SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT is made as of the 22nd day of
November, 2002
AMONG:
XXXXX XXXXX, a businessman whose address is 000 Xxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx, X0X 0X0
(Purchaser)
AND:
XX. XXXXXX X. XXXXXXX, a psychologist whose address is 310-
000 Xxxxx Xxx Xxxxx, Xxxxxxxx, XX, X0X 0X0
(Xxxxxxx)
AND:
XXXXXXX X. XXXXXXXXXXX, a businessman whose address is
000-000 Xxxxx Xxx Xxxxx, Xxxxxxxx, XX, X0X 0X0
(Xxxxxxxxxxx)
(Xxxxxxx and Xxxxxxxxxxx are collectively referred to as the
Sellers, any reference hereinafter to the parties shall be
deemed to include the Sellers and the Purchaser)
WHEREAS:
A. Sellers are, collectively, the registered owners of 30,000,000
common shares in the share capital of Cortex Systems, Inc. (Cortex),
a Nevada corporation whose common shares are listed for trading on the
National Association of Securities Dealers over-the-counter bulletin
board (the OTC-BB);
B. Purchaser wishes to purchase from Sellers, and Sellers wish to sell
to Purchaser, 700,000 of the issued and outstanding common shares of Cortex
(the Shares) for the price, and on and subject to the terms and conditions,
hereinafter set forth; and
C. Purchaser wishes to purchase from Sellers, and Sellers wish to
sell to Purchaser, 300,000 Warrants (as defined in Section 4.6 of
this Agreement) for the price, and on and subject to the terms and
conditions, hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, the Purchaser and Sellers do hereby agree to
the purchase and sale of the Shares and 300,000 Warrants on the following
terms and conditions:
1. PURCHASE AND SALE.
1.1 On the basis of the warranties and representations of the Sellers
set forth in Sections 8 and 9 of this Agreement and subject to the terms
and conditions of this Agreement, the Purchaser agrees to purchase from
the Sellers and the Sellers agree to sell to the Purchaser the Shares
and 300,000 Warrants (the Shares and the 300,000 Warrants may be collectively
hereinafter referred to as the Securities) on the Closing Date
(hereinafter defined).
1.2 All dollar amounts referred to in this Agreement are in lawful money
of the United States of America.
2. ESCROW AGENT
Within a reasonable time after the date of this Agreement, the parties
will appoint Clark, Wilson, Barristers and Solicitors, of Xxxxx 000,
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X., to act as escrow agent
(Escrow Agent) pursuant to the terms of a separate written escrow
agreement (the Escrow Agreement).
3. PURCHASE PRICE
3.1 Amount. The purchase price for the Securities, collectively, is
the sum of Fifty Thousand Dollars (50,000) (the Purchase Price), Forty
Thousand Dollars (40,000) of which is hereby allocated to the purchase
of the Shares and Ten Thousand Dollars (10,000) is hereby allocated to
the purchase of the 300,000 Warrants.
3.2 Delivery of the Purchase Price. On or before the Closing Date
(as hereinafter defined), the Purchaser will deliver to the Escrow Agent
a bank draft, certified cheque or solicitors trust account cheque in
the amount of the Purchase Price, to be held by the Escrow Agent pursuant
to the terms of the Escrow Agreement.
4. THE SECURITIES
4.1 Delivery of the Shares. On or before the Closing Date, Sellers
shall deliver one or more Share Certificates (collectively, the Share
Certificate) representing all of the Shares to the Escrow Agent to be
held by the Escrow Agent pursuant to the terms of the Escrow Agreement.
The Certificate shall be in the name of either or both of the Sellers
and shall have been duly endorsed for transfer to the Purchaser in such
form as may be required by Cortex transfer agent, together with any other
documents as may be required by the transfer agent for transfer of the
Shares to Purchaser at the Closing including, by way of example but not
in limitation, a resolution of the Board of Directors of Cortex authorizing
the transfer of the Shares to the Purchaser at the Closing and the issuance
of a new share certificate representing the Shares in the name of the Purchaser.
4.2 Delivery of the 300,000 Warrants. On or before the Closing Date,
Sellers shall deliver such number of warrant certificates (collectively,
the Warrant Certificate) as represents all of the 300,000 Warrants to the
Escrow Agent to be held by the Escrow Agent pursuant to the terms of the
Escrow Agreement. The Warrant Certificate shall be in the name of either
or both of the Sellers and shall have been duly endorsed for transfer to
the Purchaser in such form as may be required by Cortex Board of Directors
or its solicitors, together with any other documents as may be required by
Cortex or its solicitors in order to permit transfer of the Shares to
Purchaser at the Closing including, by way of example but not in limitation,
a resolution of the Board of Directors of Cortex authorizing the transfer
of the 300,000 Warrants to the Purchaser at the Closing and the issuance
of a new warrant certificate representing the 300,000 Warrants in the
name of the Purchaser.
