MEGAPRO TOOLS INC.
A Nevada Corporation
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September 10, 1999
MEGA TOOLS LTD.
a British Columbia Company
- and to -
MR. ▇▇▇▇ ▇▇▇▇▇▇
- and to -
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
- and to -
ENVISION WORLDWIDE PRODUCTS, LTD.
- and to -
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
- and to -
▇▇. ▇▇▇ ▇▇▇▇
- and to -
MR. ▇▇▇▇ PAAKSPUU
Dear Sirs:
Re: MEGAPRO TOOLS INC. (the "Company")
- Offer to Acquire Mega Tools Ltd., a British Columbia
Company ("Mega Tools") from the shareholders of Mega Tools
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We write to set out the offer of the Company to each of ▇▇▇▇▇
▇▇▇▇▇▇, Envision Worldwide Products, Ltd. ("Envision"), ▇▇. ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇. ▇▇▇ ▇▇▇▇ and Mr. ▇▇▇▇ Paakspuu, as the holders of
all of the issued and outstanding shares of Mega Tools (together
the "Mega Tools Shareholders") to acquire all of issued and
outstanding shares of Mega Tools.
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This offer is on the terms and is subject to the conditions set
forth in this letter. If this offer is acceptable, we ask that you
indicate your agreement by signing this letter where indicated
below, completing the required information and returning an
executed copy to us. This offer is open for acceptance until
12:00 p.m. (Pacific Time) on September 15, 1999 (the "Expiry
Time"), at which time this offer will terminate unless extended in
writing.
The Company's offer is as follows:
1. Offer to Purchase
-----------------
The Company offers to purchase from the Mega Tools Shareholders all
of the issued and outstanding shares of Mega Tools (the "Mega Tools
Shares") on the terms and subject to the conditions set forth in
this offer. The Company's offer is subject to acceptance by all of
the Mega Tools Shareholders holding not less than 100% of the Mega
Tools Shares and to execution of this offer by ▇▇▇▇ ▇▇▇▇▇▇ as
covenantor. Upon acceptance, this offer will become a firm and
binding agreement between the Company, Mega Tools, ▇▇▇▇ ▇▇▇▇▇▇ and
each of the Mega Tools Shareholders.
2. Payment for the Mega Tools Shares
---------------------------------
The Company will issue to the Mega Tools Shareholders a total of
6,200,000 shares of common stock of the Company (each a "Company
Share" and together, the "Company Shares") in consideration for the
Mega Tools Shares. The Company Shares will be issued to the Mega
Tools Shareholders pro rata in accordance with their ownership of
Mega Tools as follows:
Mega Tool Ownership Interest
Shareholder in Mega Tools Company Shares
----------- ------------------ --------------
▇▇▇▇▇ ▇▇▇▇▇▇ 66.9% (243 Shares) 4,017,600
Envision 24.8% (93 Shares) 1,537,600
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 7.2% (27 Shares) 446,400
▇▇▇ ▇▇▇▇ 1.5% (6 Shares) 99,200
▇▇▇▇ Paakspuu 1.5% (6 Shares) 99,200
Each of the Mega Tools Shareholders acknowledges and agrees that
the Company Shares are being issued pursuant to available
exemptions from the prospectus and registration requirements of
each of the Securities Act (British Columbia) and the United
States Securities Act of 1933. The Mega Tools Shareholders agrees
to abide by all applicable resale restrictions and hold periods
imposed by such statutes.
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All shares certificates representing the Company Shares will be
endorsed with the following legend pursuant to the United States
Securities Act of 1933 and the British Columbia Securities Act:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND ARE
BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER
THE APPLICABLE PROVISIONS OF THE ACT OR ARE EXEMPT FROM
SUCH REGISTRATION. THE SECURITIES REPRESENTED BY THIS
SHARE CERTIFICATE ARE SUBJECT TO A HOLD PERIOD AND MAY
NOT BE TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF
THE HOLD PERIOD EXCEPT AS PERMITTED BY THE SECURITIES
ACT BRITISH COLUMBIA) AND THE REGULATIONS MADE UNDER THE
ACT.
