SHARE PURCHASE AGREEMENT
THIS AGREEMENT made the 15th day of April, 1999, BETWEEN:
ALRAE INVESTMENTS INC.,
a corporation incorporated under the laws of the Province of Ontario
(hereinafter called "Alrae"),
▇▇▇▇▇▇▇▇▇ ▇▇▇,
of the City of ▇▇▇▇▇▇▇, in the Municipality of York
(hereinafter called "Kan")
ROYNAT INC.,
a corporation incorporated pursuant to the laws of Canada
(hereinafter called "Roynat")
(Alrae, Kan and Roynat being hereinafter collectively called the
"Vendors")
OF THE FIRST PART,
- and -
INTERNATIONAL MENU SOLUTIONS INC.,
a corporation incorporated under the laws of the Province of Ontario,
(hereinafter called the "Purchaser")
OF THE SECOND PART,
- and -
INTERNATIONAL MENU SOLUTIONS CORPORATION,
a corporation incorporated under the laws of the State of Nevada
(hereinafter called "IMSC")
OF THE THIRD PART.
WHEREAS the Purchaser wishes to acquire all of the issued and outstanding
shares of Tasty Selections Inc. (herein called the "Corporation");
AND WHEREAS Alrae is the owner of 52 common shares in the capital of the
Corporation (herein called the "Alrae Shares");
Page 2
AND WHEREAS Kan is the owner of 28 common shares in the capital of the
Corporation (herein called the "Kan Shares"):
AND WHEREAS Roynat is the owner of 8 common shares in the capital of the
Corporation (herein called the "Roynat Shares");
AND WHEREAS the Purchaser wishes to purchase the Alrae Shares, the Kan
Shares, and the Roynat Shares (herein collectively called the "Purchased
Shares") from the respective owners thereof and such respective owners wish to
sell the Purchased Shares to the Purchaser on the terms and conditions herein
set forth;
AND WHEREAS the parties hereto wish to complete the said sale and purchase
of the Purchased Shares as herein this Agreement provided.
THIS AGREEMENT WITNESS THAT in consideration of the respective covenants,
agreements, representations, warranties and indemnities herein contained and for
other good and valuable consideration (the receipt and sufficiency of which are
acknowledged by each party,) the parties covenant and agree as follows:
ARTICLE I
INTERPRETATION
1.01 Defined Terms
All capitalized terms used in this Agreement and not defined above shall have
meanings set forth in Schedule A to this Agreement.
1.02 Currency
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are expressed in Canadian funds.
1.03 Sections and Headings
The division of this Agreement into sections and the insertion of headings
are for convenience of reference only and shall not affect the interpretation of
this Agreement. Unless otherwise indicated, any reference in this Agreement to a
section or a Schedule refers to the specified section of or Schedule to this
Agreement.
Page 3
1.04 Number, Gender and Persons
In this Agreement, words importing the singular number only shall include
the plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities.
1.05 Accounting Principles
Any reference in this Agreement to "generally accepted accounting
principles" refers to generally accepted accounting principles as approved from
time to time by the Canadian Institute of Chartered Accountants or any successor
institute.
1.06 Entire Agreement
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral, including
the letter of intent dated March 3, 1999 between the parties hereto. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.
1.07 Time of Essence
Time shall be of the essence of this Agreement.
1.08 Applicable Law
This Agreement shall be constructed, interpreted and enforced in accordance
with, and the respective rights and obligations of the parties shall be governed
by, the laws of the Province of Ontario and the federal laws of Canada
applicable therein, and each party hereby irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
1.09 Severability
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision in hereby
declared to be separate, severable and distinct.
Page 4
1.10 Successors and Assigns
This Agreement shall enure to the benefit of and shall be binding on and
enforceable by the parties and, where the context so permits, their respective
successors and permitted assigns. No party may assign any of its rights or
obligations hereunder without the prior written consent of the other parties.
1.11 Amendment and Waivers
No amendment or waiver of any provision of this Agreement shall be binding
on any party unless consented to in writing by such party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
1.12 Schedules
The following Schedules are attached to and form part of this Agreement:
Schedule A - Defined Terms
Schedule B - Representations and Warranties of the Vendors with respect
to the Corporation
Schedule C - Representations and Warranties of Alrae
Schedule D - Representations and Warranties of Roynat
Schedule E - Representations and Warranties of Kan
Schedule F - Representations and Warranties of the Purchaser
Schedule G - Representations and Warranties of IMSC
Schedule 2.03 - Allocation of Purchase Price
Schedule 4.01(i) - Kan Employment Agreement
Schedule 4.01(j) - Form of Opinion of Vendors' Counsel
Schedule 4.01(l) - Form of Release
Schedule 4.02(g) - Forms of Opinion of Purchaser's Counsel
Schedule 4.02(k) - Form of Release
Schedule A1.01(d) - Audited Financial Statements
Schedule A1.01(dd) - Interim Financial Statements
Schedule A1.01(hh) - Permitted Encumbrances
Schedule B1.08 - Location of Real Property
Schedule B1.10 - Real Property Leases
Schedule B1.13 - Intellectual Property
Schedule B1.14 - Insurance Policies
Schedule B1.17 - Licenses and Permits
Schedule B1.18 - Regulatory and Third Party Consents
Schedule B1.26 - Accounts and Attorneys
Page 5
Schedule B1.27 - Directors and Officers
Schedule B1.31 - Employee Plans
Schedule B1.33 - Employee Matters
Schedule B1.35 - Major Customers
1.13 Best of Knowledge
Any reference in this Agreement to "the best of the knowledge" of a party
or to "the knowledge" of a party will mean the actual knowledge of the party
(which shall be the knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ in the case of Alrae) and the
knowledge which such party would have had if such party had conducted a
reasonably prudent inquiry into the relevant subject matter.
