SCHEDULE 14C
Information Required in Information Statement
SCHEDULE 14C INFORMATION
Proxy Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ X ] Definitive Information Statement
Heartsoft, Inc.
------------------------------------------------
(Name of Registrant as specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14c-5(g) and 0-11.
1) Title of each class of securities to which transaction
applies:
__________________________________________________________
2) Aggregate number of securities to which transaction
applies:
__________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
__________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________
5) Total fee paid:
__________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
_________________________________________________________
3) Filing party:
_________________________________________________________
4) Date Filed:
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<PAGE 2>
HEARTSOFT, INC.
NOTICE OF ACTION TAKEN
BY WRITTEN CONSENT OF MAJORITY STOCKHOLDERS
Holders of a majority of the issued and outstanding stock
entitled to vote of Heartsoft, Inc. (the "Company"), holding
2,702,807 votes out of a total of 5,394,824 votes, or 51%, have
submitted to the Company written consents of stockholders
consenting to the sale by the Company of an undivided 15%
interest in its Heartsoft K-8 Library (the "Software Library"),
following which sale the Company will have effectively disposed
of a total undivided 45% interest in the Software Library (by
means of the previous two sales of an 15% interest each, on
essentially identical terms to those approved by the stockholder
consent).
This Information Statement is being sent to all stockholders of
the Company to inform you that the above action will be taken by
the Company as soon as possible, but no earlier than October 26,
1997.
By Order of the Board of Directors
/s/ Jimmy L. Butler
------------------------
Jimmy L. Butler
Secretary
Broken Arrow, Oklahoma
October 6, 1997
<PAGE 3>
HEARTSOFT, INC.
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is furnished to the stockholders
of Heartsoft, Inc. (the "Company") to advise them of certain
corporate actions described herein, which have been authorized by
the written consent of stockholders owning a majority of the
shares of common stock, $.0005 par value ("Common Stock") of the
Company entitled to vote thereon, pursuant to the requirements of
the General Corporation Law of Delaware and the Securities
Exchange Act of 1934, as amended ("Exchange Act") and the
regulations promulgated thereunder.
As described herein, by unanimous written consent dated
September 19, 1997, the Board of Directors of the Company
authorized the sale of an undivided 15% interest of the Company's
Heartsoft K-8 Library (the "Software Library"). The Board of
Directors fixed September 1, 1997 as the record date for the
determination of stockholders entitled to vote with respect to
the stockholder authorization of the sale. Thereafter, on
September 22, 1997, seven stockholders ("Majority Stockholders")
who are owners of record of 2,702,807 (51%) of the Common Stock,
the Company's only class of voting stock outstanding, executed
and delivered to the Company their written consents to authorize
the sale. Accordingly, all corporate actions necessary to
authorize the sale have been taken.
Pursuant to the regulations promulgated under the Exchange
Act, the authorization of the sale by the Board of Directors and
Majority Stockholders shall not become effective until twenty
days after the Company has mailed this Information Statement to
the stockholders of the Company. Promptly following the
expiration of such twenty day period, the Company intends to
consummate the sale.
This Information Statement is first being sent to
stockholders on or about October 6, 1997.
<PAGE 4>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of September 1, 1997 (the record date), the Company had
issued a total of 5,394,824 shares of $.0005 par value Common
Stock. Each share of Common Stock is entitled to one vote on all
matters submitted to a vote by stockholders. While the Company
also had issued and outstanding as of the record date 1,058,500
shares of 12% Convertible Preferred Stock, $.01 par value, none
of such shares are entitled to vote. The consent of the holders
of a majority of all of the outstanding shares of Common Stock
was sought to authorize the sale.
The following table sets forth, as of September 1, 1997, the
aggregate number of shares of Common Stock of the Company owned
of record or beneficially by the only persons who owned of
record, or are known by the Company to own beneficially, more
than 5% of the Company's Common Stock, each officer whose 1996
salary and bonus exceeded $100,000 ("Executive Officers"), and
the name and share ownership of each other director and such
officers and all directors as a group:
Name and address of the 5%
stockholders and each
Executive Officer Number of shares of Percent
and names of other directors owned (1) class
- -----------------------------------------------------------------
Benjamin P. Shell (2) 954,462 17.7
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
Jimmy L. Butler (2) 930,674 17.3
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
Executive Officers and all directors
as a group (2 persons) 1,885,136 (4) 35.0 (4)
- -------------------------------------
(1) All shares are held beneficially and of record and the owner
has sole voting and investment power with respect thereto,
except as otherwise noted.
(2) Messrs. Shell and Butler are also directors.
TERMS OF THE SALE
The Company will sell an undivided 15% interest in the
Software Library pursuant to the terms of a Software Agreement
("Software Agreement") to be entered into between the Company and
Heartsoft III 1997 Limited Partnership, an Ontario limited
partnership (the "Partnership"). The Partnership's address is
225 Richmond Street West, Suite 400, Toronto, Canada M5V 1W2, and
its general partner is CVILP Management, Inc.
The Software Agreement is virtually identical to two
previous software agreements pursuant to which the Company
conveyed an aggregate undivided 30% interest in the Software
Library previously (to the Heartsoft 1997 Limited Partnership, in
May of 1997, and the Heartsoft II 1997 Limited Partnership in
August of 1997). Pursuant to the terms of the Software
Agreement, the Company will sell the interest in the Software
Library for a maximum of $1,750,000 (Canadian) (currently,
$189,000 U.S.), less related expenses, which is payable $262,500
(currently, $28,350 U.S.) at closing, $262,500 ($28,350 U.S.) on
May 31, 1998, with the balance of $1,225,000 (currently, $132,300
U.S.) evidenced by a promissory note (the "Acquisition Note") ,
which is payable from funds generated by the Partnership through
a joint venture with the Company (evidenced by a Joint Venture
Agreement, the terms of which are more completely described
below). A copy of the form of the Software Agreement is included
as Exhibit "A", a copy of the form of the Acquisition Note is
included as Exhibit "B", and a copy of the form of Joint Venture
Agreement is included as Exhibit "C".
<PAGE 5>
The Company has no involvement or association with the
Partnership other than through the Joint Venture Agreement. The
Partnership is being formed by its general partner to acquire the
investment in the Software Library and to take advantage of
certain Canadian tax laws. The general partner of the
Partnership is responsible for its formation and operation. In
the event the funds raised by Partnership are less than the
maximum sought by the general partner, the purchase price to be
paid to the Company will be proportionately reduced.
