EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
By and between
BARIATRIX PRODUCTS INTERNATIONAL INC.
and
BALANCE BAR COMPANY
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
3357481 CANADA INC.
and
▇▇▇▇▇▇ ▇▇▇▇▇
May 20, 1999
SUBSCRIPTION AGREEMENT
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THIS AGREEMENT is made on the 20/th/ day of May, 1999.
BY AND BETWEEN: BARIATRIX PRODUCTS INTERNATIONAL INC., a corporation
duly incorporated according to the laws of Canada,
herein acting and represented by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, its
President and Secretary, duly authorized as he so
declares,
(herein referred to as the "Corporation")
AND: BALANCE BAR COMPANY, a company duly incorporated
according to the laws of Delaware, herein acting and
represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇, its Senior Vice President
of Finance and Administration, duly authorized as he so
declares,
(herein referred to as "Balance Bar")
AND: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, businessman, of the City of Burlington,
State of Vermont,
(herein referred to as "Rod")
AND: 3357481 CANADA INC., a corporation duly incorporated
according to the laws of Canada, herein acting and
represented by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, its President, duly
authorized as he so declares,
(herein referred to as "3357481")
AND: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, businessman, of the City of Westmount,
Province of Quebec,
(herein referred to as "▇▇▇▇▇▇")
(Rod, ▇▇▇▇▇▇ and 3357481 are sometimes herein
collectively referred to as the "Guarantors")
WHEREAS the authorized capital of the Corporation consists of an unlimited
number of Class "A" Shares, Class "B" Shares, Class "C" Shares, Class "D"
Shares, Class "E" Shares, Class "F" Shares, Class "G" Shares and Class "H"
Shares;
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WHEREAS Balance Bar has proposed to make an investment in the amount of
Three million five hundred thousand dollars (US$3,500,000) in the Corporation by
way of purchase from the Corporation of such number of Class "A" Shares of the
Corporation as represents in the aggregate 10% of the issued and outstanding
Class "A" Shares on a fully diluted basis; and
WHEREAS the Corporation wishes to issue to Balance Bar such number of Class
"A" Shares of the Corporation as represents in the aggregate 10% of the issued
and outstanding Class "A" Shares on a fully diluted basis.
NOW THEREFORE, THIS AGREEMENT WITNESSETH:
1. DEFINITIONS
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The following terms, when used herein, shall have the following meanings:
"Affiliates" shall have the meaning ascribed thereto in subsection 2(2) of
the Canada Business Corporations Act;
"Benefit Plan" shall have the meaning ascribed thereto in section 4.23;
"Closing" and "Closing Date" shall mean the date hereof;
"Contracts" shall have the meaning ascribed thereto in section 4.21;
"Environmental Conditions" shall have the meaning ascribed thereto in
section 4.41.13;
"Environmental Laws" shall have the meaning ascribed thereto in section
4.41.13;
"Environmental Liabilities" shall have the meaning ascribed thereto in
section 4.41.13;
"Environmental Permit" shall have the meaning ascribed thereto in section
4.41.13;
"Financial Statements" shall have the meaning ascribed thereto in section
4.15;
"Governmental Entity" shall have the meaning ascribed thereto in section
4.3;
"Hazardous Substance" shall have the meaning ascribed thereto in section
4.41.13;
"Intellectual Property" shall have the meaning ascribed thereto in section
4.26;
"Licenses" shall have the meaning ascribed thereto in section 4.14;
"Losses" shall have the meaning ascribed thereto in section 6.2;
"Millenium Compliant" shall have the meaning ascribed thereto in section
4.40;
"Property" shall have the meaning ascribed thereto in section 4.14;
"Shareholders" shall have the meaning ascribed thereto in section 4.6;
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"Share Issue Price" shall have the meaning ascribed thereto in section 3;
"Shares" shall have the meaning ascribed thereto in section 2;
"Subsidiaries" shall have the meaning ascribed thereto in section 4.5;
"Taxes" or "Tax" shall have the meaning ascribed thereto in section 4.18.1;
"Tax Returns" and "Tax Return" shall have the meaning ascribed thereto in
section 4.18.1;
"Third Party Claim" shall have the meaning ascribed thereto in section 6.3.
2. SUBSCRIPTION AND ISSUE OF SHARES
--------------------------------
Upon and subject to the terms and conditions hereof, Balance Bar hereby
subscribes for, on its own account, and the Corporation agrees to issue to
Balance Bar 1,000 Class "A" Shares of the Corporation (the "Shares").
3. ISSUE PRICE
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The Shares shall be issued for an aggregate issue price of Three million
five hundred thousand dollars (US$3,500,000) (the "Share Issue Price") being
US$3,500 per Class "A" Share, which Share Issue Price shall be payable by way of
a cheque made payable to the Corporation.
The Share Issue Price was established on the basis of a negotiation between
the Corporation and Balance Bar. In addition, Balance Bar has also been granted
certain additional volume discounts by the Corporation on the purchase of
increased volumes by Balance Bar Company of products manufactured by the
Corporation.
4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE GUARANTORS
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The Guarantors and the Corporation hereby represent and warrant, on a
solidary basis as among each of them and hereby waiving the benefit of division
and discussion to and in favour of Balance Bar as follows:
4.1 Incorporation and Capacity. The Corporation is a corporation duly
--------------------------
incorporated under the laws of Canada and is a valid and subsisting
corporation in good standing under such laws and is in good standing
as a corporation and is licensed or qualified to transact business in
each jurisdiction where the nature of its activities makes such
license or qualification necessary and a list of such jurisdictions is
hereto annexed as Schedule 4.1. The Corporation has the full corporate
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power and authority to enable it to own, lease or otherwise hold its
properties and assets and to carry on its business as it is now being
conducted and to own its property.
4.2 Authority; No Conflicts. The Corporation has all requisite power and
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authority to execute and deliver this Agreement and to consummate the
transactions
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contemplated hereby. All acts and other proceedings required to be
taken by the Corporation to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken. This Agreement
and all other agreements contemplated hereby that have been executed
by the Corporation have been duly executed and delivered by the
Corporation and constitute the valid and binding obligation of the
Corporation enforceable against the Corporation in accordance with its
terms. All other agreements and instruments contemplated by this
Agreement to be delivered or executed by the Corporation at Closing
shall at Closing constitute the valid and binding obligation of the
Corporation enforceable against the Corporation in accordance with its
terms.
4.3 Consents. No consent, license, approval, order or authorization of, or
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registration, filing or declaration with, any Governmental Entity is
required to be obtained or made with respect to the Corporation in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, and no consent
of any other third party is required to be obtained with respect to
the Corporation in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby. As used herein the term "Governmental Entity"
means any federal, provincial, municipal or other governmental
department, commission, board, bureau, agency, court or
instrumentality.
4.4 No Bankruptcy. There has not been filed any petition or application,
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or any proceeding commenced which has not been discharged, by or
against the Corporation with respect to any assets of the Corporation
under any law, domestic or foreign, relating to bankruptcy,
reorganization, fraudulent transfer, compromise, arrangements,
insolvency, readjustment of debt or creditors' rights, and no
assignment has been made by the Corporation for the benefit of its
creditors.
4.5 Subsidiaries. Except for the subsidiaries set out on Schedule 4.5
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hereto (the "Subsidiaries"), the Corporation does not have, directly
or indirectly, any ownership or other interest in, or control any
corporation, partnership, joint venture, business association or other
entity.
4.6 Authorized and Issued Stock. The authorized capital stock of the
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Corporation consists of an unlimited number of Class "A" Shares, an
unlimited number of Class "B" Shares, an unlimited number of Class "C"
Shares, an unlimited number of Class "D" Shares, an unlimited number
of Class "E" Shares, an unlimited number of Class "F" Shares, an
unlimited number of Class "G" Shares and an unlimited number of Class
"H" Shares of which there are issued and outstanding such number of
shares as are set forth on Schedule 4.6. The Shares represent one-
------------
tenth of all of the issued and outstanding Class "A" Shares in the
capital of the Corporation. All of the Shares are duly authorized and
validly issued and are outstanding as fully paid and non-assessable.
None of the Shares has been issued in violation of, and none of the
Shares is subject to, any pre-emptive or subscription rights and
except as set forth above, there are no shares in the capital stock or
other equity securities of the Corporation outstanding. There are no
outstanding subscriptions, warrants, options, agreements, convertible
or
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exchangeable securities or other commitments pursuant to which the
Corporation is or may become obligated to issue, sell, purchase,
return or redeem any shares of capital stock or other securities of
the Corporation. The sole registered and beneficial owner of all of
the issued and outstanding shares of the capital stock of the
Corporation are the shareholders listed on Schedule 4.6 hereto (the
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"Shareholders").
4.7 Title to Shares. Each of the Shareholders owns the shares set forth
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opposite his or its name in Schedule 4.6 above and the Corporation
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owns all of the shares of each of the Subsidiaries with good and
marketable title, free and clear of all liens, encumbrances, pledges,
security interests, options, charges and claims of any nature or kind
whatsoever.
