Exhibit 4.3
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EXCHANGE AGREEMENT
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EXCHANGE AGREEMENT ("Agreement") made as of the 27th day of July, 2004.
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A M O N G:
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SWEET VALLEY FOODS INC., a Corporation incorporated under the laws of
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the Province of Ontario (hereinafter referred to as "SVFI")
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-and
MG HOLDINGS INC., a corporation incorporated under the laws of the
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Province of Ontario (hereinafter referred to as "MG Holdings")
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-and
MONACO GROUP INC., a corporation incorporated under the laws of the
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State of Delaware (hereinafter referred to as "Monaco")
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WHEREAS pursuant to an Asset Purchase Agreement dated as of May 25, 2004 among
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SVFI, MG Holdings, and Monaco, as such agreement is amended by the Asset
Purchase Amending Agreement dated as of June 21, 2004 (hereafter, collectively
referred to as the "Purchase Agreement"), the parties agreed that they would
execute and deliver an exchange agreement which would govern the relationship
among the parties as it related to the issuance and existence of exchangeable
shares (the "Exchangeable Shares") in the capital of MG Holdings, which are to
be issued pursuant to the Purchase Agreement;
AND WHEREAS the Articles of Incorporation of MG Holdings, as amended, set forth
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the rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares;
AND WHEREAS the parties hereto have agreed to enter into this Agreement in order
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to give effect to those exchange rights;
NOW THEREFORE in consideration of the respective covenants and agreements
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provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
covenant and agree as follows:
ARTICLE 1
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DEFINITIONS AND INTERPRETATION
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1.1 Definitions
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Each term denoted herein by initial capital letters and not otherwise defined
herein shall have the meaning ascribed thereto in the rights, privileges,
restrictions and conditions (collectively, the "Share Provisions") attaching to
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the Exchangeable Shares as set out in the Articles of Incorporation of MG
Holdings, as amended, unless the context requires otherwise.
1.2 Interpretation Not Affected by Headings
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The division of this Agreement into articles, sections and other portions and
the insertion of headings are for convenience of reference only and should not
affect the construction or interpretation of this Agreement. Unless otherwise
indicated, all references to an "Article" or "Section" followed by a number
and/or a letter referred to the specified Article or Section of this Agreement.
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The terms "this Agreement", "hereof', "herein" and "hereunder" and similar
expressions refer to this Agreement and not to any particular Article, Section
or other portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 Number and Gender
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Words importing the singular number only shall include the plural and vice
versa. Words importing any gender shall include all genders.
1.4 Date for any Action
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If any date on which any action is required to be taken under this Agreement is
not a Business Day, such action shall be required to be taken on the next
succeeding Business Day.
ARTICLE 2
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COVENANTS OF MONACO AND EXCHANGECO
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2.1 Covenants Regarding Exchangeable Shares
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So long as any Exchangeable Shares not owned by Monaco or its Affiliates are
outstanding, Monaco covenants and agrees in favour of SVFI and MG Holdings that
it will:
(a) not declare or pay any dividend on the Monaco Common Shares unless (i)
MG Holdings shall on the same day declare or pay, as the case may be,
an equivalent dividend (as provided for in the Share Provisions) on
the Exchangeable Shares (an "Equivalent Dividend") and (ii) MG
Holdings shall have sufficient money or other assets or authorized but
unissued securities available to enable the due declaration and the
due and punctual payment, in accordance with applicable law, of any
such Equivalent Dividend or (iii) MG Holdings shall (y) subdivide the
Exchangeable Shares in lieu of stock dividend thereon (as provided for
in the Share Provisions) (an "Equivalent Stock Subdivision"), and (z)
have sufficient authorized but unissued securities available to enable
the Equivalent Stock Subdivision;
(b) advise MG Holdings sufficiently in advance of the declaration by
Monaco of any dividend on Monaco Common Shares and take all such other
actions as are reasonably necessary, in co-operation with MG Holdings,
to ensure that (i) the respective declaration date, record date and
payment date for an Equivalent Dividend on the Exchangeable Shares
shall be the same as the declaration date, record date and payment
