Share Purchase Agreement
THIS AGREEMENT made and effective as of July 31, 2000
B E T W E E N:
SYMPHONY TELECOM INC., a corporation incorporated under the
laws of the Province of Ontario, having its principal place
of business at 347 Bay Street, Suite 500, Toronto, Ontario
M5H 2R7
(the "Purchaser")
- and -
TELEMAX COMMUNICATIONS INC., a corporation incorporated
under the laws of the Province of Ontario with its
principal place of business at 231 Millway Avenue, Suite
17, Concord, Ontario L4K 3W7
(the "Corporation")
WHEREAS the Corporation wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Corporation 307,500 common shares in the capital
stock of the Corporation (the "Purchased Shares") from the Corporation's
treasury;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants,
agreements, warranties and payments herein set out and provided for, the parties
hereto covenant and agree as follows:
Article 1
Purchased Shares and Purchase Price
1.1 Subject to the terms and conditions hereof, the Corporation agrees to
sell from its treasury to the Purchaser and the Purchaser agrees to
purchase from the Corporation the Purchased Shares.
1.2 The consideration payable by the Purchaser to the Corporation for the
Purchased Shares shall be the sum of $4,000,000 (CDN) shall be payable
on Closing (as defined below) by certified cheque or bank draft.
1.3 The portion of the purchase price referred to in Section 1.2(a) above
shall be set-off in its entirety against the amount of $4,000,000 to be
advanced by the Corporation to the Purchaser and its parent, Symphony
Telecom International Inc. pursuant to a promissory note dated evenly
herewith.
Article 2
Representations and Warranties of the Corporation
2.1 The Corporation 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:
(a) The Corporation has been duly incorporated and is organized,
validly subsisting and in good standing under the laws of the
Province of Ontario.
(b) The Corporation is duly qualified as a corporation to do
business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the property
owned or leased by it makes such a qualification necessary.
(c) The authorized capital of the Corporation prior to issuance of
the Purchased Shares consists of an unlimited number of common
shares of which 692,500 shares have been duly issued and are
outstanding as fully paid and non-assessable as follows:
Name of Shareholder Number of Common Shares
Vakili 150,675
Manucher 110,700
Farshid 46,125
Purchaser 307,500
(d) No person, firm or corporation has any agreement or option, or
any right or privilege capable of becoming an agreement or
option for the purchase from the Corporation of any of the
shares.
(e) No person, firm or corporation has any agreement or option or
any right or privilege capable of becoming an agreement,
including convertible securities, warrants or convertible
obligations of any nature, for the purchase, subscription,
allotment or issuance of any of the unissued shares in the
capital of the Corporation or of any securities of the
Corporation.
(f) The sales revenue of the Corporation for its 2000 fiscal year
was approximately $9,600,000 (CDN).
(g) The sales revenue of the Corporation for its 2001 fiscal year
is projected to be $15,000,000 to $18,000,000 (CDN).
(h) The Corporation's outstanding debt to its bank is
approximately $300,000.
(i) The Corporation's assets include 1 switch at 151 Front Street,
6th Floor, Toronto, Ontario, and 2 workstations, an accounting
network, miscellaneous software licenses, a complete graphics
system with work stations and associated software, a die cut
system and a scratch off system, all located at 231 Millway
Avenue, Suite 17, Concord, Ontario.
(j) The books and records of the Corporation fairly and correctly
set out and disclose in all material respects, in accordance
with generally accepted accounting principles, the financial
position of the Corporation as of the date thereof and all
material financial transactions of the Corporation relating to
its business have been accurately recorded in such books and
records.
(k) The corporate records and minutes of the Corporation contain
complete and accurate minutes of all meetings of the directors
and shareholders of the Corporation held since incorporation
of the Corporation, all such meetings were duly called and
held, the share certificate books, register of shareholders,
register of transfers, and register of directors of the
Corporation are complete and accurate.
(l) There are no actions, suits, proceedings, investigations or
claims now threatened or pending against the Corporation in
respect of taxes, governmental charges or assessments, or any
matters under discussion with any governmental authority
relating to taxes, governmental charges or assessments
asserted by any such authority.
