by these vendors
are Y2K compliant. In addition, the vendors of the Company's own internal
network, computers, accounting, and other systems have assured the Company that
their products are Y2K compliant.
The worst case for the Company with respect to Y2K compliance would be
the failure of common services such as electrical supply, water supply, data or
voice communications or other common services that may disrupt the Company's
ability to provide services and products. For the Company, the consequences
could be that customers will refuse to pay for the Company's services and
products and the Company will suffer a decline in revenues. Costs would go up as
the Company would seek to mitigate its problems. The Company could lose its
goodwill, reputation for reliability, and some or all of its customer base.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company does not own any materially important physical properties.
The Company leases its headquarters under the terms of a commercial lease for
office space. The lease term is on a month by month basis with a 90 day notice
period requirement for termination. The Company could move its headquarters
without any material adverse affect on the Company. The Company does not intend
to make any investment in real property, either directly or in securities
relating to real property.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of March 31, 1999, the ownership of
the Company's Common Stock by (i) each director and executive officer of the
Company, (ii) all executive officers and directors of the Company as a group,
and (iii) all persons known by the Company to beneficially own more than 5% of
the Company's Common Stock.
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<TABLE>
<CAPTION>
Percent of
Class
Amount and Nature of total
of Beneficial Shares and
Title of Class Name and Address of Beneficial Owner Ownership(1) Options
- -------------- ---------------------------------------------- ----------------- ----------
<S> <C> <C> <C>
Common Chris-Matthew Zawitkowski, 1122 North Stanford 1,630,002(2) 13%
Dr., Simi Valley, CA 93065-4955 USA (Founder)
Common Douglas Scott Feagan, 38 Grandview Road, 2,773,202(3) 22%
Nepean, Ontario Canada K2H 8B3 (Founder)
Common Janusz Waclaw Rydel, 26 O'Hara Drive, Kanata, 1,627,002(4) 13%
Ontario Canada K2W 1A2 (Founder)
Common Robert Lloyd Bell, 8 Jackson Avenue, Ottawa, 2,773,202(5) 22%
Ontario Canada K1S 4K8 (Founder)
Common Directors and Executive Officers as a group 8,803,408 70%
Beneficial ownership of more than 5%
Common Alexander Duncan (Sandy) McQuarrie, 1804 des 693,301(6) 5%
Epinettes, Orleans, Ontario Canada K1 C 7A8 (Founder)
</TABLE>
- ----------
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of 1934.
Unless otherwise stated below, each such person has sole voting and investment
power with respect to all such shares. Under Rule 13d-3(d), shares not
outstanding which are subject to options, warrants, rights or conversion
privileges exercisable within 60 days are deemed outstanding for the purpose of
calculating the number and percentage owned by such person, but are not deemed
outstanding for the purpose of calculating the percentage owned by each other
person listed.
(2) Includes 242,000 shares of Preferred Stock on a fully converted basis of
three Shares of Common Stock for each share of Preferred Stock.
(3) Includes 6,600 shares of Preferred Stock on a fully converted basis of
three Shares of Common Stock for each share of Preferred Stock.
(4) Includes 241,500 shares of Preferred Stock on a fully converted basis of
three Shares of Common Stock for each share of Preferred Stock.
(5) Includes 6,600 shares of Preferred Stock on a fully converted basis of
three Shares of Common Stock for each share of Preferred Stock.
(6) Includes 3,300 shares of Preferred Stock on a fully converted basis of
three Shares of Common Stock for each share of Preferred Stock.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Chris M. Zawitkowski, Chairman of the Board. Mr. Zawitkowski has served
as Chairman of the Board since the Company's inception in 1998. He has a Masters
Degree in Applied Mechanics from the University of Warsaw and has accumulated
almost 30 years of diverse experience in the United States, Canada, and Europe
working at senior levels for Litton Systems and Rockwell Corporation.
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D. Scott Feagan is President of AXYN Corporation. Mr. Feagan has served
as President since the Company's inception in 1998. Prior to joining the Company
he held positions as President AGISS Software Corporation and CPAD Technologies
Inc. and was founder and President of AGISS Power Technologies Corporation. He
brings over 25 years of business experience in various senior management
positions in technology companies specializing in systems integration and Y2K
remediation services.
Robert L. Bell is a Director of AXYN Corporation. Mr. Bell has been a
Director since the Company's inception in 1998. He has operational
responsibilities for the Company's North American affiliate companies. He brings
30 years of project and business management experience including nine years as
Vice-President of Monenco AGRA Inc. and AGRA Systems Limited. During this time,
Mr. Bell conceived, built, and managed a successful project management, systems
engineering, and systems integration business with projects for clients in
Canada, Europe, Asia and South America.
Janusz W. Rydel is a Director of AXYN Corporation. Mr. Rydel has been a
Director since the Company's inception in 1998. He has operational
responsibilities for the Company's European affiliate companies. He brings 15
years experience in world-wide marketing as well as considerable expertise in
the computer field. He was co-founder and President of Eurocom Corporation, a
large manufacturer of notebook computers. He is a graduate of the Technical
University of Warsaw and the Technical University of Vienna, having earned a
Masters Degree in Electrical Engineering. He speaks four languages - English,
German, Polish, and Russian.
Officer Summary
<TABLE>
<CAPTION>
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
Chris M. Zawitkowski 51 Chairman and Director 1998
D. Scott Feagan 47 President, Secretary, Director 1998
Robert L. Bell 53 Director 1998
Janusz W. Rydel 45 Director 1998
</TABLE>
The directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. Officers of the Company are elected annually by the Board
of Directors and hold office until their successors are elected and qualified.
The following sets forth biographical information concerning the
Company's directors and executive officers for at least the past five years.
<TABLE>
<S> <C>
Name and Position with Issuer Chris-Matthew Zawitkowski, Chairman
Residential Address 1122 North Stanford dr., Simi Valley, CA 93065-4955 USA
Date of Birth 25 February 1948
Professional Qualifications P.Eng., M.Sc.
Assoc. with other Public Companies None
5-Year Employment History Feb'98 to Present - Chairman, AXYN Corporation
Jan'94 to Present - Private Investor
</TABLE>
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<PAGE> 26
<TABLE>
<S> <C>
Name and Position with Issuer Douglas Scott Feagan, President and Secretary
Residential Address 38 Grandview Road, Nepean, Ontario Canada K2H 8B3
Date of Birth 13 December 1951
Professional Qualifications None
Assoc. with other Public Companies AGISS Corporation (NASD OTC EBB) Dec'96 to Jan'98
5-Year Employment History Feb'98 to Present - President, AXYN Corporation
Dec'96 to Jan'98 - President, AGISS
Corporation Jun'96 to Dec'96 -
President, CPAD Technologies Corporation
Feb'94 to Present - President, 1062497
Ontario Inc. Mar'90 to May'96 -
President, AGISS Power Technologies
Corporation
Name and Position with Issuer Janusz Waclaw Rydel, Director
Residential Address 26 O'Hara Drive, Kanata, Ontario Canada K2W 1A2
Date of Birth 26 MARCH 1954
Professional Qualifications P.Eng., M.Sc.
Assoc. with other Public Companies None
5-Year Employment History Feb'98 to Present - President, AXYN Unitra
Feb'97 to Jan'98 - Consultant, JWR Consulting
Dec'91 to Jan'97 - President, EUROCOM Corporation
Name and Position with Issuer Robert Lloyd Bell, Director
Residential Address 8 Jackson Avenue, Ottawa, Ontario Canada K1S 4K8
Date of Birth 27 MAY 1946
Professional Qualifications P.Eng./ Ing.
Assoc. with other Public Companies None
5-Year Employment History Feb'98 to Present - Director, AXYN Corporation
Jan'98 to Present - President, BPS Bell Professional Services
Apr'89 to Feb'98 - Vice President, Agra Monenco
</TABLE>
Page 26
<PAGE> 27
ITEM 6. EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- -------
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Awards Options/SARs Payouts Compensation
- ------------------ ---- ------- ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chris M. Zawitkowski, 1998 0 0 0 0 0 0 0
Chairman 1999 0 0 0 0 0 0 0
D. Scott Feagan, 1998 $22,500 0 0 0 0 0 0
President 1999 0 0 0 0 0 0 0
Robert L. Bell, Director 1998 $22,500 0 0 0 0 0 0
1999 0 0 0 0 0 0 0
Janusz W. Rydel, 1998 0 0 0 0 0 0 0
Director 1999 0 0 0 0 0 0 0
</TABLE>
OPTION GRANTS IN FISCAL YEAR 1998 and 1999
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------
Percent of Potential Realizable Value at
Number of Total Options Exercise Market Assumed Annual Rates of Stock Price
Shares Granted to of Base Price on Appreciation for Option Term
Underlying Employees in Price Date of Expiration -----------------------------------
Name Options Fiscal Year ($/Sh) Grant(1) Date 5%($) 10%($)
- ---- ----------- ------------ -------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
None
</TABLE>
The Company also reimburses members of the board of directors for their
travel, entertainment, and other out-of-pocket expenses incurred on behalf of
the Company.
Page 27
<PAGE> 28
The Company has entered into employment agreements with Scott Feagan
and Robert Bell. Pursuant to these employment agreements, Mr. Feagan and Mr.
Bell are each entitled to receive cash compensation of $150,000 annually. If Mr.
Feagan's or Mr. Bell's employment is terminated for any reason, including cause,
other than death and disability, then the Company is obligated to pay him a
severance amount equal to three times his gross salary for the preceding 12
month period. In addition, the Company maintains a life insurance policy on both
Mr. Feagan and Mr. Bell in the amount of $C1,000,0000, payable to the Company.
Initially, Mr. Feagan and Mr. Bell had entered into a shareholder's buy-sell
agreement referenced in their employment agreements. However, the buy-sell
agreement was terminated at the time of the reverse share exchange with the
Company and ACC.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Directors and major shareholders have financed the Company by
providing working capital to the Company from time to time as needed. Advances
and repayments have been made from time to time beginning in March, 1998, and
ending in June, 1999. The amounts which the Company owes to its officers and
directors as of June 30, 1999, is set forth in the following table:
<TABLE>
<CAPTION>
Name Amount
------------------ -----------
<S> <C>
Scott Feagan $332,582.21
Robert Bell $211,668.15
Chris Zawitkowski $ 56,343.27
Janusz Rydel $ 40,584.07
</TABLE>
The officers and directors have advanced these funds pursuant to the
terms of a standard promissory note. The promissory note is payable upon demand
and bears interest at the prime rate of interest posted by the NationsBank as
being charged to its best commercial customers plus 2.0 % per annum, calculated
monthly. So long as AXYN remains liable to pay the whole or any part of this
obligation, the officers and directors may convert all or any part of the
remaining obligation into common shares of either 1) the Company at the
conversion rate of $1.50 per common share, or 2) free trading shares of Syscan
International at the conversion rate of $0.33 per common share held by the
Company and receive an additional equal value of Syscan shares held by the
Company. This right of conversion may be exercised at any time, including when
and if the common shares of the Company become registered within the meaning of
the Securities Act of 1933, as amended, or of any state.
Scott Feagan, the president of the Company, serves on the board of
directors of MPT Millennium Patent Technologies Corporation Limited, the
licensor of technology to the Company. Mr. Feagan has no direct or beneficial
ownership interest in MPT Millennium Patent Technologies Corporation Limited.
Mr. Feagan receives no direct or indirect compensation or financial benefit from
MPT Millennium Patent Technologies Corporation Limited. Mr. Feagan serves on the
board of directors exclusively in his capacity as president of
Page 28
<PAGE> 29
the Company in order to protect the Company's interests as a distributor and
licensee of MPT Millennium Patent Technologies Corporation Limited.
The Company acquired Axyn Technologies Corporation , a Delaware
corporation, on June 30, 1999. Axyn Technologies Corporation was majority owned
by Scott Feagan, 979,723 shares of common stock, Robert Bell, 979,750 shares of
common stock, Chris Zawitkowski, 875,000 shares of common stock, Janusz Rydel,
875,000 shares of common stock (collectively "founders"). Other investors and
employees of Axyn Technologies Corporation owned 1,290,527 shares of common
stock. Pursuant to the terms of the purchase agreement, the Company exchanged
1,000,000 Shares of its Common Stock on a one-for-one basis for the outstanding
shares of stock of Axyn Technologies Corporation as to the non-founder
shareholders. The Company exchanged 500,000 Shares of its Preferred Stock on a
one-for-four basis for the outstanding shares of stock of Axyn Technologies
Corporation as to the founders. The shares of Preferred Stock are convertible on
a one-for-three basis into Shares of Common Stock of the Company. The net
beneficial conversion rate is therefore three-eighths of a Share of Common Stock
of the Company for one shares of common stock of Axyn Technologies Corporation.
The Company prepared a valuation of Axyn Technologies Corporation for purposes
of determining the share exchange ratio in connection with this transaction.
This valuation was not reviewed by independent valuation experts. The Common
Shares were issued pursuant to Rule 506 of Regulation D.
ITEM 8. DESCRIPTION OF SECURITIES.
DESCRIPTION OF SECURITIES.
Common Stock
The Company is authorized to issue up to 30,000,000 shares of Common
Stock, $0.0001 par value. Each share of Common Stock is entitled to share pro
rata in dividends and distributions, if any, with respect to the Common Stock
when, as and if declared by the Board of Directors from funds legally available
therefor, subject to the preferential rights of holders of shares of any series
of outstanding Preferred Stock. The Company has never paid any dividends on its
Common Stock and does not intend to do so in the foreseeable future. No holder
of Common Stock has any preemptive right to subscribe for any securities of the
Company. Upon liquidation, dissolution or winding up of the Company, each share
of the Common Stock is entitled to share ratably in the amount available for
distribution to holders of Common Stock. All shares of Common Stock presently
outstanding are fully paid and nonassessable.
Each holder of Common Stock is entitled to one vote per share with
respect to all matters that are required by law to be submitted to shareholders.
Shareholders are not entitled to cumulative voting in the election of directors.
Accordingly, the holders of more than 50% of the shares voting for the election
of directors can elect 100% of the directors if they choose to do so; and, in
such event, the holders of the remaining shares voting for the election of the
directors will be unable to elect any person to the Board of Directors.
Page 29
<PAGE> 30
The Common Stock is subject to any Preferred Stock issued by the
Company. The terms of the Preferred Stock are described below.
As of March 31, 1999, the Company had issued and outstanding 12,527,033
shares of Common Stock and had reserved: 0 shares of Common Stock for issuance
upon exercise of outstanding options.
Preferred Stock
The Company is authorized to issue up to 1,000,000 shares of Preferred
Stock, par value $.001 per share. The Board of Directors is authorized to divide
the Preferred Shares into series and to fix and determine the relative rights
and preferences of the series. These rights and preferences include the rate,
preference, and cumulative nature of dividends, terms and conditions of
redemption, if any, amounts payable upon voluntary and involuntary liquidation,
sinking funds, if any, conversion rights, if any, voting rights, if any, and
other rights and preferences. The shares of common stock are subject to the
rights and preferences of the preferred stock.
The Company has issued 500,000 shares Series 1 of Preferred Stock. Each
share of preferred stock is convertible into three shares of Common Stock of the
Company. The Preferred Shares are entitled to receive dividends on the same
basis as shares of Common Stock on an as, if, and when declared basis, except
that each share of Preferred Stock shall received three times the amount of each
share of Common Stock. Upon liquidation, the Preferred Shares are entitled to
receive distributions on the same basis as shares of Common Stock, except that
each share of Preferred Stock shall received three times the amount of each
share of Common Stock. The Preferred Stock shall have the same voting rights as
the Common Stock, except that each share of Preferred Stock shall have three
votes.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS.
The Company's Common Stock, par value $.0001 per share, is not eligible
for listing on the Nasdaq system; however, the Company's Common Stock is traded
on the Electronic Bulletin Board under the trading symbol `AXYN'. The following
table sets forth the high and low bid prices for the Company's Common Stock
since the beginning of the fiscal year 1998. The quotations reflect inter-dealer
prices, with no retail mark-up, mark-down or commissions, and may not represent
actual transactions. The information presented has been derived from National
Quotation Bureau, Inc.
<TABLE>
<CAPTION>
From To High Sales Price Low Sales Price Volume
- -------- ----------- ---------------- --------------- -------
<S> <C> <C> <C> <C>
Jan' 98 Mar' 98 N/A N/A N/A
Apr' 98 Jun' 98 N/A N/A N/A
</TABLE>
Page 30
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C>
July' 98 Sept' 98 2.750 0.375 47,500
Oct' 98 Dec' 98 2.625 1.125 780,900
Jan' 99 Mar' 99 2.625 0.875 810,100
Apr' 99 Jun(27)' 99 1.625 0.750 482,200
</TABLE>
On June 29, 1999, the last reported bid and asked prices for the Common
Stock were $1 1/32 and $1 1/8, respectively.
As of June 29, 1999, there were 490 active holders of record of the
Company's Common Stock.
The Company has never declared a dividend on its Common Stock, and it
is anticipated that any earnings which might be available for distribution as
Common Stock dividends will be retained for the Company's operations for the
foreseeable future.
The transfer agent for the Company's Common Stock is Corporate Stock
Transfer located at Republic Plaza, 370 17th Street, Suite 2350, Denver,
Colorado 80202-4614, USA Ph: (303) 595-3300 Fax: (303) 592-8821.
ITEM 2. LEGAL PROCEEDINGS.
Neither the Company nor its property is involved in any legal
proceeding, and the Company is not aware of any pending or threatened legal
proceeding.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The Company has not changed accountants nor has it had any disagreement
with its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The Company, known as Thor Management Group, Inc., was incorporated
under the laws of the State of Colorado on January 12, 1998 and was established
as a real estate management company located at 1422 Delgany Street, Denver, CO.
On January 28, 1998, the Company conducted an offering of shares pursuant to
Rule 504 of Regulation D. The Company raised $75,000 from 23 investors. The
Company never conducted any business prior to June 19, 1998.
The Company completed a reverse share exchange on June 18, 1998, with
ACC, pursuant to which ACC became a wholly owned subsidiary of the Company. The
Company issued a total of 10,530,000 shares of Common Stock to the individuals
and in the amounts set forth in Part I, Item 4, above. The shares were issued
pursuant to Rule 506 of Regulation D.
On June 30, 1999, the Company consummated an agreement with Raymond
Carrier, a resident of Canada and the sole shareholder of Le Groupe Mobitech
Inc., pursuant to which the Company acquired all outstanding shares of Le Groupe
Mobitech
Page 31
<PAGE> 32
Inc. The Company caused ACC to issue 282,000 shares of its common stock in
exchange for such shares. The Company furthered agreed to exchange its common
shares for the shares of ACC at the option of Mr. Carrier. At such time as the
Company issues such shares, the shares will be issued under Regulation S
promulgated by the Securities and Exchange Commission.
On June 30, 1999, the Company consummated an agreement with Gilles
Painchaud, Josee Lachance, C.R.E. Inc. , and 9013 7720 QUEBEC Inc., all of which
are residents of Canada, who are the sole shareholders of Profil CDI Multimedia
Inc., pursuant to which the Company acquired all outstanding shares of Profil
CDI Multimedia Inc. The Company caused ACC to issue 200,000 shares of its common
stock in exchange for such shares. The Company furthered agreed to exchange its
common shares for the shares of ACC at the option of these shareholders. At such
time as the Company issues such shares, the shares will be issued under
Regulation S promulgated by the Securities and Exchange Commission.
On June 30, 1999, the Company acquired the outstanding stock of Axyn
Technologies Corporation, a Delaware corporation. As consideration, the Company
issued 1,000,000 shares of common stock and 500,000 shares of preferred stock to
shareholders of the Axyn Technologies Corporation. The Common Shares were issued
pursuant to Rule 506 of Regulation D. See Part I, Item 1, and Part I, Item 7 for
additional information.
On June 30, 1999, the Company consummated an agreement to acquire a
controlling interest in SYSCAN International through the acquisition of 57.6% of
the shares of the Corporation held by it's founder, Daniel C. Benoit., who is a
resident of Canada. The sale was recorded under the purchase accounting method
and is included in the Company's audited 1999 fiscal year-end results, dated
June 30, 1999. The Company caused ACC to issue 1,300,000 shares of its common
stock and cash and notes payable of $841,500 USD in exchange for such shares.
The Company furthered agreed to exchange its common shares for the shares of ACC
at the option of these shareholders. At such time as the Company issues such
shares, the shares will be issued under Regulation S promulgated by the
Securities and Exchange Commission.
On June 30, 1999, the Company consummated an agreement with LUC BEDARD,
C.R.E. Inc. and 9013 7720 QUEBEC Inc., all of which are residents of Canada, who
are the sole shareholders of S.I.Q. (Service Internet Quebec) Inc., pursuant to
which the Company acquired all outstanding shares of S.I.Q. (Service Internet
Quebec) Inc. The Company caused ACC to issue 110,000 shares of its common stock
in exchange for such shares. The Company furthered agreed to exchange its common
shares for the shares of ACC at the option of these shareholders. At such time
as the Company issues such shares, the shares will be issued under Regulation S
promulgated by the Securities and Exchange Commission.
Page 32
<PAGE> 33
On November 20, 1998, the Company consummated an agreement with Angelo
Rocca, Rocco Spagnuolo, and Exceed Systems Ltd., all of which are residents of
Canada, who are the sole shareholders of Burlington Systems Integration, Inc.,
pursuant to which the Company acquired all outstanding shares of Burlington
Systems Integration, Inc. The Company issued 112,500 shares of its common stock
to each of Exceed Systems Ltd. and Angelo Rocca in exchange for such shares. The
shares were issued under Regulation S promulgated by the Securities and Exchange
Commission.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation limit the liability of
directors by reason of the fact that they are directors if the directors acted
in good faith and in a manner reasonably believed to be in, or not opposed to,
the best interests of the Company, and with respect to any criminal action or
proceeding, if the directors had no reasonable cause to believe the directors'
conduct was unlawful.
The Company's Articles of Incorporation limit the liability of
directors in the case of shareholder suits or derivative suits if the directors
acted in good faith and in a manner reasonably believed to be in, or not opposed
to, the best interests of the Company, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation, unless, and only to the extent that, the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability, but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnification for such
expenses which such court deems proper.
There is no pending litigation or proceeding involving a director,
officer, employee or other agent of the Company as to which indemnification is
being sought, and the Company is not aware of any pending or threatened
litigation that may result in claims for indemnification by any director,
officer, employee or other agent.
The Company has not purchased Directors and Officers liability
insurance to defend and indemnify Directors and Officers who are subject to
claims made against them for their actions and omissions as directors and
officers of the Company.
FORWARD LOOKING STATEMENTS AND RISK FACTORS
This Form 10 SB contains certain forward-looking statements. The
Company's forward-looking statements include the plans and objectives of
management for future operations, including plans and objectives relating to the
Company's planned marketing efforts and future economic performance of the
Company and future capital raising activities of the Company. The
forward-looking statements and associated risks set forth in this Form 10 SB
include or relate to the ability of the Company to: (i) obtain meaningful
consumer acceptance and a successful market for the product on a national and
Page 33
<PAGE> 34
international basis at competitive prices; (ii) develop and maintain an
effective national and international sales network; (iii) forecast demand for
its product; (iv) maintain pricing and thereby maintain adequate profit margins;
and, (v) achieve adequate intellectual property protection.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that: (i) the Company will obtain equity
and/or debt capital; (ii) there will be no material adverse competitive or
technological change in condition of the Company's business; (iii) there will be
a demand for the Company's product; (iv) the Company's forecasts accurately
anticipate market demand; and, (v) there will be no material adverse change in
the Company's operations, business or governmental regulation affecting the
Company or its suppliers. The foregoing assumptions are based on judgments with
respect to, among other things, future economic, competitive and market
conditions, and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the Company's
control. Accordingly, although the Company believes that the assumptions
underlying the forward-looking statements are reasonable, any such assumption
could prove to be inaccurate and therefore there can be no assurance that the
results contemplated in forward-looking statements will be realized. In
addition, as disclosed elsewhere in `Risk Factors', there are a number of other
risks inherent in the Company's business and operations which could cause the
Company's operating results to vary markedly and adversely from prior results,
or the results contemplated by the forward-looking statements. Management
decisions, including budgeting, are subjective in many respects and periodic
revisions must be made to reflect actual conditions and business developments,
the impact of which may cause the Company to alter its marketing, capital
investment and other expenditures, which may also materially adversely affect
the Company's results of operations. In light of significant uncertainties
inherent in forward-looking information included herein, the inclusion of such
information should not be regarded as a representation by the Company or any
other person that the Company's objectives or plans will be achieved.
PART F/S
The Company's financial statements for the third quarter FY1999 (March
31, 1999) are filed as part of this Registration Statement.
The Company has included its audited statements for its first partial
year-end for FY1998 (June 30, 1998) that includes the period from February 24,
1998 through to June 30, 1998.
PART III
ITEM 1. INDEX TO EXHIBITS.
(b) The exhibits required by Part III of Form 1-A are set forth below.
Page 34
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description Page
- ------ ----------- ----
<S> <C> <C> <C>
(2) a. Articles of Incorporation
b. Amendment one to Articles of Incorporation
c Amendment two to Articles of Incorporation
d. Amendment three to Articles of Incorporation
e. Bylaws
(3)
(5)
(6) a. LE GROUPE MOBITECH INC. Share Purchase Agreement
b. PROFIL CDI MULTIMEDIA INC. Share Purchase Agreement
c. S.I.Q. (SERVICE INTERNET QUEBEC) INC. Share Purchase Agreement
d. Department of Public Works and Government Services (DPWGS) - Standard Terms
and Conditions
e. Department of Public Works and Government Services - Standing Offer and
Call-up Authority
f. Scott Feagan Employment Agreement
g. Robert Bell Employment Agreement
h. Form of promissory note in favor of certain directors
i. MPT MILLENNIUM PATENT TECHNOLOGIES CORPORATION LIMITED Distribution Agreement
j. MPT MILLENNIUM PATENT TECHNOLOGIES CORPORATION LIMITED License Agreement
k. Burlington Systems Integration Inc. Share Purchase Agreement
l. Syscan International Inc. Share Purchase Agreement
m. Axyn Technologies Corporation Share Purchase Agreement
n. Valuation of shares of Axyn Technologies Corporation
(10) a. Consent of Independent Auditors
</TABLE>
ITEM 2. DESCRIPTION OF EXHIBITS.
Exhibits Attached.
Page 35
<PAGE> 36
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
AXYN CORPORATION
(Registrant)
Date: August 6, 1999 By /s/ Scott Feagan
-------------------------------------
Scott Feagan, President
Page 36
<PAGE> 37
CONSOLIDATED FINANCIAL STATEMENTS
AXYN CORPORATION
(A DEVELOPMENT STAGE COMPANY)
JUNE 30, 1998
<PAGE> 38
AUDITORS' REPORT
To the Board of Directors and Shareholders of
AXYN CORPORATION (A DEVELOPMENT STAGE COMPANY)
We have audited the accompanying consolidated balance sheet of AXYN CORPORATION
(a development stage company) as of June 30, 1998 and the consolidated
statements of net loss and comprehensive income, stockholders' deficiency and
cash flows for the period from February 24, 1998 (inception) to June 30, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Axyn Corporation (a development
stage company) as of June 30, 1998 and the consolidated results of its
operations and its cash flows for the period from February 24, 1998 (inception)
through June 30, 1998 in accordance with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has incurred significant operating losses which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ ERNST & YOUNG LLP
Ottawa, Canada, ---------------------
September 29, 1998. Chartered Accountants
<PAGE> 39
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
(U.S. dollars, U.S. GAAP)
[See Note 1 - Going Concern Uncertainty]
As at June 30
1998
$
- ------------------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 142,175
Accounts receivable [note 2] 1,354
Goods and services taxes receivable 10,428
Prepaid expenses 764
- ------------------------------------------------------------------------------------------
154,721
Fixed assets [note 3] 3,018
Intangible assets [note 4] 5,096
- ------------------------------------------------------------------------------------------
162,835
==========================================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable 85,314
Convertible loans [note 6] 190,253
shareholder loans [note 7] 20,630
- ------------------------------------------------------------------------------------------
296,197
- ------------------------------------------------------------------------------------------
Commitments and contingencies [note 8]
STOCKHOLDERS' DEFICIENCY
Capital stock [note 5]
Common shares
Authorized
30,000,000 common shares par value of $0.0001 per share 1,000,000
preference shares par value of $0.001 per share
Issued
11,700,000 common shares 1,170
Paid in capital 149,174
Accumulated deficit during development stage (283,706)
- ------------------------------------------------------------------------------------------
(133,362)
- ------------------------------------------------------------------------------------------
162,835
==========================================================================================
</TABLE>
See accompanying notes
On behalf of the Board:
Director Director
<PAGE> 40
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE INCOME
(U.S. dollars, U.S. GAAP)
<TABLE>
<CAPTION>
FEBRUARY 24, 1998
TO
JUNE 30, 1998
$
- ------------------------------------------------------------------------------------------
<S> <C>
REVENUE 2,242
- ------------------------------------------------------------------------------------------
OPERATING EXPENSES
Selling, general and administrative 245,994
Research and development 38,257
Amortization 1,697
- ------------------------------------------------------------------------------------------
285,948
- ------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE INCOME (283,706)
Loss per share [note 1]
Basic (0.02)
- ------------------------------------------------------------------------------------------
Weighted average number of shares [note 1]
Basic 11,700,000
==========================================================================================
See accompanying notes
</TABLE>
<PAGE> 41
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' DEFICIENCY
(U.S. dollars, U.S. GAAP)
[See Note 1 - Going Concern Uncertainty]
Period ended June 30
AMOUNT DEFICIT TOTAL
COMMON $ $ $
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCES, FEBRUARY 24, 1998 -- -- -- --
- ------------------------------------------------------------------------------------------
Issuance of shares:
Private placement of shares 8,072,367 68,851 -- 68,851
Issued for services 2,386,366 79,115 -- 79,115
Acquisition of Monroe Group Inc. 71,267 2,377 -- 2,377
Reverse take-over 1,170,000 1 -- 1
Loss -- -- (283,706) (283,706)
- ------------------------------------------------------------------------------------------
BALANCES, JUNE 30, 1998 11,700,000 150,344 (283,706) (133,362)
- ------------------------------------------------------------------------------------------
See accompanying notes
</TABLE>
<PAGE> 42
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars, U.S. GAAP)
[See Note 1 - Going Concern Uncertainty]
Period ended June 30
JUNE 30,
1998
$
- ------------------------------------------------------------------------------------------
<S> <C>
OPERATING ACTIVITIES
Net loss (283,706)
Non-cash items:
Amortization 1,697
Shares issued for services 79,115
- ------------------------------------------------------------------------------------------
(202,894)
Change in non-cash working capital
Increase in accounts receivable (1,334)
Increase in goods and services taxes receivable (10,270)
Increase in prepaid expenses (753)
Increase in accounts payable 84,033
- ------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (131,218)
- ------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Increase in intangible assets (5,964)
Additions to fixed assets (3,726)
- ------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (9,690)
- ------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Convertible loans 190,221
Shareholder loans 20,585
Issue of common shares 68,972
- ------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 279,778
- ------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,305
- ------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 142,175
Cash and cash equivalents, beginning of period --
- ------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 142,175
==========================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest --
Taxes --
- ------------------------------------------------------------------------------------------
See accompanying notes
</TABLE>
<PAGE> 43
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Axyn Corporation is in the development stage in accordance with Statement of
Financial Accounting Standards (SFAS) No. 7.
These consolidated financial statements have been prepared by the Corporation
(formerly known as Thor Management Group, Inc.) in U.S. dollars and in
accordance with generally accepted accounting principles ("GAAP") in the United
States of America ("U.S.").
The preparation of these consolidated financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and the accompanying
notes. In the opinion of management, these consolidated financial statements
reflect all adjustments necessary to state fairly the results for the period
presented. Actual results could differ from these estimates.
GOING CONCERN UNCERTAINTY
The financial statements have been prepared by management in accordance with
generally accepted accounting principles in the United States of America on a
going concern basis. This presumes that funds will be available to finance
ongoing operations and capital expenditures and permit the realization of assets
at their carrying values and the payment of liabilities in the normal course of
operations for the foreseeable future. The Company's ability to continue as a
going concern is dependent upon its ability to achieve sufficient revenues to
cover expenses, or to obtain appropriate levels of financing on a timely basis,
the outcome of which cannot be predicted at this time. These financial
statements do not give effect to any adjustments to the amounts and
classification of assets and liabilities what might be necessary should the
Company be unable to continue its operations as a going concern.
BASIS OF CONSOLIDATION
These consolidated financial statements include the accounts of the Corporation
and its subsidiaries. Intercompany transactions and balances have been
eliminated. Acquisitions during the period have been accounted for using the
purchase method.
The financial statements of the parent company and its subsidiaries have been
translated into U.S. dollars in accordance with the Financial Accounting
Standards Board (FASB) Statement No. 52, Foreign Currency Translation. All
assets, liabilities, revenues and expenditure amounts have been translated using
the exchange rates in effect at the applicable period end. Currency transaction
gains or losses are immaterial for all periods presented.
1
<PAGE> 44
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
REVENUE
Revenue from consulting, and other services is recognized at the time such
services are rendered. Revenue from software license sales are recognized upon
delivery, if collectability is assured. Revenue from maintenance or support
contracts is deferred and recognized ratably over the term of the contract.
CASH AND CASH EQUIVALENTS
Cash includes cash equivalents, which are investments that are generally held to
maturity and have terms of three months or less at the time of acquisition. Cash
equivalents typically consist of term deposits with major North American banks.
The carrying amounts of cash and cash equivalents are stated at cost, which
approximates their fair value.
FIXED ASSETS
Fixed assets are recorded at cost. Office furniture and equipment are amortized
20%, straight-line.
INTANGIBLE ASSETS
Intangible assets represents patent costs. Patent costs are recorded at cost.
Related amortization is calculated by the straight-line method over a period of
three years.
Software development costs are expensed as incurred unless they meet generally
accepted accounting criteria for deferral and amortization. Software development
costs incurred prior to the establishment of technological feasibility do not
meet these criteria and are expensed as incurred. Research costs are expensed as
incurred. The Corporation reassesses whether it has met the relevant criteria
for deferral and amortization at each reporting date.
INCOME TAXES
The liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and income tax bases of assets and liabilities, and are
measured using the enacted tax rates and laws.
2
<PAGE> 45
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
NET LOSS PER SHARE
Net loss per common share has been computed on the basis of the weighted average
number of shares outstanding. In accordance with the rules of the Securities and
Exchange Commission, any stock sold at a nominal value, as compared to the
public offering, should be considered outstanding for the entire period.
2. ACCOUNTS RECEIVABLE
Accounts receivable include no allowance for doubtful accounts.
<TABLE>
<CAPTION>
3. FIXED ASSETS
1998
ACCUMULATED NET BOOK
----------------------------------
COST AMORTIZATION VALUE
$ $ $
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Office furniture and equipment 3,771 (753) 3,018
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
4. INTANGIBLE ASSETS
1998
----------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
$ $ $
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Patents 6,040 (944) 5,096
==========================================================================================
</TABLE>
5. PURCHASE ACCOUNTING AND REVERSE TAKE-OVER
Effective June 17, 1998 Axyn Canada Corporation acquired 100% of the issued and
outstanding common shares of The Monroe Group Inc., a development stage
corporation consulting in the area of information technology and Year 2000
system solutions. As at the time of acquisition the company had net assets of
$2,377 which represented the fair market value.
3
<PAGE> 46
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
5. PURCHASE ACCOUNTING AND REVERSE TAKE-OVER (CONT'D)
Effective July 18, 1998, Axyn Corporation (formerly known as Thor Management
Group Inc.) acquired 100% of the issued and outstanding common shares of Axyn
Canada Corporation. At the date of acquisition, Axyn Corporation was a
non-operating company. By this transaction, sufficient common shares of Axyn
Corporation were issued so that a controlling interest of the corporate group
passed to the former shareholders of Axyn Canada Corporation. Accordingly, for
accounting purposes, Axyn Canada Corporation was treated as the purchaser, and
the acquisition was accounted for as a reverse take-over. The legal parent
company, Axyn Corporation, is deemed to be a continuation of Axyn Canada
Corporation and accordingly, these financial statements are a continuation of
the financial statements of the legal subsidiary, and not the legal parent. In
making the acquisition, Axyn Canada Corporation acquired net liabilities of
approximately $1,725 which amount has been expensed. The acquisition has been
accounted for using the purchase method with the cost of the purchase being a
nominal $1.
6. CONVERTIBLE LOANS
The convertible loans are non-interest bearing with no specified terms of
repayment; however, upon closing of any further public offering, the convertible
loan holders have the right to convert such loans to common stock at a value of
$1.50 per share.
7. SHAREHOLDER LOANS
Shareholder loans are due upon demand and bear interest at Nation Bank's prime
rate plus 2%.
8. COMMITMENTS AND CONTINGENCIES
The Corporation's offices and certain computer equipment are leased under
various terms. The annual aggregate lease expense in fiscal 1998 was $11,250.
The aggregate amount of payments for these operating leases, in each of the next
fiscal years are approximately as follows:
<TABLE>
<CAPTION>
$
- -----------------------------------------------------------------
<S> <C>
1999 10,200
2000 6,100
2001 6,100
</TABLE>
4
<PAGE> 47
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
8. COMMITMENTS AND CONTINGENCIES (CONT'D)
The Corporation has entered into an agreement with a related company for the use
of certain technology. An annual maintenance fee of $39,000 is due each year
that the technology is continued to be utilized by the Company. Furthermore,
revenues derived from the use or sale of such technology will be subject to a
maximum royalty of 39% payable to the related company. There were no such
charges during fiscal 1998.
The senior officers of the Corporation have employment agreements which provide
three years of severance upon termination for an aggregate of approximately
$1,125,000.
9. FINANCIAL INSTRUMENTS
CONCENTRATION OF CREDIT RISK
The Corporation operates internationally in one business segment. The
Corporation provides consulting services along with developing, marketing, and
supporting computer software tools. The Corporation markets and supports these
products both directly and through resellers. The Corporation is not dependent
on any single customer or group of customers or supplier.
There is no material concentration of credit risk related to the Corporation's
position in trade accounts receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of The Corporation's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable and short term
loans, approximate the fair value due to their short maturities.
10. INCOME TAXES
The reported income tax provision differs from the amount computed by applying
the US rate. The reasons for this difference and the related tax effects are as
follows:
<TABLE>
<CAPTION>
1998
$
- ------------------------------------------------------------------
<S> <C>
Expected tax rate 34.0%
Expected tax provision (96,000)
Foreign tax rate differences (29,000)
Losses not recognized 125,000
- ------------------------------------------------------------------
</TABLE>
5
<PAGE> 48
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
REPORTED INCOME TAX PROVISION 0%
- ------------------------------------------------------------------
6
<PAGE> 49
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
10. INCOME TAXES (CONT'D)
Deferred income taxes result principally from temporary differences in the
financial and tax reporting. Significant components of the Corporation's
deferred tax assets and liabilities as of June 30, 1998 are as follows:
<TABLE>
<CAPTION>
1998
$
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating tax loss carryforwards 125,000
Valuation allowance for deferred tax assets (125,000)
Net deferred tax assets --
</TABLE>
The net change in the total valuation allowance for the period ended June 30,
1998 was $125,000.
Realization of the net deferred tax assets is dependent on generating sufficient
taxable income in certain legal entities. Realization is not likely. However,
this estimate could change in the near term as future taxable income in the
legal entities change.
As of June 30, 1998, the Corporation had tax loss carryforwards of approximately
$275,000 available to reduce future years' income for tax purposes. These losses
expire in 2004.
11. SEGMENTED INFORMATION
The Corporation has one reportable segment - computer software tools which the
Corporation sells as part of the Corporation's Year 2000 consulting services.
Revenue is derived from the licensing of software and the provision of related
services, which include product support, consulting and other services. The
Corporation generally licenses software and provides services subject to terms
and conditions consistent with industry standards.
Revenue, expenses, assets and liabilities are substantially in Canada.
7
<PAGE> 50
AXYN CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1998
12. SUBSEQUENT EVENTS
As at July 10, 1998, the Corporation filed, pursuant to an exemption under Rule
504 of Regulations D of the Securities Act of 1933, as amended (the "Act"), its
intent to raise capital solely to accredited and/or sophisticated investors,
400,000 common shares at $1.50 per share.
The Corporation is relying upon exemptions from registration believing it to be
available under federal and state securities laws in connection with the
offering. If it is later determined that a state law exemption was unavailable,
the Corporation may be required to rescind any sale(s) in that state and/or take
other steps as may be necessary to comply with the state's applicable securities
laws.
Subsequent to June 30, 1998 the Corporation has initiated development of a stock
option plan and a stock purchase plan.
13. PENDING ACCOUNTING STANDARDS
SFAS No. 133 which relates to accounting for derivative instruments and hedging
activities is pending and will be adopted by the Company in Fiscal 2000.
<PAGE> 51
AXYN CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
PREPARED INTERNALLY
AS AT MARCH 31, 1999
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Includes
Axyn Corporation
Axyn Canada Corporation
Axyn Technologies Corporation
Burlington Systems Ltd.
PROFORMA COMBINED BALANCE SHEET
PROFORMA COMBINED STATEMENTS OF NET LOSS AND COMPREHENSIVE INCOME
PROFORMA COMBINED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
Includes
Axyn Corporation
Axyn Canada Corporation
Axyn Technologies Corporation
Burlington Systems Ltd.
58% Syscan International Inc.
Le Group Mobitech Inc.
Service Internet Quebec Inc.
