Exhibit 4.7
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of November 1, 2008.
AMONG:
SKY GROUP OF COMPANIES INC.
(the "Purchaser")
- and -
XXXXX X. XXXXXXX
("Xxxxxxx")
- and -
MODUS ENTERPRISE INTERNATIONAL INC.
(the "Vendor")
- and -
BONSO ELECTRONICS INTERNATIONAL INC.
("Bonso")
- and -
GRAM PRECISION SCALES INC.
(the "Corporation")
THIS AGREEMENT WITNESSES that in consideration of the covenants and
agreements contained in this Agreement and other good and valuable consideration
(the receipt and sufficiency of which is hereby acknowledged by each of the
parties), the parties covenant and agree as follows:
1. Definitions
-----------
In this Agreement, unless the context otherwise requires or unless
otherwise defined, all capitalized words shall have the meaning given them in
Schedule "A".
2. Agreement to Purchase
---------------------
Subject to the terms and conditions of this Agreement, the Vendor
agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the
Vendor, the Purchased Shares on Closing.
3. Purchase Price
--------------
(a) The purchase price payable by the Purchaser for the Purchased Shares shall
be the sum of US $1.00 (the "Purchase Price").
(b) The Purchase Price shall be paid and satisfied by the Purchaser on the
Closing Date by the payment of the sum of US $1.00, which shall be paid to the
Vendor by cash or cheque.
2
4. Debt Forgiveness
----------------
The parties acknowledge that the Corporation is indebted to Bonso for
approximately US $5,000,000.00 in respect of products supplied by Bonso to the
Corporation. Bonso agrees to forgive all debts owing by the Corporation to Bonso
in excess of US $1,700,000.00. The sum of US $1,700,000.00 which shall remain
owing by the Corporation to Bonso, shall be evidenced by the Promissory Note
which is to be given by the Corporation to Bonso on Closing, and the terms of
payment of such debt shall be those as set out in the Promissory Note. The
Promissory Note shall provide that no payment except for the first $1,050,000
due under the Promissory Note (the "Permitted Amount") shall be due or shall be
paid at any time if:
(a) at such time the Corporation is in breach of any term or provision of any
agreement (a "Lending Agreement") that the Corporation has entered into with an
institutional lender (a "Lender") and such Lender has required that payments
under the Promissory Note be suspended in accordance with the provisions of a
Lending Agreement; or
(b) if the making of such payment shall cause the Corporation to be in breach of
any term or provision of a Lending Agreement made with a Lender.
Bonso shall, at the request of the Corporation made from time to time, enter
into a subordination agreement directly with a Lender in such form as the Lender
may require to confirm the foregoing provisions. This provision supercedes any
inconsistent provision set out in the Promissory Note. Despite the foregoing,
the Corporation shall use all reasonable commercial efforts to make due and
punctual payments under the Promissory Note, including requesting the Lender to
consent to any payments which would otherwise not be permitted by a
subordination agreement.
5. Bank Guarantee
--------------
The parties acknowledge that Bonso has provided assurances to HSBC Bank
Canada, including a "Bank to Bank Guarantee", which assurances support a
$650,000 line of credit (the "Line of Credit") in favour of the Corporation
which has been established with HSBC Bank Canada. Bonso and the Vendor jointly
and severally agree that they will do everything that is necessary or desirable
to maintain all of such assurances in place for a period of 12 months following
Closing (the "Initial Period"). If despite using reasonable commercial efforts,
the Corporation is unable to obtain conventional bank financing prior to the end
of the Initial Period to permit the Line of Credit to remain in place without
such assurances, Bonso shall either extend the Initial Period until such
conventional bank financing can be obtained, or reduce the Permitted Amount to
such amount as is required by the Corporation to obtain such conventional bank
financing.
6. Legal , Consulting and Accounting Fees
--------------------------------------
(a) The parties agree that that the Vendor and Bonso shall be jointly and
severally responsible for 50% of the legal, consulting and accounting fees and
disbursements incurred by the Purchaser, the Corporation and Xxxxxxx in
association with the Transaction (the "Vendor Group Fees").
