SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 23rd day of April, 2001
BETWEEN :
1472311 ONTARIO LIMITED
(hereinafter called the "Purchaser")
OF THE FIRST PART
- and -
INFORMATION HIGHWAY, INC.
(hereinafter called the "Vendor")
OF THE SECOND PART
WHEREAS:
1. The Vendor is the registered and beneficial owner of 3,115,000 Common
Shares (the "Purchased Shares") in the capital stock of YESIC
Communications, Inc. (the Company");
2. The Purchaser wishes to purchase from the Vendor and the Vendor wishes to
sell to the Purchaser, the Purchased Shares;
3. Purchaser shall assume all responsibility for all the operations of the
Company.
NOW THEREFORE in consideration of the mutual covenants herein contained and of
other good and valuable consideration, the receipt and sufficiency of which each
of the parties hereto hereby acknowledges, the parties hereto covenant and agree
as follows:
ARTICLE I
DEFINITIONS AND SCHEDULES
1.1 In this agreement, the following words and terms shall have the following
meanings:
(a) "Accounts Payable" means all accounts payable and all other liabilities
and indebtedness owed by the Company as at April 23, 2001, save for the
Shareholder's Loan"; and, "Accounts Receivable" means the accounts receivable of
the Company as at April 23, 2001;
(b) "Agreement", "hereto", "hereof", "herein", "hereby", "hereunder", and
similar expressions mean this agreement together with all Schedules annexed
hereto, as they may be amended from time to time;
(c) "Business" means the business of an internet service provider and web
hoster;
(d) "Business Day" means a day on which banks open for business in the
Province of Ontario;
(e) "Business Information" means all financial and business information and
data relating to the Company, its customers, clients, consultants and employees,
including, without limitation, customer and client lists, business and marketing
plans and strategies of the Company;
(f) "Closing" means the completion of the purchase by the Purchaser of the
Purchased Shares as provided for in this Agreement;
(g) "Closing Date" means April 24, 2001, or such other date, as the parties
may agree upon as the date on which the Closing shall take place;
(h) "Consultant's Contract" means any contract, verbal or in writing, with
any person, firm or corporation wherein any such person, firm or corporation is
to provide any services to the Company for the operation of the Business;
(i) "Encumbrances" means mortgages, charges, pledges, security interests,
liens, encumbrances, trust deeds, debentures bonds or any indebtedness of any
nature;
(j) "Financial Statements" means the complete financial statements of the
Company for the two fiscal years ending May 31, 1999 and May 31, 2000;
(k) "Governmental Charges" means and includes all income taxes, corporate
taxes, capital taxes, custom duties, goods and services tax, provincial sales
taxes, rates, levies, assessments, reassessments and other charges, together
with all penalties, interest and fines with respect thereto, payable to any
federal, provincial, municipal, local or other government or governmental
agency, authority, board, bureau or commission, domestic or foreign;
(l) "Purchased Shares" means all of the issued and outstanding common shares
of the Company, being of 3,115,000 Common Shares;
(m) "Real Property Leases" means all leases of premises from where the
Company carries on its Business;
(n) "Shareholder's Loan" means the loan outstanding to the Vender from the
Company in the sum of $1,000,000;
(o) "Telephone Equipment Supply Contracts" means all contracts; both verbal
and in writing pertaining to the supply of telephone lines and digital services,
and include all contracts, verbal and in writing with Xxxx Canada and A. T. & T.
Canada and any of their respective affiliates;
(p) "Time of Closing" means 5:00 P.M. Toronto time on the Closing Date, or
such other time as is mutually agreed upon by the parties hereto.
All Dollar amounts referred to in this Agreement, including any Schedules, are
in Canadian funds.
