SHARE EXCHANGE AGREEMENT
This Ageement is made as of the 29th clay of September, 1999
AMONGST:
FOREST GLADE INTERNATIONAL INC., a company duly incorporated and
validly existing under the laws of the State Nevada having its
executive offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0
("FGI")
AND:
XXXXXXX XXXXXXX, businessman, of #401 1 0000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(herein separately called "Xxxxxxx")
AND:
XXXX XXXXXXX XXXX, software programmer of 0000 0xx Xxxxxx, Xxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
(herein separately called "Xxxx")
AND:
XXXXXXX XXXXXXXX XXXXXX, Attorney, of 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, XX0 0X0
(herein separately called "WFM")
(Xxxxxxx, Xxxx and WFM are herein collectively referred to as
the "Original Shareholders")
AND:
XXXXX XXXXXXXXX. Attorney at Law, 00000 X. 000xx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000
(the "Escrow Agent")
WHEREAS:
A. A Company named SSA Coupon Ltd. ("SSA") was incorporated by Xxxxxxx pursuant
to the laws of British Columbia for the purpose of developing, exploiting and
marketing an internet web search engine and data base as an internet portal (the
"Project") and Xxxxxxx was the originator of the concept and has been retained
by SSA on a consulting basis.
B. Dana has worked with Xxxxxxx in the development of the technology for the
Project and was retained by SSA to continue his involvement with programming for
the Project and to co ordinate and oversee the development of the software and
the writing of the specifications in a consulting capacity with the Company and
as its Chief Technical Officer.
C. WFM is an attorney of law in partnership under the name Metro Law Office,
which partnership are the lawyers to the Company and the Company retained WFM as
its President on a long term basis.
A. There are 12,500 common shares issued and outstanding in the capital of SSA
and Xxxxxxx, Xxxx and WPM were the original shareholders of SSA with Xxxxxxx
owning 7,142 common shares and each of Xxxx and WFM owning 1,429 common shat. By
an agreement made as of July 23. 1999, SSA issued 2,500 common shares to FGI.
A. The parties have agreed that it is desirable and to the best interests of FGI
and its shareholders, that SSA be held as a wholly-owned subsidiary of FGI and
this Agreement is being entered into for the purposes of setting forth the terms
and conditions of achieving this result.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and of the agreements hereinafter contained, the parties hereto
mutually covenant and agree as follows:
ARTICLE 1
PLAN OF SHARE EXCHANGE
1.01 Share Transfer. The Original Shareholders will transfer their shares in SSA
to FGI in exchange for a total of 19,000,000 common shares in the capital of FGI
(the "Exchange Shares") to be issued a follows:
(a) FGI shall issue 13,300,000 shares to Xxxxxxx,
(b) FGI shall issue 2,850,000 shares to Xxxx, and
(c) FGI shall issue 2,850,000 shares to WPM
1.02 Exchange Price. The Exchange Shares will be restricted common shares
subject to Rule 144 of the Securities Exchange Act of the United States and the
parties agree that the Exchange Shares have no present value and the share
exchange will be deemed to occur at the issue price to the Original Shareholders
of their common shares in SSA such that the Exchange Shares will be issued for
$100 or $0.0000052 per share.
1.03 Appointment of Escrow Agent. To facilitate the share exchange FGI and the
Original Shareholders hereby appoint the Escrow Agent to act as escrow agent for
the closing of the share exchange. FGI and the Original Shareholders acknowledge
that the Escrow Agent is legal counsel to FGI and FGI and the Original
Shareholders waive any objections as to the Escrow Agent's apparent conflict of
interest while serving as escrow agent. FGI and the Original Shareholders shall
indemnify and hold harmless the Escrow Agent from any and all liability for
performance under this Agreement done honestly and in good faith. The Escrow
Agent shall have the tight to file an Interpleader Action in the Colorado State
courts should any dispute arise between the parties as to the right, title or
interest in any securities deposited with the Escrow Agent as a result of this
Agreement.
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1.04 Escrow of SSA Shares. On or before the tenth business day following the
execution of this Agreement by all parties, the Original Shareholders will
deliver to the Escrow Agent:
(a)SSA share certificate numbered 4 representing the 7,142 common shares
held by Xxxxxxx duly endorsed for transfer to FGI,
(b)SSA share certificate numbered 5 representing the 1,429 common shares
held by Xxxx duly endorsed for transfer to FGI,
(c)SSA share certificate numbered 6 representing the 1,429 common shares
held by WFM duly endorsed for transfer to FGI,
(d)A directors' resolution of SSA approving this Agreement and
authorizing its execution,
(e)A directors' resolution of SSA consenting to the transfer of the
Original Shareholders' common shares to FGI and resolving to cancel
share certificates numbered 4, 5, and 6 on receipt of the endorsed
share certificates and resolving to issue shire certificate numbered 8
for 10,000 common shares in the name of FGI, and
(f)Share certificate number 8 representing 10,000 common shares in the
capital of SSA in the name of FGI.
