SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is dated for reference the 12th day of
February, 2000, and is made
AMONG:
FLINTROCK FINANCIAL SERVICES INC., a company incorporated
under the laws of the State of Nevada, having an office at Xxxxx 000, 0000
Xxxxxxxxx Xxxxx, Xxxx, Xxxxxx, XXX 00000
("FNTF")
AND:
TYSA CORPORATION, a company duly incorporated under the laws
of the State of Washington, having an office located at 00000
000xx Xxxxxx X.X., Xxxxxxxxxxx, XX, XXX 00000
("Tysa")
AND:
XXXXXX XXX XXXXXXX, businessperson, of 00000 000xx Xxxxxx X.X.
, Xxxxxxxxxxx, XX, XXX 00000
("Xxxxx")
AND:
XXXXXXXX XXX XXXXXXX, businessperson, of 00000 000xx Xxxxxx
X.X., Xxxxxxxxxxx, XX, XXX 00000
("Xxxxxx")
(Xxxxx and Xxxxxx collectively the "Vendors")
(FNTF, Tysa and the Vendors collectively, the "Parties")
WHEREAS:
A. The Vendors are the registered and beneficial owners of
82.5% of the issued and outstanding shares in the capital
stock of Tysa (the "Vendors' Shares"); and
B. The Vendors have agreed to sell to FNTF and FNTF has agreed
to purchase from the Vendors the Vendors' Shares, subject to the terms and
conditions hereof.
NOW THEREFORE THIS AGREEMENT WITNESSES that for and in
consideration of the mutual premises and the mutual covenants and agreements
contained herein, the parties covenant and agree each with the other as follows:
1. DEFINITIONS
1.1 For all purposes of this Agreement, including the schedules hereto, the
following terms shall have the following meanings:
"Approvals" means the approvals set out in Section 5.1 herein;
"Business Interests" means all of the assets of Tysa including its interests in
and to NorthWest Dealer Specialties and California Dealer Specialties, located
in Washington State and the State of California, as more particularly described
in Schedule "B" hereto;
"Closing" means the completion of the transactions contemplated by this
Agreement;
"Closing Date" means the 3rd business day following the day upon which all
conditions precedent contemplated under Section 10 are satisfactorily completed
or waived, or February 28, 2000 at 4:00 p.m. or at such other time and place as
the parties may agree in writing;
"Code" means the Internal Revenue Service Code of 1986, as amended;
"Commission" means the Securities and Exchange Commission;
"Exchange" means the NASD Over The Counter Bulletin Board;
"Franchisee" means Tysa Corporation;
"Franchisor" means Dealer Specialties International Inc., an Ohio corporation
with an office at 00 X. Xxxxxxxx Xxx, Xxxxxx, Xxxx, XXX
00000;
"Indebtedness" means any and all advances, duties, endorsements, guarantees,
liabilities, obligations, responsibilities and undertakings assumed, created,
incurred or made, whether voluntary or involuntary, however arising, whether due
or not due, absolute, inchoate or contingent, liquidated or unliquidated,
determined or undetermined, direct or indirect, express or implied;
"Lien" means any mortgage, debenture, charge, hypothecation, pledge, lien or
other security interest or encumbrance of whatever kind or nature, regardless of
form and whether consensual or arising by laws, statutory or otherwise;
"LOI" means the letter agreement between FNTF and Tysa, dated for reference
January 12, 2000.
"Material Adverse Effect" with respect to any entity or group of entities, means
any event, change or effect that, when taken individually or together with all
other adverse changes and effects, is or is reasonably likely to be materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations or results of such entity and its
subsidiaries, taken as a whole, or to prevent or materially delay consummation
of the transactions contemplated under this Agreement or otherwise to prevent
such entity and its subsidiaries from performing their obligations under this
Agreement;
"Name Change" means the change of FNTF's corporate name to "Auteo Media Inc.",
or such other name as may be approved by the Secretary of State for Nevada or
other regulatory authorities;
"Person" means an individual, corporation, body corporate, partnership, joint
venture, society, association, trust or unincorporated organization or any
trustee, executor, administrator, or other legal representative;
"Private Placement" means the private placement of 225,000 units at US$6.00 per
unit, consisting of one common share, and one warrant to purchase one restricted
common share of FNTF for the price of US$8.00 per share within one year of the
purchase of the unit;
"Private Placement Shares" means the common shares of FNTF to be issued pursuant
to the Private Placement;
"Purchase Price" means collectively the cash consideration set out in Section 2,
and the Shares to be issued under Section 2;
"FNTF Financial Statements" means the audited financial statements of FNTF as of
December 31, 1999, a copy of which is attached hereto as Schedule "C";
"Regulatory Authorities" means the Exchange and the Commission;
"Shares" means the 2,100,000 common shares in the capital of FNTF being acquired
by the Vendors;
"Shareholders Meeting" means the general meeting of the shareholders of FNTF to
be called pursuant to paragraph 8.2(b);
"Subsidiary" means any operating subsidiary or business unit of Tysa, whether
incorporated or unincorporated;
"Tysa Balance Sheet" means the balance sheet in the Tysa audited financial
statements at September 30, 1999, and the unaudited balance sheet as at January
31, 2000 as attached on Schedule "G" hereto;
"Tysa Balance Sheet Date" means [September 30, 1999];
"Tysa Financial Statements" means the full set of Tysa audited and unaudited
financial statements, including the balance sheets, statements of changes of
financial position, statements of retained earnings, and income statements at
September 30, 1999 and January 31, 2000, as attached on Schedule "G" hereto;
"Transfer Agent" means Pacific Stock Transfer Company, the registrar and
transfer agent of FNTF at the time of this Agreement;
"Vendors' Shares" means the 42,075 common shares in the capital of Tysa to be
purchased by FNTF from the Vendors, being all of the issued and outstanding
capital stock of Tysa owned by the Vendors and not under option to Abstract, as
listed in Schedule "A" hereto; and
1.2 In this Agreement, except as otherwise expressly provided:
(a) "Agreement" means this agreement, including the preamble and
the schedules hereto, as it may from time to time be supplemented or amended
in effect;
(b) all references in this Agreement to a designated
"Section" or other subdivision or to a schedule is to the
designated Section or other subdivision of, or Schedule to,
this Agreement;
(c) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not
to any particular Section or other subdivision or Schedule;
(d) the headings are for convenience 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 hereof;
(e) the singular of any term includes the plural, and vice versa,
the use of any term is equally applicable to any gender and,
where applicable, a body corporate, the word "or" is not
exclusive and the word "including" is not limiting (whether or
not non-limiting language, such as "without limitation" or
"but not limited" or words of similar import, is used with
reference thereto);
(f) any accounting term not otherwise defined has the meanings
assigned to it in accordance with generally accepted
accounting principles applicable to the United States;
(g) any reference to a statute includes and is a reference to that
statute and to the regulations made pursuant thereto, with all
amendments made thereto and in force from time to time, and to
any statute or regulations that may be passed which has the
effect of supplementing or superseding that statute or
regulations;
(h) except as otherwise provided, any dollar amount referred to in
this Agreement is in U.S. funds; and
(i) any other term defined within the text of this Agreement has
the meaning so ascribed.
1.3 The following are the Schedules to this Agreement:
Schedule Description
A Vendors' Shares Purchased and Exchanged Shares Issued
B Business Interests of Tysa
C FNTF's Financial Statements
D Securities Positions on Closing
E Material Contracts of Tysa
F Material Contracts of FNTF
G Tysa Financial Statements
H Management Agreement
1.4 This Agreement supersedes all previous agreements between FNTF, Tysa
and the Vendors.
2. PURCHASE AND SALE
2.1 Subject to the terms and conditions hereof, at the Closing the Vendors
shall sell and FNTF shall purchase the Vendors' Shares in consideration
of the Purchase Price which is defined to be EIGHT HUNDRED AND THIRTY
FIVE THOUSAND U.S. DOLLARS (US$835,000.00) and 2,100,000 shares in the
capital of FNTF, which shall be payable by FNTF or its nominee
delivering to the Vendors cash consideration of EIGHT HUNDRED AND
THIRTY FIVE THOUSAND U.S. DOLLARS (US$835,000.00) as set out below and
by FNTF allotting and issuing up to a maximum of 2,100,000 Shares to
the Vendors, determined as follows:
(a) the sum of EIGHT HUNDRED AND THIRTY FIVE THOUSAND U.S.
DOLLARS (US$835,000.00), payable to the Vendors as per Schedule "A", by
certified cheque, bank draft or FNTF's solicitor's cheque at Closing;
(b) TWO MILLION ONE HUNDRED THOUSAND (2,100,000) shares in the
capital of FNTF, to be delivered and held in accordance with
the provisions of this section 2 and the management agreement
with Xxxxx.
