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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) MARCH 2, 1999
INTERNATIONAL BARTER CORP.
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or Other Jurisdiction
of Incorporation)
<TABLE>
<S> <C>
0-24005 91-1739746
(Commission File Number) (IRS Employer Identification
Number)
</TABLE>
INTERNATIONAL BARTER CORP.
21400 INTERNATIONAL BLVD., SUITE 207
SEATTLE, WASHINGTON 98198
(Address of Principal Executive Offices)
(206) 870-9290
(Registrant's Telephone, Including Area Code)
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INTERNATIONAL BARTER CORP.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 2, 1999, pursuant to a Share Purchase Agreement ("Purchase
Agreement") among International Barter Corp. ("IBC"), Barter Business Exchange,
Inc. ("BBE"), an Ontario corporation, and Bob Bagga ("Bagga"), the selling
shareholder of BBE, IBC acquired one hundred percent (100%) of the issued and
outstanding shares of BBE ("Shares") from Bagga, the seller, and registered and
beneficial owner of all the issued and outstanding shares of BBE. A copy of the
Purchase Agreement is filed as an exhibit to this report and is incorporated by
reference. Unless otherwise specified, all dollar amounts stated in this report
are denominated in Canadian dollars.
The total amount of consideration payable by IBC to Bagga, pursuant to the
Purchase Agreement is CN $2,450,000. The aggregate consideration payable to
Bagga is subject to adjustment and includes: (i) the payment of CN $850,000
(including funds advanced Bagga prior to closing) and payment in lawful money of
the United States of the amount of $US 100,000; (ii) a Promissory Note (the
"Note") in the principal amount of CN $850,000 (subject to adjustment, if
applicable, pursuant to the terms of the Purchase Agreement); (iii) the payment
of IBC Trade Dollars (barter dollars) in the amount of CN $250,000; and (iv) the
issuance by IBC to Bagga of 150,000 shares of IBC common stock which have a
minimum aggregate value, upon registration and resale, of CN $350,000.
The Note in the principal amount of CN $850,000 is subject to reduction, if
applicable, pursuant to the terms of the Share Purchase Agreement. The Note
provides that the principal will be reduced by the amount, if any, that 10% of
the consolidated cash revenues of BBE for the period from March 1, 1999 to
February 29, 2000, is less than CN $750,000. If the cash revenues of BBE exceed
CN $750,000 during this period, then IBC will pay Bagga the amount over CN
$750,000 in equivalent value of common shares of IBC. These shares must be
registered and freely tradeable, with a value per share equal to the closing
trading price on the business day immediately preceding March 1, 2000. The 10%
cash revenues do not include trade dollar revenues, and include any incremental
cash revenues to IBC from any acquisitions by BBE of a majority interest
(whether for cash or shares) in any entities during the period, including cash
revenues derived from strategic alliances or joint ventures, provided that only
any increase in cash revenues after the effective date of the acquisition are
included. A copy of the Note is filed as an exhibit to this report and is
incorporated by reference.
The obligations of IBC under the Note are secured by a Share Pledge
Agreement, by which IBC pledged the Shares to Bagga. The Share Pledge Agreement
constitutes a security interest in first position until such time as the Note is
paid and IBC's obligations have been satisfied. A copy of the Share Pledge
Agreement is filed as an exhibit to this report and is incorporated by
reference.
IBC agreed to register the resale of the 150,000 shares issued to Bagga
within sixty (60) days after Closing. Upon registration, the IBC Shares shall
have a minimum aggregate value of Three Hundred Fifty Thousand Dollars (CN
$350,000). In the event the minimum aggregate value falls below this amount,
then IBC will make up the difference, at its option, either by (i) a payment of
cash; or (ii) through the issuance of additional shares of common stock of IBC.
The purchase price and the terms for the transaction were determined in
arms-length negotiations between the parties. Each of the parties acknowledge
that the determination of the Purchase price is based on assumptions relating to
the financial condition of the Corporation disclosed to IBC through
representations made by Bagga and the unaudited financial statements
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prepared by BBE. The Purchase price is subject to adjustment to account for any
change in the revenues, accounts receivables, inventory, trade exchange deficit
and liabilities of BBE. In the event the financial condition of BBE differs from
the assumptions at Closing, the parties will enter into good faith negotiations
for a period not to exceed ten (10) business days from the closing. If the
parties cannot agree on an adjustment to the purchase price within the ten (10)
business days, then neither party will be obligated to consummate the
acquisition of the Purchased Shares under the Share Purchase Agreement. In that
event Bagga will be obligated to repay the principal amount of the Bridge Loan
to IBC, together with interest calculated at eight percent (8.0%) per annum.
Item 7. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS OF BARTER BUSINESS EXCHANGE, INC.
The Financial Statements of the acquired business, which are required
to be filed pursuant to Item 7(a) of Form 8-K, were not available at
the time of filing this Current Report on Form 8-K and will be filed
on a Form 8-K/A as soon as practicable, but in no event later than 60
days after the date this Form 8-K is required to be filed.
(b) PRO FORMA FINANCIAL INFORMATION.
The Pro Forma Financial Information required to be filed pursuant to
Item 7(b) of Form 8-K was not available at the time of filing of this
Current Report on Form 8-K and will be filed on a Form 8-K/A as soon
as practicable, but in no event later than 60 days after the date this
Form 8-K is required to be filed.
(c) EXHIBITS.
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<CAPTION>
Exhibit No. Description
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<S> <C>
10.9 Share Purchase Agreement among Bob Bagga and International Barter Corp. and
Business Barter Exchange, Inc.
10.10 Share Pledge Agreement between International Barter Corp., and Bob Bagga, and
Business Barter Exchange, Inc.
10.11 Promissory Note.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL BARTER CORP.
(Registrant)
By: /s/ Steven White
------------------------------------
Steven White
President and Chief Executive Officer
By: /s/ Kevin R. Andersen
------------------------------------
Chief Financial Officer
Date: March 15, 1999
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description
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<S> <C>
10.9 Share Purchase Agreement among Bob Bagga and International Barter Corp. and
Business Barter Exchange, Inc.
10.10 Share Pledge Agreement between International Barter Corp., and Bob Bagga, and
Business Barter Exchange, Inc.
10.11 Promissory Note.
</TABLE>
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EXHIBIT 10.9
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 28th day of February, 1999.
A M O N G:
BOB BAGGA, a business person residing in Richmond Hill, Ontario,
Canada
(hereinafter referred to as the "VENDOR")
OF THE FIRST PART
- and -
INTERNATIONAL BARTER CORP., a corporation organized and existing
under the laws of the State of Nevada, U.S.A.
(hereinafter referred to as the "PURCHASER")
OF THE SECOND PART
- and -
BARTER BUSINESS EXCHANGE INC., a corporation organized and
existing under the laws of the Province of Ontario, Canada
(hereinafter referred to as the "CORPORATION")
OF THE THIRD PART
WHEREAS:
A. The Vendor is the registered and beneficial owner of all the issued and
outstanding shares in the capital of the Corporation which he wishes to
sell to the Purchaser;
B. The Purchaser wishes to purchase the said issued and outstanding shares in
the capital of the Corporation owned by the Vendor, all upon and subject to
the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that for good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto) the parties make the agreements and acknowledgments
hereinafter set forth:
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ARTICLE I
INTERPRETATION
1.1 Definitions - Whenever used in this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following words and
terms shall have the respective meanings ascribed to them as follows:
(1) "AGREEMENT" means this Share Purchase Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof; "hereof",
"hereto", and "hereunder" and similar expressions mean and refer to
this Agreement and not to any particular Article or Section;
"Article", "Section", "paragraph" or "clause" means and refers to the
specified article, section, paragraph or clause of this Agreement;
(2) "BALANCE SHEET" means the balance sheet of the Corporation as at
February 28, 1998, forming part of the Financial Statements;
(3) "BRIDGE LOAN" means a loan from the Purchaser to the Vendor in the
original principal amount of $500,000 pursuant to and in accordance
with the terms of that certain bridge loan agreement between the
Purchaser and the Vendor and related documents, including a stock
pledge agreement pursuant to which, inter alia, the Vendor pledged the
Purchased Shares to the Purchaser to secure the Vendor's obligations
under the said bridge loan agreement, copies of which are attached
hereto as SCHEDULE 1.1(C);
(4) "BUSINESS" means the business presently and heretofore carried on by
the Corporation consisting of barter trading operations, including the
operation of the following offices:
(1) 3357 Walker Road
Unit 1C Windsor,
Ontario N8W 5J5
(2) The Airport Centre
5955 Airport Road
Suite 224
Mississauga, Ontario L4V 1R9
(3) 8988 Fraserton Court
Suite 105-B
Burnaby, British Columbia V5J 5H8
(5) "BUSINESS DAY" means a day other than a Saturday, Sunday or any other
day on which the principal commercial banks located at the City of
Toronto are not open for business during normal banking hours;
(6) "CASH REVENUES" means the consolidated cash revenues of the Purchaser,
inclusive of cash revenues of UBarter.com from March 1, 1999 to
February 29, 2000, which does not include trade dollar revenues, and
includes any incremental cash revenues to the Purchaser from any
acquisitions of a majority interest (whether for cash or shares) in
any entities during such period, including cash
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revenues derived from strategic alliances or joint ventures of the
Purchaser, provided that only any increase in cash revenues after the
effective date of the acquisition be included;
(7) "CLOSING" means the completion of the sale and purchase of the
Purchased Shares hereunder by the transfer and delivery of documents
of title thereto and the payment of the purchase price therefor as
contemplated herein;
(8) "CLOSING DATE" means the 1st of March, 1999, or such other date as the
parties hereto may agree as to the date upon which the Closing shall
take place;
(9) "CLOSING TIME" means 1:00 o'clock in the afternoon on the Closing Date
or such other time on the Closing Date as the parties hereto may agree
as to the time on the Closing Date which the Closing shall take place;
(10) "CORPORATE TRADE DOLLARS" means the barter currency commonly known by
the parties as barter dollars;
(11) "EFFECTIVE DATE" means the 28th day of February, 1999;
(12) "FINANCIAL STATEMENTS" means the unaudited financial statements of the
Corporation for the fiscal period ended February 28, 1998, consisting
of the Balance Sheet and the statements of income, retained earnings
and source and application of funds and all notes thereto as reported
upon by The Sacks Partnership, Chartered Accountants, a copy of which
is annexed hereto as SCHEDULE 4.1(j);
(13) "IBC SHARES" means the 150,000 common shares in the capital stock of
the Purchaser to be issued to the Vendor in partial payment and
satisfaction of the Purchase Price pursuant to subsection 3.1(c)(iv)
of this Agreement, as same may be adjusted;
(14) "LETTER OF INTENT" means that certain letter of intent between the
Purchaser and the Vendor as amended, copies of which are annexed
hereto as SCHEDULE 1.1(m);
(15) "PLEDGE AGREEMENT" means a share pledge by the Purchaser in favour of
the Vendor in respect of the Purchased Shares in substantially the
form attached hereto as SCHEDULE 1.1(o) which is to secure the
Purchaser's obligations under the Promissory Note pursuant to
subsection 3.1(c)(iii) of this Agreement;
(16) "PURCHASE PRICE" has the meaning ascribed to it in subsection 3.1(a)
of this Agreement;
(17) "PURCHASED SHARES" means all of the issued and outstanding common
shares in the capital of the Corporation which consists of 200 issued
and outstanding shares in the capital of the Corporation, all of which
are registered in the name of and are beneficially owned by the
Vendor;
(18) "PROMISSORY NOTE" means that certain promissory note in substantially
the form attached hereto as SCHEDULE 1.1(r) in the original principal
amount of up to Eight Hundred Fifty Thousand Dollars ($850,000),
subject to reduction, if any, to be issued and delivered to the Vendor
on closing in partial payment and satisfaction of the Purchase Price
pursuant to subsection 3.1(c)(iii) of this Agreement; and
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(19) "SUBSIDIARY" means, with respect to the Corporation, any corporation
the shares to which are attached more than 50% of the voting rights
ordinarily exercisable at meetings of the shareholders of such
corporation, of which are beneficially owned, directly or indirectly,
by the Corporation.
