<PAGE>
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 16th day of November, 2000.
AMONG:
JOHN ROBERTSON, of # 203 - 728 Farrow St., Coquitlam, B.C. V3J - 3S6
("Robertson")
AND:
MIRZA KASSAM, of 705-1075 Barclay Street, Vancouver, B.C. V6E 1G5
("Kassam")
AND:
CHRIS NEUMANN, of 2762 Bayview Street, Surrey, B.C. V4A 2Z4
("Neumann")
AND:
ROBERT FETHERSTONHAUGH, of 130, De Liege Street East, Montreal, Quebec
H2P 1J1
("Fetherstonhaugh")
AND:
STIRLING MERCANTILE CORPORATION, of 1370 - 1095 West Pender St.,
Vancouver, B.C. V6E 2M6
(the "Broker")
AND:
PETER A. SCOTT CONSULTING LTD., of 1370 - 1095 West Pender St.,
Vancouver, B.C. V6E 2M6
("Scott Consulting")
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AND:
W. HUGH NOTMAN, of 1370 - 1095 West Pender St., Vancouver, B.C. V6E
2M6
("Notman")
(Robertson, Kassam, Neumann, Fetherstonhaugh, the Broker, Scott
Consulting and Notman, collectively, the "Vendors")
AND:
UNITY WIRELESS CORPORATION, of 7438 Fraser Park Drive, Burnaby, B.C.
V5J 5B9
(the "Purchaser")
AND:
ULTRATECH LINEAR SOLUTIONS INC., of 4193 McConnell Drive, Burnaby,
B.C. V5A 3J7
(the "Company")
WHEREAS:
A. The Vendors are the registered and beneficial owners of all the issued
and outstanding common shares without par value in the capital of the Company
and the Broker's Rights;
B. The Company carries on the business of the design and manufacturing of
linear high power RF amplifiers for cellular, PCS and other wireless systems
from leased premises located at 4193 McConnell Drive, Burnaby, B.C.; and
C. The Vendors have agreed to sell and the Purchaser has agreed to
purchase the shares and the Broker's Rights held by the Vendors, on the terms
and conditions contained in this Agreement.
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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the covenants of the parties, the parties agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following words and phrases will have the
meanings set after each:
"Agreement" means this share purchase agreement and all attached schedules
as supplemented, amended, restated or replaced from time to time;
"Applicable Law" means any domestic or foreign statute, law, ordinance,
rule, regulation, restriction, regulatory policy or guideline, by-law
(zoning or otherwise), or Order that applies to any of the Company, the
Business, the way the Business is carried on, the Vendors, any of the
Vendors' Shares, the Consideration Shares, the Purchaser or the
Subsidiaries of the Purchaser, as the case may be;
"Assets" means all of the assets, real and personal, tangible and
intangible, and undertaking of the Company;
"Benefit Plans" means all bonus, deferred compensation, incentive
compensation, share purchase, share appreciation and share option,
severance or termination pay, hospitalization or other medical benefits,
life or other insurance, dental, disability, salary continuation, vacation,
supplemental unemployment benefits, profit-sharing, mortgage assistance,
pension, retirement or supplemental retirement plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement sponsored, maintained or contributed to or required to be
contributed to by the Company, for the benefit of any employee or former
employee of the Company, whether or not insured or funded, whether formal
or informal, whether or not subject to any applicable legislation and
whether or not legally binding;
"Broker's Rights" means the rights granted by the Company to the Broker
pursuant to the Engagement Letter entitling the Broker to receive a portion
of the Consideration Shares;
"Business" means the business carried on as Ultratech Linear Solutions and
located at 4193 McConnell Drive, Burnaby, B.C.;
"Business Day" means a day other than Saturday or Sunday, on which Canadian
chartered banks are open for the transaction of domestic business in
British Columbia;
"Closing" means the completion of the transactions contemplated by this
Agreement which
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are to occur on the Closing Date;
"Closing Date" means Thursday, November 16, 2000, or such other Business
Day as the Parties agree in writing as the date that the Closing shall take
place;
"Closing Documents" means any document or undertaking delivered in relation
to the Closing as provided in this Agreement;
"Closing Time" means 3:00 p.m. (Vancouver Time) on the Closing Date or such
other time on that date as the Parties agree in writing that the Closing
shall take place;
"COMPANY ACT" means the COMPANY ACT (British Columbia);
"Consideration Shares" means 700,000 US$0.001 par value shares in the
common stock of the Purchaser, to be issued by the Purchaser and delivered
to the Vendors at Closing as set forth in s. 2.3 hereof;
"Contracts" means those contracts, agreements, commitments, entitlements
and engagements of the Company relating to the Business and the Assets
(and, for greater certainty, not including the Equipment Leases) whether
with suppliers, customers or otherwise and including all unfulfilled orders
from customers, all forward commitments for supplies or materials, all
orders for new equipment as yet undelivered, all equipment and construction
guarantees and warranties, negative covenants with employees, and all other
contracts described in Schedule D;
"Documents" means all title documents, customer lists, client lists,
marketing materials, files, correspondence, technical information,
agreements and other documents in the Company's possession or control
relating to the Business, the Assets or the Vendors' Shares including all
insurance policies maintained by the Company and all Benefit Plans;
"Effective Date" means October 31, 2000 unless otherwise agreed to by the
parties in writing;
"Employees" means those individuals employed by the Company and described
as employees in Schedule C;
"Encumbrances" means any encumbrance of any kind whatever and includes a
security interest, mortgage, lien, hypothecate, pledge, hypothecation,
assignment, charge, trust or deemed trust (whether contractual, statutory
or otherwise arising), a voting trust or pooling agreement with respect to
securities, an adverse claim or any other right, option or claim of others
of any kind whatever affecting the Vendors' Shares or the Consideration
Shares or any covenant or other agreement, restriction or limitation on the
transfer of the Vendors' Shares or the Consideration Shares;
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"Engagement Letter" means the engagement letter among the Broker,
Roberston, Kassam, Neumann, Fetherstonhaugh, the Vendors and the Company,
dated September 22, 2000 pursuant to which the Company granted the Broker's
Rights to the Broker;
"Equipment Leases" means all leases and conditional sales contracts of
machinery and equipment used in connection with the Business;
"EXCHANGE ACT" means the United States SECURITIES AND EXCHANGE ACT of 1934;
"Financial Statements of the Company" means the financial statements of the
Company for the financial year ending April 30, 2000 consisting of a
balance sheet, statements of earnings and retained earnings, an income
statement and a statement of changes in financial position of the Company,
together with the notes to such financial statements;
"Financial Statements of the Purchaser" means the audited financial
statements of the Purchaser for the financial year ending December 31,
1999, consisting of a balance sheet, statements of earnings and retained
earnings, an income statement and a statement of changes in financial
position of the Purchaser, together with the notes to such financial
statements, copies of which are filed with the SEC;
"Generally Accepted Accounting Principles" means generally accepted
accounting principles from time to time approved by the Canadian Institute
of Chartered Accountants, or any successor institute, applicable as at the
date of which any calculation or determination is required to be made in
accordance with generally accepted accounting principles, and where the
Canadian Institute of Chartered Accountants includes a recommendation in
its Handbook concerning the treatment of any accounting matter, such
recommendation shall be regarded as the only generally accepted accounting
principle applicable to the circumstances that it covers;
"General Security Agreement" means the general security agreement dated
October 3, 2000 granted by the Company in favour of the Purchaser as
security for the obligations of the Company under the Loan;
"Governmental Agency" means any domestic or foreign government whether
federal, provincial, state or municipal and any governmental agency,
governmental authority, governmental tribunal or governmental commission of
any kind whatever;
"Income Tax Act" means the INCOME TAX ACT (Canada);
"License" means any material license, permit, approval, right, privilege,
concession, quota or franchise issued, granted, conferred otherwise created
by a Governmental Agency;
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"Loan" means the $1,000,000 loan facility pursuant to the Loan Agreement;
"Loan Agreement" means the loan agreement between the Purchaser as lender
and the Company as borrower, dated October 3, 2000;
"Order" means any order, judgment, injunction, decree, award or writ of any
court, tribunal, arbitrator, Government Agency or other Person;
"ordinary course of business" when used in relation to the conduct of the
Business means any transaction which constitutes an ordinary day to day
business activity of the Company conducted in a commercially reasonable,
professional and businesslike manner consistent with such Company's past
practices;
"Parties" means the Purchaser, the Vendors and the Company, collectively,
and "Party" means any one of them;
"Payable" means any amount owing or found to be owing in connection with or
arising out of the Business and existing as of the Closing Date, including
trade accounts and amounts owing for Taxes;
"Permitted Encumbrances" means:
(a) inchoate or statutory liens for Taxes not at the time overdue;
(b) security given by the Company to a public utility or any
Governmental Agency when required in the ordinary course of
business of the Company;