(b) The parties also agree that Bonso will be responsible for 100% of the:
(i) outstanding fees and disbursements owing by the Corporation to the
Corporation's accountants; and
(ii) accounting fees incurred and to be incurred by the Corporation in
connection with the fiscal year of the Corporation ended March 31,
2008 and the fiscal period of the Corporation ended November 1, 2008
for the preparation of financial statements and tax returns,
(collectively, the "Accounting Fees").
(c) On Closing, the Vendor and Bonso will provide a written direction to Pallett
Valo LLP, directing Pallett Valo LLP to pay the Vendor Group Fees and the
Accounting Fees out of funds currently held by Pallett Valo LLP in trust for
Bonso.
3
7. Representations and Warranties of the Vendor and Bonso
------------------------------------------------------
The Vendor and Bonso hereby jointly and severally represent and warrant
to the Purchaser, upon each of which representations and warranties the
Purchaser specifically relies, as follows:
(a) the Vendor is an international business corporation duly incorporated
and organized and validly subsisting under the laws of British Virgin
Islands;
(b) Bonso is a corporation duly incorporated and organized, and validly
existing under the laws of Hong Kong;
(c) the Purchased Shares are owned by the Vendor as the beneficial owner
of record, with good and marketable title thereto, free and clear of
all Encumbrances;
(d) the Vendor has the exclusive right to sell and dispose of the
Purchased Shares in accordance with the terms of this Agreement;
(e) the Purchased Shares have been duly and validly issued and are
outstanding as fully paid and non-assessable shares in the capital of
the Corporation;
(f) no Person has any 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 from the Vendor of any of the
Purchased Shares;
(g) the Vendor has not had any petition for a receiving order in
bankruptcy filed against the Vendor, nor has the Vendor made a
voluntary assignment in bankruptcy or a proposal to creditors; and
(h) this Agreement has been duly executed and delivered by each of the
Vendor and Bonso and constitutes a valid and binding obligation of the
Vendor and Bonso enforceable against each of them in accordance with
its terms, subject to the fact that:
(i) such enforcement may be limited by applicable bankruptcy,
insolvency or other laws of general application affecting the
enforcement of creditors' rights generally; and
(ii) equitable remedies, including, without limitation, the remedies
of specific performance and injunction, may only be granted in
the discretion of a court of competent jurisdiction;
(i) no representation or warranty by the Vendor or Bonso contained in this
Agreement contains an untrue statement of a material fact or omits to
state a material fact necessary to make such representation and
warranty not misleading.
8. Representations and Warranties of the Purchaser
-----------------------------------------------
The Purchaser represents and warrants to the Vendor, upon each of which
representations and warranties the Vendor specifically relies, as follows:
(a) the Purchaser is a corporation duly incorporated and organized, and
validly subsisting under the laws of Ontario;
4
(b) the Purchaser has not had any petition for a receiving order in
bankruptcy filed against the Purchaser, nor has the Purchaser made a
voluntary assignment in bankruptcy or a proposal to creditors;
(c) this Agreement has been duly executed and delivered by Purchaser and
constitutes a valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms,
subject to the fact that:
(i) such enforcement may be limited by applicable bankruptcy,
insolvency or other laws of general application affecting the
enforcement of creditors' rights generally; and
(ii) equitable remedies, including, without limitation, the remedies
of specific performance and injunction, may only be granted in
the discretion of a court of competent jurisdiction; and
(d) no representation or warranty by the Purchaser contained in this
Agreement contains an untrue statement of a material fact or omits to
state a material fact necessary to make such representation and
warranty not misleading.
9. Survival of Representations and Warranties
------------------------------------------
The representations and warranties of the parties contained in this
Agreement shall survive the Closing and, despite the Closing, shall continue
thereafter in full force and effect. No investigations made by or on behalf of
the parties at any time shall have the effect of superseding, prejudicing,
waiving, diminishing the scope of or otherwise affecting any representation or
warranty made by the parties in this Agreement.
