AGREEMENT OF PURCHASE AND SALE
INTERNATIONAL MENU PARTNERSHIP,
a limited liability partnership
by its general partner,
INTERNATIONAL MENU GP INC.
Purchase from
PRICEWATERHOUSECOOPERS INC.
a court-appointed interim receiver of the
Business of International Menu Solutions Inc.,
And its Subsidiaries and of certain assets of
INTERNATIONAL MENU SOLUTIONS CORP.
and not in its personal or corporate capacity
of certain assets of
INTERNATIONAL MENU SOLUTIONS CORP.
INTERNATIONAL MENU SOLUTIONS INC.
PRIME FOODS PROCESSING INC.
TRANSCONTINENTAL GOURMET FOODS INC.
TASTY SELECTIONS INC.
D.C. FOOD PROCESSING INC.
THE ULTIMATE COOKIE CO. INC.
THIS AGREEMENT OF PURCHASE AND SALE dated March 16, 2001.
B E T W E E N:
PRICEWATERHOUSECOOPERS INC., the court-appointed Interim
Receiver of the Business of INTERNATIONAL MENU SOLUTIONS
INC., and its Subsidiaries and of certain assets of
INTERNATIONAL MENU SOLUTIONS CORP. and not in its personal
or corporate capacity
(hereinafter called the "Seller")
OF THE FIRST PART
- and -
INTERNATIONAL MENU PARTNERSHIP, a limited liability
partnership by its general partner INTERNATIONAL MENU GP
INC., a corporation incorporated under the laws of Ontario
(hereinafter called the "Buyer")
OF THE SECOND PART
WHEREAS:
International Menu Solutions Inc. (the "Company") carries on the business of
producing and selling home meal replacement products through various operating
subsidiaries;
International Menu Solutions Corp. owns all the issued shares in the capital
stock of Huxtable's Kitchens Inc.; and
The Seller has agreed to sell to the Buyer and the Buyer has agreed to purchase
from the Seller substantially all the assets, property and undertaking of and
pertaining to such business and such shares, subject to the terms and conditions
of this Agreement.
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NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and the mutual covenants herein contained and the sum of $1 now paid by each
party hereto to each other party hereto (the receipt and sufficiency whereof is
hereby acknowledged), the parties hereto agree as follows:
ARTICLE 1.
INTERPRETATION
1.01 Definitions
In this Agreement and the recitals unless the context otherwise requires:
(a) "Affiliate" has the meaning prescribed by section 1 (1) of the Ontario
Business Corporations Act;
(b) "Approval and Vesting Order" means an order or orders of the Court in the
proceedings in which the Seller was appointed as Receiver of the Business
and the Huxtable's Shares, on terms acceptable to the Buyer, acting
reasonably, approving the Agreement and the completion of the transactions
contemplated by this Agreement and vesting in the Buyer as of Closing all
right, title and interest in and to the Purchased Assets free and clear of
any right, title or interest of the Bank of Nova Scotia, the Seller,
International Menu Solutions Corp., the Company, a Subsidiary, those
persons who may have claims referred to in subsection 2.11, those persons
who will be listed by the Purchaser, acting reasonably, in Schedule 1.01(t)
during the Due Diligence Period, or of any other person in the Purchased
Assets (other than such right, title and interest held by or issued to
persons holding a valid Purchase Money Security Interest and for which a
Financing Statement was registered pursuant to the Personal Property
Security Act on the Fixed Assets and Equipment in priority to the Bank of
Nova Scotia and other than such right, title and interest held or issued as
security for any Assumed Liabilities), including without limitation any
estates, titles, rights, benefits, interests, claims, liens, hypothecs,
security interests, trusts or deemed trusts, whether statutory or
otherwise, assignments, executions, judgments, rights of distress, legal,
equitable or contractual set-offs, options, adverse claims, levies,
agreements, taxes, disputes, debts, charges, mortgages, encumbrances or any
other rights or claims howsoever arising, whether contractual, statutory,
by operation or law or otherwise, or whether or not they have attached or
been perfected, registered or filed, whether secured or unsecured or
otherwise, by or of all persons;
(c) "Assumed Liabilities" means the liabilities and obligations of the Company
or a Subsidiary relating to
(i) the Contracts, Equipment Contracts, and Leases (other than the
Outstanding Contract Payment Obligations) and required to be performed
or discharged after the Closing Date;
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(ii) vacation pay accrued up to the Closing Date in respect of the Retained
Employees and any payments in respect of Retained Employees referred
to in Section 6.01(c);
(iii) the Assumed Mortgages;
and for greater certainty, Assumed Liabilities shall not include any other
liabilities or obligations of International Menu Solutions Corp., the
Company or a Subsidiary whatsoever (including without limitation any
liabilities and obligations under any employee pension plan);
(d) "Assumed Mortgages" mean the obligations of Prime Foods Processing Inc. in
favour of the Business Development Bank of Canada not exceeding $550,000
and the obligations of D.C. Food Processing Inc. in favour of the Royal
Bank of Canada not exceeding $583,000 secured by a Charge/Mortgage of Land
registered against the Lands.
