Exhibit 6.2
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made effective August 25, 1998 (the "Effective Date").
AMONG:
iQ POWER TECHNOLOGY INC., of Suite 708, 1111 West Hastings
Street, Vancouver, British Columbia, Canada, V6E 2J3,
Telecopier (000) 000-0000
(hereinafter called "iQ Canada")
AND:
iQ BATTERY RESEARCH AND DEVELOPMENT GmbH, of Erlenhof Park,
Xxxxxxxxxxx Xxxxxxx 0, X-00000 Xxxxxxxxxxxx, Xxxxxxx,
Telecopier 0000-000000-00
(hereinafter called "iQ Germany")
AND:
THE SHAREHOLDERS OF iQ BATTERY RESEARCH AND DEVELOPMENT GmbH,
whose names and addresses for service are set out in the
Schedule of Shareholders to this Agreement
(hereinafter collectively called the "Shareholders" and individually
referred to as a "Shareholder")
WHEREAS:
A. The Shareholders named herein are the registered and beneficial owners of
all of the issued and outstanding Ordinary Shares of iQ Germany (the "iQ
Germany Shares");
B. iQ Canada has agreed to purchase the iQ Germany Shares from the
Shareholders; and
C. iQ Germany has been joined as a party to this Agreement to ensure delivery
of the iQ Germany Shares to iQ Canada;
NOW THEREFORE THIS AGREEMENT WITNESSETH that for and in consideration of the
premises, the mutual covenants and agreements to be kept and performed by each
of the parties hereto, the parties hereto hereby agree as follows:
1.0 INTERPRETATION
--------------------
1.1 Interpretation
In and for the purposes of this Agreement, unless there is something in the
subject matter or context inconsistent therewith or unless otherwise
specifically provided, the interpretation provisions set forth in the Schedule
of Interpretation shall apply and each of the words, phrases and expressions
described in the Schedule of Interpretation attached hereto shall have the
meanings ascribed thereto.
1.2 Schedules
The following are the Schedules attached to and incorporated in this Agreement
by this reference and deemed to form a part hereof:
Schedule of Shareholders
Schedule of Interpretation
Schedule of iQ Canada Financial Statements
Schedule of iQ Germany Financial Statements
Schedule of iQ Germany Assets (including Intellectual Property)
Schedule of iQ Germany Material Contracts
Schedule of iQ Germany Employees of Business Schedule of iQ Germany
Representations Schedule of iQ Canada Representations Schedule of Pooling
Agreement Schedule of Employment Agreements Schedule of Confidentiality
Agreements Schedule of Consulting Agreements Schedule of Insider Agreements
Schedule of Financing Arrangements Schedule of Atypical Share Exchange Agreement
Schedule of Atypical Shareholder Consents
Schedule of Legal Opinion of Counsel for iQ Germany - Intellectual Property
Schedule of Legal Opinion of Counsel for iQ Germany - iQ Germany Schedule of
Legal Opinion of Counsel for iQ Canada
2.0 SALE OF IQ GERMANY SHARES
-------------------------------
2.1 Share Exchange Between the Shareholders and iQ Canada
On the terms and subject to the conditions of this Agreement, on execution and
delivery of this Agreement the Shareholders shall sell and transfer their iQ
Germany Shares to iQ Canada for, in the aggregate, 10,000,000 iQ Canada Shares
to be issued by iQ Canada to the Shareholders on execution and delivery of this
Agreement at a deemed price of US$0.25 per share in the numbers set out opposite
their respective names in the Schedule of Shareholders attached hereto. This
Agreement, once executed by all parties, shall act without more as evidence of
the transfer of the iQ Germany Shares to iQ Canada.
2.2 Share Exchange Between the Atypical Shareholders and iQ Canada
iQ Canada agrees to reserve an aggregate of 2,800,000 common shares of iQ Canada
for issuance to the holders of Atypical Shares of iQ Germany pursuant to the
terms of the Atypical Share Exchange Agreement the form of which is set forth in
the Schedule of Atypical Share Exchange Agreement hereto.
2.3 Form of Payments
All payments required to be made under or pursuant to this Agreement shall be
made by telegraphic transfer to, or certified cheque or bank cashier's cheque or
solicitor's trust cheque drawn on, a Canadian or US chartered bank or trust
company, payable in lawful money of the United States of America at par in
immediately available funds in Vancouver, Canada.
2.4 Stock Not Registered in Canada or USA
Each of the Shareholders represent and warrant to iQ Canada that:
a. the Shareholders are acquiring the iQ Canada Shares for their own account
for investment purposes only and not with a view to the distribution or
public offering thereof, in the United States of America or Canada, nor
with any present intention of reselling or distributing the same in the
United States of America except pursuant to registration under the United
States Securities Act of 1933, as amended (the "U.S. Securities Act"), or
pursuant to an exemption from such registration requirements;
b. the Shareholders are not "U.S. Persons", as such term is defined by
Regulation S under the U.S. Securities Act; were not offered by the iQ
Canada Shares while in the United States; and were not in the United States
at the time of execution and delivery of this Agreement.
c. the Shareholders have such knowledge and experience in business and
financial matters generally as to be capable of evaluating the merits and
risks of their investment in iQ Canada contemplated to be made by each of
them hereunder;
d. the Shareholders have sufficient financial strength to hold the iQ Canada
Shares as an investment and to bear the economic risks of such an
investment (including possible total loss of investment) for an indefinite
period of time, and that the Shareholders have been provided full and free
access to the corporate books, financial statements, records, contracts,
documents and other information concerning iQ Canada, and to their offices
and facilities and have been afforded the opportunity to ask such questions
and obtain such other relevant information as each deem necessary or
desirable and to be given all such information as had been requested in
order to evaluate the merits and risks of the prospective investment
contemplated hereunder; and
e. the iQ Canada Shares will be issued pursuant to exemptions contained in the
Securities Act (British Columbia) (the "B.C. Securities Act"), and that the
iQ Canada Shares 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.
