-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AJ9Y6rziIoO05r+MTOk9nct48kK6eH5hrIy3suzRraj9Jo7NCITriFEjC4YrbG4C mfoXl+lLH5cTSIdK7ouyfg== 0001144204-05-017197.txt : 20050611 0001144204-05-017197.hdr.sgml : 20050611 20050526093917 ACCESSION NUMBER: 0001144204-05-017197 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050519 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities FILED AS OF DATE: 20050526 DATE AS OF CHANGE: 20050526 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTIVECORE TECHNOLOGIES INC CENTRAL INDEX KEY: 0001011601 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30397 FILM NUMBER: 05858327 BUSINESS ADDRESS: STREET 1: 156 FRONT STREET WEST STREET 2: SUITE 210 CITY: TORONTO STATE: A6 ZIP: M5J 2L6 BUSINESS PHONE: 9053069343 MAIL ADDRESS: STREET 1: 156 FRONT STREET WEST STREET 2: SUITE 210 CITY: TORONTO STATE: A6 ZIP: M5J 2L6 FORMER COMPANY: FORMER CONFORMED NAME: IVP TECHNOLOGY CORP DATE OF NAME CHANGE: 20050106 FORMER COMPANY: FORMER CONFORMED NAME: ACTIVECORE TECHNOLOGIES, INC. DATE OF NAME CHANGE: 20050105 FORMER COMPANY: FORMER CONFORMED NAME: IVP TECHNOLOGY CORP DATE OF NAME CHANGE: 20000404 8-K 1 v019169.txt 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 Date of report (Date of earliest event reported): May 19, 2005 ActiveCore Technologies, Inc. (Exact name of registrant as specified in its charter)
Nevada 000-30397 65-6998896 - -------------------------------------------------------------------------------------------------------------------- (State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification No.) Incorporation) - -------------------------------------------------------------------------------------------------------------------- 156 Front Street West, Suite 210, Toronto, Ontario, Canada M5J 2L6 - -------------------------------------------------------------------------------------------------------------------- (Address of Principal Executive Officers) (Zip Code) - --------------------------------------------------------------------------------------------------------------------
Registrant's telephone number, including area code: (416) 252-6200 (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) - -------------------------------------------------------------------------------- This Form 8-K and other reports filed by Registrant from time to time with the Securities and Exchange Commission contain or may contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performances. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue", or the negative of these terms or other comparable terminology. Such statements reflect the current view of Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to Registrant's industry, Registrant's operations and results of operations and any businesses that may be acquired by Registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned. Although Registrant believes that the expectations reflected in the forward-looking statements are reasonable, Registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, Registrant does not intend to update any of the forward-looking statements to conform these statements with actual results. Section 2 - Financial Information Item 2.01 Completion of Acquisition or Disposition of Assets On May 19, 2005, ActiveCore Technologies, Inc. (the "Registrant") completed the acquisition (the "Acquisition") of Cratos Technology Solutions Inc., an Ontario corporation ("Cratos"). The Registrant effected the acquisition of Cratos pursuant to the terms of a share purchase agreement dated effective February 22, 2005 (the "Effective Date"), as amended May 19, 2005 (the "Share Purchase Agreement"). The Registrant has filed a copy of the original Share Purchase Agreement as Exhibit 2.1 to this Form 8-K and has filed a copy of the amendment as Exhibit 99.1 to this Form 8-K. Under the terms of the Share Purchase Agreement, the Registrant acquired from Andrew Wickett ("Wickett") and Debbie Gracie-Smith ("Gracie-Smith") all of the stock of Cratos in exchange for approximately CAD$2.6 million in cash and Registrant common stock. Under the terms of the Share Purchase Agreement, the Registrant issued 9,421,030 shares (the "Purchaser Shares") of its common stock (in equal proportions to Wickett and Gracie-Smith) on May 19, 2005 and will pay cash in the amount of CAD$200,000 (in equal proportions to Wickett and Gracie-Smith). The per share stock consideration was approximately USD$0.21 which (based on the average closing price of the Company's common stock based on the five day trading period ending two days after the Effective Date). The purchase price is subject to an adjustment mechanism which will require (i) the Company to issue additional shares to Wickett and Gracie-Smith (in equal proportions) in the event Cratos exceeds certain specified financial targets, and (ii) Wickett and Gracie-Smith to contribute back to the Company's treasury Purchaser Shares (in equal proportions) in the event Cratos' fails to achieve certain specified financial targets. In addition to the foregoing, Cratos also made a cash payment to its primary supplier which cash payment equaled all amounts due to such supplier and which amounts represent receivables to Cratos. This cash payment was substantially funded by way of a draw-down of a credit facility which Cratos put in place with a Canadian chartered bank prior to the completion of the Acquisition. The Registrant also issued 3,921,633 shares of its common stock to this same supplier as bonus shares in consideration for its agreement to (i) enter into renewed agreements which Cratos, and (ii) terminate any existing security agreements between such party and Cratos as well as discharge any registered security and agree to subordinate any future security to that of any senior lender of the Company. On March 16, 2005, the Company issued a press release discussing the Share Purchase Agreement and the transaction. A copy of that press release was filed with the Commission as Exhibit 99.1 to a Form 8-K filed on March 19, 2005. Registration Rights Agreement The Purchaser Shares were not registered at the time of issuance with the Securities Exchange Commission (the "Commission") or the securities commission of any state of the United States, and were issued in reliance upon an exemption under the Securities Act of 1933. Pursuant to the terms of the Share Purchase Agreement, the Company granted to each of Wickett and Gracie-Smith registration rights in respect of the Purchaser Shares which will require the Registrant to prepare and file with the Commission, no later than 90 days from the closing date, a registration statement in respect of said shares. The Registrant shall use its best efforts to have the registration statement declared effective by the Commission within 120 days of the closing date. The Registrant has filed a copy of the registration rights agreement as Exhibit 4.1 to this Form 8-K. Lock-Up Agreement Pursuant to the terms of the Share Purchase Agreement, each of Wickett and Gracie-Smith will agree to a contractual lock-up and voting restrictions in respect of the Purchaser Shares. Specifically, the Purchaser Shares will be subject to a lock-up in accordance with the following release conditions: (i) 20% of the Purchaser Shares shall be released on the seventh business day following the Effective Date; (ii) 40% of the Purchaser Shares will be released on the first anniversary of the Effective Date; and (iii) 40% of the Purchaser Shares will be released on the second anniversary of the Effective Dave. Each of Wickett and Gracie-Smith will also agree for a period of two years from the closing date to vote the Purchaser Shares in support of any recommendation made by the directors and/or management of the Company at any annual or special meeting of the Company. Employment Agreement for Wickett Pursuant to the terms of the Share Purchase Agreement, Wickett (or a personal services company on Wickett's behalf) and the Company shall enter into an employment agreement pursuant to which Wickett shall continue as Cratos' President and Chief Executive Officer for a period of two years after the closing date. The employment agreement provides for an annual salary of CAD$130,000 and a bonus of 3% of Cratos' net revenues to be determined on a per project basis. Employment Agreement for Gracie-Smith Pursuant to the terms of the Share Purchase Agreement, Gracie-Smith (or a personal services company on Gracie-Smith's behalf) and the Company shall enter into an employment agreement pursuant to which Gracie-Smith shall continue as Cratos' Chief Operating Officer for a period of two years after the closing date. The employment agreement provides for an annual salary of CAD$130,000 and a bonus of 3% of Cratos' net revenues to be determined on a per project basis. Section 3 - Securities and Trading Markets Item 3.02 Unregistered Sales of Equity Securities As described in Item 2.01 of this Current Report on Form 8-K, the Registrant in exchange for all of the stock of Cratos issued to Cratos' shareholders (Wicket and Gracie-Smith) on May 19, 2005 9,421,030 shares of its common stock and cash consideration in connection with the Share Purchase Agreement. The Registrant also issued 3,921,633 shares of its common stock to a primary supplier in satisfaction of amounts due to such supplier and which amounts represented receivables to Cratos. All of the issuances were made by the Registrant pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: May 25, 2005 ActiveCore Technologies, Inc. By: /s/ [Peter J. Hamilton] - ------------------------------------ Name: Peter J. Hamilton President & CEO EXHIBIT INDEX Exhibit No. Description 2.1 Share Purchase Agreement dated effective February 22, 2005 between ActiveCore Technologies, Inc., Andrew Wickett, Debbie Gracie-Smith and Cratos Technology Solutions Inc. 2.2 Amendment No. 1 to the Share Purchase Agreement dated May 19, 2005 4.1 Registration Rights Agreement 99.1 Press Release EX-2.1 2 v019169_ex2-1.txt Execution Copy SHARE PURCHASE AGREEMENT THIS AGREEMENT effective as of the 22nd day of February, 2005, B E T W E E N ANDREW WICKETT, an individual resident in the Province of Ontario ("Wickett") - and - DEBBIE GRACIE-SMITH, an individual resident in the Province of Ontario ("Gracie-Smith") (collectively, the "Vendors") - and - ACTIVECORE TECHNOLOGIES INC., a corporation incorporated under the laws of the State of Nevada (the "Purchaser") WHEREAS the Vendors are collectively the registered and beneficial owners of 50 common shares (the "Shares") in the capital of Cratos Technology Solutions Incorporated (the "Corporation"), being all of the issued and outstanding shares of the Corporation; AND WHEREAS the Purchaser wish to purchase and the Vendors wish to sell the Shares on the terms and conditions contained in this Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows: ARTICLE 1 INTERPRETATION 1.1 Definitions. In this Agreement, the following terms shall have the meanings set out below unless the context requires otherwise: (1) "Affiliate" means, with respect to any Person, any other Person who directly or indirectly controls, is controlled by, or is under direct or indirect common control with, such Person, and includes any Person in like relation to an Affiliate. A Person shall be deemed to control a Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the term "controlled" shall have a similar meaning. (2) "Agreement" means this Agreement, including the Exhibits and the Schedules to this Agreement, as it or they may be amended or supplemented from time to time, and the expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this Agreement and not to any particular Section or other portion of this Agreement. (3) "Applicable Law" means, with respect to any Person, property, transaction, event or other matter, any law, rule, statute, regulation, order, judgment, decree, treaty or other requirement having the force of law (collectively, the "Law") relating or applicable to such Person, property, transaction, event or other matter. Applicable Law also includes, where appropriate, any interpretation of the Law (or any part thereof) by any Person having jurisdiction over it, or charged with its administration or interpretation. (4) "Applicable Securities Laws" means, collectively, the applicable Canadian Securities Laws and U.S. Securities Laws. (5) "Books and Records" means all books, records, files and papers of the Corporation, including drawings, engineering information, computer programs (including source code), software programs, manuals and data, sales and advertising materials, sales and purchases correspondence, trade association files, research and development records, lists of present and former customers and suppliers, personnel, employment and other records, and the minute and share certificate books of the Corporation, and all copies and recordings of the foregoing. (6) "Business" means the business carried on by the Corporation which primarily involves the sale and installation of corporate disclosure products. (7) "Business Day" means any day except Saturday, Sunday or any day on which banks are generally not open for business in the City of Toronto, Ontario. (8) "Canadian Securities Laws" means, collectively, the securities laws of the Province of Ontario with the regulations and rules made and forms prescribed thereunder together with all applicable published policy statements, blanket orders, rulings and notices of the Ontario Securities Commission. (9) "Closing" means the completion of the purchase and sale of the Shares in accordance with the provisions of this Agreement. (10) "Closing Date" shall have the meaning ascribed to such term in Section 2.6. (11) "Commission" means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or Exchange Act, as applicable. (12) "Common Stock Equivalent" means any securities of the Purchaser which would entitle the holder thereof to acquire at any time Common Stock of the Purchaser, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock of the Purchaser. 