Share Purchase Agreement
THIS AGREEMENT made and effective as of July 31, 0000
X X X X X X X:
SYMPHONY TELECOM INC., a corporation incorporated
under the laws of the Province of Ontario, having
its principal place of business at 000 Xxx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0
(the "Purchaser")
- and -
SYMPHONY TELECOM INTERNATIONAL INC., a corporation
incorporated under the laws of the State of Utah,
having its principal place of business at 000 Xxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0
("SYMY")
- and -
XXX XXXXXX, of 00 Xxxxxxx Xxxxx, XX 00, Xxxxx Xxxx,
Xxxxxxx X0X 0X0
("Xxxxxx")
- and -
MANUCHER MISSAGHIE, of 00 Xxxxxxxxx Xxxxx, Xxxxxxxx
Xxxx, Xxxxxxx X0X 0X0
("Manucher")
- and -
XXXXXXX XXXXXXXX, of 00 Xxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxx X0X 0X0
("Xxxxxxx")
WHEREAS Xxxxxx, Xxxxxxxx and Xxxxxxx (collectively referred to as the "Vendors")
are the registered and beneficial owners of 692,500 common shares (the "Shares")
in the capital stock of Telemax Communications Inc. (the "Corporation"),
representing all of the issued and outstanding shares in the capital stock of
the Corporation;
AND WHEREAS the Vendors wish to sell to the Purchaser, and the Purchaser wishes
to purchase from the Vendors 307,500 of the Shares (the "Purchased Shares") in
accordance with the terms and conditions of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants,
agreements, warranties and payments herein set out and provided for, the parties
hereto covenant and agree as follows:
Article 1
Purchased Shares and Purchase Price
1.1 Subject to the terms and conditions hereof, the Vendors agree to sell
to the Purchaser and the Purchaser agrees to purchase from the Vendors
the Purchased Shares.
1.2 The consideration payable by the Purchaser to the Vendors for the
Purchased Shares shall be the aggregate of the following:
(a) The sum of $250,000 (CDN) shall be payable on Closing (as
defined below) by certified cheque or bank draft;
(b) The issuance from treasury of 1,000,000 common shares in the
capital stock of the Purchaser (the "Consideration Shares").
The Consideration Shares shall be exchangeable at any time
within five (5) years after Closing by the Vendors for common
shares in the capital stock of SYMY having a market value of
$3,000,000 (CDN);
(c) A Share Purchase Warrant (the "Warrant") exercisable at any
time within the period commencing six (6) months after the
Closing Date and ending twelve (12) months following the
Closing Date (extendable for six (6) months at the Vendors'
option) entitling the Vendors to purchase a further 1,000,000
common shares in the capital stock of the Purchaser for a
purchase price per share equal to thirty percent (30%) less
that the trading price of one share of SYMY (the "Warrant
Shares"). The Warrant Shares shall be exchangeable at any time
within five (5) years after Closing by the Vendors for common
shares in the capital stock SYMY on a one for one basis, fully
diluted, and subject to adjustment for stock dividends, stock
splits, stock consolidations and like adjustments;
(d) The sum of $250,000 (CDN) by shall be payable by certified
cheque or bank draft forthwith upon the annual sales of the
Corporation meeting or exceeding $15,000,000 (CDN) for the one
(1) year period from October 1, 2000 to September 30, 2001;
(e) The sum of $250,000 (CDN) shall be payable by certified cheque
or bank draft forthwith upon the annual sales of the
Corporation meeting or exceeding $30,000,000 (CDN) for the one
(1) year period from October 1, 2000 to September 30, 2001;
and
(f) The sum of $250,000 (CDN) shall be payable by certified cheque
or bank draft forthwith upon the annual sales of the
Corporation meeting or exceeding $45,000,000 (CDN) for the one
(1) year period from October 1, 2000 to September 30, 2001.
Article 2
Representations and Warranties of the Vendors
2.1 The Vendors covenant, represent and warrant as follows and acknowledge
that the Purchaser is relying upon such covenants, representations and
warranties in connection with the purchase by the Purchaser of the
Purchased Shares:
(a) The Corporation has been duly incorporated and is organized,
validly subsisting and in good standing under the laws of the
Province of Ontario.
