EXCHANGE AGREEMENT
THIS AGREEMENT is made the 17th day of May, 1999.
B E T W E E N:
ELILILCO LTD.,
a corporation incorporated under the laws of the Province of Ontario
(herein called the "Vendor")
- and -
XXXXX XXXXX,
of the City of Xxxxxxxxx, of the Province of Ontario
(herein called "Xxxxx Xxxxx")
- and -
XXXXXXXX XXXXX,
of the City of Xxxxxxxxx, of the Province of Ontario
(herein called "Xxxxxxxx Xxxxx")
- and -
INTERNATIONAL MENU SOLUTIONS INC.,
a corporation incorporated under the laws of the Province of Ontario
(herein called the "Purchaser")
-and-
INTERNATIONAL MENU SOLUTIONS CORPORATION
A corporation incorporated under the laws of the State of
Nevada (herein called "IMSC")
RECITALS:
A. The Vendor is the beneficial and registered owner of 36 common shares
(herein called the "Purchased Shares") of Norbakco Ltd. (herein called the
"Corporation");
B. The Vendor wishes to sell and the Purchaser wishes to purchase the
Purchased Shares;
C. The Vendor and the Purchaser wish to make an election under subsection
85(1) of the Income Tax Act (Canada) (the "Tax Act") in respect of the
Purchased Shares.
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NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
agree as follows:
1. Purchase and Sale. The Vendor agrees to sell and the Purchaser agrees to
purchase all of the Vendor's right, title and interest in and to the Purchased
Shares on the terms and conditions contained herein.
2. Purchase Price. The purchase price of the Purchased Shares shall be equal to
the fair market value of the Purchased Shares at the date hereof (the "Fair
Market Value"), which Fair Market Value is set out in the attached Schedule A
(the "Purchase Price"). The Purchase Price shall be satisfied by the allotment
and issuance by the Purchaser to the Vendor of 25,000 Class X shares in the
capital stock of the Purchaser (the "Share Amount").
3. Election. The parties agree to co-operate in good faith with each other and
their respective legal advisors, accountants and other representatives in
connection with any steps required to be taken in connection with this
Agreement, including, without limitation, in connection with any filing
necessary pursuant to the Tax Act (including without limitation, joint elections
pursuant to Section 85(1) thereof in respect of the Share Amount received by the
Vendor).
4. Vendor's Representations and Warranties. The Vendor represents and warrants
to the Purchaser that:
(a) the Vendor has been duly incorporated and organized and in good
standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and capacity to own or lease its
property, to carry on its business as now being conducted by it, to
enter this Agreement and perform its obligations hereunder. The Vendor
is duly qualified or licensed and in good standing to do business in
each jurisdiction in which the nature of the business or the property
and assets owned or leased by it make such qualification or licensing
necessary;
(b) the execution and delivery of this Agreement by the Vendor and the
consummation of the transactions provided for herein will not result
in the violation of, or constitute a default under, or conflict with
or cause the acceleration of any obligation of the Vendor under:
(i) any contract to which the Vendor is a party or by which it is
bound;
(ii) any provision of the constating documents or by-laws or
resolutions of the board of directors (or any committee thereof)
or shareholders of the Vendor;
(iii) any judgement, decree, order or award of any court, governmental
body or arbitrator having jurisdiction over the Vendor;
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(iv) any license, permit, approval, consent or other authorization
held by the Vendor; or
(v) any applicable, law, statute, ordinance, regulation or rule;
(c) this Agreement has been duly authorized, executed and delivered by the
Vendor and is a legal, valid and binding obligation of, and
enforceable against the Vendor by the Purchaser in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency
and other laws affecting the enforcement of rights of creditors
generally and except that equitable remedies may only be granted in
the discretion of a court of competent jurisdiction;
(d) there is no requirement for the Vendor to make any filing with, give
any notice to or obtain any license, permit, certificate,
registration, authorization, consent or approval of, any government or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement. There is no requirement
under any Contract to which the Vendor is a party or by which it is
bound to give any notice to, or to obtain the consent or approval of
any party to such contract relating to the consummation of the
transactions contemplated by this Agreement;
(e) the Vendor beneficially owns the Purchased Shares free and clear of
all charges, security interests, pledges, demands and other
encumbrances and has the exclusive right and full power to sell,
assign and transfer the Purchased Shares to the Purchaser;
(f) no person, firm or corporation has any agreement, option or any right
capable of becoming an agreement or option for the acquisition from
the Vendor of any of the Purchased Shares; and
(g) the Vendor is not a non-resident of Canada within the meaning of the
Tax Act.
5. Purchaser's Representations and Warranties. The Purchaser represents and
warrants to the Vendor as follows:
(a) the Purchaser is duly incorporated and validly subsisting under the
laws of the Province of Ontario;
(b) the Purchaser has been duly authorized to enter into the transaction
herein;
(c) the Class X shares to be issued by the Purchaser to the Vendor
pursuant to this agreement have been duly authorized; and
(d) the issuance of the Class X shares to the Vendor pursuant to this
agreement will not result in the breach of any instrument, agreement
or licence to which the Purchaser
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is a party or by which it is bound or of any shareholder agreement.
