Exhibit 10.3
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ASSET PURCHASE AMENDING AGREEMENT
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THIS AMENDING AGREEMENT made this 21st day of June, 2004.
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B E T W E E N:
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SWEET VALLEY FOODS INC.,
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a Corporation incorporated pursuant to the laws of the Province of Ontario
(hereinafter the "Seller")
-and-
MG HOLDINGS INC.,
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a Corporation incorporated pursuant to the laws of the Province of Ontario
(hereinafter the "Buyer")
-and-
MONACO GROUP INC.,
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a Corporation incorporated pursuant to the laws of the State of Delaware
(hereinafter the "Parent")
AND WHEREAS the Seller agreed to sell to the Buyer and the Buyer has agreed
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to purchase from the Seller substantially all the assets, property and
undertaking of and pertaining to the business of the Seller pursuant to an asset
purchase agreement dated May 25, 2004 (the "Asset Purchase Agreement");
AND WHEREAS the Buyer, Seller and the Parent have agreed to amend certain
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provisions of the Asset Purchase Agreement and wish to evidence their mutual
consent to such amendments.
THIS AMENDING AGREEMENT WITNESSES THAT in consideration of the respective
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conditions, covenants, agreements, representations, warranties and indemnities
herein contained and for other good and valuable consideration (the receipt and
sufficiency of which are acknowledged by each party), the parties covenant and
agree as follows:
ARTICLE I
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DEFINITIONS AND PRINCIPLES OF INTERPRETATION
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1.01 Definitions
Whenever used in this Amending Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following words and
terms shall have the respective meanings ascribed to them as follows:
(a) "Act" means the Income Tax Act, S.C. 1970-71-72, chapter 63, as
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amended.
(b) "Exchangeable Shares" means the proposed Exchangeable Shares of
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the Buyer that do not exist as of the date hereof, but which the
Parent shall, as the sole shareholder of the Buyer sanction and
approve as necessary and in respect of which Articles of Amendment
of the Buyer shall be approved by the Parent as sole shareholder
of the Buyer and by the Board of Directors of the Buyer and filed
by the Buyer to allow for such shares to be issued to the Seller,
which shares shall have the following characteristics: (i) they
shall entitle the Seller, at its option, and for a period of ten
(10) years from the date of issuance thereof to the Seller, to
exchange such shares for shares of common stock of the Parent at a
ratio of two (2) shares of common stock of the Parent for each
such exchangeable share of the Buyer; (ii) they shall be
non-voting; (iii) no dividends shall be payable thereon; and (iv)
they shall be redeemable in whole or from time to time in part at
the option of the Buyer, upon not less than 30 days prior written
notice at a price of U.S.$1.25 per share. In the event the Buyer
provides a notice of redemption as aforesaid, the Seller shall
have 15 days to notify both the Buyer and the Parent in writing of
the Sellers' wish to exercise the aforesaid rights of exchange
notwithstanding such notice of redemption, failing which the
rights of the Seller to exchange such shares shall terminate and
the Buyer may proceed to effect the redemption of such shares.
Capitalized words not defined in this Amending Agreement shall have the meanings
given thereto in the Asset Purchase Agreement.
1.02 Gender and Number
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Words importing the singular shall be construed to include the plural and
vice versa; and words importing gender shall include all genders.
1.03 Entire Agreement
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(a) Except as modified and amended by this Amending Agreement, the Asset
Purchase Agreement, including the Schedules thereto, together with the
agreements and other documents to be delivered pursuant thereto,
constitute the entire agreement between the Parties pertaining to the
subject matter hereof and supersede all prior agreements, understanding,
negotiations and discussions, whether oral or written, of the Parties and
there are no warranties, representations or other agreements between the
Parties in connection with the subject matter thereof except as
specifically set forth therein and in this Amending Agreement. No further
supplement, modification or waiver or termination of the Asset Purchase
Agreement, as amended by this Amending Agreement shall be binding unless
executed in writing by the Party to be bound thereby. No waiver of any of
the provisions of the Asset Purchase Agreement, as amended by this
Amending Agreement shall be deemed or shall constitute a waiver of any
other provisions (whether or not similar) nor shall such waiver
constitute a continuing waiver unless other wise expressly provided.