2.2 The Shares shall be issued and allotted to the Vendors in the
proportions set forth on Schedule "A" hereto.
2.3 The Shares shall be held by the Vendors pursuant to terms of
paragraph 2.5.
2.4 On completion of the transactions contemplated herein, the outstanding share
capital of FNTF shall be no more than 8,300,000 shares, unless otherwise agreed
by the parties in writing.
2.5 SECURITIES LAW COMPLIANCE
2.5.1 The Shares to be issued pursuant to this Agreement shall
not be registered under the Securities Act of 1933, as amended ("US Securities
Act").
2.5.2 Stock Restrictions. The certificates representing the
Shares issued pursuant to this Agreement shall bear a restrictive legend or
legends (and stop transfer orders shall be placed against the transfer thereof
with Transfer Agent), stating substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933."
3. CLOSING AND ADJUSTMENTS
3.1 The Closing will take place on the Closing Date at the offices of Xxxxxxx X.
Xxxxxxxx, or such place as the parties may mutually agree.
4. TRANSACTION EXPENSES
4.1 Each party to this Agreement shall bear all costs and expenses incurred by
it in negotiating and preparing this Agreement and in closing and carrying out
the transactions contemplated by this Agreement. All costs and expenses related
to satisfying any condition or fulfilling any covenant contained in this
Agreement shall be borne by the party whose responsibility it is to satisfy the
condition or fulfill the covenant in question. Notwithstanding the foregoing, it
is expressly acknowledged and agreed that FNTF shall make available the sum of
TWENTY THOUSAND U.S. DOLLARS (US$20,000.00) for the purposes of assisting Tysa
in satisfying certain professional fees it has incurred in connection with this
transaction.
5. APPROVALS
5.1 The obligations of the parties to complete the purchase and sale of the
Vendors' Shares on the terms herein shall be subject to the following filings
and approvals:
(a) all regulatory approvals required for acquisition of Tysa
and the completion of the Name Change of FNTF (subject to the
filing of final documentation after Closing);
(b) the passing of the resolutions by shareholders of FNTF
contemplated by paragraph 8.2(b) at the Shareholders Meeting; and
(c) the consent of the Franchisor to the acquisition of the
Vendor's Shares of Tysa by FNTF, and any and all other consents
as may be required by the Franchisor.
6. VENDORS' AND TYSA'S WARRANTIES AND REPRESENTATIONS
6.1 Each of the Vendors warrant and represent to FNTF, as to their individual
interests, with the intent that FNTF will rely thereon in entering into this
Agreement and in concluding the transactions contemplated herein, that:
(a) such Vendor is the registered holder of that number of the
Vendors' Shares listed opposite his name in Schedule "A"
hereto, free and clear of all Liens, and such Vendor has no
other interest, legal or beneficial, direct or indirect, in
any other shares in the capital of Tysa, or in the assets or
business of Tysa;
(b) such Vendor has the power and capacity and good and sufficient
right and authority to enter into this Agreement on the terms
and conditions herein set forth and to transfer the legal and
beneficial title and ownership of the Vendors' Shares to FNTF
and this Agreement constitutes a valid obligation of such
Vendor, legally binding and enforceable against such Vendor in
accordance with its terms;
(c) such Vendor is not acting jointly or in concert with any other
Vendors so that the sum total of all Vendors is greater than five
persons;
(d) such Vendor has read this Agreement and the other documents
to be delivered in connection with the consummation of the
transactions contemplated hereby and has made an independent
examination of the transactions contemplated hereby (including
the tax consequences thereof). The Vendor acknowledges that the
Vendor has had an opportunity to consult with and has relied
solely upon the advice, if any, of the Vendor's legal counsel,
financial advisors, or accountants with respect to the
transactions contemplated hereby to the extent the Vendor has
deemed necessary, and has not been advised or directed by Tysa,
FNTF or their respective legal counsel or other advisors in
respect of any such matters and has not relied on any such
parties in connection with this Agreement and the transactions
contemplated hereby;
(e) the Shares to be acquired by the Vendor will be acquired for
investment for the Vendor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that the Vendor has no present intention of
selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Vendor further
represents that he does not presently have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third
person, with respect to any of the Shares and the Vendor's Shares
convey such Vendor's interest in the assets of Tysa, and also
that Tysa owns all of the assets required to conduct its
business, including the ideas and concepts of the Vendors
regarding the expansion of Tysa's business to include e-commerce,
multimedia, new media, telecommunications, auctions, automotive
parts and accessories, as set out in more detail in the press
release of FNTF dated February 23, 2000;
(f) such Vendor has had an opportunity to discuss FNTF's business,
management, financial affairs and the terms and conditions of
the offering of the Shares with FNTF's management. The Vendor
understands that such discussions, as well as any other
written information delivered by FNTF to the Vendor, were
intended to describe the aspects of the FNTF's business which
it believes to be material to this transaction;
(g) such Vendor understands that the Shares have not been, and
will not be, registered under the US Securities Act. The Vendor
understands that the Shares are "restricted securities" under
applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Vendor must hold the Shares
indefinitely unless they are registered with the Commission and
qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The
Vendor acknowledges that FNTF has no obligation to register or
qualify the Shares for resale. The Vendor further acknowledges
that if an exemption from registration of qualification is
available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the
holding period for the Shares, and on requirements relating to
FNTF which are outside of the Vendor's control, and which FNTF is
under no obligation and may not be able to satisfy; and
(h) such Vendor is an accredited investor as defined in Rule
501(a) of Regulation D promulgated under the US Securities Act.
6.2 Tysa warrants and represents to FNTF, with the intent that FNTF will rely
thereon in entering this Agreement and in concluding the transactions
contemplated herein, that:
(a) Tysa is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Washington and
has the power, authority and capacity to hold the Business
Interests and to enter into this Agreement and to carry out
its terms;
(b) the making of this Agreement, the completion of the trans-
actions contemplated hereby and the performance of and compliance
with the terms hereof, does not conflict with or result in the
breach of or the acceleration of any indebtedness under, any
terms, provisions or conditions of, or constitute default under
the constating documents of Tysa or any share- holder agreement,
indenture, mortgage, deed of trust, agreement, lease, franchise,
certificate,consent, permit, licence, authority or other
instrument to which Tysa is a party or is bound or any judgment,
decree, order, rule or regulation of any court or administrative
body by which Tysa is bound, or, to its knowledge, of any law or
regulation applicable to Tysa, and to its knowledge Tysa is not
in breach, default or otherwise in violation of any instrument to
which it is a party;
(c) the execution and delivery of this Agreement and the
completion of the transactions contemplated hereby have been,
or will be as of the Closing Date, duly and validly authorized
by all necessary corporate action on the part of Tysa, and
this Agreement constitutes a valid obligation of Tysa, legally
binding and enforceable against Tysa in accordance with its
terms;
(d) the authorized and issued capital of Tysa consists of 100,000
common shares without par value; the Vendors' Shares are
validly issued and outstanding as fully paid and
non-assessable, and comprise 82.5% of the issued and
outstanding shares of Tysa;
(e) other than an option to purchase 12.5% of the shares of Tysa,
granted to Abstract Enterprises Corp. ("Abstract"), as set out
in Schedule "E" hereto, no Person has any agreement, right or
option, consensual or arising by law, present or future,
contingent or absolute, or capable of becoming an agreement,
right or option:
(i) to require Tysa to issue any further or other shares
in its capital, or any other security convertible or
exchangeable into shares in its capital, or to
convert or exchange any securities into or for shares
in the capital of Tysa;
(ii) for the issue or allotment of any of the authorized
