THIS AGREEMENT made the 18th day of February, 2000.
BETWEEN:
PARADIGM ADVANCED TECHNOLOGIES, INC.,
a corporation incorporated under the laws of the
state of Delaware, United States of America, with
its principal business office at 0 Xxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx
(hereinafter called the "Purchaser")
- AND -
XXXXXX & ASSOCIATES INTERNATIONAL CORP.
("Xxxxxx"), a corporation incorporated under the
laws of Bahamas, XXXXXXX XXXXXXXXXX
("Xxxxxxxxxx"), of the Province of Ontario, on
behalf of himself and members of his Immediate
family, and XXXXX XXXXX, IN TRUST ("Xxxxx"), of
the Province of Ontario,
(hereinafter collectively called the "Vendor")
THIS AGREEMENT WITNESSETH that in consideration of the
covenants, agreements, warranties and payments herein set out and provided
for, the parties hereto hereby respectively covenant and agree as follows:
ARTICLE I - DEFINED TERMS
-------------------------
Where used herein or in any amendments hereto, the following terms shall have
the following meanings respectively:
1.1. "Advance Payment" shall mean the sum of $100,000.00 described in
section 3.1;
1.2. All dollar amounts referred to in this agreement are in United States
funds;
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1.3. "Closing Date" means the 24th day of March, 2000;
1.4. "Common Shares" means the common shares in the capital of the
Corporation;
1.5. The "Corporaton" means Powerloc Technologies Inc., a corporation
incorporated under the laws of the province of Ontario;
1.6. "Employment Agreement" means the Employment Agreement between
the Corporation and Xxxxxxxxxx, to be guaranteed by the Purchaser, in
the form annexed hereto as Schedule "3";
1.7. "Funding Commitment" shall have the meaning attributed thereto in
section 8.3;
1.8. "Xxxxxxxxxx" means Xxxxxxx Xxxxxxxxxx, of the province of Ontario.
1.9. "Hunterpro S.A." means a Uruguayan Corporation;
1.10. "Xxxxxxx" means Xxxxx Xxxxxxx, of the province of Ontario, the president
and chief executive officer of the Purchaser:
1.11. "OTCBB" means the NASD Bulletin Board, commonly known as the Nasdaq Over
the Counter Bulletin Board;
1.12. "Paradigm Information" means the information pertaining to the Purchaser
as set out in Schedule "2" hereto;
1.13. "Paradigm Shares" means the common stock of Paradigm in the form in
which it is currently listed on OTCBB;
1.14. "Pledge Agreement" means the Pledge Agreement in the form annexed
hereto as Schedule "4";
1.15. "PMI" means Powerpoint Microsystems Inc., a Corporation incorporated
under the laws of the Province of Ontario;
1.16. The terms "Purchased Shares" and "Purchase Price" shall have the
respective meanings attributed thereto in Article III;
1.17. "Purchaser Subsidiary" means the corporation to be incorporated pursuant
to Article X;
1.18. "Quarter" means a three (3) month calendar period, with each Quarter
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commencing on the day of the month which is the same day of the month
as the Closing Date;
1.19. "SEC" means the securities and exchange commission of the United
States of America.
1.20. "Special Purchaser Condition" means the condition in favour of the
Purchaser described in section 7.1;
---
1.21. "Special Shares" means the various classes of special shares in the
capital of the Corporation;
1.22. "Stock Optons" means the stock options to be issued to the Vendor
described in section 3.4;
---
1.23. "Technology" means the Global Positioning System Technology and the
claims and demonstration methodology pertaining thereto described in
Schedule "1" hereto;
1.24. "Time of Closing" means 11:00 a.m. on the Closing Date;
1.25. "Top-up Amount" shall have the meaning attributed thereto in section 3.3
(b);
1.26. "Xxxxx Option" means the option referred to in Article X.
