BOARD REPRESENTATION AGREEMENT
AGREEMENT made the 13th day of October, 1997 as amended and restated by
agreement dated as of January 15, 1998
AMONG:
INTEGRATED BRANDS INC., a company incorporated under the laws of the
State of New Jersey
("Integrated Brands")
- and -
YOGEN FRUZ WORLD-WIDE INC., a corporation amalgamated under the laws
of the Province of Ontario
("Yogen Fruz")
- and -
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, each of the State of
New York
(the "Integrated Brands Principal Shareholders")
- and -
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇▇, each of the Province of Ontario
- and -
1082272 ONTARIO INC., a corporation incorporated under the laws of the
Province of Ontario
("1082272")
- and -
THE SERRUYA FAMILY TRUST, a trust organized under the laws of the
Province of Ontario
(the "Serruya Family Trust")
(▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, 1082272 and the Serruya Family Trust are
sometimes hereinafter collectively referred to as the "Yogen Fruz Principal
Shareholders." The Yogen Fruz Principal Shareholders and the Integrated Brands
Principal Shareholders are sometimes hereinafter collectively referred to as the
"Principal Shareholders".)
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RECITALS:
1. Yogen Fruz has agreed to complete a capital reorganization (the
"Reorganization") after which (i) its outstanding share capital will
consist of 200,000,000 multiple voting shares having 10 votes per share
("Multiple Voting Shares") and 200,000,000 subordinate voting shares having
1 vote per share ("Subordinate Voting Shares"), and (ii) Yogen Fruz has
agreed to continue from Ontario to Nova Scotia. As part of the
Reorganization, stockholders of Yogen Fruz will have the right to elect to
receive either (i) one Multiple Voting Share or (ii) 1.05 Subordinate
Voting Shares for each Common Share of Yogen Fruz outstanding immediately
prior to the Merger.
2. 1082272 and The Serruya Family Trust own common shares of Yogen Fruz (i)
for the benefit of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, which in the
Reorganization shall be changed into an aggregate of 4,733,332 Multiple
Voting Shares, and (ii) for the benefit of ▇▇▇▇▇ ▇▇▇▇▇▇▇, which in the
Reorganization shall be changed into an aggregate of 2,394,830 Subordinate
Voting Shares (the "▇▇▇▇▇ ▇▇▇▇▇▇▇ Shares"). Notwithstanding anything to the
contrary in this Agreement, after the Merger (as defined herein) the ▇▇▇▇▇
▇▇▇▇▇▇▇ Shares may be sold free of the restrictions on disposition set
forth in Section 3.5 of this Agreement, provided however, that until the
▇▇▇▇▇ ▇▇▇▇▇▇▇ Shares are sold they shall be voted in accordance with the
terms of this Agreement.
3. Yogen Fruz and Integrated Brands have agreed to enter into a merger
agreement of even date herewith (the "Merger Agreement"), pursuant to which
a wholly-owned subsidiary of Yogen Fruz will merge with Integrated Brands
and shareholders of Integrated Brands will have the right to receive either
(i) 0.557266 Multiple Voting Shares for each share of Class A Common Stock
of Integrated Brands or (ii) 0.585129 Subordinate Voting Shares for each
share of Class A Common-Stock of Integrated Brands (the "Merger").
4. Pursuant to the Merger, the Integrated Brands Principal Shareholders will
receive an aggregate of 1,752,713 Multiple Voting Shares in exchange for
their shares of Class A Common Stock of Integrated Brands.
5. As a result, after completion of the Merger, the Yogen Fruz Principal
Shareholders and the Integrated Brands Principal Shareholders will be
significant shareholders of Yogen Fruz.
6. It is a condition of the execution of the Merger Agreement that this
Agreement be entered into by the parties hereto.