but unissued shares in the capital of Tysa;
(iii) to require Tysa to purchase, redeem or otherwise
acquire any of the issued and outstanding shares in the capital of Tysa; or
(iv) to purchase or otherwise acquire any shares in the
capital of Tysa;
(f) except as set forth on Schedule "E" hereto, Tysa does not have
any material contracts, agreements, undertakings or
arrangements, whether oral, written or implied, of any nature;
(g) there are no actions, suits, judgments, investigations or
proceedings outstanding or pending or to its knowledge
threatened against or affecting Tysa at law or in equity or
before or by any court or governmental authority, department,
commission, board, tribunal, bureau or agency and Tysa is not
a party to or threatened with any litigation;
(h) Tysa is the sole recorded holder and sole legal beneficiary of
the Business Interests as set out in Schedule "B", and to
Tysa's knowledge, the Business Interests are in good standing
in accordance with the laws of Washington, Ohio and
California;
(i) to Tysa's knowledge, Tysa is not in default of any provision
of any of the Business Interests and Tysa knows of no reason
for the Business Interests to be cancelled or terminated prior
to the expiry of the term thereof;
(j) the Business Interests and the assets utilized therein consti-
tute set out the material assets of Tysa;
(k) from the date of the execution of the LOI between FNTF and
Tysa there has not been, occurred or arisen any:
(i) transaction by Tysa except in the ordinary course of
business as conducted on that date and consistent
with past practices, other than the sale of 5%, and
the granting of an option on 12.5%, of the capital of
Tysa to Abstract;
(ii) amendments or changes to the Articles of Incorpora-
tion or Bylaws of Tysa;
(iii) capital expenditure or commitment for capital
expenditures by Tysa, in any individual amount
exceeding $5,000, or in the aggregate, exceeding
$10,000, except as discussed with and approved in
writing by FNTF;
(iv) destruction of, damage to, or loss of any assets
(including, without limitation, intangible assets),
business or customer of Tysa (whether or not covered
by insurance) which would constitute a Material
Adverse Effect;
(v) written claim of wrongful discharge or other unlawful
labor practice or action;
(vi) change in accounting methods or practices (including
any change in depreciation or amortization policies
or rates, any change in policies in making or
reversing accruals, or any change in capitalization
of software development costs) by Tysa, other than
the conversion to a full accrual method of
accounting, which has been disclosed to FNTF;
(vii) revaluation by Tysa of any of its material assets;
(viii) declaration, setting aside, or payment of a dividend
or other distribution in respect to the capital stock
of Tysa, or any direct or indirect redemption,
purchase or other acquisition by Tysa of any of its
capital stock that will result in Tysa violating the
covenants set forth in Section 8.1 of this Agreement;
(ix) increase in the salary or other compensation payable
or to become payable by Tysa to any officers,
directors, employees or consultants of Tysa, except
in the ordinary course of business consistent with
past practice, or the declaration, payment, or
commitment or obligation of any kind for the payment
by Tysa of a bonus or other additional salary or
compensation to any such person, that will result in
Tysa violating the covenants set forth in Section 8.1
of this Agreement;
(x) the establishment of any bonus, insurance, deferred
compensation, pension, retirement, profit sharing,
stock option (including without limitation, the
granting of stock options, stock appreciation rights,
performance awards), stock purchase or other employee
benefit plan;
(xi) sale, lease, license or other disposition of any
of the assets or properties of Tysa, except the sale to
Abstract or in the ordinary course of business;
(xii) termination or material amendment of any material
contract, agreement or license (including any
distribution agreement) to which Tysa is a party or
by which it is bound;
(xiii) loan by Tysa to any person or entity, or guaranty by
Tysa of any loan, except for (i) travel or similar
advances made to employees in connection with their
employment duties in the ordinary course of business,
consistent with past practices and (ii) trade
payables not in the ordinary course of business,
consistent with past practices;
(xiv) waiver or release of any right or claim of Tysa,
including any write-off or other compromise of any
account receivable of Tysa, in excess of $5,000 in
the aggregate;
(xv) commencement or notice or threat of commencement of
any lawsuit or proceeding against Tysa or, to Tysa's
or Tysa's officers' or directors' knowledge,
investigation of Tysa or its affairs;
(xvi) written notice of any claim of ownership by a third
party of Tysa's Intellectual Property as defined
below, or of infringement by Tysa of any third
party's Intellectual Property rights;
(xvii) issuance or sale by Tysa of any of its shares of
capital stock, or securities exchangeable,
convertible or exercisable therefor, or of any other
of its securities other than to Abstract as herein
before described;
(xviii) material change in pricing or royalties set or
charged by Tysa to its customers or licensees or in
pricing or royalties set or charged by persons who
have licensed Intellectual Property to Tysa;
(xix) to Tysa's knowledge, any event or condition of any
character that has or could reasonably be expected to
have a Material Adverse Effect on Tysa; and
(xx) agreement by Tysa, or any officer or employee of Tysa
on behalf of Tysa to do any of the things described
in the preceding clauses (i) through (xix) (other
than negotiations with FNTF and its representatives
regarding the transactions contemplated by this
Agreement);
(l) there is no private or governmental action, suit, proceed-
ing, claim, arbitration or investigation pending before any
agency, court or tribunal, foreign or domestic, for which Tysa
has received notice thereof or, to Tysa's knowledge, threatened
against Tysa or any of its proper- ties or any of its officers or
directors (in their capacities as such) that, individually or in
the aggregate, could reasonably be expected to have a Material
Adverse Effect on Tysa. There is no judgment, decree or order
against Tysa or, to Tysa's knowledge, any of its directors or
officers (in their capacities as such), that could prevent,
enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on Tysa. All litiga-
tion to which Tysa is a party (or, to the knowledge of Tysa,
threatened to be- come a party) has been disclosed in the Tysa
Disclosure Schedule;
(m) there is no agreement, judgment, injunction, order or decree
binding upon Tysa which has or could reasonably be expected to
have the effect of prohibiting or materially impairing any
current or future business practice of Tysa, any acquisition
of property by Tysa or the overall business activity as
currently conducted by Tysa. Tysa has not entered into any
agreement under which Tysa is restricted from selling,
licensing or otherwise distributing any of its products to any
class of customers, in any geographic area, during any period
of time or in any segment of the market;
(n) Permits; Tysa Products; Regulation
(i) to Tysa's knowledge, Tysa is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and
orders necessary for Tysa, to own, lease and operate its
properties or to carry on its business as it is now being
conducted (the "Tysa Authorizations") and no suspension or
cancellation of any Tysa Authorization is pending or
threatened,except, in any case, where the failure to have, or the
suspension or cancellation of, any Tysa Authorization could not
reasonably be expected to have a Material Adverse Effect on Tysa.
To its knowledge, Tysa is not in conflict with, or in default or
violation of, (i) any laws applicable to Tysa or by which any
property or asset of Tysa is bound or affected, (ii) any Tysa
Author- ization or (iii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Tysa is a party or by which
Tysa or any property or asset of Tysa is bound or affected,
except, in any case, for any such conflict, default or violation
that would not, individually or in the aggregate have a Material
Adverse Effect on Tysa;
(ii) except as would not reasonably be expected to have a
Material Adverse Effect on Tysa, to Tysa's knowledge, there have
been no written notices, citations or decisions by any
governmental or regulatory body that any product produced,
manufactured, marketed or distributed at any time by Tysa (the
"Products") is defective or fails to meet any applicable
standards promulgated by any such governmental or regulatory
body. To the knowledge of Tysa and the Vendors, Tysa has complied
in all material respects with the laws, regulations, policies,
procedures and specifications with respect to the design,
manufacture, labeling, testing and inspection of the Products.
