Form Of
OPTION AGREEMENT
This OPTION AGREEMENT (the "Agreement") is effective as of the 3rd day
of November, 1998, by and between Xxxxxx Xxxxxxxx, an individual residing in
Ontario, Canada ("Xxxxxxxx"), and Hyaton Organics Inc., a Nevada corporation
("Hyaton").
RECITALS
A. WHEREAS, Xxxxxxxx owns one thousand (1,000) common shares, par value
$0.01 per share (the "Common Shares") of Camden Agro-Systems, Inc., an Ontario
corporation ("Camden Agro"), representing ten percent (10%) of the total
outstanding Common Shares of Camden Agro; and
B. WHEREAS, Kafus Industries, Ltd., a British Columbia corporation
("Kafus"), formerly owned nine thousand (9,000) Common Shares of Camden Agro,
representing the remaining ninety percent (90%) equity interest in Camden Agro;
and
C. WHEREAS, Hyaton and Kafus have entered into a "Plan And Agreement Of
Reorganization" pursuant to which, among other things, Kafus transferred and
delivered to Hyaton all of its Camden Agro Common Shares in exchange for twenty
million (20,000,000) shares of Hyaton voting common stock, par value $0.01 per
share (the "Hyaton Common Stock" or the "Hyaton Shares"); and
D. WHEREAS, pursuant to the terms of this Agreement, Hyaton has agreed
to grant to Xxxxxxxx an option, and Xxxxxxxx has agreed to grant to Hyaton an
option, to exchange his 1,000 Camden Agro Common Shares to Hyaton in exchange
for 120,000 shares of Hyaton Common Stock; and
E. WHEREAS, for the purposes of this Agreement, the parties have agreed
to value Xxxxxxxx'x interest in the 1,000 Camden Agro Common Shares at $120,000,
and to value the Hyaton Shares to be exchanged for such Common Shares at $1.00
per Hyaton Share;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, and covenants contained herein, Xxxxxxxx and Hyaton
hereby agree as follows:
1. GRANT AND EXERCISE OF OPTION
1.1 Grant of Option. Subject to the terms and conditions of this
Agreement, Hyaton hereby grants to Xxxxxxxx an option to exchange (the "Call
Option"), and Xxxxxxxx hereby grants to the Hyaton an option to require that
Xxxxxxxx exchange (the "Put Option"), Xxxxxxxx'x 9,000 Common Shares in Camden
for 120,000 shares of Hyaton Common Stock as set forth in Section 1.3.
The Call Option or Put Option (collectively "Option") may be exercisable, in
whole but not in part, at any time on or before November 3, 2003 (the
"Expiration Date").
1.2 Exercise of Option. Xxxxxxxx shall have the right to exercise the
Call Option, and the Company shall have the right to exercise the Put Option,
from time to time by written notice to either Hyaton or Xxxxxxxx, as applicable
(the "Exercise Notice"), delivered any time on or prior to the Expiration Date.
1.3 Delivery of Shares. Within seven (7) business days after the
delivery of the Exercise Notice (the "Option Exercise Date"):
a. By Xxxxxxxx. Xxxxxxxx shall deliver to Hyaton (i) a
certificate or certificates representing all 1,000 of the Camden Agro Shares
held by Xxxxxxxx, and (ii) stock powers executed in favor of Hyaton sufficient
to validly transfer title to the Camden Agro Common Shares, and ownership
thereof, to Hyaton; and
b. By Hyaton. Hyaton shall deliver to Xxxxxxxx (i) a
certificate or certificates representing one hundred twenty thousand (120,000)
shares of Hyaton Common Stock (the "Option Shares"), and (ii) stock powers
executed in favor of Xxxxxxxx sufficient to validly transfer title to the Option
Shares, and ownership thereof, to Xxxxxxxx. The number of Option Shares shall be
subject to appropriate adjustment for any recapitalization, reclassification,
stock split, reverse stock split, combination of shares, stock dividend, or
other similar event, subsequent to the date first stated above, with respect to
the Hyaton Common Stock.
2. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Hyaton. Hyaton represents and
warrants to Xxxxxxxx as follows:
a. Organization and Good Standing. Hyaton is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Nevada.
b. No Lien or Encumbrances. The Option Shares to be issued and
delivered to Xxxxxxxx shall be validly issued, fully paid, and nonassessable,
and shall be free and clear of all liens, mortgages, pledges, encumbrances, or
charges.
c. Authority to Execute Agreement. The Board of Directors of
Hyaton, pursuant to the power and authority legally vested in it, has duly
authorized the execution and delivery by Hyaton of this Agreement, and has duly
agreed to the transaction hereby contemplated. Hyaton has the power and
authority to execute and deliver this Agreement, to approve the transaction
hereby contemplated, and to take all other actions required to be taken by it
pursuant to the provisions hereof. Hyaton has taken all actions required by law,
its Articles of Incorporation, as amended, or otherwise, to authorize the
execution and delivery of this Agreement. This Agreement is valid and
binding upon Hyaton. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will constitute a
violation or breach of the Articles of Incorporation, as amended, or the Bylaws,
as amended, of Hyaton, or any agreement applicable to Hyaton.
