MEMORANDUM OF AGREEMENT
Exhibit 1
DATED THIS 18th day of March, 2004.
AMONG
XXX XXXXXXXX
("Xxxxxxxx")
OF THE FIRST PART
-and-
CVF TECHNOLOGIES CORPORATION
("CVF")
OF THE SECOND PART
-and-
SRE CONTROLS INC.
("SRE")
OF THE THIRD PART
A) CURRENT OUTSTANDING SHARES AND DEBT OF SRE
1. The issued and outstanding shares of SRE as at the date hereof are as follows:
|
Shareholder |
Common Shares |
Class A Shares |
Total |
% Voting |
Class B Shares |
Total (all shares) |
| CVF Corp. |
- |
1,169,418 |
1,169,418 |
75.77% |
- |
1,169,418 |
| Xxxxxxxx |
- |
137,931 |
137,931 |
8.94% |
- |
137,931 |
| Others |
100,000 |
136,064 |
236,064 |
15.29% |
22,736 |
258,800 |
| Totals |
100,000 |
1,443,413 |
1,543,413 |
100.0% |
22,736 |
1,566,149 |
2. The current debt outstanding to CVF and Xxxxxxxx respectively is as follows:
|
CVF |
Xxxxxxxx |
|
| Principal |
$1,751,000.00 |
$840,000.00 |
| Interest to March 31/04 |
$ 164,954.13 |
$ 45,500.00 |
| Total |
$1,915,954.13 |
$885,500.00 |
B) XXXXXXXX INVESTMENT
Xxxxxxxx agrees to invest $500,000.00 of new money into SRE and to convert $645,500.00 of SRE's existing debt and outstanding interest thereon to Xxxxxxxx (the "Xxxxxxxx Conversion Amount") on or before March 31, 2004 on the following terns and conditions:
| 1. | CVF converts all of the debt and outstanding interest thereon ($1,915,954.00, as shown in paragraph A2 above) owed to it by SRE (the "CVF Conversion Amount") into Common |
| or Class A shares of SRE at a conversion price of $1.00 per share coincidentally with the investment of new monies by Xxxxxxxx. | |
| 2. |
Following the conversion by CVF of the CVF Conversion Amount and by Xxxxxxxx of the Xxxxxxxx Conversion Amount, Xxxxxxxx shall receive Class A shares in the capital of SRE equal to 102% of the then issued and outstanding Common and Class A shares of SRE. |
| 3. |
Xxxxxxxx shall retain $240,000.00 of his current loan to SRE as senior debt which shall be due November 30, 2004 and bear interest at 10% per annum payable from and after March 31, 2004 on the due date and secured by a first charge/lien (GSA) over all the assets of SRE. |
C)
POST-INVESTMENT HOLDINGS
Immediately following the completion of Xxxxxxxx'x investment, debt conversion by CVF and Xxxxxxxx and the issue of shares relative thereto, all as provided above, the shareholdings and debt of SRE shall be as follows:
SRE SHARES
| Shareholder |
Common/Class A Shares |
% Voting |
Class B |
Total |
| Xxxxxxxx |
4,970,395 |
59.94% |
- |
4,970,395 |
| CVF |
3,085,372 |
37.21% |
- |
3,085,372 |
| Others |
236,064 |
2.85% |
22,736 |
258,800 |
| Total |
8,291,831 |
100.00% |
22,736 |
8,314,567 |
calculations with respect to the foregoing are attached as Schedule "A".
DEBT
| Debtholder | Principal Amount |
| Xxxxxxxx | $240,000.00 CDN |
| Xxxxx | $125,000.00 US |
| MacPherson | $ 25,000.00 CDN |
| CVF | Nil |
The foregoing numbers have been rounded and are subject to nominal changes following the exact determination of interest on CVF and Xxxxxxxx debt as agreed by CVF and Xxxxxxxx prior to the finalization of documentation.
D) DOCUMENTATION
The parties agree to take such action as necessary to complete the transactions contemplated above and cause SRE to convert debt, issue stock, pass resolution and to otherwise take such other action to complete and fully document the foregoing transactions within sixty (60) days of the receipt of the new monies by SRE from Xxxxxxxx.
