SHARE EXCHANGE AGREEMENT
MADE EFFECTIVE AS OF 16 FEBRUARY 2000 (the "Effective Date").
BETWEEN: XXXXXXXXXXXX.XXX HOLDINGS LIMITED, a company incorporated in
England with registered number 3863067 whose registered office
is situated at 000 Xxxxxx, Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxx,
XX0X 0XX ("Holdings");
AND: XXXXXX XXXXX XxXXXXXXX "Xx. XxXxxxxxx"), of 108 The
Butlers Wharf Building, 00 Xxxx Xxxxxx, Xxxxxx XX0 0XX
XXXXXXXX XXXXXXX ("Xx. Xxxxxxx"), of Xxxxxx Xxxxx, Xxxxxx
Xxxx, Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxxx XX00 0XX PRASHANT
XXXXXX XXXXX ("Xx. Xxxxx"), of 0 Xxxxxxxx Xxxxx, Xxxxx Xxx,
Xxxxxx, Xxxxxxxxx XX0 0XX XXXXX XXXXX XXXXXXXXX XXXXXXXX ("Xx.
Xxxxxxxx"), of Jessamine Lodge, Xxxxxxxxxxx Xxxxxxxx, Xxxx,
Xxxxxxx XX00 0XX; and THE CONTINENTAL TRUST COMPANY LIMITED
("Continental"), a company registered in Jersey whose
registered office is at P.O. Box 829, Xxxxxxx House, Xxxxxxx
Street, St. Helier, Jersey, JE4 0UE, Channel Islands
(collectively, the "Shareholders" and individually, a
"Shareholder");
AND: XXXXXXXXXXXX.XXX LIMITED, a company incorporated in
England with registered number 3835226 whose registered office
is situated at 000 Xxxxxx, Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxx,
XX0X 0XX; ("Yellowbubble");
AND: XXXXXXXXXXXX.XXX, INC., (formerly FAMOUS INTERNET MALL,
INC.), a Nevada corporation having an office at 804 - 1415
West Georgia Street, Vancouver, British Columbia, Canada, V6G
3C8 ("FIMI");
WHEREAS:
A. The authorized share capital of Yellowbubble consists of (pound)10,000
divided into 10,000 ordinary shares of (pound)1 each, of which only 1 ordinary
share (the "Yellowbubble Share") is issued and outstanding;
B. Holdings is the sole legal and beneficial owner of the Yellowbubble Share;
C. The authorized share capital of Holdings consists of (pound)10,000 divided
into 10,000 ordinary shares of (pound)1 each, all of which (the "Holdings
Shares") are issued and outstanding;
D. The sole legal and beneficial owners of the Holdings Shares are as follows:
Shareholder Number of Holdings Shares Held
----------- ------------------------------
Xx. Xxxxxxx 5,000
Continental (as trustee) 2,500
Xx. XxXxxxxxx 1,000
Xx. Xxxxxxxx 750
Xx. Xxxxx 750
------
Total 10,000
F. The Shareholders and FIMI have agreed to exchange the Holdings Shares for
voting common shares of FIMI, on the terms and conditions described in this
Agreement; and
G. Terra Growth Investment Fund ("Terra") has made a (pound)300,000 credit
facility (the "Credit Facility") available to Yellowbubble to provide bridge
financing pending completion of the transactions contemplated in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements herein contained, the parties hereto do covenant and agree (the
"Agreement") as follows:
1. SHARE EXCHANGE
1.1 Subject to the terms and conditions of this Agreement, the
Shareholders shall transfer all of the Holdings Shares to FIMI in exchange for
8,163,000 voting common shares of FIMI (the "FIMI Shares").
1.2 Except as expressly noted otherwise, the transactions contemplated
under this Agreement shall be completed (the "Completion") at the offices of
Yellowbubble's solicitors, Messrs. Xxxxxxxx Xxxxxx, 000 Xxxxxx, Xxxxxx, Xxxxxxx,
or at such other place as may be agreed between the parties, at 9:00 o'clock
a.m. local time in London, England, or at such other time as may be agreed
between the parties, (the "Time of Closing") on 2 March, 2000, or on such other
date as may be agreed between the parties, (the "Closing Date").
1.3 On the Closing Date, immediately prior to Completion, FIMI shall
purchase from existing FIMI shareholders 7,400,000 voting common shares of FIMI
for a price not to exceed US$0.0004 per share.
1.4 On or before the Closing Date, Yellowbubble shall meet the Closing
Milestones identified in the subscription agreement (the "Subscription
Agreement") attached as Schedule A to this Agreement. If Yellowbubble meets the
Closing Milestones on or before that date, then immediately after the transfer
of the Holdings Shares, FIMI shall complete a financing (the "Closing
Financing") to raise US$1,500,525 for working capital purposes, by issuing
102,600 voting common shares of FIMI at a price per share of US$14.625, in
accordance with the Subscription Agreement. If the Closing Milestones have not
been met by the Closing Date, then FIMI shall not be obliged to complete the
Closing Financing.
On the Closing Date, the Closing Financing proceeds shall be paid to the law
firm of Xxxxxxxx Xxxxxx ("Xxxxxxxx Xxxxxx") in trust for FIMI on Xxxxxxxx
Xxxxxx'x professional undertaking to immediately pay to Terra on behalf of FIMI
all amounts owing by Yellowbubble in respect of the Credit Facility and
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completely discharge the Credit Facility, and Yellowbubble shall thereupon be
indebted to FIMI to repay to FIMI a corresponding amount on demand without
interest, or on such other terms as may be agreed in writing between FIMI and
Yellowbubble.
1.5 Within 120 days after the Closing Date, Yellowbubble shall meet the
First Post-Closing Milestones identified in the Subscription Agreement. If
Yellowbubble meets the First Post-Closing Milestones within that period, then
FIMI shall complete a financing (the "First Post-Closing Financing") to raise
US$1,500,525 for working capital purposes, by issuing 102,600 voting common
shares of FIMI at a price per share of US$14.625, in accordance with the
Subscription Agreement. If the First Post-Closing Milestones have not been met
within 120 days after the Closing Date, then FIMI shall not be obliged to
complete the First Post-Closing Financing.
1.6 Within 120 days after the Closing Date, Yellowbubble shall meet the
Second Post-Closing Milestones identified in the Subscription Agreement. If
Yellowbubble meets the Second Post-Closing Milestones within that period, and if
FIMI receives the funds then due under the Subscription Agreement, then FIMI
shall complete a financing (the "Second Post-Closing Financing") to raise at
least US$2,000,700 for working capital purposes, by issuing 136,800 voting
common shares of FIMI at a price per share of US$14.625, in accordance with the
Subscription Agreement. If the Second Post-Closing Milestones have not been met
within 120 days after the Closing Date, then FIMI shall not be obliged to
complete the Second Post-Closing Financing.
2. CONDITIONS PRECEDENT
2.1 FIMI's obligations to carry out the terms of this Agreement and to
complete its transactions contemplated under this Agreement are subject to the
fulfilment to the satisfaction of FIMI of each of the following conditions that:
(a) on or before the Closing Date, FIMI shall have been able to
complete FIMI's Investigation (defined below) with results to
its reasonable satisfaction;
(b) on or before the Closing Date, the directors and, if required,
the shareholders of FIMI shall have approved this Agreement
and all the transactions of FIMI contemplated hereunder;
(c) on or before the Closing Date, FIMI shall have received the
fully executed Subscription Agreement and FIMI's London
solicitors, Xxxxxx, Xxxxxx & Xxxxxxxx ("WFW"), shall have
received in trust the funds required thereunder in respect of
the Closing Financing and the First Post-Closing Financing;
(d) at the Time of Closing, Xxxxxxxx Xxxxxx shall provide an
opinion dated as of the Closing Date, substantially in the
form of Schedule B to this Agreement (the "Yellowbubble
Solicitor Opinion");
(e) at the Time of Closing, Yellowbubble shall have met all the
Closing Milestones identified in the Subscription Agreement;
(f) as of the Time of Closing, the Shareholders, Holdings and
Yellowbubble (collectively, the "Yellowbubble Group") shall
have complied with all of their respective covenants and
agreements contained in this Agreement; and
(g) as of the Time of Closing, the representations and warranties
of each of the Yellowbubble Group contained in this Agreement
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or contained in any certificates or documents delivered by any
of them pursuant to this Agreement shall be completely true as
if such representations and warranties had been made as of the
Time of Closing.
The conditions set forth above are for the exclusive benefit of FIMI and may be
waived by FIMI in whole or in part at any time at or before the Time of Closing.
2.2 The Shareholders' obligations to carry out the terms of this Agreement
and to complete the transactions contemplated under this Agreement are subject
to the fulfilment to their satisfaction of each of the following conditions
that:
(a) by the Time of Closing, the Shareholders shall have been able
to complete the Shareholders' Investigation (defined below)
with results to its reasonable satisfaction;
(b) after cancellation of 7,400,000 of the Repurchased Shares
immediately prior to the Time of Closing, FIMI's issued share
capital will be not more than 5,100,000 common shares;
(c) at the Time of Closing, the U.S. solicitors for FIMI, Xxxxxx &
Associates, shall provide an opinion dated as of the Closing
Date, substantially in the form of Schedule C to this
Agreement (the "FIMI Solicitor Opinion");
(d) at the Time of Closing, the common shares of FIMI will be
quoted on the Over the Counter Bulletin Board of NASDAQ (the
"OTC Board");
(e) by the Time of Closing, FIMI shall have received the fully
executed Subscription Agreement and WFW shall have received in
trust the funds required thereunder in respect of the Closing
Financing and the First Post-Closing Financing;
(f) as of the Time of Closing, FIMI shall have complied with all
of its covenants and agreements contained in this Agreement;
and
(g) as of the Time of Closing, the representations and warranties
of FIMI contained in this Agreement or contained in any
certificates or documents delivered by it pursuant to this
Agreement shall be completely true as if such representations
and warranties had been made by FIMI as of the Time of
Closing.
The conditions set forth above are for the exclusive benefit of the Shareholders
and may be waived by the Shareholders in whole or in part at or before the Time
of Closing.
