SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JUNE 17, 1999.
DIGITAL COMMERCE INTERNATIONAL, INC.
(Exact name of registrant as specified in charter.)
Delaware 0-011228 02-0337028
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
815 Hornby Street, Suite 404, Vancouver B.C. V6Z 2E6
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (604) 899-0411
Note: Page 1 of 3 sequentially numbered pages.
ITEM 1. CHANGE IN CONTROL.
On June 15, 1999, Systems Assurance Corporation ("the Company") entered
into an agreement for the acquisition of all the equity of Digital Commerce,
Inc. ("Digital") in exchange for the issuance of five million (5,000,000)
common shares. As a result of the Acquisition, the previous shareholders of
the Digital became the majority shareholders of the Company. Those holding more
than 5% of the outstanding shares after the transaction are Michael Kang
2,000,000 shares and Jack Combs 2,000,000 shares.
In addition to the foregoing issuances, two hundred and fifty thousand
(250,000) preferred shares were issued to each to Michael Kang and Jack Combs.
Those shares are convertible into common stock if certain performance
criteria are met.
Additionally, pursuant to the acquisition Jack Combs was appointed to the
Board of Directors and was appointed to the position of Executive Vice
President respectively. Additionally, Michael Kang was appointed President
and CEO of the Company.
MICHAEL Y. H. KANG - CHAIRMAN AND CEO
Michael Y.H. Kang, a resident of Vancouver, British Columbia, is Chairman
and a cofounder of Digital Commerce Inc. As well as his role with DCI, Mr.
Kang is a founding partner of Capital West Group Inc., a private investment
and capital management firm in Vancouver, established in 1997.
Born in Korea, Mr. Kang spent his early years in Korea and Brazil, then
moving to Toronto where he earned a Bachelor of Commerce degree from the
University of Toronto in 1981. He was hired by Continental Illinois National
Bank and Trust Company of Chicago to work in their offices in Seoul, Korea
providing international banking functions. Subsequently, Mr.Kang returned to
Canada to assume the position of General Manager of his family's chain of
convenience stores. When the stores were eventually sold, Mr. Kang moved to
Phoenix, Arizona and purchased Prism Graphics Inc., the fourth largest sheet
feed printer in the State of Arizona. Upon the sale of this business in
1995, Mr. Kang returned to Vancouver to co-found Capital West and Digital
Commerce, Inc.
JOHN W. COMBS - EXECUTIVE VICE PRESIDENT
Jack Combs, a resident of Vancouver, British Columbia, is Executive Vice
President and co-founder of Digital Commerce Inc. Mr. Combs is also a founding
partner of Capital West Group Inc., a private investment and capital
management firm and a shareholder in Combs Group, a family commercial real
estate corporation in Toronto. He is also the owner of Brockton Realty Inc., a
Vancouver based real estate and development Company which has been involved in
all phases of the development process, including planning, financing,
development, construction management and marketing.
Born in New York, Mr. Combs moved with his family to Toronto where he
earned a Bachelor of Arts degree from the University of Toronto in 1969.
Prior to joining Mr. Kang in the founding of Capital West and Digital Commerce
Inc, Mr. Combs has been active in the real estate development business in
Ontario and British Columbia since the early 1970's. Throughout this time
Mr. Combs has maintained a high level services for such companies as Quadrant
Development Corp., a division of Weyerhauser Canada Ltd. and Webb & Knapp
Canada Ltd.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 15, 1999 the Company entered into an agreement with shareholders
of Digital Commerce, Inc. to acquire all of its outstanding equity. As a
result of the acquisition, Digital became a wholly-owned subsidiary of the
Company.
Digital is a Nevis corporation based in Vancouver Canada. Digital is
engaged in the business of handling the financial execution of e-commerce
transactions through the Internet. Currently, the services rendered primarily
consist of processing credit card transactions for merchants and E-Commerce
businesses. To expand the financial services it can offer to its world wide
customers, Digital has applied for a bank license in the country of St.
Vincent and the Grenadines and is investigating an acquisition of a bank
within the United States.
ITEM 5. OTHER EVENTS.
The Company recently changed its name from Systems Assurance Corporation
to Digital Commerce International, Inc. Additionally, the Company obtained a
new CUSIP number and trading symbol (THBK).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 25, 1999
Digital International Commerce, Inc.
By: /s/ Michael Kang
Michael Kang, President
ACQUISITION AGREEMENT
This Agreement is entered into by, between and among Systems Assurance
Corporation, a corporation organized under the laws of the State of Delaware
(hereinafter the "Purchaser"), Dean H. Becker, the President of the Purchaser
entering into this Agreement in his personal capacity, and the equity owners
("the Shareholders") of Digital Commerce Inc., a Nevis corporation
(hereinafter "the Company").
