SHARE PURCHASE AGREEMENT
------------------------
This AGREEMENT is made as of the ___ day of March, 2002.
GARUDA CAPITAL CORP., a company incorporated pursuant to the laws of
Nevada, having an office located at 0000 00xx Xxxxxx, Xxxx Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
(herein referred to as "Garuda")
OF THE FIRST PART
AND:
HAGENSBORG FOODS LTD., a company incorporated pursuant to the laws of the
Province of British Columbia, with its registered offices at 480 - 000 Xxxx
Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(herein called "HFL")
OF THE SECOND PART
AND:
THOSE SHAREHOLDERS OF HFL, signatory to this agreement as evidenced by
their names and signatures affixed to the execution pages hereof.
(herein referred to as the "Vendors")
OF THE THIRD PART
WHEREAS:
A. Garuda, HFL and the Vendors entered a Letter Agreement dated February 26,
2002 for the purchase of all issued shares in the capital of HFL (the "HFL
Shares");
B. Garuda wishes to acquire the HFL Shares from the Vendors, and the Vendors
have agreed to sell to Garuda all of their respective legal and beneficial
interests in the HFL Shares on the terms and conditions contained herein.
C. The holders of the Series "A" Convertible Debentures issued by HFL in the
principal amount of CDN$600,000, have agreed to accept payment on their
Debentures and release the underlying security on payment in total of
US$365,000.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the payment of
$10.00 to the Vendors the receipt and sufficiency of which is acknowledged, the
premises and the mutual agreements herein contained (the receipt and adequacy of
such consideration is hereby mutually admitted by each party), the parties
hereby covenant and agree as follows:
1. INTERPRETATION
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1.1 Definitions - In this Agreement the following words and phrases shall have
the meanings set forth after each:
(a) "Common Shares" - means the Common shares in the capital of HFL issued
and outstanding as of the Closing Date, all of which are being
acquired hereunder;
(b) "Closing", "Closing Time", "Closing Date" - means 2:00 p.m. on the
15th of March, 2002, or such later time or date as may be agreed upon
in writing by the parties hereto;
(c) "Company Act" means the British Columbia Company Act in effect at the
date of this Agreement;
(d) "Directors" - means the persons holding the position of director of
Garuda;
(e) "Income Tax Act" - means the Income Tax Act of Canada in effect on the
date of this Agreement;
(f) "Material Contracts" means those subsisting commitments, contracts,
agreements, instruments, leases or other documents entered into by any
party hereto, by which it is bound or to which it or its assets are
subject which have total payment obligations on the part of HFL which
exceed $10,000.00 or are for a term of or in excess of two years, all
as set out in Schedule "B" hereto;
(g) "Garuda Financial Statements" - means the financial statements for
Garuda, copies of which are contained in the Public Record;
(h) "Public Record" - means the information filed by Garuda with the SEC,
or on the XXXXX system, with the required Securities Commissions and
with the Secretary of State for Nevada, as required in accordance with
Securities Legislation requirements, and which record contains all
material facts (as that term is defined by the Securities Legislation)
relating to the corporate structure, business and operations of
Garuda;
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(i) "HFL" means Hagensborg Foods Ltd., incorporated in British Columbia
under the Company Act;
(j) "HFL Shares" - means the Common and Preferred shares in the capital of
HFL being acquired by Garuda hereunder;
(k) "Preferred Shares" - means the Class "A" Preferred shares of Garuda
issued and outstanding as of the Closing Date, all of which are being
acquired hereunder;
(l) "Purchase Price" means the sum of US$700,000 allocated as to
US$600,000 to the Common Shares and US$100,000 to the Preferred
Shares;
(m) "Securities Legislation" means the Nevada Business Corporations Act,
the Securities Exchange Act of 1934, the Securities Act of 1933 and
the equivalent securities legislation of the States of America which
apply to Garuda, each as now enacted or as the same may be amended and
the applicable rules, regulations, rulings, orders and forms made or
promulgated under such statutes and the published policies of the
regulatory authorities administering such statutes;
(n) "Vendors" - means the registered holder of the Preferred Shares and
Common Shares signatory hereto;
(o) "HFL Financial Statements" - means the audited financial statements of
HFL for the annual period ending June 30, 2001, to consist of a
balance sheet, statement of retained earnings, an income statement and
a statement of changes in financial position of HFL including the
notes to such financial statements, a copy of which will be attached
hereto as Schedule "C" upon their completion; and
1.2 Schedules - The following are the schedules to this Agreement:
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Schedule "A" - Shareholders and Shareholdings of HFL
Schedule "B" - Material Contracts
Schedule "C" - HFL audited Financial Statements for the year ended
June 30, 2001
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1.3 Accounting Interpretation - For the purposes of this Agreement, except as
otherwise expressly provided herein all accounting terms not otherwise defined
have the meanings assigned to them in accordance with generally accepted
accounting principles applicable in Canada and applied on a basis consistent
with prior years;
2.0 REPRESENTATIONS AND WARRANTIES
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2.1 Representations and Warranties of the Vendors - In order to induce Garuda to
enter into and to consummate the transactions contemplated by this Agreement,
the Vendors jointly and severally hereby represent and warrant to Garuda as
follows:
(a) Organization and Good Standing of HFL - HFL is duly incorporated and
