<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 7, 1998
-----------------------------------------------
Date of Report (Date of earliest event reported)
CANMAX INC.
-----------------------------------------------------
Exact Name of Registrant as Specified in its Charter)
Wyoming 0-22636 75-2461665
---------------- ----------- ----------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
150 West Carpenter Freeway
Irving, Texas 75039
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(972) 541-1600
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
----------------------------
(Former Name or Former Address, If Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 7, 1998, Canmax Inc., a Wyoming corporation (the "Company"),
sold substantially all of the assets (the "Assets") of Canmax Retail Systems,
Inc. ("CRSI"), a wholly-owned subsidiary of the Company that develops and
provides retail automation software to the convenience store and retail
petroleum market (the "Software Business"), to Affiliated Computer Systems,
Inc., a Delaware corporation ("Buyer"), pursuant to the terms of an Asset
Purchase Agreement dated as of September 3, 1998 among the Company, CRSI and
Buyer (as amended, the "Purchase Agreement"). Pursuant to the terms of the
Purchase Agreement, Buyer purchased the Assets and paid to CRSI $4,025,000 at
closing and assumed certain liabilities arising from the Software Business.
Pursuant to the Purchase Agreement, CRSI is entitled to receive additional
deferred payments of up to an additional $3.625 million calculated as described
below.
In addition, on or before January 21, 1999, Buyer and the Company are to
calculate the Net Working Capital (as defined below) as of the closing date, and
the Company is entitled to receive from (or required to pay to) Buyer an amount
equal to the positive (negative) difference between the Net Working Capital as
of the closing minus $530,019. Generally, the term "Net Working Capital" means,
as of the closing, an amount equal to (i) the current assets of CRSI (other than
cash and cash equivalents, which are to be retained by the Company) minus (ii)
the current liabilities of CRSI (but specifically excluding any liabilities of
the Company). The Company expects to receive additional payments of
approximately $200,000 or $300,000 from the Buyer as a result of the Net Working
Capital adjustment.
The deferred payments will be calculated at the end of each calendar
quarter during the twelve month period commencing on January 1, 1999. Each
deferred payment is calculated based upon the cumulative level of revenue
attributable to the Software Business from January 1, 1999 through the end of
each three month through December 31, 1999, and equals (a) the sum of (i) 75% of
all such revenues greater than $4 million and less than or equal to $7 million
plus (ii) 13.75% of all such revenues greater than $7 million or less than or
equal to $17 million, minus (b) the sum of any deferred payments previously made
by Buyer. If CRSI disputes any calculation of the amount of any deferred
payment and such dispute cannot be resolved among the parties, that the
independent public accountants for each party are to mutually designate a third
independent public accountant to resolve such dispute and the determination of
such designated party will be conclusive and binding on all parties.
Company and CRSI believe that the ultimate amount received by CRSI for the
sale of the Assets will be approximately $7 million to $7.7 million following
the receipt of the deferred payments and the Net Working Capital adjustment.
The actual purchase price may, however, be more or less than this amount.
No material relationship exists between the Buyer and the Company, CRSI or
any of its affiliates, any directors or officers of the Company or CRSI, or any
associate of any such director or officer.
<PAGE>
ITEM 5. OTHER EVENTS.
On December 11, 1998, the Company and Founders Equity Group, Inc., on its
own behalf and as agent for various lenders ("Founders"), executed Amendment No.
1 to the Restated Convertible Loan Agreement dated March 31, 1998, as amended by
the Letter Agreement dated August 25, 1998 (as amended, the "Loan Agreement").
As a result of the Amendment, Canmax agreed to defer the Founders' conversion of
the remaining indebtedness outstanding under the Loan Agreement in exchange for
(a) Founders' waiver of any registration obligations under the Registration
Rights Agreement dated May 1, 1997 or under the Loan Agreement, until February
1, 1999 or Canmax's earlier delivery of a Conversion Notice, (b) the adjustment
of the conversion price for the remaining convertible indebtedness outstanding
under the Loan Agreement ($500,000) from $.50 per share to the greater of $.50
per share or 75% of the average closing price of the Canmax common stock over
the ten trading days preceding the delivery of a conversion notice, and (c)
Founders' agreement to convert the remaining outstanding principal amount under
the Loan Agreement ($500,000) upon written notice from the Company at the
adjusted conversion price described above. Further, the amendment to the Loan
Agreement reduced the interest rate payable on the outstanding principal amount
on the Loan Agreement from 12% to 9% per annum. The amendment also terminated
any additional funding obligations of Founders under the Loan Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
On December 7, 1998, the Company disposed of substantially all of the
assets and operations of its retail systems subsidiary for $4.0 million in cash
consideration and deferred payments up to an additional $3.625 million, based
upon the future revenues from the sold business. The historical financial
statements prior to the disposition transaction include the assets and
operations of its retail systems subsidiary.
The following unaudited pro forma balance sheet as of July 31, 1998 gives
effect to the disposition of the assets described above as if the transaction
had occurred on that date. The unaudited consolidated statements of operations
for the nine months ended July 31, 1998 and the year ended October 31, 1997 give
effect to the sale of the assets and the operations of CRSI effective November
1, 1997 and November 1, 1996, respectively. This includes the effect on
interest expense resulting from the settlement of a portion of the convertible
debt as it relates to the pro forma unaudited consolidated statement of
operations for the nine month period ended July 31, 1998. The disposal of CRSI
will be accounted for as discontinued operations.
The unaudited pro forma adjustments are based upon available information
and certain assumptions that management believes are reasonable under the
circumstances. The unaudited pro forma financial information reports are not
intended to represent what the Company's
<PAGE>
financial position or results of operations would have actually been if the
disposition had occurred on the referenced dates or project the Company's
financial position or results of operation as of a future date or period.
The unaudited pro forma financial information should be read in conjunction
with the Company's financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended October 31,
1997 and Quarterly Reports on Form 10-Q for the periods ended January 31,
1998, April 30, 1998 and July 31, 1998.
(c) EXHIBITS.
Exhibit No. Document Description
10.1 Asset Purchase Agreement dated September 3, 1998 among
Affiliated Computer Services, Inc., Canmax Inc., and
Canmax Retail Systems, Inc.*
10.2 Amendment No. 1 to First Restated Convertible Loan Agreement
dated December 11, 1998 among Canmax Inc., Canmax Telecom,
Inc., Founders Equity Group, Inc. and various other lenders.*
- ----------
* Filed herewith
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CANMAX INC.
DATE: December 22, 1998 By: /s/ Roger D. Bryant
-------------------------------------
Roger D. Bryant
President and Chief Executive Officer
<PAGE>
CANMAX INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
JULY 31, 1998
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-----------------------------------------
HISTORICAL (a) (b) PRO FORMA
-------------- ------------------- ------------------- -------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.................................. $ 160,971 $ 4,000,000 $ (1,470,247) $ 2,690,724
Accounts receivable................... 1,941,540 (1,858,866) -- 82,674
Inventory............................. 69,648 (39,223) -- 30,425
Note receivable--current.............. 245,972 -- -- 245,972
Prepaid expenses and other............ 190,782 (190,782) -- --
-------------- ------------------- ------------------- -------------
Total current assets.............. 2,608,913 1,911,129 (1,470,247) 3,049,795
PROPERTY AND EQUIPMENT, net............. 596,882 (542,191) -- 54,691
CAPITALIZED SOFTWARE COSTS, net......... 740,030 (740,030) -- --
INTELLECTUAL PROPERTY RIGHTS, net....... 18,055 (18,055) -- --
NOTE RECEIVABLE--LONG TERM.............. 450,989 -- -- 450,989
OTHER ASSETS............................ 84,479 (84,479) -- --
-------------- ------------------- ------------------- -------------
TOTAL ASSETS............................ $ 4,499,348 $ 526,374 $ (1,470,247) $ 3,555,475
-------------- ------------------- ------------------- -------------
-------------- ------------------- ------------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Convertible debentures--shareholder... $ 1,500,000 $ -- $ (1,000,000) $ 500,000
Accounts payable...................... 664,639 (438,300) (137,500) 363,839
Accrued liabilities................... 532,458 (383,600) (30,247) 118,611
Deferred revenue...................... 581,085 (545,890) -- 35,195
Current portion of lease obligation... 108,129 (108,129) -- --
Current portion of long-term debt..... 35,195 (35,195) -- --
-------------- ------------------- ------------------- -------------
Total current liabilities......... 3,421,506 (1,511,114) (892,747) 1,017,645
LEASE OBLIGATION........................ 119,262 (119,262) -- --
LONG-TERM DEBT.......................... 24,885 (24,885) -- --
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock........................ 24,858,809 -- -- 24,858,809
Accumulated deficit................. (23,925,114) 2,181,635 (577,500) (22,320,979)
-------------- ------------------- ------------------- -------------
Total stockholders' equity
(deficit)....................... 933,695 2,181,635 (577,500) 2,537,830
-------------- ------------------- ------------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)...................... $ 4,499,348 $ 526,374 $ (1,470,247) $ 3,555,475
-------------- ------------------- ------------------- -------------
-------------- ------------------- ------------------- -------------
</TABLE>
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(a) To reflect the sale of substantially all of the assets of the retail systems
subsidiary for $4,000,000 to be paid in cash, resulting in a gain from the
sale of $2,181,635.
(b) To reflect the cash settlement of $1,000,000 of the convertible debentures,
accrued interest of $30,247, closing fees of $120,000 and other fees of
$17,500 in connection with the closing of the sale of substantially all of
the assets of the retail systems subsidiary. Further reflects transaction
expenses of approximately $250,000 and the settlement of certain accrued
obligations and accounts payable of $190,000.
F-1
<PAGE>
CANMAX INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
NINE MONTHS ENDED JULY 31, 1998
<TABLE>
<CAPTION>
(c)
RETAIL PRO FORMA (e)
HISTORICAL SYSTEMS ADJUSTMENTS USC PRO FORMA
-------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Software licenses and product......... $ 392,963 $ 392,963 $ -- $ --
Development........................... 3,330,131 3,330,131 -- --
Customer service...................... 2,039,180 2,039,180 -- --
Prepaid phone cards--USC
Communication....................... 709,525 -- -- (709,525) --
Prepaid phone cards and other......... 110,722 -- -- 110,722
-------------- ------------- ------------- ----------- -----------
Total revenues.................... 6,582,521 5,762,274 -- (709,525) 110,722
COSTS AND EXPENSES
Software licenses and product......... 160,643 160,643 -- --
Development........................... 1,964,893 1,964,893 -- --
Customer service...................... 1,628,244 1,628,244 -- --
Prepaid phone cards and other......... 226,630 -- -- 226,630
Prepaid phone cards--USC
Communications...................... 565,151 -- -- (565,151) --
Product development................... -- -- -- --
Sales and marketing................... 481,392 354,617 -- 126,775
General and administrative............ 1,923,478 1,837,990 -- 85,488
Selling general and administrative--US
Communication....................... 499,970 -- -- (499,970) --
Depreciation and amortization......... 730,269 645,553 -- (57,095) 27,621
Interest and financing................ 100,781 -- (51,015)(d) 49,766
-------------- ------------- ------------- ----------- -----------
Total cost of revenues............ 8,281,451 6,591,940 (51,015) (1,122,216) 516,280
-------------- ------------- ------------- ----------- -----------
Loss on disposal of USC
Communication....................... (1,155,385) -- -- (1,155,385)
-------------- ------------- ------------- ----------- -----------
NET INCOME (LOSS)....................... $ (2,854,315) $ (829,666) $ 51,015 412,691 $(1,560,943)
-------------- ------------- ------------- ----------- -----------
-------------- ------------- ------------- ----------- -----------
BASIC EARNINGS (LOSS) PER SHARE $ (0.39) $ (0.18)
-------------- -----------
-------------- -----------
</TABLE>
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(c) To reflect the sale of substantially all of the assets and operations of the
retail systems subsidiary as if the sale occurred on November 1, 1997
(d) To reflect the reduction of interest expense related to the reduction of the
convertible debenture of $1,000,000 at a rate of 12% annually.
(e) The pro forma statement of operations includes the operations and related
expenses of the prepaid phone card business only. The majority of overhead
including officers expenses for the periods presented was incurred in the
retail systems business.