date for the corresponding dividend on the Monaco Common Shares, or
(ii) the record date and effective date for an Equivalent Stock
Subdivision shall be the same as the record date and payment date for
the corresponding stock dividend on the Monaco Common Shares;
(c) ensure that the record date for any dividend declared on Monaco Common
Shares is not less than 10 Business Days after the declaration date of
such dividend;
(d) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit MG Holdings, in accordance
with applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Liquidation Amount, the Redemption
Price, the Retraction Price or Redemption Call Purchase Price in
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respect of each issued and outstanding Exchangeable Share (other than
Exchangeable Shares owned by Monaco or its Affiliates) upon the
liquidation, dissolution or winding-up of MG Holdings or any other
distribution of the assets of MG Holdings among its shareholders for
the purpose of winding up its affairs, the delivery of a Retraction
Request by a Holder of Exchangeable Shares or a redemption of
Exchangeable Shares by MG Holdings, including without limitation all
such actions and all such things as are necessary or desirable to
enable and permit MG Holdings to cause to be delivered Monaco Common
Shares to the holders of Exchangeable Shares in accordance with
Articles 5, 6, 7 or 8 of the provisions of the Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit Monaco, in accordance with applicable
law, to perform its obligations arising upon the exercise by it of the
Liquidation Call Right, the Retraction Call Right or the Redemption
Call Right. including without limitation all such actions and all such
things as are necessary or desirable to enable and permit Monaco to
cause to be delivered Monaco Common Shares to the Holders of
Exchangeable Shares in accordance with the provisions of the
Liquidation Call Right, the Retraction Call Right or the redemption
Call Right as the case may be; and
(f) not exercise its vote as a shareholder to initiate the voluntary
liquidation, dissolution or winding up of MG Holdings or any other
distribution of the assets of MG Holdings among its shareholders for
the purpose of winding up its affairs, nor take any action or omit to
take any action that is designed to result in the liquidation,
dissolution or winding up of MG Holdings or any other distribution of
the assets of MG Holdings among its shareholders for the purpose of
winding up its affairs.
2.2 Segregation of Funds
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Monaco will cause MG Holdings to deposit a sufficient amount of funds in a
separate account of MG Holdings and segregate a sufficient amount of such other
assets and property as is necessary to enable MG Holdings to pay dividends when
due and to pay or otherwise satisfy its respective obligations under the Share
Provisions, as applicable.
2.3 Reservation of Monaco Common Shares
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Monaco hereby represents, warrants and covenants in favour of MG Holdings and
SVFI that Monaco has reserved for issuance and will, at all times while any
Exchangeable Shares are outstanding, keep available, free from pre-emptive and
other rights, out of its authorized and unissued capital stock such number of
Monaco Common Shares (or other shares or securities into which Monaco Common
Shares may be reclassified or changed as contemplated by Section 2.6): as is
equal to the sum of (i) the number of Exchangeable Shares issued and outstanding
from time to time and (ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and to enable and permit MG Holdings and Monaco to meet their respective
obligations hereunder and under the Share Provisions.
2.4 Notification of Certain Events
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In order to assist Monaco to comply with its obligations hereunder, MG Holdings
will notify Monaco of each of the following events at the time set forth below:
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(a) in the event of any determination by the Board of Directors of MG
Holdings to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to MG Holdings or to effect any other
distribution of the assets of MG Holdings among its shareholders for
the purpose of winding up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution, winding-up
or other distribution;
(b) promptly, upon the earlier of receipt by MG Holdings of notice of and
MG Holdings otherwise becoming aware of any threatened or instituted
claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding-up of MG Holdings or
to effect any other distribution of the assets of MG Holdings among
its shareholders for the purpose of winding up its affairs; and
(c) on the same date on which notice of redemption is given to holders of
Exchangeable Shares, upon the determination of a Redemption Date in
accordance with the Share Provisions.
2.5 Delivery of Monaco Common Shares to MG Holdings
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In furtherance of its obligations under Section 2.1(d), upon notice from MG
Holdings of any event that requires MG Holdings to cause to be delivered Monaco
Common Shares to any holder of Exchangeable Shares, Monaco shall forthwith
allot, issue and deliver or cause to be delivered to the relevant holder of
Exchangeable Shares as directed by MG Holdings the requisite number of Monaco
Common Shares to be allotted to, received by, and issued to or to the order of,
the former holder of the surrendered Exchangeable Shares. All such Monaco Common
Shares shall be duly authorized and validly issued as fully paid and shall be
free and clear of any lien, claim or encumbrance.
