EXHIBIT 2
SECURITIES PURCHASE AGREEMENT
AMONG
XXXXXX SNOWBOARDS, INC.,
XXXXXX, LLC,
XXXXXX SNOWBOARDS ULC,
WESTBEACH SNOWBOARD CANADA LTD.
AND
CERTAIN SECURITY HOLDERS OF WESTBEACH SNOWBOARD CANADA
LTD.
CONTENTS
1. PURCHASE AND SALE OF SECURITIES.................................. 1
1.1 PURCHASE PRICE............................................. 1
1.2 THE CLOSING................................................ 2
1.3 DETERMINATIONS AS OF THE FIRST CLOSING DATE;
SUBSEQUENT ADJUSTMENTS............................... 6
1.4 SPECIAL PRE- CLOSING ACTIONS............................... 7
2. REPRESENTATIONS AND WARRANTIES OF SELLERS........................ 8
2.1 DUE AUTHORIZATION.......................................... 8
2.2 TITLE TO SECURITIES........................................ 8
2.3 SECURITIES ACT REPRESENTATIONS............................. 9
2.4 BROKERS' AND FINDERS' FEES; OTHER COSTS AND
ADJUSTMENTS.......................................... 11
2.5 KNOWLEDGE OF SIGNIFICANT SHAREHOLDERS...................... 11
2.6 SHAREHOLDERS AGREEMENT..................................... 12
3. REPRESENTATIONS AND WARRANTIES OF WESTBEACH...................... 12
4. REPRESENTATIONS AND WARRANTIES OF XXXXXX XX,
XXXXXX AND XXXXXX LLC................................ 12
4.1 ORGANIZATION............................................... 12
4.2 DUE AUTHORIZATION; NO CONFLICTS............................ 12
4.3 LITIGATION................................................. 13
4.4 CONSENTS................................................... 13
4.5 BROKERS' AND FINDERS' FEES................................. 13
4.6 INVESTMENT................................................. 13
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4.7 DISCLOSURE................................................. 14
5. CONDUCT PENDING THE CLOSING...................................... 14
5.1 CONDUCT OF BUSINESS OF WESTBEACH........................... 14
5.2 NO SOLICITATION; ACQUISITION PROPOSALS..................... 16
5.3 NOTICE OF BREACH........................................... 17
6. OTHER COVENANTS.................................................. 17
6.1 ACCESS TO INFORMATION...................................... 17
6.2 CONFIDENTIALITY............................................ 18
6.3 PUBLICITY.................................................. 18
6.4 TRANSFER RESTRICTIONS...................................... 18
6.5 RESALE EXEMPTION........................................... 18
6.6 TAX TREATMENT.............................................. 18
6.7 CUSTODIAN AND ESCROW AGREEMENTS............................ 19
6.8 REVENUE CANADA AUDIT....................................... 19
6.9 WESTBEACH SENIOR MANAGEMENT................................ 19
6.10 DEBENTURES................................................ 19
6.11 ADVISORY AGREEMENT........................................ 19
6.12 FURTHER ASSURANCES........................................ 20
7. CONDITIONS PRECEDENT TO THE FIRST CLOSING........................ 20
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY.................... 20
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF
WESTBEACH AND SELLERS................................ 21
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF
XXXXXX XX, XXXXXX AND XXXXXX LLC..................... 22
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8. TERMINATION, AMENDMENT, WAIVER AND SUBSTITUTION................ 24
8.1 TERMINATION............................................... 24
8.2 EFFECT OF TERMINATION..................................... 25
8.3 AMENDMENT; WAIVER......................................... 25
8.4 SUBSTITUTION OF SUBSIDIARY FOR XXXXXX XX.................. 25
9. SURVIVAL AND INDEMNIFICATION................................... 25
9.1 INDEMNIFICATION BY ALL SELLERS............................ 25
9.2 INDEMNIFICATION BY SIGNIFICANT SHAREHOLDERS............... 26
10. REGISTRATION RIGHTS............................................ 26
10.1 PIGGYBACK REGISTRATION RIGHTS............................. 26
10.2 OBLIGATIONS OF XXXXXX..................................... 26
10.3 FURNISHING OF INFORMATION................................. 27
10.4 REGISTRATION EXPENSES..................................... 28
10.5 UNDERWRITING REQUIREMENTS................................. 28
10.6 AVAILABILITY OF RULE 144.................................. 28
11. ARBITRATION.................................................... 28
12. GENERAL PROVISIONS............................................. 29
12.1 NOTICES................................................... 29
12.2 INTERPRETATION................................................. 30
12.3 SEVERABILITY.............................................. 30
12.4 REMEDIES CUMULATIVE; NO WAIVER............................ 30
12.5 RULES OF CONSTRUCTION..................................... 31
12.6 LEGAL ADVICE.............................................. 31
12.7 EXPENSES.................................................. 31
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12.8 ATTORNEYS' FEES........................................... 31
12.9 GOVERNING LAW............................................. 31
12.10 ENTIRE AGREEMENT......................................... 32
12.11 COUNTERPARTS............................................. 32
INDEX OF DEFINED TERMS
The following terms used in this Agreement are defined in the Paragraphs
indicated:
TERM PARAGRAPH
---- ---------
1994 Debentures 3.30.a of Exhibit A
1996 Debenture Amount 1.2.b.(2)(b)
1996 Debentures 3.30.b of Exhibit A
AA 1.3.a
Accounts Receivable 3.29 of Exhibit A
Adjusted Purchase Price 1.1
Annual Financial Statements 3.5 of Exhibit A
Applicable Law(s) 3.16.a of Exhibit A
Callable Class "A" Common shares 3.2 of Exhibit A
Canadian GAAP 1.3.a
Cash Amount 1.1
Claim 2.2
Class "A" Common shares 3.2 of Exhibit A
Class "B" Preferred shares 3.2 of Exhibit A
Confidential Information 3.12.f of Exhibit A
Conventions 1.3.a
Custodian 1.2.b.(1)
Custodian Agreement 1.2.c.(3)
Debenture Escrow Agent 1.2.b.(2)(b)
Debenture Escrow Agreement 1.2.b.(2)(b)
Debentures 7.3.h
Employee Agreement(s) 3.16 of Exhibit A
Employee Plan(s) 3.15.a of Exhibit A
Environment 3.13.c of Exhibit A
Environmental Law 3.13.b of Exhibit A
Escrow Agent 1.2.b.(2)
Escrow Agreement 7.2.h
Escrow Amount 1.2.b.(2)
Financial Statements 3.5 of Exhibit A
First Closing 1.2.a.(1)
First Closing Date 1.2.a.(1)
First Closing Date Balance Sheet 1.3.a
Government Entity 2.1
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TERM PARAGRAPH
---- ---------
include 12.2
Indemnified Party 9.5 of Exhibit B
Indemnifying Party 9.5 of Exhibit B
Information Meeting 2.3
Information Statement 2.3
Insurance Policies 3.18 of Exhibit A
Intellectual Property 3.12.a of Exhibit A
Interim Financial Statements 3.5 of Exhibit A
Inventory 3.22 of Exhibit A
knowledge 2.5 and 12.2
Lien 2.1
Loan Amount 1.2.b.(3)(a)
Loan Documentation 1.2.b.(3)(a)
Losses 9.1
material 12.2
Material Adverse Effect 12.2
Material Undertakings 3.10 of Exhibit A
Materials of Environmental Concern 3.13.e of Exhibit A
Xxxxxx Parties
Xxxxxx Common Stock 2.3.a
Xxxxxx LLC Parties
Xxxxxx XX Parties
Options 3.2 of Exhibit A
Proprietary Information 6.2
Purchase Price 1.1
release 3.13.c of Exhibit A
SEC 2.3.a
Second Closing 1.2.a.(2)
Second Closing Date 1.2.a.(2)
Section 338 6.6
Securities Recital A
Securities Act 2.3.a
Sellers Parties
Shareholders Agreement 1.2.a.(2)
Significant Shareholders 1.2.b.(2)
Stock Amount 1.1
Subsidiary 3.3 of Exhibit A
Surviving Indemnities 9.3 of Exhibit B
Tax Return(s) 3.14 of Exhibit A
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TERM PARAGRAPH
---- ---------
Tax Authority 3.14 of Exhibit A
Tax(es) 3.14 of Exhibit A
Third-Party Intellectual Property Rights 3.12.b of Exhibit A
Transfer Documentation 1.2.b.(1)
Transaction Costs 12.7
Undertaking 2.1
Warrants 3.2 of Exhibit A
waste 3.13.c of Exhibit A
Westbeach Parties
Westbeach Authorizations 3.9 of Exhibit A
SECURITIES PURCHASE AGREEMENT
PARTIES:
XXXXXX SNOWBOARDS, INC., an Oregon corporation (Xxxxxx)
XXXXXX, LLC, an Oregon limited liability company (Xxxxxx LLC)
XXXXXX SNOWBOARDS ULC, a Nova Scotia unlimited company (Xxxxxx XX)
WESTBEACH SNOWBOARD CANADA LTD., a British Columbia corporation (Westbeach)
The security holders of Westbeach listed on the attached Schedule A who
have executed this Agreement (each, a Seller and collectively, Sellers)
RECITALS:
A. Sellers own the issued and outstanding shares and rights to acquire
shares in the capital of Westbeach (the Securities) listed on Schedule X.
X. Xxxxxx NS desires to purchase from Sellers, and each Seller desires to
sell to Xxxxxx XX, the Seller's Securities listed on Schedule A on the terms and
subject to the conditions set forth in this Agreement.
AGREEMENTS:
1. PURCHASE AND SALE OF SECURITIES.
Upon the terms and subject to the conditions set forth in this Agreement,
Sellers shall sell to Xxxxxx XX, and Xxxxxx XX shall purchase from Sellers, the
Securities.
1.1 PURCHASE PRICE
The aggregate purchase price (the Purchase Price) to be paid by Xxxxxx XX
to Sellers for the Securities is (a) cash in the amount of Two Million Eight
Hundred Seventy Thousand Canadian Dollars (CN$2,870,000) (calculated by
deducting from the initial cash consideration of CN$3,170,000, the amount of
CN$60,000 (the prepayment penalty on the 1994 Debentures) and CN$240,000 (the
call price for 200,000 Class "A" Common shares)) (the Cash Amount) and (b) Five
Hundred Eighty-Four Thousand Two Hundred Forty (584,240) shares of Common Stock
of Xxxxxx (the Stock Amount). The Purchase
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Price shall be allocated among Sellers as set forth in Schedule A. The parties
acknowledge that, as outlined in Schedule A, certain portions of the Cash Amount
will be deducted before distribution to the Sellers. As additional consideration
for the transactions contemplated by this Agreement, Xxxxxx shall lend funds to
Westbeach to pay certain debt obligations of Westbeach and fund the purchase of
the issued and outstanding Callable Class "A" Common shares as provided in
Paragraph 7.2.d. The Purchase Price shall be adjusted (Adjusted Purchase Price)
as provided in Paragraph 1.3.a of this Agreement, with such adjustment to be
borne solely by the Significant Shareholders (as defined herein).
1.2 THE CLOSING
a. The closing of Xxxxxx NS's purchase of the Securities in exchange
for payment of the Purchase Price shall take place at the offices of Xxxxxxxx
Xxxxxxxx Xxxx Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, X.X. in two (2) stages,
as follows:
(1) The first closing (the First Closing), shall take place no
later than three (3) business days following the date on which the conditions
set forth in Paragraph 7 shall be fulfilled or waived in accordance with this
Agreement, but in any event no later than November 13, 1997 (the First Closing
Date); provided, at Xxxxxx XX' request, the First Closing Date may be delayed
following the fulfillment or waiver of such conditions until bank loan funding
is complete, but not beyond November 13, 1997.
(2) Subject to Paragraph 1.2.a.(3), the second closing (the
Second Closing) shall take place within two (2) business days following the
expiration or waiver of the thirty (30) days notice of offer required under the
Shareholders' Agreement dated October 7, 1994 between Westbeach and the
shareholders listed therein (the Shareholders Agreement), such date to be
extended as necessary to ensure the closing occurs on a Tuesday, Wednesday or
Thursday (the Second Closing Date), but no later than December 16, 1997.
(3) However, if at any time on or after the First Closing Date,
the holders of all Class "A" Common shares (including the holders of all
Callable Class "A" Common shares) have executed and become parties to this
Agreement, the Second Closing will occur five (5) business days after all
holders of Class "A" Common shares have signed this Agreement. If the last
holder of Class "A" Common shares signs this Agreement on the First Closing
Date, Westbeach will not be required to deliver the notice specified in
Paragraph 1.2.b.(3)(e) to the Custodian.
b. At the First Closing:
(1) Each Seller then a party to this Agreement shall deliver to
B.P.Y.A. 863 Holdings Ltd., as custodian for Sellers (the Custodian), (i) if
stock, the
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certificate(s) representing the Securities being sold by that Seller, duly
endorsed in blank and witnessed or with separate witnessed stock transfer powers
attached thereto and signed in blank, and, if a Warrant or Option, the original
agreement with a certificate in substantially the form attached as Exhibit
1.2.b.(1) providing that all rights are assigned to Westbeach for cancellation
and conveying good and marketable title as provided in Paragraph 2.2 (Transfer
Documentation), and (ii) if a Significant Shareholder, the various certificates
and documents described in Paragraphs 7.3.e., k. and o.
(2) Xxxxxx XX shall:
(a) Deliver to the Custodian (i) a certified check or a
wire transfer of funds in an amount equal to the Cash Amount; (ii) a stock
certificate issued in the name of each Seller then a party to this Agreement,
and each other holder of Class "A" Common shares (except the Callable Class "A"
Common shares) even if not yet a party to this Agreement, representing that
Seller's or security holder's portion of the Stock Amount as set forth on
Schedule A; provided, however, that Xxxxxx XX shall withhold an aggregate of
Forty Thousand (40,000) shares of Common Stock of Xxxxxx (the Escrow Amount)
from the Stock Amount issuable to Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxx
and Xxxx Xxxxxxxx (collectively, the Significant Shareholders), the certificates
for which shall be issued for the number of shares and in the name of each
Significant Shareholder as set forth on the attached Schedule 1.2.b.(2), but
shall be delivered at the First Closing to Hershner, Hunter, Xxxxxxx, Xxxxx &
Xxxxx, LLP, as escrow agent (the Escrow Agent), to be held in accordance with
Paragraph 1.3; (iii) a certified check or wire transfer of funds in the amount
of Nine Hundred Thousand Canadian Dollars (CN$900,000) to fund the redemption of
the 1994 Debentures (CN$600,000), the prepayment penalty on the 1994 Debentures
(CN$60,000) and the purchase of 200,000 Callable Class "A" Common shares
(CN$240,000), plus interest through the estimated payment date; (iv) a certified
check or a wire transfer of funds in an amount sufficient to pay the outstanding
balance of Westbeach's line of credit with the Bank of Nova Scotia (the BNS
Loan); and (v) the various certificates, documents and payments described in
Paragraph 7.2.
(b) Deliver to M.O.I. Escrow Services Ltd., as escrow agent
(the Debenture Escrow Agent), a certified check or a wire transfer of funds in
the amount of Two Million One Hundred Thirty Thousand Canadian Dollars
(CN$2,130,000), plus interest through the estimated payment date (the 1996
Debenture Amount), to fund the redemption of the 1996 Debentures, such sum to be
held and disbursed in accordance with a Debenture Escrow Agreement in
substantially the form attached as Exhibit 1.2.b.(2)(b) (the Debenture Escrow
Agreement).
(3) Westbeach shall take the actions described in Paragraphs
7.3.g., j., k. and p., and:
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(a) Deliver loan documentation in substantially the form
attached as Exhibit 1.2.b.(3) (the Loan Documentation) evidencing the loan by
Xxxxxx or Xxxxxx XX of the funds described above for the redemption of the 1994
Debentures and the 1996 Debentures, the prepayment penalty on the 1994
Debentures, the purchase of the Callable Class "A" Common shares and the payment
of the BNS Loan (collectively, the Loan Amount), and constituting a first lien
on Westbeach's assets, except for the lien of the 1996 Debentures.
(b) Deliver the loan opinion provided in Exhibit 7.3.1.A.
(c) Deliver to the Custodian irrevocable instructions to
pay off the 1994 Debentures on the First Closing Date.
(d) Deliver to the Debenture Escrow Agent irrevocable
instructions to pay off the 1996 Debentures within five (5) days after the
Second Closing Date.
(e) Deliver to the Custodian the notice of call and
irrevocable instructions to deliver the notice of call to the holders of and pay
the purchase price for the Callable Class "A" Common shares.
(f) Deliver to the Custodian the waiver of 30 day notice of
offer required under the Shareholders Agreement (consisting of this Agreement
and the Information Statement) and irrevocable instructions to deliver the
notice of offer to the shareholders listed in the Shareholders Agreement.
(g) Deliver to the Custodian waivers of the prepayment time
limits under the 1994 Debentures and 1996 Debentures.
(4) The Custodian shall:
(a) Except as provided in Paragraphs 1.2.b (4)(b) and (c)
hold all documents, certificates, payments and other materials delivered to the
Custodian pursuant to this Paragraph 1.2.b. in escrow, and the First Closing
shall not be considered to have occurred, until all Sellers specified in
Paragraph 7.3.f. have become parties to this Agreement.
(b) The Custodian shall disburse the Purchase Price to
Sellers in accordance with a Custodian Agreement between the Custodian and
Sellers in substantially the form attached as Exhibit 1.2.c.(3) (the Custodian
Agreement). Xxxxxx XX shall have no further liability to Sellers for payment of
the Purchase Price upon delivery of the Purchase Price to the Custodian,
delivery of the 1996 Debenture Amount
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to the Debenture Escrow Agent and delivery of the Escrow Amount to the Escrow
Agent, except as set forth in Paragraph 1.3.
(c) The Custodian shall deliver to Xxxxxx (i) the
certificates, together with the related Transfer Documentation, from Sellers,
and (ii) the Warrants and Options of Sellers, together with the related Transfer
Documentation and (iii) the waivers described in paragraphs 1.2(b)(3)(f) and
(g).
(d) As soon as practical after the First Closing Date, the
Custodian shall deliver the 1994 Debentures and file or cause to be filed the
releases of the security interests and liens imposed under the terms of the loan
covered by such 1994 Debentures.
c. At the Second Closing:
(1) Each additional Seller who has become a party to this
Agreement since the First Closing Date shall deliver to the Custodian the
Transfer Documentation provided in Paragraph 1.2.b(1), conveying good and
marketable title or surrendering the Securities for cancellation as provided in
Paragraph 2.2.
(2) Xxxxxx XX shall deliver to the Custodian replacement stock
certificates dated as of the Second Closing Date for any additional Sellers
tendering Securities pursuant to Paragraph 1.2.c.(1).
(3) The Custodian shall disburse the Purchase Price to such
additional Sellers in accordance with a Custodian Agreement between the
Custodian and Sellers in substantially the form attached as Exhibit 1.2.c.(3)
(the Custodian Agreement). Xxxxxx XX shall have no further liability to Sellers
for payment of the Purchase Price upon delivery of the Purchase Price to the
Custodian, delivery of the 1996 Debenture Amount to the Debenture Escrow Agent
and delivery of the Escrow Amount to the Escrow Agent, except as set forth in
Paragraph 1.3.
(4) The Custodian shall deliver to Xxxxxx (i) the certificates,
together with the related Transfer Documentation, from the additional Sellers,
and (ii) the Warrants and Options of the additional Sellers, together with the
related Transfer Documentation, and (iii) as soon as practical after the First
Closing Date, the Custodian shall deliver the 1994 Debentures and file or cause
to be filed the releases of the security interests and liens imposed under the
terms of the loan covered by such 1994 Debentures.
(5) To the extent any holder of Securities listed on Schedule A
does not become a party to this Agreement, the Custodian shall release that
portion of the Purchase Price listed on Schedule A to Westbeach.
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1.3 DETERMINATIONS AS OF THE FIRST CLOSING DATE; SUBSEQUENT
ADJUSTMENTS.
a. As of the First Closing Date, Westbeach shall perform a physical
count of its inventory, and Xxxxxx XX will cause Xxxxxx Xxxxxxxx, LLP (AA) to
observe such physical inventory. Promptly following the First Closing Date but
in any event no later than thirty (30) days thereafter, the Westbeach senior
management team existing on the First Closing Date, together with such other
personnel as Xxxxxx shall designate, shall prepare a balance sheet of Westbeach
as of the close of business on the First Closing Date (the First Closing Date
Balance Sheet), which shall be prepared in accordance with Canadian generally
accepted accounting principles (Canadian GAAP), consistently applied, and those
persons shall have the right to consult with Xxxxx Xxxxxx, Westbeach's current
auditors, in preparing the First Closing Date Balance Sheet. AA will perform an
audit of the First Closing Date Balance Sheet in accordance with generally
accepted auditing standards, provided that where Canadian GAAP allows for
alternate policies, conventions or elections (collectively, Conventions)
regarding the treatment of an item, AA will accept the Convention used by
Westbeach even if inconsistent with the Convention used by Xxxxxx, as long as
that Convention has been properly applied under Canadian GAAP. Westbeach will
cooperate by providing AA with full access to Westbeach's books and records. AA
will deliver copies of the audited First Closing Date Balance Sheet to all
parties no later than sixty (60) days after the First Closing Date. AA's
related fees and expenses shall be borne by Xxxxxx XX. Unless Xxxxxx XX or the
Significant Shareholders dispute the audited First Closing Date Balance Sheet
and submit the dispute to arbitration pursuant to Paragraph 11 within ten (10)
days after its delivery, the audited First Closing Date Balance Sheet shall be
final and binding on all parties, and will be used to determine the final
Adjusted Purchase Price calculated in accordance with this Paragraph 1. The
Purchase Price shall be decreased (A) on a dollar for dollar basis by the amount
(as a positive number) by which the aggregate shareholders' deficit (the sum of
the book value of Westbeach's Common shares, Preferred shares and retained
earnings) of Westbeach, based on the audited First Closing Date Balance Sheet,
exceeds the aggregate shareholders' deficit recorded in the August 31, 1997
balance sheet of Westbeach, excluding, for such purposes, the effect of expenses
related to the transaction described herein which expenses will include, but are
not limited to, the write-off of capitalized expenses related to the 1994 and
1996 Debentures, and the prepayment penalty on the 1994 Debentures and the costs
related to the borrowing by Westbeach from Xxxxxx or Xxxxxx XX as contemplated
in Paragraph 1.1, plus (B) on a dollar for dollar basis by (1) the amount by
which the sum of the changes in inventory reserves, accounts receivable
reserves, accruals for warranty or other contingent liabilities (including
contingent liabilities for overtime pay) and write-offs of accounts receivable
and inventory (including any book to physical adjustment), for the period from
August 31, 1997 to the First Closing Date, exceeds Fifty Thousand Canadian
Dollars (CN$50,000),
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less (2) any adjustment to the Purchase Price required in clause (A) above. In
calculating the foregoing Purchase Price adjustment, the parties shall not take
into account any increases in reserves or write-offs for: (i) the first one-half
percent (1/2%, or .005) of new sales for warranty claims, (ii) the first one-
half percent (1/2%) of new accounts receivable, (iii) the first one percent (1%)
of new inventory at the wholesale level and (iv) the first one and one-half
percent (1 1/2%) of new inventory at the retail level. The Significant
Shareholders shall be solely responsible for any adjustment to the Purchase
Price resulting from the audited First Closing Date Balance Sheet, which shall
be allocated among the Significant Shareholders as set forth on the attached
Schedule 1.3.b. The Significant Shareholders' liability for such adjustment to
the Purchase Price, and for indemnification under Paragraph 9, absent fraud,
shall be limited to the amounts set forth on Schedule 1.3.b., and may exceed the
Escrow Amount.
b. Unless so submitted to arbitration, on the tenth (10th) day after
delivery by AA of the audited First Closing Date Balance Sheet, the Escrow Agent
shall deliver to Xxxxxx XX the amount, if any, determined to have been overpaid
at the First Closing from the Escrow Amount, and shall deliver the balance, if
any, to the Significant Shareholders as nearly as possible in the proportions
described in Schedule 1.3.b.
1.4 SPECIAL PRE- CLOSING ACTIONS.
The parties to this Agreement acknowledge that the following actions are
being taken or will be taken to facilitate this transaction and for legal,
business and tax reasons.
a. Prior to execution of this Agreement, one or more of the
following persons: Xxxx X. Xxxxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx
Xxxxxx, will have accepted employment with Xxxxxx, subject to consummation of
the First Closing. Such acceptance is being done (i) to give Xxxxxx assurances
regarding such parties' commitment to continue employment with the combined
Xxxxxx and Westbeach entities; and (ii) to terminate existing employment
relationships between such persons in Westbeach, thereby terminating certain
severance pay rights under British Columbia law for these individuals. In such
case, their severance pay rights will be governed under the employment
agreements with Xxxxxx.
b. Prior to the First Closing, Xxxxxx XX expects to cause the
formation of a British Columbia corporation (B.C. Corporation) to be substituted
for Xxxxxx XX hereunder pursuant to Paragraph 8.4. Due to Canadian residency
requirements applicable to boards of directors of British Columbia corporations,
one or more of Xxxx X. Xxxxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxx and
Xxxxxxx Xxxxxx, will serve as members of the board of directors of such
corporation. The parties hereto acknowledge that such service, prior to the
First Closing, is being done as an accommodation to facilitate the transaction
due to restrictions on residency of directors under British Columbia law.
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After the First Closing, such persons will be Xxxxxx employees and would act on
behalf of Xxxxxx in such capacities. Xxxxxx hereby agrees to indemnify and hold
them harmless from any and all Losses they suffer (as defined in Paragraph 9.1)
in acting in such capacity. If all Westbeach security holders agree to this
transaction on or before the First Closing date, such B.C. Corporation would not
be created and used.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby severally represents and warrants to Xxxxxx XX and to
Westbeach as follows:
2.1 DUE AUTHORIZATION
Seller has full power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seller and, if Seller is other than an
individual, the person signing is duly authorized to sign this Agreement on
behalf of such Seller and bind such Seller. Seller is under no legal or other
incapacity and, if other than an individual, such Seller has taken all action
under applicable law to maintain its existence and authority to contract.
Seller is not able to assert any defense to enforcement of this Agreement under
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. Seller is not entering this
Agreement under duress and believes Xxxxxx, Xxxxxx XX, and Xxxxxx LLC have acted
in good faith. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, (a) violate or
conflict with any permit, order, license, decree, judgment, statute, law,
ordinance, rule or regulation applicable to Seller or (b) result in any breach
or violation of, constitute a default (with or without notice or lapse of time,
or both) under, give rise to a right of termination, cancellation or
acceleration of, result in the creation of any mortgage, pledge, lien,
encumbrance, charge or other security interest (a Lien) on any of Seller's
Securities pursuant to, or require the consent of any party to any mortgage,
indenture, lease, contract, agreement, instrument, bond, note, concession,
franchise or understanding (collectively, Undertaking) applicable to Seller or
any of Seller's Securities. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality (Government
Entity) is required by or with respect to Seller in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
2.2 TITLE TO SECURITIES
Seller has, and will convey at Closing, good and marketable title to the
Securities set forth next to his or her name on Schedule A, free and clear of
any restriction on transfer (other than any restriction on further transfer
under United States, state and
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Canadian provincial securities laws); any private or governmental action, suit,
proceeding, claim, arbitration or investigation (collectively, Claim); any
preemptive right, right of first refusal or similar right; and any option,
warrant, put, call, purchase right, equity, claim, demand or other commitment,
right or Undertaking of any nature. Each Significant Shareholder represents that
there is no lien on any of the Securities set forth next to his name on Schedule
A. Each other Seller represents that, if there is a lien on any of that Seller's
Securities listed on Schedule A, at the First Closing, that Seller will deliver
to the Custodian those Securities, together with instructions to pay the
lienholder and the lienholder's agreement to release the lien. Except for the
holder's contractual rights to put the Warrants (as defined herein) and portions
of the Class "A" Common shares to Westbeach, which Seller hereby agrees not to
exercise, and Westbeach's rights to call portions of the Class "A" Common shares
and all of the Class B Preferred Shares, Seller is not a party to any option,
warrant, put, call, purchase right or other commitment or agreement that could
require Seller to sell, transfer or otherwise convey any Securities, other than
pursuant to this Agreement. If Seller is a natural person, he or she is a
competent adult. Seller is the record and beneficial owner of the Securities so
listed in Seller's name, with the sole right to exercise all rights attached to
those Securities, including, to the extent applicable, the right to vote,
dispose of and receive dividends or distributions with respect to those
Securities. If Seller is a trust, the relevant trustee has the sole right to
exercise all rights attached to Seller's Securities on behalf of the
beneficiary. Seller has no other right in or right to acquire any other
securities of Westbeach.
2.3 SECURITIES ACT REPRESENTATIONS.
a. COMPLIANCE WITH LAW. Seller acknowledges that the shares of
Common Stock of Xxxxxx (Xxxxxx Common Stock) to be delivered to Seller pursuant
to this Agreement have not been and will not be registered under the Securities
Act of 1933, as amended (the Securities Act), and therefore may not be resold
without compliance with the Securities Act. Xxxxxx Common Stock to be acquired
by Seller pursuant to this Agreement is being acquired solely for Seller's own
account, for investment purposes only and with no present intention of
distributing, selling or otherwise disposing of it in connection with a
distribution. Seller will not offer, sell, assign, pledge, hypothecate, transfer
or otherwise dispose of any shares of Xxxxxx Common Stock issued to Seller,
except after full compliance with all applicable provisions of the Securities
Act, the rules and regulations of the Securities and Exchange Commission (SEC)
and other applicable securities law (including state and Canadian provincial
securities law). Seller acknowledges that all Xxxxxx Common Stock issued to
Seller shall bear the following legend, together with any other legend required
under Canadian provincial securities laws:
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"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND MAY BE SOLD OR
OTHERWISE TRANSFERRED ONLY IF THE HOLDER HEREOF COMPLIES WITH THE
SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAW."
b. INFORMATION. Seller has received the following information with
respect to Westbeach, Xxxxxx and Xxxxxx XX:
Regarding Xxxxxx
----------------
1996 Annual Report to Shareholders, incorporating Form 10-K, filed with the
SEC.
Form 10-K, filed with the SEC.
Quarterly Report on Form 10-Q as filed with the SEC for the Quarterly
Period Ended September 30, 1996.
Quarterly Report on Form 10-Q as filed with the SEC for the Quarterly
Period Ended March 29, 1997.
Quarterly Report on Form 10-Q as filed with the SEC for the Quarterly
Period Ended June 28, 1997.
Draft Financial Statements for the Quarterly Period June 29 to September
27, 1997.
Regarding Westbeach
-------------------
1996 Annual Report to Shareholders, including audited financial statements
for the year ended December 31, 1996.
Financial Statements for the quarters ended March 31, 1997 and 1996.
Financial Statements for the quarters ended June 30, 1997 and 1996.
Financial Statements for the quarters ended September 30, 1997 and 1996.
Regarding the Transactions Outlined in this Agreement
-----------------------------------------------------
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Information Statement from Xxxxxx dated October 27, 1997.
Seller has also had an adequate opportunity to ask questions of and receive
answers from Xxxxxx'x officers concerning any and all matters relating to the
transactions contemplated by this Agreement, including, without limitation, the
background and experience of Xxxxxx'x current and proposed officers and
directors, the business, operations and financial condition of Xxxxxx and any
plans for additional acquisitions and the like. Such opportunity shall be
accomplished, among other ways, through a meeting to which all Westbeach
security holders have been invited, and at which Xxxxxx personnel are present to
discuss Xxxxxx and the matters in the preceding sentence, and which Westbeach
security holders may attend in person or by teleconference hookup (Information
Meeting). Each Seller originally signing this Agreement acknowledges having met
or having had the opportunity to meet with Xxxxxx'x Chief Executive Officer to
address such questions. An Information Meeting was held on October 30, 1997 for
the Sellers initially signing this Agreement and an Information Meeting will be
held on November 6, 1997, at XxXxxxxxxx X'Xxxxxx Xxxxx'x offices to permit other
Westbeach security holders to address such questions.
2.4 BROKERS' AND FINDERS' FEES; OTHER COSTS AND ADJUSTMENTS
Except for fees of British Columbia Mercantile Corporation to Westbeach,
which Sellers will pay on behalf of Westbeach, no Seller has incurred, or will
incur, any liability for brokerage or finders' fees, agents' commissions,
investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby. Each Seller acknowledges that
the Cash Amount that Seller will receive is subject to reduction to reflect
Transaction Costs of Westbeach and Sellers and certain other expenses as
provided in the Custodian Agreement.
2.5 KNOWLEDGE OF SIGNIFICANT SHAREHOLDERS
No Significant Shareholder has knowledge of any falsity or inaccuracy in
any representation or warranty made by Westbeach pursuant to Paragraph 3. For
purposes of this Paragraph 2.5., "knowledge" means the actual knowledge of that
Significant Shareholder in his capacity as an officer or director of Westbeach,
and if an officer, or director, after reasonable inquiry of other members of
senior management and relevant employees of Westbeach; and the knowledge each
Significant Shareholder shall be imputed to all of the other Significant
Shareholders.
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2.6 SHAREHOLDERS AGREEMENT
By executing this Agreement, each Seller who is a party to the Shareholders
Agreement hereby agrees to terminate the Shareholders Agreement effective as of
the Second Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF WESTBEACH
Westbeach hereby makes the representations and warranties to Xxxxxx XX,
Xxxxxx and Xxxxxx LLC set forth on the attached Exhibit A. All such
representations and warranties are qualified by the exceptions noted in Exhibit
A and by the Schedules attached to Exhibit A, as well as by all information
apparent on the face of the materials delivered by Westbeach to Xxxxxx XX and
listed in Schedule 3.1.
