PUT IN DOCUMENT HEADER HERE
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is made as of the 13th day of January, 2000.
AMONG:
PARAMOUNT SERVICES CORP., a body corporate formed pursuant to the
laws of the State of Delaware and having an office for business
located at Xxxxx 0000, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0
(the "Purchaser")
AND:
595796 B.C. LTD., a body corporate formed pursuant to the laws of
the Province of British Columbia and having its registered office
located at X.X. Xxx 00000, Xxxxxxx Xxxxxx, Xxxxx 0000, 000 Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Vendor")
AND:
XXXXX X. XXXXXXX, businessman, of 0000 Xxxxxxxx Xxxxx, Xxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
AND:
XXXXXXX X. XXXXXXX, businessman, of 0000, 00xx Xxxxxx, Xxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
AND:
XXXXX XXXXXXX, businessman, of 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0
(Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxx being
hereinafter referred to as the "Significant Shareholders")
WHEREAS:
A. WOW xxxx.xxx Inc. (the "Company") is a body corporate formed pursuant to
the laws of the State of Nevada and engaged in the business of developing
a community of local market internet portals in major North American urban
centers;
B. The Vendor owns all of the issued and outstanding common shares in the
capital stock of the Company (the "Company Shares");
C. The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Company Shares, subject to the terms and conditions of this Agreement; and
D. The Significant Shareholders own substantially all of the issued and
outstanding shares of the Vendor and are being made parties to this
Agreement for the purpose of jointly and severally covenanting with the
Vendor to indemnify the Purchaser in the manner hereinafter provided.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquisition Shares" means the 5,000,000 Purchaser Common Shares to
be issued in the name of the Vendor at Closing;
(b) "Agreement" means this agreement among the Purchaser and the Vendor;
(c) "Bridge Loan" means the sum of $50,000 advanced to the Company as
evidenced by the Promissory Note of the Company dated January 13th,
2000 and guaranteed by the Significant Shareholders;
(d) "Business" means all aspects of the business conducted by the
Company, including, without limitation, developing a community of
local market internet portals in major North American urban centers,
extending these portals into suburbs and neighborhoods, and all
other related activities;
(e) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 10
hereof;
(f) "Closing Date" means the day on which all conditions precedent to
the completion of the transaction as contemplated hereby have been
satisfied or waived;
(g) "Company" means WOW xxxx.xxx Inc.;
(h) "Company Accounts Payable and Liabilities" means all accounts
payable and liabilities of the Company due and owing as of December
31, 1999 as set forth is Schedule "C" hereto;
(i "Company Accounts Receivable" means all accounts receivable and
other debts owing to the Company as of December 31, 1999;
(j) "Company Assets" means the undertaking and all the property and
assets of the Business of every kind and description wheresoever
situated including, without limitation, the Company Equipment, the
Company Inventory, the Company Material Contracts, the Company
Accounts Receivable, the Company Cash, the Company Intangible Assets
and the Company Goodwill, and all credit cards, charge cards and
banking cards issued to the Company;
(k) "Company Cash" means all cash on hand or on deposit to the credit of
the Company on the Closing Date;
(l) "Company Equipment" means all machinery, equipment, furniture, and
furnishings used in the Business;
(m) "Company Financial Statements" means the audited financial
statements of the Company for the fiscal period ended October 31,
1999, prepared in accordance with United States' generally accepted
accounting principles, together with the unqualified auditors'
report thereon attached hereto as Schedule "A";
(n) "Company Goodwill" means the goodwill of the Business together with the
exclusive right of the Purchaser to represent itself as carrying on the
Business in succession of the Company subject to the terms hereof, the
right to all corporate, operating and trade names associated with the
Business, or any variations of such names as part of or in connection with
the Business, all telephone listings and telephone advertising contracts,
all lists of customers, books and records and other information relating to
the Business, all necessary licenses and authorizations and any other
rights used in connection with the Business;
(o) "Company Intangible Assets" means all of the intangible assets of
the Company, including, without limitation, the Company Goodwill,
all trademarks, logos, copyrights, designs, and other intellectual
and industrial property including, without limiting the generality
of the foregoing, the domain names listed in Schedule "E" hereto and
all other domain names registered by or in the name of the Company
or the Vendor or its officers, directors, employees or shareholders
and related to the Business;
(p) "Company Inventory" means all inventory and supplies of the Business
existing on the Closing Date;
(q) "Company Material Contracts" means the burden and benefit of and the right,
title and interest of the Company in, to and under all trade and non-trade
