PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made as of the 3rd day of October, 2000
BETWEEN:
DR. JAMES SWANNEY and MS. ELIZABETH FINDLAY, of 308 - 2051 McCallum Rd.,
BC V2S SN3 and 42332 Elizabeth Avenue, Chilliwack, BC V2R 5C9
respectively
(hereinafter collectively called "the Vendors" and individually referred
to as "Dr. Swanney" and "Ms. Findlay")
OF THE FIRST PART
AND:
LUNA MEDICAL TECHNOLOGIES INC.a company incorporated under the laws of
Nevada, having an address at Suite 880, 50 West Liberty Street, Reno,
Nevada 89501 U.S.A
(hereinafter called "Purchaser")
OF THE SECOND PART
AND:
KING CAPITAL CORPORATION LTD., a company incorporated under the laws of
the Province of British Columbia, having an address at 1390 - 1075 West
Georgia Street Vancouver, British Columbia, V6E 3C9
(hereinafter called "King Capital")
OF THE THIRD PART
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AND:
MENATHEN SERVICES INC., a company incorporated under the laws of the
Province of British Columbia, having a registered office at 3232 McKinley
Drive, Abbotsford, BC V3G 1B9
(hereinafter called "Menathen")
OF THE FOURTH PART
WHEREAS:
A. The Vendors are the sole shareholders of the only issued shares of
Menathen
B. Dr. Swanney is the registered owner of 100,000 Class A shares of Menathen
and Ms. Findlay is the registered owner of 100,000 Class A shares of
Menathen representing all issued capital of Menathen.
C. The Purchaser wishes to purchase from the Vendors and the Vendors wish to
sell to the Purchaser all of their right, title and interest in their
shares of Menathen on the terms and conditions as set out herein with the
intention that the Purchaser shall become the sole shareholder of
Menathen.
D. King Capital has agreed to assist the Vendors and the Purchaser to carry
out this Agreement and their respective business plans by providing
interim financing to Menathen in order that it carry out the opening of
the first Health Care Centre.
In consideration of the mutual promises set out herein and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged the parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Agreement (including the Recitals), unless the context
otherwise requires:
(a) "Closing" means the formal completion of the purchase and sale of
the Shares by the transfer and delivery of certain documents of
title on the Closing Date;
(b) "Closing Date" means September 30, 2000 or such other date as the
parties agree Upon in writing;
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(c) "Encumbrance" means any mortgage, charge, pledge, hypothecation,
lien, security interest, assignment, option, equity, execution,
claim or any other title defect or other encumbrance of any kind
or nature whatsoever (including any agreement to give any of the
foregoing), whether or not registered or registrable or whether
consensual or arising by operation of law (statutory or
otherwise);
(d) "Health Care Centre" means a medical clinic offering medical
services predominantly to women employing no less than six medical
doctors.
(e) "Shares" means either collectively all of the issued shares of
Menathen or where referred to as either of the Vendor's shares,
the shares of Menathen owned by that Vendor;
1.2 Gender and Number
In this Agreement, words importing the singular include the plural and vice
versa and words importing gender include all genders as the context may require.
1.3 Headings and Table of Contents
The division of this Agreement into Parts, Articles, Sections and the inclusion
of headings and a table of contents are for convenience only and shall not
affect the construction or interpretation of this Agreement.
1.4 Currency
All dollar amounts referred to in this Agreement are Canadian dollars.
1.5 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
British Columbia and the laws of Canada applicable therein and each of the
parties hereby attorns to the jurisdiction of the Courts of British Columbia.
1.6 Schedules
Schedule DESCRIPTION
A Financial Statements of Menathen
B Disclosed liabilities of Menathen
C Release of all claims given by the Vendors
D Promissory Note
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ARTICLE 2
PURCHASE AND SALE
2.1 The Purchaser agrees to purchase and the Vendors agree to sell to the
Purchaser all of their zight, title and interest in their Shares free and clear
of any Encumbrances affecting the Shares.