10. Covenants of the Vendor and Bonso
---------------------------------
The Vendor and Bonso covenant and agree with the Purchaser, as follows:
(a) on Closing, they shall deliver to the Purchaser the resignations of
Xxxxxx X. So, Xxxxxxx So, Kit (Xxxxx) Xxxx Xxxx and Xxxxx X. Xxxxxxxxx
as officers and directors of the Corporation;
(b) on Closing, to execute and deliver all documents, including, without
limitation, the documents described in section 15 below and perform
all acts and things necessary or desirable to give effect to the
purposes and intent of this Agreement and ensure that the
representations and warranties made by the Vendor and Bonso in this
Agreement are true and correct as of the Closing Date; and
(c) on Closing, to execute and deliver all documents reasonably required
to update the minute book of the Corporation.
11. Release by Vendor and Bonso
---------------------------
(a) The Vendor and Bonso (collectively, the "Vendor Group") hereby release,
remise, and forever discharge the Purchaser, the Corporation and Xxxxxxx
(collectively, the "Releasees") of and from all actions, causes of action,
suits, debts, duties, accounts, bonds, covenants, contracts, claims and demands
whatsoever in law or in equity which the Vendor Group now has or hereafter may
have against the Releasees (or any of them) for or by reason of or in any way
arising out of any cause, matter or thing whatsoever existing up to and
including the date of this Agreement, and in particular and without in any way
limiting the generality of the foregoing, as a result of, in connection with or
arising out of:
(i) either member of the Vendor Group having been a direct or indirect
shareholder or creditor of the Corporation;
(ii) any obligation of the Corporation to Bonso in respect of product
purchases or other indebtedness of any nature or kind whatsoever in
excess of the amount owing under the Promissory Note;
(iii) Xxxxxxx having been a director, officer and employee of the
Corporation; and
(iv) the Shareholders Agreement.
(b) The Vendor Group further covenant and agree with the Releasees not to join,
assist, aid or act in concert in any manner whatsoever with any other person,
firm or corporation in the making of any claim or demand or in the bringing of
any proceeding or action in any manner whatsoever against the Releasees, or any
of them, or to make any claim or to take any proceedings against any other
person or entity in respect of the matters and claims hereby released who might
claim contribution or indemnity from the Releasees or any of them.
(c) This Release shall not extend to release:
(i) the Releasees from the terms of this Agreement;
(ii) the Corporation from the Promissory Note;
(iii) the guarantors of the Promissory Note from their respective guarantee
obligations under the Promissory Note; or
(iv) the Releasees from the Escrow Agreement made as of the 1st day of
August 2002 among Bonso, the Vendor, Xxxxxxx, the Corporation and
Pallett Valo LLP.
12. Release by the Purchasers, the Corporation and Xxxxxxx
------------------------------------------------------
(a) The Purchaser, the Corporation and Xxxxxxx (collectively, the Releasors")
hereby release, remise, and forever discharge the Vendor and Bonso
(collectively, the "Vendor Group") of and from all actions, causes of action,
suits, debts, duties, accounts, bonds, covenants, contracts, claims and demands
whatsoever in law or in equity which the Releasors (or any of them) now have or
hereafter may have against the Vendor Group for or by reason of or in any way
arising out of any cause, matter or thing whatsoever existing up to and
including the date of this Agreement, and in particular and without in any way
limiting the generality of the foregoing, as a result of, in connection with or
arising out of:
(i) either member of the Vendor Group having been a direct or indirect
shareholder or debtor of the Corporation;
(ii) any obligation of Bonso or any of its officers, directors, agents or
affiliates of any nature or kind whatsoever to the Corporation,
Xxxxxxx, or their respective affiliates;
(iii) the Shareholders Agreement, and
(iv) Xxxxxxx So, Kit (Xxxxx) Xxxx Xxxx, Xxxxxx So, Xxxxx X. Xxxxxxxxx or
any other officer, director, agent or employee of Bonso having been an
officer, director or employee of the Corporation.
