SHARE PURCHASE AGREEMENT
THIS AGREEMENT made this 31st day of October, ▇▇▇▇,
▇ ▇ ▇ ▇ ▇ ▇ ▇:
▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
(hereinafter jointly called the "Vendor"),
- and -
▇▇▇▇▇▇▇▇▇.▇▇▇ INC.,
a company incorporated under the laws
of the Province of Ontario
(hereinafter called the "Purchaser").
INTENT OF THE AGREEMENT
WHEREAS the Vendor is the registered owner of all of the issued and
outstanding common shares (called the "Purchased Shares") or represents the
beneficial owner(s) of the Purchased Shares of TidalBeach Inc., a company
incorporated under the provisions of the Ontario Business Corporations Act,
hereinafter referred to as the "Corporation" which carries on business as
TidalBeach Inc., located at ▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇ (hereinafter called "the Location").
WHEREAS the Purchaser has agreed to purchase and the Vendor has agreed
to sell, the Purchased Shares on the terms and conditions hereinafter set out;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants of the parties hereinafter contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged;
THE PARTIES HEREBY COVENANT, PROMISE AND AGREE AS FOLLOWS:
1.00. Defined Terms In this agreement except as otherwise expressly provided,
the following words or expressions have the meanings assigned:
(a) "Agreement" means this agreement and any agreement supplemental
thereto and any amendment thereof.
(b) "Clients" means individuals, organizations and companies that have
acquired Products through the Corporation within a period of three
years prior to the Effective Date.
(c) "Closing" means the completion of the purchase and sale of the
shares pursuant to this Agreement.
(d) "Closing Date" means two (2) business days after this Agreement
and the documents required to complete the transaction referred to
herein have been approved by the Board of Directors of both the
Purchaser and the Corporation, provided that if such date does not
occur prior to November 15, 2000, the transaction shall be null
and void.
(e) "Effective Date" means July 1, 2000, following which all revenue
of the Corporation shall be for the benefit of the Purchaser, and
all expenses of the Corporation shall be the responsibility of the
Purchaser.
(f) "Effective Date Financial Statements" means the Financial
Statements of the Corporation to be prepared by the Corporation's
accountants, in a manner consistent with previous Financial
Statements of the Corporation and at the expense of the Vendor,
and which shall be completed as quickly as possible but not later
than six (6) weeks following the Closing Date.
(g) "Issued Shares" means the shares of the Purchaser issued pursuant
to Section 3.
(h) "Pre-closing liabilities" means the liabilities of the Corporation
as of the Effective Date.
(i) "Post-closing liabilities" means the liabilities of the
Corporation after the Effective Date.
(j) "Product" means the Web development services and tools, the
corporate training services and tools, and all related goods and
services provided by the Corporation as at the date of this
Agreement.
(k) "Purchased Business" means the commercial enterprise involving the
sale of Products that is carried on by the Corporation.
(l) "Purchase Price" means the product of the formula set forth
according to the provisions of Section 3.
(m) "Purchased Shares" means the two thousand (2000) issued and
outstanding common shares of the Corporation issued and
outstanding as of the Closing Date.
2.00. Purchase and Sale The Purchaser agrees to purchase and the Vendor
agrees to sell the Purchased Shares for the Purchase Price on the terms
and conditions set out herein.
3.00. Payment of the Purchase Price The Purchase Price shall be an amount
equal to the average price of a common share of the Purchaser as listed
on the NASDAQ Exchange during the two (2) week period immediately prior
to the Closing Date, multiplied by 250,000, to be paid and satisfied as
follows:
(a) the Purchaser shall issue in the name of each of the Vendors, pro
rata to each's percentage holding of common shares of the
Corporation, an aggregate of 250,000 common shares of the
Purchaser, which Issued Shares shall be registered no later than
three (3) months following the Closing Date.
