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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT dated this 27th day of September, 2002, is made
BETWEEN:
RITA BENSON, an individual resident in the Province of Ontario ("Benson");
BROOKELYNN HOLDINGS INC., a corporation incorporated pursuant to the laws of the
Province of Ontario ("Brookelynn");
J.R.B. & D. HOLDINGS LTD., a corporation incorporated pursuant to the laws of
the Province of Ontario ("JRB");
WHITEHOUSE FAMILY HOLDINGS LIMITED, a corporation incorporated pursuant to the
laws of the Province of Ontario ("WFHL");
STARR RAMBUSCH, an individual resident in the United States of America
("Rambusch");
W.H. CRAWFORD, an individual resident in the Province of Ontario ("Crawford");
SUSAN WHITE, an individual resident in the Province of Ontario ("White");
PAUL PRENDERGAST, an individual resident in the United States of America
("Prendergast");
788696 ONTARIO INC., a corporation incorporated pursuant to the laws of the
Province of Ontario ("788696");
KENNETH HARTLEN, an individual resident in the Province of Ontario ("Hartlen");
IAN LONG, an individual resident in the Province of Ontario ("Long");
NORMAN WRIGHT, an individual resident in the Province of Ontario ("Wright");
CAPITAL PARTNERS FUND I, a limited partnership formed under the laws of the
Province of Ontario ("CPFI");
ANDREW WHITE, an individual resident in the Province of Ontario ("Andrew");
CHRISTOPHER PRENDERGAST, an individual resident in the Province of Ontario
("Christopher");
PROJECT CAPITAL GROUP INC., a corporation incorporated pursuant to the laws of
the Province of Ontario ("PCGI");
1309673 ONTARIO INC., a corporation incorporated pursuant to the laws of the
Province of Ontario ("1309673");
(the foregoing 17 parties being hereinafter referred to collectively as the
"Stockholders")
- -and-
KOALA INTERNATIONAL WIRELESS INC., a corporation incorporated under the laws of
the State of Nevada (the "Purchaser")
- -and-
ROUTE1 CORPORATION, a corporation incorporated under the laws of the Province of
Ontario (the "Acquired Corporation")
WHEREAS the Stockholders are the registered and beneficial owners of all of the
issued and outstanding common shares of capital stock (the "Acquired Corporation
Common Stock") of the Acquired Corporation;
AND WHEREAS the Purchaser desires to purchase all of the Acquired Corporation
Common Stock from the Stockholders and the Stockholders desire to sell the
Acquired Corporation Common Stock to the Purchaser;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the mutual
covenants hereinafter contained and provided for and other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged by
the Parties), the Parties agree as follows:
ARTICLE I
INTERPRETATION
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1.1 DEFINITIONS. In this Agreement, unless the context otherwise requires,
the terms set forth in Schedule "A" shall have the meanings set forth therein.
1.2 ENTIRE AGREEMENT. This Agreement, together with the agreements and other
documents to be delivered pursuant to this Agreement, constitutes the entire
agreement between the Parties pertaining to the purchase and sale of the
Acquired Corporation Common Stock and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, and there
are no warranties, representations and other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth in
this Agreement or any other agreement or document to be delivered pursuant to
this Agreement.
1.3 EXTENDED MEANINGS. In this Agreement, words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders.
1.4 HEADINGS. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.5 REFERENCES. References to an article, section, subsection, paragraph,
schedule or exhibit shall be construed as references to an article, section,
subsection, paragraph, schedule or exhibit to this Agreement, unless the context
otherwise requires.
1.6 GOVERNING LAW. This Agreement shall be governed and construed in
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accordance with the laws of the Province of Ontario and the laws of Canada
applicable in that Province.
1.7 CURRENCY. Unless otherwise specified, the word "dollar", or the symbol
"$" refers to Canadian currency.
1.8 SCHEDULES. The following is a list of schedules attached to and
incorporated into this Agreement by reference and deemed as part of this
Agreement.
SCHEDULE DESCRIPTION
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"A" Definitions
"B" The Stockholders' Shareholdings
"C" Outstanding Special Warrants of the Acquired
Corporation
"D" Outstanding Options of the Acquired Corporation
"E" Outstanding Options of the Purchaser
ARTICLE II
PURCHASE AND SALE
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2.1 AGREEMENT TO PURCHASE AND SELL. On the basis of the representations,
warranties, covenants and agreements contained in this Agreement and subject to
the terms and conditions of this Agreement, the Stockholders shall sell and the
Purchaser shall purchase all of the Acquired Corporation Common Stock as of and
with effect from the Closing Time on the Closing Date.
2.2 PURCHASE PRICE. The consideration for the purchase of the Acquired
Corporation Common Stock shall consist of approximately 6,000,000 common stock
of the Purchaser from treasury (the "Purchaser Common Stock"), issued to the
Stockholders on Closing pro rata in accordance with their respective
shareholdings in the Acquired Corporation as set out in Schedule "B".
2.3 OUTSTANDING WARRANTS. All outstanding warrants of the Acquired
Corporation as set out in Schedule "C".
2.4 OUTSTANDING OPTIONS. All outstanding options of the Acquired
Corporation as set out in Schedule "D" shall be cancelled at Closing.
2.5 SECURITIES LAW EXEMPTIONS. The issuance of the Purchaser Common Stock
will be made in reliance upon the exemptions from prospectus and registration
requirements set out in section 72(1)(j) of the Securities Act (Ontario) and in
the Securities Act of 1933 (U.S.), namely Rule 506 of Regulation D with respect
to the issuance of stock to U.S. residents and/or Regulation S with respect to
shares issued to shareholders residing outside of the United States. The
purchase of the Acquired Corporation Common Stock constitutes a take-over bid
exempt from the take-over bid provisions of the Securities Act (Ontario) by
virtue of 93(1)(d) of said Act.
2.6 ARM'S LENGTH TRANSACTION. The purchase of the Acquired Corporation
Common Stock for Purchaser Common Stock is an arm's length transaction and will
not constitute a "related party transaction" under Rule 61-501 of the Ontario
Securities Commission.
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2.7 RESALE RESTRICTIONS. Each Stockholder understands and agrees that the
Purchaser Common Stock will be issued to the Stockholders under an exemption
from the prospectus requirements in Ontario and an exemption from the
registration statement requirement in the United States, and the Purchaser
Common Stock have not been registered under the Securities Act of 1933 (U.S.) as
amended, under the Securities Act (Ontario), or under any other securities laws.
Accordingly, each Stockholder may not sell or otherwise dispose of the Purchaser
Common Stock in the absence of compliance with applicable securities laws, and
each Stockholder understands that the Purchaser Common Stock being issued to the
Stockholders will be restricted securities subject to Rule 144 of the Securities
Act of 1933 (U.S.) as amended and may be subject to a resale restriction for an
indefinite period of time in Ontario. For greater certainty, each Stockholder
understands and agrees that:
(a) he is acquiring Purchaser Common Stock for his own account (and not for the
account of others) for investment and not with a view to the distribution
thereof, and he may not sell or otherwise dispose of the Purchaser Common
Stock without either filing a registration statement under the Securities
Act of 1933 (U.S.) as amended, filing a prospectus under the Securities Act
(Ontario), or an exemption therefrom, and the certificate or certificates
representing such shares may contain a legend to the foregoing effect;
(b) by virtue of his position, each Stockholder has access to the kind of
financial and other information about the Purchaser as would be contained
in a registration statement filed under the Securities Act of 1933 (U.S.)
as amended and in a prospectus under the Securities Act (Ontario); and
(c) he will indemnify and hold the Purchaser harmless from all liability
imposed upon the Purchaser by reason of any sale, pledge, transfer or other
dealing with the Purchaser Common Stock by the Stockholder in such
circumstances as to make the issuance of Purchaser Common Stock under this
Agreement no longer a transaction exempt from the registration requirements
of the Securities Act of 1933, as amended, any applicable state securities
laws, or the Securities Act (Ontario).