(c) any reservations or exceptions contained in the original grants
from the Crown, minor discrepancies in the legal description of
any real property or any adjoining real property which would be
disclosed in an up-to-date survey, easements, rights of way of or
reservations or rights of others for sewers, water lines, gas
lines, electric lines, telegraph and telephone lines and other
similar utilities, or zoning by-laws, ordinances or other
restrictions as to the use of real property, which do not in the
aggregate materially detract from the value of the properties of
the Company affected or materially impair their use in the
Business; and
(d) any Encumbrances described in Schedule E;
"Person" includes an individual, corporation, body corporate,
partnership, joint venture, association, trust or unincorporated
organization or any trustee, executor, administrator or other legal
representative thereof:
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"Promissory Note" means the $300,000 promissory note from the Company
to the Purchaser, dated October 3, 2000, evidencing the advance of
$300,000 under the Loan;
"Purchase Price" means the aggregate purchase price to be paid by the
Purchaser to the Vendors for the Vendors' Securities and the
Shareholders' Loans as provided in Article 2;
"Receivable" means a trade account receivable only in connection with
or arising out of the Business and existing as of the Closing Date plus
any refund respecting Tax Returns for the period before the Closing
Date;
"SEC" means United States Securities and Exchange Commission;
"SECURITIES ACT" means the United States SECURITIES ACT of 1933,
amended;
"Shareholders' Loans" means the aggregate residual shareholders' loans
owing by the Company to the Vendors and unpaid as of the Closing;
"Subsidiary" means any company which is directly or indirectly
controlled by another company;
"Taxes" means all federal, provincial, municipal, territorial, foreign
or other taxes, imposts, rates, levies, assessments and government
fees, charges or dues lawfully levied, assessed or imposed against the
Company or the Purchaser, as the case may be, including all income,
capital gains, sales, excise, use, property, capital, goods and
services, business transfer and value added taxes and custom and
import duties and workers compensation levies and includes all
interest, fines and penalties with respect thereto;
"Tax Returns" means all reports, returns and other documents filed or
required to be filed by the Company or the Purchaser, as the case may
be, in respect of Taxes or in respect of or pursuant to any domestic
or foreign federal, provincial, state, municipal, territorial or other
taxing statute;
"To the best of the knowledge of the Vendors" means the actual
knowledge of the Vendors and the knowledge which they would have had
if they had conducted a diligent inquiry into the relevant subject
matter;
"To the best of the knowledge of the Purchaser" means the actual
knowledge of the Purchaser and the knowledge which it would have had
if it had conducted a diligent inquiry into the relevant subject
matter;
"Vendors' Securities" means the common shares without par value in the
capital of the Company and the Broker's Rights owned by the Vendors;
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"Vendors' Solicitor" means Anfield Sujir Kennedy & Durno, Barristers &
Solicitors;
1.2 SCHEDULES
The following schedules are incorporated by reference to this
Agreement and form a part of it:
A. Shareholders and Shareholdings
B. Key Employee Employment Agreements
C. Employees
D. Contracts
E. Encumbrances
F. Licenses
G. Real Property
H. Employee Benefits/Pension Plans
I. Insurance Policies
J. deleted
K. Service Marks, Trade Marks and Trade Names
L. Pending, Outstanding or Unresolved Grievances
M. Investments
N. Litigation
O. Confidentiality Agreement
P Closing Documents
Q. Employment Contracts (Written and Unwritten)
R. Equipment Leases
S. Confidentiality, Non-disclosure and Assignment of Inventions Agreement
1.3 HEADINGS AND REFERENCES
The division of this Agreement into articles, sections, subsections,
clauses and schedules and the insertion of a table of contents and of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement. The article, section, subsection, clause and
schedule headings in this Agreement are not intended to be full or precise
descriptions of the text to which they refer and are not to be considered part
of this Agreement. All uses of the words "hereto", "herein", "hereof", "hereby"
and "hereunder" and similar expressions refer to this Agreement and not to any
particular section or portion of it. References to an Article, Section,
Subsection, Clause or Schedule refer to the applicable article, section,
subsection, clause or schedule of this Agreement.
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1.4 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
All accounting terms not defined in this Agreement shall have those
meanings generally ascribed to them in accordance with Generally Accepted
Accounting Principles applied on a basis consistent with prior years.
1.5 GENDER AND NUMBER
In this Agreement, the masculine includes the feminine and neuter
genders and the plural includes the singular and vice versa.
1.6 ENTIRE AGREEMENT
This Agreement, together with the Closing Documents, constitutes the
entire agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, negotiations, discussions and understandings,
written or oral, between the Parties.
1.7 AMENDMENT
This Agreement may be amended, modified or supplemented only by a
written agreement signed by each Party.
1.8 WAIVER OF RIGHTS
Any waiver of, or consent to depart from, the requirements of any
provisions of this Agreement shall be effective only if it is in writing and
signed by the Party giving it, and only in the specific instance and for the
specific purpose for which it has been given. No failure on the part of any
Party to exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver of such right. No single or partial exercise of any
such right shall preclude any other or further exercise of such right or the
exercise of any other right.
1.9 APPLICABLE LAW
This Agreement shall be governed by, and interpreted and enforced in
accordance with, the laws in force in the Province of British Columbia
(excluding any conflict of laws, rule or principle which might refer such
interpretation to the laws of another jurisdiction). Each Party irrevocably
submits to the non-exclusive jurisdiction of the courts of British Columbia with
respect to any matter arising hereunder or related hereto.
1.10 CURRENCY
Unless specified otherwise, all statements of or references to dollar
amounts in this Agreement are to lawful money of Canada.
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1.11 TENDER
Any tender of documents or money hereunder may be made upon the
Parties or their respective counsel and money shall be tendered by official bank
draft drawn upon a Canadian chartered bank, by negotiable cheque payable in
Canadian funds and certified by a Canadian chartered bank or a solicitor's trust
cheque.
1.12 PERFORMANCE ON HOLIDAYS
If any action is required to be taken pursuant to this
Agreement on or by a specified date which is not a Business Day, then such
action shall be valid if taken on or by the next succeeding Business Day.
ARTICLE 2 - PURCHASE AND SALE OF THE VENDORS' SHARES
2.1 PURCHASE AND SALE
Based and relying upon the representations and warranties of the
Vendors and the Purchaser as set out in this Agreement, and subject to the terms
and conditions of this Agreement, the Purchaser or one of its Subsidiaries will
purchase and the Vendors will sell the Vendors' Securities and the Shareholders'
Loans free and clear of all Encumbrances.
2.2 PURCHASE PRICE
The aggregate purchase price for the Vendors' Securities shall be the
Consideration Shares and the aggregate purchase price for the Shareholders'
Loans shall be $72,000.
2.3 PAYMENT OF THE PURCHASE PRICE
The Purchaser shall pay the Purchase Price upon Closing as follows:
(a) to Robertson, 203,315 of the Consideration Shares;
(b) to Kassam, 144,198 of the Consideration Shares;
(c) to Neumann, 130,212 of the Consideration Shares;
(d) to Fetherstonhaugh, 169,775 of the Consideration Shares;
(e) to Kassam, a cheque from the Purchaser in the amount of $26,778.78;
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(f) to Neumann, a cheque from the Purchaser in the amount of $20,221.22;
(g) to Fetherstonhaugh, a cheque from the Purchaser for $25,000.
(h) to the Broker or its nominees 52,500 of the Consideration Shares.
2.4 CLOSING
The Closing shall take place at the Closing Time on the Closing Date
at the office of the Purchaser, or such other place as may be agreed by the
Parties.
2.5 DELIVERIES BY THE VENDORS
Upon Closing, the Vendors will deliver or cause to be delivered to the
Purchaser the documents to be delivered by the Vendors as per Schedule P.
2.6 DELIVERIES BY THE PURCHASER
Upon Closing, the Purchaser will deliver or cause to be delivered to
the Vendors the documents to be delivered by the Purchaser as per Schedule P.
2.7 DELIVERIES BY THE BROKER
Upon Closing, the Broker will deliver or cause to be delivered to each
of Robertson, Kassam, Neumann and Fetherstonhaugh the documents to be delivered
by the Broker as per Schedule P.
2.8 EFFECTIVE DATE
The sale and purchase contemplated under this Agreement shall, when
completed on the Closing Date, take effect as of the close of business on the
Effective Date and from such time to the Closing Date the Business of the
Company shall be carried on by the Vendors in the ordinary course for the
account of the Purchaser.
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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors, excluding Notman, Scott Consulting and the Broker except
as to the representations in subparagraphs (d), (e) and (f), represent and
warrant as follows:
(a) ORGANIZATION AND GOOD STANDING - The Company is duly incorporated and
is validly existing and in good standing respecting the filing of
annual reports under the COMPANY ACT, and has the necessary corporate
power, authority and capacity to own the Assets and to carry on the
Business.