1.2 The following Schedules, whether or not attached hereto, are hereby
incorporated in this Agreement by reference and are deemed to be part hereof;
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Schedule "C" - Accounts Payable
Schedule "D" - Accounts Receivable
Schedule "E" - Real Property Leases
Schedule "F" - Equipment Leases
Schedule "G" - Employees
Schedule "H" - Consultants Contracts
Schedule "K" - Telephone Equipment Supply Contracts
Schedule "L" - Banking Particulars
ARTICLE 2
PURCHASE OF SHARES
2.1 Subject to the terms and conditions hereof, the purchaser agrees as
follows;
2.1.1 to purchase and the Vendor agrees to sell, assign and transfer to the
Purchaser, the Purchased Shares at the Time of Closing;
2.1.2 If, after the Closing Date, the Company makes a public offering of
its shares or if the shareholders of the Company sell the outstanding
shares of the Company to a public or private company, or if the
Company is vended into a public company, the Vendor will receive 25%
of the after tax profits in the case of any sale or 25% of the net
proceeds in the case of a public offering as a repayment of the
Vendor's Shareholder's loan up to a maximum amount of $1,000,000 after
repayment of any of the purchaser's shareholder's loans and invested
capital subject to paragraph 2.1.3. This paragraph will not be
applicable in the event that the Purchaser made a private placement
offering to raise funds for operations, however, any new shareholders
would be bound by the terms of this agreement;
2.1.3 Other than as described in 2.1.2 above, there will be no other
payments due to the Vendor during the 24 months immediately following
closing. On the later of (i) thirty days after the last day of the
fiscal year in which the Company achieves a Retained Earnings position
of $100,000 as reflected on its' Financial Statements for the fiscal
year end or (ii) thirty days after the second fiscal year end after
the closing, and upon thirty days after each fiscal year thereafter
and until such time as the Vender has received the sum of $1,000,000,
the Company will pay to the Vendor the sum of 25% of the Company's
profit after tax as reflected on the Company's Financial Statements as
a repayment of the Vendor's shareholder's loan after adding back any
salaries paid to the directors and after deduction of any shareholders
loans made by the Purchaser;
2.1.4 The maximum amount to be paid to the Vendor under both paragraphs
2.1.2 and 2.1.3 is $1,000,000. Any remaining balance of the Vendor's
shareholder's loan will be transferred to the Purchaser after the
Vendor receives the cumulative amount of $1,000,000 under either
paragraph 2.1.2, 2.1.3 or a combination of both of them.
2.1.5 if there is any dispute, it shall be settled by the Company's
accountants or auditors;
2.2 On closing, the Vendor shall pay the Purchase Price for the Purchased
Shares shall be the
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aggregate sum of Ten Dollars ($10.00)(the "Purchase Price"), such Purchase
Price to be paid on closing to the Vendor by way of cash or cheque.
2.3 Vendor agrees to cooperate with Purchaser with respect to the Shareholder's
Loan in order to facilitate any proposal to creditors subject to the terms
and conditions of paragraphs 2.1.2, and 2.1.3, and 2.1.4 of this agreement,
and the Vendor assigns the Purchaser the rights to vote on its' behalf on
any proposal to the creditors;
2.4 The Vendor agrees that the Purchaser shall be entitled to reimbursement of
those funds that Purchaser has advanced to the Company prior to the
disbursement of the 25% proceeds to the to the Vendor as set out in 2.1.2
and 2.1.3 above.
