ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is made as of the 7 day of March, 2005
BETWEEN:
XXXXXXXX PRODUCTS LIMITED., a New York company having an office and place
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of business at Corinth New York (Fax No. (518) 654 -9301)
(the "Vendor")
OF THE FIRST PART
AND:
ORGANIC RECYCLING TECHNOLOGIES, LTD, a company duly incorporated under the
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laws of New York and having an office and place of business at Corinth New
York (Fax No. (604) 419 - 0431)
(the "Purchaser")
OF THE SECOND PART
AND:
EAPI ENTERTAINMENT, INC., a company duly incorporated under the laws of
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Nevada and having an office and place of business at Xxxxx 000 - 0000
Xxxx Xxxxxxxx Xxxxxxx XX (Fax No.: (604) 419 - 0431)
(together, the "Parent")
OF THE THIRD PART
WITNESSES THAT WHEREAS:
A. The Vendor has the benefit of certain real property located in Saratoga New
York;
B. The Purchaser desires to acquire certain of the Vendor's real property
located in Saratoga New York, on the terms and subject to the conditions
hereinafter contained;
C. The Parent are principals of the Purchaser and have become parties to
this Agreement for the purpose of guaranteeing payment to the Vendor of the
real property in the manner hereinafter provided;
NOW THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained, and in consideration of the sum of $10.00 now paid
by the Purchaser to the Vendor and the Parent, and for other good and valuable
consideration (the receipt and adequacy of such consideration being hereby
acknowledged by the Vendor and Parent), the parties covenant and agree as
follows:
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SECTION 1
INTERPRETATION
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1.1 Definitions In this Agreement, the following words and phrases shall
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have the meanings set forth after each:
"Assets" means the Real property loacated in Saratoga New York;
"Closing", "Closing Time", Closing Date" means 11:00 a.m. (local Vancouver time)
on the date first written above, or such other time or date as may be agreed
upon by the parties hereto;
"Conversion Option" means the option in favour of the Vendor to convert any or
all of the principal balance of the Debt into Shares, exercisable on the terms
set forth in SCHEDULE 1.1A;
"Debt" means the portion of the Purchase Price remaining unpaid from time to
time and accrued and unpaid interest thereon;
"Encumbrance" means any mortgage, charge, pledge, hypothecation, lien, security
interest, assignment, option, equity, execution, claim or any other title defect
or other encumbrance of any kind or nature whatsoever (including any agreement
to give any of the foregoing), whether or not registered or registrable or
whether consensual or arising by operation of law (statutory or otherwise);
"Real Property" means, collectively, those items of personal property listed or
described in SCHEDULE 1.1B hereto;
"Interest Rate" means five and one half (5.5%) percent per annum;
"Note" means a promissory note evidencing the Purchaser's obligation to pay the
Purchase Price and interest thereon substantially in the form attached hereto as
SCHEDULE 1.1C
"Person" includes an individual, corporation, body corporate, partnership, joint
venture, association, trust or unincorporated organization or any trustee,
executor, administrator or other legal representative thereof;
"Purchase Price" means US$1,500,000.00 plus all applicable sales and transfer
taxes payable by the Purchaser in connection with its acquisition of the Assets;
"Vendor's Certificates" means the certificates to be delivered at Closing
pursuant to paragraph 6.1(e)(v).
1.2 Schedules The following are the schedules to this Agreement:
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Schedule 1.1A Conversion Option
Schedule 1.1B Real Property
Schedule 1.1C Note
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1.3 Interpretation For the purposes of this Agreement, except as
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otherwise expressly provided herein:
(a) "this Agreement" means this Agreement, including the Schedules hereto,
as it may from time to time be supplemented or amended and in effect;
(b) all references in this Agreement to a designated "Section",
"paragraph", "subparagraph" or other subdivision, or to a Schedule, is
to the designated Section, paragraph, subparagraph or other
subdivision of or Schedule to this Agreement, unless otherwise
specifically stated;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Section, paragraph, subparagraph or other subdivision or
Schedule;
(d) the singular of any term includes the plural and vice versa and
the use of any term is equally applicable to any gender and, where
applicable, a body corporate;
(e) the word "or" is not exclusive and the word "including" is not
limiting (whether or not non-limiting language such as "without
limitation" or "but not limited to" or other words of similar import
is used with reference thereto);
(f) all accounting terms not otherwise defined have the meanings
assigned to them in accordance with generally accepted accounting
principles applicable in the United States and applied on a basis
consistent with prior periods;
(g) except as otherwise provided, any reference to a statute includes
and is a reference to such statute and to the regulations made
pursuant thereto with all amendments made thereto and in force from
time to time, and to any statute or regulations that may be passed
which have the effect of supplementing or superseding such statute or
such regulations;
(h) where the phrase "to the best of the knowledge of" or phrases of
similar import are used in this Agreement, it shall be a requirement
that the person or persons in respect of whom the phrase is used shall
have made such due enquiries as are reasonably necessary to enable him
to make the statement or disclosure;
(i) the headings to the sections and subsections of this Agreement
are inserted for convenience only and do not form a part of this
Agreement and are not intended to interpret, define or limit the
