EXHIBIT 7.2
SHARE PURCHASE AGREEMENT - XXXXXXXXXX.XXX
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement"), between XxxxxxxxXx.xxx Ltd
(XXXXXXXXXX.XXX or the Company )and the following individual shareholders:
Xxxxxxxx Xxxxxx 75,000
Xx Xxxxxx 150,000
Xxxxx Xxxxxxxx 225,000
Xxx Xxxxxxx 50,000
plus option for 50,000@ $0.10 per share vesting pursuant to option agreement
Catalyst Venture Limited 70,000
Icon Enterprises Limited 75,000
Acil Associates Limited 80,000
Virtual Jukebox Inc. 225,000
Xxxxxxx X. Xxxxxxxxx 42,000
Xxxxxxx Xxxxx 16,000
K. Xxxxxx Xxxxx 42,000
Xxxxx Xxxxxx 10,000
Number of shares held or to be issued to present shareholders of
XxxxxxxxxxXx.Xxx is 1,200,000 common shares prior to Closing Date herein
referred to as SHAREHOLDERS, AND Xxxxxxxxxx.Xxx and Shareholders are herein
collectively referred to as "SELLERS", and WatchOut!, Inc. d/b/a Innovative
Cybersystems, a Utah corporation (as BUYER).
W I T N E S S E T H:
A. WHEREAS, WatchOut! Inc., is a corporation organized under the laws of Utah.
B. WHEREAS, SELLERS are willing to sell, and BUYER desires to purchase certain
issued and outstanding shares of capital stock in XxxxxxxxXx.xxx, as specified
on Exhibit A.
C. WHEREAS, WatchOut! and SELLERS will benefit from the transactions
contemplated hereby and desire to implement the contemplated transaction.
D. WHEREAS, Sellers are willing to issue treasury common shares to BUYER as per
Schedule "A".
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
THE CONSIDERATION
SELLERS shall sell and cause to be delivered and BUYER shall purchase the shares
of XxxxxxxxXx.xxx common stock as specified on Exhibit A. The transactions
contemplated by this Agreement shall be completed at a closing ("Closing") on a
closing date which shall be on or before February 11, 2000. The purchase price
for 455,172 common shares of XxxxxxxxXx.xxx stock to be paid by BUYER to
XxxxxxxxXx.Xxx is, $2,750.000, (Canadian). It shall be paid in accordance with
the terms set out in "Schedule A" This shall then represent
27.5% of then total issued and outstanding shares of the company being
1,655,172 common shares of XxxxxxxxXx.xxx.
BUYER shall purchase from SHAREHOLDERS common share held by them in accordance
with the terms set out in Schedule "A".
ARTICLE II
DELIVERY OF SHARES
The certificates representing all of the shares which shall be purchased shall
be delivered and conveyed by SELLERS to BUYER with duly executed stock powers,
upon receipt of the consideration by SELLERS in accordance with the receipt of
the consideration on the dates set out in Schedule "A".
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLERS AS TO XXXXXXXXXX.XXX
These representations or warranties are made by SELLERS as individuals, and as
officers and directors of XxxxxxxxXx.xxx.
SELLERS hereby represent, warrant, and covenant to BUYER as follows:
3.1 XxxxxxxxXx.xxx is a corporation duly organized, validly existing and in
good standing under the laws of Ontario, Canada, and has the corporate power and
authority to carry on its business as it is now being conducted. The Articles of
Incorporation of XxxxxxxxXx.xxx and amendments, copies of which have been
delivered to BUYER, are complete and accurate, and the minute books of
XxxxxxxxXx.xxx, which will be delivered to BUYER contain a complete and
accurate record of all material actions taken at, all meetings of the
shareholders and Board of Directors of XxxxxxxxXx.xxx.
3.2 The aggregate number of shares which XXXXXXXXXX.XXX is authorized to
issue is an unlimited number of shares with no par value per share, of which,
1,200,000 shares are issued and outstanding as at the date of Closing. Such
shares are fully paid and non- assessable. XXXXXXXXXX.XXX has no outstanding
options, warrants or other rights to purchase, or subscribe to, or securities
convertible into or exchangeable for any shares of capital stock.
3.3 SELLERS have complete and unrestricted power to enter into and,
upon receipt of the appropriate approvals as required by law, to consummate the
transactions contemplated by this Agreement.