4.3 Securities Not Registered. The parties hereto acknowledge that
the Securities have not been and will not be registered pursuant to
the securities laws of any jurisdiction and are being transferred pursuant
to exemptions from registration contained in the Securities Act
(British Columbia) (the B.C. Securities Act) and the United States
Securities Act of 1933, as amended (the 1933 Act), and the Securities
may only be sold in a jurisdiction in accordance with the restrictions on
resale prescribed under the laws of the jurisdiction in which such shares
are sold, all of which may vary depending on the jurisdiction. The parties
hereto are aware that Cortex is not a reporting issuer in any Province in
Canada and as a consequence the Securities are restricted from transfer
and may only be sold by residents of any Province of Canada in accordance
with the rules and regulations of the that Province. Further, the parties
are aware that Cortex has no obligation or present intention of becoming a
reporting issuer in any Province of Canada and as a result, any holders
of any securities of Cortex who are residents of Canada may require
an exemption order from the Securities Commission of one or more
Provinces of Canada, as applicable, in order to resell their
securities (including any holder of any of the Securities).
4.4 Legend. It is understood and agreed that the certificates
evidencing the Securities will bear the following legend:
NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933 ACT (THE 1933 ACT), OR
ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE
OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S.
PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933
ACT.
4.5 The Purchaser acknowledges that the Securities acquired
pursuant to the terms of this Agreement will have such hold periods
as are required under applicable securities laws and as a result may
not be sold, transferred or otherwise disposed, except pursuant to
an effective registration statement under the 1933 Act or pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the 1933 Act and in each case only in accordance with
applicable state and provincial securities laws.
4.6 The Warrants. It shall be a condition precedent to the Purchasers
obligation to close the transactions contemplated by this Agreement
that Cortex issue to the Sellers, on or before the Closing Date,
330,000 warrants (the Warrants), each of which shall:
(a) permit the holder to purchase one common share of Cortex at an
exercise price of:
(i) $0.75 if exercised during the one year period following the
Closing Date;
(ii) $1.00 if exercised during the one-year period following the
first anniversary of the Closing Date;
(iii) $1.25 if exercised during the one-year period following the
second anniversary of the Closing Date;
(b) be transferable but only upon receipt of the prior written
approval of the Board of Directors of Cortex; and
(c) expire on the third anniversary of the Closing Date.
4.7 Exchange Shares Fully Paid and Non-assessable. The Securities will
be issued from the treasury of Cortex as fully paid and non-assessable
and shall be free and clear of all liens, charges and encumbrances,
except as set forth herein.
5. CLOSING DATE.
5.1 Closing Date. The Closing Date (the Closing Date) shall be
December 15, 2002. The transactions contemplated by this Agreement
shall close on the Closing Date provided that the Closing Date may
be extended for up to 45 days to a date to be mutually agreed upon by
the parties if such a delay is reasonably necessary to permit the
parties to remove or waive any of the conditions precedent to their
obligations to close as are set forth in Section 6 and 10 of this
Agreement, or to enable them to obtain, acting diligently, the items
to be delivered at Closing pursuant to Section 7 of this Agreement.
The Closing shall occur at the offices of Clark, Wilson,
000-000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X.
5.2 Governance. On the Closing Date, Xx. Xxxxxxx will resign from
the Board of Directors of Cortex, and from her offices as Secretary
and Treasurer, leaving Xxx Xxxxxxxxxxx as the sole member of the
Board of Cortex. On the Closing Date, Xx. Xxxxxxxxxxx will increase
the number of directors from two to four and will appoint Xxxxxx
Xxxxxxxxxx, Xxxxxx Xxxxxx and Purchaser to the Board. Also on the
Closing Date, the newly constituted Board shall appoint Xxxxxx
Xxxxxxxxxx as President, Purchaser as Treasurer and Xxxxxx Xxxxxx
as Secretary of Cortex, respectively.
6. CONDITIONS TO CLOSING.
6.1 The obligation of the Purchaser to carry out the terms of
this Agreement and to complete the transactions contemplated hereby
is subject to the following conditions:
(a) that on the Closing Date the warranties and representations
of the Sellers as set forth in Section 8 of this Agreement will be
true in every particular as if such warranties and representations
had been made by the Sellers on the Closing Date;
(b) that, contemporaneously with the Closing of the transactions
contemplated by this Agreement, Cortex completes a share exchange
pursuant to a separate written Share Exchange Agreement (the
EAT Share Exchange Agreement) between Cortex, on the one hand,
and all of the shareholders of Elasticated Adhesive Technologies,
Inc. (EAT), a privately held Nevada corporation, on the other
hand, pursuant to which the shareholders of EAT exchange all
of the issued and outstanding shares of EAT for shares of
Cortex, all as is more particularly set forth in the EAT
Share Exchange Agreement.
