THIS AGREEMENT MADE AS OF THE 15th DAY OF OCTOBER, 2003.
BETWEEN:
MIND YOUR OWN SKIN PRODUCTS INC. a Company
incorporated pursuant to the laws of the
Province of British Columbia being a wholly
owned subsidiary of AVVAA WORLD HEALTH CARE
PRODUCTS INC. a Company incorporated
pursuant to the laws of the State of Nevada
and each having an office address located at
3018 ▇▇▇▇▇▇▇▇▇ Road, Falkland, in the
Province of British Columbia, Canada V0E 1W0
(hereinafter the "Purchaser")
OF THE FIRST PART
AND:
594360 B.C. LTD.
carrying on business under the firm name and
style of "Mystic Mountain Body and Spa
Products" a Company incorporated pursuant to
the laws of the Province of British Columbia
and having its registered office located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, in the
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(hereinafter the "Vendor")
OF THE SECOND PART
AND: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Businessman, of
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
(hereinafter called the "Vendor's Covenantor")
OF THE THIRD PART
ASSET PURCHASE AGREEMENT
------------------------
A. WHEREAS the Vendor carries on a business of manufacturing, wholesale
selling and retail selling of bath, skin and body products and aromatherapy
products under the firm name and style of Mystic Mountain Body and Spa Products
at office premises located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, in the City of ▇▇▇▇▇▇, in the
Province of British Columbia and through Internet and other sales and
distributions channels and networks (hereinafter the "Vendor's Business");
B. AND WHEREAS the Vendor has agreed to sell, and the Purchaser has agreed
to purchase, subject to certain exceptions hereinafter enumerated, all the
property, assets and undertaking of the Vendor's Business, as a going concern,
on the terms and subject to the conditions hereinafter provided;
C. AND WHEREAS the Vendor's Covenantor is the sole shareholder of the
Vendor and has become party to this Agreement for the purpose of jointly and
severally covenanting with the Vendor to indemnify the Purchaser in the manner
hereinafter provided;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the
premises and the covenants, agreements, representations, warranties and payments
hereinafter contained, the parties hereto covenant and agree as follows:
1. PURCHASE AND SALE OF ASSETS
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1.01 Description of Assets Upon the terms and subject to the conditions
---------------------
hereof, the Vendor agrees to sell, assign and transfer to the Purchaser, and the
Purchaser agrees to purchase from the Vendor the undertaking and all the
property and assets of the Vendor's Business of every kind and description
wheresoever situate (except as provided in Section 1.02), free and clear of all
encumbrances, including, without limiting the foregoing:
(a) The equipment, furnishings, supplies, floor coverings and wall
coverings (the "Equipment and Furnishings") described in the
Schedule of Equipment and Furnishings;
(b) All inventories including product inventory, product label
inventory, bottle and closure inventory and product
ingredients (the "Inventories");
(c) The benefit of, including all deposits after the time of
Closing and income earned after the time of Closing from all
bookings, contracts, agreements, engagements, arrangements and
unfilled orders received by the Vendor and forward commitments
to purchase made by the Vendor in connection with the Vendor's
Business, and all other contracts, engagements or commitments,
whether written or oral, to which the Vendor is entitled in
connection with the Vendor's Business, and in particular all
right, title and interest of the Vendor in, to and under the
material agreements and contracts (the "Material Contracts")
described in the Schedule of Material Contracts;
(d) The Vendor's customer/client list attached hereto as the
Vendor's Client List;
(e) All right and interest of the Vendor to all registered and
unregistered trade marks, patents, product formulas, product
procedures, all other formulas and procedures, trade or
brand names, copyrights, designs, restrictive covenants and
other industrial or intellectual property used in connection
with the Vendor's Business, including but not so as to limit
the generality of the foregoing the name "Mystic Mountain
Body and Spa Products" the name "Mystic Mountain Boutique",
the name "Mystic Mountain", the Mystic Mountain trade ▇▇▇▇
registered in the Canadian Intellectual Property Office
under number TMA550631, the world wide web site, domain
names, information, sales and marketing materials and
intellectual property described at the world wide web site
at ▇▇▇▇://▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and all other
intellectual property (collectively the "Intangible
Property");
(f) The goodwill of the Vendor's Business and the right of the
Purchaser to represent itself as carrying on the Vendor's
Business in continuation of and in succession to the Vendor
and the right to use the name "Mystic Mountain" or "Mystic
Mountain Body and Spa Products" or any variation or variations
thereof as part of or in connection with the Vendor's Business
(the "Goodwill");
(g) The telephone numbers and facsimile numbers (including the
telephone number ▇-▇▇▇-▇▇▇-▇▇▇▇) and e-mail address or
addresses (including ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇) of the
Vendor's Business;
(h) The Supplies as are more particularly defined in paragraph 19
hereto;
(i) The Books and Records as are more particularly defined in
paragraph 19 hereto;
all collectively called the "Assets".
1.02 Exclusions There shall be specifically excluded from the purchase and
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sale herein, and from the Assets hereinbefore described, the following:
(a) cash on hand or on deposit at the time of Closing;
(b) the Vendor's Accounts Receivable, trade accounts, notes
receivable, investments and income earned prior to the Closing
Date and debts owing to the Vendor as at the Closing Date.