scope, extent or intent of this Agreement or any provision hereof;
(j) any reference to a corporate entity includes and is also a reference
to any corporate entity that is a successor to such entity;
(k) the language in all parts of this Agreement shall in all cases be
construed as a whole and neither strictly for nor strictly against any
of the parties;
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(l) the representations, warranties, covenants and agreements contained in
this Agreement shall not merge in the Closing and shall continue in
full force and effect from and after the Closing Date;
(m) each and every covenant, representation or warranty of the Vendor and
Covenantors contained herein shall be a joint and several covenant,
representation or warranty of each of the Vendor and the Covenantors;
(n) all references to money in this Agreement are or shall be to money in
lawful money of the United States.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND COVENANTORS
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2.1 Representations and Warranties of Vendor and Parent To induce the
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Purchaser to enter into and complete the transactions contemplated by this
Agreement, the Vendor hereby jointly and severally represent and warrant that:
(a) the Vendor:
(i) is a company duly incorporated as a company under the laws
of New York;
(ii) is duly organized, validly exists and is in good standing
under the laws of its jurisdiction of incorporation;
(iii) is in good standing in each jurisdiction in which the nature of
the business conducted by it or the property owned or leased by
the Vendor makes such qualification necessary; and
(iv) has the full power, authority, right and capacity to own,
lease and dispose of the Assets, to execute and deliver this
Agreement, to complete the transactions contemplated hereby and
to duly observe and perform all of its covenants and obligations
herein set forth; and
(b) this Agreement has been duly and validly executed and delivered
by each of the Vendors and constitutes a legal, valid and binding
obligation of each of the Vendor, enforceable against each of the
Vendor in accordance with its terms, except as may be limited by laws
of general application affecting the rights of creditors;
(c) neither the execution nor the delivery of this Agreement, or the other
agreements and instruments contemplated hereby, nor the completion of
the transactions contemplated hereby will:
(i) constitute or result in the breach of or default under any
terms, provisions or conditions of, or conflict with, violate or
cause any, or give to any person any right of, after the giving
of a notice or lapse of time or otherwise, acceleration,
termination or cancellation in or with respect to any of the
following:
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(A) any constating documents, charter documents or by-laws
of the Vendor or any resolution of directors or shareholders
of the Vendor;
(B) any law, judgment, decree, order, injunction, rule, statute
or regulation of any court, arbitrator or Governmental
Authority by which any of the Assets, the Vendor is bound or
to which any of the Assets, the Vendor is subject;
(ii) result in the creation of any Encumbrance other than Permitted
Encumbrances on any of the Assets; or
(iii) result in any fees, duties, taxes, assessments or other amounts
relating to any of the Assets becoming due or payable, other than
federal or state sales or transfer tax payable by the Purchaser
as part of the Purchase Price in connection with the transactions
contemplated hereby;
(d) no authorization, approval, order, license, permit, consent,
certificate or registration of any Governmental Authority, court or
arbitrator, and no registration, declaration or filing by the Vendor
or the Covenantors with any Governmental Authority, court or
arbitrator, is required in order for the Vendor and the Covenantors:
(i) to incur the obligations expressed to be incurred by the Vendor
and the Covenantors in or pursuant to this Agreement;
(ii) to execute and deliver all other documents and instruments to be
delivered by the Vendor or the Covenantors pursuant to this
Agreement;
(iii) to duly perform and observe the terms and provisions of this
Agreement; or
(iv) to render this Agreement legal, valid, binding and enforceable;
(e) to the knowledge of the Vendor, no action suit, judgment,
investigation, inquiry, assessment, reassessment, litigation,
determination or administrative or other proceeding or arbitration
before or of any court, arbitrator or Governmental Authority or
dispute with any Governmental Authority is in process, or pending or
threatened, against or relating to the Vendor or any of the Assets and
no state of facts exists which could constitute the basis therefor;
(f) the Vendor is the legal and beneficial owner of and has good and
marketable title to the Assets free and clear of all Encumbrances
except Permitted Encumbrances, and none of the Assets is in the
possession of or under the control of any other person;
(g) the Assets are being sold to the Purchaser "as is, where is",
without any warranty of merchantability or fitness for a particular
purpose;
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(h) except as otherwise expressly disclosed to the Purchaser, there
has not been any default in any term, condition, provision or
obligation to be performed under any Material Contract, each of which
is in good standing and in full force and effect, unamended;
(i) there is no written, oral or implied agreement, option, understanding
or commitment or any right or privilege capable of becoming any of the
same, for the purchase from the Vendor of any of the Assets;
(j) there is no indebtedness to any person which might, by operation
of law or otherwise, now or hereafter constitute or be capable of
forming an Encumbrance upon any of the Assets, except Permitted
Encumbrances.
2.2 Other Representations All statements contained in any certificate or
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other instrument delivered by or on behalf of the Vendor pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Vendor hereunder.