1.14 Materiality
In this Agreement, "material" when used to describe a contract, lease or
other agreement, means in the case of the Corporation, a contract, lease or
other agreement with a term in excess of six (6) months or pursuant to which one
or more payments in excess of $20,000.00 in the aggregate become due.
ARTICLE II
PURCHASE AND SALE OF PURCHASED SHARES
2.01 Purchase and Sale of Purchased Shares
Subject to the terms and conditions hereof, each of Alrae, Kan and Roynat
covenant and agree to sell, assign and transfer to the Purchaser and the
Purchaser covenants and agrees to purchase from each of the Vendors all but not
less than all of the Alrae Shares, the Kan Shares and the Roynat Shares.
2.02 Purchase Price
The aggregate purchase price payable by the Purchaser to the Vendors for
the Purchased Shares (the "Purchase Price") shall be $2,160,000.00.
2.03 Payment of Purchase Price
The Purchase Price shall be paid and satisfied partly in cash (herein
called the "Cash Amount") and partly through the issuance of Class X Shares and
Class N Shares, (herein called the "Share Amount") to the Vendors in accordance
with Schedule 2.03 hereof.
Page 6
(a) The Cash Amount. The Cash Amount shall be paid by cash or certified cheque
by two payments, the first payment to be paid on the Closing Date (herein called
the "Closing Cash Amount"), and the second payment to be paid upon receipt of
the financial statements of the Corporation (herein called the "Closing
Financial Statements") for the nine (9) month period ending March 31, 1999
(herein called the "Second Cash Payment").
The "Cash Amount" shall be equal to $1,000,000.00 and shall be payable in two
parts as follows:
(i) the first part, being the Closing Cash Amount in the amount of
$750,000.00 on closing by certified cheque; and
(ii) the second part, in the amount of $250,000.00 by certified cheque,
upon receipt by the Purchaser of the Closing Financial Statements
(herein called the "Second Cash Amount").
To the extent that the Adjusted Net Book Value (as determined with reference to
the Closing Financial Statements) is less than $800,000.00, the Second Cash
Amount shall be reduced on a dollar for dollar basis and the "Cash Amount"
reduced accordingly.
For greater certainty, in no event shall the Purchase Price be adjusted upwards
or downwards as a result of the amount of the Adjusted Net Book Value. For the
purposes hereof, "Adjusted Net Book Value" shall mean the net book value as
determined with reference to the Closing Financial Statements of the Corporation
plus the difference between the fair market value of the machinery and plant
equipment and the book value of the machinery and plant equipment as set forth
in the Closing Financial Statements. The fair market value of the machinery and
plant equipment of the Corporation shall be determined by an appraiser selected
by the Vendors and the Purchaser prior to closing, which determination shall be
conclusive.
(b) The Share Amount. The "Share Amount" means the difference between the
Purchase Price and the Cash Amount (as the same may be adjusted as provided in
the preceding subsection (a)).
The Share Amount shall be satisfied by the issuance on Closing of 442,750
Class X Shares (subject to adjustment upwards if the Cash Amount is reduced in
accordance with subsection (a)).
(c) Allocation of the Purchase Price. The Purchase Price shall be allocated in
accordance with Schedule 2.03.
(d) Issuance of Class N Shares. IMSC shall issue to the Vendors at the Closing
Time 442,750 Class N Shares (subject to adjustment upwards if the Cash Amount is
reduced in accordance with subsection (a)) provided that the Vendors agree that
at the time of conversion of
Page 7
Class X Shares into common stock of IMSC, an equivalent number of Class N Shares
will be surrendered to IMSC for cancellation by the relevant Vendor or Vendors,
as applicable.
2.04 Escrow of Shares
On the Closing Date, the Vendors will enter into an escrow agreement with
the Purchaser which will provide that the Class X Shares, including any shares
exchanged therefor, shall be held in escrow and released as follows:
1/3 released on the first anniversary of the Closing Date
1/3 released on the second anniversary of the Closing Date, and
1/3 released on the third anniversary of the Closing Date
The Vendors further agree that on the Closing Date the Vendors will enter into
an agreement with the Purchaser granting to the Purchaser or the Purchaser's
designee a right of first refusal to purchase any of the Vendors' Class X
Shares, or any shares in IMSC into which such shares are exchanged upon any
disposition by any Vendor other than for estate and/or tax planning purposes and
such shares shall have a legend to such effect.
2.05 Acknowledgement of the Purchase and Payments Prior to Closing
The Purchaser hereby acknowledges that, for certain tax planning purposes,
1188980 Ontario Ltd. and 1346860 Ontario Ltd. have amalgamated to form Tasty
Selections Inc. immediately prior to the Closing Time. It is the intention of
the parties hereto that all representations and warranties made hereunder or
pursuant hereto pertaining to the Corporation are to be deemed to be
representations and warranties pertaining to the Corporation and it's
predecessor corporations prior to such amalgamation.
The parties acknowledge that the Corporation intends to repay any
outstanding shareholder advances out of its general corporate funds up to a
maximum of $200,000.00 and that the Corporation will pay an interest bonus fee
to Roynat in the amount of $30,000.00, in each case prior to the Closing Date
(herein called the "Permitted Distributions").