There have been no recalls, field notifications or seizures
ordered or, to Tysa's knowledge, threatened by any such
governmental or regulatory body with respect to any of the
Products; and
(iii) to Tysa's knowledge, Tysa has obtained wherever Tysa
is marketing or has marketed its Products, all
applicable licenses, registrations, approvals,
clearances and authorizations required by local,
state or federal agencies in such countries
regulating the safety, effectiveness and market
clearance of the Products currently or previously
marketed by Tysa in such countries, except for any
such failures as would not, individually or in the
aggregate, reasonably be expected to have a Material
Adverse Effect on Tysa;
(o) Title to Property
(i) Tysa has good and marketable title to all of its res-
pective properties, interests in properties and assets, real and
personal, reflected in the Tysa Balance Sheet or acquired after
the Tysa Balance Sheet Date (except properties, interests in
properties and assets sold or otherwise disposed of since the
Tysa Balance Sheet Date in the ordinary course of business), or
with respect to leased properties and assets, valid lease- hold
interests in, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except (i) the
lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will
not materially detract from or interfere with the use of the
properties subject thereto or affected thereby, otherwise
materially impair business operations involving such properties
and (iii) liens secur- ing debt which is reflected on the Tysa
Balance Sheet. The plants, property and equipment of Tysa that
are used in the operations of its business are in good operating
condition and repair, less ordinary wear and tear;
(ii) the Tysa Balance Sheet and Schedule B (collectively
the "Tysa Disclosure Schedule") also sets forth a
true, correct and complete list of all equipment (the
"Equipment") owned or leased by Tysa, and such
Equipment is, taken as a whole, (i) adequate for the
conduct of Tysa's business, consistent with its past
practice and (ii) in good operating condition (except
for ordinary wear and tear);
(p) Intellectual Property
(i) Tysa owns, or is licensed or otherwise possess
legally enforceable rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights,
service marks, copyrights, and any applications for any of the
foregoing, net lists, schematics, industrial models, inventions,
technology, know-how, trade secrets, inventory, ideas,
algorithms, processes, computer software programs or applications
(in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual
Property") that are used or proposed to be used in the busi- ness
of Tysa as currently conducted by Tysa, except to the extent that
the failure to have such rights has not had and could not
reasonably be expected to have a Material Adverse Effect on Tysa;
(ii) the Tysa Disclosure Schedule lists (i) all
patents and patent applications and all registered and
unregistered trademarks, trade names and service marks,
registered and unregistered copy- rights, and mask work rights,
included in the Intellectual Property, including the
jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such
issuance and registration has been filed, (ii) all licenses,
sublicenses and other agree- ments to which Tysa is a party and
pursuant to which any person is authorized to use any
Intellectual Property, and (iii) all
licenses, sublicenses and other agreements as to which Tysa is a
party and pursuant to which Tysa is authorized to use any third
party patents, trade- marks or copyrights, including software
("Third Party Intellectual Proper- ty Rights") which are
incorporated in, are, or form a part of any products of Tysa that
are, individually or in the aggregate, material to the business
of Tysa. To its knowledge, Tysa is not in violation of any li-
cense, sublicense or agreement described in the Tysa Disclosure
Schedule. Ex- cept as set forth in the Tysa Disclosure Schedule,
Tysa is the sole and exclusive owner or licensee of, with all
right, title and interest in and to (free and clear of any
liens), the Intellectual Property, and has sole and exclusive
rights (and is not contractually obligated to pay any
compensation to any third party in respect thereof) to the use
thereof or the material covered thereby in connection with the
services or products in respect of which Intellectual Property is
being used;
(iii) to Tysa's knowledge, there is no material
unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights
of Tysa, any trade secret material to Tysa any
Subsidiary or any Intellectual Property right of any
third party to the extent licensed by or through
Tysa, by any third party, including any employee or
former employee of Tysa. Tysa has not entered into
any agreement to indemnify any other person against
any charge of infringement of any Intellectual
Property, other than indemnification provisions
contained in purchase orders arising in the ordinary
course of business;
(iv) Tysa is not nor will be as a result of the execution
and delivery of this Agreement or the performance of
its obligations under this Agreement, in breach of
any license, sublicense or other agreement relating
to the Intellectual Property or Third Party
Intellectual Property Rights, the breach of which
could reasonably be expected to have a Material
Adverse Effect on Tysa;
(v) to Tysa's knowledge, all patents, registered
trademarks, service marks and copyrights held by Tysa are valid
and existing and there is no assertion or claim (or basis
therefor) challenging the validity of any Intellectual Property
of Tysa. Tysa has not been sued in any suit, action or proceeding
which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade
secret or other proprietary right of any third party. To Tysa's
and the Ven- dors' knowledge, neither the conduct of the business
of Tysa as currently con- ducted or contemplated nor the
manufacture, sale, licensing or use of any of the products of
Tysa as now manufactured, sold or licensed or used, nor the use
in any way of the Intellectual Property in the manufacture, use,
sale or li- censing by Tysa of any products currently proposed,
infringes on or will in- fringe or conflict with, in any way, any
license, trademark, trademark right, trade name, trade name
right, patent, patent right, industrial model, invention, service
xxxx or copyright of any third party that, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect on Tysa. All registered trademarks, service marks
and copyrights held by Tysa are valid and subsisting. To Tysa's
knowledge, no third party is challenging the ownership by Tysa,
or validity or effectiveness of, any of the Intellectual
Property. Tysa has not brought any action, suit or proceed- ing
for infringement of Intellectual Property or breach of any
license or agreement involving Intellectual Property against any
third party. There are no pending, or to the best of Tysa's
knowledge, threatened interference, re- examinations, oppositions
or nullities involving any patents, patent rights or applications
therefor of Tysa or any Subsidiary, except such as may have been
commenced by Tysa. To Tysa's knowledge there is no breach or
violation of or threatened or actual loss of rights under any
licenses to which Tysa is a party;
(vi) Tysa has secured valid written assignments from all
consultants and employees who contributed to the
creation or development of Intellectual Property of
the rights to such contributions that Tysa does not
already own by operation of law; and
(vii) to Tysa's knowledge, Tysa has taken all necessary
and appropriate steps to protect and preserve the confidentiality
of all Intellectual Property not otherwise protected by patents,
patent applica- tions or copyright ("Confidential Information").
Tysa has a policy requiring each of its employees and contractors
to execute proprietary information and confidentiality agreements
substantially in Tysa's standard forms and all current and former
employees and contractors of Tysa and each Subsidiary have
executed such an agreement. All use, disclosure or appropriation
of Confi- dential Information owned by Tysa by or to a third
party has been pursuant to the terms of a written agreement
between Tysa and such third party and all use, disclosure or
appropriation of Confidential Information not owned by Tysa has
been pursuant to the terms of a written agreement between Tysa
and the owner of such Confidential Information, or is otherwise
lawful;
(p) Environmental Matters
(i) to Tysa's knowledge, Tysa has not violated in the past,
nor is it in current violation of any federal, state or local
laws, ordinances, codes, regulations, rules, policies and
orders, as each may be amended from time to time, that are
intended to assure the protection of the environment, or that
classify, regulate, call for the remediation of, require
reporting with respect to, or list or define air, water,
groundwater, solid waste, hazardous or toxic substances,
materials, wastes, pollutants or contaminants; which regulate
the manufacture, handling, transport, use, treatment, storage
or disposal of Hazardous Materials (as defined below) or
materials containing Hazardous Materials; or which are
intended to assure the protection, safety and good health of
employees, workers or other persons, including the public (the
"Environmental and Safety Laws"); (ii) for the purpose of this
section, "Hazardous Materials" shall mean any toxic or
hazardous substance, material or waste or any pollutant or
contaminant, or infectious or radioactive substance or
material, including without limitation, those substances,
materials and wastes defined in or regulated under any
Environmental and Safety Laws; petroleum or petroleum products
including crude oil or any fractions thereof; natural gas,
synthetic gas, or any mixtures thereof; radon; asbestos; or
any other pollutant or contaminant;
(q) Taxes
(i) for purposes of this paragraph and other provisions
of this Agreement relating to Taxes, the following
definitions shall apply:
(A) the term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or
other additions to tax that may become payable in
respect thereof, (I) imposed by any federal,
territorial, state, local or foreign government or
any agency or political subdivision of any such
government, which taxes shall include, without
limiting the generality of the foregoing, all income
or profits taxes (including but not limited to,
federal, state and foreign income taxes), payroll and
employee withholding taxes, unemployment insurance
contributions, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise
taxes, gross receipts taxes, withholding taxes,
business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers' compensation, Pension
Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the
same or of a similar nature to any of the foregoing,
which are required to be paid, withheld or collected,
(II) any liability for the payment of amounts
referred to in (I) as a
result of being a member of any affiliated, consolidated,
combined or unitary group, or (III) any liability for amounts
referred to in (I) or (II) as a result of any obligations to
indemnify another person;
(B) the term "Returns" shall mean all reports,
estimates, declarations of estimated tax, information
statements and returns required to be filed in
connection with any Taxes, including information
returns with respect to backup withholding and other
payments to third parties; and
(ii) to Tysa's knowledge all Returns required to be
filed by or on behalf of Tysa have been duly filed on a timely
basis and such Returns are true, complete and correct in all
material respects. All Taxes shown to be payable on such Returns
or on subsequent assessments with respect thereto, and all
payments of estimated Taxes required to be made by or on be- half
of Tysa under Section 6655 of the Code or comparable provisions
of state, local or foreign law, have been paid in full on a
timely basis, and no other Taxes are payable by Tysa with respect
to items or periods covered by such Returns (whether or not shown
on or reportable on such Returns). To Tysa's knowledge, Tysa has
withheld and paid over all Taxes required to have been withheld
and paid over, and complied with all information reporting and
back- up withholding in connection with amounts paid or owing to
any employee, creditor, independent contractor, or other third
party. To Tysa's knowledge, there are no liens on any of the
assets of Tysa with respect to Taxes, other than liens for Taxes
not yet due and payable or for Taxes that Tysa is contest- ing in
good faith through appropriate proceedings. Tysa has no
subsidiaries and has not at any time been a member of an
affiliated group of corporations filing consolidated, combined or
unitary income or franchise tax returns for a period for which
the statute of limitations for any Tax potentially applicable as
a result of such membership has not expired;
(iii) to Tysa's knowledge, the amount of Tysa's liabilities
for unpaid Taxes for all periods through the date of
the Tysa Balance Sheet Date do not, in the aggregate,
exceed the amount of the current liability accruals
for Taxes reflected on the Financial Statements, and
the Financial Statements properly accrue in
accordance with GAAP all liabilities for Taxes of
Tysa payable after the Tysa Balance Sheet Date
attributable to transactions and events occurring
prior to such date. To Tysa's knowledge, no liability
for Taxes of Tysa has been incurred (or prior to
Closing will be incurred) since such date other than
in the ordinary course of business;
(iv) FNTF has been furnished by Tysa with true and
complete copies of (i) all relevant portions of
income tax audit reports, statements of deficiencies,
closing or other agreements received by or on behalf
of Tysa relating to Taxes, if any, and (ii) all
federal, state and foreign income or franchise tax
returns and state sales and use tax Returns for or
including Tysa for all periods since Tysa's
inception;
(v) to Tysa's knowledge, no audit of the Returns of or
including Tysa by a government or taxing authority is in process,
threatened or, to Tysa's knowledge, pending (either in writing or
orally, formally or informally). To Tysa's knowledge, no
deficiencies exist or have been asserted (either in writing or
orally, formally or informally) or are expected to be asserted
with respect to Taxes of Tysa, and Tysa has not received notice
(either in writing or orally, formally or informally) nor does it
expect to receive notice that it has not filed a Return or paid
Taxes required to be filed or paid. Tysa is not a party to any
action or proceeding for assessment or collection of Taxes, nor
has such event been asserted or threatened (either in writing or
orally, formally or informally) against Tysa or
any of its assets. No waiver or extension of any statute of
limitations is in effect with respect to Taxes or Returns of
Tysa. Tysa has disclosed on its federal and state income and
franchise tax returns all positions taken therein that could give
rise to a substantial understatement penalty within the meaning
of Code Section 6662 or comparable provisions of applicable state
tax laws, if any;
(vi) Tysa is not (nor has it ever been) parties to any tax
sharing agreement; and
(vii) Tysa is not, nor has it been, a United States real
property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. Tysa is not a "consenting
corporation" under Section 341(f) of the Code. Tysa has not
entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in
a non- deductible expense to Tysa pursuant to Section 280G of the
Code or an ex- cise tax to the recipient of such payment pursuant
to Section 4999 of the Code. Tysa has not agreed to, nor to
Tysa's knowledge is it required to make, other than by reason of
the purchase of the Vendor's Shares by FNTF, any adjust- ment
under Code Section 481(a) by reason of, a change in accounting
method, and Tysa will not otherwise have any income reportable
for a period ending after the Closing Date attributable to a
transaction or other event (e.g., an installment sale) occurring
prior to the Closing Date with respect to which Tysa received the
economic benefit prior to the Closing Date;
(r) Employee Benefit Plans
(i) Tysa does not have any employee benefit
plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) other than a
health insurance plan and a simple XXX plan for its employees.