9016-7230 Quebec Inc. Operating as Profil CDI Multimedia
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 52
AXYN CORPORATION
PROFORMA CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1999
(U.S. dollars, U.S. GAAP)
<TABLE>
<CAPTION>
COMBINED
MARCH 31 June 30
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 0 $ 142,175
Accounts receivable 235,132 11,782
Inventories 4,456 --
Corporate taxes recoverable -- --
Prepaid expenses 3,474 764
----------- -----------
243,062 154,721
FIXED ASSETS 32,792 3,018
INTANGIBLE ASSETS - DEFERRED CHARGES 4,880 5,096
----------- -----------
TOTAL ASSETS 280,734 162,835
=========== ===========
LIABILITIES
Bank overdraft 15,314 --
Accounts payable 190,257 85,314
Convertible loans -- 190,253
Shareholder loans 171,437 20,630
----------- -----------
377,008 296,197
----------- -----------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Capital stock
Authorized
30,000,000 common shares
1,000,000 preference shares
Issued
Common shares 1,353 1,170
Preferred shares 500 --
Paid in capital 1,069,344 149,174
Accumulated deficit (1,167,471) (283,706)
----------- -----------
(96,274) (133,362)
----------- -----------
TOTAL LIABILITIES AND EQUITY $ 280,734 $ 162,835
=========== ===========
</TABLE>
<PAGE> 53
AXYN CORPORATION
PROFORMA CONSOLIDATED STATEMENTS OF NET LOSS AND
COMPREHENSIVE INCOME
(U.S. dollars U.S. GAAP)
<TABLE>
<CAPTION>
COMBINED
JULY 1,1998 TO February 24, 1998
MARCH 31 to June 30
1999 1998
------------ ------------
<S> <C> <C>
REVENUES $ 289,402 $ 2,242
------------ ------------
OPERATING EXPENSES
Selling, general and administrative 1,173,167 245,994
Research and development -- 38,257
Amortization of goodwill -- --
Amortization 0 1,697
------------ ------------
1,173,167 285,948
------------ ------------
NET LOSS AND COMPREHENSIVE INCOME $ (883,765) $ (283,706)
============ ============
LOSS PER SHARE
Basic (0.07) (0.02)
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 13,527,033 11,700,000
</TABLE>
<PAGE> 54
AXYN CORPORATION
PROFORMA CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
(U.S. dollars, U.S. GAAP)
Common Preferred Amount $ Deficit $ Total $
<S> <C> <C> <C> <C> <C>
BALANCES, FEBRUARY 24, 1998 0 0 0 0 0
Issuance of shares:
Private placement of shares 8,072,367 68,851 0 68,851
Issued for services 2,386,366 79,115 0 79,115
Acquisition of Monroe Group 71,267 2,377 0 2,377
Reverse take-over 1,170,000 1 0 1
Loss 0 0 (283,706) (283,706)
-------------------------- ----------- ----------- -----------
BALANCES, JUNE 30, 1998 11,700,000 -- 150,344 (283,706) (133,362)
Issuance of shares:
Private placement of shares
Up to December 31, 1998 260,532 390,798 0 390,798
January 1 to March 31, 1999 341,501 512,552 0 512,552
Acquisition of Burlington Systems Integration 225,000 17,503 0 17,503
Acquisition of Axyn Technologies Corporation 1,000,000 500,000 0 --
Loss (883,765) (883,765)
-------------------------- ----------- ----------- -----------
BALANCES, MARCH 31, 1999 13,527,033 500,000 1,071,197 (1,167,471) (96,274)
========================== =========== =========== ===========
</TABLE>
<PAGE> 55
AXYN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
AS AT MARCH 31, 1999
(U.S. dollars, U.S. GAAP)
<TABLE>
<CAPTION>
JULY 1, 1998 TO February 24 to
MARCH 31 June 30
1999 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (883,765) $ (283,706)
Non-cash items:
Amortization -- 1,697
Shares issued for services -- 79,115
----------- -----------
(883,765) (202,894)
Change in non-cash working capital
Increase in accounts receivable (223,350) (11,604)
Increase in inventories (4,457) --
Increase in prepaid expenses (2,710) (753)
Increase in accounts payable 104,943 84,033
----------- -----------
CASH USED IN OPERATING ACTIVITIES (1,009,339) (131,218)
----------- -----------
INVESTING ACTIVITIES
Increase in intangible assets (29,774) (5,964)
Additions to fixed assets -- (3,726)
----------- -----------
CASH USED IN INVESTING ACTIVITIES (29,774) (9,690)
----------- -----------
FINANCING ACTIVITIES
Convertible loans (190,253) 190,221
Shareholder loans 150,807 20,585
Issue of common shares 920,353 68,972
Issue of preferred shares 500
----------- -----------
CASH USED IN FINANCING ACTIVITIES 881,407 279,778
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 217 3,305
----------- -----------
Net increase in cash and cash equivalents (157,489) 142,175
Cash and cash equivalents, beginning of period 142,175 --
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ (15,314) $ 142,175
=========== ===========
</TABLE>
<PAGE> 56
AXYN CORPORATION
PROFORMA COMBINED BALANCE SHEET
AS AT MARCH 31, 1999
(U.S. dollars, U.S. GAAP)
<TABLE>
<CAPTION>
AXYN Combined Syscan COMBINED
March 31 March 31 MARCH 31 June 30
1999 1999 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ -- $ 0 $ 0 $ 142,175
Accounts receivable $ 276,436 378,967 655,403 11,782
Inventories $ 4,457 448,563 453,020 --
Corporate taxes recoverable $ -- 38,851 38,851 --
Prepaid expenses $ 3,474 -- 3,474 764
---------------------------- ----------- -----------
$ 284,367 866,381 1,150,748 154,721
FIXED ASSETS $ 87,163 56,929 144,092 3,018
GOODWILL ON ACQUISITION OF SYSCAN $ 1,609,566 0 1,609,566 --
INTANGIBLE ASSETS - DEFERRED CHARGES $ 4,881 259,124 264,005 5,096
---------------------------- ----------- -----------
TOTAL ASSETS $ 1,985,977 1,182,434 3,168,411 162,835
============================ =========== ===========
LIABILITIES
Bank overdraft $ 11,423 172,052 183,475 --
Accounts payable $ 219,282 395,959 615,241 85,314
Convertible loans $ -- -- -- 190,253
Loan payable for Syscan shares $ 841,500 -- 841,500
Shareholder loans $ 158,455 -- 158,455 20,630
---------------------------- ----------- -----------
$ 1,230,660 568,011 1,798,671 296,197
---------------------------- ----------- -----------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Capital stock
Authorized
30,000,000 common shares
1,000,000 preference shares
Issued
Common shares $ 1,557 -- 1,557 1,170
Preferred shares $ 500 -- 500 --
Paid in capital $ 1,831,100 577,286 2,408,386 149,174
Accumulated deficit $(1,077,840) 37,137 (1,040,703) (283,706)
---------------------------- ----------- -----------
$ 755,317 614,423 1,369,740 (133,362)
---------------------------- ----------- -----------
TOTAL LIABILITIES AND EQUITY $ 1,985,977 $ 1,182,434 $ 3,168,411 $ 162,835
============================ =========== ===========
</TABLE>
<PAGE> 57
AXYN CORPORATION
PROFORMA COMBINED STATEMENTS OF NET LOSS AND
COMPREHENSIVE INCOME
(U.S. dollars U.S. GAAP)
<TABLE>
<CAPTION>
AXYN Combined Syscan COMBINED
July 1,1998 to July 1,1998 to JULY 1,1998 TO February 24, 98
March 31 March 31 MARCH 31 to June 30
1999 1999 1999 1998
<S> <C> <C> <C> <C>
REVENUES $ 404,020 $ 1,481,800 $ 1,885,820 $ 2,242
------------------------------ ------------ ------------
OPERATING EXPENSES
Selling, general and administrative $ 1,027,383 1,476,051 2,503,434 245,994
Research and development $ -- -- -- 38,257
Amortization of goodwill $ 62,710 -- 62,710 --
Amortization $ 76,674 0 76,674 1,697
------------------------------ ------------ ------------
$ 1,166,767 1,476,051 2,642,818 285,948
------------------------------ ------------ ------------
NET LOSS AND COMPREHENSIVE INCOME $ (762,747) $ 5,749 $ (756,998) $ (283,706)
============================== ============ ============
LOSS PER SHARE
Basic (0.05) (0.02)
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 15,572,033 11,700,000
</TABLE>
<PAGE> 58
AXYN CORPORATION
PROFORMA COMBINED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
(U.S. dollars, U.S. GAAP)
<TABLE>
<CAPTION>
Common Preferred Amount $ Deficit $ Total $
<S> <C> <C> <C> <C> <C>
BALANCES, FEBRUARY 24, 1998 0 0 0 0 0
Issuance of shares:
Private placement of shares 8,072,367 68,851 0 68,851
Issued for services 2,386,366 79,115 0 79,115
Acquisition of Monroe Group 71,267 2,377 0 2,377
Reverse take-over 1,170,000 1 0 1
Loss 0 0 (283,706) (283,706)
---------------------- --------- ---------- ---------
BALANCES, JUNE 30, 1998 11,700,000 -- 150,344 (283,706) (133,362)
Issuance of shares:
Private placement of shares
Up to December 31, 1998 260,532 390,798 0 390,798
January 1 to March 31, 1999 341,501 512,552 0 512,552
Acquisition of Burlington Systems Integration 225,000 17,503 0 17,503
Acquisition of Axyn Technologies Corporation 1,000,000 500,000 0 --
Acquisition of Syscan International Inc. 1,300,000 1,300,000 1,300,000
Acquisition of Le Group Mobitech Inc. 380,000 0 --
Acquisition of Service Internet Quebec Inc. 140,000 39,246 --
Acquisition of 9016-7230 Quebec Inc.
Operating as Profil CDI Multimedia 225,000 0 --
Loss (756,997) (756,997)
---------------------- --------- ---------- ---------
BALANCES, MARCH 31, 1999 15,572,033 500,000 2,410,443 (1,040,703) 1,369,739
====================== ========= ========== =========
</TABLE>
<PAGE> 59
Axyn Corporation
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements have been prepared by the Corporation
(formerly known as Thor Management Group, Inc.) in U.S. dollars and in
accordance with generally accepted accounting principles (`GAAP') in the United
States of America (`U.S.').
The preparation of these consolidated financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and the accompanying
notes. In the opinion of management, these consolidated financial statements
reflect all adjustments necessary to state fairly the results for the period
presented. Actual results could differ from these estimates.
GOING CONCERN UNCERTAINTY
The financial statements have been prepared by management in accordance with
generally accepted accounting principles in the United Statements of America on
a going concern basis. This presumes that funds will be available to finance
ongoing operations and capital expenditures and permit the realization of assets
at their carrying values and the payment of liabilities in the normal course of
operations for the foreseeable future. The Company's ability to continue as a
going concern is dependent upon its ability to achieve sufficient revenues to
cover expenses, or to obtain appropriate levels of financing on a timely basis,
the outcome of which cannot be predicted at this time. These financial
statements do not give effect to any adjustments to the amounts and
classification of assets and liabilities what might be necessary should the
Company be unable to continue its operations as a going concern.
BASIS OF CONSOLIDATION
These consolidated financial statements include the accounts of the Corporation
and its subsidiaries. Intercompany transactions and balances have been
eliminated. Acquisitions during the period have been accounted for using the
purchase method.
The financial statements of the parent company and its subsidiaries have been
translated into U.S. dollars in accordance with the Financial Accounting
Standards Board (SASB) Statement No. 52, Foreign Currency Translation. All
assets, liabilities, revenues, and expenditure amounts have been translated
using the exchange rates in effect at the
<PAGE> 60
applicable period end. Currency transaction gains or losses are immaterial for
all periods presented.
REVENUE
Revenue from consulting, and other services is recognized at the time such
services are rendered. Revenue from software license sales is recognized upon
delivery, if collectability is assured. Revenue from maintenance or support is
deferred and recognized ratably over the term of the contract.
CASH AND CASH EQUIVALENTS
Cash includes cash equivalents, which are investments that are generally held to
maturity and have terms of three months or less at the time of acquisition. Cash
equivalents typically consist of term deposits with major North American banks.
The carrying amounts of cash and cash equivalents are stated at cost, which
approximates their fair value.
FIXED ASSETS
Fixed assets are recorded at costs. Office furniture and equipment are amortized
20%, straight-line.
INTANGIBLE ASSETS
Intangible assets represent patent costs. Patent costs are recorded at cost.
Related amortization is calculated by the straight-line method over a period of
three years.
Software development costs are expenses as incurred unless they meet generally
accepted accounting criteria for deferral and amortization. Software development
costs incurred prior to the establishment of technological feasibility do not
meet these criteria and are expenses as incurred. Research costs are expenses as
incurred. The Corporation reassesses whether it has met the relevant criteria
for deferral and amortization at each reporting date.
INCOME TAXES
The liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and income tax bases of assets and liabilities, and are
measured using the enacted tax rates and laws.
NET LOSS PER SHARE
Net loss per common share has been computed on the basis of the weighted average
number of shares outstanding. In accordance with the rules of the Securities and
Exchange
<PAGE> 61
Commission, any stock sold at a nominal value, as compared to the public
offering, should be considered outstanding for the entire period.
2. ACCOUNTS RECEIVABLE
Accounts receivable include no allowance for doubtful accounts.
3. FIXED ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
March 1999 1998
- ------------------------------------------------------------------------------------------
Accumulated Net Book
Cost Amortization Value
- ------------------------------------------------------------------------------------------
$ $ %
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Office furniture and
equipment 47,511 (14,719) 32,792 3018
- ------------------------------------------------------------------------------------------
</TABLE>
4. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1999 1999
Accumulated Net Book
Cost Amortization Value
$ $ %
<S> <C> <C> <C> <C>
Patents 6,040 (944) 5,096 5,096
- ------------------------------------------------------------------------------------------
</TABLE>
5. PURCHASE ACCOUNTING AND REVERSE TAKE-OVER
Effective June 17, 1998 Axyn Canada Corporation acquired 100% of the issued and
outstanding common shares of The Monroe Group Inc., a development stage
corporation consulting in the area of information technology and Year 2000
system solutions. As at the time of acquisition the company had net assets of
$2,377 which represented the fair market value.
Effective July 18, 1998, Axyn Corporation (formerly known as Thor Management
Group Inc.) acquired 100% of the issued and outstanding common shares of Axyn
Canada Corporation. At the date of acquisition, Axyn Corporation was a
non-operating company. By this transaction, sufficient common shares of Axyn
Corporation were issued so that a controlling interest of the corporation group
passed to the former shareholders of Axyn Canada Corporation. Accordingly, for
accounting purposes, Axyn Canada Corporation was treated as the purchaser, and
the acquisition was accounted for as a reverse take-over. The legal parent
company, Axyn Corporation, is deemed to be a continuation of Axyn Canada
Corporation and accordingly, these financial statements are a continuation of
the financial statements of the legal subsidiary, and not the legal parent. In
making the acquisition, Axyn Canada Corporation acquired net liabilities of
approximately $1,725 which amount has been expensed. The acquisition has been
accounted for using the
<PAGE> 62
Effective November 20, 1998 Axyn Canada Corporation acquired 100% of the issued
and outstanding common shares of Burlington Systems Integration Inc. As at the
time of acquisition the company had net assets of $17,503 which represented the
fair market value.
6. CONVERTIBLE LOANS
The convertible loans are non-interest bearing with no specified terms of
repayment; however, upon closing of any further public offering, the convertible
loan holders have the right to convert such loans to common stock at a value of
$1.50 per share.
7. SHAREHOLDER LOANS
Shareholder loans are due upon demand and bear interest at Nation Bank's prime
rate plus 2%.
8. COMMITMENTS AND CONTINGENCIES
The Corporation's offices and certain computer equipment are leased under
various terms. The annual aggregate lease expense in fiscal 1998 was $11,250.
The aggregate amount of payments for these operating leases, in each of the next
fiscal years is approximately as follows:
<TABLE>
<CAPTION>
$
- --------------------------------------------------------------------------------
<S> <C>
1999 10,200
2000 6,100
2001 6,100
</TABLE>
The Corporation has entered into an agreement with a related company for the use
of certain technology. An annual maintenance fee of $39,000 is due each year
that the technology is continued to be utilized by the Company. Furthermore,
revenues derived from the use or sale of such technology will be subject to a
maximum royalty of 39% payable to the related company. There were no such
charges during fiscal 1999.
The senior officers of the Corporation have employment agreements which provide
three years of severance upon termination for an aggregate of approximately
$1,125,000.
9. FINANCIAL INSTRUMENTS
CONCENTRATION OF CREDIT RISK
The Corporation operates internationally in one business segment. The
Corporation provides consulting services along with developing, marketing, and
supporting computer
<PAGE> 63
software tools. The Corporation markets and supports these products both
directly and through resellers. The Corporation is not dependent on any single
customer or group of customers or supplier.
There is no material concentration of credit risk related to the Corporation's
position in trade accounts receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of The Corporation's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable and short term
loans, approximate the fair value due to their short maturities.
10. INCOME TAXES
The reported income tax provision differs from the amount computed by applying
the US rate. The reasons for this difference and the related tax effects are as
follows:
<TABLE>
<CAPTION>
1999 1998
$ $
- --------------------------------------------------------------------------------
<S> <C> <C>
Expected tax rate 34.0% 34.0%
Expected tax provision (300,000) (96,000)
Foreign Tax rate differences (90,000) (29,000)
Losses not recognized 390,000 125,000
- --------------------------------------------------------------------------------
Reported income tax provision 0% 0%
</TABLE>
Deferred income taxes result principally from temporary differences in the
financial and tax reporting. Significant components of the Corporation's
deferred tax assets and liabilities as of March 31, 1999 are as follows:
<TABLE>
<CAPTION>
1999 1998
$ $
- -------------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax assets:
Net change in operating tax loss carryforwards $ 390,000 $ 125,000
Net operating tax loss carryforwards $ 515,000 $ 125,000
Valuation allowance for deferred tax assets (515,000) (125,000)
- -------------------------------------------------------------------------------------
Net deferred tax assets --
</TABLE>
The net change in the total valuation allowance for the period ended March 31,
1999 was $390,000.
<PAGE> 64
Realization of the next deferred tax assets is dependent on generating
sufficient taxable income in certain legal entities. Realization is not likely.
However, this estimate could change in the near term as future taxable income in
the legal entities change.
As of March 31, 1999, the Corporation had tax loss carryforwards of
approximately $1,167,000 available to reduce future years' income for tax
purposes. These losses expire in 2004 and 2005.
11. SEGMENTED INFORMATION
The Corporation has one reportable segment - computer software tools which the
Corporation sells as part of the Corporation's Year 2000 consulting services.
Revenue is derived from the licensing of software and the provision of related
services, which include product support, consulting and other services. The
Corporation generally licenses software and provides services subject to terms
and conditions consistent with industry standards.
Revenue, expenses, assets and liabilities are substantially in Canada.
12. SUBSEQUENT EVENTS
The Corporation is relying upon exemptions from registration believing it to be
available under federal and state securities laws in connection with the
offering. If it is later determined that a state law exemption was unavailable,
the Corporation may be required to rescind any sale(s) in that state and/or take
other steps as may be necessary to comply with the state's applicable securities
laws.
Subsequent to March 31, 1999, the Corporation acquired 100% of Le Group Mobitech
Inc., 100% of Service Internet Quebec Inc, and 9016-7230 Quebec Inc. operating
as Profil CDI Multimedia and 58% Syscan International Inc.
Included in the proforma set of financial statements, acquisitions which
occurred June 30, 1999 have been included. The following became wholly owned
subsidiaries, Le Group Mobitech Inc., Service Internet Quebec Inc., 9016-7230
Quebec Inc. operating as Profil CDI Multimedia. These have been accounted for
using the pooling of interest method and all income and expenses have been
included in the combined statement of income from July 1, 1998 to March 31,
1999. 58% of Syscan International Inc. was acquired June 30, 1999 for a
combination of cash and shares and has been accounted for use the purchase
method. The proforma income statement also includes the proportionate income of
Syscan for the period July 1, 1998 to March 31, 1999. This is a departure from
the purchase method of accounting. The amount of Syscan's sales and net loss
included in the proforma income statement are $1,481,800 and $70,925
respectively.
<PAGE> 65
13. PENDING ACCOUNTING STANDARDS
SFAS No. 133 which relates to account for derivative instruments and hedging
activities is pending and will be adopted by the Company in Fiscal 2000.
<PAGE> 1
EXHIBIT (2)a
ARTICLES OF INCORPORATION
OF
THOR MANAGEMENT GROUP, INC.
KNOW ALL MEN BY THESE PRESENTS:
That I, Scott M. Thornock, desiring to establish a corporation under the
name of THOR MANAGEMENT GROUP, INC., for the purpose of becoming a body
corporate under and by virtue of the laws of the State of Colorado and, in
accordance with the provisions of the laws of said State, do hereby make,
execute and acknowledge this certificate in writing of my intention to become a
body corporate, under and by virtue of said laws.
ARTICLE I
The name of the corporation shall be: THOR MANAGEMENT GROUP, INC.
ARTICLE 11
The nature of the business and the objects and purposes to be transacted,
promoted and carried on are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do, and in any
part of the world, viz.:
(a) To transact all lawful business for which corporations may be
incorporated pursuant to the Colorado Corporation Code.
(b) To manufacture, purchase or otherwise acquire and to hold, own,
mortgage or otherwise lien, pledge, lease, sell, assign, exchange,
transfer or in any manner dispose of, and to invest, deal and trade in
and with goods, wares, merchandise and personal property of any and every
class and description, within or without the State of Colorado.
(c) To acquire the goodwill, rights and property and to undertake
the whole or any part of the assets and liabilities of any person, firm,
association or corporation; to pay for the same in cash, the stock of the
corporation, bonds or otherwise; to hold or in any manner dispose of the
whole or any part of the property so purchased; to conduct in any lawful
manner the whole or any part of any business so acquired and to exercise
all the powers necessary or convenient in and about the conduct and
management of such business.
(d) To guarantee, purchase or otherwise acquire, hold, sell,
assign, transfer, mortgage, pledge or otherwise dispose of shares of the
capital stock, bonds or other evidences of indebtedness created by other
corporations and, while the holder of such stock, to exercise all the
rights and privileges of ownership, including the right to vote thereon,
to the same extent as natural persons might or could do.
(e) To purchase or otherwise acquire, apply for, register, hold,
use, sell or in any manner dispose of and to grant licenses or other
rights in and in any manner deal with patents, inventions, improvements,
processes, formulas, trademarks, trade names, rights and licenses secured
under letters patent, copyright or otherwise.
<PAGE> 2
(f) To enter into, make and perform contracts of every kind for any
lawful purpose, with any person, firm, association or corporation, town,
city, county, body politic, state, territory, government, colony or
dependency thereof.
(g) To borrow money for any of the purposes of the corporation and
to draw, make, accept, endorse, discount, execute, issue, sell, pledge or
otherwise dispose of promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or non-negotiable,
transferable or nontransferable instruments and evidences of indebtedness,
and to secure the payment thereof and the interest thereon by mortgage or
pledge, conveyance or assignment in trust of the whole or any part of the
property of the corporation at the time owned or thereafter acquired.
(h) To lend money to, or guarantee the obligations of, or to
otherwise assist the directors of the corporation or of any other
corporation the majority of whose voting capital stock is owned by the
corporation, upon the affirmative vote of at least a majority of the
outstanding shares entitled to vote for directors.
(i) To purchase, take, own, hold, deal in, mortgage or otherwise
pledge, and to lease, sell, exchange, convey, transfer or in any manner
whatever dispose of real property, within or without the State of
Colorado.
(j) To purchase, hold, sell and transfer the shares of its capital
stock.
(k) To have one or more offices and to conduct any and all
operations and business and to promote its objects, within or without the
State of Colorado, without restrictions as to place or amount.
(1) To do any or all of the things herein set forth as principal,
agent, contractor, trustee, partner or otherwise, alone or in company with
others.
(m) The objects and purposes specified herein shall be regarded as
independent objects and purposes and, except where otherwise expressed,
shall be in no way limited or restricted by reference to or inference from
the terms of any other clauses or paragraph of these Articles of
Incorporation.
(n) The foregoing shall be constructed both as objects and powers
and the enumeration thereof shall not be held to limit or restrict in any
manner the general powers conferred on this corporation by the laws of the
State of Colorado.
ARTICLE III
The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is 11,000,000 of which 1,000,000 shall
be shares of preferred stock, $.001 par value per share, and 10,000,000 shall be
shares of common stock, $.0001 par value per share, and the designations,
preferences, limitations and relative rights of the shares of each class shall
be as follows:
(a) Shares of Preferred Stock. The corporation may divide and issue
the shares of preferred stock in series. Shares of preferred stock of each
series, when issued, shall be designated to distinguish them from the
shares of all other series. The Board of Directors is hereby vested with
authority to divide the class of shares of preferred stock into series and
to fix and determine the relative rights and preferences of the shares of
any such series so established to the full extent permitted by these
Articles of Incorporation and the Colorado Corporation Code in respect of
the following:
<PAGE> 3
(i) The number of shares to constitute such series, and the
distinctive designations thereof:
(ii) The rate and preference of dividends, if any, the time
of payment of dividends, whether dividends are cumulative and the
date from which any dividends shall accrue;
(iii) Whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(iv) The amount payable upon shares in event of involuntary
liquidation;
(v) The amount payable upon shares in event of voluntary
liquidation;
(vi) Sinking fund or other provisions, if any, for the
redemption or purchase of shares;
(vii) The terms and conditions upon which shares may be
converted, if the shares of any series are issued with the
privilege of conversion;
(viii) Voting powers, if any; and
(ix) Any other relative rights and preferences of shares of
such series, including, without limitation, any restriction on an
increase in the number of shares of any series theretofore
authorized and any limitation or restriction of rights or powers to
which shares of any future series shall be subject.
(b) Shares of Common Stock. The rights of holders of shares of
common stock to receive dividends or share in the distribution of assets
in the event of liquidation, dissolution or winding up of the affairs of
the corporation shall be subject to the preferences, limitations and
relative rights of the shares of preferred stock fixed in the resolution
or resolutions which may be adopted from time to time by the Board of
Directors of the corporation providing for the issuance of one or more
series of shares of preferred stock.
The capital stock, after the subscription price has been paid in, shall
not be subject to assessment to pay the debts of the corporation. Any stock of
the corporation may be issued for money, property, services rendered, labor
done, cash advances for the corporation or for any other assets of value in
accordance with the action of the Board of Directors, whose judgment as to value
received in return therefor shall be conclusive and said stock when issued shall
be fully-paid and nonassessable.
ARTICLE IV
The corporation shall have perpetual existence.
ARTICLE V
The governing board of this corporation shall be known as the Board of
Directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the Bylaws of this corporation.
The name and post office address of the incorporator is as follows:
<PAGE> 4
Scott M. Thornock 1422 Delgany Street
Denver, Colorado 80202
The name and post office address of the directors comprising the original
Board of Directors of the corporation are as follows:
Scott M. Thornock 1422 Delgany Street
Denver, Colorado 80202
<PAGE> 5
Jeff H. Lee 1422 Delgany Street
Denver, Colorado 80203
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
(a) To manage and govern the corporation by majority vote of
members present at any regular or special meeting at which a quorum shall
be present unless the act of a greater number is required by the laws of
the state of incorporation, these Articles of Incorporation or the Bylaws
of the Corporation.
(b) To make, alter, or amend the Bylaws of the corporation at any
regular or special meeting.
(c) To fix the amount to be reserved as working capital over and
above its capital stock paid in.
(d) To authorize and cause to be executed mortgages and liens upon
the real and personal property of this corporation.
(e) To designate one or more committees, each committee to consist
of two or more of the directors of the corporation, which, to the extent
provided by resolution or in the Bylaws of the corporation, shall have
and may exercise the powers of the Board of Directors in the management
of the business and affairs of the corporation. Such committee or
committees shall have such name or names as may be stated in the Bylaws
of the corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.
The Board of Directors shall have power and authority to sell, lease,
exchange or otherwise dispose of all or substantially all of the property and
assets of the corporation, if in the usual and regular course of its business,
upon such terms and conditions as the Board of Directors may determine without
vote or consent of its shareholders.
The Board of Directors shall have power and authority to sell, lease,
exchange or otherwise dispose of all or substantial1y all the property or assets
of the corporation, including its goodwill, if not in the usual and regular
course of its business, upon such terms and conditions as the Board of Directors
may determine, provided that such sale shall be authorized or ratified by the
affirmative vote of the shareholders of at least a majority of the shares
entitled to vote thereon at a shareholders' meeting called for that purpose, or
when authorized or ratified by the written consent of all the shareholders of
the shares entitled to vote thereon.
The Board of Directors shall have the power and authority to merge or
consolidate the corporation upon such terms and conditions as the Board of
Directors may authorize, provided that such merger or consolidation is approved
or ratified by the affirmative vote of the shareholders of at least a majority
of the shares entitled to vote thereon at a shareholders meeting called for that
purpose, or when authorized or ratified by the written consent of all the
shareholders of the shares entitled to vote thereon.
The corporation shall be dissolved upon the affirmative vote of the
shareholders of at least a majority of the shares entitled to vote thereon at a
meeting called for that purpose, or when authorized or ratified by the written
consent of all the shareholders of the shares entitled to vote thereon.
<PAGE> 6
The corporation shall revoke voluntary dissolution proceedings upon the
affirmative vote of the shareholders of at least a majority of the shares
entitled to vote at a meeting called for that purpose, or when authorized or
ratified by the written consent of all the shareholders of the shares entitled
to vote thereon.
<PAGE> 7
ARTICLE VI
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the corporation, and the same are in
furtherance of and not in limitation of the powers conferred by law.
No contract or other transactions of the corporation with any other
person, firm or corporation, or in which this corporation is interested shall be
affected or invalidated by (a) the fact that any one or more of the directors or
officers of this corporation is interested in or is a director or officer of
such other firm or corporation; or (b) the fact that any director or officer of
this corporation, individually or jointly with others, may be a party to or may
be interested in any such contract or transaction, so long as the contract or
transaction is authorized, approved or ratified at a meeting of the Board of
Directors by sufficient vote thereon by directors not interested therein, to
whom such fact or relationship or interest has been disclosed, or so long as the
contract or transaction is fair and reasonable to the corporation. Each person
who may become a director or officer of the corporation is hereby relieved from
any liability that might otherwise arise by reason of his contracting with the
corporation for the benefit of himself or any firm or corporation in which he
may be in any way interested.
The officers, directors and other members of management of this
corporation shall be subject to the doctrine of corporate opportunities only
insofar as it applies to business opportunities in which this corporation has
expressed an interest as determined from time to time by the corporation's Board
of Directors as evidenced by resolutions appearing in the corporation's minutes.
When such areas of interest are delineated, all such business opportunities
within such areas of interest which come to the attention of the officers,
directors and other members of management of this corporation shall be disclosed
promptly to this corporation and made available to it. The Board of Directors
may reject any business opportunity presented to it and thereafter any officer,
director or other member of management may avail himself of such opportunity.
Until such time as this corporation, through its Board of Directors, has
designated an area of interest, the officers, directors and other members of
management of this corporation shall be free to engage in such areas of interest
on their own and the provisions hereof shall not limit the rights of any
officer, director or other member of management of this corporation to continue
a business existing prior to the time that such area of interest is designated
by this corporation. This provision shall not be construed to release any
employee of the corporation (other than an officer, director or member of
management) from any duties which he may have to the corporation.
ARTICLE VII
Each director and officer of the corporation shall be indemnified by the
corporation as follows:
(a) The corporation shall indemnify any person who was or is a party, or
is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement, actually and reasonably incurred by
him in connection with such action, suit or proceeding, if he acted in
good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not of itself create a presumption
that the person did not act in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of
<PAGE> 8
the corporation and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the corporation, to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation, unless, and only to the
extent that, the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability,
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses which such court
deems proper.
(c) To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Sections (a) and (b) of
this Article, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this Article
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the officer, director and employee or agent is proper in the
circumstances, because he has met the applicable standard of conduct set
forth in Section (a) or (b) of this Article. Such determination shall be
made (i) by the Board of Directors by a majority vote of a quorum,
consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the
affirmative vote of the holders of a majority of the shares of stock
entitled to vote and represented at a meeting called for such purpose.
(e) Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding, as authorized in Section (d) of this Article, upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent
to repay such amount, unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this
Article.
(f) The Board of Directors may exercise the corporation's power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred
by him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liability under this Article.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may
be entitled under these Articles of Incorporation, the
<PAGE> 9
Bylaws, agreements, vote of the shareholders or disinterested directors,
or otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs and personal representatives of
such a person.
<PAGE> 10
ARTICLE V111
The initial registered and principal office of said corporation shall be
located at 1422 Delgany Street, Denver, Colorado 80202, and the initial
registered agent of the corporation at such address shall be Scott M. Thornock.
Part or all of the business of said corporation may be carried on in the
County of Denver, or any other place in the State of Colorado or beyond the
limits of the State of Colorado, in other states or territories of the United
States and in foreign countries.
ARTICLE IX
Whenever a compromise or arrangement is proposed by the corporation
between it and its creditors or any class of them, and/or between said
corporation and its shareholders or any class of them, any court of equitable
jurisdiction may, on the application in a summary way by said corporation, or by
a majority of its stock, or on the application of any receiver or receivers
appointed for said corporation, or on the application of trustees in
dissolution, order a meeting of the creditors or class of creditors and/or of
the shareholders or class of shareholders of said corporation, as the case may
be, to be notified in such manner as the said court decides. If a majority in
number, representing at least three-fourths in amount of the creditors or class
of creditors, and/or the holders of a majority of the stock or class of stock of
said corporation, as the case may be, agree to any compromise or arrangement
and/or to any reorganization of said corporation, as a consequence of such
compromise or arrangement, the said compromise or arrangement and/or the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding upon all the creditors or class of creditors, and/or
on all the shareholders or class of shareholders of said corporation, as the
case may be, and also on said corporation.
ARTICLE X
No shareholder in the corporation shall have the preemptive right to
subscribe to any or all additional issues of stock and/or other securities of
any or all classes of this corporation or securities convertible into stock or
carrying stock purchase warrants, options or privileges.
ARTICLE XI
Meetings of shareholders may be held at any time and place as the Bylaws
shall provide. At all meetings of the shareholders, one-third of all shares
entitled to vote shall constitute a quorum.
ARTICLE X11
Cumulative voting shall not be allowed.
ARTICLE XIII
These Articles of Incorporation may be amended by resolution of the Board
of Directors if no shares have been issued, and if shares have been issued, by
affirmative vote of the shareholders of at least a majority of the shares
entitled to vote thereon at a meeting called for that purpose, or, when
authorized, when such action is ratified by the written consent of all the
shareholders of the shares entitled to vote thereon.
ARTICLE XIV
<PAGE> 11
Any action for which the laws of the State of Colorado require the
approval of two-thirds of the shares of any class or series entitled to vote
with respect thereto, unless otherwise provided in the Articles of
Incorporation, shall require for approval the affirmative vote of a majority of
the shares of any class or series outstanding and entitled to vote thereon.
<PAGE> 12
ARTICLE XV
No director shall be personally liable to the corporation or any
shareholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director shall be liable under
Section 7-5-114 of the Colorado Revised Statutes, or any amendment thereto or
successor provision thereto and except for any matter in respect of which such
director shall be liable by reason that he (i) has breached his duty of loyalty
to the corporation or its shareholders, (ii) has not acted in good faith or, in
failing to act, has not acted in good faith, (iii) has acted in a manner
involving intentional misconduct or a knowing violation of law or, in failing to
act, has acted in a manner involving intentional misconduct or a knowing
violation of law, or (iv) has derived an improper personal benefit. Neither the
amendment nor repeal of this Article XV, nor the adoption of any provision of
the Articles of Incorporation inconsistent with this Article XV, shall eliminate
or reduce the effect of this Article XV in respect of any matter occurring, or
any cause of action, suite or claim that, but for this Article XV would accrue
or arise prior to such amendment, repeal or adoption of an inconsistent
provision.
IN TESTIMONY WHEREOF, I have hereunto set my hand on this 12th day of
January, 1998, and, by my signature below, I hereby further consent to my
appointment as the initial registered agent of the corporation.
Scott M. Thornock
STATE OF COLORADO
ss.
CITY AND COUNTY OF DENVER
I, _______________________ a Notary Public, in and for the said county and
state, hereby certify that there personally appeared before me, Scott M.
Thornock. Who being first duly sworn, declared that he is the person who
executed the foregoing document as the incorporator and the initial registered
agent of the corporation, and that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 12th day of
January. 1998.
My commission expires:
Notary Public
<PAGE> 1
EXHIBIT (2)b
UNANIMOUS WRITTEN CONSENT IN LIEU OF SPECIAL MEETING
OF THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THOR MANAGEMENT GROUP, INC.
JUNE 4, 1998
Pursuant to the provisions of Title 7, Article 108, Section 202, of tile
Colorado Revised Statutes, as amended ("C.R.S."), which provides that any action
required or permitted by Title 7, Articles 101 to 117, of C.R.S., to be taken at
a meeting of the board of directors of a corporation, may be taken without a
meeting if all members of the board of directors consent to such action in
writing, Jeffery Hin Lee and Scott M. Thornock (collectively, the "Directors" or
the "Board"), being both of the Directors of Thor Management Group, Inc. (the
"Corporation"), do hereby waive any and all notice that may be required to be
given with respect to a meeting of the Directors of the Corporation and do
hereby take, confirm and approve the action described in the resolutions below.
Pursuant to the provisions of Title 7, Article 107, Section 104, of C.R.S.,
which provides that any action required or permitted by Title 7, Articles 101 to
117, of C.R.S., to be taken at a meeting of the shareholders of a corporation,
may be taken without a meeting if all the shareholders entitled to, vote thereon
consent to such action in writing, the foregoing Directors together with Dan
Albright, James Delutes, Kirk Ebert, Entrepreneur Investments, LLC, Peter J.
Garthwaite, John Hyer, Brad Keech, Michael Krause, James K. Kreutz, Jessica Lee,
Stephen McKay, Kyla Moore, William Moore, Matt Nicholas, Rick Neitenbach, Dan
Nye, Brad Parker, Dave Preston, Gregory J. Simonds, Greg Skufka, Diana Thornock,
Stephine Torba, Velma Walters, James H. Watson, Jr., Heidi Wertz-Garthwaite and
Mary E. Writer (collectively, the "Shareholders"), being all of the Shareholders
of the Corporation, do hereby waive any and all notice that may be required to
be given with respect to a meeting of the Shareholders of the Corporation and do
hereby take, confirm and approve the action described in the resolutions below.
RESOLVED, that the Articles of Incorporation of the Corporation be
amended by increasing the total number of shares of all classes of
capital stock that the Company is authorized to issue from 11,000,000 to
31,000,000, with a concomitant increase in the authorized number of
shares of common stock, $.0001 par value per share, from 10,000,000 to
30,000,000 shares.
FURTHER RESOLVED, that the first paragraph of Article III of the
Corporation's Articles of Incorporation shall be amended so that, as
amended, the first paragraph of Article III will read in its entirety as
set forth below and, except as amended in the manner provided below, the
remainder of Article III of the Articles of Incorporation will remain in
full force and effect:
The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is 31,000,000 of
which 1,000,000 shall be shares of preferred stock, $.001 par
value per share, and 30,000,000 shall be shares of common stock,
$.0001 par value per share, and the designations, preferences,
limitations and relative rights of the shares of each class shall
be as follows:
RESOLVED, that the proper officers of the Corporation be, and they
hereby are, authorized and directed to file with the Secretary of State
of the State of Colorado the Articles of Amendment to the Articles of
Incorporation of the Corporation in the form attached hereto and
incorporated herein.
<PAGE> 2
FURTHER RESOLVED, that the proper officers of the Corporation be, and
they are hereby, authorized and directed to take all such further action
and to execute, acknowledge, deliver and/or file all such other
instruments and documents in the name and on behalf of the Corporation,
and under its corporate seal or otherwise, as in their judgment shall be
necessary, proper or advisable in order to fully carry out the intent
and to accomplish the purposes of the foregoing resolutions, the taking
of which actions and the delivery and/or filing of which instruments
and/or documents to be exclusive evidence of the need therefor,
This Unanimous Written Consent in Lieu of Special Meeting of the Board
of Directors and Shareholders of the Corporation ('Unanimous Written Consent')
when signed by both of the Directors and all of the Shareholders of the
Corporation, shall have the same effect, and may be described in any document,
as having been unanimously adopted by a vote of the Directors and the
Shareholders of the Corporation on June 4, 1998.
This Unanimous Written Consent may be executed in counterparts, each of
which shall constitute an original, but all of which together shall constitute
one document.
IN WITNESS WHEREOF, the undersigned have executed this Unanimous Written
Consent as of the 4th day of June, 1998.
/S/ [Duly signed by all of the Directors and the Shareholders of the
Corporation]
<PAGE> 1
EXHIBIT (2)c
UNANIMOUS WRITTEN CONSENT IN LIEU OF SPECIAL MEETING
OF THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THOR MANAGEMENT GROUP, INC.
JUNE 11, 1998
Pursuant to the provisions of Title 7, Article 108, Section 202, of the Colorado
Revised Statutes, as amended ("C.R.S."), which provides that any action,
required or permitted by Title 7, Articles 101 to 117, of C.R.S., to be taken at
a meeting of the board of directors of a corporation, may be taken without a
meeting if all members of the board of directors consent to such action in
writing, Jeffery Hin Lee and Scott M. Thornock (collectively, the "Directors" or
the "Board"), being both of the Directors of Thor Management Group, Inc. (the
"Corporation"), do hereby waive any arid all notice that may be required to be
given with respect to a meeting of the Directors of the Corporation and do
hereby take, confirm and approve the action described in the resolutions below.
Pursuant to the provisions of Title 7, Article 107, Section 104, of C.R.S.,
which provides that any action required or permitted by Title 7, Articles 101 to
117, of C.R.S., to be taken at a meeting of the shareholders of a corporation,
may be taken without a meeting If all the shareholders entitled to vote thereon
consent to such action in writing, the foregoing Directors together with Dan
Albright, James Delutes, Kirk Eberl, Entrepreneur Investments, LLC, Peter J.
Garthwaite, John Hyer, Brad Keech, Michael Krause, James K. Kreutz, Jessica Lee,
Stephen McKay, Kyla Moore, William Moore., Matt Nicholas, Rick Neitenbach, Dan
Nye, Brad Parker, Dave Preston, Gregory J. Simonds, Greg Skufka, Diana Thornock,
Stephine Torba, Velma Walters, James H. Watson, Jr., Heidi Wertz-Garthwaite and
Mary E. Writer (collectively, the "Shareholders'), being all of the Shareholders
of the Corporation, do hereby waive an), and all notice that may be required to
be given with respect to a meeting of the Shareholders of the Corporation and do
hereby take, confirm and approve the action described in the resolutions below.
<PAGE> 2
RESOLVED, that the Articles of Incorporation of the Corporation be amended to
change the name of the Corporation from "Thor Management Group, Inc." to "AXYN
Canada Corporation."
FURTHER RESOLVED, that Article I of the Corporation's Articles of Incorporation
shall be amended so that, as amended, Article I will read in its entirety as set
forth below and, except as amended in the manner provided below, the remainder
of the Articles of Incorporation will remain in full force and effect:
ARTICLE I
THE NAME of the Corporation shall be: AXYN Corporation.
RESOLVED, that the proper officers of the Corporation be, and they hereby are,
authorized and directed to file with the Secretary of State of the State of
Colorado the Articles of Amendment to the Articles of Incorporation of the
Corporation in the form attached hereto arid incorporated herein.
FURTHER RESOLVED, that the proper officers of the Corporation be, and they are
hereby, authorized and directed to take. all such further action and to execute,
acknowledge, deliver and/or file all such other instruments and documents in the
name and on behalf of the Corporation., and tinder its corporate seal or
otherwise, as in their judgment shall be necessary, proper or advisable in order
to fully carry out the intent and to accomplish the purposes of the foregoing
resolutions, the taking of which actions and the delivery and/or filing of which
instruments and/or documents to be exclusive evidence of the need therefor.
This Unanimous Written Consent in Lieu of Special Meeting of the Board of
Directors and Shareholders of the Corporation ("Unanimous Written Consent")
when., signed by both of the Directors and all of the Shareholders of the,
Corporation, shall have the same effect, and may be described in any document,
as having been unanimously adopted by a vote of the Directors and the
Shareholders of the Corporation on. June 11, 1998.
This Unanimous Written Consent may be executed in counterparts, each of which
shall constitute an original, but all of which together shall constitute one
document.
<PAGE> 1
EXHIBIT (2)d
RESOLUTION OF
THE BOARD OF DIRECTORS
FOR AXYN CORPORATION
The following, being all of the members of the Board of Directors, hereby agree
to the following unanimous resolutions:
SERIES 1 PREFERRED SHARES
Whereas the Corporation is authorized, by Article III of the Articles of
incorporation, to issue up to 1,000,000 (one Million) shares of preferred stock,
with such rights and preferences as may be determined by the Board of Directors.
Resolved that the shares of preferred stock, to be designated Series 1 Preferred
Shares shall be limited in number to 1,000,000, and shall have attached thereto
the following rights, privileges, restrictions and conditions:
1.1 Declaration and payment of dividends
Whenever any dividend is properly declared on the common shares of the
Corporation, a dividend at the same time shall be declared on each
Series 1 Preferred Share of an amount equal to three times the dividend
payable on each common share. "Dividend" is hereby defined to include
dividends in cash or stock, and by whether by way of distribution or
amalgamation of the capital stock of the Corporation. The entitlement of
the holders of the Series 1 Preferred Shares to such dividends shall not
be in preference to the entitlement of the holders of common shares of
the Corporation. Save as set out above, the holders of the Series 1
Preferred Shares are not entitled to any dividend whatsoever.
1.2 Dissolution
In the event of the liquidation, dissolution or winding-up of the
Corporation or other distribution of assets of the Corporation among
shareholders for the purpose of winding-up its affairs, the holders of
the Series 1 Preferred Shares shall be entitled to receive from the
assets of the Corporation based on the equivalent to three common shares
of the Corporation. The entitlement of the holders of the Series 1
Preferred Shares to such dividends shall not be in preference to the
entitlement of the holders of common shares of the Corporation.
1.3 Voting Rights
The holders of the Series 1 Preferred Shares shall be entitled, as such,
to receive notice of and attend and vote at any meeting of the
shareholders of the Corporation and to sign any resolution in writing in
lieu thereof, on the basis of three votes for each Series 1 Preferred
Share.
1.4 Conversion Rights
At any time after June 1, 2003, the holders of the Series 1 Preferred
Shares may convert all or a part of the Series 1 Preferred Shares into
fully paid common shares on the basis of three common shares for each
Series 1 Preferred Share. Holders of Series 1 Preferred Shares desiring
to convert such shares into common shares shall surrender the
certificate or certificates representing the same to the company at its
head office or to its registrar and transfer agent named on the
certificates together with a written notice of exercising the right to
convert, and thereupon such holders are entitled to receive a
certificate for the appropriate number of fully paid and non-assessable
common shares. The Corporation may not compel the holders of the Series
1 Preferred Shares to convert their shares into common shares of the
Corporation.