3.0 CLOSING
-------------
3.1 Closing Date, Time and Place
Subject to subsection 3.2, the Closing of the transactions contemplated by
Section 2.0 hereof shall take place at the offices of the solicitors for iQ
Germany on execution, notarization and delivery of this Agreement.
3.2 Deliveries by the Shareholders
At the Closing, the Shareholders and iQ Germany shall deliver to iQ Canada:
a. a legal opinion of counsel for iQ Germany in a form attached in the
Schedule of Legal Opinion of Counsel for iQ Germany - iQ Germany;
b. a legal opinion of counsel for iQ Germany in a form attached in the
Schedule of Legal Opinion of Counsel for iQ Germany - Intellectual Property
hereto;
c. written consent to this Share Exchange Agreement from Messrs. von
Waldthausen and von Craushaar in the form attached in the Schedule of
Atypical Shareholder Consents hereto;
d. a Pooling Agreement duly executed by each of the Shareholders in respect of
all of the shares of iQ Canada issuable hereunder [other than the 1,500,000
iQ Canada Shares indicated as being exempt from pooling in the Schedule of
Shareholders attached hereto] in the form attached as the Schedule of
Pooling Agreement hereto;
e. duly executed Employment Agreements in the form attached in the Schedule of
Employment Agreements hereto from each of Xx. Xxxxxxx Xxxxx, Xxxxx Xxxxx
and Xxxxxxx Xxxxx;
f. duly executed Confidentiality Agreement in the form attached in the
Schedule of Confidentiality Agreements hereto from Xxxxx Xxxxxx Xxxxx,
Xxxxx Wittkewitz and Xxxxxx Xxxxx;
g. such other documents and instruments as counsel for iQ Canada may
reasonably require to effectuate or evidence the transactions contemplated
hereby.
3.3 Deliveries by iQ Canada
At the Closing, iQ Canada shall deliver to the Shareholders the following:
a. satisfactory proof that the iQ Canada Shares have been duly issued and
registered in the name of the Shareholders in the amounts provided in the
Schedule of Shareholders and confirmation that the certificates therefor
[other than the 1,500,000 shares indicated as being exempt from pooling in
the Schedule of Shareholders attached hereto] have been pooled under the
Pooling Agreement, the form of which is attached in the Schedule of Pooling
Agreement hereto;
b. legal opinion of counsel for iQ Canada in a form attached in the Schedule
of Legal Opinion of Counsel for iQ Canada.
c. satisfactory evidence that Mr. Xxxxx Xxxxx, Xx. Xxxxxxx Xxxxx, and Xx.
Xxxxxxx Xxxxxx have been appointed directors of iQ Canada and that any
additional directors have been consented to by the majority of those 3
directors;
d. a Pooling Agreement duly executed by all Shareholders of iQ Canada who
acquired their shares prior to 1998 in the form attached as the Schedule of
Pooling Agreement hereto;
e. a duly executed Consulting Agreement between iQ Canada and Mayon Management
Corp. in the form attached in the Schedule of Consulting Agreements hereto
which shall be nontransferable and shall contain usual and customary
non-competition and confidentiality agreements;
f. satisfactory proof that iQ Canada has established a reserve of not less
than 2,800,000 common shares to be issued to the holders of the Atypical
Shares who have agreed to the cancellation of their agreements and Atypical
Shares; and
g. such other documents and instruments as counsel for iQ Germany may
reasonably require to effectuate or evidence the transactions contemplated
hereby.
4.0 REPRESENTATIONS AND WARRANTIES OF iQ GERMANY AND THE ORDINARY
-------------------------------------------------------------
SHAREHOLDERS
------------
4.1 Representations and Warranties
To induce iQ Canada to enter into and complete the transaction contemplated by
this Agreement, iQ Germany and the Shareholders, to the best of the
Shareholders' knowledge, jointly and severally represent and warrant to iQ
Canada that the representations and warranties contained in the Schedule of iQ
Germany Representations hereto are true and correct as at the date hereof and
will be true and correct on the Closing Date as if such representations and
warranties were made on the Closing Date (except insofar as such representations
and warranties are stated to be given as of a particular date or for a
particular period and relate solely to such date or period).
4.2 Representations and Warranties in Closing Documents
All statements contained in any certificate or other instruments delivered by or
on behalf of the Shareholders and iQ Germany pursuant hereto or in connection
with the transactions contemplated hereby shall be deemed to be representations
and warranties by the Shareholders and iQ Germany hereunder.
4.3 Reliance
The Shareholders and iQ Germany acknowledge and agree that iQ Canada has entered
into this Agreement relying on the warranties and representations and other
terms and conditions of this Agreement notwithstanding any independent searches
or investigations that may be undertaken by or on behalf of iQ Canada and that
no information which is now known or should be known or which may hereafter
become known to iQ Canada or its officers, directors or professional advisers
shall limit or extinguish the right to indemnity hereunder.
5.0 REPRESENTATIONS AND WARRANTIES OF iQ CANADA
-------------------------------------------------
5.1 Representations and Warranties
To induce the Shareholders and iQ Germany to enter into and complete the
transactions contemplated by this Agreement, iQ Canada hereby represents and
warrants to the Shareholders and iQ Germany that the representations and
warranties contained in the Schedule of iQ Canada Representations hereto are
true and correct as at the date hereof and will be true and correct on the
Closing Date as if such representations and warranties were made on the Closing
Date (except insofar as such representations and warranties are stated to be
given as of a particular date or for a particular period and relate solely to
such date or period).
5.2 Representations and Warranties in Closing Documents
All statements contained in any certificate or other instruments delivered by or
on behalf of iQ Canada pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by iQ
Canada hereunder.
5.3 Reliance
iQ Canada acknowledges and agrees that the Shareholders and iQ Germany have
entered into this Agreement relying on the warranties and representations and
other terms and conditions of this Agreement notwithstanding any independent
searches or investigations that may be undertaken by or on behalf of the
Shareholders and iQ Germany and that no information which is now known or should
be known or which may hereafter become known to the Shareholders and iQ Germany
or its officers, directors or professional advisers shall limit or extinguish
the right to indemnity hereunder.