2.3 Survival The representations and warranties of the Vendor contained
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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,
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.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PARENT
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3.1 Representations and Warranties In order to induce the Vendor to enter
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into and to consummate the transactions contemplated by this Agreement, the
Purchaser hereby represents and warrants to the Vendor that:
(a) The Purchaser is:
(i) is a company duly incorporated as a Corproation under the laws of
New York;
(ii) is duly organized, validly exists and is in good standing under
the laws of its jurisdiction of incorporation;
(iii) has the full power, authority, right and capacity to execute and
deliver this Agreement, to complete the transactions contemplated
hereby and to duly observe and perform all of its covenants and
obligations herein set forth;
(b) The execution and delivery of this Agreement has been duly authorized
by all necessary corporate action on the part of the Purchaser and
this Agreement constitutes a valid and binding obligation of the
Purchaser;
(c) The Purchaser is not a party to, bound by or subject to any indenture,
mortgage, lease, agreement, instrument, statute, regulation, order,
judgment, decree or law which would be violated, contravened or
breached by or under which any default would occur as a result of the
execution and delivery by the Purchaser of this Agreement or the
performance by the Purchaser of any of the terms hereof;
and the Purchaser covenants, represents and warrants with and in favour of the
Vendor that all of the representations and warranties set forth in this Section
3.1 shall be true and correct at the Closing Time as if made at that time.
3.2 Survival The representations and warranties of the Purchaser contained
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in this Agreement shall survive the Closing and the purchase of the Shares and,
notwithstanding the Closing and the purchase of the Shares, the representations
and warranties of the Purchaser shall continue in full force and effect for the
benefit of the Vendor for a period of one year from the Closing Date.
3.3 Reliance The Purchaser acknowledges and agrees that the Vendor have
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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 Vendor,
and that no information which is now known or should be known or which may
hereafter become known to the Vendor, or their professional advisers, shall
limit or extinguish the right to identification hereunder.
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SECTION 4
PURCHASE AND SALE
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4.1 Assets Based and relying on the representations and warranties set
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forth in Sections 2 and 3, the Purchaser hereby agrees to purchase the Assets
from the Vendor and the Vendor hereby agrees to sell the Assets to the
Purchaser, free and clear of all Encumbrances other than Permitted Encumbrances,
and the Purchaser hereby agrees to pay the Purchase Price to the Vendor on the
terms and conditions hereinafter set forth.
4.2 Allocation of Purchase Price The Purchase Price shall be allocated as
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follows:
(a) Real Property in Corinth New York - US$1,500,000.00
SECTION 5
CLOSING MATTERS
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5.1 Closing Date and Location The transactions contemplated herein shall
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be completed at 11:00 a.m. on the Closing Date at the offices of the Vendor's
Solicitors, Suite 1300 - 1111 West Georgia Street, Vancouver, British Columbia,
or at such other time or at such other location as may be mutually agreed upon
by the parties hereto.
5.2 Vendor' and Covenantors' Closing Documents On the Closing Date:
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(a) the Vendor shall deliver, or cause to be delivered, to the Purchaser
the documents set forth in subsection 11.1 hereof and such other
documents as the Purchaser may reasonably require to perfect the
purchase and sale intended hereby; and
(b) the Covenantors will deliver the Guarantees.
5.3 Purchaser's Closing Date Documents On the Closing Date, the Purchaser
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shall deliver to the Vendor:
(a) the Note; and
(b) security over all property and assets of the Purchaser, including
without limitation security in the form of a general security
agreement and a form UCC 1 in forms acceptable to the Vendor, acting
reasonably, to secure payment of the Purchase Price and interest in
accordance with this Agreement.
5.4 Interest, Payment and Conversion Privilege The Purchaser will pay interest
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on the Debt before and after each of maturity, default and judgment, in
accordance with the following provisions:
(a) the Debt will bear interest at the Interest Rate from and after
the Closing Date;
(b) interest will accrue from day to day on the basis of a year of
365 or 366 days, as the case may be, and will be calculated monthly;
and
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(c) if the Purchaser fails to make any payment of interest when due,
the Purchaser will pay compound interest thereon calculated on the
last banking day of each month until paid.
5.5 Payments Under Note The Purchase Price and interest thereon will be
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paid to the Vendor in accordance with the terms of the Note, and in the event of
any default of payment in accordance with the terms of the Note:
(a) The Purchaser, the Parent and the Vendor agree that if the first
US$500,000 payment in the Note is not complete on the date as agreed
this agreement is not a binding agreement.
(b) the Purchaser will become liable for and will pay to the Vendor
an amount equal to ten (10%) of that portion of the Debt required to
be paid on the date specified in the Note;
(b) the amount described in clause 5.5(a) will be added to the Debt
and and the unpaid portion of such amount will bear interest at the
Interest Rate from and after the date of default until such amount is
paid in full; and the provisions of section 5.4 shall apply to such
amount, mutatis mutandis.
5.6 Place of Payment All payments to be made by the Purchaser to the
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Vendor hereunder will be made to the Vendor at its address first set forth above
or at such other place as the Vendor may advise the Purchaser from time to time
in writing.
5.7 Prepayment The Purchaser shall have the right to prepay the
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principal balance of the Debt in whole or in part, together with any and all
interest and other monies due hereunder, at any time prior to the first
anniversary of the Closing Date, on not less than 30 business day's prior
written notice to the Vendor and upon issue to and in the name of the Vendor of
that number of common shares of the Parent which is equal to the product
obtained by dividing US$1,500,000 by the lesser of:
(a) that amount which is 90% of the average of the closing prices
(last trades) of the Purchaser's shares on the OTC Bulletin Board (or
on such other market or trading system on or through which its shares
shall be traded or quoted for trading) over the three trading days
immediately preceding the date on which such notice is given and such
shares are issued; and
(b) that amount which is 90% of the average of the closing prices
(last trades) of the Purchaser's shares on the OTC Bulletin Board (or
on such other market or trading system on or through which its shares
shall be traded or quoted for trading) over the thirty trading days
immediately preceding the date on which such notice is given and such
shares are issued;
provided that the Vendor shall have the right to exercise the Conversion Option
during any such 30 business day notice period at the price determined pursuant
to subsections 5.7(a) and (b).