<PAGE> 2
1.5 Rights of Redemption
ACQUISITION OF AXYN TECHNOLOGIES CORP.
RESOLVED THAT the Corporation acquire all the outstanding shares of AXYN
Technologies Corporation in accordance with the terms set out in the letter of
intent dated May 24, 1999.
ISSUE OF SERIES 1 PREFERRED SHARES
RESOLVED THAT 500,000 Series 1 Preferred Shares with par value of $.0001 each in
the capital of the Corporation be set aside for allotment and issued in
accordance with the letter of intent and valuation dated May 24, 1999, both
pertaining to the acquisition of the outstanding shares of AXYN Technologies
Corporation. The Secretary is authorized to execute such documents as are
necessary to carry out the requirements of such letter of intent and valuation.
Upon the Corporation having received the shares of common stock of AXYN
Technologies Corporation ("ATC") in respect of each such share that the said
SERIES 1 PREFERRED SHARES with par value $.0001 each are hereby declared to be
fully paid and non-assessable shares.
Dated: May 24, 1999
[Duly signed by the Board of Directors]
/S/ Chris Zawitkowski/ /S/ Janusz Rydel/ /S/ Scott Feagan/ /S/ Robert Bell/
<PAGE> 1
EXHIBIT (2)e
BYLAWS
OF
THOR MANAGEMENT GROUP, INC.
ARTICLE I
OFFICES
The registered office of Thor Management Group, Inc. (the "Corporation")
shall be located in the State of Colorado. The Corporation may have its
principal office and such other offices either within or without the State of
Colorado as the Board of Directors of the Corporation (the "Board") may
designate or as the business of the Corporation way require.
The registered office of the Corporation in the Articles of Incorporation
(the "Articles") need not be identical with the principal office.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held each year on a date and at a time and place to be determined by resolution
of the Board, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the election of directors
shall not be held on the day designated for the annual meeting of the
shareholders, or at any adjournment thereof, the Board shall cause the election
to be held at a special meeting of the shareholders.
Section 2. Special Meetings. Special meetings of the shareholders for any
purpose, unless otherwise provided for by statute may be called by the
president, the Board or by the president at the request of the holders of not
less than one-tenth of all the shares of the Corporation entitled to vote at the
meeting.
Section 3. Place of Meeting. The Board may designate any place, either
within or without the State of Colorado, as the place of meeting for any annual
or special meeting. If no designation is made, the place of meeting shall be the
registered office of the Corporation in the State of Colorado.
Section 4. Notice of Meeting. Written notice, stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered as the laws of the State of
Colorado shall provide.
Section 5. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board may fix in advance a date (the "Record Date") for any
such determination of shareholders, which date shall be not more than 50 days
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If no Record Date is fixed by the Board, the Record
Date for any such purpose shall be ten days before the date of such meeting or
action. The Record Date determined for the purpose of ascertaining the number of
shareholders entitled to notice of or to vote
<PAGE> 2
at a meeting may not be less than ten days prior to the meeting. When a Record
Date has been determined for the purpose of a meeting, the determination shall
apply to any adjournment thereof.
Section 6. Quorum. If less than a quorum of the outstanding shares as
provided for in the Articles are represented at a meeting, such meeting may
be adjourned without further notice for a period which shall not exceed 60
days. At such adjourned meeting, at which a quorum shall be present, any
business may be transacted which might have been transacted at the original
meeting. Once a quorum is present at a duly organized meeting, the
shareholders present may continue to transact business until adjournment,
notwithstanding any departures of shareholders during the meeting which
leave less than a quorum.
Section 7. Voting of Shares. Each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders.
Section 8. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary
of the Corporation before or at the time of the meeting. No proxy shall be
valid after 11 months from the date of its execution, unless otherwise
provided in the proxy. Proxies shall be in such form as shall be required
by the Board of Directors and as set forth in the, notice of meeting and/or
proxy or information statement concerning such meeting.
Section 9. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation way be voted by agent or proxy as the bylaws of
such corporation may prescribe or, in the absence of such provision, as the
Board of Directors of such corporation may determine as evidenced by a duly
certified copy of either the bylaws or corporate resolution.
Neither treasury shares nor shares held by another corporation, if the
majority of the shares entitled to vote for the election of directors of
such other corporation is held by the Corporation, shall, be voted at any
meeting or counted in determining the total number of outstanding shares at
any given time.
Shares held by an administrator, executor, guardian or conservator may
be voted by such fiduciary, either in person or by proxy, without a
transfer of such shares into the name of such fiduciary. Shares standing in
the name of a trustee may be voted by such trustee, either in person or by
proxy, but no trustee shall be entitled to vote shares held by a trustee
without a transfer of the shares into such trust.
Shares standing in the name of a receiver may be voted by such
receiver and shares held by or under the control of a receiver may be voted
by such receiver, without the transfer thereof into the name of such
receiver if authority so to do is contained in an appropriate order of the
court by which the receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred on the books of the
Corporation into the name of the pledgee, and thereafter the pledgee shall
be entitled to vote the shares so transferred.
<PAGE> 3
Section 10. Action by Consent of all Shareholders. Any action required
to be taken, or which may be taken at a meeting of the shareholders may be
taken without a meeting, if a consent in writing, setting forth the action
so taken, shall be signed by all of the shareholders entitled to vote with
respect to the subject matter thereof. Such written consent or consents
shall be filed with the minutes of the Corporation. Such action by written
consent of all entitled to vote shall have the same force and effect as a
unanimous vote of such shareholders.
Section 11. Inspectors. The Board may, in advance of any meeting of
shareholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any
of them shall fail to appear or act, the chairman of the meeting may
appoint inspectors. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the
best of his ability. The inspectors shall determine the number of shares
outstanding and the voting power of each, the number of shares represented
at the meeting, the existence of a quorum, the validity and effect of
proxies and shall receive votes, ballots or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots or consents, determine the result and
do such acts as are proper to conduct the election or vote with fairness to
all shareholders. On request of the chairman of the meeting or any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall
execute a certificate of any fact found by them.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The Board shall have the power to manage the
business and affairs of the Corporation in such manner as it sees fit. In
addition to the powers and authorities expressly conferred upon it, the Board
may do all lawful acts which are not directed to be done by the shareholders by
statute, by the Articles or by these Bylaws.
Section 2. Number, Tenure and Qualifications. The number of directors of
thc Corporation shall not be, less than one. Each director shall hold office
until the next annual meeting of shareholders and until a successor director has
been elected and qualified, or until the death, resignation or removal of such
director. Directors need not be residents of the State of Nevada or shareholders
of the Corporation.
Section 3. Regular Meetings. A regular meeting of the Board shall be held,
without other notice than this Bylaw, immediately after and at the same place as
the annual meeting of shareholders. The Board may provide, by resolution, the
time and place, either within or without the State of Colorado, for the holding
of additional regular meetings, without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the Board may be called by
or at the request of the Chairman of the Board, the Chief Executive Officer or
any two directors. The person or persons authorized to call special meetings of
the Board may fix any place, either within or without the State of Colorado, as
the place for holding any special meeting of the Board called by them.
Section 5. Telephonic Meetings. Members of the Board and committees thereof
may participate and be deemed present at a meeting by means of conference
telephone or similar communications equipment by which all persons participating
in the. meeting can hear each other at the same time.
<PAGE> 4
Section 6. Notice. Notice of any special meeting of the Board shall be
given by telephone, telegraph or written notice sent by mail. Notice shall be
delivered at least one day prior to the meeting (five days before the meeting if
the meeting is held outside the State of Colorado) if given by telephone or
telegram or if delivered personally. If notice is given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered by the telegraph
company. Written notice may be delivered by mail to each director at such
director's business or home address and, if mailed, shall be delivered at least
five days prior to the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed with postage
thereon prepaid. Any director may waive notice of any meeting. The attendance of
a director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board need be specified in the notice or
waiver of notice of such meeting,
Section 7. Quorum. A majority of the total membership of the Board shall
constitute a quorum for the transaction of business at any meeting of the Board,
but if a quorum shall not be present at any meeting or adjournment thereof, a
majority of the directors present may adjourn the meeting without further
notice.
Section 8. Action by Consent of all Directors. Any action required to be
taken, or which may be taken at a meeting of the Board may be taken without a
meeting, if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors entitled to vote with respect to the subject
matter thereof. Such written consent or consents shall be filed with the minutes
of the Corporation. Such action by written consent of all entitled to vote shall
have the same force and effect as a unanimous vote of such directors at a
meeting of directors at which a quorum is present.
Section 9. Manner of Acting. The act of a majority of the directors present
at a meeting at which a quorum is present shall be an act of the Board.
The order of business at any regular or special meeting of the Board shall
be:
1 . Record of those present.
2. Secretary's proof of notice of meeting, if notice is not
waived.
3. Reading and disposal of unapproved minutes, if any.
4. Reports of officers, if any.
5. Unfinished business, if any.
6. New business,
7. Adjournment.
Section 10. Vacancies. Any vacancy occurring in the Board by reason of an
increase in the number specified in these Bylaws, or for any other reason, may
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board may remain at the time such meeting
considering filling such vacancies is held.
Section 11. Compensation. By resolution of the Board, the directors may be
paid their expenses, if any, for attendance at each meeting of the Board and may
be paid a fixed sum for attendance at each meeting of the Board and a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor or from
receiving compensation for any extraordinary or unusual services as a director.
<PAGE> 5
Section 12. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless the dissent
of such director shall be entered in the minutes of the meeting, filed in
writing with the person acting as the secretary of the meeting before the
adjournment thereof or forwarded by registered mail to the Secretary of the
Corporation immediately after the meeting. Such right to dissent shall not apply
to a director who voted in favor of such action.
Section 13. Executive or Other Committees. The Board, by resolution adopted
by a majority of the entire Board, may designate among its members an executive
committee and one or more other committees each of which, to the extent provided
in the resolution, shall have all of the authority of the Board, but no such
committee shall have the authority of the Board in reference to amending the
Articles, adopting a plan of merger or consolidation, recommending to the
shareholders the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Corporation otherwise than
in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the Corporation or a revocation thereof,
or amending the Bylaws. The designation of such committees and the delegation
thereto of authority shall not operate to relieve the Board, or any member
thereof, of any responsibility imposed by law.
Any action required to be taken, or which may be taken at a meeting of a
committee designated in accordance with this Section of the Bylaws, may be taken
without a meeting, if a consent in writing setting forth the action so taken
shall be signed by all those entitled to vote with respect to the subject matter
thereof. Such written consent or consents shall be filed with the minutes of the
Corporation. Such action by written consent of all entitled to vote shall have
the same force and effect as a unanimous vote of such persons.
Section 14. Resignation of Officers or Directors. Any director or officer
may resign at any time by submitting a resignation in writing. Such resignation
takes effect from the time of its receipt by the Corporation unless a date or
time is fixed in the resignation, in which case it will take effect from that
time. Acceptance of the resignation shall not be required to make it effective.
Section 15. Notice Requirements -for Director Nomination. Any nomination
for election to the Board of Directors by the stockholders otherwise than
pursuant to Board resolution must be submitted to the Corporation's secretary no
later than 25 days and no more than 60 days prior to the meeting of stockholders
at which such nominations are to be submitted. In the event notice of the
meeting at which such nomination is desired to be submitted is not mailed or
otherwise sent to the stockholders of the Corporation at least 30 days prior to
the meeting, the Corporation must receive the notice of intent to nominate no
later than seven days after notice of the meeting is mailed or sent to the
stockholders by the Corporation. Notices to the Corporation's Secretary of
intent to nominate a candidate for election as a director must give the name,
age, business address and principal occupation of such nominee and the number of
shares of stock of the Corporation held by such nominee. Within seven days after
filing of the notice, a signed and completed questionnaire relating to the
proposed nominee (which questionnaire will be supplied by the Corporation to the
person submitting the notice) must be filed with the Secretary of the
Corporation. Unless this notice procedure is followed, the chairman of a
stockholders' meeting may declare the nomination defective and it may be
disregarded.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a president, a
secretary and a treasurer, all of whom shall be executive officers and each of
whom shall be elected by the Board, and such other officers as the Board
<PAGE> 6
may designate from time to time. A Chairman of the Board, Vice Chairman of the
Board and one or more Vice Presidents shall be executive officers if the Board
so determines by resolution. Such other officers and assistant officers, as may
be deemed necessary, shall be designated administrative assistant officers and
may be appointed and removed as the Chief Executive Officer decides. Any two or
more offices may be held by the same person, except the offices of President and
Secretary.
Section 2. Election and Term of Office. The executive officers of the
Corporation, to be elected by the Board, shall be elected annually by the Board
at its first meeting held after each annual meeting of the shareholders or at a
convenient time soon thereafter. Each executive officer shall hold office until
the resignation of such officer or until a successor shall be duly elected and
qualified, until the death of such executive officer, or until removal of such
officer in the manner herein provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board
may be removed by the Board whenever, in its judgment, the best interests of the
Corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any executive office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
for the unexpired portion of the term.
Section 5. The Chairman of the Board. If a Chairman of the Board (the
"Chairman") shall be elected by the Board, the Chairman shall preside at all
meetings of the shareholders and of the Board. The Chairman may sign, with the
officers authorized by the Chief Executive Officer or the Board, certificates
for the shares of the Corporation and shall perform such other duties as from
time to time are assigned by the Chief Executive Officer or the Board. The
Chairman of the Board may be elected as the Chief Executive Officer, in which
case the Chairman shall perform the duties hereinafter set forth in Article IV,
Section 7, of these Bylaws.
Section 6. The President. The President may sign, with the officers
authorized by the Chief Executive Officer or the Board, certificates for shares
of the Corporation and shall perform such other duties as from time to time are
assigned by the Chief Executive Officer or the Board. The President may be
elected as the Chief Executive Officer of the Corporation, in which case the
President shall perform the duties hereinafter set forth in Article IV, Section
7, of these Bylaws.
Section 7. The Chief Executive Officer. If no Chairman shall be elected by
the Board, the President shall be the Chief Executive Officer of the
Corporation. If a Chairman is elected by the Board, the Board shall designate,
as between the Chairman and the President, who shall be the Chief Executive
Officer. The Chief Executive Officer shall be, subject to the control of the
Board, in general charge of the affairs of the Corporation. The Chief Executive
Officer may sign, with the other officers of the Corporation authorized by the
Board, deeds, mortgages, bonds, contracts, or other instruments whose execution
the Board has authorized, except in cases where the signing and execution
thereof shall be expressly delegated by the Board or these Bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed.
Section 8. The Vice Chairman of the Board. If a Chairman shall be elected
by the Board, the Board may also elect a Vice Chairman of the Board (the "Vice
Chairman"). In the absence of the Chairman or in the event of the death or
inability or refusal to act of the Chairman, the Vice Chairman shall perform the
duties of the Chairman and when so acting shall have all of the powers of and be
subject to all of the restrictions upon the Chairman. The Vice Chairman may
sign, with the other officers authorized by the Chief Executive Officer or the
Board, certificates for shares of the
<PAGE> 7
Corporation and shall perform such other duties as from time to time may be
assigned by the Chief Executive Officer or the Board.
Section 9. The Vice President. In the absence of the President or in the
event of the death or inability or refusal to act of the President, the Vice
President shall perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. In the event there is more than one Vice President, the Vice
Presidents in the order designated at the time of their election, or in the
absence of any designation, then in the order of their election, shall perform
the duties of the President and, when so acting, shall have all the powers of
and shall be subject to all the restrictions upon the President. Any Vice
President may sign, with the other officers authorized by the Chief Executive
Officer or the Board, certificates for shares of the Corporation and shall
perform such other duties as from time to time may be assigned by the Chief
Executive Officer or the Board.
Section 10. The Secretary. Unless the Board otherwise directs, the
Secretary shall keep the minutes of the shareholders' and directors' meetings in
one or more books provided for that purpose. The Secretary shall also see that
all notices are duly given in accordance with the law and the provisions of the
Bylaws; be custodian of the corporate records and the seal of the Corporation;
affix the seal or direct its affixation to all documents, the execution of which
on behalf of the Corporation is duly authorized; keep a list of the address of
each shareholder; sign, with the other officers authorized by the Chief
Executive Officer or the Board, certificates for shares of the Corporation;
have charge of the stock transfer books of the Corporation and perform all
duties incident to the office of Secretary and such other duties as may be
assigned by the Chief Executive Officer or by the Board.
Section 11. The Treasurer. If required by the Board, the Treasurer shall
give a bond for the faithful discharge of his duties in such sum and with such
surety or sureties as the Board shall determine. He shall have charge and
custody of and be responsible for all funds and securities of the Corporation,
receive and give receipts for monies due and payable to the Corporation from any
source whatsoever and deposit all such monies in the name of the Corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of the Bylaws. The Treasurer may sign, with the
other officers authorized by the Chief Executive Officer or the Board,
certificates for shares of the Corporation and shall perform all duties incident
to the office of Treasurer and such other duties as from time to time may be
assigned by the Chief Executive Officer or the Board.
Section 12. Assistant Officers. The Chief Executive Officer may appoint
such other officers and agents as may be necessary or desirable for the business
of the Corporation. Such other officers shall include one or more assistant
secretaries and treasurers who shall have the power and authority to act in
place of the officer for whom they are elected or appointed as an assistant in
the event of the officer's inability or unavailability to act in his official
capacity. The assistant secretary or secretaries or assistant treasurer or
treasurers may sign, with the other officers authorized by the Chief Executive
Officer or the Board, certificates for shares of the Corporation. The assistant
treasurer or treasurers shall, if required by the Board, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board shall determine. The assistant secretaries and assistant treasurers, in
general, shall perform such duties as shall be assigned to them by the Secretary
or the Treasurer, respectively, or by the Chief Executive Officer or the Board.
Section 13. Salaries. The salaries of the executive officers shall be fixed
by the Board and no officer shall be prevented from receiving such salary by
reason of the fact that such officer is also a director of the Corporation. The
salaries of the administrative assistant officers shall be fixed by the Chief
Executive Officer.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
<PAGE> 8
Section 1. Contracts. The Board may authorize any officer or officers,
agent or agents, to enter into any contract on behalf of the Corporation and
such authority may be general or confined to specific instances.
Section 2. Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes or other evidence of indebtedness, issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents,
of the Corporation and in such manner as shall from time to time be determined
by resolution of the Board.
Section 3. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select.
ARTICLE VI
CERTIFICATES FOR SECURITIES AND THEIR TRANSFER
Section 1. Certificates for Securities. Certificates representing
securities of the Corporation (the "Securities") shall be in such form as shall
be determined by the Board. To be effective, such certificates for Securities
(the "Certificates") shall be signed by (i) the Chairman or Vice Chairman or by
the President or a Vice President; and (ii) the Secretary or an assistant
Secretary or by the Treasurer or an assistant treasurer of the Corporation. Any
of all of the signatures may be facsimiles if the Certificate is either
countersigned by the transfer agent, or countersigned by the facsimile signature
of the transfer agent and registered by the written signature of an officer of
any company designated by the Board as registrar of transfers so long as that
officer is not an employee of the Corporation.
A Certificate signed or impressed with the facsimile signature of an
officer, who ceases by death, resignation or otherwise to be an officer of the
Corporation before the Certificate is delivered by the Corporation, is valid
though signed by a duly elected, qualified and authorized officer, provided that
such Certificate is countersigned by the signature of the transfer agent or
facsimile signature of the transfer agent of the Corporation and registered as
aforesaid.
All Certificates shall be consecutively numbered or otherwise identified.
Certificates shall state the jurisdiction in which the Corporation is organized,
the name of the person to whom the Securities are issued, the designation of the
series, if any, and the par value of each share represented by the Certificate,
or a statement that the shares are without par value, the name, and address of
the person to whom the Securities represented hereby are issued, the number of
Securities, and date of issue, shall be entered on the Security transfer books
of the Corporation. All Certificates surrendered to the Corporation for transfer
shall be cancelled and no new Certificate shall be issued until the former
Certificate for a like number of shares shall have been surrendered and
cancelled, except that, in case of a lost, destroyed or mutilated Certificate, a
new one may be issued therefor upon such terms and indemnity to the Corporation
as the Board may prescribe.
Section 2. Transfer of Securities. Transfers of Securities shall be made
only on the security transfer books of the Corporation by the holder of record
thereof, by the legal representative of the holder who shall furnish proper
evidence of authority to transfer, or by an attorney authorized by a power of
attorney which was duly executed and filed with the Secretary of the Corporation
and a surrender for cancellation of the certificate for such shares. The person
in whose name Securities stand on the books of the Corporation shall be deemed
by the Corporation to be the owner thereof for all purposes.
ARTICLE VII
FISCAL YEAR
<PAGE> 9
The fiscal year of the Corporation shall be determined by resolution
of the Board.
ARTICLE VIII
DIVIDENDS
The Board may declare, and the Corporation may pay in cash, stock or other
property, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law mid its Articles.
ARTICLE IX
SEAL
The Board shall provide a corporate seal, circular in form, having
inscribed thereon the corporate name, the state of incorporation. and the word
"Seal." The seal on Securities, any corporate obligation to pay money or any
other document may be facsimile, or engraved, embossed or printed.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director
of the Corporation under the provisions of these Bylaws or under the provisions
of the Articles or under the provisions of the applicable laws of the State of
Colorado, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before, at or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
ARTICLE XI
INDEMNIFICATION
The Corporation shall have the power to indemnify any director, officer,
employee or agent of the Corporation or any person serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise to the fullest extent
permitted by the laws of the State of Colorado.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended, repealed or replaced by new Bylaws by
the Board at any regular or special meeting of the Board.
ARTICLE XIII
UNIFORMITY OF INTERPRETATION AND SEVERABILITY
These Bylaws shall be so interpreted and construed as to conform to the
Articles and the statutes of the State of Colorado or of any other state, in
which conformity may become necessary by reason of the qualification of the
Corporation to do business in such foreign state, and where conflict between
these Bylaws mid the Articles or a statute has arisen or shall arise, the
Bylaws shall be considered to be modified to the extent, but only to the extent,
conformity shall require. If any Bylaw provision or its application shall be
deemed invalid by reason of the said nonconformity, the remainder of the Bylaws
shall remain operable in that the provisions set forth in the Bylaws are,
severable.
<PAGE> 1
EXHIBIT (6)a
LE GROUPE MOBITECH INC.
AND
AXYN CANADA CORPORATION
AND
AXYN CORPORATION
PURCHASE AGREEMENT
JH:dd
1999-06-30
File No. AXYN-90620
JOHN HOLLANDER
BARRISTER AND SOLICITOR
#201-338 MONTREAL ROAD
VANIER, ONTARIO
K1L 6B3
<PAGE> 2
PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT in duplicate this 30th day of June, 1999.
BETWEEN: MR. RAYMOND CARRIER
The sole shareholder of Le Groupe Mobitech Inc., a
company incorporated under the laws of Quebec
(hereinafter referred to as the "VENDOR")
OF THE FIRST PART
AND: AXYN CANADA CORPORATION
a company incorporated under the laws
of Ontario
(hereinafter referred to as the "PURCHASER")
OF THE SECOND PART
AND: AXYN CORPORATION
a company incorporated under the laws
of Colorado
(hereinafter referred to as the "AXYN")
OF THE THIRD PART
THIS AGREEMENT WITNESSES that for and in consideration of the mutual
covenants and agreements contained in this Agreement and other good and
valuable consideration (the receipt and sufficiency of which are
acknowledged), the parties covenant and agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of this
Agreement, the Vendor agree to sell, assign and transfer to the
Purchaser and the Purchaser agrees to purchase from the Vendor as at and
from the close of business on June 30, 1999 (the "CLOSING DATE") 100 "A"
category Shares that represents all of the issued and outstanding common
shares in the capital stock of Le Groupe Mobitech Inc. (the "PURCHASED
SHARES").
<PAGE> 3
2
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price and Payment. The purchase price payable to the Vendor for
the Purchased Shares shall be satisfied as follows:
i. by the issuance on the Closing Date of 282,000 shares of the
Purchaser which shall be convertible one for one into an equal
number of shares of AXYN.
2.2 Share Restrictions. The Vendor acknowledge that they will be subject to
restrictions on the sale of shares of AXYN and the Purchaser, as the
case may be, in accordance with the laws of the United States and
Canada, the applicable securities regulations thereto and the terms of
this Agreement. The Shares issued to the Vendor shall bear such
restrictions on the face of the share certificates. The restrictions on
the transfer of the common shares issued by the Purchaser pursuant to
this Agreement shall be removed upon the Purchaser's compliance with
applicable securities regulations in the relevant jurisdiction and in
proportion to all other issued common shares of AXYN.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Vendor. The Vendor represent and
warrant as follows to the Purchaser and acknowledges that the Purchaser
is relying on such representations and warranties in connection with the
purchase by it of the Purchased Shares:
a) Corporate Status. Le Groupe Mobitech Inc. (the "CORPORATION") is a
corporation duly incorporated and organized and validly subsisting in
good standing under the laws of the province of Quebec. The Corporation
has the corporate power, authority and capacity to own its property and
to carry on its business as now being conducted by it. No bankruptcy,
insolvency or receivership proceedings have been instituted or are
pending against the Corporation and the Corporation is able to satisfy
its liabilities as they become due.
b) Authorized and Issued Capital. The authorized capital of the Corporation
consists of an unlimited number of common shares of which 100 "A"
category shares have been validly issued to the Vendor and are
outstanding as fully paid and non-assessable (the "TOTAL SHARES"). No
shares, options, warrants or other rights for the purchase, subscription
or issuance of shares or other securities of the Corporation or
securities convertible into or exchangeable for shares of the
Corporation have been authorized or agreed to be issued or are
outstanding, which would have the effect of reducing the percentage
ownership represented by the Purchased Shares below 100%.
c) Purchased Shares. The Vendor are the legal and beneficial owners of
the Purchased Shares. On the Closing Date, the Purchaser shall acquire
good and marketable title to the Purchased Shares, free and clear of all
agreements, mortgages, liens, charges, pledges, hypothecs, security
interests, encumbrances or other rights or claims of others. The Total
Shares constitute all of the issued
<PAGE> 4
3
and outstanding shares in the capital of the Corporation owned by the
Vendor and there are no restrictions on the transfer of the Purchased
Shares except those set forth in the constating documents of the
Corporation.
d) No Other Agreements. No person, firm or corporation has any written or
oral agreement, option, understanding or commitment, or any right or
privilege capable of becoming an agreement, for the purchase from the
Vendor of any of the Total Shares.
e) Corporate Records. The corporate records and minute books of the
Corporation contain complete and accurate minutes of all meetings of and
copies of all by-laws and all resolutions passed by the directors and
shareholders of the Corporation since its incorporation. All such
meetings were duly called and held, all such by-laws and resolutions
were duly passed and the share certificate books, registers of
shareholders, registers of transfers and other corporate registers of
the Corporation are complete and accurate in all material respects.
f) Accurate Records. The books and records of the Corporation fairly and
correctly set out and disclose in all material respects, in accordance
with generally accepted accounting principles, the financial position of
the Corporation as at the date of this Agreement and all financial
transactions relating to the Corporation have been accurately recorded
in those books and records.
g) Financial Statements. The financial statements of the Corporation as at
June 30, 1999 (the "BALANCE SHEET DATE") and for the period then ended
have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with those of previous fiscal
years and are true and correct and present fairly the assets,
liabilities (whether accrued, absolute, contingent or otherwise) and the
financial condition of the Corporation as at the Balance Sheet Date, and
the sales and earnings of the Corporation during the period covered by
those financial statements.
h) Title to Assets. The Corporation has good and marketable title to all of
its properties and assets, free and clear of all mortgages, pledges,
charges, hypothecs, liens, title retention agreements, security
interests, encumbrances or rights of others of any kind or character,
other than those disclosed on the balance sheet of the Corporation.
i) Undisclosed Liabilities. The Corporation has no liabilities (whether
accrued, absolute, contingent or otherwise) of any kind except
liabilities incurred in the ordinary course of business since the
Balance Sheet Date which are not inconsistent with past practice, and
are not, in the aggregate, material and adverse to the business,
properties, assets, financial condition or results of operation of the
Corporation.
j) No Loans. After the Closing Date, no loans by the Corporation or other
indebtedness due to the Corporation shall be outstanding (other than the
normal salaries, bonuses, fringe benefits and the obligation to
reimburse for expenses incurred on behalf of the Corporation in the
normal course of employment) from the Vendor or from any person or
corporation not dealing at arm's length or who
<PAGE> 5
4
is affiliated (as those terms are used in the INCOME TAX ACT (Canada))
with the Vendor.
k) Tax Returns. The Corporation has duly filed all tax returns required to
be filed by it (including all information returns as to which non-filing
or late filing could result in interest or penalties), has made complete
and accurate disclosure in such returns and has duly paid all taxes due
from it to federal, provincial or local taxing authorities, including,
without limitation, those due in respect of its properties, income,
capital, sales, use of property and payroll. The Corporation has also
paid all assessments and reassessments and all other taxes, governmental
charges, penalties, interest and fines due and payable by the
Corporation up to the date of this Agreement. The Corporation has made
adequate provision for and will have sufficient cash on hand to satisfy
any taxes which are payable during the current fiscal period for which
tax returns are not yet required to be filed. There are no agreements,
waivers or other arrangements providing for an extension of time with
respect to the assessment or reassessment of income tax or the filing of
any tax return by, or payment of any tax by, or levying of any
governmental charge against the Corporation. There are no actions,
audits, assessments, reassessments, suits, proceedings, investigations
or claims now threatened or pending against the Corporation in respect
of taxes or governmental charges or any matters under discussion with
any governmental authority relating to taxes or governmental charges
asserted by any such authority. The Corporation has withheld from each
payment made by it the amount of all taxes and other deductions required
to be withheld from it and has paid the same to the proper taxing or
other authority within the time prescribed under any applicable
legislation or regulation.
l) Ordinary Course. Since the Balance Sheet Date:
i. the Corporation has not carried on any business, other than its
ordinary continuing business;
ii. no capital expenditures have been made or authorized by the
Corporation;
iii. there has been no change in the affairs, business, prospects,
operations or condition of the Corporation, financial or
otherwise;
iv. the Corporation has not transferred, assigned, sold or otherwise
disposed of any of its property or assets other than those
disclosed in writing to the Purchaser;
v. the Corporation has not suffered an extraordinary loss nor
waived any rights of material value nor entered into any
material commitment or transaction;
vi. the Corporation has not declared or paid any dividends or
declared or made any other distribution on any of its securities
or shares, and has not, directly or indirectly, redeemed,
purchased or otherwise acquired any of its securities or shares
or agreed to do so except as disclosed in writing and agreed to
by the Purchaser;
vii. the Corporation has not incurred or assumed any obligation or
liability
<PAGE> 6
5
(fixed or contingent), except secured and unsecured current
obligations and liabilities, particulars of which have been
disclosed in writing to the Purchaser or its representatives; or
viii. the Corporation has not amended or changed or taken any action
to amend or change its constating documents.
m) Non-Arm's Length Transactions. The Corporation has not entered into any
contracts, agreements, options or arrangements or incurred or assumed
any obligation or liability (whether fixed or contingent) with, on
behalf of or with respect to the Vendor or any other non-arm's length
person or any affiliate of the Vendor (as those terms are defined in the
INCOME TAX ACT (Canada)), whether jointly or severally.
n) Material Contracts. The Corporation is not a party to nor bound by any
material agreement, contract or commitment, whether written or oral, of
any nature or kind whatsoever, other than those disclosed on Schedule 4.
The Corporation is not in default or breach of any agreement, contract
or commitment and there exists no state of facts which after notice or
lapse of time or both would constitute a default or breach and all
agreements, contracts or commitments are now in good standing and in
full force and effect without amendment and the Corporation is entitled
to all benefits under them.
o) Leases. The Corporation is not a party to any lease of real property or
agreement in the nature of a lease, whether as lessor or lessee, other
than those disclosed on Schedule 5.
p) Consents. There are no consents, authorizations, licenses, franchise
agreements, permits, approvals or orders of any person or government
required to permit the Vendor to complete the transactions contemplated
by this Agreement.
q) No Breaches of Charter or Other Agreements. Neither the Vendor nor the
Corporation are a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, statute, regulation,
arbitration award, charter or by-law provisions, order or judgement
which would be violated, contravened, breached by or under which any
default would occur as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated by it or
which might prevent or interfere with the use of the Corporation's
assets or which may limit or restrict or otherwise adversely affect the
Corporation's business, properties, assets or financial condition. The
entering into of this Agreement and the consummation of the transactions
contemplated in it will not:
(i) give rise to any right of acceleration by any person in respect
of any indebtedness or other obligation of the Corporation; or
(ii) result in the loss of any rights, privileges or advantages
presently enjoyed by the Corporation.
(r) No Actions. There is no suit, action, litigation, arbitration,
proceeding or governmental proceeding, including appeals and
applications for review, in
<PAGE> 7
6
progress, pending or threatened against or involving the Corporation or
relating to the Total Shares (collectively referred to as "actions") and
the Vendor are not aware of any existing ground on which any actions
might be commenced with any reasonable likelihood of success. There is
not presently outstanding any judgement, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator (collectively referred to as
"judgements") against the Corporation or which would affect the Vendor's
ability to sell the Purchased Shares as provided in this Agreement other
than those actions or judgements disclosed on Schedule 6.
s) Powers of Attorney. No person has any tax or other power of attorney
from the Corporation with respect to any matter.
t) Guarantees. The Corporation has not given nor agreed to give nor is it a
party to or bound by any guarantee, indemnification, surety or other
similar obligation.
u) Corporate Authorization. The completion of the transaction contemplated
in this Agreement has been duly and validly authorized by all necessary
corporate action on the part of the Corporation and on the part of any
corporate Vendor.
v) Residency. The Vendor are not a non-resident of Canada within the
meaning of the INCOME TAX ACT (Canada).
w) Subsidiaries. The Corporation does not own shares in any other
corporation and has not agreed to acquire any shares in the capital of
any other corporation or to acquire or lease or invest, directly or
indirectly, in any other business operation.
x) Securities Legislation. The sale of the Purchased Shares by the Vendor
to the Purchaser will be made in compliance with all applicable
securities legislation.
y) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Vendor enforceable against them in accordance
with its terms, provided that enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other
similar laws generally affecting creditors' rights and that equitable
remedies such as specific performance and injunction are in the
discretion of the Court from which they are sought.
z) Family Law Act. No order has been given under the FAMILY LAW ACT -
QUEBEC nor is there any application pending under that Act by the spouse
of Daniel Benoit or does affect the Purchased Shares in any manner.
aa) No Relevant Information. None of the representations and warranties in
this section 3.1 contains any untrue statement of material fact or omits
to state any material fact necessary to make any representation or
warranty not misleading to a prospective purchaser of the Purchased
Shares seeking full information concerning the matters which are the
subject of those representations and warranties.
3.2 Representations and Warranties of the Purchaser. The Purchaser and AXYN
represent and warrant as follows to the Vendor and acknowledge that the
Vendor are relying on such representations and warranties in connection
with the sale of the Purchased Shares:
<PAGE> 8
7
a) Corporate Status. The Purchaser is a corporation duly continued and
organized and validly subsisting in good standing under the laws of
Ontario. The Purchaser has the corporate power, authority and capacity
to own its property and to carry on its business as now being conducted
by it. No bankruptcy, insolvency or receivership proceedings have been
instituted or are pending against the Purchaser and the Purchaser is
able to satisfy its liabilities as they become due.
b) Corporate Authorization. The completion of the transactions contemplated
by this Agreement shall be duly and validly authorized by all necessary
corporate and other action of the Purchaser and AXYN prior to the
Closing Date.
c) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against it in accordance
with its terms, provided that enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other
similar laws generally affecting creditors' rights and that equitable
remedies such as specific performance and injunction are in the
discretion of the Court from which they are sought.
d) Issue Capital. Effective as of the Closing Date contemplated by this
agreement, the Shares issued to the Vendor on the Closing Date pursuant
to Section 2.1 hereof shall be duly and validly issued and outstanding
as fully paid and non-assessable shares of the Purchaser and will have
been issued in full compliance with and all applicable securities
legislation.
4. COVENANTS
4.1 Covenants of the Vendor. Unless otherwise permitted, on or before the
Closing Date, the Vendor covenant and agree with the Purchaser as
follows:
a) Non-Arm's Length Payables and Receivables. The Corporation shall have
satisfied or caused to be satisfied all amounts owed by the Vendor to
the Corporation in accordance with Section 3.1(j) of this Agreement.
b) Actions to Satisfy Closing Conditions. The Vendor shall diligently take
all actions and do all things necessary to ensure compliance with the
conditions set forth in section 6.1 of this Agreement.
c) Transfer of Purchased Shares. The Vendor shall take, and will cause the
Corporation to take, all necessary steps and proceedings as approved by
counsel for the Purchaser to permit the Purchased Shares to be duly and
validly transferred to the Purchaser.
d) Resignation of Directors and Officers. The Vendor shall resign as a
Director and Officer of the Corporation at a time specified by the
Purchaser.
e) Releases. The Vendor shall cause to be executed and delivered to the
Purchaser at the Closing Date a release in the form attached to this
Agreement as Schedule 2.
f) Tax Returns. Within 90 days of the Closing Date, the Vendor shall cause
the Corporation to duly and timely file all financial, securities and
tax returns required to be filed since the Balance Sheet Date and
promptly pay all taxes,
<PAGE> 9
8
assessments and governmental charges shown on those tax returns to be
due and payable and shall cause the Corporation not to enter into any
agreement, waiver or other arrangement providing for an extension of
time with respect to the filing of a tax return or the payment or
assessment of any tax or governmental charge.
g) Employment and Non-Compete Agreements. The Vendor shall ensure that the
employees of Le Groupe Mobitech Inc. shall enter into consulting and
non-compete agreements with the Purchaser in accordance with Section
8.1(e) of this Agreement.
h) Employee Agreements. The Vendor shall ensure that all key employees of
the Corporation, as determined by the Purchaser, to enter into
employment and non-compete agreements with the Purchaser.
4.2 Covenants of the Purchaser and AXYN. The Purchaser and AXYN covenant and
agree with the Vendor as follows:
a) Release. The Purchaser shall cause to be executed and delivered to the
Vendor at the Closing Date a release in the form attached to this
Agreement as Schedule 3.
b) Issuance of Shares. The Purchaser shall issue the shares set out in
Section 2.1 to the Vendor.
5. CONDITIONS
5.1 Conditions for the Benefit of the Purchaser. The purchase and sale of
the Purchased Shares is subject to the following terms and conditions
for the exclusive benefit of the Purchaser to be fulfilled or performed
at or prior to the times specified in this section:
a) Covenants and Warranties. The covenants, representations and warranties
of the Vendor contained in this Agreement or in any other document
delivered pursuant to it shall be true and correct as of the Closing
Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
b) Compliance. The Vendor shall have performed or complied with all
covenants and agreements in this Agreement to be performed or caused to
be performed or complied with by them prior to the time specified in
this Agreement for performance or compliance.
c) No Changes. On the Closing Date, there shall have been no material
adverse change in the properties, assets, liabilities, affairs,
financial condition or prospects of the Corporation from that shown on
or reflected in the financial statements attached to in this Agreement
as Schedule 1, except as otherwise disclosed in this Agreement. The
title of the Vendor to the Purchased Shares and all other matters in the
opinion of the Purchaser's counsel which are material in connection with
the transactions contemplated in this Agreement shall be subject to the
favourable opinion of that counsel.
<PAGE> 10
9
d) No Actions. On the Closing Date, no action or proceeding in Canada or
the United States by law or in equity shall be existing or threatened by
any person, company, firm, governmental authority, regulatory body or
agency to enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated by this Agreement.
e) Consents. On or before the Closing Date, there shall have been obtained
from all appropriate federal, provincial, municipal or other
governmental, non-governmental or administrative bodies all such
approvals, licences and consents in form and terms satisfactory to the
Purchaser as may be required in order to permit the implementation of
the transactions contemplated in this Agreement without affecting or
resulting in the cancellation or termination of any licence or permit
required in the conduct of the Corporation's business.
f) Closing Deliveries. The Vendor shall deliver to the Purchaser on the
Closing Date those items set forth in section 8.1 of this Agreement in
form and content satisfactory to the Purchaser and its counsel.
g) Change of Control Filing. The Vendor shall prepare at their expense to
be filed within the time period prescribed by the INCOME TAX ACT
(Canada) and any other applicable legislation, all tax returns and tax
filings required to be made by the Corporation consequent upon the
acquisition of control of the Corporation by the Purchaser, within 90
days of the Closing Date in accordance with section 4.1(f) of this
Agreement.
If any of the foregoing conditions is not fulfilled or performed as at the
Closing Date unless otherwise specified in this section to the satisfaction of
the Purchaser, the Purchaser may:
a) give notice thereof to the Vendor, whereupon this Agreement shall be
terminated and each of the parties shall be released from all of its
obligations under it without further liability whatsoever and the Vendor
shall return all payments received up to the date thereof, whether such
payments be in the form of cash or shares; or
b) waive compliance with any of these conditions in whole or in part if it
sees fit to do so without prejudice to any of its rights of termination
in the event of non-performance of any other condition in whole or in
part, provided that any waiver shall be binding upon the Purchaser only
if it is in writing; or
c) require the Vendor to indemnify the Purchaser in respect of any costs
incurred in fulfilling or performing the conditions outlined in this
Section.
5.2 Conditions for the Benefit of the Vendor. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for
the exclusive benefit of the Vendor to be fulfilled or performed at or
prior to the times specified in this section:
a) Covenants and Warranties. The covenants, representations and warranties
of the Purchaser and AXYN contained in this Agreement or in any other
document
<PAGE> 11
10
delivered pursuant to it shall be true and correct as of the Closing
Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
b) Compliance. The Purchaser and AXYN shall have performed or complied with
all covenants and agreements in this Agreement to be performed or caused
to be performed or complied with by it prior to the time specified in
this Agreement for performance or compliance.
6. INDEMNIFICATION AND SET-OFF
6.1 Indemnification of Purchaser. The Vendor covenant and agree to indemnify
and save harmless the Purchaser of and from any costs whatsoever arising
out of or pursuant to:
a) any reassessment for income, sales, excise, corporate or other tax of
the Corporation (and all interest or penalties relating to it) for any
period up to and including the Closing Date;
b) all judgements and awards against the Corporation, including all
interest and penalties, in consequence of any action, suit or
proceeding, whether or not disclosed to the Purchaser and whether or not
commenced after the Closing Date, if based upon any acts or omissions or
other circumstances which occurred or arose prior to the Closing Date;
c) any loss, costs and expenses suffered by the Purchaser as a result of
any breach of any representation, warranty or covenant on the part of
the Vendor contained in this Agreement or in any schedule to it; and
d) all claims, demands, costs and expenses, including all reasonable legal,
audit and other professional fees, incurred in respect of any of the
foregoing.
6.2 Indemnification of Vendor. The Purchaser and Axyn covenant and agree to
indemnify and save harmless the Vendor of and from any loss whatsoever
arising out of or pursuant to:
a) any loss, costs and expenses suffered by the Vendor as a result of any
breach of any representation, warranty or covenant on the part of the
Purchaser; and
b) all claims, demands, costs and expenses, including all reasonable legal,
audit and other professional fees, incurred in respect of any of the
foregoing.
6.3 Right of Set Off. The Purchaser shall have the right to satisfy any
amount from time to time owing by them to the Vendor, including amounts
payable under the employment agreement, royalty payments or other
payments owing to the Vendor by way of set off against any amount owing
from time to time by the Vendor to the Purchaser, arising out of this
Agreement.
<PAGE> 12
11
7. SURVIVAL OF CONDITIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES
7.1 Survival. The conditions, covenants, representations and warranties of
the parties to this Agreement or in any certificates or documents
delivered pursuant to it or in connection with the transactions
contemplated in it and the rights of Indemnification and set off set out
in Section 6 of this Agreement shall continue in full force and effect
after the Closing Date, and shall not merge for a period of three (3)
years from the Closing Date, except for the representations contained in
Section 3.1(k) and 3.1(aa) and the covenants contained in Section 4.1(f)
which shall not merge for a period of five (5) years from the Closing
Date.