WITNESSETH:
WHEREAS, Purchaser wishes to acquire, and Shareholders are willing to
sell, all of the outstanding equity ownership of the Company in exchange for
common stock of the Purchaser;
NOW, THEREFORE, in consideration of the mutual terms and covenants set
forth herein, Purchaser and Shareholders approve and adopt this Acquisition
Agreement and mutually covenant and agree with each other as follows:
ARTICLE I
SHARES TO BE TRANSFERRED AND SHARES TO BE ISSUED
1.01 a. On the closing date the Shareholders shall transfer to Purchaser
certificates representing the equity of the Company described in
Schedule "A" , attached hereto and incorporated herein, which in the aggregate
shall represent all of the issued and outstanding shares of the Company (the
"Shares"). Such certificates shall be duly endorsed to the Purchaser by
Shareholders or accompanied by duly executed certificate powers transferring
to the Purchaser with signatures guaranteed. Alternatively, the Shareholders
may assign their rights to the Shares if the Shares have not been physically
issued in the form of certificates.
b. In exchange for the transfer of the equity of the Company pursuant to
sub-section 1.01a. hereof, Purchaser shall on the closing date and
contemporaneously with such transfer of the equity of the Company to it by the
Shareholders, or rights thereto, issue and deliver to the Shareholders:
(i) 5,000,000 of Common shares of the Purchaser in accordance with Schedule
"B" hereof; and (ii) 500,000 convertible Preference shares in accordance with
Schedule "C" hereof.
2.01 The parties intend that this acquisition and exchange of equity is to
be an exchange/transaction pursuant to Section 368(a)(1)(b) of the Internal
Revenue Code of the United States.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
2.01 Ownership of Equity.
Shareholders are the record owners and holders of the number of
fully paid and non-assessable Shares of the Company listed in Schedule "A"
hereto as of the date hereof and will continue to own such Shares of the
Company until the delivery thereof to the Purchaser on the closing date and
all such Shares are or will be on the closing date owned free and clear of all
liens, encumbrances, charges and assessments of every nature and subject to
no restrictions with respect to transferability. The Shareholders will have
full power and authority to assign and transfer their Shares of the Company in
accordance with the terms hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS SHAREHOLDERS
3.01 Capitalization
Except for this Agreement, there are no outstanding options, contracts,
calls, commitments, agreements or demands of any character relating to the
Shares of the Company owned by its Shareholders.
3.02 Organization and Authority.
(a) The Company currently is a corporation duly organized, validly
existing and in good standing under the laws of the Island of Nevis, with all
requisit ecorporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted, is duly
qualified and in good standing in every jurisdiction in which the property
owned, leased or operated by it, or the nature of the business conducted by
it, makes such qualification necessary to avoid material liability or material
interference in its business operations, and is not subject to any agreement,
commitment or understanding which restricts or may restrict the conduct of its
business in any jurisdiction or location.
(b) The outstanding Shares of the Company are legally and validly
issued, fully paid and non-assessable.
(c) The Company does not own five percent (5%) or more of the
outstanding stock of any corporation except as set out in the disclosure
statement completed by the Company and attached as Schedule "D" (the "Company
Disclosure Statement").
(d) The minute book of the Company made available to Purchaser
contains complete and accurate records of all meetings and other corporate
actions of the Shareholders and the directors (and any committee thereof)
of the Company.
(e) The Company Disclosure Statement contains a list of the
directors, officers, and Shareholders of Company and copies of the
Certificates of Incorporation and Bylaws currently in effect of the Company.
(f) The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not, subject to the
approval and adoption by the Shareholders of the Company, violate any
provision of the certificate/articles of incorporation or bylaws of the
Company, or any provisions thereof, or result in the acceleration of any
obligation under, any mortgage, lien, lease, agreement, instrument, court
order, arbitration award, judgment or decree to which the Company is a party,
or by which it is bound, and will not violate any other restriction of
any kind orcharacter to which it is subject.
(g) The authorized capital of the Company is ten (10) shares of
stock, of which ten (10) shares shall be outstanding at the time of the
acquisition.
3.03 Financials.
(a) Financial statements (hereafter "financial statements") of the
Company will be delivered by Company to the Purchaser within thirty days of this
Agreement. Said financial statements are true and correct in all material
respects and present an accurate and complete disclosure of the financial
condition of the Company as of its date and for the periods covered.
(b) All accounts receivable, if any, (net of reserves for doubtful
accounts) of the Company shown on the books of account on the statement date
and as incurred in the normal course of business since that date, are
collectible in the normal course of business.
(c) The Company has good and marketable title to all of its assets,
business and properties including, without limitation, all such properties
reflected in the balance sheet as of the statement date except as disposed of
in the normal course of business, free and clear of any mortgage, lien,
pledge, charge, claim or encumbrance, except as shown on said balance sheet as
of the statement date and, in the case of real properties except for rights-of-
way and easements which do not adversely affect the use of such property.