(e) "Buildings" means all buildings and additions thereto (including leasehold
improvements) situate on the Lands;
(f) "Business" means the production, sale and distribution of home meal
replacement products and related products business carried on by the
Company and the Subsidiaries;
(g) "Business Day" means any day other than a Saturday, Sunday or statutory
holiday in the Province of Ontario;
(h) "Buyer's Counsel" means Gowling ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP;
(i) "Cash Portion" is defined in section 3.02(b)(i)B;
(j) "Claims" means any claim, demand, action, cause of action, grievance,
appeal, damage, loss, costs, liability or expense, including, without
limitation, reasonable professional fees and all costs incurred in
investigating or pursuing any of the foregoing or any proceeding relating
to any of the foregoing;
(k) "Closing" means the completion of the sale to and purchase by the Buyer of
the Purchased Assets pursuant to this Agreement by the transfer and
delivery of the Transfer Notice and payment of the Purchase Price as
contemplated in this Agreement;
(l) "Closing Date" means the first Business Day after the making of the
Approval and Vesting Order not later than, in any event, April 6th, 2001 or
such other date as may be agreed upon between the Buyer and the Seller;
(m) "Contracts" means the contracts, agreements, employee benefit plans,
insurance policies (including without limitation any and all insurance
policies covering Accounts Receivable) and other obligations of the Company
or a Subsidiary relating to the Business (except for Excluded Assets) which
the Buyer shall assume and identify during the Due Diligence Period and
which will be listed in Schedule 1.01(m), provided that the Buyer may from
time
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to time add to or remove from Schedule 1.01(m) contracts, agreements,
employee benefit plans, insurance policies and other obligations at any
time prior to Closing by written notice to the Seller;
(n) "Court" means the Ontario Superior Court of Justice (Commercial List);
(o) "Deposit" is defined in Section 2.04;
(p) "Due Diligence Period" means the period commencing on the date hereof and
ending two Business Days before the date of the hearing of the motion for
the Approval and Vesting Order by the Court;
(q) "Employees" means all employees, sales representatives and independent
contractors employed or engaged by the Company or a Subsidiary in
connection with the Business as at the date hereof;
(r) "Environment" means the environment or natural environment as defined in
any Environmental Law and includes, without limitation, air, surface,
water, ground water, land surface, soil, subsurface strata, a sewer system
and the environment in the workplace;
(s) "Environmental Laws" means all laws relating in full or in part to the
protection of the Environment, product liability, and employee and public
health and safety, and includes, without limitation, those Environmental
Laws relating to the storage, generation, use, handling, manufacture,
processing, labelling, advertising, sale, display, transportation,
treatment, release and disposal of Hazardous Substances;
(t) "Equipment Contracts" means the equipment leases, conditional sales
contracts, title retention agreements and other agreements between the
Company or a Subsidiary and third parties relating to machinery, equipment
and other assets used in the Business (except for Excluded Assets) which
the Buyer shall assume and identify during the Due Diligence Period and
which will be listed in Schedule 1.01(t), provided that the Buyer may from
time to time add or remove from Schedule 1.01(t) equipment leases,
conditional sale contracts, total retention agreements and other agreements
at any time on or before the last day of the Due Diligence Period by
written notice to the Seller;
(u) "Excluded Assets" means:
(i) any toxic or environmentally contaminated property and assets
identified by the Buyer by notice in writing to the Seller prior to
Closing, other than any such property and assets which the Buyer may
elect in writing to include in the Purchased Assets prior to Closing;
(ii) any shares in the capital stock of any Affiliate or Subsidiary of the
Company other than the Huxtable Shares;
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(iii) any Contract or Equipment Contract not included in, or removed from,
Schedules 1.01(m) and (t) respectively in accordance with those
subsections and specifically those Equipment Contracts identified in
Schedule 1.01(u), and any real property lease not included in
Schedule 1.01(z).
(v) "Hazardous Substance" means any substance, sound, vibration, ray, heat,
odour, radiation, energy, which is or is deemed to be, alone or in any
combination, a pollutant, contaminant, source of pollution or
contamination, waste of any nature, hazardous substance, hazardous
material, toxic substance, dangerous substance or dangerous good as
defined, judicially interpreted or identified in any Environmental Law;
(w) "Huxtable Shares" means all of the issued shares of Huxtable's Kitchens
Inc. owned by or registered in the name of International Menu Solutions
Corp.;
(x) "Lands" means the real property legally described as set out in Schedule
1.01(x);
(y) "Laws" means all applicable laws, by-laws, rules, regulations, orders,
ordinances, protocols and codes of any Governmental Authority including
without limitation, Environmental Laws;
(z) "Leases" mean the real property leases identified in Schedule 1.01(z);
(aa) [Intentionally Deleted]
(bb) "Outstanding Contract Payment Obligations" means all outstanding payment
obligations due and unpaid prior to the Closing Date in respect of
Contracts, Equipment Contracts, and Leases;
(cc) "Promissory Note" means the promissory note referred to in Section
3.02(b)(i)C, as the same may from time to time be amended, restated,
amended and restated, supplemented or replaced in writing by the parties
thereto;
(dd) "Purchase Price" means the price to be paid by the Buyer to the Seller for
the Purchased Assets as provided in Section 2.02;
(ee) "Purchased Assets" means all of the assets of the Business on the Closing
Date (save to the extent that the same are Excluded Assets) including,
without limitation:
(i) "Accounts Receivable" - all those accounts receivable, notes
receivable and other amounts due, owing or accruing due to any one or
more of the Company and the Subsidiaries (and specifically including
any and all deposits received from customers of the Business) in
connection with the Business as at the Closing Date;
(ii) "Contracts" and "Equipment Contracts" - all right, title and interest
of the Company or a Subsidiary and the Seller in and to and benefits
under the Contracts, all unfilled orders from customers, the Equipment
Contracts and under all service
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contracts relating to any Equipment Contracts or any equipment or
other assets covered thereby and all options to purchase
thereunder and under any leases of motor vehicles;
(iii) "Deposits" - those deposits with any public utility or any
municipal, governmental or other public authority, or with any
supplier or with any other person;
(iv) "Fixed Assets and Equipment" - all fixed assets, machinery,
equipment, freezers, computers and software, fixtures, furniture,
furnishings, vehicles, boilers, material handling equipment,
parts, tools, jigs, discs, molds, patterns and tooling owned by
the Company or a Subsidiary and used in the Business and other
tangible property (other than Inventory) owned by the Company or
a Subsidiary and used in the Business on the Closing Date,