8. CLOSING ARRANGEMENTS
8.1 Deliveries. On or before the Closing Date and upon fulfilment of all of
the conditions in this Agreement which have not been waived by the
Purchaser, the Vendor shall deliver to the Purchaser:
a) certificates representing the Purchased Shares duly endorsed in blank
for transfer or accompanied by a duly executed stock transfer power;
b) all necessary directors' and shareholders' resolutions of the
Corporation consenting to and authorizing the sale of the Purchased
Shares;
(c) a certificate of status for the Corporation dated a current date;
(d) release of the Vendor outlined in the form attached as Schedule 2;
(e) consulting and non-competition agreements for the Vendor;
(f) such further and other documents as the Purchaser's counsel may consider
reasonably necessary or advisable to implement the transactions
contemplated in this Agreement.
8.2 On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Vendor,
the Purchaser shall deliver to the Vendor:
(b) share certificates representing the shares of the Purchaser in
accordance with section 2.1 of this Agreement;
(c) copies of all necessary directors' resolutions of AXYN authorizing the
issuance of the Shares;
(d) a certificate of status for the Purchaser dated a current date;
8.3 Place of Closing. The closing shall take place at Ottawa on the Closing
Date at the offices of the Corporation.
<PAGE> 13
12
9. GENERAL MATTERS
9.1 Schedules. The following are the schedules attached to and incorporated
in this Agreement by reference and deemed to be part of this Agreement:
Schedule 1 - June 30, 1999 Financial Statements
Schedule 2 - Release of the Vendor
Schedule 3 - Release of Purchaser
Schedule 4 - Material Contracts
Schedule 5 - Leases
Schedule 6 - Actions against Corporation
9.2 Currency. All dollar amounts referred to in this agreement are in
Canadian funds unless otherwise specified.
9.3 Entire Agreement. This Agreement, including the schedules to it,
together with the agreements and other documents to be delivered
pursuant to it, constitute the entire agreement between the parties
pertaining to the subject matter of this Agreement and supersede all
prior agreements, understandings, negotiations and discussions, whether
written or oral, of the parties, and there are no warranties,
representations or other agreements between the parties in connection
with the subject matter of it. No amendment, modification, waiver or
termination of this Agreement shall be binding unless executed in
writing by the party to be bound by it. No waiver of any provision of
this Agreement shall be deemed to constitute a waiver of any other
provision (whether or not similar) nor shall that waiver constitute a
continuing waiver unless expressly provided.
9.4 Governing Laws. This Agreement shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable in it
and shall be treated in all respects as an Ontario contract. The parties
attorn to the exclusive jurisdiction of the courts of the Province of
Ontario with respect to any matter arising under this Agreement or any
of the schedules or documents to be entered into or delivered pursuant
to it.
9.5 Expenses. Unless otherwise specified herein, all costs and expenses
(including, without limitation, the fees and disbursements of legal
counsel) incurred in connection with this Agreement and the transactions
contemplated by it shall be paid by the party incurring the cost or
expense.
9.6 Notices. Any notice or other writing required or permitted to be given
under this Agreement may be delivered personally or sent by prepaid
registered mail or transmitted by telex, facsimile or other form of
recorded telecommunication transmission:
<PAGE> 14
13
(a) to the Vendor at:
1220 Boulevard Lebourgneuf, Unit 150
Quebec City, Quebec G2K 2G4
PH: 418-622-5045 FAX: 418-628-4766
(b) to the Purchaser and AXYN at:
201-338 Montreal Road
Vanier, Ontario K1L 6B3
PH: 888-869-2996 Fax: 613-742-6068
or at such other address as the parties may from time to time deliver
pursuant to this section. Any notice delivered or transmitted by telex,
facsimile or other form of recorded telecommunication shall be deemed to
be given and received on the date of its delivery or transmission, as
the case may be, provided that such day is not a Saturday, Sunday or
statutory holiday. Any notice mailed shall be deemed to have been given
and received on the third business day following the date of its
mailing.
9.7 Further Assurances. The parties shall with diligence do all things and
provide all such assurances as may be required to consummate the
transactions contemplated by this Agreement, and each party shall
provide such further documents or instruments required by any other
party as may be reasonably necessary or desirable to effect the purpose
of this Agreement and carry out its provisions, whether before or after
the Closing Date.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original of this Agreement and fully binding upon the signatory
to it, but all counterparts shall together constitute one and the same
instrument.
9.9 Time of Essence. Time shall be of the essence of this Agreement.
9.10 Language. The parties hereto have agreed that this document be drawn up
in the English language. Les parties presentes ont convenu que ce
document soit redige en anglais.
9.11 Successors and Assigns. This Agreement shall enure to the benefit of and
be binding upon the parties to it and their respective heirs,
successors, executors, administrators and assigns, as applicable. This
Agreement may not be assigned or transferred by the Vendor without the
prior written consent of the Purchaser, such consent not to be
unreasonably withheld.
<PAGE> 15
14
IN WITNESS WHEREOF the parties have executed this Agreement as of the day, month
and year first above written.
AXYN CANADA CORPORATION
PER _________________________c/s
PER _________________________c/s
AXYN CORPORATION
PER _________________________c/s
PER _________________________c/s
SIGNED SEALED AND DELIVERED
in the presence of
)
- ------------------ )---------------------------
WITNESS ) MR. RAYMOND CARRIER - VENDOR
)
<PAGE> 16
15
SCHEDULE 1
FINANCIAL STATEMENTS OF THE CORPORATION
JUNE 30, 1999
<PAGE> 17
16
SCHEDULE 2
RELEASE
TO: AXYN Canada Corporation and AXYN Corporation (the "Purchaser")
AND TO: Le Groupe Mobitech Inc. (the "Corporation")
RE: AXYN Canada Corporation purchase of all of the issued and outstanding
shares in the capital of the Corporation
In consideration of the sum of One Dollar ($1.00) and of other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
the Purchaser and the Corporation from all manner of actions, causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, claims or demands
whatsoever which the undersigned may now have or hereafter can have, against the
Purchaser or the Corporation existing up to the date of this release, including
by virtue of them being or ceasing to be an officer, director, employee or
contractor of the Corporation as the case may be, provided that nothing herein
contained shall be construed so as to release the Purchaser from its obligations
and covenants arising out of or in respect of a Purchase Agreement made the 30th
day of June, 1999 in respect of the sale by the undersigned to the Purchaser of
all of the issued and outstanding shares in the capital of the Corporation or
any documents delivered pursuant to such agreement.
DATED at Ottawa this 30th day of June, 1999.
-----------------------
Raymond Carrier
LE GROUPE MOBITECH INC.
Per:
<PAGE> 18
17
SCHEDULE 3
RELEASE
TO: Raymond Carrier ("Raymond")
RE: AXYN Canada Corporation purchase of all of the issued and outstanding
shares in the capital of Le Groupe Mobitech Inc. (the "Corporation")
In consideration of the sum of One Dollar ($1.00) and of other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
Raymond of and from all manner of actions, causes of action, suits, debts, dues,
accounts, bonds, covenants, contracts, claims or demands whatsoever which the
undersigned may now have or hereafter can have, against Raymond existing up to
the date of this release, by virtue of them being an officer, director, employee
or contractor of the Corporation as the case may be, except those actions,
causes of action, suits, debts, dues, accounts, bonds, covenants, contracts,
claims or demands arising from the terms of the Purchase Agreement between the
parties dated June 30th, 1999.
DATED at Ottawa this 30th day of June, 1999.
AXYN Canada Corporation
Per: ____________________________c/s
Per: ____________________________c/s
AXYN Corporation
Per: ____________________________c/s
Per: ____________________________c/s
Le Groupe Mobitech Inc.
Per: ____________________________c/s
<PAGE> 19
18
SCHEDULE 4
MATERIAL CONTRACTS
<PAGE> 20
19
SCHEDULE 5
LEASES
<PAGE> 21
20
SCHEDULE 6
ACTIONS OR JUDGMENTS AGAINST CORPORATION
<PAGE> 1
EXHIBIT (6)b
PROFIL CDI MULTIMEDIA INC.
AND
AXYN CANADA CORPORATION
AND
AXYN CORPORATION
PURCHASE AGREEMENT
JH:dd
1999-06-30
File No. AXYN-90621
JOHN HOLLANDER
BARRISTER AND SOLICITOR
#201-338 MONTREAL ROAD
VANIER, ONTARIO
K1L 6B3
<PAGE> 2
2
PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT in duplicate this 30th day of June, 1999.
BETWEEN: GILLES PAINCHAUD, JOSEE LACHANCE, C.R.E. INC. AND 9013 7720
QUEBEC INC.
The shareholders of Profil CDI Multimedia Inc., a
company incorporated under the laws of Quebec
(hereinafter referred to as the "VENDORS")
OF THE FIRST PART
AND: AXYN CANADA CORPORATION
a company incorporated under the laws
of Ontario
(hereinafter referred to as the "PURCHASER")
OF THE SECOND PART
AND: AXYN CORPORATION
a company incorporated under the laws
of Colorado
(hereinafter referred to as the "AXYN")
OF THE THIRD PART
THIS AGREEMENT WITNESSES that for and in consideration of the mutual
covenants and agreements contained in this Agreement and other good and
valuable consideration (the receipt and sufficiency of which are
acknowledged), the parties covenant and agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of this
Agreement, the Vendors agree to sell, assign and transfer to the
Purchaser and the Purchaser agrees to purchase from the Vendors as at
and from the close of business on June 30, 1999 (the "CLOSING DATE") 75
"A" category Shares that represents all of the issued and outstanding
common shares in the capital stock of Profil CDI Multimedia Inc. (the
"PURCHASED SHARES") and to convert all shareholder loans for the equity
in the Purchaser, as described in clause 2.1.
<PAGE> 3
2
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price and Payment. The purchase price payable to the Vendors
for the Purchased Shares shall be satisfied as follows:
i. by the issuance on the Closing Date of 200,000 shares of the
Purchaser which shall be convertible one for one into an equal
number of shares of AXYN. As follows:
GILLES PAINCHAUD 50,000 shares
JOSEE LACHANCE 50,000 shares
C.R.E. Inc. 50,000 shares
9013 7720 QUEBEC Inc. 50,000 shares
2.2 Share Restrictions. The Vendors acknowledge that they will be subject to
restrictions on the sale of shares of AXYN and the Purchaser, as the
case may be, in accordance with the laws of the United States and
Canada, the applicable securities regulations thereto and the terms of
this Agreement. The Shares issued to the Vendors shall bear such
restrictions on the face of the share certificates. The restrictions on
the transfer of the common shares issued by the Purchaser pursuant to
this Agreement shall be removed upon the Purchaser's compliance with
applicable securities regulations in the relevant jurisdiction and in
proportion to all other issued common shares of AXYN.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Vendors. The Vendors represent and
warrant as follows to the Purchaser and acknowledges that the Purchaser
is relying on such representations and warranties in connection with the
purchase by it of the Purchased Shares:
a) Corporate Status. Profil CDI Multimedia Inc. (the "CORPORATION") is a
corporation duly incorporated and organized and validly subsisting in
good standing under the laws of the province of Quebec. The Corporation
has the corporate power, authority and capacity to own its property and
to carry on its business as now being conducted by it. No bankruptcy,
insolvency or receivership proceedings have been instituted or are
pending against the Corporation and the Corporation is able to satisfy
its liabilities as they become due.
b) Authorized and Issued Capital. The authorized capital of the Corporation
consists of an unlimited number of common shares of which 75 "A"
category shares have been validly issued to the Vendors and are
outstanding as fully paid and non-assessable (the "TOTAL SHARES"). No
shares, options, warrants or other rights for the purchase, subscription
or issuance of shares or other securities of the Corporation or
securities convertible into or exchangeable for shares of the
Corporation have been authorized or agreed to be issued or are
outstanding, which would have the effect of reducing the percentage
ownership represented
<PAGE> 4
3
by the Purchased Shares below 100%.
c) Purchased Shares. The Vendors are the legal and beneficial owners of the
Purchased Shares. On the Closing Date, the Purchaser shall acquire good
and marketable title to the Purchased Shares, free and clear of all
agreements, mortgages, liens, charges, pledges, hypothecs, security
interests, encumbrances or other rights or claims of others. The Total
Shares constitute all of the issued and outstanding shares in the
capital of the Corporation owned by the Vendors and there are no
restrictions on the transfer of the Purchased Shares except those set
forth in the constating documents of the Corporation.
d) No Other Agreements. No person, firm or corporation has any written or
oral agreement, option, understanding or commitment, or any right or
privilege capable of becoming an agreement, for the purchase from the
Vendors of any of the Total Shares.
e) Corporate Records. The corporate records and minute books of the
Corporation contain complete and accurate minutes of all meetings of and
copies of all by-laws and all resolutions passed by the directors and
shareholders of the Corporation since its incorporation. All such
meetings were duly called and held, all such by-laws and resolutions
were duly passed and the share certificate books, registers of
shareholders, registers of transfers and other corporate registers of
the Corporation are complete and accurate in all material respects.
f) Accurate Records. The books and records of the Corporation fairly and
correctly set out and disclose in all material respects, in accordance
with generally accepted accounting principles, the financial position of
the Corporation as at the date of this Agreement and all financial
transactions relating to the Corporation have been accurately recorded
in those books and records.
g) Financial Statements. The financial statements of the Corporation as at
June 30, 1999 (the "BALANCE SHEET DATE") and for the period then ended
have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with those of previous fiscal
years and are true and correct and present fairly the assets,
liabilities (whether accrued, absolute, contingent or otherwise) and the
financial condition of the Corporation as at the Balance Sheet Date, and
the sales and earnings of the Corporation during the period covered by
those financial statements.
h) Title to Assets. The Corporation has good and marketable title to all of
its properties and assets, free and clear of all mortgages, pledges,
charges, hypothecs, liens, title retention agreements, security
interests, encumbrances or rights of others of any kind or character,
other than those disclosed on the balance sheet of the Corporation.
i) Undisclosed Liabilities. The Corporation has no liabilities (whether
accrued, absolute, contingent or otherwise) of any kind except
liabilities incurred in the ordinary course of business since the
Balance Sheet Date which are not inconsistent with past practice, and
are not, in the aggregate, material and adverse to the business,
properties, assets, financial condition or results of
<PAGE> 5
4
operation of the Corporation.
j) No Loans. After the Closing Date, no loans by the Corporation or other
indebtedness due to the Corporation shall be outstanding (other than the
normal salaries, bonuses, fringe benefits and the obligation to
reimburse for expenses incurred on behalf of the Corporation in the
normal course of employment) from the Vendors or from any person or
corporation not dealing at arm's length or who is affiliated (as those
terms are used in the INCOME TAX ACT (Canada)) with the Vendors.
k) Tax Returns. The Corporation has duly filed all tax returns required to
be filed by it (including all information returns as to which non-filing
or late filing could result in interest or penalties), has made complete
and accurate disclosure in such returns and has duly paid all taxes due
from it to federal, provincial or local taxing authorities, including,
without limitation, those due in respect of its properties, income,
capital, sales, use of property and payroll. The Corporation has also
paid all assessments and reassessments and all other taxes, governmental
charges, penalties, interest and fines due and payable by the
Corporation up to the date of this Agreement. The Corporation has made
adequate provision for and will have sufficient cash on hand to satisfy
any taxes which are payable during the current fiscal period for which
tax returns are not yet required to be filed. There are no agreements,
waivers or other arrangements providing for an extension of time with
respect to the assessment or reassessment of income tax or the filing of
any tax return by, or payment of any tax by, or levying of any
governmental charge against the Corporation. There are no actions,
audits, assessments, reassessments, suits, proceedings, investigations
or claims now threatened or pending against the Corporation in respect
of taxes or governmental charges or any matters under discussion with
any governmental authority relating to taxes or governmental charges
asserted by any such authority. The Corporation has withheld from each
payment made by it the amount of all taxes and other deductions required
to be withheld from it and has paid the same to the proper taxing or
other authority within the time prescribed under any applicable
legislation or regulation.
l) Ordinary Course. Since the Balance Sheet Date:
i. the Corporation has not carried on any business, other than its
ordinary continuing business;
ii. no capital expenditures have been made or authorized by the
Corporation;
iii. there has been no change in the affairs, business, prospects,
operations or condition of the Corporation, financial or
otherwise;
iv. the Corporation has not transferred, assigned, sold or otherwise
disposed of any of its property or assets other than those
disclosed in writing to the Purchaser;
v. the Corporation has not suffered an extraordinary loss nor
waived any rights of material value nor entered into any
material commitment or transaction;
<PAGE> 6
5
vi. the Corporation has not declared or paid any dividends or
declared or made any other distribution on any of its securities
or shares, and has not, directly or indirectly, redeemed,
purchased or otherwise acquired any of its securities or shares
or agreed to do so except as disclosed in writing and agreed to
by the Purchaser;
vii. the Corporation has not incurred or assumed any obligation or
liability (fixed or contingent), except secured and unsecured
current obligations and liabilities, particulars of which have
been disclosed in writing to the Purchaser or its
representatives; or
viii. the Corporation has not amended or changed or taken any action
to amend or change its constating documents.
m) Non-Arm's Length Transactions. The Corporation has not entered into any
contracts, agreements, options or arrangements or incurred or assumed
any obligation or liability (whether fixed or contingent) with, on
behalf of or with respect to the Vendors or any other non-arm's length
person or any affiliate of the Vendors (as those terms are defined in
the INCOME TAX ACT (Canada)), whether jointly or severally.
n) Material Contracts. The Corporation is not a party to nor bound by any
material agreement, contract or commitment, whether written or oral, of
any nature or kind whatsoever, other than those disclosed on Schedule 4.
The Corporation is not in default or breach of any agreement, contract
or commitment and there exists no state of facts which after notice or
lapse of time or both would constitute a default or breach and all
agreements, contracts or commitments are now in good standing and in
full force and effect without amendment and the Corporation is entitled
to all benefits under them.
o) Leases. The Corporation is not a party to any lease of real property or
agreement in the nature of a lease, whether as lessor or lessee, other
than those disclosed on Schedule 5.
p) Consents. There are no consents, authorizations, licenses, franchise
agreements, permits, approvals or orders of any person or government
required to permit the Vendors to complete the transactions contemplated
by this Agreement.
q) No Breaches of Charter or Other Agreements. Neither the Vendors nor the
Corporation are a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, statute, regulation,
arbitration award, charter or by-law provisions, order or judgement
which would be violated, contravened, breached by or under which any
default would occur as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated by it or
which might prevent or interfere with the use of the Corporation's
assets or which may limit or restrict or otherwise adversely affect the
Corporation's business, properties, assets or financial condition. The
entering into of this Agreement and the consummation of the transactions
contemplated in it will not:
<PAGE> 7
6
(I) give rise to any right of acceleration by any person in respect
of any indebtedness or other obligation of the Corporation; or
(II) result in the loss of any rights, privileges or advantages
presently enjoyed by the Corporation.
(r) No Actions. There is no suit, action, litigation, arbitration,
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or threatened against or
involving the Corporation or relating to the Total Shares (collectively
referred to as "actions") and the Vendors are not aware of any existing
ground on which any actions might be commenced with any reasonable
likelihood of success. There is not presently outstanding any judgement,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator (collectively referred
to as "judgements")against the Corporation or which would affect the
Vendors' ability to sell the Purchased Shares as provided in this
Agreement other than those actions or judgements disclosed on Schedule
6.
s) Powers of Attorney. No person has any tax or other power of attorney
from the Corporation with respect to any matter.
t) Guarantees. The Corporation has not given nor agreed to give nor is it a
party to or bound by any guarantee, indemnification, surety or other
similar obligation.
u) Corporate Authorization. The completion of the transaction contemplated
in this Agreement has been duly and validly authorized by all necessary
corporate action on the part of the Corporation and on the part of any
corporate Vendors.
v) Residency. The Vendors are not a non-resident of Canada within the
meaning of the INCOME TAX ACT (Canada).
w) Subsidiaries. The Corporation does not own shares in any other
corporation and has not agreed to acquire any shares in the capital of
any other corporation or to acquire or lease or invest, directly or
indirectly, in any other business operation.
x) Securities Legislation. The sale of the Purchased Shares by the Vendors
to the Purchaser will be made in compliance with all applicable
securities legislation.
y) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Vendors enforceable against them in accordance
with its terms, provided that enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other
similar laws generally affecting creditors' rights and that equitable
remedies such as specific performance and injunction are in the
discretion of the Court from which they are sought.
z) Family Law Act. No order has been given under the FAMILY LAW ACT -
QUEBEC nor is there any application pending under that Act by the spouse
of Daniel Benoit or does affect the Purchased Shares in any manner.
aa) No Relevant Information. None of the representations and warranties in
this section 3.1 contains any untrue statement of material fact or omits
to state any material fact necessary to make any representation or
warranty not misleading to a prospective purchaser of the Purchased
Shares seeking full information
<PAGE> 8
7
concerning the matters which are the subject of those representations
and warranties.
3.2 Representations and Warranties of the Purchaser. The Purchaser and AXYN
represent and warrant as follows to the Vendors and acknowledge that the
Vendors are relying on such representations and warranties in connection
with the sale of the Purchased Shares:
a) Corporate Status. The Purchaser is a corporation duly continued and
organized and validly subsisting in good standing under the laws of
Ontario. The Purchaser has the corporate power, authority and capacity
to own its property and to carry on its business as now being conducted
by it. No bankruptcy, insolvency or receivership proceedings have been
instituted or are pending against the Purchaser and the Purchaser is
able to satisfy its liabilities as they become due.
b) Corporate Authorization. The completion of the transactions contemplated
by this Agreement shall be duly and validly authorized by all necessary
corporate and other action of the Purchaser and AXYN prior to the
Closing Date.
c) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against it in accordance
with its terms, provided that enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other
similar laws generally affecting creditors' rights and that equitable
remedies such as specific performance and injunction are in the
discretion of the Court from which they are sought.
d) Issue Capital. Effective as of the Closing Date contemplated by this
agreement, the Shares issued to the Vendors on the Closing Date pursuant
to Section 2.1 hereof shall be duly and validly issued and outstanding
as fully paid and non-assessable shares of the Purchaser and will have
been issued in full compliance with and all applicable securities
legislation.
4. COVENANTS
4.1 Covenants of the Vendors. Unless otherwise permitted, on or before the
Closing Date, the Vendors covenant and agree with the Purchaser as
follows:
a) Non-Arm's Length Payables and Receivables. The Corporation shall have
satisfied or caused to be satisfied all amounts owed by the Vendors to
the Corporation in accordance with Section 3.1(j) of this Agreement.
b) Actions to Satisfy Closing Conditions. The Vendors shall diligently take
all actions and do all things necessary to ensure compliance with the
conditions set forth in section 6.1 of this Agreement.
c) Transfer of Purchased Shares. The Vendors shall take, and will cause the
Corporation to take, all necessary steps and proceedings as approved by
counsel for the Purchaser to permit the Purchased Shares to be duly and
validly transferred to the Purchaser.
d) Resignation of Directors and Officers. The Vendors shall resign as a
Director and Officer of the Corporation at a time specified by the
Purchaser.
<PAGE> 9
8
e) Releases. The Vendors shall cause to be executed and delivered to the
Purchaser at the Closing Date a release in the form attached to this
Agreement as Schedule 2.
f) Tax Returns. Within 90 days of the Closing Date, the Vendors shall cause
the Corporation to duly and timely file all financial, securities and
tax returns required to be filed since the Balance Sheet Date and
promptly pay all taxes, assessments and governmental charges shown on
those tax returns to be due and payable and shall cause the Corporation
not to enter into any agreement, waiver or other arrangement providing
for an extension of time with respect to the filing of a tax return or
the payment or assessment of any tax or governmental charge.
g) Employment and Non-Compete Agreements. The Vendors shall ensure that the
employees of Profil CDI Multimedia Inc. shall enter into consulting and
non-compete agreements with the Purchaser in accordance with Section
8.1(e) of this Agreement.
h) Employee Agreements. The Vendors shall ensure that all key employees of
the Corporation, as determined by the Purchaser, to enter into
employment and non-compete agreements with the Purchaser.
4.2 Covenants of the Purchaser and AXYN. The Purchaser and AXYN covenant and
agree with the Vendors as follows:
a) Release. The Purchaser shall cause to be executed and delivered to the
Vendors at the Closing Date a release in the form attached to this
Agreement as Schedule 3.
b) Issuance of Shares. The Purchaser shall issue the shares set out in
Section 2.1 to the Vendors.
5. CONDITIONS
5.1 Conditions for the Benefit of the Purchaser. The purchase and sale of
the Purchased Shares is subject to the following terms and conditions
for the exclusive benefit of the Purchaser to be fulfilled or performed
at or prior to the times specified in this section:
a) Covenants and Warranties. The covenants, representations and warranties
of the Vendors contained in this Agreement or in any other document
delivered pursuant to it shall be true and correct as of the Closing
Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
b) Compliance. The Vendors shall have performed or complied with all
covenants and agreements in this Agreement to be performed or caused to
be performed or complied with by them prior to the time specified in
this Agreement for performance or compliance.
c) No Changes. On the Closing Date, there shall have been no material
adverse change in the properties, assets, liabilities, affairs,
financial condition or
<PAGE> 10
9
prospects of the Corporation from that shown on or reflected in the
financial statements attached to in this Agreement as Schedule 1, except
as otherwise disclosed in this Agreement. The title of the Vendors to
the Purchased Shares and all other matters in the opinion of the
Purchaser's counsel which are material in connection with the
transactions contemplated in this Agreement shall be subject to the
favourable opinion of that counsel.
d) No Actions. On the Closing Date, no action or proceeding in Canada or
the United States by law or in equity shall be existing or threatened by
any person, company, firm, governmental authority, regulatory body or
agency to enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated by this Agreement.
e) Consents. On or before the Closing Date, there shall have been obtained
from all appropriate federal, provincial, municipal or other
governmental, non-governmental or administrative bodies all such
approvals, licences and consents in form and terms satisfactory to the
Purchaser as may be required in order to permit the implementation of
the transactions contemplated in this Agreement without affecting or
resulting in the cancellation or termination of any licence or permit
required in the conduct of the Corporation's business.
f) Closing Deliveries. The Vendors shall deliver to the Purchaser on the
Closing Date those items set forth in section 8.1 of this Agreement in
form and content satisfactory to the Purchaser and its counsel.
g) Change of Control Filing. The Vendors shall prepare at their expense to
be filed within the time period prescribed by the INCOME TAX ACT
(Canada) and any other applicable legislation, all tax returns and tax
filings required to be made by the Corporation consequent upon the
acquisition of control of the Corporation by the Purchaser, within 90
days of the Closing Date in accordance with section 4.1(f) of this
Agreement.
If any of the foregoing conditions is not fulfilled or performed as at the
Closing Date unless otherwise specified in this section to the satisfaction of
the Purchaser, the Purchaser may:
a) give notice thereof to the Vendors, whereupon this Agreement shall be
terminated and each of the parties shall be released from all of its
obligations under it without further liability whatsoever and the
Vendors shall return all payments received up to the date thereof,
whether such payments be in the form of cash or shares; or
b) waive compliance with any of these conditions in whole or in part if it
sees fit to do so without prejudice to any of its rights of termination
in the event of non-performance of any other condition in whole or in
part, provided that any waiver shall be binding upon the Purchaser only
if it is in writing; or
c) require the Vendors to indemnify the Purchaser in respect of any costs
incurred in fulfilling or performing the conditions outlined in this
Section.
<PAGE> 11
10
5.2 Conditions for the Benefit of the Vendors. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for
the exclusive benefit of the Vendors to be fulfilled or performed at or
prior to the times specified in this section:
a) Covenants and Warranties. The covenants, representations and warranties
of the Purchaser and AXYN contained in this Agreement or in any other
document delivered pursuant to it shall be true and correct as of the
Closing Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
b) Compliance. The Purchaser and AXYN shall have performed or complied with
all covenants and agreements in this Agreement to be performed or caused
to be performed or complied with by it prior to the time specified in
this Agreement for performance or compliance.
6. INDEMNIFICATION AND SET-OFF
6.1 Indemnification of Purchaser. The Vendors covenant and agree to
indemnify and save harmless the Purchaser of and from any costs
whatsoever arising out of or pursuant to:
a) any reassessment for income, sales, excise, corporate or other tax of
the Corporation (and all interest or penalties relating to it) for any
period up to and including the Closing Date;
b) all judgements and awards against the Corporation, including all
interest and penalties, in consequence of any action, suit or
proceeding, whether or not disclosed to the Purchaser and whether or not
commenced after the Closing Date, if based upon any acts or omissions or
other circumstances which occurred or arose prior to the Closing Date;
c) any loss, costs and expenses suffered by the Purchaser as a result of
any breach of any representation, warranty or covenant on the part of
the Vendors contained in this Agreement or in any schedule to it; and
d) all claims, demands, costs and expenses, including all reasonable legal,
audit and other professional fees, incurred in respect of any of the
foregoing.
6.2 Indemnification of Vendors. The Purchaser and Axyn covenant and agree to
indemnify and save harmless the Vendors of and from any loss whatsoever
arising out of or pursuant to:
a) any loss, costs and expenses suffered by the Vendors as a result of any
breach of any representation, warranty or covenant on the part of the
Purchaser; and
b) all claims, demands, costs and expenses, including all reasonable legal,
audit and other professional fees, incurred in respect of any of the
foregoing.
6.3 Right of Set Off. The Purchaser shall have the right to satisfy any
amount from time to time owing by them to the Vendors, including amounts
payable under the employment agreement, royalty payments or other
payments owing to the
<PAGE> 12
11
Vendors by way of set off against any amount owing from time to time by
the Vendors to the Purchaser, arising out of this Agreement.
7. SURVIVAL OF CONDITIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES
7.1 Survival. The conditions, covenants, representations and warranties of
the parties to this Agreement or in any certificates or documents
delivered pursuant to it or in connection with the transactions
contemplated in it and the rights of Indemnification and set off set out
in Section 6 of this Agreement shall continue in full force and effect
after the Closing Date, and shall not merge for a period of three (3)
years from the Closing Date, except for the representations contained in
Section 3.1(k) and 3.1(aa) and the covenants contained in Section 4.1(f)
which shall not merge for a period of five (5) years from the Closing
Date.
8. CLOSING ARRANGEMENTS
8.1 Deliveries. On or before the Closing Date and upon fulfilment of all of
the conditions in this Agreement which have not been waived by the
Purchaser, the Vendors shall deliver to the Purchaser:
a) certificates representing the Purchased Shares duly endorsed in blank
for transfer or accompanied by a duly executed stock transfer power;
b) all necessary directors' and shareholders' resolutions of the
Corporation consenting to and authorizing the sale of the Purchased
Shares;
(c) a certificate of status for the Corporation dated a current date;
(d) release of the Vendors outlined in the form attached as Schedule 2;
(e) consulting and non-competition agreements for the Vendors;
(f) such further and other documents as the Purchaser's counsel may consider
reasonably necessary or advisable to implement the transactions
contemplated in this Agreement.
8.2 On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Vendors,
the Purchaser shall deliver to the Vendors:
(b) share certificates representing the shares of the Purchaser in
accordance with section 2.1 of this Agreement;
(c) copies of all necessary directors' resolutions of AXYN authorizing the
issuance of the Shares;
(d) a certificate of status for the Purchaser dated a current date;
<PAGE> 13
12
8.3 Place of Closing. The closing shall take place at Ottawa on the Closing
Date at the offices of the Corporation.
9. GENERAL MATTERS
9.1 Schedules. The following are the schedules attached to and incorporated
in this Agreement by reference and deemed to be part of this Agreement:
Schedule 1 - June 30, 1999 Financial Statements
Schedule 2 - Release of the Vendors
Schedule 3 - Release of Purchaser
Schedule 4 - Material Contracts
Schedule 5 - Leases
Schedule 6 - Actions against Corporation
9.2 Currency. All dollar amounts referred to in this agreement are in
Canadian funds unless otherwise specified.
9.3 Entire Agreement. This Agreement, including the schedules to it,
together with the agreements and other documents to be delivered
pursuant to it, constitute the entire agreement between the parties
pertaining to the subject matter of this Agreement and supersede all
prior agreements, understandings, negotiations and discussions, whether
written or oral, of the parties, and there are no warranties,
representations or other agreements between the parties in connection
with the subject matter of it. No amendment, modification, waiver or
termination of this Agreement shall be binding unless executed in
writing by the party to be bound by it. No waiver of any provision of
this Agreement shall be deemed to constitute a waiver of any other
provision (whether or not similar) nor shall that waiver constitute a
continuing waiver unless expressly provided.
9.4 Governing Laws. This Agreement shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable in it
and shall be treated in all respects as an Ontario contract. The parties
attorn to the exclusive jurisdiction of the courts of the Province of
Ontario with respect to any matter arising under this Agreement or any
of the schedules or documents to be entered into or delivered pursuant
to it.
9.5 Expenses. Unless otherwise specified herein, all costs and expenses
(including, without limitation, the fees and disbursements of legal
counsel) incurred in connection with this Agreement and the transactions
contemplated by it shall be paid by the party incurring the cost or
expense.
9.6 Notices. Any notice or other writing required or permitted to be given
under this Agreement may be delivered personally or sent by prepaid
registered mail or transmitted by telex, facsimile or other form of
recorded telecommunication transmission:
<PAGE> 14
13
(a) to the Vendors at:
1220 Boulevard Lebourgneuf, Unit 150
Quebec City, Quebec G2K 2G4
PH: 418-622-5045 FAX: 418-628-4766
(b) to the Purchaser and AXYN at:
201-338 Montreal Road
Vanier, Ontario K1L 6B3
PH: 888-869-2996 Fax: 613-742-6068
or at such other address as the parties may from time to time deliver
pursuant to this section. Any notice delivered or transmitted by telex,
facsimile or other form of recorded telecommunication shall be deemed to
be given and received on the date of its delivery or transmission, as
the case may be, provided that such day is not a Saturday, Sunday or
statutory holiday. Any notice mailed shall be deemed to have been given
and received on the third business day following the date of its
mailing.
9.7 Further Assurances. The parties shall with diligence do all things and
provide all such assurances as may be required to consummate the
transactions contemplated by this Agreement, and each party shall
provide such further documents or instruments required by any other
party as may be reasonably necessary or desirable to effect the purpose
of this Agreement and carry out its provisions, whether before or after
the Closing Date.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original of this Agreement and fully binding upon the signatory
to it, but all counterparts shall together constitute one and the same
instrument.
9.9 Time of Essence. Time shall be of the essence of this Agreement.
9.10 Language. The parties hereto have agreed that this document be drawn up
in the English language. Les parties presentes ont convenu que ce
document soit redige en anglais.
9.11 Successors and Assigns. This Agreement shall enure to the benefit of and
be binding upon the parties to it and their respective heirs,
successors, executors, administrators and assigns, as applicable. This
Agreement may not be assigned or transferred by the Vendors without the
prior written consent of the Purchaser, such consent not to be
unreasonably withheld.
<PAGE> 15
14
IN WITNESS WHEREOF the parties have executed this Agreement as of the day, month
and year first above written.
AXYN CANADA CORPORATION
PER _________________________c/s
PER _________________________c/s
AXYN CORPORATION
PER _________________________c/s
PER _________________________c/s
SIGNED SEALED AND DELIVERED
in the presence of
)
__________________________________ )___________________________________
WITNESS ) GILLES PAINCHAUD - VENDOR
)
__________________________________ )___________________________________
WITNESS ) JOSEE LACHANCE - VENDOR
)
__________________________________ )___________________________________
WITNESS ) C.R.E. INC. - VENDOR
)
__________________________________ )___________________________________
WITNESS ) 9013 7720 QUEBEC INC. - VENDOR
<PAGE> 16
15
SCHEDULE 1
FINANCIAL STATEMENTS OF THE CORPORATION
JUNE 30, 1999
<PAGE> 17
16
SCHEDULE 2
RELEASE
TO: AXYN Canada Corporation and AXYN Corporation (the "Purchaser")
AND TO: PROFIL CDI MULTIMEDIA INC. (the "Corporation")
RE: AXYN Canada Corporation purchase of all of the issued and outstanding
shares in the capital of the Corporation
In consideration of the sum of One Dollar ($1.00) and of other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
the Purchaser and the Corporation from all manner of actions, causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, claims or demands
whatsoever which the undersigned may now have or hereafter can have, against the
Purchaser or the Corporation existing up to the date of this release, including
by virtue of them being or ceasing to be an officer, director, employee or
contractor of the Corporation as the case may be, provided that nothing herein
contained shall be construed so as to release the Purchaser from its obligations
and covenants arising out of or in respect of a Purchase Agreement made the 30th
day of June, 1999 in respect of the sale by the undersigned to the Purchaser of
all of the issued and outstanding shares in the capital of the Corporation or
any documents delivered pursuant to such agreement.
DATED at Ottawa this 30th day of June, 1999.
PROFIL CDI MULTIMEDIA INC.
____________________________________
Per: GILLES PAINCHAUD
____________________________________
Per: JOSEE LACHANCE
____________________________________
Per: C.R.E. INC.
____________________________________
Per: 9013 7720 QUEBEC INC.
<PAGE> 18
17
SCHEDULE 3
RELEASE
TO: GILLES PAINCHAUD, JOSEE LACHANCE, C.R.E. Inc. and 9013 7720 QUEBEC Inc.
("VENDORS")
RE: AXYN Canada Corporation purchase of all of the issued and outstanding
shares in the capital of Profil CDI Multimedia Inc. (the "Corporation")
In consideration of the sum of One Dollar ($1.00) and of other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
VENDORS of and from all manner of actions, causes of action, suits, debts, dues,
accounts, bonds, covenants, contracts, claims or demands whatsoever which the
undersigned may now have or hereafter can have, against the VENDORS existing up
to the date of this release, by virtue of them being an officer, director,
employee or contractor of the Corporation as the case may be, except those
actions, causes of action, suits, debts, dues, accounts, bonds, covenants,
contracts, claims or demands arising from the terms of the Purchase Agreement
between the parties dated June 30th, 1999.
DATED at Ottawa this 30th day of June, 1999.
AXYN Canada Corporation
Per: ____________________________c/s
Per: ____________________________c/s
AXYN Corporation
Per: ____________________________c/s
Per: ____________________________c/s
PROFIL CDI MULTIMEDIA INC.
____________________________________
Per: GILLES PAINCHAUD
____________________________________
Per: JOSEE LACHANCE
____________________________________
Per: C.R.E. INC.
____________________________________
Per: 9013 7720 QUEBEC INC.
<PAGE> 19
18
SCHEDULE 4
MATERIAL CONTRACTS
<PAGE> 20
19
SCHEDULE 5
LEASES
<PAGE> 21
20
SCHEDULE 6
ACTIONS OR JUDGMENTS AGAINST CORPORATION
<PAGE> 1
EXHIBIT (6)c
S.I.Q. (SERVICE INTERNET QUEBEC) INC.
AND
AXYN CANADA CORPORATION
AND
AXYN CORPORATION
PURCHASE AGREEMENT
JH:dd
1999-06-30
File No. AXYN-90622
JOHN HOLLANDER
BARRISTER AND SOLICITOR
#201-338 MONTREAL ROAD
VANIER, ONTARIO
K1L 6B3
<PAGE> 2
PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT in duplicate this 30th day of June, 1999.
BETWEEN: LUC BEDARD, C.R.E. INC. AND 9013 7720 QUEBEC INC.
The shareholders of S.I.Q. (Service Internet Quebec) Inc., a
company incorporated under the laws of Quebec
(hereinafter referred to as the "VENDORS")
OF THE FIRST PART
AND: AXYN CANADA CORPORATION
a company incorporated under the laws
of Ontario
(hereinafter referred to as the "PURCHASER")
OF THE SECOND PART
AND: AXYN CORPORATION
a company incorporated under the laws
of Colorado
(hereinafter referred to as the "AXYN")
OF THE THIRD PART
THIS AGREEMENT WITNESSES that for and in consideration of the mutual
covenants and agreements contained in this Agreement and other good and
valuable consideration (the receipt and sufficiency of which are
acknowledged), the parties covenant and agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of this
Agreement, the Vendors agree to sell, assign and transfer to the
Purchaser and the Purchaser agrees to purchase from the Vendors as at and
from the close of business on June 30, 1999 (the "CLOSING DATE") 75 "A"
category Shares that represents all of the issued and outstanding common
shares in the capital stock of S.I.Q. (Service Internet Quebec) Inc. (the
"PURCHASED SHARES") and to convert all shareholder loans for the equity
in the Purchaser, as described in clause 2.1.
<PAGE> 3
2
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price and Payment. The purchase price payable to the Vendors for
the Purchased Shares shall be satisfied as follows:
i. by the issuance on the Closing Date of 110,000 shares of the
Purchaser which shall be convertible one for one into an equal
number of shares of AXYN. As follows:
LUC BEDARD 50,000 shares
C.R.E. Inc. 30,000 shares
9013 7720 QUEBEC Inc. 30,000 shares
2.2 Share Restrictions. The Vendors acknowledge that they will be subject to
restrictions on the sale of shares of AXYN and the Purchaser, as the case
may be, in accordance with the laws of the United States and Canada, the
applicable securities regulations thereto and the terms of this
Agreement. The Shares issued to the Vendors shall bear such restrictions
on the face of the share certificates. The restrictions on the transfer
of the common shares issued by the Purchaser pursuant to this Agreement
shall be removed upon the Purchaser's compliance with applicable
securities regulations in the relevant jurisdiction and in proportion to
all other issued common shares of AXYN.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Vendors. The Vendors represent and
warrant as follows to the Purchaser and acknowledges that the Purchaser
is relying on such representations and warranties in connection with the
purchase by it of the Purchased Shares:
a) Corporate Status. S.I.Q. (Service Internet Quebec) Inc. (the
"CORPORATION") is a corporation duly incorporated and organized and
validly subsisting in good standing under the laws of the province of
Quebec. The Corporation has the corporate power, authority and capacity
to own its property and to carry on its business as now being conducted
by it. No bankruptcy, insolvency or receivership proceedings have been
instituted or are pending against the Corporation and the Corporation is
able to satisfy its liabilities as they become due.
b) Authorized and Issued Capital. The authorized capital of the Corporation
consists of an unlimited number of common shares of which 75 "A" category
shares have been validly issued to the Vendors and are outstanding as
fully paid and non-assessable (the "TOTAL SHARES"). No shares, options,
warrants or other rights for the purchase, subscription or issuance of
shares or other securities of the Corporation or securities convertible
into or exchangeable for shares of the Corporation have been authorized
or agreed to be issued or are outstanding, which would have the effect of
reducing the percentage ownership represented by the Purchased Shares
below 100%.
c) Purchased Shares. The Vendors are the legal and beneficial owners of the
<PAGE> 4
3
Purchased Shares. On the Closing Date, the Purchaser shall acquire good
and marketable title to the Purchased Shares, free and clear of all
agreements, mortgages, liens, charges, pledges, hypothecs, security
interests, encumbrances or other rights or claims of others. The Total
Shares constitute all of the issued and outstanding shares in the capital
of the Corporation owned by the Vendors and there are no restrictions on
the transfer of the Purchased Shares except those set forth in the
constating documents of the Corporation.
d) No Other Agreements. No person, firm or corporation has any written or
oral agreement, option, understanding or commitment, or any right or
privilege capable of becoming an agreement, for the purchase from the
Vendors of any of the Total Shares.
e) Corporate Records. The corporate records and minute books of the
Corporation contain complete and accurate minutes of all meetings of and
copies of all by-laws and all resolutions passed by the directors and
shareholders of the Corporation since its incorporation. All such
meetings were duly called and held, all such by-laws and resolutions were
duly passed and the share certificate books, registers of shareholders,
registers of transfers and other corporate registers of the Corporation
are complete and accurate in all material respects.
f) Accurate Records. The books and records of the Corporation fairly and
correctly set out and disclose in all material respects, in accordance
with generally accepted accounting principles, the financial position of
the Corporation as at the date of this Agreement and all financial
transactions relating to the Corporation have been accurately recorded in
those books and records.
g) Financial Statements. The financial statements of the Corporation as at
June 30, 1999 (the "BALANCE SHEET DATE") and for the period then ended
have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with those of previous fiscal
years and are true and correct and present fairly the assets, liabilities
(whether accrued, absolute, contingent or otherwise) and the financial
condition of the Corporation as at the Balance Sheet Date, and the sales
and earnings of the Corporation during the period covered by those
financial statements.
h) Title to Assets. The Corporation has good and marketable title to all of
its properties and assets, free and clear of all mortgages, pledges,
charges, hypothecs, liens, title retention agreements, security
interests, encumbrances or rights of others of any kind or character,
other than those disclosed on the balance sheet of the Corporation.
i) Undisclosed Liabilities. The Corporation has no liabilities (whether
accrued, absolute, contingent or otherwise) of any kind except
liabilities incurred in the ordinary course of business since the Balance
Sheet Date which are not inconsistent with past practice, and are not, in
the aggregate, material and adverse to the business, properties, assets,
financial condition or results of operation of the Corporation.
j) No Loans. After the Closing Date, no loans by the Corporation or other
<PAGE> 5
4
indebtedness due to the Corporation shall be outstanding (other than the
normal salaries, bonuses, fringe benefits and the obligation to reimburse
for expenses incurred on behalf of the Corporation in the normal course
of employment) from the Vendors or from any person or corporation not
dealing at arm's length or who is affiliated (as those terms are used in
the INCOME TAX ACT (Canada)) with the Vendors.
k) Tax Returns. The Corporation has duly filed all tax returns required to
be filed by it (including all information returns as to which non-filing
or late filing could result in interest or penalties), has made complete
and accurate disclosure in such returns and has duly paid all taxes due
from it to federal, provincial or local taxing authorities, including,
without limitation, those due in respect of its properties, income,
capital, sales, use of property and payroll. The Corporation has also
paid all assessments and reassessments and all other taxes, governmental
charges, penalties, interest and fines due and payable by the Corporation
up to the date of this Agreement. The Corporation has made adequate
provision for and will have sufficient cash on hand to satisfy any taxes
which are payable during the current fiscal period for which tax returns
are not yet required to be filed. There are no agreements, waivers or
other arrangements providing for an extension of time with respect to the
assessment or reassessment of income tax or the filing of any tax return
by, or payment of any tax by, or levying of any governmental charge
against the Corporation. There are no actions, audits, assessments,
reassessments, suits, proceedings, investigations or claims now
threatened or pending against the Corporation in respect of taxes or
governmental charges or any matters under discussion with any
governmental authority relating to taxes or governmental charges asserted
by any such authority. The Corporation has withheld from each payment
made by it the amount of all taxes and other deductions required to be
withheld from it and has paid the same to the proper taxing or other
authority within the time prescribed under any applicable legislation or
regulation.
l) Ordinary Course. Since the Balance Sheet Date:
i. the Corporation has not carried on any business, other than its
ordinary continuing business;
ii. no capital expenditures have been made or authorized by the
Corporation;
iii. there has been no change in the affairs, business, prospects,
operations or condition of the Corporation, financial or
otherwise;
iv. the Corporation has not transferred, assigned, sold or otherwise
disposed of any of its property or assets other than those
disclosed in writing to the Purchaser;
v. the Corporation has not suffered an extraordinary loss nor waived
any rights of material value nor entered into any material
commitment or transaction;
vi. the Corporation has not declared or paid any dividends or declared
or made any other distribution on any of its securities or shares,
and has not,
<PAGE> 6
5
directly or indirectly, redeemed, purchased or otherwise acquired
any of its securities or shares or agreed to do so except as
disclosed in writing and agreed to by the Purchaser;
vii. the Corporation has not incurred or assumed any obligation or
liability (fixed or contingent), except secured and unsecured
current obligations and liabilities, particulars of which have
been disclosed in writing to the Purchaser or its representatives;
or
viii. the Corporation has not amended or changed or taken any action to
amend or change its constating documents.
m) Non-Arm's Length Transactions. The Corporation has not entered into any
contracts, agreements, options or arrangements or incurred or assumed any
obligation or liability (whether fixed or contingent) with, on behalf of
or with respect to the Vendors or any other non-arm's length person or
any affiliate of the Vendors (as those terms are defined in the INCOME
TAX ACT (Canada)), whether jointly or severally.
n) Material Contracts. The Corporation is not a party to nor bound by any
material agreement, contract or commitment, whether written or oral, of
any nature or kind whatsoever, other than those disclosed on Schedule 4.
