STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of this ____
day of May, 1999 by and among JENNICA DEVELOPMENTS LIMITED, an Ontario
corporation ("Seller"), AMERICAN GROUP, INC., a Nevada corporation ("Buyer"),
and 0000-0000 XXXXXX INC., a Quebec corporation doing business as Torland
("Torland"), and 0000-0000 XXXXXX INC., a Quebec corporation ("AGI Quebec")
which is wholly owned by Buyer.
W I T N E S S E T H:
WHEREAS, Seller owns 10 Class A shares of common stock of Torland
representing all of the issued and outstanding capital stock of Torland (the
"Stock"); and
WHEREAS, Seller desires to sell to Buyer and AGI Quebec, and Buyer and
AGI Quebec desire to purchase from Seller, the Stock upon the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the covenants and conditions
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE AND STOCK
---------------------------
Subject to the terms and conditions set forth in this Agreement, as of
the date hereof, Seller agrees to sell, convey, transfer, assign and deliver to
Buyer, and Buyer agrees to purchase from Seller, the Stock pursuant to a Stock
Transfer Form.
ARTICLE 2
CONSIDERATION AND LOAN REPAYMENT - CLOSING
------------------------------------------
Section 2.1 Consideration and Loan Repayment. Torland is indebted to
Seller in the amount of $1,200,592.86 (CDN) (the "Seller Receivable"). Buyer and
AGI Quebec shall buy the Seller Receivable for $1,200,592.86 (CDN) or its U.S.
equivalent, and will pay the balance of $1,200,000 (USD) to Seller, all as
follows: upon the execution and delivery of this Agreement, Buyer will wire
transfer $400,000 to an account designated by Seller. In addition, Buyer and AGI
Quebec will enter into a Promissory Note in the form attached as Exhibit 2.1.A
(the "Note") in the principal amount of $800,000 (USD), with interest at the
rate of 8% per year, payable as follows:
On or before Amount
------------ ------
October 15, 1999 $200,000 plus accrued interest
January 15, 2000 $200,000 plus accrued interest
April 15, 2000 $200,000 plus accrued interest
July 15, 2000 $200,000 plus accrued interest
All amounts shall first be applied to repayment of the Seller Receivable; the
balance shall be consideration for the Stock. All amounts payable hereunder
shall be secured pursuant to the security agreements and guarantees referenced
herein. In addition to the foregoing, Seller will receive additional
consideration from AGI Quebec and Buyer pursuant to a Share Exchange Agreement,
Amalgamation Agreement and Support Agreement, all in the forms of Exhibit 2.1.B
(collectively the "AGI Quebec Agreements").
Section 2.2 Closing. Subject to the conditions contained herein,
including those in Section 5 and 6, the parties shall close the transactions
contemplated by this Agreement on April 15, 1999, at a time and place and in a
manner to be mutually agreed upon. It is contemplated that the parties may
execute the documents and agreements contemplated herein via fax, with the
original execution copies of such documents to be delivered to all parties
signing them. Until such time as the executed originals are delivered, the
consideration, including the cash component and the Note, together with such
other documents as Seller may reasonably request including the Buyer's
certificate representing the Stock, shall be conditionally delivered to Xxxxxxx
X. Xxxx, Esq., counsel to Seller, and the stock certificates and documents of
transfer, and such other documents as Buyer may reasonably request, shall be
conditionally delivered to Xxxxxx X. Claire, Esq., counsel for Buyer.
2
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
In order to induce Buyer to enter this Agreement, Seller represents and
warrants to Buyer the following which shall survive until May 1, 2000:
Section 3.1 Torland is in good standing as of the date hereof under the
laws of Quebec, Canada;
Section 3.2 Seller owns ten (10) Class A common shares of Torland, free
and clear of all liens and encumbrances, which shares constitute 100% of the
authorized, issued and outstanding common shares of Torland; and
Section 3.3 Except as provided in this Agreement or the agreements
referenced herein, upon the payment of the Purchase Price set forth herein,
neither Seller nor any affiliate (including Xxxxx Xxxxxxx, Xxxx Xxxxxxx, or any
family member of either of them) will have any ownership, security interest,
mortgage, lien, or claim to, the capital stock or assets of Torland;
Section 3.4 With respect to Torland's BEX leases 120, 122, 123, 124 and
125 (the "Leases"):
(a) The Leases are currently in good standing, with all
fees and taxes which are required to have been paid
have been paid;
(b) No default has occurred which has not been cured and
Torland is in material compliance with all the terms,
conditions and restrictions of the Leases;
(c) The Leases are registered/recorded in the name of
Torland; and
(d) A change of ownership/control of Torland will not
trigger a default or termination of the Leases.