including any of the rights of the Seller in, to or with respect
to same and including the property listed in Schedule
1.01(ee)(iv);
(v) "Goodwill" - the goodwill of the Business, including the right of
the Buyer to represent itself as carrying on the Business in
succession to the Company and the Subsidiaries and all right,
title and interest of the Company and the Subsidiaries and the
Seller in, to and in respect of all names used by the Company and
the Subsidiaries in connection with the Business;
(vi) "Huxtable Shares" - the Huxtable Shares;
(vii) "Inventory" - all inventories, wherever situate, of raw
materials, work-in-progress, finished goods, operating supplies
and packaging materials of or relating to the Business (including
consignment inventory);
(viii) "Leases" - the Leases, any leasehold improvements in connection
therewith, and any rights to offsite storage;
(viii) "Other Assets" - the Records, all of the Seller's right, interest
and benefit, if any, to and in the domain names, telephone
numbers and facsimile numbers used by the Company and the
Subsidiaries in the conduct of the Business, and all other assets
and property of the Company and the Subsidiaries not part of the
Excluded Assets;
(ix) "Patents" - all patents and applications for patents, all
reissues, divisions, continuations and extensions thereof, and
all licences and other rights relating to patents, inventions and
discoveries owned or held by the Company or a Subsidiary, and any
of the rights of the Seller in, to or with respect to same;
(x) "Prepaid Expenses" - the Company's and the Subsidiaries' rights
in respect of prepayments made by the Company or a Subsidiary for
expenses and purchases, in connection with the Business,
exclusive of income or other taxes which are personal to the
Company or a Subsidiary;
(xi) "Real Property" - the Lands and Buildings;
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(xii) "Technology" - all of the Seller's, the Company's and the
Subsidiaries' plans, designs and design rights in respect of all
intellectual property and brands and brand names, art, research
data, trade secrets and other proprietary know-how, processes,
drawings, technology, unpatented blue prints, flow sheets,
equipment and parts lists and descriptions and related
instructions, manuals, data, records and procedures and all
computer software and all computer software licences and
agreements to which the Company or a Subsidiary is a party,
including without limitation all licences, agreements and other
contracts and commitments relating to any of the foregoing to
which the Company or a Subsidiary is a party, and in any such
case used in relation to the conduct of the Business;
(xiii) "Trade Marks" and "Copyrights" - all of the Company's and the
Subsidiaries' trade marks and related trade ▇▇▇▇ registrations;
all design and design rights, both past and present; all
copyrights, copyright registrations and applications therefore;
and all renewals, modifications and extensions of any of the
aforesaid rights, and all licences and other rights relating
thereto, all artwork, packaging designs and materials and any
rights of the Seller in, to or with respect to same;
(xiv) "Warranty Rights" - the full benefit of all warranties and
warranty rights (implied, express or otherwise) against
manufacturers or sellers which apply to any of the Purchased
Assets, including without limitation all warranty claims
outstanding at the Closing Date;
(ff) "Records" means all books, records, books of account, sales and purchase
records, lists of suppliers and customers, formulae, recipe, business
reports, plans and projections and all other documents, files, records,
including all employee and personnel records of all Employees,
correspondence, and other data and information, financial or otherwise,
of the Company or a Subsidiary, relating to the Business or the
Purchased Assets, including without limitation, all data and information
stored on computer-related media;
(gg) "Retained Employees" means those Employees named in Schedule 1.01(gg)
provided that the Buyer may from time to time add or remove from
Schedule 1.01(gg) any Employee at any time on or before the last day of
the Due Diligence Period by written notice to the Seller;
(hh) "Seller's Counsel" means counsel designated by the Seller prior to the
Closing Date;
(ii) "Subsidiary" and collectively "Subsidiaries" means Prime Foods
Processing Inc., Transcontinental Gourmet Foods Inc., Tasty Selections
Inc., D.C. Food Processing Inc., and The Ultimate Cookie Co. Inc.; and
(jj) "Transfer Notice" means a receiver's certificate, or notice executed by
the Seller and delivered to the Buyer pursuant to Section 3.02(a)(i) in
the form set forth in Schedule 1.01(jj).
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1.02 Entire Agreement
This Agreement, together with the agreements and other documents to be delivered
pursuant to this Agreement, constitute the entire agreement between the parties
pertaining to their subject matter and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties and there are no warranties, representations or other agreements between
the parties in connection with their subject matter except as specifically set
forth in this Agreement or such agreements and other documents. No supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound. No waiver of any of the provisions
of this Agreement shall constitute a waiver of any other provision (whether or
not similar) nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
1.03 Extended Meanings
In this Agreement, words importing the singular include the plural and vice
versa and words importing gender include all genders. The word "person" includes
an individual, partnership, association, body corporate, trustee, executor,
administrator or legal representative.
1.04 Headings
The division of this Agreement into Articles, Sections, Subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect its construction or interpretation.
1.05 References
References to a specified Article, Section or Schedule shall be construed as
references to that specified Article or Section of or Schedule to this Agreement
unless the context otherwise requires.
1.06 Governing Law
This Agreement shall be governed by and construed in accordance with the laws in
force in the Province of Ontario and the laws of Canada applicable therein, and
shall be treated in all respects as an Ontario contract. The parties submit to
the jurisdiction of the courts of Ontario with respect to any dispute, claim or
other matter arising under this Agreement and the courts of Ontario shall have
non-exclusive jurisdiction with respect to any such dispute, claim or other
matter.
1.07 Payments and Currency
Any money to be paid or tendered by one party to another pursuant to this
Agreement shall be paid by bank draft or certified cheque payable to the person
to whom such amount is due. Unless otherwise specified, the word dollar and $
sign refer to Canadian currency. Any tender of documents or money pursuant to
this Agreement may be made upon the parties or their respective counsel.
1.08 Schedules
The schedules to this Agreement, as listed below, are an integral part of this
Agreement:
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Schedule Description
-------- -----------
Schedule 1.01(m) Contracts
Schedule 1.01(t) Equipment Contracts
Schedule 1.01(u) Certain Excluded Equipment
Schedule 1.01(x) Lands
Schedule 1.01(z) Leases
Schedule 1.01(ee)(iv) Fixed Assets and Equipment
Schedule 1.01(gg) Retained Employees
Schedule 1.01(jj) Transfer Notice
Schedule 3.02(b)(i)C. Promissory Note
ARTICLE 2.