F-2
<PAGE>
CANMAX INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
(f)
RETAIL PRO FORMA
HISTORICAL SYSTEMS ADJUSTMENTS PRO FORMA
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
REVENUES
Software licenses and product......... $ 1,924,897 $ 1,924,897 $ -- $ --
Development 8,704,338 8,704,338 -- --
Customer service...................... 2,106,988 2,106,988 -- --
-------------- -------------- ------------- -----------
Total revenues...................... 12,736,223 12,736,223 -- --
COSTS AND EXPENSES
Software licenses and product......... 772,502 772,502 -- --
Development........................... 4,564,441 4,564,441 -- --
Customer service...................... 2,254,986 2,254,986 -- --
Product development................... 614,503 614,503 -- --
Sales and marketing................... 608,445 608,445 -- --
General and administrative............ 3,813,267 3,813,267 29,525(g) 29,525
Interest and financing................ 20,748 20,748 -- --
-------------- -------------- ------------- -----------
Total cost of revenues.............. 12,648,892 12,648,892 29,525 29,525
-------------- -------------- ------------- -----------
NET INCOME (LOSS)....................... $ 87,331 $ 87,331 $ (29,525) $ (29,525)
-------------- -------------- ------------- -----------
-------------- -------------- ------------- -----------
BASIC EARNINGS (LOSS) PER SHARE......... $ 0.01 $ (0.00)
-------------- -----------
-------------- -----------
</TABLE>
- ------------------------
(f) To reflect the sale of substantially all of the assets and operations of the
retail systems subsidiary as if the sale occurred on November 1, 1996.
(g) To reflect the general and administrative costs for directors, legal, and
accounting fees and filing costs related to operating the Company as if the
sale occurred on November 1, 1996. Of the 24 Canmax employees that are
continuing in the telecom business, 5 were employed as of October 31, 1997.
Their related compensation amounted to $498,750. However, at that time all
services were related to the retail systems subsidiary, and is reflected in
(f).
F-3
<PAGE>
ASSET PURCHASE AGREEMENT
BY AND AMONG
AFFILIATED COMPUTER SERVICES, INC.
("BUYER")
CANMAX INC.
("PARENT")
AND
CANMAX RETAIL SYSTEMS, INC.
(THE "COMPANY")
DATED SEPTEMBER 3, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
ARTICLE I Purchase of Assets...................................................................... 1
1.1 Purchase of Assets...................................................................... 1
1.2 Excluded Assets......................................................................... 1
1.3 Assumed Liabilities..................................................................... 2
1.4 Liabilities Not Being Assumed........................................................... 2
1.5 Consideration........................................................................... 3
1.6 Closing................................................................................. 5
1.7 Closing Deliveries...................................................................... 5
1.8 Further Assurances...................................................................... 5
ARTICLE II Representations and Warranties of the Company and Parent................................ 6
2.1 Organization............................................................................ 6
2.2 Authority............................................................................... 6
2.3 Year 2000 Matters....................................................................... 6
2.4 Title to Assets......................................................................... 7
2.5 Condition of Assets..................................................................... 7
2.6 No Violation............................................................................ 7
2.7 Governmental Consents................................................................... 7
2.8 [RESERVED].............................................................................. 7
2.9 Absence of Undisclosed Liabilities...................................................... 7
2.10 Absence of Material Adverse Change...................................................... 7
2.11 Taxes................................................................................... 8
2.12 Litigation.............................................................................. 8
2.13 Compliance with Laws.................................................................... 8
2.14 Permits................................................................................. 8
2.15 Environmental Matters................................................................... 9
2.16 Employee Matters........................................................................ 10
2.17 Employee Benefit Plans.................................................................. 10
2.18 Ownership of the Company................................................................ 11
2.19 Material Agreements..................................................................... 11
2.20 Customers............................................................................... 12
2.21 Accounts Receivable..................................................................... 12
2.22 Intellectual Property Rights............................................................ 12
2.23 [RESERVED].............................................................................. 13
2.24 Competing Interests..................................................................... 13
2.25 Illegal or Unauthorized Payments; Political Contributions............................... 13
ARTICLE III Representations and Warranties of Buyer................................................. 13
3.1 Organization............................................................................ 13
3.2 Authority............................................................................... 13
3.3 No Violation............................................................................ 13
3.4 Governmental Consents................................................................... 13
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
ARTICLE IV Covenants and Agreements................................................................ 13
4.1 Conduct of Business..................................................................... 13
4.2 No-Shop Provisions...................................................................... 14
4.3 Access and Information.................................................................. 14
4.4 Supplemental Disclosure................................................................. 14
4.5 Fulfillment of Conditions by the Company and Parent..................................... 15
4.6 Fulfillment of Conditions by Buyer...................................................... 15
4.7 Transaction Costs....................................................................... 15
4.8 Employee Matters........................................................................ 15
4.9 Continuation of the Business............................................................ 16
4.10 Retained Rights......................................................................... 17
4.11 Use of Canmax Name...................................................................... 17
4.12 Sublease................................................................................ 17
4.13 Year 2000 Audit......................................................................... 17
ARTICLE V Closing Conditions...................................................................... 18
5.1 Conditions to Obligations of Buyer...................................................... 18
5.2 Conditions to Obligations of the Company and Parent..................................... 18
ARTICLE VI Indemnification......................................................................... 19
6.1 Indemnification of Buyer................................................................ 19
6.2 Indemnification of Seller............................................................... 19
6.3 Survival................................................................................ 20
6.4 Waiver.................................................................................. 20
6.5 Remedies Not Exclusive.................................................................. 20
6.6 Offset.................................................................................. 20
ARTICLE VII Miscellaneous........................................................................... 21
7.1 Termination............................................................................. 21
7.2 Notices................................................................................. 21
7.3 Attorneys' Fees and Costs............................................................... 22
7.4 Further Assurances...................................................................... 22
7.5 No Brokers.............................................................................. 22
7.6 Counterparts............................................................................ 22
7.7 Assignment.............................................................................. 22
7.8 Entire Agreement........................................................................ 22
7.9 Governing Law........................................................................... 22
7.10 Jurisdiction and Venue.................................................................. 23
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SCHEDULES
1.1 Southland Assets
1.2 Excluded Assets
1.3 Assumed Liabilities
1.5(a) Deposits to be Reimbursed
1.5(c) Sample Net Working Capital Calculation
2.4 Assets
2.6 Required Consents
2.16 Designated Employees
2.17 Employee Benefit Plans
2.19 Material Agreements
2.20 Customers
2.21 Accounts Receivable
2.22 Intellectual Property
4.8(b) Accrued Vacation Liability
4.10 Software License
</TABLE>
iii
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered into as
of September 3, 1998, by and among Affiliated Computer Services, Inc., a
Delaware corporation ("Buyer"), Canmax Inc., a Wyoming corporation ("Parent"),
and Canmax Retail Systems, Inc., a Texas corporation (the "Company").
WHEREAS, the Company desires to sell substantially all of its assets to
Buyer, and Buyer desires to purchase such assets from the Company, on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, Parent will receive substantial direct and indirect benefits from
the transactions contemplated by this Agreement, and Buyer has required that
Parent enter into this Agreement as a condition to Buyer's execution hereof;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 PURCHASE OF ASSETS. At the Closing (as defined in SECTION 1.6), the
Company agrees to sell, transfer, assign and deliver to Buyer, and Buyer agrees
to purchase and take, all rights of the Company in and to the Assets (as defined
below), on the terms and subject to the conditions set forth in this Agreement.
Subject to the provisions of SECTION 1.2, the "Assets" mean all tangible and
intangible assets of the Company, including, without limitation, accounts
receivable, inventory, equipment, real property, fixtures, furnishings,
leasehold rights, leasehold improvements, vehicles, prepaid assets, contract
rights, licenses, permits, customer, prospect and marketing lists, sales data,
records, computer software and software licenses, proprietary information,
intellectual property, trade secrets, patents, patent applications, patent
licenses, trademarks and trade names (including without limitation, all rights
to the name "Canmax" and derivations thereof), copyrights, goodwill associated
with such intellectual property, material and manufacturing specifications,
drawings and designs owned by the Company or acquired by the Company after the
date hereof and prior to the Closing, and specifically including (without
limitation):
(a) the assets described on SCHEDULE 2.4;
(b) the Assumed Contracts (as defined in SECTION 1.3);
(c) any Permits (as defined in SECTION 2.14); and
(d) the Registered Intellectual Property (as defined in SECTION 2.22).
In addition, the Company shall deliver to Buyer possession of the assets listed
on SCHEDULE 1.1 (the "Southland Assets") that are owned by The Southland
Corporation ("Southland") but in the possession of the Company. Prior to
Closing, the Company shall notify Southland of its proposed delivery of the
Southland Assets to Buyer at Closing, and Buyer acknowledges that the Southland
Assets shall not constitute any part of the Assets and agrees to accept such
assets subject to Southland's superior rights to the same.
1.2 EXCLUDED ASSETS. Notwithstanding the provisions of SECTION 1.1, the
Assets will exclude the following (the "Excluded Assets"):
(a) the minute books, corporate seal and stock records of the Company;
(b) the consideration to be paid by Buyer to the Company pursuant to
SECTION 1.5;
(c) any rights in the Software License (as defined in SECTION 4.10);
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT -- PAGE 1
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
(d) all rights under any Material Agreement (as defined in SECTION
2.19(A)) other than the Assumed Contracts (as defined in SECTION 1.3);
(e) all cash and cash equivalents, banks accounts, safe deposit boxes,
lockbox arrangements, post office boxes and similar assets and arrangements
(consistent with SECTION 1.5(C)); and
(f) all of the assets listed in SCHEDULE 1.2.
1.3 ASSUMED LIABILITIES. At Closing, Buyer shall deliver to the Company an
Assumption Agreement (the "Assumption Agreement"), pursuant to which Buyer shall
assume, pay, perform and discharge (when and as they become due) the following
liabilities (collectively, the "Assumed Liabilities"):
(a) all liabilities and obligations of the Company that accrue, become
owing or arise on or after the Closing Date under the Assumed Contracts;
(b) the obligations related to the Transferred Employees (as defined in
SECTION 4.8) which are specified as obligations of Buyer in SECTION 4.8,
including, without limitation, the Accrued Vacation Liabilities (as defined
in SECTION 4.8), which Accrued Vacation Liabilities shall be treated as
provided in subsections (iv) and (vi) of Section 4.8(b);
(c) any liability arising out of events or occurrences on or after the
Closing Date which relate to or arise out of the Business (as defined in
SECTION 1.5(B)) or the Assets;
(d) all of the accounts payable or other liabilities existing on the
Closing Date of Parent or the Company that are explicitly identified and
included in the calculation of Net Working Capital (as defined in SECTION
1.5(C)) as of the Closing Date;
(e) any sales tax resulting from the consummation of this Agreement or
transactions contemplated hereby;
(f) any present or future liability or obligation of Buyer to any
broker, finder or agent for any brokerage fees, finder's fees or commissions
with respect to the transactions contemplated by this Agreement; and
(g) any liabilities set forth on SCHEDULE 1.3 (excluding Parent Payables
and Telecom payables).
1.4 LIABILITIES NOT BEING ASSUMED. Buyer shall not assume or be
responsible for any of the following liabilities or obligations of Company
(collectively, the "Excluded Liabilities");
(a) any liability or obligation relating to the Excluded Assets;
(b) except to the extent included as an Assumed Liability (and
explicitly identified) pursuant to SECTION 1.3(D), any liability or
obligation that has accrued, become owing or has arisen prior to the Closing
Date under the Assumed Contracts;
(c) except to the extent included as an Assumed Liability (and
explicitly identified) pursuant to SECTION 1.3(D), any liability or
obligation of the Company for federal, state, local or foreign taxes
associated with the Assets or the Business for any period prior to the
Closing Date;
(d) any liability relating to (i) any claim relating to employee
benefits and similar matters attributable to periods prior to the Closing
Date or attributed to any period with respect to employees who are not
Transferred Employees, except to the extent of the Accrued Vacation
Liabilities or other liabilities for any Transferred Employee as provided in
SECTION 4.8, (ii) the Company's termination of employment of any employee of
the Company on or prior to the Closing Date or because of Buyer's
acquisition of the Assets under this Agreement (including any such
termination deemed to have occurred upon the transfer of any such employee
from the Company to Buyer), or (iii) any claims arising from employees other
than Transferred Employees;
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT -- PAGE 2
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
(e) any liability, whether made before or after the Closing Date,
against the Company, Buyer, or any affiliate or either, alleging damage to
the environment or any liability for environmental cleanup costs, or any
liabilities for damage to the environment or for environmental cleanup
costs, which arises out of occurrences, circumstances or actions associated
with the Assets or the operation of the Business by the Company prior to the
Closing Date;
(f) any liability for failure or alleged failure to comply with, or any
violation or alleged violation of, any law, rule, regulation, statute,
ordinance, permit, judgment, injunction, order, decree, license or other
governmental authorization or approval applicable to the Company or the
Assets, which failure or violation occurred or was alleged to have occurred
prior to the Closing Date;
(g) any present or future liability or obligation of the Company to any
broker, finder or agent for any brokerage fees, finder's fees or commissions
with respect to the transactions contemplated by this Agreement;
(h) any lawsuit, claim or proceeding of any nature existing at or prior
to the Closing or arising out of any act or transaction of the Company or
Parent, or arising out of facts or circumstances that existed at or prior to
the Closing that is related to the Company, the Assets or the operation of
the Company's business;
(i) any liabilities of Parent; and
(j) all other liabilities, whether known, unknown, contingent or fixed
of the Company which are not specifically listed in SECTION 1.3 above.