Section 3.5 Torland owns all of its assets referenced in its most
recent financial statements except assets which have been sold or transferred in
the ordinary course of business.
Section 3.6 Other than those matters which are to be satisfied or
assumed as a result of or in connection with the transaction contemplated by
this Agreement, there is no litigation or similar proceeding pending, or any
judgment in existence, or to the knowledge of the President of Torland,
threatened against or relating to Torland, or to its properties, or business nor
has Torland received written notice of any such action, or of any governmental
investigation relative to Torland, its properties and businesses.
3
Section 3.7 Torland has paid any and all taxes, license fees, or other
charges levied, assessed or imposed, upon the business and any property of
Torland, except those which are not yet due and payable.
Section 3.8 Torland has duly prepared and filed all tax returns and
reports required to be filed by it on or before the date hereof with all
governmental, provincial, Federal, State and local tax authorities, that the
returns so filed are true and correct in all material respects, and that all
such taxes, including sales, corporate, property, excise and use taxes, if any,
due and owing pursuant to such returns have been paid.
Section 3.9 Neither Torland nor Seller is presently involved in any
active or outstanding disputes with any tax authority.
Section 3.10 Neither Torland nor Seller has entered into any agreements
to sell, mortgage, pledge or transfer any parts of Torland's business as a going
concern, and that there are no claims by any third parties arising out of such
agreement.
Section 3.11 Neither Torland nor Seller has entered into any agreement
with any broker or fiduciary agent, which will in any manner give rise to a
cause of action for a brokerage commission or fee arising out of this sale.
Section 3.12 The Seller and Torland have the legal power and right to
enter into and perform this Agreement and the consummation of the transaction
contemplated by this Agreement will not result in a breach of any terms or
provision of, nor constitute a default under, any contract, mortgage or other
instruments to which Seller or Torland is a party or by which it is bound except
where such breach or default would not have a material adverse effect on
Torland.
Section 3.13 Financial Statements. The financial statements attached
hereto are true and correct in all material respects and present fairly the
financial condition at and as of the dates shown thereon.
4
ARTICLE 4
BUYER'S REPRESENTATIONS AND WARRANTIES
In order to induce Seller to sell the Stock hereunder, Buyer hereby
makes the following representations and warranties.
Section 4.1 Buyer's Authority. Buyer has full power and authority to
make, execute, deliver and perform this Agreement and the agreements referenced
herein. This Agreement constitutes the legal, valid and binding obligation of
Buyer enforceable against it in accordance with its terms.
Section 4.2 No Conflicts. The making, execution, delivery and
performance of this Agreement and the agreements and documents contemplated
herein and the consummation of the transactions contemplated hereby do not and
will not violate or conflict with any provision, or result in the default,
acceleration or other breach, of any note, mortgage, indenture, loan or other
instrument by which Buyer is affected or bound.
Section 4.3 Consents and Approvals. No filings with, notices to or
approvals of any United States governmental or regulatory body or any
governmental or regulatory agency of any state or local government or any other
person are necessary to be obtained by Buyer for the consummation of the
transactions contemplated hereby.
Section 4.4 Securities Matters. Buyer acknowledges and agrees that the
shares of Stock have not been and will not be registered under the Securities
Act of 1933, as amended, or under any Canadian, provincial or state securities
law, and Buyer will not resell the Stock unless they are so registered or unless
a valid exemption from registration is available. Buyer consents to the
imposition of a legend to this effect on the certificates for the Stock and to a
notation to this effect on the certificates for the Stock and in the appropriate
records of Torland. Buyer represents and warrants that it, or its
representatives, has had an adequate opportunity to ask questions and receive
answers from the Seller and the officers of Torland concerning any and all
matters relating to the transaction described herein. Buyer further represents
and warrants that (i) Buyer has such knowledge, sophistication and expertise in
the business and financial matters that Buyer is capable of evaluating the
merits and risks of an investment in the Stock; (ii) Buyer fully understands the
nature, scope and duration of limitations on transfer described in this Section,
and (iii) Buyer can bear the economic risk of an investment in the Stock and can
afford a complete loss of such investment.
5
Section 4.4 No Material Misrepresentations. No representation, warranty
or covenant of the Buyer contained herein contains any untrue statement of a
material fact or omits a material fact necessary to make the statement contained
therein not misleading.