2 (13) "Contracts" means all rights and interests of the Corporation in all pending and/or executory contracts, agreements, leases and arrangements to which the Corporation is a party or by which the Corporation or its assets or the Business is bound or affected including the Material Contracts. (14) "Cratos Audited Statements" means the audited financials statements of the Corporation, which financial statements shall be prepared in a manned consistent with United States GAAP and in accordance with Commission accounting pronouncements. (15) "Cratos Hospitality" means Cratos Integrated Solutions Inc., a corporation incorporated under the laws of the Province of Ontario. (16) "Debt Instrument" means any bond, debenture, promissory note or other instrument evidencing indebtedness for borrower money or other liability. (17) "Disclosure Statement" means the disclosure statement of the Corporation dated the date hereof delivered to the Purchaser by the Vendor; (18) "EBITDA" means, for any period, net income during such period plus, without duplication and to the extent deducted in determining such net income, interest expense, income tax expense and depreciation and amortization expense for such period, determined in conformity with GAAP. (19) "Employee" means an individual who is employed by the Corporation. (20) "Exchange Act" means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the relevant time. (21) "Financial Statements" means the annual financial statements of the Corporation for the twelve month fiscal period ended October 31, 2004, prepared on a review basis. (22) "GAAP" means generally accepted accounting principles in effect from time to time applied consistently throughout the periods involved. (23) "Indemnitee" means any Party and its representative entitled to indemnification under this Agreement. (24) "Indemnitor" means any Party obligated to provide indemnification under this Agreement. (25) "Indemnity Payment" means any amount of Loss required to be paid pursuant to Article 6. (26) "Intellectual Property" means all rights to and interests in: 3 (a) all business and trade names, corporate names, brand names and slogans Related to the Business; (b) all copyrights and trade-marks (whether used with wares or services and including the goodwill attaching to such trade-marks), registrations and applications for trade-marks and copyrights (and all future income from such trade-marks and copyrights) Related to the Business; and (c) all licences of the intellectual property listed in items (a) and (b) above. (27) "Lien" means any lien, mortgage, charge, hypothec, pledge, security interest, prior assignment, option, warrant, lease, sublease, right to possession, encumbrance, claim, right or restriction, including right of first refusal, which affects, by way of a conflicting ownership interest or otherwise, the right, title or interest in or to any particular property. (28) "Loss" means any and all loss, liability, damage, cost, expense, charge, fine, penalty or assessment, resulting from or arising out of any claim, including the costs and expense for any legal proceeding, assessment, judgment, settlement or compromise relating thereto and all interest, fines and penalties and reasonable legal fees and expenses incurred in connection therewith. (29) "Material Adverse Change" means a change in the business, operations or capital of the Corporation which has had or could reasonably be expected to have a significant adverse effect on the value of the Shares. (30) "Material Contract" means an agreement (whether oral or written) to which the Corporation is a party or by which the Corporation or any of the Assets or the Business is bound or affected except an agreement which involves or may reasonably be expected to involve the payment to or by the Corporation of less than Fifty Thousand Dollars ($50,000) over the term of the agreement and is not otherwise material to the operation of the Business. (31) "OTCBB" means the OTC Bulletin Board of the National Association of Securities Dealers. (32) "Parties" means the Vendors and the Purchaser. (33) "Person" is to be broadly interpreted and includes an individual, a corporation, a partnership, a trust, an unincorporated organization, the government of a country or any political subdivision thereof or any agency or department of any such government, and the executors, administrators or other legal representatives of an individual in such capacity. (34) "PPSA" means the Personal Property Security Act (Ontario). (35) "Procom" means the following group of companies: SQLTech, Professional Computer Consultants Group Ltd. and Procom Services Ltd. (36) "Procom Letter Agreement" means the letter agreement dated February 22, 2005 between Procom, the Corporation and the Purchaser. 4 (37) "Procom Bonus Shares" means the shares of Common Stock of the Purchaser to be issued to SQLTech in accordance with the Procom Letter Agreement and with this Agreement in respect of consideration for agreeing to the terms of the Procom Letter Agreement. (38) "Procom Shares" means that number of shares of Common Stock of the Purchaser issued to SQLTech in accordance with the Procom Letter Agreement and with this Agreement in respect of additional outstanding amounts due to Procom from the Corporation. (39) "Purchaser Shares" means that number of shares of Common Stock of the Purchaser having an aggregate value equal to $2,400,000, based on the average of the closing price for shares of the Corporation on the OTCBB over the 20 trading day period ending on the date immediately preceding the date hereof. (40) "Quarterly EBITDA" shall have the meaning ascribed to such term in Section 2.7(2). (41) "Quarterly EBITDA Report" shall have the meaning ascribed to such term in Section 2.7(4). (42) "Receivables" means all accounts receivable, bills receivable, trade accounts, book debts and insurance claims of the Corporation together with any unpaid interest accrued on such items and any security or collateral for such items, including recoverable deposits. (43) "Registrable Securities" means the Purchaser Shares. (44) "Registration Rights Agreement" means the registration rights agreement between the Purchaser and the Vendors substantially in the form attached hereto as Exhibit IV. (45) "Registration Statement" means a registration statement under the United States Securities Act of 1933, as amended, in respect of the Registrable Securities. (46) "Related to the Business" means, directly or indirectly, used in, arising from or relating in any manner to the Business. (47) "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as Rule 144 may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as Rule 144. (48) "SEC Reports" shall have the meaning ascribed to such term in Section 4.2(8). (49) "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the relevant time. (50) "Shares" shall have the meaning ascribed to such term in the Recitals. (51) "Share Increase Mechanism" means the mechanism pursuant to which the Purchaser Shares issued to the Vendors shall be increased based on the Corporation achieving certain financial targets set forth in Schedule "A". 5 (52) "Share Reduction Mechanism" means the mechanism pursuant to which the Purchaser Shares issued to the Vendors shall be reduced based on the Corporation failing to achieve certain financial targets set forth in Schedule "A". (53) "SQLTech" means SQLTech Inc., a corporation organized under the laws of the Province of Ontario and a wholly-owned subsidiary of Procom. (54) "Taxes" means all taxes, charges, fees, levies, imposts and other assessments, including all income, sales, use, goods and services, value added, capital, capital gains, alternative, net worth, transfer, profits, withholding, payroll, employer health, excise, franchise, real property and personal property taxes, and any other taxes, customs duties, fees, assessments or similar charges in the nature of a tax, including Canada Pension Plan and provincial pension plan contributions, unemployment insurance payments and workers' compensation premiums, together with any instalments with respect thereto, and any interest, fines and penalties imposed by any governmental authority (including federal, state, provincial, municipal and foreign governmental authorities), and whether disputed or not. (55) "Third Party Claim" means any claim asserted against an Indemnitee that is paid or payable to, or claimed by, any person who is not a Party. (56) "Transaction Documents" means this Agreement and the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder. (57) "U.S. Securities Laws" means, collectively, the Securities Act, the Exchange Act, all applicable federal and state securities laws in the United States, including "Blue Sky" laws, and regulations and forms prescribed thereunder, together with all applicable published policy statements, releases and rulings of the Commission and any applicable state securities regulatory authorities. 1.2 Headings and Table of Contents. The division of this Agreement into Articles and Sections, the insertion of headings, and the provision of any table of contents are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.3 Number and Gender. Unless the context requires otherwise, words importing the singular include the plural and vice versa and words importing gender include all genders. 1.4 Business Days. If any payment is required to be made or other action is required to be taken pursuant to this Agreement on a day which is not a Business Day, then such payment or action shall be made or taken on the next Business Day. 1.5 Section and Exhibit References. Unless the context requires otherwise, references in this Agreement to Sections or Exhibits are to Sections or Exhibits of this Agreement. The Exhibits to this Agreement are as follows: 1.6 Currency and Payment Obligations. Except as otherwise expressly provided in this Agreement: 6 (a) all dollar amounts referred to in this Agreement are stated in Canadian Dollars; and (b) any payment contemplated by this Agreement shall be made by cash, certified cheque or any other method that provides immediately available funds. 1.7 Statute References. Any reference in this Agreement to any statute or any section thereof shall, unless otherwise expressly stated, be deemed to be a reference to such statute or section as amended, restated or re-enacted from time to time. 1.8 Section and Schedule References. Unless the context requires otherwise, references in this Agreement to Sections, Exhibits or Schedules are to Sections, Exhibits or Schedules of this Agreement. The Exhibits and Schedules to this Agreement are as follows: EXHIBITS & SCHEDULES
Exhibit Schedules - ------- --------- I Form of Promissory Note A Share Increase/Decrease Mechanism II Lock-Up Agreement B Banking Information III Employment Agreements for the Vendors IV Registration Rights Agreement
ARTICLE 2 PURCHASE OF SHARES 2.1 Agreement to Purchase and Sell. Upon and subject to the terms and conditions set forth in this Agreement, the Purchaser hereby agrees to purchase and the Vendors hereby agree to sell, transfer, assign and deliver to the Purchaser, the Shares. 2.2 Payment of Purchase Price. The aggregate purchase price payable by the Purchaser to the Vendors for the Shares (the "Purchase Price") shall be paid and satisfied as follows: (i) $100,000 in cash (payable as to $50,000 to each of Wickett and Gracie-Smith) due at Closing; and (ii) the Purchaser Shares (payable as to 50% to each of Wickett and Gracie-Smith) due at Closing. 2.3 Lock-Up of Purchaser Shares. Subject to the mandatory hold periods otherwise applicable to the Purchaser Shares under Applicable Securities Laws, the Vendors hereby agree to the share sale and voting restrictions set forth in the lock-up agreement substantially in the form of Exhibit II (the "Lock-Up Agreement"). 2.4 Settlement of Shareholder Indebtedness. Within 180 days of the Closing Date, the Purchaser shall pay $100,000 to the Vendors (payable as to $50,000 to each of Wickett and Gracie-Smith) in partial satisfaction of outstanding shareholder loans made by the Vendors to the Corporation. These payments shall be evidenced by the issuance of the Purchaser to each of the Vendors of a promissory note to be substantially in the form of Exhibit I (the "Purchaser Notes"). Upon receipt by the Vendors of their respective Purchaser Note, the Vendors hereby each agree to forgive any remaining indebtedness due to such Vendor, provided such remaining indebtedness was in existence at the time of Closing. 