4.8 Voting Trust. Save and except for an agreement to be entered into
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between the Guarantors, ▇▇▇▇▇▇ ▇▇▇▇▇ and 3515176 Canada Inc. relating
to the disposition of the shares of the latter two shareholders (the
"Share Disposition Agreement") which Share Disposition Agreement is
more fully described at section 2.2 of the Shareholders' Agreement of
even date herewith relating to the shares of the Corporation, a copy
of which shall be provided to Balance Bar prior to its execution, none
of the shares or other securities of the Corporation is subject to any
voting trust agreement or other contract, agreement, arrangement,
commitment or understanding, including any such agreement,
arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rates or disposition of such shares
or securities.
4.9 Rights to Purchase Shares. There is no contract, option or other right
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of another binding upon or which at any time in the future may become
binding upon the Corporation to allot or issue any of the unissued
shares of the Corporation or to create any additional class of shares,
although the Corporation is in the process of adopting a management
stock option plan.
4.10 Actions Respecting Shares. There are no actions, suits, proceedings or
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claims pending or threatened against or relating to the Corporation or
with respect to or in any manner affecting the ownership by a
Shareholder of the shares or which would adversely affect the ability
of the Corporation to execute and deliver this Agreement and
consummate the transactions contemplated hereby.
4.11 Corporate Records. The minute books and share certificate books of the
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Corporation are true and complete and up to date in all material
respects and accurately reflect all material corporate actions and
decisions which have been taken by its board of directors and
shareholders. The Corporation has made available to Balance Bar true
and complete copies of the charter documents, including the
certificate of incorporation, as amended to the date hereof, and the
by-laws, as in effect on the date hereof, of the Corporation.
4.12 Effect of Agreement. The execution and delivery of this Agreement does
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not and the execution and delivery of every other agreement or
instrument contemplated by this Agreement to be delivered or executed
by the Corporation at Closing and the consummation of the transactions
contemplated hereby or thereby will not (i) conflict with, violate,
result in a breach of or constitute a default under any
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provision of the certificate of incorporation or articles (as amended)
or by-laws or other organizational documents of the Corporation, (ii)
violate, conflict with or result in the breach or termination of or
modification, or otherwise give any other contracting party the right
to terminate, or constitute a default, with or without notice, the
lapse of time or both, or cause the acceleration of any obligation,
under the terms of any agreement or instrument to which the
Corporation is a party or by which it or any of its properties or
other assets may be bound, (iii) result in the creation of any lien,
charge, hypothec or encumbrance upon the properties or other assets of
the Corporation, (iv) conflict with, violate, result in a breach of or
constitute a default under any judgment, order, injunction, decree or
award against, or binding upon, the Corporation or upon any of its
properties or other assets, (v) violate any law or regulation of any
jurisdiction relating to the Corporation or its properties, other
assets or business, or (vi) result in the loss of or require the
repayment of any government grant, subsidy or tax credit.
4.13 Compliance with Law. Subject to the provisions of any other
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representation or warranty contained herein which deals, more
specifically, with any particular law, ordinance or regulation, the
Corporation is, and all aspects of its business are, conducted in
compliance with all applicable laws, ordinances and regulations,
inclusive of those of any administrative boards or agencies or other
public authorities having jurisdiction, the non-compliance with which
would have an adverse effect on the Corporation or its operations.
4.14 Licenses. The Corporation owns or holds all licenses, permits,
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franchises, approvals, consents, waivers, exemptions, authorizations,
certificates of occupancy and similar rights and privileges
("Licenses"), all unencumbered and subject to no challenge,
revocation, expiry, modification or termination, which are material or
necessary to the ownership of its assets or the operation of each and
every aspect of its business. The execution and consummation of this
Agreement and the consummation of the transactions contemplated herein
will not create any right of modification, limitation, termination or
revocation on the part of a third party granting such Licenses; there
exists no pending or threatened modification, limitation, revocation
or termination of any such License. The Licenses are sufficient and
adequate in all respects to permit the continued lawful conduct by the
Corporation of its business in the manner now conducted and the
ownership, occupancy and operation of any immoveable property leased
by the Corporation (the "Property"), and none of the business
operations of the Corporation are presently being conducted in a
manner that violates in any respect any of the terms or conditions
under which any License was granted. The Licenses have been duly
obtained, are valid and are in full force and effect and the
Corporation is not and has not been in violation of any of the
Licenses, nor has the Corporation received any notice of the
revocation or limitation of any of the Licenses. Schedule 4.13
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contains a list and description of all material licenses.
4.15 Financial Statements. The Corporation has delivered to Balance Bar the
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audited consolidated financial statements of the Corporation for the
periods ended August 31, 1998 and August 31, 1997 (hereinafter
collectively referred to as the "Year-End Financial Statements"); the
Year-End Financial Statements:
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4.15.1 reflect accurately the transactions entered into the books and
accounts of the Corporation, as at the dates thereof;
4.15.2 present fairly the assets, liabilities, retained earnings,
profit and loss and financial position of the Corporation as
at the dates thereof;
4.15.3 have been prepared in accordance with Canadian generally
accepted accounting principles, consistently applied; and
4.15.4 except to the extent reflected or reserved against thereon,
the Corporation did not have on the dates thereof any
liabilities or obligations of any nature, which would be
required under Canadian generally accepted accounting
principles to be disclosed thereon, whether direct or
indirect, accrued, absolute, contingent, unasserted or
otherwise, known or unknown, fixed or unfixed, liquidated or
unliquidated including, without limitation, federal,
provincial, local, municipal or other tax liabilities due or
to become due or penalties, assessments or interest charges in
respect thereof, or unusual forward or long term commitments
or unrealized or anticipated losses from any unfavourable
commitments.
In addition, the Corporation has delivered to Balance Bar the
internally-prepared unaudited consolidated financial statements for
the seven months ended March 31, 1999 (the "March Statements"); the
March Statements:
4.15.5 reflect accurately, in all material respects, the transactions
entered into the books and accounts of the Corporation, as at
the date thereof;
4.15.6 present fairly the assets, liabilities, retained earnings,
profit and loss and financial position of the Corporation as
at the date thereof;
4.15.7 have been prepared in a manner consistent with the Year-End
Financial Statements.
The Year-End Financial Statements and the March Statements shall
hereinafter be collectively referred to as the "Financial Statements".
4.16 Title to Assets. Except as set forth on Schedule 4.16, the Corporation
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or the Subsidiaries owns each of the assets shown or reflected on the
Financial Statements (except only those assets which have been
disposed of in the ordinary course of business since the dates
thereof) and all other assets acquired since the dates thereof with
good and marketable title, free and clear of all encumbrances,
including without limitation, mortgages, liens, privileges, security
interests, claims, charges and easements, restrictive covenants,
conditional sale agreements, restrictions on transfer, rights of first
refusal or offer, due and unpaid taxes and other encumbrances on title
of any sort whatsoever. The Corporation has not received in respect of
its assets or any of them any notice of conflict with the assertive
rights of any other party. The assets owned by the Corporation on the
Closing Date will include all of the assets necessary for
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or that are used by the Corporation in the conduct of the
Corporation's business in the manner in which it has been conducted by
the Corporation.
4.17 Legal Proceedings. There are no suits, claims, actions (arbitration or
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legal) or administrative or other proceedings or governmental
investigations pending or, to the knowledge of the Corporation,
threatened against the Corporation or any of its officers, directors,
employees or agents in connection with the activities of the
Corporation or Affiliates or as to which the Corporation or any of its
officers, directors, employees, agents or Affiliates may become a
party or be affected thereby before any court or administrative agency
or officer, and the Corporation is not aware of any facts or
circumstances which should, or could, reasonably form the basis for
any such suits, claims, actions, proceedings and the Corporation is
not the subject of any investigation or proceedings by any
governmental authority, and none of the assets of the Corporation nor
any of its business practices is in any manner, directly or
indirectly, affected by any judgment, order, writ, or injunction of
any court or governmental or administrative agency or officer.
4.18 Tax Returns.
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4.18.1 All returns (including, without limitation, income tax,
corporation tax, capital tax, transfer business tax, import
duties, goods and services tax, value added tax, franchise
tax, sales and use tax, unemployment compensation, customs
duty, excise tax, severance, property tax, gross receipts tax,
profits tax, payroll and withholding tax returns and
information returns) and reports of or relating to any
federal, provincial, municipal, state, foreign or local tax,
assessment or charge of any nature whatsoever (all, together
with any penalties, additions to tax, fines and interest
thereon or related thereto, herein referred to collectively as
"Taxes" or singularly as a "Tax") that are required to be
filed (taking into account all extensions) on or before the
Closing Date for, by, on behalf of or with respect to the
Corporation (all such returns and reports herein referred to
collectively as "Tax Returns" or singularly as a "Tax
Return"), have been or will be timely filed with the
appropriate taxation authority on or before the Closing Date,
and all Taxes shown to be due and payable on such Tax Returns
or related to such Tax Returns have been or will be timely
paid in full prior to the Closing Date;
4.18.2 all Tax Returns and the information and data contained therein
have been or will be properly and accurately compiled and
completed in all respects, fairly present or will fairly
present in all respects the information purported to be shown
therein, and reflect or will reflect all liabilities for Taxes
for the periods covered by such Tax Returns;
4.18.3 save and except for a recently completed federal research and
development tax audit, which will result in a re-assessment of
approximately $50,000, none of such Tax Returns are now under
audit or examination by any taxation or other authority and
there are no agreements, waivers or other arrangements
providing for an extension of time with respect to the
assessment or collection of any Tax or
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deficiency of any nature against the Corporation or with
respect to any Tax Return and there are no suits or similar
proceedings now pending or, to the knowledge of the
Corporation, threatened against the Corporation with respect
to any Tax, and there are no matters under discussion with any
taxation or other authority relating to any Tax, or any claims
for any additional Tax asserted by any such authority.