ARTICLE 5
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligation of Buyer to purchase the Stock under this Agreement is
subject to the satisfaction of all of the following conditions:
Section 5.1 Accuracy of Seller's Representations and Warranties. Except
as otherwise permitted by this Agreement, all representations and warranties by
Seller in this Agreement shall be true.
Section 5.2 Performance by Seller. Seller shall have performed,
satisfied and complied with all covenants, agreements and conditions required by
this Agreement.
Section 5.3 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, pertaining to the transactions
contemplated hereby, shall have been instituted or threatened.
Section 5.4 Corporate Approval. The execution and delivery of this
Agreement by Torland and Seller, and the performance of the transactions
contemplated hereby, shall have been duly authorized by all necessary corporate
action.
Section 5.5 Consents. All necessary agreements and consents of any
parties to the consummation of the transactions contemplated by this Agreement,
or otherwise pertaining to the matters covered by it, shall have been obtained
by Seller and delivered to Buyer.
Section 5.6 Approval and Delivery of Documents. All certificates and
documents required to be delivered by Seller and Torland under this Agreement
shall be delivered to Buyer in a form satisfactory in all reasonable respects to
Buyer and its counsel.
Section 5.7 Certain Agreements. The following agreements shall have
been executed and delivered:
6
5.7.1 The Promissory Note issued by Buyer in the form of
Exhibit 2;
5.7.2 The Supply Contract by and among Torland, LPS
Acquisition Corp., a Florida corporation, and Buyer in the form attached hereto
as Exhibit 5.7.2;
5.7.3 Torland Guarantee and Hypothec (Moveable and Immoveable)
given by Torland in the form of Exhibit 5.7.3;
5.7.4 Employment Agreement by and among Torland, Xxxxx Xxxxxxx
and Buyer in the form of Exhibit 5.7.4;
5.7.5 Funding Agreement by and between Torland and Buyer in
the form of Exhibit 5.7.5;
5.7.6 Legal Opinion of Xxxxxxx, Xxxxx and Xxxxxxxxxx in the
form of Exhibit 5.7.6;
5.7.7 Legal Opinion of Xxxxx Xxxxx Xxxx in the form of Exhibit
5.7.7;
5.7.8 Assignment of Receivable in the form of Exhibit 5.7.8;
and
5.7.9 AGI Quebec Agreements.
5.8 Stock. Buyer shall have received a certificate representing the
Stock to be transferred hereunder, together with such documents of transfer as
Buyer may reasonably request.
5.9 Release. Buyer shall have received a release executed and delivered
by Xxxxx Xxxxxxx and Seller of any claims against Torland arising prior to the
date hereof in the form of Exhibit 5.9.
5.10 Lator Agreement. Buyer will cause Lator International, Inc. to
acknowledge that the September 24, 1997 letter agreement with Torland has been
terminated.
7
ARTICLE 6
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
--------------------------------------------
The obligation of Seller to sell and transfer the Stock under this
Agreement is subject to the satisfaction of all of the following conditions:
Section 6.1 Accuracy of Buyer's Representations and Warranties. Except
as otherwise permitted by this Agreement, all representations and warranties by
Buyer in this Agreement shall be true.
Section 6.2 Performance by Buyer. Buyer shall have performed, satisfied
and complied with all covenants, agreements and conditions required by this
Agreement.
Section 6.3 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, pertaining to the transactions
contemplated hereby, shall have been instituted or threatened.
Section 6.4 Corporate Approval. The execution and delivery of this
Agreement by Torland and Buyer, and the performance of the transactions
contemplated hereby, shall have been duly authorized by all necessary corporate
action.
Section 6.5 Consents. All necessary agreements and consents of any
parties to the consummation of the transactions contemplated by this Agreement,
or otherwise pertaining to the matters covered by it, shall have been obtained
by Buyer and delivered to Buyer.
Section 6.6 Approval and Delivery of Documents. All certificates and
documents required to be delivered by Buyer and Torland under this Agreement
shall be delivered to Seller in a form satisfactory in all reasonable respects
to Seller and its counsel.
Section 6.7 Certain Agreements. The agreements set forth in Section 5.7
shall have been executed and delivered.
Section 6.8 Payment. Seller shall have received the payment of $400,000
as contemplated in Section 2 hereof.