7 2.5 Registration Rights. The Purchaser hereby agrees to the registration rights set forth in the Registration Rights Agreement, pursuant to which the Purchaser shall use its best efforts to prepare and file with the Commission a Registration Statement under the Securities Act for the purpose of effecting a registration of the Registrable Securities. The Registration Statement shall be filed no later than 90 days from the Closing Date and the Purchaser shall use its best efforts to have the Registration Statement declared effective no later than 120 days from the Closing Date. In addition to the foregoing and subject to the terms and conditions of the Lock-Up Agreement, the Purchaser further agrees, as soon as is commercially practicable (but in any event not longer than 120 days), to take all steps necessary to ensure that the Vendors may freely trade the Purchaser Shares in accordance with Applicable Securities Laws. 2.6 Closing. (1) Subject to the terms and conditions of this Agreement, the sale and purchase of the Shares contemplated hereby shall take place at a closing (the "Closing") to be held no later than 10:00 a.m. (Toronto time) on February 25, 2005 and will occur at the offices of Chitiz Pathak LLP, 154 University Avenue, Suite 500, Toronto, Ontario M5H 3Y9, or at such other place or time as the Vendors and the Purchaser may mutually agree upon in writing (the day on which the Closing takes place being the "Closing Date"). (2) At the Closing, the Vendors shall deliver or cause to be delivered to Purchaser share certificates evidencing the Shares duly endorsed in blank or accompanied by stock powers duly executed in blank, in proper form for transfer and with all required. (3) At the Closing, against delivery of the share certificates evidencing the Shares: (a) the Purchaser shall (i) deliver to Vendors the cash portion of the Purchase Price to Chitiz Pathak LLP, in trust for the Vendors, (ii) deliver or cause to be delivered stock certificates evidencing Purchaser Shares, the Procom Shares and the Procom Bonus Shares, and (iii) deliver to the Vendors the Promissory Notes; and (b) the Purchaser and the Vendors shall collectively deliver the (i) Lock-Up Agreement, and (ii) Registration Rights Agreement. (4) At the Closing, employment agreements substantially in the form of Exhibit III hereto shall have been entered into by the Corporation with each of Wickett and Gracie-Smith. 2.7 Purchase Price Adjustment. (1) The share portion of the Purchase Price shall be subject to adjustment after the Closing Date as specified in this Section 2.7. (2) In the event that the EBITDA for the Corporation during any of the eight successive three month periods following closing (the first three month period the parties hereto agree shall commence on April 1, 2005) (the "Quarterly EBITDA") exceeds $100,000, the Purchaser agrees to issue to the Vendors (as to 50% to Wickett and as to 50% to Gracie-Smith) that number of shares of Common Stock of the Purchaser determined in accordance with the Share Increase Mechanism. 8 (3) In the event that the Quarterly EBITDA is less than $100,000, the Vendors agree to contribute back to the Purchaser that number of Purchaser Shares determined in accordance with the Share Reduction Mechanism. (4) The Quarterly EBITDA shall be prepared and verified by the Purchaser's auditors who shall submit a report stating that all such calculations have been determined in accordance with GAAP (the "Quarterly EBITDA Report"). (5) If the Vendors disagree with the Quarterly EBITDA during any three month period, the Vendors shall give notice to the Purchaser of such disagreement no later than 10 Business Days after delivery of the Quarterly EBITDA Report. Any notice of disagreement given by the Vendors shall set forth in detail the particulars of such disagreement. The Vendors and the Purchaser shall then use reasonable efforts to resolve such disagreement for a period of 30 days following the giving of such notice. If the matter is not resolved by the end of such 30 day period, then such disagreement shall be submitted by the Vendors and the Purchaser to an accounting firm of recognized national standing in Canada, which is independent of the Parties (the "Independent Accountant"). If the Vendors and the Purchaser are unable to agree on the Independent Accountant within a further 10 day period, any one of them may apply under the Arbitration Act (Ontario) to have a court appoint such accounting firm. The Independent Accountant shall, as promptly as practicable (but in any event within 45 days following its appointment), make a determination of the Quarterly EBITDA, based solely on written submissions submitted by the Vendors and the Purchaser to the Independent Accountant. The decision of the Independent Accountant as to the Quarterly EBITDA shall be final and binding upon the Parties and shall constitute the Quarterly EBITDA for purposes of this Agreement in respect of such three month period. The Purchaser shall pay one-half of the fees and expenses of the Independent Accountant with respect to the resolution of the dispute and the Vendors shall pay the balance. ARTICLE 3 REPAYMENT OF LIABILITIES OF CORPORATION AND CRATOS HOSPITALITY 3.1 Repayment of Procom. In satisfaction of amounts due to Procom from the Corporation, the Purchaser and the Vendors shall comply with the terms and conditions set forth in the Procom Letter Agreement. For greater certainty, certain obligations of the Purchaser to Procom shall be paid and satisfied as follows: (i) $1,250,000 in certified funds due at Closing; (ii) the Procom Shares due at Closing; the Procom Bonus Shares due at Closing. At Closing, and in accordance with the Procom Letter Agreement, Procom and SQLTech shall each postpone and subordinate any security interest or Liens that it may have (whether registered pursuant to the PPSA or otherwise) against the Corporation or any affiliate to the Senior Lender. 3.2 Repayment of Cratos Hospitality Indebtedness. The Corporation has made payments to various third parties in satisfaction of outstanding indebtedness due from Cratos Hospitality to such third parties in an amount in excess of $400,000 (the "Cratos Hospitality Indebtedness"). Within 180 days of the Closing, the Purchaser hereby agrees that it shall contribute to the working capital of the Corporation (by way of an intercompany advance) an amount equal to the Cratos Hospitality Indebtedness. The Purchaser further agrees that in furtherance of the foregoing it shall retain all proceeds attributable to it realized upon the proposed sale of Cratos Hospitality (pursuant to Section 5.1 hereof) within the Corporation. 9 ARTICLE 4 REPRESENTATIONS AND WARRANTIES 4.1 Vendors Representations and Warranties. The Vendors jointly and severally represent and warrant to the Purchaser as set out in this Section 4.1 and acknowledge that the Purchaser is relying on such representations and warranties in connection with the transactions contemplated in this Agreement. (1) Incorporation and Organization of the Corporation. The Corporation is a corporation duly incorporated, organized and subsisting under the federal laws of Canada. No proceedings have been taken or authorized by either Vendor or the Corporation or by any other person with respect to the bankruptcy, insolvency, liquidation, dissolution or winding up of the Corporation or with respect to any amalgamation, merger, consolidation, arrangement or reorganization of, or relating to, the Corporation nor, to the knowledge of the Vendor, have any such proceedings been taken by any other person. True and complete copies of the Articles of the Corporation and all by-laws of the Corporation are contained in the minute book of the Corporation made available to the Purchaser. The Articles of the Corporation and the by-laws of the Corporation constitute all of the Articles and by-laws of the Corporation, are complete and correct and are in full force and effect. There are no shareholders' agreements or unanimous shareholders' agreements governing the affairs of the Corporation or the relationship, rights and duties of its shareholders nor are there any voting trusts, pooling arrangements or other similar agreements with respect to the ownership or voting of any shares of the Corporation. (2) Corporate Records. The minute books of the Corporation and other corporate records made available to the Purchaser for review have been maintained in accordance with Applicable Law and contain, without limitation, complete and accurate copies of all by-laws of the Corporation and minutes of all meetings of, and resolutions passed by, the Corporation's shareholders, directors and committees of directors since the date of incorporation of the Corporation. All such meetings were duly called and held and all such by-laws and resolutions were duly passed or enacted. The share certificate book, register of shareholders, register of transfers and register of directors of the Corporation are complete, accurate and current. (3) Qualification of the Corporation to do Business. The Corporation has the necessary corporate power, authority and capacity to own or lease and use its property and assets and to carry on the Business as now being conducted by it. The Corporation possesses all Licences required for the conduct of the Business. (4) Authorized and Issued Capital. The authorized capital of the Corporation consists of an unlimited number of common shares, of which only the Shares have been validly issued and are outstanding as fully paid and non-assessable shares. 10 (5) Title to Shares. Each Vendor is the registered and beneficial owner of the Shares shown opposite its name in the register of Shareholders of the Corporation. The Vendors now have, and on Closing the Purchaser shall acquire, good and marketable title to the Shares, free and clear of all Encumbrances. There are no restrictions of any kind on the transfer of the Shares except those set out in the Articles of the Corporation. No person has, or has any right capable of becoming, any agreement, option, understanding or commitment for the purchase or other acquisition from either Vendor of any of the Shares. (6) No Obligation to Issue Securities. There are no agreements, options, warrants, rights of conversion or other rights pursuant to which the Corporation is, or may become, obligated to issue any shares or other securities. (7) Conflicting Instruments. Neither the entering into of this Agreement by the Parties, nor the entering into of any agreement or other instrument contemplated hereby nor the completion of the transactions herein contemplated nor the performance by each of the Vendors of its obligations hereunder will: (a) conflict with, or result in the breach or violation of or default under, or cause the acceleration of any obligations of the Corporation under, any of the terms and provisions of (i) any Applicable Law, (ii) the Articles of the Corporation or its by-laws or any resolution of the directors or shareholders of the Corporation; or (iii) subject to obtaining any consent or regulatory approval which may be required thereunder in connection with the completion of the transactions herein contemplated, any licence, order or agreement, contract or commitment, written or oral to which the Corporation is a party or by which it is bound, (b) relieve any other party to any contract, lease or equipment lease of that party's obligations thereunder or enable it to terminate its obligations thereunder; (c) cause the Corporation to lose any rights under any contract, lease or equipment lease or any right to a government grant or tax credit or refund; or (d) result in the creation of any lien or encumbrance on any of the property or assets of the Corporation. (8) Regulatory Approvals. No Regulatory Approval or registration or filing with, notice to, or waiver from any Governmental Authority or other person is required to be obtained or made by either Vendor or the Corporation: (a) in connection with the execution, delivery and performance by each Vendor of its obligations under this Agreement or the consummation of the transactions contemplated hereby; (b) to avoid the loss of any licence relating to the Business; or (c) to permit the Corporation to carry on the Business after the Closing as the Business is currently carried on by the Corporation. (9) Books and Records. The Vendors have made available to the Purchaser all books and records. All material financial transactions of the Corporation have been accurately recorded in the accounting records in accordance with sound business and financial practice and the accounting records accurately reflect the basis for the financial condition and the revenues, expenses and results of operations of the Corporation as of and to the date hereof. (10) Financial Statements. The Financial Statements are complete and correct, have been prepared in accordance with GAAP and present fairly and accurately: (i) all of the assets, liabilities (whether accrued, absolute, contingent, matured or unmatured or otherwise) and the financial condition of the Corporation; and (ii) the revenues, earnings and results of operations of the Corporation, in each case as of the date and throughout the period indicated. 