2.06 Arbitration
Any dispute between the parties with respect to the calculation of the
Purchase Price, the Cash Amount and the Share Amount shall be submitted to
arbitration in accordance with the following provisions:
(a) the arbitrator shall be a single arbitrator in accordance with the
Arbitrations Act (Ontario) and shall be a professional accountant who
is a partner with Ernst & Young or its successor who is appointed by
mutual agreement of the parties, or in the event the parties are
unable to agree upon an arbitrator within ten (10) days of
Page 8
notice given by one party to the other of a dispute, any party may
apply to a Judge of the Ontario Court (General Division) to appoint a
partner of Ernst & Young as the arbitrator. The arbitrator shall be at
arm's-length from the parties;
(b) the arbitrator shall be instructed that time is of the essence in
proceeding with the determination of the dispute and, in any event,
the arbitration award must be rendered within thirty (30) days of the
submission of such dispute to arbitration;
(c) the arbitration shall take place in Toronto, Ontario and all
proceedings shall be held in private to the extent that only the
parties hereto, their respective advisors and the arbitrator shall be
present;
(d) the arbitration shall be given in writing and shall be final and
binding on all parties, shall not be subject to any appeal and shall
deal with the question of costs of the arbitration and all matters
related thereto;
(e) judgment upon the arbitration award rendered may be entered in any
Court having jurisdiction, or, application may be made to such Court
for a judicial recognition of the arbitration award or any order of
enforcement thereof, as the case may be; and
(f) the law to be applied in connection with the arbitration will be the
law applicable to this Agreement.
ARTICLE III
COVENANTS
3.01 Access to the Corporation
The Vendors shall forthwith make available to the Purchaser and its
authorized representatives and, if requested by the Purchaser, provide a copy to
the Purchaser of, all title documents, contracts, financial statements, minute
books, share certificate books, share registers, plans, reports, licenses,
orders, permits, books of account, accounting records, constating documents and
all other documents, information or data relating to each of the Corporation and
the Business. The Vendors shall afford the Purchaser and its authorized
representatives every reasonable opportunity to have free and unrestricted
access to the Business and the property, assets, undertaking, records and
documents of the Corporation. At the request of the Purchaser, the Vendors shall
execute or cause to be executed such consents, authorizations and directions as
may be necessary to permit any inspection of the Business, and any property of
the Corporation to enable the Purchaser or its authorized representatives to
obtain full access to all files and records relating to any of the assets of the
Corporation maintained by governmental or other public authorities. At the
Purchaser's request, the Vendors shall co-operate with the Purchaser in
arranging any such meetings as the Purchaser should reasonably request with:
Page 9
(a) employees of the Corporation;
(b) customers, suppliers, distributors or others who have or have had a
business relationship with the Corporation; and
(c) auditors, solicitors or any other persons engaged or previously
engaged to provide services to the Corporation who have knowledge of
matters relating to the Corporation and the Business.
In particular, without limitation, the Vendors shall permit the Purchaser's
representatives or consultants to conduct such testing and inspection in respect
of environmental matters at such location of the Business as the Purchaser may
determine, in its sole discretion, acting reasonably, as may be required to
satisfy the Purchaser in respect of such matters, and the Vendors shall cause
the Corporation to conduct, and the Corporation shall conduct, in co-operation
with the representatives or consultants of the Purchaser, such physical review
of the equipment of the Business as is necessary so as to enable the
confirmation of the values carried on the respective balance sheets of the
Corporation in respect of such assets, to the reasonable satisfaction of the
Purchaser. The exercise of any rights of inspection by or on behalf of the
Purchaser under this section 3.01 shall not mitigate or otherwise affect the
representations and warranties of the Vendors and the Corporation hereunder,
which shall continue in full force and effect as provided herein.
3.02 Delivery of Books and Records
At the Closing Time there shall be delivered to the Purchaser by the
Vendors all of the books and records of and relating to the Corporation and the
Business. The Purchaser agrees that it will preserve the books and records so
delivered to it for a period of two (2) years from the Closing Date, or for such
longer period as is required by any applicable law, and will permit the Vendors
or their authorized representatives reasonable access thereto in connection with
the affairs of the Vendors relating to its matters, but the Purchaser shall not
be responsible or liable to the Vendors for or as a result of any accidental
loss or destruction of or damage to any such books or records.
3.03 Delivery of Documents
The Vendors shall deliver to the Purchaser at the Closing Time all
necessary transfer, assignments and other documentation reasonably required to
transfer the Purchased Shares to the Purchaser with a good and marketable title,
free and clear of all Encumbrances.
3.04 Delivery of Vendors' Closing Documentation
The Vendors shall deliver to the Purchaser all such documents relevant to
the closing of
Page 10
the transaction as contemplated hereby as the Purchaser, acting reasonably, may
request.
3.05 Delivery of Purchaser's Closing Documentation
The Purchaser shall deliver to each of the Vendors all such documents
relevant to the closing of the transactions contemplated hereby as the Vendors,
acting reasonably, may request.
3.06 Operation
The parties agree to co-operate in good faith with each other and their
respective legal advisors, accountants and other representatives in connection
with any steps required to be taken in connection with this Agreement,
including, without limitation, in connection with any filing necessary pursuant
to the Tax Act (including without limitation, joint elections pursuant to
Section 85(1) thereof in respect of the Share Amount received by Alrae).