2. PURCHASE PRICE AND ALLOCATION
-----------------------------
Subject to adjustment as provided in subsection 16.01 the purchase
price (the "Asset Purchase Price") payable by the Purchaser to the Vendor for
the Assets shall be an amount equal to the aggregate of the sum of TWENTY-SIX
THOUSAND EIGHT HUNDRED and ONE ($26,801.00) DOLLARS and the Inventory Purchase
Price and shall be allocated as follows:
(a) to the Equipment and Furnishings, the sum of $21,800.00;
(b) to the Inventories the Inventory Purchase Price determined in
accordance with Section 4 hereof;
(c) to the Intangible Property, the Material Contracts, Goodwill
and any other of the Assets purchased hereunder, the sum of
$1.00 .
3. PAYMENT OF THE PURCHASE PRICE
-----------------------------
3.01 The Purchase Price shall be paid and satisfied, by certified cheque,
bank draft or solicitor's trust cheque payable to or to the order of the Vendor
and delivered on the Closing Date.
4. INVENTORY PURCHASE PRICE
------------------------
4.01 The Inventory Purchase Price shall be determined as follows:
(a) commencing at the close of business on the day preceding the
Closing Date, representatives of the Vendor and
representatives of the Purchaser will conduct a physical count
and tally of the inventories and will record the same in
writing in duplicate and such record will be signed by a
representative of the Vendor and of the Purchaser;
(b) the quantities shown in the record will be valued at the lower
of the Vendor's book value as determined by the Vendor's
records or the net realizable or market value and such value
will be inserted in the record of item set forth therein;
(c) the Purchaser shall not be required to purchase and/or pay for
any inventory which the Purchaser, in the Purchaser's sole
discretion, deems to be without realizable value or without
value to the Purchaser and the Vendor may in its discretion
retain any of such inventory for its own absolute use;
(d) if the representative of the Vendor and the representative of
the Purchaser do not agree on the value of any item in the
record of inventory, the items not agreed upon shall be noted
on the record and forthwith referred to the auditors or the
accountants of the Vendor and of the Purchaser for
determination;
(e) if such auditors or accountants cannot agree on a
determination of the dispute within ten (10) days next after
reference to them, the items in dispute shall be referred to a
single arbitrator under the Commercial Arbitration Act of
British Columbia, whose decision shall be final and binding
upon the parties;
(f) if the decision of such auditors or accountants or arbitrator
is not available prior to the Closing Date, the value of the
Inventory for the purpose of computing the Inventory Purchase
Price payable on the Closing Date shall be the aggregate of
the value of the items agreed upon;
(g) the value of the items referred to the auditors, accountants
and/or arbitrator as determined by such auditors, accountants
or arbitrator will be paid within ten (10) days after receipt
of such determination;
(h) the cost of the inventory count and valuation by the Vendor's
representatives, accountants and auditors shall be borne by
the Vendor; the costs of the inventory count and valuation by
the Purchaser's representatives, accountants and auditors
shall be borne by the Purchaser; the costs of any arbitration
shall be borne equally by the Purchaser and the Vendor.
5. THE VENDOR'S ACCOUNTS RECEIVABLE
--------------------------------
5.01 The Vendor's accounts receivable as at the date of Closing (herein
referred to as the "Vendor's Accounts Receivable") shall be determined at the
date of Closing by the Vendor supplying to the Purchaser a detailed list of the
accounts receivable owing to the Vendor at the date of Closing including, but
not so as to limit the generality of the foregoing, the name of each such
account receivable and the amount owing for each such account receivable
including the terms of payment, if any.
5.02 The Vendor shall be responsible for the collection of all the Vendor's
Accounts Receivable at its sole expense and on its own account and the Purchaser
shall not in any way be obliged to take any steps to assist the Vendor or to
collect on behalf of the Vendor the Vendor's Accounts Receivable. The Purchaser
shall, however, remit and pay over to the Vendor any amounts that the Purchaser
receives, in the normal course of the Purchaser's business, on account of the
Vendor's Accounts Receivable to the Vendor within 31 days after receipt of such
amount on account of the Vendor's Accounts Receivable. The Purchaser shall
account to the Vendor for any such amounts received by the Purchaser on a
monthly basis in such form acceptable to the Purchaser. Provided, however, the
Purchaser shall not be obliged to provide any accounting to the Vendor in
respect of same after the expiration of six months from the date of this
Agreement.
5.03 The Vendor shall notify the Purchaser in writing when the Vendor has
collected all of the Vendor's Accounts Receivable or such portion thereof that
the Vendor deems collectable and upon receipt of such notice the Purchaser shall
be discharged from any further obligation to account hereunder.
6. REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND VENDOR'S COVENANTOR
--------------------------------------------------------------------
To induce the Purchaser to enter into and complete the transactions
contemplated by this Agreement, the Vendor and Vendor's Covenantor hereby
jointly and severally represent and warrant as representations and warranties
that are true and correct as at the date hereof and that will be true and
correct at the Closing Date as if such representations and warranties were made
on the Closing Date, with the intent that the Purchaser shall rely thereon in
entering into this Agreement, and in concluding the purchase and sale
contemplated herein the following:
6.01 Status of Vendor The Vendor is a company duly incorporated, validly
----------------
existing and in good standing under the laws of British Columbia, and has the
full power, authority, right and capacity to own, lease and dispose of the
Assets and to carry on the Vendor's Business as now being conducted by it, and
to enter into this Agreement and carry out its terms to the full extent.
6.02 Authority to Sell The execution and delivery of this Agreement and the
-----------------
completion of the transaction contemplated hereby has been duly and validly
authorized by all necessary corporate action on the part of the Vendor and
executed by the Vendor and the Vendor's Covenantor and this Agreement
constitutes a legal, valid and binding obligation of the Vendor and the Vendor's
Covenantor enforceable against the Vendor and the Vendor's Covenantor in
accordance with its term except as may be limited by laws of general application
affecting the rights of creditors.