(b) The Releasors further covenants and agrees with the Vendor Group not to
join, assist, aid or act in concert in any manner whatsoever with any other
person, firm or corporation in the making of any claim or demand or in the
bringing of any proceeding or action in any manner whatsoever against the Vendor
Group or any of them or to make any claim or to take any proceedings against any
other person or entity in respect of the matters and claims hereby released who
might claim contribution or indemnity from the Vendor Group or any of them.
6
(c) This Release shall not extend to release the members of the Vendor Group
from:
(i) the terms of this Agreement; or
(ii) the Escrow Agreement made as of the 1st day of August 2002 among
Bonso, the Vendor, Xxxxxxx, the Corporation and Pallett Valo LLP.
13. Indemnification by the Vendor
-----------------------------
(a) The Vendor and Bonso jointly and severally covenant and agree to indemnify
and hold harmless the Purchaser and the Corporation from and against any and all
Claims which may be made or brought against the Purchaser or the Corporation or
which the Purchaser or the Corporation may suffer or incur as a result of, in
connection with or arising out of:
(a) any non-fulfillment of any covenant or agreement on the part of the
Vendor or Bonso under this Agreement; and
(b) any breach of any representation or warranty of the Vendor or Bonso
contained in this Agreement or in any certificate or other document
furnished by the Vendor pursuant to this Agreement.
The indemnities of the Vendor and Bonso contained in this section shall survive
the Closing and continue afterwards in full force and effect.
14. Indemnification by the Purchaser
--------------------------------
The Purchaser and the Corporation jointly and severally covenant and
agree to indemnify and hold harmless the Vendor and Bonso from and against any
and all Claims which may be made or brought against the Vendor and Bonso, or
which the Vendor and Bonso may suffer or incur as a result of, in connection
with or arising out of:
(a) any non-fulfillment of any covenant or agreement on the part of the
Purchaser or the Corporation under this Agreement; and
(b) any breach of any representation or warranty of the Purchase or the
Corporation contained in this Agreement or in any certificate or other
document furnished by the Purchaser or the Corporation pursuant to
this Agreement.
The indemnities of the Purchaser and the Corporation contained in this section
shall survive the Closing and continue afterwards in full force and effect.
15. Closing
-------
(a) Closing shall take place at the Closing Time on the Closing Date at the
Closing Location, and shall be deemed to be effective as of and from November 1,
2008 for all purposes.
(b) On or before the Closing Date, all corporate parties shall take or cause to
be taken all actions, steps and corporate proceedings necessary or desirable to
validly and effectively approve or authorize the completion of the Transaction.
(c) Without limiting the generality of section 15(b), the Vendor shall deliver
the following to the Purchaser at the Closing Time, all of which shall, unless
otherwise stated, be dated the Closing Date:
(i) share certificates representing the Purchased Shares duly endorsed in
favour of the Purchaser in fully transferable form;
7
(ii) certified copy of a resolution of the board of directors of the
Corporation authorizing the transfer of shares;
(iii) the resignations of Xxxxxxx So, Xxxxxx X. So, Kit (Xxxxx) Xxxx Xxxx
and Xxxxx X. Xxxxxxxxx as directors and officers, as applicable, of
the Corporation; and
(iv) all such other documents and agreements as the Purchaser's solicitors
reasonably consider necessary or desirable to give effect to the
Transaction or to update the minute books of the Corporation.
(d) Without limiting the generality of section 15(b), the Purchaser shall
deliver the following to the Vendor at the Closing Time, all of which shall,
unless otherwise stated, be dated the Closing Date:
(i) the monies described in section 3(a); and
(ii) the Promissory Note.