Tysa has none of the following: (A) loans to a non-officer
employee in excess of $10,000, loans to officers and directors
and any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance,
sabbatical, medical, dental, vision care, disability, employee
relocation, cafeteria benefit (Code Section 125) or dependent
care (Code Section 129), life insurance or accident insurance
plans, programs or arrangements, (B) contracts and agreements
relating to employment that provide for annual compensation in
excess of $100,000 and severance agree- ments, with any of the
directors, officers or employees of Tysa (other than, in each
case, any such contract or agreement that is terminable by Tysa
at will or without penalty or other adverse consequence), (C)
bonus, pension, profit sharing, savings, deferred compensation or
incentive plans, programs or arrangements, (D) other fringe or
employee benefit plans, programs or arrangements that apply to
senior management of Tysa and that do not generally apply to all
employees, and (E) current or former employment or executive
compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of Tysa of greater than $10,000
remain for the benefit of, or relating to, any present or former
employee, consultant or director of Tysa to be the "Tysa Employee
Plans");
(ii) Tysa has furnished to FNTF a copy of each of
the Tysa Employee Plans and related plan
documents (including trust documents,
insurance policies or contracts, employee
booklets, summary plan descriptions and
other authorizing documents, and, to the
extent still in its possession, any material
employee communications relating thereto);
(iii) except as set forth in the Tysa Disclosure
Schedule, (A) none of the Tysa Employee Plans promises or
provides retiree medical or other retiree welfare or life
insurance benefits to any person; (B) to Tysa's knowledge, Tysa
has not incurred any liability under, and has complied in all
respects with, the Worker Adjustment Retraining Notification Act,
and no fact or event exists that could give rise to liability
under such act; and (C) to Tysa's knowledge, no compensation paid
or payable to any employee of Tysa has been, or will be,
non-deductible by reason of application of Section 162(m) of the
Code. No suit, administrative proceeding, action or other
litigation has been brought, or to the best knowledge of Tysa is
threatened, against or with respect to any such Employee Plan,
including any audit or inquiry by the IRS or United States
Department of Labor. Neither Tysa nor any ERISA Affiliate is a
party to, or has made any contribution to or otherwise incurred
any obligation under, any "multiemployer plan" as defined in
Section 3(37) of ERISA;
(iv) to Tysa's knowledge, with respect to each
Tysa Employee Plan, Tysa has complied with
(A) the applicable health care continuation
and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985
("COBRA") and the proposed regulations
thereunder and (B) the applicable
requirements of the Family Leave Act of 1993
and the regulations thereunder, except to
the extent that failure to comply would not,
in the aggregate, have a Material Adverse
Effect;
(v) to Tysa's knowledge, the consummation of the
transactions contemplated by this Agreement
will not (A) entitle any current or former
employee or other service provider of Tysa
or any ERISA Affiliate to severance benefits
or any other payment (including, without
limitation, unemployment compensation,
golden parachute or bonus), except as
expressly provided in this Agreement, or (B)
accelerate the time of payment or vesting of
any such benefits, or increase the amount of
compensation due any such employee or
service provider; and
(vi) to Tysa's knowledge, there has been no
amendment to, written interpretation or
announcement (whether or not written) by
Tysa or any ERISA Affiliate relating to, or
change in participation or coverage under,
any Tysa Employee Plan which would
materially increase the expense of
maintaining such Plan above the level of
expense incurred with respect to that Plan
for the most recent fiscal year included in
Tysa's financial statements;
(s) to Tysa's knowledge, neither the execution and delivery of
this Agreement nor the consummation of the transaction
contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any
director or employee of Tysa; (ii) materially increase any
benefits otherwise payable by Tysa; or (iii) result in the
acceleration of the time of payment or vesting of any such
benefits, that will result in Tysa's violation of its
covenants set forth in Section 8.1(h) of this Agreement;
(t) to Tysa's knowledge, Tysa is in compliance in all material
respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety
and health and employment practices, and is not engaged in any
unfair labor practice. There are no pending claims against
Tysa under any workers compensation plan or policy or for long
term disability for which Tysa has received written notice
thereof. Tysa has no material obligations under COBRA with
respect to any former employees or qualifying beneficiaries
thereunder. There are no controversies pending or, to Tysa's
knowledge, threatened, between Tysa and any of its employees,
which controversies have or could reasonably be expected to
have a Material Adverse Effect on Tysa. Tysa is not a party to
any collective bargaining agreement or other labor unions
contract nor does Tysa know of any activities or proceedings
of any labor union or organize any such employees;
(u) to Tysa's knowledge, Tysa has complied with, is not in
violation of, and has not received any notices of violation
with respect to, all other federal, state, local or foreign
statute, laws or regulations with respect to the conduct of
its business, or the ownership or operation of its business
and for which a more specific representation and warranty is
not otherwise provided in this Agreement, except for such
violations or failures to comply as could not reasonably be
expected to have a Material Adverse Effect on Target Co;
(v) the minute books of Tysa made available to FNTF contain a
complete summary of all meetings of directors and stockholders
or actions by written consent since the time of incorporation
of Tysa through the date of this Agreement, and reflect all
transactions referred to in such minutes accurately in all
material respects;
(w) to Tysa's knowledge, Tysa has delivered or made available
true and complete copies of each document which has been
requested by FNTF or its counsel in connection with their
legal and accounting review of Tysa;
(x) Tysa has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any transaction
contemplated hereby. For greater certainty, any fees owing to
ACT Consultants, Inc. with respect to this Agreement or the
transactions contemplated by this Agreement shall be borne
solely by the Vendors, and shall not be obligations of either
Tysa or FNTF; and
(y) to Tysa's knowledge, there is no Indebtedness of Tysa
which is not disclosed or reflected in the Tysa Financial
Statements, and the aggregate of all liabilities of Tysa will
not materially change prior to the Closing; Tysa is not
subject to liability or obligation arising out of the assets,
liabilities, business or operations of, or in any other manner
in connection with, any of its properties or assets.