6.0 COVENANTS
---------------
6.1 The Shareholders, iQ Germany and iQ Canada covenant and agree that each of
such parties will take all such actions deemed necessary or desirable to cause
the cancellation of or repurchase of all outstanding Atypical Share agreements.
6.2 The Shareholders, iQ Germany and iQ Canada covenant and agree that each of
such parties will take all such actions deemed necessary or desirable to obtain
the financing for iQ Canada contemplated in the Letter Agreement dated August
14, 1998, attached hereto in the Schedule of Financing Arrangements.
7.0 INDEMNIFICATION
---------------------
7.1 Survival of Representations, Warranties and Indemnification
All representations, warranties, covenants and agreements herein contained on
the part of each of the Shareholders, iQ Germany and iQ Canada shall survive the
Closing provided that such representations and warranties except with respect to
tax matters (which shall continue until the expiry of the applicable statute of
limitations, and claims based on fraud which shall not expire) shall only
survive until the day that is two years from the Closing Date after which time,
if no claims shall have been made hereunder against the party hereto with
respect to any incorrectness in or breach of any representation or warranty made
herein by such party, such party shall have no further liability hereunder with
respect to such representation and warranty.
7.2 Indemnification by iQ Germany and the Shareholders
iQ Germany and the Shareholders agree, subject to subsection 7.4, to indemnify
and hold harmless iQ Canada and any person claiming by or through its respective
successors and assigns from, against, and in respect of, any and all costs,
losses, claims, liabilities, fines, penalties, damages and expenses (including,
without limitation, court costs, reasonable fees and disbursements of counsel)
incurred by iQ Canada in respect of the breach of any representation or warranty
made by iQ Germany and the Shareholders herein.
7.3 Indemnification by iQ Canada
iQ Canada agrees to indemnify and hold harmless the Shareholders and iQ Germany
from and against any and all costs, losses, claims, liabilities, fines,
penalties, damages and expenses (including, without limitation, court costs,
reasonable fees and disbursements of counsel) incurred by the Shareholders or iQ
Germany in respect of the breach of any representation or warranty made by iQ
Canada herein.
7.4 Limitation on Amount of Indemnification
No breach of any representation or warranty shall give rise to a claim by either
the Shareholders and iQ Germany on one hand, or iQ Canada on the other, against
the other unless the amount determined to be owing by either of them to the
other as a result thereof would exceed US$5,000 for any single breach or if the
amount at issue when added to the sum of all prior amounts in respect of which a
claim would otherwise be made, total in excess of US$10,000 in which case all of
the amounts then at issue shall be recoverable.
8.0 SHAREHOLDER PUT OPTION
----------------------------
The Shareholders and iQ Canada agree that the Shareholders shall collectively
have the right to require iQ Canada to repurchase all, but not less than all, of
the iQ Canada Shares received by the Shareholders at the Closing (the "Put
Option") upon repayment by such Shareholders to iQ Canada the full amount of all
funds that iQ Canada shall have advanced or loaned to, or invested in, iQ
Germany. The purchase price for the iQ Canada Shares repurchased by iQ Canada
shall be all of the issued and outstanding ordinary shares of iQ Germany. The
Put Option shall be exercisable by the Shareholders on the four month
anniversary of the date of filing by iQ Canada of an offering statement on Form
1-A with the United States Securities and Exchange Commission, provided that
prior to such four month anniversary iQ Canada shall have failed to complete a
financing substantially on the terms set forth in the Schedule of Financing
Arrangements attached hereto with gross proceeds of not less than US$3,000,000.
In the event that the Put Option is exercised, the Closing of the Put Option
shall occur within two months of the date of receipt of written notice by each
of the Shareholders of their election to exercise the Put Option.
The Shareholders and iQ Canada agree that the Put Option shall terminate and
shall not be exercisable as of such date that iQ Canada shall complete an equity
financing with gross proceeds of not less than US$3,000,000.
9.0 GENERAL
-------------
9.1 Expenses, Etc.
Except as otherwise provided for herein, whether or not the transactions
contemplated by this Agreement are consummated, each party hereto shall pay his
or its own expenses and the fees and expenses of their respective counsel,
accountants and other experts.
9.2 Waiver
No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action or compliance with any representation, warranty, covenant or
agreement contained herein, and the waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
9.3 Binding Effect, Benefits
This Agreement shall enure to the benefit of and shall be binding upon the
parties hereto and their respective heirs, personal representatives, successors
and assigns.
9.4 Notices
All notices, requests, demands and other communications which are required to be
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or transmitted by telex or other
telecommunication facility or on receipt after dispatch by certified or
registered first class mail, postage prepaid, return receipt requested, to the
party to whom the same is so given or made at the address or number for that
party given or referenced on first page of this Agreement or to such other
address as any party may designate by giving notice to the other parties hereto.
9.5 Further Assurances
Each party shall, from time to time at or after the Closing, at the request of
another party, and without further consideration, execute and deliver such other
instruments and take such other actions as may be required to confer to the
benefits contemplated by this Agreement.
9.6 Entire Agreement, Amendment
This Agreement, including all Schedules attached hereto, constitutes the entire
agreement and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof
and may not be amended, modified or terminated unless in a written instrument
executed by the party or parties sought to be bound.
9.7 Counterparts
This Agreement may be executed in any number of counterparts, each of which when
executed, shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument and a facsimile copy of this Agreement
executed by a party hereto in counterpart or otherwise will be deemed to be a
valid and binding Agreement and accepted as an original of the Agreement until
such time as each of the parties has an originally executed Agreement in its
possession.
9.8 Third Parties
Nothing in this Agreement, whether expressed or implied, is intended to confer
any rights or remedies on any person other than the parties to this Agreement,
nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third party, nor shall any provision give any
person other than the parties any right of subrogation or action against any
party to this Agreement.
9.9 Time of Essence
Time is of the essence of this Agreement.