Pursuant to the Joint Venture Agreement between the Company
and the Partnership, Heartsoft and the Partnership jointly share
in the revenues attributable to the future sales of product
utilizing the Software Library. The Partnership is entitled to
100% of all "gross sales" each year until all interest owed to
the Company under the Acquisition Note is paid in full. After
all interest has been paid, and until all principal and interest
has been paid, the Partnership and the Company each are entitled
to 50% of the "gross margin" from sales attributable to the
interest in the Software Library. The "gross margin" is all
gross revenues generated from the interest in the Software
Library, less returns, discounts and cost of goods sold. After
the Acquisition Note has been paid in full (including all accrued
interest), the Company is entitled to 75% of the Gross Margin,
and the Partnership the remaining 25%.
In addition (and assuming the maximum contributions are
received by the Partnership in its formation), the Company has
the obligation to contribute to the Partnership $166,250
(currently, $17,955 U.S.) upon formation of the Joint Venture,
and an additional $201,250 (currently, $21,735 U.S.) on May 31,
1998, to fund certain expenses of the Joint Venture. Also, after
January 1, 1999, the Company has the option of terminating the
Joint Venture and reacquire the interest in the Software Library
at a price to be negotiated in good faith.
EFFECT OF SALE
The Company made a similar sale of an undivided 15% interest
in the Software Library in May, 1997, and again in August, 1997.
While each transaction was an independent transaction, and at no
time was the Company obligated to sell any additional interest in
the Software Library by reason of these earlier transactions,
because following the proposed transaction the Company will have
conveyed an aggregate 45% interest in the Software Library, the
Company's Board of Directors sought the approval for this sale
from the holders of a majority of the Common Stock, and decided
to provide notice to all other stockholders through this
Information Statement of not only this sale but of the two prior
sales.
<PAGE 6>
While the undivided 15% interest in the Software Library
constitutes only 3.2% of the assets of the Company (based on the
maximum value which could be received by the Company in exchange
pursuant to the Software Agreement), management believes that the
majority of the Company's revenues during the past twelve months
have been derived from its retail sales of products utilizing the
Software Library. As a result of the structure of the sale and
Heartsoft's continued participation in revenues attributable to
sales of the Software Library, until the acquisition notes have
been paid in full from all three sales, the Company's share of
revenue from the Software Library will be reduced from 100% to
approximately 87.4% (55% from the Software Library continued to
be owned outright, and approximately 50% of the 45% interest
shared through the three joint ventures, less payments on the
Acquisition Note following the Partnership's distributions to its
partners). Such calculation does not take into account the
contributions to the three joint ventures which the Company is
obligated to make, but also does not take into account that the
revenue stream to which it is entitled through these joint
ventures is based on a percentage of gross margin (i.e., each of
the three partnerships shares its proportionate part of the
Company's cost of goods sold attributable to the applicable
interest in the Software Library).
By Order of the Board of Directors
/s/ Benjamin P. Shell
--------------------------
Benjamin P. Shell
Chairman of the Board
October 6, 1997
<PAGE 7>
EXHIBIT A TO INFORMATION STATEMENT
SOFTWARE AGREEMENT
THIS AGREEMENT made as of the ( day of September, 1997 BETWEEN:
HEARTSOFT INC., a Delaware corporation
(hereinafter referred to as "Heartsoft")
OF THE FIRST PART
-and-
HEARTSOFT III 1997 LIMITED PARTNERSHIP,
an Ontario limited partnership
(hereinafter referred to as the "Partnership")
OF THE SECOND PART
WHEREAS Heartsoft is the owner of an 70% undivided interest
in Heartsoft K-8 Library, a set of 50 educational software
application programs;
AND WHEREAS the Partnership wishes to purchase and Heartsoft
wishes to sell an undivided 15% interest, in perpetuity, in
and to the Heartsoft K-8 Library (such 15% undivided
interest hereinafter referred to as the "Computer
Programs");
AND WHEREAS in partial payment of the purchase price for the
Computer Programs, the Partnership intends to execute and
deliver to Heartsoft the Acquisition Note;
AND WHEREAS Heartsoft and the Partnership have agreed to
form a joint venture for the purposes of marketing and
exploiting the Computer Programs throughout the world;
NOW THEREFORE in consideration of the sum of one dollar
($1.00), and other good consideration, now paid by each of
the parties hereto to the other (the receipt and sufficiency
of which is hereby acknowledged), the parties hereto hereby
covenant and agree as follows:
1. DEFINITIONS
1.01 For the purpose of this Agreement, the following terms
shall be deemed to have the following meanings:
"Acquisition Note" means the promissory note given by the
Partnership to Heartsoft pursuant to section 2.02 of this
agreement, in the form attached as Appendix "A" hereto;
"Affiliate" has the meaning ascribed thereto in the
Securities Act (Ontario);
"Associate" has the meaning ascribed thereto in the
Securities Act (Ontario) and also includes any person who
does not deal at arm's length (as that term is defined in
the Income Tax Act (Canada)) with such associate;
"Bank" means a chartered bank with offices in Tulsa,
Oklahoma, as selected from time to time by the Executive
Committee;
"Closing" means the closing of the sale of the Computer
Programs, expected to take place on or about July 30, 1997,
and in any event no later than the Final Closing Date;
"Computer Programs" means an undivided 15% interest, in
perpetuity, in and to the Heartsoft K-8 Library, a set of 50
educational software application programs, as more
particularly described in Appendix "B" hereto, together with
all Enhancements, Derivative Works and Maintenance
Modifications;
<PAGE 8>
"Derivative Work" means a work that (a) is derived from the
Computer Programs or any part thereof, including revisions,
modifications, translations, abridgments, condensations,
expansions and any other form in which the Computer Programs
may be duplicated, recast, transformed or adapted, (b) is
created or completed by the Partnership, Heartsoft or any
Associate of any of them, and (c) would, if prepared without
authorization from the owner of the copyright in the
Computer Programs, constitute an infringement of copyright;
"Enhancement" means any enhancement, modification, addition
or update of the Computer Programs, made by or on behalf of
Heartsoft or the Partnership, and which accomplish
incidental, performance, structural or functional
improvements to the Computer Programs;
"Executive Committee" means the executive committee of the
Joint Venture, as selected by Heartsoft and the Partnership
in accordance with the terms of this agreement.
"Final Closing Date" means December 31, 1997.
"General Partner" means CVI LP Management Inc., the general
partner of the Partnership, and any replacement general
partner of the Partnership;
"Joint Venture" means the joint venture between the
Partnership and Heartsoft to market and exploit the Computer
Programs throughout the world;
"Joint Venture Agreement" means the joint venture agreement
entered into as of August 27, 1997 between the Partnership
and Heartsoft;
"Losses" means any and all loss, damage, claim, demand,
deficiency, cost and expense, including interest, compound
interest and legal fees on a solicitor and his or her own
client basis;
"Maintenance Modifications" means modifications, updates or
revisions made by Heartsoft to the Computer Programs which
correct errors, support new releases of operating systems or
support new models of the Computer Programs;
"Offering" means the offering of a minimum of 1,250 and a
maximum of 1,75 units in the Partnership at $1,000 per unit
pursuant to the offering memorandum of the Partnership dated
May 30, 1997.
