SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
May 18, 1999
Date of Report
(Date of Earliest Event Reported)
CENTRAXX, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 33-3358-NY 88-0224219
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
2700 Argentia Road, Suite #1000
Mississauga, Ontario Canada L5N 5V4
(Address of Principal Executive Offices)
(905) 826-9988
Registrant's Telephone Number
Composite Design, Inc.
9005 Cobble Canyon Lane
Sandy, Utah 84093
(Former Address of Principal Executive Offices)
Item 1. Changes in Control of Registrant.
(a) On May 18, 1999, the Registrant, Centraxx Corp., a corporation
organized under the laws of the Province of Ontario, Canada ("Centraxx
Ontario"), and the stockholders of Centraxx Ontario (the "Centraxx Ontario
Stockholders"), executed a Share Sell Agreement (the "Centraxx Ontario
Agreement"), whereby the Registrant acquired 100% of the outstanding
securities of Centraxx Ontario, and Centraxx Ontario became a wholly-owned
subsidiary of the Registrant.
The transaction contemplated by the Centraxx Ontario Agreement closed on
May 18, 1999, constituted a "reverse" acquisition, and for accounting purposes
was treated as a purchase (the "Centraxx Transaction").
The Centraxx Ontario Agreement was adopted, ratified and approved by the
Board of Directors of the Registrant by unanimous written consent in
accordance with its Bylaws and the Nevada Revised Statutes.
The former principal stockholders of the Registrant and their percentage
of ownership of the outstanding voting securities of the Registrant prior to
the closing of the Centraxx Transaction were: David C. Merrell, President and
Director, owned 800,000 pre-split shares of the Registrant's common stock
(79.5%); Corie Merrell, Secretary/Treasurer and Director (and wife of David C.
Merrell), owned 50,000 pre-split shares of the Registrant's common stock
(4.6%).
The number of issued and outstanding shares of the Registrant,
immediately preceding the closing of the Centraxx Transaction was 1,069,020.
In connection with the Centraxx Ontario Agreement, the capital stock of the
Registrant was the subject of a forward split on a basis of 2.5-for-one,
resulting in 2,672,550 shares of the Registrant then being issued and
outstanding immediately prior to the closing of the transaction contemplated
by the Centraxx Transaction. The Registrant issued 15,234,415 restricted
shares of common stock (on a post-split basis) in exchange for all of the
outstanding securities of Centraxx Ontario, resulting in an aggregate of
17,906,965 outstanding shares.
The source of the consideration used by the Centraxx Ontario
Stockholders to acquire their respective interests in the Registrant was the
exchange of 100% of the outstanding common stock of Centraxx Ontario.
The basis of the "control" by the Centraxx Ontario Stockholders is stock
ownership or positions held. Pursuant to the Centraxx Ontario Agreement, at
or about the closing of the Centraxx Transaction, the then current members of
the Board of Directors and executive officers of the Registrant resigned, in
seriatim, and the persons named in paragraph (b) below were designated to
serve as directors and executive officers of the Registrant, until the next
respective annual meetings of the stockholders and directors of the Registrant
or until their prior resignations or terminations.
(b) To the knowledge of management and based upon a review of the
stock ledger maintained by the Registrant's transfer agent and registrar, the
following table sets forth the beneficial ownership of persons who own more
than five percent of the Registrant's common stock as of the date hereof, and
the share holdings of the post-Centraxx Transaction directors and executive
officers.
Name Shares Owned %
Heartland Trust 3,000,000 16.75%
Champion Business Services, Inc. 2,200,000 12.29%
Frankopan & Co., Inc. 1,995,212(1)(3)(4) 11.14%
Worldwide Consulting Services, Inc. 2,200,000 12.29%
Paltrac International Corporation 2,000,000(2) 11.17%
Michael Ivezic 20,000(4) .1117%
Stewart Somers 20,000(4)(5) .1117%
David Pamenter -0- -0-
Brian De Champlain 93,000(2)(4)(6) .5193%
Frank Gerlach 130,800(2)(4)(7) .7304%
Michael St. Eve 11,650(4)(8) .0650%
Tony Monga -0- -0-
Diane Wigley -0- -0-
Officers and Directors
as a group (8 persons)
(1) Is controlled by Michael Ivezic.
(2) 100,000 shares are held in the name of Paltrac International
Corporation. Brian De Champlain and Frank Gerlach each own 50% of
Paltrac International Corporation; Paltrac International
Corporation has 1,900,000 shares held in trust of which Appollo
Systems Ltd owns 950,000 shares and High Tech Systems Limited, LTD
owns 950,000.
(3) 15,000 shares are held in the name of Frankopan & Co., Inc. which is
controlled by Michael Ivezic and "affiliate"; 175,450 shares are
held by "affiliates" see note (4); and 1,804,762 shares are held
in trust for other non-affiliates.
(4) Held in trust by Frankopan for these "affiliates."
(5) Does not include 66,667 shares that may be acquired pursuant to
vested options. See Schedule A to the Share Exchange Agreement.
Additional options have been vested since the completion of the
Plan.
(6) Does not include 95,205 shares that may be acquired pursuant to
vested options. See Schedule A to the Share Exchange Agreement.
Additional options have been vested since the completion of the
Plan. Does include the 50,000 shares from note (2) above.
(7) Does not include 95,205 shares that may be acquired pursuant to
vested options. See Schedule A to the Share Exchange Agreement.
Additional options have been vested since the completion of the
Plan. Does include the 50,000 shares from note (2) above.
(8) Does not include 44,521 shares that may be acquired pursuant to
vested options. See Schedule A to the Share Exchange Agreement.
Item 2. Acquisition or Disposition of Assets.
See Item 1 of this Report. The consideration exchanged under the
Centraxx Ontario Agreement was negotiated at "arms length" between the
stockholders and directors of the Registrant and Centraxx Ontario and the
Centraxx Ontario Stockholders. The members of the Board of Directors of the
Registrant examined criteria used in similar proposals involving the
Registrant in the past, including the relative value of the assets of the
Registrant; its present and past business operations; the possible future
potential of Centraxx Ontario; and the potential benefit to the stockholders
of the Registrant. The members of the Board of Directors determined in good
faith that the consideration for the exchange was fair and reasonable, under
these circumstances.
No director, executive officer or person who may be deemed to be an
"affiliate" of the Registrant had any direct or indirect interest in Centraxx
Ontario prior to the closing of the Centraxx Transaction.
DESCRIPTION OF THE BUSINESS
Centraxx
Centraxx is a company that is developing high-speed, two-way wireless data
communications, with a specialization in location technologies. The Company
is the first in the industry to have developed a low cost, tracking, locating
and monitoring system utilizing revolutionary UNI-POINT (TM) technology with
numerous network-based and stand-alone applications. The UNI-POINT technology
is proprietary and United States and Spain patents are pending. There can be
no assurances that any patents will issue or that, if issued, that the
Registrant will have sufficient resources to protect its intellectual property
rights.
The Centraxx System utilizes radio frequency in a unique configuration of
voice, data and radar communication to track, locate, contain or monitor
vehicles, cargo, and equipment. The hardware consists of a receiver or Base
Station and an Electronic Location Tag ("Tag"). The object to be secured is
tagged and the Base Station monitors the relative position of the Tag. A
network of Base Stations enables the Centraxx System to monitor the location
of the tagged object over the network coverage area. This process occurs on a
real-time basis utilizing UNI-POINT tracking. UNI-POINT or single-point
tracking represents a breakthrough in the industry as it is more reliable and
substantially more cost effective than alternative conventional triangulation
systems such as Global Positioning Satellite Systems. Market research
indicates that the Centraxx product is significantly less expensive than its
nearest competitor in the industry while offering a more reliable and accurate
system.
Although management believes that there may be numerous potential applications
for Centraxx's technology, Centraxx intends initially to focus its efforts on
the stolen vehicle tracking and recovery industry by introducing a more
accurate, reliable and affordable product utilizing the UNI-POINT technology.
The Company is currently in advanced negotiations with certain major insurance
companies to form for this market. There can be no assurances that any
agreements will obtain or that if they obtain that they will provide material
financial benefit to the Registrant. This first application will be
introduced initially in the Southern Ontario market and then expanded into
Southern California and South Florida.
Properties
The Company's research and development group is housed in an 18,000 square
feet facility; 4,000 square feet are offices, 5,000 square feet is air-
conditioned lab space and 9,000 square feet is warehouse.
The lease ends in August 1999, and Centraxx currently expects that it will
move to a new 40,000 square feet facility that would accommodate
administration, sales, marketing, research and development and some
manufacturing/assembly space, as well as warehousing.
Centraxx also leases sales offices in Irvine California.
DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES
The following individuals are the directors, nominees to become
directors, executive officers and significant employees of the Registrant.