1.04 Index and Headings
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The Index to this Amending Agreement, Article and Section headings
contained herein are included solely for convenience, are not intended to be
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full or accurate description of the content thereof and shall not be considered
part of this Amending Agreement
1.05 Applicable Law
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This Amending Agreement shall be construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein and shall be
treated, in all respects, as an Ontario contract. The Parties shall attorn to
the jurisdiction of the courts in Province of Ontario.
1.06 Currency
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Unless otherwise indicated, all dollar amounts referred to in this
Amending Agreement are in Canadian funds.
ARTICLE II
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AMENDMENTS TO ASSET PURCHASE AGREEMENT
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2.01 Amendments Concerning Exchangeable Shares
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The Asset Purchase Agreement is amended as follows:
(a) The definition of the word "Convertible Shares" contained in
paragraph 1.01(i) is deleted in its entirety and the word
"Deleted" inserted in its place;
(b) The definition of the word "Series A Preferred Stock" contained in
paragraph 1.01(y) is deleted in its entirety and the word
"Deleted" inserted in its place;
(c) The word "Convertible" in the last line of paragraph 3.01(c) is
hereby deleted and replaced with the word "Exchangeable;
(d) Schedule "H" is hereby deleted in its entirety and the reference
to Schedule "H" and its contents in paragraph 1.03(b) shall
replaced with the following text: `Schedule "H" - Deleted';
(e) Paragraph 3.02 (b) and its heading is hereby deleted in its
entirety and replaced with the following:
" 3.02 (b) Exchangeable Shares. The Buyer and the Parent covenant
and agree that on or before Closing, they shall obtain all
necessary approvals and take all such necessary steps as may be
required to amend the Buyer's Certificate and Articles of
Incorporation to create the Exchangeable Shares containing the
provisions described in paragraph 1.01(b) of this Amending
Agreement and otherwise consistent with the provisions of this
Amending Agreement. In addition, the Parent covenants and agrees
that on or before Closing it shall (i) duly allot and reserve for
issuance upon exercise of the Exchangeable Shares, an aggregate of
1,500,000 shares of common stock in the capital of the Parent and
(ii) deliver to the Seller a written, enforceable instrument
acknowledging the Seller's right to exchange the Exchangeable
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Shares, in whole or in part from time to time for shares of the
common stock of Parent in accordance with their terms;
(f) Paragraph 3.02 (d) is hereby deleted in its entirety and replaced
with the following:
"3.02 (d) The board of directors of the Parent shall be composed
of a minimum of four (4) members, at least one of whom shall be
▇▇▇ Couprie or his nominee until such time the majority of the
Exchangeable Shares issued in accordance herewith are exchanged,
in accordance with their terms, for common shares of the Parent".
(g) The references to the word "Convertible" in paragraph 4.01(aa) are
hereby deleted and replaced with the word "Exchangeable";
(h) The references to the word "Convertible" in paragraph 4.01(bb) are
hereby deleted and replaced with the word "Exchangeable";
(i) Paragraph 4.01 (cc) is hereby deleted in its entirety and replaced
with the following:
"4.01 (cc) Exchangeable Shares are Restricted - The Seller
represents and warrants that it understands that the Exchangeable
Shares and the common shares of the Parent issuable upon exchange
thereof are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Buyer
and the Parent respectively in a transaction not involving a
public offering and that under the Securities Act and applicable
regulations thereunder. The Seller further warrants that it
understands that such securities may be resold without
registration under the Securities Act only in certain limited
circumstances. In this connection, the Seller represents that it
is familiar with Rule 144 of the U.S. Securities and Exchange
Commission as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. The Seller
understands that the Parent is under no obligation to register any
of the securities sold hereunder";
(j) The first paragraph of paragraph 4.01 (dd), (and for greater
certainty, this excludes the paragraph indented appearing below
the aforesaid paragraph) is hereby deleted in its entirety and
replaced with the following:
"Legended Security-The Seller acknowledges and understands that
the Exchangeable Shares, and if exchanged in accordance with their
terms for common shares of the Parent, acquired by the Seller
shall contain the legend set forth below and shall only be removed
by the Parent upon delivery to the Parent of an opinion by
counsel, reasonably satisfactory to the Parent, that a
registration statement under the Securities Act is at that time in
effect with respect to the legended security or that such security
can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will
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not jeopardize the exemption or exemptions from registration
pursuant to which the Buyer issued the Exchangeable Shares";
(k) The word "Convertible" in the fifth last line of paragraph 5.01(j)
is hereby deleted and replaced with the word "Exchangeable"; and
(l) Paragraph 5.01 (k) is hereby deleted in its entirety.