(d) All currently used property and assets of the Company, or in
which it has an interest, or which it has in possession, are in good operating
condition and repair subject only to ordinary wear and tear.
3.04 Changes Since the Statement Date. Since the financial statement
date, except as disclosed in the Company Disclosure Statement, there will not
have been any material negative change in the financial position or assets of
the Company.
3.05 Liabilities. There are no material liabilities of the Company,
whether accrued, absolute, contingent or otherwise, which arose or relate to
any transaction of the Company, its agents or servants occurring prior to the
statement date, which are not disclosed by or reflected in said financial
statements, except as disclosed in the Company Disclosure Statement. There
are no such liabilities of the Company which have arisen or relate to any
transaction of the Company, its agents or servants, occurring since the
statement date, other than normal liabilities incurred in the normal conduct
of the business of the Company, and none of which have a material adverse
effect on the business or financial condition of the Company, except as
disclosed in the Company Disclosure Statement. As of the date hereof, there
are no known circumstances, conditions, happenings, events or arrangements,
contractual or otherwise, which may hereafter give rise to liabilities, except
in the normal course of business of the Company, except as disclosed in the
Company Disclosure Statement.
3.06 Taxes. All federal, provincial, county and local income, ad
valorem, excise, profits, franchise, occupation, property, sales, use gross
receipts and other taxes (including any interest or penalties relating
thereto) and assessments which are due and payable have been duly reported,
fully paid and discharged as reported by the Company, and there are no
unpaid taxes which are, or could become a lien on the properties and assets of
the Company, except as provided for in the financial statements of their date,
or have been incurred in the normal course of business of the Company since
that date. All tax returns of any kind required to be filed have been filed
and the taxes paid or accrued.
3.07 Accuracy of All Statements Made by The Company. No representation or
warranty by the Company and Shareholders in this Agreement, nor any statement,
certificate, schedule or exhibit hereto furnished or to be furnished by or on
behalf of the Shareholders pursuant to this Agreement, nor any document or
certificate delivered to Purchaser pursuant to this Agreement or in connection
with actions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact necessary
to make the statement contained therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser and Dean H. Becker, acting in his personal capacity,
represent and warrant as follows:
4.01 Organization and Authority.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with full power and
authority to enter into and perform the transactions contemplated by this
Agreement, and with all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as now being
conducted, is duly qualified and in good standing in every jurisdiction in which
the property owned, leased or operated by it, or the nature of the business
conducted by it, makes such qualification necessary to avoid material
liability or material interference in its business operations, and is not
subject to any agreement, commitment or understanding which restricts or may
restrict the conduct of its business in any jurisdiction or location.
(a) The Purchaser is currently not operating any business.
(b) The Purchaser does not own five percent (5%) or more of the
outstanding stock of any corporation.
(c) The minute book of the Purchaser made available to the Company
and Shareholders contains complete and accurate records of all
meetings and other corporate actions of the shareholders and
the Board of Directors (and any committee thereof) of the
Purchaser.
(d) The disclosure statement prepared by the Purchaser and attached
as Schedule "E" (the "Purchaser's Disclosure Statement")
contains a list of the officers, directors and shareholders of
the Purchaser and copies of the articles of incorporation and
by-laws currently in effect of the Purchaser.
(e) The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not,
violate any provision of the certificate/articles of
incorporation or bylaws of the Purchaser, or result in a
default or the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, court order,
arbitration award, judgment or decree to which the Purchaser is a
party, or by which it is bound, and will not violate any other
restriction of any kind or character to which it is subject.
(f) The authorized capital stock of the Purchaser consists of: (i)
thirty million (30,000,000) Common shares, each with a par
value of $.001, of which approximately six million three
hundred and twenty thousand (6,320,000) shares of such
stock will be issued and outstanding at the time of closing
(exclusive of the shares issued pursuant to the acquisition as
set out in Schedule "B"); and (ii) no Preferred shares. New
class of preferred will be authorized and 500,000 (five hundred
thousand) shares will be issued in connection with this
transaction. As at the time of closing, all such issued share
capital will have been duly and validly allotted and issued and
will be outstanding as fully paid and non-assessable shares in
the capital of the Purchaser. Except for this Agreement, no
options, warrants or other rights to purchase shares or other
securities of the Purchaser have been authorized or agreed to be
issued or are outstanding.
(g) There is no suit, action, litigation, arbitration proceeding
or governmental proceeding, including appeals and
applications for review, in progress, pending or threatened
against or relating to or affecting the Purchaser or
affecting its business which might materially and adversely
affect the properties, business, future prospects or financial
condition of the Purchaser; and there is not presently
outstanding against the Purchaser any judgment, decree,
injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator.
