SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
April 1, 1998
(Date of earliest event reported)
Paradigm Advanced Technologies
(Exact name of registrant as specified in its charter)
Delaware 028836 33-0692466
(State of Incorporation)(Commission File No.)(IRS Employer Identification No.)
270 Drumlin Circle
Concord, Ontario, Canada L4K 3E2
(Address of principal executive offices)(Zip Code)
(416) 929-6565
(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets
On February 10, 1998, the Registrant acquired all of the issued and
outstanding capital stock of North York Leasing Limited ("NYLL") and all of the
trade indebtedness of NYLL in exchange for 3,720,000 shares of the Registrant's
Common Stock. The Company also acquired the business of HOJ Franchise Systems
Ltd. ("HOJ") which is the franchisor for a number of car rental and leasing
franchises in Canada.
Item 5. Other Events
The Company's address and phone number has been changed to:
270 Drumlin Circle
Concord, Ontario, Canada L4K 3E2
Phone No.:(416) 929-6565
Fax No.:(905) 660-8863
Item 7. Financial Statements and Exhibits
The audited financial statements of NYLL and HOJ will be filed not later
than 60 days after the date of the filing of this report. Filed herewith as
Exhibit A is a copy of the Purchase Agreement dated February 10, 1998 for the
transaction described in Item 2, above.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 1, 1998
By: /s/ David Kerzner
Name: David Kerzner
Title: President and CEO
Exhibit A
PARADIGM ADVANCED
TECHNOLOGIES, INC.
120 Carlton Street
Suite 419
Toronto, Canada
4M5A 4K2
Tel. (416) 929-6565
Fax (416) 413-0505
February 10, 1998
TO: Alex Weinberger,
Jennifer Weinberger, and
Eran Ostfeld
(the "Vendors")
AND TO: Gropper, Greenwood (the "Escrow Agent")
RE: The Purchase from the Vendors of all of the secured debt and
all of the share capital of North York Leasing Limited ("NYLL")
This letter summarizes the basis on which Paradigm Advanced Technologies, Inc.
("Paradigm") is prepared to purchase from the Vendors:
a) all of the issued and outstanding shares in the capital of NYLL (the
"NYLL Shares"), being 50 Class A shares registered in the name of and
beneficially held by Eran Ostfeld and 50 Class A shares registered in
the name of and beneficially held by Alex Weinberger; and
b) all of the indebtedness of NYLL to the Vendors, including the security
therefor (the "NYLL Secured Debt").
1. Closing Date. The closing of the transactions set out herein shall take
place on February 11, 1998 or such later date as the parties agree (the "Closing
Date").
2. Purchase Price. Subject to Sections 3 and 4 hereof, the Purchase Price
for the NYLL Shares and the NYLL Secured Debt shall be 3,720,000 shares of
common stock of Paradigm to be issued to the Escrow Agent or as the Escrow Agent
directs, in accordance with a share distribution agreement of even date herewith
(the "Distribution Agreement").
3. Paradigm Shares. The shares to be issued to the Escrow Agent to satisfy
the Purchase Price shall be restricted as follows:
a) 620,000 Paradigm shares shall be unrestricted, but shall be held by
the Escrow Agent and not traded for a period of sixty (60) days from
the Closing Date, on which latter date the shares may be distributed
by the Escrow Agent in accordance with the Distribution Agreement;
b) 620,000 Paradigm shares shall be unrestricted, but shall be held by
the Escrow Agent and not traded for a period of sixty (60) days from
the Closing Date, during which period Paradigm and/or certain
principals thereof shall have the option to purchase all or any of
such shares at a purchase price of $0.25 [US] per share; and
c) 2,480,000 Paradigm shares shall be restricted shares, and may not
be traded by the Vendors for a period of one (1) year from the
Closing Date.