ARTICLE IV
CONDITIONS OF CLOSING
4.01 Conditions of Closing in Favour of the Purchaser
The sale and purchase of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Purchaser, to be fulfilled
or performed at or prior to the Closing Time:
(a) Representations and Warranties. The representations and warranties of
the Vendors contained in this Agreement shall be true and correct at the Closing
Time, with the same force and effect as if such representations and warranties
were made at and as of such time, and certificates of the Vendors dated the
Closing Date to that effect shall have been delivered to the Purchaser, such
certificates to be in form and substance satisfactory to the Purchaser, acting
reasonably;
(b) Covenants. All of the terms, covenants and conditions of this Agreement
to be complied with or performed by the Vendors at or before the Closing Time
shall have been complied with or performed and certificates of the Vendors dated
the Closing Date to that effect shall have been delivered to the Purchaser, such
certificates to be in form and substance satisfactory to the Purchaser, acting
reasonably;
(c) Regulatory Consents. There shall have been obtained, from all
appropriate federal, provincial, municipal or other governmental or
administrative bodies, such licenses, permits, consents, approvals,
certificates, registrations and authorizations as are required to be obtained by
the Vendors to permit the change of ownership of the Purchased Shares
contemplated hereby including, without limitation, those described in the
Schedules hereto;
Page 11
(d) Contractual Consents. The Vendors shall have given or obtained the
notices, consents and approvals described in the Schedules hereto, in each case
in form and substance satisfactory to the Purchaser, acting reasonably;
(e) Material Adverse Change. There shall have been no material adverse
changes in the condition (financial or otherwise), assets, liabilities,
operations, earnings, business or prospects of the Corporation since the date of
the Interim Financial Statements;
(f) No Action or Proceeding. No legal or regulatory action or proceeding
shall be pending or threatened by any person to enjoin, restrict or prohibit the
purchase and sale of the Purchased Shares contemplated hereby;
(g) No Material Damage. No material damage by fire or other hazard to the
whole or any material part of the property or assets of the Corporation shall
have occurred from the date hereof to the Closing Time;
(h) Legal Matters. All actions, proceedings, instruments and documents
required to implement this Agreement, or instrumental thereto, and all legal
matters relating to the purchase of the Purchased Shares, including title of the
Vendors to the Purchased Shares, shall have been approved as to form and
legality by ▇▇▇▇▇▇▇▇ Grespan ▇▇▇▇▇▇ ▇▇▇▇▇▇, counsel for the Purchaser, acting
reasonably;
(i) Kan Employment Agreement. Kan shall have executed and delivered to the
Corporation, an employment agreement in the form of the agreement annexed hereto
as Schedule 4.01(i);
(j) Legal Opinion. The Vendors shall have delivered to the Purchaser a
favourable opinion of Fogler, Rubinoff, counsel to the Vendors, in the form
annexed hereto as Schedule 4.01(j);
(k) Resignation of Directors and Officers. Such directors and officers of
the Corporation as the Purchaser may specify shall have resigned in favour of
nominees of the Purchaser effective as of the Closing Time;
(l) Release by Vendor, Directors and Officers. The Vendors and such
directors and officers of the Corporation as the Purchaser may specify shall
have executed and delivered, at the Closing Time, releases in favour of the
Corporation in the form annexed hereto as Schedule 4.01(l);
(m) ▇▇▇▇▇▇▇▇▇▇ Agreements. The Corporation shall have entered into an
employment agreement and a confidentiality and non-compete agreement with ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇;
Page 12
(n) Share Escrow Agreement. The Vendors shall have entered into an escrow
agreement as required by Section 2.04; and
(o) Right of First Refusal Agreement. The Vendors shall have entered into
an agreement granting a right of first refusal as required by Section 2.04.
If any of the conditions contained in this section 4.01 shall not be
performed or fulfilled at or prior to the Closing Time to the satisfaction of
the Purchaser, acting reasonably, the Purchaser may, by notice to the Vendors,
terminate this Agreement and the obligations of the Vendors and the Purchaser
under this Agreement shall be terminated. Any such condition may be waived in
whole or in part by the Purchaser without prejudice to any claims it may have
for breach of covenant, representation or warranty.