(b) AUTHORIZED CAPITAL - The authorized capital of the Company consists of
3,000,000 common shares without par value.
(c) CAPITALIZATION - The issued share capital of the Company together with
the names and number, class and kind of shares held by each of the
shareholders of the Company is as set forth in Schedule A. Details of
all other issued securities of the Company and the names of the
holders of such securities are also set forth in Schedule A.
(d) TITLE - Except as set out in Schedule A, each of the Vendors owns and
has good and marketable title to all of the Vendors' Securities of the
Company opposite his name on Schedule A as the legal and beneficial
owner thereof, free and clear of all Encumbrances and such securities
have been duly and validly issued and, with respect to the shares, are
outstanding as fully paid and non-assessable shares in the capital of
the Company.
(e) AUTHORITY - The Vendors have due and sufficient right and authority to
enter into this Agreement on the terms and conditions set forth in
this Agreement and to implement this Agreement and, in particular, to
transfer to the Purchaser the legal title and beneficial ownership of
the Vendors' Securities.
(f) RESIDENCY OF VENDORS - None of the Vendors is a "non-resident" with
the meaning of section 116 of the INCOME TAX ACT.
(g) ABSENCE OF OPTIONS, ETC. - No Person other than the Purchaser or the
Broker in respect of the Broker's Rights has any agreement, option or
right for, or capable of becoming an agreement, option or right
(including convertible securities, warrants or convertible obligations
of any kind) for the purchase of any of the Vendors' Shares or any
authorized but unissued shares in the capital of the Company.
(h) ABSENCE OF OTHER INTEREST - Except for the interest of the Company in
those
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corporations as set forth in Schedule M, the Company does not own any
shares in or other securities of, or have any interest in the assets
or business of, any other Person.
(i) FINANCIAL STATEMENTS - The Financial Statements of the Company have
been prepared in accordance with Generally Accepted Accounting
Principles, applied on a basis consistent with that of the preceding
financial periods and are complete and accurate in all respects.
(j) ABSENCE OF UNDISCLOSED LIABILITIES - The Company has no liabilities,
due or accruing due, contingent or absolute, liquidated or
unliquidated, of any kind except
(i) liabilities disclosed or provided for in the Financial Statements
of the Company, and
(ii) liabilities incurred in the ordinary course of the business since
the date of the Financial Statements of the Company, which are
consistent with past practice and are not, in the aggregate,
material and adverse to the Business , or to the financial
condition or results of the Company;
(iii) liabilities under the Loan Agreement and Promissory Note; and
(iv) liabilities under the Engagement Letter.
(k) ABSENCE OF CONFLICTING AGREEMENTS - The execution and delivery of this
Agreement and the consummation of the transactions contemplated by it
will not conflict with or result in a breach of or default under any
contract, agreement or other instrument or the constating documents of
the Company and to the best of the knowledge of the Vendors will not
contravene any Applicable Law or Order.
(l) ABSENCE OF CHANGES - Since the date of the balance sheet included in
the Financial Statements of the Company there has not been:
(i) any changes in the condition or operations of the business,
assets or financial affairs of the Company which are,
individually or in the aggregate, materially adverse; or
(ii) any damage, destruction or loss, labour trouble or other event,
development or condition, of any character (whether or not
covered by insurance) which is not generally known or which has
not been disclosed to the Purchaser, which has or may materially
and adversely affect the business, assets, properties or future
prospects of the Company.
(m) ACCURACY OF RECORDS - All material financial transactions of the
Company have been
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accurately recorded in the books and records of the Company and such
books and records fairly represent the financial position and the
corporate affairs of the Company.
(n) CORPORATE RECORDS - To the best of the knowledge of the Vendors, the
Company has kept the records required to be kept by the Company Act
and these records, including filings required under these laws, are
complete, accurate and up-to-date and contain all minutes of all
meetings of directors and members of the Company held since its
incorporation.
(o) LITIGATION - To the best of the knowledge of the Vendors, other than
as set out in Schedule N, there are no actions, suits, claims,
judgments, litigation, orders, complaints, investigations or
proceedings outstanding or pending or overtly threatened by or against
the Company which would have a material adverse effect on the assets,
business, future prospects or financial condition of the Company.
(p) EMPLOYEES - There are set forth in Schedule C the names and titles of
all of the employees of the Company whether under contract of service
or contract for service, with particulars of the material terms and
conditions of employment or engagement of such Persons, including
rates of remuneration, benefits and positions held. Each employee has
been paid all wages, income and any other sum owing to him by the
Company as at the end of the most recent completed pay period, other
than statutory or other accruals incurred in the ordinary course of
business. None of the Vendors are aware of any labour conflict with
any of the employees of the Company which might reasonably be expected
to have a materially adverse effect on the operations of the Company.
(q) ABSENCE OF GUARANTEES - The Company has no guarantees with respect to
the obligations of any other Person. The Company has no indemnities or
contingent or indirect obligations with respect to the obligation of
any other Person (including any obligations to service the debt of or
otherwise acquire an obligation of another Person or to supply funds
to, or otherwise maintain any working capital or other balance sheet
condition of any other Person);
(r) TITLE TO ASSETS - The Company has good and marketable title to the
Assets free and clear of all Encumbrances except for Permitted
Encumbrances and none of the Assets is in the possession of or under
the control of any other Person.
(s) LICENSES - Except for a business licence from the Municipality of
Burnaby, British Columbia, the Company has all Licenses necessary or
desirable for the effective conduct of the Business and the ownership
or leasing of the Assets in the Province of British Columbia.
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(t) CONDUCT OF BUSINESS - The Company is carrying on the Business in
accordance with all applicable laws, regulations, directions, demands,
by-laws, covenants, agreements and restrictions governing the conduct
of such business and operations in the Province of British Columbia.
(u) CONTRACTS IN GOOD STANDING - Every contract, agreement or instrument,
written or unwritten, including insurance policies, guarantees,
commitments, indemnities, leases and warranties to which the Company
is a party or by which it is bound is in good standing and the Company
is not in breach of any of the material terms or conditions thereof.
(v) MATERIAL CONTRACTS - Except for the Encumbrances, the Equipment
Leases, the Contracts, the insurance policies listed in Schedule I,
and the employment contracts listed in Schedule Q, the Company is not
party to or bound by any material contract or commitment whether oral
or written.
(w) LEASED EQUIPMENT - Schedule R sets forth a true and complete list of
all equipment, other personal property and fixtures in the possession
or custody of the Company which, as at the date hereof, are leased or
are held under licence or similar arrangement and accurately described
as the leases, licences, agreements, or other documentation relating
thereto. All rental or other payments required to be paid by the
Company pursuant to such leases or licences have been duly paid and
the Company is not otherwise in default in meeting its obligations
thereunder.
(x) REAL PROPERTY - Schedule G contains accurate descriptions of all real
property in respect of which the Company holds an interest, whether
freehold, leasehold or otherwise. The Company is not party to or bound
by any leases of real property other than those referred to in
Schedule G and all interest held by the Company whether as owner or as
tenant are free and clear of all Encumbrances except as set out in
Schedule E. All rental and other payments required to be paid by the
Company pursuant to such leases have been duly paid and the Company is
not otherwise in default in meeting its obligations under any such
lease.
(y) COLLECTABILITY OF ACCOUNTS RECEIVABLE - The Receivables shown on the
Financial Statements or acquired subsequent to the date thereof by the
Company have been recorded by the Company in accordance with its usual
accounting practices. The reserve taken for doubtful or bad accounts
is adequate based on the past experience of the Company and is
consistent with the accounting procedures used by the Company in
previous financial periods. There is nothing which would indicate that
such reserve is not adequate or that a higher reserve should be taken.
(z) INSURANCE - Particulars of all insurance maintained by the Company are
set forth in Schedule I.
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(aa) COPIES OF AGREEMENTS - True, correct and complete copies of all
mortgages, leases, agreements, instruments and other documents listed
in Schedules D, F, G and R have been delivered to the Purchaser.
(bb) ABSENCE OF APPROVALS REQUIRED - Relying upon the Purchaser's
representations and warranties with respect to the INVESTMENT CANADA
ACT and the COMPETITION ACT as set forth in subsection 3.5(s) , no
Licence or Order of any Governmental Authority and no registration,
declaration or filing by the Vendors or the Company with any such
Governmental Authority is required in order for the Vendors:
(i) to incur the obligations expressed to be incurred by the Vendors
pursuant to this Agreement;
(ii) to execute and deliver all of the documents and instruments to be
delivered by the Vendors pursuant to this Agreement;
(iii) to duly perform and observe the terms and provisions of this
Agreement; and
(iv) to render this Agreement legal, valid, binding and enforceable in
accordance with its terms.
(cc) COLLECTIVE AGREEMENTS AND GRIEVANCES - The Company is not party to any
collective agreements and there are no pending, outstanding, or
unresolved grievances against the Company pursuant to any such
collective agreement except as set out in Schedule L.