4. Adjustment in Number of Paradigm Shares. The parties acknowledge and
agree that the Purchase Price has been calculated as being equivalent to a cash
purchase price of $930,000.00 [US] - or $0.25 [US] per Paradigm share. To
reflect such determination, if during any one consecutive sixty (60) day trading
period between the day which is sixty (60) days from the Closing Date and the
day which is one (1) year from the Closing Date, the average closing price of
Paradigm shares is less than $0.25 [US] (adjusted if necessary for share splits,
consolidations, etc.), then Paradigm shall issue additional shares of Paradigm
to the Vendors so that the total consideration paid to the Vendors is the
equivalent of $930,000.00 [US]. After the price per share has been established,
Paradigm shall confirm in writing the number of shares issued to each of the
Vendors.
5. Ownership of NYLL Shares. At closing, each of Eran Ostfeld and Alex
Weinberger shall assign, transfer and set over unto Pradigm all of their shares
of NYLL, together with:
a) an instrument of transfer in which each such
shareholder represents and warrants that he owns the
NYLL shares being transferred, free and clear of any
liens, security interests, or encumbrances;
b) a standard corporate opinion of NYLL's counsel
respecting NYLL;
c) a resignation of such person as an officer and/or
director of NYLL; and
d) a certified copy of a resolution of the sole director
of NYLL authorizing the share transfer.
6. Ownership of NYLL Secured Debt. At closing, each of the Vendors shall
assign, transfer and set over unto Paradigm, all of the indebtedness of NYLL to
such Vendors, along with the security of each such Vendor in the property and
undertaking of NYLL securing such indebtedness, together with:
a) a representation and warranty of each such Vendor that
the amounts of indebtedness and the summary of security
for such indebtedness set out in the schedules hereto
accurately describe the NYLL Secured Debt; and
b) an opinion of NYLL's counsel as to the registration of
such security under the Personal Property Security Act
(Ontario).
7. Paradigm Shares. At closing, Paradigm shall issue to the Escrow Agent,
3,720,000 Paradigm shares, together with:
a) an opinion from Paradigm's U.S. counsel stating that
such shares have been validly issued;
b) a resolution of the directors of Paradigm authorizing
the transaction and issuing the 3,720,000 Paradigm
shares; and
c) an undertaking from Paradigm and David Kerzner
respecting the registration of such shares by way of a
registration statement within 60 days of the Closing
Date.
8. Acknowledgment Re: Insolvency. Paradigm acknowledges and confirms that
it has been advised that:
a) NYLL is insolvent;
b) NYLL availed itself of the protection offered by the Bankruptcy and
Insolvency Act (Canada) on December 10, 1997 by filing a Notice of
Intention to Make a Proposal to its creditors, which proposal (by
Court Order dated January 9, 1998) must be filed by no later than
February 13, 1998; and
c) if such proposal is not accepted by NYLL's creditors,
NYLL will be deemed to be bankrupt as of the day that
such proposal is rejected.
9. Conditions of Transaction. The completion of this transaction shall be
conditional upon the closing of the following transactions at the same time on
the Closing Date:
a) the transfer by Eran Ostfeld, Alex Weinberger and the
Escrow Agent of Paradigm shares in accordance with the
Distribution Agreement;
b) the receipt by Eran Ostfeld and Alex Weinberger of
full and final releases from the HOJ Franchise Systems
Limited secured creditors and Gropper, Greenwood (as
agents or trustees for loans to Alex Weinberger
and Eran Ostfeld) of claims of such parties against Alex
Weinberger and/or Eran Ostfeld;
c) a full and final settlement of the outstanding claims
from and against Ancona Inc.;
d) the purchase by Paradigm of all of the receiver's
right, title and interest in and to the assets of HOJ
Franchise Systems Ltd. (other than the receiver's
interest in the December 31, 1995 trademark licensing
agreement); and
e) the execution by Ancona Inc. and Paradigm of a new
licensing agreement respecting the HOJ trade marks to
Paradigm.
Yours very truly,
PARADIGM ADVANCED
TECHNOLOGIES, INC.
Per: /s/David Kerzner
David Kerzner,
President and CEO
We hereby agree to and accept the foregoing terms.
/s/ Alex Weinberger Date:February 10, 1998
Alex Weinberger
/s/ Jennifer Weinberger Date:February 10, 1998
Jennifer Weinberger
/s/ Eran Ostfeld Date:February 10, 1998
Eran Ostfeld
GROPPER, GREENWOOD
Per: /s/ Bernie Gropper Date:February 10, 1998