(c) that on or before the Closing Date the Sellers will have
delivered to the Escrow Agent, and the Escrow Agent is then in
a position to deliver to the Purchaser, the following documents:
(i) a Directors Resolution of Cortex authorizing transfer of the
Shares to the Purchaser;
(ii) a Directors Resolution of Cortex authorizing transfer of
300,000 Warrants to the Purchaser;
(iii) the Share Certificate representing the Shares, duly endorsed
by the Sellers for transfer to the Purchaser;
(iv) the Warrant Certificate representing the 300,000 Warrants,
duly endorsed by the Sellers for transfer to the Purchaser;
(v) new share certificates representing the Shares, issued in the
name of the Purchaser;
(vi) new warrant certificates representing the 300,000
Warrants, issued in the name of the Purchaser;
(vii) all of the consents and approvals in writing necessary
to the transfer contemplated herein;
(viii) evidence, satisfactory to the Purchaser, that Cortex has
effected the corporate changes described in Section 10 hereof
(the Corporate Changes).
(d) that no investigation, action, suit or proceeding before any
court or any other governmental or regulatory authority shall have
been threatened or be pending against Cortex or Seller seeking to
restrain, prevent or materially change any of the transactions
contemplated by this Agreement or questioning the validity or
legality of any of such transactions.
(e) that no action shall have been taken or law enacted or
proposed to be enacted by any person having jurisdiction over
the parties or the Securities that makes any of the transactions
contemplated by this Agreement or the EAT Share Exchange Agreement
illegal.
(f) that the form and substance of all certificates, instruments
and other documents delivered to Escrow Agent or any of the
parties under this Agreement shall be satisfactory in all
reasonable respects to Cortex and its counsel.
(g) that, from and after the date that the Purchaser deposits
the Purchase Price with the Escrow Agent and until the Closing
Date, the Purchaser and its solicitors shall have had a reasonable
opportunity to perform the searches and other due diligence with
respect to the records of (and such other documents pertaining to
Cortex) as the Purchaser and its counsel reasonably require;
(h) that Cortex has received, in form and substance reasonably
satisfactory to it, a final release from all directors and officers
of Cortex who are required to resign from their offices or positions
by the terms of this Agreement.
7. DELIVERIES AT OR BEFORE CLOSING
7.1 Deliveries by Seller. On or before the Closing Date, Sellers
will deliver to the Escrow Agent:
(a) satisfactory evidence that the Board of Directors of Cortex
has approved the transactions contemplated herein by a disinterested
majority;
(b) certified copies of resolutions of the directors of Cortex
authorizing the issue of new certificates representing the Securities
in the name of Purchaser;
(c) new certificates representing the Securities in the name of Purchaser;
(d) the written resignation, effective on the Closing Date, of all
of the members of the Board of Directors of Cortex except for Xxxxxxx
Xxxxxxxxxxx, who shall remain on the Board;
(e) the written resignation, effective on the Closing Date, of all
of the officers of Cortex;
(f) a final release, in form and substance reasonably satisfactory
to Cortex, from all directors and officers of Cortex who are required
to resign from their offices or positions by the terms of this Agreement;
(g) a certified copy of a shareholders resolution of the shareholders
of Cortex appointing, effective on the Closing Date, Xxxxxx Xxxxxxxxxx,
Purchaser and Xxxxxx Xxxxxx to the Board of Directors of Cortex; and
(h) such other documents and instruments as counsel for Purchaser or
Cortex may reasonably require to enable, effectuate or evidence the
transactions contemplated hereby.
7.2 Deliveries by Purchaser. On or before the Closing Date,
Purchaser shall deliver the following to Escrow Agent:
(a) the sum of Fifty Thousand Dollars ($50,000);
(b) written consents to act as a Director of Cortex from each of
Xxxxxx Xxxxxxxxxx, Purchaser and Xxxxxx Xxxxxx;
8. SELLERS REPRESENTATIONS AND WARRANTIES
8.1 Sellers each, jointly and severally, represent and warrant to
Purchaser as of the date hereof and on the Closing Date that:
(a) Cortex is a corporation validly existing and in good standing
under the laws of the State of Nevada.