11 (11) No Material Change. Since October 31, 2004, there has been no change in the Business or in the operations, affairs, prospects or condition (financial or otherwise) of the Corporation, including any such change arising as a result of any change in Applicable Law, revocation of any licence or as a result of fire, explosion, accident, casualty, labour problem, flood, drought, riot, storm, act of God or otherwise, except for changes occurring in the ordinary course of business and which, either individually or in the aggregate, have not materially adversely affected and will not materially adversely affect the Business or the operations, affairs, prospects or condition (financial or otherwise) of the Corporation. (12) No Liabilities. The Corporation has no liabilities (whether accrued, absolute, contingent or otherwise, matured or unmatured) except: (i) liabilities disclosed on, reflected in or provided for in the Financial Statements; (ii) liabilities disclosed or referred to in this Agreement; and (iii) liabilities incurred in the ordinary course of business and attributable to the period since October 31, 2004, which are not, either individually or in the aggregate, materially adverse to the Business, or to the operations, affairs, prospects or condition (financial or otherwise) of the Corporation. (13) Business Carried on in Ordinary Course. Since October 31, 2004, the Corporation has carried on the Business in the ordinary course, consistent with past practice. (14) No Guarantees. Except as disclosed or referred to in this Agreement, the Corporation has not given nor agreed to give, nor is it a party to or bound by or subject to any guarantee. (15) Non-Arm's Length Transactions. No Interested Person is indebted to the Corporation nor is the Corporation indebted to any Interested Person, except such indebtedness as is disclosed in the Disclosure Statement or expressly disclosed in the Financial Statements, and except for usual employee reimbursements and compensation paid in the ordinary and normal course of the Business. Except as described in Disclosure Statement and except for Contracts of employment, the Corporation is not a party to any Contract with any Interested Person. No Interested Person: (a) owns, directly or indirectly, in whole or in part, any property that the Corporation uses in the operation of the Business; or (b) has any cause of action or other claim whatsoever against, or is owed any amount by the Corporation in connection with the Business, except for any liabilities reflected in the Financial Statements and claims in the ordinary course of business. (16) Debt Instruments. Except as described in the Disclosure Statement, the Corporation is not a party to or bound by or subject to any Debt Instrument or any agreement, contract or commitment to create, assume or issue any Debt Instrument and no Debt Instrument or Encumbrance which the Corporation is a party to or bound by or subject to is dependent upon the Guarantee of or any security provided by any other person. (17) Personal Property. Except for property subject to an Equipment Lease, the Corporation is the owner of all personal property used in the Business with good and marketable title thereto free of any Encumbrance other than Permitted Encumbrances. 12 (18) Sufficiency and Condition of Assets. The assets owned, licenced or leased by the Corporation constitute all of the property and assets necessary to carry on the Business as it is currently carried on, are free of material defects and include all proprietary rights, intellectual property rights and other property and assets, tangible and intangible, used in connection with the Business. All tangible assets used in the Business are in good operating condition and in a state of good repair and maintenance, reasonable wear and tear excepted. (19) Legal Proceedings. Except as disclosed in the Disclosure Statement, there is no Legal Proceeding (whether or not purportedly on behalf of the Corporation) in progress, pending or, to the knowledge of the Vendors, threatened against or affecting the Corporation before or by any Tribunal. (20) Banking Information. Schedule B sets forth the name and location (including municipal address) of each bank, trust company or other institution in which the Corporation has an account, money on deposit or a safety deposit box and the name of each person authorized to draw thereon or to have access thereto and the name of each person holding a power of attorney from the Corporation and a summary of the terms thereof. (21) Tax Matters. (a) Taxes and Tax Returns. The Corporation has duly filed in the prescribed manner and within the prescribed time all Tax returns required to be filed by it and such Tax Returns are correct and complete and the Corporation has made complete and accurate disclosure in such Tax returns and in all materials accompanying such Tax returns, except in respect of a particular Tax return to the extent that it may have been modified in a subsequent Tax return. To the best of its knowledge, the Corporation has paid all Taxes due and payable, including all Taxes shown on such Tax Returns as being due and payable and all Taxes payable under any assessment or reassessment. (b) Liabilities for Taxes. The Financial Statements fully reflect accrued liabilities for all Taxes which are not yet due and payable and for which Tax returns are not yet required to be filed. No examination of any Tax return of the Corporation by a Governmental Authority is currently in progress. There is no Legal Proceeding, assessment, re-assessment or request for information outstanding or, to the knowledge of the Vendors or the Corporation, threatened against the Corporation with respect to Taxes or any matters under discussion with any Governmental Authority relating to Taxes. (22) Accounts Receivable. The accounts receivable recorded on the Financial Statements and in the Accounting Records, which reflect a reasonable reserve in respect thereof for doubtful accounts calculated in accordance with generally accepted accounting principles consistently applied, have arisen in the ordinary course of the Business, are bona fide and good, valid, enforceable and collectible without any set-off or counterclaim. 13 (23) Residence of Vendors. Neither Vendor is a "non-resident" of Canada within the meaning of the Income Tax Act. (24) Intellectual Property (a) The Disclosure Statement lists all of the registrations and applications for registration of the Intellectual Property. All of the registrations and applications for registration of the Intellectual Property are valid and subsisting in good standing and are recorded in the name of the Corporation. No application for registration of any Intellectual Property has been rejected. (b) No Person has challenged the validity of any registrations for the Intellectual Property or the Corporation's rights to any of the Intellectual Property. (c) To the knowledge of the Vendors, neither the use of the Intellectual Property nor the conduct of the Business has infringed or currently infringes upon the industrial or intellectual property rights of any other Person. (d) No other Person has infringed the Corporation's rights to the Intellectual Property. (25) Investment Intent. Each Vendor understands that the Purchaser Shares are "restricted securities" and have not been registered under the Securities Act or any applicable state securities law and that each is acquiring the Purchaser Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Purchaser Shares or any part thereof, each has no present intention of distributing any of such Purchaser Shares and has no arrangement or understanding with any other persons regarding the distribution of such Purchaser Shares (this representation and warranty not limiting such Vendor's right to sell the Purchaser Shares pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Vendor is acquiring the Purchaser Shares hereunder in the ordinary course of its business. Such Vendor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Purchaser Shares. (26) Vendor Status. At the time such Vendor was offered the Purchaser Shares, it was, and at the date hereof it is an "accredited investor" as defined in Rule 501(a) under the Securities Act. Such Vendor is not required to be registered as a broker-dealer under Section 15 of the Exchange Act. (27) Experience of Such Vendor. Such Vendor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Purchaser Shares, and has so evaluated the merits and risks of such investment. Such Vendor is able to bear the economic risk of an investment in the Purchaser Shares and, at the present time, is able to afford a complete loss of such investment. 14 (28) General Solicitation. Such Vendor is not purchasing the Purchaser Shares as a result of any advertisement, article, notice or other communication regarding the Purchaser Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. (29) Investment Company. The Corporation is not, and is not an Affiliate of, an "investment company" within the meaning of the United States Investment Company Act of 1940, as amended. 4.2 Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Vendors and to each of the Shareholders as set out in this Section (28) and acknowledges that each Vendor and each Shareholder is relying on such representations and warranties in connection with the transactions contemplated in this Agreement. (1) Incorporation, Authority and Enforceability. The Purchaser is a corporation duly incorporated and subsisting under the laws of the State of Nevada and has the corporate power and capacity to enter into this Agreement, to purchase the Purchased Shares from the Vendors as herein contemplated and to perform its other obligations hereunder. The execution and delivery of this Agreement and the completion of the transactions herein contemplated have been duly and validly authorized by all necessary corporate action on behalf of the Purchaser and this Agreement has been duly and validly executed and delivered by the Purchaser and is a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms. (2) Interpretation. Each representation and warranty made by a Party in this Agreement shall be treated as a separate representation and warranty in respect of each statement made and the interpretation of any statement made shall not be restricted by reference to or inference from any other statement made in a representation and warranty of such Party. (3) Commissions. Each Party represents and warrants to the other Party that such other Party will not be liable for any brokerage commission, finder's fee or other similar payment in connection with the transactions contemplated hereby because of any action taken by, or agreement or understanding reached by, that Party. (4) Non-Waiver. No investigations made by or on behalf of the Purchaser at any time shall waive, diminish the scope of or otherwise affect any representation or warranty made by the Vendors or the Shareholders in this Agreement or in any Closing Document. (5) Filings, Consents and Approvals. The Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Purchaser of the Transaction Documents, other than (a) the filing with the Commission of the Registration Statement and applicable Blue Sky filings, (b) such as have already been obtained or such exemptive filings as are required to be made under Applicable Securities Laws, and (c) such other filings as may be required following the Closing Date under the Securities Act, the Exchange Act, other Applicable Securities Laws and corporate law. 15 (6) Issuance of the Securities. The Purchaser Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. (7) Capitalization. The capitalization of the Purchaser is as described in the Purchaser's most recent periodic report filed with the Commission. The Purchaser has not issued any capital stock since such filing other than pursuant to (i) the Procom Letter Agreement, (ii) the exercise of employee stock options under the Purchaser's stock option plans, if any, and pursuant to the conversion or exercise of Common Stock Equivalents outstanding on the date hereof. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Purchaser Shares and except for employee stock options under the Purchaser's stock option plans, if any, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock of the Purchaser, or contracts, commitments, understandings or arrangements by which the Purchaser is or may become bound to issue additional shares of Common Stock of the Purchaser, or securities or rights convertible or exchangeable into shares of Common Stock of the Purchaser. The issue and sale of the Purchaser Shares will not obligate the Purchaser to issue shares of Common Stock of the Purchaser or other securities to any Person (other than the Vendor) and will not result in a right of any holder of Common Stock of the Purchaser to adjust the exercise, conversion, exchange or reset price under such securities. (8) SEC Reports; Financial Statement. The Purchaser has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange Act, for the two years preceding the date hereof (or such shorter period as the Purchaser was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the "SEC Reports") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Purchaser included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Purchaser and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 16 (9) Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a material adverse effect, (ii) the Purchaser has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Purchaser's financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Purchaser has not altered its method of accounting, (iv) the Purchaser has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Purchaser has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Purchaser stock option plans, if any. The Purchaser does not have pending before the Commission any request for confidential treatment of information. (10) Internal Accounting Controls. The Purchaser and each of its subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Purchaser has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Purchaser and designed such disclosure controls and procedures to ensure that material information relating to the Purchaser, including its subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Purchaser's Form 10-K or 10-Q, as the case may be, is being prepared. (11) Private Placement. Assuming the accuracy of the Vendors' representations and warranties set forth in Section 4.1, no registration under the Securities Act is required for the offer and sale of the Purchaser Shares by the Purchaser to the Vendors as contemplated hereby. The issuance and sale of the Purchaser Shares hereunder does not contravene the rules and regulations of the OTCBB. (12) Investment Intent. The Purchaser understands that the Shares are "restricted securities" and have not been registered under the Securities Act or any applicable state securities law and that each is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof, each has no present intention of distributing any of such Shares and has no arrangement or understanding with any other persons regarding the distribution of such Shares (this representation and warranty not limiting the Purchaser's right to sell the Shares in compliance with applicable federal and state securities laws). The Purchaser is acquiring the Shares hereunder in the ordinary course of its business. The Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares. 17 (13) Investment Company. The Purchaser is not, and is not an Affiliate of, an "investment company" within the meaning of the United States Investment Company Act of 1940, as amended. 