"Partnership" means Heartsoft III 1997 Limited Partnership,
a limited partnership formed under the laws of the Province
of Ontario;
"Purchase Price" means the purchase price paid by the
Partnership to Heartsoft for the Computer Programs, as
determined in accordance with section 2.02 of this
agreement;
2. AGREEMENTS OF PURCHASE AND SALE
2.01 In consideration of the payment of the Purchase Price,
and of the fulfillment of the other obligations of the
Partnership hereunder, Heartsoft hereby sells, assigns and
transfers all right, title and interest in and to the
Computer Programs to the Partnership in perpetuity.
2.02 The Purchase Price for the Computer Programs shall be
$1,750,000 (one million seven hundred fifty thousand
dollars), payable by the Partnership to Heartsoft as
follows:
(a) as to $525,000 (five hundred twenty five thousand
dollars), by certified cheques in two instalments of
$262,500 each, the first of at Closing and the second on May
30, 1998; and
(b) as to $1,225,000 (one million two hundred twenty five
thousand dollars), by way of execution and delivery of the
Acquisition Note.
2.03 Upon execution of this agreement, Heartsoft shall
deliver to the Partnership four complete copies of the
source code of the Computer Programs, of which:
(a) two shall be in machine readable form on a machine
readable storage medium suitable for long-term storage and
compatible with either Macintosh or IBM PC computer systems;
and
(b) two shall be in human readable form with annotations in
the English language on bond paper suitable for long-term
archival storage.
<PAGE 9>
2.04 In the event that less than $1.75 million is raised
pursuant to the Offering, the Purchase Price and the payment
schedule set out in section 2.02 of this agreement shall be
reduced pro rata.
3. PROTECTION, MAINTENANCE AND ENHANCEMENT
3.01 Heartsoft shall develop, regenerate and continuously
update the Computer Programs in order to maintain the
commercial competitiveness and effective operation of the
Computer Programs.
3.02 The parties hereto acknowledge that the Computer
Programs contain valuable proprietary trading information,
and each party hereto shall not disclose to any other person
the source codes of the Computer Programs nor any other
information concerning the Computer Programs without the
written consent of all of the parties hereto.
3.03 Heartsoft hereby acknowledges that all Maintenance
Modifications, Enhancements and Derivative Works shall be
considered part of the Computer Programs and shall become
and remain the sole and exclusive property of the
Partnership.
4. REPRESENTATIONS AND WARRANTIES
4.01 Heartsoft hereby represents and warrants to the
Partnership that the following representations and
warranties are true and correct as of the date hereof, and
acknowledges that the Partnership is relying on such
representations and warranties in connection with the
performance of its obligations under this agreement:
(a) Heartsoft is a corporation duly incorporated, organized
and validly subsisting under the laws of the State of
Delaware;
(b) This agreement constitutes a valid and binding
obligation of Heartsoft, enforceable against it in
accordance with its terms, and each of the instruments and
documents necessary to give effect to the transactions
contemplated herein will, when executed and delivered,
constitute a valid and binding obligation of Heartsoft,
enforceable against it in accordance with its terms;
(c) The entering into of this agreement and the
consummation of the transactions contemplated herein have
not resulted and will not result in the violation of or
default under any of the terms and provisions of any trust
deed, hypothecation, indenture, mortgage, lease, agreement,
written or oral, license or permit to which Heartsoft is a
party or by which it may be bound;
(d) The entering into of this agreement and the
consummation of the transactions contemplated herein will
not result in the violation of any statute, regulation,
judgment, decree or law to which Heartsoft may be subject,
or any applicable order of any court, arbitrator or
government authority having jurisdiction over Heartsoft or
its property;
(e) Heartsoft is not materially in default or breach of any
contract, agreement, lease or other instrument to which it
is a party or by which it may be bound, nor is Heartsoft
aware of any state of facts which after notice or the
passage of time, or both, would constitute such a material
default or breach;
(f) The Computer Programs are an original work of
Heartsoft, and Heartsoft has exclusive right, title and
interest in and to and is the sole owner of the Computer
Programs;
(g) Heartsoft has the full right to sell, transfer and
assign the Computer Programs in the manner contemplated in
this agreement and without any restriction, encumbrance,
lien, security interest attaching thereto;
(h) Heartsoft has not granted, transferred, licensed or
assigned any right or interest in or to the Computer
Programs to any other person, and there are no contracts,
agreements, licenses or other commitments or arrangements in
effect with respect to the Computer Programs which might or
could permit the manufacture, marketing distribution or
other exploitation or use of the Computer Programs by any
other person;
(i) The execution and delivery of this agreement, the
transfer of the Computer Programs to the Partnership and the
use of the Computer Programs by the Partnership and
Heartsoft as contemplated in this agreement has not and will
not result in the infringement of any copyright, trademark,
trade secret, intellectual property right or any other
proprietary rights of any other person; and
<PAGE 10>
(j) The Computer Programs have been prepared in a
workmanlike manner and with professional diligence and
skill, will function efficiently in the machines and with
operating systems for which they are designed, are free from
defect, deficiency, design flaw or bug of any nature and
will otherwise be wholly suitable for the purpose for which
the Partnership intends to use them and for which they have
been designed.
4.02 The representations and warranties set out in section
4.01 above shall survive and continue in full force and
effect for the benefit of the Partnership until ten years
after the expiry or termination of this agreement, including
all amendments, extensions and renewals thereof.
4.03 No claim by the Partnership for breach of
representation or warranty by Heartsoft shall be valid
unless Heartsoft has been given notice thereof before the
date on which the representation or warranty shall have
terminated in accordance with section 4.02 above.