2.2 The Purchaser shall deliver to the Vendors in consideration of the
purchase and transfer of the Shares to the Purchaser the following:
(a) as soon as reasonably practicable alter the Completion Date,
200,000 common shares of the Purchaser to each of Dr. Swanney and
Ms. Findlay provided that such shares will contain a restriction
on resale as required pursuant to the Securities and Exchange Act
or such other restrictions as may be imposed by securities laws
and regulations which affect the issuance of such shares; and
(b) upon the opening for business of each of the Health Care Centres
each of Dr. Swanney and Ms. Findlay will receive 100,000 shares of
the Purchaser subject to the same resale conditions referred to in
paragraph 2.2(a) or as otherwise might be imposed by regulatory
authorities up to a maximum of 1,000,000 shares each of the
Purchaser to a total of 2,000,000.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
AND MENATHEN
3.1 Representations and Warranties. The Vendors and Menathen represent and
warrant to the Purchaser that:
(a) the Vendors legally and beneficially own the Shares, free and
clear of any Encumbrance;
(b) the Shares represent all of the issued and outstanding shares or
other securities in the capital of Menathen owned by the Vendors
and the Vendors have no right or option to acquire any additional
shares or securities of Menathen;
(c) other than the Purchaser, no person has any agreement or option to
acquire the Shares or any of them;
(d) the Vendors have due and sufficient right and authority to enter
into this Agreement on the terms and conditions herein set forth
and to transfer the legal and beneficial title to the Shares to
the Purchaser;
(e) this Agreement has been duly and validly executed and delivered by
the Vendors and constitutes a legal, valid and binding obligation
of the Vendors;
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(f) the Vendors are "residents in Canada" for the purposes of section
116 of the Income Tax Act of Canada;
(g) Menathen is not indebted to the Vendors;
(h) the Vendors have not, whether as a member, employee, director or
officer of Menathen or in any other capacity, entered into or
agreed to enter into any material agreement, commitment or
obligation or incurred or arced to incur any material liability or
expense on behalf of Menathen other than agreements, commitments,
obligations, liabilities or expenses incurred in the ordinary
course of business except those which have been disclosed in
writing to the Purchaser; and
(i) the financial statements of Menathen attached as Schedule "A"
hereto are complete and accurate and fairly state the financial
position of Menathen and there have been no material liabilities
incurred by Menathen or liabilities in excess of $5,000.00 which
have been incurred since the date of the financial statements
which have not been paid except those that are set out in Schedule
"B".
(j) Menathen has the sole and exclusive right to operate the Health
Care Centres and it possesses all right and title to operate the
Health Care Centres including the intellectual property,
management and financial systems and know how associated with the
operation of the Health Care Centres.
3.2 Survival. The representations and warranties of the Vendors and Menathen
contained in this Agreement shall survive the Closing and the payment of the
consideration by the Purchaser and, notwithstanding the Closing and the payment
of the consideration and any investigations or inquiries made by the Purchaser
prior to the Closing, the representations and warranties shall continue in full
force and effect for the benefit of the Purchaser.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TUE PURCHASER
4.1 Representations and Warranties. The Purchaser warrants and represents to
the Vendors that;
(a) this Agreement has been duly and validly executed and delivered by
the Purchaser and constitutes a legal, valid and binding
obligation of the Purchaser and the Purchaser is entitled to
deliver the consideration for the transfer of the Shares; and
4.2 Survival. The representations and warranties of the Purchaser contained
in this Agreement shall survive the Closing and the payment of the consideration
and, notwithstanding the Closing and the payment of the consideration and any
investigations or enquiries made by the Vendors prior to the Closing, the
representations, warranties, covenants and agreements of the Purchaser shall
survive the Closing.
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ARTICLE 5
VENDORS' AND PURCHASER'S CONDITIONS
5.1 Vendors' Conditions. Notwithstanding anything herein contained, the
obligation of the Vendors to carry out the terms of this Agreement and to
complete the purchase and sale of the Shares is subject to the conditions that
on the Closing Date:
(a) all of the covenants, agreements and deliveries to be performed by
the Purchaser under this Agreement on or prior to the Closing Date
shall have been duly performed; and
(b) the warranties and representations of the Purchaser as set forth
in section 4.1 of this Agreement shall be true and correct in
every respect as if such warranties and representations had been
made by the Purchaser on the Closing Date.