1.2 Headings - The division of this Agreement into Articles and Sections and
the insertion of headings are for the convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
1.3 Number - In this Agreement and unless the context otherwise requires, words
importing the singular number only shall include the plural and vice versa,
words importing the neuter gender shall include the masculine and feminine
genders and vice versa and words importing persons shall include individuals,
partnerships, associations, trusts, unincorporated organizations and
corporations and vice versa.
1.4 Accounting Principles - Unless otherwise expressly stated, wherever in this
Agreement reference is made to generally accepted accounting principles, such
reference shall be deemed to be the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants,
or any successor institute, applicable as at the date on which such calculation
is made or required to be made in accordance with generally accepted accounting
principles.
1.5 Schedules - The following are the Schedules annexed hereto and incorporated
by reference and deemed to be part hereof:
Schedule 1.1(c) - Bridge Loan
Schedule 1.1(m) - Letter of Intent
Schedule 1.1(o) - Pledge Agreement
Schedule 1.1(r) - Form of Promissory Note
Schedule 4.1(j) - Financial Statements
Schedule 4.1(k) - Undisclosed Liabilities
Schedule 4.1(n) - Encumbrances
Schedule 4.1(o) - Motor Vehicles and Equipment
Schedule 4.1(p) - Leases, Rental Agreements, Conditional Sales Contracts,
Title Retention Documents and Licenses
Schedule 4.1(q) - Intellectual Property and Related Documents
Schedule 4.1(s) - Leases and Licences of Real Property
Schedule 4.1(v) - Employees, Officers and Directors
Schedule 4.1(w) - Employment, Management, Service, Employee Benefit,
Deferred Compensation, Pension, Profit Sharing, Union and
Other Similar Agreements and Plans
Schedule 4.1(aa)- Litigation and Claims
Schedule 4.1(cc)- Bank Accounts
Schedule 4.1(ff)- Insurance
Schedule 4.1(gg)- Long Term Indebtedness
Schedule 4.1(hh)- Non-Arm's Length Contracts, Agreements or other
Arrangements
Schedule 4.1(ii)- Payments and Loans with Directors, Officers, etc.
Schedule 8.4(n) - Opinion of Counsel for the Vendor and the Corporation
Schedule 8.4(o) - Form of Release of the Vendor
Schedule 8.4(p) - Form of Employment Agreement
Schedule 8.5(c) - Opinion of Counsel for the Purchaser
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Schedule 8.5(d) - Form of Release of the Corporation
1.6 Currency - All payments required hereunder to be made and all currency
mentioned herein shall be in and refer to Canadian dollars.
1.7 Reference to Statutes - All references contained in this Agreement to a
statute shall be deemed to be made to such statute as now enacted or as the same
may from time to time be amended, re-enacted or replaced, and in the case of any
such amendment, re-enactment or replacement, such reference herein to a
provision of such statute shall be read as a reference to such amended,
re-enacted or replaced provision.
ARTICLE II
BRIDGE FINANCING
1.8 Advance of Bridge Loan - As a pre-condition to entering into this
Agreement, the Purchaser advanced to the Vendor the original principal amount of
Five Hundred Thousand Dollars ($500,000) in cash pursuant to and in accordance
with the terms of the Bridge Loan, which advance shall constitute partial
payment and be applied on Closing in satisfaction of an equivalent amount of the
Purchase Price in respect of the Purchased Shares.
ARTICLE III
PURCHASE AND SALE
1.9 Action by Vendor and Purchaser - Subject to the terms and conditions of
this Agreement, at the Closing Time, to be effective from the Effective Date:
(1) Purchase Price - The Vendor shall sell and the Purchaser shall
purchase the Purchased Shares for an aggregate purchase price of Two
Million, Four Hundred and Fifty Thousand Dollars ($2,450,000) (the
"PURCHASE PRICE").
(2) Delivery of Certificates, etc. -The Vendor shall deliver to the
Purchaser or its nominee at the Closing certificates or documents of
title or other evidences of ownership of the Purchased Shares to be
sold and purchased hereunder duly endorsed for transfer, or
accompanied by irrevocable security transfer powers of attorney duly
executed in blank, in either case by the holders of record thereof,
all in form and substance sufficient to permit the recording or
registration of the Purchaser or its nominee as the new owner of
record of the Purchased Shares in compliance with all applicable
requirements, provisions and procedures relating to the recording or
registration of such ownership. The Vendor shall also deliver to the
Purchaser certified copies of the resolutions of the board of
directors or shareholders of the Corporation, as the case may be,
required to approve the transfer of the Purchased Shares by the Vendor
to the Purchaser or its nominee.
(3) Payment to the Vendor - Subject to the Adjustments and after applying
the principal amount of the Bridge Loan in partial payment and
satisfaction thereof, the Purchaser shall pay the balance of the
Purchase Price on Closing as follows:
(1) by delivery to the Vendor of a certified cheque or bank draft
made payable in lawful money of Canada in the amount of Three
Hundred Fifty Thousand Dollars ($350,000) and a certified cheque
or bank draft made payable in lawful money of The United States
in the amount of
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One Hundred Thousand Dollars (US $100,000), both to or to the
order of the Vendor, or as he may further direct;
(2) by delivery to the Vendor of Corporate Trade Dollars having an
original face value of Two Hundred Fifty Thousand Dollars
($250,000);
(3) by delivery to the Vendor of the Promissory Note. The principal
amount of the Promissory Note shall be $850,000 to be reduced by
the amount, if any, that 10% of the Cash Revenues is less than
$750,000 for the period ended March 1, 2000 (the "REDUCTION"),
provided that in no event may the Reduction be more than
$750,000. If 10% of the Cash Revenues exceeds $750,000, the
Purchaser will pay to the Vendor on March 1, 2000 such amount
over $750,000 in common shares of the Purchaser, registered and
freely tradeable, without restriction, with a value per share
equal to the closing trading price on the Business Day
immediately preceding March 1, 2000. The Promissory Note shall be
secured by the Pledge Agreement which shall be delivered by the
Purchaser to the Vendor on Closing and which shall constitute a
security interest in first position (subject to any encumbrances
existing on Closing prior to the Purchaser acquiring the
Purchased Shares), but subject and subordinated to the rights of
the Purchaser under the Bridge Loan until such time as the Bridge
Loan has been fully repaid by the Vendor to the Purchaser and the
Vendor's obligations thereunder have been fully satisfied. While
the Promissory Note is outstanding, the Purchaser may not
transfer any assets of the Corporation out of the usual and
normal course of Business or in any case for consideration
greater than $25,000 without the consent of the Vendor, not to be
unreasonably withheld; and
(4) the issuance by the Purchaser to the Vendor of the IBC Shares,
which IBC Shares shall carry registration rights requiring the
Purchaser upon demand of the Vendor to prepare and file with the
Securities and Exchange Commission a registration statement in
respect of the IBC Shares as soon as possible and, in any event,
no later than sixty (60) days after Closing. Upon registration,
the IBC Shares shall have a minimum aggregate value of Three
Hundred Fifty Thousand Dollars ($350,000), failing which the
Purchaser covenants and agrees to make up the difference at the
option of the Purchaser by either (i) a payment of cash; or (ii)
through the issuance to the Vendor of additional common shares in
the capital stock of the Purchaser (the "ADDITIONAL IBC Shares").
The Vendor acknowledges and agrees that none of the IBC Shares
(and, if applicable, the Additional IBC Shares), nor any portion
thereof, may be sold, conveyed, transferred, traded or disposed
of on or before the earlier of (i) six (6) months after Closing;
and (ii) September 1, 1999, provided that no more than Twenty
Five Thousand (25,000) IBC Shares (including, if applicable,
Additional IBC Shares) may be sold per month after September 1,
1999, unless the Vendor gives prior written notice to the
Purchaser.
(4) Adjustments to Purchase Price - Each of the parties acknowledge and
agree that the determination of the Purchase Price is based on several
assumptions (the "ASSUMPTIONS") relating to the financial condition of
the Corporation disclosed to the Purchaser through representations
made by the Vendor and the unaudited
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financial statements prepared by management of the Corporation dated
as of July 31, 1998, including:
(1) average monthly cash revenues for the quarter ended September 30,
1998 of at least $150,000;
(2) average monthly trade revenues for the quarter ended September
30, 1998 of at least $100,000;
(3) collectible accounts receivables with an age of not more than 120
days past due at Closing Time of at least $320,000;
(4) inventory at Closing Time of at least $435,000;
(5) accounts payable at Closing Time of not more than $80,000,
exclusive of goods and services tax which may be payable; and
(6) a total Corporate Trade Dollar trade exchange deficit at Closing
Time of no greater than $5,200,000.
The Purchase Price will be subject to adjustment (the "ADJUSTMENT") to
account for any change in the revenues, accounts receivables,
inventory, trade exchange deficit and liabilities of the Corporation
which differ from the Assumptions, or reflect changes from the date of
the Letter of Intent to the Closing Time. For greater certainty, it is
agreed by the parties hereto that cash adjustments shall be made with
cash and/or certified funds and Corporate Trade Dollar adjustments
shall be made with Corporate Trade Dollars.
