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SHARE PURCHASE AGREEMENT
THIS AGREEMENT dated as of October 1, 1999 is among:
XXXXX HOLDINGS LTD., (BCCA incorporation No. 0327852)
of 00000 Xxxxxx Xxxxxxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Vendor")
AND
JAN SKOLLSBERG, of 00000 Xxxxxx Xxxxxxxx, Xxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
("Skollsberg")
AND
00000 XXXXX INC., of Xxxxx 000, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxx, X0X 0X0
(the "Purchaser")
AND
XXXXXXX & XXXXXX, INC., an Ohio corporation, of 00 Xxxxxxx
Xxxx, Xxxxxxxxx, Xxxx, 00000
("S&L")
AND
OSCAR SKOLLSBERG'S FOOD TECHNIQUE LIMITED, (Federal
Corporation No. 1241991 and extra provincially registered in
British Columbia under No. A-0029524 ) of 000 - 00000
Xxxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
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(the "Company")
WHEREAS the Vendor is the legal and beneficial owner of all of the
issued and outstanding shares in the capital of the Company, being 200 common
shares (the "Shares").
AND WHEREAS the Vendor has agreed to sell, and the Purchaser has agreed
to purchase, the Shares on the terms set out in this Agreement.
AND WHEREAS Skollsberg is a 50% shareholder and President of the Vendor
and S&L owns all of the issued and outstanding shares in the capital of the
Purchaser.
AND WHEREAS Skollsberg, S&L and the Company are party to this Agreement
for the purpose of making the representations, warranties and covenants
hereinafter set out.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which each Party acknowledges, the Parties to this Agreement agree as follows:
PART 1
INTERPRETATION
1.1 DEFINED TERMS. In this Agreement, including the Recitals, the following
terms will have the following meanings:
"ACCOUNTANTS" means PricewaterhouseCoopers LLP.
"ACT" means the Income Tax Act (Canada).
"BUSINESS DAY" means a day which is not a Saturday, Sunday or statutory
holiday in British Columbia.
"CANADIAN DOLLAR EQUIVALENT" means the net amount in Canadian dollars
received by converting the Deposit into Canadian dollars at a financial
institution determined by S&L.
"CLOSING" means the completion of the transactions set out herein on the
Closing Date.
"CLOSING DATE" means the date of this Agreement.
"CLOSING STATEMENTS" means the financial statements of the Company
prepared as at the Closing Date, comprising a balance sheet, a statement
of earnings and retained earnings, a
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statement of cash flows, changes in financial equity statement,
including full note disclosure, to be prepared by the Accountants
pursuant to Section 3.2.
"COMPANY'S SOLICITORS" means Xxxxxxxx Xxxx May & Rice, Richmond, British
Columbia.
"CONSULTING AGREEMENT" means the consulting agreement dated the date
hereof between Skollsberg and the Company.
"DEPOSIT" means the deposit of U.S. $65,000 posted by S&L with the
Escrow Agent pursuant to the terms and provisions of the Escrow
Agreement.
"DESIGNATED PERSON" means a senior Chartered Accountant agreed to by the
Vendor and Purchaser or, in absence of agreement, designated by the
President of the Institute of Chartered Accountants in British Columbia.
"ENVIRONMENTAL LAW" means any Requirement of Law relating to public
health, safety or the environment, including, without limitation, those
relating to the protection of the environment, health or safety of
Persons in connection with environmental matters, natural resources,
conservation, wildlife, waste management, hazardous substance
management, removal and remedial cost recovery, and pollution,
including, without limitation, regulation of releases and disposals to
air, land, water and groundwater.
"ESCROW AGENT" means First-Xxxx National Bank.
"ESCROW AGREEMENT" means the Security Deposit Escrow Agreement dated
August 5, 1999 among S & L, Skollsberg and the Escrow Agent.
"GAAP" means Canadian generally accepted accounting principles applied
on a consistent basis with past fiscal years of the Company.
"GOVERNMENTAL APPROVALS" means all licences, permits, consents, material
authorizations and approvals from any and all Governmental Authorities
required for any specified purpose.
"GOVERNMENTAL AUTHORITY" means the government of Canada or the United
States, or the government of any province, state, municipality or other
political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions.
"GUARANTEE" means any obligation (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) of a Person guaranteeing or, in effect, guaranteeing (or
indemnifying any Person in respect of) or supporting any indebtedness,
dividend or other obligation, of any other Person in any manner, whether
directly or indirectly.
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"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste, special
or hazardous waste, toxic or hazardous substance or material (other than
alcohol based flavouring materials required in the business of the
Company) which, when released into the natural environment, is likely to
cause harm or risk to the natural environment or to human or animal
health, including without limitation, any substance considered hazardous
under any Environmental Law.
"INFORMATION" means all proprietary technology, know-how, trade secrets,
information concerning the ownership and business, documentation,
records, data, customer lists and information, supplier lists and
information, business prospects, materials, samples and prototypes and
like information relevant to or used in connection with the business or
ownership of the Company, which is not generally known and available in
the public domain, existing as of the Closing Date.
"LABOUR AND EMPLOYMENT AGREEMENTS" means any labour agreement,
employment agreement, pension plan, profit sharing plan, bonus plan,
group insurance plan, and like agreements or arrangements (whether
written or oral) between the Company and its employees.
"LEASES" means all leases of real property (including buildings and
other fixtures thereon) held by the Company, except the Shareholder
Lease.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind including any agreement to grant any of the
foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to file any
financing statement under the applicable legislation of any jurisdiction
in connection with any of the foregoing.
"MATERIAL CONTRACT" means, (other than the Consulting Agreement and
Shareholder Lease) whether written or oral:
(a) any contract between the Company and any party with
whom the Vendor, Skollsberg or the Company does not
deal with at arm's length, as such term is defined in
the Act;
(b) any agreement in respect of the provision of banking
and other finance related services to the Company
(whether by financial institutions or any other
Person), including for greater certainty, all loan
agreements and security agreements;
(c) the Leases;
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(d) the Labour and Employment Agreements;
(e) any lease of personal property, service agreement,
sale agreement, supply agreement or other agreement
of any kind to which the Company is a party, which:
(i) involves payments of more than $2,000 in the
aggregate;
(ii) cannot be cancelled at will by the Company
without liability; or
(iii) is material to the Company or the operation
of the business of the Company;
and all quotations, orders, or tenders for such types
of contracts which remain open for acceptance.
"MATERIAL PERSONAL PROPERTY" means, other than the Material Contracts,
each item of personal property owned by the Company having a book value
of $1000 or more.
"NET EQUITY" means the aggregate of all assets of the Company reduced by
the aggregate of all liabilities of the Company, determined and set out
in the Closing Statements.
"OBSOLETE INVENTORY" means:
(a) stock items where there has been no movement for one
year but will not include stock items moved from one
warehouse location to another, such inventory to be
specifically identified and priced to reflect
realizable market value that could be obtained, net
of any reasonable costs of disposal, as agreed to by
the Vendor and the Purchaser acting reasonably;
(b) items of redundant stock brought in for a specific
use or customer and not required, such inventory to
be specifically identified and priced to reflect
realizable market value, net of any reasonable costs
of disposal, that could be obtained, as agreed to by
the Vendor and the Purchaser acting reasonably; and
(c) damaged goods to be specifically identified and
priced at a discount to reflect realizable market
value, net of any reasonable costs of disposal, that
could be obtained, as agreed to by the Vendor and the
Purchaser acting reasonably.
"PARTIES" means the Vendor, Skollsberg, the Purchaser, S&L and the
Company and "PARTY" means any one of them.