4.3 Survival of Representations and Warranties of the Vendors. The representations and warranties of the Vendors and the Shareholders contained in this Agreement and in any closing document and in any agreement, certificate, affidavit, statutory declaration or other document delivered or given pursuant to this Agreement or any closing document shall survive the Closing and, notwithstanding the Closing or any investigation made by or on behalf of the Purchaser with respect thereto, shall continue in full force and effect for the benefit of the Purchaser provided, however, that no claim in respect thereof shall be valid unless it is made within the following time periods: (a) in the case of a claim in respect of the representations or warranties relating to the authorized and issued capital of the Corporation, title of each Vendor to the Shares owned by it and title of the Corporation to its property and assets and in the case of a claim in respect of a representation or warranty based on fraud, including a claim relating to any Tax liability of the Corporation based on any misrepresentation made or fraud committed in filing a Tax return or supplying information for purposes of any applicable Tax legislation, there shall be no time limit within which such a claim may be made; (b) in the case of a claim in respect of a representation or warranty relating to a Tax matter, other than a claim in respect of a misrepresentation made or fraud committed in filing a Tax return or supplying information for the purposes of any applicable Tax legislation, within a period commencing on the Closing Date and ending on the date on which the last applicable limitation period under any applicable Tax legislation expires with respect to any taxation year which is relevant in determining any liability under this Agreement with respect to Tax matters; (c) in the case of a claim in respect of any other representation or warranty within a period of two years from the Closing Date; and any such claim as aforesaid shall be made in accordance with the provisions set forth in Article 6 and, upon the expiry of the relevant limitation period referred to in clauses (b) and (c) of this Section 4.3, the Vendors shall have no further liability to the Purchaser with respect to the representations or warranties referred to in such clauses, respectively, except in respect of claims which have theretofore been made in accordance with the provisions set forth above. 4.4 Survival of Representations and Warranties of the Purchaser. The representations and warranties of the Purchaser contained in this Agreement and in any closing document and in any agreement, certificate, affidavit, statutory declaration or other document delivered or given pursuant to this Agreement or any closing document shall survive the Closing and, notwithstanding the Closing or any investigation made by or on behalf of the Vendors with respect thereto, shall continue in full force and effect for the benefit of the Vendors provided, however, that no claim in respect thereof shall be valid unless it is made within the following time periods: 18 (a) in the case of a claim in respect of the representations and warranties set forth in Subsection (1), there shall be no time limit within which such a claim may be made; and (b) in the case of a claim in respect of any other representation and warranty, within a period of two years from the Closing Date; and any such claim shall be made in accordance with the provisions set forth in Article 6 and, upon the expiry of the relevant limitation period, the Purchaser shall have no further liability to either Vendor with respect to any of such representations or warranties, except with respect to claims which have been properly made in accordance with the provisions set forth above. ARTICLE 5 COVENANTS OF THE PARTIES 5.1 Sale of Cratos Hospitality. Immediately upon Closing, the Vendors agree to provide all reasonable and necessary assistance to the Purchaser to assist the Purchaser in either the sale of (i) all or substantially all of the assets of Cratos Hospitality, or (ii) the shares of Cratos Hospitality. Upon completion of the sale in accordance with the foregoing, the Parties agree that any proceeds realized shall be divided as to (i) 25% to each of Wickett and Gracie-Smith, and (ii) 50% to the Purchaser. 5.2 Securities Filings. Vendors shall provide to Purchaser, promptly upon Purchaser's reasonable request, all financial and other data and information relating to the Corporation as may be necessary or advisable to enable Purchaser to prepare and file all required forms, reports and documents with the Commission or any other securities authority after the date hereof under Applicable Securities Laws. 5.3 Delivery of Cratos Audited Statements. Within 60 days of the Closing Date, the Vendors shall deliver to the Purchaser the Cratos Audited Statements. 5.4 Waiver. Any Party may waive, in whole or in part, by notice to the other Parties, any condition set forth in this Agreement which is for its benefit. No waiver by a Party of any condition, in whole or in part, shall operate as a waiver of any other condition. The waiver in whole or in part by any Party of any condition requiring the accuracy of a representation or warranty or the performance of or compliance with a covenant shall not affect the right of that Party to indemnification under this Agreement for any Loss suffered or incurred by that Party based upon that misrepresentation or breach of warranty or upon the failure to observe or perform that covenant 19 5.5 Transfer Restriction (a) The Purchaser Shares and the Shares may only be disposed of in compliance with Applicable Securities Laws. In connection with any transfer of Purchaser Shares other than pursuant to an effective registration statement, to the Purchaser or to an Affiliate of a Vendor, the Purchaser may require the transferor thereof to provide to the Purchaser an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Purchaser, to the effect that such transfer does not require registration of such transferred Purchaser Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Vendor under this Agreement and the Registration Rights Agreement. In connection with any transfer of Shares other than pursuant to an effective registration statement, to the Corporation or to an Affiliate of the Purchaser, the Corporation may require the transferor thereof to provide to the Corporation an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Corporation, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Purchaser under this Agreement (b) The Vendors and the Purchaser agree to the imprinting, so long as is required by this Section 5.5(b), of a legend on the Purchaser Shares in the following form: THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT. 20 (c) Certificates evidencing the Purchaser Shares shall not contain any legend (including the legend set forth in Section 5.5(b)), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Purchaser Shares pursuant to Rule 144, or (iii) if such Purchaser Shares are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable regulation of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Purchaser shall cause its counsel to issue a legal opinion to the Purchaser's transfer agent promptly after the effective date of the Registration Statement if required by the Purchaser's transfer agent to effect the removal of the legend hereunder. The Purchaser agrees that following the effective date of the Registration Statement or at such time as such legend is no longer required under this Section 5.5(c), it will, no later than three trading days following the delivery by the Vendor to the Purchaser or the Purchaser's transfer agent of a certificate representing Purchaser Shares issued with a restrictive legend, deliver or cause to be delivered to such Purchaser a certificate representing such Purchaser Shares that is free from all restrictive and other legends. The Purchaser may not make any notation on its records or give instructions to any transfer agent of the Purchaser that enlarge the restrictions on transfer set forth in this Section. (d) Each Vendor severally and not jointly agrees that the removal of the restrictive legend from certificates representing Purchaser Shares as set forth in this Section 5.5 is predicated upon the Purchaser's reliance that the Vendor will sell any Purchaser Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom. 5.6 Furnishing of Information. As long as any Vendor owns Purchaser Shares, the Purchaser covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Purchaser after the date hereof pursuant to the Exchange Act. Upon the request of any such holder of Purchaser Shares, the Purchaser shall deliver to such holder a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. As long as any Vendor owns Purchaser Shares, if the Purchaser is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Vendors and make publicly available in accordance with Rule 144(c) such information as is required for the Vendors to sell the Purchaser Shares under Rule 144. The Purchaser further covenants that it will take such further action as any holder of Purchaser Shares may reasonably request, all to the extent required from time to time to enable such Person to sell such Purchaser Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. 5.7 Integration. The Purchaser shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Purchaser Shares in a manner that would require the registration under the Securities Act of the sale of the Purchaser Shares to the Vendors or that would be integrated with the offer or sale of the Purchaser Shares for purposes of the rules and regulations of the OTCBB. 21 ARTICLE 6 INDEMNIFICATION 6.1 Joint and Several Indemnification by the Vendors. The Vendors shall jointly and severally indemnify, defend and save harmless the Purchaser from and against any and all Loss suffered or incurred by it, as a direct or indirect result of, or arising in connection with or related in any manner whatever to: (a) any misrepresentation or breach of warranty made or given by the Vendors on a joint and several basis in this Agreement, any closing document or in any document delivered pursuant to this Agreement or any closing document; and (b) any failure by the Vendors to observe or perform any joint and several covenant or obligation contained in this Agreement, any closing document or in any document delivered pursuant to this Agreement or any closing document. 6.2 Indemnification by the Purchaser. The Purchaser shall indemnify, defend and save harmless the Vendors from and against any and all Loss suffered or incurred by them, as a direct or indirect result of, or arising in connection with or related in any manner whatsoever to: (a) any misrepresentation or breach of any warranty made or given by the Purchaser in this Agreement, in any closing document or in any document delivered pursuant to this Agreement or any closing document; or (b) any failure by the Purchaser to observe or perform any covenant or obligation contained in this Agreement, in any closing document or in any document delivered pursuant to this Agreement or any closing document. 6.3 Notice of Third Party Claims. If an Indemnitee receives notice of the commencement or assertion of any Third Party Claim, the Indemnitee shall give the Indemnitor reasonably prompt notice thereof, but in any event no later than 30 days after receipt of such notice of such Third Party Claim. Such notice to the Indemnitor shall describe the Third Party Claim in reasonable detail and shall indicate, if reasonably practicable, the estimated amount of the Loss that has been or may be sustained by the Indemnitee. 6.4 Defence of Third Party Claims. The Indemnitor may participate in or assume the defence of any Third Party Claim by giving notice to that effect to the Indemnitee not later than 30 days after receiving notice of that Third Party Claim (the "Notice Period"). The Indemnitor's right to do so shall be subject to the rights of any insurer or other party who has potential liability in respect of that Third Party Claim. The Indemnitor shall pay all of its own expenses of participating in or assuming such defence. The Indemnitee shall co-operate in good faith in the defence of each Third Party Claim, even if the defence has been assumed by the Indemnitor and may participate in such defence assisted by counsel of its own choice at its own expense. If the Indemnitee has not received notice within the Notice Period that the Indemnitor has elected to assume the defence of such Third Party Claim, the Indemnitee may, at its option, elect to settle or compromise the Third Party Claim or assume such defence, assisted by counsel of its own choosing and the Indemnitor shall be liable for all reasonable costs and expenses paid or incurred in connection therewith and any Loss suffered or incurred by the Indemnitee with respect to such Third Party Claim. If the Indemnitor elects to assume the defence of a Third Party Claim under this Section 6.4, the Indemnitor shall not have the right thereafter to contest its liability for such claim. 