In the event the financial condition of the Corporation differs from
the Assumptions at the Closing Time, the parties will enter into good
faith negotiations for a period not to exceed ten (10) Business Days
from the Closing Time in an effort to agree on the Adjustment to the
Purchase Price. If the parties cannot agree on an Adjustment to the
Purchase Price within the said ten (10) Business Day period, neither
party will be obligated to consummate the acquisition of the Purchased
Shares contemplated by this Agreement and, within ninety (90) days of
written demand by the Purchaser, the Vendor shall repay the principal
amount of the Bridge Loan to the Purchaser, together with interest
thereon calculated at 8% per annum.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
1.10 The Vendor hereby covenants, represents and warrants to the Purchaser that:
(1) Right to Sell - The Purchased Shares constitute in the aggregate all
of the issued and outstanding shares in the capital stock of the
Corporation and, subject only to the terms and conditions of a pledge
agreement among the Purchaser, the Vendor and Tollefsen Business Law
PLC, the Vendor is the sole registered and beneficial owner of the
Purchased Shares, free and clear of all liens, charges, pledges,
security interests, demands, adverse claims, rights, or other
encumbrances whatsoever and no person, firm or corporation
now has or at Closing will have any right, option, agreement or
arrangement capable of becoming an agreement for the acquisition of
any of the Purchased Shares or any interest therein from the Vendor.
(2) Due Authorization, etc. - The Corporation has all necessary corporate
power, authority and capacity to enter into this Agreement and the
agreements and other instruments contemplated herein and to perform
its respective obligations hereunder and thereunder. The execution and
delivery of this Agreement and the agreements and other instruments
contemplated herein and the consummation of the transactions
contemplated hereunder and thereunder have been duly authorized by all
necessary corporate action on the part of the Corporation. The Vendor
has all necessary power, authority and capacity to enter into this
Agreement and the agreements and other instruments contemplated herein
and the consummation of the transactions contemplated hereunder and
thereunder.
(3) Valid and Binding Obligation - This Agreement constitutes and the
agreements and other instruments contemplated herein when executed
will constitute valid and binding obligations of the Vendor and the
Corporation enforceable against each of them in accordance with the
terms hereof and thereof subject, however, to limitations with respect
to enforcement imposed in connection with laws affecting the rights of
creditors generally including, without limitation, applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws and
to the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are
sought.
(4) No Violation - The disposition of the Purchased Shares and the
entering into and performance of this Agreement and the agreements and
other instruments contemplated herein will not violate, contravene,
breach or offend against or result in any default under any security
agreement, indenture, mortgage, lease, order, undertaking, licence,
permit, agreement, instrument, charter or by-law provision, resolution
of shareholders or directors, statute, regulation, judgment, decree or
law to which the Vendor or the Corporation is a party or by which it
may be bound or affected and neither the Vendor nor the Corporation
are, or will be at Closing, party to or subject to or bound by the
terms of any unanimous shareholder agreement that restricts the
transfer of shares in the capital of the Corporation. No licenses,
agreements or other instruments or documents will terminate or require
assignment as a result of the entering into of this Agreement or the
consummation of the transactions contemplated hereby.
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(5) Organization and Good Standing of the Corporation - The Corporation is
a corporation duly incorporated, duly organized, validly existing, in
good standing and is up to date in all of the filings and
registrations required under the laws of the Province of Ontario and
has all necessary corporate power, authority and capacity to own or
lease its property and assets (including, without limitation, the
property and assets shown in the Balance Sheet) and to carry on the
Business as presently conducted by it. Neither the nature of the
Business nor the location or character of the property owned or leased
by the Corporation requires the Corporation to be registered,
recorded, licensed or otherwise qualified as an extra-provincial or
foreign corporation or to be in good standing in any jurisdiction
other than in the Province of Ontario, where it is duly registered,
recorded, licensed or otherwise qualified and in good standing for
such purpose, and British Columbia, where at the moment its wholly
owned subsidiary Vancouver Barter Business Exchange Inc. ("VANCOUVER
BBE") has been dissolved for failure to file its annual returns as
required. No such registration, record, licence or qualification
contains any burdensome term, provision, condition or limitation which
has or may have an adverse effect on the operation of the Purchased
Business.
(6) Subsidiaries - The Corporation has one (1) Subsidiary, Vancouver BBE,
and owns 50 per cent (50%) of the issued and outstanding shares of
1099048 Ontario Ltd. operating as BBE Windsor, and otherwise owns no
shares in the capital of any other corporation and has not agreed to
acquire any Subsidiary or any shares in the capital of any other
corporation or to acquire or lease or invest directly or indirectly
in, any other business operations.
(7) Authorized Capital - The authorized capital of the Corporation now
consists of and at Closing shall consist of an unlimited number of
common shares without par value, an unlimited number of Class B shares
without par value and an unlimited number of Class C shares without
par value, of which there are and at Closing shall be 200 issued and
outstanding common shares and no issued and outstanding Class B or C
shares.
(8) Issued Shares - Of the authorized capital of the Corporation 200
COMMON SHARES (and no more) have been duly and validly issued and are
outstanding as fully paid and non-assessable shares in the capital of
the Corporation. The certificates evidencing such shares do not
contain any reference to a restriction on the transfer of the
Purchased Shares (other than set out in the Articles of Incorporation)
a unanimous shareholder agreement, a lien in favour of the Corporation
or an endorsement regarding a dissenting shareholder under s.184(ii)
of the Business Corporations Act (Ontario), and bear no restrictive
legends. Neither the constating documents or by-laws of the
Corporation nor any agreement contain or provide for restrictive
legends thereto.
(9) No Options - No options, warrants, convertible obligations or other
rights to purchase or acquire shares or other securities of the
Corporation have been authorized, allotted or agreed to be issued or
are outstanding.
(10) Financial Statements - The Financial Statements which are attached
hereto as SCHEDULE 4.1(j) including the Balance Sheet, the statements
of income, retained earnings and source and application of funds
therein contained and the notes thereto are true and correct and have
been prepared in accordance with generally
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<PAGE> 10
accepted accounting principles applied on a basis consistent with
those of preceding periods and present fairly:
(1) all of the assets, liabilities (whether accrued, determinable,
absolute, contingent or otherwise) and the financial condition of
the Corporation as at February 28, 1998; and
(2) the sales, earnings and results of operations of the Corporation
during the period(s) covered by such Financial Statements.
(11) Absence of Undisclosed Liabilities - Except to the extent reflected or
reserved against in the Balance Sheet (including the notes thereto) or
incurred subsequent to the date thereof and disclosed in SCHEDULE
4.1(k) or elsewhere in this Agreement (including the Schedules hereto)
and except for unsecured current obligations and liabilities incurred
in the ordinary and usual course of the Business and which are not
materially adverse to the nature and manner of conducting the
Business, or the operations, assets, properties, future prospects or
financial condition of the Corporation, the Corporation does not have
any material outstanding indebtedness or any material liabilities or
obligations (whether accrued, determinable, absolute, contingent or
otherwise) in respect of which the Corporation or the Purchaser may be
liable on or after the completion of the transactions contemplated by
this Agreement.
(12) Tax Matters - Except to the extent reflected in or reserved against in
the Balance Sheet, the Corporation is not liable for any Canadian
federal, provincial or municipal or local taxes, levies, assessments
or other taxes in respect of its income, business or property or for
the payment of any tax instalment due in respect of its current
taxation year and, except as aforesaid, no such taxes, assessments or
penalties are required to be reserved against. The Corporation has
duly and completely filed in a timely manner all tax returns required
to be filed by it and has duly paid all taxes due from it to the
federal, provincial or local taxing authorities including without
limitation, those due in respect of its properties, income,
franchises, licences, sales, use of property and payrolls. There are
no tax liens upon any of the properties or assets, real, personal or
mixed, tangible or intangible, of the Corporation, whether or not
recorded or made subject of a lien or public notice. There are no
questions relating to, or claims asserted for, taxes or assessments
against the Corporation. The Canadian federal revenue tax liability of
the Corporation has been reviewed and determined by Revenue Canada for
the financial years ending in February 28, 1998 (and all amounts owing
thereunder have been paid). There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
assessment or reassessment of income tax or the filing of any tax
return by, or payment of any tax by, or levying of any governmental
charge against, the Corporation. There are no actions, audits,
assessments, reassessments, suits, proceedings, investigations or
claims now threatened against the Corporation in respect of taxes or
governmental charges or any matters under discussion with any
governmental authority relating to taxes or governmental charges
asserted by any such authority. The Corporation has withheld from each
payment made by it the amount of all taxes and other deductions
required to be withheld therefrom and has paid the same to the proper
taxing or other authority within the time prescribed under any
applicable legislation or regulation.
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<PAGE> 11
(13) Business Carried on in Ordinary Course - The Business has been carried
on in the ordinary and usual course since the date of the Balance
Sheet and, other than the transaction resulting in the purchase of
Robin Maini's shares in the Corporation by the Vendor effective
December 28, 1998 and all matters related thereto, there has been no
change in the affairs, business, prospects, operations or condition of
the Business, financial or otherwise, or arising as a result of any
legislative or regulatory change, revocation of any licence or right
to do business, fire, explosion, accident, casualty, labour problem,
flood, drought, riot, storm, act of God or otherwise, except changes
occurring in the ordinary and usual course of the Business and which,
in the aggregate, have not materially adversely affected and will not
materially adversely affect the nature and manner of conducting the
Business, or the operations, assets, properties, future prospects or
financial condition of the Corporation.
(14) Title to and Use of Properties - The Corporation has good and
marketable title to all its properties and assets, interests in
properties and assets, real and personal, tangible and intangible,
including without limitation those reflected in the Balance Sheet or
acquired since the date of the Balance Sheet (except as since
transferred, sold or otherwise disposed of in the ordinary and usual
course of business in compliance with this Agreement), free and clear
of all mortgages, security interests, charges, adverse claims, rights,
pledges, demands, liens, title retention agreements, or other
encumbrances of any nature or kind except as shown in SCHEDULE 4.1(n).
To the knowledge of the Vendor and the Corporation, the uses to which
any real property of the Corporation (including leasehold property)
have been put are not in breach or violation in any respect of any
statute, by-law, ordinance, regulation, covenant, governmental
restriction or official plan, municipal or otherwise. No notice of a
public taking has been received regarding any real estate or
properties occupied by the Corporation. The Corporation has neither
agreed to assign, transfer or otherwise dispose of any interest in
real property leased by it nor has it granted to any person any right
or privilege capable of becoming an agreement to acquire any such
interest.
(15) Condition and Description of the Corporation's Assets - All
facilities, machinery and equipment owned and used by the Corporation
in connection with the Business are in good operating condition, are
in a state of good repair and maintenance, reasonable wear and tear
excepted, are useable in the ordinary course of the Business and are
in compliance with all applicable laws, regulations, by-laws,
ordinances and orders. All motor vehicles and equipment owned or used
by the Corporation are described in SCHEDULE 4.1(o).
(16) Tangible and Intangible Properties - The Corporation is entitled to
use in connection with the Business all equipment, other personal
property and fixtures in the possession or custody of the Corporation
which, as of the date hereof, are leased, rented, acquired under a
conditional sales contract or other title retention document, or are
held under licence or similar arrangement, a list of which and of the
leases, rental agreements, conditional sales contracts, title
retention documents, licences, agreements or other documentation
relating thereto is set forth in SCHEDULE 4.1(p).