PURCHASE AND SALE
2.01 Agreement to Purchase
On the Closing Date and subject to the terms and conditions of this Agreement,
the Seller shall sell to the Buyer and the Buyer shall purchase from the Seller
all the right, title and interest of the Seller, the Company, and the
Subsidiaries, to and under the Purchased Assets pursuant to the Approval and
Vesting Order and the Buyer shall assume the Assumed Liabilities.
2.02 Purchase Price
The Purchase Price shall be $27,000,000 subject to adjustments as provided in
this Agreement, which Purchase Price shall be allocated amongst the assets of
each of the Company and the Subsidiaries based on the proportion that the net
book value of such corporation's assets is of the aggregate net book value of
the Purchased Assets consistent with the Company's Records, unless otherwise
agreed in writing between the Buyer and the Seller.
2.03 Taxes
The Buyer shall be liable for and on Closing shall pay, in addition to the
Purchase Price, as adjusted, all federal and provincial sales taxes and all land
transfer taxes payable in connection with the conveyance and transfer of the
Purchased Assets by the Seller to the Buyer, subject to the following
provisions:
(a) Goods and Services Tax
(i) The Seller declares that the Company and the Subsidiaries are
registered for the purposes of the goods and services tax imposed
under Part IX of the Excise Tax Act ("GST").
(ii) The Buyer hereby declares that it is acquiring under this Agreement
all or substantially all of the property that can reasonably be
regarded as being necessary for it to carry on the Business as a
business.
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(iii) The Seller and the Buyer will, on or before the Closing Date,
jointly execute elections, in the prescribed form and containing the
prescribed information, to have subsection 167(1.1) of the Excise
Tax Act (Canada) apply to the sale and purchase of the Purchased
Assets hereunder so that no tax is payable in respect of such sale
and purchase under Part IX of the Excise Tax Act (Canada). The Buyer
will file such elections with the Minister of National Revenue
within the time prescribed by the Excise Tax Act (Canada).
(b) Provincial Retail Sales Taxes
On Closing, the Buyer will provide the Seller with the Buyer's retail sales tax
registration number and a purchase exemption certificate with respect to
inventories of goods held for resale or for incorporation of goods to be held
for resale for the purposes of the tax eligible under the Ontario Retail Sales
Tax Act ("OST"). The Buyer shall remit such taxes to the appropriate tax
authority after Closing.
(c) Income Tax Election
The Buyer and Seller shall, as soon as possible after the Closing, jointly
execute an election under section 22 of the Income Tax Act with respect to the
sale of the Accounts Receivable and shall designate therein the portion of the
Purchase Price allocated to Accounts Receivable pursuant to section 2.02 hereof
as the consideration paid by the Buyer for the Accounts Receivable.
2.04 Deposit
The Buyer shall deliver a Five Hundred Thousand Dollar ($500,000.00) refundable
deposit to the Seller's Counsel at least two days before the date of the hearing
of the motion for the Approval and Vesting Order by the Court (the "Deposit"),
to be held in trust pending the Closing and to be applied on Closing against the
Purchase Price. If the purchase and sale contemplated by this Agreement is not
completed for any reason other than the default of the Buyer, the Deposit shall
be returned forthwith to the Buyer with all interest actually earned thereon and
without deduction or set-off.
2.05 Normal Adjustments
The Purchase Price shall be subject to normal adjustments for charges for fuel,
electricity, rentals, taxes and water rates, which accrue prior to the Closing
Date.
2.06 Other Adjustments
The Purchase Price shall be reduced by the following amounts:
(a) Employee Claims - all unpaid amounts accrued or owing to Retained
Employees, as described in Section 6.01(c);
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(b) Outstanding Contract Payment Obligations - all outstanding payment
obligations in respect of Outstanding Contract Payment Obligations which
are not satisfied by the Seller and which are paid by the Buyer at any
time subsequent to Closing .
(c) Excluded Equipment Contracts - the sum of $10,000 for Equipment Contracts
excluded by the Buyer from the transactions as contemplated by Section
1.01(u).
(d) Huxtable's Liabilities - the book value of all liabilities of Huxtable's
Kitchens Inc. (including present value of future payments due under
management agreements and earnout agreements) existing as of the Closing
Date (other than Equipment Contracts assumed by the Buyer) determined in
accordance with Section 2.07 which are paid or are payable by the Buyer,
any Affiliate of the Buyer, or Huxtable's Kitchens Inc. at any time
subsequent to Closing.
(e) Unpaid Supplier Claims - all adjustments required by Section 2.11 herein.
All adjustments pursuant to Sections 2.05 and 2.06 except for the adjustments
referred to in subsection 2.06(d) shall not exceed the amount of $1,400,000 less
the amount of vacation pay described in Section 1.01(c)ii, and shall be
completed by reducing the Cash Portion of the Purchase Price. Any adjustment
required by subsection 2.06(d) shall be completed by credit applied against the
Promissory Note provided that such adjustment shall not, in any event, exceed
the amount of the Promissory Note.
2.07 Calculation of Huxtable's Liabilities
In order to determine the adjustment to the Purchase Price in accordance with
Section 2.06(d), the Buyer shall deliver to the Seller within 60 business days
after the Closing Date, a balance sheet for Huxtable's Kitchens Inc. for the
period ending as at the Closing Date together with a review engagement report by
an independent public accountant chosen by the Buyer (the "Closing Financial
Statements"), setting forth the liabilities (actual and contingent) as at the
Closing Date, with such balance sheet prepared in accordance with generally
accepted accounting principles in a manner consistent with those accounting
practices used for Huxtable's Kitchens Inc. in respect of its last fiscal year.
Such Closing Financial Statements shall be prepared at the expense of the Buyer.
The Seller shall have 20 business days following receipt of the Closing
Financial Statements to notify the Buyer with reasonable particularity that it
objects to any item or items in the calculations. Any such dispute shall be
resolved in accordance with Section 2.08.