3.4 SELLERS own the common shares of XXXXXXXXXX.XXX free and clear of all
liens and encumbrances, and are authorized to sell such shares to BUYER, subject
only to the pledge agreements and debts recited hereinafter
3.5 SELLERS who represent XXXXXXXXXX.XXX shall not enter into or consummate
any transactions other than those required in the normal course of business,
prior to the Closing Date and will pay no dividend, or increase the compensation
of officers and will not enter into any other business agreement or transaction,
prior to closing date.
3.6 The representations and warranties of SELLERS shall be true and correct
as of the date hereof and as of the Closing Date.
3.7 SELLERS have delivered to buyer all of the corporate books and
records of XXXXXXXXXX.XXX for review, true and correct copies of
XXXXXXXXXX.XXX's tax returns since August, 1999. SELLERS will also deliver to
buyer on or before the Closing Date any reports relating to the financial and
business condition of XXXXXXXXXX.XXX which occur after the date of this
Agreement and any other reports sent generally to its shareholders after the
date of this Agreement.
3.8 No representation or warranty by SELLERS 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.
3.9 SELLERS will cause XXXXXXXXXX.XXX to notify Buyer prior to any Board
meeting and to allow Buyer to be represented. Buyer shall have the ability to
appoint one board member once they own 27.5% of Seller and a majority of the
Board once they have 51% of the issued and outstanding shares of Seller. The
Board shall then be comprised of 5 members of which 2 shall be appointed by the
minority shareholders.
3.10 SELLERS shall deliver within 45 days of February 10, 2000 to buyer
audited financial statements of XXXXXXXXXX.XXX dated December 31, 1999 financial
statements in accordance with Canadian GAAP standards. All such financial
statements, herein sometimes called " Financial Statements" are (and will be)
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 the periods indicated. All financial statements of XXXXXXXXXX.XXX
will have been prepared in accordance with generally accepted accounting
principles, and will be "unqualified" except as to "going concern."
3.11 Since the dates of the XXXXXXXXXX.XXX Financial Statements, there have
not been any material adverse changes in the business or condition, financial or
otherwise, of XXXXXXXXXX.XXX. XXXXXXXXXX.XXX Does not have any material
liabilities or obligations, secured or unsecured, except as shown in the
financial statements.
3.12 There are no pending legal proceedings or regulatory proceedings
involving XXXXXXXXXX.XXX, there are no legal proceedings or regulatory
proceedings involving material claims pending, or, to the knowledge of the
officers of XXXXXXXXXX.XXX, threatened against XXXXXXXXXX.XXX or affecting any
of their assets or properties, and XXXXXXXXXX.XXX is not in any material breach
or violation of or default under any contract or instrument to which
XXXXXXXXXX.XXX is a party.
3.13 XXXXXXXXXX.XXX shall not enter into or consummate any transactions
prior to the Closing Date and will pay no dividend, or increase the compensation
of officers and will not enter into any agreement or transaction, without
consent of BUYER. Closing date shall be deemed to be February 11, 2000.
3.14 The representations and warranties of SELLERS shall be true and
correct as of the date hereof and as of the Closing Date.
3.15 XXXXXXXXXX.XXX has no employee benefit plan in effect at this time.
3.16 No representation or warranty 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.
3.17 SELLERS warrant and represent that at closing those debts listed on
Exhibit B and those incurred in the ordinary course of business and those listed
in the financial statements as OF THE 31ST December 1999, shall be the sole and
only debts of XxxxxxxxXx.xxx and sellers agree to indemnify and hold buyer
harmless from any other debt whatsoever not listed thereon.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER
No representations or warranties are made by any director, officer, employee, or
shareholder of buyer as individuals, except as and to the extent stated in this
Agreement or in a separate written statement.
BUYER hereby represents, warrants, and covenants to SELLERS as follows:
4.1 BUYER is a corporation duly organized, validly existing, and in good
standing under the laws of the state of, Utah and has the corporate power and
authority and to carry on its business as it is now being conducted.
4.2 BUYER has complete and unrestricted power to enter into this
agreement; and, to consummate the transactions contemplated by this Agreement.
4.3 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
BUYER will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of BUYER.
4.4 The execution of this Agreement has been duly authorized and approved
by the BUYER S Board of Directors.
4.5 The representations and warranties of BUYER shall be true and correct
as of the date hereof and as of the Closing Date.