Each of the Mega Tools Shareholders agrees and acknowledges that
the Company will issue subsequent to the Closing a total of up to
350,000 common shares to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ at a price of $0.10 US
per share for proceeds of $35,000 US. Each of the Mega Tools
Shareholders acknowledges and agrees that the Company will attempt
to complete an offering of up to 250,000 shares of Common Stock
1933 at a price of $1.00 per share pursuant to Form SB-1
registration statement to be filed by the Company with the
Securities and Exchange Commission pursuant to the United States
Securities Act of 1933. Each of the Mega Tools Shareholders
consents to these issuances of shares which may be completed prior
to or after Closing, agrees the Company has no obligation to
complete these share issuances and waives any right to purchase
any of these shares, other than as contemplated in this agreement.
3. Closing Date
------------
The date of the closing of the purchase and sale of the Mega Tools
Shares (the "Closing") will complete on September 30, 1999,
subject to acceptance of this offer by each of the Mega Tools
Shareholders.
4. Representations and Warranties of Mega Tools and the Mega
---------------------------------------------------------
Tools Shareholders
------------------
The Company's purchase will be based on the representations and
warranties of each Mega Tool Shareholder with respect to the Mega
Tools Shares owned by them that:
(A) The Mega Tools Shares owned by the Mega Tools
Shareholders are owned by them as the recorded owners
with a good and marketable title thereto, free and clear
of all mortgages, liens, charges, security interests,
adverse claims,
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pledges, encumbrances and demands
whatsoever and the Mega Tools Shareholders have all
necessary power and authority to deal with Mega Tools
shares in accordance with this Agreement.
(B) No person, firm or corporation has any agreement or
option or any right or privilege (whether by law, pre-
emptive or contractual) capable of becoming an agreement
or option for the purchase from the Mega Tools
Shareholders of any of Mega Tools Shares held by them.
(C) The entering into of this agreement and the consummation
of the transactions contemplated hereby will not result
in the violation of any of the terms and provisions of
any agreement, written or oral, to which the Mega Tools
Shareholders may be a party.
(D) This agreement has been duly authorized, validly
executed and delivered by each of the Mega Tools
Shareholders.
The Company's purchase will be based on the joint and several
representations and warranties by Mega Tools and ▇▇▇▇ ▇▇▇▇▇▇,
jointly and severally, that:
(A) Mega Tools has been duly incorporated and organized, is
validly existing and is in good standing under the laws
of the Province of British Columbia; it has the
corporate power to own or lease its property and to
carry on the Business; it is duly qualified as a
corporation to do business and is in good standing with
respect thereto in each jurisdiction in which the nature
of the Business or the property owned or leased by it
makes such qualification necessary; and it has or will
have on the Closing Date all necessary licenses,
permits, authorizations and consents to operate its
Business in accordance with the terms of its Business
Plan.
(B) The authorized capital of Mega Tools consists of 10,000
shares of common stock, without par value, of which
three hundred seventy-five (375) of such shares have
been duly issued and are outstanding as fully paid and
non-assessable.
(C) No person, firm or corporation has any agreement or
option, including convertible securities, warrants or
convertible obligations of any nature, or any right or
privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the
purchase, subscription, allotment or issuance of any of
the unissued shares in the capital of Mega Tools or of
any securities of Mega Tools.
(D) Mega Tools does not have any subsidiaries, other than
Mega Tools USA, Inc. or agreements of any nature to
acquire any subsidiary or to acquire or lease any other
business operations.
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(E) Mega Tools is not a party to or bound by any agreement
or guarantee, warranty, indemnification, assumption or
endorsement or any other like commitment of the
obligations, liabilities (contingent or otherwise) or
indebtedness of any other person, firm or corporation,
or of any products related to the Business.
(F) The audited financial statements for Mega Tools for the
period ending December 31, 1998 (the "Mega Tools
Financial Statements"), including the review engagement
report of BDO Dunwoody, Chartered Accounts have been
prepared in accordance with generally accepted
accounting principles and present fairly and correctly
the assets and liabilities of Mega Tools as of the date
of the Mega Tools Financial Statements. There has been
no material adverse change to the assets or liabilities
of Mega Tools since the date of the Mega Tools Financial
Statements other than agreement of Mega Tools to sell
Mega Tools USA, Inc. to the Company pursuant to an
acquisition agreement dated September 1, 1999 (the "Mega
Tools USA Acquisition Agreement").
