CPL Technologies Inc.
TSX VENTURE : CCY

CPL Technologies Inc.

November 10, 2005 14:44 ET

CPL Technologies Concluded an Option to Purchase C3Gateways Services Inc.

MONTREAL, QUEBEC--(CCNMatthews - Nov. 10, 2005) - CPL Technologies Inc. (TSX VENTURE:CCY) announces having concluded a binding option agreement to purchase 100% of the capital stock of C3Gateways Services Inc. a privately held Montreal-based company and developer of innovative communications solutions for call centers. A detailed acquisition agreement will be signed in November, 2005 concluding the due diligence process conducted by the Company. Subject to either party exercising its option, the acquisition will be finalized between January 1 and May 31, 2007.

Since it constitution C3Gateways Services Inc. as developed the ContactIP™ solution. ContactIP™ uses a unique communications technology and advanced methodologies to bring, for the first time, the benefits of voice recognition to medium-sized businesses. These customers can now benefit from the customer service and productivity improvements available to large businesses who, until now, were the only ones who could afford to buy such systems. In late 2004, the company began commercialization efforts which resulted in three beta sites representing $150,000 in sales revenues. The chairman of the board is Me Andre Gervais (Borden Ladner Gervais s.r.l.) and the chief executive officer and president is Mr Bob White. There are 50 shareholders and some of those are currently employees of the company. The most important shareholders are Mr. Bill Mayers (20%) and Mr. Bob White (14%), all other shareholders have less than 10% each of participation in the capital of C3Gateways Services Inc.

"The complementary nature of the ContactIP™ solution to our C2 Enterprise solution will allow CPL to rapidly penetrate into a greater number of call centers" said Mr. Jean-Claude Desaulniers, CEO of CPL Technologies.

Collaboration agreement

The agreement provides that, in January 2006, C3Gateways will transfer in CPL office a part of their operations team to assure a better management of the common marketing strategy. This collaboration agreement provide that C3Gateways will pay their proportional share of the expenses as well as a monthly fees of 10,000$ (CND) for CPL's management and administration of these expenses

Investment into C3Gateways Services Inc.'s commercialization.

The agreement allows C3Gateways Services Inc. to proceed with its plan to invest at least a $1 million (CDN) on the commercialization of its products by the time the acquisition is concluded. As support for this commercialization effort, CPL will contribute $200,000 (CDN) to C3Gateways Services Inc. During this period the two companies will work together to jointly market their complementary products.

C3Gateways Services Inc. Shareholders' Option

Based on the performance of C3Gateways until December 31, 2006, if the sales volumes of C3Gateways are more than $750,000 (CND), C3 Gateways Services Inc. shareholders will have the option to convert in block 100% of their shares in exchange for CPL shares for a total number of shares representing between 25% and 50% of the after closing total issued capital. The performance will be prorated based on sales volumes between $750,000 CDN and 3,000,000 CDN. The sales will be evaluated on the generally accepted accounting policy plus the purchase order signed before December 31st 2006 and performed in whole within 60 days, plus discounted cash flows from leases and recurring revenue and finally C3Gateways could convert new capital investment, greater than the million dollars investment already mentioned, in sales volume in accordance with a formula that will be determined in the detailed acquisition agreement This option is exercisable between January 1 and March 31, 2007.

Earn-Out

If the market value of CPL shares, at the time of conversion, is worth less than $7.5 million (CDN), CPL will pay to C3Gateways Services Inc. shareholders an earn-out based on the sales of C3Gateways products. The calculation for the earn-out will be specified in the detailed acquisition agreement.

Transaction evaluation

Within the terms and conditions of the agreement it is impossible at this time to give an evaluation of the transaction because the value is directly related to the share market value of CPL and the participation that will be given to C3Gateways shareholders at the time of the option. Consequently, CPL will have to satisfy the regulatory requirement of the TSX venture exchange at the time that the option conditions will be determined.

CPL Technologies Inc.'s purchase Option

In the event that the C3Gateways shareholders do not exercise their option, CPL Technologies Inc. holds the option to purchase 100% of the shares of C3Gateways Services Inc. for the price of $6,5 million (CDN) payable by the issuance of CPL Technology shares. This option expires May 31st 2007.

Officer remuneration

In the scope of this transaction, CPL is negotiating a consulting contract with the firm Conseillers Corporatifs Focus in witch M. Yvan Charron CA an officer of the Company is one of the shareholders. This contract is evaluated at 125,000$ (CND) spread over a 12 months period and would be payable in part with the issuance of share of the Company subject to shareholders approval.

This transaction is conditional on approval by regulatory authorities.

The addition of this software solution is totally in line with CPL marketing strategy to offer more front end software solution focused on addressing the customer care market segment.

CPL Technologies is a recognized leader in request management solutions, for Customer Relationship Management (CRM) or internal support centers. CPL builds on extensive expertise and a thorough mastery of high-end development tools, focusing on integrating technologies that are constantly being refined to deliver superior customer care.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • CPL Technologies Inc.
    Jean Claude Desaulniers, President
    Chief Executive Officer and Chief Financial Officer
    (866) 978-1200
    (450) 978-6665 (FAX)
    jcdesaulniers@cpl-inc.com