1.5 CONSIDERATION. As consideration in full for the acquisition of the
Assets from the Company, Buyer will pay the Company the following amounts
(collectively, the "Purchase Price") by wire transfer of immediately available
funds to an account specified in writing by the Company to Buyer at least two
(2) days prior to the due date for such payment:
(a) CLOSING PAYMENT. At Closing, an amount equal to (i) $4 million plus
(ii) an amount equal to the sum of the deposits listed on SCHEDULE 1.5(A)
minus (iii) the Audit Credit, as defined in SECTION 4.13.
(b) DEFERRED PAYMENTS. On each Deferred Payment Date (as defined
below), the applicable Deferred Payment (as defined below).
(i) For purposes of this SECTION 1.5(B), all Deferred Payments shall
be calculated with regard to revenues of the Business (as defined below)
during the twelve month period commencing on the first day of the
calendar month following the Closing (the "Deferred Period Commencement
Date"). Within thirty days after the end of the third, sixth, ninth and
twelfth month following the Deferred Payment Commencement Date (the
thirtieth day following the end of each such three-month period being
referred to as a "Deferred Payment Date"), Buyer will deliver a written
statement to the Company calculating the revenues of Buyer attributable
to the Business (as defined below) for each preceding three month period,
as determined in accordance with generally accepted accounting principles
consistently applied, along with the payment of the Deferred Payment due
as calculated by Buyer. As used herein, the term "Business" means the
business historically conducted by the Company, which includes, without
limitation, the development, sale or marketing of retail automation
software (including, without limitation, its "C-Serve" family of software
products), the installation of software support for such products,
"help-desk" services and other support services associated with such
products and services.
(ii) As used herein, the term "Deferred Payment" shall mean an
amount, calculated on each Deferred Payment Date based upon the
cumulative level of revenue attributable to the Business from the
Deferred Period Commencement Date through the end of each three month
period preceding a Deferred Payment Date, equal to (A) the sum of (I) 75%
of all such revenues
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ASSET PURCHASE AGREEMENT -- PAGE 3
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
greater than $4 million and less than or equal to $7 million, plus (II)
13.75% of all such revenues greater than $7 million and less than or
equal to $17 million, MINUS (ii) the sum of any Deferred Payments
previously made under this SECTION 1.5(B)(II). The Company shall have the
right to dispute any calculation by Buyer of the amount of any Deferred
Payment at any time during the three (3) month period following the last
Deferred Payment Date. Buyer and the Company agree to use reasonable good
faith efforts to resolve any disputes regarding the calculation of the
revenues attributable to the Business. In the event that the parties
cannot reach agreement on such calculation, the independent accountants
for each party shall mutually select a third independent public
accountant (the "Designated Party") to resolve such dispute and the
determination of the Designated Party shall be conclusive and binding on
the parties. All costs and expenses of the Designated Party shall be
shared equally by the Company and Buyer. In addition, the Company shall
have the right to have its independent accountants audit the books and
records of Buyer relating to the Business; provided that the Company
shall be entitled to exercise this audit right only one time and only
during the three (3) month period following the last Deferred Payment
Date. If the Company's auditors determine that the calculation of the
aggregate Deferred Payments paid or payable under this Agreement have
been understated by 5% or more and either (A) Buyer agrees to pay such
amount or (B) such finding is confirmed by the Designated Party, then the
fees and expenses of the Company's accountants in performing such audit
shall be reimbursed or paid for by Buyer. Otherwise, such audit fees and
expenses shall be borne by the Company.
(c) NET WORKING CAPITAL ADJUSTMENT. Within thirty (30) days following
the Closing Date, the Company's accountants shall furnish Buyer with a
report (the "Net Working Capital Report") which shall set forth in
reasonably detail the Net Working Capital (as defined below) of the Business
as of the Closing Date. As used herein, the term "Net Working Capital" shall
mean, as of the Closing Date, an amount equal to (i) the current assets of
the Company (other than cash and cash equivalents to the extent that such
cash and cash equivalents do not relate to liquidation of long term assets
after the date hereof except in the ordinary course of business and
consistent with past practice) minus (ii) the current liabilities of the
Company (but specifically excluding any liabilities of Parent), calculated
consistent with and subject to the adjustments set forth in SCHEDULE 1.5(C).
The Net Working Capital Report shall indicate the procedures employed by the
Company's accountants in preparing the Net Working Capital Report and shall
contain such other financial information and methods of calculation as may
be reasonably necessary for Buyer to evaluate the accuracy thereof. Buyer
shall have a period of ten (10) days after its receipt of the Net Working
Capital Report to notify the Company of its election to accept or reject
(and in the case of a rejection, there shall be included in such notice the
reasons for such rejection in reasonable detail) of the Net Working Capital
Report. In the event no notice is received by the Company during such ten
(10) day period, the Net Working Capital Report and any required adjustments
resulting therefrom shall be deemed accepted by Buyer. If Buyer timely
rejects the Net Working Capital Report, the Company's accountants and
Buyer's accountants shall promptly (and in any event within thirty (30) days
following the date upon which Buyer rejects the Net Working Capital Report)
attempt to make a joint determination of the Net Working Capital of the
Business as of the Closing Date and such determination and any required
adjustments therefrom shall be final and binding on the parties hereto. In
the event that such accountants are unable to agree upon the Net Working
Capital determination as provided herein within ninety (90) days from the
Closing Date, such dispute shall be resolved by the Designated Party (as
defined in and selected in accordance with SECTION 1.5(B)(II)). The
determination of the Designated Party and any required adjustments resulting
therefrom shall be final and binding on all parties hereto. If the Net
Working Capital Report reflects a Net Working Capital as of the Closing Date
of less than the Base Amount (as defined below), then the Company and/or
Parent shall refund the difference between Base Amount and the Net Working
Capital within fifteen (15) days of the final determination of the Net
Working Capital. If the Net Working Capital as of the Closing Date exceeds
Base Amount, then Buyer
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ASSET PURCHASE AGREEMENT -- PAGE 4
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
shall pay to the Company an amount equal to the Net Working Capital minus
Base Amount within fifteen (15) days after the determination of the Net
Working Capital. As used herein, the term "Base Amount" shall mean the net
working capital of the Company as of July 31, 1998, minus the payables of
Parent as of such date (the "Parent Payables"), in each case as calculated
and set forth in SCHEDULE 1.5(C).
1.6 CLOSING. The Closing of the transactions contemplated by this
Agreement (the "Closing") will take place at 10:00 a.m. at the offices of the
Buyer, 2828 North Haskell Avenue, Dallas, Texas 75204, within three (3) business
days following Parent's receipt of shareholder approval for the transactions
contemplated hereby, but no later than November 30, 1998, or at such other time
and place as the parties may agree (the "Closing Date").
1.7 CLOSING DELIVERIES. At the Closing, the parties will deliver to the
other the following documents as specified below, each of which will be duly
executed by the parties thereto and will be in form and substance reasonably
satisfactory to the recipient thereof:
(a) Buyer will deliver the initial installment of the Purchase Price in
accordance with SECTION 1.4(A);
(b) Buyer will deliver to the Company an Assumption Agreement, in a form
reasonably acceptable to the Company and Buyer;
(c) the Company will execute a Bill of Sale conveying the Assets to
Buyer, in a form reasonably acceptable to the Company and Buyer;
(d) the Company will provide any certificates of title or other
conveyance documents that may be necessary to effect or record the transfer
of any Assets to Buyer;
(e) the Company will provide the originals or copies of all of the
Company's books, records, ledgers, disks, proprietary information and other
data and all other written or electronic depositories of information
relating to the Assets;
(f) the Company and Parent will deliver to Buyer a closing certificate,
in a form reasonably acceptable to the Company and Buyer;
(g) Buyer will deliver to the Company and Parent a closing certificate,
in a form reasonably acceptable to the Company and Buyer;
(h) the Company will deliver the release referred to in SECTION 2.4(VI);
and
(i) the Company will deliver to Buyer an occasional sales affidavit.
1.8 FURTHER ASSURANCES. At or after the Closing, and without further
consideration, the Company and the Parent will execute and deliver to Buyer such
further instruments of conveyance and transfer as Buyer may reasonably request
in order more effectively to convey and transfer the Assets to Buyer and to put
Buyer in operational control of the business of the Company, or for aiding,
assisting, collecting and reducing to possession any of the Assets and
exercising rights with respect thereto.
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ASSET PURCHASE AGREEMENT -- PAGE 5
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT
The Company and Parent, jointly and severally, hereby represent and warrant
to Buyer as follows:
2.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Texas and has full corporate
power to own its properties and to conduct its business as presently conducted.
The Company is duly authorized, qualified or licensed to do business and is in
good standing as a foreign corporation in each state or other jurisdiction in
which the failure to be so qualified would have a Material Adverse Effect (as
defined below). As used herein, the term "Material Adverse Effect" means any
event or circumstance which results in or is reasonably likely to result in a
material adverse change in (i) the financial condition, business, operations,
properties or prospects of the business associated with the Assets (taken as a
whole), other than either general economic changes or regulatory or competitive
changes that affect an industry generally, over which the Company has no
control; (ii) the ability of the Company or Parent to perform its obligations
under this Agreement, or (iii) the validity or enforceability of this Agreement.
2.2 AUTHORITY. The Company and Parent have all requisite power and
authority to execute, deliver and perform under this Agreement and all other
agreements and instruments required to be executed and delivered by the Company
or Parent hereunder (collectively, the "Company Documents"), subject to
shareholder approval as set forth in SECTION 5.2(E) (the "Required Approval").
Subject to Parent's receipt of the Required Approval, the execution, delivery
and performance by the Company and Parent of each Company Document (to the
extent the Company or Parent is a party thereto) have been duly authorized by
all necessary action, corporate or otherwise, on the part of the Company and
Parent. Subject to the receipt of the Required Approval, this Agreement has
been, and at the Closing the other Company Documents will be, duly executed and
delivered by the Company and Parent (to the extent each is a party thereto).
Subject to the receipt of the Required Approval, this Agreement is, and, upon
execution and delivery by the Company and Parent at the Closing, each of the
other Company Documents will be, a legal, valid and binding agreement of the
Company and Parent (to the extent each is a party thereto), enforceable against
the Company and Parent in accordance with their respective terms.
2.3 YEAR 2000 MATTERS. The Company has no contractual obligation to make
the source code developed by the Company and sold to The Southland Corporation
Year 2000 Compliant. The Company has reviewed publicly available information
provided by certain providers of hardware and software used by the Company in
connection with the Business, and such publicly available information sets forth
the "Year 2000" certifications or warranties ("Third Party Statements") of such
providers, with regard to items marked in SCHEDULE 2.4 and SCHEDULE 2.22 (the
"Y2K Items"), that are indicated in such schedules. The Company has no knowledge
(as defined in SECTION 2.15) that any Third Party Statements regarding the Y2K
Items are incorrect or that any of the Y2K Items or any of the applications
marked as "Y2K Compliant" in SCHEDULE 2.22 are not Year 2000 Compliant. For
purposes of this Agreement, the term "Year 2000 Compliant" means, with respect
to computer hardware and computer software and applications, that such items (i)
will operate and produce data before, on or after January 1, 2000 (including
taking into effect that such year is a leap year), accurately and without delay,
interruption or error relating to the fact that the time at which the date on
which such items are operating is on or after 12:00 a.m. on January 1, 2000, or
(ii) will accept, calculate, process, maintain, write an output, accurately and
without delay, interruption or error, any functions referring a time or date
after 12:00 a.m. on January 1, 2000, or both, whether before, on or after 12:00
a.m. on January 1, 2000, and any time period determined or to be determined
based on any such time or date, or both. Neither the Company nor Parent makes
any representations or warranties whether any Assets are Year 2000 Compliant
other than the limited representation and warranty set forth in this SECTION 2.3
with regard to the items or applications so marked in SCHEDULE 2.4 and SCHEDULE
2.22.