4.04 The Partnership hereby represents and warrants to
Heartsoft that the following representations and warranties
are true and correct as of the date hereof, and acknowledges
that Heartsoft is relying on such representations and
warranties in connection with the performance of its
obligations under this agreement:
(a) The Partnership is a limited partnership duly
registered and in good standing in the Province of Ontario;
(b) This agreement constitutes a valid and binding
obligation of the Partnership, enforceable against it in
accordance with its terms, and each of the instruments and
documents necessary to give effect to the transactions
contemplated herein will, when executed and delivered by the
Partnership, constitute a valid and binding obligation of
the Partnership, enforceable against it in accordance with
its terms;
(c) The entering into of this agreement and the
consummation of the transactions contemplated herein have
not resulted and will not result in the violation of or
default under any of the terms and provisions of any trust
deed, hypothecation, indenture, mortgage, lease, agreement,
written or oral, license or permit to which the Partnership
is a party or by which it may be bound;
(d) The entering into of this agreement and the
consummation of the transactions contemplated herein will
not result in the violation of any statute, regulation,
judgment, decree or law to which the Partnership may be
subject, or any applicable order of any court, arbitrator or
government authority having jurisdiction over the
Partnership or its property;
(e) the Partnership is not materially in default or breach
of any contract, agreement, lease or other instrument to
which it is a party or by which it may be bound, nor is it
aware of any state of facts which after notice or the
passage of time, or both, would constitute such a material
default or breach; and
(f) the Partnership has taken all such steps and done all
such things as may be necessary in order to allow the
Partnership to carry out the joint venture agreed to herein,
including but not limited to obtaining all such licenses,
registrations, authorizations and permits necessary to carry
on business in and from Ontario;
4.05 The representations and warranties set out in section
4.04 above shall survive and continue in full force and
effect for the benefit of Heartsoft until ten years after
the expiry or termination of this agreement, including all
amendments, extensions and renewals thereof.
<PAGE 11>
4.06 No claim by Heartsoft for breach of representation or
warranty by the Partnership shall be valid unless the
Partnership has been given notice thereof before the date on
which the representation or warranty shall have terminated
in accordance with section 4.05 above.
5. INDEMNIFICATION
5.01 The general indemnifications set out in this section
are in addition to any specific obligation of either of the
parties hereto to indemnify the other hereunder.
5.02 Heartsoft shall indemnify and save harmless the
Partnership for and from and against any Losses suffered by
it as a result of any inaccuracy in or breach of any
representation or warranty by Heartsoft, or the failure of
Heartsoft to fulfill any condition or perform any covenant
as provided herein or in the Joint Venture Agreement.
5.03 The Partnership shall indemnify and save harmless
Heartsoft for, from and against any Losses suffered by it as
a result of any inaccuracy in or breach of any
representation or warranty by the Partnership or the failure
of the Partnership to perform any covenant as provided
herein.
5.04 Notwithstanding anything else in this section, each of
the parties hereto shall have an obligation to mitigate any
Losses which are the subject of a claim for indemnification.
6. TERMINATION
6.01 Notwithstanding any other term of this agreement, the
Partnership may, but is not obligated to, terminate this
agreement upon 30 days written notice in the event that:
(a) Heartsoft becomes bankrupt or insolvent or makes an
assignment for the benefit of its creditors;
(b) Heartsoft takes steps to wind-up, dissolve or
liquidate, except for internal corporate reorganizations,
mergers or shareholder reorganizations;
(c) if a trustee, receiver, receiver and manager or
other Custodian is appointed with respect to the assets or
undertaking of Heartsoft; or
(d) there is a material breach of a material term of
the Software Agreement by Heartsoft.
6.02 On or after January 1, 1999, but subject to section
6.03 of this agreement, Heartsoft may, but is not obligated
to, terminate this agreement upon 30 days written notice to
the Partnership.
6.03 In the event that Heartsoft elects to terminate this
agreement in accordance with section 6.02 of this agreement,
Heartsoft and the Partnership shall negotiate, in good
faith, a price at which the Partnership's interest in the
Computer Programs shall be acquired by Heartsoft. In the
event that Heartsoft and the Partnership cannot in good
faith determine that price within 30 days, then an
independent appraiser shall be retained to determine the
price, and the cost of such appraisal shall be borne equally
by Heartsoft and the Partnership.
7. NOTICE
7.01 Any notice, direction or other instrument required or
permitted to be given pursuant to this agreement shall be in
writing and may be given by delivering the same or sending
the same by pre-paid first-class mail or by telecopier to
the appropriate party as follows:
(a) To Heartsoft:
3101 North Hemlock Circle
Broken Arrow, Oklahoma
74012
Attention: Bryan Reusser
Fax: 918-251-4018
(b) The Partnership:
c/o CVI LP Management Inc.
225 Richmond Street West
Suite 400
Toronto, Ontario
M5V 1W2
Attention: Greg Coleman
Fax: 416-593-6157
<PAGE 12>
7.02 Any such notice, direction or other instrument, if
delivered, shall be deemed to have been given on the date on
which it was delivered and, if sent by mail, shall be deemed
to have been given on the seventh (7th) business day
following the date of mailing and, if transmitted by
telecopier, shall be deemed to have been given at the
opening of business in the office of the addressee on the
business day next following the transmission thereof.
7.03 Any party hereto may change its address for service or
telecopier number from time to time by notice given to the
other parties hereto in accordance with the foregoing.
8. FURTHER ASSURANCES AND ACTIONS
8.01 Each of the parties hereto shall sign and deliver such
further and other documents, instruments, notices and papers
and do and perform and cause to be done and performed such
further and other acts and things as may be necessary or
desirable in order to give full effect to the purpose and
intent of this agreement and all ancillary agreements
relating to the transactions contemplated herein.
9. GENERAL MATTERS
9.01 Unless otherwise expressly stated, all dollar amounts
referred to in this agreement are expressed and shall be
payable in Canadian dollars.
9.02 In this agreement, unless the context otherwise
requires, words importing number include the singular and
plural, words importing gender include all genders, and
words importing persons shall include firms, corporations,
trusts, estates, government agencies and departments and all
other types of entities, and vice versa.
9.03 In this agreement, any reference to "generally accepted
accounting principles" mean the principles established in
and amended from time to time by the Handbook of the
Canadian Institute of Chartered Accountants.
9.04 Each of the provisions contained in this agreement is
distinct and severable, and a declaration of invalidity of
unenforceability of one or more provisions of this agreement
by any court of competent jurisdiction shall not effect the
validity or enforceability of any other provision hereof.
9.05 This agreement constitutes the entire agreement between
the parties pertaining to the transaction contemplated
herein and supersedes all prior agreements, and there are no
other warranties, representations or agreements between the
parties in connection with the transactions contemplated
herein.
9.06 This agreement shall be governed by and interpreted in
accordance with the laws of the Province of Ontario and the
laws of Canada as applicable therein. Each of the parties
hereto irrevocably attorns and submits to the jurisdiction
of the courts of the Province of Ontario.
9.07 Headings used in this agreement are for convenience of
reference only and do not form a part of this agreement, nor
are they intended to interpret, define or limit the scope,
extent or intent of this agreement or any provision hereof.