Section 6.9 Release. Seller and Xxxxx Xxxxxxx shall have received a
release from Torland of any claims arising prior to the date hereof in the form
of Exhibit 6.9. In addition, Seller and all of its affiliates shall be released
from all personal guarantees given on behalf of Torland. Should the Buyer,
notwithstanding its best efforts, be unable to secure a release of any personal
guarantee, then the Buyer shall indemnify,
8
defend and hold harmless the Seller, Xxxxx Xxxxxxx and their affiliates from any
liability, claim, costs or damages in respect of those guarantees. The Buyer's
best efforts shall include but not be limited to providing its corporate
guarantee, or that of any of its affiliates in substitution for the Seller's or
Zanette's.
Section 6.10 Payment of Legal Fees. Buyer shall pay all of Seller's
legal fees incurred in connection with this Agreement and the transactions
contemplated herein at closing.
Section 6.11 Stock Pledge. The shares of Stock shall be pledged to
secure the obligations of AGI and Torland pursuant to a Pledge Agreement in the
form of Exhibit 6.11.
ARTICLE 7
FURTHER ACTIONS
---------------
Seller, at the Closing, or at any time after the Closing, will execute,
acknowledge and deliver any further deeds, assignments, conveyances and other
assurances, documents and instruments of transfer, reasonably requested by
Buyer, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer for the purposes of
assigning, transferring, granting, conveying and confirming to Buyer, or
reducing to possession any or all property to be conveyed and transferred under
this Agreement.
ARTICLE 8
INDEMNIFICATION
---------------
Section 8.1 Indemnification of Seller. Torland and Buyer agree to
indemnify, defend and hold harmless Seller from and against all taxes,
penalties, fines, damages, sanctions, losses, assessments, liabilities, costs
and other expenses (including reasonable attorneys' fees), whether or not
resulting from third party claims (collectively "Losses"), in any way arising
out of or related to any act or omission of Torland or Buyer after Closing and
any breach or other default of any agreements, representations, warranties or
covenants on the part of Torland or Buyer contained in this Agreement or any of
the documents referred to herein.
Section 8.2 Indemnification by Seller. Seller agrees to indemnify,
defend and hold harmless Buyer from and against all Losses in any way arising
out of or related to
9
any breach or other default of any agreements, representations, warranties or
covenants on the part of Seller contained in this Agreement.
Section 8.3 Notice of Claim. In the event of a breach or other claim,
the party claiming such breach or making such other claim (the "Indemnitee")
shall give written notice ("Notice") to the party in breach or against whom such
other claim is made (the "Indemnitor") stating that payment of an amount
described in such notice is due and payable to the Indemnitee under the
provisions of this Agreement on grounds set forth in such notice.
Section 8.4 Defense. If any action, litigation, suit, investigation,
arbitration or other proceeding ("Proceeding") is brought against an Indemnitee
for which such Indemnitee is or may be entitled to indemnification pursuant to
Sections 8.1 or 8.2 from an Indemnitor, the Indemnitee shall promptly give
notice to the Indemnitor of such Proceeding. The Indemnitor shall, at its own
expense, have the opportunity to be represented by counsel of its choosing and
to assume and conduct the defense of any such Proceeding upon providing a
written undertaking to that effect to the Indemnitee. If, after such
opportunity, the Indemnitor or its counsel does not assume the defense of any
such Proceeding, it shall be bound by the results obtained by the Indemnitee. In
the event that the Indemnitee does not receive written notice from the
Indemnitor within fifteen (15) days of having given notice to the Indemnitor of
any such Proceeding, the Indemnitor shall be deemed to have elected not to
assume the defense of such Proceeding, and in such event the Indemnitee will
have the right to conduct such defense and to compromise and settle such
Proceeding without the consent of the Indemnitor. In the event that the
Indemnitor does elect to assume the defense of such Proceeding, the Indemnitee
will cooperate with and make available to the Indemnitor such assistance and
materials as may be reasonably requested by it, and the Indemnitee will have the
right at its expense to participate in the defense; provided, however, that
neither party will have the right to compromise or settle such Proceeding
without the prior written consent of the other party which shall not be
unreasonably withheld.
Section 8.5 Cooperation and Access. The parties shall cooperate fully
with each other after the Closing Date with respect to any claims, demands, tax
or other audits, suits, actions and proceedings by or against Torland, Seller or
Buyer, as the case may be, in respect of Torland or the Stock, whether or not
either party has notified the other of a claim for indemnity with respect to
such matter.
Section 8.6 Limitations. No claim for indemnification may be made
hereunder unless and until the amount of such claim or claims equals or exceeds
$50,000, and then only for such excess. In no event shall the amount payable by
reason of
10
indemnification exceed the amount owing under the Note which may from
time to time be outstanding. In no event may a claim for indemnification be
brought after May 1, 2001, except for a claim under Section 3.3. Other than a
claim of indemnification hereunder, the Buyer may not assert any other claims,
whether arising under contract, statute, common law or otherwise, with respect
to any matter involving the transfer of the Stock to the Buyer or any of the
transactions contemplated by this Agreement or under this Agreement.