IN CONSIDERATION of the sum of $1.00 now paid by each party hereto to the
other, the entering into of the Merger Agreement, the premises and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged by each party hereto, the parties hereto covenant and agree as
follows:
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ARTICLE 1
INTREPRETATION
1.1 Definitions
In this Agreement, unless the subject matter or context is inconsistent
therewith:
"Affiliate" when used to indicate a relationship with a specified Person,
means a Person that directly, or indirectly through one or more
intermediaries,controls, or is controlled by, or is under common control
with, such specified Person and a Person shall be deemed to be controlled
by another Person if controlled in any manner whatsoever that results in
control in fact by that other Person (or that other Person and any Person
or Persons with whom that other Person is acting jointly or in concert)
whether directly or indirectly and whether through share ownership, a
trust, a contract or otherwise;
"Agreement" means this Board Representation Agreement as the same may be
supplemented, amended, restated or replaced from time to time;
"Associate", when used to indicate a relationship with a specified Person
means
(a) any trust or other estate in which such specified Person has a 10% or
greater beneficial interest; or
(b) any relative of such specified Person who has the same home as such
specified Person or any Person to whom such specified Person is
married or with whom such specified Person is living in a conjugal
relationship outside marriage or any relative of such spouse or other
Person who has the same home as such specified Person;
"Business Day" means any day of the week other than a Saturday, Sunday or
statutory or civic holiday observed in Toronto, Ontario;
"Convertible Security" means a security of Yogen Fruz or Integrated Brands,
as the context requires, convertible or exercisable into or exchangeable
for one or more Voting Securities of Yogen Fruz or Integrated Brands
including options and purchase warrants;
"Disposition" includes any sale, transfer, assignment, gift (if accepted)
or other disposition of, or the creation or the coming into existence of
any Encumbrance on an asset, and "dispose of" shall have a corresponding
meaning;
"Encumbrance" means any encumbrance of any kind whatever and includes a
security interest, mortgage, lien, pledge, hypothecation, assignment,
charge, trust or deemed trust (whether contractual, statutory or otherwise
arising), adverse claim or any other right, option or claim of others of
any kind whatever affecting an asset and any
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restrictive covenant or other agreement, restriction or limitation
(registered or unregistered) on the disposition of an asset;
"Person" shall be broadly interpreted and includes an individual, body
corporate, partnership, joint venture, trust, unincorporated organization,
the Crown or any agency or instrumentality thereof or any other entity
recognized by law;
"Related Person" means:
(a) with respect to 1082272 or The Serruya Family Trust:
(i) each 1082272 Principal;
(ii) each Affiliate of a 1082272 Principal;
(iii) each Associate of a 1082272 Principal;
(iv) each trust in which a 1082272 Principal, his spouse or children
has, either individually or collectively, a 10% or greater actual
or contingent beneficial interest; and
(v) each Affiliate of 1082272 and The Serruya Family Trust; and
(b) with respect to each Integrated Brands Principal Shareholder:
(i) each Affiliate of such shareholder;
(ii) each Associate of such shareholder;
(iii) each trust in which such shareholder, his spouse or his children
has, either individually or collectively, a 10% or greater actual
or contingent beneficial interest; and
(iv) ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇▇ ▇▇▇▇▇.
"Rights" means any options, rights, warrants or subscription privileges
issued or granted by Yogen Fruz or Integrated Brands, as the context
requires, (whether or not currently exercisable or exercisable on
conditions) to purchase Voting Securities or Convertible Securities;
"1082272 Principal" means each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇;
"Securities Act (Ontario)" means the Securities Act, R.S.O. 1990, c. S.5,
as amended and the regulations thereunder, and unless otherwise specified,
means such act as the same may be hereafter amended or restated and any
successor legislation of comparable effect;
"Voting Security" means the Multiple Voting Shares and the Subordinate
Voting
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Shares of Yogen Fruz or the Class A Common Stock of Integrated Brands.
1.2 Beneficial Ownership
A Person shall be deemed to have "Beneficial Ownership" of and to
"Beneficially Own" any Voting Securities, Convertible Securities and
Rights:
(a) as to which such Person or any of its Affiliates or Associates (or
Persons acting jointly or in concert with any of them) is or may be
deemed to be the direct or indirect beneficial owner pursuant to any
of the provisions of the Securities Act (Ontario) as it exists on the
date hereof, regardless of whether such Person is subject to the
jurisdiction of that statute;
(b) as to which such Person or any of its Affiliates or Associates (or
Persons acting jointly or in concert with any of them) has, directly
or indirectly the right to vote such Voting Securities, Convertible
Securities and Rights pursuant to any agreement, arrangement, pledge
or understanding, written or oral; or
(c) which are Beneficially Owned within the meaning of subparagraphs (a)
or (b) above by any other Person with which such Person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding, written or oral, with respect to the voting of any
Voting Securities, Convertible Securities and Rights;
provided however, that a Person shall not be deemed to have "Beneficial
Ownership" of or to "Beneficially Own" any Voting Securities, Convertible
Securities or Rights:
(d) solely because such Person or any of such Person's Affiliates or
Associates has or shares the right to vote or direct the voting of
such securities pursuant to a revocable proxy given in response to a
public proxy solicitation made pursuant to, and in accordance with,
the then applicable rules and regulations under the Securities Act
(Ontario).
(e) solely because such Person or any of such Person's Affiliates or
Associates has or shares the power to vote or direct the voting of
such securities in connection with or in order to participate in a
public proxy solicitation.
1.3 Acting Jointly or in Concert
For purposes of this Agreement, a Person shall be deemed to be acting
jointly or in concert with another Person if such Person would be presumed
to be acting jointly or in concert with such other Person for purposes of
Section 91 of the Securities Act (Ontario) as it exists on the date hereof.
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1.4 Number and Gender
In this Agreement, words importing the singular include the plural and vice
versa and words in one gender include all genders.
1.5 Headings and References
The division of this Agreement into articles, sections, subsections, and
paragraphs and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this
Agreement. The article, section, subsection and schedule headings in this
Agreement are not intended to be full or precise descriptions of the text
to which they refer and are not to be considered part of this Agreement.
All uses of the words "hereto", "herein", "hereof", "hereby", "hereunder"
and similar expressions refer to this Agreement as a whole and not any
particular portion of it. References to an Article, Section Subsection,
paragraph or Schedule refer to the applicable article, section, subsection,
paragraph or schedule of this Agreement.