4.19 Tax Liabilities.
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4.19.1 The Corporation does not have any liability, obligation or
commitment for the payment of Taxes, except those as are
disclosed in the Financial Statements or such Taxes not yet
due as have arisen since the date of the most recent of the
Financial Statements in the usual and ordinary course of
business and for which adequate provision in the accounts of
the Corporation has been made, and the Corporation is not in
arrears with respect to any required withholdings or
instalment payments of any Tax of any kind. Save and except as
set forth in section 4.18.3 neither Revenue Canada Taxation
nor any other taxing authority is now asserting or threatening
to assert any deficiency or claim for additional Taxes against
the Corporation and there are no disputes as to any Taxes
payable by the Corporation nor as to any matter which would
have the effect of reducing any tax-loss carry forward that
may be available to the Corporation. Save and except as set
forth in section 4.18.3 there are no actions, suits,
proceedings, investigations or claims now threatened or
pending against the Corporation in respect of Taxes nor are
there any matters under discussion with any governmental
authority with respect to Taxes asserted by any such
authority;
4.19.2 the inventories of the Corporation have been valued for tax
purposes at the lower of cost or net realizable value;
4.19.3 the paid up capital of the Corporation for income tax purposes
equals its paid up capital under corporate law;
4.19.4 to the best of the knowledge of the Corporation, any interest
paid, payable or otherwise accruing on any interest-bearing
debt of the Corporation is deductible (and to the extent that
such debt exists on Closing will continue to be deductible) in
computing its income under the Income Tax Act (Canada);
4.19.5 save and except as set forth on Schedule 4.19.5 in respect of
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the period subsequent to August 31, 1995 only, the Corporation
has not made any election under Section 85 of the Income Tax
Act (Canada) with respect to the acquisition or disposition of
any property;
4.19.6 the Corporation has not made any election under Sub-section
83(2) of the Income Tax Act (Canada) with respect to payment
out of a capital dividend account;
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4.19.7 save and except for a lease of premises with ▇▇▇▇▇▇▇ ▇▇▇▇▇ for
an amount of $1,200 per month, the Corporation has not
acquired or had the use of any property from a person with
whom it was not dealing at arm's length;
4.19.8 save and except as set forth on Schedule 4.19.8 in respect of
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the period subsequent to August 31, 1995 only, the Corporation
has not disposed of anything to a person with whom it was not
dealing at arm's length for proceeds less than the fair market
value thereof;
4.19.9 the Corporation has not discontinued carrying on any business
in respect of which any non-capital losses were incurred;
4.19.10 the Corporation has made all elections required to be made
under the Income Tax Act (Canada) in connection with any
distributions and all such elections were true and correct and
in prescribed form and were made within the prescribed time
periods;
4.19.11 since its date of incorporation, the Corporation has been a
"Canadian-controlled private corporation" within the meaning
of the Income Tax Act (Canada);
4.19.12 save and except as set forth on Schedule 4.19.12 in respect of
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the period subsequent to August 31, 1995 only, the Corporation
is not, nor has previously been at any time, associated with
any other Canadian-controlled private corporation (within the
meaning of the Income Tax Act (Canada), and the Corporation
has not filed with the Minister of National Revenue any
agreement or form under Section 125(3) of the Income Tax Act
(Canada) and the Corporation is not carrying on and has never
carried on business as a member of any partnership;
4.19.13 neither the Corporation nor its directors, officers or
employees are aware of any contingent Tax liabilities or any
grounds which would prompt a re-assessment, including
aggressive treatment of income and expenses in filing earlier
Tax returns;
4.19.14 control of the Corporation has not been acquired by a person
or persons since its date of incorporation (for purposes of
this section, ("control" is to be given the meaning found in
Sections 186, 251 and 256 of the Income Tax Act (Canada));
4.19.15 there are no amounts outstanding and unpaid for which the
Corporation has previously claimed a deduction under the
Income Tax Act (Canada);
4.19.16 there are no circumstances existing which could result in the
application to the Corporation of either Section 78 or Section
80 of the Income Tax Act (Canada);
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4.19.17 the Corporation has not claimed and will not claim any reserve
under any one or more of subparagraph 40(1)(a)(iii) or
subparagraphs 20(1)(m) or 20(1)(n) of the Income Tax Act
(Canada) if any such amount could be included in the
Corporation's income for a period ending after Closing;
4.19.18 the financial statements and schedules attached to the
corporate income tax returns as filed by the Corporation for
each of its taxation years reflect and disclose all
transactions to which the Corporation was or is a party as
required by the Income Tax Act (Canada) and the regulations
made thereunder or other applicable revenue laws and all of
the transactions to which the Corporation was or is a party
are reflected or disclosed in these financial statements and
schedules and these statements and schedules have been duly
and accurately completed as required by these acts and
regulations;
4.19.19 subject to section 4.18.3, the Corporation is not and will not
become liable for any invalid, late or excess designations
under the Share Purchase Tax Credit Provisions or the
Scientific Research and Experimental Development Tax Credit
Provisions of the Income Tax Act (Canada) or for unpaid taxes
under Part VII or Part VIII of the Income Tax Act (Canada);
4.19.20 the Corporation has no net capital losses as of the date of
the most recent of the Financial Statements and no
transactions since that date will result in any net capital
loss;
4.19.21 the Corporation is a registrant for the purposes of the Goods
and Services Tax provided for under the Excise Tax Act and its
registration number is 100397694 RT;
4.19.22 the Corporation is a registrant for the purposes of the goods
and services tax provided for under the Quebec Sales Tax Act
and its registration number is 1001346900 TQ 0001;
4.19.23 the Corporation has paid all Taxes, if any, imposed by the
Quebec Sales Tax Act and the Retail Sales Tax Act (Ontario)
and the applicable legislation of each other province of
Canada on the acquisition of its tangible personal property
and none of its tangible personal property or moveable
property has been transferred in a transaction contemplated
under the provisions of Section 20.7 of the Quebec Sales Tax
Act and any regulations made thereunder or Section 18 of
Regulation 904 to the Retail Sales Tax Act (Ontario), or any
predecessor thereof or the analogous provisions of the sales
tax legislation of any other province;
4.19.24 the Corporation has not made or been a party to any election
under Sections 156(1), 227(1) or 273(1) of the Excise Tax Act
of Canada or under the equivalent provisions of the Quebec
Sales Tax Act;
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4.19.25 the "Accounts Receivable - Trade" shown on the Financial
Statements are net of an allowance for doubtful accounts which
is the aggregate of amounts individually calculated and
recorded as reserves on particular accounts receivable;
4.19.26 the preceding representations and warranties in this Section
4.19 which refer to the Income Tax Act (Canada) are true and
correct with respect to the same or equivalent provisions, if
any, of the Quebec Taxation Act or any other provincial
taxation legislation;
4.20 Insurance. All policies of fire, liability or other forms of insurance
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held by the Corporation are valid, outstanding and in full force and
effect, as to which premiums have been paid currently, and are in such
amounts and provide insurance against such losses and risks as are
adequate and consistent with the requirements of its business as
currently conducted and are sufficient for compliance with all
requirements of law and all agreements to which the Corporation is a
party and will not in any way be affected by or terminated or lapsed by
reason of the consummation of the transactions contemplated by this
Agreement. The Corporation is not in default under any provision of any
such policy of insurance and has not received notice of cancellation or
non-renewal of any such insurance and no misstatement or
misrepresentation has been made by the Corporation in any application
for any policy of insurance. There is no claim by the Corporation
pending under any of such policies as to which coverage has been
questioned, denied or disputed by the underwriters or carriers of such
policies. The Corporation has not received any notice from or on behalf
of any insurance carrier issuing such policies that insurance rates
will hereafter be substantially increased, that there will hereafter be
a cancellation, a change in the type of coverage provided, or an
increase in a deductible (or an increase in premiums in order to
maintain an existing deductible) or non-renewal of existing policies,
or that alteration of any equipment or any improvements to real estate
occupied by or leased to or by the Corporation, the purchase of any
additional equipment, or the modification of any of the methods of
doing business of the Corporation, will be required or suggested. The
Corporation has no knowledge of any state of facts, or of the
occurrence of any event, which the Corporation knows or has reason to
believe might reasonably (i) form the basis for any claim against the
Corporation not fully covered by insurance or for any liability on
account of any express or implied warranty or tortious omission or
commission, or (ii) result in a material increase in insurance premiums
of the Corporation. The Corporation has not been refused any insurance
with respect to its assets or operations, nor has its coverage been
limited by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last five
(5) years.