(h) Except to the extent reflected in or reserved against in the
Purchaser's financial statements attached to the
Purchaser's Disclosure Statement, such financial statements
comprising (i) financial statements dated October 31, 1998 and
audited by certified public accountants, and (ii) un-audited
financial statements for the periods beginning November 1,
1998 and ending February 28, 1999 and examined and
certified by certified public accountants (the "Purchaser's
Financial Statements"), the Purchaser is not liable for any
federal, state, provincial or municipal or local taxes,
assessments or other imposts in respect of its income,
business or property or for the payment of any tax
instalment due in respect of its current taxation year and,
except as aforesaid, no such taxes, assessments, imposts
or penalties are required to be reserved against. The
Purchaser is not, except in respect of the current taxation
year, required to file or in default in filing any tax
returns or reports, including, without limitation, any
returns or reports covering any of the aforementioned
taxes. Federal income tax assessments have been issued to
the Purchaser covering all past periods through the fiscal
year ended October 31, 1998 (and such assessments, if any
amounts were owing in respect thereof, have been paid) and
only the fiscal years subsequent to such year remain open
for reassessment of additional taxes.
(i) Except as set out in the Purchaser's Disclosure Statement,
the Purchaser is not a party to or bound by any presently
existing oral or written contract or commitment which
obligates the Purchaser to make expenditures or exposes the
Purchaser to liabilities in excess of $10,000 or which
imposes obligations on the Purchaser for a period of 30 days
or more, including without limitation, liens, charges or
encumbrances, or equipment or other personal property leases
and agreements. The contracts and agreements listed in the
Purchaser's Disclosure Statement are all in full force and
effect unamended and no material default exists in respect
thereof on the part of any of the parties thereto.
Such contracts and agreements include all the presently
outstanding material contracts entered into by the
Purchaser in the course of carrying on its business and all
quotations, orders or tenders for such contracts which
remain open for acceptance. The Purchaser has the
capacity, including the necessary personnel, equipment and
supplies, to perform all its obligations thereunder.
(j) There are no written contracts of employment entered into
with any employees employed by the Purchaser.
(k) The Purchaser has not given or agreed to give, and is not a
party or bound by, any guarantee of indebtedness or other
obligations of third parties.
(l) Liabilities. There are no material liabilities of the
Purchaser, whether accrued, absolute, contingent or
otherwise, which arose or relate to any transaction of the
purchaser, its agents or servants occurring prior to the
Purchaser Financial Statement date, which are not disclosed
by or reflected in said financial statements, except
as disclosed in the Purchaser's Disclosure Statement.
There are no such liabilities of the Purchaser which
have arisen or relate to any transaction of the Purchaser,
its agents or servants, occurring since the last date
covered by the Purchaser's Financial Statements, other
than normal liabilities incurred in the normal conduct of
the business of the Purchaser, and none of which have a
material adverse effect on the business or financial
condition of the Purchaser, except as disclosed in the
Purchaser's Disclosure Statement. As of the date hereof,
there are no known circumstances, conditions, happenings,
events or arrangements, contractual or otherwise, which may
hereafter give rise to liabilities, except in the normal
course of business of the Purchaser, except as disclosed
in the Purchaser's Disclosure Statement.
4.02 Performance of This Agreement. The execution and performance of this
Agreement and the issuance of stock contemplated hereby have been duly and
properly authorized by the board of directors of Purchaser.
4.03 Financials.
(a) True copies of the Purchaser's Financial Statements as
described in sub- section 4.01(h) are attached to the Purchaser's Disclosure
Statement. The Purchaser's Financial Statements are true and correct in all
material respects and present an accurate and complete disclosure of the
financial condition and earnings of the Purchaser for the periods covered, in
accordance with generally accepted accounting principles applied on a consistent
basis.
(b) All accounts receivable, if any, (net of reserves for
doubtful accounts) of the Purchaser shown on the Purchaser's Financial
Statements, and as incurred in the normal course of business since that date,
are collectible in the normal course of business.
(c) The Purchaser has good and marketable title to all of its
assets, business and properties including, without limitation, all such
properties reflected in the Purchaser's Financial Statements, except as
disposed of in the normal course of business, free and clear of any mortgage,
lien, pledge, charge, claim or encumbrance, except as shown in the
Purchaser's Financial Statements, and, in the case of real properties, except
for rights-of-way and easements which do not adversely affect the use of such
property.
4.04 Absence of Change - Since the latest date covered by the Purchaser's
Financial Statements there has not been:
(a) any change in the condition or operations of the business,
assets or financial condition of the Purchaser other than changes in the
ordinary and normal course of business, none of which has been materially
adverse; or
(b) any damage, destruction or loss, labour trouble or other
event, development or condition of any character (whether or not covered by
insurance) materially and adversely affecting the business, assets, properties
or future prospects of the Purchaser.