4. REPRESENTATIONS AND WARRANTIES OF XXXXXX XX, XXXXXX AND XXXXXX LLC
Xxxxxx XX, Xxxxxx and Xxxxxx LLC hereby represent and warrant to Westbeach
and Sellers as follows:
4.1 ORGANIZATION
Xxxxxx XX is an unlimited company duly organized and validly existing under
the laws of the Province of Nova Scotia. Xxxxxx is a corporation, and Xxxxxx
LLC is a limited liability company, each duly organized and validly existing
under the laws of the State of Oregon. Xxxxxx has all requisite corporate power
and authority to own its properties and carry on its business as now being
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on Xxxxxx. Xxxxxx has delivered to Westbeach a
true and correct copy of its Articles of Incorporation and Bylaws, each as
amended to date. Xxxxxx is not in violation of its Articles of Incorporation or
Bylaws, as amended.
4.2 DUE AUTHORIZATION; NO CONFLICTS
Each of Xxxxxx XX, Xxxxxx and Xxxxxx LLC has full corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Xxxxxx XX, Xxxxxx and Xxxxxx LLC and constitutes the valid and binding
obligation of each of Xxxxxx XX, Xxxxxx and Xxxxxx LLC, enforceable against each
of them in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, (a) violate or conflict with the Articles of Incorporation or Bylaws
of Xxxxxx, as amended, the Memorandum of Association or
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Articles of Association of Xxxxxx XX or the Articles of Organization or
Operating Agreement of Xxxxxx LLC; (b) violate or conflict with any permit,
order, license, decree, judgment, statute, law, ordinance, rule or regulation
applicable to Xxxxxx XX, Xxxxxx or Xxxxxx LLC; or (c) result in any breach or
violation of, constitute a default (with or without notice or lapse of time, or
both) under, give rise to a right of termination, cancellation or acceleration
of, result in the creation of any Lien on any of their respective properties or
assets pursuant to, or require the consent of any party to any Undertaking
applicable to Xxxxxx XX, Xxxxxx or Xxxxxx LLC or any of their respective
properties or assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Government Entity is required by
or with respect to Xxxxxx XX, Xxxxxx or Xxxxxx LLC in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.3 LITIGATION
There is no Claim pending or, to the knowledge of Xxxxxx XX, Xxxxxx or
Xxxxxx LLC, threatened, at law or in equity, by or before any Government Entity,
(a) that seeks to enjoin or obtain damages in respect of the transactions
contemplated hereby, (b) with respect to which there is a reasonable likelihood
of a determination that would prevent Xxxxxx XX, Xxxxxx or Xxxxxx LLC from
consummating the transactions contemplated hereby or (c) that would have a
Material Adverse Effect on Xxxxxx.
4.4 CONSENTS
Except as set forth on the attached Schedule 4.4, no consent, approval or
authorization of, or registration or filing with, any Government Entity or other
person is required in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby by Xxxxxx
XX, Xxxxxx or Xxxxxx LLC.
4.5 BROKERS' AND FINDERS' FEES
Except for fees of Pacific Crest Securities, which Xxxxxx will pay, neither
Xxxxxx XX, Xxxxxx nor Xxxxxx LLC has incurred, or will incur, directly or
indirectly, any liability for brokerage or finders' fees, agents' commissions,
investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
4.6 INVESTMENT
Xxxxxx XX is not acquiring the Securities with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act.
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4.7 DISCLOSURE
The representations and warranties by Xxxxxx XX, Xxxxxx or Xxxxxx LLC
herein, including any Schedule referenced in Paragraph 4 or in any certificate
furnished by any of them pursuant to this Agreement, and the information and
documents provided by Xxxxxx and listed in Paragraph 2.3.b., when all such
documents are read together in their entirety, do not contain and will not
contain at the First Closing Date any untrue statement of a material fact, and
do not omit and will not omit at the First Closing Date any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading; provided, however,
that Xxxxxx has relied on Westbeach with respect to any Westbeach information
contained in the Information Statement referenced in Paragraph 2.3.x. Xxxxxx
has delivered or made available true and complete copies of each document that
has been requested by Sellers, Westbeach or their respective counsel in
connection with their legal and accounting review of Xxxxxx.
5. CONDUCT PENDING THE CLOSING
5.1 CONDUCT OF BUSINESS OF WESTBEACH
Prior to the First Closing and continuing between the First Closing and the
Second Closing, except as expressly contemplated by this Agreement or as agreed
in writing by the other party:
a. AFFIRMATIVE COVENANTS
Each of Xxxxxx, Xxxxxx XX, Xxxxxx LLC and Westbeach will:
(1) Carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and use its best
efforts to preserve intact its present business organization, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees and
others having business dealings with it, to the end that its goodwill and
ongoing business shall be unimpaired at Closing.
(2) Maintain insurance coverages and its books, accounts and
records in the usual manner consistent with past practice.
(3) Comply in all material respects with all Applicable Laws of
any Government Entity.
(4) Maintain and keep its plants, property and equipment in good
repair, working order and condition, ordinary wear and tear excepted.
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(5) Perform in all material respects its obligations under each
Undertaking to which it is a party or by which it is bound.
(6) Notify the other party of any event or occurrence not in the
ordinary course of its business, and of any event that could have a Material
Adverse Effect on it.
(7) Pay, consistent with past practice, all accounts payable
that arise in the ordinary course of its business, including, without
limitation, in the case of Westbeach, payment of interest on Debentures and
other debt as it comes due, except to the extent that the amount owing is being
duly contested by Westbeach, such contest does not have a Material Adverse
Effect on Westbeach and adequate reserves therefor are reflected on the
Financial Statements.
b. NEGATIVE COVENANTS
Except as otherwise provided herein, Westbeach will not do any of the
things enumerated in Paragraph 3.6 of Exhibit A. In addition, but without
limiting the generality of the foregoing, none of Xxxxxx, Xxxxxx XX, Xxxxxx LLC
or Westbeach will:
(1) Cause or permit any amendments to, in Xxxxxx'x case, its
Articles of Incorporation or Bylaws; in Xxxxxx NS's or Xxxxxx LLC's case, its
governing documents; or, in Westbeach's case, its Memorandum or Articles.
(2) Accelerate, amend or change the period of exercisability or
vesting of any option or other right granted under any employee or director
stock plan or authorize cash payments in exchange for any option or other right
granted under any such plan.
(3) Transfer to any person or entity any right to any of its
Intellectual Property.
(4) Enter into or amend any Undertaking pursuant to which any
other party is granted exclusive marketing or other rights of any type or scope
with respect to any of its products or technology.
(5) Adopt or amend any employee benefit, stock purchase or
option plan; hire any new director-level or officer-level employee; or pay any
special bonus or special remuneration to any employee or director, or increase
the salaries or wage rates of its employees, except for normal salary or wage
increases relating to periodic performance reviews and bonuses consistent with
Westbeach's past practices, where the increases or bonuses are not given to
Sellers or their relations or members of Westbeach's leadership team.
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(6) In Westbeach's case, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets, other than in the ordinary course of
business consistent with past practice. In Xxxxxx'x case, Xxxxxx will promptly
give written notice to Westbeach if Xxxxxx directly or indirectly enters into
any of the foregoing transactions or enters into an agreement contemplating any
of the foregoing transactions contemplated herein.
(7) Except for Xxxxxx and Xxxxxx XX credit facilities to finance
the transactions contemplated herein, increase the amount or change the
composition of its long-term funded debt; incur any additional debt for money
borrowed; incur or increase any obligation or liability except in the ordinary
course of business consistent with past practices; forgive or release any debt
or claim; waive any right of material value; or voluntarily suffer any
extraordinary loss.
(8) Declare, pay or make any dividend or other distribution of
money or property on or with respect to any of its capital stock.
(9) Mortgage, pledge or otherwise encumber or subject to Lien
any of its assets or properties, or commit itself to do any of the foregoing.
(10) Enter into any Undertaking or make any commitment to do the
same, except in the ordinary course of business and, in Westbeach's case, not
requiring the payment of an amount in excess of Fifteen Thousand Canadian
Dollars (CN$15,000) in the aggregate.
(11) Redeem any of its securities, other than as contemplated in
this Agreement.
(12) Take, or agree in writing or otherwise to take, any other
action that would make any of its representations or warranties in this
Agreement untrue.
(13) Agree, whether in writing or otherwise, to do any of the
foregoing.
5.2 NO SOLICITATION; ACQUISITION PROPOSALS
Westbeach will not, directly or indirectly, through any officer, director,
employee, representative, agent, financial advisor or otherwise, solicit,
initiate or encourage inquiries or submission of proposals or offers from any
person relating to any sale of all or any portion of the assets, business or
properties of (other than the sale of immaterial or insubstantial assets or
inventory in the ordinary course of business), or any equity interest
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in, Westbeach or any business combination with Westbeach, whether by merger,
purchase of assets, tender offer or otherwise, or participate in any negotiation
regarding, or furnishing to any other person any information with respect to, or
otherwise cooperate in any way with, or assist in, facilitate or encourage, any
effort or attempt by any other person to do or seek to do any of the foregoing.
Westbeach will notify Xxxxxx XX immediately if any inquiry or proposal is
received by, any information is requested from, or any negotiation or discussion
is sought to be initiated or continued with, Westbeach in each case in
connection with any of the foregoing. Westbeach shall use its best efforts to
cause all confidential materials previously furnished to any third party in
connection with any of the foregoing to be returned promptly to Westbeach and
shall cease any negotiations conducted in connection therewith or otherwise
conducted with any such party.
5.3 NOTICE OF BREACH
Westbeach, Xxxxxx XX and Xxxxxx will promptly give written notice to each
other and to the Significant Shareholders upon becoming aware of the occurrence
or, to its knowledge, impending or threatened occurrence, of any event that
could cause or constitute a breach of any of its representations, warranties or
covenants hereunder.
6. OTHER COVENANTS
6.1 ACCESS TO INFORMATION
Westbeach and Xxxxxx will each afford the other, and the others' employees,
accountants, counsel and other representatives, full access during normal
business hours (and at such other times as the parties agree), during the period
before the First Closing Date, to (a) all of its properties, books, contracts,
commitments and records, and (b) all other information concerning its business,
properties and personnel as the other party may reasonably request. Westbeach
and Xxxxxx will each provide to the other, and the other's employees,
accountants, counsel and other representatives, copies of its internal financial
statements promptly upon request. Westbeach and Xxxxxx will cooperate with each
other's due diligence review of the other to the extent necessary to confirm the
accuracy of the representations and warranties in Paragraphs 3 and 4. Subject to
compliance with applicable law, from the date hereof until the First Closing
Date, each of Xxxxxx and Westbeach shall confer on a regular and frequent basis
with one or more representatives of the other party to report operational
matters of materiality and the general status of ongoing operations. No
information or knowledge obtained in any investigation pursuant to this
Paragraph 6.1 shall affect or be deemed to modify any representation or warranty
contained in this Agreement or the conditions to the parties' obligations to
consummate the transactions contemplated hereby.
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6.2 CONFIDENTIALITY
Each party agrees to treat as confidential and hold in confidence all
information concerning the business and affairs of Westbeach and the business
and affairs of Xxxxxx that is not already generally available to the public and
is not otherwise known to the party to whom it was disclosed on a non-
confidential basis (Proprietary Information) and to refrain from using any
Proprietary Information except in furtherance of this Agreement or as required
by law.
6.3 PUBLICITY
Westbeach will not issue, or cause or permit to be issued, any press
release or otherwise make any public statement regarding the terms of this
Agreement or the transactions contemplated hereby without Xxxxxx'x prior written
consent. Xxxxxx shall consult with Westbeach before issuing any press release
or otherwise making any public statement regarding the terms of this Agreement
or the transactions contemplated hereby, except as required by law or its other
legal obligations.
6.4 TRANSFER RESTRICTIONS
No Significant Shareholder shall sell, assign, exchange, transfer,
encumber, pledge or otherwise dispose of his shares of Xxxxxx Common Stock for a
period of one (1) year following the First Closing Date, plus any period during
which a dispute regarding that Significant Shareholder's indemnification
obligations under Paragraph 9 has, at the parties' election, been submitted to
arbitration pursuant to Paragraph 11, without providing ongoing assurances
reasonably acceptable to Xxxxxx XX that such Significant Shareholder has
retained sufficient assets to satisfy those indemnification obligations.
6.5 RESALE EXEMPTION
Westbeach will prepare and apply for, with a request for confidential
treatment, and use reasonable efforts to obtain, an exemption from the resale
restrictions under Alberta and British Columbia securities law to permit
Sellers' resale of Xxxxxx Common Stock at one (1) year after the First Closing
Date; provided, however, that (notwithstanding any such exemption) the
Significant Shareholders shall still comply with the transfer restrictions set
forth in Paragraph 6.4.
6.6 TAX TREATMENT
The parties intend that the transactions contemplated by this Agreement
qualify for treatment under Section 338 of the Internal Revenue Code of 1986, as
amended (Section 338), and the parties agree to take all actions necessary or
appropriate for such transactions to qualify under Section 338.
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6.7 CUSTODIAN AND ESCROW AGREEMENTS
Each party agrees that, from and after the First Closing Date, it will not
challenge any provision of the Custodian Agreement, the Escrow Agreement or the
Debenture Escrow Agreement or withdraw any payment, certificate, document or
other material delivered to the Custodian, the Escrow Agent or the Debenture
Escrow Agent pursuant to this Agreement.
6.8 REVENUE CANADA AUDIT
Xxxxxx XX will cause Westbeach to use its best efforts to resolve the
Revenue Canada audit disclosed in Schedule 3.14 after the First Closing Date.
6.9 WESTBEACH SENIOR MANAGEMENT
Xxxxxx will use reasonable efforts to employ or cause Westbeach to continue
to employ the existing Westbeach senior management team from the First Closing
Date until the later of (a) ten (10) days after AA's delivery of the audited
First Closing Date Balance Sheet or (b) the resolution by arbitration of any
disputes regarding the audited First Closing Date Balance Sheet, all in
accordance with Paragraph 1.3; provided, however, that nothing contained in this
paragraph shall prevent Xxxxxx from terminating the employment of Xxxx Xxxxxxxx,
Xxxxx Xxxxxx, Xxxxx Xxxxxx or Xxxxxx Xxxxxx for cause in accordance with their
respective employment agreements with Xxxxxx.
6.10 DEBENTURES
Each Seller that holds Debentures will instruct the trustee for the
Debentures not to pursue any claim, breach or default with respect to the
Debentures, including any default with respect to any additional principal
payment required under Section 2.2 of the indenture covering the 1994
Debentures, and not to revoke any action permitting early payment of the 1996
Debentures, during the period from the date of this Agreement through the Second
Closing Date.
6.11 ADVISORY AGREEMENT
Westbeach acknowledges that the Advisory Agreement dated October 7, 0000,
xxxxxxx Xxxxxxxxx xxx Xxxxxxx Xxxxxxxx Mercantile Corporation, as amended by
letter dated July 8, 1996 from British Columbia Mercantile Corporation to
XxXxxxxxxx O'Xxxxxx Xxxxx, will terminate automatically upon payment in full of
the 1996 Debentures.
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6.12 FURTHER ASSURANCES
a. Subject to the terms and conditions of this Agreement, each party
shall use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
Applicable Laws to consummate the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers, consents
and approvals, to effect all necessary registrations and filings (including, but
not limited to, filings with all applicable Government Entities) and to lift any
injunction or other legal bar to the transactions contemplated hereby (and, in
such case, to proceed with those transactions as expeditiously as possible).
b. In case at any time after the First Closing or the Second Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, the appropriate parties shall take all such necessary action.
7. CONDITIONS PRECEDENT TO THE FIRST CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY
The parties' respective obligations to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the First Closing Date of each of the following conditions, any of which may
be waived in writing by agreement of Xxxxxx XX, Westbeach, and Sellers holding a
majority in number of the Sellers' Class "A" Common shares and a majority in
number of the Sellers' Warrants (collectively, a Majority in Interest of
Sellers):
a. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby, or any proceeding brought by any Government
Entity seeking any of the foregoing, shall be pending; or any statute, rule,
regulation or order enacted, entered or enforced that makes the consummation of
the transactions contemplated hereby illegal.
b. The parties shall have timely obtained from all Government
Entities and third parties each approval, waiver and consent, if any, necessary
for the consummation of or in connection with the transactions contemplated
hereby, including any approvals, waivers and consents required under Canadian
provincial, United States, state or foreign securities and Blue Sky laws.
c. No Material Adverse Effect has occurred for Xxxxxx or Westbeach.
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7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WESTBEACH AND SELLERS
The obligations of Westbeach and Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the First Closing Date of each of the following conditions, any of which may
be waived in writing by Westbeach and a Majority in Interest of Sellers:
a. Each representation and warranty made by Xxxxxx XX, Xxxxxx and
Xxxxxx LLC in this Agreement, or in any exhibit or other document delivered
pursuant hereto, shall be true and correct in all material respects on and as of
the First Closing Date with the same force and effect as though made on and as
of that date.
x. Xxxxxx NS, Xxxxxx and Xxxxxx LLC shall have complied with or
performed in all material respects each covenant, obligation and condition in
this Agreement to be complied with or performed by any of them on or before the
First Closing Date.
x. Xxxxxx NS shall have delivered to the Custodian a certified check
or wire transfer of funds equal to the Cash Amount and stock certificates for
Xxxxxx Common Stock in the respective amounts specified in Paragraph
1.2.b.(2)(a), less the Escrow Amount.
x. Xxxxxx NS shall have delivered to the Custodian a certified check
or a wire transfer of funds in the Loan Amount, together with the Loan
Documentation duly executed by Xxxxxx XX.
x. Xxxxxx NS shall have delivered to Westbeach and the Custodian the
Custodian Agreement, duly executed by Xxxxxx, Xxxxxx XX and Xxxxxx LLC.
x. Xxxxxx NS shall have delivered to the Debenture Escrow Agent a
certified check or a wire transfer of funds in the 1996 Debenture Amount.
x. Xxxxxx NS shall have delivered to Westbeach and the Debenture
Escrow Agent the Debenture Escrow Agreement, duly executed by Xxxxxx, Xxxxxx XX
and Xxxxxx LLC.
x. Xxxxxx NS shall have delivered to the Significant Shareholders
and the Escrow Agent an Escrow Agreement regarding disbursement of the Escrow
Amount, in substantially the form attached as Exhibit 7.2.h (the Escrow
Agreement), among Xxxxxx XX, the Significant Shareholders and the Escrow Agent,
duly executed by Xxxxxx XX, the Significant Shareholders, and the Escrow Agent,
and shall have delivered the Escrow Amount to the Escrow Agent.
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x. Xxxxxx NS shall have delivered to Westbeach a certificate, dated
as of the First Closing Date, executed by the Chief Executive Officer of Xxxxxx
XX and Xxxxxx and manager or member of Xxxxxx LLC, certifying that the
conditions specified in Paragraph 7.2 have been fulfilled.
j. Westbeach and Sellers shall have received a legal opinion of
Hershner, Hunter, Xxxxxxx, Xxxxx & Xxxxx, LLP, counsel to Xxxxxx XX, Xxxxxx and
Xxxxxx LLC, in substantially the form attached as Exhibit 7.2.j.
k. Westbeach shall have applied for, with a request for confidential
treatment, and shall have obtained, an exemption from the resale restrictions
under Alberta and British Columbia securities law to permit Sellers' resale of
Xxxxxx Common Stock at one (1) year after the First Closing Date; provided,
however, that (notwithstanding any such exemption) the Significant Shareholders
shall still comply with the transfer restrictions set forth in Paragraph
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF XXXXXX XX, XXXXXX AND
XXXXXX LLC
The obligations of Xxxxxx XX, Xxxxxx and Xxxxxx LLC to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
on or prior the First Closing Date of each of the following conditions, any of
which may be waived in writing by Xxxxxx XX:
a. Each representation and warranty made by Westbeach and by Sellers
in this Agreement, or in any exhibit or other document delivered pursuant
hereto, shall be true and correct in all material respects on and as of the
First Closing Date with the same force and effect as though made on and as of
that date.
b. Westbeach and Sellers shall have complied with or performed in
all material respects each covenant, obligation and condition in this Agreement
to be complied with or performed by Westbeach and/or Sellers on or before the
First Closing Date.
c. Each Seller then a party to this Agreement shall have delivered
to the Custodian the stock certificate(s) or other document(s) representing the
Securities being sold by that Seller as specified in Paragraph 1.2.b.(1).
d. Westbeach shall have delivered to Xxxxxx XX, to the extent
requested by Xxxxxx XX, the resignation of each director and officer of
Westbeach, effective as of the First Closing Date, and adequate documentation to
appoint Xxxxxx'x designated candidates for officer and director positions with
Westbeach.
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e. The Significant Shareholders shall have delivered to Xxxxxx XX
and the Escrow Agent the Escrow Agreement, duly executed by the Significant
Shareholders.
f. The holders of eighty percent (80%) of the Class "A" Common
shares issued and outstanding on the First Closing Date (and ninety percent
(90%) of the issued and outstanding Class "A" Common shares, assuming redemption
of the Callable Class "A" Common shares), one hundred percent (100%) of all
other classes of issued and outstanding shares in the capital of Westbeach, one
hundred percent (100%) of all Options and eighty percent (80%) of Warrants for
Class "A" Common shares shall have become parties to this Agreement.
g. Westbeach's Board of Directors shall have adopted irrevocable
resolutions approving the call of all Callable Class "A" Common shares (not held
by Sellers then a party to this Agreement), with notice of the call to be issued
immediately upon consummation of the First Closing.
h. Westbeach shall have amended the trust indentures relating to the
1994 Debentures and the 1996 Debentures (collectively, the Debentures) to
provide that (i) Westbeach may prepay the Debentures, with a prepayment penalty
not to exceed Seventy Thousand Canadian Dollars (CN$70,000), during the period
from the date of this Agreement through the Second Closing Date.
i. Westbeach shall have obtained such consents and assurances as are
necessary or appropriate from the other parties to any Material Undertaking so
that each Material Undertaking continues in full force and effect after the
First Closing Date.
j. Westbeach shall have adopted (i) irrevocable resolutions calling
for the redemption of the Debentures, (ii) delivered to Xxxxxx XX and the
Custodian the Custodian Agreement, duly executed by Westbeach and Sellers, and
(iii) delivered to Xxxxxx XX and the Debenture Escrow Agent the Debenture Escrow
Agreement, duly executed by Westbeach and Sellers.
k. Westbeach and each Significant Shareholder shall have delivered
to Xxxxxx XX a certificate, dated as of the First Closing Date, executed by the
Chief Executive Officer of Westbeach and by each Significant Shareholder,
certifying that the conditions specified in Paragraph 7.3 have been fulfilled.
x. Xxxxxx NS shall have received legal opinions of Xxxxxxxx Xxxxxxxx
Xxxx Xxxxxxxx, counsel to Westbeach, in substantially the form attached as
Exhibits 7.3.l.A and 7.3.1.B.
-24-
x. Xxxxxx NS shall have received a legal opinion of Dunn, Carney,
Xxxxx, Xxxxxxx & Tongue with respect to Sellers, in substantially the form
attached as Exhibit 7.3.m.
n. The Information Meeting shall have been held, unless the failure
to hold such meeting is due to the action or inaction of Xxxxxx XX, Xxxxxx or
Xxxxxx LLC.
o. As of the First Closing Date, the Westbeach board shall consist
of directors designated by Xxxxxx.
p. Westbeach shall have delivered to Xxxxxx XX a copy of the final
unaudited consolidated balance sheet of Westbeach at September 30, 1997, and the
unaudited financial statement including the unaudited consolidated statements of
income and changes in financial position for the period then ended.
q. Westbeach shall have delivered to the Custodian waivers of
(i) the thirty (30) day notice of call for the Westbeach Callable Class A Common
Stock and (ii) waivers of thirty (30) days notice of offer to the Shareholders
required under the Shareholders Agreement.
r. The condition in Paragraph 7.2(h) shall have been satisfied.
8. TERMINATION, AMENDMENT, WAIVER AND SUBSTITUTION
8.1 TERMINATION
At any time before the First Closing Date, this Agreement may be
terminated:
a. By mutual consent of Xxxxxx XX and a Majority in Interest of
Sellers.
b. By either Xxxxxx XX or a Majority in Interest of Sellers if,
without fault of the terminating party, the First Closing shall not have
occurred on or before November 13, 1997, or such later date as the parties may
agree in writing.
c. By Xxxxxx XX, if (i) any condition specified in Paragraph 7.3 has
not been satisfied or waived at such time as the condition is no longer capable
of satisfaction; or (ii) any Seller shall have breached in any material respect
any representation or warranty in Paragraph 2, or if Westbeach shall have
breached in any material respect any representation or warranty in Paragraph 3
or any of its other obligations under this Agreement, and the breach continues
for a period of ten (10) days after a Majority in Interest of Sellers receives
notice of the breach from Xxxxxx XX.
-25-
d. By either Westbeach or a Majority in Interest of Sellers, if (i)
any condition specified in Paragraph 7.2 has not been satisfied or waived at
such time as the condition is no longer capable of satisfaction, or (ii) Xxxxxx
XX, Xxxxxx or Xxxxxx LLC shall have breached in any material respect any
representation or warranty in Paragraph 4 or any of their other obligations
under this Agreement, and the breach continues for a period of ten (10) days
after Xxxxxx XX receives notice of the breach from a Majority in Interest of
Sellers.
8.2 EFFECT OF TERMINATION
If this Agreement is terminated as provided in Paragraph 8.1, this
Agreement shall become void and the parties shall have no further liability or
obligation under this Agreement, except, to the extent the termination results
from a party's breach of any representation, warranty or covenant set forth in
this Agreement, the breaching party shall be liable for the breach as provided
by law; provided that, in any case, the provisions of this Paragraph 8.2,
Paragraph 6.2 (Confidentiality) and Paragraph 12 (General Provisions) shall
remain in full force and effect and survive any termination of this Agreement.
8.3 AMENDMENT; WAIVER
The parties may cause this Agreement to be amended at any time by executing
an instrument in writing signed by Xxxxxx XX, Westbeach, and a Majority in
Interest of Sellers.
8.4 SUBSTITUTION OF SUBSIDIARY FOR XXXXXX XX
The parties hereto acknowledge and agree that Xxxxxx or Xxxxxx XX may
substitute for Xxxxxx XX, a wholly owned subsidiary of Xxxxxx XX organized under
British Columbia law ("Xxxxxx XX") hereunder and in all agreements herein
contemplated. Such substitution shall be accomplished by an amendment to this
Agreement and such other agreements signed by Xxxxxx, Xxxxxx XX, Xxxxxx XX and
Westbeach with Xxxxxx XX in such case becoming a party hereto in the same manner
as Xxxxxx LLC.
9. SURVIVAL AND INDEMNIFICATION
9.1 INDEMNIFICATION BY ALL SELLERS
The representations and warranties contained in Paragraphs 2.2 (Title to
Stock) and 2.4 (Brokers' and Finders' Fees) shall survive indefinitely after the
Closing Date. Each Seller severally agrees to indemnify and hold harmless
Xxxxxx XX, Xxxxxx and Xxxxxx LLC, and their respective officers, directors,
employees and agents, from and against any and all Losses (as defined below)
incurred by Xxxxxx XX, Xxxxxx or
-26-
Xxxxxx LLC arising out of any breach or inaccuracy of any representation or
warranty made by that Seller in Paragraph 2.2 or 2.4. For purposes of this
Agreement "Losses" means (i) all losses, liabilities, damages, actions, demands,
claims, fines and penalties and (ii) all out-of-pocket costs, including, without
limitation, reasonable expenses of investigation, remediation and other response
costs, reasonable attorneys' and paralegals' fees (at trial, on appeal, in
connection with any petition for review and in any agency proceeding) and
reasonable consulting, expert and accounting fees incurred in investigating,
defending or prosecuting any claim.
9.2 INDEMNIFICATION BY SIGNIFICANT SHAREHOLDERS
In addition, the Significant Shareholders jointly and severally agree to
indemnify Xxxxxx XX, Xxxxxx and Xxxxxx LLC as set forth on the attached Exhibit
B.
10. REGISTRATION RIGHTS
10.1 PIGGYBACK REGISTRATION RIGHTS
If (but without any obligation to do so) Xxxxxx proposes to register
(including for this purpose a registration effected by Xxxxxx for shareholders
other than Sellers) any of its Common Stock or other securities under the
Securities Act in connection with the public offering of those securities
(registration relating solely to the sale of securities to participants in a
Xxxxxx stock plan or (ii) a shelf registration of securities to be used as
consideration for acquisitions of additional businesses by Xxxxxx), Xxxxxx shall
promptly give each Seller written notice of its intent to do so. Upon the
written request of any Seller given within twenty (20) days after receipt of
Xxxxxx'x notice, Xxxxxx shall, subject to this Paragraph 10, use all reasonable
efforts to cause to be included in such registration all Xxxxxx Common Stock
issued to that Seller pursuant to this Agreement (including any stock issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued by Xxxxxx) a dividend or other distribution with respect
to, in exchange for or in replacement of that Xxxxxx Common Stock) that Seller
has requested to be registered. Sellers' rights under this Paragraph 10 may be
exercised an unlimited number of times.
10.2 OBLIGATIONS OF XXXXXX
Whenever required under this Paragraph 10 to effect the registration of any
Xxxxxx Common Stock, Xxxxxx shall, as expeditiously as reasonably possible:
a. Prepare and file with the SEC a registration statement with
respect to Xxxxxx Common Stock and use its best efforts to cause the
registration statement to become effective, and, upon the request of Sellers
holding a majority of Xxxxxx
-27-
Common Stock registered thereunder, keep the registration statement effective
for up to one hundred twenty (120) days.
b. Prepare and file with the SEC any amendments and supplements to
the registration statement, and the prospectus used in connection with the
registration statement, as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
registration statement.
c. Furnish to Sellers such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and any other documents that Sellers may reasonably request to
facilitate the disposition of their Xxxxxx Common Stock.
d. Use its best efforts to register and qualify the securities
covered by the registration statement under the securities or Blue Sky laws of
such jurisdictions as Sellers shall reasonably request, provided that Xxxxxx
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
of those states or jurisdictions.
e. In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the underwriters of the offering. Each Seller participating in the
underwriting shall also enter into and perform its obligations under the
underwriting agreement.
f. Notify each Seller holding Xxxxxx Common Stock covered by the
registration statement, at any time when a prospectus covered by the
registration statement is required to be delivered under the Securities Act, of
the occurrence of any event as a result of which the prospectus included in the
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
10.3 FURNISHING OF INFORMATION
It shall be a condition precedent to Xxxxxx'x obligation to take any action
pursuant to this Paragraph 10, that each Seller requesting registration shall
furnish to Xxxxxx such information regarding that Seller, Xxxxxx Common Stock
held by that Seller and the intended method of disposition of Xxxxxx Common
Stock as shall be required to effect the registration of that Seller's Xxxxxx
Common Stock, and to execute any documents in connection with the registration
as Xxxxxx may reasonably request.
-28-
10.4 REGISTRATION EXPENSES
All expenses incurred in connection with registrations under this Paragraph
10 (including, without limitation, all registration, filing and qualification
fees and printing, legal and accounting fees, but excluding underwriting
commissions and discounts and stock transfer taxes) shall be borne by Xxxxxx.
10.5 UNDERWRITING REQUIREMENTS
In connection with any offering involving an underwriting of shares of
capital stock being issued by Xxxxxx, Xxxxxx shall not be required under
Paragraph 10.1 to include any Seller's securities in the underwriting unless
that Seller accepts the terms of the underwriting as agreed upon between Xxxxxx
and the underwriters selected by Xxxxxx (or by other persons entitled to select
the underwriters), and then only in such quantity as the underwriters determine
in their sole discretion will not jeopardize the success of Xxxxxx'x offering.
If the underwriters advise Xxxxxx in writing that the total amount of
securities, including Xxxxxx Common Stock held by Sellers, requested by persons
other than Xxxxxx to be included in the offering exceeds the amount of
securities that the underwriters reasonably believe is compatible with the
success of the offering, then Xxxxxx may reduce pro rata the number of shares
offered for the accounts of those persons (based on the number of shares held by
each person) to a number deemed satisfactory by the underwriters. To facilitate
the allocation of shares in accordance with the above provisions, Xxxxxx may
round the number of shares allocated to any selling shareholder, including
Sellers, to the nearest one hundred (100) shares.
10.6 AVAILABILITY OF RULE 144
Xxxxxx shall not be obligated to register Xxxxxx Common Stock held by any
Seller at any time when the resale provisions of Rule 144(k) (or any similar or
successor provision) promulgated under the Securities Act are available to that
Seller.
11. ARBITRATION
In the event of a dispute between Xxxxxx XX and any Significant Shareholder
relating to the Closing Date Balance Sheet under Paragraph 1.3, the parties
shall submit the dispute to binding arbitration in accordance with the attached
Exhibit C. In the event of a dispute with respect to the indemnification
obligations under Exhibit B, Xxxxxx XX and a majority in interest (based on the
number of shares of Xxxxxx Common Stock issued to such persons as of the First
Closing) of the Significant Shareholders also may agree, but shall not be
required, to submit any such dispute to arbitration pursuant to Exhibit C.
-29-
12. GENERAL PROVISIONS
12.1 NOTICES
All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed effectively given (a) upon personal delivery
to the party notified; (b) three (3) days after deposit in the mail, by
registered or certified mail, postage prepaid, return receipt requested; or (c)
on the day of facsimile transmission, with confirmed transmission; in any case
to the party to be notified at the following address for that party, or at such
other address as that party may indicate by ten (10) days' advance written
notice to the other parties:
a. If to Xxxxxx XX, Xxxxxx or Xxxxxx LLC to:
Xxxxxx Snowboards, Inc.
0000 Xxxxxxx Xxxx, X.X.
Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Hershner, Hunter, Xxxxxxx, Xxxxx & Xxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
b. If to Westbeach, to:
Westbeach Snowboard Canada Ltd.