validly existing and in good standing with respect to the filing of
all reports in British Columbia , and has all necessary corporate
powers, authorities and capacity to own its assets and to carry on its
business as presently conducted;
(b) Vendors' Title - The list of Vendors set out in Schedule "A" is a
complete list of all persons or parties having a beneficial claim to
the HFL Shares;
(c) Authority - The Vendors, and each of them, have due and sufficient
right and authority to enter into this Agreement on the terms and
conditions herein set forth and to transfer the legal and beneficial
title and ownership of the HFL Shares to Garuda as required by this
Agreement;
(d) Absence of Options, etc. - No Person has any agreement or option,
present or future, contingent, absolute or capable of becoming an
agreement or option or which with the passage of time or the
occurrence of any event could become an agreement or option:
(i) to require HFL to issue any further or other shares in its
capital or any other security convertible or exchangeable into
shares in its capital or to convert or exchange any securities
into or for shares in the capital of HFL;
(ii) for the issue or allotment of any of the authorized but unissued
shares in the capital of HFL; or
(iii) to acquire the issued shares of HFL;
(e) Financial Statements - That, on or before Closing, audited financial
statements for HFL shall be completed by Xxxxxx, Xxxxxxxx & Co., and
delivered to Garuda, and the HFL Financial Statements will be prepared
in accordance with generally accepted accounting principles applied on
a basis consistent with that of prior fiscal years; such Financial
Statements present fairly the financial position of HFL as at the date
thereof and the results of HFL's and the changes in HFL's financial
position for the periods then ending;
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(e) Absence of Undisclosed Liabilities - Except as will be set out in the
HFL Financial Statements or incurred subsequent to the date thereof in
the ordinary and usual course of the business of HFL, to the best of
the Vendors' knowledge, information and belief, HFL will not have any
outstanding indebtedness or any liabilities or obligations (whether
accrued, absolute, contingent or otherwise);
(f) Title to Assets - HFL has title to all of the assets, real and
personal, including those reflected in the HFL Financial Statements or
acquired since the date of the HFL Financial Statements (except as
since transferred, sold or otherwise disposed of in the ordinary
course of business), as have been represented to be held by HFL,
subject to such charges on its assets as have been required pursuant
to the bank and debenture debts reflected in the HFL Financial
Statements;
(g) Material Contracts - Except for the contracts, agreements and
debentures listed in Schedule "B", neither HFL nor any of its
subsidiaries is party to or bound by any material contract or
commitment, whether oral or written, and the contracts, agreements and
debentures listed in Schedule "B" are all in full force and effect and
unchanged, no material default exists in respect thereof on the part
of any of the other parties thereto, the Vendors are not aware of any
intention on the part of any of the other parties thereto to terminate
or materially alter any such contracts or agreements, or take action
under the debentures and Schedule "B" lists all the present
outstanding material contracts entered into by HFL in the course of
carrying on its business;
(h) Litigation - There is not any suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or threatened against,
or relating to HFL, or affecting its assets, properties or business
which might materially and adversely affect the assets, properties,
business, future prospects or financial condition of HFL, and there is
not presently outstanding against HFL any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator;
(i) Corporate Records - To the best of the knowledge of the Vendors, HFL,
has kept all corporate records required to be kept by the Company Act
of British Columbia, and such records are complete and accurate and
contain all minutes of all meetings of directors and members of HFL;
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(j) Permits and Licenses - HFL holds all permits, licenses, consents and
authorities issued by any government or governmental authority or any
municipal, regional or other authority, or any subdivision thereof,
which are necessary or desirable in connection with the conduct and
operation of HFL's business and the ownership or leasing of its assets
and the conduct and operation of its business;
(k) Undisclosed Information - The Vendors do not have any specific
information relating to HFL which is not generally known or which has
not been disclosed to Garuda and which if known could reasonably be
expected to have a materially adverse effect on the value of the HFL
Shares; and
(l) Taxes - HFL has duly filed, if required to date, on a timely basis all
tax returns required to be filed by it and has paid all taxes which
are due and payable, and has paid all assessments and reassessments,
and all other taxes, governmental charges, penalties, interest and
fines due and payable on or before the date hereof.
and the Vendors covenants, represents and warrants to Garuda that all of the
representations and warranties set forth in this Section 2.1 shall be true and
correct at the Closing as if made on that date.
2.2 Survival - The representations and warranties of the Vendors contained in
this Agreement shall survive the Closing and the payment of the Purchase Price
and, notwithstanding the Closing and the payment of the Purchase Price and,
notwithstanding any investigations or enquiries made by Garuda prior to the
Closing and notwithstanding the waiver of any condition by Garuda, the
representations, warranties, covenants and agreements of the Vendors shall
(except where otherwise specifically provided in this Agreement) survive the
Closing and shall continue in full force and effect for a period of one year
from the Closing Date for all matters.