contracts, engagements or commitments, whether written or oral, to which
the Company is entitled in connection with the Business including, without
limitation, any loan agreements, security agreements, indemnities and
guarantees, any agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors,
attorneys or others, and those contracts listed in Schedule "B" hereto;
(r) "Company Shares" means all of the issued and outstanding shares of
the Company's common stock, par value $0.001;
(s) "Employment Agreements" means employment agreements among the
Company, Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxx to
be entered into pursuant to Article 7 hereof;
(t) "Place of Closing" means the offices of Century Capital Management
Ltd. or such other place as the Purchaser and the Vendors may
mutually agree upon;
(u) "Private Placement" means the private sale by the Purchaser of not
less than 500 Purchaser Preferred Shares at a price of $1,000.00 per
Purchaser Preferred Share;
(v) "Purchaser" means Paramount Services Corp.;
(w) "Purchaser Accounts Payable and Liabilities" means all accounts
payable and liabilities of the Purchaser due and owing as of
December 31, 1999 as set forth is Schedule "G" hereto;
(x) "Purchaser Common Shares" means the shares of common stock in the
capital of the Purchaser;
(y) "Purchaser Financial Statements" means the audited financial
statements of the Purchaser for the periods ended April 30, 1998 and
1999 and the management prepared financial statements of the
Purchaser for the six month period ended October 31, 1998 and 1999,
true copies of which are attached as Schedule "F" hereto;
(z) "Purchaser Preferred Shares" means the 500 shares of the Purchaser's
Series A Convertible Preferred Stock to be issued in the Private
Placement;
(aa) "Significant Shareholders" means Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx
and Xxxxx Xxxxxxx; and
(bb) "Vendor" means 595796 B.C. Ltd.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience
of reference only and do not form a part of this Agreement and are not
intended to interpret, define or limit the scope, extent or intent of this
Agreement or any provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause"
or other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter
will mean the appropriate Schedule attached to this Agreement and by such
reference the appropriate Schedule is incorporated into and made part of
this Agreement. The Schedules to this Agreement are as follows:
Information concerning the Company
Schedule "A" Company Financial Statements
Schedule "B" Company Material Contracts
Schedule "C" Company Accounts Payable and Liabilities
Schedule "D" Debts to Related Parties
Schedule "E" Domain Names
Information concerning the Purchaser
Schedule "F" Purchaser Financial Statements
Schedule "G" Purchaser Accounts Payable and Liabilities
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder
which will continue in full force and effect and be construed as if this
Agreement had been executed without the invalid portion, and it is hereby
declared the intention of the parties that this Agreement would have been
executed without reference to any portion which may, for any reason, be
hereafter declared or held to be invalid.
ARTICLE 2
PURCHASE AND SALE OF COMPANY SHARES
Sale of Company Shares
2.1 The Vendor agrees to sell to the Purchaser, and the Purchaser agrees to
purchase from the Vendor, all the Company Shares at Closing subject to the
terms and conditions of this Agreement.
Consideration
2.2 In consideration of the sale of the Company Shares by the Vendor to the
Purchaser, the Purchaser agrees to issue the Acquisition Shares to the
Vendor at Closing.
Adherence with Applicable Securities Laws
2.3 The Vendor agrees that it is acquiring the Acquisition Shares for
investment purposes and will not offer, sell or otherwise transfer, pledge
or hypothecate any of the Acquisition Shares (other than pursuant to an
effective Registration Statement under the Securities Act of 1933 (United
States), as amended) directly or indirectly unless:
(a) the sale is to the Purchaser;
(b) the sale is made pursuant to the exemption from registration under
the Securities Act of 1933 (United States) provided by Rule 144
thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act of 1933 (United
States) or any applicable United States state laws and regulations
governing the offer and sale of securities, and the Vendor has
furnished to the Purchaser an opinion of counsel to that effect or
such other written opinion as may be reasonably required by the
Purchaser.
The Vendor acknowledges that the certificates representing the Acquisition
Shares shall bear the following legend:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER
THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF SUCH
SHARES IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.
The Vendor further acknowledges that trades of Acquisition Shares within
British Columbia will be subject to restrictions imposed by the Securities Act
(British Columbia) and that the Acquisition Shares may not be traded within
British Columbia unless the trade is made solely through a registered dealer and
a prospectus is filed with the British Columbia Securities Commission in respect
of the Acquisition Shares (and a final receipt obtained for such prospectus) or
an exemption from the registration and prospectus requirements may be relied
upon.