5.2 Vendors' Waiver. The conditions set forth in section 5.1 of this
Agreement are for the exclusive benefit of the Vendors and may be waived by the
Vendors in writing in whole or in part on or before the Closing Date.
5.3 Purchaser' Conditions. Notwithstanding anything herein contained, the
obligation of the Purchaser to carry out the terms of this Agreement and to
complete the purchase and sale of the Shares is subject to the conditions that:
(a) on the Closing Date all of the covenants, agreements and
deliveries to be performed under this Agreement by the Vendors on
or prior to the Closing Date shall have been duly performed;
(b) the warranties and representations of the Vendors as set forth in
section 3.1 of this Agreement shall be true and correct in every
respect as if such warranties and representations had been made by
the Vendors on the Closing Date;
(e) the Purchaser being satisfied it has the lawfull authority to
issue the shares referred to in Section 2.2(a) and 2.2(b) and it
obtaining from its securities counsel an unqualified opinion that
it can carry out this transaction and deliver the consideration
for the Shares.
5.4 Purchaser' Waiver. The conditions set forth in section 5.3 of this
Agreement are for the exclusive benefit of the Purchaser and may be waived by
the Purchaser in writing in whole or in part on or before the Closing Date.
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ARTICLE 6
DELIVERIES AT CLOSING
6.1 Vendors' Deliveries. At the Closing, the Vendors and Menathen shall
deliver or cause to be delivered to the Purchaser:
(a) share certificate(s) in the name of the Vendors representing the
Shares, duly endorsed for transfer to the Purchaser;
(b) the Release executed by the Vendors in the form attached hereto as
Schedule "C";
(c) Notice of Director appointing Ms. Elizabeth Findlay as director of
Menathen and the Purchaser;
(d) the resignation of Dr. James Swanney as a director of Menathen;
(e) the Promissory Note of Menathen;
(f) such other documents as may reasonably be required.
ARTICLE 7
CLOSING
7.1 Closing. The Closing of the purchase and sale of the Shares as
contemplated by this Agreement shall take place on the Closing Date at such time
and place as agreed to by the parties at Fasken Martineau DuMoulin LLP, 2100 -
1075 West Georgia Street, Vancouver, BC V6E 3G2
7.2 Closing Procedures. All documents to be delivered at the Closing will be
delivered in escrow on or before the Closing Date. All matters of payment,
execution and delivery of the documents to be delivered at Closing will be
deemed to be concurrent requirements and nothing will be complete at the Closing
until everything required to complete the Closing has been paid, executed and
delivered. Upon completion of the Closing, the documents delivered at the
Closing will be delivered to the appropriate parties.
ARTICLE 8
HEALTH CARE CENTRE DEVELOPMENT
8.1 Health Care Centre Development. The Purchaser shall use its good faith
best efforts to develop and promote the establishment of a series of up
to ten Health Care Centres during the 24 months following the date of
this Agreement.
8.2 First Health Care Centre. The Purchaser shall commit the sum of
$600,000.00 towards the establishment of the first Health Care Centre
located at Abbotsford B.C. for the
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purposes of construction and operation of same in such manner as the
Purchaser determines. The Purchaser shall advance $200,000 by October 1,
2000, $200,000 by November 1, 2000 and $200,000 by January 1, 2001. In
the event that the Purchaser fails to make such payments within 60 days
of the dates set out above and after demand for payment of the
installments is made, the Vendors shall be entitled to terminate this
Agreement and the Purchaser shall reconvey the Shares upon demand to the
Vendors and the Vendors shall reconvey to the Purchaser the shares of the
Purchaser that they received under this Agreement.
ARTICLE 9
INTERIM FINANCIAL ASSISTANCE
9.1 Interim Financial Assistance. The parties acknowledge that King Capital
has provided interim financial assistance to the Purchaser and Menathen
by means of the advancement of the sum of $200,000.00 on account of the
obligations of the Purchaser under paragraph 8.2. King Capital may
advance additional monies from time to time (collectively the "Advances")
9.2 Promissory Notes. As evidence of the Advances, Menathen shall grant
Promissory Notes in the form attached as Schedule "D" in favour of King
Capital.