2.3 The parties acknowledge and agree each with the other that this
Agreement and all of the transactions contemplated under this Agreement are
subject to receipt of any regulatory approvals that may be required under
applicable laws. If any such approvals are required but are not obtained by the
Closing Date, then this Agreement shall terminate and be of no further force or
effect.
3. COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS
3.1 Each of the Yellowbubble Group jointly and severally covenants and
agrees with FIMI that each of the Yellowbubble Group shall:
(a) from and including the Effective Date through to and including
the Time of Closing, permit FIMI, through its directors,
officers, employees and authorized agents and representatives,
at FIMI's own cost, full access to the books, records and
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property of Yellowbubble including, without limitation, all of
the assets, contracts, correspondence, accounts and minute
books of Yellowbubble, so as to permit FIMI to make such
investigation ("FIMI's Investigation") of Yellowbubble as FIMI
considers advisable;
(b) use its reasonable best efforts to obtain any regulatory
approvals for this Agreement and the transactions contemplated
hereunder required by applicable laws on or before the Closing
Date;
(c) provide to FIMI all such further documents, instruments and
materials and do all such acts and things as may be required
by FIMI to obtain any regulatory approvals that may be
required under applicable laws;
(d) from and including the Effective Date through to and including
the Time of Closing, do all such acts and things that may be
necessary to ensure that all of the representations and
warranties of each of the Yellowbubble Group contained in this
Agreement or any certificates or documents delivered by any of
them pursuant to this Agreement remain true and correct;
(e) from and including the Effective Date through to and including
the Time of Closing, preserve and protect all of the goodwill,
assets, business and undertaking of Yellowbubble and Holdings
and, without limiting the generality of the foregoing, carry
on the businesses of Yellowbubble and Holdings in a reasonable
and prudent manner; and
(f) from and including the Effective Date through to and including
the Time of Closing, keep confidential all discussions and
communications (including all information communicated
therein) between the parties, and all written and printed
materials of any kind whatsoever exchanged by the parties,
except only any information or material that:
(i) was in the public domain at the time of disclosure to
a party (the "Recipient");
(ii) was already in the possession of the Recipient prior
to disclosure, as demonstrated by the Recipient
through tangible evidence;
(iii) subsequently enters the public domain through no
fault of the Recipient or any officer, director,
employee or agent of the Recipient; or
(iv) is required to be disclosed by law or by a court or
regulatory authority of competent jurisdiction;
and, if so requested by FIMI, each of the Yellowbubble Group
shall arrange for any director, officer, employee, authorized
agent or representative of Yellowbubble to enter into, and
each of the Yellowbubble Group themselves shall enter into, a
non-disclosure agreement with FIMI in a form acceptable to
FIMI acting reasonably.
3.2 Each of the Yellowbubble Group jointly and severally covenants and
agrees with FIMI that, from and including the Effective Date through to and
including the Time of Closing, each of the Yellowbubble Group shall not:
(a) do any act or thing that would render any representation or
warranty of any of the Yellowbubble Group contained in this
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Agreement or any certificates or documents delivered by any of
them pursuant to this Agreement untrue or incorrect; nor
(b) sell, encumber or dispose of, or negotiate with any other
person in respect of a sale, encumbrance or disposition of,
the Yellowbubble Share, any of the Holdings Shares or any
other shares, goodwill, assets, business or undertaking of
Yellowbubble or Holdings.
3.3 Each of the Yellowbubble Group jointly and severally acknowledges to
and agrees with FIMI that FIMI's Investigation shall in no way limit or
otherwise adversely affect the rights of FIMI as provided for hereunder in
respect of the representations and warranties of each of the Yellowbubble Group
contained in this Agreement or in any certificates or documents delivered by any
of them pursuant to this Agreement.
3.4 FIMI covenants and agrees with the Yellowbubble Group that FIMI shall:
(a) from and including the Effective Date through to and including
the Time of Closing, permit the Shareholders, through their
authorized agents and representatives, at the Shareholders'
own cost, full access to the books, records and property of
FIMI including, without limitation, all of the assets,
contracts, correspondence, accounts and minute books of FIMI,
so as to permit the Shareholders to make such investigation
(the "Shareholders' Investigation") of FIMI as the
Shareholders consider advisable;
(b) use its reasonable best efforts to obtain any regulatory
approvals for this Agreement and the transactions contemplated
hereunder required by applicable laws on or before the Closing
Date;
(c) provide to the Shareholders all such further documents,
instruments and materials and do all such acts and things as
may be required by the Shareholders to obtain any regulatory
approvals that may be required under applicable laws;
(d) from and including the Effective Date through to and including
the Time of Closing, do all such acts and things that may be
necessary to ensure that all of the representations and
warranties of FIMI contained in this Agreement or in any
certificates or documents delivered by it pursuant to this
Agreement remain true and correct;
(e) from and including the Effective Date through to and including
the Time of Closing, preserve and protect all of the goodwill,
assets, business and undertaking of FIMI and, without limiting
the generality of the foregoing, carry on the business of FIMI
in a reasonable and prudent manner;
(f) from and including the Effective Date through to and including
the Time of Closing, subject to its legal reporting
obligations, keep confidential all discussions and
communications (including all information communicated
therein) between the parties, and all written and printed
materials of any kind whatsoever exchanged by the parties,
except only any information or material that:
(i) was in the public domain at the time of disclosure to
a party (the "Recipient");
(ii) was already in the possession of the Recipient prior
to disclosure, as demonstrated by the Recipient
through tangible evidence;
(iii) subsequently enters the public domain through no
fault of the Recipient or any officer, director,
employee or agent of the Recipient; or
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(iv) is required to be disclosed by law or by a court or
regulatory authority of competent jurisdiction;
and, if so requested by Yellowbubble, FIMI shall arrange for
any director, officer, employee, authorized agent or
representative of FIMI to enter into, and FIMI itself shall
enter into, a non-disclosure agreement with Yellowbubble in a
form acceptable to Yellowbubble acting reasonably;
(g) complete the Closing Financing on the Closing Date if
Yellowbubble has met all the Closing Milestones;
(h) complete the First Post-Closing Financing if Yellowbubble
meets all the First Post-Closing Milestones within 120 days
after the Closing Date;
(i) complete the Second Post-Closing Financing if FIMI receives
the funds due in respect thereof pursuant to the Subscription
Agreement and Yellowbubble meets all the Second Post-Closing
Milestones within 120 days after the Closing Date; and
(j) promptly after Completion, execute the declarations of trust
and powers of attorney delivered to FIMI by the Shareholders
on Completion and deliver certified copies to the
Shareholders.
3.5 FIMI covenants and agrees with the Yellowbubble Group that, from and
including the Effective Date through to and including the Time of Closing, FIMI
shall not do any act or thing that would render any representation or warranty
of FIMI contained in this Agreement or any certificates or documents delivered
by it pursuant to this Agreement untrue or incorrect.
3.6 At the time of Closing, FIMI will take all necessary corporate actions
so that as soon as practicable after Closing the officers and directors of FIMI
will be:
Directors: Xx. Xxxxxxx
Xx. Xxxxxxxx
Xx. Xxxxx
Officers: President: Xx. Xxxxx
Secretary: Xx. Xxxxxxxx
Chief Executive Officer: Xx. Xxxxxxx
3.7 If the transactions contemplated herein do not complete on the Closing
Date, then FIMI shall immediately upon written request by Yellowbubble change
its name to a name that does not incorporate the name "Yellowbubble" or any name
confusingly similar to it, and FIMI shall not be entitled to carry on or hold
itself out as carrying on the Xxxxxxxxxxxx.xxx business.
