Exhibit 10.2
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ASSET PURCHASE AGREEMENT
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THIS AGREEMENT made this 25th day of May, 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")
WHEREAS the Seller carries on, among other things, the business of
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importing, manufacturing and the sale of sugar;
AND WHEREAS the Seller has agreed to sell to the Buyer and the Buyer has
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agreed to purchase from the Seller substantially all the assets, property and
undertaking of and pertaining to the Business (as hereinafter defined), upon and
subject to the terms and conditions hereof;
AND WHEREAS the Buyer is a wholly owned subsidiary of the Parent which has
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agreed to cause the Buyer to perform its obligations hereunder;
THIS 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
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Whenever used in this 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) "Agreement" means this Asset Purchase Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof;
"hereof", "hereto" and "hereunder" and similar expressions mean and
refer to this Agreement and not to any particular article or
section; "Article" or "Section" means and refers to the specified
article or section of this Agreement;
(b) "Assumed Liabilities" means:
(i) the Assumption Agreement and Indemnity respecting all
liabilities and obligations of the Seller under the small
business loan in the approximate principal amount of
$135,300.00 as at December 31, 2003 accruing and due
subsequent to the Closing as more particularly set forth in
Schedule A and referred to in Section 7.04 (a);
(ii) the Leases set forth in Schedule B and referred to in Section
1.1 (o);
(iii) the Equipment Contracts set forth in Schedule C and referred
to in Section 1.1 (k);
(iv) the Employee Contracts set forth in Schedule D and referred to
in Section 1.1 (j); and
(v) The Indemnity of Couprie, Xxxxxx Inc. for liability respecting
its lease at 0000 Xxxxxxxxx Xxxxxxxx, Xxxx 0, Xxxxxxxxxxx,
Xxxxxxx, as set forth in Schedule "J" and referred to in
Section 7.04 (b).
(c) "Business" means the manufacturing, processing and the sale of sugar
carried on by the Seller, including all assets, tangible or
intangible, leases, contracts, and rights which in combination make
up and comprise the business operations of the Seller;
(d) "Business Day" means a day other than a Saturday, Sunday or any day
on which the principal commercial banks located at Toronto, Ontario
are not open for business during normal banking hours;
(e) "Buyer" means MG Holdings Inc., a corporation organized and existing
under the laws of the Province of Ontario;
(f) "Closing" means the completion of the sale and purchase of the
Purchased Assets under this Agreement by the transfer and delivery
of documents of title thereto and the payment of the Purchase Price
therefore;
(g) "Closing Date". The date on which the Closing actually occurs, which
shall be no later than June 30, 2004, unless otherwise agreed by the
parties, but shall not in any event be prior to satisfaction or
waiver of the conditions to Closing specified in Article V of this
Agreement;
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(h) "Contracts" means the contracts, agreements and other obligations of
the Seller relating to the Business, including the Assumed
Liabilities as referred to and defined in this Article, and such
other contracts and obligations entered into by the Seller;
(i) "Convertible Shares" means the defined number of Series A Preferred
Stock of the Parent to be issued to the Seller subsequent to
approval from the majority of Parent's shareholders necessary to
amend Parent's certificate of incorporation to allow for preferred
stock and, subsequently, approval of Parent's board of directors of
the voting powers, rights, designations, preferences and
qualifications of such Series A Preferred Stock, as set out in
Sections 2.01(b) of the Agreement;
(j) "Employee Contracts" means the employee contracts, whether written
or verbal, to which the Seller is a party with respect to its
Business as set forth in Schedule D hereto;
(k) "Equipment Contracts" means the equipment leases, conditional sales
contracts, title retention agreements and other agreements between
the Seller and third Persons relating to equipment used by the
Seller in connection with the Business as set forth in Schedule C
hereto;
(l) "Excluded Assets" means:
(i) all cash, bank balances, moneys in possession of banks and
other depositories, term or time deposits and similar cash
items of, owned or held by or for the account of the Seller;
(ii) the accounts receivables of the Seller with respect to the
Business up to the Closing;
(iii) the corporate, financial, taxation and other records of the
Seller not pertaining exclusively to the Business; and
(iv) all other assets of the Business of any nature or kind that
are not identified as Purchased Assets in article 1.01 (t).
(m) "Excluded Liabilities" means all liabilities contracts, debts,
obligations of the Seller not assumed herein as Assumed Liabilities.
(n) "Inventory Payment" shall have the meaning assigned thereto in
Section 2.01(c) hereof;
(o) "Leases" means the leases and subleases of real property listed in
Schedule B hereto;
(p) "Material Contract" means any contract, agreement, real property
lease, obligation or commitment of the Seller with respect to the
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Business having a value in excess of $5,000.00 and which is not
terminable upon 30 days written notice;
(q) "Parent" means Monaco Group Inc., a corporation organized and
existing under the laws of the State of Delaware, in the United
States of America, which wholly owns the Buyer;
(r) "Parties" means the Seller, the Buyer and the Parent, collectively,
and "Party" means any one of them;
(s) "Person" means any individual, corporation, partnership, trustee or
trust or unincorporated association and pronouns have a similarly
extended meaning;
(t) "Permitted Encumbrances" means any pledge, lien, charge, security
interest, mortgage, encumbrance or adverse claim against the
Purchased Assets set forth in Sections 3.02 (a) and 7.04 (a) hereto;
(u) "Purchase Price" means the purchase price to be paid by the Buyer to
the Seller for the Purchased Assets as provided in Section 2.01
hereof, subject to adjustment as provided in Section 2.02 hereof;
(v) "Purchased Assets" means all of the assets, property and
undertaking, and those assets owned and used by Seller or held by it
for use in, or in respect of the operation of, the Business,
including, without limitation, the following:
(i) Leases-All right, title and interest of the Seller in, to and
under the Leases and the premises subject thereto, all
leasehold improvements pertaining to such Leases and leasehold
premises, all fixtures located in, on or about such leasehold
premises, and all appurtenance thereto;
(ii) Inventories-All inventories of raw materials,
work-in-progress, finished goods, operating supplies and
packaging materials of or pertaining to the Business;
(iii) Confidential Information-All confidential information used in
and related to the Business, including, but not limited to,
customer lists, supplier lists and customer contracts.
(iv) Contracts-All right, title and interest of the Seller in, to
and under the Contracts and the full benefit of all service
contracts relating to any equipment or other assets covered
thereby and all options, including, without limitation,
options to purchase, thereunder;
(v) Fixed Assets, etc-All fixed assets, machines, manufacturing,
equipment, fixtures, furniture, furnishings, vehicles,
materials, handling equipment, implements, parts, tools discs,
and other similar items used in the Business owned or held by
the Seller, including, without limitation, any which are in
storage, and other tangible property and facilities used in
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the Business whether located in or on the premises of the
Seller or elsewhere, as set out in Schedule E hereto;
(vi) Intellectual Property-the intellectual property rights of the
Seller, including all trade xxxx registrations, trade names
and registered user and other trade xxxx rights all
copyrights, copyright registrations and applications
therefore, and all renewals, modifications and extensions of
any of the aforesaid items; all patents and applications for
patents, all reissues, divisions, continuations and extensions
thereof, and all licences and other relating to patent,
inventions and discoveries owned or held by the Seller; and
all patterns, plans, designs, research data, trade secrets and
other proprietary know-how, processes, drawings, technology,
unpatented blue prints, flow sheets, equipment and parts lists
and descriptions and related instructions, manuals, data,
records and procedures and any and all data used in the
Business. Such Intellectual Property rights of the Seller are
set out in Schedule F, which is attached hereto.
(vii) Goodwill of Business-The goodwill of the Business, including,
without limitation, the right to the Buyer represent itself as
carrying on the Business in succession to the Seller and all
right, title and interest of the Seller in, to and in respect
of the name "Sweet Valley Foods" and variations thereof, the
Seller's telephone number, customer and supplier lists, and
other items identifiable with the Business of the Seller
(viii) Deposits- All deposits and prepayments of the Seller,
including but not restricted to rent, public utilities,
telephone, prepaid expenses and equipment leases or other
leases;
(ix) Warranty Rights-The full benefit of all warranties and
warranty rights (implied, express or otherwise) against
manufacturers or Seller's which apply to any of the Purchased
Assets and the net realizable value of warranty claims
outstanding at the Closing;
(x) General-All other rights, properties and assets (other than
any Excluded Assets) of the Seller used or useful in the
Business, of whatever nature or kind and wherever situated.
(w) "Securities Act" means the U.S. Securities Act of 1933, as amended;
(x) "Seller" means Sweet Valley Foods Inc., a corporation organized and
existing under the laws of the Province of Ontario; and
(y) "Series A Preferred Stock" means the proposed Series A Preferred
Stock of the Parent that does not exist as of the date hereof, but
the Parent shall obtain, on or before Closing, approval from the
majority of its shareholders necessary to amend its certificate of
incorporation to allow for preferred stock and, subsequently,
approval of its board of directors of the voting powers, rights,
designations, preferences and qualifications of such Series A
Preferred Stock along with the provisions setout in Schedule H
attached hereto.
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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) This Agreement, including the following Schedules A to M hereto,
together with the agreements and other documents to be delivered
pursuant hereto, 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 hereof except as specifically set
forth herein and therein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in
writing by the Party to be bound thereby. No waiver of any of the
provisions of this 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.
(b) The following attached schedules are hereby incorporated in this
Agreement by reference:
Schedule "A"--Assumption Agreement and Indemnity for CIBC Small
Business Loan
Schedule "B"--Leases
Schedule "C"--Equipment Contracts
Schedule "D"--Employee Contracts
Schedule "E"--Fixed Assets
Schedule "F"--Intellectual Property
Schedule "G"--Permitted Encumbrances
Schedule "H" - Proposed voting powers, rights, designations,
preferences and qualifications of Series A Preferred Stock
Schedule "I" - Assumption Agreement
Schedule "J" - Indemnity of Couprie Xxxxxx for Lease
Schedule "K" - Guarantee re: Line of Credit
Schedule "L" - Allocation of the Purchase Price
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Schedule "M" - List of Customer Contracts
1.04 Index and Headings
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The Index to this Agreement, Article and Section headings contained herein
are included solely for convenience, are not intended to be full or accurate
description of the content thereof and shall not be considered part of this
Agreement
1.05 Applicable Law
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This 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
Agreement are in Canadian funds.
