SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement"), dated as of May 17, 2004,
between Tonga Capital Corp ("TC") a Colorado Corporation, ("Seller") and
_________________ (the "Buyer"), a ____________________ Company.
W I T N E S S E T H:
A. WHEREAS, TC is a corporation duly organized under the laws of the State of
Colorado.
B. WHEREAS, Buyer wishes to purchase an aggregate of 21,000,000 shares of
newly issued TC common stock from TC, (the "Purchase Shares"), and Seller
will retire 1,250,000 shares of common stock of Seller surrendered by old
shareholders after all of the conditions under this contract have been
performed and TC desires to sell the Purchase Shares to Buyer pursuant to
this agreement.
C. WHEREAS, prior to the transaction Buyer is not an affiliate of TC.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein, and the purchase set forth
in 1.2 hereof Seller shall retire 1,250,000 shares surrendered by old
shareholders,.
1.2 TC shall sell 21,000,000 shares to Buyer for $375,000 and Buyer shall
purchase said shares, under the terms and conditions of this
agreement.
ARTICLE II
Closing and Issuance of Shares
2.1 The Purchase Shares (21,000,000) shall be issued by TC in escrow for
delivery to Buyer upon deposit of the consideration of $375,000 in
escrow for share purchase, with escrow agent, M.A. Xxxxxxx, Attorney
at Law The escrow is subject to satisfaction of the conditions
precedent in Article V, and in Article VIII, subsections 10, 11, 12,
13, 14, and all other terms and conditions of this Agreement.
2.2 Closing hereunder shall be completed by release from escrow of the
cash consideration, and purchase share certificates on or before May
31, 2004 at 5:00 p.m. MDT ("Closing Date") subject to satisfaction of
the terms and conditions set forth herein. Consideration may be
delivered by Federal Express or wire transfers, and any closing
documents may be delivered by facsimile, Federal Express or other
appropriate means.
ARTICLE III
Representations, Warranties and Covenants of TC and Sellers
TC hereby, represents, warrants and covenants to Buyer as follows:
3.1 TC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado, and has the
corporate power and authority carry on its business. The Articles of
Incorporation and Amendments and Bylaws of TC, which will be delivered
to Buyer at closing, are complete and accurate, and the minute books
of TC, copies of which have also been delivered to Buyer, contain a
record, which is complete and accurate in all material respects, of
all meetings, and all corporate actions of the shareholders and Board
of Directors of TC.
3.2 The authorized capital stock of TC consists of 500,000,000 shares of
common stock. There are 3,377,539 shares (approximately) of Common
Stock of TC issued and outstanding as of date hereof and will be prior
to closing. All such shares of capital stock of TC are validly issued,
fully paid, non-assessable and free of preemptive rights. TC has no
outstanding warrants, or other rights to purchase, or subscribe to, or
other securities convertible into or exchangeable for any shares of
capital stock of TC, or contracts or arrangements of any kind relating
to the issuance, sale or transfer of any capital stock or other equity
securities of TC, except certain note conversion rights which shall be
released at closing. All outstanding options will be released in
writing and cancelled at the time of the closing of this transaction.
This Agreement has been duly authorized, validly executed and
delivered on behalf of TC and is a valid and binding agreement and
obligation of TC enforceable against the parties in accordance with
its terms, subject to limitations on enforcement by general principles
of equity and by bankruptcy or other laws affecting the enforcement of
creditors' rights generally, and TC has complete and unrestricted
power to enter into and to consummate the transactions contemplated by
this Agreement.
3.3 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated
herein by TC will conflict with or result in a breach or violation of
the Articles of Incorporation or Bylaws of TC, or of any material
provisions of any indenture, mortgage, deed of trust or other material
agreement or instrument to which TC is a party, or of any material
provision of any law, statute, rule, regulation, or any existing
applicable decree, judgment or order by any court, federal or state
regulatory body, administrative agency, or other governmental body
having jurisdiction over TC, or any of its material properties or
assets, or will result in the creation or imposition of any material
lien, charge or encumbrance upon any material property or assets of TC
pursuant to the terms of any agreement or instrument to which TC is a
party or by which TC may be bound or to which any of TC property is
subject and no event has occurred with which lapse of time or action
by a third party could result in a material breach or violation of or
default by TC.
3.4 There is no claim, legal action, arbitration, governmental
investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or to the
best knowledge of TC threatened against or relating to TC or affecting
any of its assets, properties, business or capital stock. There is no
continuing order, injunction or decree of any court, arbitrator or
governmental authority to which TC is a party or by which TC or its
assets, properties, business or capital stock are bound.
3.5 TC has accurately prepared and filed all federal, state and other tax
returns required by law, domestic and foreign, to be filed by it
through its fiscal 1993 year and has paid or made provisions for the
payment of all taxes shown to be due and all additional assessments,
and adequate provisions have been and are reflected in the financial
statements of TC for all current taxes and other charges to which TC
is subject and which are not currently due and payable. None of the
Federal income tax returns of TC have been audited by the Internal
Revenue Service or other foreign governmental tax agency. TC has no
knowledge of any additional assessments, adjustments or contingent tax
liability (whether federal or state) pending or threatened against TC
for any period, nor of any basis for any such assessment, adjustment
or contingency.