4. REPRESENTATIONS AND WARRANTIES
4.1 In order to induce FIMI to enter into this Agreement and complete its
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transactions contemplated hereunder, each of the Shareholders other than
Continental jointly and severally represents and warrants to FIMI that:
(a) Yellowbubble and Holdings were each duly incorporated under
the laws of England and have been duly continued and remain
validly existing under the laws of England, and each of them:
(i) is a "private company limited by shares" within the
meaning of section 1 of the Companies Xxx 0000, and
is not subject to any statutory registration or
filing requirements applicable to public reporting
companies;
(ii) has the power, authority and capacity to enter into
this Agreement and carry out its terms; and
(iii) is in good standing with respect to the filing of all
annual reports required under the laws of England;
(b) the Directors and Officers of each of Yellowbubble and
Holdings are as follows:
(i) Xx. Xxxxxxx - Director;
(ii) Xx. Xxxxx - Director;
(iii) Xx. Xxxxxxxx - Director and Secretary; and
(iv) Xx. XxXxxxxxx - Director of Holdings and Yellowbubble
and Non-Executive Chairman of Yellowbubble;
(c) the authorized and issued share capital of Yellowbubble and of
Holdings is as set forth in Recitals A and C of this
Agreement;
(d) the Yellowbubble Share is and will on the Closing Date
immediately prior to Completion be a validly issued and
outstanding fully paid ordinary share of Yellowbubble
registered in the name of, and legally and beneficially owned
by, Holdings, free and clear of all voting restrictions, trade
restrictions, liens, claims, charges or encumbrances of any
kind whatsoever, save for those imposed by law and the
Articles of Association of Yellowbubble;
(e) except for the Yellowbubble Share, there are no documents,
instruments or other writings of any kind whatsoever which
constitute a security of Yellowbubble and there are no
options, agreements or rights of any kind whatsoever to
acquire directly or indirectly any other shares of
Yellowbubble;
(f) except for the Holdings Shares, there are no documents,
instruments or other writings of any kind whatsoever which
constitute a security of Holdings and, except as is provided
for by operation of this Agreement, there are no options,
agreements or rights of any kind whatsoever to acquire
directly or indirectly any other shares of Holdings;
(g) the Memorandum and Articles of Association of Yellowbubble
have not been altered since the incorporation of Yellowbubble,
except to effect the change of its name to its present name;
-8-
(h) the Memorandum and Articles of Association of Holdings have
not been altered since the incorporation of Holdings, except
to effect the change of its name to its present name;
(i) all of the material transactions of Yellowbubble which are
required to be recorded or filed in or with the books or
records of Yellowbubble have been promptly and properly so
recorded or filed and the minute books of Yellowbubble contain
all records of the meetings and proceedings of the
shareholders and directors of Yellowbubble since its
incorporation;
(j) all of the material transactions of Holdings which are
required to be recorded or filed in or with the books or
records of Holdings have been promptly and properly so
recorded or filed and the minute books of Holdings contain all
records of the meetings and proceedings of the shareholders
and directors of Holdings since its incorporation;
(k) Yellowbubble and Holdings hold all licences and permits that
are required for carrying on their respective businesses in
the manner in which such businesses have been carried on;
(l) Yellowbubble is the registered and beneficial owner of each of
the properties and assets used by Yellowbubble and which is
necessary or useful in the conduct of its business
(collectively the "Assets") including, without limitation, the
domain names "Xxxxxxxxxxxx.xxx" and "Xxxxxxxxxxxx.xxx" (the
"Domain Names") and the other assets listed on Schedule D to
this Agreement, which are owned or licensed as indicated
therein;
(m) Yellowbubble has good and marketable exclusive title to each
of the Assets free and clear of all liens, charges and
encumbrances of any kind whatsoever save and except those
specified as "Permitted Encumbrances" on Schedule D to this
Agreement, and in particular:
(i) Yellowbubble is the sole and exclusive legal and
beneficial owner of the Domain Names, free and clear
of all encumbrances whatsoever, and is not a party to
or bound by any contract or any other obligation
whatsoever that limits or impairs its ability to
sell, transfer, assign or convey, or that otherwise
affects, the Domain Names;
(ii) Yellowbubble is or is able to procure that it becomes
the registered owner of the Domain Names, and all
fees or other costs associated with maintaining the
registration of the Domain Names have been paid for
the 2000 calendar year and the registration of the
Domain Names is in good standing with Network
Solutions Inc.; and
(iii) no other person has been granted any interest in or
right to use all or any portion of the Domain Names;
(n) each item of machinery and equipment of any kind whatsoever
comprised in the Assets is in reasonable operating condition
and in a state of reasonable maintenance and repair taking
into account its age and use;
(o) the only bank accounts of Yellowbubble are current account and
a deposit account both held at the Sheffield branch of
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National Westminster Bank plc; Holdings does not have a bank
account and neither Yellowbubble nor Holdings has any safety
deposit box or any other bank or brokerage account;
(p) each of Yellowbubble and Holdings has the corporate power to
own the assets it owns, and to carry on the business carried
on by it, and is duly qualified to carry on business in all
jurisdictions in which it carries on business;
(q) save for any costs and expenses arising in the ordinary course
of business, all material outstanding liabilities, whether
direct, indirect, absolute, contingent or otherwise,
whatsoever of Yellowbubble and of Holdings have been disclosed
in writing to FIMI, and the total liabilities of Holdings and
of Yellowbubble (save in respect of the indebtedness owed by
Yellowbubble to Terra in respect of the Credit Facility) do
not exceed (pound)250,000;
(r) except as disclosed in writing to FIMI prior to FIMI's
execution of this Agreement:
(i) no dividends or other distributions of any kind
whatsoever on any shares in the capital of
Yellowbubble or Holdings have been made, declared or
authorized;
(ii) no new machinery or equipment of any kind whatsoever
has been ordered by, or installed or assembled on the
premises of, Yellowbubble or Holdings;
(iii) neither Yellowbubble nor Holdings is indebted to any
of the Shareholders;
(iv) none of the Shareholders or any other officer,
director or employee of Yellowbubble or Holdings is
indebted or under obligation to Yellowbubble or
Holdings on any account whatsoever; and
(v) neither Yellowbubble nor Holdings has guaranteed or
agreed to guarantee any debt, liability or other
obligation of any kind whatsoever of any person, firm
or corporation of any kind whatsoever;
(s) since Yellowbubble's incorporation:
(i) there has not been any material adverse change of any
kind whatsoever in the financial position or
condition of Yellowbubble or Holdings, or any damage,
loss or other change of any kind whatsoever in
circumstances materially affecting the business or
Assets of Yellowbubble or Holdings or the right or
capacity of Yellowbubble or Holdings to carry on
their respective businesses;
(ii) neither Yellowbubble nor Holdings has waived or
surrendered any right of any kind whatsoever of
material value; and
(iii) except as may be expressly permitted under this
Agreement, neither Yellowbubble nor Holdings has
discharged, satisfied or paid any lien, charge or
encumbrance of any kind whatsoever or obligation or
liability of any kind whatsoever other than current
liabilities in the ordinary course of its business;
(t) the directors, officers, key employees and independent
contractors and consultants of Yellowbubble and Holdings, and
all of their compensation arrangements with Yellowbubble and
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Holdings, whether as directors, officers, employees,
independent contractors or consultants, are as listed on
Schedule E to this Agreement;
(u) no payments of any kind whatsoever have been made or
authorized by Yellowbubble or Holdings directly or indirectly
to or on behalf of any of the Shareholders or any of the
directors, officers, key employees, independent contractors or
consultants of Yellowbubble or Holdings except in accordance
with those compensation arrangements specified on Schedule E
to this Agreement;
(v) there are no pensions, profit sharing, group insurance or
similar plans or other deferred compensation plans of any kind
whatsoever affecting Yellowbubble or Holdings other than
those, if any, specified on Schedule E to this Agreement;
(w) neither Yellowbubble nor Holdings is now, or has ever been, a
party to any collective agreement with any labour union or
other association of employees of any kind whatsoever, no
collective bargaining agent has been certified in respect of
Yellowbubble or Holdings, and there is no application pending
for certification of a collective bargaining agent in respect
of Yellowbubble or Holdings;
(x) the contracts and agreements included on Schedule E to this
Agreement and those additional contracts and agreements
specified on Schedule F to this Agreement (collectively the
"Material Contracts") constitute all of the material contracts
and agreements of Yellowbubble and Holdings;
(y) except as may be noted on the appropriate Schedule to this
Agreement, the Material Contracts are in good standing in all
material respects and not in default in any respect;
(z) neither Yellowbubble nor Holdings has licensed, leased,
transferred, disposed of or encumbered any of the Assets in
any way, or permitted any third party access to any of the
Assets the value of which may be compromised by such access,
including in particular the source code to any computer
software, any subscriber lists or any trade secret information
included in the Assets, except only in accordance with the
terms of the Material Contracts;
(aa) to the best of the Shareholders' knowledge, having made
appropriate searches, no third party privacy or intellectual
property rights, including without limitation, copyright,
trade secret or patent rights, were violated in the creation,
compilation or acquisition of, or are violated by the use of,
any of the Assets by Yellowbubble or by any party through whom
Yellowbubble acquired title or a license or to whom
Yellowbubble has granted a license in respect of the Assets,
and in particular the use of the Domain Names by Yellowbubble
does not infringe upon or induce or contribute to the
infringement of any intellectual property rights, domestic or
foreign, of any other person;
(bb) neither Yellowbubble nor Holdings is in material breach of any
applicable law, ordinance, statute, regulation, by-law, order
or decree of any kind whatsoever including, without
limitation, any applicable securities laws;
(cc) all tax returns and reports of Yellowbubble and of Holdings
required by law to have been filed have been filed and are
substantially true, complete and correct and all taxes and
other government charges of any kind whatsoever of
Yellowbubble and of Holdings have been paid or disclosed in
writing to FIMI before FIMI entered into this Agreement;
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(dd) neither Yellowbubble nor Holdings has:
(i) except as disclosed in writing to FIMI prior to the
Effective Date, made any election under any
applicable tax legislation with respect to the
acquisition or disposition of any property at other
than fair market value;
(ii) acquired any property for proceeds greater than the
fair market value thereof; or
(iii) disposed of anything for proceeds less than the fair
market value thereof;
(ee) each of Yellowbubble and Holdings has made all elections
required to have been made under any applicable tax
legislation in connection with any distributions made by
either of them and all such elections were true and correct
and filed in the prescribed form and within the prescribed
time period;
(ff) adequate provision has been made for taxes payable by
Yellowbubble and by Holdings for the current period for which
tax returns are not yet required to be filed and there are no
agreements, waivers or other arrangements of any kind
whatsoever providing for an extension of time with respect to
the filing of any tax return by, or payment of, any tax or
governmental charge of any kind whatsoever by Yellowbubble or
Holdings;
(gg) neither Yellowbubble nor Holdings has any contingent tax
liabilities of any kind whatsoever, and there are no grounds
which would prompt a reassessment of Yellowbubble or Holdings,
including for aggressive treatment of income or expenses in
earlier tax returns filed;
(hh) there are no amounts outstanding and unpaid for which
Yellowbubble or Holdings has previously claimed a deduction
under any applicable tax legislation;
(ii) Yellowbubble and Holdings have each made all collections,
deductions, remittances and payments of any kind whatsoever
and filed all reports and returns required by it to be made or
filed under the provisions of all applicable statutes
requiring the making of collections, deductions, remittances
or payments of any kind whatsoever;
(jj) there are no actions, suits, judgements, investigations or
proceedings of any kind whatsoever outstanding, pending or
known to be threatened against or affecting Yellowbubble or
Holdings at law or in equity or before or by any federal,
provincial, state, municipal or other governmental department,
commission, board, bureau or agency of any kind whatsoever and
there is no basis therefor;
(kk) each of Yellowbubble and Holdings has good and sufficient
power, authority and capacity to enter into this Agreement and
complete its respective transactions contemplated under this
Agreement on the terms and conditions set forth herein;
(ll) the execution and delivery of this Agreement, the performance
of their respective obligations under this Agreement and the
Completion will not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or constitute
default under, any of the constating documents of
Yellowbubble or Holdings, or any of the terms of any
indenture, mortgage, agreement, lease, licence or
other instrument of any kind whatsoever to which any
-12-
of the Yellowbubble Group is a party or by which any
of them is bound, or any judgement or order of any
kind whatsoever of any court or administrative body
of any kind whatsoever by which any of them is bound;
nor
(ii) result in the violation of any law or regulation in
the U.K. by any of Yellowbubble Group;
(mm) neither Yellowbubble nor Holdings has incurred any liability
for agency, brokerage, referral or finder's fees, commissions
or compensation of any kind whatsoever with respect to this
Agreement or any transaction contemplated under this
Agreement; and
(nn) the representations and warranties of the Shareholders
contained in this Agreement disclose all material facts known
to each of them specifically relating to the transactions
contemplated under this Agreement which, so far as the
Shareholders are aware, materially and adversely affect, or in
the future may materially and adversely affect, their
respective abilities to perform their respective obligations
under this Agreement or the value of the Yellowbubble Share,
the Holdings Shares or the Assets.