ARTICLE II
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PURCHASE PRICE
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2.01 Purchase Price
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Subject to the terms and conditions of this Agreement and to any
adjustments provided for, the Purchase Price payable by the Buyer and the Parent
hereunder for the Purchased Assets shall be payable as follows:
(a) 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;
(b) Seven Hundred and Fifty Thousand (750,000) Convertible Shares,
issued in accordance with the Seller's direction;
(c) Cash for Inventories (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).
2.02 Adjustments to Purchase Price
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The Purchase Price shall be adjusted as at the Closing for:
(a) all amounts paid or payable to or by the Seller under the Leases
including rental (including base, additional and percentage rental),
taxes (including contributions by lessees to real estate taxes),
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common area maintenance charges, utilities charges, business taxes,
advertising fees and occupancy costs;
(b) Adjustments Under the Contracts. All amounts paid or payable by, or
in the case of amounts such as rebates or royalties, payable to, the
Seller;
(c) Employee Remuneration and Benefits. Wages, bonuses, commissions,
sick pay, vacation pay, earned vacation, flex days, holiday pay,
contributions to Benefit Plans and other remuneration and health,
welfare or other benefits paid or payable by the Seller;
(d) Fuel, Utilities, etc. All fuel, telephone and other utility charges
paid or payable by the Seller;
(e) All deposits and prepayments, including but not restricted to rent,
public utilities, prepaid expenses and equipment or other leases;
and
(f) all other usual adjustments in a transaction of the type
contemplated by this Agreement.
2.03 Allocation of Purchase Price
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The Purchase Price shall be allocated in accordance with the provisions of
Schedule "L" hereto provided that if the Purchase Price shall be adjusted
pursuant to Section 2.02 hereof, the amount of adjustment required shall be
allocated on a pro rata basis among the various categories of assets. The Seller
and the Buyer agree to cooperate in the filing of such elections under the
Income Tax Act (Canada) and other taxation statutes as may be necessary or
desirable to give effect to such allocation for tax purposes.
2.04 Taxes, Duties And Other Charges
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(a) The Purchase Price shall include all G.S.T., where applicable;
(b) The Buyer shall be liable for and shall pay all land transfer taxes,
federal and provincial sales taxes and all other taxes, duties or
other like charges properly payable on and in connection with the
conveyance and transfer of the Purchased Assets by the Seller to the
Buyer;
(c) The Seller and the Buyer agree to co-operate in the filing of
elections under the Income Tax Act, R.S.C. 1952, c. 148, the Excise
Tax Act R.S.C. l985, as amended, and all other taxation statutes as
may be necessary or desirable to give effect to the allocation for
tax purposes.
ARTICLE III
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PURCHASE AND SALE
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3.01 Action by Seller and Buyer
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At the Closing:
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(a) Purchase and Sale of the Purchased Assets-The Seller shall sell and
the Buyer shall purchase the Purchased Assets for the Purchase Price
payable as hereinafter provided;
(b) Assumption of Assumed Liabilities-The Buyer shall assume the Assumed
Liabilities;
(c) Payment of the Purchase Price-Subject to the adjustments pursuant to
section 2.02, the Buyer shall pay to the order of the Seller, by
certified cheque or bank draft made payable in lawful money of
Canada, the sum of $ 80,000.00, the Inventory Payment and the Buyer
shall transfer to the Seven Hundred and Fifty Thousand (750,000)
Convertible Shares; and
(d) Transfer and Delivery of Purchased Assets-The Seller shall execute
and deliver to the Buyer all such bills of sale, assignments,
instruments of transfer, assurances, consents and other documents as
shall be necessary effectively to transfer to Buyer all the Seller's
right, title and interest in, to and under, or in respect of, the
Purchased Assets, and shall deliver up to the Buyer possession of
the Purchased Assets, free and clear of any liens charges or
encumbrances or rights of third Persons; and shall effect such
registrations recordings and filings with public authorities as may
be required in connection with the transfer of ownership to the
Buyer of the Purchased Assets.
3.02 Action by the Parent
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(a) Line of Credit
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On or before Closing, the Parent or the Buyer shall obtain an
operating line of credit, for the Business to be owned by the Buyer
on Closing, in the minimum amount of one million dollars (CAN
$1,000,000.00), as is more particularly set out in Schedule "K"
hereto;
(b) Series A Preferred Stock
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On or before Closing, the Parent shall obtain, on or before Closing,
approval from the majority of its shareholders necessary to amend
its certificate of incorporation to allow for preferred stock and,
subsequently, approval of its board of directors of the voting
powers, rights, designations, preferences and qualifications of such
Series A Preferred along with the provisions setout in Schedule H
attached hereto;
(c) The Parent shall take all such other actions as may be necessary to
cause the Buyer to perform its obligations under the provisions of
Section 3.01 hereof at the Closing, but such covenant by the Parent
and agreement shall not affect the liability of the Buyer for any
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non-performance on its part of such obligations hereunder, or
otherwise excuse any such non-performance, nor shall such the
non-performance increase the liability of the Buyer hereunder; and
(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 Xxx Couprie or
his nominee until such time the majority of the Series A Preferred
Stock issued herein are converted into common shares.
3.03 Place of Closing
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The Closing shall take place at the offices of Xxxxxxxxx, Proszanski LLP
located at 000-000 Xxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx or at such other place
as may be agreed upon by the Seller and the Buyer.
3.04 Tender
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Any tender of documents or money hereunder may be made upon the Parties or
their respective counsel and money may be tendered by official bank draft drawn
upon a Canadian chartered bank of by negotiable cheque payable in Canadian funds
and certified by a Canadian chartered bank or trust company.
3.05 Greater Certainty
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For greater certainty the Parties hereby declare that, except for the
Assumed Liabilities expressly assumed by the Buyer hereunder as provided in
Section 3.01 (b) hereof, the Buyer is not assuming and shall not be responsible
for any of the liabilities, debts or obligations of the Seller, whether present
or future and whether or not relating to the Business, and the Seller shall
indemnify and save harmless the Buyer from and against all such liabilities,
debts and obligations.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES
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4.01 Representations and Warranties of the Seller
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The Seller hereby represents and warrants to the Buyer and the Parent
that:
(a) Organization and Good Standing-The Seller is a corporation duly
incorporated or continued, organized and validly existing in good
standing under the laws of its jurisdiction of incorporation;
(b) Seller's Capacity to Carry on Business-The Seller has all necessary
corporate power, authority and capacity to own its property and
assets and to carry on the Business as presently conducted. Neither
the nature of the Business nor the location or character of the
property owned or leased by the Seller requires it to be registered,
licensed or otherwise qualified as an extra-provincial or foreign
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corporation or to be in good standing in any jurisdiction other than
in the Provinces of Ontario and licensed or otherwise qualified and
in good standing for such purpose;
(c) Due Authorization, etc-The Seller has all necessary corporate power
and authority to enter into this Agreement and to carry out its
obligations hereunder; the execution and delivery of this agreement
and the consummation of the transactions contemplated hereunder have
been duly authorized by all necessary corporate action on the part
of the Seller;
(d) Absence of Conflicting Agreements-Except for Leases and Equipment
Contracts and the small business loan referred to in Section 1.01
(b)(i), the consent to the assignment or transfer of which from
landlords, lessors, or financial institutions thereunder may be
required in connection with the completion of the transactions
contemplated hereby, the Seller is not a Party to, bound or affected
by or subject to any indenture, mortgage, lease, agreement,
instrument, charter or by-law provision, statute, regulation,
judgment, decree or law which would be violated, contravened,
breached by, or under which default would occur as a result of, the
execution and delivery of this Agreement or the consummation of an
of the transaction provided for herein;
(e) Right to Sell-The Seller is the absolute beneficial owner of the
Purchased Assets, with good and marketable title thereto, free and
clear of any liens, charges, encumbrances or rights of others (save
and except, in the case of Leases and Equipment Contracts, for the
proprietary or other rights of landlords or lessors thereunder, and
the small business loan referred to in Section 1.01 (b)(i)) and is
exclusively entitled to possess and dispose of the same (subject
only to the necessity for obtaining landlords' or lessors' consents
to transfer in the case of Leases and Equipment Contracts) and in
particular, without limiting the generality of the foregoing, there
has been no assignment, subletting or granting of any licence (of
occupation or otherwise) of or in respect of any of the Leases or
Equipment Contracts;
(f) Litigation-There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or, to the best of the
knowledge, information and belief (after due enquiry) of the senior
officer of the Seller, threatened against or relating to the Seller
or affecting its properties or the Business which if determined
adversely to the Seller might materially and adversely affect the
properties, Business, future prospects or financial condition of the
Seller; and, except as shown in the Schedule G, there is not
presently outstanding against the Seller, any judgment, or any
proceeding that has the likelihood of becoming a judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator;
(g) Enforceability of Obligations-This Agreement constitutes a valid and
binding obligation of the Seller enforceable against it in
accordance with the terms hereof, subject, however, to limitations
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with respect to enforcement imposed by law in connection with
bankruptcy or similar proceedings and to the extent that equitable
remedies such as specific performance and injunction are in the
discretion of the court from which they are sought;
(h) Absence of Changes- Since December 31, 2003, there has not been:
(i) any material change in the condition or operations of the
Business, assets or financial condition of the Seller other
than changes in the ordinary and normal course of Business,
none of which has been 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) materially and adversely affecting
the Business, assets, properties or future prospects of the
Seller or the Business;
(i) Absence of Unusual Transactions-Since December 31, 2003, the Seller
has not:
(i) transferred, assigned, sold or otherwise disposed of any of
the assets shown in the balance sheet or cancelled any debts
or claims except in each case in the ordinary and usual course
of Business;
(ii) discharged or satisfied any lien or encumbrance, or paid any
obligation or liability (fixed or contingent) other than
liabilities included in the said balance sheet and liabilities
incurred since the date thereof in the ordinary and normal
course of Business;
(iii) suffered an operating loss or any extraordinary loss, or
waived any rights of substantial value, or entered into any
commitment or transaction not in the ordinary and usual course
of Business where such loss, rights, commitment or
transactions or would be material in relation to the Seller or
its Business as the case may be;
(iv) mortgaged, pledged, subjected to lien, granted a security
interest in or otherwise encumbered any of its assets or
property, whether tangible or intangible; or
(v) authorized or agreed or otherwise become committed to do any
of the foregoing.