4.21 Contracts. Schedule 4.21 annexed hereto is a true and complete list and
--------- -------------
description as at the date hereof of all written or oral contracts,
agreements, arrangements or commitments to which the Corporation is a
party or by which it or its assets are bound (collectively the
"Contracts") and a list of those customers with which the Corporation
has entered into manufacturing agreements, provided that Schedule 4.21
-------------
does not describe (but all of which are included within the term
"Contracts") (i) Contracts which are otherwise disclosed on other
Schedules
-13-
to this Agreement or which have a value of less than Fifty Thousand
Dollars ($50,000), (ii) Contracts which are terminable without penalty
on notice from the Corporation of thirty (30) days or less, or (iii)
Contracts for the supply of materials used in the manufacture of the
Company's products having a term which is less than six (6) months, or
(iv) customer Contracts or purchase orders which, in each case, have
been entered into in the ordinary course of business, and have a term
of less than six (6) months; except as set forth on Schedule 4.21, the
-------------
Corporation and each of the other parties thereto has performed all
obligations to be performed under all Contracts, and neither the
Corporation nor, to the knowledge of the Corporation, any other party
thereto is in default under any provision of such Contracts (except for
any defaults which would not have an adverse effect on the Corporation
or its operations), and no event has occurred which constitutes, or
which with the passage of time or the giving of notice or both will
constitute, a default under any provision thereof; except as set forth
in Schedule 4.21, no consent of any party to any Contract is required
-------------
for the consummation of the transactions contemplated by this
Agreement, nor will the consummation of the transactions contemplated
by this Agreement violate any Contract or constitute a default under,
or occasion or result in the acceleration of any term of payment or in
any change in any rate of interest payable pursuant to any such
Contract or result in or give rise to a right to amend or modify the
terms thereof. The copies of each of the Contracts delivered by the
Corporation to Balance Bar represent the full and complete text thereof
and have not been amended or modified, nor have any provisions thereof
or rights of any party thereto been waived.
4.22 Employment Matters. The Corporation does not have any employment,
------------------
consulting or severance contract, arrangement or understanding (either
written or oral) with any executive of the Corporation except such
contracts as are listed on Schedule 4.22. The Corporation has made all
-------------
deductions required by law to be made for wages and salaries, which
deductions are consistent with past practices and in accordance with
generally accepted accounting principles and has either remitted same
to the respective legally constituted authorities entitled to receive
payment of same or has provided for same in its accounts. Hours worked
by, and payments made to, employees of the Corporation have not been in
violation of any applicable laws, rules or regulations dealing with
such matters and all severance payments due to any employee have been
paid or accrued as a liability on the books of the Corporation. The
salaries and bonuses of all officers and employees of the Corporation
are paid by the Corporation.
4.23 Benefit Plans. Except as disclosed on Schedule 4.23 annexed hereto, the
------------- -------------
Corporation does not have in effect and has not announced or publicly
proposed to have in effect any bonus, deferred compensation, pension,
profit sharing, retirement, severance, stock option, group insurance,
death benefit, welfare or other employee benefit plan, arrangement or
policy whether formal or informal, for the benefit of any of its
employees or former employees (each a "Benefit Plan"). Schedule 4.23
-------------
contains an accurate and complete description of, and sets forth the
annual amount payable pursuant to, each of the Benefit Plans therein
described and the Financial Statements reflect in the aggregate an
accrual of all amounts accrued but unpaid under all such Benefit Plans
as of the dates thereof. The Corporation does not have any commitment,
whether formal
-14-
or informal, and whether legally binding or not, to create any
additional such Benefit Plan. Each of such Benefit Plans disclosed on
Schedule 4.23 is in effect and the Corporation is in compliance with
-------------
all laws, rules and regulations applicable thereto. All Benefit Plans
disclosed on Schedule 4.23 have been duly registered where required by,
-------------
and are in good standing under, all applicable legislation and the
Corporation has fulfilled its funding obligations under all such plans
and no past service funding liabilities exist thereunder. With respect
to each current Benefit Plan or plan under which benefits may be due
to, or liabilities may exist in respect of, current or former
employees, the Corporation has delivered to Balance Bar accurate and
complete copies of (i) all currently applicable plan texts and
agreements; (ii) all summary plan descriptions and material employee
communications; (iii) the most recent annual report; (iv) the most
recent annual and periodic accounting of plan assets; (v) the most
recent actuarial valuation. Each Benefit Plan has been administered
materially in accordance with its terms. All material reports, returns
and similar documents with respect to the Benefit Plans required to be
filed with any Governmental Entity or distributed to any Benefit Plan
participant had been duly and timely filed or distributed. There are no
pending investigations by any Governmental Entity, termination
proceedings or other claims (except claims for benefits payable in the
normal operation of the Benefit Plans), suits or proceedings against or
involving any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan that could give rise to any liability.
4.24 Unions and Labour Practices. Except as set forth on Schedule 4.24, no
--------------------------- -------------
trade union, counsel of trade unions, employee bargaining agency or
affiliated bargaining agent:
4.24.1 holds bargaining rights with respect to any of the
Corporation's employees by way of certification, interim
certification, voluntary recognition, designation or successor
rights;
4.24.2 has applied to be certified as the bargaining agent of any of
the Corporation's employees; or
4.24.3 has applied to have the Corporation declared a related employer
pursuant to the provisions of applicable law.
There is no unfair labour practice charge or complaint with respect to
employees of the Corporation pending before any agency or board, there
is no labour strike, picketing, slow down or work stoppage or lock out
actually pending or threatened against or affecting the Corporation or
any of its operations, and the Corporation has not experienced any
strike, slowdown or work stoppage, lock out or other collective labour
action by or with respect to its employees, there are no charges with
respect to or relating to the Corporation before any commission, agency
or body responsible for the prevention of unlawful employment
practices, the Corporation has no notice from any federal, provincial,
local or other agency responsible for the enforcement of labour or
employment laws of an intention to conduct an investigation of the
Corporation or any of its business or employment practices and no such
investigation is in progress, and the Corporation is in compliance with
all applicable laws relating to employment and employment
-15-
practices, wages, hours and terms and conditions of employment with
respect to employees, including part-time employees (if any).
4.25 Employee Indebtedness. Except as disclosed in the Financial Statements
---------------------
no director, former director, officer, former officer, shareholder or
employee of the Corporation or any person not dealing at arm's length
within the meaning of the Income Tax Act (Canada) with any such person
is indebted to the Corporation;
4.26 Intellectual Property. Schedule 4.26 annexed hereto is a complete and
--------------------- -------------
accurate list of all registered trade marks, trade names, patents,
copyrights, service marks, applications therefor and other industrial
and intellectual property (collectively "Intellectual Property") owned
by the Corporation or necessary to the conduct of the business of the
Corporation as presently conducted and which schedule sets forth, where
appropriate, an identification of each such item of Intellectual
Property, the date of any registration thereof or application therefor
and the serial or registration number thereof; the Corporation has the
right to use all such Intellectual Property and the consummation of the
transactions contemplated herein will not adversely affect the right of
the Corporation to use such Intellectual Property; the Corporation is
the registered and beneficial owner of all such Intellectual Property
with good and marketable title, subject to the security interests set
forth in Schedule 4.26 and, except as set forth on Schedule 4.26,
------------- -------------
subject to no pending challenge, revocation, expiry or termination; the
Corporation is not required to pay royalties, fees or other
consideration to any other person with respect to the use of such
Intellectual Property or in connection with the conduct of its business
or otherwise and the operation of the business of the Corporation does
not violate, breach or infringe any patents, copyrights, trade names,
trade marks or licenses held by others in Canada or the United States
of America and the Corporation has no knowledge of any alleged breach
or violation thereof. All of the Intellectual Property listed on
Schedule 4.26 as registered or filed has been duly registered or filed
-------------
in the appropriate governmental office or with the appropriate
governmental entity, to the extent that any such registration is
required by law and the Corporation has paid all fees due prior to the
Closing Date that are necessary to obtain or maintain in force any of
the Intellectual Property. No event has occurred during the
registration or filing of, or during any other proceeding relating to,
the Intellectual Property that would make invalid or unenforceable, or
negate the right to issuance or use of, any of the Intellectual
Property. Except as set forth on Schedule 4.26, there are no
-------------
infringements or threats of infringements by the Corporation or any
asserted or unasserted claims of third parties against the Corporation
of infringements or misappropriation of any of the Intellectual
Property nor are there any asserted claims by the Corporation
contesting or challenging the right, title or interest of any other
person in any of the Intellectual Property. There are no outstanding
threatened or actual claims asserted against the Corporation alleging
the infringement or misappropriation by the Corporation of any
intellectual property. The use of the Intellectual Property by the
Corporation has not infringed upon the rights of any other party and
the Corporation has not received any notice of the revocation,
withdrawal, expiration, abandonment or breach of any right to use the
Intellectual Property.