Name Title/Position Age
Brian J. DeChamplain Executive Vice President, Chief
Technology Officer, Director 44
Frank Gerlach Vice President, Chief Engineer and
Director 39
Michael Ivezic Acting President, Director 39
Tony Monga Director 41
David Pamenter Secretary 51
Stewart Somers Executive Vice President and 57
Chief Financial Officer
Michael St. Eve Vice President Sales 47
Diane Wigley Director 55
RESUMES
Brian J. De Champlain, Executive Vice President, Chief Technology Officer,
Director. Mr. De Champlain, a co-founder of Centraxx, brings 16 years
entrepreneurial management and RF electronic design experience in the
communications, cable, TV, broadcast and consumer product industries. From
1996 to 1997, Mr. De Champlain was President of Paltrac International
Corporation. Prior to 1996, Mr. De Champlain was President of Conquest Design
Ltd.
Frank Gerlach, Vice President, Chief Engineer and Director. Mr. Gerlach, a
co-founder of Centraxx. Between 1986 and 1996, Mr. Gerlach was employed by
Spar Aerospace as a Senior Project Engineer responsible for projects including
the redesign of the Canada Arm and integration of a fiber optic based naval
communications systems. From 1996 to 1997 Mr. Gerlach was Vice President of
Paltrac International Corporation.
Michael Ivezic, Acting President, director. From 1997 to present Mr. Ivezic
has been the Managing Director of Frankopan & Co, Inc. Between 1994 and 1997
he was President and CEO of Luminart Inc. Mr. Ivezic is providing overall
direction to Centraxx during its startup and development phase. Mr. Ivezic
has 15 years experience in managing the startup and growth phases of several
companies. He has extensive expertise in identifying high potential business
opportunities and raising the necessary working capital for these ventures.
Tony Monga, Director. From 1994 to present Mr. Monga, as Managing Director
has been directing the operations of MVS Mode Inc., a company engaged in
international trade liaison and consulting. Mr. Monga brings 20 years of
experience as a management and financial consultant for several large
international companies dealing and negotiating with international joint
ventures, government corporation or state authorities in different cultural
environments. His expertise will be vital as Centraxx crosses political
borders and establishes itself as global power.
David Pamenter, Secretary. Mr. Pamenter, a lawyer, has been a partner with
Gowling, Strathy & Henderson from 1997 to present. Prior to this, he was a
partner with Lang, Michener.
Stewart Somers, Executive Vice President and Chief Financial Officer. Mr.
Somers joined Centraxx in October, 1998. Prior to joining Centraxx, Mr.
Somers was President of S. D. Somers & Associates, Inc., a financial and
marketing consulting firm in business from 1976. Mr. Somers still holds this
position with S. D Somers & Associates, Inc. Between 1995 to 1996, Mr. Somers
was Vice President and CFO of Zenon Environmental Inc. From 1996 to 1997 he
was employed as Vice President and CFO of American Sensors Inc.
Michael St. Eve, Vice President. Mr. St. Eve brings 26 years of experience in
the radio communications industry. From 1995 to 1997 Mr. St. Eve was
President of Midland International Corp. and there after was an independent
consultant until he joined Centraxx in August 1998. Between 1990 and 1996 he
was Executive Vice President of Simmonds Capital Limited. His substantial
expertise in the management of the sales and distribution process for various
wireless products will ensure effective penetration of the Centraxx product in
the market place.
Diane Wigley, Director. Ms. Wigley has been a principal and Secretary
Treasurer of Consolidated Insurance Brokers Limited since 1970. She was
President of the Insurance Brokers of Metropolitan Toronto in 1992 and was the
first female President, in 1996, of the Insurance Brokers Association of
Ontario.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
None; not applicable.
Item 5. Other Events.
On May 18, 1999, the Registrant filed a Certificate of Amendment to
its Articles of Incorporation changing its name to "Centraxx, Inc."
Item 6. Resignations of Registrant's Directors.
See Item 1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Audited financial statements of Centraxx Ontario are currently being
prepared, and will be filed with the Securities and Exchange
Commission as an amendment to this Report on or about August 1,
1999, which is 75 days after the completion of the Centraxx Ontario
Agreement on May 18, 1999.
(b) Pro Forma Financial Information.
Pro Forma financial statements, taking into account the completion
of the Centraxx Ontario Agreement, are being prepared and will be
filed on or before August 1, 1999, which is 75 days after the
completion of the Centraxx Ontario Agreement on May 18, 1999.
(c) Exhibits.
3.1 Certificate of Amendment to the Articles of
Incorporation of the Registrant filed with the
Secretary of State of Nevada on May 18, 1999.
3.2 New By-laws.
10 Share Exchange Agreement between the Registrant,
Centraxx Ontario and the Centraxx Ontario Stockholders
dated May 18, 1999.
Exhibit A-List of Centraxx Ontario Awarded
Options.
Exhibit B-The Registrant's financials
statements for the year ended December 31,
1998.*
Exhibit C-Centraxx Ontario's unaudited
Balance Sheet (Canadian Dollars)for the
years ended December 31, 1998 and 1997, the
period ended March 31, 1999.
99 Press Release dated May 25, 1999.
* Incorporated by reference from the Registrant's 10-KSB
Annual Report for the year ended December 31, 1999.
Item 8. Change in Fiscal Year.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
CENTRAXX, INC.
Date: 6/17/99 By:/s/Mike Ivezic
--------- --------------------------------------
Mike Ivezic
Acting President, Director
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
COMPOSITE DESIGN, INC.
We, the undersigned, David C. Merrell, President, and Corie
Merrell, Secretary, of Composite Design, Inc., a Nevada corporation (the
"Corporation"), do hereby certify:
I
Pursuant to Section 78.390 of the Nevada Revised Statutes, the
Articles of Incorporation of the Corporation shall be amended as follows:
The name of the Corporation is "Centraxx, Inc."
II
The foregoing amendment was adopted by Unanimous Consent of the
Board of Directors pursuant to Section 78.315 of the Nevada Revised Statutes,
and by Consent of the Majority Stockholders pursuant to Section 78.320 of the
Nevada Revised Statutes.
Pursuant to the resolutions adopted by the Board of Directors and
the Majority Stockholders as referenced in Paragraph II above, the 1,069,020
outstanding shares of the Corporation's $0.001 par value common stock were
forward split on a basis of 2.5 for one, while retaining the current
authorized shares and with appropriate adjustments to the capital accounts of
the Corporation, effective on filing with the Secretary of State of Nevada,
and with all fractional shares being rounded up to the nearest whole share.
IV
The number of shares entitled to vote on the amendments was
1,069,020.
V
The number of shares voted in favor of the amendments was 850,000,
with none opposing and none abstaining.
/s/David C. Merrell
----------------------------------
David C. Merrell, President
/s/Corie Merrell
----------------------------------
Corie Merrell, Secretary
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 18th day of May, 1999, personally appeared before me, a
Notary Public, David C. Merrell, who acknowledged that he is the President of
Composite Design, Inc., and that he is authorized to and did execute the above
instrument.
/s/Sheryl A. Ross
----------------------------------
NOTARY PUBLIC
(Notary Seal)
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 18th day of May, 1999, personally appeared before me, a
Notary Public, Corie Merrell, who acknowledged that she is the Secretary of
Composite Design, Inc., and that she is authorized to and did execute the
above instrument.
/s/Sheryl A. Ross
----------------------------------
NOTARY PUBLIC
(Notary Seal)
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made the 18th day of May, 1999
AMONG:
CENTRAXX CORP. a corporation
duly formed under the laws of
the Province of Ontario.
("Canada")
-and-
COMPOSITE DESIGN, INC. a
corporation duly formed under
the laws of the State of
Nevada. ("Nevada")
and
Heartland Trust, Champion
Business Services Inc.,
Worldwide Consulting Services
Inc., Paltrac International
Corporation and Frankopan &
Co. Inc., the record owners of
certain shares of capital stock
of Canada being hereinafter
referred to as the (Major
Shareholders) (the Major
Shareholders are hereinafter
sometimes collectively referred
to as the "Canada
Shareholders")
BACKGROUND
(1) Nevada desires to purchase from the Canada Shareholders and the Canada
Shareholders desire to sell to Nevada all their shares in the capital of
Canada ("the Canada Shares").
(2) Nevada and the Canada Shareholders desire to effect the purchase and sale
of the Canada Shares pursuant to a share exchange in accordance with the terms
and conditions of this Agreement.
FOR GOOD AND VALUABLE CONSIDERATION (the receipt and sufficiency of which is
hereby acknowledged by the Parties), the Parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions. In this Agreement, unless the context otherwise requires,
the terms set forth in Schedule 1.1 shall have the meanings set forth
therein.
1.2 Entire Agreement. This Agreement, together with the agreements and other
documents to be delivered pursuant to this Agreement, constitute the entire
agreement between the Parties pertaining to the Share Exchange and supersedes
all prior agreements, understandings, negotiations and discussions, whether
oral or written and there are no warranties, representations and other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth in this Agreement or any other agreement or
document to be delivered pursuant to this Agreement.