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"PERMITTED LIENS" means:
(a) Liens arising in the ordinary course of business of
the Company and not incurred in connection with any
financial obligation, including encumbrances in the
nature of zoning restrictions, easements, rights and
restrictions of record on the use of real property,
and landlord's and lessor's Liens;
(b) Liens in the form of security given to a public
utility or any Governmental Authority in connection
with the operations of the Company in the ordinary
course of its business;
(c) the reservations, limitations, provisos and
conditions, if any, expressed in any original grants
from the Crown;
(d) Liens in respect of matters arising in the ordinary
course of business of the Company which will be fully
accounted or reserved for in the Closing Statements
including:
(i) Liens for taxes, assessments or governmental
charges not then due and delinquent or which
are being contested in good faith by
appropriate proceedings;
(ii) Liens in connection with worker's
compensation, social security taxes or
similar charges; and
(iii) Liens created pursuant to borrowings from
Canadian Imperial Bank of Commerce; and
(e) purchase money Liens and lease obligations in respect
of equipment and motor vehicles which have been
disclosed to the Purchaser and are noted in the
records of the Company, including without limitation,
those obligations with respect to which financing
statements have been filed in the Personal Property
Security Registry ("PPR") as disclosed in a PPR
search dated September 30, 1999 with a currency date
of September 25, 1999.
"PERSON" means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a Governmental Authority and the heirs,
executors, administrators or other legal representatives of an
individual.
"PRIME RATE" means the prime interest rate per annum for Canadian dollar
commercial loans in Canada declared by Canadian Imperial Bank of
Commerce from time to time.
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"PURCHASE PRICE" has the meaning set out in Section 2.2.
"PURCHASER'S SOLICITORS" means Xxxxx & Company, Vancouver, British
Columbia.
"REAL PROPERTY" means all real property interests of any nature
(including any options, rights to purchase or like interests) held by
the Company, other than the Leases or Shareholder Lease.
"REQUIREMENT OF LAW" means, as to any Person, the charter documents,
by-laws or other organizational or governing documents of such Person,
and any Canadian or United States federal, provincial, state or local
statute, law, regulation, order, consent, decree, judgment, permit,
licence, code, covenant, deed restriction, common law, treaty,
convention, ordinance or determination of an arbitrator or a court or
other competent authority, in each case applicable to or binding upon
such Person or any of the property of such Person.
"SHAREHOLDER LEASE" means the lease among the Company and Skollsberg
dated the date of this Agreement in respect of those lands and premises
located at 000 - 00000 Xxxxxxxxxxx Xxx, Xxxxxxxx, XX.
"SHARES" has the meaning set out in Recital A.
"S&L" means Xxxxxxx & Xxxxxx, Inc.
"SKOLLSBERG ENTERPRISES CONSULTING AGREEMENT" means the consulting
agreement dated January 1, 1999 between Skollsberg Enterprises Inc. and
the Company providing for a consulting fee to be paid by the Company in
the amount of Cdn. $30,000 per month.
"SPOT RATE" means, in relation to the conversion of one currency into
another currency, the rate of exchange for such conversion as quoted by
Bank of Canada (or if not quoted, the spot rate of exchange quoted for
wholesale transactions by Canadian Imperial Bank of Commerce in
accordance with its standard money market practices) at approximately
noon (Toronto time) on the Business Day such conversion is to be made.
"SUBSIDIARY" has the meaning set out in the Canada Business Corporations
Act.
1.1 SCHEDULES. The following are the Schedules attached to and incorporated
in this Agreement by reference and are considered to be a part of this
Agreement:
Schedule 1 - Financial Statements
Schedule 2 - [Intentionally Deleted]
Schedule 3 - Material Contracts
Schedule 4 - Leases
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Schedule 5 - Labour and Employment Agreements
Schedule 6 - Schedule of Removed Assets
Schedule 7 - Consulting Agreement
PART 2
SALE AND PURCHASE
2.1 SALE AND PURCHASE. The Vendor hereby agrees to sell the Shares to the
Purchaser free and clear of any Liens, and the Purchaser, relying on the
representations, warranties and covenants of the Vendor and Skollsberg as set
out in Part 4, hereby agrees to purchase the Shares, on the Closing Date, on the
terms contained in this Agreement.
2.2 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares is Cdn. $1,205,000 plus or minus any adjustments pursuant to Part 3,
which Purchase Price will be proportionately allocated to the Shares.
2.3 PAYMENT OF THE PURCHASE PRICE. The Purchaser will at the Closing pay,
on account of the Purchase Price, $1,205,000:
(a) by causing S&L to direct the Escrow Agent to deliver at
Closing the Canadian Dollar Equivalent of the Deposit as at
September 30, 1999; and
(b) by delivering the difference between $1,205,000 and the amount
referred to in (a) above;
in each case by certified cheque, bank draft or solicitor's trust cheque made
payable to the Company's Solicitors, in trust, on behalf of the Vendor.
2.4 ESCROW MATTERS. S&L and Skollsberg agree:
(a) to make the direction to the Escrow Agent referred to in
Section 2.3(a);
(b) to further direct the Escrow Agent to deliver any interest
accrued on the Deposit to S&L; and
(c) that S&L will pay to the Escrow Agent its fees and
disbursements in respect of the Escrow Agreement.
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PART 3
PRICE ADJUSTMENT
3.1 PRICE ADJUSTMENT. The Purchase Price will be adjusted:
(a) upwards by the amount, if any, that the Net Equity as of the
Closing Date as shown in the Closing Statements exceeds
$161,291;
(b) downward by the amount, if any, that the Net Equity as of the
Closing Date as shown in the Closing Statements is less than
$161,291;
(c) downward by the amount, if any, that the Company as at the
Closing Date is deficient in payment of taxes pursuant to the
Income Tax Act (federal), Corporation Capital Tax Act, Excise
Tax Act (federal), Social Service Tax Act and Municipal Act
(unless such amounts are already accrued and provision is made
therefor in the Closing Statements); and
(d) up or down, as required, by the amount of any difference
between the Canadian Dollar Equivalent of the Deposit actually
transferred to the Purchaser's counsel's trust account and the
amount calculated in section 2.3(a) and any transfer fees
charged by financial institutions relating to wiring the
Deposit to a Canadian Bank or converting the Deposit to
Canadian Dollars.
3.2 PREPARATION OF THE CLOSING STATEMENTS. The Vendor and Purchaser will
take all steps reasonably required, forthwith after the Closing Date, to cause
the Closing Statements to be prepared at the cost of the Company, in the manner
hereinafter described:
(a) the Closing Statements will be prepared as of 12.01 a.m. on
the Closing Date in accordance with GAAP on a "Review
Engagement Report" basis;
(b) all management estimates used in preparing the Closing
Statements will be made on a basis consistent with management
estimates made in previous fiscal years, of the Company and
the Closing Statements will include reasonable reserve for
unpaid accounts;
(c) the Closing Statements will be reported upon by the
Accountants;
(d) the Accountants will be authorized and required to review,
during the course of and following the review, their working
papers and findings with the Purchaser, the Purchaser's
representatives, and the Vendor and the Vendor's
representatives;
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(e) the Vendor and the Purchaser will use their best efforts to
cause the Closing Statements to be produced within sixty (60)
days after the Closing Date in final draft form, together with
the Accountants' draft report thereon, whereupon they will be
forthwith delivered by the Accountants to the Vendor and the
Purchaser. The Accountant's draft report will be accompanied
by a statement by the Accountants to the effect that the
Accountants are prepared to deliver the same in "reviewed"
form, subject to any dispute which may be raised by the Vendor
or the Purchaser;
(f) if any of the Vendor or the Purchaser wishes to dispute any
matter in the Closing Statements, such Party may do so by
notice in writing delivered to the other Party within thirty
(30) days of the final draft Closing Statement being delivered
to that Party. The notice of dispute will specify the nature
and reason for the dispute;
(g) if the Vendor and the Purchaser are not able to resolve the
matter in dispute within fourteen (14) days following the date
of delivery of the notice of dispute, the matter will be
referred to the Designated Person for determination. The
Designated Person's determination will be final and binding on
the Vendor and the Purchaser for the purposes of settling the
Purchase Price, provided that such determination will in no
way limit or prejudice the Vendor's or the Purchaser's right
to bring a claim for breach of covenant or representation and
warranty within the time limits provided for herein or at law;
(h) if no Designated Person is able or willing to be designated
within fourteen (14) days after the Vendor and the Purchaser
commence seeking such appointment, or if for whatever reason
the Designated Person is unwilling or unable to make a
determination referred to in (g) above within a reasonable
period of time after selection, the provisions of Part 7 will
apply to settlement of the dispute;
(i) the Accountants will, if there is no dispute, deliver the
Closing Statements, together with their report thereon and
their final account for preparation of the Closing Statements
to the Vendor and the Purchaser immediately following the
expiration of the thirty (30) days following the day on which
the final draft thereof is delivered in accordance with (e)
above or, if there is a dispute, immediately following the
resolution of the dispute by the Vendor and the Purchaser or
by a determination by the Designated Person as contemplated in
(f) above and such Closing Statements will give effect to such
resolution or determination. The report of the Accountants may
be further qualified with respect to any issue that is
disputed and resolved or determined in accordance with the
foregoing if they are of the view that such resolution or
determination is not in accordance with GAAP; and
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(j) the fees of the Designated Person in respect of the dispute of
any matter in the Closing Statements will be borne by the
Vendor and the Purchaser in such proportion as the Designated
Person deems appropriate.