-16-
4.27 Guarantees. Save and except as disclosed on Schedule 4.27, the
---------- -------------
Corporation does not have any outstanding contracts or commitments
guaranteeing the payment of or the performance of the obligations of
others, and the Corporation has not entered into any deficiency
agreements, or issued any comfort letters, or otherwise granted any
financial assistance to any person, firm, corporation or other entity.
4.28 Non-Arm's Length Relationship. None of the Corporation nor any party
-----------------------------
with whom the Corporation does not act at arm's length (as such term is
defined in the Income Tax Act (Canada)) owns any property or assets,
tangible or intangible, which are used by the Corporation in connection
with the conduct of its business except pursuant to arrangements which
form part of the Contracts.
4.29 Governmental Filings. The execution, delivery and performance of this
--------------------
Agreement by the Corporation and the consummation of the transactions
contemplated herein does not require any authorizations, consents or
approvals of, or filings, registrations, qualifications or recordings
with, any governmental, regulatory or other authority.
4.30 Accounts and Records. The Corporation has maintained and shall continue
--------------------
to maintain books of account and financial records which are true and
complete in all material respects, fairly reflecting all matters
required by generally accepted accounting principles to be entered into
books of account and such books of account and financial records have
been maintained and shall continue to be maintained in accordance with
generally accepted accounting principles consistently applied.
4.31 Conflicts and Interests in Competitors. No officer, director, employee
-----------------------
or shareholder of the Corporation, nor any member of the family of any
of them or any corporation, partnership or trust in which any of them,
or in which any member of the family of any of them, has a substantial
interest, directly or indirectly, or of which any of them or any member
of his family is an officer, director, partner or trustee, is now, nor
has been during the last thirty-six (36) months, directly or indirectly
(i) a party to any contract, agreement or other arrangement with the
Corporation providing for employment, the supply of services, products,
merchandise or supplies, the rental of immoveable or moveable property,
or otherwise requiring payments from or to the Corporation, or (ii) the
holder of any interest, direct or indirect, in, or is a director,
officer or employee of, or consultant to, or in any way controls or
directs the management of, any entity which is a competitor, potential
competitor, supplier or customer of the Corporation or the business of
which is in any way related to the business of the Corporation, or
(iii) the holder of any interest, direct or indirect, in any assets of
the Corporation or any assets which are used by the Corporation in or
in connection with the business conducted by the Corporation, the whole
except as disclosed on Schedule 4.31 annexed hereto.
-------------
4.32 Transactions with Directors, Officers, Shareholders and Affiliates.
------------------------------------------------------------------
Except as disclosed in Schedule 4.32, there have been no transactions,
-------------
agreements or arrangements relating to or affecting the Corporation or
its business involving (i) any affiliate of the Corporation, (ii) any
director, officer, shareholder of the
-17-
Corporation, or of any affiliate of the Corporation, or (iii) any
member of the immediate family of any individual described in clause
(ii) above.
4.33 Accounts Receivable. All the accounts receivable as shown on the books
-------------------
of the Corporation on the date hereof are actual and bona fide
receivables resulting from the ordinary and usual conduct of the
business of the Corporation, and the reserve for bad debts established
in the most recent of the Financial Statements has been established in
accordance with generally accepted accounting principles and the past
experience of the Corporation.
4.34 Inventories. The value of inventories as reflected in the Financial
-----------
Statements has been determined at the lower of cost (as determined on a
first in, first out basis) or net realizable value and on a basis
consistent with prior years.
4.35 Moveable Property. The machinery and equipment, rolling stock and other
-----------------
tangible moveable property owned or used by the Corporation are in
reasonably good operating condition, ordinary wear and tear excepted,
subject to normal repairs in the ordinary course of business, and are
suitable for the uses made thereof by the Corporation in the conduct of
its business.
4.36 Plants and Structures. The plants and structures owned, occupied or
---------------------
used by the Corporation in its business are in satisfactory operating
condition and repair for the businesses now being conducted therein and
conform with all applicable ordinances, regulations and laws relating
to their ownership, occupation and use. In December of 1998, the
Corporation purchased the land described in Schedule 4.36 in order to
-------------
expand operations and is in the process of completing negotiations with
a general contractor for the erection of a building thereon for a cost
currently estimated at approximately $9,500,000.
4.37 Warranties and Product Liability. The Corporation does not provide
--------------------------------
written warranties with respect to its products, and represents only
that its products are prepared in accordance with good manufacturing
practice for products suitable for human consumption and that same
comply with (U.S.) FDA requirements or (Canadian) HPB requirements, as
the case may be . During the past five (5) year period, there has been
no change in the policies of the Corporation relative to warranties or
returns. There is no action, suit, inquiry, proceeding or investigation
by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the best knowledge
of the Corporation, threatened against or involving the Corporation
relating to any product alleged to have been manufactured or sold by
the Corporation and alleged to have been defective, or improperly
designed or manufactured, and the Corporation does not know or has any
reason to know of any basis for any such action, proceeding or
investigation.
4.38 No Power of Attorney. The Corporation has not given to any person,
--------------------
firm, corporation or other entity any power of attorney, whether
limited or general, which is now or will be in effect, except powers of
attorney (in customary form) given to customs brokers.
-18-
4.39 Suppliers and Customers. To the knowledge of the Corporation, the
-----------------------
relationships of the Corporation with each of the suppliers and
customers of the Corporation are good commercial working relationships
and no supplier or customer of the Corporation has cancelled or
otherwise terminated, or threatened in writing to cancel or otherwise
terminate, its relationship with the Corporation, or has during the
last twelve (12) months decreased materially, or threatened to decrease
or limit materially, its services, supplies or materials to the
Corporation. The Corporation has no reason to believe that the
consummation of the transactions contemplated hereunder by Balance Bar
will adversely affect the relationship of the Corporation with any such
supplier or customer, save and except for the fact that many of the
customers of the Corporation are competitors of Balance Bar.
4.40 Y2K. Schedule 4.40 summarizes the program of testing and evaluation
--- -------------
which has been undertaken by the Corporation of the information systems
hardware and the information systems software used by Corporation in
order to determine the extent to which the information systems hardware
and the information systems software is Millennium Compliant (as
hereinafter defined) and includes a summary of all information systems
hardware and information systems software in respect of which a
decision has been made to upgrade or replace further to the results of
such program of testing and evaluation and actions taken or to be taken
or implemented and the disclosure provided by certain of the
Corporation's suppliers in order to cause the information systems
hardware and the information systems software to be Millennium
Complaint. For purposes hereof the term "Millennium Compliant" means
the ability of a system to provide all of the following functions:
4.40.1 to date information before, during and after January 1, 2000,
including but not limited to accepting date input, providing
date output and calculating and storing information involving
dates or portions of dates in a way that resolves the ambiguity
as to century; and
4.40.2 to function accurately and without interruption, before, during
and after January 1, 2000, without any change in operations or
change in input or output procedures associated with the advent
of the new century or with leap years.
The Corporation has not experienced and has no reason to believe that
it will experience material revenue losses as a result of its own
information systems hardware or information systems software not being
Millennium Compliant.
4.41 Environmental Matters. Except as may be indicated by the Phase I
---------------------
environmental reports annexed hereto as Schedule 4.42, the Corporation
-------------
is in compliance with, and has not violated, all Environmental Laws,
the non-compliance with which would have an adverse effect on the
Corporation or its operations, and all judgments, injunctions, notices
or demand letters issued pursuant thereto.
Without restriction as to the generality of the foregoing, each of the
Corporation and any person or entity whose liability for Environmental
Liabilities the Corporation has or may have retained or assumed either
contractually or by
-19-
operation of law, including, without limitation, employees and
consultants of the Corporation:
4.41.1 Has not caused or allowed the generation, use, treatment,
storage, or disposal of any Hazardous Substance at, or
transportation from, any site or facility owned, leased or
operated by the Corporation except in accordance with all
applicable Environmental Laws;
4.41.2 Has not caused or allowed the release of any Hazardous
Substance onto, at, near or from any site or facility owned,
leased or operated by the Corporation;
4.41.3 Is not required to secure any Environmental Permits in order to
conduct its business and operations;
4.41.4 Has not received any notice requiring it to obtain any
Environmental Permit;
4.41.5 Has not received, nor has there been issued to or against the
Corporation, any claim, notice, citation, summons or order, and
no investigation or review is pending or, to the Corporation's
actual knowledge, threatened by any authority with respect to:
4.41.5.1 any alleged violation by the Corporation of any
Environmental Law;
4.41.5.2 any alleged failure by the Corporation to hold any
Environmental Permit; or
4.41.5.3 any alleged violation by the Corporation to comply
with any such Environmental Permit.
