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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MAY 19, 1999
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Date of Report (Date of earliest event reported)
SMARTSOURCES.COM, INC.
(formerly Innovest Capital Sources Corporation,
Telco Communications, Inc. and Cody Capital Corporation)
(Exact Name of Registrant as Specified in Charter)
COLORADO 33-1933 3-D 84-1073083
- ---------------------------- ------------ ------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2030 MARINE DRIVE, SUITE 100
NORTH VANCOUVER, BRITISH COLUMBIA V7P 1V7, CANADA
(Address of Principal Executive Offices, Including Zip Code)
(604) 986-0889
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(Registrant's telephone number,
including area code)
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SMARTSOURCES.COM, INC.
FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 1, 1999, Origin Software Corp., a wholly-owned subsidiary of
SmartSources.com, Inc. (the "Company"), entered into an agreement to purchase
from Columbia Diversified Software Fund Limited Partnership ("Columbia") the
ORIGIN(R) software. ORIGIN(R) software checks a product's qualifications under
the North American Free Trade Agreement's ("NAFTA") Rules of Origin. ORIGIN(R)
provides the logical and geographic representations and reports necessary to
determine whether tariffs apply to a product imported under NAFTA regulations.
The purchase includes all source materials and other documentation relating to
ORIGIN(R), including copyrights and other intellectual property rights.
World-wide marketing rights to ORIGIN(R) are held by SmartSources.com
Technologies, Inc. (formerly Nifco Synergy Ltd.), another subsidiary of the
Company. SmartSources.com Technologies, Inc.'s right to market and distribute
Origin is preserved under the terms of the purchase agreement.
The purchase of the Origin software closed on May 19, 1999. A share
exchange agreement was signed among Columbia, the Company and Origin Software
Corp. The purchase price for Origin was $16,670,380.00 (Canadian) payable by the
issuance to Columbia of 11,670,380 Class A Preferred Shares of Origin Software
Corp. and 5,000,000 Class B Preferred Shares of Origin Software Corp. Origin
Software Corp. may redeem the Class A Preferred Shares by issuing a promissory
note of Origin Software Corp. in the amount of $11,670,380.00 (Canadian) to
Columbia. The purchase agreement provides that the promissory note issued to
Columbia for the redemption of the Class A Preferred Shares must be transferred
to SmartSources.com Technologies, Inc. in satisfaction of the existing liability
of Columbia to SmartSources.com Technologies, Inc. for an identical amount. The
end result of the issuance and redemption of the Class A Preferred Shares will
be an inter-company debt of $11,670,380.00 (Canadian) owed to SmartSources.com
Technologies, Inc. by Origin Software Corp.
The Class B Preferred Shares may be exchanged by Columbia for Common
Stock of the Company at any time after October 1, 1999. The number of shares of
Common Stock to be issued to Columbia will be that number of shares having an
aggregate value equal to the redemption price of the Class B Preferred Shares
converted to U.S. currency. The redemption price of the Class B Preferred Shares
is $1.00 (Canadian) per share. The price of each share of the Company to be
issued to Columbia will be equal to the average trading price of the Company's
shares on the OTC Bulletin Board over the 14-day period immediately preceding
the date of delivery by Columbia to the Company of a written notice of
Columbia's intention to fix the exchange price. Columbia may fix the exchange
price at any time. Upon the issuance of shares in the Company in exchange for
the Class B Preferred Shares, 20% of the shares will be delivered to Columbia.
The remaining 80% will be subject to hold-back restrictions and will be released
to Columbia at the rate of 25% per year over the next three years on the
anniversary of the share exchange, with the remaining 5% to be released on the
fourth anniversary of the share exchange. Voting and dividend rights on all of
the shares are held by Columbia, notwithstanding the hold-back restrictions.
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The purchase agreement further provides that SmartSources.com
Technologies, Inc. must pay to Columbia $257,025.03 (Canadian) in shared sales
revenue derived from the distribution and marketing of ORIGIN(R) up to the
closing date.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The exhibits filed as a part of this report are listed on the Index to
Exhibits on page 4 of this report, which Index is incorporated in this Item 7 by
reference.
SIGNATURE
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 thereunto duly authorized.
Date: May 19, 1999 SMARTSOURCES.COM
By: /s/ Nathan Nifco
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Nathan Nifco
Chairman, President and CEO
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INDEX TO EXHIBITS
The following exhibits to this report are incorporated herein by
reference:
1. Share Exchange Agreement by and among Columbia Diversified Software
Fund Limited Partnership and SmartSources.com, Inc. and Origin Software
Corporation, dated May 19, 1999
2. Software Acquisition Agreement by and among Columbia Diversified
Software Fund Limited Partnership and Origin Software Corp. and Nifco
Synergy Ltd., dated January 1, 1999
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EXHIBIT 1
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made as of the 19th day of May, 1999.
BETWEEN:
COLUMBIA DIVERSIFIED SOFTWARE FUND LIMITED
PARTNERSHIP, a limited partnership formed under the laws of
the Province of British Columbia by its managing partner,
Columbia Management (Software) Corp., a company formed under
the laws of the Province of British Columbia
(hereinafter referred to as "Columbia");
AND:
SMARTSOURCES.COM INC., a company duly incorporated under the
laws of the State of Colorado, having a corporate office
located at 3100 Bank One Center, 1717 Main Street, Dallas,
Texas, United States of America 75201-4681
(hereinafter referred to as "SmartSources")
AND:
ORIGIN SOFTWARE CORPORATION, a company duly
incorporated under the laws of the Province of British
Columbia having an address at 600 - 815 Hornby Street,
Vancouver, British Columbia, V6Z 2E6
(hereinafter referred to as "Origin")
WHEREAS:
A. Columbia is the registered and beneficial owner of 5,000,000 Class B
Preferred shares without par value in the capital of Origin (the "Origin
Shares");
B. Origin is a wholly-owned subsidiary of SmartSources.
C. In order to facilitate the acquisition of certain software by Origin from
Columbia (the "Software Acquisition") SmartSources has agreed to grant to
Columbia certain exchange rights under which Columbia is entitled to receive
SmartSources common shares issued from treasury (the "SmartSources Shares")
immediately upon delivery to SmartSources of the Origin Shares held by Columbia,
in accordance with the terms of this Agreement.