ARTICLE II - SCHEDULES
2.1. The following are the Schedules attached to and incorporated in this
agreement by reference and deemed to be part hereof;
Schedule 1 - Technology
Schedule 2 - Paradigm Information
Schedule 3 - Employment Agreement
Schedule 4 - Pledge Agreement
Schedule 5 - NRC/IRAP Agreements
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ARTICLE III - PURCHASED SHARES AND PURCHASE PRICE
3.1. Subject to the terms and conditions hereof, the Vendor covenants and
agrees to sell, assign and transfer to the Purchaser and the Purchaser
covenants and agrees to purchase from the Vendor all (but not less than
all) of the issued and outstanding shares in the capital of the
Corporation, being 10,000 Common Shares, (the "Purchased Shares") for an
aggregate purchase price (the "Purchase Price") being the aggregate value
of the following monies and consideration:
(i) an Advance Payment in the amount of US$100,000.00 in
certified funds shall be paid to the Purchaser or as it
may in writing direct upon the execution of this
agreement, The Advance Payment shall not be refundable in
any event except if the Special Purchaser Condition has
not been fulfilled or waived in accordance with its terms;
(ii) the sum of US$200,000.00 in certified funds shall be
payable at the Time of Closing or as the Vendor may in
writing direct;
(iii) the Purchaser shall cause to be issued to the Vendor at
the Time of Closing 5,000,000 Paradigm Shares on the terms
set out in section 3.3 hereof; and
(iv) the Purchaser shall issue to the Vendor at the Time of
Closing the Stock Options as described in section 3.4
hereof.
3.2. In addition, at the time of the execution of this Agreement, the
Purchaser shall pay to the Vendor the sum of US$20,000.00 in certified
funds, which is not intended to be part of the Purchase Price, but
represents reimbursement of the Vendors costs in facilitating the due
diligence process of the Purchaser including, provision of technical
staff, professional fees, travel and other expenses. In this regard, the
Purchaser agrees to assume responsibility for the Vendor's legal fees in
connection with all matters pertaining to this agreement and the
transaction contemplated therein, with the exception of Vendor's internal
tax planning and costs related to the acquisition of the Technology. The
Vendor shall provide an accounting to the Purchaser of the disbursement
of the funds contemplated by this section and, to the extent that the
Vendor's legal fees have not been completely paid out of such funds, the
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Purchaser shall be responsible to pay any remaining balance of the
Vendor's legal fees as and when billed by the Vendor's counsel in that
regard.
3.3. (a) The 5,000,000 Paradigm Shares to be issued to the Vendor by the
Purchaser as described in section 3.1 (iii) above, shall be
issued as restricted shares with the proviso that twenty five
percent (25%) of such Paradigm Shares shall be made freely
trading shares at the end of each Quarter following the Closing
Date. Notwithstanding the foregoing, the Purchaser shall be
entitled to an extension of one (1) month beyond the first
Quarter, if required, in order to comply with the obligations
pertaining to the end of the first Quarter as set out in this
section 3.3.
(b) If at the end of each Quarter, the number of Paradigm Shares to
be made free trading shares have an aggregate value of less then
US$500,000.00 as at the average closing price on the ten (10)
business days immediately preceding the end of such Quarter, the
Purchaser shall issue and deliver to the Vendor, at the expiry
of such Quarter, such additional number of Paradigm Shares or
the equivalent in certified funds as shall be necessary so that
the aggregate value of free trading shares becoming unrestricted
in such Quarter for the benefit of the Vendor shall not be less
than US$500,000.00 as at the closing price on the date
immediately preceding the expiry of such Quarter (the "Top-up
Amount").
3.4. The Stock Options to be issued and delivered by the Purchaser to the
Vendor as described in section 3.1 (iv) above shall entitle the Vendor to
exercise stock options enabling it to acquire 4,166,666 additional
Paradigm Shares on the following basis:
(i) 833,334 Paradigm Shares with an exercise price of
US$0.20/share.
(ii) 833,333 Paradigm Shares with an exercise price of
US $0.40/share.
(iii) 833,333 Paradigm Shares with an exercise price of US
$0.60/share.
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(iv) 833,333 Paradigm Shares with an exercise price of
US $0.80/share.
(v) 833,333 Paradigm Shares with an exercise price of
US $1.00/share.
The Stock Options shall be vested immediately on the Closing Date and shall be
valid and exercisable for a 3 year period commencing from the Closing Date.
The Vendor shall have the option and the Purchaser hereby covenants and
agrees to issue the Stock Options on the basis that the Vendor shall have the
option to "piggyback" all or part of the Paradigm Shares covered by the Stock
Options free of charge on any registration statement filed by the Purchaser
within the 3 year period. The stock option certificates representing the Stock
Options shall be in form approved by the Vendor and its counsel, acting
reasonably.
3.5. The Purchaser covenants and agrees to use its reasonable best efforts to
have the Paradigm Shares issued to the Vendor as contemplated herein,
included in a registration statement to be filed with the SEC and use its
best efforts to have that registration statement declared effective by
the SEC, in order to comply with its requirement to have at least twenty
five percent (25%) of the Paradigm Shares become free trading shares at
the end of each Quarter. If the Purchaser files any registration
statement to permit the issuance of any new Paradigm Shares to any other
party, the remaining restricted Paradigm Shares shall be included in any
such registration statement to permit them to become free trading shares.