16. General Contract Terms
----------------------
(a) Entire Agreement
----------------
This Agreement, including any Schedules and any agreements and
documents to be delivered pursuant to the terms of this Agreement, constitutes
the entire agreement between the parties pertaining to the subject matter of
this Agreement and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. There are no
representations, warranties or other agreements, whether oral or written,
between the parties in connection with the subject matter of this Agreement
except as specifically set out in this Agreement. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding on the
parties unless same is in writing and signed by all of the parties.
(b) Schedules
---------
The Schedules are as follows:
Schedule "A" - Definitions
Schedule "B"- Promissory Note
The Schedules are incorporated into and form an integral part of this Agreement.
(c) Waiver
------
No waiver of any provision of this Agreement shall be deemed to
constitute a waiver of any other provision, whether or not similar, nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
No forbearance by any party to seek a remedy for any breach by any other party
of any provision of this Agreement shall constitute a waiver of any rights or
remedies with respect to any subsequent breach.
(d) Headings
--------
The division of this Agreement into sections and the insertion of
headings is for convenience of reference only and shall not affect the
construction or interpretation of this Agreement or any part of it.
(e) References to Articles
----------------------
Any reference to a section or Schedule in this Agreement shall be
deemed a reference to the applicable Article, section or Schedule contained in
or attached to this Agreement and to no other agreement or document unless
specific reference is made to such other agreement or document.
8
(f) Statutes
--------
Any reference to a statute in this Agreement includes a reference to
all regulations made pursuant to such statute, all amendments made to such
statute and regulations in force from time to time and to any statute or
regulation which may be passed and which has the effect of supplementing or
superseding such statute or regulations.
(g) Applicable Law
--------------
This Agreement shall be construed in accordance with the laws of the
Province of Ontario (other than Ontario principles of conflicts of law) and the
laws of Canada applicable in the Province of Ontario and shall be treated in all
respects as an Ontario contract. All disputes arising out of or in connection
with or in relation to this Agreement shall be submitted to the jurisdiction of
the courts of the province of Ontario which shall have exclusive jurisdiction
over any such dispute. Each of the parties irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario.
(h) Currency
--------
Unless otherwise indicated, all dollar amounts referred to in this Agreement are
in lawful US funds.
(i) Invalidity
----------
If any provision of this Agreement or any part of any provision of this
Agreement is held to be invalid, illegal or unenforceable by a court of
competent jurisdiction, such provision or part shall not affect the validity,
legality or enforceability of any other provision of this Agreement or the
balance of any provision of this Agreement absent such part and such invalid,
illegal or unenforceable provision or part shall be deemed to be severed from
this Agreement and this Agreement shall be construed and enforced as if such
invalid, illegal or unenforceable provision or part had never been inserted in
this Agreement.
(j) Further Assurances
------------------
The parties shall with reasonable diligence do all things and provide
all such reasonable assurances as may be required to complete the Transaction.
Each party shall provide and execute such further documents or instruments as
may be reasonably required by any other party, exercise its influence and do and
perform or cause to be done or performed such further and other acts as may be
reasonably necessary or desirable to effect the purpose of and to carry out the
provisions of this Agreement.
(k) Counterparts and Execution by Fax
---------------------------------
This Agreement may be executed by the parties in separate counterparts
each of which when so executed and delivered to all of the parties shall be
deemed to be and shall be read as a single agreement among the parties. In
addition, execution of this Agreement by any of the parties may be evidenced by
way of a faxed or pdf transmission of such party's signature (which signature
may be by separate counterpart), or a photocopy of such faxed or pdf
transmission, and such faxed or pdf signature, or photocopy of such faxed or pdf
signature, shall be deemed to constitute the original signature of such party to
this Agreement.
(l) Assignability
-------------
Neither this Agreement nor any rights or obligations of any of the
parties under this Agreement may be assigned by any of the parties without the
prior written consent of all of the other parties.
9
(m) Binding Effect
--------------
This Agreement shall enure to the benefit of and shall be binding upon
the parties and their respective heirs, executors, administrators and
successors.