(j) Leases of Real Property-The Seller is not a Party to or bound by any
leases of real property other than the Leases referred to in
Schedule B hereto and all interests held by the Seller as lessee
under the Leases are free and clear of any and all liens, charges
and encumbrances of any nature and kind whatsoever. All rental and
other payments required to be paid by the Seller pursuant to the
Leases have been duly paid and the Seller is not otherwise in
default in meeting its obligations under any such Lease;
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(k) Real Property-The Seller does not own any real property or, except
for the Leases, any interests in real property;
(l) Condition of Assets-All material tangible assets of the Seller used
in or in connection with the Business are in good condition, repair
and (where applicable) in proper working order, having regard to the
use and age thereof;
(m) Material Contracts-Except for the Equipment Contracts listed in
Schedule C, Employee Contracts listed in Schedule D, the Leases
listed in Schedule B, and the small business loan listed in Schedule
A there are no Material Contracts undisclosed to the Buyer, nor are
there any current or pending negotiations with respect to the
renewal, termination or amendment of any such Material Contracts;
(n) Customer Contracts-All existing and pending customer contracts
entered into by the Seller in the course of carrying on the Business
are in good standing and all quotations, orders or tenders for such
contracts remain open for acceptance. The Seller has the capacity,
including the necessary personnel, equipment and supplies, to
perform all its obligations under customer contracts thereunder. The
Seller shall provide to the Buyer a list of the top ten customer
contracts of the Seller, to be determined by gross revenue obtained
over the two years prior to Closing, and shall attach such list as
Schedule M to this Agreement;
(o) Pension Plans-Seller has not registered or established any pension
plans for its employees;
(p) Residence of the Seller-The Seller is a resident of Canada for the
purposes of the Income Tax Act (Canada);
(q) Insurance -The Seller maintains such policies of insurance, issued
by responsible insurers, as are appropriate to its Business,
property and assets, in such amounts and against such risks as are
customarily carried and insured against by owners of comparable
businesses, properties and assets; all such policies of insurance
are in full force and effect and the Seller is not in default,
whether as to the payment of premium or otherwise, under the terms
of any such policy;
(r) Copies of Agreements, etc.-True, correct and complete copies of all
Equipment Contracts, Leases, Employee Contracts, and the small
business listed in Schedules C, B, D, and A respectively hereto and
of the policies of insurance referred to in Section 4.01 (q) have
been delivered to the Buyer;
(s) Worker's Compensation-There are no notices of assessment,
provisional assessment, reassessment, supplementary assessment,
penalty assessment or increased assessment (collectively,
"assessments") or any other communications related thereto which the
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Seller has received from any workers' compensation or workplace
safety and insurance board or similar authorities and there are no
assessments which are unpaid on the date hereof or which will be
unpaid at the Closing and there are no facts or circumstances which
may result in a material increase in liability to the Buyer in
respect of the operation of the Business from any applicable
workers' compensation or workplace safety and insurance legislation,
regulations or rules after the Closing. To the knowledge of the
Seller, the Business is such that there are no material pending or
possible assessments and there are no claims or potential claims
which may materially adversely affect the Buyer. The Seller will
obtain, and provide to the Buyer at, or as soon as possible after
Closing, a Purchase Certificate or Clearance Certificate from any
workers' compensation or workplace safety and insurance board or
similar authority with respect to the Business;
(t) Occupation Health and Safety-There are no outstanding inspection
orders nor any pending charges made under any Occupational Health
and Safety Acts relating to the Business, nor have there been any
fatal or critical accidents within the last year which might lead to
charges under Occupational Health and Safety Acts in respect of the
Business. The Seller has complied in all material respects with any
orders issued under Occupational Health and Safety Acts and, there
are no appeals of any Orders under Occupational Health and Safety
Acts relating to the Business which are currently outstanding;
(u) Employee Contracts-The Seller has no written contracts of employment
with any of its employees other than as described in Schedule D
hereto and all such contracts remain in full force and effect and
are in good standing. The Seller is not aware, and has no knowledge,
of any claims or demands, including any statutory claims, affecting
those employees listed in Schedule D hereto;
(v) Intellectual Property-The Seller has ownership of the Intellectual
Property as defined in Section 1.01(v)(vi), and all right, title and
interest in and to the Intellectual Property free and clear of any
encumbrances. The Intellectual Property owned by the Seller are in
full force and effect, are valid and enforceable and have not been
used or enforced or failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of
any rights of the Seller to the Intellectual Property. All
registrations and filings necessary to preserve the rights of the
Seller in and to the Intellectual Property have been made;
(w) No Indebtedness-Except as otherwise referred to herein, the Seller
has no indebtedness to any person, firm, corporation, government or
agency thereof which might by operation of law or otherwise now or
hereafter constitute a lien, charge or encumbrance on any of the
Purchased Assets;
(x) Environmental Matters-The Seller is now in material compliance with
all federal and provincial environmental laws and to its knowledge
the Seller possesses all material environmental permits necessary
14
for it to carry on the Business. The Seller has not caused or
permitted nor does it have knowledge of any release, discharge or
disposal of any hazardous substance on, from, to or under the
premises on which the Business is conducted in excess of acceptable
criteria as set out by the relevant legislation. The Seller has no
knowledge of any storage tanks located on or under the premises on
which the Business is conducted. The Seller has not received any
written notice nor does the Seller have any knowledge of any claims,
actions, charges, suits, permit revocations, remedial orders or
other proceedings ("Environmental Claims") relating to breaches of
environmental laws asserted by third parties or governmental
authorities involving the Seller and the Purchased Assets. The
Seller has not received any written notice nor does the Seller have
any knowledge of any pending Environmental Claims relating to
environmental matters and to the Business. The Seller has not been
charged with or convicted of an offence for non-compliance with or
breach of any environmental law relating to the Business, and the
Seller has no knowledge of any facts or circumstances that would be
reasonably likely to give rise to an Environmental Claim;
(y) Licenses and Permits-The Seller owns, holds, possesses or lawfully
uses all licenses, permits, certificates, approvals, consents and
other authorizations which are necessary in order to conduct, in all
material respects, the Business and to operate the Purchase Assets
as now operated by the Seller;
(z) Compliance with Laws-The Seller has complied with and is not in
violation of any applicable laws;
(aa) Information Pertaining to the Convertible Shares-The Seller
represents and warrants that it has received or has had full access
to all the information it considers necessary or appropriate to make
an informed decision with respect to the Convertible Shares to be
received under this Agreement. The Seller further has had an
opportunity to ask questions and receive answers from the Parent
regarding the Parent's business and to obtain additional information
(to the extent the Parent possesses such information or could
acquire it without unreasonable effort or expense) necessary to
verify any information furnished to the Seller or to which the
Seller had access;
(bb) Acquisition of the Convertible Shares-The Seller represents and
warrants that it fully acknowledges and accepts that the Convertible
Shares to be received by Seller hereunder will be acquired for
investment for Seller's own account, not as a nominee or agent, and
not with a view to the public resale or distribution thereof within
the meaning of the Securities Act of 1933, as amended, (the
"Securities Act"), and that the Seller has no present intention of
selling, granting any participation in, or otherwise distributing
the same. The Seller also represents that it has not been formed for
the specific purpose of acquiring the Convertible Shares;
15
(cc) Convertible Shares are Restricted-The Seller represents and warrants
that it understands that the Convertible Shares and the underlying
common shares are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Parent
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;
(dd) Legended Security-The Seller acknowledges and understands that the
Convertible Shares, and if converted the underlying common shares,
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
not jeopardize the exemption or exemptions from registration
pursuant to which the Parent issued the Convertible Shares.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY HIS OR
HER ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS AND WARRANTS
THAT HE OR SHE IS NOT A U.S. PERSON AND IS ACQUIRING THOSE
SECURITIES IN AN OFFSHORE TRANSACTION, (2) AGREES THAT HE OR
SHE WILL NOT WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF
THOSE SECURITIES RESELL OR OTHERWISE TRANSFER THOSE SECURITIES
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
PURSUANT TO THE SECURITIES ACT, (B) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S, OR
(C) PURSUANT TO ANY OTHER EXEMPTION FROM REGISTRATION PURSUANT
TO THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT HE OR
SHE WILL GIVE TO EACH PERSON TO WHOM THOSE SECURITIES ARE
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THOSE SECURITIES
WITHIN ONE YEAR AFTER ORIGINAL ISSUANCE OF THOSE SECURITIES,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A
TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATIONS. THOSE SECURITIES MAY
NOT BE HEDGED (SOLD IN SHORT SELLING TRANSACTION) EXCEPT IN
COMPLIANCE WITH THE PROVISIONS OF THE SECURITIES ACT.
16
(ee) Full Disclosure-None of the foregoing representations and statements
of fact contains any untrue statement of material fact or omits to
state any material fact necessary to make any such statement or
representation no misleading to a prospective purchaser of the
Purchased Assets seeking full information as to the Business and its
assets and properties.
(ff) No investigation or inquiry made by or on behalf of the Purchaser
shall have the effect of waiving or diminishing any of the foregoing
representations and warranties.
(gg) Except for the representations and warranties made by the Seller in
this Agreement, the Seller makes no further representations or
warranties to the Buyer of any kind, character or nature, whether
express or implied, statutory or otherwise, with respect to the
Purchased Assets or the Business including, without limitation, any
representations or warranties regarding merchantability or fitness
for a particular purpose.