ARTICLE 3
REGISTRATION RIGHTS
3.1 As soon as practicable after the Closing the Purchaser shall file a
registration statement on Form SB-2 (or similar form) under the Securities
Act of 1933 (United States) covering not more than 250,000 of the
Acquisition Shares and will use its best efforts to cause such registration
statement to be declared effective by the Securities and Exchange
Commission at the earliest practicable date, all at the Purchaser's sole
cost and expense. Such best efforts shall include responding to all
comments received by the staff of the Securities and Exchange Commission
and promptly preparing and filing amendments to such registration statement
which are responsive to the comments received from the staff of the
Securities and Exchange Commission. Such registration statement shall name
the Vendor as the selling shareholder and shall provide for the sale by the
Vendor of the Acquisition Shares being registered from time to time
directly to purchasers or in the over-the-counter market or through or to
securities brokers or dealers that may receive compensation in the form of
discounts, concessions, or commissions. None of the foregoing shall in any
way limit the Vendor's rights to sell any Acquisition Shares held by them
in reliance on an exemption from the registration requirements under the
Securities Act of 1933 (United States) in connection with a particular
transaction.
3.2 The Purchaser shall use its best efforts to maintain the currency of the
registration statement filed with the Securities and Exchange Commission in
respect of the Acquisition Shares being registered for a period of twelve
months following the effective date thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE VENDOR AND THE SIGNIFICANT SHAREHOLDERS
Representations and Warranties
4.1 Each of the Vendor and the Significant Shareholders jointly and severally
represent and warrant in all material respects to the Purchaser, with the intent
that the Purchaser will rely thereon in entering into this Agreement and in
completing the transactions contemplated hereby, that:
The Company - Corporate Status and Capacity
(a) Incorporation. The Company is a corporation duly incorporated and
validly subsisting under the laws of the State of Nevada, and is in
good standing with the office of the Secretary of State for the
State of Nevada;
(b) Carrying on Business. The Company carries on business in the
Province of British Columbia and does not carry on any material
business activity in any other jurisdiction. The Company has an
office in Vancouver, British Columbia and in no other locations. The
nature of the Business does not require the Company to register or
otherwise be qualified to carry on business in any other
jurisdiction;
(c) Corporate Capacity. The Company has the corporate power, capacity and
authority to own the Company Assets and to carry on the Business;
The Vendors - Capacity and Tax Matters
(d) Capacity. The Vendor has the full right, power and authority to
enter into and complete this Agreement on the terms and conditions
contained herein and to transfer and cause the transfer of full
legal, registered and beneficial title and ownership of the Company
Shares to the Purchaser;
The Company - Capitalization
(e) Authorized Capital. The authorized capital of the Company consists
of 50,000,000 shares of Common Stock, par value $0.001 (being the
Company Shares) and 5,000,000 shares of Preferred Stock, par value
$0.001;
(f) Ownership of Company Shares. The issued and outstanding share capital of
the Company will on to Closing consist of 100 shares of Common Stock, par
value $0.001 (being the Company Shares), which shares on Closing shall be
validly issued and outstanding as fully paid and non-assessable shares. The
Vendor will be immediately prior to Closing the registered and beneficial
owner of all of the Company Shares. The Vendor owns and will immediately
prior to Closing own all of the Company Shares free and clear of any and
all liens, charges, pledges, encumbrances, restrictions on transfer and
adverse claims whatsoever;
(g) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option for
the acquisition of the Company Shares or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of the Company;
(h) No Restrictions. The transfer of the Company Shares to the Purchaser
will not be restricted under the charter documents of the Company or
under any agreement, and will be permitted under all applicable laws
and regulations;
The Company - Records and Company Financial Statements
(i) Charter Documents. The charter documents of the Company have not been
altered since the incorporation of the Company, except as filed in the
record book of the Company;
(j) Books and Records. The books and records of the Company fairly and
correctly set out and disclose in all material respects the
financial position of the Company, and all material financial and
other transactions of the Company relating to the Business,
including any and all Company Material Contracts and any amendments
thereto, have been accurately recorded or filed in such books and
records;
(k) Company Financial Statements. The Company Financial Statements are
true and correct and present fairly and correctly the assets and
liabilities (whether accrued, absolute, contingent or otherwise) of
the Company as of the date thereof, and the sales and earnings of
the Business during the period covered thereby, in all material
respects, and have been prepared in substantial accordance with
United States' generally accepted accounting principles consistently
applied;
(l) Company Accounts Receivable. All Company Accounts Receivable (if
any) are bona fide and are good and collectible without set-off or
counterclaim;
(m) Company Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of the Company which are not
disclosed in Schedules "E" or "F" hereto or reflected in the Company
Financial Statements, other than the Bridge Loan, except those incurred in
the ordinary course of business since the date of the said financial
statements, and the Company has not guaranteed or agreed to guarantee any