(dd) TRADE MARKS - The Company does not have and does not use any service
marks, trade names or trade marks other than those shown in Schedule
K.
(ee) INDEBTEDNESS TO VENDORS - Except for the Shareholders' Loans and the
balance of the fee payable to the Broker under the Engagement Letter
amounting to $12,037.50, the Company is not indebted to any of the
Vendors or any directors, officers or employees of the Company or any
affiliate or associate of any of them.
(ff) CONDITION OF ASSETS - All material tangible Assets used by the Company
in the Business are in good operating condition and in a good state of
maintenance and repair.
(gg) WITHHOLDINGS AND REMITTANCES - The Company has withheld from each
payment made to any of its present or former employees, officers and
directors, and to all persons who are non-residents of Canada for the
purposes of the INCOME TAX ACT all amounts required by law and shall
continue to do so until the Closing Time. The
<PAGE>
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Company has remitted all Canada Pension Plan contributions, employment
insurance premiums, employer health taxes and other Taxes payable by
it in respect of its employees to the proper Governmental Agency.
(hh) PAYMENT OF SOCIAL SERVICE TAX - The Company has paid all Taxes imposed
under the SOCIAL SERVICE TAX ACT (British Columbia) on the acquisition
of tangible personal property as defined in the SOCIAL SERVICE TAX ACT
(British Columbia).
(ii) CANADIAN-CONTROLLED PRIVATE CORPORATION - The Company is and has been
since its incorporation a "Canadian-controlled private corporation"
within the meaning of this term under the INCOME TAX ACT.
(jj) [INTENTIONALLY LEFT BLANK]
(kk) ADDITIONAL TAX MATTERS - Except as specified in Schedule J, the
Company has not:
(i) acquired or had the use of any property from a Person with whom
it was not dealing at arm's length other than at fair market
value;
(ii) disposed of anything to a Person with whom the Company was not
dealing at arm's length for proceeds less than the fair market
value thereof;
(iii) made any election with respect to the acquisition or disposition
of any Assets;
(iv) made any election with respect to the payment out of the capital
dividend account of the Company;
(v) discontinued carrying on any business in respect of which
non-capital losses were incurred, and any non-capital losses
which the Company has are not losses from property or business
investment losses;
(ll) DIVIDENDS - No dividends or other distribution on any shares in the
capital of the Company have been made, declared or authorized except
as disclosed in the Financial Statements.
(mm) SERVICE CONTRACTS - The Company does not have any contracts,
arrangements, whether oral or implied or expressed, with lessees,
licensees, managers, accountants, suppliers, agents, distributors,
officers, lawyers, or others which cannot be terminated either
immediately or upon reasonable notice.
(nn) INDEBTEDNESS OF OFFICERS, DIRECTORS AND EMPLOYEES - None of the
Vendors nor any officer, director or employee of the Company is now
indebted or under obligation to
<PAGE>
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the Company on any account.
(oo) INTELLECTUAL PROPERTY - To the best of the knowledge of the Vendors,
the operations of the Business, the manufacture, storage, use and sale
by it of its products and the provision by it of its services do not
involve infringements or claimed infringement of any patent,
copyright, trade mark or trade name. No employee of the Company owns,
directly or indirectly in whole or in part, any patent, trade mark,
trade name, copyright, invention, process, know-how, formula or trade
secret which the Company is presently using or the use of which is
necessary for the Business.
(pp) CONSENTS - Except for Contracts and the Equipment Leases requiring the
consents to the change of control of the Company, there are no
consents, authorizations, licenses, franchise agreements, permits,
approvals or orders of any person or government required to permit the
Vendors to complete the transaction with the Purchaser.
(qq) INVENTORIES - The inventories of the Company are in good and
merchantable condition and are useable in the ordinary course of
business for the purposes for which they are intended and are carried
on the books of the Company at cost.
3.2 VENDORS' REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING
SECURITIES LAWS
Each Vendor hereby represents, warrants and covenants as follows:
(a) Either alone or with the assistance of his professional advisor(s),
the Vendor is a person of adequate financial sophistication and has
such knowledge and experience in financial and business affairs that
he is capable of evaluating the merits and risks of his acquisition of
the Consideration Shares.
(b) The Vendor has sufficient financial resources to be able to bear the
risk of his investment in the Consideration Shares.
(c) The securities being acquired hereunder (the Consideration Shares)
involve a high degree of risk and the entire amount of the Vendor's
investment might be lost.
(d) A partial inducement to the Purchaser to enter into this Agreement is
the representation by the Vendor that he has a high degree of business
and financial sophistication concerning the industry and the business
operations and prospects of the Purchaser. The Vendor has either
spoken or met with, or been given a reasonable opportunity to speak or
meet with representatives of the Purchaser for the purpose of asking
questions of, and receiving answers and information from, such
representatives concerning the Purchaser, the Consideration Shares and
the Broker's Shares.
<PAGE>
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(e) The Vendor is acquiring the Consideration Shares for his own account
for investment purposes and not with a view toward the sale or
distribution of all or any part of the Consideration Shares.
(f) No one other than the Vendor has any beneficial interest in the
Consideration Shares.
(g) The Consideration Shares have been offered and distributed pursuant to
exemptions from registration under the SECURITIES ACT and relevant
state and provincial securities laws and the reliance of the Purchaser
upon such exemptions is predicated on the accuracy of the Vendor's
representations and warranties herein.
(h) The Consideration Shares have not been registered under the SECURITIES
ACT and therefore they have the status of securities acquired in a
transaction under Section 4(2) of the SECURITIES ACT. The
Consideration Shares cannot be sold or distributed unless (i) there is
an effective registration statement under the SECURITIES ACT and
applicable state securities laws covering any such transaction
involving the Consideration Shares, or (ii) the Purchaser receives an
opinion of the Vendor's legal counsel, acceptable to the Purchaser,
stating that such transaction is exempt from registration under the
SECURITIES ACT and applicable state securities laws, or (iii) the
Purchaser otherwise satisfies itself that such transaction is exempt
from registration.
(i) The Consideration Shares are being offered and sold pursuant to
Regulation S under the SECURITIES ACT relating to offers and sales of
securities outside the United States.
(j) The Vendor is not a "U.S. person" as that term is defined under Rule
902(o)(1) of the SECURITIES ACT and he is not acquiring the
Consideration Shares for the account or benefit of any "U.S. person."
The definition of a "U.S. person" includes (i) a natural person
resident in the United States, (ii) any partnership or corporation
organized or incorporated under the laws of the United States, and
(iii) other entities located in or administered by persons in the
United States.
(k) The Vendor is located outside the United States at the time of the
execution of this Agreement.
(l) The resale of the Consideration Shares will not be offered or sold in
the United States or to U.S. persons (other than distributors) unless:
(i) the resale of the Consideration Shares is registered under the
SECURITIES ACT, (ii) an exemption from registration is available, or
(iii) the resale of the Consideration Shares is in
<PAGE>
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accordance with the provisions of Regulation S. The Vendor understands
that under Regulation S, he will be prohibited generally from resale
of any of the Consideration Shares to U.S. persons or to persons
purchasing for the account of U.S. persons for a period of one year
beginning on completion of this offering. The Vendor further
understands that the Purchaser will not register any transfer of the
Consideration Shares unless in accordance with these requirements.
(m) The certificates for the Consideration Shares will contain a legend to
the effect that transfer of the Consideration Shares is prohibited
except in accordance with the provisions of Regulation S under the Act
(Rule 901 through Rule 905, and Preliminary Notes), pursuant to
registration under the SECURITIES ACT, or pursuant to an available
exemption from registration; and that hedging transactions involving
the Consideration Shares may not be conducted unless in compliance
with the Act to read as follows:.
"The securities represented by this certificate have not been
registered under the United States Securities Act of 1933 (the
"Act") or any other federal or U.S. state securities laws in
reliance on applicable exemptions therefrom and are "restricted
securities" under the Act. The shares may not be offered for
sale, sold or otherwise transferred or assigned for value,
directly or indirectly, nor may hedging transactions involving
these securities be conducted, nor may the securities be
transferred on the books of the Company (except in accordance
with Regulation S under the Act), without registration of such
securities under all applicable United States federal or state
securities laws or compliance with an applicable exemption
therefrom to the satisfaction of the Company, such compliance, at
the option of the Company, to be evidenced by an opinion of the
security-holders' counsel, in form acceptable to the Company,
that such transfer, assignment or resale is exempt from the
registration requirements of the Act or state laws."
3.3 ABSENCE OF UNTRUE STATEMENTS
None of the foregoing representations and warranties contains any
untrue statement or omits to state any fact necessary to make any such
representation or warranty not misleading to the Purchaser seeking full
information as to the Company and its Business, Assets, and liabilities, and the
Vendors, excluding the Broker, Scott Consulting and Notman have no information
or knowledge of any facts relating to the Business, Assets and liabilities of
the Company, or the Vendors' Securities, which if known to the Purchaser might
reasonably be expected to deter the
<PAGE>
-21-
Purchaser from completing the transactions contemplated under this Agreement or
cause the Purchaser to seek an adjustment to the Purchase Price.