5.8 Acceleration At the sole option of the Vendor, the principal balance
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of the Debt and all other monies due hereunder shall become immediately due and
payable upon the occurrence of an Event of Default.
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5.9 Event of Default The Purchaser shall be in default under this
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Agreement, unless waived in writing by the Vendor, in any of the following
events (each of which is herein called an "Event of Default"):
(a) if the Purchaser defaults in payment when due of the Debt or any
other monies due and owing hereunder;
(b) if the Purchaser defaults in the performance or observance of any
other term, condition or covenant contained herein or in any security
instrument or in any other agreement between the Vendor and the
Purchaser and such default is not remedied within thirty (30) days'
notice from the Vendor to the Purchaser specifying such default;
(c) if the Purchaser declares itself to be insolvent or admits in
writing its inability to pay its debts generally as they become due,
or makes an assignment for the benefit of its creditors, is declared
bankrupt, makes or files a notice of intention to make a proposal or
otherwise takes advantage of provisions for relief under bankruptcy
legislation in any jurisdiction (including "Chapter 11"); or
(d) a receiver, receiver and manager or receiver-manager of all or
any part of the assets of the Purchaser is appointed; or
(e) an order is made or an effective resolution is passed for winding-up
the Purchaser; or
(f) the Purchaser proposes to dispose of all or substantially all of
its assets and undertaking or ceases or threatens to cease to carry on
all or a substantial part of its business; or
(g) without the prior written consent of the Vendor, the Purchaser
creates or permits to exist any security interest in, charge,
encumbrance, lien on or claim against any assets of the Purchaser
which ranks or could in any event rank in priority to or pari passu
with any of the security interests granted to the Vendor; or
(h) the holder of any other security interest, charge, encumbrance,
lien or claim against any of the assets of the Purchaser does anything
to enforce or realize on such security interest, charge, encumbrance,
lien or claim; or
(i) the Purchaser enters into an amalgamation, merger, share exchange
or other arrangement or compromise with any other person;
and the Vendor may waive non-performance, default or any breach by the Purchaser
hereunder, but no waiver shall extend to a subsequent non-performance, breach or
default, whether or not the same as or similar to the non-performance, breach or
default waived.
5.10 Conversion Option
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The Purchaser and the Parent hereby grants the Conversion Option to the Vendor.
SECTION 6
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POST-CLOSING MATTERS
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6.1 Post-Closing Matters - After Closing, the Vendor will apply all funds
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received in accordance with the Note to reduce Equipment Debt, until the
Equipment Debt has been paid in its entirety.
SECTION 7
VENDOR'S COVENANTS
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7.1 Prior to Closing Date Each of the Vendor covenants and agrees with
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the Purchaser that from and after the date of execution of this Agreement to the
Closing Date:
(a) except with the prior written consent of the Purchaser, the Vendornor
will do or fail to do anything that would result in any of the
representations and warranties set forth in subsection 2.1 not being
true and correct in all material respects at the time of Closing;
(b) the Vendor will obtain all necessary releases, discharges, waivers,
consents and approvals as may be required to validly and effectively
transfer the Assets to the Purchaser;
(c) each of the Vendor will take or cause to be taken all proper steps,
actions and corporate proceedings on its part (including the approval
of the sale by the directors and shareholders of the Vendor) to enable
it to vest a good and marketable title in the Purchaser to the Assets,
free and clear of all Encumbrances except Permitted Encumbrances;
(d) the Vendor will permit the Purchaser, its officers, directors, agents,
professional advisers or other authorized representatives at any time
and from time to time to inspect the Assets.
7.2 Enduring From and after the execution of this Agreement, both before
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and after the Closing Date, each of the Vendor covenants and agrees with the
Purchaser that the Vendor will, at their expense, execute and do all such
further deeds, acts, things and assurances as may reasonably be required for
more perfectly and absolutely assigning, transferring, assuring to and vesting
in the Purchaser title to the Assets.