4.02 Representations and Warranties of the Buyer
-------------------------------------------------
The Buyer represents and warrants to the Seller that:
(a) Organization and Good Standing-The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the Province of Ontario;
(b) Due Authorization-The Buyer has all necessary corporate power,
authority and capacity to perform its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder have been duly authorized by all
necessary corporate action on the part of the Buyer;
(c) Enforceability of Obligations-This Agreement, when executed and
delivered by the Buyer, constitutes or will constitute, as the case
may be, a valid and binding obligation of the Buyer enforceable
against it in accordance with the terms hereof, subject however, to
limitations with respect to enforcement imposed by law in connection
with bankruptcy or similar proceedings and to the extent that
equitable remedies such as specific performance and injunction are
in the discretion of the court from which they are sought;
(d) Absence of Conflicting Agreements-The Buyer is not a Party to, bound
or affected by or subject to any indenture, mortgage, lease,
agreement, instrument, charter or by-law provision, statute,
regulation, order, judgment, decree or law which would be violated,
contravened or breached by, or under which any default would occur
as a result of the execution and delivery by it of this Agreement or
the performance by it of the terms hereof;
17
(e) There is no suit, action, litigation, investigation, claim,
complaint, arbitration proceeding or governmental proceeding,
including appeals and applications for review, in progress, pending
or, to the best of the Buyer's knowledge, threatened against or
relating to the Buyer or any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator which, in any case, might adversely
affect the ability of the Buyer to enter into this Agreement or to
consummate the transactions contemplated in this Agreement, and the
Buyer is not aware of any existing ground on which any action, suit
or proceeding may be commenced with any reasonable likelihood of
success; and
(f) The Buyer has no knowledge that any representation or warranty made
by the Seller in this Agreement is false or inaccurate in any
material respect.
4.03 No Broker
---------------
Each of the Parties represents and warrants to the others that all
negotiations relating to this Agreement and the transactions contemplated hereby
have been carried on between them directly and without the intervention of any
other Party in such manner as to give rise to any valid claim against any of the
Parties for a brokerage commission, finder's fee or other like payment.
4.04 Non-Waiver
----------------
No investigations made by or on behalf of the Buyer or the Parent at any
time shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty made by the Seller herein or pursuant
hereto. No waiver by the Buyer of any condition, in whole or in part, shall
operate as a waiver of any condition.
4.05 Nature and Survival of Representations and Warranties
-----------------------------------------------------------
All statements contained in any certificate or other instrument delivered
by or on behalf to the Party pursuant to or in connection with the transactions
contemplated by this Agreement shall be deemed to be made by such Party
hereunder. All representations, warranties, covenants and agreements herein
contained on the part of each of the Parties shall survive the Closing, the
execution and delivery hereunder of any bills of sale, instruments of
conveyance, assignments, or other instruments of transfer of title to any of the
Purchased Assets and the payment of the consideration therefore, provided that
such representations and warranties, shall only survive for a period of 2 year
from the Closing after which time, if no claim shall, prior to the expiry of the
said 2 year period, have been made hereunder against a Party hereto with respect
to any incorrectness in or breach of any representation or warranty made herein
by such Party, such Party shall have no further liability hereunder with respect
to such representation or warranty.
ARTICLE V
---------
CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER AND THE
------------------------------------------------------------
SELLER OF THEIR OBLIGATIONS UNDER THIS AGREEMENT
------------------------------------------------
18
5.01 Buyer's Conditions
------------------------
The obligation of the Buyer to complete the purchase of the Purchased
Assets hereunder shall be subject to the satisfaction of, or compliance with, at
or before the Closing, each of the following conditions precedent (each of which
is hereby acknowledged to be inserted or the exclusive benefit of the Buyer and
may be waived by it in whole or in part):
(a) Truth and Accuracy of Representations of the Seller at the Closing
-All of the representations and warranties of the Seller made in or
pursuant to this Agreement, including, without limitation, the
representations and warranties made by the Seller set forth in
Section 4.01 hereof, 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 (except as such representations and warranties
may be affected by the occurrence of events or transactions
expressly contemplated and permitted hereby) and the Buyer shall
have received a certificate from the President or other person
exercising the functions of chief executive officer of the Seller,
confirming, to the best of this knowledge, information and belief
(after due enquiry), the truth and correctness in all material
respects of the representations and warranties of the Seller;
(b) Performance of Obligations-The Seller shall have performed or
complied with, in all respects, all its obligations, covenants and
agreements hereunder;
(c) Receipt of Closing Documentation-All instruments of conveyance and
other documentation relating to the sale and purchase of the
Purchased Assets including, without limitation, assignments of
Leases, Contracts and Equipment Contracts (and consents thereto,
where required), bills of sale and trade xxxx assignments,
documentation relating to the due authorization and completion of
such sale and purchase and all actions and proceedings taken on or
prior to the Closing in connection with the performance by the
Seller of its obligations under this Agreement shall be satisfactory
to the Buyer and the Parent and their respective counsel and the
Buyer shall have received copies of all such documentation or other
evidence as it may reasonable request in order to establish the
consummation of the transactions contemplated hereby and the taking
of all corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and otherwise)
and substance satisfactory to the Buyer, the Parent and their
respective counsel;
(d) Retail Sales Tax-The Seller shall deliver to the Buyer at the
Closing a clearance certificate under section 6 of the Retail Sales
Tax Act (Ontario) and similar clearance certificates, if available,
from the retail sales tax authorities in the jurisdiction where the
Business is carried on by the Vendor or the Purchased Assets are
located;
19
(e) WSIB Certificate-At Closing the Seller shall deliver a valid and
current Workplace Safety and Insurance Board Purchase Certificate in
respect of the Business;
(f) Opinion of Counsel for Seller - At the Closing, the Buyer shall have
received an opinion dated the Closing, in form and substance
satisfactory to the Buyer, the Parent and their respective counsel,
from counsel for the Seller, Xx. Xxxxxx Xxxxxxx, confirming the
matters warranted in subsections (a), (b), (c), (e), (f) and (g) of
Section 4.01 hereof, provided that, insofar as the opinions
expressed with respect to such matters are based on matters of fact,
such opinions may be based upon certificates of the Seller and
public officials and such other evidence as such counsel may
reasonably deem appropriate. Such opinion shall also cover such
other matters as the Buyer may reasonably request;
(g) Consents to Assignment-All consents or approvals from or
notifications to any landlord, lessor or other third person required
under the terms of any of the Leases, Equipment Contracts or
Contracts with respect to the assignment thereof to the Buyer
hereunder, or otherwise in connection with the consummation of the
transactions contemplated hereby, shall have been duly obtained or
given, as the case may be, on or before the Closing;
(h) Consents, Authorizations and Registrations-All consents, approvals,
orders and authorizations of any Persons or governmental authorities
in Canada or elsewhere (or registrations, declarations, filings or
recordings with any such authorities), including, without
limitation, all clearance certificates required pursuant to any
applicable retail sales tax legislation, required in connection with
the completion of any of the transactions contemplated by this
Agreement, the execution of this Agreement, the Closing or the
performance of any of the terms and conditions hereof shall have
been obtained on or before the Closing;
(i) Bulk Sales Act-The Seller shall have been furnished, at the Closing,
with evidence satisfactory to it that the purchase and sale of the
Purchased Assets shall be in compliance with the provisions of the
Bulk Sales Act (Ontario) and any other applicable legislation;
(j) Non-Competition-There shall have been delivered to the Buyer written
undertakings from Xxx Couprie, Xxxxxx Ganpaul, Xxxxxxx Xxxxx and
Xxxx Xxxxxx to the effect that they will not, for a period of five
(5) years from the Closing either alone or in conjunction with any
individual, firm, corporation, association or other entity (except
for the Buyer), whether as principal, agent, shareholder or in any
other capacity whatsoever, compete with the Business. If at any time
after two (2) years from the Closing the per share price of the
common shares underlying the Convertible Shares is not equal to or
greater than US$1.00 (One US Dollar) at the end of each trading day
for sixty consecutive trading days, then this non-competition clause
shall become void and they shall be free to compete with the Buyer
or the Parent from that time onwards; and
20
(k) Approval by Shareholders and Board of Parent- The Parent shall have
received approval from the majority of its shareholders for it to
amend its certificate of incorporation to allow for preferred stock
and, subsequently, approval of its board of directors of the voting
powers, rights, designations, preferences and qualifications of such
Series A Preferred Stock, along with the provisions set out in
Schedule H attached hereto.
5.02 Seller's Conditions
-------------------------
The obligations of the Seller to complete the sale of the Purchased Assets
hereunder shall be subject to the satisfaction of or compliance with, at or
before the Closing, each of the following conditions precedent (each of which is
hereby acknowledged to be inserted for the exclusive benefit of the Seller and
may be waived by it in whole or in part):
(a) Truth and Accuracy of Representations of the Buyer and the Parent at
Closing-All of the representations and warranties of the Buyer and
the Parent made in or pursuant to this Agreement, including without
limitation the representations and warranties made by the Buyer and
the Parent and set forth in Sections 4.02 hereof, 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 and the Seller shall have
received a certificate from a senior officer of each of the Buyer
and the Parent confirming to the best of their knowledge,
information and belief (after due enquiry), the truth and
correctness in all material respects of such representations and
warranties of the Buyer and the Parent;
(b) Performance of Agreement-The Buyer and the Parent shall have
performed or complied with, in all respects, all its other
obligations, covenants and agreements hereunder;
(c) Opinion of Counsel for Buyer and the Parent-The Seller shall have
received opinions dated the Closing, in form and substance
reasonably satisfactory to the Seller, from counsel for the Buyer,
confirming the matters warranted in paragraphs (a) to (d) (both
inclusive) of Section 4.02 hereof, provided that insofar as the
opinions expressed with respect to such matters are based upon
matters of fact, such opinion may be based upon certificates of the
Buyer, the Parent, or public officials and such other evidence as
such counsel or counsels may reasonably deem appropriate. Such
opinion shall also cover such other matters as the Seller may
reasonably request;
(d) All consents, approvals, orders and authorizations of persons or any
governmental authorities in the United States, Canada or any state
or province (or registrations, declarations, filings or recordings
with any of those authorities) which are required to be obtained in
connection with the completion of any of the transactions
contemplated by this Agreement, the execution of this Agreement, the
Closing or the performance of any of the terms and conditions (other
than any which are the responsibility, under applicable law, of the
21
Seller to obtain) shall have been obtained by the Buyer on or before
the Closing Time, including the approval of the majority of the
Parent's shareholders for the Parent to amend its certificate of
incorporation to allow for preferred stock and, subsequently,
approval of its board of directors of the voting powers, rights,
designations, preferences and qualifications of such Series A
Preferred Stock along with the provisions setout in Schedule H
attached hereto; and
(e) Retail sales tax - The Buyer shall have delivered to the Seller a
provincial sale tax exemption certificate and a certified cheque or
bank draft in an amount estimated to be equal to the G.S.T payable
in accordance with section 2.04 arising from the transaction
contemplated by this Agreement.