3.6 TC has delivered to Buyer audited financial statements for the period
ended December 31, 2003 and March 31, 2004 unaudited financial
statements. All such statements, herein sometimes called "TC Financial
Statements" are complete and correct in all material respects and,
together with the notes to these financial statements, present fairly
the financial position and results of operations of TC for the periods
indicated within the knowledge of TC. All financial statements of TC
have been prepared in accordance with generally accepted accounting
principles.
3.7 As of the date hereof, TC, represents and warrants that all
outstanding indebtedness of TC is as shown on the financial statements
attached hereto (the updated statements), which include debts shown
and not shown in March 31, 2004 financial statements, except legal and
consulting fees being incurred and paid in conjunction herewith. Any
and all accruals to officers and directors shall be waived and
released by each officer or director, in writing.
3.8 Since the dates of the updated TC Financial Statements, there have not
been any material adverse changes in the business or condition,
financial or otherwise, of TC within the knowledge of TC and/or
Seller. TC does not have any liabilities, commitments or obligations,
secured or unsecured except as shown on updated financials (whether
accrued, absolute, contingent or otherwise).
3.9 TC is not a party to any contract performable in the future except,
and in conjunction with notes to shareholders which will be paid or
released at closing.
3.10 The representations and warranties of TC and Seller shall be true and
correct as of the date hereof.
3.11 TC will deliver to Buyer, all of its corporate books and records all
available corporate records at closing
3.12 TC has no employee benefit plan in effect at this time.
3.13 No representation or warranty by TC in this Agreement, or any
certificate delivered pursuant hereto contains any untrue statement of
a material fact or omits to state any material fact necessary to make
such representation or warranty not misleading.
3.14 Buyer has received copies of Form 10KSB as filed with the Securities
and Exchange Commission ("SEC") which included audits for the year
ended December 31, 2003 and each of its other reports to shareholders
filed with the SEC through the period. TC is a registered company
under the Securities Exchange Act of 1934, as amended, and is current
in its filings.
3.15 Seller has not made to Buyer any general solicitation or general
advertising regarding the shares of TC common stock.
3.16 TC has incurred no liabilities except as shown on the financial
statements and fees in conjunction with this transaction, which fees
incurred in conjunction with this transaction shall be paid at closing
3.17 TC has attached a complete list of all obligations, leases, notes,
advances due, contracts and accounts payable upon which any balance
remains due and outstanding as Schedule 3.17 hereto, and such is
complete and accurate within the knowledge of TC.
ARTICLE IV
Procedure for Closing
4.1 At the Closing Date, the purchase and sale shall be consummated after
satisfaction of all conditions precedent set forth in Article V and
deliveries in Article VIII, by TC common stock certificates for the
Purchase Shares being delivered for 21,000,000 shares of TC in
Consideration of $375,000 for the share purchase, together with
delivery of all other items, agreements, warranties, and
representations set forth in this Agreement.
ARTICLE V
Conditions Precedent to the
Consummation of the Purchase
The following are conditions precedent to the consummation of the
Agreement on or before the Closing Date:
5.1 TC shall have performed and complied with all of its respective
obligations hereunder which are to be complied with or performed on or
before the Closing Date.
5.2 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the transactions
contemplated herein, or which might subject any of the parties hereto
or their directors or officers to any material liability, fine,
forfeiture or penalty on the grounds that the transactions
contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have
otherwise acted improperly in connection with the transactions
contemplated hereby, and the parties hereto have been advised by
counsel that, in the opinion of such counsel, such action, suit or
proceeding raises substantial questions of law or fact which could
reasonably be decided adversely to any party hereto or its directors
or officers.
5.3 The representations and warranties made by TC in this Agreement shall
be true as though such representations and warranties had been made or
given on and as of the Closing Date, except to the extent that such
representations and warranties may be untrue on and as of the Closing
Date because of changes caused by transactions suggested or approved
in writing by the Buyer.
ARTICLE VI
Termination and Abandonment
6.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to or
on the Closing Date:
(a) By mutual consent of parties;
(b) By either party, if any condition set forth in Article V or any
other Article relating to the other party has not been met or has
not been waived;
(c) By Buyer, if any suit, action, or other proceeding shall be
pending or threatened by the federal or a state government before
any court or governmental agency, in which it is sought to
restrain, prohibit, or otherwise affect the consummation of the
transactions contemplated hereby;
(d) By Buyer, if there is discovered any material error, misstatement
or omission in the representations and warranties of another
party;
(e) By TC, if the Closing does not occur, through no failure to act
by TC, on closing date, or if Buyer fails to deliver the
consideration required herein;
(f) If all of the outstanding liabilities cannot be settled for
within the purchase price;
6.2 Any of the terms or conditions of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, by action
taken by its Board of Directors provided; however, that such action
shall be taken only if, in the judgment of the Board of Directors
taking the action, such waiver will not have a materially adverse
effect on the benefits intended under this Agreement to the party
waiving such term or condition.