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ASSET PURCHASE AGREEMENT -- PAGE 6
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
2.4 TITLE TO ASSETS. Set forth in SCHEDULE 2.4 is a complete list of (a)
all real property currently owned by the Company; (b) all real property
currently leased or otherwise used by the Company; (c) each vehicle owned or
leased by the Company; and (d) each asset of the Company with a book value or
fair market value greater than $5,000. The Company has good and marketable title
to all of the Assets and owns all of the Assets free and clear of any
liabilities, obligations, liens, claims, security interests, encumbrances or
contingencies of any nature (collectively, "Liens"), other than (i) Liens for
current taxes not yet due and payable; (ii) deposits under workmen's
compensation, unemployment insurance or social security laws, or to secure
statutory obligations or surety or similar bonds; (iii) statutory liens imposed
by law incurred in the ordinary course of business or for obligations not yet
due to carriers, warehousemen, laborers or materialmen; (iv) the interest or
title of any lessor in property pursuant to a lease of real or personal property
under Assumed Contracts; (v) minor imperfections of title and encumbrances that
do not materially detract from or interfere with the present use or value of
such properties; and (vi) any Liens held by Founders Equity Group, Inc. or its
affiliates (the "Senior Lender") to be released at Closing. The execution and
delivery of the Company Documents by the Company and Parent at the Closing will
convey to and vest in Buyer good and marketable title to the Assets, free and
clear of any Liens except the Assumed Liabilities and the Liens described in
clauses (i) and (ii) above.
2.5 CONDITION OF ASSETS. The Assets constitute all assets used by the
Company in the conduct of its business, except for the Excluded Assets or assets
held under leases or licenses disclosed pursuant to SECTION 2.19. All
facilities, machinery, equipment, fixtures, vehicles and other tangible property
owned, leased or used by the Company in the Business are in good operating
condition and repair, normal wear and tear excepted, are reasonably fit and
useable for the purposes for which they are being used, are adequate and
sufficient for the Company's business and conform in all material respects with
all applicable laws, rules and regulations.
2.6 NO VIOLATION. Subject to the receipt of the Required Approval and the
consents for the transfer of the Assumed Contracts set forth on SCHEDULE 2.6,
neither the execution or delivery of the Company Documents nor the consummation
of the transactions contemplated thereby, including, without limitation, the
sale of the Assets to Buyer, will conflict with or result in the breach of any
term or provision of, or violate, or constitute a default under, or result in
the creation of any Lien on the Assets pursuant to, or relieve any third party
of any obligation to the Company or give any third party the right to terminate
or accelerate any obligation under, any charter provision, bylaw, Material
Agreement (as defined in SECTION 2.19(A)), Permit (as defined in SECTION 2.14),
order, law or regulation to which the Company or Parent is a party or by which
the Company, Parent or any of their respective assets is in any way bound or
obligated.
2.7 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
governmental or quasi-governmental agency, authority, commission, board or other
body (collectively, a "Governmental Body") is required on the part of the
Company or Parent in connection with the transfer of any Permits or other Assets
to Buyer or any of the other transactions contemplated by this Agreement.
2.8 [RESERVED]
2.9 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no Liabilities
except for the Assumed Liabilities and Excluded Liabilities. The Company has no
liabilities required to be recorded under generally accepted accounting
principles other than (i) liabilities disclosed in the Company's balance sheet
previously delivered to Buyer dated July 31, 1998 (subject to adjustments to
reflect the reclassification of certain items of cost and expense), (ii) normal
or recurring liabilities incurred since the July 31, 1998 in the ordinary course
of business consistent with past practices, or (iii) liabilities which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect.
2.10 ABSENCE OF MATERIAL ADVERSE CHANGE. Since July 31, 1998 and except as
specifically contemplated by this Agreement, there has not been: (a) any change
in the condition (financial or otherwise),
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ASSET PURCHASE AGREEMENT -- PAGE 7
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
results of operations, business, prospects, assets or Liabilities of the Company
or with respect to the manner in which the Company conducts its business or
operations that could reasonably be anticipated to have a Material Adverse
Effect; (b) any breach or default (or event that with notice or lapse of time
would constitute a breach or default), termination or threatened termination
under any Material Agreement; (c) any theft, damage, destruction, casualty loss,
condemnation or eminent domain proceeding affecting the Assets and not covered
by insurance that could reasonably be anticipated to have a Material Adverse
Effect; (d) any sale, assignment or transfer of any material assets of the
Company, except in the ordinary course of business and consistent with past
practices; (e) any waiver by the Company of any material rights related to the
Company's business, operations or assets; (g) any other transaction, agreement
or commitment entered into by the Company or Parent affecting the Company's
business, operations or assets, except in the ordinary course of business and
consistent with past practices; or (h) any agreement or understanding to do or
resulting in any of the foregoing.
2.11 TAXES. Except for the accrued sales tax liability described in
SCHEDULE 1.5(C) or other tax liabilities included in the calculation of Net
Working Capital as of the Closing Date, all required federal, state, local and
other tax returns, notices and reports (including without limitation income,
property, sales, use, franchise, withholding, social security and unemployment
tax returns) relating to or involving transactions with the Company or Parent
have been accurately prepared and duly and timely filed, and all taxes required
to be paid with respect to the periods covered by any such returns have been
timely paid or adequately reserved for by Parent in its consolidated financial
statements. No tax deficiency has been proposed or assessed against the Company
or Parent, and the Company and Parent have not executed any waiver of any
statute of limitations on the assessment or collection of any tax. No tax audit,
action, suit, proceeding, investigation or claim is now pending or, to the
knowledge of the Company or Parent, threatened against the Company or Parent,
and no issue or question has been raised (and is currently pending) by any
taxing authority in connection with any of the Company's or Parent's tax returns
or reports. Each of the Company and Parent has withheld or collected from each
payment made to each of its employees the full amount of all taxes required to
be withheld or collected therefrom and has paid the same to the proper tax
receiving officers or authorized depositories.
2.12 LITIGATION. There are currently no pending or, to the knowledge of
the Company or Parent, threatened lawsuits, administrative proceedings or
reviews, or formal or informal complaints or investigations by any individual,
corporation, partnership, Governmental Body or other entity (collectively, a
"Person") against or relating to the Company or any of its directors, employees
or agents (in their capacities as such) or to which any of the Assets are
subject, which could reasonably be anticipated to have a Material Adverse
Effect. The Company is not subject to or bound by any currently existing
judgment, order, writ, injunction or decree.
2.13 COMPLIANCE WITH LAWS. The Company is currently complying with and has
at all times complied with, and the use, operation and maintenance of the Assets
comply with and have at all times complied with, and neither the Company, the
Assets nor the use, operation or maintenance of the Assets is in violation or
contravention of, any applicable statute, law, ordinance, decree, order, rule or
regulation of any Governmental Body, including, without limitation, all federal,
state and local laws relating to occupational health and safety, employment and
labor matters; except, in each case, to the extent that such noncompliance or
partial compliance could not reasonably be anticipated to have a Material
Adverse Effect.
2.14 PERMITS. The Company owns or possesses from each appropriate
Governmental Body all right, title and interest in and to all permits, licenses,
authorizations, approvals, quality certifications, franchises or rights
(collectively, "Permits") issued by any Governmental Body necessary to conduct
its business, except with the failure to own or possess such Permit could not
reasonably be anticipated to have a Material Adverse Effect. No loss or
expiration of any such Permit is pending or, to the knowledge of the Company or
Parent, threatened or reasonably foreseeable, other than expiration in
accordance with the terms thereof of Permits that may be renewed in the ordinary
course of business without lapsing.
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ASSET PURCHASE AGREEMENT -- PAGE 8
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
2.15 ENVIRONMENTAL MATTERS.
(a) The only real property owned, leased or otherwise used by the
Company since 1992 is the Company's corporate headquarters located at 150 W.
Carpenter Freeway, Irving, Texas 75039 (the "HQ Property") held under a
commercial lease described in SCHEDULE 2.19. The Company has never disposed
of, released or transported Hazardous Substances.
(b) Without limiting the generality of the other representations and
warranties set forth in this ARTICLE II: (i) the Company has conducted its
business in compliance with all applicable Environmental Laws, including,
without limitation, by having all Permits required under any Environmental
Laws for the operation of its business; (ii) to the Company's knowledge,
none of the real property owned or leased by the Company contains any
Hazardous Substance in amounts exceeding the levels permitted by applicable
Environmental Laws; (iii) the Company has not received any notices, demand
letters or requests for information from any Governmental Body or other
Person indicating that the Company may be in violation of, or liable under,
any Environmental Law or relating to any of the Assets or the HQ Property;
(iv) no reports have been filed, or are required to be filed, by the Company
concerning the release of any Hazardous Substance or the threatened or
actual violation of any Environmental Law; (v) to the Company's knowledge,
no Hazardous Substance has been disposed of, released or transported in
violation of any applicable Environmental Law from any real property owned
or leased by the Company or as a result of any activity of the Company; (vi)
there have been no environmental investigations, studies, audits, tests,
reviews or other analyses regarding compliance or noncompliance with any
Environmental Law conducted by or which are in the possession of the Company
relating to the activities of the Company, any of real property owned or
leased by the Company or the HQ Property that have not been delivered to
Buyer prior to the date hereof; (vii) to the Company's knowledge, there are
no underground storage tanks on, in or under any real property owned or
leased by the Company, and no underground storage tanks have been closed or
removed from any of such properties; (viii) to the Company's knowledge,
there is no asbestos or asbestos containing material present in any of the
properties owned by the Company, and no asbestos has been removed from any
of such properties; and (ix) neither the Company nor any of the Assets are
subject to any material Liabilities or expenditures relating to any suit,
settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law.
(c) As used herein, "Environmental Law" means any federal, state, local
or foreign law, statute, ordinance, rule, regulation, code, legal doctrine,
Permit, license, authorization, approval, consent, order, judgment, decree,
injunction, requirement or agreement with any Governmental Body relating to
(i) the protection, preservation or restoration of the environment
(including without limitation air, water vapor, surface water, groundwater,
drinking water, surface land, subsurface land, plant and animal life or any
other natural resource) or to human health or safety or (ii) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and in effect on the date of the
Closing.
(d) As used herein, "Hazardous Substance" means any substance presently
or hereafter listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any Environmental
Law. Hazardous Substance includes any substance to which exposure is
regulated by any Governmental Body or any Environmental Law, including
without limitation any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance or petroleum or any derivative or by-product thereof, radon,
radioactive material, asbestos or asbestos containing material, urea
formaldehyde, foam insulation, lead or polychlorinated biphenyls.
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ASSET PURCHASE AGREEMENT -- PAGE 9
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
(e) As used in this Agreement, the term "knowledge" means the current
actual knowledge of any executive vice president, president or the chief
executive officer of the Company, without imposing upon any such person of
any duty of inquiry with regard to such facts or circumstances.
2.16 EMPLOYEE MATTERS. Set forth in SCHEDULE 2.16 is a complete list of
all current Designated Employees of the Company, including date of employment,
current title and compensation, and date and amount of last increase in
compensation. Except as set forth in SCHEDULE 2.19, the Company has no
collective bargaining, union or labor agreements, contracts or other
arrangements with any group of employees, labor union or employee
representative. Neither the Company nor Parent knows of any organization effort
currently being made or threatened by or on behalf of any labor union with
respect to employees of the Company. The Company has not experienced, and
neither the Company nor Parent knows or has reasonable grounds to know of any
basis for, any strike, material labor trouble, work stoppage, slow down or other
interference with or impairment of the business of the Company. Following the
Closing and except as provided in SECTION 4.8 with regard to Accrued Vacation
Liabilities, Buyer will have no Liabilities whatsoever under or resulting from
(a) the employment by Buyer of any employee of the Company and relating to such
employee's services to or employment by the Company prior to the Closing; (b)
the termination (by the Company) of the employment of any of the Company's
employees; or (c) the failure of Buyer to offer to employ any of the Company's
employees other than the Designated Employees.
2.17 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.17 lists all "employee pension benefit plans," as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), ever maintained or contributed to (or required to be
contributed to) by the Company or any Affiliate (the "Pension Plans"). As
used in this SECTION 2.17, "Affiliate" means any corporation, trade or
business the employees of which, together with the employees of the Company,
are required to be treated as employed by a single employer under the
provisions of ERISA or Section 414 of the Internal Revenue Code of 1986, as
amended (the "Code").