4.02 Conditions of Closing in Favour of the Vendors
The purchase and sale of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Vendors, to be fulfilled
or performed at or prior to the Closing Time:
(a) Representations and Warranties. The representations and warranties of
the Purchaser and IMSC contained in this Agreement shall be true and correct in
all material respects at the Closing Time, with the same force and effect as if
such representations and warranties were made at and as of such time, and a
certificate of the President of the Purchaser and IMSC dated the Closing Date to
that effect shall have been delivered to the Vendors, such certificate to be in
form and substance satisfactory to the Vendors, acting reasonably;
(b) Covenants. All of the terms, covenants and conditions of this Agreement
to be complied with or performed by the Purchaser and IMSC at or before the
Closing Time shall have been complied with or performed in all material respects
and certificates of the President of the Purchaser and IMSC dated the Closing
Date to that effect shall have been delivered to the Vendors, such certificate
to be in form and substance satisfactory to the Vendors, acting reasonably;
(c) Regulatory Consents. There shall have been obtained, from all
appropriate federal, provincial, state, municipal or other governmental or
administrative bodies, such licenses, permits, consents, approvals,
certificates, registrations and authorizations as are required by law to be
obtained by the Purchaser or IMSC to permit the change of ownership of the
Purchased Shares and payment of the Purchase Price contemplated hereby,
including those described in Schedules B1.18 hereto, in each case in form and
substance satisfactory to the Vendors, acting reasonably;
(d) No Action or Proceeding. No legal or regulatory action or proceeding
shall be pending or threatened by any person to enjoin, restrict or prohibit the
purchase and sale of the
Page 13
Purchased Shares or the issuance of the Class X Shares or the Class N Shares
contemplated hereby;
(e) Legal Matters. All actions, proceedings, instruments and documents
required to implement this Agreement, or instrumental thereto, shall have been
approved as to form and legality by Fogler, Rubinoff, acting reasonably;
(g) Legal Opinion. The Purchaser shall have delivered to the Vendors a
favourable opinion of ▇▇▇▇▇▇▇▇ Grespan ▇▇▇▇▇▇ ▇▇▇▇▇▇, Canadian counsel to the
Purchaser, and U.S. Counsel to the Purchaser in the forms annexed hereto as
Schedule 4.02(g);
(h) Guarantee. The Vendors and their principals shall have been released
from all guarantees with respect to the indebtedness of the Corporation;
(i) Support Agreement. The Purchaser and IMSC shall have entered into and
delivered a support agreement;
(j) ▇▇▇▇▇▇▇▇▇▇ Agreements. The Corporation shall have entered into an
employment agreement and a confidentiality and non-compete agreement with ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇; and
(k) Release of Directors and Officers. The Corporation shall have delivered
to the resigning directors and officers a release with respect to matters
addressed within the proper exercise of their duties as directors and officers,
in the form annexed hereto as Schedule 4.02(k).
If any of the conditions contained in this section 4.02 shall not be
performed or fulfilled at or prior to the Closing Time to the satisfaction of
the Vendors, acting reasonably, the Vendors may, by notice to the Purchaser,
terminate this Agreement and the obligations of the Vendors and the Purchaser
under this Agreement shall be terminated. Any such condition may be waived in
whole or in part by the Vendors without prejudice to any claims they may have
for breach of covenant, representation or warranty.
ARTICLE V
CLOSING ARRANGEMENTS
5.01 Place of Closing
The closing shall take place at the Closing Time at the offices of Fogler,
Rubinoff, counsel for the Vendors, ▇▇▇▇▇ #▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
Page 14
5.02 Closing
At the Closing Time, upon fulfillment of all the conditions set out in
Article IV that have not been waived in writing by the Purchaser or the Vendors,
the Vendors shall deliver to the Purchaser certificates respecting all the
Purchased Shares, duly endorsed in blank for transfer, and will cause transfers
of such shares to be duly and regularly recorded in the name of the Purchaser,
or its nominee(s), and will cause a meeting of the board of directors of the
Corporation to be held, at which the directors and officers of the Corporation
specified by the Purchaser pursuant to section 4.01(k) will resign in favour of
nominees of the Purchaser whereupon, subject to all other terms and conditions
hereof being complied with, payment of the Closing Cash Amount shall be paid and
satisfied in the manner provided in Article II.
5.03 Further Assurances
Each party to this Agreement covenants and agrees that, from time to time
subsequent to the Closing Date, it will at the request and expense of the
requesting party, execute and deliver all such documents, including, without
limitation, all such additional conveyance, transfers, consents and other
assurances and do all such other acts and things as any other party hereto,
acting reasonably, may from time to request be executed or done in order to
better evidence or perfect or effectuate any provision of this Agreement or of
any agreement or other document executed pursuant to this Agreement or any of
the respective obligations intended to be created hereby or thereby.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
6.01 Survival of Representations and Warranties of the Vendor
To the extent that they have not been fully performed at a prior to the
Closing Time, the covenants, representations and warranties of the Vendors
contained in this Agreement and any agreement, instrument, certificate or other
document executed or delivered pursuant hereto shall survive the closing of the
transactions contemplated hereby until the second anniversary of the Closing
Date and, notwithstanding such closing, nor any investigation made by or on
behalf of the Purchaser, shall continue in full force and effect for the benefit
of the Purchaser during such period, except that:
(a) the representations and warranties set out in sections 1.02, 1.03 and
1.04 of Schedule B, section 1.04 and 1.06 of Schedule C, section 1.04 and 1.06
of Schedule D, and sections 1.03 and 1.05 of Schedule E (and the corresponding
representations and warranties set out in the certificates to be delivered
pursuant to subsection 4.01(a) (the "Closing Certificates")) shall survive and
continue in full force and effect without limitation of time;
Page 15
(b) the representations and warranties contained in section 1.22 of
Schedule B shall, in the absence of fraud or negligent or wilful
misrepresentation, survive until the expiration of any applicable limitation
periods imposed by law; and
(c) a claim for any breach of any of the representations and warranties
contained in this Agreement or in any agreement, instrument, certificate or
other document executed or delivered pursuant hereto involving fraud or
fraudulent misrepresentation may be made at any time following the Closing Date,
subject only to applicable limitation periods imposed by law, provided that no
claim for breach of covenant, representation or warranty shall be valid unless
the Vendor against whom such claim is made has been given notice thereof before
the date on which the applicable covenant, representation or warranty shall have
terminated in accordance with the foregoing and, provided further that any such
claim as aforesaid shall be made in accordance with Article VII. Upon the expiry
of the relevant limitation periods set forth in this section, the Vendors shall
not have any further liability to the Purchaser with respect to the covenants,
representations and warranties contained herein, except in respect of claims
which have theretofore been made in accordance with the provisions set forth
above.