6.03 Sale Will Not Cause Default Neither the execution and delivery of this
---------------------------
Agreement, or other agreements and instruments contemplated hereby, nor the
completion of the purchase and sale contemplated herein will:
(a) violate any of the terms and provisions of the constating
documents or bylaws or articles of the Vendor, or any
resolution of directors or shareholders of the Vendor, or any
order, decree, statute, by-law, regulation, covenant,
restriction applicable to the Vendor or any of the Assets;
(b) give any person the right to terminate, cancel or remove any
of the Assets, save to the extent that the consent of third
parties is required to assign the Material Contracts, or
(c) result in any encumbrance on any of the Assets;
(d) result in any fees, duties, taxes, assessments or other
amounts relating to any of the Assets becoming due or payable
other than British Columbia social services tax and goods and
services tax payable by the Purchaser in connection with the
purchase and sale.
6.04 Assets The Vendor owns and possesses and has a good and marketable
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title to the Assets free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever, except as described
in the Schedule of Material Contracts.
6.05 Books and Records The books and records of the Vendor fairly and
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correctly set out and disclose in all material respects, in accordance with
generally accepted accounting principles, the financial position of the Vendor
and all material financial transactions of the Vendor relating to the Vendor's
Business have been accurately recorded in such books and records.
6.06 Financial Statements The audited financial statements (the "Financial
--------------------
Statements") of the Vendor for the year ended September 30, 2003 copies of which
are attached as Schedule of Financial Statements, have been prepared in
accordance with generally accepted accounting principles of Canada applied on a
basis consistent with those of previous fiscal years and present fairly and
correctly the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of the Vendor as of the date of the
Financial Statements, and the sales and earnings of the operations of the Vendor
during the periods covered by such Financial Statements.
6.07 Material Change Since the date of the September 30, 2003 Financial
---------------
Statements there has not been:
(a) any material change in the financial condition of the Vendor's
Business, its liabilities or the Assets other than changes in
the ordinary course of business, none of which has been
materially adverse;
(b) any damage, destruction, loss or other event (whether or not
covered by insurance) materially and adversely affecting the
Assets or the Vendor's Business.
(c) any material increase in the compensation payable or to become
payable by the Vendor to any of its officers, employees or
agents or any bonus, payment or arrangement made to or with
any of them save and except increases agreed to in writing by
the Purchaser.
(d) no event has occurred which would adversely affect the
Goodwill;
(e) the Vendor has not, directly or indirectly, purchased agreed
to purchase or leased or agreed to lease or acquired or agreed
to acquire any asset, other than as required in the usual and
ordinary course of the operation of the Vendor's Business;
(f) the Vendor has not, directly or indirectly, sold, transferred,
disposed of, mortgaged, pledged, charged or leased any asset,
other than as required in the usual and ordinary course of the
Vendor's Business;
(g) the Vendor has not, directly or indirectly, engaged or entered
in any transaction or made any disbursement or assumed any or
incurred any liability or obligation or made any commitment to
make any expenditure which might materially and adversely
affect any of the Assets or the organization, operations,
affairs, business, properties, prospects or financial
condition or position of the Vendor's Business
6.08 Litigation There is no litigation or administrative or governmental
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proceeding or inquiry pending, or to the knowledge of the Vendor, threatened
against or relating to the Vendor, the Vendor's Business, or any of the Assets,
nor does the Vendor know of or have reasonable grounds for believing that there
is any basis for any such action, proceeding or inquiry.
6.09 Conformity with Laws All governmental licences and permits required
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for the conduct in the ordinary course of the operations of the Vendor's
Business and the uses to which the Assets have been put, have been obtained and
are in good standing and such conduct and uses are not in breach of any statute,
by-law, regulation, covenant, restriction, plan or permit.
6.10 Forward Commitments All outstanding forward commitments by or on
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behalf of the Vendor for the purchase or sale of the Inventories have been made
in accordance with established price lists of the Vendor or its suppliers, or if
otherwise, then in accordance with the Vendor's normal business custom in
varying therefrom.
6.11 Terms of Employment The Vendor is not a party to any collective
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agreement relating to the Vendor's Business with any labour union or other
association of employees, no part of the Vendor's Business has been certified as
a unit appropriate for collective bargaining and there is no employee who cannot
be dismissed upon such period of notice as is required by law in respect of a
contract of hire for an indefinite term.
6.12 Material Contracts The Schedule of Material Contracts contains a true
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and correct listing of each written or oral contract of the following types to
be acquired or assumed by the Purchaser:
(a) contracts or commitments out of the ordinary course of
business;
(b) contracts or commitments involving an obligation to pay in the
aggregate $1,000.00 or more or of a duration greater
than one year;
(c) contracts or commitments affecting ownership of, or title to,
or any interest in real estate or in personal property;
(d) contracts or commitments in respect of the Intangible Property;
(e) except as required by statute or regulation, contracts or
commitments in respect of bonuses, incentive compensation,
pensions, group insurance or employee welfare plans all of
which are fully funded as determined by an independent and
reputable firm of actuaries employed by the Vendor;
(f) employment contracts or commitments other than unwritten
employment contracts of indefinite duration entered into in
the ordinary course of the Vendor's Business.
6.13 No Defaults Except as otherwise expressly disclosed herein or in any
-----------
schedule hereto there has not been any default in any obligation to be performed
under any Material Contract, each of which is in good standing and in full force
and effect, unamended, except as set forth in the Schedule of Material
Contracts.