2.8 SECTION 116 TAX CERTIFICATE. In the event that a Stockholder is a
non-resident of Canada within the meaning of section 116 of the Income Tax Act
(Canada), such Stockholder shall either obtain a section 116 clearance
certificate from the Canadian Customs and Revenue Agency or agrees to the
Purchaser withholding and remitting such number of Purchaser Common Stock as
necessary to comply with Part XIII of the Income Tax Act (Canada).
ARTICLE III
FURTHER COVENANTS
-----------------
3.1 DUE DILIGENCE REVIEW. During the Interim Period, each of the Acquired
Corporation and the Purchaser shall each:
(a) allow all each other and their representatives full and free access during
normal business hours to their corporate minute books and records,
including contracts and share registers, personnel, properties and other
documents and data;
(b) provide to each other and their representatives copies of all such
contracts, books, records and other existing documents and data as such
Parties or their representatives may reasonably request;
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and
(c) provide to each other and their representatives such other information
about themselves as such Parties or their representatives may reasonably
request;
(collectively, the "Due Diligence Review"), provided that such Due Diligence
Review shall be completed on or before the Closing Date.
3.2 BUSINESS IN THE ORDINARY COURSE. From the date hereof until the Closing
(the "Interim Period"), each of the Acquired Corporation and the Purchaser shall
continue to carry on its business in the ordinary course. Each of the Acquired
Corporation and the Purchaser shall not sell or pledge any of its properties or
other assets, issue any shares or enter into any transac-tions outside the
ordinary course of its business.
3.3 PUBLICITY. The Parties agree to keep confidential all negotiations with
respect to the transactions contemplated between the parties herein, save and
accept for such disclosure as may be required by any applicable securities
legislation or regulatory authorities. For greater certainty, it is anticipated
that the Purchaser will issue a press release to announce the execution of this
Agreement and the Closing, and both the Purchaser and the Acquired Corporation
must approve the language on such press releases prior to their dissemination to
the public.
3.4 LOCK-UP. From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Acquired Corporation and the Stockholders
shall not solicit or enter into any negotiations or agreements with any Person
other than the Purchaser with a view to the acquisition of the Acquired
Corporation Common Stock by any Person other than the Purchaser.
3.5 REGISTRATION RIGHTS. The Purchaser shall use its best efforts to
register the Purchaser Common Stock (the "Registrable Securities") with the
Securities and Exchange Commission ("SEC") in the United States, subject to
compliance with the Securities Act of 1933 (United States) as amended (the "US
Securities Act"), for resale within 180 days (the "Registration"). In
connection with the Registration, the Purchaser shall:
(a) prepare and file a registration statement or similar document (a
"Registration Statement") with the SEC in respect of the Registrable
Securities and cause such Registration Statement to become effective within
180 days from the date of this Agreement and remain effective until the
earlier of such time as all the Registrable Securities subject to such
Registration Statement have been disposed of or the expiration of one year;
(b) prepare and file with the SEC such amendments and supplements to such
Registration Statement used in connection therewith as may be necessary to
keep such Registration Statement effective and to comply with the
provisions of the US Securities Act in respect of the sale or other
disposition of all the Registrable Securities covered by such Registration
Statement until the earlier of such time as all of such Registrable
Securities have been disposed of or the expiration of one year;
(c) furnish to the Stockholders such number of copies of the Registration
Statement in conformity with the requirements of the US Securities Act and
each amendment or supplement thereto, together with such other documents as
the Stockholders may reasonably request;
(d) otherwise comply with all applicable rules and regulations of the SEC, and
make available to its security holders, as soon as practicable, an earnings
statement covering the period of at least twelve months, beginning with the
first month after the effective date of such Registration Statement, which
earnings statement will satisfy the provisions of Section 11(a) of the US
Securities Act;
(e) provide and cause to be maintained a transfer agent and registrar for the
Registrable Securities covered by the Registration Statement from and after
a date not later than the effective date of such Registration Statement;
and
(f) during the period when the Registration Statement is required to be
effective, notify the Stockholders of the occurrence of any event, the
result of which will cause the prospectus included in the Registration
Statement to contain an untrue statement of a material fact or to omit to
state any material fact required to be stated therein or must be disclosed
to make the statements therein not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact of omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
The Purchaser shall bear all expenses arising or incurred in connection with any
of the transactions contemplated by this section, including without limitation:
(a) all expenses in respect of filing with the SEC, OTCBB, any securities
exchange or the National Association of Securities Dealers, Inc.; (b)
registration fees; (c) printing expenses; (d) accounting and legal fees and
expenses (but excluding the fees and expenses of any accountants or legal
counsel engaged by the Stockholders); (e) expenses of any special audits or
comfort letters incidental to or required by the Registration; and (f) expenses
in respect of complying with securities laws of any jurisdiction in connection
with the Registration.
3.6 DIRECTORS' ROLLOVER. On or before the Closing, one (1) of the current
directors of the Purchaser and all of the officers of the Purchaser shall
deliver their resignations to the Acquired Corporation, together with
comprehensive releases from each such person of any and all their actions,
claims, liabilities, debts, causes of action, obligations and demands against
the Purchaser. The board of directors of the Purchaser following completion of
the Transaction shall consist of five (5) directors, three (3) of which shall be
nominees of the Acquired Corporation.
3.7 CHANGE OF NAME. Following the Closing, the Purchaser shall change its
name to "Route 1 Corporation" or to such other name as the directors of the
Purchaser and the relevant regulatory authority consider appropriate.
3.8 EXPENSES OF THE TRANSACTION. Except for costs and expenses of any
accountants, legal counsel or other professional advisor engaged by the
Stockholders, the Purchaser shall bear all expenses arising or incurred in
connection with the Transaction including without limitation, all costs and
expenses incurred by the Parties in respect of the Transaction whether incurred
prior to, on or after Closing. For further certainty, the Purchaser shall be
responsible for all such expenses even if the Transaction is not completed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each Stockholder
represents and warrants to the Purchaser as follows and acknowledges that the
Purchaser is relying on these representations and warranties in entering into
this Agreement and performing its obligations under the same:
(a) CAPACITY AND AUTHORITY- The Stockholder has full power, right and
------------------------
authority to own the Acquired Corporation Common Stock, enter into this
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Agreement and to perform his obligations under it. If an individual, the
Stockholder has attained the age of majority. If not an individual, the
Stockholder has been duly formed and is validly existing under the laws of its
jurisdiction of incorporation or organization, and execution and delivery of
this Agreement by the Stockholder and the Stockholder's performance of its
obligations hereunder have been duly authorized by all necessary proceedings of
the directors, shareholders, trustees, beneficiaries, partners or members of the
Stockholder, and the individual signing this Agreement on behalf of the
Stockholder has the authority to do so and to bind the Stockholder by his
signature.
(b) TITLE TO ACQUIRED CORPORATION COMMON STOCK - The Stockholder is the sole
------------------------------------------
legal and beneficial owner of the Acquired Corporation Common Stock set out
opposite his name in Schedule "B" hereto with good and marketable title thereto,
free and clear of any Encumbrances other than Permitted Encumbrances.
(c) NO OPTION - Except as set out in this Agreement, no Person has any
----------
agreement, warrant, option or right, or a right capable of becoming an agreement
for, the purchase of the Stockholder's Acquired Corporation Common Stock.