3.4 RELIANCE
The Purchaser has entered into this Agreement relying on the
representations and warranties of the Vendors and other terms and conditions of
this Agreement notwithstanding any independent searches or investigations that
may be undertaken by or on behalf of the Purchaser and no information which is
now known or should be known or which hereafter becomes known to the Purchaser
or its officers, directors or professional advisors shall limit or extinguish
any right of the Purchaser to a legal or equitable remedy under this Agreement.
3.5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants as follows:
(a) ORGANIZATION AND GOOD STANDING - The Purchaser is duly
incorporated and is validly existing and in good standing
under Delaware law.
(b) AUTHORIZED CAPITAL - The Purchaser has an authorized capital
of 105,000,000 shares, consisting of 100,000,000 shares of
common stock, US$0.001 par value per share and 5,000,000
shares of preferred stock, US$0.001 par value per share, of
which 24,821,725 shares of common stock, US$0.001 par value
per share were issued and outstanding as of November 15, 2000.
This number of issued and outstanding shares does not include
shares in the common stock of the Company to be issued
hereunder.
(c) FINANCIAL STATEMENTS - The Financial Statements of the
Purchaser have been prepared in accordance with Generally
Accepted Accounting Principles, applied on a basis consistent
with that of the preceding financial periods and are complete
and accurate in all respects.
(d) ABSENCE OF UNDISCLOSED LIABILITIES - The Purchaser has no
liabilities, due or accruing due, contingent or absolute,
liquidated or unliquidated, of any kind except
(i) liabilities disclosed or provided for in the
Financial Statements of the Purchaser,
(ii) liabilities incurred in the ordinary course of the
business since the date of the Financial Statements
of the Purchaser, which are consistent with past
practice and are not, in the aggregate, material and
adverse to the business of the Purchaser, or to the
financial condition or results of the Purchaser;
<PAGE>
-22-
(e) ABSENCE OF CONFLICTING AGREEMENTS - The execution and delivery
of this Agreement and the consummation of the transactions
contemplated by it will not conflict with or result in a
breach of or default under any contract, agreement or other
instrument or the constating documents of the Purchaser and to
the best of the knowledge of the Purchaser will not contravene
any Applicable Law or Order.
(f) ABSENCE OF CHANGES - Since the date of the balance sheet
included in the Financial Statements of the Purchaser there
has not been:
(i) any changes in the condition or operations of the
business, assets or financial affairs of the
Purchaser which are, individually or in the
aggregate, materially adverse; or
(ii) any damage, destruction or loss, labour trouble or
other event, development or condition, of any
character (whether or not covered by insurance) which
is not generally known or which has not been
disclosed to the Vendors, which has or may materially
and adversely affect the business, assets, properties
or future prospects of the Purchaser.
(g) ACCURACY OF RECORDS - All material financial transactions of
the Purchaser have been accurately recorded in the books and
records of the Purchaser and such books and records fairly
represent the financial position and the corporate affairs of
the Purchaser.
(h) CORPORATE RECORDS - To the best of the knowledge of the
Purchaser, the Purchaser has kept the records required to be
kept by the corporate law of Delaware and these records,
including filings required under these laws, are complete,
accurate and up-to-date and contain all minutes of all
meetings of directors and members of the Purchaser held since
its incorporation.
(i) CONDUCT OF BUSINESS - The Purchaser is carrying on its
business in accordance with all applicable laws, regulations,
directions, demands, by-laws, covenants, agreements and
restrictions governing the conduct of such business and
operations in the Province of British Columbia.
(j) CONTRACTS IN GOOD STANDING - Every contract, agreement or
instrument, written or unwritten, including insurance
policies, guarantees, commitments, indemnities, leases and
warranties to which the Purchaser is a party or by which it is
bound is in good standing and the Purchaser is not in breach
of any of the material terms or conditions thereof.
(k) FILING OF TAX RETURNS - The Purchaser has prepared and filed
all Tax Returns with all appropriate Governmental Agencies for
all financial or other relevant periods
<PAGE>
-23-
ending before the Closing Date and each such Tax Return was
filed on time. Each such Tax Return was correct and complete.
(l) PAYMENT OF TAXES - The Purchaser has paid all Taxes due and
payable as reflected on its filed Tax Returns and has paid all
assessments and reassessments it has received in respect of
Taxes. The Purchaser has paid all Tax instalments due in
respect of all taxation years.
(m) ABSENCE OF LIABILITY FOR TAXES - Except for Taxes in respect
of ordinary operations of the Purchaser and in the current
financial period, the Purchaser has no liability, contingent
or otherwise, for Taxes.
(n) ABSENCE OF REASSESSMENTS FOR TAXES - There are no
reassessments of Taxes that have been issued and are
outstanding. No Governmental Agency has challenged, disputed
or questioned the Company in respect of Taxes or of any Tax
Returns. The Company is not negotiating any draft assessment
or reassessment with any Governmental Agency. The Purchaser
is not aware of any contingent liabilities of the Purchaser
for Taxes or grounds for an assessment or reassessment
including aggressive treatment of income, expenses, credits
or other claims for deduction under any return, filing or
report. The Purchaser has not received any notice from any
Governmental Agency that an assessment or reassessment is
proposed in respect of any Taxes, regardless of its merits.
The Purchaser has not executed or filed with any
Governmental Agency any agreement extending the period for
assessment, reassessment or collection of any Taxes.
(o) CORPORATE AUTHORITY - The Purchaser has all necessary
corporate power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder; the
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by all necessary corporate resolutions on the part
of the Purchaser and has the necessary corporate power,
authority and capacity to own its assets and carry on its
business.
(p) PURCHASER NOT INSOLVENT - The Purchaser is solvent and has not
committed an act of bankruptcy, proposed a compromise or
arrangement to its creditors generally, had any petition for a
receiving order in bankruptcy filed against it, made a
voluntary assignment in bankruptcy or taken any proceeding to
have itself wound-up or declared bankrupt or to have a
receiver appointed over all or any portion of its assets.
(q) ABSENCE OF LITIGATION - To the best of the knowledge of the
Purchaser, other than as set out in Schedule N, there are no
actions, suits, claims, judgments, litigation, orders,
complaints, investigations or proceedings outstanding or
pending or overtly threatened by or against the Purchaser
which would have a material adverse effect
<PAGE>
-24-
on the assets, business, future prospects or financial
condition of the Purchaser.
(r) LICENSES - The Purchaser has all Licenses necessary or
desirable for the effective conduct of the business of the
Purchaser and the ownership or leasing of the assets of the
Purchaser in the Province of British Columbia.
(s) COMPETITION ACT - The assets and gross revenues of the
Purchaser and its associates are such that the transactions
contemplated herein are exempted from the provisions of Part
VIII of the COMPETITION AC and the transactions contemplated
herein are exempt from the provisions of the INVESTMENT CANADA
ACT.
(t) GOVERNMENTAL CONSENTS - No governmental or regulatory
authorizations, consents, approvals, filings or notices
pertaining to the Purchaser are required to be obtained or
given or waiting period is required to expire in order that
the purchase and sale of the Vendors' Shares may be
consummated by the Purchaser or for the Purchaser to carry out
its obligations set out in this Agreement.
(u) REGISTRATION OF SECURITIES - The Purchaser is a reporting
company under the EXCHANGE ACT and the Purchaser has duly
prepared and filed all documents required to be filed by it
pursuant to THE EXCHANGE ACT and the regulations and rules
thereunder and such documents, when filed, did not contain
any false or misleading statements with respect to any
material facts or omit to state a material fact necessary to
be stated in order for the statement not to be misleading or
false. To the best of the knowledge of the Purchaser, the
Purchaser is not in breach or default of any requirement of
the Applicable Law, its common shares are quoted on the
National Association of Securities Dealers Bulletin Board
and the Purchaser is not in breach or default of any
requirement of any applicable by-laws, rules or regulations
of the National Association of Securities Dealers.
(v) DISCLOSURE OF MATERIAL FACTS - The Purchaser has no knowledge
of any material fact or material change relating to the
Purchaser which has not been publicly disclosed, other than
the transaction contemplated by this Agreement.
(w) CONSIDERATION SHARES VALIDLY ISSUED - The Consideration Shares
will, when issued, be validly issued as fully paid and
non-assessable and free and clear of all Encumbrances, save
and except for restrictions imposed under Applicable Laws.
(x) CONSIDERATION SHARES EXEMPT FROM REGISTRATION - The issuance
of the Consideration Shares will be effected in such a manner
as to be exempt from registration under the SECURITIES ACT and
all applicable state securities or blue sky laws. The issuance
of the Consideration Shares will also be effected is such a
manner so as to be exempt from the registration and prospectus
requirements of the SECURITIES ACT (British Columbia).