<PAGE 13>
9.08 Any reference in this agreement to a statute shall
include and shall be deemed to be a reference to such
statute and the regulations made pursuant thereto, with
amendments made thereto and in force from time to time, and
to any statute or regulation that may be passed which has
the effect of supplementing or superseding the statute so
referred to or the regulations made pursuant thereto.
9.09 Any reference in this agreement to any entity shall
include and shall be deemed to be a reference to any entity
that is a successor to such entity.
9.10 Time shall be of the essence in this agreement.
9.11 This agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and
the same agreement.
9.12 This agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs,
legal personal representatives, successors and assigns, but
shall not be assignable by any party hereto without the
written consent of the other parties hereto.
9.13 No waiver of any provision of this agreement shall
constitute a waiver of any other provision nor shall any
waiver of any provision of this agreement constitute a
continuing waiver unless otherwise expressly provided.
EXECUTED at Toronto this ( day of September, 1997
HEARTSOFT INC.
Per:
Benjamin P. Shell - Chief Executive Officer
HEARTSOFT III 1997 LIMITED PARTNERSHIP, by
its general partner, CVI LP MANAGEMENT INC.
Per:
Greg Coleman - President
<PAGE 14>
EXHIBIT B TO INFORMATION STATEMENT
ACQUISITION NOTE
September , 1997
Toronto, Ontario
MATURITY DATE: September 1, 2007
FOR VALUE RECEIVED, the undersigned (the "Maker")
acknowledges itself indebted to and promises to pay to
Heartsoft Inc. (the "Holder") on the dates specified below
at 225 Richmond Street West, Suite 400, Toronto, Ontario,
M5V 1W2 (or at such other place as the Holder may from time
to time designate in writing to the Maker), the principal
sum of $1,225,000 (one million two hundred twenty five
thousand dollars) (the "Principal Sum") in lawful money of
Canada, together with interest thereon as set forth herein.
The Principal Sum plus all accrued and unpaid interest
thereon shall be due and payable by the Maker to the Holder
in full on September 1, 2007.
The Principal Sum from time to time outstanding shall bear
interest from and after the date hereof at the rate of five
percent (5%) per annum, payable in U.S. dollars, compounded
annually both before and after demand, default, maturity and
judgment with interest on overdue principal and interests at
the same rate until the date of payment in full. The Maker
shall pay all accrued and unpaid interest on the principal
amount outstanding from time to time, annually, in arrears,
on or before January 30 of each year.
In the event that the Maker defaults in payment of any sum
due hereunder, and fails to correct that default within 30
days of receiving written notice from the Holder, the
Principal Sum then outstanding together with accrued but
unpaid interest may, at the Holder's option, be accelerated
and immediately become due and payable in full, with
interest thereon from such date at the rate as specified
herein.
So long as the Maker is not in default in the making of any
payment due hereunder, it shall have the right to prepay at
any time and from time to time all or any part of the
Principal Sum then outstanding, and any interest thereon,
without notice, bonus or penalty, provided that the right of
the Maker to make any such prepayments shall be conditional
upon payment by the Maker to the Holder of all accrued and
unpaid interest owing in respect of the Principal Sum to the
date of any such prepayment.
The provisions of this promissory note shall enure to the
benefit of the Holder (who may not transfer, assign, pledge
or otherwise encumber this promissory note without the
express written consent of the Maker, which consent may be
unreasonably withheld) and shall be binding upon the Maker
and its successors and assigns. The Maker hereby waives
presentment, protest, demand, notice of protest and notice
of dishonour of this promissory note and expressly agrees
that this promissory note and any payment due hereunder may
be extended from time to time by the Holder without in any
way affecting the liability of the Maker.
The Maker agrees to pay to the Holder 100% of Gross
Receipts, as defined in the offering memorandum of the Maker
dated May 30, 1997 (the "Offering Memorandum"), on an annual
basis, until all of the interest owing under this promissory
note is paid in full, and to pay to the Holder 44% of
Distributable Cash (as defined in the Offering Memorandum)
until all principal owing under this promissory note has
been paid in full.
<PAGE 15>
This promissory note is issued by the Maker and accepted by
the Holder as partial payment of the consideration due under
a software agreement dated September (, 1997 between the
Maker and the Holder, and this promissory note is subject to
the terms and conditions of that agreement.
This promissory note shall be governed by and construed in
accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein.
Executed at Toronto, Ontario this ( day of September, 1997.
HEARTSOFT III 1997 LIMITED
PARTNERSHIP, by its General
Partner, CVI LP MANAGEMENT INC.
Per:
Greg Coleman - President
<PAGE 16>
EXHIBIT C TO INFORMATION STATEMENT
JOINT VENTURE AGREEMENT
THIS AGREEMENT made as of the ( day of September, 1997
BETWEEN:
HEARTSOFT INC., a Delaware corporation
(hereinafter referred to as "Heartsoft"),
OF THE FIRST PART
-and-
HEARTSOFT III 1997 LIMITED PARTNERSHIP, an Ontario
limited partnership (hereinafter referred to as the
"Partnership")
OF THE SECOND PART
WHEREAS the Partnership has acquired from Heartsoft an
undivided 15% interest in and to Heartsoft K-8 Library, a
set of 50 educational application software programs (the
"Computer Programs");
AND WHEREAS the Partnership and Heartsoft wish to form and
operate a joint venture to market and exploit the Computer
Programs throughout the world;
NOW THEREFORE in consideration of the sum of one dollar
($1.00), and other good consideration, now paid by each of
the parties hereto to the other (the receipt and sufficiency
of which is hereby acknowledged), the parties hereto hereby
covenant and agree as follows:
1. DEFINITIONS
1.1 For the purpose of this Agreement, the following terms
shall be deemed to have the following meanings:
(a) "Affiliate" has the meaning ascribed thereto in the
Securities Act (Ontario);
(b) "Associate" has the meaning ascribed thereto in the
Securities Act (Ontario) and also includes any person who
does not deal at arm's length (as that term is defined in
the Income Tax Act (Canada)) with such associate;
(c) "Auditors" means the international firm of licensed
auditors to be engaged by the Executive Committee in order
to give effect to section 6 of this agreement;
(d) "Bank" means a chartered bank selected from time to
time by the Executive Committee;
(e) "Bank Account" means the bank account of the
Partnership and Heartsoft to be opened at a Bank with
offices in Tulsa, Oklahoma in accordance with the terms of
section 4 of this agreement;
<PAGE 17>
(f) "Business Plan" means the business plan of Heartsoft
dated October, 1996, a copy of which has been provided to
the Partnership, as may be amended and updated from time to
time;
(g) "Computer Programs" means an undivided 15% interest in
and to Heartsoft K-8 Library, a set of 50 educational
application software programs;
(k) "General Partner" means CVI LP Management Inc., the
general partner of the Partnership, and any replacement
general partner of the Partnership;
(l) "Gross Margin" means Gross Sales less returns,
discounts to arm's length parties and the cost of goods sold
(all costs associated with the acquisition of components,
assembly of finished products and shipping);
(m) "Gross Sales" shall mean the aggregate of all gross
revenues generated by the marketing and exploitation of the
Computer Programs;
(n) "Joint Venture" means the joint venture between the
Partnership and Heartsoft to market and exploit the Computer
Programs, the terms of which are set out in this agreement;
(o) "Joint Venture Funds" means the maximum of $367,500 to
be contributed by Heartsoft to the Joint Venture pursuant to
section 4 of this agreement;
(p) "Losses" means any and all loss, damage, claim, demand,
deficiency, cost and expense, including interest, compound
interest and legal fees on a solicitor and his or her own
client basis;
(q) "Offering" means the offering of a maximum of 1,750
units in the Partnership pursuant to the terms and
conditions set out in the Offering Memorandum;
(r) "Offering Memorandum" means the offering memorandum of
the Partnership dated June 25, 1997, and any amendments
thereto;
(s) "Partnership" means Heartsoft III 1997 Limited
Partnership, a limited partnership formed under the laws of
the Province of Ontario;
(t) "Quarterly Report" means the quarterly report prepared
by the Executive Committee and provided to Heartsoft and the
Partnership in accordance with the terms of section 6.1 of
this agreement;
(u) "Software Agreement" means the software agreement dated
September (, 1997 between the Partnership and Heartsoft,
pursuant to which the Partnership acquired the Computer
Programs;
2. FORMATION OF JOINT VENTURE
2.1 The parties hereto agree to form a joint venture, the
purpose of which shall be to market and exploit the Computer
Programs throughout the world, in accordance with the terms
and conditions of this agreement.