(d) ABSENCE OF CONFLICT - The Stockholder is not a party to, bound or
---------------------
affected by any agreement which would be violated, breached or terminated by, or
which would result in creation or imposition of any Encumbrance upon any of the
Acquired Corporation Common Stock as a consequence of the execution and delivery
of this Agreement or the consummation of the transactions contemplated in this
Agreement. The consummation of transactions contemplated herein do not and will
not conflict with, or result in a breach of, or constitute a default under the
terms or conditions of any Constating Documents of the Stockholder (if not an
individual), any court or administrative order or process, any agreement or
instrument to which the Stockholder is party or by which it is bound.
(e) RESIDENCE - The Stockholder is either:
---------
(i) not a non-resident of Canada within the meaning of section 116 of the Income
Tax Act (Canada); or
(ii) is a non-resident of Canada within the meaning of section 116 of the Income
Tax Act (Canada) and has either applied for a clearance certificate from the
Canadian Customs and Revenue Agency or agrees to the Purchaser withholding and
remitting such number of Purchaser Common Stock as necessary to comply with Part
XIII of the Income Tax Act (Canada).
(f) BINDING AGREEMENT - This Agreement constitutes a legal, valid and
------------------
binding obligation of the Stockholder enforceable against the Stockholder in
accordance with its terms except as may be limited by laws of general
application affecting the rights of creditors.
(g) BANKRUPTCY / LIQUIDATION - No proceedings have been taken, are pending
--------------------------
or have been authorized, and no receiver or trustee has been appointed for the
Stockholder by the Stockholder or by any other person in respect to the
bankruptcy, insolvency, liquidation, dissolution or winding up of the
Stockholder.
(h) LITIGATION - There are no judgments, decrees, injunctions, rulings or
----------
orders of any court, arbitrator, federal, provincial, state, municipal or other
governmental authority, department, commission, board, bureau or agency, or any
actions, suits, grievances or proceedings (whether or not on behalf of the
7
Stockholder) commenced, pending or threatened against or relating to the
Stockholder which may result in the imposition of a Encumbrance on the Acquired
Corporation Common Stock owned by the Stockholder or which may prevent, delay,
make illegal or otherwise interfere with the consummation by the Stockholder of
the transactions contemplated in this Agreement.
(i) NONDISTRIBUTIVE INTENT - Each Stockholder is acquiring the shares of
-----------------------
Purchaser Common Stock to be issued hereunder to him for his own account (and
not for the account of others) for investment and not with a view to the
distribution thereof.
(j) FULL DISCLOSURE - Neither this Agreement nor any document to be
----------------
delivered by Andrew and Christopher (the "Active Stockholders) nor any
certificate, report, statement or other document furnished by the Active
Stockholders in connection with the negotiation of this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
4.2 REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED CORPORATION. The Acquired
Corporation represents and warrants to the Purchaser as follows and acknowledges
that the Purchaser is relying on these representations and warranties in
entering into this Agreement and performing its obligations under the same:
(a) DUE INCORPORATION - The Acquired Corporation is a corporation duly
------------------
incorporated and validly existing under the laws of the Province of Ontario.
(b) CAPACITY TO ENTER AGREEMENT- The Acquired Corporation has all necessary
----------------------------
power, authority and capacity to enter into this Agreement and perform its
obligations hereunder.
(c) DUE CORPORATE AUTHORIZATION - The Acquired Corporation's execution and
-----------------------------
delivery of this Agreement and its performance of its obligations hereunder have
been duly authorized by all necessary proceedings of the directors and
shareholders of the Acquired Corporation.
(d) BINDING OBLIGATION - This Agreement has been duly executed and delivered
------------------
by the Acquired Corporation and constitutes a valid and binding obligation on
its part.
(e) CAPACITY TO CARRY ON BUSINESS- The Acquired Corporation has all
---------------------------------
necessary power, authority and capacity to carry on the business currently
carried on by it and to own the assets currently owned by it. The Acquired
Corporation has obtained all permits, certificates, approvals, registrations and
licenses which are required for the operation of its business as it is presently
being conducted, and no violations thereof have been experienced, noted, or
recorded, and no proceeding is pending or threatened to revoke or limit any of
them.
(f) TITLE TO ASSETS - The Acquired Corporation is the sole legal and
-----------------
beneficial owner of its assets, as disclosed in its books, records and financial
statements, with good and marketable title thereto free and clear of any
Encumbrances.
(g) CONSTATING DOCUMENTS - The articles of incorporation of the Acquired
---------------------
Corporation have not been altered since the incorporation of the Acquired
Corporation except as disclosed in the minute books of the Acquired Corporation.
(h) CORPORATE RECORDS - All material transactions of the Acquired
------------------
Corporation have been promptly and properly recorded or filed in or with its
--
respective books and records, and the minute books of the Acquired Corporation
8
contain all records of the meetings and proceed-ings of shareholders and
directors thereof.
(i) FINANCIAL STATEMENTS - The Acquired Corporation's financial statements
---------------------
for its most recently completed fiscal year and its most recently completed
fiscal period are substantially true and correct in every material respect and
present fairly the financial position of the Acquired Corporation and the
results of its operations for the periods then ended, in accordance with
Canadian generally-accepted accounting principles applied on a consistent basis.
(j) BUSINESS IN ORDINARY COURSE - Since the end of the most recent period
------------------------------
reported on in the Acquired Corporation's financial statements, the Acquired
Corporation has carried on its business in the ordinary course of business and
there have been no material adverse changes in its business or assets.
(k) LIABILITIES - The Acquired Corporation has no liabilities which are not
-----------
disclosed or reflected in the Acquired Corporation's financial statements,
except those incurred in the ordinary course of business since the end of the
last fiscal period reported on in the Acquired Corporation's financial
statements, which additional liabilities do not exceed $30,000.00. The Acquired
Corporation has not guaranteed, or agreed to guarantee, any debt, liability or
other obligation of any Person.
(l) SHARE CAPITAL - The authorized share capital of the Acquired Corporation
-------------
consists of an unlimited number of common shares, an unlimited number of special
shares and no other shares, of which 1,287,976 common shares and none of the
special shares are issued and outstanding.
(m) DUE ISSUANCE - The Acquired Corporation Common Stock have been validly
-------------
authorized, validly issued, fully paid and non-assessable, and is owned of
record and beneficially by the Stockholders in the case of the Acquired
Corporation in accordance with Schedule "B".
(n) NO OPTION - Except as disclosed in this Agreement, no Person, other the
----------
Purchaser under this Agreement, has any agreement, warrant, option or any right
capable of becoming an agreement, warrant, option or right for the purchase of
any of further shares of the Acquired Corporation or securities convertible into
shares of the Acquired Corporation.
(o) SUBSIDIARIES- The Acquired Corporation does not own, directly or
------------
indirectly, any shares or interest in any other Person.
(p) ABSENCE OF CONFLICT - The Acquired Corporation is not a party to, bound
--------------------
or affected by any agreement which would be violated, breached or terminated by,
or which would result in creation or imposition of any Encumbrance upon any of
the Acquired Corporation Common Stock as a consequence of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
in this Agreement. The consummation of transactions contemplated herein do not
and will not conflict with, or result in a breach of, or constitute a default
under the terms or conditions of any constating documents or by-laws of the
Acquired Corporation, any court or administrative order or process, any
agreement or instrument to which the Acquired Corporation is party or by which
it is bound.
(q) REGULATORY APPROVALS - No governmental or regulatory authorization,
---------------------
approval, order, consent or filing is required on the part of the Acquired
Corporation in connection with the execution, delivery and performance of this
9
Agreement and the performance of the Acquired Corporation's obligations under
this Agreement.
(r) NO BANKRUPTCY - No proceedings have been taken, are pending or
--------------
authorized by the Acquired Corporation or by any other person in respect to the
-
bankruptcy, insolvency, liquidation, dissolution or winding up of the Acquired
Corporation.