00 Xxxx 0xx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxxx Xxxx Xxxxxxxx
2500-Four Bentall Centre
0000 Xxxxxxxx Xxxxxx, X.X. Xxx 00000
Xxxxxxxxx, X.X. X0X 0X0
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
-30-
c. If to Sellers, to:
The addresses shown on Westbeach's
Securities Registers as of the Closing Date
12.2 INTERPRETATION
The terms "include," "includes" and "including," when used in this
Agreement, shall be deemed in each case to be followed by the words "without
limitation." In this Agreement, any reference to any event, change, condition
or effect being "material" with respect to any person or entity means any
material event, change, condition or effect related to the condition (financial
or otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of that person or entity. In this
Agreement, any reference to a "Material Adverse Effect" with respect to any
person or entity means any event, change or effect that is materially adverse to
the condition (financial or otherwise), properties, assets, liabilities,
business, operations or results of operations of that person or that entity and
its Subsidiaries, taken as a whole. In this Agreement, except as provided in
Paragraph 2.5 or in Paragraph 3.13 of Exhibit B, any reference to a party's
"knowledge" means that party's actual knowledge after due and diligent inquiry
of officers, directors and other employees of that party reasonably believed to
have knowledge of such matters. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.
12.3 SEVERABILITY
If any provision of this Agreement for any reason is found by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement shall continue in full force and effect. The parties further
agree to replace the void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provision.
12.4 REMEDIES CUMULATIVE; NO WAIVER
Except as otherwise provided herein, any and all remedies expressly
conferred upon a party herein will be deemed cumulative with and not exclusive
of any other remedy conferred hereby, or by law or equity upon that party, and a
party's exercise of any one remedy will not preclude the exercise of any other
remedy. No failure or delay by any party in the exercise of any right hereunder
shall impair that right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right.
-31-
12.5 RULES OF CONSTRUCTION
The parties acknowledge that they have been represented by counsel during
the negotiation, preparation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting the agreement or document.
12.6 LEGAL ADVICE
Sellers acknowledge that Xxxxxxxx Xxxxxxxx Xxxx Xxxxxxxx has been engaged
by and represents Westbeach only. Sellers have been advised to seek the advice
of independent legal counsel.
12.7 EXPENSES
Whether or not the transactions contemplated hereby are consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, the fees and
expenses of advisers and legal counsel) (collectively, Transaction Costs):
(a) incurred by Xxxxxx XX, Xxxxxx or Xxxxxx LLC will be paid by Xxxxxx;
and
(b) incurred by Westbeach and Sellers will be paid by the Sellers;
provided, however, that Xxxxxx XX shall pay all accounting fees incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby.
12.8 ATTORNEYS' FEES
If any action at law or in equity is commenced to enforce or interpret this
Agreement, the prevailing party shall be entitled to receive his, her or its
reasonable attorneys' fees, costs and expenses, in addition to any other relief
to which such prevailing party may be entitled, at trial and on appeal.
12.9 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Oregon (without regard to the principles of conflicts of
law thereof).
-32-
12.10 ENTIRE AGREEMENT
This Agreement, and the exhibits, schedules and documents specifically
referred to herein or delivered pursuant hereto, constitute the parties' entire
agreement and understanding with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral among
the parties with respect to the subject matter hereof.
12.11 COUNTERPARTS
This Agreement may be executed in more than one counterpart, each of which
shall be deemed an original, and all of which shall constitute one and the same
agreement.
DATED: October 31, 1997.
Xxxxxx:
XXXXXX SNOWBOARDS, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
Xxxxxx XX:
XXXXXX SNOWBOARDS ULC
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive Officer
Xxxxxx LLC:
XXXXXX, LLC
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
-00-
Xxxxxxxxx:
XXXXXXXXX XXXXXXXXX XXXXXX LTD.
By /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
Chief Executive Officer
By /s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx
Director
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXX XXXXXXXX
Signature: X /s/ Xxxx Xxxxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 0000 XXXXXX XXXXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 53,810
--------------------------------------------------------------------------
Class B Preferred Shares 12,000
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $129,200
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 31,554
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxx Xxxxxxxx
---------------------------------
Name
000 000 Xxx XX
---------------------------------
Street Address
Xxxxxxxx, XX 00000
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXX XXXXXX
Signature: X /s/ Xxxxxx Xxxxxx Witness: /s/ Xxxxxxx Xxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 1997 XXXXXXX XXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call 198,980
--------------------------------------------------------------------------
Class B Preferred Shares 45,000
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 10,000
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $477,910
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 117,812
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXX XXXXXX
Signature: X /s/ Xxxxx Xxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 0000 XXXXXX XXXXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call 198,980
--------------------------------------------------------------------------
Class B Preferred Shares 45,000
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $473,555
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 116,738
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXXXXX XXXX XXXXXX
Signature: X /s/ Xxxxxxxxx Xxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 0000 XXXXXX XXXXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 20,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 15,000
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $58,437
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 8,489
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXXX XXXXXX
Signature: X /s/ Xxxxxxx Xxxxxx Witness: /s/ Xxxxxx Xxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 1997 XXXXXX XXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call 198,980
--------------------------------------------------------------------------
Class B Preferred Shares 45,000
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $473,555
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 116,738
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxxxxx Xxxxxx
---------------------------------
Name
0000 Xxxxxx Xxx
---------------------------------
Xxxxxx Xxxxxxx
Xxxx Xxxxxxxxx, X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: MARIASERENA X. XXXXXX
Signature: X /s/ Xxxxxx Xxxxxx Witness: /s/ Xxxxxxx Xxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 1997 XXXXXXX XXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 20,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 15,000
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $58,437
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 8,489
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxxxx Xxxxxx
---------------------------------
Name
0000 Xxxxxx Xxx
---------------------------------
Xxxxxx Xxxxxxx
Xxxx Xxxxxxxxx, X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXX XXXX XXXXXXXXX
Signature: X /s/ Xxxx Xxxxxxxxx Witness: /s/ Xxxxxx Xxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 1997 XXXXXX XXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 10,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 7,500
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 15,000
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $49,702
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 9,295
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
HALLIWELL MARKETING INC.
---------------------------------
Name
0000 Xxxx Xxxxxx
---------------------------------
Street Address
Whistler, B.C. VON 1B6
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: FIONA XXXX XXXXXXXXX
Signature: X /s/ Xxxxx Xxxxxxxxx Witness: /s/ Xxxxxx Xxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 1997 XXXXXX XXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 10,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 7,500
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 15,000
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $49,702
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 9,295
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
HALLIWELL MARKETING INC.
---------------------------------
Name
0000 Xxxx Xxxxxx
---------------------------------
Street Address
Whistler, B.C. VON 1B6
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: B.C. MERCANTILE CORPORATION
Signature: X /s/ Xxx Xxxxxx Witness: /s/ Xxxxxxxx XxXxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 1997 XXXXXXXX XxXXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 101,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 75,000
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 150,000
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $498,226
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 92,943
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
c/o XXXXXXXX XxXXXXXXXX (BARRISTER AND SOLICITOR)
-------------------------------------------------
Name
0000-000 XXXXXXXX XXXXXX
------------------------------
Xxxxxx Xxxxxxx
XXXXXXXXX, X.X. X0X 0X0 ((000) 000-0000)
------------------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: 358679 B.C. LTD.
Signature: X /s/ Xxxxx Xxxxx Witness: /s/ C. Titanich
-------------------------- --------------------------
Authorized Signature Signature
Date: November 5, 1997 C. TITANICH
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 5,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 3,750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $14,609
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 2,122
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
358679 B.C. LTD.
---------------------------------
Name
940-1040 [NAME ILLEGIBLE]
---------------------------------
Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXX XXXXXX XXXXXXXX
Signature: X /s/ Xxxx X. Xxxxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 0000 XXXXXX XXXXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 2,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 1,500
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $5,844
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 849
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxx Xxxxxxxx
---------------------------------
Name
0000 X. 0xx Xxx
---------------------------------
Street Address
Xxxxxxxxx, XX X0X 175
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: X. XXXXXXX & ASSOC. INC.
Signature: X /s/ Xxx Xxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 0000 XXXXXX XXXXXXXX
--------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 5,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 3,750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $14,609
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 2,122
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXXX XXXXXXXXX FAMILY TRUST
Signature: X /s/ Xxxxxxx Xxxxxxxxx Witness: /s/ X. Xxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 5, 1997 X. XXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 3,750
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $5,121
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 1,262
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXXXX XXXX
Signature: X /s/ Xxxxxxxx Xxxx Witness: /s/ Xxxx Xxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 5, 1997 XXXX XXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $2,922
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 424
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXX M.I. XXXXX
Signature: X /s/ Xxxxx Xxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 7, 0000 XXXXXX XXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 7,500
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $10,242
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 2,525
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXX XXXX
Signature: X /s/ Xxxxx Xxxx Witness: /s/ Xxxxx Xxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 5, 1997 XXXXX XXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 750
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $1,024
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 252
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxxx Xxxx
---------------------------------
Name
0000 Xxxxxx Xxx, XX
---------------------------------
Street Address
Xxxxxxx, Xxxx, 00000
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXX X. XXXXXX
Signature: X /s/ Xxxxxx Xxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 0000 XXXXXX XXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $2,922
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 424
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxxxx Xxxxxx
---------------------------------
Name
108 - 0000 Xxxxxxx Xx.
---------------------------------
Street Address
Xxxxxxxx XX X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXX XXXXXXX
Signature: X /s/ Xxx Xxxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 0000 XXXXXX XXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $2,922
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 424
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxx Xxxxxxx c/o BBDO
---------------------------------
Name
Xxxxx 000 - 000 Xxxxx Xxxxxx
---------------------------------
Street Address
Vancouver, B.C.
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: K. XXXXX XXXXXXXXX
Signature: X /s/ K. B. Halliwell Witness: /s/ Xxxx Xxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 7, 1997 XXXX XXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 15,000
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $20,484
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 5,050
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
X. XXXXXXXXX
---------------------------------
Name
00 Xxxxx, Xx. X.X.
---------------------------------
Street Address
Xxxxxxx, XX X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: RICHARDSONS XXXXXXXXXXXX OF CANADA LIMITED,
IN TRUST FOR XXXXX XXXXXXXXX,
RRSP ACCOUNT NO. 50-7618R-1S
Signature: X [SIGNATURE ILLEGIBLE] Witness: /s/ Xxxx Xxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 7, 1997 XXXX XXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 5,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 3,750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $14,609
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 2,122
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
R BC DOMINION
---------------------------------
Name
000 0 Xxx X.X. Xxxxx 0000
---------------------------------
Street Address
Xxxxxxx, XX X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXX XXXXXXXXX
Signature: X /s/ Xxxx Xxxxxxxxx Witness: /s/ Xxxxx X. Xxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 1997 XXXXX X. XXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 7,500
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $10,242
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 2,525
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
MRS. W.A. HALLIWELL
---------------------------------
Name
0000 XXXXX XXXX XX
---------------------------------
Street Address
XXXXXXX, XX X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXXX XXXXX
Signature: X /s/ Xxxxxxx Xxxxx Witness: [SIGNATURE ILLEGIBLE]
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 1997 [NAME ILLEGIBLE]
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 15,000
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $20,484
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 5,050
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
XXXX XXXXX
---------------------------------
Name
1140 - 000 XXXX XXXXXXX XX.
---------------------------------
Xxxxxx Xxxxxxx
XXXXXXXXX X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: LEVANTE INC.
Signature: X /s/ Kano Yamanaka Witness: /s/ Xxxxxxxx X. Xxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 4, 1997 XXXXXXXX X. XXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 75,000
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $102,422
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 25,250
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
LEVANTE, INC.
---------------------------------
Name
TAMAGAWADAI TOKYU BLD. 0X, 0-00-0 XXXXXXXXXXX XXXXXXXX-XX
----------------------------------------------------------
Xxxxxx Xxxxxxx
XXXXX, XXXXX 158
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXXX XxXXXX
Signature: X /s/ Xxxxxxx XxXxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 5, 0000 XXXXXX XXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $2,922
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 424
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXX XXXXXXX XxXXXXXX
Signature: X /s/ Xxxx XxXxxxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 9, 0000 XXXXXX XXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $2,922
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 424
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
_________________________________
Name
_________________________________
Street Address
_________________________________
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: P. XXXXX XXXXXX
Signature: X /s/ X. X. Xxxxxx Witness: /s/ Xxxxxxx Xxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: October 31, 1997 XXXXXXX XXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call -
--------------------------------------------------------------------------
Class A Shares not subject to Call -
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 20,000
--------------------------------------------------------------------------
Common Share Options at $5.00 20,000
--------------------------------------------------------------------------
Common Share Options at $2.00 20,000
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $39,743
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 9,797
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
XXXXX XXXXXX
---------------------------------
Name
0000 XXXXXX XXX
---------------------------------
Street Address
XXXX XXXXXXXXX XX XXXXXX X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXX X. XXXXX
Signature: X /s/ Xxxx X. Xxxxx Witness: /s/ Xxxxxx Xxxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 6, 1997 XXXXXX XXXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 10,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 7,500
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 15,000
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $49,702
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 9,295
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxx Xxxxx
---------------------------------
Name
000 Xxxxxxxx Xx
---------------------------------
Street Address
Xxxxxxx XX X0X 0X0
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXX KOUSUKI SUZUKI
Signature: X /s/ Xxxxx Xxxxxx Witness: /s/ X. Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 7, 1997 X. XXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $2,922
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 424
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxxx Xxxxxx
---------------------------------
Name
0000 X 00xx Xxx
---------------------------------
Street Address
Vancouver B.C. V6N - 3G8
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
SCHEDULE "A"
ACCEPTANCE FORM
SIGNED, SEALED AND DELIVERED BY: XXXXXX X. XXXX
Signature: X /s/ Xxxxxx Xxxx Witness: /s/ Xxxxxx Xxxxxxxx
-------------------------- --------------------------
Authorized Signature Signature
Date: November 8, 0000 XXXXXX XXXXXXXX
-------------------- --------------------------
Print Name
WESTBEACH SECURITIES WHICH YOU ARE SELLING
------------------------------------------
--------------------------------------------------------------------------
Class A Shares subject to Call 1,000
--------------------------------------------------------------------------
Class A Shares not subject to Call 750
--------------------------------------------------------------------------
Class B Preferred Shares -
--------------------------------------------------------------------------
Warrants at $2.50 -
--------------------------------------------------------------------------
Common Share Options at $8.00 -
--------------------------------------------------------------------------
Common Share Options at $5.00 -
--------------------------------------------------------------------------
Common Share Options at $2.00 -
--------------------------------------------------------------------------
CONSIDERATION YOU WILL RECEIVE ON CLOSING:
------------------------------------------
--------------------------------------------------------------------------
Cash * $2,922
--------------------------------------------------------------------------
Shares of Common Stock of Xxxxxx 424
--------------------------------------------------------------------------
*Represents the Securityholder's pro-rata share of the Cash Amount, less a
holdback of $500,000 which has been withheld by the Custodian. The Custodian
will pay actual transaction costs (estimated at $400,000) for all Sellers and
will distribute the balance of the holdback, if any, pro-rata to the Seller on
or before January 15, 1998.
Delivery Instructions:
Xxxxxx Xxxx
---------------------------------
Name
0000 Xxxxxxx Xx.
---------------------------------
Street Address
North Vancouver BC V6N - 3G8
---------------------------------
City, Country, Postal Code
Please indicate the address for delivery of the consideration you receive from
the Custodian. If no address is given, the consideration will be sent to your
address on the register of shareholders of Westbeach.
EXHIBITS:
1.2.b.(1) Form of Transfer Documentation
1.2.b.(2)(b) Form of Debenture Escrow Agreement
1.2.b.(3)(a) Form of Loan Documentation
1.2.c.(3) Form of Custodian Agreement
7.2.h Form of Escrow Agreement
7.2.j Form of Opinion of Counsel to Xxxxxx
7.3.1.A Form of Opinion of Counsel to Westbeach
7.3.1.B Form of Loan Opinion
7.3.m Form of Opinion of Counsel regarding Sellers
A Representations and Warranties of Westbeach
B Indemnification
C Arbitration
SCHEDULES:
A Securities of Westbeach
1.2.b.(2) Escrow Amount
1.3.a Purchase Price Adjustment Limits
3.1 Organization and Standing
3.2 Warrants and Options
3.3 Subsidiaries and Affiliates
3.4 Conflicts
3.6 Certain Changes
3.7 Liabilities
3.8 Litigation
3.9 Governmental Authorizations
3.10 Material Undertakings
3.11 Real and Personal Property
3.12 Intellectual Property
3.14 Taxes
3.15 Employee Benefit Plans
3.16 Employee Matters
3.17 Related-Party Transactions
3.18 Insurance Policies
3.20 Major Customers
3.22 Inventory Locations
3.23 Product Warranty and Product Liability
3.26 Return of Shipments
3.29 Accounts Receivable
EXHIBIT 1.2.B(1)
SURRENDER OF WARRANT
TO: WESTBEACH SNOWBOARD CANADA LTD.
00 Xxxx 0/xx/ Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
AND TO: XXXXXX SNOWBOARDS ULC
0000 Xxxxxxx Xxxx, X.X.
Xxxxx, XX 00000
RE: CANCELLATION OF SHARE PURCHASE WARRANT
I am the registered holder of the attached share purchase warrant (the
"Warrant") of Westbeach Snowboard Canada Ltd. ("Westbeach") and hereby surrender
the Warrant to Westbeach for cancellation, renounce all my rights under the
Warrant and release Westbeach from all other obligations thereunder.
I represent and warrant that I have the capacity and authority to surrender the
Warrant and have good and marketable title to the Warrant, and that none of the
Warrant has been exercised.
Dated:__________________ , 1997.
_______________________________ __________________________________
Signature of Witness Signature of Holder or Authorized
Signatory
_______________________________ __________________________________
Name of Witness (Please Print) Name of Registered Holder (Please
Print)
_______________________________
_______________________________
Address
EXHIBIT 1.2.B.(1)
RELEASE BY OPTIONEE
TO: Westbeach Snowboard Canada Ltd. (the "Company")Xxxxxx Snowboards ULC
("Xxxxxx")
AND TO: Xxxxxx Snowboards ULC ("Xxxxxx")Westbeach Snowboard Canada Ltd. (the
"Company")
RE: Purchase by Xxxxxx of Incentive Stock Options
I, . ( [name of Optionee], pursuant to a securities purchase agreement (the
"Purchase Agreement") dated October 31, 1997, have agreed to sell or return for
cancellation to the Company the incentive stock options granted to me by
Westbeach Snowboard Canada Ltd. (the "Company"). Capitalized terms in this
release not otherwise defined will have the meanings assigned in the Purchase
Agreement.
I represent and warrant to you as follows:
(a) the Company granted me the option (the "Option") to purchase up to .
(Class "A" common shares of the Company at a price of $. (Cdn) until (.;
(b) the Option was not reduced to writing, and there exists no written
agreement or certificate evidencing the Option; and
(c) the Option represents the only right held by me entitling me to acquire any
securities of the Company, [for Chip only: other than statutory
pre-emptive rights], and I have not assigned in any way my rights under the
Option. and am the person entitled to provide this release.
Effective on the receipt by the Custodian of the purchase price for the Option,
I hereby irrevocably and unconditionally release and forever discharge Xxxxxx,
the Company, Xxxxxx, each of their affiliates, their respective directors and
officers and each of their respective successors, assigns, heirs and legal
representatives (all such persons and entities being called the "Releasees") of
and from all rights, manner of actions, causes of action, suits, demands, debts,
accounts, covenants, contracts,
damages and all other claims whatsoever which I or my successors or assigns ever
had, now has or may in the future have against any of the Releasees by reason of
the Option.
DATED this ______ day of November, 1997.
SIGNED, SEALED AND DELIVERED )
by . ( in the presence of: )
)
)
__________________________________ )
Witness )
) _______________________________
__________________________________ ) .
Address )
)
__________________________________ )
)
__________________________________ )
Occupation )
EXHIBIT 1.2.B.(2)(B)
DEBENTURE ESCROW AGREEMENT
THIS AGREEMENT, dated for reference November ___, 1997, is made
BETWEEN:
WESTBEACH SNOWBOARD CANADA LTD., a British Columbia company;
("Westbeach");
AND:
XXXXXX SNOWBOARDS ULC, a Nova Scotia unlimited company;
("Xxxxxx XX")
AND:
XXXXXX, LLC, an Oregon limited liability company;
("Xxxxxx LLC")
AND:
XXXXXX SNOWBOARDS, INC., an Oregon corporation;
("Xxxxxx")
AND:
BRITISH COLUMBIA MERCANTILE MANAGEMENT CORP., a British Columbia company;
(the "Trustee")
AND:
M.O.I. ESCROW SERVICES LIMITED, a British Columbia company;
("Escrow Agent").
-2-
WHEREAS:
A. Pursuant to a securities purchase agreement dated October 31, 1997 (the
"Purchase Agreement"), Xxxxxx XX agreed to acquire from the securityholders of
Westbeach, all the issued and outstanding securities of Westbeach.
B. The Trustee is the trustee under a trust indenture dated for reference July
16, 1996 (the "Trust Indenture"), pursuant to which Westbeach issued debentures
(the "1996 Debentures") in the principal amount of $2,130,000;
C. As a term of the Purchase Agreement, Xxxxxx XX has lent to Westbeach
$2,130,000 (the "Redemption Proceeds") together with $_______, representing
interest accruing under the Debentures until the last date for the Second
Closing Date and an advance against expenses of $5,000 (the "Interest Amount")
to fund the redemption of the 1996 Debentures;
D. Westbeach and Xxxxxx XX have requested the Trustee to consent to the
amendment of the Trust Indenture to permit the prepayment of the 1996
Debentures;
E. The Purchase Agreement provides that the holders of the 1996 Debentures
will sell warrants of Westbeach to Xxxxxx XX prior to the redemption of the 1996
Debentures and the Trustee is concerned that the sale of the Warrants prior to
the redemption of the 1996 Debentures will impair the security of the
Debentureholders and Westbeach and Xxxxxx have agreed to make the agreements,
grant the assurances and give the security provided for in this Agreement in
order to induce the Trustee to consent to the amendment of the 1996 Debentures;
F. The Escrow Agent is prepared to hold the Redemption Proceeds in escrow on
the terms of this Agreement;
THEREFORE, the parties agree:
1. INTERPRETATION
Capitalized terms not otherwise defined in this Agreement have the meanings
assigned in the Purchase Agreement.
2. ADVANCE OF FUNDS
2.1 On the First Closing Date, Xxxxxx XX will deliver the Redemption
Proceeds and the Interest Amount to the Escrow Agent by certified cheque,
solicitor's trust cheque or wire transfer of funds to be held in escrow in
accordance with the terms of this Agreement. The Trustee will deposit with the
Escrow Agent an undated
-3-
financing change statement to discharge the security to be granted under
Section4. The parties acknowledge that Debentureholders will deposit with the
Escrow Agent the certificates representing the 1996 Debentures.
2.2 Westbeach irrevocably instructs the Escrow Agent to pay the Redemption
Proceeds to the Trustee for redemption of the Debentures on the day (the
"Payment Date") which is the fifth business day following the Second Closing
Date, and the Escrow Agent agrees to make such payment.
2.3 While the Redemption Proceeds and the Interest Amount are held in
escrow, Westbeach will not, except as contemplated in this Agreement, transfer,
grant or assign any right or interest in the Redemption Proceeds or the Interest
Amount to any other person or otherwise encumber the Redemption Proceeds.
2.4 From and after the First Closing Date, Westbeach, Xxxxxx, Xxxxxx LLC
and Xxxxxx XX:
(a) will not contest or challenge this Agreement or the performance
by any of the parties of any term of this Agreement in any way or
assert any right to the Redemption Proceeds or the Interest
Amount not expressly acknowledged in this Agreement;
(b) acknowledge that in any action to enjoin or otherwise prevent or
delay the payment contemplated in subsection 2.2, they will be
estopped from challenging or contesting this Agreement or the
performance by any of the parties of a term of this Agreement in
any way;
(c) agree not to take any action inconsistent with or contrary to the
performance by the parties of their obligations under this
Agreement, including, without limitation, withdrawing all or any
part of the Redemption Proceeds or changing any instructions or
directions given under this Agreement; and
(d) will co-operate with and assist the Escrow Agent and Trustee in
defending any legal proceeding which the Redemption Proceeds are
sought to be attached and will jointly and severally indemnify
the Escrow Agent and the Trustee for all reasonable expenses in
defending any such action, including legal fees and expenses on a
solicitor and own client basis.
-4-
3. TERMS OF ESCROW
3.1 Westbeach, Xxxxxx, Xxxxxx LLC, Xxxxxx XX and the Trustee irrevocably
direct the Escrow Agent not to release or otherwise deal with the Redemption
Proceeds or the Interest Amount and the other documents held in escrow under
this Agreement except in accordance with the terms of this Agreement.
3.2 Forthwith following receipt, the Escrow Agent will deposit the
Redemption Proceeds and the Interest Amount in a daily interest savings account
with a Canadian chartered bank.
3.3 On the Payment Day, the Escrow Agent will:
(a) pay to the Trustee the Redemption Proceeds, plus an amount out of
the Interest Amount equal to $_____ for each day the Redemption
Proceeds were held in escrow hereunder;
(b) deduct actual expenses incurred by the Escrow Agent in the
performance of its duties under this Agreement;
(c) pay to Xxxxxx XX the balance, if any, of the funds held in
escrow, including any interest actually earned on the funds in
the account net of bank charges; and
(d) file the financing change statement to discharge any registration
of the security interest granted by Westbeach pursuant to
Section 4.
3.4 The Escrow Agent shall have no duties except those which are expressly
set forth herein, and it shall not be bound in any way by:
(a) any notice of a claim or demand with respect thereto or any
waiver, modification, amendment, termination or rescission of
this Agreement unless received in writing and signed by all other
parties to this Agreement, and, if its duties herein are
affected, unless it has given its prior written consent thereto;
or
(b) any other contract or agreement between any of Westbeach, the Trustee,
Xxxxxx, Xxxxxx LLC and Xxxxxx XX, whether or not the Escrow Agent has knowledge
thereof or of its terms and conditions.
-5-
4. SECURITY INTEREST
4.1 Westbeach grants a security interest in all of its right, title and
interest in the Redemption Proceeds to the Trustee to secure the Obligations (as
defined in the Trust Indenture) of Westbeach under the Trust Indenture and the
1996 Debentures.
4.2 Xxxxxx, Xxxxxx LLC and Xxxxxx XX acknowledge that any claim which they
may now or in the future have to the Redemption Proceeds will rank subsequent in
priority to the interest of the Trustee.
4.3 The security interest created by this Agreement will, on making the
payments contemplated in subsection 2.2, cease and become null and void.
4.4 The security interest created by this Agreement will become
enforceable on the occurrence of an Event of Default, as defined in the Trust
Indenture, or the failure of the Second Closing Date to occur within 35 days of
the First Closing Date.
5. AMENDMENT AND ASSIGNMENT
5.1 This Agreement may be amended only by a written agreement among the
Escrow Agent, the Trustee, Westbeach, Xxxxxx, Xxxxxx LLC and Xxxxxx XX.
5.2 The Trustee may, on behalf of the holders of the 1996 Debentures,
assign any or all of its rights under this Agreement without the consent of the
other parties to this Agreement. No other party may assign its rights under
this Agreement except with the written consent of all other parties or as
otherwise contemplated in this Agreement.
6. INDEMNIFICATION OF ESCROW AGENT
6.1 Except for its acts of negligent misconduct, the Escrow Agent will not
be liable for any acts done or steps taken or omitted in good faith, or for any
mistake of fact or law and each of the Trustee, Westbeach, Xxxxxx, Xxxxxx LLC
and Xxxxxx XX will jointly and severally release, indemnify and save harmless
the Escrow Agent from all costs, charges, claims, demands, damages, losses and
expenses resulting from the Escrow Agent's compliance in good faith with this
Agreement. Westbeach agrees to pay the Escrow Agent's proper and reasonable
charges for its services rendered and its disbursements incurred as escrow agent
in this matter.
-6-
7. RESIGNATION OF ESCROW AGENT
7.1 If the Escrow Agent wishes to resign as escrow agent under this
Agreement, the Escrow Agent must give notice in writing to the Trustee,
Westbeach, Xxxxxx, Xxxxxx LLC and Xxxxxx XX.
7.2 The resignation of the Escrow Agent will be effective and the Escrow
Agent will cease to be bound by this Agreement on the date that is 20 days after
the date of receipt of the notice referred to in subsection 7.1 or on such other
date as the Escrow Agent, Westbeach, the Debentureholders and Xxxxxx may agree
upon (the "Resignation Date").
7.3 Following receipt of the notice referred to in subsection 7.1 and
before the Resignation Date, the Trustee, Westbeach and Xxxxxx will provide the
Escrow Agent with written instructions to deliver the Redemption Proceeds and
the Interest Amount and accrued interest then held by the Escrow Agent pursuant
to this Agreement to a third party, to be held on the terms and conditions of
this Agreement or otherwise as the Trustee, Westbeach, and Xxxxxx may agree. If
the Trustee, Westbeach and Xxxxxx cannot agree on a new escrow agent before the
Resignation Date, then the Escrow Agent will deliver the Redemption Proceeds to
the Trustee to be held in accordance with the terms of this Agreement.
7.4 The effect of the delivery of the Redemption Proceeds then held in
escrow to a third party or the Trustee under subsection 7.3 will be to appoint
the third party or the Trustee as successor escrow agent under this Agreement.
The third party or the Trustee will be entitled to all the rights of the Escrow
Agent under this Agreement, and the other parties to this Agreement will be
bound by the appointment and by this Agreement as if the third party or the
Trustee had originally been appointed as escrow agent under this Agreement.
7.5 If, at any time, a dispute arises between any of the Trustee,
Westbeach, Xxxxxx, Xxxxxx LLC and Xxxxxx XX as to the proper interpretation of
this Agreement, the Escrow Agent will be at liberty to deliver the documents
then held by it in escrow under this Agreement into court and will thereby be
released of all further obligations under this Agreement and the Trustee,
Westbeach, Xxxxxx, Xxxxxx LLC and Xxxxxx XX will jointly and severally be liable
for and will indemnify the Escrow Agent for all fees, charges and expenses of
the Escrow Agent charged on a solicitor and own client basis in connection with
any such dispute.
-7-
8. FURTHER ASSURANCES
From and after the date of this Agreement, the Trustee, Westbeach, Xxxxxx,
Xxxxxx LLC and Xxxxxx XX will execute and deliver any further documents and
perform any acts necessary to carry out the intent of this Agreement.
9. TIME
Time is of the essence of this Agreement.
10. NOTICES
All notices, documents and other communications ("Notices") required or
permitted to be given to any party to this Agreement shall be in writing, and
shall be addressed to the parties as follows or at such other address as the
parties may specify from time to time:
(a) Westbeach:
Westbeach Snowboard Canada Ltd.
00 Xxxx 0xx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: P. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
(b) The Trustee:
British Columbia Mercantile Corporation
2386, 0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(c) Xxxxxx, Xxxxxx LLC or Xxxxxx XX:
Xxxxxx Snowboards, Inc.
0000 Xxxxxxx Xxxx, X.X.
Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(d) the Escrow Agent:
-8-
M.O.I. Escrow Services Limited
1100, 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: Xxxxxxxx XxXxxxxxxx
Facsimile: (000) 000-0000
Notices must be delivered or sent by telecopier and addressed to the party
to which notice is to be given to the address or facsimile number above or to
such other address as a party may advise by Notice to the other parties. If
Notice is delivered or transmitted by telecopier during the normal business
hours of the recipient, it will be deemed to be received when delivered or sent
by telecopier. If a Notice is delivered or transmitted by telecopier outside of
normal business hours of the recipient, it will be deemed to be received at the
commencement of normal business hours of the recipient on the next business day.
11. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original and all of which shall constitute one
agreement.
12. LANGUAGE
Wherever a singular expression is used in this Agreement, that expression
is deemed to include the plural or the body corporate where required by the
context.
13. ENUREMENT
This Agreement enures to the benefit of and is binding on the parties and
their successors and permitted assigns.
14. CONFLICTING AGREEMENTS
Where a provision of this Agreement conflicts or is inconsistent with a
provision of the Purchase Agreement or any other agreement to which any of the
parties to this Agreement are party, the terms of this Agreement will supersede
any such conflicting provision.
-9-
15. LAW
This Agreement is governed by the laws of British Columbia and the parties
irrevocably attorn to the jurisdiction of the courts of British Columbia for the
resolution of disputes under this Agreement.
IN WITNESS of this Agreement, the parties have executed this Agreement under
seal and delivered it to each other as of the date given above.
)
THE COMMON SEAL of WESTBEACH )
SNOWBOARD CANADA LTD. was )
hereunto affixed in the presence of: )
)
)
________________________________________ ) c/s
Authorized Signatory )
)
)
________________________________________ )
Authorized Signatory
XXXXXX SNOWBOARDS ULC
By:
________________________________________
Xxxxx X. Xxxxxx, President and
Chief Executive Officer
XXXXXX, LLC
By:
________________________________________
Xxxxx X. Xxxxxx, Chief Executive Officer
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XXXXXX SNOWBOARDS, INC.
By:
________________________________________
Xxxxx X. Xxxxxx, Chief Executive Officer
)
THE COMMON SEAL of BRITISH )
COLUMBIA MERCANTILE )
MANAGEMENT CORP. was hereunto )
affixed in the presence of: ) c/s
)
)
________________________________________ )
Authorized Signatory )
)
)
________________________________________ )
Authorized Signatory )
)
THE COMMON SEAL of M.O.I. )
ESCROW SERVICES LIMITED was )
hereunto affixed in the presence of )
)
)
________________________________________ ) c/s
Authorized Signatory )
)
)
________________________________________ )
Authorized Signatory
EXHIBIT 1.2.B.(3)(A)
PROMISSORY NOTE
---------------
DUE ON DEMAND [CDN $*]
FOR VALUE RECEIVED THE UNDERSIGNED WESTBEACH SNOWBOARD CANADA LTD. promises to
pay to the order of XXXXXX SNOWBOARDS ULC the sum of [. ($.)] ON DEMAND at
Vancouver, British Columbia, with interest as hereinafter set out.
The principal amount outstanding hereunder from time to time shall bear interest
calculated and payable monthly from the date hereof, both before and after
default and judgment at a rate of . percent (.%) per annum, with interest on
overdue interest at the same rate.