(G) The books and records of Mega Tools fairly and correctly
set out and disclose in all material respects, in
accordance with generally accepted accounting
principles, the financial position of Mega Tools as at
the date hereof, and all material financial transactions
of Mega Tools relating to the Business have been
accurately recorded in such books and records, with the
exception of the Mega Tools USA Acquisition Agreement.
(H) The entering into of this agreement and the consummation
of the transactions contemplated hereby will not result
in the violation of any of the terms and provisions of
the Articles of Incorporation or bylaws of Mega Tools or
of any indenture, instrument or agreement, written or
oral, to which Mega Tools may be a party;
(I) The entering into of this agreement and the consummation
of the transactions contemplated hereby will not, to the
best of the knowledge of Mega Tools and ▇▇▇▇ ▇▇▇▇▇▇,
result in the violation of any law or regulation of
Canada or the United States, or of any provinces or
states in which they are resident or in which the
Business is or at the Closing Date will be carried on or
of any city bylaw or ordinance to which Mega Tools or
the Business may be subject;
(J) This agreement has been duly authorized, validly
executed and delivered by Mega Tools and the Mega Tools
Shareholders.
(K) With the exception of the Mega Tools USA Acquisition
Agreement, the Business has been carried on in the
ordinary and normal course by Mega Tools since the date
of the incorporation of Mega Tools and will be carried
on
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by Mega Tools in the ordinary and normal course after
the date hereof and up to the Closing Date.
(L) Mega Tools is not a party to any written or oral
employment, service or pension agreement, and Mega Tools
does not have any employees who cannot be dismissed on
not more than one months notice without further
liability.
(M) Mega Tools does not have outstanding any bonds,
debentures, mortgages, notes or other indebtedness, and
Mega Tools is not under any agreement to create or issue
any bonds, debentures, mortgages, notes or other
indebtedness.
(N) Mega Tools owns, possesses and has good and marketable
title to its undertaking, property and assets, and
without restricting the generality of the foregoing, all
those assets described in the Business Plan and the Mega
Tools Financial Statements, free and clear of any and
all mortgages, liens, pledges, charges, security
interests, encumbrances, actions, claims or demands of
any nature whatsoever or howsoever arising.
(O) Mega Tools has its property insured against loss or
damage by all insurable hazards or risks on a
replacement cost basis and such insurance coverage will
be continued in full force and effect to and including
the Closing Date; to the best of the knowledge of Mega
Tools and the Mega Tools Shareholders, Mega Tools is not
in default with respect to any of the provisions
contained in any such insurance policy and has not
failed to give any notice or present any claim under any
such insurance policy in due and timely fashion.
(P) Except as disclosed herein, Mega Tools does not have any
outstanding material agreements (including employment
agreements) contracts or commitment, whether written or
oral, of any nature or kind whatsoever.
(Q) There are no actions, suits or proceedings (whether or
not purportedly on behalf of Mega Tools), pending or
threatened against or affecting Mega Tools or affecting
the Business, at law or in equity, or before or by any
federal, state, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign and neither Mega
Tools nor ▇▇▇▇ ▇▇▇▇▇▇ is aware of any existing ground on
which any such action, suit or proceeding might be
commenced with any reasonable likelihood of success.
(R) Mega Tools is not in material default or breach of any
contracts, agreements, written or oral, indentures or
other instruments to which it is a party and there
exists no state of facts which after notice or lapse of
time or both which would constitute such a default or
breach, and all such contracts, agreements, indentures
or other instruments are now in good standing and Mega
Tools is entitled to all benefits thereunder.
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(S) Mega Tools has the right to use all of the registered
trade marks, trade names and patents, both domestic and
foreign, in relation to the Business.