THIS AGREEMENT WITNESSES that in consideration for Columbia completing the
Software Acquisition for the benefit of both Origin and SmartSources, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
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1. Columbia hereby represents and warrants to SmartSources that Columbia
has good and sufficient authority to enter into this Agreement.
2. Subject to the terms and conditions hereof, SmartSources hereby grants
to Columbia the right to exchange all or any part of the Origin Shares
for SmartSources Shares, at any time after October 1, 1999 (the
"Exchange"). SmartSources agrees to allot, issue and deliver to
Columbia on the Exchange Date (as defined below) such number of
SmartSources Shares having an aggregate value equal to the value of the
Origin Shares being exchanged by Columbia, as determined in accordance
with paragraph 3 below.
3. The price of each SmartSources Share to be allotted, issued, and
delivered to Columbia (the "Exchange Price") shall be equal to the
average trading price of SmartSources common shares on the NASD
bulletin board over the fourteen (14) day period (the "Pricing Period")
immediately preceding the date of delivery by Columbia to SmartSources
of a written notice of its intention to fix the Exchange Price (the
"Pricing Notice"). The average trading price will be determined by
dividing the cumulative price of all SmartSources common shares traded
on the NASD bulletin board over the Pricing Period, by the total number
of SmartSources common shares traded on the NASD bulletin board over
that same period. Columbia will not directly or indirectly trade in
SmartSources common shares during the Pricing Period. The price of each
Origin Share will be equal to its redemption amount converted to U.S.
currency at a rate of exchange of Canadian currency into U.S. currency
prevailing at the close of business on the last business day
immediately preceding the date of delivery of the Pricing Notice.
4. Columbia may fix the Exchange Price at any time by delivery of the
Pricing Notice. The Pricing Notice may fix the date on which the
Exchange will take place and the SmartSources Shares will be issued
(the "Exchange Date"), which will be not less than three business days
following the date of the Pricing Notice. If no Exchange Date is fixed
in the Price Notice, a further notice in writing must be given by
Columbia to SmartSources (the "Exchange Notice"), setting out the
number of Origin Shares to be exchanged and providing SmartSources with
three business days notice to deliver the SmartSources Shares.
5. Columbia's obligation to deliver Origin Shares, and SmartSources'
obligation to allot and issue the SmartSources Shares pursuant to the
Exchange and this Agreement is subject to Columbia's delivery to
SmartSources of the Pricing Notice and if applicable, the Exchange
Notice.
6. Upon completion of the Exchange and the issuance of the SmartSources
Shares, Columbia will deliver or cause to be delivered to a mutually
agreeable trustee (the "Trustee"), certificates for 80% of the
SmartSources Shares, to be held by the Trustee and released on the
following basis:
(a) 25% of the SmartSources Shares delivered to the
Trustee, one year from the Exchange Date;
(b) 25% of the SmartSources Shares delivered to the
Trustee, two years from the Exchange Date;
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(c) 25% of the SmartSources Shares delivered to the
Trustee, three years from the Exchange Date; and
(d) the balance of the SmartSources Shares delivered to
the Trustee, four years from the Exchange Date.
7. The SmartSources Shares delivered to the Trustee and the beneficial
ownership of or any interest in them shall not be sold, assigned,
hypothecated, alienated, or otherwise dealt with in any manner
whatsoever until released by the Trustee.
8. All voting rights attached to the SmartSources Shares held by the
Trustee may at all times be exercised by Columbia.
9. During the period in which any of the SmartSources Shares are held by
the Trustee, any dividend paid in respect of such shares shall be paid
to Columbia.
10. SmartSources hereby represents and warrants to Columbia as follows:
(a) SmartSources has good and sufficient authority to enter into
this Agreement;
(b) SmartSources has sought and received all required regulatory
approvals for the transactions, contemplated by this
Agreement;
(c) SmartSources has allotted and reserved for issuance in
accordance with this Agreement up to a maximum of 5,000,000
common shares in its capital;
(d) subject only to the restrictions referred to in paragraph 6
above, the SmartSources Shares, when issued, will be free from
resale restrictions and will be freely tradable on the NASD
bulletin board market;
(e) SmartSources is in compliance in all material respects with
its continuous disclosure obligations under all applicable
securities laws;
(f) the allotment and issuance of the SmartSources Shares will not
conflict with or result in any breach of any terms, conditions
or provisions of SmartSources constating documents or any
agreements or instruments to which it is a party, or any
applicable law;
(g) this Agreement has been duly authorized by all necessary
corporate action on the part of SmartSources and constitutes a
valid and legally binding obligation upon it, enforceable in
accordance with its terms; and
(h) except for the Origin Shares, SmartSources is the legal and
beneficial owner of all of Origin's issued and outstanding
shares.
9. SmartSources covenants and agrees to maintain the existence of Origin
and not to assign, transfer or otherwise dispose of any of its interest
in Origin for so long as Columbia holds the Origin Shares.