6.14 Accuracy of Representations No certificate furnished by or on behalf
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of the Vendor to the Purchaser at the time of Closing in respect of the
representations, warranties or covenants of the Vendor herein will contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements contained therein not misleading.
6.15 Canadian Resident The Vendor is a resident in Canada within the
-----------------
meaning of the Income Tax Act (Canada).
6.16 Environmental Contamination
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(a) The Vendor has not used the Vendor's Business or any of the
Assets or permitted them to be used to generate, manufacture,
refine, treat, transport, store, handle dispose of, transfer,
produce or process Hazardous Substances, except in compliance
with all applicable laws, judgements, decrees, orders,
injunctions, rules, statutes and regulations of all courts,
arbitrators or Governmental Authorities, including all
environmental, health and safety statutes and regulations, and
to the best of the Vendor's and Covenantor's knowledge,
neither has any lessee, prior owner or other person.
(b) The Vendor's Business complies with all applicable laws,
judgements, decrees, orders, injunctions, rules, statutes and
regulations of all courts, arbitrators or Governmental
Authorities, including all environmental, health and safety
regulations;
(c) The Vendor's Business is not subject to any judicial or
administrative proceeding alleging the violation of any
applicable environmental, health or safety law, judgement,
decree, order, injunction, rule, statute or regulation;
(d) The Vendor's Business is not the subject of any investigation
by any Governmental Authority evaluating whether any remedial
action is needed to respond to a release of any Hazardous
Substance into the environment;
(e) Neither the Vendor nor the Covenantor have filed any notice
under any applicable environmental, health or safety law,
judgement, decree, order, injunction, rule, statute or
regulation indicating past or present treatment, storage or
disposal of a Hazardous Substance or constituent, or other
substance into the environment;
(f) Neither the Vendor nor the Covenantor have any contingent
liability in connection with the release of any Hazardous
Substance or constituent, or other substance into the
environment;
(g) At the date of Closing no Hazardous Substance shall have been
released into the environment, or deposited, discharged,
placed or disposed of at the Vendor's Business;
(h) The Vendor and the Covenantor hereby covenant and agree to
clean, remove or rectify, at their sole expense, any Hazardous
Substance on the Vendor's Business arising out of the Vendor's
ownership or operation of the Vendor's Business and the Vendor
and the Covenantor hereby agree to indemnify and save harmless
the Purchaser from any and all liability in respect thereof
pursuant to subsection 7.07 of this Agreement.
6.17 Goods and Services Tax The Vendor is a G.S.T. Registrant and is
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registered under number R
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7. COVENANTS OF THE VENDOR AND VENDOR'S COVENANTOR
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7.01 Conduct of the Business Until the time of Closing, the Vendor shall
-----------------------
conduct the Vendor's Business diligently and only in the normal and ordinary
course and will use its best efforts to preserve the Assets intact, to keep
available to the Purchaser its present employees and to preserve for the
Purchaser its relationships with its suppliers, customers and others having
business relations with it.
7.02 Change of Trade Name The Vendor shall, within thirty (30) days after
--------------------
the time of Closing, change its trade name to a name that does not include any
of the words "Mystic Mountain" in any registries in which the Vendor has
registered such trade name and does hereby assign all of its right, title and
interest in such trade name to the Purchaser.
7.03 Access by Purchaser The Vendor will give to the Purchaser and the
-------------------
Purchaser's counsel, accountants and other representatives full access, during
normal business hours throughout the period prior to Closing, to all of the
properties, books, contracts, commitments and records of the Vendor relating to
the Vendor's Business and the Assets, and will furnish to the Purchaser during
such period all such information as the Purchaser may reasonably request.
7.04 Permits and Licenses The Vendor and the Vendor's Covenantor will make
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all necessary applications for and each of the Vendor and the Vendor's
Covenantor will use their best efforts to obtain all necessary approvals of the
relinquishment, transfer and reissue to the Purchaser of all necessary permits
required to conduct the Vendor's Business.
7.05 Social Services Tax The Vendor will obtain, as soon as available from
---------------
the Commissioner of Social Services Tax, a certificate in duplicate pursuant to
the Social Services Tax Act of British Columbia confirming that all social
services taxes have been paid and deliver a duplicate thereof to the Purchaser.
7.06 Insurance From the date hereof until the time of closing the Vendor
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will maintain in full force and effect the policies of insurance heretofore
maintained and obtain and maintain such additional policies of insurance as may
be required to adequately insure the Assets and shall forthwith cause the
Purchaser to be added as a named insured under all such policies and to remain
as a named insured until the time of Closing.
7.07 Covenant of Indemnity The Vendor and the Covenantor will jointly and
---------------------
severally indemnify and hold harmless the Purchaser from and against:
(a) any and all liabilities, whether accrued, absolute, contingent
or otherwise, existing at the time of Closing;
(b) any and all damage or deficiencies resulting from any
misrepresentation, breach of warranty or non-fulfilment of any
covenant on the part of the Vendor under this Agreement or
from any misrepresentation in or omission from any certificate
or other instrument furnished or to be furnished to the
Purchaser hereunder; and
(c) any and all actions, suits, proceedings, demands, assessments,
judgments, costs and legal and other expenses incident to any
of the foregoing.
7.08 Termination of Employees The Vendor will at the time of Closing
------------------------
terminate the employment of all employees including the employees to whom the
Purchaser has made an offer of employment and the Vendor and the Vendor's
Covenantor will indemnify and save harmless the Purchaser from and against all
claims by any employee of the Vendor for wages, salaries, bonuses, pension or
other benefits, severance pay, notice or pay in lieu of notice and holiday pay
in respect of any period prior to the time of Closing.