4.41.6 Has not received any request for information, notice of claim,
demand or other notification that it is or may be potentially
responsible with respect to any investigation or clean-up of
any threatened or actual release of any Hazardous Substance and
has not received inquiry or notice nor does it have any reason
to suspect or believe it will receive inquiry or notice of any
actual or potential proceedings, claims, lawsuits or losses
related to or arising under any Environmental Laws;
4.41.7 Does not own, operate or lease and did not at any previous time
own, operate or lease any real property, improvements or
related assets which have been subject to the lease of any
Hazardous Substance;
4.41.8 Does not own, operate or lease and did not at any previous time
own, operate or lease any real or immoveable property,
improvements or related assets wherein PCB's, asbestos or urea
formaldehyde insulation is or has been present whether above
ground, underground or within any structure thereon or
contained in any equipment owned,
-20-
operated or leased by the Corporation; nor are there any
underground storage tanks, active or abandoned, at any property
now or previously owned, operated or leased by the Corporation;
4.41.9 Is not currently operating or required to be operating under
any compliance order, schedule, decree or agreement, any
consent decree, order or agreement and/or corrective action
decree, order or agreement issued or entered into under any
federal, provincial, state or municipal statute, regulation or
ordinance regarding the environment and/or health or safety in
the work place;
4.41.10 Has not transported any Hazardous Substance or arranged for the
transportation of any such substance to any location which is
not listed and duly authorized pursuant to the Environmental
Laws or which is the subject of federal, provincial, state or
municipal enforcement actions or other investigations which may
lead to claims against the Corporation for clean-up cost,
remedial work, damages to natural resources or for personal
injury claims under any applicable Environmental Law and all
Hazardous Substances transported by or on behalf of the
Corporation have been transported in compliance with all
applicable laws, and no Hazardous Substance has been released,
spilled, leaked, discharged, disposed of, pumped, poured,
ignited, emptied, injected, leached, dumped or allowed to
escape at, under or from any property now or formerly owned,
operated or leased by the Corporation;
4.41.11 Is in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and
obligations established under Environmental Laws, the non-
compliance with which would have an adverse effect on the
Corporation or its operations, and is not subject to any
Environmental Liabilities;
4.41.12 Except as set forth in Schedule 4.41, has not conducted or
-------------
caused to be conducted any environmental audit of any property
operated, leased or owned by it, nor is it aware of any such
environmental audit conducted by any third party (including,
without restriction, any lender or potential purchaser) unless
in each such case a copy of every report, memorandum or summary
prepared with respect to such environmental audit has been
delivered to Balance Bar;
4.41.13 Has not failed to report to the proper authorities the
occurrence of each event which is required to be so reported by
the Environmental Laws, and has provided Balance Bar with true
and complete copies of all such reports and all correspondence
relating thereto.
For the purposes hereof:
The expression "Environmental Laws" includes any federal, provincial,
state or municipal law, by-law, rule, regulation, decree, code,
guideline, standard, order or ordinance of the United States or Canada
relating to the environment including
-21-
those relating to (i) the control of any potential pollutant or the
protection of the air, water or land, (ii) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or
transportation, and (iii) exposure to hazardous, toxic or other
substances considered to be harmful, or (iv) the release of any
Hazardous Substance (as defined below) into the environment;
The expression "Environmental Conditions" includes any pollution,
contamination, degradation, damage or injury caused by, related to, or
arising from or in connection with the generation, use, ownership,
possession, handling, treatment, storage, transportation, disposal,
discharge, release or emission of any pollutant, contaminant, or toxic
or hazardous substance, material, or waste, including mixtures thereof
with other materials, and any toxic, flammable, or hazardous building
materials, including, but not limited to, asbestos and urea
formaldehyde foam insulation;
The expression "Environmental Permit" includes any permit, license,
approval or other authorization with respect to the Corporation or its
operations or businesses under any applicable law, regulation or other
requirement of Canada or the United States or of any province, state,
municipality or other subdivision thereof relating to the control of
any pollutant or protection of health or the environment, including
laws, regulations or other requirements relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient
air, surface water, groundwater or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of chemical substances, pollutants,
contaminants or hazardous or toxic materials or wastes;
The expression "Environmental Liabilities" includes any and all
liabilities, responsibilities, claims, suits, losses, costs (including
remedial, removal, response, abatement, clean-up, investigative and/or
monitoring costs and any other related costs and expenses), other
causes of action now recognized, damages, settlements, expenses,
charges, assessments, liens, penalties, fines, pre-judgment and post-
judgment interest, legal fees and costs of court which are incurred
by, asserted against, or imposed upon the Corporation or Balance Bar
arising out of or in connection with the Corporation or its business
operations pursuant to any agreement, order, notice of responsibility,
directive (including directives and requirements embodied in
Environmental Laws), injunction, judgment or similar document
(including settlements) issued by a court of competent jurisdiction or
any federal, state, or local governmental entity or agency, or
pursuant to any claim by a governmental agency or any person for
personal injury, property damage, damage to natural resources,
remediation, or payment or reimbursement of response costs incurred or
expended by said governmental agency or person pursuant to common law
or statute, arising out of or in connection with: (i) any violation of
or non-compliance with Environmental Laws (including but not limited
to failure to procure or violation of Environmental Permits), and (ii)
any actual or alleged Environmental Condition (regardless of when
discovered) existing on the Closing Date or exposure thereto.
The expression "Hazardous Substance" includes any substance, waste,
solid, liquid or gaseous matter, petroleum or petroleum derived
substance,
-22-
micro-organism, sound, vibration, ray, heat, odour, radiation, energy
vector, plasma, organic or inorganic matter, whether animate or
inanimate, transient reaction intermediate or any combination of the
above deemed hazardous, hazardous waste, solid waste, toxic or
pollutant, a deleterious substance, a contaminant or source of
pollution or contamination under any Environmental Law, or by any
federal, provincial, state or municipal government, governmental
agency, minister, deputy-minister, governor-in-council, lieutenant
governor-in-council, or any tribunal or board.
4.42 No Violation. The Corporation has no legal obligation (absolute or
------------
contingent) to, is not a party to and is not affected by any
arrangement with, any other person or entity to sell the Shares or any
other shares in the capital of the Corporation or securities issued by
it or to sell any of the properties or assets, immoveable, moveable or
mixed, or any interest therein, of the Corporation (other than sales
in the ordinary course of business) or to enter into any agreement
with respect to the foregoing. The execution, delivery and performance
of this Agreement by the Corporation and the consummation of the
transactions contemplated hereby will not violate or result in a
breach of any agreement in principle, letter of intent or other
agreement entered into by the Corporation in connection with any
proposed acquisition of the Shares or any other shares in the capital
of the Corporation or securities issued by it or the assets of the
Corporation or violate any other rights of any third party with
respect to any proposed acquisition of the Shares or the assets of the
Corporation.
4.43 Absence of Certain Changes or Events. From August 31, 1998 until the
------------------------------------
date hereof, the Corporation has:
4.43.1 (a) conducted its business in the manner in which such
business has heretofore been conducted; (b) except as
otherwise disclosed herein, not incurred any liability or
obligation whatsoever, secured or unsecured, direct or
indirect, other than current liabilities for accounts payable
in the ordinary and usual course of its business, none of
which is material, or as otherwise disclosed in this
Agreement; (c) except as otherwise disclosed herein, not
entered into any contracts or agreements whatsoever, other
than in the ordinary and usual conduct and course of its
business; and (d) not amended nor terminated nor suffered the
amendment nor termination of, nor given nor received any
notice of any proposed amendment or termination of, any
Contract;
4.43.2 without limiting the generality of Section 4.43.1, and except
as otherwise disclosed herein, not sold, leased, mortgaged or
otherwise encumbered or disposed of any of its assets, except
in the ordinary and usual conduct and course of its business;
4.43.3 without limiting the generality of Section 4.43.1, not
amalgamated, merged or consolidated, nor entered into any
agreement to amalgamate, merge or consolidate, with any
person, nor purchased or agreed to purchase all or
substantially all of the assets of any person, nor purchased
or agreed to purchase, nor leased or agreed to lease, nor
acquired or agreed to acquire, any additional assets except as
-23-
mentioned in section 4.36 and Schedule 4.36, except leases of
-------------
equipment and purchases of materials and supplies for use in
the ordinary and usual conduct and course of its business;
4.43.4 save and except for the articles of amendment annexed hereto
as Schedule 4.43.4 adopted in order to effect a 90:1 stock
---------------
split and create Class "H" shares and convert the Class "E"
shares into Class "H" shares, made no changes in its charter,
by-laws, other than with respect to the Corporation's
registered office and number of directors and the repeal of a
by-law respecting special majority, or capital structure, nor
issued or sold and not agreed to issue or sell any of its
capital stock or other corporate securities;
4.43.5 except for the payment of dividends of $42,145 on the Class
"D" shares and the redemption of 100,000 Class "D" shares of
the Corporation, not declared, authorized, paid or made any
dividend or other distribution to any shareholder; nor paid or
agreed to pay any salaries, management fees, royalties,
bonuses or any other payments to any shareholders or any
persons not acting at arm's length with the Corporation other
than in the ordinary course of business; nor purchased or
otherwise acquired any of its shares or agreed to take any
such action;
4.43.6 without limiting the generality of Section 4.43.1, not
cancelled or released any debts or claims except, in each
case, in the ordinary and usual conduct and course of
business;
4.43.7 not suffered any extraordinary loss or knowingly waived any
right of substantial value;
4.43.8 not suffered any damage, destruction or loss, whether or not
covered by insurance, which may materially and adversely
affect its property or business;
4.43.9 not suffered any material adverse changes, financial or
otherwise, in its business, financial condition or Properties
or any occurrences or circumstances which might reasonably be
expected to result in a material adverse change thereto;
4.43.10 not incurred any obligations or expenses out of the ordinary
course of business or effected any material changes in the
management or operation of its business;
4.43.11 not increased the wages, salary or basis of remuneration of
any employee of the Corporation, nor paid any bonus or similar
payment, other than in the ordinary course of business and,
with respect to the executives of the Corporation, other than
as set forth on Schedule 4.22 annexed hereto;
-------------
-24-
4.43.12 not changed any of its accounting methods, principles,
practices or policies;
4.43.13 without limiting the generality of Section 4.43.1, not
materially changed any of its business policies, including,
without limitation, advertising, marketing, pricing,
purchasing, personnel, sales, returns, budget or product
acquisition policies.