(b) on the date of this Agreement, the authorized capital stock
of Cortex consists of 100,000,000 common shares, each with a par
value of $0.0001, of which 34,583,800 are validly issued and
outstanding, fully paid and non-assessable;
(c) on the date of this Agreement, Sellers own 30,000,000 common
shares in the share capital of Cortex (the Total Shares), which
number of shares represents approximately 86.75% of the issued
and outstanding shares of Cortex;
(d) Sellers own the Total Shares, free and clear of any claim,
security interest, mortgage, pledge, or other lien or encumbrance
of any kind whatsoever.
(e) to the best of Sellers knowledge, there are no outstanding
options, agreements, contracts, calls or commitments of any
character which would require the issuance by Cortex of any
securities;
(f) Cortex has the power and authority to carry on its business
as it is now conducted and to own its assets it now owns;
(g) Cortex has no material assets;
(h) to the best of Sellers knowledge, except for this Agreement,
the EAT Share Exchange Agreement (as described in Section 6.1(b)
of this Agreement) and a contract for services between Cortex and
its transfer agent, Cortex is not a party to any contract, and has
no contractual obligations, that will survive the Closing;
(i) Sellers are not aware of a claim of infringement or breach of
any industrial or intellectual property rights of any other person
by Cortex, nor has Cortex received any notice that the conduct of
its business infringes upon or breaches any industrial or intellectual
property rights of any other person;
(j) as of the date of this Agreement, the officers of Cortex
are Xxx Xxxxxxxxxxx, President and Chief Financial Officer,
and Xx. Xxxxxx Xxxxxxx, Secretary and Treasurer;
(k) as of the date of this Agreement, Sellers constitute all of
the members of the Board of Directors of Cortex;
(l) to the best of Sellers knowledge, this Agreement constitutes
the valid and binding obligation of Sellers and is enforceable against
them in accordance with its terms, except as enforceability may be
affected by bankruptcy, insolvency or similar laws affecting creditors
rights generally or court applied equitable remedies;
(m) to the best of Sellers knowledge, the execution, delivery
and performance of this Agreement by each of Sellers does not and
will not (i) conflict with or result in a breach of any of the
terms, conditions or provisions of the articles of incorporation or
bylaws of Cortex or any judgment, order, injunction, decree, regulation
or ruling of any court or other governmental authority to which either
of them is subject or of any agreement or contract listed on any
schedule delivered pursuant hereto or any other material agreement
or contract to which either of them or Cortex is a party or is
subject, or constitute a default thereunder, or (ii) give to others
any rights of termination or cancellation of any agreement or contract
or any other material agreement or contract to which Cortex or
Sellers is a party or is subject, or (iii) create any lien or
encumbrance upon the assets of Sellers or Cortex, or (iv) require
the consent, authorization or approval of any governmental agency,
body, official or authority;
(n) to the best of Sellers knowledge, Cortex has filed with
all applicable securities and regulatory authorities (including
exchanges and markets) all information and documents required to
be filed with such authorities (the Public Record) and the
statements set forth in the Public Record are true, correct and
complete and do not contain any misrepresentation as of the date
made and Cortex has not filed any confidential material change
reports or similar reports;
(o) to the best of Sellers knowledge, and except as may be
reflected in the Public Record, there has not been any adverse
material change in the business, operations or affairs, financial
or otherwise, of Cortex since September 30, 2002, being the date
of the last reviewed financial statements of Cortex (included in
its Form 10-QSB filed November 5, 2002);
(p) Cortex common shares are approved for trading on the
National Association of Securities Dealers Over-the-Counter
Bulletin Board (the OTC BB) and are eligible for quotation on
the OTC BB as of the Closing Date;
(q) to the best of Sellers knowledge, Sellers are not aware,
of nor has either of them failed to disclose to Purchaser any
change, event or circumstance which would adversely affect Cortex
or its business or assets or the prospects, operation or condition
of Cortex or which would reasonably be considered to reduce the
value of Cortex or the value of the Securities to Purchaser;
(r) to the best of Sellers knowledge, Sellers have not made
any untrue statement to Purchaser nor has either failed to state
a material fact that is required to be stated or that is necessary
to prevent a statement that is made from being materially false
or misleading in the circumstances in which it was made;
(s) to the best of Sellers knowledge, the Cortex financial
statements for the year ended June 30, 2002 and the three-month
period ended September 30, 2002 (the Cortex Financial Statements)
are true and correct in every material respect and present fairly
the financial position of Cortex as of the date of such statements,