If the remaining restricted Paradigm Shares become free trading shares,
the Vendor shall execute an agreement with the Purchaser pursuant to
which the Vendor shall agree that the Vendor shall not cause to be sold
any of such remaining Paradigm Shares except in the manner which would
have been permitted pursuant to section 3.3 had such shares become free
trading shares Quarterly as contemplated therein.
3.6. As security for compliance by the Purchaser with its obligations
pertaining to the payment and compliance with the balance of the Purchase
Price requirements as set out in this Article III, and the Funding
Commitment, the Purchased Shares shall be pledged as security in
accordance with the terms of the Pledge Agreement annexed hereto as
Schedule "4".
3.7. In the event that the Special Purchaser Condition has not been fulfilled
by the Vendor in accordance with its terms and/or has not been waived by
the Purchaser, the Advance Payment referred to in section 3.1 (i) hereof,
shall be returned to the Purchaser by the Vendor within seven (7) days of
the termination of this agreement by the Purchaser by notice in writing
to
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the Vendor as a result of the non-satisfaction of the Special Purchaser
Condition. If the Advance Payment has not been repaid to the Purchaser
within such period, the Vendor shall be required forthwith to issue to
the Purchaser such number of shares of all classes of shares which are
then outstanding In the capital of the Corporation so that the Purchaser
shall be the registered owner of five percent (5%) of all issued and
outstanding shares of all classes in the capital of the Corporation for
an aggregate issue price equal to the amount of the Advance Payment, and
the Advance Payment shall be deemed to be the subscription price paid by
the Purchaser in respect thereof. In such event the Purchaser shall be
provided with an antidilution provision and a covenant to operate the
Corporation's business in a commercially responsible manner, in form
reasonably satisfactory to Purchaser's counsel.
ARTICLE IV - COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE VENDOR
Each member of the Vendor covenants, represents and warrants as
follows and acknowledges that the Purchaser is relying upon such covenants,
representations and warranties in connection with the purchase by the Purchaser
of the Purchased Shares:
4.1. Organization and Good Standing - The Corporation is duly incorporated,
organized and validly existing in good standing under the laws of the
province of Ontario;
4.2. Authorized and Issued Capital - The authorized capital of the Corporation
consists of an unlimited number of Class A Special Shares, Class B
Special Shares, Class C Special Shares and Common Shares, of which 10,000
Common Shares (and no more) have been duly issued and are outstanding as
fully paid and non-assessable;
4.3. Title to Shares - All of the Purchased Shares are owned by the Vendor as
the owner of record, with a good and marketable title thereto, free and
clear of all mortgages, lions, charges, security interests, adverse
claims, pledges, encumbrances and demands whatsoever;
4.4. No Agreements, Options, etc. - No person, firm or corporation has any
agreement or option or any right or privilege (whether by law, preemptive
or contractual) capable of becoming an agreement, including convertible
securities, warrants or convertible obligations of any nature, for the
purchase, subscriptions, allotment or issuance of any of the unissued
shares in the capital of the Corporation or of any securities of the
8
Corporation, except for agreements or arrangements between members of the
Vendor to subscribe for or receive shares of the Corporation prior to the
Time of Closing, which shares shall form part of the Purchased Shares:
4.5. No Subsidiaries - The Corporation has no subsidiaries or agreements of
any nature to acquire any subsidiary or to acquire or lease any other
business operations and will not prior to the Time of Closing acquire, or
agree to acquire, any subsidiary or business without the prior written
consent of the Purchaser, except that at the Time of Closing PMI will be
a wholly owned subsidiary of the Corporation;
4.6. Status of Corporation - The Corporation is a newly incorporated
Corporation and at the Time of Closing will have no assets or liabilities
other than the Technology assets described in Schedule "l" hereto;
4.7. Litigation - There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Corporation), pending or threatened against
or affecting the Corporation or the Vendor, at law or in equity, or
before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic, foreign (which action, suit or proceeding involves the
possibility of any judgment against or liability of the Corporation or
the Vendor not fully covered by insurance); the Vendor is not now aware
of any existing ground on which any such action, suit or proceeding might
be commenced with any reasonable likelihood of success; nor is the Vendor
aware of any judgement, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or
arbitrator which would affect the Vendors ability to sell the Purchased
Shares as provided for in this Agreement.
