THIS AGREEMENT made the 9th day of October, 1998.
BETWEEN:
1218951 ONTARIO LIMITED,
a corporation existing under the laws of Ontario,
(hereinafter referred to as the "Vendor"),
OF THE FIRST PART,
- and -
PRIME FOODS PROCESSING INC.,
a corporation existing under the laws of Ontario,
(hereinafter referred to as the "Purchaser"),
OF THE SECOND PART.
WHEREAS the Vendor carries on the business of the manufacture of pasta food
products for retail sale under the trade name Pasta Kitchen;
AND WHEREAS the Purchaser wishes to purchase from the Vendor and the Vendor
wishes to sell to the Purchaser the business and assets for Pasta Kitchen on the
terms and conditions herein set forth.
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants,
agreements, representations, warranties and indemnities of the parties herein
contained and for other good and valuable consideration (the receipt and
sufficiency of which are acknowledged by each party), the parties agree as
follows:
ARTICLE I
INTERPRETATION
1.01 Defined Terms. For the purposes of this Agreement, unless the context
otherwise requires, the following terms shall have the respective meanings set
out below and grammatical variations of such terms shall have the corresponding
meanings:
(a) "Act" means the Business Corporations Act (Ontario) as in effect on the
date hereof;
(b) "Accounts Receivable" means the accounts receivable, trade accounts,
notes receivable, book debts and other debts due or accruing due to the Vendor
as provided in Section 2.01(e);
(c) "Assumed Liabilities" has the meaning set out in Section 4.01;
(d) "Business Day" means any day, other than a Saturday or a Sunday, on
which the main branch of the Toronto-Dominion Bank in Toronto, Ontario is open
for business;
(e) "Cash Portion of the Purchase Price" has the meaning set out in
subsection 3.03(b);
(f) "Claim" has the meaning set out in Section 11.03;
(g) "Closing Date" means October 9, 1998 or such other date as the Vendor
and the Purchaser may mutually determine;
(h) "Closing Date Payment" has the meaning set out in Section 3.02;
(i) "Contract" means any agreement, indenture, contract, lease, deed of
trust, licence, option, instrument or other commitment, whether written or oral;
(j) "Employees" means those salaried and non-unionized employees of the
Vendor who are employed in the Purchased Business immediately prior to the Time
of Closing;
(k) "Encumbrance" means any encumbrance, lien, charge, hypothec, pledge,
mortgage, title retention agreement, security interest of any nature, adverse
claim, exception, reservation, easement, right of occupation, any matter capable
of registration against title, option, right of pre-emption, privilege or any
Contract to create any of the foregoing;
(l) "Environmental Laws" has the meaning set out in subsection 5.27(a);
(m) "Environmental Permits" has the meaning set out in subsection 5.27(b);
(n) "ETA" means Part IX of the Excise Tax Act (Canada), as amended from
time to time;
(o) "Excluded Employees" has the meaning set out in Section 8.09;
(p) "GST" means all taxes payable under the ETA or under any provincial
legislation similar to the ETA, and any reference to a specific provision of the
ETA or any such provincial legislation shall refer to any successor provision
thereto of like or similar effect;
(q) "Hazardous Substances" has the meaning set out in subsection 5.27(a);
(r) "IMSC" means International Menu Solutions Corporation, a Nevada
corporation;
(s) "Indemnified Party" has the meaning set out in Section 11.03;
(t) "Indemnifying Party" has the meaning set out in Section 11.03;
(u) "Intellectual Property" has the meaning set out in subsection 2.01(i);
(v) "Lease" has the meaning set out in Section 5.09;
2
(w) "Leased Property" has the meaning set out in Section 5.07;
(xy) "Licences" has the meaning set out in Section 5.16;
(y) "Losses" means, in respect of any matter, all claims demands,
proceedings, losses, damages, liabilities, deficiencies, costs and expenses
(including, without limitation, all legal and other professional fees and
disbursements, interest, penalties and amounts paid in settlement) arising
directly or indirectly as a consequence of such matter;
(z) "Purchase Price" has the meaning set out in Section 3.01;
(aa) "Purchased Assets" has the meaning set out in Section 2.01;
(bb) "Purchased Business" means the business carried on by the Vendor
consisting primarily of the production of ready meals for retail sale under the
brand name Pasta Kitchen;
(cc) "Tax Act" means the Income Tax Act (Canada), as amended from time to
time;
(dd) "Time of Closing" means 10 a.m. (local time) on the Closing Date, or
such other time on the Closing Date as the Vendor and the Purchaser may mutually
determine; and
(ee) "Transferred Employees" has the meaning set out in Section 8.10.
1.02 Currency. Unless otherwise indicated, all dollar amounts in this Agreement
are expressed in Canadian funds.
1.03 Sections and Headings. The division of this Agreement into Articles,
sections and subsections and the insertion of headings are for convenience of
reference only and shall not affect the interpretation of this Agreement. Unless
otherwise indicated, any reference in this Agreement to an Article, section,
subsection or Schedule refers to the specified Article, section or subsection of
or Schedule to this Agreement.
1.04 Number, Gender and Persons. In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organizations,
governmental bodies and other legal or business entities of any kind whatsoever.
1.05 Accounting Principles. Any reference in this Agreement to generally
accepted accounting principles refers to generally accepted accounting
principles that have been established in Canada, including those approved from
time to time by the Canadian Institute of Chartered Accountants or any successor
body thereto.
3
1.06 Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether written or
oral. There are no conditions, covenants, agreements, representations,
warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as herein provided.
1.07 Time of Essence. Time shall be the essence of this Agreement.
1.08 Applicable Law. This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the Province of Ontario and the federal laws
of Canada applicable therein, and each party irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
1.09 Successors and Assigns. This Agreement shall enure to the benefit of and
shall be binding on and enforceable by the parties and, where the context so
permits, their respective successors and permitted assigns. Subject to Section
12.05, neither party may assign any of it rights or obligations hereunder
without the prior written consent of the other party.
1.10 Severability. If any provision of this Agreement is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
1.11 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement shall be binding on either party unless consented to in writing by
such party. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision nor shall any waiver constitute a continuing
waiver unless otherwise provided.
1.12 Schedules. The following Schedules are attached to and form part of this
Agreement:
Schedule 1- Leased Real Property
Schedule 2 - Machinery and Equipment
Schedule 3 - Material Contracts
Schedule 4 - Employee Matters
Schedule 5 - Insurance
Schedule 6 - Intellectual Property
Schedule 7 - Allocation of Purchase Price
Schedule 8 - Location of Assets
Schedule 9 - Third Party Consents
Schedule 10 - Major Customers
Schedule 11 - Non-Competition Agreement
Schedule 12 - Opinion of Vendor's Counsel
4
ARTICLE II
PURCHASE AND SALE OF PURCHASED ASSETS
2.01 Purchased Assets. Subjects to the provisions of this Agreement, the Vendor
agrees to sell, assign and transfer to the Purchaser and the Purchaser agrees to
purchase from the Vendor, effective as of the close of business on the Closing
Date, all of the property and assets used in connection with or otherwise
relating to the Purchased Business (other than the Excluded Assets), whether
real or personal, tangible or intangible, of every kind and description and
wheresoever situate, as a going concern (collectively, the "Purchased Assets"),
including, without limitation:
(a) Lease of Real Property. All rights as a sub-lessee under the lease of
real property, together with the benefit of use of all leasehold improvements
relating thereto, including, without limitation, all rights under the lease
described in Schedule 1;
(b) Machinery and Equipment. All machinery, equipment, fixtures, furniture,
furnishings, parts, refrigerators, mixing machines, ovens and other fixed
assets, including, without limitation, the machinery and equipment described in
Schedule 2;
(c) Vehicles. Not Applicable;
(d) Inventories. All inventories, including, without limitation, raw
materials, work-in-process, finished goods and replacement parts;
(e) Accounts Receivable. All accounts receivable, trade accounts, notes
receivable, book debts and other debts due or accruing due to the Vendor and the
benefit of all security for such accounts, notes and debts;
(f) Prepaid Expenses. All prepaid expenses;
(g) Agreements. All rights under orders or contracts for the provision of
goods or services (whether as buyer or seller), distribution and agency
agreements, employment agreements, and other Contracts not otherwise referred to
in this Section 2.01, including, without limitation, the Contracts described in
Schedule 3;
(h) Licenses and Permits. Not Applicable;
(i) Intellectual Property. All trade or brand names, business names, trade
marked trade xxxx registrations and applications, service marks, service xxxx
registrations and applications, copyrights, copyright registrations and
applications, trade secrets, proprietary manufacturing information and know-how,
including without limitation the Pasta Kitchen product recipes, equipment and
parts lists and descriptions, instruction manuals, together with all rights
under licences, agreements and other agreements or instruments relating to any
of the foregoing (collectively, "Intellectual Property"), including, without
limitation, the trademarks, copyrights, and agreements described in Schedule 6;
5
(j) Computer Hardware and Software. All computer hardware and software,
including all rights under licences and other agreements or instruments relating
thereto;
(k) Books and Records. All books and records (other than those required by
law to be retained by the Vendor, copies of which will be made available to the
Purchaser), including, without limitation, customer lists, sales records, price
lists and catalogues, sales literature, advertising material, manufacturing
data, production records, employee manuals, personnel records, supply records,
inventory records and correspondence files (together with, in the case of any
such information that is stored electronically, the media on which the same is
stored); and
(l) Goodwill. All goodwill, together with the exclusive right for the
Purchaser to represent itself as carrying on the Purchased Business in
succession to the Vendor and the right to use any words indicating that the
Purchased Business is so carried on, including the exclusive right to use the
name "Pasta Kitchen", or any variation thereof, as part of the name or style
under which the Purchased Business or any part thereof is carried on by the
Purchaser.
2.02 Excluded Assets.
The Purchased Assets shall not include any of the following property and
assets (collectively, the "Excluded Assets"):
(a) Cash. All cash on hand or in banks or other depositories;
(b) Income Taxes. All income tax instalments paid by the Vendor and the
right to receive any refund of income taxes paid by the Vendor.