22 6.5 Assistance for Third Party Claims. The Indemnitor and the Indemnitee will use all reasonable efforts to make available to the Party which is undertaking and controlling the defence of any Third Party Claim (the "Defending Party"), (a) those employees and other persons whose assistance, testimony or presence is necessary to assist the Defending Party in evaluating and in defending any Third Party Claim; and (b) all documents, records and other materials in the possession of such Party reasonably required by the Defending Party for its use in defending any Third Party Claim, and shall otherwise cooperate with the Defending Party. The Indemnitor shall be responsible for all reasonable expenses associated with making such documents, records and materials available and for all reasonable expenses of any employees or other persons made available by the Indemnitee to the Indemnitor hereunder. 6.6 Settlement of Third Party Claims. If an Indemnitor elects to assume the defence of any Third Party Claim as provided in Section 6.4, the Indemnitor shall not be liable for any legal expenses incurred by the Indemnitee in connection with the defence of such Third Party Claim following the receipt by the Indemnitee of notice of such assumption. However, if the Indemnitor fails to take reasonable steps necessary to defend diligently such Third Party Claim within 30 days after receiving notice from the Indemnitee that the Indemnitee believes on reasonable grounds that the Indemnitor has failed to take such steps, the Indemnitee may, at its option, elect to assume the defence of and to negotiate, settle or compromise the Third Party Claim assisted by counsel of its own choosing and the Indemnitor shall also be liable for all reasonable costs and expenses paid or incurred in connection therewith. The Indemnitor shall not, without the prior written consent of the Indemnitee, enter into any compromise or settlement of a Third Party Claim, which would lead to liability or create any other obligation, financial or otherwise, on the Indemnitee. 6.7 Direct Claims. Any Direct Claim shall be asserted by giving the Indemnitor reasonably prompt written notice thereof, but in any event not later than 60 days after the Indemnitee becomes aware of such Direct Claim. The Indemnitor shall then have a period of 30 days within which to respond in writing to such Direct Claim. If the Indemnitor does not so respond within such 30 day period, the Indemnitor shall be deemed to have rejected such Claim, and in such event the Indemnitee shall be free to pursue such remedies as may be available to the Indemnitee. 23 6.8 Failure to Give Timely Notice. A failure to give timely notice as required by this Article 6 shall not affect the rights or obligations of any Party except and only to the extent that, as a result of such failure, any Party which was entitled to receive such notice was deprived of its right to recover any payment under its applicable insurance coverage or was otherwise directly and materially damaged as a result of such failure. 6.9 Reductions and Subrogation. If the amount of any Loss at any time subsequent to the making of an Indemnity Payment in respect of that Loss is reduced by any recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other person, the amount of such reduction (less any costs, expenses (including Taxes) or premiums incurred in connection therewith), shall promptly be repaid by the Indemnitee to the Indemnitor. Upon making a full Indemnity Payment, the Indemnitor shall, to the extent of such Indemnity Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Loss to which the Indemnity Payment relates. Until the Indemnitee recovers full payment of its Loss, any and all claims of the Indemnitor against any such third party on account of such Indemnity Payment shall be postponed and subordinated in right of payment to the Indemnitee's rights against such third party. Without limiting the generality or effect of any other provision hereof, the Indemnitee and Indemnitor shall duly execute upon request all instruments reasonably necessary to evidence and perfect such postponement and subordination. 6.10 Limitation. (a) No claims may be asserted by the Purchaser or the Purchaser's representatives under paragraph 6.1(a) unless and until the aggregate of the Losses of the Purchaser and its representatives collectively, in respect of such Claims exceeds $10,000 in the aggregate, in which event the amount of all such Loss including such $10,000 amount may be asserted. (b) No Claim may be asserted by the Vendor or the Vendor's representatives under paragraph 6.4(a) unless and until the aggregate of the Losses of the Vendor and its representatives collectively, in respect of such Claims exceeds $10,000 in the aggregate, in which event the amount of all such Loss including such $10,000 amount may be recovered by the Vendor. 6.11 Additional Rules and Procedures (a) If any Third Party Claim is of a nature such that the Indemnitee is required by Applicable Law to make a payment to any person (a "Third Party") with respect to such Third Party Claim before the completion of settlement negotiations or related legal proceedings, the Indemnitee may make such payment and the Indemnitor shall, forthwith after demand by the Indemnitee, reimburse the Indemnitee for any such payment. If the amount of any liability under the Third Party Claim in respect of which such a payment was made, as finally determined, is less than the amount which was paid by the Indemnitor to the Indemnitee , the Indemnitee shall, forthwith after receipt of the difference from the Third Party, pay such difference to the Indemnitor; 24 (b) The Indemnitee and the Indemnitor shall co-operate fully with each other with respect to Third Party Claims, shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available) and shall each designate a senior officer who will keep himself informed about and be prepared to discuss the Third Party Claim with his counterpart and with counsel at all reasonable times. ARTICLE 7 GENERAL 7.1 Expenses. The parties shall be responsible for their own legal and other expenses (including any Taxes imposed on such expenses) incurred in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the transactions contemplated by this Agreement and for the payment of any broker's commission, finder's fee or like payment payable by it in respect of the purchase and sale of the Shares or Purchaser Shares pursuant to this Agreement. 7.2 Payment of Taxes. Each of the Vendors and the Purchaser shall be responsible for, and shall pay, the taxes rightly payable by such party applicable to, or resulting from transactions contemplated by this Agreement in accordance with applicable legislation, and any filing or recording fees payable in connection with the instruments of transfer provided for in this Agreement. 7.3 Entire Agreement. This Agreement (together with every other agreement expressly contemplated hereby), constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. There are no conditions, warranties, representations or other agreements between the parties in connection with the subject matter of this Agreement (whether oral or written, express or implied, statutory or otherwise) except as specifically set out in this Agreement. 7.4 Public Announcements. Unless otherwise required by applicable law or stock exchange requirements, no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without prior notification to the other party, and the parties will cooperate as to the timing and content of any such announcement. 7.5 Amendments, Waiver. No modification of or amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by all of the parties hereto and no waiver of any breach of any term or provision of this Agreement shall be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided, shall be limited to the specific breach waived. 25 7.6 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. 7.7 Further Assurances. Each party shall from time to time execute or procure such documents and other assurances as may be reasonable or advisable to give effect to the provisions of this Agreement. 7.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable in that Province and shall be treated, in all respects, as an Ontario contract. 7.9 Successors and Assigns. This Agreement shall enure to the benefit of, and be binding on, the parties and their respective successors, legal representatives and permitted assigns. Neither party may assign or transfer, whether absolutely, by way of security or otherwise, all or any part of its respective rights or obligations under this Agreement without the prior written consent of the other party. 7.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument. Counterparts may be executed either in original or faxed form and the parties adopt any signatures received by a receiving fax machine as original signatures of the parties; provided, however, that either party providing its signature in such manner shall promptly forward to the other party an original of the signed copy of this Agreement which was so faxed. [SIGNATURES ON FOLLOWING PAGE] 26 IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed. ACTIVECORE TECHNOLOGIES, INC. /s/ [Peter Hamilton] Name: Peter Hamilton Title: President WITNESSED BY: ) ) ) /s/ Mark Hayman ) /s/ Andrew Wickett - ------------------------------- ----------------------------------------- Signature of Witness: ) ANDREW WICKETT ) Mark Hayman ) - ------------------------------- Name of Witness: ) ) ) ) ) WITNESSED BY: ) ) ) /s/ Mark Hayman ) /s/ Debbie Gracie-Smith - ------------------------------- ----------------------------------------- Signature of Witness: ) DEBBIE GRACIE-SMITH ) Mark Hayman ) - ------------------------------- Name of Witness: ) ) ) ) ) 27 EXHIBIT "I" FORM OF PROMISSORY NOTE (Please see attached.) 28 EXHIBIT "II" LOCK-UP AGREEMENT (Please see attached.) 29 EXHIBIT "III" EMPLOYMENT AGREEMENTS FOR THE VENDORS (Please see attached.) 30 EXHIBIT "IV" REGISTRATION RIGHTS AGREEMENT (Please see attached.) 31 SCHEDULE "A" Share Increase Mechanism and Share Decrease Mechanism Share Increase Mechanism The Share Increase Mechanism shall operate as follows: 1. Determine amount of Quarterly EBITDA in excess of $100,000 (X). 2. Divide X by 2 (Y) 3. Divide Y by the average of the closing price for shares of the Purchaser on the OTCBB over the 20 trading day ending on the date immediately preceding the applicable three month period (Z). 4. Z is the number of shares issuable to the Vendors in respect of the applicable three month period. 5. The Purchaser shall not be required to issue shares pursuant to the Share Increase Mechanism in excess of 200,000 shares during the first twelve month period and 200,000 during the second twelve month period. Share Decrease Mechanism The Share Decrease Mechanism shall operate as follows: 1. Determine amount of Quarterly EBITDA which is less than $100,000 (X). 2. Divide X by 2 (Y) 3. Divide Y by the average of the closing price for shares of the Purchaser on the OTCBB over the 20 trading day ending on the date immediately preceding the applicable three month period (Z). 4. Z is the number of shares required to be contributed back to the Purchaser in respect of the applicable three month period. 5. The Vendors shall not be required to contribute back to the Purchaser shares pursuant to the Share Decrease Mechanism in excess of 200,000 shares during the first twelve month period and 200,000 during the second twelve month period. 32 SCHEDULE "B" Banking Information TD Canada Trust 321 Iroquois Shore Road Oakville, Ontario L6H 1M3 (905) 845-6621 Contact: Yvette Silva Branch: #2128 33 EX-2.2 3 v019169_ex2-2.txt AMENDMENT NO. 1 TO SHARE PURCHASE AGREEMENT DATED MAY 19, 2005 B E T W E E N ANDREW WICKETT, an individual resident in the Province of Ontario ("Wickett") - and - DEBBIE GRACIE-SMITH, an individual resident in the Province of Ontario ("Gracie-Smith") (collectively, the "Vendors") - and - ACTIVECORE TECHNOLOGIES, INC., a corporation incorporated under the laws of the State of Nevada (the "Purchaser") WHEREAS the Vendors and the Purchaser are parties to a share purchase agreement (the "Share Purchase Agreement") dated effective February 22, 2005; AND WHEREAS the Vendors and the Purchaser desire to amend the Share Purchase Agreement as described herein; NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows: 1. Definitions. In this Amending Agreement, capitalized terms not otherwise defined herein have the same meanings as specified in the Share Purchase Agreement. 2. Additional Consideration. In consideration for the Vendors agreeing to enter into this Amending Agreement, the Purchaser shall issue to each of Wickett and Gracie-Smith an additional 250,000 (the "Additional Shares") shares in the capital stock of the Purchaser the receipt of which is hereby acknowledged by Wickett and Gracie-Smith. It is acknowledged by the Vendors and the Purchaser that the Additional Shares shall not be subject to any form of contractual lock-up or other restriction. 3. Definition - "Purchaser Shares". Section 1.1(39) of the Share Purchase Agreement shall be deleted in its entirety and shall be replaced with the following: "(39) "Purchaser Shares" means that number of shares of Common tock of the Purchaser having an aggregate value equal to $2,413,834 based on the average of the closing price for shares of the Corporation on the OTCBB over the five trading day period ending on two days after the effective date hereof; 4. Payment of Purchase Price. Section 2.2 of the Share Purchase Agreement shall be deleted in its entirety and shall be replaced by the following: "2.2 Payment of Purchase Price. The aggregate purchase price payable by the Purchaser to the Vendors for the Shares (the "Purchase Price") shall be paid and satisfied as follows: (i) $100,000 in cash (payable as to $50,000 to each of Wickett and Gracie-Smith) due on May 31, 2005; and (ii) the Purchaser Shares (payable as to 50% to each of Wickett and Gracie-Smith) due at Closing." 