and the results of its operations for the periods then ended
and are prepared in accordance with generally accepted accounting
principles applied on a consistent basis except as specifically
provided therein;
(t) to the best of Sellers knowledge, Sellers has disclosed
all contracts, engagements and commitments, whether oral or
written, relating to Cortex;
(u) to the best of Sellers knowledge, all licenses, permits,
approvals, consents, certificates, registrations and authorizations
required in the ordinary course of the Cortex business or in the use
of its assets have been obtained and are in good standing and are not
terminable on the basis of a transfer in ownership of the Shares;
(v) Sellers have the full and absolute right, power and authority
to enter into this Agreement on the terms and subject to the
conditions herein set forth, to carry out the transactions
contemplated hereby and to transfer on the Closing Date, legal
and beneficial title and ownership of his or her portion of
the Securities to Purchaser;
(w) to the best of Sellers knowledge, all alterations, if any,
to the Articles of Incorporation of Cortex since its incorporation
have been duly approved by the shareholders of Cortex;
(x) to the best of Sellers knowledge, the corporate records of
Cortex, as required to be maintained by it under its statute of
incorporation and constating documents, are accurate, complete
and up-to-date in all material respects and reflect all material
transactions of Cortex;
(y) to the best of Sellers knowledge, Cortex has filed all necessary
tax returns in all jurisdictions required to be filed by it, all
returns affecting workers compensation with the appropriate agency,
corporation capital tax returns, if required, and any other material
reports and information required to be filed by Cortex with any
governmental authority;
(z) to the best of Sellers knowledge, Cortex has withheld and
remitted to tax collection authorities such taxes as are required
by law to be withheld and remitted as and when due;
(aa) to the best of Sellers knowledge, Cortex has paid all
income, sales and capital taxes payable by it as and when due;
(bb) to the best of Sellers knowledge, Cortex has paid all
instalments of orporate taxes due and payable, and there is not
presently outstanding nor does Cortex expect to receive any
notice of re-assessment from any applicable tax collecting
authority;
(cc) to the best of Sellers knowledge, Cortex has not declared or
paid any dividends of any kind or declared or made any other
distributions of any kind whatsoever including, without limitation,
by way of redemption, repurchase or reduction of its authorized capital;
(dd) to the best of Sellers knowledge, there has been no material
adverse change in the financial condition and position of Cortex and
no damage, loss destruction or other change in circumstances materially
affecting the business, property or assets of Cortex or its right or
capacity to carry on business since the date of the Cortex Financial
Statements;
(ee) except as specifically disclosed by Sellers to Purchaser and
to the best of Sellers knowledge, since the date of the Cortex Financial
Statements, Cortex has not engaged in any transaction or made any
disbursement or assumed or incurred any liability or obligation or
made any commitment, including, without limitation, any forward purchase
commitment or similar obligation, to make any expenditure which would
materially affect its operations, property, assets or financial condition;
(ff) to the best of Sellers knowledge, Cortex has not waived
or surrendered any right of substantial value and has not made
any gift of money or of any of its property or assets;
(gg) to the best of Sellers knowledge, Cortex is not in default
under or in breach of, or would, after notice or lapse of time or both,
be in default under any contract, agreement, indenture or other
instrument to which it is a party or by which it is bound;
(hh) to the best of Sellers knowledge, there are no claims
threatened against or affecting Cortex nor are there any
actions, suits, judgments, proceedings or investigations pending
or, threatened against or affecting Cortex, at law or in equity,
before or by any court, administrative agency or other tribunal
or any governmental authority;
(ii) Sellers are not aware of any infringement by Cortex of any
registered patent, trademark or copyright;
(jj) Cortex has no employees;
(kk) to the best of Sellers knowledge, Cortex has not failed to
comply in any respect with all applicable federal, state and local
laws, rules and regulations relating to employment or employment
termination, and all applicable laws, rules and regulations governing
payment of minimum wages and overtime rates, and the withholding and
payment of taxes from compensation of employees;
(ll) to the best of Sellers knowledge, Cortex has not ever entered
into a collective bargaining agreement or other labor union contract;
(mm) to the best of Sellers knowledge, there are no brokerage,
finders or similar fees paid or payable by or on behalf of Sellers
in connection with this Agreement or the transactions contemplated
by this Agreement; and
(nn) Purchaser has been a personal acquaintance of Xxx Xxxxxxxxxxx
over the past five years.