ARTICLE III
PURCHASE PRICE
3.01 Purchase Price. The aggregate purchase price (the "Purchase Price") payable
by the Purchaser to the Vendor for the Purchased Assets shall be the sum of
$640,000.00 payable as provided in Sections 3.02 and 3.03, and subject to
adjustment as set forth in Sections 3.02 and 3.03 respectively.
3.02 Closing Date Payment of Purchase Price. Subject to the next following
paragraph of this Section 3.02, at the Time of Closing, the Purchaser shall pay
the Vendor the amount of $300,000.00 (the "Closing Date Payment") by certified
cheque or bank draft payable to or to the order of the Vendor. The Vendor shall
be responsible for paying the following amounts on the Closing Date from the
Closing Date Payment:
(a) on account of trade payables identified by the Vendor and the
Purchaser the sum of $108,614.57; and
(b) the payroll of the Vendor to be paid on Thursday October 15, 1998 in
the sum of $8,940.00;
6
being payments which in the aggregate are $117,554.57 (herein called the "Vendor
Credit").
Subject to the following, the Purchaser shall pay to the Vendor amounts on
account of the Vendor Credit as follows:
(a) firstly, during the sixty (60) day period following the Closing Date,
50% of the accounts receivable received after the Closing Date from the
Pasta Kitchen Division of the Purchaser, up to the aggregate amount of
the Vendor Credit with such payments to be made weekly; and
(b) provided that if the amount paid by the Purchaser to the Vendor
pursuant to the preceding subparagraph (a) is less than the Vendor
Credit, then the difference (herein called the "Vendor Credit Balance"
shall be paid by the Purchaser to the Vendor by consecutive monthly
payments on the last day of each month commencing with the first month
following the said sixty (60) day period, the said monthly payments to
be in the amount of $10,000.00 until paid.
In the event that during the two year period following the Closing Date the
aggregate of the following amounts, namely:
(a) the dollar amount of the accounts receivable acquired by the
Purchaser from the Vendor as part of the Purchased Assets
collected during the sixty (60) day period referred to above
is herein called the "Receivable Amount"; and
(b) the dollar amount of amounts required to be paid by the
Purchaser following the closing to the trade creditors
identified in Schedule 13 by "***" together with any other
amounts required to be paid by the Purchaser for any matter or
thing arising from or in connection with the operation of the
Pasta Kitchen business by the Vendor prior to the Closing
Date;
exceed the sum of $34,072.42 then the Vendor shall pay to the Purchaser on
demand any and all such amounts which in the aggregate exceed such sum. The
Purchaser shall have the right to set off any such sums that become due to the
Purchaser from the Vendor against any sums that are due or which may become due
from the Purchaser to the Vendor.
3.03 Determination of Balance of Purchase Price. The balance of the Purchase
Price of $340,000.00 shall be subject to adjustment based upon the revenue of
the Pasta Kitchen Division of the Purchaser during the twelve month period from
and including October 9, 1998 to and including October 8, 1999.
At the end of the said twelve month period the auditors of the Purchaser
shall determine (on an unaudited basis) the aggregate dollar amount of the sales
by the Pasta Kitchen Division of the Purchaser for the said twelve (12) month
period. In the event that the aggregate dollar amount is less than
$1,000,000.00, then the Purchase Price shall be proportionally reduced. For
example, if such
7
aggregate sales for such period are $900,000.00, the Purchase Price would be
reduced by ten percent (10%) or $64,000.00, so that the adjusted Purchase Price
would be $576,000.00. The balance of the Purchase Price would be $576,000.00
less the $300,000.00, namely $276,000.00. Such amount of the Purchase Price
being $340,000.00 or such lesser amount as determined in accordance with the
foregoing is herein called the "Balance of the Purchase Price".
The Corporation shall have the option, exercisable during the forty-five (45)
day period following the determination of the Balance of the Purchase Price, to
pay the Balance of the Purchase Price by certified cheque or by the issue of
restricted common shares (having a par value of $0.001 per share) in the capital
stock of IMSC. In the event that the Purchaser exercises the option to pay the
Balance of the Purchase Price by the delivery of IMSC common shares, the number
of shares to be delivered by the Purchaser to the Vendor (herein called the
"Shares") shall be determined as follows:
The Balance of the Purchase Price shall be divided by the average closing
trading price for the IMSC common shares for the ten (10) trading days
prior to the date on which the calculation is made, and the number so
determined shall be the number of common shares of IMSC to be delivered by
the Purchaser to the Vendor in satisfaction of the Balance of the Purchase
Price. The appropriate foreign exchange translations where required shall
be made based upon quotes provided by the banker of the Corporation on the
relevant day.
The Shares when issued shall be subject to an escrow agreement wherein the
Shares shall be held and released as follows: forty percent (40%) upon
determination of the number of Shares; forty percent (40%) on September 30, 2000
and twenty percent (20%) on September 30, 2001. The Vendor acknowledges that
during such time as the Shares are held in escrow the Vendor shall not be
entitled to deal with the Shares in any manner whatsoever until such time as
Shares are released from escrow in accordance with the foregoing schedule. The
Shares to be held in escrow shall be held by counsel for IMSC.
The Shares shall be subject to applicable securities laws and regulations
including hold periods or qualification prior to the shares being available for
public trading.
The Securities Act of 1933 as amended (the "Act") requires that the sale of
securities be registered with the United States Securities and Exchange
Commission (the "SEC") or that there be an exemption from the registration
requirements. The Shares that will be issued to the Vendor pursuant to this
Schedule will not be registered under the Act and will be issued by IMSC without
any such registration.
Notwithstanding anything to the contrary contained herein, the IMSC common
shares to be issued and delivered pursuant to this Section will not be issued
pursuant to a registration statement under the United States Securities Act of
1933 (the "Act") or any other applicable federal or state statute and, as a
result, such common shares cannot be transferred, sold or otherwise disposed of,
unless registered under the Act or pursuant to an exemption therefrom.
Additionally, the following legend will be placed on each certificate evidencing
such common shares:
8
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"). THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT WITH
RESPECT TO SUCH SHARES, OR AN OPINION OF THE REGISTERED HOLDER'S COUNSEL
REASONABLY ACCEPTABLE TO ISSUER'S COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT.
3.04 Allocation of Purchase Price. The Vendor and the Purchaser agree to
allocate the Purchase Price among the Purchased Assets in accordance with
Schedule 7 and to report the sale and purchase of the Purchased Assets for all
federal, provincial and local tax in a manner consistent with such allocation.
3.05 ETA Election. The Purchaser and the Vendor shall, on the Closing Date,
elect jointly under subsection 167(1) of the ETA, in the form prescribed for the
purposes of that subsection, in respect of the sale and transfer of the
Purchased Assets hereunder. The Purchaser shall file such election with Revenue
Canada, Excise not later than the day on which it is required to file its GST
return for its reporting period which includes the Closing Date.
3.06 Transfer Taxes. The Purchaser shall be liable for and shall pay all federal
and provincial sales taxes (including any retail sales taxes and land transfer
taxes) and all other taxes, duties, fees or other like charges of any
jurisdiction properly payable in connection with the transfer of the Purchased
Assets by the Vendor to the Purchaser.
3.07 Income Tax Election. The Purchaser and the Vendor agree to elect jointly in
the prescribed form under Section 22 of the Tax Act as to the sale of the
accounts receivable and other assets that are referred to in subsection 2.01(e)
and described in Section 22 of the Tax Act and to designate in such election an
amount equal to the portion of the Purchase Price allocated to such assets
pursuant to Section 3.04 as the consideration paid by the Purchaser therefor.
ARTICLE IV
ASSUMPTION OF LIABILITIES
4.01 Assumption of Certain Liabilities by the Purchaser. Subject to the
provision of this Agreement, the Purchaser agrees to assume from and after the
Time of Closing, those liabilities of the Vendor existing as at the Time of
Closing (the "Assumed Liabilities") under:
(a) the Contracts described in Schedules 6;
(b) the agreements entered into by the Vendor in the ordinary course of
the Purchased Business for the sale of pasta products by the Vendor.
9
4.02 Product Liability and Warranty Obligations. Without in any way limiting
subsection 11.01(c), the Purchaser shall not assume, and the Vendor shall be
solely responsible for and shall indemnify and hold harmless the Purchaser from
and against, all product liability, and other claims and obligations respecting
products manufactured by the Vendor in connection with the Purchased Business up
to the Time of Closing. The Purchaser may satisfy any such obligations not
assumed by it where it is required to do so by law or by order of any court or
regulatory authority having jurisdiction over it or where it determines in good
faith to do so for valid business reasons and, in any such case, the Vendor
shall reimburse the Purchaser forthwith following demand for all expenses
incurred by the Purchaser in connection therewith, including all labour and
material costs incurred in repairing or replacing products. The Vendor does not
provide any written warranty to its customers with respect to the Vendor's
products purchased by its customers.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor represents and warrants to the Purchaser as follows and
acknowledges that the Purchaser is relying on such representations and
warranties in connection with its purchase of the Purchased Assets:
5.01 Organization. The Vendor is a corporation duly incorporated and organized
and validly subsisting under the laws of the Province of Ontario and has the
corporate power to own or lease its property, to carry on the Purchased Business
as now being conducted by it and to enter into this Agreement and to perform its
obligations hereunder. The Vendor is duly qualified as a corporation to do
business in the Province of Ontario, the only jurisdiction in which the
Purchased Business makes such qualification necessary.
5.02 Authorization. This Agreement has been duly authorized, executed and
delivered by the Vendor and is a legal, valid and binding obligation of the
Vendor, enforceable against the Vendor by the Purchaser in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency and other
laws affecting the rights of creditors generally and except that equitable
remedies may be granted only in the discretion of a court of competent
jurisdiction.
5.03 No Other Agreements to Purchase. No person other than the Purchaser has any
written or oral agreement or option or any right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement or option for the
purchase or acquisition from the Vendor of any of the Purchased Assets, other
than pursuant to purchase orders accepted by the Vendor in the ordinary course
of the Purchased Business.