ARTICLE V
OBLIGATIONS OF THE PARTIES PENDING THE CLOSING DATE
5.1 At all times prior to the Closing Date during regular business hours,
each party will permit the other to examine its books and records to the extent
the same are relevant to the purchase of the shares of XXXXXXXXXX.XXX and the
books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement, each
party may provide the other party with information which is confidential or
proprietary information. During the term of this Agreement, and for two years
following the earlier of the Closing or the termination of this Agreement, the
recipient of such information shall protect such information from disclosure to
persons, other than members of its own or affiliated organizations and its
professional advisers, in the same manner as it protects its own confidential or
proprietary information from unauthorized disclosure, and not use such
information to the competitive detriment of the disclosing party. In addition,
if this Agreement is terminated for any reason, each party shall promptly
destroy, return, or cause to be returned all documents or other written records
of such confidential or proprietary information, together with all copies of
such writings and, in addition, shall either furnish or cause to be furnished,
or shall destroy, or shall maintain with such standard of care as is exercised
with respect to its own confidential or proprietary information, all copies of
all documents or other written records developed or prepared by such party on
the basis of such confidential or proprietary information. No information shall
be considered confidential or proprietary if it is (a) information already in
the possession of the party to whom disclosure is made, (b) information acquired
by the party to whom the disclosure is made from other sources, or (c)
information in the public domain or generally available to interested persons or
which at a later date passes into the public domain or becomes available to the
party to whom disclosure is made without any wrongdoing by the party to whom the
disclosure is made.
5.2 SELLERS and BUYER shall promptly provide each other with information as
to any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.3 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
PROCEDURE FOR CLOSING
6.1 At the Closing Date, the purchase and sale shall be effected with share
certificates of XXXXXXXXXX.XXX together with stock powers executed in blank,
being delivered to escrow agent for all shares which may be purchased in
accordance with Exhibit "A" with delivery of $150,000 (CND). Seller shall issue
shares proportionate to the receipt of funds as set out in Schedule "A".
ARTICLE VII
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:
7.1 SELLERS and BUYER shall each have performed and complied with all of
their respective obligations hereunder which are to be complied with or
performed on or before the Closing Date and SELLERS and BUYER shall provide one
another at the Closing with a certificate to the effect that such party has
performed each of the acts and undertakings required to be performed by it on
or before the Closing Date pursuant to the terms of this Agreement.
7.2 This Agreement and the transactions contemplated herein shall have been
duly and validly authorized, approved and adopted by SELLERS, and buyer in
accordance with the applicable laws.
7.3 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 if decided adversely to any party hereto or its directors or officers
XxxxxxxxXx.xxx would materially and adversely affect the business, assets, or
financial position of XXXXXXXXXX.XXX.
7.4 The representations and warranties made by SELLERS and by BUYER in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date.
7.5 Since the dated of the XXXXXXXXXX.XXX Financial Statements, there have
not been any material adverse changes in the business or condition, financial,
or otherwise, of XXXXXXXXXX.XXX. XXXXXXXXXX.XXX does not have any material
liabilities or obligations, secured or unsecured except as shown on current
financials (whether accrued, absolute, contingent or otherwise).
7.6 All outstanding liabilities of XXXXXXXXXX.XXX to SELLERS or SELLERS'
affiliates, save and except as disclosed in the financial statements of
XxxxxxxxXx.xxx, shall be waived prior to or concurrent with closing. Such waiver
shall be deemed and treated as additional paid in capital and shall constitute
additional basis in sellers stock.
7.7 Creditors of XXXXXXXXXX.XXX shall have executed written agreements
prior to Closing Date, providing for a payment schedule, as may be required by
buyer.
7.8 No press release or public statement will be issue relating to the
transactions contemplated by this Agreement without prior approval of Buyer.
However, either BUYER or XXXXXXXXXX.XXX 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.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the Closing
Date:
(a) By mutual consent of SELLERS and BUYER;
(b) By either party, if any condition set forth in Article VII relating to
the other party has not been met or has not been waived;
(c) By BUYER and SELLER 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 any party, if there is discovered any material error, misstatement
or omission in the representations and warranties of another party;
(e) By BUYER'S at BUYER election if SELLERS do not deliver, or indicates to
BUYER that it will not deliver, XxxxxxxxXx.xxx financial arrangements with all
creditors of XXXXXXXXXX.XXX, in form and substance satisfactory to both BUYER
and SELLERS.
8.2 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.
ARTICLE IX
TERMINATION COVENANTS, OF REPRESENTATIONS, AND WARRANTIES
The respective covenants, representations and warranties of the parties
hereto as contained herein shall survive the Closing for a period of two years.
ARTICLE X
MISCELLANEOUS
10.1 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, referenced herein, or those provided
for herein.
10.2 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.