8.2 Consent to Corporate Changes. Sellers hereby consent, in
their capacity as majority shareholders of Cortex and in their capacity
as the sole members of the Board of Directors of Cortex, to the execution
of this Agreement and to the Corporate Changes (as defined in Section
10 hereof) by Cortex and to the execution of any documents executed or
prepared by Cortex in connection with this Agreement and the
transactions contemplated hereby;
9. PURCHASERS REPRESENTATIONS AND WARRANTIES
9.1 Purchaser represents and warrants to Cortex and Sellers as of
the date hereof and on the Closing Date that:
(a) Purchaser has the full and absolute right, power and authority
to enter into this Agreement on the terms and subject to the conditions
herein set forth, to carry out the transactions contemplated hereby;
(b) this Agreement constitutes the valid and binding obligation
of Purchaser, and is enforceable against Purchaser in accordance with
its terms, except as enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditors rights generally
or court applied equitable remedies;
(c) Purchasers execution, delivery and performance of this
Agreement does not and will not (i) conflict with or result in a
breach of any of the terms, conditions or provisions of any judgment,
order, injunction, decree, regulation or ruling of any court or other
governmental authority to which Purchaser is subject or of any agreement
or contract or any other material agreement to which Purchaser is a
party or is subject, or constitute a default thereunder;
(d) Purchaser understands that none of the Securities have been
or will be registered under the 1933 Act, or under any state
securities or blue sky laws of any state of the United States,
and, unless so registered, may not be offered or sold in the
United States, or, directly or indirectly, to U.S. Persons,
pursuant to an effective registration statement under the 1933 Act,
or pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the 1933 Act and in each
case only in accordance with applicable state and provincial
securities laws;
(e) Purchaser is an accredited investor as defined in Regulation
D under the 1933 Act and as defined in Multilateral Instrument
45-103 as adopted by the B.C. Securities Commission and that it
is acquiring the Securities pursuant to the exemption from
registration requirements contained in Rule 506 of Regulation
D under the 1933 Act and the exemption from the dealer registration
requirements set forth in Multilateral Instrument 45-103; and
(f) Purchaser understands that offers and sales of any of the
Securities can only be made pursuant to the registration provisions
of the 1933 Act or an exemption therefrom, and in each case only in
accordance with applicable state and provincial securities laws.
(g) Purchaser has been a personal acquaintance of Xxx Xxxxxxxxxxx
over the past five years.
10. CORPORATE CHANGES
From and after the date of this Agreement, and prior to or on
the Closing Date, the Seller shall use its best efforts to cause
Cortex to effect (collectively, the Corporate Changes):
(a) an increase in the number of members of the Board of Directors
to four;
(b) an amendment of its Articles of Incorporation to create at
least three million (3,000,000) convertible preferred shares
(the Convertible Preferred Shares), each of which will:
(i) be convertible, at the option of the holder, into two common
shares of Cortex at any time during the five years following the
date of issue,
(ii) automatically convert on the fifth anniversary of the
date of issue;
(iii) will have the right to twelve votes,
(c) the issuance of some or all of the Convertible Preferred Shares
to some or all of the shareholders of EAT pursuant to the EAT Share
Exchange Agreement;
(d) the authorization and issuance of 330,000 Warrants to the Sellers
and 25,000 shares of the Convertible Preferred Shares to
Xxx Xxxxxxxxxxx in exchange for the surrender by Sellers to Cortex of
29,285,000 shares of the common stock of Cortex owned by them;
(e) the unconditional acceptance by the Securities and Exchange
Commission (SEC) of a Registration Statement registering Cortex
pursuant to the Securities and Exchange Act of 1934 on
Form 8(a) or such other form as may be acceptable to the SEC; and
(f) on the Closing Date, appoint Xxxxxx Xxxxxxxxxx to the office of
President, Purchaser to the office of Treasurer and Xxxxxx Xxxxxx
to the office of Secretary of Cortex, respectively; and
(g) on the Closing Date, appoint Xxxxxx Xxxxxxxxxx, Xxxxx Xxxxx
and Xxxxxx Xxxxxx to the Board of Directors.
11. COVENANTS OF SELLER.
11.1 Affirmative Covenants. Sellers covenant and agree with
Purchaser that: (a) both before and after the Closing Date, Sellers
shall execute and do all such further deeds, acts and things and give
such assurances as may reasonably be required to effect the Corporate
Changes and otherwise to consummate the transactions contemplated
hereby and referenced herein;
(b) from and after the date of this Agreement until the Closing Date,
they shall cause Cortex to carry on its business in the ordinary
course consistent with past practice and in compliance with all
applicable laws, regulations and rules of all governmental authorities;
(c) on the Closing Date, simultaneously with the issuance of the
Convertible Preferred Stock to the EAT shareholders pursuant to the EAT
Share Exchange Agreement as described in Section 10(d), above, Sellers
shall surrender to Cortex 29,285,000 shares of Cortex common stock
in consideration of Cortex issuing the Warrants.
(d) they will give, and that they will cause Cortex to give, to
the Purchaser and the Purchaser's counsel, accountants and other
representatives full access, during normal business hours throughout
the period from the date of this Agreement to the Closing Date, to
all of Cortex' books and records, and will promptly furnish to the
Purchaser during that period all such information as the Purchaser
may request (and that they will use their best efforts to cause
Cortex to furnish to the Purchaser during that period all such
information as the Purchaser may request).