5.04 No Violation. The execution and delivery of this Agreement by the Vendor
and the consummation of the transactions herein provided for will not result in:
(a) the breach or violation of any of the provisions of, or constitute a
default under, or conflict with or cause the acceleration of any
obligation of the Vendor under:
10
(i) any Contract to which the Vendor is a party or by which it is or
its properties are bound;
(ii) any provision of the constating documents or by-laws or
resolutions of the board of directors (or any committee thereof)
or shareholders of the Vendor;
(iii) any judgment, decree, order or award of any court, governmental
body or arbitration having jurisdiction over the Vendor;
(iv) any licence, permit, approval, consent or authorization held by
the Vendor or necessary to the operation if the Purchased
Business; or
(v) any applicable law, statute, ordinance, regulation or rule; nor
(b) the creation or imposition of any Encumbrance on any of the Purchased
Assets.
5.05 Sufficiency of Purchased Assets. The Purchased Assets owned or leased by
the Vendor are sufficient to carry on the Purchased Business. All Purchased
Assets owned and used by the Vendor in connection with the Purchased Business
are in good operating condition and are in a state of good repair and
maintenance. During the two years preceding the date of this Agreement, there
has not been any significant interruption of operations (being an interruption
of more than one day) of the Purchased Business due to inadequate maintenance of
any of the Purchased Assets. With the exception of inventory in transit, all the
tangible assets of the Purchased Business are situate at the Leased Premises.
5.06 Title to Personal Property. The Purchased Assets are owned beneficially by
the Vendor with a good and marketable title thereto, free and clear of all
Encumbrances.
5.07 Location of Real Property. Schedule 1 sets forth the municipal address and
complete and accurate legal description of all the real property that is used in
the Purchased Business and leased by the Vendor (the "Leased Property").
5.08 Leased Property. The Vendor is not the beneficial or registered owner of
and has not agreed to acquire any real property or any interest in any real
property. The Vendor has the exclusive right to possess, use and occupy the
Leased Property. All buildings, structures, improvements and appurtenances
situated on the Leased Property are in good operating condition and in a state
of good maintenance and repair and are adequate and suitable for the purposes
for which they are currently being used, and the Vendor has adequate rights of
ingress and egress for the operation of the Purchased Business in the ordinary
course. None of such buildings, structures, improvements or appurtenances (or
any equipment therein) nor the operation or maintenance thereof, violates any
restrictive covenant or any provision of any federal, provincial or municipal
law, ordinance, rule or regulation, or encroaches on any property owned by
others. Without limiting the generality of the foregoing:
11
(a) the Leased Property, the current uses thereof and the conduct of the
Purchased Business comply with all regulations, statues, enactments, laws and
by-laws, including, without limitation, those dealing with zoning, parking,
access, loading facilities, landscaped areas, building construction, fire and
public health and safety and Environmental Laws;
(b) no alteration, repair, improvement or other work has been ordered,
directed or requested in writing to be done or performed to or in respect of the
Leased Property or to any of the plumbing, heating, elevating, water, drainage,
or electrical systems, fixtures or works by the landlord of the Leased Property
or any municipal, provincial or other competent authority, which alteration,
repair, improvement or other work has not been completed, and the Vendor knows
of no written notification having been given to it of any such outstanding work
being ordered, directed or requested, other than those that have been complied
with;
(c) all accounts for work and services performed and materials placed or
furnished upon or in respect of the Leased Property at the request of the Vendor
or the landlord of the Leased Property have been fully paid and satisfied, and
no person is entitled to claim a lien under the Construction Lien Act (Ontario)
against the Leased Property or any part thereof, other than current accounts in
respect of which the payment due date has not yet passed;
(d) there is nothing owing in respect of the Leased Property by the Vendor
to any municipal corporation or to any other corporation or commission owning or
operation a public utility for water, gas, electrical power or energy, steam or
hot water, or for the use thereof, other than current accounts in respect of
which the payment due date has not yet passed;
(e) no part of the Leased Property has been taken or expropriated by any
federal, provincial, municipal or other competent authority, nor has any notice
or proceeding in respect thereof been given or commenced;
(f) the Leased Property (including all buildings, improvements and
fixtures) is fit for its present use, and there are no material or structural
repairs or replacements that are necessary or advisable and, without limiting
the foregoing, there are no repairs to, or replacements of, the roof or the
mechanical, electrical, heating, ventilating, air-conditioning, plumbing or
drainage equipment or systems that are necessary or advisable; and the Leased
Property is not currently undergoing any alteration or renovation nor is any
such alteration or renovation contemplated; and
(g) the Leased Property is fully serviced and has suitable access to public
roads, and there are no outstanding levies, charges or fees assessed against the
Leased Property by any public authority (including development or improvement
levies, charges or fees).
5.09 Leased Property. The Vendor is not a party to any lease or agreement to
lease in respect of any real property, whether as lessor or lessee, other than
the lease (the "Lease") described in Schedule 1 relating to the Leased Property.
Schedule 2 sets out the parties to the Lease, its date of execution and expiry
date, any options to renew, the location of the leased lands and premises and
the rent
12
payable thereunder. The Vendor occupies the Leased Property and has the
exclusive right to occupy and use the Leased Property. The Lease is in good
standing and in full force and effect, and neither the Vendor nor any other
party thereto is in breach of any covenants, conditions or obligations
contained therein. The Vendor has provided a true and complete copy of the
Lease and all amendments thereto to the Purchaser.
5.10 Inventories. The inventories of the Vendor relating to the Purchased
Business do not include any material items that are slow moving, below standard
quality or of a quality or quantity not useable or saleable in the normal course
of business, the value of which has not been written down on its books of
account to net realizable market value. The inventory levels of the Vendor have
been maintained at such amounts as are required for the operation of the
Purchase Business as previously conducted and as proposed to be conducted, and
such inventory levels are adequate therefor.
5.11 Accounts Receivable. All accounts receivable, book debts and other debts
due or accruing to the Vendor in connection with the Purchased Business are bona
fide and good and, subject to an allowance for doubtful accounts that have been
reflected on the books of the Vendor in accordance with generally accepted
accounting principles, collectible without set-off or counterclaim.
5.12 Intellectual Property. Schedule 6 sets out the Intellectual Property of the
Vendor comprised of the trade name and trade xxxx "Pasta Kitchen Inc.". The
Vendor has no other intellectual property other than recipes for the food
products produced by the Vendor, and such recipes have not been reduced to
writing by the Vendor, as such recipes are in the memory of the Vendor's
president The Vendor is the beneficial owner of the Intellectual Property, free
and clear of all Encumbrances, and is not a party to or bound by any Contract or
any other obligation whatsoever that limits or impairs its ability to sell,
transfer, assign or convey, or that otherwise affects, the Intellectual
Property. No person has been granted any interest in or right to use to all or
any portion of the Intellectual Property. The conduct of the Purchased Business
does not infringe upon the industrial or intellectual property rights, domestic
or foreign, of any other person. The Vendor is not aware of a claim of any
infringement or breach of any industrial or intellectual property rights of any
other person, nor has the Vendor received any notice that the conduct of the
Purchased Business, including the use of the Intellectual Property, infringes
upon or breaches any industrial or intellectual property rights of any other
person, and the Vendor, after due inquiry, has no knowledge of any infringement
or violation of any of its right in the Intellectual Property. The Vendor is not
aware of any state of facts that casts doubt on the validity of enforceability
of the Intellectual Property.
5.13 Insurance. The Vendor has the Purchased Assets insured against loss or
damage by all insurable hazards or risks on a replacement cost basis and such
insurance coverage will be continued in full force and effect to and including
the Time of Closing. Schedule 5 sets out the insurance policies (specifying the
insurer, the amount of the coverage, the type of insurance, the policy number
and any pending claims thereunder) maintained by the Vendor on the Leased
Property The Vendor is not in default with respect to any of the provisions
contained in such insurance policy and has not failed to give any notice or
present any claim under any such insurance policy, in due and timely fashion.
The Vendor will forthwith provide a true copy of such insurance policy referred
to in Schedule 5 to the Purchaser.
13
5.14 No Expropriation. No part of Purchased Assets has been taken or
expropriated by any federal, provincial, municipal or other authority, nor has
any notice or proceeding in respect thereof been given or commenced, nor is the
Vendor aware of any intent or proposal to give any such notice or commence any
such proceedings.
5.15 Agreements and Commitments. Except as described in Schedule 3, the Vendor
is not a party to or bound by any Contract relating to the Purchased Business or
Purchased Assets including, without limiting the generality of the foregoing:
(a) any distributor, sales, advertising, agency or manufacturer's
representative Contract;
(b) any collective bargaining agreement or other Contract with any labour
union;
(c) any continuing Contract for the purchase of materials, supplies,
equipment or services involving more that $5,000.00 in respect of any
one such Contract or more than $10,000.00 in respect of all such
Contracts;
(d) any employment or consulting Contract or any other Contract with any
officer, employee or consultant, other that oral Contracts of
indefinite hire terminable by the Vendor without cause or reasonable
notice;
(e) any profit sharing, bonus, stock option, pension, retirement,
disability, stock purchase, medical, dental, hospitalization,
insurance or similar plan or agreement providing benefits to any
current or former director, officer, employee or consultant;
(f) any trust indenture, mortgage, promissory note, loan agreement,
guarantee or other Contract for the borrowing of money or a leasing
transaction of the type required to be capitalized in accordance with
generally accepted accounting principles, other than the small
business development loan made by the Vendor in the amount of
$72,212.06;
(g) any commitment for charitable contributions;
(h) any Contracts for capital expenditures in excess of $5,000.00 in the
aggregate;
(i) any Contract for the sale of any assets, other than sales of inventory
to customers in the ordinary course of the Purchased Business;
(j) any Contract pursuant to which the Vendor is a lessor of any
machinery, equipment, motor vehicles, office furniture, fixtures or
other personal property;
(k) any confidentiality, secrecy or non-disclosure Contract (whether the
Vendor is a beneficiary obligor thereunder) relating to any
proprietary or confidential information
14
or any non-competition or similar Contract;
(l) any licence, franchise or other agreement that relates in whole or in
part to any Intellectual Property;
(m) any agreement of guarantee, support, indemnification, assumption or
endorsement of, or any other similar commitment with respect to, the
obligations, liabilities (whether accrued, absolute, contingent or
otherwise) or indebtedness of any other person, except for cheques
endorsed for collection in the ordinary course of the Purchased
Business;
(n) any Contract that expires, or may expire if the same is renewed or
extended at the option of any person other than the Vendor, more than
one (1) year after the date of this Agreement; or
(o) any Contract entered into by the Vendor other than in the ordinary
course of the Purchased Business.