3.3 INVENTORY AND FIXED ASSETS. The inventory and fixed assets of the
Company will be determined as at Closing Date as follows:
(a) the inventory of the Company will be listed and manually
counted or weighed by the Company, in a method acceptable to
standard audit practices, and the inventory count will be
observed by an independent financial auditor of the Purchaser,
who will be entitled to be in attendance at all reasonable
times;
(b) the fixed asset listing will set out the acquisition cost and
date of acquisition of each fixed asset as at Closing Date,
which shall be prepared by the Company and be provided to an
independent financial auditor of the Purchaser;
(c) the cost of the independent financial auditor of the Purchaser
will be borne by the Purchaser.
3.4 PAYMENT OF ADJUSTMENT AMOUNTS. Any adjustment to the Purchase Price
owing from one Party to the other Party pursuant to Section 3.1 will be payable
within thirty (30) days after delivery of the Closing Statements pursuant to
Section 3.2(f) together with interest thereon from the Closing Date to the date
of payment at a rate of 7.75% calculated and compounded monthly.
3.5 PURCHASE OF UNCOLLECTED ACCOUNTS RECEIVABLE. Any accounts receivable
of the Company as of the Closing Date that, after reasonable efforts by the
Company to effect collection, remain outstanding after March 31, 2000 will at
the request of the Company be purchased by the Vendor, and Skollsberg agrees to
cause the Vendor to so purchase, for a price equal to the amount recorded on the
Closing Statement therefor net of any allowance therefor set forth on the
Closing Statements; provided that, at the request of the Vendor the Company will
assign such outstanding accounts receivable to the Vendor against payment under
this Section 3.5.
3.6 XXXX SKOLLSBERG. With respect to the employment of Xxxx Skollsberg by
the Company after the Closing Date, the Vendor and the Purchaser agree as
follows:
(a) if the Company terminates the employment of Xxxx Skollsberg
(expressly or constructively) on or before February 29, 2000,
the Vendor will, and Skollsberg will cause the Vendor to, pay
all severance pay and other termination amounts owing and will
indemnify and save the Company harmless from all costs,
expenses and liabilities in connection therewith; and
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(b) if the Company terminates the employment of Xxxx Skollsberg
(expressly or constructively) after February 29, 2000, neither
the Vendor nor Skollsberg will have any liability in
connection therewith and the Company will pay all severance
pay and other termination amounts owing.
3.7 XXXX XXXXXX. The Purchaser acknowledges that it has received from the
Company, and accordingly relies upon, a written confirmation from the physician
of Xxxx Xxxxxx, advising that Xxxx Xxxxxx is fit to return to work as of
September 27, 1999.
PART 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE VENDOR AND SKOLLSBERG
4.1 INDUCEMENTS - THE VENDOR AND SKOLLSBERG. In order to induce S&L and
the Purchaser to enter into and consummate this Agreement, the Vendor and
Skollsberg jointly and severally represent and warrant to and covenant with the
S&L and the Purchaser as follows:
(a) OWNERSHIP. The Shares constitute all of the issued and
outstanding shares in the capital of the Company and the
Vendor is the legal and beneficial owner of the Shares, free
of all Liens.
(b) COMPETING RIGHTS TO SHARES. No Person has any agreement or
option, or a right capable of becoming an agreement, for the
purchase of any of the Shares.
(c) SHARES DELIVERED FREE AND CLEAR. The Vendor will, at the
Closing, transfer to the Purchaser legal and beneficial title
to, and ownership of, the Shares, free and clear of any Liens
and subject to section 4.5, the said transfer will not result
in any fees, duties, taxes, assessments or other amounts being
payable by the Company.
(d) STATUS OF VENDOR. The Vendor is a corporation duly
incorporated, validly existing, and in good standing with
respect to annual filings under the laws of the Province of
British Columbia.
(e) CAPACITY OF VENDOR. The Vendor has the requisite power and
capacity to own the Shares and to enter into this Agreement
and to perform its obligations hereunder and the execution,
delivery or observance or performance of this Agreement is not
a contravention or breach, or will not be a contravention or
breach, of the constating documents or resolutions of
directors and shareholders of the Vendor or the terms of any
agreement, trust or other document or any Requirement of Law
applicable to the Vendor.
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(f) OWNERSHIP OF VENDOR. Skollsberg and Xxxx Xxxxxxxxx Skollsberg
are the owners of all of the issued and outstanding shares in
the capital of the Vendor.
(g) STATUS OF COMPANY. The Company is a corporation duly
incorporated, validly existing, and in good standing with
respect to the filing of annual reports under the laws of
Canada, is duly extra-provincially registered in the Province
of British Columbia and has the power and capacity to own its
assets, to carry on its business and to enter into this
Agreement and carry out its terms.
(h) MEMORANDUM AND ARTICLES. The Memorandum and Articles of the
Company have not been altered since its incorporation other
than as disclosed to the Purchaser in writing prior to the
date of this Agreement.
(i) CAPACITY OF COMPANY. The Company has the requisite power and
capacity to own its assets and carry on its business as
conducted prior to Closing and to enter into this Agreement
and to perform its obligations hereunder and the execution,
delivery or observance or performance of this Agreement by the
Company is not a contravention or breach, or will not be a
contravention or breach, of the constating documents or
resolutions of directors and shareholders of the Company or
the terms of any agreement, trust or other document or,
subject to section 4.5, any Requirement of Law applicable to
the Company.
(j) AUTHORIZED CAPITAL. The authorized capital of the Company is
10,000 common shares. No Person has any agreement or option or
a right capable of becoming an agreement for the purchase of
any of the shares of the Company or any right capable of
becoming an agreement for the purchase, subscription or
issuance of any of the unissued shares in the capital of the
Company.
(k) CONSENTS AND APPROVALS. Subject to section 4.5, the Vendor,
Skollsberg and the Company have together obtained all required
Governmental Approvals and all consents or approvals of any
Person applicable to or required by them in respect of the
entering into and completion by them of the transactions
contemplated in this Agreement, except that, with respect of
any required consents of the lessors under the Leases, the
Vendor, Skollsberg and the Company have made reasonable
efforts to obtain such consents.
(l) AUTHORIZATION AND BINDING EFFECT OF AGREEMENT. This Agreement
has been duly authorized in the case of the Vendor and the
Company and duly executed and delivered by each of the Vendor,
Skollsberg and the Company and constitutes valid and legally
binding obligations of the Vendor, Skollsberg and the Company,
enforceable against each of them in accordance with its terms,
subject to the fact that
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specific performance is an equitable remedy available only in
the discretion of the courts.