1.3 Extended Meanings. In this Agreement, words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders.
1.4 Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of
this Agreement.
1.5 References. References to an article, section, subsection, paragraph,
schedule or exhibit shall be construed as references to an article, section,
subsection, paragraph of or schedule or exhibit to this Agreement, unless the
context otherwise requires.
1.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada and the laws of United States
of America applicable therein, save and except for the conflict of laws rules
which might refer the matters to the laws of a different jurisdiction.
1.7 Currency. Unless otherwise specified, the word "dollar" and "$" sign
refer to Canadian currency.
1.8 Schedules. The following is a list of schedules attached to and
incorporated into this Agreement by reference and deemed to be a part of this
Agreement: "A" , "B" and "C"
ARTICLE II
SHARE EXCHANGE
2.1 Agreement to Purchase. Upon the terms and subject to the conditions
contained in this Agreement, the Canada Shareholders shall sell and Nevada
shall purchase, as of and with effect from the opening of business on the
Closing Date, the Canada Shares.
2.2 Share Exchange. The purchase and sale of the Canada Shares shall be
effected by the issue of up to 15,234,415 common shares, which are restricted
securities, of Nevada to the Canada Shareholders, on a share-for-share basis
(if all such Canada Shares are tendered), pursuant to the exemption from
registration and prospectus delivery requirements, as contained in Sections 3b
and 4(2) of the US Securities Act of 1933 as amended, including the rules and
regulations promulgated thereunder.
Name of Canada Shareholder Canada Shares held Shares of Nevada to be
issued on Share Exchange
Heartland Trust 3,000,000 3,000,000
Frankopan & Co. in trust 1,613,800 1,613,800
Frankopan & Co. Inc. in trust 4,220,615 4,220,615
Paltrac International
Corporation in trust 2,000,000 2,000,000
Champion Business Services Inc. 2,200,000 2,200,000
Worldwide Consulting Services Inc. 2,200,000 2,200,000
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MAJOR SHAREHOLDERS
3.1 Representations and Warranties of the Major Shareholders.
Each of the Major Shareholders jointly and severally (except as the
context otherwise requires) represents and warrants to Nevada as
follows and acknowledges that Nevada is relying on these
representations and warranties in connection with the completion of
the Share Exchange and the transactions contemplated herein:
(i) No S-8 Registration Statement. Without prior consent of the current
members of the Board of Directors of Nevada, no registration
statements on Form S-8 of the Securities and Exchange
Commission will be filed on Nevada's behalf, following the
Closing, for a period of 12 months, other than Employee Stock
Option Plan (ESOP) as per schedule "A", attached.
(ii)Limitation on Reverse Splits. Without the prior written consent of
the current members of the Board of Directors of Nevada, no
reverse split of the outstanding voting securities of Nevada
shall be effected following the Closing for a period of 12
months.
(a) Capacity to Enter Agreement. Each of the Major
Shareholders, represents and warrants that it has have
full power, right and authority to enter into this
Agreement and to perform its obligations under it.
Canada has full corporate power and authority to enter
into this Agreement and to perform its obligations under
it.
(b) Binding Obligation. Each of the Major Shareholders
represents and warrants that it has duly executed and
delivered this Agreement, and that Canada has duly
executed and delivered this Agreement and that it
constitutes a legal, valid and binding obligation of each
of them, except that:
(i) enforceability may be limited by bankruptcy,
insolvency and other laws affecting the enforcement
of creditors' rights generally; and
(ii) equitable remedies, including the remedies of
specific performance and injunctive relief, are
available only in the discretion of a court of
competent jurisdiction.
(c) Absence of Conflict. None of the Major Shareholders, nor
Canada is a party to, bound or affected by any agreement
which would be violated, breached or terminated by, or
which would result in the creation or imposition of any
Encumbrance upon any of the Canada Shares to be sold by
any of them as a consequence of the execution and
delivery of this Agreement or the consummation of the
transactions contemplated in this Agreement save and
except for the Shareholders Agreement.
(d) Title to Canada Shares. Each of the Major Shareholders
represents and warrants that it is the legal and (other
than Frankopan & Co. Inc. and Paltrac International Inc.
which holds as trustee) beneficial owners of those Canada
Shares registered in their name, with good and marketable
title, free and clear of any Encumbrances.
(e) No Bankruptcy. No proceedings have been taken or
authorised by any Major Shareholder, Canada or by any
other person in respect of the bankruptcy, insolvency,
liquidation, dissolution or winding up, as applicable, of
any Major Shareholder or Canada.
(f) No Option. No Person, other than Nevada under this
Agreement, has any agreement, option, understanding or
commitment or any right or privilege capable of becoming
an agreement for the purchase of any of the Canada Shares
owned by the Major Shareholders.
(g) Due Incorporation. Canada is a corporation duly
incorporated and validly existing under the laws of
Ontario.
(h) Private Company. Canada is a "private company" within
the meaning of the Securities Act (Ontario).
(i) Non-Violation. The entering into of this Agreement and
the consummation of transactions contemplated herein do
not and will not conflict with, or result in a breach of,
or constitute a default under the terms or conditions of
any constating document of Canada, any by-laws, any court
or administrative order or process, any agreement or
instrument to which Canada or any of the Major
Shareholders is a party or by which any of them are
bound, other than the Shareholders Agreement.
(j) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated under it have been duly authorised by all
necessary corporate action on the part of Canada and
Major Shareholders..
(k) Approvals. Except for the approval of the parties hereto
for the transactions contemplated herein, no governmental
or regulatory authorization, approval, order, consent or
filing is required on the part of Canada or any of the
Major Shareholders, in connection with the execution,
delivery and performance of this Agreement and the
performance of their respective obligations under this
Agreement.
(l) Authorized and Issued Capital. The authorized capital of
Canada consists of an unlimited number of common shares,
of which 15,234,415 common shares are currently issued
and outstanding. Such common shares are duly and validly
issued and outstanding as fully paid and non-assessable
shares of Canada. There is no option or other right of
any kind in existence, authorized or agreed to which
could result in any further shares or other securities of
Canada being allotted or issued or becoming outstanding,
other than the employee options which are outlined in
Schedule "A"
(m) Canada's Capacity and Power. Canada has full corporate
right, power and authority to own or lease its assets as
now owned or leased and to carry on the Canada Business.
(n) Business. The only business carried on by Canada is the
Canada Business.
(o) No Guarantees etc. Canada is not a party to or bound by
any agreement of guarantee, indemnification, assumption
or endorsement or any like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of
any Person.
(p) Tax Matters Regarding Canada. There are no agreements,
waivers or other arrangements with any tax authority
providing for an extension of time with respect to the
filing of any return, election or designation against
Canada other than the ones disclosed in the financial
statements
(q) Shareholders' Agreements etc. There are no shareholders'
agreements, voting trusts or other similar agreements
with respect to the ownership or voting of any of the
Canada Shares other than the Shareholders Agreement.
(r) Litigation. There are no judgements, decrees, injunctions,
rulings or orders of any court. Governmental Authority or
arbitration, tribunal or any actions, suits, grievances
or proceedings (whether or not on behalf of Canada) and,
after investigation and to the best of knowledge of the
Major Shareholders and Canada, pending or threatened or
involving Canada, or the Canada Business which may
materially adversely affect the Canada Business or
Canada's assets.
(s) Ownership of Assets. Canada is the owner with a good and
marketable title, free and clear of all liens, charges,
encumbrances and any other rights of others, of all
assets used in the conduct of the Canada Business, other
than operating leases of certain fixed assets.
(t) Absence of Options etc. There is no agreement, option,
understanding or commitment, or any right or privilege
capable of becoming an agreement, for the purchase from
Canada of its business or any of its assets other than in
the usual and ordinary course of business.
(u) Employee Claims. Except as accrued in the Canada
financial statements, no employee, consultant or agent
has made or after investigation and to the best of the
knowledge of the Major Shareholders and Canada, has any
basis for making any claim (whether under law, any
employment or consulting agreement, or otherwise) on
account of or for (1) overtime pay, other than overtime
for the current payroll period, (2) wages or salary for
any period other than the current payroll period, (3)
vacation, time off, sick time or pay in lieu of any of
the foregoing, other than that earned in respect of the
current fiscal period, or (4) any violation of any
statute, ordinance or regulation relating to minimum
wages or the maximum hours of work.
(v) Compliance with Laws. To the best of the knowledge of the
Major Shareholders Canada is conducting its business in
material compliance with all applicable rules and
regulations of Canada and of the Province of Ontario and
all municipalities thereof in which its business is
carried on and is duly licensed, registered or qualified
in the Province of Ontario and all municipalities thereof
in which Canada carries on its business to enable its
business to be carried on as now conducted and its assets
to be owned, leased and operated, and all such licenses,
registrations and qualifications are valid and subsisting
and in good standing and none of the same contains any
term, provision, condition or limitation which has or may
have a material adverse effect on the operation of its
business or which may be affected by the completion of
the transactions contemplated hereby.