4.05 Absence of Unusual Transactions - Since the latest date covered
by the Purchaser's Financial Statements the Purchaser has not:
(a) transferred, assigned, sold or otherwise disposed of any of
the assets shown in the Purchaser's Financial Statements or cancelled any
debts or claims except in each case in the ordinary and usual course of
business;
(b) incurred or assumed any obligation or liability (fixed or
contingent), except those listed in the Purchaser's Disclosure Statement and
except unsecured current obligations and liabilities incurred in the ordinary
and normal course of business;
(c) issued or sold any shares in its capital stock or any
warrants, bonds, debentures or other corporate securities of the Purchaser or
issued, granted or delivered any right, option or other commitment for the
issuance of any such or other securities (other than as contained in this
Agreement);
(d) discharged or satisfied any lien or encumbrance, or paid
any obligation or liability (fixed or contingent) other than current
liabilities included in the Purchaser's Financial Statements, current
liabilities incurred since the date thereof in the ordinary and normal course
of business and liabilities required to be satisfied hereunder prior to the
Closing Time;
(e) declared or made any payment of any dividend or other
distribution in respect of its capital or purchased or redeemed any of the
shares thereof or split, consolidated or reclassified any such shares in its
capital, except as set out in the Purchaser's Disclosure Statement;
(f) suffered an operating loss or any material extraordinary
loss, or waived any rights of substantial value, or entered into any material
commitment or transaction not in the ordinary and usual course of business;
(g) amended or changed or taken any action to amend or change
its charter or by-laws, except as set out in the Purchaser's Disclosure
Statement;
(h) made any general wage or salary increases in respect of
personnel which it employs;
(i) mortgaged, pledged, subjected to lien, granted a security
interest in or otherwise encumbered any of its assets or property, whether
tangible or intangible; or
(j) authorized or agreed or otherwise have become committed
to do any of the foregoing.
4.06 Accuracy of All Statements Made by Purchaser. No representation or
warranty by the Purchaser in this Agreement, nor any statement, certificate,
schedule or exhibit hereto furnished or to be furnished by the Purchaser
pursuant to this Agreement, nor any document or certificate delivered to the
Company or the Shareholders pursuant to this Agreement or in connection with
actions contemplated hereby, contains or shall contain any untrue statement
of material fact or omits or shall omit a material fact necessary to make the
statement contained therein not misleading to a prospective purchaser of the
shares of the Purchaser seeking full information as to the Purchaser and its
properties, business and affairs.
4.07 No Covenant as to Tax Consequences. It is expressly understood and
agreed that neither Purchaser nor its officers or agents has made any warranty
or agreement, expressed or implied, as to the tax consequences of the
transactions contemplated by this Agreement or the tax consequences of any
action pursuant to or growing out of this Agreement.
4.08 Securities Matters. The Purchaser is not aware of any formal or
informal investigation of the Purchaser or its securities by any governmental
or non-governmental regulatory agency.
ARTICLE V
ADDITIONAL COVENANTS
5.01 Access to Information. The Purchaser and the Company shall have
full access during normal business hours to all properties, books, records,
contracts and documents of each other, and shall furnish or cause to be
furnished to each other all information with respect to their respective
affairs and business as the other may reasonably request.
5.02 Actions Prior to Closing. From and after the date of this Agreement
and until the closing date, the Purchaser and the Company shall not
materially alter their respective business or affairs except as contemplated
by this Agreement.
5.03 Limitation of Subsequent Corporate Actions. It is expressly
understood and agreed that the Company, the Shareholders, and their
affiliates, will use their best efforts to ensure that for a period of
eighteen months:
A) there shall be no reverse split of the Company's common stock;
B) that the assets of the Company shall remain in the Company as
part of its business operations;
C) that the Company will not issue shares for any consideration
less than $2 per share.
ARTICLE VI
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
Each and every obligation of Purchaser to be performed on the closing
date shall be subject to the satisfaction of the Purchaser of the following
conditions (each of which is hereby acknowledged to be inserted for the
exclusive benefit of the Purchaser and may be waived by it in whole or in part):
6.01 Truth of Representations and Warranties. The representations and
warranties made by the Company and Shareholders in this Agreement or given on
its behalf hereunder shall be substantially accurate in all material respects
on and as of the closing date with the same effect as though such
representations and warranties had been made or given on and as of the
closing date.
6.02 Compliance with Covenants. Shareholders shall have performed and
complied with all obligations under this Agreement which are to be performed or
complied with by them prior to or on the closing date, including the delivery
of the closing documents specified hereafter.