2.3 Reliance - The Vendors acknowledge and agree that Garuda has entered into
this Agreement relying on the warranties and representations and other terms and
conditions of this Agreement notwithstanding any independent searches or
investigations that may be undertaken by or on behalf of Garuda and that no
information which is now known or which may hereafter become known to Garuda or
its officers, directors or professional advisers shall limit or extinguish the
right to indemnification hereunder.
2.4 Independent Legal Advice - the Vendors acknowledge that they have been
advised that this agreement has been prepared by legal counsel acting jointly
for and by the consent of Garuda and HFL. The Vendors are advised that they
should seek their own independent legal advice prior to executing this
agreement.
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3.0 REPRESENTATIONS AND WARRANTIES OF GARUDA
----------------------------------------
3.1 Garuda represents and warrants to and in favour of the Vendors as follows
and acknowledges that the Vendors are relying upon such representations and
warranties in connection with the transactions contemplated herein:
(a) Garuda is a Nevada company duly organized, validly existing and in
good standing with respect to all filings required under applicable
laws, has the corporate power and capacity to own or lease its
property and assets and to carry on its business as now conducted by
it, is duly licensed or qualified as a foreign corporation in each
jurisdiction in which the character of the property and assets now
owned by it or the nature of its business as now conducted by it
requires it to be so licensed or qualified (save where failure to have
such license or qualification is not in the aggregate material) and
has the corporate power and capacity to enter into this Agreement and
perform its obligations hereunder;
(b) There are 1,247,575 Common Shares issued and outstanding as fully paid
and non-assessable in the capital of Garuda, as at the date hereof,
inclusive of the 1,000,000 shares issued on the most recent private
placment;
(c) with the exception of the Series "A" Convertible Debentureholders who
maintain the right to convert their outstanding principal and interest
into shares of HFL at $0.20 per share, no person at present has any
agreement, option, understanding or commitment (including convertible
securities, warrants or convertible obligations of any nature), for
the purchase or issue of or conversion into any of the unissued shares
of Garuda or any unissued securities of Garuda;
(d) the financial statements contained in the Public Record present fairly
the financial position of Garuda at the relevant dates and the results
of its operations and cash flows for the periods indicated in the said
statements and have been prepared in accordance with accounting
principles generally accepted in the United States consistently
applied;
(e) except as disclosed in the Public Record, there has been no material
adverse change in the business or condition, financial or otherwise,
of Garuda from that shown in the financial statements referred to in
Paragraph (d) of this Section 3.0 and Garuda has not experienced, nor
is it aware of any occurrence or event which has, or might reasonably
be expected to have, a material adverse effect on the business or the
result of its operations which would materially adversely affect the
value of its business;
(f) the execution and delivery of this Agreement and the consummation of
the transaction contemplated herein do not and will not:
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(i) result in the breach or violation of any term or provision of the
constating documents of Garuda; or
(ii) conflict with, result in a breach or cancellation of, constitute
a default under, invalidate or impair rights to properties under,
or accelerate or permit the acceleration of the performance
required by, any agreement, instrument, license, permit or
authority to which Garuda is a party or by which it is bound or
to which any property of Garuda is subject or result in the
creation of any lien, charge or encumbrance upon any of the
assets of Garuda under any such agreement or instrument, or give
to others any material interest or rights, including rights of
purchase, termination, cancellation or acceleration, under any
such agreement, instrument, license, permit or authority; or
(iii)violate any provision of law or administrative regulation or any
judicial or administrative order, award, judgment or decree
applicable to Garuda;
(g) the execution, delivery and performance of this Agreement and the
performance of the transactions contemplated herein are within the
corporate power and authority of Garuda and have been authorized by
all necessary corporate action of Garuda; the directors of Garuda
believe this transaction is in the best interests of Garuda and this
Agreement constitutes a valid and binding obligation of Garuda;
(h) Garuda is not a party to, or bound by, any agreements, covenants,
undertakings or other commitments, on its own or as a result of any
partnership or joint venture in which it is a partner or participant:
(i) under which the transaction contemplated herein would have the
effect of imposing restrictions or obligations on Garuda
materially greater than those imposed upon Garuda or any such
partnership or joint venture at the date hereof;
(ii) which would give a third party, as a result of the consummation
of the transaction contemplated herein, a right to terminate any
material agreement to which Garuda or any such partnership or
joint venture is a party or to purchase any of their respective
assets; or
(iii)under which the consummation of the transaction contemplated
herein would impose material restrictions on the ability of
Garuda to carry on any business which it might choose to carry on
within any geographical area, to acquire property or dispose of
its property and assets in their entirety or to change its
corporate status;
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(j) the description of the business of Garuda, its financial condition,
assets and properties in the Public Record does not contain any untrue
statement of a material fact or omit to state any material fact