The Vendor has performed all of the obligations required to be performed by it
and is entitled to all benefits under, and is not in default or alleged to be in
default in respect of, any Contract relating to the Purchased Business or
Purchased Assets to which it is a party or by which it is bound; all such
Contracts are in good standing and in full force and effect, and no event,
condition or occurrence exists that, after notice or lapse of time or both,
would constitute a default under any of the foregoing. The Vendor has provided
to the Purchaser a true and complete copy of each Contract listed or described
in Schedules 1 and 3 and all amendments thereto.
5.16 Compliance with Laws; Governmental Authorization. The Vendor has complied
with all laws, statutes, ordinance, regulations, rules, judgments, decrees or
orders applicable to the Purchased Business or the Purchased Assets. There are
no licences, permits, approvals, consents, certificates, registrations or
authorizations necessary to carry on the Purchased Business or to own or lease
any of the Purchased Assets, save and except that it is acknowledged that the
Vendor does not have the Hazard Analysis Critical Control Point approval.
5.17 Consents and Approvals. There is no requirement to make any filing with,
give any notice to or to obtain any licence, permit, certificate, registration,
authorization, consent or approval of, any governmental or regulatory as a
condition to the lawful consummation of the transactions contemplated by this
Agreement, except for the filings, notifications, licences, permits,
certificates, registrations, consents and approvals described in Schedule 9.
There is no requirement under any Contract relating to the Purchased Business or
Purchased Assets to which the Vendor is a party or by which it is bound to give
any notice to, or to obtain the consent or approval of, any party to such
agreement, instrument or commitment relating to the consummation of the
transactions contemplated by this Agreement, except for the notifications,
consents and approvals described in Schedule 9.
5.18 Financial Statements. Not applicable.
15
5.19 Books and Records. The books and records of the Vendor fairly and correctly
set out and disclose, in accordance with generally accepted accounting
principles, the financial position of the Vendor as at the date hereof, and all
financial transactions of the Vendor relating to the Purchased Business have
been accurately recorded in such books and records.
5.20 Closing Financial Information. Immediately following the close of business
on the day prior to the Closing Date the parties shall complete an inventory of
the assets of the Vendor, and complete a determination of the receivables and
payables and other liabilities of the Vendor.
5.21 Absence of Changes. Since June 30, 1998, the Purchased Business has been
carried on only in the ordinary and normal course consistent with past practice
and there has not been:
(a) any material adverse change in the condition (financial or otherwise),
assets, liabilities, operations, earnings, business or prospects of the
Purchased Business;
(b) any damage, destruction or loss (whether or not covered by insurance)
affecting the Purchased Assets;
(c) any obligation or liability (whether absolute, accrued, contingent or
otherwise, and whether due or to become due) incurred by the Vendor in
connection with the Purchased Business, other than those incurred in the
ordinary and normal course of the Purchased Business and consistent with past
practice, save with respect to the Vendors liabilities to the Workmen's
Compensation Board.;
(d) any payment, discharge or satisfaction of any Encumbrance, liability or
obligation of the Vendor in relation to the Purchased Business or the Purchased
Assets (whether absolute, accrued, contingent or otherwise, and whether due or
to become due) other than payment of accounts payable and tax liabilities
incurred in the ordinary and normal course business consistent with past
practice;
(e) any labour trouble adversely affecting the Purchased Business or the
Purchased Assets;
(f) any licence, sale, assignment, transfer, disposition, pledge, mortgage
or granting of a security interest or other Encumbrance on or over any Purchased
Assets, other than sales of inventory to customers in the ordinary and normal
course of the Purchased Business;
(g) any write-down of the value of any inventory or any write-off as
uncollectible of any accounts or notes receivable or any portion thereof
relating to the Purchased Business;
(h) any cancellation of any debts or claims or any amendment, termination
or waiver of any rights of value to the Purchased Business;
(i) any general increase in the compensation of employees of the Vendor
involved in the Purchased Business (including, without limitation, any increase
pursuant to any Employee Plan or
16
commitment), or any increase in any such compensation or bonus payable to any
officer, employee, consultant or agent thereof or the execution of any
employment contract with any officer or employee, or the making of any loan to,
or engagement in any transaction with, any employee, officer or director of the
Vendor in relation to the Purchased Business;
(j) any capital expenditures or commitments relating to the Purchased
Business or Purchased Assets;
(k) any forward purchase commitments in excess of the requirements of the
Purchased Business for normal operating inventories or at prices higher than the
current market prices;
(l) any forward sales commitments other than in the ordinary and normal
course of the Purchased Business or any failure to satisfy any accepted order
for goods or services;
(m) any change in the accounting or tax practices followed by the Vendor;
or
(n) any change adopted in the depreciation or amortization policies or
rates; or any change in the credit terms offered to customers of, or by
suppliers to, the Purchased Business.
5.22 Non-Arm's Length Transactions. With respect to the Purchased Business:
(a) the Vendor has not since June 30, 1998 made any payment or loan to, or
borrowed any moneys from or is otherwise indebted to, any officer, director,
employee, shareholder or any other person not dealing at arm's length with the
Vendor (within the meaning of the Tax Act) or any Affiliate or Associate of any
of the foregoing, except as disclosed on the Audited Financial Statements and
except for usual employee reimbursements and compensation paid in the ordinary
course of the Purchased Business; and
(b) except for Contracts of employment, the Vendor is not party to any
Contract with any officer, director, employee, shareholder or any other person
not dealing at arm's length with the Vendor (within the meaning of the Tax Act)
or any Affiliate or Associate of any of the foregoing.
No officer, director or shareholder of the Vendor and no entity that is an
Affiliate or Associate of one or more of such individuals:
(c) owns, directly or indirectly, any interest in (except for shares
representing less than one per cent of the outstanding shares of any class or
series of any publicly traded company), or is an officer, director, employee or
consultant of, any person that is, or is engaged in business as, a competitor of
the Purchased Business or a lessor, lessee, supplier, distributor, sales agent
or customer of the Purchased Business;
(d) owns, directly or indirectly, in whole or in part, any property that
the Vendor uses in the operations of the Purchased Business; or
17
(e) has any cause of action or other claim whatsoever against, or owes any
amount to, the Vendor in connection with the Purchased Business, except for any
liabilities reflected in the Financial Statements and claims in the ordinary
course of business such as for accrued vacation pay and accrued benefits under
Employee Plans.
5.23 Taxes. The Vendor has duly filed on a timely basis all tax returns required
to be filed by it and has paid all taxes that are due and payable, and all
assessments, reassessment, governmental charge, penalties, interest and fines
due and payable by it. The Vendor has made adequate provision for taxes payable
in respect of the Purchased Business for the current period and any previous
period for which tax returns are not yet required to be filed. There are no
actions, suits proceedings, investigations or claims pending or, to the
knowledge of the Vendor, threatened against the Vendor in respect of taxes,
governmental charges or assessments, nor are any material matters under
discussion with any governmental authority to taxes, governmental charges or
assessments asserted by any such authority. The Vendor has withheld from each
payment made to any of its past or present employees, officers or directors, and
to any non-residents of Canada, the amount of all taxes and other deductions
required to be withheld therefrom, and has paid the same to the proper tax or
other receiving officers within the time required under any applicable
legislation. The Vendor has remitted to the appropriate tax authority, when
required by law to do so, all amounts collected by it on account of GST.
5.24 Litigation. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Vendor) pending or, to the best knowledge of the
Vendor, after due enquiry, threatened against or affecting the Vendor at law or
in equity or before or by any federal, provincial, municipal or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before or by an arbitrator or
arbitration board. The Vendor is not aware of any ground on which any such
action, suit or proceeding might be commenced with any reasonable likelihood of
success.
5.25 Residency. The Vendor is a resident of Canada for the purposes of the Tax
Act.
5.26 GST Registration. The Vendor is a registrant for purposes of the ETA whose
registration number is 889857660RT0001.
5.27 Environmental.
(a) The Vendor, in respect of the Purchased Business and the Purchased
Assets, has been and is in compliance with all applicable federal, provincial,
municipal and local laws, statutes, ordinances, by-laws and regulations, and
others, directives and decisions rendered by any ministry, department or
administrative or regulatory agency ("Environmental Laws") relating to the
protection of the environment, occupational health and safety or the
manufacture, processing, distribution, use, treatments, storage, disposal,
transport or handling of any pollutants, contaminants, chemicals or industrial
toxic or hazardous wastes or substances ("Hazardous Substances").
(b) The Vendor has obtained all licences, permits, approvals, consents,
certificates,
18
registration and other authorizations under Environmental Laws (the
"Environmental Permits") required for the operation of the Purchased Business,
all of which are described in Schedule 8. Each Environmental Permit is valid,
subsisting and in good standing, and the Vendor is not in default or breach of
any Environmental Permit and no proceeding is pending or threatened to revoke or
limit any Environmental Permit.
(c) The Vendor, in connection with the Purchased Business, has not used or
permitted to be used, except in compliance with all Environmental Laws, any of
its property (including any of the Leased Property) or facilities to generate,
manufacture, process, distribute, use, treat, store, dispose of, transport or
handle any Hazardous Substance.
(d) No building, structure or improvement located on the Real Property or
Leased Property is or ever has been insulated with urea formaldehyde insulation,
nor do such buildings or structures contain any aluminum wiring or friable
asbestos or any other substance containing asbestos.