7. FNTF'S WARRANTIES AND REPRESENTATIONS
7.1 FNTF warrants and represents to the Vendors and Tysa, with the
intent that the Vendors and Tysa will rely thereon in entering into this
Agreement and in concluding the transactions contemplated herein that to the
best of its knowledge:
(a) FNTF is a company duly incorporated, validly existing and
in good standing under the laws of Nevada; FNTF is up to date
in all material filings required in Nevada, and is not
registered or otherwise carrying on business in any other
jurisdiction in the USA; FNTF has all requisite corporate
authority and power to own its own property and assets, to
carry on its business and to enter into the transactions
contemplated by this Agreement;
(b) FNTF has no subsidiaries or corporate affiliates
and has not, at any time, had a corporate name other than FNTF;
(c) the execution and delivery of this Agreement and the
completion of the transactions contemplated hereby has been,
or will as at the Closing be, duly and validly authorized by
all necessary corporate action on the part of FNTF, and this
Agreement constitutes a legal, valid and binding obligation of
FNTF enforceable against FNTF in accordance with its terms;
(d) the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the terms hereof, does not conflict with or
result in the breach of or the acceleration of any
indebtedness under, any terms, provisions or conditions of, or
constitute default under, the Memorandum or Articles of FNTF
or any shareholder agreement indenture, mortgage, deed of
trust, agreement, lease, franchise, certificate, consent,
permit, licence, authority or other instrument to which FNTF
is a party or is bound or any judgment, decree, order, rule or
regulation or any securities commission policy or stock
exchange rule of any court or administrative body by which
FNTF is bound, or, to its knowledge, of any statute or
regulation applicable to FNTF;
(e) the authorized capital of FNTF consists of 25,000,000
common shares of which 8,500,000 common shares are issued and
outstanding as fully paid and non-assessable and, except for
the Shares to be acquired under the Private Placement and
except as otherwise disclosed to the Vendors and Tysa in the
FNTF Financial Statements and interim quarterly statements, no
Person holds any securities convertible into Shares or into
any other securities of FNTF, or has any agreement, warrant or
option or any right capable of becoming an agreement, warrant
or option for the purchase of any unissued Shares or other
securities of FNTF;
(f) the Shares to be acquired by the Vendors will, at the time
of issue, be duly allotted, validly issued, fully paid and
non-assessable and, upon completion of the purchase and sale
of the Vendors' Shares, the Vendors or their nominees shall be
the beneficial and registered holders of the Exchanged Shares
as fully paid and non-assessable, free and clear of all Liens,
if any;
(g) the audited financial statements of FNTF dated December
31, 1999, a copy of which is attached as Schedule "C" hereto,
have been prepared in accordance with generally accepted
accounting principles in the U.S.A., consistently followed
through the period indicated, and consistent with past
practice, are true and correct in every material respect,
present fairly and accurately the financial position and
results of the operations of FNTF for the periods then ended,
contain no untrue, false or misleading statements of a
material fact, and no material fact or information has been
omitted therefrom;
(h) all material contracts of FNTF are listed on Schedule "F"
hereof and have been disclosed or provided to Tysa or the
Vendors and all such material contracts are in good standing
in all material respects and not in default in any material
respect;
(i) as at the date of this Agreement, except as disclosed in
the FNTF Financial Statements, to the knowledge of FNTF there
are no material liabilities, contingent or otherwise,
including assessed or unassessed liabilities for taxes and
environmental liabilities nor is there any undisclosed
litigation, proceeding or investigation pending or threatened
against FNTF, its property or business, nor does FNTF know of
any basis for any litigation, proceeding or investigation
against FNTF, its properties or business;
(j) to the knowledge of FNTF there is no Indebtedness of FNTF
which is not disclosed or reflected in the FNTF Financial
Statements, and the aggregate of all liabilities of FNTF will
not materially change prior to the Closing; FNTF is not
subject to liability or obligation arising out of
the assets, liabilities, business or operations of, or in any
other manner in connection with, any of its properties or assets;
(k) FNTF has not guaranteed, or agreed to guarantee, any
Indebtedness or other obligation of any Person;
(l) there are no shareholders of FNTF indebted to FNTF
and FNTF is not indebted to any of its shareholders; and
(m) FNTF is not a party to any legal proceedings and to FNTF's
knowledge, there are no material actions, suits, judgments,
investigations or proceedings outstanding or pending or to the
knowledge of FNTF threatened against or affecting FNTF at law
or in equity or before or by any court or federal, provincial,
state, municipal or other governmental authority, department,
commission, board, tribunal, bureau or agency and FNTF is not
a party to or threatened with any litigation.
(n) all of the material transactions of FNTF have been
promptly and properly recorded or filed in or with the books
or records of FNTF and the minute books of FNTF contain the
records of the meetings and proceedings of FNTF's directors,
shareholders and other committees, if any;
(o) FNTF is not in breach of any statute, regulation or by-law
applicable to the operations of FNTF which would have a
Material Adverse Effect in the financial position or condition
of FNTF;
(p) FNTF has no knowledge of any information or facts relating
to the affairs, business, operations, assets, liabilities
(contingent or otherwise), capital or condition (financial or
otherwise) of FNTF, either individually or taken as a whole,
except as disclosed hereunder which, if known to the Vendors,
might reasonably be expected to deter the Vendors from
completing the transactions herein contemplated and any such
facts arising or occurring hereafter prior to the Closing
shall forthwith be disclosed in writing to the Vendors; and
(q) FNTF has no knowledge of any material liabilities of FNTF
of any kind whatsoever, whether or not accrued and whether or
not determined or determinable, in respect of which the Vendor
or Tysa or the Purchaser may become liable on or after the
consummation of the transactions contemplated by this
Agreement other than those arising in the ordinary course of
business.
8. COVENANTS OF THE PARTIES
8.1 Tysa hereby covenants and agrees with FNTF that be-
tween the date of this Agreement and the Closing, Tysa will:
(a) provide to FNTF and its authorized representatives access
to all books, contracts, commitments and records of Tysa, and
will furnish such copies (certified if requested) thereof and
other information as FNTF may reasonably request, and will
take such steps as may be necessary to permit FNTF and its
authorized representatives to make such audit of the books of
account of Tysa and such physical verification of the Business
Interests as FNTF may reasonably see fit;
(b) diligently take all reasonable steps to obtain, prior to
the Closing, all consents and approvals required to complete
the transactions contemplated herein in accordance with the
terms and conditions hereof including any consents, waivers
and approvals as reasonably requested by FNTF or FNTF's
solicitors;
(c) together with the Vendors, do any and all things
reasonable necessary and use their best efforts, to assist and
fully cooperate with FNTF in its efforts to obtain the
Approvals;
(d) make all such filings as are required in connection with
the Bulk Sales laws of Washington State, including, without
limitation, the filings and public notice requirements of the
Washington State Uniform Commercial Code, if any;
(e) take such steps and to assist and fully cooperate with
FNTF as may be necessary to comply with the securities and
Blue Sky Laws of all jurisdictions which are applicable to the
issuance of the Shares pursuant hereto;
during the period from the date of this Agreement and
continuing until the earlier of the termination of
this Agreement or the Closing Date, Tysa agrees
(except to the extent that the FNTF shall otherwise
consent in writing) that Tysa shall promptly notify
FNTF of any event or occurrence or emergency that is
not in the ordinary course of business of Tysa and
that is material and adverse to the business of Tysa.
Tysa shall not without the prior consent of FNTF (i)
amend its Certificate of Incorporation in any manner
that would materially adversely affect the rights of
holders of FNTF shares, (ii) issue, deliver or sell
or authorize or propose the issuance, delivery or
sale of, or purchase or propose the purchase of, any
shares of its capital stock of any class or
securities convertible into, or subscriptions,
rights, warrants or options to acquire, or other
agreements or commitments of any character obligating
it to issue any such shares or other convertible
securities, except for the issuance of shares of its
capital stock or options to purchase shares of its
capital stock (A) in connection with privately
negotiated sales of stock pursuant to corporate
partnering arrangements in effect on the date hereof,
or (B) pursuant to stock option grants or exercises
or other employee stock benefit plans, (iii) take, or
agree in writing or otherwise to take, any action
that would make any of the representations,
warranties or covenants of Tysa contained in this
Agreement untrue or incorrect or prevent Tysa from
performing or cause Tysa not to perform its covenants
hereunder, or (iv) declare or pay any cash dividends
or make any other cash distributions in respect of
any of its capital stock, or repurchase or otherwise
acquire, directly or indirectly any shares of its
capital stock (other than in connection with the
repurchase of stock from terminated employees), that
will result in the violation of the covenants set
forth in Section 8.1 of this Agreement; and
(g) that Tysa shall have maintained a minimum of net
current assets on the Closing Date of at least
US$60,000, of which a minimum of US$15,000 shall be
in cash or cash equivalents.