The Corporation is not in default or breach of any agreement, contract or
commitment and there exists no state of facts which after notice or lapse
of time or both would constitute a default or breach and all agreements,
contracts or commitments are now in good standing and in full force and
effect without amendment and the Corporation is entitled to all benefits
under them.
o) Leases. The Corporation is not a party to any lease of real property or
agreement in the nature of a lease, whether as lessor or lessee, other
than those disclosed on Schedule 5.
p) Consents. There are no consents, authorizations, licenses, franchise
agreements, permits, approvals or orders of any person or government
required to permit the Vendors to complete the transactions contemplated
by this Agreement.
q) No Breaches of Charter or Other Agreements. Neither the Vendors nor the
Corporation are a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, statute, regulation,
arbitration award, charter or by-law provisions, order or judgement which
would be violated, contravened, breached by or under which any default
would occur as a result of the execution and delivery of this Agreement
or the consummation of the transactions contemplated by it or which might
prevent or interfere with the use of the Corporation's assets or which
may limit or restrict or otherwise adversely affect the Corporation's
business, properties, assets or financial condition. The entering into of
this Agreement and the consummation of the transactions contemplated in
it will not:
(I) give rise to any right of acceleration by any person in respect of
any indebtedness or other obligation of the Corporation; or
<PAGE> 7
6
(II) result in the loss of any rights, privileges or advantages
presently enjoyed by the Corporation.
(r) No Actions. There is no suit, action, litigation, arbitration, proceeding
or governmental proceeding, including appeals and applications for
review, in progress, pending or threatened against or involving the
Corporation or relating to the Total Shares (collectively referred to as
"actions") and the Vendors are not aware of any existing ground on which
any actions might be commenced with any reasonable likelihood of success.
There is not presently outstanding any judgement, decree, injunction,
rule or order of any court, governmental department, commission, agency,
instrumentality or arbitrator (collectively referred to as
"judgements")against the Corporation or which would affect the Vendors'
ability to sell the Purchased Shares as provided in this Agreement other
than those actions or judgements disclosed on Schedule 6.
s) Powers of Attorney. No person has any tax or other power of attorney from
the Corporation with respect to any matter.
t) Guarantees. The Corporation has not given nor agreed to give nor is it a
party to or bound by any guarantee, indemnification, surety or other
similar obligation.
u) Corporate Authorization. The completion of the transaction contemplated
in this Agreement has been duly and validly authorized by all necessary
corporate action on the part of the Corporation and on the part of any
corporate Vendors.
v) Residency. The Vendors are not a non-resident of Canada within the
meaning of the INCOME TAX ACT (Canada).
w) Subsidiaries. The Corporation does not own shares in any other
corporation and has not agreed to acquire any shares in the capital of
any other corporation or to acquire or lease or invest, directly or
indirectly, in any other business operation.
x) Securities Legislation. The sale of the Purchased Shares by the Vendors
to the Purchaser will be made in compliance with all applicable
securities legislation.
y) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Vendors enforceable against them in accordance
with its terms, provided that enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar
laws generally affecting creditors' rights and that equitable remedies
such as specific performance and injunction are in the discretion of the
Court from which they are sought.
z) Family Law Act. No order has been given under the FAMILY LAW ACT - QUEBEC
nor is there any application pending under that Act by the spouse of
Daniel Benoit or does affect the Purchased Shares in any manner.
aa) No Relevant Information. None of the representations and warranties in
this section 3.1 contains any untrue statement of material fact or omits
to state any material fact necessary to make any representation or
warranty not misleading to a prospective purchaser of the Purchased
Shares seeking full information concerning the matters which are the
subject of those representations and warranties.
<PAGE> 8
7
3.2 Representations and Warranties of the Purchaser. The Purchaser and AXYN
represent and warrant as follows to the Vendors and acknowledge that the
Vendors are relying on such representations and warranties in connection
with the sale of the Purchased Shares:
a) Corporate Status. The Purchaser is a corporation duly continued and
organized and validly subsisting in good standing under the laws of
Ontario. The Purchaser has the corporate power, authority and capacity to
own its property and to carry on its business as now being conducted by
it. No bankruptcy, insolvency or receivership proceedings have been
instituted or are pending against the Purchaser and the Purchaser is able
to satisfy its liabilities as they become due.
b) Corporate Authorization. The completion of the transactions contemplated
by this Agreement shall be duly and validly authorized by all necessary
corporate and other action of the Purchaser and AXYN prior to the Closing
Date.
c) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against it in accordance
with its terms, provided that enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar
laws generally affecting creditors' rights and that equitable remedies
such as specific performance and injunction are in the discretion of the
Court from which they are sought. d) Issue Capital. Effective as of the
Closing Date contemplated by this agreement, the Shares issued to the
Vendors on the Closing Date pursuant to Section 2.1 hereof shall be duly
and validly issued and outstanding as fully paid and non-assessable
shares of the Purchaser and will have been issued in full compliance with
and all applicable securities legislation.
4. COVENANTS
4.1 Covenants of the Vendors. Unless otherwise permitted, on or before the
Closing Date, the Vendors covenant and agree with the Purchaser as
follows:
a) Non-Arm's Length Payables and Receivables. The Corporation shall have
satisfied or caused to be satisfied all amounts owed by the Vendors to
the Corporation in accordance with Section 3.1(j) of this Agreement.
b) Actions to Satisfy Closing Conditions. The Vendors shall diligently take
all actions and do all things necessary to ensure compliance with the
conditions set forth in section 6.1 of this Agreement.
c) Transfer of Purchased Shares. The Vendors shall take, and will cause the
Corporation to take, all necessary steps and proceedings as approved by
counsel for the Purchaser to permit the Purchased Shares to be duly and
validly transferred to the Purchaser.
d) Resignation of Directors and Officers. The Vendors shall resign as a
Director and Officer of the Corporation at a time specified by the
Purchaser.
e) Releases. The Vendors shall cause to be executed and delivered to the
<PAGE> 9
8
Purchaser at the Closing Date a release in the form attached to this
Agreement as Schedule 2.
f) Tax Returns. Within 90 days of the Closing Date, the Vendors shall cause
the Corporation to duly and timely file all financial, securities and tax
returns required to be filed since the Balance Sheet Date and promptly
pay all taxes, assessments and governmental charges shown on those tax
returns to be due and payable and shall cause the Corporation not to
enter into any agreement, waiver or other arrangement providing for an
extension of time with respect to the filing of a tax return or the
payment or assessment of any tax or governmental charge.
g) Employment and Non-Compete Agreements. The Vendors shall ensure that the
employees of S.I.Q. (Service Internet Quebec) Inc. shall enter into
consulting and non-compete agreements with the Purchaser in accordance
with Section 8.1(e) of this Agreement.
h) Employee Agreements. The Vendors shall ensure that all key employees of
the Corporation, as determined by the Purchaser, to enter into employment
and non-compete agreements with the Purchaser.
4.2 Covenants of the Purchaser and AXYN. The Purchaser and AXYN covenant and
agree with the Vendors as follows:
a) Release. The Purchaser shall cause to be executed and delivered to the
Vendors at the Closing Date a release in the form attached to this
Agreement as Schedule 3.
b) Issuance of Shares. The Purchaser shall issue the shares set out in
Section 2.1 to the Vendors.
5. CONDITIONS
5.1 Conditions for the Benefit of the Purchaser. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Purchaser to be fulfilled or performed at or
prior to the times specified in this section:
a) Covenants and Warranties. The covenants, representations and warranties
of the Vendors contained in this Agreement or in any other document
delivered pursuant to it shall be true and correct as of the Closing Date
with the same force and effect as if such covenants, representations and
warranties had been made on and as of that date.
b) Compliance. The Vendors shall have performed or complied with all
covenants and agreements in this Agreement to be performed or caused to
be performed or complied with by them prior to the time specified in this
Agreement for performance or compliance.
c) No Changes. On the Closing Date, there shall have been no material
adverse change in the properties, assets, liabilities, affairs, financial
condition or prospects of the Corporation from that shown on or reflected
in the financial
<PAGE> 10
9
statements attached to in this Agreement as Schedule 1, except as
otherwise disclosed in this Agreement. The title of the Vendors to the
Purchased Shares and all other matters in the opinion of the Purchaser's
counsel which are material in connection with the transactions
contemplated in this Agreement shall be subject to the favourable opinion
of that counsel.
d) No Actions. On the Closing Date, no action or proceeding in Canada or the
United States by law or in equity shall be existing or threatened by any
person, company, firm, governmental authority, regulatory body or agency
to enjoin, restrict or prohibit the purchase and sale of the Purchased
Shares contemplated by this Agreement.
e) Consents. On or before the Closing Date, there shall have been obtained
from all appropriate federal, provincial, municipal or other
governmental, non-governmental or administrative bodies all such
approvals, licences and consents in form and terms satisfactory to the
Purchaser as may be required in order to permit the implementation of the
transactions contemplated in this Agreement without affecting or
resulting in the cancellation or termination of any licence or permit
required in the conduct of the Corporation's business.
f) Closing Deliveries. The Vendors shall deliver to the Purchaser on the
Closing Date those items set forth in section 8.1 of this Agreement in
form and content satisfactory to the Purchaser and its counsel.
g) Change of Control Filing. The Vendors shall prepare at their expense to
be filed within the time period prescribed by the INCOME TAX ACT (Canada)
and any other applicable legislation, all tax returns and tax filings
required to be made by the Corporation consequent upon the acquisition of
control of the Corporation by the Purchaser, within 90 days of the
Closing Date in accordance with section 4.1(f) of this Agreement.
If any of the foregoing conditions is not fulfilled or performed as at the
Closing Date unless otherwise specified in this section to the satisfaction of
the Purchaser, the Purchaser may:
a) give notice thereof to the Vendors, whereupon this Agreement shall be
terminated and each of the parties shall be released from all of its
obligations under it without further liability whatsoever and the Vendors
shall return all payments received up to the date thereof, whether such
payments be in the form of cash or shares; or
b) waive compliance with any of these conditions in whole or in part if it
sees fit to do so without prejudice to any of its rights of termination
in the event of non-performance of any other condition in whole or in
part, provided that any waiver shall be binding upon the Purchaser only
if it is in writing; or
c) require the Vendors to indemnify the Purchaser in respect of any costs
incurred in fulfilling or performing the conditions outlined in this
Section.
5.2 Conditions for the Benefit of the Vendors. The purchase and sale of the
<PAGE> 11
10
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Vendors to be fulfilled or performed at or prior
to the times specified in this section:
a) Covenants and Warranties. The covenants, representations and warranties
of the Purchaser and AXYN contained in this Agreement or in any other
document delivered pursuant to it shall be true and correct as of the
Closing Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
b) Compliance. The Purchaser and AXYN shall have performed or complied with
all covenants and agreements in this Agreement to be performed or caused
to be performed or complied with by it prior to the time specified in
this Agreement for performance or compliance.
6. INDEMNIFICATION AND SET-OFF
6.1 Indemnification of Purchaser. The Vendors covenant and agree to
indemnify and save harmless the Purchaser of and from any costs
whatsoever arising out of or pursuant to:
a) any reassessment for income, sales, excise, corporate or other tax of
the Corporation (and all interest or penalties relating to it) for any
period up to and including the Closing Date;
b) all judgements and awards against the Corporation, including all
interest and penalties, in consequence of any action, suit or
proceeding, whether or not disclosed to the Purchaser and whether or
not commenced after the Closing Date, if based upon any acts or
omissions or other circumstances which occurred or arose prior to the
Closing Date;
c) any loss, costs and expenses suffered by the Purchaser as a result of
any breach of any representation, warranty or covenant on the part of
the Vendors contained in this Agreement or in any schedule to it; and
d) all claims, demands, costs and expenses, including all reasonable
legal, audit and other professional fees, incurred in respect of any of
the foregoing.
6.2 Indemnification of Vendors. The Purchaser and Axyn covenant and agree
to indemnify and save harmless the Vendors of and from any loss
whatsoever arising out of or pursuant to:
a) any loss, costs and expenses suffered by the Vendors as a result of any
breach of any representation, warranty or covenant on the part of the
Purchaser; and
b) all claims, demands, costs and expenses, including all reasonable
legal, audit and other professional fees, incurred in respect of any of
the foregoing.
6.3 Right of Set Off. The Purchaser shall have the right to satisfy any
amount from time to time owing by them to the Vendors, including
amounts payable under the employment agreement, royalty payments or
other payments owing to the Vendors by way of set off against any
amount owing from time to time by the
<PAGE> 12
11
Vendors to the Purchaser, arising out of this Agreement.
7. SURVIVAL OF CONDITIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES
7.1 Survival. The conditions, covenants, representations and warranties of
the parties to this Agreement or in any certificates or documents
delivered pursuant to it or in connection with the transactions
contemplated in it and the rights of Indemnification and set off set
out in Section 6 of this Agreement shall continue in full force and
effect after the Closing Date, and shall not merge for a period of
three (3) years from the Closing Date, except for the representations
contained in Section 3.1(k) and 3.1(aa) and the covenants contained in
Section 4.1(f) which shall not merge for a period of five (5) years
from the Closing Date.
8. CLOSING ARRANGEMENTS
8.1 Deliveries. On or before the Closing Date and upon fulfilment of all of
the conditions in this Agreement which have not been waived by the
Purchaser, the Vendors shall deliver to the Purchaser:
a) certificates representing the Purchased Shares duly endorsed in blank
for transfer or accompanied by a duly executed stock transfer power;
b) all necessary directors' and shareholders' resolutions of the
Corporation consenting to and authorizing the sale of the Purchased
Shares;
(c) a certificate of status for the Corporation dated a current date;
(d) release of the Vendors outlined in the form attached as Schedule 2;
(e) consulting and non-competition agreements for the Vendors;
(f) such further and other documents as the Purchaser's counsel may
consider reasonably necessary or advisable to implement the
transactions contemplated in this Agreement.
8.2 On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Vendors,
the Purchaser shall deliver to the Vendors:
(b) share certificates representing the shares of the Purchaser in
accordance with section 2.1 of this Agreement;
(c) copies of all necessary directors' resolutions of AXYN authorizing the
issuance of the Shares;
(d) a certificate of status for the Purchaser dated a current date;
<PAGE> 13
12
8.3 Place of Closing. The closing shall take place at Ottawa on the Closing
Date at the offices of the Corporation.
9. GENERAL MATTERS
9.1 Schedules. The following are the schedules attached to and incorporated
in this Agreement by reference and deemed to be part of this Agreement:
Schedule 1 - June 30, 1999 Financial Statements
Schedule 2 - Release of the Vendors
Schedule 3 - Release of Purchaser
Schedule 4 - Material Contracts
Schedule 5 - Leases
Schedule 6 - Actions against Corporation
9.2 Currency. All dollar amounts referred to in this agreement are in
Canadian funds unless otherwise specified.
9.3 Entire Agreement. This Agreement, including the schedules to it,
together with the agreements and other documents to be delivered
pursuant to it, constitute the entire agreement between the parties
pertaining to the subject matter of this Agreement and supersede all
prior agreements, understandings, negotiations and discussions, whether
written or oral, of the parties, and there are no warranties,
representations or other agreements between the parties in connection
with the subject matter of it. No amendment, modification, waiver or
termination of this Agreement shall be binding unless executed in
writing by the party to be bound by it. No waiver of any provision of
this Agreement shall be deemed to constitute a waiver of any other
provision (whether or not similar) nor shall that waiver constitute a
continuing waiver unless expressly provided.
9.4 Governing Laws. This Agreement shall be construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable
in it and shall be treated in all respects as an Ontario contract. The
parties attorn to the exclusive jurisdiction of the courts of the
Province of Ontario with respect to any matter arising under this
Agreement or any of the schedules or documents to be entered into or
delivered pursuant to it.
9.5 Expenses. Unless otherwise specified herein, all costs and expenses
(including, without limitation, the fees and disbursements of legal
counsel) incurred in connection with this Agreement and the
transactions contemplated by it shall be paid by the party incurring
the cost or expense.
9.6 Notices. Any notice or other writing required or permitted to be given
under this Agreement may be delivered personally or sent by prepaid
registered mail or transmitted by telex, facsimile or other form of
recorded telecommunication transmission:
<PAGE> 14
13
(a) to the Vendors at:
1220 Boulevard Lebourgneuf, Unit 150
Quebec City, Quebec G2K 2G4
PH: 418-622-5045 FAX: 418-628-4766
(b) to the Purchaser and AXYN at:
201-338 Montreal Road
Vanier, Ontario K1L 6B3
PH: 888-869-2996 Fax: 613-742-6068
or at such other address as the parties may from time to time deliver
pursuant to this section. Any notice delivered or transmitted by telex,
facsimile or other form of recorded telecommunication shall be deemed
to be given and received on the date of its delivery or transmission,
as the case may be, provided that such day is not a Saturday, Sunday or
statutory holiday. Any notice mailed shall be deemed to have been given
and received on the third business day following the date of its
mailing.
9.7 Further Assurances. The parties shall with diligence do all things and
provide all such assurances as may be required to consummate the
transactions contemplated by this Agreement, and each party shall
provide such further documents or instruments required by any other
party as may be reasonably necessary or desirable to effect the purpose
of this Agreement and carry out its provisions, whether before or after
the Closing Date.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original of this Agreement and fully binding upon the
signatory to it, but all counterparts shall together constitute one and
the same instrument.
9.9 Time of Essence. Time shall be of the essence of this Agreement.
9.10 Language. The parties hereto have agreed that this document be drawn up
in the English language. Les parties presentes ont convenu que ce
document soit redige en anglais.
9.11 Successors and Assigns. This Agreement shall enure to the benefit of
and be binding upon the parties to it and their respective heirs,
successors, executors, administrators and assigns, as applicable. This
Agreement may not be assigned or transferred by the Vendors without the
prior written consent of the Purchaser, such consent not to be
unreasonably withheld.
<PAGE> 15
14
IN WITNESS WHEREOF the parties have executed this Agreement as of the day, month
and year first above written.
AXYN CANADA CORPORATION
PER _________________________c/s
PER _________________________c/s
AXYN CORPORATION
PER _________________________c/s
PER _________________________c/s
SIGNED SEALED AND DELIVERED
in the presence of
)
__________________ )__________________________________
WITNESS ) LUC BEDARD - VENDOR
)
__________________ )__________________________________
WITNESS ) C.R.E. INC. - VENDOR
)
__________________ )__________________________________
WITNESS ) 9013 7720 QUEBEC INC. - VENDOR
<PAGE> 16
15
SCHEDULE 1
FINANCIAL STATEMENTS OF THE CORPORATION
JUNE 30, 1999
<PAGE> 17
16
SCHEDULE 2
RELEASE
TO: AXYN Canada Corporation and AXYN Corporation (the "Purchaser")
AND TO: S.I.Q. (SERVICE INTERNET QUEBEC) INC. (the "Corporation")
RE: AXYN Canada Corporation purchase of all of the issued and
outstanding shares in the capital of the Corporation
In consideration of the sum of One Dollar ($1.00) and of other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
the Purchaser and the Corporation from all manner of actions, causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, claims or demands
whatsoever which the undersigned may now have or hereafter can have, against the
Purchaser or the Corporation existing up to the date of this release, including
by virtue of them being or ceasing to be an officer, director, employee or
contractor of the Corporation as the case may be, provided that nothing herein
contained shall be construed so as to release the Purchaser from its obligations
and covenants arising out of or in respect of a Purchase Agreement made the 30th
day of June, 1999 in respect of the sale by the undersigned to the Purchaser of
all of the issued and outstanding shares in the capital of the Corporation or
any documents delivered pursuant to such agreement.
DATED at Ottawa this 30th day of June, 1999.
S.I.Q. (SERVICE INTERNET QUEBEC)
INC.
___________________________________
Per: LUC BEDARD
___________________________________
Per: C.R.E. INC.
___________________________________
Per: 9013 7720 QUEBEC INC.
<PAGE> 18
17
SCHEDULE 3
RELEASE
TO: LUC BEDARD, C.R.E. Inc. and 9013 7720 QUEBEC Inc. ("VENDORS")
RE: AXYN Canada Corporation purchase of all of the issued and outstanding
shares in the capital of S.I.Q. (Service Internet Quebec) Inc. (the
"Corporation")
In consideration of the sum of One Dollar ($1.00) and of other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
VENDORS of and from all manner of actions, causes of action, suits, debts, dues,
accounts, bonds, covenants, contracts, claims or demands whatsoever which the
undersigned may now have or hereafter can have, against the VENDORS existing up
to the date of this release, by virtue of them being an officer, director,
employee or contractor of the Corporation as the case may be, except those
actions, causes of action, suits, debts, dues, accounts, bonds, covenants,
contracts, claims or demands arising from the terms of the Purchase Agreement
between the parties dated June 30th, 1999.
DATED at Ottawa this 30th day of June, 1999.
AXYN Canada Corporation
Per: ___________________________c/s
Per: ___________________________c/s
AXYN Corporation
Per: ___________________________c/s
Per: ___________________________c/s
S.I.Q. (SERVICE INTERNET QUEBEC)
INC.
____________________________
Per: LUC BEDARD
____________________________
Per: C.R.E. INC.
____________________________
Per: 9013 7720 QUEBEC INC.
<PAGE> 19
18
SCHEDULE 4
MATERIAL CONTRACTS
<PAGE> 20
19
SCHEDULE 5
LEASES
<PAGE> 21
20
SCHEDULE 6
ACTIONS OR JUDGMENTS AGAINST CORPORATION
<PAGE> 1
EXHIBIT (6)d
TABLE OF CONTENTS
SECTION I - STANDARD INSTRUCTIONS AND CONDITIONS
A. Standard Instructions and Conditions - Standing Offer DSS-MAS 9403-6
(15/06/98)
B. General Conditions - Services DSS-MAS 9676 (16/02/98)
SECTION II - CONTRACTING AUTHORITY
SECTION III - INSTRUCTIONS TO CONSULTANTS
Clauses which apply to this Standing Offer
- Standing Offer, Period of
- Standing Offer, Delivery Requirements outside a CLCSA
- Call-up Procedures
- Limitation of Submissions
- Disclosure of Information
- Goods and Services Tax/Harmonized Sales Tax
- Tax Withholding of 15 Percent
- Time Verification
- Basis of Payment
- Method of Payment
- International Sanctions
ANNEXES
Annex "A" - Statement of Work
Annex "B" - Pricing
Page 1 of 15
<PAGE> 2
SECTION I - STANDARD INSTRUCTIONS AND CONDITIONS
STANDARD ACQUISITION CLAUSES AND CONDITIONS MANUAL
All instructions, general terms, conditions and clauses identified herein by
title, number and date are set out in the Standard Acquisition Clauses and
Conditions (SACC) Manual, issued by the Department of Public Works and
Government Services (DPWGS), bearing Catalogue No. P60-4/1-1991E and revised as
of 16 February 1998.
The SACC Manual may be obtained from the Government of Canada, Communications
Co-ordination Services Branch, telephone (819) 956-4800, and may also be viewed
on the Government Electronic Tendering Service (GETS), provided by MERX,
telephone: 1-800-964-6379, Internet Address: http://www.merx.cebra.com.
TREASURY BOARD GUIDELINES ON TRAVEL AND LIVING
The Treasury Board of Canada Secretariat Travel Directive (98/09/11) for travel
and living expenses may be viewed on the Internet at the following address:
http://www.ibs-sct.gc.ca/Pubs_pol/hrpubs/TBM_113/TD-e.html.
STANDARD INSTRUCTIONS
Instructions set out in Part A of the Standard and Conditions - Standing Offers,
DSS-MAS 9403-6 (06/98) with the exception of Section 7, set out in the SACC
Manual, are hereby incorporated by reference into and form part of this Standing
Offer.
A. TERMS AND CONDITIONS - STANDING OFFER
1. Pursuant to the Department of Public Works and Government Services Act, S. C.
1996, c. 16,
(a) the general terms, conditions and clauses identified herein by
number, date and title, and
(b) the Particulars of the Standing Offer set out in Part B and, for the
purchase of goods, the Conditions set out in Part C of Standard
Instructions and Conditions - Standing Offers, DSS MAS 9403-6
(06/98), with the exception of Section 7, are hereby incorporated by
reference into this Standing Offer as though expressly set out
herein. subject to any other express terms and conditions herein
contained.
B. GENERAL CONDITIONS
The General Conditions - Services DSS-MAS 9676 (16/02/98), also apply to
this Standing Offer.
Wherever the word "Contractor" appears in DSS-MAS 9676 (16/02/98), it is
hereby replaced by the word "Consultant."
Page 2 of 15
<PAGE> 3
SECTION II - CONTRACTING AUTHORITY
The Contracting Authority for this Standing Offer is:
Louise Sullivan
A/Sr. Contract Management Officer
Professional and Technical Services Contracting
Real Property Contracting Directorate
3C2, Phase M, Place du Portage
Hull, Quebec
K1A OS5
Telephone: (819) 956-5452
Fax: (819) 956-3160
The Contracting Authority is responsible for the establishment of the Standing
Offer, the administration and issuance of individual call-ups.
Page 3 of 15
<PAGE> 4
SECTION III - INSTRUCTIONS TO CONSULTANTS
THE FOLLOWING CLAUSES WILL APPLY:
STANDING OFFER, PERIOD OF
The period for placing call-ups against this Standing Offer shall be from date
of issuance for two (2) years.
STANDING OFFER, DELIVERY REQUIREMENTS OUTSIDE A CLCSA
The Standing Offer is not to be used for deliveries within a Comprehensive Land
Claims Settlement Area (CLCSA). All requirements for delivery within a CLCSA are
to be submitted to the Department of Public Works and Government Services for
individual processing.
CALL-UP PROCEDURES:
The Technical Authority/Project Manager of Real Property Services (RPS) will
establish the Scope of Services to be performed. The highest ranked consultant
shall be given first consideration. Should that consultant be deemed unable to
carry out the proposed services within the required time frame, the next highest
ranked consultant would be approached. This process will continue until a
consultant is deemed able to carry out the proposed services. The Technical
Authority will negotiate a price proposal based on the number of hours, by
category, required to carry out the services. Once the hours are accepted, the
fixed lump sum for this call-up will be established by multiplying the accepted
number of hours by the appropriate rate as indicated at Annex "B" - Pricing.
A call-up will then be issued by the Real Property Contracting Directorate
(RPCD) and the consultant will be advised to proceed with the provision of the
services in accordance therewith.
DISCLOSURE OF INFORMATION
It is understood and agreed that the Consultant shall, during and after the
effective period of the Standing Offer, treat it as confidential and not
divulge, unless authorized in writing by the Project Authority, any information
obtained in the course of the performance of the ensuing contract.
GOOD AND SERVICES TAX/HARMONIZED SALES TAX
All prices and amounts of money in the Contract are exclusive of GST or HST, as
applicable, unless otherwise indicated. The Goods and Services Tax (GST) or
Harmonized Sales Tax (HST), whichever is applicable, is extra to the price
herein and will be paid by Canada.
The estimated GST or HST is included in the total estimated cost. GST or HST, to
the extent applicable, will be incorporated into all invoices and progress
claims and shown as a separate item on invoices and progress claims. All items
that are zero-rated, exempt or to which the GST or HST does not apply, are to be
identified as such on all invoices. The Contractor agrees to remit to Revenue
Canada any amounts of GST and HST paid or due.
Page 4 of 15
<PAGE> 5
TAX WITHHOLDING OF 15 PERCENT
The Contractor agrees that, pursuant to the provisions of the Income Tax Act,
Canada is empowered to withhold an amount of 15 percent of the price to be paid
to the Contractor, if the Contractor is a non-resident contractor as defined in
said Act. This amount will be held on account with respect to any liability for
taxes which may be owed to Canada.
TIME VERIFICATION
Time charged and the accuracy of the Contractor's time recording system may be
verified by Canada's representatives before or after payment is made to the
Contractor under the terms and conditions of the Contract. If verification is
done after payment, the Contractor agrees to repay any overpayment immediately
upon demand by Canada.
BASIS OF PAYMENT
Payment for the provision of services under a call up will be a fixed lump sum
which will be based on the fixed hourly rates as per Annex "B" - Pricing and the
hours of labour established for the Scope of Services required.
Disbursements as defined in the clause "Method of Payment" are to be paid at
cost with no allowance for overhead or profit.
METHOD OF PAYMENT
Payment will be made for services rendered, provided that:
1. INVOICES ARE SUBMITTED IN ACCORDANCE WITH THE INVOICING INSTRUCTIONS
CONTAINED HEREIN;
(A) TRAVEL AND LIVING EXPENSES
Reasonable and proper travel and living expenses incurred by
personnel directly engaged in the performance of the work, as
pre-authorized in writing by the Technical Authority/Y2K Project
Manager, shall be reimbursed at actual cost without any allowance
thereon for overhead or profit and shall be in accordance with the
then-current Treasury Board of Canada Secretariat Travel Directive.
Travel expenses incurred from the Consultant's place of business to
the call-up work site will only be reimbursed if they are within
the same PWGSC geographic region. Living expenses will be
reimbursed in all situations, at cost, with no allowance for
overhead or profit and shall be in accordance with the then-current
Treasury Board Guidelines.
Page 6 of 15
<PAGE> 6
(B) DISBURSEMENTS
The following disbursements incurred by the Consultant, that are
related to the Services and approved in advance in writing by the
Technical Authority/ Project Manager, will be reimbursed to the
Consultant at actual cost:
(i) copies of drawings, CADD files, specifications, in excess of
those stated in the Statement of Work;
(ii) transportation costs for material samples and models, courier
and delivery charges;
(iij) costs associated with translation of documents;
(iv) travel and living expenses as identified in (a) above;
(v) bilingual documents; and
(vi) other direct expenses made with the prior approval and
authorization of the Technical Authority/ Project Manager.
2. PAYMENT TO THE CONSULTANT:
WHERE DELIVERY OF SERVICES UNDER A CALL-UP WILL BE LESS THAN 60 DAYS, payment by
Canada for the work shall be made within:
thirty (30) days following the date of which all of the Work has been delivered
at the location(s) specified on the call-up document and all other Work required
to be performed by the Consultant under the terms of the Standing Offer has been
completed; or
thirty (30) days following the date on which an invoice and substantiating
documentation are received according to the terms of the Standing Offer;
whichever is later.
WHERE DELIVERY OF SERVICES UNDER A CALL-UP WILL BE MOM THAN 60 DAYS, the
Consultant shall be entitled to receive progress payments at monthly or other
agreed intervals. Such payments shall be made not later than the due date. The
due date shall be the 30th day following receipt of a properly submitted
invoice.
The monthly progress payment shall be calculated based on productive hours
performed times the appropriate hourly rate indicated in Annex "B". The sum
total of progress payments against any call-up shall not exceed 90% of the fixed
lump sum established for the call-up.
Upon the satisfactory completion of all Services, the amount due, less any
payments already made, shall be paid to the Consultant not later than 30 days
after receipt of a properly submitted invoice.
Page 7 of 15
<PAGE> 7
3. INVOICE SUBMISSION
The properly submitted invoice shall be an invoice delivered to the Technical
Authority/Project Manager in the agreed format with sufficient detail and
information to permit verification. The invoice shall also identify, as separate
items:
(a) the amount of the payment being claimed for Services satisfactorily
performed;
(b) the amount for any tax calculated in accordance with the applicable
federal legislation, and
(c) the total amount which shall be the sum of the amounts referred to
in (a) and (b) above.
The amount of the tax shown on the invoice shall be paid by Canada to the
Consultant in addition to the amount of the payment for Services satisfactorily
performed.
INTERNATIONAL SANCTIONS
I. Persons and companies in Canada are bound by economic sanctions
imposed by Canada by regulations passed pursuant to the United
Nations Act, R. S. C. 1985, c. U-2, the Special Economic Measures
Act, S. C. 1992, c. 17 or the Export and Import Permits Act, R. S.
C. 1985, c. E-19. As a result, the Government of Canada cannot
accept delivery of goods or services that originate, either directly
or indirectly, from the countries subject to economic sanctions. At
the time of contract award, the following regulations implement
economic sanctions:
(a) United Nations Iraq Regulations;
(b) United Nations Libya Regulations;
(c) United Nations Republic of Bosnia and Herzegovina Regulations;
(d) United Nations Federal Republic of Yugoslavia (Serbia and
Montenegro) Regulations.
2. It is a condition of this Contract that the Contractor not supply to
the Government of Canada any goods or services which are subject to
economic sanctions as described in paragraph (1) above.
3. During the performance of the Contract should the addition of a
country to the list of sanctioned countries or the additions of a
good or service to the list of sanctioned goods or services cause an
impossibility of performance for the Contractor, the situation will
be treated by the Parties as a force majeure. The Contractor shall
forthwith inform Canada of the situation; the procedures applicable
to force majeure shall then apply.
Page 8 of 15
<PAGE> 8
ANNEX A - STATEMENT OF WORK
A. SCOPE OF SERVICES:
The services rendered by the Consultant in all provinces and territories of
Canada will be in support of Federal Government departments Year 2000 Readiness
preparedness activities in respect of embedded building control systems.
Individual commissions will provide support to a departmental Project Manager or
Property Manager and may include one or more of the activities broadly related
to digital building control systems. The Consultant will provide expertise in
most if not all of the following areas:
(a) Building Inventory - identify microprocessor embedded systems
located in a base building system
(b) Inventory Assessment - search of VIS web site to determine the
system's or components' Y2K compliance status
(c) Remediation Planning - develop a plan and the cost to upgrade the
system or component to ensure Y2K compliance
(d) Contingency Planning - develop plans to rectify failures of a system
or component during testing or at year 2000
W System Testing - plan one witness compliance test conducted by
manufacturer.
Please note that, in general, services in respect of building/facilities control
systems must be complete in that they identify those systems, subsystems or
components that can compromise a building or facility's ability to operate as
intended as Year 2000 approaches and arrives. This will ensure continued
operation of buildings/facilities necessary for ongoing government operations.
DEFINITION OF DUTIES:
a) Senior Personnel are expected to assess project requirements, define scope
of work, assign project personnel with skill appropriate to the project
work proposed along with schedules, prepare reports to departmental
management and maintain records appropriate to demonstrating "due
diligence" in respect of Y2K remediation.
b) Project Personnel are expected to develop Y2K readiness strategy for a
particular facility or type of facility, inventory equipment, verify Y2K
readiness status using the PWGSC Vendor Information System, develop a
remediation strategy with appropriate alternatives, as appropriate,
estimate remediation costs, coordinate with contractors and departmental
managers for remediation and testing, witness testing and prepare final
readiness reports for inclusion in departmental files.
SENIOR PERSONNEL
A1.1 BASIC SERVICES
A1.1.1 Unless otherwise indicated in the Call-up, the Standing
Offer will include the following Basic Services:
(a) accurately inventorying of specific control systems
resident in a building/facility;
(b) identification of systems containing embedded chips;
(c) assessment of system vulnerability to Y2K malfunction
using the departmental Vendor Information Service
(VIS);
(d) identifying and articulating the requirements of those
systems requiring remediation and advise the owner of
the requirements;
(e) development of a contingency plan: i) to recover
operational integrity of a building in the event of a
system failure during testing; ii) to return a facility
to operation in the event of a complete system failure
at Year 2000;
Page 9 of 15
<PAGE> 9
(f) testing/witnessing tests/preparing test reports;
A1.1.2 When the client requests a change that may alter the scope
of work or add to the cost of the project, and/or the cost
of services, request approval of the Technical
Authority/Project Manager prior to incorporation in the
work.
A1.2 ANALYSIS OF PROJECT SCOPE OF WORK
A1.2.1 The Consultant shall analyze the Project Brief and advise
the Technical Authority/Project Manager of any noted
problems or the need for more information, clarification or
direction.
A1.2.2 Visit the site to perform work and obtain local information
applicable to the installation. This includes verifying
as-built records as necessary.
(a) Subject to applicable security restrictions, the
Consultant will be given access to existing plans, survey
notes, specifications or reports that will aid in the work.
All such documents must be returned to the department
representative on termination of the contract.
A1.2.3 Submit a written report to the Technical Authority/Project
Manager after each Call-up detailing the action undertaken
in the performance of the deliverable, future action
required along with cost estimates and schedule for
implementation.
A2.1 BILINGUAL DOCUMENTS
A2.1.1 The Consultant shall provide all documents in one or both of
Canada's two Official Languages, as requested at time of
call-up.
A2.1.2 The total amount payable for the production of bilingual
remediation documents shall be approved in advance by the
Technical Authority/Project Manager at the time of the
Call-up.
B. DELIVERABLES:
Deliverables; will be defined in detail for each individual Call-up,
deliverables will include, but are not limited to, the following services:
a) BUILDING INVENTORY - conduct a detailed inventory to identify
microprocessor embedded systems located in specific buildings or
facilities in accordance with Public Works Government Services
(PWGSC) standard Inventory Collection Sheet. The inventory shall
identify the manufacturer, model number, version type of all
embedded systems including subsystems and panels. Standard
building/facilities embedded systems include but are not limited to:
- Building Control Automation Systems
- Elevating devices
- Fire Alarm Systems
- Security Systems
- Chillers
- Boilers
- Emergency generators
- Water softening systems
- Fuel monitoring systems
Page 10 of 15
<PAGE> 10
- Supervisory Control and Data Acquisition (SCADA) systems
- Variable frequency/speed drives
- Transfer switches
- Other facility based systems that have a date sensitive
microprocessor
b) INVENTORY ASSESSMENT - conduct a detailed assessment of the inventory
based on the data contained in the PWGSC Inventory Collection Sheet. The
assessment is to include but not be limited to the following:
- A search of the VIS web site at http://vend2000.gc.ca or the
manufacturers' website to determine the system's or components' year
2000 compliance status.
- Download verification information from the manufacturer that the
system or components are year 2000 compliant.
- If the system or components are not compliant, verify vendor cost
and schedule for upgrade.
- If the system or components are not found on the Internet or the
vendor's web site, contact the manufacturer and verify that the
system or components are year 2000 compliant. If the system or
components are not compliant verify vendor cost and schedule for
upgrade.
- Forward information obtained for systems or components not found on
the Internet to PWGSC, Embedded System Manager, 2250 Riverside
Drive, Rm C456, Ottawa, Ontario KIA 0X1.
c) REMEDIATION PLANNING - develop a plan to upgrade a system or components
that is identified as year 2000 non-compliant to include but not be
limited to:
- Manufacturers' costs including fees, travel and disbursements to
upgrade non-compliant systems or components.
- Develop schedule to affect system upgrade.
- Communicate cost and schedule to system owner (federal department or
agency).
- Assist in project implementation.
- Obtain written verification from the system manufacturer that the
system upgrade is complete and the system is compliant.
d) CONTINGENCY PLANNING - develop contingency plans Level 1 and Level 2 to
include the following:
Contingency Plan Level 1 (in the event of a failure during test)
- - Schedule date of test
- - Contact information
- - Name and phone number or Property Manager, Building Operator(s),
Monitoring Company,
- - Fire Department, Manufacturer or representative, and PWGSC technical
specialist.
- - System Name
- - System Description
- - Operational Information
Confirm the following:
1. Does the equipment or system have a calendar based programming function?
2. If a problem were to arise during testing procedures, can an operator
override the equipment or system time clock?
3. Does the equipment or system have a manual mode feature which can be
utilized?
4. If problems occur during testing at any time, can equipment be isolated
quickly from the
Page 11 of 15
<PAGE> 11
Control system?
5. Will the manufacturer have spare parts or temporary (embedded system)
panels on site during testing?
- Action Plan in the Event of Malfunction or System Failure Provide an
action plan for each system in the event of a malfunction or
failure. A partial list of necessary actions are provided as
follows:
FIRE ALARM SYSTEM
1. If the fire alarm evacuation system fails to function, it is
recommended that the facility not be occupied until repairs are
completed, to the satisfaction of that authority having
jurisdiction. (Based on discussions with Labour Canada).
2. Ensure that the property manager is notified immediately if
evacuation is required.
(Based on discussions with Labour Canada and contractors, and on testing
experience to date, it is unlikely that Y2K testing office alarm systems
would impair the function of the fire alarm detection/evacuation
operation.)
SECURITY SYSTEMS
1. In the event of failure repair the panel.
2. If panel can not be repaired on same day install a temporary panel
to monitor fire alarm and fire trouble. Lock doors manually and
increase regular patrols.
3. If a temporary panel is not available consult with local fire
department and/or other applicable regulatory authorities to know
what other options are available (i.e. evacuate staff or put in
place a 24 hours security guard). Lock doors manually.