debt, liability or other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts payable and
liabilities of the Company, excluding the Bridge Loan, are described in
Schedules "E" or "F" hereto;
(n) No Debt to Related Parties. The Company is not, and on Closing will
not be, materially indebted to any of the Significant Shareholders
nor to any family member of any of the Significant Shareholders, nor
to any affiliate, director, officer or shareholder of the Company or
the Vendor except as set forth in Schedule "F" hereto;
(o) No Related Party Debt to the Company. Neither the Vendor nor any of
the Significant Shareholders are now indebted to or under any
financial obligation to the Company on any account whatsoever,
except for advances on account of travel and other expenses not
exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in the
capital of the Company have been made,declared or authorized since the date
of the Company Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Company Financial Statements to or on behalf
of the Vendor or the Significant Shareholders or to or on behalf of
officers, directors, shareholders or employees of the Company or the
Vendor or under any management agreements with the Company, except
payments made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting the Company;
(s) No Adverse Events. Since the date of the Company Financial Statements
(i) there has not been any material adverse change in the
financial position or condition of the Company, its
liabilities or the Company Assets or any damage, loss or other
change in circumstances materially affecting the Company, the
Business or the Company Assets or the Company's right to carry
on the Business, other than changes in the ordinary course of
business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting the Company, the Business or the Company
Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by the Company to the Significant
Shareholders or to any of the Company's officers, employees or
agents or any bonus, payment or arrangement made to or with
any of them,
(iv) the Business has been and continues to be carried on in the
ordinary course,
(v) the Company has not waived or surrendered any right of
material value,
(vi) the Company has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
The Company - Income Tax Matters
(t) Tax Returns. All tax returns and reports of the Company required by
law to be filed have been filed and are true, complete and correct,
and any taxes payable in accordance with any return filed by the
Company or in accordance with any notice of assessment or
reassessment issued by any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable for the
current period for which tax returns are not yet required to be filed and
there are no agreements, waivers, or other arrangements providing for an
extension of time with respect to the filing of any tax return by, or
payment of, any tax, governmental charge or deficiency by the Company. The
Vendors are not aware of any contingent tax liabilities or any grounds
which would prompt a reassessment including aggressive treatment of income
and expenses in filing earlier tax returns;
The Company- Applicable Laws and Legal Matters
(v) Licences. The Company holds all licences and permits as may be
requisite for carrying on the Business in the manner in which it has
heretofore been carried on, which licences and permits have been
maintained and continue to be in good standing;
(w) Applicable Laws. The Company has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it the violation of which would have a material adverse effect on
the Company, and the Company is not in breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees the
contravention of which would result in a material adverse impact on
the Business;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to the Company, the Business, or any
of the Company Assets, nor does the Company have any knowledge of
any deliberate act or omission of the Company that would form any
material basis for any such action, proceeding or enquiry;
(y) No Bankruptcy. The Company has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against the
Company and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of the Company;
(z) Labour Matters. The Company is not party to any collective agreement
relating to the Business with any labour union or other association
of employees and no part of the Business has been certified as a
unit appropriate for collective bargaining or, to the knowledge of
the Vendor or the Significant Shareholders, has made any attempt in
that regard;
(aa) Finder's Fees. The Company is not party to any agreement which
provides for the payment of finder's fees, brokerage fees,
commissions or other fees or amounts which are or may become payable
to any third party in connection with the execution and delivery of
this Agreement and the transactions contemplated herein except as
due to Century Capital Management Ltd.;
Execution and Performance of Agreement
(bb) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of the Vendor and this Agreement
constitutes a legal, valid and binding obligation of the Vendor and
is enforceable against the Vendor and the Significant Shareholders
in accordance with its terms;
(cc) No Violation or Breach. The performance of this Agreement will not
(i) violate the charter documents of the Company or result in any
breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which the Vendor, the
Significant Shareholders, the Company, or any of them, is a
party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the Company Material Contracts,
or any right or rights enjoyed by the Company,
(iii) result in any alteration of the Company's obligations under
any agreement to which the Company is party including, without
limitation, the Company Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favour of a third
party upon or against the Company Assets,
(v) result in the imposition of any tax liability to the Company
relating to the Company Assets or the Company Shares, or
(vi) violate any court order or decree to which the Company and the
Vendors or any of them are subject.