(b) SCHEDULE 2.17 lists each "employee welfare benefit plan" (as defined
in Section 3(1) of ERISA) that the Company or any Affiliate maintains,
contributes to or is required to contribute to on behalf of any employee or
former employee, including any multiemployer welfare plan (the "Welfare
Benefit Plans"), and sets forth the amount of any Liability of the Company
or any Affiliate for any payment past due with respect to each Welfare
Benefit Plan as of the date of the Closing. No voluntary employees'
beneficiary association or other funding arrangement (other than insurance
contracts) are being used to fund or implement any Welfare Benefit Plan. The
Company has not made any written or oral representations to any employee or
former employee promising or guaranteeing any employer payment or funding
for the continuation of benefits or coverage under any Welfare Benefit Plan
for any period of time beyond the end of the current plan year (except to
the extent required under Code Section 4980B).
(c) SCHEDULE 2.17 lists each plan or policy providing for "fringe
benefits" (including but not limited to vacation, paid holidays, personal
leave, employee discount, educational benefit or similar program), and any
other deferred compensation, bonus, stock option, employee stock purchase,
severance, group insurance, disability, unemployment, supplemental
unemployment, layoff, consulting or stock appreciation rights plan, and any
other similar plan, policy, arrangement, commitment or understanding
(whether written or oral) not required to be listed under paragraph (a) or
(b) above that is maintained by the Company for employees or provides
benefits or describes policies or procedures applicable to any employee,
former employee, director or former director of the Company (the "Employee
Benefit Plans").
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ASSET PURCHASE AGREEMENT -- PAGE 10
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
(d) SCHEDULE 2.17 lists and specifically identifies each multiemployer
plan (as defined in Section 3(37) of ERISA) to which the Company or any
Affiliate contributes or has at any time contributed or had an obligation to
contribute (the "Multiemployer Plans").
(e) Neither the Company nor any Affiliate maintains, or has ever
maintained, contributed to, been required to contribute to or had any
employees participating in, any "defined benefit plan" (as defined in
Section 3(35) of ERISA).
(f) The Pension Plans, the Welfare Benefit Plans and the Employee
Benefit Plans and related trusts and insurance contracts, including any
Multiemployer Plans (collectively, the "Plans"), are legally valid and
binding and in full force and effect. All of the Plans comply currently, and
have complied in the past, both as to form and operation, with the
provisions of all laws, rules and regulations governing or applying to such
Plans; all necessary governmental approvals for the Pension Plans and the
Welfare Benefit Plans have been obtained; and a favorable determination as
to the qualification under the Code of each of the Pension Plans and each
amendment thereto has been made by the Internal Revenue Service, and nothing
has occurred since the date of such determination letters that could
adversely affect the qualification of such plans or the tax exempt status of
the related trust. All reports and filings required by any Governmental Body
(including without limitation Form 5500 Annual Reports, Summary Annual
Reports and Summary Plan Descriptions) with respect to each Plan have been
timely and completely filed, and have been distributed to participants as
required by applicable law. Neither the Company, any Affiliate or any plan
fiduciary of any Plan has engaged in any transaction in violation of Section
406(a) or (b) of ERISA or any "prohibited transaction" (as defined in Code
Section 4975(c)(1)) that would subject the Company to any taxes, penalties
or other Liabilities resulting from such transaction. None of the Plans is
being audited or investigated by any Governmental Body.
(g) The Company has no Liabilities to any Person with respect to any
Plan, except for (i) Liabilities that are fully funded by assets set aside
in trust or irrevocably dedicated for that purpose, the fair market value of
which assets exceed the Liabilities to which they are set aside or
dedicated, and (ii) Liabilities that have been fully accrued on the
Financial Statements. Following the Closing and except as provided in
SECTION 4.8, Buyer will have no Liabilities whatsoever under or resulting
from the Plans or the termination by the Company of any employee of the
Company from any Plan and will have no obligation to continue or replace any
of the Plans.
(h) True and complete copies of the following documents have been
delivered to Buyer: (i) each Plan and each related trust agreement or
annuity contract (or other funding instrument); (ii) the most recent
determination letter issued by the Internal Revenue Service with respect to
each Pension Plan; (iii) Annual Reports on Form 5500 Series required to be
filed with any Governmental Body for each Welfare Benefit Plan and each
Pension Plan for the two (2) most recent plan years; and (iv) the three (3)
most recent actuarial reports for each Pension Plan.
2.18 OWNERSHIP OF THE COMPANY. Subject to the lien of the Senior Lender on
the capital stock of the Company, Parent owns all of the issued and outstanding
capital stock of the Company. There are no outstanding options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
obligating the Company, Parent or any other Person to issue or sell any
securities or ownership interests in the Company. There are no stockholders'
agreements, voting agreements, voting trusts or similar agreements binding on
Parent or applicable to any of the Company's capital stock. All of the
outstanding capital stock of the Company has been offered and sold in compliance
with all applicable securities laws, rules and regulations.
2.19 MATERIAL AGREEMENTS.
(a) SCHEDULE 2.19 lists each agreement and arrangement (whether written
or oral and including all amendments thereto) to which the Company is a
party or a beneficiary or by which the Company
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<PAGE>
or any of its assets is bound and that is material to the Company
(collectively, the "Material Agreements"), including, without limitation (i)
any real estate leases; (ii) any contracts that have accounted for revenues
of more than $10,000 during the one year period preceding the date of this
Agreement; (iii) any agreement evidencing, securing or otherwise relating to
any indebtedness for which the Company is liable; (iv) any capital or
operating leases or conditional sales agreements relating to vehicles,
equipment or other assets of the Company; (v) any supply or manufacturing
agreements or arrangements pursuant to which the Company is entitled or
obligated to acquire any assets from a third party; (vi) any employment,
consulting, noncompetition, separation, collective bargaining, union or
labor agreements or arrangements; (vii) any agreement with or for the
benefit of any stockholder, director, officer or employee of the Company, or
any affiliate or family member thereof; and (viii) any other agreement or
arrangement pursuant to which the Company could be required to make or
entitled to receive aggregate payments in excess of $10,000 in the twelve
month period commencing November 1, 1998. SCHEDULE 2.19 also indicates which
Material Agreements are "Assumed Contracts" for purposes of SECTION 1.3(A).
(b) The Company has delivered to Buyer a copy of each Material
Agreement. Except as described in SCHEDULE 2.19, (i) each Material Agreement
is valid, binding and in full force and effect and enforceable in accordance
with its terms; (ii) the Company has performed all of its obligations under
each Material Agreement, and there exists no breach or default (or event
that with notice or lapse of time would constitute a breach or default) by
either the Company or, to the Company's knowledge, any other party to, any
Material Agreement; (iii) there has been no termination or notice of default
or, to the knowledge of the Company or Parent, any threatened termination
under any Material Agreement; and (iv) no consent of any Person is required
in connection with the transactions contemplated by this Agreement in order
to transfer the Company's rights to Buyer under any of the Assumed
Contracts.
2.20 CUSTOMERS. Set forth in SCHEDULE 2.20 is a complete list of each
customer of the Company that has accounted or is expected to account for more
than $10,000 of revenues during the one year period ending October 31, 1998 (the
"Material Customers").
2.21 ACCOUNTS RECEIVABLE. SCHEDULE 2.21 sets forth the accounts receivable
of the Company, and the payments and rights to receive payments related thereto.
The amounts of all accounts receivable, unbilled invoices and other debts due or
recorded in the records and books of account of the Company as being due to the
Company as of July 31, 1998 (less the amount of any provision or reserve
therefor made in the respective records and books of account of the Company,
which provision or reserve has been computed in accordance with past practice
and is reasonably believed to be adequate) constitute valid claims against third
parties not affiliated with the Company arising in bona fide transactions in the
ordinary course of the business of the Company.
2.22 INTELLECTUAL PROPERTY RIGHTS. Set forth in SCHEDULE 2.22 is a
complete list of all registered patents, trademarks, service marks, trade names
and copyrights, and applications for and licenses (to or from the Company) with
respect to any of the foregoing (collectively, "Registered Intellectual
Property"), owned by the Company or with respect to which the Company has any
rights. The Company has the right to use all Registered Intellectual Property
and other computer software and software licenses, intellectual property,
proprietary information, trade secrets, trademarks, trade names, copyrights,
material and manufacturing specifications, drawings and designs (collectively,
"Intellectual Property") used by the Company or necessary in connection with the
operation of the Company's business, without infringing on or otherwise acting
adversely to the rights or claimed rights of any Person, and neither the Company
nor Parent are obligated to pay any royalty or other consideration to any Person
in connection with the use of any such Intellectual Property, other than
reasonable and customary license fees that may be associated with third party
retail software. To the knowledge of the Company or Parent, no person is
infringing the rights of the Company in any of its Intellectual Property.
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(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
2.23 [RESERVED]
2.24 COMPETING INTERESTS. None of the Company, Parent or any director,
officer, relative or affiliate of any of the foregoing owns, directly or
indirectly, an interest in any Person that is a competitor, customer or supplier
of the Company or that otherwise has material business dealings with the
Company.
2.25 ILLEGAL OR UNAUTHORIZED PAYMENTS; POLITICAL CONTRIBUTIONS. Neither
the Company nor any of its officers, directors, employees, agents or other
representatives or, to the knowledge of the Company or Parent, any other
business entity or enterprise with which the Company is or has been affiliated
or associated, has, directly or indirectly, made or authorized any payment,
contribution or gift of money, property or services, whether or not in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b)
to any political organization, or the holder of or any aspirant to any elective
or appointive public office, except for personal political contributions not
involving the direct or indirect use of funds of the Company. The Company has
not violated any federal or state antitrust statutes, rules or regulations,
including without limitation those relating to unfair competition, price fixing,
bid rigging or collusion.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company and the Parent as follows:
3.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of Delaware.
3.2 AUTHORITY. Buyer has all requisite power and authority to execute,
deliver and perform under this Agreement. The execution, delivery and
performance of this Agreement by Buyer has been duly authorized by all necessary
action, corporate or otherwise, on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and is a legal, valid and binding agreement
of Buyer, enforceable against Buyer in accordance with its terms.
3.3 NO VIOLATION. The execution, delivery and performance of this
Agreement by Buyer will not conflict with or result in the breach of any term or
provision of, or violate or constitute a default under any charter provision or
bylaw or under any material agreement, instrument, order, law or regulation to
which Buyer is a party or by which Buyer is in any way bound or obligated.
3.4 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
Governmental Body is required on the part of Buyer in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. Prior to the Closing, the Company will, and
Parent will cause the Company to, (a) operate in the ordinary course of business
and consistent with past practices and use its best efforts to preserve the
goodwill of the Company and of its employees, customers, suppliers, Governmental
Bodies and others having business dealings with the Company; (b) except as
contemplated by this Agreement, not engage in any transaction outside the
ordinary course of business, including without limitation by making any material
expenditure, investment or commitment or entering into any material agreement or
arrangement of any kind; (c) not (i) increase in the compensation of any officer
or employee of the Company listed as a Designated Employee (as defined in
SECTION 4.8), or (ii) hire any employee to be included as a Designated Employee
(as defined in SECTION 4.8), in each case without the prior written approval of
Buyer (which shall not be unreasonably withheld or delayed); provided that if
Buyer fails to respond to any written request for such approval within one
business day, then Buyer shall be deemed to have approved to such increase in
compensation or hiring; (d) maintain all insurance policies and all Permits that
are required for the Company to carry on its business; (e) maintain books of
account and
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(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
records in the usual, regular and ordinary manner and consistent with past
practices; (f) pay all sales and other taxes prior to the date any tax lien
attaches to the Assets; and (g) not take any action that would result in a
breach (as of the Closing) of the representations and warranties set forth in
ARTICLE II.