(m) The Corporation has no loans or indebtedness outstanding which
have been made to directors, former directors, officers,
shareholders and/or employees of the Corporation or to any
person or corporation not dealing at arms length with any of
the foregoing.
(n) The Corporation has good and marketable title to its assets,
free and clear of any and all claims, liens, encumbrances and
security interests whatsoever, with the exception of claims,
liens, encumbrances and security interests granted in favour
of lenders relating to debts which are reflected in the
Corporation's financial statements.
(o) The Corporation has duly and timely filed all tax returns
required to be filed by it and has paid all taxes which are
due and payable, and has paid all assessments and
reassessments, and all other taxes, governmental charges,
penalties, interest and fines due and payable by it on or
before the date hereof.
(p) The Corporation is not in default or breach of any contracts
or agreements (written or oral), or 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, indentures or other instruments are now in good
standing and the Corporation is entitled to all benefits
thereunder except as otherwise disclosed herein. The
Corporation is under no obligation in respect of its business
which the Corporation cannot reasonably be expected to fulfill
in the ordinary course of its business.
2.2 The covenants, representations and warranties of the Corporation
contained in this Agreement and contained in any document 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, or any investigation made by or on behalf
of the Purchaser, shall continue in full force and effect for the
benefit of the Purchaser for a period of five (5) years following
closing of the transaction provided for herein after which time the
Corporation shall be released from all obligations and liabilities
hereunder in respect of such representations and warranties except with
respect to any claims made by the Purchaser in writing prior to the
expiration of such period.
Article 3
Indemnification
3.1 The Corporation agrees to indemnify and save harmless the Purchaser of
and from any loss whatsoever arising out of, under or pursuant to:
(a) any material loss suffered by the Purchaser as a result of any
breach or inaccuracy of representation, warranty or covenant
contained in this Agreement; and
(b) all claims, demands, costs and expenses reasonably incurred in
respect of the foregoing.
Article 4
Closing Arrangements
4.1 The closing shall take place at 4:00 p.m. on September 29, 2000 at the
offices of Lafleur Brown counsel for the Corporation.
4.2 Each of the parties hereto will from time to time at the other's
request and expense and without further consideration, execute and
deliver such other instruments of transfer, conveyance and assignment
and take such further action as the other may require to more
effectively complete any matter provided for herein.
4.3 Each party represents and warrants to each other party that, except as
otherwise expressly provided in this Agreement, no other party will be
liable for any brokerage commission, finder's fee or other like payment
in connection with the transactions contemplated hereby because of any
action taken by, or agreement or understanding reached by, the first
party.
4.4 The Purchaser shall have the right, prior to Closing, to have an
auditing firm, Anderson, Quick & Fernival, to audit the books and
records of the Corporation, provided that (i) all costs and expenses of
such auditing firm shall be borne by the Purchaser, and (ii) the
Corporation shall in no way be responsible or liable to the Purchaser
or any third party for any negligence or wrongful conduct of such
auditors.
4.5 Any notice, direction or instrument required or permitted to be given
hereunder shall be in writing and may be given by mailing the same
postage prepaid or delivering the same addressed to the such party at
its address first above mentioned. Any notice, direction or other
instrument aforesaid, if delivered shall be deemed to have been given
or made on the date on which it was delivered or it mailed shall be
deemed to have been given or made on the third business day following
the day on which it was mailed. The Parties may change their addresses
for service from time to time by notice given in accordance with the
foregoing.
4.6 Time shall be of the essence of this Agreement.
4.7 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.
4.8 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.
4.9 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.
4.10 The parties acknowledge that the recitals herein are true and correct
in all material respects.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.
SYMPHONY TELECOM INC.
Per: /s/ Daniel G. Cullen
--------------------------
Name: Dan Cullen
Title: President
TELEMAX COMMUNICATIONS INC.
Per: /s/ Ali Vakili
--------------------------
Name: Ali Vakili
Title: President