(b) The Corporation is duly qualified as a corporation to do
business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the property
owned or leased by it makes such a qualification necessary.
(c) The authorized capital of the Corporation consists of an
unlimited number of common shares of which 692,500 shares have
been duly issued and are outstanding as fully paid and
non-assessable as follows:
Name of Shareholder Number of Common Shares
Xxxxxx 150,675
Manucher 110,700
Xxxxxxx 46,125
(d) No person, firm or corporation has any agreement or option, or
any right or privilege capable of becoming an agreement or
option for the purchase from the Vendors of any of the Shares.
(e) No person, firm or corporation has any agreement or option or
any right or privilege capable of becoming an agreement,
including convertible securities, warrants or convertible
obligations of any nature, for the purchase, subscription,
allotment or issuance of any of the unissued shares in the
capital of the Corporation or of any securities of the
Corporation.
(f) The sales revenue of the Corporation for its 2000 fiscal year
was approximately $9,600,000 (CDN).
(g) The sales revenue of the Corporation for its 2001 fiscal year
is projected to be $15,000,000 to $18,000,000 (CDN).
(h) The Corporation's outstanding debt to its bank is
approximately $300,000.
(i) The Corporation's assets include 1 switch at 000 Xxxxx Xxxxxx,
0xx Xxxxx, Xxxxxxx, Xxxxxxx, and 2 workstations, an accounting
network, miscellaneous software licenses, a complete graphics
system with work stations and associated software, a die cut
system and a scratch off system, all located at 000 Xxxxxxx
Xxxxxx, Xxxxx 00, Xxxxxxx, Xxxxxxx.
(j) The Vendors are the registered and beneficial owners of the
Purchased Shares, with good and marketable title thereto, free
and clear of any pledge, lien, charge, encumbrance or security
interest of any kind and the Vendors have the power and
authority and right to sell the Purchased Shares in accordance
with the terms of this Agreement.
(k) The books and records of the Corporation fairly and correctly
set out and disclose in all material respects, in accordance
with generally accepted accounting principles, the financial
position of the Corporation as of the date thereof and all
material financial transactions of the Corporation relating to
its business have been accurately recorded in such books and
records.
(l) The corporate records and minutes of the Corporation contain
complete and accurate minutes of all meetings of the directors
and shareholders of the Corporation held since incorporation
of the Corporation, all such meetings were duly called and
held, the share certificate books, register of shareholders,
register of transfers, and register of directors of the
Corporation are complete and accurate.
(m) There are no actions, suits, proceedings, investigations or
claims now threatened or pending against the Corporation in
respect of taxes, governmental charges or assessments, or any
matters under discussion with any governmental authority
relating to taxes, governmental charges or assessments
asserted by any such authority.
(n) The Corporation has no loans or indebtedness outstanding which
have been made to directors, former directors, officers,
shareholders and/or employees of the Corporation or to any
person or corporation not dealing at arms length with any of
the foregoing.
(o) The Corporation has good and marketable title to its assets,
free and clear of any and all claims, liens, encumbrances and
security interests whatsoever, with the exception of claims,
liens, encumbrances and security interests granted in favour
of lenders relating to debts which are reflected in the
Corporation's financial statements.
(p) Each of the Vendors is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada).
(q) The Corporation has duly and timely filed all tax returns
required to be filed by it and has paid all taxes which are
due and payable, and has paid all assessments and
reassessments, and all other taxes, governmental charges,
penalties, interest and fines due and payable by it on or
before the date hereof.
(r) The Corporation is not in default or breach of any contracts
or agreements (written or oral), or indentures or other
instruments to which it is a party and there exists no state
of facts which after notice or lapse of time or both would
constitute such a default or breach, and all such contracts,
agreements, indentures or other instruments are now in good
standing and the Corporation is entitled to all benefits
thereunder except as otherwise disclosed herein. The
Corporation is under no obligation in respect of its business
which the Corporation cannot reasonably be expected to fulfill
in the ordinary course of its business.