1.05 Issuance of FGI Common Shares and Escrow. On or before the fifth business
day following the execution of this Agreement by all parties, FGI shall deliver
to the Escrow Agent duly executed instructions to its transfer agent for the
issuance of the 19,000,000 Exchange Shares GI as set forth below and
instructions for the delivery of the certificates for the Exchange Shares to the
Escrow Agent within an additional two business days:
(a) 13,000,000 of the Exchange Shares to be issued in the name of
Xxxxxxx Xxxxxxx,
(b) 2,850,000 of the Exchange Shares to be issued in the name of
Xxxxxxx Xxxxxxx Xxxxxx, and
(c) 2,850,000 of the Exchange Shares to be issued in the name of Xxxx
Xxxxxxx Xxxx.
(the documents described in article 1.05 and the instruction described in this
article together with the Exchange Share certificates described in this Article
are collectively called the "Escrow Documents").
1.06 Closing of the Exchange Shares. On or before one business day following
receipt by the Escrow Agent of the later of the instructions to FGI's transfer
agent and the SSA endorsed and new share certificate the Escrow Agent will
present the instructions to the transfer agent and, on receipt of the Exchange
Share certificates from the transfer agent, the Escrow Agent shall send
facsimile notice of receipt of said certificates to all parties and will
deliver:
(a) SSA share certificate number 8 representing 10,000 common shares in
SSA and the certified copies of the directors' resolutions to FGI,
(b) the endorsed SSA share certificates numbered 4, 5. and 6 to SSA,
and
(c) the Exchange Shares certificates to each of the Original Shareholders
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by overnight courier. Upon deposit of the Certificates with the overnight
courier, this Agreement shall be deemed closed and the Escrow Agent dismissed.
1.07 Failure Timely Close. In the event the Escrow Documents (except for the
Exchange Shares certificates to be received from the transfer agent) are
not received on of before the tenth business day following the execution
of this Agreement by all parties, or the failure to receive the Exchange
Shares certificates from the transfer agent within two business days
thereafter, or if the Escrow Documents do not conform to what is set forth
above, the Escrow Agent shall notify the patties in writing by fax and
upon written instructions of either party to termintae the escrw for
failure to timely close, the Escrow Agent shall return any Escrow
Documents held in escrow to the sender thereof. In the absence of such
request the time of Closing shall be extended until such time that the
correct Escrow Documents are received or written instructions of either
parry to terminate the escrow for failure to timely close is received.
Upon receipt of such instructions, the Escrow Agent shell send facsimile
notice of receipt thereof to all parties and return the Escrow Documents
to the sender thereof by overnight courier on or before the next business
day from receipt. Upon deposit of all of the Escrow Documents in his
possession with the overnight courier, the escrow shall be deemed
terminated and the Escrow Agent dismissed.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.01 Investment Representations. Each Original Shareholder represents that he is
acquiring the common shares of FGI to be issued pursuant hereto for his own
account and not to distribute such shares within the meaning of the Securities
Act of 0000 (xxx 0000 Xxx) unless an appropriate registration statement has been
filed with the SEC, or unless an exemption from registration under the 1933 Act
is available according to opinion of counsel for FGI; each such certificate
shall be stamped or otherwise imprinted with the following, or a substantially
similar legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act") nor any state securities laws.
These shares many not be offend for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an opinion of counsel acceptable to FGI that an exemption from
such registration is available."
2.02 Sophisticated Investors. The Original Shareholders each represent and
warrant that he has sufficient investment sophistication and ability to take the
financial risks associated with this transaction, and those representations
contained in this article 2.02, which meet the standards for availability of an
exemption from the registration requirements of the 1933 Act, and from the
registration and/or qualification requirements of any other applicable law.