ARTICLE VI
----------
COVENANTS OF THE PARTIES
------------------------
The Seller Covenants with the Buyer and the Parent as follows:
--------------------------------------------------------------
6.01 Conduct of Business Prior to Closing
------------------------------------------
During the period from the date of this Agreement to the Closing, the
Seller will do the following:
(a) Conduct Business in the Usual and Ordinary Course-Except as
otherwise contemplated or permitted by this Agreement, conduct the
Business in the ordinary and normal course thereof and not, without
the prior written consent of the Buyer, enter into any transaction
which, if effected before the date of this Agreement, would
constitute a breach of the representations, warranties or agreements
of the Seller contained herein;
(b) Continue Insurance-Continue in force all policies of insurance
maintained by the Seller in respect of the Business;
(c) Perform Obligations- Comply with all laws affecting the operation of
the Business; and
(d) Prevent Certain Changes- Not, without the prior written consent of
the Buyer and the Parent, take any of the actions, do any of the
things or perform any of the acts described in subparagraphs (i) to
(v) inclusive of paragraph 4.01 (i).
6.02 Seller's Covenants with Respect to the Convertible Shares
---------------------------------------------------------------
The Seller covenants with the Buyer and the Parent that it will not
dispose of the Convertible Shares, the underlying common shares, or any portion
thereof, unless and until:
22
(i) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement;
or
(ii) the Seller shall furnish the Parent with an opinion of counsel,
reasonably satisfactory to the Parent, that such disposition will
not require registration of such securities under the Securities
Act.
6.03 Access for Investigation
------------------------------
The Seller shall permit the Buyer, or its designee, and its employees,
agents, counsel and accountants or other representatives, between the date
hereof and the Closing, without interference to the ordinary conduct of the
Business of the Seller, to have free and unrestricted access during normal
business hours to the premises and to all the books, accounts, records and other
data of the Seller (including, without limitation, all corporate and accounting
records of the Seller) and to the properties and assets of the Seller, and to
furnish to the Buyer, or its designee, such financial and operating data and
other information with respect to the business, properties and assets of the
Seller as the Buyer, or its designee, shall from time to time reasonably request
to enable confirmation of the matters warranted in Section 4.01 hereof. Without
limiting the generality of the foregoing, it is agreed that the accounting
representatives of the Buyer shall be afforded ample opportunity to make a full
investigation of all aspects of the financial affairs of the Seller. Until the
Closing, and in the event of the termination of this Agreement without
consummation of the transactions contemplated hereby, the Buyer will use its
best efforts to keep confidential any information (unless readily available from
public or published information or sources) obtained from the Seller. If this
Agreement is so terminated, promptly after such termination, all documents, work
papers and other written material obtained from one Person in connection with
this Agreement and not theretofore made public (including all copies thereof),
shall be returned to the Person which provided such material.
6.04 Actions to Satisfy Closing Conditions
-------------------------------------------
Each of the Parties hereto hereby agrees to take all such actions as are
within its power to control, and to use its best efforts to cause other actions
to be taken which are not within its power to control, so as to ensure
compliance with any conditions set forth in Articles Five and Six hereof which
are for the benefit of any other Party hereto.
6.05 Change of Seller's Name
-----------------------------
Forthwith following the completion of the purchase and sale of the
Purchased Assets hereunder, the Seller shall discontinue further use of the name
"Sweet Valley Foods Inc." except where legally required to identify the Seller
until its name has been changed to another name and, not later than 10 days
thereafter, file articles of amendments or otherwise take such corporate action
as may be necessary to change the corporate name of the Seller to another name
not including the words "Sweet Valley" and otherwise having no visual or audio
similarity to its present name.
The Buyer Covenants with the Seller as follows:
-----------------------------------------------
23
6.06 Offer of Employment, etc
------------------------------
Prior to the Closing, but conditional upon the completion of the Closing
the Buyer shall offer employment to all persons employed by the Seller in
connection with the Business to persons referred to in Schedule D hereto, on
terms and conditions which are at least financially equivalent to those upon
which such persons are presently employed by the Seller and in such event that
the Buyer shall, subsequent to the time when any such person becomes so employed
by the Buyer, terminate the employment of such person in circumstances where
such person shall have a claim or entitlement in respect of wrongful dismissal,
severance pay or the receipt of reasonable prior notice, that for such purposes
the prior employment of such employee with the Seller as employment with the
Buyer.
6.07 Transfer Taxes
--------------------
The Buyer shall pay direct to the appropriate taxing authority, within the
time period specified therefore, all provincial sales taxes payable by it in
respect of the Purchased Assets sold to it hereunder.
ARTICLE VII
-----------
INDEMNIFICATION
---------------
7.01 Mutual Indemnifications for Breaches of Warranty, etc
-----------------------------------------------------------
Each of the Seller hereby covenants and agrees with the Buyer and the
Parent, and the Buyer and the Parent hereby jointly and severally covenant and
agree with the Seller (the Party or parties so covenanting and agreeing to
indemnify another Party being hereinafter in this Section 7.01 referred to as
the "Indemnifying Party" and the Party or Parties so to be indemnified being
hereinafter called the "Indemnified Party") to indemnify and save harmless the
Indemnified Party, effective as and from the Closing, from and against any
claims, demands, actions, causes of action, damage, loss, costs, liability or
expense (hereinafter in this Article Seven called "Claims") which may be made or
brought against the Indemnified Party and/or which it may suffer or incur as a
result of, in respect of, or arising out of any non-fulfillment of any covenant
or agreement on the part of the Indemnifying Party under this Agreement or any
incorrectness in or breach of any representation or warranty of the Indemnifying
Party contained herein or in any certificate or other document furnished by the
Indemnifying Party pursuant hereto. The foregoing obligation of indemnification
in respect of such Claims shall be:
(i) subject to the limitation mentioned in Section 4.05 hereof
respecting the survival of the representations and warranties of the
Parties;
(ii) subject to the requirement that the Indemnifying Party shall, in
respect of any Claim made by any third Party, be afforded an
opportunity at its sole expense to resist, defend and compromise the
same; and
(iii) applicable only to the extent that such Claims, in the aggregate,
exceed five thousand dollars ($5,000.00).
24
7.02 Product Liability
-----------------------
The Seller hereby undertakes and agrees to hold the Buyer harmless from
and indemnify against any and all claims with respect to product liability
relating to the products of the Business which are sold and delivered by the
Seller on or before Closing.
7.03 Leased Premise
--------------------
The Buyer hereby undertakes and agrees to hold the Seller harmless from,
and indemnify against, any and all claims arising after Closing, made by the
landlord in respect of the leased premise listed in Schedule B hereto. For
greater clarity, the Buyer shall not assume any liability, nor indemnify the
Seller, for any claims made by the landlord which had originated prior to
Closing and for which the landlord had no knowledge until after Closing.
7.04 Assumed Liabilities
-------------------------
(a) Assumption Agreement and Indemnity re: Small Business Loan
----------------------------------------------------------
On Closing, the Buyer and Parent shall assume liability for payment
of a Small Business Loan of the Seller and shall indemnify the
shareholders of Sweet Valley Foods respecting liability for the said
Small Business Loan in accordance with Schedule "A" hereto;
(b) Indemnity of Couprie Xxxxxx re: Lease
-------------------------------------
The Buyer and Parent shall indemnify Couprie, Xxxxxx Inc. for
liability arising after Closing, respecting its lease at 0000
Xxxxxxxxx Xxxxxxxx, Xxxx 0, Xxxxxxxxxxx, Xxxxxxx, as is more
particularly set out in Schedule "J" hereto. For greater clarity,
the Buyer and the Parent shall not assume any liabilities, nor
indemnify Couprie, Xxxxxx Inc., from any and all events which had
originated prior to Closing that cause actions or claims before, on
or after Closing.;
ARTICLE VIII
------------
GENERAL
-------
8.01 Public Notices
--------------------
All public notices to the Parties and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
coordinated by the Seller and the Buyer and no Party shall act unilaterally in
this regard without the prior approval of the Seller and the Buyer or the other
of them, such approval not to be reasonably withheld, unless such disclosure
shall be required to meet timely disclosure obligations of any Party under
applicable securities laws or stock exchange rules in circumstances where prior
to consultation with the other of the Seller or Buyer is not practicable.
8.02 Expenses
--------------
25
All costs and expenses (including, without limitation, the fees and
disbursement of legal counsel) incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the Party incurring such
expenses.
8.03 Time
----------
Time shall be of the essence hereof.
8.04 Notices
-------------
Any notice or other writing required or permitted to be given hereunder or
for the purpose hereof (hereinafter in this Section 8.04 called a "Notice") to
any Party shall be sufficiently given if delivered personally, or if sent by
prepaid registered mail or if transmitted by telex or other form of recorded
communication tested prior to transmission to such Party:
(a) in the case of a notice to the Buyer or the Parent at:
00X Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Attention: President
Fax: 000-000-0000
(b) in the case of notice to the Seller at:
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Attention: President
Fax: 000-000-0000
or at such other address as the Party to whom such writing is to be given shall
have last notified to the Party giving the same in the manner provided in this
section. Any Notice delivered to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the Notice shall be deemed to have been given and received on the 4th
Business Day next following such day. Any Notice mailed as aforesaid shall be
deemed to have been given and received on the Business Day next following the
date of its mailing. Any Notice transmitted by telex or other form of recorded
communication shall be deemed given and received on the first Business Day after
its transmission.
8.05 Assignment
----------------
The Seller and the Buyer may not assign this Agreement, or any part
hereof.
26
8.06 Further Assurances
------------------------
The Parties hereto shall with reasonable diligence do all such things and
provide all such reasonable assurances as may be required to consummate the
transactions contemplated hereby, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing
8.07 Counterparts
------------------
This 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 Agreement.