6. IMSC's Representations and Warranties. IMSC represents and warrants to the
Vendor as follows:
(a) IMSC is duly incorporated and validly subsisting under the laws of the
State of Nevada;
(b) IMSC has been duly authorized to enter into the transaction herein;
(c) the Class N shares to be issued by IMSC to the Vendor pursuant to this
Agreement have been duly authorized;
(d) the issuance of the Class N shares to the Vendor pursuant to this
agreement will not result in the breach of any instrument, agreement
or licence to which the Purchaser is a party or by which it is bound
or of any shareholder agreement;
(e) the execution and delivery of this agreement by IMSC, the issue of the
Class N Shares and the issue of the common shares (the "Common
Shares") upon the exchange of the Class X Shares of IMSI and/or the
Class N Shares of IMSC have been duly authorized by all necessary
corporate action by IMSC, and IMSC has all requisite corporate power
and authority to enter into this agreement and to issue the Class N
Shares; and
(f) IMSC is in good standing under the Securities Act of 1933, as amended
(United States of America) (the "Act") and will use its best efforts
to maintain such status for the purposes of the Act.
7. Completion of the Transaction. This agreement shall be completed
contemporaneously with the execution hereof at which time the following shall
occur:
(a) the Vendor shall execute and deliver to the Purchaser all such
documents, certificates and instruments and do all such other acts and
things as the Purchaser may consider necessary or desirable, acting
reasonably, to effectively transfer and assign the Purchased Shares to
the Purchaser and to deliver possession thereof to the Purchaser;
(b) the Purchaser shall issue to the Vendor 25,000 Class X shares in the
capital stock of the Purchaser;
(c) the Corporation and the Vendor will sign a services agreement to
confirm in writing the arrangements for the services of Xxxxxxxx Xxxxx
to be provided to the Corporation by the Vendor;
(d) the Corporation and Xxxxx Xxxxx shall enter into an employment
agreement with respect to the Xxxxx Xxxxx'x employment with the
Corporation;
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(e) the Vendor shall have the option to acquire for the aggregate amount
of $1.00, 25,000 Class N shares in the capital stock of International
Menu Solutions Corporation (herein called "IMSC"), which shares are
voting non-equity shares;
(f) the Purchaser shall deliver an undertaking and indemnity to Xxxxxxxx
Xxxxx and to Xxxxx Xxxxx, undertaking to have their guarantees at the
Bank of Nova Scotia released;
(g) the Corporation and Xxxxxxxx shall enter into an employment option
agreement;
(h) the Vendor shall enter into an agreement to terminate the shareholders
agreement among the shareholders of Norbakco;
(i) the Vendor shall deliver to the Purchaser a declaration of loss with
respect to the loss of the minute book of the Corporation and the
share certificate issued to the Vendor;
(j) Xxxxx and IMSC shall enter into a stock option agreement; and
(k) Xxxxxxxx and IMSC shall enter into a stock option agreement.
So long as the option for the Class N shares has not been exercised, one Class X
share in the capital stock of the Purchaser may be exchanged for one common
share of IMSC. In the event that the Vendor exercises the option to acquire the
25,000 Class N shares as provided above, then thereafter, one Class X share
together with one Class N share may be exchanged for one common share in the
capital stock of IMSC.
8. Survival of Representations and Warranties. The representations, warranties
and covenants contained in this agreement shall survive the completion of the
transaction contemplated hereby and, notwithstanding such completion, shall
continue in full force and effect from and after the date hereof.
9. First Right of Refusal. In the event that the Vendor wishes to sell the Class
X shares acquired by the Vendor pursuant to this Agreement (or any shares
acquired upon an exchange of such shares), the Vendor shall first advise the
President of the Purchaser by notice in writing and will sell such shares to the
Purchaser if the Purchaser wishes to purchase such shares. If the Purchaser does
not accept the Vendor's offer to sell the shares that the Vendor is offering for
sale within three (3) business days of receipt of written notice given by the
Vendor to the Purchaser, then the Vendor shall have the right to sell such
shares, at or above the average closing price for the common shares of IMSC for
the twenty (20) trading days prior to the date on which the Vendor gave notice
to the Purchaser, during the 90 day period following the last day of the said
three (3) business day period. In the event that the Vendor wishes to sell such
shares at a lesser price than originally offered to the Purchaser, the first
right of refusal shall again apply.
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10. (a). Put Option. In the event that the services agreement for the supply of
the services of Xxxxxxxx Xxxxx is terminated for whatever reason and neither
Xxxxx Xxxxx or Xxxxxxxx Xxxxx are employees of the Corporation or an affiliate
of the Corporation, then during the fifteen day period following the date on
which Xxxxx Xxxxx or Xxxxxxxx Xxxxx was an employee or provided services to the
Corporation, the Vendor shall have the right to have the Purchaser purchase the
Class X shares (and the Class N shares) at a price per Class X share equal to
the average trading price for the common shares of IMSC for the twenty trading
days prior to the date on which the Vendor gives notice to the Purchaser
pursuant to this paragraph with the aggregate amount to be paid by the Purchaser
shall be such average price multiplied by the number of Class X shares. The
obligation of the Purchaser is subject to the Purchaser being compliant with all
applicable laws, rules, regulations and administrative authorities in making
such purchase.