necessary to make such description not misleading;
(k) Garuda has not incurred any liability for brokerage fees, finder's
fees, agent's commissions or other similar forms of compensation in
connection with this Agreement;
(l) except as disclosed in the Public Record, there is no basis for and
there are no actions, suits, proceedings or investigations commenced,
or to the knowledge of Garuda contemplated or threatened, against or
affecting Garuda or by any person or before any arbitrator of any kind
which would prevent or hinder the consummation of this Agreement or
which have resulted in, involve the possibility of or could involve
the possibility of any judgment or liability which can reasonably be
expected to have a material adverse effect on the business operations,
properties, assets or condition, financial or otherwise, of Garuda;
(m) there are no known or anticipated material liabilities of any kind
whatsoever (including absolute, accrued or contingent liabilities) nor
any commitments whether or not determined or determinable, in respect
of which Garuda is or may become liable other than the liabilities
disclosed on, reflected in or provided for in the financial statements
referred to in Paragraph (d) of Section 3.0 hereof or reflected in the
Public Record or incurred in the ordinary course of business;
(n) the corporate records and minute books of Garuda as required to be
maintained by it under the laws of its jurisdiction of incorporation
are up to date and contain complete and accurate minutes of all
meetings of its respective directors and shareholders and all
resolutions consented to in writing;
(o) except as disclosed in the Public Record Garuda does not have any
material contracts, and each material contract or agreement between
Garuda and any other person is in full force and effect and, to the
best of the knowledge and belief of Garuda, is valid, binding and
enforceable against each of the parties thereto in accordance with its
terms and no material breach or default exists in respect thereof on
the part of any party thereto and no event has occurred which, with
the giving of notice or lapse of time or both, would constitute such a
material breach or default;
(p) Garuda has duly filed on a timely basis all tax returns required to be
filed by it and has paid all taxes which are due and payable, and has
paid all assessments and reassessments, and all other taxes,
governmental charges, penalties, interest and fines due and payable on
or before the date hereof; adequate provision has been made for taxes
payable for the current period for which tax returns are not yet
required to be filed; there are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
filing of any tax return by, or payment of any tax, governmental
charge or deficiency against Garuda; there are no actions, suits,
proceedings, investigations or claims now threatened or pending
9
against Garuda in respect of taxes, governmental charges or
assessments, or any matters under discussion with any governmental
authority relating to taxes, governmental charges or assessments
asserted by any such authority;
(q) Garuda has withheld from each payment made to any of its officers,
directors, former directors and employees the amount of all taxes
including, but not limited to, income tax and other deductions
required to be withheld therefrom and has paid the same to the proper
tax and other receiving officers within the time required under any
applicable tax legislation;
(r) the common shares of Garuda are at present listed and posted for
trading on the NASD Over the Counter Market (OTC Bulletin Board) and
on no other stock exchange;
(s) Garuda is a reporting issuer pursuant to the U.S. Securities Exchange
Act of 1934 in good standing and in compliance with its obligations
under such legislation and the rules and regulations thereunder, and
all other Securities legislation, both Federal and State;
(t) all of Garuda's issued Common Shares were issued in compliance with
applicable securities laws;
(u) to Garuda's knowledge, Garuda is in compliance, in all material
respects, with all applicable laws; and
(v) none of the representations, warranties or statements of fact made in
this Section contain any untrue statement of a material fact or omit
to state any material fact necessary to make any such warranty or
representation not misleading.
3.2 Survival - The representations and warranties of Garuda contained in this
Agreement shall survive the Closing and the purchase of the HFL Shares, and,
notwithstanding the Closing and the purchase of the HFL Shares, the
representations and warranties of Garuda shall continue in full force and effect
for the benefit of the Vendors for a period of one year from the Closing Date.
3.3 Reliance - Garuda acknowledges and agrees that the Vendors have entered into
this Agreement relying on the warranties and representations and other terms and
conditions of this Agreement notwithstanding any independent searches or
investigations that may be undertaken by or on behalf of the Vendors and that no
information which is now known or should be known or which may hereafter become
known to any of the Vendors or their professional advisers shall limit or
extinguish the right to indemnification hereunder.
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4.0 PURCHASE AND SALE
-----------------
4.1 HFL Shares - Based and relying on the representations and warranties set
forth in Part 2, Garuda hereby agrees to purchase the HFL Shares from the
Vendors and the Vendors agrees to sell the HFL Shares to Garuda, free and clear
of all liens, claims, charges, options and encumbrances whatsoever and Garuda
hereby agrees to pay the Purchase Price on the terms and conditions hereinafter
set forth.
4.2 Purchase Price - The Purchase Price shall be US$700,000 allocated:
US$600,000 to the 6,894,000Common Shares - US$0.087 per Common Share, and
US$100,000 to the 240,000 Preferred Shares - US$0.4167 per Preferred Share
4.3 Payment of Purchase Price - The Purchase Price shall be paid by Bank Drafts
or Solicitor's Trust Cheques totalling the Purchase Price, each Vendor to
receive that portion of the Purchase Price as is set out beside their names in
Schedule "A" hereto.