(m) THE VENDOR. The Vendor has no material obligations to any
Person which could materially adversely affect the Company or
the transactions contemplated by this Agreement.
(n) RESIDENCY. The Vendor is a resident of Canada and not a
non-resident of Canada for the purposes of the Act.
4.2 INDUCEMENTS - COMPANY BUSINESS MATTERS. In order to induce S&L and the
Purchaser to enter into and consummate this Agreement, the Vendor and Skollsberg
jointly and severally represent and warrant to and covenant with S&L and the
Purchaser as follows:
(a) BUSINESS. The Company carries on business in the Province of
British Columbia and does not directly or indirectly carry on
business in any other Province or Territory of Canada or in
any other country other than by way of the sale of its
products.
(b) LICENCES AND PERMITS. All Governmental Approvals required for
the conduct, in the ordinary course, of the business of the
Company have been obtained and are in good standing and none
of such licences and permits will be cancelled or terminated,
nor, subject to the provisions of section 4.5, will additional
such licences and permits be required, as a result of the
closing of this Agreement.
(c) FINANCIAL STATEMENTS. The financial statements of the Company
as at December 31, 1998, December 31, 1997, December 31, 1996,
December 31, 1995 and December 31, 1994, which are attached to
this Agreement as Schedule 1, have been prepared on a "Notice
to Reader" basis, and as such present fairly the condition of
the Company, and are true and correct in every material
respect as at the dates for the years then ended and have been
prepared on a basis consistent with those of previous fiscal
years. Without limiting the generality of the foregoing:
(i) the revenues of the Company for fiscal year 1998 are
as set out in the December 31, 1998 financial
statements attached hereto;
(ii) the accounts receivable recorded on the December 31,
1998 financial statements attached hereto were
recorded at the lower of cost and net realizable
value;
(iii) the capital assets recorded on the December 31, 1998
financial statements attached hereto were recorded at
cost, less accumulated depreciation;
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(iv) management estimates underlying the financial
statements were made on a basis consistent with those
of previous fiscal years.
(d) INDEBTEDNESS TO RELATED PARTIES. The Company is not indebted
to or under any obligation of any nature to any of:
(i) the Vendor;
(ii) Skollsberg; or
(iii) any Person who does not deal at arm's length (as such
term is defined in the Act) from any of the Vendor,
Skollsberg, the Company or any director or officer of
the Company, other than Xxxx Skollsberg as provided
in Section 3.5.
For greater certainty, the Skollsberg Enterprises Consulting
Agreement and the employment arrangements with Jan Skollsberg
and Xxxx-Xxxxxxxxx Skollsberg and have been terminated as of
the Closing Date without liability to the Company.
(e) INDEBTEDNESS OF RELATED PARTIES. None of the:
(i) the Vendor;
(ii) Skollsberg; or
(iii) any Person who does not deal at arm's length (as such
term is defined in the Act) from any of the Vendor,
Skollsberg, the Company or any director, officer or
employee of the Company;
is now indebted to the Company.
(f) DISTRIBUTIONS AND DIVIDENDS. Except in respect of the
Skollsberg Enterprises Consulting Agreement, and except for
the repayment of a $45,000 loan by the Company to Skollsberg
Enterprises Inc., or otherwise as disclosed to S&L or the
Purchaser in writing, prior to the Closing Date, since
December 31, 1998 no dividends, indebtedness or other
distribution of funds of the Company have been paid to:
(i) the Vendor;
(ii) Skollsberg; or
16
-16 - Exhibit #2
(iii) any Person who does not deal at arm's length (as such
term is defined in the Act) from any of the Vendor,
Skollsberg, the Company or any director, officer or
employee of the Company.
(g) GUARANTEES. The Company is not party to any Guarantee, or has
agreed to grant any Guarantee.
(h) ABSENCE OF CHANGES. Since December 31, 1998:
(i) there has not been any material adverse change in the
financial position or condition of the Company or any
damage, loss or other change in circumstances
materially affecting the business of the Company as
conducted prior to Closing or property of the Company
or its right to carry on business;
(ii) the Company has not waived or surrendered any right
of material value; and
(iii) the business of the Company has been carried on in
the ordinary course.
(i) CUSTOMERS AND ACCOUNTS. The relationship between the Company
and its significant suppliers and customers is good and
neither the Company or Skollsberg knows, or has reasonable
grounds to believe, that any such significant supplier or
customer does not intend to continue dealing with the Company
after the date of this Agreement on a basis consistent with
past practices. Without limiting the generality of the
foregoing, of the Company's eight (8) largest customers
(during the fiscal year ended December 31, 1998):
(i) sales to five (5) of them were between Cdn. $50,000
and Cdn. $100,000 each;
(ii) sales to two (2) of them were between Cdn. $150,000
and Cdn. $200,000 each; and
(iii) sales to one (1) of them was between Cdn. $200,000
and Cdn. $250,000.
(j) MATERIAL CONTRACTS. The agreements listed in Schedule 3
comprise a complete list of all Material Contracts, a true
copy of each (including all amendments thereto) of which has
been delivered to the Purchaser or in the case of oral
contracts, has been disclosed in full to the Purchaser in
writing prior to the date of this Agreement. The Company has
the full benefit of the Material Contracts and each Material
Contract is in full force and effect and unamended except as
disclosed in Schedule 3. The Company is not in default in any
material respect under the terms of any Material Contract
except as disclosed in Schedule 3 and the leases of 145- and
000-00000 Xxxxxxxxxxx Xxx, Xxxxxxxx, XX, if it is unable to
obtain the prior written consent
17
- 17 - Exhibit #2
of the landlords with respect to change in control of the
tenant before the Closing Date, nor has it waived any of its
rights thereunder or released any party from its obligations
with respect thereto. The Company has the capacity, including
necessary personnel, equipment, and supplies, to perform all
of its obligations under the Material Contracts.
(k) SUGAR SUPPLY. The Company purchases sugar from only Xxxxxx
Sugars Ltd. and from no other source.
(l) LEASES. The leases listed in Schedule 4 comprise a complete
list of all Leases, a true copy of each (including all
amendments thereto) of which has been delivered to Purchaser.
The Company has the full benefit of the Leases and each Lease
is in full force and effect and unamended except as disclosed
in Schedule 4. The Company is not in default in any material
respect under the terms of any Lease nor has it waived any of
its rights thereunder or released any party from its
obligations with respect thereto, except the Vendor has failed
to obtain consent to a change in control of the tenant in
favour of the Purchaser of the Lease for 000 - 00000
Xxxxxxxxxxx Xxx, Xxxxxxxx, XX.
(m) LABOUR AND EMPLOYMENT AGREEMENTS. There are no Labour and
Employment Agreements affecting the Company other than those
specified in Schedule 5 and there are no onerous or unusual
provisions in any contract with employees of the Company which
would cause such employees to be made redundant, or be deemed
constructively terminated, directly or indirectly as a result
of the completion of the transactions set out in this
Agreement or the resignations of Persons as directors or
officers of the Company or which would cause the Company to be
liable in any manner as a result thereof.
(n) MATERIAL PERSONAL PROPERTY. [Deleted]
(o) INVENTORIES. All inventories of the Company as exist at the
Closing Date, except Obsolete Inventories, are of normal
merchantable quality, free from defects and such inventories
consist of the types and quantities of items as is consistent
with the operations of the Company in the ordinary course
prior to the date of this Agreement.
(p) INFORMATION. The Company is the sole legal and beneficial
owner of the Information.
(q) INSURANCE. The Company maintains such insurance against loss
or damage to its assets (including business interruption
insurance) and concerning public liability as is reasonably
prudent for companies of similar size and in similar
businesses and such insurance is in effect and the Company has
not, to the best of the Vendor's and
18
- 18 - Exhibit #2
Skollsberg's knowledge, done anything which would render such
insurance void or unenforceable.