(T) To the best of the knowledge of Mega Tools and ▇▇▇▇
▇▇▇▇▇▇, the conduct of the Business does not infringe
upon the patents, trade marks, trade names or
copyrights, domestic or foreign, of any other person,
firm or corporation.
(U) To the best of the knowledge of Mega Tools and ▇▇▇▇
▇▇▇▇▇▇, Mega Tools is conducting and will conduct the
Business in compliance with all applicable laws, rules
and regulations of each jurisdiction in which the
Business is or will be carried on, Mega Tools is not in
material breach of any such laws, rules or regulations
and fully licensed, registered or qualified in each
jurisdiction in which Mega Tools owns or leases property
or carries on or proposes to carry on the Business to
enable the Business to be carried on as now conducted
and its property and assets to be owned, leased and
operated, and all such licenses, registrations and
qualifications are valid and subsisting and in good
standing and that none of the same contains or will
contain any provision, condition or limitation which has
or may have a materially adverse effect on the operation
of the Business.
(V) All facilities and equipment owned or used by Mega Tools
in connection with the Business are in good operating
condition and are in a state of good repair and
maintenance.
(W) Mega Tools has no loans or indebtedness which have been
made to directors, former directors, officers,
shareholders and employees of Mega Tools or to any
person or corporation not dealing at arm's length with
any of the foregoing.
(X) Mega Tools has made full disclosure to the Purchaser of
all aspects of the Business and has made all of its
books and records available to the representatives of
the Purchaser in order to assist the Purchaser in the
performance of its due diligence searches and no
material facts in relation to the Business have been
concealed by Mega Tools or the ▇▇▇▇ ▇▇▇▇▇▇.
(Y) The directors and officers of Mega Tools are as follows:
Name Position
---- --------
▇▇▇▇ ▇▇▇▇▇▇ President and Director
▇▇▇▇ ▇▇▇▇▇ Director
▇▇▇▇▇ ▇▇▇▇▇▇ Secretary and Director
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5. Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to the Mega Tools and the Mega
Tools Shareholders that:
(A) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Nevada;
(B) upon issue, the Company Shares will be fully paid and
non-assessable shares in the capital of the Company;
(C) the authorized capital of the Company consists of
25,000,000 shares of common stock, par value of $0.001
per share (the "Common Stock"), of which no shares of
Common Stock have been issued and are outstanding as of
the date of this Agreement;
(D) no person has any option, warrant or other right to
acquire any shares of the Company, except as disclosed
in this Agreement;
(E) the Company does not own any assets;
(F) the Company does not have any liabilities or
indebtedness to any party;
(G) the Company is not party to any material agreements;
(H) there are no actions, suits or proceedings pending or
threatened against or affecting the Company and the
Company is not aware of any existing ground on which any
such action, suit or proceeding might be commenced with
any reasonable likelihood of success.
6. Conditions Precedent to Closing
-------------------------------
The Company's obligation to complete the purchase of the Mega
Tools Shares is subject to each of the following conditions:
(A) All representations and warranties of the Mega Tools
Shareholders will be true and correct as of Closing;
(B) there shall have been no material adverse change to the
business of Mega Tools between the date of this offer
and the date of Closing;
(C) the Mega Tools Shareholders will have made the
deliveries contemplated in this offer on Closing;
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(D) all books, accounting records, legal documentation,
financial statements, material contracts relating to
Mega Tools will have been delivered to the Company
contemporaneously with Closing;
(E) the MegaTools Shareholders will have entered into a
termination agreement whereby the shareholders agreement
between the Mega Tools Shareholders, as evidenced by the
shareholders agreement between ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Envision dated October 1, 1998 and an
addendum to shareholders agreement between the Mega
Tools Shareholders dated March 1, 1999, has been
terminated;
(F) the Company will have complete the acquisition of Mega
Tools USA, Inc. from Mega Tools pursuant to the Mega
Tools USA Acquisition Agreement.
The obligation of Mega Tools and each of the Mega Tools
Shareholders to complete the sale of the Mega Tools Shares to the
Company is subject to each of the following conditions:
(A) all representations and warranties of the Company will
be true and correct in all material respects as of
Closing;
(B) the Company will have made the deliveries contemplated
in this offer on Closing.