(w) Canada Financial Statements. Canada Financial Statements
consisting of: (1) the Balance Sheet as at March 31,1999,
(unaudited) and; (2) the Statement of Changes in
Financial position for the three month ending March 31,
1999, (unaudited) attached hereto as Schedule "C"
(A) have been prepared in accordance with generally
accepted auditing standards applied on a basis
consistent with those of preceding fiscal periods;
and
(B) present fully, fairly and correctly: (i) with respect to
the Canada Financial Statements referred to in
(1)and (2) above, the assets, liabilities (whether
accrued, absolute contingent or otherwise) and
financial condition of Canada as at the date
thereof; and (ii) with respect to all of the Canada
Financial Statements, the results of its operations
and the changes in its financial position for the
periods then ended.
ARTICLE IV DELETED INTENTIONALLY
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF NEVADA
5.1 Representations and Warranties of Nevada. Nevada hereby
represents and warrants to the Canada Shareholders as follows and
acknowledges that the Canada Shareholders are relying on these
representations and warranties in connection with the Share
Exchange and the transactions contemplated herein:
(a) Due Incorporation. Nevada is a corporation duly
incorporated and validly existing under the laws of the
State of Nevada.
(b) Capacity to Enter Agreement. Nevada has full power,
right and authority to enter into this Agreement and to
perform the obligations under it.
(c) Due Corporate Authorization. The execution and delivery
of this Agreement and the consummation of the
transactions contemplated under it have been duly
authorized by all necessary corporate action on the part
of Nevada.
(d) Binding Obligation. This Agreement has been duly
executed and delivered by Nevada and constitutes a legal,
valid and binding obligation of Nevada, except that:
(i) enforceability may be limited by bankruptcy,
insolvency and other laws affecting the enforcement
of creditors' rights generally; and
(ii) equitable remedies, including the remedies of
specific performance and injunctive relief, are
available only in the discretion of a court of
competent jurisdiction.
(e) Absence of Conflict. Nevada is not a party to, bound or
affected by or subject to any agreement which would be
violated, breached or terminated by, or which would
result in the creation or imposition of any Encumbrance
upon any of the Nevada Shares as a consequence of the
execution and delivery of this Agreement or the
consummation of the transactions contemplated in this
Agreement.
(f) Approvals. Except for the approval of the parties hereto
for the transactions contemplated herein, no governmental
or regulatory authorization, approval, order, consent or
filing is required on the part of Nevada, in connection
with the execution, delivery and performance of this
Agreement and the performance of Nevada's obligations
under this Agreement.
(g) No Bankruptcy. No proceedings have been taken, are
pending or authorized by Nevada or by any other person in
respect of the bankruptcy, insolvency, liquidation,
dissolution or winding up of Nevada.
(h) Authorized and Issued Capital. On the date of this
Agreement, the authorized capital of Nevada consists of
a 200,000,000 common shares, of which 2,672,550 are
validly issued and outstanding as fully paid and non-
assessable. Other than this Agreement, there is no option
or other right of any kind in existence, authorised or
agreed to which could result in any further shares or
other securities of Nevada being allotted or issued or
becoming outstanding.
(i) No Subsidiaries. Nevada does not own any shares in or
securities of any corporate body and is not a partner of
any partnerships or a member of any joint ventures.
(j) Public Company Status. None of the securities (whether
debt or equity) of Nevada is subject to any reporting
obligations pursuant to the Securities and Exchange Act
of 1934, as amended.
(k) Nevada Financial Statements. Nevada Financial Statements
consisting of: (1) the Balance Sheets as at December
31,1998, (audited) and; (2) the Statements of Operations
and Deficit for period ending December 31, 1998,
(audited) and
(l) (3) the Statements of Changes in the Financial Position for
the period ending December 31, 1998 (audited), attached
hereto as Schedule "B"
(A) have been prepared in accordance with generally
accepted auditing standards applied on a basis
consistent with those of preceding fiscal periods;
and
(B) present fully, fairly and correctly: (i) with respect to
the Nevada Financial Statements referred to in (1),
(2) and (3) above, the assets, liabilities (whether
accrued, absolute contingent or otherwise) and
financial condition of Nevada as at the date
thereof; and (ii) with respect to all of the Nevada
Financial Statements, the results of its operations
and the changes in its financial position for the
periods then ended.
(m) Employees. No employee has made any claim or has any
basis for any action or proceeding against Nevada arising
out of any statute, ordinance or regulation relating to
discrimination in employment or employment practices,
harassment, occupational health and safety standards or
worker's compensation. No employee, consultant or agent
has made or has any basis for making any claim (whether
under law, any employment or consulting agreement, or
otherwise) on account of or for (1) overtime pay, other
than overtime for the current payroll period, (2) wages
or salary for any period other than the current payroll
period, (3) vacation, time off, sick time or pay in lieu
of any of the foregoing, other than that earned in
respect of the current fiscal period, or (4) any
violation of any statute, ordinance or regulation
relating to minimum wages or the maximum hours of work.
(o) Litigation. There are no judgements, decrees,
injunctions, rulings or orders of any court, Governmental
Authority or arbitration, or any actions, suits,
grievances or proceedings (whether or not on behalf of
Nevada) involving Nevada its directors or to the
knowledge of Nevada or its directors pending or
threatened which may materially adversely affect Nevada's
assets.
(p) Absence of Material Changes.
(i) no changes have been made in the accounting methods, practices,
or policies followed by Nevada;
(ii) Nevada has not made or authorised any Capital
Expenditures;
(iii)Nevada has not increased, incurred or
guaranteed any material debt, obligation, or
liability (whether absolute or contingent and
whether or not currently due and payable) other
than current liabilities for trade or business
obligations incurred in the ordinary course of
business;
(iv) there has been no damage, destruction or loss, or
other event, development or condition of any
character (whether or not covered by insurance)
which adversely affects, or, may adversely affect,
the assets or prospects of Nevada;
(v) Nevada has not paid any amount or dividend,
declared any dividend or otherwise made any
distribution or other payment of any kind or nature
whatsoever to any Person; and
(vi) Nevada's business has been carried on in the
ordinary and customary course. Nevada has used its
best efforts to preserve the goodwill associated
with it and its assets, both tangible and
intangible.
(q) Compliance with Laws. Nevada is conducting its business
in material compliance with all applicable laws, rules
and regulations of the United States of America and of
the State of Nevada and all municipalities thereof in
which its business is carried on, is not in material
breach of any such laws, rules or regulations and is duly
licensed, registered or qualified in the State of Nevada
and all municipalities thereof in which Nevada carries on
its business to enable its business to be carried on as
now conducted and its assets to be owned, leased and
operated, and all such licenses, registrations and
qualifications are valid and subsisting and in good
standing and none of the same contains any term,
provision, condition or limitation which has or may have
a material adverse effect on the operation of its
business or which may be affected by the completion of
the transactions contemplated hereby.
(r) No Guarantees etc. Nevada is not a party to or bound by any
agreement of guarantee, indemnification, assumption or
endorsement or any like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of
any Person.
(s) Tax Matters Regarding Nevada.
(i) Nevada has made true and timely filings of all
federal, state and local tax returns respecting
taxes to which it is subject.
(ii) Subject to an alternative final determination at
the instance of applicable taxing authorities, the
tax liability of Nevada is as indicated in its tax
returns and Nevada has made timely payment of the
taxes (including interest and penalties thereon)
shown in those returns and any subsequent
assessments, reassessments or determinations
thereof.
(iii)Subject to an alternative final determination
at the instance of applicable taxing authorities,
Nevada has no liability, contingent or otherwise,
for any taxes except for taxes not now due and
payable with respect to ordinary operations of
Nevada during the current fiscal period. Nevada
will pay, in full, all instalments of taxes in
respect of the current fiscal period. Nevada has
adequate reserves for taxes payable for the current
period for which tax returns are not yet required
to be filed.
(iv) Nevada has paid all applicable property and
business taxes and has collected and remitted all
sales, use or consumption taxes. Nevada has
withheld and remitted, as required by law, all
payments made to non-residents and applicable
payroll taxes and deductions including without
limitation local state and Federal tax filings, and
any interest or penalties related thereto.
(v) There are no agreements, waivers or other
arrangements with any tax authority providing for
an extension of time with respect to the filing of
any return, election or designation by, or any
payment of any amount by or governmental charge
against Nevada with respect to the issuance of any
assessment or reassessment of any tax.
(t) Non-Violation. The entering into of this Agreement and
the consummation of transactions contemplated herein do
not and will not conflict with, or result in a breach of,
or constitute a default under the terms or conditions of
any constating document of Nevada, any by-laws, any court
or administrative order or process, any agreement or
instrument to which Nevada is a party or by which it is
bound.