The Company Assets - Ownership and Condition
(dd) Business Assets. The Company Assets comprise all of the property and
assets of the Business, and none of the Vendor or the Significant
Shareholders nor any other person, firm or corporation owns any
assets used by the Company in operating the Business, whether under
a lease, rental agreement or other arrangement;
(ee) Title. The Company is the legal and beneficial owner of the Company
Assets, free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever;
(ff) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the Company Assets;
(gg) Company Material Contracts. The Company Material Contracts listed
in Schedule "B" constitute all of the material contracts of the
Company;
(hh) No Default. There has not been any default in any material
obligation of either of the Company, the Vendor or any Significant
Shareholder or any other party to be performed under any of the
Company Material Contracts, each of which is in good standing and in
full force and effect and unamended, and the Vendor and the
Significant Shareholders are not aware of any default in the
obligations of any other party to any of the Company Material
Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of the Company. The
Company is not obliged to pay benefits or share profits with any
employee after termination of employment except as required by law;
The Company Assets - Company Equipment
(jj) Company Equipment. The Company Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner;
The Company Assets - Company Goodwill and Other Assets
(kk) Company Goodwill. The Company carries on the Business only under the names
"WOW town,.com Inc." and xxxxxxxxxxxx.xxx and under no other business or
trade names. The Company has the legal right to use its corporate name in
the Province of British Columbia and neither the Company, the Vendor nor
any of the Significant Shareholders are aware of any names similar to
"wowtown" in use in any areas where the Business is conducted or is planned
to be conducted. Neither the Vendor nor any Significant Shareholder has any
knowledge of any infringement by the Company of any patent, trademark,
copyright or trade secret;
The Business
(ll) Maintenance of Business. Since the date of the Company Financial
Statements, the Business has been carried on in the ordinary course
and the Company has not entered into any material agreement or
commitment except in the ordinary course; and
(mm) No Ownership of Company. The Company does not own any subsidiary
and does not otherwise own, directly or indirectly, any shares
or interest in any other corporation, partnership, joint venture or
firm.
Non-Merger and Survival
4.2 The representations and warranties of the Vendor and the Significant
Shareholders contained herein will be true at and as of Closing in all
material respects as though such representations and warranties were made
as of such time. Notwithstanding the completion of the transactions
contemplated hereby, the waiver of any condition contained herein (unless
such waiver expressly releases a party from any such representation or
warranty) or any investigation
made by the Purchaser, the representations and warranties of the Vendor
and the Significant Shareholders shall survive the Closing.
Indemnity
4.3 The Vendor and the Significant Shareholders jointly and severally agree to
indemnify and save harmless the Purchaser from and against any and all
claims, demands, actions, suits, proceedings, assessments, judgments,
damages, costs, losses and expenses, including any payment made in good
faith in settlement of any claim (subject to the right of the Vendor and
the Significant Shareholders to defend any such claim), resulting from the
breach by any of them of any representation or warranty of such party under
this Agreement or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by the Vendor
or the Significant Shareholders to the Purchaser hereunder.
ARTICLE 5
COVENANTS OF THE VENDORS
Covenants
5.1 The Vendor and the Significant Shareholders jointly and severally covenant
and agree with the Purchaser that they will:
(a) Conduct of Business. Until the Closing, conduct the Business
diligently and in the ordinary course consistent with the manner in
which the Business generally has been operated up to the date of
execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts
to preserve the Business and the Company Assets and, without
limitation, preserve for the Purchaser the Company's relationships
with their suppliers, customers and others having business relations
with them;
(c) Access. Until the Closing, give the Purchaser and its
representatives full access to all of the properties, books,
contracts, commitments and records of the Company relating to the
Company, the Business and the Company Assets, and furnish to the
Purchaser and its representatives all such information as they may
reasonably request; and
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the transfer of the Company Shares to
the Purchaser and to preserve and maintain the Company Assets,
including the Company Material Contracts, notwithstanding the change
in control of the Company arising from the purchase of the Company
Shares by the Purchaser.
Authorization
5.2 The Vendor and the Significant Shareholders hereby agree to promptly cause
the Company, upon the request of the Purchaser, to authorize and direct any and
all federal, provincial, municipal, foreign and international governments and
regulatory authorities having jurisdiction respecting the Company to release any
and all information in their possession respecting the Company to the Purchaser.
The Vendor and the Significant Shareholders shall promptly cause the Company to
execute and deliver to the Purchaser any and all consents to the release of
information and specific authorizations which the Purchaser reasonably requires
to gain access to any and all such information.