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10. Columbia shall, from time to time as and when requested by SmartSources
and at the sole expense of SmartSources, do, execute and cause to be
made done and executed all such further conveyances, assignments,
assurances, and other documents as may be necessary and that may be
reasonably required by SmartSources to carry out the terms and intent
of this Agreement.
11. Columbia may assign its rights under this Agreement to its Limited
Partners or to an affiliate of Columbia, without the consent or
authorization of SmartSources.
12. This Agreement shall be governed and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada where
applicable.
13. Time is expressly declared to be of the essence of this Agreement and
each of the terms and conditions of this Agreement.
14. This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
COLUMBIA DIVERSIFIED SOFTWARE FUND LIMITED PARTNERSHIP
by its Managing Partner
COLUMBIA MANAGEMENT (SOFTWARE) CORP.
Per: /s/ LARRY D. WHITEHEAD
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Authorized Signatory
SMARTSOURCES.COM INC.
Per: /s/ NATHAN NIFCO
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Authorized Signatory
Per: /s/
--------------------------------
Authorized Signatory
ORIGIN SOFTWARE CORPORATION
Per: /s/ NATHAN NIFCO
--------------------------------
Authorized Signatory
Per:
--------------------------------
Authorized Signatory
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EXHIBIT 2
SOFTWARE ACQUISITION AGREEMENT
THIS AGREEMENT made as of the 1st day of January, 1999.
BETWEEN:
COLUMBIA DIVERSIFIED SOFTWARE FUND LIMITED PARTNERSHIP, a Limited
Partnership formed under the laws of the Province of British Columbia
by its managing partner, Columbia Management Software Corp., a company
formed under the laws of the Province of British Columbia
(hereinafter referred to as "Columbia");
AND:
ORIGIN SOFTWARE CORP., a company formed under the laws of the Province
of British Columbia, having its registered and records office at 600 -
815 Hornby Street, Vancouver, British Columbia
(hereinafter referred to as "Origin");
AND:
NIFCO SYNERGY LTD., a company formed under the laws of the Province of
British Columbia, having its registered and records office at 600 - 815
Hornby Street, Vancouver, British Columbia
(hereinafter referred to as "Nifco")
WHEREAS:
A. Origin wishes to purchase all of Columbia's right, title and interest in and
to the Work and all rights, benefits and advantages of Columbia under the
Software Acquisition Agreements for the purposes of jointly reproducing,
marketing and distributing the Work with Nifco.
B. Columbia has agreed to sell, transfer, and assign to Origin all of its right,
title and interest in and to the Work and all rights, benefits, and advantages
under Software Acquisition Agreements in accordance with the terms of this
Agreement.
THIS AGREEMENT WITNESSES that for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, and in consideration of
the mutual covenants hereinafter contained the parties hereto agree as follows:
PART I - INTERPRETATION
1.1 DEFINED TERMS. In this Agreement:
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(a) "ASSETS" means collectively the Work and the Software
Acquisition Agreements.
(b) "BUSINESS DAY" means any day from Monday to Friday, inclusive,
except for any day that is a statutory holiday in British
Columbia.
(c) "CLOSING TIME" means the time set out for closing described in
paragraph 8.1.
(d) "LIMITED PARTNERS" means the holders of limited partnership
units in Columbia.
(e) "MANAGING PARTNER" means Columbia Management (Software) Corp.,
the managing partner of Columbia.
(f) "NOTES" means the acquisition notes, assumption of the
acquisition notes and the promissory notes executed and
delivered pursuant to the Software Acquisition Agreements and
attached hereto as Schedule 2.
(g) "PURCHASE PRICE" means the purchase price set out in paragraph
2.2.
(h) "SOFTWARE ACQUISITION AGREEMENTS" means the agreement in
writing made as of November 18, 1994, and amended by further
agreements in writing made December 4, 1994, December 31, 1995
and May 31, 1997 and the agreement in writing made as of June
7, 1995 and amended by further agreements in writing made
December 31, 1995 and May 31, 1997 between Columbia and Nifco,
copies of which are annexed hereto as Schedule 1, save and
except the obligation, duty, responsibility, or liability to
pay any amounts on account of the purchase price and interest
thereon owed to Nifco under or pursuant to the Software
Acquisition Agreements, or the principal amounts and interest
thereon owed to Nifco under or pursuant to the Notes;
(i) "WORK" has the same meaning as in the Software Acquisition
Agreements.
1.2 SCHEDULES. The following attached Schedules form part of this
Agreement.
(a) Schedule 1 - Software Acquisition Agreements
(b) Schedule 2 - Notes
(c) Schedule 3 - Origin Class "A" Preferred Shares Special rights
and restrictions
(d) Schedule 4 - Origin Class "B" Preferred Shares Special rights
and restrictions
(e) Schedule 5 - SmartSources Agreement
(f) Schedule 6 - Mutual Release
(g) Schedule 7 - Legal Opinions
PART 2
2.1 PURCHASE AND SALE. Columbia agrees to sell, transfer, and assign to Origin
and Origin agrees to purchase from Columbia, all of Columbia's right, title and
interest in and to the Assets, and all rights, benefits, and advantages to be
derived therefrom, on the terms and conditions set out in this Agreement.
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2.2 PURCHASE PRICE. Subject to the adjustment provided in Part 3, the purchase
price for the Assets will be $16,670,380 (the "Purchase Price").
2.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price will be allocated as
follows:
(a) $16,670,379 for the Work; and
(b) $1.00 for the Software Acquisition Agreements.