------------------
SWEET VALLEY FOODS INC.
-----------------------
Per: /s/ Xxxxxx Ganpaul
-----------------------------
Xxxxxx Ganpaul
Per: /s/ Xxx Couprie
-----------------------------
Xxx Couprie
MG HOLDINGS INC.
----------------
Per: /s/ Xxxxxxx Xxxxx
-----------------------------
Xxxxxxx Xxxxx
MONACO GROUP INC.
-----------------
Per: /s/ Xxxxxxx Xxxxx
-----------------------------
Xxxxxxx Xxxxx
27
Schedule "A"--Assumption Agreement and Indemnity for CIBC Small Business
Loan
Schedule "B"--Leases
Schedule "C"--Equipment Contracts
Schedule "D"--Employee Contracts
Schedule "E"--Fixed Assets
Schedule "F"--Intellectual Property
Schedule "G"--Permitted Encumbrances
Schedule "H" - Proposed voting powers, rights, designations, preferences
and qualifications of Series A Preferred Stock
Schedule "I" - Assumption Agreement
Schedule "J" - Indemnity of Couprie Xxxxxx for Lease
Schedule "K" - Guarantee re: Line of Credit
This line of credit shall be used for general working capital
purposes and fixed asset purchases.
Schedule "L" - Allocation of the Purchase Price
Schedule "M" - List of Customer Contracts
28
SCHEDULE - "A"
--------------
Small Business Loan
-------------------
Under the terms of the agreement, Buyer agrees to assume liability for
Sweet Valley Foods Small Business Loan.
Balance as of December 31, 2003: $135,316.74
-----------
Reducing by 5,203.33 monthly
Statement as of January 16, 2004 attached.
MISSISSAUGA CITY CENTRE MISSISAGA
CIBC SWEET VALLEY FOODS INC.
LEDGER DATE 16 JAN 2004
ACCOUNT NUMBER 3022
DATE DETAILS CAPITAL INTEREST
--------------------------------------------------------------------------------
DAY MTH TRANSACTIONS BALANCE TRANSACTIONS BALANCE
31 07 BALANCE FORWARD 161358.39 548
15 08 AUTOMATIC PAYT. 5208.33 156150.06
15 08 CALC UPTO AUG 15 512.81 1060
19 08 AUTOMATIC PAYT. 1060.99 0
29 08 CALC UPTO AUG 31 530.48 530
03 09 CALC UPTO SEPT 3 99.47 629
15 09 AUTOMATIC PAYT. 5208.33 150941.73
15 09 CALC UPTO SEPT 15 383.96 1013
17 09 AUTOMATIC PAYT. 1013.91 0
30 09 CALC UPTO SEPT 30 465.23 465
15 10 AUTOMATIC PAYT. 5208.33 145733.40
15 10 CALC UPTO OCT 15 464.16 929
17 10 AUTOMATIC PAYT. 929.39 0
31 10 CALC UPTO OCT 31 479.12 479
17 11 AUTOMATIC PAYT. 5208.33 140525.07
14 11 CALC UPTO NOV 15 449.18 928
18 11 AUTOMATIC PAYT. 828.30 0
28 11 CALC UPTO NOV 30 434.20 434
15 12 AUTOMATIC PAYT. 5208.33 135316.74
15 12 CALC UP0TO DEC 15 432.06 866
17 12 AUTOMATIC PAYT. 866.26 0
31 12 CALC UPTO DEC 31 444.88 444
2004
15 01 AUTOMATIC PAYT. 5208.33 130108.41 860
15 01 CALC UPTO JAN 15 416.00
DUPLICATE COPY
SCHEDULE - "B"
--------------
Lease of Premises
For
0-0000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Copy of Lease attached
FOR USE IN THE PROVINCE OF ONTARIO
OFFER TO LEASE
--------------
(ICI)
-----
Toronto
Real Estate
Board
TO THE XXXX XXXXX DEVELOPMENT CORPORATION Lessor (Landlord)
-------------------------------------------------------------
I SWEET VALLEY SUGAR CO. Lessee (Tenant)
----------------------------------------------------------------
having inspected the premises or plans, hereby offer to lease through
CB XXXXXXX XXXXX LIMITED (Listing Broker)
----------------------------------------------------------------
and CB XXXXXXX XXXXX LIMITED (Co-operating Broker)
--------------------------------------------------------
the premises known municipally as 0000 Xxxxxxxxx Xx., Xxxx 0
-----------------------------------------------
in the City of Mississauga comprising
--------------------------- -----------------------------------
13,066 square feet, more or less, subject to measurement using current
-----------------
B.O.M.A. standards (and as outlined in the Schedules attached hereto) for a term
of Five (5) Years from July 15th, 2000 to July 14th, 2005 at a
------------------ --------------------- --------------------
rental of $ (see Schedule "A") per annum payable $ (see Schedule "A") monthly,
in advance, on the First day of each month during the said term.
-----
Cheque in the amount of $ (see Schedule "A") as a deposit, payable to the
---------------------
Listing Broker in trust for the Lessor, is submitted (within 48 hours of
--------------------
acceptance) to be held pending completion or other termination of this
-----------
Agreement, and is to be credited on account of (see Schedule "A").
------------------
The Lease shall be drawn by the Lessor and executed by the Lessee and the Lessor
in conformity with the terms of this Offer forthwith subject to minor
adjustments as negotiated between the Lessor's and the Lessee's Solicitors, both
acting reasonably.
The Premises is to be used for office uses, sales, distribution, and
--------------------------------------------------------------------------------
re-packaging of sugars and other similar food products. It is understood and
---------------------------------------------------------
agreed that the Tenant shall be responsible for any costs re pest control that
result from the Tenant's products.
IT IS UNDERSTOOD AND AGREED that
SCHEDULE "A", "B1", "B2", "C" AND "D" ATTACHED HERETO SHALL BE READ WITH AND
-------------------------------------------------
FORM A PART OF THIS OFFER TO LEASE.
THIS OFFER shall be irrevocable by the Lessee until 5:00 (p.m.) on the 16th day
----------------------------------------
of June, 2000 after which time if not accepted, this Offer shall be null and
--------------
void and all deposit monies paid by the Lessee hereunder shall be refunded
without any interest or deduction whatsoever.
SCHEDULE "A"
------------
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
1. NET RENT SCHEDULES
------------------
Base Rent
Year 1 $6.25 per square foot per annum plus applicable taxes
Year 2 $6.35 per square foot per annum plus applicable taxes
Year 3 $6.45 per square foot per annum plus applicable taxes
Year 4 $6.55 per square foot per annum plus applicable taxes
Year 5 $6.65 per square foot per annum plus applicable taxes
Amortization of Dock Levellers in Addition to Base Rent
Year 1 $191.22 per square foot per annum plus applicable taxes
Year 2 $191.22 per square foot per annum plus applicable taxes
Year 3 $191.22 per square foot per annum plus applicable taxes
Year 4 $191.22 per square foot per annum plus applicable taxes
Year 5 $191.22 per square foot per annum plus applicable taxes
2. ADDITIONAL RENT (TMI)
---------------------
Other than as contained herein the Lease shall be entirely net and carefree
to the Landlord. Included in the amounts paid as Additional Rent the Tenant
shall be responsible for all realty taxes (including business taxes that
are included in the realty taxes), reasonable costs of building insurance,
snow removal, landscape maintenance, and maintenance other than the
maintenance that is the responsibility of the Landlord as listed herein.
The Tenant's portion of the items listed above is estimated to be $2.40 per
---------
square foot for 2000 ("TMI") plus applicable taxes.
---------------------------------------------------
In addition to TMI, and usually billed directly to the Tenant by the
applicable authority, the Tenant agrees to pay for all other costs of
occupancy including, but without limiting the generality of the foregoing,
business taxes other than those included in the realty taxes, insurance on
contents, water, gas, hydro and heating, all as defined in the Lease.
It is also understood and agreed that the Tenant will not be responsible
for the Landlord's capital taxes, income taxes, or mortgage payments.
Page 2 of Schedule "A"
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
3. DEPOSIT (NON INTEREST BEARING ACCOUNT)
--------------------------------------
It is understood and agreed by the Landlord and the Tenant that the Deposit
cheque of $20,621.41 will be deposited in CB Xxxxxxx Xxxxx Limited,
Realtor's trust account within forty-eight (48) hours of receipt thereof.
The Deposit shall be put toward the first and last months' Net Rent and
Additional Rent, plus GST.
Notwithstanding the foregoing, it is understood and agreed by the Landlord
and Tenant that the commissions in this transaction, plus applicable taxes
thereon, may be deducted from the Deposit monies by the Listing Broker upon
the earlier of the Landlord and the Tenant executing a Lease Agreement and
the Tenant taking possession of the Premises.
4. EARLY ACCESS PERIOD
-------------------
The Tenant shall be given a free early access period for the south portion
of the warehouse area (demised by block wall, and outlined in the Schedules
that follow, with the Landlord temporarily closing off the opening between
the two portions of the unit) from July 1st to July 15th, 2000 for the
purposes of installing their packaging equipment and other required
equipment. The Tenant shall not pay any Net Rent, TMI or utilities during
this period, but shall ensure that insurance is in effect. It is understood
that Landlord's work shall be continuing during this period.
5. OPTION TO EXTEND
----------------
The Tenant, if not in default under the Lease either in payment of rent or
observance of the covenants therein, shall have the option to extend the
Lease for two further terms of five (5) years upon giving the landlord at
least three (3) months, but not more than six (6) months written notice of
the exercise of such right subject to substantially the same provisions as
are contained in the Lease except that there shall be no further right of
extension (other than those contained here-in), no additional early
occupancy, and no other Tenant inducements. The rent for the extended term
shall be at the then market rent for renewals (as opposed to the rate for
new leases), shall not include any amounts for the dock levellers amortized
--------------------------------------------------------------
over the initial term, as determined by agreement between the Landlord and
---------------------
the Tenant.