9.10 Independent Counsel
Each of the parties acknowledges having obtained independent legal advice from
its own solicitor with respect to this Agreement prior to its execution and
further acknowledges that it understands the terms, and its rights and
obligations under this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto executed this Agreement
effective as of the day and year first above written.
SIGNED, SEALED AND DELIVERED by ) iQ BATTERY RESEARCH AND
iQ BATTERY RESEARCH AND ) DEVELOPMENT GmbH
DEVELOPMENT GmbH in the presence of: )
_____________________________________ )
)
)
_____________________________________ ) Per: _____________________________
Witness ) Signature
_____________________________________ )
Address )
______________________________________ )
Postal Code )
SIGNED, SEALED AND DELIVERED by ) iQ POWER TECHNOLOGY, INC.
iQ POWER TECHNOLOGY INC. )
in the presence of: )
_____________________________________ )
)
)
_____________________________________ ) Per: _____________________________
Witness ) Signature
_____________________________________ )
Address )
______________________________________ )
Postal Code )
SIGNED, SEALED AND DELIVERED by )
XX. XXXXXXX XXXXX )
in the presence of: )
_____________________________________ ) _____________________________
) XX. XXXXXXX XXXXX
)
_____________________________________ )
Witness )
_____________________________________ )
Address )
______________________________________ )
Postal Code )
SIGNED, SEALED AND DELIVERED by )
XXXXX XXXXX in the presence of: )
_____________________________________ ) _____________________________
) XXXXX XXXXX
)
_____________________________________ )
Witness )
_____________________________________ )
Address )
______________________________________ )
Postal Code )
SIGNED, SEALED AND DELIVERED by )
XXXXX XXXXXX XXXXX in the presence of: )
_____________________________________ ) _____________________________
) XXXXX XXXXXX XXXXX
)
_____________________________________ )
Witness )
_____________________________________ )
Address )
______________________________________ )
Postal Code )
SIGNED, SEALED AND DELIVERED by )
XXXXX WITTKEWITZ in the presence of: )
_____________________________________ ) _____________________________
) XXXXX WITTKEWITZ
)
_____________________________________ )
Witness )
_____________________________________ )
Address )
______________________________________ )
Postal Code )
SIGNED, SEALED AND DELIVERED by )
XXXXXX XXXXX in the presence of: )
_____________________________________ ) _____________________________
) XXXXXX XXXXX
)
_____________________________________ )
Witness )
_____________________________________ )
Address )
______________________________________ )
Postal Code )
SCHEDULE OF INTERPRETATION
PART 1.00 INTERPRETATIONS
--------------------------
1.1 Definitions
In and for the purposes of this Agreement, unless there is something in the
subject matter or context inconsistent therewith or unless otherwise
specifically provided, each of the words, phrases and expressions described in
Part 2.00 of this Schedule shall have the meanings ascribed thereto. 1.2 Words
Defined in Canada Business Corporations Act
Unless there is something in the subject matter or context inconsistent
therewith, any words, phrases or expressions defined in the Canada Business
Corporations Act and used herein shall have the meanings ascribed therein.
1.3 Governing Law and Forum
This Agreement and all matters arising hereunder will be governed by and
construed in accordance with the laws of the Province of British Columbia, and
the laws of Canada applicable therein, and all disputes and claims, whether for
specific performance, injunction, declaration or otherwise howsoever both at law
and in equity, arising out of or in any way connected with this Agreement will
be referred to the courts of the Province of British Columbia exclusively, and
to the Supreme Court of Canada if need be, and, by execution and delivery of
this Agreement, each party hereby irrevocably submits and attorns to such
jurisdiction.
1.4 Severability
If any one or more of the provisions contained in this Agreement should be
invalid, illegal, or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision or provisions shall not
in any way be affected or impaired thereby in any other jurisdiction and the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, unless in either
case as a result of such determination this Agreement would fail in its
essential purpose.
1.5 Included Words
The singular of any term includes the plural, and vice versa, the use of any
term is generally applicable to any gender and, where applicable, to a
corporation, the word "or" is not exclusive and the word "including" is not
limiting whether or not non-limiting language (such as "without limitation", or
"but not limited to" or words of similar import) is used with reference thereto.
1.6 Headings
The headings to the sections and subsections of this Agreement are inserted for
convenience only and do not form a part of this Agreement and are not intended
to interpret, define or limit the scope, extent or intent of this Agreement or
any provision hereof.
1.7 Cross-Reference
Unless otherwise stated, all references in this Agreement to a designated
"section", "subsection" or other subdivision or to a schedule is to the
designated section, subsection or other subdivision of, or schedule to, this
Agreement.
1.8 Referenced to Whole Agreement
Unless otherwise stated, the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular section, subsection or other subdivision or schedule.
1.9 Statutes
Unless otherwise stated, any reference to a statute includes and is a reference
to such statute and to the regulations made pursuant thereto, with all
amendments made thereto and in force from time to time, and to any statute or
regulations that may be passed which supplement or supersede such statute or
such regulations.
1.10 References to Successors Included
Any reference to a corporate entity includes and is also a reference to any
corporate entity that is a successor to such entity.
1.11 No Contra Proferentum
The language in all parts of this Agreement shall in all cases be construed as a
whole and neither strictly for nor strictly against any of the parties.
1.12 No Merger
The representations, warranties, covenant and agreements contained in this
Agreement shall not merge in the Closing and shall continue in full force and
effect from and after the Closing Date.
1.13 Joint and Several
Each and every covenant, representation or warranty of a party hereto contained
herein shall be a joint and several covenant, representation or warranty of each
entity composing that party.
1.14 Accounting Terminology
All accounting terms not expressly defined in this Agreement shall have the
respective meanings usually ascribed to them in accordance with generally
accepted accounting principles in Canada, applied on a basis consistent with
prior years.
1.15 Currency
Unless otherwise specifically stated, all references to money in this Agreement
are or shall be to money in lawful money of the United States of America. If it
is necessary to convert money from another currency to lawful money of United
States of America, such money shall be converted as at the Effective Date.