4.2 NO-SHOP PROVISIONS. Until the earlier of the Closing or October 31,
1998, (a) the Company and Parent will each negotiate exclusively and in good
faith with Buyer with respect to the sale of the Company; (b) neither the
Company nor Parent will, directly or indirectly (through agents or otherwise),
encourage or solicit any inquiries or accept any proposals by, or engage in any
discussions or negotiations with or furnish any information to, any other Person
concerning a sale of a substantial portion of the assets or business of the
Company, whether through an asset sale, stock sale, merger or otherwise (each,
an "Acquisition Proposal"); and (c) the Company and Parent will promptly
communicate to Buyer the material substance of any Acquisition Proposal that may
be received by any of them; provided that nothing contained in this Agreement
shall prevent Parent or the Company, or their respective Boards of Directors, to
the extent that such Board of Directors determines in good faith that such
action is required to comply with its fiduciary duties to its shareholders from
(i) furnishing non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited bona
fide written Acquisition Proposal by such person or entity or recommending an
unsolicited bona fide written Acquisition Proposal by such person or entity to
the shareholders of such party, if and only to the extent that (A) the Board of
Directors of such party believes in its good faith reasonable judgment that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and, after taking into account the strategic benefits anticipated to be
derived from the transaction contemplated by this Agreement and the long-term
prospects of Parent and Company as a combined company, would, if, consummated,
result in a transaction more favorable over the long-term from a financial point
of view than the transaction contemplated by this Agreement (any such more
favorable Acquisition Proposal being referred to in this Agreement as a
"Superior Proposal") and the Board of Directors of such party determines in good
faith that such action is necessary for such Board of Directors to comply with
its fiduciary duties to shareholders under applicable law and (B) prior to
furnishing such non-public information to, who are entering into discussions or
negotiations with, such person or entity, such Board of Directors receives from
such person or entity an executed confidentiality agreement with terms no less
favorable to such party than those contained in the Exclusive Negotiation and
Confidentiality Agreement dated July 20, 1998 between the Company, Parent and
Buyer (as amended, the "Confidentiality Agreement"), such non-public information
has been previously delivered to the Board of Directors of Buyer and the Company
or Parent advises Buyer in writing of such disclosure or negotiations, including
the party to whom disclosed or with whom discussions or negotiations will occur;
or (ii) complying with Rules 14d-9 and 14e-2 promulgated under the Securities
Exchange Act of 1934, as amended, with regard to an Acquisition Proposal.
4.3 ACCESS AND INFORMATION. From and after the date hereof, the Company
and Parent will permit Buyer and its representatives to have reasonable access
to the Company's directors, officers, employees, agents, assets and properties
and all relevant books, records and documents of or relating to the business and
assets of the Company during normal business hours and will furnish to Buyer
such information, financial records and other documents relating to the Company
and its operations and business as Buyer may reasonably request. The Company and
Parent will permit Buyer and its representatives reasonable access to the
Company's accountants, auditors, customers, suppliers and Governmental Bodies
having dealings with the Company for consultation or verification of any
information obtained by Buyer and will use their respective best efforts to
cause such Persons to cooperate with Buyer and its representatives in such
consultation and in verifying such information. Unless otherwise required by
law, Buyer will hold any such information which is non-public in confidence and
in accordance with the Confidentiality Agreement, the confidentiality provisions
of which shall continue in effect (and are hereby extended) until the
consummation of the transactions contemplated by this Agreement.
4.4 SUPPLEMENTAL DISCLOSURE. The Company and Parent will promptly
supplement or amend each of the Schedules hereto with respect to any matter that
arises or is discovered after the date hereof that, if
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(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
existing or known at the date hereof, would have been required to be set forth
or listed in the Schedules hereto; provided that, for purposes of determining
the rights and obligations of the parties hereunder (other than the obligations
of the Company and Parent under this SECTION 4.4), any such supplemental or
amended disclosure will not be deemed to have been disclosed to Buyer unless (a)
such supplemental or amended disclosure is consistent with the actions
contemplated by SECTION 4.1 above, or (b) Buyer otherwise expressly consents in
writing.
4.5 FULFILLMENT OF CONDITIONS BY THE COMPANY AND PARENT. The Company and
Parent agree not to take any action that would cause the conditions on the
obligations of the parties to effect the transactions contemplated hereby not to
be fulfilled, including, without limitation, by taking or causing to be taken
any action that would cause the representations and warranties made by the
Company and Parent herein not to be true and correct as of the Closing. The
Company and Parent will take all reasonable steps within their power to cause to
be fulfilled the conditions precedent to Buyer's obligations to consummate the
transactions contemplated hereby that are dependent on the actions of the
Company or Parent.
4.6 FULFILLMENT OF CONDITIONS BY BUYER. Buyer agrees not to take any
action that would cause the conditions on the obligations of the parties to
effect the transactions contemplated hereby not to be fulfilled, including
without limitation by taking or causing to be taken any action that would cause
the representations and warranties made by Buyer herein not to be true and
correct as of the Closing. Buyer will take all reasonable steps within its power
to cause to be fulfilled the conditions precedent to the obligations of the
Company and Parent to consummate the transactions contemplated hereby that are
dependent on the actions of Buyer.
4.7 TRANSACTION COSTS. Parent and the Company will pay all attorneys',
accountants', finders', brokers', investment banking and other fees, costs and
expenses incurred by the Company or Parent in connection with the preparation,
negotiation, execution and performance of this Agreement or any of the
transactions contemplated by this Agreement. Buyer will pay all attorneys',
accountants', finders', brokers', investment banking and other fees, costs and
expenses that it incurs in connection with the preparation, negotiation,
execution and performance of this Agreement or any of the transactions
contemplated by this Agreement, including without limitation any sales, use,
transfer, excise or other taxes arising out of the sale of the Assets.
4.8 EMPLOYEE MATTERS.
(a) EMPLOYEES HIRED AND NOT HIRED BY BUYER.
(i) DEFINITIONS. In this Agreement, "Designated Employees" means (A)
each of the employees of the Company identified on SCHEDULE 2.16 and (B)
any employees hired following the date hereof and approved or deemed
approved by Buyer as a "Designated Employee" as provided in SECTION
4.1(C)(II), and "Transferred Employees" means all Designated Employees
that accept an offer of employment from Buyer at Closing.
(ii) HIRING OF TRANSFERRED EMPLOYEES. Buyer shall offer employment
as of the Closing Date to all Designated Employees. Employment shall be
upon terms and conditions as Buyer shall agree with each Designated
Employee prior to the Closing Date; PROVIDED, HOWEVER, that such terms
and conditions shall be at least as favorable as those that such
Designated Employee currently has with the Company.
(iii) COMMUNICATIONS WITH EMPLOYEES. During the period from the date
of this Agreement until the Closing Date, Buyer may (after prior notice
to the Company) contact any Designated Employees, review their personnel
records (with each such employee's permission, as necessary) and extend
to such Designated Employees offers of employment with Buyer subject to
and following the Closing. The Company shall provide access to and
information concerning such Designated Employees as Buyer may reasonably
request. Nothing contained in this paragraph shall confer upon any person
the right to remain an employee of Buyer or any of its affiliates, or
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(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
the right to prevent Buyer from changing the terms and conditions of
employment of any person following the Closing Date.
(iv) EMPLOYEES NOT HIRED. Except as set forth above, no other
employees of the Company shall be hired by Buyer or its affiliates.
(b) LIABILITIES AND OBLIGATIONS WITH RESPECT TO EMPLOYEES.
(i) BENEFITS UNDER PENSION PLANS. As of the Closing Date, all
Transferred Employees shall cease to accrue benefits under all Pension
Plans maintained by the Company. The Company agrees to retain the
responsibilities for payment of all benefits accrued by any participant
or beneficiary under such Pension Plans. The Company shall retain all
liability under Pension Plans as to employees not hired by Buyer.
(ii) WELFARE BENEFIT PLANS. As of the Closing Date, each Transferred
Employee shall cease participating in all Welfare Benefit Plans
maintained by the Company. The Company shall be responsible for all
claims incurred by any person under such Welfare Benefit Plans, and, in
addition, shall be responsible for benefits payable with respect to
disabilities incurred by any person prior to the Closing Date, whether or
not claim is made for such benefits prior to the Closing Date. The
Company shall retain all liability under Welfare Benefit Plans as to
employees not hired by Buyer.
(iii) LIABILITY UNDER EMPLOYEE BENEFIT PLANS. The Company shall be
responsible for any and all liability incurred prior to or as of the
Closing Date under any Employee Benefit Plan for all Transferred
Employees. The Company shall retain all liability for such benefits as to
employees not hired by Buyer.
(iv) DISCRIMINATION CLAIMS; VACATION BENEFITS. The Company shall be
responsible for any liability with respect to any claims of
discrimination brought by any Transferred Employee under state or federal
law; provided such claims arose or termination occurred prior to the
Closing Date. Buyer shall assume the liability of the Company for accrued
vacation benefits with respect to any Transferred Employee attributable
to periods of service prior to the Closing Date ("Accrued Vacation
Liabilities"), and in this regard shall allow such Transferred Employee
to use such accrued vacation benefits following the Closing, consistent
(in accordance with SECTION 4.8(VI) with Buyer's policies for Buyer's
employees at the same or similar level. The Accrued Vacation Liabilities
for the Designated Employees through July 31, 1998 is set forth in
SCHEDULE 4.8(B). The Company shall retain all liability for
discrimination claims, and for vacation benefits as to employees not
hired by Buyer.
(v) OTHER LAWS RELATED TO EMPLOYEES. As to all Employees, whether or
not hired by Buyer, the Company shall be responsible for complying with
all obligations and liabilities arising under COBRA (including providing
adequate notice, and maintaining insurance for those Employees electing
to continue insurance coverage) and the Workers Adjustment and Retraining
Notification Act of 1988 ("WARN ACT") (including providing timely notice
of termination).
(vi) PARTICIPATION IN BUYER'S BENEFIT PLANS. Buyer shall take all
actions necessary or appropriate to permit the Transferred Employees to
participate as soon as practical after the Closing Date in the employee
benefit programs of Buyer for which they are eligible. For this purpose,
the Transferred Employees service with the Company shall be counted as
service with Buyer to the maximum extent possible.
4.9 CONTINUATION OF THE BUSINESS. Following the Closing Date and for a
period of one year following the Deferred Period Commencement Date, Buyer shall
use reasonable efforts to maintain and promote the Business, and shall cause all
revenues arising from the Business to be accounted for separate and apart from
Buyer's other business segments.
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<PAGE>
4.10 SOFTWARE LICENSE. Following the Closing, the Company and Parent shall
have a non-exclusive license to use, copy and modify the source code for certain
Intellectual Property owned by the Company or the Parent set forth in SCHEDULE
4.10 that is being transferred to Buyer (the "Software License"); provided that
such use shall not be in competition with the Business (as defined in SECTION
1.5(B)); provided further that the Company or the Parent may sell "run-time"
licenses derived from or using such Software License, subject to the
restrictions set forth in the preceding clause.
4.11 USE OF CANMAX NAME. Company and Parent shall, within one hundred
twenty (120) days following the Closing, cause the corporate name of each entity
to be changed to delete any derivation of the name "Canmax" and Buyer hereby
grants to Parent and the Company a limited license to use the name "Canmax" and
derivations thereof during such one hundred twenty (120) day period.
4.12 SUBLEASE. Following the Closing, Buyer shall sublease the HQ Property
(other than portions of the premises currently occupied by employees of the
Company or Parent other than Designated Employees) from the Company and shall
pay to the Company on the first day of each month and amount equal to the sum of
all payments due by the Company under the existing lease for the HQ Property
(the "Prime Lease"), which payments include, without limitation, base rent,
utilities and real and personal property taxes. The sublease shall continue
until terminated by Buyer upon 90 days prior written notice to the Company,
unless the Prime Lease is earlier terminated by the landlord thereunder (the
"Prime Landlord"). Following the date of this Agreement, the Company shall give
Buyer prompt written notice of its receipt of any termination notice from the
Prime Landlord under the Prime Lease, and without the prior written approval of
Buyer, the Company will not terminate the Prime Lease. Buyer hereby assumes and
agrees, for the benefit of the Company and the Parent, to comply with and be
bound by all of the provisions of the Prime Lease which are to be observed or
performed following the date hereof by the Company as a tenant thereunder.
Further, Buyer and the Company agree that all rights and obligations between
Buyer and the Company hereunder shall be governed as if Buyer were the tenant
under the Prime Lease and the Company were the landlord under the Prime Lease.
4.13 YEAR 2000 AUDIT. For a period of 20 days following the date of this
Agreement, Buyer may test, or cause to be tested, the source codes for any
computer software and applications both developed by the Company and used by the
Company in connection with the Business ("Company Products") and any third party
software embedded in any such applications or software ("Third Party Products"),
which test(s) will be intended to determine whether or not such computer
software and applications are Year 2000 Compliant (as defined in SECTION 2.3).