WESTBEACH SNOWBOARD CANADA LTD. hereby waives presentment, protest and notice of
dishonour and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Promissory Note.
DATED this _____ day of October, 1997.
WESTBEACH SNOWBOARD CANADA LTD.
Per:
______________________________
Authorized Signatory
GENERAL SECURITY AGREEMENT
--------------------------
WESTBEACH SNOWBOARD CANADA LTD. (the "Debtor") hereby mortgages, charges and
absolutely assigns to XXXXXX SNOWBOARDS ULC (the "Secured Party"), and grants to
the Secured Party and the Secured Party takes a security interest in, all of the
Debtor's present and after-acquired Personal Property (including all Goods,
Securities, Instruments, Documents of Title, Chattel Paper, Money and
Intangibles), real property and other assets and undertaking, (collectively, the
"Charged Property") to secure payment and performance of all present and future
debts, liabilities and other obligations of the Debtor to the Secured Party,
direct and indirect, absolute and contingent (collectively, the "Secured
Obligations").
All terms with initial capital letters will, unless otherwise defined herein,
have the respective meanings given to them in the Personal Property Security Act
(British Columbia) and the regulations made thereunder (collectively, the
"PPSA").
The Debtor will not sell, lease or otherwise dispose of any Charged Property
except that, until default, the Debtor may deal with Inventory, Accounts and
Money in the ordinary course of business. The Debtor will not allow any Charged
Property to be situate outside of British Columbia, except for those assets and
their respective locations as set forth in Schedule "A" hereto. The Debtor will
not allow the Debtor's chief executive office or sole place of business to be
located outside of British Columbia, nor will the Debtor allow, except upon 10
days' prior written notice to the Secured Party, the Debtor's name to be
changed.
The Debtor will be in default under this agreement if default is made in payment
or performance of any of the Secured Obligations, or if there is a default under
any document evidencing any of the Secured Obligations. Upon a default
hereunder, the Secured Party will have all the rights and remedies of a secured
party under the PPSA and of a mortgagee at law or in equity and, in addition,
will be entitled to declare payment and performance of all of the Secured
Obligations to be immediately due, and will be entitled by instrument in writing
to appoint any legal person as receiver or receiver and manager (as the case may
be, a "Receiver") of all or any part of the Charged Property. Any Receiver so
appointed will have all the rights and remedies of the Secured Party (except the
right to appoint a Receiver). Without limiting the rights and remedies referred
to above, the Secured Party and any Receiver may, after default, use any or all
of the Charged Property in the manner and to the extent it considers
commercially reasonable, and may sell, lease or otherwise dispose of the same
either for cash or in any manner involving deferred payment. Neither the
Secured Party nor any Receiver will be obligated to take any necessary or other
steps to preserve rights against others with respect to any Securities,
Instruments or Chattel Paper now or hereafter in its possession.
The Debtor acknowledges receipt of a copy of this agreement and waives its right
to receive copies of all financing statements, financing change statements and
verification statements that may be filed or issued with respect to the Security
Interests created hereby.
Agreed to at Vancouver, British Columbia this ___ day of October, 1997.
WESTBEACH SNOWBOARD CANADA LTD.
By:___________________________________ (c/s)
Authorized Signatory
-2-
SCHEDULE "A"
------------
ASSET LOCATION
-------------------------------------------------------------------------------
EXHIBIT 1.2.C.(3)
THE CUSTODIAN AGREEMENT made the ____ day of __________, 1997
AMONG:
B.P.Y.A. 863 HOLDINGS LTD., a company incorporated under the laws of
the Province of British Columbia
("Custodian")
AND:
WESTBEACH SNOWBOARD CANADA LTD., a company incorporated under the laws
of Canada, and continued under the laws of the Province of British
Columbia
("Westbeach")
AND:
XXXXXX SNOWBOARDS, INC. a corporation incorporated under the laws of
the State of Oregon, in the United States of America
("Xxxxxx")
AND:
XXXXXX, LLC, a limited liability company organized under the laws of
the State of Oregon, in the United States of America
("Xxxxxx LLC")
AND:
XXXXXX SNOWBOARDS ULC., an unlimited company incorporated under the
laws of the Province of Nova Scotia
("Xxxxxx XX")
AND:
ALL SECURITY HOLDERS OF WESTBEACH LISTED ON THE SCHEDULE ATTACHED TO
THIS AGREEMENT AS SCHEDULE "A" AND WHO HAVE EXECUTED THIS AGREEMENT
(collectively, the "Sellers")
-2-
WHEREAS:
A The Sellers own the issued and outstanding shares and rights to
acquire shares (the "Securities") in the capital of Westbeach listed on Schedule
"A" to this Agreement.
B Xxxxxx XX desires to purchase from Sellers, and each Seller desires
to sell to Xxxxxx XX, all the Seller's Securities on the terms and conditions
set forth in a certain agreement between Xxxxxx, Xxxxxx LLC, Xxxxxx XX, the
Sellers, and Westbeach, dated October 31, 1997 ("Securities Purchase
Agreement").
C By the terms of the Securities Purchase Agreement, the Custodian has
agreed to act as custodian in respect to the sale of the Securities to Xxxxxx
XX, on the terms and conditions set forth in this custodian agreement
("Agreement").
FOR GOOD AND VALUABLE CONSIDERATION, (the receipt and sufficiency of which is
hereby acknowledged) the parties hereto agree as follows:
ARTICLE 1
THE FIRST CLOSING
1.1 Capitalized terms not otherwise defined in this Agreement have the
meanings assigned in the Securities Purchase Agreement.
1.2 Unless the Custodian has received notice of waiver from Xxxxxx XX on
or before the First Closing, then on or before the First Closing each Seller who
has executed the Securities Purchase Agreement shall deliver the following to
the Custodian:
(i) if the particular Seller is the legal and beneficial owner of shares
in the capital of Westbeach, the certificates(s) representing all
shares being sold by that Seller, duly endorsed in blank and
witnessed or with separate witnessed stock transfer powers attached
thereto and signed in blank;
(ii) if the particular Seller holds Warrants, the originally executed
Warrant Agreement, with a surrender of Warrant form, duly executed by
the Seller and witnessed; and
(iii) if the particular Seller holds employee incentive stock options,
which options the Seller represents and warrants to Xxxxxx XX were
not reduced to writing, a release of his rights under such option.
1.3 Unless the Custodian has received notice of waiver from the Majority
in Interest of Sellers on or before the First Closing, then on or before the
First Closing Xxxxxx XX shall deliver the following to the Custodian:
-3-
(i) a certified cheque or a wire transfer of funds in an amount equal to
the Cash Amount;
(ii) a stock certificate issued in the name of each Seller and each other
holder of Class "A" Common shares (except the Callable Class "A"
Common shares) even if not yet a party to the Securities Purchase
Agreement, representing that Seller's or security holder's portion of
the Stock Amount, as set forth on Schedule "A" of this Agreement,
except that with respect to the Significant Shareholders the
aggregate amount of Forty Thousand (40,000) shares of Common Stock of
Xxxxxx from the Stock Amount issuable to them shall not be delivered
to the Custodian but shall be delivered to the Escrow Agent pursuant
to the terms of the Escrow Agreement;
(iii) a certified cheque or wire transfer of funds in the amount of
Nine Hundred Thousand Canadian dollars (Cdn.$900,000), plus interest
through the estimated payment date;
(iv) a certified cheque or wire transfer of funds in an amount sufficient
to pay the outstanding balance of Westbeach's line of credit with the
Bank of Nova Scotia;
(v) the notice of offer required under the Shareholders Agreement
(consisting of the Securities Purchase Agreement and the Information
Statement) and irrevocable instructions to deliver the notice of
offer to the shareholders listed in the Shareholders Agreement;
(vi) a copy of this Agreement duly executed by Xxxxxx, Xxxxxx LLC and
Xxxxxx XX; and
(vii) copy of the Escrow Agreement duly executed by Xxxxxx XX and the
Escrow Agent.
1.4 Unless the Custodian has received notice of waiver from Xxxxxx XX on
or before the First Closing, then on or before the First Closing Westbeach shall
deliver the following to the Custodian:
(i) waivers of the Sellers of the prepayment time limits under the 1994
Debentures and the 1996 Debentures.
(ii) written irrevocable instructions directing the Custodian to pay in
full the 1994 Debentures on the First Closing Date;
-4-
(iii) the notice of call and written irrevocable instructions directing the
Custodian to call the Callable Class "A" Common Shares; and
(iv) an executed copy of the Securities Purchase Agreement.
1.5 The Custodian shall hold in escrow all deliveries made pursuant to
paragraphs 1.2, 1.3 and 1.4 herein, and the First Closing shall not be
considered to have occurred, until the requirements specified in paragraph
7.3.f. of the Securities Purchase Agreement have been satisfied.
1.6 Except as set out in paragraph 1.9, provided the Custodian receives
the deliveries specified in paragraphs 1.3(iii) and (iv) and 1.4(ii) and (iii)
herein, then on the First Closing Date:
(i) The Custodian shall pay in full the holders of the 1994 Debentures;
(ii) the Custodian shall deliver the notice of call to the holders of and
pay in full the holders of the Callable Class "A" Common shares;
(iii) the Custodian shall pay in full the outstanding balance of
Westbeach's line of credit with the Bank of Nova Scotia;
(iv) the Custodian shall pay to the Sellers who are party to the
Securities Purchase Agreement, the portion of the Cash Amount and
will deliver to such Sellers the number of shares of Xxxxxx Common
Stock allocated to each such Seller in Schedule "A";
(v) the Custodian will deliver to Xxxxxx XX the certificates and
documents received by it under paragraph 1.2(i), (ii) and (iii); and
(vi) the Custodian will pay, or reimburse Westbeach for, the Transaction
Costs incurred to date as contemplated in Article 3.
1.7 Save and except for the payments to be made by the Custodian in
accordance with paragraph 1.6 and 1.9 of this Agreement, all cash, cheques or
wire transfers (collectively "Money") received by the Custodian from Xxxxxx XX,
Xxxxxx, or Xxxxxx LLC as and from the date of execution this Agreement to the
Second Closing shall be placed in an interest-bearing trust account (with
interest accruing for the credit of Sellers) undelivered until required to
release the same or any portion thereof in accordance with the provisions of
this Agreement.
1.8 All Money, Transfer Documentation, stock or other certificates, and
other documents received by the Custodian from any party hereto shall remain the
property of the
-5-
party delivering same to the Custodian until the applicable First or Second
Closing Date as specified in this Agreement.
1.9 On the First Closing Date, the Custodian shall make all of the
deliveries specified in paragraph 1.6 of this Agreement, except that the
Custodian shall withhold (the "Withhold Amount") from each of Levante, Inc.,
Xxxx Xxxxxxxx and Xxxxx Xxxxx (together the "Non-resident Sellers") thirty-three
and one-third percent (331/3%) of:
(i) the portion of the redemption proceeds referred to in paragraph
1.6(i) to be delivered to that Non-resident Seller which
represents interest or income; and
(ii) the proceeds to be delivered to that Non-resident Seller pursuant
to paragraphs 1.6(ii) and (iv) of this Agreement.
1.10 Notwithstanding the Withhold Amount, the parties acknowledge that on
the First Closing Date the Custodian shall deliver to Xxxxxx XX all certificates
and documents delivered to it by the Non-resident Sellers pursuant to paragraph
1.2 of this Agreement.
1.11 Notwithstanding any other term of this Agreement, the Custodian shall
continue to hold the Withhold Amount and any amount to be distributed under
paragraph 3.3 of this Agreement for each Non-resident Seller in escrow in
accordance with the terms of this agreement until the earlier of:
(i) the time that Non-resident Seller has delivered to the Custodian a
copy of the Revenue Canada tax clearance certificate required that
Non-resident Seller pursuant to section 116 of the Income Tax Act
(Canada), in respect of the proceeds from the sale of the Securities
and the proceeds of redemption of the 1994 Debentures or 1996
Debentures to be received by that Non-resident Seller whereupon the
Custodian will pay to that Non-resident Seller the portion of the
Withhold Amount representing the amount withheld for that Non-
resident Seller; and
(ii) December 30, 1997, whereupon the Custodian will remit the
Withhold Amount to the Receiver General of Canada on behalf of the
Non-resident Seller who has not delivered the above certificates to
the Custodian before December 30, 1997.
1.12 To the extent that the Custodian receives redemption proceeds referred
to in paragraph 1.6(i) which represents interest to a Non-resident Seller, the
Custodian shall withhold such part of such interest as required by applicable
law and remit the same to the appropriate governmental body as required by law,
provided the Custodian shall first have obtained all necessary information from
Westbeach and the Non-resident Seller so that the proper remittance may be made.
In the event that no remittance is made by the Custodian in this fashion, the
Custodian shall hold the Withhold Amount and deal with the same according to law
including,
-6-
without restricting the generality of the foregoing, payment of the same into a
court of competent jurisdiction on the basis of interpleader relief or such
other basis as it may deem just.
1.13 Each Non-resident Seller will deliver to the Purchaser the original
copy of any tax clearance certificate obtained by the Non-resident Seller in
connection with the sale of Securities or the redemption of the 1994 Debentures
or the 1996 Debentures.
ARTICLE 2
THE SECOND CLOSING
2.1 Each additional Seller who becomes a party to the Securities Purchase
Agreement and this Agreement at any time between the First Closing Date and the
Second Closing Date shall deliver to the Custodian the Transfer Documentation
provided for in paragraph 1.2 hereof for that particular Seller's Securities.
2.2 At the Second Closing, Xxxxxx shall deliver to the Custodian
replacement stock certificates for any additional Sellers who tendered their
Securities to the Custodian pursuant to paragraph 2.1 of this Agreement.
2.3 Subject to the terms of this Agreement, the Custodian shall deliver to
Xxxxxx at the Second Closing the Securities of the Sellers together with related
Transfer Documentation.
2.4 Subject to the terms of this Agreement for each additional Seller who
has executed the Securities Purchase Agreement as of the Second Closing, the
Custodian shall on the Second Closing Date:
(i) pay to each such Seller the portion of the Cash Amount and will
deliver to each such Seller the number of shares of Xxxxxx Common
Stock allocated to each such Seller in Schedule "A"; and
(ii) as and when directed by Westbeach, pay to Westbeach and the third
parties identified by Westbeach the Transaction Costs of the Sellers
pursuant to paragraph 12.7 of the Securities Purchase Agreement.
2.5 Subject to the terms of this Agreement, with respect to any holder of
Securities who does not execute the Securities Purchase Agreement as at the
Second Closing, the Custodian shall on the Second Closing Date:
(i) pay to Westbeach the portion of the Cash Amount allocated to each such
holder of Securities on Schedule "A" to this Agreement; and
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(ii) deliver to Westbeach the portion of the Stock Amount allocated to each
such holder of Securities on Schedule "A" to this Agreement.
ARTICLE 3
THE EXPENSE FUND
3.1 The parties acknowledge that $500,000 of the Cash Amount represents
the estimated Transaction Costs of Sellers (the "Expense Fund") and, through the
payment allocation to the Sellers in Schedule "A", has been withheld from
Sellers pro rata.
3.2 On the First Closing and thereafter until January 15, 1998, the
Custodian will, as and when directed by Westbeach, pay or reimburse Westbeach
for, any Transaction Costs of the Sellers and Westbeach in connection with the
transactions contemplated in the Securities Purchase Agreement out of the
Expense Fund.
3.3 On January 15, 1998, the Custodian will distribute to the Sellers, pro
rata based on the allocations set forth in Schedule "A" , the balance, if any,
of the Expense Fund and accrued interest, if any.
ARTICLE 4
THE CUSTODIAN
4.1 The parties hereto acknowledge and agree that for the purposes of the
transactions contemplated by this Agreement the Custodian is only acting in the
capacity as a facilitator in respect to the purchase and sale of the Securities
contemplated by the terms of the Securities Purchase Agreement, and that it
shall not be liable to any party hereto for any reason whatsoever, including,
without limitation, the following:
(i) any loss or damages that has been or may be incurred by any party
hereto and, without limiting the generality of the foregoing, for the
sufficiency of or any deficiency in any notice, stock or other
certificates, documents, paper or Money received by the Custodian from
any party hereto, including, without limitation, the Transfer
Documentation, Securities, Xxxxxx Common Stock, and Cash Amount save
and except for any loss or diminution arising out of the Custodian's
wilful misconduct or lack of good faith;
(ii) acting upon any signature, notice, certificate, document or paper
believed by the Custodian to be genuine, and the Custodian may assume
that any person purporting to give any such notice, statutory
declaration, document or paper has been duly authorized to do so;
-8-
(iii) for the truth of any matter represented or stated in any notice,
stock or other certificate, document or paper, and the Custodian
shall be entitled to assume the genuineness of all signatures and the
authenticity of any such notice, stock or other certificate, document
or paper; and
(iv) loss of any notice, stock or other certificate, document or paper,
save and except that the Custodian shall have the duty to exercise
such care in the safekeeping thereof as it would exercise if the same
were its property.
4.2 The parties hereto acknowledge and agree that the firm of Xxxxxxxx
Xxxxxxxx Xxxx Xxxxxxxx is acting as counsel for the Custodian and as counsel for
Westbeach, and that such firm may continue to act as counsel for the Custodian
and as counsel for Westbeach unless otherwise ordered by a court of competent
jurisdiction. The parties further acknowledge and agree that Westbeach and the
Custodian may each continue to obtain the advice of legal counsel, including the
firm of Xxxxxxxx Xxxxxxxx Xxxx Xxxxxxxx, but shall not be liable in any manner
whatsoever for acting or failing to act on any advice so obtained.
4.3 The parties hereto acknowledge and agree that in the event the
Custodian fails or refuses to act under this Agreement, the Sellers may appoint
a substitute custodian acceptable to Westbeach, Xxxxxx, Xxxxxx XX, and Xxxxxx
LLC, and the parties hereto further agree to provide a direction in writing to
the Custodian authorizing the Custodian to deliver all Money, stock or other
certificates, documents, and papers, in its possession to the substitute
custodian.
4.4 The Custodian may withdraw from its position under this Agreement
effective immediately upon service of notice of withdrawal on each of the
parties herein. Upon withdrawal the Custodian will have no further
responsibilities or liabilities other than to deliver all Money, stock or other
certificates, documents and papers, in its possession to the substitute
custodian in accordance with paragraph 4.3 of this Agreement, unless then
prohibited by an order of a court of competent jurisdiction. In the event the
Custodian wishes to withdraw and no substitute custodian has been appointed, the
Custodian may pay the Money in its possession into court, and return all stock
or other certificates, documents and papers received to the originating party,
pending resolution of the matter preventing appointment of a substitute
custodian, and thereafter the Custodian may resign.
4.5 The parties hereto jointly and severally covenant and agree to
indemnify and save harmless the Custodian from any and all claims, demands,
damages, or loss arising out of the performance of its duties hereunder.
4.6 If at any time from the date of this Agreement the Custodian is
prohibited from acting under this Agreement or from fulfilling its duties under
this Agreement by an order of a court of competent jurisdiction, the Custodian
will immediately, if ordered by the court, pay into court all Money in its
possession, or will hold the balance of all such Money and all other
-9-
documents, stock or other certificates or other papers then held by or in the
possession of the Custodian in accordance with such other court order pending
resolution of the matter.
4.7 The parties hereto shall jointly and severally agree to be liable for
and shall indemnify the Custodian for all fees, charges and expenses of the
Custodian charged on a solicitor and own client basis in connection with the
performance of its duties hereunder and any court proceedings relating in whole
or in part to this Agreement.
4.8 The Custodian is hereby authorized to comply with any order,
judgment, decree or writ entered or issued by any court, and in the event the
Custodian obeys or complies with any such order, judgment, decree or writ, it
shall not be liable to any of the parties, or to any other person or entity, by
reason of its compliance.
ARTICLE 5
GENERAL PROVISIONS
5.1 Any capitalized term in this Agreement not expressly defined in this
Agreement shall have the same meaning as set forth in the Securities Purchase
Agreement.
5.2 In this Agreement:
(i) any notice required or permitted to be given under this Agreement
will be in writing and will be considered to have been given if
delivered personally, transmitted by facsimile transmission or mailed
by prepaid registered post to the address or facsimile transmission
number of each party described herein or, if in respect to any Seller
for whom there is no address stated herein then to the address
recorded for such Seller in the Register of Members in Westbeach's
corporate record book, or to such other address or party as any party
hereto may from time to time designate in writing to the Custodian;
(ii) any delivery to be made herein will be considered to have been
delivered if delivered personally, or mailed by prepaid registered
post to the address of each party described herein or, if in respect
to any Seller for whom there is no address stated herein then to the
address recorded for such Seller in the Register of Members in
Westbeach's corporate record book, or to such other address or party
as any party hereto may from time to time designate in writing to the
Custodian; and
(iii) notice and delivery will be considered to have been received:
(a) if delivered by hand during business hours on a Business Day
(hereafter defined);
-10-
(b) if sent by facsimile transmission during business hours on a
Business Day, upon the sender receiving confirmation of the
transmission, and if not transmitted during business hours, upon
the commencement of business on the next Business Day;
(c) if mailed by prepaid registered post in Canada, upon the fifth
(5th) Business Day following the date of mailing; except that,
in the case of a disruption or an impending or threatened
disruption in postal services every notice or communication will
be delivered by hand or sent by facsimile transmission; or
(d) if mailed in United States upon the third (3rd) Business Day
after deposit in the United States Mail, by registered or
certified mail, postage prepaid, return receipt requested.
For the purposes of this paragraph of this Agreement, "Business Day" means
Monday through Friday of any week, except any such day that is considered to be
a statutory holiday in British Columbia, Canada or in the United States,
whichever is applicable.
5.3 Neither this Agreement nor any provision hereof may be amended,
waived, discharged, or terminated except by a document executed by all parties
hereto.
5.4 The parties hereto shall forthwith at all times, and from time
to time do, execute and acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, and assurances which,
in the opinion of the Custodian, are reasonably necessary or advisable for the
better accomplishing and effectuating of the intent of this Agreement, and
without limitation shall do such acts and execute and deliver such documents as
may be necessary to carry out the intention of this Agreement.
5.5 This Agreement shall be governed by and construed in accordance
with the laws of the province of British Columbia, and the laws of Canada
applicable therein. Each of the parties hereto agrees that any action under or
for the enforcement of this Agreement shall be brought in the courts of British
Columbia. Each of the parties hereto by their execution of this Agreement
irrevocably attorns to the exclusive jurisdiction of the courts of British
Columbia for the resolution of all disputes arising out or in connection with
this Agreement.
5.6 For the purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(i) "this Agreement" means this agreement and Schedule "A" attached
hereto;
-11-
(ii) any reference in this Agreement to a designated "paragraph" or other
subdivision refers to the designated paragraph or other subdivision
of this Agreement;
(iii) the words "herein" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
paragraph, or subparagraph or other subdivision of this Agreement;
(iv) words importing the masculine gender include the feminine or neuter
gender and words in the singular include the plural, and vice versa;
and
(v) any reference to a persons includes an individual, corporation,
partnership, trust, fund, association and any other organized group
of persons to whom the context can apply according to law.
5.7 This Agreement shall enure to the benefit of and be binding upon the
parties hereto, their respective heirs, executors, administrators, successors
and assigns.
5.8 Time shall be of the essence in this Agreement and the transactions
contemplated by this Agreement.
5.9 This Agreement may be executed and delivered in any number of
counterparts and by facsimile or other direct written electronic means, each of
which shall be deemed to be an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one counterpart.
IN WITNESS WHEREOF the parties hereto have affixed their respective hands and
seals as at the day and year first above written.
THE COMMON SEAL OF )
WESTBEACH SNOWBOARD CANADA )
LTD. was hereunto affixed in the presence )
of: )
) C/S
)
__________________________________ )
Authorized Signatory )
)
)
__________________________________ )
Authorized Signatory
-12-
XXXXXX SNOWBOARDS ULC
By:
__________________________________
Xxxxx X. Xxxxxx, President and
Chief Executive Officer
XXXXXX, LLC
By:
__________________________________
Xxxxx X. Xxxxxx, Chief Executive
Officer
XXXXXX SNOWBOARDS, INC.
By:
__________________________________
Xxxxx X. Xxxxxx, Chief Executive
Officer
THE COMMON SEAL OF B.P.Y.A. 863 )
HOLDINGS LTD. was hereunto affixed in )
the presence of: )
) C/S
)
__________________________________ )
Authorized Signatory )
)
)
__________________________________ )
Authorized Signatory
All Security holders of Westbeach listed on
Schedule "A"
EXHIBIT 7.2.H
ESCROW AGREEMENT
PARTIES:
XXXXXX SNOWBOARDS ULC, a Nova Scotia unlimited company (Xxxxxx XX)
XXXX XXXXXXXX, XXXXXXX XXXXXX, XXXXX XXXXXX and XXXXXX XXXXXX
(collectively, the Significant Shareholders), shareholders of Westbeach
Snowboard Canada Ltd., a British Columbia corporation (Westbeach)
HERSHNER, HUNTER, XXXXXXX, XXXXX & XXXXX, LLP, an Oregon limited liability
partnership (the Escrow Agent)
RECITAL:
The parties desire to enter into this Agreement as a condition to closing
of the transactions contemplated by the Securities Purchase Agreement dated
October 31, 1997 (the Purchase Agreement) among Xxxxxx Snowboards, Inc., an
Oregon corporation (Xxxxxx), Xxxxxx, LLC, an Oregon limited liability company,
Xxxxxx XX, Westbeach and the security holders of Westbeach listed therein,
including the Significant Shareholders.
AGREEMENTS:
1. APPOINTMENT OF ESCROW AGENT. Xxxxxx XX and the Significant
Shareholders hereby appoint the Escrow Agent, and the Escrow Agent hereby
accepts such appointment, for the purposes and on the terms set forth in this
Agreement. The Escrow Agent hereby acknowledges receipt from the other parties
of an executed copy of the Purchase Agreement.
2. DEPOSIT INTO ESCROW ACCOUNT. Pursuant to Paragraph 1.2.b.(2) of the
Purchase Agreement, on the First Closing Date, Xxxxxx XX will deposit Forty
Thousand (40,000) shares of Common Stock of Xxxxxx (Xxxxxx Common Stock),
registered in the names of the Significant Shareholders as set forth on the
attached Schedule A , into an account (the Escrow Account) maintained by the
----------
Escrow Agent. The Escrow Agent will hold and disburse the Escrow Account in
accordance with this Agreement.
-2-
3. PLEDGE OF PARENT STOCK; RESTRICTION ON TRANSFERABILITY.
3.1 Each Significant Shareholder hereby pledges for the benefit of
Xxxxxx XX, and grants Xxxxxx XX a security interest in, the Xxxxxx Common Stock
deposited hereby. Each Significant Shareholder has delivered to the Escrow Agent
a stock power endorsed in blank with respect to the Xxxxxx Common Stock
registered in that Significant Shareholder's name.
3.2 Each stock certificate representing Xxxxxx Common Stock in the
Escrow Account shall have the following legend noted conspicuously thereon:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CANCELLATION, IN WHOLE OR IN PART, PURSUANT TO THE
SECURITIES PURCHASE AGREEMENT DATED __________, 1997 AMONG
THE PURCHASER, XXXXXX SNOWBOARDS, INC., XXXXXX, LLC, XXXXXX
SNOWBOARDS ULC, WESTBEACH SNOWBOARD CANADA LTD. AND CERTAIN
SECURITY HOLDERS OF WESTBEACH."
4. PURPOSE OF THE ESCROW ACCOUNT. To the extent provided in Paragraph 1
of the Purchase Agreement, the parties have specified a mechanism for the final
determination of the Purchase Price of Westbeach. The purpose of the Escrow
Account is to provide funds for any overpayment of the Purchase Price at the
First Closing under the Purchase Agreement.
5. APPLICATION OF THE ESCROW ACCOUNT. Upon final determination of the
Purchase Price pursuant to Paragraph 1 of the Purchase Agreement, Xxxxxx XX
shall give written notice to the Escrow Agent, with a copy to each Significant
Shareholder, indicating to whom and to what extent the Escrow Account is to be
disbursed. If the Escrow Agent does not receive written notice of a dispute
concerning those instructions from the Significant Shareholders within ten (10)
days thereafter, then the Escrow Agent shall disburse the Escrow Account in
accordance with those instructions. Xxxxxx XX and the Significant Shareholders
shall cause the Escrow Account to be disbursed so as to give effect to the final
determination of the Purchase Price pursuant to Paragraph 1 of the Purchase
Agreement. If a dispute concerning the Purchase Price is submitted to
arbitration pursuant to Paragraph 1.3 of the Purchase Agreement, the Escrow
Agent shall be entitled to rely on the arbitrator's decision in disbursing the
Escrow Account. If any of the stock certificates deposited with the Escrow Agent
hereunder must be cancelled and reissued upon final determination of the
Purchase Price, Xxxxxx XX shall provide any replacement stock certificates
required to the Escrow Agent.
-3-
6. TERM. This Agreement shall continue in effect until the tenth (10th)
day after the delivery by AA of the audited First Closing Date Balance Sheet
under the Purchase Agreement; provided, however, that in the event there is an
-------- -------
asserted but unresolved claim (a Claim) on that date with respect to the audited
First Closing Date Balance Sheet, then this Agreement shall continue in effect
until the Claim is resolved by arbitration pursuant to Exhibit C of the Purchase
Agreement.
7. LIABILITY OF THE ESCROW AGENT.
7.1 The Escrow Agent's duties under this Agreement will be limited to
the observance of the express provisions of this Agreement. The Escrow Agent
will not make any disbursement from the Escrow Account except as provided in
this Agreement. The Escrow Agent may rely and act upon any instrument received
by it pursuant to this Agreement which it reasonably believes to be in
conformity with the requirements of this Agreement. The Escrow Agent agrees to
use the same degree of care and skill in performing its duties hereunder as is
customary for an escrow agent in similar circumstances. The Escrow Agent will
not be liable for any action taken or not taken by it hereunder in the absence
of breach of its obligations or negligence or willful misconduct on its part.
7.2 In receiving the Xxxxxx Common Stock deposited into the Escrow
Account, the Escrow Agent is acting only as a depository for Xxxxxx XX and the
Significant Shareholders. No withdrawal shall be permitted from the Escrow
Account except as provided herein or as required by law or court order.
7.3 Except as expressly provided in this Agreement and except for
expenses incurred in delivering Xxxxxx Common Stock to the Significant
Shareholders, no provision hereof shall require the Escrow Agent to expend or
risk its own funds or otherwise incur financial liability or expense in
performing any of its duties hereunder.
7.4 The Escrow Agent is hereby authorized to comply with any order,
judgment, decree or writ entered or issued by any court, and in the event the
Escrow Agent obeys or complies with any such order, judgment, decree or writ, it
shall not be liable to any of the parties, or to any other person or entity, by
reason of its compliance.
7.5 Should any controversy arise between Xxxxxx XX and the
Significant Shareholders with respect to the ownership of or the right to
receive any part of the Escrow Account, the Escrow Agent shall have the right to
institute a xxxx of interpleader in any court of competent jurisdiction to
determine the parties' respective rights.
-4-
7.6 Xxxxxx XX and the Significant Shareholders agree that the Escrow
Agent is acting solely as an escrow agent hereunder and not as a trustee, and
that the Escrow Agent has no fiduciary duties, obligations or liabilities under
this Agreement.
8. INDEMNIFICATION OF THE ESCROW AGENT. Xxxxxx XX and the Significant
Shareholders will indemnify and hold the Escrow Agent harmless from and against
any and all losses, costs, damages or expenses (including reasonable attorneys'
fees) the Escrow Agent may sustain by reason of its service as escrow agent
hereunder, except to the extent such loss, cost, damage or expense (including
attorneys' fees) was incurred solely by reason of acts or omissions for which
the Escrow Agent is liable or responsible under Paragraph 7.
9. FEES OF ESCROW AGENT. All fees, if any, of the Escrow Agent for
service hereunder shall be paid by Xxxxxx XX.
10. DESIGNATIONS. Each of Xxxxxx XX and the Significant Shareholders may,
by notice to the Escrow Agent, designate one (1) or more persons who will
execute notices and from whom the Escrow Agent may take instructions hereunder
or to whom the Escrow Agent may give notices. Such designation may be changed
from time to time upon notice to the Escrow Agent from the respective parties.
The Escrow Agent will be entitled to rely conclusively on any action taken by
those persons or their respective successor designees.
11. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given if delivered personally
or by commercial delivery service, or mailed by registered or certified mail,
return receipt requested, or sent via facsimile, with confirmation of receipt,
to the parties at the following addresses or at such other address as a party
may indicate by ten (10) days' advance written notice to the other parties:
If to Xxxxxx XX, to:
Xxxxxx Snowboards ULC
c/x Xxxxxx Snowboards, Inc.
0000 Xxxxxxx Xxxx, X.X.
Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
If to the Significant Shareholders, to:
The addresses shown on Westbeach's Securities Registers on the
date of this Agreement.
-5-
If to the Escrow Agent, to:
Hershner, Hunter, Xxxxxxx, Xxxxx & Xxxxx, LLP
000 X. 00xx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
12. BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the parties and their respective representatives, successors and
assigns.
13. AMENDMENT AND TERMINATION. This Agreement may be amended or canceled
by and upon joint written notice by Xxxxxx XX and the Significant Shareholders
to the Escrow Agent, but the Escrow Agent's duties and responsibilities
hereunder may not be increased without its consent.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon (without regard to the
principles of conflicts of law thereof).
15. DEFINITIONS. All capitalized terms used and not otherwise defined in
this Agreement shall have the respective meanings set forth in the Purchase
Agreement.
16. ENTIRE AGREEMENT. This Agreement, and the exhibits, schedules and
documents referred to herein or delivered pursuant hereto, constitute the
parties' entire agreement and understanding with respect to the subject matter
hereof and supersede all prior agreements and understandings, written or oral,
among the parties with respect to the subject matter hereof.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same agreement.
DATED:______________, 1997.