Part 2.00 DEFINITIONS
a. "Act" means the German Securities Act.
b. "Audited iQ Canada Financial Statements" means the audited financial
statements of iQ Canada as at and for the years ended December 31, 1996 and
1997, copies of which are contained in the Schedule of iQ Canada Financial
Statements attached hereto.
c. "Audited Statements Date" means December 31, 1997.
d. "B.C. Securities Act" means the Securities Act, S.B.C. 1997, c. 418.
e. "Business" means the business carried on by iQ Germany.
f. "By-Laws" means the By-Laws of iQ Canada, as amended.
g. "Closing" means the closing of the transactions contemplated by section 2
hereof.
h. "Closing Date" means ________________, 1998, or such other time or place as
the parties shall mutually agree in writing.
i. "iQ Canada Financial Statements" means Audited iQ Canada Financial
Statements and the Interim iQ Canada Financial Statements.
j. "Interim iQ Canada Financial Statements" means the unaudited consolidated
financial statements of iQ Canada as at and for the 3 month period ended
March 31, 1998, copies of which are contained in the Schedule of iQ Canada
Financial Statements attached hereto.
k. "Interim Period" means the period from and including the date of this
Agreement to and including the Closing Date.
l. "iQ Canada" means iQ Power Technology Inc.
m. "iQ Canada Shares" means fully paid and non-assessable shares of iQ Canada.
n. "iQ Germany" means iQ Battery Research and Development GmbH.
o. "iQ Germany Shareholders" means the shareholders of iQ Germany.
p. "iQ Share Exchange" means the exchange of iQ Germany Shares and iQ Canada
Shares between the iQ Germany Shareholders and iQ Canada respectively
pursuant to the Share Exchange Agreement.
q. "iQ Share Exchange Closing" means the date of closing of the Share Exchange
Agreement.
r. "Partners" means those individuals who have entered into atypical silent
partnership agreements with iQ Germany and whose names and addresses for
service are set out in the Schedule of Atypical Silent Partners hereto.
s. "Partnership Agreements" means the atypical silent partnership agreements
entered into between the Partners and iQ Germany.
t. "Second Closing" means the closing of a financing by iQ Canada to raise not
less than US$3,000,000 occurring on or before December 31, 1998.
u. "Share Exchange Agreement" means an agreement dated August ____, 1998,
among iQ Canada, iQ Germany and the iQ Germany Shareholders.
v. "Shareholders" means the shareholders of ordinary common shares of iQ
Germany.
SCHEDULE OF MATERIAL CONTRACTS
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Type of Agreement Contracting With Date
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Share Exchange Agreement iQ Germany and the August ____, 1998
Shareholders
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SCHEDULE OF PARTNERS' REPRESENTATIONS
The Partners hereby jointly and severally represent and warrant that:
1.1 Authorizations and Enforceability
1.1.1 the Partners have all requisite power, authority and capacity to
enter into, deliver and perform this Agreement and to consummate the
transactions contemplated hereby without first obtaining the consent
of any other person or body corporate;
1.1.2 the Partners have taken all necessary or desirable actions, steps and
corporate and other proceedings to approve or authorize, validly and
effectively, the entering into of, and the execution, delivery or
performance of, this Agreement and the cancellation of their
Partnership Agreements at Closing;
1.1.3 this Agreement is a legal, valid and binding obligation of the
Shareholders enforceable against each of them in accordance with its
terms subject to:
a. bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditors' rights
generally; and
b. the fact that equitable remedies, including the remedies of
specific performance and injunction, may only be granted in the
discretion of a court;
1.3 Restrictions, Burdensome Agreements
the Partners are not party to any agreement, debt instrument, commitment or
agreement and the Partners nor any of their respective properties and
assets are subject to or bound or affected by any charter, by-law or other
corporate restriction, or any order, judgment, decree, law, statute,
ordinance, rule, regulation or other restriction of any kind or character
which would prevent the Partners from entering into this Agreement or from
consummating the transactions contemplated hereby;
1.4 Government and Other Consents
no consent, authorization or approval of or exemption by or filing with any
governmental, public or self-regulatory body or authority is required in
connection with the execution, delivery and performance by the Shareholders
of this Agreement or any of the instruments or agreements herein referred
to or the taking of any action herein contemplated;
1.5 Schedule Information
all information set out in the Schedules to this Agreement is accurate and
correct in every material respect;
SCHEDULE OF iQ CANADA REPRESENTATIONS
iQ Canada hereby represents and warrants that:
1.1 Authorized Capitalization, Outstanding Shares and Title
1.1.1 immediately prior to Closing:
a. the authorized capital of iQ Canada shall consist of an unlimited
number of common shares without par value, of which not more than
15,000,000 shall have been issued and allotted as fully paid and
non-assessable shares; and
b. the issued common shares of iQ Canada represent 100% of the
outstanding voting shares of iQ Canada;
1.2 Organization, Good Standing, Power, etc.
1.2.1 iQ Canada is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is
extra-provincially registered to do business in the province of British
Columbia, and is not required at the date hereof to be authorized or
licensed to do business as an extra-territorial or foreign corporation
in any other jurisdiction by reason of the nature of the business
conducted by it and has the requisite power and authority to own, lease
and operate its properties and assets and to carry on its business as
currently conducted;
1.3 Agreements Relating to Stock, Options, Warrants, Restrictions on
Shares, Etc.