2.6 Economic Equivalence
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So long as any Exchangeable Shares not owned by Monaco or its Affiliates are
outstanding:
(a) Monaco will not without prior approval of MG Holdings and the prior
approval of the holders of the Exchangeable Shares given in accordance
with Section 9.2 of the Share Provisions:
(i) issue or distribute Monaco Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire Monaco Common Shares) to the holders of all or
substantially all of the then outstanding Monaco Common Shares by
way of stock dividend or other distribution, other than an issue
of Monaco Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Monaco Common
Shares) to holders of Monaco Common Shares (i) who exercise an
option to receive dividends in Monaco Common Shares (or
securities exchangeable for or convertible into or carrying
rights to acquire Monaco Common Shares) in lieu of receiving cash
dividends, or (ii) pursuant to any dividend reinvestment plan or
scrip dividend; or
(ii) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding Monaco Common
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Shares entitling them to subscribe for or to purchase Monaco
Common Shares (or securities exchangeable for or convertible into
or carrying rights to acquire Monaco Common Shares); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding Monaco Common Shares (A) shares or
securities of Monaco of any class other than Monaco Common Shares
(other than shares convertible into or exchangeable for or
carrying rights to acquire Monaco Common Shares) or (B) rights,
options or warrants other than those referred to in Section
2.6(a)(ii);
unless in each case the economic equivalent on a per share basis of
such rights, options, securities, shares, evidences of indebtedness or
other assets is issued or distributed simultaneously to holders of the
Exchangeable Shares;
(b) Monaco will not without the prior approval of MG Holdings and the
prior approval of the holders of the Exchangeable Shares given in
accordance with Section 9.2 of the Share Provisions:
(i) subdivide, redivide or change the then outstanding Monaco Common
Shares into a greater number of Monaco Common Shares; or
(ii) reduce, combine, consolidate or change the then outstanding
Monaco Common Shares into a lesser number of Monaco Common
Shares; or
(iii) reclassify or otherwise change Monaco Common Shares or effect an
amalgamation, merger, reorganization or other transaction
affecting Monaco Common Shares; unless the same or an
economically equivalent change shall simultaneously be made to,
or in the rights of the holders of, the Exchangeable Shares.
(c) Monaco will ensure that the record date for any event referred to in
Section 2.6(a) or Section 2.6(b), or (if no record date is applicable
for such event) the effective date for any such event, is not less
than five Business Days after the date on which such event is declared
or announced by Monaco (with contemporaneous notification thereof by
Monaco to MG Holdings).
(d) The Board of Directors of MG Holdings shall determine, in good faith
and in its sole discretion, economic equivalence for the purposes of
any event referred to in Section 2.6(a) or Section 2.6(b) in
accordance with the Share Provisions and each such determination shall
be conclusive and binding on Monaco.
(e) MG Holdings agrees that, to the extent required, upon due notice from
Monaco, MG Holdings will use its best efforts to take or cause to be
taken such steps as may be necessary for the purposes of ensuring that
appropriate dividends are paid or other distributions are made by MG
Holdings, or subdivisions, redivisions or changes are made to the
Exchangeable Shares, in order to implement the required economic
equivalence with respect to the Monaco Common Shares and Exchangeable
Shares as provided for in this Section 2.6.
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2.7 Tender Offers
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In the event that a tender offer, share exchange offer, issuer bid, take-over
bid or similar transaction with respect to Monaco Common Shares (an "Offer") is
proposed by Monaco or is proposed to Monaco or its shareholders and is
recommended by the Board of Directors of Monaco, or is otherwise effected or to
be effected with the consent or approval of the Board of Directors of Monaco,
and the Exchangeable Shares are not redeemed by MG Holdings, Monaco will
expeditiously and in good faith to take all such actions and do all such things
as are reasonably necessary or desirable to enable and permit holders of
Exchangeable Shares (other than Monaco and its Affiliates) to participate in
such Offer to the same extent and on an economically equivalent basis as the
holders of Monaco Common Shares, without discrimination. Without limiting the
generality of the foregoing, Monaco will expeditiously and in good faith take
all such actions and do all such things as are reasonably necessary or desirable
to ensure that holders of Exchangeable Shares may participate in each such Offer
without being required to exchange Exchangeable Shares (or, if so required, to
ensure that any such exchange, shall be effective only upon, and shall be
conditional upon, the closing of such Offer and only to the extent necessary to
tender or deposit to the Offer). Nothing herein shall affect the rights of MG
Holdings to redeem Exchangeable Shares in accordance with the Share Provisions.
2.8 Ownership of Outstanding Shares
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Without the prior approval of MG Holdings and the prior approval of the holders
of the Exchangeable Shares given in accordance with Section 9.2 of the Share
Provisions, Monaco covenants and agrees in favour of MG Holdings that, as long
as any outstanding Exchangeable Shares are owned by any Person other than Monaco
or any of its Affiliates, Monaco will be and remain the direct or indirect
beneficial owner of all issued and outstanding voting shares in the capital of
MG Holdings.