XXXXXX SNOWBOARDS ULC
By_____________________________________________________
Xxxxx X. Xxxxxx
President and Chief Executive Officer
_______________________________________________________
Xxxx Xxxxxxxx
-6-
_______________________________________________________
Xxxxxxx Xxxxxx
_______________________________________________________
Xxxxx Xxxxxx
_______________________________________________________
Xxxxxx Xxxxxx
EXHIBIT 7.2.J
_______, 0000
Xxxxxxxxx Xxxxxxxxx Xxxxxx Ltd.
The security holders of Westbeach Snowboard
Canada Ltd. listed on the attached Schedule A
00 Xxxx 0xx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
XXXXXX
Ladies and Gentlemen:
We have acted as counsel to Xxxxxx Snowboards, Inc., an Oregon corporation
(Xxxxxx), Xxxxxx, LLC, an Oregon limited liability company (Xxxxxx LLC), and
Xxxxxx Snowboards ULC, a Nova Scotia unlimited company (Xxxxxx XX), in
connection with the preparation and negotiation of the Securities Purchase
Agreement dated October 31, 1997 (the Securities Purchase Agreement) among
Xxxxxx, Xxxxxx LLC, Xxxxxx XX, Westbeach Snowboard Canada Ltd., a British
Columbia corporation (Westbeach), and the security holders of Westbeach listed
on Schedule A (Sellers). This opinion is provided to you pursuant to Paragraph
----------
7.2.j. of the Securities Purchase Agreement. Xxxxxx, Xxxxxx LLC and Xxxxxx XX
are collectively referred to herein as the Xxxxxx Companies. Capitalized terms
used and not otherwise defined herein shall have the respective meanings set
forth in the Securities Purchase Agreement.
In our capacity as such counsel, we have examined and are familiar with : (a)
the Articles of Incorporation and Bylaws of Xxxxxx, as amended; (b) the Articles
of Organization and Operating Agreement of Xxxxxx LLC; (c) the Memorandum of
Association and Articles of Association of Xxxxxx XX; (d) the Securities
Purchase Agreement; (e) the various documents and agreements delivered pursuant
to the Securities Purchase Agreement (the Related Agreements); and (f) such
corporate and other certificates, agreements, documents and other papers, and we
have made such inquiries and investigations, as we have deemed necessary or
advisable for purposes of rendering this opinion.
Westbeach Snowboard Canada Ltd
The security holders of Westbeach Snowboard
Canada Ltd. Listed on the attach Schedule A
October 31, 1997
Page 2
In rendering this opinion, we have assumed the genuineness of all signatures,
the authenticity of all documents provided to us as originals and the conformity
to authentic original documents of all documents provided to us as certified,
conformed or photostatic copies. As to questions of fact material to the
following opinions, when relevant facts were not independently established, we
have relied on the representations and warranties of the Xxxxxx Companies in the
Securities Purchase Agreement, certificates of public officials and a
certificate of the Xxxxxx Companies of even date herewith (the Certificate). We
assume that the Certificate is accurate and complete. A copy of the Certificate
is enclosed. In providing the opinion set forth in paragraph 8 below, we have
relied on the representations and warranties of Sellers in the Securities
Purchase Agreement.
Based upon the foregoing and subject to the limitations and qualifications set
forth below, we are of the opinion that:
1 Xxxxxx is a corporation, and Xxxxxx LLC is a limited liability company,
each duly organized and validly existing under the laws of the State of Oregon.
Xxxxxx XX is an unlimited company duly organized and validly existing under the
laws of the Province of Nova Scotia.
2 Each of the Xxxxxx Companies has full power and authority to execute and
deliver, and perform its obligations under, the Securities Purchase Agreement
and each of the Related Agreements and to consummate the transactions
contemplated thereby. Each of the Xxxxxx Companies has taken all necessary
corporate or other action to authorize the execution, delivery and performance
of the Securities Purchase Agreement and each of the Related Agreements, and the
consummation by it of the transactions contemplated thereby.
3 The Securities Purchase Agreement and each of the Related Agreements have
been duly executed and delivered by each of the Xxxxxx Companies and constitute
the legal, valid and binding obligations of each of the Xxxxxx Companies,
enforceable against each of those companies in accordance with their terms,
except as enforceability may be limited by (a) applicable bankruptcy,
receivership, insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws affecting creditors' rights generally and (b) general
principles of equity, including those limiting the availability of specific
performance, injunctive relief and other equitable remedies and those providing
for defenses of reasonableness, regardless of whether enforceability is
considered in a proceeding in equity or at law; and except as enforcement of
rights of indemnity thereunder with respect to claims concerning or arising with
respect to U.S., state or provincial securities laws may be limited by those
laws or public policy principles.
Westbeach Snowboard Canada Ltd
The security holders of Westbeach Snowboard
Canada Ltd. Listed on the attach Schedule A
October 31, 1997
Page 3
4 The execution and delivery by the Xxxxxx Companies of, and their
consummation of the transactions contemplated by, the Securities Purchase
Agreement do not and will not violate, conflict with, result in a breach of any
term or provision of or constitute a default under (a) the organizational
documents of any of the Xxxxxx Companies, as amended; (b) any material
Undertaking known to us to which any of the Xxxxxx Companies is a party or by
which their respective properties or assets are bound; or (c) any statute,
order, writ, injunction, decree, rule or regulation known to us applicable to
any of the Xxxxxx Companies.
5 Except as provided in the Securities Purchase Agreement, the execution,
delivery and performance of the Securities Purchase Agreement and each of the
Related Agreements and the consummation of the transactions contemplated thereby
by the Xxxxxx Companies do not and will not require the consent, approval,
authorization, declaration or other order of, or registration or filing with,
any Government Entity.
6 To our knowledge, there is no Claim pending or threatened that questions
the validity of the Securities Purchase Agreement or any of the Related
Agreements or would prevent or hinder the consummation of the transactions
contemplated thereby.
7 The shares of Xxxxxx Common Stock to be issued to Sellers pursuant to the
Securities Purchase Agreement have been duly authorized and validly issued to
Sellers as fully paid and non-assessable.
8 All necessary documents have been filed and proceedings have been taken,
and all other legal requirements have been satisfied, under the federal laws of
the United States of America and the laws of the State of oregon to qualify the
shares of Xxxxxx Common Stock through the registration exemptions in Regulation
D under the Securities Act of 1933, as amended, and the Oregon Nasdaq exemption,
except for filings required to be made after the issuance of those shares.
Whenever a statement herein is qualified by the phrase "to our knowledge,"
"known to us" or similar language, it is intended to indicate that, during the
course of our representation of the Xxxxxx Companies, no information that would
give us current actual knowledge with respect to that statement has come to the
attention of those attorneys in this firm who have rendered legal services in
connection with the representation described in the introductory paragraph of
this letter.
The opinions expressed herein are limited to matters governed by the federal
laws of the United States and the laws of the State of Oregon. As to the
opinions expressed in the second
Westbeach Snowboard Canada Ltd.
The security holders of Westbeach Snowboard
Canada Ltd. listed on the attached Schedule A
October 31, 1997
Page 4
sentence of paragraph 1 and paragraphs 2, 3, 4 and 5, we have relied on the
opinion of Xxxxxxx XxXxxxxx Stirling Scales, Barristers and Solicitors, as to
matters relating to Xxxxxx XX which are governed by the laws of the Province of
Nova Scotia.
This opinion has been rendered solely for your information in connection with
the transactions set forth in and contemplated by the Securities Purchase
Agreement and may not be relied upon by you for any other purpose, or relied
upon by any other person for any purpose, without our prior written consent. We
expressly disclaim any obligation to advise of changes in law or fact that occur
after the date of this letter.
Very truly yours,
HERSHNER, HUNTER, XXXXXXX, XXXXX & XXXXX, LLP
EXHIBIT 7.3.I.A
-----------------------------------------------
[LETTERHEAD OF XXXXXXXX XXXXXXXX XXXX XXXXXXXX]
REPLY ATTENTION OF: Douglas H. Hopkins
FILE NO: 42230.1
November 3, 1997
Morrow Snowboards, Inc.
Morrow, LLC
Morrow Snowboards ULC
2600 Pringle Road S.E.
Salem, Oregon 97302
USA
Dear Ladies and Gentlemen:
RE: WESTBEACH SNOWBOARD CANADA LTD.
------------------------------------------------
We have acted as counsel to Westbeach Snowboard Canada Ltd., a British Columbia
company (the "Company"), in connection with the preparation and negotiation of
the Securities Purchase Agreement dated October 31, 1997 (the "Securities
Purchase Agreement") among Morrow Snowboards, Inc., an Oregon corporation,
Morrow, LLC,
Morrow Snowboards ULC Page 2
an Oregon limited liability company, Morrow Snowboards ULC, a Nova Scotia
unlimited company, the Company and the security holders of the Company who have
signed Schedule A attached to the Securities Purchase Agreement (collectively,
----------
"Sellers"). This opinion is provided to you pursuant to Paragraph 7.3.l. of the
Securities Purchase Agreement. Capitalized terms used and not otherwise defined
herein have the meanings set forth in the Securities Purchase Xxxxxxxxx.Xx our
capacity as such counsel, we have examined and are familiar with: (a) the
Memorandum and Articles of the Company (the "Charter"), (b) the Certificate of
Continuance; (c) the Company's corporate record book; ( d) the Securities
Purchase Agreement; (e) the Custodian Agreement and the Debenture Escrow
Agreement delivered pursuant to the Securities Purchase Agreement (the "Related
Agreements"); and (f) such corporate and other certificates as stated herein.
In rendering this opinion, we have assumed the authenticity of all documents
provided to us as originals and the conformity to authentic original documents
of all documents provided to us as certified, conformed or photostatic copies.
We have also assumed the capacity of all natural persons. As to questions of
fact material to the following opinions, when relevant facts were not
independently established, we have relied on and assumed the accuracy and
completeness of the representations and warranties of the Company and Sellers in
the Securities Purchase Agreement, certificates of public officials and a
certificate of the Company of even date herewith (the "Certificate"). We assume
that the Certificate is accurate and complete. A copy of the Certificate is
attached hereto as Schedule "A".
Based upon the foregoing and subject to the limitations and qualifications set
forth below, we are of the opinion that:
1. The Company was duly incorporated under the laws of Canada, continued
into the Province of British Columbia, validly exists under the laws of the
Province of British Columbia and is in good standing in the Office of the
Registrar of Companies with respect to the filing of annual reports. The Company
has full corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted.
2. The authorized capital of the Company consists of 4,000,000 shares
divided into 1,000,000 Class "A" Common shares, 1,000,000 Class "B" Common
Shares, 1,000,000 Class "A" Preferred shares and 1,000,000 Class "B" Preferred
shares, all without par value, of which there are issued and outstanding 999,250
Class A Common shares, no Class B Common shares or Class A Preferred shares, and
147,000 shares of Class B Preferred shares . Based solely on our review of the
Company's corporate record book and relying entirely upon the Certificate, to
our knowledge no warrants or options have been granted by the Company other than
warrants representing 319,500 Class A Common Shares and options representing
70,000 Class A Common Shares.
Morrow Snowbound ULC Page 3
3. The Company has corporate power and capacity to execute and deliver,
and perform its obligations under the Securities Purchase Agreement and the
Related Agreements. The Company has taken all necessary corporate action to
authorize the execution and delivery of the Securities Purchase Agreement and
the Related Agreements, and the performance of the obligations contemplated
thereby.
4. The Securities Purchase Agreement and the Related Agreements have been
duly executed and delivered by the Company and each constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
(a)applicable bankruptcy, receivership, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws affecting creditors' rights
generally; and (b) general principles of equity, including those limiting the
availability of specific performance, injunctive relief and other equitable
remedies and those providing for defenses of reasonableness, regardless of
whether enforceability is considered in a proceeding in equity or at law; and
except as enforcement of rights of indemnity thereunder with respect to claims
concerning or arising with respect to provincial securities laws may be limited
by those laws or public policy principles.
5. Except as provided in the Securities Purchase Agreement, the execution
and delivery by the Company of, and its performance of the obligations
contemplated by, the Securities Purchase Agreement and Related Agreements do
not, violate, conflict with, result in a breach of any term or provision of or
constitute a default under (a) the Charter of the Company, or (b) any statute,
order, writ, injunction, decree, rule or regulation known to us.
6. Except as provided in the Securities Purchase Agreement, the execution
and delivery of the Securities Purchase Agreement and the Related Agreements and
the performance of its obligations contemplated thereby by the Company do not,
to our knowledge, require the consent, approval, authorization, declaration or
other order of, or registration or filing with, any Government Entity.
7. Except as provided in the Securities Purchase Agreement, there is, to
our knowledge, no Claim pending or threatened against the Company that
questions the validity of the Securities Purchase Agreement or the Related
Agreements or would prevent or hinder the performance by the Company of the
transactions contemplated thereby.
Whenever a statement herein is qualified by the phrase "to our knowledge,"
"known to us" or similar language, it is intended to indicate that (i) we have
not undertaken any investigation whatsoever to determine the existence or
absence of such facts or circumstances, and no inference as to our knowledge of
the existence of such facts or circumstances should be drawn merely from our
representation of the Company and (ii) during the course of our representation
of the Company no information that would give us current actual knowledge with
respect to that statement has come to the attention of those attorneys in this
firm who have rendered legal services in connection with the representation
described in the introductory paragraph of this letter.
The opinions expressed herein are limited to matters governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable therein.
As to the opinion regarding the enforceability of the Securities Purchase
Agreement expressed in paragraph 4 above and as the Securities Purchase
Agreement is stated to be
Morrow Snowboards ULC Page 4
governed by the laws of the State of Oregon, we have relied entirely on the
opinion of Dunn, Carney, Allen, Higgins & Tongue delivered herewith, including
all assumptions, qualifications and limitations contained or referenced therein.
The choice of the laws of the State of Oregon as the governing law of the
Securities Purchase Agreement is a valid and effective choice of law provided
that such choice of law is bona fide (in the sense that it was not made with a
view to avoiding the consequences of the law of any other jurisdiction) and in
an action brought before a court of competent jurisdiction in British Columbia,
the laws of the State of Oregon would, to the extent specifically pleaded and
proven as a fact by expert evidence, be recognized and applied by such court to
all issues which under conflict of laws rules in effect in British Columbia are
characterized to be contract issues, except that any such court:
(a) will apply those laws of British Columbia as such court characterizes
as procedural and will not apply those laws of the State of Oregon as
such court characterizes as procedural;
(b) will not apply those laws of the State of Oregon which a British
Columbia court would characterize as revenue, expropriatory, penal or
similar law; and
(c) will not apply those laws of the State of Oregon, the application of
which a British Columbia court would characterize as inconsistent with
"public policy", as such term is applied by British Columbia courts.
Furthermore, a court in the Province of British Columbia may reserve
to itself an inherent power to decline to hear such an action if it
determines that it is not the proper forum to hear such action, or if
concurrent proceedings are being brought elsewhere.
In the event that a judgment of a foreign court (i.e. Oregon) is obtained in
relation to the Securities Purchase Agreement:
(d) The judgment creditor could enforce the judgment of the foreign court
in the Province of British Columbia, without retrial or further review
on its merits, by suing on the judgment in summary proceedings,
subject to the following:
(i) the foreign court must properly have had jurisdiction to
hear and determine the issues;
(ii) the decision of the foreign court must be final and
conclusive and for a sum of money;
(iii) the decision of the foreign court must not have been
obtained by fraud or by trick;
(iv) the decision of the foreign court must not have been
contrary to its public policy or have been given in
proceedings of a criminal or revenue nature;
(v) the proceedings and decision of the foreign court must not
have been contrary to the rules of natural justice and
procedural fairness;
Morrow Snowboards ULC Page 5
(vi) the procedural rules for commencement and maintenance of
the enforcement proceedings in the Province of British
Columbia must have been observed;
(vii) the enforcement of the judgment of the foreign court must
not violate the public policy of the Province of British
Columbia as to the enforcement of judgments;
(viii) the Foreign Extraterritorial Measures Act (Canada) and
Part VIII of the Competition Act (Canada) preclude
enforcement of foreign judgments and orders in some
circumstances;
(ix) under the Limitation Act (British Columbia) action must be
brought on the foreign judgment within 6 years of the date
of the judgment; and
(x) no new admissible evidence relevant to the action is
discovered prior to the rendering of judgment by the
British Columbia court.
(e) Alternatively, the judgment creditor could enforce the judgment of the
foreign court in the Province of British Columbia, without retrial or
further review on its merits following registration under Part II of
the Court Order Enforcement Act (British Columbia), subject to the
requirements set out above in clauses (a)(i) to (a)(viii) and (x)
inclusive, and further provided that registration will not be granted
if:
(i) the judgment debtor would have had a good defense if an
action were brought on the judgment;
(ii) the judgment debtor, being a person who was neither
carrying on business nor ordinarily resident in the
jurisdiction of the original court, did not voluntarily
appear or otherwise submit during the proceedings to the
jurisdiction of the foreign court;
(iii) the judgment debtor was not duly served with the process
of the foreign court and did not appear notwithstanding
that he was ordinarily resident or was carrying on
business in the jurisdiction of that court or had agreed
to submit to the jurisdiction of that court; or
(iv) application for registration is made more than 6 years
after the date of the judgment.
Insofar as the laws of any other jurisdiction are relevant, we express no
opinion.
The opinion expressed herein in paragraph 4 with respect to the enforceability
of the Related Agreements are subject to the qualifications that:
(a) such enforcement may be limited by:
Morrow Snowboards ULC Page 6
(i) laws relating to bankruptcy, insolvency, reorganization,
winding up, fraudulent preference and conveyance,
moratorium or creditor's rights generally;
(ii) general principles of equity and no opinion is given as to
whether a court will order injunctive relief, specific
performance, or other equitable remedies with respect to
any particular provision of such agreements or documents
in any particular instance; and
(iii) the statutory and inherent powers of a court to grant
relief from forfeiture, to stay execution of proceedings
before it and to stay executions on judgements;
(b) courts in British Columbia have discretionary powers with respect to
the awarding of costs notwithstanding provisions regarding the
recovery of costs in such agreements or documents;
(c) the right to exercise any unilateral or unfettered discretion in such
agreements or documents will not prevent a British Columbia court from
requiring such discretion to be exercised reasonably;
(d) no opinion is expressed as to the validity, binding effect and
enforceability of the indemnity provisions set out in the Securities
Purchase Agreement;
(e) claims may become barred under the Limitation Act (British Columbia)
or may become subject to defences of set off and counterclaim;
(f) where obligations are to be performed in a jurisdiction outside
British Columbia, they may not be enforceable in British Columbia to
the extent that performance would be illegal under the laws of that
jurisdiction;
(g) the breach of any particular obligation to a party may not give rise
to a remedy in damages if no damages result to that party by reason of
a failure to properly perform the obligation;
(h) the conditions precedent to the obligations of the parties in such
agreements or documents have been satisfied or, if capable of being
waived, have been waived by the party or parties entitled to insist on
performance of the obligation, and the rights of termination set out
therein have not been exercised by the parties entitled to exercise
such rights;
(i) no opinion is expressed as to those provisions relating to self-help,
rights of setoff, or similar rights;
(j) no opinion is expressed as to those provisions purporting to establish
evidentiary standards;
(k) no opinion is expressed as to those provisions relating to the waiver
of rights, remedies, and defenses;
Morrow Snowboards ULC Page 7
(l) no opinion is expressed as to those provisions which purport to allow
the severance of invalid, illegal, or unenforceable provisions or
restricting their effect; and
(m) no opinion is expressed as to those provisions which suggest that
modification, amendments or waiver of or with respect to the agreement
that are not in writing will not be effective.
As to the Debenture Escrow Agreement and the security interest ("Security
Interest") created thereby in the Redemption Proceeds (as that term is defined
in the Debenture Escrow Agreement and herein), our opinion is subject to the
further qualifications and assumptions as set forth in Schedule "B" attached
hereto.
This opinion has been rendered solely for your information in connection with
the transactions set forth in and contemplated by the Securities Purchase
Agreement and may not be relied upon by you for any other purpose, or relied
upon by any other person for any purpose, without our prior
written consent. We expressly disclaim any obligation to advise of changes in
law or fact that occur after the date of this letter.
Yours very truly,
BOUGHTON PETERSON YANG ANDERSON
Douglas H. Hopkins
SCHEDULE "B"
1. We have assumed that the Company has rights in the Redemption Proceeds,
that value has been given and that British Columbia Mercantile Management
Corp. and the Company have not entered into any written or oral agreements
to postpone the time for attachment of the Security Interest;
2. We express no opinion as to the legal or beneficial title of the Company to
or any other rights of the Company in the Redemption Proceeds;
3. We express no opinion as to the priority of the Security Interest;
4. We have made no registrations, filings or searches in any office of public
record, with respect to the Debenture Escrow Agreement or the Security
Interest;
5. We express no opinion with respect to any Redemption Proceeds being
proceeds which are not identifiable or traceable;
6. The enforceability of the Debenture Escrow Agreement or the Security
Interest, as the case may be, is subject:
(i) to the power of the Court under the PPSA to grant relief from the
consequences of default;
(ii) to the detailed provisions of the Personal Property Security Act
(British Columbia) ("PPSA") which set out procedures for the
enforcement of security agreements and impose duties with respect to
the exercise of rights or remedies thereunder, including special
procedures applicable where the Redemption Proceeds includes a duty
to exercise or discharge rights, remedies, duties and obligations in
good faith and in a commercial reasonable manner. Such procedures and
duties are in most cases applicable notwithstanding waivers or
contrary terms in the Debenture Escrow Agreement; and
(iii) to any estoppel based on incorrect information given in response to a
demand for information made pursuant to Section 18 of the PPSA.
EXHIBIT 7.3.1.B
[Date]
Morrow Snowboards ULC
c/o Morrow Snowboards, Inc.
2600 Pringle Road, S.E.
Salem, OR 97302
USA
- and -
Russell & DuMoulin
Barristers & Solicitors
2100 - 1075 West Georgia Street
Vancouver, British Columbia
V6E 3G2
RE: WESTBEACH SNOWBOARDS CANADA LTD. (THE "BORROWER")
------------------------------------------------------
We have acted as counsel for the Borrower in connection with the Security
Documents referred to below executed in favour of Morrow Snowboards ULC (the
"Lender").
1. DOCUMENTS
---------
1.1 Security Documents. We refer to the following documents
------------------
(collectively, the "Security Documents"), each of which is dated for reference
October ., 1997:
(a) the promissory note in the principal amount of [$2,130,000.00],
bearing interest at nine percent per annum, executed by the Borrower
in favour of the Lender; and
(b) the General Security Agreement executed by the Borrower in favour of
the Lender.
-2-
2. SCOPE OF INQUIRY
----------------
We have considered such questions of law, reviewed such documents and conducted
such searches and investigations as we have deemed necessary for the purposes
hereof.
3. OPINION
-------
Based on the foregoing, we submit the following opinion:
3.1 Corporate Existence, Power and Capacity. The Borrower has been duly
----------------------------------------
continued as a company under the laws of the Province of British Columbia and,
as of the date of delivery of the Security Documents:
(a) validly existed and was in good standing with the office of the
British Columbia Registrar of Companies with respect to the filing of
annual reports; and
(b) had the corporate power and capacity to execute and deliver the
Security Documents, to borrow the moneys and grant the security
contemplated thereby, and to make, observe and perform the covenants
of the Borrower set out therein.
3.2 Authorization, Execution and Delivery. Each of the Security Documents
--------------------------------------
has been validly authorized, executed and delivered by the Borrower.
Yours very truly,
BOUGHTON PETERSON YANG ANDERSON
EXHIBIT 7.3.M
November 3, 1997
Morrow Snowboards, Inc. McCullough O'Connor Irwin
Morrow LLC Solicitors
Morrow Snowboards ULC 1100-888 Dunsmuir Street
2600 Pringle Road, S.E. Vancouver, British Columbia
Salem, Oregon 97302 Canada V6C 3K4
Boughton Peterson Yang Anderson
Barristers & Solicitors
2500 - 1055 Dunsmuir Street
P. O. Box 49290
Vancouver, British Columbia
Canada V7X 1S8
Re: Purchase of Westbeach Snowboard Canada Ltd.
Dear Ladies and Gentlemen:
INTRODUCTION
We have acted as Oregon counsel to Westbeach Snowboard Canada Ltd., a
British Columbia corporation (the "Company"), in connection with that certain
Securities Purchase Agreement ("Securities Purchase Agreement") dated October
31, 1997, by and among Morrow Snowboards, Inc., an Oregon corporation, Morrow,
LLC, an Oregon limited liability company, and Morrow Snowboards, ULC, a Nova
Scotia unlimited company (collectively, the "Purchaser"), the Company and those
holders of the Class 'A' Common Shares, the Class B Preferred Shares, the
warrants and options of the Company who have signed the Purchase Agreement (the
"Sellers").
We are not the Company's general counsel, we have not previously
represented the Company, and we have made no investigation of the Company's
legal affairs except as expressly set forth in this letter. We do not, and have
not represented Sellers.
Morrow Snowboards, Inc.
Morrow LLC
Morrow Snowboards ULC
Boughton Peterson Yang Anderson
McCullough O'Connor Irwin
November 3, 1997
Page 2
SCOPE OF INVESTIGATION
In rendering our opinion, we have only examined drafts of the Securities
Purchase Agreement and the Escrow Agreement. We have made no independent
investigation of the warranties and representations made by the Company or
Sellers in the Securities Purchase Agreement or of any related matters. Except
as specifically identified herein, we have not been retained or engaged to
perform, and we have not performed, any independent review or investigation of
(1) any agreement or instrument to which the Company or Sellers may be a party
or by which the Company or Sellers or any property owned by the Company or
Sellers may be bound, or (2) any order of any governmental or public body or
authority to which the Company or Sellers may be subject.
ASSUMPTIONS
This opinion assumes:
(i) that Purchaser and Sellers have satisfied all necessary legal
requirements applicable to them and that Purchaser has all necessary corporate
authority to enter into the Securities Purchase Agreement and the Escrow
Agreement and consummate the transactions contemplated thereby;
(ii) the legal capacity of all natural persons to enter into and perform
their respective obligations under the Securities Purchase Agreement and the
Escrow Agreement regardless of their country, state or province of domicile,
residence or origin;
(iii) the authenticity and completeness of all documents submitted to us
for review, that each such document that is a copy conforms to an authentic
original, and that all signatures on each such document are genuine;
(iv) that the Company is duly organized and validly existing as a
corporation under the laws of British Columbia, and is in good standing under
such laws;
(v) that the Securities Purchase Agreement and the Escrow Agreement have
been duly executed and delivered by the Company and the Sellers;
(vi) that Purchaser has negotiated the transactions contemplated by the
Securities Purchase Agreement and the Escrow Agreement and will exercise its
rights and remedies under the Securities Purchase Agreement and the Escrow
Agreement and applicable law in good faith with fair dealing and in a
commercially reasonable manner;
(vii) that Purchaser and Sellers have no notice of any defense against the
enforcement of the Securities Purchase Agreement or the Escrow Agreement;
(viii) that there has not been any mutual mistake of fact or
misunderstanding, fraud, duress, or undue influence;
(ix) that Oregon law (without regard to Oregon law regarding conflicts of
law) will apply to the interpretation, validity, and enforceability of the
Securities Purchase Agreement and the Escrow Agreement; and
(x) that there are no agreements or understandings among the parties,
written or oral, and there is no usage of trade or course of prior dealing among
the parties that would in either case, define, supplement, or qualify the terms
of the Securities Purchase Agreement or the Escrow Agreement.
Morrow Snowboards, Inc.
Morrow LLC
Morrow Snowboards ULC
Boughton Peterson Yang Anderson
McCullough O'Connor Irwin
November 3, 1997
Page 3
OPINIONS
Subject to the qualifications stated herein, we are of the opinion that:
The Securities Purchase Agreement constitutes a legal, valid and binding
obligation of the Company and Sellers who execute same, enforceable against the
Company and said Sellers in accordance with its terms, except as enforceability
may be limited by (a) applicable bankruptcy, receivership, solvency, fraudulent
transfer, reorganization, moratorium or other similar laws affecting creditors'
rights generally, and (b) general principles of equity, including those limiting
the availability of specific performance, injunctive relief and other equitable
remedies and those providing for defenses of reasonableness, regardless of
whether enforceability is considered in a proceeding in equity or at law.
The Escrow Agreement constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company and the Sellers who are parties
thereto in accordance with its terms, except as enforceability may be limited by
(a) applicable bankruptcy, receivership, solvency, fraudulent transfer,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and (b) general principles of equity, including those limiting the
availability of specific performance, injunctive relief and other equitable
remedies and those providing for defenses of reasonableness, regardless of
whether enforceability is considered in a proceeding in equity or at law.
Although (i) the following list is not a complete recitation of matters as
to which no opinion is expressed; and (ii) this list is not intended to
supersede or diminish other limitations set forth or incorporated by reference
in the opinion, we wish to specifically emphasize and advise you that we express
no opinion as to the enforceability of:
(a) self-help, rights of setoff, or similar rights;
(b) provisions purporting to establish evidentiary standards;
(c) provisions relating to the waiver of rights, remedies, and defenses;
(d) any reservation of the right to pursue inconsistent or cumulative
remedies;
(e) provisions for payment or reimbursement of costs and expenses or
indemnification for claims, losses, or liabilities (including, without
limitation, attorney fees) in excess of statutory limits or an amount
determined to be reasonable by any court or other tribunal, and any
provision for attorney fees other than to the prevailing party;
(f) provisions pertaining to jurisdiction, venue, or choice of law;
LIMITATIONS
The opinions herein expressed are specifically subject to and qualified by
the following:
1. Regardless of the states in which members of this firm are licensed to
practice, our opinion is limited to the laws of Oregon and to applicable federal
laws of the United States of America.
2. This opinion is provided to you as a legal opinion only, and not as a
guaranty or warranty of the matters discussed herein. Our opinion is limited to
the matters expressly stated herein, and no other opinions may be implied or
inferred.
3. We express no opinion as to any matter whatsoever relating to:
Morrow Snowboards, Inc.
Morrow LLC
Morrow Snowboards ULC
Boughton Peterson Yang Anderson
McCullough O'Connor Irwin
November 3, 1997
Page 4
(a) the value of the Company or its stock;
(b) the adequacy of the consideration for the purchase pursuant to the
Securities Purchase Agreement and the adequacy of the consideration to
the Escrow Agreement;
(c) the accuracy or completeness of any representations made by the
Company or Sellers to Purchaser;
(d) the accuracy or completeness of any financial, accounting, or
statistical information furnished to Purchaser;
(e) Sellers' legal capacity to bring or defend an action in Oregon or
that any such action would be brought in Oregon;
(f) the financial status of the Company;
(g) the ability of the Company to meet its obligations under the
Securities Purchase Agreement;
(h) the jurisdiction of Oregon courts over Sellers; or
(i) the effect of treaties between Sellers' country of origin, residence
or domicile and the United States.
4. Nothing contained in this opinion shall be deemed to constitute a
waiver of the attorney-client privilege between this firm and the Company except
as to the matters specifically set forth herein.
This opinion is rendered as of the date set forth above, and we disclaim
any obligation to advise you of any changes in the circumstances, laws, or
events that may occur after this date or to otherwise update this opinion.
This opinion has been rendered to you in connection with the transaction
described herein solely for your information and is not to be quoted in whole or
in part or otherwise referred to,
used, or relied upon by any person or entity other than you, your legal counsel,
and your successors and assigns.
Very truly yours,
DUNN, CARNEY, ALLEN, HIGGINS & TONGUE
____________, 1997
Morrow Snowboards, Inc.
Morrow, LLC
Morrow Snowboards ULC
Morrow Westbeach Ltd.
2600 Pringle Road, S.E.
Salem, Oregon 97302
USA
Ladies and Gentlemen:
RE: WESTBEACH SNOWBOARD CANADA LTD.
--- -------------------------------
We have acted as counsel to British Columbia Mercantile Corporation ("BCMC"), in
connection with the preparation and negotiation of the Securities Purchase
Agreement dated October 31, 1997 (the "Securities Purchase Agreement") among
Morrow Snowboards, Inc., an Oregon corporation, Morrow, LLC, an Oregon limited
liability company, Morrow Snowboards ULC, a Nova Scotia unlimited company,
Westbeach Snowboard Canada Ltd., a British Columbia company (the "Company"), and
the security holders of the Company who have signed Schedule A attached to the
----------
Securities Purchase Agreement (collectively, "Sellers"). BCMC was engaged by
the Company to negotiate the Securities Purchase Agreement on behalf of the
Sellers. We do not act for any of the Sellers, other than BCMC, and no
inference should be drawn that, in acting as counsel for BCMC, we have any
knowledge relating to the Sellers, including, without limitation, their personal
circumstances, capacity to contract, authority to execute documents or the
authenticity of their signatures. This opinion is provided to you pursuant to
Paragraph 7.3.l. of the Securities Purchase Agreement. Capitalized terms used
and not otherwise defined herein have the meanings set forth in the Securities
Purchase Agreement.
In our capacity as such counsel, we have examined and are familiar with: (a)
the Securities Purchase Agreement; and (b) the Custodian Agreement and the
Debenture Escrow Agreement delivered pursuant to the Securities Purchase
Agreement (the "Related Agreements"); and (c) such corporate and other
certificates as stated herein.
In rendering this opinion, we have assumed the genuineness of all signatures,
the authenticity of all documents provided to us as originals and the conformity
to authentic original documents of all documents provided to us as certified,
conformed or photostatic copies. We have also assumed the capacity of all
natural persons. We have assumed that the Custodian Agreement and the Debenture
Escrow Agreement have been duly executed and delivered by all parties to those
agreements, other than the Trustee. As to questions of fact material to the
following opinions, when relevant facts were not independently established, we
have relied, without investigation, on
Morrow Snowboards, Inc.
Morrow, LLC
Morrow Snowboards ULC
_________,1997
Page 2
and assumed the accuracy and completeness of the representations and warranties
of the Company and Sellers in the Securities Purchase Agreement, certificates of
public officials and a certificate of the Company of even date herewith (the
Certificate). We assume that the Certificate is accurate and complete. A copy of
the Certificate is enclosed.