(e) The Vendor has never received any notice of or been prosecuted for
non-compliance with any Environmental Laws, nor has the Vendor settled any
allegation of non-compliance short of prosecution. There are no orders or
directions relating to environmental matters requiring any work, repairs or
construction or capital expenditures to be made with respect to the Purchased
Business or the Purchased Assets, nor has the Vendor received notice of any of
the same.
(f) The Vendor has not caused or permitted, nor does it have any knowledge
of, the release, in any manner whatsoever, of any Hazardous Substance on or from
any of its properties or assets (including any of the Leased Property) utilized
in the Purchased Business, or any such release on or from a facility owned or
operated by third parties but with respect to which the Vendor in connection
with the Purchased Business is or may reasonably be alleged to have liability.
All Hazardous Substances and all other wastes and other materials and substances
used in whole or in part by the Vendor in connection with the Purchased Business
or resulting from the Purchased Business have been disposed of, treated and
stored in compliance with all Environmental Laws.
(g) The Vendor has not received any notice that the Vendor is potentially
responsible for a federal, provincial, municipal or local clean-up site or
corrective action under any Environmental Laws in connection with the Purchased
Business. The Vendor, in connection with the Purchased Business, has not
received any request for information in connection with any federal, provincial,
municipal or local inquiries as to disposal sites.
(h) The Vendor has delivered to the Purchaser a true and complete copy of
all environmental audits, evaluations, assessments, studies or tests relating to
the Purchased Business or Purchased Assets of which it is aware.
5.28 Customers and Suppliers. Schedule 10 sets out the major customers of the
Purchased Business (being those customers of the Purchased Business accounting
for more than eighty percent (80%) of sales for the period January 1, 1998 to
August 31, 1998 and there has been no termination or cancellation of, and no
modification or change in, the Vendor's business relationship with any
19
major customer or group of major customers. The Vendor has no reason to believe
that the benefits of any relationship with any of the major customers or
suppliers of the Purchased Business will not continue after the Closing Date in
substantially the same manner as prior to the date of this Agreement.
5.29 Product Warranties. The Vendor has not provided any written warranties to
any of its customers.
5.30 Employee Plans. The Vendor does not have and has never had for employees of
the Vendor either past or present any retirement, pension, bonus, stock
purchase, profit sharing, stock option, deferred compensation, insurance,
medical, hospital, dental, vision care, drug, disability, salary continuation,
legal benefits, unemployment benefits, vacation, incentive or other compensation
plan or arrangement or other employee benefit that is maintained, or otherwise
contributed to or required to be contributed to, by the Vendor relating to the
Purchased Business or the Purchased Assets for the benefit of employees or
former employees of the Vendor.
5.31 No Collective Agreements. The Vendor has not made any Contracts with any
labour union or employee association nor made commitments to or conducted
negotiations with any labour union or employee association with respect to any
future agreements, and the Vendor is not aware of any current attempts to
organize or establish any labour union or employee association with respect to
any Employees of the Vendor nor is there any certification of any such union
with regard to a bargaining unit. Other than grievances brought in the ordinary
and normal course of the Purchased Business, none of which could, individually
or collectively with other such grievances, have a material adverse effect on
the Purchased Business or the right or the ability of the Vendor or the
Purchaser to carry on the Purchased Business substantially in the manner in
which it has heretofore been carried on, there are no grievances against the
Vendor of which the Vendor has received written notice.
5.32 Employees. Schedule 4 contains a complete and accurate list of the names of
all individuals who are full-time, part-time or casual employees or individuals
engaged on contract to provide employment services or sales or other agents or
representatives of the Vendor employed or engaged in the Purchased Business (the
"Employees") as of the date of this Agreement specifying the length of hire,
title or classification and rate of salary or hourly pay and commission or bonus
entitlements (if any) for each such Employee. Schedule 4 lists all Employees
including those on lay-off and those in receipt of benefits under Workers'
Compensation Legislation, who have been absent continually from work for a
period in excess of one month, as well as the reason for their absence. There
are no complaints, claims or charges outstanding, or to the best of the
knowledge of the Vendor, anticipated, nor are there any orders, decisions,
directions or convictions currently registered or outstanding by any tribunal or
agency against or in respect of the Vendor under or in respect of any Employment
Legislation. Schedule 5 lists all Employees in respect of whom the Vendor has
been advised by the Workers' Compensation Board that such Employees are in
receipt of benefits under the Workers' Compensation Act (Ontario). The Vendor is
in compliance with the Employment Standards Act (Ontario), the Workers'
Compensation Act (Ontario) and other Employment Legislation and, without
limiting the generality of the foregoing: (i) there are no appeals pending
20
before a Workers' Compensation Tribunal involving the Vendor; (ii) all levies,
assessments and penalties made against the Vendor pursuant to the Workers'
Compensation Act (Ontario) have been paid by the Vendor, save for the judgement
in favour of the Workers' Compensation board dated April 15, 1998 in the amount
of $5,314.00; (iii) the Vendor is currently in Rate Group for workers'
compensation purposes; (iv) there has been no change in the rating assessment
applicable to the Vendor or the Purchased Business under the Workers'
Compensation Act (Ontario)since the incorporation of the Vendor; (v) the Vendor
is not aware of any audit currently being performed by the Workers' Compensation
Board; and (vi) all payments required to be made in trust to the Director of
Employment Standards in respect of termination and/or severance pay under the
Employment Standards Act (Ontario) have been made.
5.33 Employee Accruals. All accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, Canada Pension Plan premiums, accrued
wages, salaries and commissions and employee benefit plan payments have been
reflected in the books and records of the Vendor.
5.34 No Liabilities. There are no liabilities of the Vendor or its Associates or
Affiliates, whether or not accrued and whether or not determined or
determinable, in respect of which the Purchaser may become liable on or after
the consummation of the transaction herein provided for, other than the Assumed
Liabilities.
5.35 Full Disclosure. Neither this Agreement nor any document to be delivered by
the Vendor nor any certificate, report, statement or other document furnished by
the Vendor in connection with the negotiation of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading and there has been event, transaction or information that has come to
the attention of the Vendor that has not been disclosed to the Purchaser in
writing that could reasonably be expected to have a material adverse effect on
the assets, business, earnings, prospects, properties or condition (financial or
otherwise) of the Purchased Business.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendor as follows and
acknowledges and confirms that the Vendor is relying on such representations and
warranties in connection with its sale of the Purchased Assets:
6.01 Organization. The Purchaser is a corporation duly incorporated and
organized and validly subsisting under the laws of the Province of Ontario and
has the corporate power to enter into this Agreement and to perform its
obligations hereunder.
6.02 Authorization. This Agreement has been duly authorized, executed and
delivered by the
21
Purchaser and is a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser by the Vendor in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency and other
laws affecting the rights of creditors generally and except that equitable
remedies may only be granted in the discretion of a court of competent
jurisdiction.
6.03 No Violation. The execution and delivery of this Agreement by the Purchaser
and the consummation of the transactions herein provided for will not result in
the violation of, or constitute a default under, or conflict with or cause the
acceleration of any obligation of the Purchaser under:
(a) any Contract to which the Purchaser is a party or by which it is bound;
(b) any provision of the constating documents or by-laws or resolutions of
the board of directors (or any committee thereof) or shareholders of the
Purchaser;
(c) any judgment, decree, order or award of any court, governmental body or
arbitrator having jurisdiction over the Purchaser; or
(d) any applicable law, statute, ordinance, regulation or rule.
6.04 Consents and Approvals. There is no requirement for the Purchaser to make
any filing with, give any notice to or obtain any licence, permit, certificate,
registration, authorization, consent or approval of, any government or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement.
6.05 Investment Canada. The Purchaser is a Canadian within the meaning of the
Investment Canada Act.
6.06 GST Registration. The Purchaser is a registrant for purposes of the ETA
whose registration number is 124926544RT0001.
6.07 International Menu Solutions Corporation. ANM Holdings Corporation, a
corporation incorporated pursuant to the laws of the State of Nevada, changed
its name by a Certificate of Amendment dated July 15, 1998 to International Menu
Solutions Corporation.
ARTICLE VII
SURVIVAL OF COVENANTS, REPRESENTATIONS
AND WARRANTIES
7.01 Survival of Covenants, Representations and Warranties. To the extent that
they have not been fully performed at or prior to the Time of Closing, the
covenants, representations and warranties contained in this Agreement and in all
certificates and documents delivered pursuant to or contemplated by this
Agreement shall survive the closing of the transactions contemplated hereby and
shall continue for the applicable limitation period notwithstanding such closing
nor any investigation made by or on behalf of the party entitled to the benefit
thereof; provided, however,
22
that the representations and warranties set out in Article V and the
corresponding representations and warranties set out or incorporated in the
certificates to be delivered pursuant to subsection 9.01(a) (other than those
contained in Section 5.01, 5.02, 5.03, 5.06, 5.08, 5.23, 5.27 and 8.09 shall
terminate on the second anniversary of the Closing Date.
ARTICLE VIII
COVENANTS
8.01 Access to Purchased Business and Purchased Assets. The Vendor shall
forthwith make available to the Purchaser and its authorized representatives
and, if requested by the Purchaser, provide a copy to the Purchaser of, all
title documents, Contracts, financial statements, policies, plans, reports,
licences, orders, permits, books of account, accounting records and all other
documents, information and data relating to the Purchased Business. The Vendor
shall afford the Purchaser and its authorized representatives every reasonable
opportunity to have free and unrestricted access to the Purchased Assets and all
other property and assets utilized in the Purchased Business. At the request of
the Purchaser, the Vendor shall execute such consents, authorizations and
directions as may be necessary to permit any inspection of the Purchased
Business or any of the Purchased Assets or to enable the Purchaser or its
authorized representative to obtain full access to all files and records
relating to any of the Purchased Assets maintained by governmental or other
public authorities. At the Purchaser's request, the Vendor shall co-operate with
the Purchaser in arranging any such meetings as the Purchaser should reasonably
request with:
(a) employees employed in the Purchased Business;
(b) customers, suppliers, distributors or others who have or have had a
business relationship with the Vendor in respect of the Purchased Business; and
(c) the auditors, solicitors or any other persons engaged or previously
engaged to provide services to the Vendor who have knowledge of matters relating
to the Purchased Business or Purchased Assets.