(17) Intellectual and Industrial Property Rights - Neither the Vendor nor
the Corporation has received notice that, and to the best knowledge
and belief of the Vendor and the Corporation, the Corporation is not
infringing any patent, trade mark, trade name, copyright, proprietary
or similar right, domestic or foreign, of
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<PAGE> 12
any other person, firm or corporation. There is included in SCHEDULE
4.1(q) a list (including, where applicable, applications for
registration and registration particulars) of all registered service
marks, registered copyrights, trade names, industrial designs, trade
marks, and patents, both domestic and foreign, which are owned or used
by the Corporation and the Corporation has the sole and exclusive
right to use the same and the same are in good standing and duly
registered in all appropriate offices to preserve the right thereof
and thereto. There are neither any royalty payments or licence fees
payable to or by the Corporation nor any licence, registered user or
other agreements in respect thereof.
(18) Collectability of Accounts Receivable - All accounts receivable, book
debts and other debts due or accruing to the Corporation are bona fide
and to the best knowledge and belief of the Vendor and the
Corporation, are good and collectible at the aggregate recorded
amounts thereof (subject to no defence, counterclaim or set off) and,
in respect of those having an age of not more than 120 days past due,
having a value of at least Three Hundred Twenty Thousand Dollars
($320,000) as at the Closing Time.
(19) Leases and Licences of Real Property - The Corporation is not a party
to or bound by any leases or licences of real property or agreements
in the nature of leases or licences of real property, either as lessor
or lessee, or agreements to enter into such leases or licences, other
than those referred to in SCHEDULE 4.1(s) (in which is specified the
parties, their dates of execution and expiry dates, any options to
renew, the location of any leased or licensed lands or premises and
the rental payments thereunder) and all interests held by the
Corporation as lessor, lessee, licensor or licensee under such leases,
licences or agreements and to the knowledge and belief of the Vendor
and the Corporation, are free and clear of any and all mortgages,
security interest, charges, adverse claims, rights, pledges, demands,
liens, title retention agreements and other encumbrances of any nature
or kind whatsoever. All rental and other payments required to be paid
by or to the Corporation pursuant to such leases, licences or
agreements have been duly paid and the Corporation is not otherwise in
default in meeting its obligations under any such leases, licences or
agreements. To the best knowledge and belief of the Vendor and the
Corporation, there are no events or circumstances which could give
rise to such parties claiming default by the Corporation under such
leases, licences or agreements. No consent of any parties to such
leases, licences or agreements (other than the Corporation) is
required by reason of the transactions contemplated hereby except as
specified in SCHEDULE 4.1(s) nor will such transactions impose any
more onerous obligations on the Corporation under such leases,
licences or agreements.
(20) Real Property - The Corporation is not now and never has been the
registered or beneficial owner of any real property whatsoever and,
save and except as disclosed in SCHEDULE 4.1(s), the Corporation does
not and never has had any interest (leasehold or otherwise) in any
real property whatsoever.
(21) Compliance with Contracts - To the best knowledge and belief of the
Vendor and the Corporation, the Corporation is not in material default
under any contract, lease, licence, engagement agreement, commitment,
indenture or other instrument, whether written or oral, (including,
without limitation, those referred to in the Schedules hereto) to
which it is a party and to the best knowledge and belief of the Vendor
and the Corporation, all such contracts, leases, licence, engagements,
agreements, commitments, indentures or other instruments are now
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<PAGE> 13
in good standing and in full force and effect and the Corporation is
entitled to all rights and benefits thereunder.
(22) Employees, etc. - There are set forth in SCHEDULE 4.1(v) the names and
titles of all the directors and officers of the Corporation, and of
all personnel employed or engaged in the Business thereof, together
with particulars of the material terms and conditions of employment or
engagement of such persons, including rates of remuneration, benefits
and positions held.
(23) Employment Contracts, etc. - Except as disclosed on SCHEDULE 4.1(w),
the Corporation does not have any written contracts of employment
entered into with any employees employed by the Corporation, any oral
contracts of employment which are not terminable on the giving of
reasonable notice in accordance with applicable law, any management,
any employee benefit, deferred compensation, profit sharing or other
similar agreement or plan.
(24) Vacation Pay, etc. - All vacation pay, bonuses, commissions and other
emoluments for employees of the Corporation are reflected and have
been properly accrued in the Financial Statements and books of account
of the Corporation and such accruals are adequate to meet any bona
fide claims of employees.
(25) Accuracy of Books and Records - The books and records of the
Corporation, financial and otherwise, fairly and correctly set out and
disclose in all material respects the financial position of the
Corporation and all material financial and other transactions have
been accurately recorded in such books and records.
(26) Absence of Guarantees - The Corporation has not given or agreed to
give, or is a party or bound by, any indemnity, or any guarantee of
indebtedness or other obligations of third parties or any other
commitment by which the Corporation is or is contingently responsible
for such indebtedness or other obligations, other than those given
pursuant to the transaction with Robin Maini of January 7, 1999.
(27) Litigation and Claims - Except as disclosed in SCHEDULE 4.1(aa):
(1) there is no suit, action, litigation, labour grievance or
complaint, investigation, (including, without limitation,
investigations under human rights or health and safety
legislation) or administrative, governmental, arbitration or
other proceeding (whether or not purportedly on behalf of the
Corporation), including without limitation appeals and
applications for review, in progress, or to the best knowledge
and belief of the Vendor and the Corporation, pending or
threatened against or relating to the Corporation, or affecting
its respective properties or the Business, or affecting the
Purchased Shares, or affecting the right of the Vendor to enter
into this Agreement or perform the Vendor's obligations
hereunder;
(2) the Vendor is not aware (after due enquiry from the senior
officers of the Corporation) of any existing grounds upon which
any suit, action, litigation, labour grievance or complaint,
investigation or proceeding referred to in clause (i) above might
be commenced with any reasonable likelihood of success;
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<PAGE> 14
(3) there is not presently outstanding against the Corporation any
judgment, decree, injunction, rule, order or award of any court,
governmental department, commission, board, bureau, agency,
instrumentality or arbitrator or any settlement agreement binding
upon it or them;
(4) Neither the Vendor nor the Corporation has received notice of,
and to the best knowledge and belief of the Vendor and the
Corporation, there are no open files, notices of violation or
outstanding work orders relating to the equipment, building or
realty owned or used by the Corporation from or required by any
police, fire department, sanitation, health, worker safety or
factory authorities or any federal, provincial or municipal
authority, or any matters under discussion with any such
authority or department relating to open files, notice of
violation or work orders. No order affecting the Corporation has
been issued or is expected to be issued by the Ministry of
Labour, Worker's Compensation Board or any other ministry, agency
or authority; and
(5) there are no proceedings, investigations, assessments or claims
now in affect against the Corporation pursuant to the Income Tax
Act (Canada).
(28) Compliance with Applicable Laws, etc. - To the best knowledge and
belief of the Vendor and the Corporation, the Corporation is
conducting the Business in compliance with all applicable laws, rules,
regulations, by-laws and ordinances of each jurisdiction in which the
Business is carried on and is not in breach of any such laws, rules,
regulations, by-laws and ordinances. Without limiting the foregoing,
the Corporation has obtained all licences, permits or other
governmental authorizations necessary to the ownership of its assets
and properties or the conduct of its Business where a failure to
obtain same might adversely affect the Business, or the operations,
assets or condition (financial or otherwise) of the Corporation.
Neither the Vendor nor the Corporation has offered, paid or agreed to
pay directly or indirectly any money or anything of value to any
individual who is or was an official of any foreign, federal,
provincial or local government, or any agency or instrumentality
thereof, or to any individual who is or was an officer or employee or
any present or former customer of the Corporation or any predecessor
thereof, for the purpose of or with the interest of inducing that
individual to use his or her influence to obtain or maintain
significant business for the Corporation or otherwise significantly
affect the Business or the operations, properties or assets of the
Corporation (financial or otherwise).
(29) Bank Accounts, etc. - There is set forth in SCHEDULE 4.1(cc) the name
of each bank or other depository in which the Corporation maintains
any bank account, trust account or safety deposit box and the names of
all persons authorized to draw thereon or who have access thereto.
(30) Residence of the Vendor - The Vendor is not a non-resident of Canada
for the purposes of Section 116 of the Income Tax Act (Canada).
(31) Inventories - The inventories of the Corporation as at the Closing
Time shall:
(1) consist solely of items of tangible and intangible personal
property and services of the kind and quality regularly used or
produced in the
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<PAGE> 15
Business by the Corporation and which are, to the best knowledge
and belief of the Vendor and the Corporation, of marketable
quality; and
(2) have an aggregate value of at least $435,000.
(32) Insurance - The Corporation maintains such policies of insurance,
issued by responsible insurers, as are appropriate to its Business,
property and assets, in such amounts and against such risks as are
customarily carried and insured against by owners of comparable
businesses, properties and assets. SCHEDULE 4.1(ff) lists all such
policies together with worker's compensation coverages presently
maintained by the Corporation together with a brief description of
each such policy including the types of policy, name of insurer,
coverage limits, expiration dates and annual premiums. All such
policies of insurance are in full force and effect and the Corporation
is not in default, whether as to the payment of premium or otherwise,
under the terms of any such policy and has not failed to give any
notice or present any claim under any such insurance policy in due and
timely fashion. No notice of cancellation or non-renewal with respect
to, nor disallowance of any claim under or with respect to any such
policy has been received by the Corporation. The Vendor has no
knowledge (after due enquiry from the officers of the Corporation) of
any circumstances or occurrences which might form the basis of a
material increase in premiums.
(33) Long Term Indebtedness - Except as set forth in SCHEDULE 4.1(gg), the
Corporation does not have outstanding any bonds, debentures, mortgages
or notes, and is not under any obligation to create or issue any
bonds, debentures, mortgages or notes. Furthermore, except as set
forth in SCHEDULE 4.1(gg), the Corporation does not
have any indebtedness maturing more than one year after the date of
its creation or issuance and the Corporation is not under any
agreement or obligation to create, incur or issue any such
indebtedness.
(34) Non-Arm's Length Transactions - Except as disclosed in SCHEDULE
4.1(hh), the Corporation is not and has not been since the date of the
Balance Sheet a party to any contract, agreement or arrangement with
any associated or affiliated corporation within the meaning of the
Business Corporations Act, (Ontario) or with any of its officers,
directors, shareholders or employees, or former officers, directors,
shareholders or employees, or any other person not dealing at arm's
length (as such term is construed under the Income Tax Act (Canada)),
with any of the foregoing.