1.6 Amendment
This Agreement may be amended, modified or supplemented only by a written
agreement signed by each party hereto.
1.7 Waiver of Rights
Any waiver of, or consent to depart from, the requirements of any provision
of this Agreement shall be effective only if it is in writing and signed by
the party hereto giving it and only in the specific instance and for the
specific purpose for which it has been given. No failure on the part of any
party hereto to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver of such right. No single or partial
exercise of any such right shall preclude any other or further exercise of
such right or the exercise of any other right.
1.8 Time of Essence
Time is of the essence of this Agreement and each of its provisions.
1.9 Recitals
The Recitals to this Agreement are hereby incorporated and deemed to be
part of this Agreement.
1.10 Action by Principal Shareholders
Any act or election on the part of a group of Principal Shareholders shall
be deemed
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taken upon receipt of a written direction signed by a member or members of
such group owning at least 50% of the Voting Securities owned in the
aggregate by such group of Principal Shareholders.
1.11 Reference to Amounts of Voting Securities
All references to numbers of Voting Securities shall be adjusted
appropriately in the event of a stock split, consolidation, merger,
amalgamation or other similar transaction.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Integrated Brands and the Integrated Brands Principal Shareholders
Representations
The Integrated Brands Principal Shareholders each jointly and severally
represents and warrants to Yogen Fruz and the Yogen Fruz Principal
Shareholders that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ each is the
registered and Beneficial Owner of the following shares of Class A Common
Stock of Integrated Brands:
No. of Integrated Brands
shares of common stock
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 2,547,300
▇▇▇▇▇ ▇▇▇▇▇ 517,000
▇▇▇▇▇ ▇▇▇▇▇ 81,000
and that such shares are all the shares of Class A Common Stock of
Integrated Brands of which each is the registered or Beneficial Owner on
the date hereof. On the date hereof, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ are the
Beneficial Owners of options which could result in them acquiring the
following additional shares of Class A Common Stock of Integrated Brands:
No. of additional shares
of Class A Common Stock of
Integrated Brands which
could be acquired
--------------------------
▇▇▇▇▇ ▇▇▇▇▇ 175,000
▇▇▇▇▇ ▇▇▇▇▇ 222,500
In addition, it is anticipated that ▇▇▇▇▇ ▇▇▇▇▇ will be granted an option
to purchase 138,225 shares, and ▇▇▇▇▇ ▇▇▇▇▇ will be granted an option to
purchase 90,000 shares of Class A Common Stock of Integrated Brands
subsequent to the date hereof. In addition, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇ collectively will be granted an additional option to purchase an
aggregate of 836,921 Multiple Voting Shares of Yogen Fruz, subject to the
consummation of the Merger contemplated herein. ▇▇▇▇▇ ▇▇▇▇▇ and
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▇▇▇▇▇ ▇▇▇▇▇ will elect to convert their options into options to purchase
Multiple Voting Shares. On the date hereof, except as contemplated above,
none of the Integrated Brands Principal Shareholders is the Beneficial
Owner of any Convertible Securities or Rights which could result in them
acquiring additional Voting Securities or other capital stock of Integrated
Brands.
2.2 Yogen Fruz and the Yogen Fruz Principal Shareholders Representations
The Yogen Fruz Principal Shareholders and ▇▇▇▇▇ ▇▇▇▇▇▇▇ each jointly and
severally represents and warrants to Integrated Brands and the Integrated
Brands Principal Shareholders that The Serruya Family Trust and 1082272 are
the registered owner of the following common shares of Yogen Fruz:
No. of Yogen Fruz
common shares
-----------------
108227 6,859,092
The Serruya Family Trust 155,031
and that such common shares are all the Voting Securities of Yogen Fruz of
which the Yogen Fruz Principal Shareholders and ▇▇▇▇▇ ▇▇▇▇▇▇▇ are the
registered or Beneficial Owner on the date hereof (of which 2,280,791
shares constitute the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Shares, which will be changed into
Subordinate Voting Shares and not into Multiple Voting Shares). The Yogen
Fruz Principal Shareholders are the Beneficial Owners of 4,733,332 of such
shares and ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the Beneficial Owner of 2,280,791 of such
shares. On the date hereof, The Serruya Family Trust, 1082272 and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ are not the Beneficial Owners of
any Convertible Securities or Rights which could result in them acquiring
additional Voting Securities or other capital stock of Yogen Fruz.
ARTICLE 3
BOARD REPRESENTATION
3.1 Proportionate Representation
The parties hereto acknowledge that (i) the Integrated Brands Principal
Shareholders have agreed to support the Merger on the understanding that
they are to be entitled to nominate 50% of the members of the board of
directors of Yogen Fruz and that the Yogen Fruz Principal Shareholders have
agreed to vote their common shares of Yogen Fruz and their Voting
Securities of Yogen Fruz to elect such nominees, and (ii) the Yogen Fruz
Principal Shareholders have agreed to support the Merger on the
understanding that they are entitled to nominate 50% of the members of the
board of directors of Yogen Fruz, all of whom will be Canadian residents,
and the Integrated Brands Principal Shareholders have agreed to vote their
Voting Securities of Yogen
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Fruz to elect such nominees.