E) GENERAL CONTRACTUAL TERMS
| 1. |
Time shall be of the essence. |
| 2. |
This agreement shall be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. |
| 3. |
Each party hereby gives their further assurance that he or it shall co-operate with the other parties and do all things required to complete all matters as contemplated herein. |
| 4. |
This agreement may be signed in any number of counterparts and by facsimile, the receipt of which by each party shall be deemed to be the execution and receipt by all parties of the original. |
DATED AT Xxxxxxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxx this 23rd day of March, 2004.
SIGNED, SEALED AND DELIVERED )
In the presence of: )
)
)
/s/Xxxxxxx X. Xxxxxxxx ) /s/ Xxx Xxxxxxxx
Witness XXX XXXXXXXX
CVF TECHNOLOGIES CORPORATION
Per:
/s/ Xxxxxx Xxxxx
Name:
XXXXXX XXXXX
Office:
COO
I have authority to bind the Corporation.
SRE CONTROLS INC.
Per:
/s/ Xxxxxxx X. Xxxxx
Name:
XXXXXXX X. XXXXX
Office:
President/CEO
I have authority to bind the Corporation.
SCHEDULE "A"
SHARE CALCULATIONS
Calculation of CVF's shareholdings post-transaction:
1,169,418 (existing CVF shareholdings) + 1,915,954 (conversion of debt owed
to CVF
by SRE) = 3,085,372 Class A shares (post transaction total shareholdings)
Calculation of Xxxxxxxx'x shareholdings post-transaction:
1,543,413 (total outstanding Class A and Common shares pre-conversion and pre-Investment) + 1,915,954 (CVF debt conversion) + 645,500 (Xxxxxxxx debt conversion) = 4,104,887 (total Common and Class A shares outstanding post-conversion) x 1.02 = 4,186,964 (Class A shares to be issued to Xxxxxxxx for new money investment) + 137,931 (Xxxxxxxx'spre-transactionshareholdings) + 645,500 (Xxxxxxxx debt Conversion) = 4,970,395 Class A shares (post transaction total shareholdings)
SRE CONTROLS INC.
(the "Corporation")
Directors' Resolution Authorizing Memorandum of Agreement
WHEREAS the directors have determined that it is in the best interests of the Corporation to enter into a Memorandum of Agreement with CVF Technologies Corporation ("CVF") and Xxx Xxxxxxxx ("Xxxxxxxx") for the conversion of outstanding debt by the Corporation to those parties:
NOW THEREFORE BE IT RESOLVED THAT:
| 1. |
The Corporation enter into a Memorandum of Agreement with CVF and Xxxxxxxx in the form attached hereto: |
| 2. |
Any one director or officer of the Corporation be and he is hereby authorized on behalf of the Corporation to execute and deliver the Memorandum of Agreement to CVF and Xxxxxxxx, with such alterations, additions, amendments and deletions as may be approved by such person executing the same, whose signature shall be conclusive evidence of such approval; and |
| 3. |
The persons designated in paragraph 2 above are hereby authorized for and on behalf of the Corporation to execute and deliver under the corporate seal of the Corporation all such other documents and to do all such other acts and things as may be necessary or desirable to give effect to this resolution or as my be required by CVF and Xxxxxxxx. |
| 4. |
The directors hereby agree that this resolution may be signed in several counterparts each of which when executed shall be deemed to be an original, and such counterparts shall each constitute one and the same instrument and notwithstanding their date of execution shall be deemed to bear the date set out below. |
| 5. |
The directors hereby agree that the execution and delivery of a facsimile transmission of this resolution shall constitute delivery of an executed original and shall be binding upon the director whose signature appears on the transmitted copy. |
The foregoing resolution is hereby passed by all the directors of the Corporation pursuant to the provisions of the Business Corporations Act (Ontario), as evidenced by the signatures hereto.
DATED: March 16th , 2004.
|
/s/ Xxxxxxx Xxxxxx |
/s/ Xxxxxx Xxxxx |
|
Xxxxxxx X. Xxxxxx |
Xxxxxx X. Xxxxx |
|
/s/ Xxxxxxx Xxxxx |
/s/ Xxx Xxxxxxxx |
|
Xxxxxxx X. Xxxxx |
Xxx Xxxxxxxx |