4.44 No Material Adverse Change. Since August 31, 1998, there has been no
--------------------------
material adverse change in the assets, Properties, business,
prospects, operations or condition (financial or otherwise) of the
Corporation, and the Corporation does not know of any such change
which is threatened, nor has there been any damage, destruction or
loss materially adversely affecting any of the assets, Properties,
business, prospects, operations or condition (financial or otherwise)
of the Corporation, whether or not covered by insurance.
4.45 No Materially Adverse Undisclosed Facts. There is no fact known to the
---------------------------------------
Corporation which has not previously been disclosed in writing to
Balance Bar which materially adversely affects the Corporation or its
assets, Properties, business, prospects, operation or condition
(financial or otherwise), or which should be disclosed to Balance Bar
in order to make any of the warranties and representations herein not
misleading and no state of facts is known to the Corporation, which
materially adversely affects the Corporation or would operate to
prevent the Corporation from continuing to carry on its business in
the manner in which carried on at the date hereof. All documents and
other papers delivered by or on behalf of the Corporation to Balance
Bar in connection with this Agreement and the transactions
contemplated hereby are true, complete and authentic. No
representation or warranty of the Corporation contained in this
Agreement, and no statement of information contained in any schedule
annexed hereto or in any certificate or other document required to be
furnished to Balance Bar pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the
statements herein not false or misleading.
4.46 All Representations and Warranties applicable to Subsidiaries. All
-------------------------------------------------------------
representations and warranties made in this Article 4 apply to each of
the Subsidiaries or shall apply to each of the Subsidiaries and
whenever and wherever the word Corporation is used in this Article 4,
it shall include the word Subsidiaries except where the context
otherwise clearly requires.
5. REPRESENTATIONS AND WARRANTIES OF BALANCE BAR
---------------------------------------------
Balance Bar hereby represents and warrants to and in favour of the
Corporation as follows:
5.1 Incorporation and Capacity. Balance Bar is a corporation duly
--------------------------
incorporated under the laws of Delaware and is a valid and subsisting
corporation in good standing under such laws and under the laws of
each jurisdiction in which it carries on
-25-
business and Balance Bar has the corporate power and authority to
consummate the transactions contemplated hereby.
5.2 Authorization. Balance Bar has all requisite power and authority to
-------------
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All acts and other proceedings required to be
taken by Balance Bar to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken. This Agreement
and all other agreements contemplated hereby that have been executed by
Balance Bar have been duly executed and delivered by Balance Bar and
constitute the valid and binding obligation of Balance Bar enforceable
against Balance Bar in accordance with its terms. All other agreements
and instruments contemplated by this Agreement to be delivered or
executed by Balance Bar at Closing shall at Closing constitute the
valid and binding obligation of Balance Bar enforceable against Balance
Bar in accordance with its terms.
5.3 Effect of Agreement. The execution, delivery and performance of this
-------------------
Agreement and the consummation of the transactions contemplated by this
Agreement will not (a) violate or result in a breach of or default (or
event which, upon notice or lapse of time, would constitute a default)
or acceleration under the articles or by-laws of Balance Bar or any
instrument or agreement to which Balance Bar is a party or is bound, or
(b) violate any judgment, order, injunction, decree or award against,
or binding upon Balance Bar or upon the property or business of Balance
Bar.
5.4 Consents. No consent, license, approval, order or authorization of or
--------
registration, filing or declaration with, any Governmental Entity is
required to be obtained or made with respect to Balance Bar in
connection with the execution and delivery of this Agreement or the
consummation of the transaction contemplated hereby, and no consent of
any other third party is required to be obtained with respect to
Balance Bar in connection with the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated
hereby.
5.5 Compliance with law. Balance Bar is, and all aspects of its business
-------------------
are, conducted in compliance with all applicable laws, ordinances and
regulations, inclusive of those of any administrative boards or
agencies or other public authorities having jurisdiction, the non-
compliance with which would have a material adverse affect on Balance
Bar or its operations.
5.6 Legal proceedings. There are no suits, claims, actions (arbitration or
-----------------
legal) or administrative or other proceedings or governmental
investigations pending or, to the knowledge of Balance Bar, threatened
against Balance Bar or any of its officers, directors, employees,
agents or Affiliates in connection with the activities of Balance Bar
or Affiliates or as to which Balance Bar or any of its officers,
directors, employees, agents or Affiliates may become a party or be
affected thereby before any court or administrative agency or officer,
and Balance Bar is not aware of any facts or circumstances which
should, or could, reasonably form the basis for any such suits, claims,
actions, proceedings and Balance Bar is not the subject of any
investigation or proceedings by any governmental authority,
-26-
and none of the assets of Balance Bar nor any of its business practices
is in any manner, directly or indirectly, affected by any judgement,
order, writ or injunction of any court or governmental or
administrative agency or officer.
5.7 Governmental filings. The execution, delivery and performance of this
--------------------
Agreement by Balance Bar and the consummation of the transactions
contemplated herein does not require any authorizations, consents or
approvals of, or filings, registrations, qualifications or recordings
with, any governmental, regulatory or other authority except as
required by the United States Securities and Exchange Commission.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNITY
--------------------------------------------------------
6.1 All of the representations, warranties, covenants and agreements made
by the Corporation and the Guarantors in this Agreement or pursuant
hereto shall be continuing and shall survive the execution hereof and
the Closing and any investigation made at any time by or on behalf of
Balance Bar. All statements of the Corporation and the Guarantors
contained herein or in any certificate, schedule, list, exhibit,
document or other writing required to be delivered pursuant hereto or
in connection with the transactions contemplated hereby shall be deemed
representations and warranties of the Corporation and the Guarantors
made in this Agreement or pursuant hereto.
6.2 The Corporation and the Guarantors shall indemnify Balance Bar and the
officers, directors and representatives of Balance Bar and save Balance
Bar harmless from and against any and all claims, demands, losses,
liabilities, damages, causes of action, proceedings, judgments,
recoveries, deficiencies, costs and expenses (including, without
limitation, interest, penalties and reasonable attorneys' fees and
disbursements and amounts paid in settlement) (hereinafter some times
referred to collectively as "Losses") suffered or sustained by Balance
Bar or by the Corporation resulting from, arising out of or relating
to:
6.2.1 any breach or falsity of any of the representations or
warranties of the Corporation set forth herein or any failure of
the Corporation to duly perform, observe or fulfil any term,
provision, covenant or agreement contained herein or in any
agreement delivered pursuant to this Agreement to be performed
or observed by the Corporation, or from any misrepresentation in
or omission from any certificate, schedule or other document
provided to Balance Bar by the Corporation pursuant to this
Agreement;
6.2.2 any claims, demands, suits, proceedings or actions by any third
party containing allegations which, if true, would constitute a
misrepresentation, breach of warranty or failure to fulfil a
covenant or obligation on the part of the Corporation under this
Agreement;
6.2.3 any claims, demands or causes of action of any kind or nature by
any third party arising from the issuance of the Shares
contemplated hereby;
-27-
6.2.4 any claims, demands or causes of action of any kind or nature by
any third party arising from the conduct of the business of the
Corporation prior to the Closing Date which are not reflected on
the Financial Statements.
6.3 Obligations of indemnification shall be satisfied within fifteen (15)
days after written notice thereof from Balance Bar to the Corporation.
The amount of any payment to Balance Bar in respect of any Losses shall
be of sufficient amount to make Balance Bar whole, including, without
limitation or duplication, an amount sufficient to make up any
diminution in the value of the Shares held by Balance Bar resulting
from the payment by the Corporation of such indemnification payment.
Upon obtaining knowledge thereof, Balance Bar shall promptly notify the
Corporation in writing of any claim or demand which Balance Bar has
determined has given or could give rise to a right of indemnity under
this Agreement. The failure by Balance Bar to give such notice shall
not relieve the Corporation from any liability it shall otherwise have
pursuant to this Agreement except to the extent the Corporation is
actually prejudiced by such failure of notice. If such claim or demand
relates to a claim or demand asserted by a third party against Balance
Bar ("Third Party Claim"), the Corporation shall have the right to
defend the same at its own cost and expense with counsel of its own
selection, provided that: (i) Balance Bar shall at all times have the
right to fully participate in the defence at its own expense; (ii) the
Third Party Claim does not seek any injunctive or other relief other
than monetary damages against Balance Bar; (iii) the Corporation
unconditionally acknowledges in writing its obligation to indemnify and
hold Balance Bar harmless with respect to the Third Party Claim; and
(iv) counsel chosen by the Corporation is satisfactory to Balance Bar,
acting reasonably. If the Third Party Claim is asserted against the
Corporation, then the Corporation alone shall defend same.