If no objection is delivered within the 20 day period, the Closing Financial
Statements shall be used to determine any adjustment referred to in Section
2.06(d).
2.08 Dispute Resolution
Any item of dispute relating to the calculations referred to in Section 2.06,
2.07 and 3.02(b)(i)B is hereinafter referred to as a "Disputed Item". If the
Buyer and the Seller shall be unable to resolve any Disputed Item within 20
business days after notice that there exists a Disputed Item then an
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independent chartered accountant chosen by the Seller (hereinafter referred to
as the "Seller's Accountant") and an independent chartered accountant chosen by
the Buyer (hereinafter referred to as the "Buyer's Accountant") shall together
within 20 business days, appoint a representative from an accounting firm
recognized in Canada (other than the Shareholders' Accountant or the Buyer's
Accountant) to arbitrate the dispute (hereinafter referred to as the
"Arbitrator"). The Seller and the Buyer shall, within the 20 business days after
the appointment of the Arbitrator present their position with respect to the
Disputed Item to the Arbitrator together with such other materials as the
Arbitrator deems appropriate. The Arbitrator shall within 20 business days after
the submission of such evidence, submit its written decision on each Disputed
Item to the parties. Any determination by the Arbitrator with respect to any
Disputed Item shall be final and binding on such parties. Except as specifically
set forth to the contrary in this paragraph, the Arbitrator shall comply, and
the arbitration shall be conducted in the Province of Ontario, Canada in
accordance with the provisions of the Arbitrations Act (Ontario).
2.09 Monitoring by Buyer
During the Due Diligence Period the Buyer shall be entitled to monitor the
Business and the Purchased Assets and for such purpose, if requested by the
Buyer, the Seller shall provide to the Buyer all information which the Buyer
shall reasonably require, including without limitation, borrowing base
calculations, daily cash receipts, daily cash disbursements, daily purchase
commitments and daily sales.
2.10 Loss or Damage
In the event there is any damage, destruction or loss of any or all of the Fixed
Assets and Equipment and Real Property prior to the Closing, the Buyer may
elect, in its sole and absolute discretion:
(a) in respect of each instance of damage, destruction or loss amounting to
$10,000 or more, to complete the transactions contemplated by this
Agreement and
(i) accept the proceeds of the insurance coverage on such Purchased
Assets; or
(ii) accept a decrease in the Purchase Price by an amount to be agreed
upon by the Buyer and the Seller as the amount of the relevant
damage, destruction or loss (in which case, the Promissory Note
shall be appropriately adjusted); or
(b) in respect of any material damage, destruction or loss, to accept
insurance proceeds or a decrease in the Purchase Price as aforesaid, or to
terminate this Agreement without any obligations or liabilities on its
part whatsoever, in which event the Deposit shall be forthwith returned to
the Buyer with all interest actually earned thereon and without deduction
or set-off.
2.11 Unpaid Supplier Claims
Subject to the limitations contained in Section 2.06, if any supplier of
goods to the Company or a Subsidiary makes a valid claim under Section
81.1 of the Bankruptcy and Insolvency Act
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for the possession of such goods, the Seller shall (subject to any
applicable court order) determine whether or not the claim is valid. The
Buyer shall have no liability to the Seller or the Company in respect of
any such claim. If as a result of such a claim, the Buyer is obliged to
give the supplier repossession of the goods or make a payment to the
supplier, the Seller shall pay the Buyer an amount equal to the Purchase
Price paid by the Buyer in respect of such goods or (as applicable) the
amount payable to the supplier. The Buyer agrees that the Seller shall
have no liability under this Section 2.11, after the expiry of thirty (30)
days from the Closing Date, save with respect to any outstanding valid
claim made by suppliers prior to the expiry of such period.
ARTICLE 3.
CLOSING ARRANGEMENTS
3.01 Place and Time of Closing
The Closing shall take place at 10:00 a.m. local time on the Closing Date at the
offices of Gowling ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, at , ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ or at such other time and place as the parties may
agree upon.
3.02 Action at Closing
At the Closing, the following matters shall be completed:
(a) Purchased Assets - the Seller shall:
(i) execute and deliver to the Buyer the Transfer Notice, and deliver to
the Buyer possession of the Purchased Assets;
(ii) deliver to the Buyer the documentation and certificates which the
Seller is required to deliver pursuant to Section 2.03;
(iii) deliver to the Buyer the Approval and Vesting Order, and the Buyer
shall promptly thereafter register the Approval and Vesting Order on
title to the Lands; and
(iv) deliver to the Buyer all instruments of conveyance, assignments, and
other documents reasonably necessary to effectively convey, assign
and transfer the Purchased Assets to the Buyer.
(b) Purchase Price and Assumed Liabilities - The Buyer shall:
(i) pay to the Seller the Purchase Price as adjusted pursuant to Section
2.06 as follows:
A. by application of the Deposit;
B. by delivery of a certified cheque in the amount of the
Purchase Price
14
less:
a. the Deposit;
b. the book value of the future obligations under Equipment
Contracts (other than the Equipment Contracts identified
in Schedule 1.01(t) under headings "Additional
Commitments") determined in accordance with generally
accepted accounting principles consistent with the
Company's past practise not exceeding $5,800,000;
c. the aggregate of the amounts to be adjusted under
Sections 2.05 and 2.06;
d. vacation pay described in Section 1.01(c)ii;
e. the Assumed Mortgages forming part of the Assumed
Liabilities as at the Closing Date; and
f. the amount of the Promissory Note;
which certified cheque shall be made payable to the Seller
(the "Cash Portion"); and
C. by execution and delivery to the Seller, as evidence of the
obligation of the Buyer to pay the balance of the Purchase
Price, the Promissory Note, which shall be subject to offsets
and adjustments as set forth herein but shall be in the amount
of $2,000,000.00, in the form set forth in Schedule
3.02(b)(i)C;
(ii) deliver to the Seller the documentation and certificates
contemplated in Section 2.03; and
(iii) execute and deliver to the Seller all such documents as shall be
necessary to effectively assume the Assumed Liabilities.