During the period preceding the Closing Date, Buyer may continue to test any
previously identified noncompliant Company Product (and any remedial efforts to
cure such noncompliance) or Third Party Product. The cost and expenses of such
testing shall be borne by Buyer; provided that at Closing, Buyer shall be
entitled to receive a credit (the "Audit Credit") against the payment to be made
in SECTION 1.5(A) equal to the lesser of (a) fifty percent of the cost for such
testing and (b) Twenty Five Thousand Dollars ($25,000). If an affiliate of Buyer
is used to conduct such tests, such affiliate will be compensated at its
standard commercial rates for such testing. Within 20 days following the date of
this Agreement, Buyer shall deliver to the Company written notice of any items
of Company Product that are not Year 2000 Compliant. Within 25 days following
the date of this Agreement, Buyer shall deliver to the Company a written cost
estimate for causing such items of Company Product to become Year 2000 Compliant
(the "Compliance Estimate"). If the Compliance Estimate is less than or equal to
$75,000, then the Company shall have the right to either (a) at its sole cost
and expense, elect to cause such items of Company Product to be Year 2000
Compliant by the Closing Date, or (b) not remedy such noncompliance and escrow
the amount of the Compliance Estimate with an escrow agent reasonably acceptable
to Buyer to be used to remedy such noncompliance. If the Compliance Estimate
exceeds $75,000, then the Company shall have the right to either (i) at its sole
cost and expense, elect to cause such Company Product to be Year 2000 Compliant
by the Closing Date, (ii) not remedy such noncompliance and escrow the amount of
the Compliance Estimate with an escrow agent reasonably acceptable to Buyer to
be used to remedy such noncompliance; provided that the Company shall not have
the right to escrow
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(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
any Compliance Estimate in excess of $75,000 if Buyer determines that the escrow
of such amounts will have adverse accounting consequences to Buyer in its sole
discretion; provided further that if the Compliance Estimate exceeds $200,000,
the Company shall have the right, in addition to the rights set forth above, to
terminate this Agreement.
ARTICLE V
CLOSING CONDITIONS
5.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer under
this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions, but compliance with any such conditions may be waived by
Buyer in writing:
(a) All representations and warranties of the Company and Parent
contained in this Agreement are true and correct (i) in all respects (with
regard to representations and warranties subject to materiality or Material
Adverse Effect qualifications) and (ii) in all respects other than the
failure of which could not reasonably be anticipated to have a Material
Adverse Effect (with regard to representations and warranties not subject to
materiality or Material Adverse Effect qualifications), in each such case
when made, and shall be true and correct in all such respects as is
originally made on and as of the Closing.
(b) The Company and Parent have performed and complied in all material
respects with all the covenants and agreements and satisfied the conditions
required by this Agreement to be performed, complied with or satisfied by
them at or prior to the Closing, including, without limitation, the delivery
of all items required to be delivered by them pursuant to SECTION 1.7.
(c) There is no pending or threatened litigation in any court or any
proceeding before or by any Governmental Body against Parent, the Company or
Buyer to restrain or prohibit or obtain damages or other relief with respect
to this Agreement or the consummation of the transactions contemplated
hereby.
(d) All necessary contractual and governmental consents, approvals,
orders or authorizations have been obtained and all necessary contractual or
governmental notices have been given.
(e) The Company and Parent have delivered to Buyer executed UCC-3
Termination Statements or other releases satisfactory to Buyer to evidence
the release of all Liens on the Assets (other than Liens arising from
Assumed Liabilities).
(f) The Company will deliver to Buyer an occasional sales affidavit.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND PARENT. The obligations
of the Company and Parent under this Agreement are subject to the satisfaction
at or prior to the Closing of the following conditions, but compliance with any
such conditions may be waived by the Company in writing:
(a) All representations and warranties of Buyer contained in this
Agreement are true and correct (i) in all respects (with regard to
representations and warranties subject to materiality qualifications) and
(ii) in all respects other than the failure of which could not reasonably be
anticipated to have a material adverse effect on Buyer (with regard to
representations and warranties not subject to materiality qualifications),
in each when made, and shall be true and correct in all such respects as if
originally made on and as of the Closing Date.
(b) Buyer has performed and complied in all material respects with the
covenants and agreements and satisfied the conditions required by this
Agreement to be performed, complied with or satisfied by it at or prior to
the Closing, including without limitation the delivery of all items required
to be delivered by Buyer pursuant to SECTION 1.9.
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(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
(c) There is no pending or threatened litigation in any court or any
proceeding before or by any Governmental Body against Parent, the Company or
Buyer to restrain or prohibit or obtain damages or other relief with respect
to this Agreement or the consummation of the transactions contemplated
hereby.
(d) All necessary governmental consents, approvals, orders or
authorizations have been obtained and all necessary governmental notices
have been given.
(e) Parent must have obtained the affirmative vote from the requisite
amount of stockholders under Wyoming law to approve the sale of the Assets.
(f) Parent or the Company shall have obtained (i) an estoppel
certificate from The Southland Corporation with regard to the contractual
arrangements between Parent, the Company and Southland in a form reasonably
acceptable to Buyer and the Company, and (ii) any necessary consents from
third parties for the assignment of any Assumed Contract to Buyer, which
consents are set forth on SCHEDULE 2.6.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION OF BUYER. The Company and Parent will jointly and
severally indemnify and hold Buyer, its subsidiaries and their respective
directors, officers, employees and agents (collectively, the "Buyer Parties")
harmless from any and all liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all court costs and reasonable attorneys'
fees (collectively, "Buyer Claims"), that any Buyer Party may suffer or incur as
a result of or relating to:
(a) the breach or inaccuracy, or any alleged breach or inaccuracy, of
any of the representations, warranties, covenants or agreements made by the
Company or Parent in this Agreement or pursuant hereto;
(b) the Company's failure to discharge any Excluded Liability;
(c) the Company's failure to discharge any closing cost for which the
Company is to be responsible pursuant to the terms of this Agreement; or
(d) any wages, salaries or other compensation and any other Liabilities
of any nature (other than Accrued Vacation Liability to be assumed by Buyer
and any accrued salary or other benefit amounts reflected in the calculation
of the Net Working Capital as of the Closing Date), including without
limitation any Liabilities under any Plan, to any director, officer,
employee, agent or representative of the Company in connection with their
services to or employment by the Company or their termination by the Company
either prior to or after the Closing.
Neither Parent nor the Company shall be obligated to indemnify any Buyer Parties
pursuant to this SECTION 10.2 or otherwise be liable to any Buyer Party for any
reason hereunder or with respect to the transactions contemplated hereby unless
and until the Buyer claims, exceed, in the aggregate, $25,000, after which time
the Buyer claims in excess of $25,000 shall be indemnified. In no event shall
the indemnification obligations of Parent and Company exceed the Purchase Price.
6.2 INDEMNIFICATION OF PARENT AND THE COMPANY. Buyer will indemnify and
hold Parent and the Company, their respective subsidiaries and their respective
directors, officers, employees and agents (collectively, the "Seller Parties")
harmless from any and all liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all court costs and reasonable attorneys'
fees (collectively, the "Seller Claims") that any Seller Party may suffer or
incur as a result of or relating to:
(a) the breach or inaccuracy, or any alleged breach or inaccuracy, of
any of the representations, warranties, covenants or agreements made by the
Buyer and this Agreement or pursuant hereto;
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ASSET PURCHASE AGREEMENT -- PAGE 19
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
(b) Buyer's failure to discharge any Assumed Liability; or (c) Buyer's
failure to discharge any closing cost for which Buyer is to be responsible
pursuant to the terms of this Agreement.
6.3 SURVIVAL. All representations, warranties and indemnification
obligations made in or pursuant to this Agreement will survive for a period of
one year following the Closing, except that representations, warranties and
indemnification obligations made in or pursuant to this Agreement with respect
to federal state, local and other taxes will survive for a period of seven years
following Closing. All statements contained in any schedule, certificate or
other writing delivered in connection with this Agreement or the transactions
contemplated hereby will constitute representations and warranties under this
Agreement.
6.4 WAIVER. No waiver by any party of any default or breach by another
party of any representation, warranty, covenant or condition contained in this
Agreement, any exhibit or any document, instrument or certificate contemplated
hereby shall be deemed to be a waiver of any subsequent default or breach by
such party of the same or any other representation, warranty, covenant or
condition. No act, delay, omission or course of dealing on the part of any party
in exercising any right, power or remedy under this Agreement or at law or in
equity shall operate as a waiver thereof or otherwise prejudice any of such
party's rights, powers and remedies. All remedies, whether at law or in equity,
shall be cumulative and the election of any one or more shall not constitute a
waiver of the right to pursue other available remedies.
6.5 REMEDIES NOT EXCLUSIVE. The remedies provided in this Article shall
not be exclusive of any other rights or remedies available to one party against
the other, either at law or in equity.
6.6 OFFSET. Subject to the provisions of this Section 6.6, any and all
amounts owing or to be paid by Buyer to the Company or Parent, hereunder or
otherwise, shall be subject to offset and reduction PRO TANTO by any amounts
that may be owing at any time by the Company or Parent to Buyer in respect of
any failure or breach of any representation, warranty or covenant of the Company
or Parent under or in connection with this Agreement or any other agreement with
Buyer or any transaction contemplated hereby or thereby, as reasonably
determined by Buyer. If Buyer determines that such offset is appropriate,
written notice (an "Offset Notice") shall be given to the Company and Parent of
such determination at least thirty (30) days prior to the due date of Buyer's
payment to be reduced, along with a detailed explanation of the circumstance(s)
that Buyer believes entitles it to reduce the Deferred Payment otherwise owing
to the Company. During the ten-day period following Buyer's delivery of an
Offset Notice, the Company and the Buyer shall negotiate in good faith to
resolve such dispute. If such dispute cannot be resolved within such ten-day
period, then the parties shall either (a) mutually agree to refer the matter to
the Designated Party (as defined in SECTION 1.5 and selected in accordance with
the provisions of that section) for resolution, or (b) commence an action to
have the matter resolved by a court of competent jurisdiction, in which case the
amount of the disputed payment shall be deposited with such court. If the
conditions upon which the reduction is based are cured by the Company or Parent
within three (3) days prior to the due date of Buyer's payment, as determined by
Buyer, the amount of such payment shall not be so reduced.
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ASSET PURCHASE AGREEMENT -- PAGE 20
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
ARTICLE VII
MISCELLANEOUS
7.1 TERMINATION. This Agreement and the transactions contemplated hereby
may be terminated and abandoned (a) at any time prior to the Closing by mutual
written consent of Buyer and the Company; (b) by either Buyer or the Company if
a condition to performance by the terminating party hereunder has not been
satisfied or waived prior to November 30, 1998; (c) by either the Company or
Buyer if a court of competent jurisdiction or other governmental entity shall
have issued a non-appealable final order, decree or ruling or taking any other
non-appealable final action, in each case, having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby; (d) by the Company as provided in SECTION 4.13; or (e) by Parent or the
Company, if (i) the Board of Directors of Parent, in the exercise of its
fiduciary obligations to the shareholders of Parent, shall have withdrawn or
modified its recommendation of this Agreement or the transactions contemplated
hereby; or (ii) the Board of Directors of Parent shall have recommended to the
shareholders of Parent a Superior Proposal; provided that if this Agreement is
terminated by Parent or the Company as a result of the recommendation to such
shareholders of a Superior Proposal that is consummated within nine (9) months
of the date of termination, Parent or the Company shall pay to Buyer a fee equal
to $300,000. Notwithstanding the foregoing clause (b), (i) Buyer may not
terminate this Agreement if the event giving rise to its termination right
results from Buyer's willful failure to perform or observe any of its covenants
or agreements set forth herein or if Buyer is, at such time, in breach of this
Agreement, and (ii) the Company may not terminate this Agreement if the event
giving rise to its termination right results from the willful failure of the
Company or Parent to perform or observe any of its covenants or agreements set
forth herein or if the Company or Parent is, at such time, in breach of this
Agreement.
7.2 NOTICES. All notices that are required or may be given pursuant to
this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this SECTION
7.2):
IF TO BUYER:
Affiliated Computer Services, Inc.
2828 North Haskell Avenue
Dallas, Texas 75204
Attention: General Counsel
Fax: 214/823-5746
WITH A COPY TO:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attention: David G. Luther, Jr.
Fax: 214/939-5849
IF TO THE COMPANY OR PARENT:
Canmax Inc./Canmax Retail Systems, Inc.
150 W. Carpenter Freeway
Irving, Texas 75039
Attention: Roger D. Bryant
Fax: 972-281-2385
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ASSET PURCHASE AGREEMENT -- PAGE 21
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
WITH A COPY TO:
Arter & Hadden LLP
1717 Main Street
Suite 4100
Dallas, Texas 75201
Attention: William L. Rivers
Fax: 214-741-7139
Buyer may specify a different recipient for any approvals sought pursuant to
SECTION 4.1(C) upon written notice to the Company. Any such notice or other
communication will be deemed to have been given and received (whether actually
received or not) on the day it is personally delivered or delivered by courier
or overnight delivery service or sent by telecopy or, if mailed, when actually
received.