The Yogen Fruz Principal Shareholders acknowledge that the Integrated
Brands Principal Shareholders intend to nominate directors who are not
residents of Canada. The Yogen Fruz Principal Shareholders agree that in
the event that the laws of the jurisdiction of incorporation of Yogen Fruz
are changed in a manner which prevents the Integrated Brands Principal
Shareholders from nominating and electing non-residents of Canada as their
respective nominees to the board of directors of Yogen Fruz, then the Yogen
Fruz Prindpal Shareholders will cooperate with the Integrated Brands
Principal Shareholders in causing Yogen Fruz to take all necessary action
to ensure that the Integrated Brands Principal Shareholders are entitled to
nominate and elect non-residents of Canada as their director nominees
(including, without limitation, continuing Yogen Fruz from its current
jurisdiction of incorporation to another jurisdiction within Canada which
permits at least 50% of the directors to be non-Canadians).
3.2 Yogen Fruz Obligations
Yogen Fruz shall cause to be nominated for election as directors of Yogen
Fruz only legally qualified individuals, 50% of whom shall be recommended
jointly by the Integrated Brands Principal Shareholders and 50% of whom
shall be recommended jointly by the Yogen Fruz Principal Shareholders, as
is contemplated in Section 3.1. Yogen Fruz agrees to solicit proxies from
its shareholders for such nominees and to cause management proxies to be
voted in favour of such nominees, except for such proxies as contain a
specific contrary direction. Yogen Fruz's obligations under this Section
3.2 shall terminate (i) with respect to the nominees of Integrated Brands
Principal Shareholders, if the Integrated Brands Principal Shareholders
own, in the aggregate, less than 500,000 Voting Securities (including
Voting Securities issuable upon exercise or conversion of Convertible
Securities), or (ii) with respect to the nominees of the Yogen Fruz
Principal Shareholders, if the Yogen Fruz Principal Shareholders own, in
the aggregate, less than 1,000,000 Voting Securities (including Voting
Securities issuable upon exercise or conversion of Convertible Securities).
3.3 Obligations of the Principal Shareholders
If any director of Yogen Fruz nominated by either group of Principal
Shareholders shall cease to be a director for any reason whatsoever, each
Principal Shareholder shall use its best efforts, promptly upon the request
of the group of Principal Shareholders whose director has ceased to be a
director, to cause to be elected or appointed a legally qualified
individual nominated jointly by that group of Principal Shareholders (whose
director has ceased to be a director) to replace such director.
Each of the Yogen Fruz Principal Shareholders and the Integrated Brands
Principal Shareholders shall cast or cause to be cast all votes attached to
the Voting Securities Beneficially Owned by it from time to time at all
meetings of shareholders of Yogen
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Fruz at which any director of Yogen Fruz is to be elected, to elect and
maintain as directors of Yogen Fruz the number of nominees of the
Integrated Brands Principal Shareholders and Yogen Fruz Principal
Shareholders required by this Agreement. If any director ceases to be a
director of Yogen Fruz for any reason at any time, each group of Principal
Shareholders shall direct any nominees which it has on the board of
directors of Yogen Fruz to vote to appoint a new or additional nominee to
the board of the group of Principal Shareholders whose nominee ceased to be
a director. If the board of directors of Yogen Fruz does not appoint any
such required nominee to the board of directors of Yogen Fruz within 5
Business Days after receiving notice of such nomination, then Yogen Fruz
shall, at the request of any Principal Shareholder, promptly call a meeting
of its shareholders to fill such vacancy, which meeting shall be held
within 75 days thereafter.
At any such meeting, each Yogen Fruz Principal Shareholder and each
integrated Brands Principal Shareholder shall cast or cause to be cast all
votes attached to the Voting Securities of Yogen Fruz Beneficially Owned by
it as contemplated by this Agreement.
Each Principal Shareholder agrees to use its best efforts, and shall take
all actions to ensure (i) that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ are
elected as the Co-Chairman and Chief Executive Officer of Yogen Fruz and
each subsidiary and (ii) that the Board of Directors of Yogen Fruz and the
Board of Directors of each direct and indirect subsidiary of Yogen Fruz,
and each Committee of the Board of Directors of Yogen Fruz and each
Committee of the Board of Directors of each direct and indirect subsidiary
of Yogen Fruz shall be comprised of members, 50% of whom shall be
designated jointly by the Integrated Brands Principal Shareholders and 50%
of whom shall be designated jointly by the Yogen Fruz Principal
Shareholders.
Each of the Yogen Fruz Principal Shareholders and the Integrated Brands
Principal Shareholders agrees that they shall vote against any of the
following matters put to the shareholders of Yogen Fruz unless the Yogen
Fruz Principal Shareholders and the Integrated Brands Principal Shareholder
agree in writing to vote for such matter:
(a) the sale of all or substantially all of the assets of Yogen Fruz;
(b) an amalgamation, arrangement, merger, consolidation or other similar
transaction involving Yogen Fruz;
(c) any amendment or reenactment of the Memorandum of Association and/or
the Articles of Association of Yogen Fruz that would adversely affect
the rights of the Yogen Fruz Principal Shareholders or the Integrated
Brands Principal Shareholders.