11.2 Negative Covenants. Sellers covenant and agree with
Purchaser that they will use their best efforts to prevent Cortex from,
prior to the Closing Date and except with the prior written consent of
Purchaser (which consent will not be unreasonably withheld):
(a) making or permitting to be made any employment contracts or
other arrangements with any directors, officers, agents, servants
or employees of Cortex except as permitted pursuant to this Agreement;
(b) making or assuming or permitting to be made or assumed any
commitment, obligation or liability which is outside of the usual
and ordinary course of the business of Cortex;
(c) declaring or paying any dividends or make any other
distributions or appropriations of profits or capital except as expressly
set forth in this Agreement;
(d) create or assume any indebtedness other than in the ordinary
course of business or guarantee the obligations of any third party; or
(e) sell or otherwise in any way alienate or dispose of or encumber
any of its assets except as may be in the ordinary course of the business
of Cortex.
11.3 No Entertainment of Other Offers. Sellers shall not, directly
or indirectly, solicit, initiate or encourage submission of proposals
or offers for the sale, transfer, exchange, conversion or other
disposition of any of the Securities or the assets or other securities
of Cortex, or participate in any discussions or negotiations regarding,
or furnish to any person information with respect to, or otherwise
participate in any of the foregoing.
12. INDEMNITY
12.1 Survival of Representations. Notwithstanding any right of
Purchaser (whether or not exercised) to investigate the affairs of
Sellers or Cortex, or a waiver by Purchaser of any condition to
Closing set forth in 6, each party shall have the right to rely
fully upon the representations, warranties, covenants and
agreements of the other parties contained in this Agreement,
except to the extent expressly waived in writing, or in any
instrument delivered pursuant to this Agreement and, in addition,
Purchaser shall have the indemnification rights set forth herein.
All of the representatio ns, warranties, covenants and agreements
of the parties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Closing
and continue until the third anniversary of the Closing Date.
12.2 Indemnity. Each of the Sellers (each an Indemnifying Party
and collectively the Indemnifying Parties) shall for a period of two
years from the Closing Date, jointly and severally, indemnify, defend
and hold harmless each of Purchaser and Cortex, and their respective
officers, directors, subsidiaries, agents, affiliates, and employees
(each an Indemnified Party and collectively the Indemnified Parties)
from and against any and all losses, claims, demands, suits, actions,
causes of actions, costs, damages, liabilities and expenses including,
without limitation, reasonable attorneys fees (collectively, Losses),
arising out of, directly or indirectly, any material misrepresentation
or material breach of or default in connection with any of
the representations, warranties, covenants and agreements given or
made by any of the Indemnifying Parties in this Agreement or in
any certificate, instrument or document delivered by Sellers or
Cortex pursuant to this Agreement and any material liabilities of
Cortex that the Sellers intentionally failed to disclose to Purchaser;
provided that each Indemnifying Partys indemnification obligation
hereunder shall be several and not joint to the extent Losses arise out
of, directly or indirectly, any material misrepresentation or material
breach of or default or inaccuracy in connection with any of the
representations, warranties, covenants and agreements given or made
by a Seller in his individual capacity in this Agreement or any
certificate, instrument or document delivered by any Seller in
his or her individual capacity pursuant to this Agreement.
12.3 Losses Threshold. Notwithstanding Section 12.2 hereof, no
Indemnified Party shall be entitled to receive any amounts with
respect to the indemnification obligations of the Indemnifying
Parties set forth herein unless and until the Indemnified Parties
collectively shall have incurred Losses exceeding Five Thousand Dollars
(5,000), in which case all Losses in excess of Five Thousand Dollars
(5,000) shall be recoverable.
13. MISCELLANEOUS
13.1 Business Agent. The parties acknowledge that Xxxxxx X. X.
Xxxxx represents the purchaser in the capacity of Business Agent.
Purchaser hereby authorizes Xx. Xxxxx, who will receive a finders
fee pursuant to a separate agreement between Purchaser and Xx. Xxxxx,
to communicate with Sellers on behalf of Purchasers in all matters
pertaining to this Agreement and the transactions contemplated hereby.
13.2 Survival. The representations and warranties made in this Agreement,
and the covenants made in Sections 10 of this Agreement, shall survive the
Closing Date.
13.3 Prior Agreements. This Agreement supersedes all prior agreements,
written and oral, concerning the matters contained herein, except for
the EAT Share Exchange Agreement.
13.4 Cross-Default. A default under the EAT Share Exchange Agreement
shall constitute a default under this Agreement, and a default under
this Agreement shall constitute a default under the EAT Share Exchange
Agreement.
13.5 Successors. This Agreement shall be binding upon and inure to
the benefit of the heirs and successors of each of the parties. None of
the party may assign this Agreement without the prior written consent of
the other party.