7.09 Employees The Vendor shall pay to all employees all wages, salaries
---------
and bonuses and all amounts due in lieu of holiday pay and other benefits up to
and including the Closing Date.
7.10 Maintenance and Repair of Assets The Vendor will take good care of
--------------------------------
all of the Assets and do all necessary repairs and maintenance to such assets as
are used by the Vendor in the usual and ordinary course of the operation of the
Vendor's Business and take reasonable care to protect and safeguard the Assets.
7.11 Filings The Vendor will make all necessary tax, governmental and other
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filings in a timely fashion.
7.12 Procure Consents The Vendor shall diligently take all reasonable steps
----------------
to assist the Purchaser to obtain, prior to the time of Closing, all consents to
the assignment of the Material Contracts and any other Assets for which a
consent is required.
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Vendor as follows, with the
intent that the Vendor shall rely thereon in entering into this Agreement, and
in concluding the purchase and sale contemplated herein.
8.01 Status of Purchaser The Purchaser is a corporation duly incorporated,
-------------------
validly existing and in good standing under the laws of Canada, has the power
and capacity to enter into this Agreement and carry out its terms, and at the
time of closing will be duly registered as a company under the Companies Act of
British Columbia.
8.02 Authority to Purchase The execution and delivery of this Agreement and
---------------------
the completion of the transaction contemplated hereby has been duly and validly
a authorized by all necessary corporate action on the part of the Purchaser, and
this Agreement constitutes a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms except
as limited by laws of general application affecting the rights of creditors.
9. COVENANTS OF THE PURCHASER
--------------------------
9.01 Purchase and Transfer Taxes The Purchaser shall be liable for and
---------------------------
shall pay all provincial sales taxes and other taxes, registration charges and
transfer fees properly payable upon and in connection with the sale and transfer
of the Assets by the Vendor to the Purchaser. The Vendor shall be liable for and
shall pay any and all goods and services taxes payable upon and in connection
with the sale and transfer of the Assets by the Vendor to the Purchaser.
9.02 Consents The Purchaser will at the request of the Vendor execute and
--------
deliver such applications for consent and such assumption agreements, and
provide such information as may be necessary to obtain the consents referred to
in paragraph 7.12 and will assist and cooperate with the Vendor in obtaining the
said consents.
9.03 Vendor's Access to Books and Records The Purchaser shall permit the
------------------------------------
Vendor access to the Vendor's Books and Records for a period of two (2) months
after the Closing Date.
9.04 Assumption of Material Contracts by Purchaser The Purchaser shall and
---------------------------------------------
does hereby assume the Material Contracts.
9.05 Employment of Vendor's Employees The Purchaser covenants with the
--------------------------------
Vendor to offer employment at the time of Closing on terms and conditions then
in effect to all employees of the Vendor employed by the Vendor in connection
with the Vendor's business unless the Purchaser determines in its sole
discretion that the employees or any one or more of them are unsuitable for
employment in their respective positions with the Vendor or otherwise unsuitable
to the Purchaser.
9.06 Employment of Vendor's Covenantor The Purchaser covenants with the
---------------------------------
Vendor to offer the Vendor's Covenantor, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, employment with
the Purchaser as the Purchaser's Vice President of Manufacturing and
Distribution upon terms and conditions acceptable to the Purchaser and the
Vendor's Covenantor.
10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
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10.01 Vendor's Representations, Warranties and Covenants All Statements
--------------------------------------------------
contained in any certificate or other instrument delivered by or on behalf of
the Vendor pursuant hereto or in connection with the transaction contemplated
hereby shall be deemed to be representations and warranties by the Vendor and
the Vendor's Covenantor hereunder. All representations, warranties, covenants
and agreements made by the Vendor and the Vendor's Covenantor in this Agreement
or pursuant hereto shall, unless otherwise expressly stated, survive the time of
Closing and any investigation at any time made by or on behalf of the Purchaser
and shall continue in full force and effect for the benefit of the Purchaser.
10.02 Purchaser's Representations, Warranties and Covenants All
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representations, warranties, covenants and agreements made by the Purchaser in
this Agreement or pursuant hereto shall, unless otherwise expressly sated,
survive the time of Closing and any investigation at any time made by or on
behalf of the Purchaser and shall continue in full force and effect for the
benefit of the Vendor.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER.
--------------------------------------------------------
All obligations of the Purchaser under this Agreement are subject to
fulfilment at or prior to the time of Closing of the conditions hereinafter
enumerated.
11.01 Vendor's Representations and Warranties The Vendor's and the Vendor's
---------------------------------------
Covenantor's representations and warranties contained in this Agreement and in
any certificate or document delivered pursuant to the provisions hereof or in
connection with the transactions contemplated hereby shall be true at and as of
the time of Closing as if such representations and warranties were made at and
as of such time.
11.02 Vendor's Covenants The Vendor and/or the Vendor's Covenantor shall
------------------
have performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior to or at
the time of Closing.
11.03 Vendor's Certificate The Vendor shall have delivered to the Purchaser
--------------------
a certificate of the President and Secretary of the Vendor, dated the time of
Closing, certifying in such detail as the Purchaser may specify to the
fulfilment of the conditions set forth in sections 11.01 and 11.02.
11.04 Opinion of the Purchaser's Counsel The Purchaser shall have received
----------------------------------
from its counsel, Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Company, an opinion dated the time of
closing that the Purchaser has acquired a good and marketable title to the
Assets to the extent contemplated by this Agreement.