iQ Canada is not party to any written or oral agreement, understanding,
arrangement or commitment or bound by any certificate of incorporation,
by-law or instrument (including options, warrants or convertible
securities) which creates any rights in a person with respect to shares
of the capital stock or any other securities of iQ Canada or which
relates to the voting of, restricts the transfer of, requires iQ Canada
to issue or sell, or create rights in any person with respect to the
capital stock or other securities of iQ Canada (or warrants or rights
with respect thereto) other than as may be issued pursuant to the Share
Exchange Agreement, and there exists no option or other right to
purchase, or right to convert any securities or obligations into any
shares of the capital stock or other securities of iQ Canada other than
as may be reserved or granted under the 1998 Stock Option Plan of iQ
Canada (to a maximum of 3,000,000 shares) or the 1998 Incentive Plan of
iQ Canada (to a maximum of 4,000,000 shares), none of which shall be
granted prior to Closing;
1.4 Authorizations and Enforceability
1.4.1 iQ Canada has all requisite power, authority and capacity to enter
into, deliver and perform this Agreement and to consummate the
transactions contemplated hereby without first obtaining the consent of
any other person or body corporate;
1.4.2 each of iQ Canada, and its Board of Directors have taken all necessary
or desirable actions, steps and corporate and other proceedings to
approve or authorize, validly and effectively, the entering into of,
and the execution, delivery or performance of, this Agreement and the
issue of the iQ Canada Shares by iQ Canada to the Partners;
1.4.3 this Agreement is a legal, valid and binding obligation of iQ Canada
enforceable against it in accordance with its terms subject to:
a. bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditors' rights
generally; and
b. the fact that equitable remedies, including the remedies of
specific performance and injunction, may only be granted in the
discretion of a court;
1.5 Effect of Agreement, Etc.
the execution, delivery and performance of this Agreement and each of
the other agreements contemplated or referred to herein by iQ Canada,
and the completion of the transactions contemplated hereby, will not
constitute or result in a violation of breach of or default under, or
cause the acceleration of any obligations of iQ Canada under:
a. any term or provision of any of the Articles of Incorporation,
By-Laws or other constating documents of iQ Canada; or
b. the terms of any agreement (written or oral), indenture,
instrument or understanding or other obligation or restriction to
which iQ Canada is party or by which it is bound.
1.6 Restrictions, Burdensome Agreements
iQ Canada is not party to any agreement, debt instrument, commitment or
agreement and neither iQ Canada nor any of its respective properties
and assets are subject to or bound or affected by any charter, by-law
or other corporate restriction, or any order, judgment, decree, law,
statute, ordinance, rule, regulation or other restriction of any kind
or character which would:
a. prevent iQ Canada from entering into this Agreement or from
consummating the transactions contemplated hereby; or
b. adversely affect, or in the future adversely affect the Business,
properties, prospects or the conditions, financial or otherwise,
of iQ Canada or accelerate the due date for payment of any
liabilities of iQ Canada;
1.7 Shareholders' Agreement
there are no shareholders' agreements, pooling agreements, voting trust
or other similar agreements with respect to the ownership or voting of
any of the shares of iQ Canada other than the proposed Pooling
Agreement to be entered into in connection with the Share Exchange
Agreement;
1.8 Government and Other Consents
no consent, authorization or approval of or exemption by or filing with
any governmental, public or self-regulatory body or authority is
required in connection with the execution, delivery and performance by
iQ Canada of this Agreement or any of the instruments or agreements
herein referred to or the taking of any action herein contemplated;
1.9 Permits, Licenses, Compliance with Applicable Laws and Court Orders
iQ Canada has all requisite corporate power and authority, and all
permits, licenses, orders and approvals of governmental and
administrative authorities to own, lease and operate its properties and
to carry on its business as presently conducted and its business as
conducted does not violate or infringe any domestic or foreign law,
statute, ordinance or regulation currently in effect, scheduled to come
into effect or, to the knowledge of the iQ Canada, proposed to be
adopted, the enforcement of which would adversely affect the financial
condition, results of operations, properties or business of iQ Canada,
and iQ Canada is not aware of any default in any respect under any
executive, legislative, administrative or private (such as arbitration)
ruling, order, writ, injunction or decree;
1.10 Financial Statements of iQ Canada and Absence of Undisclosed Liabilities
the following statements concerning the financial information presented
to iQ Canada by iQ Canada are true and accurate:
a. the iQ Canada Financial Statements are true and correct in every
material respect and present fairly the financial position of iQ
Canada as of the dates of the respective 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 with that of the
previous year except as specifically noted therein;
b. except to the extent reflected or reserved against or otherwise
disclosed in the balance sheet which forms part of the iQ Canada
Financial Statements and except for debts, liabilities or
obligations incurred in the ordinary course of business, iQ
Canada has no liabilities, debts or obligations of any nature,
whether absolute, accrued, contingent or otherwise or whether due
or to become due including, without limitation, liabilities for
any taxes which would not have been provided for in the iQ Canada
Financial Statements;
c. all accounts receivable of iQ Canada as at the date of the most
recent iQ Canada Financial Statements referred to in most recent
iQ Canada Financial Statements as recorded in the books of iQ
Canada are genuine and at that date were owing without set-off or
counterclaim, and adequate provision has been made in the most
recent iQ Canada Financial Statements for doubtful accounts
receivable as at the date of the most recent iQ Canada Financial
Statements;
d. since the Audited Statements Date;
i. no payments of any kind have been made or authorized to be
made by or on behalf of iQ Canada to any of its officers,
directors or shareholders, or under any management
agreements with iQ Canada, save and except in the ordinary
course of business and at the regular rates of salary,
management or consulting fees and regular staff bonuses
payable to them;
ii. iQ Canada has not made a distribution of retained earnings
or made a payment out of iQ Canada's capital dividend
account;
iii. save and except for in connection with the Share Exchange
Agreement, iQ Canada has not acquired or had the use of any
property from a person with whom it was not dealing at arm's
length;
iv. iQ Canada has not disposed of anything to a person with whom
iQ Canada was not dealing at arm's length for proceeds less
than the fair market value thereof;
v. iQ Canada has not made any capital expenditures in excess of
US$5,000;
vi. the business, affairs and assets of iQ Canada have only been
dealt with in the ordinary course of business and iQ Canada
has not incurred any liability to any person with whom iQ
Canada does not deal at arm's length, except for any
liability of iQ Canada to the Shareholders for unpaid salary