BACS (BUILDING AUTOMATION & CONTROL $WEMS)
Confirm the following;
1. Fans and Pumps
In the event that the Power Control Unit (PCU) fails, can a fan or pump be
started by switching the hand-off-auto switch on the Motor Control Centre
(MCC) motor starter to "HAND" position? If the pump or fan has a variable
speed drive, can the variable speed drive be switched to manual and the
drive operated manually by using the local controls on the drive to ramp
to position?
2. Damper Actuators Control Valves
Page 12 of 15
<PAGE> 12
In the event that the PCU fails and the air handling system or converter
have to be operated manually, the following can be done:
- ensure that the fan or pump is operating as mentioned above.
- on some PCU models, the local hand-off-auto on the PCU can be
switched to manual and a local pot (screwdriver operated) can be
used for manual adjustment. Use thermometers to adjust pots to
desired temperatures.
- if the PCU is an older model it may be necessary to use a PRV
(pressure regulating valve) if the end devices are pneumatic to
adjust accordingly. If the actuators are electronic either use the
manual override (Belimo Actuators) to adjust or a bypass hand valve.
Mixed air dampers may also bc disconnected from their actuators and
positioned manually for lower volume systems.
3. Hardware Failure
In the event that there is a hardware failure for systems, can the system
be operated manually by the building operator until repairs are completed?
SPECIALIZED SYSTEMS
The manufacturer or representative of specialized equipment and systems
should be consulted in the preparation of the Level 1 Contingency Plan.
Appropriate actions in the event of malfunction or failure should address
resultant impacts on program activities.
Contingency Plan Level 2 (in the event of a failure at 23:59 hrs, 31
December, 1999)
This plan is to include all the elements contained in the Contingency Plan
Level 1 and the remediation action required to work around systems or
components which have failed or are not year 2000 compliant, to ensure
continued operations until upgrade or replacement of the system or
components can be effected.
c) System Testing - witness compliance test conducted by system or component
manufacturer in accordance with PWGSC's Year 2000 Embedded System Test
Protocol.
C. DELIVERY
The schedule for the delivery of services will be determined at the time of each
individual Call-up.
Page 13 of 15
<PAGE> 13
ANNEX "B" - PRICING
Firm's Name and Address: AXYN CANADA CORPORATION
338 Montreal Road, Suite 201
Vanier, Ontario KIL 6B3
Hourly Rates for duration of Standing Offer - Fixed hourly rates (excluding
GJST)
CATEGORY OF PERSONNEL
<TABLE>
<CAPTION>
BUILDING INVENTORY HOURLY RATE
- ------------------ -----------
<S> <C>
Senior Personnel - Project Manager $96.28/hour
Project Personnel $76.71/hour
INVENTORY ASSESSMENT
Senior Personnel - Project Manager $96.28/hour
Project Personnel $76.71/hour
REMEDIATION PLANNING
Senior Personnel - Project Manager $96.28/hour
Project Personnel $76.71/hour
CONTINGENCY PLANS LEVEL 1 & 2
Senior Personnel - Project Manager $96.28/hour
Project Personnel $76.71/hour
SYSTEM TESTING
Senior Personnel - Project Manager $96.28/hour
Project Personnel $76.71/hour
</TABLE>
Page 14 of 15
<PAGE> 14
1. The Consultant, when requested by the Technical Authority/Project Manager
during the period of the Standing Offer, will calculate individual project
estimates, in accordance with the fixed hourly rates (excluding GST) shown
an the previous page.
2. Unless otherwise approved in writing by the Technical Authority/Project
Manager, the Consultant undertakes:
a) To employ only those classes of persons with skill levels
appropriate to each task, as defined in the Scope of Work section of
each Call-up.
b) To pro-rate accordingly to cover the actual time worked, where work
performed using the Time-Based fee Method, is of a duration of less
that one hour.
c) To provide a full and comprehensive list of names of each individual
to be assigned to a project subject to a Call-up, where payment is
based on the Time-Based Fee Method, prior to the provision of any
services.
Please be advised that overtime rates will NOT be paid. Consultants should be
aware that same of the testing may need to be done during silent hours.
Page 15 of 15
<PAGE> 1
EXHIBIT (6)e
05/13/99 14:53 FAX 819 956 3160
Public Works and Government Services Canada
Purchasing Office, Bureau des achats:
Consulting services Division/Division des services de marches
11 Laurier St 11 Rue Laurier
3C2, Place du Portage
Phase III, Quebec KIA OS5
STANDING OFFER AND CALL-UP AUTHORITY
National Individual Standing Offer (NISO)
This is not a Contract
Canada, as represented by the Minister of Public Works and Government Services
Canada, hereby authorizes the identified Users listed herein to make call-ups
against this Standing Offer.
THE OFFERER HEREBY ACKNOWLEDGES THAT THE ATTACHED DOCUMENT CONTAINS ITS STANDING
OFFER.
Signature Date
Name, title of person authorized to sign (type or print)
Comments -
VENDOR NAME AND ADDRESS
Y2743
AXYN Canada Corporation
201-338 Montreal Road
Vanier
Ontario
KlL6B3
CANADA
Date: 13-May-1999
Title - Y2000 Embedded Systems
PERIOD OF STANDING OFFER -
Start: 13-May-1999
End: 12-May-2001
STANDING OFFER NO. -
EP007-8-0010/001/FE
CLIENT REFERENCE NO. -
EP007-8-0010
REQUISITION NO. -
EP007-8-0010
FILE NO. -
fe108.EP007-8-0010
FINANCIAL CODES
<PAGE> 2
404529
GST
INDIVIDUAL CALL-UP LIMITATION
$200,000.00
SECURITY
This Standing Offer shall not be used for call-ups where security requirements
have been identified.
IF MARKED "X" PLEASE SEE THE BOX TO THE LEFT.
Acknowledgement copy required.
DESTINATION - OF GOODS AND SERVICES
PWGSC
As per individual call-up
INVOICES - ORIGINAL AND TWO COPIES TO BE SENT TO:
As per individual call up.
ADDRESS ENQUIRIES TO:
Louise Sullivan
TELEPHONE NO.
(919) 956-5452
TOTAL ESTIMATED COST
$0.00
<PAGE> 1
EXHIBIT (6)f
MEMORANDUM OF AGREEMENT
BETWEEN:
AXYN CANADA CORPORATION
"AXYN"
AND:
SCOTTFEAGAN
"FEAGAN"
I. RECITALS:
1. Axyn is a newly created Canadian company which carries on the business of
Year 2000 remediation and computer systems integration. Axyn is a company
related (as defined by the Income Tax Act, Canada) either at present or in
the near future to other companies, including a company to be named Axyn
Corporation ("Holdco"), which is to serve as the holding company for Axyn
and other companies. Both Axyn and Holdco require, or will shortly require,
the services of a Chairman of the Board of Directors (uChair"), and
President.
2. Feagan has agreed to fulfill the roles of President and Chief executive
Officer of Holdco and of Chair of Axyn.
3. All sums expressed below in monetary terms shall be in currency of the
United States of America.
II. AGREEMENT:
4. Axyn agrees to retain Feagan as an employee in the role of Chair for an
indefinite period, commencing March 1, 1998. During the period of
employment, Feagan agrees to provide such services as may be required by
Axyn, compatible with his role as Chair of Axyn, and also as President of
Holdco, to the extent that he is competent to provide such services.
5. The parties agree that the two roles as described shall require Feagan's
full time and attention. The parties acknowledge that Feagan is further
bound by the provisions of the Principals' Agreement, as executed by Axyn,
Robert Bell, A.D. McQuarrie and Feagan.
6. Axyn will pay to Feagan remuneration in the form of base salary as follows:
a. On account of his role as President of Holdco, the sum of $50,000 per
annum, to commence retroactively March 1, 1998. Such retroactivity is
in recognition of the time and effort expended by Feagan in connection
with the corporate reorganization that has caused or will cause Holdco
to be related to Axyn, and to the initial public offering of equity in
Holdco.
b. On account of his role as Chair of Axyn, the sum of $100,000 per
annum, to commence retroactively March 1, 1998. Such retroactivity is
in recognition of the time and effort expended by Feagan in connection
with the corporate creation of Axyn. Axyn shall recover such
expenditure from Holdco in a manner appropriate to
<PAGE> 2
Page 2 of 3
such companies.
7. During the period of his employment with Axyn, Axyn's standard Employee
Information Package shall apply to Feagan.
8. In recognition of the considerable financial risk accepted by Feagan in his
role in the organization and reorganization of Axyn, Holdco and related
companies, and in further consideration of the commitments made by Feagan
as set out herein, the parties agree that, in the event that Feagan's
employment with Axyn, Holdco or related companies is terminated for any
reason whatsoever, including for just cause but excluding for death or long
term disability, Axyn shall be liable to pay Feagan a sum equivalent to
three times his gross salary for the previous 12 months, which term shall
include the gross cash value of any other consideration received by Feagan
on account of profit sharing, bonus, options or other remuneration of any
kind.
9. Axyn shall maintain (or shall cause Holdco to maintain) insurance with a
Life Underwriting Company licensed to cover risks of death and disability
in Canada or the United States of America, which insurance shall cover the
risks of death and long term disability of Feagan. In the event of his
death, or in the event that physical or mental infirmity prevents Feagan
from actively carrying on his duties for a continuous period of six months,
or any total period of six months within a continuous period of twelve
months, Feagan agrees that the provisions of the Principals' Agreement
pertaining to Axyn, Robert Bell, A.D. McQuarrie and Feagan, shall govern,
and Feagan and his estate agree to accept the consideration described in
that agreement in full satisfaction of any claims he may have to the sums
described in paragraph 8 above.
10. Axyn shall pay, or shall cause Holdco to pay, such sums on account of
profit-sharing as the parties agree from time to time, as ratified by the
Board of Directors of Axyn and/or Holdco.
11. Axyn shall issue, or shall cause Holdco to issue, such shares of the common
or other equity of the issuing company (either Axyn or Holdco, as may be
appropriate), or the option to acquire such shares, on account of bonus,
executive compensation or incentive, as the parties agree from time to
time, as ratified by the Board of Directors of Axyn and/or Holdco.
12. In the event that Feagan causes shares of the common or other equity of the
issuing company (either Axyn or Holdco, as may be appropriate), or the
option to acquire such shares, which shares or option may have been
received by reason of either this agreement, the initial organization of
Axyn or the reorganization which causes Holdco to become the holding
company for Axyn, to be assigned or transferred to an assignee or nominee
related to Feagan, then such assignee or nominee shall be bound by the
terms of this agreement, and Feagan shall take such steps as may be
necessary to accomplish this result.
13. Upon the reorganization that causes Holdco to become the holding company
for Axyn, the parties agree to cause Holdco to execute such contract as to
oblige Holdco to honour such terms of this agreement as may apply to
Holdco, either explicitly or by implication.
<PAGE> 3
Page 3 of 3
III. ENTIRE AGREEMENT:
14. The parties agree and acknowledge that this agreement constitutes all the
terms and provisions of their agreement, and that there are no other terms
(collateral or otherwise) and no other representations governing their
relationship, this agreement or their rights and obligations among
themselves.
IV. BINDING ON ASSIGNEES
15. The provisions of this agreement shall be binding on all parties, whether
companies, trusts, estates, partnerships or individuals, who may be
assignees of either Axyn or Feagan.
March 1, 1998 Axyn Canada Corporation
per:
D. Scott Feagan Robert L. Bell, President
<PAGE> 1
EXHIBIT (6)g
MEMORANDUM OF AGREEMENT
BETWEEN:
AXYN CANADA CORPORATION
"AXYN"
AND:
ROBERT L. BELL
"BELL"
I. RECITALS:
1. Axyn is a newly created Canadian company which carries on the business of
Year 2000 remediation and computer systems integration. Axyn is a company
related (as defined by the Income Tax Act, Canada) either at present or in
the near future to other companies, including a company to be named Axyn
Corporation ("Holdco"), which is to serve as the holding company for Axyn
and other companies. Both Axyn and Holdco require, or VAII shortly require,
the services of a Chairman of the Board of Directors ("Chair"), and
President.
2. Bell has agreed to fulfill the roles of President and Chief Executive
Officer of Axyn.
3. All sums expressed below in monetary terms shall be in currency of the
United States of America.
II. AGREEMENT:
4. Axyn agrees to retain Bell as an employee in the role of President and
Chief Executive Officer for an indefinite period, commencing March 1, 1998.
During the period of employment, Bell agrees to provide such services as
may be required by Axyn, compatible with his said role, to the extent that
he is competent to provide such services.
5. The parties agree that the two roles as described shall require Bell's full
time and attention. The parties acknowledge that Bell is further bound by
the provisions of the Principals' Agreement, as executed by Axyn, D. Scott
Feagan, A.D. McQuarrie and Bell.
6. Axyn will pay to Bell remuneration in the form of base salary as follows:
a. On account of his role as President and Chief Executive Officer of
Axyn, the sum of $150,000 per annum, to commence retroactively March
1, 1998. Such retroactivity is in recognition of the time and effort
expended by Bell in connection with the corporate creation of Axyn.
7. During the period of his employment with Axyn, Axyn's standard Employee
Information Package shall apply to Bell.
8. In recognition of the considerable financial risk accepted by Bell in his
role in the organization and reorganization of Axyn, Holdco and related
companies, and in further consideration of the commitments made by Bell as
set out herein, the parties agree that,
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in the event that Bell's employment with Axyn, Holdco or related companies
is terminated for any reason whatsoever, including for just cause but
excluding for death or long term disability, Axyn shall be liable to pay
Bell a sum equivalent to three times his gross salary for the previous 12
months, which term shall include the gross cash value of any other
consideration received by Bell on account of profit sharing, bonus, options
or other remuneration of any kind.
9. Axyn shall maintain (or shall cause Holdco to maintain) insurance with a
Life Underwriting Company licensed to cover risks of death and disability
in Canada or the United States of America, which insurance shall cover the
risks of death and long term disability of Bell. In the event of his death,
or in the event that physical or mental infirmity prevents Bell from
actively carrying on his duties for a continuous period of six months, or
any total period of six months within a continuous period of twelve months,
Bell agrees that the provisions of the Principals' Agreement pertaining to
Axyn, Robert Bell, A.D. McQuarrie and D. Scott Feagan, shall govern, and
Bell and his estate agree to accept the consideration described in that
agreement in full satisfaction of any claims he may have to the sums
described in paragraph 8 above.
10. Axyn shall pay, or shall cause Holdco to pay, such sums on account of
profit-sharing as the parties agree from time to time, as ratified by the
Board of Directors of Axyn and/or Holdco.
11. Axyn shall issue, or shall cause Holdco to issue, such shares of the common
or other equity of the issuing company (either Axyn or Holdco, as may be
appropriate), or the option to acquire such shares, on account of bonus,
executive compensation or incentive, as the parties agree from time to
time, as ratified by the Board of Directors of Axyn and/or Holdco.
12. In the event that Bell causes shares of the common or other equity of the
issuing company (either Axyn or Holdco, as may be appropriate), or the
option to acquire such shares, which shares or option may have been
received by reason of either this agreement, the initial organization of
Axyn or the reorganization which causes Holdco to become the holding
company for Axyn, to be assigned or transferred to an assignee or nominee
related to Bell, then such assignee or nominee shall be bound by the terms
of this agreement, and Bell shall take such steps as may be necessary to
accomplish this result.
13. Upon the reorganization that causes Holdco to become the holding company
for Axyn, the parties agree to cause Holdco to execute such contract as to
oblige Holdco to honour such terms of this agreement as may apply to
Holdco, either explicitly or by implication.
III. ENTIRE AGREEMENT:
14. The parties agree and acknowledge that this agreement constitutes all the
terms and provisions of their agreement, and that there are no other terms
(collateral or otherwise) and no other representations governing their
relationship, this agreement or their rights and obligations among
themselves.
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IV. BINDING ON ASSIGNEES
15. The provisions of this agreement shall be binding on all parties, whether
companies, trusts, estates, partnerships or individuals, who may be
assignees of either Axyn or Bell.
March 1, 1998 Axyn Canada Corporation
per:
Robert L. Bell Scoft Feagan, Chair
and per:
A.D. McQuarrie,
Senior Vice-President
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EXHIBIT (6)h
[AXYN LOGO]
PROMISSORY NOTE
AXYN CORPORATION ("AXYN") hereby promises to pay to __________________ (the
"Payee") the sum of $ _____________ (USD/CDN) on demand, together with interest
at the prime rate of interest posted by the NationsBank as being charged to its
best commercial customers plus 2.0 % per annum, calculated monthly.
So long as AXYN remains liable to pay the whole or any part of the obligation
described above, the Payee may convert all or any part of the remaining
obligation into common shares of either 1) AXYN at the conversion rate of $1.50
USD per common share, or 2) Free Trading shares of Syscan International at the
conversion rate of $0.50 CDN per common share held by AXYN Corporation and
receive an additional equal value of Syscan escrow shares held by AXYN
Corporation. AXYN agrees and acknowledges that this right of conversion may be
exercised at any time, including when and if the common shares of AXYN become
registered within the meaning of the Securities Act of the United States or of
any state. The Payee may exercise such conversion right by notice in writing
delivered to the head office of AXYN.
Dated: _____________________
AXYN CORPORATION
per: ________________________
per: ________________________
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EXHIBIT (6)i
DISTRIBUTION AGREEMENT
THIS AGREEMENT made in triplicate the day of November, 1998.
BETWEEN:
AXYN CANADA CORPORATION, a corporation incorporated pursuant to
the laws of Canada
(hereinafter called "the Distributor")
OF THE FIRST PART
AND:
MPT MILLENNIUM PATENT TECHNOLOGIES CORPORATION LIMITED, a
corporation incorporated under the laws of Cyprus
(hereinafter called "the Owner")
OF THE SECOND PART
WHEREAS the Owner has agreed to sell copies of the Software (defined herein) to
the Distributor and the Distributor has agreed to market and distribute copies
of the Software in accordance with the terms of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged) the parties hereto
hereby agree as follows:
ARTICLE I APPOINTMENT AS DISTRIBUTOR
1.1 The Owner hereby appoints the Distributor as the exclusive distributor of
the Software (as defined in Schedule "A") in Canada and the Distributor hereby
accepts such appointment. In accordance with such appointment, the Distributor
shall have the exclusive right to distribute and sell copies of the Software to
third parties in Canada only (the "Territory").
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1.2 In consideration for and in connection with such appointment, the
Distributor shall:
(a) diligently exploit and market the Software;
(b) maintain, enhance, support, assist and provide such other
services with respect to the Software as may be necessary or
desirable to properly exploit the Software; and
(c) take all other steps as may be reasonably required in order to
effectively market and sell copies of the Software including,
without limitation, preparing sales and promotional materials in
order to facilitate advertising and sales of the Software and to
write, update and maintain all user manuals.
1.3 In connection with the appointment by the Owner of the Distributor as
the exclusive distributor of the Software in the Territory, the
Distributor shall have the right to use any trademarks associated with
the Software for the purposes of carrying out its obligations under this
Agreement and for no other purposes whatsoever. The Owner shall record
the Distributor as a registered user of all trademarks associated with
the Software in the Territory required by the Distributor to market and
sell the Software.
1.4 Except as otherwise provided herein, the Distributor shall, in
consultation with the Owner, make all decisions and do and perform all
such acts and things as may be necessary or desirable in connection with
the sale, marketing and distribution of the Software;
1.5 The Owner shall produce or cause to be produced, copies of the Software
for sale to the Distributor for resale to third parties as principal.
The Distributor is acting as an independent contractor and distributor
and nothing herein shall be deemed to constitute the Distributor as
agent, joint venturer or partner of the Owner or to be related to the
Owner. For greater certainty, the Distributor shall have no authority to
negotiate or conclude contracts in the name of the Owner and the Owner
shall not be bound in any manner whatsoever by any agreement, warranty
or representation made by the Distributor to any other person or with
respect to any action of the Distributor.
1.6 The Distributor shall be responsible for all costs, expenses and
disbursements of any kind in connection with the exploitation,
marketing, distribution and sale of the Software and in connection with
the performance of all of its obligations hereunder, including without
limitation, its share of all costs of enhancing and maintaining the
Software, all costs incurred in promoting and advertising the Software
and all costs of packaging, invoicing, collecting and support services
related to the Software. FOR GREATER CERTAINTY, ALL COSTS OF DUPLICATING
THE SOFTWARE SHALL BE INCURRED BY THE DISTRIBUTOR.
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1.7 Copies of the Software may be sold by the Distributor singly or in bulk,
depending on the requirements of its customers. Copies of the Software
may also be produced in customized format to meet unique demands of
purchasers. The Distributor shall also be entitled to grant licenses for
the use of all or some of the Software to users (including users
affiliated with the Distributor) provided that such licensing activity
shall not exceed twenty percent (20%) of the Distributor's business,
based on revenues, in connection with the commercial exploitation of the
Software.
1.8 The Distributor shall develop and/or oversee, at its own expenses, the
production of all marketing and sales literature, technical and
professional literature, and direct mail publications and presentations
required in connection with the sale and marketing of the Software.
1.9 The Distributor shall determine the selling price for each copy of the
Software to third parties with a view to maximizing the revenues
attributable to the exploitation of the Software.
1.10 The Distributor shall not be entitled to any compensation, fees or costs
in connection with the services provided hereunder.
ARTICLE 2 PURCHASE PRICE AND PAYMENT FOR SOFTWARE
2.1 The Distributor shall pay the following:
(a) an amount equal to 7% of the gross revenue of the Software
received by the Distributor in the Territory;
(b) an amount equal to a payment of 9% of the gross revenue from the
sale of the Software by the Distributor in the Territory by
assumption of the similar obligation of the Owner to The Guide
Associates Inc. pursuant to a Software Purchase Agreement dated
as of the date of this Agreement; and
(c) $10,000.00 per year payable on the date first written above and
thereafter on each anniversary date of this Agreement.
2.2 The Distributor shall pay to the Owner the amount owing to the Owner for
the sale by the Distributor of copies of the Software (net of sales and
value added taxes) (hereinafter referred to as "Sales Revenues") within
twenty (20) days following the end of each calendar quarter. Payment of
Sales Revenues shall be payable by the Distributor out of receipts from
sales of copies of the Software by the Distributor. Each payment of
Sales Revenues payable hereunder shall be accompanied by a statement,
setting forth particulars of all sales by the Distributor of copies of
the Software for the period then
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ended. Within sixty (60) days of each calendar year end, the Distributor
shall provide a statement, certified by its auditors, of all sales of
copies of the Software for such year.
2.3 Upon reasonable notice and no more than once per year, the Owner, at its
own expense, shall have the right to appoint a representative to review
the financial records of the Distributor for the purposes of verifying
the calculations of the sale prices and the total purchases and sales by
the Distributor of copies of the Software. The Distributor shall fully
cooperate with such representative. The Distributor covenants that it
shall cause accurate and complete financial books of accounts and
records to be kept at all times in respect of purchases and sales of
copies of the Software. The Distributor shall also provide to the Owner,
when same are prepared and received by the Distributor, copies of the
internal quarterly financial statements of the Distributor and copies of
the year-end audited financial statements of the Distributor.
2.4 All references to dollars contained in this Agreement and all Schedules
hereto are to United States dollars unless otherwise indicated.
ARTICLE 3 MARKETING PLAN
3.1 The Distributor shall periodically prepare a marketing plan.
ARTICLE 4 INSURANCE
4.1 The Distributor shall name the Owner as the insured, in respect of any
insurance obtained by the Distributor relating to the Software in
amounts which third party insurance agents from time to time advise is
customary in the industry for comparable products.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE DISTRIBUTOR
5.1 The Distributor hereby represents and warrants to the Owner as follows
and hereby acknowledges and confirms that the Owner is relying on such
representations and warranties in connection with the entering into by
the Owner of this Agreement:
(a) the Distributor is a corporation duly and validly incorporated
and organized under the laws of Canada and is validly existing
and in good standing under the laws of Canada;
(b) the execution and delivery of this Agreement by the Distributor
has been duly authorized by all necessary corporate action and
the Distributor has all requisite corporate power and authority
to enter into this Agreement and to carry out its terms;
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(c) the execution and delivery of this Agreement by the Distributor
and the observance of, performance of and compliance by it with
the terms hereof do not constitute: a violation of applicable
law; a violation or a breach of any contract or any other
instrument to which the Distributor is a party or by which it is
bound; a default under, or would constitute a default with the
passage of time or the giving of notice or both or otherwise
under, any contract or obligation to which the Distributor is a
party or by which it is bound; or a violation or a breach of any
writ, injunction, statute, by-law, judgment, decree, order, rule
or regulation, including of any court or administrative body, by
which the Distributor is bound;
(d) the Distributor has all requisite power and authority to own,
lease and operate the properties and assets now owned, leased
and operated by it and is duly qualified to do business and is
in good standing in every jurisdiction in which the character of
the business conducted or the nature of the properties owned,
leased or operated by the Distributor makes such qualification
necessary;
(e) there are no judgments outstanding and no claims, actions,
suits, proceedings or investigations pending or, to the best of
the Distributor's knowledge after reasonably diligent
investigation, threatened against or affecting the Distributor
or the Software at law or in equity or before any federal,
state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic
or foreign, enjoining, restricting or prohibiting the right of
the Distributor to sell, market and distribute the Software as
contemplated herein and pursuant to the marketing plan;
(f) no registration or filing with the consent, approval or other
action by any federal, state, provincial or other governmental
agency or instrumentality is or will be necessary for the valid
execution and performance of this Agreement by the Distributor;
(g) except for events or conditions relating to businesses in
general, there is no event or condition of any character
pertaining to the business of the Distributor or to the assets
of the Distributor that may reasonably be expected to adversely
affect its assets or its business. The Distributor is not in
default under any laws, regulations, by-laws, orders or
requirements applicable to its business;
(h) the business carried on by the Distributor has been and is now
being conducted in compliance with all statutes, regulations,
by-laws, orders, covenants, restrictions or plans of all
federal, state, provincial or municipal authorities, agencies,
boards, or licensing bodies applicable to such business and the
Distributor holds all licenses and permits necessary for the
carrying on of such business. There is no threatened suspension,
cancellation or invalidation of any
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such approval, license, permit or certificate which could
reasonably be expected to have an adverse effect on the
Distributor;
(i) the Distributor is not in default under or in breach of any
material term of any contract to which it is a party or by which
it is bound. There exists no state of facts which, after notice
or lapse of time or both, or otherwise, would constitute a
default under or breach of a material term of any such
contracts. All such contracts are now in good standing and in
full force and effect and the Distributor is entitled to all of
the benefits thereunder.
ARTICLE 6 COVENANTS OF THE DISTRIBUTOR
6.1 The Distributor covenants and agrees to do the following:
(a) enhance, market and distribute the Software pursuant to the
terms hereof and in accordance with the provisions of the
marketing plan;
(b) exploit the Software and carry on its business in a prudent,
efficient and conscientious manner and at all times ensure that
the exploitation of the Software and the business carried on by
the Distributor is carried on in compliance with all applicable
laws;
(c) assist the Owner, in securing the Distributor as a registered
user of the trademarks used in association with the Software,
and thereafter, the Distributor shall maintain its registration
as a registered user of such trademarks;
(d) provide or arrange for, at its own expense, technical support
for the Software including maintenance, enhancement and
refinement, where applicable, of the Software for purposes of
use, demonstration, duplication and distribution of the
Software. The Distributor shall ensure that the Software is
maintained free of bugs and defects and shall reasonably enhance
or refine existing features, if applicable, in order to
reasonably maintain the marketability of the Software;
(e) comply with all license and registration requirements, file all
returns, keep all records, pay all taxes, fees, levies, rates
and assessments which may be levied or assessed against it as a
result of the operation of its business;
(f) do all things and cause all things to be done to ensure that all
of the representations and warranties of the Distributor
contained in this Agreement remain true and correct throughout
the term of this Agreement as if such representations and
warranties were continuously made throughout the term of this
Agreement;
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(g) pay all Sales Revenues to the Owner, as hereby agreed to;
(h) not, in any way, infringe or contribute to the infringement by
others of the rights of the Owner in any of the trademarks or
copyrights associated with the Software and furnish any
information in its possession in connection with the
infringement of such trademarks or copyrights by a third party
to the Owner, as soon as reasonably possible and to cooperate
fully with the Owner in any action commenced with respect to any
infringement relating to such trademarks or copyrights;
(i) neither the Distributor nor any person, firm or corporation with
which it is affiliated in any way shall develop, market,
enhance, or exploit, either directly or indirectly, any software
or similar product that may be competitive in any way with the
Software other than a software product developed with the use or
assistance of all or part of the Software in which the
Distributor has an ownership interest;
(j) ensure that all copies of the Software and all packaging
includes proprietary, patent, copyright, trademarks and trade
secret legends, in such form and in such location as specified
by the Owner, from time to time in writing, clearly indicating
that (i) copyright to the Software is owned by "MPT Millennium
Patent Technologies Corporation Limited" and that (ii) copies of
the Software cannot be reproduced and sold without the consent
of the Owner; and
(k) provide the Owner, upon request being made therefor, from time
to time, with information relating to the sales and marketing of
the Software by the Distributor, revenues generated from the
sales of the Software by the Distributor, and of any
modification, production, reproduction, or use of the Software.
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE OWNER
7.1 The Owner hereby represents and warrants as follows and hereby
acknowledges and agrees that the Distributor is relying on such
representations and warranties in connection with the entering into by
the Distributor of this Agreement:
(a) the Owner has the right to make the appointment and grant the
rights provided for herein;
(b) the Owner is a corporation duly and validly incorporated and
organized under the laws of Cyprus and is validly existing and
in good standing under the laws of Cyprus;
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(c) the execution and delivery of this Agreement by the Owner has
been duly authorized by all necessary action, and the Owner has
all requisite power and authority to enter into this Agreement
and to carry out the terms herein;
(d) this Agreement has been duly and validly executed and delivered
by the Owner and constitutes a valid and legally binding
agreement, enforceable against the Owner in accordance with its
terms; and
(e) the execution and delivery of this Agreement by the Owner, and
the observance of, performance of and compliance by it with the
terms hereof do not constitute: a violation of applicable law; a
violation or breach of any contract or any other instrument to
which the Owner is a party or by which it is bound; a default
under, or would constitute a default with the passage of time or
the giving of notice or both or otherwise under, any contract or
obligation to which the Owner is a party or by which it is
bound; or a violation or a breach of any writ, injunction,
statute, bylaw, judgment, decree, order, rule or regulation,
including of any court or administrative body, by which the
Owner is bound.
ARTICLE 8 CONFIDENTIALITY
8.1 The Distributor shall use its best efforts to maintain the
confidentiality of any proprietary information or trade secrets
pertaining to the Software and will seek to restrict the ability of any
employee having knowledge of such proprietary information or trade
secrets from disclosing same to any other person. The Distributor shall
promptly notify the Owner of any violation or challenge to the copyright
relating to the Software. For purposes of this Agreement, all knowledge
or information relating to this Agreement or developed or acquired or
conceived by the Distributor in performing its obligations hereunder, or
in exploiting the Software, including, without limitation, technology,
source code, documentation and test procedures pertaining to the
Software shall be deemed to be trade secrets, know how and proprietary
information of the Owner and the Distributor shall maintain in
confidence at all times during the term of this Agreement and following
its termination all such trade secrets, know how or proprietary or other
information and shall not disclose any such trade secrets, know how or
proprietary information to anyone.
ARTICLE 9 OBLIGATION TO PROTECT COPYRIGHT AND TRADEMARKS
9.1 The Distributor hereby acknowledges that the Owner owns, at all times,
all right, title and interest in and to the Software, including all
intellectual property rights and copyrights associated therewith. The
Distributor shall, at all times, protect the interest of the Owner in
and to the Software and in connection therewith, the Distributor hereby
agrees to defend and protect, at its own expense, all intellectual
property rights and copyrights associated with the Software against
third party claims.
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ARTICLE 10 INDEMNITY
10.1 The Distributor hereby agrees to indemnify and hold harmless the Owner
from and against any and all losses, costs, claims and amounts arising
out of or in connection with any acts or omissions of the Distributor
pursuant to this Agreement, including, without limitation, any claims by
third parties, including, without limitation, claims for product
liability or loss of profits, arising out of the sale of copies of the
Software or any other services provided by the Distributor to such third
party and from any claims by any person for or relating to infringement
of any copyright or intellectual property rights associated with the
Software. The Distributor further covenants and agrees to indemnify and
hold harmless the Owner from and against any and all losses, damages,
costs, expenses and amounts incurred by the Owner in connection with or
relating to any untruth of any representation or warranty made by the
Distributor hereunder or relating to any breach by the Distributor of
any of its covenants or agreements contained herein. The Distributor
shall diligently defend any such claim, suit or proceeding brought
against the Owner by any third party with respect to any matter to which
this indemnity relates. The Owner shall be entitled to participate in
any such litigation conducted by the Distributor with its own counsel at
its own expense and the Distributor shall at all times consult the Owner
and, if applicable, its counsel, and generally keep the Owner apprised
of all matters with respect to the litigation. If the Distributor fails
to take any actions to restrain an infringement or alleged infringement
of any intellectual property rights and/or copyrights associated with
the Software, the Owner shall have the right, at the Distributors cost
and expense, to take any such action they deem necessary to protect
their intellectual property rights in the Software, including filing
lawsuits in the event of infringement, and filing for copyright and
trademark registrations.
10.2 The Owner hereby covenants and agrees to indemnify and hold harmless the
Distributor from and against any and all losses, damages, costs,
expenses and amounts arising out of or in connection with any acts or
omissions of the Owner pursuant to this Agreement or in connection with
or relating to any untruth of any representation or warranty made by the
Owner hereunder or relating to any breach by the Owner of any of its
covenants or agreements contained herein. The Owner shall diligently
defend any such claim, suit or proceeding brought against the
Distributor by any third party with respect to any matter to which this
indemnity relates. The Distributor shall be entitled to participate in
any such litigation conducted by the Owner with its own counsel at its
own expense and the Owner shall at all times consult the Distributor
and, if applicable, its counsel, and generally keep the Distributor
apprised of all matters with respect to the litigation.
10.3 For greater certainty, except for the express warranties set forth in
Section 7 hereof, the Owner makes no further warranties or covenants
whatsoever with respect to the Software or the sale of copies thereof to
the Distributor, either expressed or implied, including, without
limitation, any warranty as to merchantable quality or fitness for any
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particular purpose or arising by statute or otherwise in law or from any
course of dealing or usage of trade.
ARTICLE 11 TERMS
11.1 The term of this Agreement shall be five years and thereafter shall
automatically be renewed for successive periods of one year unless
either party gives no less than ninety days notice of termination prior
to the expiry of the original term or any renewal term.
ARTICLE 12 TERMINATION
12.1 With the exception of Paragraph 10.1, which shall survive the
termination of this Agreement, this Agreement shall terminate upon the
happening of the following events:
(a) if the Distributor fails to make any payment hereunder when due
and such breach is not cured within ninety (90) days after
notice of such breach is given by the Owner to the Distributor;
(b) if the Distributor shall fail to perform or comply with any
other material term, condition, covenant or obligation hereunder
on its part to be performed or complied with and such failure to
perform or comply is not remedied within ninety (90) days after
written notice of such is given by the Owner to the Distributor;
(c) if the Distributor becomes insolvent, makes any assignment in
bankruptcy or makes any other assignment for the benefit of
creditors, makes any proposal under the Bankruptcy and
Insolvency Act (Canada) or any comparable law, is adjudged
bankrupt, files a petition or proposal to take advantage of any
act of insolvency, consents to or acquiesces in the appointment
of a trustee, receiver, receiver and manager, interim receiver,
custodian, sequestrator or other person with similar powers of
itself or of all or any substantial portion of its property or
assets, files a petition or otherwise commences any proceeding
seeking any reorganization, arrangement, composition or
readjustment under any applicable bankruptcy, insolvency,
moratorium, reorganization or other similar law affecting
creditors' rights or consents to, or acquiesces in, the filing
of such a petition;
(d) if any creditor of the Distributor appoints a trustee, receiver,
receiver and manager, interim receiver, custodian, sequestrator
or other person with similar powers, of the Distributor or of
all or any substantial portion of its property or assets, files
a petition or otherwise commences any proceeding seeking any
reorganization, arrangement, composition or readjustment under
any applicable bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting creditors' rights
and such action, appointment or proceeding is not terminated or
withdrawn within 90 days of the Owner providing written notice
to the Distributor;
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(e) if the Distributor ceases or threatens to cease to carry on its
business or institutes or agrees to institute proceedings for
the winding-up of its operations; and
(f) if any representation or warranty made by the Distributor in
this Agreement shall prove to have been incorrect in any
material respect on and as of the date thereof.
12.2 Upon termination or expiration of the appointment made hereunder, for
any reason whatsoever, the right of the Distributor to use any of the
trademarks and any other intellectual property associated with the
Software shall immediately cease and all activities of the Distributor
with respect to the sale and marketing of the Software shall immediately
cease.
12.3 Upon termination of this Agreement in accordance with Paragraph 12.1
hereof, the Distributor shall promptly account to the Owner, with
respect to any and all amounts which may be owing by the Distributor to
the Owner hereunder and the Distributor shall return all unsold copies
of the Software to the Owner at no cost to the Owner.
ARTICLE 13 GENERAL CONTRACT PROVISIONS
13.1 Any notice or other communication which may be or is required to be
given or made pursuant to this Agreement may be given in writing by
personal delivery, by registered mail, postage prepaid or by telecopier
address as follows:
(a) to the Distributor at: Axyn Canada Corporation
201-338 Montreal Road
Vanier, Ontario K1 L 6B3
Attention: Robert Bell
Telecopier: (613) 782-6068
(b) to the Owner at: c/o Soloway, Wright
900-427 Laurier Avenue West
Ottawa, Ontario KI R 7Y2
Attention: Gregory Sanders
Telecopier: (613) 238-8507
or at such other address as may be given by either of them to the other
in writing from time to time. Any notice or other communication given by
mail as aforesaid shall be deemed to have been received on the tenth
(1Oth) day following the date of mailing such notice or other
communication. Any notice or other communication delivered or sent by
telecopier
<PAGE> 12
12
as aforesaid shall be deemed to have been received on the date on which
such notice or document was delivered or sent by telecopier. If a notice
or other communication shall have been mailed and if regular mail
service shall be interrupted by strike or other irregularity before the
deemed receipt of such notice as aforesaid, such notice shall, unless
earlier actually received, be deemed to have been received on the tenth
(1Oth) day following the resumption of normal mail service.
13.2 There are no other representations, undertakings or agreements of any
kind between or among the parties hereto with respect to the subject
matter hereof except those contained herein.
13.3 All agreements, representations, warranties and covenants of any of the
parties made herein or in any certificate or other document delivered by
or on behalf of any of the parties hereto pursuant to the provisions
hereof are material and shall be deemed to have been relied on by the
other party notwithstanding any investigation heretofore or hereafter
made by such other party, and shall survive the execution and delivery
of this Agreement and shall continue in full force and effect.
13.4 If any provision of this Agreement or the application thereof to any
person in any circumstance shall, to the extent be invalid or
unenforceable, such invalid or unenforceable provision shall be
severable from the remainder of this Agreement and shall not affect or
impair the validity or enforceability of any other provision of this
Agreement.
13.5 This Agreement shall be construed and enforced in accordance with the
laws of Cyprus applicable therein.
13.6 This Agreement is not assignable by the Distributor without the prior
written consent of the Owner, which consent may be unreasonably or
arbitrarily withheld, provided that the Distributor shall be entitled to
assign this Agreement, without the consent of the Owner to:
(a) a wholly-owned subsidiary of the Distributor provided such
wholly-owned subsidiary agrees to be bound by the terms of this
Agreement and provided further that such assignment shall not
release the Distributor of its obligations hereunder; and
(b) a third party in connection with the sale to such third party of
all or substantially all of the business and assets of the
Distributor to such third party, provided such assignee agrees,
in writing, with the Owner, to assume and be bound by all of the
Distributor's obligations under this Agreement in place and
instead of the Distributor.
Subject to the foregoing, the provisions of this Agreement shall inure
to the benefit and be binding upon the parties hereto and their
respective successors and assigns.
<PAGE> 13
13
13.7 Time shall be of the essence in this Agreement.
13.8 Each party shall from time to time hereafter and upon reasonable request
by any other party, execute, perform an make or cause to be executed,
performed or made all such other further acts, assurances and things as
may be required in order to give full effect to this Agreement.
IN WITNESS WHEREOF the parties have hereto have executed this Agreement
as of the date first above mentioned.
AXYN CANADA CORPORATION
MPT MILLENNIUM PATENT TECHNOLOGIES
CORPORATION LIMITED
<PAGE> 14
14
SCHEDULE "A"
(Description of Software)
<PAGE> 1
EXHIBIT (6)j
THIS AGREEMENT made the 17th day of June, 1998.
BETWEEN:
MPT MILLENNIUM PATENT TECHNOLOGIES CORPORATION LIMITED
(the "Licensor"),
AND
AXYN CANADA CORPORATION
(the "Licensee").
WHEREAS:
1. By virtue of an assignment from the Licensee, the Licensor is the exclusive
owner of a certain invention entitled DATE OVERLOADING(TM) and more fully
described and claimed in its application for patents in Canada and the
United States, as assigned;
2. As partial consideration for the said assignment, the Licensor is required
to grant and the Licensee desires to obtain a license exclusive to the
Licensee for sale and distribution in Canada of products embodying a claim
for the invention;
IN CONSIDERATION of the premises and of the mutual covenants set out together
with other good and valuable consideration (the receipt of which is
acknowledged), the parties agree as follows:
1. GRANT OF LICENSE
The Licensor gives and grants to the Licensee an exclusive license, for
Canada, to practice the inventions claimed in the Licensor's application for
patents in Canada and the United States;
2. SUPPORT AND MAINTENANCE PAYMENTS AND ROYALTY
(1) The Licensee agrees to pay to the Licensor an annual support and
maintenance payment of Thirty-Nine Thousand Five Hundred ($39,500.00 U.S.) U. S.
Dollars commencing upon execution of this agreement and continuing thereafter on
each anniversary thereafter during the currency of this agreement.
(2) The Licensee agrees to pay to the Licensor a royalty of Thirty-Nine
(39%) percent of the Net Sale Price of products sold within Canada embodying a
claim of the Licensor's invention (and/or patents when issued), the failure to
pay which shall be deemed to be a default by the Licensee under this agreement.
Page 1
<PAGE> 2
(3) "Net Sale Price" as used in this paragraph shall be the price at which
any product licensed under this agreement is sold by the Licensee less sales or
excise taxes and less credits for any returned goods and allowances for
defective products.
3. WARRANTY
The Licensor warrants to the Licensee that it is the owner of the invention
covered by the application for patents in Canada and the United States and that
it has the sole right to grant the license granted free from all encumbrances.
4. VALIDITY OF PATENT
The Licensee covenants with the Licensor that it will not during the
subsistence of this license, raise or cause to be raised, any question
concerning or any objection to the validity of any claim in the letters patent
on any grounds whatsoever.
5. SUBLICENSES
The Licensee shall have the right to give and grant sublicenses of its
rights, provided that all articles sold under the sublicense shall be subject to
the royalty payments reserved to the Licensor, and the Licensee covenants with
the Licensor to make the royalty payments to the Licensor by reason of sales by
sublicensees and for the observance and performance by all sublicensees of all
the provisions of this agreement. The licensee shall provide the Licensor with a
copy of all sublicenses forthwith after their execution.
6. SALES PROMOTION
(1) The Licensee covenants with the Licensor that it will with all
reasonable dispatch produce, market and sell in Canada products embodying the
invention claimed in application for patents in Canada and the United States and
will use its best efforts to promote, continue and increase such sale during the
continuance of this agreement.
(2) The Licensor covenants with the Licensee that it will with all
reasonable dispatch produce, market and sell worldwide (except in Canada)
products embodying the invention claimed in application for patents in Canada
and the United States and will use its best efforts to promote, continue and
increase such sale during the continuance of this agreement.