SECTION 8
PURCHASER'S COVENANTS
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8.1 Purchaser's Covenants The Purchaser covenants and agrees with each of
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the Vendor that:
(a) from and after the date of this Agreement until the Closing, as
soon as the Purchaser has determined that a state of facts exists
which results in or will result in any representation or warranty
contained in subsection 3.1 being untrue or incorrect in any material
respect on the Closing Date, the Purchaser will notify the Vendor of
such state of facts;
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(b) the Purchaser will co-operate with each of the Vendor with respect to
all covenants set forth herein and the satisfaction of all conditions
precedent set forth herein;
(c) the Purchaser will be liable for and pay all social service taxes,
sales taxes, goods and services taxes, registration charges and
transfer fees properly payable upon and in connection with the sale
and transfer of the Assets by the Vendor to the Purchaser; provided
that all such taxes, charges and fees shall be included in the
Purchase Price;
(d) on and after the time of Closing, the Purchaser will assume,
perform and discharge all obligations arising under the Material;
SECTION 9
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
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9.1 Purchaser's Conditions Precedent Notwithstanding anything herein
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contained, the obligation of the Purchaser to complete the purchase of the
Assets is conditional upon the fulfillment of the following conditions
precedent:
(a) the representations and warranties of the Vendor contained in this
Agreement and in any certificate or document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated
hereby shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of the Closing Date, except:
(i) to the extent that any of such representations and warranties
have been waived by the Purchaser or affected by the transactions
between the parties contemplated hereby; or
(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to
such date or period;
(b) all of the covenants, agreements and deliveries of each of the
Vendor to be performed or complied with on or before the Closing Date
pursuant to the terms of this Agreement shall have been duly performed
or complied with, except to the extent that such performance or
compliance has been waived by the Purchaser or is prevented by a
default by the Purchaser in the performance of its obligations
hereunder;
(c) all consents or approvals required to be obtained by the Vendor
for the purpose of selling, assigning or transferring the Assets have
been obtained;
(d) since the date hereof and prior to the Closing Date no substantial
damage by fire, negligence or otherwise to the Assets shall have
occurred which materially and adversely affects any of the Assets;
(e) The Purchaser shall be satisfied, acting reasonably, that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not constitute defaults under
any Material Contracts.
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9.2 Conditions for Benefit of Purchaser The foregoing conditions are for
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the exclusive benefit of the Purchaser and any such condition may be waived in
whole or in part by the Purchaser on or prior to the Closing Date.
SECTION 10
CONDITIONS PRECEDENT TO THE VENDOR'S OBLIGATIONS
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10.1 Vendor's Conditions Precedent Notwithstanding anything herein
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contained, the obligation of the Vendor to complete the sale hereunder is
subject to the following conditions:
(a) the Purchaser's representations and warranties contained in this
Agreement shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of the Closing Date, except:
(i) to the extent that any of such representations and warranties has
been waived by the Vendor or affected by the transactions between
the parties contemplated hereby; or
(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to
such date or period;
(b) the Purchaser shall have performed and complied with all covenants,
agreements and deliveries required by this Agreement to be performed
or complied with by it on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed or complied
with, except to the extent that such performance or compliance has
been waived by the Vendor or is prevented by a default by the Vendor
or the Covenantors in the performance of its obligations hereunder;
and
(c) all consents or approvals required to be obtained by the Vendor
for the purpose of selling, assigning or transferring the Assets have
been obtained, provided that this condition may only be relied upon by
the Vendor if the Vendor and the Covenantors have diligently exercised
their best efforts to procure all such consents or approvals and the
Purchaser has not waived the need for all such consents or approvals.
10.2 Conditions for Benefit of the Vendor The foregoing conditions are
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for the exclusive benefit of the Vendor and any such condition may be waived in
whole or in part by the Vendor on or prior to the Closing Date.
SECTION 11
DELIVERIES AT CLOSING
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11.1 Vendor's Deliveries At the Closing, the Vendor shall deliver or
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cause to be delivered to the Purchaser:
(a) all deeds of conveyance, bills of sale, transfer and assignments,
duly executed, in form and content satisfactory to the Purchaser's
Solicitors, appropriate to effectively vest good
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and marketable title to the Assets in the Purchaser to the extent
contemplated by this Agreement, and immediately registrable in all
places where registration of such instruments is necessary or
desirable;
(b) all consents or approvals required by this Agreement to be obtained by
the Vendor;
(c) at the Vendor's place of business, physical possession of the Assets;
(d) a certified copy of a resolution of the directors of the Vendor
duly passed, with a certification that it has not been rescinded and
continues to be in effect, authorizing the execution, delivery and
implementation of this Agreement and of all transactions contemplated
hereby and of all documents to be delivered by the Vendor pursuant
hereto; and
(e) if required by law, a certified copy of a special resolution of
the shareholder(s) of the Vendor duly passed, with a certification
that it has not been rescinded and continues to be in effect,
approving the sale of the Assets by the Vendor.
11.2 Purchaser's Deliveries At the Closing the Purchaser shall deliver or
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cause to be delivered to the Vendor a certified copy of a resolution of the
directors of the Purchaser duly passed authorizing the execution, delivery and
implementation of this Agreement and of all transactions contemplated hereby and
of all documents to be delivered by the Purchaser pursuant hereto.
SECTION 12
LOSS OR DAMAGE PRIOR TO CLOSING
-------------------------------
12.1 Loss or Damage Prior to Closing If, prior to the Closing Date, there
-------------------------------
shall have been any loss or damage to any Assets, the Vendor shall forthwith
thereafter deliver to the Purchaser a detailed list showing the insurance
coverage with respect thereto, particulars of any claims made by the Vendor
under its insurance coverage, and the standing of such claims and if,
notwithstanding such loss or damage, the Purchaser elects by notice in writing
to the Vendor to complete the transactions contemplated herein, the sale and the
purchase provided for herein shall be completed, and the Vendor shall on
Closing:
(a) pay to the Purchaser all monies received by the Vendor before the
Closing Date as proceeds of insurance with respect thereto; and
(b) deliver to the Purchaser a duly executed assignment in form and
substance satisfactory to the Purchaser's Solicitors, of all of the
Vendor's interest in and to any proceeds of insurance with respect to
any such items and the Vendor's written undertaking to co-operate with
the Purchaser in the satisfactory settlement of all claims.