2.2 Subject to Section 10 of this agreement, the term of
the Joint Venture shall commence upon the execution of this
agreement and continue until March 1, 2012.
2.3 Upon written notice given by the Partnership to
Heartsoft not less than 60 days prior to the expiry of the
term of the joint venture and any extensions thereto, the
term of this agreement and the joint venture shall be
extended for an additional ten (10) years upon the same
terms and conditions as contained herein.
<PAGE 18>
3. FORMATION OF EXECUTIVE COMMITTEE
3.1 The Partnership and Heartsoft shall form an Executive
Committee, the purpose of which shall be to:
(a) implement the Business Plan with such additions and
amendments and changes as the Executive Committee may
determine;
(b) approve the hiring and monitor the performance of the
key personnel necessary to operate the Joint Venture;
(c) prepare or cause to be prepared a detailed budget (the
"Budget") for the Joint Venture;
(d) oversee the long-term planning of the Joint Venture;
(e) approve all expenditures of the Joint Venture in excess
of $25,000;
(f) report to the Partnership and Heartsoft in accordance
with the terms of section 6 of this agreement; and
(g) do all such other things as may be necessary in order
to administer, manage, control and operate the business of
the Joint Venture in accordance with the terms of the
Business Plan.
3.2 The Executive Committee shall be comprised of three
persons, the first of which shall be selected by the
Partnership, the second of which shall be selected by
Heartsoft and the third of which shall be selected by the
Partnership and Heartsoft together. In the event that the
Partnership and Heartsoft cannot agree on the third member
of the Executive Committee, Heartsoft shall be entitled to
select that member, provided that such member has the skills
and qualifications necessary to fulfil his or her duties as
a member of the Executive Committee.
3.3 The Executive Committee shall meet regularly, and in no
event less than every quarter, either in person or by
telephone, in order to carry out its obligations under this
agreement.
3.4 Subject to section 3.5 of this agreement, at any
meeting of the Executive Committee, provided proper notice
of such meeting has been given to every member of the
Executive Committee, the approval of any two members of the
Executive Committee shall be sufficient to determine any
matter.
3.5 Notwithstanding section 3.4 of this agreement,
decisions of the Executive Committee in respect of the
following matters shall require the consent of all members
of the Executive Committee:
(a) changing or selling all or substantially all of the
business or assets of the Joint Venture;
(b) amending this agreement;
(c) agreeing to any compromise or arrangement with any
creditor or class or classes of creditors;
(d) borrowing money;
(e) dissolving or terminating the Joint Venture except in
accordance with the terms of this agreement; or
(f) approving the settlement of any action against the
Joint Venture.
<PAGE 19>
4. FUNDING OF JOINT VENTURE EXPENSES
4.1 Upon execution of this agreement, Heartsoft shall
deposit into a bank account (the "Bank Account") at a Bank
the sum of $166,250 (the "Joint Venture Funds"), which,
along with any interest on such deposit, shall be used
solely for the purpose of paying the expenses of the Joint
Venture in accordance with the Budget and the decisions of
the Executive Committee.
4.2 On May 30, 1998, Heartsoft shall deposit into the Bank
Account the additional sum of $201,250 (the "Joint Venture
Funds"), which, along with any interest on such deposit,
shall be used solely for the purpose of paying the expenses
of the Joint Venture in accordance with the Budget and the
decisions of the Executive Committee.
4.3 Notwithstanding sections 4.1 and 4.2 of this agreement:
(a) in the event that the Partnership raises less than
$1,750,000 pursuant to the Offering, Heartsoft's obligations
to deposit the Joint Venture Funds shall be reduced pro
rata; and
(b) in the event that the terms of the Offering permit the
limited partners of the Partnership to make multiple
payments on their units, Heartsoft's obligation to deposit
the Joint Venture Funds shall be amended to reflect the
payment provisions offered to such limited partners.
4.4 The Bank Account shall require:
(a) in the case of individual withdrawals or cheques in an
amount less than $25,000, the consent of any two members of
the Committee; and
(b) in the case of individual withdrawals or cheques in an
amount greater than $25,000, the consent of all of the
members of the Executive Committee.
5. TREATMENT OF JOINT VENTURE REVENUES
5.1 The Partnership shall be entitled to receive 100% of
Gross Sales each year until all interest owed by the
Partnership to Heartsoft pursuant to the acquisition note
dated September (, 1997 from the Partnership to Heartsoft in
respect of the acquisition of the Computer Programs has been
paid in full.
5.2 After all outstanding interest on the Acquisition Note
has been paid in full, and until principal and interest on
the Acquisition Note have been paid in full, the Partnership
and Heartsoft shall each be entitled to 50% of the Gross
Margin. After the Partnership has received written notice
from Heartsoft that all interest and principal on the
Acquisition Note has been paid in full, the Partnership
shall be entitled to 25% of the Gross Margin and Heartsoft
shall be entitled to the balance of Gross Margin.