Survival
5.3 The covenants set forth in this Article shall survive until the Closing
for the benefit of the Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Representations and Warranties
6.1 The Purchaser represents and warrants in all material respects to the Vendor
and the Significant Shareholders, with the intent that the Vendor and the
Significant Shareholders will rely thereon in entering into this Agreement and
in completing the transactions contemplated hereby, that:
The Purchaser - Corporate Status and Capacity
(a) Incorporation. The Purchaser is a corporation duly incorporated and
validly subsisting under the laws of the State of Delaware, and is
in good standing with the office of the Secretary of State for the
State of Delaware;
(b) Carrying on Business. The Purchaser has not carried on and does not
now carry on any material business activity. The Purchaser has an
office in Vancouver, British Columbia and in no other locations;
(c) Corporate Capacity. The Purchaser has the corporate power, capacity
and authority to enter into and complete this Agreement;
(d) Reporting Status. The Purchaser Common Shares have been registered
pursuant to s. 12(g) of the Securities and Exchange Act of 0000
(Xxxxxx Xxxxxx);
The Purchaser - Capitalization
(e) Authorized Capital. The authorized capital of the Purchaser consists
of 30,000,000 Purchaser Common Shares, $0.0001 par value and
5,000,000 shares of preferred stock. $0.0001 par value, of which
2,249,000 Purchaser Common Shares and no shares of preferred stock
are presently issued and outstanding;
(f) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option for
the acquisition of Purchaser Common Shares or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of the Purchaser save and except as referred to herein;
(g) Capacity. The Purchaser has the full right, power and authority to
enter into and complete this Agreement on the terms and conditions
contained herein;
(h) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of the Acquisition Shares contained in the charter
documents of the Purchaser or under any agreement to which the
Purchaser is a Party;
The Purchaser - Records and Financial Statements
(i) Charter Documents. The charter documents of the Purchaser have not
been altered since the incorporation of the Purchaser, except as
filed in the record books of the Purchaser;
(j) Books and Records. The books and records of the Purchaser fairly and
correctly set out and disclose in all material respects the
financial position of the Purchaser, and all material financial and
other transactions of the Purchaser, including any and all contracts
and any amendments thereto, have been accurately recorded or filed
in such books and records;
(k) Purchaser Financial Statements. The Purchaser Financial Statements
are true and correct and present fairly and correctly the assets and
liabilities (whether accrued, absolute, contingent or otherwise) of
the Purchaser as of the respective dates thereof and have been
prepared in substantial accordance with United States' generally
accepted accounting principles consistently applied;
(l) Purchaser Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of the Purchaser which are not
disclosed in Schedule "G" hereto or reflected in the Purchaser Financial
Statements except those incurred in the ordinary course of business since
the date of the said financial statements, and the Purchaser has not
guaranteed or agreed to guarantee any debt, liability or other obligation
of any person, firm or corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of the Purchaser are
described in Schedule "G" hereto;
(m) No Dividends. No dividends or other distributions on any shares in the
capital of the Purchaser have been made, declared or authorized since the
date of the Purchaser Financial Statements;
(n) No Payments. No payments of any kind have been made or authorized
since the date of the Purchaser Financial Statements to or on behalf
of officers, directors, shareholders or employees of the Purchaser
or under any management agreements with the Purchaser;
(o) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting the Purchaser;
(p) No Adverse Events. Since the date of the Purchaser Financial
Statements there has not been any material adverse change in the
financial position or condition of the Purchaser or its liabilities
or any damage, loss or other change in circumstances materially
affecting the Purchaser;
(q) Applicable Laws. The Purchaser has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it the violation of which would have a material adverse effect on
the Purchaser;
(r) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to the Purchaser nor does the
Purchaser have any knowledge of any deliberate act or omission of
the Purchaser that would form any material basis for any such
action, proceeding or enquiry;
(s) No Bankruptcy. The Purchaser has not made any voluntary assignment
or proposal under applicable laws relating to insolvency and
bankruptcy and no bankruptcy petition has been filed or presented
against the Purchaser and no order has been made or a resolution
passed for the winding-up, dissolution or liquidation of the
Purchaser;
(t) Finder's Fees. The Purchaser is not party to any agreement which
provide for the payment of finder's fees, brokerage fees,
commissions or other fees or amounts which are or may become payable
to any third party in connection with the execution and delivery of
this Agreement and the transactions contemplated herein except as
due to Century Capital Management Ltd.;
Execution and Performance of Agreement
(u) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of the Purchaser and this Agreement
constitutes a legal, valid and binding obligation of the Purchaser
and is enforceable against it in accordance with its terms;
(v) No Violation or Breach. The performance of this Agreement will not
violate the charter documents of the Purchaser or result in any
breach of, or default under, any agreement to which the Purchaser is
a party; and
The Purchaser - Acquisition Shares
(w) Acquisition Shares. The Acquisition Shares when delivered to the
Vendor shall be validly issued and outstanding as fully paid and
non-assessable shares, subject to the provisions of this Agreement,
and the Acquisition Shares shall be transferable upon the books of
the Purchaser, in all cases subject to the provisions and
restrictions of all applicable securities laws.
Non-Merger and Survival
6.2 The representations and warranties of the Purchaser contained herein will be
true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by the Vendor or the
Significant Shareholders, the representations and warranties of the Purchaser
shall survive the Closing.