ARTICLE 3
ASSURANCES OF THE VENDOR
3.1 The Vendor cannot guarantee the accuracy of the following information
contained in this section 3.1. However, the Vendor can and shall offer its
assurance and shall provide reasonable efforts to cooperate with the Purchaser
to confirm or assist the Purchaser with its due diligence of the following
information. In consideration of the aforementioned caveat, the Vendor advises,
to the beat of its knowledge, as follows:
3.1.1 the authorized capital of the Company consists of an unlimited number
of Common Voting Shares ("Common Shares"). The Company was
incorporated pursuant to the Canada Business Corporations act and
Articles of Incorporation in respect of the Company were issued on
February, 23, 1996;
3.1.2 the Purchased Shares are owned by the Vendor as the beneficial owner
thereof, with good and marketable title thereto, free and clear of all
Encumbrances, whatsoever. There are no other shares of the Company
which are issued and outstanding and none shall be issued as at the
Time of Closing, other than the Purchased Shares;
3.1.3 the Company has no subsidiaries or agreements of any nature to
acquire any shares or securities of any corporation or person;
3.1.4 this Agreement has been duly executed and delivered by the Vendor and
is a valid and binding obligation of the Vendor enforceable in
accordance with its terms. The entering into of this Agreement and the
transactions contemplated hereby will not result in the violation of
any of the terms and provisions of the constating documents or by-laws
of the Company or, of any indenture, order, judgment, decree or other
agreement, written or oral, to which the Company or the Vendor may be
a party;
3.1.5 there is no action, litigation, enquiry, investigation, arbitration
proceeding or Governmental proceeding, in progress or pending against
or relating to the Vendor which affects the ownership of the Purchased
Shares owned by such Vendor or the ability of the Vendor to complete
the transactions contemplated by this Agreement. The Company is not a
party to, bound or affected by or subject to any agreement,
instrument, order, judgment or law which would be violated,
contravened or breached by, or under which any default would occur as
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a result of, the execution and delivery of this Agreement or the
performance of any of the terms of this Agreement;
3.1.6 to the best of Vendor's knowledge, the Company is not a party to any
litigation either as plaintiff or defendant and there are no actions,
suits or proceedings with the exception of UUnet which has been
previously disclosed to the Purchaser (whether or not purportedly on
behalf of the Company pending or threatened against or affecting the
Company or before or by any federal, provincial, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign);
3.1.7 The Vendor is a Washington Corporation,
3.1.8 The only director of the Company is Xxxx Xxxxxxxxx and the only
officers of the Company are the President and CEO, held by Xxxx
Xxxxxxxxx, Secretary, held by Xxxxxxxx Xxxxxxx, and the Vice
President, Operations, held by Xxxx Xxxxxxxxx;
3.1.9 at the Time of Closing, the Vendor shall deliver to the Purchaser,
(i) Schedule "C", which is an up-to-date list of all Accounts Payable,
to the best of the knowledge of the Vendor, and (ii) Schedule "D",
which is an up-to-date list of all Accounts Receivable, to the best of
the knowledge of the Vendor;
3.1.10 the Company is a tenant pursuant to real Property Leases at 00 Xxxx
Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx, namely Xxxxx 000, Xxxxxxxx 00. The
said Real Property Leases, particulars of which are referred to in
Schedule "E", may also include other leases which shall be set out in
Schedule "E";
3.1.11 there are no undeclared dividends of the Company outstanding as at
the date hereof and no dividends shall be declared or paid by or on
behalf of the Company;
3.1.12 save for the Shareholder's Loan, no monies or compensation shall be
outstanding to any shareholder of the Company or to any director,
officer, former director or officer or to any party not dealing at
arm's length with the Corporation, as at the Time of Closing. Without
the consent, in writing of the Purchaser, no loans shall be made to
the Company from and after the date hereof by any party;
3.1.13 to the best of the knowledge of the Vendor, the Equipment Leases are
referred hereto in Schedule "F" are all the material leases for the
Company;
3.1.14 to the best of the Vendor's knowledge, the Company is not a party to
any written employment agreement relating to any employee of the
Business. To the best of the knowledge of the Vendor, the Company does
not have any employee who cannot be dismissed on such period of notice
as is required by law in respect of a contract of hire for an
indefinite term. To the best of the knowledge of the Vendor, the
Company has not entered into any agreement with any labour union or
employee association and has not made any commitment to or conducted
negotiations with any labour union or employee association with
respect to any future agreement, nor is the Company party to any
pension agreement or any employee benefits program or agreement.