(not exceeding US$10,000) and for monies actually loaned to
iQ Canada (not exceeding US$20,000);
vii. iQ Canada has not incurred any obligation or liability
(fixed or contingent), except normal trade or business
obligations incurred in the ordinary course of its business,
none of which is materially adverse to iQ Canada;
xxxx.xX Canada has not paid or satisfied any obligational
liability (fixed or contingent), except:
A. current liabilities included in the Audited iQ Canada
Financial Statements;
B. current liabilities incurred since the Audited
Statements Date in the ordinary course of its business;
and
C. scheduled payments pursuant to the obligations under
loan agreements or other contract or commitments
described in the Share Purchase Agreement or in the
Schedules attached thereto;
ix. iQ Canada has not:
A. created any encumbrance upon any of its properties or
assets, except as described in the Share Exchange
Agreement or in the Schedules thereto;
B. sold, assigned, transferred, leased or otherwise
disposed of any of its properties or assets, except in
the ordinary course of its business;
C. purchased, leased or otherwise acquired any properties
or assets, except in the ordinary course of its
business;
D. waived, canceled, surrendered or written off any
rights, claims, accounts receivable or any amounts
payable to iQ Canada, except in the ordinary course of
its business;
E. entered into any transaction, contract, agreement, or
commitment, except in the ordinary course of its
business and except the Share Purchase Agreement and
any agreements entered into in connection thereto;
F. terminated, discontinued, closed or disposed of any
plant, facility or business operations;
G. made any material change with respect to any method of
management, operation, or accounting in respect of its
business;
H. suffered any damage, destruction or loss (whether or
not covered by insurance) which has materially
adversely affected or could materially adversely affect
the business or the condition of iQ Canada;
I. increased any form of compensation or other benefits
payable or to become payable to any of the employees of
iQ Canada, except increases made in the ordinary course
of its business which do not exceed 5%, in the
aggregate, of the amount of the aggregate salary
compensation payable to all of iQ Canada's employees
prior to such increase;
J. suffered any extraordinary loss relating to its
business;
K. made or incurred any material change in or become aware
of any event or condition with is likely to result in
the material change in, the business or condition of iQ
Canada save and except for in connection with the Share
Exchange Agreement; and
L. authorized, or agreed or otherwise become committed to
do any of the foregoing;
1.11 Title to Properties, Absence of Liens and Encumbrances, Etc.
1.11.1 iQ Canada owns and has good and marketable title to its properties,
assets and leases used in its business (including, without limitation,
the assets reflected in the balance sheet contained in the iQ Canada
Financial Statements), free and clear of all mortgages, security
interests, claims, liens, charges, encumbrances, restrictions on use
or transfer or other defects in title; no default or event of default
exists and no event which, with notice or lapse of time or both, would
constitute a default, has occurred and is continuing under the terms
or provisions, express or implied, of any agreement to which any of
the properties of iQ Canada is subject, nor has iQ Canada received
notice of any claim of such default, nor has iQ Canada failed to
comply in any respect with any provision or condition of any such
agreement; and iQ Canada has not received a notice of violation of any
applicable law, ordinance, regulation, order or requirement relating
to its operations or its owned or leased properties;
1.11.2 all of the assets of iQ Canada are used in its business;
1.12 Accounts Receivable
the accounts receivable of iQ Canada reflected in the most recent iQ
Canada Financial Statements and all accounts receivable of iQ Canada
arising since the date of the most recent iQ Canada Financial
Statements arose from bona fide transactions in the ordinary course of
its business and are valid, enforceable and fully collectable accounts
(subject to a reasonable allowance, consistent with past practice, for
doubtful accounts as reflected in the iQ Canada Financial Statements
or as previously disclosed in writing to iQ Canada). Such accounts
receivable are not subject to any set-off or counterclaim;
1.13 Deposit Accounts and Safe Deposit Boxes of iQ Canada
iQ Canada currently maintains one bank account at The Canada Trust
Company in British Columbia on which Xxxxxxx Xxxxxx is the sole person
authorized to draw thereon or to have access thereto;
1.14 No Insolvency Proceedings
no proceedings are pending for, and iQ Canada is unaware of any basis
for the institution of any proceedings which could lead to the placing
of iQ Canada in bankruptcy or subject iQ Canada to any other laws
governing the affairs of insolvent persons;
1.15 Real Properties
1.15.1 iQ Canada holds no real property and is not a party to any
agreements, options, contracts or commitments to purchase, sell, or
otherwise transfer Real Property;
1.16 Leased Premises
iQ Canada is not party to any lease agreements, options to lease or
other lease arrangements for leased premises;
1.17 Intellectual Property
iQ Canada has no proprietary interests in any intellectual property
other than the proprietary interests held or to be held through iQ
Germany;
1.18 Leased Equipment
iQ Canada is not party to any lease agreements, options to lease or
other lease arrangements for equipment
1.19 Royalty Payments
iQ Canada is not obligated to pay any royalty or similar payments to
any person, firm or corporation;
1.20 Non-Arm's Length Matters
iQ Canada is not a party to or bound by any agreement with, is not
indebted to, and no amount is owing to iQ Canada by any officers,
former officers, directors, former directors, shareholders, former
shareholders, employees (except for oral employment agreements with
employees) or former employees of iQ Canada or any person not dealing
in arm's length with any of the foregoing. Since the Audited
Statements Date, iQ Canada has not made any or authorized any payments
to any
officers, former officers, directors, former directors, shareholders,
former shareholders, employees or former employees of iQ Canada or to
any person not dealing at arm's length with any of the foregoing,
except for management fees, salaries and other employment compensation
payable to employees or managers of iQ Canada in the ordinary course
of the routine daily affairs of its business and at the regular rates
payable to them;
1.21 Tax Filings, Employee Deductions
1.21.1 iQ Canada has filed with the appropriate governmental agencies
all tax returns and there are no unpaid assessments nor proposed
assessments of income taxes pending against iQ Canada and all
liability for taxes shown on tax returns filed have been paid or the
liability therefor has been provided for in the iQ Canada Financial
Statements, and all income taxes, employee withholding taxes or
deductions, or other taxes for periods subsequent to the period
covered by such tax returns have been paid or adequately accrued in
the books and records of iQ Canada;
1.21.2 adequate provision has been made for taxes payable by iQ Canada for
which tax returns are not yet required to be filed and there are no
agreements, waivers or other arrangements providing for an extension
of time with respect to the filing of any tax return by or payment of
any tax, governmental charge or deficiency by iQ Canada, and to the
knowledge of iQ Canada, there are no contingent tax liabilities or any
grounds which would prompt a re-assessment;