2.9 Monaco and Affiliates Not to Vote Exchangeable Shares
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Monaco covenants and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by it and its
Affiliates for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. Monaco further covenants and agrees that it will not, and will cause
its Affiliates not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Share
Provisions or pursuant to the provisions of the Act (or any successor or other
corporate statute by which MG Holdings may in the future be governed) with
respect to any Exchangeable Shares held by it or by its Affiliates in respect of
any matter considered at any meeting of holders of Exchangeable Shares.
2.10 Ordinary Market Purchases
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For certainty, nothing contained in this Agreement, including without limitation
the obligations of Monaco contained in Section 2.7, shall limit the ability of
Monaco (or any of its subsidiaries including, without limitation, MG Holdings)
to make ordinary market purchases of Monaco Common Shares in accordance with
applicable laws and regulatory or stock exchange requirements.
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ARTICLE 3
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GENERAL
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3.1 Term
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This Agreement shall come into force and be effective as of the date hereof and
shall terminate and be of no further force and effect until the earlier of (i)
ten years form the date hereof and (ii) such time as no Exchangeable Shares (or
securities or rights convertible into or exchangeable for or carrying rights to
acquire Exchangeable Shares) are held by any Person other than Monaco and any of
its Affiliates.
3.2 Severability
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If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
3.3 Amendments, Modifications
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(a) This Agreement may not be amended or modified except by an agreement
in writing executed by MG Holdings, SVFI and Monaco and approved by
the holders of the Exchangeable Shares in accordance with Section 9.2
of the Share Provisions.
(b) No amendment or modification or waiver of any of the provisions of
this Agreement otherwise permitted hereunder shall be effective unless
made in writing and signed by all of the parties hereto.
3.4 Ministerial Amendments
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Notwithstanding the provisions of Section 3.4, the parties to this Agreement may
in writing at any time and from time to time, without the approval of the
holders of the Exchangeable Shares, amend or modify this Agreement for the
purposes of:
(a) adding to the covenants of any or all parties provided that the Board
of Directors of each of MG Holdings and Monaco shall be of the good
faith opinion that such additions will not be prejudicial to the
rights or interests of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which, in the good faith opinion of the Board of Directors
of each of MG Holdings and Monaco, it may be expedient to make,
provided that each such Board of Directors shall be of the good faith
opinion that such amendments or modifications will not be prejudicial
to the rights or interests of the holders of the Exchangeable Shares;
or
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(c) making such changes or corrections which, on the advice of counsel to
MG Holdings and Monaco, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error, provided that the
Boards of Directors of each of MG Holdings and Monaco shall be of the
good faith opinion that such changes or corrections will not be
prejudicial to the rights or interests of the holders of the
Exchangeable Shares.
3.5 Meeting to Consider Amendments
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MG Holdings, at the request of Monaco, shall call a meeting or meetings of the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval pursuant to Section 3.4. Any such
meeting or meetings shall be called and held in accordance with the bylaws of MG
Holdings, the Share Provisions and all applicable laws.
3.6 Enurement
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This Agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and assigns.
3.7 Notices to Parties
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(a) All notices and other communications between the parties to this
Agreement shall be in writing and shall be deemed to have been given
if delivered personally or by confirmed telecopy to the parties at the
following addresses (or at such other address for any such party as
shall be specified in like notice):
c/o Monaco and MG Holdings:
00X Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Telecopier No.: 000-000-0000
c/o SVFI:
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Telecopier No.: 000-000-0000
(b) Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof and if given by
telecopy shall be deemed to have been given and received on the date
of confirmed receipt thereof unless such day is not a Business Day, in
which case it shall be deemed to have been given and received upon the
immediately following Business Day.
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3.8 Counterparts
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This Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one and the same
instrument.
3.9 Jurisdiction
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This Agreement shall be construed and enforced in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein.
3.10 Attornment
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Each of the parties hereto agrees that any action or proceeding arising out of
or relating to this Agreement may be instituted in the courts of Ontario, waives
any objection which it may have now or hereafter to the venue of any such action
or proceeding, irrevocably submits to the jurisdiction of the said courts in any
such action or proceeding, agrees to be bound by any judgment of the said courts
and not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction, and Monaco hereby appoints MG
Holdings at its registered office in the Province of Ontario as attorney for
service of process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
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executed as of the date first above written.
SWEET VALLEY FOODS INC.
By: /s/ Xxx Couprie & /s/ Xxxxxxx Ganpaul
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Name: Xxx Couprie & Xxxxxxx Ganpaul
Title: Chairman & President
MG HOLDING INC.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: CFO
MONACO GROUP INC.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: CFO