<PAGE>
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(y) NO ORDER CEASING OR SUSPENDING TRADING - No Order ceasing or
suspending trading in the securities of the Purchaser, or
prohibiting the sale of securities by the Purchaser is in
effect and no proceedings for this purpose have been
instituted or threatened or to the best of the knowledge of
the Purchaser are pending or contemplated.
(z) REPRESENTATIONS AND WARRANTIES RE: SUBSIDIARIES OF THE
PURCHASER - The representations and warranties of the
Purchaser in this Agreement shall apply MUTATIS MUTANDIS to
all Subsidiaries of the Purchaser.
3.6 ABSENCE OF UNTRUE STATEMENTS
None of the foregoing representations and warranties contains any
untrue statement or omits to state any fact necessary to make any such
representation or warranty not misleading to the Vendors seeking full
information as to the Purchaser and its business, assets, and liabilities, and
the Purchaser has no information or knowledge of any facts relating to the
business, assets and liabilities of the Purchaser or the Consideration Shares
which if known to the Vendors might reasonably be expected to deter the Vendors
from completing the transactions contemplated under this Agreement or cause the
Vendors to seek an adjustment to the Purchase Price.
3.7 RELIANCE
The Vendors have entered into this Agreement relying on the
representations and warranties of the Purchaser and other terms and conditions
of this Agreement notwithstanding any independent searches or investigations
that may be undertaken by or on behalf of the Vendors and no information which
is now known or should be known or which hereafter becomes known to the Vendors
or their professional advisors shall limit or extinguish any right of the
Vendors to a legal or equitable remedy under this Agreement.
3.8 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES OF THE VENDORS AND THE
PURCHASER - All of the representations and warranties of the
Vendors and the Purchaser contained in this Agreement or in
any document delivered in connection with the transactions
contemplated by this Agreement shall be true and complete at
Closing as if made at and as of the Closing and,
notwithstanding any investigations or enquiries made by or on
behalf of the Vendors or the Purchaser before the Closing,
shall survive the Closing and shall continue in full force and
effect for the benefit of the Vendors or the Purchaser, as the
case may be.
(b) RELEASE OF VENDORS AND THE PURCHASER - Notwithstanding the
foregoing, the representations and warranties of the Vendors
and the Purchaser shall only survive:
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(i) for all representations and warranties unrelated to Tax
matters, for 18 months from the Closing Date; and
(ii) for representations and warranties related to Tax matters,
for the period of time during which Taxes to which the
representations and warranties relate may be reassessed by
the relevant authorities, unless the Vendors or the
Purchaser, as the case may be, have been fraudulent in
filing a Tax Return or supplying information to any taxation
authority, in which case the survival of those
representations and warranties relating to Tax matters shall
be unlimited.
ARTICLE 4 - COVENANTS OF THE PARTIES
4.1 CONSENTS REQUIRED IN CONTRACTS
The Vendors shall be responsible for obtaining any consent for any
Contract or Equipment Lease where such consent is required upon a change of
control of the Company as a result of the consummation of transactions
contemplated by this Agreement. If the Vendors are unable to obtain such
consent, such Contract or Equipment Lease shall not be assigned and the Company
shall, to the extent legally possible, hold its interest in the Contract or
Equipment Lease in trust for the benefit of the Purchaser until such consent is
obtained.
4.2 KEY EMPLOYEE EMPLOYMENT AGREEMENTS
The Vendors will cause the following key employees to enter into
employment agreements or consulting agreements with the Company at Closing, in
the forms of the employment agreements and consulting agreements attached as
Schedule B:
(a) Igor Bolouchaev;
(b) Chris Neumann
(c) Charles Ohiri; and
(d) John Robertson.
The Vendors will also cause Daniel Ho and Ken Watanabe to enter into
Confidentiality, Non-Competition and Assignment of Inventions Agreements in the
form of the agreement attached as Schedule S.
4.3 POSSESSION
At or before the Closing Time, the Vendors shall deliver to the
Purchaser IN SITU possession of all books, records, book accounts, lists of
suppliers and customers of the Company
<PAGE>
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and all other documents, files, records and other data, financial or otherwise,
relating to the Business. The Purchaser will preserve the documents, books and
records so delivered to it for a period of six years from the Closing Date, or
for such other period as may be required by any applicable law, and will permit
the Vendors or their authorized representatives reasonable access to those books
and records in connection with the affairs of the Company relating to any Tax,
workers' compensation or litigation matters.
4.4 BOOKS AND RECORDS
(a) The Vendors will permit the Purchaser, at any time up to the
Closing Date, and its auditors, solicitors and other
authorized persons, to make such investigation of the Assets
and of the financial and legal condition of the Company as the
Purchaser deems necessary.
(b) The Purchaser will permit the Vendors, at any time up to the
Closing Date, and their auditors, solicitors and other
authorized persons, to make such investigation of the assets
of the Purchaser and of its financial and legal condition as
the Vendors deem necessary.
4.5 OPINION
[Deleted]
THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
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4.6 OPINION
The Purchaser will deliver to the Vendors at the Closing Time one or
more legal opinions, addressed to the Vendors, excluding the Broker, Scott
Consulting and Notman and the Vendors' Solicitor, in form satisfactory to the
Vendors' Solicitor that:
(a) the Purchaser is duly organized and validly existing under the
laws of the State of Delaware and is in good standing with the
Secretary of State of Delaware;
(b) the Purchaser may issue the Consideration Shares excluding the
Consideration Shares to be issued to the Broker, Scott
Consulting and Notman as provided for under this Agreement in
reliance upon Regulation S under the SECURITIES ACT and such
issuance will not violate the registration requirements of the
SECURITIES ACT or Delaware law.
(c) the Purchaser may issue the Consideration Shares as provided
for under this Agreement in reliance upon exemption from
registration and prospectus requirements under the securities
laws of British Columbia;
(d) the Consideration Shares, excluding the Consideration Shares
to be issued to the Broker, Scott Consulting and Notman, are
"Restricted Securities" under the SECURITIES ACT as defined in
SECURITIES ACT Rule 144 and the Vendors, excluding the Broker,
Scott Consulting and Notman, may resell these shares without
registration under the SECURITIES ACT, provided the provisions
of Rule 144 promulgated under the SECURITIES ACT are complied
with.
4.7 TRANSFER OF SHARES
The Vendors will, upon Closing, take all necessary steps and
proceedings as approved by the Purchaser to permit the Vendors' Securities to be
duly and regularly transferred to the Purchaser or its nominee Subsidiary and
registered in its name, free and clear of all Encumbrances.
4.8 RESIGNATIONS
The Vendors will cause Mirza Kassam and Chris Neumann to resign as
directors and officers of the Company in favour of nominees of the Purchaser,
such resignations to be effective as at the Closing Date.
<PAGE>
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4.9 CONFIDENTIALITY AGREEMENT
At Closing, Kassam and Fetherstonhaugh shall enter into Confidentiality
Agreement in the form attached as Schedule O.
4.10 EXCLUSION OF THE BROKER, SCOTT CONSULTING AND NOTMAN
The Broker, Scott Consulting and Notman shall be excluded from the
operation of sections 4.1 - 4.9.
4.11 PIGGYBACK REGISTRATION RIGHTS
The Purchaser shall notify the Vendors at least 30 days before filing
any registration statement under the SECURITIES ACT for purposes of effecting a
public offering of securities of the Purchaser and will, at no cost to the
Vendor, afford each Vendor an opportunity to include in such registration
statement all or any part of the Consideration Shares issued under this
Agreement and then held by such Vendor. If such registration is pursuant to an
underwritten offering, participation in such offering shall be subject to the
consent of the underwriters. On the expiry of one year from the Closing Date,
the Purchaser will, upon request, at its own expense, seek a legal opinion
relating to the resale of the Consideration Shares as referred to in s.
3.2(h)(ii) of this Agreement and the removal of the legend placed on the
Consideration Shares and referred to in s. 3.2(m) of this Agreement. The ability
of Purchaser to obtain such legal opinion depends upon conditions beyond
Purchaser's control, including, without limitation, no changes in United States
securities laws and regulations with respect to resale of the Consideration
Shares from those existing as of the Closing Date and an assumption that at such
time each Vendor will not be an "affiliate" of the Purchaser within the meaning
of Rule 144 under the Securities Act. The Purchaser will cooperate with and
assist the Vendors in seeking such an opinion and in having any such legend
removed from the certificates representing the Consideration Shares.
4.12 LOAN
The Parties, except for the Broker, Scott Consulting and Notman,
acknowledge that the Purchaser has extended a credit facility to the Company of
up to $1,000,000 (the "Loan Amount"), pursuant to the Loan Agreement. The
parties acknowledge that the Purchaser has already advanced $300,000 of the Loan
Amount, to be used by the Company for the current obligations of the Company,
including working capital, supplier invoices, capital leases, payroll and
statutory remittances. From and after Closing, the Purchaser will advance up to
another $200,000 of the Loan Amount, as required, for the ongoing current
obligations of the Company and will also advance up to another $500,000 of the
Loan Amount for working capital.