9.3 Further Security. As further security for any and all Promissory Notes,
Menathen hereby grants to King Capital a security interest in all of its
personal property no matter when acquired and it shall at the request of
King Capital execute a General Security Agreement in favour of King
Capital in respect of its personal property.
9.4 Option in favour of King Capital. Subject to regulatory approval, the
Purchaser agrees to grant to King Capital an Option to acquire shares of
the Purchaser at a price of $.50US by means of paying for such shares by
means of assigning the indebtedness owed to King Capital by Menathen or
in in such other manner as may be determined such that the extent of the
option right of King Capital shall be limited to the right to acquire
shares of the Purchaser to the extent of the total amount that it has
advanced to Menathen under this section. Such stock will contain
restrictions on resale or will otherwise be subject to a voluntary
restriction on resale which shall restrict the ability of King Capital to
resell such stock for a term of one year following issuance.
ARTICLE 10
CORPORATE ORGANIZATION AND OTHER AGREEMENTS
10.1 Dr. Swanney and Ms. Findlay shall, if they consent, be appointed to the
board of directors of the Purchaser provided that the two of them shall
not constitute a majority of directors of the Purchaser. Subject to
regulatory approval and as a condition of acting as directors of the
Purchaser, Dr. Swanney and Ms. Findlay shall be granted upon appointment,
a stock option in a form acceptable to relevant securities regulators
allowing them to acquire up to 50,000 shares of the Purchaser at an
exercise price of $1.00 U.S. per share.
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10.2 The Purchaser and Dr. Swanney and Ms. Findlay shall enter into employment
contacts upon normal commercial terms subsequent to the completion of
this Agreement.
ARTICLE 11
GENERAL PROVISIONS
11.1 Notices
Any notice, document or communication required or permitted to be given
hereunder shall be in writing and delivered by hand or by facsimile to the party
to which it is to be given as follows:
To: Dr. James Swanney:
33623 Wildwood Drive
Abbotsford, BC V2S 152
Ms. Elizabeth Findlay:
42332 Elizabeth Avenue
Chilliwack, BC V2R 5C9
To: Luna Medical Technologies Inc.:
c/o Fasken Martineau DuMoulin LLP
Barristers & Solicitors
2100 - 1075 West Georgia Street
Vancouver, British Columbia V6E 3G2
Attention: Robert A. Millar
Facsimile No.: (604) 631-3232
To: King Capital Corporation Ltd.
c/o Fasken Martineau DuMoulin LLP
Barristers & Solicitors
2100 - 1075 West Georgia Street
Vancouver, British Columbia VEE 3G2
Attention: Robert A Millar
Facsimile No.: (604) 631-3232
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To: Menathen Services Inc.
3232 McKinley Drive,
Abbotsford, BC V30 1B9
or to such other address or facsimile number as a party may advise by notice
given in accordance with this Section. Any such notice, document or
communication shall be deemed to have been given when delivered or transmitted.
11.2 Time
Time shall be of the essence of this Agreement.
11.3 Invalidity
If any covenant, obligation or agreement or part thereof or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement or the application of such
covenant, obligation or agreement or part thereof to any person or circumstance
other than those to which it is held invalid or unenforceable shall not be
affected thereby. Each covenant, obligation and agreement in this Agreement
shall be separately valid and enforceable to the fullest extent permitted by
law.
11.4 Further Assurances
Each of the parties will execute and deliver all such further documents and do
such further acts and things as may be reasonably required from time to time to
give effect to this Agreement.
11.5 Remedies Cumulative
No remedy under this Agreement shall be deemed to be exclusive and a party may
from time to time have recourse to one or more of all of the available remedies
under this Agreement either at law or in equity.
11.6 Waiver
No consent to or waiver of any breach or default by a party in the performance
of its obligations hereunder shall be deemed or construed to be a consent or
waiver of any other breach or default in the performance by such party of the
same or of any other obligation of such party. Failure on the part of any party
to complain of any act or failure to act of any other party or to declare the
other party in default irrespective of how long such failure continues, shall
not constitute a waiver by such party of its rights hereunder.
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11.7 Entire Agreement
This Agreement constitutes the entire agreement among the parties pertaining to
the subject matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations, and discussions, whether oral or
written, of the parties with respect to the subject matter hereof and there are
no warranties, representations or other agreements among the parties in
connection with the subject matter hereof except as specifically set forth
herein.