2.03 FGI Warranties. FGI represents and warrants to the Original Shareholders
with the intent that the Original Shareholders shall rely thereon in entering
into this Agreement and in concluding the exchange of shares contemplated herein
as follows:
(a) Status of FGI. FGI is a corporation duty incorporated, validly
existing and in good standing under the laws of the state of Nevada,
United States of America and has the power and capacity to own its
properties and carry on its business as now bring conducted by it, and to
enter into this Agreement and carry out its terms to the full extent;
(b) Authority. The execution and delivery of this Agreement and the
completion of the transaction contemplated hereby has been duly and
validly authorized by all the necessary corporate
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action on the part of FGI, and this Agreement constitutes a legal,
valid and binding obligation of FGI enforceable against it in
accordance with its terms except as may be limited by laws of general
application affecting the rights of creditors;
(c) Will not cause Default. Neither the execution and delivery of this
Agreement, nor the completion of the share exchange contemplated herein
will violate any of the terms and provisions of the constating documents
or by-laws or articles of FGI, or any order, decree, statute, by-law,
regulation, covenant, or restriction applicable to FGI or any of its
shares or assets;
(d) Litigation. There is no claim or litigation pending or threatened with
respect to FGI which could affect the right of the Original Shareholders
to own, vote or obtain dividends from the Exchange Shares except as is
expressly set forth in this Agreement;
(e) Outstanding Shares. FGI presently bas 17,900,000 common
shares issued and outstanding and 9,300,000 of such shares are owned
by the present control group as follows:
(i) 2,866,668 owned by Xxxxx Xxxxx,
(i) 1,583,333 owned by Xxxxx X. Xxxxxx,
(i) 1,583,333 owned by Xxxxxxx Xxxxx,
(iv) 1,583,333 owned by Xxxx Xxxxxx,
(v) 1,683,333 owned by Xxx Xxxxxx.
(f) No Further Share Issuances. No person, firm or corporation has any
agreement or option or a right capable of becoming an agreement for the
purchase of any other shares in the capital of the FGI or any right
capable of becoming n agreement for the purchase, subscription or issuance
of any of the unissued shares in the capital of FGI;
(g) No Debt to Directors. FGI is not indebted to any of its
directors or officers or to any affiliate, or to any director or
officer of any affiliate;
(h) No dividends. No dividends or other distribution on any
shares in the capital of FGI have been made, declared or authorized;
(i) No Long Term Contracts. FGI does not have any contracts, agreements,
pension plans, profit sharing plans, bonus plans, undertakings, or
arrangements whether oral, written or implied with employees, lessees,
licensees, managers, accountants, suppliers, agents, distributors,
officers directors, lawyers or others which cannot be terminated on not
more than one month's notice;
(j) Legal Proceedings. There is no basis for and there are no
actions, suits, judgments, investigations or proceedings outstanding
or pending or to the knowledge of FGI threatened against or affecting
FGI at law or in equity or before or by any federal, provincial,
state, municipal or other governmental department, commission, board,
bureau or agency;
(k) No Contractual Violations. The performance of this Agreement will not
be in violation of the constating documents FGI or of any agreement to
which FGI is a party and will not give any person or company any right to
terminate or cancel any agreement or any right enjoyed by FGI and will not
result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favour of a third party upon or
against the assets of the FGI;
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(l) Release of Exchange Shares. The Exchange Sham will be released from
their restrictions at the rate of 10% (1,900,000) each year after their
issuance and the Original Shareholders will be entitled to distribute
10% of such shares within the meaning of the Securities Act of 0000
(xxx 0000 Xxx) pursuant to an exemption from registration without
having to file a registration statement with the SEC and counsel for
FGI will be able to provide an opinion that an exemption from
registration under the 1933 Act is available.
ARTICLE III
FGI COVENANTS
3.01 Appointment of Directors. FGI covenants and agrees that it will cause two
of its directors to resign and will have two nominees of the Original
Shareholders elected to fill these casual vacancies until the next general
meeting of FGI.
3.02 Consulting Agreement and Royalties. FGI acknowledges that SSA has
consulting agreements (the "Consulting Agreements") with each of the Original
Shareholders and that under the agreement of July 23, 1999 wherein it acquired
20% of the share of SSA, it agreed to the payment of a royalty to the Original
Shareholders. FGI covenants and agrees to make the payments under, or provide
the financing to SSA to make the payments under, the Consulting Agreements and
it confirms its covenant and agreement that it will pay, or cause SSA to pay, in
perpetuity, to the Original Shareholders a royalty aggregating 7% of the gross
revenues of every kind and nature received by SSA and/or FGI (without
duplication) arising directly or indirectly from the licensing, use, sale of
banner advertising, access fees, service fees, other billable services and from
any other exploitation of the SSA's technology including all works created by
SSA, FGI or any associated or related company based in whole or in part on the
technology, including any modifications, adaptations, transformations,
revisions, improvements, enhancements, translations or variations of the
technology.
3.04 Royalty Payments. The royalty will be paid four times a year as
follows:
(a) on or before April 30th each year on the gross revenue for the
preceding calendar quarter of January, February and March,
(b) on or before July 30th on the gross revenue for the preceding
calendar quarter of April, May and June,
(c) on or before October 30th on the gross revenue for the preceding
calendar quarter of July, August and September, and
(a) on or before January 30th on the gross revenue for the
preceding calendar quarter of October, November and December.