2.4 PAYMENT OF THE PURCHASE PRICE. Origin will pay the Purchase Price as
follows:
(a) as to the sum of $11,670,380, by the allotment and issuance to
Columbia at the Closing Time of 11,670,380 Class "A" Preferred
Shares without par value in the capital of Origin, having the
special rights and restrictions set out on Schedule 3 (the
"Class A Preferred Shares"); and
(b) as to the balance of the Purchase Price, being $5,000,000, by
the allotment and issuance to Columbia at the Closing Time of
5,000,000 Class "B" Preferred shares without par value in the
capital of Origin, having the special rights and restrictions
set out in Schedule 4 (the "Class B Preferred Shares").
2.5 SECTION 85 ELECTION. Origin and Columbia will each execute and file a
joint election under sub-section 85(2) of the Income Tax Act (Canada),
providing for the transfer of the Assets at an "elected amount" of $1.
PART 3 - ADJUSTMENTS
3.1 TAXES. Origin will pay all Goods and Services Tax payable in respect of this
sale to it at the Closing Time, unless all conditions set out in paragraph 3.2
have been satisfied at that time. Origin will pay directly to the appropriate
taxing authority at the Closing Time any provincial retail sales tax or social
services tax payable by it in respect of the Assets.
3.2 G.S.T. ELECTION. Columbia and Origin will elect jointly under Section
167(l) of the Excise Tax Act (Canada) by completing at or prior to the Closing
Time, all prescribed forms and related documents in the manner prescribed so
that no Goods and Services Tax is payable on the purchase of the Assets.
PART 4 - REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF COLUMBIA. Columbia represents and warrants
to Origin as follows:
(a) STATUS OF COLUMBIA. Columbia is a limited partnership duly
formed under the laws of the Province of British Columbia, and
subject to receipt of the approval of the Limited Partners by
extraordinary resolution, as required by Columbia's
partnership agreement (the "Limited Partners' Approval"), has
requisite authority, right and power to enter into this
Agreement and to carry out its terms.
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(b) STATUS OF MANAGING PARTNER. The Managing Partner is a company
duly incorporated, validly existing, and in good standing
under the laws of the Province of British Columbia and has the
authority to enter into this Agreement and to carry out its
terms on behalf of Columbia.
(c) AUTHORITY TO SELL. Subject to receipt of the Limited Partners'
Approval, the execution and delivery of this Agreement has
been duly and validly authorized by all necessary action of
Columbia, and this Agreement constitutes a legal, valid, and
binding obligation of Columbia, enforceable against it in
accordance with its terms, except as may be limited by laws of
general application affecting the rights of creditors, and
subject to the availability of any equitable remedy in any
particular instance.
(d) NO ASSIGNMENT. Columbia has not assigned, transferred,
pledged, or encumbered any of its interest in or to the Assets
in favour of any other person, firm or corporation.
(e) LITIGATION. There is no litigation, or administrative or
governmental proceeding or inquiry pending or, to the
knowledge of Columbia, threatened against or relating to
Columbia, or any of the Assets, nor does Columbia know of, or
have reasonable grounds for believing that there is any basis
for any litigation, proceeding, or enquiry.
(f) NOT INSOLVENT. Columbia is not insolvent, bankrupt or in
receivership and there are no bankruptcy proceedings
threatened, pending or instituted against Columbia.
(g) NO DEFAULT. Subject to receipt of the Limited Partners'
Approval, the execution and delivery of this Agreement and the
performance of its terms by Columbia does not and will not
constitute a breach of any of Columbia's obligations under any
other agreement to which Columbia is a party or is bound by
the terms of such agreements.
(h) GST REGISTRATION. Columbia is registered for GST purposes
under registration number 139846836RT1001.
(i) AMOUNT PAYABLE UNDER NOTES. The principal sum of $11,670,380
is payable by Columbia and the Limited Partners under the
Notes.
(j) MORAL RIGHTS. Columbia and its Limited Partners, servants,
agents, and employees do not have any moral rights in or to
the Work.
4.2 REPRESENTATIONS OF ORIGIN. Origin represents and warrants to Columbia
and Nifco as follows:
(a) STATUS OF ORIGIN. Origin is a company duly incorporated,
validly existing and in good standing under the laws of the
Province of British Columbia, and has the power and capacity
to enter into this Agreement and to carry out its terms.
(b) AUTHORITY. The execution and delivery of this Agreement and
the SmartSources Agreement, and the completion of the
transactions contemplated therein, have been duly and validly
authorized by all necessary corporate action on the part of
Origin, and this Agreement and the SmartSources Agreement
constitute legal, valid, and binding
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obligations of Origin, enforceable against Origin in
accordance with their respective terms, except as limited by
laws of general application affecting the rights of creditors,
and subject to the availability of any equitable remedy in any
particular instance.
(c) INVESTMENT CANADA ACT. Origin is a "Canadian" as defined in
Section 3 of the Investment Canada Act.
(d) GST REGISTRATION. Origin is registered for GST purposes under
registration number 867254260RT.
4.3 REPRESENTATIONS OF NIFCO. Nifco represents and warrants to Columbia and
Origin as follows:
(a) STATUS OF NIFCO. Nifco is a company duly incorporated, validly
existing and in good standing under the laws of the Province
of British Columbia, and has the power and capacity to enter
into this Agreement and to carry out its terms.
