WORLDBID CORPORATION
A Nevada Corporation
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February 2, 1999
DATABOAT INTERNATIONAL LIMITED
0000 Xxxx 0xx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxxxx, President
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- and to -
XX. XXXXX XXXXXXX
0000 Xxxx 0xx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Dear Sirs:
Re: WORLDBID CORPORATION (the " Company")
- Offer by the Company to Databoat International Limited
("Databoat") to acquire XxxxxXxx.Xxx
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We write to set out the offer of the Company to acquire all of the
assets, technology, property and undertaking comprising the
"XxxxxXxx.Xxx" internet business carried on by Databoat (the
"Business").
This offer is on the terms and is subject to the conditions set
forth in this letter. If this offer is acceptable, we ask that you
indicate the agreement of Databoat by signing this letter where
indicated below and returning an executed copy to us. This offer
is open for acceptance until 4:00 p.m. (Pacific Time) on February
2, 1999 (the "Expiry Time"), at which time this offer will
terminate unless accepted in writing.
The Company's offer is as follows:
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1. Offer to Purchase
The Company offers to purchase from Databoat all of the assets,
property and undertaking of the Business as a going concern,
including all of the assets, technology, property and rights
comprising and used in the conduct of the Business (together, the
"Assets") on the terms and subject to the conditions set forth in
this offer. It is agreed that the Assets will include, without
limitation:
(A) all data, source code, object code, drawings, and
software comprising the Business and all copyright,
patents, trademarks, proprietary information, trade
secrets and intellectual property relating to the
Business;
(B) the goodwill of the Business, together with the exclusive
right to the Company to represent itself as carrying on
the Business in continuation of and in succession to
Databoat and the right to use any word indicating that
the Business is so carried on, including the right to use
the name "WorldBid", or any variation thereof as part of
the name of or in connection with the Business or any
part thereof carried on or to be carried on by the
Company;
(C) the "XxxxxXxx.xxx" internet domain name and the agreement
with InterNIC with respect to the domain name;
(D) the benefit of the agreements between Databoat and its
programmers for the benefit of the Business.
The Company will purchase and Databoat will sell the Business and
the Assets free and clear of all mortgages, liens, charges,
security interests and encumbrances of every kind and nature
whatsoever.
The Company acknowledges and agrees that the assets of Databoat
comprising the Databoat and Vacation Life internet businesses
developed and operated by Databoat are not included within the
Assets or the Business.
The Company acknowledges and agrees that the Business is a startup
business and has not produced any revenues as of the date of this
Agreement. The Company acknowledges and agrees that Databoat gives
no representation or warranty or other assurance as to the ability
of the Business to generate revenues or profits.
2. Payment for the Assets
Subject to Section 3, the Company will issue to Databoat 3,000,000
common shares in the capital of the Company (each a "Company
Share") in consideration for the transfer of the Assets by Databoat
to the Company. Databoat and the Company agree that the Company
Shares will be issued at a deemed price based on $0.01 US per share
based on the best estimate of the fair market value of the Assets
and the Business. Databoat and the Company agree that the
consideration will be
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allocated between the Assets based on the best estimate of the fair
market value of the Assets as of the date of this Agreement, as
determined in good faith by the accountants for Databoat.
Databoat acknowledges and agrees that the Company Shares are being
issued pursuant to available exemptions from the prospectus and
registration requirements of each of the Securities Act (British
Columbia) and the United States Securities Act of 1933. Databoat
agrees to abide by all applicable resale restrictions and hold
periods imposed by such statutes.
All shares certificates representing the Company Shares will be
endorsed with the following legend pursuant to the United States
Securities Act of 1933 and the British Columbia Securities Act:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND ARE
BEING OFFERED AND SOLD ONLY TO ACCREDITED INVESTORS IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT BE
REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE
PROVISIONS OF THE ACT OR ARE EXEMPT FROM SUCH
REGISTRATION. THE SECURITIES REPRESENTED BY THIS SHARE
CERTIFICATE ARE SUBJECT TO A HOLD PERIOD AND MAY NOT BE
TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF THE HOLD
PERIOD EXCEPT AS PERMITTED BY THE SECURITIES ACT BRITISH
COLUMBIA) AND THE REGULATIONS MADE UNDER THE ACT.