<PAGE>
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ARTICLE 5-CONDITIONS PRECEDENT
5.1 PURCHASER'S CONDITIONS
The obligations of the Purchaser under this Agreement are subject to
the following conditions for the exclusive benefit of the Purchaser being
fulfilled in all material respects in the reasonable opinion of the Purchaser
upon Closing or waived by the Purchaser at or before the Closing or agreed by
the Vendors and the Purchaser to be indemnified for by the Vendors:
(a) TRUTH AND ACCURACY OF REPRESENTATIONS OF THE VENDORS AT
CLOSING - The representations and warranties of the Vendors
made in Article 3 shall be true and correct in all material
respects as at the Closing and with the same effect as if made
at and as of the Closing.
(b) PERFORMANCE OF OBLIGATIONS - The Vendors shall have complied
in all material respects with their respective obligations
hereunder and the Vendors shall have caused the Company to
have performed and complied with all the obligations to be
performed and complied with by the Company.
(c) ABSENCE OF INJUNCTIONS ETC. - No injunction or restraining
order of any Court or administrative tribunal of competent
jurisdiction shall be in effect prohibiting the transactions
contemplated hereby and no action or proceeding shall have
been instituted or be pending before any Court or
administrative tribunal to restrain or prohibit the
transactions between the Parties contemplated hereby.
(d) ABSENCE OF CHANGE OF CONDITIONS - No event shall have occurred
or condition or state of facts of any character shall have
arisen or legislation (whether by statute, rule, regulation,
by-law or otherwise) shall have been introduced which might
reasonably be expected to have a materially adverse effect
upon the financial condition, results of operations or
business prospects of the Company.
(e) CLOSING DOCUMENTATION - The Purchaser shall have received from
the Vendors and, where applicable, the Company, the Closing
Documents set forth in Schedule P.
(f) ABSENCE OF DAMAGES ETC. - No damage, destruction or loss to
any property of the Company that is not adequately covered by
insurance shall have occurred.
(g) LEGAL OPINION - The Purchaser shall have received the legal
opinion referred to in s. 4.5.
(h) BOARD RESOLUTION - The board of directors of the Purchaser
shall have approved the within transaction.
<PAGE>
-31-
5.2 THE VENDORS' CONDITIONS
The obligations of the Vendors under this Agreement are subject to the
following conditions for the exclusive benefit of the Vendors being fulfilled in
all material respects in the reasonable opinion of the Vendors upon Closing, or
waived by the Vendors at or before Closing, or agreed by the Purchaser and the
Vendors to be indemnified for by the Purchaser:
(a) TRUTH AND ACCURACY OF REPRESENTATIONS OF THE PURCHASER AT
CLOSING - The representations and warranties of the Purchaser
made in Article 3 shall be true and correct in all material
respects as at the Closing and with the same effect as if made
at and as of the Closing.
(b) PERFORMANCE OF OBLIGATIONS - The Purchaser shall have
performed and complied with all the obligations required by
this Agreement to be performed and complied with by the
Purchaser prior to or on the Closing Date.
(c) ABSENCE OF INJUNCTIONS ETC. - No injunction or restraining
order of any Court or administrative tribunal of competent
jurisdiction shall be in effect prohibiting the transactions
contemplated hereby and no action or proceeding shall have
been instituted or be pending before any Court or
administrative tribunal to restrain or prohibit the
transactions between the Parties contemplated hereby.
(d) ABSENCE OF CHANGE OF CONDITIONS - No event shall have occurred
or condition or state of facts of any character shall have
arisen or legislation (whether by statute, rule, regulation,
by-law or otherwise) shall have been introduced which might
reasonably be expected to have a materially adverse effect
upon the financial condition, results of operations or
business prospects of the Purchaser.
(e) CLOSING DOCUMENTATION - The Vendors shall have received from
the Purchaser the Closing Documents set forth in Schedule P.
(e) ABSENCE OF DAMAGES ETC. - No damage, destruction or loss to
any property of the Purchaser that is not adequately covered
by insurance shall have occurred.
(f) LEGAL OPINION - The Vendors shall have received the legal
opinion referred to in s. 4.6.
(g) BOARD RESOLUTION - The board of directors of the Purchaser
shall have approved the within transaction.
5.3 NON-FULFILMENT OF CONDITION
If any of the conditions in Sections 5.1 and 5.2 are not fulfilled,
waived or
<PAGE>
-32-
indemnified for, the Party entitled to the benefit of such condition (the "First
Party") may terminate this Agreement by notice in writing to the other party and
in such event the First Party shall be released from all obligations under this
Agreement. Unless the First Party can show that the condition or conditions
which have not been satisfied and for which the First Party has terminated this
Agreement are reasonably capable of being performed or caused to be performed by
the other Party, then the other Party shall also be released from all
obligations under this Agreement, except that the First Party may waive
compliance with any such conditions, obligations or covenants in whole or in
part if it sees fit to do so without prejudice to any of its rights of
termination in the event of non-performance of any other condition, obligation
or covenant, in whole or in part.
5.4 WAIVER OF CONDITION
The conditions in Sections 5.1 and 5.2 may be waived in whole or in
part without prejudice to any right of any party in the event of the
non-fulfilment of any other condition or conditions. A waiver will be binding
only if it is in writing.
ARTICLE 6 - GENERAL
6.1 JOINT AND SEVERAL
All covenants, representation and warranties of the Vendors excluding
the Broker, Scott Consulting and Notman in this Agreement and in the Closing
Documents are and will be joint and several, provided that each such Vendor will
only be liable under this Agreement to the extent of his percentage
shareholdings in the Company.
6.2 TIME
Time shall be of the essence of this Agreement.
6.3 EXPENSES
The Company will bear the fees and disbursements of the respective
lawyers, accountants and consultants engaged by the Company and the Vendors in
connection with this Agreement. The Purchaser will bear the fees and
disbursements of the lawyers, accountants and consultants engaged by it in
connection with this Agreement.
6.4 NOTICES
Any notice, direction or other instrument required or permitted to be
given under this Agreement shall be in writing and shall be given by hand
delivering or couriering the same addressed as follows:
<PAGE>
-33-
To the Vendors: John Robertson #203 - 728 Farrow St.,
Coquitlam, B.C. V3J 3S6
Mirza Kassam #705 - 1075 Barclay St.,
Vancouver, B.C. V6E 1G5
Chris Neumann 2762 Bayview St., Surrey, B.C. V4A 2Z4
Robert Fetherstonhaugh, 130, De Liege Street East,
Montreal, Quebec H2P 1J1
Stirling Mercantile Corporation, Peter A. Scott
Consulting Ltd. and Hugh Notman,
1370 - 1095 West Pender St., Vancouver, B.C. V6E 2M6
with a copy to:
Anfield Sujir Kennedy & Durno
160 - 609 Granville St., Box 10068
Vancouver, B.C. V7Y 1C3
Attention: Michael Kennedy
To the Purchaser: Unity Wireless Corporation
7438 Fraser Park Drive
Burnaby, B.C. V5J 5B9
or to such other address as a Party may specify by notice and shall be deemed to
have been received when delivered.
6.6 FURTHER ASSURANCES
Each of the Parties shall, upon request of the other, execute and
deliver all such further documents and instruments and do all such further acts
and things as may be reasonably necessary before or after the Closing Date to
evidence, carry out or give full effect to the terms, conditions, intent and
meaning of this Agreement and to assure the transfer of the Vendors' Shares to
the Purchaser and the issuance of the Consideration Shares to the Vendors
pursuant to this Agreement.
6.7 ENUREMENT
This Agreement shall enure to the benefit of and be binding upon each
of the Parties and their respective heirs, executors, administrators, legal
personal representatives, successors and assigns.
<PAGE>
-34-
6.8 COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
counterparts together, shall form one original.
6.9 CURRENCY
Unless otherwise specified, all dollar amounts referred to in this
Agreement shall be in Canadian currency.
THE PARTIES INTENDING TO BE LEGALLY BOUND have entered into this
Agreement on the day and year first above written.
/s/ John Robertson
----------------------------------
JOHN ROBERTSON
/s/ Mirza Kassam
----------------------------------
MIRZA KASSAM
/s/ Chris Neumann
----------------------------------
CHRIS NEUMANN
/s/ Robert Fetherstonhaugh
----------------------------------
ROBERT FETHERSTONHAUGH
STIRLING MERCANTILE CORPORATION
/s/ Hugh Notman
----------------------------------
Authorized Signatory
PETER A. SCOTT CONSULTING LTD.