4.2 In order to induce FIMI to enter into this Agreement and complete its
transactions contemplated hereunder, each of the Shareholders jointly and
severally represents and warrants to FIMI that, in respect of each Shareholder:
(a) the Shareholder has good and sufficient power, authority and
capacity to enter into this Agreement and complete the
transactions contemplated under this Agreement on the terms
and conditions set forth herein;
(b) the Holdings Shares indicated in Recital D of this Agreement
to be held by the Shareholder are and will on the Closing Date
immediately prior to Completion be validly issued and
outstanding fully paid and non-assessable common shares of
Holdings registered in the name of, and legally and, except in
the case of Continental, beneficially owned by, the
Shareholder, free and clear of all voting restrictions, trade
restrictions, liens, claims, charges or encumbrances of any
kind whatsoever other than as set out in the Articles of
Association of Holdings;
(c) the Shareholder has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits
and risks of an investment in the FIMI Shares and is able to
bear the economic risk of loss of the Shareholder's entire
investment;
(d) FIMI has provided to the Shareholder the opportunity to ask
questions and receive answers concerning the terms and
conditions of the issuance of the FIMI Shares and the
Shareholder has had access to such information concerning FIMI
as the Shareholder has considered necessary or appropriate in
connection with the investment decision to acquire the FIMI
Shares;
(e) the Shareholder is acquiring the FIMI Shares for the
Shareholder's own account, for investment purposes only and
not with a view to any resale, distribution or other
disposition of the FIMI Shares in violation of applicable
United States securities laws;
(f) the Shareholder has not agreed to acquire the FIMI Shares as a
result of any form of general solicitation or general
advertising, including advertisements, articles, notices or
other communications published in any newspaper, magazine or
-13-
similar media or broadcast over radio, or television, or any
seminar or meeting whose attendees have been invited by
general solicitation or general advertising;
(g) the Shareholder is not a "U.S. Person", the definition of
which includes, but is not limited to, an individual resident
in the United States and an estate or trust of which any
executor or administrator or trustee, respectively, is a U.S.
Person, any partnership or corporation organized or
incorporated under the laws of the United States, and any
partnership or corporation organized or incorporated under the
laws of any foreign jurisdiction by a U.S. Person principally
for the purposes of investing in securities not registered
under the United States Securities Act of 1933 (the
"Securities Act");
(h) the Shareholder was outside the United States at the time of
execution and delivery of this Agreement;
(i) no offers to sell the FIMI Shares were made by any person to
the Shareholder while the Shareholder was in the United
States; and
(j) the FIMI Shares are not being acquired, directly or
indirectly, for the account or benefit of a U.S. Person or a
person in the United States.
4.3 The representations and warranties of each of the Shareholders
contained in this Agreement shall be true at the Time of Closing as though they
were made at the Time of Closing, and they shall survive the Completion and
remain in full force and effect thereafter for the benefit of FIMI.
4.4 The representations and warranties in section 4.1 of this Agreement
are made and given subject to the disclosures contained in Schedule L and the
Shareholders shall not be nor shall they be deemed to be in breach of any such
representations or warranties to the extent (but only to the extent)
qualifications of such representations or warranties are reasonably apparent
from the face of the documents listed in Schedule L.
4.5 Each of the Shareholders acknowledges and agrees that:
(a) the FIMI Shares have not been and will not be registered under
the Securities Act or the securities laws of any state of the
United States or other jurisdiction and that the exchange
contemplated hereby is being made in reliance on the
Shareholder's representations and warranties regarding the
circumstances required for an exemption from such registration
requirements;
(b) the issuance of the FIMI Shares has not been approved or
disapproved by the United States Securities and Exchange
Commission, any state securities agency, or any foreign
securities agency, and FIMI is not registered under the United
States Securities Exchange Act of 1934 (the "Exchange Act");
(c) the certificates representing the FIMI Shares will bear a
legend stating that such shares have not been registered under
the Securities Act or the securities laws of any state of the
United States and may not be traded except in compliance with
the Securities Act and the Exchange Act; and
(d) if the Shareholder decides to offer, sell or otherwise
transfer any of the FIMI Shares, he will not offer, sell or
otherwise transfer any of the FIMI Shares directly or
indirectly, unless:
-14-
(i) the sale is to FIMI;
(ii) the sale is made pursuant to the exemption from the
registration requirements under the Securities Act
provided by Rule 144 thereunder or Regulation S, and
in accordance with any applicable state securities or
"Blue Sky" laws; or
(iii) the FIMI Shares are sold in a transaction that does
not require registration under the Securities Act or
any applicable state laws and regulations governing
the offer and sale of securities, and he has prior to
such sale furnished to FIMI an opinion of counsel to
that effect reasonably satisfactory to FIMI.
4.6 Each of the Shareholders consents to FIMI making a notation on its
records or giving instructions to any transfer agent of FIMI to implement the
restrictions on transfer set forth and described herein.
4.7 Each of the Shareholders acknowledges and accepts that there may be
material tax consequences to a Shareholder in respect of an acquisition or
disposition of the FIMI Shares, and that FIMI gives no opinion and makes no
representation with respect to the tax consequences to the Shareholder under
United States, state, local or foreign tax law in respect of the Shareholder's
acquisition or disposition of the FIMI Shares.
4.8 In order to induce the Shareholders to enter into this Agreement and
complete the transactions contemplated hereunder, FIMI represents and warrants
to the Shareholders that:
(a) FIMI was and remains duly incorporated and validly existing
under the laws of the State of Nevada, and FIMI is in good
standing with respect to all filings required by the Nevada
Secretary of State;
(b) the authorized capital of FIMI consisted of 50,000,000 shares
with a par value of $0.001 per share, of which 12,500,000
shares (the "Outstanding Shares") were issued and outstanding
as of the Effective Date;
(c) other than as contemplated in this Agreement, no further
shares of FIMI will be issued after the Effective Date, and
there are no commitments, plans or arrangements of any kind
whatsoever to issue any further shares of FIMI, nor are there
any outstanding options, warrants, convertible securities or
other rights of any kind whatsoever calling for the issuance
of any of the unissued shares of FIMI;
(d) Except for the 12,500,000 common shares of FIMI that are
currently issued and the further shares to be issued pursuant
to this Agreement, there are no documents, instruments or
other writings of any kind whatsoever which constitute a
security of FIMI;
(e) the FIMI Shares to be issued on Completion will be, when
issued, validly issued as fully paid and non-assessable;
(f) FIMI has good and sufficient power, authority and capacity to
enter into this Agreement and complete its transactions
contemplated under this Agreement on the terms and conditions
set forth herein;
(g) the common shares of FIMI are currently quoted on the OTC
Board;
-15-
(h) the constating documents of FIMI have not been altered since
the incorporation of FIMI, except to effect changes of its
name, culminating in its present name, and to complete a 2.5:1
forward split to increase its issued and outstanding share
capital from 5,000,000 to 12,500,000 common voting shares;
(i) all of the material transactions of FIMI which are required to
be recorded or filed in or with the books or records of FIMI
have been promptly and properly so recorded or filed and the
minute books of FIMI contain all records of the meetings and
proceedings of the shareholders and directors of FIMI since
its incorporation;
(j) FIMI holds all licences and permits that are required for
carrying on its business in the manner in which such business
has been carried on;
(k) FIMI has good and marketable exclusive title to each of the
assets used by it free and clear of all liens, charges and
encumbrances of any kind whatsoever, except as may be
disclosed to Yellowbubble in writing prior to the execution of
this Agreement;
(l) FIMI is in material compliance with all applicable laws
including, without limitation, all applicable U.S. securities
laws;
(m) there has been no material adverse change to the financial
position of FIMI since September 30, 1999, as set forth in the
unaudited financial statements of FIMI as of that date (the
"FIMI Financial Statements"), which have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis with prior periods;
(n) FIMI has the corporate power to own the assets it owns, and to
carry on the business carried on by it, and is duly qualified
to carry on business in all jurisdictions in which it carries
on business;
(o) FIMI does not have any outstanding liabilities, whether
direct, indirect, absolute, contingent or otherwise,
whatsoever, except as may be indicated in the FIMI financial
statements or as may have been incurred in the ordinary course
of business or in respect of this Agreement and the
transactions contemplated herein and the total liabilities of
FIMI will not exceed US$80,000 as of the Closing Date;
(p) except as may be disclosed in writing to the Shareholders
prior to the Shareholders' execution of this Agreement:
(i) no dividends or other distributions of any kind
whatsoever on any shares in the capital of FIMI have
been made, declared or authorized;
(ii) no new machinery or equipment of any kind whatsoever
has been ordered by, or installed or assembled on the
premises of, FIMI;
(iii) FIMI is not indebted to any of its shareholders;
(iv) none of the shareholders or any other officer,
director or employee of FIMI is indebted or under
obligation to FIMI on any account whatsoever; and
(v) FIMI has not guaranteed or agreed to guarantee any
debt, liability or other obligation of any kind
whatsoever of any person, firm or corporation of any
kind whatsoever;
-16-
(q) since FIMI's incorporation:
(i) there has not been any material adverse change of any
kind whatsoever in the financial position or
condition of FIMI, or any damage, loss or other
change of any kind whatsoever in circumstances
materially affecting the business or assets of FIMI
or the right or capacity of FIMI to carry on its
business;
(ii) FIMI has not waived or surrendered any right of any
kind whatsoever of material value; and
(iii) except as may be expressly permitted under this
Agreement, FIMI has not discharged, satisfied or paid
any lien, charge or encumbrance of any kind
whatsoever or obligation or liability of any kind
whatsoever other than current liabilities in the
ordinary course of its business;
(r) other than as disclosed in writing to the Shareholders prior
to the Shareholders' execution of this Agreement, no
remuneration payable to directors, officers or employees is
outstanding, and there are no arrangements or agreements in
place between FIMI and any consultant or independent
contractor of any kind;
(s) no commitments of any kind whatsoever have been made or
authorized by FIMI directly or indirectly to or on behalf of