(b) AUTHORITY. The execution and delivery of this Agreement and
the completion of the transactions contemplated by this
Agreement have been duly and validly authorized by all
necessary corporate action on the part of Nifco, and this
Agreement constitutes a legal, valid, and binding obligation
of Nifco, enforceable against Nifco in accordance with its
terms, except as limited by laws of general application
affecting the rights of creditors, and subject to the
availability of any equitable remedy in any particular
instance.
(c) NOTES. The aggregate principal amount owing under the Notes is
$11,670,380. Nifco is entitled to the full principal amount
outstanding under the Notes and has not assigned or
transferred any of its interest in the Notes or the debt
thereunder. Except for the debt evidenced by the Notes and
amounts which may become due under indemnities provided by
Columbia, neither Columbia nor the Limited Partners are in any
way indebted to Nifco.
(d) SOFTWARE ACQUISITION AGREEMENTS. Nifco has not assigned or
transferred any of its interest in the Software Acquisition
Agreements. No events of default have occurred under such
agreements and neither the execution and delivery nor the
performance of the obligations under this Agreement will
result in a default under the Software Acquisition Agreements.
PART 5 - COVENANTS OF THE PARTIES
5.1 COVENANTS OF COLUMBIA. Columbia covenants with Origin and Nifco as follows:
(a) ACCESS BY ORIGIN. Columbia will give to Origin full access,
during normal business hours, throughout the period from the
date of this Agreement to the Closing Time, to all of the
properties, books, contracts, commitments, and records of
Columbia relating to the Assets, and will furnish to Origin
during that period any information reasonably requested by
Origin.
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(b) OBTAIN CONSENTS. Columbia will obtain, prior to the Closing
Time, all consents, waivers, approvals, and releases as are
required to validly and effectively assign and transfer the
Assets;
(c) DELIVER SOURCE MATERIALS. Columbia shall execute and deliver
to Origin on Closing all source materials in its possession
and such other documentation as may be reasonably required by
Origin to evidence Origin's ownership in the Work as of the
Closing Time including, without limiting the generality of the
foregoing, any assignment of copyright or trademark rights,
domestic or foreign, to complete the transfer of rights
contemplated by this Agreement.
(d) ASSIGNMENT OF PROCEEDS OF REDEMPTION. On the redemption of the
Class "A" Preferred Shares pursuant to paragraph 5.2(c),
Columbia will distribute proceeds of such redemption (the
"Class A Redemption Proceeds") to the Limited Partners in
proportion to their respective interests in Columbia on the
express condition that the Limited Partners forthwith deliver
the Class A Redemption Proceeds to Nifco in repayment of the
Notes in full;
(e) RESTRICTION ON TRANSFER. Columbia will not sell, transfer, or
otherwise dispose of or offer to sell, transfer or otherwise
dispose of any interests in and to the Class "A" Preferred
Shares or the Class "B" Preferred Shares except as otherwise
expressly permitted under this Agreement. Columbia may assign
and transfer the Class "B" Preferred Shares to an affiliate of
Columbia or to SmartSources.com Inc. ("SmartSources") pursuant
to the SmartSources Agreement, and upon receipt of notice of
same, Origin covenants and agrees to cause the registration of
such transfer to be effected on its register of members.
(f) COVENANT OF INDEMNITY. Columbia will indemnify and hold
harmless Origin from and against any damage, or loss arising
from any misrepresentation, or non-fulfillment or breach of
any covenant on the part of Columbia under this Agreement, or
from any misrepresentation in, or omission from, any
certificate, or other instrument furnished, or to be
furnished, to Origin under this Agreement.
(g) ASSIGNMENT OF DIVIDENDS. Columbia will assign all dividends
payable on the Class "A" Preferred Shares to Nifco in
satisfaction of any amounts outstanding from time to time
under the Notes in respect of interest payable thereunder.
(h) NO INFRINGEMENT. Columbia will not write, re-write, or create
software or products for itself or for any other person which
are so similar to the Work that such software or products may
infringe the copyright or any other rights of Origin relating
to the Work.
(i) OWNERSHIP OF ASSETS. Columbia shall not directly or indirectly
at any time after the Closing Time in any manner whatsoever
contest Origin's ownership of all right, title and interest
existing and in the future, in and to the Assets.
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(j) INTELLECTUAL PROPERTY. Columbia shall not directly or
indirectly at any time after the Closing Time in any way
question or dispute any and all tradenames, copyrights and
other intellectual property rights, used or embodied in
connection with the Work.
5.2 COVENANTS OF ORIGIN. Origin covenants with Columbia and Nifco as
follows:
(a) SOFTWARE ACQUISITION AGREEMENTS. From the Closing Time, Origin
will assume and perform all of Columbia's obligations, duties,
responsibilities and other liabilities under the Software
Acquisition Agreements, except for any obligation to pay any
amounts on account of the purchase price or the principal
amount or interest due under the Notes.
(b) FEES AND TAXES. Origin will pay any social services taxes,
sales taxes, goods and services taxes, registration charges,
property purchase taxes, and other transfer fees properly
payable upon and in connection with the sale and transfer of
the Assets pursuant to this Agreement.
(c) REDEMPTION OF CLASS "A" PREFERRED SHARES. On October 1, 1999,
Origin will redeem all of the 11,670,380 Class "A" Preferred
Shares issued pursuant to this Agreement. Origin will pay the
redemption amount by delivery to Columbia of a promissory note
in the principal amount of $11,670,380.
(d) COVENANT OF INDEMNITY. Origin will indemnify and hold harmless
Columbia from and against any damage, or loss arising from any
misrepresentation, or non-fulfilment or breach of any
covenant, on the part of Origin under this Agreement, or from
any misrepresentation in, or omission from, any certificate,
or other instrument furnished, or to be furnished, to Columbia
under this Agreement.