3.4 Resignation of Nominees
If either group of Principal Shareholders does not have the requisite
number of nominees elected to the board of Yogen Fruz as provided for in
this Agreement for a
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period of 90 consecutive days, then the other group of Principal
Shareholders shall use their best efforts to have any of their nominees who
are in excess of 50% of the board resign as a director of Yogen Fruz, until
each group of Principal Shareholders' nominees constitute 50% of the Board
of Directors.
3.5 Limitations on Sale
No Integrated Brands Principal Shareholder or Yogen Fruz Principal
Shareholder shall dispose of, or permit the disposition of, any Voting
Securities, Convertible Securities or Rights Beneficially Owned by such
shareholder to a Related Person unless such Related Person agrees in
writing with the other parties to this Agreement to assume and be bound by
the obligations of such shareholder under this Agreement with respect to
the Voting Securities, Convertible Securities or Rights disposed of and not
to further dispose of any such Voting Securities, Convertible Securities or
Rights to a Related Person of the disposing Shareholder or to an Associate
or Affiliate of such Related Person unless the disposee agrees in writing
with the other parties to this Agreement to assume and be bound by the same
obligations.
Except as provided in this paragraph, until the first to occur of (i)
theTermination of this Agreement or (ii) the 21st anniversary of the date
hereof, no Principal Shareholder shall dispose of any Voting Securities to
a non-Related Person without the prior written consent of the other
Principal Shareholders which consent may be withheld or granted in the
other Principal Shareholders' sole discretion. Notwithstanding the
foregoing, (i) the consent of the Integrated Brands Principal Shareholders
shall not be required with respect to the disposition of Voting Securities
by the Yogen Fruz Principal Shareholders to a non-Related Person if, after
giving effect to such disposition, the Yogen Fruz Principal Shareholders
will own, in the aggregate, more than 3,733,332 Voting Securities and (ii)
the consent of the Yogen Fruz Principal Shareholders shall not be required
with respect to the disposition of Voting Securities by the Integrated
Brands Principal Shareholders to a non-Related Person if, after giving
effect to such disposition, the Integrated Brands Principal Shareholders
will own, in the aggregate, more than 1,800,000 Voting Securities
(including Convertible Securities). Whether or not requiring consent in
accordance with the terms of this paragraph (and, if requiring consent,
after such consent is given) a Principal Shareholder desiring to dispose of
his Voting Securities to a non-Related Person shall first offer such Voting
Securities to the other group of Principal Shareholders at the market price
(as defined in Schedule A) for such Voting Securities as of the date of the
offer, provided that if such Voting Securities are Multiple Voting Shares
and such Multiple Voting Shares are not listed, they shall be offered at
the market price for Subordinate Voting Shares. The offer shall be made by
written notice (the "Notice") which Notice shall specify the number of
Voting Shares to be sold (the "Offered Securities") and the market price.
The other group of Principal Shareholders may elect to purchase all or a
portion of such Offered Securities, provided that if the other group of
Principal Shareholders do not elect to purchase all of such Offered
Securities on or before 5:00 P.M. of the third Business Day after
delivering of the Notice (which election may be transmitted by facsimile),
then the Offered Securities which the other group of Principal Shareholders
has not elected to purchase may be
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sold. The other group of Principal Shareholders must evidence the election
to purchase all or such portion of the Offered Shares by a written
acceptance, which acceptance shall specify the number of Offered Shares to
be purchased, the identity(ies) of the purchaser and the concurrence in the
calculation of the market price, provided, however, in the event of a
disagreement in the calculation of the market price a certificate from
Yogen Fruz's independent accountants shall conclusively establish the
market price. Each group of Principal Shareholders shall allocate among
themselves the amount of Offered Shares to be purchased, but in the event
of an inability to agree, each member shall be allowed to purchase no less
than such individual member's pro rata percentage of the Voting Securities
owned by his or its Principal Shareholder Group. The acceptance shall
specify the date of the closing of the purchase of the Offered Securities
which shall be no later than thirty (30) days from the date of the
acceptance offer. All shares sold pursuant hereto shall be sold free and
clear of all Encumbrances and all payments shall be made in immediately
available funds against delivery of the certificates evidencing the shares
subject to the sale, duly endorsed in blank for transfer. Prior to any sale
to a non-Principal Shareholder, any Multiple Voting Shares must be
converted to Subordinate Voting Shares. The parties hereto recognize and
agree that the foregoing restriction on sales are reasonable and necessary
to effectuate the intent and purposes of this Agreement.