6. REPORTING AND AUDIT
6.1 Throughout the term of this agreement, the Executive
Committee shall prepare, or cause to be prepared, and shall
provide to the Partnership and Heartsoft, a quarterly report
(the "Quarterly Report") setting out:
(a) a summary of the status of the Joint Venture and the
activities carried out during the quarter;
(b) a description of any significant new business
developments or changes in the status of the Joint Venture
or of Heartsoft during the quarter; and
(c) a brief summary of the financial statements prepared
for the quarter.
<PAGE 20>
6.2 Each Quarterly Report shall be provided to the
Partnership within 30 days of the end of the quarter in
respect of which the report is prepared, and the last
Quarterly Report for each calendar year shall be accompanied
by any payment due to the Partnership from the Joint Venture
for the preceding year pursuant to this agreement.
6.3 Throughout the term of this agreement, and within 30
days of the end of each quarter, the Executive Committee
shall prepare and provide to the Partnership and to
Heartsoft unaudited quarterly financial statements, prepared
in accordance with generally accepted accounting principles.
6.4 Throughout the term of this agreement, and within 90
days of the end of each fiscal year of the Joint Venture,
the Executive Committee provide to the Partnership and to
Heartsoft audited financial statements, prepared by the
Auditors in accordance with generally accepted accounting
principles.
6.5 Once per year, and upon written request, either or both
of the Partnership and Heartsoft shall be entitled, at their
own expense, to audit the books and records of the Joint
Venture. In the event that such an audit reveals material
irregularities in the books, records or audited financial
statements of the Joint Venture, the party responsible for
conducting such audit shall be reimbursed by Heartsoft for
the cost of such audit.
7. PROTECTION, MAINTENANCE AND ENHANCEMENT
7.1 Heartsoft shall develop, regenerate and continuously
update the Computer Programs in accordance with the terms of
the Software Agreement.
7.2 The parties hereto acknowledge that the Computer
Programs contain valuable proprietary trading information,
and neither party hereto shall disclose to any other person
the source codes of the Computer Programs nor any other
information concerning the Computer Programs without the
written consent of the other, subject only to the right of
Heartsoft, upon receipt of an executed non-disclosure
agreement from other parties, to disclose such information
about the Computer Programs to such parties as may be
necessary during the normal course of business.
8. REPRESENTATIONS AND WARRANTIES
8.1 Heartsoft hereby represents and warrants to the
Partnership that the following representations and
warranties are true and correct as of the date hereof, and
acknowledges that the Partnership is relying on such
representations and warranties in connection with the
performance of its obligations under this agreement:
(a) Heartsoft is a corporation duly incorporated, organized
and validly subsisting under the laws of the State of
Delaware;
(b) This agreement constitutes a valid and binding
obligation of Heartsoft, enforceable against it in
accordance with its terms, and each of the instruments and
documents necessary to give effect to the transactions
contemplated herein will, when executed and delivered by
Heartsoft, constitute a valid and binding obligation of
Heartsoft, enforceable against it in accordance with its
terms;
(c) The entering into of this agreement and the
consummation of the transactions contemplated herein have
not resulted and will not result in the violation of or
default under any of the terms and provisions of any trust
deed, hypothecation, indenture, mortgage, lease, agreement,
written or oral, license or permit to which Heartsoft is a
party or by which Heartsoft may be bound;
(d) The entering into of this agreement and the
consummation of the transactions contemplated herein will
not result in the violation of any statute, regulation,
judgment, decree or law to which Heartsoft may be subject,
or any applicable order of any court, arbitrator or
government authority having jurisdiction over Heartsoft or
its property;
<PAGE 21>
(e) Heartsoft is not materially in default or breach of any
contract, agreement, lease or other instrument to which it
is a party or by which it may be bound, nor is it aware of
any state of facts which after notice or the passage of
time, or both, would constitute such a material default or
breach;
(f) Heartsoft has taken all such steps and done all such
things as may be necessary in order to allow Heartsoft and
the Partnership to carry out the joint venture agreed to
herein, including but not limited to obtaining all such
licenses, registrations, authorizations and permits
necessary to carry on business from the State of Delaware
and in all other states in which Heartsoft carries on
business; and
(h) the Computer Programs have been prepared in a
workmanlike manner and with professional diligence and
skill, will function efficiently in the machines and with
operating systems for which they are designed, is free from
defect, deficiency, design flaw or bug of any nature and
will otherwise be wholly suitable for the purpose for which
the Joint Venture intends to use them and for which they
have been designed.
8.2 The representations and warranties set out in section
8.1 above shall survive and continue in full force and
effect for the benefit of the Partnership until ten years
after the expiry or termination of this agreement, including
all amendments, extensions and renewals thereof.
8.3 No claim by the Partnership for breach of
representation or warranty by Heartsoft shall be valid
unless Heartsoft has been given notice thereof before the
date on which the representation or warranty shall have
terminated in accordance with section 8.2 above.
8.4 The Partnership hereby represents and warrants to
Heartsoft that the following representations and warranties
are true and correct as of the date hereof, and acknowledges
that Heartsoft is relying on such representations and
warranties in connection with the performance of its
obligations under this agreement:
(a) The Partnership is a limited partnership duly
registered and in good standing in the Province of Ontario;
(b) This agreement constitutes a valid and binding
obligation of the Partnership, enforceable against it in
accordance with its terms, and each of the instruments and
documents necessary to give effect to the transactions
contemplated herein will, when executed and delivered by the
Partnership, constitute a valid and binding obligation of
the Partnership, enforceable against it in accordance with
its terms;
(c) The entering into of this agreement and the
consummation of the transactions contemplated herein have
not resulted and will not result in the violation of or
default under any of the terms and provisions of any trust
deed, hypothecation, indenture, mortgage, lease, agreement,
written or oral, license or permit to which the Partnership
is a party or by which it may be bound;
(d) The entering into of this agreement and the
consummation of the transactions contemplated herein will
not result in the violation of any statute, regulation,
judgment, decree or law to which the Partnership may be
subject, or any applicable order of any court, arbitrator or
government authority having jurisdiction over the
Partnership or its property;
(e) the Partnership is not materially in default or breach
of any contract, agreement, lease or other instrument to
which it is a party or by which it may be bound, nor is it
aware of any state of facts which after notice or the
passage of time, or both, would constitute such a material
default or breach; and
<PAGE 22>
(f) the Partnership has taken all such steps and done all
such things as may be necessary in order to allow the
Partnership to carry out the joint venture agreed to herein,
including but not limited to obtaining all such licenses,
registrations, authorizations and permits necessary to carry
on business in and from Ontario;
8.5 The representations and warranties set out in section
8.4 above shall survive and continue in full force and
effect for the benefit of Heartsoft until ten years after
the expiry or termination of this agreement, including all
amendments, extensions and renewals thereof.