(r) ACCOUNTS RECEIVABLE. No accounts receivable held by the
Company have been the subject of any factoring and all
accounts receivable held by the Company as of the date of this
Agreement are bona fide, good and collectible without set-off
or counterclaim, except to the extent of the allowance
therefor set forth on the Closing Statements.
(s) BOOKS AND RECORDS. The Company maintains books, records and
accounts in reasonable detail which accurately and fairly
reflect its transactions and business affairs, and maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed in
accordance with management's general or specific authorization
and to permit preparation of financial statements in
accordance with GAAP. All material transactions of the Company
have been promptly and properly recorded or filed in or with
its books and records. The minute book of the Company contain
all records of the meetings and proceedings of shareholders
and directors.
(t) REAL PROPERTY. The Company owns no Real Property.
(u) OWNERSHIP INTERESTS. The Company owns no shares in the capital
of any other corporation or ownership interests in other
entities of any nature.
(v) ASSETS. The Company has good and marketable title to all its
properties and assets free of all Liens except for Permitted
Liens.
(w) CONDITION OF ASSETS. The Company has the assets necessary to
operate its business in the ordinary course after the date of
this Agreement in a manner consistent with that prior to the
date of this Agreement and such assets, taken as a whole, have
been properly maintained and are in good working order for the
purposes of ongoing operation, subject to ordinary wear and
tear for assets of comparable age and use.
(x) NON-OWNERSHIP OF ASSETS. Except for the property described in
the Shareholder Lease and the assets listed on Schedule 6,
none of the Vendor, Skollsberg or any Person who does not deal
at arm's length (as such term is defined in the Act) from any
of the Vendor or Skollsberg owns any property or assets which
are used by the Company or which are necessary or useful in
the conduct of its business in a manner consistent with the
operations of the Company in the ordinary course prior to the
date of this Agreement. The Vendor and Skollsberg hereby
covenant that, prior to December 31, 1999, they shall purchase
or cause a third party to purchase for sale to the Company a
Kettle/processor and lightning mixer (for $1,500 plus
applicable
19
- 19 - Exhibit #2
taxes) and racking (for $250 plus applicable taxes) replacing
those particular assets listed on Schedule 6.
(y) FINANCING ARRANGEMENTS. The Company is not party to any
banking or borrowing arrangements which cannot be terminated
and repaid without penalty or bonus on 30 days' notice or less
other than the operating line and demand instalment loan in
favour of Canadian Imperial Bank of Commerce.
(z) ABSENCE OF CONFLICTING AGREEMENTS. The performance of this
Agreement will not be in violation of any agreement or
Material Contract to which the Company is a party except the
lease of 000-00000 Xxxxxxxxxxx Xxx, Xxxxxxxx, XX, if the
Company is unable to obtain the prior written consent of the
landlords with respect to change in control of the tenant
before the Closing Date, and will not, except as aforesaid,
give any Person any right to terminate or cancel any agreement
or Material Contract or any right enjoyed by the Company, will
not, subject to section 4.5, result in the creation or
imposition of any lien, encumbrance or restriction of any
nature whatsoever in favour of a third party upon or against
the assets of the Company and will not result in any fees,
duties, taxes, assessments or other amounts relating to the
Company's assets becoming due or payable.
(aa) LITIGATION. There are no actions, suits, judgments,
investigations or proceedings outstanding or pending or, to
the Vendor's knowledge, threatened against or affecting the
Company at law or in equity or before or by any Governmental
Authority.
(bb) COMPLIANCE WITH REQUIREMENT OF LAW. The Company is not in
default with respect to any Requirement of Law relating to it.
Without limiting the generality of the foregoing, the Company:
(i) is not in violation of any Environmental Law
applicable to it;
(ii) does not own, control or is responsible for any
property onto which Hazardous Substances have been
released, disposed of or are present (including, for
greater certainty, the property which is the subject
of the Leases and the Shareholder Lease);
(iii) has not released or disposed of any Hazardous
Substances into the environment or onto the property
of any Person; or
(iv) is not subject to any litigation, investigation,
order or proceeding in connection with Hazardous
Substances or Environmental Laws.
20
- 20 - Exhibit #2
(cc) DISCLOSURE. No representation or warranty of the Vendor or
Skollsberg made in this Agreement, and no statement in any
schedule hereto, omits to state a material fact necessary to
make the statements, in light of the circumstances in which
they were made, not misleading. There is no fact known to any
of the Vendor or Skollsberg that has not been disclosed to the
Purchaser and S&L that has specific application to the
Purchaser, the Company or the business, assets or future
profitability of the Company that could reasonably be expected
to be considered by the Purchaser or S&L to be materially
adverse in nature.
4.3 INDUCEMENTS - TAXATION. In order to induce S&L and the Purchaser to
enter into and consummate this Agreement, the Vendor and Skollsberg jointly and
severally represent and warrant to and covenant with S&L and the Purchaser as
follows:
(a) TAXES. All tax returns required to be filed by the Company in
any jurisdiction have been filed, and all taxes, assessments,
fees and other governmental charges upon the Company or upon
any of its property, income or franchises, which are due and
payable, have been paid timely or within appropriate extension
periods or contested in good faith by appropriate proceedings.
The Company has collected, deducted, withheld and remitted to
the proper taxing authorities when due all taxes required to
be collected, deducted, withheld and remitted.
(b) PROVISIONS FOR TAXES. Adequate provision has been made for
taxes payable for the current period for which tax returns are
not yet required to be filed and there are no agreements,
waivers, or other arrangements providing for an extension of
time concerning the filing of any tax return by, or payment
of, any tax, governmental charge or deficiency by the Company.
There are no contingent tax liabilities or any grounds which
would prompt a reassessment of returns filed including
aggressive treatment of income and expenses in filing earlier
tax returns.
(c) TAX ASSESSMENTS. The Company has received no notice of
reassessment for federal and provincial income tax for all
years to and including the fiscal year of the Company ended
December 31, 1997 and has been assessed concerning its return
for the year ended December 31, 1998.
(d) ELECTIONS. The Company has not prior to the date of this
Agreement:
(i) made any election under Section 85 of the Act
concerning the acquisition or disposition of any
property;
(ii) made any election under Section 83 or 196 of the Act;
21
- 21 - Exhibit #2
(iii) except for the property described in the Shareholder
Lease, acquired or had the use of any property from a
Person with whom it was not dealing at arm's length
(as such term is defined in the Act);
(iv) disposed of anything to a Person with whom the
Company was not dealing at arm's length (as such term
is defined in the Act) for proceeds less than the
fair market value thereof; or
(v) discontinued carrying on business in respect of which
its non-capital losses were incurred.
(e) DISTRIBUTIONS. The Company has made all elections required to
be made under the Act in connection with any distributions by
the Company and all such elections were true and correct and
in the prescribed form and were made within the prescribed
time periods.
(f) MANUFACTURER. Since 1993, the Company has been and is carrying
on "manufacturing and processing in Canada of goods for sale
or lease" within the meaning given to the phrase and the words
therein under the Act and any administrative pronouncements
published by the Department of National Revenue, Taxation.
(g) DEDUCTIONS CLAIMED. There are no amounts outstanding and
unpaid for which the Company has previously claimed a
deduction under the Act.
4.4 INDUCEMENTS - FUTURE MATTERS. In order to induce S&L and the Purchaser
to enter into and consummate this Agreement, the Vendor and Skollsberg jointly
and severally represent and warrant to and covenant with the S&L and the
Purchaser as follows:
(a) CLOSING STATEMENTS. The Closing Statements will be true and
correct in every material respect and present fairly the
financial position of the Company as at the date of this
Agreement, in accordance with GAAP.
(b) LIABILITIES. There are no liabilities, contingent or
otherwise, of the Company as at the date of this Agreement
which will not be fully and accurately quantified and
accounted for in the Closing Statements.
(c) INFORMATION. The Vendor and Skollsberg will use diligent
efforts to ensure the Purchaser's representatives are
thoroughly informed of the Information.