any of the shareholders or any of the directors, officers, key
employees, independent contractors or consultants of FIMI
regarding any compensation or other amount to be paid by FIMI
after the Closing Date;
(t) there are no pensions, profit sharing, group insurance or
similar plans or other deferred compensation plans of any kind
whatsoever affecting FIMI;
(u) FIMI is not now, and has never been, a party to any collective
agreement with any labour union or other association of
employees of any kind whatsoever, no collective bargaining
agent has been certified in respect of FIMI, and there is no
application pending for certification of a collective
bargaining agent in respect of FIMI;
(v) FIMI is not a party to or bound by any material contracts
other than this Agreement and a standard form of agreement
with its stock transfer agent;
(w) to the best of FIMI's knowledge, FIMI has not done anything
which infringes upon or induces or contributes to the
infringement of any third party privacy or intellectual
property rights, domestic or foreign, of any other person,
including without limitation, copyright, trade-xxxx, trade
secret or patent rights;
(x) all tax returns and reports of FIMI required by law to have
been filed have been filed and are substantially true,
complete and correct and all taxes and other government
charges of any kind whatsoever of FIMI have been paid or
disclosed in writing to the Shareholders before the
Shareholders entered into this Agreement;
(y) FIMI has good and sufficient power, authority and capacity to
enter into this Agreement and complete the transactions
contemplated under this Agreement on the terms and conditions
set forth herein;
(z) FIMI has not:
-17-
(i) made any election under any applicable tax
legislation with respect to the acquisition or
disposition of any property at other than fair market
value;
(ii) acquired any property for proceeds greater than the
fair market value thereof; or
(iii) disposed of anything for proceeds less than the fair
market value thereof;
(aa) FIMI has made all elections required to have been made under
any applicable tax legislation in connection with any
distributions made by it and all such elections were true and
correct and filed in the prescribed form and within the
prescribed time period;
(bb) adequate provision has been made for taxes payable by FIMI for
the current period for which tax returns are not yet required
to be filed and there are no agreements, waivers or other
arrangements of any kind whatsoever providing for an extension
of time with respect to the filing of any tax return by, or
payment of, any tax or governmental charge of any kind
whatsoever by FIMI;
(cc) FIMI does not have contingent tax liabilities of any kind
whatsoever, and there are no grounds which would prompt a
reassessment of FIMI, including for aggressive treatment of
income or expenses in earlier tax returns filed;
(dd) there are no amounts outstanding and unpaid for which FIMI has
previously claimed a deduction under any applicable tax
legislation;
(ee) FIMI has made all collections, deductions, remittances and
payments of any kind whatsoever and filed all reports and
returns required by it to be made or filed under the
provisions of all applicable statutes requiring the making of
collections, deductions, remittances or payments of any kind
whatsoever;
(ff) there are no actions, suits, judgements, investigations or
proceedings of any kind whatsoever outstanding, pending or
threatened against or affecting FIMI at law or in equity or
before or by any federal, provincial, state, municipal or
other governmental department, commission, board, bureau or
agency of any kind whatsoever and there is no basis therefor;
(gg) the execution and delivery of this Agreement, the performance
of FIMI's obligations under this Agreement and the Completion
will not:
(i) conflict with, or result in the breach of or the
acceleration of any indebtedness under, or constitute
default under, any of the constating documents of
FIMI, or any of the terms of any indenture, mortgage,
agreement, lease, licence or other instrument of any
kind whatsoever to which FIMI is a party or by which
FIMI is bound, or any judgement or order of any kind
whatsoever of any court or administrative body of any
kind whatsoever by which FIMI is bound; nor
(ii) result in the violation of any law or regulation of
any kind whatsoever by FIMI;
(hh) FIMI has not incurred any liability for agency, brokerage,
referral or finder's fees, commissions or compensation of any
kind whatsoever with respect to this Agreement or any
transaction contemplated under this Agreement;
(ii) the representations and warranties of FIMI contained in this
Agreement disclose all material facts known to FIMI
-18-
specifically relating to the transactions contemplated under
this Agreement which, so far as FIMI is aware, materially and
adversely affect, or in the future may materially and
adversely affect, FIMI's ability to perform its obligations
under this Agreement; and
(jj) FIMI has had access to such information concerning Holdings
and Yellowbubble as FIMI has considered necessary or
appropriate in connection with the investment decision to
acquire the Holdings Shares.
4.9 The representations and warranties of FIMI contained in this Agreement
shall be true at the Time of Closing as though they were made at the Time of
Closing, and they shall survive the Completion and remain in full force and
effect thereafter for the benefit of the Shareholder.
5. INDEMNITIES
5.1 Notwithstanding the completion of the transactions contemplated under
this Agreement or FIMI's Investigation, the representations, warranties and
acknowledgements of any of the Shareholders contained in this Agreement or any
certificates or documents delivered by any of them pursuant to this Agreement
shall survive the Completion and shall continue in full force and effect
thereafter for the benefit of FIMI. If any of the representations, warranties or
acknowledgements given by any of the Shareholders is found to be untrue or there
is a breach of any covenant or agreement in this Agreement on the part of any of
the Yellowbubble Group, then the party or parties responsible shall jointly and
severally indemnify and save harmless FIMI from and against any and all
liability, claims, debts, demands, suits, actions, penalties, fines, losses,
costs (including legal fees, disbursements and taxes as charged on a lawyer and
own client basis), damages and expenses of any kind whatsoever which may be
brought or made against FIMI by any person, firm or corporation of any kind
whatsoever or which may be suffered or incurred by FIMI, directly or indirectly,
arising out of or as a consequence of any such misrepresentation or breach of
warranty, acknowledgement, covenant or agreement. Without in any way limiting
the generality of the foregoing, this shall include any loss of any kind
whatsoever which may be suffered or incurred by FIMI, directly or indirectly,
arising out of any material assessment or reassessment levied upon Yellowbubble
for tax, interest and/or penalties relating to any period of business operations
up to and including the Closing Date and all claims, demands, costs (including
legal fees, disbursements and taxes as charged on a lawyer and own client basis)
and expenses of any kind whatsoever in respect of the foregoing. For the
avoidance of doubt, notwithstanding the provisions of this paragraph,
Continental shall not be required to indemnify FIMI in respect of a breach of
any representation, warranty or acknowledgement by any Shareholder other than
Continental.
5.2 Notwithstanding the completion of the transactions contemplated under
this Agreement or the Shareholders' Investigation, the representations,
warranties and acknowledgements of FIMI contained in this Agreement or any
certificates or documents delivered by FIMI pursuant to this Agreement shall
survive the Completion and shall continue in full force and effect thereafter
for the benefit of the Shareholders. If any of the representations, warranties
or acknowledgements given by FIMI is found to be untrue or there is a breach of
any covenant or agreement in this Agreement on the part of FIMI, then the party
or parties responsible shall jointly and severally indemnify and save the
Shareholders harmless from and against any and all liability, claims, debts,
demands, suits, actions, penalties, fines, losses, costs (including legal fees,
disbursements and taxes as charged on a lawyer and own client basis), damages
and expenses of any kind whatsoever which may be brought or made against any of
the Shareholders by any person, firm or corporation of any kind whatsoever or
which may be suffered or incurred by any of the Shareholders, directly or
indirectly, arising out of or as a consequence of any such misrepresentation or
breach of warranty, acknowledgement, covenant or agreement. Without in any way
-19-
limiting the generality of the foregoing, this shall include any loss of any
kind whatsoever which may be suffered or incurred by any of the Shareholders,
directly or indirectly, arising out of any material assessment or reassessment
levied for tax, interest and/or penalties relating to any period of business
operations up to and including the Closing Date and all claims, demands, costs
(including legal fees, disbursements and taxes as charged on a lawyer and own
client basis) and expenses of any kind whatsoever in respect of the foregoing.
6. CLOSING
6.1 At the Time of Closing, the Yellowbubble Group shall deliver to the
solicitors for FIMI:
(a) certified true copies of resolutions of the directors of
Yellowbubble and Holdings evidencing that the directors of
Yellowbubble and Holdings have approved this Agreement and all
of the transactions of Yellowbubble and Holdings contemplated
hereunder, specifically referring to:
(i) the exchange and transfer of the Holdings Shares
from the Shareholders to FIMI as provided for in this
Agreement;
(ii) the cancellation of the share certificates (the "Old
Share Certificates") representing the Holdings Shares
held as set forth in Recital D of this Agreement, as
and when the Old Share Certificates may be tendered
by FIMI for cancellation; and
(iii) the issuance of a new share certificate representing
the Holdings Shares to be registered in the name of
FIMI as and when may be requested by FIMI;
(b) the Old Share Certificates;
(c) undated transfers of the Holdings Shares, duly endorsed by the
Shareholders;
(d) all minute books of Yellowbubble and Holdings;
(e) all original and duplicate certificates evidencing
registration anywhere in the world of any interest in tangible
or intangible property included in the Assets, and original
assignments of each interest to Yellowbubble, duly executed in
registrable form acceptable to FIMI's solicitors, acting
reasonably;
(f) a release in the form of Schedule G to this Agreement from
each of the Shareholders of all claims against Yellowbubble
for outstanding amounts owing by either of Yellowbubble or
Holdings on account of any loans, bonuses, reimbursements,
compensation, fees, royalties, dividends or other
consideration whatsoever;
(g) the Yellowbubble Solicitor Opinion;
(h) a certificate of confirmation from each of the Shareholders
other than Continental, substantially in the form of Schedule
H to this Agreement;
(i) the consent of Xx. Xxxxxxx to become a Director and the Chief
Executive Officer of FIMI, the consent of Xx. Xxxxxxxx to
become a Director and Secretary of FIMI, and the consent of
Xx. Xxxxx to become a Director of FIMI;
-20-
(j) a trust declaration in the form of Schedule I to this
Agreement from each of the Shareholders, collectively in
respect of all of the Holdings Shares;
(k) a power of attorney in the form of Schedule J to this
Agreement from each of the Shareholders, collectively in
respect of all of the Holdings Shares; and
(l) any other materials that are, in the opinion of the solicitors
for FIMI, reasonably required to complete the transactions
contemplated under this Agreement.