5.3 COVENANTS OF NIFCO. Nifco covenants with Columbia and Origin as
follows:
(a) PAYMENT OF PRINCIPAL UNDER THE NOTES. Nifco will accept the
Class A Redemption Proceeds in full satisfaction of all
amounts owed to Nifco. If for any reason Origin does not
redeem the Class A Preferred Shares on October 1, 1999, Nifco
will accept an assignment and transfer of the Class A
Preferred Shares in full satisfaction of all amounts owed to
Nifco by Columbia and the Limited Partners. Immediately upon
delivery of the Class A Redemption Proceeds or certificates
representing the Class "A" Preferred Shares, duly endorsed in
blank, Columbia and the Limited Partners will be released from
all further liability or obligation to Nifco and Nifco will be
deemed to have released and fully discharged its security
interest in Limited Partners' units and any other assets of
Columbia or the Limited Partners. Nifco will caused to be
executed and filed such financing change statements and other
discharges as may be required to release and discharge any
such security interest.
(b) PAYMENT OF INTEREST UNDER THE NOTES. Nifco will accept an
assignment of all dividends payable on the Class A Preferred
Shares in full satisfaction of all amounts outstanding under
the Notes in respect of interest payable. If for any reason,
Origin fails to make the dividend payments to the holders of
Class A Preferred Shares or such dividends are insufficient to
pay all interest due under the Notes, Nifco will forego such
interest
<PAGE> 8
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payments or deficiency and interest due under the Notes will
be deemed to be paid and discharged in full by the assignment
of such dividends.
(c) COVENANT OF INDEMNITY. Nifco will indemnify and hold harmless
Columbia from and against any damage, or loss arising from any
misrepresentation, or non-fulfillment or breach of any
covenant, on the part of Nifco under this Agreement, or from
any misrepresentation in, or omission from, any certificate,
or other instrument, furnished, or to be furnished, to
Columbia under this Agreement, and will indemnify, hold
harmless, defend and bear all reasonable costs of defending
Columbia, together with its successors or assigns, from
against or in respect of any and all damage, loss, deficiency,
expense (including but not limited to any reasonable legal
costs or expenses), action, suit, proceedings, demand,
assessment, or judgment to or against Columbia arising out of
or in connection with or caused by:
(i) any debt, obligation or liability of Nifco which was
not expressly assumed by Columbia under the Software
Acquisition Agreements;
(ii) any claim for products liability asserted against
Columbia for or with respect to products sold or
distributed by Nifco;
(iii) any claim for warrant, product support, product
maintenance, software development, or with respect to
the condition of products sold or distributed by
Nifco not expressly assumed by Columbia as provided
in the Software Acquisition Agreements; and
(iv) any claim for breach of the covenants, warranties and
representations of Nifco set forth in Part II,
paragraphs 11(g), (h), (i), (j), (k), (1), (p), (q)
and (x) of the Software Acquisition Agreement made as
of the 18th day of November, 1994 between Columbia
and Nifco.
PART 6 - SURVIVAL OF REPRESENTATIONS AND COVENANTS
6.1 SURVIVAL OF COLUMBIA'S REPRESENTATIONS AND COVENANTS. Any statement
contained in any certificate, or other instrument delivered by, or on behalf of,
Columbia under this Agreement will, unless otherwise expressly stated, survive
the Closing time for a period of two years, and any investigation at any time
made by or on behalf of Origin, and will continue in full force and effect for
the benefit of Origin until the expiry of such period.
6.2 SURVIVAL OF ORIGIN'S REPRESENTATIONS AND COVENANTS. Any representation, or
agreement that may still be applicable, made by Origin in this Agreement will,
unless otherwise expressly stated, and if it may still be applicable, survive
the Closing Time for a period of two years, and any investigation at anytime by,
or on behalf of, Columbia, and will continue in full force and effect for the
benefit of Columbia until the expiry of such period.
6.3 SURVIVAL OF NIFCO'S REPRESENTATIONS AND COVENANTS. All representations and
agreements made by Nifco in this Agreement will survive the Closing Time.
<PAGE> 9
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PART 7 - CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO ORIGIN'S OBLIGATIONS. Any obligation of Origin under
this Agreement is subject to the fulfilment at, or prior to, the Closing Time
of the following conditions and any failure in fulfilment of the conditions
will allow Origin at is option to terminate this Agreement without any further
liability to Origin:
(a) COLUMBIA'S REPRESENTATIONS. Columbia's representations
contained in this Agreement, and in any certificate or
document delivered under this Agreement, or in connection with
the transactions contemplated by this Agreement, will be true
at, and as of, the Closing Time, as if those representations
and warranties were made at and as of, the Closing time.
(b) COLUMBIA'S COVENANTS. Columbia will have performed any
agreement required by this Agreement to be performed by it
prior to or at the Closing Time and will have delivered every
document and anything required to be delivered by it pursuant
to paragraph 8.3.
7.2 WAIVER OF CONDITIONS BY ORIGIN. Each of the conditions set out in paragraph
7.1, is for the exclusive benefit of Origin, and any of those conditions may be
waived, in whole or in part, by Origin at or prior to the Closing time, by
delivering to Columbia and to Nifco a written waiver to that effect.
7.3 CONDITIONS PRECEDENT TO COLUMBIA'S OBLIGATIONS. Any obligation of Columbia
under this Agreement is subject to the fulfilment, prior to or at the Closing
Time, of the following conditions:
(a) ORIGIN'S AND NIFCO'S REPRESENTATIONS. The representations of
Origin and Nifco contained in this Agreement will be true at
and as of the Closing Time as though those representations
were made as of the Closing Time.