11.05 Consents The Purchaser shall have received duly executed copies of any
--------
consents or approvals required to transfer, convey and/or assign the Assets.
11.06 Financing The Purchaser shall have arranged financing satisfactory to
---------
the Purchaser on or before December 31, 2003.
11.07 Vendor's Financial Statements The Vendor hereby confirms that within
-----------------------------
75 days of the date hereof, its financial statements for the last 2 fiscal years
must be audited for the purposes of Purchaser filing a Form 8-K with the United
States Securities and Exchange Commission. ___________ shall be responsible for
undertaking such audit and the costs related thereto. In addition, if the audit
is for a period that is not within 135 days of the date of closing of this
transaction, an interim period review for a period within 135 days of the date
of closing of this transaction must be undertaken within such time period. Such
review shall be the responsibility of ________________.
The foregoing conditions are for the exclusive benefit of the Purchaser
and any such condition may be waived in whole or in part by the Purchaser at or
prior to the time of closing by delivering to the Vendor a written waiver to
that affect signed by the Purchaser.
12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE VENDOR
-----------------------------------------------------
All obligations of the Vendor under this Agreement are subject to the
fulfilment, prior to or at the time of Closing, of the conditions hereinafter
enumerated.
12.01 Purchaser's Representations and Warranties The Purchaser's
------------------------------------------
representations and warranties contained in this Agreement shall be true at and
as of the time of closing as though such representations and warranties were
made as of such time.
12.02 Purchaser's Covenants The Purchaser shall have performed and complied
---------------------
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it at or prior to the time of Closing.
Each of the foregoing conditions are for the exclusive benefit of the
Vendor and any such condition may be waived in whole or in part by the Vendor at
or prior to the time of closing by delivering to the Purchaser a written waiver
to that effect signed by the Vendor.
12. CLOSING
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12.01 Time of Closing Subject to the terms and conditions hereof, the
---------------
purchase and sale of the Assets shall be completed at a closing to be held at
4:00 p.m. local time on January 2, 2004 or such other, date, time, place or
manner in which the Vendor and the Purchaser may agree in writing (herein
referred to as the "time of Closing", "Closing" or the "Closing Date").
12.02 Place of Closing Subject to paragraph 12.01 the Closing shall take
----------------
place at the offices of the Purchaser's solicitors, Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
Company, #▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
12.03 Transactions of the Vendor on Closing At the time of Closing the
-------------------------------------
Vendor shall deliver or cause to be delivered to the Purchaser:
(a) all deeds of conveyance, agreements for sale, bills of sale,
transfer and assignments in form and content satisfactory to
the Purchaser's counsel, appropriate to effectively vest a
good and marketable title to the Assets in the Purchaser to
the extent contemplated by this Agreement, and immediately
registrable in all places where registration of such
instruments is required;
(b) possession of the Assets;
(c) the certificate of the President and Secretary of the Vendor
to be given under paragraph 11.03;
(d) certified copies of such resolutions of the shareholders and
directors of the Vendor as are required to be passed to
authorize the execution, delivery and implementation of this
Agreement and of all documents to be delivered by the Vendor
pursuant thereto.
(e) duly executed releases of, or evidence to the reasonable
satisfaction of the Purchaser as to the discharge of any and
all liabilities which the Purchaser has not agreed to assume
and which may be enforceable against any of the Assets being
purchased hereunder.
12.04 Transactions of the Purchaser on Closing At the Closing the Purchaser
----------------------------------------
shall deliver or cause to be delivered:
(a) subject to the adjustments set out in paragraph 16, a
certified cheque, banker's draft or solicitor's trust cheque
payable to the Vendor or the Vendor's solicitors for the Asset
Purchase Price payable pursuant to paragraph 3.01;
(b) an acknowledgement signed by the Purchaser that it has
received the opinion of its counsel in compliance with
paragraph 10.04.
13. RISK OF LOSS
------------
From the date hereof to the time of Closing, the Assets shall be and
remain and the risk of the Vendor. If any of the Assets shall be lost, damaged
or destroyed prior to the time of Closing, the Purchaser may either terminate
this Agreement or, in lieu of terminating this Agreement, elect by notice in
writing to the Vendor to complete the purchase to the extent possible without
reduction of the Asset Purchase Price, in which event all proceeds of any
insurance or compensation in respect of such loss, damage or destruction shall
be payable to the Purchaser and all right and claim of the Vendor to any such
amounts not paid by the time of Closing shall be assigned to the Purchaser.
14. INDEMNITY AND SET-OFF
---------------------
14.01 Indemnity by the Vendor and the Vendor's Covenantor
---------------------------------------------------
Without prejudicing any other remedy available to the Purchaser at law
or in equity, the Vendor and the Vendor's Covenantor hereby jointly and
severally agree, forthwith upon demand, to indemnify and save harmless the
Purchaser from and against any and all costs, losses, damages or expenses
suffered or incurred by the Purchaser in any manner arising out of, in
connection with, with respect to or relating to:
(a) any and all liabilities, whether accrued, absolute, contingent
or otherwise, existing at the time of Closing;
(b) any representation or warranty of the Vendor or the Vendor's
Covenantor set forth in this Agreement, or any agreement
delivered pursuant hereto, being untrue or incorrect or the
failure of the Vendor or the Vendor's Covenantor to observe or
perform any obligations pursuant hereto;
(c) any and all indebtedness existing at the time of Closing which
affects the title to the Assets and which do not form part of
the Material Contracts as represented to the Purchaser;
(d) any misrepresentation in or omission from any certificate or
other instrument furnished or to be furnished to the Purchaser
hereunder;
(e) any claim or claims whatsoever made in connection with the
sale and purchase provided for herein by any agent, broker or
other third party claiming to have acted as broker or agent or
to otherwise be entitled to a commission, fee or other payment
in respect of the transactions contemplated hereby as a result
of any act or thing done on behalf of the Vendor;
(f) any and all goods and services taxes, social services tax,
actions, suits, proceedings, demands, assessments, judgements,
costs and legal and other expenses incidental to any of the
foregoing.