(35) Payments and Loans to Directors, Officers, etc. - Other than pursuant
to the transaction with Robin Maini of January 7, 1999, since the date
of the Balance Sheet, the Corporation has not made or authorized any
payment to or conferred or authorized to be conferred any benefit upon
any of its officers, directors, shareholders or employees, or former
officers, directors, shareholders or employees or to any other person
not dealing at arm's length (as such term is construed under the
Income Tax Act (Canada)) with any of the foregoing, except in the
ordinary and usual course of the Business and at the regular rates
payable to them of salary, pension, bonuses, rents or other
remuneration of any nature and relocation expenses and reimbursements
and except as disclosed in SCHEDULE 4.1(ii). There have not been any
increases in the rates of salary, pension, bonuses, rents or other
remuneration of any nature or relocation expenses or reimbursements
payable to any such person since the date of the Balance Sheet
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<PAGE> 16
except increases disclosed in SCHEDULE 4.1(ii) and increases approved
by the Purchaser in advance in writing. Except as expressly otherwise
disclosed in SCHEDULE 4.1(ii), the Corporation has not made any loans
or has any indebtedness outstanding to any of its officers, directors,
shareholders or employees, or former officers, directors, shareholders
or employees or to any other person not dealing at arm's length (as
such term is construed under the Income Tax Act (Canada)) with any of
the foregoing.
(36) Copies of Agreements, etc. - True, correct and complete copies of all
mortgages, leases, agreements, instruments and other documents listed
in the Schedules hereto have been made available for review by the
Purchaser.
(37) Corporate Records - The corporate records and minute books of the
Corporation contain accurate and complete minutes of all meetings of
the directors and shareholders of the Corporation since the date of
incorporation thereof (all of which meetings were duly called and
held) and copies of all by-laws and resolutions passed by its
directors and shareholders at such meetings. Each of the Corporation's
share certificate books, share registers, transfer registers and other
corporate registers and records are complete and accurate.
(38) Changes to Law and Technology - There are no proposed environmental,
safety, health or other laws, rules or regulations and no new
technological developments of which the Vendor or the Corporation has
any knowledge which might have an adverse effect on the Business or
operations of the Corporation or which might require substantial new
capital investment by the Corporation in the Business, provided that
the Vendor and the Corporation make no representation or warranty with
respect to disruptions to the Business caused by what is commonly
referred to as the "Year 2000 computer bug".
(39) Absence of Unusual Transactions - Other than in connection with the
transaction with Robin Maini of January 7, 1999, since the date of the
Balance Sheet and without limiting anything elsewhere contained in
this Agreement the Corporation has not:
(1) transferred, assigned, sold or otherwise disposed of any of the
assets shown in the Balance Sheet or cancelled any debts or
claims except in each case in the ordinary and usual course of
the Business;
(2) incurred or assumed any indebtedness, obligation or liability
(whether accrued, determinable, absolute, contingent or
otherwise), except those listed in SCHEDULE 4.1(k) and except
unsecured current obligations and liabilities incurred in the
ordinary and usual course of the Business which are not
materially adverse to the nature and manner of conducting the
Business, or the operations, assets, properties, future prospects
or financial condition of the Corporation;
(3) issued or sold any shares in its capital stock or any warrants,
bonds, debentures or other corporate securities of the
Corporation or issued, granted or delivered any right, option or
other commitment for the issuance of any such or other
securities;
(4) discharged or satisfied any lien or encumbrance, or paid any
obligation or liability (fixed or contingent) other than current
liabilities included in
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<PAGE> 17
the Balance Sheet, and current liabilities incurred since the
date thereof in the ordinary and usual course of the Business;
(5) declared or paid any dividend or declared or made any other
distribution in respect of its capital stock or purchased,
redeemed or otherwise acquired any of the shares of the
Corporation or effected any subdivision, consolidation or
reclassification of or other change to the Corporation's capital
stock, except a dividend of $55,000 declared on February 26, 1999
for the benefit of the Vendor;
(6) suffered an operating loss or any extraordinary loss, or waived
any rights of substantial value, or entered into any commitment
or transaction not in the ordinary and usual course of the
Business where such loss, rights, commitment or transaction
materially adversely affects or which will materially adversely
affect the nature and manner of conducting the Business, or the
operations, assets, properties, future prospects or financial
condition of the Corporation;
(7) amended or changed or taken any action to amend or change its
charter or by-laws;
(8) made or made a commitment to make any general wage or salary
increases in respect of personnel which it employs;
(9) except as disclosed in SCHEDULE 4.1(n), mortgaged, pledged,
charged, subjected to an adverse claim, granted rights in,
subjected to a demand, subjected to a title retention agreement,
subjected to lien, granted a security interest in or otherwise
encumbered any of its assets or property, whether tangible or
intangible;
(10) except as disclosed on SCHEDULE 4.1(w) made or authorized or
intended to make any capital expenditures (except expenditures in
the ordinary and usual course of the Business); or
(11) authorized or agreed or otherwise have become committed to do any
of the foregoing.
(40) Other Material Contracts - The Corporation has no outstanding
contract, lease, licence, agreement, indenture, engagement, commitment
or other instrument, whether written or oral, of any nature or kind
whatsoever (including, without limitation, all tenders, quotations and
orders open for acceptance) which has not been disclosed to and made
available for inspection by the Purchaser.
To the best of the knowledge, information and belief of the Vendor
(after due enquiry of the senior officers of the Corporation), the
Corporation has the capacity, including the necessary personnel,
equipment and supplies, to perform all its obligations thereunder.
(41) Third Party Discussions - The Purchaser shall not incur any liability
in connection with the consummation of the transaction contemplated by
this Agreement to any third party with whom the Vendor or his agents
and affiliates have had discussions regarding the disposition of the
Purchased Shares.
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<PAGE> 18
(42) Accounts Payable - The cash accounts payable of the Corporation as at
the Closing Time have an aggregate value of no greater than $80,000,
exclusive of goods and services tax which may be payable by the
Corporation.
(43) Corporate Trade Dollars - The trade exchange deficit in respect of the
Corporate Trade Dollars as at the Closing Time has an aggregate value
of no greater than $5,200,000. The Corporation has accounted for an
amount not in excess of $500,000 of Corporate Trade Dollars payable by
the Vendor and Robin Maini to the Corporation (the "EXPENSES") as an
expenditure of the Business prior to the Closing Date. The Vendor has
no further claim for Corporate Trade Dollars against the Purchaser or
the Corporation, as such accounting for the Expenses satisfies in full
the obligation of the Purchaser to pay $500,000 of Corporate Trade
Dollars to the Vendor under the provisions of the Letter of Intent.
(44) Full Disclosure - None of the foregoing representations and statements
of fact contains any untrue statement of material fact or omits to
state any material fact necessary to make any such statement or
representation not misleading to a prospective purchaser of the
Purchased Shares seeking full information as to the Corporation and
its property, business and affairs. The Vendor has no information or
knowledge of any material facts relating to the Business or to the
Purchased Shares which the Vendor has not disclosed to the Purchaser
and which are not within the public domain and which in the aggregate
would have a material adverse effect on the financial condition or
prospects of the Corporation.
1.11 No Change - All the covenants, representations and warranties of the Vendor
and the Corporation, were true and correct as of the date of the Financial
Statements, are true and correct as of the date of this Agreement and shall be
true and correct as of the Effective Date and the Closing Date.
1.12 Reliance - The Vendor hereby expressly acknowledges that the Purchaser is
relying upon the covenants, representations and warranties of the Vendor
contained in this Agreement or in any agreement, certificate or other document
delivered pursuant hereto in connection with the purchase of the Purchased
Shares hereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
1.13 The Purchaser hereby covenants, represents and warrants to the Vendor that:
(1) Organization and Good Standing - The Purchaser is a corporation duly
incorporated and organized, validly existing, in good standing and is
up to date in all of the filings and registrations required under the
laws of the State of Nevada, U.S.A.
(2) Due Authorization, etc. - The Purchaser has all necessary corporate
power, authority and capacity to enter into this Agreement and the
agreements and other instruments contemplated herein and to perform
its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the agreements and other instruments
contemplated herein and the performance of the transactions
contemplated hereunder and thereunder
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<PAGE> 19
have been duly authorized by all necessary corporate action on the
part of the Purchaser.
(3) Valid and Binding Obligation - This Agreement constitutes and the
agreements and other instruments contemplated herein when executed
will constitute valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with the terms hereof
and thereof subject to limitation with respect to enforcement imposed
in connection with laws affecting the rights of creditors generally
including, without limitation, applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws and to the extent that
equitable remedies such as specific performance and injunction are in
the discretion of the court from which they are sought.
(4) No Violation - The Purchaser is not a party to, bound by or subject to
any indenture, mortgage, lease, agreement, instrument, charter or
by-law provision, 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.
(5) Securities Law - The Purchaser is duly registered as a public company
with the Securities and Exchange Commission (the "SEC") and is in
compliance with all applicable securities laws of the United States.
(6) IBC Shares - The IBC Shares, when issued in accordance with the terms
of this Agreement, will be validly issued and outstanding shares in
the capital of the Purchaser, and will be duly registered with the SEC
pursuant to a registration statement. Subject to the provisions
contained herein, and to any legal circumstances personal to the
Vendor concerning trading shares of the Purchaser from time to time,
there will be no restrictions preventing the Vendor from freely
trading the IBC Shares on the NASDAQ OTC exchange or on such other
exchange as the shares of the Purchaser may be listed from time to
time.
1.14 Reliance - The Purchaser hereby expressly acknowledges that the Vendor is
relying upon the covenants, representations and warranties of the Purchaser
contained in this Agreement or in any agreement, certificate or other document
delivered pursuant hereto in connection with the sale of the Purchased Shares
hereunder.
ARTICLE VI
NO BROKER AND EXCLUSIVE DEALING
1.15 No Broker - Each of the parties hereto represents and warrants to the
others that all negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on between them directly and without the
intervention of any other party in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's fee
or other like payment.
1.16 Exclusive Dealing - Until the later of the Closing Time or other
termination of this Agreement, the Vendor and Corporation each agree not to
directly or through intermediaries enter into any agreement, discussion or
negotiation with, or provide information to, any other
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<PAGE> 20
corporation, firm or any other person or solicit, encourage, entertain or
consider any inquiries or proposals, with respect to:
(1) any offers to purchase all or any portion of the Purchased Shares;
(2) the possible disposition of a material portion of the Corporation; or
(3) any business combination involving the Corporation, whether by way of
merger, consolidation, share exchange or other transaction.
ARTICLE VII
CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE PURCHASER
AND THE VENDOR OF THEIR OBLIGATIONS UNDER THIS AGREEMENT
1.17 Purchaser's Conditions - The obligation of the Purchaser to complete the
purchase of the Purchased Shares hereunder shall be subject to the satisfaction
of, or compliance with, at or before the Closing Time, each of the following
conditions precedent (each of which is hereby acknowledged to be inserted for
the exclusive benefit of the Purchaser and may be waived by the Purchaser in
whole or in part):
(1) Truth and Accuracy of Representations of Vendor at Closing Time - All
of the representations and warranties of the Vendor made in or
pursuant to this Agreement (including the Schedules hereto) or in
agreement, certificate or other document delivered or given pursuant
to this Agreement, including, without limitation, the representations
and warranties set forth in Article IV, 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 (except as such
representations and warranties may be affected by the occurrence of
events or transactions expressly contemplated and permitted hereby).