6.2 At the Time of Closing, FIMI shall deliver to Xxxxxxxx Xxxxxx:
(a) certified true copies of the resolutions of the directors and,
if shareholder approval is required, of the shareholders of
FIMI, evidencing that the directors and, as applicable, the
shareholders, of FIMI have approved this Agreement and all of
the transactions of FIMI contemplated hereunder, including the
issuance of the FIMI Shares in exchange for the Holdings
Shares, the appointment of Xx. Xxxxxxx as a Director of FIMI,
the appointment of Xx. Xxxxxxxx as a Director and Secretary of
FIMI, the appointment of Xx. Xxxxx as a Director of FIMI and
the resignation of Xx. Xxxx X. Xxxxx as a Director and
Secretary of FIMI;
(b) share certificates representing the FIMI Shares, or written
confirmation that FIMI's stock transfer agent has been
instructed to issue and deliver to the Shareholders share
certificates representing the FIMI Shares, registered in the
names of the Shareholders as jointly directed by the
Shareholders in writing;
(c) a certificate of confirmation signed by Xx. Xxxx X. Xxxxx, the
sole director and officer of FIMI substantially in the form of
Schedule K to this Agreement;
(d) the FIMI Solicitor Opinion;
(e) the Closing Financing proceeds, as described in paragraph 1.5
of this Agreement;
(f) an escrow agreement in the form of Schedule M to this
Agreement, executed by WFW; and
(g) the resignation of Xx. Xxxx X. Xxxxx as a Director and
Secretary of FIMI, effective on Completion.
7. GENERAL
7.1 Time and each of the terms and conditions of this Agreement shall be
of the essence of this Agreement and any waiver by the parties of this paragraph
7.1 or any failure by them to exercise any of their rights under this Agreement
shall be limited to the particular instance and shall not extend to any other
instance or matter in this Agreement or otherwise affect any of their rights or
remedies under this Agreement.
7.2 The Schedules to this Agreement incorporated by reference and the
recitals to this Agreement constitute a part of this Agreement.
7.3 This Agreement constitutes the entire Agreement between the parties
hereto in respect of the matters referred to herein and there are no
representations, warranties, covenants or agreements, expressed or implied,
collateral hereto other than as expressly set forth or referred to herein.
-21-
7.4 The headings in this Agreement are for reference only and do not
constitute terms of the Agreement.
7.5 The provisions contained in this Agreement which, by their terms,
require performance by a party to this Agreement subsequent to the Closing Date
of this Agreement, shall survive the Closing Date of this Agreement.
7.6 No alteration, amendment, modification or interpretation of this
Agreement or any provision of this Agreement shall be valid and binding upon the
parties hereto unless such alteration, amendment, modification or interpretation
is in written form executed by the parties directly affected by such alteration,
amendment, modification or interpretation.
7.7 Whenever the singular or masculine is used in this Agreement the same
shall be deemed to include the plural or the feminine or the body corporate as
the context may require.
7.8 The parties hereto shall execute and deliver all such further
documents and instruments and do all such acts and things as any party may,
either before or after the Closing Date, reasonably require in order to carry
out the full intent and meaning of this Agreement.
7.9 Any notice, request, demand and other communication to be given under
this Agreement shall be in writing and shall be delivered by hand to the
appropriate party at the address as first set out above or to such other
addresses or by such other means as may be designated in writing by the parties
hereto in the manner provided for in this paragraph, and shall be deemed to have
been received on the date of delivery by hand, or if delivered by e-mail or
telecopy, then on the date transmission completes.
7.10 This Agreement shall be subject to, governed by, and construed in
accordance with the laws of the State of Nevada and the laws of the United
States of America applicable therein.
7.11
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7.12 This Agreement may be signed by the parties in as many counterparts
as may be deemed necessary, each of which so signed shall be deemed to be an
original, and all such counterparts together shall constitute one and the same
instrument.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals as of the
Effective Date:
SIGNED, SEALED & DELIVERED )
by XXXXXXXX XXXXXXX in the presence of: )
)
)
) ------------------------------
--------------------------------------- ) XXXXXXXX XXXXXXX
Signature of Witness )
)
Name: )
---------------------------------- )
Address: )
------------------------------- )
)
--------------------------------------- )
Occupation: )
---------------------------- )
)
SIGNED, SEALED & DELIVERED by )
XXXXXX XXXXX XxXXXXXXX )
in the presence of: )
)
--------------------------------------- ) ------------------------------
Signature of Witness ) XXXXXX XXXXX XxXXXXXXX
)
Name: )
---------------------------------- )
Address: )
------------------------------- )
)
--------------------------------------- )
Occupation: )
---------------------------- )
)
SIGNED, SEALED & DELIVERED by )
XXXXX XXXXX XXXXXXXXX XXXXXXXX )
in the presence of: )
)
)
--------------------------------------- ) ------------------------------
Signature of Witness ) XXXXX XXXXX XXXXXXXXX XXXXXXXX
)
Name: )
---------------------------------- )
Address: )
------------------------------- )
)
--------------------------------------- )
Occupation: )
---------------------------- )
-23-
SIGNED, SEALED & DELIVERED by )
PRASHANT XXXXXX XXXXX in )
the presence of: )
)
--------------------------------------- ) ------------------------------
Signature of Witness ) PRASHANT XXXXXX XXXXX
)
Name: )
---------------------------------- )
Address: )
------------------------------- )
)
--------------------------------------- )
Occupation: )
---------------------------- )
)
)
THE CORPORATE SEAL of )
THE CONTINENTAL TRUST COMPANY )
LIMITED was hereunto affixed in the presence of )
its authorized signatory(ies): )
)
--------------------------------------- ) c/s
Name: )
---------------------------------- )
Title: )
--------------------------------- )
)
)
--------------------------------------- )
Name: )
---------------------------------- )
Title: )
--------------------------------- )
)
)
EXECUTED by )
XXXXXXXXXXXX.XXX LIMITED )
acting by two directors: )
)
--------------------------------------- )
Name: )
---------------------------------- )
Title: )
--------------------------------- )
)
)
--------------------------------------- )
Name: )
---------------------------------- )
Title: )
--------------------------------- )
)
-24-
EXECUTED by )
XXXXXXXXXXXX.XXX HOLDINGS LIMITED )
acting by two directors: )
)
)
--------------------------------------- )
Name: )
---------------------------------- )
Title: )
--------------------------------- )
)
)
--------------------------------------- )
Name: )
---------------------------------- )
Title: )
--------------------------------- )
)
)
EXECUTED by )
XXXXXXXXXXXX.XXX, INC. (formerly )
FAMOUS INTERNET MALL, INC.) )
acting by its sole director: )
)
--------------------------------------- )
Name: XXXX X. XXXXX )
Title: DIRECTOR AND PRESIDENT )
-25-
SCHEDULE A
SUBSCRIPTION AGREEMENT - ss. 74(2)(4)
THIS AGREEMENT MADE EFFECTIVE AS OF __ FEBRUARY 2000 (the "Effective Date").
BETWEEN:
XXXXXXXXXXXX.XXX, INC.;
(the "Company")
AND:
THE PARTY NAMED AS PURCHASER BELOW
(the "Purchaser")
WHEREAS:
A. Subject to fulfilment by the Company of certain conditions described in
Appendix 1 attached hereto, the Purchaser wishes to subscribe for a total of
342,000 common shares of the Company (collectively, the "Securities"), in three
separate stages (collectively, this "Subscription"), as follows:
i) 102,600 common shares (the "Closing
Subscription Shares"), immediately after acquisition by
the Company of beneficial (but not registered or legal)
title to all the issued and outstanding shares of
Xxxxxxxxxxxx.xxx Holdings Limited (the "Acquisition") and
achievement of the Closing Milestones defined in Appendix
1;
ii) 102,600 common shares (the "First Post-Closing
Subscription Shares") upon achievement of the First
Post-Closing Milestones defined in Appendix 1; and
iii) 136,800 common shares (the "Second Post-Closing
Subscription Shares") upon achievement of the Second
Post-Closing Milestones defined in Appendix 1;
B. It is the intention of the parties to this Agreement that this Subscription
will be made pursuant to appropriate exemptions (the "Exemptions") from the
registration and prospectus or equivalent requirements of all rules, policies,
notices, orders and legislation of any kind whatsoever (collectively the
"Securities Rules") of all jurisdictions applicable to this Subscription;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained, the receipt of which is hereby
acknowledged, the parties covenant and agree with each other (the "Agreement")
as follows:
1. Representations and Warranties of the Purchaser
1.1 The Purchaser represents and warrants to the Company, and acknowledges
that the Company is relying on these representations and warranties to, among
other things, ensure that it is complying with all of the applicable Securities
Rules, that:
(a) the Purchaser is purchasing a sufficient number of Securities
in each stage of this Subscription such that the aggregate
acquisition cost to the Purchaser of such Securities is not
less than $97,000, if the Purchaser is a resident of British
Columbia, Alberta, Manitoba, New Brunswick, Xxxxxx Xxxxxx
Island, Newfoundland or an International Jurisdiction, or
$150,000 if the Purchaser is a resident of Saskatchewan,
Ontario, Quebec or Nova Scotia, and the Purchaser is:
(i) purchasing such Securities as principal for its own
account and not for the benefit of any other person; or
(ii) deemed to be acting as principal by virtue of it being:
A. a trust company or insurer which is authorized
to carry on business in B.C. under the
Financial Institutions Act (British Columbia)