14.02 Clarification of Indemnity by Vendor and Vendor's Covenantor
------------------------------------------------------------
With respect to the indemnity provided in subparagraph 14.01, each of
the Vendor and Vendor's Covenantor hereby:
(a) waives notice of demand for payment, performance or
satisfaction of all or any part of its or their obligations
under the indemnity given in subparagraph 14.01, protest,
notice of protest and notice of default, any right they may
have to require that an action be brought against the Vendor's
Covenantor or the Vendor, as the case may be, or any other
person and any and all other notices and legal and equitable
defences to which they may be entitled;
(b) agrees to honour their obligations under the indemnity
given in subparagraph 14.01 forthwith upon demand and
acknowledges that such liability is not contingent or
conditional upon the pursuit of any remedies against the
Vendor's Covenantor or the Vendor, as the case may be, or
any other person and that such liability shall not be
diminished, relieved of otherwise affected by the extension
of time, credit or any other indulgence which the Purchaser
may from time to time grant to the Vendor's Covenantor or
the Vendor, as the case may be, or to any other person,
including the acceptance of any partial payment, performance
or satisfaction, or compromise or release of any claims, or
by the Vendor's Covenantor or the Vendor not having legal
existence, or the Vendor's Covenantor or the Vendor, as the
case may be, being under no obligation to pay the
indebtedness under the indemnity, or any part thereof, or by
the indebtedness under the indemnity becoming irrevocable or
unenforceable in whole or in part from or against the
Vendor's Covenantor or the Vendor, as the case may be, by
operation of law or otherwise, none of which shall in any
way modify or amend the indemnity given in subparagraph
14.01, which shall be continuing and irrevocable and binding
on each of the Vendor and the Vendor's Covenantor as
principal obligant;
(c) agrees that nothing but payment, satisfaction and performance
in full of their obligations to the Purchaser under the
indemnity given in subparagraph 14.01 shall release the Vendor
and the Vendor's Covenantor, or either of them, from their
obligations hereunder;
(d) agrees that no document, proof or other action, other than as
herein set forth is necessary as a condition of either the
Vendor and the Vendor's Covenantor honouring their obligations
hereunder;
(e) agrees that in the event of bankruptcy, winding-up or
distribution of the assets of the Vendor's Covenantor or the
Vendor, as the case may be, the rights of the Purchaser shall
not be affected or impaired by its omission to prove its
claim, or to prove its full claim, and it may prove such claim
as it sees fit and may refrain from proving any claim;
(f) agrees that no term, condition or provision hereof or any
right hereunder, or in respect thereof, shall be or shall be
deemed to have been waived by the Purchaser, except by express
written waiver signed by the Purchaser, all such waivers to
extend only to the particular circumstances therein specified.
Neither forbearance nor indulgence by the Purchaser shall
constitute a waiver of any term, condition or provision to be
performed or observed by either of the Vendor and the Vendor's
Covenantor, or want of any performance or observance thereof;
and,
(g) agrees that no action or omission on the part of the Purchaser
in exercising or failing to exercise its rights hereunder or
in connection with or arising from any of the Vendor's and the
Vendor's Covenantor's obligations under the indemnity given
under paragraph 14.01, or any part thereof shall make the
Purchaser liable to the Vendor or the Vendor's Covenantor, or
all of them, for any loss occasioned to either of the Vendor
or the Vendor's Covenantor.
14.03 Set-Off If under this Agreement or any other document delivered
-------
pursuant hereto the Vendor becomes obligated to pay any sum of money to the
Purchaser, then such sum may, at the election of the Purchaser, and without
limiting or waiving any other right or remedy of the Purchaser under this
Agreement, be set off against and shall apply to any sum of money or security
owed by the Purchaser to the Vendor until such amount has been completely set
off.
16. ADJUSTMENTS
-----------
16.01 Taxes, rents, water, gas and hydro rates, prepaid expenses relating to
the Assets and other matters customarily the subject of adjustment shall be
adjusted as at the close of business on the Closing Date and the Asset Purchase
Price shall be adjusted accordingly.
17. RESTRICTIVE COVENANT
--------------------
17.01 The Vendor and the Vendor's Covenantor jointly and severally covenant
and agree with the Purchaser that they will not for a period of 2 years from the
date of this Agreement, either individually or in partnership or jointly or in
conjunction with any person or persons, including, without limitation, any
individual, firm, association, syndicate, company, corporation or other business
enterprise, as principal, agent, shareholder, officer, employee or in any other
manner whatsoever carry on or be engaged in or be concerned with or interested
in or advise or permit its or his name or names to be used or employed by any
person or persons, including, without limitation, any individual, firm,
association, syndicate, company, corporation or other business enterprise
engaged in or concerned with or interested in within Canada and the United
States any business of manufacturing, wholesale selling and retail selling of
bath, skin and body products and aromatherapy products or any part thereof
presently carried on by the Vendor. Provided, however, that in the event that
the Purchaser shall permanently cease business operations and provided such
release will not harm or adversely affect the financial position or standing of
the Purchaser or its successors or assigns the Purchaser agrees that it will
release the Vendor and the Vendor's Covenantor from this covenant.