(b) ORIGIN'S AND NIFCO'S COVENANTS. The covenants required by this
Agreement to be performed by Origin and Nifco at or prior to
the Closing Time will have been performed and every document
and thing required to be delivered pursuant to paragraphs 8.4
and 8.5 will have been delivered.
(c) LIMITED PARTNERS' APPROVAL. Columbia shall have received the
Limited Partners' Approval required to proceed with this
transaction.
(d) CONSENTS OF THIRD PARTIES. Any consent or approval required to
be obtained by Columbia for the purpose of selling, assigning,
or transferring the Assets, including but not limited to the
approval of the Limited Partners.
(e) CAPITAL REORGANIZATION. Origin shall have completed a
reorganization of its capital which includes the creation of
the Origin Class "A" Preferred Shares and the Origin Class "B"
Preferred Shares.
(f) SMARTSOURCES AGREEMENT. Columbia, Origin and SmartSources
shall have entered into a legally binding agreement (the
"SmartSources Agreement"), in the form and containing the
terms of Schedule 5.
<PAGE> 10
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(g) REPAYMENT OF NIFCO INDEBTEDNESS. Nifco shall have paid to
Columbia all outstanding amounts due and owing pursuant to the
Software Acquisition Agreements in respect of shared sales
revenue up to the Closing Time in the amount of $257,025.03.
Except for the amount due and owing pursuant to the Software
Acquisition Agreements in respect of shared revenue and
amounts which may come due under indemnities provided by
Nifco, Nifco is not currently indebted to Columbia or to the
Limited Partners.
(h) NOTES AND UNIT CERTIFICATES. Nifco shall have tabled at
Closing all original Notes and all Limited Partners' unit
certificates held as security for the repayment of the Notes
(collectively, the "Original Documents"). The Original
Documents shall be held by Nifco's counsel in escrow pending
the repayment of the Notes and the release and discharge of
the security interest over the Limited Partners' units on
October 1, 1999.
(i) DUE DILIGENCE. Columbia shall have satisfactorily completed
its due diligence review of SmartSources and the terms of the
reverse take-over transaction completed by Origin.
(j) LEGAL OPINIONS. Columbia and its counsel shall have received
legal opinions from counsel for Origin, Nifco and
SmartSources, in form of Schedule 7.
7.4 WAIVER OF CONDITIONS BY COLUMBIA. Each of the conditions set out in
paragraph 7.3 is for the exclusive benefit of Columbia, and any of those
conditions may be waived, in whole or in part by Columbia, at or prior to the
Closing Time, by delivering to Origin and to Nifco a written waiver to that
effect.
7.5 CONDITIONS PRECEDENT TO NIFCO'S OBLIGATIONS. Any obligation of Nifco under
this Agreement is subject to the fulfilment at, or prior to, the Closing Time
of the following conditions and any failure in fulfilment of the conditions
will allow Nifco at its option to terminate this Agreement without any further
liability to Nifco:
(a) COLUMBIA'S REPRESENTATIONS. Columbia's representations
contained in this Agreement, and in any certificate or
document delivered under this Agreement, or in connection with
the transactions contemplated by this Agreement will be true
at, and as of, the Closing Time, as if those representations
and warranties were made at and as of, the Closing Time.
(b) COLUMBIA'S COVENANTS. Columbia will have performed any
agreement required by this Agreement to be performed by it
prior to or at the Closing time and will have delivered every
document and anything required to be delivered by it pursuant
to paragraph 8.3.
7.6 WAIVER OF CONDITIONS BY NIFCO. Each of the conditions set out in paragraph
7.5, is for the exclusive benefit of Nifco, and any of those conditions may be
waived, in whole or in part, by Nifco at or prior to the Closing time, by
delivering to Columbia and to Origin a written waiver to that effect.
<PAGE> 11
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PART 8 - CLOSING
8.1 CLOSING TIME. Subject to the terms and conditions of this Agreement, the
purchase and sale of the Assets will be completed at a closing to be held at
9:00 a.m., local time, in Vancouver, on April 30, 1999, or at any other time as
may be agreed upon, in writing, between the parties (the "Closing Time").
8.2 PLACE OF CLOSING. The closing will take place at the offices of the Origin's
lawyers, Allard & Company, Suite 600, 815 Hornby Street, Vancouver, British
Columbia ("Closing").
8.3 DOCUMENTS AND ASSETS TO BE DELIVERED BY COLUMBIA. At Closing Time, Columbia
will deliver or cause to be delivered:
(a) all deeds of conveyance, bills of sale, transfers, and
assignments reasonably required by Origin, and in form and
content satisfactory to Origin's lawyers, appropriate to
effectively vest a good and marketable title to the Assets in
Origin, to the extent contemplated by this Agreement, and
immediately registrable in all places where registration of
any instrument is required or is considered necessary by
Origin;
(b) all Assets in Columbia's possession, which will be delivered
to Origin immediately after completion of the Closing;
(c) the certificate of the president or any director of the
Managing Partner on behalf of Columbia, certifying as to the
fulfillment or waiver of the conditions contained in paragraph
7.3;
(d) the duly prescribed form under subsection 85(2) of the Income
Tax Act;
(e) the duly prescribed form under Section 167 of the Excise Tax
Act;
(f) the duly executed Mutual Release of all claims in the form of
Schedule 6;
(g) a certified extract of the minutes of the special meeting of
Limited Partners, approving the disposition of Columbia's
software and software related assets, including the Assets;
and
(h) such other documents, instruments or assurances as Origin may
reasonably require to give effect to the transactions
contemplated herein.