2.02 Amendments Concerning Determination and Payment of Purchase Price
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The Asset Purchase Agreement is further amended as follows:
(a) Paragraph 2.01 is hereby deleted in its entirety and replaced with
the following:
"2.01 Purchase Price. Subject to the terms and conditions of this
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Agreement and to any adjustments provided for as provided in
paragraph 2.02, the Purchase Price payable by the Buyer and the
Parent hereunder for the Purchased Assets shall be the fair market
value thereof;
(b) Paragraph 2.03 is hereby deleted in its entirety and replaced with
the following:
"2.03 Satisfaction of Purchase Price. Subject to the terms and
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conditions of this Agreement and to any adjustments provided for
as provided in paragraph 2.02, the Purchase Price payable by the
Buyer and the Parent hereunder for the Purchased Assets shall be
satisfied:
(i) by delivery of a certified cheque for Eighty Thousand
Dollars (CAN $80,000.00) on the Closing Date, payable
according to the Seller's direction; and
(ii) Seven Hundred and Fifty Thousand (750,000) Exchangeable
Shares, issued in accordance with the Seller's direction;
and
(iii) with respect to Inventories, a cash payment (the "Inventory
Payment"), valued by independent accountants on the Closing
Date at the lower of cost or net realizable value
(calculated in accordance with generally acceptance
accounting principals as defined by the Canadian Institute
of Chartered Accountants) less one dollar ($1.00)";
(c) Paragraph 2.05 is hereby added as follows:
"2.05 Allocation of Purchase Price. The portion of the Purchase
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Price attributable to the Purchased Assets shall be payable and
allocated by the Parties so that the Seller's deemed proceeds of
disposition of the Purchased Assets shall be the greater of (i)
the tax cost thereof or (ii) the aggregate of (a) the amount set
out in paragraph 2.03(i) plus (b) the amount set out in paragraph
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2.03(iii) plus (c) the small business loan included in the Assumed
Liabilities, all as at the Closing Date"; and
(d) Paragraph 2.06 is hereby added as follows:
"2.06 Filing of Election. The Seller and the Buyer agree to
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jointly elect under Subsection 85(1) of the Act in the form, at
the time and in the manner required therein that the proceeds of
disposition of the Seller and the cost to the Buyer of the
Purchased Assets is equal to the greater of (i) the tax cost
thereof or (ii) the aggregate of (a) the amount set out in
paragraph 2.03(i) plus (b) the amount set out in paragraph
2.03(iii) plus (c) the small business loan included in the Assumed
Liabilities, all as at the Closing Date.
2.03 Concerning GST Election
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The Asset Purchase Agreement is further amended as follows:
(a) Paragraph 2.04 (a) is deleted and replaced with the following:
"2.04(a) The Seller and the Buyer shall jointly elect and the
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Buyer will file with Canada Customs and Revenue Agency within the
required time, an election under Section 167(1) of the Excise Tax
Act (Canada), as amended, that no tax be payable in respect of the
conveyance or transfer of the Purchased Assets hereunder".
ARTICLE III
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GENERAL
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3.01 Counterparts
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This Amending Agreement may be executed by the Parties in separate
counterparts each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have hereunto duly executed this Amending
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Agreement.
SWEET VALLEY FOODS INC.
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Per: /s/ ▇▇▇▇▇▇ Ganpaul
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▇▇▇▇▇▇ Ganpaul
Per: /s/ ▇▇▇ Couprie
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▇▇▇ Couprie
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MG HOLDINGS INC.
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Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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MONACO GROUP INC.
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Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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