11.8 Amendments
This Agreement may hot be modified, supplemented or amended except with the
written agreement of the parties hereto.
11.9 Binding Effect
This Agreement shall enure to the benefit of and shall be binding upon the
parties hereto and, to the extent that they are permitted, their respective
successors and assigns.
11.10 Counterparts and Formal Date
This Agreement may be executed in counterparts, each of which when so executed
shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument and notwithstanding the date of execution
shall be deemed to bear the date written in the beginning of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
SIGNED, SEALED & DELIVERED )
by DR JAMES SWANNEY in the presence )
of: )
)
_____________________________ )
Witness )
)
_____________________________ ) /s/ DR. JAMES SWANNEY
Name ) ----------------------
) DR. JAMES SWANNEY
_____________________________ )
Address )
)
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SIGNED, SEALED & DELIVERED )
by MS. ELIZABETH FINDLAY in the )
presence of: )
)
_____________________________ )
Witness )
)
_____________________________ ) /s/ MS. ELIZABETH FINDLAY
Name ) --------------------------
) MS. ELIZABETH FINDLAY
_____________________________ )
Address )
)
LUNA MEDICAL TECHNOLOGIES INC.
By its Authorized Signatory;
/s/ [ILLEGIBLE]
-------------------------------
KING CAPITAL CORPORATION LTD.
By its Authorized Signatory;
/s/ Cameron King
-------------------------------
MENATHEN SERVICES INC.
By its Authorized Signatory;
/s/ Elizabeth Findlay
-------------------------------
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SCHEDULE "A"
Attached Financial Statements of Menathen
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SCHEDULE "B"
Attached Disclosed liabilities of Menathen
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SCHEDULE "C"
RELEASE
KNOW ALL MEN BY THESE PRESENTS that DR. JAMES SWANNEY ("Swanney") and
ELIZABETH FINDLAY ("Findlay") for and in consideration of the sum of ONE ($1.00)
DOLLAR and other good and valuable consideration, the receipt of which is hereby
acknowledged, DO HEREBY AGREE to release and forever discharge, and by these
presents does for themselves, their agents, successors and assigns, hereby
remise, release and forever discharge MENATHEN SERVICES INC. ("Menathen"), its
successors and assigns of and from any and all manner of actions, causes of
action, suits, claims, contracts, debts, demands and damages of every nature and
kind whatsoever, at law or in equity and whether known or unknown, suspected or
unsuspected, which Swanney, Findlay or their agents, successors and assigns have
or hereafter can, shall or may have by reason of any matter, cause or thing
whatsoever existing up to the present time.
IN WITNESS WHEREOF Swanney and Findlay have hereunto set their respective
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hands and seal as of the 3rd day of October, 2000
SIGNED, SEALED & DELIVERED )
by DR. JAMES SWANNEY in the )
presence of: )
)
_____________________________ )
Witness )
)
_____________________________ ) /s/ DR. JAMES SWANNEY
Name ) ---------------------
) DR. JAMES SWANNEY
_____________________________ )
Address )
)
SIGNED, SEALED & DELIVERED )
by MS. ELIZABETH FINDLAY in the )
presence of: )
)
_____________________________ )
Witness )
)
_____________________________ ) /s/ MS. ELIZABETH FINDLAY
Name ) --------------------------
) MS. ELIZABETH FINDLAY
_____________________________ )
Address )
)
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SCHEDULE "D"
DEMAND PROMISSORY NOTE
$200,000.00 September 30, 2000
FOR VALUE RECEIVED, the undersigned promises to pay on demand the sum of
$200,000.00, together with interest thereon at the prime rate of interest
announced from time to time by the Royal Bank of Canada from the date of
advance, to the order of King Capital Corporation Ltd. at #1390-1075 West
Georgia Sweet, Vancouver, B.C. V6E 3C9
The undersigned hereby waives presentment and demand for payment, protest
and notice of protest, and notice of dishonour and non-payment.
MENATHEN SERVICES INC.
By its Authorized Signatory:
/s/ Elizabeth Findlay
----------------------------