(d) GOVERNMENTAL MATTERS. The Vendor and Skollsberg will [at the
request of the Company, acting reasonably] assist and
cooperate with the Purchaser and Company
22
- 22 - Exhibit #2
in resolving any questions, enquiries or disputes with any
Governmental Authority in connection with the Company and its
business and assets.
(e) "OSCAR SKOLLSBERG'S FOOD TECHNIQUE". The Vendor and Skollsberg
will, on request and at the expense of the Company, assist and
cooperate with the Purchaser and the Company in obtaining
trade-xxxx protection of "Oscar's", to the extent possible, or
other commercial rights in respect of the words "Oscar
Skollsberg's Food Technique" and "Oscars" and will sign all
consents and documents reasonably requested by the Company in
connection therewith. The Vendor and Skollsberg hereby
acknowledge and agree that the Company is solely entitled to
the use of the corporate name "Oscar Skollsberg's Food
Technique Limited" and to registered trademark rights to the
word "Oscars", and neither the Vendor nor Skollsberg have nor
will assert any interest therein.
(f) Neither the Vendor nor Skollsberg will commercially use or
assert rights in the use, nor register under Canadian or
American corporate or trademark registries the words "Oscar
Skollsberg", "Skollsberg Food", "Skollsberg Foods", without
the prior written consent of the Company, but the foregoing
shall not be interpreted as prohibiting Skollsberg from using
or registering the name "Skollsberg" in isolation or in
combinations other than the foregoing.
(g) Neither the Purchaser, nor after closing, the Company, will
commercially use or assert rights in the use, nor register
under Canadian or American corporate or trademark registries
the word "Skollsberg", save and except as part of the complete
corporate name of the Company: "Oscar Skollsberg's Food
Technique Limited".
4.5 LIMITATION ON VENDOR'S AND SKOLLSBERG'S REPRESENTATIONS AND
WARRANTIES. The representation and warranties of the Vendor and Skollsberg set
out in sections 4.1(c), 4.1(i), 4.1(k) and 4.2(b) and 4.2(z) are subject to the
limitation that, with respect to any matters specifically related to the
Purchaser's status as an American controlled public corporation, the
representations and warranties of the Vendor and Skollsberg are given solely "to
the best of the knowledge of the Vendor and Skollsberg, after due enquiry".
4.6 SURVIVAL. The representations and warranties given to, and covenants
made with, S&L and the Purchaser by the Vendor and Skollsberg under Part 4 will
survive Closing until October 1, 2003, four (4) years after the Closing Date.
23
- 23 - Exhibit #2
PART 5
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE PURCHASER
5.1 INDUCEMENTS. In order to induce the Vendor and Skollsberg to enter
into and consummate this Agreement, S&L and the Purchaser jointly and severally
represent and warrant to and covenant with the Vendor and Skollsberg as follows:
(a) STATUS OF PURCHASER. The Purchaser is a corporation duly
incorporated under the Business Corporations Act (Yukon), is a
valid and subsisting corporation and is in good standing with
respect to the filing of annual returns required under that
Act.
(b) AUTHORIZATION - PURCHASER. The Purchaser has the requisite
corporate power and capacity to enter into the transactions
contemplated by this Agreement, and to perform its obligations
hereunder, and the execution and delivery or observance or
performance of this Agreement is not a contravention or breach
of the constating documents or resolutions of directors and
shareholders of the Purchaser or the terms of any agreement,
trust or other document or any Requirement of Law applicable
to the Purchaser and this Agreement has been duly authorized
by all necessary corporate action on the part of the Purchaser
and constitutes valid and legally binding obligations of the
Purchaser enforceable against it in accordance with its terms,
subject to the fact that specific performance is an equitable
remedy available only in the discretion of the courts.
(c) STATUS OF S&L. S&L is a corporation duly incorporated under
the laws of Ohio and is a valid and subsisting corporation.
(d) AUTHORIZATION - S&L. S&L has the corporate power and capacity
to enter into the transactions contemplated by this Agreement,
and this Agreement has been duly authorized by all necessary
corporate action on the part of S&L and constitutes valid and
legally binding obligations of S&L enforceable against it in
accordance with its terms.
(e) CONSENTS AND APPROVALS. The Purchaser and S&L have together
obtained all required Governmental Approvals and all consents
or approvals of any Person applicable to or required by them
in respect of the entering into and completion by them of the
transactions contemplated in this Agreement.
(f) SKOLLSBERG GUARANTEES. The Purchaser and S&L have used
reasonable efforts to extinguish the personal guarantees
granted by the Company, Skollsberg and Xxxx-
24
-24- Exhibit #2
Xxxxxxxxx Skollsberg on behalf of the Company to CIBC by
either paying off the CIBC bank financing or assuming the
personal guarantees of Skollsberg."
(g) LEASE. The Company will continue to lease the premises located
at 185-11960 Hammersmith Way, Richmond from the Vendor until
April 30, 2000 at the existing lease rate.
(h) COMPETITION ACT. The transaction contemplated under this
Agreement is not subject to pre-notification under the
Competition Act (Canada) and the Purchaser is not aware of any
reason why the Director of Investigations and Research under
the Act would not approve the transactions contemplated in
this Agreement.
(i) INVESTMENT CANADA. There is no requirement under the
Investment Canada Act (Canada) to file for pre-approval to the
transactions contemplated in this Agreement prior to Closing
and the Purchaser will file a notification within the
requisite 30 day period following Closing.
(j) ABSENCE OF CONFLICTING AGREEMENTS. The performance of this
Agreement will not be in violation of the constating documents
of the Purchaser or S&L nor of any agreement or material
contract to which the Purchaser is a party and will not give
any Person any right to terminate or cancel any agreement of
the Purchaser nor this Agreement.
(k) DISCLOSURE. No representation or warranty of the Purchaser or
S&L made in this Agreement omits to state a material fact
necessary to make the statement, in light of the circumstances
in which they were made, not misleading.
PART 6
INDEMNITY
6.1 VENDOR'S AND SKOLLSBERG'S INDEMNITY. Notwithstanding any
investigations or enquiries made by the Purchaser or S&L prior to the date of
this Agreement, the Vendor and Skollsberg jointly and severally covenant and
agree to indemnify and save harmless S&L, the Purchaser and the Company of and
from any direct or indirect loss whatsoever arising out of, under or pursuant
to:
(a) any assessment or reassessment for all taxes (including
without limitation income taxes and corporate taxes), interest
and/or penalties for any period up to and including the date
of this Agreement for which no adequate reserve has been
provided for and disclosed in the Closing Statements;
25
- 25 - Exhibit #2
(b) for a period of four (4) years following the Closing Date, any
actions or suits against or affecting the Company at law or in
equity or before or by any Governmental Authority, whether or
not known to any of the Vendor or Skollsberg, the basis for
which arose prior to the date of this Agreement and are not
caused by the status of the Purchaser as described in section
4.5 and for which no adequate reserve has been provided for
and disclosed in the Closing Statements;
(c) for a period of four (4) years following the Closing Date, any
default on the part of the Company with respect to any
Requirement of Law, including any Environmental Law, relating
or applicable to its business as conducted prior to the
Closing, whether or not known to any of the Vendor or
Skollsberg (unless the default relates to a matter governed by
section 4.5 in which case the default must be known to the
Vendor), the basis for which arose or existed prior to the
date of this Agreement and for which no adequate reserve has
been provided for and disclosed in the Closing Statements;
(d) for a period of four (4) years following the Closing Date, any
loss suffered by S&L, the Purchaser or the Company directly or
indirectly as the result of or arising out of any
representation or warranty made by the Vendor or Skollsberg in
this Agreement being untrue or incorrect when made;
(e) the breach of any covenant of any of the Vendor or Skollsberg
in this Agreement; and
(f) all claims, demands, costs and expenses in respect of the
foregoing.