2.2 Representations and Warranties of Xxxxxxxx. Xxxxxxxx represents and
warrants to Hyaton as follows:
a. Title. He is the sole and lawful owner of the 1,000 Camden
Agro Common Shares, and he has good and marketable title to the Camden Agro
Shares.
b. No Lien or Encumbrances on Camden Agro Shares. The Camden
Agro Shares owned by Xxxxxxxx and to be delivered to Hyaton shall be free and
clear of all liens, mortgages, pledges, encumbrances, or charges, defects, or
other restrictions or equities of any kind whatsoever.
c. Authority. He has full right and authority to convey and
transfer the Camden Agro Shares to Hyaton pursuant to the terms of this
Agreement.
d. Tax Consequences. Hyaton has made no representations
whatsoever with respect to the tax consequences to Xxxxxxxx in connection with
the transactions contemplated by this Agreement. Xxxxxxxx has had an opportunity
to discuss with a professional tax expert the potential tax consequences
resulting from the transactions contemplated by this Agreement and recognizes
and understands the risk of tax liability to himself resulting from the transfer
of the Camden Agro Shares.
3. ADDITIONAL COVENANTS OF THE PARTIES
3.1 Exempt Transaction. In connection with the issuance of the Option
Shares, Hyaton covenants and agrees to execute all documentation reasonably
necessary to establish such issuance as exempt from the registration
requirements of the United States Securities Act of 1933, as amended, and
applicable blue sky securities laws.
3.2 No Cash Dividend. Subject to Section 1.3 hereof, Xxxxxxxx shall not
be entitled to any cash dividend or other entitlement the record date for which
is prior to the date of issuance of the Option Shares.
3.3 Legended Shares. All Option Shares shall bear a legend in
substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR ANY APPLICABLE STATE LAW, AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE ACT AND THE RULES AND REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION THEREUNDER AND WITH APPLICABLE STATE LAWS AND
REGULATIONS.
3.4 Filings; Cooperation. Hyaton and Kafus shall, on request and
without further consideration, cooperate with one another by furnishing or using
their best efforts to cause others to furnish any additional information and/or
executing and delivering or using their best efforts to cause others to execute
and deliver any additional documents and/or instruments, and doing or using
their best efforts to cause others to do any and all such other things as may be
reasonably required by the parties or their counsel to consummate or otherwise
implement the transaction contemplated by this Agreement.
3.5 No Disposition of Option Shares. Xxxxxxxx undertakes that he shall
not for a period of one (1) year following the date of issue of any Option
Shares dispose of or agree to dispose of any of those Option Shares other than
through Hyaton's stockbrokers.
3.6 No Disposition of Camden Agro Shares. Xxxxxxxx covenants and agrees
that he shall not, prior to the Expiration Date, transfer, sell, exchange, sign,
transfer, whether by will, by the laws of intestacy, or otherwise, pledge,
hypothecate, or otherwise encumber or permit to be encumbered, give or otherwise
dispose of, whether any such disposition shall be voluntary or involuntary, or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree, order, rule, or regulation of any governmental body,
any of the Camden Agro Shares, without the prior written consent of Hyaton,
which may be withheld in its sole discretion.
3.7 Expenses. Each of the parties hereto shall pay all of its
respective costs and expenses (including attorneys' and accountants' fees,
finder's and consultant's fees, costs and expenses) incurred in connection with
this Agreement and the consummation of the transactions contemplated herein.
3.8 Confidentiality. While each party is obligated to provide access to
and furnish information in accordance with this Agreement, it is understood and
agreed that such disclosure and information obtained as a result of such
disclosures are proprietary and confidential in nature. Each party agrees to
hold such information in confidence and not to reveal any such information to
any person who is not a party to this Agreement, or an officer, director, or key
employee thereof, and not to use the information obtained for any purpose other
than assisting in its due diligence inquiry. This Section 3.8 shall survive the
consummation of the transaction called for by this Agreement, and shall be
limited to the time period of two (2) years.
4. CONDITIONS
4.1 Conditions of the Obligations of Hyaton. The obligations of Hyaton
to consummate the exercise of the Option shall be subject to the satisfaction of
each of the conditions set forth in this Section 4.1, unless waived by Hyaton:
a. Accuracy of Representations and Warranties of Xxxxxxxx;
Performance of Obligations. The representations and warranties of Xxxxxxxx set
forth in Section 2.2 shall be true and correct as of the Option Exercise Date as
though made on and as of such date, Xxxxxxxx shall have performed all
obligations and complied with all covenants required to be performed or to be
complied with by him under this Agreement on or prior to the Option Exercise
Date, and Hyaton shall have received on the Option Exercise Date from Xxxxxxxx a
certificate or certificates, dated on or before the Option Exercise Date, to
such effect, which certificate or certificates shall be signed by Xxxxxxxx.
b. No Pending or Threatened Legal Action. No order,
injunction, decree, or other action or legal, administrative, arbitration, or
other proceeding or investigation by any governmental entity shall be pending or
threatened, challenging or imposing a material limitation on the performance of
this Agreement, the consummation of any of the transactions contemplated hereby,
or the operation by Hyaton of its business as now conducted or as presently
proposed to be conducted.
c. Proceedings and Documents. All proceedings taken in
connection with the transactions contemplated hereby and all documents incident
to such transactions shall be reasonably satisfactory in form and substance to
Hyaton and its counsel.