Based upon the foregoing and subject to the limitations and qualifications set
forth below, we are of the opinion that:
1. The Securities Purchase Agreement has been duly executed and delivered
by the Sellers and constitutes a legal, valid and binding obligation of the
Sellers, enforceable against them in accordance with its terms, except as
enforceability may be limited by (a)applicable bankruptcy, receivership,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws affecting creditors' rights generally; and (b) general principles of
equity, including those limiting the availability of specific performance,
injunctive relief and other equitable remedies and those providing for defenses
of reasonableness, regardless of whether enforceability is considered in a
proceeding in equity or at law.
2. Except as provided in the Securities Purchase Agreement and the
Custodian Agreement, the execution and delivery by the Sellers of, and their
performance of the obligations contemplated by the Securities Purchase Agreement
and the Custodian Agreement do not, to our knowledge, violate any statute,
order, writ, injunction, decree, rule or regulation known to us and, to our
actual knowledge, does not violate any material Undertaking to which any Seller
is a party.
3. Except as provided in the Securities Purchase Agreement and the
Custodian Agreement, the execution and delivery of the Securities Purchase
Agreement and the Custodian Agreement and the performance of the obligations
contemplated thereby by the Sellers who execute the said agreements do not, to
our knowledge, require the consent, approval, authorization, declaration or
other order of, or registration or filing with, any Government Entity.
4. Except as provided in the Securities Purchase Agreement, there is, to
our knowledge, no Claim pending or threatened against any of the Sellers that
questions the validity of the Securities Purchase Agreement or the Custodian
Agreement or would prevent or hinder the performance by any such Seller of the
transactions contemplated thereby.
Morrow Snowboards, Inc.
Morrow, LLC
Morrow Snowboards ULC
________, 1997
Page 3
5. The Custodian Agreement has been duly executed and delivered by the
Sellers and constitutes a valid and binding obligation of the Sellers,
enforceable against them in accordance with its terms.
6. The Debenture Escrow Agreement has been duly executed and delivered by
the Trustee, and constitutes a legal, valid and binding obligation of the
Trustee, enforceable against it in accordance with its terms.
Whenever a statement herein is qualified by the phrase "to our knowledge,"
"known to us" or similar language, it is intended to indicate that (i) we have
not undertaken any investigation whatsoever to determine the existence or
absence of such facts or circumstances, and no inference as to our knowledge of
the existence of such facts or circumstances should be drawn merely from our
representation of BCMC; and (ii) during the course of our representation of
BCMC, no information that would give us current actual knowledge with respect to
that statement has come to the attention of those lawyers in this firm who have
rendered legal services in connection with the representation described in the
introductory paragraph of this letter.
The opinions expressed herein are limited to matters governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable therein.
As to the opinion regarding the enforceability of the Securities Purchase
Agreement expressed in paragraph 1 above and as the Securities Purchase
Agreement is stated to be governed by the laws of the State of Oregon, we have
relied entirely on the opinion of Dunn, Carney, Allen, Higgins & Tongue
delivered herewith, including all assumptions, qualifications and limitations
contained or referenced therein and our opinion is restricted to enforceability
of the Securities Purchase Agreement in an Oregon forum.
The choice of the laws of the State of Oregon as the governing law of the
Securities Purchase Agreement is a valid and effective choice of law provided
that such choice of law is bona fide (in the sense that it was not made with a
view to avoiding the consequences of the law of any other jurisdiction) and in
an action brought before a court of competent jurisdiction in British Columbia,
the laws of the State of Oregon would, to the extent specifically pleaded and
proven as a fact by expert evidence, be recognized and applied by such court to
all issues which under conflict of laws rules in effect in British Columbia are
characterized to be contract issues, except that any such court:
Morrow Snowboards, Inc.
Morrow, LLC
Morrow Snowboards ULC
________, 1997
Page 4
A. will apply those laws of British Columbia as such court characterizes
as procedural and will not apply those laws of the State of Oregon as
such court characterizes as procedural;
B. will not apply those laws of the State of Oregon which a British
Columbia court would characterize as revenue, expropriatory, penal or
similar law; and
C. will not apply those laws of the State of Oregon, the application of
which a British Columbia court would characterize as inconsistent with
"public policy", as such term is applied by British Columbia courts.
Furthermore, a court in the Province of British Columbia may reserve
to itself an inherent power to decline to hear such an action if it
determines that it is not the proper forum to hear such action, or if
concurrent proceedings are being brought elsewhere.
Insofar as the laws of any other jurisdiction are relevant, we express no
opinion.
The opinions expressed herein in paragraphs 5 and 6 with respect to the
enforceability of the terms of agreements and documents are subject to the
qualifications that:
(a) such enforcement may be limited by:
(i) laws relating to bankruptcy, insolvency, reorganization, winding
up, fraudulent preference and conveyance, moratorium or
creditor's rights generally;
(ii) general principles of equity and no opinion is given as to
whether a court will order injunctive relief, specific
performance, or other equitable remedies with respect to any
particular provision of such agreements or documents in any
particular instance; and
(iii) the statutory and inherent powers of a court to grant relief
from forfeiture, to stay execution of proceedings before it and
to stay executions on judgments;
(b) courts in British Columbia have discretionary powers with respect to
the awarding of costs notwithstanding provisions regarding the
recovery of costs in such agreements or documents;
Morrow Snowboards, Inc.
Morrow, LLC
Morrow Snowboards ULC
________, 1997
Page 5
(c) the right to exercise any unilateral or unfettered discretion in such
agreements or documents will not prevent a British Columbia court from
requiring such discretion to be exercised reasonably;
(d) no opinion is expressed as to the validity, binding effect and
enforceability of any of the following provisions in the Debenture
Escrow Agreement and Custodian Agreement:
(i) indemnity provisions;
(ii) self-help, rights of set-off or similar rights;
(iii) provisions purporting to establish evidentiary
standards;
(iv) provisions relating to the waiver of rights, remedies and
defences;
(v) provisions which purport to allow the severance of invalid,
illegal or unenforceable provisions or restricting their effect;
or
(vi) provisions which suggest that modification, amendment or waiver
of or with respect to such agreements will not be effective;
(e) claims may become barred under the Limitation Act (British Columbia)
or may become subject to defences of set off and counterclaim;
(f) where obligations are to be performed in a jurisdiction outside
British Columbia, they may not be enforceable in British Columbia to
the extent that performance would be illegal under the laws of that
jurisdiction;
(g) the breach of any particular obligation to a party may not give rise
to a remedy in damages if no damages result to that party by reason of
a failure to properly perform the obligation; and
(h) the conditions precedent to the obligations of the parties in such
agreements or documents have been satisfied or, if capable of being
waived, have been waived by the party or parties entitled to insist on
performance of the obligation, and the rights of termination set out
therein have not been exercised by the parties entitled to exercise
such rights.
Morrow Snowboards, Inc.
Morrow, LLC
Morrow Snowboards ULC
________, 1997
Page 6
As to the Debenture Escrow Agreement and the security interest (the "Security
Interest") created thereby in the Redemption Proceeds (as that term is defined
in the Debenture Escrow Agreement), our opinion is subject to the further
qualifications and assumptions as set forth in Schedule "A" attached.
This opinion has been rendered solely for your information in connection with
the transactions set forth in and contemplated by the Securities Purchase
Agreement and may not be relied upon by you for any other purpose, or relied
upon by any other person for any purpose, without our prior written consent. We
expressly disclaim any obligation to advise of changes in law or fact that occur
after the date of this letter.
Yours very truly,
MCCULLOUGH O'CONNOR IRWIN
SCHEDULE "A"
1. We have assumed that the Company has rights in the Redemption
Proceeds, that value has been given and that British Columbia
Mercantile Management Corp. and the Company have not entered into any
written or oral agreements to postpone the time for attachment of the
Security Interest;
2. We express no opinion as to the legal or beneficial title of the
Company to or any other rights of the Company in the Redemption
Proceeds;
3. We express no opinion as to the priority of the Security Interest;
4. We have made no registrations, filings or searches in any office of
public record, with respect to the Debenture Escrow Agreement or the
Security Interest;
5. We express no opinion with respect to any Redemption Proceeds being
proceeds which are not identifiable or traceable;
6. The enforceability of the Debenture Escrow Agreement or the Security
Interest, as the case may be, is subject:
(i) to the power of the Court under the PPSA to grant relief from
the consequences of default;
(ii) to the detailed provisions of the Personal Property Security Act
(British Columbia) ("PPSA") which set out procedures for the
enforcement of security agreements and impose duties with
respect to the exercise of rights or remedies thereunder,
including special procedures applicable where the Redemption
Proceeds includes a duty to exercise or discharge rights,
remedies, duties and obligations in good faith and in a
commercially reasonable manner. Such procedures and duties are
in most cases applicable notwithstanding waivers or contrary
terms in the Debenture Escrow Agreement; and
(iii) to any estoppel based on incorrect information given in response
to a demand for information made pursuant to Section 18 of the
PPSA.
EXHIBIT A
REPRESENTATIONS AND WARRANTIES OF WESTBEACH
3.1 ORGANIZATION AND STANDING. Westbeach is a corporation duly organized,
validly existing and in good standing under the laws of the Province of British
Columbia, has all requisite corporate power and authority to own its properties
and carry on its business as now being conducted and as proposed to be conducted
and is duly qualified to do business and in good standing in each jurisdiction
in which the failure to be so qualified and in good standing would have a
Material Adverse Effect (as defined in Paragraph 10.2 of the Agreement) on
Westbeach. Westbeach has delivered to Morrow NS a true and correct copy of its
Memorandum and Articles, each as amended to date. Westbeach has also delivered
to Morrow NS the materials set forth in Schedule 3.1. Westbeach is not in
violation of its Memorandum or Articles, as amended.
3.2 CAPITALIZATION. The authorized capital of Westbeach consists of Four
Million (4,000,000) shares divided into four (4) classes of One Million
(1,000,000) shares each (no par value) of (i) Class "A" Common shares, (ii)
Class "B" Common shares, (iii) Class"A" Preferred shares and (iv) Class "B"
Preferred shares; of which there are issued and outstanding: 999,250 Class "A"
Common shares (of which 349,250 shares are subject to put and call rights
(Callable Class "A" Common shares)); no Class "B" Common shares; no Class "A"
Preferred shares; and 147,000 Class "B" Preferred shares. There are no other
outstanding shares of capital or other securities of Westbeach and no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any nature
relating to the capital or other securities of Westbeach, or otherwise
obligating Westbeach to issue, transfer, sell, purchase, redeem or otherwise
acquire such capital or securities, except, as set forth on the attached
Schedule 3.2, for warrants (Warrants) to acquire 319,500 shares of and options
(Options) to acquire 70,000 shares of Class "A" Common shares. All outstanding
Securities are duly authorized, validly issued, fully paid and non-assessable,
are, to Westbeach's knowledge without inquiry, free and clear of any Lien and
are not subject to preemptive rights or rights of first refusal created by
statute, by the Memorandum or Articles of Westbeach or by any Undertaking to
which Westbeach is a party or by which it is bound. The list of security holders
of Westbeach and the number and type of Securities held by each security holder
set forth on Schedule A to the Agreement are accurate and complete.
3.3 SUBSIDIARIES AND AFFILIATES. Except as set forth on the attached
Schedule 3.3, Westbeach does not own, directly or indirectly, any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity. For purposes of this
Agreement, the term "Subsidiary" means any entity listed on Schedule 3.3 and any
corporation, partnership, joint venture or other business association or entity
in which any entity listed on Schedule 3.3 owns, directly or indirectly, any
equity or similar interest. Westbeach beneficially owns the entire equity
interest in each Subsidiary. Westbeach also hereby represents and warrants that
each Subsidiary is duly organized, validly existing and in good standing under
the laws where the Subsidiary was formed, and as to each Subsidiary, Westbeach
makes the representations and warranties set forth in Paragraphs 3.8
(Litigation), 3.10 (Material Undertakings), 3.11 (Title to and Condition of
Property), 3.12 (Intellectual Property), 3.13 (Environmental Matters), 3.19
(Compliance with Laws), 3.25 (Payments) and 3.31 (Disclosure) with respect to
each Subsidiary, and, to the extent applicable, the Schedules referenced in
those Paragraphs include relevant information with respect to each Subsidiary.
3.4 NO CONFLICTS. Except as set forth on the attached Schedule 3.4, the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, (a) violate or conflict with the
Memorandum or Articles of Westbeach, as amended; (b) violate or conflict with
any permit, order, license, decree, judgment, statute, law, ordinance, rule or
regulation applicable to Westbeach or Westbeach's properties or assets; or (c)
result in any breach or violation of, constitute a default (with or without
notice or lapse of time, or both) under, give rise to a right of termination,
cancellation or acceleration of, result in the creation of any Lien on any of
Westbeach's properties or assets pursuant to, or require the consent of any
party to any Undertaking applicable to Westbeach or any of its properties or
assets. Except as set forth on Schedule 3.4, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Government
Entity is required by or with respect to Westbeach in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
3.5 FINANCIAL STATEMENTS. Westbeach has delivered to Morrow NS true and
complete copies of audited consolidated financial statements at and for the
years ended December 31, 1993, 1994, 1995 and 1996, including audited
consolidated balance sheets and, for 1993 and 1996, the related consolidated
statements of income and retained earnings and changes in financial position of
Westbeach and, for 1994 and 1995, the related consolidated statements of
operations and deficit and changes in financial position of Westbeach (the
Annual Financial Statements), and the opinion of
Westbeach's independent chartered accountants. Westbeach also has delivered to
Morrow NS true and complete copies of the unaudited consolidated balance sheet
of Westbeach at June 30, 1997 and August 31, 1997, and the unaudited financial
statements including the unaudited consolidated statements of income and changes
in financial position for the periods then ended (the Interim Financial
Statements). The Annual Financial Statements and the Interim Financial
Statements (collectively, the Financial Statements) were prepared in accordance
with Westbeach's books and records and fairly present the financial condition
and operating results of Westbeach at the dates and during the periods
indicated. The Annual Financial Statements were prepared in accordance with
Canadian GAAP consistently applied throughout the periods indicated. The Interim
Financial Statements were prepared in accordance with Canadian GAAP consistently
applied throughout the period indicated in all material respects.
3.6 ABSENCE OF CERTAIN CHANGES. Except as set forth on the attached
Schedule 3.6, since June 30, 1997, Westbeach has conducted its business in the
ordinary course consistent with past practice and there has not occurred:
a. Any change in the financial condition, assets, liabilities,
prospects, net worth, earning power or business of Westbeach (except changes in
the ordinary course of business, individually or in the aggregate), which has
had or might reasonably be expected to have a Material Adverse Effect on
Westbeach.
b. Any sale, lease or other transfer or disposition of any property
or asset of Westbeach, except for the sale of inventory or other assets in the
ordinary course of business.
c. Any change in any accounting method, practice or policy (including
any change in any depreciation or amortization policy or rate) by Westbeach or
any revaluation by Westbeach of any of its assets, except as described in the
notes to the Annual Financial Statements.
d. Except for the call of the Callable Class "A" Common shares and
redemption of the Debentures contemplated by this Agreement, any declaration,
setting aside or payment of any dividend or other distribution to Westbeach's
security holders or any direct or indirect redemption, retirement, purchase or
other acquisition by Westbeach of any of its Securities.
e. Any entering into, amendment or termination of, or default under,
by Westbeach, of any Undertaking to which Westbeach is a party or by which it is
bound, other than in the ordinary course of business.
f. Any damage, destruction or loss (whether or not covered by
insurance) to any property or asset or the business of Westbeach having a
Material Adverse Effect on Westbeach.
g. Any commitment, transaction or Undertaking, or amendment thereto
(including any capital expenditure, capital financing or sale of assets), by
Westbeach for any amount that requires or could require payments in excess of
Fifteen Thousand Canadian Dollars (CN$15,000) in the aggregate with respect to
any individual Undertaking or series of related Undertakings.
h. Any new Lien on any asset allowed to exist by Westbeach.
i. Any cancellation of any debt or waiver or release of any right or
claim by Westbeach, other than in the ordinary course of business.
j. Any payment, discharge or satisfaction of any claim, liability or
obligation by Westbeach, other than as reflected or reserved against in the
Financial Statements or in the ordinary course of business consistent with past
practice.
k. Any labor dispute, litigation or governmental investigation
affecting Westbeach's business or financial condition.
l. Except as contemplated by this Agreement, any issuance or sale of
capital stock or other securities, exchangeable or convertible securities,
options, warrants, puts, calls or other rights to acquire capital stock or other
securities of Westbeach.
m. Any indebtedness for borrowed money incurred, assumed or
guaranteed by Westbeach, other than in the ordinary course of business.
n. Any loan or advance (other than advances to employees in the
ordinary course of business for travel and entertainment in accordance with past
practice, and other than intercompany loans or advances on commissions to sales
representatives in Saskatchewan or the United Kingdom in an aggregate amount
less than Ten Thousand Canadian Dollars (CN$10,000)) to any person.
o. Except as disclosed in Schedule 3.16, any increase in any salary,
wage, benefit or other remuneration payable or to become payable to any current
or former officer, director, employee, agent or shareholder of Westbeach; any
bonus or severance payment or arrangement made to, for or with any officer,
director, employee or agent of Westbeach; or any supplemental retirement plan or
other program or special remuneration for any officer, director, employee or
agent of
Westbeach, except for normal salary or wage increases relating to
periodic performance reviews and annual bonuses consistent with Westbeach's past
practices.
p. Any grant of credit to any customer on terms or in amounts more
favorable than those extended to that customer in the past, or if a new
customer, that class of customers, any other change in the terms of any credit
heretofore extended or any other change in Westbeach's policies or practices
with respect to the granting of credit.
q. Any delay in the payment of any trade or other payable other than
in the ordinary course of business consistent with past practice.
r. Any strike, walkout, labor dispute, slowdown, work stoppage or
organizational effort that has or could have a Material Adverse Effect on
Westbeach.
s. Any disposition of or failure to keep in effect any rights in, to
or for the use of any patent, trade mark, service mark, trade name or copyright,
or any disclosure to any person not an employee or other disposition of any
trade secret, process or know-how.
t. Any Undertaking by Westbeach, in writing or otherwise, to do any
of the foregoing.
3.7 LIABILITIES. Except as set forth in the Annual Financial Statements,
the Interim Financial Statements or the attached Schedule 3.7, and except for
liabilities or obligations arising in the ordinary course and consistent with
past practice, Westbeach has no liability or obligation of any nature, whether
due or to become due, fixed or contingent.
3.8 LITIGATION. Except as set forth on the attached Schedule 3.8, there
is no Claim pending or, to Westbeach's knowledge, threatened, before any agency,
court or tribunal, foreign or domestic, at law or in equity, against Westbeach,
any of its assets or properties or any of its officers or directors (in their
capacities as such), or, to Westbeach's knowledge, any facts that create a basis
upon which a Claim could be made or instituted. There is no judgment, decree or
order against or affecting Westbeach or, to Westbeach's knowledge, any of
Westbeach's directors or officers (in their capacities as such), that could
prevent consummation of the transactions contemplated by this Agreement.
3.9 GOVERNMENTAL AUTHORIZATIONS. The attached Schedule 3.9 contains a
complete and accurate list of each Canadian, provincial, state, local or foreign
governmental consent, license, permit, grant and other authorization necessary
for Westbeach to own, lease, operate and use its assets and properties and to
carry on its business as currently conducted, other than licenses or permits
required on a per shipment basis (collectively, Westbeach Authorizations); to
Westbeach's knowledge, Westbeach has performed and fulfilled all of its
obligations under all Westbeach Authorizations; and, to Westbeach's knowledge,
all Westbeach Authorizations are in full force and effect, except where the
failure to obtain or have any Westbeach Authorization could not reasonably be
expected to have a Material Adverse Effect on Westbeach.
3.10 MATERIAL UNDERTAKINGS. The attached Schedule 3.10 contains a complete
and accurate list of each Undertaking, written or oral, to which Westbeach is a
party and which (a)(i) involves an obligation for borrowed money except for
suppliers granting Westbeach credit in the ordinary course of business and
consistent with past practices of Westbeach, (ii) involves an obligation
evidenced by bonds, debentures, notes or similar instruments, (iii) involves an
obligation to pay the deferred purchase price of property or services (other
than trade accounts arising in the ordinary course of business), (iv) involves
an obligation under capital leases, (v) is a debt of others secured by a Lien on
its property, (vi) is a guaranty of liabilities or obligations of others, (vii)
is an agreement under which Westbeach is obligated to make or expects to receive
payments in excess of Fifteen Thousand Canadian Dollars (CN$15,000) in the
aggregate, or which cannot be cancelled without liability on thirty (3) days'
notice, (viii) is a trade agreement concerning the delivery or distribution of
Westbeach's products except for purchase orders and sale orders executed in the
ordinary course of business or (ix) is an agreement granting any person a Lien
on any of its properties or assets (except purchase money security interests
created in the ordinary course of business consistent with past practice);
(b)(i) other than as disclosed in Schedule 3.16, is an employment agreement,
collective bargaining agreement or agreement that affects an employment
relationship or (ii) is an agreement that limits the right of Westbeach or any
of its employees to compete in any line of business; or (c) is an agreement
which, after giving effect to the transactions contemplated hereby, purports to
restrict or bind Morrow NS or any of its Subsidiaries, other than Westbeach, in
any material respect (collectively, the Material Undertakings). True and
complete copies of all Material Undertakings have been delivered or made
available to Morrow NS. Westbeach, to its knowledge, has fulfilled, or taken all
action to enable it to fulfill when due, its obligations under each Material
Undertaking. To Westbeach's knowledge, all parties to each Material Undertaking
have complied in all material respects with the provisions thereof and no party
is in breach or violation of, or in default (with or without notice or lapse of
time, or both) under any Material Undertaking. Westbeach has not received any
notice of termination, cancellation or acceleration or any notice of breach,
violation or default of any Material Undertaking.
3.11 TITLE TO AND CONDITION OF PROPERTY. Except as set forth on the
attached Schedule 3.11, Westbeach has good and marketable title to each of its
properties and assets, real and personal, or in the case of leased properties
and assets, has valid leasehold interests in each of those properties, free and
clear of any Lien. The plants, property and equipment of Westbeach that are used
in the operations of its business are in satisfactory condition and repair,
given their depreciated value on the Financial Statements. All plants, property
and equipment have been well maintained and conform (to Westbeach's knowledge as
to leased real property) with all applicable ordinances, regulations and zoning
and other applicable laws, and to Westbeach's knowledge, without inquiry, do not
encroach on the property of others. There is no pending or, to Westbeach's
knowledge, without inquiry, threatened, change in any such ordinance, regulation
or zoning or other applicable laws, and there is no pending or, to Westbeach's
knowledge, threatened, condemnation of any such building, machinery or
equipment. Westbeach's properties and assets include all rights, properties,
interests in properties and assets necessary to permit Westbeach to conduct its
business as currently conducted. Schedule 3.11 identifies each parcel of real
property owned or leased by Westbeach.
3.12 INTELLECTUAL PROPERTY.
u. To the best of its knowledge, Westbeach has not used and is not
using any intellectual property, including, without limiting the generality of
the foregoing, any patent, trade mark or copyright (collectively, Intellectual
Property), in a manner that infringes or breaches the rights of any third party,
except to the extent that such use could not reasonably be expected to have a
Material Adverse Effect on Westbeach.
v. The attached Schedule 3.12 contains a complete and accurate list
of (i) each patent, patent application, trade name application and registration
and, to Westbeach's knowledge, each trade mark application and registration,
that Westbeach considers to be material to its business and included in the
Intellectual Property; (ii) each material license, sublicense and other
Undertaking to which Westbeach is a party and pursuant to which any person is
authorized to use any Intellectual Property; and (iii) each material license,
sublicense and other Undertaking as to which Westbeach is a party and pursuant
to which Westbeach is authorized to use any third-party patent, trade mark or
copyright (Third-Party Intellectual Property Rights), in each case which are
incorporated in, are or form a part of any product of Westbeach. Schedule 3.12
specifies as to each item listed, as applicable: (i) the owner of the item; (ii)
the jurisdiction in which the item is issued or registered or in which any
application for issuance or registration has been filed, including the
respective issuance, registration or application number; (iii) the date of
application and issuance or registration of the
item; and (iv) with respect to any trade mark, the class or classes of goods and
services for which each trade mark is intended to be used.
w. To Westbeach's knowledge, there is no unauthorized use,
disclosure, infringement or misappropriation of any Intellectual Property right
of Westbeach, any trade secret material to Westbeach or any Third-Party
Intellectual Property Right, by any third party, including any employee or
former employee of Westbeach. Westbeach has not entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, other than indemnification provisions contained in
Material Undertakings or purchase orders arising in the ordinary course of
business.
x. To the best of its knowledge, Westbeach is not, and will not as a
result of the execution and delivery of this Agreement or the performance of
Westbeach's obligations under this Agreement be, in breach of any license,
sublicense or other agreement relating to the Intellectual Property or any
Third-Party Intellectual Property Right, the breach of which could have a
Material Adverse Effect on Westbeach.
y. To the best of Westbeach's knowledge, each registered trade mark,
service mark and copyright held by Westbeach is valid and subsisting. Except as
disclosed on Schedule 3.12, to the best of Westbeach's knowledge, no Claim of
infringement of any patent, trade mark, service mark or copyright, or violation
of any trade secret or other proprietary right of any third party, has been made
or instituted against Westbeach. There is no outstanding Claim by Westbeach
against any third party for infringement of any Intellectual Property or breach
of any license or undertaking involving Intellectual Property.
z. Westbeach has taken all reasonable and appropriate steps to
protect and preserve the confidentiality of all Intellectual Property not
otherwise protected by patents, patent applications or copyright (Confidential
Information). All use, disclosure or appropriation of Confidential Information
owned by Westbeach by or to a third party has been pursuant to the terms of a
written agreement with that party. To the best of its knowledge, Westbeach has
not unlawfully used, disclosed or appropriated any Confidential Information of
any third party.
3.13 ENVIRONMENTAL MATTERS.
aa. To its knowledge, Westbeach has complied with, and is in
compliance with, all Environmental Laws (as defined in Paragraph 3.13.b.)
applicable to its business, properties and assets. Westbeach has, and Westbeach
has provided to Morrow NS true and complete copies of, each permit, approval,
registration, license
and other authorization required by any Government Entity pursuant to any
Environmental Law applicable to its business, properties and assets, the absence
of which would have a Material Adverse Effect on Westbeach. To Westbeach's
knowledge (including external investigation if appropriate), there is no pending
or threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding, investigation, inquiry or information request by any
Government Entity relating to any Environmental Law, to which Westbeach is a
party or, to Westbeach's knowledge, threatened to be made a party. There is no
pending or outstanding or, to Westbeach's knowledge, threatened, notice of
defect or noncompliance, work order, pollution abatement order, remediation
order or any other order from any Government Entity applicable to Westbeach's
business, properties or assets.
bb. For purposes of this Paragraph 3.13, "Environmental Law" means
any Canadian federal, provincial, local or foreign (including U.S. federal and
state) law, statute, rule or regulation or the common law relating to the
environment or occupational health and safety, including any statute, regulation
or order pertaining to (i) treatment, storage, disposal, generation and
transportation of industrial, toxic or hazardous substances or solid or
hazardous waste, or explosives, radioactive materials, asbestos materials,
special wastes or wastes of any kind or dangerous goods; (ii) air, water and
noise pollution; (iii) groundwater and solid contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
substances, or solid or hazardous waste, or explosives, radioactive materials,
asbestos materials, special wastes or wastes of any kind or dangerous goods,
including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants, chemicals, explosives,
radioactive materials, asbestos materials, special wastes or wastes of any kind
or dangerous goods; (v) the protection of wildlife, marine sanctuaries, wetlands
and fish, including, without limitation, all endangered and threatened species
and protected species; (vi) storage tanks, vessels and containers; (vii)
underground and other storage tanks or vessels, abandoned, disposed or discarded
barrels, containers and other closed receptacles; (viii) health and safety of
employees and other persons, including occupational health and safety laws; and
(ix) manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or oil or petroleum products or solid or hazardous
waste, or explosives, radioactive materials, asbestos materials, special wastes
or wastes of any kind or dangerous goods.
cc. For purposes of this Paragraph 3.13: (i) "environment" has the
meaning set forth in the Waste Management Act (British Columbia), R.S.B.C. 1996,
as amended (the WMA); (ii) "release" means any release, emission, discharge,
injection, dumping, spill, escape or any other means, way or method by which a
substance is introduced into the environment; (iii) "waste" includes air
contaminants, litter, effluent, contamination, refuse, biomedical waste and
other substances designated as waste by the Lieutenant Governor in Council, all
in accordance with the definitions in the WMA; and (iv) for Westbeach sites
within the United States, the terms "environment" and "release" have the
respective meanings set forth in the U.S. federal Comprehensive Environmental
Compensation, Liability and Response Act of 1980.
dd. To Westbeach's knowledge (such knowledge being without inquiry),
there has been no release of any Materials of Environmental Concern (as defined
in Paragraph 3.13.e.) into the environment at any parcel of real property or any
facility presently or formerly owned by Westbeach, or by Westbeach at any parcel
of real property or any facility presently or formerly leased, operated or
controlled by Westbeach or at any parcel of real property or any facility to
which Westbeach has a right to possession, directly or indirectly, through a
Seller or any other party.
ee. For purposes of this Paragraph 3.13, "Materials of Environmental
Concern" means any chemicals, pollutants or contaminants, hazardous substances,
solid wastes, hazardous wastes, toxic materials, special wastes or wastes of any
kind as defined under Environmental Law, including oil or petroleum and
petroleum products, whether or not the same at that point have become waste.
ff. There is no environmental report, investigation or audit in
Westbeach's possession with respect to the operations of, or real property
leased by, Westbeach (whether conducted by or on behalf of Westbeach or a third
party and whether done at the initiative of Westbeach or directed by a
Government Entity or third party) .
3.14 TAXES. Westbeach has duly and timely filed all Tax Returns (as
defined below) required to be filed by it, taking into account extensions of due
dates; has paid all Taxes (as defined below) shown thereon to be due and has
paid all assessments and reassessments, and all other taxes, governmental
charges, penalties, interest and fines due and payable by it on or before the
First Closing; and has provided adequate accruals in accordance with Canadian
GAAP, consistently applied, in its financial statements for any Taxes that have
not been paid, whether or not shown as being due on any Tax Returns. To
Westbeach's knowledge, the Canadian federal income tax liability of Westbeach
has been reviewed by Revenue Canada for all fiscal years up to and including the
fiscal year ended December 31, 1993. Adequate provision has been made for taxes
payable for the current period for which Tax Returns are not yet required to be
filed. Westbeach has withheld and remitted all
Taxes required to have been withheld and remitted, and has complied with all
information reporting requirements, including maintenance of required records
with respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party. Westbeach does not carry
on business in or derive income from any foreign taxing jurisdiction to the
extent that a Taxable presence has been created, other than those for which Tax
Returns have been furnished to Morrow NS. Except as disclosed on the attached
Schedule 3.14: (a) no material claim for Taxes has become a Lien against the
property of Westbeach; (b) to Westbeach's knowledge, no audit of any Tax Return
of Westbeach is being conducted by a Tax Authority; (c) no Tax Authority is now
assessing, or to the best knowledge of Westbeach, threatening to assess, any
deficiency or claim for additional Taxes against Westbeach, and there are no
assessments, reassessments or, to the best knowledge of Westbeach, pending
assessments or reassessments, and no requests for information from a Tax
authority currently outstanding that could affect the Taxes of Westbeach; (d) no
extension or waiver of the statute of limitations on the assessment of any Taxes
has been granted by Westbeach and is currently in effect; (e) any action that
would have the effect of deferring any liability for Taxes for Westbeach from
any period prior to the First Closing to any period after the First Closing has
been disclosed; and (f) Westbeach is not subject to any joint venture,
partnership or other arrangement or contract that is treated as a partnership
for Canadian income tax purposes. Schedule 3.14 contains complete and accurate
information as at , 1997 with respect to: (w) all material Tax elections in
effect with respect to Westbeach, (x) the Tax basis of Westbeach's assets, (y)
the accumulated earnings and profits of Westbeach, and (z) the Tax credit and
non-capital and capital loss carry-forward balances of Westbeach. For purposes
of this Paragraph 3.14, "Tax" (and, with correlative meaning, "Taxes" and
"Taxable" means (i) any net income, alternative minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, business and
occupations, occupation, premium, property, environmental or windfall profit
tax, custom, duty, other tax or governmental fee or other like assessment or
charge of any kind whatsoever, including for greater certainty capital taxes and
the Goods and Services Tax, together with any interest, any penalty or addition
to tax or additional amount imposed by any governmental entity (a Tax Authority)
responsible for the imposition of any such Tax (domestic or foreign); and (ii)
any liability for the payment of any amounts of the type described in clause (i)
as a result of any express or implied obligation to indemnify any other person.
"Tax Return" means any return, statement, report or form required to be filed
with respect to Taxes. Westbeach is in full compliance with all terms and
conditions of any Tax exemption or order of a foreign government, and the
consummation of the
transactions contemplated hereby will not have any adverse effect on the
continued validity and effectiveness of any such Tax exemption or order.