4.00 Schedules The following Schedules shall be an integral part of this
Agreement:
"A" (para. 7(g)(i)) Financial Statements to December 31, 1999
"B" (para. 7(g)(ii)) Balance Sheet, etc. to September 30, 2000
"C" (para. 7(j)) Assets
"D" (para. 7(k)) Bank Accounts
"E" (para. 7(l)) Claims
"F" (para. 7(q)) Existing Employment/Independent Contractor
Agreements (x2)
"G" (para. 7(q)) Amended Independent Contractor Agreements (x3)
"H" (para. 7(t)) Employees
"I" (para. 7(u)) Clients
"J" (para. 8(e)) Release
"K" (para. 8(i)) Non-Solicitation and Non-Competition
"L" (para. 8(j)) Indemnity
"M" (para. 8(l)) Insurance
"N" (para. 7(p)) Lease (x2)
5.00 Left Intentionally Blank
6.00. Fiscal Year End - The Vendor shall cause the Corporation at his expense
forthwith after Closing to have its accountants prepare the Effective
Date Financial Statements, and file final tax returns as of the
Effective Date with both the federal and provincial taxing authorities
on the basis of such Financial Statements. The Purchaser's accountants
shall be entitled to review the said Financial Statements before the
Statements are finalized. Such statements do not need to be audited.
7.00. Representations and Warranties of the Vendor. The Vendor represents and
warrants to the Purchaser as follows:
(a) Existence, Authorized and Issued Capital - The Corporation is
incorporated and existing under the Ontario Business Corporations
Act, with authorized capital, consisting of an unlimited number of
Common shares and an unlimited number of Preference shares and the
issued and outstanding capital shares on Closing shall consist of
Two Hundred (200) Common Shares only, and no Preference Shares.
(b) Power and Authority - The Corporation has the necessary corporate
power and authority to own its assets and to carry on business as
presently carried on by it and hold all necessary licences,
permits and consents as are required to own its assets and carry
on its business.
(c) Ownership of Shares - The Vendor is or represents all of the
registered and beneficial owners of the Purchased Shares, and has
the authority to bind all such owners. The Purchased Shares are
owned as follows:
▇▇▇▇▇▇▇ ▇▇▇▇ - 1000 common shares
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ - 1000 common shares
(d) Title to the Purchased Shares - The Purchased Shares on Closing
will be free and clear of all agreements, claims, liens, security
interests and encumbrances.
(e) No Shares Held - The Corporation holds no shares of other
companies, other than
X Conexys Corporation Limited 27,299 common shares
X Envision Communications Corp. common shares
(f) No Conflict with Other Agreements - The execution and delivery of
this Agreement does not, and the completion of this Agreement will
not violate any of the terms and provisions of the by-laws of the
Corporation and/or any agreements to which the Corporation or its
shareholders are bound.
(g) Financial Statements
(i) The Financial Statements of the Corporation for the fiscal
years ended the December 31, 1998 and December 31, 1999,
copies of which are attached hereto as Schedule "A" present
fairly, in all material respects, the financial position of
the Corporation as of those dates and the results of its
operations for the periods then ended, prepared in
accordance with generally accepted accounting principles
applied on a basis consistent with preceding years. Such
statements reflects all assets and all liabilities
(contingent or otherwise) of the Corporation as at such
dates.
(ii) The Balance Sheet/Income/Expense Statements generated by
the Corporation's management for the nine (9) month period
ended September 30, 2000, a copy of which is attached
hereto as Schedule "B" present fairly, in all material
respects, the financial position of the Corporation for the
nine (9) month period ended as at that date save and except
for such post-period adjustment as may be made in
accordance with GAAP, and such statements reflect all
assets and liabilities and the results of its operations as
of that date, save and except for such post-period
adjustment as may be made in accordance with GAAP for the
periods ended. Such statements reflects all assets and
liabilities (contingent or otherwise) of the Corporation as
of those dates.
(iii) No liability of the Corporation has been incurred since the
Effect Date except in the ordinary course of business.
Specifically, no dividend has been declared or paid and no
payment has been made to shareholders other than the salary
paid in the normal course of business, since the Effective
Date.
(h) Payment of Tax - The Corporation has filed all Federal and
Provincial tax returns required to be filed and has paid all taxes
due and payable and provided sufficient funds on deposit with the
Corporation as may be needed for the filing of the Corporate tax
returns as of the Effective Date, and is aware of no actual or
threatened investigation inquiry, claim or challenge to those
filings by any such authority.
(i) Minute Books - The Minute Books of the Corporation are complete
and accurately reflect all actions taken by its board of directors
and shareholders.
(j) Title to Equipment and Leases - The Corporation holds all of its
assets free and clear of all claims, liens and encumbrances,
except as set forth in Schedule "C". All of the assets of the
Corporation including its unfettered and unchallenged rights to
use the trade style "TidalBeach", the Canadian trade ▇▇▇▇
"Skillset Training", as well as its current telephone and
facsimile numbers and url co-ordinates shall remain in the
Corporation after the Effective Date. All listed assets are in
good working condition. Assets which are subject to lease are
described in Schedule "C" together with the terms thereof.