3. Escrow and Financing
Databoat acknowledges and agrees that the Company Shares will be
held in escrow for a period of one year on the terms and conditions
of the escrow agreement attached hereto as Schedule A. The Company
Shares will be released to Databoat in accordance with the escrow
agreement (the "Escrow Agreement"), commencing on the date which is
one year from the date of Closing. In the event that the Company
determines prior to the date which is one year from the date of
Closing not to pursue development and commercialization of the
Business, the Company will have the option to cause Databoat to
deliver all of the Company Shares to the Company for cancellation.
In the event that the Company exercises its right to cause the
Company Shares to be delivered to the Company in accordance with
the terms and conditions of the Escrow Agreement, Databoat will
have the right to acquire the Business and Assets, including any
improvements to the Business and the Assets, from the Company for
a purchase price of $10.00. In the event of delivery of the
Company Shares to the Company pursuant to the Escrow Agreement and
exercise by Databoat of its option to acquire the Business and the
Assets, each of the Company and Databoat will have no further
liability or obligation to the other.
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Databoat acknowledges that the Company will issue prior to or on
the Closing Date a total of 2,700,000 common shares pursuant to
Rule 504 of Regulation D promulgated pursuant to the United States
Securities Act of 1933 (the "Act") in consideration for the
following payments:
Shares Consideration
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2,000,000 shares $0.01 US per share
700,000 shares $0.20 US per share
Databoat acknowledges and agrees that the Company will apply the
proceeds of $140,000 realized from the offering of 700,000 shares
at $0.20 per share (the "Private Placement")as follows:
(A) to apply $50,000 US to the development and
commercialization of the Business;
(B) to apply approximately $50,000 US to the payment of
outstanding indebtedness of the Company; and
(C) to apply the balance to expenses of the offerings, to
working capital and for general corporate purposes of the
Company; and
Databoat will consent to the issue of 300,000 common shares of the
Company for proceeds of not less than $300,000, provided Databoat
acknowledges and agrees that the Company will have no obligation to
complete any financings other than the Private Placement.
The Company will create a bank account on Closing to be used as the
operating account for the Business (the "Operating Account").
Xxxxxxx will be the sole authorized signatory on the Operating
Account. The $50,000 US portion of the Private Placement to be
used to develop and commercialize the Business will be deposited
into the Operating Account. Xxxxxxx will ensure that the funds in
the Operating Account are applied to the Business in accordance
with the business plan delivered by Databoat to the Company, except
for material deviations approved by the directors. Xxxxxxx will
report to the board of directors for all expenditures incurred in
the development and commercialization of the Business.
Databoat and Xxxxxxx acknowledge and agree that funds from any
additional financing will not be available for the Business until
such time as the board of directors approve the application of any
portion of the net proceeds of the financing to the development and
commercialization of the Business. The Company will open a bank
account on Closing to be used for the deposit of funds raised by
financings and for the payment of general corporate expenses of the
Company (the "Financing Account"). The signatories of the
Financing Account will be as directed by a majority of the board of
directors of the Company.
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In the event that, during the one year period commencing on the
Closing Date, the Company does not advance to the Business
sufficient funds for the Company to complete the expenditures set
forth in the Company's business plan, as attached hereto or in any
revised business plan approved by the board of directors of the
Company, then Databoat will be entitled to deliver notice to the
Company demanding that the Company advance to the Business
sufficient funds to enable the Company to meet the objectives of
the business plan (a "Demand Notice"). Upon receipt of a Demand
Notice, the Company will have a period of thirty (30) days in which
to provide the required funding to bring the Company current with
the expenditures required under the business plan.
In the event that, during the one year period commencing on the
Closing Date, the Company elects not to or fails to provide the
necessary funding to the Business or in the event Xxxxxxx
terminates the Management Consulting Agreement, as defined below,
pursuant to Section 6.3 of the Management Consulting Agreement,
Databoat will have the option to put the Company Shares to the
Company in exchange for the transfer by the Company to Databoat of
the Business. On closing, the Company will execute and deliver
into escrow an executed general conveyance of business as required
to give effect to the transfer of the Business to Databoat upon
exercise of its option. In the event of the exercise by Databoat
of its option and the transfer of the Business to Databoat, the
Company Shares will be released to the Company and each of the
Company, Xxxxxxx and Databoat will have no further liability or
obligation to the other.