3.05. Royalty Payments. The royalty will be payable pro rata to the Original
Shareholders as follows:
(a) a royalty of 4.9% of such gross revenues to Xxxxxxx or his
heirs, executors or assigns,
(b) a royalty of 1.05% of such gross revenues to Xxxx or his heirs,
executors or assigns, and
(c) a royalty of 1.05% of such gross revenues to WFM or his heirs,
executors or assigns.
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3.06 No Further Share Issuances. FGI covenants and agrees that it will not issue
or agree to issue or grant any options for the issuance of any further shares in
its capital without the prior written consent of the original Shareholders.
3.07 Directors and Officers of SSA. FGI covenants and agrees that it will vote
its shares in SSA, being alt of the issued and outstanding shares, so that the
board of directors of the SSA (the "Board") shall be comprised of three
directors and so that the one nominee of each of the Original Shareholders shall
constitute the Board. The Original Shareholders or their nominees shall be the
oficers of SSA and in the event that a position on the Board shall be open for
any reason whatsoever, the Original Shareholder whose nominee shall have
formerly occupied such position shall be entitled to nominate a new director to
fill such vacancy.
ARTICLE IV
MISCELLANEOUS
4.01 Expenses and Further Assurances. FGI shall pay the attorneys fees for the
preparation, execution and closing of this Agreement. The Original Shareholders
shall each bear their respective costs and expenses incurred in connection with
the transactions contemplated by this Agreement. Each xxxxx hereto will use its
best efforts to provide any and all additional information, execute and deliver
any and all documents or other written material, and perform any and all acts
necessary to carry-out the intent, of this Agreement.
4.02 Survival of Representations, Warranties and Covenants. All of the
representations, warranties and covenants made as of the date of this
Agreement and as of Closing, shall survive the closing of this transaction.
4.03 Successors and Assigns. All representations, warranties, covenants and
agreements in this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, representatives, successors and
assigns whether so expressed or not.
4.04 Governing Law. This Agreement is to be governed by and interpreted
under the laws of British Columbia, Canada without giving effect to the
principles of conflicts of laws thereof.
4.05 Notices. All notices, requests, consents acrd other Communications
hereunder shall be in writing and shall be deemed to have been duly given on the
date of delivery if delivered personally or on the tenth day after being sent by
certified mail, return receipt requested, with postage prepaid and addressed as
follows:
If to FGI addressed to: Forest Glade International, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx Xxxxxx, X.X. XXXXXX X0X 0X0
Fax: (250) 377 - 3569
If to the Original Shareholders, addressed to:
Xxxxxxx Xxxxxxx Xxxxxxx Xxxxxx
c/o 4920 - 800 X. Xxxxxx St. c/o Metro Law Office
Vancouver, BC V6C 2V6 00000 - 0000 Xxxxxxxx
Fax: _____________ Burnaby, BC VSH 4MI
Fax: (000) 000-0000
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Xxxx Xxxx
0000 - 0" Xxxxxx
Xxxxx, XX X0X 0X0
Fax #:
If to the Escrow Agent: Xxxxxx Xxxxxxxxx
00000 X. 000xx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000
Fax (000) 000 0000
4.07 Section and Other Headings. The section and other headings herein
contained are for convenience only and shall not be construed as part of
this Agreement.
4.08 Counterparts. This Agreement may be executed in any number of counterparts
and each counterpart shall constitute an original instrument, but all such
separate counterparts shall constitute but one and the same instrument.
4.09 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements, understandings and
agreements, oral or written between the parties hereto with respect to the
subject matter hereof. This Agreement may not be amended or modified, except by
a written agreement signed by all parties hereto.
4.10 Deletion of Terms. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffectual to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
4.11 Arbitration. Unless otherwise provided herein, all claims, disputes or
controversies arising out of or relating to this Agreement between the parties
shall be decided in the Province of British Columbia, Canada by arbitration in
accordance with the Commercial Arbitration Act of British Columbia as may be
hereafter amended from time to time or other legislation in force from time to
time in British Columbia in pari material therewith. This agreement to arbitrate
shall be specifically enforceable in accordance with applicable law in any court
having jurisdiction thereof.
4.12 Notice of Arbitration. Notice of demand for arbitration shall be delivered
in writing to the other parties to this Agreement within a reasonable time after
the claim, dispute or other matter in question has arisen. In no event shall the
demand for arbitration be made alter the date when institution of legal
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations.
4.13. Arbitration Award. The award rendered by the arbitrator shall be
final and judgement may be entered upon it in accordance with the applicable
law in any court having jurisdiction thereof.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective Officers, hereunto duly authorized,
as of the last date set forth below.
FOREST GLADE INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, President, Dated: October 14, 1999
By: /s/ Xxx Xxxxxx
Xxx Xxxxxx, Secretary, Dated: October 14, 1999
THE ORIGINAL SHAREHOLDERS
Xxxxxxx Xxxxxxx, Dated:
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