3.03 Transfer Taxes
Subsequent to Closing, the Buyer shall remit directly to the appropriate taxing
authorities, within the time period specified for such payments, all federal and
provincial sales taxes payable by it in respect of the sale of the Purchased
Assets pursuant to this Agreement.
15
3.04 Assumption of Liabilities
Except for the Assumed Liabilities, the Buyer shall not assume and shall not be
responsible for any of the liabilities, debts or obligations of the Company or a
Subsidiary whether present or future and whether or not relating to the Business
or the Purchased Assets.
3.05 Assignment of Contracts
Nothing in this Agreement shall be construed as an attempt to assign any
contractual rights forming part of the Purchased Assets that are not assignable
in whole or in part without the consent of the other party to such contract,
unless the consent has been given or the assignment is otherwise lawful. The
Seller shall, pending the effective transfer thereof, hold all rights or
entitlements that the Seller have thereto in trust for the exclusive benefit of
the Buyer without obligation to the Seller, provided that the Buyer shall pay,
perform and discharge all obligations arising or accruing subsequent to the
Closing with respect thereto following the Closing. The Seller shall authorize
the Buyer at its expense to seek any such required consent to assignment prior
to or after the Closing Date.
ARTICLE 4.
CLOSING CONDITIONS
4.01 Buyer's Conditions
The obligation of the Buyer to complete the purchase of the Purchased Assets
pursuant to this Agreement shall be subject to the satisfaction of each of the
following conditions on or before the Time of Closing, (each of which is for the
exclusive benefit of the Buyer and may be waived by it in whole or in part):
(a) Truth and Accuracy of Representations of Seller - all of the
representations and warranties of the Seller made in this Agreement shall
be true and correct in all material respects as at the time of Closing and
the Buyer shall have received a certificate from an officer of the Seller,
confirming the truth and correctness in all material respects of such
representations and warranties of the Seller;
(b) Performance of Obligations - the Seller shall not be in default in the
performance of any of its obligations pursuant to this Agreement;
(c) Receipt of Closing Documentation - the Seller shall have executed and
delivered to the Buyer the documents referred to in Section 3.02(a);
(d) Consents to Assignment - all consents or approvals from or notifications to
any third party required under the terms of this Agreement in connection
with any of the Contracts, Leases or Equipment Contracts and the assignment
thereof to the Buyer, or otherwise in connection with the completion of the
transactions contemplated by this Agreement and that are material to the
operation of the Business shall have been obtained, given, or waived by the
Buyer (provided that the Buyer and the Seller shall act reasonably to
resolve non-material failures
16
to obtain such consents or approvals);
(e) No Changes - there shall not have occurred during the Due Diligence Period
any material adverse change in the Business, actual or anticipated
customers' purchase orders to the Subsidiaries, damage, destruction or
loss, labour trouble or other event, development or condition of any
character (whether or not covered by insurance) which alone or in the
aggregate materially and adversely affects the Business, the Purchased
Assets or future prospects of the Business (other than the order appointing
the Seller as receiver of the Business);
(f) Orders - the Seller shall have obtained the Approval and Vesting Order;
(g) Appeal of Orders - the Seller shall not have received notice of appeal in
respect of the Approval and Vesting Order;
(h) Injunctions - no order of a court of competent jurisdiction shall have been
made enjoining the Seller or the Buyer from completing the transactions
hereby contemplated; and
(i) Company Acts - between the date hereof and the Time of Closing, the Company
nor any Subsidiary shall have transferred, assigned, or disposed of any of
the Purchased Assets except for the sale of inventory in the ordinary and
usual course of business.
4.02 Seller's Conditions
The obligation of the Seller to complete the sale of the Purchased Assets
pursuant to this Agreement shall be subject to the satisfaction of each of the
following conditions precedent at or prior to the time of Closing (each of which
is for the exclusive benefit of the Seller and may be waived by it in whole or
in part):
(a) Truth and Accuracy of Representations of the Buyer - all of the
representations and warranties of the Buyer made in or pursuant to this
Agreement shall be true and correct in all material respects as at the time
of Closing;
(b) Performance of Obligations - the Buyer shall have performed all of its
obligations pursuant to this Agreement;
(c) Orders - the Seller shall have obtained the Approval and Vesting Order;
(d) Appeal of Orders - the Seller shall not have received notice of appeal in
respect of the Approval and Vesting Order;
(e) Injunctions - no order of a court of competent jurisdiction shall have been
made enjoining the Seller, the Company or the Buyer from completing the
transactions hereby contemplated; and
(f) The Bank of Nova Scotia Leases - with respect to the Assumed Liabilities in
favour of The
▇▇
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, the Buyer shall have executed assumption agreements in
a form reasonably satisfactory to the Bank and to the Buyer and on the
terms and in accordance with the commitments made between the Bank and the
Company and any Subsidiary.
4.03 Non-Satisfaction of Conditions
If the conditions set out in Article 4 are not satisfied or waived by the Time
of Closing, the Buyer, in the case of Section 4.01, and the Seller, in the case
of Section 4.02, may in its absolute discretion terminate this Agreement,
without any obligation or liability whatsoever, by providing written notice to
the other.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
5.01 Representations and Warranties of the Seller
The Seller represents and warrants to the Buyer as follows:
(a) Authority and Enforceability - the Seller has the authority to enter into
this Agreement and to sell all of its right, title and interest, and the
right, title, and interest of the Company and the Subsidiaries in and to
the Purchased Assets, subject to the approval of a court of competent
jurisdiction and no orders have been made by a court of competent
jurisdiction enjoining the Seller from completing the transactions herein
contemplated;
(b) Residency - the Seller is not a non-resident of Canada within the meaning
of the Income Tax Act (Canada);
(c) No Encumbrance - the Seller has not done any act to encumber the Purchased
Assets.