4.8. Corporation is Not in Breach or Default of Contracts etc. - To the best
of the knowledge and information and belief of the Corporation, the
Corporation is not in default or breach of any contracts, agreements,
written or oral, indentures or other instruments to which it is a party
and there exists no state of facts which after notice or lapse of time or
both would constitute such a default or breach, and all such contracts,
agreements, indenture or other instruments are now in good standing and
the Corporation is entitled to all benefits thereunder (provided that
this provision shall not apply to any default or breach adversely
affecting the financial position of the Corporation to the extent of less
than One Thousand ($1,000.00) Dollars in the aggregate);
4.9. Technology - The Technology listed in Schedule "1" hereto, shall, at the
9
Time of Closing, be validly and wholly owned by the Corporation and, to
the best of the knowledge of the Vendor, the Technology does not infringe
upon the patents, trademarks, trade names, trade secrets or copyrights,
domestic or foreign of any other person, firm or corporation.
4.10. Residency - Xxxxxx is not resident in Canada for the purposes of the
Income Tax Act (Canada) and will comply with the necessary
requirements with respect to the sale of the Purchased Shares in that
regard. All of the other members of the Vendor are resident in Canada for
the purposes of the Income Tax Act (Canada).
4.11. Status of PMI - PMI is duly incorporated, organized and validly existing
in good standing under the laws of the Province of Ontario, and at the
Time of Closing, PMI will have no assets or liabilities, except assets
relating to the Technology, including agreements with NRC/IRAP as set out
in Schedule 5 hereto. In this regard, Xxxxxxxxxx hereby agrees to execute
and deliver to the Purchaser, at the Time of Closing, an indemnity in
favour of the Purchaser with respect to any and all liabilities of PMI,
in form reasonably acceptable to Purchaser's counsel it is further
expressly acknowledged that any representations, warranties or covenants
in this Agreement pertaining to PMI are not the responsibility of Xxxxx
and he shall be excluded from any obligations or liability in respect
thereof.
4.12. Hunterpro Agreement - At the Time of Closing, the Corporation shall have
entered into a binding agreement with Hunterpro to transfer to the
Corporation all of their rights to the Technology and an agreement
pursuant to which Hunterpro will continue in a consulting capacity, for
compensation of not more than US$5,000.00 per month during an initial
period (to be subject to future increase to US$7,000.00 per month
commencing June 1, 2000), for research and development services. Xxxxxxxx
Xxxxxx and Xxxxx Xxxxxx are the principals of Hunterpro and will commit
their services to the Corporation on behalf of Hunterpro to fulfill the
consulting agreement which shall be in form and substance reasonably
acceptable to Purchaser's counsel.
ARTICLE V - COVENANTS, REPRESENTATION AND WARRANTIES OF THE PURCHASER
The Purchaser covenants, represents and warrants as follows and
acknowledges that the Vendor is relying upon such covenants, representations
and warranties in connection with the sale by the Vendor of the purchased
shares;
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5.1. Organization and Good Standing - The Purchaser is duly incorporated,
organized and validly existing in good standing under the laws of the
state of Delaware, United States of America;
5.2. Authorized and Issued Capital - The authorized capital of the
Purchaser consists Of 100,000,000 common shares;
5.3. Issued Capital - The issued capital of the Purchaser currently
is approximately 35,000,000 common shares, of which no more than
25,000,000 common shares are currently free trading shares;
5.4. Options and Warrants - The Purchaser has previously issued and
there are outstanding, in the aggregate, stock options and warrants
permitting the holders thereof to exercise their rights to acquire an
aggregate of not more than 55,000,000 common shares;
5.5. Future Issues - The Purchaser will not prior to the Closing Date
issue more than approximately 10,000,000 additional common shares and
shall not grant stock options for any additional common shares prior to
the Closing Xxxx. The Vendor shall be entitled to the benefit of and
shall be subject to any consolidation, change, classification,
reclassification or subdivision, as the case may be, of any of the
Paradigm Shares occurring from the date hereof and until the date of the
issue of the Paradigm Shares and the Stock Options as contemplated in
sections 3.1 and 3.4 hereof;
5.6. Status - The Paradigm Shares are currently listed on OTCBB and
the Purchaser is and will continue to be listed and in good standing on
OTCBB and is an SEC reporting company and is current in all its filings;
5.7. Paradigm Information - The Paradigm Information listed on Schedule "2"
hereto is true and correct in all respects and there is no information
omitted which, if included, would make any of the information contained
therein misleading. Schedule 2 contains the following, all of which have
been filed with U.S. Securities and Exchange Commission:
(a) Form 10-QSBA-1 for the quarterly period ended March 31, 1999;
(b) Form 10-QSBA-1 for the quarterly period ended June 30,
1999;
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(c) Form 10-QSB for the quarterly period ended September 30, 1999;
(d) Form 10-KSB for the fiscal year ended December 31, 1998;
5.8. Litigation - There are no actions, suits or proceedings except as
disclosed in Schedule "2" and except for a potential claim by Xxxxxxx
Xxxxx relating to not more than 500,000 Paradigm Shares. (whether or not
purportedly on behalf of the Purchaser), pending or threatened against or
affecting the Purchaser, at law or in equity, or before or by any
federal, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic, foreign
(which action, suit or proceeding involves the possibility of any
judgment against or liability of the Purchaser not fully covered by
insurance); the Purchaser is not now aware of any existing ground on
which any such action, suit or proceeding might be commenced with any
reasonable likelihood of success; nor is the Purchaser aware of any
judgement, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator which would
affect the Purchaser's ability to purchase the Purchased Shares or to
issue the Paradigm Shares or Stock Options as provided for in this
Agreement.