6.4 If the Corporation is not entitled to defend a Third Party Claim
against Balance Bar, or shall, within a reasonable time after notice of
a Third Party Claim, fail to defend a Third Party Claim against Balance
Bar, Balance Bar shall have the right, but not the obligation, to
undertake the defence of and to compromise or settle the Third Party
Claim against Balance Bar at the risk and expense of the Corporation,
provided that it is determined that the Corporation was obliged to
indemnify and hold harmless Balance Bar with respect to such Third
Party Claim. In the event that the Corporation does defend a Third
Party Claim against Balance Bar, it will not be permitted to control
the settlement of the claim, unless (i) the terms of the settlement
require only the payment of money and do not require Balance Bar to
admit any wrongdoing or take or refrain from taking any action; (ii)
the full amount of the settlement is paid by the Corporation; and (iii)
Balance Bar receives, as part of the settlement, a legally binding and
enforceable unconditional satisfaction or release, which is in form and
substance reasonably satisfactory to Balance Bar, providing that the
Third Party Claim and any claimed liability of Balance Bar with respect
to the claim is being fully satisfied because of the settlement and
that Balance Bar is being released from any and all obligations or
liabilities it may have with respect to the Third Party Claim.
6.5 Balance Bar shall only be entitled to make a claim or demand under this
Section 6 if the aggregate Losses exceeds, or after giving effect to
the claim or
-28-
demand in question, would exceed $500,000, whereupon Balance Bar shall
be entitled to make a claim or demand based solely upon Losses in
excess of the amount of $500,000.
6.6 For purposes of determining the losses suffered or incurred as a result
of a breach or falsity of the representations and warranties set forth
in Section 4.18 or 4.19 hereof, if an assessment or reassessment with
respect to the fiscal years of the Corporation ending on or before the
Closing Date results in an increase in the income or taxable income for
a fiscal year of the Corporation ending on or before the Closing Date,
but results in a reduction in the income or taxable income of the
Corporation for fiscal years ending after the Closing Date, the amount
which the Corporation shall be liable to pay with respect to such
assessment or reassessment for the period ending on or before the
Closing Date shall be reduced by the amount of the reduction in taxes,
if any, resulting from such reduction in income or taxable income for
the period ending after the Closing Date. Furthermore, if the effect of
an assessment or reassessment with respect to fiscal periods of the
Corporation ending on or before the Closing Date is to entitle the
Corporation to a refund of taxes paid for another year prior to the
Closing Date then the amount which the Corporation shall be liable to
pay with respect to such assessment or reassessment shall be reduced by
the aggregate of the taxes refunded and ten percent (10%) of the net
after tax amount retained by the Corporation in respect of the interest
paid by the appropriate governmental authority with respect to such
refund. If a refund can only be obtained by filing an amended tax
return, then Balance Bar shall agree to allow the Corporation to file
such amended tax return.
6.7 The determination as to whether Balance Bar shall make any claim or
demand made under this Agreement shall be determined at the sole
discretion of Balance Bar. Any such demand or claim shall be based on
the losses actually suffered or incurred by the claiming party on a
dollar for dollar basis without resort to any multiple upon which the
Share Issue Price may have been determined. For greater certainty,
should Balance Bar seek indemnification based on a decline in value of
the Corporation, the determination of its losses shall reflect that
Balance Bar holds a ten percent (10%) equity interest in the
Corporation, such that a one dollar decline in value of the Corporation
shall not amount to more than a ten cent loss to Balance Bar.
6.8 Notwithstanding any other provision of this Agreement, all of the
representations and warranties made herein by the Corporation or
Balance Bar shall survive the execution and delivery of this Agreement
until the third (3/rd/) anniversary of the Closing Date, whereas all
the representations and warranties made herein by the Guarantors shall
only survive the execution and delivery of this Agreement until the
second (2/nd/) anniversary of the Closing Date, except for any claim or
demand based on intentional misrepresentation or fraud, which shall
survive in perpetuity.
6.9 The provisions of this Section 6 shall apply mutatis mutandis to any
claim of the Corporation against Balance Bar.
-29-
7. SOLIDARY OBLIGATIONS
--------------------
Each and all of the covenants, obligations and agreements of both the
Corporation and the Guarantors made in this Agreement shall be a solidary
obligation as amongst the Corporation and the Guarantors, subject to the time
limitations set forth in Section 6.8, each of them hereby waiving the benefits
of division and discussion.
8. EXAMINATION
-----------
It is expressly provided that all inspections, investigations, reviews or
feasibility studies undertaken by Balance Bar or its agents shall not serve to
diminish the liability of the Corporation occasioned by the Corporation's breach
of any representations and warranties made by the Corporation pursuant to the
provisions of this Agreement, or otherwise prevent Balance Bar from enforcing
the obligations of the Corporation pursuant to this Agreement, it being
understood and agreed that Balance Bar's subscription for the Shares pursuant to
this Agreement shall be in reliance upon such representations and warranties.
9. NOTICES
-------
Any notice or other communication permitted or required to be given
hereunder by one party to the other shall be in writing and shall be delivered
by hand or by courier service or by telecopier to the party entitled or required
to receive the same, as follows:
IF TO THE CORPORATION: ▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Copy to: Spiegel ▇▇▇▇▇▇
Place Ville ▇▇▇▇▇
Suite 1203
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
IF TO BALANCE BAR: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1501 ▇▇▇▇▇▇ College
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-30-
IF TO ▇▇▇▇▇▇▇▇ ▇▇▇▇▇: c/o Bariatrix Products International Inc.
▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Copy to: Spiegel ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
IF TO 3357481 CANADA INC.: c/o Bariatrix Products International Inc.
▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Copy to: Spiegel ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
IF TO ▇▇▇▇▇▇ ▇▇▇▇▇: c/o Bariatrix Products International Inc.
▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
-31-
Copy to: Spiegel ▇▇▇▇▇▇
Place Ville ▇▇▇▇▇
Suite 1203
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Notice delivered as aforesaid shall be deemed received on the date of
actual delivery thereof. Each party may change its address by notice delivered
in like manner. Notices and other communications may be signed by any officer of
any party hereto or by their respective legal counsel.
10. INTEGRATED CONTRACT, WAIVER AND MODIFICATION
--------------------------------------------
This Agreement (including the schedules hereto and the other documents and
certificates delivered pursuant to the terms hereof) represents the complete and
entire understanding and agreement between the parties hereto with regard to all
matters involved in this transaction and supersedes any and all prior
agreements, whether written or oral. No agreements or provisions, unless
incorporated herein, shall be binding on either party hereto. This Agreement
may not be modified or amended nor may any covenant, agreement, condition,
requirement, provision, warranty or obligation contained herein be waived,
except in writing signed by both parties or, in the event that such
modification, amendment or waiver is for the benefit of one of the parties
hereto and to the detriment of the other, then the same must be in writing
signed by the party to whose detriment the modification, amendment or waiver
enures.
11. GOVERNING LAW
-------------
This Agreement shall be construed in accordance with and governed by the
laws of the Province of Quebec and the laws of Canada applicable therein.
12. BINDING EFFECT
--------------
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, personal representatives,
successors and assigns.
13. DESCRIPTIVE HEADINGS
--------------------
The descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
14. ENFORCEABILITY OF PROVISIONS
----------------------------
If any provisions of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable, then the remaining
provisions of this Agreement or the application of such provisions to persons or
circumstances other than those as to whom or which it is held invalid or
unenforceable, shall not be affected thereby, and every provision hereof shall
be valid and enforceable to the fullest extent permitted by law.
-32-
15. PLURAL, SINGULAR, GENDER
------------------------
When the context in which the words are used in this Agreement indicates
that such is the intent, words in the singular number shall include the plural
and vice-versa. References to any gender shall include any other gender as may
be applicable under the circumstances.
The terms "herein", "hereof", "hereunder", and other words of similar
import mean and refer to this Agreement as a whole and not merely as to the
specific paragraph or clause in which the respective word appears, unless
expressly so stated.
16. PUBLICITY
---------
None of the Corporation nor Balance Bar shall make or issue, or cause to be
made or issued, any announcement or written statement concerning this Agreement
or the transactions contemplated hereby for dissemination to the general public
without the prior consent of the other party. This provision shall not apply,
however, to any announcement or written statement required to be made by law or
the regulations of any federal or provincial governmental agency or any stock
exchange, except that the party required to make such announcement shall consult
with the other party concerning the timing and content of such announcement
before such announcement is made.
17. CURRENCY
--------
All references to currency in this Agreement are to Canadian dollars.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
date first above stated.
BARIATRIX PRODUCTS INTERNATIONAL INC.
Per: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
BALANCE BAR COMPANY
Per: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3357481 CANADA INC.
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