2
Page 3 of Schedule "A"
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
6. CONDITIONAL CLAUSE CREDIT
-------------------------
This Offer is conditional for two (2) business days from acceptance of this
offer by both parties, upon the Landlord satisfying itself of the
creditworthiness of the Tenant. Failure to notify the Tenant within the
prescribed time period of the non-fulfilment of this condition shall
constitute a waiver of this condition and this Offer to Lease and all
agreements arising from its acceptance shall remain in full force and
effect.
7. LANDLORD'S WORK
---------------
The Landlord shall complete the work outlined in Schedules that follow in a
good and workmanlike fashion at the Landlord's sole expense prior to the
commencement date, or as soon after the commencement date as is practical,
working diligently.
8. SIGNS
-----
The Tenant shall be entitled to erect signs upon the Premises as per the
Landlord's standard sign policies.
9. AREA MEASUREMENT
----------------
If requested in writing by the Tenant, the Rentable Area of the Premises
for the purposes of calculating the Net Rent payable by the Tenant and
calculation of the Tenant's proportionate share of utilities (if
applicable), operating costs (if applicable), and taxes as set out in this
Offer to Lease, shall be verified using the most current S.I.O.R standards,
by an architect, engineer, or professional space measuring company licensed
to practice in Ontario, who shall provide a certificate addressed and
delivered to the Tenant, obtained at the Landlord's expense, prior to the
Commencement Date.
10. RIGHT TO SUBLEASE
-----------------
The Tenant has the option to sublet the demised Premises of a portion of
the demised Premises with the prior written consent of the Landlord and
such consent shall not be unreasonably or arbitrarily withheld or delayed.
3
Page 4 of Schedule "A"
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
11. ALTERATIONS AND IMPROVEMENTS
----------------------------
Any alterations or modifications to the Premises will require the prior
written consent of the Landlord, which is not to unreasonably withheld, and
said alterations or modifications must comply with the local building codes
and by-laws.
12. ENVIRONMENTAL
-------------
The Lessee covenants not to produce, bring upon or dispose from the
Premises any toxic or hazardous substance or any pollutant or any substance
which, if it were to remain on or escape from the Premises would
contaminate the Premises or any other property in which it came in contact
with, other than products specifically required as part of the Tenant's
ongoing business use as defined in this offer that may be deemed to be
hazardous. The Lessee agrees to indemnify and hold the Lessor harmless from
all liability of any nature whatsoever arising out of or related to
pollution caused by activities of the Lessee to or escaping from the
Premises or the breach by the Lessee of the covenants and agreements in
this Section. The indemnification shall survive the termination of this
Lease.
The Landlord represents and warrants that there is no contamination or any
other environmental hazard or non-compliance above M.O.E. current cleanup
guidelines on the lands that form the Premises, and that there are no
underground tanks or piping on or under the lands outside the building
(other than utility piping), and agrees to indemnify and hold harmless the
Tenant in regards to any and all environmental issues that preceded the
Tenant's occupancy or that are not a result of the Tenant's acts or
negligence. These representations and warranties shall survive the
termination of this Lease.
13. FACSIMILE
---------
This Offer to Lease may be delivered by facsimile transmission and signed
on a facsimile copy. Both parties accept the facsimile copy as a legal and
binding document. The originals will be delivered to the Landlord and the
Tenant once this Offer to Lease is fully executed.
4
Page 5 of Schedule "A"
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
14. LEGAL ADVICE
------------
The parties to this agreement acknowledge that CB Xxxxxxx Xxxxx Limited,
Realtor has recommended that they obtain advice from their legal counsel
prior to signing this document. The parties further acknowledge that no
information provided by CB Xxxxxxx Xxxxx Limited, Realtor or its employees
is to be construed as expert legal or tax advice.
15. TIME OF THE ESSENCE
-------------------
Time shall be of the essence in all respects.
16. DUAL AGENCY
-----------
The parties to this transaction hereby acknowledge that the Listing Broker
and Co-operating Broker are the same Firm, such that there has been, and is
dual agency, the Landlord and Tenant consenting to such dual agency, by
their signatures hereto, and waiving any conflict of interest or duty of
confidentiality.
5
SCHEDULE "B1"
-------------
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
[MAP OF BUILDING]
SCHEDULE "B2"
-------------
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
[MAP OF UNIT #4]
SCHEDULE "C"
------------
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
LANDLORD'S WORK
---------------
1. Offices o Install a high quality air-tight sliding window in the
existing opening between the office and vestibule
(immediately on left as entering).
o Paint the office area in up to 2 colors chosen by the
Tenant from the Landlord's samples.
o Replace existing vinyl tile and carpet with ceramic
tiles chosen by the Tenant from the Landlord's samples.
2. Warehouse o Install two high quality mechanical dock levellers.
o Clean the entire warehouse area in order that is it
suitable for food product use.
SCHEDULE "D"
------------
To be read with and form a part of this Offer to Lease between
THE XXXX XXXXX DEVELOPMENT CORPORATION (LESSOR) AND
--------------------------------------------------------------------
SWEET VALLEY SUGAR CO. (LESSEE)
------------------------------------------------------------------------
June 13th, 2000
--------------------------------------------------------------------------------
RE: 0000 XXXXXXXXX XXXXXXXX, XXXX 0, XXXXXXXXXXX XX
--------------------------------------------------------------------------------
TENANT'S WORK
-------------
1. Signs A sign on the unit front of the Demised Premises
which shall conform to design criteria of
Landlord's standard sign specifications.
2. Offices/Warehouse All partitions, electrical wiring outlets and
fixtures, plumbing lines and features in excess of
the existing, will be constructed by the Landlord
and charged back to the Tenant at a cost of
$35.00/sq.ft. amortized over 5 years at an
interest rate of 10%.
3. Telephone Service In order to comply with the City of Mississauga
Heating Inspection, Tenant agrees to have
installed, through either Xxxx Canada or a private
company, non-combustible wiring.
4. Occupancy Permit Upon acceptance of this Offer, Tenant will be
required to provide to the Landlord a cheque in
the amount of $100.00, payable to the City of
Mississauga, for the application of an Occupancy
Permit.
5. Floor Slabs The Tenant acknowledges that floor slabs have been
Design Loading designed assuming a maximum 300 lb/sq.ft. uniform
load and that any large equipment or sources of
point loading in excess of 100 lb/sq.ft. will
require an independent foundation or other
technique to distribute the loads.
6. Utilities The Tenant will be responsible for the application
for service from Mississauga Hydro and Consumers
Gas. The Tenant will also be responsible for the
installation and rental of a hot water tank.
7. Approvals The Tenant acknowledges and agrees to comply with
any requirements made, as a direct result of the
Tenant's use of the Demised Premises, by any
Municipal, Provincial and Federal office based
upon regulations and by-laws in place at the time
an application for construction and/or occupancy
is submitted. The costs of such compliance shall
be the sole responsibility of the Tenant.
8. Mezzanine During the lease term or any renewal term, the
Tenant shall not be permitted to install any form
or mezzanine in the Demised Premises.
The heirs, executors, administrators, successors and assigns of the undersigned
are bound by the terms hereof. This Agreement shall be read with such changes of
gender or number as may be required by the context.
DATED at Mississauga this 14th of June, 2000
--------------------------------------------
SIGNED, SEALED and DELIVERED IN WITNESS whereof I have hereunto set my hand
in the presence of and seal:
I have authority to bind the Company
(Affix
Seal) JUNE 14, 2000
--------------------------- ---------------------------- -------------
Witness Sweet Valley Sugar Co. (Date)
(Affix
Seal) JUNE 14, 2000
--------------------------- ---------------------------- -------------
Witness Sweet Valley Sugar Co. (Date)
When the lease or agreement to lease provides for any periods where no rent or a
reduced rent is payable, the commission payable hereunder shall be calculated on
the stated rate per annum as if there were no period of free or reduced rent.
Any deposit in respect of any agreement shall first be applied to reduce the
commission payable. Should such amounts paid to you from the deposit or by my
solicitor not be sufficient, I shall be liable to pay to you, on demand, any
deficiency in commission and taxes owing on such commission. All amounts set out
as commission are to be paid plus applicable Goods and Services Tax (G.S.T.) on
such commission.
DATED at MISSISSAUGA this 14TH day of June , 2000.
----------------------- -------------- ------------------
SIGNED, SEALED and DELIVERED IN WITNESS whereof I have hereunto set my hand
in the presence of and seal:
I have authority to bind the Company
(Affix
Seal) JUNE 14, 2000
--------------------------- ---------------------------- -------------
Witness Lesssor (Date)
(Affix
Seal) JUNE 14, 2000
--------------------------- ---------------------------- -------------
Witness Lesssor (Date)
================================================================================
SCHEDULE - "C"
--------------
Equipment Contracts
-------------------
There are no equipment contracts
SCHEDULE - "D"
--------------
Employee Listing
----------------
Employee listing & Salaries attached
Schedule "D" attachment
-----------------------
SALARIED EMPLOYEES
Names Annual Salary
-------------------- ---------------------------
Xxxx X'Xxxxx $38,600
Washington Chirimelo $31,500
Xxxxxxxxx Xxxxx $32,000
Xxx Xxxxx $19,200
SCHEDULE - "E"
--------------
Fixed Assets
------------
Schedule "E" attachment
Equipment List
--------------
Description Model & Serial Numbers
-------- ---------------------------------------------------------- --------------------------
One 30 foot Platform Mezzanine with adjacent staircase and
two 1 ton stainless steel hoppers with valves
One Xxxxxxx Denver 25 hp compressor with additional tank Model: MODESBRFA
Serial: M49121
One Airtec Dryer 220 SCFM
One Nissan 5000lbs. Electric Fork Lift with charger Model: CYGM02L25AS
Serial: CYGM02-001442
One Xxxxx 5000lbs. Electric Fork Lift with charger Model: CGX17E
Serial: GV127E0287
One Xxxxxxx 10 foot stainless steel bucket elevator
Two General conveyers complete with motors and variable speed drives
1) 8 foot with dating encoder indexer 2) foot
One 36" transfer conveyer motorized and with variable speed
drive and 10 foot rail conveyer
Four 1 ton food processing bins with stands
Two Syntron vibratory feeders
One 5 foot stainless steel packing tubes
Two Equipment stands 1) 15 foot high 2) 8 foot high
One 40 foot long by 16 feet high industrial racking section
One Tool chest complete assorted tools: Power tools, drills,
chopsaw, grinder, electrical meters
One Volpac packaging system Model: VE280
Serial: 12031B/VE-280
One Hapmann Conveyer - stainless steel & helix conveyer with
bin
One Automatic label applicator
One Mac's welding - Overhead conveyer
One GWE Industries - Dust Collector
One Heat tunnel with 3 foot conveyor
One 25 foot screw conveyor
One Samsung phone system
One HP Pavilion computer system
One Rama Computer system
One Panasonic laser printer
One Brother fax machine
One General conveyors 5 sections of 10 foot 2-90 sections,
foot stands, plastic conveyor chain (all above to be
assembled)
Miscellaneous Office Furniture
SCHEDULE - "F"
--------------
Intellecdtual Property Rights
Brand Names Owned by the company
-> Sweet Valley
SCHEDULE - "G"
--------------
Permitted Encumbrances
CIBC re: Small Business Loan
Xxxx Xxxxx Development Corp. re: Lease of premises
SCHEDULE - "H"
--------------
Proposed Series A of Preferred
Stock
Schedule "H" - Proposed voting powers, rights, designations, preferences
------------------------------------------------------------------------
and qualifications of Series A Preferred Stock
----------------------------------------------
All dollar amounts referred to in this Schedule "H" are US Dollars.