6.03 Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced, against the Shareholders, the Company or any of the
affiliates, associates, officers or directors of any of them, seeking to
restrain, prevent or change the transactions contemplated hereby, or
questioning the validity or legality of any such transactions, or seeking
damages in connection with any of such transactions.
6.04 Receipt of Approvals, Etc. All approvals, consents and/or waivers
that are necessary to effect the transactions contemplated hereby shall have
been received.
6.05 No Material Adverse Change. As of the closing date there shall not
have occurred any material adverse change which materially impairs the ability
of the Company to conduct its business or the earning power thereof on the
same basis as in the past.
6.06 Accuracy of Financial Statement. Purchaser and its representatives
shall be satisfied as to the accuracy of all balance sheets, statements of
income and other financial statements of the Company furnished to Purchaser.
6.07 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as Purchaser may request shall have
been delivered to Purchaser. The Company and the Shareholders shall have
delivered certificates in such detail as Purchaser may request as to compliance
with the conditions set forth in this Article.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND SHAREHOLDERS
Each and every obligation of the Company and Shareholders to be performed
on the closing date shall be subject to the satisfaction prior thereto of the
following conditions (each of which is hereby acknowledged to be inserted for
the exclusive benefit of the Purchaser and may be waived by it in whole or
in part):
7.01 Truth of Representations and Warranties. The representations and
warranties of Purchaser and Dean H. Becker, contained in this Agreement shall
be true at and as of the closing date as though such representations and
warranties were made at and as of the transfer date.
7.02 Purchaser's Compliance with Covenants. Purchaser shall have
performed and complied with its obligations under this Agreement which are to
be performed or complied with by it prior to or on the closing date.
7.03 Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced against Purchaser, or any of the affiliates, associates,
officers or directors of the Purchaser seeking to restrain, prevent or change
the transactions contemplated hereby, or questioning the validity or legality
of any such transactions, or seeking damages in connection with any of such
transactions.
7.04 Receipt of Approvals, Etc. All approvals, consents and/or waivers
that are necessary to effect the transactions contemplated hereby shall have
been received.
7.05 No Material Adverse Change. As of the closing date there shall not
have occurred any material adverse change which materially impairs the ability
of the Purchaser to conduct its business or the earning power thereof on the
same basis as in the past.
7.06 Accuracy of Financial Statements. The Company and the Shareholders
shall be satisfied as to the accuracy of all balance sheets, statements of
income and other financial statements of the Purchaser furnished to the
Company herewith.
7.07 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as the Company may request shall have
been delivered to the Company. The Purchaser shall have delivered certificates
in such detail as the Shareholders may request as to compliance with the
conditions set forth in this Article.
7.08 Settlement of Claims: The Purchaser shall deliver to the Company
and the Shareholders, and the Company and the Shareholders shall be satisfied
with, the following:
(a) Documentation evidencing the settlement and release of the
Bureau of Land Management claim identified in the Purchaser's
Financial Statements;
(b) Documentation evidencing the settlement and release of the
directors' fees claim identified in the Purchaser's Financial
Statements;
(c) Documentation evidencing the Purchaser's discharge from
bankruptcy.
7.09 Legal Opinion: The Company and the Shareholders shall have
received an opinion dated the date of Closing, in form and substance
satisfactory to them, acting reasonably, from counsel for the Purchaser,
confirming the matters warranted in the first paragraph of Section 4.01 and
the following subsections of Section 4.01: (c), (d), (e), and (f), and in
Section 4.02 hereof and such other matters as the Vendor may reasonably request,
provided that, insofar as the opinions expressed with respect to such matters
are based on matters of fact, such opinions may be based upon certificates of
public officials and officers of the Purchaser and such other evidence as such
counsel may reasonably deem appropriate and, as to matters involving the laws
of jurisdictions in which such counsel is not qualified to practice, on
opinions of recognized local counsel in such jurisdictions;
ARTICLE VIII
INDEMNIFICATION
8.01 The Company shall indemnify Purchaser for any loss, cost, expense
or other damage suffered by Purchaser resulting from, arising out of, or
incurred with respect to the falsity or the breach of any representation,
warranty or covenant made by the Company herein, and any claims arising from
the operations of the Company prior to the closing date. Purchaser shall
indemnify and hold the Company and Shareholders harmless from and against
any loss, cost, expense or other damage (including, without limitation,
attorneys' fees and expenses) resulting from, arising out of, or incurred
with respect to, or alleged to result from, arise out of or have been incurred
with respect to, the falsity or the breach of any representation, covenant,
warranty or agreement made by Purchaser herein and any claims arising from
the operations of the Purchaser prior to the closing date.