Schedule "G" contains a list of the names and titles of all personnel
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employed by the Company with particulars of their positions and
salaries and any applicable bonus entitlement;
3.1.15 Schedule "H" is a list of the Consultants Contracts to the best of
the knowledge of the Vendor, pertaining to the Business;
3.1.16 the Vendor shall deliver to the Purchaser, the Financial Statements
for the prior two fiscal periods of the Company;
3.1.17 the conduct of the Business does not infringe upon the upon the
patents, trademarks, trade names or copyrights, domestic or foreign of
any other person, firm or corporation and no notice of any
infringement has ever been received or brought to the attention of the
Vendor. The Company is not party to any technology licenses;
3.1.18 Schedule "K" is a list of all Telephone Equipment Supply Contracts,
including all particulars pertaining thereto, including, commencement
and termination dates, payments required to be made thereunder and any
arrears of payments. In additions copies of all Telephone Equipment
Supply Contracts shall be delivered to the Purchaser;
3.1.19 No party whatsoever is entitled to any finder's fee or other payment
compensation from the Purchaser or the Company in respect of the
transactions contemplated by this Agreement;
3.1.20 Schedule "L" contains, to the best of the Vendor's knowledge, a
listing of all Safety Deposit Boxes and Bank Accounts of the Company,
including, names of signing officers or individuals, Safety Deposit
Boxes and Bank Account numbers. No changes affecting the banking or
safety deposit box arrangements of the Company will be made nor will
any new bank accounts or safety deposit boxes be opened nor powers of
attorney granted prior to the Time of Closing, without the consent, in
writing of the Purchaser;
3.1.21 The Vendor recognizes that a change in control of the Company may
necessitate a new year end; accordingly, the Vendor agrees to
co-operate fully with the Purchaser in providing all information which
the Purchaser may require as a result of the change in control;
3.1.22 In addition to any other deliveries and Schedules to be provided to
the Purchaser by the Vendor, the Vendor agrees to give its reasonable
effort to deliver to the Purchaser the following:
(i) the Company's general ledger for the past twelve months;
(ii) 2000 year T4's and T4 Summary; and
(iii) Bank Reconciliation for past two months;
(iv) an up to date trial balance for the Company;
(v) GST returns for the last 6 filings;
3.1.23 the Purchaser and its representatives shall be entitled to obtain
customers list of the
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Business and make such enquires of staff as deemed necessary;
ARTICLE 4
CLOSING
4.1 The Vendor shall give its assurance to provide its reasonable effort to
provide the Purchaser on or before the Closing Date that it will do or will
cause to be done the following;
4.1.1 transfer the Purchased Shares to the Purchaser, including taking all
necessary steps and proceedings to permit same to be duly and
regularly transferred to the Purchaser;
4.1.2 provide Purchaser with evidence of indebtedness reasonably required
by the Purchaser of the Shareholder's Loan to the Purchaser, together
with, together with confirmation of indebtedness by the Company in
form required by the Purchaser;
4.1.3 execute such resignations, resolutions and other documentation and
assurances, as may be required by the Purchaser, to give effect to
this Agreement;
4.1.4 the Vendor shall deliver, at the Time of Closing, resignations of all
existing directors and officers of the Company, share certificates
representing the Purchased Shares duly endorsed as required by the
Purchaser, all books and record of the Company required by the
Purchaser, all books and records of the Company required by the
Purchaser, an undertaking of the Vendor undertaking to deliver to the
Purchaser, at the Purchaser's request, without const, all books and
records of the Company, not delivered on Closing and to co-operate
fully with the Purchaser as regards all maters pertaining to the
Business, a release of all claims in favor of the Company, in form
satisfactory to the Purchaser;
4.1.5 the Vendor shall deliver on Closing, such other documentation and
things as may reasonable required by the Purchaser;
ARTICLE 5
NOTICES
5.1 Any notice or other documents required or permitted to be given under
this Agreement shall be in writing and shall be delivered, mailed by pre-paid
mail, or sent by facsimile transmission addressed to the party or parties to
whom it is to be given at the address shown below or at such other address or
addresses as the party or parties to whom such writing or document is to be
given shall have last notified all other parties in accordance with the
provisions of this paragraph;
(a) if to the Purchaser, at:
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 000
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Toronto, Ontario
M2N 1 N5
Attention: Xxxxx Xxxxxxxx
Facsimile No: 000-000-0000
With a copy to :
Xxxxx, Xxxx & Lubelsky
Barristers and Solicitors
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X#
Attention: Xxxxx Xxxx
Facsimile No: 000-000-0000
(b) if to the Vendor, at:
#185-10751 Xxxxxxxxxxx Xxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
X0X0X0
Attention: Xxxx Xxxxxxxxx
Facsimile No: 000-000-0000
5.2 Any notice, designation, communication, request, demand or other
document given or sent or delivered as a foresaid shall;
(a) if delivered as aforesaid, he deemed to have been delivered and
received on the date of delivery;
(b) if sent by mail as aforesaid, be deemed to have delivered and received
on the forth business day following the date of mailing, unless at any time
between the date of mailing and the fourth business day thereafter there is
a discontinuance or interruption of regular postal service, where due to
strike or lockout or work slowdown, affecting postal service at the point
of dispatch or delivery or any intermediate point, in which case the same
shall be deemed to have been given, sent, delivered and received in the
ordinary course or the mails, allowing for such discontinuance or
interruption of regular postal service; and
(c) if sent by facsimile transmission, be deemed delivered and received on
the date the sender receives the facsimile answer back confirming receipt
by the recipient.