(b) Second Put Option. In the event that:
(a) after January 1, 2000 the Vendor wishes to sell any of the Class X
shares and, upon conversion of the Class X shares (including the
surrender of an equal number of Class N shares) for Common shares of
IMSC, the Vendor is not entitled to sell the Common shares received
upon the exchange save as provided in Section 144 of the Securities
Act of 1933 (the "1933 Act"), and
(b) IMSC has not qualified Common shares so that freely tradeable Common
shares could be made immediately available to the Vendor upon an
exchange of Class X shares for such Common shares during the 90 day
period following the Vendor giving to the Purchaser written notice of
a request to sell all or part of the Class X shares,
the Vendor shall have the right to have the Purchaser purchase the Class X
shares (including the Class N shares) at a price per Class X shares equal to the
average closing trading price for the Common shares of IMSC for the twenty
trading days prior to the date on which the Vendor gives notice to the Purchaser
pursuant to this paragraph with the aggregate amount to be paid by the Purchaser
shall be such average price multiplied by the number of Class X shares. The
obligation of the Purchaser is subject to the Purchaser being compliant with all
applicable laws, rules, regulations and administrative authorities in making
such purchase. The Vendor shall not sell any of such shares in numbers less than
5,000 shares unless such lesser number is the remaining balance of the shares
held by the Vendor.
(c) Closing Procedure. In the event that a purchase and sale is to occur
pursuant to any of Sections 9, 10 (a) or 10(b), then such closing shall occur on
the tenth (10th) business day (herein called the "Closing Date") following the
date that the sale and purchase arrangement is confirmed and on the Closing Date
the Vendor shall deliver to the Purchaser the appropriate share certificate for
the shares to be sold by the Vendor to the Purchaser together with such other
draw down certificates with respect to such shares as the Purchaser acting
reasonably may request, and the Purchaser shall delvier to the Vendor a
certified cheque or bank draft for the purchase price for such shares.
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11. Xxxxxxxxx Bakery Ltd. Obligation. The Corporation commenced its operations
by acquiring the assets of Xxxxxxxxx Bakery Ltd. ("Xxxxxxxxx") and in connection
therewith assumed certain limited personal obligations of Xxxxxxxx Xxxxx and
Xxxxx Xxxxx. The Purchaser has been advised of an obligation to Revenue Canada
for approximately Cdn $11,500.00 arising from directors liability payments not
made to Revenue Canada by Xxxxxxxxx. For the sum of Ten Dollars now paid by each
of Xxxxx Xxxxx and Xxxxxxxx Xxxxx to the Purchaser and for other good and
valuable consideration the receipt of which is hereby acknowledged by the
Purchaser, the Purchaser agrees to indemnify and hold Xxxxxxxx Xxxxx and Xxxxx
Xxxxx harmless with respect to payments required to be made to Revenue Canada
and other governmental authorities arising from Xxxxxxxx Xxxxx and Xxxxx Xxxxx
having been directors of Xxxxxxxxx and the failure to make the appropriate
remittances for Xxxxxxxxx.
12. Further Assurances. Each of the parties hereto shall promptly do, make,
execute or deliver, or cause to be done, made, executed or delivered, all such
further acts, documents and things as the other party hereby may reasonably
require from time to time for the purpose of giving effect to this agreement and
shall use its best efforts and take all such steps as may be reasonably within
its power to implement to their full extent the provisions of this agreement.
13. Enurement. This agreement shall be binding upon and shall enure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.
14. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
15. Counterparts. This agreement may be executed by facsimile and in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
agreement.
16. Survival of Covenants. Those covenants contained herein which are by their
nature intended to survive the completion of the share exchange shall continue
following the closing of such exchange.
17. Legal Advice. The Vendor hereby represents and warrants to the Purchaser and
acknowledges and agrees that it had the opportunity to seek and was not
prevented nor discouraged by the Purchaser from seeking independent legal advice
prior to the execution and delivery of this Agreement and that, in the event
that it did not avail itself of that opportunity prior to signing this
Agreement, it did so voluntarily without any undue pressure and agrees that its
failure to obtain independent legal advice shall not be used by it as a defence
to the enforcement of its obligations under this Agreement.
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IN WITNESS WHEREOF the parties hereto have executed this agreement.
ELILILCO LTD.
Per: /s/ Xxxxxxxx Xxxxx
------------------------
Title: Sales Manager
---------------------
/s/ Xxxxx Xxxxx
-------------------------------- -----------------------------
Witness Xxxxx Xxxxx
/s/ Xxxxxxxx Xxxxx
-------------------------------- -----------------------------
Witness Xxxxxxxx Xxxxx
INTERNATIONAL MENU SOLUTIONS INC.
Per: /s/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx, President
INTERNATIONAL MENU SOLUTIONS CORPORATION
Per: /s/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx, President
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SCHEDULE A
Fair Market Value
o $43,750.00 CDN