5.0 CLOSING
-------
5.1 Closing Date and Location - The transactions contemplated herein shall be
completed at 2:00 p.m. on March 15, 2002, at the offices of Xxxxxxxxx & Company,
000-000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X. or at such other time or at such
other location as may be mutually agreed upon in writing by the parties hereto.
5.2 Vendor's Closing Documents - On the Closing Date, the Vendors shall deliver,
or cause to be delivered, to Garuda the documents set forth in subsection 6.1(e)
hereof and such other documents as Garuda may reasonably require to perfect the
purchase and sale intended hereby.
5.3 Payment of Purchase Price - On the Closing Date, Garuda shall pay the
Purchase Price by delivering to the Vendors or their representative, a bank
draft or solicitor's trust cheque representing that portion of the Purchase
Price as is set out opposite their respective names in Schedule "A" hereto.
6.0 CONDITIONS PRECEDENT TO THE PERFORMANCE BY GARUDA OF ITS OBLIGATIONS UNDER
---------------------------------------------------------------------------
THIS AGREEMENT
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6.1 The obligations of Garuda to complete the purchase of the HFL Shares shall
be subject to the satisfaction of, or compliance with, at or before the Closing
Time, each of the following conditions precedent:
(a) HFL Financials - The HFL Financials shall have been completed and
delivered to Garuda and be as represented herein;
(b) Approvals - The directors of Garuda shall have approved the
acquisition contemplated herein at the Meeting called to consider this
matter;
(c) Truth and Accuracy of Representations of the Vendors at Closing - The
representations and warranties of the Vendors made in Section 2 shall
be true and correct in all material respects as at the Closing and the
Vendors shall have complied in all material respects with his
obligations and covenants hereunder;
(d) Performance of Obligations - The Vendors shall have caused HFL to have
performed and complied with all the obligations to be performed and
complied with by it in order to complete the intent of this Agreement;
(e) Absence of Injunctions, etc. - No injunction or restraining order of
any Court or administrative tribunal of competent jurisdiction shall
be in effect prohibiting the transactions contemplated hereby and no
action or proceeding shall have been instituted or be pending before
any Court or administrative tribunal to restrain or prohibit the
transactions between the parties contemplated hereby;
(f) Absence of Change of Conditions - No event shall have occurred or
condition or state of facts of any character shall have arisen or
legislation (whether by statute, rule, regulation, by-law or
otherwise) shall have been introduced which might reasonably be
expected to have a materially adverse effect upon the financial
conditions, results of operations or business prospects of HFL;
(g) Closing Documentation - Garuda shall have received from the Vendors
and, where applicable, HFL the following closing documentation:
(i) share certificates representing all of the issued preferred and
common shares in HFL issued in the name of the Vendors, duly
endorsed for transfer to Garuda;
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(ii) a certified copy of resolutions of the directors of HFL
authorizing the transfer of the shares contemplated herein, the
registration of the respective shares in the name of Garuda and
the issuance of share certificates representing the respective
shares registered in the name of Garuda;
(iii)share certificates registered in the name of Garuda, signed by
the President of HFL representing the HFL Shares being acquired
hereunder;
(iv) all other necessary consents, waivers, and authorizations
required to enable the transfer of the respective shares to
Garuda as provided for in this Agreement;
(v) all such instruments of transfer, duly executed, which in the
opinion of Garuda acting reasonably are necessary to effect and
evidence the transfer of the HFL Shares from the Vendors to
Garuda free and clear of all liens, charges and encumbrances
whatsoever;
(vi) the corporate minute books and all other books and records of HFL
and such copies of corporate records for HFL as counsel for
Garuda may determine is appropriate; and
(vii) the corporate seals for HFL.
(h) Completion of Due Diligence - Garuda shall have completed its due
diligence on HFL, and the results of such due diligence shall be
satisfactory to Garuda in its discretion, failing which at any time
Garuda may provide written notice of its intent to terminate and this
Agreement will be terminated immediately upon receipt of such notice
by the Vendors ("Termination Date").
6.2 The conditions set forth in this Section 6 are for the exclusive benefit of
Garuda and, with the exception of item (a), may be waived by Garuda in writing
in whole or in part on or before the Closing Date. Notwithstanding any such
waiver, the completion of the purchase and sale contemplated by this Agreement
by Garuda shall not prejudice or affect in any way the rights of Garuda in
respect of the warranties and representations of the Vendors set forth in
Section 2 of this Agreement, and the representations and warranties of the
Vendors set forth in Section 2 of this Agreement shall survive the completion
and payment of the Purchase Price.