ARTICLE IX
SECURITY ACT PROVISIONS
9.01 Restrictions on Disposition of Shares. Shareholders covenant and
warrant that the shares received are acquired for their own accounts and not
with the present view towards the distribution thereof and will not dispose of
such shares except (i) pursuant to an effective registration statement under
the Securities Act of 1933, as amended, or (ii) in any other transaction which,
in the opinion of counsel, acceptable to Purchaser, is exempt from
registration under the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. In order to
effectuate the covenants of this sub-section, an appropriate endorsement will
be placed upon each of the certificates of stock of the Purchaser at the time
of distribution of such shares pursuant to this Agreement, and stop transfer
instructions shall be placed with the transfer agent for the securities.
9.02 Notice of Limitation Upon Disposition. Each Shareholder is
aware that the shares distributed pursuant to this Agreement will not have
been registered pursuant to the Securities Act of 1933, as amended; and,
therefore, under current interpretations and applicable rules, the
shareholder will probably have to retain such shares for a period of at
least one year and at the expiration of such one year period sales may be
confined to brokerage transactions of limited amounts requiring certain
notification filings with the Securities and Exchange Commission and such
disposition may be available only if the Purchaser is current in its filings
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, or other public disclosure requirements, and the other
limitations imposed thereby on the disposition of shares of the Purchaser.
Additionally, "affiliates" owning shares will be subject to additional
restrictions limiting sales.
9.03 Limited Public Market for Common Shares. Each Shareholder
acknowledges that the common shares being issued pursuant to this agreement
currently has a limited public market in which the shares may be liquidated
and there is no assurance that such pubic market will grow or develop.
ARTICLE X
CLOSING
10.01 Time. The closing of this transaction ("closing") shall be
effective June 15, 1999, or such other date as the parties may agree in
writing. Such date is referred to in this agreement as the "closing date."
Provided, however, that additional documents necessary to complete the
transaction may be executed and provided subsequent to the closing date.
10.02 Documents To Be Delivered by Shareholders. At the closing
Shareholders shall deliver to Purchaser the following documents:
(a) Certificates or assignments for all Shares of ownership of the
Company in the manner and form required by sub-section 1.01 hereof.
(b) A certificate signed by the directors of the Company that the
representations and warranties made by the Company in this Agreement are true
and correct on and as of the closing date with the same effect as though such
representations and warranties had been made on or given on and as of the
closing date and that Shareholders have performed and complied with all of
their obligations under this Agreement which are to be performed or complied
with by or prior to or on the closing date.
(c) A copy of the Bylaws of the Company certified by its secretary
and a copy of the Articles of Incorporation of the Company certified by the
applicable governmental authority.
(d) Certificates or letters from Shareholders evidencing the
receipt of the Common and Preference shares of the Purchaser in accordance
section 1.01 of this Agreement and their understanding of the restrictions
thereunder.
(e) Such other documents of transfer, certificates of authority and
other documents as Purchaser may reasonably request.
10.03 Documents To Be Delivered by Purchaser. At the closing
Purchaser shall deliver to Shareholders the following documents:
(a) Certificates for the number of shares of stock of Purchaser as
determined in Article 1 hereof.
(b) A certified copy of the duly adopted resolutions of the Board of
Directors of Purchaser authorizing or ratifying the execution and performance
of this Agreement and authorizing or ratifying the acts of its officers and
employees in carrying out the terms and provisions hereof.
(c) A copy of the Bylaws of the Purchaser certified by its
current secretary and a copy of the Articles of Incorporation of the Purchaser
certified by the applicable governmental authority.
(d) A certificate signed by the current directors and officers
of the Purchaser that the representations and warranties made by the Purchaser
and Dean H. Becker in this Agreement are true and correct on and as of the
closing date with the same effect as though such representations and
warranties had been made on or given on and as of the closing date and that
the Purchaser has performed and complied with all of its obligations
under this Agreement which are to be performed or complied with by or prior to
or on the closing date.
(e) The opinion from counsel for the Purchaser referred to in
Section 7.09.
(f) Documents evidencing the resignations of the Purchaser's
current board of directors and the appointment of the Shareholders as the only
directors of the Purchaser as at the closing date.
(g) Such other documents of issuance, certificates of authority
and other documents as the Shareholders may reasonably request.
ARTICLE XI
TERMINATION AND ABANDONMENT
11.01 This Agreement may be terminated and the transaction provided
for by this Agreement may be abandoned without liability on the part of any
part to any other, at any time before the closing date:
(a) By mutual consent of Purchaser, the Company and the Shareholders;
(b) By Purchaser if any of the conditions provided for in Article 6
of this Agreement have not been met and have not been waived in writing by
Purchaser.
(c) By the Company if any of the conditions provided for in Article
7 of this Agreement have not been met and have not been waived in writing by
the Company.