5.9. Purchaser is Not in Breach or Default of Contracts etc. - To the
best of the knowledge and information and belief of the Purchaser, the
Purchaser is not in default or breach of any contracts, agreements,
written or oral, indentures or other instruments to which it is a party
and there exists no state of facts which after notice or lapse of time or
both would constitute such a default or breach, and all such contracts,
agreements, indenture or other instruments are now in good standing and
the Purchaser is entitled to all benefits thereunder (provided that this
provision shall not apply to any default or breach adversely affecting
the financial position of the Purchaser to the extent of less than One
Thousand ($1,000.00) Dollars in the aggregate);
5.10. No Intellectual Property Infringements - To the best of the
knowledge of the Purchaser, the conduct of the business of the Purchaser
does not infringe upon the patents, trademarks, trade names or
copyrights, domestic or foreign, of any other person, firm or
corporation:
5.11. Compliance with Applicable Laws - The Purchaser is in
compliance with all applicable laws, rules and regulations of each
jurisdiction in which it carries on business or has assets, and is not in
breach of any such laws, rules or regulations:
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5.12. Investment Canada Act - The Purchaser shall have complied with the
Investment Canada Act, if necessary and shall have made all filings in
respect of the transaction contemplated by this agreement.
ARTICLE VI - SURVIVAL OF COVENANTS, REPRESENTATIONS AND
WARRANTIES
6.1. The covenants, representations and warranties of the Vendor and the
Purchaser, respectively contained in this agreement and contained in any
documents or certificate given pursuant hereto shall survive the closing
of the purchase and sale of the Purchased Shares herein provided for and,
notwithstanding such closing, nor any investigation made by or on behalf
of the Purchaser or the Vendor, as the case may be, shall continue in
full force and effect for the benefit of the Purchaser and the Vendor,
respectively.
ARTICLE VII - CONDITIONS OF CLOSING FOR BENEFIT OF PURCHASER
The sale and purchase of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Purchaser to be fulfilled
and/or performed at or prior to the Time of Closing (or such earlier time as is
stipulated herein);
7.1. Special Purchaser Condition - The Purchaser shall have safisfied
itself, in its sole discretion, as to the operability and construction of
the Technology listed in Schedule "1" hereto on or before March 6, 2000.