5.02 Representations and Warranties of the Buyer
The Buyer represents and warrants to the Seller as follows:
(a) Corporate - the Buyer is a duly constituted limited liability partnership
and International Menu GP Inc. is a corporation duly organized, validly
existing and in good standing under the laws of Ontario and has all
requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby;
(b) Authorization - this Agreement, the execution and delivery hereof by the
Buyer, the payment of the Purchase Price and the performance by the Buyer
of its obligations and undertakings hereunder have been, or will be prior
to Closing, duly authorized and approved by all requisite corporate action;
and
18
(c) GST Registration - the Buyer is or will be prior to Closing registered
pursuant to the Excise Tax Act (Canada).
5.03 Title to and Condition of the Purchased Assets
Except as otherwise provided in this Agreement, the Purchased Assets are being
sold by the Seller and purchased by the Buyer on an "as is, where is" basis; the
Buyer has conducted such inspections of the Purchased Assets and such
investigations of the Seller's right, title and interest in and to the Purchased
Assets as it has deemed appropriate and has relied entirely on its own
inspection, investigation and analysis and has satisfied itself considering
those matters. The Buyer agrees that the Seller (including the Seller's
directors, officers, employees, Affiliates, agents, advisors and
representatives) shall have no liability or responsibility based on or in
respect of any information or documents obtained by or provided or made
available to the Buyer or at its request. No representation, warranty or
condition, either express or implied, has been or will be given by the Seller as
to the title, description, condition, cost, size, quantity, quality, fitness for
purpose, merchantability, valuation, revenues, expenses, assignability or
otherwise of or concerning the Purchased Assets or the right of the Seller to
sell or assign the same, or as to the accuracy or completeness of any of the
information or documents obtained by or provided or made available to the Buyer
(including its directors, officers, employees, Affiliates, agents, advisors and
representatives) save and except for the express representations and warranties
given in Section 5.01 hereof. Without limiting the foregoing, any and all
conditions, warranties or representations expressed or implied pursuant to the
Sale of Goods Act (Ontario) do not apply hereto and have been waived by the
Buyer solely in respect of the Seller. The descriptions of the Purchased Assets
contained herein are for the purposes of identification only and no
representation, warranty or condition has been or will be given by the Seller
concerning the accuracy of these descriptions and the Buyer acknowledges that it
does not rely on the same.
5.04 Non-Waiver
No investigations made by or on behalf of the Buyer at any time shall have the
effect of waiving or diminishing the scope of or otherwise affecting any
representation or warranty made by the Seller in or pursuant to this Agreement,
save to the extent of any information obtained by or disclosed to the Buyer
prior to Closing. No waiver by the Buyer of any condition, in whole or in part,
shall operate as a waiver of any other condition.
5.05 Nature and Survival of Representations and Warranties
All statements contained in any certificate or other instrument delivered by or
on behalf of any of the parties in connection with the transactions contemplated
by this Agreement shall be deemed to be made by such party. All representations
and warranties contained in Article 5 of this Agreement on the part of each of
the parties shall survive the Approval and Vesting Order, the Closing, the
execution and delivery of any bills of sale, instruments of conveyance,
assignments or other instruments of transfer of title to any of the Purchased
Assets and the payment of the Purchase Price for a period of six (6) months from
the Closing Date after which time, if no claim shall have been made against a
party with respect to any incorrectness in or breach of any representation or
warranty
19
made by such party in Article 5, such party shall have no further liability
under this Agreement with respect to such representation or warranty.
ARTICLE 6.
COVENANTS
6.01 Employees
(a) The parties acknowledge that Schedule 1.01 (gg) sets forth the names,
titles and annual rates of remuneration of all the Retained Employees.
(b) Subject to subsection (d) below, prior to but conditional upon the
completion of the Closing, the Buyer shall offer employment to all Retained
Employees at their current wage or base salary (not including bonuses) and
on such other terms and conditions it deems satisfactory. If the Buyer
terminates the employment of any such Retained Employees following Closing,
the Buyer shall be solely responsible for all termination pay and severance
payments associated therewith and the Buyer agrees that for such purposes
the prior employment of such Employee with the Company or a Subsidiary
shall be treated as employment with the Buyer.
(c) All items in respect of such Retained Employees including, without
limitation, premiums for unemployment insurance, O.H.I.P., Workers
Compensation, benefit plans, Canada Pension Plan, accrued wages, salaries,
commissions, bonuses, employee benefit plan payments, or entitlements and
other employee benefits which are payable to, receivable by, or accrued in
favour of such Retained Employees up to the opening of business on the
Closing Date shall be appropriately adjusted in favour of the Buyer to the
opening of business on the Closing Date (specifically excluding accrued
vacation pay which is an Assumed Liability) by way of adjustment to the
Cash Portion of the Purchase Price
(d) The Buyer's obligation under subsection Section 6.01(b) shall be solely to
make an offer of employment as of the Closing Date to the Retained
Employees on the terms referred to in Section 6.01(b). The Buyer shall not
be obligated to any such Retained Employee who refuses such offer.
6.02 Access for Due Diligence
The Seller shall permit the Buyer through its authorized representatives to have
free and unrestricted access during normal Business hours to all the premises of
the Company and the Subsidiaries, and to all books, accounts, records and other
data of the Company and the Subsidiaries (including, without limitation, all
corporate and accounting records of the Company and the Subsidiaries) pertaining
to the Business and to the Purchased Assets. The Seller shall also furnish to
the Buyer:
(a) the Records and such other financial and operating data and other
information with respect to the Business and the Purchased Assets as the
Buyer shall from time to time request to
20
assist in such due diligence, and for such purpose the Seller shall
cooperate fully with the Buyer; and
(b) copies of all Contracts and Equipment Contracts and of all insurance
policies relating to the Business or the Purchased Assets.
6.03 Actions to Satisfy Closing Conditions
The Buyer shall take, and the Seller shall use good faith endeavours to take,
all such actions as are within its power to control, and the Buyer shall use its
best efforts to cause other actions to be taken which are not within its power
to control, so as to ensure compliance with any conditions set forth in Article
4 which are for the benefit of any other party.