/s/ Peter Scott
----------------------------------
Authorized Signatory
<PAGE>
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/s/ Hugh Notman
----------------------------------
W. HUGH NOTMAN
ULTRATECH LINEAR SOLUTIONS INC.
/s/ Mirza Kassam
----------------------------------
Authorized Signatory
UNITY WIRELESS CORPORATION
/s/ Roland Sartorius
----------------------------------
Authorized Signatory
<PAGE>
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SCHEDULE A
SHAREHOLDERS AND SHAREHOLDINGS
<TABLE>
<CAPTION>
SHAREHOLDER NO. AND TYPE OF SHARES
----------- ----------------------
<S> <C>
John Robertson 363,016 common shares without par value
Mirza Kassam 257,463 common shares without par value
Chris Neumann 232,492 common shares without par value*
Robert Fetherstonhaugh 303,129 common shares without par value
</TABLE>
OTHER ISSUED SECURITIES AND SECURITY HOLDERS
<TABLE>
<CAPTION>
NAME NO. AND TYPE OF SECURITY
---- ------------------------
<S> <C>
Stirling Mercantile Corporation Broker's Rights
</TABLE>
<PAGE>
-37-
SCHEDULE B
KEY EMPLOYEE EMPLOYMENT AGREEMENTS
<PAGE>
-38-
SCHEDULE C
EMPLOYEES
CONTRACT FOR SERVICES
<TABLE>
<CAPTION>
NAME POSITION ANNUAL SALARY (CDN $)
---- -------- ---------------------
<S> <C> <C>
Chris Neumann VP Sales & marketing 92,000
</TABLE>
CONTRACT OF SERVICE
<TABLE>
<CAPTION>
NAME POSITION ANNUAL SALARY (CDN $)
---- -------- ---------------------
<S> <C> <C>
John Robertson President and GM 108,000
Charles Ohiri Senior Engineer 86,130
Igor Bolouchaev Engineer 52,000
Daniel Ho RF Technician 36,000
Ken Watanabe RF Technician 32,000
</TABLE>
<PAGE>
-39-
SCHEDULE D
CONTRACTS
1. Engagement Agreement among Ultratech Linear Solutions Inc., the
shareholders of the company and Stirling Mercantile Corporation dated
September 22, 2000.
2. Loan Agreement between Ultratech Linear Solutions Inc. as debtor and
Unity Wireless Corporation as lender dated October 3, 2000.
3. $300,000 Promissory Note in favour of Unity Wireless Corporation dated
October 3, 2000.
4. Sales Agency Agreement with Gumsung Trading Company.
<PAGE>
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SCHEDULE E
ENCUMBRANCES
1. PPSA Security Agreement in favour of Hewlett-Packard (Canada) Ltd.,
registered in the British Columbia Personal Property Registry on June
24, 1999 under Base Registration No. 8328327.
2. PPSA Security Agreement in favour of Affordable Leasing Ltd.,
registered in the British Columbia Personal Property Registry on August
27, 1999 under Base Registration No. 8437264.
3. PPSA Security Agreement in favour of Agilent Technologies Canada Inc.,
registered in the British Columbia Personal Property Registry on
February 3, 2000 under Base Registration No. 8685139.
4. General Security Agreement in favour of Unity Wireless Corporation
dated October 3, 2000, registered in the British Columbia Personal
Property Registry on October 5, 2000 under Base Registration No.
91209828.
<PAGE>
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SCHEDULE F
LICENSES
[None]
<PAGE>
-42-
SCHEDULE G
REAL PROPERTY
The only interest in real property held by the Company is an interest as tenant
in the month to month lease of the business premises of the Company.
<PAGE>
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SCHEDULE H
EMPLOYEE BENEFITS/PENSION PLANS
Group Insurance Policy No. 660133 with Imperial Life Financial, effective
November 15, 1999
<PAGE>
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SCHEDULE I
INSURANCE POLICIES
Underwriter: The Dominion of Canada General Insurance Company
Insured: Ultratech Linear Solutions Inc.
Agent: Reliance Insurance Agencies Ltd.
Type: property and liability business insurance ($750,000 equipment;
$250,000 stock; $2,000,000 comprehensive general liability;
$150,000 tenant's legal liability (broad form); and $2,000,000
non-owned automobile)
Risk Location: 4193 McConnell Drive, Burnaby
<PAGE>
-45-
SCHEDULE J
deleted
<PAGE>
-46-
SCHEDULE K
SERVICE MARKS, TRADE MARKS AND TRADE NAMES
1. Unregistered trade name "ULTRATECH LINEAR SOLUTIONS"
<PAGE>
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SCHEDULE L
PENDING, OUTSTANDING OR UNRESOLVED GRIEVANCES
[None]
<PAGE>
-48-
SCHEDULE M
INVESTMENTS
[None]
<PAGE>
-49-
SCHEDULE N
LITIGATION
Potential claims against Ultratech by one or more of the following individuals:
1. Sam Kim
2. Jimmy Kim
3. Janna Kim
4. Frank Lee
5. H. Park
6. GMR Communications Inc.
7. Yong Ho Park
<PAGE>
-50-
SCHEDULE O
CONFIDENTIALITY AGREEMENTS
<PAGE>
-51-
EXHIBIT P
CLOSING DOCUMENTS
VENDORS' CLOSING DOCUMENTS
(a) certified copy of resolutions of the board of directors of the Company
authorizing the transfer of the Vendors' Shares to, and the
registration of the transfer of the Vendors' Shares in the name of the
Purchaser or one of its Subsidiaries and authorizing the issuance of a
new share certificate;
(b) share certificate representing the Vendors' Shares registered in the
name of the Purchaser or one of its Subsidiaries, signed by an officer
of the Company;
(c) Vendors' share certificates duly endorsed for transfer to the
Purchaser;
(d) the corporate minute books and all other books and records of the
Company;
(e) an assignment of the Shareholders' Loans signed by the Vendors;
(f) duly signed resignations of the directors and officers of the Company;
(g) executed confidentiality agreement by and between the Company and
Mirza Kassam and Robert Fetherstonhaugh, substantially in the form of
Schedule O;
(h) comprehensive releases in favour of the Company respecting any claims
the Vendors may have against the Company;
(i) employment agreements or consulting agreements between the Company and
the key employees (John Robertson, Chris Neumann, Charles Ohiri and
Igor Bolouchaev) in the form of the agreements attached as Schedule B.
<PAGE>
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(j) Confidentiality, Non-Competition and Assignment of Inventions
Agreements from Daniel Ho and Ken Watanabe, in the form of the
agreements attached as Schedule S.
PURCHASER'S CLOSING DOCUMENTS
(a) certified copy of the resolutions of the board of directors of the
Purchaser authorizing the Share Purchase Agreement and the
transactions contemplated under it;
(b) legended share certificate representing 203,315 shares in the common
stock of Unity Wireless Corporation registered in the name of John
Robertson;
(c) legended share certificate representing 144,198 shares in the common
stock of Unity Wireless Corporation registered in the name of Mirza
Kassam;
(d) legended share certificate representing 130,212 shares in the common
stock of Unity Wireless Corporation registered in the name of Chris
Neumann;
(e) legended share certificate representing 169,775 shares in the common
stock of Unity Wireless Corporation registered in the name of Robert
Fetherstonhaugh;
(f) legended share certificate representing 26,250 shares in the common
stock of Unity Wireless Corporation registered in the name of W. Hugh
Notman;
(g) legended share certificate representing 26,250 shares in the common
stock of Unity Wireless Corporation registered in the name of Peter A.
Scott Consulting Ltd.;
(h) cheque from the Purchaser payable to Mirza Kassam in the amount of
$26,778.78;
(i) cheque from the Purchaser payable to Chris Neumann in the amount of
$20,221.22;
(j) cheque from the Company to Robert Fetherstonhaugh in the amount of
$25,000;
(k) comprehensive releases in favour of each director of the Company
respecting any claims the Company may have against such directors.
(l) executed Notice of Change of Directors;
(m) executed Notice of Change of Registered and Records Offices.
<PAGE>
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BROKER'S CLOSING DOCUMENTS
(a) Comprehensive releases in favour of each of Robertson, Kassam, Neumann
and Fetherstonhaugh the Broker may have against them
<PAGE>
-54-
SCHEDULE Q
EMPLOYMENT CONTRACTS
[None]
<PAGE>
-55-
SCHEDULE R
EQUIPMENT LEASES
Master Equipment Lease Agreement between Hewlett-Packard (Canada) Ltd. and
Ultratech Linear Solutions Inc. dated May 20, 1999 and schedules dated May 20,
June 1 and June 16, 1999 and July 12, 1999
Affordable Leasing Ltd. lease agreement
Agilent Technologies Canada Inc. lease agreement
Test Equity Inc. equipment lease agreement
<PAGE>
-56-
SCHEDULE S
CONFIDENTIALITY, NON-DISCLOSURE AND
ASSIGNMENT OF INVENTIONS AGREEMENT