(u) Benefits. Nevada does not have, and is not subject to
any present or future obligation or liability under, any
pension plan, deferred compensation plan, retirement
income plan, stock option or stock purchase plan, profit
sharing plan, bonus plan or policy, employee group
insurance plan, hospitalisation plan, disability plan or
other employee benefit plan, program, policy or practice,
formal or informal, with respect to any of its employees.
(v) Disclosure. The representations and warranties of Nevada
in this Agreement are true, complete and correct in all
material respects and do not contain any untrue or
misleading statement of a material fact.
ARTICLE VI
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
6.1 All representations and warranties contained in this Agreement
on the part of each of the Parties shall survive the Closing for a
period of eighteen (18) months from the Closing Date, after which
time, if no claim shall have been made against a Party with respect
to any incorrectness in or breach of any representation or
warranty, that Party shall have no further liability under this
Agreement with respect to the representation or warranty.
6.2 All statements contained in any certificate or other
instrument delivered by or on behalf of Party pursuant to or in
connection with the transactions contemplated by this Agreement
shall be deemed to be made by such Party under this Agreement.
ARTICLE VII
COVENANTS
7.1 Conduct of Canada Business Prior to Closing. During the
Interim Period, Canada and the Major Shareholders shall:
(a) Conduct Business in Ordinary Course. Except as otherwise
contemplated or permitted by this Agreement, conduct the
Canada Business diligently and prudently and shall not,
without the prior written consent of Nevada, such consent
not to be unreasonably withheld, enter into any
contracts, agreements, commitments or leases, or
undertake any activity (including the allotment or
issuance of any further shares or securities of Canada)
except in the ordinary course of the Canada Business;
(b) Continue Insurance. Continue in full force all
existing insurance policies;
(c) Comply with Laws. Comply with all laws applicable to
Canada and the Canada Business;
(d) Corporate Existence. Make all requisite
filings to continue its existence under the
Business Corporations Act (Ontario).
(e) Maintain Permits. Apply for, maintain in good standing
and renew all Permits, licenses and registrations
necessary to enable it to carry on the Canada Business as
now conducted; and
(f) Distributions. Not pay any amount or dividend or
otherwise make any distribution to its shareholders or
any non-arm's length Person without the prior written
consent of Nevada.
7.2 Conduct of Nevada Prior to Closing. During the Interim
Period, Nevada shall:
(a) Comply with laws. Comply with all laws applicable to Nevada;
(b) Distributions. Not pay any amount or dividend or
otherwise make any distribution to its shareholders or
any non-arm's length Person without the prior written
consent of Canada,
(c) Issuer Status and Corporate Existence. Make
all requisite filings with the NASD Regulation
Inc. and the Securities and Exchange
Commission and maintain issuer status within
the State of Nevada; and
(d) Maintain Permits. Apply for, maintain in good standing
and renew all Permits, licenses and registrations
necessary to enable it to carry on its business as now
conducted.
7.3 Access for Investigation. Nevada and Canada shall permit the
other's Authorised Representatives, until the Closing Date, to have
reasonable access during normal business hours to their respective
premises and their respective Records to enable confirmation of the
accuracy of the Records and the matters represented and warranted
in Articles III and IV.
7.4 Confidentiality. Until the Closing Date and, in the
event of the termination of this Agreement without the completion
of the transactions contemplated hereby, each of the Parties shall
thereafter, use its best efforts to keep confidential and not use
for its own purpose (other than as contemplated by this Agreement)
any information obtained from the other Party with respect to the
other Party's affairs. If this Agreement is terminated, all
documents, working papers and other written material obtained by
the Party from the other Party in connection with this Agreement
and not previously made public (and all copies thereof) shall be
returned to the other Party promptly after such termination.
The obligation of each of the Parties to keep confidential and not
use any information shall not apply to information which:
(i) becomes generally available to the public other
than as a result of disclosure by the Party or its
representatives in violation of this Agreement;
(ii) was available to the Party on a non-confidential
basis prior to its disclosure by that Party or its
Authorised Representatives; or
(iii)the Party is required by law to disclose.
7.5 Closing Documents. The Ancillary Agreements and the
Conveyance Documents shall be executed and delivered by the Parties
thereto at the Closing Time.
7.6 Corporate Proceedings. On or before the Closing Date, each
Party (which is a corporation) shall provide to the other Parties
certified copies of all necessary proceedings and resolutions,
corporate or otherwise, and all other necessary actions, corporate
or otherwise, authorising the execution and delivery of this
Agreement and the matters contemplated in it.
7.7 Actions to Satisfy Closing Conditions. Each Party shall take
all such actions as are within its power to control, and shall use
reasonable commercial efforts to cause other actions to be taken
which are not within its power to control, so as to ensure
compliance with any conditions set forth in this Agreement which
are for the benefit of itself or any other Party.
ARTICLE VIII
NEVADA BOARD OF DIRECTORS
8.1 Directors. On the Closing Date the Nevada directors and
officers will resign from Nevada and the Canada Shareholders will
cause a new slate of directors and officers to be appointed at that
time.
ARTICLE IX
CONDITIONS OF CLOSING
9.1 Conditions for Nevada's Benefit. Nevada shall not be obliged
to complete the Share Exchange unless, on the Closing Date, each of
the following conditions shall have been satisfied:
(a) Accuracy of Representations. The representations and
warranties of the Canada Shareholders set forth in
Article III shall be true and correct in all material
respects at the Closing, except as those representations
and warranties may be affected by the occurrence of
events or transactions expressly contemplated and
permitted by this Agreement, including, without
limitation, those in the ordinary course of business, and
Nevada shall have received a certificate from the Canada
Shareholders confirming the foregoing;
(b) Performance of Obligations. Canada and the Canada
Shareholders shall have performed all of the obligations
hereunder to be performed by them at or prior to the
Closing and Canada and the Canada Shareholders shall not
be in breach of any agreement on their part contained
herein;
(c) Deliveries. Canada and the Canada Shareholders shall
have delivered or caused to be delivered to Nevada the
Conveyance Documents, and shall deliver up to Nevada
possession of not less than 50.1% of the Canada Shares,
free and clear of any Encumbrances;
(d) Regulatory Approval. The Regulatory Approval shall have
been obtained or given, as the case may be, on or before
the Closing Time;
(e) Completion of Investigations. The investigations and
assessments contemplated in section 7.3 shall have been
completed and Nevada shall be satisfied with the results
of such investigations and assessments including, without
limitation, the accuracy of the Records and matters
represented and warranted in Article III;
(f) Consents, Authorisations and Registrations. All
consents, approvals, orders and authorisations of, from
or notifications to any Persons or Governmental
Authorities required in connection with the completion of
any of the transactions contemplated by this Agreement,
the execution of this Agreement, the Closing or the
performance of any of the terms and conditions of this
Agreement shall have been obtained on or before the
Closing Date;
There shall be no injunction or order issued preventing,
and no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or investigation
against any Party by any Governmental Authority or Person
for the purpose of enjoining or preventing the
consummation of this Agreement, or otherwise claiming
that this Agreement or the consummation thereof is
improper or would give rise to proceedings under any
statute or rule of law;
(g) No Loss. During the Interim Period, there has been no
material damage to the assets of Canada or the Canada
Business by fire or other peril, whether or not such
damage is covered by insurance;
(h) No Material Changes. There shall have been no material
adverse changes in the Canada Business, assets or
financial condition of Canada during the Interim Period;
and
(i) Cancellation of Shareholders' Agreement. Immediately
prior to the Closing the Major Shareholders and Canada
shall cancel the Shareholders' Agreement.
If any one or more of the foregoing conditions shall not
have been fulfilled on or before the Closing Date, Nevada may
terminate this Agreement by notice in writing to the other Parties
in which event Nevada shall be released from all obligations under
this Agreement and (unless Nevada can show that the condition
relied upon could reasonably have been performed by the other
Parties) the other Parties shall also be released from all
obligations hereunder; provided, however, that Nevada shall be
entitled to waive compliance with any one or more of such
conditions in whole or in part if it shall see fit to do so,
without prejudice to its rights of termination in the event of the
non-fulfilment of any other condition in whole or in part.