SECTION 13
EFFECTIVE DATE AND ADJUSTMENTS
------------------------------
13.1 Effective Date The purchase and sale of Assets herein contemplated
---------------
shall take effect as of and from the Closing Date.
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13.2 Adjustments Rentals and prepaid expenses relating to the Assets and
-----------
other matters customarily the subject of adjustment shall be adjusted as at the
close of business on the business day immediately preceding the Closing Date on
a per diem basis and the Purchase Price shall be adjusted accordingly.
SECTION 14
CONVEYANCE AND POSSESSION
-------------------------
14.1 Conveyance of Assets On completion of the Closing, this Agreement
----------------------
shall, without further act or formality, operate as a transfer to the Purchaser
of all Assets to be sold and purchased hereunder as the same shall be at the
close of business on the Closing Date. The Vendor shall nevertheless, at the
Closing and from time to time after the Closing, execute and deliver to the
Purchaser all such conveyances, transfers, assignments and other instruments in
writing and further assurances as the Purchaser shall reasonably require from
the Vendor, and the Purchaser shall execute and deliver to the Vendor all such
agreements of assumptions and other instruments in writing and further
assurances as the Vendor shall reasonably require in order to give effect to the
provisions of this Agreement.
14.2 Trust Regarding Assets Not Conveyed Should any of the Assets
---------------------------------------
intended to be transferred hereunder not be transferred to the Purchaser at the
completion of the Closing on the Closing Date, the Vendor shall hold as bare
trustee in trust for, and at the sole cost of the Purchaser, all such Assets
from the commencement of business on the Closing Date until such Assets are
effectively transferred.
SECTION 15
LAW AND PROCEDURE FOR RESOLVING DISPUTES
----------------------------------------
15.1 Arbitration Notwithstanding the jurisdictions of subsistence of the
-----------
parties to this Agreement and notwithstanding the situs of the subject matter of
this Agreement, this Agreement shall be governed by and construed in accordance
with the laws of the Province of British Columbia and, subject to the
requirement for arbitration of disputes set forth herein, the parties hereto
irrevocably submit and attorn to the jurisdiction of the Courts of the Province
of British Columbia; provided that any and all disputes arising out of or in
connection with this Agreement or in respect of any legal relationship
associated herewith or derived from this Agreement shall be referred to and
finally resolved by arbitration by a single arbitrator pursuant to the
International Commercial Arbitration Act (British Columbia), and the place of
the arbitration hearing shall be Vancouver, British Columbia.
SECTION 16
GENERAL PROVISIONS
------------------
16.1 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 its address first set forth
above 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, and:
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(a) 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 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 only be effectively given if actually delivered or sent
by telecopier; and
(b) 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.
16.2 Time Time shall be of the essence of this Agreement.
----
16.3 Entire Agreement This Agreement contains the whole agreement between
----------------
the parties in respect of the subject matters hereof and there are no
warranties, representations, terms, conditions or collateral agreements,
express, implied or statutory, other than as expressly set forth in this
Agreement and this Agreement supersedes all of the terms of any written or oral
agreement or understanding between the parties.
16.4 Enurement This Agreement shall enure to the benefit of and be
---------
binding upon the Vendor, the Purchaser and the Covenantors and each of them and,
as applicable, their heirs, executors, administrators, successors and assigns.
16.5 Further Assurances Each of the parties will, on demand by another
-------------------
party, execute and deliver cause to be executed and delivered all such further
documents and instruments and do all such further acts and things as the other
may either before or after the Closing reasonably require to evidence, carry out
and give full effect to the terms, conditions, intent and meaning of this
Agreement and to assure the completion of the transactions contemplated hereby.
16.6 Modifications, Approvals and Consents No amendment, modification,
----------------------------------------
supplement, termination or waiver of any provision of this Agreement will be
effective unless in writing signed by the appropriate party and then only in the
specific instance and for the specific purpose given.
16.7 Legal and Other Fees Unless otherwise specifically provided herein,
---------------------
the parties will pay their respective legal, accounting and other professional
fees and expenses, including goods and services taxes on such fees and expenses,
incurred by each in connection with negotiation and settlement of this
Agreement, the completion of the transactions contemplated hereby and other
matters pertaining hereto.
16.8 Proof of Indebtedness The records of the Vendor as to the amount
-----------------------
outstanding hereunder, or as to payment of any money payable hereunder or any
part thereof being in default or of any demand for payment having been made
shall be prima facie proof of such fact.
16.9 Counterparts This Agreement may be executed in any number of
------------
counterparts or by facsimile, each of which shall together, for all purposes,
constitute one and the same instrument, binding on the parties, and each of
which shall together be deemed to be an original, notwithstanding that all of
the parties are not signatory to the same counterpart or facsimile.
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16.10 Assignment The Purchaser may not assign the benefit of this
----------
Agreement except with the prior written consent of the Vendor and the
Covenantors, which consents may be arbitrarily withheld; and in the event of any
permitted assignment, the Purchaser shall nevertheless remain bound by the terms
hereof including the obligation to pay the Purchase Price when due.
16.11 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
jurisdiction and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any
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way be affected or impaired thereby, unless in either case as a result of such
determination this Agreement would fail in its essential purpose.
IN WITNESS WHEREOF the parties hereto have hereunto duly executed this Agreement
as of the day and year first above written.
EAPI ENTERTAINMENT, INC.