6.02 Expiry of the Representations and Warranties of the Purchaser and IMSC
The representations and warranties of the Purchaser and IMSC contained in this
Agreement or in any document, certificate or undertaking given pursuant hereto
shall terminate on the second anniversary of the Closing Date other than the
representations contained in section 1.07 of Schedule F and section 1.05 of
Schedule G, which sections shall survive and continue in full force and effect
without limitation of time. For greater certainty, all covenants and agreements
of the Purchaser or IMSC contained in this Agreement and any agreement,
instrument, certificate or other document executed or delivered pursuant hereto
shall survive the closing of the transactions contemplated hereby until the
second anniversary of the Closing Date or in the case of any such covenants and
agreements which by their terms are to be performed subsequent to the Closing
Date until the second anniversary of the date on which such covenant and
agreement is to be performed and, notwithstanding such closing shall continue in
full force and effect for the benefit of the Vendors for such period, provided
that no claim for breach of covenant, representation or warranty shall be valid
unless the Purchaser and/or IMSC has been given notice thereof before the date
on which the applicable covenant, representation or warranty shall have
terminated in accordance with the foregoing and, provided further that any such
claim as aforesaid shall be made in accordance with Article VII. Upon the expiry
of the relevant limitation periods set forth in this section, the Purchaser and
IMSC shall not have any further liability to the Vendors with respect to the
covenants, representations and warranties contained herein, except in respect of
claims which have theretofore been made in accordance with the provisions set
forth above.
Page 16
ARTICLE VII
INDEMNIFICATION
7.01 Indemnification by the Vendors
Subject to Sections 7.08, 7.09 and 7.10 each of the Vendors agrees to
severally indemnify and save harmless the Purchaser from all Losses suffered or
incurred by the Purchaser as a result of or arising directly or indirectly out
of or in connection with:
(a) any breach by such Vendor of or any inaccuracy of any representation or
warranty of such Vendor contained in this Agreement or in any agreement,
certificate or other document delivered pursuant hereto (provided that no Vendor
shall be required to indemnify or save harmless the Purchaser in respect of any
breach or inaccuracy of any representation or warranty unless the Purchaser
shall have provided notice to such Vendor in accordance with section 7.03 on or
prior to the expiration of the applicable time period related to such
representation and warranty set out in section 6.01);
(b) any breach or non-performance by such Vendor of any covenant to be
performed by it that is contained in this Agreement or in any agreement,
certificate or other document delivered pursuant hereto; and
(c) all liabilities (whether accrued, absolute, contingent or otherwise) of
the Corporation existing at the Closing Time, including any liabilities for
federal, provincial, sales excise, income, corporate or any other taxes of the
Corporation for any period up to and including the Closing Time, and not
disclosed on, provided for or included in the balance sheets forming part of the
Closing Financial Statements, except those liabilities accruing or incurred
subsequent to the balance sheet date of the Closing Financial Statements in the
ordinary course of the Business.
7.02 Indemnification by the Purchaser and IMSC
(a) The Purchaser agrees to indemnify and save harmless the Vendors from all
Losses suffered or incurred by the Vendors as a result of or arising directly or
indirectly out of or in connection with:
(i) any breach by the Purchaser of or any inaccuracy of any representation
or warranty of the Purchaser contained in this Agreement or in any agreement,
instrument, certificate or other document delivered pursuant hereto (provided
that the Purchaser and IMSC shall be required to indemnify or save harmless any
Vendor in respect of any breach or inaccuracy of any representation or warranty
unless any Vendor shall have provided notice to the Purchaser and IMSC in
accordance with section 7.03 on or prior to the expiration of the applicable
time period related to such representation and warranty set out in section
6.02); and
Page 17
(ii) any breach or non-performance by the Purchaser of any covenant to be
performed by it that is contained in this Agreement or in any agreement,
certificate or other document delivered pursuant hereto.
(b) IMSC agrees to indemnify and save harmless the Vendors from all Losses
suffered or incurred by the Vendors as a result of or arising directly or
indirectly out of or in connection with:
(i) any breach by IMSC of or any inaccuracy of any representation or
warranty of IMSC contained in this Agreement or in any agreement, instrument,
certificate or other document delivered pursuant hereto; and
(ii) any breach or non-performance by IMSC of any covenant to be performed
by it that is contained in this Agreement or in any agreement, certificate or
other document delivered pursuant hereto.
7.03 Notice of Claim
In the event that a party (the "Indemnified Party") shall become aware of
any claim, proceeding or other matter (a "Claim") in respect of which another
party (the "Indemnifying Party") agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a claim by a person against the Indemnified Party (a
"Third Party Claim") or whether the Claim does not so arise (a "Direct Claim"),
and shall also specify with reasonable particularity (to the extent that the
information is available) the factual basis for the Claim and the amount of the
Claim, if known, or, if an amount is not then determinable, if reasonably
possible, an approximate and reasonable estimate of the likely amount of the
Claim.
7.04 Direct Claims
With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have thirty (30)
days to make such investigation of the Claim as is considered necessary or
desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request.