5. Settlement of Shareholder Indebtedness. Section 2.4 of the Share Purchase Agreement shall be deleted in its entirety and shall be replaced by the following: "2.4 Settlement of Shareholder Indebtedness. On or before August 1, 2005, the Purchaser shall pay $100,000 to the Vendors (payable as to $50,000 to each of Wickett and Gracie-Smith) in partial satisfaction of outstanding shareholder loans made by the Vendors to the Corporation. These payments shall be evidenced by the issuance of the Purchaser to each of the Vendors of a promissory note to be substantially in the form of Exhibit I (the "Purchaser Note"). Upon receipt by the Vendors of their respective Purchaser Note, the Vendors hereby each agree to forgive any remaining indebtedness due to such Vendor, provided such remaining indebtedness was in existence at the time of Closing. 6. Exhibit I - Form of Purchaser Note. Exhibit I - Form of Purchaser Note shall be deleted in its entirety and shall be replaced by the Amended Promissory Note set forth at Exhibit I to this Amending Agreement. The Vendors shall deliver herewith to the Purchaser each of their respective Purchaser Notes for cancellation. 7. Exhibit II - Form of Lock-Up Agreement. Exhibit II - Form of Lock-Up Agreement shall be deleted in its entirety and shall be replaced by the Amended Lock-Up Agreement set forth at Exhibit II to this Amending Agreement and the previously executed agreements are hereby cancelled. 8. Further Assurances. Each party shall from time to time execute or procure such documents and other assurances as may be reasonable or advisable to give effect to the provisions of this Agreement. 9. Governing Law. This Amending Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable in that Province and shall be treated, in all respects, as an Ontario contract. 10. Successors and Assigns. This Amending Agreement shall enure to the benefit of, and be binding on, the parties and their respective successors, legal representatives and permitted assigns. Neither party may assign or transfer, whether absolutely, by way of security or otherwise, all or any part of its respective rights or obligations under this Amending Agreement without the prior written consent of the other party. 11. Counterparts. This Amending Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument. Counterparts may be executed either in original or faxed form and the parties adopt any signatures received by a receiving fax machine as original signatures of the parties; provided, however, that either party providing its signature in such manner shall promptly forward to the other party an original of the signed copy of this Amending Agreement which was so faxed. 2 IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed. ACTIVECORE TECHNOLOGIES, INC. /s/ [Peter Hamilton] Name: Peter Hamilton Title: President WITNESSED BY: ) ) ) /s/ Mark Hayman ) /s/ Andrew Wickett - ------------------------------- ----------------------------------------- Signature of Witness: ) ANDREW WICKETT ) Mark Hayman ) - ------------------------------- Name of Witness: ) ) ) ) ) WITNESSED BY: ) ) ) /s/ Mark Hayman ) /s/ Debbie Gracie-Smith - ------------------------------- ----------------------------------------- Signature of Witness: ) DEBBIE GRACIE-SMITH ) Mark Hayman ) - ------------------------------- Name of Witness: ) ) ) ) ) 3 EXHIBIT "I" FORM OF AMENDED PURCHASER NOTE (Please see following page.) ACTIVECORE TECHNOLOGIES, INC. UNSECURED PROMISSORY NOTE CDN$50,000.00 Toronto, Ontario Dated Effective February 22, 2005 FOR VALUE RECEIVED, ACTIVECORE TECHNOLOGIES, INC., a corporation incorporated under the laws of the State of Nevada ("Borrower"), unconditionally promises to pay to (""), in the manner hereinafter provided, the principal sum of CDN$50,000 (the "Loan"). The Loan shall be repaid by the Borrower in full on August 1, 2005. The Loan shall not be subject to interest. Prepayment in whole or in part of the Loan may be made by the Borrower at any time following the date of the advance of the Loan. It is hereby expressly agreed that in the event that any default be made in the payment of the Loan as stipulated above, which default is not cured or waived, then may exercise any right or recourse and proceed by any action, suit, remedy or proceeding against the Borrower authorized or permitted by law or in equity for the recovery of all indebtedness and liabilities of the Borrower to hereunder. This Promissory Note is intended as a contract under and shall be construed and enforceable in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. IN WITNESS WHEREOF, the Borrower has caused this Promissory Note to be executed and delivered by its duly authorized officer as of the date and at the place first above written. ACTIVECORE TECHNOLOGIES, INC. By: _____________________________ Name: Peter Hamilton Title: President EXHIBIT "II" FORM OF AMENDED LOCK-UP AGREEMENT (Please see following page.) , 2005 ActiveCore Technologies, Inc. 156 Front Street, Suite 210 Toronto, Ontario M5J 2L6 Attention: Peter Hamilton Dear Sir: Re: Acquisition by ActiveCore Technologies Inc. ("ActiveCore") of Cratos Technology Solutions Inc. ("Cratos") (the "Acquisition") Pursuant to the terms and conditions of the share purchase agreement (the "Share Purchase Agreement") effective as of February 22, 2005 (the "Effective Date") between ActiveCore, Cratos, Andrew Wickett and Debbie Gracie-Smith relating to the Acquisition, and in consideration thereof, the undersigned hereby agrees to the terms and conditions set forth below. Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Share Purchase Agreement. 1. Lock-Up Agreement The undersigned will not, directly or indirectly, during the Lock-Up Period (as defined below), without the prior written consent of ActiveCore, issue, sell, pledge, encumber, transfer, in whole or in part, or otherwise dispose of any of the Purchaser Shares. The "Lock-Up Period" shall apply to the undersigned's Purchaser Shares in accordance with the following release conditions: (i) 20% of the Purchaser Shares shall be released on the date of issuance of such shares; (ii) 40% of the Purchaser Shares shall be released on the first anniversary of the Effective Date; and (iii) 40% of the Purchaser Shares shall be released on the second anniversary of the Effective Date. 2. Voting Restrictions The undersigned agrees for a period of 2 years from the date hereof to vote all shares of ActiveCore common stock held by the undersigned (either directly or indirectly) in support of any recommendation made by the directors and/or management of ActiveCore at any annual general meeting or special meeting of ActiveCore. The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into the agreements set forth herein, and that, upon request, the undersigned will execute any additional documents necessary in connection with implementing the agreements, authorizations and other terms hereof. Any obligations of the undersigned shall be binding upon the successors and assigns of the undersigned. Yours truly, By:________________________________ EX-4.1 4 v019169_ex4-1.txt Execution Copy REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated effective February 22, 2005, by and among ACTIVECORE TECHNOLOGIES, INC., a Nevada corporation, with its principal office located at 156 Front Street West, Suite 210, Toronto, Ontario, Canada M5J 2L6 (the "Company"), and Andrew Wickett and Debbie Gracie-Smith (each, an "Investor" and collectively, the "Investors"). WHEREAS: A. In connection with the Share Purchase Agreement by and among the parties hereto of even date herewith (the "Share Purchase Agreement"), the Company has agreed, upon the terms and subject to the conditions of the Share Purchase Agreement, to issue to the Investors eight million nine hundred and twenty one thousand and thirty one (8,921,031) shares of Common Stock of the Company, par value $0.001 per share (the "Common Stock"), pursuant to the terms of the Share Purchase Agreement for an aggregate purchase price of up to Two Million, Four Hundred Thousand Dollars ($2,400,000). Capitalized terms not defined herein shall have the meaning ascribed to them in the Share Purchase Agreement. B. To induce the Investors to execute and deliver the Share Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investors hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: (a) "Investor" means an Investor and any transferee or assignee thereof to whom an Investor assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 hereof. (b) "Person" means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency. (c) "Register", "Registered," and "Registration" refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the "SEC"). (d) "Registrable Securities" means the shares of Common Stock issuable to Investors pursuant to the Share Purchase Agreement. (e) "Registration Statement" means a registration statement under the 1933 Act which covers the Registrable Securities. 2. REGISTRATION. (a) Filing of Registration Statement. Subject to the terms and conditions of this Agreement, the Company shall prepare and file, no later than ninety (90) days from the date of the closing of the transactions contemplated by the Share Purchase Agreement (the "Scheduled Filing Deadline"), with the SEC a registration statement on Form S-1 or SB-2 (or, if the Company is then eligible, on Form S-3) under the 1933 Act (the "Initial Registration Statement") for the registration for the resale of the Registrable Securities by all Investors. The Registration Statement required hereunder shall contain (except if otherwise directed by the Investors) the "Plan of Distribution" attached hereto as Annex A. The Company shall cause the Registration Statement to remain effective until all of the Registrable Securities have been sold. Prior to the filing of the Registration Statement with the SEC, the Company shall furnish a copy of the Initial Registration Statement to the Investors and Chitiz Pathak LLP for their review and comment. The Investors and Chitiz Pathak LLP shall furnish comments on the Initial Registration Statement to the Company within seventy-two (72) hours of the receipt thereof from the Company. (b) Effectiveness of the Initial Registration Statement. The Company shall use its best efforts (i) to have the Initial Registration Statement declared effective by the SEC no later than one hundred and twenty (120) days date of the closing of the transactions contemplated by the Share Purchase Agreement (the "Scheduled Effective Deadline") and (ii) to insure that the Initial Registration Statement and any subsequent Registration Statement remains in effect until all of the Registrable Securities have been sold, subject to the terms and conditions of this Agreement. (c) Failure to File or Obtain Effectiveness of the Registration Statement. In the event the Registration Statement is not filed by the Scheduled Filing Deadline or is not declared effective by the SEC on or before the Scheduled Effective Deadline, or if after the Registration Statement has been declared effective by the SEC, sales cannot be made pursuant to the Registration Statement (whether because of a failure to keep the Registration Statement effective, failure to disclose such information as is necessary for sales to be made pursuant to the Registration Statement, failure to register sufficient shares of Common Stock or otherwise), then as partial relief for the damages to any holder of Registrable Securities by reason of any such delay in or reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not be exclusive of any other remedies at law or in equity), the Company will pay as liquidated damages (the "Liquidated Damages") to the holder a cash amount within three (3) business days, after demand therefore, equal to two percent (2%) of the liquidated value of the Registrable Securities outstanding, based on the purchase price paid for such securities pursuant to the Share Purchase Agreement, as Liquidated Damages for each thirty (30) day period after the Scheduled Filing Deadline or the Scheduled Effective Deadline as the case may be. 2 (d) Liquidated Damages. The Company and the Investors hereto acknowledge and agree that the sums payable under subsection 2(c) above shall constitute liquidated damages and not penalties. The parties further acknowledge that (i) the amount of loss or damages likely to be incurred is incapable or is difficult to precisely estimate, (ii) the amounts specified in such subsections bear a reasonable relationship to, and are not plainly or grossly disproportionate to the probable loss likely to be incurred in connection with any failure by the Company to obtain or maintain the effectiveness of a Registration Statement, (iii) one of the reasons for the Company and the Investors reaching an agreement as to such amounts was the uncertainty and cost of litigation regarding the question of actual damages, and (iv) the Company and the Investors are sophisticated business parties and have been represented by sophisticated and able legal counsel and negotiated this Agreement at arm's length. 3. RELATED OBLIGATIONS. (a) The Company shall keep the Registration Statement effective pursuant to Rule 415 at all times until the date on which the Investors shall have sold all the Registrable Securities covered by such Registration Statement (the "Registration Period"), which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (b) The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company's filing a report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall incorporate such report by reference into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement. 