8.6 No claim by Heartsoft for breach of representation or
warranty by the Partnership shall be valid unless the
Partnership has been given notice thereof before the date on
which the representation or warranty shall have terminated
in accordance with section 8.5 above.
9. INDEMNIFICATION
9.1 The general indemnifications set out in this section
are in addition to any specific obligation of either of the
parties hereto to indemnify the other hereunder.
9.2 Heartsoft shall indemnify and save harmless the
Partnership for and from and against any Losses suffered by
it as a result of any inaccuracy in or breach of any
representation or warranty by Heartsoft, or the failure of
Heartsoft to fulfill any condition or perform any covenant
as provided herein.
9.3 The Partnership shall indemnify and save harmless
Heartsoft for, from and against any Losses suffered by it as
a result of any inaccuracy in or breach of any
representation or warranty by the Partnership or the failure
of the Partnership to perform any covenant as provided
herein.
9.4 Notwithstanding anything else in this section, each of
the parties hereto shall have an obligation to mitigate any
Losses which are the subject of a claim for indemnification.
10. TERMINATION
10.1 Notwithstanding any other term of this agreement, the
Partnership may, but is not obligated to, terminate this
agreement upon 30 days written notice in the event that:
(a) Heartsoft becomes bankrupt or insolvent or makes an
assignment for the benefit of its creditors;
(b) either Heartsoft takes steps to wind-up, dissolve or
liquidate, except for internal corporate reorganizations,
mergers or shareholder reorganizations;
(c) if a trustee, receiver, receiver and manager or other
custodian is appointed with respect to the assets or
undertaking of Heartsoft; or
(d) there is a material breach of this agreement.
10.2 On or after January 1, 1999, notwithstanding any other
term of this agreement, but subject to section 10.3 of this
agreement, Heartsoft may, but is not obligated to, terminate
this agreement upon 30 days written notice to the
Partnership.
10.3 In the event that Heartsoft elects to terminate this
agreement in accordance with section 10.02 of this
agreement, Heartsoft and the Partnership shall negotiate, in
good faith, a price at which the Partnership's interest in
the Joint Venture shall be acquired by Heartsoft.
11. NOTICE
11.1 Any notice, direction or other instrument required or
permitted to be given pursuant to this agreement shall be in
writing and may be given by delivering the same or sending
the same by pre-paid first-class mail or by telecopier to
the appropriate party as follows:
(a) To Heartsoft:
3101 North Hemlock Circle
Broken Arrow, Oklahoma
74012
Attention: Bryan Reusser
Fax: 918-251-4018
(b) The Partnership:
c/o CVI LP Management Inc.
225 Richmond Street West
Suite 400
Toronto, Ontario
M5V 1W2
Attention: Greg Coleman
Fax: 416-593-6157
<PAGE 23>
11.2 Any such notice, direction or other instrument, if
delivered, shall be deemed to have been given on the date on
which it was delivered and, if sent by mail, shall be deemed
to have been given on the seventh (7th) business day
following the date of mailing and, if transmitted by
telecopier, shall be deemed to have been given at the close
of business in the office of the addressee on the business
day next following the transmission thereof.
11.3 Any party hereto may change its address for service or
telecopier number from time to time by notice given to the
other parties hereto in accordance with the foregoing.
12. FURTHER ASSURANCES AND ACTIONS
12.1 Each of the parties hereto shall sign and deliver such
further and other documents, instruments, notices and papers
and do and perform and cause to be done and performed such
further and other acts and things as may be necessary or
desirable in order to give full effect to the purpose and
intent of this agreement and all ancillary agreements
relating to the transactions contemplated herein.
13. GENERAL MATTERS
13.1 Unless otherwise expressly stated, all dollar amounts
referred to in this agreement are expressed and shall be
payable in Canadian dollars.
13.2 In this agreement, unless the context otherwise
requires, words importing number include the singular and
plural, words importing gender include all genders, and
words importing persons shall include firms, corporations,
trusts, estates, government agencies and departments and all
other types of entities, and vice versa.
13.3 In this agreement, references to "generally accepted
accounting principles" mean the principles established in
and amended from time to time by the Handbook of Canadian
Institute of Chartered Accountants.
13.4 Each of the provisions contained in this agreement is
distinct and severable, and a declaration of invalidity of
unenforceability of one or more provisions of this agreement
by any court of competent jurisdiction shall not effect the
validity or enforceability of any other provision hereof.
13.5 This agreement constitutes the entire agreement between
the parties pertaining to the transaction contemplated
herein and supersedes all prior agreements, whether written
or oral, and there are no other warranties, representations
or agreements between the parties in connection with the
transactions contemplated herein.
13.6 This agreement shall be governed by and interpreted in
accordance with the laws of the Province of Ontario and the
laws of Canada as applicable therein. Each of the parties
hereto irrevocably attorns and submits to the jurisdiction
of the courts of the Province of Ontario.
13.7 Headings used in this agreement are for convenience of
reference only and do not form a part of this agreement, nor
are they intended to interpret, define or limit the scope,
extent or intent of this agreement or any provision hereof.
<PAGE 24>
13.8 Any reference in this agreement to a statute shall
include and shall be deemed to be a reference to such
statute and the regulations made pursuant thereto, with
amendments made thereto and in force from time to time, and
to any statute or regulation that may be passed which has
the effect of supplementing or superseding the statute so
referred to or the regulations made pursuant thereto
13.9 Any reference in this agreement to any entity shall
include and shall be deemed to be a reference to any entity
that is a successor to such entity.
13.10 Time shall be of the essence in this agreement.
13.11 This agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and
the same agreement.
13.12 This agreement shall enure to the benefit of and
be binding upon the parties hereto and their respective
heirs, legal personal representatives, successors and
assigns, but shall not be assignable by any party hereto
without the written consent of the other parties hereto.
13.13 No waiver of any provision of this agreement shall
constitute a waiver of any other provision nor shall any
waiver of any provision of this agreement constitute a
continuing waiver unless otherwise expressly provided.
EXECUTED at Toronto this ( day of September, 1997.
HEARTSOFT INC.
Per:
Benjamin P. Shell - Chief
Executive Officer
HEARTSOFT III 1997 LIMITED
PARTNERSHIP, by
its general partner, CVI LP
MANAGEMENT INC.
Per:
Greg Coleman - President