6.04 Product Claims
The Buyer shall not be responsible for any Claims in respect of any and all
products sold by the Business prior to the Closing Date.
6.05 Description of Purchased Assets
The Buyer acknowledges that any descriptions of the Purchased Assets provided by
the Seller have been prepared solely for the convenience of prospective buyers
and are not warranted to be complete or accurate or correct and that such
descriptions do not constitute part of any terms and conditions of sale of the
Purchased Assets.
6.06 Approval and Vesting Order
The Seller shall forthwith upon its appointment by a Court as receiver of the
Purchased Assets, apply to the Court for the Approval and Vesting Order and
shall diligently take all reasonable steps to obtain the same on or before April
5, 2001.
ARTICLE 7.
GENERAL
7.01 Expenses
All costs and expenses (including the fees and disbursements of accountants and
legal counsel) incurred in connection with this Agreement and completion of the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
7.02 Time
Time shall be of the essence in all respects of this Agreement.
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7.03 Notices
Any notice or demand to be given to any party to this Agreement shall be in
writing and shall be either:
(a) personally delivered;
(b) sent by registered mail, postage prepaid, except during a real or before an
apprehended mail strike in Canada; or
(c) sent by telecopier or similar method of recorded communication, charges
prepaid.
Any notice given pursuant to paragraphs (a), (b) and (c) above shall be sent to
the intended recipient at its address as follows:
if to the Buyer: International Menu Partnership LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Gowling ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Seller: PricewaterhouseCoopers Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Gervais LLP
Scotia Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
22
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may from time to time change its address or other contact information
by written notice to each other party given in accordance with the provisions of
this Section.
Any notice given by personal delivery shall be deemed to have been received on
the date of delivery. Any notice given by registered mail shall be deemed to
have been received on the fourth Business Day after which it was so mailed. Any
notice sent by telecopier or similar method of recorded communication shall be
deemed to have been received on the next Business Day following the date of its
transmission.
7.04 Assignment
Neither this Agreement nor any of the rights or obligations of the Buyer
hereunder may be assigned without the prior written consent of the Seller.
Neither this Agreement nor any of the rights or obligations of the Seller
hereunder may be assigned otherwise than by operation of law without the prior
written consent of the Buyer. This Agreement shall enure to the benefit of and
be binding upon each party and its heirs, executors, administrators, successors
and permitted assigns.
7.05 Further Assurances
The parties shall with reasonable diligence do all things and provide all
reasonable assurances as may be required to complete the transactions
contemplated by this Agreement, and each party shall provide such further
documents or instruments required by any other party as may be reasonably
necessary or desirable to give effect to this Agreement and carry out its
provisions, whether before or after the Closing, including such registrations,
recordings and filings with public authorities as may be required in connection
with the transfer of ownership to the Buyer of the Purchased Assets.
7.06 Risk of Loss
From the date of this Agreement until the Closing Date, the Purchased Assets
shall be and remain at the risk of the Seller. From and after the Closing Date,
the Purchased Assets shall be and remain at the risk of the Buyer. Pending the
Closing, the Seller and the Company shall hold all insurance policies and the
proceeds of insurance in trust for the Seller and the Buyer as their interests
may appear pursuant to the provisions of this Agreement.
7.07 Public Notice
All public notices to third parties and all other publicity or release of
information of any nature whatsoever concerning the transactions contemplated by
this Agreement shall be jointly planned and coordinated by the Seller and the
Buyer and no party shall act unilaterally in this regard without the prior
approval of the other party, such approval not to be unreasonably withheld,
unless such disclosure is required to meet the timely disclosure obligations of
any party under securities laws or stock exchange rules in circumstances where
prior consultation with the other parties is not practicable.
23
7.08 Seller's Capacity
Notwithstanding any other provision of this Agreement, the Buyer agrees with the
Seller that:
(a) the Seller, in entering into this Agreement and completing the
transactions contemplated hereby, is acting in the role of seller of
the Purchased Assets, solely in its capacity as court-appointed
receiver of the Purchased Assets; and
(b) neither the Seller personally nor any of its shareholders, directors,
officers, employees or agents shall have any personal or corporate
liability under or as a result of this Agreement (except as regards
its representations and warranties in Section 5.01) or any agreements
or documents to be delivered by the Seller pursuant to this Agreement
or otherwise in connection herewith, including pursuant to the
representations and warranties of the Seller in this Agreement or in
respect of any breach of covenant by the Seller.
In the event of any conflict or inconsistency between the provisions of
this Section 7.08 and any other provision of this Agreement or any other
agreement or document delivered pursuant to this Agreement the provisions
of this Section 7.08 shall prevail.
7.09 Planning Act
This Agreement has been entered into subject to the express condition that it
shall not be effective to create or convey an interest in the Real Property
until the provisions of the Planning Act (Ontario) have been satisfied.
7.10 Counterparts
This Agreement and any agreement contemplated thereby may be executed in one or
more counterparts, each of which so executed shall constitute an original and
all of which together shall constitute one and the same Agreement or agreement,
as applicable.
7.11 Facsimile
Execution and delivery of a facsimile transmission of this Agreement shall
constitute, for purposes of this Agreement, delivery of an executed original and
shall be binding upon the party whose signature appears on the transmitted copy.
Any party so executing this Agreement hereby undertakes to originally-execute
and deliver to the other parties hereto a copy of this Agreement as soon as
possible after execution by facsimile.
24
IN WITNESS WHEREOF the parties have executed and delivered this Agreement.
PRICEWATERHOUSECOOPERS INC.,
the court-appointed Interim Receiver of the
Business of INTERNATIONAL MENU
SOLUTIONS INC., and its Subsidiaries,
And certain assets of
INTERNATIONAL MENU SOLUTIONS CORP.
and not in its personal or corporate capacity
Per: _________________________________
Name: ________________________________
Title: _______________________________
INTERNATIONAL MENU PARTNERSHIP LLP
by its General Partner
INTERNATIONAL MENU GP INC.
Per: ________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice-President