Unless the Purchaser has advised the Vendor in writing on or before such
date that it is not so satisfied, the Purchaser shall be deemed to have
waived such condition;
7.2. Covenants, Representations and Warranties on Closing Date - The
covenants, representations and warranties of the Vendor contained in this
agreement or in any Schedule hereto or certificate or other document
delivered to the Purchaser pursuant hereto shall be true and correct on
and as of the Closing Date with the same force and effect as though such
covenants, representations and warranties had been made on and as of such
date, regardless of the date as of which the information in this
agreement or any such Schedule or certificate or documents is given, and
the Purchaser shall have received at the Time of Closing on the Closing
Date a certificate dated the Closing Date, in form reasonably
satisfactory to counsel for the Purchaser, signed under seal by each
member of the
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Vendor to the effect that such covenants, representations and warranties
referred to above are true and correct on and as of the Closing Date with
the same force and effect as though made on and as of such date; provided
that the acceptance of such certificate and the closing of the
transaction herein provided for shall not be a waiver of the covenants,
representations and warranties contained in Article IV or in any Schedule
hereto or in any certificate or documents given pursuant to this
agreement or in the certificate under this clause 7.2. which covenants,
representations and warranties shall continue in full force and effect as
provided in Article VI;
7.3. Compliance With Covenants - The Vendor shall have complied with all
covenants and agreements herein agreed to be performed or caused to be
performed by the Vendor;
7.4. Supply of Share Information to Counsel - The title of the Corporation to
its assets and undertaking, the legality of the incorporation and
organization of the Corporation, the due creation and issuance as fully
paid of all the outstanding Common Shares of the Corporation and all
corporate proceedings of the Corporation, its shareholders and directors
and all other matters which in the reasonable opinion of counsel for the
Purchaser are material in connection with the transaction of purchase and
sale herein contemplated shall be subject to the favourable reasonable
opinion of such counsel and all relevant records and information shall be
supplied to such counsel for that purpose. Notwithstanding the foregoing,
no objections may be raised with respect to the matters contained within
the Special Purchaser Condition;
7.5. Rights Upon Breach of Conditions - In case any of the foregoing
conditions shall not be fulfilled and/or satisfied by the Vendor at or
before the Closing Date (or any such earlier date as stipulated herein)
to the satisfaction of the Purchaser, the Purchaser may rescind this
agreement by notice to the Vendor and in such event the parties shall be
released from all obligations hereunder, provided that any of the said
conditions may be waived in whole or in part by the Purchaser without
prejudice to its rights of rescission in the event of the non-fulfilment
of any other condition or conditions, any such waiver to be binding on
the Purchaser only if the same is in writing.
ARTICLE VIII - CONDITIONS OF CLOSING IN FAVOUR OF THE VENDOR
The sale and purchase of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Vendor to be fulfilled
and/or
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performed at or prior to the Time of Closing (or such earlier time as is
stipulated herein);
8.1. Covenants, Representations and Warranties on Closing Date - The
covenants, representations and warranties of the Purchaser contained in
this agreement or in any Schedule hereto or certificate or other document
delivered to the Vendor pursuant hereto shall be true and correct on and
as of the Closing Date with the same force and effect as though such
covenants, representations and warranties had been made on and as of such
date, regardless of the date as of which the information in this
agreement or any such Schedule or certificate or documents is given, and
the Vendor shall have received at the Time of Closing on the Closing Date
a certificate dated the Closing Date, in form satisfactory to counsel for
the Vendor, signed under seal by the Purchaser to the effect that such
covenants, representations and warranties referred to above are true and
correct on and as of the Closing Date with the same force and effect as
though made on and as of such date; provided that the acceptance of such
certificate and the closing of the transaction herein provided for shall
not be a waiver of the covenants, representations and warranties
contained in Article V or in any Schedule hereto or in any certificate or
documents given pursuant to this agreement or in the certificate under
this clause 8.1, which covenants, representations and warranties shall
continue in full force and effect as provided in Article VI;
8.2. Employment Agreement - The Purchaser shall have entered into the
Employment Agreement with Xxxxxxxxxx in the form of Schedule "3" hereto;
8.3. Funding Commitment - The Purchaser shall have agreed in writing to fund
the operations of the Corporation for a period of six (6) months by
lending to the Corporation the sum of US$100,000.00 monthly on the first
day of each such month commencing from the Closing Date, plus the salary
and bonus amounts required to be paid to Xxxxxxxxxx pursuant to the
Employment Agreement during such six (6) month period, the agreement to
be in form reasonably satisfactory to Purchaser's counsel;
8.4. Rights Upon Breach of Conditions - In case any of the foregoing
conditions shall not be fulfilled and/or satisfied by the Purchaser at or
before the Closing Date (or any such earlier date as stipulated herein)
to the satisfaction of the Vendor, the Vendor may rescind this agreement
by notice to the Purchaser and in such event the parties shall be
released from all obligations hereunder, provided that any of the said
conditions may be waived in whole or in part by the Vendor without
prejudice to its rights of rescission in the event of the non-fulfilment
of any other condition or conditions, any such waiver to be binding on
the Vendor only if the
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same is in writing.