No Principal Shareholders shall convert, or cause to be converted, any
Multiple Voting Shares or common shares of Yogen Fruz, or Rights to receive
Multiple Voting Shares or common shares of Yogen Fruz, into Subordinated
Voting Shares, or Rights to receive Subordinate Voting Shares, without the
prior written consent of the other Principal Shareholders, which consent
may be withheld or granted in the other Principal Shareholders' sole
discretion, except as required in connection with (i) a permitted sale to a
non-Principal Shareholder as set forth above, and (ii) the 2,366,66 common
shares of Yogen Fruz held for the benefit of ▇▇▇▇▇ ▇▇▇▇▇▇▇.
The parties hereto agree that the Principal Shareholders shall not accept
an offer to sell any Voting Securities at a price in excess of the market
price of the Voting Securities on the date of such offer, except: 1) sales
made on the Toronto Stock Exchange or other regional or national exchange,
outside or inside Canada, on which such securities are regularly traded; 2)
to another Principal Shareholder; or 3) pursuant to an offer made
proportionately and at the same price to all other Yogen Fruz shareholders.
3.6 Shareholders and Yogen Fruz
Each of the Integrated Brands Principal Shareholders and the Yogen Fruz
Principal Shareholders, to the extent that it is permitted by law, shall
act and vote to carry out the intent and provisions of this Agreement.
Yogen Fruz agrees to carry out and be bound by the provisions of this
Agreement to the full extent that it has the capacity and power at law to
do so. Without limiting the generality of the foregoing, each of the
parties hereto agrees to cause such meetings of the directors and/or
shareholders of Yogen Fruz to be called and held, resolutions passed,
Certificate or Articles of Incorporation and/or Memorandum of Association
and Articles of Association
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amended, by-laws enacted, agreements and other documents executed and
delivered and things done or performed as may be required to ensure that
the affairs of Yogen Fruz are conducted in accordance with the provisions
of this Agreement.
ARTICLE 4
OTHER PROVISIONS
4.1 Support of Merger
Each of the Integrated Brands Principal Shareholders agree to vote all of
their Voting Securities of Integrated Brands in favour of the Merger at the
meeting of Integrated Brands to be called to consider the Merger and to
elect to receive Multiple Voting Shares in exchange for each of their
Voting Securities under the Merger.
Each of the Yogen Fruz Principal Shareholders agree to vote all of their
common shares of Yogen Fruz for the Reorganization and other proposals at
the meeting of Yogen Fruz and to change their common shares of Yogen Fruz
into Multiple Voting Shares (except the shares held for the benefit of
▇▇▇▇▇ ▇▇▇▇▇▇▇ which shall be changed into Subordinate Voting Shares).
4.2 Agreement by the Principal Shareholders not to Sell
Until consummation or termination of the Merger, each of the Principal
Shareholders agree not to dispose of any of their Voting Securities of
Integrated Brands and of Yogen Fruz.
4.3 Termination
This Agreement shall terminate in the event the Merger Agreement is
terminated prior to the Effective Time (as the term "Effective Time" is
defined in the Merger Agreement). In addition, this Agreement may be
terminated (i) by the Yogen Fruz Principal Shareholders, in the event the
Integrated Brands Principal Shareholders are the Beneficial Owners, in the
aggregate, of fewer than 750,000 Voting Securities (including Voting
Securities issuable upon conversion or exercise of Convertible Securities);
and (ii) by the Integrated Brands Principal Shareholders, in the event the
Yogen Fruz Principal Shareholders are the Beneficial Owners of fewer than
1,500,000 Voting Securities (including Voting Securities issuable upon
conversion or exercise of Convertible Securities).
Any such termination of this Agreement shall be without prejudice to the
rights of the parties hereto accrued under this Agreement to the date of
termination.
4.4 Default
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(a) In the event that either the Integrated Brands Principal Shareholders
or Yogen Fruz Principal Shareholders do not comply with their
obligations and agreements set forth in this Agreement (which failure
to comply, if capable of being cured, is not cured within ten (10)
days after receiving notice thereof from the other Principal
Shareholders) then the other Principal Shareholders shall have the
right to require the defaulting Principal Shareholders to sell (free
and clear of all liens and Encumbrances to such other Principal
Shareholders, all or such portion thereof as elected by the other
group of Principal Shareholders, of the Yogen Fruz Multiple Voting
Shares beneficially owned by the defaulting Principal Shareholders, at
the market price (as defined in Schedule A), for such Multiple Voting
Shares, less 30%, or if the Multiple Voting Shares are not listed, at
the market price (as defined in Schedule A) for Subordinate Voting
Shares, less 30%. In each case, the exercise price of Convertible
Securities shall be deducted from the purchase price. Such purchase
shall be consummated on the date set forth in the notice of the
failure (the "Breach Notice") of a group of Principal Shareholders to
comply with their obligations and agreements set forth in this
Agreement, but in no event more than sixty (60) days after such
notice. All shares sold pursuant hereto shall be sold free and clear
of all Encumbrances and all payments shall be made in immediately
available funds against delivery of the certificates evidencing the
shares subject to the sale, duly endorsed in blank for transfer.