(s) LITIGATION - There are no judgements, decrees, injunctions, ruling or
----------
orders of any court, Governmental Authority or arbitration, or any actions,
suits, grievances or proceedings (whether or not on behalf of the Acquired
Corporation) pending or threatened against the Acquired Corporation which may
materially increase the Acquired Corporation's liabilities other than an action
commenced against the Acquired Corporation by Dr. Steven Small which has been
disclosed to the Purchaser.
(t) TAXES - The Acquired Corporation is not now and at the Closing Date will
-----
not be in arrears or in default in respect of the filing of any required
federal, provincial or municipal tax or other return, and to the best of the
Acquired Corporation's knowledge, no such return contains any mis-statement or
conceals any statement that should have been included thereinThe Acquired
Corporation has paid and will pay all taxes, filing fees and other assessments
due and payable or collectable. The Acquired Corporation has withheld and will
withhold up to the Closing Date from each payment made to any employee the
amount of all taxes (including but not limited to income tax) and other
deductions required to be withheld therefrom and has paid or will pay such
amounts to the proper tax or other receiving authority.
(u) QUESTIONABLE PAYMENTS - Neither Acquired Corporation, any Subsidiary,
----------------------
any director, officer, agent, employee, or other person associated with or
acting on behalf of Acquired Corporation or any Subsidiary, nor any Stockholder
has, directly or indirectly: used any corporate funds for unlawful
contributions, gifts; entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; established or maintained any unlawful or unrecorded
fund of corporate monies or other assets; made any false or fictitious entry on
the books or records of Acquired Corporation or any Subsidiary, made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment; given
any favour or gift which is not deductible for federal income tax purposes; or
made any bribe, kickback, or other payment of a similar comparable nature,
whether lawful or not, to any person or entity , private or public, regardless
of form, whether in money, property, or services, to obtain favourable treatment
in securing business or to obtain special concessions, or to pay for favourable
treatment for business secured or for special concessions already obtained.
(v) FULL DISCLOSURE - Neither this Agreement nor any document to be
----------------
delivered by the Acquired Corporation nor any certificate, report, statement or
other document furnished by the Acquired Corporation in connection with the
negotiation of this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading. There has been no
event, transaction or information that has come to the attention of the Acquired
Corporation that has not been disclosed to the Purchaser in writing that could
reasonably be expected to have a material adverse effect on the assets,
business, earnings, prospects, properties or condi-tion (financial or otherwise)
of the Acquired Corporation.
4.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
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represents and warrants to the Stockholders and the Acquired Corporation as
follows and acknowledges that the Stockholders and the Acquired Corporation are
relying on these representations and warranties in entering into this Agreement
and performing their obligations under the same:
(a) DUE INCORPORATION - The Purchaser is a corporation duly incorporated and
-----------------
validly existing under the laws of the State of Nevada.
(b) CAPACITY TO ENTER AGREEMENT- The Purchaser has all necessary power,
------------------------------
authority and capacity to enter into this Agreement and perform its obligations
hereunder.
(c) DUE CORPORATE AUTHORIZATION - The Purchaser's execution and delivery of
----------------------------
this Agreement and its performance of its obligations hereunder have been duly
authorized by all necessary proceedings of the directors and stockholders of the
Purchaser.
(d) BINDING OBLIGATION - This Agreement has been duly executed and delivered
------------------
by the Purchaser and constitutes a valid and binding obligation on its part.
(e) ABSENCE OF CONFLICT - The Purchaser is not a party to, bound or affected
-------------------
by any agreement which would be violated, breached or terminated by, or which
would result in creation or imposition of any Encumbrance upon any of the
Purchaser Common Stock as a consequence of the execution and delivery of this
Agreement or the consummation of the transactions contemplated in this
Agreement. The Purchaser's execution of this Agreement and the consummation of
transactions contemplated herein do not and will not conflict with, or result in
a breach of, or constitute a default under the terms or conditions of any
constating documents or by-laws of the Purchaser, any court or administrative
order or process, any agreement or instrument to which the Purchaser is party or
by which it is bound.
(f) REPORTING ISSUER STATUS - The Purchaser is a reporting company in the
-------------------------
United States under the Securities Exchange Act of 1934 (United States) and is
not in default under the provisions of the said Act or the regulations, rules
and policies promulgated thereunder, but is not a "reporting issuer" in any
province of territory of Canada, as that term is defined in the Securities Act
(Ontario) (the foregoing state of affairs being hereinafter known as the
"Reporting Issuer Status"). The Purchaser has made all filings with the
Securities and Exchange Commission (United States) that it has been required to
make under the Securities Exchange Act of 1934 (United States) and the
Securities Act of 1933 (United States) (collectively, the "Public Reports").
Each of the Public Reports has complied with the Securities Exchange Act of 1934
(United States) and the Securities Act of 1933 (United States), as applicable,
in all material respects. None of the Public Reports, as of their respective
dates, contain any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they are made, false or misleading.
(g) LISTING STATUS - The common stock of the Purchaser are listed or quoted
---------------
for trading on the NASD Over-the-Counter Bulletin Board ("OTCBB") under the
symbol "KIWI". The Purchaser is in good standing with the OTCBB and is not in
default under any of its rules, policies or by-laws (the foregoing state of
affairs being hereinafter known as the "Listing Status").
(h) CONSTATING DOCUMENTS - The articles of incorporation of the Purchaser
---------------------
have not been altered since the incorporation of the Purchaser except as
disclosed in the minute books of the Purchaser.
(i) CORPORATE RECORDS - All material transactions of the Purchaser have been
-----------------
11
promptly and properly recorded or filed in or with its respective books and
records, and the minute books of the Purchaser contain all records of the
meetings and proceed-ings of shareholders and directors thereof.
(j) FINANCIAL STATEMENTS - The Purchaser's financial statements for its most
--------------------
recently completed fiscal year and its most recently completed fiscal period are
substantially true and correct in every material respect and present fairly the
financial position of the Purchaser and the results of its operations for the
periods then ended, in accordance with U.S. generally-accepted accounting
principles applied on a consistent basis.
(k) BUSINESS IN ORDINARY COURSE - Since the end of the most recent period
------------------------------
reported on in the Purchaser's financial statements, the Purchaser has carried
on its business in the ordinary course of business and there have been no
material adverse changes in its business or assets.
(l) ASSETS - The Purchaser has no assets which are not disclosed or
------
reflected in the Purchaser's financial statements.
(m) LIABILITIES - The Purchaser has no liabilities which are not disclosed
-----------
or reflected in the Purchaser's financial statements, except those incurred in
the ordinary course of business since the end of the last fiscal period reported
on in the Purchaser's financial statements, which additional liabilities do not
exceed US$200,000.00. The Purchaser has not guaranteed, or agreed to guarantee,
any debt, liability or other obligation of any Person.
(n) SHARE CAPITAL - The authorized share capital of the Purchaser consists
--------------
of an 100,000,000 common shares having a par value of $0.001 per share, and
20,000,000 preferred shares having a par value of $0.001 per share, of which
13,696,000 common shares are issued and outstanding and no preferred shares are
issued and outstanding.
(o) DUE ISSUANCE - The Purchaser Common Stock have been validly reserved and
------------
allotted for issuance to the Stockholders, and at Closing the Purchaser Common
Stock will be validly issued to the Stockholders as fully-paid and
non-assessable.
(p) NO OPTION - Except as set out in Schedule "E" of this Agreement, no
----------
Person, other the Purchaser under this Agreement, has any agreement, warrant,
option or any right capable of becoming an agreement, warrant, option or right
for the purchase of any of further shares of the Purchaser or securities
convertible into stock of the Purchaser.
(q) SUBSIDIARIES- The Purchaser does not own, directly or indirectly, any
------------
shares or interest in any other Person except for Urbanesque.com Inc., its
wholly-owned subsidiary.