and which is acting as agent or trustee for
accounts that are fully managed by it within
the meaning of ss. 74(1)(a) of the Securities
Act (British Columbia (the "Act") and NIN
#97/11 issued by the B.C. Securities Commission
(the "Commission"); or
B. a portfolio manager within the meaning of ss.
1(1) of the Act which is carrying on business
in B.C. and which is registered or exempt from
registration under the Act and which is acting
as agent for accounts that are fully managed by
it within the meaning of ss. 74(1)(b) of the
Act and NIN #97/11; or
C. a trust company, insurer or portfolio manager
within the meaning of BOR #97/4 issued by the
Commission which is acting, in the case of a
trust company or insurer, as agent or trustee
or, in the case of a portfolio manager, as
agent, for accounts that are fully managed by
it within the meaning of BOR #97/4and NIN
#97/11;
and the Purchaser is also deemed to be acting as
principal under the analogous provisions of any other
Securities Rules having application;
(b) the Purchaser has not been formed, created, established or
incorporated for the purpose of permitting the purchase of the
Securities without a prospectus by groups of individuals whose
individual share of the aggregate acquisition cost for such
Securities is less than $97,000, if the beneficial purchaser
is a resident of British Columbia, Alberta, Manitoba, New
Brunswick, Xxxxxx Xxxxxx Island, Newfoundland or an
International Jurisdiction, or $150,000 if the beneficial
purchaser is a resident of Saskatchewan, Ontario, Quebec or
Nova Scotia;
(c) the Purchaser is resident of an "International Jurisdiction"
(which means a country other than Canada or the United States)
and the Purchaser further represents and warrants that:
-2-
(i) the Purchaser is knowledgeable of, or has been
independently advised as to, the applicable
Securities Rules of the International Jurisdiction
which would apply to this Subscription, if there are
any;
(ii) the Purchaser is purchasing the Securities pursuant
to Exemptions under the Securities Rules of that
International Jurisdiction or, if such is not
applicable, the Purchaser is permitted to purchase
the Securities under the applicable Securities Rules
of the International Jurisdiction without the need to
rely on Exemptions; and
(iii) the applicable Securities Rules do not require the
Company to make any filings or seek any approvals of
any kind whatsoever from any regulatory authority of
any kind whatsoever in the International
Jurisdiction; and
the Purchaser will, if requested by the Company, deliver to
the Company a certificate or opinion of local counsel from the
International Jurisdiction which will confirm the matters
referred to in subparagraphs (ii) and (iii) above to the
satisfaction of the Company, acting reasonably;
(d) [intentionally left blank]
(e) the Purchaser acknowledges that the Company is relying on the
Exemptions in order to complete the trade and distribution of
the Securities and the Purchaser is aware of the criteria of
the Exemptions to be met by the Purchaser, and the Purchaser
meets those criteria;
(f) the Purchaser acknowledges that because this Subscription is
being made pursuant to the Exemptions:
(i) the Purchaser is restricted from using certain of
the civil remedies available under the applicable
Securities Rules;
(ii) the Purchaser may not receive information that might
otherwise be required to be provided to the Purchaser
under the applicable Securities Rules if the
Exemptions were not being used;
(iii) the Company is relieved from certain obligations that
would otherwise apply under the applicable Securities
Rules if the Exemptions were not being used;
(iv) no securities commission, stock exchange or similar
regulatory authority has reviewed or passed on the
merits of the Securities;
(v) there is no government or other insurance covering
the Securities;
(vi) there are risks associated with the purchase of the
Securities; and
(vii) there are restrictions on the Purchaser's ability to
resell the Securities and it is the responsibility of
the Purchaser to find out what those restrictions are
and to comply with them before selling the
Securities.
-3-
(g) the Securities are not being subscribed for by the Purchaser
as a result of any material information about the Company's
affairs that has not been publicly disclosed;
(h) the offer and sale of these Securities was not accompanied by
an advertisement and the Purchaser was not induced to purchase
these Securities as a result of any advertisement made by the
Company;
(i) if the Purchaser is a corporation, the Purchaser is a valid
and subsisting corporation, has the necessary corporate
capacity and authority to execute and deliver this Agreement
and to observe and perform its covenants and obligations
hereunder and has taken all necessary corporate action in
respect thereof, or, if the Purchaser is a partnership,
syndicate, trust or other form of unincorporated organization,
the Purchaser has the necessary legal capacity and authority
to execute and deliver this Agreement and to observe and
perform its covenants and obligations hereunder and has
obtained all necessary approvals in respect thereof, and, in
either case, upon the Company executing and delivering this
Agreement, this Agreement will constitute a legal, valid and
binding contract of the Purchaser enforceable against the
Purchaser in accordance with its terms and neither the
agreement resulting from such acceptance nor the completion of
the transactions contemplated hereby conflicts with, or will
conflict with, or results, or will result, in a breach or
violation of any law applicable to the Purchaser, any
constating documents of the Purchaser or any agreement to
which the Purchaser is a party or by which the Purchaser is
bound;
(j) the Purchaser is not, and was not at any time that it
purchased the Securities or received an offer to purchase the
Securities pursuant to this subscription, a "U.S. Person" as
defined in Regulation S under the United States Securities Act
of 1933, as amended (the "U.S. Securities Act"), which
definition includes, but is not limited to, an individual
resident in the United States, an estate or trust of which any
executor or administrator or trustee, respectively, is a U.S.
person, and any partnership or corporation organized or
incorporated under the laws of the United States;
(k) the Purchaser did not receive any term sheet, subscription
form or other offering materials in connection with this
subscription in the United States, and did not execute or
deliver any such subscription form or other materials in the
United States;
(l) no offers of Securities were made by any person to the
Purchaser while the Purchaser was in the United States; and
(m) the Purchaser is not acquiring Securities, directly or
indirectly, for the account or benefit of a U.S. Person or a
person in the United States.
1.2 The Company represents and warrants to the Purchaser, and acknowledges
that the Purchaser is relying on these representations and warranties in
entering into this Agreement, that:
(a) the Company is a valid and subsisting corporation duly
incorporated and in good standing under the laws of the State
of Nevada;
(b) the Company is not a reporting issuer in British Columbia and
any Securities issued to the Purchaser will be subject to an
indefinite hold period in British Columbia unless an exemption
-4-
from the registration and prospectus requirements of the
Securities Act is available. Such an exemption may not be
available;
(c) the Company's subsidiaries (the "Subsidiaries"), if any, are
valid and subsisting corporations and in good standing under
the laws of the jurisdictions in which they were incorporated;
(d) the common shares of the Company are eligible for quotation on
the N.A.S.D. OTC Bulletin Board ("OTC");
(e) upon their issuance, the Shares (as defined below) will be
validly issued and outstanding fully paid and non-assessable
common shares of the Company registered as directed by the
Purchaser, free and clear of all trade restrictions (except as
may be imposed by operation of the applicable Securities
Rules) and, except as may be created by the Purchaser, liens,
charges or encumbrances of any kind whatsoever;
(f) the Company and its Subsidiaries, if any, hold all licences
and permits that are required for carrying on their business
in the manner in which such business has been carried on and
the Company and its Subsidiaries, if any, have the corporate
power and capacity to own the assets owned by them and to
carry on the business carried on by them and they are duly
qualified to carry on business in all jurisdictions in which
they carry on business;
(g) all prospectuses, exchange offering prospectuses, offering
memorandums, filing statements, information circulars,
material change reports, shareholder communications, press
releases and other disclosure documents of the Company
including, but not limited to, financial statements, contain
no untrue statement of a material fact as at the date thereof
nor do they omit to state a material fact which, at the date
thereof, was required to have been stated or was necessary to
prevent a statement that was made from being false or
misleading in the circumstances in which it was made;
(h) to the best of its knowledge, and except as publicly
disclosed, there are no material actions, suits, judgments,
investigations or proceedings of any kind whatsoever
outstanding, pending or threatened against or affecting the
Company or its Subsidiaries, if any, at law or in equity or
before or by any Federal, Provincial, State, Municipal or
other governmental department, commission, board, bureau or
agency of any kind whatsoever and, to the best of the
Company's knowledge, there is no basis therefor;
(i) the Company has good and sufficient right and authority to
enter into this Agreement and complete its transactions
contemplated under this Agreement on the terms and conditions
set forth herein; and
(j) to the best of its knowledge, the execution and delivery of
this Agreement, the performance of its obligations under this
Agreement and the completion of its transactions contemplated
under this Agreement will not conflict with, or result in the
breach of or the acceleration of any indebtedness under, or
constitute default under, the constating documents of the
Company or any indenture, mortgage, agreement, lease, licence
or other instrument of any kind whatsoever to which the
Company is a party or by which it is bound, or any judgment or
-5-
order of any kind whatsoever of any Court or administrative
body of any kind whatsoever by which it is bound.
2. Subscriptions
2.1 The Purchaser hereby subscribes US$1,500,525 (the "Closing
Subscription Funds") for and agrees to take up 102,600 common shares of the
Company at a price of U.S. $14.625 per share.
2.2 On or before 17 February 2000 (the "Closing Date"), the Purchaser
shall deliver the Closing Subscription Funds for the Closing Subscription Shares
in the form of a solicitor's trust cheque, certified cheque, bank draft, money
order or wire transfer payable to "Xxxxxx, Xxxxxx & Xxxxxxxx In Trust" as the
solicitors for and on behalf of the Company. Upon receipt of the Closing
Subscription Funds, completion of the Acquisition and receipt of written notice
from Xx. Xxxx XxxXxxxxxx confirming that the Closing Milestones have been met,
the Company will immediately proceed to issue share certificates representing
the Closing Subscription Shares, and the Company will be entitled to use the
Closing Subscription Funds immediately upon the issuance of those certificates.
The Purchaser hereby confirms that upon the Company advising Xxxxxx, Xxxxxx &
Xxxxxxxx that it is holding such certificates for immediate delivery to the
Purchaser, Xxxxxx, Xxxxxx & Xxxxxxxx is hereby irrevocably authorized and
directed to release and deliver the Closing Subscription Funds, together with
any accrued interest thereon, to the Company or for use as directed by the
Company without prior notice to, consent of or action by the Purchaser and that
Xxxxxx, Xxxxxx & Xxxxxxxx can rely on this irrevocable direction as if it were a
party to this Agreement.
2.3 The Purchaser hereby subscribes US$1,500,525 (the "First Post-Closing
Subscription Funds") for and agrees to take up 102,600 common shares of the
Company (the "First Post-Closing Subscription Shares") at a price of U.S.
$14.625 per share.