7.3 ATTORNEYS' FEES AND COSTS. If attorneys' fees or other costs are
incurred to secure performance of any obligations hereunder, or to establish
damages for the breach thereof or to obtain any other appropriate relief,
whether by way of prosecution or defense, the prevailing party will be entitled
to recover reasonable attorneys' fees and costs incurred in connection
therewith.
7.4 FURTHER ASSURANCES. Each party agrees to execute any and all documents
and to perform such other acts as may be necessary or expedient to further the
purposes of this Agreement and the transactions contemplated hereby.
7.5 NO BROKERS. Except for any consulting fees payable by the Company to
the Senior Lender (for which the Company shall be solely responsible), each
party to this Agreement represents to the other party that it has not incurred
and will not incur any liability for any other brokerage fees or agents'
commissions in connection with this Agreement or the transactions contemplated
hereby, and agrees that it will indemnify and hold harmless the other party
against any claim for brokerage and finders' fees or agents' commissions in
connection with the negotiation or consummation of the transactions contemplated
by this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
will constitute one and the same instrument.
7.7 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned or delegated by the Company, Parent or
Buyer, without the prior written consent of the other parties; except that Buyer
may assign its rights and obligations under this Agreement to any direct or
indirect subsidiary of Buyer provided that Buyer guarantees the performance of
the obligations of such subsidiary hereunder. This Agreement is not intended to
confer any rights or benefits to any Person (including without limitation any
employees of the Company) other than the parties hereto.
7.8 ENTIRE AGREEMENT. This Agreement and the related documents contained
as Exhibits and Schedules hereto or expressly contemplated hereby contain the
entire understanding of the parties relating to the subject matter hereof and
supersede all prior written or oral and all contemporaneous oral agreements and
understandings relating to the subject matter hereof. This Agreement cannot be
modified or amended except in writing signed by the party against whom
enforcement is sought. The Exhibits and Schedules to this Agreement are hereby
incorporated by reference into and made a part of this Agreement for all
purposes. Unless otherwise expressly stated in this Agreement, no right or
remedy described or provided in this Agreement is intended to be exclusive or to
preclude a party from pursuing other rights and remedies to the extent available
under this Agreement, at law or in equity.
7.9 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
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ASSET PURCHASE AGREEMENT -- PAGE 22
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
7.10 JURISDICTION AND VENUE.
(a) Any judicial proceeding brought by or against any of the parties to this
Agreement on any dispute arising out of this Agreement or any matter related
hereto shall be brought in any Federal or State court sitting in the County of
Dallas, State of Texas, and by execution and delivery of this Agreement, each of
the parties to this Agreement accepts for itself the exclusive jurisdiction and
venue of the aforesaid courts as trial courts, and irrevocably agrees to be
bound by any final non-appealable judgment rendered in connection with this
Agreement.
(b) The parties hereby expressly and irrevocably agree and consent that any
suit, Agreement and the transactions contemplated herein shall be instituted
exclusively in any State or Federal court sitting in the County of Dallas, State
of Texas, and, by the execution and delivery of this Agreement, the parties
expressly waive any objection which any party may have now or hereafter to the
laying of the venue or to the jurisdiction of any such suit, action or
proceeding, and irrevocably submit generally and unconditionally to the
jurisdiction of any such court in any such suit, action or proceeding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AFFILIATED COMPUTER SERVICES, INC.
By: /s/ JOHN H. REXFORD
-----------------------------------------
Name: John H. Rexford
Title: Senior Vice President
CANMAX INC.
By: /s/ ROGER D. BRYANT
-----------------------------------------
Name: Roger D. Bryant
Title: President
CANMAX RETAIL SYSTEMS, INC.
By: /s/ ROGER D. BRYANT
-----------------------------------------
Name: Roger D. Bryant
Title: President
[The Schedules to this Agreement are listed on page (iii) of this Exhibit A.
Said Schedules do not contain any material information and have been omitted
from this Exhibit A.]
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ASSET PURCHASE AGREEMENT -- PAGE 23
(CANMAX/AFFILIATED COMPUTERS)
<PAGE>
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (this "Amendment") is made
and entered into as of November 10, 1998, by and among Affiliated Computer
Services, Inc., a Delaware corporation ("Buyer"), Canmax Inc. a Wyoming
corporation ("Parent"), and Canmax Retail Systems, Inc., a Texas corporation
(the "Company").
RECITALS:
A. Buyer, Parent and the Company have previously entered into that certain
Asset Purchaser Agreement dated as of September 3, 1998 (the "Original
Agreement"), pursuant to which the Company agreed to sell substantially all of
its assets to Buyer.
B. The Original Agreement contemplated a closing date on or before November
30, 1998.
C. The parties desire to amend the Original Agreement to provide for a
closing to occur on or before December 22, 1998, and is further provided herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment and not
otherwise defined shall have the meaning set forth in the Original Agreement.
2. EXTENSION OF CLOSING DATE. Section 1.6 and subpart (b) of Section 7.1
of the Agreement are hereby amended by substituting the date December 22, 1998
for the date November 30, 1998 within such sections, such that the Closing Date
and the date by which the conditions to Closing shall have occurred is extended
from November 30, 1998 to December 22, 1998.
3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which together will constitute one in the same instrument.
4. EFFECT OF AMENDMENT. Except as specifically amended by the terms of
this Amendment, the terms and provisions in the Original Agreement shall remain
in full force and effect, and the Original Agreement and this Amendment shall be
construed as one agreement.
<PAGE>
Executed as of the date first written above.
AFFILIATED COMPUTER SERVICES, INC.
By: /s/ JEFFREY A. RICH
-----------------------------------------
Name: Jeffrey A. Rich
Its: President and COO
CANMAX INC.
By: /s/ ROGER D. BRYANT
-----------------------------------------
Name: Roger D. Bryant
Its: President
CANMAX RETAIL SYSTEMS, INC.
By: /s/ ROGER D. BRYANT
-----------------------------------------
Name: Roger D. Bryant
Its: President
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1 TO FIRST RESTATED CONVERTIBLE LOAN AGREEMENT
THIS AMENDMENT NO. 1 TO FIRST RESTATED CONVERTIBLE LOAN AGREEMENT (this
"Agreement") is executed as of this 11th day of December, 1998 by and among
Canmax Inc. ("Canmax"), Canmax Telecom, Inc. ("CTI" and together with Canmax
referred to as "Borrower"), and Founders Equity Group, Inc. ("Founders"), on its
own behalf and as agent for various parties (collectively, "Lenders").
R E C I T A L S :
A. Founders is the owner of 863,364 shares of common stock of Canmax, and
Canmax has the obligation to register, upon demand, such shares for resale by
Founders pursuant to an effective registration statement under the Securities
Act of 1933, as amended, as set forth in the Registration Rights Agreement dated
May 1, 1997 ("Registration Agreement").
B. Lenders, Borrower, Canmax Retail Systems, Inc. ("CRSI") and
USCommunications Services, Inc. ("USC") have previously executed the First
Restated Convertible Loan Agreement dated as of March 31, 1998 (the "Original
Agreement") providing for lending of up to $2.5 million to the borrowers
thereunder.
C. Pursuant to the Asset Purchase Agreement dated as of September 3, 1998
(the "Purchase Agreement") between Canmax, CRSI and Affiliated Computer
Services, Inc. ("ACS"), CRSI agreed to sell substantially all of its assets to
ACS for $4.0 million plus the additional consideration provided therein.
D. As a condition to the consummation of the Purchase Agreement, Lenders
were required to release their liens on the assets of CRSI transferred to ACS.
E. By Letter Agreement dated August 25, 1998 (the "Letter Agreement"),
Lenders agreed, upon the consummation of the Purchase Agreement, to release
their liens on the assets to be transferred to ACS and to accept the repayment
of approximately $1.0 million of outstanding indebtedness under the Loan
Agreement and to convert the remaining indebtedness of approximately $.5 million
into shares of Canmax common stock at a conversion price of $.50 per share.
F. Pursuant to the Original Agreement, Canmax had the obligation to
register, upon demand, any shares issued upon the conversion of indebtedness
outstanding thereunder for resale by Lenders pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(collectively, with the registration obligations under the Registration
Agreement, the "Registration Obligation").
G. Borrowers and Lenders desires to amend the Registration Agreement, the
Original Agreement and the Letter Agreement, as further provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. ACKNOWLEDGMENT OF RECEIPT OF CONSIDERATION AND CONVERSION OBLIGATION.
Lender hereby acknowledges having received payment of $1.0 million principal
plus all accrued but unpaid interest through the date hereof. Further, Lenders
acknowledge that, upon the consummation of the Purchase Agreement, they were
obligated, at Canmax's request, to convert the remaining $500,000 of
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<PAGE>
outstanding principal under the Loan Agreement (the "Outstanding Balance")
into shares of Canmax common stock at $.50 per share.
2. DEFERRAL OF CONVERSION OBLIGATIONS. In consideration for (a) the
waiver of the Registration Obligation (as set forth in Section 4 below), (b) the
conversion price adjustment (as set forth in Section 3 below) and (c) the
agreement to convert the Outstanding Balance into shares of Canmax common stock
at the Adjusted Conversion Price upon the delivery of a written notice (a
"Conversion Notice") to Lenders by Canmax (as set forth in Section 5 below),
Canmax hereby agrees that the obligation of Lenders to convert the Outstanding
Balance shall be deferred until Lender's receipt of a Conversion Notice from
Canmax.
3. ADJUSTED CONVERSION PRICE. From and after the date hereof, the
Conversion Price for the Outstanding Balance shall be adjusted to equal the
greater of (a) $.50 per share or (b) 75% of the Closing Average (the "Adjusted
Conversion Price"). As used herein, the term "Closing Average" shall mean the
average closing price of Canmax common stock over the ten trading days preceding
the delivery of a Conversion Notice, as reported on the NASDAQ stock market, OTC
Bulletin Board or other exchange or quotation system on which shares of Canmax
common stock may be quoted or listed.
4. WAIVER OF REGISTRATION OBLIGATION. Lenders hereby waive, on their own
behalf and on behalf of any successors and assigns, any right to require Canmax
to fulfill its Registration Obligation until the earlier of (a) Canmax's
delivery of a Conversion Notice or (b) February 1, 1999.
5. CONVERSION OBLIGATION. Lenders hereby agree to convert the
Outstanding Balance at the Adjusted Conversion Price upon the receipt of a
Conversion Notice from Canmax. Nothing contained herein shall restrict Lenders'
right to convert the Outstanding Balance in accordance with the terms of the
Original Agreement at the Adjusted Conversion Price.
6. INTEREST ON OUTSTANDING BALANCE. The Outstanding Balance shall
continue to accrue interest at the rate of 9% per annum from and after the date
hereof, which amounts shall be payable at the beginning of each calendar quarter
within five days following Canmax's receipt of a statement of interest due from
Lenders.
7. EFFECT OF AMENDMENT. Except as amended hereby, the Original Agreement
shall continue in full force and effect. In the event of any conflict between
the terms of this Agreement and the Original Agreement, the terms of this
Agreement shall prevail.
8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which, taken together, shall constitute one and the same
document. Founders is authorized to execute this Agreement on behalf of
Lenders.
9. USC AND CRSI. Lenders have previously consented to the rescission of
Canmax's acquisition of USC and the sale of substantially all of the assets of
CRSI. Therefore, Lenders acknowledge and agree that they shall have no
continuing liens upon USC or CRSI and that neither of such entities shall
continue to be a party to the Original Agreement.
10. TERMINATION OF COMMITMENT. Lenders shall have no further obligation
to advance any amounts pursuant to Loan Agreement.
11. FURTHER ASSURANCES. Borrower hereby agrees to execute any additional
documents necessary to reflect the intent of this Agreement or otherwise
required under the Original Agreement,
2
<PAGE>
including, without limitation, the execution and recording of any financing
statements (or amendments to existing financing statements) with regard to
Canmax, CTI or any other subsidiaries of Borrower.
EXECUTED as of the date first written above.
CANMAX INC.
By: /s/ Roger D. Bryant
Roger D. Bryant, President
CANMAX TELECOM, INC.
By: /s/ Roger D. Bryant
Roger D. Bryant, President
FOUNDERS EQUITY GROUP, INC., ON ITS
OWN BEHALF AND AS AGENT FOR LENDERS
By: /s/ Thomas Spackman
Thomas Spackman, President
3