In the event that the shares of the Company or any successor are
not listed or quoted for trading on any public trading market,
including Nasdaq Small Cap Market, the OTC Bulletin Board or an
electronic quotation service, within the date which is eighteen
months from the Closing Date, then Databoat will have the right to
purchase the Business from the Company in consideration for the
transfer of the Company Shares to the Company. Databoat must give
notice of its election within 30 days of the date which is eighteen
months from the Closing Date. Upon receipt of notice of election,
the Company will execute and deliver an executed general conveyance
of business assets to Databoat upon presentation of the Company
Shares released from escrow. Each party will give joint
instruction to the escrow agent as required to deliver the balance
of the Company Shares to the Company.
4. Closing Date
The date of the closing of the purchase and sale of the Assets will
be the 15th day of February, 1999 (the "Closing Date").
5. Management Agreement
In order to enable WorldBid to develop and commercialize the
Business, Xxxxxxx will enter into the management consulting
agreement with WorldBid in the form attached hereto as Schedule B
(the "Management Consulting Agreement") on closing. Databoat
consents to the execution of the Management Consulting Agreement
and the provision of the consulting services pursuant to the
Management Consulting Agreement by Xxxxxxx. Databoat agrees that
the consultant fee payable
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pursuant to the Management Consulting Agreement will include
reimbursement for all home office expenses of Xxxxxxx and Databoat,
including use of existing office supplies equipment and facilities
presently owned by Xxxxxxx and Databoat, for a maximum of four
months. Databoat will continue to host the "XxxxxXxx.xxx" Internet
site at no extra cost until such time as the Company enters into a
new server contract for hosting the Business, for a maximum of four
months and provided that the volume of the Business is within the
capacity of the existing NetNation contract.
6. Representations and Warranties
The Company's purchase will be based on the representations and
warranties by Databoat and Xxxxx Xxxxxxx, the principal shareholder
of Databoat, each of which will survive closing, that:
(A) Databoat is a corporation duly organized, validly
existing and in good standing under the British Columbia
Company Act;
(B) Databoat owns, possesses and has good and marketable
title to the Assets free and clear of any and all
mortgages, liens, pledges, charges, security interests,
encumbrances, actions, claims or demands of any nature
whatsoever or howsoever arising;
(C) Databoat is the registered owner of the "XxxxxXxx.xxx"
URL domain name (the "Domain Name") and has not received
notice from any other party claiming an interest in the
Domain Name or claiming that Databoat has no right to use
the Domain Name;
(D) Databoat has in place the domain name and Internet server
provider agreements necessary for the conduct of the
Business in the manner carried on as of the date of this
Agreement, provided that the "XxxxxXxx.xxx" internet site
is hosted by NetNation pursuant to a long term contract
between NetNation and Databoat;
(E) No person, firm or corporation has any agreement or
option or any right or privilege (whether by law, pre-
emptive or contractual) capable of becoming an agreement
or option for the purchase of the Assets or any interest
in the Assets;
(F) No other person, firm or corporation owns or has any
legal or beneficial interest in any of the Assets or, to
the knowledge of Databoat and Xxxxxxx, has any rights,
including any moral rights, copyright, trademark or any
other intellectual property rights, in any of the Assets;
(G) Databoat does not have any outstanding material
agreements (including employment agreements) contracts or
commitment, whether written or oral, of any nature or
kind whatsoever, with respect to the ownership of the
Assets or the conduct of the
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Business, except material agreements which are in the ordinary
course of the Business;
(H) Databoat is not in material default or breach of the
InterNIC domain agreement, the NetNation server agreement
or any agreement with its programmers for the Business
and there exists no state of facts which after notice or
lapse of time or both which would constitute such a
default or breach;
(I) with the exception of the claim by Xerox Canada against
Databoat with respect to a leased photocopier, there are
no actions, suits or proceedings pending or threatened
against or affecting Databoat is not aware of any
existing ground on which any such action, suit or
proceeding might be commenced with any reasonable
likelihood of success;
(J) Databoat is the owner all intellectual property,
including tradenames, copyrights and confidential
information, as required to conduct the Business provided
the Company acknowledges that Databoat is not the owner
of any patents or registered trademarks. Databoat is not
aware of any infringement or claimed infringement of the
intellectual property comprising the Assets and used in
connection with the Business by any other person, firm or
corporation;
(K) Databoat has not received any notice from any
governmental authority stating or claiming that Databoat
does not have any governmental licence or permit required
for the conduct of the Business.