3.15 EMPLOYEE BENEFIT PLANS .
gg. The attached Schedule 3.15 contains a complete and accurate
list of (i) each material employee benefit plan of Westbeach; (ii) each stock
option, stock purchase, phantom stock, stock appreciation right, supplemental
retirement, severance, sabbatical, medical, extended medical, dental, vision
care, disability, employee relocation, cafeteria benefit, dependent care, life
insurance or accident insurance plan, program or arrangement; (iii) each
Westbeach bonus, pension, profit-sharing, savings, deferred compensation or
incentive plan, program or arrangement; (iv) each other Westbeach fringe or
employee benefit plan, program or arrangement that applies to senior management
and that does not generally apply to all employees; and (v) any current or
former employment or executive compensation or severance agreement, written or
otherwise, as to which unsatisfied obligations of greater than Fifteen Thousand
Canadian Dollars (CN$15,000) remain for the benefit of, or relating to, any
present or former employee, consultant or director of Westbeach (collectively,
the Employee Plans).
hh. Westbeach has furnished to Morrow NS a copy of each Employee
Plan and related plan documents (including trust documents, insurance policies
or contracts, employee booklets, summary plan descriptions and other authorizing
documents, and, to the extent still in its possession, any material employee
communications relating thereto).
ii. Except as described on Schedule 3.15, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not (i) entitle any current or former employee, other service
provider or any director of Westbeach to severance benefits or any other payment
(including unemployment compensation, golden parachute, bonus or otherwise),
(ii) increase any benefit otherwise payable or (iii) accelerate the time of
payment or vesting, or increase the amount of compensation due, any such
employee, service provider or director.
jj. There has been no amendment to, written interpretation or
announcement (whether or not written) by Westbeach relating to, or change in
participation or coverage under, any Employee Plan that would materially
increase the expense of maintaining that Plan above the expense level incurred
with respect to that Plan for the most recent fiscal year included in the Annual
Financial Statements.
kk. There is no Undertaking by Westbeach, or legal obligation under
Applicable Laws, to pay any bonus, performance or incentive amount to any
existing
employees or proposed managerial employees and executive officers, except as set
forth on Schedule 3.16. Based on Westbeach's performance for calendar year 1997,
no bonus is owing to any Westbeach employee under Westbeach's Bonus Plan.
Westbeach's Bonus Plan may be terminated for future calendar years.
3.16 EMPLOYEE MATTERS.
ll. The attached Schedule 3.16 contains a complete and accurate list
of all existing employees and all proposed executive officers of Westbeach,
including each employee's age, term of employment, job description, salary and
benefits to which the employee is entitled. Schedule 3.16 also lists each
employment agreement, expense entitlement, and each pension, bonus, profit-
sharing or other agreement or arrangement providing for employee remuneration or
benefits, present or prospective, to which Westbeach is a party or by which it
is bound (collectively, Employee Agreements) and any Undertaking pursuant to
which a party provides services to Westbeach; each Employee Agreement is in full
force and effect, and neither Westbeach nor any other party is in material
default under any Employee Agreement. There has been no claim of default and, to
Westbeach's knowledge, there is no fact or condition which, if continued, or on
notice, will result in a default under any Employee Agreement. Except as set
forth on Schedule 3.16, each individual Employee Agreement is terminable without
penalty, except for statutory and common law severance pay rights, if any, under
provincial law. There is no pending or, to Westbeach's knowledge, threatened,
labor dispute, strike or work stoppage that would have a Material Adverse Effect
on Westbeach. Westbeach is in compliance in all respects with all current
applicable Canadian, provincial, state, territorial, local and foreign
(including United States) laws and regulations (collectively, Applicable Laws)
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices. There is no pending claim against Westbeach under any workers'
compensation plan or policy or for long-term disability. There is no unfair
labor practice complaint pending or, to Westbeach's knowledge, threatened,
against Westbeach, and there is no private Undertaking restricting Westbeach's
ability to relocate, close or terminate any of Westbeach's operations.
b. Westbeach is not a party to any union, collective bargaining
or other labor agreement with any labor organization, union, group or
association with respect to any of its employees, and there is no organizing
drive or application for certification pending with respect to any such labor
organization or union.
3.17 RELATED-PARTY TRANSACTIONS. Except as disclosed on the attached
Schedule 3.17, Westbeach is not indebted to any shareholder, director, officer,
employee or agent of Westbeach (except for amounts due as normal salaries and
bonuses and in reimbursement of ordinary expenses), and no such person is
indebted to Westbeach. No such person has any interest in any property or assets
of Westbeach or has any contractual or other claim, express or implied, of any
kind whatsoever against Westbeach .
3.18 INSURANCE. Except as described on the attached Schedule 3.18,
Westbeach has insurance policies and bonds (collectively, Insurance Policies) of
the type and in amounts customarily carried by persons conducting businesses or
owning assets similar to those of Westbeach. Schedule 3.18 contains a complete
and accurate list of all Insurance Policies, including in each case applicable
coverage limits, deductibles and policy expiration dates. There is no material
claim pending under any Insurance Policy as to which Westbeach has received a
denial, or, to Westbeach's knowledge, which coverage has been questioned, denied
or disputed by the underwriters of the Insurance Policies. All premiums due and
payable under all Insurance Policies have been paid and Westbeach is otherwise
in compliance in all material respects with the terms of each Insurance Policy.
Westbeach has no knowledge of any threatened termination of, or material premium
increase with respect to, any Insurance Policy. To the knowledge of Westbeach,
each Insurance Policy is in full force and effect and will continue to be in
full force and effect following the consummation of the transactions
contemplated hereby.
3.19 COMPLIANCE WITH LAWS. Westbeach, to its knowledge, has complied
with, is not in violation of and has not received any notices of violation with
respect to, any Applicable Law with respect to the conduct or ownership of its
business, except for such violation or failure to comply as could not be
reasonably expected to have a Material Adverse Effect on Westbeach.
3.20 MAJOR CUSTOMERS. The attached Schedule 3.20 contains a complete and
accurate list of each of Westbeach's customers for each of the two most recent
fiscal years, which individually accounted for more than five percent (5%) of
the total dollar amount of Westbeach's net sales, showing the total dollar
amount of net sales to each such customer during each year. No customer has
informed Westbeach that it will not continue to be a customer of Westbeach after
the First Closing at substantially the same level of purchases and based on
general credit or other information on the customer, Westbeach has no reason to
believe the customers will not continue to be customers of Westbeach after the
First Closing at substantially the same level of purchases. Westbeach has not
knowingly breached any Undertaking with any customer of Westbeach so as to
provide a benefit to Westbeach that was not intended
by the parties, or engaged in any conduct that is unlawful, outside Westbeach
policies or could reasonably be viewed as fraudulent as a general business
practice with respect to any customer of Westbeach.
3.21 SUPPLIERS. No supplier of Westbeach has indicated to Westbeach that
it will stop, decrease the rate of or materially increase the prices for
supplying materials, products or services to Westbeach. Westbeach has not
knowingly breached any Undertaking with any supplier of Westbeach so as to
provide a benefit to Westbeach that was not intended by the parties, or engaged
in any conduct that is unlawful, outside Westbeach policies or could reasonably
be viewed as fraudulent as a general business practice with respect to any
supplier of Westbeach.
3.22 INVENTORY. All inventories of raw materials, work-in-process and
finished goods of Westbeach, together with related packaging materials
(collectively, Inventory), reflected in the Annual and Interim Financial
Statements consist of a quality and quantity usable and saleable in the ordinary
course of business, have commercial value at least equal to the value shown on
those balance sheets or are subject to purchase obligations by customers or
suppliers at that value and are valued on a moving average in accordance with
Canadian GAAP, consistently applied. All Inventory purchased since the date of
such balance sheet consists of a quality and quantity usable and saleable in the
ordinary course of business. Except as set forth on the attached Schedule 3.22,
all Inventory is located on premises owned or leased by Westbeach. Eighty-five
percent (85%) of the work-in-process contained in Inventory (including work-in-
process by third parties that constitute items in process of production) are
covered by contracts or open orders taken in the ordinary course of business,
from regular customers of Westbeach with credit consistent with past credit
policies of Westbeach; neither Westbeach nor any such customer is in material
breach of the terms of any obligation to the other; and, based on Westbeach's
knowledge, no valid grounds exist for any counterclaim or set-off of amounts
billable to those customers upon the completion of orders to which work-in-
process relates. To Westbeach's knowledge, all work-in-process is of a quality
ordinarily produced in accordance with the requirements of the orders to which
the work-in-process is identified, and will require no rework with respect to
work performed before the First Closing, except for rework on certain items of
Westbeach outerwear having a cost of no more than Twenty Thousand Canadian
Dollars (CN$20,000).
3.23 PRODUCT WARRANTY AND PRODUCT LIABILITY. The attached Schedule 3.23
contains a true and complete copy of Westbeach's standard warranty or warranties
for its products. There has been no variation from those warranties, except as
set forth on Schedule 3.23. Except as stated therein or required by law, there
is no warranty, commitment or obligation with respect to Westbeach's performance
of
services. Schedule 3.23 contains a description of each product liability claim
and similar Claim relating to products sold or services rendered, which are
presently pending or, to Westbeach's knowledge, threatened, or which have been
asserted or commenced against Westbeach within the last five (5) years, in which
a party thereto either requests injunctive relief (whether temporary or
permanent) or alleges damages (whether or not covered by insurance). Except as
disclosed on Schedule 3.23, there are no defects in Westbeach's products or, to
Westbeach's knowledge, in the products it purchases from others for resale in
its retail stores, that would adversely affect the performance of products
Westbeach manufactures or create an unusual risk of injury to persons or
property. The manufacturing of Westbeach's products has been designed or
performed so as to meet and comply with all Applicable Laws and applicable
governmental and industry standards and specifications currently in effect, and
has received all governmental and industry approvals necessary to allow their
sale. Westbeach has no reserve for product warranty or product liability claims.
3.24 MINUTE BOOKS. Westbeach's minutes books made available to Morrow NS
contain complete and accurate summaries of all meetings of directors and
shareholders or actions by written consent since January 1994, and reflect all
transactions referred to in those minutes accurately in all material respects.
3.25 PAYMENTS. No director or officer of Westbeach nor, to Westbeach's
knowledge after normal review of internal expense records and expense
reimbursements, any agent, employee or other person acting on behalf of
Westbeach, has, directly or indirectly, paid any fee, commission or other sum of
money or delivered any item of property or anything of value, however
characterized, to any finder, agent, customer, government official or other
party, in Canada, the United States or any other country, that in any manner is
related to Westbeach's business or operations, and that has violated any
Applicable Law. Neither Westbeach, nor, to its knowledge, any agent, employee or
other person acting on behalf of Westbeach or any other party, has accepted,
received, made or given any contribution, payment, gift, expenditure or other
thing of value that is unlawful, outside Westbeach policies or could reasonably
be viewed as fraudulent as a general business practice, based on normal review
of orders and other relevant Westbeach documents. Neither Westbeach nor any
officer, director, agent or employee thereof has participated, directly or
indirectly, in any boycott or similar practice.
3.26 RETURN OF SHIPMENTS. Except as set forth on the attached Schedule
3.26, since June 30, 1997, there have been no cancellations of purchase orders
or contracts by any of Westbeach's customers, or shipments of Westbeach's
products that have been returned by customers, or that Westbeach has authorized
to be so returned, or the acceptance of which has been rejected by customers for
any reason
whatsoever, except for such returns and rejections of items occurring in the
ordinary course of business and not exceeding Fifteen Thousand Canadian Dollars
(CN$15,000) in the aggregate. Schedule 3.26 also states the terms upon which
orders for goods may be cancelled or goods returned to Westbeach following
shipping and delivery.
3.27 BROKERS' AND FINDERS' FEES. Except as acknowledged in Paragraph 2.4
of the Agreement, Westbeach has not incurred, and will not incur, directly or
indirectly, any liability for brokerage or finders' fees, agents' commissions,
investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
3.28 INFORMATION. Westbeach has delivered to Morrow NS sufficient
information concerning Westbeach to enable Morrow NS and Morrow to comply with
their disclosure obligations to Westbeach's shareholders.
3.29 ACCOUNTS RECEIVABLE. All of Westbeach's trade accounts and other
documents and notes receivable in respect of products shipped or services
rendered (collectively, the Accounts Receivable) represent amounts receivable
for merchandise actually delivered or services actually provided (or, in the
case of non-trade accounts or notes, represent amounts receivable in respect of
any bona fide business transactions), have arisen in the ordinary course of
business, and are not subject to any known counterclaims or offsets. All
Accounts Receivable are fully collectible in the normal and ordinary course of
business within six (6) months of the First Closing except to the extent of
reserves for uncollectible accounts set forth in the First Closing Date Balance
Sheet. The attached Schedule 3.29 lists, for each of the fiscal years ending
December 31, 1996 and December 31, 1995, the amount of Accounts Receivable
written off and the amount of Westbeach's provisions for doubtful accounts.
Each sales order for Westbeach's products from a distributor in an amount
exceeding Seventy-Five Thousand Canadian Dollars (CN$75,000) for delivery
outside the United States or Canada is fully secured by an irrevocable letter of
credit.
3.30 DEBENTURES.
a. With respect to the debentures issued by Westbeach under the
Trust Indenture dated October 7, 1994 between Westbeach and British Columbia
Mercantile Management Corporation, as trustee (the 1994 Debentures): (i) the
aggregate principal amount of 1994 Debentures outstanding is Seven Hundred
Thousand Canadian Dollars (CN$700,000); (ii) the prepayment penalty is Seventy
Thousand Canadian Dollars (CN$70,000); and (iii) all interest is paid current.
b. With respect to the debentures issued by Westbeach under the
Trust Indenture dated July 16, 1996 between Westbeach and British Columbia
Mercantile Management Corporation, as trustee (the 1996 Debentures): (i) the
aggregate principal amount of 1996 Debentures outstanding is Two Million One
Hundred Thirty Thousand Canadian Dollars (CN$2,130,000); (ii) there is no
prepayment penalty; and (iii) all interest under the 1996 Debentures is paid
current.
3.31 B.C. CONTINUATION. The continuation of Westbeach into the Province of
British Columbia was accomplished with the consent of one hundred percent (100%)
of Westbeach's shareholders.
3.32 DISCLOSURE. No representation or warranty made by Westbeach in this
Exhibit A, in any Schedule referenced herein or in any certificate furnished by
Westbeach pursuant to this Agreement, when all such documents are read together
in their entirety, contain or will contain at the First Closing any untrue
statement of a material fact relating to Westbeach, or omit or will omit at the
First Closing to state any material fact relating to Westbeach necessary in
order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading; excluding, however, the impact
of general industry conditions and factors, which are not specific to Westbeach,
such as weather, changes in industry growth rates, general economic conditions,
proposed governmental policies on exports or taxation, and similar factors.
Westbeach has delivered or made available true and complete copies of each
document that has been requested by Morrow NS or Morrow, or their counsel, in
connection with their legal and accounting review of Westbeach.
EXHIBIT B
INDEMNIFICATION
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in this Agreement, and all statements contained in any
exhibit, schedule, certificate or other document delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby, shall be
deemed to constitute representations and warranties of the party making or
delivering the same. All such representations and warranties shall survive the
Closing for a period of one (1) year after the First Closing, except that the
representations and warranties in Paragraphs 2.2 (Title to Securities), 3.2
(Capitalization), 3.27 and 4.5 (Brokers' and Finders' Fees) of the Agreement
shall survive indefinitely after the Closing Date (Surviving Indemnities). In
each case, the last day of the applicable survival period is referred to herein
as the Survival Date. If notice of one (1) or more claims subject to
indemnification is given on or before the Survival Date, the representation and
indemnification rights related thereto set forth in this Exhibit B shall
survive, subject to any applicable statute of limitations, until such claims
(but not other claims and not timely raised) have been finally resolved and all
indemnification rights have been satisfied.
9.4 INDEMNIFICATION.
a. BY THE SIGNIFICANT SHAREHOLDERS. The Significant Shareholders
jointly and severally shall indemnify and hold harmless Morrow NS, Morrow and
Morrow LLC, and their respective officers, directors, employees and agents, from
and against any and all Losses incurred by Morrow NS, Morrow or Morrow LLC
arising out of or in connection with:
(1) Any breach or inaccuracy of any representation or
warranty made by any of the Significant Shareholders in Paragraph 2 of the
Agreement.
(2) Any breach or inaccuracy of any representation or
warranty made by Westbeach in Paragraph 3 of the Agreement.
(3) Any failure by Westbeach to fulfill any of its
covenants or other agreements hereunder.
(4) Any liability arising out of the ongoing Revenue Canada
audit disclosed in Schedule 3.14, notwithstanding the expiration of Westbeach's
representations and warranties regarding Taxes in Paragraph 3.14 of Exhibit A.
(5) Any liability arising out of the potential trademark
infringement regarding "Westbeach Streetwear" in Japan disclosed in Schedule
3.12, notwithstanding the expiration of Westbeach's representations and
warranties regarding Intellectual Property in Paragraph 3.12 of Exhibit A.
(6) Any liability exceeding Five Thousand Canadian Dollars
(CN$5,000) in the aggregate arising with respect to Huntingdon Mills or North
Pole, suppliers with which Westbeach has quality or billing disputes as
disclosed in Schedule 3.6 (Absence of Certain Changes).
b. BY MORROW NS. Morrow NS, Morrow and Morrow LLC, jointly and
severally, shall indemnify and hold harmless Sellers from and against any and
all Losses incurred by Sellers arising out of or in connection with:
(1) Any breach or inaccuracy of any representation or
warranty made by Morrow NS, Morrow or Morrow LLC in this Agreement.
(2) Any failure by Morrow NS, Morrow or Morrow LLC to
fulfill any of their respective covenants or other agreements hereunder.
Seller's rights to indemnification hereunder shall be in
addition to any provided by statute in connection with the offer and sale of
securities.
9.5 INDEMNIFICATION PROCEDURE. Any party will notify the other
parties if that party has knowledge of the basis for any claim to which the
indemnification obligations in this Exhibit B apply. Promptly after receipt by
a party (the Indemnified Party) of notice of any claim by a third party or
otherwise that might give rise to indemnification hereunder, the Indemnified
Party shall notify the other party (the Indemnifying Party) in writing
specifying, in reasonable detail, the nature and amount of the claim and
including supporting documentation to the extent available. The Indemnifying
Party shall be entitled to assume and have sole control of the defense and
settlement of such action or claim and shall notify the Indemnified Party
whether or not it will assume such control within ten (10) days after receipt of
the Indemnified Party's notice; provided, however, that:
c. The right to assume and have sole control shall not apply to
claims seeking an injunction, restraining order, declaratory relief or other
non-monetary relief against the Indemnified Party.
d. The Indemnified Party shall be entitled to participate in the
defense of the claim and, in connection therewith, to employ counsel at its own
expense.
e. Without the Indemnified Party's prior written consent, which
consent shall not be unreasonably withheld, the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement that requires
any action other than the payment of money.
f. If the Indemnifying Party elects to assume control of the
defense of any action in accordance with the foregoing provisions, (i) the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
fees, costs and expenses incurred by the Indemnified Party in connection with
the defense thereof and (ii) the Indemnified Party shall fully cooperate with
the Indemnifying Party in such defense. If the Indemnifying Party does not
assume control of the defense of the claim in accordance with the foregoing
provisions, the Indemnified Party shall have the right to defend such claim, in
which case the Indemnifying Party shall pay all reasonable costs and expenses of
such defense. The Indemnified Party shall conduct such defense in good faith and
shall have the right to settle the matter with the Indemnifying Party's prior
written consent, which consent shall not be unreasonably withheld.
g. For purposes of the indemnification obligations hereunder,
the decision of a majority in interest of the Significant Shareholders shall
bind all of the Significant Shareholders.
9.6 LIMITS ON INDEMNIFICATION. Notwithstanding the foregoing:
h. The indemnification obligations hereunder shall not apply
unless the Losses exceed Ten Thousand Canadian Dollars (CN$10,000) for a single
incident or Fifty Thousand Canadian Dollars (CN$50,000) in the aggregate.
b. The maximum aggregate amount of the Significant Shareholders'
liability as Indemnifying Parties under this Exhibit B shall be limited to the
dollar amounts set forth on Schedule 1.3.b. to the Agreement, unless any of the
Significant Shareholders had actual knowledge of the falsity of the related
representation or warranty.
9.7 EXCLUSIVE REMEDY. In the absence of fraud, the indemnification
provided in this Exhibit B shall constitute the exclusive remedy of the parties
and their respective successors and assigns from and against any and all Losses
asserted against, resulting to, imposed upon or incurred or suffered by, any of
them, directly or
indirectly, as a result of, or based upon or arising from the breach of any
representation or warranty in or pursuant to this Agreement.
9.8 CHARACTERIZATION OF INDEMNITY PAYMENTS. Any indemnification
payments made pursuant to this Agreement shall be treated by the parties for Tax
purposes as an adjustment to the Purchase Price, unless otherwise required by
applicable law.
9.9 PAYMENT TERMS. If all or part of any indemnification obligation
under this Agreement is not paid when due, the Indemnifying Party shall pay the
Indemnified Party interest thereon for each day from the date the amount became
due until the date of payment in full, payable on demand, at a rate of twelve
percent (12%) per annum.
9.10 OTHER INDEMNIFICATION MATTERS. Morrow NS's claims pursuant to
the foregoing indemnification provisions shall not be limited by any examination
made by or on behalf of Morrow NS or its Subsidiaries, the knowledge of Morrow
NS or its Subsidiaries or any of their respective officers, directors,
shareholders, employees or agents, or the acceptance by Morrow NS of any
certificate or opinion. Seller's claims pursuant to the foregoing
indemnification provisions shall not be limited by any examination made by
Seller or on behalf of Seller, the knowledge of Seller, or its respective
officers, directors, shareholders, employees, or agents, or the acceptance by
Seller of any certificate or opinion, except that Seller is presumed to have
read and understood all materials provided under Paragraph 2.3 of the Agreement.
In any action for indemnification under Paragraph 9.4.b.(1), Sellers:
i. Will be deemed to have relied on the representations and
warranties of Morrow NS, Morrow and Morrow LLC in agreeing to the transactions
contemplated by the Agreement.
j. Will not be required to prove that a given misrepresentation
by Morrow NS, Morrow or Morrow LLC was intentional.
9.11 CONTRIBUTION. The Significant Shareholders have indicated they
may enter into a contribution agreement with respect to their indemnification
obligations hereunder. Any such contribution agreement shall not affect the
Significant Shareholders' indemnification obligations hereunder to Morrow NS,
Morrow and Morrow LLC, which obligations are joint and several.
EXHIBIT C
ARBITRATION
1. SELECTION OF ARBITRATOR. Within ten (10) days after a party gives
notice of a dispute to be submitted to arbitration, that party shall select an
arbitrator from among the following accounting firms in the order listed below,
provided that the parties shall eliminate any such firm which, at the time of
the dispute subject to arbitration, is handling any matter for any party with an
interest in the arbitration:
a. Iain MacKay
MacKay & Partners
1190 Hornby Street, Suite 1000
Vancouver, BC
b. Bill Davidson
Davidson & Company
609 Graville Street, Suite 1270
Vancouver, BC
If none of the arbitrators listed above is available at the time of
the dispute subject to arbitration, an arbitrator shall be appointed in
accordance with the Commercial Arbitration Act (British Columbia).
2. DECISION BY ARBITRATOR. The arbitrator shall conduct the arbitration
in accordance with the rules of the Commercial Arbitration Act (British
Columbia) then in effect, provided that:
a. The parties shall submit their evidence to the arbitrator within
fifteen (15) days of its selection.
b. The arbitrator shall render its decision within fifteen (15) days
thereafter.
3. EXPENSES. The arbitrator's expenses shall be allocated among the
parties as determined by the arbitrator, which shall be paid at its normal
billing rates, together with reasonable disbursements and including expenses of
legal counsel retained by the arbitrator as deemed necessary or appropriate.
4. HOLD HARMLESS. The parties shall hold the arbitrator harmless with
respect to its decision regarding the dispute, unless the arbitrator acts with
gross negligence in rendering its decision.
WESTBEACH SNOWBOARD CANADA LTD.
ALLOCATION OF CONSIDERATION
-------------------------------------------------------------------------------------------------------
Non-Callable Common Warrants $8.00 Options $5.00 Options
-------------------------------------------------------------------------------------------------------
Morrow Shares Morrow Morrow Morrow
-------------------
Cash Escrow Non Escrow Cash Shares Cash Shares Cash Shares
------------------------------------------------------------------------------------------------------------------------------
Mark Allinoll $ 123,535 3,308 27,145 $ - - $ - - $ - -
Dennis Wilson $ 456,812 12,231 100,380 $ - - $ - - $ 4,355 1,074
Scott Sibley $ 456,812 12,231 100,380 $ - - $ - - $ - -
E. Jane Sibley $ 34,437 - 8,489 $ - - $ - - $ - -
Richard Mellon $ 456,812 12,231 100,380 $ - - $ - - $ - -
Mariaserena Mellen $ 34,437 - 8,489 $ - - $ - - $ - -
David A. Hallwell $ 17,218 - 4,245 $ 20,484 5,050 $ - - $ - -
Fiona M. Hallwell $ 17,218 - 4,245 $ 20,484 5,050 $ - - $ - -
BC Mercantile $ 172,182 - 42,446 $ 204,844 50,497 $ - - $ - -
356679 BC Ltd. $ 8,809 - 1,122 - - $ - - $ - -
Todd Allinoll $ 3,444 - 849 - - $ - - $ - -
A. Klopfer & Assoc. $ 8,609 - 2,122 - - $ - - $ - -
G. Alexander Family $ - - - $ 5,121 1,262 $ - - $ - -
Jennifer Bell $ 1,722 - 424 - - $ - - $ - -
James M.I. Bruce $ - - - $ 10,242 2,252 $ - - $ - -
Scott Cary $ - - - $ 1,024 252 $ - - $ - -
Angela Chyzyk $ 1,722 - 424 $ - - $ - - $ - -
George Fisher $ 6,887 - 1,698 $ - - $ - - $ - -
Jay Gundzlk $ 1,722 - 424 $ - - $ - - $ - -
Barry Hallwell $ 8,608 - 2,122 $ 20,484 5,050 $ - - $ - -
Jone Hallwell $ - - - $ 10,242 5,525 $ - - $ - -
Douglas Irwin $ - - - $ 20,484 5,050 $ - - $ - -
Levante Inc. $ - - - $ 102,422 25,250 $ - - $ - -
Jeffrey D. McCord $ 1,722 - 424 $ - - $ - - $ - -
Mark D.Mcintyre $ 1,722 - 424 $ - - $ - - $ - -
P. Blair Muflin $ - - - $ - - $ - - $ 8,710 2,147
Dean H. Smith $ 17,218 - 4,245 $ 20,484 5,050 $ - - $ - -
David K.Suzuki $ 1,722 - 424 $ - - $ - - $ - -
Tracey C. Wood $ 1,722 - 424 $ - - $ - - $ - -
----------- -------- --------- ----------- -------- ------- ------- ------- -------
Total $ 1,834,893 40,001 412,325 $ 436,315.0 107,561 $ - - $13,065 3,221
Custodian Holdback
Control Total
--------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
$2.00 Option Preferred Shares Cash TOTAL
------------------------------------------------------------------------------------------
Morrow Morrow Callable MORROW
Cash Shares Cash Shares Shares CASH SHARES
--------------------------------------------------------------------------------------------------------------------
Mark Allinoll $ - - $ 4,465 1,101 $ 1,200 $ 129,200 31,554
Dennis Wilson $ - - $ 16,743 4,127 $ - $ 477,910 117,812
Scott Sibley $ - - $ 16,743 4,127 $ - $ 473,555 116,738
E. Jane Sibley $ - - $ - - $ 24,000 $ 58,437 8,489
Richard Mellon $ - - $ 18,743 4,127 $ - $ 473,555 118,738
Mariaserena Mellen $ - - $ - - $ 24,000 $ 58,437 8,489
David A. Hallwell $ - - $ - - $ 12,000 $ 49,702 9,295
Fiona M. Hallwell $ - - $ - - $ 12,000 $ 49,702 9,295
BC Mercantile $ - - $ - - $ 121,200 $ 498,226 92,943
356679 BC Ltd. $ - - $ - - $ 8,000 $ 14,609 2,122
Todd Allinoll $ - - $ - - $ 2,400 $ 5,844 649
A. Klopfer & Assoc. $ - - $ - - $ 6,000 $ 14,609 2,122
G. Alexander Family $ - - $ - - $ - $ 5,121 1,262
Jennifer Bell $ - - $ - - $ 1,200 $ 2,922 424
James M.I. Bruce $ - - $ - - $ - $ 10,242 2,525
Scott Cary $ - - $ - - $ - $ 1,024 252
Angela Chyzyk $ - - $ - - $ 1,200 $ 2,922 424
George Fisher $ - - $ - - $ 4,800 $ 11,687 1,698
Jay Gundzlk $ - - $ - - $ 1,200 $ 2,922 424
Barry Hallwell $ - - $ - - $ 6,000 $ 35,093 7,172
Jone Hallwell $ - - $ - - $ - $ 10,242 2,525
Douglas Irwin $ - - $ - - $ - $ 20,484 5,050
Levante Inc. $ - - $ - - $ - $ 102,422 25,250
Jeffrey D. McCord $ - - $ - - $ 1,200 $ 2,922 424
Mark D.Mcintyre $ - - $ - - $ 1,200 $ 2,922 424
P. Blair Muflin $ 31,033 7,650 $ - - $ - $ 39,743 9,797
Dean H. Smith $ - - $ - - $ 12,000 $ 49,702 9,295
David K.Suzuki $ - - $ - - $ 1,200 $ 2,922 424
Tracey C. Wood $ - - $ - - $ 1,200 $ 2,922 424
-------- ------ ---------- -------- ---------- ---------- ----------
Total $ 31,033 7,650 $ 54,694 13,482 $ 240,000 $2,610,000 584,240
Custodian Holdback $ 500,000 -
---------- ----------
Control Total $3,110,000 584,240
--------------------------------------------------------------------------------------------------------------------
Westbeach Snowboard Canada Ltd.
Allocation of Debenture Repayment
------------------------------------- ---------
1994 Debenture 1996
-------------------------------------
PrePmt Debenture
Debenture Penalty Total
------------------------------------------------------------------- ---------
Mark Allinott $ 3,000 $ 300 $ 3,300 $ -
Dennis Wilson $ - $ - $ - $ -
Scott Sibley $ - $ - $ - $ -
E. Jane Sibley $ 60,000 $ 6,000 $ 66,000 $ -
Richard Mellen $ - $ - $ - $ -
Mariaserena Mellen $ 60,000 $ 6,000 $ 66,000 $ -
David A. Halliwell $ 30,000 $ 3,000 $ 33,000 $ 100,000
Fiona M. Halliwell $ 30,000 $ 3,000 $ 33,000 $ 100,000
BC Mercantile $ 303,000 $ 30,000 $ 333,000 $1,000,000
358679 BC Ltd. $ 15,000 $ 1,500 $ 16,500 $ -
Todd Allinott $ 6,000 $ 600 $ 6,600 $ -
A. Klopfer & Assoc. $ 15,000 $ 1,500 $ 16,500 $ -
G. Alexander Family $ - $ - $ - $ 25,000
Jennifer Bell $ 3,000 $ 300 $ 3,300 $ -
James M.I. Bruce $ - $ - $ - $ 50,000
Scott Cary $ - $ - $ - $ 5,000
Angela Chyzyk $ 3,000 $ 300 $ 3,300 $ -
George Fisher $ 12,000 $ 1,200 $ 13,200 $ -
Jay Gundzlk $ 3,000 $ 300 $ 3,300 $ -
Barry Halliwell $ 15,000 $ 1,500 $ 16,500 $ 100,000
Ione Halliwell $ - $ - $ - $ 50,000
Douglas Irwin $ - $ - $ - $ 100,000
Levante Inc. $ - $ - $ - $ 600,000
Jeffrey D. McCord $ 3,000 $ 300 $ 3,300 $ -
Mark D. McIntyre $ 3,000 $ 300 $ 3,300 $ -
P. Blair Mullin $ - $ - $ - $ -
Dean H. Smith $ 30,000 $ 3,000 $ 33,000 $ 100,000
David K. Suzuki $ 3,000 $ 300 $ 3,300 $ -
Tracey C. Wood $ 3,000 $ 300 $ 3,300 $ -
--------- -------- --------- ----------
Total $ 600,000 $ 60,000 $ 660,000 $2,130,000
Custodian Holdback
Control Total
------------------------------------- ----------
SCHEDULE 1.2 B (2)
ESCROW ALLOCATION
--------------------------------------------------------------------------------
------------------------------------------
NAME NUMBER OF MORROW
SHARES
------------------------------------------
Mark Allinott 3,308
------------------------------------------
Dennis Wilson 12,231
------------------------------------------
Scott Sibley 12,231
------------------------------------------
Richard Mellen 12,231
------------------------------------------
TOTAL 40,000
------------------------------------------
SCHEDULE 1.3.A
PURCHASE PRICE ADJUSTMENT LIMITS
--------------------------------------------------------------------------------
--------------------------------------------------
SHAREHOLDER INDIVIDUAL LIMIT IN
DOLLARS
--------------------------------------------------
Mark Allinott $172,021
--------------------------------------------------
Dennis Wilson $636,401
--------------------------------------------------
Scott Sibley $636,401
--------------------------------------------------
Richard Mellen $636,401
--------------------------------------------------
CUMULATIVE LIMIT $2,081,223
--------------------------------------------------
[_] Calculation of total proceeds reflects pro-rata Class A Common Shares and
Preference Shares and is net of transaction costs.