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7.0 CONDITIONS PRECEDENT TO THE PERFORMANCE OF THE VENDORS OF THEIR OBLIGATIONS
---------------------------------------------------------------------------
UNDER THIS AGREEMENT
--------------------
7.1 The obligations of the Vendors to complete the sale of HFL Shares hereunder
shall be subject to the satisfaction of or compliance with, at or before the
Closing Time, each of the following conditions precedent:
(a) Truth and Accuracy of Representations of Garuda at Closing Time - All
of the representations and warranties of Garuda set forth in Section
3.1 hereof shall be true and correct in all material respects as at
the Closing Time and with the same effect as if made at and as of the
Closing Time;
(b) Performance of Agreements - Garuda shall have complied with and/or
performed all its obligations, covenants and agreements herein;
(c) Approvals - Garuda shall have received, on or before the Closing Date,
all approvals necessary to this transaction;
(d) Private Placement Financing - At the Closing Date, or within 21 days
thereafter, Garuda shall have arranged a private placement to raise
not less than $1,000,000; and
(e) Purchase Price - The delivery at Closing, in accordance with paragraph
5.3, of the Purchase Price.
(f) Appointment of Director - Garuda shall, at the Closing Date, or at
such later time as is advised by Xxxxx Xxxxx, appoint Xxxxx Xxxxx to
the board of directors of Garuda.
7.2 The conditions set forth in this Section 7 are for the exclusive benefit of
the Vendors and may be waived by the Vendors in writing in whole or in part on
or before the Closing Date. Notwithstanding any such waiver, completion of the
purchase and sale contemplated by this Agreement by the Vendors shall not
prejudice or affect in any way the rights of the Vendors in respect of the
warranties and representations of Garuda set forth in Section 3 of this
Agreement, and the representations and warranties of Garuda set forth in Section
3 of this Agreement shall survive for a period of one year from the date hereof.
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8.0 COVENANTS
---------
8.1 Covenants of Garuda - Garuda hereby covenants and agrees as follows:
(a) until the Closing Date, Garuda will carry on its business in the
ordinary course, except as otherwise contemplated in this Agreement;
(b) until the Closing Date, Garuda will not merge into or with, or
amalgamate or consolidate with, or enter into any other corporate
reorganization with, any other corporation or person or perform any
act or enter into any transaction or negotiation which interferes or
is inconsistent with the completion of the transactions contemplated
hereby, other than as contemplated in this Agreement or in the
Circular and, without limiting the generality of the foregoing, Garuda
will not:
(i) make any distribution by way of dividend, return of capital or
otherwise to or for the benefit of Garuda's shareholders;
(ii) with the exception of a private placement of 1,000,000 shares,
issue any of its shares or other securities convertible into
shares or enter into any commitment or agreement therefor, other
than as is contemplated by this agreement, or as may be agreed
upon in writing by the Vendors;
(iii) make any payment to any director, officer or employee;
(c) Garuda shall not alter or amend its constating documents as the same
exist at the date of this Agreement except as contemplated in the
Circular;
(d) except as consented to in writing by the Vendors, Garuda shall not,
until the Closing Date, engage in any business, enterprise or other
activity different from that carried on by it at the date of this
Agreement or enter into any transaction or incur (except in respect of
obligations or liabilities to which it is already legally subject) any
obligation, expenditure or liability other than obligations,
expenditures and liabilities relating to the maintenance of its
corporate existence and this Agreement;
(e) Garuda shall furnish to the Vendors such information, in addition to
the information contained in this Agreement, relating to the financial
condition, business, properties and affairs of Garuda as may
reasonably be requested by the Vendors, which information shall be
true and complete in all material respects and shall not contain an
untrue statement of any material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances in which they
are made, not misleading;
(f) Garuda shall ensure that the information and financial statements
related to Garuda and provided by Garuda shall be true, correct and
complete in all material respects and shall not contain any untrue
statement of any material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances in
which they are made; and
15
(g) Garuda shall do all such other acts and things as may be necessary or
desirable in order to give effect to the transaction contemplated by
this Agreement and, without limiting the generality of the foregoing,
Garuda shall use its best efforts:
(i) to obtain, before the Closing Date, all authorizations, waivers,
exemptions, consents, orders and other approvals from domestic or
foreign courts, governmental or regulatory agencies, boards,
commissions or other authorities, shareholders and third parties
as are necessary for the consummation of the transactions
contemplated hereby; and
(ii) to satisfy each of the conditions precedent to be satisfied by it
and to take, or cause to be taken, all other actions and to do,
or cause to be done, all other things necessary or advisable
under applicable laws and regulations to permit the completion of
the transaction contemplated herein in accordance with the
provisions of this Agreement.