8.4 DOCUMENTS TO BE DELIVERED BY ORIGIN. At the Closing Time, Origin will
deliver, or cause to be delivered:
(a) a share certificate, registered in Columbia's name,
representing the Origin Class "A" Preferred Shares issuable
pursuant to paragraph 2.4(a);
(b) a share certificate, registered in Columbia's name,
representing the Origin Class "B" Preferred Shares issuable
pursuant to paragraph 2.4(b);
<PAGE> 12
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(c) the SmartSources Agreement;
(d) the duly prescribed form under subsection 85(2) of the Income
Tax Act;
(e) the duly prescribed form under Section 167 of the Excise Tax
Act;
(f) the legal opinions referred to in paragraph 7.3(i); and
(g) such other documents, instruments or assurances as Columbia
may reasonably require to release and discharge all liability,
claim or obligation to Nifco whatsoever arising under the
Software Acquisition Agreements and any security interest
granted in favour of Nifco in connection therewith.
8.5 DOCUMENTS TO BE DELIVERED BY NIFCO. At the Closing Time, Nifco will
deliver or cause to be delivered:
(a) a certified cheque or bank draft for all amounts payable
pursuant to paragraph 7.3(g);
(b) the legal opinions referred to in paragraph 7.3(i); and
(c) such other documents, instruments or assurances as Columbia
may reasonably require to release and discharge all liability,
claim or obligation to Nifco whatsoever arising under the
Software Acquisition Agreements and any security interest
granted in favour of Nifco in connection therewith.
PART 9 - GENERAL
9.1 FURTHER ASSURANCES. The parties shall at all times hereafter, at the request
of any other party, execute and deliver all such further documents, deeds,
instruments and assurances, and do and perform all such further acts, as may be
necessary to give full effect to the intent and meaning of this Agreement.
9.2 ASSIGNMENT. Subject to the terms of this Agreement no party may assign this
Agreement without the written consent of the other parties, and notwithstanding
any such assignment, each party shall remain liable for the obligations
contained within this Agreement.
9.3 NOTICE. Unless otherwise expressly provided in this Agreement, any notice,
request, direction, consent, waiver, extension, agreement or other communication
that is or may be given or made hereunder shall be in writing and either
personally delivered to a responsible officer or the addressee or sent by
telegram or facsimile transmission to:
Origin Software Corp.
Suite 100-2030 Marine Drive
North Vancouver, BC V7P 1V7
Attention: Nathan Nifco
<PAGE> 13
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Nifco Synergy Ltd.
Suite 100-2030 Marine Drive
North Vancouver, BC V7P 1V7
Attention: Nathan Nifco
Columbia Diversified Software Fund Limited Partnership
by its Managing Partner
Suite 310, 1959-152nd Street
South Surrey, BC V4A 9E3
Attention: Larry D. Whitehead
The parties hereto may change their respective addresses for notice given in the
manner aforesaid. Any notice given by telegram or facsimile transmission shall
be deemed to have been received on the next business day after transmission. Any
notice given by personal delivery shall be deemed to have been received on the
business day on which it is delivered and left with a responsible officer at the
recipient's address for notice.
9.4 LAW OF AGREEMENT. This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable therein, as interpreted by the Courts of such province, and
the parties irrevocably attorn to the jurisdiction of the courts of such
province.
9.5 CURRENCY. Any dollar amounts noted herein are represented in Canadian
currency.
9.6 SUCCESSORS AND ASSIGNS. Subject to the restrictions on assignment and
transfer herein contained, this Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators and other legal representatives, successors and assigns.
9.7 SEVERABILITY. Each provision of this Agreement is intended to be severable.
If any provision hereof is illegal or invalid, such illegality or invalidity
shall not effect the validity of the remainder hereof.
9.8 ENTIRE AGREEMENT. This Agreement sets forth all (and is intended by all
parties to be an integration of all) of the representations, promises,
agreements and understandings among the parties hereto with respect to the
purchase and sale of the Work, and the assignment and assumption of the Software
Acquisition Agreement, and there are no representations, promises, agreements or
understandings, oral or written, express or implied, among them other than as
set forth, referred to, or incorporated herein.
9.9 GENDER, ETC. Words importing the singular number only include the plural,
and words in the plural include the singular, and the words importing the
masculine gender shall include the feminine gender and the neuter gender where
the context so requires, and wording importing Person shall include Persons or
vice versa.
9.10 HEADINGS. The division of this Agreement into sections and the article
headings are for convenience or reference only and shall not affect the
interpretation or construction of this Agreement.
<PAGE> 14
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9.11 TIME OF THE ESSENCE. Time shall be of the essence in this Agreement.
9.12 COUNTERPARTS. This Agreement may be signed in one or more counterparts,
each such counterpart taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF this Agreement has been executed under seal as of the date
first above written.
COLUMBIA DIVERSIFIED SOFTWARE FUND LIMITED PARTNERSHIP
by its Managing Partner
COLUMBIA MANAGEMENT SOFTWARE CORP.
Per: /s/ LARRY D. WHITEHEAD
--------------------------------
Authorized Signatory
ORIGIN SOFTWARE CORP.
Per: /s/ JOEL S. DUMARESQ
--------------------------------
Authorized Signatory
Per:
--------------------------------
Authorized Signatory
NIFCO SYNERGY LTD.
Per: /s/ NATHAN NIFCO
--------------------------------
Authorized Signatory
Per:
--------------------------------
Authorized Signatory