In particular, without limitation, the Vendor shall permit the Purchaser's
representatives or consultants to conduct all such testing and inspection in
respect of environmental matters at such locations of the Purchased Business as
the Purchaser may determine, in its sole discretion, as may be required to
satisfy the Purchaser in respect of such matters and the Vendor shall conduct,
in co-operation with the representatives or consultants of the Purchaser, such
physical review of the equipment of the Purchased Business as is necessary so as
to enable the confirmation of the values carried on the balance sheets of the
Vendor in respect of such assets, to the reasonable satisfaction of the
Purchaser. The exercise of any rights of inspection by or on behalf of the
Purchaser under this Section 8.01 shall not mitigate or otherwise affect any of
the representations and warranties of the Vendor hereunder, which shall continue
in full force and effect as provided in Section 7.01.
8.02 Delivery of Books and Records. At the Time of Closing, there shall be
delivered to the Purchaser by the Vendor all the books and records described in
subsection 2.01(1). The Purchaser
23
agrees that it will preserve the books and records so delivered to it for a
period of three (3) years from the Closing Date, or for such longer period as is
required by any applicable law, and will permit the Vendor or its authorized
representatives reasonable access thereto in connection with the affairs of the
Vendor relating to its matters, but the Purchaser shall not be responsible or
liable to the Vendor for or as result of any accidental loss or destruction of
or damage to any such books or records.
8.03 Use of Name. Following the closing the Vendor acknowledges and agrees not
to use the name Pasta Kitchen under any circumstance and all correspondence or
any other communications of the Vendor shall not include the name Pasta Kitchen.
8.04 Conduct of Purchased Business Prior to Closing. Without in any way limiting
any other obligations of the Vendor hereunder, during the period from the date
hereof to the Time of Closing:
(a) Conduct Business in the Ordinary Course. The Vendor shall conduct the
Purchased Business only in the ordinary and normal course consistent with past
practice and the Vendor shall not, without the prior written consent of the
Purchaser, enter into any transaction or refrain from doing any action that, if
effected before the date of this Agreement, would constitute a breach of any
presentation, warranty, covenant or other obligation of the Vendor contained
herein, and the Vendor shall not enter into any material supply arrangements
relating to the Purchased Business or make any material decisions or enter into
any material Contracts with respect to the Purchased Business without the
consent of the Purchaser, which consent shall not be unreasonably withheld;
(b) Continue Insurance. The Vendor shall continue to maintain in full force
and effect all policies of insurance or renewals thereof now in effect, shall
take out, at the expense of the Purchaser, such additional insurance as may be
reasonably requested by the Purchaser and shall give all notices and present all
claims under all policies of insurance in a due and timely fashion;
(c) Regulatory Consents. Not applicable.
(d) Contractual Consents. The Vendor shall use its best efforts to give or
obtain, at or prior to the Time of Closing, the notices, consents and approvals
described in Schedule 16;
(e) Preserve Goodwill. The Vendor shall use its best efforts to preserve
intact the Purchased Business and Purchased Assets and to carry on the Purchased
Business as currently conducted, and the Vendor shall use its best efforts to
promote and preserve for the Purchaser the goodwill of suppliers, customers and
others having business relations with the Vendor;
(f) Discharge Liabilities. The Vendor shall pay and discharge the
liabilities of the Vendor relating to the Purchased Business in the ordinary
course in accordance and consistent with the previous practice of the Vendor,
except those contested in good faith by the Vendor;
(g) Corporate Action. The Vendor shall use its best efforts to take or
cause to be
24
taken all necessary corporate action, steps and proceedings to approve or
authorize validly and effectively the transfer of the Purchased Assets to the
Purchaser and the execution and delivery of this Agreement and the other
agreements and documents contemplated hereby and to cause all necessary meetings
of directors and shareholders of the Vendor to be held for such purpose;
(h) Best Efforts. The Vendor shall use its best efforts to satisfy the
conditions contained in Section 9.01 including, without limitation, the
condition contained in subsection 9.01(e); and
(i) Withdrawal of Funds. The Vendor shall not (a) pay an dividends or
provide for the repatriation of capital of the Vendor to the Vendor's
shareholders; (b) pay any fees or reimburse any expenses or provide any other
monetary compensation to the directors of the Vendor; and (c) pay any bonus or
reimburse any expenses of provide any other monetary compensation to officers
and employees of the Vendor other than base compensation consistent with that
paid by the Vendor during the period prior to June 30, 1998.
8.05 Delivery of Conveyancing Documents. The Vendor shall deliver to the
Purchaser all necessary deeds, conveyances, bills of sale, assurances,
transfers, assignments and any other documentation necessary or reasonably
required to transfer the Purchased Assets to the Purchaser with a good and
marketable title, free and clear of all Encumbrances whatsoever except for
Permitted Encumbrances.
8.06 Retail Sales Tax Certificate. The Vendor shall deliver to the Purchaser a
certificate issued by the Minister of Revenue of Ontario under subsection 6(1)
of the Retail Sales Tax Act (Ontario).
8.07 Delivery of Vendor's Closing Documentation. The Vendor shall deliver to the
Purchaser a certificate of status and three (3) copies, certified by a senior
officer of the Vendor as the Closing Date, of its constating documents and
by-laws and of the resolution authorizing the execution, delivery and
performance by the Vendor of this Agreement and any documents to be provided by
it pursuant to the provisions hereof. The Vendor shall also execute and deliver
or cause to be executed and delivered to the Purchaser three (3) copies of such
other documents relevant to the closing of the transactions contemplated hereby
as the Purchaser, acting reasonably, may request.
8.08 Delivery of Purchaser's Closing Documentation. The Purchaser shall deliver
to the Vendor a certificate of status and three (3) copies, certified by a
senior officer of the Purchaser as of the Closing Date, of its constating
documents and by-laws and of the resolution authorizing the execution, delivery
and performance by the Purchaser of this Agreement and any documents to be
provided by it pursuant to the provisions hereof. The Purchaser shall also
execute and deliver or cause to be executed and delivered two (2) copies of such
other documents relevant to the closing of the transactions contemplated hereby
as the Vendor, acting reasonably, may request.
25
8.09 Employees.
(a) The Vendor agrees to provide the Purchaser with an up-to-date list of
the names of the Employees at least two (2) Business Days and not more than four
(4) Business Days prior to the Closing Date. The Purchaser agrees that it shall
offer employment to all Employees on such list, effective as at the Time of
Closing, on substantially the same terms and conditions of employment as are
then applicable to the Employees. The Vendor shall indemnify and hold harmless
the Purchaser from and against all Losses suffered or incurred by the Purchaser
as a result of or arising directly or indirectly out of, in connection with or
pursuant to any claims by any employees of the Purchased Business, other than
claims by Transferred Employees who accept the Purchaser's offers of employment
with respect to their employment with the Purchaser. No employee of the
Purchased Business shall be entitled to any rights under this subsection 8.09(a)
or under any other provisions of this Agreement. The Vendor and the president of
the Vendor, Xxxxxx Xxxxx, shall on a joint and several basis, indemnify and hold
harmless the Purchaser from and against all claims by Xxxxxxx X. Xxxxx
("Adriano") as a result of the termination of employment of Adriano, it being
acknowledged by the parties that the Purchaser will hire Adriano on the Closing
Date provided that the Purchaser shall not be responsible for any costs with
respect to the termination of the employment of Adriano with respect to the
period of employment of Adriano with the Vendor prior to the Closing Date.
(b) The Vendor shall employ all the employees set out in Schedule 4 until
the Time of Closing, except for any employees who prior to the Time of Closing:
(i) are terminated for cause;
(ii) are terminated with the Purchaser's consent, which consent
shall not be unreasonably withheld;
(iii) voluntarily resign; or
(iv) retire.
The Vendor shall not attempt in any way to discourage any of the Employees
from accepting any offer of employment to be made by the Purchaser and shall not
solicit the services of any of the Employees during the two (2) year period
following the Closing Date without the consent in writing of the Purchaser,
which consent may be unreasonably withheld.
8.10 Employee Plans. The Vendor has not maintained or provided any employee
benefit plans and accordingly the Purchaser shall not assume any liability for
benefits under any employee plans of any kind.
8.11 Purchaser's Special Undertaking. The Purchaser undertakes to continue to
operate the Pasta Kitchen Division during the one year period from and including
October 9, 1998 to and including October 8, 1999 on a basis with sufficient
inventory, staff, capital, marketing and sales not less than
26
that applied by the Vendor during the twelve month period preceding October 1,
1998.
8.12 Tax Credits. The Vendor agrees with the Purchaser that the Purchaser shall
receive as part of the Purchased Assets all right, title and interest of the
Vendor to all claims and refunds for scientific research tax credits that may be
available to the Vendor for the period to and including the Closing Date.
ARTICLE IX
CONDITIONS OF CLOSING
9.01 Conditions of Closing in Favour of the Purchaser. The sale and purchase of
the Purchased Assets is subject to the following terms and conditions for the
exclusive benefit of the Purchaser, to be performed or fulfilled at or prior to
the Time of Closing:
(a) Representations and Warranties. The representation and warranties of
the Vendor contained in this Agreement shall be true and correct at the Time of
Closing with the same force and effect as if such representations and warranties
were made at and as of such time, and a certificate of the President of the
Vendor, dated the Closing Date, to that effect shall have been delivered to the
Purchaser, such certificate to be in form and substance satisfactory to the
Purchase, acting reasonably;
(b) Covenants. All of the terms, covenants and conditions of this Agreement
to be complied with or performed by the Vendor at or before the Time of Closing
shall have been complied with or performed, and a certificate of the President
of the Vendor, dated the Closing Date, to that effect shall have been delivered
to the Purchaser, such certificate to be in form and substance satisfactory to
the Purchaser, acting reasonably;
(c) Contractual Consents. The Vendor shall have given or obtained the
notices, consents and approvals described in Schedule 9, in each case in form
and substance satisfactory to the Purchaser, acting reasonably;
(d) Not applicable.