13.6 Construction. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada. Each of Purchaser and
the Sellers acknowledge that he or she was represented by competent legal
counsel or advised to seek legal counsel in the review of the terms and
conditions set forth in this Agreement and the other documents relating to
this transaction and, therefore, neither this Agreement nor any of the
other documents shall be construed against any party as the drafter.
13.7 Counterparts. This Agreement may be executed in multiple
counterparts, including facsimile counterparts, that when taken together
shall constitute a single instrument; provided that original signed
counterpart copies are delivered to each party.
13.8 Public Announcements. No party hereto shall make any public
announcement or disclosure of the terms or conditions of this Agreement
without the prior written consent of the other parties, except that
any parties approval shall not be required as to any statements or other
information which may be required to make pursuant to any rule or
regulation of the any competent securities commissions or otherwise
required by law.
13.9 Headings. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and shall
in no way restrict or otherwise modify any or the terms or provisions of
this Agreement.
13.10 Severability. Any provision of this Agreement which is found to
be contrary to Nevada law or otherwise unenforceable shall not affect the
remaining terms of this Agreement, which shall be construed in such event
as if the unenforceable provision were absent from this Agreement.
13.11 Notices. All notices, requests and other communications from any
of the parties hereto to the other shall be in writing and shall be considered
to have been duly given or served when (i) personally delivered, (ii) when
received if delivered by confirmed facsimile transmission, air courier or
other comparable delivery service, or (iii) on the third day after
deposit in the United States mail, certified or registered, return receipt
requested, postage prepaid, addressed to the party at their address set
forth below, or to such other address as such party may hereafter
designate by written notice:
if to Purchaser:
M. Xxxxx Xxxxx
000 Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx
Xxxxxx X0X 0X0
Off: 204. 453. 0873
Cell: 604. 312. 4041
With a copy to Escrow Agent and the Business Agent
if to Sellers:
Xx. Xxxxxxx X. Xxxxxxxxxxx and Xx. Xxxxxx X. Xxxxxxx
000-000 Xxxxx Xxx Xxxxx, Xxxxxxxx, XX
Xxxxxx X0X 0X0
Ph: 250. 744. 4230
Fax: 250. 744. 4265
with a copy to Escrow Agent and the Business Agent
if to Escrow Agent:
Xxxxx, Xxxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX X0X 0X0
Attn: Xxxxx X. Xxxxxx
Ph. 604.643-3151
Fax: 604. 687. 6314
if to Business Agent:
Xx. Xxxxxx X.X. Xxxxx
President
Highbrook Capital Corporation
Suite 0000 Xxxx Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X.
Xxxxxx X0X 0X0
Ph. 000.000.0000
Fax: 000.000.0000
13.12 Attorneys Fees. All fees and expenses incurred by the parties
in connection with the negotiation of this Agreement or compliance with
its terms shall be borne by the party incurring them. If, after the date
of this Agreement, the parties enter into a dispute arising out of this
Agreement, the prevailing party therein shall be entitled to recover from
the other its costs and expenses including, specifically, a reasonable
attorneys fee (through all trial and appellate levels).
14. TIME OF THE ESSENCE
14.1 Time is of the essence of this Agreement.
15. GOVERNING LAW AND VENUE.
15.1 This Agreement will be governed by and construed in accordance
with the law of British Columbia, and the parties hereby attorn to the
jurisdiction of the Courts of competent jurisdiction of British Columbia
in any proceeding hereunder. Venue shall lie in the Supreme Court of
British Columbia, sitting in the City of Vancouver, British Columbia.
16. COUNTERPARTS
16.1 This Agreement may be executed in several counterparts, each of
which will be deemed to be an original and all of which will together
constitute one and the same instrument.
17. ELECTRONIC MEANS
17.1 Delivery of an executed copy of this Agreement by electronic
facsimile transmission or other means of electronic communication capable
of producing a printed copy will be deemed to be execution and delivery of
this Agreement as of the date set forth on page one of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.
PURCHASER
/s/ Xxxxx Xxxxx
Xxxxx Xxxxx
SIGNED, SEALED and DELIVERED by
XXXXX XXXXX in the presence of:
/s/ Xxxxxx X. Xxxxxxxxxx
SELLER
/s/ Xxxxxxx X. Xxxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxxx
SIGNED, SEALED and DELIVERED by
XXXXXXX X. XXXXXXXXXXX in the
presence of:
/s/Xxxxxxx Xxxx Xxxxxxxx
Xxxxxxx Xxxx Xxxxxxxx
SELLER
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
SIGNED, SEALED and DELIVERED by
XXXXXX X. XXXXXXX in the
presence of:
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