ARTICLE IX - CLOSING ARRANGEMENTS
9.1. The closing shall take place at the Time of Closing on the Closing Date
at the offices of Minden Gross Xxxxxxxxx & Xxxxxxxxxx, counsel for the
Vendor, Toronto, Ontario;
9.2. At the Time of Closing on the Closing Date, upon fulfilment of all the
conditions set out in Articles VII and VIII which have not been waived in
writing by the Purchaser or the Vendor, as the case may be, the Vendor
shall deliver to the Purchaser certificates respecting all the Purchased
Shares duly endorsed in blank for transfer and will cause transfers of
such shares to be duly and regularly recorded in the name of the
Purchaser, or its nominee and will cause a meeting of the board of
directors of the Corporation to be held at which all the directors and
officers of the Corporation will resign in favour of nominees of the
Purchaser whereupon, subject to all other terms and conditions hereof
being complied wfth, payment of the Purchase Price shall be paid and
satisfied in the manner provided in Article III.
ARTICLE X - SHARE EXCHANGE TRANSACTION
10.1. It is acknowledged that Xxxxx desires to complete the transaction
contemplated in this Agreement in a manner which will enable him to defer
his Income Taxes in respect of the sale of his portion of the Purchased
Shares until he has sold the Paradigm Shares received by him as
consideration in that regard. Accordingly, Xxxxx shall have the option
(the "Xxxxx Option") which is deemed to have been exercised and accepted
by the Purchaser, to require the Purchaser to incorporate a new
corporation under the laws of the Province of Ontario (the "Purchaser
Subsidiary") which will create a class of exchangeable shares to be
issued to Xxxxx in place of his proportionate share of the Paradigm
Shares and Stock Options which he would otherwise be entitled to receive
pursuant to Article III of this Agreement. Xxxxx'x proportionate share of
the Purchased Shares and Stock Options is twenty-seven (27%) percent. The
shares to be issued to Xxxxx by the Purchaser Subsidiary shall be subject
to provisions, rights and designations contained in the Articles of the
Purchaser Subsidiary satisfactory to Xxxxx'x counsel, acting reasonably,
and shall provide, inter alia, for the rights on the part of Xxxxx,
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at his option, to exchange the shares of the Purchaser Subsidiary
received by him for an equivalent number of Paradigm Shares as he would
otherwise have received pursuant to Article III had Xxxxx received his
proportionate share of the Paradigm Shares and Stock Options. Without
limiting the generality of the foregoing, the exchangeable shares to be
issued to Xxxxx pursuant to the Xxxxx Option shall place Xxxxx, as much
as possible, in the same position with respect to receipt of dividends,
rights to convert to and sell Paradigm Shares to the same extent as if
Xxxxx had received the Paradigm Shares and Stock Options as contemplated
pursuant to Article III.
10.2. The Purchaser hereby covenants and agrees to act in good faith to
implement the requirements and completion of the transaction contemplated
by the Xxxxx Option and the Purchaser shall provide and execute all
documentation, confirmations and assurances that may be reasonably
required in order to proceed with the completion of the transaction
contemplated by the Xxxxx Option. In that regard, and without limiting
the generality of the foregoing, the Purchaser shall obtain all necessary
regulatory approvals required in order to implement the Xxxxx Option.
10.3. Xxxxx agrees that he shall bear the legal expenses of the Purchaser with
respect to the incorporation and preparation and completion of all
documentation pertaining to the Xxxxx Option except for the legal
expenses of obtaining the necessary regulatory approvals, which shall be
the responsibility of the Purchaser.
ARTICLE XI - NOTICES
11.1. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person,
transmitted by telecopy or similar means of recorded electronic
communication or sent by registered mail, charges prepaid, addressed as
follows:
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(i) to the Vendor:
c/o Xxxxxxx Xxxxxxxxxx
0X - 00 Xxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX X0X 0X0
Fax #: (000) 000-0000
Copy to:
Minden Gross Xxxxxxxxx & Xxxxxxxxxx
000 Xxxxxxxx Xxxxxx X.
Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
if to the Purchaser:
Paradigm Advanced Technologies, Inc.
0 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX
Attention:
Telecopier No.: (416)
Copy to:
Xxxxxx Xxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx Xxxx, XX X0X 0X 7
Attention: Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
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(iii) if to the Corporation:
c/o Xxxxxxx Xxxxxxxxxx
0X - 00 Xxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX X0X 0X0
Fax #: (000) 000-0000
Copy to:
Minden Gross Xxxxxxxxx & Xxxxxxxxxx
000 Xxxxxxxx Xxxxxx X.
Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
11.2. Any such notice or other communication shall be deemed to have been
given and received on the day on which it was delivered or transmitted
(or, if such day is not a business day, on the next following business
day) or, if mailed, on the third business day following the date of
mailing; provided however, that if at the time of mailing or within three
business days thereafter there is or occurs a labour dispute or other
event that might reasonably be expected to disrupt the delivery of
documents by mail, any notice or other communication hereunder shall be
delivered or transmitted by means of recorded electronic communication as
aforesaid;
11.3. Any party may at anytime change its address for service from time to time
by giving notice to the other parties in accordance with clause 11.2.