8.2 Covenants of the Vendors and HFL The Vendors and HFL hereby covenant and
agree as follows:
(a) The Vendors and/or HFL shall furnish to Garuda such information, in
addition to the information contained in this Agreement, relating to
the financial condition, business, properties and affairs of HFL as
may reasonably be requested by Garuda, which information shall be true
and complete in all material respects and shall not contain an untrue
statement of any material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances in which they
are made, not misleading;
(b) The Vendors and/or HFL shall ensure that the information related to
HFL and provided by the Vendors or the directors of HFL shall be true,
correct and complete in all material respects and shall not contain
any untrue statement of any material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading in light of the
circumstances in which they are made;
(c) The Vendors and/or HFL shall do all such other acts and things as may
be necessary or desirable in order to give effect to the transaction
contemplated hereby;
(d) until the Closing, HFL agrees, and the Vendors will cause HFL, to
carry on its business in the ordinary course, except as otherwise
contemplated in this Agreement;
16
(e) until the Closing, HFL agrees, and the Vendors will not cause, HFL to
merge into or with, or amalgamate or consolidate with, or enter into
any other corporate reorganization with, any other corporation or
person or perform any act or enter into any transaction or negotiation
which interferes or is inconsistent with the completion of the
transactions contemplated hereby, other than as contemplated in this
Agreement or as disclosed to Garuda and, without limiting the
generality of the foregoing, HFL will not:
(i) make any distribution by way of dividend, return of capital
or otherwise to or for the benefit of their respective
shareholders;
(ii) cause the issuance of any shares or other securities
convertible into shares or enter into any commitment or
agreement therefore, other than with respect to issuances to
Vendor's whose interest is as set out in Schedule "A"
hereto;
(iii)make any payment to any director, officer or employee
except pursuant to existing employment arrangements;
(f) except as otherwise consented to in writing by Garuda, HFL shall not,
and the Vendors shall not permit HFL, until the Closing, to engage in
any business, enterprise or other activity different from that carried
on by it at the date of this Agreement;
(g) The Vendors and HFL shall furnish to Garuda such valuation and
technical reports and financial statements, in addition to the
information contained in this Agreement, relating to the financial
condition, business, properties and affairs of HFL as may reasonably
be requested by Garuda and all other applicable regulatory
authorities, which information shall be true and complete in all
material respects and shall not contain an untrue statement of any
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances in which they are made, not misleading;
(h) The Vendors and HFL shall do all such other acts and things as may be
necessary or desirable in order to give effect to the transactions
contemplated herein and, without limiting the generality of the
foregoing, the Vendors and HFL shall use their best efforts to apply
for and obtain such other consents, orders or approvals as counsel for
Garuda may advise are necessary or desirable for the implementation of
this Agreement.
9. EXAMINATIONS AND WAIVERS
------------------------
17
9.1 Access for Investigation - The Vendors shall permit Garuda and its
employees, agents, legal counsel, accountants and other representatives, between
the date hereof and the Closing Date, to have access during normal business
hours to the premises and to all the key employees, books, accounts, records and
other data of HFL (including, without limitation, all corporate, accounting and
tax records and any electronic or computer accessed data) and to the properties
and assets of HFL, and HFL will furnish, and require that their principal
bankers, appraisers and independent auditors and other advisors furnish, to
Garuda such financial and operating data and other information with respect to
the business, properties and assets of HFL as Garuda shall from time to time
reasonably request to enable confirmation of the matters warranted in Section 2
hereof. It is also the intention of the parties that Garuda will be entitled to
meet with HFL's major clients, customers and suppliers prior to Closing.
9.2 Disclosure of Information - Until the Closing Time and, in the event of the
termination of this Agreement without consummation of the transactions
contemplated hereby, thereafter, Garuda will use its best efforts to keep
confidential any information (unless otherwise required by law or such
information is readily available or becomes readily available, from public or
published information or sources) obtained from HFL. If this Agreement is so
terminated, promptly after such termination all documents, work papers and other
written material obtained from a party in connection with this Agreement and not
theretofore made public (including all copies and photocopies thereof), shall be
returned to the party which provided such material.
10.0 GENERAL
-------
10.1 Public Notices - The parties hereto agree that all notices to third parties
and all other publicity concerning the transactions contemplated by this
Agreement shall be jointly planned and co-ordinated and no party hereto shall
act unilaterally in this regard without the prior approval of the others, such
approval not to be unreasonably withheld.
10.2 Expenses - All costs and expenses including legal expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by Garuda.
10.3 Currency - Unless otherwise specified, all dollar figures contained in this
agreement refer to U.S. currency.
10.4 Time - Time shall be of the essence hereof.
10.5 Notices - Any notice or other writing required or permitted to be given
hereunder or for the purposes hereof shall be sufficiently given if delivered or
telecopied to the party to whom it is given or if mailed, by prepaid registered
mail, addressed to such party at:
18
(a) If to Garuda,
Xxxx Xxxxx, President
0000 Xxxx 00xx Xxxxxx
Xxxx Xxxxxxxxx, XX, X0X 0X0
Fax: 000-000-0000
(b) If to the Vendors,
C. Xxxxx Xxxxx, Chairman
0000 Xxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Fax: 000-000-0000
with a copy in each case to:
Xxxx Xxxxxxx, Esq. Barrister & Solicitor
480 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Fax (000) 000-0000
or at such other address as the party to whom such writing is to be given shall
have last notified to the party giving the same in the manner provided in this
section. Any notice mailed as aforesaid shall be deemed to have been given and
received on the fifth business day next following the date of its mailing unless
at the time of mailing or within five (5) business days thereafter there occurs
a postal interruption which could have the effect of delaying the mail in the
ordinary course, in which case any notice shall not be effectively given unless
it is actually delivered or sent by telecopy. Any notice delivered or telecopied
to the party to whom it is addressed shall be deemed to have been given and
received on the day it was delivered, provided that if such day is not a
business day then the notice shall be deemed to have been given and received on
the business day next following such day.