(k) Bank Accounts - The Corporation maintains only those bank accounts
set out in Schedule "D" hereto.
(l) Absence of Litigation or Claims - Other than as described in
Schedule "E", there is no litigation, proceedings or government
investigation pending against the Corporation. The Vendor has no
knowledge of any basis for potential litigation which, if
commenced, would affect the Corporation materially. There is no
outstanding judgment or injunction affecting the Corporation or
its assets, other than as described in Schedule "E".
(m) Residence of Vendor - The Vendor is a resident of Canada for the
purposes of the Income Tax Act (Canada).
(n) Guarantees - The Corporation is not a party to or bound by any
agreement, guarantee or indemnification of the obligations,
liabilities (contingent or otherwise) or indebtedness of any other
person.
(o) Licenses - The Corporation does not require any governmental,
self-regulatory or other licence in order to carry on business.
(p) Lease of Premises - The occupancy of the Location by the
Corporation is subject to a Lease which expires on March 19, 2005,
a copy of which is attached as Schedule N1. The Vendor shall be
responsible for any and all claims relating to the Lease up to and
including the Effective Date, but thereafter full responsibility
will rest with the Corporation. In addition, the Corporation is a
tenant occupying premises known municipally as ▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, pursuant to a lease which expires on August
31, 2003, a copy of which is attached as Schedule N2. Both of
these leases are in good standing and both requires the consent of
the relevant landlord in the circumstances of this transaction.
(q) Independent Contractor Agreements - The Corporation has existing
written independent contractor agreements with each of ▇▇▇▇▇ ▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (based on copies of each of which are attached
as Schedule F1 and F2, respectively) and an oral employment
agreement with ▇▇▇▇▇▇▇ ▇▇▇▇; and will deliver to the Purchaser on
or before Closing amendments to those agreements, signed by the
Corporation and the named individual in form and substance as set
forth in Schedules G1, G2 and G3 respectively.
(r) Clients - The Vendor has no knowledge of the past loss or the
potential future loss of any Clients whose contribution to the
Corporation's revenue is material.
(s) Trade Style - The Trade Style "TidalBeach" has not been registered
by the Corporation but the Vendor is aware of no challenge,
anywhere in Canada or the USA, to the Corporation's right to use
such trade style. The Canadian trade ▇▇▇▇ "Skillset Training" has
been issued to the Corporation and the Vendor is aware of no
challenge to the Corporation's right to use such trade ▇▇▇▇.
(t) Employees - Attached as Schedule "H" is a list of the current
employees (full-time and part-time) and independent contractors
together with each individual's start date, salary or payment
review date, current payment or salary, current vacation
entitlement and other benefits. There are no other contract staff
or outside sales representatives associated with the Corporation.
There are no unions or collective bargaining agreements or
entitlements affecting any of the employees and the Vendor is
aware of no attempts to organize any.
(u) Clients - Attached as Schedule "I" is a list of the current
clients of the Corporation.
(v) Ordinary Course - Until the Closing Date, the Purchased Business
will be carried on as per normal, subject to the prior approval of
the Purchaser.
8.00. Conditions of Closing for the Benefit of the Purchaser The Closing is
subject to the following terms and conditions, all of which are for the
benefit of and may be waived by the Purchaser, and all of which are to
be fulfilled on or performed at or prior to the time of Closing:
(a) Representations and Warranties - All representations and
warranties of the Vendor contained in this Agreement are true and
correct as of Closing, with the same effect as though made again
at and as of that time subject only to those changes which are
permitted by this Agreement, and there shall have no material
adverse change in the business and affairs of the Corporation
prior to the Closing.
(b) Compliance with Agreement - All of the acts and undertakings of
the Vendor set out herein have been performed.
(c) Certificate - The Vendor shall deliver a certificate dated as at
the Date of Closing certifying as to (a) and (b) above.
(d) Legal Opinion - The Purchaser shall have been furnished with an
opinion of the Vendor's counsel, dated the Closing Date (a draft
of which shall be provided by the Purchaser) in respect of their
knowledge as to the Corporation is duly incorporated, organized
and validity subsisting under the laws of the province of Ontario
with full corporate right, power and authority to carry its
business in the province of Ontario as now conducted and to enter
into such documentation as may be necessary to complete the
transactions set out in this Agreement.