[_] Adjustments to number of Morrow shares is calculated at US$5.00 per share
and an exchange rate of 1.3693
SCHEDULE 3.1
DOCUMENTS PROVIDED TO MORROW
1. Complete list of all subsidiaries
2. Year end consolidated financial statements for
. 1996
. 1995
. 1994
. 1993
3. Interim financial statements for
. June 1997
. August 1997
. September 1997
4. Copies of 1997 forecasts dated
. August
. October 22/nd/
5. Philip Morris "Cease and Desist" order
6. Copies of the following insurance policies
. Westbeach Canada - commercial liability
. Westbeach Canada - property
. Westbeach Canada - cargo
. Westbeach Canada/ USA - accounts receivable
. Westbeach USA - property
. Westbeach USA - commercial liability
. Westbeach GmbH/ UK - Accounts Receivable
7. Evidence of renewal of Westbeach Canada commercial and liability insurance
policy
8. Westbeach USA insurance policy
9. Lease Agreements:
. 60 West 7/th/ Head Office
. 4/th/ Avenue Retail Store
. Whistler Retail Store
. Bellevue, Washington Retail Store
10. Agreement with Rainer Diepolder (Sport Fashion Labels)
11. Agreement with Angela Gram
12. Agreement with Tom Bollum
13. Agreement with B.C. Mercantile
14. Computer Purchase agreement with Barbara Saunders
15. Employment agreements with
. Blair Mullin
. Scott Sibley
. Dennis Wilson
. Mark Allinot
16. List of Sales Reps by region
17. List of Distributors by region
18. List of all direct customers
19. List of employees of Westbeach Canada and all subsidiaries including
salaries
20. Copy of the Westbeach compensation policy
21. Copy of the option benefits package available to employees
22. List of all significant contractors
23. List of all outstanding stock options
24. List of all outstanding warrants
25. Copy of request letter from Revenue Canada auditor
26. Copy of Bank of Nova Scotia Operating Line agreement
27. Copy of offering memorandum for outstanding debentures
28. Copies of income tax returns for
. Westbeach Snowboard Canada
. 1996
. 1995
. 1994
. Westbeach Snowboard USA
. 1996
. 1995
29. August 31 Accounts Receivable Listings for all Westbeach companies
30. Copy of Westbeach draft Credit Management Policy
31. Listing of all Fixed Asset Additions for 1996 and 1997
32. Copies of all Goods and Services Tax returns from January 1996 to current
33. Copy of Westbeach Shareholder's Agreement
34. Copy of consent resolution of shareholders to amend shareholder's
agreement
35. Copies of the minutes of meetings of the Westbeach Snowboard Canada Board
of Directors and any committees thereof
36. Copy of informal agreement with Cowie and Fox
37. Copy of Royalty agreement with Kevin Young
38. List of patents, trademarks and other intellectual property
39. List of ten largest customers with sales amounts
40. List of all outstanding letters of credit
41. List of all order cancellations for Fall 1997
42. List of all reorders for Fall 1997
43. List of all permits and licenses required to run the business
44. Shipping plan as of October 28, 1997 for remainder of the Fall 1997 program
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.2
CAPITALIZATION
________________________________________________________________________________
[_] Stock Options:
. Blair Mullin 20,000 @ $2.00 - expire 2000
. Blair Mullin 20,000@ $5.00 - expire 2000
. Blair Mullin 20,000 @ $8.00 - expire 2000
. Dennis Wilson 10,000 @ $5.00 - expire 1997
[_] Warrants
. See 1996 Consolidated Financial Statements: Note #5.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.3
SUBSIDIARIES AND AFFILIATES
________________________________________________________________________________
SUBSIDIARIES
[_] Westbeach Snowboard USA Inc. - USA
[_] Westbeach Snowboard Gesellschaft m.b.H. - Austria
[_] Westbeach UK Limited - United Kingdom
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.4
NO CONFLICTS
________________________________________________________________________________
c. Agreements/ Undertakings
[_] Bank of Nova Scotia Operating Line
[_] Operating lease agreements - see S3.11
[_] Notice must be provided within 30 days to Investment Canada re, change
of control
[_] Authorized Dealer Agreement dated May 24, 1995 between The Burton
Corporation and Westbeach Snowboard Canada Ltd.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.5
FINANCIAL STATEMENTS
________________________________________________________________________________
[_] See attached financial statements as at June 30, 1997.
[_] Revenue Canada Audit is outstanding. See letter from Madelaine Woo of
Revenue Canada to Blair Mullin dated September 11, 1997 provided.
[_] Prepaid amounts to suppliers as reflected in June 30, 1997 Balance Sheet
were $70,063.
[_] Adjustment for unaccrued interest on short-term loan from Levante at June
30, 1997 - USD $22,806.
[_] Adjustment for unaccrued fees to independent Directors - CAD $8,500.
[_] Adjustment for recognition of Income Tax liability for Westbeach GmbH as
at September 30, 1996 - ATS 252,000 less accrual ATS 109,897.
[_] No accrual made for Income Tax for Westbeach GmbH or Westbeach UK in
respect of fiscal 1997.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.6
ABSENCE OF CERTAIN CHANGES
________________________________________________________________________________
a. Production of Fall 97 clothing has fallen behind schedule in both Canada
and China. Up to US$250,000 of Fall 97 revenues is at risk due to this
circumstance.
b. Sale of the Homeless trademark in July 1997.
c. Issuance of draft Credit Management Policy. This is being used for Fall
1997 customer account management.
Beginning August Accounts Receivable from Sales Reps have been
reclassified from "Trade Receivables" to "Other Receivables".
e. The Company, as at October 24/th/ 1997, had not completed shipments to the
following customers pursuant to Letters of Credit for which final ship
dates had passed (for details of the LC's see S3.10):/1/
[_] Levante
[_] One Off
[_] John Doe
[_] TEO
The Company does not foresee any cancellation of orders as a result of the
late shipments.
f. Damage Destruction or Loss
[_] Breakins at the West 4/th/ Avenue Retail Store in Vancouver resulted
in the loss of some sample clothing items and loss of a stereo
valued at ~$3,500.
_______________________________________
/1/ Goods will continue to be shipped under these LC's. The fact that the LC
under which payment is being made has expired prior to shipment is considered a
discrepancy. All discrepancies must be accepted by the customer prior to the
turnover of documents giving title to the goods. Once this acceptance has been
given, payment is irrevocable.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
[_] An employee theft of $4,600 at the Whistler Retail Store occurred in
July.
g. Commitments, Transactions, Undertakings
[_] Approval August 20, 1997 for expenditure of CAD $10,250 for Fixed
Assets in the Innsbruck office and warehouse.
[_] Approval given for purchase of "Pick and Pack" software for
approximately $7,000.
[_] Retention of Tom Bollum for three month contract beginning July 1,
1997 to manage the Retail division at $5,000 per month. Contract
terminated as of October 31, 1997.
[_] Retention of Sport Fashion Labels (Rainer Diepolder) as European
Operations Manager effective July 1 at DM 6,500 per month until
December 31, 1997. SFL was previously the company's distributor in
Germany. Pursuant to this agreement, the Company is obligated to
repurchase approximately USD $15,000 of SFL inventory. No commitment
has been made beyond December 31, 1997.
[_] Prepayment of UKP 951.75 for Soltex trade show (Europe)
[_] Retention of Angela Grams as Production Consultant for 12 months
beginning June 1, 1997 at $3,000 per month. Contract cancelable on 30
days notice.
k. The Federal Income Tax audit by Revenue Canada continues.
p. Credit granted under terms of draft Credit Management Policy.
q. Delays in payment to the following suppliers are pending the resolution of
quality disputes (these disputes are in the normal course of business);
[_] Huntingdon Mills (now paid) - maximum potential liability - $10,000
[_] North Pole - maximum potential liability - $10,000
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
s. "Homeless" trademark sold in July.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHSE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.7
LIABILITIES
________________________________________________________________________________
[_] There is a liability in respect of royalties to be paid to one of the
company's team riders for product design and marketing for the Fall 1997
and Fall 1998 outerwear programs. Such royalties are not expected to exceed
$4,700 in 1997 and $10,000 in 1998. See attached letter Royalty for
Designing one Fabric of the 1997 Fall Line./2/ This liability will be
booked as the goods are shipped.
____________________________
/2/ There is no documented agreement with respect to this arrangement other
than the letter referenced.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.8
LITIGATION
--------------------------------------------------------------------------------
[_] Phillip Morris "cease & desist" order was received in December 1996. This
has been acknowledged and complied with.
[_] See documentation provided re, S3.12.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.9
GOVERNMENTAL AUTHORIZATIONS
--------------------------------------------------------------------------------
The following governmental consents, licenses, authorizations are necessary for
the company to carry on business:
[_] City of Vancouver business license for retail operation for 1766 West 4/th/
Avenue.
[_] City of Vancouver business license for manufacturing operation for 60 West
7/th/ Avenue.
[_] Burglar alarm permit for 60 West 7/th/ Avenue
[_] Burglar alarm permit for 1766 West 4/th/ Avenue
[_] Village of Whistler business license
[_] Provincial Social Services Tax registration (BC)
[_] Federal Goods and Services Tax registration
[_] Worker's Compensation Board registration
[_] City of Bellevue [Seattle] business license
[_] Washington State Sales Tax registration
[_] VAT registration - Westbeach GmbH
[_] Austrian Trade License
[_] VAT registration - Westbeach UK
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.10
MATERIAL UNDERTAKINGS
--------------------------------------------------------------------------------
a(i) Obligation for borrowed money
[_] Short term loan from Levante due November 30, 1997
a(ii) Obligation evidenced by bonds or debentures
[_] Bank of Nova Scotia Operating Loan agreement
[_] 1994 Debenture
[_] 1996 Debenture
a(vi) Guaranty of Liabilities or Obligations of Others
[_] Westbeach Canada guarantees the indebtedness of Westbeach USA to
Burton Snowboards
a(vii) Agreement obligating payments or generating receipts of greater than
$15,000
[_] See list of operating leases under S3.11
[_] Agreements for production of Fall 1998 sample line for aggregate
value of ~ $250,000 including;
. fabric commitments Pontex Tiger and Kyodo Sangyo and,
. Cut and sew commitment with Pama (H.K.) Ltd.
[_] Design Consulting agreement with Cowie and Fox Creative
[_] Advertising agreement with Transworld Snowboarding Magazine
[_] Letters of Credit with amounts outstanding as at October 27, 1997
and expiry dates
. As Applicant
.. Pama (H.K.) Ltd. - USD $201,645 expires November 21, 1997
a(viii)Trade agreements concerning the delivery of the company's goods.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
[_] The company maintain agreements with the following Distributors in
the following countries;/3/
. Japan
Levante Inc.
3F 2-13-2 Tamagawadai
Setagaya-Ku, Tokyo
158 Japan
. Sweden
One Off
Klipanvagen 262
71 Angelholm,
Sweden
. Spain - Contorn
. Czech Republic - Stigma
. Finland - SK Import
. Korea - Paramount Trading
. Australia - Empire Distribution
. New Zealand - Alpine Apparel
. Norway
TEO Sports International
Box 475
N - 2601, Lillehammer
Norway
. Switzerland
John Doe AG
Postfach 477
Lagerhausstrasse 18
8401 Winterthur
Switzerland
[_] The company also has Sales Reps earning 8% on Fall sales and 10% on
Spring sales in the following countries;/4/
. Canada
. USA
____________________________
/3/ All Distributors and Sales Reps have exclusive rights to market Westbeach
products in their region. No Distributor or Sales Rep is required to handle
Westbeach products exclusively.
/4/ See attached listing of all of the company's Sales Reps by geographic area.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
. Austria
. United Kingdom
. France
. Holland
[_] The company also has Sales Reps in Germany who receive a 10%
commission on both Spring and Fall sales.
[_] For a list of all Sales Reps and their territories, please see
attached lists.
a(ix) Any agreement granting a lien on any property or asset
[_] Bank of Nova Scotia Operating Loan Agreement
[_] 1994 Debenture Issue
[_] 1996 Debenture Issue
b(i/ii)Agreements effecting employment relationships
[_] Employment agreements
.. Blair Mullin
.. Bonus for 1997 - undetermined
.. Severence benefits - three (3) months on termination twelve (12)
months if on change of control
[_] Employment/ non competition agreements/5/
. Dennis Wilson
. Scott Sibley
. Mark Allinott
[_] Non - competition agreements
. Richard Mellen
[_] BC Mercantile Advisory agreement
__________________________________
/5/ See employment agreements provided.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
[_] Contract with Angela Grams (see S3.6)
[_] Agreement with Reiner Diepolder (see S3.6)
[_] Operating Loan agreement with Bank of Nova Scotia
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.11
TITLE AND CONDITION OF PROPERTY
--------------------------------------------------------------------------------
The company does not own any real property.
The following are real property leased by Westbeach:
[_] Corporate Office and Warehouse
60 west 7/th/ Avenue
Vancouver, BC
[_] Vancouver Retail Store
1766 West 4/th/ Avenue
Vancouver, BC
[_] Whistler Retail Store
119 - 4350 Lorimar Road
Whistler, BC
[_] Whistler Retail Store Manager's Residence
2222 Castle Drive
Whistler, BC
[_] Seattle Retail Store and Warehouse
304 - 105 Avenue NE
Bellevue, Washington 98004
[_] European Office and Warehouse
BachlechnerstraBe.23
A - 6020 Innsbruck, Austria
[_] Sport Fashion Labels (used as transshipment warehouse)
Forststr. 1
86940 Schwifting
Germany/6/
__________________________________
/6/ The Schwifting warehouse is leased by Sport Fashion Labels who carries all
responsibility for payment of the lease. The use of this warehouse is noted in
the agreement with Rainer Diepolder (SFL principal). Westbeach does not have a
copy of the lease. See also, comments under S3.6 re, Sport Fashion Labels
agreement.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
The company is not able to warranty that the premises that it leases do not
encroach on the property of others.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SHCEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.12
INTELLECTUAL PROPERTY
--------------------------------------------------------------------------------
b. List of Patents, Trademarks etc.
[_] See attached schedule
[_] Note that the company's trademark to sell clothing in Japan includes
"special sports clothing" only.
e. See comment under 3.12(b) above
SCHEDULE 3.12
________________________________________________________________________________
1. AUSTRALIA
---------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration Nos: A510416 Class 25
A510417 Class 18
Registration Date: May 10, 1989
Renewal/Expiry date: May 10, 2006.
Original Certificate: Yes
Local Agent: Carter Smith & Beadle, PO Box 557,
Camberwell, Victoria 3124, Australia
Tel: 61 3 9882 0599
Fax: 61 3 9882 9854
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration Nos: A601592 Class 14
A601593 Class 18
A601594 Class 25
A601595 Class 28
Registration Date: April 30, 1993
Renewal/Expiry Date: April 30, 2003
Original Certificates: Yes
Local Agent: Griffith Hack, GPO Box 4164, Sydney NSW 2001,
Australia
Tel: 612 9957 5944
Fax: 612 9957 6288
-1-
________________________________________________________________________________
2. AUSTRIA
-------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 126 322 Classes 18 and 25
Renewal/Expiry date: August 2, 1999.
Original Certificate: No - only copy
Local Agent: Dipl. Ing. Adolf Kretschmer, Dr. Thomas M.
Haffner, Schottengasse 3a, A-1014 Wien 1, Austria
Tel: 43 1 533 25 04
Fax: 43 1 533 92 50
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 147 702 Classes 14, 18, 25 and 28
Registration Date: June 23, 1993
Renewal/Expiry date: June 23, 2003.
Original Certificate: Yes
Local Agent: Erinnerung, Singerstrasse 13, A-1011 Wien, Austria
Tel: 43 1 512 23 02
Fax: 43 1 513 37 09
________________________________________________________________________________
-2-
3. BENELUX
-------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 457928 Classes 18 and 25
Renewal/Expiry date: March 16, 1999.
Original Certificate: No - only copy
Local Agent: Vereenigde, Postbus 87930, DH Den Haag,
Netherlands
Tel: 70 3500 464
Fax: 70 35 227 23
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 534413 Classes 14, 18 and 25
Registration Date: July 15, 1993
Renewal/Expiry date: July 15, 2003.
Registration No. 556385 Class 28
Registration Date: September 13, 1994
Renewal/Expiry Date: September 13, 2004
Original Certificates: Yes
Local Agent: De Brauw Blackstone Westbroek, Rue Brederode 13,
B-1000 Brussels, Belgium
Tel: 32-2 517 94 11
Fax: 32-2 517 94 94
________________________________________________________________________________
-3-
4. CANADA
------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 343,815 Extended to include additional
wares July 15, 1994.
Registration Date: August 12, 1988
Expiry date: August 12, 2003.
Original Certificate: No - copy only
Local Agent: Boughton Peterson Yang Anderson, 2500 - 1055
Dunsmuir Street, PO Box 49290, Vancouver,
BC V7X 1S8
Tel: (604) 687 6789
Fax: (604) 683 5317
(B) THREE SURFBOARDER LOGO & WESTBEACH
Status: Registered
Registration No. 344,461 Extended to include additional
wares July 15, 1994.
Registration Date: September 9, 1988
Renewal/Expiry date: September 9, 2003
Original Certificate: No - copy only
(C) THREE SURFBOARDER LOGO
Status: Registered
Registration No. 357,606 Extended to include additional
wares July15, 1994.
-4-
Registration Date: June 23, 1989
Renewal/Expiry date: June 23, 2004.
Original Certificate: No - copy only
________________________________________________________________________________
5. CZECH REPUBLIC
--------------
(A) WORD MARK (WESTBEACH)
Status: Pending
Application No. 0-100915-95 Classes 18, 25 and 28)
Application Date: June 5, 1995
Local Agent: Associated Law Offices, Vsetecka & Partners,
Halkova 2, 120 00 Praha 2, Czech Republic
Tel: 2 24 21 62 22
Fax: 2 24 22 25 60
________________________________________________________________________________
6. DENMARK
-------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 6401-1990 Classes 18 and 25
Registration Date: September 28, 1990
Renewal/Expiry date: September 28, 2000.
Original Certificate: Yes
Local Agent: Plougmann & Vingtoft, Sankt Annoe Plads 11, Box
3007, DK-1021 Copenhagen K, Denmark
-5-
Tel: 45 33 11 05 66
Fax: 45 33 11 18 87
________________________________________________________________________________
7. EUROPEAN COMMUNITY
------------------
(A) WORD MARK (WESTBEACH)
Status: Pending
Application No. 473744 (Classes 16, 18, 25 and 41)
Application Date: April 10, 1996
Local Agents: Clifford Chance, 200 Aldersgate Street, London EC1A
4JJ, England
Tel: 44 171 600 1000
Fax: 44 171 600 5555
________________________________________________________________________________
8. FRANCE
------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 1436421 Class 25 only.
Renewal/Expiry date: November 20, 1997.
Comments: This was pencilled in on the list which we
received client and Punder Volhard, but we have no
further information or details about this
registration or the agents who filed the original
application.
Original Certificate: No
-6-
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 93458422 Classes 14, 18, 25 and 28.
Registration Date: March 8, 1993
Renewal/Expiry date: March 7, 2003.
Original Certificate: Yes
Local Agent: Clifford Chance, 200 Aldersgate Street, London
EC1A 4JJ, England
Tel: 44 171 600 1000
Fax: 44 171 600 5555
________________________________________________________________________________
9. GERMANY
-------
(A) WORD MARK (WESTBEACH)
Status: Registration expired
Registration No. 1132456 Class 25 only.
Renewal/Expiry date: November 20, 1997.
Comments: Agents instructed to renew before expiry.
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 2045595 Classes 14, 18, 25 and 28.
Registration Date: September 23, 1993
Renewal/Expiry date: January 5, 2003.
-7-
Original Certificate: Yes
Local Agent: Ruschke Lewald Hartmann & Partners,
Pienzenauerstrasse 2, 81679 Munchen, Germany
Tel: 89 98 49 34
Fax: 89 98 71 05
________________________________________________________________________________
10. HONG KONG
---------
(A) WORD MARK (WESTBEACH)
Status: Lapsed
Registration No. B3825/1990 Class 18
B000989/1992 Class 25
Renewal/Expiry date: May 5, 1996 (Class 18)
May 5, 1996 (Class 25)
Original Certificate: Yes
Local Agent: Deacon Graham & Jones, Alexandra House, 3rd-6th
Floors, Hong Kong
Tel: 852 2825 9211
Fax: 852 2810 0431
________________________________________________________________________________
11. ITALY
-----
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 510 394 Class 25 only.
Renewal/Expiry date: November 20, 1997.
-8-
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. RM93C/000461 Classes 14, 18, 25 and 28.
Registration Date: February 17, 1993
Renewal/Expiry date: February 17, 2003.
Original Certificate: Yes
Local Agent: Ing. Barzano & Zanardo Roma S.p.A, 26 Via
Piemonte, 00187 Roma, Italy
Tel: 6 47 43 241
Fax: 6 48 70 273
________________________________________________________________________________
12. JAPAN
-----
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 2334876 Class 21 (Japanese)
Renewal/Expiry date: September 30, 2001.
Original Certificate: Yes
Application No. Not yet available Class 25
Application date: August 7, 1997
Application No. Not yet available Class 28
(B) THREE SNOWBOARDER LOGO
Status: Registered
-9-
Registration No. 3178899 Class 14
3178900 Class 18
Registration Date: July 31, 1996
Renewal/Expiry Date: July 31, 2006
Registration No. 3189122 Class 25
Registration Date: August 30, 1996
Renewal/Expiry Date: August 30, 2006
Registration No. 3205900 Class 28
Registration Date: May 16, 1997
Renewal/Expiry Date: May 16, 2007
Original Certificates: Yes
Local Agents: Kashiwagi Sogo Law Offices, Atago Toyo Building,
3-4 Atago 1-Chome, Minato-ku, Tokyo 105, Japan
Tel: 81 3 5472 5050
Fax: 81 3 5472 5077
(C) REGISTRATIONS ASSIGNED TO WESTBEACH
Three Snowboarder Logo Class 24 (Japan)
Registration No. 2648294
Registration date: April 28, 1994
Renewal/Expiry Date: April 28, 2004
Original Certificates: No
WESTBEACH & Snowboarder Logo Class 24 (Japan)
-10-
Registration No. 2686740
Registration date: July 29, 1994
Renewal/Expiry Date: July 29, 2004
Original Certificate: No
(D) CIRCLE & MAPLE LEAF DESIGN
Status: Pending
Application no.: Not yet available Class 25
Class 28
Application date: August 7, 1997
Local agent: Same as above
________________________________________________________________________________
13. NORWAY
------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 143 228 Classes 18 and 25
Renewal/Expiry date: October 25, 2000
Original Certificate: Yes
Agent: Punder Volhard Weber Axster, Postfach 111442,
Mainzer Landstrasse 46, 6000 Frankfurt Am
Main, Germany
Tel: 69 71 9901
Fax: 69 71 99 600
________________________________________________________________________________
-11-
14. PEOPLE'S REPUBLIC OF CHINA
--------------------------
(A) WORD MARK (WESTBEACH)
Status: Pending in classes 18, 25 and 28
Application Date: August 7, 1996
Local Agent: Shanghai Patent & Trademark Agency, 435 Guiping
Road, Caohejing Hi-Tech Park, Shanghai 200233,
China
Tel: 86 21 64853500
Fax: 86 21 64828651
________________________________________________________________________________
15. SINGAPORE
---------
(A) WORD MARK (WESTBEACH)
Status: Registration expired
Registration No. 3230/89 Class 18
3231/90 Class 25
Expiry date: May 23, 1996.
Comments: Not renewed per client's instructions
Original Certificate: Yes
Agent: Punder Volhard Weber Axster, Postfach 111442,
Mainzer Landstrasse 46, 6000 Frankfurt Am
Main, Germany
Tel: 69 71 9901
Fax: 69 71 99 600
________________________________________________________________________________
-12-
16. SLOVAK REPUBLIC
---------------
(A) WORD MARK (WESTBEACH)
Status: Pending
Application No. Poz-1603-95
Application Date: June 7, 1995
Local Agent: Associated Law Offices, Vsetecka & Partners,
Halkova 2, 120 00 Praha 2, Czech Republic
Tel: 2 24 21 62 22
Fax: 2 24 22 25 60
________________________________________________________________________________
17. SPAIN
-----
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 1322348 Class 18
1322349 Class 25
Registration Date: May 8, 1989
Renewal/Expiry date: May 8, 1999.
Original Certificate: Yes
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 1741411 Class 14
1741412 Class 18
1741413 Class 25
1741414 Class 28
-13-
Expiry date: January 27, 2003.
Original Certificate: Yes
Local Agent: Roeb & Co. S.L., Apartado Postal 365, 28080
Madrid, Spain
Tel: 34 1 555 65 97
Fax: 34 1 556 35 34
________________________________________________________________________________
18. SWEDEN
------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 222 027 Classes 18 and 25.
Registration Date: March 21, 1991
Expiry date: March 22, 2001.
Original Certificate: Yes
Agent: Punder Volhard Weber Axster, Postfach 111442, Mainzer
Landstrasse 46, 6000 Frankfurt Am Main, Germany
Tel: 69 71 9901
Fax: 69 71 99 600
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 253 160 Classes 14, 18, 25 and 28.
Registration Date: November 5, 1993
Renewal/Expiry date: November 5, 2003.
-14-
Original Certificate: Yes
Local Agent: Lagerlof & Leman, Strandvagen 7A, Box 5402, S-
11484 Stockholm, Sweden
Tel: 46 8 665 66 00
Fax: 46 8 667 68 83
________________________________________________________________________________
19. SWITZERLAND
-----------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 371 372 Classes 18 and 25
Renewal/Expiry date: 20 years from the date that the application was
received by the Swiss trade marks office. This may
have been March 16, 1989, but we would have to
check with the previous agent to confirm.
Original Certificate: Yes
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 403 276 Classes 14, 18, 25 and 28
Registration Date: January 4, 1993
Expiry date: January 4, 2013.
Original Certificate: Yes
Local Agent: Novamark S.A., 9 rue du Valais, 1202 Geneva,
Switzerland
Tel: 41 22 738 21 61
Fax: 41 22 731 33 84
-15-
________________________________________________________________________________
20. TURKEY
------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 113 882 Classes 18 and 25
Registration Date: April 7, 1989
Renewal/Expiry date: April 7, 1999.
Original Certificate: Yes
Local Agent: Deris Patents & Trademarks Agency Ltd., PO Box
575, Karakoy, Istanbul, Turkey
Tel: 90 212 252 61 22 23
Fax: 90 212 293 7676
________________________________________________________________________________
21. UNITED KINGDOM
--------------
(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 1327554 Class 25 only
Registration Date: May 22, 2004
Renewal/Expiry date: May 22, 2008.
Original Certificate: No
Local Agent: Page White & Farrer, 54 Doughty Street, London
WC1N 2LS, England
Tel: 44 171 831 7929
Fax: 44 171 831 8040
-16-
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 1522633 Class 14
1522634 Class 18
1522636 Class 28
1522635 Class 25
Registration Date: December 24, 1992
Renewal/Expiry Date: December 24, 1999
Expiry date: December 24, 1999 (for Class 14, 18 & 28).
Original Certificates: Yes
Local Agent: Clifford Chance, 200 Aldersgate Street, London
EC1A 4JJ, England
Tel: 44 171 600 1000
Fax: 44 171 600 5555
________________________________________________________________________________
22. UNITED STATES
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(A) WORD MARK (WESTBEACH)
Status: Registered
Registration No. 1909709 Classes 6, 14, 18, 20, 25 and 28
Registration Date: August 8, 1995
Renewal/Expiry Date: August 8, 2005
Original Certificate: Yes
-17-
(B) THREE SNOWBOARDER LOGO
Status: Registered
Registration No. 1771357 Classes 14, 18, 25 and 28
Registration Date: May 18, 1993
Renewal/Expiry date: May 18, 2003.
Original Certificate: Yes
(C) THREE SNOWBOARDER LOGO (SERVICE MARK)
Status: Registered
Registration No. 2016009 Class 42
Registration Date: November 12, 1996
Renewal/Expiry Date: November 12, 2006
________________________________________________________________________________
-18-
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.14
TAXES
________________________________________________________________________________
b. Tax Audits
[_] Revenue Canada audit is outstanding. See comments under S3.5
c. Tax Authorities Requests for Information
[_] The Revenue Canada auditor has requested working papers related to an
alleged valuation of the company. This valuation has not been provided
and inquiries to the company's auditor and legal counsel indicate that
the valuation was not done.
w. For all tax elections see 1996 Income Tax returns.
x. For current tax basis of the company's assets see 1996 Income Tax returns.
y. For current and accumulated earnings and profits of the Company see year-
end and interim financial statements previously provided.
z. For tax credit and carry - forward information see 1996 Income Tax returns
previously provided.
[_] All tax filings including Income Tax, Goods and Services Tax, Provincial
Sales Tax, employment deductions remittances are up to date.
[_] Canadian tax installments in Canada have been made for the 1997 taxation
year in accordance with the provisions of the Canadian Income Tax Act.
[_] Income Tax liability for recognized in Westbeach GmbH as at September 30,
1996 is ATS 109,897. The draft Austrian Income Tax return as at September
30, 1996 indicates a liability of ATS 252,000.
[_] There has been no recognition of any tax liability for Westbeach GmbH or
Westbeach UK for fiscal 1997.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.15
EMPLOYEE BENEFIT PLANS
________________________________________________________________________________
a.(i) Employee Benefit Plans
[_] Standard company benefits plan (see copy provided)
a.(ii) Stock Options:
[_] See S3.2 for outstanding Stock Options
a.(iii) Bonus Plan
[_] See Compensation Policy provided
a.(iv) Senior Management Plans
[_] The Company has three Key Man insurance policies on senior
management;
. Bank of Nova Scotia
.. Scott Sibley
.. Mark Allinott
.. Dennis Wilson
. 1994 Debenture Issue
.. Scott Sibley
.. Mark Allinott
.. Dennis Wilson
.. Richard Mellen
. 1996 Debenture Issue
.. Blair Mullin
.. Scott Sibley
.. Mark Allinott
.. Dennis Wilson
[_] Mortgage supplement plan through Investor's Group for Scott Sibley
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
a.(v) Severance Agreements:/7/
[_] See comments under S3.10.
[_] P Blair Mullin
[_] Dennis Wilson
[_] Mark Allinott
[_] Scott Sibley
c.(i) Severance Benefits Initiated by Transaction
[_] Blair Mullin - see S3.10
[_] Brian Bacon - Board of Directors resolution calling for success
fee of $25,000 payable on closing./8/
__________________
/7/ See comments under $3.10
/8/ This payment is a liability of the selling shareholders.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.16
EMPLOYEE MATTERS
________________________________________________________________________________
a. Employee matters
[_] Employees and salaries - see attached lists
. Westbeach Canada
. Westbeach USA
. Westbeach GmbH
. Westbeach UK - not applicable, no employees
[_] The Company believes that, as discussed with Morrow, it may have
employee liability obligations not recorded in the books. These
obligations are estimated to be not in excess of $20,000.
[_] Employees are reimbursed for expenses incurred in the performance of
company business. These provisions are not stipulated in any
employment agreements. Acceptance of expense submissions is at the
discretion of the department manager in the context of his or her
operating budget. All employee expense reimbursements are generally
submitted within thirty (30) days and there are no material
outstanding expense reimbursement claims for periods beyond thirty
(30) days.
[_] To the best of the Company's knowledge, it is in compliance in all
respects with its employee related obligations in the USA and Austrian
subsidiaries.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.17
RELATED PARTY TRANSACTIONS
________________________________________________________________________________
[_] Advisory agreement with BCMC.
[_] Consulting agreement with Tom Bollum who is a director of Westbeach.
[_] Rental of condo from Whistler Retail Store Manager.
[_] The Company is not indebted to any shareholder, director, officer, employee
or agent of the Company except that some individuals in the aforementioned
groups are debenture holders.
[_] No shareholder, director, officer, employee or agent of the Company is
indebted to the Company with the exception of one employee who has an
employee loan for a computer purchase repayable monthly over one year
without interest (see attached).
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.18
INSURANCE POLICIES
________________________________________________________________________________
List of all insurance policies:
[_] Property Insurance Canada: Policy expires August 1, 1998 and is currently
being renewed. See copy of policy provided.
[_] Property Insurance USA: Policy runs for one year beginning November 19,
1996. Coverage and deductible vary according to incident - see copy of
policy provided.
[_] Property Insurance Austria: Policy expires August 1, 2008. Coverage and
deductible vary according to incident - see summary of terms attached.
[_] Cargo: Policy amount CAD $300,000 by sea, rail, truck or air with a CAD
$100,000 limit on any one package shipped by air; policy effective November
29, 1996; deductable CAD $200 per claim.
[_] Accounts Receivable Canada and USA: Policy Amount - $400,000 (nominal
dollars); one year term commencing July 1, 1997; covering selected accounts
over $7,000 (nominal currency); deductable of $30,000.
[_] Accounts Receivable Export (Europe): Policy amount - USD $200,000; loss
%'age 90%/10%; one year term commencing August 1, 1997; covering selected
accounts of any value; deductible of $7,500.
[_] Key person insurance policies;
. See S3.15
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.20
MAJOR CUSTOMERS
________________________________________________________________________________
[_] Customers who's sales account for greater than 5% of Consolidated Net Sales:
. Levante: 1997 Forecast Sales - $2,765,000, 1996 Sales - CAD $3,808,000,
1995 Sales - CAD $2,535,000
[_] Levante's Spring 1998 order is approximately US$30,000.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.22
INVENTORY
________________________________________________________________________________
[_] It is consistent with the company's standard business practices to supply
inventory such as fabric and findings to contractors producing garments for
the Company.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.23
PRODUCT WARRANTY & PRODUCT LIABILITY
________________________________________________________________________________
[_] See Warranty Policy noted on label attached.
[_] The company accrued 1/2% each month's Sales to provide for the costs of
warranty work.
[_] Terms Upon Which Orders May be Cancelled or Goods Returned:
. Goods are shipped to customer subsequent to cancellation date stipulated
in order.
. Goods shipped are not in accordance with customer's Purchase Orders
. Return Authorization is negotiated with the Company pursuant to the terms
and conditions of the Company's dealer application.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.24
MINUTE BOOKS
________________________________________________________________________________
The company's minute books are available at;
[_] Westbeach Canada
Boughton Peterson Yang Anderson
Vancouver, Canada
[_] Westbeach USA
Preston Gates Ellis
Seattle, USA
[_] Westbeach GmbH
Schwaighoffer & Sallinger
Innsbruck, Austria
[_] Westbeach UK
John Shackleton
Leeds, England
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.26
RETURN OF SHIPMENTS
________________________________________________________________________________
[_] For conditions under which customers may return goods sold to them by the
company see S3.23
[_] Westbeach agreed to allow Levante to return unsold pieces of Fall 97
Elevation outerwear if unsold. This was to compensate Levante for the
shipment arriving late in Japan. The amount of the order is approximately
US$60,000.
WESTBEACH SNOWBOARD CANADA
SHARE PURCHASE AGREEMENT
SCHEDULES
UPDATED OCTOBER 24, 1997
SCHEDULE 3.29
ACCOUNTS RECEIVABLE
____________________________________________________________
1996 1995
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Written Off 84,500 70,000
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Provided For 91,103 144,292
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Total Bad Debt Expense 91,103 144,292
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