The Integrated Brands Principal Shareholders and the Yogen Fruz
Principal Shareholders have agreed upon the above formula as as a
realistic estimate at the time of this Agreement of the fair market
value of their respective holdings based upon the then current market
price as reduced by numerous factors, including, without limitation,
the number of Voting Securities held by each party in relation to the
trading volume of Yogen Fruz's securities, the restriction on the
purchaser of such securities ability to resell such securities under
applicable securities laws and the related market risks, and the
absence of brokerage commissions and other costs of sale.
(b) At the effective time of the merger the Yogen Fruz Principal
Shareholders and the Integrated Brands Principal Shareholders shall
deposit with an Escrow Agent to be mutually determined by them all of
the multiple voting Yogen Fruz shares held by them. The Escrow Agent
shall hold such shares in accordance with the provisions of this
section and Section 3.5 of this Agreement.
(c) Each of the Principal Shareholders acknowledges and agrees that:
(i) this Agreement and, in particular, the provisions of this Section
4.4, have been specifically negotiated by sophisticated
commercial parties of equal bargaining power with the benefit of
independent legal advice;
(ii) the provisions of this Section 4.4. are reasonable in the
circumstances of the transactions contemplated by this Agreement
and are given as an integral and essential part of such
transactions; and
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(iii) each of the Principal Shareholders waives, to the fullest extent
permitted by law, any right to contest the validity or
enforceability of this Section 4.4 and all defenses to the strict
enforcement thereof.
4.5 Legend
All certificates representing Voting Securities owned by Principal
Shareholders shall bear the following legend:
"The Shares represented by this certificate and the right to dispose
and vote said shares is subject to a Board Representation Agreement by
and among certain principal shareholders of the Company, a copy of
which is available at the offices of the Company."
4.6 Tax Waiver
Yogen Fruz agrees that, in the event that any Treaty Country Holder of
Multiple Voting Shares elects to convert any Multiple Voting Shares into
Subordinate Voting Shares, then Yogen Fruz will not withhold any amount on
account of any failure by such Treaty Country Holder to obtain and deliver
a Yogen Fruz clearance certificate under Section 116 of the Income Tax Act,
if, and only if, Yogen Fruz has received, prior to a conversion, a "comfort
letter" from Revenue Canada, which in the opinion of counsel, states that a
clearance certificate under Section of the Income Tax Act is not required
where a Treaty Country Holder converts any Multiple Voting Shares into
Subordinate Voting Shares, and such Treaty Country Holder provides a
representation to Yogen Fruz that it is a Treaty Country Holder.
For these purposes, "Treaty Country Holder" means any holder of Multiple
Voting Shares which is a non-resident of Canada but a resident of a country
with which Canada has an income tax convention which exempts a resident
from the requirement to pay Canadian tax on any gains with respect to a
disposition of shares of Yogen Fruz unless the value of such shares is
derived principally from real property situated in Canada (and, for greater
certainty, the United States of America is such a country having such an
income tax convention).
ARTICLE 5
GENERAL
5.1 Notices
Any notice or other communication (hereinafter a "Notice") required or
Permitted to be given or made hereunder shall be in writing and shall be
well and sufficiently given or
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made if sent by prepaid first class registered mail,
in the case of a Notice to Integrated Brands, addressed to it at:
Integrated Brands Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
in the case of a Notice to Yogen Fruz, addressed to it at:
Yogen Fruz World-Wide Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
in the case of a Notice to 1082272 or The Serruya Family Trust, addressed
to it at:
c/o Yogen Fruz World-Wide Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
In the case of a Notice to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇,
addressed to them at:
c/o Integrated Brands Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Any Notice given or made in accordance with this Section 4.1 shall be
deemed to have been given or made and to have been received:
(a) on the day it was delivered, if delivered in person as aforesaid; or
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(b) on the third Business Day (excluding each day during which there
exists any general interruption of postal services due to strike,
lockout or other cause) after it was mailed, if mailed as aforesaid;
and
Any party hereto may from time to time change its address for notice by
giving Notice to the other parties hereto in accordance with the provisions
of this Section 5.1.
5.2 Further Assurances
Each party hereto shall do such acts and shall execute and deliver such
further agreements, documents and other writings, and shall cause the doing
of such acts and the execution and delivery of such further agreements,
documents and other writings, as are within its power and as any other
party hereto may in writing at any time and from time to time reasonably
request, in order to give full effect to the provisions of this Agreement.
5.3 Invalidity
In the event that any term or provision of this Agreement shall be invalid
or unenforceable such provision shall only be affected to the extent of
such invalidity and unenforceabilty and shall be enforced to the fullest
permitted extent and the remaining terms and provisions of this Agreement
shall not be affected thereby and shall be valid and enforceable to the
fullest extent permitted by law.
5.4 Successors and Assigns
Neither this Agreement nor any right or obligation hereunder is assignable
in whole or in part. Subject thereto, this Agreement shall, enure to the
benefit of and be binding upon the parties hereto and their respective
heirs, executors, legal personal representatives, administrators,
successors (including any successor by reason of amalgamation or statutory
arrangement of any party hereto) and permitted assigns.
5.5 Counterparts
This Agreement may be executed in any number of counterparts. Each
counterpart shall be deemed to be an original and all counterparts taken
together shall constitute one agreement.