(r) NO BANKRUPTCY - No proceedings have been taken, are pending or
--------------
authorized by the Purchaser or by any other person in respect to the bankruptcy,
-
insolvency, liquidation, dissolution or winding up of the Purchaser.
(s) LITIGATION - There are no judgements, decrees, injunctions, ruling or
----------
orders of any court, Governmental Authority or arbitration, or any actions,
suits, grievances or proceedings (whether or not on behalf of the Purchaser)
pending or threatened against the Purchaser which may materially increase the
Purchaser's liabilities.
12
(w) REGULATORY APPROVALS - Except for filing an 8-K on completion of the
---------------------
Transaction, no governmental or regulatory authorization, approval, order,
consent or filing is required on the part of the Purchaser in connection with
the execution, delivery and performance of this Agreement and the performance of
the Acquired Corporation's obligations under this Agreement.
(t) TAXES - The Purchaser is not now and at the Closing Date will not be in
-----
arrears or in default in respect of the filing of any required federal, state,
provincial or municipal tax or other return, and to the best of the Purchaser's
knowledge, no such return contains any mis-statement or conceals any statement
that should have been included therein. The Purchaser has paid and will pay all
taxes, filing fees and other assessments due and payable or collectable. The
Purchaser has withheld and will withhold up to the Closing Date from each
payment made to any employee the amount of all taxes (including but not limited
to income tax) and other deductions required to be withheld therefrom and has
paid or will pay such amounts to the proper tax or other receiving authority.
(u) NONDISTRIBUTIVE INTENT - The Purchaser is acquiring the Acquired
-----------------------
Corporation Common Stock for his own account (and not for the account of others)
for investment and not with a view to the distribution thereof.
(v) FULL DISCLOSURE - Neither this Agreement nor any document to be
----------------
delivered by the Purchaser nor any certificate, report, statement or other
document furnished by the Purchaser in connection with the negotiation of this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading. There has been no event,
transaction or information that has come to the attention of the Purchaser that
has not been disclosed to the Stockholders and the Acquired Corporation in
writing that could reasonably be expected to have a material adverse effect on
the assets, business, earnings, prospects, properties or condi-tion (financial
or otherwise) of the Purchaser.
4.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement shall survive the Closing until the
expiry of one (1) year from the Closing Date, after which time, if no claim
shall have been made against a Party with respect to any incorrectness or in
breach of any representation or warranty, that Party shall have no further
liability under this Agreement with respect to the representation or warranty.
4.5 CERTIFICATES AND INSTRUMENTS INCLUDED. All statements contained in any
certificate or any instrument delivered by or on behalf of a Party pursuant to
or in connection with the transactions contemplated by this Agreement shall be
deemed to be made by such Party under this Agreement.
13
ARTICLE V
CLOSING
-------
5.1 CLOSING. The Closing shall take place at Toronto, Ontario at the
Closing Time on the Closing Date, subject to the satisfaction of the conditions
set out in sections 5.2 and 5.3 below, in accordance with the procedures set out
in section 5.4 below.
5.2 CONDITIONS FOR THE PURCHASER'S BENEFIT. The Purchaser shall not be
obliged to complete the purchase of the Acquired Corporation Common Stock unless
each of the following conditions shall have been satisfied on or before the
Closing Date:
(a) ACCURACY OF REPRESENTATIONS - The representations and warranties of the
----------------------------
Stockholders and the Acquired Corporation set forth in sections 4.1 and 4.2
above shall be true and correct as of the Closing Date, except as those
representations and warranties may be affected by the occurrence of events or
transactions expressly contemplated and permitted by this Agreement, including,
without limitation, those in the ordinary course of business, and the Purchaser
shall have received a certificate from the Acquired Corporation and the
Stockholders confirming the foregoing.
(b) DUE DILIGENCE REVIEW - The Due Diligence Review shall have been
----------------------
completed to the satisfaction of the Purchaser and its counsel.
(c) PERFORMANCE OF OBLIGATIONS - The Acquired Corporation and the
----------------------------
Stockholders shall have performed all of the obligations hereunder to be
-
performed by them at or prior to the Closing. The Acquired Corporation and the
Stockholders shall not be in breach of any provision of this Agreement.
(d) DELIVERIES - Subject to section 5.2(e) below, the Stockholders shall
----------
have delivered or caused to be delivered to the direction of the Purchaser
possession of the Acquired Corporation Common Stock free and clear of any
Encumbrances, together with all endorsements and documents required to authorize
or give effect to said transfer.
(e) CONSENTS, AUTHORIZATIONS AND REGISTRATIONS - All consents, approvals,
---------------------------------------------
orders and authorizations of, from or notifications to any Persons or
Governmental Authorities required (if any) in connection with the completion of
any of the transactions contemplated by this Agreement, the execution of this
Agreement, the Closing or the performance of any of the terms and conditions of
this Agreement shall have been obtained on or before the Closing Date.
(f) NO CLAIMS - There shall be no injunction or order issued preventing, and
---------
no pending or threatened claim, action, litigation or proceeding, judicial or
administrative, or investigation against any Party by any Governmental Authority
or Person for the purpose of enjoining or preventing the consummation of this
Agreement, or otherwise claiming that this Agreement or the consummation thereof
is improper or would give rise to proceedings under any statute or rule of law.
14
(g) NO MATERIAL CHANGES - During the Interim Period, there shall have been
---------------------
no material adverse change in the busi-ness, assets, or liabilities of the
Acquired Corporation, or in the Acquired Corporation's title to its assets, and
the Acquired Corporation shall not have sold or pledged any assets, issued any
shares or entered into any transac-tions outside the ordinary course of its
businesses.
If any one or more of the foregoing conditions shall not have been fulfilled on
or before the Closing Date, the Purchaser may terminate this Agreement by notice
in writing to the other Parties in which event the Purchaser shall be released
from all obligations under this Agreement and (unless the Purchaser can show
that the condition relied upon could reasonably have been performed by the other
parties) the other Parties shall also be released from all obligations
hereunder; provided, however, that the Purchaser shall be entitled to waive
compliance with any one or more of such conditions in whole or in part if it
shall see fit to do so, without prejudice to their rights of termination in the
event of the non-fulfilment of any other condition in whole or in part.
5.3 CONDITIONS FOR THE STOCKHOLDERS' BENEFIT. The Stockholders and the
Acquired Corporation shall not be obliged to complete the sale of the Acquired
Corporation Common Stock unless each of the following conditions shall have been
satisfied on or before the Closing Date:
(a) ACCURACY OF REPRESENTATIONS - The representations and warranties of the
----------------------------
Purchaser set forth in section 4.3 above shall be true and correct as of the
Closing Date, except as those representations and warranties may be affected by
the occurrence of events or transactions expressly contemplated and permitted by
this Agreement, including, without limitation, those in the ordinary course of
business, and the Stockholders shall have received a certificate from the
Purchaser confirming the foregoing.
(b) DUE DILIGENCE REVIEW - The Due Diligence Review shall have been
----------------------
completed to the satisfaction of the Acquired Corporation and its counsel.
(c) PERFORMANCE OF OBLIGATIONS - The Purchaser shall have performed all of
---------------------------
the obligations hereunder to be performed by it at or prior to the Closing,
including but not limited to the obligation to enter into employment or
consulting agreements with the Stockholders pursuant to section 3.6 above. The
Purchaser shall not be in breach of any provision of this Agreement.
(d) DELIVERIES - Subject to section 5.3(e) below, the Purchaser shall have
----------
delivered or caused to be delivered to the direction of the Stockholders
possession of the Purchaser Common Stock free and clear of any Encumbrances,
together with all endorsements and documents required to authorize or give
effect to said transfer.