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ARTICLE 6
GENERAL
6.1 The Closing of the transaction herein shall take place at the Time of
Closing at the offices of Xxxxx, Xxxx & Lubelsky, 0000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx, X0X 0X0, or such other location as may be agreed upon by
the parties.
6.2 Time shall be of the essence of this Agreement. This Agreement shall be
read with all changes of gender and number required by the context thereof.
6.3 This Agreement, including all Schedules and documents to be delivered,
constitutes the entire agreement between the parties hereto with respect to
all of the matters herein and this Agreement may not be amended or modified
in any respect except by written instrument signed by the parties hereto.
6.4 This Agreement may be executed in one or more counterparts, each of which
so executed will constitute an original and all of which together shall
constitute one and the same agreement.
6.5 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 and the laws of Canada applicable therein.
6.6 Any tender of documents or money hereunder may be made upon the parties
hereto or their respective counsel and money may be tendered by negotiable
cheque payable in Canadian funds and certified by a Canadian chartered
bank.
6.7 No waiver by any party of a breach of any of the covenants, conditions and
provisions herein contained shall be effective or binding upon such party
unless the same shall be expressed in writing and any waiver so expressed
shall not limit or affect such party's rights with respect to any other
future breach.
6.8 Each of the parties agrees to do and perform or cause to be done and
performed such further and other acts and things as may be necessary or
desirable from time to time in order to give full effect to this Agreement
and every part thereof.
6.9 If any covenant or provision contained herein is determined to be, in whole
or in part, invalid or unenforceable by reason of any rule of law or public
policy, such invalidity or unenforceability shall not affect the validity
or enforceability of any other covenant or provision contained herein and,
in the case of partial invalidity or unenforceability of a covenant or
provision, such partial invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of such covenant or provision,
and such invalid or unenforceable covenant or provision or portion thereof,
as the case may be , shall be severable from the remainder of this
Agreement.
6.10 The headings of the sections of this Agreement are inserted for convenience
only and do not constitute part of this Agreement.
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6.11 The Purchaser and Vendor agree that this Agreement may be executed by
facsimile communication, and thereafter treated as though it were an
original document.
6.12 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective permitted heirs, legal personal
representatives, successors and assigns.
IN WITNESS WHEREOF the parties have hereunto executed this agreement as of the
day and year first above written.
SIGNED, SEALED AND DELIVERED
in the presence of:
)
) INFORMATION HIGHWAY, INC.
)
)
) per: /s/ Xxxx Xxxxxxxxx c/s
------------------------------
) Name: Xxxx Xxxxxxxxx
) Title: President
)
)
) I have authority to bind the corporation
)
)
) 1472311 ONTARIO LIMITED
)
)
) per: /s/ Xxxxx Xxxxxxxx c/s
------------------------------
) Name: Xxxxx Xxxxxxxx
) Title: President
)
)
) I have authority to bind the corporation
)
)
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