9.2 Conditions for the Benefit of the Canada Shareholders. The
Canada Shareholders shall not be obliged to complete the Share
Exchange unless, on the Closing Date, each of the following
conditions shall have been satisfied:
(a) Accuracy of Representations. The representations and
warranties of Nevada set forth in Article V shall be true
and correct in all material respects at the Closing,
except as those representations and warranties may be
affected by the occurrence of events or transactions
expressly contemplated and permitted by this Agreement
and the Canada Shareholders shall have received a
certificate from Nevada confirming the foregoing;
(b) Performance of Obligations. Nevada shall have performed
all of the obligations hereunder to be performed by them
at or prior to the Closing including, without limitation,
the covenants contained in section 7.2 hereof and Nevada
shall not be in breach of any agreement on their part
contained herein;
(c) Deliveries. Nevada shall have delivered or caused to be
delivered to Canada Shareholders possession of the Nevada
Shares, free and clear of any Encumbrances;
(d) Shareholders Approval and Regulatory Approval. The
Shareholder Approval and the Regulatory Approval shall
have been obtained, completed or given, as the case may
be, on or before the Closing Time;
(e) Completion of Investigations. The investigations and
assessments contemplated in section 7.3 shall have been
completed and the Canada Shareholders shall be satisfied
with the results of such investigations and assessments
including, without limitation, the accuracy of the
Records and matters represented and warranted in Article
V;
(f) No Loss. During the Interim Period, there has been no
material damage to the assets of Nevada by fire or other
peril, whether or not such damage is covered by
insurance;
(g) Consents, Authorisations and Registrations. All consents,
approvals, orders and authorisations of, from or
notifications to any Persons or Governmental Authorities
required in connection with the completion of any of the
transactions contemplated by this Agreement, the
execution of this Agreement, the Closing or the
performance of any of the terms and conditions of this
Agreement shall have been obtained on or before the
Closing Date.
There shall be no injunction or order issued preventing,
and no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or investigation
against any Party by any Governmental Authority or Person
for the purpose of enjoining or preventing the
consummation of this Agreement, or otherwise claiming
that this Agreement or the consummation thereof is
improper or would give rise to proceedings under any
statute or rule of law.
(h) Issuer Certificate. Nevada shall have delivered to
Canada a Certificate from the Secretary of State of the
State of Nevada evidencing Nevada's good standing as a
corporation incorporated in the State of Nevada; and
(i) No Material Changes. There shall have been, in the
reasonable opinion of the Canada Shareholders, no
material adverse changes in the assets or financial
condition of Nevada during the Interim Period. For the
purposes of this subsection, the term "material adverse
change" shall mean any change in the assets, liabilities
or financial condition of Nevada that may, in the
reasonable opinion of Canada Shareholders involve
material reduction, damage, risk to or destruction of the
assets, whether or not the change is covered by
insurance.
If any one or more of the foregoing conditions shall not
have been fulfilled on or before the Closing Date, the Canada
Shareholders may terminate this Agreement by notice in writing to
Nevada in which event the Canada Shareholders shall be released
from all obligations under this Agreement and (unless the Canada
Shareholders can show that the condition relied upon could
reasonably have been performed by Nevada) Nevada shall also be
released from all obligations hereunder; provided, however, that
the Canada Shareholders shall be entitled to waive compliance with
any one or more of such conditions in whole or in part if they
shall see fit to do so, without prejudice to their rights of
termination in the event of the non-fulfilment of any other
condition in whole or in part.
ARTICLE X
INDEMNIFICATION
10.1 Mutual Indemnification's for Breaches of Warranty, etc.
Subject to section 10.2, Nevada hereby covenants and agrees with
Canada and the Canada Shareholders and Canada and the Canada
Shareholders hereby covenant and agree with Nevada (the parties
covenanting and agreeing to indemnify another party under this
Article 10.1 are hereinafter individually referred to as an
"Indemnifying Party" and the parties that are being indemnified by
another Party under this Article 10.1 are hereinafter individually
referred to as an "Indemnified Party") to indemnify and save
harmless the Indemnified Party, effective as and from the Closing
Time, from and against any Claims which may be made or brought
against the Indemnified Party and/or which it may suffer or incur
as a result of, or arising out of any non-fulfilment of any
covenant or agreement on the part of the Indemnifying Party under
this Agreement or any Ancillary Agreement or any incorrectness in
or breach of any representation or warranty of the Indemnifying
Party contained in this Agreement or any Ancillary Agreement. For
greater certainty the parties hereto agree that they shall not in
any event look to the Major Shareholders for indemnification, in
whole or in part, in respect of any claims which may be made or
brought against the Indemnified Party and or which it may suffer or
incur as a result of or arising out of any non-fulfilment of any
covenant or agreement hereunder or in any Ancillary Agreement or
incorrectness in or breach of any representation and warranty
contained in this Agreement or any Ancillary Agreement.
10.2 Limitation on Mutual Indemnification. The indemnification
obligations of each of the Parties pursuant to section 10.1 shall
be subject to the following:
(a) the applicable limitation mentioned in Article VI
respecting the survival of the representations and
warranties of the Parties;
(b) the indemnity obligations under section 10.1 shall
survive for a period of (18) eighteen months from the
Closing Date; and
(c) there shall be no limit as to amount in respect of
breaches of the representations and warranties of the
Parties other than as specifically limited by the
provisions of this section; an Indemnifying Party shall
not be required to indemnify an Indemnified Party until
the aggregate Claims sustained by that Indemnified Party
exceeds a value of $50,000.
10.3 Procedure for Indemnification. The following provisions shall apply to
any Claims for which an Indemnifying Party may be obligated to indemnity an
Indemnified Party pursuant to this Agreement:
(a) upon receipt from a third party by the Indemnified Party of notice of a
Claim or the Indemnified Party becoming aware of a Claim in respect of
which the Indemnified Party proposes to demand indemnification from the
Indemnifying Party, the Indemnified Party shall give notice to that
effect to the Indemnifying Party with reasonable promptness, provided
that failure to give such notice shall not relieve the Indemnifying Party
from any liability it may have to the Indemnified Party except to the
extent that the Indemnifying Party is prejudiced thereby;
(b) in the case of Claims arising from third parties, the Indemnifying Party
shall have the right by notice to the Indemnified Party not later than 30
days after receipt of the notice described in paragraph (a) above to
assume the control of the defence, compromise or settlement of the
Claims, provided that such assumption shall, by its terms, be without
costs to the Indemnified Party and the Indemnifying Party shall at the
Indemnified Party's request furnish it with reasonable security against
any costs or other liabilities to which it may be or become
exposed by reason of such defence, compromise or settlement;
(c) upon the assumption of control by the Indemnifying Party as aforesaid,
the Indemnifying Party shall diligently proceed with the defence,
compromise or settlement of the Claims at its sole expense, including
employment of counsel and, in connection therewith, the
Indemnified Party shall co-operate fully, but at the expense of the
Indemnifying Party, to make available to the Indemnifying Party all
pertinent information and witnesses under the Indemnified Party's
control, make such assignments and take such other steps as in the
opinion of counsel for the Indemnifying Party are necessary to enable the
Indemnifying Party to conduct such defence; provided always that the
Indemnified Party shall be entitled to reasonable security from the
Indemnifying Party for any expense, costs or other liabilities
to which it may be or may become exposed by reason of such co-operation;
and,
(d) should the Indemnifying Party fail to give notice to the Indemnified
Party as provided in paragraph (b) above, the Indemnified Party shall be
entitled to make such settlement of the Claims as in its sole discretion
may appear advisable, and such settlement or any other final
determination of the Claims shall be binding upon the Indemnifying Party.
ARTICLE XI
CLOSING ARRANGEMENTS
11.1 Closing. The Closing shall take place at the offices of Arter & Hadden
LLP at 5 Park Plaza, Suite 1000, Irvine, CA, 92614-8528; at the Closing Time
on the Closing Date.
11.2 Closing Procedures. At the Closing Time:
(a) Nevada shall issue and deliver to the Canada Shareholders possession
of the shares of Nevada as set forth in section 2.2;
(b) the Canada Shareholders shall deliver up to Nevada the Canada
Shares; and
(c) the Parties shall take or shall have taken, as the case may be, the
other actions contemplated to be taken by them at or before the
Closing contemplated in this Agreement, such as cancellation of the
control block and change of the board of directors of Nevada.
11.3 No Broker. Each of the Parties represents and warrants to the other that
all negotiations relating to this Agreement and the transactions contemplated
by this Agreement have been carried on between them directly, without the
intervention of any other party in such manner as to give rise to any valid
claim against any of the Parties for a brokerage commission, finder's fee or
other like payment.
11.4 Non-Waiver. No investigations made by or on behalf of Nevada and the
Canada Shareholders at any time shall have the effect of waiving or
diminishing the scope of or otherwise affecting any representation, warranty
or indemnity made by or imposed upon the Parties pursuant to this Agreement.
ARTICLE XII
GENERAL
12.1 Termination.
(a) This Agreement may be terminated at any time prior to the Closing Date:
(i) by the mutual agreement of the Parties; or,
(ii) by either Party if:
(a) the Share Exchange shall not have been completed by May 15,
1999 (or such other date, if any, as the Parties shall have
agreed in writing), if the failure to complete such purchase
and sale on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate;
or,
(b) the Share Exchange would violate any non-appealable final
order, decree or judgement of any court or governmental body
having competent jurisdiction.