Indemnity
6.3 The Purchaser agrees to indemnify and save harmless the Vendor and the
Significant Shareholders from and against any and all claims, demands, actions,
suits, proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of the Purchaser to defend any such claim), resulting from the breach
by it of any representation or warranty of such party under this Agreement or
from any misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished by the Purchaser to the Vendor and the
Significant Shareholders hereunder.
ARTICLE 7
EMPLOYMENT AGREEMENTS
At the Closing, the Company shall enter into the Employment Agreements
with Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxx pursuant to which
each of them will provide services to the Company.
ARTICLE 8
CONDITIONS PRECEDENT
Conditions Precedent in favour of the Purchaser
8.1 The Purchaser's obligations to carry out the transactions contemplated
hereby is subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to the Purchaser hereunder will have been so executed and
delivered;
(b) pro forma financial statements showing the combined assets,
liabilities, stockholders' equity and results of operations of the
Purchaser and the Company, prepared in prepared in accordance with
United States' generally accepted accounting principles and the
requirements of the Securities and Exchange Commission will have
been delivered to the Purchaser;
(c) the Purchaser shall have completed its due diligence review of the
affairs of the Company, and shall be satisfied with same in all
material respects;
(d) the Company shall have agreed to repay the Bridge Loan from the
proceeds of the Private Placement;
(e) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Vendor at or prior to the Closing
will have been complied with or performed;
(f) title to the Company Shares and Company Assets will be free and
clear of all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever;
(g) the Vendor will have transferred the Company Shares to the Purchaser
and the Company Shares will be issued to the Purchaser and
registered on the books of the Company in the name of the Purchaser
at Closing;
(h) subject to Article 9 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of the Company, its liabilities or the Company
Assets or any damage, loss or other change in circumstances
materially and adversely affecting the Vendor, the Significant
Shareholders, the Business or the Company Assets or the
Company's right to carry on the Business, other than changes
in the ordinary course of business, none of which has been
materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to the Company or
the Business (whether or not covered by insurance) materially
and adversely affecting the Company, the Business or the
Company Assets; and
(i) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
Waiver by the Purchaser
8.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of the Purchaser and any such condition may be waived in
whole or in part by the Purchaser at or prior to Closing by delivering to the
Vendor a written waiver to that effect signed by the Purchaser. In the event
that the conditions precedent set out in the preceding section are not satisfied
on or before the Closing the Purchaser shall be released from all obligations
under this Agreement.
Conditions Precedent in Favour of Vendors
8.3 The obligation of the Vendor to carry out the transactions contemplated
hereby is subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to the Vendor hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Purchaser at or prior to the
Closing will have been complied with or performed;
(c) the Purchaser will have delivered the Acquisition Shares to the
Vendor and the Acquisition Shares will be registered on the books of
the Purchaser in the name of the Vendor at Closing;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) the board of directors of the Purchaser shall have appointed the
Significant Shareholders as directors of the Purchaser; and
(f) the Purchaser shall have received duly executed subscriptions for
not less that 500 Purchaser Preferred Shares pursuant to the Private
Placement and shall have received in full the subscription funds
therefore, such funds being held in escrow pending Closing.
Waiver by Vendor
8.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of the Vendor and any such condition may be waived in
whole or in part by the Vendor at or prior to the Closing by delivering to the
Purchaser a written waiver to that effect signed by the Vendor. In the event
that the conditions precedent set out in the preceding section are not satisfied
on or before the Closing the Vendor shall be released from all obligations under
this Agreement.
Nature of Conditions Precedent
8.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favour of the other party or parties set forth in
this Article.
Confidentiality
8.6 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated the parties agree to return to one another any
and all financial, technical and business documents delivered to the other party
or parties in connection with the negotiation and execution of this Agreement
and shall keep the terms of this Agreement and all information and documents
received from the Company and the contents thereof confidential and not utilize
nor reveal or release same, provided, however, that the Purchaser will be
required to issue one or more news releases and file a Current Report on Form
8-K with the Securities and Exchange Commission respecting the proposed share
purchase contemplated hereby.
ARTICLE 9
RISK
If any material loss or damage to the Business occurs prior to Closing and
such loss or damage, in the Purchaser's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, the Purchaser shall,
within seven (7) days following any such loss or damage, by notice in writing to
the Vendors, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the purchase of the Company Shares and the other
transactions contemplated hereby, in which case the proceeds and the
rights to receive the proceeds of all insurance covering such loss
or damage will, as a condition precedent to the Purchaser's
obligations to carry out the transactions contemplated hereby, be
vested in the Company or otherwise adequately secured to the
satisfaction of the Purchaser on or before the Closing Date.