7. Representations and Warranties of The Company
The Company represents and warrants to Databoat, which
representations and warranties will survive Closing, that:
(A) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Nevada;
(B) upon issue, the Company Shares will be fully paid and
non-assessable shares in the capital of the Company and
each Company Share will have the same voting rights as
all other issued and outstanding common shares of the
Company;
(C) the issued and outstanding shares of the Company will not
exceed 2,700,000 common shares immediately prior to the
Closing;
(D) no person has any option, warrant or other right to
acquire any shares of the Company;
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(E) the Company does not own any assets;
(F) the Company is not party to any agreements, contracts or
commitments;
(G) there are no actions, suits or proceedings pending or
threatened against or affecting the Company and the
Company is not aware of any existing ground on which any
such action, suit or proceeding might be commenced with
any reasonable likelihood of success.
8. Conditions Precedent to Closing
Databoat's obligations to complete the sale of the Assets is
subject to each of the following conditions:
(A) all representations and warranties of the Company will be
true and correct in all material respects on the Closing
Date;
(B) the Company will have made the deliveries contemplated in
this offer on the Closing Date;
(C) the Company will have completed a minimum of $70,000 of
the Private Placement prior to or contemporaneously with
Closing.
Each of the above conditions precedent is for the sole benefit of
Databoat and may be waived by the Databoat. In the event that any
of the above conditions has not been satisfied by the Closing Date,
the Databoat may elect to terminate this Agreement and will have no
further liability to the Company.
The Company's obligation to complete the purchase of the Assets is
subject to each of the following conditions:
(A) all representations and warranties of Databoat and
Xxxxxxx will be true and correct in all material respects
on the Closing Date;
(B) there shall have been no material adverse change to the
Business between the date of acceptance and the Closing
Date;
(C) Databoat and Xxxxxxx will have made the deliveries
contemplated in this offer on the Closing Date;
Each of the above conditions precedent is for the sole benefit of
the Company and may be waived by the Company. In the event that
any of the above conditions has not been satisfied by the Closing
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Date, the Company may elect to terminate this Agreement and will
have no further liability to Databoat.
9. Closing Deliveries
On the Closing Date, Databoat will deliver to the Company:
(A) a general conveyance of the Assets and all other deeds of
conveyance, bills of sale, transfer and assignments, duly
executed, in form and content satisfactory to the
Company's solicitors, appropriate to effectively vest
good and marketable title to the Assets free and clear of
all encumbrances and immediately registerable in all
places where registration of such instruments is
necessary or desirable duly executed transfers of the
Assets to the Company, duly endorsed for transfer to the
Company;
(B) written confirmation by an officer of Databoat and by
Xxxxxxx, in his personal capacity, as to the truth and
correctness of the representations and warranties of
Databoat and Xxxxxxx as of the Closing Date;
(C) all other corporate resolutions, agreements, assignments,
consents and documentation as deemed necessary by the
Company's solicitors to give effect to the transactions
contemplated by this agreement in accordance with
accepted commercial practice;
(D) duly executed documents of transfer and waivers of moral
rights by any developer or programmer of the Business
reasonably required, in the opinion of the Company's
solicitors, to transfer title to the Assets to the
Company;
(E) the Escrow Agreement duly executed by Databoat;
(F) the Management Consulting Agreement executed by Xxxxxxx;
On the Closing Date, the Company will deliver to Databoat and
Xxxxxxx:
(A) an acknowledgement of acceptance executed by the Company
confirming the Company will deliver the certificates
representing the Company Shares to which Databoat is
entitled to the Escrow Agent to be held pursuant to the
Escrow Agreement. Databoat acknowledges and agrees that
delivery of share certificates will be delayed pending
appointment of the Company's transfer agent;
(B) resolutions of the shareholders of the Company appointing
the directors of the Company as contemplated by this
Agreement;
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(C) the Escrow Agreement executed by the Company and the
general conveyance of business assets, as contemplated by
the Escrow Agreement, duly executed by the Company;
(D) the Management Consulting Agreement executed by the
Company, together with the initial bonus payment of
$5,000 US contemplated by the Management Consulting
Agreement;
(E) evidence that the Company has advanced the sum of $50,000
US to the operating account of the Company for the
development and commercialization of the Business.