8.2 FNTF hereby covenants and agrees with Tysa and the Vendors that
between the date of this Agreement and the Closing, FNTF will:
(a) provide to the Vendors and their authorized
representatives access to all books, contracts, commitments
and records of FNTF and will furnish such copies (certified if
requested) thereof and other information as the Vendors may
reasonably request, and will take such steps as may be
necessary to permit the Vendors and their authorized
representatives to make such audit of
the books of account of FNTF and such physical verification of
the assets of FNTF as the Vendors may reasonably see fit;
(b) unless otherwise provided by the by-laws of FNTF or Nevada
corporations law, call a general meeting of its shareholders
to be held as soon as practicable after execution hereof to
consider and, if thought fit, approve resolutions respecting
the following matters, subject to the Closing taking place,
together with such amendments as the Vendors may specify prior
to the date notice of such meeting is mailed to FNTF's
shareholders:
(i) approval of the Name Change and any other
amendment to the organizing documents of FNTF to
increase the board of directors by one director and
to provide that two nominees of Vendors shall be
appointed to the board of directors of FNTF following
the Closing, all by special resolution;
(ii) approval of the following matters as one
resolution: the purchase of the Vendors' Shares by
FNTF on the terms and conditions hereof; the issuance
and allotment of the Shares to the Vendors as
contemplated herein, and any change in control
resulting therefrom, including but not limited to the
agreement to elect the two nominees of Vendors to the
board of directors of FNTF following the Closing; and
the issuance of the Private Placement Shares; and
(iii) such other matters pertaining to the
transactions contemplated herein as may be required
by FNTF or reasonably requested by Tysa or the
Vendors;
(c) prepare and file as soon as practical after the exe-
cution of this Agreement a share exchange takeover bid for Abstract;
(d) use its best efforts to raise US$500,000 by way of
the Private Placement for the Private Placement Shares;
(e) use its reasonable best efforts to obtain the
Approvals and deliver written confirmation of the same, to the Vendors;
(f) attend to all corporate matters to carry out and implement the Name
Change as soon as possible, to have effect immediately following the Closing;
and
(g) during the period from the date of this Agreement and
continuing until the earlier of the termination of this
Agreement or the Closing Date, FNTF agrees (except to the
extent that the Vendors and Tysa shall otherwise consent in
writing) that FNTF shall promptly notify Tysa of any event or
occurrence or emergency that is not in the ordinary course of
business of FNTF and that is material and adverse to the
business of FNTF. FNTF shall not without the prior consent of
Vendors and Tysa (i) amend its Certificate of Incorporation in
any manner that would materially adversely affect the rights
of Vendors and Tysa, (ii) issue, deliver or sell or authorize
or propose the issuance, delivery or sale of, or purchase or
propose the purchase of, any shares of its capital stock of
any class or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such
shares or other convertible securities, except for the
issuance of shares of its capital stock or options to purchase
shares of its capital stock in connection with this Agreement,
(iii) take, or agree in writing or otherwise to take, any
action that would make any of the representations, warranties
or covenants of FNTF contained in this Agreement untrue or
incorrect or prevent FNTF from performing or cause FNTF not to
perform its covenants hereunder, or (iv) declare or
pay any cash dividends or make any other cash distributions in
respect of any of its capital stock, or repurchase or otherwise
acquire, directly or indirectly any shares of its capital stock.
9. SURVIVAL
9.1 The representations, warranties, covenants and agreements of the
Vendors and Tysa contained herein and those contained in the documents and
instruments delivered pursuant hereto will survive the Closing Date, and
notwithstanding the completion of the transactions herein contemplated, the
waiver of any condition contained herein (unless such waiver expressly releases
the Vendors or Tysa of such representation, warranty, covenant or agreement), or
any investigation by FNTF, the same will remain in full force and effect
thereafter for a period of 18 months.
9.2 The representations, warranties, covenants and agreements of FNTF
contained herein and those contained in the documents and instruments delivered
pursuant hereto will survive the Closing Date, and notwithstanding the
completion of the transactions herein contemplated, the waiver of any condition
contained herein (unless such waiver expressly releases FNTF of such
representation, warranty, covenant or agreement) or any investigation by the
Vendors, the same will remain in full force and effect, thereafter for a period
of 18 months.
10. CONDITIONS PRECEDENT
10.1 The obligations of FNTF to consummate the transactions herein
contemplated are subject to the fulfilment of each of the following conditions
at the times stipulated:
(a) the representations and warranties of the Vendors and Tysa
contained herein will be true and correct in all material
respects at and as of the Closing except as may be in writing
disclosed to and approved by FNTF;
(b) all covenants, agreements and obligations hereunder on the
part of the Vendors and Tysa to be performed or complied with
at or prior to the Closing, including the obligation of the
Vendors and Tysa to deliver the documents and instruments
herein provided for, have been performed and complied with at
and as of the Closing;
(c) all Approvals having been received;
(d) the parties will work together in good faith to sign any and
all other definitive agreements necessary and appropriate to
effect the purpose and agreements set forth herein;
(e) FNTF and its professional advisors and agents may conduct due
diligence of the Vendors and Tysa, including but not limited
to reviews of corporate information, status of environmental
matters, detailed financial statements, meetings with
management, material contracts, title to assets, etc. The
Vendors and Tysa will make full disclosure of existing and
contingent material liabilities and any material changes or
facts with respect to Tysa, and any all other items of a
material nature which may reasonably affect FNTF's decision to
proceed with the Transaction. The parties will execute and
deliver all such further documents and instruments and do all
such acts and things as the respective counterparties may
reasonably require in order to carry out the due diligence
process; and
(f) in the opinion of counsel to FNTF, the proposed transactions
will be in compliance with all applicable securities laws.
10.2 The conditions set forth in Section 10.1 are for the exclusive
benefit of FNTF and may be waived by FNTF in writing in whole or in part at any
time.
10.3 The obligations of the Vendors and Tysa to consummate the
transactions herein contemplated are subject to the fulfilment of each of the
following conditions at the times stipulated:
(a) the representations and warranties of FNTF contained here-
in will be true and correct in all material respects at and as of
the Closing except as may be in writing disclosed to and approved
by the Vendors;
(b) all covenants, agreements and obligations hereunder on the
part of FNTF to be performed or complied with at or prior to
the Closing, including in particular FNTF's obligations to
deliver the documents and instruments herein provided for,
including the Approvals, having been performed and complied
with as of the Closing; and
(c) all Approvals having been received.
10.4 The conditions set forth in Section 10.3 are for the exclusive
benefit of the Vendors and Tysa and may be waived by the Vendors and Tysa in
whole or in part at any time.
11. TRANSACTIONS OF THE VENDORS AT THE CLOSING
11.1 At the Closing, the Vendors will deliver or cause to
be delivered to FNTF the following:
(a) share certificates representing the Vendors' Shares
registered in the names of the Vendors, duly endorsed for transfer to FNTF;
(b) all such other documents as may be reasonably requested by
FNTF to properly carry out the purchase and sale contemplated
hereby including, if requested, a legal opinion of counsel for
the Vendors and Tysa; and
(c) management agreement executed by Xxxxx.
11.2 At the Closing, Tysa will deliver or cause to be
delivered to FNTF the following:
(a) certified copies of resolutions of directors of Tysa
authorizing the transfer of the Vendors' Shares and the
registration of the Vendors' Shares in the name of FNTF and
authorizing the issue of a new share certificate or
certificates representing common shares in the capital of FNTF
equal in number to the Vendors' Shares, in the name of FNTF;
and
(b) a duly issued share certificate or certificates registered
in the name of FNTF representing common shares in the capital
of Tysa equal in number to the Vendors' Shares.
12. TRANSACTIONS OF FNTF AT THE CLOSING
12.1 At the Closing, FNTF shall deliver or cause to be
delivered to Tysa and the Vendors the following:
(a) copies of all written Approvals;
(b) written confirmation of the Transfer Agent that
the Shares have been issued to the Vendors specified in Schedule
"A";
(c) all necessary forms as required by securities laws
and the rules thereto respecting the issuance of the Shares and
the Private Placement Shares;
(d) resignation of one director of FNTF;
(e) copies of all resolutions of the directors of FNTF
authorizing FNTF to:
(i) enter into and fulfil the terms of this
Agreement;
(ii) implement the Name Change of FNTF;
(iii) issue the Private Placement Shares and the
Shares; and
(iv) appoint the two new directors of FNTF as
contemplated herein.
(f) written confirmation of FNTF having prepared all
documentation required to complete the Name Change, other than
documentation to be filed following the Closing, which will be
tabled at Closing and filed immediately thereafter;
(g) all such documents and agreements as may be required
to carry out the Private Placement;
(h) copies of all resolutions of the members of FNTF
passed at the Shareholders Meeting to approve those matters as
set forth in section 8.2(b); and
(i) all such other documents as may be reasonably requested by
the Vendors or Tysa to properly carry out the purchase and
sale contemplated hereby including, if requested, a legal
opinion of counsel to FNTF; and
(j) management agreement duly executed by Xxxxx.
13. POST CLOSING AGREEMENTS
13.1 The Vendors severally will indemnify and hold harmless
FNTF from and against any and all losses, damages or
deficiencies resulting from any material misrepresentation,
breach of warranty or nonfulfillment of any covenant on the
part of the Vendors under this Agreement or from any
material misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished
by the Vendors to FNTF hereunder, and any and all actions,
suits, proceedings, demands, assessments, judgments, costs
and legal and other expenses incidental to any of the
foregoing, provided that FNTF shall have provided to the
Vendors written notice of its claim for such indemnification
within 18 months after the date of Closing.