7.05 Third Party Claims
With respect to any Third Party Claim, the Indemnifying Party shall have
the right, at its expense, to participate in or assume control of the
negotiation, settlement or defence of the Claim and, in such event, the
Indemnifying Party shall reimburse the Indemnified Party for all the
Page 18
Indemnified Party's out-of-pocket expenses as a result of such participation or
assumption. If the Indemnifying Party elects to assume such control, the
Indemnified Party shall have the right to participate in the negotiation,
settlement or defence of such Third Party Claim and to retain counsel to act on
its behalf provided that the fees and disbursements of such counsel shall be
paid by the Indemnified Party unless the Indemnifying Party consents to the
retention of such counsel or unless the named parties to any action or
proceeding include both the Indemnifying Party and the Indemnified Party and a
representation of both the Indemnifying Party and the Indemnified Party by the
same counsel would be inappropriate due to the actual or potential differing
interests between them (such as the availability of different defences). If the
Indemnifying Party, having elected to assume such control, thereafter fails to
defend the Third Party Claim within a reasonable time, the Indemnified Party
shall be entitled to assume such control, and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim. If any Third Party Claim is of a nature such that the
Indemnified Party is required by applicable law to make a payment to any person
(a "Third Party") with respect to the Third Party Claim before the completion of
settlement negotiations or related legal proceedings, the Indemnified Party may
make such payment and the Indemnifying Party shall, forthwith after demand by
the Indemnified Party, reimburse the Indemnified Party for such payment. If the
amount of any liability of the Indemnified Party under the Third Party Claim in
respect of which such payment was made, as finally determined, is less than the
amount that was paid by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, forthwith after receipt of the difference from the
Third Party, pay the amount of such difference to the Indemnifying Party.
7.06 Settlement of Third Party Claims
If the Indemnifying Party fails to assume control of the defence of any
Third Party Claim, the Indemnified Party shall have the exclusive right to
contest, settle or pay the amount claimed. Whether or not the Indemnifying Party
assumes control of the negotiation, settlement or defence of any Third Party
Claim, the Indemnifying Party shall not settle any Third Party Claim without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that the liability of the
Indemnifying Party shall be limited to the proposed settlement amount if any
such consent is not obtained for any reason.
7.07 Co-operation
The Indemnified Party and the Indemnifying Party shall co-operate fully
with each other with respect to Third Party Claims, and shall keep each other
fully advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).
The Indemnified Party shall make available to the Indemnifying Party and its
advisors all pertinent information and witnesses under its control (including,
if applicable, employees of the Purchaser).
Page 19
The Indemnified Party shall not permit any right of appeal in respect of any
Third Party Claim to terminate without giving the Indemnifying Party reasonable
notice thereof and an opportunity to contest such Third Party Claim.
7.08 Proportionate Liability of the Vendors
Where the liability of the Vendors to indemnify the Purchaser hereunder is
in relation to the breach or inaccuracy of any representation or warranty which
has been given by more than one of the Vendors or any breach or non-performance
of any covenant of more than one of the Vendors or is otherwise stated to be
several, each Vendor shall be liable only for the percentage of such claim for
indemnification by the Purchaser equal to such Vendor's proportionate share of
the Purchase Price (ie. pro rata to their common shareholdings in the
Corporation).
7.09 Threshold Amount
Notwithstanding any other provision of this Agreement, (a) the Purchaser
shall not be entitled to indemnification hereunder until the aggregate of all
claims for indemnification made by the Purchaser hereunder, whether individually
or collectively, exceeds $25,000.00, in which event the Purchaser shall be
indemnified for the full amount of such claims for indemnification, and (b) in
no event shall the aggregate amount of all claims for indemnification to be paid
by the Vendors, or any of them, to the Purchaser exceed the Purchase Price.
7.10 Mitigation
The Indemnified Party shall take all reasonable steps to avoid and mitigate
the amount of each Claim and the amount to be paid by the Indemnifying Party to
the Indemnified Party hereunder shall be reduced by the amount of any (i)
insurance proceeds actually received by the Indemnified Party and the
Corporation, if applicable; and (ii) any tax benefit realized by the Indemnified
Party arising from or in connection with the Claim or the payment thereof.
7.11 Set-Off
Any amounts becoming owing by any of the Vendors to the Purchaser hereunder
shall be set-off against amounts owed by the Purchaser to such Vendor as
follows:
(a) firstly against that portion of the Cash Amount to which such Vendor is
entitled to the extent it is not paid as at the date of such claim or
claims for indemnification; and
(b) secondly against that portion of the Share Amount to which such Vendor
is entitled, by a surrender of a number of common shares in the capital of
IMSC into which the Class X Shares held by such Vendor have been exchanged
or Class X Shares held by the Vendor to the extent that such Class X Shares
have not been exchanged at the time of such claim or claims for
indemnification.
Page 20
To the extent that the Purchaser has not been fully indemnified after utilizing
its rights of set-off as set forth in this Section 7.11, nothing contained
herein shall preclude the Purchaser from taking any action permitted at law to
recover such deficiency.
ARTICLE VIII
MISCELLANEOUS
8.01 Confidentiality of Information
In the event that the transactions contemplated herein are not consummated
for any reason, the Purchaser covenants and agrees that, except as otherwise
authorized by the Vendors, neither IMSC, the Purchaser nor its representatives,
agents or employees will disclose to third parties, directly or indirectly, any
confidential information or confidential data relating to the Corporation
discovered by IMSC, the Purchaser or their respective representatives as a
result of the Vendors and the Corporation making available to IMSC, the
Purchaser and their respective representatives the information requested by them
in connection with the transactions contemplated herein.