On the Closing Date, the Company will advance to the Company's
operating account the sum of $50,000 US for the development and
commercialization of the Business. Xxxxxxx will be the sole
signatory on the operating account effective as of closing.
10. Appointment of Directors
On completion of the Closing, the directors of the Company will
consist of Xxxxx Xxxxxxxx and two representatives of the group
providing the financing, as directed by Xxxxx Xxxxxxxx.
If the Company elects to retain the Business after the expiry of
the one-year period following Closing, the directors of the Company
will consist of Xxxxx Xxxxxxx, Xxxxx Xxxxxxxx or his nominee, and
one representative appointed by Databoat.
11. Stock Options
Databoat acknowledges and agrees that incentive stock options will
be granted equally on a 50/50 basis between the Company's operating
group, including Xxxxx Xxxxxxx, and between the Company's financing
and administration group, including Xxxxx Xxxxxxxx and his associates,
in such amounts and on such terms as approved by the board of
directors from time to time.
12. Jurisdiction/Arbitration
This Agreement shall be governed by the laws of the State of
Washington and each party irrevocably attorns to the jurisdiction
of the courts of the State of Washington. Any dispute or claim
arising hereunder shall be settled by arbitration. Any party may
commence arbitration by sending a written notice of arbitration to
the other party. The notice will state the dispute with
particularity. The arbitration hearing shall be commenced thirty
(30) days following the date of delivery of notice of arbitration
by one party to the other, by the American Arbitration Association
("AAA") as arbitrator. The arbitration shall be conducted in
Seattle, Washington in accordance with the commercial arbitration
rules promulgated by AAA, and each party shall retain the right to
cross-examine the opposing party's witnesses, either through legal
counsel, expert witnesses or both. The decision of the arbitrator
shall be final, binding and conclusive on all parties (without any
right of appeal
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therefrom) and shall not be subject to judicial review. As part of
his decision, the arbitrator may allocate the cost of arbitration,
including fees of attorneys and experts, as he or she deems fair
and equitable in light of all relevant circumstances. Judgment on
the award rendered by the arbitrator may be entered in any court of
competent jurisdiction.
13. Acceptance
If Databoat wishes to accept this offer, Databoat must execute this
offer where indicated below and deliver a copy of the acceptance to
the Company by no later than 4:00 p.m. (Pacific Time) on February
2, 1999. This offer and its acceptance may be executed in
counterparts.
Yours truly,
WORLDBID CORPORATION
Per: \s\ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, President
This offer is accepted and agreed to this 2nd day of February,
1999.
DATABOAT INTERNATIONAL LIMITED
by its authorized signatory:
\s\ Xxxxx Xxxxxxx
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________________________________
Xxxxx Xxxxxxx, President
and by
\s\ Xxxxx Xxxxxxx
-----------------
XXXXX XXXXXXX
in his personal capacity
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SCHEDULE A
ESCROW AGREEMENT
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SCHEDULE B
MANAGEMENT CONSULTING AGREEMENT
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SCHEDULE C
BUSINESS PLAN EXPENDITURES
Worldbid Budget for the first to third month following closing,
in US dollars:
Programing......................$10,000
Design...........................10,000
Marketing........................30,000
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Total...........................$50,000
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Worldbid Budget for the fourth to twelfth month following
closing, in US dollars:
Programming.....................$40,000
Design...........................20,000
Marketing.......................100,000
Office rent......................60,000
Server...........................10,000
Server co-location................8,000
Miscellaneous....................12,000
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Total..........................$250,000
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