7. Closing Deliveries
------------------
On Closing, the Mega Tools Shareholders will deliver to the
Company:
(A) all executed documents, assignments and stock powers of
attorney necessary to transfer the Mega Tools Shares
held by the Mega Tools Shareholders to the Company;
(B) written confirmation by each of the Mega Tools
Shareholder and by an officer of Mega Tools as to the
truth and correctness of the representations and
warranties of the Mega Tools Shareholders as of Closing;
(C) all other corporate resolutions, agreements,
assignments, consents and documentation as deemed
necessary by the Company's solicitors to give effect to
the transactions contemplated by this agreement in
accordance with accepted commercial practice.
On the Closing Date, the Company will deliver to each the Mega
Tools Shareholders:
(A) a certified copy of resolutions of the directors of the
Company approving the execution of this agreement by the
Company and the issue of the Company Shares to the Mega
Tools Shareholders on Closing;
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(B) the written agreement of the Company to deliver to each
Mega Tools Shareholder the certificates representing the
Company Shares to which the Mega Tools Shareholder is
entitled, with the legend contemplated by this Agreement
endorsed upon the share certificates.
8. Appointment of Directors
------------------------
On Closing, the following will be appointed the officers and
directors of the Company:
(A) Directors
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
(B) Officers Office
▇▇▇▇ ▇▇▇▇▇▇ President
▇▇▇▇▇ ▇▇▇▇▇▇ Secretary and Treasurer
9. Acceptance
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If a Mega Tools Shareholder wishes to accept this offer, the Mega
Tools Shareholder must:
(A) execute this offer where indicated below;
(B) complete all information;
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(C) deliver a copy of the Mega Tools Shareholder's
acceptance to the Company by no later than 12:00 p.m.
(Pacific Time) on September 15, 1999.
Yours truly,
MEGAPRO TOOLS INC.
by its Authorized Signatory:
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Authorized Signatory
This offer is accepted and agreed as of the 15th day of September,
1999.
MEGA TOOLS LTD.
by its authorized signatory:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
____________________________
▇▇▇▇ ▇▇▇▇▇▇, PRESIDENT
- and by -
▇▇▇▇ ▇▇▇▇▇▇ AS COVENANTOR /s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
- and by -
SIGNATURE OF MEGA TOOLS SHAREHOLDER: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
NAME OF MEGA TOOLS SHAREHOLDER: ▇▇▇▇▇ ▇▇▇▇▇▇
NUMBER OF SHARES OF MEGA TOOLS HELD: 243 Shares
DATE OF ACCEPTANCE: September 15, 1999
- and by -
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SIGNATURE OF MEGA TOOLS SHAREHOLDER: /s/ ▇▇▇▇ ▇▇▇▇▇
NAME OF MEGA TOOLS SHAREHOLDER: ENVISION WORLDWIDE
PRODUCTS, LTD.
NUMBER OF SHARES OF MEGA TOOLS HELD: 93 Shares
DATE OF ACCEPTANCE: September 15, 1999
- and by -
SIGNATURE OF MEGA TOOLS SHAREHOLDER: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
NAME OF MEGA TOOLS SHAREHOLDER: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
NUMBER OF SHARES OF MEGA TOOLS HELD: 27 Shares
DATE OF ACCEPTANCE: September 15, 1999
- and by -
SIGNATURE OF MEGA TOOLS SHAREHOLDER: /s/ ▇▇▇ ▇▇▇▇
NAME OF MEGA TOOLS SHAREHOLDER: ▇▇▇ ▇▇▇▇
NUMBER OF SHARES OF MEGA TOOLS HELD: 6 Shares
DATE OF ACCEPTANCE: September 15, 1999
- and by -
SIGNATURE OF MEGA TOOLS SHAREHOLDER: /s/ ▇▇▇▇ Paakspuu
NAME OF MEGA TOOLS SHAREHOLDER: ▇▇▇▇ PAAKSPUU
NUMBER OF SHARES OF MEGA TOOLS HELD: 6 Shares
DATE OF ACCEPTANCE: September 15, 1999