IN WITNESS WHEREOF this Agreement has been executed by the parties on
December 12, 2008 with effect as of November 1, 2008.
Sky Group of Companies Inc.
Per:
------------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
Witness
--------------------------------------------- -------------------------------------------------
Name: Xxxxx Xxxxxxx
Modus Enterprise International Inc.
Per:
-------------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Secretary and Attorney-in-Fact
Bonso Electronics International Inc.
Per:
-------------------------------------------------
Name:
Title:
Gram Precision Scales Inc.
Per:
-------------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
SCHEDULE "A"
DEFINITIONS
In this Agreement, the following words and phrases (which may be used in
the singular or plural) shall have the meanings set forth after them:
"Agreement" means this agreement as amended from time to time;
"Claims" means any and all claims, damages, losses, liabilities, demands,
suits, judgments, causes of action, legal proceedings, penalties or other
sanctions and any and all costs and expenses arising in connection
therewith, including, without limitation, legal fees and disbursements on a
solicitor and his own client basis (including, without limitation, all such
legal fees and disbursements in connection with any and all appeals);
"Closing" means the completion of the Transaction on the Closing Date;
"Closing Date" means December 19, 2008, or such other date as the parties
may agree upon in writing;
"Closing Location" means the Mississauga, Ontario, offices of Pallett Valo
LLP or such other place as may be approved in writing by the parties;
"Closing Time" means 2 p.m. on the Closing Date or such other time as the
parties may agree upon in writing;
"Encumbrances" means security interests, charges, mortgages, liens,
encumbrances, actions, claims, demands and equities of any nature
whatsoever or howsoever arising and any rights or privileges capable of
becoming any of the foregoing;
"Person" means an individual, partnership, corporation, firm, trust,
unincorporated association, joint venture, syndicate or other entity or
Governmental Entity;
"Promissory Note" means a promissory note to be given by the Corporation to
Bonso on Closing and to be guaranteed by Dragonfly Distributing (Canada)
Inc. and Tantric Europe Ltd., and to be in the form attached to this
Agreement as Schedule "B".
"Purchase Price" shall have the meaning given that term in section 3(a);
"Purchased Shares" means the 2,805 common shares of the Corporation which
are registered in the name of and beneficially owned by the Vendor;
"Schedules" means the schedules attached to this Agreement and which are
more particularly described in section 13 (b);
"Shareholder Agreement" means the agreement made among Bonso, the Vendor,
the Purchaser, Xxxxxxx and the Corporation dated August 1, 2002.
"Transaction" means the transaction of purchase and sale contemplated by
this Agreement.
2
SCHEDULE "B"
PROMISSORY NOTE
SCHEDULE "B"
PROMISSORY NOTE
Principal Amount: $1,700,000.00 U.S
Date: As of November 1, 2008
For value received, Gram Precision Scales Inc. (the "Maker") promises to
pay to Bonso Electronics International Inc. (the "Holder") at Xxxx 0000-0000
19/F Delta House, 3 On YIU Street, Xxxx Xxx, Shatin, New Territories, Hong Kong,
or at such other place as the Holder may designate from time to time to the
Maker in writing, in lawful money of the United States of America, at the time
or times set out below, the principal sum of $1,700,000.00 (the "Principal
Amount"), without interest.
The Principal Amount shall be payable in 6 equal installments of $10,000
each on the 30th day of each month, commencing on December 30, 2008 and ending
on May 30, 2009 and 82 equal installments of $20,000 each on the 30 day of each
month, commencing on June 30, 2009 and ending on March 30, 2016.