(e) CONSENTS, AUTHORIZATIONS AND REGISTRATIONS - All consents, approvals,
---------------------------------------------
orders and authorizations of, from or notifications to any persons or
Governmental Authorities required (if any) in connection with the completion of
any of the transactions contemplated by this Agreement, the execution of this
Agreement, the Closing or the performance of any of the terms and conditions of
this Agreement shall have been obtained on or before the Closing Date.
(f) NO CLAIMS - There shall be no injunction or order issued preventing, and
---------
no pending or threatened claim, action, litigation or proceeding, judicial or
administrative, or investigation against any Party by any Governmental Authority
or Person for the purpose of enjoining or preventing the consummation of this
Agreement, or otherwise claiming that this Agreement or the consummation thereof
is improper or would give rise to proceedings under any statute or rule of law.
15
(g) NO MATERIAL CHANGES - During the Interim Period, there shall have been
---------------------
no material adverse change in the busi-ness, assets, liabilities, Reporting
Issuer Status or Listing Status of the Purchaser, and the Purchaser shall not
have sold or pledged any assets, issued any shares or entered into any
transac-tions outside the ordinary course of its businesses or as contemplated
in this Agreement.
(h) ASSETS AND LIABILITIES - The Purchaser shall have no more than
------------------------
US$150,000 in assets and no liabilities which are not disclosed or reflected in
-
the Purchaser's financial statements, except those incurred in the ordinary
course of business since the end of the last fiscal period reported on in the
Purchaser's financial statements, which additional liabilities do not exceed
US$200,000.00 as of the Closing Date.
(i) DIRECTORS RESIGNATIONS - Pursuant to section 3.6 of this Agreement, one
-----------------------
(1) of the directors of the Purchaser shall have resigned at or prior to Closing
as directors and members of all committees of the Board of Directors of the
Purchaser, and executed comprehensive releases in respect thereof, in writing
effective immediately after Closing. All officers of the Purchaser shall have
resigned and executed comprehensive releases at or prior to the Closing in
writing effective immediately after the Closing subject to acceptance by the
Purchaser.
If any one or more of the foregoing conditions shall not have been fulfilled on
or before the Closing Date, the Stockholders or the Acquired Corporation may
terminate this Agreement by notice in writing to the other Parties in which
event the terminating Party or Parties shall be released from all obligations
under this Agreement and (unless the terminating Party or Parties can show that
the condition relied upon could reasonably have been performed by the other
Parties) the other Parties shall also be released from all obligations
hereunder; provided, however, that the terminating Party or Parties shall be
entitled to waive compliance with any one or more of such conditions in whole or
in part if it shall see fit to do so, without prejudice to their rights of
termination in the event of the non-fulfilment of any other condition in whole
or in part.
5.4 CLOSING PROCEDURES. At the Closing Time:
(a) the Stockholders shall deliver to the Purchaser certificates
representing the Acquired Corporation Common Stock, duly signed off for
transfer, together with all other documentation required to transfer title to
the Acquired Corporation Common Stock; and
(b) the Purchaser shall deliver to the Stockholders certificates
representing the Purchaser Common Stock.
5.5 NON-WAIVER. No investigations made by or on behalf of any Party at any
time shall have the effect of waiving or diminishing the scope of or otherwise
affecting any representation, warranty or indemnity made by or imposed upon the
Parties pursuant to this Agreement.
16
ARTICLE VI
INDEMNIFICATIONS
----------------
6.1 INDEMNIFICATION BY THE PURCHASER FOR BREACHES OF WARRANTY, ETC. The
Purchaser hereby covenants and agrees with the Stockholders to indemnify and
save harmless the Stockholders, effective as and from the Closing Time, from and
against any claims, demands, actions, causes of action, damage, loss, costs,
liability or expense (hereinafter in this Article 6 called "Purchaser Claims")
which may be brought against the Stockholders and/or which it may suffer or
incur as a result of, in respect of, or arising out of any material
non-fulfillment of any covenant or agreement on the part of the Purchaser under
this Agreement or any incorrectness in or breach of any representation or
warranty of the Purchaser contained herein or in any certificate or other
document furnished by the Purchaser pursuant hereto. The foregoing obligation
of indemnification in respect of such Purchaser Claims shall be subject to the
limitation mentioned in Section 4.4 hereof respecting the survival of the
representations and warranties of the Parties.
6.2 INDEMNIFICATION BY THE ACTIVE STOCKHOLDERS FOR BREACHES OF WARRANTY,
ETC. The Active Stockholders hereby covenants and agrees with the Purchaser to
indemnify and save harmless the Purchaser, effective as and from the Closing
Time, from and against any claims, demands, actions, causes of action, damage,
loss, costs, liability or expense (hereinafter in this Article 6 called "Other
Claims") which may be brought against the Purchaser and/or which they may suffer
or incur as a result of, in respect of, or arising out of any material
non-fulfillment of any covenant or agreement on the part of the Active
Stockholders under this Agreement or any incorrectness in or breach of any
representation or warranty of the Active Stockholders contained herein or in any
certificate or other document furnished by the Active Stockholders pursuant
hereto. The foregoing obligation of indemnification in respect of such Other
Claims shall be subject to the limitation mentioned in Section 4.4 hereof
respecting the survival of the representations and warranties of the Parties.
ARTICLE VII
CONFIDENTIALITY
---------------
7.1. CONFIDENTIALITY. Each Party (referred to as the "Receiving Party" in
this Article VII) acknowledges and agrees that the information which it receives
from any of the other Parties (referred to as the "Disclosing Party" in this
Article VII), is and shall be confidential and proprietary to the Disclosing
Party (the "Confidential Information"). The Receiving Party agrees not to
disclose the Confidential Information to any third party, nor to use the
Confidential Information for any purpose other than the performance of its
obligations under this Agreement and any other agreement with the Disclosing
Party, without the prior written consent of the Disclosing Party. The Receiving
Party agrees to restrict dissemination of particular Confidential Information to
only those persons in its organization, or to its legal counsel, who must have
access to such Confidential Information in order for the Receiving Party to
perform its obligations under this Agreement and any other agreement with the
Disclosing Party. The Receiving Party shall cause every employee or third party
to whom it discloses Confidential Information as permitted hereunder to abide by
the foregoing confidentiality provisions. Upon the termination of this
Agreement, the Receiving Party shall promptly return such confidential
information (and any copies, extracts and summaries thereof) to the Disclosing
Party or, with the Disclosing Party's written consent, shall promptly destroy
such confidential information (and any copies, extracts and summaries thereof)
and, with respect to electronically stored copies, delete such records from any
storage unit. The Receiving Party's obligations under this Article VII shall
come into effect on the date hereof and shall continue indefinitely.
17
7.2 EXCLUSIONS. The Receiving Party's obligations with regard to the
Confidential Information shall not apply in respect of such information that:
(a) the Disclosing Party authorizes the Receiving Party to disclose to third
parties by prior written authorization;
(b) is or becomes available in the public domain, other than by an act or
omission of the Receiving Party or any employee, agent or other person acting
for or on behalf of the Receiving Party;
(c) is lawfully acquired by the Receiving Party from another source without
restriction; or
(d) is ordered to be disclosed by a court, administrative agency or other
governmental body with jurisdiction over the parties, provided the Receiving
Party will first have provided the Disclosing Party with prompt written notice
of such required disclosure and will take reasonable steps to allow the
Disclosing Party to seek a protective order with respect to the confidentiality
of the information required to be disclosed. The Receiving Party will promptly
co-operate with and assist the Disclosing Party in connection with obtaining
such protective order, at the Disclosing Party's expense.