(e) Directors & Officers - At the Closing the Directors and Officers
of the Corporation shall tender their resignations, as officers,
directors and employees of the Corporation and shall execute and
deliver a release (as per Schedule "J" attached) of all claims
which may have arisen against the Corporation in those or in any
other capacities, save and except those which arise directly and
expressly out of this Agreement.
(f) Corporate Acts - At the time of Closing, all appropriate actions
shall have been taken to effect the transfer of the Shares
contemplated hereby including but not limited to the approval of
the Board of Directors of the Corporation to the transfer of the
Shares, and of the Board of Directors of the Purchaser with
respect to its concurrence in this transaction.
(g) Fire and Hazard - No substantial damage by fire or other hazard to
the Location and goodwill of the Business including all documents
and records of the Corporation shall have occurred prior to the
Closing and if such damage does occur, the Purchaser shall have
the option of completing this Agreement and accepting the proceeds
of the insurance policy covering such loss or rescinding the
Agreement.
(h) Pre-closing Liabilities - Provision shall have been made for the
payment for any and all Pre-closing Liabilities, of every nature,
kind and description, of the Corporation (including outstanding
shareholders advances from shareholders which shall be assigned to
the Purchaser at no additional cost) either through payment in
full or sufficient monies on deposit to cover any and all such
obligations.
(i) Non-solicitation and Non-competition Covenant - Each of the two
Vendors shall provide on Closing a Non-solicitation and
Non-competition Covenant as set out in Schedule "K".
(j) Indemnity Covenant - The Vendor shall provide on Closing an
Indemnity Covenant as set out in Schedule "L".
(k) Licence - Left Intentionally Blank.
(l) Insurance - The Corporation shall be covered by the Insurance
Policy, details of which are attached hereto as Schedule "M".
(m) Employees - Left Intentionally Blank.
(n) Amended Independent Contractor Agreements - The Vendor ▇▇▇▇▇▇▇
▇▇▇▇ and the two other named individuals shall have signed the
Amended Independent Contractor Agreements referred to in Section
7(q).
(o) Leases - Landlord's approval has been provided with respect to the
leases referred to in paragraph 7(p).
(p) Actual Revenue - The Purchaser's investigation of the books and
records of the Corporation shall have confirmed to the
satisfaction of the Purchaser that they reflect actual revenue of
at least the amount which, when annualized, will meet or exceed
the revenue reflected in Schedules A and B, once annualized where
necessary.
(q) Board Approval - The Purchaser's Board of Directors must approve
of this transaction, and all component parts of it.
9. Conditions of Closing for the Benefit of the Vendor The Closing is
subject to the following terms and conditions, all of which are for the benefit
of and may be waived by the Vendor and all of which are to be fulfilled on or
performed at or prior to the time of Closing:
(a) Representations and Warranties - All Representations and
Warranties of the Purchaser contained in this Agreement are true
and correct as of the time of Closing with the same effect as
though made again at and as of that time subject only to those
changes which are permitted by this Agreement.
(b) Compliance with Agreement - All of the acts and undertakings of
the Purchaser set out herein have been performed.
(c) Certificate - The Purchaser shall deliver a certificate dated as
at the Date of Closing certifying as to (a) above.
10.00. Closing Arrangements
i) Deliveries by the Purchaser The Purchaser agrees to deliver the
following on the Closing Date:
(a) a certified copy of the resolution authorizing the issuance
of the shares referred to in Section 3(a); and
(b) the Certificate as set out in Section 9(c).
ii) Closing Deliveries by the Vendor The Vendor agrees to deliver the
following on the Closing Date:
(a) Transfer of Shares duly endorsed to the Purchaser or such
nominee as the Purchaser may direct;
(b) Resignation of Officers and Directors;
(c) the Certificate as set out in Section 8 (c);
(d) All other documents referred to herein as being required of
the Vendor, or its responsibility to produce.
iii) Time and Place The Closing shall take place at the offices of
Heifetz, Crozier, Law, solicitors for the Purchaser at 2:00 p.m.
or such other time as the parties mutually agree. Time to be of
the essence.
11.00. Rescission of Agreement In the event that any of the conditions
enumerated in this Agreement shall not be fulfilled or performed at or
prior to the Closing, the Purchaser or the Vendor in whose favour the
condition was inserted as the case may be, may rescind this Agreement
by notice to the other. In such event, the party giving notice shall
thereupon be released from all obligations hereunder, and, unless such
party can establish that the condition or conditions for the
nonfulfillment or nonperformance of which it has rescinded this
Agreement are reasonably capable of being fulfilled or performed by the
other party, then the other party also shall be released from all
obligations hereunder.