(b) If this Agreement is terminated by a Party under subsection 12.1(a), such
termination shall be without liability of any of the Parties to the other
Parties, or to any of their shareholders, directors, officers, employees,
agents, consultants or representatives provided that if such termination shall
result from the wilful failure of the Party to fulfil a condition to the
performance of the other Parties or to perform a covenant of this Agreement or
from a wilful breach by the Party to this Agreement, the Party shall be fully
liable for any and all damages, costs and expenses (including, but not limited
to, reasonable counsel fees and disbursements) sustained or incurred by the
other Parties.
12.2 Expenses. Except as otherwise specified herein, all costs and expenses
(including the fees and disbursements of accountants and legal counsel)
incurred in connection with this Agreement and completion of the transactions
contemplated by this Agreement shall be paid by the Party incurring those
expenses.
12.3 Time of Essence. Time shall be of the essence in all respects of this
Agreement.
12.4 Notices. Any notice or other communication which is required or
permitted to be given or made by one Party to the others hereunder shall be in
writing and shall be either:
(a) personally delivered to such Parties; or
(b) sent by facsimile.
Any notice shall be sent to the intended recipient at its address as
follows:
to Nevada at: Mr. Leonard Burningham
Hermes Building
Suite 205, 455East 5th South
Salt Lake City, Utah
84111-3323
Fax: (801)355-7126
to Canada at: Mr. David Pamenter Mr. Stewart Somers
Gowling's Centraxx Corp.
Commerce Court W. Suite 4900 2700 Argentia Rd.#1000
Toronto, Ont. Mississauga, Ont.
M5L 1J3 L5N 5V4
Fax: (416)862-7661 Fax:(905)814-0029
or at such other address as any Party may from time to time advise the others
by notice in writing. Any notice given by personal delivery shall be deemed
to have been received on the date of delivery. Any notice sent by facsimile
or similar method of recorded communication shall be deemed to have been
received on the next Business Day following the date of its transmission.
12.5 Further Assurances. The Parties shall with reasonable diligence do all
things and provide all reasonable assurances as may be required to complete
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 give effect to this Agreement and carry
out its provisions, whether before or after the Closing.
12.6 Public Notice. All public notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and co-ordinated by the Parties and no Party shall act
unilaterally in this regard without the prior written approval of the other
Parties, such approval not to be unreasonably withheld
12.7 Amendment and Waiver. No supplement, modification, waiver or termination
of this Agreement shall be binding unless executed in writing by the party to
be bound. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly
provided.
12.8 Assignment. This Agreement and the rights or obligations hereunder or
thereunder are not assignable by any Party without the prior written consent
of the other Parties, which consent shall not be unreasonably withheld. This
Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns.
12.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining
provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
12.10 Counterparts. This Agreement may be executed by the Parties in one
or more counterparts, including by facsimile, each of which when so executed
and delivered shall be an original and such counterparts shall together
constitute one and the same instrument.
12.11 Default. In the event of default the prevailing party shall be
entitled to reasonable attorney's fees and related costs of court..
12.12 Waiver of Right to Contest Validity of Outstanding Stock of Nevada.
Centraxx and Centraxx shareholders agree not to challenge the validity or
legality of any of Nevada's outstanding shares that are issued and outstanding
immediately prior to the Closing of this Agreement, except to the extent that
such issuance is inconsistent with representations set forth in Section 5.1(h)
hereof
IN WITNESS WHEREOF this Agreement has been executed by the Parties
each as of the day and year first before written.
DATED as of the 18th day of May, 1999.
CENTRAXX CORP.
Per:/s/
Authorised Signing Officer
COMPOSITE DESIGN, INC.
Per:/s/David C. Merrell
Authorised Signing Officer
MAJOR SHAREHOLDERS;
HEARTLAND TRUST PALTRAC INTERNATIONAL
CORPORATION
Per:/s/ Per:/s/
FRANKOPAN & CO. INC. WORLDWIDE
CONSULTING SERVICES INC.
Per:/s/ Per:/s/
CHAMPION BUSINESS SERVICES INC.
Per:/s/
SCHEDULE 1.1
DEFINITIONS
"Affiliate" and "Associate" means an "affiliate" and "associate",
respectively, as those terms are defined in the Business Corporations Act,
(Ontario), as amended on the date hereof.
"Agreement" means this Agreement and any instrument supplemental or ancillary
to it.
"Ancillary Agreements" means all documents, agreements, certificates and
instruments to be executed or delivered by any Person under this Agreement
including the Conveyance Documents.
"Authorised Representatives" means employees, agents, counsel, accountants and
other representatives.
"Business Day" means any day other than a Saturday, Sunday or statutory
holiday in the Province of Ontario.
"Canada Business" means Canada's business of research and development.
"Canada " means Centraxx Corp.
"Canada Records" means Canada's books, records, files, including business and
financial records, documentation and information, whether in writing or stored
in any retrieval system or database.
"Canada Shares" means issued and outstanding common shares of Canada.
"Capital Expenditures" means expenditures which, in accordance with Canadian
generally accepted accounting principles consistently applied, are chargeable
to capital or fixed assets accounts and includes expenditures in connection
with the acquisition by purchase, erection or construction of lands, fixed
assets, plant, machinery and/or equipment, whether fixed or moveable.
"Claims" means claims, demands, actions, causes of action, damages, losses,
costs, fines, penalties, interest, liabilities and expenses, including,
without limitation, reasonable legal fees.
"Closing," means the completion of the Share Exchange pursuant to this
Agreement.
"Closing Date" means such dates and times as the parties hereto may mutually
agree, but in no event later than May 15, 1999.
"Closing Time" means 10:00 a.m. (Los Angeles Time) on the Closing Date or such
other time on the Closing Date as may be agreed to by the Parties.
"Restricted Securities" means securities that fall under Rule 144 of the
United States Securities and Exchange Commission.
"Conveyance Documents" means all bills of sale, assignments, instruments of
transfer, assurances, consents, and other documents as shall be necessary to
effectively transfer to Nevada the Canada Shares.
"Encumbrances" means any mortgage, charge, pledge, hypothec, lien,
encumbrance, restriction, option, right of others or security interest of any
kind.
"Governmental Authorities" means any applicable Canadian or non-Canadian
federal, provincial and municipal agency, ministry, Crown Corporation,
department, inspector and official.
"Interim Period" means the period commencing on the date of this Agreement
and ending immediately before the opening of business on the Closing Date.
"Nevada Financial Statements" means the financial statements of Nevada
attached as Schedule "B"
"Nevada Records" means Nevada books, records, files including business and
financial records, documentation and information, whether in writing or stored
in any retrieval system or database.
"Nevada Shares" means common shares of Nevada.
"Parties" means the parties to this Agreement and "Party" means any one of
them.
"Permits" means authorisations, registrations, permits, approvals or licenses
that can be issued or granted by Governmental Authorities.
"Person" means an individual, body corporate, partnership, trustee, trust,
unincorporated association, executor, administrator or legal representative.
"Records" means the business and financial records of Canada and business and
financial records of Nevada.
"Regulatory Approval" means the approvals and consents of NASD Regulation Inc.
and any other approvals or consents of Governmental Authorities that are
required to complete the Share Exchange.
"Share Exchange" has the meaning attributed to it in section 2.2.
"Shareholder Agreement" means the agreement among the Major Shareholders and
Canada made the 2nd day of September 1997.
"Shareholder Approval" means the concurrence by the shareholders of Nevada to
approve any resolution required to complete the transaction contemplated
herein.
<PAGE>
SCHEDULE A
<PAGE>
Centraxx Corp
Awarded Stock Options
As at April 30, 1999
Estimated
Vesting Yearly Total Number of Total
Date Amount of Amount of Days Amount of
per Contract Options Options Vested Options Exercise
Name or Understanding Awarded Awarded to April 30 Vested Price
[S] [C] [C] [C] [C] [C] [C]
Ron Roberge Nov 2/98 5000 385 5000 1.00
Nov 2/99 10000 178 4877 9877 1.00
Nov2/2000 15000 1.00
30000 30000
Daniel Brunt Nov 23/98 5000 365 5000 1.00
Nov 23/99 10000 158 4329 9329 1.00
Nov 23/2000 15000 1.00
30000 30000
Dennis Deller Feb 1/99 5000 365 5000 1.00
Feb l/2000 10000 89 2438 7438 1.00
Feb l/2001 15000 1.00
30000 30000
Quang Vu Feb 8/99 5000 365 5000 1.00
Feb 9/2000 10000 81 2219 7219 1.00
Feb 9/2001 15000 1.00
30000 30000
Paul Sawyer March 9/99 10000 356 9753 1.00
March 9/2000 15000 52 2137 11890 1.00
Narch 9/2001 20000 1.00
45000 45000
Thorogood
Technologies April 12/99 15000 365 15000 15000 1.00
April 12/2000 15000 18 740 1.00
April 12/2001 20000 1.00
50000 50000
Frank Evans Sept 7/99 10000 233 6384 6384 1.00
Sept 7/2000 15000 1.00
Sept 7/2001 20000 1.00
45000 45000
Michael Kravets 5000 Nov1/99 5000 180 2466 2466 1.00
5000 Nov1/2000 10000 1.00
5000 Nov1/2001 15000 1.00
30000 30000
Jeff Wollford Sept 2/99 25000 239 16370 16370 1.00
Sept 2/2000 30000 1.00
Sept 2/2001 35000 1.00
90000 90000
<PAGE>
Ruby Archer 5000 Oct 1/99 5000 208 2849 2849 1.00
5000 Oct 1/2000 5000 1.00
5000 Oct 1/2001 5000 1.00
15000 15000
Gina Westwood Nov 11/98 5000 365 5000 1.00
Nov 11/99 5000 167 2288 7288 1.00
Nov 11/2000 5000 1.00
15000 15000
Van Duong 5000 Nov 16/98 5000 365 5000 1.00
5000 Nov 16/99 5000 163 2233 7233 1.00
5000 Nov 16/2000 5000 1.00
15000 15000
Stewart Somers 30-Sep-98 25000 25000 1.00
31-Dec-98 12500 12500 1.00
3/31/99 12500 90 12500 50000 1.00
6/30/99 12500 30 4167 1.00
9/30/99 12500 1.00
12/31/99 12500 1.00
3/31/00 12500 1.00
6/30/00 12500 1.00
9/30/00 12500 1.00
12/31/00 12500 1.00
3/31/01 12500 1.00
6/30/01 12500 1.00
9/30/01 12500 1.00
175000 175000
Michael St. Eve.