The Maker represents, warrants and covenants with, the Holder as follows:
a. Authorization; Enforceability. All corporate action on the part
of the Maker, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Note and
the performance of all obligations of the Maker hereunder has
been taken, and this Note constitutes a valid and legally binding
obligation of the Maker, enforceable in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
b. Governmental Consents. No consent, approval, qualification, order
or authorization of, or filing with, any local, provincial or
federal governmental authority is required on the part of the
Maker in connection with the Maker's valid execution, delivery or
performance of this Note.
c. No Violation. The execution, delivery and performance by the
Maker of this Note and the consummation of the transactions
contemplated hereby will not result in a violation of its
Articles of Incorporation or Bylaws, in any material respect of
any provision of any mortgage, agreement, instrument or contract
to which it is a party or by which it is bound or, to the best of
its knowledge, of any federal or provincial judgment, order,
writ, decree, statute, rule or regulation applicable to the Maker
or be in material conflict with or constitute, with or without
the passage of time or giving of notice, either a material
default under any such provision or an event that results in the
creation of any material lien, charge or encumbrance upon any
assets of the Maker or the suspension, revocation, impairment,
forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to the Maker, its business
or operations, or any of its assets or properties.
The occurrence of any one or more of the following events (regardless of
the reason therefor), shall constitute an "Event of Default" hereunder:
3
a. The Company shall fail to make any payment of principal of, or of
interest on, or any other amount owing in respect of, the Note
when due and payable or declared due and payable, and such
failure shall have remained unremedied for a period of 90 days.
b. A case or proceeding shall have been commenced against the
Company in a court having competent jurisdiction (i) seeking a
decree or order in respect of the Company under the Canadian
bankruptcy laws as now constituted or hereafter amended or any
other applicable Federal, provincial or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar
official) of the Company or of any substantial part of its
properties, or (iii) ordering the winding-up or liquidation of
the affairs of the Company, and any such case or proceeding shall
remain undismissed or unstayed for sixty (60) consecutive days or
such court shall enter a decree or order granting the relief
sought in such case or proceeding.
c. The Company shall (i) file a petition seeking relief under the
Canadian bankruptcy laws as now constituted or hereafter amended,
or any other applicable federal, provincial or foreign bankruptcy
or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of the Company or of any substantial part of
its or his properties, or (iii) fail generally to pay its debts
as such debts become due.
d. Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $100,000
in the aggregate shall be rendered against the Company and the
same shall not (i) be fully covered by insurance or bonded over
or (ii) within thirty (30) days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or
have been discharged within five (5) days after the expiration of
any such stay.
If an Event of Default occurs as described herein, then the entire amount
of the Note shall become immediately due and payable in full.
Despite any other provision contained in this Promissory Note no payment,
except for the first $1,050,000 due under this Promissory Note, shall be due or
shall be paid under this Promissory Note at any time if:
d. at such time the Corporation is in breach of any term or
provision of any agreement (a "Lending Agreement") that the
Corporation has entered into with an institutional lender (a
"Lender") and such Lender has required that payments under this
Promissory Note be suspended in accordance with the provisions of
a Lending Agreement; or
e. the making of such payment shall cause the Corporation to be in
breach of any term or provision of a Lending Agreement made with
a Lender.
The Maker shall have the right to prepay at any time or times the whole or
any part of the Principal Amount due under this Promissory Note, without notice,
bonus or penalty, provided that such prepayments are made in multiples of
$10,000.00, or if less than $10,000.00 remains unpaid, provided that the entire
balance of the Principal Amount is paid.
Upon default, this Promissory Note may be enforced in the courts of any
province of Canada, which shall have exclusive jurisdiction with respect to all
disputes concerning this Promissory Note. This Promissory Note shall be
construed, interpreted and applied in accordance with, and shall be governed by
the laws of the Province of Ontario, Canada.
4
This Promissory Note is non-assignable and non-negotiable.
IN WITNESS WHEREOF the undersigned has executed this Promissory Note on
December 19 2008, with effect as of November 1, 2008.
Gram Precision Scales Inc.
Per:
-------------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
Guarantee
Dragonfly Distributing (Canada) Inc. and Tantric Europe Ltd. hereby guarantee the due and punctual payment of all
principal due under this Promissory Note.
Dated as of November 1, 2008.
Dragonfly Distributing (Canada) Inc.
Per:
-------------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
Tantric Europe Ltd.
Per:
-------------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