12.00. Survival of Representations and Warranties All representations,
warranties, covenants, undertakings, indemnities and agreements made by
any of the parties in or pursuant to this Agreement shall survive the
Closing and any investigation at any time made by or on behalf of any
party shall not be considered waived by consummation of the Closing
notwithstanding knowledge of any breach. Representations and warranties
made by any of the parties in or pursuant to the Agreement shall
however only survive the Closing for a period of one (1) years, except
insofar as they relate to income tax obligations, which representations
and warranties shall survive seven (7) years.
13.00. Investigation The parties acknowledge the importance of the
representations of sales, revenue, expenses, clientele and operations
to the Purchaser. Between the date of the signing of this Agreement and
the Closing Date, the Vendor will allow reasonable access to the
Purchaser and his representative during normal business hours to
examine the books and records of the corporation to interview the
personnel that are to be retained and to receive information including
client profiles pertaining to the Business and pertinent to its
operation.
14.00. Notice Any notice or document required or permitted to be given
hereunder shall be in writing and may be given by delivering same, or
sending the same by telegram, telex, facsimile or other similar means
of telecommunications or by prepaid ordinary mail addressed to the
party at the address set out on the face page of this Agreement. Notice
so mailed shall be deemed to have been given and received on the fifth
business day after deposit in a post off ice or public letter box,
except in the event of an interruption in postal service, in which
case, notice shall not be given by mail. Notice given by telegram,
telex, facsimile or other similar means of telecommunications shall be
deemed to have been given and received on the first business day after
the sending of such notice. Notice given by delivery shall be deemed to
have been given and received on the date it is delivered. Any party to
this Agreement may change their address for service from time to time
by notice given in accordance with the foregoing. For purposes of this
Agreement, notices to the Vendor shall be addressed to:
▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
and in the case of the Purchaser to:
505 - ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇
15.00. Binding Effect This Agreement shall bind and benefit the parties hereto
and their respective heirs, executors, administrators, successors and
permitted assigns.
16.00. Entire Agreement This Agreement sets forth the entire agreement among
the parties hereto pertaining to the subject matter hereof, and
supersedes all prior agreements. There are not and shall not be any
oral statements, representations, warranties, undertakings or
agreements among the parties.
17.00. Further Assurances The parties hereto agree to execute and deliver such
further and other documents and perform and cause to be performed such
further and other acts and things as may be necessary or desirable in
order to give full effect to this Agreement and every part thereof.
18.00. Applicable Law This Agreement shall be governed by the laws of the
Province of Ontario and the laws of Canada applicable therein. The
parties hereto do hereby irrevocably attorn to the jurisdiction of the
Courts of the Province of Ontario.
19.00. Severability If any provision of this agreement or its application to
any party or circumstance is restricted, prohibited or unenforceable,
such provision shall be ineffective only to the extent of such
restrictions, prohibition or unenforceability without invalidating the
remaining provisions hereto and without affecting the application of
such provision to other parties or circumstances.
20.00. Amendments, Waiver, etc. This Agreement shall not be amended or
modified in any respect except by written instrument signed by the
parties hereto. 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. The failure
of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
21.00. Time of Essence Time shall be of the essence of this Agreement. No
waiver of any time period prescribed hereunder shall be effective
unless in writing signed by the parties hereto.
22.00. Extended Meanings Words in the singular include the plural and vice
versa and words importing gender include all genders.
23.00. Headings The headings in this Agreement are included for convenience of
reference only and shall not affect the interpretation hereof.
24.00. Assignment The Purchaser shall be entitled to assign this Agreement to
a subsidiary, affiliate or associate, without the prior approval of the
Vendor. Subject to the foregoing, this Agreement shall not be assigned
by either party without the prior written consent of the other party.
25.00. Facsimile Transmission The parties agree that the acceptance of the
Agreement herein may be transmitted by Facsimile machine and any
initialling, witnessing and acceptance of the Agreement shall be firm
and binding between all parties. The parties further agree to sign the
true copies of this Agreement forthwith.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of ) _____________________________________________
)
) ▇▇▇▇▇▇▇ ▇▇▇▇
)
) ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
)
) ▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
)
)
) per: Declan French
) I have the authority to bind the Corporation.