ARTICLE 10
CLOSING
Closing
10.1 The purchase and sale of the Company Shares and the other transactions
contemplated by this Agreement will be closed at the Place of Closing in
accordance with the closing procedure set out in this Article.
Documents to be Delivered by Vendors
10.2 On or before the Closing, the Vendor will deliver or cause to be delivered
to the Purchaser:
(a) certified copies of such resolutions of the directors of the Vendor
as are required to be passed to authorize the execution, delivery
and implementation of this Agreement;
(b) the original or certified copies of the charter documents of the
Company and all corporate records documents and instruments of the
Company, the corporate seals of the Company and all books and
accounts of the Company;
(c) certificates representing the Company Shares, duly endorsed for
transfer to the Purchaser, together with a duly executed share
certificate respecting the Company Shares issued to the Purchaser
and recorded in the share register of the Company;
(d) all reasonable consents or approvals required to be obtained by the
Vendor and the Company for the purposes of validly transferring the
Company Shares to the Purchaser and preserving and maintaining the
interests of the Company under any and all Company Material
Contracts and in relation to the Company Assets;
(e) certified copies of such resolutions of the shareholders and
directors of the Company as are required to be passed to authorize
the execution, delivery and implementation of this Agreement;
(f) an acknowledgement from the Vendor of the satisfaction of the
conditions precedent set forth in section 8.3 hereof;
(g) the Employment Agreements, duly executed by the parties thereto; and
(h) such other documents as the Purchaser may reasonably require to give
effect to the terms and intention of this Agreement.
Documents to be Delivered by the Purchaser
10.3 On or before the Closing, the Purchaser shall deliver or cause to be
delivered to the Vendors:
(a) share certificates representing the Acquisition Shares duly registered
in the name of the Vendor;
(b) certified copies of such resolutions of the director of the
Purchaser as are required to be passed to authorize the execution,
delivery and implementation of this Agreement; and
(c) an acknowledgement from the Purchaser of the satisfaction of the
conditions precedent set forth in section 8.1 hereof.
ARTICLE 11
GENERAL PROVISIONS
Arbitration
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of Vancouver, British
Columbia.
Notice
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address of the intended recipient
stated above by personal delivery, prepaid single certified or registered mail,
or telecopier. Any notice delivered by mail shall be deemed to have been
received on the fourth business day after and excluding the date of mailing,
except in the event of a disruption in regular postal service in which event
such notice shall be deemed to be delivered on the actual date of receipt. Any
notice delivered personally or by telecopier shall be deemed to have been
received on the actual date of delivery.
Change of Address
11.3 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
Further Assurances
11.4 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
11.5 Time is expressly declared to be the essence of this Agreement.
Entire Agreement
11.6 The provisions contained herein constitute the entire agreement among the
Vendor, the Purchaser and the Significant Shareholders respecting the subject
matter hereof and supersede all previous communications, representations and
agreements, whether verbal or written, among the Vendor, the Purchaser and the
Significant Shareholders with respect to the subject matter hereof.
Enurement
11.7 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
11.8 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
11.9 This Agreement may be executed in counterparts, each of which when executed
by any party will be deemed to be an original and all of which counterparts will
together constitute one and the same Agreement. Delivery of executed copies of
this Agreement by telecopier will constitute proper delivery, provided that
originally executed counterparts are delivered to the parties within a
reasonable time thereafter.
Applicable Law
11.10 This Agreement is subject to the laws of the Province of British Columbia
and the laws of Canada applicable therein and, subject to section 11.1 hereof,
the parties hereto to attorn to the exclusive jurisdiction of the Courts of the
Province of British Columbia.
Independent Legal Advice
11.11 The parties hereto acknowledge that they have each received independent
legal advice with respect to the terms of this Agreement and the transactions
contemplated herein or have knowingly and willingly elected not to do so. The
parties hereto further acknowledge that this Agreement has been prepared by
Century Capital Management Ltd. as a convenience to the parties only, and that
Century Capital Management Ltd. has not provided any of the parties hereto with
any professional advice with respect to this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
PARAMOUNT SERVICES CORP.
By: ___________________________
Witness Authorized Signatory
Name
Address
595796 B.C. LTD.
By: ___________________________
Witness Authorized Signatory
Name
Address
___________________________________
Witness XXXXX X. XXXXXXX
Name
Address
___________________________________
Witness XXXXXXX X. XXXXXXX
Name
Address
___________________________________
Witness XXXXX XXXXXXX
Name
Address
This is Page 22 to the Share Exchange Agreement dated January 13, 2000
among Paramount Services Corp., 595796 B.C. Ltd., Xxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxxx and Xxxxx Xxxxxxx.