50000 Sept 7/99 50000 234 32055 32055 1.00
Sept 7/2000 50000 1.00
Sept 7/2001 50000 1.00
150000 150000
Brian De Champlain
50000 Sept 2/98 50000 365 50000 1.00
Sept 2/99 50000 239 32740 82740 1.00
Sept 2/2000 50000 1.00
150000 150000
Frank Gerlach
50000 Sept 2/98 50000 365 50000 1.00
Sept 2/99 50000 239 32740 82740 1.00
Sept 2/2000 50000 1.00
150000 150000
Bob Hill 35000 Sept 2/98 30000 365 30000 1.00
35000 Sept 2/99 35000 239 22918 52918 1.00
35000 Sept 2/2000 40000 1.00
105000 105000
<PAGE>
Chuck Courson Sept 2/98 35000 365 35000 1.00
Sept 2/99 40000 239 26192 61192 1.00
Sept 2/2000 45000 1.00
120000 120000
Danny Wong Mar-99 5000 30 411
Mar-00 10000
Mar-01 15000
30000 30000
Randy Petrie Mar-99 5000 30 411
Mar-00 10000
Mar-01 15000
30000 30000
Brian Rutherford
10000 Sept 14/99 10000 225 6164 6164 1.00
10000 Sept 14/2000 10000 1.00
10000 Sept 14/2001 10000 1.00
30000 30000
TOTAL AWARDED AND VESTED AT
APRIL 30/99 1365000 471151
Vested amounts and related dates is based on the current employment or service
agreements.
Any upward corrections to the award has been identified by *
In the absence of formal agreements, the award is to be vested quarterly
commencing March 31; accordingly, the expiry dates for non contractual
vestings will be March 31, June 30, Sept 30 and Dec 31
<PAGE>
SCHEDULE B
See the 10-KSB Annual Report filed with the Securities and Exchange
Commission.
<PAGE>
SCHEDULE C
STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31,1999, DECEMBER 31,1998 and 1997
(in Cdn $)
ASSETS
31 -Mar-99 31 -Dec-98 31 -Dec-97
Cash 3,319 (28,323) 1,893
Deposits and Prepaid Expenses 44,831 29,832 19,379
Capital Assets at net book value
(note 3) 355,119 380,520 492,202
Patent Costs 22,561 22,561 16,925
Incorporation and Other Assets 1,000 1,000 55,500
TOTAL ASSETS 426,830 405,590 585,899
LIABILITIES
Accounts Payable and Accrued Costs 374,990 444,361 76,146
Taxes Payable and Other Employee
Deductions 92,510 52,016 11,909
467,500 496,377 88,055
SHAREHOLDERS' EQUITY
Paid Up Share Capital (note 5) 3,126,740 2,399,185 869,293
Deficit (3,167,410)(2,489,972) (371,449)
(40,670) (90,787) 497,844
TOTAL 426,830 405,590 585,899
See accompanying notes to the financial statement
CENTRAXX CORP
STATEMENT OF LOSS
FOR THE PERIOD FROM SEPTEMBER 2,1997 TO MARCH 31,1999
(in Cdn $)
3 months ending 12 months to From September 2, 1997
31 -Mar-99 31-Dec-98 to December 31, 1997
General and administrative costs
Advertising and promotion 38,095 153,905 19,546
Management fees 77,500 210,000 45,000
Professional fees 47,550 70,838 75,970
Rent 37,375 159,634 63,000
Paltrac 0 80,346
Depreciation 25,401 101,606 25,906
Salaries and other office 195,200 341,625 13,815
421,121 1,117,954 243,237
Research and development costs
Manpower 190,356 644,323 79,705
Materials 20,128 159,030 7,266
Expenses 45,833 197,216 41,241
256,317 1,000,569 128,212
Total loss for the period 677,438 2,118,523 371,449
Deficit, at the beginning of
the year 2,489,972 371,449 0
Deficit, at the end of the
year 3,167,410 2,489,972 371,449
Centraxx
- ---------------
P r e s s R e l e a s e OTCBB:CNXX
- ---------------
Location Technology Innovator Centraxx Corp.
Is Acquired By U.S. Company
- ---------------
LAS VEGAS, Nevada (May 25, 1999) -- Composite Design, Inc. today announced
that it has acquired all of the outstanding shares of location technology
innovator Centraxx Corp. of Mississauga, Ontario. Pursuant to the Share
Exchange Agreement, Composite Design issued 15,234,415 restricted shares to
the stockholders of Centraxx Corp. Immediately following the acquisition the
corporate name was changed to Centraxx Inc. to better reflect the nature of
the ongoing business. Centraxx Corp. will operate as a wholly owned
subsidiary of Centraxx Inc. and continue to be based in Mississauga.
Centraxx is a wireless data communications company specializing in providing
location technology solutions. Location technology as an industry has emerged
in the past 10 years and in North America it has become a multi-billion dollar
business. With safety and security needs on the rise the industry is expected
to continue its phenomenal growth trend in step with technology advancements.
Centraxx has developed an advanced technology utilizing RF single-point
tracking which can be deployed to provide cost-effective and efficient
solutions for numerous safety, security and location information needs. This
revolutionary UNI-POINT technology operates within a network environment and
does not rely on the Global Positioning System (GPS). Centraxx has filed a
broad based patent application to protect its unique technology.
Centraxx is set to introduce its first location based products in response to
consumer driven demand for stolen vehicle recovery and emergency assistance
devices. The Centraxx Vehicle Tracking & Recovery System will offer superior
pinpoint, real-time tracking and locating at a price well below existing
systems, making it the first automobile locating system with mass market
appeal. Features will include 24/7 monitoring, automatic arming/disarming, 30
second response to theft and 10 meter locating accuracy. The Company will also
offer optional roadside and emergency notification service with Centraxx PLUS.
Drivers will be able to summon help to their exact location, including tow
truck, ambulance and police--all at the touch of button. Product availability
is anticipated in Q1 2000 in certain select areas.
The Company intends to ultimately offer national coverage to its customers and
to achieve this an aggressive network deployment strategy is being
implemented. In order to accelerate the establishment of a North American
network Centraxx is in the process of licensing certain regional territories.
Centraxx Inc. stock is available for quotation and trading through the OTC
Bulletin Board under the symbol CNXX. There are currently 17,906,965 shares
issued and outstanding. Detailed information regarding Centraxx and its
products and services can be found on the World Wide Web at
http://www.centraxx.com
For more information contact:
Financial Public Relations
Contact:
Chuck Courson, Director
Frankopan & Co.
Tel. 905-814-0030 Ext. 243
E-mail [email protected]
Company Contact:
Stewart Somers, Executive
V.P. and C.F.O.
Centraxx Inc.
Tel. 905-826-9988 Ext. 236
E-mail [email protected]
Forward-looking statements in this release are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties, including, without limitation, acceptance of the Company's
products, increased levels of competition, new products, technological
changes, the Company's dependence upon third-party suppliers, and other risks
detailed from time to time in company documents.
(The information in this release has been neither approved nor disapproved by
any regulatory body.)
- ---------------
REMOVAL FROM THE E-MAIL LIST
This e-mail is being sent as a courtesy to those who have expressed an
interest in Centraxx. We apologize if this e-mail came to you by mistake. If
you do not wish to receive future e-mail messages about Centraxx, please do
not reply to this message. Instead send a message to [email protected]
with the message "leave investor" followed by your e-mail address.
For example, "leave investor [email protected]."