Per:
/s/ Xxxx Xxxxxxx
---------------------------------------
Authorized Signatory
ORGANIC RECYCLING TECHNOLOGIES, LTD.
Per:
/s/ Xxxxx Xxxxxxxx
---------------------------------------
Authorized Signatory
XXXXXXXX PRODUCTS LIMITED
Per:
/s/ Xxxxx Xxxxxxxx
---------------------------------------
Authorized Signatory
SCHEDULE 1.1A
TERMS OF CONVERSION OPTION
--------------------------
1.0 Conversion Privilege
--------------------
1.1 Subject to the provisions hereinafter set forth, the Vendor shall have
the sole and exclusive right and option (the "Option"), at any time and from
time to time during the two year term (the "Term") next following the first
anniversary date of the Closing, to convert the whole or any part of the
principal balance of the Debt then outstanding (the "Debt") into common shares
("Shares") of the Parent at a conversion price (the "Conversion Price") per
Share equal to the lesser of:
(a) that amount which is 90% of the average of the closing prices
(last trades) of the Parent's shares on the OTC Bulletin Board (or on
such other market or trading system on or through which its shares
shall be traded or quoted for trading) over the three trading days
immediately preceding the date on which such notice is given and such
shares are issued; and
(b) that amount which is 90% of the average of the closing prices
(last trades) of the Parent's shares on the OTC Bulletin Board (or on
such other market or trading system on or through which its shares
shall be traded or quoted for trading) over the thirty trading days
immediately preceding the date on which such notice is given and such
shares are issued.
1.2 If at any time the Vendor exercises the Option to convert only part of
the Debt into Shares, then the Vendor shall have the further right and option
under the Option to convert all or any part of the remaining Debt into Shares on
one (1) or more later occasions prior to the end of the Term.
2.0 Manner of Exercise of Right to Convert
--------------------------------------
2.1 On each occasion on which the Vendor desires to convert a portion of the
Debt to Shares, the Vendor shall deliver a written notice (each a "Notice') to
the Parent specifying the amount of the Debt to be converted, expressed in U.S.
dollars.
2.2 Upon receiving a Notice, the Parent shall, within five (5) days:
(a) deliver an appropriate order to its transfer agent directing the
registration of the Vendor as the owner of the number of Shares into
which the portion of the Debt specified in the Notice is convertible;
and
(b) deliver to the Vendor certificates for the shares and warrants
comprised in such Shares and, if applicable, a cheque for any amount
payable under paragraph 4.1.
2.3 Any part of the Debt may be converted as provided in this Option and all
references in this Option to the conversion of the Debt shall be deemed to
include the conversion of a part of the Debt where applicable.
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3.0 Adjustment of Conversion Price
------------------------------
3.1 If and whenever at any time prior to the expiry of the Term the
outstanding shares of the Purchaser are subdivided, redivided or changed into a
greater or consolidated into a lesser number of shares or reclassified into
different shares, if the Vendor has not fully exercised its right of conversion
prior to the effective date of such subdivision, redivision, change or
consolidation or reclassification (each a "Change"), the Vendor shall be
entitled to receive and shall accept, upon the exercise of such right at any
time thereafter, in lieu of the number of Shares to which the Vendor was
entitled upon conversion immediately prior to such Change, the aggregate number
of Shares of the Parent that the Vendor would have been entitled to receive as a
result of such Change if, on the effective date thereof, the Vendor had been the
registered holder of the number of Shares to which it was entitled upon
conversion immediately prior to such Change.
3.2 If and whenever at any time prior to the expiry of the Term there is a
capital reorganization of the Purchaser or an amalgamation of the Parent with or
into any other company including by way of a sale whereby all or substantially
all of the Parent's undertaking and assets would become the property of any
other company, if the Vendor has not fully exercised its right of conversion
prior to the effective date of such reorganization, consolidation, merger,
amalgamation or sale (herein individually called a "Reorganization"), the Vendor
shall be entitled to receive and shall accept, upon exercise of such right at
any time on or thereafter, in lieu of the number of Shares to which the Vendor
was entitled upon conversion immediately prior to such Reorganization, the
aggregate number of securities or property of the Parent resulting from the
Reorganization that the holder would have been entitled to receive as a result
of such Reorganization if, on the effective date thereof, the Vendor had been
the registered holder of the number of Shares to which it was entitled upon
conversion immediately prior to such Reorganization.
3.3 If any Reorganization occurs, appropriate adjustment shall be made in
the application of the provisions set forth in this Option with respect to the
rights and interests thereafter of the Vendor to the end that after such event
the Vendor shall retain rights substantially equivalent to the rights held by it
prior to the occurrence of such event and that the provisions set forth in this
Option shall thereafter be made applicable, as nearly as may reasonably be, in
relation to any shares or other securities or property to which the Vendor is
entitled on the exercise of its right of conversion thereafter.
3.4 The adjustments provided for in this option are cumulative and shall
apply to successive Changes, Reorganizations or other events resulting in any
adjustment under the provisions of this Option.
3.5 In the event of any question arising with respect to the adjustments
provided in this Option, such question shall be determined by a firm of
chartered accountants appointed by the Vendor (who may be the auditors of the
parent); and such accountants shall have access to all necessary records of the
Parent and such determination shall be binding upon the Vendor and the
Purchaser.