Page 2
<PAGE> 3
7. ASSISTANCE BY LICENSOR TO LICENSEE
Following the execution of this agreement and for the purpose of
facilitating the production of articles embodying the Licensor's claims by the
Licensee, the Licensor shall:
(a) promptly make available to the Licensee technical information on the
Licensor's developments, techniques and practices concerning the
construction and use of the articles;
(b) give to the Licensee, it agents and servants, if and whenever so
required by the Licensee, any assistance, explanation and information
and make known to the Licensee all drawings and blueprints as are
available to the Licensor, or as are in its possession or as are used
by the Licensor for the manufacture of the articles, and on written
request by the Licensee send, within a reasonable time, to any
designated production facility of the Licensee those of its personnel
who are qualified to provide advice, information and assistance;
provided that, if personnel are sent, the Licensee shall pay to the
Licensor at its request all travelling and general living expenses of
such personnel;
(c) make available to the Licensee from time to time technical information
regarding any improvements made or acquired by the Licensor in
processes, techniques or designs pertinent to the manufacture of the
articles; and make available to the Licensee promptly after the filing
of their respective applications information regarding improvements on
which the Licensor may determine to apply for letters patent;
(d) permit the Licensee at all reasonable times during the term of this
agreement to send its authorized representatives to the Licensor's
facilities for the purpose of witnessing any new or improved
processes, techniques, practices or designs pertinent to the
production and use of the articles; and
(e) in recognition of the value of the assignment of patent rights, pay to
the Licensee Eleven (11%) percent of the Net Sale Price, as defined
above, of products sold by the Licensor in any country of the world
other than Canada embodying a claim of the Licensor's invention
(and/or patents when issued).
Page 3
<PAGE> 4
8. IMPROVEMENTS (CORRESPONDING OBLIGATION OF SUBLICENCES)
(1) If the Licensee shall discover or invent an improvement to the
subject-matter of any of the claims applied for and/or latterly granted in
letters patent during the term of this agreement, the Licensee agrees promptly
to disclose the same or cause the same to be disclosed to the Licensor and to
furnish to the Licensor all information pertaining thereto, including
blueprints, sketches, drawings, designs and other data. At the Licensor's
option, the Licensee agrees to assign or cause to be assigned to the Licensor
any discovery or invention and to assist the Licensor, at the Licensor's
expense, to secure patent protection covering discovery or invention in any and
all countries required by the Licensor. In connection therewith, the Licensee
shall furnish to the Licensor, all pertinent information and have executed any
patent applications, assignments or other instruments necessary or desirable,
without expense to the Licensor. Any discovery or invention as to which the
Licensor shall have exercised its option as mentioned shall be the property of
the Licensor, and any patents issued thereon shall be included as subject-matter
as to which the Licensee is licensed under this agreement.
(2) The Licensee shall, to the best of its ability, cause its employees to
disclose any discovery or invention made or developed by them during the term of
this agreement and falling within the terms of subparagraph (1) and to assign
discovery or invention of the Licensor as provided.
(3) At any time after the Licensee has made full disclosure in writing to
the Licensor of any discovery or invention, the Licensee may in writing request
the Licensor to advise the Licensee as to whether or not the Licensor desires to
exercise its option with respect to discovery or invention. If the Licensor
fails to exercise the option with respect to discovery or invention by written
notice sent to the Licensee within three months after receipt of the request,
the Licensee may at its own expense apply for a patent thereon, and if the
Licensor does elect to have discovery or invention assigned to it but does not
apply for patent protection in any country within a period of six months after
assignment, the Licensor shall, if so requested by the Licensee, re-assign to
the Licensee all rights to discovery or invention in respect of all or any
country, and the Licensee may at its own expense apply for letters patent in
that country or countries.
(4) The Licensor shall promptly disclose to the Licensee any discovery or
invention which is an improvement on the invention claimed by the Licensor which
it makes or acquires during the term of this agreement within a reasonable time
after a patent application has been filed, and shall make available to the
Licensee all information relating thereto, including blueprints, sketches,
drawings, designs and other data, and discovery or invention shall be deemed to
be part of the licensed subject-matter for all purposes of this agreement.
Page 4
<PAGE> 5
9. INFRINGEMENT
If either party shall have information that any licensed claim is
infringed, the information with regard to it shall be promptly transmitted to
the other party, whereupon the Licensor shall have the right to enter suit to
prevent infringement and to prosecute the suit; provided that if the Licensor
shall fail to institute infringement proceedings within one month of a request
so to do, then the Licensee shall have the right to enter suit for infringement
and to join the Licensor as a party to the suit.
In the event that the Licensor shall institute proceedings pursuant to a
request of the Licensee, the parties agree that any recovery of damages in the
suit shall first be applied to the reimbursement of the parties for the cost of
the suit and the balance shall be paid to the Licensor and Licensee in
accordance with any award made by the court and failing an award equally between
the Licensor and Licensee.
In the event that the patent shall be held invalid in any infringement or
impeachment proceedings, the parties shall continue to make the payments
required of them by this agreement until a final determination of validity has
been made by a court of competent jurisdiction from which either no appeal has
been or can be taken.
10. IMPEACHMENT
The Licensor shall be entitled but shall not be bound to defend every
action, suit or proceeding instituted for the impeachment or a declaration of
non-infringement of the patent; provided that, if the Licensor shall decide not
to defend any action, suit or proceeding it shall so advise the Licensee who
shall be entitled but shall not be bound to defend at its own cost the action,
suit or proceeding.
11. RECORDS
The Licensee agrees to keep full, accurate and complete records and books
of account relating to its operation under this license for the accurate
determination of royalties to be made under this agreement. All of these records
and books of account of the Licensee necessary for the determination of the
royalty payments to be made shall be open at all reasonable times during
business hours during the term of this agreement for inspection and audit by
duly authorized independent chartered accountants designated by the Licensor to
ascertain the accuracy of the royalty payments made by the Licensee. The
chartered accountants shall be entitled to make notes and copies of any
information contained in those records and accounts applicable to the royalty
obligation and to report them to the Licensor.
Page 5
<PAGE> 6
12. REPORTS
The Licensee shall deliver to the Licensor quarterly reports on the 30th
days of January, April, July, and October in each and every year during the term
of this agreement showing for the three preceding calendar months the amount of
net sales in respect of which a royalty is payable and each report shall be
accompanied by payment to the Licensor of the full amount shown by the report to
be payable to the Licensor.
13. TERM
(1) This agreement shall endure for an indefinite period unless terminated
in writing.
(2) This agreement may be terminated by the Licensee by delivery of a
notice in writing to the Licensor at least ninety days prior to any anniversary
date.
(3) If the Licensee shall be in default of any obligation on its part under
this agreement, then the Licensor may issue a notice in writing of default and
on failure of the Licensee to remedy the same or cause the same to be remedied
within sixty days after the issuance of the notice, the Licensor may at its
option terminate this license by notifying the Licensee in writing of its
election so to do. Termination shall not prevent the Licensor from collecting
from the Licensee any royalties accrued prior to termination.
14. AUTOMATIC TERMINATION
The license granted to the Licensee shall automatically cease and terminate
in the event of:
(a) the bankruptcy of the Licensee whether voluntary or involuntary, or
(b) the winding up or liquidation of the Licensee, whether voluntary or
involuntary,
and on termination the Licensor shall be entitled to the immediate payment of
all royalties accrued prior to termination.
Page 6
<PAGE> 7
15. NOTICES
Any notice given by the Licensor to the Licensee under this agreement shall
be well and sufficiently given if mailed or delivered to the Licensee addressed
as follows:
AXYN Canada Corporation
201-338 Montreal Road
Vanier, Ontario, Canada
K1l 6B3
Attention: Robert L. Bell
President and Chief Executive Officer
or to any other address as shall have been given by the Licensee in writing to
the Licensor for that purpose, and any notice given by the Licensee to the
Licensor shall be well and sufficiently given if mailed or delivered to the
Licensor addressed as follows:
MPT Millennium Patent Technologies Corporation Limited
227, Arch. Makarios III Avenue
Doma Building, 5th Floor
3105 Limassol, Cyprus
Attention: Licensing Manager
or to any other address as shall have been given by the Licensor in writing to
the Licensee for that purpose, and any notice shall be deemed to have been given
if delivered, when delivered, and if mailed, within ten days after the mailing
of the notice by prepaid registered post in the relevant government post office.
16. DISPUTE RESOLUTION
All disputes arising in relation to this agreement shall be finally settled
under the Rules of Conciliation and Arbitration of the International Chamber of
Commerce. If arbitration is commenced by either party it shall take place in
London, England.
17. SEVERABILITY
The invalidity or unenforceability of any provision of this agreement shall
not affect the validity or enforceability of any other provision of this
agreement.
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<PAGE> 8
18. EXTENDED MEANINGS
Words importing the singular number include the plural and vice versa and
words importing gender include all genders.
19. APPLICABLE LAW
This agreement shall be governed by and shall be construed in accordance
with the laws of the Province of Ontario, Canada. The parties agree that the
application of the United Nations Convention on Contracts for the International
Sale of Goods to this agreement does not apply and is specifically excluded.
20. ENTIRE AGREEMENT
This agreement constitutes the entire agreement between the parties and
there are no other representations, undertakings or agreements of any kind
between the parties except where otherwise specifically acknowledged in this
agreement.
21. SUCCESSORS AND ASSIGNS
This agreement shall be binding upon and inure to the benefit of the
successors and assigns of both parties and all persons or corporations
succeeding them.
Page 8
<PAGE> 9
IN WITNESS WHEREOF the parties have set their hands and seals this 17th day of
June, 1998.
AXYN CANADA CORPORATION MPT MILLENNIUM PATENT TECHNOLOGIES
CORPORATION LIMITED
Per Per
- --------------------------------- ------------------------------------
ROBERT L. BELL, PRESIDENT & CEO
- --------------------------------- ------------------------------------
A.D. MCQUARRIE, CORPORATE SECRETARY
<PAGE> 1
EXHIBIT (6)k
EXCEED SYSTEMS LTD.
ROCCO SPAGNUOLO
ANGELO ROCCA
AND
AXYN CANADA CORPORATION
AND
AXYN CORPORATION
PURCHASE AGREEMENT
GS:kd
1998-11-20
File No. 38908-1004
SOLOWAY, WRIGHT
BARRISTERS AND SOLICITORS
427 LAURIER AVENUE WEST
SUITE 900
OTTAWA, ONTARIO
K1R 7Y2
<PAGE> 2
PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT in duplicate this 20th day of November, 1998.
BETWEEN:
EXCEED SYSTEMS LTD. AND ANGELO ROCCA
hereinafter referred to as the "VENDORS"
OF THE FIRST PART
AND:
ROCCO SPAGNUOLO
hereinafter referred to as "Rocco"
OF THE SECOND PART
AND:
AXYN CANADA CORPORATION
a company incorporated under the laws
of Ontario
hereinafter referred to as the "PURCHASER"
OF THE THIRD PART
AND:
AXYN CORPORATION
a company incorporated under the laws
of Colorado
hereinafter referred to as the "AXYN"
OF THE FOURTH PART
<PAGE> 3
2
THIS AGREEMENT WITNESSES that for and in consideration of the mutual
covenants and agreements contained in this Agreement and other good and valuable
consideration (the receipt and sufficiency of which are acknowledged), the
parties covenant and agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of this
Agreement, the Vendors agree to sell, assign and transfer to the Purchaser and
the Purchaser agrees to purchase from the Vendors as at and from the close of
business on November 20, 1998 (the "CLOSING DATE") all of the issued and
outstanding shares in the capital stock of Burlington Systems Integration Inc.
(the "PURCHASED SHARES").
2. PURCHASE PRICE AND PAYMENT
2.1 Purchase Price and Payment. The purchase price payable to the Vendors
for the Purchased Shares shall be $600,000.00 Cdn. to be paid and
satisfied by the Purchaser issuing on the Closing Date 225,000 common
shares of AXYN (the "SHARES") subject to the adjustments as provided
pursuant to Section 2.2.
2.2 Adjustment to Purchase Price. In the event that the average closing
price of the common shares of AXYN issued to the Vendors on the NASD is
not at least $1.75 U.S. for the five (5) consecutive business days
immediately prior to the one year anniversary of the Closing Date (the
"Adjustment Period"), the Purchase Price shall be adjusted by way of
the issuance by AXYN to the Vendors, on a pro rata basis based on the
number of Shares issued to the Vendors on the Closing Date, of
additional common shares of AXYN in an amount determined by calculating
the difference between (i) the number of common shares of AXYN
determined by dividing 600,000 by the average of the closing prices of
the common shares of AXYN during the Adjustment Period converted to a
Canadian dollar equivalent using the exchange at the one year
anniversary of the Closing Date, and (ii) the Shares issued to the
Vendors on the Closing Date. The maximum adjustment will be 22,500
Shares.
2.3 Share Restrictions. The Vendors acknowledge that they will be subject
to restrictions on the sale of shares of AXYN, as the case may be, in
accordance with the laws of the United States and Canada and the
applicable securities regulations thereto. The Shares issued to the
Vendors shall bear such restrictions on the face of the share
certificates. The restrictions on the transfer of the common shares
issued by AXYN pursuant to this Agreement shall be removed upon AXYN's
compliance with applicable securities regulations in the relevant
jurisdiction and in proportion
<PAGE> 4
3
to all other issued common shares of AXYN.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Vendors. The Vendors represent
and warrant as follows to the Purchaser and acknowledges that the
Purchaser is relying on such representations and warranties in
connection with the purchase by it of the Purchased Shares:
a) Corporate Status. Burlington Systems Integration Inc. (the
"CORPORATION") is a corporation duly incorporated and organized and
validly subsisting in good standing under the laws of Ontario. The
Corporation has the corporate power, authority and capacity to own its
property and to carry on its business as now being conducted by it. No
bankruptcy, insolvency or receivership proceedings have been instituted
or are pending against the Corporation and the Corporation is able to
satisfy its liabilities as they become due.
b) Authorized and Issued Capital. The authorized capital of the
Corporation consists of an unlimited number of common shares of which
300 have been validly issued and are outstanding as fully paid and
non-assessable. No options, warrants or other rights for the purchase,
subscription or issuance of shares or other securities of the
Corporation or securities convertible into or exchangeable for shares
of the Corporation have been authorized or agreed to be issued or are
outstanding.
c) Purchased Shares. The Vendors are the legal and beneficial owners of
the Purchased Shares. On the Closing Date, the Purchaser shall acquire
good and marketable title to the Purchased Shares, free and clear of
all agreements, mortgages, liens, charges, pledges, hypothecs, security
interests, encumbrances or other rights or claims of others. The
Purchased Shares constitute all of the issued and outstanding shares in
the capital of the Corporation and there are no restrictions on the
transfer of the Purchased Shares except those set forth in the
constating documents of the Corporation.
d) No Other Agreements. No person, firm or corporation has any written or
oral agreement, option, understanding or commitment, or any right or
privilege capable of becoming an agreement, for the purchase from the
Vendors of any of the Purchased Shares.
e) Corporate Records. The corporate records and minute books of the
Corporation contain complete and accurate minutes of all meetings of
and copies of all by-laws and all resolutions passed by the directors
and shareholders of the Corporation since its incorporation. All such
meetings were duly called and held, all such by-laws and resolutions
were duly passed and the share certificate books, registers of
shareholders, registers of transfers and other corporate registers of
the Corporation are complete and accurate in all material respects.
<PAGE> 5
4
f) Accurate Records. The books and records of the Corporation fairly and
correctly set out and disclose in all material respects, in accordance
with generally accepted accounting principles, the financial position
of the Corporation at the date of this Agreement and all financial
transactions relating to the Corporation have been accurately recorded
in those books and records.
g) Financial Statements. The financial statements of the Corporation as at
September 30, 1998 (the "BALANCE SHEET DATE") and for the period then
ended (copies of which are attached to this Agreement as Schedule 1)
have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with those of previous fiscal
years and are true and correct and present fairly the assets,
liabilities (whether accrued, absolute, contingent or otherwise) and
the financial condition of the Corporation as at the Balance Sheet
Date, and the sales and earnings of the Corporation during the period
covered by those financial statements.
h) Title to Assets. The Corporation has good and marketable title to all
of its properties and assets, free and clear of all mortgages, pledges,
charges, hypothecs, liens, title retention agreements, security
interests, encumbrances or rights of others of any kind or character,
other than those disclosed on the balance sheet of the Corporation.
i) Undisclosed Liabilities. The Corporation has no liabilities (whether
accrued, absolute, contingent or otherwise) of any kind except
liabilities incurred in the ordinary course of business since the
Balance Sheet Date which are not inconsistent with past practice, and
are not, in the aggregate, material and adverse to the business,
properties, assets, financial condition or results of operation of the
Corporation.
j) No Loans to Directors, etc. After the Closing Date, no loans by the
Corporation or other indebtedness due to the Corporation shall be
outstanding (other than the normal salaries, bonuses, fringe benefits
and the obligation to reimburse for expenses incurred on behalf of the
Corporation in the normal course of employment) to or from any
director, officer, shareholder or employee, to or from any former
director, officer, shareholder or employee of the Corporation or to or
from any person or corporation not dealing at arm's length or who is
affiliated (as those terms are used in the INCOME TAX ACT (Canada))
with any of the foregoing.
<PAGE> 6
5
k) Tax Returns. The Corporation has duly filed all tax returns required to
be filed by it (including all information returns as to which
non-filing or late filing could result in interest or penalties), has
made complete and accurate disclosure in such returns and has duly paid
all taxes due from it to federal, provincial or local taxing
authorities, including, without limitation, those due in respect of its
properties, income, capital, sales, use of property and payroll. The
Corporation has also paid all assessments and reassessments and all
other taxes, governmental charges, penalties, interest and fines due
and payable by the Corporation up to the date of this Agreement. The
Corporation has made adequate provision for the taxes which are payable
during the current fiscal period for which tax returns are not yet
required to be filed. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
assessment or reassessment of income tax or the filing of any tax
return by, or payment of any tax by, or levying of any governmental
charge against the Corporation. There are no actions, audits,
assessments, reassessments, suits, proceedings, investigations or
claims now threatened or pending against the Corporation in respect of
taxes or governmental charges or any matters under discussion with any
governmental authority relating to taxes or governmental charges
asserted by any such authority. The Corporation has withheld from each
payment made by it the amount of all taxes and other deductions
required to be withheld from it and has paid the same to the proper
taxing or other authority within the time prescribed under any
applicable legislation or regulation.
l) Ordinary Course. Since the Balance Sheet Date:
(i) the Corporation has not carried on any business, other than
its ordinary continuing business;
(ii) no capital expenditures have been made or authorized by the
Corporation;
(iii) there has been no change in the affairs, business, prospects,
operations or condition of the Corporation, financial or
otherwise;
(iv) the Corporation has not transferred, assigned, sold or
otherwise disposed of any of its property or assets other than
those disclosed in writing to the Purchaser;
(v) the Corporation has not suffered an extraordinary loss nor
waived any rights of material value nor entered into any
material commitment or transaction;
(vi) the Corporation has not declared or paid any dividends or
declared or made any other distribution on any of its
securities or shares, and has not, directly or indirectly,
redeemed, purchased or otherwise acquired any of its
securities or shares or agreed to do so except as disclosed in
writing and agreed to by the Purchaser;
(vii) the Corporation has not incurred or assumed any obligation or
liability (fixed or contingent), except secured and unsecured
current obligations and liabilities, particulars of which have
been disclosed in writing to the Purchaser or its
representatives; or
<PAGE> 7
6
(viii) the Corporation has not amended or changed or taken any action
to amend or change its constating documents.
(m) Non-Arm's Length Transactions. The Corporation has not entered into any
contracts, agreements, options or arrangements or incurred or assumed
any obligation or liability (whether fixed or contingent) with, on
behalf of or with respect to the Vendors or any other non-arm's length
person or any affiliate of the Vendors (as those terms are defined in
the INCOME TAX ACT (Canada)), whether jointly or severally.
(n) Material Contracts. The Corporation is not a party to nor bound by any
material agreement, contract or commitment, whether written or oral, of
any nature or kind whatsoever, other than those disclosed on Schedule
5. The Corporation is not in default or breach of any agreement,
contract or commitment and there exists no state of facts which after
notice or lapse of time or both would constitute a default or breach
and all agreements, contracts or commitments are now in good standing
and in full force and effect without amendment and the Corporation is
entitled to all benefits under them.
(o) Leases. The Corporation is not a party to any lease of real property or
agreement in the nature of a lease, whether as lessor or lessee, other
than those disclosed on Schedule 6.
(p) Consents. There are no consents, authorizations, licenses, franchise
agreements, permits, approvals or orders of any person or government
required to permit the Vendors to complete the transactions
contemplated by this Agreement.
(q) No Breaches of Charter or Other Agreements. Neither the Vendors nor the
Corporation are a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, statute, regulation,
arbitration award, charter or by-law provisions, order or judgment
which would be violated, contravened, breached by or under which any
default would occur as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated by it or
which might prevent or interfere with the use of the Corporation's
assets or which may limit or restrict or otherwise adversely affect the
Corporation's business, properties, assets or financial condition. The
entering into of this Agreement and the consummation of the
transactions contemplated in it will not:
(i) give rise to any right of acceleration by any person in
respect of any indebtedness or other obligation of the
Corporation; or
(ii) result in the loss of any rights, privileges or advantages
presently enjoyed by the Corporation.
<PAGE> 8
7
(r) No Actions. There is no suit, action, litigation, arbitration,
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or threatened against or
involving the Corporation or relating to the Purchased Shares
(collectively referred to as "actions") and the Vendors and Rocco are
not aware of any existing ground on which any actions might be
commenced with any reasonable likelihood of success. There is not
presently outstanding any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency,
instrumentality or arbitrator (collectively referred to as
"judgments")against the Corporation or which would affect the Vendors'
ability to sell the Purchased Shares as provided in this Agreement
other than those actions or judgments disclosed on Schedule 7.
(s) Employees and Contractors. There are no employees or contractors of the
Corporation other than the employees listed on Schedule 8.
(t) Banks. The Corporation has a bank account at the Bank of Montreal,
Oakville Place, 240 Leighland Avenue, Oakville, Ontario L6H 3H6 and at
no other location. The only signing officers for the bank account are
Angelo Rocca and Rocco.
(u) Powers of Attorney. No person has any tax or other power of attorney
from the Corporation with respect to any matter.
(v) Guarantees. The Corporation has not given nor agreed to give nor is it
a party to or bound by any guarantee, indemnification, surety or other
similar obligation.
(w) Corporate Authorization. The completion of the transaction contemplated
in this Agreement has been duly and validly authorized by all necessary
corporate action on the part of the Corporation and on the part of any
corporate Vendor.
(x) Residency. The Vendors are not a non-resident of Canada within the
meaning of the INCOME TAX ACT (Canada).
(y) Subsidiaries. The Corporation does not own shares in any other
corporation and has not agreed to acquire any shares in the capital of
any other corporation or to acquire or lease or invest, directly or
indirectly, in any other business operation.
(z) Securities Legislation. The Corporation is a private company within the
meaning of the SECURITIES ACT (Ontario) and the sale of the Purchased
Shares by the Vendors to the Purchaser will be made in compliance with
all applicable securities legislation.
(aa) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Vendors and Rocco enforceable against them in
accordance with its terms, provided that enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and
other similar laws generally affecting creditors' rights and that
equitable remedies such as specific performance and injunction are in
the discretion of the Court from which they are sought.
<PAGE> 9
8
(bb) Family Law Act. No order has been given under the FAMILY LAW ACT
(Ontario) nor is there any application pending under that Act by the
spouse of Rocco or the spouse of Angelo Rocca which would or does
affect the Purchased Shares in any manner.
(cc) No Relevant Information. None of the representations and warranties in
this section 3.1 contains any untrue statement of material fact or
omits to state any material fact necessary to make any representation
or warranty not misleading to a prospective purchaser of the Purchased
Shares seeking full information concerning the matters which are the
subject of those representations and warranties.
3.2 Representations and Warranties of the Purchaser. The Purchaser and AXYN
represent and warrant as follows to the Vendors and acknowledge that the Vendors
are relying on such representations and warranties in connection with the sale
of the Purchased Shares:
(a) Corporate Status. The Purchaser is a corporation duly continued and
organized and validly subsisting in good standing under the laws of
Ontario. The Purchaser has the corporate power, authority and capacity
to own its property and to carry on its business as now being conducted
by it. No bankruptcy, insolvency or receivership proceedings have been
instituted or are pending against the Purchaser and the Purchaser is
able to satisfy its liabilities as they become due.
(b) Corporate Authorization. The completion of the transactions
contemplated by this Agreement has been duly and validly authorized by
all necessary corporate and other action of the Purchaser and AXYN.
(c) Enforceability of Obligations. This Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against it in
accordance with its terms, provided that enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and
other similar laws generally affecting creditors' rights and that
equitable remedies such as specific performance and injunction are in
the discretion of the Court from which they are sought.
(d) Issued Capital. Effective immediately after closing of the transactions
contemplated by this agreement, the Shares issued to the Vendors on the
Closing Date pursuant to Section 2.1 hereof shall be duly and validly
issued and outstanding as fully paid and non-assessable shares of AXYN
and will have been issued in full compliance with the Ontario
Securities Act and all applicable state and federal laws of the United
States of America.
4. COVENANTS
4.1 Covenants of the Vendors. The Vendors covenant and agree with the Purchaser
as follows:
(a) Non-Arm's Length Payables and Receivables. By the Closing Date, the
Corporation shall have satisfied or caused to be satisfied (i) all
amounts owed by it to persons with which it does not deal at arm's
length (as that term is used in the INCOME TAX ACT (Canada)) and (ii)
all amounts owed by
<PAGE> 10
9
such persons to the Corporation.
(b) Actions to Satisfy Closing Conditions. The Vendors and Rocco shall
diligently take all actions and do all things necessary to ensure
compliance with the conditions set forth in section 6.1 of this
Agreement prior to the Closing Date.
(c) Transfer of Purchased Shares. The Vendors shall take, and will cause
the Corporation to take, all necessary steps and proceedings as
approved by counsel for the Purchaser to permit the Purchased Shares to
be duly and validly transferred to the Purchaser.
(d) Resignation of Directors and Officers. Rocco and Angelo Rocca agree to
resign as officers and directors of the Corporation in favour of
nominees of the Purchaser, such resignations to be effective on such
date as specified by the Purchaser.
(e) Releases. The Vendors and Rocco shall cause to be executed and
delivered to the Purchaser at the Closing Date a release in the form
attached to this Agreement as Schedule 3.
(f) Tax Returns. The Vendors and Rocco shall cause the Corporation to duly
and timely file all tax returns required to be filed up to and
including the Closing Date and promptly pay all taxes, assessments and
governmental charges shown on those tax returns to be due and payable
and shall cause the Corporation not to enter into any agreement, waiver
or other arrangement providing for an extension of time with respect to
the filing of a tax return or the payment or assessment of any tax or
governmental charge.
(g) Employment and Non-Compete Agreements. The Vendors shall enter into
consulting and non-compete agreements with the Purchaser in accordance
with Section 8.1(e) of this Agreement.
(h) Employee Agreements. The Corporation shall cause all key employees of
the Corporation, as determined by the Purchaser, to enter into
employment and non-compete agreements with the Purchaser.
4.2 Covenants of the Purchaser and AXYN. The Purchaser and AXYN covenant and
agree with the Vendors as follows:
(a) Release. The Purchaser shall cause to be executed and delivered to the
Vendors at the Closing Date a release in the form attached to this
Agreement as Schedule 4.
(b) Issuance of Shares. AXYN shall issue the Shares to the Vendors in
proportion to their shareholdings in the Corporation.
(c) Guarantee of Axyn. AXYN guarantees the obligations of the Purchaser in
respect of the matters set out in Sections 10.1, 10.2, 10.3 and 8.1(e)
of this Agreement.
5. CONDITIONS
5.1 Conditions for the Benefit of the Purchaser. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Purchaser to be fulfilled or performed at or prior to
the times specified in this section:
<PAGE> 11
10
(a) Covenants and Warranties. The covenants, representations and warranties
of the Vendors and Rocco contained in this Agreement or in any other
document delivered pursuant to it shall be true and correct as of the
Closing Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
(b) Compliance. The Vendors and Rocco shall have performed or complied with
all covenants and agreements in this Agreement to be performed or
caused to be performed or complied with by them prior to the time
specified in this Agreement for performance or compliance.
(c) No Changes. On the Closing Date, there shall have been no material
adverse change in the properties, assets, liabilities, affairs,
financial condition or prospects of the Corporation from that shown on
or reflected in the financial statements attached to in this Agreement
as Schedule 1 and Schedule 2, except as otherwise disclosed in this
Agreement. The title of the Vendors to the Purchased Shares and all
other matters in the opinion of the Purchaser's counsel which are
material in connection with the transactions contemplated in this
Agreement shall be subject to the favourable opinion of that counsel.
(d) No Actions. On the Closing Date, no action or proceeding in Canada or
the United States by law or in equity shall be existing or threatened
by any person, company, firm, governmental authority, regulatory body
or agency to enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated by this Agreement.
(e) Consents. On or before the Closing Date, there shall have been obtained
from all appropriate federal, provincial, municipal or other
governmental, non-governmental or administrative bodies all such
approvals, licences and consents in form and terms satisfactory to the
Purchaser as may be required in order to permit the implementation of
the transactions contemplated in this Agreement without affecting or
resulting in the cancellation or termination of any licence or permit
required in the conduct of the Corporation's business.
(f) Closing Deliveries. The Vendors shall deliver to the Purchaser on the
Closing Date those items set forth in section 8.1 of this Agreement in
form and content satisfactory to the Purchaser and its counsel.
(g) Change of Control Filing. The Vendors shall prepare at their expense to
be filed within the time period prescribed by the INCOME TAX ACT
(Canada) and any other applicable legislation, all tax returns and tax
filings required to be made by the Corporation consequent upon the
acquisition of control of the Corporation by the Purchaser, within 60
days of the Closing Date.
If any of the foregoing conditions is not fulfilled or performed as at the
Closing Date unless otherwise specified in this section to the satisfaction of
the Purchaser, the Purchaser may:
(a) give notice thereof to the Vendors, whereupon this Agreement shall be
terminated and each of the parties shall be released from all of its
obligations under it without further liability whatsoever; or
<PAGE> 12
11
(b) waive compliance with any of these conditions in whole or in part if it
sees fit to do so without prejudice to any of its rights of termination
in the event of non-performance of any other condition in whole or in
part, provided that any waiver shall be binding upon the Purchaser only
if it is in writing; or
(c) require the Vendors to indemnify the Purchaser in respect of any costs
incurred in fulfilling or performing the conditions outlined in this
Section.
5.2 Conditions for the Benefit of the Vendors. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Vendors to be fulfilled or performed at or prior to the
times specified in this section:
(a) Covenants and Warranties. The covenants, representations and warranties
of the Purchaser and AXYN contained in this Agreement or in any other
document delivered pursuant to it shall be true and correct as of the
Closing Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
(b) Compliance. The Purchaser and AXYN shall have performed or complied
with all covenants and agreements in this Agreement to be performed or
caused to be performed or complied with by it prior to the time
specified in this Agreement for performance or compliance.
(c) Audited Statements. The Purchaser shall cause the Corporation to
complete audited financial statements at the cost of the Purchaser for
the periods ending on the Balance Sheet Date and the Closing Date as a
result of the acquisition of control of the Corporation by the
Purchaser.
6. INDEMNIFICATION AND SET-OFF
6.1 Indemnification of Purchaser. The Vendors covenant and agree to
indemnify and save harmless the Purchaser of and from any loss
whatsoever arising out of or pursuant to:
(a) any reassessment for income, sales, excise, corporate or other tax of
the Corporation (and all interest or penalties relating to it) for any
period up to and including the Closing Date;
(b) all judgements and awards against the Corporation, including all
interest and penalties, in consequence of any action, suit or
proceeding, whether or not disclosed to the Purchaser and whether or
not commenced after the Closing Date, if based upon any acts or
omissions or other circumstances which occurred or arose prior to the
Closing Date;
(c) any loss, costs and expenses suffered by the Purchaser as a result of
any breach of any representation, warranty or covenant on the part of
the Vendors contained in this Agreement or in any schedule to it; and
(d) all claims, demands, costs and expenses, including all reasonable
legal,
<PAGE> 13
12
audit and other professional fees, incurred in respect of any of the
foregoing.
6.2 Indemnification of Vendors. The Purchaser and Axyn covenant and agree to
indemnify and save harmless the Vendors of and from any loss whatsoever arising
out of or pursuant to:
(a) any loss, costs and expenses suffered by the Vendors as a result of any
breach of any representation, warranty or covenant on the part of the
Purchaser; and
(b) all claims, demands, costs and expenses, including all reasonable
legal, audit and other professional fees, incurred in respect of any of
the foregoing.
6.3 Right of Set Off. The Purchaser shall have the right to satisfy any amount
from time to time owing by them to the Vendors, including amounts payable under
the management fee, the team sales performance bonus and the profit sharing plan
by way of set off against any amount owing from time to time by the Vendors to
the Purchaser, arising out of this Agreement.
7. SURVIVAL OF CONDITIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES
7.1 Survival. The conditions, covenants, representations and warranties of the
parties to this Agreement or in any certificates or documents delivered pursuant
to it or in connection with the transactions contemplated in it and the rights
of Indemnification and set off set out in Section 6 of this Agreement shall
continue in full force and effect after the Closing Date, and shall not merge
for a period of three (3) years from the Closing Date, except for the
representations contained in Section 3.1(k) and 3.1(cc) and the covenants
contained in Section 4.1(f) which shall not merge for a period of five (5) years
from the Closing Date.
8. CLOSING ARRANGEMENTS
8.1 Deliveries. On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Purchaser, the
Vendor shall deliver to the Purchaser:
(a) certificates representing the Purchased Shares duly endorsed in blank
for transfer or accompanied by a duly executed stock transfer power;
(b) all necessary directors' and shareholders' resolutions of the
Corporation consenting to and authorizing the sale of the Purchased
Shares
(c) a certificate of status for the Corporation dated a current date;
(d) release of the Vendor outlined in the form attached as Schedule 3;
(e) consulting and non-competition agreements for the Vendors in the form
attached as Schedules 10 and 11;
(f) employment and non-competition agreements for key employees;
<PAGE> 14
13
(g) signed resignation of Rocco and Angelo Rocca as officers and directors
of the Corporation in the form attached as Schedule 9; and
(h) such further and other documents as the Purchaser's counsel may
consider reasonably necessary or advisable to implement the
transactions contemplated in this Agreement.
8.2 On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Vendors,
the Purchaser shall deliver to the Vendors:
(a) two share certificates, one issued to Exceed Systems Ltd. for 50% of
the Shares and the second issued to Angelo Rocca for 50% of the Shares;
(b) copies of all necessary directors' resolutions of AXYN authorizing the
issuance of the Shares; and
(c) a certificate of status for the Purchaser and a comparable document for
AXYN, each dated a current date.
8.3 Place of Closing. The closing shall take place at Toronto on the Closing
Date at the offices of the Corporation.
9. GENERAL MATTERS
9.1 Schedules. The following are the schedules attached to and incorporated in
this Agreement by reference and deemed to be part of this Agreement:
Schedule 1 - September 30, 1998 Financial Statements
S Schedule 2 - Intentionally Deleted
Schedule 3 - Release of the Vendors
Schedule 4 - Release of Purchaser
Schedule 5 - Material Contracts
Schedule 6 - Leases
Schedule 7 - Actions against Corporation
Schedule 8 - List of Employees and Contractors
Schedule 9 - Resignations as officers and directors
Schedule 10 - Consulting Agreement
Schedule 11 - Non-compete and Confidentiality Agreements
9.2 Currency. All dollar amounts referred to in this agreement are in Canadian
funds unless otherwise specified.
9.3 Entire Agreement. This Agreement, including the schedules to it, together
with the agreements and other documents to be delivered pursuant to it,
constitute the entire agreement between the parties pertaining to the subject
matter of this Agreement and supersede all prior agreements, understandings,
negotiations and discussions, whether written or oral, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter of it. No
<PAGE> 15
14
amendment, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound by it. No waiver of
any provision of this Agreement shall be deemed to constitute a waiver of any
other provision (whether or not similar) nor shall that waiver constitute a
continuing waiver unless expressly provided.
9.4 Governing Laws. This Agreement shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable in it and
shall be treated in all respects as an Ontario contract. The parties attorn to
the exclusive jurisdiction of the courts of the Province of Ontario with respect
to any matter arising under this Agreement or any of the schedules or documents
to be entered into or delivered pursuant to it.
9.5 Expenses. Unless otherwise specified herein, all costs and expenses
(including, without limitation, the fees and disbursements of legal counsel)
incurred in connection with this Agreement and the transactions contemplated by
it shall be paid by the party incurring the cost or expense.
9.6 Notices. Any notice or other writing required or permitted to be given under
this Agreement may be delivered personally or sent by prepaid registered mail or
transmitted by telex, facsimile or other form of recorded telecommunication
transmission:
(a) to the Vendors at:
2275 Lakeshore Boulevard West, 4th Floor
Etobicoke, Ontario M8V 3Y3
Fax: 416-255-4876
(b) to the Purchaser and AXYN at:
201-338 Montreal Road
Vanier, Ontario K1L 6B3
Fax: 613-742-6068
or at such other address as the parties may from time to time deliver pursuant
to this section. Any notice delivered or transmitted by telex, facsimile or
other form of recorded telecommunication shall be deemed to be given and
received on the date of its delivery or transmission, as the case may be,
provided that such day is not a Saturday, Sunday or statutory holiday. Any
notice mailed shall be deemed to have been given and received on the third
business day following the date of its mailing.
9.7 Further Assurances. The parties shall with diligence do all things and
provide all such assurances as may be required to consummate the transactions
contemplated by this Agreement, and each party shall provide such further
documents or instruments required by any other party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing Date.
<PAGE> 16
15
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original of this Agreement and fully binding upon the
signatory to it, but all counterparts shall together constitute one and
the same instrument.
9.9 Time of Essence. Time shall be of the essence of this Agreement.
9.10 Successors and Assigns. This Agreement shall enure to the benefit of
and be binding upon the parties to it and their respective heirs,
successors, executors, administrators and assigns, as applicable. This
Agreement may not be assigned or transferred by the Vendors without the
prior written consent of the Purchaser, such consent not to be
unreasonably withheld.
10. OTHER MATTERS
10.1 Profit Sharing. The Purchaser shall establish a profit sharing plan
equivalent to 12% of the pre-tax earnings generated by the Burlington
unit of the Corporation for each of the three years following the
Closing Date, commencing on October 31, 1999 and terminating on October
31, 2001. The target revenue and income for the Burlington Unit of the
Corporation for these three fiscal years is as set out in the following
chart:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Performance Target Target Year 1 Year 2 Year 3 Total
Revenues Income
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
On target Year 1 $2,750,000 $1,200,000 $144,000 $144,000
- -----------------------------------------------------------------------------------------------
On target Year 2 $3,440,000 $1,600,000 $192,000 $192,000
- -----------------------------------------------------------------------------------------------
On target Year 3 $4,170,000 $1,864,000 $216,000 $216,000
- -----------------------------------------------------------------------------------------------
$552,000
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 17
16
10.2 Team Sales Performance Bonus. The Purchaser shall cause to be implemented a
team sales performance bonus by the Burlington unit of the Corporation for the
purposes of making bonus payments to the employees and contractors of the
Corporation for the successful achievement of target revenue and income after
the payment of any profit sharing plans outlined in Section 10.1 above. The team
sales performance bonus shall be payable for the three years following the
Closing Date commencing October 31, 1999 and ending October 31, 2001 in
accordance with the targeted revenue and income schedules attached below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Performance Target Target Year 1 Year 2 Year 3 Total
Revenues Income
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
On target Year 1 $2,750,000 $1,056,000 $105,600 $105,600
- -----------------------------------------------------------------------------------------------
On target Year 2 $3,440,000 $1,408,000 $140,800 $140,800
- -----------------------------------------------------------------------------------------------
On target Year 3 $4,170,000 $1,584,000 $158,400 $158,400
- -----------------------------------------------------------------------------------------------
$404,800
- -----------------------------------------------------------------------------------------------
</TABLE>
The team sales performance bonus shall be payable to the Vendors and to other
employees of the Corporation as the Vendors see fit. To the extent that the
Vendors achieve less than 100% of target revenue but greater than 80% of target
revenue, the team sales performance bonus will be 50% of that set out on the
table.
10.3 Management Fees. Each of the Vendors will be entitled to management fees
payable quarterly in the amounts set out in the table below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
12 Months 24 Months 36 Months
- ------------------------------------------------------------------------
<S> <C> <C>
$100,000 $140,000 $180,000
- ------------------------------------------------------------------------
</TABLE>
These payments will be made quarterly on the first day of each quarter starting
upon the Closing Date and will be allocated between the Vendors equally, unless
otherwise indicated. The management fees payable pursuant to this Agreement will
be paid to the Vendors regardless of the employment or consulting arrangement
between the Purchaser and the parties. In the event that in any quarter the
pre-tax earnings of the Corporation are not at least 1.5 times the quarterly
management fee set out above, and provided that the consulting contracts
referred to in Section 8.1(e) have not been terminated, then the Vendors agree
to defer any such payments in that quarter until such time as there is
sufficient profit in the Corporation to pay out that management fee.
Notwithstanding this, regardless of the pre-tax earnings of the Corporation in
the first two quarters following the Closing Date, the full management fee will
be paid out.
10.4 Employee Stock Purchase Plan. Rocco and Angelo Rocca shall be entitled to
participate in the employee stock purchase plan established by AXYN.
10.5 Stock Options. Each of Rocco and Angelo Rocca will be granted initial
options for 25,000 shares in AXYN in accordance with the terms of the AXYN
employee stock option plan.
<PAGE> 18
17
IN WITNESS WHEREOF the parties have executed this Agreement as of
the day, month and year first above written.
AXYN CANADA CORPORATION
PER _________________________c/s
PER _________________________c/s
AXYN CORPORATION
PER _________________________c/s
PER _________________________c/s
EXCEED SYSTEMS LTD. (VENDOR)
PER _________________________c/s
PER _________________________c/s
SIGNED SEALED AND DELIVERED
in the presence of
)
___________________ )___________________________
WITNESS )ROCCO SPAGNUOLO - VENDOR
)
)
)
___________________ )___________________________
WITNESS )ANGELO ROCCA - VENDOR
<PAGE> 19
18
SCHEDULE 1
FINANCIAL STATEMENTS OF THE CORPORATION
SEPTEMBER 30, 1998
<PAGE> 20
19
SCHEDULE 2
INTENTIONALLY DELETED
<PAGE> 21
20
SCHEDULE 3
RELEASE
TO: AXYN Canada Corporation and AXYN Corporation (the "Purchaser")
AND TO: Burlington Systems Integration Inc. (the "Corporation")
RE: AXYN Canada Corporation purchase of all of the issued and
outstanding shares in the capital of the Corporation
In consideration of the sum of One Dollar ($1.00) and of other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
the Purchaser and the Corporation from all manner of actions, causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, claims or demands
whatsoever which the undersigned may now have or hereafter can have, against the
Purchaser or the Corporation existing up to the date of this release, including
by virtue of them being or ceasing to be an officer, director, employee or
contractor of the Corporation as the case may be, provided that nothing herein
contained shall be construed so as to release the Purchaser from its obligations
and covenants arising out of or in respect of a Purchase Agreement made the 20th
day of November, 1998 in respect of the sale by the undersigned to the Purchaser
of all of the issued and outstanding shares in the capital of the Corporation or
any documents delivered pursuant to such agreement.
DATED at Ottawa this day of November, 1998.
_________________________________
Rocco Spagnuolo
_________________________________
Angelo Rocca
EXCEED SYSTEMS LTD.
Per:
Per:
<PAGE> 22
21
SCHEDULE 4
RELEASE
TO: Rocco Spagnuolo and Angelo Rocca ("Rocco and Angelo")
RE: AXYN Canada Corporation purchase of all of the issued and
outstanding shares in the capital of Burlington Integration Systems
Inc. (the "Corporation")
In consideration of the sum of One Dollar ($1.00) and of other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
Rocco and Angelo of and from all manner of actions, causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts, claims or demands whatsoever
which the undersigned may now have or hereafter can have, against Rocco and
Angelo existing up to the date of this release, by virtue of them being an
officer, director, employee or contractor of the Corporation as the case may be,
except those actions, causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, claims or demands arising from the terms of the Purchase
Agreement between the parties dated November , 1998.
DATED at Ottawa this day of November, 1998.
AXYN Canada Corporation
Per: _____________________________c/s
AXYN Corporation
Per: _____________________________c/s
Burlington Systems Integration Inc.