(e) Non-Competition Agreement. The Vendor and Xxxxxx Xxxxx shall have
executed and delivered to the Purchaser a non-competition agreement in the form
of the non-competition agreement annexed hereto as Schedule 11;
(f) Indemnity. The Vendor and Xxxxxx Xxxxx shall have delivered to the
Purchaser an indemnity in form and substance acceptable to the Purchaser as
required by Section 8.09(a);
(g) No Action or Proceeding. No legal or regulatory action or proceeding
shall be pending or threatened by any person to enjoin, restrict or prohibit the
purchase and sale of the Purchased Assets contemplated hereby;
27
(h) No Material Damage. No material damage by fire or other hazard to the
whole or any material part of the Purchased Assets shall have occurred from the
date hereof to the Time of Closing;
(i) No Material Adverse Change. There shall have been no material adverse
changes in the condition (financial or otherwise), assets, liabilities,
operations, earnings, business or prospects of the Purchased Business since the
date of the Financial Statements;
(j) Legal Matters. All actions, proceedings, instruments and documents
required to implement this Agreement, or instrumental thereto, and all legal
matters relating to the purchase of the Purchased Assets, including title of the
Vendor to the Purchased Assets, shall have been approved as to form and legality
by XxXxxxxx Grespan Xxxxxx Xxxxxx, counsel for the Purchaser, acting reasonably;
(k) Legal Opinion. The Vendor shall have delivered to the Purchaser a
favourable opinion of counsel to the Vendor in the form annexed hereto as
Schedule 21;
(l) Employment Agreement. The Purchaser shall have entered into an
employment agreement with Xxxxxx Xxxxx to manage the Pasta Kitchen Division of
the Purchaser;
(m)Lease and Sub-lease. The lease for the Leased Property shall have been
amended in writing with the terms and conditions of such amendment to be
acceptable to the Purchaser;
(n) Sub-lease. The Purchaser shall have entered into a sub-lease with the
Vendor for the lease of the Leased Property, such sub-lease to be on terms and
conditions acceptable to the Purchaser;
(o) Lease Payments. All payments required to be made under the Vendor's
lease for the Leased Property shall be current and the parties shall adjust for
any amounts that are applicable for the period prior to the Closing Date that
have not been paid by the Vendor;
(p) Insurance on Leased Property. The insurance maintained by the Vendor on
the Leased Property shall have been assigned to the Purchaser;
(q) Small Business Development Loan. The small business development loan of
the Vendor shall be assumed or discharged as at the Closing Time on a basis
acceptable to the Purchaser;
(r) Inventory at Time of Closing. The Vendor and the Purchaser shall cause
to be completed an inventory of the Vendor's inventory assets at the close of
business on the day preceding the Closing Date and such inventory shall be
acceptable to the Purchaser; and
(s) Delivery of Other Closing Documents. The delivery to the Purchaser of
such other closing documents required to complete the sale and purchase of the
Purchased Assets.
If any of the conditions contained in this Section 9.01 shall not be
performed or fulfilled at
28
or prior to the Time of Closing to the satisfaction of the Purchaser, acting
reasonably, the Purchaser may, by notice to the Vendor, terminate this Agreement
and the obligations of the Vendor and the Purchaser under this Agreement, other
than the obligations contained in Sections 12.02, 12.03 and 12.04, provided that
the Purchaser may also bring an action pursuant to Article XI against the Vendor
for damages suffered by the Purchaser where the non-performance or
non-fulfilment of the relevant condition is a result of a breach of covenant,
representation or warranty by the Vendor. Any such condition may be waived in
whole or in part by the purchaser without prejudice to any claims it may have or
breach of covenant, representation or warranty.
9.02 Conditions of Closing in Favour of the Vendor. The sale and purchase of the
Purchased Assets is subject to the following terms and conditions for the
exclusive benefit of the Vendor, to be performed or fulfilled at or prior to the
Time of Closing:
(a) Representations and Warranties. The representations and warranties of
the Purchaser contained in this Agreement shall be true and correct at the Time
of Closing with the same force and effect as if such representations and
warranties were made at and as of such time, and a certificate of the President
of the Purchaser, dated the Closing Date, to that effect shall have been
delivered to the Vendor, such certificate to be in form and substance
satisfactory to the Vendor, acting reasonably;
(b) Covenants. All of the terms, covenants and conditions of this Agreement
to be complied with or performed by the Purchaser at or before the Time of
Closing shall have been complied with or performed, and a certificate of the
President of the Purchaser, dated the Closing Date, to that effect shall have
been delivered to the Vendor, such certificate to be in form and substance
satisfactory to the Vendor, acting reasonably;
(c) Regulatory Consents. There shall have been obtained from all
appropriate federal, provincial, municipal or other governmental or
administrative bodies such licences, permits, consents, approvals, certificates,
registrations and authorization as are required to be obtained by the Purchaser
to permit the change of ownership of the Purchased Assets contemplated hereby,
including those described in Schedule 15, in each case in form and substance
satisfactory to the Vendor, acting reasonably;
(d) No Action or Proceeding. No legal or regulatory action or proceeding
shall be pending or threatened by any person to enjoin, restrict or prohibit the
purchase and sale of the Purchased Assets contemplated hereby;
(e) Legal Matters. All actions, proceedings, instruments and documents
required to implement this Agreement, or instrumental thereto, shall have been
approved as to form, and legality by Xxxxxx Xxxx, counsel for the Vendor, acting
reasonably; and
(s) Delivery of Other Closing Documents. The delivery to the Vendor of such
other closing documents required to complete the sale and purchase of the
Purchased Assets.
29
If any of the conditions contained in this Section 9.02 shall not be
performed or fulfilled at or prior to the Time of Closing to the satisfaction of
the Vendor acting reasonably, the Vendor may, by notice to the Purchaser,
terminate this Agreement and the obligations of the Vendor and the Purchaser
under this Agreement, other than the obligations contained in Sections 12.02,
12.03 and 12.04, provided that the Vendor may also bring an action pursuant to
Article XI against the Purchaser of damages suffered by it where the
non-performance or non-fulfilment of the relevant condition is as a result of a
breach of covenant, representation or warranty by the Purchaser. Any such
condition may be waived in whole or in part by the Vendor without prejudice to
any claims it may be have for breach of covenant, representation or warranty.
ARTICLE X
CLOSING DATE AND TRANSFER OF POSSESSION
10.01 Transfer. Subject to compliance with the terms and conditions hereof, the
transfer of possession of the Purchased Assets shall be deemed to take effect as
at the opening of business on the Closing Date.
10.02 Place of Closing. The closing shall take place at the Time of Closing at
the offices of XxXxxxxx Grespan Xxxxxx Xxxxxx, counsel for the Purchaser, 000
Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx X0X 0X0.
10.03 Further Assurances. From the time subsequent to the Closing Date, each
party to this Agreement covenants and agrees that it will at all times after the
Closing Date, at the expense of the requesting party, promptly execute and
deliver all such documents, including, without limitation, all such additional
conveyances, transfers, consents and other assurances and do all such other acts
and things as the other party, acting reasonably, may from time to time request
be executed or done in order to better evidence or perfect or effectuate any
provision of this Agreement or of any agreement or other document executed
pursuant to this Agreement or any of the respective obligations intended to be
created hereby or thereby.
10.04 Risk of Loss. From the date hereof up to the Time of Closing, the
Purchased Assets shall be and remain at the risk of the Vendor. If, prior to the
Time of Closing, all or any part of the Purchased Assets that are necessary to
carry on the Purchased Business as currently conducted are destroyed or damaged
by fire or any other casualty or shall be appropriated, expropriated or seized
by governmental or other lawful authority, unless the Purchaser terminates its
obligations under this Agreement as contemplated by Section 9.01, the Purchaser
shall complete the purchase without reduction of the Purchase Price, in which
event all proceeds of insurance or compensation for expropriation or seizure
shall be paid to be Purchaser at the Time of Closing and all right and claim of
the Vendor to any such amounts not paid by the Closing Date shall be assigned at
the Time of Closing to the Purchaser.
ARTICLE XI
INDEMNIFICATION
11.01 Indemnification by the Vendor. The Vendor agrees to indemnify and save
harmless the
30
Purchaser from all Losses suffered or incurred by the Purchaser as a result of
or arising directly or indirectly out of or in connection with:
(a) any breach by the Vendor of or any inaccuracy of any representation or
warranty of the Vendor contained in this Agreement or in any agreement,
certificate or other document delivered pursuant hereto (provided that the
Vendor shall not be required to indemnify or save harmless the Purchaser in
respect of any breach or inaccuracy of any representation or warranty unless the
Purchaser shall have provided notice to the Vendor in accordance with Section
11.03 on or prior to the expiration of the applicable time period related to
such representation and warranty as set out in Section 7.01);
(b) any breach or non-performance by the Vendor of any covenant to be
performed by it that is contained in this Agreement or in any agreement,
certificate or other document delivered pursuant hereto; and
(c) the operations of the Purchased Business up to the Time of Closing.
11.02 Indemnification by the Purchaser. The Purchaser agrees to indemnify and
save harmless the Vendor from all Losses suffered or incurred by the Vendor as a
result of or arising directly or indirectly out of or in connection with:
(a) any breach by the Purchaser of or any inaccuracy of any representation
or warranty contained in this Agreement or in any agreement, instrument,
certificate or other document delivered pursuant hereto;
(b) any breach or non-performance by the Purchaser of any covenant to be
performed by it that is contained in this Agreement or in any agreement,
certificate or other document delivered pursuant hereto; and
(c) the operations of the Purchaser Business after the Time of Closing
including, without limitation, any failure by the Purchaser to pay, satisfy,
discharge, perform or fulfil any of the Assumed Liabilities.