ARTICLE XII - TIME OF THE ESSENCE
Time shall be of the essence of this agreement.
ARTICLE XIII - EXECUTION OF COUNTERPARTS AND BY FACSIMILE
This agreement may be executed in one or more counterparts, each of which
so executed shall constitute an original and all of which together shall
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constitute one and the same agreement. This agreement may be executed by any
party by a facsimile signature and such facsimile signature shall be binding
upon such party as if such signature had been an original signature.
ARTICLE XIV - ENTIRE AGREEMENT
This agreement, including the Schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be any verbal
statements, representations, warranties, undertakings or agreements between the
parties and this agreement may not be amended or modified in any respect except
by written instrument signed by the parties hereto.
ARTICLE XV - PROPER LAW OF CONTRACT
This agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the Province of
Ontario. Each of the parties hereto hereby irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario.
ARTICLE XVI - BENEFIT AND BINDING NATURE OF AGREEMENT
This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal representatives,
successors and assigns.
ARTICLE XVII - ARTICLE AND CLAUSE HEADINGS
Article and clause headings contained in this agreement are included
solely for convenience, are not intended to be full or accurate descriptions of
the content of any Article or clause and shall not be considered to be part of
this agreement.
ARTICLE XVIII - NUMBER AND GENDER
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith:
(a) words in the singular number include the plural and such
work shall be construed as if the plural had been used;
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(b) words in the plural include the singular and such words shall
be construed as if the plural had been used;
(c) words importing the use of any gender shall include all genders
where the context or party referred to so requires, and the rest
of the sentence shall be construed as if the necessary
grammatical and terminological changes had been made.
ARTICLE XIX - ARBITRATION
19.1. If their is any dispute between the parties as to the interpretation of
any provision of this Agreement, then any such dispute may be referred to
a single arbitrator to be appointed and agreed upon by the parties
hereto, if they agree upon one arbitrator, otherwise, each of the Vendor
and the Purchaser shall be entitled to appoint one arbitrator and the two
arbitrators so appointed shall appoint a third arbitrator, and failing
agreement on such appointment, the third arbitrator shall be appointed by
any judge of any court having jurisdiction thereover. The arbitrator or
arbitrators shall proceed to hear and determine the dispute and the award
or determination which shall be made by such arbitrator or such majority
of them (if more than one) shall be final and binding upon the parties
hereto.
19.2. The arbitrators shall expressly be authorized to assess damages and to
make a determination that a party is liable to pay damages to the other
if there has been a determination that a party has breached any of the
provisions of this Agreement. The Arbitrators further shall have the
right to make any disposition they determine with respect to costs and
shall take into account in awarding costs any unreasonable positions or
frivolous positions that might have been taken by a party.
19.3. The parties agree that compliance with the arbitration provisions of this
Article shall be a condition precedent to the commencement of any action
at law, except with respect to the matters contemplated by section 19.4
hereof.
19.4. Notwithstanding anything herein contained to the contrary, the
arbitration provisions of this Article may not be invoked and shall not
apply to the enforcement of any rights of the Vendor under the Pledge
Agreement annexed hereto as Schedule 4 or any determination by the Vendor
that it is entitled to exercise its rights under the Pledge Agreement.
The
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foregoing shall not preclude any party from commencing any legal
proceedings relating to any issue pertaining to the Pledge Agreement.
IN WITNESS WHEREOF the parties hereto have executed this agreement.
SIGNED, SEALED AND DELIVERED
in the presence of: PARADIGM ADVANCED
TECHNOLOGIES INC.
/s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: President & CEO
XXXXXX & ASSOCIATES
INTERNATIONAL CORP.
/s/ Xxxxxxx Xxxxxxxx
-------------------------------
(Vendor)
/s/ Xxxxxxx Xxxxxxxxxx
-------------------------------
XXXXXXX XXXXXXXXXX
/s/ Xxxxx Xxxxx
-------------------------------
XXXXX XXXXX, IN TRUST