3 (c) The Company shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) at least one (1) copy of such Registration Statement as declared effective by the SEC and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, all exhibits and preliminary prospectus and (ii) such other documents as such Investors may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor. (d) The Company shall use its best efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or "blue sky" laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its certificate of incorporation or by-laws, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose. (e) As promptly as practicable after becoming aware of such event or development, the Company shall notify each Investor in writing of the happening of any event as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to each Investor. The Company shall also promptly notify each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each Investor by facsimile on the same day of such effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. 4 (f) The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction within the United States of America or in the Province of Ontario and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose. (g) The Company shall make available for inspection by (i) any Investor and (ii) one (1) firm of accountants or other agents retained by the Investors (collectively, the "Inspectors") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree, and each Investor hereby agrees, to hold in strict confidence and shall not make any disclosure (except to an Investor) or use any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement of which the Inspector and the Investor has knowledge. Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. 5 (h) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. (i) The Company shall use its best efforts either to cause all the Registrable Securities covered by a Registration Statement (i) to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or (ii) the inclusion for quotation on the National Association of Securities Dealers, Inc. OTC Bulletin Board for such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(i). (j) The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and registered in such names as the Investors may request. (k) The Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities. (l) The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve (12) month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of the Registration Statement. (m) The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder. (n) Within two (2) business days after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A. 6 (o) The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of Registrable Securities pursuant to a Registration Statement. (p) In the event that the Company issues securities to the Investors pursuant to the Share Increase Mechanism of the Share Purchase Agreement that are not covered by an effective Registration Statement and the Company determines to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans, then the Company shall send to each Investor a written notice of such determination and, if within fifteen days after the date of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement all or any part of such securities issued pursuant to the Share Increase Mechanism such Investor requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights 4. OBLIGATIONS OF THE INVESTORS. Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(e) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended certificates for shares of Common Stock to a transferee of an Investor in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor's receipt of a notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e) and for which the Investor has not yet settled. 5. EXPENSES OF REGISTRATION. All expenses incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers, legal and accounting fees shall be paid by the Company. 6. INDEMNIFICATION. With respect to Registrable Securities which are included in a Registration Statement under this Agreement: 7 (a) To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor, the directors, officers, partners, employees, agents, representatives of, and each Person, if any, who controls any Investor within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint or several (collectively, "Claims") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in any final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading; or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation there under relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). The Company shall reimburse the Investors and each such controlling person promptly as such expenses are incurred and are due and payable, for any legal fees or disbursements or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (y) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c); and (z) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9 hereof. 8 (b) In connection with a Registration Statement, each Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers, employees, representatives, or agents and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each an "Indemnified Party"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or is based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the prospectus was corrected and such new prospectus was delivered to each Investor prior to such Investor's use of the prospectus to which the Claim relates. (c) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one (1) counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. 9 (d) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred. (e) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 10 8. REPORTS UNDER THE 1934 ACT. With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration ("Rule 144") the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents as are required by the applicable provisions of Rule 144; and (c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration. 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; and (iii) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein. 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. No such amendment shall be effective to the extent that it applies to fewer than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement. 11 11. MISCELLANEOUS. (a) A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two (2) or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. (b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company, to: ActiveCore Technologies Inc. 156 Front Street West, Suite 210 Toronto, ON M5J 2L6 Attention: President Telephone: (416) 252-6200 Facsimile: (416) 252-4578 If to an Investor, to its address and facsimile number on the Schedule of Investors attached hereto, with copies to such Investor's representatives as set forth on the Schedule of Investors or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. 12 (d) The laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and the Investors as its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Nevada. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the Superior Courts of the State of Nevada, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. (e) This Agreement by and among the Company and the Investors set forth on the Schedule of Investors attached hereto constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. (f) This Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto. (g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. 13 (i) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party. (j) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 14 IN WITNESS WHEREOF, the parties have caused this Investor Registration Rights Agreement to be duly executed as of day and year first above written. ACTIVECORE TECHNOLOGIES, INC. By: /s/ [Peter Hamilton] -------------------------------------------- Name: Peter Hamilton Title: Chief Executive Officer By: /s/ [Andrew Wickett] -------------------------------------------- Name: Andrew Wickett By: /s/ [Debbie Gracie-Smith] -------------------------------------------- Name: Debbie Gracie-Smith 15 SCHEDULE OF INVESTORS Andrew Wickett 17 Spruce Hill Road Toronto, Ontario CANADA M4E 3G2 - -and- Debbie Gracie-Smith 2502 Trevor Drive Oakville, Ontario CANADA L6L 5C6 EXHIBIT A FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT Re: ACTIVECORE TECHNOLOGIES INC. Ladies and Gentlemen: We are counsel to ActiveCore Technologies Inc., a Nevada corporation (the "Company"), which has entered into that certain Share Purchase Agreement (the "Purchaser Agreement") by and among the Company and the investors named therein (collectively, the "Investors") pursuant to which the Company issued to the Investors shares of its Common Stock, par value $0.001 per share (the "Common Stock"). Pursuant to the Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Investors (the "Registration Rights Agreement") pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the "1933 Act"). In connection with the Company's obligations under the Registration Rights Agreement, on ________________, the Company filed a Registration Statement on Form ________ (File No. 333-_____________) (the "Registration Statement") with the Securities and Exchange SEC (the "SEC") relating to the Registrable Securities which names each of the Investors as a selling stockholder thereunder. In connection with the foregoing, we advise you that a member of the SEC's staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a member of the SEC's staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement. Very truly yours, [ISSUER'S COUNSEL] By:_______________________________ cc: [LIST NAMES OF INVESTORS] ANNEX A PLAN OF DISTRIBUTION The Selling Stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares: o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange; o privately negotiated transactions; o settlement of short sales; o broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; o a combination of any such methods of sale; and o any other method permitted pursuant to applicable law. The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus. The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Stockholders have informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. The Company is required to pay all fees and expenses incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. EX-99.1 5 v019169_ex99-1.txt CRATOS Secures $2 Million Operating Facility from Major Bank Toronto, May 26, 2005: ActiveCore Technologies, Inc. (OTCBB: ATVE), a Company that operates a group of subsidiaries and divisions in the US, UK and Canada that offer a Smart Enterprise Suite of products, is pleased to announce that CRATOS, a wholly owned subsidiary of ActiveCore, has secured a revolving credit facility from a major Canadian Bank in the amount of $2 Million. The revolving credit facility will be used primarily to fund continued growth and expand the current infrastructure to ensure that it is capable of supporting CRATO's numerous global interests. As a tremendous vote of confidence in the future of CRATOS and ActiveCore, the facility was personally guaranteed by ActiveCore management. ActiveCore President & Ceo Peter Hamilton stated, "We see this as a very positive development for CRATOS and ActiveCore as the facility will help to sustain our growth curve and build out our infrastructure." Mr. Hamilton went on to say, "Management is deeply committed to the success of both CRATOS and ActiveCore, such that we have personally guaranteed the operating facility. We believe that the future is extremely bright and that the weeks and months ahead will be very exciting times for the Company and its shareholders." This press release is available on the company's official online investor relations site for investor commentary, feedback and questions. Investors are asked to visit the ActiveCore IR Hub located at http://www.Agoracom.com/IR/ActiveCore Alternatively, investors can e-mail AGORA Investor Relations directly at ATVE@Agoracom.com. About ActiveCore Technologies, Inc. (www.ActiveCore.com) ActiveCore Technologies, Inc., operates a group of subsidiaries and divisions in the U.S., U.K. and Canada that offer a Smart Enterprise Suite of products and services. We integrate, enable, and extend functions performed by current and legacy IT systems. Our products encompass web portals, enterprise middleware, mobile data access, data management and system migration applications. The Systems Integration & Modernization Division of ActiveCore operates under the trade names of Cratos, MDI Solutions and TwinCentric. The Corporate Disclosure and Messaging Division of ActiveCore operates under the trade names C Comm Network Corporation, DisclosurePlus and ActiveCast. ActiveCore services clients in healthcare, financial services, government and manufacturing worldwide. IR CONTACT: AGORA Investor Relations Email: ATVE@agoracom.com IR Hub: http://www.Agoracom.com/IR/ActiveCore Statements contained in this news release regarding ActiveCore Technologies, Inc. formerly IVP Technology and planned events are forward-looking statements, subject to uncertainties and risks, many of which are beyond ActiveCore's control, including, but not limited to, reliance on key markets, suppliers, and products, currency fluctuations, dependence on key personnel and trade restrictions, each of which may be impacted, among other things, by economic, competitive or regulatory conditions. These and other applicable risks are summarized under the caption "Risk Factors" in ActiveCore's Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on January 4, 2005. Forward-looking statements by their nature involve substantial risks and uncertainties. As a result, actual results may differ materially depending on many factors, including those described above. -----END PRIVACY-ENHANCED MESSAGE-----