6.2 S&L'S AND PURCHASER'S INDEMNITY. Notwithstanding any investigations or
enquiries made by the Vendor or Skollsberg prior to the date of this Agreement,
S&L and the Purchaser jointly and severally covenant and agree to indemnify and
save harmless the Vendor or Skollsberg of and from any direct or indirect loss
whatsoever arising out of, under or pursuant to:
(a) any loss suffered by the Vendor or Skollsberg directly or
indirectly as the result of or arising out of any
representation or warranty made by S&L and the Purchaser in
Part 5 of this Agreement being untrue or incorrect or the
breach of any covenant of the Purchaser in Part 5 of this
Agreement; and
(b) all claims, demands, costs and expenses in respect of the
foregoing.
(c) the personal guarantees granted by the Company, Skollsberg and
Xxxx-Xxxxxxxxx Skollsberg on behalf of the Company to CIBC in
the event that the Purchaser does not pay off the CIBC bank
financing.
26
- 26 - Exhibit #2
6.3 NOTICE OF CLAIM. After the Closing, any Party will promptly give
notice to the other of any bona fide claim by any of them acting in good faith
for indemnification pursuant to Sections 6.1 or 6.2 (a "Claim", which term will
include more than one Claim). Such notice will be given within the said four (4)
year period identified in section 6.1 (if relevant) and will specify whether the
Claim arises as a result of a claim by a third party (a "Third Party Claim") or
otherwise (an "Inter-Party Claim"), and will also specify with reasonable
particularity (to the extent the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, or, if an amount is not then
determinable, an approximate and reasonable estimate of the
likely amount of the Claim.
6.4 MATERIAL AMOUNT. No Claim may be made by any Party hereunder unless
the amount of any such Claim is equal to or exceeds Cdn. $500.
6.5 MATERIAL AMOUNT - CLOSING STATEMENTS. No Claim may be made with
respect to the Closing Statements unless the Claim is equal to or greater than
Cdn.$10,000. No other Claim may be made by any party unless the amount of any
such Claim is equal to or exceeds Cdn.$500.
6.6 PROCEDURE FOR INDEMNIFICATION.
(a) Following receipt of notice by a Party or Parties (the
"Indemnitor") from the other Party or Parties (the
"Indemnitee") of notice of a Claim, the Indemnitor will have
thirty (30) days to make such investigation of the Claim as it
considers necessary or desirable. For the purpose of such
investigation, the Indemnitee will make available to the
Indemnitor and its authorized representatives the information
relied upon by the Indemnitee to substantiate the Claim. If
the Indemnitee and the Indemnitor agree at or prior to the
expiration of such thirty (30) day period (or any mutually
agreed upon extension thereof) to the validity and amount of
such Claim, the Indemnitor will immediately pay to the
Indemnitee the full agreed upon amount of the Claim. If the
Indemnitor and Indemnitee do not agree within such period (or
any mutually agreed upon extension thereof), the provisions of
Part 7 will apply.
(b) With respect to any Third Party Claim, the Indemnitor will
have the right, at its own expense, to participate in or
assume control of the negotiation, settlement or defence of
such Third Party Claim and, in such event, the Indemnitor will
reimburse the Indemnitee for all the Indemnitee's
out-of-pocket expenses as a result of such participation or
assumption. If the Indemnitor elects to assume such control,
the Indemnitee will co-operate with the Indemnitor, will have
the right to participate in the negotiations, settlement or
defence of such Third Party Claim at its own expense and will
have the right to disagree on reasonable grounds with the
selection and
27
- 27 - Exhibit #2
retention of counsel, in which case counsel satisfactory to
the Indemnitor and the Indemnitee will be retained by the
Indemnitor. If the Indemnitor, having elected to assume such
control, thereafter fails to defend any such Third Party Claim
within a reasonable time, the Indemnitee will be entitled to
assume such control and the Indemnitor will be bound by the
results obtained by the Indemnitee with respect to such Third
Party Claim and will reimburse the Indemnitee for all its
out-of-pocket expenses as a result of such assumption.
(c) The obligation of the Indemnitor to indemnify the Indemnitee
in respect of Claims will also be subject to the following:
(i) in the event that any Third Party Claim is of a
nature such that the Indemnitee is required by
applicable law to make a payment to any third party
with respect to such Third Party Claim before the
completion of settlement negotiations or related
legal proceedings, the Indemnitee may make such
payment and the Indemnitor will, forthwith after
demand by the Indemnitee, reimburse the Indemnitee
for any such payment. If the amount of any liability
of the Indemnitee under the Third Party Claim in
respect of such a payment was made as finally
determined, in less than the amount which was paid by
the Indemnitor to the Indemnitee, the Indemnitee
will, forthwith after receipt of the difference from
the Third Party, pay the amount of such difference to
the Indemnitor;
(ii) except in the circumstances contemplated by (i)
above, and whether or not the Indemnitor assumes
control of the negotiation, settlement or defence of
any Third Party Claim, the Indemnitee will not
negotiate, settle, compromise, or pay any Third Party
Claim except with the prior written consent of the
Indemnitor;
(iii) the Indemnitee will not permit any right of appeal in
respect of any Third Party Claim to terminate without
giving the Indemnitor notice thereof and an
opportunity to contest such Third Party Claim; and
(iv) the Indemnitee and the Indemnitor will co-operate
fully with each other with respect to Third Party
Claims and will keep each other fully advised with
respect thereto (including supplying copies of all
relevant documentation promptly as it becomes
available).
6.7 SUBSEQUENT RECOVERY. If an Indemnitee subsequently recovers from any
other Person an amount which is referable to any Claim for which the Indemnitee
has already received indemnification under this Agreement, the Indemnitee will
forthwith repay to the Indemnitor such
28
- 28 - Exhibit #2
part of the payment made by way of indemnity hereunder as equals the loss
suffered by the Indemnitee so recovered.
6.8 REDUCTION OF PURCHASE PRICE. All amounts paid to the Purchaser in
respect of any Claim will be deemed to constitute a reduction of the Purchase
Price and will be allocated proportionately among all the Shares.
PART 7
DISPUTE RESOLUTION
7.1 NEGOTIATION, MEDIATION, ARBITRATION. Except for settlement of the
Closing Statements as provided for in Part 3, any dispute between the Parties in
connection with this Agreement:
(a) will first be attempted to be resolved by the Parties through
good faith negotiations and in connection therewith, any Party
may request in writing that the other Party or Parties meet
and commence such negotiations within a reasonable period of
time (in no event later than seven (7) days) after such
request;
(b) if within seven (7) days after commencement of negotiations
under Section 7.1(a) above the Parties cannot come to
agreement, the Parties will attempt to resolve the dispute by
mediated negotiation and will use best efforts to agree on the
choice of mediator within seven (7) days of a request for
mediation by one Party to the others;
(c) if the matter cannot be resolved by mediation within fourteen
(14) days of appointment of a mediator, or if the Parties
cannot agree on a mediator within seven (7) days of a request
of a Party to appoint a mediator, the matter will be referred
to arbitration in accordance with the provisions set out
below;
(d) any dispute between the Parties which cannot be settled by
negotiation or mediation will be determined by arbitration in
accordance with the Commercial Arbitration Act (British
Columbia) and arbitration will be the exclusive method for
final resolution of such dispute;
(e) there will be a single arbitrator who will be disinterested in
the dispute or controversy and will be impartial with respect
to all Parties hereto. If the Parties cannot agree on an
arbitrator within seven (7) days of the dispute going to
arbitration pursuant to Section 7.1(c) above, the appointment
will be according to the Commercial Arbitration Act (British
Columbia);
(f) the determination of the arbitrator will be final and binding
on the Parties;
29
- 29 - Exhibit #2
(g) each Party will bear its own costs in any such arbitration,
provided that, if the arbitrator finds that any Party will
have acted unreasonably he may, in his discretion, award costs
against such Party;
(h) the arbitrator will have the discretionary authority to grant
injunctive relief and specific performance as may be requested
by a Party;
(i) any order of an arbitrator may be entered with a Court of
competent jurisdiction for the purposes of enforcement;
(j) the place of arbitration will be Vancouver;
(k) the arbitrator will give effect insofar as possible to the
desire of the Parties hereto that the dispute or controversy
be resolved in accordance with good commercial practice; and
(l) the arbitrator will decide such dispute in accordance with the
laws of the Province of British Columbia.