1.22 Agreements, Plans, Arrangements, Etc.
iq canada is not a party to, nor is iq canada or any of the properties
and assets of iq canada bound or affected by, any oral or written
agreement of any sort, including without limitation:
a. lease agreements (whether as lessor or lessee) relating to real
or personal property except as disclosed to iQ Canada and
summarized in the iQ Canada Financial Statements;
b. license agreements, assignments or other contracts (whether as
licensor or licensee, assignor or assignee) relating to
trademarks, trade names, patents, copyrights (or applications
therefor), unpatented designs or styles, know-how or technical
assistance;
c. employment or consulting agreements, other than a management
agreement with Mayon Management Corp.;
d. agreements for the purchase or sale of goods, materials,
supplies, machinery, capital assets or services;
e. agreements with any labour union;
f. agreements with any supplier, distributor, franchisor, dealer,
sales agent or representative;
g. agreements with any manufacturer, supplier or customer with
respect to discounts or allowances;
h. joint venture or partnership agreements with any other person;
i. agreements for the borrowing or lending of money or guaranteeing,
indemnifying or otherwise becoming liable for the obligations or
liabilities of another;
j. agreements with any bank, factor, financing company or similar
organization regarding the financing of accounts receivable or
other extensions or credit;
k. agreements granting any lien, security interest or mortgage on
any property or asset of iQ Canada including, without limitation,
any factoring agreement for the assignment of accounts
receivable;
l. agreements for the construction or modification of any building
or structure or for the incurrence of any other capital
expenditure;
m. advertising agreements of any kind;
n. agreements which restrict it from doing business anywhere in the
world;
o. agreements, statutes or regulations giving any party the right to
re-negotiate or require a reduction in prices or the repayment of
any amount previously paid;
p. any agreements to defend, indemnify or hold harmless any person;
q. agreements, pension plans, profit sharing plans, bonus plans,
undertakings or arrangements, whether oral, written or implied,
with the employees, lessees, licensees, managers, accountants,
suppliers, agents, distributors, officers or directors or others
which cannot be terminated on not more than one month's notice;
or
r. agreements to pay severance pay for separation allowances, except
for any requirement which may be applicable at law;
1.23 Guarantees and Indemnities
iQ Canada is not a party to or bound by any agreement of guarantee,
indemnification, assumption or endorsement or any other like
commitment of the obligations, liabilities (contingent or otherwise)
or indebtedness of any persons;
1.24 Litigation
there is no claim, action, suit, proceeding, arbitration,
investigation or inquiry pending or threatened against, relating to or
affecting iQ Canada or any of the assets, properties or businesses of
iQ Canada or the transactions contemplated by this Agreement, nor is
there any basis for any such claim, action, suit, proceeding,
arbitration, investigation or inquiry which may have any adverse
effect upon the assets, properties or business of iQ Canada or the
transactions contemplated by this Agreement; none of iQ Canada or any
officer, director, partner, agent or employee of iQ Canada have been
enjoined or barred by order, judgment or decree of any court or other
tribunal or
any agency or self-regulatory body from engaging in or continuing any
conduct or practice in connection with its business; and there is not
in existence at the date hereof any order, judgment or decree of any
court or other tribunal or any agency or self-regulatory body to which
iQ Canada or the business, properties or assets of iQ Canada are
subject or by which they are bound;
1.25 Books and Records
the minute books of iQ Canada contain complete and accurate records of
all meetings and accurately reflect all other corporate action of iQ
Canada and the directors (and committees thereof) of iQ Canada as of
the date hereof and all material transactions are properly recorded
and filed;
1.26 Insurance
iQ Canada currently maintains no insurance policies;
1.27 Terms of Employment
iQ Canada is not a party to any collective agreement relating to its
business with any labour union or other association of employees; iQ
Canada is not aware of any attempt to organize any labour union or
other association of employees in connection with its business; no
part of its business has been certified as a unit appropriate for
collective bargaining; and, additionally, every employee may be
dismissed on one month's notice or less, without further liability;
1.28 Employment Information
iQ Canada has no employees;
1.29 Employment Benefits
iQ Canada has no accrued employment benefits;
1.30 Subsidiaries and Other Interests
prior to the closing of the Share Exchange Agreement, iQ Canada has no
subsidiaries and does own any securities issued by, or any equity or
ownership interest in, any other person. After the closing of the
Share Exchange Agreement, iQ Germany shall be a wholly-owned
subsidiary of iQ Canada. iQ Canada is not subject to any obligation to
make any investment in or to provide funds by way of loan, capital
contribution or otherwise to any person;
1.31 Material Facts
this Agreement does not contain any untrue statement by iQ Canada of a
material fact nor has iQ Canada omitted to state in this Agreement a
material fact necessary in order to make the statements contained
herein not misleading;
1.32 Schedule Information
all information concerning iQ Canada set out in the Schedules to this
Agreement is accurate and correct in every material respect;
1.33 No Defaults
except as otherwise expressly disclosed herein or in any Schedule
hereto there has not been any default in any obligation to be
performed under any material contract to which iQ Canada is party,
each of which is in good standing and in full force and effect,
unamended; and
1.34 Finder's Fee
except in relation to the Finder's Fee, there is no firm, corporation,
agency or other person that is entitled to a consultant's or finder's
fee or any type of brokerage commission in relation to or in
connection with the transactions contemplated by this Agreement as a
result of any agreement with iQ Canada.