(2) Performance of Obligations - The Vendor shall have complied with and
performed in all respects its obligations, covenants and agreements
herein.
(3) Consents, Authorizations and Registrations - Except for consents which
are required from the Bank of Nova Scotia in connection with certain
SBIL loans to the Corporation and a consent required under the lease
described in Schedule 4.1(s) and not yet received, all consents,
approvals, orders and authorizations of any persons or governmental or
administrative authorities in Canada or elsewhere (or registrations,
declarations, filings or recordings with any such authorities),
including any such consents or approvals required under any of the
leases or licences of real property listed in SCHEDULE 4.1(s), in form
and terms satisfactory to counsel for the Purchaser and compliance
with any conditions thereof required in connection with the completion
of any of the transactions contemplated by this Agreement, the
execution of this Agreement, the Closing or the performance of any of
the terms and conditions hereof shall have been obtained on or before
the Closing Time.
(4) Legal Matters - The title of the Corporation to its assets and
undertaking, the form of and documentation relating to the transfer of
the Purchased Shares by the Vendor to the Purchaser, the legality of
the incorporation and organization of the Corporation, the due
creation and issuance as fully paid of all of the outstanding shares
in the capital of the Corporation and all corporate proceedings of the
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Corporation, its shareholders and directors, and all matters which in
the reasonable opinion of counsel for the Purchaser are material in
connection with the transactions herein contemplated shall be subject
to the favourable opinion of such counsel and all relevant documents,
records and information shall be made available by the Vendor for
review by such counsel for that purpose.
1.18 Vendor's Conditions - The obligation of the Vendor to complete the sale of
the Purchased Shares hereunder shall be subject to the satisfaction of or
compliance with, at or before the Closing Time, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendor and may be waived by the Vendor in whole or in part):
(1) Truth and Accuracy of Representations of Purchaser at Closing Time -
All of the representations and warranties of the Purchaser made in or
pursuant to this Agreement (including the Schedule hereto) or in any
agreement, certificate or other document delivered or given pursuant
to this Agreement, including without limitation the representations
and warranties set forth in Article V 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.
(2) Performance of Obligations - The Purchaser shall have complied with
and performed in all respects all its obligations, covenants and
agreements herein.
1.19 Non-Performance of Conditions for the Benefit of the Purchaser - In the
event that any of the conditions set forth in Section 7.1 shall not be fulfilled
and/or performed at or before the Closing Time, the Purchaser may terminate this
Agreement by notice in writing to the Vendor, and the Purchaser shall thereupon
be released from all obligations under this Agreement and the Vendor shall also
be released from all obligations under this Agreement, provided any of the said
conditions may be waived in whole or in part by the Purchaser at any time
without prejudice to its right of termination in the event of a non-fulfilment
and/or non-performance of any other condition or conditions, any such waiver to
be binding upon the Purchaser only if the same is in writing. Upon such
termination, within ninety (90) days of written demand by the Purchaser, the
Vendor shall repay the principal amount of the Bridge Loan to the Purchaser,
together with interest thereon calculated at 8% per annum.
1.20 Non-Performance of Conditions for the Benefit of the Vendor - In the event
that any of the conditions set forth in Section 7.2 shall not be fulfilled
and/or performed at or before the Closing Time, the Vendor may terminate this
Agreement by notice in writing to the Purchaser, and the Vendor shall thereupon
be released from all obligations under this Agreement and the Purchaser, then
the Purchaser shall also be released from all obligations under this Agreement,
provided any of the said conditions may be waived in whole or in part by the
Vendor at any time without prejudice to its right of termination in the event of
a non-fulfilment and/or non-performance of any other condition or conditions,
any such waiver to be binding upon the Vendor only if the same is in writing.
Upon such termination, within ninety (90) days of written demand by the
Purchaser, the Vendor shall repay the principal amount of the Bridge Loan to the
Purchaser, together with interest thereon calculated at 8% per annum.
1.21 Acceptance of Notice of Non-Fulfilment
(1) The Purchaser covenants and agrees that in the event that at the
Closing Time, any condition or conditions for the benefit of the
Purchaser set out in this Article VII have not been fulfilled and/or
performed to the reasonable satisfaction of the Purchaser and such
condition or conditions is or are not reasonably capable of
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being fulfilled and/or performed or caused to be fulfilled and/or
performed by the Vendor, and the Vendor has, at or prior to the
Closing Time, made complete and accurate disclosure in writing,
referring specifically to the provisions of this Section 7.5 to the
Purchaser of the facts relating to its failure to fulfill and/or
perform such condition or conditions, and the Purchaser elects to
complete the purchase and sale of the Purchased Shares, except as
otherwise agreed by the Purchaser and the Vendor, the Vendor shall not
be liable to the Purchaser hereunder for breach of any covenant,
representation or warranty in respect of the matter so disclosed.
(2) The Vendor covenants and agrees that in the event that at the Closing
Time, any condition or conditions for the benefit of the Vendor set
out in this Article VII have not been fulfilled and/or performed to
the reasonable satisfaction of the Vendor and such condition or
conditions is or are not reasonably capable of being fulfilled and/or
performed or caused to be fulfilled and/or performed by the Purchaser,
and the Purchaser has, at or prior to the Closing Time, made complete
and accurate disclosure in writing, referring specifically to the
provisions of this Section 7.5 to the Vendor of the facts relating to
its failure to fulfill and/or perform such condition or conditions,
and the Vendor elects to complete the purchase and sale of the
Purchased Shares, except as otherwise agreed by the Purchaser and the
Vendor, the Purchaser shall not be liable to the Vendor hereunder for
breach of any covenant, representation or warranty in respect of the
matter so disclosed.
ARTICLE VIII
COVENANTS OF THE VENDOR AND THE PURCHASER
1.22 Investigations - The Vendor shall cause the Corporation to permit the
Purchaser and its employees, agents, counsel and accountants or other
representatives, between the date hereof and the Closing Time, without
interference to the ordinary conduct of the Business, to have free and
unrestricted access during normal business hours to the premises and personnel
of the Corporation, to all the books, accounts, records and other data of the
Corporation (including, without limitation, all corporate, accounting and tax
records, guarantees, agreements, title documentation, surveys, minute books,
share certificate books, tax returns and related correspondence, and financial
statements of the Corporation) and to the properties and assets of the
Corporation, and to furnish to the Purchaser such financial and operating data
and other information with respect to the Business, legal condition, properties
and assets of the Corporation as the Purchaser shall from time to time consider
necessary or desirable to enable confirmation of the matters represented,
warranted and covenanted herein. Without limiting the generality of the
foregoing, it is agreed that the accounting representatives of the Purchaser
shall be afforded ample opportunity to make a full investigation of all aspects
of the financial affairs of the Corporation.
1.23 Confidentiality - In the event of the termination of this Agreement without
consummation of the transactions contemplated hereby, the Purchaser will use its
best efforts to keep confidential any information (unless in the public domain)
obtained from the Corporation or the Vendor. If this Agreement is so terminated,
promptly after such termination, all documents, working papers and other written
material obtained from one party in connection with this Agreement and not
theretofore made public (including all copies thereof), shall be returned to the
party which provided such material or, in lieu thereof, a certificate in writing
confirming that the information in question has been destroyed.
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<PAGE> 23
1.24 Non-Waiver - No investigations made by or on behalf of the Purchaser at any
time shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation, warranty or covenant made by the Vendor herein or
in any agreement, certificate or any other document delivered or given pursuant
hereto.
1.25 Covenants of the Vendor - The Vendor covenants and agrees that the Vendor
shall do the following:
(1) Corporate Documents - Forthwith following the execution of this
Agreement the Vendor will supply the Purchaser with the Certificate of
Incorporation and any Articles of amendment or amalgamation of the
Corporation and all minute and share certificate books of the
Corporation. Any deficiencies discovered by the Purchaser following an
investigation of such documents, and records, shall be corrected to
the satisfaction of the Purchaser prior to the Closing Date. A copy of
any resolution or by-law passed or minutes of any meeting held by the
Corporation's directors or shareholders between the date hereof and
the Closing Date shall be delivered to the Purchaser prior to such
date.
(2) Conduct Business in Ordinary Course - Except as otherwise contemplated
or permitted by this Agreement, the Vendor shall cause the Corporation
during the period from the date of this Agreement to the Closing Time,
to conduct the Business in the ordinary and usual course thereto and
not, without the prior written consent of the Purchaser, to enter into
any transaction or do any thing which, if effected before the date of
this Agreement, would constitute or would cause a material breach of
the covenants, representations and warranties contained herein. On
Closing, the Vendor shall provide the Purchaser with updated
management prepared financial statements as of November 30, 1998,
which shall be certified by the Vendor and comprehensively reflect all
material changes and the financial position of the Corporation from
the date of the Financial Statements up to such date. The Vendor
acknowledges its obligation to provide the Purchaser with financial
statements to the Effective Date, to be provided as soon as possible
but in no event later than 30 days thereafter.
(3) Correctness of Representations and Warranties - The Vendor shall cause
each of the covenants, representations and warranties of the Vendor
contained herein, including, without limitation, Article IV, to remain
true and correct until and at each of the Effective Date and the
Closing Time.
(4) Continue Insurance - The Vendor shall cause the Corporation during the
period from the date of this Agreement to the Closing Time, to
continue in force and effect, and to renew, when necessary, all
existing policies of insurance presently maintained by the Corporation
and to give all notices and present all claims under all such policies
of insurance in due and timely fashion and to promptly advise the
Purchaser of any such claims.
(5) Perform Obligations - The Vendor shall cause the Corporation during
the period from the date of this Agreement to the Closing Time, to
comply with all laws and other obligations affecting the operation of
the Business and to pay all required taxes and tax installments,
including without limitation, income, corporate, retail, excise and
realty taxes.
(6) Transfer of Purchased Shares - The Vendor shall take and cause the
Corporation to take all necessary steps and proceedings as are
necessary to permit all of the
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Purchased Shares to be duly and regularly transferred to the Purchaser
or its nominee(s) at the Closing.
(7) Resignation of Directors and Officers - The Vendor shall cause such
directors and officers of the Corporation as the parties may agree to
resign in favour of nominees of the Purchaser, such resignations to be
effective as at the Closing Time, and shall cause the board of
directors and officers of the Corporation at the Closing Time to be
those persons nominated by the Vendor provided that while the
Promissory Note is outstanding, the Purchaser will ensure that the
Vendor is a director of the Corporation.