PART 8
NOTICES
8.1 NOTICE. In this Agreement:
(a) any notice or communication required or permitted to be given
under this Agreement will be in writing and will be considered
to have been given if delivered by hand, transmitted by
facsimile transmission or mailed by prepaid registered post in
Canada, to the address or facsimile transmission number of
each Party set out below:
(i) if to S&L, the Purchaser or the Company:
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxxx, President, and Xxxx
Xxxxxxxxx, Chief Financial Officer
Fax No: (000) 000-0000
with a copy to:
30
- 30 - Exhibit #2
Xxxxx & Company
0000 Xxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: X.X. Xxxxxxxx
Fax No: (000) 000-0000
(ii) if to the Vendor or Skollsberg:
000-00000 Xxxxxxxxxxx Xxx
Xxxxxxxx, X.X. X0X 0X0
Attention: Jan Skollsberg
Fax No: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxx May & Xxxx
Barristers & Solicitors
000 - 0000 Xxxxxx Xxxx
Xxxxxxxx, X.X. X0X 0X0
Attention: Xxxx Xxxxxxxxxxx
Fax No: (000) 000-0000
(b) notice or communication will be considered to have been
received:
(i) if delivered by hand during business hours on a
business day at the recipient's location, upon
receipt by a responsible representative of the
recipient, and if not delivered during business
hours, upon the commencement of business on the next
business day at the recipient's location; and
(ii) if sent by facsimile transmission during business
hours on a business day at the recipient's location,
upon the sender receiving confirmation of the
transmission, and if not transmitted during business
hours, upon the commencement of business on the next
business day at the recipient's location.
Any Party may change its address for notice to the other Parties by notice in
the manner set forth above.
31
- 31 - Exhibit #2
PART 9
GENERAL
9.1 TIME OF ESSENCE. Time will be of the essence of this Agreement.
9.2 CALCULATION OF TIME. Unless otherwise specifically provided herein, in
calculating the period of time within which or following which any act or thing
is to be done or any step is to be taken pursuant to this Agreement, the date
which is the initial reference date in calculating such period will be excluded.
9.3 EXPIRY OF TIME PERIOD. In this Agreement, if any period ends on a day
other than a Business Day, that period will be extended to the next following
Business Day.
9.4 GENDER AND NUMBER. Words of one gender include all genders, and words
in the singular include the plural and vice versa.
9.5 INTERPRETATION NOT AFFECTED. In this Agreement, using separate Parts,
providing a table of contents, and inserting headings are for convenient
reference only and will not affect how this Agreement is interpreted.
9.6 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with British Columbia laws and applicable Canadian law and will be
treated in all respects as a British Columbia contract.
9.7 SUBMISSION TO JURISDICTION. Each of the Parties will:
(a) submit to the jurisdiction of British Columbia;
(b) if not resident, incorporated or registered in British
Columbia, appoint an agent to receive service of any process
in British Columbia; and
(c) if any appointed agent is required, notify the others of the
name and address of its appointed agent.
9.8 ENTIRE AGREEMENT. This Agreement is the entire Agreement among the
Parties and, except as stated in this Agreement and in the instruments and
documents to be executed and delivered under it, contains all the covenants,
representations, and warranties of the respective parties and expressly
supersedes the Letter of Intent between S&L and Skollsberg dated August 5, 1999.
There are no oral representations or warranties of any kind among the Parties.
This Agreement may not be amended or modified in any respect except by written
instrument signed by each of the Parties.
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- 32 - Exhibit #2
9.9 SEVERABILITY. The invalidity, illegality, or unenforceability of any
provision of this Agreement will not affect the validity, legality, or
enforceability of any other provision of this Agreement.
9.10 CURRENCY. Except where otherwise specifically set out, all
transactions referred to in this Agreement will be made in lawful currency of
Canada in immediately available funds.
9.11 LEGISLATION. In this Agreement, any reference to legislation includes
a reference to the legislation and to any regulations made under that
legislation as that legislation or those regulations may be amended or
re-enacted from time to time.
9.12 ACCOUNTING PRINCIPLES. Except where otherwise expressly set out, all
calculations made or referred to in this Agreement will be made in accordance
with GAAP. All accounting terms used in this Agreement which are not defined in
this Agreement will have the meaning assigned to them in accordance with GAAP.
9.13 ENUREMENT. This Agreement will enure to the benefit of and will be
binding upon the Parties and their respective heirs, executors, administrators,
successors and assigns.
9.14 FURTHER ASSURANCES. Each of the Parties hereto will at all times
hereafter execute and deliver at the request of any other Party all such further
documents, deeds and instruments, and will do and perform all such further acts
as may be reasonably necessary to give full effect to the intent and meaning of
this Agreement.
9.15 LEGAL FEES. Each Party will be responsible for its own legal fees and
other charges incurred in connection with the purchase and sale of the Shares
and all negotiations between the Parties and the consummation of the
transactions contemplated and without limiting the generality of the foregoing,
Skollsberg and the Vendor, rather than the Company, will pay for all legal,
accounting and other advice obtained on behalf of their respective interests,
rather than the interests of the Company.
9.16 TENDER. Any tender of documents, notices or money hereunder may be
made upon the Vendor or the Purchaser or the solicitor acting for any of them.
9.17 ASSIGNMENT. The Vendor acknowledge and agree that the Purchaser may
assign its rights and obligations under this Agreement to a nominee of the
Purchaser.
9.18 EQUITABLE RIGHTS. Nothing herein will limit a Party's right to apply
to a court of competent equitable jurisdiction for such relief by way of
restraining order, injunction, decree or otherwise as may be appropriate to
ensure compliance with the provisions of this Agreement.
00
- 00- Xxxxxxx #0
0.00 XXX-XXXXXX. Xxxx of the provisions of this Agreement will merge in the
transfer of the Shares and all of the provisions of this Agreement will survive
the Closing Date and the completion of this transfer of the Shares.
9.20 PUBLIC ANNOUNCEMENTS. The Parties agree that no disclosure or public
announcement with respect to this Agreement or any of the transactions
contemplated by this Agreement will be made by any of the Parties without the
prior written consent of the others, except that nothing herein contained will
prevent or restrict S&L from making, or permitting its shareholders from making,
any public announcement or filing with respect to the transactions herein
contemplated to the extent that S&L, in its sole discretion reasonably
exercised, is of the view that such an announcement or filing is required to be
made in order to comply with rules of regulatory bodies having jurisdiction or
in order to permit S&L to meet obligations as a publicly traded security issuer.
9.21 COUNTERPART. This Agreement may be signed by original or by facsimile
in one or more counterparts and upon execution in counterparts by each Party
hereto, such counterpart will constitute an original of this Agreement and
execution and delivery by facsimile will be legally binding upon the Parties.
TO EVIDENCE THEIR AGREEMENT each of the Parties has executed this Agreement as
of the date set out on the initial page hereof.
XXXXX HOLDINGS LTD. 19035 YUKON INC.
per: __________________________ per: __________________________
OSCAR SKOLLSBERG'S FOOD XXXXXXX & XXXXXX, INC.
TECHNIQUE LIMITED
per: __________________________ per: __________________________
--------------------------------
JAN SKOLLSBERG
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- 34 - Exhibit #2
SCHEDULE 1
FINANCIAL STATEMENTS
35
- 35 - Exhibit #2
SCHEDULE 2
ACCOUNTING PRINCIPLES
[Intentionally Deleted]