2.2 The covenants, representations and warranties of the Vendors contained
in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the closing of the purchase and sale of
the Purchased Shares herein provided for and, notwithstanding such
closing, or any investigation made by or on behalf of the Purchaser,
shall continue in full force and effect for the benefit of the
Purchaser for a period of five (5) years following closing of the
transaction provided for herein after which time the Vendors shall be
released from all obligations and liabilities hereunder in respect of
such representations and warranties except with respect to any claims
made by the Purchaser in writing prior to the expiration of such
period.
Article 3
Representations and Warranties of the Purchaser
3.1 The Purchaser and SYMY jointly and severally covenant, represent and
warrant as follows and acknowledge that the Vendors are relying upon
such covenants, representations and warranties in connection with the
purchase by the Purchasers of the Purchased Shares and the
consideration received by the Vendors in respect thereof:
(a) The Purchaser has been duly incorporated and is organized,
validly subsisting and in good standing under the laws of the
Province of Ontario. SYMY has been duly incorporated and is
organized, validly subsisting and in good standing under the
laws of the State of Utah.
(b) Each of the Purchaser and SYMY is duly qualified as a
corporation to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by
it or the property owned or leased by it makes such a
qualification necessary.
(c) The authorized capital of the Purchaser consists of an
unlimited number of common shares of which 7,924,375 shares
have been duly issued to SYMY and are outstanding as fully
paid and non-assessable (the "SYMY Shares"). The authorized
capital of SYMY consists of 50,000,000 common shares of which
16,260,409 shares have been duly issued and are outstanding as
fully paid and non-assessable.
(d) No person, firm or corporation has any agreement or option, or
any right or privilege capable of becoming an agreement or
option for the purchase from SYMY of any of the SYMY Shares.
(e) No person, firm or corporation has any agreement or option or
any right or privilege capable of becoming an agreement,
including convertible securities, warrants or convertible
obligations of any nature, for the purchase, subscription,
allotment or issuance of any of the unissued shares in the
capital of the Purchaser or of any securities of the
Purchaser.
(f) The books and records of the Purchaser and SYMY fairly and
correctly set out and disclose in all material respects, in
accordance with generally accepted accounting principles, the
respective financial positions of the Purchaser and SYMY as of
the date thereof and all material financial transactions of
the Purchaser and SYMY relating to their respective businesses
have been accurately recorded in such books and records.
(g) The corporate records and minutes of each of the Purchaser and
SYMY contain complete and accurate minutes of all meetings of
the directors and shareholders of the Purchaser and SYMY held
since incorporation of the Purchaser and SYMY, all such
meetings were duly called and held, the share certificate
books, register of shareholders, register of transfers, and
register of directors of the Purchaser and SYMY are complete
and accurate.
(h) The Purchaser has good and marketable title to its assets,
free and clear of any and all claims, liens, encumbrances and
security interests whatsoever, with the exception of claims,
liens, encumbrances and security interests granted in favour
of lenders relating to debts which are reflected in the
Purchaser's financial statements.
(i) The Purchaser is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada).
(j) The Purchaser has duly and timely filed all tax returns
required to be filed by it and has paid all taxes which are
due and payable, and has paid all assessments and
reassessments, and all other taxes, governmental charges,
penalties, interest and fines due and payable by it on or
before the date hereof.
(k) The Purchaser is not in default or breach of any contracts or
agreements (written or oral), or indentures or other
instruments to which it is a party and there exists no state
of facts which after notice or lapse of time or both would
constitute such a default or breach, and all such contracts,
agreements, indentures or other instruments are now in good
standing and the Purchaser is entitled to all benefits
thereunder except as otherwise disclosed herein. The Purchaser
is under no obligation in respect of its business which the
Purchaser cannot reasonably be expected to fulfill in the
ordinary course of its business.