In the event of termination and abandonment by any party as above
provided in this Article, written notice shall forthwith be given to the other
party, and each party shall pay its own expenses incident to preparation for
the consummation of this Agreement and the transactions contemplated hereunder.
ARTICLE XII
MISCELLANEOUS
12.01 Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given, if delivered
by hand or mailed, certified or registered mail with postage prepaid:
(a) If to The Company, Inc., or its Shareholders, to Michael Kang
at 815 Hornby Street, Suite 404, Vancouver, BC V6Z 2E6, or to such other
person and place as the Company and its Shareholders shall furnish to
Purchaser in writing.
(b) If to Purchaser, to Nathan W. Drage at 6975 South Union Park
Center, Suite 600, Salt Lake City, Utah 84047, or to such other person and
place as Purchaser shall furnish to Company in writing.
12.02 Announcements. Announcements concerning the transactions
provided for in this Agreement by either the Company or Purchaser shall be
subject to the approval of the other in all essential respects, except that
the approval of the Company shall not be required as to any statements and
other information which Purchaser may submit to its shareholders.
12.03 Default. Should any party to this Agreement default in any of
the covenants, conditions, or promises contained herein, the defaulting party
shall pay all costs and expenses, including a reasonable attorney's fee, which
may arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by the statutes of the State of Utah, United States of
America.
12.04 Assignment. This Agreement may not be assigned in whole or in
part by the parties hereto without the prior written consent of the other
party or parties, which consent shall not be unreasonably withheld.
12.05 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their successors and
assigns.
12.06 Holidays. If any obligation or act required to be performed
hereunder shall fall due on a Saturday, Sunday or other day which is a legal
holiday established by the State of Utah, such obligation or act may be
performed on the next succeeding business day with the same effect as if it
had been performed upon the day appointed.
12.07 Computation of Time. The time in which any obligation or act
provided by this Agreement is to be performed is computed by excluding the
first day and including the last, unless the last day is a holiday, in which
event such day shall also be excluded.
12.08 Governing Law and Venue. This Agreement shall be governed by and
interpreted pursuant to the laws of the Sate of Utah. Any action to enforce
the provisions of this Agreement shall be brought in a court of competent
jurisdiction within the State of Utah and in no other place.
12.09 Partial Invalidity. If any term, covenant, condition or
provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Agreement or application of such term or provision to persons or
circumstances other than those as to which it is held to be invalid or
unenforceable shall not be affected thereby and each term, covenant, condition
or provision of this Agreement shall be valid and shall be enforceable to the
fullest extent permitted by law.
12.10 No Other Agreements. This Agreement constitutes the entire
Agreement between the parties and there are and will be no oral
representations which will be binding upon any of the parties hereto.
12.11 Rights are Cumulative. The rights and remedies granted
hereunder shall be in addition to and cumulative of any other rights or
remedies provided under the laws of the State of Utah.
12.12 Waiver. No delay or failure in the exercise of any power or
right shall operate as a waiver thereof or as an acquiescence in default. No
single or partial exercise of any power or right hereunder shall preclude any
other or further exercise thereof or the exercise of any other power or right.
12.13 Survival. All representations, warranties, covenants and
agreements herein contained on the part of each of the parties hereto shall
survive the closing date, the execution and delivery hereunder of share or
security transfer instruments or other documents of title and the payment of
the consideration therefor, provided that such representations and
warranties, except with respect to tax matters (which shall continue
without limitation), shall only survive for a period of five years from the
closing date after which time, if no claim shall, prior to the expiry of the
said five-year-period, have been made hereunder against a party hereto with
respect to any incorrectness in or breach of any representation or warranty
made herein by such party, such party shall have no further liability
hereunder with respect to such representation or warranty.
12.14 Further Action. The parties hereto agree to execute and
deliver such additional documents and to take such other and further action as
may be required to carry out fully the transaction(s) contemplated herein.
12.15 Amendment. This Agreement or any provision hereof may not be
changed, waived, terminated or discharged except by means of a written
supplemental instrument signed by the party or parties against whom
enforcement of the change, waiver, termination, or discharge is sought.
12.16 Headings. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
12.17 Counterparts. This agreement may be executed in two or more
partially or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument, provided that Purchaser shall have
no obligations hereunder until all Shareholders have become signatories hereto.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Acquisition
Agreement effective the 16th day of June, 1999.
PURCHASER: SYSTEMS ASSURANCE CORPORATION
By /s/ Dean H. Becker
Dean H. Becker, President
COMPANY: DIGITAL COMMERCE INTERNATIONAL, INC.
By /s/ Michael Kang
Michael Kang, President
/s/ Dean H. Becker
DEAN H. BECKER (IN HIS PERSONAL CAPACITY)
SHAREHOLDERS:
/s/ Michael Kang /s/ Jack Combs
Michael Kang Jack Combs