If the transactions contemplated herein are not consummated, the Vendors
shall return to the Purchaser any confidential schedules, documents or other
written information obtained from the Purchaser, whether received before or
after the date of this Agreement. In the event that the transactions
contemplated herein are not consummated for any reason, the Vendors covenant and
agree that, except as otherwise authorized by the Purchaser, neither the Vendors
nor their representatives, agents or employees will disclose to third parties,
directly or indirectly, any confidential information or confidential data
relating to the Purchaser and IMSC discovered by the Vendor or its
representatives as a result of the Purchaser and IMSC making available to the
Vendors and their representatives the information requested by them in
connection with the transactions contemplated herein.
8.02 Notices
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person, transmitted by
telecopy or similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
(i) if to the Vendors:
Alrae: ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Page 21
Kan: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Director of Equity Investments
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fogler, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇ ▇▇
Royal Trust Tower
Toronto-Dominion Centre
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Avi ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Purchaser:
International Menu Solutions Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Grespan ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Q.C.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to IMSC:
International Menu Solutions Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 22
with a copy to:
▇▇▇▇▇▇▇▇ Grespan ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Q.C.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was delivered or transmitted (or, if
such day is not a Business Day, on the next following Business Day) or, if
mailed, on the fifth Business Day following the date of mailing; provided,
however, that if at the time of mailing or within three Business Days thereafter
there is or occurs a labor dispute or other event that might reasonably be
expected to disrupt the delivery of documents by mail, any notice or other
communication hereunder shall be delivered or transmitted by means of recorded
electronic communication as aforesaid.
(c) Any party may at any time change its address for service from time to
time by giving notice to the other parties in accordance with this section 8.02.
8.03 Commissions, etc.
The Vendors agree to indemnify and save harmless the Purchaser from and
against all Losses suffered or incurred by the Purchaser in respect of any
commission or other remuneration payable or alleged to be payable to any broker,
agent or other intermediary who purports to act or have acted for or on behalf
of any of the Vendors, in connection with the transactions contemplated hereby.
The Purchaser agrees to indemnify and save harmless the Vendors from and
against all Losses suffered or incurred by the Vendors in respect of any
commission or other remuneration payable or alleged to be payable to any broker,
agent or other intermediary who purports to act or have acted for or on behalf
of the Purchaser, in connection with the transactions contemplated hereby.
8.04 Consultation
The parties shall consult with each other before issuing any press release
or making any other public announcement with respect to this Agreement or the
transactions contemplated hereby and, except as required by any applicable law
or regulatory requirement, none of the Vendors nor the Purchaser shall issue any
such press release or make any such public announcement without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed.
Page 23
8.05 Disclosure
Prior to any public announcement of the transaction contemplated hereby
pursuant to section 8.04, neither party shall disclose this Agreement or any
aspect of such transaction except to its board of directors, its senior
management, its legal, accounting, financial or other professional advisors, any
financial institution contacted by it with respect to any financing required in
connection with such transaction and counsel to such institution, or as may be
required by any applicable law or any regulatory authority or stock exchange
having jurisdiction.
8.06 Public Announcements
No public announcement or press release not required by law or by
applicable stock exchange rule concerning the purchase sale of the Purchased
Shares shall be made by the Vendors, the Corporation or the Purchaser without
the consent and joint approval of the Vendors and the Purchaser.
8.07 Expenses of Parties
Each of the parties hereto shall bear their own expenses in connection with
the transactions contemplated hereby, including with respect to the Vendors, any
and all costs with respect to any reorganization of the Corporation prior to the
Closing Date.
8.08 Counterparts
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument.
8.09 IMSC Guarantee
In consideration of the mutual covenants contained in this Agreement,
$10.00 and other good and valuable consideration now paid to IMSC by each
Vendor, the receipt and sufficiency whereof is hereby acknowledged, IMSC hereby
unconditionally and irrevocably guarantees to each of the Vendors the observance
and performance by the Purchaser of all of the Purchaser's covenants and
obligations contained in this Agreement, and agrees to indemnify and save
harmless each of the Vendors from and against all Losses of any nature
whatsoever occasioned by any act or default of the Purchaser or which may be
incurred or sustained by reason of any failure by the Purchaser to observe and
perform any or all of its said obligations and covenants, provided that in no
event shall the obligations of IMSC be greater than the obligations of the
Purchaser set forth in this Agreement. The obligations of IMSC under this
Section 8.09 shall not be released, discharged, impaired or affected by any act
or thing whereby it would otherwise be so released, discharged, impaired or
affected, including, without limitation, by any extensions of time or
indulgences or modifications granted to the Purchaser by the failure of the
Vendors to enforce any of the terms or provisions of this Agreement or by the
bankruptcy, insolvency,
Page 24
dissolution, amalgamation, winding-up or reorganization of the Purchaser, and
IMSC hereby waives any right to require the Vendors to exhaust any action or
recourse against the Purchaser or any other party before requiring performance
by IMSC pursuant to the provisions of this Section 8.09, provided that where the
obligations of the Purchaser are time limited, the obligations of IMSC shall be
similarly time limited.
----------------------------------------------------
Page 25
IN WITNESS WHEREOF this Agreement has been executed by the parties.
ALRAE INVESTMENTS INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: President
------------------------------
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇
------------------------------------- -----------------
Witness ▇▇▇▇▇▇▇▇▇ ▇▇▇
ROYNAT INC.
Per: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: Director of Merchant Banking
------------------------------
INTERNATIONAL MENU SOLUTIONS
INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Title: President
-------------------------------
INTERNATIONAL MENU SOLUTIONS
CORPORATION
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: President
-------------------------------