ARTICLE VIII
GENERAL
-------
8.1 TERMINATION.
(a) This agreement may be terminated at any time prior to the Closing Date:
(i) by the mutual agreement of the Parties;
(ii) by any Party if:
(A) the purchase and sale of the Acquired Corporation Common Stock
shall not have been completed by October 31, 2002 (or such other
date, if any, as the Parties may agree on in writing), if the
failure to complete such purchase and sale on or before such date
is not caused by any breach of this Agreement by the Party
electing to terminate; or
(B) the purchase and sale of the Acquired Corporation Common Stock
would violate any non-appealable final order, decree or judgement
of any court or Governmental Authority having competent
jurisdiction.
(b) If this Agreement is terminated by a Party under subsection 8.1(a), such
termination shall be without liability of such Party to the other Parties, or to
any of its directors, officers, employees, agents, consultants or
representatives provided that if such termination shall result from the wilful
failure of the Party to fulfil a condition to the performance of the other
Parties or to perform a covenant of this agreement or from a wilful breach by
the party to this Agreement, the Party shall be fully liable for any and all
damages, costs and expenses (including, but not limited to, reasonable counsel
fees and disbursements) sustained or incurred by the other Parties.
18
8.2 NOTICES. All notices, requests, demands and other communications
hereunder must be made in writing and will be deemed to have been duly given if
delivered by courier, sent by prepaid registered mail addressed to the
addressee, or sent by facsimile transmission if such notice is delivered,
addressed or sent to the address or fax number given below, or such other
address or fax number as the Party receiving the notice may give to the Party
giving the notice:
(a) if to the Stockholders:
See Schedule "B".
(b) if to the Acquired Corporation:
c/o Carbonaro Sugar Szweras LLP
390 Bay Street, Suite 1600
Toronto, Ontario
M5H 2Y2
Attention: Enrico Moretti
Tel: 416-368-2500
Fax: 416-368-0909
(c) if to the Purchaser:
141-757 West Hastings, Suite 676
Vancouver, BC, Canada
V6C 1A1
Tel: 604-681-7806
Fax: 604-681-7846
Any notice given by personal delivery shall be deemed to be received on the date
of delivery. Any notice sent by courier shall be deemed to be received on the
next Business Day following the deposit of the communication with the courier
service. Any notice sent by prepaid registered mail shall be deemed to be
received on the fifth (5th) day other than a Saturday, Sunday or statutory
holiday in Canada, following the deposit of the communication in the mail. If
the party giving any Communication knows or ought reasonably to know of any
difficulties with the postal system which might affect the delivery of mail, any
such Communication may not be mailed but must be given by personal delivery or
by electronic communication. Any notice sent by facsimile or similar method of
recorded communication shall be deemed to have been received on the date of its
transmission if transmitted before 4:30 p.m. (Toronto time), and on the next
Business Day following the date of its transmission if transmitted after that
time.
8.3 TIME OF ESSENCE. Time shall be of the essence in all respects of this
Agreement.
8.4 FURTHER ASSURANCES. The Parties shall with reasonable diligence do all
things and provide all reasonable assurances as may be required to complete the
transactions contemplated by this Agreement, and each Party shall provide such
further documents or instruments required by any other Party as may be
reasonably necessary or desirable to give effect to this Agreement and carry out
its provisions.
19
8.5 PUBLIC NOTICE. All public notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and co-ordinated by the Parties and no Party shall act
unilaterally in this regard without the prior consent of the other Party, such
approval not to be unreasonably withheld.
8.6 AMENDMENT. No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by both Parties.
8.7 WAIVER. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
8.8 ASSIGNMENT. This Agreement and the rights or obligations hereunder or
thereunder may not be assigned by a Party without the prior written consent of
the other Parties.
8.9 BINDING AGREEMENT. This Agreement shall be binding on and enure to the
benefit of the Parties and their respective successors and permitted assigns.
In addition all obligations of the Parties under this Agreement shall also be
binding upon any and all directors, officers, employees, consultants, advisors
and agents of each Party as well as all parent corporations, subsidiaries,
related and affiliated companies thereof.
8.10 ATTORNMENT. For the purpose of all legal proceedings this Agreement
shall be deemed to have been performed in the Province of Ontario and the courts
of the Province of Ontario shall have jurisdiction to entertain any action
arising under this Agreement. Each of the Parties hereby attorns to the
jurisdiction of the courts of the Province of Ontario.
8.11 SEVERABILITY. If any provision of this Agreement is determined to be
prohibited, void or unenforceable in whole or in part, such void or
unenforceable provision shall not affect or impair the validity of any other
provision of this Agreement and shall be severable from this Agreement. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.12 INDEPENDENT LEGAL ADVICE AND TAX ADVICE. Each Party acknowledges
having been advised to seek independent legal counsel and independent tax advice
in respect of the Agreement and the matters contemplated herein. To the extent
that a Party declines to receive independent legal counsel and independent tax
advice in respect of the Agreement, that Party hereby waives the right, should a
dispute later develop, to rely on its lack of independent legal counsel or
independent tax advice to avoid its obligations, to seek indulgences from the
other Parties hereto, or to otherwise attack the integrity of the Agreement and
the provisions thereof, in whole or in part.
8.13 COUNTERPARTS. This Agreement may be executed by the Parties in one or
more counterparts by facsimile, each of which when so executed and delivered
shall be an original and such counterparts shall together constitute one and the
same instrument.
20
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date
written above.
ROUTE 1 CORPORATION
Per: ________________________________
Authorized Signing Officer
I have authority to bind the corporation
KOALA INTERNATIONAL WIRELESS INC.
Per: ________________________________
Authorized Signing Officer
I have authority to bind the corporation
THE STOCKHOLDERS:
_________________________ _________________________
Witness RITA BENSON
BROOKELYNN HOLDINGS INC.
Per: _________________________
Authorized Signing Officer
I have authority to bind the corporation.
J.R.B. & D. HOLDINGS LTD.
Per: _________________________
Authorized Signing Officer
I have authority to bind the corporation.
21
WHITEHOUSE FAMILY HOLDINGS LIMITED
Per: _________________________
Authorized Signing Officer
I have authority to bind the corporation.
_________________________ _________________________
Witness STARR RAMBUSCH
_________________________ _________________________
Witness W.H. CRAWFORD
_________________________ _________________________
Witness SUSAN WHITE
_________________________ _________________________
Witness PAUL PRENDERGAST
788696 ONTARIO INC.
Per: _________________________
Authorized Signing Officer
I have authority to bind the corporation.
_________________________ _________________________
Witness KENNETH HARTLEN
_________________________ _________________________
Witness IAN LONG
_________________________ _________________________
Witness NORMAN WRIGHT
CAPITAL PARTNERS FUND I
Per: _________________________
Authorized Signing Partner
I have authority to bind the partnership.
22
1309673 ONTARIO INC.
Per: _________________________
Authorized Signing Officer
I have authority to bind the corporation.
_________________________ _________________________
Witness ANDREW WHITE
_________________________ _________________________
Witness CHRISTOPHER PRENDERGAST
PROJECT CAPITAL GROUP INC.
Per: _________________________
Authorized Signing Officer
I have authority to bind the corporation.
S:\R\ROUTE1\KOALA INTERNATIONAL WIRELESS INC. RTO WITH ROUTE 1\SHARE EXCHANGE
AGT OCT4-02.DOC
23
SCHEDULE "A"
DEFINITIONS
"Active Stockholders" means Christopher and Andrew.
"Acquired Corporation" means Route1 Corporation.
"Acquired Corporation Common Stock" means all of the issued and outstanding
shares of the common stock of the Acquired Corporation owned by the
Stockholders, as set out in Schedule "B" hereto.
"Agreement" means the Agreement and any instrument supplemental or ancillary to
it.
"Business Day" means any day other than a Saturday, Sunday or statutory holiday
in the Province of Ontario.
