SCHEDULE 13D
---------------------- ---------------------
CUSIP No. 89464M 20 2 Page 9 of 11 Pages
---------------------- ---------------------
EXHIBIT 7(d)
TREAT INTERNATIONAL ENTERPRISES, INC.
MEMORANDUM OF UNDERSTANDING
RBCC, XXXX XXXXXX AND TIEI
The parties to the agreement are RBCC and Xxxx Xxxxxx, as shareholder
representing his family's shareholder interest and in his personal capacity
(the "Xxxxxx interests") in TIEI, and TIEI ("the company"). This agreement is
intended to document the agreement between the parties wherein either RBCC
will provide funding to the company which would allow the company to
repurchase the Xxxxxx interests, or an investor group will provide funding to
the company that would allow the company to repurchase the investment
position of RBC and RBCC, collectively (the "RBCC interests"). At the present
time the various interest are understood to include and be limited to:
XXXXXX INTERESTS
i. 6,200,000 (ACTUAL NUMBER TO BE PROVIDED) common shares of TIEI;
ii. Severance in the amount of approximately $400,000 (ACTUAL AMOUNT TO BE
CONFIRMED);
iii. Senior loan - participation in the term loan held by 3193853 Canada Inc.
- of $120,000 (ACTUAL AMOUNT TO BE CONFIRMED);
iv. Shareholder advances in the amount of $80,000 (ACTUAL AMOUNT TO BE
CONFIRMED).
RBCC INTERESTS
i. 7,207,760 common shares;
ii. 5,409,825 Series A preferred shares with a face value of $3,732,779 and
cumulative, but undeclared dividends in the approximate amount of
$500,000 (5.5% cumulative dividend) as at December 31, 1996;
iii. a subordinated debenture with a principal face value of $1,129,562, with
accrued interest of approximately $78,000 at December 31, 1996, accruing
at a rate of 8% per month.
DEAL PROPOSALS
Each of RBCC and Xxxxxx have agreed upon a price, and basic terms, for which
they would be prepared to either: (i) buy out the Xxxxxx interests or the
RBCC interests respectively; or, (ii) sell the RBCC interests or Xxxxxx
interests respectively. The respective prices, and basic terms, are as follow:
SCHEDULE 13D
---------------------- ---------------------
CUSIP No. 89464M 20 2 Page 10 of 11 Pages
---------------------- ---------------------
XXXXXX PRICE AND TERMS
The total price for the Xxxxxx interests is $2,600,000 (subject to adjustment
up or down re independent confirmation of amounts as noted above). The price
is to be satisfied by: (i) a payment, by certified cheque, in the amount of
$1,500,000 at closing; and, (ii) the take back of a debenture in the amount
of $1,100,000 (subject to adjustment up or down for reasons noted above),
such debenture which would rank ahead of the existing RBCC debenture. The
debenture would have a 3 year term with interest payable monthly in arrears
calculated at a rate of RBC Prime.
RBCC PRICE AND TERMS
The total price for the RBCC interests is $3,800,000. The price is to be
satisfied by a payment, by certified cheque, in the amount of $3,800,000 at
closing.
SUMMARY TERMS AND CONDITIONS OF THE BUY/SELL PROCESS
1. The Buy/Sell agreement will be in force for 90 days from the date of
signing.
2. At the time of signing each of RBCC and Xxxxxx will deposit the RBCC
interests and the Xxxxxx interests respectively into escrow with a
mutually acceptable legal counsel. All appropriate transfer documents
will be executed and deposited with the escrow agent at the same time.
3. During the 90 day period the company will make itself and management
available for due diligence. It is anticipated that due diligence
examinations may be carried out by any investor groups working with Xxxxxx
or by RBCC or any parties working with RBCC. 48 hours notice, as well as
a summary due diligence list, must be provided to the company prior to
any on-site visits.
4. All contracts between TIEI and RBCC or Xxxxxx and their respective
affiliates will be fully disclosed to any investor.
5. The company will also take steps to ensure that professional advisors
(lawyers, auditors) may be contacted for due diligence purposes.
6. Each of Xxxxxx, TIEI, and RBCC will pay their own legal counsel. Xxxxxx
and TIEI may not use the same legal counsel/firm. The selling party will
pay the costs of Xxxxxxxxx & Partners re the mediation process.
Xxxxxxxxx will be asked to provide an estimate of this cost.
7. The first part to deliver an offer and certified cheque pursuant to the
Xxxxxx Price and Terms or RBCC Price and Terms to the escrow agent will
have the right and obligation to acquire the other party's position. Any
cheque should be made out to the TIEI and be held by the escrow agent
pending finalization of documentation and regulatory approvals, if any.
8. The parties agree that at all times they will cooperate to conclude an
agreement and closing as quickly as possible.
SCHEDULE 13D
---------------------- ---------------------
CUSIP No. 89464M 202 Page 11 of 11 Pages
---------------------- ---------------------
9. Upon the closing of either transaction, the parties will provide mutual
releases.
ACCEPTED AND AGREED TO:
By: Treats International Enterprises, Inc. Royal Bank Capital Corporation
/s/ Xxxx Xxxxxx /s/ Xxxxxxx Xxxxxx
------------------------------------------ -------------------------------
Xxxx Xxxxxx Xxxxxxx Xxxxxx
President and C.E.O. President
By: Xxxx Xxxxxx
/s/ Xxxx Xxxxxx
----------------------------------------