18. GENERAL PROVISIONS
------------------
18.01 Election Regarding GST. The Vendor and the Purchaser shall jointly
----------------------
elect to have Section 167 of the Excise Tax Act of Canada apply to the transfer
of the Assets. Such election shall be in the prescribed form and shall be filed
in a timely fashion with the return of the Vendor for the reporting period in
which the transfer occurs.
18.02 Further Assurances The parties hereto shall execute such further and
------------------
other documents and do such further and other things as may be necessary to
carry out and give effect to the intent of this Agreement.
18.03 Notice All notices required or permitted to be given hereunder shall
------
be in writing and personally delivered to the address of the intended recipient
set forth on the first page hereof or at such other address as may from time to
time be notified by any of the parties hereto in the manner herein provided.
18.04 Entire Agreement This Agreement constitutes the entire Agreement
----------------
between the parties and there are no representations or warranties, express or
implied, statutory or otherwise and no agreements collateral hereto other than
as expressly set forth or referred to herein.
18.05 Time of the Essence Time shall be of the essence of this Agreement.
-------------------
18.06 Applicable Law This Agreement shall be governed by and interpreted in
--------------
accordance with the laws of the Province of British Columbia.
18.07 Successors and Assigns This Agreement shall enure to the benefit of
----------------------
and be binding upon the parties hereto and their respective, heirs, executors,
administrators, successors and assigns.
18.08 Captions The captions appearing in this Agreement are inserted for
--------
convenience of reference only and shall not affect the interpretation of this
Agreement.
18.09 Counterpart This Agreement may be executed in any number of
-----------
counterparts or by facsimile, each of which shall together, for all purposes,
constitute one and the same instrument, binding on the parties, and each of
which shall together be deemed to be an original, notwithstanding that all of
the parties are not signatory to the same counterpart of facsimile.
18.10 Legal and Other Fees Unless otherwise specifically provided herein,
--------------------
the parties will pay their respective legal, accounting and other professional
fees and expenses, including goods and services taxes on such fees and expenses,
incurred by each in connection with the negotiation and settlement of this
Agreement, the completion of the transactions hereby and other matters
pertaining hereto.
18.11 Assignment The Purchaser and/or the Vendor may not assign the benefit
----------
of this Agreement, in whole or in part without the prior written consent of the
other party, such consent not to be unreasonably withheld.
19. DEFINITIONS
-----------
19.01 "Books and Records" means true copies of all books, records, files,
------------------
documents and other written, electronically maintained or computer assessed
information relating to the Business or the Assets which are in the Vendor's or
the Vendor's Covenantor' possession or control, including the following:
(a) lists of customers and suppliers (past, present and
potential);
(b) price lists;
(c) records with respect to productions, engineering, product
development, costs, inventory, and equipment;
(d) advertising matter, catalogues, correspondence, mailing
lists, photographs, sales materials and records, purchasing
materials and records;
(e) personnel records of employees whose employment will be
continued with the Purchaser;
(f) media materials and plates;
(g) sales order and purchaser order files;
(h) information from accounting, tax files relating to goods and
services tax or social services tax, and litigation files
reasonably requested by the Purchaser from time to time;
(i) plans, specifications, surveys, construction contracts, and
other materials relating to the any leasehold property;
(j) correspondence files (including correspondence relating to
discounts, rebates, future commitments, product returns,
production errors, standards of any relevant Governmental
Authority, social service taxes, goods and services taxes,
environmental legislation and fitness and service warranties
relating to the Assets); and,
(k) other records used in or required to continue the Business
as heretofore and presently being conducted by the Vendor.
19.02 "Government Authority" means any federal, provincial, state, municipal,
---------------------
county or regional government or governmental authority, domestic or foreign,
and includes any department, commission, bureau, board, administrative agency or
regulatory body of any of the foregoing.
19.03 "Hazardous Substance" includes any contaminants, pollutants, dangerous
--------------------
substances, liquid wastes, industrial wastes, hauled liquid wastes, toxic
substances, hazardous wastes, hazardous materials, or hazardous substances as
defined in or pursuant to any law, judgment, decree, order, injunction, rule,
statute and regulation of any court, arbitrator or Governmental Authority by
which the Business, the Assets, the Vendor or the Vendor's Covenantor is bound
or to which Business, the Assets, the Vendor or the Vendor's Covenantor is
subject.
19.04 "Parties" means the Vendor, the Purchaser, the Vendor's Covenantor and
--------
the Purchaser's Covenantor.
19.05 "Permits" means all licenses, consents, permits, authorities,
--------
certificates and registrations which are required necessary or desirable for the
conduct in the usual and ordinary course of the operation of the Business and
the ownership or leasing of and the uses to which the Assets have been and
presently are put.
19.06 "Supplies" means all operating stores or supplies used to carry on
---------
the Vendor's Business.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
MIND YOUR OWN SKIN PRODUCTS INC. )
by its authorized signatories: )
)
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
---------------------------------------------- )
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
---------------------------------------------- )
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
594360 B.C. LTD. )
by its authorized signatory: )
)
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
---------------------------------------------- )
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
SIGNED, SEALED AND DELIVERED by )
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the presence of: )
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
------------------------------------- ) /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
) -------------------------
) ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------- )
------------------------------------- )
)
SCHEDULE OF MATERIAL CONTRACTS
------------------------------
VENDOR'S CLIENT LIST
Attached hereto
SCHEDULE OF FINANCIAL STATEMENTS
SCHEDULE OF EQUIPMENT AND FURNISHINGS