4.0 No Requirement to Issue Fractional Shares
-----------------------------------------
4.1 The Parent shall not be required to issue fractional Shares upon the
conversion of the Debt pursuant to this Option. If any fractional interest in a
Shares would be deliverable upon the conversion of the Debt, the Parent shall,
in lieu of delivering any certificate for such fractional interest, satisfy such
fractional interest by paying to the Vendor an amount in lawful money of Canada
equal (computed to the nearest cent) to the appropriate fraction of the value
(being the last reported sale price if a sale took place
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within sixty (60) days of the applicable Notice or, if none, a value determined
by the Directors of the Parent) of a the Purchaser share on the date of receipt
by the Purchaser of the Vendor's Notice.
5.0 Purchaser to Reserve Shares
------------------------------
5.1 The Parent covenants that it will at all times reserve and keep
available out of its authorized capital solely for the purpose of issuance upon
conversion of the Debt as in this Option provided, and conditionally allot to
the Vendor such number of shares and warrants as shall then be issuable upon
conversion of the Debt and such number of shares as shall then be issuable upon
the exercise of the Conversion Warrants; and all shares so issued shall be duly
and validly issued as fully paid and non-assessable.
6.0 Certificate as to Adjustment
----------------------------
6.1 The Parent shall from time to time immediately after the occurrence of
any event which requires an adjustment as provided in this Option, deliver a
certificate signed by two of its Officers to the Vendor specifying the nature of
the event requiring the same and the amount of the adjustment necessitated
thereby and setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based and the method of calculation and the
amount of the adjustment specified in such certificate shall be reported on by a
firm of chartered accountants appointed by the Parent (who may be the auditors
of the Parent).
SCHEDULE 1.1B
REAL PROPERTY LIST
------------------
60 acre permitted parcel of land in Corinth, New York
SCHEDULE 1.1C
PROMISSORY NOTE
---------------
Vancouver, B.C.
March 7 , 2005
-----------
PRINCIPAL AMOUNT: U.S.$1,500,000
FOR VALUE RECEIVED, ORGANIC RECYCLING TECHNOLOGIES, LTD. (the "Purchaser") and
EAPI ENTERTAINMENT, INC. (the "Parent") hereby promises to pay to the order of
XXXXXXXX PRODUCTS LIMITED (the "Vendor"), at Xxxxx 000, 0000 Xxxx Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0, the sum of ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS lawful money of the United States of America (U.S.
$1,500,000) (the "Principal Sum") together with interest on the unpaid balance
of the Principal Sum from and after the date of this promissory note at the
Interest Rate (as hereinafter defined) as follows:
(a) on June 30, 2005, a payment comprised of FIVE HUNDRED THOUSAND DOLLARS
(US$500,000) on account of the Principal Sum and all interest having
accrued to and including the date of payment;
(b) on September 15, 2005, a payment comprised of ONE HUNDRED THOUSAND
DOLLARS (US$100,000) on account of the Principal Sum and all interest
having accrued to and including the date of payment;
(c) on December 15, 2005, a payment comprised of ONE HUNDRED THOUSAND
DOLLARS (US$100,000) on account of the Principal Sum and all interest
having accrued to and including the date of payment;
(d) on March 15, 2006, a payment comprised of ONE HUNDRED THOUSAND DOLLARS
(US$100,000) on account of the Principal Sum and all interest having
accrued to and including the date of payment;
(e) on June 15, 2006, a payment comprised of ONE HUNDRED THOUSAND DOLLARS
(US$100,000) on account of the Principal Sum and all interest having
accrued to and including the date of payment;
(f) on September 15, 2006, a payment comprised of TWO HUNDRED THOUSAND
DOLLARS (US$200,000) on account of the Principal Sum and all interest
having accrued to and including the date of payment;
(g) on December 15, 2006, a payment comprised of TWO HUNDRED THOUSAND
DOLLARS (US$200,000) on account of the Principal Sum and all interest
having accrued to and including the date of payment;
(h) on March 15, 2007, a payment comprised of TWO HUNDRED THOUSAND DOLLARS
(US$200,000) on account of the Principal Sum and all interest having
accrued to and including the date of payment;
For the purpose hereof the Interest Rate means Five and one-half per cent (5.5%)
per annum. Interest at the Interest Rate will be calculated monthly not in
advance and will be paid at the Interest Rate both before and after each of
maturity, default and judgment. If the Purchaser fails to make any payment of
interest when due, the Purchaser will pay compound interest thereon computed on
the last banking day of each month until paid.
At the sole option of the Vendor, the whole of the Principal Sum remaining
unpaid together with all accrued and unpaid interest thereon shall become
immediately due and payable if there occurs an Event of Default as defined in
that certain asset purchase agreement dated for reference March, 2005 among the
Vendor and the Purchaser. The Purchaser hereby waives presentment, protest,
notice of protest and notice of dishonor of this Promissory Note.
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THE COMMON SEAL OF
ORGANIC RECYCLING TECHNOLOGIES, LTD.
was hereunto affixed in the presence of:
c/s
/s/ Xxxxx Xxxxxxxx
----------------------------------------
Authorized Signatory
THE COMMON SEAL OF
EAPI ENTERTAINMENT, INC.
was hereunto affixed in the presence of:
c/s
/s/ Xxxx Xxxxxxx
----------------------------------------
Authorized Signatory