11.03 Notice of Claim. In the event that a party (the "Indemnified Party") shall
become aware of any claim, proceeding or other matter (a "Claim") in respect of
which the other party (the "Indemnifying Party") agreed to indemnify the
Indemnified Party pursuant to this Agreement, the Indemnified Party shall
promptly give written notice thereof to the Indemnifying Party. Such notice
shall specify whether the Claim arises as a result of a claim by a person
against the Indemnified Party (a "Third Party Claim") or whether the Claim does
not so arise (a "Direct Claim"), and shall also specify with reasonable
particularity (to the extent that the information is available):
(a) the factual basis for the Claim; and
31
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time to effectively contest the determination of
any liability susceptible of being contested, the Indemnifying Party shall be
entitled to set off against the amount claimed by the Indemnified Party the
amount of any Losses incurred by the Indemnifying Party resulting from the
Indemnified Party's failure to give such notice on a timely basis.
11.04 Direct Claims. With respect to any Direct Claim, following receipt of
notice from the Indemnified Party of the Claim, the Indemnifying Party shall
have seven (7) days to make such investigation of the Claim as is considered
necessary or desirable. For the purpose of such investigation, the Indemnified
Party shall make available to the Indemnifying Party the information relied upon
by the Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such seven (7) day period (or any
mutually agreed upon extension thereof) to the validity and amount of such
Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the
full agreed upon amount of the Claim, failing which the matter shall be referred
to binding arbitration is such manner as the parties may agree or shall be
determined by a court of competent jurisdiction.
11.05 Third Party Claims. With respect to any Third Party Claim, the
Indemnifying Party shall have the right, at its expense, to participate in or
assume control of the negotiation, settlement or defence of the Claim and, in
such event, the Indemnifying Party shall reimburse the Indemnified Party for all
the Indemnified Party's out-of-pocket expenses as a result of such participation
or assumption. If the Indemnifying Party elects to assume such control, the
Indemnified Party shall have the right to participate in the negotiation,
settlement or defence of such Third Party Claim and to retain counsel to act on
its behalf, provided that the fees and disbursements of such counsel shall be
paid by the Indemnified Party unless the Indemnifying Party consents to the
retention of such counsel or unless the named parties to any action or
proceeding include both the Indemnifying Party and the Indemnified Party and a
representation of both the Indemnifying Party and the Indemnified Party by the
same counsel would be inappropriate due to the actual or potential differing
interests between them (such as the availability of different defense). If the
Indemnifying Party, having elected to assume such control, thereafter fails to
defend the Third Party Claim within a reasonable time, the Indemnified Party
shall be entitled to assume such control and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim. If any Party Claim is of a nature such that the Indemnified
Party is required by applicable law to make a payment to any person (a "Third
Party") with respect to the Third Party Claim before the completion of
settlement negotiations or related legal proceedings, the Indemnified Party may
make such payment and the Indemnifying Party shall, forthwith after demand by
the Indemnified Party, reimburse the Indemnified Party for such payment. If the
amount of any liability of the Indemnified Party under the Third Party Claim in
respect of which such a payment was made, as finally determined, is less than
the amount that was paid by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, forthwith after receipt of the difference from the
Third Party, pay the amount of such difference to the Indemnifying Party.
32
11.06 Settlement of Third Party Claims. If the Indemnifying Party fails to
assume control of the defence of any Third Party Claim, the Indemnified Party
shall have the exclusive right to contest, settle or pay the amount claimed.
Whether or not the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Third Party Claim, the Indemnifying Party shall not
settle any Third Party Claim without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that the liability of the Indemnifying Party shall be limited to the
proposed settlement amount if any such consent is not obtained for any reason.
11.07 Co-operation. The Indemnified Party and the Indemnifying Party shall
co-operate fully with each other with respect to Third Party Claims, and shall
keep each other fully advised with respect thereto (including supplying copies
of all relevant documentation promptly as it becomes available).
11.08 Exclusivity. The provisions of this Article XI shall apply to any Claim
for breach of any covenant, representation, warranty of other provision of this
Agreement or any agreement, certificate or other document delivered pursuant to
this Agreement (other than a claim for specific performance or injunctive
relief) with the intent that all such Claims shall be subject to the limitations
and other provisions contained in this Article XI.
ARTICLE XII
MISCELLANEOUS
12.01 Notices.
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person, transmitted by
telecopy or similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
(i) if to the Vendor:
1218951 Ontario Limited
d.b.a. Pasta Kitchen
00 Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxx Xxxxx, President
Telecopier No.:
(ii) if the Purchaser:
Prime Foods Processing Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxxx, Secretary-Treasurer
Telecopier No.: (000) 000-0000
33
(b) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was delivered transmitted (or, if such
day is not a Business Day, on the next following Business Day) or, if Mailed, on
the third Business Day following the date of mailing; provided, however, that if
at the time of mailing or within three Business Days there-after there is or
occurs a labour dispute or other event that might reasonably be expected to
disrupt the delivery of documents by mail, any notice or other communication
hereunder shall be delivered or transmitted by means of recorded electronic
communication as aforesaid.
(c) Either party may at any time change its address for service from time
to time by giving notice to the other party in accordance with this Section
12.01.
12.02 Commissions, etc. The Vendor agrees to indemnify and save harmless the
Purchaser from and against all Losses suffered or incurred by the Purchaser in
respect of any commission of other remuneration payable or alleged to be payable
to any broker, agent or other intermediary who purports to act or have acted for
or on behalf of the Vendor.
12.03 Consultation. The parties shall consult with each other before issuing any
press release or making any other public announcement with respect to this
Agreement or the transactions contemplated hereby and, except as required by any
applicable law or regulatory requirement, neither of them shall issue any such
press release or make any such public announcement without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed.
12.04 Disclosure. Prior to any public announcement of the transaction
contemplated hereby pursuant to Section 12.03, neither party shall disclose this
Agreement or any aspects of such transaction except to its board of directors,
its senior management, its legal, accounting, financial or other professional
advisors, any financial institution contacted by it with respect to any
financing required in connection with such transaction and counsel to such
institution, or as may be required by any applicable law or any regulatory
authority or stock exchange having jurisdiction.
12.05 Assignment by Purchaser. The Purchaser may assign its right under this
Agreement in whole or in part to any other person; provided, however, that any
such assignment shall not relieve the Purchaser from any of its obligations
hereunder.
12.06 Best Efforts. The parties acknowledge and agree that, for all purpose of
this Agreement, an obligation on the part of either party to use its best
efforts to obtain any waiver, consent, approval, permit, licence of other
document shall not require such party to make any payment to any person for the
purpose of procuring the same, other than payments for amounts due and payable
to such person, payments for incidental expenses incurred by such person and
payments required by any applicable law or regulation.
12.07 Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties.
34
1218951 ONTARIO LIMITED
Per: /s/ Xxxxxx Xxxxx
------------------------
Title: President
------------------------
PRIME FOODS PROCESSING INC.
Per: /s/ Xxxxxxx Xxxxxx
------------------------
Title: Secretary - Treasurer
------------------------
35
THIS IS SCHEDULE 1 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
.
Leased Real Property
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Lease
Landlord: 1117423 Ontario Ltd.
Tenant: 1218951 Ontario Limited
Date of Lease: February 1, 1997
Date of Amendment: October 9, 1998
36
THIS IS SCHEDULE 2 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Machinery and Equipment
37
THIS IS SCHEDULE 3 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Material Contracts
1. Sublease of Leased Premises
2. Xxxxx XxXxxxx Commissioned Sales Agent Agreement at 5% of Gross Sales
3. Bank of Montreal Lease of Computer
38
THIS IS SCHEDULE 4 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Employee Matters
Biweekly
Name Start Date Position Salary/Hourly Rate
---- ---------- -------- ------------------
Xxxxxxx Xxxxx Jan. 20/97 $1,200.00 salary
Xxxxx Xxxxxxx Jan. 20/97 Salesman $ 800.00 salary
Ashok Master Jan. 20/97 Accountant $1,000.00 salary
Chiara Rauti Jan. 20/97 Chef $ 14.00 per hour
Xxxxx Xxxxxxxx Jan. 20/97 Kitchen-help $ 7.00 per hour
Xxxxxxx Xxxxxxx Jan. 20/97 Kitchen-help $ 10.00 per hour
Xxxxxxxxxx Xxxxxxxxxx Jan. 20/97 Kitchen-help $ 9.00 per hour
Xxxxx Xxxx Jan. 20/97 Kitchen-help $ 10.00 per hour
Xxxxx Xx Xxxxx Jan. 20/97 Kitchen-help $ 8.00 per hour
Xxxxxxxx Xxxxxx Xxxxxxxx Jul. 07/97 Kitchen-help $ 7.00 per hour
Xxxxx Xxxxxxxx Sep. 28/98 Kitchen-help $ 7.00 per hour
39
THIS IS SCHEDULE 5 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Insurance
Policy No.: 4-156692
INDUSTRIAL PACKAGE POLICY
Effective Date: 07-Nov-1997
Expiry Date: 07-Nov-1998
Insurer: The Citadel General Assurance Company
Premium: $3,550.00
40
THIS IS SCHEDULE 6 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Intellectual Property
1. Trade Xxxx : Pasta Kitchen Inc.
2. Recipes
41
THIS IS SCHEDULE 7 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Allocation of Purchase Price
Inventory $_______________
Equipment $_______________
Receivables $_______________
Goodwill $_______________
42
THIS IS SCHEDULE 8 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Location of Assets
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
43
THIS IS SCHEDULE 9 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Third Party Consents
1. The approval of the shareholders of the Vendor.
2. The approval and consent of the Landlord under the Lease.
3. Bank of Montreal computer lease.
44
THIS IS SCHEDULE 10 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Major Customers
1. National Grocers
45
THIS IS SCHEDULE 11 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Non-Competition Agreement
46
THIS IS SCHEDULE 12 TO THE ASSET PURCHASE AGREEMENT BETWEEN 1218951 ONTARIO
LIMITED AND PRIME FOODS PROCESSING INC.
--------------------------------------------------------------------------------
Opinion of Vendor's Counsel
47