The Parent shall obtain, on or before Closing, approval from the majority of its
shareholders necessary to amend Article FOURTH of its certificate of
incorporation to allow for preferred stock and, subsequently, approval of its
board of directors of the following voting powers, rights, designations,
preferences and qualifications of such Series A Preferred Stock:
1. Designation and Amount. There shall be a series of Preferred Stock
designated as "Series A Preferred Stock" and the number of shares constituting
such series of Preferred Stock shall be 750,000.
2. Par Value. The par value of each such share of Series A Preferred
Stock shall be $0.001.
3. Rank. All shares of Series A Preferred Stock shall rank prior, both
as to payment of dividends and as to distributions of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
to all of the Corporation's now or hereafter issued common stock par value
$0.001 per share (the "Common Stock").
4. Dividends. The holders of Series A Preferred Stock shall be entitled
to receive, out of the net profits of the Corporation, dividends at the annual
rate of $0.04 per share per annum payable monthly by the 15th day of the
following month and accruing until paid starting and assessed beginning the
first full month following issuance. The amount of dividends payable shall be
computed on the basis of a 360 day year of twelve 30 day months. The Common
Stock is entitled to all remaining profits which the Board of Directors may
determine to distribute to the holders of Common Stock as dividends, subject to
any future designations regarding the remainder of the unissued Preferred Stock.
No dividends or other distributions, other than dividends payable solely
in shares of Common Stock of the Corporation ranking junior as to dividends and
as to liquidation rights to the Series A Preferred Stock shall be declared, paid
or set apart for payment on any shares of Common Stock unless and until all
accrued and unpaid dividends of Series A Preferred Stock shall have been paid
and/or set apart for payment.
Any reference to "distribution" contained in this Section 4 shall not be
deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation whether voluntary or involuntary.
5. Liquidation Preference. In the event of a liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Series A Preferred Stock shall be entitled to receive out of the assets of
the Corporation, whether such assets are stated capital or surplus of any
nature, an amount equal to the dividends accumulated thereon to the date of
final distribution to such holders which have not prior thereto been paid
without interest, and a sum equal to $1.25 per share, before any payment shall
be made or any assets distributed to the holders of Common Stock, or any other
class or series of the Corporation's capital stock. All of the remaining net
assets shall belong to and be distributed among the holders of the Common Stock,
subject to any future designations regarding the remainder of the unissued
Preferred Stock. Neither a consolidation or merger of the Corporation with
another corporation nor a sale or transfer of all or part of the Corporation's
assets for cash, securities or other property will be considered a liquidation,
dissolution or winding up of The Corporation.
6. Redemption at Option of the Corporation. The Corporation may, at its
option, at any time redeem in whole, or from time to time in part, out of the
earned funds of the Corporation, the Series A Preferred Stock on any date set by
the Board of Directors, at $1.25 per share plus, in each case, an amount in cash
equal to all dividends on the Series A Preferred Stock accrued and unpaid
thereon, pro rata to the date fixed for redemption (such sum being hereinafter
referred to as the "Redemption Price").
In case of the redemption of less than all of the then outstanding Series
A Preferred Stock, the Corporation shall designate by lot, or in such other
manner as the Board of Directors may determine, the shares to be redeemed or
shall effect such redemption pro rata. Notwithstanding the foregoing, the
Corporation shall not redeem less than all of the Series A Preferred Stock at
any time outstanding until all dividends accrued and in arrears upon all Series
A Preferred Stock then outstanding shall have been paid for all past dividend
periods.
Not less than thirty (30) days prior to the redemption date notice by
first class mail, postage prepaid, shall be given to the holders of record of
the Series A of Preferred Stock to be redeemed, addressed to such stockholders
at their last addresses as shown on the books of the Corporation. Each such
notice of redemption shall specify the date fixed for redemption, the Redemption
Price, the place or places of payment, that payment will be made upon
presentation and surrender of the shares of the Series A Preferred Stock and
that on and after the redemption date, dividends will cease to accumu1ate on
such shares.
Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of the Series A
Preferred Stock receives such notice; and failure to give such notice by mail,
or any defect in such notice, to the holders of any shares designated for
redemption shall not affect the validity of the proceedings for the redemption
of any other shares of the Series A Preferred Stock. On or after the date fixed
for redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price. If less than all the shares
represented by any such surrendered certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares. If, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been irrevocably deposited or set aside, then, notwithstanding that
the certificates evidencing any shares so called for redemption shall not have
been surrendered, the dividends with respect to the shares so called shall cease
to accrue after the date fixed for redemption, the shares shall no longer be
deemed outstanding, the holders thereof shall cease to be stockholders, and all
rights whatsoever with respect to the shares so called for redemption (except
the right of the holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate.
The shares of Series A Preferred Stock shall not be subject to the
operation of any purchase, retirement or sinking fund.
7. Conversion. Each share of Series A Preferred Stock shall be
convertible, at any time, at the option of the holder thereof into 2 common
shares. If the Corporation provides the holders of the Series A Preferred Stock
notice of its intention to redeem the shares of Series A Preferred Stock, these
holders shall have no more than fifteen (15) days to notify the Corporation with
written instruction to convert each of the shares of Series A Preferred Stock
into 2 common shares, otherwise such shares shall be redeemed by the Corporation
in accordance with Section 6.
8. Voting Rights.
a. General. The shares of Series A Preferred Stock shall not have any
voting rights regarding any corporation business except that solely and directly
affecting the existence and rights and obligations of such Series A Preferred
Stock.
b. Class Voting Rights. In addition to voting rights provided above, so
long as the Series A Preferred Stock is outstanding, the Corporation shall not,
without the affirmative vote or consent of the holders of at least one half
(1/2) of all outstanding Series A Preferred Stock voting separately as a class,
amend, alter or repeal (by merger or otherwise) any provision of the Certificate
of Incorporation or the By-Laws of the Corporation, as amended, so as adversely
to affect the relative rights, preferences, qualifications, limitations or
restrictions of the Series A Preferred Stock.
9. Outstanding Shares. All shares of the Series A Preferred Stock
issued shall be deemed outstanding except (i) from the date fixed for redemption
pursuant to Section 6 hereof, all shares of Series A Preferred Stock that have
been so called for redemption under Section 6 hereof; and (ii) from the date of
registration of transfer, all shares of the Series A Preferred Stock held of
record by the Corporation.
10. Partial Payments. Upon an optional redemption by the Corporation, if
at any time the Corporation does not pay amounts sufficient to redeem all Series
A Preferred Stock, then such funds which are paid shall be applied to redeem
such Series A Preferred Stock as the Corporation may designate by lot.
11. Preemptive Rights. The Series A Preferred Stock is not entitled to
any preemptive or subscription rights in respect of any securities of the
Corporation.
12. Severability of Provisions. Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or otherwise adversely affecting
the remaining provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be val1d or enforceable if a period of
time were extended or shortened or a particular percentage were increased or
decreased, then such court may make such change as shall be necessary to render
the provision in question effective and valid under applicable law.
13. Future Preferred Stock Issues. The Corporation may issue one or more
additional Series of Preferred Stock without the consent of the holders of
Series A Preferred Stock, provided, however, that the rights and preferences of
such subsequent series of preferred stock as to liquidation, dividends, voting,
redemption, and registration rights shall not be superior (but may be pari
passu) to those of the Series A Preferred Stock.
SCHEDULE - "I"
--------------
Assumption Agreement
--------------------
On Closing, the Buyer and Parent shall assume liability for payment of a Small
Business Loan of the Seller and shall indemnify the shareholders of Sweet Valley
Foods respecting liability for the said Small Business Loan in accordance with
Schedule A hereto;
SCHEDULE - "J"
--------------
Indemnity of Couprie Xxxxxx for
-------------------------------
Lease
-----
The Buyer agrees to indemnify Couprie Xxxxxx Inc. against any liability for
Lease payments on the premises at 0-0000 Xxxxxxxxx Xxxxxxxx, Xxxxxxxxxxx,
Xxxxxxx.
SCHEDULE - "K"
--------------
Guarantee re: Line of Credit
----------------------------
On or before Closing, the Parent or the Buyer shall obtain an operating line of
credit, for the Business to be owned by the Buyer on Closing, in the minimum
amount of one Million dollars (CAN $1,000,000.00). This line of credit shall be
used for general working capital purposes and for fixed asset purchases.
SCHEDULE - "L"
--------------
Allocation of the Purchase Price
--------------------------------
The purchase price shall be adjusted pursuant to Section 2.02, the amount of
adjustment required shall be allocated on a pro-rata basis among the various
categories of assets. The Seller and Buyer agree to cooperate in the filing of
such elections under the Income Tax Act (Canada) and other taxation statutes as
may be necessary or desirable to give effect to such allocation for tax
purposes.
SCHEDULE - "M"
--------------
List of Customer Contracts
--------------------------
There are no signed Customer Contracts currently in place.