Notwithstanding anything contained herein, the covenants and obligations of
Buyer and Torland with respect to the payment of the consideration to Seller set
forth in Article 2 shall not be subject to any of the limitations in this
Section 8.6 as to amount, time or otherwise.
Section 8.7 Set-Off. Buyer and Torland shall have the right to satisfy
any amount due and owing hereunder pursuant to Article 2 hereof or under the
Employment Agreement by them to the Seller by way of set-off against any
liquidated amount due and owing from time to time by the Seller to Buyer and
Torland; provided, however, that Buyer and Torland must first notify Seller in
writing of their intent to set off, stating with reasonable particularity the
reasons therefor, and the amount to be set off; and provided further that Seller
has not provided written objection thereto within 15 days of receipt of such
written notice of setoff.
ARTICLE 9
NOTICES
-------
Section 9.1 Notices to Parties. All notices and other communications
shall be effective upon receipt if hand delivered or sent by facsimile
transmission and confirmed by U.S. mail and shall be effective one (1) day after
sending by a nationally recognized overnight delivery service to the addresses
stated below, or to such other addresses as to which either party shall have
previously notified the other party in writing. Any such notice not contemplated
above shall be effective upon receipt. For the purposes of this Section, the
addresses of the parties shall be as follows:
If to Seller: JENNICA DEVELOPMENTS LIMITED
0000 Xxx Xxxx
Xxxxxx, XX 00000
11
With a copy to: Xxxxxxx X. Xxxx, Esq.
Xxxxx Xxxxx Xxxx
00 Xxxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx X0X 0X0
XXXXXX
If to Buyer or
AGI Quebec: AMERICAN GROUP, INC.
00000 Xxxxx Xxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx, President
With a copy to: Xxxxxx X. Xxxxxx, Esq.
0000 X. Xxxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
9.2 Change of Address. A party may change the address to which such
communications are to be directed by notice to the other parties as provided in
Section 9.1.
ARTICLE 10
MISCELLANEOUS
-------------
Section 10.1 Complete Agreement. This Agreement, including the
Schedules and Exhibits referred to herein, is the complete agreement between the
parties and supersedes all prior negotiations and agreements. There are no
representations, warranties, covenants, conditions, terms, agreements, promises,
understandings, commitments or other arrangements other than those expressly set
forth or incorporated herein or made in writing on or after the date of this
Agreement and the letter agreement dated September 24, 1997 between Torland and
Lator International, Inc. is null and void and of no further force and effect.
Section 10.2 Governing Law. This Agreement has been made and accepted
in the State of Florida and it shall be interpreted in accordance with, and
governed by, the laws of the State of Florida. Venue for any proceeding arising
hereunder shall be Palm Beach County, Florida.
12
Section 10.3 Binding Agreement; Successors. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the successors,
assigns, heirs, legatees, executors, personal representatives, guardians,
custodians, administrators and conservators of the parties hereto, provided that
no assignment of this Agreement shall be effective without the express written
consent of the other parties.
Section 10.4 Headings. The article, section, subsection, Schedule and
Exhibit headings herein are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement, nor are they deemed to
constitute a part of this Agreement.
Section 10.5 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
Section 10.6 Time of the Essence. Time shall be of the essence of this
Agreement and of each and every part thereof.
Section 10.7 Waiver. The failure of either party to exercise or enforce
any right or remedy conferred upon it hereunder shall not be deemed to be a
waiver of any such right or remedy nor operate to bar the exercise or
enforcement thereof at any time thereafter.
Section 10.8 Confidentiality. Except to the extent required by law, the
parties shall maintain the terms of this Agreement and all agreements and
documents referenced herein strictly confidential.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first above written.
JENNICA DEVELOPMENTS LIMITED, an Ontario
corporation
By:
--------------------------------------
Its:
-------------------------------------
13
AMERICAN GROUP, INC., a Florida corporation
By:
----------------------------------------
Its:
----------------------------------------
0000-0000 XXXXXX INC., a Quebec corporation
doing business as Torland
By:
----------------------------------------
Its:
----------------------------------------
0000-0000 XXXXXX INC.
By:
----------------------------------------
Xxxx X. Xxxxxxxxx
Its:
----------------------------------------
14