Per: _____________________________c/s
<PAGE> 23
22
SCHEDULE 5
MATERIAL CONTRACTS
NIL
<PAGE> 24
23
SCHEDULE 6
LEASES
1. Lease dated October 11, 1996 with Hearn Vehicle Leasing with respect to
a 1997 Pontiac Grand Prix VIN 1G2WP5217VF220902 with a monthly payment
of $646.82.
2. Lease dated October 11, 1996 with Pine View Pontiac Buick Sales Ltd.
for a 1997 Pontiac Grand Prix GTP VIN 1G2WP5219VF221422 with a monthly
payment of $626.75.
3. Lease dated March 1, 1997 for space at Suite 401, 2275 Lakeshore
Boulevard West, Toronto, originally signed in the name of Logitek
Technology Ltd.
4. Lease with Teleteck Financial Corporation for office furniture used by
Rocco Spagnuolo and Angelo Rocca, Contract No. 83956-00. Lease is in
the name of Logitech Data Sciences Ltd. with Burlington responsible for
only a portion equal to $178.00/month. Parties are attempting to have
lease formally split and Burlington is withholding payments until the
split is completed.
<PAGE> 25
24
SCHEDULE 7
ACTIONS OR JUDGMENTS AGAINST CORPORATION
1. Writ of Execution No. 98-012459 filed against Burlington Systems
Integration Inc. in favour of Access Graphics Inc. in the amount of
$16,994.10 plus interest and costs, effective September 21, 1998.
<PAGE> 26
25
SCHEDULE 8
LIST OF EMPLOYEES AND CONTRACTORS
- - Rocco Spagnuolo
- - Angelo Rocca
- - Exceed Systems Ltd.
- - Rocmar Systems Inc.
<PAGE> 27
26
SCHEDULE 9
RESIGNATIONS OF OFFICERS AND DIRECTORS
<PAGE> 28
27
SCHEDULE 10
CONSULTING AGREEMENT
<PAGE> 29
28
SCHEDULE 11
NON-COMPETE & CONFIDENTIALITY AGREEMENTS
<PAGE> 1
EXHIBIT (6)1
2977541 CANADA INC.
DANIEL BENOIT
AND
AXYN CANADA CORPORATION
AND
AXYN CORPORATION
PURCHASE AGREEMENT
GS:kd
1999-06-18
File No. 39186-1004
SOLOWAY, WRIGHT
BARRISTERS AND SOLICITORS
427 LAURIER AVENUE WEST
SUITE 900
OTTAWA, ONTARIO
K1R 7Y2
<PAGE> 2
PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT in duplicate this 18th day of June, 1999.
BETWEEN:
2977541 CANADA INC. AND DANIEL BENOIT
hereinafter referred to as the "VENDORS"
OF THE FIRST PART
AND:
AXYN CANADA CORPORATION
a company incorporated under the laws
of Ontario
hereinafter referred to as the "PURCHASER"
OF THE SECOND PART
AND:
AXYN CORPORATION
a company incorporated under the laws
of Colorado
hereinafter referred to as the "AXYN"
OF THE THIRD PART
THIS AGREEMENT WITNESSES that for and in consideration of the
mutual covenants and agreements contained in this Agreement and other good and
valuable consideration (the receipt and sufficiency of which are acknowledged),
the parties covenant and agree as follows:
<PAGE> 3
2
1. PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement, the Vendors agree to sell, assign and transfer to the Purchaser
and the Purchaser agrees to purchase from the Vendors as at and from the close
of business on June 30, 1999 (the "CLOSING DATE") 10,460,031 issued and
outstanding common shares in the capital stock of Syscan International Inc. (the
"PURCHASED SHARES").
1. PURCHASE PRICE AND PAYMENT
1.1 Purchase Price and Payment. The purchase price payable to
the Vendors for the Purchased Shares shall be satisfied as follows:
1.2
i) as to the sum of $75,000.00 U.S. by the payment made
on or about April 26, 1999, which the Vendors hereby acknowledge receipt of;
ii) as to the sum of $25,000.00 U.S. by the delivery to
the Vendors of 25,000 shares of Axyn Technologies Corporation, which the Vendors
acknowledge receipt of;
iii) as to the sum of $150,000.00 U.S. by the issuance
on the Closing Date of 150,000 shares of the Purchaser which shall be
convertible one for one into an equal number of freely tradable shares of AXYN;
iv) by the issuance in escrow in favour of Vendors
counsel, on the Closing Date of 1,150,000 shares of the Purchaser which shall be
convertible one for one into an equal number of shares of AXYN.
2.2 Share Restrictions. The Vendors
acknowledge that they will be subject to restrictions on the sale of shares of
AXYN and the Purchaser, as the case may be, in accordance with the laws of the
United States and Canada, the applicable securities regulations thereto and the
terms of this Agreement. The Shares issued to the Vendors shall bear such
restrictions on the face of the share certificates. The restrictions on the
transfer of the common shares issued by the Purchaser pursuant to this Agreement
shall be removed upon the Purchaser's compliance with applicable securities
regulations in the relevant jurisdiction and in proportion to all other issued
common shares of AXYN. The Vendors acknowledge that in addition to any
applicable restrictions in Canada or the United States, that the shares of the
Purchaser and of AXYN, as the case may be, shall be held in escrow by Vendors
counsel and released as to 1/3 on May 19, 2000, as to 1/3 on May 19, 2001 and as
to the balance on May 19, 2002.
<PAGE> 4
3
1. REPRESENTATIONS AND WARRANTIES.
1.1 Representations and Warranties of the Vendors. The Vendors represent and
warrant as follows to the Purchaser and acknowledges that the Purchaser is
relying on such representations and warranties in connection with the purchase
by it of the Purchased Shares:
(a) Corporate Status. Syscan International Inc. (the
"CORPORATION") is a corporation duly incorporated and organized and validly
subsisting in good standing under the laws of Canada. The Corporation has the
corporate power, authority and capacity to own its property and to carry on its
business as now being conducted by it. No bankruptcy, insolvency or receivership
proceedings have been instituted or are pending against the Corporation and the
Corporation is able to satisfy its liabilities as they become due.
(a) Authorized and Issued Capital. The authorized
capital of the Corporation consists of an unlimited number of common shares of
which 11,878,830 have been validly issued to the Vendors and are outstanding as
fully paid and non-assessable (the "TOTAL SHARES"). No shares, options, warrants
or other rights for the purchase, subscription or issuance of shares or other
securities of the Corporation or securities convertible into or exchangeable for
shares of the Corporation have been authorized or agreed to be issued or are
outstanding, which would have the effect of reducing the percentage ownership
represented by the Purchased Shares below 56.69%.
(a) Purchased Shares. The Vendors are the legal and
beneficial owners of the Purchased Shares. On the Closing Date, the Purchaser
shall acquire good and marketable title to the Purchased Shares, free and clear
of all agreements, mortgages, liens, charges, pledges, hypothecs, security
interests, encumbrances or other rights or claims of others, save and except for
an escrow agreement dated August 19, 1997 between the Vendors, Montreal Trust
Company and the Corporation. The Total Shares constitute all of the issued and
outstanding shares in the capital of the Corporation owned by the Vendor and as
set out in the escrow agreement dated August 19, 1997 between the Vendors,
Montreal Trust Company and the Corporation and there are no restrictions on the
transfer of the Purchased Shares except those set forth in the escrow agreement.
(a) No Other Agreements. No person, firm or corporation
has any written or oral agreement, option, understanding or commitment, or any
right or privilege capable of becoming an agreement, for the purchase from the
Vendors of any of the Total Shares.
(a) Corporate Records. The corporate records and minute
books of the Corporation contain complete and accurate minutes of all meetings
of and copies of all by-laws and all resolutions passed by the directors and
shareholders of the Corporation since its incorporation. All such meetings were
duly called and held, all
<PAGE> 5
4
such by-laws and resolutions were duly passed and the share certificate books,
registers of shareholders, registers of transfers and other corporate registers
of the Corporation are complete and accurate in all material respects.
(a) Accurate Records. The books and records of the
Corporation fairly and correctly set out and disclose in all material respects,
in accordance with generally accepted accounting principles, the financial
position of the Corporation as at the date of this Agreement and all financial
transactions relating to the Corporation have been accurately recorded in those
books and records.
(a) Financial Statements. The audited financial
statements of the Corporation as at December 31, 1998 (the "BALANCE SHEET DATE")
and the unaudited financial statements of the Corporation for the quarter ended
March 31, 1999 and for the period then ended have been prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
those of previous fiscal years and are true and correct and present fairly the
assets, liabilities (whether accrued, absolute, contingent or otherwise) and the
financial condition of the Corporation as at the Balance Sheet Date, and the
sales and earnings of the Corporation during the period covered by those
financial statements.
(a) Title to Assets. The Corporation has good and
marketable title to all of its properties and assets, free and clear of all
mortgages, pledges, charges, hypothecs, liens, title retention agreements,
security interests, encumbrances or rights of others of any kind or character,
other than those disclosed on the balance sheet of the Corporation.
(a) Undisclosed Liabilities. The Corporation has no
liabilities (whether accrued, absolute, contingent or otherwise) of any kind
except liabilities incurred in the ordinary course of business since March 31,
1999 which are not inconsistent with past practice, and are not, in the
aggregate, material and adverse to the business, properties, assets, financial
condition or results of operation of the Corporation.
(a) No Loans. After the Closing Date, assuming that the
Corporation will have paid the loan of $30,000.00 granted by 2977541 Canada Inc.
on June 9, 1999, no loans by the Corporation or other indebtedness due to the
Corporation shall be outstanding (other than the normal salaries, bonuses,
fringe benefits and the obligation to reimburse for expenses incurred on behalf
of the Corporation in the normal course of employment) from the Vendors or from
any person or corporation not dealing at arm's length or who is affiliated (as
those terms are used in the INCOME TAX ACT (Canada)) with the Vendors.
(a) Tax Returns. The Corporation has duly filed all tax
returns required to be filed by it (including all information returns as to
which non-filing or late filing could result in interest or penalties), has made
complete and accurate disclosure in such returns and has duly paid all taxes due
from it to federal, provincial or
<PAGE> 6
5
local taxing authorities, including, without limitation, those due in respect of
its properties, income, capital, sales, use of property and payroll. The
Corporation has also paid all assessments and reassessments and all other taxes,
governmental charges, penalties, interest and fines due and payable by the
Corporation up to the date of this Agreement. The Corporation has made adequate
provision for and will have sufficient cash on hand to satisfy any taxes which
are payable during the current fiscal period for which tax returns are not yet
required to be filed. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the assessment or
reassessment of income tax or the filing of any tax return by, or payment of any
tax by, or levying of any governmental charge against the Corporation. There are
no actions, audits, assessments, reassessments, suits, proceedings,
investigations or claims now threatened or pending against the Corporation in
respect of taxes or governmental charges or any matters under discussion with
any governmental authority relating to taxes or governmental charges asserted by
any such authority. The Corporation has withheld from each payment made by it
the amount of all taxes and other deductions required to be withheld from it and
has paid the same to the proper taxing or other authority within the time
prescribed under any applicable legislation or regulation.
(a) Ordinary Course. Since March 31, 1999, other than in
the ordinary course of business:
(i) the Corporation has not carried on any business, other than its ordinary
continuing business;
(i) no capital expenditures have been made or authorized by the Corporation;
(i) there has been no material change in the affairs, business, prospects,
operations or condition of the Corporation, financial or otherwise;
(i) the Corporation has not transferred, assigned, sold or otherwise disposed of
any of its property or assets other than those disclosed in writing to the
Purchaser;
(i) the Corporation has not suffered an extraordinary loss nor waived any rights
of material value nor entered into any material commitment or transaction;
(i) the Corporation has not declared or paid any dividends or declared or made
any other distribution on any of its securities or shares, and has not, directly
or indirectly, redeemed, purchased or otherwise acquired any of its securities
or shares or agreed to do so except as disclosed in writing and agreed to by the
Purchaser;
(i) the Corporation has not incurred or assumed any obligation or liability
(fixed or contingent), except secured and unsecured current obligations and
liabilities, particulars of which have been disclosed in writing to the
Purchaser or its representatives; or
(i) the Corporation has not amended or changed or taken any action to amend or
<PAGE> 7
6
change its constating documents.
(a) Non-Arm's Length Transactions. The Corporation has
not entered into any contracts, agreements, options or arrangements or incurred
or assumed any obligation or liability (whether fixed or contingent) with, on
behalf of or with respect to the Vendors or any other non-arm's length person or
any affiliate of the Vendors (as those terms are defined in the INCOME TAX ACT
(Canada)), whether jointly or severally.
(a) Material Contracts. The Corporation is not a party
to nor bound by any material agreement, contract or commitment, whether written
or oral, of any nature or kind whatsoever, other than those disclosed on
Schedule 4. The Corporation is not in default or breach of any agreement,
contract or commitment and there exists no state of facts which after notice or
lapse of time or both would constitute a default or breach and all agreements,
contracts or commitments are now in good standing and in full force and effect
without amendment and the Corporation is entitled to all benefits under them.
(a) Leases. The Corporation is not a party to any lease
of real property or agreement in the nature of a lease, whether as lessor or
lessee, other than those disclosed on Schedule 5.
(a) Consents. There are no consents, authorizations,
licenses, franchise agreements, permits, approvals or orders of any person or
government required to permit the Vendors to complete the transactions
contemplated by this Agreement.
(a) No Breaches of Charter or Other Agreements. Neither
the Vendors nor the Corporation are a party to, bound or affected by or subject
to any indenture, mortgage, lease, agreement, instrument, statute, regulation,
arbitration award, charter or by-law provisions, order or judgment which would
be violated, contravened, breached by or under which any default would occur as
a result of the execution and delivery of this Agreement or the consummation of
the transactions contemplated by it or which might prevent or interfere with the
use of the Corporation's assets or which may limit or restrict or otherwise
adversely affect the Corporation's business, properties, assets or financial
condition. The entering into of this Agreement and the consummation of the
transactions contemplated in it will not:
(i) give rise to any right of acceleration by any person in respect of any
indebtedness or other obligation of the Corporation; or
(i) result in the loss of any rights, privileges or advantages presently enjoyed
by the Corporation.
(a) No Actions. There is no suit, action, litigation,
arbitration, proceeding or governmental proceeding, including appeals and
applications
<PAGE> 8
7
for review, in progress, pending or threatened against or involving the
Corporation or relating to the Total Shares (collectively referred to as
"actions") and the Vendors are not aware of any existing ground on which any
actions might be commenced with any reasonable likelihood of success. There is
not presently outstanding any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator (collectively referred to as "judgments")against the Corporation or
which would affect the Vendors' ability to sell the Purchased Shares as provided
in this Agreement other than those actions or judgments disclosed on Schedule 6.
(a) Powers of Attorney. No person has any tax or other
power of attorney from the Corporation with respect to any matter.
(a) Guarantees. The Corporation has not given nor agreed
to give nor is it a party to or bound by any guarantee, indemnification, surety
or other similar obligation.
(a) Corporate Authorization. The completion of the
transaction contemplated in this Agreement has been duly and validly authorized
by all necessary corporate action on the part of the Corporation and on the part
of any corporate Vendor.
(a) Residency. The Vendors are not a non-resident of
Canada within the meaning of the INCOME TAX ACT (Canada).
(a) Subsidiaries. The Corporation does not own shares in
any other corporation and has not agreed to acquire any shares in the capital of
any other corporation or to acquire or lease or invest, directly or indirectly,
in any other business operation.
(a) Securities Legislation. The sale of the Purchased
Shares by the Vendors to the Purchaser will be made in compliance with all
applicable securities legislation.
(a) Enforceability of Obligations. This Agreement
constitutes a valid and binding obligation of the Vendors enforceable against
them in accordance with its terms, provided that enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws generally affecting creditors' rights and that equitable remedies
such as specific performance and injunction are in the discretion of the Court
from which they are sought.
(a) Family Law Act. No order has been given under the
FAMILY LAW ACT OF QUEBEC nor is there any application pending under that Act
that affects the Purchased Shares in any manner.
(a) No Relevant Information. None of the representations
<PAGE> 9
8
and warranties in this section 3.1 contains any untrue statement of material
fact or omits to state any material fact necessary to make any representation or
warranty not misleading to a prospective purchaser of the Purchased Shares
seeking full information concerning the matters which are the subject of those
representations and warranties.
1.1 Representations and Warranties of the Purchaser. The Purchaser and AXYN
represent and warrant as follows to the Vendors and acknowledge that the Vendors
are relying on such representations and warranties in connection with the sale
of the Purchased Shares:
1.2
(a) Corporate Status. The Purchaser is a corporation
duly continued and organized and validly subsisting in good standing under the
laws of Ontario. The Purchaser has the corporate power, authority and capacity
to own its property and to carry on its business as now being conducted by it.
No bankruptcy, insolvency or receivership proceedings have been instituted or
are pending against the Purchaser and the Purchaser is able to satisfy its
liabilities as they become due.
(a) Corporate Authorization. The completion of the
transactions contemplated by this Agreement shall be duly and validly authorized
by all necessary corporate and other action of the Purchaser and AXYN prior to
the Closing Date.
(a) Enforceability of Obligations. This Agreement
constitutes a valid and binding obligation of the Purchaser enforceable against
it in accordance with its terms, provided that enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws generally affecting creditors' rights and that equitable remedies
such as specific performance and injunction are in the discretion of the Court
from which they are sought.
(a) Issue Capital. Effective as of the Closing Date
contemplated by this agreement, the Shares issued to the Vendors on the Closing
Date pursuant to Section 2.1 hereof shall be duly and validly issued and
outstanding as fully paid and non-assessable shares of the Purchaser and will
have been issued in full compliance with and all applicable securities
legislation.
1. COVENANTS
1.1 Covenants of the Vendors. Unless otherwise permitted, on or before the
Closing Date, the Vendors covenant and agree with the Purchaser as follows:
1.2
(a) Non-Arm's Length Payables and Receivables. The
Corporation shall have satisfied or caused to be satisfied all amounts owed by
the Vendors to the Corporation in accordance with Section 3.1(j) of this
Agreement.
<PAGE> 10
9
(a) Actions to Satisfy Closing Conditions. The Vendors
shall diligently take all actions and do all things necessary to ensure
compliance with the conditions set forth in section 5.1 of this Agreement.
(a) Transfer of Purchased Shares. The Vendors shall
take, and will cause the Corporation to take, all necessary steps and
proceedings as approved by counsel for the Purchaser to permit the Purchased
Shares to be duly and validly transferred to the Purchaser.
(a) Nomination of Directors and Officers. The Vendors
shall cause the board of directors of the Corporation to nominate Scott Feagan
as Chairman of the board of directors of the Corporation.
(a) Releases. The Vendors shall cause to be executed and
delivered to the Purchaser at the Closing Date a release in the form attached to
this Agreement as Schedule 2.
(a) Tax Returns. Within 90 days of the Closing Date, the
Vendors shall cause the Corporation to duly and timely file all financial,
securities and tax returns required to be filed since the Balance Sheet Date and
promptly pay all taxes, assessments and governmental charges shown on those tax
returns to be due and payable and shall cause the Corporation not to enter into
any agreement, waiver or other arrangement providing for an extension of time
with respect to the filing of a tax return or the payment or assessment of any
tax or governmental charge.
(a) Consulting Services Agreements. Daniel Benoit shall
enter into consulting services agreements with the Purchaser in accordance with
Section 9.2 of this Agreement.
(a) Employee Agreements. The Corporation shall cause all
key employees of the Corporation, as determined by the Purchaser, to enter into
employment and non-compete agreements with the Purchaser.
4.2 Covenants of the Purchaser and AXYN. The Purchaser and AXYN covenant and
agree with the Vendors as follows:
(a) Due Diligence. Before entering into this Agreement,
the Purchaser has performed a complete due diligence of the Corporation up to
March 31, 199 and is fully satisfied with it. It is aware that the Corporation
has incurred losses of $336,465.00 for the first quarter ended March 31, 1999.
(b) Release. The Purchaser shall cause to be executed
and delivered to the Vendors at the Closing Date a release in the form attached
to this Agreement as Schedule 3.
(c) Issuance of Shares. The Purchaser shall issue the
<PAGE> 11
10
shares set out in Section 2.1 to the Vendors.
(d) Escrow of Shares. AXYN shall set aside and issue in
trust for the Vendors sufficient shares of AXYN equal to the number of shares of
the Purchaser convertible into AXYN shares.
1. CONDITIONS
1.1 Conditions for the Benefit of the Purchaser. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Purchaser to be fulfilled or performed at or prior to
the times specified in this section:
(a) Covenants and Warranties. The covenants,
representations and warranties of the Vendors contained in this Agreement or in
any other document delivered pursuant to it shall be true and correct as of the
Closing Date with the same force and effect as if such covenants,
representations and warranties had been made on and as of that date.
(a) Compliance. The Vendors shall have performed or
complied with all covenants and agreements in this Agreement to be performed or
caused to be performed or complied with by them prior to the time specified in
this Agreement for performance or compliance.
(a) No Changes. On the Closing Date, there shall have
been no material adverse change in the properties, assets, liabilities, affairs,
financial condition or prospects of the Corporation from that shown on or
reflected in the financial statements attached to in this Agreement as Schedule
1, except as otherwise disclosed in this Agreement. The title of the Vendors to
the Purchased Shares and all other matters in the opinion of the Purchaser's
counsel which are material in connection with the transactions contemplated in
this Agreement shall be subject to the favourable opinion of that counsel.
(a) No Actions. On the Closing Date, no action or
proceeding in Canada or the United States by law or in equity shall be existing
or threatened by any person, company, firm, governmental authority, regulatory
body or agency to enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated by this Agreement.
(a) Consents. On or before the Closing Date, there shall
have been obtained from all appropriate federal, provincial, municipal or other
governmental, non-governmental or administrative bodies all such approvals,
licences and consents in form and terms satisfactory to the Purchaser as may be
required in order to permit the implementation of the transactions contemplated
in this Agreement without affecting or resulting in the cancellation or
termination of any licence or permit
<PAGE> 12
11
required in the conduct of the Corporation's business.
(a) Closing Deliveries. The Vendors shall deliver to the
Purchaser on the Closing Date those items set forth in section 8.1 of this
Agreement in form and content satisfactory to the Purchaser and its counsel.
(a) Change of Control Filing. The Vendors shall prepare
at their expense to be filed within the time period prescribed by the INCOME TAX
ACT (Canada) and any other applicable legislation, all tax returns and tax
filings required to be made by the Corporation consequent upon the acquisition
of control of the Corporation by the Purchaser, within 90 days of the Closing
Date in accordance with section 4.1(f) of this Agreement.
(a) Unfulfilled Conditions. If any of the foregoing
conditions is not fulfilled or performed as at the Closing Date unless otherwise
specified in this section to the satisfaction of the Purchaser, the Purchaser
may:
(i) give notice thereof to the Vendors, whereupon this
Agreement shall be terminated and each of the parties shall be released from all
of its obligations under it without further liability whatsoever and the Vendors
shall return all payments received up to the date thereof, whether such payments
be in the form of cash or shares; or
(ii) waive compliance with any of these conditions in
whole or in part if it sees fit to do so without prejudice to any of its rights
of termination in the event of non-performance of any other condition in whole
or in part, provided that any waiver shall be binding upon the Purchaser only if
it is in writing; or
(iii) require the Vendors to indemnify the Purchaser in
respect of any costs incurred in fulfilling or performing the conditions
outlined in this Section.
1.1 Conditions for the Benefit of the Vendors. The purchase and sale of the
Purchased Shares is subject to the following terms and conditions for the
exclusive benefit of the Vendors to be fulfilled or performed at or prior to the
times specified in this section:
1.2
(a) Covenants and Warranties. The covenants,
representations and warranties of the Purchaser and AXYN contained in this
Agreement or in any other document delivered pursuant to it shall be true and
correct as of the Closing Date with the same force and effect as if such
covenants, representations and warranties had been made on and as of that date.
(a) Compliance. The Purchaser and AXYN shall have
performed or complied with all covenants and agreements in this Agreement to be
performed or caused to be performed or complied with by it prior to the time
specified in this Agreement for performance or compliance.
<PAGE> 13
12
1. INDEMNIFICATION
1.1 Indemnification of Purchaser. Subject to the provisions of paragraph 6.2,
the Vendors covenant and agree to indemnify and save harmless the Purchaser of
and from any costs whatsoever arising out of or pursuant to:
(a) any reassessment for income, sales, excise,
corporate or other tax of the Corporation (and all interest or penalties
relating to it) for any period up to and including the Closing Date;
(a) all judgements and awards against the Corporation,
including all interest and penalties, in consequence of any action, suit or
proceeding, whether or not disclosed to the Purchaser and whether or not
commenced after the Closing Date, if based upon any acts or omissions or other
circumstances which occurred or arose prior to the Closing Date;
(a) any loss, costs and expenses suffered by the
Purchaser as a result of any breach of any representation, warranty or covenant
on the part of the Vendors contained in this Agreement or in any schedule to it;
and
(a) all claims, demands, costs and expenses, including
all reasonable legal, audit and other professional fees, incurred in respect of
any of the foregoing.
1.1 Notwithstanding the provisions of paragraph 6.1, the
indemnification of the Purchaser is subject to the following terms and
conditions:
1.2
(a) the same accounting principles used by Samson Belair
for the years 1996, 1997 and 1998, provided that the principles are in
accordance with generally accepted accounting principles, will prevail up to the
Closing Date;
(b) 300,000 shares of the Purchaser will be deposited by
the Vendors in trust with Lavery, de Billy. Any amount to be paid by the Vendors
to the Purchaser pursuant to this section will be paid in shares of the
Purchaser on the basis of the market value of the shares of AXYN at the time an
amount is payable by the Vendors, subject to a minimum value of $2.00 U.S. per
share;
(c) the 300,000 shares deposited in trust with Lavery,
de Billy will be released as follows in favour of the Vendors:
(i) one third on May 19, 2000;
(ii) one third on May 19, 2001; and
(iii) one third on May 19, 2002.
<PAGE> 14
13
6.3 Survival. The conditions, covenants, representations and warranties of the
parties to this Agreement or in any certificates or documents delivered pursuant
to it or in connection with the transactions contemplated in it and the rights
of Indemnification set out in Section 6 of this Agreement shall continue in full
force and effect after the Closing Date, and shall not merge for a period of one
and a half (1 1/2) years from the Closing Date, except for the representations
contained in Section 3.1(k) which shall not merge for a period ending
immediately after the date that a Revenue authority no longer has the right to
re-assess the Corporation.
7. CLOSING ARRANGEMENTS
7.1 Deliveries. On or before the Closing Date and upon fulfilment of all of the
conditions in this Agreement which have not been waived by the Purchaser, the
Vendors shall deliver to the Purchaser:
(a) certificates representing the Purchased Shares duly
endorsed in blank for transfer or accompanied by a duly executed stock transfer
power;
(b) all necessary directors' and shareholders'
resolutions of the Vendors consenting to and authorizing the sale of the
Purchased Shares;
(c) a certificate of status for the Corporation dated a
current date;
(d) release of the Vendor outlined in the form attached
as Schedule 2;
(e) consulting and non-competition agreements for the
Vendors.
7.2 On or before the Closing Date and upon fulfilment of all of the conditions
in this Agreement which have not been waived by the Vendors, the Purchaser shall
deliver to the Vendors:
(a) share certificates representing the shares of the
Purchaser in accordance with section 2.1 of this Agreement;
(b) copies of all necessary directors' resolutions of
the Purchaser and AXYN authorizing the issuance of the Shares;
(c) release of the Purchaser outlined in the form
attached as Schedule 3;
(d) a certificate of status for the Purchaser and AXYN
dated a current date.
<PAGE> 15
14
7.3 Place of Closing. The closing shall take place at Montreal on the Closing
Date at the offices of the Corporation.
8. GENERAL MATTERS
8.1 Schedules. The following are the schedules attached to and incorporated in
this Agreement by reference and deemed to be part of this Agreement:
Schedule 1 - December 31, 1998 and March 31, 1999 Financial
Statements
Schedule 2 - Release of the Vendors
Schedule 3 - Release of Purchaser
Schedule 4 - Material Contracts
Schedule 5 - Leases
Schedule 6 - Actions against Corporation
Schedule 7 - Commission Payment Agreement
Schedule 8 - Consulting Services Agreement
Schedule 9 - Employment Agreement
8.2 Currency. All dollar amounts referred to in this agreement are in United
States funds unless otherwise specified.
8.3 Entire Agreement. This Agreement, including the schedules to it, together
with the agreements and other documents to be delivered pursuant to it,
constitute the entire agreement between the parties pertaining to the subject
matter of this Agreement and supersede all prior agreements, understandings,
negotiations and discussions, whether written or oral, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter of it. No amendment, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound by it. No waiver of any provision of this Agreement shall be
deemed to constitute a waiver of any other provision (whether or not similar)
nor shall that waiver constitute a continuing waiver unless expressly provided.
8.4 Governing Laws. This Agreement shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable in it and
shall be treated in all respects as an Ontario contract. The parties attorn to
the exclusive jurisdiction of the courts of the Province of Ontario with respect
to any matter arising under this Agreement or any of the schedules or documents
to be entered into or delivered pursuant to it.
8.5 Expenses. Unless otherwise specified herein, all costs and expenses
(including, without limitation, the fees and disbursements of legal counsel)
incurred in connection with this Agreement and the transactions contemplated by
it shall be paid by
<PAGE> 16
15
the party incurring the cost or expense.
8.6 Notices. Any notice or other writing required or permitted to be given under
this Agreement may be delivered personally or sent by prepaid registered mail or
transmitted by telex, facsimile or other form of recorded telecommunication
transmission:
(a) to the Vendors at:
802-11 O'Reilly
Verdun, Quebec H3E 1T6
(b) to the Purchaser and AXYN at:
201-338 Montreal Road
Vanier, Ontario K1L 6B3
Fax: 613-742-6068
or at such other address as the parties may from time to time deliver pursuant
to this section. Any notice delivered or transmitted by telex, facsimile or
other form of recorded telecommunication shall be deemed to be given and
received on the date of its delivery or transmission, as the case may be,
provided that such day is not a Saturday, Sunday or statutory holiday. Any
notice mailed shall be deemed to have been given and received on the third
business day following the date of its mailing.
8.7 Further Assurances. The parties shall with diligence do all things and
provide all such assurances as may be required to consummate the transactions
contemplated by this Agreement, and each party shall provide such further
documents or instruments required by any other party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing Date.
8.8 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be deemed to be an original of
this Agreement and fully binding upon the signatory to it, but all counterparts
shall together constitute one and the same instrument.
8.9 Time of Essence. Time shall be of the essence of this Agreement.
8.10 Language. The parties hereto have agreed that this document be drawn up in
the English language. Les parties presentes ont convenu que ce document soit
redige en anglais.
8.11 Successors and Assigns. This Agreement shall enure to the benefit of and be
binding upon the parties to it and their respective heirs, successors,
executors,
<PAGE> 17
16
administrators and assigns, as applicable. This Agreement may not be assigned or
transferred by the Vendors without the prior written consent of the Purchaser,
such consent not to be unreasonably withheld.
8.12 Invalidity of Provisions. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or unenforceability of
any other provision hereof and any such invalid or unenforceability provision
shall be deemed to be severable.
9. OTHER MATTERS
9.1 Commission Payment. After the Closing Date, the Purchaser shall cause the
Corporation to pay a fee to 2977541 Canada Inc. equal to $25.00 U.S. for each
printer sold by the Corporation in a fiscal year of the Corporation. The fee
outlined herein shall only be payable in respect of printers sold in excess of
5,000 for each fiscal year of the Corporation for a total of 3 years.
Thereafter, no additional fee will be payable. The Corporation may terminate
this obligation by payment to 2977541 Canada Inc. of the fees that would have
been payable to 2977541 Canada Inc. if 5,000 printers were sold in the first
fiscal year, 10,000 printers were sold in the second fiscal year and 20,000
printers were sold in the third fiscal year after the Closing Date. To the
extent that a fiscal period is not a full 12 months, the numbers above will be
pro-rated accordingly. The parties shall agree to enter into an agreement in the
form attached as Schedule 7.
9.2 Consulting Services Agreement. The Purchaser shall cause the Corporation to
enter into a consulting services agreement with 2977541 Canada Inc.
substantially in accordance with the terms set out in the Letter of Intent dated
April 26, 1999 between the Purchaser and the Vendors, attached as Schedule 8.
9.3 Employment Agreement. The Purchaser shall cause the Corporation to enter
into an employment agreement with Sylvain Benoit substantially in accordance
with the terms set out in the Letter of Intent dated April 26, 1999 between the
Purchaser and the Vendors, attached as Schedule 9.
9.4 Nomination of Benoit. The Purchaser shall cause Daniel Benoit to be
nominated to the Board of Directors of the Purchaser. Daniel Benoit agrees to
stay on as President of the Corporation until a successor has been appointed and
agrees to cause Scott Feagan to be appointed as Chairperson of the Corporation.
9.5 Pre-Closing Shares. The parties acknowledge that the Vendors provided
100,000 shares of the Corporation endorsed in blank to the Purchaser's legal
counsel and the Purchaser deposited 25,000 shares of Axyn Technologies
Corporation with the Vendors' legal counsel in contemplation of the completion
of the transactions contemplated herein. On the Closing Date, the Purchaser will
return the 100,000 shares of the Corporation to the Vendors provided that all
conditions of the closing have been met by the respective parties.
9.6 Total Shares Issued. The Vendors acknowledge that of the total shares held
by the Vendors, the following shares are subject to the terms of the escrow
agreement dated August 19, 1997 between the Vendors, Montreal Trust Company and
the
<PAGE> 18
17
Corporation:
i) Total # of shares held by the Vendors 11,878,830
ii) Total # of shares held subject to the escrow
agreement 8,372,022
iiii) Total # of shares freely tradable by the Vendors
3,506,808
The parties acknowledge that the Purchaser shall receive on closing all of the
freely tradable shares held by the Vendor and 6,953,223 shares held subject to
the escrow agreement provided that the Purchaser shall also be entitled before
any other person, to the first shares released under the escrow agreement until
such time as the Purchaser has received all of its 6,953,223 shares, and
thereafter, the Vendors shall be entitled to the balance of shares under escrow,
subject to the provisions of the option agreement described in clause 9.7 of
this Agreement.
9.7 Option Agreement. The Vendors agree to enter into an option agreement with
the Purchaser in respect of the balance of shares not subject to the terms of
this Agreement whereby the outstanding shares shall be held in a voting trust
with the voting rights to be cast by the Purchaser and whereby the Purchaser
shall have the right to acquire up to 705,000 of the outstanding shares and the
issuance of one share of the Purchaser for each three outstanding shares and
whereby the Vendors shall have the right to cause the Purchaser to acquire up to
705,000 of the outstanding shares on the basis of three outstanding shares for
each share of the Purchaser. The said shares of the Purchaser issued pursuant to
the terms of this option agreement shall be convertible on a one for one basis
into shares of AXYN. In the event that the Vendors wish to sell the outstanding
shares to third parties, subject to the rights hereunder, the Purchaser shall
have first rights of refusal on those shares on the same terms and conditions as
offered to third party bone fide purchasers. The Purchaser shall have 30 days
from the receipt of notice of such offer to exercise their rights of first
refusal. In the event that the outstanding shares are not sold to a third party,
the option rights contained herein shall expire as to 235,000 shares on May 19,
2000, as to 235,000 shares on May 19, 2001 and as to the balance on May 19,
2002.
IN WITNESS WHEREOF the parties have executed this Agreement as
of the day, month and year first above written.
AXYN CANADA CORPORATION
PER _________________________c/s
PER _________________________c/s
AXYN CORPORATION
<PAGE> 19
18
PER _________________________c/s
PER _________________________c/s
<PAGE> 20
19
2977541 CANADA INC. (VENDOR)
PER _________________________c/s
PER _________________________c/s
SIGNED SEALED AND DELIVERED
in the presence of
)
__________________ )___________________________
WITNESS )DANIEL BENOIT - VENDOR
)
<PAGE> 21
20
SCHEDULE 1
FINANCIAL STATEMENTS OF THE CORPORATION
DECEMBER 31, 1998 (AUDITED)
AND
MARCH 31, 1999 (UNAUDITED)
<PAGE> 22
21
SCHEDULE 2
RELEASE
TO: AXYN Canada Corporation and AXYN Corporation (the "Purchaser")
AND TO: Syscan International Inc. (the "Corporation")
RE: AXYN Canada Corporation purchase of shares in the capital of the
Corporation
In consideration of the sum of One Dollar ($1.00) and of other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
the Purchaser and the Corporation from all manner of actions, causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, claims or demands
whatsoever which the undersigned may now have or hereafter can have, against the
Purchaser or the Corporation existing up to the date of this release, including
by virtue of them being or ceasing to be an officer, director, employee or
contractor of the Corporation as the case may be, provided that nothing herein
contained shall be construed so as to release the Purchaser from its obligations
and covenants arising out of or in respect of a Purchase Agreement made the 18th
day of June, 1999 in respect of the sale by the undersigned to the Purchaser of
shares in the capital of the Corporation or any documents delivered pursuant to
such agreement.
DATED at Montreal this ____ day of June, 1999.
-----------------------
Daniel Benoit
2977541 CANADA INC.
Per:
Daniel Benoit
Per:
<PAGE> 23
22
SCHEDULE 3
RELEASE
TO: Daniel Benoit and 2977541 Canada Inc. ("Daniel and 2977541")
RE: AXYN Canada Corporation purchase of shares in the capital of Syscan
International Inc. (the "Corporation")
In consideration of the sum of One Dollar ($1.00) and of other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the undersigned hereby remises, releases and forever discharges
Daniel and 2977541 of and from all manner of actions, causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts, claims or demands whatsoever
which the undersigned may now have or hereafter can have, against Daniel and
2977541 existing up to the date of this release, by virtue of them being an
officer, director, employee or contractor of the Corporation as the case may be,
except those actions, causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, claims or demands arising from the terms of the Purchase
Agreement between the parties dated June 18th, 1999.
DATED at Montreal this day of June, 1999.
AXYN Canada Corporation
Per: ____________________________c/s
AXYN Corporation
Per: ____________________________c/s
<PAGE> 24
23
SCHEDULE 4
MATERIAL CONTRACTS
<PAGE> 25
24
SCHEDULE 5
LEASES
<PAGE> 26
25
SCHEDULE 6
ACTIONS OR JUDGMENTS AGAINST CORPORATION
<PAGE> 27
26
SCHEDULE 7
COMMISSION PAYMENT AGREEMENT
<PAGE> 28
27
SCHEDULE 8
CONSULTING SERVICES AGREEMENT
<PAGE> 29
28
SCHEDULE 9
EMPLOYMENT AGREEMENT
<PAGE> 1
EXHIBIT (6)m
[AXYN LETTERHEAD]
CONFIDENTIAL
Monday, 24 May 1999
The Board of Directors
AXYN Technologies Corporation
13020 Colt Drive
Clifton, Virginia, 22024
USA
Dear Sirs:
RE: ACQUISITION OF AXYN TECHNOLOGIES CORPORATION ("TECH")
This letter follows our discussions and exchanges of information with respect to
the proposed acquisition of AXYN Technologies Corporation. The purpose of this
letter is to outline our proposal to acquire all of the shares of AXYN
Technologies Corporation.
Since our initial discussions in December, 1998, we have confirmed our belief
that the acquisition of TECH by AXYN Corporation ("AXYN") is in the best
interest of both parties from a financial and business perspective. The
acquisition of TECH by AXYN will result in a share exchange to the shareholders
of TECH, would allow the existing administration and structure of TECH to remain
intact and be a significant part of AXYN and would further enhance TECH's and
AXYN's future profitability in the information technology sector.
No legally binding arrangements will be created between us except upon the
entering into of a definitive Purchase Agreement satisfactory to our respective
counsel and the satisfaction of all the terms contained in the attached Term
Sheet.
Our Offer to Purchase is subject to the Term Sheet attached to this letter of
intent, which includes the following:
(1) approval of the offer by the board of directors of AXYN;
(2) AXYN being satisfied with financial, business and legal due
diligence of TECH;
(3) the execution of all definitive agreements giving affect to this
letter, including a Share Purchase Agreement between AXYN and
the shareholders of TECH, and employment and non-competition
agreements with all key AXYN Technologies Corporation employees
(the "Principals");
<PAGE> 2
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(4) the obtaining of all required consents and approvals, including
those of regulatory nature; and
AXYN has already incurred and will continue incur substantial costs in
connection with this offer. Accordingly, in consideration of the offer, the
Principals and AXYN Technologies Corporation shall agree by execution of this
letter, that during the period commencing on the date hereof and ending on the
close of business thirty (30) days thereafter, or such later date which the
parties may determine in writing, TECH and the Principals will not, directly or
indirectly, solicit interest from, negotiate or deal with any party other than
AXYN for the sale, merger or other disposition of all or any part of the
business, assets or shares of AXYN Technologies Corporation.
If you wish to accept this offer, please return one executed copy of this letter
to AXYN Corporation, attention: Scott Feagan, President no later than 5:00 p.m.
on May 25, 1999.
Yours truly,
AXYN CORPORATION
Per: ________________________
Scott Feagan
President
We accept this Offer this ____ day of May, 1999
AXYN Technologies Corporation
Per: _______________________
THE PRINCIPALS
______________________________ ______________________________
Robert L. Bell Scott Feagan
______________________________ ______________________________
Chris Zawitkowski Janusz Rydel
______________________________
A.D. (Sandy) McQuarrie
<PAGE> 3
-3-
TERM SHEET
PURCHASE BY AXYN CORPORATION (AXYN") OF
ALL OF THE ISSUED AND OUTSTANDING SHARES IN THE SHARE CAPITAL OF
AXYN TECHNOLOGIES CORPORATION ("TECH")
PURCHASER AXYN Corporation
VENDOR Shareholders of AXYN Technologies Corporation
OBJECT Purchase all of the issued and outstanding shares of AXYN
Technologies Corporation
CLOSING DATE On or before June 30, 1999
OFFER SUMMARY Offer of 1,000,000 Common shares and 500,000
Convertible Preferred shares in AXYN Corporation for all
of the shares of TECH payable as follows:
(i) 1,000,000 Common shares deliverable upon the
closing date; and
(ii) 500,000 Convertible Preferred shares of AXYN
Corporation with a conversion date of no sooner
than December 31, 2003 and convertible into AXYN
Corporation shares at the rate of each Convertible
Preferred share into three (3) Common shares.
EMPLOYEE SHARE
PURCHASE PLAN All employees of TECH will be entitled to participate
in AXYN's employee share purchase plan upon acceptance and
ratification by the AXYN Corporation Board of Directors.
EMPLOYEE OPTION PLAN
All employees of TECH will be entitled to participate in
AXYN's employee option plan upon acceptance and
ratification by the AXYN Corporation Board of Directors.
SALE OF COMMON SHARES
Subject to any regulatory provisions, the Vendors may be
subject to regulatory or other restrictions on the sale of
the AXYN shares in conformance with applicable securities
regulations. The stock purchased by Vendor shall have
equitable registration rights upon AXYN Corporation stock
becoming registered on the NASDAQ or such other registered
stock exchange.
SALE OF PREFERRED SHARES
The certificates representing the Convertible Preferred
shares of AXYN shall be held in escrow pending their
release in accordance with the terms of an escrow
agreement.
<PAGE> 4
-4-
CONDITION PRECEDENT
TO CLOSING
The completion of the transaction is subject to the following:
(i) AXYN being satisfied with the due diligence;
(ii) Approval by the Board of Directors of AXYN and TECH
(iii) Execution of a Purchase Agreement between the parties
and other legal documents that may be required or
customary for a transaction of such nature
(iv) Obtaining of regulatory approvals or other required
approvals or consents, if any;
(v) Execution of employment contract and non-compete
agreements with all key employees;
(vi) To extent practicable and as long as there is no adverse
financial or legal impact on AXYN, transaction to be
structured tax effectively for the vendors;
REPRESENTATION AND
WARRANTIES BY VENDOR
Standard representation and warranties for a transaction of such
nature shall be a part of the Share Purchase Agreement.
<PAGE> 1
EXHIBIT (10)a
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated September 29, 1998 with respect to the consolidated
financial statements of Axyn Corporation for the period ended June 30, 1998 in
the Registration Statement Form 10-SB of Axyn Corporation for the registration
of its common and preference stock.
Ottawa, Canada ERNST & YOUNG LLP
July 29, 1999 Chartered Accountants