5.6 Facsimile Execution
An executed copy of this Agreement may be delivered by any party hereto by
facsimile. In such event, such party shall forthwith deliver to the other
parties hereto, the copy of this Agreement executed by such party.
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5.7 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to its rule of conflicts of
law.
5.8 Enforcement of Agreement
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement are not performed-in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to injunctive and
other equitable relief to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof exclusively in any court
(federal or state) located in New York County ("New York Courts"), this
being in addition to any other remedy to which the parties may be entitled
at law or in equity. Each of the parties hereto (i) irrevocably submits to
the exclusive jurisdiction of the New York Courts for the purpose of any
suit, action or other proceeding arising out of this Agreement, the subject
matter hereof or any of the transactions contemplated hereby brought by any
party or their successor or assigns, and (ii) hereby waives, and agrees not
to assert, by way of motion, as a defense or otherwise, in any such suit,
action or proceedings, to the fullest extent permitted by applicable law,
that the suit, action or proceeding is brought in an inconvenient forum,
that the venue or the suit, action or proceeding is improper, or that this
Agreement, or the subject matter hereof or any of the transactions
contemplated hereby may not be enforced in or by such courts. Yogen Fruz
hereby irrevocably appoints, and generally consents to service of process
on Corporation Service Company at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, it being agreed that service upon such entity shall be valid service
on Yogen Fruz. Final judgment against any party in any suit shall be
conclusive, and may be enforced in other jurisdictions by suit on the
judgment, a certified or true copy of which shall be conclusive evidence of
the fact and of the amount of any indebtedness or liability of such party
therein described.
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IN WITNESS WHEREOF the parties hereto have duly executed this
Agreement under seal.
SIGNED, SEALED AND DELIVERED )
in the presence of ) "▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇" l/s
------------------------
) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
)
) "▇▇▇▇▇ ▇▇▇▇▇" l/s
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) ▇▇▇▇▇ ▇▇▇▇▇
)
) "▇▇▇▇▇ ▇▇▇▇▇" l/s
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) ▇▇▇▇▇ ▇▇▇▇▇
)
) INTEGRATED BRANDS INC.
)
) By "▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇"
---------------------
)
) By "▇▇▇▇▇ ▇▇▇▇▇" c/s
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)
) YOGEN FRUZ WORLD-WIDE INC.
)
) By "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"
---------------------
)
) By "▇▇▇▇▇ ▇▇▇▇▇▇▇" c/s
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)
) 1082272 ONTARIO INC.
)
) By "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"
---------------------
)
) By "▇▇▇▇▇ ▇▇▇▇▇▇▇" c/s
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)
) THE SERRUYA FAMILY TRUST
)
) By "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"
---------------------
)
) By "▇▇▇▇▇ ▇▇▇▇▇▇▇" c/s
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)
) "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇" l/s
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) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
)
) "▇▇▇▇▇ ▇▇▇▇▇▇▇" l/s
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) ▇▇▇▇▇ ▇▇▇▇▇▇▇
By signing below, ▇▇▇▇▇ ▇▇▇▇▇▇▇ agrees until consummation or termination of
the Merger not to dispose of any of his Beneficially Owned Voting
Securities of Yogen Fruz and at the Effective Time to convert such shares
into Subordinate Voting Shares:
)
) "▇▇▇▇▇ ▇▇▇▇▇▇▇" l/s
------------------------
) ▇▇▇▇▇ ▇▇▇▇▇▇▇
Schedule A
For the purposes of this Agreement "market price" of a class of securities,
as to which there is a published market, at any date, is an amount equal to the
simple average of the closing price of securities of that class for each of the
business days on which there was a closing price falling not more than twenty
business days before that date.
Where a published market does not provide a closing price, but provides
only the highest and lowest prices of securities traded on a particular day, the
market price of the securities, at any date, is an amount equal to the average
of the simple averages of the highest and lowest prices for each of the business
days on which there were highest and lowest price falling not more than twenty
business days before that date.
Where there is more than one published market for a security, the market
price shall be determined as follows:
1. If only one of the published markets is in Canada, the market
price shall be determined solely by reference to that market.
2. If there is more than one published market in Canada, the market
price shall be determined solely by reference to the published
market in Canada on which the greatest volume of trading in the
particular class of securities occurred during the twenty
business days preceding the date as of which the market price is
being determined.
3. If there is no published market in Canada, the market price shall
be determined solely by reference to the published market on
which the greatest volume of trading in the particular class of
securities occurred during the twenty business days preceding the
date as of which the market price is being determined.
Where there has been trading of securities in a published market for fewer
than ten of the twenty business days preceding the date as of which the market
price of the securities is being determined, the market price shall be the
average of the following prices established for each of the twenty business days
preceding that date,
(a) the average of the bid and ask prices for each day on which there was
no trading; and
(b) the closing price of securities of the class for each day that there
hasbeen trading, if the published market provides a closing price; or
(c) the average of the highest and lowest prices of securities of that
class for each day that there has been trading, if the published
market provides only the highest and lowest prices of securities
traded on a particular day.