2.4 On or before the Closing Date, the Purchaser shall deliver the First
Post-Closing Subscription Funds for the First Post-Closing Subscription Shares
in the form of a solicitor's trust cheque, certified cheque, bank draft, money
order or wire transfer payable to "Xxxxxx, Xxxxxx & Xxxxxxxx In Trust" as the
solicitors for and on behalf of the Company. Provided that the First
Post-Closing Subscription Funds have been so delivered and within 120 days after
the Closing Date the Company receives written notice from Xx. Xxxx XxxXxxxxxx
confirming that the First Post-Closing Milestones have been met, the Company
will immediately upon receipt of that notice proceed to issue share certificates
representing the First Post-Closing Subscription Shares, and the Company will be
entitled to use the First Post-Closing Subscription Funds immediately upon the
issuance of those certificates. The Purchaser hereby confirms that upon the
Company advising Xxxxxx, Xxxxxx & Xxxxxxxx that it is holding such certificates
for immediate delivery to the Purchaser, Xxxxxx, Xxxxxx & Xxxxxxxx is hereby
irrevocably authorized and directed to release and deliver the First
Post-Closing Subscription Funds, together with any accrued interest thereon, to
the Company or for use as directed by the Company without prior notice to,
consent of or action by the Purchaser and that Xxxxxx, Xxxxxx & Xxxxxxxx can
rely on this irrevocable direction as if it were a party to this Agreement. If
within 120 days after the Closing Date the Company does not receive from Xx.
Xxxx XxxXxxxxxx written notice that the First Post-Closing Milestones have been
met, then at the option of the Purchaser the First Post-Closing Subscription
Funds shall be returned to the Purchaser and the Purchaser's subscription for
the First Post-Closing Subscription Shares shall be cancelled.
-6-
2.5 The Purchaser hereby subscribes US$2,000,700 (the "Second Post-Closing
Subscription Funds") for and agrees to take up 136,800 common shares of the
Company (the "Second Post-Closing Subscription Shares") at a price of U.S.
$14.625 per share.
2.6 Upon issuance of the First Post-Closing Subscription Shares, the
Purchaser shall deliver the Second Post-Closing Subscription Funds for the
Second Post-Closing Subscription Shares in the form of a solicitor's trust
cheque, certified cheque, bank draft, money order or wire transfer payable to
"Xxxxxx, Xxxxxx & Xxxxxxxx In Trust" as the solicitors for and on behalf of the
Company. Provided that the Second Post-Closing Subscription Funds have been so
delivered and within 120 days after the Closing Date the Company receives
written notice from Xx. Xxxx XxxXxxxxxx confirming that the Second Post-Closing
Milestones have been met, the Company will immediately upon receipt of that
notice proceed to issue share certificates representing the Second Post-Closing
Subscription Shares, and the Company will be entitled to use the Second
Post-Closing Subscription Funds immediately upon the issuance of those
certificates. The Purchaser hereby confirms that upon the Company advising
Xxxxxx, Xxxxxx & Xxxxxxxx that it is holding such certificates for immediate
delivery to the Purchaser, Xxxxxx, Xxxxxx & Xxxxxxxx is hereby irrevocably
authorized and directed to release and deliver the Second Post-Closing
Subscription Funds, together with any accrued interest thereon, to the Company
or for use as directed by the Company without prior notice to, consent of or
action by the Purchaser and that Xxxxxx, Xxxxxx & Xxxxxxxx can rely on this
irrevocable direction as if it were a party to this Agreement. If within 120
days after the Closing Date the Company does not receive from Xx. Xxxx
XxxXxxxxxx written notice that both the First Post-Closing Milestones and the
Second Post-Closing Milestones have been met, then at the option of the
Purchaser the Second Post-Closing Subscription Funds shall be returned to the
Purchaser and the Purchaser's subscription for the Second Post-Closing
Subscription Shares shall be cancelled.
3. Covenants, Agreements and Acknowledgements
3.1 The Purchaser covenants and agrees with the Company to hold and not
sell, transfer or in any manner dispose of the Securities unless the sale,
transfer or disposition is made in accordance with all applicable Securities
Rules.
3.2 The Purchaser acknowledges and agrees that the Securities will be
subject to such trade restrictions as may be imposed by operation of the
applicable Securities Rules, and the share certificates representing the
Securities will bear such legends as may be required by the applicable
Securities Rules. The Purchaser further acknowledges and agrees that it is the
Purchaser's obligation to comply with the trade restrictions in all of the
applicable jurisdictions and the Company offers no advice as to those trade
restrictions.
3.3 The Purchaser acknowledges that:
(a) the Securities have not been registered under the U.S.
Securities Act and are "restricted securities" within the
meaning of Rule 144 under the U.S. Securities Act and may only
be resold in accordance with the provisions of Regulation S
under the U.S. Securities Act, pursuant to registration under
the U.S. Securities Act, or pursuant to an available exemption
from such registration. The Purchaser understands that the
Company has no obligation or present intention of filing a
registration statement under the U.S. Securities Act in
respect of the Securities;
-7-
(b) hedging transactions involving the Securities may not be
conducted unless in compliance with the U.S. Securities Act;
(c) there may be material tax consequences to the Purchaser of an
acquisition or disposition of Securities. The Company gives no
opinion and makes no representation with respect to the tax
consequences to the Purchaser under United States, state,
local or foreign tax law of the Purchaser's acquisition or
disposition of such securities;
(d) the certificates evidencing the Securities issued in this
subscription will bear a legend in substantially the following
form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND MAY BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED ONLY (i) TO
THE COMPANY; (ii) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT; (iii) IN ACCORDANCE WITH RULE
144 UNDER THE 1933 ACT; OR (iv) IN A TRANSACTION THAT IS
OTHERWISE EXEMPT FROM REGISTRATION UNDER THE 1933 ACT AND
APPLICABLE STATE SECURITIES LAWS, PROVIDED, PRIOR TO ANY SUCH
SALE, TRANSFER OR ASSIGNMENT, THE COMPANY SHALL HAVE RECEIVED
AN OPINION OF COUNSEL, IN FORM ACCEPTABLE TO THE COMPANY, THAT
NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM
ANY PROPOSED TRANSFER OR ASSIGNMENT. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT."; and
(e) the Company is required to refuse to register any transfer of
the Securities not made in accordance with the provisions of
Regulation S under the U.S. Securities Act, pursuant to
registration under the U.S. Securities Act, or pursuant to an
available exemption from such registration.
3.4 The Company covenants and agrees with the Purchaser to file the
documents necessary to be filed under the applicable Securities Rules, including
Forms 20 (or the forms equivalent thereto), within the required time.
4. [Intentionally left blank]
5. [Intentionally left blank]
6. General
6.1 For the purposes of this Agreement, time is of the essence.
6.2 The parties hereto shall execute and deliver all such further
documents and instruments and do all such acts and things as may, either before
or after the execution of this Agreement, be reasonably required to carry out
the full intent and meaning of this Agreement.
-8-
6.3 This Agreement shall be subject to, governed by and construed in
accordance with the laws of British Columbia.
6.4 This Agreement may not be assigned by either party hereto.
6.5 This Agreement may be signed by the parties in as many counterparts as
may be deemed necessary, each of which so signed shall be deemed to be an
original, and all such counterparts together shall constitute one and the same
instrument.
IN WITNESS WHEREOF the parties have executed this written Agreement effective as
of the Effective Date.
XXXXXXXXXXXX.XXX, INC.
Per:
----------------------------
Authorized Signatory
TO BE COMPLETED BY THE PURCHASER:
A. Name and Address (Note: Cannot be a U.S. Address) The name and address (to
establish the Purchaser's jurisdiction of residence for the purpose of
determining the applicable Securities Rules) of the purchaser (the "Purchaser")
is as follows:
----------------------------------------
Name
----------------------------------------
Street Address
----------------------------------------
City and Province
----------------------------------------
Country
---------------
Postal Code
-9-
B. Registration Instructions (Note: Cannot be a U.S. Address) The name and
address of the person in whose name the Purchaser's Securities are to be
registered is as follows (if the name and address is the same as was inserted in
paragraph A above, then insert "N/A"):
----------------------------------------
Name
----------------------------------------
Street Address
----------------------------------------
City and Province
----------------------------------------
Country Postal Code
C. Delivery Instructions (Note: Cannot be a U.S. Address) The name and address
of the person to whom the certificates representing the Purchaser's Securities
referred to in paragraph A above are to be delivered is as follows (if the name
and address is the same as was inserted in paragraph A above, then insert
"N/A"):
----------------------------------------
Name
----------------------------------------
Street Address
----------------------------------------
City and Province
----------------------------------------
Country Postal Code
TO BE COMPLETED AND SIGNED BY THE PURCHASER:
------------------------------------------
Name of the "Purchaser" - use the name inserted in paragraph A above.
Per:
---------------------------------
Signature of Purchaser
---------------------------------
Title (if applicable)
-10-
APPENDIX 1
MILESTONES
1. Closing Milestones:
i) The xxxxxxxxxxxx.xxx Website to be up and functional by 30
January 2000.
ii) Undertaking by xxxxxxxxxxxx.xxx to register 50 "Founder
Executives" (i.e. key Executives to drive the terrestrial
marketing programme) within 60 days of Closing of Agreement.
iii) Undertaking by xxxxxxxxxxxx.xxx to register at least 50,000
Members onto its website within 60 days of Closing of the
Agreement.
iv) Schedule of xxxxxxxxxxxx.xxx's pre-start Assets and
Operational Costs incurred as at 3 February 2000 to be
completed.
1. First Post-Closing Milestones
i) 50 Founder Executives to be registered.
ii) At least 50,000 Members to be registered.
iii) Completion of the Marketing Plan for both on-line (surfing
Members) and off-line (terrestrial Members).
iv) Completion of the Marketing Budget, identifying all areas
of promotional activity and costs.
v) Confirmation that the following have been secured:
- Hire of PR Agency/ Consultancy
- Hire of Advertising Agency/ Consultancy
- Hire of Investor Relations Agency or media Consultant
- Serviced offices for the main operations of xxxxxxxxxxxx.xxx
- Phase I team structure in place (substantially as per
attached Outline Document).
2. Second Post-Closing Milestones
i) Completion of 2-year Business Plan, for use as a management
tool including full budget projections, which will include a
final Marketing Plan incorporating both on-line and off-line
methodologies.
ii) Commissioning of a consumer research programme in relation to
brand awareness of the xxxxxxxxxxxx.xxx brand.
iii) 250 Executive Members to be registered (in total).
iv) 100,000 Members to be registered (in total)
v) Personnel for Phase II team structure (substantially as per
attached Phase II Outline Document) to be identified, with a
view to recruiting such personnel as soon as possible, subject
to operational requirements and funding.
-11-