"Claims" means claims, demands, actions, causes of action, damages, losses,
costs, fines, penalties, interest, liabilities and expenses, including, without
limitation, reasonable legal fees.
"Closing" means the completion of the purchase and sale of the Acquired
Corporation Common Stock pursuant to this Agreement.
"Closing Date" means October 3, 2002 or such later date as may be agreed upon by
the Parties, but no later than October 31, 2002.
"Closing Time" means 2:00 p.m. (Toronto time) on the Closing Date or such other
time on the Closing Date as may be agreed to by the Parties.
"Encumbrances" means any mortgage, charge, pledge, hypothecate, lien,
encumbrance, restriction, option, voting trusts, right of others or security
interest of any kind.
"Governmental Authorities" means any applicable Canadian or U.S. federal,
provincial and municipal agency, ministry, crown corporation, department,
inspector and official.
"Interim Period" means the period commencing on the date of this Agreement and
ending immediately before the Closing Time on the Closing Date.
"Listing Status" means the Purchaser's status as a company whose common shares
are listed or quoted for trading on the OTCBB and which is in good standing with
the OTCBB and is not in default under any of its rules, policies or by-laws.
"OTCBB" means the NASD Over-The-Counter Bulletin Board in the United States.
"Parties" means the parties to this Agreement and "Party" means any one of them.
"Person" means an individual, body corporate, partnership, trustee, trust,
unincorporated association, executor, administrator or legal representative.
"Permitted Encumbrances" means the resale restrictions set forth in section 2.7
herein.
"Purchaser" means Koala International Wireless Inc.
24
"Purchaser Common Stock" means approximately 6,000,000 common stock of the
Purchaser to be issued to the Stockholders as partial consideration for the
Acquired Corporation Common Stock pursuant to section 2.2 of this Agreement.
"Reporting Issuer Status" means the Purchaser's status as a reporting company in
the United States under the U.S. Securities Exchange Act of 1934, in good
standing and not in default under said act, but not a "reporting issuer" in any
province of territory of Canada, as that term is defined in the Securities Act
(Ontario).
"Stockholders" means the registered owners of the Acquired Corporation Common
Stock as set out in Schedule "B" hereto.
25
SCHEDULE "B"
THE STOCKHOLDERS' SHAREHOLDINGS
NAME AND ADDRESS OF NUMBER OF ACQUIRED NUMBER OF PURCHASER COMMON
STOCKHOLDER CORPORATION COMMON STOCK STOCK TO BE ISSUED TO
OWNED BY STOCKHOLDER STOCKHOLDER
- ---------------------------------- ----------------------------------------------------------------
RITA BENSON 12,000 55,901
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
BROOKELYNN HOLDINGS INC. 12,000 55,901
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
J.R.B. & D. HOLDINGS INC. 12,000 55,901
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
WHITEHOUSE FAMILY HOLDINGS LIMITED 12,000 55,901
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
STARR RAMBUSCH 12,000 55,901
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
W.H. CRAWFORD 12,000 55,901
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
SUSAN WHITE 36,000 167,704
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
PAUL PRENDERGAST 12,000 55,901
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4
26
788696 ONTARIO INC.
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4 6,000 27,950
KENNETH HARTLEN
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4 12,000 55,901
IAN LONG
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4 12,000 55,901
NORMAN WRIGHT
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4 12,000 55,901
CAPITAL PARTNERS FUND I
44 WHIPPANY ROAD
SUITE 140
MORRISTOWN, NEW JERSEY
07960 696,976 3,246,843
1309673 ONTARIO INC. 75,000 349,385
ANDREW WHITE
39 UNSWORTH AVENUE
TORONTO, ONTARIO
M5M 3C4 162,000 754,672
CHRISTOPHER PRENDERGAST
37 BROOKMOUNT ROAD
TORONTO, ONTARIO
M4L 3N3 162,000 754,672
PROJECT CAPITAL GROUP INC.
49 WELLINGTON STREET EAST
SUITE 300
TORONTO, ONTARIO
M5E 1C9 30,000 139,754
TOTAL 1,287,976 5,999,990
- -----------------------------------------------------------------------------------------
27
SCHEDULE "C"
OUTSTANDING SPECIAL WARRANTS OF THE ACQUIRED CORPORATION
NAME OF
SPECIAL WARRANT HOLDER NUMBER AND TERMS OF OUTSTANDING SPECIAL WARRANTS
---------------------- ------------------------------------------------
Techbanc Inc. 82,500 Special Warrants entitling the holder at
no further consideration, upon exercise, to 82,500
common shares and 82,500 share purchase warrants
until June 14, 2003. The common share purchase
warrants will entitle the holder to purchase
one common share for each whole warrant at an
exercise price of $10.00 per share until June
14, 2003.
- --------------------------------------------------------------------------------
Alterpower Corp. (formerly
Metal Royalties Corporation)
27,500 Special Warrants entitling the holder at
no further consideration, upon exercise, to 27,500
common shares and 27,500 share purchase warrants
until June 14, 2003. The common share purchase
warrants will entitle the holder to purchase one
common share for each whole warrant at an exercise
price of $10.00 per share until June 14, 2003.
- --------------------------------------------------------------------------------
TOTAL 110,000 WARRANTS
- ----- -----------------
28
SCHEDULE "D"
OUTSTANDING OPTIONS OF THE ACQUIRED CORPORATION
NAME OF OPTION HOLDER DATE OF GRANT NUMBER AND TERMS OF OPTIONS
--------------------- ------------- ---------------------------
K. Andrew White June 14,2000 31,875 options at exercise price
of $9.00 per share until April
28,2005
- ------------------------------
Christopher M. Prendergast June 14,2000 31,875 options at exercise price
of $9.00 per share until April
28,2005
- ------------------------------
TOTAL 63,750 OPTIONS
- ----- ---------------
29
SCHEDULE "E"
OUTSTANDING OPTIONS OF THE PURCHASER
NAME OF OPTION DATE OF VESTING SCHEDULE NUMBER AND TERMS OF OPTIONS
HOLDER GRANT
-------------- ------- ---------------- ---------------------------
Lawrence Austin March 22, n/a 600,000 options at exercise price
2002 of US$0.03 per share until
March 22, 2005
- --------------------------------------------------------------------------------
Karen Ard March 13, April 15, 2002 50,000 options at exercise price
2002 of US$5.00 per share until
April 15,2004
- --------------------------------------------------------------------------------
Craig Scott March 13, April 15, 2002 50,000 options at exercise price
2002 of US$5.00 per share until
April 15,2004
- --------------------------------------------------------------------------------
Karen Ard March 13, June 15, 2002 50,000 options at exercise price
2002 of US$7.50 per share until
June 15,2004
- --------------------------------------------------------------------------------
Craig Scott March 13, June 15, 2002 50,000 options at exercise price
2002 of US$7.50 per share until
June 15,2004
- --------------------------------------------------------------------------------
Karen Ard March 13, Sept. 1, 2002 50,000 options at exercise price
2002 of US$10.00 per share until
Sept. 1,2004
- --------------------------------------------------------------------------------
Craig Scott March 13, Sept. 1, 2002 50,000 options at exercise price
2002 of US$10.00 per share until
Sept. 1,2004
- --------------------------------------------------------------------------------
Christine Cerisse August 20, n/a 100,000 options at exercise price
2002 of US$0.50 per share until
August 20,2005
- --------------------------------------------------------------------------------
Larry Wintemute August 20, n/a 100,000 options at exercise
2002 price of US$0.50 per share
until August 20,2005
- --------------------------------------------------------------------------------
Lorne Catling August 20, n/a 100,000 options at exercise price
2002 of US$0.50 per share until
August 20,2005
- --------------------------------------------------------------------------------
TOTAL 1,200,000 OPTIONS
- ----- ------------------