10.6 Governing Law - This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia and the parties
hereto submit and attorn to the jurisdiction of the Courts of the Province of
British Columbia.
10.7 Severability - If any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect in any
jurisdiction, the validity, legality and enforceability of such provision or
provisions shall not in any way be affected or impaired thereby in any other
jurisdiction and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby, unless in either case as a result of such determination this Agreement
would fail in its essential purpose.
19
10.8 Entire Agreement - This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements and understandings, oral
or written, by and between any of the parties hereto with respect to the subject
matter hereof.
10.9 Further Assurances - The parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each party hereto shall
provide such further documents or instruments required by the other party as may
be reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions whether before or after the Closing Date.
10.10 Enurement - This Agreement and each of the terms and provisions hereof
shall enure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
10.11 Counterparts - This Agreement may be executed in as many counterparts as
may be necessary or by facsimile and each such agreement or facsimile so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument.
20
IN WITNESS WHEREOF the parties hereto have hereunto duly executed this
Agreement as of the day and year first above written.
GARUDA CAPITAL CORP.
per: /s/
---------------------------------------
Authorized Signatory
HAGENSBORG FOODS LTD
per: /s/
---------------------------------------
Xxxxx Xxxxx, Director
SIGNED, SEALED AND DELIVERED )
by XXXXX XXXXX in the presence of: )
)
__________________________________ )
Name )
) /s/
__________________________________ ) ________________________________
Address ) XXXXX XXXXX
)
)
)
__________________________________ )
Occupation )
HAGENSBORG FOODS CORPORATION
per: /s/
---------------------------------------
Authorised Signatory
21
XXXXXX ASSET MANAGEMENT S.A.
per: /s/
---------------------------------------
Authorised Signatory
THE RIGPA FOUNDATION LTD
per: /s/
---------------------------------------
Authorised Signatory
HAGENSBORG LIMITED
per: /s/
---------------------------------------
Authorised Signatory
22
SCHEDULE "A"
The Vendors
Common Shares
---------------------------------------------------------- ------------------------------- ---------------------------
Name and address for delivery of Purchase Proceeds: Number of Common Portion of Purchase Price:
Shares Held
---------------------------------------------------------- ------------------------------- ---------------------------
XxXxxx Asset Management S.A.
c/o A & A Actienbank 72,000 $6,266.32
Xxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx
---------------------------------------------------------- ------------------------------- ---------------------------
The Rigpa Foundation Ltd.
XX Xxx X-000, 0xx Xxxxx 72,000 $6,266.32
Xxxxxx House, Xxxxxx Street
Nassau, Bahamas
---------------------------------------------------------- ------------------------------- ---------------------------
Hagensborg Foods Corporation
0000 X. 000xx Xx., Xxxxx X-000 500,000 $43,516.10
Xxxx, XX 00000
---------------------------------------------------------- ------------------------------- ---------------------------
Hagensborg Limited
0xx Xxxxx, Xxxxxx Xxxxx 6,250,000 $543,951.26
Xxxxxx Xxxxxx, XX Xxx X-0000
Xxxxxx, Bahamas
---------------------------------------------------------- ------------------------------- ---------------------------
Total: 6,894,000 US$600,000
---------------------------------------------------------- ------------------------------- ---------------------------
Preferred Shares
---------------------------------------------------------- ------------------------------- ---------------------------
Name and address for delivery of Purchase Proceeds: Number of Preferred Portion of Purchase Price:
Shares Held
---------------------------------------------------------- ------------------------------- ---------------------------
XxXxxx Asset Management S.A.
c/o A & A Actienbank 120,000 $50,000
Xxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx
---------------------------------------------------------- ------------------------------- ---------------------------
$50,000
Xxxxx Xxxxx 120,000
#4, Xxxxxx Island, Old Fort Bay
New Providence, Bahamas
---------------------------------------------------------- ------------------------------- ---------------------------
240,000 US$100,000
Total:
---------------------------------------------------------- ------------------------------- ---------------------------
SCHEDULE "B"
Material Contracts
(a) Lease of Premises at 0000 Xxxx Xxxxxx, Xxxxxxxxx, X.X. pursuant to
Lease Agreement dated July 29, 1996, as Modified August 30, 1996
(b) Series "A" Convertible Debentures in the total sum of $600,000