(8) Resignation of Auditors - The Vendor shall cause the present auditors
of the Corporation to resign, such resignation to be effective as at
the Closing Time.
(9) Evidence of Payments of Tax and Title - Upon request, the Vendor shall
furnish the Purchaser with evidence satisfactory to the Purchaser that
at the Closing Time there are no arrears of or liabilities for taxes
(including taxes on income), rates, assessments or other charges
adversely affecting the assets of the Corporation not shown as
accruals or allowances on the Financial Statements except taxes,
rates, assessments or other charges accruing in the ordinary and usual
course of the Business subsequent to the date of the Financial
Statements and that at the Closing Time all of the assets of the
Corporation shall be owned by the Corporation with good and marketable
title thereto, free and clear of all mortgages, liens, charges,
pledges, security interests, demands, rights, adverse claims and other
encumbrances of any nature or kind, except as may be otherwise
disclosed in this Agreement (including the Schedules hereto).
(10) Representation Evidence by the Vendor - Upon request, the Vendor shall
furnish the Purchaser at the Closing Time with evidence (which may
include statutory declarations made by the Vendor and officers of the
Corporation) satisfactory to the Purchaser that the facts with respect
to each of the representations and warranties of the Vendor contained
herein or in any Agreement, certificate or any other document
delivered or given pursuant hereto, are true and correct as at each of
the Effective Date and the Closing Time, provided that the receipt of
such evidence and the closing of the transaction of purchase and sale
herein shall not act as a waiver of the covenants, representations and
warranties of the Vendor or the Corporation contained herein or any
agreement, certificate or any other document delivered or given
pursuant hereto, which covenants, representations and warranties shall
continue in full force and effect as provided for herein.
(11) Payments of Taxes - Cause the Corporation, up to the Closing Date, to
duly and expeditiously file all tax returns required to be filed by it
(all such returns being subject to the prior approval of the
Purchaser) and, except where otherwise specified by the Purchaser, to
promptly pay all taxes, assessments and governmental charges which are
claimed by any governmental authority to be due and owing; not suffer
or permit the Corporation, without the prior consent of the Purchaser,
to enter into any agreement, waiver or other arrangement providing for
an extension of time with respect to the filing of any tax return or
the payment or assessment of any tax, governmental charge or
deficiency.
(12) No Encumbrances - The Vendor shall transfer Purchased Shares to the
Purchaser at the Closing Time free and clear of all mortgages, liens,
charges, security
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interests, adverse claims, pledges, demands, rights and other
encumbrances of any nature or kind.
(13) Opinion of Counsel for the Vendor and the Corporation - The Vendor
shall cause to be delivered to the Purchaser at the Closing Time an
opinion dated the Closing Date, from counsel for the Vendor and the
Corporation in the form annexed hereto as SCHEDULE 8.4(m).
(14) Release of the Corporation - The Vendor shall deliver and cause to be
delivered to the Purchaser at the Closing Time executed releases by
the Vendor and by each director and officer of the Corporation and
such other persons as the Purchaser may specify, each such release to
be in the form annexed hereto as SCHEDULE 8.4(n).
(15) Employment Agreement - The Vendor shall deliver and cause to be
delivered to the Purchaser at the Closing Time an executed Employment
Agreement in the form of Employment Agreement annexed hereto as
SCHEDULE 8.4(o).
(16) Deliveries and Assurances - The Vendor shall deliver and cause to be
delivered to the Purchaser at the Closing Time all required deliveries
as set out herein together with all assurances, transfers,
assignments, certificates and other documents as the Purchaser's
solicitors consider reasonably necessary or desirable to validly and
effectively complete the transactions contemplated by this Agreement
including, without limitation, the transfer of the Purchased Shares
from the Vendor to the Purchaser.
1.26 Covenants of the Purchaser - The Purchaser covenants and agrees that the
Purchaser shall do the following:
(1) Correctness of Representations and Warranties - The Purchaser shall
cause each of the covenants, representations and warranties of the
Purchaser contained herein, including, without limitation, Article V,
to remain true and correct until and at each of the Effective Date and
the Closing Time.
(2) Representation Evidence by the Purchaser - The Purchaser shall furnish
the Vendor at the Closing Time with evidence (which may include a
statutory declaration made by an officer of the Purchaser)
satisfactory to the Vendor that the facts with respect to each of the
representations and warranties of the Purchaser contained herein are
true and correct as at each of the Effective Date and Closing Time,
provided that the receipt of such evidence and the closing of the
transaction of purchase and sale herein shall not act as a waiver of
the covenants, representations and warranties of the Purchaser
contained herein, which covenants, representations and warranties
shall continue in full force and effect as provided for herein.
(3) Opinion of Counsel for the Purchaser - The Purchaser shall cause to be
delivered to the Vendor and the Corporation at the Closing Time an
opinion dated the Closing Date, from counsel for the Purchaser in the
form annexed hereto as SCHEDULE 8.5(c). The Purchaser further
covenants to cause to be delivered to the Vendor with the IBC Shares,
when issued in accordance with the terms of this Agreement, an opinion
from US counsel to the Purchaser concerning compliance with applicable
US laws.
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(4) Release of the Vendor - The Purchaser shall deliver and cause to be
delivered to the Vendor at the Closing Time an executed release by the
Corporation, such release to be in the form annexed hereto as SCHEDULE
8.5(d).
(5) Deliveries and Assurances - The Purchaser shall deliver and caused to
be delivered at the Closing Time to the Vendor all required deliveries
as set out herein, together with all other documents as the Vendor's
solicitors consider reasonably necessary or desirable to validly and
effectively complete the transactions contemplated by this Agreement.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE VENDOR AND PURCHASER
1.27 Survival of Representations, Warranties and Covenants of the Vendor - The
representations, warranties and covenants of the Vendor contained in this
Agreement or in any agreement, certificate or any other document delivered or
given pursuant to this Agreement shall survive the completion of the
transactions contemplated by this Agreement and, notwithstanding such completion
or any investigation made by or on behalf of the Purchaser, shall continue in
full force and effect for the benefit of the Purchaser for a period of 1 year
from the Closing Date, subject to Article X.
1.28 Survival of Representations, Warranties and Covenants of the Purchaser The
covenants, representations and warranties of the Purchaser contained in this
Agreement or in any agreement, certificate or any other document delivered or
given pursuant to this Agreement shall survive the completion of the
transactions contemplated by this Agreement and, notwithstanding such completion
or any investigation made by or on behalf of the Vendor, shall continue in full
force and effect for the benefit of the Vendor until the expiration of the
period referred to in subsection 9.1(a) but subject to Article X.
ARTICLE X
INDEMNIFICATION
1.29 Vendor to Indemnify - Subject to the limitations hereinafter provided in
this Article X, the Vendor covenants and agrees to indemnify and save harmless
the Purchaser and the Corporation, their respective officers, directors,
shareholders, lenders and affiliates, of and from:
(1) all debts, liabilities, contracts or engagements whatsoever, including
any liabilities for federal, provincial, sales, excise, income,
corporate or any other taxes of the Corporation, existing at the
Closing Time and not disclosed on or included in the Balance Sheet
save and except those liabilities disclosed in this Agreement
(including the Schedules hereto) or accruing or incurred subsequent to
the date of the Balance Sheet in the ordinary course of the Business
and none of which is materially adverse to the Business, or the
operations, assets, properties or financial condition of the
Corporation;
(2) all contingent liabilities which the Corporation becomes obligated to
pay, existing at the Closing Time, not disclosed or reflected in the
Balance Sheet or notes forming part of the Financial Statements or
elsewhere in this Agreement (including the Schedules hereto);
(3) any assessment or reassessment for income, franchise or corporate tax,
interest and/or penalties for any period up to and including the
Closing Date for which no
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adequate reserve has been provided and disclosed or reflected in the
Financial Statements, except to the extent that the assessment or
reassessment disallows an expense or a deduction claimed by the
Corporation the amount of which the Corporation is or will be
entitled, for any subsequent taxation year, to claim as capital cost
allowances pursuant to the regulation to the Income Tax Act (Canada)
or claim as an expense or other deduction in computing its income
under the Income Tax Act (Canada) in which case the Vendor shall bear
the full risks of any interest or penalties attributable to such
timing difference;
(4) any loss suffered by the Purchaser or the Corporation as a result of
any breach of any representation, warranty or covenant of the Vendor
contained in this Agreement or in any agreement, certificate or other
document delivered or given pursuant to this Agreement;
(5) any claims by or liabilities to any third party with whom the Vendor
or his agents and affiliates have had discussions regarding the
disposition of the Purchased Shares made or incurred in relation to or
as a result of or in connection with the consummation of the
transactions contemplated by this Agreement; and
(6) all claims, actions, causes of action, damages, losses, liabilities,
demands, costs and expenses (including legal expenses on a
solicitor-client basis) in respect of the foregoing.
Subject to the limitations hereinafter provided in this Article X, the liability
of the Vendor under this Section 10.1 shall cease upon the expiration of the
respective limitation periods set out in Article IX unless the Vendor shall have
been given notice by the Purchaser of any claim hereunder pursuant to this
Section 10.1 prior to such date in which event the limitation period shall not
apply with respect to such claim.
1.30 Notification to Vendor - The Purchaser shall forthwith notify the Vendor of
any debts, liabilities, contracts, engagements, assessments, reassessments or
losses, or other amounts for which the Vendor may be liable under Section 10.1
and the Vendor shall have the right to participate in any negotiations with
respect thereto. If the Corporation receives an assessment or reassessment in
respect of which the indemnity of the Vendor hereunder may extend or relate, the
Purchaser shall cause the Corporation forthwith after receipt thereof to deliver
to the Vendor a copy of such assessment or reassessment and the Purchaser shall
notify the Vendor of its claim, if any, against the Vendor under the within
indemnity within ninety (90) days after receipt of such assessment or
reassessment and the Purchaser shall take all action necessary to preserve the
Corporation's right to object to the assessment or reassessment. Unless the
Purchaser shall have complied with the provisions of the immediately preceding
sentence, the liability of the Vendor to indemnify the Purchaser or the
Corporation with respect to such assessment or reassessment shall cease provided
that general notice from either the Purchaser or the Corporation that
circumstances have arisen which may lead to an indemnity being sought will be
sufficient notice.