ARTICLE VII
Continuing Representations and
Warranties and Covenants
7.1 The respective representations, warranties, and covenants of the
parties hereto and agreements of the parties hereto shall survive
after the closing under this Agreement for a period of two years
hereafter in accordance with the terms thereof.
ARTICLE VIII
Miscellaneous
8.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties
among the parties other than those set forth herein or those provided
for herein, except that a companion document, the Reorganization
Agreement, has been executed concurrently which contains numerous
warranties and representations.
8.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall
be deemed to be an original instrument, but all such counterparts
together shall constitute but one instrument.
8.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other
assurances as are deemed necessary, the party requested to do so will
use its best efforts to provide such executed instruments or do all
things necessary or proper to carry out the purpose of this Agreement.
8.4 This Agreement may not be amended except by written consent of both
parties.
8.5 Any notices, requests, or other communications required or permitted
hereunder shall be delivered personally or sent by overnight courier
service, prepaid, addressed as follows:
To TC: Tonga Capital Corp
c/o 0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
To Buyer:
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
8.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of
the Buyer and Sellers. However, TC may issue at any time any press
release or other public statement it believes on the advice of its
counsel it is obligated to issue to avoid liability under the law
relating to disclosures, but the party issuing such press release or
public statement shall make a reasonable effort to give the other
party prior notice of and opportunity to participate in such release
or statement.
8.7 This Agreement shall be governed by and construed in accordance with
and enforced under the laws of the state of Colorado applicable to all
agreements made hereunder. Venue and jurisdiction for any legal
actions hereunder shall be District Court in and for Jefferson County,
Colorado.
8.8 TC and Buyer agree that Buyer and TC can and will cause the
effectuation, of a reverse split, of the common shares of TC issued
and outstanding at such date, in a ratio of not more than one for 8
shares within 90 days following the Closing hereunder.
8.9 In the event of a breach or default of this Agreement or any of the
continuing covenants hereunder which results in a party or any
effected shareholder who is a beneficiary of a surviving or continuing
covenant, commencing legal action, the prevailing party in such legal
action shall be entitled to an award of all legal fees and costs of
the action, against the non-prevailing party.
8.10 Buyer shall designate at least two new directors to be effective
subject to compliance with Section 14f of the Securities & Exchange
Act of 1934, and Seller agrees to appoint such Directors by consent
minutes to be drawn by Buyers attorney.
8.11 In connection with this Agreement the parties have appointed the
escrow agent, M.A. Xxxxxxx, Attorney at Law who shall be authorized by
this agreement to do the following:
1) Accept the deposit of $375,000 purchase price for Purchase
shares, upon receipt of a copy of this Agreement signed by TC and
Buyer and hold it in accordance with this Agreement;
2) Accept the newly issued common stock certificates of TC duly
authorized for 21,000,000 common shares in name of Buyer and,
1,250,000 shares of TC duly executed, for retirement to treasury;
3) Upon receipt of Directors & Officers Settlement Agreements for
compensation claims, audits and signed SEC filings to bring all
reporting current, Escrow Agent shall disburse the proceeds
received from the escrow in accordance with this Agreement; and
shall deliver the stock certificates to Buyer at:
_________________________;
4) In the event of default in delivery any item by a party under
this agreement, any cash or certificates received from the other
party shall be returned to the remitting party 3 business days
after default; and
5) Escrow Agent is specifically indemnified and held harmless hereby
for its actions or inactions in following these instructions. In
the event of a dispute involving the escrow instructions or the
consideration to be delivered in escrow, the escrow agent is
authorized to implead the consideration received into the
District Court of Jefferson County, Colorado upon ten days
written notice, and be relieved of any further escrow duties
thereupon. Any and all costs of attorney's fees and legal actions
of escrow agent for any dispute resolution or impleader action
shall be paid in equal shares by the parties to this agreement.
6) Disburse the funds as shown on an exhibit to be provided to
escrow agent by TC prior to closing.
8.12 Current President agrees to sign, as CEO/CFO all filings and
Sarbanes/Oxley Certifications at closing, for all SEC filings
required. Xxxxx Xxxxxx shall thereafter resign as CEO/CFO, and he
shall resign as director effective upon compliance with Section 14f by
mailing Notice to Shareholders.
8.13 Written Release and Waiver of any and all compensation, consulting, or
salary claims of Seller shall be delivered prior to Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement this 18th
day of June, 2004.
---------------
BUYER:
TONGA CAPITAL CORP
By: _________________________________ By: ______________________________
Name: _______________________________ Name: ____________________________
Title: ________________________________ Tile: ______________________________
SCHEDULE 3.17
Debts to be paid at closing:
Xxxxx Xxxxxx $50,000
M.A. Xxxxxxx $4,500
Note release Xxxxxx Xxxxxx $5,000
X. Xxxxxxxx advances $20,000