5. TERMINATION
5.1 Mutual Termination. Hyaton and Xxxxxxxx may mutually agree to
terminate this Agreement at any time prior to the Option Exercise Date without
any liability to each other.
5.2 Termination for Breach or Misrepresentation. If either party
breaches any of its obligations hereunder, or if either party's representations
are discovered to be materially false prior to the Option Exercise Date, the
non-breaching party may, at its sole option, terminate the proposed transactions
proposed to be effected under this Agreement.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
6.1 As to Hyaton. The representations and warranties of Hyaton
contained herein shall survive the execution and delivery of this Agreement, the
Option Exercise Date, and the consummation of the transaction called for by this
Agreement for a period of 2 years from the date of this Agreement, unless a
lesser time period is specified.
6.2 As to Xxxxxxxx. The representations and warranties of Xxxxxxxx
contained herein shall survive the execution and delivery of this Agreement, the
Option Exercise Date, and the consummation of the transaction called for by this
Agreement for a period of 2 years from the date of this Agreement unless a
lesser time period is specified.
7. MISCELLANEOUS
7.1 Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereby, and supersedes all negotiations, representations, warranties,
commitments, offers, contracts, and writings prior to the date hereof. No waiver
and no modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the parties to
this Agreement.
7.2 Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective assigns and successors
in interest; provided, that neither this Agreement nor any right hereunder shall
be assignable by Xxxxxxxx or Hyaton without the prior written consent of the
other parties.
7.3 Indemnification. Xxxxxxxx covenants and agrees to defend,
indemnify, and hold harmless each of the officers, directors, employees, agents,
and advisors of Hyaton, as such persons existed prior to the Option Exercise
Date (collectively, the "Hyaton Indemnitees") from and against any loss,
liability, damage, or expense (including reasonable attorney's fees and costs)
which the Hyaton Indemnitees may suffer, sustain or become subject to, as a
result of a breach of any representation, warranty, or covenant by Xxxxxxxx
contained in this Agreement.
Hyaton covenants and agrees to defend, indemnify, and hold harmless
Xxxxxxxx from and against any loss, liability, damage, or expense (including
reasonable attorney's fees and costs) which the Xxxxxxxx may suffer, sustain or
become subject to, as a result of a breach of any representation, warranty, or
covenant by Hyaton contained in this Agreement.
7.4 Brokers and Finders. Neither Xxxxxxxx nor Hyaton not any Person
acting on behalf of any of them, has employed any broker, agent, or finder, or
incurred any liability for any brokerage fees, agents' commissions, finders'
fees, or advisory fees in connection with the transactions contemplated hereby;
and Xxxxxxxx agrees that he shall indemnify and hold Hyaton harmless in respect
to any damages arising out of any agreements or arrangements or understandings
claimed to have been made by him, or any person acting on his behalf, with any
third party; and Hyaton shall indemnify and hold Xxxxxxxx harmless in respect to
any damages arising out of any agreements or arrangements or understandings
claimed to have been made by Hyaton, or any person acting on its behalf, with
any third party.
7.5 Attorney's Fees. In the event of any controversy, claim, or dispute
among the parties to this Agreement arising out of or relating to this Agreement
or breach thereof, each party hereto shall pay its own legal expenses,
attorney's fees, and costs.
7.6 Severability. If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect on any other provisions hereof.
7.7 Governing Law. In any action or proceeding arising out of or
related to this Agreement, the laws of British Columbia shall be followed,
without regard to the application of conflicts of laws provisions.
7.8 Notices. All notices or other communications required hereunder
shall be in writing and shall be sufficient in all respects and shall be deemed
delivered after five (5) days if sent via mail, postage prepaid; the next day if
sent by overnight courier service; or upon completion of transmission if sent by
facsimile to the following:
If to Hyaton:
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attn: Secretary
If to Xxxxxxxx:
Notra Holdings Inc.
c/o 0000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
7.9 Counterparts; Signatures. This Agreement may be executed in one or
more counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by a party and sent to the other parties via facsimile transmission and
the facsimile transmitted copy shall have the same integrity, force and effect
as an original document.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
XXXXXX XXXXXXXX
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HYATON ORGANICS INC.
By:____________________________________________
Its:___________________________________________