10.3 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 commercially reasonable
efforts to provide such executed instruments or do all things necessary or
proper to carry out the purpose of this Agreement.
10.4 This Agreement may be amended only in writing duly executed by all
parties hereto.
10.5 Any notices, requests, or other communications required or permitted
hereunder shall be delivered personally or sent by overnight courier service,
fees prepaid, addressed as follows:
SELLERS:
To: Bodnaruk & Xxxxxx
000 Xxxx Xxxxxx Xxxx
Xxxxx 000, P.O. Box 49
Toronto, Ontario
M5V 1J9
Attention: X. Xxxxxx
Fax #: 000-000-0000
BUYERS:
To: Innovative Cybersystems Corp.
00000 Xxxxx Xxxx 0, #000
Xxxx Xxxxx, XX 00000
Fax #:
copy to: Xxxxxxx X. Xxxxxxx
Attorney at Law
00000 Xxxxx Xxxx 0, #000
Xxxx Xxxxx, XX 00000
Fax #:
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.
10.6 BUYER agrees that, as controlling shareholder of XxxxxxxxXx.xxx, it
will not cause or allow any reverse splits, or consolidations of shares for a
period of 18 months following closing hereunder.
IN WITNESS WHEREOF, THE PARTIES HAVE SET THEIR HANDS THIS 10TH day of February
2000.
SELLERS:
_________________________________
Xxxxxxxx Xxxxxx
_________________________________
Xx Xxxxxx
_________________________________
Xxxxx Xxxxxxxx
_________________________________
Xxx Xxxxxxx
Catalyst Venture Limited
Per:____________________________
Icon Enterprises Limited
Per:____________________________
Acil Associates Limited
Per:_____________________________
Virtual Jukebox Inc.
Per:_____________________________
_________________________________
Xxxxxxx X. Xxxxxxxxx
_________________________________
Xxxxxxx Xxxxx
_________________________________
K. Xxxxxx Xxxxx
_________________________________
Xxxxx Xxxxxx
BUYER:
WatchOut! Inc. d/b/a
Innovative Cybersystems Corp.
Per:_____________________________
Xxxxx Xxxxxxx, President
EXHIBIT A
1. PAYMENT DATES
February 11, 2000 $150,000 (CND) ***
February 18, 2000 $150,000 (CND)
February 29, 2000 $200,000 (CND)
MARCH 29, 2000 $2,250,000(CND)
---------------
$2,750,000 representing 455,172
common shares to the Buyer
2. The Buyer's percentage will remain 27.5 % during this time being March 29,
2000 regardless of dilution. (Such time period is subject to 7 days grace
period).
3. Buyer shall also purchase 282,000 shares of the shares from the present
Shareholders proportionately to their present shareholdings in the Company being
23.5% of 1.2 million shares with a payment of $2,360,000 (CND) payable on April
15, 2000.
4. On March 15th the Buyer will present to selling Shareholders the option to
receive shares in WatchOut in lieu of the cash payment contemplated in paragraph
3 above of $2,260,000 in such proportions of cash and or shares of WatchOut as
directed by the selling Shareholder to WatchOut! prior to April 7th, 2000.
5. Buyer shall then, for the next 18 months have the option to purchase the
remaining 918,000 shares presently held by the Shareholders in XxxxxxxxXx.xxx
for $8,750,000 (CND) or the present remaining shareholder of XxxxxxxxXx.xxx may
choose to allow the purchase of these shares with shares of Buyer at a 35%
discount to bid at time of purchase. If however, Buyer does not purchase the
remaining ownership interest, the Seller may buy back 2% of the stock from Buyer
for $350,000 (CND). In the event that the Buyer does not exercise the option,
the Buyer and the selling shareholders agree to cause the directors of the
company to take such proceedings so as to cause the company to become a public
trading entity in Canada or the United States with all present shareholders
being treated on an equal basis.
6. Once the first payment is received by Seller, Seller shall insure that the
governing documents of XxxxxxxxXx.xxx shall require a 66% shareholder vote on
any and all major changes affecting the Company including but not limited to
mergers, acquisitions, acquiring debt.
EXHIBIT B
Promissory Note payable by XxxxxxxxXx.xxx to Novalink Finance Ltd. in the amount
of $300,000.00.
Interest shall be payable on the Promissory Note monthly in arrears at the CIBC
prime rate of interest plus 1%.
Principle on the note shall commence to be paid once the Company is positive
EBITDA amortized over 1 year payable monthly from commencement of the term.
The Promissory Note shall be secured in the ordinary course against the assets
of the company.