1.31 Right of Vendor to Defend - The Vendor shall at all times have the right at
its sole and only expense to participate in any negotiations regarding, and
dispute and contest in the name of the Corporation, any claim for amounts for
which the Vendor may be liable under Section 10.1 and so long as the Vendor is
defending such claim in good faith, the Purchaser shall not settle or compromise
the same; provided, however, that with respect to any assessment or reassessment
for income, corporate, sales, excise or other tax, the right of the Vendor to so
contest shall only apply after the payment of any such assessment or
reassessment by the Vendor on behalf of the Corporation if payment is, at law, a
pre-condition to the right to contest the assessment or reassessment. If the
Vendor does not elect to defend such claim, the Purchaser shall have no
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obligation to do so. The payment of any such assessment or reassessment by the
Vendor on behalf of the Corporation shall be repaid to the Vendor if repaid by
the taxing authority, together with any interest thereon paid by the taxing
authority; provided, however, that notwithstanding anything elsewhere contained
in this Section 10.3, if any such contest or settlement shall also involve
matters which could affect the future tax liabilities of the Corporation or the
Purchaser, then any such contest or settlement must be handled or conducted to
the mutual satisfaction and agreement of the Vendor, the Corporation and the
Purchaser. The Purchaser will fully cooperate and will cause the Corporation to
fully cooperate with the Vendor and its counsel in any proceedings with respect
to any such amounts and shall give the Vendor reasonable access to all documents
relating thereto.
1.32 Purchaser to Indemnify - Subject to the limitations hereinafter provided in
this Article X, the Purchaser covenants and agrees to indemnify and save
harmless the Vendor of and from:
(1) any loss suffered by the Vendor as a result of any breach of
representation, warranty or covenant of the Purchaser contained in
this Agreement or in any agreement, certificate or other document
delivered or given pursuant to this Agreement; and
(2) all claims, actions, causes of action, damages, losses, liabilities,
demands, costs and expenses (including legal expenses on a
solicitor-client basis) in respect of the foregoing.
Subject to the limitations hereinafter provided in this Article X, the liability
of the Purchaser under this Section 10.4 shall cease upon the expiration of the
respective limitation periods set out in Article IX unless the Purchaser shall
have been given notice of any claim hereunder by the Vendor pursuant to this
Section 10.4 prior to such date in which event the limitation period shall not
apply with respect to such claim.
1.33 Notification to Purchaser - The Vendor shall forthwith notify the Purchaser
of any amounts for which the Purchaser may be liable under Section 10.4 and the
Purchaser shall have the right to participate in any negotiations with respect
thereto.
1.34 Right of Purchaser to Defend - The Purchaser shall at all times have the
right in its sole and only expense to participate in any negotiations regarding,
and dispute and contest in the name of the Vendor, any claim for amounts for
which the Purchaser may be liable under Section 10.4 and so long as the
Purchaser is defending such claim in good faith, the Vendor shall not settle or
compromise the same. If the Purchaser does not elect to defend such claim, the
Vendor shall have no obligation to do so. The Vendor will fully cooperate with
the Purchaser and its counsel in any proceedings with respect to any such
amounts and shall give the Purchaser reasonable access to all documents relating
thereto.
1.35 Limitations
(1) The Vendor shall not be obligated to make any payment to the Purchaser
or the Corporation in respect of any amount payable by the Vendor to
either or both them under this Article X unless, and then only to the
extent that, in the case of one payment, the amount exceeds $20,000,
or in the event that the aggregate of such amounts exceeds $30,000.
(2) The Purchaser shall not be obligated to make any payment to the Vendor
in respect of any amount payable by the Purchaser to the Vendor under
this Article X unless, and then only to the extent that, in the case
of one payment, the
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amount exceeds $20,000, or in the event that the aggregate of such
amounts exceeds $30,000.
(3) Nothing contained in this Agreement, including without limitation,
Section 9.1, shall limit the liability of the Vendor to the Purchaser
or the Corporation by reason of any fraudulent breach of
representation or warranty contained in this Agreement or in any
agreement, certificate or other document delivered or given pursuant
to this Agreement, or limit the time within which a claim hereunder on
account of such fraudulent breach may be made.
(4) Nothing contained in this Agreement, including without limitation,
Section 9.2, shall limit the liability of the Purchaser to the Vendor
by reason of any fraudulent breach of representation or warranty
contained in this Agreement or in any agreement, certificate or other
document delivered or given pursuant to this Agreement, or limit the
time within which a claim hereunder on account of such fraudulent
breach may be made.
(5) The remedies available to the Purchaser, the Vendor and the
Corporation under this Agreement are in addition to and without
limitation to any other remedy available at law or in equity.
ARTICLE XI
CLOSING
1.36 The Closing - The sale and purchase of the Purchased Shares hereunder shall
be completed at the Closing Time at the offices of Weir & Foulds, 130 King
Street West, Suite 1600, Toronto, Ontario, M5X 1J5 or at such other location as
may be mutually agreed upon by the parties hereto.
1.37 Tender - Any tender of documents or money hereunder may be made upon the
parties hereto or their respective counsel and money may be tendered by official
bank draft drawn upon a Canadian chartered bank or by negotiable cheques payable
in Canadian funds and certified by a Canadian chartered bank or trust company.
ARTICLE XII
GENERAL
1.38 Public Notices - The parties hereto hereby agree that all press releases,
public announcements, notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
prepared, planned and co-ordinated and no party hereto shall act unilaterally in
this regard without the prior approval of the other, such approval not to be
unreasonably withheld, unless such disclosure shall be required to meet timely
disclosure obligations of any party under applicable securities laws and stock
exchange rules in circumstances where prior consultation with the other party is
not practicable.
1.39 Expenses - All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses. However, the cost of drafting the Letter of Intent,
this Agreement and the completion of financial statements of the Corporation by
an accounting firm designated by the Purchaser shall be borne by the Purchaser.
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1.40 Time - Time shall be of the essence of this Agreement and of every part
hereof and no extension or variation of this Agreement shall operate as a waiver
of this provision.
1.41 Notices - All payments and communications which may be or are required to
be given by either party to the other herein, shall (in the absence of any
specific provision to the contrary) be in writing and delivered or sent by
prepaid registered mail or telecopier to the parties at their following
respective addresses:
For: BOB BAGGA
7 Fern Avenue
Richmond Hill, ON L4B 3R7
with a copy to: THOMAS P. POWERS
Margolis Partnership
Barristers and Solicitors
30 St. Clair Avenue West
Suite 1108
Toronto, ON M4V 3A1
Facsimile: (416) 968-7702
For: BARTER BUSINESS EXCHANGE INC.
The Airway Centre
5955 Airport road, Suite 224
Toronto, ON L4V 1R9
Facsimile: (905) 678-9606
with a copy to: THOMAS P. POWERS
Margolis Partnership
Barristers and Solicitors
30 St. Clair Avenue West
Suite 1108
Toronto, ON M4V 3A1
Facsimile: (416) 968-7702
For: INTERNATIONAL BARTER CORP.
61 West 62nd Street
19D
New York, NY 10023
Attention: Mr. Steven White,
Chairman, CEO and President
Facsimile: (212) 757-3881
with a copy to: WEIR & FOULDS
Barristers and Solicitors
130 King Street West
Suite 1600
Toronto, ON M5X 1J5
Attention: Mr. Wayne Egan
Facsimile: (416) 365-1876
and if any such payment or communication is sent by prepaid registered mail, it
shall, subject to the following sentence, be conclusively deemed to have been
received on the third business day following the mailing thereof and, if
delivered or telecopied, it shall be conclusively deemed to have been received
at the time of delivery or transmission. Notwithstanding the foregoing
provisions with respect to mailing, in the event that it may be reasonably
anticipated that, due to
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any strike, lock-out or similar event involving an interruption in postal
service, any payment or communication will not be received by the addressee by
no later than the third (3rd) Business Day following the mailing thereof, then
the mailing of any such payment or communication as aforesaid shall not be an
effective means of sending the same but rather any payment or communication must
then be sent by an alternative means of transportation which it may reasonably
be anticipated will cause the payment or communication to be received reasonably
expeditiously by the addressee. Either party may from time to time change its
address hereinbefore set forth by notice to the other of them in accordance with
this section.
1.42 Governing Law - This Agreement and the rights and obligations and relations
of the parties hereto shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein (but without giving effect to any conflict of laws rules). The parties
hereto agree that the Courts of Ontario shall have jurisdiction to entertain any
action or other legal proceedings based on any provisions of this Agreement.
Each party hereto does hereby attorn to the jurisdiction of the Courts of the
Province of Ontario.
1.43 Headings - The index to and headings in this Agreement and in the Schedules
hereto are inserted solely for convenience of reference and do not affect the
interpretation thereof or define, limit or construe the contents of any
provision of this Agreement.
1.44 Assignment - Neither this Agreement nor any rights or obligations hereunder
shall be assignable by any party hereto without the prior written consent of
each of the other parties, which consent may be unreasonably withheld. Subject
thereto, this Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors (including any successor by
reason of amalgamation of any party hereto) and permitted assigns.
1.45 Entire Agreement - With respect to the subject matter of this Agreement,
and save and except for the Bridge Loan, this Agreement (a) sets forth the
entire agreement between the parties hereto and any persons who have in the past
or who are now representing either of the parties hereto, (b) supersedes all
prior understandings and communications between the parties hereto or any of
them, oral or written, including, without limitation, the Letter of Intent and
(c) constitutes the entire agreement between the parties hereto. Each party
hereto acknowledges and represents that this Agreement is entered into after
full investigation and that no party is relying upon any statement or
representation made by any other which is not embodied in this Agreement. Each
party hereto acknowledges that he or it shall have no right to rely upon any
amendment, promise, modification, statement or representation made or occurring
subsequent to the execution of this Agreement unless the same is in writing and
executed by each of the parties hereto.
1.46 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, at or after the Closing Time.
1.47 Counterparts - This Agreement may be executed in any number of counterparts
and all such counterparts shall for all purposes constitute one agreement,
binding on the parties hereto, provided each party hereto has executed at least
one counterpart, and each shall be deemed to be an original, notwithstanding
that all parties are not signatory to the same counterpart.
1.48 Waiver - The failure of any party to this Agreement to enforce at any time
any of the provisions of this Agreement or any of its rights in respect thereto
or to insist upon strict adherence to any term of this Agreement will not be
considered to be a waiver of such provision, right or term or in any way to
affect the validity of this Agreement or deprive the applicable party
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of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. The exercise by any party to this Agreement of any
of its rights provided by this Agreement will not preclude or prejudice such
party from exercising any other right it may have by reason of this Agreement or
otherwise, irrespective of any previous action or proceeding taken by it
hereunder. Any waiver by any party hereto of the performance of any of the
provisions of this Agreement will be effective only if in writing and signed by
a duly authorized representative of such party.
1.49 Negotiation - This Agreement has been negotiated and approved by counsel on
behalf of all parties hereto and, notwithstanding any rule or maxim of
construction to the contrary, any ambiguity or uncertainty will not be construed
against any party hereto by reason of the authorship of any of the provisions
hereof.
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IN WITNESS WHEREOF the parties hereto have hereunto duly executed this
Agreement as of the day and year first above written.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
- -------------------------------------
Witness BOB BAGGA
BARTER BUSINESS EXCHANGE INC.
Per:
Name: Bob Bagga
Title: President
INTERNATIONAL BARTER CORP.
Per:
Name: Steven White
Title: Chairman, Chief Executive Officer
and President
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