13.2 FNTF will indemnify and hold harmless the Vendors and Tysa
from and against:
(a) any and all losses, damages or deficiencies resulting from any
material misrepresentation, breach of warranty or
nonfulfillment of any covenant on the part of FNTF under this
Agreement or from any material misrepresentation in or
omission from any certificate or other instrument furnished or
to be furnished to the Vendors or Tysa hereunder;
(b) any and all losses, damages or deficiencies resulting from any
Indebtedness of FNTF save and except Indebtedness disclosed in
the FNTF Financial Statements or disclosed in writing
hereunder; and
(c) any and all actions, suits, proceedings, demands, assess-
ments, judgments, costs and legal and other expenses incidental
to any of the foregoing.
13.3 Tysa will indemnify and hold harmless FNTF from and against:
(a) any and all losses, damages or deficiencies resulting from any
material misrepresentation, breach of warranty or
nonfulfillment of any covenant on the part of Tysa under this
Agreement or from any material misrepresentation in or
omission from any certificate or other instrument furnished or
to be furnished to FNTF hereunder;
(b) any and all losses, damages or deficiencies resulting from any
Indebtedness of Tysa save and except Indebtedness disclosed in
the Tysa Financial Statements or disclosed in writing
hereunder; and
(c) any and all actions, suits, proceedings, demands, assess-
ments, judgments, costs and legal and other expenses incidental
to any of the foregoing.
13.4 Limitation on Indemnification. Except as set forth
herein, the following limitations shall apply to the rights
of indemnification set forth in Sections 13.1 through 13.3
hereof as applicable (and notwithstanding Sections 9.5 and
9.6 hereof): (a) the liability of the Indemnitor shall be
net of any insurance benefits received by Indemnitee (or in
the case of indemnification by Vendors, of insurance
benefits received by the Company) and any tax benefits
received by Indemnitee (or in the case of indemnification by
Vendors, of tax benefits received by the Company) in respect
of the loss giving rise to the Claim for indemnification;
(b) any indemnification payments made by FNTF shall
constitute an increase, and any indemnification payments
made by Vendors or Tysa shall constitute a reduction, of the
Purchase Price; (c) the indemnification payable by Vendors
hereunder shall not exceed USD$500,000.00; and (d) no
indemnification shall be required from the Tysa or the
Vendors until the aggregate amount of FNTF's damages exceeds
USD$25,000.00, and then only for the amount in excess of
USD$25,000.00.
14. TIME OF THE ESSENCE
14.1 Time is of the essence in this Agreement.
15. FURTHER ASSURANCES
15.1 The parties will execute and deliver such further documents and instruments
and do all such acts and things as may be required to carry out the full intent
and meaning of this Agreement and to effect the transactions contemplated by
this Agreement.
15.2 Each of the Vendors hereby appoints Tysa as its agent to deliver, on behalf
of such Vendor, all such further documents as may, at the Closing, be required
to be delivered by such Vendor (in order to effect the transactions contemplated
by this Agreement).
16. SUCCESSORS AND ASSIGNS
16.1 This Agreement will enure to the benefit and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
17. COUNTERPARTS
17.1 This Agreement may be executed in several counterparts, and by facsimile,
each of which will be deemed to be an original and all of which will together
constitute one and the same instrument.
18. NOTICE
18.1 Any notice, request, demand or other communication required or permitted to
be given or sent or delivered hereunder to any party hereto shall be deemed to
have been properly given when delivered , sent by registered mail or sent by
facsimile with all postage or other charges fully prepaid, and addressed to the
parties respectively as follows:
(a) to FNTF:
x/x Xxxxx 000, 0000 Xxxxxxxxx Xxxxx
Xxxx, Xxxxxx, XXX 00000
Facsimile: 000 000-0000
Attention: President
with a copy to Xxxxxxx X. Xxxxxxxx:
Xxxxx 000, 0000 Xxxxxxxxx Xxxxx
Xxxx, Xxxxxx, XXX 89509
Facsimile: 000 000-0000
(b) to the Vendors or Tysa:
00000 000xx Xxxxxx X.X.
Xxxxxxxxxxx, XX, XXX 00000
Facsimile: 000 000 0000
Attention: President
with a copy to:
Foster, Swift, Xxxxxxx & Xxxxx, X.X.
000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX, XXX 00000
Facsimile: 000 000 0000
Attention: Xxxxx X. Xxxx
or such other address as any party hereto may specify by notice in writing in
accordance with this section 18 to the others.
18.2 Any notice, request, demand or other communication delivered
will be deemed to be given when delivered.
18.3 Any notice, request, demand or other communication sent
by facsimile on a business day will be deemed conclusively
to have been effectively given on the date notice was given,
if sent during normal business hours, and if not, on the
next business day thereafter.
18.4 Any notice, request, demand or other communication
delivered or sent by prepaid registered mail will be deemed
conclusively to have been effectively given on the third
business day after posting; but if at the time of posting or
between the time of posting and the third business day
thereafter there is a strike, lockout or other labour
disturbance affecting postal service, then the notice will
not be effectively given until actually delivered.
21. PROPER LAW
21.1 This Agreement will be governed by and construed in accordance with the
laws of Nevada and the parties will attorn to jurisdiction of the Courts
thereof.
22. ANNOUNCEMENTS
22.1 No announcements with respect to this Agreement will be made by any party
hereto without the prior approval of the other parties. The foregoing will not
apply to any announcement by any party required in order to comply with laws
pertaining to timely disclosure, provided that such party consults with the
other parties before making any such announcement.
23. ASSIGNMENT
23.1 The rights of FNTF, Tysa and the Vendors hereunder are not be
assignable.
24. ENTIRE AGREEMENT
24.1 This Agreement and the Schedules referred to herein constitute the entire
agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof. None of the parties hereto shall be bound or charged with
any oral or written agreements, representations, warranties, statements,
promises, information, arrangements or understandings not specifically set forth
in this Agreement or in the schedules, documents and instruments to be delivered
on or before the Closing pursuant to this Agreement.
25. WAIVER
25.1 Any party hereto which is entitled to the benefits of this Agreement may,
and has the right to, waive any term or condition hereof at any time on or prior
to the Closing; provided, however, that such waiver shall be evidenced by
written instrument duly executed on behalf of such party.
26. AMENDMENTS
26.1 No modification or amendment to this Agreement may be made unless
agreed to by the parties hereto in writing.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under
seal as of the day and year first above written.
FLINTROCK FINANCIAL SERVICES INC.
Per:
Authorized Signatory
TYSA CORPORATION
Per:
Authorized Signatory
Selling Shareholders of Tysa Corporation:
Signed and Delivered by )
XXXXXX XXX XXXXXXX )
in the presence of: )
) /s/ XXXXXX XXX XXXXXXX
-----------------------------
) XXXXXX XXX XXXXXXX
-------------------------
Signature )
Print Name:
Signed and Delivered by )
XXXXXXXX XXX XXXXXXX )
in the presence of: )
) /s/ XXXXXXXX XXX XXXXXXX
----------------------------
) XXXXXXXX XXX XXXXXXX
------------------------
Signature )
Print Name:
SCHEDULE "A"
VENDORS' SHARES PURCHASED AND EXCHANGED
----------------- ----------------------- --------------------------- ------------------ ---------------------------
Vendors Number Of Vendors' Number Of Exchanged Shares Shares Held Shares To Be Received
Shares
----------------- ----------------------- --------------------------- ------------------ ---------------------------
Xxxxx Van 21,038* 1,050,000 0 1,050,000
Leeuwen
----------------- ----------------------- --------------------------- ------------------ ---------------------------
Xxxxxxxx Van 21,037* 1,050,000 0 1,050,000
Leeuwen
----------------- ----------------------- --------------------------- ------------------ ---------------------------
* These 42,075 common shares of Tysa are actually jointly held by Xxxxx Xxx
Xxxxxxx and Xxxxxxxx Xxx Xxxxxxx as joint tenants with rights of survivorship.
SCHEDULE "B"
BUSINESS INTERESTS OF TYSA
SCHEDULE "C"
FLINTROCK
FINANCIAL STATEMENTS
SCHEDULE "D"
SECURITIES TO BE ISSUED
Description of Securities Number
------------------------- ------
Shares to be issued to Vendors 2,100,000
Private Placement Shares to be issued 225,000
Total: 2,325,000
SCHEDULE "E"
MATERIAL CONTRACTS OF TYSA
SCHEDULE "F"
MATERIAL CONTRACTS OF FLINTROCK
NIL
SCHEDULE "G"
TYSA FINANCIAL STATEMENTS
SCHEDULE "H"
MANAGEMENT AGREEMENT