3.2 The covenants, representations and warranties of the Purchaser and SYMY
contained in this Agreement and contained in any document or
certificate given pursuant hereto shall survive the closing of the
purchase and sale of the Purchased Shares herein provided for and,
notwithstanding such closing, or any investigation made by or on behalf
of the Vendors, shall continue in full force and effect for the benefit
of the Vendors for a period of five (5) years following closing of the
transaction provided for herein after which time the Purchaser and SYMY
shall be released from all obligations and liabilities hereunder in
respect of such representations and warranties except with respect to
any claims made by the Vendors in writing prior to the expiration of
such period.
Article 4
Indemnification
4.1 The Vendors agree to indemnify and save harmless the Purchaser of and
from any loss whatsoever arising out of, under or pursuant to:
(a) any material loss suffered by the Purchaser as a result of any
breach or inaccuracy of representation, warranty or covenant
contained in this Agreement; and
(b) all claims, demands, costs and expenses reasonably incurred in
respect of the foregoing.
4.2 The Purchaser and SYMY agree to indemnify and save harmless the Vendors
of and from any loss whatsoever arising out of, under or pursuant to:
(a) any material loss suffered by the Vendors as a result of any
breach or inaccuracy of representation, warranty or covenant
contained in this Agreement; and
(b) all claims, demands, costs and expenses reasonably incurred in
respect of the foregoing.
Article 5
Closing Arrangements
5.1 The closing shall take place at 4:00 p.m. on September 29, 2000 at the
offices of Xxxxxxx Xxxxx counsel for the Vendors.
5.2 Each of the parties hereto will from time to time at the other's
request and expense and without further consideration, execute and
deliver such other instruments of transfer, conveyance and assignment
and take such further action as the other may require to more
effectively complete any matter provided for herein.
5.3 Each party represents and warrants to each other party that, except as
otherwise expressly provided in this Agreement, no other party will be
liable for any brokerage commission, finder's fee or other like payment
in connection with the transactions contemplated hereby because of any
action taken by, or agreement or understanding reached by, the first
party.
5.4 The parties agree that all of the legal fees and expenses of the
Corporation and the Vendors incurred in connection with the
transactions contemplated by this Agreement shall be borne by the
Corporation.
5.5 The Purchaser shall have the right, prior to Closing, to have an
auditing firm, Xxxxxxxx, Quick & Furnival, to audit the books and
records of the Corporation, provided that (i) all costs and expenses of
such auditing firm shall be borne by the Purchaser, and (ii) the
Corporation shall in no way be responsible or liable to the Purchaser
or any third party for any negligence or wrongful conduct of such
auditors.
5.6 Any notice, direction or instrument required or permitted to be given
hereunder shall be in writing and may be given by mailing the same
postage prepaid or delivering the same addressed to the such party at
its address first above mentioned. Any notice, direction or other
instrument aforesaid, if delivered shall be deemed to have been given
or made on the date on which it was delivered or it mailed shall be
deemed to have been given or made on the third business day following
the day on which it was mailed. The Parties may change their addresses
for service from time to time by notice given in accordance with the
foregoing.
5.7 Time shall be of the essence of this Agreement.
5.8 This Agreement, including the Schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be
any verbal statements, representations, warranties, undertakings or
agreements between the parties and this Agreement may not be amended or
modified in any respect except by written instrument signed by the
parties hereto.
5.9 This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the
Province of Ontario.
5.10 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal
representatives, successors and assigns.
5.11 The parties acknowledge that the recitals herein are true and correct
in all material respects.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.
SYMPHONY TELECOM INC.
Per: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxx Xxxxxx
Title: President
SYMPHONY TELECOM INTERNATIONAL INC.
Per: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxx Xxxxxx
Title: President
By: /s/ Xxxxx Xxxxxxxx /s/ Xxx Xxxxxx
---------------------------------- -------------------------------------
Witness Xxxxx Xxxxxxxx XXX XXXXXX
By: /s/ Xxxxx Xxxxxxxx /s/ Manucher Missaghie
---------------------------------- -------------------------------------
Witness Xxxxx Xxxxxxxx" MANUCHER MISSAGHIE
By: /s/ Xxxxx Xxxxxxxx /s/ Xxxxxxx Xxxxxxxx
---------------------------------- -------------------------------------
Witness Xxxxx Xxxxxxxx XXXXXXX XXXXXXXX
